U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WORLD SHOPPING NETWORK, INC.
(Name of Small Business Issuer in its charter)
Delaware 454110 11-2872782
(State or Jurisdiction of Primary Standard Industrial I.R.S. Employer
Incorporation or Classification Code Number Identification
Organization) Number)
1530 Brookhollow Drive, Suite C, Santa Ana, California 92705; (714) 427-0760
(Address and telephone number of Registrant's principal executive
offices and principal place of business)
Brian F. Faulkner, Esq., 3900 Birch Street, Suite 113, Newport Beach
California; (949) 975-0544
(Name, address, and telephone number of agent for service)
Approximate date of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration number of the earlier effective registration
statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If the delivery of the prospectus is expected to be made pursuant
to Rule 434, check the following box.
CALCULATION OF REGISTRATION FEE
Title of Amount to be Proposed maximum Proposed Amount of
each class registered offering price maximum registration
of per unit aggregate fee
securities offering
to be price
Common
Shares 50,000,000 $0.14 $7,000,000.00 $1,848.00
The company hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date
until the company shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
(1) Pursuant to Rule 416, such additional amounts to prevent dilution
from stock splits or similar transactions.
(2) Calculated in accordance with Rule 457(c): The average of
the bid and asked price as of June 30, 2000
PROSPECTUS
WORLD SHOPPING NETWORK, INC.
50,000,000 Shares
Common Stock *
World Shopping Network, Inc., a Delaware corporation, is hereby
offering up to 50,000,000 shares and warrants of its $0.001 par
value common stock under the following: 1) 25,000,000 to
institutional investors at an offering price of 80% of the
average closing bid price on the five business days immediately
preceding the date of notice of a drawdown, under a common stock
purchase agreement, on a delayed basis under Rule 415, pursuant
to the terms of this prospectus, for the purpose of providing
working capital for the company (an investor will receive one
warrant for each share purchased, exercisable at a price equal
to 80% of the closing bid price of the common stock on the
effective date of the agreement, from said date until five years
from said date) and 2) 25,000,000 shares of common stock may be
used to pay company consultants and for possible future company
or assets acquisitions.
The shares offered hereby are highly speculative and involve a
high degree of risk to public investors and should be purchased
only by persons who can afford to lose their entire investment
(See "Risk Factors" on page 5).
These securities have not been approved or disapproved by the
U.S. Securities and Exchange Commission or any state securities
commission nor has the U.S. Securities and Exchange Commission
or any state securities commission passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary
is a criminal offense.
Price to Public Underwriting Proceeds to
Discounts and Issuer (3)
Commissions (2)
Per Share $ (1) $0 $ (1)
Total Maximum $ (1) $0 $ (1)
Information contained herein is subject to completion or
amendment. The registration statement relating to the
securities has been filed with the U.S. Securities and Exchange
Commission. The securities may not be sold nor may offers to
buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any state in which such
offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any
such state.
Subject to Completion, Dated: ______________, 2000
* Pursuant to SEC Rule 416, there will be a change in the
amount of securities being issued to prevent dilution resulting
from stock splits, stock dividends, or similar transaction.
(1) The price per share, the maximum amount to be raised under this
offering and the proceeds to the issuer will be dependent on the
market price at the times that drawdowns are taken under a common
stock purchase agreement.
(2) No commissions will be paid in connection with the sale of
the shares on this delayed basis.
(3) The Proceeds to the company is before the payment of certain
expenses in connection with this offering. See "Use of
Proceeds."
TABLE OF CONTENTS
PROSPECTUS SUMMARY 4
RISK FACTORS 6
USE OF PROCEEDS 12
DETERMINATION OF OFFERING PRICE 13
PLAN OF DISTRIBUTION 13
LEGAL PROCEEDINGS 14
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 16
DESCRIPTION OF SECURITIES 17
INTEREST OF NAMED EXPERTS AND COUNSEL 18
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES 18
ORGANIZATION WITHIN LAST FIVE YEARS 21
DESCRIPTION OF BUSINESS 21
PLAN OF OPERATION 30
DESCRIPTION OF PROPERTY 31
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 31
MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 32
EXECUTIVE COMPENSATION 33
FINANCIAL STATEMENTS 34
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 55
AVAILABLE INFORMATION 55
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by detailed
information appearing elsewhere in this prospectus. Each
prospective investor is urged to read this prospectus, and the
attached exhibits, in their entirety.
The Company.
(a) Background.
USA Growth, Inc., a Delaware corporation, was originally
incorporated on August 14, 1987 in the State of Delaware, and has
adopted a July 31 year-end. At July 31, 1999, the company was a
development stage company, since it had not commenced its planned
principal operations.
The company's board of directors unanimously approved the
following actions at a meeting duly held and called on August 17,
1999:
the merger of World Shopping Network, Inc., a Wyoming
corporation, with and into the company
a reverse split of the issued and outstanding shares of the
common stock on a one-for-twelve (1:12) basis
an amendment to the certificate of incorporation of the company
to implement this reverse stock split and to change the name of
the company to World Shopping Network, Inc.
the election of new directors of the company.
On August 17, 1999, holders of a majority of the issued and
outstanding shares of common stock approved the merger and the
amendment by written consent in accordance with and as permitted
by Section 228 of the General Corporation Law of the State of
Delaware. The merger was completed upon the terms and conditions
provided in an agreement and plan of merger dated as of September
15, 1999 by and among the company, the Wyoming corporation, and
the principal stockholders of the company. The merger agreement
provides for the Wyoming corporation to be merged with and into
the company, with the company being the surviving corporation.
The company's common stock is currently traded on the Over the
Counter Bulletin Board under the ticker symbol "WSHP".
(b) Business.
To date, the primary business of the company has been as an
Internet website host with over 125 customers. These services
include website development, hosting, maintenance, linking, and
access. Many businesses wish to create an on-line presence
without the investment into the hardware and software necessary
to maintain their own servers. The company has invested over
$100,000 into the development of its hardware and has dual-
redundant T1 line capability. It maintains sufficient access
lines so that if a server becomes busy, the next available server
will receive and process the customer's request. Over time the
capacity of the company's equipment has grown, and will continue
to grow with new servers being added to accommodate new customers
and their ever increasing needs.
In addition to providing Internet services to others, the
company has established its own Internet shopping mall, "World
Shopping Network Mall" which can be accessed at
http://www.wsnetwork.com. This site offers a range of goods and
services for sale to consumers over the Internet through a
variety of vendors. Vendors are showcased on the company's
website's main page, with each vendor displaying a banner link to
a separate vendor "store" hosted on our website. In this way the
company provides value to both the end-user and to its vendors by
providing many goods and services in one easy-to-access location.
Consumers can fulfill most, if not all, of their shopping needs
at one location, and vendors have increased traffic due to
consumers seeing their banner advertisement while browsing for an
unrelated product.
Finally, the company has begun designing and hosting
Internet shopping malls for individual suppliers or
manufacturers. The company offers a turn-key approach to those
wishing to establish their own shopping malls. Once general
content is designated by the customer, the company designs,
hosts, and maintains the site.
The Offering.
Shares of common stock of the company will be sold under a shelf
registration under Rule 415. Based upon the terms and subject to
the conditions of a form of common stock purchase agreement, the
company intends to sell to one or more institutional investor up
to 25,000,000 shares of common stock (the number of shares to be
issued in connection with any drawdown under this agreement will
equal the dollar amount of such drawdown divided by 80% of the
lowest closing reported bid price of the shares for the five
trading days immediately preceding the drawdown date); for each
share purchased on under that agreement, an investor will receive
one warrant, (exercisable at a price equal to 80% of the closing
bid price of the common stock on the effective date of the
agreement from said date until a date which is five years
thereafter). The cash sale price of the shares will be modified,
from time to time, by amendment to this prospectus, in accordance
with changes in the market price of the company's common stock.
In addition, the company will sell up to 25,000,000 shares of
common stock for consulting services for the company and for
possible future acquisitions of companies and/or assets.
Liquidity of Investment.
Although the shares will be "free trading," there has been only a
limited public market for the shares. Therefore, an investor may
not be able to sell his shares when he or she wishes; therefore,
an investor may consider his or her investment to be long-term.
Risk Factors.
And investment in the company involved risks due in part to a
limited previous financial and operating history of company, as
well as competition in the internet gaming industry. Also,
certain potential conflicts of interest arise due to the
relationship of the company to management and others.
RISK FACTORS
The securities offered hereby are highly speculative in nature
and involve a high degree of risk. They should be purchased only
by persons who can afford to lose their entire investment.
Therefore, each prospective investor should, prior to purchase,
consider very carefully the following risk factors among other
things, as well as all other information set forth in this
prospectus.
Limited Prior Operations.
The company has only had limited prior operations and has
embarked on a new business direction within the past twelve
months. Thus, the company is subject to all the risks inherent
in the creation of a new business. The likelihood of the success
of the company must be considered in the light of the problems,
expenses, difficulties, complications, and delays frequently
encountered in connection with the expansion of a business and
the competitive environment in which the company operates.
Unanticipated delays, expenses and other problems such as
setbacks in product development, and market acceptance are
frequently encountered in connection with the expansion of a
business.
Consequently, there is only a limited operating history upon
which to base an assumption that the company will be able to
achieve its business plans. In addition, the company has only
limited assets. As a result, there can be no assurance that the
company will generate significant revenues in the future; and
there can be no assurance that the company will operate at a
profitable level. If the company is unable to obtain customers
and generate sufficient revenues so that it can profitably
operate, the company's business will not succeed.
As a result of the fixed nature of many of the
company's expenses, the company may be unable to adjust spending
in a timely manner to compensate for any unexpected delays in the
development and marketing of the company's products or any
capital raising or revenue shortfall. Any such delays or
shortfalls will have an immediate adverse impact on the company's
business, operations and financial condition.
Significant Working Capital Requirements.
The working capital requirements associated with the
plan of business of the company will continue to be significant. The
company anticipates, based on currently proposed assumptions
relating to its operations (including with respect to costs and
expenditures and projected cash flow from operations), that it
cannot generate sufficient cash flow to continue its operations
for an indefinite period at the current level without requiring
additional financing. The company will need to raise additional
capital in the next six months, through debt or equity, to
implement fully implement its sales and marketing strategy and
grow. In addition, the company currently plans one or more
acquisitions over the next twelve months and will need financing
of at least $1,000,000 during the year 2000 in order to pay for
these anticipated acquisitions and to sustain the company. In
the event that the company's plans change or its assumptions
change or prove to be inaccurate or if cash flow from operations
proves to be insufficient to fund operations (due to
unanticipated expenses, technical difficulties, problem or
otherwise), the company would be required to seek additional
financing sooner than currently anticipated or may be required to
significantly curtail or cease its operations.
Company Only Has Limited Assets.
The company has only limited assets. As a result, there can be
no assurance that the company will generate significant revenues
in the future; and there can be no assurance that the company
will operate at a profitable level. If the company is unable to
obtain customers and generate sufficient revenues so that it can
profitably operate, the company's business will not succeed.
Success of Company Dependent on Management.
The company's success is dependent upon the hiring of key
administrative personnel. None of the company's officers,
directors, and key employees have an employment agreement with
the company; therefore, there can be no assurance that these
personnel will remain employed by the company after the
termination of such agreements. Should any of these individuals
cease to be affiliated with the company for any reason before
qualified replacements could be found, there could be material
adverse effects on the company's business and prospects. In
addition, management has no experience is managing companies in
the same business as the company.
In addition, all decisions with respect to the management of
the company will be made exclusively by the officers and
directors of the company. Investors will only have rights
associated with minority ownership interest rights to make
decision that affect the company. The success of the company,
to a large extent, will depend on the quality of the directors
and officers of the company. Accordingly, no person should
invest in the shares unless he is willing to entrust all aspects
of the management of the company to the officers and directors.
Control of the Company by Officers and Directors.
The company's officers and directors beneficially own
approximately 29% of the outstanding shares of the company's
common stock. As a result, such persons, acting together, have
the ability to exercise significant influence over all matters
requiring stockholder approval. Accordingly, it could be
difficult for the investors hereunder to effectuate control over
the affairs of the company. Therefore, it should be assumed that
the officers, directors, and principal common shareholders who
control the majority of voting rights will be able, by virtue of
their stock holdings, to control the affairs and policies of the
company.
Limitations on Liability, and Indemnification, of Directors and
Officers.
Although neither the articles of incorporation nor the
bylaws of the company provide for indemnification of officer or
directors of the company, the Delaware General Corporation Law
provides or permissive indemnification of officers and directors
and the company may provide indemnification under such
provisions. Any limitation on the liability of any director, or
indemnification of directors, officer, or employees, could result
in substantial expenditures being made by the company in covering
any liability of such persons or in indemnifying them.
