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--U.S. Securities and Exchange Commission--
Washington, D.C. 20549
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 316,
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
Offering Offering
Price Per Price(1)
Unit (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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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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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
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.
All shares registered are to be offered by the selling stockholders. We
will not receive any of the proceeds from the sale of these shares by the
selling stockholders.
Prior to the offering, no public market has existed for shares of our
common stock. We cannot guarantee that a trading market in the shares of our
common stock will ever develop. We hope to have our common stock quoted on the
OTC Bulletin Board, but there is no assurance that we will do so.
The selling stockholders have not entered into any underwriting
arrangements. The sale of the shares by the selling stockholders may occur in
one or more transactions that may take place on the over-the-counter market,
including ordinary broker's transactions, privately negotiated transactions, and
sales to one or more dealers for transfer of the shares as principals, at market
prices prevailing at the time of transfer, or at negotiated prices. Brokerage
fees or commissions may be paid by the selling stockholders in connection with
the sales of the common stock. The selling stockholders may transfer some or all
of the common stock in exchange for consideration other than cash, or for no
consideration, in the selling stockholders' sole discretion. This prospectus may
be used by the selling stockholders to transfer the common stock to affiliates
of the selling stockholders.
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.
These securities are highly speculative, involve a high degree of risk and
should be purchased only by persons who can afford to lose their entire
investment (see "Risk Factors" for special risks concerning us and the
offering).
The date of the Prospectus is , 2000.
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We have filed with the United States Securities and Exchange Commission
(the "SEC") a registration statement under the Securities Act of 1933, as
amended, with respect to the common stock being offered. We have not included in
the prospectus all of the information in the registration statement and the
attached exhibits. Statements of the contents of any document are not
necessarily complete. You should be aware that copies of these documents are
contained as exhibits to the registration statement. We will provide to you a
copy of any of the referenced information if you contact us at 2921 N. Tenaya
Way, Suite 216, Las Vegas, Nevada, 89128, Attention: President, telephone (702)
947-4877.
In February of 2000 the Company voluntarily filed with the SEC a
registration statement under the Securities Exchange Act of 1934, as amended, to
become a "reporting company" subject to the reporting requirements of that Act.
Our registration became effective April 24, 2000. Our filings may be inspected
and copied at the SEC, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. We have filed, and will continue to file, our
registration statements (including this one) and other documents and reports
electronically through the Electronic Data Gathering, Analysis and Retrieval
System ("EDGAR") which is publicly accessible through the SEC's Internet Web
site (http://www.sec.gov).
We intend to furnish to our stockholders, after the close of each fiscal
year, an annual report containing audited financial statements examined and
reported upon by an independent certified public accountant relating to our
operations. In addition, we may furnish to our stockholders, from time to time,
such other reports as may be authorized by our board of directors. Our fiscal
year ends December 31.
WE HAVE NOT AUTHORIZED ANYONE TO GIVE INFORMATION OR TO MAKE
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THE PROSPECTUS, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY US. THE PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE DELIVERY OF THE PROSPECTUS SHALL
NOT UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY
CHANGE IN OUR AFFAIRS SINCE THE DATE OF THE PROSPECTUS. HOWEVER, WE DO NOT
CONSIDER ANY CHANGES THAT MAY HAVE OCCURRED MATERIAL TO AN INVESTMENT DECISION.
IN THE EVENT THERE HAS BEEN ANY MATERIAL CHANGE IN OUR AFFAIRS, WE WILL FILE A
POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT DESCRIBING THE CHANGES.
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TABLE OF CONTENTS
Page
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PROSPECTUS SUMMARY.............................................7
SUMMARY FINANCIAL INFORMATION..................................8
RISK FACTORS...................................................8
THE COMPANY...................................................14
MANAGEMENT....................................................17
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS.......20
CERTAIN TRANSACTIONS..........................................20
PRINCIPAL STOCKHOLDERS........................................21
DESCRIPTION OF SECURITIES.....................................23
SELLING SECURITY HOLDERS AND PLAN OF DISTRIBUTION.............23
LEGAL PROCEEDINGS.............................................24
EXPERTS.......................................................25
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
AND CAUTIONARY STATEMENTS...................................26
FINANCIAL STATEMENTS..........................................27
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PROSPECTUS SUMMARY
We incorporated under the laws of the State of Nevada on October 14, 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. The Board of Directors unanimously resolved to abandon the
original business plan and to focus on uncovering alternate business or
investment opportunities, or to acquire, merge with or be acquired by an
operating business. We are, and have been since inception, a development stage
company.
