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 July 31, 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
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(Exact name of small business issuer in its charter)
DELAWARE 52-2002729
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(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
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Securities registered under Section 12(b) of the Act: None
Title of each class Name of each exchange on which registered
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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 .
----- -----
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>
CONSOLIDATED FINANCIAL STATEMENTS
WESTERGAARD.COM, INC. AND SUBSIDIARY
For the nine months ended July 31, 2000 and 1999
Unaudited
ITEM I. FINANCIAL INFORMATION
Westergaard.com, Inc.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
JULY 31, 2000
Unaudited
ASSETS
CURRENT ASSETS
Cash ....................................................... $ 1,048,978
Investment in securities, at market ........................ 14,062
Accounts receivable ........................................ 8,000
-----------
Total current assets .............................. 1,071,040
NONCURRENT ASSETS
Property and equipment (less accumulated
depreciation and amortization of $47,812) ................ 59,153
Other assets ................................................ 16,297
-----------
Total assets ...................................... $ 1,146,490
===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses ....................... $ 203,833
Due to affiliate ............................................ 55,217
Capital received in advance ................................. 1,491,000
Other liabilities ........................................... 48,130
-----------
Total current liabilities ......................... 1,798,180
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
Additional paid-in capital .................................. 2,861,275
Accumulated deficit ......................................... (3,493,006)
Accumulated other comprehensive loss ........................ (31,875)
-----------
Total shareholders' deficit ....................... (651,690)
-----------
Total liabilities and shareholders' deficit ....... $ 1,146,490
===========
The accompanying notes are an integral part of these statements.
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<PAGE>
<TABLE>
<CAPTION>
Westergaard.com, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
THREE MONTHS NINE MONTHS
ENDED JULY 31, ENDED JULY 31,
------------------------------ ----------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Member fee income, net of fees waived .......... $ 76,000 $ 30,003 $ 150,000 $ 97,336
Conferences, net of fees waived ................ 44,000 51,000 180,480 196,468
Interest ....................................... 7,218 19,107 14,824 23,352
Advertising .................................... 142 -- 5,692 --
Other .......................................... -- 2,439 -- 15,711
------------ ------------ ------------ ------------
Total revenues ............................ 127,360 102,549 350,996 332,867
Expenses
Conference expense ............................. 34,026 33,587 75,266 93,706
Compensation and benefits ...................... 231,932 159,669 599,569 424,516
Professional services .......................... 175,748 68,115 277,393 167,643
Rent and occupancy ............................. 24,993 28,507 58,022 58,143
General and administrative expenses ............ 184,015 92,396 370,429 252,851
Advertising expenses ........................... 8,025 22,273 31,769 45,873
Financing costs ................................ -- -- -- 62,200
Interest expense ............................... 999 667 2,999 6,695
Miscellaneous expense .......................... 299 (3,046) 4,562 615
------------ ------------ ------------ ------------
Total expenses ............................ 660,037 402,168 1,420,009 1,112,242
------------ ------------ ------------ ------------
NET LOSS .................................. $ (532,677) $ (299,619) $ (1,069,013) $ (779,375)
============ ============ ============ ============
Loss per share
Basic and diluted .............................. $ (0.04) $ (0.03) $ (0.09) $ (0.07)
Weighted-average common shares outstanding
Basic and diluted .............................. 11,916,445 11,104,648 11,916,445 11,104,648
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
<TABLE>
<CAPTION>
Westergaard.com, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Unaudited
THREE MONTHS NINE MONTHS
ENDED JULY 31, ENDED JULY 31,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Comprehensive income
Net loss ................................... $ (532,677) $ (299,619) $(1,069,013) $ (779,375)
Other comprehensive income (loss)
Unrealized depreciation on investment in
