SECURITIES AND EXCHANGE COMMISSION
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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WIMAX EU, LTD
(Exact Name of Small Business Issuer in its Charter)
Nevada 91-2006471
(State of Incorporation) (Primary Standard (IRS Employer ID No.)
Classification Code)
356 Pine Avenue, Apt. #1
Pacific Grove, California 93950
(831) 372-3006
(Address and Telephone Number of Registrant's Principal
Executive Offices and Principal Place of Business)
Christopher Miles
356 Pine Avenue, Apt. #1
Pacific Grove, California 93950
(831) 372-3006
(Name, Address and Telephone Number of Agent for Service)
Copies of communications to:
GREGG E. JACLIN, ESQ.
ANSLOW & JACLIN, LLP
195 Route 9 South, Suite 204
Manalapan, NJ 07726
TELEPHONE NO.: (732) 409-1212
FACSIMILE NO.: (732) 577-1188
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective. If any of the
securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, please 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(c) under
the Securities Act of 1933, 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 of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.|_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
Amount to be Proposed Maximum Proposed Maximum
Registered Aggregate Aggregate Amount of
Title of Each Class Of Offering Price Offering Price Registration fee
Securities to be Registered per share
Common Stock, par value $0.001 (1) 9,715,000 $0.10 $ 971,500 $114.35
Common Stock, par value $0.001 (2) 4,000,000 $0.10 $ 400,000 $ 47.08
Total 13,715,000 $0.10 $1,371,500 $161.43
(1) Represents shares held by our selling security holders.
(2) Represents shares being registered pursuant to our Stock Option
Agreement with Christopher Lee Miles.
The offering price has been estimated solely for the purpose of computing the
amount of the registration fee in accordance with Rule 457(c). Our common stock
is not traded and any national exchange and in accordance with Rule 457, the
offering price was determined by the price shareholders were sold to our
shareholders in a recent offering. The price of $0.10 is a fixed price at which
the selling security holders may sell their shares until our common stock is
quoted on the OTC Bulletin Board at which time the shares may be sold at
prevailing market prices or privately negotiated prices.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED MARCH , 2005
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant 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.
WIMAX EU, LTD.
13,715,000 SHARES
COMMON STOCK
The selling shareholders named in this prospectus are 9,715,000 shares of our
common stock offered through this prospectus. In addition, we are registering an
additional 4,000,000 shares of our common stock pursuant to a Stock Option
Agreement with Christopher Lee Miles. Our common stock is presently not traded
on any market or securities exchange. The 9,715,000 shares of our common stock
can be sold by selling security holders at a fixed price of $.10 per share until
our shares are quoted on the OTC Bulletin Board and thereafter at prevailing
market prices or privately negotiated prices. We have agreed to bear the
expenses relating to the registration of the shares for the selling security
holders.
THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE
HEADING "RISK FACTORS" BEGINNING ON PAGE 2.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
Our common stock will be penny stock; therefore, trading in our securities is
subject to penny stock considerations. Broker-dealer practices in connection
with transactions in "penny stocks" are regulated by certain penny stock rules
adopted by the Securities and Exchange Commission. Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system). Penny stock rules require a broker-dealer, prior to a transaction in a
penny stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the risks
in the penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the customer's
account. The broker-dealer must also make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These requirements may have
the effect of reducing the level of trading activity, if any, in the secondary
market for a security that becomes subject to the penny stock rules.
The Date Of This Prospectus Is: March , 2005
TABLE OF CONTENTS
PAGE
Summary Financial Data Schedule 1
RISK FACTORS 2
Determination of Offering Price 5
Selling Shareholders 6
Plan of Distribution 7
Legal Proceedings 8
Directors, Executive Officers, Promoters and Control Persons 8
Security Ownership of Certain Beneficial Owners and Management 9
Description of Securities Interests of Named Experts and Counsel 9
Disclosure of Commission Position of Indemnification for
Securities Act Liabilities 10
Organization Within Last Five Years 10
Description of Business 11
Plan of Operation 15
Description of Property 16
Certain Relationships and Related Transactions 16
Market for Common Equity and Related Stockholder Matters 16
Executive Compensation 18
Available Information 19
Index to Financial Statements F
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i
ABOUT OUR COMPANY
We were incorporated under the laws of the State of Nevada on October 13, 1999
and filed a certificate of amendment in the State of Nevada changing our name to
December 13, 2004. We are a development stage company dedicated to providing
wireless broadband internet service to commercial and residential customers
primarily within countries that are members of the European Union.
Although we are a development stage company, both the market we intend to serve
and the technology we will utilize in serving it are developed and proven.
Additionally, the European system for cell phone usage is primarily GSM (Global
System for Mobile Communication). By comparison the US initially built out an
analog system and is only now converting to digital. This unique situation means
the opportunity to utilize the existing cellular networks for backhaul and
antenna placement is already in place. Additionally, these cellular providers
have indicated not only a willingness but are openly inviting the income that
they can generate by renting us their unused bandwidth.
Terms of the Offering
The selling shareholders named in this prospectus are offering all of the shares
of common stock offered through this prospectus. The selling stockholders are
selling shares of common stock covered by this prospectus for their own account.
We will not receive any of the proceeds from the resale of these shares. The
offering price of $.10 was determined by the price shares were sold to our
shareholders in a private placement memorandum. Such offering price is a fixed
price at which the selling security holders may sell their shares until our
common stock is quoted on the OTC Bulletin Board, at which time the shares may
be sold at prevailing market prices or privately negotiated prices. We have
agreed to bear the expenses relating to the registration of the shares for the
selling security holders.
