SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report: December 31, 2001
Alph-Net Consulting Group, Ltd.
A Nevada corporation
77-0426983 (I.R.S. Employer Identification Number)
Commission File No. 0000-28341
2110 E. Water Street, Tucson, Arizona 87519
Registrant's telephone number, including area code:
(520) 322-9918
Item 1. Change in Control of Registrant.
On October 31, 2001, we entered into the contribution
agreement whereby, subject to shareholder approval, we
acquired, in exchange for 750,000 shares of our common
stock, the assets and liabilities of McKnight Consulting.
Pursuant to the closing of the acquisition of the assets and
liabilities of McKnight Consulting, on December 31, 2001 the
Company had a change in management. Patrick McKnight was
appointed President and Director, while Kathy McKnight was
appointed Secretary and Director. The Company's founder,
Daniel Hodges, resigned from his position with the Company
on December 31, 2001.
Patrick E. McKnight and Kathy McKnight now own 75% of the
outstanding common stock Alph-Net Consulting.
Name and
Title of address of Amount of Percent
Class Beneficial Beneficial of
Owner ownership Class
Common Patrick E. McKnight 375,000 37.5%
President and Director
2110 E. Water Street
Tucson, AZ 85719
Common Kathy McKnight 375,000 37.5%
Secretary and Director
2110 E. Water Street
Tucson, AZ 85719
Common All directors 750,000 75%
and officers
Item 2. Acquisition or Disposition of Assets
Since its formation on April 15, 1996, ALPH-NET CONSULTING
GROUP, LTD., a Nevada corporation (the "Company"), has not
engaged in any operations other than organizational matters
until it closed on the purchase of the assets and
liabilities of McKnight Consulting LLC on December 31, 2001.
Alph-Net was formed specifically for the purpose of either
merging with or acquiring an operating company with
operating history and assets.
In connection with the normal business practice of Alph-Net
Consulting Group, we continuously reviewed our strategic
business opportunities and in April 2001, a representative
of McKnight Consulting LLC contacted us concerning a
possible combination. From April 2001 through the execution
of the contribution agreement, ongoing discussions were held
between representatives of McKnight Consulting and our
management. The consideration for the acquisition of the
assets and liabilities of McKnight Consulting by the
issuance to McKnight Consulting members of seventy-five
percent of the common stock of Alph-Net Consulting was the
product of negotiations between the parties and reflects
their estimate of the value of the assets and liabilities of
McKnight Consulting.
On October 31, 2001, we entered into the contribution
agreement whereby in exchange for 750,000 shares of our
common stock, the assets and liabilities of McKnight
Consulting. Originally operated as a sole proprietorship,
and then reformed as a limited liability company under the
laws of the state of Arizona in 2001, McKnight Consulting
LLC was a technical consulting company with two areas of
expertise. The first area is in using computers to
facilitate communication. McKnight has been developing,
supporting, designing, and implementing computer hardware
connection and usage solutions, such as website hosting and
computer networking technology including both local computer
connections (i.e., local area networks) and internet
connections (i.e., wide area networks), with small to mid-
sized companies nationwide for over eight years. McKnight's
technical computer related skills and services include
computer network design, database design, computer
configuration, network management, network administration,
and software development
Recently, McKnight Consulting has been applying these
computer skills to social scientist research. Specifically,
clients interested in conducting social science research
enlist our help to plan, conduct and report research
projects. Along with these services, McKnight provides and
utilizes computer based applications for data collection,
analysis, and reporting to enable researchers to accomplish
their projects. Additionally, McKnight designs database
applications to store research data, internet or web-based
applications to collect data, and software applications to
analyze collected data. McKnight's primary efforts are
focused on research design, methodology and statistics
combined with appropriate computer applications to assist
social science researchers. Our research services include
grant writing, grant evaluation, research consulting,
statistical consulting, program evaluation, and research
design consulting. The acquisition of the assets and
liabilities of McKnight Consulting closed on December 31,
2001.
