UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for use of the Commission (only as permitted by Rule
14c-5(d)(2))
[X] Definitive Information Statement
URBAN TELEVISION NETWORK CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with Preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing fee for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.
(3) Filing Party:
(4) Date Filed:
November 1, 2002
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
URBAN TELEVISION NETWORK CORPORATION
18505 Highway 377 South, Fort Worth, TX 76126
(817) 512-3033
INFORMATION STATEMENT
AND NOTICE OF ACTIONS TAKEN
BY WRITTEN CONSENT OF THE MAJORITY STOCKHOLDERS
General Information
-------------------
This information is being provided to the shareholders of Urban
Television Network Corporation, (the "Company"), in connection with our prior
receipt of approval by written consent, in lieu of a special meeting, of the
holder of a majority of our common stock (1) authorizing an amendment to our
Articles of Incorporation effecting a reverse split of our issued and
outstanding common stock on a one for twenty (1:20) basis (the "Reverse Split")
and increasing our authorized common stock capital from 50,000,000 common
shares, par value $0.01 to 200,000,000 common shares, par value $0.0001 and; (2)
authorizing the acquisition of Urban Television Network Corporation, a Texas
corporation, (Urban Texas) from its shareholders in a share exchange transaction
(the "Share Exchange"). The shareholder holding shares representing 71.9% of the
votes entitled to be cast at a meeting of the Company's shareholders, consented
in writing to the proposed actions. The approval by the shareholder will not
become effective until 20 days from the date of mailing of this Information
Statement to our shareholders.
The Company's Board of Directors approved these actions on September 3,
2002 and (1) recommended that the Articles of Incorporation be amended in order
to effectuate the Reverse Split and change in common share capital and (2)
recommended the Share Exchange with the shareholders of Urban Texas.
The proposed Amendment to the Articles of Incorporation will be filed
with the Nevada Secretary of State and will be effective when filed. The
anticipated filing date will be approximately 20 days after the mailing of this
Information Statement to our shareholders. The Share Exchange will be subject to
a future definitive acquisition agreement. We propose to issue 14,720,000 New
Common shares in the Exchange Transaction, subject to state and federal
securities law compliance.
If the proposed Amendment were not adopted by written majority
shareholder consent, it would have been necessary for this action to be
considered by the Company's shareholders at a special shareholder's meeting
convened for the specific purpose of approving the Amendment.
The elimination of the need for a special meeting of the shareholders
to approve the Amendment is authorized by Section 78.320 of the Nevada Revised
Statutes, (the "Nevada Law"). This Section provides that the written consent of
the holders of outstanding shares of voting capital stock, having not less that
the minimum number of votes which would be necessary to authorize or take the
action at a meeting at which all shares entitled to vote on a matter were
present and voted, may be substituted for the special meeting. According to this
Section 78.390 of the Nevada Law, a majority of the outstanding shares of voting
capital stock entitled to vote on the matter is required in order to amend the
Company's Articles of Incorporation. In order to eliminate the costs and
management time involved in holding a special meeting and in order to effect the
Amendment as early as possible in order to accomplish the purposes of the
Company, the Board of Directors of the Company voted to utilize the written
consent of the majority shareholders of the Company.
The date on which this Information Statement was first sent to the
shareholders is on, or about November 1, 2002. The record date established by
the Company for purposes of determining the number of outstanding shares of
Voting Capital Stock of the Company was September 3, 2002, (the "Record Date").
Outstanding Voting Stock of the Company
---------------------------------------
As of the Record Date, there were 22,231,667 shares of Common Stock
issued and outstanding. The Common Stock constitutes the outstanding class of
voting securities of the Company. Each share of Common Stock entitles the holder
to one (1) vote on all matters submitted to the shareholders.
Security Ownership of Certain Owners and Management
---------------------------------------------------
The following Table sets forth the Common Stock ownership information
as of September 3, 2002, with respect to (i) each person known to the Company to
be the beneficial owner of more than 5% of the Company's Common, (ii) each
director of the Company, (iii) each person intending to file a written consent
to the adoption of the actions described herein, and (iv) all directors,
executive officers and designated shareholders of the Company as a group. This
information as to beneficial ownership was furnished to the Company by or on
behalf of each person named. Unless otherwise indicated, the business address of
each person listed is the Company's address.
