As filed with the Securities and Exchange Commission on March_____, 2000.
Registration No. 333-3074
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO FORM 8-K
FILED DECEMBER 3, 1999
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
------------------------------------------------------------------------------
Date of Report (Date of earliest event reported) November 17, 1999
NEXLAND, INC.
(Exact Name of registrant as specified in its charter)
Arizona 333-3074 65-0782410
(State of other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation)
20801 Biscayne Boulevard
Aventura, Florida 33180
(address of principal executive offices)
Tel: (305) 937-3877
(Registrant's telephone number)
Windstar Resources, Inc.
(Former name or former address, if change since last report)
Item 1. Change in Control of Registrant.
Not applicable
Item 2. Acquisition or Disposition of Assets.
Not applicable
Item 3. Bankruptcy or Receivership.
Not applicable
Item 4. Changes in Registrant's Certifying Accountant
Not applicable
Item 5. Other Events.
Not applicable
Item 6. Resignation of Registrant's Directors.
Not Applicable
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements and Businesses Acquired - Not
applicable
(b) Pro Forma Financial Information
(c) Exhibits - Financial Statements
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEXLAND, INC.
By /s/ Gregory Scott Levine
---------------------------
Gregory Scott Levine, President
Dated: March 9, 2000
NEXLAND, INC.
20801 Biscayne Boulevard
Aventura, Florida 33180
NEXLAND, INC.
Financial Statements
For the period ended
November 17, 1999 and
December 31, 1998 and 1997
WILLIAMS & WEBSTER, P.S.
Certified Public Accountants
Bank of America Financial Center
W. 601 Riverside, Suite 1940
Spokane, WA 99201
(509) 838-5111
Nexland, Inc.
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Operations and Accumulated Deficit 3
Statements of Stockholders' Equity 4
Statements of Cash Flows 5
NOTES TO FINANCIAL STATEMENTS 6
SUPPLEMENTAL INFORMATION 12
[GRAPHIC OMITTED]
Williams & Webster, PS.
Certified Public Accountants
Williams & Webster, P.S.
Certified Public Accountants & Business Consultants
Bank of America Financial Center + 601 W. Riverside, Suite 1940 + Spokane, WA
99201-0611 509-838-5111 Fax: 509-838-5114 + E-mail: wwpcpas@williams-webster.com
Board of Directors
Nexland, Inc.
Miami, Florida
Independent Auditor's Report
----------------------------
We have audited the accompanying balance sheets of Nexiand, Inc. as of November
17, 1999, December 31, 1998 and 1997 and the related statements of operations
and stockholder's equity, and cash flows, for the period and years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects,the financial position of Nexland, Inc. as of November 17,
1999, December 31, 1998 and 1997, and the results of its operations and its cash
flows for the period and years then ended in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 12 to the
financial statements, the Company's significant losses raise substantial doubt
about its ability to continue as a going concern. Management's plans regarding
the resolution of this issue are also discussed in Note 12. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Our audit was conducted for the purpose of forming an opinion must on the basic
financial statements taken as a whole. The proforma financial statements on
pages 11 through 15 are presented for purposes of additional analysis and is not
a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Williams & Webster, P.S.
- ----------------------------
Williams & Webster, P.S.
Spokane, Washington
February 24, 2000
NEXLAND, INC.
BALANCE SHEETS
November 17, December 31, December 31,
A S S E T S 1999 1998 1997
----------- ---- ---- ----
CURRENT ASSETS
Cash $ 12,476 $ -- $ --
Accounts receivable 52,989 -- --
Receivable from affiliated partnership -- 2,900 2,900
Inventory 90,519 -- --
Investment in Nexland LP -- 100 100
--------- --------- ---------
TOTAL CURRENT ASSETS 155,984 3,000 3,000
--------- --------- ---------
PROPERTY AND EQUIPMENT
Furniture and equipment 8,434 -- --
Less: accumulated depreciation (3,659) -- --
--------- --------- ---------
TOTAL PROPERTY AND EQUIPMENT 4,775 -- --
--------- --------- ---------
OTHER ASSETS
Escrow and security deposits 28,180 -- --
Trademarks 211,562 -- --
--------- --------- ---------
TOTAL OTHER ASSETS 239,742 -- --
--------- --------- ---------
TOTAL ASSETS $ 400,501 $ 3,000 $ 3,000
========= ========= =========
L I A B I L I T I E S & S T O C K H O L D E R S ' E Q U I T Y
CURRENT LIABILITIES
Accounts payable $ 196,061 $ -- $ --
Accured expense 10,122 -- --
--------- --------- ---------
TOTAL CURRENT LIABILITIES 206,183 -- --
--------- --------- ---------
LONG-TERM LIABILITIES
Notes payable to shareholder 174,318 -- --
--------- --------- ---------
TOTAL LIABILITIES 380,501 -- --
--------- --------- ---------
COMMITMENTS AND CONTINGENCIES -- -- --
--------- --------- ---------
STOCKHOLDERS' EQUITY
Common stock, 20,000 shares authorized,
no par value; 20,000, 3,000 and 3,000 shares
issued and outstanding, respectively 20,000 3,000 3,000
--------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY 20,000 3,000 3,000
--------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 400,501 $ 3,000 $ 3,000
========= ========= =========
The accompanying notes are an integral part of these financial statements.
2
NEXLAND, INC.
