U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 10-KSB
[X} Annual Report pursuant to Section 13 OR 15(d) of the Securities
Exchange Act of 1934 for the Fiscal year ended April 30, 2000.
Commission file number 0-26955
ARCHER SYSTEMS LIMITED, INC.
----------------------------
(Name of Small Business Issuer in its charter)
Delaware 22-3652650
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
75 Lincoln Highway, Iselin, NJ 08830
------------------------------ ----------
(Address of principal executive offices) (Zip Code)
(732) 603-9456
--------------
(Registrants telephone number)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.0001 par value
-----------------------------
Title of Class
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes _X__ No _____
The registrant's revenues for its most recent fiscal year were: $0
The number of shares outstanding of the registrant's class of common stock
on July 28, 2000 was 524,721,759 shares.
The aggregate market value of voting stock held by non-affiliates of the
registrant was approximately $ 23,634,872 as of April 30, 2000.
DOCUMENTS INCORPORATED BY REFERENCE:
NONE
<PAGE>
ARCHER SYSTEMS LIMITED, INC.
FORM 10-KSB
For the fiscal year ended April 30, 2000
TABLE OF CONTENTS
Page
PART I
Item 1. Description of Business 1
Item 2. Description of Properties 5
Item 3. Legal Proceeding 5
Item 4. Submission of Matters to a Vote of Security Holders 5
PART II
Item 5. Market for Common Equity and Related Stockholder
Matters 5
Item 6. Management's Discussion and Analysis or Plan of
Operations 6
Item 7. Financial Statements 8
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 8
PART III
Item 9. Directors, Executive Officers, Promoters,
and Control Persons 9
Item 10 Compliance with Section 16(a) of the Exchange Act 10
Item 11. Executive Compensation 10
Item 12. Security Ownership of Certain Beneficial Owners
and Management 11
Item 13. Exhibits and Reports on Form 8-K 13
Signatures 16
Index to Financial Statements F-1
1
<PAGE>
Part I.
Item 1. Description of Business
General
Archer Systems Limited, Inc., (the "Company") was established by Archer
Limited, a foreign corporation based in London, England. Archer Systems Limited,
Inc. was incorporated under the laws of the State of Delaware on March 19, 1986.
The Company was organized in June of 1986, for the purpose of acquiring the
name and all the outstanding common stock of Computer Technology International,
Inc., ("CTI") a publicly traded computer related technology company through the
exchange of stock. One share of the Company was exchanged for each share of CTI.
CTI was not merged into the Company and remained a wholly owned subsidiary. The
intended business purpose of the transaction, the entering into the retail
computer sales market with a publicly recognized name was never realized. The
Company, shortly after its acquisition of CTI abandoned all plans to actively
engage in business and remained dormant until December of 1998 when a new Board
of Directors was elected and new officers were appointed.
CTI in 1985, prior to its acquisition by the Company, had only one asset.
That asset was its wholly owned subsidiary Micro Merchants Inc. ("MM") that CTI
acquired on November 15, 1982. CTI had been formed for the purpose of acquiring
MM. MM originally consisted of one retail computer store and later expanded into
a chain of such stores. In 1985 due to a series of business reversals and the
intense competition in the personal computer retail business, CTI decided to
liquidate MM in a state insolvency proceeding, i.e. via an assignment for the
benefit of creditors filed in Bergen County, New Jersey on September 25, 1985.
The liquidation of MM was completed in November of 1985. As a result of the
liquidation, CTI's sole assets in 1985 consisted of MM, an inactive corporation
whose assets were liquidated, CTI's name and a large shareholder base consisting
of approximately 3,000 shareholders.
There was no activity in the Company subsequent to the purchase of CTI
until all the common shares of CTI owned by the Company was sold to an
individual on December 14, 1998.
The Company intends to develop and/or operate Internet and technology
related companies through majority owned subsidiaries and expansion of its
investment in other Internet companies through venture capital arrangements. If
successful in such an acquisition program, the number of employees would
increase in proportion to the companies acquired. The Company, which on April
17, 2000 acquired NextNet.Com, Inc, whose name has been changed to ArcusNet, is
presently considering a number of proposals for potential acquisition,
investment and/or strategic alliance.
2
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The Company is considered to be in the development stage as defined in the
Statement of Financial Accounting Standards ("FASB") No. 7.
Investment and Development
On April 17, 2000, the Company acquired all the outstanding shares of
common stock of NextNet.Com, Inc. ("NextNet"), a Delaware Corporation, in
exchange for shares of Common Stock of the Company (the "Exchange"). The
Exchange was accomplished pursuant to the terms of an Agreement and Plan of
Reorganization (incorporated by reference) dated April 17, 2000 (the
"Agreement"), by and between the Company and Larry Weinstein. The terms of the
Purchase Agreement reflected arm's-length negotiations among the parties.
Pursuant to the terms of the agreement, all of the shares of NextNet owned
by Larry Weinstein, i.e. 2,000,000 common shares, the sole shareholder of
NextNet, were exchanged for 2,000,000 shares of common stock of the company.
Larry Weinstein is NextNet's founder, President and CEO. Most recently, Mr.
Weinstein served as Vice President of Strategic Projects for Cybergold, Inc.
