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--U.S. Securities and Exchange Commission--
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WESTNET COMMUNICATION GROUP, INC.
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(Name of small business issuer in its charter)
Nevada 6770 82-0441332
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(State or Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation Industrial Classification Identification No.)
or Organization) Number)
2921 N. Tenaya Way, Suite 216, Las Vegas, NV 89128 (702) 947-4877
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(Address and telephone number of principal executive offices
2921 N. Tenaya Way, Suite 216, Las Vegas, NV 89128
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(Address of principal place of business
or intended principal place of business.)
Elizabeth A. Sanders, 2921 N. Tenaya Way, Suite 216,
Las Vegas, NV 89128 702-947-4877
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(Name, address and telephone number of agent for service)
Copies to:
Amy L. Clayton
Attorney at Law
175 N. C Street
Salt Lake City, Utah 84103
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Approximate date of proposed sale to the public: As soon as practicable
after the effective date of the registration statement and date of the
prospectus.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 of 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, 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,
check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of Each Class Amount Proposed Proposed Amount of
of Securities Being Being Maximum Maximum Registration
Registered Registered Offering Aggregate Fee
Price Per Offering
Unit (1) Price(1)
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Shares of Common Stock 3,500,000 $.04 $140,000 $36.96
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TOTAL $140,000 $36.96
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(1) Estimated for purposes of computing the registration fee pursuant to Rule
457.
The registrant hereby amends the 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 the registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
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<PAGE>
Part I. Information Required in Prospectus
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Cross Reference Sheet
Showing the Location In Prospectus of
Information Required by Items of Form SB-2
Item
No. Required Item Location or Caption
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1. Front of Registration Statement Front of Registration
and Outside Front Cover of Statement and Outside
Prospectus Front Cover of Prospectus
2. Inside Front and Outside Back Inside Front Cover Page
Cover Pages of Prospectus of Prospectus and Outside
Front Cover Page of Prospectus
3. Summary Information and Risk Prospectus Summary;
Factors Risk Factors
4. Use of Proceeds Not Applicable
5. Determination of Offering Not Applicable
Price
6. Dilution Not Applicable
7. Selling Security Holders Selling Security Holders
and Plan of Distribution
8. Plan of Distribution Selling Security Holders
and Plan of Distribution
9. Legal Proceedings Legal Proceedings
10. Directors, Executive Officers, Management
Promoters and Control Persons
11. Security Ownership of Certain Principal Stockholders
Beneficial Owners and Management
12. Description of Securities Description of Securities
13. Interest of Named Experts and Experts
Counsel
14. Disclosure of Commission Position Management -
on Indemnification for Securities Indemnification of
Act Liabilities Directors and Officers
15. Organization Within Last Certain Transactions
Five Years
16. Description of Business The Company
17. Management's Discussion The Company - Plan of
and Analysis or Plan of Operation
Operation
18. Description of Property The Company - Property
19. Certain Relationships and Related Certain Transactions
Transactions
20. Market for Common Stock and Market for Common Stock
Related Stockholder Matters and Related Stockholders Matters
21. Executive Compensation Management
22. Financial Statements Financial Statements
23. Changes in and Disagreements Changes in and Disagreements
with Accountants on Accounting with Accountants on
and Financial Disclosure Accounting and Financial
Disclosure
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<PAGE>
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SELLING STOCKHOLDER
PROSPECTUS
SUBJECT TO COMPLETION
Westnet Communication Group, Inc.
3,500,000 Shares of Common Stock
Offering Price $0.04 per share
This Prospectus relates to the sale of 3,500,000 shares of common stock of
Westnet Communication Group, Inc. held by all of the existing stockholders of
the Company. This will be the initial public sale of our stock, so there is
currently no market for our shares.
All of the shares registered are being offered by the selling stockholders.
We will not receive any of the proceeds from the sale of these shares by the
selling stockholders. Securities sold, and proceeds of the sales, will be held
in an escrow account meeting the requirements of Rule 419 of Regulation C under
the Securities Act of 1933, as amended. See "Selling Shareholders and Plan of
Distribution -- Escrow Account" on page 23.
Prior to this offering, no public market has existed for shares of our
common stock. We hope to have our common stock quoted on the OTC Bulletin Board,
but there is no assurance that we will do so, or that a trading market in our
shares will develop.
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.
An investment in us is very risky, especially considering our young age and
our lack of an income-producing business. Only people who can afford to lose all
of their investment should purchase our shares (see "Risk Factors" on page 8 of
this prospectus for special risks concerning us and the offering).
The date of the Prospectus is , 2000.
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<PAGE>
TABLE OF CONTENTS
Page
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PROSPECTUS SUMMARY.............................................6
SUMMARY FINANCIAL INFORMATION..................................7
RISK FACTORS...................................................8
THE COMPANY...................................................12
MANAGEMENT....................................................16
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS.......19
CERTAIN TRANSACTIONS..........................................20
PRINCIPAL STOCKHOLDERS........................................20
DESCRIPTION OF SECURITIES.....................................22
SELLING SECURITY HOLDERS AND PLAN OF DISTRIBUTION.............22
LEGAL PROCEEDINGS.............................................25
EXPERTS.......................................................26
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
AND CAUTIONARY STATEMENTS...................................26
FINANCIAL STATEMENTS..........................................27
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PROSPECTUS SUMMARY
We incorporated in Nevada in 1999 for the purpose of developing a
special-interest world wide web site. We raised capital through private sales of
our common stock to a few investors and officers; however, our resources were
insufficient to properly carry out our business plan. We abandoned our original
business plan to focus on uncovering alternate business or investment
opportunities, or to acquire, merge with or be acquired by an operating
business. Since our inception, we have never received revenues from operating a
business.
Our management believes that becoming a reporting public shell company will
make us an attractive candidate for a business combination, and so we have
voluntarily registered our outstanding securities under the Securities Exchange
Act of 1934 to become a reporting company. Our Exchange Act registration became
effective April 24, 2000. Exchange Act Registration does not imply that the
Securities and Exchange Commission or any securities regulatory body has ruled
on the merits of an investment in our securities, or on the accuracy or
completeness of our disclosures. See "Description of Our Business" beginning on
page 12, and "Regulation" on page 15.
We are considered to be a "blank check" company under the federal
securities laws, because we have no specific business plan and our securities
are not traded on a stock exchange. Rule 419 of Regulation C under the
Securities Act of 1933 requires that the sales of shares in a blank check
company be transacted through an escrow account meeting the requirements of that
Rule. See "Selling Shareholders and Plan of Distribution -- Escrow Account" on
page 23.
Investing in the securities of a blank check company is extremely risky.
Those risks include the potential for losing your entire investment. Specific
risks are discussed under "Risk Factors" beginning on page 8.
We maintain our mailing address at 2921 N. Tenaya Way, Suite 216, Las
Vegas, Nevada 89128. Our phone number is (702) 947-4877.