Summary Financial Data
The following summary financial data should be read in conjunction with
"Management's Discussion and Analysis," "Plan of Operation" and the Financial
Statements and Notes thereto, included elsewhere in this prospectus. The
statement of operations and balance sheet data from inception (October 13, 1999)
through December 31, 2004 are derived from our audited financial statements.
Year Ended Year Ended From Inception-
December 31, December 31 October 13, 1999 through
2004 2003 December 31, 2004
STATEMENT OF OPERATIONS
Revenues $ 0 $ 0 $ 0
Net Income $ 0 $ 0 $ 0
Total Operating Expenses $ 6,500 $ 0 $ 23,639
Net Loss $ (6,500) $ 0 $ (23,639)
As of
December 31,
2004
BALANCE SHEET DATA
Cash $ 2,641
Total Assets $ 2,641
Total Liabilities $ 0
Stockholders' Equity (Deficiency) $ 2,641
WHERE YOU CAN FIND US
Our corporate offices are located at 356 Pine Avenue, Apt. #1, Pacific Grove,
California 93950. Our telephone number is (831) 372-3006. We have an Internet
website located at www.wimax-eu.com.
1
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
prospectus before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed. Please note that throughout this prospectus, the words "we",
"our" or "us" refer to the Company and not to the selling stockholders.
WE HAVE A LIMITED OPERATING HISTORY THAT YOU CAN USE TO EVALUATE US, AND THE
LIKELIHOOD OF OUR SUCCESS MUST BE CONSIDERED IN LIGHT OF THE PROBLEMS, EXPENSES,
DIFFICULTIES, COMPLICATIONS AND DELAYS FREQUENTLY ENCOUNTERED BY A SMALL
DEVELOPING COMPANY.
We were incorporated in Nevada in October 1999 and we recently commenced
operations We have no significant assets or financial resources. The likelihood
of our success must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered by a small
developing company starting a new business enterprise and the highly competitive
environment in which we will operate. Since we have a limited operating history
of marketing our services to the public over the Internet, we cannot assure you
that our business will be profitable or that we will ever generate sufficient
revenues to meet our expenses and support our anticipated activities.
WE WILL REQUIRE FINANCING TO ACHIEVE OUR CURRENT BUSINESS STRATEGY AND OUR
INABILITY TO OBTAIN SUCH FINANCING COULD PROHIBIT US FROM EXECUTING OUR BUSINESS
PLAN AND CAUSE US TO SLOW DOWN OUR EXPANSION OF OPERATIONS.
We will need to raise additional funds through public or private debt or sale of
equity to achieve our current business strategy. Such financing may not be
available when needed. Even if such financing is available, it may be on terms
that are materially adverse to your interests with respect to dilution of book
value, dividend preferences, liquidation preferences, or other terms. Our
capital requirements to implement our business strategy will be significant. We
will need a minimum of $25,000 to continue operations over the next twelve
months, which we currently have in our cash reserve. However, we anticipate
requiring additional funds in order to significantly expand our operations. No
assurance can be given that such funds will be available or, if available, will
be on commercially reasonable terms satisfactory to us. There can be no
assurance that we will be able to obtain financing if and when it is needed on
terms we deem acceptable.
If we are unable to obtain financing on reasonable terms, we could be forced to
delay or scale back our plans for expansion. In addition, such inability to
obtain financing on reasonable terms could have a material adverse effect on our
business, operating results, or financial condition.
OUR AUDITOR HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A
GOING CONCERN.
Based on our financial history since inception, our auditor has expressed
substantial doubt as to our ability to continue as a going concern. We are a
development stage company that has not commenced generating revenue. As of
December 31, 2004, we have incurred a net loss of $23,639, and an accumulated
deficit of $23,639. If we cannot generate sufficient revenues from our services,
we may not be able to implement our business plan and may be forced to cease our
business activities.
TECHNOLOGICAL ADVANCEMENTS COULD BRING ADDED COMPETITION TO OUR SERVICE LINE
WHICH MAY LIMITED OUR ABILITY TO EXPAND OUR OPERATIONS.
Future advancements in wireless broadband internet services could create new or
lower cost services that would compete with our existing service offerings.
Additional competition could result in reductions in our subscriber base,
declining revenues and smaller operating margins. Narrowband PCS, providing
advanced messaging capabilities, and broadband PCS, providing wireless phone
service along with paging capabilities, could both affect our subscriber base
as service becomes more prevalent and prices fall. We cannot provide any
assurance that we will be able to introduce new and competitive services in a
timely fashion, if at all, nor can we represent that our margins, inventory
costs or cash flows will be unaffected by these developments.
2
IF WE ARE UNABLE TO INCREASE OUR CUSTOMER BASE DUE TO INDUSTRY COMPETITORS AND
ONGOING CONSOLIDATION WE MAY NOT BE ABLE TO EARN SUFFICIENT REVENUES TO COMPLETE
OUR BUSINESS PLAN.
The telecommunications industry is extremely competitive. Some of our
Competitors possess greater financial, technical and other resources than we do
and may therefore be better able to complete strategic business acquisitions or
to compete for subscribers in the marketplace. Moreover, some of our competitors
currently offer broader network coverage than that provided by our systems and
some follow a low-price discounting strategy to expand their market shares.
IF WE ARE UNABLE TO GENERATE SIGNIFICANT REVENUES FROM OUR OPERATIONS, WE MAY BE
UNABLE TO EXPAND OUR SERVICES AND MAY BE FORCED TO CEASE OPERATIONS.
