SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Amendment No. 1
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of event reported): October 31, 2000.
WESTERN MEDIA GROUP CORPORATION
(Exact name of registrant as specified in its charter)
Commission File No. 2-71164
Minnesota 41-1311718
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11900 Wayzata Blvd., Suite 100 Hopkins, MN 55305
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number: (612)-546-1332
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Change in Control Transaction
On October 31, 2000, Western Media Group Corporation, Pink
Sheet symbol WMGC ("Company") issued 9,000,000 shares of its
common stock to DDR, Ltd. ("DDR") in connection with certain
transactions contemplated under a Consulting Agreement dated
October 11, 2000 and Acquisition Agreement dated October 27, 2000
(collectively the "DDR Agreements"). These shares were issued
following a recapitalization of the Company in which the Company
increased the number of authorized shares to 100,000,000, par
value $0.001, consisting of 95,000,000 shares of common stock and
5,000,000 shares of preferred stock without designation as to
series, rights, or preferences, and a 1 for 10 reverse split in
the issued and outstanding common shares. The recapitalization
was approved at a meeting of the stockholders held on October 10,
2000. At the meeting, the stockholders also elected Patrick L.
Riggs and Raymond T. Minicucci as directors to serve until the
next annual meeting of stockholders and until their successors
are elected and qualified.
Under the DDR Agreements, DDR agreed to provide over a
period of one-year consulting services to the Company in
connection with private and public financing, securities broker
and investor relations, and mergers and acquisitions, including a
proposed acquisition of K-Rad Konsulting, LLC, of Huntington, New
York ("KKL") which was a wholly owned subsidiary of DDR. In
consideration for such services, the Company agreed to sell to
DDR 9,000,000 post-reverse split shares for $900. The DDR
Agreements also provide for the acquisition of KKL in exchange
for 100,000 shares of the Company's common stock. Pursuant to
the verbal agreement of the parties to modify the terms of the
written DDR Agreements, the Company issued 9,000,000 shares of
common stock to acquire all of the member interest in KKL from
DDR, and DDR agreed to continue to provide the consulting
services described in the DDR Agreements in consideration for the
benefits derived from the Company common stock issued to DDR.
The purchase price was determined through arms-length
negotiations between the Company and DDR on the basis of the net
assets of KKL and the goodwill associated with the business. The
owners of DDR, Dennis Helfman, Donald Helfman and Bita Azarieh
were not affiliated or associated with the Company or its
affiliates prior to the acquisition.
As a result of the reverse stock split and the transaction
with DDR, DDR acquired approximately 78.3% of the 11,499,310
shares of common stock of the Company outstanding on October 31,
2000.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 31, 2000, the Company acquired from DDR all of
the member interest in K-Rad Konsulting, LLC, as described under
Item 1, above. In connection with the transaction, the board of
directors of the Company appointed Konrad Kim as a director of
the Company.
2
<PAGE>
KKL is engaged in the business of providing computer network
and software system consulting, installation, and maintenance
services to businesses. KKL commenced business in February 2000,
and from February 10, 2000 through September 30, 2000, had an
unaudited net income of $40,493 on total revenue of $60,470.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements.
(a) Financial Statements. Included in this filing are the
following reports and financial statements of K-Rad Konsulting,
LLC, for the period from inception on February 10, 2000 to
September 30, 2000
Auditor's Report
Balance Sheet
Statements of Income and Member's Equity
Statement of Cash Flows
Notes to Financial Statements
(b) Pro Forma Financial Information. Included in this filing is
the following proforma financial information giving effect to the
acquisition of K-Rad Konsulting, LLC
Proforma Consolidated Balance Sheet
Proforma Consolidated Statements of Operations
Proforma Consolidated Statement of Stockholders' Equity (Deficit)
Proforma Consolidated Statements of Cash Flows
(c) Exhibits. Copies of the following documents were included
as exhibits in the initial filing of this report with the
Securities and Exchange Commission on November 13, 2000, and are
incorporated herein by this reference.