(NASDAQ: CGLD). In his position with Cybergold, Mr. Weinstein developed large
scale cross media promotions with Cybergold clients. Cybergold is an Internet
incentives and payment technology company. As part of the acquisition, Larry
Weinstein entered into a five- (5) year Employment Agreement, with NextNet,
pursuant to which Larry Weinstein continued as the President and Chief Executive
Officer and was elected, to the Board of Directors of NextNet along with Richard
Margulies and Walter Krzanowski. Larry Weinstein is to receive annually
twenty-percent (20%) of any increase in equity in NextNet which arises due to
operations in addition to receiving a cashless option to purchase 250,000 shares
of NextNet. On June 7, 2000, with the consent of the Board of Directors of
NextNet, the Articles of Incorporation were amended which changed the name of
the corporation to ArcusNet Corporation.
On May 18, 2000, INFe.com, a Florida Corporation ("INFE"), whose common
shares are traded on the OTC Bulletin Board and the Company entered into a
Strategic Alliance Agreement (the "Strategic Alliance") to acquire an equity
interest in each other's corporation, that they then might pursue common goals
for their joint benefit. In accordance with the Strategic Alliance, INFe agreed
to grant the Company $336,000 worth of INFE common stock, par value $.001 per
share ("INFe Shares"). The share price for the purpose of determining the number
of shares to be granted to the Company was measured at the average trading price
of the INFe Shares over the thirty trading days prior to May 18, 2000, which is
300,000 shares at $1.12 per share. Such INFe Shares were granted to the Company
subject to Rule 144 of the Securities and Exchange Commission ("SEC"). In
exchange for the INFe Shares, the Company agreed to grant INFe $336,000 worth of
the Company's common stock, par value $.001 per share ("Archer Shares").
3
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The share price for the purpose of determining the number of Archer shares
to be granted to INFe was measured at the average trading price of the Archer
Shares over the thirty trading days prior to the date of the signing of this
Agreement, or 4,307,692 shares at $.078 per share. Such shares were also granted
subject to Rule 144 of the SEC.
INFe agreed to include the INFe Shares granted to the Company in the first
Form SB-2 Public Offering Registration Statement that it files with the SEC
after the date of the Strategic Alliance, subject to the parties entering into
mutually agreeable lockup and leakout agreements. The Company agreed that the
Company will include the Archer Shares granted to INFe in the first Public
Offering Registration Statement that the Company files with the SEC May 18,
2000, subject to the parties entering into mutually agreeable lockup and leakout
agreements.
On June 8, 2000 the Company entered into a financial advisory agreement
with Superwire.com, Inc., whose common shares are traded on the Pink Sheets, to
render services to Superwire as a corporate consultant to assist Superwire in
developing strategic alliances. The Company is, initially to receive 25,000
shares of restricted Superwire common stock as compensation. Thereafter, the
Company will be compensated on a deal-by-deal basis under mutually agreed upon
terms.
On July 21, 2000, the Company entered into a financial consulting agreement
with ComLinx, Inc. The Company will assist ComLinx in securing equity financing
and will receive as compensation, equity interests based on funds provided by
outside sources to ComLinx.
On July 22, 2000, ArcusNet Corporation entered into a market development
agreement with Cydoor Technologies, Inc. ArcusNet will be compensated based on
the increased revenues generated by Cydoor.
In its efforts to raise capital to finance its business plan, the Company
recently submitted a proposed Term Sheet to a New York based funding and
investment organization. The proposal contemplates initial funding of a minimum
of $250,000 to a maximun of $500,000. This transaction may not be consummated or
completed notwithstanding the Company's best efforts.
Employees
As of April 30, 2000, the Company and subsidiaries employed three persons,
two of whom are officers of the Company. If the Company's acquisition program is
successful, the number of employees would increase in proportion to the
companies acquired.
Competetion
There are many companies engaged in similar endeavors in the Internet and
Technology industries, a great many, if not most of such companies having
greater financial resources than the Company. The Company believes it can
compete by targeting selected opportunities in this vast marketplace.
4
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Environmental Impact
None of the Company's activities utilize any hazardous materials or result
in any discharge of pollutants into the environment. The Company believes it
complies fully with all environmental laws and regulations.
Regulation
There are no specific regulatory issues affecting the Company not common to
publicly held businesses in general.
Item 2. Description of Properties
The Company currently has no material assets, and the Company does not own
or lease any real or personal property. The Company currently operates without
charge out of space donated by the Company's President, Richard Margulies, at 75
Lincoln Highway, Iselin, New Jersey 08830. The Company believes that this space
is sufficient for the Company at this time. The Company has indicated a capital
contribution of $600 per month of activity for the donation of such space in the
footnotes (Note 3A) to it's financial statements.
Item 3. Legal Proceedings.
There are no legal proceedings pending or threatened against the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the security holders during fiscal
year ending April 30, 2000.
Part II.
Item 5. Market Price for Common Equity and Related Shareholder Matters
Market Information.
The Company's common stock is traded on the OTC Bulletin Board maintained
by the National Association of Securities Dealers under the trading symbol
"ARYN". There is no assurance that the common stock will continue to be quoted
or that any liquidity exists for the Company's shareholders.