If we are unable to generate significant revenues from our operations, we could
be forced to delay or scale back our growth plans and possibly eliminate certain
services and product development programs. We believe that the our expansion
plans will allow us to become profitable in the future. However, if we fail to
generate significant revenues in the future, then we will not able to expand our
as we anticipate. This failure to expand may hurt our ability to raise
additional capital which could have a negative effect on our business, operating
results, or financial condition to such extent that we are forced to
restructure, file for bankruptcy, sell assets or cease operations, any of which
could put your investment dollars at significant risk.
WE MAY NOT BE ABLE TO IDENTIFY, FINANCE OR INTEGRATE SUITABLE BUSINESSES TO
ACQUIRE. THIS WOULD IMPAIR OUR ABILITY TO EXECUTE OUR BUSINESS PLAN FOR GROWTH
AND REMAIN COMPETITIVE.
A key element of our longer term business strategy is to diversify our business
and product lines through acquisitions of independent services providers.
Because we do not have extensive cash resources or an acquisitions line of
credit available to us, it may be difficult for us to grow because we cannot pay
for or finance the our expansion. If we do not make acquisitions on economically
acceptable terms and integrate acquired businesses successfully, our future
growth and financial performance will be limited. In addition, the process of
integrating acquired businesses may involve unforeseen difficulties and/or
require a disproportionate amount of our time, attention and resources from time
to time. We may not achieve some of the expected benefits of acquisitions that
we may execute if the existing operations of such companies are not successfully
integrated with our own in a timely manner. Even if integrated in a timely
manner, there can be no assurance that our operating performance after
acquisitions will be successful or will fulfill management's objectives.
The integration of businesses we acquire will require, among other things,
coordination of administrative, sales and marketing, distribution and accounting
and finance functions and expansion of information and management systems. The
integration process could cause the interruption of the activities of the two
businesses or the diversion of attention and resources from the businesses'
primary operational goals. The difficulties of such integration may initially be
increased by the necessity of coordinating geographically separate organizations
and integrating personnel with disparate business backgrounds and corporate
cultures. We may not be able to retain key employees. The process of integrating
newly acquired businesses may require a disproportionate amount of time and
attention of our management and financial and other resources and may involve
other, unforeseen difficulties.
The success of our growth strategy will also depend on numerous other
contingencies beyond our control, including national and regional economic
conditions, interest rates, competition, changes in regulation or technology and
our ability to attract and retain skilled employees. As a result, we cannot
assure investors that our growth and business strategies will prove effective or
that we will achieve our goals.
OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED
SERVICE OF CHRISTOPHER LEE MILES AND MARGOT MILES, OUR OFFICERS AND DIRECTORS.
WITHOUT HIS CONTINUED SERVICE, WE MAY BE FORCED TO INTERRUPT OR EVENTUALLY CEASE
OUR OPERATIONS.
3
We are presently dependent to a great extent upon the experience, abilities and
continued services of Christopher Lee Miles and Margot Miles, our officers and
directors. We currently do not have an employment agreements with either
Christopher Miles and Margot Miles. The loss of their services could have a
material adverse effect on our business, financial condition or results of
operation.
CHRISTOPHER LEE MILES'S CONTROL MAY PREVENT YOU FROM CAUSING A CHANGE IN THE
COURSE OF OUR OPERATIONS AND MAY AFFECT THE PRICE OF OUR COMMON STOCK.
Christopher Lee Miles beneficially owns approximately 70% of our common stock.
Accordingly, for as long as Christopher Lee Miles continues to own more than 50%
of our common stock, he will be able to elect our entire board of directors,
control all matters that require a stockholder vote (such as mergers,
acquisitions and other business combinations) and exercise a significant amount
of influence over our management and operations. Therefore, regardless of the
number of our common shares sold, your ability to cause a change in the course
of our operations is eliminated. As such, the value attributable to the right to
vote is limited. This concentration of ownership could result in a reduction in
value to the common shares you own because of the ineffective voting power, and
could have the effect of preventing us from undergoing a change of control in
the future.
OUR OFFICER HAS A CONFLICT OF INTEREST IN THAT HE IS AN OFFICER AND DIRECTOR OF
ANOTHER COMPANY WHICH WILL PREVENT HIM FROM DEVOTING FULL-TIME TO OUR OPERATIONS
WHICH MAY AFFECT OUR OPERATIONS.
Our principal officer, Christopher Lee Miles has a conflict of interest in that
he is 100% owner and an officer and director of Maxwell Media Marketing. It is
possible that there may be a conflict of interest in providing the same
management services to two companies. It is possible that although Mr. Miles
plans on devoting at least 40 hours a week to our business, the time he must
spend on his duties to the other companies may delay our operations and may
reduce our financial results because of the slow down in operations.
OUR SUCCESS DEPENDS UPON OUR ABILITY TO ATTRACT AND HIRE KEY PERSONNEL. OUR
INABILITY TO HIRE QUALIFIED INDIVIDUALS WILL NEGATIVELY AFFECT OUR BUSINESS, AND
WE WILL NOT BE ABLE TO IMPLEMENT OR EXPAND OUR BUSINESS PLAN.
Our business is greatly dependent on our ability to attract key personnel. We
will need to attract, develop, motivate and retain highly skilled technical
employees. Competition for qualified personnel is intense and we may not be able
to hire or retain qualified personnel. If we are unable to retain such
employees, we will not be able to implement or expand our business plan.
AS AN WIRELESS BROADBAND INTERNET SERVICE COMPANY, WE ARE IN AN INTENSELY
COMPETITIVE INDUSTRY AND ANY FAILURE TO TIMELY IMPLEMENT OUR BUSINESS PLAN COULD
DIMINISH OR SUSPEND OUR DEVELOPMENT AND POSSIBLY CEASE OUR OPERATIONS.
