|
||||||||||||||||||||||||||
| SEC Info℠ | | | Home | | | Search | | | My Interests | | | Help | | | Sign In | | | Please Sign In | |||||||
|
||||||||||||||||||||||||||
As Of Filer Filing For·On·As Docs:Size Issuer Agent 1/17/06 American Radio Empire, Inc 8-K:1,2,5,712/15/05 2:555K Dieterich & Associates |
Document/Exhibit Description Pages Size 1: 8-K Current Report HTML 333K 2: EX-10 Material Contract HTML 96K
| 8K Work Up Information |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report: December 15, 2005
(Date of earliest event reported)
STONE FIELD MANAGEMENT COMPANY, INC.
(Exact name of registrant as specified in its charter)
Wyoming | 86-0970014 | |
State of Incorporation | Commission File Number | IRS Employer Identification No. |
13210 Kerrville Folkway, Building G
(Address of principal executive offices)
Tel: 512-249-9600
(Issuer's telephone number)
N/A
(Former name or former address, if changed since last report)
Item 1.01
Entry into a Material Definitive Agreement.
On December 15, 2005, the Management of the Stone Field Management Company, Inc. ("Stone Field" or the "Company") announced that they had concluded that the Company would be unable to raise the necessary funds to operate its then-current business and continue with the existing business model and plan. Accordingly, management sought new opportunities that could be acquired via a reverse merger transaction or alternative business opportunities with the intent to assure that the Company becomes a viable going concern.
On December 15, 2005, the Company executed a letter of intent whereby Stone Field proposed to exchange 5,000,000 shares of the Company’s common stock for one hundred percent (100%) of the issued and outstanding shares of common stock of American Radio Empire, Inc.. ("ARE"), a Nevada corporation. Pursuant to the terms of the agreement, all of the issued and outstanding shares of ARE common stock will be converted, by virtue of the merger, into shares of Stone Field common stock (the "Merger Securities") on the Closing Date. On or before the Closing Date, each Shareholder of ARE will surrender their outstanding shares of ARE common stock to the Company. Upon such surrender, shares of ARE common stock so surrendered shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist.
Management of Stone Field intends to amend its Articles of Incorporation in order to change its corporate name to “American Radio Empire, Inc.” in order to better reflect the newly-acquired business and general business model.
Item 2.01 Completion of Acquisition or Disposition of Assets.
Item 5.01 Changes in Control of Registrant.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
Item 7.01 Regulation FD Disclosure.
Item 9.01 Financial Statements and Exhibits.
On December 31, 2005, the Company completed the acquisition of American Radio Empire, Inc., a Nevada corporation, pursuant to an Agreement and Plan of Merger, the form of which is attached as Exhibit 10.1 hereto. At the effective time of the merger, December 31, 2005, American Radio Empire, Inc., will become a wholly owned subsidiary of Stone Field Management Company, Inc., a Wyoming corporation.
All of the outstanding shares of ARE common stock were converted into shares of Stone Field common stock.
Information Required for a Form 10SB Filing
PART I
Item 1. Description of Business
American Radio Empire, Inc. (which is referred to as “we” or “American Radio” or “The Company”) is a Nevada corporation formed in 1997, with its principal office at 13210 Kerrville Folkway, Building G, Austin, Texas 78729-7522.
The Company was created to acquire, accumulate and operate small town radio stations across the United States. American Radio proposes to tie the radio station group together with its own media rep firm for national and regional advertising sales. American Radio currently has an executed nonbinding Letter of Intent for the acquisition of an existing, established media rep firm to speed its entry into that segment of the business. Additionally the Company has nonbinding letters of intent for the acquisition of a radio station in Pennsylvania, two stations in Mississippi and three stations in Wyoming.
American Radio will provide listeners and advertisers with select internet services and partner with an established Wireless internet Service Provider (WIFI) group for the ability to offer high speed internet access, satellite television and cell phone services as well. American Radio has commenced negotiations for strategic partnerships with service providers for its WIFI and internet services.
Overview of Business
The Company proposes to start with the possible acquisition of various radio stations spread between Pennsylvania, Mississippi and Wyoming, though stations located in other states may replace some of these proposed acquisitions or be added to the acquisition list. American Radio intends to pursue a regionally focused acquisition strategy, adding clusters of stations primarily across the Southwest, Southeast and Mid-West quadrants of the country, to accumulate stations within the group. The total number of stations acquired will be a function of availability, timing and marketing feasibility. American Radio currently has identified over 85 potential acquisition targets besides the media rep firm and radio stations currently under letters of intent or contract.
American Radio's Management believes that all of these opportunities can be linked together quickly for efficient operation. The strategy is a combination of a small market radio station consolidation and a very specific
internet and WIFI approach that is cross-market oriented.
American Radio proposes to buy stations with a combination of senior bank debt/private equity and public stock. Sellers will become stockholders in American Radio. Each seller will be invited to become of member of a Board of Advisors that the Company will form.
Besides its regional focus, our core strategy is based upon achieving certain economies of scale. For example, under current market conditions, an advertiser is unable to initiate an advertising campaign targeting smaller markets without entering into multiple separate media purchases with each radio station.
Our salespeople will be thoroughly trained in marketing their respective stations. In order to attract and retain qualified personnel, we recognize the need for a fair and appealing compensation plan. Management intends to use bonus programs selectively as a method of rewarding outstanding salespeople. Finally, we are committed to providing ongoing sales training and motivational programs to help our salespeople develop their full potential.
Radio Industry Revenue Overview
Radio stations primarily derive revenues from the sale of commercial advertising spots or programs to national, regional, and local advertisers. Advertising rates that stations charge depend on their performance in the rating periods in larger markets and on relationships and results in smaller markets. Ratings are based on estimates of the number of persons listening to the station, as well as the number of homes in the station's services area. The national radio audience measuring service, Arbitron, serves the entire country and provides even the smallest towns with semi-annual ratings service. American Radio will not rely entirely on these semiannual ratings but will, instead, work on building sound results-based relationships with its advertisers.
Radio Industry Consolidation
The radio broadcast industry is evolving, and consolidation is having a major impact on the competitive landscape. Local ownership limits by the Federal Communications Commission (“FCC”) of one AM and one FM station per market and a total limit of 14 total stations prevented radio groups from amassing greater size to attract outside capital. Because of these strict limits, radio station ownership was highly fragmented and characterized by “mom and pop” operations in even the largest markets. By 1984, however, FCC rules began relaxing, with major expansion in ownership limits occurring in 1992 and 1994.
The passage of the 1996 Telecommunications Act (the “Telecom Act”) eliminated the national limits on the number of radio stations that one entity could own and eased local ownership rules to allow one operating entity to control up to eight stations (versus 4 previously) in most medium and major markets. Much of the consolidation activity to date has been centered on major markets, resulting in increased competition and higher valuations.
Management believes that there are opportunities to acquire small market properties at more acceptable prices and build a group comparable in size to major market operators such as Clear Channel Communications, Cumulus, Citadel, or CBS.
Radio Industry Conditions
American Radio competes in an industry that is constantly evolving. Deregulation by the FCC has created widespread opportunities within the radio industry, but competitive pressures have also increased. The resulting consolidation moves have swept through the larger-market radio stations and are now working their way through the smaller-sized markets. Among all of the usual advertising-supported media, radio’s growth has been among the fastest, although cable, network television, outdoor and satellite radio have also experienced strong demand.
Competition
The Company is not concerned about satellite radio intrusion into the small towns it looks to serve since those services do not provide localized small town news and sports information.
Management believes that American Radio’s primary competition in these sizes of markets will be local newspapers and occasionally cable television operators and some billboard operations. The Company has the capability of providing multimedia services in the form of both radio and
internet entertainment coupled with a variety of services possible through WIFI.
Broadcast Equipment
We will use each acquired station’s existing transmitter, audio chain equipment, antenna and tower space wherever possible or feasible. We will upgrade particular station equipment on an as-needed basis. All other equipment required to tie each station into headquarters will either be purchased or leased. The use of high-speed internet connections will allow the rapid transfer of data between our stations.
Competitive Position In the Market
American Radio’s target markets are rural broadcast areas throughout the United States. If we are able to implement our business plan successfully on a significant level, we can be a dominant small market group operator.
Government Regulation – Federal Communications Commission
The Federal Communications Commission (“FCC“) regulates the radio broadcast industry. The FCC is led by five (5) Commissioners, who are appointed by the President subject to confirmation by the Senate. Formed in 1934, the Commission is responsible for granting licenses to all stations and insuring compliance with its rules and regulations.
Currently there are no FCC ownership restrictions relating to the total number of stations one company may own across the US. This is due to the passage of the 1996 Telecommunications Act by Congress. The stations we propose to acquire are in small, unrated markets and have already been clustered together by the current owner with FCC approval.
There is no pending legislation before Congress, nor is there any pending rule making before the FCC that we believe would adversely effect our activities or plans for the future. Our officers are all experienced broadcasters who have a proven track record in operations. None of our officers and directors have ever been investigated or fined by the FCC, nor has the FCC ever failed to approve a license transfer in which any of our officers has been a party.
Acquisition and Closing Process
We plan to streamline the negotiating and closing process on the proposed station purchases by, among other things, standardizing the transaction documents as much as possible, including creating a form of purchase option agreement and purchase agreement. Following the execution of a definitive purchase agreement (subject to FCC approval, and satisfactory completion of our due diligence), the Company and the station’s seller will submit the appropriate transfer documents to the FCC. While the FCC has the authority to approve or reject a transfer request, transfer requests are, in the normal course, generally approved within approximately three to six months of submission of all required applications and related documents.