securities ............................. -- -- (1,725) (1,725)
----------- ----------- ----------- -----------
Comprehensive income (loss) ............ $ (532,677) $ (299,619) $(1,070,738) $ (781,100)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
<TABLE>
<CAPTION>
Westergaard.com, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
THREE MONTHS NINE MONTHS
ENDED JULY 31, ENDED JULY 31,
-------------------------- --------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net loss .................................................... $ (532,677) $ (299,619) $(1,069,013) $ (779,375)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation and amortization ......................... 4,619 2,255 14,097 10,112
Compensation and benefits -- fair value of
stock options issued .................................. -- -- -- 62,200
----------- ----------- ----------- -----------
Changes in operating assets and liabilities
Decrease (increase) in employee advances .......... 20,516 (400) 20,765 (3,700)
(Increase) decrease in accounts receivable ........ (8,000) -- 41,000 --
(Increase) in other assets ........................ (4,153) -- (7,583) --
Increase (decrease) in accounts payable and accrued
expenses ........................................ 86,691 (34,223) 67,543 (176,389)
(Decrease) increase in deferred revenues .......... (44,000) 31,997 (122,000) (84,804)
(Decrease) in due to affiliate .................... -- -- (4,816) (50,000)
(Decrease) increase in other liabilities .......... 26,137 937 2,137 (24,957)
----------- ----------- -----------
Net cash used in operating activities ..... (450,867) (299,053) (1,057,870) (1,046,913)
----------- ----------- ----------- -----------
Cash flows from investing activities
Purchase of property and equipment .......................... (3,314) (7,603) (10,316) (28,265)
----------- ----------- ----------- -----------
Net cash used in investing activities ..... (3,314) (7,603) (10,316) (28,265)
----------- ----------- ----------- -----------
Cash flows from financing activities
Proceeds received in advance for issuance of preferred stock 967,000 -- 1,491,000 --
Proceeds from issuance of common stock ...................... -- -- -- 2,016,500
----------- ----------- ----------- -----------
Net cash provided by financing activities . 967,000 -- 1,491,000 2,016,500
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH ........... 512,819 (306,656) 422,814 941,322
Cash at beginning of period ..................................... 536,159 1,258,993 626,164 11,015
----------- ----------- ----------- -----------
Cash at end of period ........................................... $1,048,978 $ 952,337 $ 1,048,978 $ 952,337
=========== =========== =========== ===========
</TABLE>
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The accompanying notes are an integral part of these statements.
<PAGE>
Westergaard.com, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended July 31, 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.
As a result of the matter discussed in Note F-2 to these financial
statements, the Board of Directors of the Company decided to cease
operations effective August 15, 2000 and began to formulate a plan to
sell or liquidate for the Company. Subsequently, the Company entered
into negotiations with an unrelated party for a potential business
combination. A letter of intent was exchanged between the Company and
the third party, on September 1, 2000, with respect to a potential
merger between the two unaffiliated entities.
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 registration statements on Form 10-SB filed
with the Securities Exchange Commission (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.
-6-
<PAGE>
Westergaard.com, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the nine months ended July 31, 2000 and 1999
NOTE A (CONTINUED)
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. Subsequent to July 31,
2000, in connection with the matters discussed in Note A-1, management
has determined the fair value of all property and equipment to be
negligible and has distributed such assets to its employees.
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
-7-
<PAGE>
Westergaard.com, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the nine months ended July 31, 2000 and 1999
NOTE A (CONTINUED)
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 is
recorded net 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.
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 - RELATED PARTY TRANSACTIONS
Included in due to affiliate are liabilities in connection with unpaid
expense reimbursements made by Westergaard Publishing Corporation
("Publishing"), an affiliated entity under common control, on behalf of the
Company and an outstanding loan balance of $50,000 at July 31, 2000 from
Publishing. The loan bears interest of 8% per annum. The loan does not have
a scheduled repayment date.