The wireless broadband industry is highly competitive, and has few barriers to
entry. We can provide no assurance that additional competitors will not enter
into the online dating industry. There are numerous other wireless broadband
companies that currently offer similar services, that have established user
bases that are significantly larger than ours, and that have access to greater
capital. If we are unable to efficiently and effectively institute our business
plan as a result of intense competition or a saturated market, we may not be
able to continue the development and enhancement of our web site and become
profitable.
OUR MARKET IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGE, AND IF WE FAIL TO
DEVELOP AND MARKET NEW TECHNOLOGIES RAPIDLY, WE MAY NOT BECOME PROFITABLE IN THE
FUTURE.
The internet and the wireless broadband industry are characterized by rapid
technological change that could render our intended services obsolete. The
development of our business entails significant technical and business risks. We
can give no assurance that we will successfully use new technologies effectively
or adapt our services to customer requirements or needs. If our management is
unable, for technical, legal, financial, or other reasons, to adapt in a timely
manner in response to changing market conditions or customer requirements, we
may never become profitable which may result in the loss of all or part of your
investment.
4
THE OFFERING PRICE OF THE SHARES WAS ARBITRARILY DETERMINED, AND THEREFORE
SHOULD NOT BE USED AS AN INDICATOR OF THE FUTURE MARKET PRICE OF THE SECURITIES.
THEREFORE, THE OFFERING PRICE BEARS NO RELATIONSHIP TO THE ACTUAL VALUE OF THE
COMPANY, AND MAY MAKE OUR SHARES DIFFICULT TO SELL.
Since our shares are not listed or quoted on any exchange or quotation system,
the offering price of $.10 for the shares of common stock was arbitrarily
determined. The facts considered in determining the offering price were our
financial condition and prospects, our limited operating history and the general
condition of the securities market. The offering price is not an indication of
and is not based upon the actual value of Wimax EU, Ltd. The offering price
bears no relationship to the book value, assets or earnings of our company or
any other recognized criteria of value. The offering price should not be
regarded as an indicator of the future market price of the securities.
THERE IS NO ASSURANCE OF A PUBLIC MARKET OR THAT THE COMMON STOCK WILL EVER
TRADE ON A RECOGNIZED EXCHANGE. THEREFORE, YOU MAY BE UNABLE TO LIQUIDATE YOUR
INVESTMENT IN OUR STOCK.
There is no established public trading market for our securities. Our shares are
not and have not been listed or quoted on any exchange or quotation system.
There can be no assurance that a market maker will agree to file the necessary
documents with the National Association of Securities Dealers, which operates
the OTC Electronic Bulletin Board, nor can there be any assurance that such an
application for quotation will be approved or that a regular trading market will
develop or that if developed, will be sustained. In the absence of a trading
market, an investor may be unable to liquidate their investment.
OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH IS SUBJECT TO RESTRICTIONS
ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES.
If our common stock becomes tradable in the secondary market, we will be subject
to the penny stock rules adopted by the Securities and Exchange Commission that
require brokers to provide extensive disclosure to their customers prior to
executing trades in penny stocks. These disclosure requirements may cause a
reduction in the trading activity of our common stock, which in all likelihood
would make it difficult for our shareholders to sell their securities.
USE OF PROCEEDS
The selling stockholders are selling shares of common stock covered by this
prospectus for their own account. We will not receive any of the proceeds from
the resale of these shares. We have agreed to bear the expenses relating to the
registration of the shares for the selling security holders.
DETERMINATION OF OFFERING PRICE
Since our shares are not listed or quoted on any exchange or quotation system,
the offering price of the shares of common stock was arbitrarily determined. The
offering price was determined by the price shares were sold to our shareholders
in a private placement held in January 2005 pursuant to an exemption from
Registration at Section 4(2) of the Securities Act of 1933.
The offering price of the shares of our common stock has been determined
arbitrarily by us and does not necessarily bear any relationship to our book
value, assets, past operating results, financial condition or any other
established criteria of value. The facts considered in determining the offering
price were our financial condition and prospects, our limited operating history
and the general condition of the securities market. Although our common stock is
not listed on a public exchange, we attempting to locate a market maker to will
be filing to obtain a listing on the Over The Counter Bulletin Board (OTCBB)
concurrently with the filing of this prospectus. In order to be quoted on the
Bulletin Board, a market maker must file an application on our behalf in order
to make a market for our common stock. There is no assurance that our common
stock will trade at market prices in excess of the initial public offering price
as prices for the common stock in any public market which may develop will be
determined in the marketplace and may be influenced by many factors, including
the depth and liquidity of the market for the common stock, investor perception
of us and general economic and market conditions.
5
DILUTION
The common stock to be sold by the selling shareholders is common stock that is
currently issued and outstanding. Accordingly, there will be no dilution to our
existing shareholders.
PENNY STOCK CONSIDERATIONS
Our common stock will be penny stock; therefore, trading in our securities is
subject to penny stock considerations. Broker-dealer practices in connection
with transactions in "penny stocks" are regulated by certain penny stock rules
adopted by the Securities and Exchange Commission.
Penny stocks generally are equity securities with a price of less than $5.00
(other than securities registered on certain national securities exchanges or
quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior
to a transaction in a penny stock not otherwise exempt from the rules, to
deliver a standardized risk disclosure document that provides information about
penny stocks and the risks in the penny stock market. The broker-dealer also
must provide the customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the
transaction, and monthly account statements showing the market value of each
penny stock held in the customer's account. The broker-dealer must also make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
These requirements may have the effect of reducing the level of trading
activity, if any, in the secondary market for a security that becomes subject to
the penny stock rules. The additional burdens imposed upon broker-dealers by
such requirements may discourage broker-dealers from effecting transactions in
our securities, which could severely limit their market price and liquidity of
our securities. These requirements may restrict the ability of broker-dealers to
sell our common stock and may affect your ability to resell our common stock.