Exhibit SEC Ref. Title of Document
No. No.
1 (10) Consulting Agreement with DDR, Ltd. dated
October 11, 2000
2 (2) Acquisition Agreement pertaining to K-Rad
Konsulting,
LLC, dated October 27, 2000
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, the Registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly
authorized.
Western Media Group
Corporation
DATED: December 28, 2000 By:/s/ Patrick l. Riggs
Patrick L. Riggs, President
4
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KRAD KONSULTING, LLC
FINANCIAL STATEMENTS
FOR THE PERIOD FEBRUARY 10, 2000 (INCEPTION)
TO SEPTEMBER 30, 2000
TABLE OF CONTENTS
Page No.
AUDITOR'S REPORT................................................... 1
FINANCIAL STATEMENTS
Balance Sheet......................................... 2
Statements of Income and Member's Equity.............. 3
Statement of Cash Flows............................... 4
Notes to Financial Statements......................... 5
5
<PAGE>
STEWART H. BENJAMIN
CERTIFIED PUBLIC ACCOUNTANT, P.C.
27 SHELTER HILL ROAD
PLAINVIEW, NY 11803
TELEPHONE: (516) 933-9781
FACSIMILE: (516) 827-1203
INDEPENDENT AUDITOR'S REPORT
To the Member
Krad Konsulting, LLC
Huntington, New York
I have audited the accompanying balance sheet of Krad Konsulting,
LLC as of September 30, 2000, and the related statements of
income, member's equity, and cash flows for the period February
10, 2000 (Inception) to September 30, 2000. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. 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. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Krad
Konsulting, LLC as of September 30, 2000, and the results of its
operations and cash flows for the period February 10, 2000
(Inception) to September 30, 2000, in conformity with generally
accepted accounting principles.
Stewart H. Benjamin
Certified Public Accountant, P.C.
Plainview, New York
December 7, 2000
6
<PAGE>
KRAD KONSULTING, LLC
Balance Sheet
September 30, 2000
ASSETS
Current assets:
Cash $ 127
Accounts receivable 8,300
Due from member 13,285
Loan receivable 5,000
26,712
Property and equipment:
Office equipment 2,372
Automobiles 15,990
18,362
Accumulated depreciation (3,534)
14,828
Other assets:
Investments in partnerships 5,046
$ 46,586
LIABILITIES AND MEMBER'S EQUITY
Current liabilities:
Accounts payable $ 6,093
Equity:
Member's equity 40,493
$ 46,586
The accompanying notes are an integral part of the financial
statements.
7
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KRAD KONSULTING, LLC
Statements of Income and Member's Equity
For the Period February 10, 2000 (Inception) to September 30, 2000
Revenue:
Consulting income $ 60,470
Costs and expenses:
Depreciation 3,534
General and administrative 16,443
19,977
Net income 40,493
Member's equity - February 10, 2000 (inception) --
Member's equity - September 30, 2000 $ 40,493
The accompanying notes are an integral part of the financial
statements.
8
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KRAD KONSULTING, LLC
Statement of Cash Flows
For the Period February 10, 2000 (Inception) to September 30, 2000
Cash flows from operating activities:
Net income $ 40,493
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation 3,534
Changes in assets and liabilities:
Increase in accounts receivable (8,300)
Increase in amounts due from member (13,285)
Increase in loan receivable (5,000)
Increase in accounts payable 6,093
Net cash provided by operating activities 23,535
Cash flows from investing activities:
Purchases of equipment (18,362)
Investments in partnerships (5,046)
Net cash used in investing activities (23,408)
Cash flows from financing activities: --
Net increase in cash 127
Cash at beginning of period --
Cash at end of period $ 127
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 43
Income taxes $ --
The accompanying notes are an integral part of the financial
statements.
