UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: September 30, 2001 Commission File Number 333-45678
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WEDGE NET EXPERTS, INC.
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(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0875030
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1706 Winding Ridge Road, Knoxville, Tennessee 37922
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(Address of principal executive offices) (Zipcode)
(865) 694-6468
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(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check whether the registrant (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 12 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $.0001 par value 4,603,000
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Class Number of shares outstanding at
November 9, 2001
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This document is comprised of 10 pages.
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FORM 10-QSB
3RD QUARTER
WEDGE NET EXPERTS, INC.
Index
Page
PART 1 - FINANCIAL INFORMATION ----
Item 1. Financial Statements
Condensed balance sheet, September 30, 2001 (unaudited) .............. 3
Condensed statements of operations, three months ended
September 30, 2001 (unaudited) and 2000 (unaudited),
nine months ended September 30, 2001 (unaudited) and
2000 (unaudited), and September 21, 1999 (inception)
through September 30, 2001 (unaudited) ............................ 4
Condensed statements of cash flows, nine months ended
September 30, 2001 (unaudited) and 2000 (unaudited),
and September 21, 1999 (inception) through
September 30, 2001 (unaudited) .................................... 5
Notes to condensed financial statements (unaudited) .................. 6
Item 2. Plan of Operation ........................................... 8
PART 2 - OTHER INFORMATION
Item 1. Legal Information ........................................... 9
Item 2. Changes in Securities ....................................... 9
Item 3. Defaults Upon Senior Securities ............................. 9
Item 4. Submission of Matters to a Vote of Security Holders ......... 9
Item 5. Other Information ........................................... 9
Item 6. Exhibits and Reports on Form 8-K ............................ 9
Signatures ........................................................... 10
Part 1. Item 1. Financial Information
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WEDGE NET EXPERTS, INC.
(A Development Stage Company)
Condensed Balance Sheet
(Unaudited)
September 30, 2001
Assets
Cash ............................................................. $ 1,358
Equipment, net ................................................... 8,728
Deferred offering costs .......................................... 18,315
--------
$ 28,401
========
Liabilities and shareholders' equity
Liabilities:
Accounts payable and accrued expenses ....................... $ 2,899
Due to officer (Note B) ..................................... 230
--------
Total liabilities 3,129
--------
Commitment ....................................................... --
Shareholders' equity:
Preferred stock ............................................. --
Common stock ................................................ 3,800
Additional paid-in capital .................................. 98,775
Deficit accumulated during development stage ................ (77,303)
--------
Total shareholders' equity 25,272
--------
$ 28,401
========
See accompanying notes to condensed financial statements
3
WEDGE NET EXPERTS, INC.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
September 21,
1999
Three Months Ended Nine Months Ended (Inception)
September 30, September 30, Through
------------------------ ------------------------ September 30,
2001 2000 2001 2000 2001
---------- ---------- ---------- ---------- ---------
Sales ................................ $ 322 $ -- $ 1,657 $ -- $ 1,747
---------- ---------- ---------- ---------- ---------
Operating expenses:
Stock-based compensation:
Organization costs ........... -- -- -- -- 2,800
Compensation .................... -- 500 500 2,500 3,500
Contract labor .................. 225 -- 1,397 -- 3,647
Contributed services (Note B) ... 15,867 -- 44,225 -- 44,225
Contributed rent (Note B) ....... 600 600 1,800 1,800 4,800
Office .......................... 1,979 481 2,692 956 5,573
Professional fees ............... -- 13 1,450 13 1,463
Travel .......................... 350 1,232 974 1,232 3,072
Internet services ............... 1,500 1,095 2,700 1,095 3,795
Depreciation .................... 1,116 373 3,204 457 4,659
Other ........................... 33 44 137 261 966
---------- ---------- ---------- ---------- ---------
Total operating expenses (21,670) (4,338) (59,079) (8,314) (78,500)
---------- ---------- ---------- ---------- ---------
Operating loss (21,348) (4,338) (57,422) (8,314) (76,753)
Interest expense ..................... -- -- -- -- (550)
---------- ---------- ---------- ---------- ---------
Loss before income taxes (21,348) (4,338) (57,422) (8,314) (77,303)
Income taxes (Note C) ................ -- -- -- -- --
---------- ---------- ---------- ---------- ---------
Net loss $ (21,348) $ (4,338) $ (57,422) $ (8,314) $ (77,303)
========== ========== ========== ========== =========
Basic loss per common share $ * $ * $ (0.02) $ *
========== ========== ========== ==========
Basic weighted average common
shares outstanding 3,800,000 3,466,667 3,800,000 2,911,111
========== ========== ========== ==========
* Less than $.01 per share
See accompanying notes to condensed financial statements
4
WEDGE NET EXPERTS, INC.