STATEMENTS OF OPERATIONS
Period Year Year
Ending Ending Ending
November 17, December 31, December 31,
1999 1998 1997
---- ---- ----
R E V E N U E S $ -- $ -- $ --
------- ------- -------
E X P E N S E S -- -- --
------- ------- -------
TOTAL OPERATING EXPENSES -- -- --
------- ------- -------
NET LOSS $ -- $ -- $ --
======= ======= =======
Basic net loss per common share $ nil $ nil $ nil
======= ======= =======
Weighted average number of
common stock shares outstanding $20,000 $ 3,000 $ 3,000
======= ======= =======
The accompanying notes are an integral part of these financial statements.
3
NEXLAND, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock
------------ Total
Number Additional Accumulated Stockholders'
of Shares Amount Paid-in Capital Deficit Equity
--------- ------ --------------- ------- ------
Issuance of common stock in December, 1997
for cash at $1.00 per share 3,000 $ 3,000 $ -- $-- $ 3,000
Income (Loss) for year ending, December, 1997 -- -- -- -- --
------- ------- ------ ---- -------
Balance at December 31, 1997 3,000 3,000 -- -- 3,000
Income (Loss) for year ending, December, 1998 -- -- -- -- --
------- ------- ------ ---- -------
Balance at December 31, 1998 3,000 3,000 -- -- 3,000
Stock exchanged for the acquisition of
Nexland LP 17,000 17,000 -- -- 17,000
Income (Loss) for period ending, November 17, 1999 -- -- -- -- --
------- ------- ------ ---- -------
Balance at November 17, 1999 20,000 $20,000 $ -- $-- $20,000
======= ======= ====== ==== =======
The accompanying notes are an integral part of these financial statements.
4
NEXLAND, INC.
STATEMENTS OF CASH FLOWS
Period Year Year
Ending Ending Ending
November 17, December 31, December 31,
1999 1998 1997
---- ---- ----
Cash flows from operating activities:
Net income (loss) $ -- $ -- $ --
Net cash used in operating activities -- -- --
------- --------- -------
Cash flows from investing activities:
Loans to Nexland LP -- -- (2,900)
Investment in Nexland LP -- -- (100)
------- --------- -------
Cash flows from financing activities:
Issuance of stock -- -- 3,000
Acquisition of Nexland LP 12,476 --
------- --------- -------
Net cash provided by financing activities 12,476 -- --
------- --------- -------
Net increase (decrease) in cash -- -- --
Cash, beginning of period -- -- --
------- --------- -------
Cash, end of period 12,476 -- --
======= ========= =======
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest and income taxes:
Interest -- -- --
======= ========= =======
Income taxes -- -- --
======= ========= =======
The accompanying notes are an integral part of these financial statements.
5
NEXLAND, INC.
NOTES TO FINANCIAL STATEMENTS
For the Period Ended November 17, 1999
For the Years Ended December 31, 1998 and 1997
NOTE 1 - BUSINESS ORGANIZATION
Nature of Operations
- --------------------
Nexland, Inc. (hereinafter "Nexland") was incorporated on December 4, 1994 under
the laws of the State of Florida. From inception until November 17, 1999,
Nexland was inactive. On November 15, 1999, the partners of Nexland Limited
Partnership assigned all rights, title and interest in partnership assets to
Nexland, Inc. in exchange for 17,000 common stock shares of Nexland, Inc.
Nexland LP was formed on September 25, 1997. The activities of the partnership
are reflected in the proforma financial statements. The Company is engaged in
the production of internet sharing boxes.
Subsequent to November 17, 1999, Nexland, Inc. exchanged its stock in a
merger-acquisition with Windstar Resources, Inc. See Note 10.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
- -------------------
Nexland uses the accrual basis of accounting in accordance with generally
accepted accounting principles.
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.
Advertising
- -----------
Advertising costs are charged to operations in the year incurred.
Property, Plant and Equipment
- -----------------------------
Property, plant and equipment is recorded at cost and depreciated using the
straight-line method over estimated useful lives of three to seven years.
Expenditures for repairs and maintenance which do not extend the useful life of
the related asset are expensed as incurred.
6
NEXLAND, INC.
NOTES TO FINANCIAL STATEMENTS
For the Period Ended November 17, 1999
For the Years Ended December 31, 1998 and 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment of Long-lived Assets
- -------------------------------
The Company evaluates the recoverability of long-lived assets when events and
circumstances indicate that such assets might be impaired. The Company
determines impairment by comparing the undiscounted future cash flows estimated
to be generated by these assets to their respective carrying amounts.
Income Taxes
- ------------
No provision for taxes or tax benefit has been reported in the financial
statements, as there is not a measurable means of assessing future profits or
losses.
Cash and Cash Equivalents
- -------------------------
The Company considers all highly liquid investments with a maturity of three
months or less at the date of acquisition to be cash equivalents.
Basic and Diluted Earnings Per Share
- ------------------------------------
In December 1997, the Company adopted Statement of Financial Accounting
Standards Statement (SFAS) No. 128, Earnings Per Share. Basis earnings per share
is computed using the weighted average number of common shares outstanding.
Diluted net loss per share is the same as basic net loss per share as the
inclusion of common stock equivalents would be antidilutive.
Revenue and Cash Recognition
- ----------------------------
Revenues and cost of revenues are recognized when services and products are
furnished or delivered.
Intangibles
- -----------
Intangible assets consist of trademarks pending. Trademarks will be amortized
using a straight-line method over twenty years, once the trademarks are granted.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets. The Company
evaluates the recoverability of property and equipment when events and
circumstances indicate that such assets might be impaired. The Company
determines impairment by comparing the undiscounted future cash flows estimated
to be generated by these assets to their respective carrying amounts.