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THE OFFERING
The selling shareholders may sell a total of up to 3,500,000 shares of
common stock.
The shares are being offered at $0.04 per share. The selling shareholders
have not entered into any underwriting arrangements for the sale of the shares.
If a selling shareholder engages any broker, dealer, underwriter, or sales agent
to help sell the shares, the selling shareholder, and not the company, will bear
the costs of any resulting commissions, brokerage fees, or underwriting
discounts. See "Selling Security Holders and Plan of Distribution" beginning on
page 22.
We will not receive any proceeds from the sale of common stock by the
selling shareholders.
Common Stock outstanding
after the Offering.................... 3,500,000 shares
SUMMARY FINANCIAL INFORMATION
The following is a summary of our financial information and is qualified in
its entirety by our audited financial statements.
As of
June 30, 2000 December 31, 1999
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Balance Sheet Data (Unaudited) (Audited)
Total Assets...................... $ 55,944 $ 55,750
Common Stock...................... 3,500 1,750
Paid-in Capital................... 66,000 67,750
Deficit accumulated
during the development stage...... (12,881) (13,750)
Total
Shareholders' equity.............. 56,619 $ 55,750
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RISK FACTORS
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Any investment in our common stock involves a high degree of risk. You
should carefully consider the following information about those risks, together
with the other information contained in this prospectus, before you decide
whether to buy our shares. Should any one or more of these risks actually
materialize, the results of our operations and our financial condition would
likely suffer. In that event, the market price of our common stock could
decline, and you could lose part or all of your investment.
The risks and uncertainties described below are not the only ones we face.
You should realize that investing in penney stocks and particularly in blank
check companies is by nature very risky.
We Have No Operating History, No Revenue and Minimal Assets. We have no
history of operating a business, nor have we produced any revenues or earnings.
Our only tangible resources are our small cash reserves. We believe we have
enough cash to meet our needs for at least 12 months while we evaluate potential
business combinations or other opportunities. But we will, in all likelihood,
continue to incur operating expenses without corresponding revenues, at least
until we can complete a business combination. This may result in our incurring a
net operating loss which will increase continuously until we can complete a
business combination with a profitable business opportunity. There is no
assurance that we can identify a suitable business opportunity and complete a
business combination before our cash is depleted, if at all.
Our Success Depends Upon Our Management, Who Lack Experience in Mergers and
Acquistions and Will Not Devote Full Time to Our Business. Even if we succeed in
entering into a business combination it may not be on terms most favorable to
the Company or our shareholders. Our management has very limited experience in
locating, evaluating, and negotiating with companies that may be suitable for a
business combination with us. Furthermore, each member of our current management
is engaged in other, unrelated business pursuits, and will devote only part of
his or her working hours to our affairs. We may confer with business
consultants, investment banks, attorney firms, accountants or other business
professionals to help us identify and evaluate opportunities, but our available
resources for those sorts of consultations are very limited.
Our Proposed Operations are by Nature Very Risky. The success of our
proposed plan of operation will depend to a great extent on the operations,
financial condition and management of the particular business opportunity we
decide to pursue. While we intend to seek a business combination with an entity
that has established an operating history, we cannot assure you that we will be
successful in locating candidates meeting any particular criteria. In the event
we complete a business combination, there will likely be significant changes in
our management. Accordingly, the success of our future operations may depend
upon the management of the successor firm and numerous other factors beyond our
control.
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State Blue Sky Regulations May Make It Difficult for You to Resell Our
Stock. If you purchase shares of our Common Stock from the selling shareholders,
you may find it difficult or impossible to sell or transfer them. The individual
states have enacted laws (separate from the federal securities laws) regulating
the registration and sales of securities within their their own jursidictions.
We currently have no plans to register any of our securities with any state,
which means that you will not be able to re-sell the securities in a state
unless you register them with that state, or unless an exemption from
registration is available. To ensure that state laws are not violated through
the resales of our securities, we will refuse to register the transfer of any of
our securities unless we are satisfied that the transfer doesn't violate any
state laws. We do not expect a secondary trading market for the Company's stock
to develop in any state until after we have completed a merger with, or an
acquisition of, an operating company, if at all.
We Currently Have No Agreement for a Business Combination or Merger
Transaction, and No Specific Standards for One, Which Makes an Evaluation of Us
Very Difficult. We currently have no arrangement, agreement or understanding
regarding engaging in a merger with, a joint venture with or an acquisition of,
a private or public company. We can not be certain that we will be successful in
identifying and evaluating suitable business opportunities or in concluding a
business combination. We have not identified any particular industry or specific
business within an industry to evaluate, and even if we identify such a company
we cannot assure you that we will be able to negotiate a business combination on
terms favorable to us. We have not established specific requirements or
characteristics for a company we will evaluate, such as a specific length of
operating history or a specified level of earnings, assets, net worth or other
criteria. All of these uncertainties make an evaluation of our business
prospects very difficult.
It Will be Difficult for Us to Locate and Complete a Suitable Acquisition
or Business Combination. We are, and will continue to be, a minor participant in
the business of seeking mergers with, and acquisitions of, small private and
public businesses. A large number of established and well-financed entities,
including venture capital firms and investment banks, are active in mergers
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<PAGE>
and acquisitions of companies of the type which we may be interested in
acquiring or merging with. We believe that nearly all of the firms competing
with us have significantly greater financial resources, technical expertise and
managerial capabilities than we have. Consequently, we will be at a competitive
disadvantage in identifying possible business opportunities and successfully
completing a business combination. Moreover, we may also have to compete in
seeking merger or acquisition candidates with other small public companies like
ourselves. All of these factors could make it very difficult for us to achieve
our current business objectives.
A Business Combination Transaction May Involve Conflicts of Interest On the
Part of Our Management. It is possible that various conflicts of interest and
non-arms length transactions may arise in the future in connection with our
selection of a target Company to acquire or to merge with. For instance, it is
possible that the terms of a business combination may include such terms as one
or more of our officers or directors continuing to serve as officers or
directors of the merged entity. There may also be a payment in cash or some
other consideration to officers or directors for the purchase or retirement of
all or part of our common stock held by them. The officers and directors would
directly benefit from such a payment, and those benefits may influence their
selection of a target company. Our Articles of Incorporation provide that we may
indemnify our officers and/or directors for liabilities, which can include
liabilities arising under the securities laws. Therefore, assets of the Company
could be used or attached to satisfy any liabilities arising out of that
indemnification. See "Management -- Indemnification of Officers and Directors"
beginning on page 18.
Management and Shareholder Control Will Probably Change. If we enter into a
business combination involving the issuance of our Common Shares, it
is likely that the shareholders of a private company will obtain a controlling
interest in us. Such a business combination may require our management to sell
or transfer all or a portion of our Common Stock Shares held by them, or resign
as members of the Board of Directors of the Company, or both. The resulting
change in our control could result in the removal of present officers
and a corresponding reduction in -- or elimination of -- their participation in
the future affairs of the Company.
