<PAGE>
ANNUAL REPORT FOR SMALL BUSINESS ISSUERS SUBJECT
TO THE 1934 ACT REPORTING REQUIREMENTS
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended April 30, 2000
-----------------------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________to________________________
Commission file number_________________________________________________________
Westergaard.com, Inc
(Exact name of small business issuer in its charter)
Delaware 52-2002729
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
560 West 43rd Street, New York 10036
------------------------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (212) 947-1900
--------------
Securities registered under Section 12(b) of the Act: None
Title of each class Name of each exchange
on which registered
--------------------------------------- --------------------------------
--------------------------------------- --------------------------------
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes_X__. No____.
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
------ -----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's class of
common equity, as of the last practicable date: As of June 12, 2000 the Company
had 11,948,445 shares of Common Stock issued and outstanding.
Transitional Small Business Disclosure Format (check one): ____ _____
<PAGE>
ITEM I. FINANCIAL INFORMATION
Westergaard.com, Inc.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
Unaudited
<TABLE>
<CAPTION>
April 30, October 31,
2000 1999
----- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 536,159 $ 626,164
Investment in securities, at market 14,062 15,787
Accounts receivable 49,000
Employee advances 20,516 20,765
----------- ------------
Total current assets 570,737 711,716
NONCURRENT ASSETS
Property and equipment (less accumulated
depreciation and amortization of $43,193 and $33,715, respectively) 60,458 62,934
Other assets 12,144 8,714
----------- -------------
Total noncurrent assets 72,602 71,648
----------- ------------
Total assets $ 643,339 $ 783,364
========== ===========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 117,142 $ 136,290
Deferred revenues 44,000 122,000
Due to affiliate 55,217 60,033
Capital received in advance 524,000
Other liabilities 21,993 45,993
----------- -----------
Total current liabilities 762,352 364,316
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock, par value $.001; 100,000,000 shares authorized;
11,916,445 shares issued and outstanding 11,916 11,916
Additional paid-in capital 2,861,275 2,861,275
Accumulated deficit (2,960,329) (2,423,993)
Accumulated other comprehensive loss (31,875) (30,150)
------------- ------------
Total shareholders' (deficit) equity (119,013) 419,048
------------- -----------
Total liabilities and shareholders' (deficit) equity $ 643,339 $ 783,364
============= ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
Westergaard.com, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
<TABLE>
<CAPTION>
Three Months Six Months
Ended April 30, Ended April 30,
------------------------------- -----------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Member fee income, net of fees waived $ 53,000 $ 25,332 $ 74,000 $ 67,333
Conferences, net of fees waived 69,000 -- 136,480 145,468
Interest 926 3,210 7,606 4,245
Advertising 2,770 2,750 5,550 2,750
Other -- 4,889 -- 10,522
------------ ------------ ------------ ------------
Total revenues 125,696 36,181 223,636 230,318
Expenses
Conference expense 22,622 27,338 41,240 60,119
Compensation and benefits 208,331 181,001 367,637 264,847
Professional services 74,757 89,532 101,645 99,528
Rent and occupancy 14,849 10,895 33,029 29,636
General and administrative expenses 93,044 116,712 186,414 160,456
Advertising expenses 17,790 22,352 23,744 23,599
Financing costs -- 62,200 -- 62,200
Interest expense 1,000 6,028 2,000 6,028
Miscellaneous expense 3,207 1,541 4,263 3,661
------------ ------------ ------------ ------------
Total expenses 435,600 517,599 759,972 710,074
------------ ------------ ------------ ------------
NET LOSS $ (309,904) $ (481,418) $ (536,336) $ (479,756)
============ ============ ============ ============
(Loss) income per share
Basic and diluted $ (0.03) $ (0.04) $ (0.05) $ (0.04)
Weighted-average common shares outstanding
Basic and diluted 11,916,445 10,698,745 11,916,445 10,698,745
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
Westergaard.com, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Unaudited
<TABLE>
<CAPTION>
Three Months Six Months
Ended April 30, Ended April 30,
----------------------------- -------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Comprehensive income
