SB-2/A: Optional form for registration of securities to be sold to the public by small business issuers

Date Filed: April 7, 1999 SEC File No.333-72097

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
AMENDMENT NO. 2 TO FORM SB-2
Registration Statement Under the Securities Act of 1933

AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(Exact Name of Issuer as Specified in Its Charter)

- --------------------------------------------------------------------

Nevada 4832 74-2897368
- --------------------------------------------------------------------

State of Incorporation Primary Standard I.R.S. Employer
Industrial Identification Number
Classification Code
Number
- --------------------------------------------------------------------

7103 Pine Bluffs Trail, Austin, TX 78729 (512) 249-2344
(Address and Telephone Number of Issuer's Principal Offices and Place
of Business)

Corporate Service Center, Inc.
1475 Terminal Way
Suite E
Reno, Nevada 89502
(702)329-7721
(Name, Address and Telephone Number of Agent for Service)

Approximate date of proposed sale to the public: As soon as this Registration
Statement becomes effective.

If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|

If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|

If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|

If delivery of the Prospectus is expected to be made pursuant to
Rule 434, please check the box. |_|

CALCULATION OF REGISTRATION FEE

- --------------------------------------------------------------------

Title of Amount to Proposed Proposed Amount of
class of be Maximum maximum Registration
securities registered offering aggregate Fee
to be price per offering
registered unit price

- --------------------------------------------------------------------

Common Stock 11,000,000 $0.05 $550,000 $162.25
- --------------------------------------------------------------------

The registrant hereby amends this registration statement on such date oar dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a) ,
may determine.


PROSPECTUS

AMERICAN COMMUNICATIONS ENTERPRISES, INC

Maximum of 11,000,000 shares of common stock
Price per share: $0.05.
Total proceeds if maximum sold: $550,000.

This is American Communications's initial public offering so there is no public
market for American Communications's shares. However, we hope to have prices for
our shares quoted on the bulletin board maintained by the National Association
of Securities Dealers after we complete our offering.

An investment in American Communications is risky, especially given the young
age of our company. Only people who can afford to lose the money they invest in
American Communications should invest in our shares. A full discussion of the
risks of owning our shares begins at page 2 of this Prospectus.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of our shares or determined if this
prospectus is truthful of complete. Any representation to the contrary is a
criminal offense.


Price to Public Underwriting DiscouProceeds to Issuer
and Commissions or other Persons
Per Share $0.05 None $0.05
Total Maximum $550,000 None $550,000

We will probably sell the shares ourselves and do not plan to use underwriters
or pay any commissions. We will be selling our shares using our best efforts and
no one has agreed to buy any of our shares. There is no minimum amount of shares
we must sale so no money raised from the sale of our stock will go into escrow,
trust or another similar arrangement. We expect to end our offering no later
than June 30, 2000.

The information in this Prospectus is not complete and may be changed. We may
not sell our shares until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell
our shares and it is not soliciting an offer to buy our shares in any state
where the offer or sale is not permitted.


April 7, 1999







SUMMARY OF THE OFFERING...........................................1
RISK FACTORS......................................................2
Development stage company...................................2
Failure of American Communications to remain a going concern2
Operating losses............................................2
No assurances of radio station acquisitions.................3
Lack of diversification.....................................3
No assurance of continued programming acceptance of radio stations
desired to be purchased.................................3
"Best efforts" offering.....................................4
Dependence on marketing and promotion.......................4
Dependence on management....................................4
FCC regulation regarding radio broadcasting.................4
Voting control by management................................5
Compensation of officers....................................5
Dilution....................................................5
Shares Available For Resale Under Rule 144..................6
No dividends on common stock................................6
Illiquidity of investment in shares.........................6
Penny stock regulation......................................6
Location of our accountants.................................7
USE OF PROCEEDS...................................................7
DETERMINATION OF OFFERING PRICE..................................10
DILUTION.........................................................11
PLAN OF DISTRIBUTION.............................................11
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.....12
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT .......................14
DESCRIPTION OF SECURITIES........................................14
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES............15
DESCRIPTION OF BUSINESS..........................................16
MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.........22
DESCRIPTION OF PROPERTY..........................................35
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................35
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.........35
EXECUTIVE COMPENSATION...........................................37
FINANCIAL STATEMENTS.............................................37







SUMMARY OF THE OFFERING

THE COMPANY: American Communications is a recently incorporated
Nevada corporation. We expect to develop music
programming products for use on both radio stations
and the Internet and to locate radio stations for
possible acquisition. Our goal is to acquire,
consolidate and operate small-to-medium sized market
radio stations, initially in Texas, and then in other
geographic regions of the United States. With the
proceeds of this offering, we plan to build the
studios necessary to create this music programming and
to sign letters of intent on as many as four(4) radio
stations in Texas. We maintain our executive offices
at 7103 Pine Bluffs Trail, Austin, Texas 78729,
telephone number (512) 249-2344.

SECURITIES OFFERED: Up to a maximum of 11,000,000 shares of common stock,
no par value per share. The shares are offered at
$0.05 per share for total gross offering proceeds of
$550,000.

SHARES OF COMMON 10,500,000 shares
STOCK OUTSTANDING
BEFORE OFFERING:

SHARES OF COMMON 21,500,000 shares
STOCK OUTSTANDING
AFTER OFFERING,
ASSUMING MAXIMUM
AMOUNT SOLD:

TERMS OF THE OFFERING: There is no minimum offering.
Accordingly, as shares are sold, we will use the money
raised for our activities. The offering will remain
open until June 30, 2000, unless we decide to cease
selling efforts prior to this date.

USE OF PROCEEDS: We intend to use the net proceeds of this offering
primarily for creation of music programming services,
station acquisitions and for working capital and
general corporate purposes.

PLAN OF DISTRIBUTION: This is a best efforts underwriting,
with no commitment by anyone to purchase any shares.
The shares will be offered and sold by our principal
executive officers and directors, although we may
retain the services of one or more NASD registered
broker-dealers as selling agent(s) to effect offers
and sales on our behalf.



1




RISK FACTORS

An investment in the shares involves a high degree of risk, including a
risk of loss of an investor's entire investment in American Communications.
Prospective investors should consider carefully, in addition to the other
information contained in this prospectus, the following risk factors before
purchasing any shares.

Development stage company. American Communications was incorporated in
October 1998, and is, therefore, a development stage company with no operating
history or revenues. We need to receive substantially all of the maximum
proceeds of this offering to proceed with our business plan and will require
substantial additional capital, for which no agreements or arrangements are
currently in place, to implement our
business plan. If additional capital is not subsequently available, our planned
operations could be materially adversely affected. No assurances can be given
that our business will ultimately be successful or that we will ever be or
remain profitable.

Failure of American Communications to remain a going concern. Our independent
certified public accountants have pointed out that we have an accumulated
deficit and negative working capital such that our ability to continue as a
going concern is dependent upon obtaining additional capital and financing for
our planned principal operations. We are conducting this offering to generate
the capital necessary to finance at least our initial operations. As a result,
our ability to continue as a going concern is dependent upon us receiving the
maximum proceeds of this offering and securing additional conventional
financing.

Operating losses. As with most development stage companies, we have
experienced losses since inception. As set forth in our financial statements,
our total stockholders' deficit is -$70,730 such that our company is currently
essentially insolvent. If only limited funds are raised in this offering, the
risk of our financial failure is high. We have been dependent upon loans from
members of management in the aggregate amount of $6,140, to sustain our
development activities to date. In our discretion, if we receive the

2




maximum proceeds sought to be raised, the entire principal amount of this loan,
including interest, may be repaid.

No assurances of radio station acquisitions. While we have targeted
approximately 4 radio stations in the state of Texas for acquisition over
approximately the next six (6) months after the effective date of this
Prospectus, no assurances are given that we will be successful in acquiring any
of such radio stations. While our management has had and continues to have
ongoing discussions with the owners of such stations who have expressed a
willingness to sell such stations to us, we do not currently have any binding
agreements or understandings concerning the acquisition of any radio stations.
We do not consider it probable that we will acquire any specific stations. The
acquisition of radio stations will require significant funding beyond the
proceeds sought in this offering, for which there are no financing arrangements
currently in place. While we believe that the radio stations we have currently
targeted in the Texas market are not currently being targeted by radio
consolidation companies having significantly greater financial and other
resources than we do, in view of their focus on larger markets, no assurances
are given that such companies may not in fact target the specific radio stations
that we are currently targeting and acquire one or more of such stations prior
to when we have the ability to close on any of such transactions. In the event
we are unable to acquire one or more of the radio stations currently sought, we
plan to seek to acquire one or more other radio stations in small-to-medium
sized markets in other areas of the United States. Our management has not, as of
this time, expended any significant time, effort or resources in reviewing or
analyzing other potential radio station candidates for acquisition in other
parts of the United States and therefore, would have to devote significant time
and energy to do so.