Table 1. Beneficial Ownership (a)
Common
------
Name Shares Beneficially Owned Percent of Class
----
Urban Television
Network Corporation (2)(3) 16,000,000 71.9%
Randy Moseley (4) 16,000,000 71.9%
----------------- ---------- ----
Directors and Officers
as a Group (4) 16,000,000 71.9%
--- ---------- ----
Total Shares 16,000,000 71.9%
------------- ---------- ----
(1) Directors and Officers
(2) Consenting shareholder
(3) 5% Beneficial shareholder
(4) Randy Moseley is a director and President of the Company. He is also the
President of Urban Television Network Corporation, a Texas corporation, the
company which is the majority shareholder of Urban Television Network
Corporation, a Nevada corporation. He has the authority to vote the 16,000,000
Company shares owned by Urban Network Television Network Corporation, the Texas
corporation. Therefore, he is deemed a beneficial owner of the shares.
Changes in Capital
------------------
The Company's Board of Directors is taking action to effect a one-for-twenty
(1:20) reverse stock split (the "Reverse Split") of the Company's then issued
and outstanding Common Stock (the "Prior Common"). Additionally, we are taking
action to increase our authorized common stock to 200,000,000 shares and reduce
the par value of the common shares to $0.0001 per share. We propose to amend the
Articles of Incorporation in connection with the Reverse Split and change in
common stock capital.
Pursuant to the Reverse Split, each of the twenty (20) shares of Prior Common
issued and outstanding would be reclassified as, and exchanged for, one (1)
share of newly issued Common Stock ("New Common").
The Reverse Split will occur on a future designated date, (the "Effective Date")
without any further action on the part of shareholders of the Company and
without regard to the date or dates on which certificates representing shares of
Prior Common are actually surrendered by each holder for certificates
representing the number of shares of the New Common that each stockholder is
entitled to receive as a consequence of the Reverse Split. After the Effective
Date of the Reverse Split, the certificates representing shares of Prior Common
represent one-twentieth the number of shares of New Common. Certificates
representing shares of New Common will be issued in due course as old
certificates are tendered for exchange. No fractional shares of New Common will
be issued and, in lieu thereof, shareholders holding a number of shares of Prior
Common not evenly divisible by 20, and stockholders holding fewer than 20 shares
of Prior Common prior to the Effective Date, upon surrender of their old
certificates, will receive one share of stock in lieu of fractional shares of
New Common.
The Reverse Split will not materially affect the proportionate equity interest
in the Company of any shareholder of Prior Common or the relative rights,
preferences, privileges or priorities of any such stockholder. The New Common
issued pursuant to the Reverse Split will be fully paid and non-assessable. All
shares of New Common will have the same voting rights and other rights as shares
of the Prior Common have. Stockholders of the Company do not have preemptive
rights to acquire additional shares of Common Stock which may be issued.
Purpose and Effect of the Change in Capital
The proposed increase in our authorized common stock increasing the
number of common shares from 50,000,000 to 200,000,000 will enable the Company
to have sufficient shares for future financing and acquisition opportunities.
Presently, we have no financing or acquisition plans which involve the issuance
of common stock. This increase in capital from 50,000,000 to 200,000,000 shares
is not necessary for us to complete our planned acquisition of Urban Television
Texas. This change in capital will not affect the relative rights or privileges
of our common stock shareholders. The newly authorized common stock will have
the same rights as the presently authorized shares of Common Stock.
The principal purpose for increasing our authorized common stock to
200,000,000 shares is to provide us with additional financial flexibility to
issue common stock for purposes which may in the future be deemed in the best
interests of our shareholders. This financial flexibility could include the
ability to obtain future financing and to make possible acquisitions through the
use of our common stock. There are no assurances that any of the above-described
possible transactions will occur. The proposed increase in the number of
authorized shares of our common stock, coupled with the issuance of such shares,
could have variety of effects on our shareholders. Without a proportionate
increase in our earnings and book value, an increase in the aggregate number of
our outstanding shares caused by any future common stock issuances would dilute
the earnings per share and book value per share of all outstanding shares of our
common stock. As a result, the potential realizable value of a stockholder's
investment in our common stock may be negatively affected. Additional shares of
our common stock could be issued in one or more transactions that could make a
change in control or takeover more difficult. In this instance the increase in
authorized common stock could have an anti-takeover effect. Nonetheless,
management believes that having the financial flexibility to affect such
transactions would ultimately be beneficial to the Company and its shareholders.
The Reverse Split is a requirement of the Share Exchange transaction
with Urban Texas. The Reverse Split will decrease the number of Prior Common
shares outstanding and presumably increase the per share market price for the
New Common stock. Theoretically, the number of shares outstanding should not, by
itself, affect the marketability of the stock, the type of investor who acquires
it, or the Company's reputation in the financial community, but in practice this
is not necessarily the case, as many investors look upon a stock trading at, or
under $1.00 per share as unduly speculative in nature, and as a matter of
policy, avoid investment in such stocks. Additionally, the reverse stock split
would reduce the number of shares of its New Common stock outstanding to amounts
that management believes are more reasonable in light of its size and market
capitalization. The Company will require additional capital for its operations
and does not believe that it will be able to raise the necessary capital unless
the price of the common stock is higher than the current common stock price
levels. However, no assurance can be given that the Reverse Split will result in
any increase in the common stock price or that the Company will be able to
complete any financing following the Reverse Split.