9
<PAGE>
KRAD KONSULTING, LLC
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Description of Business
The financial statements presented are those of Krad Konsulting,
LLC (the "Company"). The Company was organized as a single
member limited liability company under the laws of the State of
Delaware on February 10, 2000. The Company is engaged in the
business of providing computer network and software systems
consulting, installation, and maintenance services to businesses.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reporting 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 period.
Actual results could differ from those estimates.
Accounts Receivable
The Company considers accounts receivable to be fully
collectible; accordingly, no allowance for doubtful accounts is
required.
Property and equipment and depreciation
Property and equipment are stated at cost. Depreciation for both
financial reporting and income tax purposes is computed using
accelerated methods over the estimated lives of the respective
assets. Maintenance and repairs are charged to expense when
incurred. When property and equipment are retired or otherwise
disposed of, the related cost and accumulated depreciation are
removed from the respective accounts and any gain or loss is
credited or charged to income.
Income Taxes
The Company is not a taxpaying entity for federal income tax
purposes, and thus no income tax expense has been recorded in the
financial statements. Income of the Company is taxed to the
member in his individual returns.
Note 2 - Loan receivable
The Company provided a loan of $5,000 to an individual on August
16, 2000. The loan is due in one year, uncollateralized and
bears interest at 7% per annum.
10
<PAGE>
KRAD KONSULTING, LLC
Notes to Financial Statements
Note 3 - Investments in Partnerships
The Company invested $5,046 in the following investment
partnerships:
Sun Investments Partnership I $2,500
Sun Investments Partnership II 2,500
Sun Investments Partnership III 46
$5,046
The investments in the "Sun Investments" partnerships are carried
at cost, as there is no readily available market for these
entities. If an other-than-temporary impairment resulting from a
decline in fair value in the investment shall be considered to
have occurred, the cost basis shall be written down to fair value
as a new cost basis and the amount of the write-down shall be
included in earnings as a realized loss.
Note 4 - Long-lived Assets
The Company accounts for long-lived assets in accordance with the
provisions of Statement of Financial Accounting Standards (SFAS)
No. 121, Accounting for the Impairment of Long-lived Assets and
for Long-lived Assets to be Disposed Of. This statement requires
that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used
is measured by a comparison of the carrying amount of an asset to
future net cash flows expected to be generated by an asset. If
such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount
of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of carrying amount or fair
value less costs to sell.
Note 5 - Related Party Transactions
The Company made advances to its member totaling $13,285 as of
September 30, 2000. There are no specific terms for repayment.
The Company does not lease or rent any property. Office services
are provided without charge by the member. Such costs are
immaterial to the financial statements and, accordingly, have not
been reflected therein.
Note 6 - Year 2000 Issue
The Company uses computer software programs and operating systems
in its internal operations, including applications used in
financial business systems and various administrative functions.
Although the Company's software applications contain source code
that appropriately interpreted
11
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KRAD KONSULTING, LLC
Notes to Financial Statements
the calendar year 2000, failure by the Company to make any
further modifications resulting from "Year 2000" could result in
systems interruptions or failures that could have a material
adverse effect on the Company's business. The Company has not
incurred, nor anticipates that it will incur material expenses to
make its computer software programs and operating systems "Year
2000" compliant. However, there can be no assurance that
unanticipated costs necessary to update software, or potential
systems interruptions, will not exceed the Company's expectations
and have a material adverse effect on the Company's business,
financial condition and results of operations.
Note 7 - Subsequent Events
Sale of Business
Pursuant to an acquisition agreement entered into with Western
Media Group Corporation ("WMGC") on October 27, 2000, WMGC
acquired the Company in exchange for the issuance of 100,000
shares of common stock of WMGC, and the Company became a wholly
owned subsidiary of WMGC. WMGC is a publicly held, inactive
Minnesota corporation in good standing. In connection with the
transaction, the board of directors of WMGC appointed the member
of the Company as a director of WMGC.