Management believes that a major consideration for ensuring the success of its planned acquisitions is to do so in as timely and low profile a manner as possible. Normally, the sale of stations in the market sizes we propose would be significant events within their respective marketplaces. To maintain the stations’ stability and consistency under our planned ownership, it is important that the listeners and advertisers notice little, if any, change to the current operation.
Assuming receipt of final FCC notification of transfer approval, we will immediately proceed to closing, and then commence implementing the operational changes deemed necessary as a result of the due diligence investigation.
After completing an acquisition, corporate operating controls are planned for each station, including careful tracking of expenses and actively searching for vendors willing to provide us with group discounts for using their service or product. All station computer systems will be networked with headquarters to produce station-level information on a real time and on request basis. We will regionalize administrative and accounting controls wherever it is feasible and prudent to do so.
Employees
At this time, American Radio has one contract employee - Dain Schult, our Chief Executive Officer, President and Chairman of the Board. We have executed employment agreements with Harry Hedges and Herb Neu which are more fully described below. We intend to hire additional marketing and other personnel as management believes may be required.
RISK FACTORS
We cannot assure that we will ever be profitable. American Radio was incorporated in November 1997, and is a development stage company with no operating history or revenues. The operating losses reflect expenses encountered in the organization and initial operations of the entity. Funds were raised for operating expenses to service providers via both convertible and redeemable notes issued by the company along with warrant agreements. Additionally, some of the funds raised via these notes were utilized to cover the costs involved in due diligence of prospective radio station deals for American Radio to pursue.
At present, we have no agreements currently in place to receive any capital. We cannot assure that we will be successful or that we will ever be profitable.
We anticipate net losses for the foreseeable future. The primary reasons for these anticipated losses are significant charges for depreciation and amortization relating to our proposed acquisition of radio stations, as well as interest charges on debt that we expect to incur in connection with those acquisitions. If we acquire additional stations, these charges will likely increase further. We cannot assure you that we will be profitable in the future, and our failure to do so could harm our business and cause the value of our common stock to decline. We have experienced losses since inception. Our net loss from inception through September 30, 2005 was approximately $662,356. American Radio has been dependent upon loans from management and third parties in the aggregate amount of approximately $508,000, exclusive of interest, to sustain our development activities to date. In the event we are unable to raise sufficient capital and to become profitable, our business will fail.
We cannot assure that we will ever acquire any radio stations. We signed a purchase agreement to acquire two radio stations in Lampasas, Texas, as well as nonbinding letters of intent to acquire a media rep firm and a radio station in Pennsylvania, three radio stations in Wyoming and two radio stations in Mississippi. Negotiations on all of these transactions continue to progress, and management believes it is likely that some, if not all, of these acquisitions can close. We are currently involved in litigation with the owners of the Lampasas stations about the interpretation of the purchase agreement, but we hope that, through mediation, that transaction can be successfully concluded. We cannot assure that we will successfully acquire any radio stations. Failure to acquire radio stations in accordance with our business plan would result in the failure of our business.
We have no current agreements to provide the substantial additional capital required to implement our business plan. As of September 30, 2005, we had a working capital deficit of approximately $653,000. In the event we fail to obtain sufficient capital, we will be unable to acquire radio stations and implement our business plan, and investors may lose all of their investment. While we are in negotiations with several potential funding groups, we have no definitive agreements yet with anyone to provide us with additional financing.
Our independent auditors have expressed doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing. In their report dated July 29, 2005, our independent auditors stated that deficits in stockholders' equity raises substantial doubt of our ability to continue as a going concern. Our ability to continue as a going concern is subject to our ability to generate a profit or obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities, producing revenue by acquiring radio stations, or obtaining loans. The going concern qualification in the auditor's report increases the difficulty in meeting these goals, and we cannot assurance that we will prove successful at raising capital.
Management controls American Radio and will be able to control the outcome of any vote on major decisions. Currently, our management owns and controls approximately 64% of our outstanding common stock. As a result, our management effectively controls our affairs, including the election of all of the members of our Board of Directors, the issuance of additional shares of common stock, the distribution and timing of dividends, if any, and all other matters. This means that although shareholders are entitled to vote on certain matters affecting American Radio and its business, management will be able to control the outcome of any vote on major decisions, even if all of American Radio’s non-management shareholders oppose a management decision.
There may not be a market for our common stock. We do not currently meet the requirements – such as income, shareholders' equity and number of public shares outstanding – to have our shares listed on a stock exchange in the United States or quoted on the NASDAQ Stock Market. Therefore, our common stock may be an illiquid long-term investment. We anticipate that our common stock will, however, be eligible for trading through some medium.
Any market for the shares, which does develop, may be illiquid. There may be only a limited trading market for our common stock. We expect that initially any market will be on the “Pink Sheets.” Shares that are thinly traded on the Pink Sheets often trade only infrequently and experience a significant spread between the market maker's “bid” and “ask” prices. As a result, it may be difficult or expensive to sell shares even if there is a market.
Item 2. Management's Discussion and Analysis or Plan of Operation
Since we have not yet had any revenue from operations since the corporation’s inception, nor do we have adequate funds already in hand for operations for the next twelve months. Therefore, we will rely on funds for operations and acquisitions being derived by two methods:
* First, we seek to raise working capital for operations as well as the required cash portion of the purchase price for one or more radio station acquisitions by the issuance of restricted securities in private transactions.
* Second, if we are able to acquire one or more radio stations in conjunction with the proposed acquisition of the media rep firm, we will have access to the cash flow generated by these entities post-closing. We intend to acquire stations that we believe will produce revenue sufficient not only to cover their own operating costs, but also to provide cash flow that can be used by us for corporate working capital purposes.
As of September 30, 2005, our cash balance was $2,491 and our net loss, since inception, has totaled $662,356. Without raising additional capital through one or more private transactions, we cannot continue to satisfy our cash requirements In addition, we will only be able to close on one or more radio station acquisitions upon obtaining bank financing for the cash portion of the purchase price.
Prior to acquiring any radio stations, our anticipated minimum capital need is approximately $15,000 per month, of which approximately $10,000 is payable to our chief executive officer in the form of a consulting fee as compensation. Raising capital to fund this minimum need would permit us to continue to seek one or more radio stations for acquisition. We will attempt to borrow these funds, but we cannot assure that any lender will lend them to us. If we cannot borrow the funds, we will seek to raise the funds in a private placement of equity securities. Should those efforts fail, we will be forced to cease operations.
We should then reap the benefit of any cash flow of the acquired station or stations as they become of a part of our operations.
If management cannot achieve these objectives, we will cease operations.
Item 3. Description of Property
Our executive offices are located at 13210 Kerrville Folkway, Building G, Austin, Texas 78729-7522. The offices are leased from Dain Schult under a renewable lease expiring December 31, 2006 with monthly lease payments of $500 or $6,000 annually. Management believes such facilities are adequate for its current needs.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the beneficial ownership of Common Stock of the Company as of the date of this report for the following: (i) each person or entity who is known to the Company to beneficially own more than 5% of the outstanding shares of the Company's Common Stock; (ii) each of the Company's Directors; (iii) the Company's Chief Executive Officer and each of the officers ("Named Officers") named in the Summary Compensation Table herein; and (iv) all Directors and executive officers of the Company as a group.
The number and percentage of shares beneficially owned is determined under rules of the Securities and Exchange Commission ("SEC"), and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or dispositive power and also any shares that the individual has the right to acquire within sixty days of the Record Date through the exercise of any stock option or other right. Unless otherwise indicated in the footnotes, each person has sole voting and dispositive power (or shares such power) with respect to the shares shown as beneficially owned.
|
TITLE OF CLASS |
NAME AND ADDRESS OF BENEFICIAL OWNER |
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP |
PERCENT OF CLASS (1) |
|
Common Stock |
Dain L. Schult 13210 Kerrville Folkway |
3,025,000 shares |
60.2% |
|
Common Stock |
Herb Neu P.O. Box 20518 |
187,500 shares |
1.9% |
|
Common Stock |
Harry H. Hedges P.O. Box 1626 |
187,500 shares |
1.9% |
|
Common Stock |
Sherry Schult 13210 Kerrville Folkway |
3,025,000 shares* |
60.2% |
|
|
All Officers and Directors as a group |
3,400,000 shares |
64% |
|
Total |
|
3,400,000 shares |
64% |
* Represents shares owned by Mr. Dain Schult. Ms. Schult is deemed to be the beneficial owner of the shares that are owned by her spouse, Mr. Schult.
(1) Based upon 5,200,000 shares outstanding as of December 31, 2005.