Our management believes that becoming a reporting public shell company will
make us an attractive candidate for a business combination, and accordingly we
have voluntarily registered our outstanding securities under the Securities
Exchange Act of 1934 to become such a reporting company. Our Exchange Act
registration became effective April 24, 2000. Exchange Act Registration does not
imply that the Securities and Exchange Commision or any securities regulatory
body has ruled on the merits of an investment in the Company's securities.
We maintain our mailing address at 2921 N. Tenaya Way, Suite 216, Las
Vegas, Nevada 89128. Our phone number is (702) 947-4877.
THE OFFERING
The selling shareholders may sell a total of up to 3,500,000 shares of
common stock.
The shares may be sold at market prices or other negotiated prices. In
addition, the selling shareholders may, in their sole discretion, transfer the
shares in exchange for consideration other than cash or for no consideration.
The selling shareholders have not entered into any underwriting arrangements for
the sale of the shares. See "Selling Security Holders and Plan of Distribution".
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
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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
May 31, 2000 December 31, 1999
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Balance Sheet Data
Total Assets...................... $ 56,082 $ 55,750
Common Stock...................... 3,500 1,750
Paid-in Capital................... 66,000 67,750
Deficit accumulated
during the development stage...... (13,418) (13,750)
Total
Shareholders' equity.............. 56,082 $ 55,750
RISK FACTORS
LACK OF OPERATING HISTORY; NO REVENUE AND MINIMAL ASSETS. The Company has
had no operating history nor any revenues or earnings from operations. The
Company has minimal tangible assets or financial resources. We believe we have
sufficient cash to meet our needs for at least 14 months while we evaluate
potential business combinations or other opportunities. But we will, in all
likelihood, continue to sustain operating expenses without corresponding
revenues, at least until we can complete a business combination. This may result
in the Company incurring a net operating loss which will increase continuously
until the Company can consummate a business combination with a profitable
business opportunity. There is no assurance that the Company can identify such a
business opportunity and consummate such a business combination within any
specific time frame, if at all.
LACK OF MANAGEMENT EXPERIENCE IN MERGERS AND ACQUISTIONS. Our management
has limited experience locating, evaluating, and negotiating with companies that
may be suitable for a business combination with us. We may confer with business
consultants, investment banks, attorney firms, accountants or other business
professionals to assist us in evaluating an opportunity, but our available
resources for such consultations are very limited. Accordingly, there can be no
assurance that we can find a suitable business combination, and if we do enter
into a business combination it may not be on terms most favorable to the Company
or our shareholders.
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SPECULATIVE NATURE OF COMPANY'S PROPOSED OPERATIONS. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the particular business
opportunity we identify. While management intends to seek a business combination
with an entity having established an operating history, there can be no
assurance that we will be successful in locating candidates meeting such
criteria. In the event we complete a business combination, of which there can be
no assurance, the success of the Company's operations may be dependent upon
management of the successor firm or venture partner firm and numerous other
factors beyond the Company's control. There is no assurance that we can identify
a target company and complete a business combination.
STATE BLUE SKY REGISTRATION; RESTRICTED RESALES OF THE SECURITIES
Transferability of the shares of Common Stock of the Company is very limited
because a significant number of states have enacted regulations pursuant to
their securities or so-called "blue sky" laws restricting, or in many instances
prohibiting, the initial sale and subsequent resale of securities of "blank
check" companies such as the Company within that state. In addition, many
states, while not specifically prohibiting or restricting "blank check"
companies, would not register the securities of the Company for sale or resale
in their states. Because of these regulations, the Company currently has no plan
to register any securities of the Company with any state other than California.
To ensure that any state laws are not violated through the resales of the
securities of the Company, the Company will refuse to register the transfer of
any securities of the Company to residents of any state which prohibits such
resale or if no exemption is available for such resale. It is not anticipated
that a secondary trading market for the Company's securities will develop in any
state until subsequent to consummation of a business combination, if at all.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS.