Lack of diversification. If we are successful in selling the maximum
number of shares offered, we will only have enough money to obtain rights to a
handful of radio stations. As a result, we will have no real diversification of
operations, at least initially. This will mean that our fortunes will depend
significantly upon the performance of a limited number of formats; if the public
does not like our few radio stations, we will not succeed.

No assurance of continued programming acceptance of radio stations desired
to be purchased. We have conducted only limited market research concerning
consumer tastes and preferences in the markets of the radio stations we intend
to acquire and do not anticipate conducting for ourselves any significant
marketing research, studies or surveys on a going forward basis. Instead, we
have relied and will continue to rely upon the programming currently aired by
such stations due to their perceived success as evidenced by the marketing
success these stations have enjoyed, as well as industry research firms and
their published data regarding industry and


3




market trends in those geographic areas where we plan to operate and acquire
radio stations when and where applicable. Due to changes in consumer taste and
preferences, there can be no assurance that any programming continued by us or
introduced will continue to or otherwise achieve any significant degree of
market acceptance, or that such acceptance will be sustained for any significant
period. Failure to sustain or achieve market acceptance would have a material
adverse effect on our operating results and financial condition as our revenues
from advertising will undoubtedly will be adversely impacted.

"Best efforts" offering This offering is being conducted on a "best
efforts" basis. As such, no assurances are given as to what level of proceeds,
if any, will be obtained. In the event we fail to obtain all or substantially
all of the proceeds sought in this offering, our ability to effectuate our
business plan will be materially adversely effected, and investors may lose all
or substantially all of their investment. No assurances are given that the
subscription proceeds that may be received by us will be sufficient to sustain
our operations prior to our anticipated receipt of revenues from advertisers.

Dependence on marketing and promotion . We plan to market and promote our
stations as unique and "fun to listen to" in their respective markets with the
goal to increase station awareness and "dial position recognition" among
retailers, buyers and listeners. We expect to market and promote our stations
through our own sales and marketing personnel as well as through advertising in
recognized trade publications and on a proposed Internet web site. Depending
upon the level and timing of funding received in this offering, such marketing
and promotional efforts will commence by the end of second or third quarter,
1999. No assurances are given that such marketing and promotional efforts will
prove or continue to be successful.

Dependence on management. Our future success is materially dependent on
the continued services of Mr. Dain Schult, our chief executive officer,
president and chairman of the board, who intends to devote full time to our
business, and of Mr. Robert Ringle, our chief marketing officer and vice
president, who also intends to devote full time to our affairs. Our success is
also dependent on our ability to attract, motivate and retain highly-qualified
employees. The loss of the services of Mr. Schult or Mr. Ringle could have a
material adverse effect upon our business and operations until a suitable
replacement may be located, of which no assurances are given. While we intend to
obtain key man life insurance on each of Mr. Schult and Mr. Ringle for
approximately $1,000,000, with American Communications to be named as
beneficiary, no assurances are given that such insurance will in fact be
obtained.

FCC regulation regarding radio
broadcasting. The Federal
Communications Commission ("FCC" or

4




"Commission") is the federal regulatory body that oversees the operation of all
radio and television stations in the United States. The Commission is
responsible for granting licenses to all stations and insuring that its rules
and regulations are complied with at each station. In both the license renewal
process and the license transfer process which takes place when a company buys a
radio station from a current owner (and license holder), the Commission is
interested in knowing the makeup of the station ownership. Although we are not
aware or any reason the FCC should fail to approve the transfer of any radio
stations to us, if the FCC failed to approve a proposed acquisition of a radio
station by us, our ability to effectively complete our business plan will be
jeopardized.

Voting control by management. After completion of this offering, assuming
all of the shares offered hereby are sold, our management, inclusive of our
board of directors, will own 10,500,000 shares of American Communications'
outstanding common stock. Thus, management will control approximately 49% of the
voting securities of American Communications if all shares offered hereby are
sold, without giving effect to (i) any stock option plan if adopted by
management and approved by a majority of the shareholders or (ii) any additional
issuances of common stock or other securities of American Communications to
management and/or others, in management's sole discretion. As a result, our
management will effectively control our affairs, including the election of all
of our board of directors, the issuance of additional shares of common stock for
a stock option plan or otherwise, the distribution and timing of dividends, if
any, and all other matters.

Compensation of officers.
Because Messrs. Schult and Ringle collectively will own at least 49% of
our company, they will continue to control the our board of directors. As a
result, Messrs. Schult and Ringle will be entitled to establish the amount of
their own compensation, including the amount of any bonuses paid to them. In
addition, because we do not have any independent directors, there will be no
oversight of the reasonableness of any bonuses paid to Messrs. Schult or Ringle.

Dilution. American Communications is authorized to issue a substantial
number of shares of common stock in addition to the shares comprising the shares
offered hereby, as well as potentially shares of preferred stock in such series
and with such designating rights and preferences as may be determined by our
board of directors in its sole discretion. We will require significant
additional financing to fully implement our business plan, which funding could
entail the issuance of a substantial number of additional securities which could
in turn cause material dilution to investors in this offering.

This offering itself involves
immediate and substantial dilution to
investors. Any securities issuances in
the future, including issuances to


5




management, could reduce the proportionate ownership, economic interests and
voting rights of any holders of shares of our common stock purchased in this
offering.

Shares Available For Resale Under Rule 144. All of our presently
outstanding shares of common stock, aggregating 10,500,000 shares of common
stock, are "restricted securities" as defined under Rule 144 promulgated under
the Securities Act and may only be sold pursuant thereto or otherwise pursuant
to an effective registration statement or an exemption from registration, if
available. Rule 144, as amended, generally provides that a person who has
satisfied a one year holding period for such restricted securities may sell,
within any three month period (provided we are current in our reporting
obligations under the Exchange Act) subject to certain manner of resale
provisions, an amount of restricted securities which does not exceed the greater
of 1% of a company's outstanding common stock or the average weekly trading
volume in such securities during the four calendar weeks prior to such sale.
Messrs. Schult and Ringle, our principal executive officers, own an aggregate of
10,500,000 restricted shares for which the one year holding period expires on
October 30, 1999. A sale of shares by such security holders, whether pursuant to
Rule 144 or otherwise, may have a depressing effect upon the price of our common
stock in any market that might develop.

No dividends on common stock. We intend for the foreseeable future to
retain earnings, if any, for the future operation and expansion of our business
and do not anticipate paying dividends on our shares of common stock for the
foreseeable future.

Illiquidity of investment in shares. There is currently no market for any
of our shares and no assurances are given that a public market for such
securities will develop or be sustained if developed. While we plan, following
the termination of this offering, to take affirmative steps to request or
encourage one or more broker/dealers to act as a market maker for our
securities, no such efforts have yet been undertaken and no assurances are given
that any such efforts will prove successful. As such, investors may not be able
to readily dispose of any shares purchased hereby.

Penny stock regulation. Broker-dealer practices in connection with
transactions in "penny stocks" are regulated by certain penny stock rules
adopted by the Commission. Penny stocks generally are equity securities with a
price of less than $5.00. The penny stock rules require a broker-dealer, prior
to a transaction in a penny stock not otherwise exempt from the rules, to
deliver a standardized risk disclosure document that provides information about
penny stocks and the risks in the penny stock market. The broker-dealer also
must provide the customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the
transaction, and

6




monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker-dealer make a special
written determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules. As our shares immediately following this offering will likely
be subject to such penny stock rules, investors in this offering will in all
likelihood find it more difficult to sell their
securities.

Location of our accountants. Our accountants are located in Florida, but
our offices and books and records are located in Texas. When we need our
accountants to audit our records, we send to our accountants the necessary
materials to allow them to perform their examination of our records. Because our
company is only recently organized, with no meaningful history of operations,
this procedure has not caused problems for us in the past. However, as our
operations grow, this separation between us and our accountants may become
inefficient and potentially costly. Although we currently have no plans to
change this arrangement, if problems are presented that we feel do not justify
our continued use of our existing accountants, we may decide to change to
accountants located in the state of Texas. Changing accountants can be
expensive.

USE OF PROCEEDS

The net proceeds to our company from the sale of the Shares offered
hereby, assuming all of the Shares offered hereby are sold, of which no
assurances are given, are estimated to be $450,000, giving effect to the
estimated expenses of the Offering of approximately $50,000 and exclusive of
selling commissions, if any.




7




The following table sets forth the anticipated use of the net proceeds of
this Offering in the event that all 11,000,000 Shares offered hereby are sold.
We may not be able to sell all of the Shares and thus generate $550,000. Our
receipt of no or nominal proceeds will have a material adverse effect upon our
investors and us.

The entry in the table for station purchase options are amounts that would
be paid to existing station owners giving us 180 days to arrange financing to
purchase the stations or to put into place leases on the stations that are
acceptable by the FCC. These amounts will be paid to non-affiliated
third-parties. The entry below for administrative costs includes costs expected
to be incurred for leasing office space, furniture, fixtures, equipment,
licensing agreements to use certain broadcast programing, office expenses, long
distance calls, and related expenses.