Net loss $(309,904) $ (481,418) $(536,336) $(479,756)
Other comprehensive income (loss)
Unrealized depreciation on investment in (1,725) (4,687) (1,725) (4,687)
securities ---------- ---------- ---------- -----------
Comprehensive income (loss) $(311,629) $(486,105) $(538,061) $(484,443)
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
Westergaard.com, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
<TABLE>
<CAPTION>
Three Months Six Months
Ended April 30, Ended April 30,
------------------------- -------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net loss $ (309,904) $ (481,418) $ (536,336) $ (479,756)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation and amortization 5,175 7,857 9,478 7,857
Compensation and benefits - fair value of stock options issued -- 62,000 -- 62,200
Changes in operating assets and liabilities
Decrease (Increase) in employee advances 149 (1,000) 249 (3,300)
Decrease in accounts receivable 39,000 49,000 --
(Increase) Decrease in other assets (1,358) 2,000 (3,430) --
(Decrease) in accounts payable and accrued expenses 53,262 44,951 (19,147) (142,166)
(Decrease) in deferred revenues (32,000) (19,327) (78,000) (116,801)
(Decrease) in due to affiliate -- (50,000) (4,816) (50,000)
(Decrease) increase in other liabilities (28,499) (15,725) (24,000) (25,894)
----------- ----------- ----------- -----------
Net cash used in operating activities (271,459) (450,462) (607,002) (747,860)
----------- ----------- ----------- -----------
Cash flows from investing activities
Purchase of fixed assets (437) (12,574) (7,003) (20,662)
----------- ----------- ----------- -----------
Net cash used in investing activities (437) (12,574) (7,003) (20,662)
----------- ----------- ----------- -----------
Cash flows from financing activities
Proceeds received in advance for issuance of preferred stock 524,000 -- 524,000 --
Repayment of short-term loan -- (200,000) -- --
Proceeds from collection of stock subscription receivable -- 212,000 -- --
Proceeds from issuance of common stock -- -- -- 2,016,500
----------- ----------- ----------- -----------
Net cash provided by financing activities 524,000 12,000 524,000 2,016,500
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 252,104 (451,036) (90,005) 1,247,978
Cash at beginning of period 284,055 1,710,029 626,164 11,015
----------- ----------- ----------- -----------
Cash at end of period $ 536,159 $ 1,258,993 $ 536,159 $ 1,258,993
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
Westergaard.com, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended April 30, 2000 and 1999
NOTE A - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
1. Organization
Westergaard.com, Inc. (the "Company"), a Delaware company, was
organized on August 15, 1996 and commenced operations on January 1,
1996. The Company was formed to engage in the business of online
publishing on the Internet, primarily for the purpose of providing
investment research on publicly traded Micro-Mid Cap companies.
Additionally, the Company sponsors conferences focusing on Micro-Mid
Cap companies.
The consolidated financial statements include the assets, liabilities
and results of operations of the Company's wholly-owned subsidiary,
Westergaard Broadcasting Network, Inc. All intercompany balances and
transactions have been eliminated.
The unaudited interim financial statements reflect all adjustments
(consisting of normal, recurring accruals) which are, in the opinion of
management, necessary to a fair statement of the results for the
interim periods presented. These financial statements should be read in
conjunction with the Company's audited financial statements included in
the Company's annual report on Form 10-SB filed with the SEC. Results
of the interim periods are not necessarily indicative of the results to
be obtained for a full fiscal year.
2. Investments in Securities
The Company's investments in securities are categorized as
available-for-sale securities, as defined by Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." These securities consist of equity
securities and are stated at fair value, which is estimated based on
quoted market prices, when available. If a quoted price is not
available, fair value is estimated using quoted market prices for
similar financial instruments. Unrealized holding gains and losses are
reflected as a net amount in a separate component of shareholders'
equity until realized. Realized gains and losses on sales of
investments in securities are determined on a specific identification
basis.