Potential Conflicts of Interest Involving Management.
Currently, the officers and directors of the company devote 100%
of their time to the business of the company. However, conflicts
of interest may arise in the area of corporate opportunities
which cannot be resolved through arm's length negotiations. All
of the potential conflicts of interest will be resolved only
through exercise by the directors of such judgment as is
consistent with their fiduciary duties to the company. It is the
intention of management, so as to minimize any potential
conflicts of interest, to present first to the board of directors
to the company, any proposed investments for its evaluation.
Acceptance And Effectiveness Of Internet Electronic Commerce.
The company's success in establishing an e-commerce business
web site will be dependent on consumer acceptance of e-retailing
and an increase in the use of the Internet for e-commerce. If
the markets for e-commerce do not develop or develop more slowly
than the company expects, its e-commerce business may be harmed.
If Internet usage does not grow, the company may not be able to
increase revenues from Internet advertising and sponsorships
which also may harm both our retail and e-commerce business.
Internet use by consumers is in an early stage of development,
and market acceptance of the Internet as a medium for content,
advertising and e-commerce is uncertain. A number of factors may
inhibit the growth of Internet usage, including inadequate
network infrastructure, security concerns, inconsistent quality
of service, and limited availability of cost-effective, high-
speed access. If these or any other factors cause use of the
Internet to slow or decline, our results of operations could be
adversely affected.
Competition In Internet Commerce.
Increased competition from e-commerce could result in
reduced margins or loss of market share, any of which could harm
both our retail and e-commerce businesses. Competition is likely
to increase significantly as new companies enter the market and
current competitors expand their services. Many of the company's
present and potential competitors are likely to enjoy substantial
competitive advantages, including larger numbers of users, more
fully-developed e-commerce opportunities, larger technical,
production and editorial staffs, and substantially greater
financial, marketing, technical and other resources. If the
company does not compete effectively or if it experiences any
pricing pressures, reduced margins or loss of market share
resulting from increased competition, the company's business
could be adversely affected.
Unreliability Of Internet Infrastructure.
If the Internet continues to experience increased numbers of
users, frequency of use or increased bandwidth requirements, the
Internet infrastructure may not be able to support these
increased demands or perform reliably. The Internet has
experienced a variety of outages and other delays as a result of
damage to portions of its infrastructure, and could face
additional outages and delays in the future. These outages and
delays could reduce the level of Internet usage and traffic on
the company website. In addition, the Internet could lose its
viability due to delays in the development or adoption of new
standards and protocols to handle increased levels of activity.
If the Internet infrastructure is not adequately developed or
maintained, use of the company website may be reduced. Even if
the Internet infrastructure is adequately developed, and
maintained, the company may incur substantial expenditures in
order to adapt its services and products to changing Internet
technologies. Such additional expenses could severely harm the
company's financial results.
Transactional Security Concerns.
A significant barrier to Internet e-commerce is the secure
transmission of confidential information over public networks.
Any breach in our security could cause interruptions in the
operation of our website and have an adverse effect on the
company's business.
Governmental Regulation Of The Internet.
There are currently few laws that specifically regulate
communications or commerce on the Internet. Laws and regulations
may be adopted in the future, however, that address issues
including user privacy, pricing, taxation and the characteristics
and quality of products and services sold over the Internet. An
increase in regulation or the application of existing laws to the
Internet could significantly increase our costs of operations and
harm the company's business.
Influence of Other External Factors on Prospects for Company.
The industry of the company in general is a speculative venture
necessarily involving some substantial risk. There is no
certainty that the expenditures to be made by the company will
result in a commercially profitable business. The marketability of
its products will be affected by numerous factors beyond the
control of the company. These factors include market
fluctuations, and the general state of the economy (including the
rate of inflation, and local economic conditions), which can
affect companies' spending. Factors which leave less money in
the hands of potential customers of the company will likely have
an adverse effect on the company. The exact effect of these
factors cannot be accurately predicted, but the combination of
these factors may result in the company not receiving an adequate
return on invested capital.
No Cumulative Voting
Holders of the shares are not entitled to accumulate their votes
for the election of directors or otherwise. Accordingly, the
holders of a majority of the shares present at a meeting of
shareholders will be able to elect all of the directors of the
company, and the minority shareholders will not be able to elect
a representative to the company's board of directors.
Absence of Cash Dividends
The board of directors does not anticipate paying cash dividends
on the shares for the foreseeable future and intends to retain
any future earnings to finance the growth of the company's
business. Payment of dividends, if any, will depend, among other
factors, on earnings, capital requirements, and the general
operating and financial condition of the company, and will be
subject to legal limitations on the payment of dividends out of
paid-in capital.
Limited Public Market for Company's Securities.
Prior to the Offering, there has been only a limited public
market for the shares of common stock being offered. There can
be no assurance that an active trading market will develop or
that purchasers of the shares will be able to resell their
securities at prices equal to or greater than the respective
initial public offering prices. The market price of the shares
may be affected significantly by factors such as announcements by
the company or its competitors, variations in the company's
results of operations, and market conditions in the retail,
electron commerce, and internet industries in general. The
market price may also be affected by movements in prices of stock
in general. As a result of these factors, purchasers of the
shares offered may not be able to liquidate an investment
in the shares readily, or at all.
No Assurance of Continued Public Trading Market; Risk of Low
Priced Securities.
There has been only a limited public market for the
common stock of the company. The common stock of the company is
currently quoted on the Over the Counter Bulletin Board. As a
result, an investor may find it difficult to dispose of, or to
obtain accurate quotations as to the market value of the
company's securities. In addition, the common stock is subject to
the low-priced security or so called "penny stock" rules that
impose additional sales practice requirements on broker-dealers
who sell such securities. The Securities Enforcement and Penny
Stock Reform Act of 1990 requires additional disclosure in
connection with any trades involving a stock defined as a penny
stock (generally, according to recent regulations adopted by the
U.S. Securities and Exchange Commission, any equity security that
has a market price of less than $5.00 per share, subject to
certain exceptions), including the delivery, prior to any penny
stock transaction, of a disclosure schedule explaining the penny
stock market and the risks associated therewith. The
regulations governing low-priced or penny stocks sometimes limit
the ability of broker-dealers to sell the company's common stock
and thus, ultimately, the ability of the investors to sell their
securities in the secondary market.
Effects of Failure to Maintain Market Makers.
If the company is unable to maintain a National Association
of Securities Dealers, Inc. member broker/dealers as market
makers, the liquidity of the common stock could be impaired, not
only in the number of shares of common stock which could be
bought and sold, but also through possible delays in the timing
of transactions, and lower prices for the common stock than might
otherwise prevail. Furthermore, the lack of market makers could
result in persons being unable to buy or sell shares of the
common stock on any secondary market. There can be no assurance
the company will be able to maintain such market makers.
Offering Price.
The offering price of the shares will be determined in relation
to the then current market price of the shares on the Over the
Counter Bulletin Board. Because of market fluctuations, there
can be no assurance that the shares will maintain market values
commensurate with the offering price.
"Shelf" Offering
The shares are offered directly by the company on a delayed
basis. No assurance can be given that any or all of the shares
will be issued. No broker-dealer has been retained as an
underwriter and no broker-dealer is under any obligation to
purchase any of the shares. In addition, the officers and
directors of the company, collectively, have limited experience
in the offer and sale of securities on behalf of the company.
Use of Proceeds Not Specific.
The proceeds of this offering have been allocated only generally.
Proceeds from the offering have been allocated generally to legal
and accounting, and working capital. Accordingly, investors will
entrust their funds with management in whose judgment investors
may depend, with only limited information about management's
specific intentions with respect to a significant amount of the
proceeds of this offering.
Shares Eligible For Future Sale
All of the 5,400,000 shares of common stock which are currently
held, directly or indirectly, by management have been issued in
reliance on the private placement exemption under the Securities
Act of 1933. Such shares will not be available for sale in the
open market without separate registration except in reliance upon
Rule 144 under the Securities Act of 1933. In general, under
Rule 144 a person (or persons whose shares are aggregated) who
has beneficially owned shares acquired in a non-public
transaction for at least on year, including persons who may be
deemed affiliates of the company (as that term is defined under
that rule) would be entitled to sell within any three-month
period a number of shares that does not exceed the greater of 1%
of the then outstanding shares of common stock, or the average
weekly reported trading volume during the four calendar weeks
preceding such sale, provided that certain current public
information is then available. If a substantial number of the
shares owned by these shareholders were sold pursuant to Rule 144
or a registered offering, the market price of the common stock
could be adversely affected.
Forward-Looking Statements.
This prospectus contains "forward looking statements" within the
meaning of Rule 175 of the Securities Act of 1933, as amended,
and Rule 3b-6 of the Securities Act of 1934, as amended,
including statements regarding, among other items, the company's
business strategies, continued growth in the company's markets,
projections, and anticipated trends in the company's business and
the industry in which it operates. The words "believe,"
"expect," "anticipate," "intends," "forecast," "project," and
similar expressions identify forward-looking statements. These
forward-looking statements are based largely on the company's
expectations and are subject to a number of risks and
uncertainties, certain of which are beyond the company's control.
The company cautions that these statements are further qualified
by important factors that could cause actual results to differ
materially from those in the forward looking statements,
including, among others, the following: reduced or lack of
increase in demand for the company's products, competitive
pricing pressures, changes in the market price of ingredients
used in the company's products and the level of expenses incurred
in the company's operations. In light of these risks and
uncertainties, there can be no assurance that the forward-looking
information contained herein will in fact transpire or prove to
be accurate. The company disclaims any intent or obligation to
update "forward looking statements."
Uncertainty Due to Year 2000 Problem.
The Year 2000 issue arises because many computerized systems
use two digits rather than four to identify a year. Date
sensitive systems may recognize the year 2000 as 1900 or some
other date, resulting in errors when information using the year
2000 date is processed. In addition, similar problems may arise
in some systems which use certain dates in 1999 to represent
something other than a date. The effects of the Year 2000 issue
may be experienced before, on, or after January 1, 2000, and if
not addressed, the impact on operations and financial reporting
may range from minor errors to significant system failure which
could affect the company's ability to conduct normal business
operations. This creates potential risk for all companies, even
if their own computer systems are Year 2000 compliant. It is not
possible to be certain that all aspects of the Year 2000 issue
affecting the company, including those related to the efforts of
customers, suppliers, or other third parties, will be fully
resolved.
The company currently believes that its systems are Year 2000
compliant in all material respects. Although management is not
aware of any material operational issues or costs associated with
preparing its internal systems for the Year 2000, the company may
experience serious unanticipated negative consequences (such as
significant downtime for one or more of its suppliers) or
material costs caused by undetected errors or defects in the
technology used in its internal systems. Furthermore, the
purchasing patterns of customers may be affected by Year 2000
issues. The company does not currently have any information
about the Year 2000 status of its potential material suppliers.
The company's Year 2000 plans are based on management's best
estimates.
USE OF PROCEEDS
The amount of proceeds from this offering will depend on the
offering price per share and the number of shares sold for cash.
When the initial offering price is determined, this prospectus
will be amended to so indicate; then the amount of proceeds from
this offering can be estimated. The proceeds of the offering,
less the expenses of the offering, will be used to provide
working capital for the company.
The following table sets forth the use of proceeds from this
offering (the blank number will be completed upon the amendment
of this prospectus with the initial offering price):
Use of Proceeds Maximum Offering
Amount Percent
Transfer Agent Fee $ 1,000
Printing Costs $ 1,000
Legal Fees $25,000
Accounting Fees $ 1,500
Working Capital
Total
Management anticipates expending these funds for the purposes
indicated above. To the extent that expenditures are less than
projected, the resulting balances will be retained and used for
general working capital purposes or allocated according to the
discretion of the board of directors. Conversely, to the extent
that such expenditures require the utilization of funds in excess
of the amounts anticipated, supplemental amounts may be drawn
from other sources, including, but not limited to, general
working capital and/or external financing. The net proceeds of
this offering that are not expended immediately may be deposited
in interest or non-interest bearing accounts, or invested in
government obligations, certificates of deposit, commercial
paper, money market mutual funds, or similar investments.
DETERMINATION OF OFFERING PRICE
The cash offering price of the shares will be determined, from
time to time, based on the current market price of the shares on
the Over the Counter Bulletin Board.