Item 5. Directors and Executive Officers, Promoters and Control Persons
Directors and Executive Officers
The following table sets forth the names and ages of the members of our Board of Directors and our executive officers and the positions held by each.
|
Name |
Age |
Current Position/Office |
Position Held Since |
|
51 |
Chairman, President/CEO, Treasurer, Director |
||
|
Sherry Schult |
54 |
Secretary |
|
|
Herb Neu |
64 |
Chief Operating Officer - Southeastern Division |
|
|
Harry Hedges |
59 |
Chief Operating Officer - Southwestern Division |
Dain Schult – Chairman, President/CEO: Mr. Dain Schult has served as a Director, Chairman, President/Chief Executive Officer and Treasurer of American Radio since 1998. He is a broadcast veteran of over 37 years in the radio industry. He created Radioactivity, Inc. (as Founder and President March 1977-September 1996), a full-service radio broadcast consultancy and personally consulted over 150 stations around the country. Mr. Schult participated in the turnaround of numerous radio stations, created turn-key management services for new station owners, conducted station appraisals and market analysis projects for sellers and buyers, assisted as broker, buyer’s agent, buyer or seller on over 120 station transactions and developed specific music formats for on-air use by client stations. He was Chief Operating Officer for Sunbelt Radio Group, Inc., (September 1989-May 1991) a radio station group of up to 15 stations created to acquire and operate radio stations along the Texas-Mexico border. He was founder and CEO for TexRock Radio, Inc. (March 1995-October 1998), a Texas-based group of 71 stations. Mr. Schult later created and served as Chairman and CEO of American Communications Enterprises, Inc. (December 1998-September 2000). From September 2000 until the present, Mr. Schult has devoted the bulk of his time to American Radio. During that time, he has occasionally provided broadcast consulting services to third parties. He is a graduate of Georgia State University, Atlanta, GA, and a published author. His published works include “The Radio Guide”, “Nashville, Chattanooga & St. Louis – A History of the Dixie Line,” “Grandpa’s Road” and “Roll Away The Stone.”
Herb Neu – Chief Operating Officer – Southeastern Division: Mr. Neu serves currently as a Director and as our COO – Southeastern Division. He has served as a manager of several different radio station groups, as well as VP/Midwest Sales Manager for ABC FM Radio Network Spot Sales (September 1969-January 1971), General Manager of Programming and Marketing Operations of CNN Radio Network (March 1982-November 1986), VP/Sales for Impact Resources Research (1988-1992) and President/Publisher of OTC Publishing (1994-Present). In his over 40 years in media, he has experience in dealing with national and regional advertising, successfully working with advertising agencies and media buyers across the country.
Harry H. Hedges, III – Chief Operating Officer – Southwestern Division: As a Director and COO of our Southwestern Division, Mr. Hedges brings over 30 years of experience in the radio broadcasting industry. Prior to American Radio’s formation, Mr. Hedges was Senior Vice-President/Regional Manager for Equicom, Inc. (October 1997-October 1999). Since October 1999, Mr. Hedges has split his professional time between providing broadcast consulting services and providing contractor services. Additionally he served as an associate consultant with Radioactivity, Inc. (May 1992-October 1997), and founded Hedges and Associates (February 1990-August 1996), a sales and marketing company to market Western and Southwestern clothing and accessories. Previously, Mr. Hedges held various general manager, sales and promotion manager, account executive, and news reporter/copy writer positions at several stations in Texas.
Sherry Schult – Secretary: Ms. Schult has served as American Radio’s secretary and as a Director since its formation in 1998. Since 1988, Ms. Schult has owned and operated the TYFG Company, which manufactures and markets motivational dolls.
Employment Agreements
Mr. Schult currently serves at a initial annual salary of $137,500 per annum pursuant to a five-year employment agreement dated December 15, 2000 that has been extended until December 15, 2008. The employment agreement also provides for a monthly vehicle allowance of $550, for reimbursement of business related expenses, and for bonuses as may be determined in the sole discretion of the Board of Directors. Through the date of this Report, Mr. Schult had accrued approximately $275,000 in unpaid salary for the years 2001 and 2002. In light of our cash flow shortage, Mr. Schult orally agreed, beginning in 2003, to accept consulting payments of $10,000 per month and reimbursement of expenses in lieu of compensation under his Employment Agreement. In connection with the merger, Mr. Schult has waived any claim for unpaid compensation for the years 2001, 2002, 2003, 2004 and 2005 under his Employment Agreement.
Mr. Schult currently devotes one-hundred percent (100%) of his professional time to American Radio.
Ms. Sherry Schult currently serves as American Radio’s Secretary. Ms. Schult does not receive any cash remuneration for her services and does not have a written employment agreement. Ms. Schult currently spends less than five (5) hours per month devoted to American Radio’s business. Ms. Schult and Mr. Schult are married.
We have employed Mr. Neu at an annual salary of $100,000 per annum pursuant to a five-year employment agreement. The employment agreement provides for a monthly vehicle allowance of $550, for reimbursement of business related expenses, and for bonuses as may be determined in the sole discretion of the Board of Directors. Mr. Neu has agreed to delay the effectiveness of his Employment Agreement until American Radio, in its sole discretion, determines that it is financially feasible to employ Mr. Neu full time. Until that time, Mr. Neu has agreed to make himself available to us to serve as divisional COO on a consulting basis. Currently, Mr. Neu spends less than five (5) hours per month as a consultant on American Radio’s business.
We have employed Mr. Hedges at an annual salary of $87,500 per annum pursuant to a five-year employment agreement. The employment agreement provides for a monthly vehicle allowance of $550, for reimbursement of business related expenses, and for bonuses as may be determined in the sole discretion of the Board of Directors. Mr. Hedges has agreed to delay the effectiveness of his Employment Agreement until American Radio, in its sole discretion, determines that it is financially feasible to employ Mr. Hedges full time. Until that time, Mr. Hedges has agreed to make himself available to us to serve as divisional COO on a consulting basis. Currently, Mr. Hedges spends less than five (5) hours per month as a consultant on American Radio’s business.
While Messrs. Neu and Hedges are available for consultations on an as-needed basis (without charge), currently there are no written consulting agreements between them and American Radio. The proposed Employment Agreements between American Radio and Messrs. Neu and Hedges do not go into effect until such time as their services are required by American Radio, and American Radio has the funds to pay for their services.
Messrs. Schult, Hedges and Neu may, as the sole members of our Board of Directors, approve the issuance of shares of common stock and/or other American Radio securities to themselves in consideration of services they have and will provide. American Radio does not currently compensate its directors for their services.
Audit Committee Financial Expert
The functions of the Audit and Compensation Committee are: (i) to recommend the engagement of the Company's independent auditors and review with them the plan, scope and results of their audit for each year; (ii) to consider and review other matters relating to the financial and accounting affairs of the Company; and (iii) to review and recommend to the Board of Directors all compensation packages, including the number and terms of stock options, offered to officers and executive employees of the Company. The Company’s entire board of directors serves as the Company's Audit Committee and as the Company's Compensation Committee.
Code of Ethics
We have adopted a "Code of Ethics for Directors, Officers and Employees", a code of ethics that applies to all employees, including our executive officers. A copy of our Code of Ethics for Directors, Officers and Employees will be filed with the Securities and Exchange Commission as Exhibit 14.1 to this Registration Statement.
Item 6. Executive Compensation
The following table sets forth the aggregate annual remuneration of Stone Field's Chief Executive Officer and the other executive officers for the fiscal years ending December 31, 2003, 2004 and 2005 (collectively, the "named executive officers"). All amounts are in U.S. dollars unless otherwise noted.
|
|
|
Annual Compensation |
Long term compensation | ||||
|
Name and Principal Position |
Year |
Salary |
Bonus |
Other |
Restricted |
Options |
All Other Compensation |
|
|
|
|
|
|
|
|
|
|
Daniel Hodges, Former President |
2005 |
0 |
|
|
|
|
|
|
2004 |
0 |
|
|
|
|
| |
|
2003 |
0 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
President/CEO/Treasurer |
2005 |
N/A |
|
|
|
|
|
|
2004 |
N/A |
|
|
|
|
| |
|
2003 |
N/A |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Sherry Schult, Secretary
|
2005 |
N/A |
|
|
|
|
|
|
2004 |
N/A |
|
|
|
|
| |
|
2003 |
N/A |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Herb Neu, COO - Southeast |
2005 |
N/A |
|
|
|
|
|
|
2004 |
N/A |
|
|
|
|
| |
|
2003 |
N/A |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Harry Hodges, COO - Southwest |
2005 |
N/A |
|
|
|
|
|
|
2004 |
N/A |
|
|
|
|
| |
|
2003 |
N/A |
|
|
|
|
|
Item 7. Certain Relationships and Related Transactions
In connection with organizing the Company, on June 19, 1997, persons consisting of its officers, directors, and other individuals were issued a total of 1,000 shares of Common Stock at a value of $.001 per share. On October 20, 1999, the outstanding shares were forward split 1,000 to 1, resulting in a total of 1,000,000 shares outstanding.
Item 8. Description of Securities
Principal Shareholders
The table below sets forth information as to each person owning of record or who was known by the Company to own beneficially more than 5% of the 5,200,000 shares of issued and outstanding common stock of the Company as of December 31, 2005 and information as to the ownership of the Company Stock by each of its directors and executive officers as a group. Except as otherwise indicated, all shares are owned directly, and the persons named in the table have sole voting and investment power with respect to the shares shown as beneficially owned by them.
|
TITLE OF CLASS |
NAME AND ADDRESS OF BENEFICIAL OWNER |
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP |
PERCENT OF CLASS (1) |
|
Common Stock |
Dain L. Schult 13210 Kerrville Folkway |
3,025,000 shares |
60.2% |
|
Common Stock |
Herb Neu P.O. Box 20518 |
187,500 shares |
1.9% |
|
Common Stock |
Harry H. Hedges P.O. Box 1626 |
187,500 shares |
1.9% |
|
Common Stock |
Sherry Schult 13210 Kerrville Folkway |
3,025,000 shares* |
60.2% |
|
Common stock |
3D Intel, Inc. 2002-A Guadalupe St., Suite 187 |
1,600,000 shares |
30.77% |
|
|
All Officers and Directors as a group |
3,400,000 shares |
64% |
|
Total |
|
5,000,000 shares |
96% |
* Represents shares owned by Mr. Dain Schult. Ms. Schult is deemed to be the beneficial owner of the shares that are owned by her spouse, Mr. Schult.