3. Property and Equipment
Property and equipment are stated at cost less accumulated depreciation
and amortization. Depreciation and amortization are computed on a
straight-line basis over the estimated useful life of the asset.
Computer equipment and furniture are depreciated over 5 to 7 years.
Computer software is amortized over 3 years. Leasehold improvements are
amortized over the lives of their respective leases or the service
lives, whichever is shorter.
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<PAGE>
Westergaard.com, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the six months ended April 30, 2000 and 1999
NOTE A (continued)
4. Stock-Based Compensation
The Company, as permitted by Statement of Financial Accounting
Standards No. 123 ("SFAS No. 123"), "Accounting for Stock-Based
Compensation," has elected to account for stock-based compensation
using the intrinsic value method prescribed in Accounting Principles
Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to
Employees." Accordingly, compensation cost for common share options is
measured as the excess, if any, of the quoted market price of the
Company's common shares at the date of grant over the amount an
employee must pay to acquire the common shares. The Company has adopted
the disclosure requirements of SFAS No. 123.
5. Earnings Per Share
Earnings per share are calculated under the provisions of Statement of
Financial Accounting Standards No. 128 ("SFAS No. 128"), "Earnings per
Share." SFAS No. 128 requires the presentation and disclosure of basic
earnings per share, and, if applicable, diluted earnings per share.
Basic earnings per share are computed by dividing income available to
common shareholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share are based on
the weighted-average number of common and common equivalent shares
outstanding. The calculation takes into account the shares that may be
issued upon exercise of stock options, reduced by the shares that may
be repurchased with the funds received from the exercise, based on the
average price during the year. In computing diluted earnings per share,
only potential common shares that are dilutive (those that reduce
earnings per share or increase loss per share) are included. Exercise
of stock options is not assumed if the result would be antidilutive,
such as when a loss from continuing operations is reported.
6. Revenue Recognition
Conference revenue is recognized when the conference is presented and
is recorded not of fees waived. Funds received in advance are treated
as deferred revenue until the service is provided.
The Company receives fees from its members for CyberStation services to
be provided over one-year contracts. Such fees are treated as deferred
revenue and are recognized as fee income over the course of the
contract, net of any fees waived.
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<PAGE>
Westergaard.com, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the six months ended April 30, 2000 and 1999
NOTE A (continued)
7. Advertising Revenue and Costs
Advertising revenue is recognized over the period which services are
provided. Advertising costs are expensed as incurred.
8. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE B - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
April 30, 2000
--------------
<S> <C>
Computer equipment $ 68,469
Computer software 4,927
Telecommunications equipment 12,212
Furniture and fixtures 18,043
-------
103,651
Less accumulated depreciation and amortization (43,193)
-------
$ 60,458
=======
</TABLE>
-8-
<PAGE>
Westergaard.com, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the six months ended April 30, 2000 and 1999
NOTE C - RELATED PARTY TRANSACTIONS
Included in due to affiliate are liabilities in connection with unpaid
expense reimbursements made by Westergaard Publishing Corporation, an
affiliated entity under common control, on behalf of the Company and an
outstanding loan balance of $50,000 at April 30, 2000 from Publishing. The
loan bears interest of 8% per annum. The loan does not have a scheduled
repayment date.
NOTE D - STOCK OPTIONS AND STOCK-BASED COMPENSATION
During 1998, the Company established a stock option plan accounted for
under APB 25 and related interpretations. Options currently outstanding are
exercisable either immediately or up to four years from the grant date and
expire ten years after the grant date. No compensation cost has been
recognized for the plan for the three months and six months ended April 30,
2000 and 1999. Had compensation cost for the plan been determined based on
the fair value of the options at the grant dates consistent with the method
of SFAS No. 123, the Company's net loss would have increased from $309,904
to $476,459 and $481,418 to $855,076 for the three months ended April 30,
2000 and 1999, respectively, and from $536,336 to $785,704 and $479,576 to
$874,688 for the six months ended April 30, 2000 and 1999, respectively.