PLAN OF DISTRIBUTION
Shares of common stock of the company will be sold under a shelf
registration under Rule 415. Based upon the terms and subject to
the conditions of a form of common stock purchase agreement, the
company intends to sell to one or more institutional investor up
to 25,000,000, shares of common stock (the number of shares to be
issued in connection with any drawdown under this agreement will
equal the dollar amount of such drawdown divided by 80% of the
lowest closing reported bid price of the shares for the five
trading days immediately preceding the drawdown date); for each
share purchased on under that agreement, an investor will receive
one warrant, (exercisable at a price equal to 80% of the closing
bid price of the common stock on the effective date of the
agreement from said date until a date which is five years
thereafter). The cash sale price of the shares will be modified,
from time to time, by amendment to this prospectus, in accordance
with changes in the market price of the company's common stock.
In addition, the company will sell up to 25,000,000 shares of
common stock for consulting services for the company and for
possible future acquisitions of companies and/or assets.
There can be no assurance that all of these shares will be issued
or that any of them will be sold for cash. The gross proceeds to
the company will depend on the amount actually sold for cash and
the sales price per share. No commissions or other fees will be
paid, directly or indirectly, by the company, or any of its
principals, to any person or firm in connection with solicitation
of sales of the shares. These securities are offered by the
company subject to prior issue and to approval of certain legal
matters by counsel.
Opportunity to Make Inquiries.
The company will make available to each offeree, prior to any
sale of the shares, the opportunity to ask questions and receive
answers from the company concerning any aspect of the investment
and to obtain any additional information contained in this
prospectus, to the extent that the company possesses such
information or can acquire it without unreasonable effort or
expense.
Execution of Documents.
Each person desiring to be issued shares, either as a conversion
of a debenture, or an exercise of a warrant, must complete,
execute, acknowledge, and delivered to the company certain
documents, By executing these documents, the subscriber is
agreeing that such subscriber will be, a shareholder in the
company and will be otherwise bound by the articles of
incorporation and the bylaws of the company in the form attached
to this prospectus.
LEGAL PROCEEDINGS
The company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the company has been threatened.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,
AND CONTROL PERSONS
The names, ages, and respective positions of the directors
and officers of the company are set forth below. There are no
other persons which can be classified as a promoter, controlling
person, or significant employee of the company.
John J. Anton , President/Chief Executive Officer/Director.
Mr. Anton, age 72, is a 40-year veteran of the motion picture and
television industry working for all three major television
networks. For the last 22 years, Mr. Anton has been a member of
the Directors Guild and of the International Alliance of
Theatrical Stage Employees. During his career in the motion
picture and television industry Mr. Anton produced special shows
for the Ford Motor Company as well as shows with Tony Bennett,
the Kingston Trio, and the Smothers Brothers. He also
coordinated special events including major college bowl games and
the Academy Awards. Further, Mr. Anton was instrumental in the
opening of the Santa Monica Civic Center as a consultant. Mr.
Anton retired from National Broadcasting Company, Inc. (NBC) in
1993 as Sports Operations Producer for the West Coast. Since
that time, he has been active as an independent businessman and
consultant. Mr. Anton has been with the company since its
inception in 1995 and became its president in 1996. Mr. Anton
attended Saint Ambrose Academy, Iowa, the Don Martin School of
Broadcasting in Hollywood and NBC Business and Technical
Operations College in Burbank, California.
John Moore, Vice President of Information
Systems/Secretary/Director
Mr. Moore, age 30, has been Vice President of Information Systems
for the company since 1995 where he has designed, developed, and
managed all of the company's systems. In this capacity, Mr.
Moore built one of the original Windows based Bulletin Board
systems. This system serviced approximately 350 users from all
over Southern California, had roughly 80 advertisers, and was one
of the first to show images and was therefore easily transformed
into an Internet presence.
Prior to his service with the company, Mr. Moore taught Computer
Science at Glendale College, California and coordinated the
Internet activities for the Computer Science and Information
Systems Department. In the Network Administrator there he
supervised a small service group that was responsible for 350
computers on a campus with a student population of 10,000. Mr.
Moore also has worked as a programmer in the Information Systems
departments for several local governments and as a technical
consultant to a variety of business and political agencies.
Mr. Moore received a Bachelor of Arts in Journalism and a
Bachelor of Arts in Political Science from California State
University, Humboldt, a Masters Degree in International Relations
from the University of San Diego (where he taught professors how
to use the Internet in exchange for his tuition), and an
Associate of Arts in German from the Monterey Institute of
International Studies. Mr. Moore has been using the Microsoft
operating system since its inception and is familiar with each
subsequent revision. This has resulted in Mr. Moore becoming a
member of the Microsoft Developers network, a member of the
Microsoft Site Builder Program, and a member of the Microsoft NT
Users Group.
Martin Bloomenstein, Vice President of
Finance/Treasurer/Director.
Mr. Bloomenstein, age 64, has been the Vice President of Finance
for the company since 1996. Prior to that time, he was an
officer, director and consultant of APN, Inc., a SMR development
company. Mr. Bloomenstein has been a certified public accountant
(CPA) for over 35 years. He received his Bachelor of Science
degree from New York University.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the
beneficial ownership of shares of the company's common stock as
of June 15, 2000 (18,586,210 issued and outstanding) by (i) all
stockholders known to the company to be beneficial owners of more
than 5% of the outstanding common stock; and (ii) all officers
and directors of the company (each person has sole voting power
and sole dispositive power as to all of the shares shown as
beneficially owned by them):
Title of Name and Address of Amount of Percent
Class Beneficial Owner Beneficial of
Ownership(1) class
Common Tri-Star Diversified 4,500,000 24.21%
Stock Ventures, L.L.C.,
1601 East Flamingo
Road, Suite 18,
Las Vegas, Nevada 89119
Common John J. Anton 3,250,000 17.49%
Stock 1530 Brookhollow Drive
Suite C,
Santa Ana, California 92705
Common John Moore 2,000,000 8.98%
Stock 1530 Brookhollow Drive
Suite C,
Santa Ana, California 92705
Common Marcine Aniz Uhler 1,200,000 6.46%
Stock 3402 Bimini Lane, #3-F
Coconut Creek, Florida
33066-2049
Common Martin Bloomenstein 150,000 0.81%
Stock 1530 Brookhollow Drive
Suite C
Santa Ana, California 92705
Common Shares of all 5,400,000 29.05%
Stock directors and
executive officers
as a group (3 persons)
(1) None of these security holders has the right to acquire any
amount of the shares within sixty days from options, warrants,
rights, conversion privilege, or similar obligations.
DESCRIPTION OF SECURITIES
General Description.
The securities being offered are shares of common stock. The
company's articles of incorporation authorize the issuance of
100,000,000 shares of common stock, with a par value of $0.001.
The holders of the shares: (a) have equal ratable rights to
dividends from funds legally available therefore, when, as, and
if declared by the board of directors of the company; (b) are
entitled to share ratably in all of the assets of the company
available for distribution upon winding up of the affairs of the
company; and (c) are entitled to one non-cumulative vote per
share on all matters on which shareholders may vote at all
meetings of shareholders. These securities do not have any of the
following rights: (a) special voting rights; (b) preference as to
dividends or interest; (c) preemptive rights to purchase in new
issues of shares; (d) preference upon liquidation; or (e) any
other special rights or preferences. In addition, the shares are
not convertible into any other security. There are no
restrictions on dividends under any loan other financing
arrangements or otherwise. As of June 15, 2000, the company had
18,586,210 shares of common stock issued and outstanding. There
are no preferred shares authorized in the articles of
incorporation.
Non-Cumulative Voting.
The holders of shares of common stock of the company do not have
cumulative voting rights, which means that the holders of more
than 50% of such outstanding shares, voting for the election of
directors, can elect all of the directors to be elected, if they
so choose. In such event, the holders of the remaining shares
will not be able to elect any of the company's directors.
Dividends.
The company does not currently intend to pay cash dividends. The
company's proposed dividend policy is to make distributions of
its revenues to its stockholders when the company's board of
directors deems such distributions appropriate. Because the
company does not intend to make cash distributions, potential
shareholders would need to sell their shares to realize a return
on their investment. There can be no assurances of the projected
values of the shares, nor can there be any guarantees of the
success of the company.
A distribution of revenues will be made only when, in the
judgment of the company's board of directors, it is in the best
interest of the company's stockholders to do so. The board of
directors will review, among other things, the investment quality
and marketability of the securities considered for distribution;
the impact of a distribution of the investee's securities on its
customers, joint venture associates, management contracts, other
investors, financial institutions, and the company's internal
management, plus the tax consequences and the market effects of
an initial or broader distribution of such securities.
Possible Anti-Takeover Effects of Authorized but Unissued Stock.
Upon the completion of this offering, assuming the maximum
offering of 50,000,000 is sold, the company's authorized but
unissued capital stock will consist of 31,413,790 shares of
common stock (based on the issued and outstanding shares of
18,586,210 as of June 15, 2000). One effect of the existence of
authorized but unissued capital stock may be to enable the board
of directors to render more difficult or to discourage an attempt
to obtain control of the company by means of a merger, tender
offer, proxy contest, or otherwise, and thereby to protect the
continuity of the company's management. If, in the due exercise
of its fiduciary obligations, for example, the board of directors
were to determine that a takeover proposal was not in the
company's best interests, such shares could be issued by the
board of directors without stockholder approval in one or more
private placements or other transactions that might prevent, or
render more difficult or costly, completion of the takeover
transaction by diluting the voting or other rights of the
proposed acquiror or insurgent stockholder or stockholder group,
by creating a substantial voting block in institutional or other
hands that might undertake to support the position of the
incumbent board of directors, by effecting an acquisition that
might complicate or preclude the takeover, or otherwise.
Transfer Agent.
The company has engaged the services of Corporate Stock Transfer,
3200 Cherry Creek Drive South, Suite 430, Denver, Colorado 80209,
to act as transfer agent and registrar.
INTEREST OF NAMED EXPERTS AND COUNSEL
Other than as set forth below, no named expert or counsel was
hired on a contingent basis, will receive a direct or indirect
interest in the small business issuer, or was a promoter,
underwriter, voting trustee, director, officer, or employee of
the company.
Counsel for the company named in this registration statement
as giving an opinion on the validity of the securities being
registered has previously received 120,000 shares of stock under
the Retainer Plan for Non-Employee Directors and Consultants
under a Form S-8 in exchange for legal services consisting of
advice and preparation work in connection with reports of World
Shopping Network, Inc. under the Securities Exchange Act of 1934
and general corporate legal work.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Limitation of Liability.
Directors of the company are not liable to the company
corporation or its stockholders for monetary damages for a breach
of fiduciary duties unless the breach involves: (i) a director's
duty of loyalty to the corporation or its stockholders; (2) acts
or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (3) liability for
unlawful payments of dividends or unlawful stock purchases or
redemption by the corporation; or (4) a transaction from which
the director derived an improper personal benefit.
Indemnification.
Although neither the articles of incorporation nor the bylaws of
the company provide for indemnification of officer or directors
of the company, the Delaware General Corporation Law provides or
permissive indemnification of officers and directors and the
company may provide indemnification under such provisions:
Section 145. Indemnification of officers, directors, employees and
agents; insurance.
(a) A corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason
of the fact that the person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by the person in connection with such
action, suit or proceeding if the person acted in good faith and
in a manner the person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe the person's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which the person
reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the person's
conduct was unlawful.
(b) A corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by
reason of the fact that the person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by the person in connection with
the defense or settlement of such action or suit if the person
acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery or the court in
which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a present or former director or officer
of a corporation has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of this section, or in defense of any
claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the present or former
director, officer, employee or agent is proper in the
circumstances because the person has met the applicable standard
of conduct set forth in subsections (a) and (b) of this section.
Such determination shall be made, with respect to a person who is
a director or officer at the time of such determination, (1) by a
majority vote of the directors who are not parties to such
action, suit or proceeding, even though less than a quorum, or
(2) by a committee of such directors designated by majority vote
of such directors, even though less than a quorum, or (3) if
there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (4) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer
or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount if it shall
ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this section.
Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so
paid upon such terms and conditions, if any, as the corporation
deems appropriate.
(f) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other subsections of this section
shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be
entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity
while holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify such
person against such liability under this section.
(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall
stand in the same position under this section with respect to the
resulting or surviving corporation as such person would have with
respect to such constituent corporation if its separate existence
had continued.
(i) The indemnification and advancement of expenses provided by,
or granted pursuant to, this section shall, unless otherwise
provided when authorized or ratified, continue as to a person who
has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators
of such a person.
Undertaking.
The company undertakes the following:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the small business issuer pursuant to
the foregoing provisions, or otherwise, the small business issuer
has been advised that in the opinion of the U.S.Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore,
unenforceable.