7
NEXLAND, INC.
NOTES TO FINANCIAL STATEMENTS
For the Period Ended November 17, 1999
For the Years Ended December 31, 1998 and 1997
NOTE 3 - PROPERTY AND EQUIPMENT (CONTINUED)
Major additions and betterments are capitalized. Costs of maintenance and
repairs which do not improve or extend the lives of the respective assets are
expensed as incurred. When property and equipment are retired or otherwise
disposed of, the related costs and accumulated depreciation are removed from the
accounts and any gain or loss is recognized in operations.
NOTE 4 - INVENTORY
Inventories are stated at the lower of cost or market, with cost being
determined on a first-in-first out basis.
Inventories at November 17, 1999, December 31, 1998 and 1997 consist of the
following:
Finished goods $ 90,519 $ -- $ --
=========== =========== ==========
NOTE 5 - LEASE COMMITMENT
Nexland leases commercial office space in Miami, Florida under a six month
lease. The monthly rent is $3,000 and the lease term ends in February, 2000.
NOTE 6 - INTANGIBLE ASSETS
On November 17, 1999, Windstar Resources, Inc acquired Nexland, Inc. in a
reverse acquisition accounted for as a purchase. The purchase price exceeded the
net assets of Windstar and the fair value of common stock issued at the date of
acquisition by $1,040,301, which was assigned to trademarks. Trademarks will be
capitalized and amortized using the straight-line method over twenty years.
There was no amortization expensed for the period ended November 17, 1999.
At November 17, 1999, the Company's trademark applications were still pending
approval. All trademark amortization will be recorded in the period after the
merger and acquisition.
8
NEXLAND, INC.
NOTES TO FINANCIAL STATEMENTS
For the Period Ended November 17, 1999
For the Years Ended December 31, 1998 and 1997
NOTE 7 - NOTES PAYABLE, RELATED PARTIES
Nexland has unsecured cash loans with its shareholder in the amount of $174,318
at November 17, 1999. The notes bear an interest rate equal to the applicable
federal rate, which is 5.83%, are unsecured and are subject to adjustment on
August 1, 2000. The terms of the notes were not finalized until after the merger
with Windstar Resources, Inc. See Note 10.
NOTE 8 - COMMON STOCK
Mr. Israel D. Sultan, the original shareholder of Nexland, was issued 3,000
shares of no par common stock for his original capital contribution of $3,000.
On November 15, 1999, Nexland LP was acquired for the issuance of 17,000 shares
of common stock which were valued at $211,562. This transaction included the net
debt of Nexland LP assumed of $194,461 and common stock valued at $17,000,
Nexland, Inc. original investment in Nexland LP of $101.
NOTE 9 - YEAR 2000
Like other companies, Nexland could be adversely affected if the computer
systems it, its suppliers or customers use do not properly process and calculate
date-related information and data from the period surrounding and including
January 1, 2000. This is commonly known as the "Year 2000" issue. Additionally,
this issue could impact non-computer systems and devices such as production
equipment, elevators, etc. At this time, because of the complexities involved in
the issue, management cannot provide assurances that the Year 2000 issue will
not have an impact on the company's operations.
The Company has reviewed its business and processing systems and believes that
the majority of its systems are already Year 2000 compliant or can be made so
with software updates. Based on preliminary assessments, the Company regards the
costs associated with Year 2000 readiness to be immaterial.
NOTE 10 - SUBSEQUENT EVENT - MERGER /ACQUISITION
On November 17, 1999 Nexland, Inc. exchanged each of its shares of common stock
for 1,475 shares of Windstar Resources, Inc. common stock shares. Nexland,
Inc.'s shareholders received 29,500,000 shares of Windstar Resources, Inc.
common stock. The market value of the common shares of Windstar as of the
effective merger date was $0.03125 per share resulting in a value of $921,875.
The acquisition valuation used this market value to arrive at the value of
trademarks for the consolidated company in the proforma filings required by
reporting standards of the Securities and Exchange Commission. As part of the
transaction, Nexland, Inc. agreed to pay $25,000 in debts owed to certain
creditors of Windstar Resources, Inc.
9
NEXLAND, INC.
NOTES TO FINANCIAL STATEMENTS
For the Period Ended November 17, 1999
For the Years Ended December 31, 1998 and 1997
NOTE 10 - SUBSEQUENT EVENT - MERGER /ACQUISITION (Continued)
Furthermore the Company acquired liabilities in excess of Windstar's assets of
$82,551 and net equity and investment adjustments of $16,875. The value of
trademarks were increased by $1,046,301 in the valuation of the components of
the acquisitions.
Nexland was wholly merged into Windstar Resources, Inc. Windstar Resources, Inc.
subsequently changed its name to Nexland, Inc.
NOTE 11 - ACQUISITION OPTION FOR NEXLAND SA
Nexland, Inc. has the option to purchase all the common stock shares of Nexland
S.A., a French corporation. This option expires on June 30, 2000. The sale price
is dependent upon a valuation preformed by an independent French accounting
firm.
NOTE 12 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.
As shown in the accompanying financial statements, the Company and its
predecessor, Nexland LP, have generated no revenues before 1999. The predecessor
partnership had a net loss of $98,614 for 1999 at the time it was acquired by
the Company. The Company is currently involved in a merger, which will, if
successful, mitigate these factors which raise substantial doubt about the
Company's ability to continue as a going concern. Management believes that
significant resources will be available from private and public sources in 2000
to continue the marketing of its internet sharing devices. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded assets, or the amounts and classification of
liabilities that might be necessary in the event the Company cannot continue in
existence.