Programming Development $ 50,000

Station Purchase Options $130,000

Administrative Costs $123,360

Repay Loan Made by President
to our Company $ 6,140

Working Capital $190,500

Offering Costs $ 50,000

Total Offering Proceeds $550,000

Because we presently anticipate selling the shares strictly through the
efforts of our officers and directors, the above numbers do not include any
deductions for selling commissions. If broker/dealers are used in the sale of
the shares, up to 10% of any gross proceeds raised in this offering will
probably be payable to one or more NASD registered broker-dealers. In such
event, net proceeds to us will be decreased and the use of proceeds may be
proportionately reallocated in management's sole discretion. Concurrent with
this offering, we may seek to obtain debt financing in the form of senior bank
debt as well as subordinated seller financing from the radio station owners. In
the event of our receipt of any such debt financing, we may seek to convert a
part of such debt financing to shares of our common stock or some other class of
securities which may have a dilutive effect on investors in this offering. There
are no current agreements, arrangements or other understandings in connection
with any of the foregoing.

We may borrow relatively small

8




amounts from various persons to pay expenses while this offering is completed.
We anticipate that the agreements by which these funds may be borrowed may
provide that the persons who loan the money may have the right to convert the
amounts due to them into our common stock on the basis of 1 share of common
stock for each $0.05 loaned. If the lenders decide to convert their debt into
common stock, we may issue shares of the common stock offered hereby to the
lenders in satisfaction of the loan agreements on the basis of one share of
common stock for each $0.05 of debt so converted. In the alternative, we may
take part of the proceeds of the offering to pay these debts.

In the event we receive the maximum proceeds of $550,000, our management
believes that the net proceeds therefrom, together with anticipated funds from
operations, will provide us with sufficient funds to meet our cash requirements
for approximately twelve (12) months following the receipt of this maximum
amount. This will provide the necessary funding for creation of the music
programming services and provide the initial capital necessary to locate
additional potential station acquisitions. In such event, our management
believes we will in all likelihood only have sufficient funds to commence
production of Internet music programming and possibly certain other Internet
products as well as to establish a FCC-acceptable lease of the initially
proposed station acquisitions. If we receive net proceeds in amounts less than
the maximum proceeds, this twelve month time frame will be diminished and our
business operations will be curtailed to an extent not presently determinable by
Management. The receipt of no or nominal proceeds will have a material adverse
effect upon our investors and us. No assurances are given that we will sell any
of the shares offered hereby, or raise any proceeds or consummate any other
financing.

Our president and vice president have never been paid any salaries from
our company despite the fact that they have employment agreements with us where
the president is supposed to be paid an annual salary of $126,000 and the vice
president is supposed to be paid an annual salary of $115,000. Notwithstanding
the fact they have not been paid, our president and vice president have agreed
to continue to work for us until this offering is either completed or abandoned.
In return for their continued assistance, our officers will be entitled to begin
to receive 1/2 of their monthly salaries only when we have received $100,000
from the sale of our shares. In addition, only when we have received $200,000
from the sale of our shares will our officers be entitled to receive their full,
contractual salaries. We believe that these levels of funding, together with
other funding that we hope to be able to get, will allow us to generate revenues
that will allow our officers' salaries to be paid out of our operating profits.

Because we have employment contracts with our officers, we have an
obligation to pay their salaries during the period they are not actually being


9




given cash. We have reached an
agreement with our officers that
amounts that are obligated to be paid to
our officers but not timely paid will be
accrued and characterized as our
liability and will be paid only when and if we achieve sufficient operating
profits to pay our officers' accrued but unpaid salaries. We will not use any of
the proceeds raised by the sale of our shares to pay these accrued but unpaid
salaries. Our officers understand that if these amounts of net operating profits
are never generated, they have little chance of ever being paid for their
services to our company. In addition, none of the offering proceeds that we may
receive will be used to make loans to officers, directors and/or affiliates.

The estimated allocation of net proceeds of this offering set forth above
is based upon our present plans and our assumptions and estimates regarding our
intended operations, anticipated expenditures and revenues and general economic
and broadcast industry conditions. The actual allocation of net proceeds of this
offering may be shifted at the discretion of our board of directors, if our
assumptions and estimates concerning anticipated expenditures and revenues prove
to be inaccurate. The allocation may also be changed if problems, expenses and
delays frequently encountered in growing a new business within the radio
industry, implementing new business strategies, as well as changes in the
economic climate and/or our planned business operations are experienced by us.

Proceeds not immediately required for the foregoing purposes will be
invested principally in federal and/or state government securities, short-term
certificates of deposit, money market funds or other short term interest-bearing
investments as well as repay Mr. Schult for his loan of $6,140 to American
Communications.

DETERMINATION OF OFFERING
PRICE

There is no established public market for the shares of common stock being
registered. As a result, the offering price and other terms and conditions
relative to the shares of common stock offered hereby have been arbitrarily
determined by us and do not necessarily bear any relationship to assets,
earnings, book value or any other objective criteria of value. In addition, no
investment banker, appraiser or other independent, third party has been
consulted concerning the offering price for the shares or the fairness of the
price used for the shares.


10




DILUTION

At December 31, 1998, we had a net tangible book value of -$70,730. The
following table sets forth the dilution to persons purchasing shares in this
offering without taking into account any changes in the our net tangible book
value, except the sale of 11,000,000 shares at the offering price and receipt of
$550,000, less offering expenses. The net tangible book value per share is
determined by subtracting total liabilities from our tangible assets, divided by
the total number of shares of common stock outstanding.


December 31, 1998 11,000,000 shares sold
Public offering price pen/a $0.05
share
Net tangible book value <0 n/a
per share of
common stock before the
offering(1)
Pro forma net tangible n/a $0.02
book value per share
of common stock after the
offering
Increase to net tangiblen/a at least $0.02
book value per share
attributable to purchase of
common stock by new
investors
Dilution to new investorn\a $0.03

(1) Our net tangible book value per share is determined by dividing the number
of shares of Common Stock outstanding into our net tangible book value and
is significantly less than zero prior to this offering.


PLAN OF DISTRIBUTION

We are offering up to a maximum of 10,000,00 shares at a price of $0.05
per share to be sold by our executive officers and directors namely, Messrs.
Schult and Ringle. If the shares are sold through our executive officers and
directors, no compensation will be paid with respect to such sales. However, we
may retain a NASD registered broker-dealer to act as the selling agent in
connection with all or part of this offering and will pay a cash commission of
up to an aggregate of 10% of the


11




proceeds of this offering. Since the offering is conducted on a "best efforts"
basis, there is no assurance that any of the shares offered hereby will be sold.

The offering will remain open until June 30, 2000, unless we determine, in
our sole discretion, to cease selling efforts. Our officers, directors and
stockholders and their affiliates may purchase shares in this offering.

There is no minimum number of shares that must be sold to complete the
offering. As a result, there will no escrow of any of the proceeds of this
offering. Accordingly, we will have use of such funds once we accept a
subscription and funds have cleared. Such funds shall be non-refundable except
as may be required by applicable law.


DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Our directors and executive officers of are as follows:


Name Position Age
Dain L. Schult President and Chief Executive 45
Officer, Secretary, Chairman of the
Board
Robert E. Ringle Vice President of Internet 55
Operations, Director of Sales,
Treasurer and Director


Dain L. Schult - President and Chief
Executive Officer: Mr. Dain Schult has
served as our President and Chief
Executive Officer since our inception .
Mr. Schult is a broadcast veteran of
over 30 years in the radio industry.

For the period from 1996 to the
inception of American Communications,

12




Mr. Schult was President and Chief
Executive Officer for Equicom, Inc., a
group consolidator of radio stations in
Texas.

For the period from 1977 to 1996, Mr. Schult was President of
Radioactivity, Inc., a full-service radio broadcast consulting firm located in
Atlanta, Georgia serving over 150 radio stations in various parts of the U.S..
While there, Mr. Schult participated in the turnaround of several stations,
created a unique turn-key management service for new station owners, conducted
station appraisals and market analysis projects for sellers and buyers, and
developed specific music formats for on-air use by client stations.
Concurrently, Mr. Schult was Chief Operating Officer for Sunbelt Radio Group,
Inc., a radio station group created to acquire and operate radio stations in
Texas.
Prior to 1977, Mr. Schult held various program manager, operating manager,
and on-air personality positions at several radio stations in the Southeast and
Southwest.

Mr. Schult holds an A.S. degree
in Commercial Music-Recording from
Georgia State University. Mr. Schult is
married to Sherry Schult, the sister of
Robert E. Ringle, one of our directors
and executive officers. As a result, Mr.
Schult is Mr. Ringle's brother-in-law.

Robert E. Ringle - Vice President
Internet Operations/Director of Sales:
Mr. Ringle has served as our Vice
President, Director of Sales and
Treasurer since our inception. Mr.
Ringle has more than 20 years
experience in owning and operating
advertising agencies and marketing
companies.

For the period from1997 to our inception, Mr. Ringle served as the Chief
Marketing Officer and Director of Sales for Equicom Inc., a regional radio
broadcasting network.