Outstanding Options to Purchase Common Stock
There are currently no outstanding options to purchase the Company’s stock.
Shares Eligible for Future Sale
Of the 5,200,000 shares of common stock currently outstanding, 5,000,000 are "restricted securities" as that term is defined under Rule 144 promulgated under the Securities Act of 1933, as amended, in that such shares were issued and sold by the Company without registration, as private transactions not involving a public offering, or are securities held by affiliates. Although such restricted and affiliated securities are not presently tradable in any public market that may develop for the common stock, such securities may in the future be publicly sold into any such market, if such a market should develop, in accordance with the provisions of Rule 144. In general, under Rule 144 as currently in effect, a person (or group of persons whose shares are aggregated), including affiliates of the Company, can sell within any three-month period, a number of shares of restricted securities that does not exceed the greater of 1% of the total number of outstanding shares of the same class, or (if the Company's stock becomes quoted on NASDAQ or a stock Transfer), the reported average weekly trading volume during the four calendar weeks preceding the sale, provided that at least one year has elapsed since the restricted securities being sold were acquired from the Company or any affiliate of the Company, and provided further that certain other conditions are also satisfied. If at least two years have elapsed since the restricted securities were acquired from the Company or an affiliate of the Company, a person who has not been an affiliate of the Company for at least three months is entitled to sell such restricted shares under Rule 144 without regard to any limitations on the amount. Future sales by current shareholders, especially of substantial amounts, could depress the market prices of the Common Stock in any market that may develop.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters
Market Information
There is no market for transactions related to shares of the Company's common stock. Private sales or transfers are permitted under the respective state and Federal securities laws, subject to compliance with exemptions set forth under the respective statutory guidelines. No estimate can be made of the viability of this secondary market.
Dividend Policy
Any payment of cash dividends will depend upon the Company’s financial condition, results of operations, capital requirements and other factors and will be at the discretion of the Board of Directors. The Company does not anticipate paying cash dividends on its common stock in the foreseeable future. Furthermore, the Company may incur additional indebtedness that may severely restrict or prohibit the payment of dividends.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table shows information with respect to each equity compensation plan under which our common stock is authorized for issuance as of the 100,000,000.
|
Plan Category |
Number of securities to be issued upon exercise of outstanding options, warrants and rights |
Weighted average exercise price of outstanding options, warrants and rights |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) |
|
|
(a) |
(b) |
(c) |
|
Equity compensation plans approved by security holders |
0 |
|
|
|
|
|
|
|
Equity compensation plans not approved by security holders |
0 |
|
|
|
|
|
| |
|
Total |
0 |
|
|
Item 2. Legal Proceedings
With the exception of what is listed below, there are no legal proceedings pending or threatened against the Company.
American Radio executed an agreement in 2003 to purchase two radio stations, for $400,000 of common stock (number of shares to be determined on the day of Closing based on market value of common stock on that date) plus $375,000 cash. An additional $25,000 was to be paid to the sellers in exchange for a non-compete agreement. This agreement was contingent upon the registration of common stock and American Radio obtaining the additional cash resources for financing purposes.
In May 2004, the Company filed a petition in a court of competent jurisdiction against the owners of those two radio stations. The litigation arose out of the Asset Purchase Agreement that American Radio executed with the owners in October 2003, for the purchase of those stations. After the execution of the Asset Purchase Agreement, a dispute arose between American Radio and the owners. American Radio believes that the owners violated the Asset Purchase Agreement by failing to provide necessary information on a timely basis and by failing to cooperate with American Radio’s efforts to complete the acquisition. The Company’s petition seeks specific performance of the agreement as well as damages for breach of contract and attorneys' fees.
The owners have filed a counterclaim that denies the enforceability of the Asset Purchase Agreement and requested that the court declare it unenforceable or, in the alternative, determine that American Radio fraudulently induced them to sign it. The Company anticipates a mediation meeting with the owners some time in First Quarter 2006.
Item 3. Changes in and Disagreements with Accountants
None.
Item 4. Recent Sale of Unregistered Securities
1,600,000 shares of common stock were issued to 3D Intel, Inc. at a par value of $0.001 in lieu of cash payment of $1,600. These shares were issued under Rule 4(2) to an investor with knowledge and experience sufficient to adequately evaluate the risk of investment
Item 5. Indemnification of Directors and Officers
The Company has adopted provisions in its Articles of Incorporation and Bylaws that limit the liability of its officers and directors and provide for indemnification by the Company of its officers and directors to the full extent permitted by Wyoming corporate law. The Company's articles generally provide that its officers and directors shall have no personal liability to the Company or its stockholders for monetary damages for breaches of their fiduciary duties as directors, except for breaches of their duties of loyalty, acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, acts involving unlawful payment of dividends or unlawful stock purchases or redemptions, or any transaction from which a director derives an improper personal benefit. Such provisions substantially limit the shareholders' ability to hold officers and directors liable for breaches of fiduciary duty, and may require the Company to indemnify its officers and directors.
Insofar as indemnification for liability arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being offered, the Company will, unless in the opinion of its counsel, the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
PART F/S
1. Audited Financial Statements of American Radio, Inc. for the fiscal years ended
2. Unaudited Financials Statements of American Radio, Inc. for the nine-month
period ended September 30, 2005
3. Pro Forma Financial Statements
AMERICAN RADIO EMPIRE, INC.
Financial Statements
(With Report of Independent Registered Accounting Firm Thereon)
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
American Radio Empire, Inc.:
We have audited the accompanying balance sheets of American Radio Empire, Inc. (a development stage company) as of December 31, 2004 and 2003, and the related statements of operations, stockholder’s equity and cash flows for the years then ended and the period from December 9, 1998 (inception) through December 31, 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 presents fairly, in all material respects, the financial position of American Radio Empire, Inc. as of December 31, 2004 and 2003 and the results of its operations and cash flows for the years then ended and the period from December 9, 1998 (inception) through December 31, 2004 in conformity with generally accepted accounting principles in the United States of America.
The accumulated deficit during the development stage for the period from December 9, 1998, date of inception, to December 31, 2004 is $506,199.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 8 to the financial statements, the Company has incurred operating losses since inception and has a deficit of stockholders’ equity of $506,199, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 8. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.
HELIN, DONOVAN, TRUBEE & WILKINSON, LLP
Austin, Texas
AMERICAN RADIO EMPIRE, INC.
(A Development Stage Company)
BALANCE SHEETS
As of December 31, 2004 and 2003
| December 31, | |||
| 2004 | 2003 | ||
| ASSETS | |||
| Cash | $ 5,592 | $ 121 | |
| Prepaid expenses | - | - | |
| TOTAL ASSETS | $ 5,592 | $ 121 | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | |||
| Liabilities | |||
| Accounts payable | $ 53,952 | $ 29,602 | |
| Accrued interest payable | 78,254 | 36,975 | |
| Convertible and redeemable notes payable | 365,000 | 181,200 | |
| Other liabilities | 5,000 | 5,000 | |
| Total liabilities | 502,206 | 252,777 | |
| Stockholders' deficit | |||
| Common stock, $0.001 par value, 50 million shares authorized, | |||
| 3,900,000 issued and outstanding at December 31, 2003 and 2004, and | |||
| 3,400,000 issued and outstanding at September 30, 2004 and 2005, | |||
| respectively | 3,900 | 3,900 | |
| Additional paid-in capital | 5,685 | 5,685 | |
| Deficit accumulated during the development stage | (506,199) | (262,241) | |
| Total stockholders' deficit | (496,614) | (252,656) | |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 5,592 | $ 121 | |
See accompanying notes and independent auditors' report.
AMERICAN RADIO EMPIRE, INC.
(A Development Stage Company) STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2004 and 2003, and
the Period from December 9, 1998 (Inception) Through December 31, 2004
|
(Unaudited) From December 9, 1998 (Inception) Through September 30, 2004 |
|||||
| 2003 | 2004 | ||||
| REVENUES | $ - | $ - | $ - | ||
| OPERATING EXPENSES | |||||
| Interest expense | 41,681 | 16,142 | 78,656 | ||
| Bank fees | 127 | 158 | 741 | ||
| Communications | 82 | 5,186 | 5,332 | ||
| Professional fees | 194,472 | 159,188 | 391,860 | ||
| Travel, meals and entertainment | 2,715 | 9,760 | 12,475 | ||
| Vehicle costs | 442 | 8,443 | 8,885 | ||
| Office supplies | 124 | 962 | 1,086 | ||
| Registration and licensing | - | 325 | 580 | ||
| Other expenses | 4,315 | 427 | 6,584 | ||
| Total operating expenses | 243,958 | 200,591 | 506,199 | ||
| LOSS BEFORE INCOME TAXES | (243,958) | (200,591) | (506,199) | ||
| Income tax expense | - | - | - | ||
| NET LOSS | $ (243,958) | $ (200,591) | $ (506,199) | ||
| Basic and diluted loss per share: | $ (0.06) | $ (0.06) | $ (0.16) | ||
| Weighted average common shares outstanding: | |||||
| Basic | 3,900,000 | 3,391,785 | 3,229,905 | ||
| Diluted | 3,900,000 | 3,391,785 | 3,229,905 | ||
See accompanying notes and independent auditors' report.