12
<PAGE>
WESTERN MEDIA GROUP CORPORATION
PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
On October 31, 2000, Western Media Group Corporation, ("Company")
issued 9,000,000 shares of its common stock to DDR, Ltd. ("DDR")
in connection with certain transactions contemplated under a
Consulting Agreement dated October 11, 2000 and Acquisition
Agreement dated October 27, 2000 (collectively the "DDR
Agreements"). These shares were issued following a
recapitalization of the Company in which the Company increased
the number of authorized shares to 100,000,000, par value $0.001,
consisting of 95,000,000 shares of common stock and 5,000,000
shares of preferred stock without designation as to series,
rights, or preferences, and a 1 for 10 reverse split in the
issued and outstanding common shares. The recapitalization was
approved a meeting of the stockholders held on October 10, 2000.
Under the DDR Agreements, DDR agreed to provide over a period of
one-year consulting services to the Company in connection with
private and public financing, securities broker and investor
relations, and mergers and acquisitions, including a proposed
acquisition of K-Rad Konsulting, LLC, of Huntington, New York
("KKL") which was a wholly owned subsidiary of DDR. In
consideration for such services, the Company agreed to sell to
DDR 9,000,000 post-reverse split shares for $900 and the
acquisition of KKL. Pursuant to the verbal agreement of the
parties to modify the terms of the written DDR Agreements, the
Company issued 9,000,000 shares of common stock to acquire all of
the member interest in KKL from DDR, and DDR agreed to continue
to provide the consulting services described in the DDR
Agreements in consideration for the benefits derived from the
Company common stock issued to DDR.
The purchase price was determined through arm's-length
negotiations between the Company and DDR on the basis of the net
assets of KKL and the goodwill associated with the business. The
owners of DDR, Dennis Helfman, Donald Helfman and Bita Azrieh
were not affiliated or associated with the Company or its
affiliates prior to the acquisition.
As a result of the reverse stock split and the transaction with
DDR, DDR acquired approximately 78.3% of the 11,499,310 shares of
common stock of the Company outstanding on October 31, 2000.
Krad Konsulting, LLC was organized as a single member limited
liability company under the laws of the State of Delaware on
February 10, 2000. Krad Konsulting, LLC is engaged in the
business of providing computer network and software systems
consulting, installation, and maintenance services to businesses.
13
<PAGE>
WESTERN MEDIA GROUP CORPORATION
(A Development Stage Company)
PROFORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30,
2000
ASSETS
Current assets:
Cash $ 1,152
Accounts receivable 8,300
Due from related party 13,285
Loan receivable 5,000
Total current assets 27,737
Property and equipment:
Office equipment 2,372
Automobiles 15,990
18,362
Accumulated depreciation (3,534)
14,828
Other assets:
Investments in partnerships 5,046
Total assets $ 47,611
14
<PAGE>
WESTERN MEDIA GROUP CORPORATION
(A Development Stage Company)
PROFORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30,
2000
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 6,093
Total current liabilities 6,093
Stockholders' equity (deficit):
Preferred stock: undesignated, 5,000,000
unauthorized; none issued and outstanding -
Common stock: $.001 par value; 95,000,000
shares authorized; issued and outstanding
11,499,310 and 1,199,310 shares, respectively 11,499
Additional paid-in capital 899,444
Accumulated deficit (943,064)
Surplus (deficit) accumulated during the
development stage 73,639
Total stockholders' equity (deficit) 41,518
Total liabilities and
stockholders' equity (deficit) $ 47,611
15
<PAGE>
WESTERN MEDIA GROUP CORPORATION
(A Development Stage Company)
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine Months Period from
Ended Year Ended August 1, 1991