There can be no assurance, nor can the Board of Directors of the
Company predict what effect, if any, the proposed Reverse Split or increase in
the authorized common stock will have on the market price of the Company's
common stock.
Acquisition of Urban Texas
--------------------------
We will begin to take the action necessary to effect the Share Exchange
with the Urban Texas shareholders. This will require the approval of the
consenting Urban Texas shareholders, the company from which we acquired our
operating assets. Presently, we have the consent of a majority of Urban Texas
shareholders, but not all of the shareholders. We propose to issue 14,720,000
New Common shares to the Urban Texas shareholders in exchange for all of the
issued and outstanding stock of Urban Texas. The Share Exchange implementation
is subject to, among other things, state and federal securities regulation. We
cannot estimate a completion date for the proposed Share Exchange at this time.
Contact Information
-------------------
Urban Television Network Corporation (the "Company") has its principal
executive offices located at 18505 Highway 377 South, Fort Worth, TX 76126. The
corporate telephone number is (817) 512-3033.
Urban Television Network Corporation, a Texas corporation ("Urban
Texas"), has its principal executive offices located at 18505 Highway 377 South,
Fort Worth, TX 76126. Its corporate telephone number is (817) 512-3033.
Summary of Proposed Acquisition Terms
-------------------------------------
The following highlights preliminary information pertaining to our
proposed acquisition of Urban Texas and does not contain all of the information
because a definitive acquisition agreement has not been prepared or executed.
o We have a letter of intent signed by the officers of Urban Texas and
its majority shareholders.
o We anticipate obtaining the consent of all Urban Texas shareholders
before completing the acquisition.
o We wish to acquire all of the issued and outstanding capital stock of
Urban Texas, but we have no assurance that we will be able to acquire
all of it.
o We will also need to comply with state and federal securities laws
relating to the issuance of our shares in exchange for all of the Urban
Texas shares.
o Based on our future review of the securities laws, we may elect to
acquire a majority of Urban Texas shares, but less than all of the
Urban Texas shares.
Business Conducted by the Companies
-----------------------------------
Urban Television Network Corporation (the "Company") acquired a
television broadcast signal and television network affiliate base from Urban
Texas in April 2002. The Company broadcasts a television signal to its network
affiliate base deriving revenues from the sale of commercial advertisements. The
television network provides television programming content serving ethnic
minority programming interests of the African-American populations across the
United States. The network presently includes in excess of 60 national
television station affiliates
Urban Texas was organized in Texas on October 9, 2001. It is a
development stage company engaged in the broadcast television business. Urban
Texas sold a portion of its television broadcast assets to the Company in April
2002. We will acquire the balance of Urban Texas's proprietary broadcast
technologies, intellectual property and goodwill with this acquisition.
Terms of the Proposed Transaction
---------------------------------
We propose to issue 14,720,000 New Common shares to the Urban Texas
shareholders (the "Share Exchange") in exchange for all of the issued and
outstanding capital stock of Urban Texas.. This will require the approval of the
consenting Urban Texas shareholders. Presently, we have the consent of a
majority of Urban Texas shareholders, but not all of the shareholders.
The Share Exchange will be subject to, among other things, state and
federal securities regulation. We are not permitted to issue the exchange shares
unless we comply with both federal and state securities laws. This governmental
securities transaction regulation is the only regulatory approval or consent
required in order to complete the Share Exchange. We will need to issue the
shares under securities transaction exemptions or register the issuance of the
shares with the regulating governmental authorities. We may not be able to
acquire all of the Urban Texas shares. We do anticipate acquiring at least a
majority of the Urban Texas shares under the isolated securities transaction
exemption permitted by Section 4(2) of the Securities Act of 1933, as amended.
We cannot estimate a completion date for the proposed Share Exchange at this
time.