Management has established plans designed to increase the sales of the Company's
products. Management intends to seek new capital from new equity securities
offerings that will provide funds needed to increase liquidity, fund internal
growth and fully implement its business plan.
10
NEXLAND, INC.
PROFORMA FINANCIAL INFORMATION
The following Proforma Combined Balance Sheets as of November 17, 1999 and
December 31, 1998 and Proforma Combined Statements of Operations for the period
ended November 17, 1999 and the year ended December 31, 1998 are audited. These
proforma financial statements relate to the reverse acquisition of Windstar
Resources, Inc. by Nexland, Inc. Windstar Resources, Inc., (subsequently renamed
Nexland, Inc.) issued 29,500,000 shares of common stock for 100% of the
outstanding common stock of Nexland, Inc.
The proforma financial information has been prepared utilizing the historical
financial statements of Windstar Resources, Inc. and Nexland, Inc. and its
predecessor, Nexland Limited Partnership and should be read in conjunction with
the separate historical financial statements and notes thereto of these
companies for the respective periods presented.
The proforma financial information is based on the purchase method of accounting
and the acquisition as a reverse acquisition with the surviving company being
the operating company, Nexland, Inc., previously Nexland, LP. The Proforma
Combined Statements of Operations assume the acquisition had occurred at the
beginning of the period presented in the statements. All intercompany accounts
and transactions have been eliminated.
The proforma combined financial statements do not purport to be indicative of
the financial positions and results of operations and cash flows which actually
would have been obtained if the acquisition had occurred on the date indicated
or the results which may be obtained in the future. The disclosures concerning
the common stock and losses per share are reported based upon each entities
share of the common stock at the acquisition. Therefore information is included
for Nexland LP based upon the stock allocated to its respective share of
Nexland, Inc.
11
NEXLAND, Inc. For Presentation Purposes
PROFORMA BALANCE SHEETS Page 1 of 2
Windstar
Resources, Inc. Nexland, Inc. Nexland, LP
A S S E T S November 17, 1999 November 17, 1999 November 15, 1999
------------------- ----------------- -----------------
CURRENT ASSETS
Cash $ 1,675 $ 12,476 $ --
Accounts receivable -- 52,989
Inventory -- 90,519 --
----------- ----------- ------
TOTAL CURRENT ASSETS 1,675 155,984 --
----------- ----------- ------
PROPERTY AND EQUIPMENT
Furniture and equipment -- 8,434 --
Less: accumulated depreciation -- (3,659) --
----------- ----------- ------
TOTAL PROPERTY AND EQUIPMENT -- 4,775 --
----------- ----------- ------
OTHER ASSETS
Escrow and security deposits -- 28,180 --
Trademarks -- 211,562 --
----------- ----------- ------
TOTAL OTHER ASSETS -- 239,742 --
----------- ----------- ------
TOTAL ASSETS $ 1,675 $ 400,501 $ --
=========== =========== ======
L I A B I L I T I E S & S T O C K H O L D E R S ' E Q U I T Y
CURRENT LIABILITIES
Accounts payable $ -- $ 196,061 $ --
Accured expense 37,093 10,122 --
Notes payable 19,533 -- --
Notes payable, related parties 27,600 174,318 --
----------- ----------- ------
TOTAL CURRENT LIABILITIES 84,226 380,501 --
----------- ----------- ------
COMMITMENTS AND CONTINGENCIES -- -- --
----------- ----------- ------
STOCKHOLDERS' EQUITY
Preferred stock -- -- --
Common stock 579 20,000 --
Additional paid in capital 468,485 -- --
Accumulated deficit (551,615) -- --
----------- ----------- ------
TOTAL STOCKHOLDERS' EQUITY (82,551) 20,000 --
----------- ----------- ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,675 $ 400,501 $ --
=========== =========== ======
[RESTUBBED TABLE]
NEXLAND, Inc. For Presentation Purposes
PROFORMA BALANCE SHEETS Page 2 of 2
Eliminations Total
A S S E T S
-------------- --------------
CURRENT ASSETS
Cash $ -- $ 14,151
Accounts receivable 52,989
Inventory -- 90,519
----------- -----------
TOTAL CURRENT ASSETS -- 157,659
----------- -----------
PROPERTY AND EQUIPMENT
Furniture and equipment -- 8,434
Less: accumulated depreciation -- (3,659)
----------- -----------
TOTAL PROPERTY AND EQUIPMENT -- 4,775
----------- -----------
OTHER ASSETS
Escrow and security deposits (25,000) 3,180
Trademarks 1,046,301 1,257,863
----------- -----------
TOTAL OTHER ASSETS 1,261,043
----------- -----------
TOTAL ASSETS $ 1,021,301 $ 1,423,477
=========== ===========
L I A B I L I T I E S & S T O C K H O L D E R S ' E Q U I T Y
CURRENT LIABILITIES
Accounts payable $ -- $ 196,061
Accured expense -- 47,215
Notes payable -- 19,533
Notes payable, related parties -- 201,918
----------- -----------
TOTAL CURRENT LIABILITIES -- 464,727
----------- -----------
COMMITMENTS AND CONTINGENCIES -- --
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock -- --
Common stock (17,050) 3,529
Additional paid in capital 486,736 955,221
Accumulated deficit 551,615 --
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 1,021,301 958,750
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,021,301 $ 1,423,477
=========== ===========
The accompanying notes are an integral part of these financial statements.