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Penny Stocks Can be Risky and Unsuitable for Many Investors. In the event
that a public market develops for our common stock following a business
combination, our stock may be classified as a "penny stock" depending upon the
market price and the manner in which it is traded. The Securities and Exchange
Commission has adopted Rule 15g-9 which establishes the definition of a penny
stock, for purposes relevant to our company, as any equity security that has a
market price of less than $5.00 per share or with an exercise price of less than
$5.00 per share whose securities are admitted to quotation but do not trade on
the Nasdaq SmallCap Market or on a national securities exchange. For any
transaction involving a penny stock, unless exempt, the rules require that the
broker deliver a document to investors stating the risks of investment in penny
stocks, the possible lack of liquidity, commissions to be paid, current
quotation and investors' rights and remedies, a special suitability inquiry,
regular reporting to the investor and other requirements. Prices for penny
stocks are often not available and investors are often unable to sell penney
stocks. Thus you may lose your entire investment in a penny stock and
consequently should be cautious of any purchase of penny stocks.
If You Purchase Shares On This Offering, Your Percentage Share Ownership
May be Reduced Following a Business Combination. Our primary plan of operation
is based upon a business combination with a private concern which, depending on
the terms of merger or acquisition, may result in the Company issuing securities
to shareholders of the private company. Our issuance of previously authorized
and unissued Common Shares would result in a reduction in the percentage of
shares owned by our present shareholders and by purchasers on this offering
(commonly called "dilution").
There is a Potential for Unfavorable Tax Treatment. Federal and state tax
consequences will, in all likelihood, be major considerations in any business
combination we may undertake. Currently, transactions like the one we are
seeking may be structured so as to result in tax-free treatment to both
companies, according to various federal and state tax provisions. We intend to
structure any business combination so as to minimize the federal and state tax
consequences to both the Company and the target entity; however, there can be no
assurance that we can comply with the statutory requirements of a tax-free
reorganization or that the parties will obtain the intended tax-free treatment
when they transfer stock or assets. If a business combination should fail to
qualify as a tax-free reorganization, both parties could suffer adverse federal
and state tax consequences.
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<PAGE>
Our Shareholders May Not Have a Say in the Selection of a Business
Opportunity. If and when our Management decides to enter into a business
combination or opportunity, we do not expect to submit the matter to a vote of
the shareholders in advance of completing a transaction. We are authorized and
may elect to enter into any lawful transaction in the discretion of the Board of
Directors. Consequently, it is unlikely that you as a shareholder will have a
voice in the selection of a business opportunity for the Company, or in the
terms of any acquisition or business combination we may undertake. You will,
however, be given an opportunity to affirm or withdraw your offer to purchase
securities after we have amended our registration statement to include
information about a merger or acquisition, and have delivered to you a new
prosectus including the information. See "Selling Securityholders and Plan of
Distribution -- Escrow Account" beginning on page 23.
THE COMPANY
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DESCRIPTION OF OUR BUSINESS.
We were incorporated in the State of Nevada on October 14, 1999, for the
purpose of developing and operating a special interest worldwide web site
community. Prior to fully implementing our business plan, however, we determined
that our capital resources were inadequate, and we abandoned the plan. We then
resolved to investigate possibilities for investing in an existing business
enterprise, or forming a business combination with an operating company of some
sort. To date, we have not been successful in locating such a venture or
company, and there is no assurance that we will be successful in the future. We
have been a development stage company since our inception, and we have no
prospects for generating any revenues or earning any profits unless or until we
can complete a business combination with an operating company, or begin
operating a business of some sort.
We believe that there are companies already conducting business operations
which could benefit from entering into a business combination with a "public"
company. In some circumstances, a transaction of that nature might aid the
company in establishing a public trading market for its stock, while avoiding
possible adverse consequences of doing its own public offering. These
consequences may include, among others:
o time delays of the registration process;
o significant expenses likely to be incurred in such an offering;
o loss of voting control to public shareholders; and
o the inability or unwillingness to comply with various federal and state
laws enacted for the protection of investors.
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<PAGE>
However, a private company which perceives these or other advantages to entering
a business combination with a public company is not permitted to do so as a way
of evading the financial disclosure requirements of the Exchange Act.
Accordingly, any company that is not willing and able to provide a current
audited financial statement within a reasonable period following the
complettion of a business combination will not be a suitable candidate for a
business combination with us.
We have not established any particular parameters or guidelines as to the
type, nature, suitability or any other characteristics of any business or
company which we may seek to acquire, invest in or form a business combination
with. The expertise and interests of the present management lie in the areas of
psychological services, education and publishing; however, the Board of
Directors has resolved to consider any viable opportunities it becomes aware of
regardless of the business or industry. In reviewing possible acquisition
targets and investment opportunities, we will perform, or engage someone to
perform, only that investigation and evaluation which our Directors deem
necessary and appropriate before deciding whether and on what terms to proceed
with a business combination, if at all. No member of our Board has any
particular experience or expertise in performing these sorts of evaluations, or
in negotiating mergers and acquisitions, and so we remain uncertain as to when,
if ever, the Company will become profitable.
We are likely to face significant competition for available business and
investment opportunities, mostly from substantial competitors with far greater
resources and expertise than we possess. Our competitors include venture capital
firms, investment banks, and large professional groups such as attorney firms,
accounting firms, and business consultants (see "Competition" on page 15).
In furtherance of our current business objective, we have voluntarily
registered our outstanding common stock pursuant to Section 12(g) of the
Exchange Act. We are informed and believe, although there can be no assurance,
that our ability to attract and successfully negotiate a business combination
with an operating company, or to pursue certain business opportunities, may be
enhanced by our becoming a reporting company under the Exchange Act. The
Company's registration statement became effective April 24, 2000, making us
subject to the reporting requirements of that Act as of that date. The fact that
the Company has registered a class of securities does not in any manner signify
that the U. S. Securities and Exchange Commission or any other regulatory body
has endorsed or expressed an opinion on the merits of an investment in our
stock, or on the accuracy or completeness of our registration statements or our
required periodic reports.
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<PAGE>
We have never filed bankruptcy, been in receivership, or been involved in
any similar proceedings. We have not been involved in a purchase or sale of a
significant amount of assets, whether in the ordinary course of business or
otherwise. We have had no sales or revenues, other than interest earned on our
cash balances, and we currently have no products or services. Accordingly, we
have no backlog of orders, nor are we dependent on any one or few large
customers.
We are not subject to any industry-specific government regulation, nor do
we need government approval for any of our operations, except that as a
reporting company we must comply with federal and state securities laws and
regulations wherever we engage in activities that are subject to those laws and
rules (see "Regulation" on page 15). We have made no significant expenditures on
research and development during the most recent fiscal year or interim period.