AMERICAN RADIO EMPIRE, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDER'S EQUITY
For the Years Ended December 31, 2004 and 2003, and
the Period from December 9, 1998 (Inception) Through December 31, 2003
| Common Stock | Additional Paid-In Capital | Deficit Accumulated During Development Stage | Total | ||||||
| Shares | Amount | ||||||||
| Initial capital contribution (at $0.000215 per share) | 3,025,000 | $3,025 | ($2,375) | $ - | 650 | ||||
| Net loss from December 9, 1998 (inception) through | |||||||||
| December 31, 2001 | - | - | - | (55,145) | (55,145) | ||||
| Balance at December 31, 2001 | 3,025,000 | 3,025 | (2,375) | (55,145) | (54,495) | ||||
| Capital contributions | - | - | 185 | - | 185 | ||||
| Net loss | - | - | - | (6,505) | (6,505) | ||||
| Balance at December 31, 2002 | 3,025,000 | 3,025 | (2,190) | (61,650) | (60,815) | ||||
| Issuance of common stock for service (at $0.01 per share) | 875,000 | 875 | 7,875 | - | 8,750 | ||||
| Net loss | - | - | - | (200,591) | (200,591) | ||||
| Balance at December 31, 2003 | 3,900,000 | 3,900 | 5,685 | (262,241) | (252,656) | ||||
| Net loss | - | - | - | (243,958) | (243,958) | ||||
| Balance at December 31, 2004 | 3,900,000 | $3,900 | $5,685 | $(506,199) | $(496,614) | ||||
See accompanying notes and independent auditors' report.
AMERICAN RADIO EMPIRE, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Twelve Months Ended December 31, 2004 and 2003, and
the Period from December 9, 1998 (Inception) Through December 31, 2004
| Year Ended December 31, |
(Unaudited) From December 9, 1998 (Inception) Through September 30, 2004 |
||||
| 2004 | 2003 | ||||
| CASH FLOWS FORM OPERATING ACTIVITIES | |||||
| Net loss | $ (243,958) | $ (200,591) | $ (506,199) | ||
| Consulting fees paid through issuance of note | - | - | 35,000 | ||
| Consulting fees paid through issuance of common stock | - | 8,750 | 8,750 | ||
| Adjustments to reconcile net income to net cash provided | |||||
| by operating activities: | |||||
| Increase in: | |||||
| Accounts payable | 24,351 | 29,602 | 53,952 | ||
| Accrued interest payable | 41,279 | 16,142 | 78,254 | ||
| Other liabilities | - | - | 5,000 | ||
| NET CASH USED IN OPERATING ACTIVITIES | (178,328) | (146,097) | (325,243) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||
| Issuance of notes payable | 183,800 | 146,200 | 330,000 | ||
| Contributions of capital | - | - | 835 | ||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 183,800 | 146,200 | 330,835 | ||
| NET INCREASE (DECREASE) IN CASH | 5,472 | 103 | 5,592 | ||
| CASH AT BEGINNING OF PERIOD | 121 | 18 | - | ||
| CASH AT END OF PERIOD | $ 5,592 | $ 121 | $ 5,592 | ||
| SUPPLEMENT DISCLOSURE | |||||
| Income taxes paid | $ - | $ - | $ - | ||
| Interest paid | $ - | $ - | $ - | ||
See accompanying notes and independent auditors' report.
AMERICAN RADIO EMPIRE, INC.
Notes to Financial Statements
Note 1 - Nature of Business
American Radio Empire, Inc., a Nevada corporation (the “Company”), was formed in December 1998. The Company was created to acquire, consolidate and operate small market radio stations in specific geographic regions of the United States of America. To date, the Company has not begun operations or acquired radio stations. When operations begin, the Company will be regulated by the Federal Communications Commission.
In 2003, the total authorized shares were increased to 50 million. This has been reflected in the stockholders’ deficit section of the balance sheet.
Development Stage Company
The Company is a development stage company, as defined in the Financial Accounting Standards Board Statement of Financial Accounting Standards (SFAS) No. 7. The Company is devoting substantially all of its present efforts in securing and establishing a new business. Planned operations have not commenced, and no revenue has been realized.
Note 2 - Significant Accounting Policies
Basis of accounting
These financial statements are presented on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America whereby revenues are recognized in the period earned and expenses when incurred.
Cash equivalents
For purposes of the statements of cash flows, the Company considers short-term investments, which may be withdrawn at any time without penalty, and restricted cash, which will become available within one year from the date of the financial statements, to be cash equivalents.
Property and equipment
Property and equipment are stated at cost. Depreciation is provided in amounts sufficient to relate the cost of depreciable assets to operations over the estimated lives, principally on an accelerated basis. Leasehold improvements are amortized over the term of the respective leases using the straight-line method. All other fixed assets are depreciated over a three to seven year period.
Expenditures for maintenance and repairs are charged to expense as incurred. Major expenditures for additions, replacements and betterments are capitalized. When assets are sold, retired or fully depreciated, the cost, reduced by the related amount of accumulated depreciation, is removed from the accounts and any resulting gain or loss is recognized as income or expense.
AMERICAN RADIO EMPIRE, INC.
Notes to Financial Statements
Note 2 - Significant Accounting Policies (Continued)
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates.
Cash balances
Cash is deposited in demand accounts in federally insured domestic institutions to minimize risk. The balances in these accounts may exceed the federally insured limit in the future.
Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset in which the Company is not able to determine on a more likely than not basis that the deferred tax asset will be realized.
Loss per common share
Basic loss per share is based on the weighted effect of common shares issued and outstanding, and is calculated by dividing net loss by the weighted average shares outstanding during the period. Diluted loss per share is calculated by dividing net loss by the weighted average number of common shares used in the basic loss per share calculation plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding.
Incremental common shares attributable to the exercise of outstanding warrants of
455,000 shares as of December 31, 2004 were excluded from the computation of diluted loss per share because the effect would be antidilutive. As of December 31, 2004, there were outstanding convertible notes to purchase approximately 380,000 shares of common stock that were not included in the computation of diluted loss per share because the effect would have been antidilutive. See Notes 3 and 4 for further discussion.
AMERICAN RADIO EMPIRE, INC.
Notes to Financial Statements
Note 3 – Convertible and Redeemable Notes Payable
The Company executed a note in 1998 in exchange for services rendered by a consultant. This $35,000 note bears interest at 18% and is due on demand. The note has a conversion feature whereby the holder can choose to convert all of the outstanding principal and interest into common stock representing 0.787% of the outstanding stock at the time of conversion. The note holder agreed to accept 50,000 shares of common stock within 60 days of the Company becoming a recognized publicly traded company in full settlement of the note and accrued interest.
In 2003, the Company executed a series of Promissory Notes (Notes) totaling $146,200 with individuals. The terms of these Notes included fixed interest of 12% per year, principal and interest due between February and July 2004 and a mandatory conversion feature contingent upon the Company becoming a recognized publicly traded company. The conversion rate is the lesser of $0.80 per common share or 80% of the average trading value per common share during the first 30 trading days. Each Note holder also received a warrant to purchase 146,200 additional shares, pro-rata based on the Notes held, at $1 per share. No value has been assigned to the warrants at the date of issuance. The warrants expire four years after the initial registration statement.
In 2004, the Company executed a series of redeemable Promissory Notes (Notes) totaling $183,800 with individuals. The terms of these Notes included fixed interest of 12% per year, principal and interest due between August and December 2005 and a Company- option redemption feature in restricted stock on or before the maturity date of the notes. The redemption rate, if exercised by the Company, is the lesser of $0.80 per common share or 80% of the average trading value per common share during the first 30 trading days. Each Note holder also received a warrant to purchase 183,800 additional shares, pro-rata based on the Notes held, at $1 per share. No value has been assigned to the warrants at the date of issuance. The warrants expire four years after the first anniversary of the maturity date of the redeemable notes.
Note 4 - Commitments and Contingencies
The Company will be subjected to various claims and liabilities in the ordinary course of business. The Company intends to maintain various forms of insurance that the Company’s management believes are adequate to reduce the exposure to these risks to an acceptable level.
The Company executed an agreement in 2003 to purchase two radio stations, for $400,000 of common stock (number of shares to be determined on the day of Closing based on market value of common stock on that date) plus $375,000 cash. An additional $25,000 was to be paid to the sellers in exchange for a non-compete agreement. This agreement was contingent on the registration of common stock and the Company obtaining the additional cash resources (Note 9).
AMERICAN RADIO EMPIRE, INC.
Notes to Financial Statements
Note 4 - Commitments and Contingencies (continued)
In May 2004, the Company filed a petition in a court of competent jurisdiction against the owners of those two radio stations. The litigation arose out of the Asset Purchase Agreement that the Company executed with the owners in October 2003, for the purchase of those stations. After the execution of the Asset Purchase Agreement, a dispute arose between the Company and the owners. The Company believes that the owners violated the Asset Purchase Agreement by failing to provide necessary information on a timely basis and by failing to cooperate with the Company's efforts to complete the acquisition. The Company’s petition seeks specific performance of the agreement as well as damages for breach of contract and attorneys' fees.
The owners have filed a counterclaim that denies the enforceability of the Asset Purchase Agreement and requested that the court declare it unenforceable or, in the alternative, determine that the Company fraudulently induced them to sign it. The case was tentatively set for trial in late June 2005.
The Company entered into an agreement in 2003 with a consultant and agreed to issue warrants for the purchase of 125,000 shares of common stock. The warrants are exercisable at 125% of the average trading value per common share during the first 30 trading days. The warrants expire five years after the initial registration statement. The warrants have not been included in the calculation of earnings per share.