September 30, December 31, To September 30,
2000 1999 2000
Revenues:
Consulting income $ 60,470 $ - $ 60,470
Administrative expenses (26,616) - (69,337)
Depreciation expense (3,534) - (3,534)
Income tax expense (benefit) - - -
Operating income (loss) 30,320 - (12,401)
Other income:
Debt forgiveness 86,040 - 86,040
Net income (loss) 116,360 - 73,639
Other comprehensive income (loss) - - -
Proforma comprehensive income (loss) $116,360 $ - $ 73,639
Proforma basic earnings (loss)
per share $ .01 $ .01 $ .04
Proforma weighted average
number of shares outstanding 8,496,296 1,199,310 1,987,765
Historical comprehensive
income (loss) $ 75,867 $ - $ 33,146
Historical basic earnings (loss)
per share $ - $ - $ -
Historical weighted average number
of shares outstanding 19,498,595 1,199,310 12,870,542
16
<PAGE>
WESTERN MEDIA GROUP CORPORATION
(A Development Stage Company)
PROFORMA CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
<TABLE>
<CAPTION>
Surplus
(Deficit)
Accumulated
Common Stock Additional During
Number of Paid-In Accumulated Development
Shares Amount Capital Deficit Stage Total
<S> <C> <C> <C> <C> <C> <C>
Reentrance into development
stage (August 1, 1991) 1,199,310 $ 1,199 $ 856,046 $ (943,064) $ - $ (85,819)
Net loss: August 1, 1991
to December 31, 1991 - - - - - -
Net income (loss) - 1992 - - - - (42,721) (42,721)
Net income (loss) - 1993 - - - - - -
Net income (loss) - 1994 - - - - - -
Net income (loss) - 1995 - - - - - -
Net income (loss) - 1996 - - - - - -
Net income (loss) - 1997 - - - - - -
Net income (loss) - 1998 - - - - - -
Net income (loss) - 1999 - - - - - -
December 31, 1999 1,199,310 1,199 856,046 (943,064) (42,721) $(128,540)
Stock issuance on March 16, 2000
in settlement of indebtedness
to former officer 100,000 100 9,900 - - 10,000
Stock issuance on March 16, 2000
at $.003 per share, net of
issuance costs of $1,125 1,200,000 1,200 32,675 - - 33,875
Equity contribution to cover
administrative expenses - - 8,923 - - 8,923
Issuance of shares as part of
DDR agreements 9,000,000 9,000 (8,100) - - 900
Net income (loss):
January 1, 2000 to
September 30, 2000 - - - - 116,360 116,360
September 30, 2000 11,499,310 $ 11,499 $ 899,444 $ (943,064) $ 73,639 $ 41,518
</TABLE>
17
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WESTERN MEDIA GROUP CORPORATION
(A Development Stage Company)
PROFORMA CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) In Cash
(UNAUDITED)
Nine Months Period from
Ended Year Ended August 1, 1991
September 30, December 31, To September 30,
2000 1999 2000
Cash flows from operating activities:
Net income (loss) $ 116,360 $ - $ 73,639
Adjustments to reconcile net income
(loss) to cash flows from
operating activities:
Depreciation 3,534 - 3,534
Debt forgiveness (86,040) - (86,040)
Accounts receivable (8,300) - (8,300)
Related party receivable (13,285) - (13,285)
Loan receivable (5,000) - (5,000)
Accounts payable and other
current liabilities (26,407) - 14,836
Cash flows from operating activities (19,138) - (20,616)
Cash flows from financing activities:
Issuance of common stock, net 43,698 - 43,698
Cash flows from investing activities:
Purchases of equipment (18,362) - (18,362)
Investments in partnerships (5,046) - (5,046)
Cash flows from investing activities (23,408) - (23,408)
Increase (decrease) in cash 1,152 - (326)
Cash:
Beginning of period - - 1,478
End of period $ 1,152 $ - $ 1,152
18
<PAGE>
Supplemental cash flows information:
Interest paid $ 43 $ - $ 43
Income taxes paid $ - $ - $ -
19
<PAGE>
WESTERN MEDIA GROUP CORPORATION
(A Development Stage Company)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000,
YEAR ENDED DECEMBER 31, 1999
AND THE PERIOD FROM REENTRANCE INTO
DEVELOPMENT STAGE
(AUGUST 1, 1991) TO SEPTEMBER 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The Company was incorporated on July 26, 1977, under the laws of
the State of Minnesota. On November 17, 1988, the Company
changed its name to Western Media Group Corporation. Formerly
the Company was known as Ionic Controls, Inc.