We maintain an office at 2921 N. Tenaya Way, Suite 216, Las Vegas, Nevada 89128
which we share with other unaffiliated business entities.
PLAN OF OPERATION
We are considered to be a company in the development stage, having no
revenues from business operations since our inception. Moreover, we are
considered under the securities regulations to be a "blank check" company since
we have no specific business plan other than to acquire, merge with or invest in
a business opportunity or entity which we have not yet identified. We believe we
have sufficient cash to meet our needs for the next 12 months, and accordingly
have not planned to raise additional capital during that time. We hope to be
able to use our securities to pay for any acquisition(s) we may complete.
However, we are uncertain what costs we will incur in locating, investigating
and negotiating for acquisitions or business combination opportunities. Should
we decide to raise additional capital by selling equity securities, your
percentage ownership of the Company could be substantially diluted.
EMPLOYEES
At present we have no full time or part time employees. Our officers have
allocated a small portion of their working hours to various activities on behalf
of the Company, but have received no compensation other than some reimbursement
of minor out-of-pocket expenses incurred by them on our behalf. We currently
have no plans to hire employees or to institute a compensation plan for the
existing officers, although it is likely that we will put into place some sort
of executive compensation plan should we succeed in creating operating revenues
through a business combination or investment. If we institute such a plan, it
would be based on industry standards for compensation of executives in similar
businesses with similar duties and responsibilities.
We have not adopted any retirement, pension, profit sharing, stock option
or insurance programs or other similar programs for the benefit of employees.
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<PAGE>
REGULATION
Since the Company is not engaged in any particular business, other than
seeking a suitable acquistion or merger, or business opportunity of some sort,
we are not subject to any industry-specific laws, rules or regulatory scheme.
Nevertheless, as a reporting company under the Securities Exchange Act of 1934,
we are subject to all of the rules and requirements applicable to reporting
companies (see "Risk Factors" beginning page 8). These requirements include at a
minimum the obligation to file periodic reports with the Securities and Exchange
Commission, including an audited financial statement within ninety days of our
fiscal year-end, and unaudited financial statements within forty-five days of
the end of each interim fiscal quarter.
We are also required to file Current Reports on Form 8-K with respect to
certain developments, including such occurrences as a change of our certifying
accountants, acquiring or disposing of a significant amount of assets, or a
change of control, any or all of which are likely to occur in connection with
our completion of a merger with or acquisition of an operating company. These
reporting requirements will represent a continuing burden on the Company's cash
and management resources whether or not we succeed in our business plan.
Although at present we have no plans to do so, it is possible that we will
invest our cash in passive investments in securities. If we do so, we may be
required to register as an investment company under the Investment Company Act
of 1940. Registering will likely incur a significant drain on the Company's
limited resources, and may require us to borrow funds or sell more securities to
defray the costs of registration. If we sell additional equity securities, or
securities exercisable or convertible into equity stock, your proportional
ownership in the Company will be diluted. Before we make passive investments in
securities, our management will consider carefully the advantages and
disadvantages of becoming an investment company.
COMPETITION
The market in mergers and acquisitions involves many very large companies
and billions of dollars in cash and securities. We will likely remain an
insignificant participant among the firms which engage in the acquisition of
business opportunities. There are many established venture capital and financial
concerns which have significantly greater financial and personnel resources and
technical expertise than us. We cannot predict in advance who will be specific
competitors for particular acquisitions or investments that we may choose to
pursue. However, in view of our limited financial resources, and limited
management availability and expertise, we will likely remain at a significant
disadvantage compared to our competitors. It is likely that the investment
opportunities available to us will be those that are of little enough
significance as to escape the attention or interest of our larger competitors.
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<PAGE>
PROPERTY
The Company does not own any real or personal property. We currently
maintain a mailing and business address at the offices of our statutory resident
agent, for which we pay a small annual fee. That address is:
Westnet Communication Group, Inc.
2921 N. Tenaya Way, Suite 216
Las Vegas, Nevada 89128
We believe these facilities will be adequate for the needs of the Company
until such time as we commence regular business operations or enter into a
business combination transaction with an operating company.
MANAGEMENT
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Ms. Elizabeth A. Sanders, age 54, is President and a Director of the
Company. She has been an active professional working in developmental psychology
and special education for over 20 years. During the past 14 years she has worked
as a contract psychologist for the Clark County (Nevada) School District, with
specialization in early childhood. She holds a Bachelor of Science Degree in
Education, a Master of Science Degree in Special Education, School Psychologist
Certification from the National Association of School Psychologist, and various
professional qualifications. For the foreseeable future, Ms. Sanders will devote
as much time to the development of the business as she deems warranted and as is
practical, to an estimated maximum of about 25 hours per week.
Ms. Nancy Cooke, age 63, who serves as Secretary to the Corporation, is an
accomplished writer who has written twenty original plays, of which ten were
first-place winners in various playwriting competitions and produced at theaters
in the Salt Lake City area. Since 1996 she has concentrated her work hours on
writing projects. Previously she gained extensive work history in service
oriented and "people oriented" professional employment, working from 1994 to
1996 for the Utah State Office of Rehabilitation in the Supported Employment
Unit for Disabled Workers, and from 1990 to 1993 for Weber State University in
Learning Support Services assisting at-risk entry-level students during their
first year at college. Ms. Cooke worked 19 years at the Salt Lake City Police
Department, serving in several capacities including Administrative Secretary to
the Chief of Police. She holds a Bachelor of Science Degree in
Psychology/Sociology, a Master of Fine Arts in Theatre/Playwriting, and a Ph.D.
in Theatre/Playwriting. For the foreseeable future, Ms. Cooke will devote as
much time as she deems warranted and as is practical to the development of the
business, up to an estimated maximum of about 20 hours per week.
-16-
<PAGE>
Ms. Kristy B. Warren, age 43, serves as Treasurer/CFO and a Director for
the Company. Ms. Warren retired from a supervisory position for Centel Telephone
in 1997, and has served five years as a Director for Investment Management
Associates, a financial consulting firm. For the foreseeable future, Ms. Warren
will devote as much time as she deems warranted and as is practical to the
development of the business, up to an estimated maximum of about 25 hours per
week.
EXECUTIVE COMPENSATION
To date, we have not paid any money to any officer or director, except
reimbursement for direct out-of-pocket expenses incurred by them on behalf of
the Company. We currently have no plans to implement executive or director
compensation, and none of the executives or directors is accruing any
compensation that would have to be paid in the future. Our directors and
executive officers currently devote less than ten percent of working hours to
the affairs of the Company.
On October 14, 1999, we issued 150,000 restricted pre-split shares (now
300,000 shares) to the executive officers of the Company in exchange for their
services in the planning and organization of the Company. Those shares are
included in the shares being offered by this prospectus.