Item 3. Bankruptcy or Receivership.
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not applicable.
Item 5. Other Events and Regulation FD Disclosure.
Not applicable.
Item 6. Resignation of Registrant's Directors.
Pursuant to the closing of the acquisition of the assets and
liabilities of McKnight Consulting, on December 31, 2001 the
Company had a change in management. Patrick McKnight was
appointed President and Director, while Kathy McKnight was
appointed Secretary and Director. The Company's founder,
Daniel Hodges, resigned from his positions with the Company
on December 31, 2001.
Currently, there two officers and directors of the Company:
Name Age Position
Patrick E. McKnight 35 President, Director
Kathy McKnight 38 Secretary, Director
Patrick McKnight has been involved in the program
development of the business since its inception. He
provides expertise in the technical areas including computer
applications, software development, statistical analysis,
and technical writing. In addition, Mr. McKnight handles
the day-to-day business operations and decisions.
Kathy McKnight has been involved in the business since 1995
and continues to serve as the secretary and specialist for
program implementation and customer care/service. Her main
responsibilities include grant application preparation,
client consultation, and information dissemination,
purchasing and long-term planning.
Item 7. Financial Statements and Exhibits.
PART F/S
FINANCIAL STATEMENTS
The consolidated financial statements of the Company
required to be included in Part F/S are set forth below.
ALPH-NET CONSULTING GROUP, LTD.
INDEPENDENT AUDITOR'S REPORT
DECEMBER 31, 2001 and 2000
CONTENTS
Page
Independent Auditor's Report . . . . . . . . F - 1
Balance Sheets
December 31, 2001 and 2000 . . . . . . . . . F - 2
Statements of Operations for the
Years Ended December 31, 2001 and 2000 . . . F - 3
Statement of Stockholders' Equity for the
Years Ended December 31, 2001 and 2000 . . . F - 4
Statements of Cash Flows for the
Years Ended December 31, 2001 and 2000 . .. . F - 5
Notes to Financial Statements. . . . . . . .. . F - 6
ROBISON, HILL & CO., A PROFESSIONAL CORPORATION,
Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT
Alph-Net Consulting Group, Ltd.
We have audited the accompanying balance sheets of
Alph-Net Consulting Group, Ltd. as of December 31, 2001
and 2000, and the related statements of operations,
cash flows and stockholders' equity for the two years
ended December 31, 2001. These financial statements
are the responsibility of the Company's management.
Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with
auditing standards generally accepted in the United
States of America. Those standards require that we
plan and perform the audit to obtain reasonable
assurance about whether the financial statements are
free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements.
An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred
to above present fairly, in all material respects, the
financial position of Alph-Net Consulting Group, Ltd.
as of December 31, 2001 and 2000, and the results of
its operations and its cash flows for the two years
ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of
America.
Respectfully submitted
Robison, Hill & Co.
Certified Public Accountants
Salt Lake City, Utah
January 30, 2002
F-1
ALPH-NET CONSULTING GROUP, LTD.
BALANCE SHEETS
December 31 December 31
2001 2000
ASSETS
Current Assets:
Cash and Cash Equivalents $4,925 $7,553
Accounts Receivable 10,484 $6,919
Inventory - 31,508
Total Current Assets 15,409 45,980
Fixed Assets:
Office Equipment 13,822 10,877
Less Accumulated Depreciation (6,310) (3,810)
Net Fixed Assets 7,512 7,067
Total Assets $22,921 $53,047
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts Payable $3,470 $5,065
Credit Card Payable - 3,848
Payroll Taxes Payable - 119
Sales Tax Payable 713 273
Total Liabilities 4,183 9,305
Shareholders' Equity
Owners' Equity - 43,742
Common Stock, Par Value $.001
Authorized 100,000,000 shares
Issued 1,000,000 shares at
December 31, 2001 and 2000 1,000 -
Paid-In Capital 42,655 -
Retained Deficit (24,917) -
Total Stockholders' Equity 18,738 43,742
Total Liabilities and
Shareholders' Equity 22,921 53,047
The accompanying notes are an integral part of these financial
statements.
