As filed with the Securities and Exchange Commission on February 14, 2000
Registration No. 333-90663
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AMENDMENT NO. 1
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WHISPERING OAKS INTERNATIONAL, INC.
(Name of small business issuer in its charter)
<S> <C> <C>
Texas 7948 75-2742601
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or Organization) Classification Code Number) Identification Number)
16910 Dallas Parkway, Suite 100, Dallas, Texas 75248 (972) 248-1922
(Address of principal executive offices) Telephone Number
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Kevin B. Halter
16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
(972) 248-1922
Copies to:
CARL A. GENERES
4315 WEST LOVERS LANE
Dallas, Texas 75248
(214) 352-8674
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this registration statement.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
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 following box. [ ]
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CALCULATION OF REGISTRATION FEE
Title of each class of Amount to be Proposed maximum Proposed maximum Registration Fee
securities to be Registered offering Price Per aggregate offering
registered Share (1) price(1)
- --------------------------- -------------------------- --------------------------- ---------------------
<S> <C> <C> <C>
COMMON STOCK 600,000 shares $1.00 $600,000 $181.81
- --------------------------- -------------------------- --------------------------- ---------------------
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Note (1) Estimated solely for calculating the registration fee.
The Registrant hereby amends this registration statement on such date or 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.
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PRELIMINARY PROSPECTUS
(subject to completion)
WHISPERING OAKS INTERNATIONAL, INC.
600,000 SHARES OF COMMON STOCK
THE OFFERING
PER SHARE TOTAL
PUBLIC PRICE $0.10 $60,000
This prospectus covers an aggregate of 600,000 shares of our common stock which
are owned and will be resold, from time to time, by three of our stockholders.
We will not receive any money from the stockholders when they sell their shares,
but we will pay all of the expenses related to this registration statement.
There is currently no public market for our common stock. It is not listed on
any national securities exchange or any other securities market.
The securities offered hereby are speculative and involve a high degree of risk.
You should read "Risk Factors", beginning on page 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
_________________, 2000
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RISK FACTORS
Our limited operating history and losses to date make it difficult to evaluate
our business.
Whispering Oaks International was organized in December 1997. Our business is to
buy and sell thoroughbred horses. Since our incorporation, we have bought and
sold 8 broodmares. Because of our limited operating history and net losses, it
is extremely difficult to evaluate our business and prospects. Our revenue and
income potential are unproven.
Our success will depend on Pam Halter's ability to buy and resell thoroughbred
horses at a profit.
Whispering Oaks buys and sells thoroughbred horses. We rely principally on the
advice of Pam Halter to buy or sell a horse. The success of our business will
depend, initially, on Ms. Halter's skill and expertise in evaluating the
potential profitability of buying for relatively quick resale thoroughbred
horses. While Ms. Halter has been engaged in the thoroughbred horse racing
business most of her adult life, she has very limited experience in buying and
reselling horses as a principal business.
One of the two executive officers of Whispering Oaks, Kevin B. Halter, Jr., does
not have significant experience in thoroughbred horse racing, breeding, training
or in buying and selling horses.
Our loss of Pam Halter could impair our ability to succeed.
Our future success depends, on the continued service of Pam Halter. If she
leaves Whispering Oaks and we are unable to replace her with a person that has
comparable knowledge of thoroughbred horses, Whispering Oaks would have
difficulty in succeeding.
Since we will not receive any amount from this offering, we are uncertain we can
obtain the capital to grow our business.
The common stock offered under this prospectus by the selling stockholders will
not provide any funds to Whispering Oaks. Since inception, we have been largely
dependent upon management loans when we required funds. However, unless we are
able to raise additional capital to enable us to buy a significant number of
thoroughbred horses and maintain them until they are ready to be sold, we will
not realize our business objectives and potential and will likely not succeed.
We may not be able to obtain financing on terms favorable to us. If we raise
capital through the sale of equity securities, our stockholders may experience
dilution of their ownership interest and the newly issued securities may have
rights superior to those of the common stock. If we are able to borrow funds, we
may be subject to limitations on our operations, including limitations on the
payment of dividends.
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Any general economic recession will adversely effect our business.
Whispering oaks' business is dependent in large part on people with significant
discretionary assets that want to own thoroughbred racehorses as a hobby or a
secondary business. If we have a material downturn in the general economy, there
will likely be fewer thoroughbred racehorse buyers and, perhaps, many more
sellers. In that event our business may be materially harmed.
FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements. We intend to
identify forward-looking statements in this prospectus using words such as
"may", "expect", "anticipate", "believe", "estimate", "intend" "continue" or
similar words. Such statements reflect our beliefs as well as assumptions we
have made using information currently available to us. Because these statements
demonstrate our current views concerning future events, these statements involve
assumptions, risks and uncertainties. Actual future results may differ
significantly from the results discussed in the forward-looking statements.
Some, but not all, of the factors that may cause these differences include those
discussed in the Risk Factors section beginning on page 2 of this prospectus.
One should not place undue reliance on such forward-looking statements that
speak only as of the date of this prospectus.