We have not entered into any employment contracts, and we do not pay
consulting fees to officers or directors. We have not paid cash or other
advances to any officer or director, nor do we have plans to do so in the
foreseeable future. We have no retirement, pension, profit sharing or stock
option plans or insurance or medical payment plans covering any officer or
director, nor do have any intention to implement such plans in the foreseeable
future.
POTENTIAL CONFLICTS OF INTEREST
If and when we complete a merger or acquisition with an unaffiliated
business entity, it is possible that the entity may desire to employ or retain
one or a number of members of our present management for the purposes of
providing services to the surviving entity. The Company has adopted a policy
whereby the offer of any post-transaction compensation to members of management
will not be a consideration in the Company's decision to undertake any proposed
transaction.
-17-
<PAGE>
The management has agreed to disclose to the Company's Board of Directors
any discussions concerning possible compensation to be paid to them by any
entity which proposes to undertake a transaction with us. It is possible that
persons associated with management may refer a prospective merger or acquisition
candidate to us. In the event the Company consummates a transaction with any
entity referred by associates of management, it is possible that such an
associate will be compensated for their referral in the form of a finder's fee.
We anticipate that this fee, if one is paid, will be in the form of either
restricted common stock or warrants issued by the Company as part of the terms
of the proposed transaction, or will be in the form of cash consideration. As of
the date of this prospectus, it is not possible for us to determine the amount
of such a finder's fee, but we expect it to be comparable to consideration
normally paid in similar transactions, or fair and reasonable under the
circumstances. Any new restricted stock we may issue as compensation will dilute
the percentage ownership of existing shareholders. Any warrants we may issue
that are subsequently exercised will dilute the percentage ownership of existing
shareholders.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
To the fullest extent permitted by the laws of the State of Nevada and by
the By-laws of the Company, we will indemnify any person who is made a party, or
threatened to be made a party, to an action or proceeding, whether criminal,
civil, administrative or investigative, because of his or her having been a
director or officer of the Company, or having served any other enterprise as
director, officer or employee at the request of the Company. The Board of
Directors, in its discretion, has the power on behalf of the Company to
indemnify any person, other than a director or officer, made a party to any
action, suit or proceeding by reason of the fact that he/she is or was an
employee of the Company.
Indemnification of officers or persons controlling the company for
liabilities arising under the securities act of 1933 is held to be against
public policy by the securities and exchange commission and is therefore
unenforceable.
-18-
<PAGE>
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
-------------------------------------------------------
Our shares have never traded, and there exists no public trading market for
our shares. As of the date of this prospectus, we have seven (7) shareholders,
including officers, directors and control persons.
We intend to apply to have our Common Stock traded on the over-the-counter
market and listed on the OTC Bulletin Board. There is no assurance that the
Company will obtain OTC Bulletin Board listing, that a trading market will ever
develop or, if a market does develop, that it will continue. Even if a market
does develop and continue, the trading volume in the Company's securities may be
inadequate to provide meaningful liquidity or reliable pricing.
The securities to which this registration statement applies are being
offered by selling security holders. We are not offering any new shares for
sale. There are no outstanding options, rights, warrants to purchase, or
securities convertible into, our common equity.
We have never paid a dividend, nor do we intend to do so in the foreseeable
future. There are no restrictions on the power of the Board of Directors to
declare and pay dividends.
CERTAIN TRANSACTIONS
--------------------
There have been no related party transactions, or any other transactions or
relationships required to be disclosed pursuant to Item 404 of Regulation S-B.
-19-
<PAGE>
PRINCIPAL STOCKHOLDERS
----------------------
The following constitute all of the individuals or groups known by us to be
the beneficial owner of more than five (5) percent of any class of the issuer's
securities:
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
-------------- ---------------- -------------------- --------
Common Stock ...........Transint Holdings and 1,600,000 shares 45.7
Consultancy, Inc.
328 Bay Street
Nassau, Bahamas
c/o Melanie Scott
750 Royal Crest Cir.
No. 325
Las Vegas, NV 89109
Common Stock ...........Kidakus Consulting, 600,000 shares 17.1
Ltd.
2921 N. Tenaya Way
Suite 216
Las Vegas, NV 89128
Common Stock ...........Corporate Capital 600,000 shares 17.1
Formation, Inc.
2921 N. Tenaya Way
Las Vegas, NV 89128
Common Stock ...........Connie S. Ross 400,000 shares 11.4
2902 La Mesa Drive
Henderson, NV 89014
Common Stock ...........Elizabeth A. Sanders 200,000 shares 5.7
(Officer and Director)
2921 N. Tenaya Way
Suite 216
Las Vegas, NV 89128
Transint Holdings and Consultancy, Inc. ("Transint"), is a Nassau-based
investment company with correspondent offices in Las Vegas, Nevada. Dennis
Sutton is President, Director, and holder of ten percent (10%) of the
outstanding shares of Transint. None of the officers or directors of Transint
has any other relationship with us.
-20-
<PAGE>
Kidakus Consulting, Inc. ("Kidakus"), is a Nevada small business investment
firm. Mr. Gary Grieco is President and Director, and owns twenty-five percent
(25%) of the outstanding shares of Kidakus. None of the officers or directors of
Kidakus has any other relationship with us.
Corporate Capital Formation, Inc. ("CCF"), serves as independent consultant
to us in matters relating to the preparation and filing of this registration
statement, corporate governance and business planning, E.D.G.A.R. filings, and
related matters. Mr. Brice Smith is president, CEO, and owner of 40% of the
equity stock of CCF.
Among other activities, CCF serves as statutory resident agent for a large
number of Nevada corporations, including us and Kidakus. While CCF's office
address is the same as the respective registered office addresses for the latter
two companies, there is no commonality of control or other relationship between
or among the three companies (i.e., CCF, Kidakus and us) except as specifically
stated in this prospectus.
The following are all of our officers and directors who are beneficial
owners of our securities:
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
-------------- ---------------- -------------------- --------
Common Stock ...........Elizabeth A. Sanders 200,000 shares 5.7
(Officer and Director)
2921 N. Tenaya Way
Suite 216
Las Vegas, NV 89128
Common Stock ...........Kristy B. Warren 50,000 shares 1.4
(Officer and Director)
2921 N. Tenaya Way
Suite 216
Las Vegas, NV 89128
Common Stock ...........Nancy J. Cooke 50,000 shares 1.4
(Officer)
2921 N. Tenaya Way
Suite 216
Las Vegas, NV 89128
---------------- -----
Common Stock ...........Officers and Directors
as a Group 300,000 shares 8.5
-21-
<PAGE>
None of the Officers or Directors currently holds any warrants, options or
rights to acquire beneficial ownership of additional shares of our securities.
There are currently no arrangements that could result in a change in our
control.
As far as we are aware, no voting trust or similar agreements exist with
respect to any of the shares held by officers, directors or control persons.