The following table shows the quarterly quotes of high and low prices for
the Company's common stock of the OTC Bulletin Board during fiscal year 1998 and
1999.
5
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Fiscal 1998
-----------
Quarter Ended: High Low
July 31, 1998 $0.001 $0.001
October 31, 1998 $0.001 $0.001
January 31, 1999 $0.250 $0.125
April 30, 1999 $0.035 $0.020
Fiscal 1999
-----------
Quarter Ended: High Low
July 31, 1999 $0.050 $0.010
October 31, 1999 $0.020 $0.010
January 31, 2000 $0.063 $0.010
April 30, 2000 $0.300 $0.010
The source of this information is Bloomberg Quotation Services and
broker-dealers making a market in the Company's common stock. These prices
reflect inter-dealer prices, without retail markup, markdown or commission and
may not represent actual transactions.
The closing sales price of the Common Stock as reported on the OTC Bulletin
Board on July 28, 2000 was $0.032.
Holders.
As of July 1, 2000, there were approximately 2,906 holders of record of the
Company's common stock (this number does not include beneficial owners who hold
shares at broker/dealers in "street-name").
Dividends.
The Company has never paid or declared any dividends on its common stock
and does not anticipate cash dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis or Plan of Operation.
Plan of Operations
From 1986 until May 18, 2000, the Company conducted no business operations
except for organizational activities and looking for technologies and businesses
to acquire.
6
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During the period from May 1, 1999 through April 30, 2000, the Company
acquired NextNet.Com, Inc., whose name has been changed to ArcusNet Corporation
and developed a strategic alliance with INFe.com. To date, the Company has had
no income from operations and operating expenses aggregating $178,001. The
Company is actively working to find additional suitable business opportunities
and/or technologies. The Company continues to concentrate its efforts in the
Internet and Technologies industries.
The Company may have to raise additional funds from outside investors to
fund the various business opportunities the Company wishes to pursue. Management
intends to explore all available alternatives for debt and/or equity financing,
including but not limited to private and public securities offerings. The
Company has determined that the cash on hand will not be sufficient to meet its
operating needs for the next 12 months and anticipates having to obtain further
loans from an officer of the Company. Should the Company be unable to secure
such additional funding, its operations would have to be curtailed or even
cease. Accordingly, management expects that it will be necessary for the Company
to raise additional funds when the Company is ready to make an acquisition or
begin operations related to ArcusNet Corporation or other acquisitions. In its
efforts to raise capital to finance its business plan, the Company recently
submitted a proposed Term Sheet to a New York based funding and investment
organization. The proposal contemplates initial funding of a minimum of $250,000
to a maximun of $500,000. This transaction may not be consummated or completed
notwithstanding the Company's best efforts.
In addition, at least initially, the Company intends to continue to operate
out of an office provided by Richard Margulies. Thus, it is not anticipated that
the Company will lease or purchase office space or computer equipment in the
foreseeable future. The Company may in the future establish its own facilities
and/or acquire computer equipment if the necessary capital becomes available;
however, the Company's financial condition does not permit management to
consider the acquisition of office space or equipment at this time.
Results of Operations
The Company is considered to be in the development stage as defined by FASB
No. 7. There were no revenues generated for the fiscal years ending April 30,
2000 and April 30, 1999.
Net loss for the year ended April 30, 2000 was $158,201 as compared to a
net loss of $19,800 for the year ended April 30, 1999. The net loss increased
primarily due to financial public relations expense and fees related to common
stock registration and maintenance.
7
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Liquidity
As a development stage company, the Company has historically relied on cash
provided through loans provided by a Company officer and other private sources.
Available cash at April 30, 2000 was $726 compared to no cash reported for the
period ended April 30, 1999. Additionally, during the fiscal year ended April
30, 2000, the Company issued 1,225,000 shares of common stock for services, and
2,000,000 shares of common stock for the acquisition of NextNet.com, Inc.
Year 2000
With the change to the year 2000, the Company experienced no significant
interruptions in its normal business processes as a result of its own systems or
those of companies with which it does business. During the year ended April 30,
2000, the Company did not incur any costs related to the remediation of the
Company's systems for the year 2000.
Forward Looking Information
This report contains certain forward-looking statements and information
relating to the company that are based on beliefs of the Company's management as
well as assumptions made by and information currently available to the Company's
management. When used in this report, words such as "anticipate", believe",
"estimate", "expect", "intend", "should", and similar expressions, as they
relate to the Company or its management, identify forward-looking statements.
Such statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties, and assumptions relating
to the operations, results of operations, liquidity, and growth strategy of the
Company, including competitive factors, changes in legal and regulatory
requirements, interest rate fluctuations, and general economic conditions, as
well as other factors described in this report. Should one or more of the risks
materialize, or should underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those described herein as anticipated,
believed, estimated, expected or intended.
Item 7. Financial Statements
The financial statements required by this Item are set forth beginning on
page F-1 hereof.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable
8
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Part III
Item 9. Directors and Executive Officers, Promoters and Control Persons
Position Year First Became
Name Age With Company Director or Officer
-------------------------------------------------------------------------------
Richard J. Margulies 50 President/Director 1998
Walter J. Krzanowski 58 Secretary/Treasurer 1998
Director
Each director serves until the next annual meeting of shareholders and/or
until his respective successor is duly elected and qualifies. Executive officers
are appointed by the Board to serve at the discretion of the directors.