WHISPERING OAKS INTERNATIONAL
Whispering Oaks International was incorporated under the laws of the State of
Texas on December 8, 1997. We formed Whispering Oaks to engage in the
acquisition and sale of thoroughbred racing stock of every age from broodmares,
weanlings and yearlings to racehorses and stallions. Our principal office is
located at 16910 Dallas Parkway, Suite 100, Dallas, Texas 75248 and our
telephone number is (972)248- 1922.
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USE OF PROCEEDS
Whispering Oaks will not receive any proceeds from the registration or sale of
the shares of common stock covered by this prospectus. However we will pay the
expenses of this offering.
NO MARKET FOR OUR COMMON STOCK
There is currently no public market for Whispering Oaks' common stock. We cannot
assure you that any trading market for our shares will exist following this
offering, or that investors in the shares will be able to resell their shares at
any price.
SHARES ELIGIBLE FOR FUTURE SALE
Whispering oaks has 2,525,000 shares of common stock outstanding including the
600,000 shares covered by this prospectus. In the event those 600,000 shares are
sold in this offering, they will be freely tradable in the United States if a
market for our stock develops. All of the remaining 1,925,000 shares are
"restricted securities" under Rule 144 of the Securities Act of 1933.
Ordinarily, a person holding restricted securities for a period of one year may,
every three months, sell in routine brokerage transactions an amount equal to
the greater of one percent of a company's then outstanding common stock or the
average weekly trading volume during the four calendar weeks prior to the
person's sales. Rule 144 also permits sales by a person who is not an affiliate
of the company and who has held the shares for two years without any quantity
limitation. Of the 1,925,000 "restricted" shares, Kevin B. Halter, Pam Halter
and Kevin B. Halter, Jr., the officers and directors of Whispering Oaks, own an
aggregate of 1,900,000 that they acquired in December 1997. All of the 1,925,000
restricted shares are eligible for resale under Rule 144.
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale from time to time of the 600,000
shares by Kevin B. Halter, Pam Halter and Kevin B. Halter, Jr., the selling
shareholders. Whispering Oaks has registered these shares for sale to provide
the selling shareholders with freely tradable securities. But registration does
not necessarily mean that any of such shares will be offered or sold by the
selling shareholders. Whispering Oaks will not receive any proceeds from the
sale of these shares by the selling shareholders but will pay all of the
expenses of registration.
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The selling shareholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of these shares
on any stock exchange, market or trading facility on which the shares are traded
or in private transactions. These sales may be at fixed or negotiated prices.
LEGAL PROCEEDINGS
Whispering Oaks is not a party to any pending litigation nor is it aware of any
threatened legal proceedings.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Whispering Oaks consists of 125,000,000 shares
of common stock with a par value of $0.001 per share. As of the date of this
prospectus, we had issued and outstanding 2,525,000 shares that were held by
four shareholders.
Holders of common stock are entitled to:
* one vote for each share held of record on all matters submitted
to a vote of stockholders;
* receive ratably dividends as may be paid on the shares;
* share ratably in all remaining assets after payment of all
liabilities upon liquidation and dissolution.
Holders of common stock do not have preemptive, conversion or redemption rights.
All 2,525,000 outstanding shares are fully paid and non-assessable.
DIVIDEND POLICY
Whispering Oaks has never paid or declared a cash dividend on its common stock
and we do not intend to pay cash dividends in the foreseeable future.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
Whispering Oaks began operations on January 19, 1998 with the purchase of eight
(8) broodmares for approximately $221,000. In December 1998, we sold all but one
broodmare and one foal for gross proceeds of approximately $238,000. Whispering
Oaks sold the remaining foal in the second quarter of 1999 for gross proceeds of
approximately $26,000. Whispering Oaks accounts for all purchased livestock at
our original cost and assigns no basis to foals delivered by a broodmare. Our
gross profits were approximately $110,000 for the year ended December 31, 1998
and approximately $36,000 for the year ended December 31, 1999.
We incurred direct operating expenses of approximately $115,000 for the year
ended December 31, 1998 and approximately $20,000 for the year ended December
31.
Whispering Oaks adopted the provisions of AICPA Statement of Position 98-5,
"Reporting on the Costs of Start- Up Activities" whereby all organization and
initial costs incurred with the incorporation and initial capitalization of
Whispering Oaks were charged to operations as incurred. Accordingly, these costs
are a component of our general and administrative expenses of approximately
$9,700 for the year ended December 31, 1998 and $-0- for the year ended December
1999.
Whispering Oaks incurred a net loss of approximately $76,000, $0.15 per share,
for the year ended December 31, 1998, and net income of approximately $5,000,
$0.01 per share, for the year ended December 31, 1999. As noted elsewhere in
this prospectus, Whispering Oaks does not pay any compensation to its
management, Kevin B. Halter, Pam Halter and Kevin B. Halter, Jr., for their
services to Whispering Oaks. If Whispering Oaks had the resources to pay and did
pay even nominal compensation to its management, Whispering Oaks would have
incurred greater losses in fiscal 1998 and a net loss in fiscal 1999.
Liquidity and Capital Resources
In January 1998, Whispering Oaks sold in a private transaction 25,000 post-split
shares of common stock for $25,000. Whispering Oaks has also, from time to time,
made non-interest-bearing demand loans from management in order to continue
operations. During 1998, we borrowed a net of $70,000 from management. During
1999, we paid back $12,000.