-8-
<PAGE>
Westergaard.com, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the nine months ended July 31, 2000 and 1999
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 nine months ended July 31,
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 $532,677
to $624,154 and $299,619 to $1,347,244 for the three months ended July 31,
2000 and 1999, respectively, and from $1,069,013 to $1,409,858 and $779,375
to $2,895,798 for the nine months ended July 31, 2000 and 1999,
respectively. During the nine months ended July 31, 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:
JULY 31,
2000
------------
Deferred tax asset
Net operating loss benefit .............. $ 1,599,000
Less valuation allowance ................ (1,599,000)
------------
Net deferred tax asset ............... $ - 0 -
============
-9-
<PAGE>
Westergaard.com, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the nine months ended July 31, 2000 and 1999
NOTE E (CONTINUED)
At July 31, 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
1,123,000 10/31/2020
----------
$3,453,000
==========
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 nine months ended July 31, 2000 and 1999 were
approximately $58,000. At July 31, 2000, f Future aggregate minimum
annual rent payments under these operating leases are approximately as
follows:
Fiscal Minimum Rental
Year Commitment
------ --------------
2000 $16,000
2001 21,000
-------
$37,000
=======
-10-
<PAGE>
Westergaard.com, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the nine months ended July 31, 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 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.
In addition, the SEC in connection with its review of the Company's
Web pages and certain press releases, provided the Company with a
draft complaint alleging claims under Section 17(b) of the Securities
Exchange Act of 1933 and Section 10(b) of the Securities Exchange Act
of 1934, and also with forms of proposed consents and judgments. The
complaint had not yet been filed as of July 31, 2000.
Subsequent to July 31, 2000, the SEC agreed in principle not to pursue
the 10(b) claim asserted against the Company and provided the Company
its final comments to the draft complaint mentioned above. The SEC
comments delete the 10(b) claim against the Company and the final
judgment will not provide for monetary relief but will include a
permanent injunction restraining the Company from violating SEC Rule
Section 17(b).
NOTE G - EARNINGS PER SHARE
The weighted-average shares used in computing earnings per share were
11,916,445 and 11,104,648, respectively, for the nine months ended July 31,
2000 and 1999. As the Company had net operating loss from continuing
operations, the effect of stock options outstanding at July 31, 2000 and
1999 is antidilutive and is therefore not part of the computation of
diluted earnings per share.
-11-
<PAGE>
Westergaard.com, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the nine months ended July 31, 2000 and 1999
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 approximately
$3,552,000 as of July 31, 2000. The Company's continuing operating losses
and insufficient cash flow to meet its operating needs as well as the
matters discussed in Note A-1 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.
As discussed in Note A-1, the Company has suspended its business operations
effective August 15, 2000, and is currently in negotiations with an
unrelated party for a potential business combination. The Company's
continuation as a going concern, at this time, is dependent upon the
outcome of these negotiations.
-12-
<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
The results of the quarter ended July 31, 2000, should not be viewed as the
results of a company seeking to operate in the normal course of business. On
August 15, 2000, we shutdown our website, www.westergaard.com and suspended all
business operations. Our Board of Directors has considered the options to sell,
merge or liquidate the Company. Recently, we have entered into negotiations with
an unrelated party for a potential business combination. We exchanged a letter
of intent with this unrelated party on September 1, 2000, regarding a potential
merger. However, there can be no guarantee that this potential merger will
occur. We have prepared Management's Discussion and Analysis of Financial
Condition and Results of Operations assuming that the reorganization and/or
merger will not occur. We currently have no full time employees and our Vice
President is working on a part time basis to assist in the preparation of the
financial statements required in this Form 10-QSB. The comparisons of current
and prior year periods set forth below should be evaluated in light of our
current operating status.
COMPARISON OF RESULTS FOR THE FISCAL QUARTER ENDED JULY 31, 1999, TO THE FISCAL
QUARTER ENDED JULY 31, 2000.
Our third fiscal quarter ended on July 31st . Any reference to the end of the
fiscal quarter refers to the end of the third fiscal quarter for the periods
discussed herein.
REVENUE. Revenues increased by $18,129 or 5.45% to $350,996 for the nine months
ended July 31, 2000, as compared to $332,867 for the comparable period of 1999.
For the three months ended July 31, 2000, revenues increased by $24,811 or
24.19% to $127,360, as compared to $102,549 for the comparable period in 1999.
Revenues for the three and nine month periods ended July 31, 2000, were
primarily generated from our increase of member affiliate fees which increased
by $52,664 or 54.11% to $150,000 for the nine months ended July 31, 2000, as
compared to $97,336 for the comparable period of 1999. For the three months
ended July 31, 2000, member affiliate fees increased by $45,997 or 153.31% to
$76,000, as compared to $30,003 for the comparable period in 1999.