12
NEXLAND, INC. For Presentation Purposes
PROFORMA COMBINED STATEMENTS OF OPERATIONS Page 1 of 2
HISTORICAL
-----------------------------------------------------------
Windstar Resources, Inc. Nexland, Inc. Nexland, LP
January through January through January through
November 17, 1999 November 17, 1999 November 15, 1999
----------------- ----------------- -----------------
REVENUES $ -- $ -- $ 196,281
COST OF REVENUES -- -- 95,136
------------ ----------- ------------
GROSS PROFIT -- -- 101,145
------------ ----------- ------------
EXPENSES
Advertising -- -- 10,164
Professional services 158,714 -- 15,492
Selling and administrative expenses 35,376 -- 181,724
Mining claims 79,076 -- --
------------ ----------- ------------
TOTAL EXPENSES 273,166 -- 207,380
------------ ----------- ------------
OPERATING LOSS (273,166) -- (106,235)
OTHER INCOME (EXPENSE)
Other income -- -- --
Loss on sale of investments -- -- --
Interest expense (21,893) -- --
------------ ----------- ------------
TOTAL OTHER INCOME (EXPENSE) (21,893) -- --
LOSS BEFORE INCOME TAXES (295,059) -- (106,235)
INCOME TAX BENEFIT -- -- --
------------ ----------- ------------
NET LOSS $ (295,059) $ -- $ (106,235)
============ =========== ============
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.07) $ nil $ nil
============ =========== ============
WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES OUTSTANDING 4,162,223 4,425,000 25,075,000
============ =========== ============
[RESTUBBED TABLE]
NEXLAND, INC. For Presentation Purposes
PROFORMA COMBINED STATEMENTS OF OPERATIONS Page 2 of 2
PROFORMA
--------
Eliminations Total
------------ -----
REVENUES $ 196,281
COST OF REVENUES 95,136
-------- ------------
GROSS PROFIT 101,145
------------
EXPENSES
Advertising 10,164
Professional services 174,206
Selling and administrative expenses 217,100
Mining claims 79,076
------------
TOTAL EXPENSES 480,546
------------
OPERATING INCOME (LOSS) (379,401)
OTHER INCOME (EXPENSE)
Other income --
Loss on sale of investments --
Interest expense (21,893)
-------- ------------
TOTAL OTHER INCOME (EXPENSE) (21,893)
INCOME (LOSS) BEFORE INCOME TAXES (401,294)
INCOME TAX BENEFIT --
-------- ------------
NET (INCOME) LOSS $ (401,294)
======== ============
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.01)
======== ============
WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES OUTSTANDING 33,662,223
======== ============
The accompanying notes are an integral part of these financial statements.
13
NEXLAND, INC. For Presentation Purposes
PROFORMA BALANCE SHEETS Page 1 of 2
Windstar
Resources, Inc. Nexland, Inc. Nexland, LP
A S S E T S December 31, 1998 December 31, 1998 December 31, 1998
----------------- ----------------- -----------------
CURRENT ASSETS
Cash $ 1,744 $ -- $ 23
Receivable from affiliated partner -- 2,900 --
Inventory -- -- 7,643
Investment in Nexland LP -- 100 --
--------- --------- ---------
TOTAL CURRENT ASSETS 1,744 3,000 7,666
--------- --------- ---------
PROPERTY AND EQUIPMENT
Furniture and equipment -- -- 6,183
Less: accumulated depreciation -- -- (1,943)
--------- --------- ---------
TOTAL PROPERTY AND EQUIPMENT -- -- 4,240
--------- --------- ---------
OTHER ASSETS
Organizatonal costs, net 274 -- --
Mining claims 79,076 -- --
Trademarks -- -- --
--------- --------- ---------
TOTAL OTHER ASSETS 79,350 -- --
--------- --------- ---------
TOTAL ASSETS $ 81,094 $ 3,000 $ 11,906
========= ========= =========
L I A B I L I T I E S & S T O C K H O L D E R S ' E Q U I T Y
CURRENT LIABILITIES
Accounts payable $ 21,637 $ -- $ 7,643
Accured expense 107,435 -- 3,153
Notes payable 53,417 -- --
Notes payable, related parties 27,600 -- 87,136
--------- --------- ---------
TOTAL CURRENT LIABILITIES 210,089 -- 97,932
--------- --------- ---------
COMMITMENTS AND CONTINGENCIES -- -- --
--------- --------- ---------
STOCKHOLDER'S EQUITY
Preferred stock -- -- --
Common stock 421 3,000 --
Additional paid in capital 162,760 -- --
Accumulated deficit (292,176) -- (86,026)
--------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY (128,995) 3,000 (86,026)
--------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 81,094 $ 3,000 $ 11,906
========= ========= =========
[RESTUBBED TABLE]
NEXLAND, INC. For Presentation Purposes
PROFORMA BALANCE SHEETS Page 2 of 2
Eliminations Total
A S S E T S
-------------- ------------
CURRENT ASSETS
Cash $ -- $ 1,767
Receivable from affiliated partner -- 2,900
Inventory -- 7,643
Investment in Nexland LP -- 100
--------- ---------
TOTAL CURRENT ASSETS -- 12,410
--------- ---------
PROPERTY AND EQUIPMENT
Furniture and equipment -- 6,183
Less: accumulated depreciation -- (1,943)
--------- ---------
TOTAL PROPERTY AND EQUIPMENT -- 4,240
--------- ---------
OTHER ASSETS
Organizatonal costs, net -- 274
Mining claims -- 79,076
Trademarks -- --
--------- ---------
TOTAL OTHER ASSETS 79,350
--------- ---------
TOTAL ASSETS $ -- $ 96,000
========= =========
L I A B I L I T I E S & S T O C K H O L D E R S ' E Q U I T Y
CURRENT LIABILITIES
Accounts payable $ -- $ 29,280
Accured expense -- 110,588
Notes payable -- 53,417
Notes payable, related parties -- 114,736
--------- ---------
TOTAL CURRENT LIABILITIES -- 308,021
--------- ---------
COMMITMENTS AND CONTINGENCIES -- --
--------- ---------
STOCKHOLDER'S EQUITY
Preferred stock -- --
Common stock -- 3,421
Additional paid in capital -- 162,760
Accumulated deficit -- (378,202)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY -- (212,021)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ -- $ 96,000
========= =========
The accompanying notes are an integral part of these financial statements.