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We must raise additional capital to continue our business of buying and selling
thoroughbred horses. However, we do not have at this time any prospects or
sources for raising any additional debt or equity capital, other than through
non-interest bearing loans from management.
DESCRIPTION OF THE BUSINESS
Whispering Oaks buys and sells thoroughbred racing stock of every age from
broodmares, weanlings and yearlings to racehorses and stallions. We plan to
concentrate, at least for the foreseeable future, our efforts in the purchase
and sale of weanlings and yearlings at auctions, commonly referred to as
"Pinhooking".
Industry Overview and Opportunity
Essentially pinhooking is the purchase of thoroughbred weanlings and yearlings
at various horse auctions with a view to resell them a few months later at
similar auctions. To understand pinhooking, one must understand some basic
facts.
All horses have common birthdays on January 1, regardless when they are born.
Thoroughbred horses are bred to be born anywhere from January to June. So if a
horse is born in June, it is considered a late foal. If it is born in January,
it is considered an early foal. Obviously an early foal is preferred over a late
foal, since a horse born in June will officially be one year old on January 1
when in reality it is only six months old. Horses are called weanlings until
they reach the age of one, yearlings until they reach the age of two.
Thoroughbred racing is a high-risk investment, with limited returns for the
average horse owner. It is a high profile glamour sport, the so-called "Sport of
Kings". People dream of owning the "Big" horse, winning the Kentucky Derby etc.
Statistically, the great majority of owners lose money year after year.
In contrast, pinhooking is a relatively conservative investment tool that can
bring financial rewards under the right circumstances. The great majority of
racing stock is bought at various auctions throughout the United States. These
are referred to as "sales". The major and best attended sales are in Kentucky,
Florida and California. The key to successful pinhooking is to gage the market,
ascertain the most popular bloodlines, know the best price ranges in which to
re-sell the purchased horses, etc. Pinhooking is an art, which demands
continuous attention to the ever-changing market. Simply put, buy low and be
able to sell high.
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We believe the risk/reward ratio of pinhooking is attractive because, on the
downside, the worst case scenario will still return a portion of the purchase
price of a horse sold at a loss. This should be in the 10-20% range, and such
losses should be offset by gains made on profitable transactions. Also, unlike
horse racing, where racing careers can be terminated rather swiftly due to
permanent injury, the likelihood of an injury that would keep a yearling out of
a sale is relatively small.
Business Plan
In general, we intend to operate in a number of areas, all involving the
purchase and sale of thoroughbred horses.
Our primary operations and their criteria are as follows:
1) Purchase of weanlings in the fall, to be resold 1) Purchase of
weanlings in the fall, to be resoldas yearlings in the spring.
2) Purchase of yearlings in the fall, to be 2) Purchase of weanlings
in the fall, to be resold as two-year olds in the Spring.
3) Purchase of broodmares in foal in the sprin. The offspring (to be
born within 30-60 days from purchase date) would be sold as
weanlings in the fall. After giving birth, the brookmares would
immediately be bred to selected stallions, thus giving Whispering
Oaks the option to:
a. sell the broodmares in foal during the fall (current year)
or spring (following year).
b. sell the foals in the spring of the following year.
4) Purchase quality stallions for breeding purposes.
We insure all of our horses for mortality.
Whispering Oaks does not own any stables or other facilities to board or
maintain the horses we own and buy in the future. We plan to board our horses at
one of many boarding and training facilities that are available throughout
Florida, Kentucky and California and that offer us the best arrangement for
maintaining and enhancing the profitability of our stock.
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Whispering Oaks has no employees. Kevin B. Halter and Pam Halter devote all the
time that is necessary to attend sales and operate the business, at no cost to
Whispering Oaks. We do not plan to hire any paid employee in the foreseeable
future.
Market Overview
According to the Blood-Horse publication, the industry bible, the current state
of the thoroughbred economy as measured by returns from public auctions across
the continent in 1999 continued the seven- year trend of rising prices. New
records for gross revenue and average and median prices were established for
each of the four major sales categories - yearlings, 2-year olds, weanlings, and
broodmares. Total auction expenditures for the four groups of horses also
expanded by 20.9% in 1999. As a result of this spending spree, total
expenditures at North American Thoroughbred sales fell just short of $1 billion
in 1999, reaching $987,455,100 by the decade's final fall of the hammer.
This vast expansion in auction revenue indicated that considerable amounts of
money were made in 1999 by purveyors of Thoroughbred bloodstock in North
America. The greatest profits were made by sellers able to satisfy the growing
demand for high-quality bloodstock.
The desire to buy the best pushed the number of horses sold at auctions in North
America for prices of $1 million to a new record total of 85. Though prices rose
most rapidly throughout the year at the very peak of the market, demand was
broad enough at the year's two biggest auctions - Keeneland's September and
November sales - to strengthen upper-middle, middle, and even occasionally,
lower-middle price ranges.