<PAGE>
However, We do not expect to continue to receive revenues from our member
affiliates or conference fees after the third fiscal quarter of 2000. Currently,
we have no member affiliates and have not scheduled any future conferences. We
do not expect to receive revenues from any other sources at this time.
EXPENSES. Total expenses increased by $307,767 or 27.67% to $1,420,009 for the
nine months ended July 31, 2000, as compared to $1,112,242 for the comparable
period of 1999. For the three months ended July 31, 2000, total expenses
increased by $257,869 or 64.12% to $660,037, as compared to $402,168, for the
comparable period in 1999. 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.
On September 7, 2000, we terminated our lease for our offices located at 530
West 43rd Street, New York, New York 10036. We have no full time employees and
one part time employee. Also, we have not ordered any office supplies and do not
plan to conduct any advertising or marketing in the foreseeable future. We
expect that our expenses will decrease after the third fiscal quarter as we pay
accrued expenses and, with the exception of legal and accounting expenses, do
not accumulate new expenses.
LIQUIDITY AND CAPITAL RESOURCES. We incurred losses during the fiscal quarter
ended July 31, 2000. Our net loss for the nine months ended July 31, 2000 was
$1,069,013 as compared to the comparable period of 1999, when we had net losses
of $779,375. Payments in future quarters will be primarily the result of accrued
expenses and continuing legal and accounting fees. The Board of Directors is
considering a sale or liquidation of the Company. In the absence of such a
reorganization or merger, we intend to liquidate the Company.
PART 11
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The SEC in connection with its review of the Company's Web pages and certain
press releases, provided the Company with a draft complaint alleging claims
under Section 17(b) of the Securities Exchange Act of 1933 and Section 10(b) of
the Securities Exchange Act of 1934, and also with forms of proposed consents
and judgments. The complaint had not yet been filed as of July 31, 2000.
Subsequent to July 31, 2000, the SEC agreed in principle not to pursue the 10(b)
claim asserted against the Company and provided the Company its final comments
to the draft complaint mentioned above. The SEC comments delete the 10(b) claim
against the Company and the final judgment will not provide for monetary relief
but will include a permanent injunction restraining the Company from violating
SEC Rule Section 17(b).
<PAGE>
In addition, 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, as mentioned in our 10-QSB for the period ended April 30, 2000.
The investigation concerned allegations that we may have failed to make
appropriate disclosures on our web pages.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
RECENT SALES OF UNREGISTED SECURITIES
From March 28, 2000, to May 25, 2000, we offered for sale 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 were offered at $10.00 per share to a limited
number of individual and entity investors. 24 accredited investors had
subscribed to purchase the shares. Pursuant to this offering we had raised
$1,491,000. No certificates had been issued and with the commencement of the SEC
investigation, the financing was cancelled with the funds being placed in escrow
for return to the investors.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Our annual meeting of shareholders was held on June 23, 2000. At that meeting
the shareholders voted for the following individuals to serve on our board of
directors: John Westergaard, Thomas Wojciechowski Derrick Ashcroft, Wenke B.
Thoman, William R. Grant, and Joseph Allen. However, after being elected to the
board of directors, John Westerggard resigned from the position due to health
reasons. The shareholders also ratified Ratification of Grant Thorton, LLP as
independent certified public accountants.
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
<PAGE>
The following two reports on Form 8-K were filed by the Company during the
quarter ended July 31, 2000:
On June 26, 2000, we filed a Form 8-K stating that John Westergaard resigned
from the Company due to health reasons.
On August 16, 2000, we filed a Form 8-K stating that our website
www.westergaard.com was shutdown on August 15, 2000; that the board of directors
of Westergaard.com, Inc., is considering whether to reorganize the Company; and
that we suspended all business operations on August 15, 2000, pending such
decision.
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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: October 5, 2000 WESTERGAARD.COM, INC.
By: /s/ ANNE STRATON
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Anne Straton, Vice President