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with, joint ventures with and acquisitions of small
private and public businesses. A large number of established and well-financed
entities, including venture capital firms, are active in mergers and
acquisitions of companies of the type which may be desirable target candidates
for the Company. Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than the Company and,
consequently, we will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination.
Moreover, the Company will also compete in seeking merger or acquisition
candidates with numerous other small public companies.
NO ESCROW OF FUNDS OR SECURITIES. Rule 419 under the Securities Act of
1933 requires that a Blank Check company deposit the proceeds from sales of its
securities, together with the securities themselves, into an escrow account at
an "insured depository institution," where they are to remain until the Company
has consummated an acquisition or business combination. However, sales of
securities through this prospectus are being made directly by the selling
shareholders, with the Company neither issuing any securities nor receiving any
proceeds. Accordingly, there will be no escrow of purchase funds or of
securities, and purchasers will have no right to a return of their funds should
the Company fail to consummate an acquisition or business combination.
Purchasers of the Company's securities should be prepared to sustain a total
loss of their invested funds.
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NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION; NO STANDARDS
FOR BUSINESS COMBINATION. The Company has no arrangement, agreement or
understanding with respect to engaging in a merger with, joint venture with or
acquisition of, a private or public entity. There can be no assurance the
Company will be successful in identifying and evaluating suitable business
opportunities or in concluding a business combination. Management has not
identified any particular industry or specific business within an industry for
evaluation by the Company. There is no assurance the Company will be able to
negotiate a business combination on terms favorable to the Company. The Company
has not established a specific length of operating history or a specified level
of earnings, assets, net worth or other criteria which it will require a target
business opportunity to have achieved, and without which the Company would not
consider a business combination in any form with such business opportunity.
Accordingly, the Company may enter into a business combination with a business
opportunity having no significant operating history, losses, limited or no
potential for earnings, limited assets, negative net worth or other negative
characteristics.
CONFLICTS OF INTEREST; NON-ARMS-LENGTH TRANSACTIONS. Conflicts of interest
and non-arms length transactions may occur in the future in connection with the
Company's selection of a target Company with which to enter a business
combination. The Company has adopted a policy that it will not enter into a
business combination with any entity in which any member of management serves as
an officer, director or partner, or in which such person or such person's
affiliates or associates hold any ownership interest. The terms of a business
combination may include such terms as one or more of the officers or directors
remaining officers or directors of the merged entity. The terms of a business
combination may also provide for a payment by cash or otherwise to officers or
directors for the purchase or retirement of all or part of their common stock of
the Company by a target company. The officers and directors would directly
benefit from such payment, and those benefits may influence their selection of a
target company. The Certificate of Incorporation of the Company provides that
the Company may indemnify officers and/or directors of the Company 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 subject to such indemnification. See "MANAGEMENT -- Indemnification
of Officers and Directors."
LIMITED MANAGEMENT TIME AND ATTENTION TO THE AFFAIRS OF THE COMPANY. Each
of the executive officers and directors of the Company participates in other
business and employment activities which compete with the Company for their time
and attention, and may preclude such officers and directors devoting adequate
time to the Company's interests. At present, each officer devotes less than 10%
of working hours to the Company's affairs. The Company has not entered into any
employment contract with any officer or director, and does not anticipate doing
so in the foreseeable future. The Company has not purchased key man life
insurance on any of the officers. The loss of an officer may adversely affect
the development of the Company's business.
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LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company has neither
conducted, nor have others made available to it, results of market research
indicating that market demand exists for the transactions contemplated by the
Company. Moreover, the Company does not have, and does not plan to establish, a
marketing organization. Even in the event demand is identified for a merger or
acquisition contemplated by the Company, there is no assurance the Company will
be successful in completing any such business combination.
LACK OF DIVERSIFICATION. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a business
combination with an operating business. Consequently, the Company's activities
may be limited to those engaged in by business opportunities which the Company
merges with or acquires. The Company's inability to diversify its activities
into a number of areas may subject the Company to economic fluctuations within a
particular business or industry and therefore increase the risks associated with
the Company's operations.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination involving
the issuance of the Company's Common Shares will, in all likelihood, result in
shareholders of a private company obtaining a controlling interest in the
Company. Any such business combination may require management of the Company to
sell or transfer all or a portion of the Company's Common Shares held by them,
or resign as members of the Board of Directors of the Company, or both. The
resulting change in control of the Company 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.