For the period from 1995 to 1997, Mr. Ringle served as the Chief Executive
Officer of Quadra Group, Inc., a small consulting company specializing in
marketing and management.

For the period from 1993 to 1995, Mr. Ringle served as the Marketing
Director and Sales Manager for Pell Automotive Group, a car dealership in
Tucson, Arizona.

Mr. Ringle has a B.S. degree in
Marketing from Wayne State University.

As stated previously, Mr. Ringle
is Mr. Schult's brother-in-law.

Directors. All of the Directors serve for one year periods. We presently
expect to conduct our first annual meeting of shareholder and directors in
October, 1999 at which time directors will again be elected. All directors serve
for a period of one year unless removed in accordance with our bylaws.




13




SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The following table sets forth certain information with respect to the
beneficial ownership of our common stock before and after giving effect to the
sale of the maximum number of shares of common stock offered. All shareholders
have sole voting and investment power over the shares beneficially owned.


Beneficial Ownership
of Common Stock
Shares Owned Percentage of Class
Before Offering After Offering
Dain L. Schult 8,400,000 80% 39.0698%
Robert E. Ringle 2,100,000 20% 9.7674%
- --------- -------
All directors and 10,500,000 100% 48.8372%
officers as a group
(2 persons)





DESCRIPTION OF SECURITIES

Common Stock

American Communications is authorized to issue 30,000,000 shares of common
stock, no par value per share, of which 10,500,000 shares are issued and
outstanding. The outstanding shares of common stock are fully paid and
non-assessable. The holders of common stock are entitled to one vote per share
for the election of directors and with respect to all other matters submitted to
a vote of stockholders. Shares of common stock do not have cumulative voting
rights, which means that the holders of more than 50% of such shares voting for
the election of directors can elect 100% of the directors if they choose to do
s. Our common stock does not have preemptive rates, meaning that the common
shareholders' ownership interest in American Communications would be diluted if
additional shares of common stock are subsequently issued and the existing
shareholders are not granted the right, in the discretion of the Board of
Directors, to maintain their ownership interest in our company.

Upon any liquidation, dissolution
or winding-up of American
Communications, our assets, after the
payment of debts and liabilities and any

14




liquidation preferences of, and unpaid dividends on, any class of preferred
stock then outstanding, will be distributed pro-rata to the holders of the
common stock. The holders of the common stock do not have preemptive or
conversion rights to subscribe for any our securities and have no right to
require us to redeem or purchase their shares.

The holders of Common Stock are entitled to share equally in dividends,
if, as and when declared by our Board of Directors, out of funds legally
available therefor, subject to the priorities given to any class of preferred
stock which may be issued.


Preferred Stock

American Communications is not presently authorized to issue shares of
preferred stock However, the majority of the our shareholders may later
determine to establish preferred stock for American Communications. If done, the
preferred stock may be created and issued, in one or more series and with such
designations, rights, preference and restrictions as shall be stated and
expressed in the resolution(s) providing for the creation and issuance of such
preferred stock. If preferred stock is authorized and issued and if American
Communications is subsequently liquidated or dissolved, the preferred stock
would be entitled to our assets, to the exclusion of the common stockholders, to
the full extent of the preferred stockholders' interest in American
Communications. Dividend Policy

To date, we have not paid any dividends. The payment of dividends, if any,
on the common stock in the future is within the sole discretion of the Board of
Directors and will depend upon our earnings, capital requirements, financial
condition, and other relevant factors. The Board of Directors does not intend to
declare any dividends on the common stock in the foreseeable future, but instead
intends to retain all earnings, if any, for use in our business operations.

Transfer Agent and Registrar

We intend to use Signature Stock Transfer, Inc., in Dallas, Texas as our
transfer agent for the common stock.

DISCLOSURE OF COMMISSION
POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES

Article V of the our Bylaws provides that American Communications shall
indemnify its officers or directors against expenses incurred in connection with
the defense of any action in which they are made parties by reason of being our
officers or directors, except in relation to matters as to which such director
or officer shall be adjudged in such action to be liable for negligence or
misconduct in the performance of his duty. One of our officers or directors
could take the position that this duty on behalf of American Communications to
indemnify the director or officer may include the duty to indemnify the officer
or director for the violation of securities


15




laws.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to our directors, officers and
controlling persons pursuant to our Articles of Incorporation, Bylaws, Nevada
law or otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or payed by one of our directors, officers or controlling
persons, and the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by a controlling precedent, submit to a court of
appropriate jurisdiction the question 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.

DESCRIPTION OF BUSINESS

General

American Communications Enterprises, Inc., a recently formed Nevada
corporation, based in Austin, Texas, was created to acquire, consolidate and
operate small-to-medium-sized market radio stations, initially in Texas and then
in other geographic regions of the United States. We hope to develop related
"state-of-the industry" Internet services to network our planned regional
clusters of radio stations in such markets. We believe that this cross-marketing
strategy will allow us to offer greater advertising capabilities to potential
advertisers, and therefore avail itself of possibly greater revenue
opportunities than available to radio stations on a "stand alone" basis or other
consolidators who do not follow such strategy.

We hope to lease or acquire radio stations in Brownwood and Coleman,
Texas, with the proceeds of this Offering, assuming the maximum proceeds are
received, and plan to eventually acquire up to approximately 15 stations in the
Southwestern section of the United States. Assuming the
continued availability of additional small-to-medium sized radio stations in
other parts of the U.S., the availability of financing and our ability to
integrate the operations of additional radio stations, none of which assurances
may be given, we intend to acquire, consolidate, and operate additional radio
stations beginning by Third Quarter 1999. We plan to pursue a regionally focused
acquisition strategy adding clusters of stations across the country when and
wherever possible. The total number of stations acquired will be a function of
availability, our financing capability and marketing feasibility and could
result in us operating as many as 100 stations. We are currently looking for
additional acquisition targets in Texas, New Mexico, Oklahoma, Arkansas and

16




Louisiana.

Based on our management's prior experience in operating radio stations in
consolidated groups, we believe that these stations can be linked together for
efficient operation in a reasonable time frame. We also intend to develop a
unique entertainment web site on the Internet. By combining the small to medium
market broadcast radio stations with the Internet, we believes we can eventually
create a network presence across the country and internationally. The strategy
is a hybrid of a small-to-medium-market radio station consolidation and an
Internet approach that is cross-market oriented.

Acquisition and Operating Strategy

We will pursue a regionally focused acquisition strategy. We propose to
initially purchase small-to-medium-sized radio stations in non-major
metropolitan areas in Texas and then expand to surrounding states. Our
management believes that many of the non-major metropolitan areas currently
offer many attractively priced acquisition candidates compared to the larger
cities.

Besides our regional focus, our growth strategy is planned to be founded
upon the achievement of synergies and economies of scale, including but not
limited to, the generation of incremental sales through network marketing for
greater national and regional advertising, the reduction of overhead expenses
and the realization of operational cost savings.

Assuming the completion of our initial station acquisitions and the
successful integration of such operations by Third Quarter 1999, we believe we
will be able to offer regional advertisers the ability to access a population
base of approximately 300,000 people in Central/West Texas. As we acquire more
stations, advertisers will be able to purchase the entire American
Communications group as a network with one media buy which will also include
advertising capabilities on the Internet. Under current market conditions, an
advertiser would not be able to roll out a campaign targeting non-major Texas
areas without entering into a number of separate media purchases which is both
time consuming and non-cost effective due to having to contact each station
separately instead of as a group .

Based upon, the prior personal, professional experiences of Messrs. Schult
and Ringle as well as the success of other regional consolidators, our
management believes our ability to market our entire network will result in a
consolidated advertising approach with a distinctly higher component of national
and regional advertising versus local direct retail advertising. This is
favorable because national and regional advertising often command premiums over
local ad rates by as much as 50% and 100% in smaller cities.

We plan to utilize a blend of WAN (Wide Area Network) music programming
coupled with centralized satellite voice programming from a


17




centrally located control location. Additionally, all of our stations are
planned to operate with centralized accounting, billing, marketing and
promotions systems, an in-house sales group that will be utilized for group
advertising for the radio stations as well as for Internet advertising, and
specialized in-house sales training programs for all of our salespeople. Due to
such planned centralization of services, we believe that each station's general
manager will have more time to focus on sales instead of administration
responsibilities. We expect that we will also eventually utilize "super regional
managers" each of whom will serve on-site as general manager in one market but
also oversee the operation of other stations within their designated region.

Current Radio Industry Conditions

We will compete in an industry that has undergone deregulation and
innovation. Deregulation by the Federal Communications Commission ("FCC") which,
in general, has permitted the elimination of station ownership limits, has given
rise to widespread opportunities within the radio industry but competitive
pressures have also increased. Consolidation activity has swept through the
larger-market radio stations and is now working its way through the small-to-
medium-sized markets. These smaller markets provide opportunities for
consolidation without the expense of large market or major city acquisitions.