F-2
ALPH-NET CONSULTING GROUP, LTD.
STATEMENTS OF OPERATIONS
For the year ended
December 31
2001 2000
Revenues:
Net Sales $36,455 $23,611
Cost of Goods Sold 37,301 10,693
Gross Profit (Loss) (846) 12,918
Expenses:
General and Administrative 24,070 10,766
Depreciation 2,499 2,074
Profit (Loss) Before Taxes (27,415) 78
Income Taxes - -
Net Income (Loss) $(27,415) $ 78
Basic & Diluted loss per share
$ (9.10) $ -
The accompanying notes are an integral part of these financial
statements.
F-3
ALPH-NET CONSULTING GROUP, LTD.
STATEMENT OF STOCKHOLDERS' EOUITY
FOR THE TWO YEARS ENDED DECEMBER 31, 2001
Common Stock Paid-In Retained Member's
Shares Par Value Capital Deficit Equity
Balance at December 31, 1999
(Inception) - $ - $ - $ - $43,664
New Income - - - - 78
Balance at December 31, 2000
- - - - 43,742
April 2001, Distribution to
LLC Members - - - - (7,176)
December 31, 2001 Merger with
Alph-Net Consulting Group, LLC
1,000,000 1,000 35,566 - (36,566)
Capital contributed by shareholder
7,089 - -
Net Loss - - - (27,415) -
Balance at December 31, 2001
1,000,000 $1,000 $42,655 $(27,415) $ -
The accompanying notes are an integral part of these financial
statements.
F-4
ALPH-NET CONSULTING GROUP, LTD.
STATEMENT OF CASH FLOWS
For the year ended
December 31
2001 2000
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Loss $(24,917) $ 78
Adjustment to reconcile net loss to
net cash used in operating activities:
Depreciation 2,500 2,074
Change in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable (3,565) 4,546
(Increase) Decrease in Inventory 31,508 (2,431)
Increase (Decrease) in Accounts Payable (1,595) 303
Increase (Decrease) in Sales Tax Payable 440 (1,038)
Increase (Decrease) in Credit Cards Payable (3,848) -
Increase (Decrease) in Payroll Taxes Payable (119) -
Net Cash Used in
Operating activities 404 3,532
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of Equipment (2,945) (1,011)
Net Cash provided by Investing activities (2,945) (1,011)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Capital contributed By shareholder 7,089 (13)
Distribution to LLC Members (7,176) -
Net Cash provided by
Financing activities (87) (13)
Net (Decrease) Increase in
Cash and Cash Equivalents (2,628) 2,508
Cash and Cash Equivalents
At Beginning of Period 7,553 5,045
Cash and Cash Equivalents
At End of Period $ 4,925 $ 7,553
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ -
Franchise and income taxes $ - $ -
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AN
FINANCING ACTIVIITES: None
The accompanying notes are an integral part of these financial
statements.
F-5
ALPH-NET CONSULTING GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
This summary of accounting policies for Alph-Net
Consulting Group, Ltd. is presented to assist in
understanding the Company's financial statements. The
accounting policies conform to generally accepted
accounting principles and have been consistently
applied in the preparation of the financial statements.
Organization and Basis of Presentation
The Company was incorporated under the laws of the
State of Nevada on April 15, 1996. The Company ceased
all operating activities during the period from April
15, 1996 to July 12, 1999 and was considered dormant.
On July 12, 1999, the Company obtained a Certificate of
renewal from the State of Nevada. From July 12, 1999
to December 31, 2001, the Company was in the
development stage.