ORGANIZATION WITHIN LAST FIVE YEARS
The names of the officers and directors as disclosed
elsewhere in this Form SB-2. None of these individuals, as
promoters, have received anything of value from the company.
DESCRIPTION OF BUSINESS
Company History.
USA Growth, Inc., a Delaware corporation, was originally
incorporated on August 14, 1987 in the State of Delaware, and has
adopted a July 31 year-end. At July 31, 1999, the company was a
development stage company, since it had not commenced its planned
principal operations.
Pursuant to a share exchange agreement dated as of August 15,
1999, among the company, TriStar Diversified Ventures, L.L.C.,
John J. Anton, and Nick Markulis, TriStar and Messrs. Anton and
Markulis exchanged all of their shares of common stock of World
Shopping Network, Inc., a Wyoming corporation, for an aggregate
of 79,950,000 newly issued shares of common stock of the company.
As a result of this exchange (a) TriStar held 54,000,000 shares
of common stock, which represented approximately 58% of the
issued and outstanding common stock, (b) John J. Anton held
15,000,000 shares of the common stock, which represented
approximately 16% of the issued and outstanding common stock, and
(c) Nick Markulis held 10,950,000 shares of common stock, which
represented approximately 12% of the issued and outstanding
common stock. As a result of the share exchange agreement the
company owned approximately 59% of the issued and outstanding
shares of Wyoming corporation and this corporation was a majority
owned subsidiary of the company.
The company's board of directors unanimously approved the
following actions at a meeting duly held and called on August 17,
1999: (i) the merger of World Shopping Network, Inc., a Wyoming
corporation, with and into the company; (ii) a reverse split of
the issued and outstanding shares of the common stock on a one-
for-twelve (1:12) basis; (iii) an amendment to the certificate of
incorporation of the company to implement this reverse stock
split and to change the name of the company to World Shopping
Network, Inc.; and (iv) the election of new directors of the
company.
Under applicable Delaware Law, approval of the merger and the
amendment to the certificate of incorporation required an
affirmative vote of a majority of the outstanding shares of
common stock. On August 17, 1999, holders of a majority of the
issued and outstanding shares of common stock approved the merger
and the amendment by written consent in accordance with and as
permitted by Section 228 of the General Corporation Law of the
State of Delaware.
An information statement was furnished by the board of directors
of the company to the holders of record at the close of business
on August 16, 1999, of the company's outstanding common stock
pursuant to Rule 14c-2 under the Securities Exchange Act of 1934,
as amended. The merger was completed upon the terms and
conditions provided in the agreement and plan of merger dated as
of September 15, 1999 by and among the company, the Wyoming
corporation, and the principal stockholders of the company. The
merger agreement provides for the Wyoming corporation to be
merged with and into the company, with the company being the
surviving corporation. The company's common stock is currently
traded on the Over the Counter Bulletin Board under the ticker
symbol "WSHP".
Company Overview.
To date, the primary business of the company has been as an
Internet website host with over 125 customers. These services
include website development, hosting, maintenance, linking, and
access. Many businesses wish to create an on-line presence
without the investment into the hardware and software necessary
to maintain their own servers. The company has invested over
$100,000 into the development of its hardware and has dual-
redundant T1 line capability. It maintains sufficient access
lines so that if a server becomes busy, the next available server
will receive and process the customer's request. Over time the
capacity of the company's equipment has grown, and will continue
to grow with new servers being added to accommodate new customers
and their ever increasing needs.
In addition to providing Internet services to others, the
company has established its own Internet shopping mall, "World
Shopping Network Mall" which can be accessed at
http://www.wsnetwork.com. This site offers a range of goods and
services for sale to consumers over the Internet through a
variety of vendors. Vendors are showcased on the company's
website's main page, with each vendor displaying a banner link to
a separate vendor "store" hosted on our website. In this way the
company provides value to both the end-user and to its vendors by
providing many goods and services in one easy-to-access location.
Consumers can fulfill most, if not all, of their shopping needs
at one location, and vendors have increased traffic due to
consumers seeing their banner advertisement while browsing for an
unrelated product.
Finally, the company has begun designing and hosting
Internet shopping malls for individual suppliers or
manufacturers. The company offers a turn-key approach to those
wishing to establish their own shopping malls. Once general
content is designated by the customer, the company designs,
hosts, and maintains the site.
Industry Background.
The Internet is a worldwide series of interconnected electronic
and/or computer networks. Individuals and companies recently
have recognized that the technological capabilities of the
Internet provide a medium not only for the promotion and
communication of ideas and concepts, but also for the
presentation and sale of information, goods and services. The
Internet is accessible principally through personal computers,
"Web TV" and hand-held wireless products designed to provide
access to the Internet through alternative devices. The company
believes that these alternative devices will serve to increase
the number of individuals who shop online.
The Internet began in the late 1960's as an experiment in the
design of robust computer networks. Basically, the Internet is a
collection of computer networks - a network of networks - that
allows anyone to connect with their computer to the Internet and
immediately communicate with other computers and users across the
world. Its use for decades was primarily limited to defense
contractors and academic institutions. With the advent of high-
speed modems for digital communication over common telephone
lines, some individuals and organizations began connecting to and
taking advantage of the Internet's advanced global communications
ability.
Because the Internet has experienced rapid growth, it has
developed into a significant tool for global communications,
commerce and media, enabling millions of people to share
information and transact business electronically. Advances in
online security and payment mechanisms have also prompted more
businesses and consumers to engage in electronic commerce.
The terms electronic commerce and Internet commerce encompass the
use of the Internet for selling goods and services. The use of
the Internet as a marketing and advertising tool is enhanced by
the ability to communicate information through the Internet to a
large number of individuals, businesses and other entities. The
unique characteristics of the Internet create numerous advantages
for online retailers and provides a convenient and unique means
for consumers to order products and services. The virtual nature
of Internet commerce by way of website accessibility for
merchants can reduce or even eliminate the costs associated with
maintaining a physical retail facility. Online merchants may
also realize significant savings by eliminating traditional
product packaging, print advertising and other point of purchase
materials. Marketing on the Internet can be especially
advantageous for smaller companies by removing the traditional
barrier of location and essentially, leveling the playing field
to allow smaller companies to compete with larger companies
effectively.
The unique characteristics of the Internet create a number of
advantages for online retailers and have dramatically affected
the manner in which companies distribute goods and services.
Specifically, online retailers use the Internet to: provide
consumers with a broad selection of products and services,
increased information and enhanced convenience; operate with
reduced overhead costs and greater economies of scale; frequently
adjust featured selections, editorial content and pricing,
providing significant merchandising flexibility; display a larger
number of products than traditional retailers at lower cost; and
obtain demographic and behavioral data about customers,
increasing opportunities for direct marketing and personalized
services.
The Internet also provides a powerful and convenient means for
consumers to order products and services. As a result of the
increased use of the Internet and the benefits of online
retailing, the company believes consumer spending on the Internet
will grow rapidly.
Strategy.
The company expects the number of suppliers and
manufacturers selling their products and services over the
Internet to grow in a geometric rather than linear fashion over
the next five years. This growth will create a great need both
for web hosting of companies wishing to establish an Internet
presence, and for hosting of on-line shopping malls. As more
consumers discover the ease of shopping on-line, demand for on-
line malls will increase. It is the company's strategy to help
meet that demand.
The company is positioning itself to be a leader in its
industry with the following four-pronged approach:
Through image development, infomercials, radio advertising, and a
constant trade show presence, create brand recognition of the
World Shopping Network name.
Aggressively market its own on-line shopping mall, World Shopping
Network Mall.
Springboard off increased brand recognition created by 1 and 2
above to significantly increase revenues attributable to web
hosting, and on-line shopping mall design and maintenance.
Strategically identify and acquire local and regional web hosting
competitors.
Products And Services.
When first formed, the company's principal activities were
primarily focused on: (a) the development and implementation of
an Internet shopping model, the WSN Mall; (b) the development of
proprietary technology to support such model; (c) an analysis of
products and services to be offered; (d) relationship development
with providers of such products and services; (e) the design,
development and implementation of proprietary merchandising and
marketing techniques to support the WSN Mall model; and (f) the
identification and building of a management team. These goals
have been attained and the company operates in high technology
and e-commerce business under a dual-tier model with the
following components:
WSN Mall
World Access Network.
Technology.
The company utilizes a Dell Power Edge as its main server with
dual processors equipped with RAID5 disk array. This system is
supported by dual power supplies. The WSN Mall uses Active
Service Pages interacting with Microsoft SQL Server as its
database engine. Further, the World Access Network employs
Microsoft Site Server Commerce Edition to provide e-mail, chat
service, and all other customer and community support, and
Microsoft Internet Information Server to provide Internet access
to members.
The company's management team has made a priority of establishing
many redundant systems to insure that customers are never
delayed, left without service, or experience failures of any
kind. Such development and maintenance of redundant systems are
the result of the expertise of the members of the management team
and their years of experience building computer networks.
WSN Mall.
Present
The WSN Mall operates as a 24-hour worldwide Internet based
online service providing for the direct sale and delivery of a
wide variety of competitively priced consumer products and
services. WSN Mall is also the exclusive seller of several
items, unavailable through any other site. The company supplies
products sold on WSN Mall through an agreement with Ingram Micro
and additionally, utilizes Specialty Merchandise Corporation and
Tech Data. The company does not generally warehouse any
inventory for resale. Arrangements are made with each individual
vendor, or strategic partner to package, ship and notify the
company of sale and delivery. The company obtains payment from
customers and pays the strategic partner directly for the
products. Products are shipped by Federal Express, the U.S.
Postal Service or United Parcel Service to the consumer.
The company's primary objective is to make it convenient for the
e-commerce consumer to purchase a broad range of products and
services at prices that are highly competitive with traditional
mail order and electronic retail channels. The WSN Mall differs
from most other shopping sites on the Internet because it is a
true retail "store." Most other shopping sites on the Internet
are "Malls." When a consumer visits the malls, they are in most
cases actually reviewing a list of manufacturers and resellers
who have their own separate web sites. The consumer must then
link to one of these other sites by actually leaving the mall
location.
Most of these manufacturers and resellers do not have the
capability of selling their products directly over the Internet,
so once at the new site, the consumer must call an 800 number to
place an order separately by phone. In other cases, the
manufacturer or reseller will present a list of local "dealers"
the consumer can visit. As a result, most malls on the Internet
essentially become electronic advertising agencies.
Consequently, no unique advantage to the telephone-mail order
format is provided to the consumer.
The WSN Mall, on the other hand, is a true retailer. When a
consumer comes "into" the WSN Mall store, he or she has the
capability of purchasing any product presented directly, without
having to go to another site or call an 800 number. By dealing
directly with the WSN Mall, the consumer is assured of the
overall satisfaction and convenience of purchasing from a "one
stop" shopping source. In addition, the WSN Mall offers a value-
added shopping experience by featuring the ability to process the
transaction conveniently, while presenting a broad range of
products at exceptional prices in a global format for any shopper
who can access the Internet.
The WSN Mall model is based on demand for convenient purchases of
a broad range of consumer products and services. Its revenues
are primarily generated by the sale of the products and services
offered through its web site. Consequently, the WSN Mall has a
vested interest in ensuring those products and services are
purchased. The Internet Malls have little or no such incentive
to sell products and services because their revenues are
generated by advertising others' web sites.
In dealing directly with the WSN Mall, manufacturers and other
product suppliers are assured of a low-cost distribution channel
to a large potential customer base by working with an
organization that is highly motivated to sell those suppliers'
products and services. Other advantages to this supplier include
increasing market share without increasing personnel,
administrative and advertising costs. Products are promoted
globally without increasing advertising expenditures. By
presenting products and services under the WSN Mall advertising
umbrella, promotion of product is assured in each advertising
vehicle the WSN Mall undertakes.
By increasing market share without additional associated costs,
the suppliers can offer their products and services at a reduced
cost to the WSN Mall. In turn, the WSN Mall intends to pass
these cost savings on to its customers. The company also offers
a frequent buyer program that rewards customer loyalty by
providing the opportunity to accrue points for purchases. Such
points are then redeemed for additional discounts and sales
incentives at later dates.
Following is a chart of the WSN Mall order fulfillment procedure:
Order Transfer of order Strategic partner Payment
Received to strategic fills order provides made to
Partner notification strategic
Partner
One of the company's objectives remains that of becoming a
dominant international retailer of consumer goods and services
with the primary goal of facilitating the ease, efficiency and
advantages of online shopping. The initial implementation of the
WSN Mall has been successful in generating revenue despite the
extremely competitive environment in which it has operated.