PURCHASE OF PENNY STOCKS CAN BE RISKY. In the event that a public market
develops for the Company's securities following a business combination, such
securities may be classified as a penny stock depending upon their market price
and the manner in which they are traded. The Securities and Exchange Commission
has adopted Rule 15g-9 which establishes the definition of a "penny stock," for
purposes relevant to the 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 delivery by the broker
of 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 such stock. Thus an investor
may lose his investment in a penny stock and consequently should be cautious of
any purchase of penny stocks.
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POTENTIAL REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS
COMBINATION. The Company's 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 any
such private company. The issuance of previously authorized and unissued Common
Shares of the Company would result in a reduction in the percentage of shares
owned by present and prospective shareholders of the Company and may result in a
change in control or management of the Company.
TAXATION. Federal and state tax consequences will, in all likelihood, be
major considerations in any business combination the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends 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 such business combination
will meet the statutory requirements of a tax- free reorganization or that the
parties will obtain the intended tax-free treatment upon a transfer of stock or
assets. A non-qualifying reorganization could result in the imposition of both
federal and state taxes which may have an adverse effect on both parties to the
transaction.
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION. Pursuant to the
requirements of Section 13 of the Securities Exchange Act of 1934 (the "Exchange
Act"), the Company is required to provide certain information about significant
acquisitions including audited financial statements of the acquired company.
These audited financial statements must be furnished within 75 days following
the effective date of a business combination. Obtaining audited financial
statements are the economic responsibility of the target company. The additional
time and costs that may be incurred by some potential target companies to
prepare such financial statements may significantly delay or essentially
preclude consummation of an otherwise desirable acquisition by the Company.
Acquisition prospects that do not have or are unable to obtain the required
audited statements may not be appropriate for acquisition so long as the
reporting requirements of the Exchange Act are applicable. Notwithstanding a
target company's agreement to obtain audited financial statements within the
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required time frame, such audited financials may not be available to the Company
at the time of effecting a business combination. In cases where audited
financials are unavailable, the Company will have to rely upon unaudited
information that has not been verified by outside auditors in making its
decision to engage in a transaction with the business entity. This risk
increases the prospect that a business combination with such a business entity
might prove to be an unfavorable one for the Company.
COMPUTER SYSTEMS REDESIGNED FOR YEAR 2000. Many existing computer programs
use only two digits to identify a year in such program's date field. These
programs were designed and developed without consideration of the impact of the
change in the century for which four digits will be required to accurately
report the date. If not corrected, many computer applications could fail or
create erroneous results by or following the year 2000 ("Year 2000 Problem").
Many of the computer programs containing such date language problems have not
been corrected by the companies or governments operating such programs. It is
impossible to predict what computer programs will be affected, the impact any
such computer disruption will have on other industries or commerce or the
severity or duration of a computer disruption.
YEAR 2000 PROBLEM MAY ADVERSELY AFFECT THE COMPANY. The Company does not
have operations and does not maintain computer systems. Before the Company
enters into any business combination, it may inquire as to the status of any
target company's Year 2000 Problem, the steps such target company has taken or
intends to take to correct any such problem and the probable impact on such
target company of any computer disruption. However, there can be no assurance
that the Company will not enter into a business combination with a target
company that has an uncorrected Year 2000 Problem or that any planned Year 2000
Problem corrections will be sufficient. The extent of the Year 2000 Problem of a
target company may be impossible to ascertain and any impact on the Company will
likely be impossible to predict. If the Company does not determine the Year 2000
Problem readiness of a target company, or if that target company is unsure of
its own readiness or vulnerability, then the Company may suffer severe
consequences if the disruptions predicted by the Year 2000 Problem materialize.
In addition to the those disruptions that may be suffered by region, such as
erratic distribution of electricity, gas, food, water, telephone and
transportation systems, the Company may be specifically harmed by computer
hardware or software failure on which the target company may have been
dependent.
FINANCIAL AUDIT REQUIREMENTS MAY PRECLUDE CERTAIN BUSINESS OPPORTUNITIES.