SELLING SHAREHOLDERS
The shares being offered for resale by the selling stockholders consist of the
9,715,000 shares of our common stock held by 50 shareholders. Such shareholders
include the holders of the share sold in our Regulation D offering in 1999. In
addition, included in that amount are shares issued to various consultants
pursuant to consulting agreements and issued pursuant to an exemption from
registration at Section 4(2) of the Securities Act of 1933. We are also
registering a total of 4,500,000 shares of our common stock held by Christopher
Lee Miles and Margot Miles, our officers and directors.
The following table sets forth the name of the selling stockholders, the number
of shares of common stock beneficially owned by each of the selling stockholders
as of March 14, 2005 and the number of shares of common stock being offered by
the selling stockholders. The shares being offered hereby are being registered
to permit public secondary trading, and the selling stockholders may offer all
or part of the shares for resale from time to time. However, the selling
stockholders are under no obligation to sell all or any portion of such shares
nor are the selling stockholders obligated to sell any shares immediately upon
effectiveness of this prospectus. All information with respect to share
ownership has been furnished by the selling stockholders.
Shares of
Name of selling stockholder Shares of common common Shares of common Percent of
Stock owned prior stock to be stock owned common stock
to offering sold after offering owned after offering
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35215 Yukon, Inc. 200,000 200,000 0 0
Kenneth Bornstein 300,000 300,000 0 0
35216 Yukon, Inc. 300,000 300,000 0 0
Marquis Investments 700,000 700,000 0 0
Natural Venture Corp. 1,000,000 1,000,000 0 0
Global Internet Marketing Corp. 1,500,000 1,500,000 0 0
Eurotech Capital Ventures 1,000,000 1,000,000 0 0
Margot Miles 500,000 500,000 0 0
Christopher Miles 12,001,000 4,000,000 8,001,000 44.16%
Fred Quadros Jr 5,000 5,000 0 0
Desert-AU, Inc. 5,000 5,000 0 0
William Shine 5,000 5,000 0 0
6
Christopher Lachman 5,000 5,000 0 0
Abigail Miles 5,000 5,000 0 0
Mary Ann Lang 10,000 10,000 0 0
Raymond/Yoshiko Uno 5,000 5,000 0 0
Kevin Tatsugawa 5,000 5,000 0 0
Mitsuo Tatsugawa 5,000 5,000 0 0
Subrina Hamasaki 5,000 5,000 0 0
Dean Cummings 5,000 5,000 0 0
Gary/Bonnie See 5,000 5,000 0 0
John Polli, Jr 5,000 5,000 0 0
Robert Watson III 5,000 5,000 0 0
Patrick Gundlach 5,000 5,000 0 0
Karen Fellbaum 5,000 5,000 0 0
Kazu Fujita 5,000 5,000 0 0
Nancy Jewell 5,000 5,000 0 0
Beryl Salerno 5,000 5,000 0 0
Elizabeth Gheen 5,000 5,000 0 0
Scott/Christina Lindquist 5,000 5,000 0 0
Thomas Bass 5,000 5,000 0 0
Erich Schmid 5,000 5,000 0 0
Johnny Wong 5,000 5,000 0 0
Lorie Tatsugawa/Curtis Spackman 5,000 5,000 0 0
Dale Benson 5,000 5,000 0 0
Kevin Robinson 5,000 5,000 0 0
Timothy Kasden 5,000 5,000 0 0
Elizabeth Hingley 5,000 5,000 0 0
Robert/Susanna Ichikawa 5,000 5,000 0 0
James Potter 10,000 10,000 0 0
Chandra Miles Cholakian 5,000 5,000 0 0
James Yanai 5,000 5,000 0 0
Gary Kihs 5,000 5,000 0 0
Cassia Miles 5,000 5,000 0 0
Paul Spiegler 5,000 5,000 0 0
Jody Walker 5,000 5,000 0 0
JoAnn/Brian Murphy 5,000 5,000 0 0
(1) 3215 Yukon, Inc. is controlled by Samy Zands.
(2) 3216 Yukon, Inc. is controlled by Abbie Zands.
(3) Marquis Investments is controlled by Laura Mouck.
(4) Natural Venture Corp. is controlled by Harmodio Herrera.
(5) Global Internet Marketing Corp. is controlled by Alex James.
(6) Eurotech Capital Ventures is controlled by Janice Hypolite.
(7) Desert-AU, Inc. is controlled by Robert E. Hunt.
To our knowledge, except for Christopher Lee Miles and Margot Miles, our
officers and directors, none of the selling shareholders or their beneficial
owners:
- has had a material relationship with us other than as a shareholder at
any time within the past three years; or
- has ever been one of our officers or directors or an officer or
director of our predecessors or affiliates
- are broker-dealers or affiliated with broker-dealers.
PLAN OF DISTRIBUTION
The selling security holders may sell some or all of their shares at a fixed
price of $.10 per share until our shares are quoted on the OTC Bulletin Board
and thereafter at prevailing market prices or privately negotiated prices. Prior
to being quoted on the OTCBB, shareholders may sell their shares in private
transactions to other individuals. However, sales by selling security holder
must be made at the fixed price of $.10 until a market develops for the stock.
Once a market has been developed for our common stock, the shares may be sold or
distributed from time to time by the selling stockholders directly to one or
more purchasers or through brokers or dealers who act solely as agents, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, at negotiated prices or at fixed prices, which may be
changed. The distribution of the shares may be effected in one or more of the
following methods:
o ordinary brokers transactions, which may include long or short sales,
o transactions involving cross or block trades on any securities or
market where our common stock is trading,
o through direct sales to purchasers or sales effected through agents,
o through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise), or
o any combination of the foregoing.