Sales have been consistent, but in order to create a
distinguishable business method along with a viable, long-term
future, the company seeks to develop a new and innovative online
shopping experience to operate in conjunction with its business
hosting and website development services.
As the e-commerce market is relatively new and competitive, the
company expects that competition may continue to increase. The
company currently competes against other companies with e-
commerce sites, including, but certainly not limited to
Amazon.com, Inc., Buy.com, Inc., Yahoo, Intermallamerica.com,
iVillage.com and many other companies marketing and selling goods
over the Internet. Most of these competitors have significantly
greater resources than the company which may provide them with a
greater ability to market their products more effectively.
Future of WSN Mall
It is the intent of the company to create an online shopping mall
showcasing products aimed at the 20-35 year old, active consumer.
The company seeks to implement a theme-based shopping
experience, selling products geared toward image-conscious and
active adult consumer population. New and innovative marketing
techniques will be utilized to expand the brand recognition of
the site and also to generate interest in the mall. In
addition, the company plans to expand its operations by acquiring
technology related businesses so as to operate under a three tier
model.
World Access Network.
Present
In addition to operating the WSN Mall, the company also provides
a full-range of Internet services through World Access Network
("WAN"), a division of the company. This includes website
development and hosting for businesses and other organizations
wishing to create an online presence without the cost and hassle
associated with maintaining their own servers and hardware.
Additionally, WAN provides Internet access to businesses and
consumers.
WAN currently serves over 125 customers, primarily in the
Southern California market, providing for all of their Internet
service needs including website development, hosting and
maintenance, linking and access. The company has invested over
$100,000 of capital into the development of its hardware and has
dual-redundant T1 line capability. The company maintains
sufficient access lines so that if a server becomes busy, the
next available server will receive and process the customer's
request. As requests grow beyond the capacity of the equipment,
new servers will be added to the rotation. This arrangement
makes growth easy and accommodates the risk of failure.
Additionally, WAN offers turn-key mall opportunities to its
clients, enabling the establishment and maintenance of their own
shopping malls. WAN currently provides this service to eight of
its existing customers and hopes to expand the offering of the
service.
The company and WAN anticipate that, as with the WSN Mall, the
competition in the area of web hosting and development will
continue to increase. The web development and hosting market is
extremely competitive and WAN expects competition to only
intensify in the future. WAN's current competitors include
companies such as Network Solutions, Inc., Creative Business
Solutions Co. and numerous other companies engaged in the
business of web development and hosting.
Future of World Access Network
In the future the company expects its Web Development Services to
offer superior connectivity to both new and existing customers.
The company will continue to service its existing customers,
upgrading their current operations to offer increased marketing
exposure.
Vision for the Future of the Company.
While the company has achieved and is maintaining a steady level
of success with regard to the WSN Mall and its web services
divisions, it seeks to implement a plan to further increase its
market share, particularly with young, active consumers through
the development of a highly interactive shopping and educational
experience.
Long-term viability of the company is a priority. The company
does not wish to follow the path of many of its competitors by
striving only to amass a large market share with the primary goal
of becoming a viable buy-out target. Its philosophy remains that
of developing and maintaining a profitable balance between
successful operations with regard to:
locating and maintaining market share
web development services and Internet access
the ultimate acquisition of businesses, technologies, services
and/or products to further expand the business.
Strategic Relationships.
The company has established strategic partnerships with three
specialty catalog warehouse companies: Specialty Merchandise,
Ingram Micro, and Tech Data. Each of these companies have
extensive catalogs listing thousands of products ranging from
extremely inexpensive novelty items to computers and other
electronic products costing thousands of dollars. The company
has established open purchase orders with each of these partners.
Currently, the company listed over 4,700 products listed in the
catalogs of these three companies on the WSN Mall. Only the
limited personnel resources of the company has prevented it from
adding additional products. It is the intention of the company
to utilize the proceeds from this offering to add employees and
increase its product offerings. In addition, the company will
pursue strategic relationships with additional catalog companies
to increase the variety of its product offerings thus attracting
a broader range of web traffic.
Advertising And Promotion.
Success or failure in this highly competitive industry, where
consumers can change shopping locations with a click of their
mouse, and can easily ignore advertising and promotion that is
not compelling or eye-catching, will be determined by the
company's ability to capture the attention of consumers "surfing"
the Internet.
The company will continue to market and effectuate its current
operations while developing new features. In order to create a
more stimulating and engaging online shopping experience, the
company foresees the development of an extremely interactive
shopping experience. In furtherance of that goal, current
efforts are being directed toward the development of the
company's image around an animation-created celebrity. The
company intends to create an animated celebrity who will guide
shoppers through the site for a shopping experience with an
Internet edge, much like that of a video game. In addition, the
animated celebrity will engage in educational encounters with
shoppers informing them about computers and the Internet.
Image Development
The company foresees that the development of the animated
celebrity will distinguish it from the other e-commerce sites and
attract youthful, active and financially sound visitors and
shoppers. The company anticipates that in addition to
implementing the animated celebrity on the website, a line of
merchandise with the animated celebrity's image will be
developed. Potential media include the development of a comic
book series, an animated series for television as well as
wearable merchandise such as t-shirts, sweatshirts and hats.
Infomercials
To further market the site, the company also seeks to develop an
infomercial educating the public as to why the Internet should be
a part of their lives and why they should be online, and further,
why the company's sites should be a part of their lives. The
company currently offers unprecedented convenience and benefits.
The company seeks not only to improve upon and increase those
benefits, but also to educate about the Internet, its uses,
values and benefits.
Radio Advertising
In addition to the infomercial, the company intends to purchase
radio air time to advertise in an effort to create name
recognition and additionally, maintain a visible presence at
industry events such as trade shows and seminars.
Competition.
The Internet and e-commerce market is extremely competitive and
can be significantly affected by many factors, including changes
in local, regional or national economic conditions, changes in
consumer preferences, brand name recognition and marketing, and
the development of new and competing technologies. The company's
current or potential competitors include:
e-commerce solution providers that provide shopping cart based
transaction products such as: Yahoo/Viaweb, Icat, and Pandesic
web developers that incorporate e-commerce products in their
solutions such as Mercantec, Hiway, and Simplenet
on-line shopping malls and auction houses such as The Internet
Mall, Branch Mall, iMall, the Yahoo Store, Amazon.com, eBay, and
Zauction
product search software and comparison shopping sites such as
Excite's Jengo, Yahoo Junglee, MSN's Sidewalk.com, and
Webmarket.com.
In terms of the web hosting portion of its business, the
company anticipates competition from Internet service providers
who offer a variety of connection features and speeds of access.
Some use telephone lines, some use television cable systems, and
others offers satellite focused services. There are numerous
providers of these services and no one provider dominates the
market. Many service providers are affiliated with telephone or
cable television companies which provide capital resources and
customer marketing opportunities unavailable to the company.
The company believes the principal competitive factors in
this market are brand recognition, selection, personalized
services, convenience, price, accessibility, customer service,
quality of search tools, quality of editorial and other site
content, reliability, and speed of fulfillment. Although the
company is one of the pioneers in this industry, most of its
competitors have larger customer bases, greater brand
recognition, and significantly greater financial, marketing, and
other resources available to them. Some of its competitors may
be able to secure merchandise from vendors on more favorable
terms, devote greater resources to marketing and promotional
campaigns, adopt more aggressive pricing or inventory
availability policies, and devote substantially more resources to
web site and systems development. Nevertheless, the company has
and believes it can continue to remain competitive in this
industry due to its delivery of quality products and services on
an extremely cost competitive basis. Compared to many of its
competitors, the company has an exceedingly lean overhead and
cost base. This lean overhead and cost base has not compromised
the quality of the company's products and services. On the
contrary, the company believes the quality of its products and
services are equal to or better than its larger competitors.
Government Regulation.
There are currently few laws or regulations directly applicable
to access to or commerce on the Internet. Therefore, the
company is not directly subject to any special regulation outside
of those rules and regulations concerning commerce in general.
Nevertheless, the company believes that dramatically increasing
Internet usage will eventually result in additional government
regulation.
PLAN OF OPERATION
The following discussion should be read in conjunction with the
financial statements of the company and notes thereto contained
elsewhere in this registration statement.
The company's principal activities have focused on:
the development and implementation of an Internet shopping model,
the "WSN Mall"
the development of proprietary technology to support such model
an analysis of products and services to be offered
relationship development with providers of such products and
services
the design, development and implementation of proprietary
merchandising and marketing techniques to support the WSN Mall
model
the development of full-range of Internet services through World
Access Network, a division of the company
the identification and building of a management team.
The company can satisfy its cash requirements for approximately
six months with the cash available at June 30, 2000 (the company
borrowed a total of $36,000 in March 2000 under two unsecured
promissory notes, bearing interest at the rate of 10% and due in
one year). The company will need to raise additional capital in
the next 12 months in order to meet its continuing requirements,
including any acquisitions that the company may undertake.
Management expects that such acquisitions, although not
determined at this time, will take at least $1,000,000 in capital
to accomplish.
The company currently has no employees. Members of the
management team and several support personnel are treated as
independent contractors at this time. It is the intention of the
company to establish a payroll and benefits with some of the
working capital from this offering for these individuals. Other
than this, the company does not expect to increase employees over
the next twelve months.
DESCRIPTION OF PROPERTY
The company currently owns or controls the following property in
connection with its operations:
The company leases its corporate offices at 1530 Brookhollow
Drive, Suite C, Santa Ana, California 92705. This space is
deemed adequate for the immediate future. In addition, the
company currently owns approximately $85,000 in computers, office
equipment, and furniture at its offices.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past two years, there have not been any transaction
that have occurred between the company and its officers,
directors, and five percent or greater shareholders, except as
follows:
Share Exchange Agreement.
Pursuant to a share exchange agreement dated as of August 15,
1999, among the company, Tri-Star Diversified Ventures, L.L.C.,
John J. Anton, and Nick Markulis, TriStar and Messrs. Anton and
Markulis exchanged all of their shares of common stock of World
Shopping Network, Inc., a Wyoming corporation, for an aggregate
of 79,950,000 newly issued shares of common stock of the company.
As a result of this exchange (a) Tri-Star held 54,000,000 shares
of common stock, which represented approximately 58% of the
issued and outstanding common stock, (b) John J. Anton held
15,000,000 shares of the common stock, which represented
approximately 16% of the issued and outstanding common stock, and
(c) Nick Markulis held 10,950,000 shares of common stock, which
represented approximately 12% of the issued and outstanding
common stock. As a result of the share exchange agreement the
company owned approximately 59% of the issued and outstanding
shares of Wyoming corporation and this corporation was a majority
owned subsidiary of the company.
Consulting Agreement.
On April 26, 2000, the company entered into a consulting
agreement with Marcine Aniz Uhler wherein she agreed to perform
for the company services and consulting related to structuring
and producing radio programs, and associated publicity items.
Consulting services include, but are not limited to, providing
information, evaluation, and analysis with regard to the
publicity needs of the company, including the possible production
of one or more radio programs concerning the e-commerce in
general and the business of company in particular. Under the
terms of this agreement, Ms. Uhler received, as consideration for
services provided, 1,200,000 shares of common stock of the
company which have been issued under the company's retainer stock
plan for non-employee directors and consultants, which shares
have been registered under a Form S-8 filed and effective with
the U.S. Securities and Exchange Commission on May 2, 2000.
MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
(a) Market Information.
The company's shares of common stock are traded on the Over the
Counter Bulletin Board (under the symbol "WSHP") and the range of
closing prices shown below is as reported by that exchange. The
quotations shown reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily
represent actual transactions.
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended on June 30, 2000
High Low
Quarter Ended June 30, 2000 0.44 0.10
Quarter Ended March 31, 2000 0.81 0.37
Quarter Ended December 31, 1999 * 2.81 0.25
Quarter Ended October 31, 1999 ** 0.43 0.25
* The fiscal year of the company was changed to June 30,
effective on November 22, 1999.
** The shares only trading on one day during the month of
October 1999.
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended on July 31, 1999
High Low
Quarter Ended October 31, 1998 0.13 0.12
Quarter Ended January 31, 1999 0.13 0.10
Quarter Ended April 30, 1999 0.12 0.10
Quarter Ended July 31, 1999 0.50 0.10
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended on July 31, 1998
High Low
Quarter Ended October 31, 1997 0.46 0.23
Quarter Ended January 31, 1998 0.28 0.09
Quarter Ended April 30, 1998 0.12 0.08
Quarter Ended July 31, 1998 0.12 0.11
(b) Holders of Common Equity.
As of June 15, 2000, there were 268 shareholders of record of the
company's common stock.