14
NEXLAND, INC.
PROFORMA COMBINED STATEMENTS OF OPERATIONS
HISTORICAL PROFORMA
----------------------------------------------------------- --------
Windstar Resources, Inc. Nexland, Inc. Nexland, LP
Year Ended Year Ended Year Ended
December 31, 1998 December 31, 1998 December 31, 1998 Eliminations Total
----------------- ----------------- ----------------- ------------ -----
REVENUES $ -- $ -- $ -- $ --
COST OF REVENUES -- -- -- --
---------- ---------- ------------ ----- -----------
GROSS PROFIT -- -- -- --
---------- ---------- ------------ -----------
EXPENSES
Advertising -- -- 3,354 3,354
Professional services 33,006 -- 42,814 75,820
Selling and administrative expenses 112,021 -- 53,734 165,755
---------- ---------- ------------ -----------
TOTAL EXPENSES 145,027 -- 99,902 244,929
========== ========== ============ ===== ===========
OPERATING LOSS (145,027) -- (99,902) (244,929)
OTHER INCOME (EXPENSE)
Other income -- -- -- --
Loss on sale of investments -- -- -- --
Interest expense (15,637) -- -- (15,637)
---------- ---------- ------------ ----- -----------
TOTAL OTHER INCOME (EXPENSE) (15,637) -- -- (15,637)
LOSS BEFORE INCOME TAXES (160,664) -- (99,902) (260,566)
INCOME TAX BENEFIT -- -- -- --
---------- ---------- ------------ ----- -----------
NET LOSS $ (160,664) $ -- $ (99,902) $ (260,566)
========== ========== ============ ===== ===========
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.04) $ nil $ nil $ (0.01)
========== ========== ============ ===== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES OUTSTANDING 4,162,223 4,425,000 25,075,000 33,662,223
========== ========== ============ ===== ===========
The accompanying notes are an integral part of these financial statements.
15
NEXLAND LIMITED PARTNERSHIP
Financial Statements
For the period ended November 15, 1999 and For
the years ended December 31, 1998 and 1997
WILLIAMS & WEBSTER, P.S.
Certified Public Accountants
Bank of America Financial Center
W 601 Riverside, Suite 1940
Spokane, WA 99201
(509) 838-5111
NEXLAND LIMITED PARTNERSHIP
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Operations and Partners' Capital (Deficit) 3
Statements of Cash Flows 4
NOTES TO FINANCIAL STATEMENTS 5
[GRAPHIC OMITTED]
Williams & Webster, PS.
Certified Public Accountants
Williams & Webster, P.S.
Certified Public Accountants & Business Consultants
Bank of America Financial Center + 601 W. Riverside, Suite 1940 + Spokane, WA
99201-0611 509-838-5111 Fax: 509-838-5114 + E-mail: wwpcpas@williams-webster.com
General Partner
Nexland Limited Partnership
Miami, Florida
Independent Auditor's Report
----------------------------
We have audited the accompanying balance sheets of Nexland Limited Partnership
as of November 15, 1999, December 31, 1998 and 1997 and the related statements
of operations and partner's capital (deficit), and cash flows, for the period
and years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nexland Limited Partnership as
of November 15, 1999, December 31, 1998 and 1997, and the results of its
operations and its cash flows for the period and years then ended in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 12 to the
financial statements, the Company's significant losses raise substantial doubt
about its ability to continue as a going concern. Management's plans regarding
the resolution of this issue are also discussed in Note 12. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Williams & Webster, P.S.
- ----------------------------
Williams & Webster, P.S.
Spokane, Washington
February 24, 2000
NEXLAND LIMITED PARTNERSHIP
BALANCE SHEETS
November 15, December 31, December 31,
1999 1998 1997
---- ---- ----
A S S E T S
CURRENT ASSETS
Cash $ 12,476 $ 23 $ 9,540
Accounts receivable 52,989 -- --
Inventory 90,519 7,643 --
--------- --------- ---------
TOTAL CURRENT ASSETS 155,984 7,666 9,540
--------- --------- ---------
PROPERTY AND EQUIPMENT
Furniture and equipment 8,434 6,183 5,651
Less: accumulated depreciation and amortization (3,659) (1,943) (415)
--------- --------- ---------
TOTAL PROPERTY AND EQUIPMENT 4,775 4,240 5,236
--------- --------- ---------
OTHER ASSETS
Escrow deposit 25,000 -- --
Security deposit 3,180 -- --
--------- --------- ---------
TOTAL OTHER ASSETS 28,180 -- --
--------- --------- ---------
TOTAL ASSETS $ 188,939 $ 11,906 $ 14,776
========= ========= =========
L I A B I L I T I E S & P A R T N E R S' C A P I T A L
CURRENT LIABILITIES
Accounts payable $ 196,060 $ 7,643 $ --
Accrued expenses 10,122 2,453 200
Advance from related party 2,900 2,900 2,900
Notes payable to partner 174,318 87,136 --
--------- --------- ---------
TOTAL CURRENT LIABILITIES 383,900 100,132 3,100
--------- --------- ---------
COMMITMENTS AND CONTINGENCIES -- -- --
--------- --------- ---------
PARTNERS' CAPITAL (194,461) (88,226) 11,676
--------- --------- ---------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 188,939 $ 11,906 $ 14,776
========= ========= =========
The accompanying notes are an integral part of these financial statements.