DESCRIPTION OF SECURITIES
-------------------------
Our authorized capital consists of 25,000,000 shares of voting common
stock, par value $.001 per share, of which 3,500,000 shares have been issued and
are outstanding. The shares carry one vote per share and have no pre-emptive
rights, terms of conversion, sinking fund provisions, or liquidation rights, and
cumulative voting for directors is denied. Once subscribed and paid, the shares
are fully paid and non-assessable by us. The shares have rights to participate
in dividends and other distributions if, as, and when declared by the Board of
Directors. The rights of the shareholders can only be modified by a vote of a
majority or more of the shares outstanding, voting as a class.
Transfer Agent for the Company's securities is:
Holladay Stock Transfer, Inc.
2939 N. 67th Pl.
Scottsdale, Arizona 85251
SELLING SECURITY HOLDERS AND PLAN OF DISTRIBUTION
-------------------------------------------------
METHOD OF DISTRIBUTION
This prospectus concerns the sale by the selling security holders of an
aggregate of 3,500,000 shares of common stock. The selling security holders are
offering the shares at a price of $0.04 per share. The selling shareholders are
offering the shares directly through their own selling efforts, with the aid of
underwriters, brokers or sales agents. Should the selling shareholders decide to
employ selling agents or underwriters, they -- and not the company -- will bear
the costs of any associated commissions, fees, or underwriting discounts. We
will not receive any proceeds from the sale of common stock by the selling
security holders.
-22-
<PAGE>
Under federal securities laws, we are deemed to be a "blank check" company,
because we are a development stage company with no specific business plan or
purpose, and our securities are not traded on a securities exchange. Rule 419 of
Regulation C under the Securities Act of 1933 imposes a special escrow
requirement on sales of stock in blank check companies. Under the rule, all
proceeds from the sales of the securities offered by this prospectus will be
deposited into an escrow or special account and held there until certain
conditions are met. See "Escrow Account" following.
ESCROW ACCOUNT
Rule 419 requires that securities sold by a blank check issuer, and the
proceeds of those sales, be deposited into an escrow account at an insured
depository institution, or into a segregated account at a registered securities
Broker-Dealer. If you purchase shares of stock offered through this prospectus,
the selling shareholder(s) will deposit the shares and your payment into an
escrow account established for that purpose at Southwest Escrow, Inc. of Las
Vegas, Nevada. When we acquire an operating business, or complete a merger or
other business combination with an operating entity, the funds will be released
to the Selling Shareholders, and the securities will be released to you.
Once we have secured an agreement to acquire or combine with an operating
company, we will file an amendment to our registration statement and send you an
amended prospectus with information about the new business, including financial
statements. If, after reviewing the amended prospectus, you still wish to
purchase the shares, you will be asked to affirm your intention in writing. If
you do not affirm your purchase in writing within 45 days of the effective date
of our amended registration statement, your funds will be promptly returned to
you together with any interest or dividends earned on them. If a sufficient
number of purchasers affirm their purchases, the acquisition or merger will be
completed, and the funds will be released to the selling shareholders and the
securities will be released to you.
If we have not consummated an acquisition or business combination within 18
months after the effective date of our initial registration statement, your
funds will be returned to you together with any interest or dividends earned on
them. If the selling shareholders elect to withdraw their registration statement
prior to the consummation of a business combination or the passing of 18 months,
your funds will be returned to you with interest or dividends earned, if any.
The Escrow Agreement between Southwest Escrow Co. and the Selling
Shareholders is attached as Exhibit 99 to our Registration Statement filed on
the E.D.G.A.R. reporting system. If you wish to review the Escrow Agreement, and
are unable or do not wish to access E.D.G.A.R., you may contact the selling
shareholders in care of Westnet Communication Group, Inc., 2921 N.Tenaya Way,
Suite 216, Las Vegas, Nevada, 89128, (702) 947-4877 and a copy will be made
available to you.
-23-
<PAGE>
SALES THROUGH REGISTERED BROKER-DEALERS
We expect that the selling security holders will offer the shares in direct
sales to private persons. In that event, the transactions will be effected as
described above under "Escrow Account."
It is possible that the selling security holders may offer the shares to or
through registered broker-dealers who may be paid standard commissions or
discounts by the selling security holders. In that event, the funds and
securities will be deposited into a segregated account at the Broker-Dealer, to
be held and released on the same terms and conditions as described under "Escrow
Account" above, except that the amount of any brokerage commission or selling
expenses may be deducted from your funds as soon as they are deposited.
As of the date of this Prospectus, we believe that no selling security
holders have any arrangements or agreements with any underwriters or
broker-dealers to sell the shares. Should any selling security holder make such
an agreement or arrangement, any sales under the agreement must be transacted
either through the Escrow Agreement with Southwest Escrow Co. or through a
segregated brokerage account. Additionally, agents, brokers or dealers may
acquire shares or interests in shares and may, from time to time, make
distributions of the shares or interests in that capacity. These distributions
will be subject to the escrow requirements of Rule 419 until we have completed
an acquisition or merger.
SELLING SECURITY HOLDERS
The following table shows the names of the selling security holders, the
number of shares of common stock owned by the selling security holders before
this offering, the number of shares of common stock being registered, and the
number and percentage of shares of common stock owned after this offering. None
of the selling security holders has held any position or office, or had any
marital relationship with our officers or directors in the past three years
except as noted below.
-24-
<PAGE>
The table assumes all of the shares registered are sold. The percents do
not total 100% due to rounding.
Beneficial Ownership Beneficial Ownership
Prior to the Offering After the Offering
Name of --------------------- --------------------
Beneficial Owner Number Percent Number Percent
-----------------------------------------------------------------------------
Transint Holdings & 1,600,000 45.7 0 0
Consultancy, Inc.
Kidakus Consulting, Ltd. 600,000 17.1 0 0
Connie S. Ross 400,000 11.4 0 0
Corporate Capital 600,000 17.1 0 0
Formation, Inc.
Elizabeth A. Sanders* 200,000 5.7 0 0
Nancy J. Cooke* 50,000 1.4 0 0
Kristy B. Warren* 50,000 1.4 0 0
-----------------------------------------------------------------------------
*/Elizabeth A. Sanders and Kristy B. Warren are our two directors and also serve
as officers. Nancy J. Cooke serves as one of our officers.
LEGAL PROCEEDINGS
-----------------
There are no legal proceedings involving the Company, either pending or
threatened.
-25-
<PAGE>
EXPERTS
-------
Our financial auditors are Randy Simpson C.P.A. P.C., 11775 South Nicklaus
Road, Sandy Utah 84092. Our attorney is Amy L. Clayton, 175 N. C Street, Salt
Lake City, Utah 84103. Experts who have provided or will provide services to us
in connection with this offering have been paid or will be paid in cash,
securities, or cash and securities, and to the our knowledge will have no
ownership interest in the Company's securities exceeding $50,000 in value.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS AND CAUTIONARY STATEMENTS
-------------------------------------------------------------------------
This prospectus includes "forward-looking statements". All statements other
than statements of historical fact included in this prospectus regarding our
financial position, business strategy, plans and objectives of our management
for future operations and capital expenditures, are forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements and the assumptions upon which the forward-looking statements are
based are reasonable, we can give no assurance that such expectations will prove
to have been correct.