(c) Dividends.
The company has not declared or paid a cash dividend to
stockholders since it was incorporated on August 14, 1987. The
board of directors presently intends to retain any earnings to
finance company operations and does not expect to authorize cash
dividends in the foreseeable future. Any payment of cash
dividends in the future will depend upon the company's earnings,
capital requirements and other factors.
EXECUTIVE COMPENSATION
(a) The current officers and directors have not received
any compensation to date. They will not be remunerated until the
company turns profitable.
(b) There are no annuity, pension or retirement benefits
proposed to be paid to officers, directors, or employees of the
company in the event of retirement at normal retirement date as
there is no existing plan provided for or contributed to by the
company.
(c) No remuneration is proposed to be paid in the future
directly or indirectly by the company to any officer or director
since there is no existing plan which provides for such payment,
including a stock option plan.
FINANCIAL STATEMENTS
WORLD SHOPPING NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, 2000 March 31, 1999
ASSETS
Current Assets
Checking/Savings
Cash and Cash Equivalents 7,103 52,047
Restricted Cash 454,540 0
Total Checking/Savings 461,643 52,047
Accounts Receivable
Accounts Receivable, Net 9,117 37,470
Total Accounts Receivable 9,117 37,470
Other Current Assets
Inventory Asset 7,984 7,984
Stock Subscription Receivable 0 14,500
Total Other Current Assets 7,984 22,484
Total Current Assets 478,744 112,001
Fixed Assets
Fixed Assets, Net 34,401 28,799
Total Fixed Assets 34,401 28,799
Other Assets
Other Assets, Net 1,474 2,255
Total Other Assets 1,474 2,255
TOTAL ASSETS 514,619 143,055
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
Accounts Payable, Net 35,658 26,846
Total Accounts Payable 35,658 26,846
Other Current Liabilities
Note Payable - Tristar Dv. 45,000 0
Note payable Boardwalk Assoc 30,000 0
Note payable Coldwater Capital 6,000 0
Total Other Current Liabilities 81,000 0
Total Current Liabilities 116,658 26,846
Long Term Liabilities
Long Term Liability, Net 0 (401)
Total Long Term Liabilities 0 (401)
Total Liabilities 116,658 26,445
Equity
Capital Stock 544,238 374,112
Investments - GrowthNet Inc. 455,583 0
Preferred Stock 666,439 666,439
Retained Earnings (1,071,270) (779,301)
Net Income (197,029) (144,640)
Total Equity 397,961 116,610
Total Liabilities & Equity 514,619 143,055
See Accompanying Notes to Unaudited Financial Statement
WORLD SHOPPING NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
Ordinary Income/Expense
Income
Fee Income $ 14,647 $ 12,306
Mall Sales 917 0
Reimbursed Expenses 0 (2,850)
Uncategorized Income 0 0
Total Income 15,564 9,456
Gross Profit 15,564 9,456
Expense
Advertising 1,710 0
Automobile Expense 3,174 1,264
Bank Service Charges 225 193
Client Processing 0 17
Commissions 0 5,925
Domain Name 840 0
Dues and Subscriptions 0 100
Equipment Rental 298 0
Insurance 0 (1,077)
Leases 857 105
Miscellaneous 132 0
Office Supplies 497 1,424
Postage and Delivery 224 113
Professional Fees 61,773 34,243
Rent 5,294 4,784
Reseller Expense 70 0
Security 210 0
Service Bureau 107 9,209
Supplies 69 0
Taxes 847 67
Telephone 3,967 8,405
Travel & Ent 344 0
Total Expense 80,639 64,772
Net Ordinary Income (65,075) (55,316)
Other Income/Expense
Other Income
Insurance Claim 0 789
Total Other Income 0 789
Other Expense
Other Expenses 0 9,461
Total Other Expense 0 9,461
Net Other Income 0 (8,672)
Net Income $(65,075) $(63,988)
Basic and diluted loss per
common share $(0.01) $(0.01)
Average weighted common
shares outstanding 12,515,405 7,787,500
See Accompanying Notes to Unaudited Financial Statement
WORLD SHOPPING NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
OPERATING ACTIVITIES
Net Income (65,075) (63,988)
Adjustments to reconcile Net Income
to net cash provided by operations:
Accounts Receivable (1,648) 154
Accounts Payable 25,319 2,435
Notes Payable 36,000 0
Net cash used in operating activities (5,404) (61,399)
INVESTING ACTIVITIES
Fixed Assets, Net:Computer Equipment (1,625)
Net cash provided by Investing
Activities (1,625)
FINANCING ACTIVITIES
Capital Stock 97,500
Net cash provided by Financing
Activities 97,500
Net cash increase for period (5,404) 34,476
Cash at beginning of period 467,046 17,574
Cash at end of period 461,642 52,050
See Accompanying Notes to Unaudited Financial Statement
WORLD SHOPPING NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Organization and Nature of Operations
The company was originally was incorporated as USA Growth, Inc.
on August 14, 1987 in the State of Delaware. The company has
adopted a June 30 fiscal year-end (based on a resolution of the
board of directors, dated November 22, 1999). In September 1999
the company entered into a merger agreement with World Shopping
Network, Inc., a Wyoming corporation ("WSN") (a development stage
company). WSN operates an Internet shopping mall and other
Internet related services. As a result of the merger, the
company changed its name to World Shopping Network, Inc.
Accounting Method
The company uses the accrual method of accounting for financial
statement and tax return purposes.
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of the company and its wholly-owned subsidiary, Growth
Net Inc., a Nevada corporation. Intercompany transactions have
been eliminated in the consolidation.
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.
Cash and Cash Equivalents
The company considers all highly liquid instruments purchased
with an original maturity of three moths or less to be cash
equivalents.
Concentration of Credit Risk.
Cash balances are maintained at several banks. Accounts at each
institution are insured by the Federal Deposit Insurance
Corporation ("FDIC") up to $100,000.
Income Taxes
The company complies with Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes", which
requires an asset and liability approach to financial reporting
of income taxes. Deferred income tax assets and liabilities are
computed for differences between the financial statements and tax
bases of assets and liabilities that will result in taxable or
deductible amounts in the future. Deferred tax assets and
liabilities are based on enacted tax laws and rates applicable to
the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when
necessary, to reduce deferred income tax assets to the amount
expected to be realized.
Income (Loss) per Common Share
Effective July 31, 1998, the company adopted SFAS No. 128,
"Earnings Per Share". SFAS No. 128 requires dual presentation of
basic and diluted earnings per share for all periods presented.
Basic earnings/loss per share is computed by dividing income
(loss) applicable to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted
earnings/loss per share reflects the potential dilution that
could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or resulted
in the issuance of common stock that shared in the earnings of
the entity. At March 31, 2000 and 1999, the company has
unexercised common stock warrants to purchase 16,000,000
(1,333,333 post-split) shares. Such warrants were not included
in the computations of diluted loss per share because their
effect would have been antidilutive. See Note 3.
The computations of income or loss per share of common stock are
based on the weighted average number of shares outstanding during
the period, retroactively adjusted for the stock split discussed
in Note 3.
NOTE 2: RESCINDED INVESTMENTS AND TERMINATED MERGERS
In 1988, the company issued 3,500,000 (291,667 post-split)
restricted shares of common stock, for all of the outstanding
common stock of Factory Outlets of America, Inc. (FOA), a
franchisor of general merchandise stores. In accordance with the
agreement, the company contributed $250,000 to FOA's additional
paid-in capital. In 1990, this agreement was rescinded as FOA
failed to achieve the specified profit levels, and 3,080,000
(256,667 post-split) shares of restricted stock were returned to
the company. The company issued the remaining 420,000 (35,000
post-split) shares to the underwriter as compensation for
services rendered. As a result of this transaction, the company
incurred total expenses of $270,734, which consisted of
acquisition and organization costs of $20,734, and the write-off
of its investment in FOA of $250,000.
On July 1, 1997, the company entered into an agreement with World
Wide Web Casinos, Inc. (WWWC), whereby the company and WWWC would
merge into WWWC Acquisition Corporation, in a tax-free
transaction. On January 28, 1998, WWWC informed the company that
it was unable to provide audited financial statements, which was
one of the conditions for consummating the merger. As a result,
WWWC terminated the merger.
NOTE 3: STOCKHOLDERS' EQUITY
On February 16, 1988, the company successfully completed its
public offering and sold 8,000,000 (666,666 post-split) units at
$0.10 per unit. Each unit consists of one share of restricted
common stock and one Class A redeemable common stock purchase
warrant. Each Class A warrant entitles the holder to purchase,
for $0.17 ($2.04 post split), one share of common stock and one
Class B common stock purchase warrant, through December 31, 1999.
The company has the right to redeem the unexercised warrants on
thirty days written notice for $0.001 per warrant. Each Class B
warrant entitles the holder to purchase one share of common stock
at $0.25 ($3.00 post-split) per share and is exercisable through
December 31, 2000 (extended from December 31, 1999).
NOTE 4: RELATED PARTY TRANSACTIONS
On February 2, 1998, the company issued 130,000 (10,833 post-
split) shares with value of $10,400 to a related party as
compensation for services provided.
On June 29, 1999, the company issued 2,400,000 (200,000 post-
split) shares to three existing shareholders for $48,000 in cash.
NOTE 5: MERGERS AND ACQUISITIONS
During May and June 1999, the company acquired 13.5 million
shares of Growth Net Inc. ("GNI") common stock for $455,583 in
cash. This transaction was accounted for as a purchase.
Accordingly, the accompanying consolidated financial statements
include the accounts of GNI, a wholly-owned non-operating
subsidiary of the company. As memorialized in the Share Exchange
Agreement dated August 15, 1999, all of the current assets of the
company of July 31, 1999, a total of 456,813, were transferred to
GNI for the benefit of the shareholders of the company as of June
30, 1999.
In September 1999, the company entered into a merger agreement with
WSN (a development stage company), whereby such entities would
merge and operate as WSN. The merger agreement provides for WSN to
be merged with and into the company, which is the surviving
corporation. The merger is tax free under Internal Revenue Code
361. This merger also resulted in the following stock splits: (a)
of the total 93,450,000 issued and outstanding shares of the
company prior to the merger, they were subject to a reverse split
of 12 to 1, resulting in issued and outstanding shares of
7,787,500; and (b) of the total 4,556,162 issued and outstanding
shares of WSN prior to the merger, they were first subject to a
reduction of 2,665,000 due to a Share Exchange Agreement, resulting
in a total of 1,891,162, which was then subject to a forward split
of 2.5 to 1, resulting in issued and outstanding shares of
4,727,905. The total issued and outstanding shares of common stock
after the merger was 12,515,405. The issued and outstanding Class
A Warrants totaling 16,000,000 were subject to a reverse split of
12 to 1, resulting in a total of 1,333,333. Effective September
30, 1999, the company changed its name to World Shopping Network,
Inc.
Management accounted for the merger as a capital stock
transaction (as opposed to a business combination, as that term
is defined by generally accepted accounting principles) because
the reorganization is a "reverse acquisition" involving a public
shell entity. Accordingly, the merger was reported as a
reorganization of WSN, which is considered the acquirer for
accounting purposes.
There are certain restrictions on the sale or other transfer of the
company's common stock issued under the merger. Such stock,
generally referred to as "Rule 144 stock", was not registered under
the Securities Act of 1933, as amended (the "Act"), in reliance
upon an exemption from its requirements. Each exchanging
shareholder agreed to (1) acquire such stock for his/her own
account and (2) hold the stock for investment purposes only. In
addition, the stock certificates are required to contain a legend
(a) documenting these restrictions and (b) requiring a legal
opinion that any proposed sale is exempt from registration under
the Act.
NOTE 7: GOING CONCERN
The company is a development stage company, as defined in the
SFAS No. 7. The company is devoting substantially all of its
present efforts in securing and establishing a new business, and
has not generated any operating revenues. It is the company's
belief that it will continue to incur losses for at least the
next 12 months, and as a result will require additional funds
from equity investments to meet such needs. The continued
existence of the company is dependent upon its ability to meet
future financing requirements, and the success of future
operations. These factors raise substantial doubt about the
company's ability to continue as a going concern.
NOTE 8: COMMITMENTS AND CONTINGENCIES
As of December 31, 1999, the company was delinquent on several
filing requirements to the SEC. These filings include Form 10-KSB
for the year ended July 31, 1999, and a Form 8-K to announce the
consummation of the merger and the change of the fiscal year end
to June 30. Possible sanctions may include as enforcement action
and/or suspension of (1) trading in the company's stock and/or
warrants and (2) the ability of securities dealers to make a
public market in the company's securities. All these delinquent
filings were made in February 2000.