Overview of the Radio Business
Radio station revenues are
derived from the sale of advertising spots or programs to national, regional,
and local advertisers of commercials. Advertising rates charged by a station are
predicated on its performance in the ratings based on estimates of the number of
persons listening to a station as well as the number of homes in a station's
service area.

The only national radio audience measuring service, Arbitron, serves the
entire country and provides even the smallest markets with annual ratings
service. Ultimately, the success of a radio station (or group of stations)
depends on its ability to develop popular programming and promotions, thus
generating higher rates and allowing the station to charge more for airing
commercials.

Historical Trends in Radio Ad
Revenues

As evidenced by Interep (a group of national radio rep firms), radio
industry revenues have consistently grown faster than the Gross National Product
and have historically demonstrated an ability to be somewhat recession
resistant.

Radio advertising expenditures have declined only twice in its history-in
1961 revenues declined 1% due to a recession and in 1991, the combination of the
Persian Gulf War and economic recession led to a 3% decline in revenues. Interep
reports that over the last 40 years, radio advertiser spending has grown at a
compound annual rate of

18




8.3%, somewhat higher than total ad spending for other forms of advertising
(television, cable, outdoor and print) which has grown at a 7.5% annual rate.

Economic downturns can have an impact on broadcasting, as it would any
other form of advertising or business in a recession, but not to the same degree
that they affect consumer discretionary spending in general. As reported by the
Radio Advertising Bureau, many national and regional brand advertisers have
found by experience that they must maintain their broadcasting advertising
budgets during periods of recession if they do not wish to lose market share
when the economy recovers.

The Radio Advertising Bureau reports that the main factor for radio's
growth is radio's unique ability for "narrowcasting" or reaching specific
demographic groups. By offering specialized audiences for advertisers, radio has
become more cost-effective, versus television or newspapers, which tend to sweep
a broader demographic scale.

Industry Consolidation

The radio broadcast industry is currently subject to consolidation
activity which is having a major impact on the competitive landscape. In
general, and as further discussed below, such consolidation activity has been
triggered by the Telecommunications Act of 1996. Up until the mid-1980s, there
was no public market for radio stocks. Local ownership limits by the 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 ownership rules had begun to be relaxed, with major
relaxation of such rules 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 so as to allow 1 operating entity to
control up to 8 stations 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 in such markets.

The mid-sized markets (generally defined to mean US markets ranked #50 to
#265 based on population) have recently begun to see upward price pressure, with
10.0x to 14.0x EBITDA (Earnings before Income Taxes, Depreciation and
Amortization) multiples not uncommon (vs. 8.0x to 10.0x EBITDA multiples as
recently as 1997). The consolidation activity of large market operators such as
Chancellor/Capstar Communications (Hicks, Muse), Sunburst (Bain Capital), and
Cumulus (Wisconsin State Teachers Retirement/Quaestus Capital) all of whom have
consolidated stations


19




across the US, have begun the process in some of the same markets that we are
exploring for acquisitions thus tending to indicate that consolidation has begun
in the smaller markets. We believe that we will only encounter these larger
mid-market consolidators at the upper end of our target markets in rated medium
sized markets but not in the smaller, non-regularly rated markets. Few groups
have ventured beyond focusing on the top 100 markets, which has kept acquisition
multiples in our targeted markets low but that could change should other
consolidators follow our small market strategy.

Competition

Competition within the radio broadcasting industry has historically been
and will continue to be very intense. Overall, the principal factor affecting
competition in this industry is the number of audience members reached with one
advertising medium. With the advent of deregulation, competition has increased
since the key to success is no longer how many listeners can an independent firm
reach in one market, but rather, how many listeners can a consolidator reach in
multiple markets. Competition with newspapers and television for advertising
dollars is also high. However, radio's audience has held up well over time. In
the past five years listenership has actually increased as reported by the Radio
Advertising Bureau. In addition, with the bulk of radio listening taking place
outside of the home and on the road, where competition with other mediums is
limited, and the audience somewhat "captive" (unable to access television,
newspapers, or the Internet), radio appears to be well positioned for continued
growth.

Regulation

The radio broadcast industry is subject to extensive regulation at the
federal level. Any change in existing statutes and regulations, or the adoption
of new statutes and regulations, could force stations to alter their methods of
operation at substantial costs.

All firms, whether large or small, are affected by these changes. Also, as
seen in recent legislative action (the 1996 Telecom Act), changes in
regulations, especially, deregulation, can drastically shift the competitive
landscape. Going from being able to own 7 AM and 7 FM stations in 1992 to 18 and
18 to 20 and 20 to now no limits, the FCC has now allowed for a free and open
market on radio station ownership. Additionally the FCC has continued a pattern
of reducing paperwork requirements of its license holders and eliminating
outdated rules and26
regulations.

Overview of the Internet Industry

The Internet's brief and meteoritic existence provides little historic
performance data. From a few hundred thousand users seeking information,
entertainment and commerce in the early 1990's the Internet community has grown
to millions today. Only a few short years ago, Internet companies

20




were struggling to carve out revenue and many Internet sites offered free
information posted by various entities with links to related and unrelated
sites. Now, as reported by Advertising Age, billions of dollars in revenue are
generated from advertising, website development and retailing.

Major electronic manufacturers have products and/or are developing
integrated Internet products for next generation home systems and mobile
systems. Future delivery of the Internet is slated to arrive via increased cable
usage and/or satellite to multi-purpose home entertainment systems that will
function as Internet links, computers, radios and TV sets. Cellular phones
currently can connect to the Internet as well as automobile radios. There
appears to be little or no limit to the ways and means one can and will be able
to access the "Net".

Trends in Ad Revenues

Currently, as reported by Advertising Age, the most lucrative Internet
advertising comes from banner advertising. Banner advertisers pay for "hits" or
"impressions" based on the number of user exposures to their ads. National
brands in every industry are now using the Internet as part of an integrated
approach to marketing. Although difficult to exactly quantify, it is estimated
that national Internet ad revenues reach into the billions of dollars. According
to Advertising Age, local and regional web sites offer similar opportunities to
local and regional advertisers.
The Internet has become a global market place for commercial and consumer
goods from banking to soft goods. Entrepreneurs and national brands are also
enjoying phenomenal growth through "catalog", retail sales on the Internet. The
Internet user can access VAR (Value Added Retailer) and factory direct products
over secure sites using most types of credit cards and generally save time and
money in the process.

Competition

Competition within the Internet community will be fierce. Internet
"audiences" will continue to be exposed to newspaper, TV, radio, direct mail,
etc. The advantages of the Internet lie in the totality of content and the
ability to deliver messages in audio and visual media twenty-four hours a day
seven days a week. Furthermore, studies by Arbitron have indicated that the
Internet is the media of choice for the 24 to 35 age group with increasing
numbers of users in the affluent 35 to 55 age group.

Regulation

The Internet is under no enforceable broadcast or entertainment content
regulation at this time. Although the U.S. Government may prevail in regulating
some functions of U.S. based web sites and portals, there is good reason to
believe it will be many years before regulation will be enforceable.

Summary of Industry Attractiveness

We believe the Internet industry


21




will prevail as the media of choice for the aforementioned demographics groups
in the foreseeable future. The almost unlimited opportunities for growth and
expansion are the key points for selection of the Internet as a component of our
planned sales and marketing strategy. The ability to access users across the
country and even internationally may offer the opportunity for increased
revenues in national and regional advertising.

MANAGEMENTS DISCUSSION AND
ANALYSIS OR PLAN OF OPERATION

Our success is largely dependent on our ability to sell all of the shares
offered. Assuming the receipt of these funds, our management believes that we
will be able to acquire at least the right to operate up to four radio stations
that have been tentatively identified for acquisition. However, the acquisition
of any specific stations at this time is not probable. The two general
conditions which will effect the ability of the company to survive are the
ability to find willing sellers of existing radio stations and our ability to
operate acquired stations at a profit. If either or these conditions become
impossible, we will probably not be capable of continuing in business.

Our management has significant experience in the radio industry and has
conducted significant research as to the availability of stations and the
methods in which to achieve profitability once obtained. Our management,
therefore, plans to utilize this expertise to take such steps are necessary to
see that the conditions to our success are satisfied.

Upon receipt of the funds generated from the sale of shares, we expect to
immediately begin negotiations to acquire the radio stations that have been
identified for acquisition. Although the period between the receipt of such
funds and the date by which we may be actually able to complete the purchase of
these stations is difficult to estimate, our management thinks that this process
can be completed in no more than four months after the receipt of proceeds under
this offering. However, the specific acquisition of any station is not probable
at this time. We currently expect that when we acquire a radio station, we will
also acquire its accounts receivable such that immediately upon acquisition, we
should be entitled to begin receiving revenues from advertisers for the existing
radio stations.

The result of the foregoing is that within four months of the completion
of the offering, we expect to be generating net income with the expectation
that, by the completion of the first twelve months of our operations, we could
have generated enough net income from operations to remain in business. Our
management believes that the foregoing plan is viable and that it will be able
to continue as a going concern; however, if we are unable to fully effectuate
our plan such that it is not accomplished, it is probable that we will not be
able to continue as a viable, going concern.