As a result, mid-market median prices rose for all four categories of horses,
including an especially stout 48.4% rise, from $9,100 in 1998 to $13,500 in
1999, for broodmares. According to the Blood-Horse, this willingness on the part
of numerous buyers to plan for the future with mid and lower-level broodmares
underlined just how far the desire to breed and own Thoroughbreds has spread.
The Blood-Horse further states that on the basis of auction returns from 1999,
it is possible to argue that confidence in the industry has never been stronger
among both newcomers and established owners and breeders.
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Though many part of the Thoroughbred auction scene were strong in 1999, some
parts were stronger than others. The strongest of all was the Keeneland
September yearling sale, which was labeled as the strongest single Thoroughbred
sale ever held.
Led by big spenders from North America, Dubai, Europe, and other points on the
globe, the average price increased by 49.1% to $256,665 at September's two
select sessions and by 30.3% to $77,390 for the entire 11-day auction. This
increase lifted 1999's overall average price for yearlings to $50,364, up by
17.7% from 1998.
The price increases spread to broodmare sales in the year's final three months,
where the average price of broodmares and broodmare prospects rose by 27.7% to
$55,227.
By contrast, the strength of the September yearling sale may have affected the
weanling auctions by encouraging breeders to retain more of the high-quality
foals for future yearling auctions. As a result, the average price of weanlings
in 1999 rose by a relatively modest 9.4% to $42,842.
Pinhookers who buy weanlings for resale as yearlings and yearlings for resale as
juveniles had a roller coaster year in 1999. Profits were available for the most
favored horses. But pinhookers also had to deal with an expanding list of
criteria on the part of the buyers who were willing to reject horses that did
not measure up in every respect.
On the high side, new records were set and exceeded several times for the
greatest price appreciation on individual horses in the history of both
weanling-to-yearling and yearling-to-juvenile pinhooking in North America. Rates
of return on investment for the full group of pinhooked horses resold at major
yearling and juvenile auctions also surpassed all previous standard.
On the low side, buy-back rates rose among all pinhooked horses, and the
percentage of individual pinhooked horses sold for profits tumbled at both
yearling and juvenile sales, thus amplifying the high- low split between success
and failure for pinhookers.
Competition
Whispering Oaks is a very small player in the thoroughbred racehorse trading
business. We have limited resources. We compete by using our skill in evaluating
horses for resale before we buy them. While we consider bloodlines and the
win-loss records of a particular horses' lineage as well as other factors, our
success will depend in large measure on our innate ability to evaluate the
potential resale value of a horse and to raise sufficient capital to purchase
and maintain the horse until we sell it. We will rely almost exclusively on Pam
Halter to evaluate a horse and to management to raise the capital to buy any
horse we believe to be a good investment. We expect to bid against many horse
traders at the "sales" that have far greater financial resources and more
experience in buying and selling horses than we have.
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YEAR 2000 CONSIDERATIONS
Whispering Oaks has not had and does not expect to have any Y2K problems in any
aspects of its business.
DESCRIPTION OF PROPERTY
Whispering Oaks neither owns or leases nor plans to own or lease any physical
property or facility. Any horse we own will be boarded at non-affiliated
stables.
MANAGEMENT
The directors and officers of Whispering Oaks are listed below with information
about their respective backgrounds.
Name Age Position
- ---- --- --------
Kevin B. Halter 64 Chairman, President, CEO & Director
Pam Halter 44 Director
Kevin B. Halter, Jr. 39 Vice President, Secretary, Treasurer & Director
Kevin B. Halter has served as Chairman, President, CEO and a director of
Whispering Oaks since December 1997. Mr. Halter has served as Chairman of the
Board and Chief Executive Officer of Halter Capital Corporation, a privately
held investment and consulting company, since 1987. Mr. Halter has served as
Chairman of the Board and President of Millennia, Inc. and Chairman of the Board
of Digital Communications Technology Corporation since 1994. Mr. Halter is the
husband of Pam Halter and the father of Kevin B. Halter, Jr.
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Pam J. Halter has served as a director of Whispering Oaks since December 1997.
Ms. Halter has been involved in various facets of horse racing since age
sixteen, culminating with her successful record as a trainer. Since her
retirement from training, she became a successful owner of a small stable of
horses attaining in 1995 the highest win percentage (21.8%) at Louisiana Downs.
Her respected reputation in the industry combined with her exceptionally keen
eye in recognizing prime racing prospects based upon their physical attributes,
makes her an invaluable member of the management team. Ms. Halter is the wife of
Kevin B. Halter.
Kevin B. Halter, Jr. has served as Vice President, Secretary, Treasurer and a
director of Whispering Oaks since December 1997. Mr. Halter also serves as Vice
President and Secretary of Halter Capital Corporation. He is the President of
Securities Transfer Corporation, a stock transfer company registered with the
Securities and Exchange Commission, a position that he has held since 1987. Mr.
Halter has served as Vice President, Secretary and a director of Millennia, Inc.
and Digital Communications Technology Corporation since 1994. Kevin B. Halter,
Jr. is the son of Kevin B. Halter.
All directors hold office until the next annual meeting of the shareholders of
Whispering Oaks or until their successors have been elected and qualified.