NOTE 9: YEAR 2000 COMPLIANCE (UNAUDITED)
The management is utilizing both internal and external resources,
as appropriate, to ensure that all mission critical systems will
be Y2K compliant. Management has also taken reasonable steps to
assess the Y2K compliance of its significant third parties.
Management believes that all necessary actions have been taken to
address this issue, although there can be no assurance as to the
outcome of the conversion efforts.
INDEPENDENT AUDITOR'S REPORT
Board of Directors
World Shopping Network, Inc. (formerly known as U.S.A. Growth,
Inc.)
We have audited the accompanying consolidated balance sheet of
World Shopping Network, Inc. and subsidiary (formerly known as
U.S.A. Growth, Inc.), a development stage company, as of July 31,
1999, and the related consolidated statements of operations, and
cash flows for the period August 14, 1987 (date of inception) to
July 31, 1999, and for the years ended July 31, 1999 and 1998,
and stockholders' equity for the years ended July 31, 1999 and
1998. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion
on these 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 audit provides 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 the
company as of July 31, 1999, and the results of its operations
and its cash flows for the period August 14, 1987 (date of
inception) to July 31, 1999 and for the years ended July 31,1999
and 1998, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming
the company will continue as a going concern. As discussed in
Note 8 to the financial statements, the company has been in the
development stage since its inception. The company is devoting
substantially all of its present efforts in establishing its
business. Management's plans regarding the matters which raise
doubt about the company's ability to continue as a going concern
are also disclosed in Note 8 to the financial statements. The
continued existence of the company is dependent upon its ability
to meet its future financing requirements, and the success of
future operations. These factors raise substantial doubt about
the company's ability to continue as going concern. The
accompanying financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ Keyhan Company
Keyhan Company
an accountancy corporation
December 28, 1999
WORLD SHOPPING NETWORK, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS U.S.A. GROWTH, INC.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
JULY 31, 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 454,540
Income taxes receivable 2,273
Deferred tax asset, net of valuation
Allowance of $71,000 -
$ 456,813
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses 1,222
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, par value $.001 per share,
Authorized 100,000,000 shares, issued and
Outstanding 1,125,000 13,500
Paid in capital 768,843
Accumulated deficit during development stage (326,752)
455,591
456,814
WORLD SHOPPING NETWORK, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS U.S.A. GROWTH, INC.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Cumulative
August 14, 1987
Year ended July 31 (Date of Inception)
1999 1998 to July 31 1999
INTEREST AND DIVIDEND INCOME 18,708 21,041 251,654
EXPENSES
Selling, general and
Administrative 14,295 28,399 293,591
Expenses incurred as a result
Of rescinded investment - - 270,734
INCOME (LOSS) BEFORE INCOME TAX 4,413 (7,358) (312,671)
INCOME TAX PROVISION (BENEFIT)
Federal - - 3,739
State (1,023) - 10,342
NET INCOME (LOSS) 5,436 7,358 (326,752)
BASIC INCOME (LOSS) PER SHARE
OF COMMON STOCK 0.01 (0.01) (0.39)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 932,692 919,583 834,144
The accompanying notes are an integral part of these financial statements
WORLD SHOPPING NETWORK, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS U.S.A. GROWTH, INC.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Accumulated
Deficit During
Common Stock Paid in Development
Shares Amount Capital Stage
BALANCES, August 14,
1987 (inception - - - -
COMMON STOCK ISSUED TO
FOUNDING STOCKHOLDERS 2,550,000 2,550 (2,550) -
COMMON STOCK ISSUED
AT INITIAL PUBLIC OFFERING 8,000,000 8,000 715,523
COMMON STOCK ISSUED FOR
SERVICES 420,000 420 - -
NET LOSS - - - (324,830)
BALANCES, July 31, 1997 10,970,000 10,970 712,973 (324,830)
COMMON STOCK ISSUED FOR
SERVICES 130,000 130 10,270 -
NET LOSS - - - (7,358)
BALANCES, July 31, 1998 11,100,000 11,100 723,243 (332,188)
COMMON STOCK ISSUED
FOR CASH 2,400,000 2,400 45,600 -
NET INCOME - - - 5,436
13,500,000 13,500 768,843 (326,752)
12 TO 1 REVERSE SPLIT /12 - - -
BALANCES,
July 31, 1999 1,125,000 13,500 768,843 (326,752
The accompanying notes are an integral part of these financial statements
WORLD SHOPPING NETWORK, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS U.S.A. GROWTH, INC.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cumulative
August 14, 1987
Year ended July 31 (Date of Inception)
1999 1998 to July 31 1999
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Income (loss) 5,436 (7,358) (326,752)
Adjustments to reconcile net
Income (loss) to net cash
Provided (used) by operating
Activities:
Increase in accounts
Receivable (1,123) (150) (2,273)
Increase (decrease) in
Accounts payable and
Accrued expenses (3,228) 1,780 1,222
1,085 (5,728) (327,803)
CASH FLOWS FROM FINANCING
ACTIVITIES
Common Stock issued for
Services - 10,400 11,100
Net proceeds from sales of
Common stock 48,000 - 771,243
48,000 10,400 782,343
NET INCREASE IN CASH AND
CASH EQUIVALENTS 49,085 4,672 454,540
BEGINNING CASH AND CASH
EQUIVALENTS 405,455 400,783 -
ENDING CASH AND CASH
EQUIVALENTS 454,540 405,455 454,540
The accompany notes are an integral part of these financial statements
WORLD SHOPPING NETWORK, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS U.S.A. GROWTH, INC.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Organization and Nature of Operations
U.S.A. Growth, Inc. ("USAG") was incorporated on August 14, 1987
in the state of Delaware, and has adopted a July 31 year-end. At
July 31, 1999, USAG was a development stage company, since it has
not commenced its planned principal operations. Since its
inception, USAG has engaged in research, internally and through
the use of independent consultants, to determine what type of
business could be established by a new venture, which would have
potentially high profits.
In September 1999 USAG entered into a merger agreement with World
Shopping Network, Inc. ("WSN") (a development stage company).
WSN operates an Internet shopping mall and other Internet related
services. As a result of the merger, USAG changed its name to
World Shopping Network, Inc. , and will change its fiscal year-
end to June 30. See Note 9.
Accounting Method
The company uses the accrual method of accounting for financial
statement and tax return purposes.
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of the company and its wholly-owned subsidiary, Growth
Net Inc., a Nevada corporation. Intercompany transactions have
been eliminated in the consolidation.
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.
Cash and Cash Equivalents
The company considers all highly liquid instruments purchased
with an original maturity of three moths or less to be cash
equivalents.
Concentration of Credit Risk.
Cash balances are maintained at several banks. Accounts at each
institution are insured by the Federal Deposit Insurance
Corporation ("FDIC") up to $100,000.
Cash equivalents include approximately $400,000 in a Dreyfus
money market fund, which invests exclusively in a diversified
portfolio of short-term marketable securities (which are direct
obligations of the U.S. Government) and is not insured by FDIC.
The fair market value of such fund approximates the related
carrying value at July 31, 1999.
Income Taxes
The company complies with Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes", which
requires an asset and liability approach to financial reporting
of income taxes. Deferred income tax assets and liabilities are
computed for differences between the financial statements and tax
bases of assets and liabilities that will result in taxable or
deductible amounts in the future. Deferred tax assets and
liabilities are based on enacted tax laws and rates applicable to
the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when
necessary, to reduce deferred income tax assets to the amount
expected to be realized.
Income (Loss) per Common Share
Effective July 31, 1998, the company adopted SFAS No. 128,
"Earnings Per Share". SFAS No. 128 requires dual presentation of
basic and diluted earnings per share for all periods presented.
Basic earnings/loss per share is computed by dividing income
(loss) applicable to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted
earnings/loss per share reflects the potential dilution that
could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or resulted
in the issuance of common stock that shared in the earnings of
the entity. At July 31, 1999 and 1998, the company has
unexercised common stock warrants to purchase 16,000,000
(1,333,333 post-split) shares. Such warrants were not included
in the computations of diluted loss per share because their
effect would have been antidilutive. See Note 3.
The computations of income or loss per share of common stock are
based on the weighted average number of shares outstanding during
the period, retroactively adjusted for the stock split discussed
in Note3.
NOTE 2: RESCINDED INVESTMENTS AND TERMINATED MERGERS
In 1988, the company issued 3,500,000 (291,667 post-split)
restricted shares of common stock, for all of the outstanding
common stock of Factory Outlets of America, Inc. ("FOA"), a
franchisor of general merchandise stores. In accordance with the
agreement, the company contributed $250,000 to FOA's additional
paid-in capital. In 1990, this agreement was rescinded as FOA
failed to achieve the specified profit levels, and 3,080,000
(256,667 post-split) shares of restricted stock were returned to
the company. The company issued the remaining 420,000 (35,000
post-split) shares to the underwriter as compensation for
services rendered. As a result of this transaction, the company
incurred total expenses of $270,734, which consisted of
acquisition and organization costs of $20,734, and the write-off
of its investment in FOA of $250,000.
On July 1, 1997, the company entered into an agreement with World
Wide Web Casinos, Inc. ("WWWC"), whereby the company and WWWC
would merge into WWWC Acquisition Corporation, in a tax-free
transaction. On January 28, 1998, WWWC informed the company that
it was unable to provide audited financial statements, which was
one of the conditions for consummating the merger. As a result,
WWWC terminated the merger.
NOTE 3: STOCKHOLDERS' EQUITY
On February 16, 1988, the company successfully completed its
public offering and sold 8,000,000 (666,666 post-split) units at
$0.10 per unit. Each unit consists of one share of restricted
common stock and one Class A redeemable common stock purchase
warrant. Each Class A warrant entitles the holder to purchase,
for $0.17 ($2.04 post split), one share of common stock and one
Class B common stock purchase warrant, through December 31, 1999.
The company has the right to redeem the unexercised warrants on
thirty days written notice for $0.001 per warrant. Each Class B
warrant entitles the holder to purchase one share of common stock
at $0.25 ($3.00 post-split) per share and is exercisable through
December 31, 1999.
NOTE 4: RELATED PARTY TRANSACTIONS
On February 2, 1998, the company issued 130,000 (10,833 post-
split) shares with value of $10,400 to a related party as
compensation for services provided.
On June 29, 1999, the company issued 2,400,000 (200,000 post-
split) shares to three existing shareholders for $48,000 in cash.
NOTE 5: MERGERS AND ACQUISITIONS
During May and June 1999, the company acquired 13.5 million
shares of Growth Net Inc. ("GNI") common stock for $455,583 in
cash. This transaction was accounted for as a purchase.
Accordingly, the accompanying consolidated financial statements
include the accounts of GNI, a wholly-owned non-operating
subsidiary of the company. As memorialized in the Share Exchange
Agreement dated August 15, 1999, all of the current assets of the
company of July 31, 1999, a total of 456,813, were transferred to
GNI for the benefit of the shareholders of the company as of June
30, 1999.
In September 1999, USAG entered into a merger agreement with World
Shopping Network, Inc. (WSN) (a development stage company), whereby
these entities would merge and operate as WSN. See Note 9.
NOTE 6: INCOME TAXES.
For the period from inception to July 31, 1999, the company is
considered a start-up entity for federal and state income tax
purposes. As a result, start-up expenses are capitalized for tax
purposes; all such costs are expensed as incurred for financial
reporting purposes. In addition, as discussed in Note 2, the
company has incurred capital losses as a result of a rescinded
investment. These are the only significant temporary differences
at July 31, 1999; the estimated income tax effect of such
differences approximated $71,000.
The reported income tax benefit differs from the amount that
would result from applying the federal statutory rate to the pre-
tax loss because of the state income tax effect at a rate of
approximately 9%. The components of the deferred income tax
benefit are set forth below:
Inception to
July 31, 1999 July 31, 1998 July 31, 1999
$ 0 $2,000 $69,000
As of July 31, 1999, the company's federal and state net
operating loss ("NOL") and capital loss carryforwards for income
tax purposes were approximately $90,000 and $250,000,
respectively. If not utilized, the federal net operating loss
carryforwards will begin to expire in 2008, and the state net
operating loss carryforwards will begin to expire in 2003.
The company's accounting NOL carryforward approximates $325,000
at July 31, 1999. The related deferred tax asset arising in 1998
and 1997 approximated $0 and $7,500, respectively. Because the
company is a development stage enterprise and there is no
reasonable assurance that such asset will be realized in future
year, the company has recorded a 100% valuation allowance against
the July 31, 1999 balance of this deferred tax asset.