Past Contacts, Transactions or Negotiations
-------------------------------------------
The consideration exchanged in Asset Purchase Agreement between the
Company and Urban Texas was negotiated between the Company and Urban Texas in a
transaction with management. The management of the Company and Urban Texas are
comprised of the same individuals. The transaction did not represent an
arms-length transaction. The transaction was valued at $877,000 or $0.058 per
share. This dollar amount represented the actual cash invested in the agreements
by Urban Texas and the face value of the three promissory notes. The notes were
in payment default and their values should have been considered impaired by
virtue of the default. No effect was given to the impaired value of the
defaulted notes when the purchase price consideration was determined. At that
time a market value for the Company's common shares was difficult to ascertain
because of the limited and illiquid market for the company shares. The company
shares were quoted on the National Quotation Bureau's electronic "Pink Sheets"
at the time of the asset acquisition. The bid price for company shares at that
time was one cent per share and the Company shares had not traded since December
18, 2001.
Selected Financial Data
-----------------------
Urban Television Network Corporation
Historical Data
The following sets forth financial information about the Company. Also,
financial information about the Company is incorporated herein by reference to
the Company's Annual Reports on Form 10-KSB for the years ended September 30,
2001, 2000 and 1999.
Year Ended September 30,
-----------------------------------------
2001 2000 1999
----------- ----------- -----------
Revenues $ -0- $ -0- $ -0-
Income (loss) continuing operations $ (91,654) $ (27,780) $ (144,319)
Extraordinary item $ 8,880 $ 1,562,122 $ -0-
Income (loss) continuing operations
Per share $ (.01) $ .25 $ (.02)
Total assets $ -0- $ -0- $ -0-
Liabilities $ 503,392 $ 420,618 $ 1,954,960
Cash dividends declared per common
Share $ -0- $ -0- $ -0-
Selected Pro Forma Financial Data
---------------------------------
Pro Forma Results
Unaudited
Urban Television Network Corporation, a Texas corporation, was created in
October 2001. Following are pro forma financial information for comparative
purposes only and is not indicative of the operating results that actually would
have occurred had the Urban Texas been consummated on October 1, 2001. In
addition, these results are not intended to be a projection of future results
and do not reflect any synergies that might have been achieved from combined
operations.
Nine months ended
June 30, 2002
-------------
Revenues $ 129,795
Income (loss) continuing operations $ (714,683)
Extraordinary item, gain on extinquishment of debt $ 424,665
Income (loss) $ (300,018)
Income (loss) continuing operations
Per share $ (.02)
Total assets $ 1,377,608
Liabilities $ 653,416
Cash dividends declared per common
Share $ -0-
Comparative Per Share Data
(Unaudited)
The following table summarizes the per share information for the Company on a
historical, pro forma combined and equivalent basis. The pro forma information
gives effect to the merger accounted for as purchase. You should read this
information together with the Company's historical and pro forma financial
statements and the notes thereto. You should not rely on the pro forma combined
information as being indicative of the results that would have been achieved had
the companies been combined or the future results that the combined company will
experience after the merger.
Urban Television Network Corporation
Per Common Share Data
Year Ended September 30,
------------------------------
2001 2000 1999
-------- -------- --------
Historical:
Net income (Loss per share, basic $( .01) $ .25 $( .02)
Book value per common share $( .08) $( .07) $( .32)
Pro forma combined after merger
Net income (Loss per share, basic $( .01) $ .07 $( .01)
Book value per common share $( .02) $( .02) $( .09)
This pro forma balance sheet assumes that the definitive agreement between UTVN
- Nevada and UTVN - Texas follows the Letter Of Intent terms and there is an
exchange for 100% of the common shares outstanding of Urban Television Network
Corporation, a Texas corporation.
Urban Television Network Corporation
Condensed Pro Forma Balance Sheet
June 30, 2002
Historical Pro Forma
Financial Pro Forma Financial
Statements Adjustments Statements
ASSETS
Current Assets
Cash $ 20,000 $ 2,000 $ 22,000
Advance to subsidiary 109,692
-109,692
Accounts receivable 15,000 941 15,941
----------- -----------
Total current assets 35,000 37,941
----------- -----------
Furniture, fixtures and equipment, net 5,555 21,252 26,807
----------- -----------
Other assets
Note receivable, net 500,000 500,000
Network assets 600,000 100,000 700,000
Organizational costs 0 112,860 112,860
----------- -----------
Total other assets 1,100,000 1,312,500
----------- -----------
Total Assets $ 1,140,555 $ 1,377,608
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,150 2,529 $ 4,679
Advances from shareholders 109,692 -109,692 138,737
Accrued interest payable 10,000 10,000
Current portion of long-term debt 250,000 250,000
----------- -----------
Total current liabilities 371,842 403,416
----------- -----------
Long-term debt payable 250,000 250,000
----------- -----------
Total Liabilities 621,842 653,416
----------- -----------
Stockholders' equity:
Common stock 222,316 147,200 369,516
Additional paid-in capital 5,681,562 58,279 5,739,841
Accumulated deficit 5,385,165) (5,385,165)
----------- -----------
Total Stockholders' equity 518,713 724,192
----------- -----------
Total liabilities and stockholders
equity $ 1,140,555 $ 1,377,608
----------- -----------
Purpose and Effect of the Share Exchange
----------------------------------------
The proposed acquisition of Urban Texas, will complete our acquisition
of their proprietary broadcast technology, intellectual and goodwill properties
(Urban Texas Assets). The Urban Texas Assets, include, among other things,
technology agreements and information management software systems which we
believe will improve our operations and sales networks. The Company's majority
shareholder approved the Urban Texas acquisition. There is no requirement that
this acquisition be approved by our shareholders, however, the Reverse Split and
capital changes facilitates the share exchange transaction. The issuance of the
exchange shares will dilute existing shareholder equity at the time it is
completed.