7
In addition, the selling stockholders may enter into hedging transactions with
broker-dealers who may engage in short sales, if short sales were permitted, of
shares in the course of hedging the positions they assume with the selling
stockholders. The selling stockholders may also enter into option or other
transactions with broker-dealers that require the delivery by such
broker-dealers of the shares, which shares may be resold thereafter pursuant to
this prospectus.
Brokers, dealers, or agents participating in the distribution of the shares may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholders and/or the purchasers of shares for whom such
broker-dealers may act as agent or to whom they may sell as principal, or both
(which compensation as to a particular broker-dealer may be in excess of
customary commissions). Neither the selling stockholders nor we can presently
estimate the amount of such compensation. We know of no existing arrangements
between the selling stockholders and any other stockholder, broker, dealer or
agent relating to the sale or distribution of the shares.
We will not receive any proceeds from the sale of the shares of the selling
security holders pursuant to this prospectus. We have agreed to bear the
expenses of the registration of the shares, including legal and accounting fees,
and such expenses are estimated to be approximately $25,000.
LEGAL PROCEEDINGS
There are no legal proceedings pending or threatened against us.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our executive officers and directors and their ages as of March 14, 2005 are as
follows:
NAME AGE POSITION
- ---- --- -------------------------------
Christopher Lee Miles 54 President, Chief Executive Officer,
Chief Financial Officer, Chairman
of the Board of Directors
Margot Miles 35 Treasurer and Director
Set forth below is a brief description of the background and business experience
of our executive officers and directors for the past five years.
Christopher Lee Miles has been our President, Chief Executive Officer, Chief
Financial Officer and a member of our Board of Directors since 2000. He has also
been an independent media and marketing consultant for the past fifteen years
working primarily in electronics, broadcast and golfing industries contracting
for various companies. In 2001 he formed Maxwell Media Marketing and operates
his consulting business under that name. He also was CEO/Director of Dorado
Capital Ventures, Inc. from 2000 until April 2004 and is the CEO/Director of
Edmonds & Edmonds, Ltd. a corporation with no practical activity or business
since 2000. Since 1996, Mr. Miles has worked in Monterey, California at the CBS
affiliate KNRY AM 1240 as a talk show producer and assistant to the owner and
general manager. In such capacity, he is responsible for all areas of the radio
station, including, sales, billing, production and on air hosting.
Mr. Miles has also served as the News Director and produced hundreds of news
shows. He has worked specifically in the golf industry since 1998 as a talk show
producer. He also consults in the equipment manufacturing sector as a marketing
specialist and continues to assist start-up companies with developing and
implementing their sales and marketing plans.
Margot Miles has been our Treasurer and member of our Board of Directors since
2000. She is a licensed hypnotherapist and has operated Ashland Hypnotherapy
since 2003. Additionally Ms. Miles was Treasurer/Director of Dorado Capital
Ventures, Inc from 2000 until April 2004 and is the Treasurer/Director of
Edmonds & Edmonds, Ltd. an inactive corporation since 2000. Prior to becoming
licensed as a hypnotherapist, Ms. Miles was the owner/operator of Hey Diddle
Diddle Diaper Service from 1996 to 1999. Margot attended Salt Lake City College
from 1983-1984 and Southern Oregon University from 2000-2002.
8
Term of Office
Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our officers are appointed by our board of directors
and hold office until removed by the board.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person known to us
to own more than 5% of our outstanding common stock as of March 14, 2005, and by
the officers and directors, individually and as a group. Except as otherwise
indicated, all shares are owned directly.
Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Owner of Class
- -------------- ------------------- ------------------- --------
Common Stock Christopher Lee Miles(1)(2) 12,001,000 69.87%
356 Pine Avenue, Apt. 1
Pacific Grove, CA 93950
Common Stock Margot Miles 500,000 2.82%
356 Pine Avenue, Apt. 1
Pacific Grove, CA 93950
Common Stock All executive officers 12,501,000 70.57%
and directors as a group
The percent of class is based on 17,715,000 shares of common stock issued and
outstanding as of March 14, 2005.
(1) Does not include an option held by Mr. Miles to purchase 4,000,000 shares
of our common stock of our common stock for a period of two years expiring
January 10, 2007 at $.50 a share.
(2) We have an option to repurchase up to 8,000,000 shares from Christopher Lee
Miles for a period of two years expiring January 10, 2007 at the rate of
$.025 per share.
DESCRIPTION OF SECURITIES
General
Our authorized capital stock consists of 50,000,000 shares of common stock at a
par value of $0.001 per share. There are no provisions in our charter or by-laws
that would delay, defer or prevent a change in our control.
Common Stock
As of March 14, 2005, 17,715,000 shares of common stock are issued and
outstanding and held by 50 shareholders. Holders of our common stock are
entitled to one vote for each share on all matters submitted to a stockholder
vote.
Holders of common stock do not have cumulative voting rights.
Therefore, holders of a majority of the shares of common stock voting for the
election of directors can elect all of the directors. Holders of our common
stock representing a majority of the voting power of our capital stock issued
and outstanding and entitled to vote, represented in person or by proxy, are
necessary to constitute a quorum at any meeting of our stockholders. A vote by
the holders of a majority of our outstanding shares is required to effectuate
certain fundamental corporate changes such as liquidation, merger or an
amendment to our Articles of Incorporation.