22




Overview of Operating Model and
Growth Strategy

The key elements of our operating model and growth strategy, which
incorporates concepts utilized by other radio broadcast consolidators as well as
in other industries, are highlighted below:

Station/Market Selection. Our initial strategy is to acquire radio assets
in small-to-middle-market areas throughout the Southwest including Texas, with
additional American Communications clusters to be formed in adjoining states
and/or in close proximity with such strategy to be financed with the proceeds of
this offering, seller debt financing, when and where applicable, and other
potential equity funding sources.

By avoiding the major metropolitan areas (ie. Dallas, Houston, San Antonio
and Austin), we believe we may be able to acquire stations at very attractive
prices. Medium-to-major-market radio stations have been selling for 12.0x to
17.0x EBITDA. In contrast, we believe, based upon our management's personal,
professional experiences in locating and acquiring radio stations, that we may
acquire our small market radio assets at between 7.5x -10x EBITDA.

Assuming our success in our acquisition strategy, we believe we may
ourselves become an attractive acquisition candidate in the future to a larger
market consolidator.

Clustering by State/Region. In addition to focusing on smaller markets, we
plan to also pursue a regional clustering strategy. Accordingly, our first
planned acquisitions of radio stations (approximately four (4)) is only focused
in Texas. By clustering stations within a tight, regional market, we believe we
can achieve certain back office cost benefits. Our management's plan for the
Texas regional cluster evolves into a centralized hub where the major managerial
and administrative functions will be housed to where we should be able to serve
up to approximately 70 stations in local markets throughout the state.

Localization. A key element of our strategy is to be able to "sound live -
sound local" in every market. We plan to present a live morning show in each
local market, the popularity of which is viewed as material to the success of a
radio station's operation as live morning shows serve to perpetuate a strong
local image in a market. The concept of "localization" is complementary to our
regional focus and extends past the morning drive period to the rest of the
broadcast day. Unlike nationally syndicated formats, we plan to make our
regional flagship announcers available for promotional campaigns or on-site
advertising engagements throughout the region and state. The ability to utilize
well known radio personalities is a major selling point to advertisers in
smaller-market areas.


Centralized Operating Cost
Savings. We plan to centralize much of


23




our administrative and operating functions at one of our station locations (to
be determined later) while maintaining an office in Austin to serve as corporate
headquarters and marketing center for regional and national advertising.
Programming is one of the key areas targeted for cost savings by elimination of
separate programming staffs at each station, replaced with one consolidated
network programming staff which will provide greater programming quality. Radio
voice programming is planned to be created at the flagship stations for each
format featured by the our network. By satellite transmission and use of WANs
and integrated computers, we should be able to minimize redundant equipment used
at each individual station and more efficiently utilize on-air talent by having
one centralized programming staff. In addition, accounting and bookkeeping is
also planned to be located at the flagship station site. One billing/traffic
person at the flagship headquarters can handle 4 stations at once which is a
great savings over having a billing/traffic person located at each individual
station. Other functions such as engineering, advertising, purchasing, and human
resources will also be handled from the flagship site. As new stations may be
added into the regional cluster, we believe that the achievement of economies of
scale will result in increasing levels of operating profitability.

Generating Incremental Growth in Ad Revenues. Our management believes that
we will achieve incremental revenue growth out of the planned combined American
Communications radio group compared to the sales level that such stations have
generated on a stand-alone basis. In many small markets, the general manager is
often the head salesperson, in addition to being the overseer of the day-to-day
operations, on which the majority of such person's time is frequently spent.

The size of the sales staffs at each of our stations is planned to be
adequate to handle the flow of business allowing salespeople to handle between
30-50 accounts each while the programming, traffic/billing and technical staffs
will be pared down to reflect our centralized operating structure. Importantly,
employees who face the possibility of having their job functions reduced due to
centralization will be given opportunities to move into a sales role.

Attracting National and
Regional Advertisers

As reported by the Radio Advertising Bureau, national and regional
advertising accounts for approximately 10% to 25% of the
revenue mix for a typical radio station in the market sizes that we have
identified, with local advertising representing the balance of the sales mix.

Historically, it has been difficult for national/regional advertisers to
target the small-to-middle-market areas due to the large number of separate
purchases of advertising spots that would be required. We intend to market our

24




entire network of stations within a region to national and regional advertisers
and thereby offer the convenience of the opportunity to reach an aggregate
substantial population in smaller cities and rural areas. In such fashion, we
believe we may attract national and regional advertising which often commands a
50% to 100% premium over local advertising income.




The Internet Component

We recognize the growth potential within the Internet market. While large
consolidators such as Capstar broadcasting group and Cumulus broadcasting group
dominate the major markets and continue to compete with each other for market
control in the major metropolitan areas, our cross-market approach is to look
past this hotly contended arena towards the expanding opportunities on the
Internet.

Currently, radio sites on the Internet are focused on duplicating standard
broadcast type programming and formats. We plan to create a unique entertainment
site utilizing every technological advance and revenue-generating feature
available. We plan to deliver content in both streaming audio and video and to
utilize a major portal such as Yahoo to lead users to our site. Once there, we
plan to offer a wide array of entertainment and products including

o several music formats ranging
from country to jazz.

o MTV-like videos of favorite
artists.

o contests.

o gaming.

o shopping carts of VAR
merchandise from CD's and
concert tickets to A/V equipment.

o our own branded merchandise.

o entertainment news.

o special programming, including
music and travel features.

o links to points of interest.

Proposed Potential Radio Station
Investments

Assuming the continued availability of the following radio stations and
our success in obtaining additional financing for such acquisitions (owner
offered of otherwise), neither of which assurances are given, we hope to acquire
the stations identified below, with such acquisitions probably to include the
assets of each station, which normally include the broadcast equipment,
broadcasting tower and antenna, transmitter, office furnishings, office
furniture, accounts receivable, station vehicles, station promotional items,
station advertising accounts, FCC Station License and real estate including
studio/office space as well as


25




land upon which the tower and transmitter is located or leases for that space
instead. Because we will be making asset purchases, we do not intend to acquire
any existing liabilities of these stations. Following the assumed successful
completion of this offering, we plan to negotiate purchase option agreements
with some of the station's owners since no agreements or understandings are
currently in place. We hope to acquire each of such stations within
approximately six (6) to nine (9) months from the execution of a definitive
agreement. No assurances are given:

o as to the continued availability of
such stations.

o that we and each of such station
owners will agree on price and
other material terms.

o that we will be able to timely
secure required financing for
such acquisitions on terms
satisfactory to us.

o that we will be able to successfully operate and integrate any of such
stations' operations into our operations occurring at the time of
acquisition.

o that the FCC will approve of any
such transfers.

Because of the foregoing concerns, we cannot say at this time that the
acquisition of any specific radio station is probable, notwithstanding the
identification of the specific stations set forth below.

26




The following is a breakdown of our estimate of the costs to acquire the
two AM and two FM stations described below. All of these costs will be paid to
third-parties and not to members of our management.


Proposed purchase price to be paid existing owne$1,600,000.00 of KXYL AM and FM,
Brownwood, Texas and KSTA AM and FM, Coleman, Texas Estimated closing costs
$140,000.00 Estimated equipment costs associated with creation $76,000.00 of
satellite network Initial working capital to be used for expenses $184,000.00
incurred until advertising revenues are generated Total Funding Requirement:
$2,000,000.00

The maximum amount to be raised in this offering is $550,000. To be able
to complete the acquisition of any radio stations, we will need to obtain
significant additional financing. Our management's plan is to obtain this
additional financing through the following potential methods:

o Traditional bank financing from commercial banks.

o Arrangements with venture capitalists who may be willing to loan amounts
to us in return for some combination of debt and equity consideration.

o The issuance by us of additional stock, either preferred or common.

Although our management has had preliminary conversations with various
lenders and other financiers, we do not have any commitments from anyone to
provide any of this additional financing. Our ability to get this additional
funding is critical to our continued existence.

Estimated Closing Costs

The table above contains an entry of $140,000.00 for estimated closing
costs. This $140,000.00 consists of the following estimated expenses that are
anticipated to be incurred in the acquisition of each radio station.
Additionally, this estimate does not include any extraordinary due-diligence in
the form of any engineering studies or protracted negotiations both of which
would increase related closing cost expenditures. Based upon our management's
personal knowledge of these stations and the communities of Brownwood and
Coleman, Texas, we do not anticipate any such


27




extraordinary expenses with these proposed station purchases.

Local Legal Counsel $3,500
Communication (FCC) Law Counsel $10,000
Accounting Expenses $10,000
Long Distance Phone Calls $1,000
Overnight Delivery Services $300
Travel and Lod$2,500
On-site Market Research/Due-Diligence $3,500
Miscellaneous Expenses $4,200

Total Estimated Closing Costs per station acquired: $35,000


Acquisition and Closing Process

We plan to streamline the negotiating and closing process on the proposed
station transactions by, among other things, "standardizing" a form of purchase
option agreement and purchase agreement and related documents which will
nevertheless be subject to at least some negotiation and revision and the FCC
station license transfer process.