Officers serve at the discretion of the Board of Directors. Kevin B. Halter will
devote 10% of his time to Whispering Oaks' business. Kevin B. Halter, Jr. will
devote 1% of his time. Kevin B. Halter, Jr. does not have significant experience
in any aspect of the thoroughbred horse racing business. However, Kevin B.
Halter has several years experience in buying and selling horses at sales. Mr.
Halter believes that he is a good judge of horse bloodlines. Combined with Ms.
Halter's experience and talents in assessing horse confirmations (builds) and
breeding, Whispering Oaks management believes that it has the requisite ability
to make Whispering Oaks a successful business.
EXECUTIVE COMPENSATION
Whispering Oaks pays no compensation to its officers and directors currently and
has paid no compensation in any amount or of any kind to its executive officers
or directors since inception.
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SELLING STOCKHOLDERS
This prospectus relates to the offering by the selling stockholders for their
own account of shares acquired by them as original investors in Whispering Oaks.
The following table sets forth information with respect to the common stock
beneficially owned by the selling stockholders as of the date of this prospectus
and assuming sale of the 600,000 shares covered by this prospectus.
SELLING NUMBER OF NUMBER NUMBER OF SHARES
STOCKHOLDER SHARES OWNED SHARES OWNED AFTER
PRIOR TO THE TO BE THE OFFERING (1)
OFFERING SOLD
- --------------------------------------------------------------------------------
Pam Halter 250,000 100,000 150,000
Kevin B. Halter 1,000,000 200,000 800,000
Kevin B. Halter, Jr. 1,250,000 300,000 950,000
(1) Assumes the sale of all shares of common stock offered by this prospectus.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information, as of the date of this
prospectus, regarding the Whispering Oaks 's common stock owned by (1) any
person (including any "group") who owns beneficially more than 5% of the
outstanding common stock, (2) each director and executive officer, and (3) all
executive officers and directors as a group.
Name and Address(a) Shares owned Percentage
- --------------------------------------------------------------------------------
Kevin B. Halter 1,000,000 39.6%
Pam Halter 250,000 9.9%
Kevin B. Halter, Jr. 1,250,000 49.5%
Executive officers and directors as 2,500,000 99%
a group (three persons)
(a) The address for each person is 16910 Dallas Parkway, Suite 100, Dallas Texas
75248.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In order to maintain liquidity, Whispering Oaks has obtained
non-interest-bearing advances from entities owned by Whispering Oaks management.
These advances are payable on demand. At December 31, 1998 Whispering Oaks owed
approximately $70,000. These outstanding advances from affiliates were reduced
to approximately $59,000 at December 31, 1999.
LEGAL MATTERS
Dominic M. Federico, attorney at law, Dallas, Texas, has passed upon the
validity of the common stock covered by this registration statement for
Whispering Oaks.
EXPERTS
The financial statements included in the registration statement on Form SB-2
have been audited by S.W. Hatfield, CPA, independent certified accountant, to
the extent and for the periods set forth in his report, and are included herein
in reliance upon the authority of said firm as experts in auditing and
accounting.
ADDITIONAL INFORMATION
Whispering Oaks is currently subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended, and has in the past filed, and will
continue in the future to file, periodic reports, proxy statements and other
information with the Securities and Exchange Commission ("Commission"). You may
read and copy any of these reports at the following public reference rooms
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, or at the regional offices of the Commission located at 7 World
Trade Center, Suite 1300, New York, NY, or at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, IL 60661.
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You may obtain information on the operation of the public reference rooms by
calling the Commission at 1-800-SEC-0330. You may also obtain copies of this
information by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C., 20549. The Commission also maintains an
Internet website that contains these reports and information about issuers, like
Whispering Oaks, who file electronically with the Commission. The address of
that site is: http://www.sec.gov.
Whispering Oaks has filed with the Commission a registration statement
(including exhibits and information, which the Commission permits the registrant
to omit from the prospectus) on Form SB-2 under the Securities Act of 1933, as
amended, with respect to the common stock covered by this prospectus. Statements
contained in this prospectus as to the contents of any contract, agreement or
other document referred to are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the registration statement. You may obtain copies of the registration
statement, including exhibits and other information about Whispering Oaks, by
contacting the Commission in the manner and at the addresses referenced above.
You should rely only on the information incorporated by reference or provided in
this prospectus or any prospectus supplement. Neither Whispering Oaks nor the
selling shareholders have authorized anyone else to provide you with different
information. Neither Whispering Oaks nor the selling shareholders are making an
offer to sell, nor soliciting an offer to buy, these securities in any
jurisdiction where that would not be permitted or legal.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
DISCLOSURE OF COMMISSION'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITES.
The Articles of Incorporation of Whispering Oaks provide that no director or
officer shall be directly liable for damages incurred in connection with legal
proceedings brought about by reason of being an officer or director if the
person is not ultimately adjudged liable for negligence or misconduct in the
action.
15
<PAGE>
The Texas Business Corporation Act contains provisions relating to
indemnification of officers and directors. Generally, this section provides that
a corporation may indemnify any person who was or is a party to any threatened,
pending or completed action, suit, or proceeding, whether civil, criminal,
administrative or investigative, except an action by or in right of the
corporation by reason of the fact that he was a director, officer, employee or
agent of the corporation. It must be shown that he acted in good faith and in a
manner he reasonably believed to be in the best interest of the corporation.