2
NEXLAND LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS AND PARTNERS' CAPITAL (DEFICIT)
For the Period Ended November 15, 1999 and
For the Years Ended December 31, 1998 and 1997
1999 1998 1997
--------- --------- ---------
R E V E N U E S $ 196,281 $ -- $ --
COST OF REVENUES 95,136 -- --
--------- --------- ---------
GROSS PROFIT 101,145 -- --
--------- --------- ---------
E X P E N S E S
Advertising 10,164 3,354 6,698
Administrative expenses 181,724 53,734 25,750
Professional fees 15,492 42,814 20,876
--------- --------- ---------
TOTAL EXPENSES 207,380 99,902 53,324
--------- --------- ---------
NET LOSS (106,235) (99,902) (53,324)
PARTNERS' CAPITAL (DEFICIT), BEGINNING BALANCE (88,226) 11,676 --
PARTNERS' CAPITAL CONTRIBUTION -- -- 65,000
--------- --------- ---------
PARTNERS' CAPITAL (DEFICIT), ENDING BALANCE $(194,461) $ (88,226) $ 11,676
========= ========= =========
The accompanying notes are an integral part of these financial statements.
3
NEXLAND LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Period Ended November 15, 1999 and
For the Years Ended December 31, 1998 and 1997
1999 1998 1997
---- ---- ----
Cash flows from operating activities:
Net loss $(106,235) $ (99,902) $ (53,324)
Adjustments to reconcile net loss
to net cash provided (used) by operating activities:
Depreciation and amortization 1,716 1,528 415
Decrease (Increase) in :
Accounts receivable (52,989) -- --
Inventory (82,876) (7,643) --
Prepaids and other assets (28,180) -- --
Increase (Decrease) in :
Accounts payable 188,417 7,643 --
Accrued expenses 7,662 2,253 200
--------- --------- ---------
Net cash provided (used) in operating activities (72,485) (96,121) (52,709)
--------- --------- ---------
Cash flows from investing activities:
Purchase of property and equipment (2,244) (578) (5,651)
Cash contributed by partners 87,182 87,182 65,000
--------- --------- ---------
Net cash provided (used) in investing activities 84,938 86,604 59,349
--------- --------- ---------
Cash flows from financing activities:
Advance from related party -- -- 2,900
--------- --------- ---------
Net cash provided (used) in financing activities -- -- 2,900
--------- --------- ---------
Net increase (decrease) in cash 12,453 (9,517) 9,540
Cash, beginning of period 23 9,540 --
--------- --------- ---------
Cash, end of period $ 12,476 $ 23 $ 9,540
========= ========= =========
SUPPLEMENTAL DISCLOSURES:
Cash paid for:
Interest $ -- $ -- $ --
========= ========= =========
The accompanying notes are an integral part of these financial statements.
4
NEXLAND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
For the Period Ended November 15, 1999
For the Years Ended December 31, 1998 and 1997
NOTE 1 - BUSINESS ORGANIZATION
Nature of Operations
- --------------------
Nexland Limited Partnership (hereinafter "Nexland LP") was formed on September
27, 1997 under the laws of the State of Florida. Nexland LP has engaged in the
production of internet sharing boxes. From inception until November 15, 1999,
Nexland LP was actively engaged in the development and marketing of the internet
sharing activities. On November 15, 1999, the partners of Nexland LP assigned
all rights, title and interest in partnership assets to Nexland, Inc. in
exchange for 17,000 common stock shares of Nexland, Inc.
Subsequent to November 17, 1999, Nexland, Inc. exchanged its stock in a
merger-acquisition with Windstar Resources, Inc. See Note 10.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
- -------------------
Nexland LP uses the accrual basis of accounting in accordance with generally
accepted accounting principles.
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.
Advertising
- -----------
Advertising costs are charged to operations in the year incurred.
Property, Plant and Equipment
- -----------------------------
Property, plant and equipment is recorded at cost and depreciated using the
straight-line method over estimated useful lives of three to seven years.
Expenditures for repairs and maintenance which do not extend the useful life of
the related asset are expensed as incurred.
Impairment of Long-lived Assets
- -------------------------------
The Company evaluates the recoverability of long-lived assets when events and
circumstances indicate that such assets might be impaired. The Company
determines impairment by comparing the undiscounted future cash flows estimated
to be generated by these assets to their respective carrying amounts.
5
NEXLAND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
For the Period Ended November 15, 1999
For the Years Ended December 31, 1998 and 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
- ------------
All tax effects of the Partnership's income or loss are passed through to the
partners individually, and as such, no income taxes are provided for in the
financial statements.