No Dissenter's Rights
---------------------
Under Nevada Law, our dissenting shareholders are not entitled to
appraisal rights with respect to our amendment, and we will not independently
provide our shareholders with any such right.
Financial and Other Information
-------------------------------
For more detailed information on our corporation, including financial
statements, you may refer to our most recent Form 10-QSB for the quarter ended
June 30, 2002 and other periodic filings with the Securities and Exchange
Commission (SEC) from time to time. This information may be found on the SEC's
EDGAR database at www.sec.gov.
Conclusion
----------
As a matter of regulatory compliance, we are sending you this
Information Statement which describes the purpose and effect of the Amendment.
Your consent to the Amendment is not required and is not being solicited in
connection with this action. This Information Statement is intended to provide
our stockholders information required by the rules and regulations of the
Securities Exchange Act of 1934.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
THE ATTACHED MATERIAL IS FOR INFORMATIONAL PURPOSES ONLY.
For the Board of Directors of
Date: November 1, 2002 Urban Television Network Corporation
/s/ Randy Moseley
By: Randy Moseley ------------------------
Title: President/Chairman
of the Board
Exhibit "A"
Form of Proposed Amendment to the Articles of Incorporation
FORM OF PROPOSED
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF
URBAN TELEVISION NETWORK CORPORATION
Pursuant to the provisions of the Nevada Revised Statutes (NRS),
Chapter 78, the following Certificate of Amendment is submitted for filing:
FIRST: The name of the corporation is URBAN TELEVISION NETWORK
CORPORATION.
SECOND: The following amendment to Article IV of the Articles of
Incorporation of Urban Television Network Corporation was adopted on September
3, 2002, as prescribed by the Nevada Revised Statutes, by a vote of the
shareholders sufficient for approval of the Amendment.
ARTICLE IV, CAPITAL STOCK, is amended effective November___, 2002,
after giving effect to the reverse split as set forth in the THIRD below, as
follows:
The first paragraph of Article IV is amended as follows:
The aggregate number of shares which this corporation will have
authority to issue is Two Hundred Million Five Hundred Thousand (200,500,000)
shares as follows:
(a) Two Hundred Million (200,000,000) shares of Common Stock with a par
value of $0.0001 per share,
(b) Five Hundred Thousand (500,000) shares of Preferred Stock with a
par value of $1.00 per share.
The following paragraphs of Article IV were not amended and are
incorporated herein by reference to the Articles of Incorporation October 20,
1986: paragraphs (b) and (c).
THIRD: The manner in which any exchange, reclassification, or
cancellation of issued shares provided for in the Amendment will be effected, is
as follows:
Following the effective date of the reverse split and affecting all
issued and outstanding shares as of _________, 2002, one (1) share of common
stock will be issued for each twenty (20) common shares previously issued and
outstanding. Share certificates representing the pre-split denominations may be
exchanged for share certificates representing the post-split denominations, at
the election of shareholders, and in any case, new denomination certificates
will be issued upon transfer in the ordinary course of business. Mandatory share
certificate exchange is not required.
In the event, that the reverse split results in fractional shares, all
fractions will be rounded up to the next whole number.
The reverse stock split will be effective on , 2002.
FOURTH: This amendment does not change the amount of stated capital.
Under penalty of perjury, the undersigned declares that the foregoing document
was executed by the corporation and that the statements contained therein are
true and correct to the best of his knowledge.
This amendment has been consented to and approved by the unanimous vote
of the board of directors and a majority of stockholders holding at least a
majority of each class of stock outstanding and entitled to vote thereon.
Dated this day of , 2002.
---- ------------------
URBAN TELEVISION NETWORK CORPORATION
By: Randy Moseley
Title: President
By: Stan Woods
Title: Secretary