On December 31, 2001, the Company finalized a
merger with McKnight Consulting, LLC. The Company
acquired McKnight Consulting and all of its assets and
liabilities in exchange for 750,000 shares of common
stock. Since the merger, the Company is no longer
considered a development stage entity.
Nature of Business
McKnight Consulting is a research and technical
consulting firm specializing in social science research
and technology that supports efforts in research.
Efforts are focused on research design, methodology and
statistics in formulating sound research design
proposals. Additionally, McKnight Consulting offers
technical and computer consulting related to the
research process.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be
cash equivalents to the extent the funds are not being
held for investment purposes.
Pervasiveness of Estimates
The preparation of financial statements in
conformity with generally accepted accounting
principles required 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.
F-6
Loss per Share
The reconciliations of the numerators and
denominators of the basic loss per share computations
are as follows:
Per-Share
Income Shares Amount
(Numerator) (Denominator)
For the year ended December 31, 2001:
Basic Loss per Share
Loss to common shareholders
$(24,917) 2,740 $ (9.10)
The Company was a Limited Liability Company as of
December 31, 2000, thus earnings per share is not
applicable and was not calculated for December 31,
2000.
There are no common stock equivalents for December
31, 2001.
Fixed Assets
The office equipment is stated at cost and will be
depreciated, on a straight-line basis, over their
estimated useful lives of five years.
The Company has adopted the Financial Accounting
Standards Board SFAS No., 121, "Accounting for the
Impairment of Long-lived Assets." SFAS No. 121
addresses the accounting for (i) impairment of long-
lived assets, certain identified intangibles and
goodwill related to assets to be held and used, and
(ii) long-live lived assets and certain identifiable
intangibles to be disposed of. SFAS No. 121 requires
that long-lived assets and certain identifiable
intangibles be held and used by an entity be reviewed
for impairment whenever events or changes in
circumstances indicate that the carrying amount of an
asset may not be recoverable. If the sum of the
expected future cash flows from the used of the asse,
and it" eventuwl dispo^ition (n-disco nted an+ withou(
interest charges) is less than the carrying amount of
the asset, an impairment loss is recognized.
Inventory
Inventories are stated at the lower of cost or
market.
F-7
Concentration of Credit Risk
The Company has no significant off-balance-sheet
concentrations of credit risk such as foreign exchange
contracts, options contracts or other foreign hedging
arrangements. The Company maintains the majority of
its cash balances with one financial institution, in
the form of demand deposits.
NOTE 2 - INCOME TAXES
As of December 31, 2001, the Company had a net
operating loss carryforward for income tax reporting
purposes of approximately $25,000 that may be offset
against future taxable income through 2021. Current
tax laws limit the amount of loss available to be
offset against future income when a substantial change
in ownership occurs. Therefore, the amount available
to offset future taxable income will be limited. No
tax benefit has been reported in the financial
statements, because the Company believes there is a 50%
or greater chance the carryforwards will expire unused.
Accordingly, the potential tax benefits of the loss
carryforwards are offset by a valuation allowance of
the same amount.
NOTE 3 - COMMITMENTS
As of December 31, 2001 all activities of the
Company have been conducted by corporate officers from
either their homes or business offices. Currently,
there are no outstanding debts owed by the Company for
the use of these facilities and there are no
commitments for future use of the facilitates.
NOTE 4 - MERGER
On December 31, 2001, the Company finalized a
reverse merger with McKnight Consulting, LLC. The
Company, acquired McKnight Consulting and all of its
assets and liabilities in exchange for 750,000 shares
of Common Stock or 75% of the New Common Stock
outstanding subsequent to the Merger.
Item 8. Change in Fiscal Year.
Not applicable.
Item 9. Regulation FD Disclosure.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
Date: April 15, 2002 By:
/s/PATRICK E. MCKNIGHT
Patrick E. McKnight, President, Chief Financial Officer and
Director
ALPH-NET CONSULTING GROUP, LTD.