During 2004, the Company entered into two non-binding agreements for the purchase of a total of 5 radio stations. To date, no further agreements have been signed in connection with these acquisitions.
Note 5 – Other Liabilities
The Company received $5,000 from an individual in 1999 as part of an agreed upon investment. The individual has not fully invested the agreed amount and the Company intends to either repay the amount with interest or issue common stock in settlement of this liability in the future.
Note 6 – Related Party Transactions
An individual who is an officer and shareholder of the Company provides facilities and other operating costs for the Company without reimbursement. That individual has an employment agreement with the Company that requires payment of a salary with a set progression of annual raises, medical insurance and a vehicle for business use in exchange for management services. To date, the Company has not provided this compensation. This individual has forgone claims to this compensation and therefore it has not been accrued as a liability as of December 31, 2004 and 2003. In 2003, the Company executed a consulting agreement with this shareholder that provides for payment of consulting fees and reimbursement of expenses. Approximately $109,000 and $135,000 have been paid under this agreement during 2003 and 2004, respectively.
AMERICAN RADIO EMPIRE, INC.
Notes to Financial Statements
Note 7 – Income Taxes
At December 31, 2004 and 2003, the Company has net operating loss carry forwards of approximately $429,000 and $211,000, respectively, which may be offset against future taxable income. The operating loss carry forwards expire between 2019 and 2023. The remaining tax benefit of approximately $146,000 has not been reported in these financial statements because the Company believes that there is at least a 50% chance that the carry forwards will expire unused. Accordingly, the tax benefit has been offset by a valuation allowance of the same amount.
Note 8 – Common Stock
During 2003, the Company issued a stock dividend of 3,021,975 shares to its sole shareholder at that time. This transaction has been reflected retroactively to all periods presented in accordance with Statement of Financial Accounting Standards No. 128, Earnings per Share.
Also during 2003, the Company issued 875,000 shares to two officers and a consultant for services performed during the year. As part of this transaction, $8,750 has been included in professional fees in these financial statements for the year ended December
Note 9 – Liquidity and Capital Resources
The Company has experienced operating losses since inception as a result of efforts to acquire capital and use that capital to acquire radio stations. The Company expects that it will achieve profitability and positive cash flows in the future if it can successfully raise capital and acquire an operating business. The Company’s plans in regard to this are to increase revenues by acquiring profitable radio stations and substantially reduce the cost of professional fees and obtain capital through the sale of stock. There can be no assurance that the Company will ever achieve or sustain profitability or positive cash flow from its operations, reduce expenses or sell common stock. To date, the Company has funded its activities primarily through private convertible and redeemable debt offerings (Note 3).
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the ultimate outcome of these matters.
AMERICAN RADIO EMPIRE, INC.
Notes to Financial Statements
Note 10 – Subsequent Events
In March 2005, the Company executed a Termination and Release Agreement in connection with a consulting agreement that was entered into in 2003. Simultaneously with the execution of the termination of the agreement, 500,000 of stock previously issued to the consultant were transferred back to the Company.
In July 2005, the Company entered into formal negotiations to effect a merger with E- Commerce Group Inc., a Nevada corporation. (“E-Commerce”). For accounting purposes, the proposed transaction will be treated as a recapitalization of E-Commerce, with the Company as the acquirer, and it’s assets and liabilities recorded at carryover basis. In addition, E-Commerce will change it’s name to American Radio Empire, Inc. and the historical financial statements of E-Commerce prior to the merger will be those of the Company.
The Company has initiated negotiations to acquire a media rep firm that represents small to medium sized radio stations to national and regional advertisers. The negotiations are in the preliminary stage and the Company has not signed a formal letter of intent.
AMERICAN RADIO EMPIRE, INC.
(A Development Stage Company)
BALANCE SHEETS
| December 31, |
(Unaudited) |
||||||
| 2003 | 2004 | 2004 | 2005 | ||||
| ASSETS | |||||||
| Cash | $ 121 | $ 5,592 | $ 80 | $ 2,491 | |||
| Prepaid expenses | - | - | - | 6,516 | |||
| TOTAL ASSETS | $ 121 | $ 5,592 | $ 80 | $ 9,007 | |||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||
| Liabilities | |||||||
| Accounts payable | $ 29,602 | $ 53,952 | $ 70,972 | $ 37,722 | |||
| Accrued interest payable | 36,975 | 78,254 | 67,702 | 116,056 | |||
| Convertible and redeemable notes payable | 181,200 | 365,000 | 299,000 | 503,000 | |||
| Other liabilities | 5,000 | 5,000 | 5,000 | 5,000 | |||
| Total liabilities | 252,777 | 502,206 | 442,674 | 661,778 | |||
| Stockholders' deficit | |||||||
| Common stock, $0.001 par value, 50 million shares authorized, | |||||||
| 3,900,000 issued and outstanding at December 31, 2003 and 2004, and | |||||||
| 3,400,000 issued and outstanding at September 30, 2004 and 2005, | |||||||
| respectively | 3,900 | 3,900 | 3,900 | 3,400 | |||
| Additional paid-in capital | 5,685 | 5,685 | 5,685 | 6,185 | |||
| Deficit accumulated during the development stage | (262,241) | (506,199) | (452,179) | (662,356) | |||
| Total stockholders' deficit | (252,656) | (496,614) | (442,594) | (652,771) | |||
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 121 | $ 5,592 | $ 80 | $ 9,007 | |||
See accompanying notes.
AMERICAN RADIO EMPIRE, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
| Year Ended December 31, |
(Unaudited) From December 9, 1998 (Inception) Through September 30, 2005 |
(Unaudited) Nine Months Ended September 30, |
|||||||
| 2003 | 2004 | 2004 | 2005 | ||||||
| REVENUES | $ - | $ - | $ - | $ - | $ - | ||||
| OPERATING EXPENSES | |||||||||
| Interest expense | 16,142 | 41,681 | 118,049 | 31,002 | 39,393 | ||||
| Bank fees | 158 | 127 | 1,196 | 127 | 455 | ||||
| Communications | 5,186 | 82 | 5,332 | 82 | 2,102 | ||||
| Professional fees | 159,188 | 194,472 | 497,027 | 151,501 | 105,167 | ||||
| Travel, meals and entertainment | 9,760 | 2,715 | 13,962 | 2,564 | 4,243 | ||||
| Vehicle costs | 8,443 | 442 | 8,885 | 253 | 3,208 | ||||
| Office supplies | 962 | 124 | 1,119 | 97 | 165 | ||||
| Registration and licensing | 325 | - | 580 | - | - | ||||
| Other expenses | 427 | 4,315 | 16,206 | 4,313 | 1,424 | ||||
| Total operating expenses | 200,591 | 243,958 | 662,356 | 189,939 | 156,157 | ||||
| LOSS BEFORE INCOME TAXES | (200,591) | (243,958) | (662,356) | (189,939) | (156,157) | ||||
| Income tax expense | - | - | - | - | - | ||||
| NET LOSS | $ (200,591) | $ (243,958) | $ (662,356) | $ (189,939) | $ (156,157) | ||||
| Basic and diluted loss per share: | $ (0.06) | $ (0.06) | $ (0.20) | $ (0.05) | $ (0.04) | ||||
| Weighted average common shares outstanding: | |||||||||
| Basic | 3,391,785 | 3,900,000 | 3,256,582 | 3,900,000 | 3,473,529 | ||||
| Diluted | 3,391,785 | 3,900,000 | 3,256,582 | 3,900,000 | 3,473,529 | ||||
See accompanying notes.
AMERICAN RADIO EMPIRE, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT
| Common Stock | Additional Paid-In Capital | Deficit Accumulated During Development Stage | Total | ||||||
| Shares | Amount | ||||||||
| Initial capital contribution (at $0.000215 per share) | 3,025,000 | $3,025 | ($2,375) | $ - | $650 | ||||
| Capital contributions | - | - | 185 | - | 185 | ||||
| Net loss from December 9, 1998 (inception) through | |||||||||
| December 31, 2002 | - | - | - | (61,650) | (61,650) | ||||
| Balance at December 31, 2002 | 3,025,000 | 3,025 | (2,190) | (61,650) | (60,815) | ||||
| Issuance of common stock for service (at $0.01 per share) | 875,000 | 875 | 7,875 | - | 8,750 | ||||
| Net loss | - | - | - | (200,591) | (200,591) | ||||
| Balance at December 31, 2003 | 3,900,000 | 3,900 | 5,685 | (262,241) | (252,656) | ||||
| Net loss | - | - | - | (243,958) | (243,958) | ||||
| Balance at December 31, 2004 | 3,900,000 | 3,900 | 5,685 | (506,199) | (496,614) | ||||
| Termination of Cytation agreement | (500,000) | (500) | 500 | - | - | ||||
| Net loss | - | - | - | (156,157) | (156,157) | ||||
| Balance at September 30, 2005 | 3,400,000 | $3,400 | $6,185 | $(662,356) | $(652,771) | ||||
See accompanying notes.