Additional statements concerning important factors that could cause actual
results to differ materially from our expectations ("Cautionary Statements") are
disclosed in the "Risk Factors" section and elsewhere in this prospectus. All
written and oral forward-looking statements attributable to us or persons acting
on our behalf subsequent to the date of this prospectus are expressly qualified
in their entirety by the Cautionary Statements.
-26-
<PAGE>
FINANCIAL STATEMENTS
--------------------
Randy Simpson C.P.A. P.C.
11775 South Nicklaus Road
Sandy, Utah 84092
Fax & Phone (801) 572-3009
CERTIFIED PUBLIC ACCOUNTANT'S REVIEW REPORT
Stockholders and Board of Directors
Westnet Communication Group, Inc.
Las Vegas, NV
I have reviewed the accompanying balance sheets of Westnet Communication Group,
Inc. as of Deember 31, 1999 and June 30, 2000, and the related statements of
income, shareholders' equity and cash flows for the year ended December 31, 1999
and the six months ended June 30, 2000, in accordance with Statements of
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants. All information included in these financial
statements is the represntation of the management of Wstnet Communication Group,
Inc.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinon regarding the financial statements taken as
a whole. Accordingly, I do not express such an opinion.
Based on our review, I am not aware of any material modifications that should be
made to the accompanying financial statements in order fo them to be in
conformity with generally accepted acccounting principles.
/s/ Randy Simpson
--------------------------
Randy Simpson, CPA P.C.
August 10, 2000
Sandy, Utah
-27-
<PAGE>
WESTNET COMMUNICATION GROUP, INC.
BALANCE SHEET
June 30, 2000 (unaudited)
June 30
2000
-----------
(Unaudited)
ASSETS
Cash ......................................... $ 55,944
----------
Total Current Assets ...................... $ 55,944
Organization Costs
(net of accumulated amortization) .......... 675
----------
TOTAL ASSETS .............................. $ 56,619
==========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Payables -
----------
TOTAL CURRENT LIABILITIES $ -
Common Stock, $.001 par value; Authorized
25,000,000, issued and outstanding
3,500,000 shares on May 31, 2000 ............. 3,500
Paid in Capital .............................. 66,000
Accumulated Deficit ........................... ( 12,881)
----------
Total Stockholders' Equity (Deficit) .... 56,619
TOTAL LIABILITIES AND ----------
STOCKHOLDERS' EQUITY (DEFICIT) .......... $ 56,619
==========
See Accompanying Notes to the Financial Statements.
-28-
<PAGE>
WESTNET COMMUNICATION GROUP, INC.
STATEMENT OF INCOME
<TABLE>
<CAPTION>
6 Months Ended
June 30, 2000
--------------
(Unaudited)
<S> <C>
Revenues
Interest Income ....................... 969
------------
Total Revenues $ 969
Expenses
General and Administrative ............ 25
Amortization of Organizational Costs .. 75
------------
Total Expenses ........................... 100
Income Taxes 130
Benefit of loss carry forward ..... (130)
------------
NET INCOME (LOSS) .................... $ 869
============
Weighted Average Shares
Common Stock Outstanding ................. 2,236,111
NET INCOME (LOSS) PER COMMON SHARE ... $ 0.00
============
</TABLE>
See Accompanying Notes to the Financial Statements
-29-
<PAGE>
WESTNET COMMUNICATION GROUP, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
6 Months Ended
June 30, 2000
--------------
(Unaudited)
<S> <C>
Cash flows used in Operating Activities
Net Income (Loss) ................................ $ 869
Common Stock Issued for Expenses ................. --
Non-cash Expenses
(Amortization of Organization Costs) ............ 75
Changes to operating assets and liabilities ...... --
-----------
Cash flows used in operating activities .......... $ 944
Cash flows used in Investing Activities
Organizational costs incurred .................... --
-----------
Cash flows from investing activities ............. --
Cash flows from Financing Activities
Common stock issued for cash ..................... --
-----------
Cash flows for financing activities .............. --
Net increase (decrease) in cash ....................... $ 944
Cash at beginning of period ........................ 55,000
-----------
Cash at end of period .............................. $ 55,944
===========
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
-30-
<PAGE>
WESTNET COMMUNICATION GROUP, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
From Inception (October 14, 1999) through June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Common Common
Stock Stock Paid-in Accumulated Total
Shares Amount Capital Deficit Equity
------ ------ ------- --------- -------
<S> <C> <C> C> <C> <C>
Balances At October 14, 1999 .................. - $ - $ - $ - $ -
Founders shares issued for services
valued at $0.001 per share .................... 450,000 450 4,050 - 4,500
Common stock issued for cash
at $0.05 per share ........................... 1,300,000 1,300 63,700 - 65,000
Net loss for the period from inception
(October 14, 1999) through December 31, 1999 .. - - - (13,750) (13,750)
May 10, 2000 Common Stock Split 2 for 1 ....... 1,750,000 1,750 (1,750) - -
Net Income six months ending June 30, 2000 .... - - - 869 869
---------- ------ -------- --------- ---------
Balances June 30, 2000 3,500,000 $3,500 $ 66,000 $(12,881) $ 56,619
========== ====== ======== ========= =========
See Accompanying Notes to the Financial Statements
</TABLE>
-31-
<PAGE>
WESTNET COMMUNICATION GROUP, INC.
Note to Financial Statement
June 30, 2000
These financial statements reflect the stock transactions of Westnet
Communication Group, Inc. (the Company) from inception (October 14, 1999)
through June 30, 2000. The Company has not yet commenced operations and is
exploring various business opportunities. In the opinion of management, all
adjustments necessary for a fair presentation of results of operations have been
made to the financial statements. Results of operations for the six months
ending June 30, 2000 are not necessarily indicative of results of operations for
the year.
Organizational costs are amortized to expense over 60 months starting January 1,
2000.
There are no timing differences between the financial statement and income tax
accounting for the Company.
-32-
<PAGE>
Randy Simpson C.P.A. P.C.
11775 South Nicklaus Road
Sandy, Utah 84092
Fax & Phone (801) 572-3009
Independent Auditors' Report
Board of Directors and Stockholders
Westnet Communication Group, Inc.
Las Vegas, NV
We have audited the accompanying balance sheets of Westnet Communication Group,
Inc. (the Company) as of December 31, 1999 and the related statements of
operations, stockholders' equity, and cash flows for the period from inception
(October 14, 1999) through December 31, 1999. 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 audits.
We conducted our audits in accordance with generally accepted auditing
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 above mentioned financial statements fairly present, in all
material respects, the financial position of Westnet Communication Group, Inc.
as of December 31, 1999 and the results of its operations and its cash flows for
the period from inception (October 14, 1999) through December 31, 1999, in
conformity with generally accepted accounting principles.