Subject to the availability of financing and the continued availability of
targeted stations, we hope to stage the closing of the transaction over
approximately a six (6) month period so as to provide the opportunity for a
successful integration of such radio station operations. Notwithstanding the
fact that additional time has been "built-in" to our timetable, no assurances
are given that we will successfully operate and integrate any of such
acquisitions, assuming the successful completion thereof.

Initial Acquisition Plans
Our management believes that a
major consideration in accomplishing our 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 as targeted by us would be a significant event within their
respective marketplaces.

To maintain stability and consistency of these stations under our planned
ownership, it is important that the perception, as well as the reality, at least
initially during the ownership transition period, be of little if any change to
the current operation. During the ownership transition period, we expect that
our management will spend time with each station's employees to discuss with and
assure personnel about the pending transfer, with little, if any, outside
contacts with community civic or business leaders concerning such matter.
Emphasis will be placed in staff meetings that additional stations are planned
to be added, and that there will be opportunities for employees to move into
future management openings at other Company owned stations so

28




that they can experience personal
professional growth inside the
organization.

After ownership transfer of a station is effected, we plan to implement minor
operational changes which we believe will enhance financial performance,
including the following:

o The introduction of major-market-
style promotions and contests.

o Modification of rate cards to better exploit a station's remote commercial
broadcast capabilities and increase national/regional advertising.

o Negotiating with interested third
parties to lease for the station's sub-
carrier frequencies such as CUE
Paging (a national paging service
that is on the lookout for additional
radio stations to work with) that
could use a station's use the sub-
carrier frequency for national paging
services. Such lease will not effect
the station's main signal and may
generate between approximately
$6,000 to $20,000 a year in fees.

o The leasing of portable music
system through Disc Jockeys
Unlimited of Atlanta, Georgia, a
service provider who builds portable
music systems for disc jockeys and
radio stations at a cost of $225 a
month This will allow the station to
earn equipment rentals as an
additional revenue stream and the
staff's disc jockeys the opportunity to earn extra money weekly by performing
at wedding receptions, company and private parties, etc.

o The development of a firm (proposed to be referred to as ACENET) that will
literally represent the group for all of its national and regional
advertising and will include Internet advertising connections.

o The introduction of an internal,
ongoing research system to allow
the station to track listener patterns
between Arbitron ratings periods
(where applicable in markets that
are rated). Such research will be
conducted by telephone utilizing
existing staff personnel.

o A review and update of as appropriate with current music selections added as
necessary for the WAN music programming network element.

After Acceptance Of An Offer

Following execution of a definitive purchase agreement (subject to FCC
approval, and completion by us of satisfactory due diligence), our management,
in cooperation with the seller of a station, will submit the appropriate
transfer documents to the FCC. While the FCC has the authority, in its sole
discretion, to approve or reject a transfer request, transfer requests are, in
the normal course, generally approved within approximately three (3) to six (6)
months of submission of all required applications and related documents.



29




Preceding the FCC filing, a comprehensive due diligence investigation
including at least the following steps will be undertaken:

o A thorough inspection of station facilities including offices, studios and
transmitting sites.

o An independent engineering
inspection of the station's facilities.
Age and condition of all equipment
including transmitters and towers will
be recorded. A comprehensive
program of schedule maintenance
will be designed and implemented
after the closing.

o A survey will be conducted of the
market to analyze existing and
potential competition, market growth
trends, current marketing trends,
past and future programming,
promotions, and advertising plans
along with listener and advertiser
perceptions of the station. Included
will be an independent ratings
survey for each market as well.

o Meetings with present management
to gain insight into the stations'
current operations. This is expected
to include written assessments of
station employees, job responsibility
lists for themselves and their staff,
budget projections, plus any other
input they can offer regarding the
stations.

o A review of all station contracts with
vendors and clients. All existing
station trade/barter agreements will
be reviewed with the sellers to
determine their current status and
disposition. Retention preference is
expected to be given to any trade
agreements that directly benefit the
stations in the form of promotional
considerations and advertising with
other media.

o General staff meetings will be
conducted to help minimize anxiety
caused by the pending transfer.
Each employee will be asked to
submit in writing a description of
their job responsibilities as they
perceive them with comparisons
then made by management to the
station manager's views. We will
then compare the employee's lists
against those submitted by the
managers.

o Review of staff members' levels of experience and expertise, job
responsibilities, station/market tenure and future potential.

o Review of existing standards and practices. A system-wide company operations
manual will be distributed post closing, that will set forth operating rules
and regulations, our benefits and vacation policies.

o Investigating peripheral station
revenue enhancement (ie. renting
tower space for use by one or more
telecommunications service
providers, utilizing the air staff for
remote broadcasts or private parties
using a portable music system or
other similar methods.)

Closing and Post Closing Matters

30




Assuming receipt of final FCC notification of transfer approval, we will
immediately proceed to closing, and then commence implementing those operational
changes earlier discussed as deemed appropriate.

Corporate Operating Controls

Upon the completion of an acquisition, corporate operating controls are
planned to be implemented at each station. In addition, all station computer
systems are planned to be networked with headquarters in order to produce
station-level information on a real time and on request basis. We plan to
generate financial reports within 30 days of month end for review by senior and
station management. Administrative and accounting controls will be centralized
in our Austin headquarters. Corporate staff at both headquarters and each
station should be kept to a minimum.

The majority of commercials and station promotions productions are planned to
be created at the flagship stations and then "fed" to the other stations in the
group via the satellite link that will be created at the flagship stations.

Marketing, Advertising and
Promotion

Our stations are planned to be marketed, advertised and promoted as the
leading "fun-to-listen-to-station" in each market, with the goal to increase
station awareness and "dial position recognition" among retailers, buyers and
listeners.

Being viewed as a truly local station is highly valued by both advertisers
and listeners in the mid-size and smaller markets in which we plan to operate.
Therefore, we plan to aggressively promote our stations in their respective
markets independently as well as cooperatively with client retailers and
companies with whom we may establish joint marketing/sales relationships through
on-air contests, local promotions, direct mail, website and e-mail promotion,
local publications, outdoor advertising and "word-of-mouth" advertising
endorsements.

Our sales force will be trained on an ongoing basis in marketing their
respective stations. In order to attract and retain qualified personnel, we
recognize that it is imperative to structure a compensation plan for our sales
staff that is both fair and appealing. As such, compensation is expected to be
both salary and incentive based. Our management also plans to selectively use
bonus programs as a method of rewarding outstanding salespeople. The sales force
at each station will handle local advertising, with National and regional
advertising to be handled by ACENET or another rep firm.

Assuming we successfully execute our acquisition strategy of a planned
American Communications group of stations, our management believes it will be
possible to increase group revenues over the current operators' level for the
following reasons:


31




o Because not currently existing as a
group, none of these stations are
currently offered as a total
advertising package. Therefore, any
regional and/or national desiring to
advertise in such markets presently
must effect separate media buys
with each individual station and thus
deal with sales people in each of
such markets Under our plan, this
same advertiser will be able to
contact any one of such stations and
buy advertising time from the whole
group or any of its component parts
by contacting just one marketing
consultant

o As we may add affiliate stations to
our programming network (i.e.,
stations that buy our planned
satellite programming content but in
which we have no financial interest),
such relationships may also
enhance our ability to sell network
advertising and increase revenues.

o Generally speaking, the size of the sale staffs at each of our stations will
grow while the programming staffs will be down-sized to reflect our satellite
programming approach.

o Greater emphasis will be placed on the actual in-house production of
advertiser's commercials to improve the quality of the commercial for each
client.

o All of our marketing consultants will
be thoroughly trained in marketing
their respective stations without
reliance on ratings because stations
which build relationships with its
clients to buy advertising based on
results and not just ratings tend to
do better than stations which rely
strictly on ratings as their selling
point.

o We expect to develop, through on-going market research, specific information
to help clients develop immediate and long- term marketing plans.

o We expect to coordinate sales literature, telemarketing programs and direct
response promotions with the goal to increase our billings.

o Our marketing strategy includes
offering multiple broadcast formats
in each of the markets we serve. We
believe that cross-selling synergies
can be achieved with this approach
as all formats do not appeal to all
types of advertisers. For example,
an independent station owner
broadcasting a big-band format
would not be able to sell advertising
to a retailer that targets the teenage
demographic sector. However, by
offering a CHR (Top 40) format in
many of its markets, we believes we
will be able to capture sales that the
individual operator could not.

Other Revenue Opportunities

Each FM station has one sub carrier "frequency" beneath the main frequency
upon which it broadcasts which may be leased to such types of entities as CUE
Paging or Muzak franchises, local data-processing sources and pager services.
The lessee would be responsible for all

32




costs of setting up the equipment for use of the sub carrier as well as covering
all its own expenses including utilities and maintenance. Such leasing
arrangements could potentially net our company approximately $1,000 per month
per FM station.