On July 31, 1991, the Company sold substantially all of its
operations, KXDC-AM and FM in Monterey, California for
$1,100,000. Proceeds from this sale were assigned to the
Company's chief executive officer in settlement of $5,156,139
owed to this individual. The Company recorded a gain on debt
forgiveness of $4,056,139 on this transaction as reported in its
September 30, 1991 Form 10-Q.
The Company's only remaining operations at that date were 100%
working interests in two oil leases in Bugai - Guadolupe County,
Texas owned through the Company's wholly-owned subsidiary, Ionic
Energy Corporation. These leases were without value and the
Company ultimately abandoned these interests in 1992. The
Company further allowed Ionic Energy Corporation to be
statutorially dissolved on August 1, 1997.
On October 31, 2000, Western Media Group Corporation, ("Company")
issued 9,000,000 shares of its common stock to DDR, Ltd. ("DDR")
in connection with certain transactions contemplated under a
Consulting Agreement dated October 11, 2000 and Acquisition
Agreement dated October 27, 2000 (collectively the "DDR
Agreements"). These shares were issued following a
recapitalization of the Company in which the Company increased
the number of authorized shares to 100,000,000, par value $0.001,
consisting of 95,000,000 shares of common stock and 5,000,000
shares of preferred stock without designation as to series,
rights, or preferences, and a 1 for 10 reverse split in the
issued and outstanding common shares. The recapitalization was
approved a meeting of the stockholders held on October 10,
2000.
20
<PAGE>
WESTERN MEDIA GROUP CORPORATION
(A Development Stage Company)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000,
YEAR ENDED DECEMBER 31, 1999
AND THE PERIOD FROM REENTRANCE INTO
DEVELOPMENT STAGE
(AUGUST 1, 1991) TO SEPTEMBER 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Nature of Business (Continued)
Under the DDR Agreements, DDR agreed to provide over a period of
one-year consulting services to the Company in connection with
private and public financing, securities broker and investor
relations, and mergers and acquisitions, including a proposed
acquisition of K-Rad Konsulting, LLC, of Huntington, New York
("KKL") which was a wholly owned subsidiary of DDR. In
consideration for such services, the Company agreed to sell to
DDR 9,000,000 post-reverse split shares for $900 and the
acquisition of KKL. Pursuant to the verbal agreement of the
parties to modify the terms of the written DDR Agreements, the
Company issued 9,000,000 shares of common stock to acquire all of
the member interest in KKL from DDR, and DDR agreed to continue
to provide the consulting services described in the DDR
Agreements in consideration for the benefits derived from the
Company common stock issued to DDR.
The purchase price was determined through arm's-length
negotiations between the Company and DDR on the basis of the net
assets of KKL and the goodwill associated with the business. The
owners of DDR, Dennis Helfman, Donald Helfman and Bita Azrieh
were not affiliated or associated with the Company or its
affiliates prior to the acquisition.
As a result of the reverse stock split and the transaction with
DDR, DDR acquired approximately 78.3% of the 11,499,310 shares of
common stock of the Company outstanding on October 31, 2000.
Krad Konsulting, LLC was organized as a single member limited
liability company under the laws of the State of Delaware on
February 10, 2000. Krad Konsulting, LLC is engaged in the
business of providing computer network and software systems
consulting, installation, and maintenance services to businesses.
21
<PAGE>
WESTERN MEDIA GROUP CORPORATION
(A Development Stage Company)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000,
YEAR ENDED DECEMBER 31, 1999
AND THE PERIOD FROM REENTRANCE INTO
DEVELOPMENT STAGE
(AUGUST 1, 1991) TO SEPTEMBER 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary, Krad
Konsulting, LLC. All intercompany transactions and balances have
been eliminated in consolidation.