During the six months ended April 30, 2000, the Company granted options to
purchase 525,000 shares to employees with a range of exercise prices
between $.80 and $1.00 per share.
NOTE E - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 ("SFAS No. 109"), which requires an
asset and liability approach to financial accounting and reporting for
income taxes. Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax bases of
assets and liabilities that will result in taxable or deductible amounts in
the future, based on enacted tax laws and rates applicable to the periods
in which the differences are expected to affect taxable income. Valuation
allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized. The tax effect of the temporary
differences is as follows:
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<PAGE>
Westergaard.com, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the six months ended April 30, 2000 and 1999
NOTE E (continued)
April 30,
2000
---------
Deferred tax asset
Net operating loss benefit $ 1,326,000
Less valuation allowance (1,326,000)
----------
Net deferred tax asset $ - 0 -
==========
At April 30, 2000, the Company has carryforward losses which are available
to offset future Federal and state taxable income. Such losses expire as
follows:
Net operating loss Expiration date
------------------ ---------------
$ 617,000 10/31/2017
543,000 10/31/2018
1,170,000 10/31/2019
535,000 10/31/2020
----------
$2,865,000
==========
NOTE F - COMMITMENTS AND CONTINGENCIES
1. Operating Leases
The Company is obligated to make payments under noncancellable
operating leases expiring in 2000 and 2001. Such leases contain
renewable options which allow the Company to renew the lease for two
additional years at the end of each lease period. Total rental expenses
for the three months and six months ended April 30, 2000 and 1999 were
approximately $15,000 and $11,000, and $33,000 and $30,000,
respectively. Future aggregate minimum annual rent payments under these
operating leases are approximately as follows:
Fiscal Minimum Rental
------ --------------
Year Commitment
---- ----------
2000 $35,000
2001 21,000
--------
$56,000
========
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<PAGE>
Westergaard.com, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the six months ended April 30, 2000 and 1999
NOTE F (continued)
2. SEC Investigation
The Company had been the subject to a formal order of investigation
dated February 13, 1998 pursuant to Rule 7(a) of the Securities and
Exchange Commission (the "SEC") Rules relating to investigations. The
investigation concerns certain allegations that the Company may have
failed to make appropriate disclosures on its Web pages.
The SEC took testimony of Company's Chief Executive Officer on October
1, 1998 and interviewed at least two of the Company's corporate
clients. The Company had fully cooperated with the investigation and
has reviewed with the SEC staff members its disclosure polices. In
February 2000, the Company was notified by the SEC that the
investigation has been terminated and that no enforcement action has
been recommended.
Additionally Company is aware that the SEC is reviewing its web site
and certain press releases for possible violations of SEC disclosure
rules. The company's executive officers have met with the SEC in an
effort to resolve these matters and to correct any alleged violations.
Nevertheless, should the SEC decide to initiate further proceedings
against the Company, the Company could incur additional costs in
connection with the defense of any such proceeding or any sanctions
that may be imposed by the SEC resulting from such proceedings, which
could have an adverse effect on the Company.
NOTE G - EARNINGS PER SHARE
The weighted-average shares used in computing earnings per share were
11,916,445 and 10,698,749, respectively, for the three months and six
months ended April 30, 2000 and 1999. As the Company had net operating loss
from continuing operations, the effect of stock options outstanding at
April 30, 2000 and 1999 is antidilutive and is therefore not part of the
computation of diluted earnings per share.
NOTE H - GOING CONCERN MATTERS
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements, the Company incurred accumulative losses of $2,960,000 as of
April 30, 2000. The Company's continuing operating losses and insufficient
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<PAGE>
cash flow to meet its operating needs are factors, among others, which may
indicate that the Company will be unable to continue as a going concern for
a reasonable period of time.