AMERICAN RADIO EMPIRE, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
| Year Ended December 31, |
(Unaudited) From December 9, 1998 (Inception) Through September 30, 2005 |
(Unaudited) Nine Months Ended September 30, |
|||||||
| 2003 | 2004 | 2004 | 2005 | ||||||
| CASH FLOWS FORM OPERATING ACTIVITIES | |||||||||
| Net loss | $ (200,591) | $ (243,958) | $ (662,356) | $ (189,939) | $ (156,157) | ||||
| Consulting fees paid through issuance of note | - | - | 35,000 | - | - | ||||
| Consulting fees paid through issuance of common stock | 8,750 | - | 8,750 | - | - | ||||
| Adjustments to reconcile net income to net cash provided | |||||||||
| by operating activities: | |||||||||
| Increase in prepaid expenses | - | - | (4,826) | - | (6,516) | ||||
| (Decrease) increase in accounts payable | 29,602 | 24,350 | 36,032 | 41,371 | (16,230) | ||||
| Increase in accrued interest payable | 16,142 | 41,279 | 116,056 | 30,727 | 37,802 | ||||
| Increase in other liabilities | - | - | 5,000 | - | - | ||||
| NET CASH USED IN OPERATING ACTIVITIES | (146,097) | (178,329) | (466,344) | (117,841) | (141,101) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
| Issuance of notes payable | 146,200 | 183,800 | 468,000 | 117,800 | 138,000 | ||||
| Contributions of capital | - | - | 835 | - | - | ||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 146,200 | 183,800 | 468,835 | 117,800 | 138,000 | ||||
| NET INCREASE (DECREASE) IN CASH | 103 | 5,471 | 2,491 | (41) | (3,101) | ||||
| CASH AT BEGINNING OF PERIOD | 18 | 121 | - | 121 | 5,592 | ||||
| CASH AT END OF PERIOD | $ 121 | $ 5,592 | $ 2,491 | $ 80 | $ 2,491 | ||||
| SUPPLEMENT DISCLOSURE | |||||||||
| Income taxes paid | $ - | $ - | $ - | $ - | $ - | ||||
| Interest paid | $ - | $ - | $ - | $ - | $ - | ||||
See accompanying notes.
AMERICAN RADIO EMPIRE, INC.
Notes to Financial Statements
Note 1 - Nature of Business
American Radio Empire, Inc., a Nevada corporation (the “Company”), was formed in December 1998. The Company was created to acquire, consolidate and operate small market radio stations in specific geographic regions of the United States of America. To date, the Company has not begun operations or acquired radio stations. When operations begin, the Company will be regulated by the Federal Communications Commission.
In 2003, the total authorized shares were increased to 50 million. This has been reflected in the stockholders’ deficit section of the balance sheet.
Development Stage Company
The Company is a development stage company, as defined in the Financial Accounting Standards Board Statement of Financial Accounting Standards (SFAS) No. 7. The Company is devoting substantially all of its present efforts in securing and establishing a new business. Planned operations have not commenced, and no revenue has been realized.
Note 2 - Significant Accounting Policies
Basis of accounting
These financial statements are presented on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America whereby revenues are recognized in the period earned and expenses when incurred.
Cash equivalents
For purposes of the statements of cash flows, the Company considers short-term investments, which may be withdrawn at any time without penalty, and restricted cash, which will become available within one year from the date of the financial statements, to be cash equivalents.
Property and equipment
Property and equipment are stated at cost. Depreciation is provided in amounts sufficient to relate the cost of depreciable assets to operations over the estimated lives, principally on an accelerated basis. Leasehold improvements are amortized over the term of the respective leases using the straight-line method. All other fixed assets are depreciated over a three to seven year period.
Expenditures for maintenance and repairs are charged to expense as incurred. Major expenditures for additions, replacements and betterments are capitalized. When assets are sold, retired or fully depreciated, the cost, reduced by the related amount of accumulated depreciation, is removed from the accounts and any resulting gain or loss is recognized as income or expense.
AMERICAN RADIO EMPIRE, INC.
Notes to Financial Statements
Note 2 - Significant Accounting Policies (Continued)
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates.
Cash balances
Cash is deposited in demand accounts in federally insured domestic institutions to minimize risk. The balances in these accounts may exceed the federally insured limit in the future.
Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset in which the Company is not able to determine on a more likely than not basis that the deferred tax asset will be realized.
Loss per common share
Basic loss per share is based on the weighted effect of common shares issued and outstanding, and is calculated by dividing net loss by the weighted average shares outstanding during the period. Diluted loss per share is calculated by dividing net loss by the weighted average number of common shares used in the basic loss per share calculation plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding.
Incremental common shares attributable to the exercise of outstanding warrants of 455,000 and 583,000 shares as of December 31, 2004 and September 30, 2005, respectively were excluded from the computation of diluted loss per share because the effect would be antidilutive. As of December 31, 2004 and September 30, 2005, there were outstanding convertible notes to purchase approximately 380,000 and 518,000, respectively, shares of common stock that were not included in the computation of diluted loss per share because the effect would have been antidilutive. See Notes 3 and 4 for further discussion.
AMERICAN RADIO EMPIRE, INC.
Notes to Financial Statements
Note 3 – Convertible and Redeemable Notes Payable
The Company executed a note in 1998 in exchange for services rendered by a consultant. This $35,000 note bears interest at 18% and is due on demand. The note has a conversion feature whereby the holder can choose to convert all of the outstanding principal and interest into common stock representing 0.787% of the outstanding stock at the time of conversion. The note holder agreed to accept 50,000 shares of common stock within 60 days of the Company becoming a recognized publicly traded company in full settlement of the note and accrued interest.
In 2003, the Company executed a series of Promissory Notes (Notes) totaling $146,200 with individuals. The terms of these Notes included fixed interest of 12% per year, principal and interest due between February and July 2004 and a mandatory conversion feature contingent upon the Company becoming a recognized publicly traded company. The conversion rate is the lesser of $0.80 per common share or 80% of the average trading value per common share during the first 30 trading days. Each Note holder also received a warrant to purchase 146,200 additional shares, pro-rata based on the Notes held, at $1 per share. No value has been assigned to the warrants at the date of issuance. The warrants expire four years after the initial registration statement.
In 2004, the Company executed a series of redeemable Promissory Notes (Notes) totaling $ 183,800 with individuals. The terms of these Notes included fixed interest of 12% per year, principal and interest due between August and December 2005 and a Company-option redemption feature in restricted stock on or before the maturity date of the notes. The redemption rate, if exercised by the Company, is the lesser of $0.80 per common share or 80% of the average trading value per common share during the first 30 trading days. Each Note holder also received a warrant to purchase 183,800 additional shares, pro-rata based on the Notes held, at $1 per share. No value has been assigned to the warrants at the date of issuance. The warrants expire four years after the first anniversary of the maturity date of the redeemable notes.
In 2005, the Company executed a series of redeemable Promissory Notes (Notes) totaling $138,000 with individuals. The terms of these Notes included fixed interest of 12% per year, principal and interest due between August and December 2005 and a Company-option redemption feature in restricted stock on or before the maturity date of the notes. The redemption rate, if exercised by the Company, is the lesser of $0.80 per common share or 80% of the average trading value per common share during the first 30 trading days. Each Note holder also received a warrant to purchase 138,000 additional shares, pro-rata based on the Notes held, at $1 per share. No value has been assigned to the warrants at the date of issuance. The warrants expire four years after the first anniversary of the maturity date of the redeemable notes.
AMERICAN RADIO EMPIRE, INC.
Notes to Financial Statements
Note 4 - Commitments and Contingencies
The Company will be subjected to various claims and liabilities in the ordinary course of business. The Company intends to maintain various forms of insurance that the Company’s management believes are adequate to reduce the exposure to these risks to an acceptable level.
The Company executed an agreement in 2003 to purchase two radio stations, for $400,000 of common stock (number of shares to be determined on the day of Closing based on market value of common stock on that date) plus $375,000 cash. An additional $25,000 was to be paid to the sellers in exchange for a non-compete agreement. This agreement was contingent on the registration of common stock and the Company obtaining the additional cash resources (Note 9).
In May 2004, the Company filed a petition in a court of competent jurisdiction against the owners of those two radio stations. The litigation arose out of the Asset Purchase Agreement that the Company executed with the owners in October 2003, for the purchase of those stations. After the execution of the Asset Purchase Agreement, a dispute arose between the Company and the owners. The Company believes that the owners violated the Asset Purchase Agreement by failing to provide necessary information on a timely basis and by failing to cooperate with the Company's efforts to complete the acquisition. The Company’s petition seeks specific performance of the agreement as well as damages for breach of contract and attorneys' fees.
The owners have filed a counterclaim that denies the enforceability of the Asset Purchase Agreement and requested that the court declare it unenforceable or, in the alternative, determine that the Company fraudulently induced them to sign it. The Company anticipates a mediation meeting with the owners before year end.
The Company entered into an agreement in 2003 with a consultant and agreed to issue warrants for the purchase of 125,000 shares of common stock. The warrants are exercisable at 125% of the average trading value per common share during the first 30 trading days. The warrants expire five years after the initial registration statement. The warrants have not been included in the calculation of earnings per share.
During 2004, the Company entered into two non-binding agreements for the purchase of a total of 5 radio stations. To date, no further agreements have been signed in connection with these acquisitions.
Note 5 – Other Liabilities
The Company received $5,000 from an individual in 1999 as part of an agreed upon investment. The individual has not fully invested the agreed amount and the Company intends to either repay the amount with interest or issue common stock in settlement of this liability in the future.
AMERICAN RADIO EMPIRE, INC.