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
September 21,
1999
Nine Months Ended (Inception)
September 30, Through
-------------------- September 30,
2001 2000 2001
-------- -------- --------
Net cash used in operating activities ............... $ (7,065) $ (5,662) $(17,141)
-------- -------- --------
Cash flows from investing activities:
Equipment purchases ............................ (1,028) (9,758) (13,386)
-------- -------- --------
Net cash used in investing activities (1,028) (9,758) (13,386)
-------- -------- --------
Cash flows from financing activities:
Proceeds from notes payable .................... -- 45,000 50,000
Capital contribution by president .............. -- 100 200
Advances received from officer ................. -- 500 500
Advances repaid to officer ..................... (500) -- (500)
Advances paid to officer ....................... -- -- (97)
Advances repaid by officer ..................... 97 -- 97
Payments for offering costs .................... (1,546) (16,769) (18,315)
-------- -------- --------
Net cash (used in) provided by finacing activities (1,949) 28,831 31,885
-------- -------- --------
Net change in cash (10,042) 13,411 1,358
Cash, beginning of period ........................... 11,400 4,915 --
-------- -------- --------
Cash, end of period $ 1,358 $ 18,326 $ 1,358
======== ======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest .................................... $ -- $ -- $ --
======== ======== ========
Income taxes ................................ $ -- $ -- $ --
======== ======== ========
Non-cash financing activity:
Common stock issued in exchange for debt .... $ -- $ -- $ 50,000
======== ======== ========
See accompanying notes to condensed financial statements
5
WEDGE NET EXPERTS, INC.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
Note A: Basis of presentation
---------------------
The financial statements presented herein have been prepared by the Company in
accordance with the accounting policies in its amended Form SB-2 dated December
31, 2000 and April 30, 2001, and should be read in conjunction with the notes
thereto.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the year.
The Company is in the development stage in accordance with Statements of
Financial Accounting Standards (SFAS) No. 7 "Accounting and Reporting by
Development Stage Enterprises". As of September 30, 2001, the Company has
devoted substantially all of its efforts to financial planning, raising capital
and developing markets.
Financial data presented herein are unaudited.
Note B: Related party transactions
--------------------------
Contributed rent
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An officer contributed office space to the Company for the nine months ended
September 30, 2001 and 2000. The office space was valued at $250 per month based
on the market rate in the local area and is included in the accompanying
unaudited condensed financial statements as rent expense with a corresponding
credit to additional paid-in capital.
Contributed services
- --------------------
An officer contributed administrative, management and website services to the
Company valued at $44,225 for the nine months ended September 30, 2001. The time
and effort was recorded in the accompanying unaudited condensed financial
statements based on the fair value of the services, which ranged between $20 and
$125 per hour based on the level of services performed and is reported as
contributed services with a corresponding credit to additional paid-in capital.
Officer advances
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During the nine months ended September 30, 2001, an officer advanced $230 to the
Company for working capital. The advances are included in the accompanying
unaudited condensed financial statements as indebtedness to related party.
Note C: Income taxes
------------
The Company records its income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". The Company incurred net operating losses during
the nine months ended September 30, 2001 resulting in a deferred tax asset,
which was fully allowed for; therefore, the net benefit and expense resulted in
$-0- income taxes.