Generally, no indemnification may be made where the person has been determined
to be negligent or guilty of misconduct in the performance of his duty to the
corporation.
As to indemnification for liabilities arising under the Securities Act of 1933
for directors, officers and controlling persons of Whispering Oaks, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy and unenforceable. In
the event that a claim for indemnification against such liabilities (other than
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person in connection with 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, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
INDEX TO FINANCIAL STATEMENTS
16
<PAGE>
WHISPERING OAKS
INTERNATIONAL, INC.
Financial Statements
and
Auditor's Report
December 31, 1999 and 1998
S. W. HATFIELD, CPA
certified public accountants
Use our past to assist your future sm
<PAGE>
WHISPERING OAKS INTERNATIONAL, INC.
CONTENTS
Page
----
Reports of Independent Certified Public Accountants F-3
Financial Statements
Balance Sheets as of December 31, 1999 and 1998 F-4
Statements of Operations and Comprehensive Income
for the years ended December 31, 1999 and 1998 F-5
Statement of Changes in Stockholders' Equity
for the years ended December 31, 1999 and 1998 F-6
Statements of Cash Flows
for the years ended December 31, 1999 and 1998 F-7
Notes to Financial Statements F-8
F-2
<PAGE>
S. W. HATFIELD, CPA
certified public accountants
Member: American Institute of Certified Public Accountants
SEC Practice Section
Information Technology Section
Texas Society of Certified Public Accountants
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors and Stockholders
Whispering Oaks International, Inc.
We have audited the accompanying balance sheets of Whispering Oaks
International, Inc. (a Texas corporation) as of December 31, 1999 and 1998 and
the related statements of operations and comprehensive income, changes in
stockholders' equity and cash flows for the years ended December 31, 1999 and
1998, respectively. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Whispering Oaks International,
Inc. as of December 31, 1999 and 1998 and the related statements of operations,
changes in stockholders' equity and cash flows for the years ended December 31,
1999 and 1998, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note A to the
financial statements, the Company has no significant assets and is dependent
upon significant shareholders to provide sufficient working capital to maintain
the integrity of the corporate entity. These circumstances create substantial
doubt about the Company's ability to continue as a going concern and are
discussed in Note A. The financial statements do not contain any adjustments
that might result from the outcome of these uncertainties.
S. W. HATFIELD, CPA
Dallas, Texas
January 24, 2000
Use our past to assist your future sm
P. O. Box 820395 9002 Green Oaks Circle, 2nd Floor
Dallas, Texas 75382-0395 Dallas, Texas 75243-7212
214-342-9635 (voice) (fax) 214-342-9601
800-244-0639 [email protected]
F-3
<PAGE>
WHISPERING OAKS INTERNATIONAL, INC.
BALANCE SHEETS
December 31, 1999 and 1998
ASSETS
------
1999 1998
-------- --------
Current assets
Cash on hand and in bank $ 18,036 $ 15,266
-------- --------
Livestock -- 32,000
Accumulated depreciation -- (10,225)
-------- --------
Net livestock -- 21,775
-------- --------
TOTAL ASSETS $ 18,036 $ 37,041
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable - trade $ -- $ 12,231
Advances from affiliates 58,925 70,705
-------- --------
Total liabilities 58,925 82,936
-------- --------
Commitments and contingencies
Stockholders' equity Common stock - $0.001 par value
125,000,000 shares authorized
2,525,000 issued and outstanding, respectively 2,525 2,525
Additional paid-in capital 27,475 27,475
Contributed capital 20,000 15,000
Accumulated deficit (90,889) (90,895)
-------- --------
Total stockholders' equity (40,889) (45,895)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,036 $ 37,041
======== ========
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
WHISPERING OAKS INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years ended December 31, 1999 and 1998
1999 1998
----------- -----------
Revenues
Sales of livestock $ 46,728 $ 238,347
Cost of Sales
Net capitalized cost of livestock 11,108 127,907
----------- -----------
Gross Profit 35,620 110,440
----------- -----------
Operating expenses
Livestock expenses 15,623 104,806
Executive compensation contributed
by a controlling shareholder 5,000 15,000
General and administrative expenses 4,297 9,711
Depreciation 10,667 71,818
----------- -----------
Total operating expenses 35,614 201,335
----------- -----------
Income (Loss) from operations 6 (90,895)
Other income (expense) -- --
----------- -----------
Income (Loss) before income taxes 6 (90,895)
Provision for income taxes -- --
----------- -----------
Net Income (Loss) 6 (90,895)
Other comprehensive income -- --
----------- -----------
Comprehensive Income (Loss) $ 6 $ (90,895)
=========== ===========
Income (Loss) per weighted-average share
of common stock outstanding, computed
on net loss - basic and fully diluted nil $ (0.04)
=========== ===========
Weighted-average number of
common shares outstanding 2,525,000 2,525,000
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
WHISPERING OAKS INTERNATIONAL, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Year ended December 31, 1999 and 1998
Common Stock Additional
------------ paid-in Contributed Accumulated
# shares amount capital capital deficit Total
--------- --------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balances at
January 1, 1998 -- $ -- $ -- $ -- $ -- $ --
Shares issued to founders 505,000 505 29,495 -- -- 30,000
Effect of 5 for 1
forward split on