Section 13 and 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), require companies that are subject the reporting requirements of those
sections to provide certain information about significant acquisitions. That
information must include certified financial statements for the company
acquired, covering one, two or three years, depending on the relative size of
the acquisition. The time and additional costs that may be incurred by some
target companies to prepare such statements may make it impractical to conclude
an otherwise desirable acquisition by the Company. Acquisition prospects that do
not have or are unable to obtain the required audited financial statements may
not be appropriate for acquisition so long as the reporting requirements of the
1934 Act are applicable.
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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. Accordingly, it is unlikely that the shareholders will have a voice
in the selection of a business opportunity for the Company, or in the terms of
any acquisition or business combination.
THE COMPANY
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DESCRIPTION OF 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, management
determined that our capital resources were inadequate, and the plan was
abandoned. The Company 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. The Company has been in the development stage since its
inception, and there are no prospects for us to generate any revenues or earn
any profits unless or until we can complete a business combination with an
operating company.
The Company may enter into a business combination with an entity that
desires to establish a public trading market for its shares. A business
opportunity may attempt to avoid what it deems to be adverse consequences of
undertaking its own public offering by seeking a business combination with the
Company. Such consequences may include, among others, time delays of the
registration process, significant expenses to be incurred in such an offering,
loss of voting control to public shareholders and the inability or unwillingness
to comply with various federal and state laws enacted for the protection of
investors. Regardless of such perceived advantages, however, such a company or
business opportunity is not permitted to utilize a business combination with a
reporting company as a device to circumvent the disclosure requirements of
Exchange Act. Accordingly, any company that is not willing and able to provide a
current audited financial statement within a reasonable period following the
consummation 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 opportunites it becomes aware of
regardless of the business or industry. In reviewing possible acquisition
targets and investment opportunities, we will perform, or cause to be performed,
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. Accordingly, we remain uncertain as to when, if ever, the
Company will become profitable.
The Company is and will likely remain subject to 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").
-14-
<PAGE>
In furtherance of our current business objective, we have voluntarily
registered our outstanding common stock pursuant to Section 12(g) of the
Securities Exchange Act of 1934 (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 passed upon the merits of an
investment in the Company's stock, or on the accuracy or completeness of its
registration statements or required periodic reports.
The Company has not filed bankruptcy, been in receivership, or been
involved in any similar proceedings. The Company has not been involved in a
purchase or sale of a significant amount of assets, whether or not in the
ordinary course of business. The Company has had no sales or revenues, other
than interest earned on its cash balances, and it currently has no products or
services. Accordingly, we have no backlog of orders, nor are we dependent on any
one or few large customers. The Company is not subject to any industry-specific
government regulation, nor does it need government approval for any of its
operations, except that as a reporting company we must comply with federal and
state secuities laws and regulations wherever we engage in activities that are
subject to those laws and rules (see "Regulation"). The Company has made no
significant expenditures on research and development during the most recent
fiscal year or interim period. The Company maintains an office at 2921 N. Tenaya
Way, Suite 216, Las Vegas, Nevada 89128 which it shares with other business
entities.
PLAN OF OPERATION
The Company is in the development stage, having no revenues from business
operations since 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 an as-yet-unidentified
business opportunity or entity. 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. 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.
-15-
<PAGE>
EMPLOYEES
At present the Company has 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 some
sort of executive compensation plan will be put in place should the Company
succeed in creating operating revenues through a business combination or
investment. Any such plan, if instituted, would be based on industry standards
for compensation of executives in similar businesses with similar duties and
responsibilities.
REGULATION
Inasmuch as 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"). 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
the Company's 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 the Company to borrow funds or sell more
securities to defray the costs of registration. If we sell additional equity
securities, or securities exercisable or convertable into equity stock, your
proportional ownership in the Company will be diluted.
-16-
<PAGE>
COMPETITION
The Company will 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 the Company. It
is impossible to predict in advance who will be specific competitors for
particular acquisitions or investments that we may choose to pursue. However, in
view of the Company's limited financial resources, and limited management
availability and expertise, the Company will likely remain at a significant
competitive disadvantage compared to its competitors.
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
----------
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
-17-
<PAGE>
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.
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, no monetary remuneration has been paid 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. The Company's 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.
The Company is not a party to any employment contracts and does not pay
consulting fees to officers or directors. No cash or other advances have been or
are contemplated to be made to any officer or director. 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.