6
WEDGE NET EXPERTS, INC.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
Note D: Shareholders' equity
--------------------
During 2001, the Company filed a registration statement with the SEC on Form
SB-2. The Form SB-2 was declared effective by the SEC on September 11, 2001 and
offers for sale a minimum of 800,000 and a maximum of 3,000,000 shares of its
$.001 par value common stock at $.05 per share. The Company is conducting the
offering through its executive officers and directors (See Note E).
Note E: Subsequent events
-----------------
During October 2001, the Company sold 803,000 shares of its common stock for
$40,150 pursuant to the offering included in its Form SB-2. The Company broke
escrow on the funds on October 25, 2001.
7
Part I. Item 2. Plan of operation
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WEDGE NET EXPERTS, INC.
(A Development Stage Company)
PLAN OF OPERATION
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The Company's plan over the next twelve months is to focus on the completion of
the development of the Company's website, including an international database of
computer, software, Internet related information, and to assemble a provider
network of qualified expert consultants to provide accurate, real-time, in-depth
solutions to problems relating to, among other things, computer software and
hardware malfunction, computer network configuration and operation, Internet
connectivity, and e-commerce. Upon completion of these steps, the Company plans
to concentrate on the marketing and sale of its consulting and informational
services and technical assistance and support primarily through online marketing
and advertising.
The Company filed a registration statement on Form SB-2, which was declared
effective by the SEC on September 11, 2001. As of October 25, 2001, the Company
had sold 803,000 shares of its common stock for $40,150.
The Company does not believe it will be necessary to raise additional capital to
meet expenditures required for operating the business during the next year
following the Form SB-2 offering. However, the full implementation of the
business plan, including the assembly of a large number of expert consultants,
is dependent upon our ability to raise significant capital from equity and/or
financings in addition to the above offering. There is no assurance that the
Company will be able to generate additional capital in the future.
The Company has allocated $75,000, based on the maximum offering proceeds, for
website development and the purchase of computer equipment. The Company does not
expect a significant change in the number of employees over the next twelve
months.
FINANCIAL CONDITION
- -------------------
As of September 30, 2001, the Company had total assets of $28,401 as compared to
$39,169 at December 31, 2000. The change was related to a decrease in cash
related to the net loss, equipment purchases, and payments for offering costs.
RESULTS OF OPERATIONS
- ---------------------
During the nine months ended September 30, 2001, the Company recorded sales
totaling $1,657 as compared with $-0- for the nine months ended September 30,
2000. The increase in sales was a result of the Company commencing website
consultation services in December of 2000. Operating expenses increased from
$8,314 for the nine months ended September 30, 2000 to $59,079 for the nine
months ended September 30, 2001. The operating expenses increased because of (1)
an increase in contributed services by the Company's president for management,
customer consulting services and administration, and (2) increases in office,
Internet and depreciation costs.
8
Part I. Item 2. Plan of operation, continued
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WEDGE NET EXPERTS, INC.
(A Development Stage Company)
Special note regarding forward-looking statements
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This report contains forward-looking statements within the meaning of federal
securities laws. These statements plan for or anticipate the future.
Forward-looking statements include statements about our future business plans
and strategies, statements about our need for working capital, future revenues,
results of operations and most other statements that are not historical in
nature. In this Report, forward-looking statements are generally identified by
the words "intend", "plan", "believe", "expect", "estimate", and the like.
Investors are cautioned not to put undue reliance on forward-looking statements.
Except as otherwise required by applicable securities statues or regulations,
the Company disclaims any intent or obligation to update publicly these
forward-looking statements, whether as a result of new information, future
events or otherwise. Because forward-looking statements involve future risks and
uncertainties, these are factors that could cause actual results to differ
materially from those expressed or implied.
Part 2. Other Information
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Items 1 through 6 - No responses required.
9
SIGNATURES
The financial information furnished herein has not been audited by an
independent accountant; however, in the opinion of management, all adjustments
(only consisting of normal recurring accruals) necessary for a fair presentation
of the results of operations for the three and nine months ended September 30,
2001 have been included.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEDGE NET EXPERTS, INC.
(Registrant)
DATE: November 9, 2001 BY: /s/ Gregory M. Walters
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Gregory M. Walters
President
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