Richard J. Margulies - President/Director- Has been an officer and director
of the Company since December 1998. Mr. Margulies has served as a management and
financial public relations consultant to a number of private and publicly held
companies over the past 20 years. From November 1988 to May of 1999, Mr.
Margulies was an officer and director of Greenleaf Technologies Corporation, a
publicly traded company, which is in the business of developing software
technology and related products. From 1993 to December of 1997, Mr. Margulies
was an officer and director of Creative Media International, Inc. a public
company that was in the financial public relations and printing business. On or
about February 1998, Creative Media International, Inc. filed for reorganization
under section 11 of the U.S. Bankruptcy Code. From 1987 through March 2000, Mr.
Margulies was an officer and director of Entertainment Arts, Inc., formerly
Nightwing Entertainment Group, Inc., a publicly traded company that is in the
entertainment business. From December 1998 through May 2000, Mr. Margulies
served as director and officer of Creative Gaming, Inc., a publicly traded
company offering ISP and high speed DSL services through its E-Centre, Inc.
subsidiary. From 1982 to 1983, Mr. Margulies was with The Dratel Group, Inc., a
NYSE member firm which offers private money management and brokerage services.
From 1979 to 1981, he was a Vice President with the firm of Bear Stearns & Co.,
Inc. and from 1974 to 1979, he was an account executive with Bache & Co.
Walter J. Krzanowski - Secretary/Treasurer-Director - Has been an officer
and director of the Company since December 1998. From March 1998 to November
1998, Mr. Krzanowski was the interim Controller of a privately held laundry
service management company. Mr. Krzanowski had been the Chief Financial Officer
and Treasurer of Creative Gaming, Inc., a publicly traded company from July 1995
to December 1997.
9
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From January to June 1995, Mr. Krzanowski served as an independent
consultant providing financial services to Creative Gaming, Inc. From September
1993 to December 1994, Mr. Krzanowski was self-employed, acting as a consultant
to a number of companies providing accounting, financial reporting and data
processing services. From April 1986 to August 1993, Mr. Krzanowski held
financial and management information services positions with Zenith
Laboratories, Inc., a publicly traded, generic pharmaceutical company. Prior to
joining Zenith Laboratories, Mr. Krzanowski held various financial management
positions with Hoffmann-LaRoche, Inc., a major pharmaceutical company, from 1966
to 1986.
Richard Margulies and Walter Krzanowski will devote such time and effort to
the business and affairs of the Company as may be necessary to perform their
responsibilities as executive officers and/or directors of the Company.
Aside from the above officers and directors, and Larry Weinstein, President
of ArcusNet Corporation, the wholly owned subsidiary of the Company, there are
no other persons whose activities will be material to the operations of the
Company at this time.
Family Relationships
There are no family relationships between or among the executive officers
and directors of the Company.
Item 10. Compliance with Section 16(a) of the Exchange Act
Richard Margulies and Walter Krzanowski did file the appropriate Form 3 and
Form 4 during the fiscal period ending April 30, 2000.
Item 11. Executive Compensation:
It is anticipated that the Company's president and other officers will
receive appropriate salaries for services as executive officers at such time as
the Company generates a revenue stream. These individuals will devote such time
and effort as may be necessary to participate in the day-to-day management of
the Company. (See Part III, Item 9. "Directors, Executive Officers, Promoters
and Control Persons). The Company does not provide officers with pension, stock
appreciation rights, long-term incentive or other plans but has the intention of
implementing such plans in the future.
The only compensation paid to the Secretary/Treasurer of the Company was
the issuance of 1,000,000 shares of restricted common stock in July, 2000.
10
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Compensation of Directors
The Company has no standard arrangements for compensating the directors of
the Company for their attendance at meetings of the Board of Directors.
There were no stock appreciation rights granted, nor were any stock options
granted, to any of the above named officers in the fiscal year ended April 30,
2000.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the date of this report, the stock
ownership of each person known by the Company to be the beneficial owner of five
(5) percent or more of the Company's Common Stock, each executive officer and
director individually and all executive officers and directors of the Company as
a group. No other class of voting securities is outstanding. Each person is
believed to have sole voting and investment power over the shares except as
noted.
(a) Security ownership of certain beneficial owners
Name and Amount and
Address of Nature of Percent
Beneficial Beneficial of
Title of Class Owner Owner(1) Class(2)
-------------------------------------------------------------------------------
Common Henry Guell 90,000,000 17.2%
264 Skyline Lake Drive
Ringwood, NJ 07302
Common Peter J. Jegou (3) 42,063,800 8.0%
c/o Zamora Funding
75 Lincoln Hwy, 2nd Fl.
Iselin, NJ 08830
11
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(b) Security ownership of management.
Name and Amount and
Address of Nature of Percent
Beneficial Beneficial of
Title of Class Owner Owner(1) Class(2)
-------------------------------------------------------------------------------
Common Richard J. Margulies(4) 13,000,000 2.5%
75 Lincoln Hwy, Rt.27
Iselin, NJ 08830
Common Walter J. Krzanowski(5) 1,500,000 0.3%
75 Lincoln Hwy, Rt. 27
Iselin, NJ 08830
Common Includes all officers and 14,500,000 2.8%
directors of the Company
as a group (2 persons)
(1) Includes the amount of shares each person or group has the right to
acquire within 60 days pursuant to options, warrants, rights,
conversion privileges or similar obligations.