October 15, 1999 2,025,000 2,020 (2,020) -- -- --
Capital contributed by a
controlling shareholder
in the form of executive
compensation -- -- -- 15,000 -- 15,000
Net loss for the year -- -- -- -- (90,895) (90,895)
--------- --------- ---------- ----------- ----------- ---------
Balances at
December 31, 1998 2,525,000 2,525 27,475 15,000 (90,895) (45,895)
Capital contributed by a
controlling shareholder
in the form of executive
compensation -- -- -- 5,000 -- 5,000
Net income for the year -- -- -- -- 6 6
--------- --------- ---------- ----------- ----------- ---------
Balances at
December 31, 1999 505,000 $ 505 $ 29,495 $ 20,000 $ (90,889) $ (40,889)
========= ========= ========== =========== =========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
WHISPERING OAKS INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
Years ended December 31, 1999 and 1998
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) for the year $ 6 $ (90,895)
Adjustments to reconcile net loss to net
cash provided by operating activities
Gain on sale of livestock (35,620) (110,440)
Depreciation 10,667 71,818
Executive compensation contributed
by a controlling shareholder 5,000 15,000
Increase (Decrease) in accounts payable (12,231) 12,231
--------- ---------
Net cash used in operating activities (32,178) (102,286)
--------- ---------
Cash flows from investing activities
Proceeds from sales of livestock 46,728 238,347
Purchases of livestock -- (221,500)
--------- ---------
Net cash provided by investing activities 46,728 16,847
--------- ---------
Cash flows from financing activities
Advances from affiliates -- 70,305
Repayment of advances from affiliates (11,780) --
Proceeds from sale of common stock -- 30,000
--------- ---------
Net cash provided by financing activities (11,780) 100,705
--------- ---------
INCREASE IN CASH 2,770 15,266
Cash at beginning of year 15,266 --
--------- ---------
Cash at end of year $ 18,036 $ 15,266
========= =========
Supplemental disclosure of interest and income taxes paid
Interest paid for the period $ -- $ --
========= =========
Income taxes paid for the period $ -- $ --
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
WHISPERING OAKS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
Note A - Organization and Description of Business
Whispering Oaks International, Inc. (Company) was incorporated on December 8,
1997 under the laws of the State of Texas. The Company was formed to engage in
the acquisition and sale of thoroughbred race horses of every age, from
broodmares and weanlings to mature racehorses and stallions. The Company
intends, initially, to focus in the area of purchasing and selling weanlings and
yearlings at various auctions in an activity commonly referred to as
"pinhooking".
Pinhooking is essentially the purchase of thoroughbred weanlings and yearlings
at auction and reselling them at a different, but similar, auction in the near
future. The Company projects an average historical holding period of five to six
months between purchase and resale.
The Company began operations in January 1998 with its initial capitalization and
its initial livestock purchase.
On October 15, 1999, the Company's Board of Directors amended the Company's
Articles of Incorporation to modify the Company's capital structure to allow for
the issuance of up to 125,000,000 total equity shares consisting solely of
common stock with a par value of $0.001 per share and effected a five (5) for
one (1) forward stock split. The effects of these transactions are reflected in
the accompanying financial statements as of the first day of the first period
presented.
The Company has elected a year-end of December 31 and uses the accrual method of
accounting.
As of December 31, 1999, the Company has liquidated its livestock stable and has
no significant assets and owes related entities amounts in excess of available
cash. Accordingly, the Company is dependent upon management and/or significant
shareholders to provide sufficient working capital to preserve the integrity of
the corporate entity at this time. It is the intent of management and
significant shareholders to provide the sufficient working capital necessary to
support and preserve the integrity of the corporate entity for the foreseeable
future.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note B - Summary of Significant Accounting Policies
1. Cash and cash equivalents
-------------------------
For Statement of Cash Flows purposes, the Company considers all cash on
hand and in banks, including accounts in book overdraft positions,
certificates of deposit and other highly-liquid investments with maturities
of three months or less, when purchased, to be cash and cash equivalents.
Cash overdraft positions may occur from time to time due to the timing of
making bank deposits and releasing checks, in accordance with the Company's
cash management policies.
F-8
<PAGE>
WHISPERING OAKS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Note B - Summary of Significant Accounting Policies - Continued
2. Livestock
---------
Livestock is recorded at cost and are depreciated on a straight-line basis,
over their estimated useful lives (generally 3 years). Foals delivered
after the broodmare is purchased are capitalized by the Company at a "zero
cost" basis. At December 31, 1998, the Company had one broodmare and one
foal delivered by a broodmare after acquisition by the Company in its
stable. As of December 31, 1999, the Company had liquidated its entire
stable of livestock.
3 Organization costs
------------------
The Company has adopted the provisions of AICPA Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" whereby all organization
and initial costs incurred with the incorporation and initial
capitalization of the Company were charged to operations as incurred.