/s/ Randy Simpson
----------------------------
RANDY SIMPSON, C.P.A. P.C.
A Professional Corporation
May 23, 2000
Sandy, Utah
-33-
<PAGE>
WESTNET COMMUNICATION GROUP, INC.
BALANCE SHEETS
December 31, 1999
Dec. 31
1999
------
ASSETS
Cash ......................................... $ 55,000
----------
Total Current Assets ...................... $ 55,000
Organization Costs 750
----------
TOTAL ASSETS .............................. $ 55,750
==========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Payables -
----------
TOTAL CURRENT LIABILITIES $ -
Common Stock, $.001 par value; Authorized
25,000,000 shares, issued and outstanding
1,750,000 shares on December 31, 1999 ........ 1,750
Paid in Capital .............................. 67,750
Accumulated Deficit ........................... ( 13,750)
----------
Total Stockholders' Equity (Deficit) .... 55,750
TOTAL LIABILITIES AND ----------
STOCKHOLDERS' EQUITY (DEFICIT) .......... $ 55,750
==========
See Accompanying Notes to the Financial Statements.
-34-
<PAGE>
WESTNET COMMUNICATION GROUP, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Period from Oct. 14, 1999
through Dec. 31, 1999
----------------------
<S> <C>
Revenues --
-----------
Total Revenues $ --
Expenses
General and Administrative ............. 13,750
-----------
Total Expenses ............................ 13,750
-----------
NET INCOME (LOSS) .................... $ (13,750)
===========
Weighted Average Shares
Common Stock Outstanding .................... 1,750,000
NET INCOME (LOSS) PER COMMON SHARE .... $ (0.01)
===========
</TABLE>
See Accompanying Notes to the Financial Statements
-35-
<PAGE>
WESTNET COMMUNICATION GROUP, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Period From Oct. 14, 1999
through Dec. 31, 1999
---------------------
<S> <C>
Cash flows used in operating activities:
Net Loss ......................................... $ (13,750)
Common Stock issued for expenses ................. 4,500
Changes to operating assets and liabilities ...... --
----------
Cash flows used in operating activities .......... (9,250)
Cash flows used in investing activities
Organizational costs incurred .................... (750)
----------
Cash flows used in investing activities .......... (750)
Cash flows from financing activities:
Common stock issued for cash ..................... 65,000
----------
Cash flows from financing activities ............. 65.000
Net increase (decrease) in cash ....................... 55,000
----------
Cash at beginning of period ........................ -
----------
Cash at end of period .............................. $ 55,000
==========
</TABLE>
See Accompanying Notes to the Financial Statements
-36-
<PAGE>
WESTNET COMMUNICATION GROUP, INC.
Notes to Financial Statements as of December 31, 1999
These financial statements reflect the transactions of Westnet Communication
Group, Inc. (the Company) from inception (October 14, 1999) through December 31,
1999. The Company was organized in Nevada. In the opinion of management, all
adjustments necessary for a fair presentation of results of operations have been
made to the financial statements. Results of operations from inception (October
14, 1999) through December 31, 1999 are not necessarily indicative of results of
operations for a full year. The Company had not commenced operations as of
December 31, 1999.
Organizational costs will be amortized to expense on the straight line method
over 5 years, starting in the year 2000.
-37-
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROPSECTUS
================================================
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the fullest extent permitted by the laws of the State of Nevada and the
By-laws of the Company, the Company will indemnify any person who is made a
party, or threatened to be made a party, to an action or proceeding, whether
criminal, civil, administrative or investigative, because of his or her having
been a director or officer of the Company, or having served any other enterprise
as director, officer or employee at the request of the Company. The Board of
Directors, in its discretion, shall have the power on behalf of the Company to
indemnify any person, other than a director or officer, made a party to any
action, suit or proceeding by reason of the fact that he/she is or was an
employee of the Company.
The Company has not entered into any specific contracts or agreements with
any person with regard to indemnification, but may do so in the future.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Filing Fee ........................ $ 36.96
State Filing Fees ..................... 500.00
Printing and Engraving Expenses ....... 1,000.00
Legal Fees and Expenses ............... 2,500.00
Accounting Fees and Expenses .......... 1,550.00
Miscellaneous Expenses ................ 1,000.00
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TOTAL 6,586.96
Expenses are estimated. Filng Fees, Printing and Engraving Expenses, Legal,
Accounting and Miscellaneous Expenses will be borne by the Company.
Selling commissions, underwriting fees, or other expenses of offering and
selling the shares, if any, will be borne entirely by the selling shareholders.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES:
On October 14, 1999, the Company issued 450,000 shares of its common stock
to officers, directors and consultants, the consideration for which was various
services to the Company, and 300,000 shares to an investor, Kidakus Consulting,
Ltd., for cash. On December 1, 1999, we sold 1,000,000 shares of common stock to
two private investors for $0.05 per share. All of the shares were issued
pursuant to the exemption authority provided in Section 4(2) of the Securities
Act of 1933, as amended, and are therefore subject to certain restrictions on
transfer until such time as a registration statement has become effective with
respect to the shares, or unless an exemption is available.
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<PAGE>
Recently, our Board of Directors voted a 2-for-1 forward split of the
stock, which has the effect of doubling the number of shares held by
each shareholder and by all shareholders together.
ITEM 27. EXHIBITS
Number Description
-------------------------------------------------------------------------------
3.1 Articles of Incorporation (Incorporated by Reference to
Exhibit 3.(I) of Form 10-SB Filed on E.D.G.A.R. February 24, 2000)
3.2 By-laws (Incorporated by Reference to Exhibit 3.(II) of
Form 10-SB filed on E.D.G.A.R. February 24, 2000)
5 Opinion of Counsel Regarding Legality and Consent of Counsel
23 Consent of Randy Simpson C.P.A. P.C.
27 Financial Data Schedule
99 Escrow Agreement
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 this Registration Statement.
(i) To include any Prospectus required by Section l0(a)(3) of the
Securities Act of l933;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) 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,
including (but not limited to) any addition or deletion of a managing
underwriter.
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<PAGE>
(2) That, for the purpose of determining any liability under the Securities
Act of l933, 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 which remain unsold at the termination
of the offering.
(4) Insofar as indemnification for liabilities arising under the Securities
Act of l933 may be permitted to directors, officers and controlling persons
of the Registrant, the Registrant 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 Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant 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 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 Act and will be governed by
the final adjudication of such issue.
(5) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated 9/26/00
----------------
WESTNET COMMUNICATION
GROUP, INC.
By:
/s/ Elizabeth Sanders
----------------------------
Elizabeth Sanders,
President and a Director
/s/ Kristy B.Warren
----------------------------
Treasurer and a Director
/s/ Nancy J. Cooke
----------------------------
Secretary
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