(2) Based upon 524,721,759 shares outstanding, plus the amount of shares
each person or group has the right to acquire within 60 days pursuant
to options, warrants, rights, conversion privileges or similar
obligations.
(3) Peter J. Jegou individually owns 19,019,000 shares. Also, included are
1,650,000 shares owned by the Jegou Family Foundation, which is
controlled by Peter J. Jegou and his wife, Carol A. Kulina-Jegou.
Included in the table is 21,394,800 shares owned by Zamora Funding,
Inc., a privately held company of which Peter J. Jegou is President and
Director.
(4) Richard Margulies is President and a Director of the Company.
(5) Walter J. Krzanowski is Secretary, Treasurer and a Director of the
Company. Walter J. Krzanowski individually owns 1,050,000 shares and
Dolores A. Krzanowski, his wife, individually owns 450,000 shares.
12
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Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits marked with a footnote reference were filed with a
periodic report filed by the Company pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended, (the "Securities Act"),
and are incorporated herein by this reference. If no footnote reference
is made, the exhibit is filed with this report.
Number Exhibit
2 Form of Agreement and Plan of Reorganization dated April 17,
2000, by and between Archer Systems Limited, Inc. and
NextNet.com (5)
3 Certificate of Incorporation of Company filed with the
Secretary of State of Delaware on March 19, 1986. (1)
3.1 Certificate for renewal and revival of Charter of the Company
filed with the Secretary of State Division of Corporations on
December 2, 1998. (1)
3.2 Certificate of Amendment of the Certificate of Incorporation
of Archer Systems Limited, Inc., filed with the Secretary of
State Division of Corporations on February 12, 1999. (1)
3.3 Certificate of Correction to Certificate of Amendment of the
Certificate of Incorporation of Archer Systems Limited, Inc.,
filed February 12, 1999 with the Secretary of State Division
of Corporations. (1)
3.4 Copy of the by-laws of the Company. (1)
4 Specimen Stock Certificate. (1)
10.1 Copy of 6% Promissory Note Due June 30, 2001. (2)
10.2 Copy of 6% Promissory Note Due June 8, 2001. (2)
10.3 Copy of 6% Promissory Note Due August 1, 2001. (3)
13
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10.4 Copy of 6% Promissory Note Due August 17, 2001. (2)
10.5 Copy of 6% Promissory Note Due November 18, 2001. (4)
10.6 Employment Agreement dated April 25, 2000 between NextNet.com
and Larry Weinstein (5)
10.7 Copy of 6% Promissory Note Due February 15, 2002.
10.8 Copy of 6% Promissory Note Due March 9, 2002.
10.9 Copy of 6% Promissory Note Due March 20, 2002.
10.10 Copy of 6% Promissory Note Due April 9, 2002.
10.11 Form of Strategic Alliance Agreement dated May 18, 2000. (6)
10.12 Agreement dated June 8, 2000 between the Company and
Superwire.com, Inc.
10.13 Agreement dated July 21, 2000 between the Company and
ComLinx, Inc.
10.14 Agreement dated July 22, 2000 between ArcusNet Corporation
and Cydoor Technologies, Inc.
21 Subsidiaries of the Company
27 Financial Data Schedule
14
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(1) Filed as an exhibit to the Company's Form 10SB12G/A filed September
10, 1999 and incorporated herein by this reference
(2) Filed as an exhibit to the Company's Form 10QSB/A filed December 9,
1999 and incorporated herein by this reference.
(3) Filed as an exhibit to the Company's Form 10SB/A filed December 14,
1999 and incorporated herein by this reference.
(4) Filed as an exhibit to the Company's Form 10QSB filed March 15,
2000 and incorporated herein by this reference.
(5) Filed as an exhibit to the Company's Form 8-K filed on May 8, 2000
and incorporated herein by this reference.
(6) Filed as an exhibit to the Company's Form 8K/A filed June 14, 2000
and incorporated herein by this reference.
(b) Reports on Form 8-K.
A Form 8-K was filed on May 8, 2000 disclosing in Item 2 the
acquisition of Next Net, Inc.
A Form 8 K was filed on June 14, 2000 disclosing in Item 2 a
Strategic Alliance Agreement with InFe.com
15
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Archer Systems Limited, Inc.
By:/s/ Richard J. Margulies
---------------------------
Dated: July 28, 2000 Richard J. Margulies
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant on July 28, 2000 in the capacities indicated:
Signatures Title
---------- -----
/s/ Richard J. Margulies Principal Executive
------------------------ Officer and Director
(Richard J. Margulies)
/s/ Walter J. Krzanowski Secretary, Treasurer
------------------------ and Director
(Walter J. Krzanowski)
16
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Archer Systems Limited, Inc.