Fixed Assets
Fixed assets are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the
related assets, ranging from three to seven years. When assets
are retired or otherwise disposed of, the cost and related
accumulated depreciation ae removed from the accounts and the
resulting gain or loss is recognized in income for the period.
The cost of maintenance and repairs is expensed as incurred;
significant renewals and betterments are capitalized. Deduction
is made for retirements resulting from renewals or betterments.
Risks, Estimates and Uncertainties
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 reported amounts of revenues and expenses during the
reporting period.
22
<PAGE>
WESTERN MEDIA GROUP CORPORATION
(A Development Stage Company)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000,
YEAR ENDED DECEMBER 31, 1999
AND THE PERIOD FROM REENTRANCE INTO
DEVELOPMENT STAGE
(AUGUST 1, 1991) TO SEPTEMBER 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable
The Company sells to domestic companies. The Company grants
uncollateralized credit. Management believes all amounts are
collectible and has not provided for an allowance for doubtful
accounts. Due to uncertainties in the collection process,
however, it is at least reasonably possible that management's
estimate will change during the next year. That amount cannot
be estimated.
Earnings Per Share
The Company has implemented FASB 128: Earnings Per Share. Basic
EPS excludes dilution and is computed by dividing net income by
the weighted-average number of common shares outstanding for the
year. Diluted EPS reflects the potential dilution from stock
options and warrants and is computed using the treasury stock
method. Under the treasury stock method stock options are
assumed to have been exercised at the beginning of the period if
the exercise price exceeds the average market price during the
period. The computation of diluted EPS does not assume
conversion or exercise of securities that would have an
antidilutive effect on earnings per share.
There are not outstanding stock options or warrants.
23
<PAGE>
WESTERN MEDIA GROUP CORPORATION
(A Development Stage Company)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000,
YEAR ENDED DECEMBER 31, 1999
AND THE PERIOD FROM REENTRANCE INTO
DEVELOPMENT STAGE
(AUGUST 1, 1991) TO SEPTEMBER 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Comprehensive Income
SFAS No. 130 establishes standards for the reporting and
disclosure of comprehensive income and its components which will
be presented in association with a company's financial
statements. Comprehensive income is defined as the change in a
business enterprise's equity during a period arising from
transactions, events or circumstances relating to non-owner
sources, such as foreign currency translation adjustments and
unrealized gains or losses on available-for-sale securities. It
includes all changes in equity during a period except those
resulting from investments by or distributions to owners. For
the periods ended September 30, 2000 and December 31, 1999, net
income and comprehensive income were equivalent.
Fair Value of Financial Instruments
SFAs No. 107, "Disclosures About Fair Value of Financial
Instruments" requires disclosure of the estimated fair value of
financial instruments as follows:
Short-term Assets and Liabilities:
The fair values of cash, accounts receivable, accounts
payable, accrued liabilities, and short-term debt approximate
their carrying values due to the short-term nature of these
financial instruments.
24
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" which requires the use of the "liability
method" of accounting for income taxes. The Company's net
operating loss carryforwards are fully allowed for due to
questions regarding the Company's ability to utilize these losses
before they expire.
NOTE 2 - DEVELOPMENT STAGE COMPANY
On July 31, 1991, the Company sold substantially all of its
operations and reentered the development stage. From that date
to October 2000, the Company has devoted the majority of its
efforts to: maintenance of the corporate status; raising capital;
and the search for a merger candidate.
The Company has been fully dependent upon the support of certain
stockholder(s) for the maintenance of its corporate status and to
provide all working capital support for the Company. These
stockholder(s) intend to continue to fund necessary expenses to
sustain the Company. As described in Note 1, the Company has
merged with Krad Konsulting, LLC. If Krad Konsulting does not
remain profitable or if the Company's stockholder(s) do not
continue to fund necessary expenses of the Company it could
result in the Company being unable to continue as a going
concern. No estimate can be made of the range of loss that is
reasonably possible should the Company be unsuccessful.