Cash and Cash Equivalents
- -------------------------
The Company considers all highly liquid investments with a maturity of three
months or less at the date of acquisition to be cash equivalents.
Revenue and Cash Recognition
- ----------------------------
Revenues and cost of revenues are recognized when services and products are
furnished or delivered.
Trademarks
- ----------
Trademarks will be amortized using a straight-line method over twenty years once
the trademarks are legally granted.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets. The Company
evaluates the recoverability of property and equipment when events and
circumstances indicate that such assets might be impaired. The Company
determines impairment by comparing the undiscounted future cash flows estimated
to be generated by these assets to their respective carrying amounts.
Major additions and betterments are capitalized. Costs of maintenance and
repairs which do not improve or extend the lives of the respective assets are
expensed as incurred. When property and equipment are retired or otherwise
disposed of, the related costs and accumulated depreciation are removed from the
accounts and any gain or loss is recognized in operations.
NOTE 4 - INVENTORY
Inventories are stated at the lower of cost or market, with cost being
determined on a first-in-first out basis.
Inventories of finished goods at November 17, 1999 were $90,519. The Company did
not maintain an inventory prior to 1999.
NOTE 5 - LEASE COMMITMENT
Nexland leases commercial office space in Miami, Florida under a six month
lease. The monthly rent is $3,000 and the lease term ends in February, 2000.
6
NEXLAND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
For the Period Ended November 15, 1999
For the Years Ended December 31, 1998 and 1997
NOTE 6 - INTANGIBLE ASSETS
On November 15, 1999, Nexland, Inc. acquired Nexland LP in a merger, accounted
for as a purchase. The purchase price exceeded the net assets of Nexland LP. At
the date of acquisition, the Partnership's capital deficit was $194,461 and the
common stock in Nexland, Inc. was 17,000 shares valued at a dollar per share. A
valuation of $211,562 was assigned to trademarks. Trademarks will be capitalized
and amortized using the straight-line method over twenty years. Amortization
will not begin until the trademarks have been granted.
All trademark amortization will be recorded in the period after the merger and
acquisition.
NOTE 7 - NOTES PAYABLE, RELATED PARTIES
Nexland LP has unsecured cash loans with its shareholder in the amounts of
$174,318 and $87,136 at November 15, 1999 and December 31, 1998 respectively.
The notes bear an interest rate equal to the applicable federal rate, (which is
5.83%), are unsecured and are subject to adjustment on August 1, 2000. The loan
was not finalized until after the merger with Nexland, Inc. Accrued interest at
November 30, 1999 and December 31, 1998 was $9,821 and $2,200, respectively.
Nexland LP received an unsecured, noninterest-bearing advance from Nexland, Inc.
in 1997 of $2,900.
NOTE 8 - PARTNERS' CAPITAL
The original partners contributed $65,000 as the initial capital of Nexland LP.
All further funding was from loans from related parties. See Note 7.
NOTE 9 - YEAR 2000
Like other companies, Nexland could be adversely affected if the computer
systems it, its suppliers or customers use do not properly process and calculate
date-related information and data from the period surrounding and including
January 1, 2000. This is commonly known as the "Year 2000" issue. Additionally,
this issue could impact non-computer systems and devices such as production
equipment, elevators, etc. At this time, because of the complexities involved in
the issue, management cannot provide assurances that the Year 2000 issue will
not have an impact on the company's operations.
The Company has reviewed its business and processing systems and believes that
the majority of its systems are already Year 2000 compliant or can be made so
with software updates. Based on preliminary assessments, the Company regards the
costs associated with Year 2000 readiness to be immaterial.
7
NEXLAND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
For the Period Ended November 15, 1999
For the Years Ended December 31, 1998 and 1997
NOTE 10 - SUBSEQUENT EVENT - MERGER /ACQUISITION
On November 17, 1999 Nexland, Inc. exchanged each of its shares of common stock
for 1,475 shares of Windstar Resources, Inc. common stock shares. Nexland,
Inc.'s shareholders received 29,500,000 shares of Windstar Resources, Inc.
common stock. The market value of the common shares of Windstar as of the
effective merger date was $0.03125 per share. The acquisition valuation used
this market value to arrive at the value of trademarks for the consolidated
company in the proforma filings required by reporting standards of the
Securities and Exchange Commission. As part of the transaction, Nexland, Inc.
agreed to pay $25,000 in debts owed to certain creditors of Windstar Resource,
Inc.
Nexland was wholly merged into Windstar Resources, Inc and Windstar Resources,
Inc. subsequently changed its name to Nexland, Inc.
NOTE 11 - ACQUISITION OPTION FOR NEXLAND SA
Nexland, Inc. has the option to purchase all the common stock shares of Nexland
S.A., a French corporation. This option expires on June 30, 2000. The sales
price is dependent upon a valuation performed by an independent French
accounting firm.
NOTE 12 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company would continue as a going concern.
As shown in the accompanying financial statements, the Company had not generated
any significant revenues before 1999. Although revenues were generated in 1999,
the net loss was $106,235 for the period ending November 15, 1999. The Company
is currently involved in a merger, which will, if successful, mitigate these
factors which raise substantial doubt about the Company's ability to continue as
a going concern. Management believes that significant resources will be
available from private and public sources in 2000 to continue the marketing of
its internet sharing devices. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be necessary
in the event the Company cannot continue in existence.
Management has established plans designed to increase the sales of the Company's
products. Management intends to seek new capital from new equity securities
offerings that will provide funds needed to increase liquidity, fund internal
growth and fully implement its business plan.
8