-18-
<PAGE>
It is possible that, after we successfully complete a merger or acquisition
with an unaffiliated entity, that entity may desire to employ or retain one or a
number of members of the Company's present management for the purposes of
providing services to the surviving entity. However, the Company has adopted a
policy whereby the offer of any post-transaction remuneration to members of
management will not be a consideration in the Company's decision to undertake
any proposed transaction.
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 the Company. It is
possible that persons associated with management may refer a prospective merger
or acquisition candidate to the Company. 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. The amount of such finder's fee cannot be determined as of the
date of this prospectus, but is expected to be comparable to consideration
normally paid in like transactions. Any new restricted stock we may issue will
dilute the percentage ownership of existing shareholders. Any warrants we may
issue will potentially dilute the percentage ownership of existing shareholders.
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs have been adopted by the Company for the benefit of
its employees.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
To the fullest extent permitted by the laws of the State of Nevada and 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, 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.
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.
-19-
<PAGE>
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
-------------------------------------------------------
The Company's shares have never traded, and there exists no public trading
market for the shares. As of the date of this prospectus, the Company has seven
(7) shareholders, including officers, directors and control persons.
The Company intends to apply to have its 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 such 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. No new shares are being offered for sale by
the Company. There are no outstanding options, rights, warrants to purchase, or
securities convertible into, our common equity.
The Company has never paid a dividend, nor does it 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.
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, organization and formation of the Company. Those
shares are included among the shares being offered by this prospectus.
-20-
<PAGE>
PRINCIPAL STOCKHOLDERS
----------------------
The following constitute all of the individuals or groups known by the
Company 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 the Company.
-21-
<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 the Company.
Corporate Capital Formation, Inc. ("CCF"), serves as independent consultant
to the Company 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 the Company 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 except as specifically stated in this
prospectus.
The following are all of the officers and directors of the Company 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
None of the Officers or Directors currently holds any warrants, options or
rights to acquire beneficial ownership of additional shares of the Company's
securities. There are currently no arrangements that could result in a change in
control of the Company.
-22-
<PAGE>
As far as the Company is aware, no voting trust or similar agreements exist
with respect to any of shares held by officers, directors or control persons.
DESCRIPTION OF SECURITIES
-------------------------
The Company is authorized 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 the Issuer. 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 may not be modified
otherwise than 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
-------------------------------------------------
This prospectus concerns the transfer by the selling security holders of an
aggregate of 3,500,000 shares of common stock. The selling security holders may
transfer the common stock at those prices that they are able to obtain in the
market or in negotiated transactions. In addition, the selling stockholders may
transfer the shares in exchange for consideration other than cash, or for no
consideration, as determined by the selling stockholders in their sole
discretion. The selling stockholders may use this prospectus to transfer shares
of the common stock to affiliates of the selling stockholders. We will receive
no proceeds from the sale of common stock by the selling security holders.
We anticipate that the selling security holders will offer the shares in
direct sales to private persons and in open market transactions. 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. We believe that no selling security holders have any arrangements or
agreements with any underwriters or broker/dealers to sell the shares, and they
may contact various broker/dealers to identify prospective purchasers.
-23-
<PAGE>
Additionally, agents, brokers or dealers may acquire shares or interests in
shares and may, from time to time, effect distributions of the shares or
interests in such capacity. The following table sets forth the name 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.
Beneficial Ownership Beneficial Ownership
Prior to the Offering After the Offering(1)
Name of --------------------- --------------------
Beneficial Owner Number Percent(2) 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
-----------------------------------------------------------------------------
(1) Assuming all of the shares registered are sold.
(2) Percents do not total 100% due to rounding.
Elizabeth A. Sanders and Kristy B. Warren currently serve as officers and
directors of the Company. Nancy J. Cooke currently serves as an officer of the
Company.
LEGAL PROCEEDINGS
-----------------
There are no legal proceedings involving the Company, either pending or
threatened.
-24-
<PAGE>
EXPERTS
-------
Financial auditors for the Company are Randy Simpson C.P.A. P.C., 11775
South Nicklaus Road, Sandy Utah 84092. Counsel for the Company 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.