Although there are no provisions in our charter or by-laws that may delay, defer
or prevent a change in control, we are authorized, without shareholder approval,
to issue shares of preferred stock that may contain rights or restrictions that
could have this effect. Certain provisions of the Delaware General Corporate Law
may serve to delay, defer or prevent a change in control of the company.
9
Holders of common stock are entitled to share in all dividends that the board of
directors, in its discretion, declares from legally available funds. In the
event of a liquidation, dissolution or winding up, each outstanding share
entitles its holder to participate pro rata in all assets that remain after
payment of liabilities and after providing for each class of stock, if any,
having preference over the common stock. Holders of our common stock have no
pre-emptive rights, no conversion rights and there are no redemption provisions
applicable to our common stock.
Dividends
Since inception we have not paid any dividends on our common stock. We currently
do not anticipate paying any cash dividends in the foreseeable future on our
common stock, when issued pursuant to this offering. Although we intend to
retain our earnings, if any, to finance the exploration and growth of our
business, our Board of Directors will have the discretion to declare and pay
dividends in the future. Payment of dividends in the future will depend upon our
earnings, capital requirements, and other factors, which our Board of Directors
may deem relevant.
Warrants
There are no outstanding warrants to purchase our securities.
Options
Christopher Lee Miles has an option to purchase 4,000,000 shares of our common
stock of our common stock for a period of two years expiring January 10, 2007 at
$.025 a share. There are no other options to purchase our securities
outstanding. We may in the future establish an incentive stock option plan for
our directors, employees and consultants.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant or any of its parents or
subsidiaries. Nor was any such person connected with the registrant or any of
its parents or subsidiaries as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
The financial statements included in this prospectus and the registration
statement have been audited by Jewett Schwartz & Associates, certified public
accountants, to the extent and for the periods set forth in their report
appearing elsewhere herein and in the registration statement, and are included
in reliance upon such report given upon the authority of said firm as experts in
auditing and accounting.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our director and officer is indemnified as provided by the Nevada Statutes and
our Bylaws. We have been advised that in the opinion of the Securities and
Exchange Commission indemnification for liabilities arising under the Securities
Act is against public policy as expressed in the Securities Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities is asserted by one of our directors, officers, or controlling
persons in connection with the securities being registered, we will, unless in
the opinion of our legal counsel the matter has been settled by controlling
precedent, submit the question of whether such indemnification is against public
policy to a court of appropriate jurisdiction. We will then be governed by the
court's decision.
ORGANIZATION WITHIN LAST FIVE YEARS
We were incorporated on October 13, 1999 in the State of Nevada as Atlantic
Capital Ventures, Inc. and filed Articles of Amendment in the State of Nevada
changing our name to WIMAX EU, Ltd.
10
DESCRIPTION OF BUSINESS
General
We were incorporated under the laws of the State of Nevada on October 13, 1999.
We are a development stage company dedicated to providing wireless broadband
internet service to commercial and residential customers primarily within
countries that are members of the European Union.
Whereas the popular "WiFi" wireless internet offers what has been called the
"last 100 feet" of internet service to customers, we offer a rapidly developing
technology which provides the "last mile" of broadband internet service. More
accurately this technology can provide the last several miles of connectivity to
customers in a cost competitive fashion and where other traditional broadband
services might not be available due to lack of hardwired infrastructure.
Although there are several forms of "WiMax like" technologies currently in use,
the term WiMax more accurately refers to the latest Intel technology known as
802.16 and this technology appears to represent the future in wireless internet
connectivity. Just like telephones are becoming less and less dependent upon
hardwiring, a world of wireless internet connectivity is not only foreseeable,
it is predictable. We are committed to participating in the expansion of this
technology in a market far more fertile than that of the United States using all
available technologies.
According to studies, as of September 2004, over 69% of US residents are
internet users compared to only 44.6% of European users. One of the primary
reasons for this disparity is the fact that infrastructure is simply not
available to many people in Europe, particularly in the newest Eastern European
members of the EU where market penetration is as low as 16%.
Growth statistics however prove a stronger demand for internet service in EU
countries than the US. These same studies show that growth in the US since 2000
at 112% and 119% for EU countries. With the advent of wireless technology into
the EU, we expect to see this disparity increase as broadband service becomes
more and more available to the general population at affordable rates.
The statistics for growth within the broadband markets is even more startling.
In July 2004, household broadband use within the US grew to 51% from 38% the
previous year. Conversely, household use of broadband service in the established
EU countries at the end of 2003 was only 15% while the 10 new accession
countries showed less than 2% broadband use. With broadband service still in its
infancy in these countries compared to the United States, the opportunity for
providing service that is not dependent on a non-existent wired infrastructure
is obvious.
As we introduce our service into a new country, we intend to establish a
subsidiary company which will be managed locally where appropriate for first
rate customer service but which will utilize the cost advantage of a centralized
administrative and technical support staff whenever possible for cost effective
implementation of the rollout.
In order to capitalize on local recognition of a nationally based company while
promoting our brand name throughout the EU, each regional company will be
identified by its country. For example, WiMax EU in Germany will be called
"WiMax Germany", WiMax EU in Poland will be called "WiMax Poland" etc. Likewise
each company will have its individual URL assigned to it. Wimax Germany will be
called WiMax-Germany.com, Wimax Poland will use WiMax-Poland.com etc. We have
acquired all these URL's as well as the local language equivalent like
WiMax-Deutschland.com and WiMax-Polska.com.
Wherever possible, we will look to acquire existing independent internet
providers who are interested in joining our company and becoming the subsidiary
for that country. This will enable us to acquire an existing customer base and
staff who are familiar with the market and regulations specific to their
country. These acquisitions will focus on companies generating positive cash
flow and will be accretive to existing shareholders.