While certain of the stations we intend to acquire do not own the towers on
which their antennas are located, on those stations which do own their own
towers, we can offer space on a rental basis to pager services and other
telecommunications vendors. As with the sub carrier, all start-up costs,
utilities and maintenance are borne by the lessee. We estimate that tower space
leases could generate approximately $1,000 per month, per lease.

As we plan to produce specialized satellite programming for our own stations
each day, we will have the capability of selling that programming concept to
affiliate stations. In markets too small for us to consider for acquisition, we
should be able to provide more localized satellite programming than any of the
large nationally syndicated satellite services can offer because the national
syndicators are not able to localize each individual commercial break the way we
will be able to. Additionally, we will be able to offer affiliates the
opportunity to "tie into" our centralized bookkeeping system and become an
affiliate of our ACENET sales force, allowing the affiliate stations to be
marketed as a part of the overall American Communications network. These are
services for which we plan to charge additional fees.

We plan to market not only our own stations but also affiliates with which we
may enter into joint marketing relationships. Such joint marketing plan, if
successful, is expected to provide us the size and marketing strength necessary
to eventually operate our own in-house rep "firm" eliminating the need to
outsource such business, and the 15%+ commissions that go with it, to some other
rep firm.

Programming

Strong, consistent programming is important for our success. Regardless of
the format offered, we plan to take a relatively conservative approach to our
programming by at least initially operating each acquired station with the
format it is currently using since all acquisition targets are planned to be
generating positive cash flow.

Music for each format will be stored on hard drives inside computers located
in the control rooms of each individual station. This music will be format
specific to that particular station.

Each station will feature a live morning show. Depending on the needs of the
market, this may be a one or two person show. In most markets, there will be a
local newscaster for presenting local news, events, etc. These local air talents
will also be responsible for local commercial production and public appearances.

Each station's music programming


33




computer will be wired to American Communications' Satellite Network, which
literally serves as a pipeline for sending specific programming and disc jockey
patter to each individual station in the group. All music and programming logs
will be sent directly to each station's programming computer from the flagship
uplink site. When the live morning show is finished, the disc jockey merely has
to flip a switch and the on-site music computer takes over the programming for
unattended walk-away capabilities.

The planned uplink site will provide the voice tracks to go with the music
being played by the local music computers at each station. Instead of having a
disc jockey actually sit in a control room for a full 4 or 6 hour airshift, the
satellite disc jockey can prerecord a full 4 hour show in less than 30 minutes
and send it on its way to the respective station receiving it. The on-site music
computer will insert the actual recorded breaks by the disc jockey at the
appropriate times.

The capability exists of breaking into regular programming with any urgent
weather forecast or breaking news story. The technology is now here to allow for
a pre-recorded show to sound perfectly live - even down to actual time checks.

Because of this system, we are planning for one "super staff" of announcers
to be located at our uplink center capable of handling a variety of formats.
Such staff of approximately 12 full-time announcers will be capable of producing
formats ranging from country, adult contemporary, classic rock, contemporary hit
radio and oldies. Depending on the mix of stations available for acquisition, a
specific Hispanic (Tejano) format may also be available. These announcers will
also be capable of producing all network commercials as well as local
commercials for specific stations. We believe this system will afford us the
widest possible format range and allow us to seek out a number of available
properties in our proposed markets.

Broadcast Equipment.

We plan to utilize the acquired stations' existing transmitters, audio chain
equipment, and tower space wherever possible or feasible, based on our initial
due-diligence. We will upgrade particular station equipment on an as-needed
basis. All other equipment required to network each station into headquarters
will either be purchased or leased.

To establish the in-house satellite network, we intend to install our
satellite uplink/downlink systems at our planned flagship stations. We will then
install satellite downlink systems at our other stations.

To establish the satellite network connection, the following expenses will be
incurred:


34





Equipment necessary to create uplink portion of satel$67,335.00
network
Equipment necessary to enable control center to receiv$2,870.00
signal
Installation charges $4,800.00
Preparation for FCC License Application $800.00
Project Total: $75,805.00

The above amounts are based upon an estimate received by us for the creation
of a satellite uplink center. These amounts would be paid to a company
experienced in the installation of satellite uplink centers. None of these
amounts would be paid to our officers or directors.

DESCRIPTION OF PROPERTY

Our company is newly organized
and has only conducted organizational
activities. As a result, we have acquired
no property.

CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS

Since the inception of our company, our President, Mr. Schult has loaned
American Communications approximately $6,140 pursuant to an oral agreement. This
agreement generally provides for the repayment of the loan with interest at 10%
per annum within twelve(12) months from the time of the loan to American
Communications. In the event we receive the maximum proceeds, we may, in our
discretion, repay the entire amount of such loan.

MARKET FOR COMMON EQUITY
AND RELATED SHAREHOLDER
MATTERS

Our company is newly organized and this is our initial public offering so
there is currently no public trading market for our common stock. We hope to
have our common stock prices listed on the bulletin board maintained by the
National Association of Securities Dealers. To be eligible to have American
Communications' common stock quoted on the bulletin board, we will be required
to file with the Securities and Exchange Commission periodic reports required by
the Securities and Exchange Act of 1934 and thus be a "reporting" company, a
step we will attempt to accomplish after the effective date of this registration
statement.

None of our common stock is subject to outstanding options or rights to
purchase nor do we have any securities that are convertible into our common
stock. We have not agreed to register any our stock for anyone nor do we
presently have in effect employee stock options or benefit plans that would


35




involve the issuing of additional shares
of our common stock.

Dain Schult, our President, and Bob Ringle, our Vice President, collectively
own 10,500,000 shares of our common stock. Messrs Schult and Ringle's common
stock is "founder stock" and was issued to Messrs Schult and Ringle without
registration under the Securities Act. Because the stock owned by Messrs Schult
and Ringle is not registered, it is "restricted stock" within the meaning of
Rule 144 under the Securities Act and may only be sold in accordance with the
various rules and regulations of Rule 144. Specifically, after Mr. Schult and
Ringle have held their common stock for a period of at least one year, Messrs
Schult and Ringle could begin to sell part of their common stock. Generally
speaking, the amount of stock that each of Messrs Schult and Ringle could sell
could not exceed one percent (1%) of our outstanding common stock during any
ninety (90) day period. If the maximum number of shares are sold under this
offering, the total number of shares of common stock outstanding after the
offering will be 21,500,000 shares. As a result, each of Messrs Schult and
Ringle could sell up to 215,000 shares during any ninety (90) day period.
Although neither of Messrs Schult or Ringle have any present intention to sell
any of their shares, the sale of the large block of our common stock could
depress the per share price of our common stock.

Rule 144 is conditioned upon our making public certain information concerning
American Communications. Although we do not currently make information
publically available that would allow us or Messrs Schult or Ringle to use Rule
144, we anticipate making such information available so that Messrs Schult and
Ringle could sell the amount set forth in Rule 144.

Dividends

We have never paid dividends and do not expect to declare any in the
foreseeable future. Instead, we expect to retain all earnings for our growth.
Although we have no specific limitations on our ability to pay dividends, the
corporate law of Nevada, the State under which we are organized, limits our
ability to pay dividends to those instances in which we have earnings and
profits. If we are unable to achieve earnings and profits in a sufficient amount
to satisfy the statutory requirements of Nevada, no dividends will be made, even
if the our Board of Directors wanted to pay dividends. Investors should not
purchase shares in this offering if their intent is to receive dividends.



36



EXECUTIVE COMPENSATION

The following table sets forth the compensation of our two employees. Because
American Communications was only incorporated in October, 1998, the amounts set
forth below are the only amounts that have ever been proposed to be paid to our
officers.


Name Position Annual Salary
Dain L. Schult Chief Executive Officer$126,000
President, Chairman of the
Board and Secretary
Robert E. Ringle Vice President of Inter$115,000
Operations Director of
Sales, Treasurer and
Director


Mr. Schult is currently employed by American Communications at an annual
salary of $126,000 per annum pursuant to a three (3) year written employment
agreement dated as of October 29, 1998. Mr. Schult's employment agreement
generally provides for a monthly vehicle allowance of $500, for reimbursement of
business related expenses, and for bonuses as may be determined in management's
sole discretion.

Mr. Ringle is currently employed by American Communications at an annual
salary of $115,000 per annum pursuant to a three (3) year written employment
agreement dated as of October 29, 1998. Mr. Ringle's employment agreement
generally provides for a monthly vehicle allowance of $500, for reimbursement of
business related expenses, and for bonuses as may be determined in management's
sole discretion.

We do not presently have a stock option plan but intend to develop an
incentive-based stock option plan for our officers and directors in the future
and may reserve up to approximately ten (10%) percent of our outstanding shares
of Common Stock for such purpose.

FINANCIAL STATEMENTS

The following are our financial statements, with independent auditor's
report, for the period ending December 31, 1998.




37








American Communications Enterprises, Inc.
(A Development Stage Enterprise)

TABLE OF CONTENTS