The financial statements do not include any adjustments relating to the
recoverability of assets and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern. The
Company's continuation as a going concern is dependent upon its ability to
generate sufficient cash flow to meet its obligations on a timely basis, to
obtain additional financing as may be required, and ultimately to attain
profitability. The Company is
Westergaard.com, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the six months ended April 30, 2000 and 1999
NOTE H (continued)
currently conducting a private offering of preferred stock in the fiscal
year of 2000 in order to raise additional capital required to fund
operations for the foreseeable future and implement its business plan. In
the event that the Company is not able to obtain such additional outside
financing, the Company would scale back its growth plans and business
operations to allow it to continue without the additional capital.
Specifically, the Company would eliminate or delay plans to pursue
formation of an online radio station, limit its marketing and advertising
budget, and, if necessary, scale down its payroll expenses.
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<PAGE>
ITEM 2. MANANGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our Financial
Statements and Notes thereto which appear elsewhere in this document. The
results shown herein are not necessarily indicative of the results to be
expected in any future periods. This discussion contains forward-looking
statements based on current expectations, which involve uncertainties. Actual
results and the timing of events could differ materially from the
forward-looking statements as a result of a number of factors. Readers should
also carefully review factors set forth in other reports or documents that we
file from time to time with the Securities and Exchange Commission.
Overview
We were incorporated in 1996. Our primary activities to date have consisted of
the following:
Developing a business model;
Marketing our services to smallcap companies;
Recruiting employees and analysts;
Initial planing and development of our web sites; and
Building of infrastructure of web sites.
COMPARISON OF RESULTS FOR THE FISCAL QUARTER ENDED APRIL 30, 1999, TO THE FISCAL
QUARTER ENDED APRIL 30, 2000.
Our second fiscal quarter ended on April 30th. Any reference to the end of the
fiscal quarter refers to the end of the second fiscal quarter for the periods
discussed herein.
REVENUE. Total revenues for the fiscal quarter ended April 30, 2000, increased
from $36,181 to $125,696 or by 347% as compared to the fiscal quarter ended
April 30, 1999. This increase was a result of an increase in member affiliate
fees from $25,332 in the quarter ended April 30, 1999, compared to $53,000 for
the quarter ended April 30, 2000, and $69,000 in conference fees for the quarter
ended April 30, 2000, as compared to $0 for the same quarter of 1999.
In the second quarter we had seventeen member affiliates compared to nine in the
same quarter of 1999. Our member affiliates are charged a nominal $48,000 fee
and a case-by-case negotiated fee during a variable length start-up period after
which the annual fee of $48,000 is billed quarterly.
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<PAGE>
Our revenues from our conference series were $69,000 for the quarter ended April
30, 2000, as compared to $0 for the quarter ended April 30, 1999. This is due to
the fact that in the second fiscal quarter we held one conference, compared to
no conferences in the same quarter of 1999. At the conferences, participating
co-host companies are charged a fee to present to a specified group of
investment professionals. The fees charged to co-hosts are recognized when the
conference is presented and not when received by us.
EXPENSES. Expenses consist primarily of salary and administrative costs as well
as professional services and fees. These expenses also include rent, office
supplies, conference expenses, leases of computer equipment, advertising and
marketing, and telephone charges. Total Expenses decreased by $81,999 in the
fiscal quarter ended April 30, 2000, to $435,600 from $517,599.
LIQUIDITY AND CAPITAL RESOURCES. We incurred losses during the fiscal quarter
ended April 30, 2000. Our net loss for the fiscal quarter ended April 30, 2000
was $309,904 as compared to the same fiscal quarter of 1999, when we had net
losses of $481,418.
Net cash used in operations decreased from $450,462 to $271,459 for the fiscal
quarter ended April 30, 2000 as compared to the same period in the second fiscal
quarter of 1999.
Our material capital commitments consist of obligations under facilities,
operating leases, and salaries of our employees and analysts. We anticipate that
we will experience an increase in our capital expenditures consistent with our
anticipated growth in operations, infrastructure, including redesigning our web
site, upgrading our software and in-house computers, and increasing personnel.
We anticipate that our costs for the above expenditures will be approximately
$90,000 to $150,000. We further anticipate devoting additional resources to
building strength in our brand name and business model through increased
marketing and advertising in both print media and on the Internet. We expect to
spend approximately $500,000 on marketing and advertising in the year 2000.