25
<PAGE>
WESTERN MEDIA GROUP CORPORATION
(A Development Stage Company)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000,
YEAR ENDED DECEMBER 31, 1999
AND THE PERIOD FROM REENTRANCE INTO
DEVELOPMENT STAGE
(AUGUST 1, 1991) TO SEPTEMBER 30, 2000
NOTE 3 - OTHER TRANSACTIONS
Loan Receivable
The Company provided a loan of $5,000 to an individual on August
16, 2000. The loan is due in one year, uncollaterlized and bears
interest at 7% per annum.
Note Payable and Accrued Interest - Related party /
Amount Due to Officer
These obligations were settled March 16, 2000 for $20,000 (
$10,000 in cash; 1,000,000 shares of common stock with a stated
value of $10,000) resulting in $21,391 in debt forgiveness.
Related Party Transactions
The Company made advances to its member totaling $13,285 as of
September 30, 2000. There are no specific terms for repayment.
The Company does not lease or rent any property. Office services
are provided without charge by the member. Such costs are
immaterial to the financial statements, and, accordingly, have
not been reflected therein.
Accounts Payable
In 2000 the $87,149 in accounts payable from December 31, 1999,
were settled for $22,500 resulting in debt forgiveness of
$64,649.
Stock Issuance
On March 16, 2000, the Company approved the issuance of 1,200,000
shares of common stock at $.093 a share.
On October 31, 2000, the Company issued 9,000,000 shares of
common stock at $.0001 a share. See Note 1.
26
<PAGE>
WESTERN MEDIA GROUP CORPORATION
(A Development Stage Company)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000,
YEAR ENDED DECEMBER 31, 1999
AND THE PERIOD FROM REENTRANCE INTO
DEVELOPMENT STAGE
(AUGUST 1, 1991) TO SEPTEMBER 30, 2000
NOTE 3 - OTHER TRANSACTIONS (Continued)
Investments
The Company invested $5,046 in the following investment
partnerships:
Sun Investments Partnership I $ 2,500
Sun Investments Partnership II 2,500
Sun Investments Partnership III 46
$ 5,046
The investments in the "Sun Investments" partnerships are carried
at cost, as there is no readily available market for these
entities. If an other-than-temporary impairment resulting from a
decline in fair value in the investment shall be considered to
have occurred, the cost basis shall be written down to fair value
as a new cost basis and the amount of the write-down shall be
included in earnings as a realized cost.
NOTE 4 - LONG-LIVED ASSETS
The Company acccounts for long-lived assets in accordance with
the provisions of Statement of Financial Accounting Standards
(SFAS) No. 121, Accounting for the Impairment of Long-Lived
Assets and or Long-Lived Assets to be disposed Of. This
statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows expected to
be generated by an asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported
at the lower of carrying amounts of air value less costs to sell.
27
<PAGE>
WESTERN MEDIA GROUP CORPORATION
(A Development Stage Company)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000,
YEAR ENDED DECEMBER 31, 1999
AND THE PERIOD FROM REENTRANCE INTO
DEVELOPMENT STAGE
(AUGUST 1, 1991) TO SEPTEMBER 30, 2000
NOTE 5 - SUMMARY OF NON CASH ACTIVITY
On March 16, 2000, the Company entered into a settlement
agreement with former officer and a company controlled by this
former officer resulting in debt forgiveness of $21,391. This
agreement also provided for the issuance of 1,000,000 shares of
common stock in settlement of $10,000 owed to this former
officer.
The Company's former auditors forgave any amounts owed to them
resulting in debt forgiveness of $5,000.
The Company settled a $48,370 judgement for $17,500 resulting in
debt forgiveness of $30,870.
The Company's former attorney settled a $33,779 obligation for
$5,000 resulting in debt forgiveness of $28,779.
28
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