(A Development Stage Company)
TABLE OF CONTENTS TO FINANCIAL STATEMENTS
Page
Report of Independent Certified Public Accountant............................F-2
Balance Sheet for the fiscal year ended April 30, 2000 and
April 30, 1999..........................................................F-3
Statement of Operations and Accumulated Deficit - For the fiscal year
ended April 30, 2000, April 30, 1999, and cumulative since inception....F-5
Statement of Cash Flows -
For the fiscal year ended April 30, 2000, April 30, 1999
and cumulative since inception..........................................F-6
Statement of Stockholder's Equity (Deficiency) -
For the period from inception (March 19, 1986) through
April 30, 1999 and April 30, 2000.......................................F-7
Notes to Consolidated Financial Statements...................................F-8
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Stockholders and Board of Directors
Archer Systems Limited, Inc.
75 Lincoln Highway, Route 27 - 2nd Floor
Iselin, New Jersey 08830
Gentlemen and Madams:
We have audited the accompanying comparative balance sheets of Archer
Systems Limited, Inc. and subsidiary (A Development Stage Co.) as of April 30,
2000 and April 30, 1999 and the related statements of operations and accumulated
deficits, cash flows and statements of stockholder's equity (deficiency) for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted accounting
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly,
in all material respects, the financial position as of April 30, 2000 and April
30, 1999, and the results of its operations and its cash flows for the years
then ended in conformity with generally accepted accounting principles.
/s/ GERALD BRIGNOLA, CPA, PA
Hackensack, New Jersey
July 20, 2000
F-2
<PAGE>
ARCHER SYSTEMS LIMITED, INC.
(A Development Stage Company)
BALANCE SHEETS
April 30, 2000 and 1999
ASSETS
2000 1999
---------- ----------
CURRENT ASSETS
Cash in bank $ 726 $
Accounts receivable 1,030 200
---------- ----------
Total current assets 1,756 200
OTHER ASSETS
Security deposit 6,000
Prepaid employment contract 155,000
---------- ----------
Total other assets 161,000 0
---------- ----------
TOTAL ASSETS $ 162,756 $ 200
========== ==========
See accountants' report and notes to financial statements
F-3
<PAGE>
ARCHER SYSTEMS LIMITED, INC.
(A Development Stage Company)
Balance SheetS
April 30, 2000 and 1999
LIABILITIES AND
STOCKHOLDER'S EQUITY
2000 1999
---------- ----------
CURRENT LIABILITIES
Accounts payable $ 11,144 $ 20,000
Accrued expenses 28,692 0
---------- ----------
Total current liabilities 39,836 20,000
LONG-TERM LIABILITIES 50,983 0
---------- ----------
Total liabilities 90,819 20,000
---------- ----------
STOCKHOLDER'S EQUITY
Common stock (.0001 par
value 600,000,000 shares
authorized 523,721,759
and 520,496,750 shares
issued respectively) 323 0
Paid in capital 249,615
---------- ----------
Accumulated (deficit) (178,001) (19,800)
TOTAL STOCKHOLDER'S
EQUITY (Deficit) 71,937 (19,800)
---------- ----------
TOTAL LIABILITIES &
STOCKHOLDER'S EQUITY $ 162,756 $ 200
========== ==========
See accountants' report and notes to financial statements
F-4
<PAGE>
ARCHER SYSTEMS LIMITED, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS AND ACCUMULATED (DEFICIT)
Year Ended April 30, 2000 and 1999
<TABLE>
<CAPTION>
Cumulative From
Inception to
2000 1999 April 30, 2000
---------- ---------- ---------------
<S> <C> <C> <C>
INCOME
Revenue during the
development stage $ 0 $ 0 $ 0
General & administrative 158,201 20,000 178,201
---------- ---------- ---------------
NET OPERATING LOSS DURING
BEFORE EXTRAORDINARY ITEM (158,201) (20,000) (178,201)
Extraordinary Item-
sale of Operating Name
Computer Technology
International 0 200 200
---------- ---------- ---------------
NET LOSS AFTER
EXTRAORDINARY ITEM (158,201) (19,800) (178,001)
Accumulated deficit - beg (19,800) 0 0
---------- ---------- ---------------
Accumulated deficit - end (178,001) (19,800) (178,001)
========== ========== ===============
Net loss per share
before and after extra-
ordinary item - based on
shares outstanding of
523,721,759 and
520,496,750 respectively $(.000340) $(.000038) $ (.000340)
========== ========== ===============
</TABLE>
See accountants' report and notes to financial statements
F-5
<PAGE>
ARCHER SYSTEMS LIMITED, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Period From Inception Through April 30, 2000
<TABLE>
<CAPTION>
Cumulative
Year Year From
Ended Ended Inception
4/30/00 4/30/99 Thru 4/30/00
---------- ---------- ---------------
<S> <C> <C> <C>
CASH FLOWS PROVIDED (USED)
IN OPERATIONS
Net income (loss) for the period $(158,201) $ (19,800) $ (178,001)
Adjustments to reconcile net
income to net cash used in
operating activities:
Increase in Current Assets $ (830) $ (200) $ (1,030)
Increase in Other Assets (161,000) (161,000)
Increase in Current
Liabilities 19,836 20,000 39,836
---------- ---------- ---------------
(141,994) 19,800 (122,194)
---------- ---------- ---------------
NET CASH PROVIDED (USED)
BY OPERATIONS (300,195) 0 (300,195)
---------- ---------- ---------------
CASH FLOWS PROVIDED (USED)
IN FINANCING ACTIVITIES
Notes Payable 50,983 50,983
Issuance of Common Stock 249,938 249,938
---------- ---------- ---------------
300,921 0 300,921
---------- ---------- ---------------
NET INCREASE (DECREASE)
IN CASH 726 0 726
CASH BEGINNING OF PERIOD 0 0 0
---------- ---------- ---------------
CASH END OF PERIOD $ 726 $ - $ 726
========== ========== ===============
</TABLE>
See accountants' report and notes to financial statements
F-6
<PAGE>
ARCHER SYSTEMS LIMITED, INC.