We also plan to launch WBNfn, our Internet radio station, in the fall of 2000.
We anticipate that we will have to hire personnel for the radio station
including financial journalists and producers. We foresee payroll costs for
WBNfn will be approximately $500,000 for its first year. We anticipate that our
operating costs for the radio station will be approximately $800,000 for its
first year.
We plan to support the radio station through advertising fees. The Internet
radio station is suitable for advertisements on-air and banner advertisements.
However, there can be no assurance that we will generate sufficient revenues
from advertisements to cover our costs or make a profit. If we do not raise
sufficient funds as a result of advertisements it may have a material adverse
effect on our business, results of operations, and our financial condition.
We have sought additional funding for our operations through a private offering
of our preferred stock pursuant to the exemption from registration provided by
Regulation D Rule 506 and
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<PAGE>
Sections 4(2) and 4(6) of the Securities Act of 1933 (see Item 2, below). The
issuance of the preferred stock may result in dilution to existing shareholders.
Furthermore, in the event that this funding is not sufficient to fund our
anticipated operations and growth, we will have to scale back our growth plans
and business operations. Specifically, we would eliminate or delay plans to
pursue the formation of our Internet radio station, limit our marketing and
advertising budget, and, if necessary, scale down in payroll expenses. In
addition, we may be unable to develop or enhance our products and services, take
advantage of business opportunities or respond to competitive pressures, any of
which could have a material adverse effect on our business, financial condition,
and results of operations.
PART 11
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
At this time we are aware that the Securities and Exchange Commission (the
"SEC") is reviewing our web site and certain press releases for possible
violations of SEC disclosure rules. Our executive officers have met with the SEC
in an effort to resolve these matters and to correct any alleged violations.
Nevertheless, should the SEC decide to initiate further proceedings against us,
we could incur additional costs in connection with the defense of any such
proceeding or any sanctions that may be imposed by the SEC resulting from such
proceedings, which could have an adverse effect on the Company.
We had been the subject of a formal order of investigation dated February 13,
1998, pursuant to Rule 7(a) of the SEC Rules relating to investigations. The
investigation concerned allegations that we may have failed to make appropriate
disclosures on our web pages.
The SEC took testimony of John Westergaard, our then Chief Executive Officer, on
October 1, 1998, and interviewed at least two of our corporate clients. We fully
cooperated with the investigation and reviewed with the SEC staff members our
disclosure policies. On February 24, 2000, we were notified by the SEC that the
investigation has been terminated and that no enforcement action has been
recommended.
Currently, we display on our web site a disclaimer allowing visitors to the site
to review compensation the Company, our employees, and our officers receive for
their services. All consideration is paid in cash. Neither the Company, its
employees, nor its Contributing Analysts accept stock, stock options or other
consideration from any Member Affiliate for services rendered.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
RECENT SALES OF UNREGISTED SECURITIES
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<PAGE>
From March 28, 2000, to May 25, 2000, we sold an aggregate of 149,100 shares of
our preferred stock pursuant to the exemption from registration provided by
Regulation D Rule 506 and Sections 4(2) and 4(6) of the Securities Act of 1933.
The shares which were purchased by 24 accredited investors were offered at
$10.00 per share to a limited number of individual and equity investors.
Pursuant to this offering we raised 1,491,000.
The preferred shares offered are restricted securities pursuant to Rule 144(a)
and cannot be resold or transferred in the United States absent registration or
an applicable exemption from the registration requirements.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During this period covered by this report there have been no special meetings or
an annual meeting of our shareholders. Our annual meeting of shareholders is
scheduled for June 23, 2000.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this report.
There are no exhibits to be filed as part of this report.
(b) Reports of Form 8-K
There were no reports on Form 8-K filed by the Company during the quarter ended
April 30, 2000.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: June 14, 2000 WESTERGAARD.COM, INC.
By: /s/ Thomas J. Wojciechowski
--------------------------------
Thomas J. Wojciechowski, President
Chief Executive Officer