Notes to Financial Statements
Note 6 – Related Party Transactions
An individual who is an officer and shareholder of the Company provides facilities and other operating costs for the Company without reimbursement. That individual has an employment agreement with the Company that requires payment of a salary with a set progression of annual raises, medical insurance and a vehicle for business use in exchange for management services. To date, the Company has not provided this compensation. This individual has forgone claims to this compensation and therefore it has not been accrued as a liability as of December 31, 2004 and September 30, 2005. In 2003, the Company executed a consulting agreement with this shareholder that provides for payment of consulting fees and reimbursement of expenses. Approximately $109,000, $135,000 and $90,000 have been paid under this agreement during 2003, 2004, and nine months ended September 30, 2005, respectively.
Note 7 – Income Taxes
At December 31, 2003 and 2004 and September 30, 2005, the Company has net operating loss carryforwards of approximately $211,000, $429,000 and $585,000, respectively, which may be offset against future taxable income. The operating loss carry forwards expire between 2019 and 2023. The remaining tax benefit of approximately $199,000 has not been reported in these financial statements because the Company believes that there is at least a 50% chance that the carry forwards will expire unused. Accordingly, the tax benefit has been offset by a valuation allowance of the same amount.
Note 8 – Common Stock
During 2003, the Company issued a stock dividend of 3,021,975 shares to its sole shareholder at that time. This transaction has been reflected retroactively to all periods presented in accordance with Statement of Financial Accounting Standards No. 128, Earnings per Share.
Also during 2003, the Company issued 875,000 shares to two officers and a consultant for services performed during the year. As part of this transaction, $8,750 has been included in professional fees in these financial statements for the year ended December 31, 2003.
During 2005, 500,000 shares were returned to the Company and were cancelled in connection with the termination of a consulting agreement.
AMERICAN RADIO EMPIRE, INC.
Notes to Financial Statements
Note 9 – Liquidity and Capital Resources
The Company has experienced operating losses since inception as a result of efforts to acquire capital and use that capital to acquire radio stations. The Company expects that it will achieve profitability and positive cash flows in the future if it can successfully raise capital and acquire an operating business. The Company’s plans in regard to this are to increase revenues by acquiring profitable radio stations and substantially reduce the cost of professional fees and obtain capital through the sale of stock. There can be no assurance that the Company will ever achieve or sustain profitability or positive cash flow from its operations, reduce expenses or sell common stock. To date, the Company has funded its activities primarily through private convertible and redeemable debt offerings (Note 3).
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the ultimate outcome of these matters.
Note 10 – Subsequent Events
During 2005, the Company entered into formal negotiations to effect a merger with Starbridge Global, Inc. (“Starbridge”). For accounting purposes, the proposed transaction will be treated as a recapitalization of Starbridge, with the Company as the acquirer, and its assets and liabilities recorded at carryover basis. In addition, Starbridge will change its name to American Radio Empire, Inc. and the historical financial statements of Starbridge prior to the merger will be those of the Company.
The Company has initiated negotiations to acquire a media rep firm that represents small to medium sized radio stations to national and regional advertisers. The negotiations are in the preliminary stage and the Company has not signed a formal letter of intent.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On December 15, 2005, Stone Field Management Company, and American Radio Empire, Inc., executed a Merger Agreement that provides for the Acquisition of American Radio Empire, Inc. by Stone Field Management Company in a reverse merger. See "The Merger." The following unaudited pro forma condensed combined financial statements are based on the year ended December 31, 2004, giving effect to the transaction under the purchase method of accounting, with American Radio Empire, Inc. treated as the acquiring entity for financial reporting purposes.
The unaudited pro forma condensed combined balance sheet at December 31, 2004 presents the financial position of the Surviving Corporation assuming the merger was completed on December 31, 2004. The pro forma condensed combined statement of operations for the year ended December 31, 2004 presents the results of operations of the Surviving Corporation, assuming the merger was completed on January 1, 2004. The pro forma condensed combined statement of operations for the nine months ended September 30, 2005 presents the results of operations of the Surviving Corporation, assuming the merger was completed on January 1, 2005.
The pro forma condensed combined financial statements have been prepared by management of Stone Field Management Company and American Radio Empire, Inc. based on the financial statements included elsewhere herein. The pro forma adjustments include certain assumptions and preliminary estimates as discussed in the accompanying notes and are subject to change. These pro forma statem ents may not be indicative of the results that actually would have occurred if the combination had been in effect on the dates indicated or which may be obtained in the future. These pro forma financial statements should be read in conjunction with the accompanying notes and the historical financial information of both Stone Field Management Company and American Radio Empire, Inc. (including the notes thereto) included in this Form. See "FINANCIAL STATEMENTS."
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
| American Radio Empire, Inc. | Stone Field Management Company, Inc. | Pro Forma Adjustments | Pro Forma Combined Balance | ||||
| Assets | |||||||
| Cash | $ 5,592 | $ - | $ - | $ 5,592 | |||
| Total Assets | 5,592 | - | - | 5,592 | |||
| Liabilities & Stockholders' Deficit | |||||||
| Liabilities | |||||||
| Accounts payable | 53,952 | 9,368 | - | 63,320 | |||
| Accrued interest payable | 78,254 | - | - | 78,254 | |||
| Convertible and redeemable notes payable | 365,000 | - | - | 365,000 | |||
| Other | 5,000 | - | - | 5,000 | |||
| Total liabilities | 502,206 | 9,368 | - | 511,574 | |||
| Stockholders' deficit | |||||||
| Common Stock | 3,900 | 1,000 | (1,300) | A | 5,200 | ||
| 1,600 | B | ||||||
| Additional paid-in capital | 5,685 | 3,588 | (9,273) | - | |||
| Retained Deficit | - | (1,050) | (3,933) | (4,983) | |||
| Development stage deficit | (506,199) | (12,906) | 12,906 | (506,199) | |||
| Total stockholders' deficit | (496,614) | (9,368) | - | (505,982) | |||
| Total Liabilities & Stockholders' Deficit | $ 5,592 | $ - | $ - | $ 5,592 | |||
See accompanying
notes to unaudited pro forma condensed combined financial statements.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2004
| American Radio Empire, Inc. | Stone Field Management Company, Inc. | Pro Forma Adjustments | Pro Forma Combined Balance | ||||
| Revenues | $ - | $ - | $ - | $ - | |||
| Operating expenses | 243,958 | 9,100 | 1,600 | A | 254,658 | ||
| Net loss | $ (243,958) | $ (9,100) | $ (1,600) | $ (254,658) | |||
| Income (Loss) per share | $ (0.06) | $ (0.01) | $ (0.05) | ||||
| Weighted average shares outstanding | 3,900,000 | 1,000,000 | 5,200,000 | ||||
See accompanying notes to unaudited pro forma condensed combined financial statements.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(1) General
On December 31, 2005, the shareholders of the American Radio Empire, Inc. completed a Merger Agreement with Stone Field Management Company, a Wyoming corporation. The merger was accounted for as a reverse merger, with American Radio Empire, Inc. being treated as the acquiring entity for financial reporting purposes. In connection with this merger, Stone Field Management Company issued 5,000,000 shares of common stock in connection with the agreement which was recorded as a reverse merger and shown on the Statement of Stockholders Equity as a net issuance of 1,600,000 shares. Immediately following the merger, the surviving entity will have
5,200,000 shares issued and outstanding as follows;
* 200,000 shares issued to the pre-merger Stone Field Management Company shareholders,
* 3,400,000 shares issued to the pre-merger American Radio Empire, Inc. shareholders, and
* 1,600,000 shares issued as compensation for the merger.
For financial reporting purposes, American Radio Empire, Inc. is considered the new reporting entity.
For purposes of preparing these pro forma financial statements, certain assumptions as set forth in the notes to the pro forma adjustments have been made. As such, the pro forma adjustments discussed below are subject to change.
(2) Fiscal Year Ends
The pro forma condensed combined statements of operations for the years ended December 31, 2004 include
Stone Field Management Company’s and American Radio Empire, Inc.’s operations on a common fiscal year.
(3) Pro Forma Adjustments
below:
The adjustments to the accompanying unaudited pro forma condensed combined balance sheet are described
(A) To record 500,000 shares of American Radio Empire, Inc. and 800,000 shares of Stone Field
Management Company cancelled prior to merger.
(B) To record 1,600,000 shares issued for compensation expense valued at $1,600 in connection with the merger.
The adjustments to the accompanying unaudited pro forma condensed combined statements of operations are described below:
(A) To record compensation expense of 1,600 shares issued in connection with the merger.
Exhibits
Exhibit 10.1 Agreement and Plan of Merger between Stone Field Management Company and American Radio Empire, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: January 13, 2006
STONE FIELD MANAGEMENT COMPANY, INC.
/s/ Dain Schult
Dain Schult, President and CEO
| This ‘8-K’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 12/15/08 | ||||
| 12/31/06 | 10KSB, NT 10-K | |||
| Filed as of: | 1/17/06 | |||
| Filed on: | 1/13/06 | |||
| 12/31/05 | 10KSB, NT 10-K | |||
| For Period End: | 12/15/05 | |||
| 9/30/05 | 10QSB, NT 10-Q | |||
| 7/29/05 | ||||
| 1/1/05 | ||||
| 12/31/04 | 10KSB | |||
| 9/30/04 | 10QSB | |||
| 1/1/04 | ||||
| 12/31/03 | 10KSB | |||
| 9/30/03 | 10QSB | |||
| 12/31/02 | 10KSB | |||
| 12/31/01 | 10KSB | |||
| 12/15/00 | ||||
| 10/20/99 | ||||
| 12/9/98 | ||||
| 6/19/97 | ||||
| List all Filings | ||||