(A Development Stage Company)
Statement of Stockholder's Equity (DEFICIENCY)
Inception through April 30, 2000
<TABLE>
<CAPTION>
Additional Retained
Common Stock Paid in Earnings
Shares Amount Capital (Deficit)
------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, Inception March 19, 1986
No Par 100 $ 0 $ 0 $ 0
June 1986 Cancellation of No Par
Stock (100) 0 0 0
Authorization of
600,000,000 shares,
$.0001 Par Value and
issuance for investment
all shares of Computer
Technology International Inc.,
as of June 1986 520,496,750 52,050 (52,050)
------------------------------------------------------------
Balance, December 14,1998 520,496,750 52,050 (52,050) 0
Reclassification (52,050) 52,050
Net Loss for Reactivation Period
December 14, 1998 to
April 30, 1999 (19,800)
Balance, April 30, 1999 520,496,750 0 0 (19,800)
------------------------------------------------------------
Shares issued for services 1,225,000 123 94,815 0
Shares issued for the
purchase of NextNet.com 2,000,000 200 154,800 0
Net loss for period ending
April 30, 2000 (158,201)
------------------------------------------------------------
Balance April 30, 2000 523,721,750 $ 323 $ 249,615 $ (178,001)
============================================================
</TABLE>
See accountants' report and notes to financial statements
F-7
<PAGE>
Archer Systems Limited, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
April 30, 2000
Note 1 - Organization and Summary of Significant Accounting Policies
A. Organization: Archer Systems Limited, Inc. was incorporated on March
19, 1986, under the laws of the State of Delaware. The Company was
established by Archer Limited, a foreign corporation based in London,
England which is no longer in existence. The Company adopted a fiscal
year ending, April 30.
The Company was organized to acquire the name and all the common stock
of a publicly traded computer related technology company. The Company
exchanged common stock on a one for one basis for the shares of the
computer technology company. On December 14, 1998, the Company sold
all the common stock and the name of Computer Technology
International, Inc. to an individual for $200.
Archer Systems Limited, Inc. has acquired and will continue to develop
and/or operate Internet and technology related companies through
majority owned subsidiaries or investment in other Internet companies
through venture capital arrangements. At the present time, the Company
is considering a number of proposals for potential acquisitions,
investments and/or strategic alliances.
Because of the speculative nature of the Company, there are
significant risks, which are summarized as follows:
- Newly formed company has no operating history and minimal assets.
- Limited funds available for acquisitions.
- Management is inexperienced and offers limited time commitment.
- Conflict-of-interest, as all employees have other part-time or
full-time employment.
- The Company is considered to be in the development stage, as defined
in the Statement of Financial Accounting Standards No. 7. There have
been no operations since incorporation.
B. Estimates: The preparation of financial statements in conformity with
generally accepted principles, requires management to make estimates
and
F-8
<PAGE>
assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and
expenses during the period. Actual results could differ from those
estimates.
C. Method of Accounting: The financial statements have been prepared in
accordance with the accrual basis method of accounting. Under this
method of accounting, income and expenses are identified with specific
periods of time and are recorded as earned or incurred without regard
to date of receipt or disbursements of cash.
D. Earnings Per Share: Computed by dividing the net loss by the weighted
average number of shares outstanding during the year. Common stock
warrants attached to the Computer Technology, Inc. shares expired
prior to 1986, 15 months after issuance. They are excluded from the
earnings per share computation because of their expiration date as
well as their anti-dilutive effect on the loss per share if there were
such common stock equivalents.
E. Consolidation Policy: The consolidated financial statements include
all the accounts of Archer Systems Limited, Inc. and controlled
entities. The Company accounts for its investments in consolidated
subsidiaries by the equity method. All intercompany transactions are
eliminated.
Note 2 - Stockholders Equity
Incorporation Shares: Upon incorporation, the Company had authorized 100
shares of common stock, no par value.
In June 1986, the Company's officers approved a change in the authorized
shares from 100 shares common stock, no par value, to 600,000,000 shares
of common stock, $.0001 par value. The majority stockholder and directors
ratified the increase in authorized shares on December 14, 1998.
In June 1986, the Company exchanged 520,496,750 shares of common stock of
the Company for all the issued and outstanding common shares, on a one for
one basis, of Computer Technology International, Inc. (see Note #1A).
On April 1, 2000, the Company issued to a vendor, 1,225,000 shares of the
Company's common stock per a financial services agreement.