4. Income Taxes
------------
The Company uses the asset and liability method of accounting for income
taxes. At December 31, 1999 and 1998, respectively, the deferred tax asset
and deferred tax liability accounts, as recorded when material to the
financial statements, are entirely the result of temporary differences.
Temporary differences represent differences in the recognition of assets
and liabilities for tax and financial reporting purposes, primarily
accumulated depreciation and amortization, allowance for doubtful accounts
and vacation accruals.
At December 31, 1999, the Company has a net operating loss carryforward for
income purposes of approximately $70,000, after a Fiscal 1999 utilization
of approximately $5,000. If this carryforward is not fully utilized, it
will expire in 2018. As of December 31, 1999 and 1998, the deferred tax
asset related to the Company's net operating loss carryforward is fully
reserved.
5. Earnings (loss) per share
-------------------------
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of December 31, 1999 and 1998, the Company
had no warrants and/or options outstanding.
Note C - Common Stock Transactions
On October 15, 1999, the Company's Board of Directors amended the Company's
Articles of Incorporation to modify the Company's capital structure to allow for
the issuance of up to 125,000,000 total equity shares consisting solely of
common stock with a par value of $0.001 per share and effected a five (5) for
one (1) forward stock split. The effects of these transactions are reflected in
the accompanying financial statements as of the first day of the first period
presented.
F-9
<PAGE>
WHISPERING OAKS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Note C - Common Stock Transactions - Continued
In January 1998, as revised in March 1998, the Company prepared a Private
Placement Memorandum, utilizing an exemption from registration under Regulation
D, Rule 504 of the US Securities and Exchange Commission, intending to sell up
to 200,000 shares of Common Stock at a price of $5.00 per share. The Company
sold no shares pursuant to this Memorandum and subsequently canceled the
proposed offering.
Note D - Contributed Capital
Executive management and oversight services are provided to the Company by a
controlling shareholder. The accompanying financial statements reflect
management's estimate of the estimated fair value of the services contributed to
the Company during each fiscal year based on the time and effort required to
administer the Company's operations and affairs.
F-10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 25. Other Expenses of Issuance and Distribution.
The estimated expenses of the registration, all of which will be paid
by Whispering Oaks, are as follows:
SEC Filing fee $ 181.81
Printing Expense $ 800.00
Accounting Fees and Expenses $ 3,780.00
Legal Fees and Expenses $ 6,000.00
Blue Sky Fees and Expenses -0-
----------
TOTAL $10,761.81
Item 26. Recent Sales of Unregistered Securities
Upon its incorporation in December 1997, Whispering Oaks issued 1,000,000 shares
of common stock to Kevin B. Halter, 250,000 shares to Pam Halter and 1,250,000
shares to Kevin B. Halter, Jr. for $0.002 per share consideration, after giving
effect to a 5 for 1 stock split. In January, 1998, Whispering Oaks sold 25,000
shares of common stock to VLM Enterprises, Inc., a non-affiliated entity, for $1
per share, after giving effect to said stock split. Whispering Oaks relied on
Section 4(2) of the Securities Act of 1933 as its exemption from the
registration requirements of said Act in connection with each of these sales. .
Item 27. Exhibits.
3.1 Articles of Incorporation of Whispering Oaks International, Inc.*
3.1 (a) Amendment to Articles of Incorporation *
3.2 Bylaws of Whispering Oaks International, Inc.*
4.1 Specimen Stock Certificate for Common shares*
5.1 Opinion of Dominic M. Federico, Esq.*
23.1 Consent of S.W. Hatfield, C.P.A.**
23.2 Consent of Dominic M. Federico, Esq.*
27 Financial Data Schedule**
* previously filed
** filed herewith
II-1
<PAGE>
Item 28. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement:
(a) To include any prospectus required under Section 10(a) (3) of the
Securities Act.
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or most recent
post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set
forth in the registration statement.
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post- effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered that remain unsold at the termination of the
offering.
II-2
<PAGE>
"Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has 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 the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudicaiton of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Whispering Oaks
International, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form SB-2 and has duly caused this
Amendment Number 1 to this registration statement to be signed on its behalf by
the undersigned thereunto duly authorized, in the City of Dallas, State of
Texas, on the ____th day of February, 2000.
WHISPERING OAKS INTERNATIONAL, INC.
By: /s/ Kevin B. Halter February 14, 2000
--------------------- ------------
Kevin B. Halter, President
And Chief Executive Officer
(Principal Executive Officer)
II-3
EXHIBIT 23.1
------------
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
We consent to the use in Form SB-2/A Registration Statement under The Securities
Act of 1933 of Whispering Oaks International, Inc. (a Texas corporation) of our
report dated January 24, 2000 on the financial statements of Whispering Oaks
International, Inc. as of December 31, 1999 and 1998 and for the each of the
years then ended, accompanying the financial statements contained in such Form
SB-2/A Registration Statement Under The Securities Act of 1933, and to the use
of our name and the statements with respect to us as appearing under the heading
"Experts".
S. W. HATFIELD, CPA
Dallas, Texas
February 12, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK> 0001092562
<NAME> Whispering Oaks International, Inc.
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 18036
<SECURITIES> 0
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0
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