A summary of the activity in the valuation allowance for the
deferred tax asset for the years ended July 31, 1999 and 1998 is
presented below:
Amount
Balance at August 1, 1997 $ 69,000
Adjustment for 1997 deferred tax asset 2,000
Balance at July 31, 1998 71,000
Adjustment for 1998 deferred tax asset -
Balance at July 31, 1999 $ 71,000
NOTE 7: SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes of $500 were paid during the year ended July 31,
1999. The cumulative tax payment from August 17, 1987 (date of
inception) through July 31, 1999 was $20,987.
NOTE 8: GOING CONCERN
The company is a development stage company, as defined in the
SFAS No. 7. The company is devoting substantially all of its
present efforts in securing and establishing a new business, and
has not generated any operating revenues. It is the company's
belief that it will continue to incur losses for at least the
next 12 months, and as a result will require additional funds
from equity investments to meet such needs. The continued
existence of the company is dependent upon its ability to meet
future financing requirements, and the success of future
operations. These factors raise substantial doubt about the
company's ability to continue as a going concern.
NOTE 9: SUBSEQUENT EVENT
In September 1999, USAG entered into a merger agreement with World
Shopping Network, Inc. ("WSN") (a development stage company),
whereby such entities would merge and operate as WSN. The merger
agreement provides for WSN to be merged with and into USAG, which
is the surviving corporation. The merger is tax free under
Internal Revenue Code 361. This merger also resulted in the
following stock splits: (a) of the total 93,450,000 issued and
outstanding shares of the company prior to the merger, they were
subject to a reverse split of 12 to 1, resulting in issued and
outstanding shares of 7,787,500; and (b) of the total 4,556,162
issued and outstanding shares of WSN prior to the merger, they were
first subject to a reduction of 2,665,000 due to a Share Exchange
Agreement, resulting in a total of 1,891,162, which was then
subject to a forward split of 2.5 to 1, resulting in issued and
outstanding shares of 4,727,905. The total issued and outstanding
shares of common stock after the merger was 12,515,405. The issued
and outstanding Class A Warrants totaling 16,000,000 were subject
to a reverse split of 12 to 1, resulting in a total of 1,333,333.
Effective September 30, 1999, USAG changed its name to World
Shopping Network, Inc. The certificate of incorporation and bylaws
of USAG will continue to govern the operation of the company.
Management will account for the merger as a capital stock
transaction (as opposed to a business combination, as that term
is defined by generally accepted accounting principles) because
the reorganization is a "reverse acquisition" involving a public
shell entity. Accordingly, the merger will be reported as a
reorganization of WSN, which is considered the acquirer for
accounting purposes.
There are certain restrictions on the sale or other transfer of the
company's common stock issued under the merger. Such stock,
generally referred to as "Rule 144 stock", was not registered under
the Securities Act of 1933, as amended (the "Act"), in reliance
upon an exemption from its requirements. Each exchanging
shareholder agreed to (1) acquire such stock for his/her own
account and (2) hold the stock for investment purposes only. In
addition, the stock certificates are required to contain a legend
(a) documenting these restrictions and (b) requiring a legal
opinion that any proposed sale is exempt from registration under
the Act.
The accompanying financial statements do not reflect any
adjustments as a result of this merger. The financial statements of
WSN have been audited for the years ended June 30, 1999 and 1998.
By a resolution of the board of directors in December 1999, the
exercise period for the Class A Warrants and the Class B Warrants
was extended to December 31, 2000.
The following unaudited proforma information is based on the
aforementioned financial statements.
WSN
HISTORICAL PRO FORMA
Cash and cash equivalents $ 122,532 $ 577,072
Other assets 39,267 41,540
Accounts payable and accrued expenses 23,869 25,090
Stockholders' equity 137,930 595,522
Revenues 40,984 57,201
Expenses 334,430 348,725
Net loss $(293,446) $(288,010)
The above historical column represents WSN financial information
as of the year ended June 30, 1999. In the pro forma
presentation, the historical column has been added to the
company's July 31, 1999 financial information, and the combined
data have been adjusted assuming that (a) the merger occurred on
July 31, 1999 and (b) all of WSN's stockholders elected to
convert their shares. WSN's July 1999 financial activity is not
material to the pro forma presentation.
If the merger had occurred on August 1, 1997, the pro forma
effect on basic and diluted income/loss per share for fiscal 1998
and 1999 would not have been significant.
Since the merger is not a business combination, additional pro
forma financial information otherwise required by the rules and
regulations of the U.S. Securities and Exchange Commission
("SEC") has not been presented.
NOTE 10: COMMITMENTS AND CONTINGENCIES
As of December 28, 1999, the company was delinquent on several
filing requirements to the SEC. These filings include Form 10-KSB
for the year ended July 31, 1999, Form 10-Q for the quarter ended
October 31, 1999, and Form 8-K's to announce the consummation of
the merger and a change in the company's fiscal year-end to June
30.
As of December 28, 1999, the sanctions (if any) that could be
imposed by the SEC, the National Association of Securities
Dealers, and/or any state securities commission as a result of
the matters described in the preceding paragraph are unknown.
Possible sanctions may include as enforcement action and/or
suspension of (1) trading in the company's stock and/or warrants
and (2) the ability of securities dealers to make a public market
in the company's securities.
NOTE 11: YEAR 2000 COMPLIANCE (UNAUDITED)
The management is utilizing both internal and external resources,
as appropriate, to ensure that all mission critical systems will
be Y2K compliant. Management has also taken reasonable steps to
assess the Y2K compliance of its significant third parties.
Management believes that all necessary actions have been taken to
address this issue, although there can be no assurance as to the
outcome of the conversion efforts.
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
(a) Effective on September 10, 1999, the independent
accountant who was previously engaged as the principal accountant
to audit the company's financial statements, Rothstein, Kass &
Company, P.C., was dismissed by company. This accountant's
report on the financial statements for the past two years neither
contained an adverse opinion or a disclaimer of opinion, nor was
qualified or modified as to uncertainty, audit scope, or
accounting principles. The decision to change accountants was
approved by the board of directors.
During the company's two most recent fiscal years and any
subsequent interim period preceding such resignation, there were
no disagreements with the former accountant on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure. In addition, there
were no "reportable events" as described in Item
304(a)(1)(iv)(B)1 through 3 of Regulation S-B that occurred
within the company's two most recent fiscal years and the
subsequent interim period preceding the former accountant's
dismissal.
(b) Effective on September 15, 1999, the firm of Keyhan Company
has been engaged to serve as the new principal accountant to
audit the company's financial statements. During the company's
two most recent fiscal years, and the subsequent interim period
prior to engaging that accountant, neither the company (nor
someone on its behalf) consulted the newly engaged accountant
regarding any matter.
AVAILABLE INFORMATION
The company has filed with the U.S. Securities and Exchange
Commission, Washington, D.C. 20549, a Registration Statement on
Form SB-2 under the Securities Act of 1933 with respect to the
shares of common stock offered by this prospectus. This
prospectus does not contain all of the information set forth in
the registration statement and the exhibits and schedules filed
with the registration statement. Certain items are omitted in
accordance with the rules and regulations of the Commission. For
further information with respect to the company and the common
stock offered by this prospectus, reference is made to the
registration statement and the exhibits and schedules filed with
the registration statement. Statements contained in this
prospectus as to the contents of any contract or any other
document referred to are not necessarily complete, and in each
instance, reference is made to the copy of such contract or other
document filed as an exhibit to the registration statement, each
such statement being qualified in all respects by such reference.
A copy of the registration statement, and the exhibits
and schedules filed with it, may be inspected without charge at
the public reference facilities maintained by the Commission in
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
the Commission's regional offices located at the Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago
Illinois 60661 and Seven World Trade Center, 13th Floor, New
York, New York 10048, and copies of all or any part of the
registration statement may be obtained from such offices upon the
payment of the fees prescribed by the Commission. The public may
obtain information on the operation of the public reference room
by calling the Commission at 1 (800) SEC-0330. The Commission
maintains a World Wide Web site that contains reports, proxy and
information statements and other information regarding
registrants that file electronically with the Commission,
including the company. The address of the site is
http://www.sec.gov. The registration statement, including all its
exhibits and any amendments, has been filed electronically with
the Commission.
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Information on this item is set forth in the propsectus under the
heading "Disclosure of Commission Position on Indemnification for
Securities Act Liabilities."
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Information on this item is set forth in the prospectus
under the heading "Use of Proceeds."
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On June 29, 1999, the company issued 2,400,000 (200,000
post-split) shares to three existing shareholders for $48,000 in
cash. This transaction was accomplished pursuant to Rule 506
under Regulation D promulgated under Section 4(2) of the
Securities Act of 1933. No discounts or commission were paid in
connection with these sales. The class of persons to whom these
sales were made is sophisticated investors.
ITEM 27. EXHIBITS
The Exhibits required by Item 601 of Regulation S-B, and an index
thereto, are attached.
ITEM 28. UNDERTAKINGS
The undersigned company hereby undertakes to:
(a) (1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement; and Notwithstanding
the forgoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation From the
low or high end of the estimated maximum offering range may be
reflected in the form of prospects filed with the U.S. Securities
and Exchange Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in the volume and price represent no more
than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act of 1933,
treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(d) Provide to the underwriter at the closing specified in the
underwriting agreement certificates in such denominations and
registered in such names as required by the underwriter to permit
prompt delivery to each purchaser.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the small business issuer pursuant to
the foregoing provisions, or otherwise, the small business issuer
has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses
incurred or paid by a director, officer or controlling person of
the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion
of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
SIGNATURES
In accordance with the requirements of the Securities Act of
1933, the company certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
SB-2 and authorized this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorize, in the
City of Santa Ana, State of California, on June 30, 1999.
World Shopping Network, Inc.
By: /s/ John J. Anton
John J. Anton, President, Chief Executive Officer
Special Power of Attorney
The undersigned constitute and appoint John Anton their true and
lawful attorney-in-fact and agent with full power of
substitution, for him and in his name, place, and stead, in any
and all capacities, to sign any and all amendments, including
post-effective amendments, to this Form SB-2 registration
statement, and to file the same with all exhibits thereto, and
all documents in connection therewith, with the U.S. Securities
and Exchange Commission, granting such attorney-in-fact the full
power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that such
attorney-in-fact may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities and on the date indicated:
Signature Title Date
/s/ John J. Anton President/Chief Executive June 30, 2000
John J. Anton Officer/Director
/s/ John Moore Vice President, Information June 30, 2000
John Moore Systems/Director
/s/ Martin Bloomenstein Vice President Finance June 30, 2000
Martin Bloomenstein (principal financial and
accounting officer)/Director
EXHIBIT INDEX
Number Exhibit Description
2 Agreement and Plan of Merger between the company and
World Shopping Network, Inc., dated September 15, 1999
(incorporated by reference to the Schedule 14C Definitive
Information Statement filed on October 1, 1999).
3.1 Certificate of Incorporation (incorporated by reference
to Exhibit 3.1 of the Form 10-K filed on November 5, 1996).
Certificate of Merger (which includes amendment to Articles of
Incorporation) (incorporated by reference to Exhibit 3.2 of the
Form 10-QSB for the period ended October 31, 1999 - filed on
February 28, 2000).
3.3 Bylaws (incorporated by reference to Exhibit 3.2 of the Form 10-K
filed on November 5, 1996).
4.1 Share Exchange Agreement between the company, Tri Star
Diversified Ventures, L.L.C., Nick Markulis, and John J. Anton,
dated August 15, 1999 (incorporated by reference to Exhibit 4 of
the Form 10-QSB for the period ended October 31, 1999 - filed on
February 28, 2000).
4.2 Retainer Stock Plan for Non-Employee Directors and
Consultants, dated April 25, 2000 (incorporated by reference to
Exhibit 4.1 of the Form S-8 filed on May 2, 2000).
4.3 Consulting Services Agreement between the company and
Laurel-Jayne Yapel Manzanares, dated April 25, 2000 (incorporated
by reference to Exhibit 4.2 of the Form S-8 filed on May 2, 2000).
4.4 Consulting Services Agreement between the company and
Marcine Aniz Uhler, dated April 26, 2000 (incorporated by
reference to Exhibit 4.3 of the Form S-8 filed on May 2, 2000).
4.5 Form of Common Stock Purchase Agreement between the company
and institutional investors (see below).
5 Opinion Re: Legality (see below).
21 Subsidiaries of the company (incorporated by reference
to Exhibit 21 to the Form 10-KSB/A filed on February 25, 2000).
23.1 Consent of Accountant (see below).
23.2 Consent of Counsel (see below).
27 Financial Data Schedule (see below).