-25-
<PAGE>
FINANCIAL STATEMENTS
--------------------
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 May 31, 2000 and the related statements of income,
shareholders' equity (from inception October 14, 1999), and cash flows for the
five months ending May 31, 2000. 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 of the financial statements provides a reasonable
basis for our opinion.
In our opinion, based on our audit, the financial statements referred to above
present fairly, in all material respects, the financial position of Westnet
Communication Group, Inc. as of May 31, 2000 and the results of its operations,
shareholders' equity and cash flows for the five months ending May 31, 2000, in
conformity with generally accepted accounting principles.
/s/ Randy Simpson
----------------------------
RANDY SIMPSON, CPA
A Professional Corporation
June 25, 2000
Sandy, Utah
-26-
<PAGE>
WESTNET COMMUNICATION GROUP, INC.
BALANCE SHEET
May 31, 2000
May 31
2000
------
ASSETS
Cash ......................................... $ 52,395
Advances to Consultant ........................ 3,000
----------
Total Current Assets ...................... $ 55,395
Organization Costs
(net of accumulated amortization) .......... 687
----------
TOTAL ASSETS .............................. $ 56,082
==========
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 ........................... ( 13,418)
----------
Total Stockholders' Equity (Deficit) .... 56,082
TOTAL LIABILITIES AND ----------
STOCKHOLDERS' EQUITY (DEFICIT) .......... $ 56,082
==========
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
-27-
<PAGE>
WESTNET COMMUNICATION GROUP, INC.
STATEMENT OF INCOME
<TABLE>
<CAPTION>
5 Months Ended
May 31, 2000
--------------
<S> <C>
Revenues
Interest Income ....................... 420
------------
Total Revenues $ 420
Expenses
General and Administrative ............. 25
Amortization of Organizational Costs ... 63
------------
Total Expenses ............................ 88
Income Taxes 70
Benefit of loss carry forward ...... (70)
------------
NET INCOME ............................ $ 332
============
Weighted Average Shares
Common Stock Outstanding .................. 1,966,050
NET INCOME (LOSS) PER COMMON SHARE .... $ 0.00
============
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
-28-
<PAGE>
WESTNET COMMUNICATION GROUP, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
5 Months Ended
May 31, 2000
--------------
<S> <C>
Cash flows used in operating activities
Net Income ....................................... $ 332
Non-cash Expenses
(Amortization of Organization Costs) ............ 63
Advance to Consultant ............................ (3,000)
Changes to operating assets and liabilities ...... --
----------
Cash flows used in operating activities .......... $ (2,605)
Net increase (decrease) in cash ....................... $ (2,605)
Cash at beginning of period ........................ 55,000
-----------
Cash at end of period .............................. $ 52,395
===========
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
-29-
<PAGE>
WESTNET COMMUNICATION GROUP, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
From Inception (October 14, 1999) through May 31, 2000
<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 five months ending May 31, 2000 .... - - - 332 332
---------- ------ -------- --------- ---------
Balances May 31, 2000 3,500,000 $3,500 $ 66,000 $(13,418) $ 56,082
========== ====== ======== ========= =========
See Accompanying Notes to the Financial Statements
</TABLE>
-30-
<PAGE>
WESTNET COMMUNICATION GROUP, INC.
Notes to Financial Statements as of May 31, 2000
These financial statements reflect the stock transactions of Westnet
Communication Group, Inc. (the Company) from inception (October 14, 1999)
through May 31, 2000. The Company was organized in Nevada. 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 five months ending May 31, 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.
The Advance to a consultant was returned to the company in June, 2000.
There are no timing differences between the financial statement and income tax
accounting of the Company.
-31-
<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
-32-
<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.
-33-
<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
-34-
<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
-35-
<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.
-36-
<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 ..................... 1,500.00
Printing and Engraving Expenses ....... 1,000.00
Legal Fees and Expenses ............... 2,500.00
Accounting Fees and Expenses .......... 750.00
Miscellaneous Expenses ................ 1,000.00
----------
TOTAL 6,786.96
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.
-37-
<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
---------------------------------------------------------------------
3.0 Articles of Incorporation (Incorporated by Reference to
Exhibit 3.(I) ofForm 10-SB Filed on E.D.G.A.R. February 24, 2000)
3.1 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
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.
-38-
<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.
-39-
<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 6/28/00
----------------
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
-40-