F-9
<PAGE>
Note 3 - Related Party Transactions
A. Office Space:
As of June 1, 1999, the Company shares office space at 75 Lincoln
Highway, Iselin, New Jersey. The space is leased by GRQ Financial,
Inc. which is solely owned by Richard J. Margulies, President of the
Company. No rent is presently charged to the Company by GRQ Financial,
Inc. and no formal lease exists between GRQ Financial, Inc. and the
Company. The fair market value of donated rent and administrative
costs were determined to be $600 per month. $6,600 was charged to rent
expense during the year ended April 30, 2000.
B. During the fiscal year ended April 30, 2000, the Company's president
and stockholder and a stockholder advanced to the Company $22,191 and
$27,172 respectively. These loans are represented by nine separate
notes, are unsecured and carry an annual interest rate of 6%.
Accordingly, these shareholder loans are recorded as long-term debt
due to related parties in the accompanying financial statements.
Note 4 - Income Taxes
A. Operating Loss:
The Company, as of April 30, 2000 has loss carryforwards totaling
$178,201 that may be offset against future taxable income.
B. Components - Current and Deferred:
The provisions for income taxes consist of the following components:
April 30, 2000
--------------
Current Taxes $ 0
Deferred 60,520
-------
$60,520
=======
Based on management's present assessment, the Company has not yet
determined it to be more likely than not that a net deferred long term
tax asset of $60,520 attributable to the future utilization of
$178,001 of net operating loss carryforwards as of April 30, 2000,
will be realized.
F-10
<PAGE>
Accordingly, the Company has provided 100% allowance against the net
deferred tax asset in the financial statements as of April 30, 2000.
The Company will continue to review this valuation allowance and make
adjustments as appropriate. Net operating loss carryforwards will
expire as follows.
Year Ended Deferred
April 30 Tax Asset
---------- ---------
2014 $ 6,732
2015 53,788
---------
$ 60,520
=========
Net deferred tax benefit $ 60, 520
=========
Note 5 - Acquisitions and Commitments
On April 17, 2000, Mr. L. Weinstein, the sole stockholder of
NextNet.com, Inc., exchanged 2,000,000 shares of his company's stock
for 2,000,000 of Archer Systems Limited and a five year employment
agreement, which commenced on April 27,2000. Mr. Weinstein will serve
as President and Chief Executive Officer of the subsidiary during the
term of this agreement. During each calendar year of this agreement,
the employee shall receive an amount of dollars or property equal to
twenty percent of the net increase in equity of NextNet.com, Inc.
during such period, less any funds or capital has been invested into
NextNet.com, Inc. by third party investors during that period. In
addition, the employee is to receive each year during the term of this
agreement, 20% of the shares which NextNet.com receives in any entity
through compensation or exchange during the period of the agreement.
Also, the employee is to receive an option to purchase 250,000 shares
of NextNet.com's common stock at a strike price of five cents ($0.05).
During the current fiscal year, $155,000 was charged to a prepaid
employment contract, in connection with this exchange of stock, and
will be expensed over the next five years.
Note 6 - Subsequent Events
On May 18, 2000 Archer Systems Limited, Inc. and INFe.com, a Florida
Corporation whose common stock is traded on the OTC-BB, entered into a
Strategic Alliance Agreement whereby they agreed to acquire an equity
interest in each other's corporation, so that they may pursue common
goals for their joint benefit.
F-11
<PAGE>
By the agreement, INFe.com agreed to grant to Archer $336,000 worth of
INFe.com's common stock, par value of $.001 per share. The share price
for the purpose of determining the number of shares to be granted to
Archer was measured at the average trading price of the INFe.com stock
over the thirty trading days prior to May 18, 2000, which is 300,000
shares at $1.12 per share. The INFe.com shares which shall be granted
to Archer is subject to Rule 144 of the Securities and Exchange
Commission. In exchange for the INFe.com shares, Archer agreed to
grant INFe.com $336,000 worth of the Company's common stock, par value
$.001 per share. The share price for the purpose of determining the
number of shares to be granted to INFe.com was measured as the average
trading price of the Archer stock over the thirty trading days prior
to the date of the signing of this agreement, or 4,307,692 shares at
$.078 per share. Such shares were granted subject to Rule 144 of the
Securities and Exchange Commission. INFe.com agreed to include the
INFe shares granted to Archer into the first Form SB-2 Public Offering
Registration Statement that it filed with the SEC after the date of
this agreement subject to the parties entering into a mutually
agreeable lockup and leakout agreements. Archer agreed that the
Company will include the Archer shares granted to INFe.com into the
first Public Offering Registration Statement that the company files
with the SEC after May 18, 2000, subject to the parties entering into
a mutually agreeable lockup and leakout agreements.
F-12
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
----------- ---------------------------------- ----
10.7 Copy of 6% Promissory Note Due 2
February 15, 2002
10.8 Copy of 6% Promissory Note Due 3
March 9, 2002
10.9 Copy of 6% Promissory Note Due 4
March 20, 2002
10.10 Copy of 6% Promissory Note Due 5
April 9, 2002
10.12 Agreement dated June 8, 2000 6
between the Company and
Superwire.com, Inc.
10.13 Agreement dated July 21, 2000 10
between the Company and
ComLinx, Inc.
10.14 Agreement dated July 22, 2000 11
between ArcusNet Corporation and
Cydoor Technologies, Inc.
21 Subsidiaries of Companies 16
1