We plan on developing the Wimax-EU trademark into a recognized international
brand. We plan on developing a coordinated marketing strategy which can then be
implemented on a regional basis pointing out both our international scope as
well as our locally managed benefits.
11
We will recruit wireless internet veterans with a history of success to fill the
top executive positions of our company. Once funded these people will be
installed and will recruit additional personnel as they deem appropriate.
Our financial pro-forma indicates that the initial roll out of WiMax EU can be
accomplished and positive cash flow can be achieved with an initial investment
of $2 Million.
The window of opportunity for wireless broadband internet in European Union
countries has opened. We intend to capitalize on this opportunity by providing
quality connectivity and superior service at competitive rates.
WIMAX WIRELESS BROADBAND INTERNET
WiMAX is the word coined to describe the latest, state-of-the-art technology in
delivering the last several miles of broadband internet service to end users.
There are currently several different actual technologies in use but it is
suggested and widely assumed that Intel's 802.16 technologies will eventually be
the primary successor to broadband connectivity. We intend to utilize all
available WiMAX and WiMAX-like technologies depending upon the various markets
we enter.
MARKET COMPARISON
We will not depend upon proprietary technology but rather will focus on
delivering service utilizing proven technologies from companies with strong
support systems. Among the companies we have chosen to create alliances with are
Aperto Networks and NetNext Wireless. Both these companies supply hardware and
support services for the primary technologies we intend to utilize. We have
contacted these companies and they have expressed interest in working with us to
bring wireless broadband internet connectivity to Europe. We expect to formalize
our relationships in the near future as circumstances dictate.
We intend to set focus on three primary qualities to gain market share. Those
are:
1. Areas of demand with limited supply. These would be population concentrations
without the infrastructure that supports broadband service through hard wired
technologies. These areas can be found primarily in the newest members to the
European Union that have limited market penetration.
2. Superior customer support - Customer support in Europe does not generally
measure up to support in the US. Generally speaking, even urban centers do not
generally offer 24/7 tech support. By utilizing both localized tech support
backed up by a central multi-lingual call center, we intend to offer customers
tech support around the clock.
3. Competitive pricing - Without a reliance on the massive and expensive
infrastructure necessary to support a hard wired internet service, we expect to
be able to offer our service at competitive rates with other providers. That
fact, combined with superior service and the advantage of mobility will allow us
to penetrate the market and gain a reasonable market share.
Although we are a development stage company, both the market we intend to serve
and the technology we will utilize in serving it are developed and proven.
Additionally, the European system for cell phone usage is primarily GSM (Global
System for Mobile Communication). By comparison the US initially built out an
analog system and is only now converting to digital. This unique situation means
the opportunity to utilize the existing cellular networks for backhaul and
antenna placement is already in place. Additionally, these cellular providers
have indicated not only a willingness but are openly inviting the income that
they can generate by renting us their unused bandwidth.
MARKETING AND SALES
OUR MARKET
The best way to appreciate our market is to compare it to the same market in the
US. In doing so, one gets a clear picture of the comparative attractiveness of
our market.
12
SIZE
In September 2004, the number of internet users in the US and Europe were very
similar. Studies indicate that 202,452,190 residents in the US used the internet
compared to 204,050,785 residents of the European Union. The primary distinction
between the two is that these respective figures represent 69% of the total
population in the US and only 44.6% of the population in European Union
countries. This gives Europe a significant edge in the quality of our market.
A more exciting statistic shows that in July 2004, household broadband usage in
the US grew to 51% from 38% the previous year. By comparison, at the end of
2003, total household broadband usage in the established EU countries (excluding
the 10 countries admitted to the EU in May 2004) was only 15% and in the rate
for the 10 new accession countries was only 1.9%. Much of this lack of
penetration can be attributed to lack of suitable hard wired infrastructure
necessary to support broadband connectivity.
Additionally, the fact that the range of penetration in various EU countries
varies from a high of 74% in Sweden to a low of 15% in Greece suggests that we
can pick in which order to expand our service into various countries based upon
some very divergent circumstances thereby assuring us the best possible
opportunity to capture market share.
GROWTH
Since 2000, studies indicate that the number of internet users in the US has
grown by 112%. By comparison in that same time period the number of internet
users in the EU has grown by 119%. From these two statistics one can easily see
that our market is not only considerably bigger, it is also stronger than the US
market.
To further emphasize the strength of the European internet market is the fact
that, according to analysts internet sales during the 2004 Christmas season in
Europe will reach $18 Billion, exceeding US sales by about 30%. This represents
an increase of about 44% over the previous year and firmly establishes Europe's
commitment to the internet.
TARGET MARKET
Our target market consists of both commercial and household users, primarily
those who have either no internet service or only dial up service available to
them. As much of Europe's regular telephone service is measured, unlike in the
US, dial up service is not a highly cost effective way to access the internet.
The concept of unlimited dial-up service at a low fixed price simply doesn't
exist.
Conversely, much of the residential areas, especially in the newer EU member
countries do not have the existing infrastructure necessary to provide quality
broadband service. Additionally, both commercial and residential areas that do
offer broadband service, usually only have one provider and service can be
spotty with customer support only being available during day and early evening
hours.
Broadband service is generally provided as ADSL by the local telephone company
only in areas where they have upgraded to IDSN capable infrastructure. This
often represents by no means the majority of their service area. Additionally
the local cable companies do provide broadband service, again when their
infrastructure permits it. As with the telcom providers, this infrastructure is
not well developed or complete. This means that few have multiple choices in
broadband service and many have no choice at all.
Our target markets will be primarily residential and commercial concentrations
where broadband service is first non-existent and secondly where we determine
that we can provide superior service at competitive rates.
PRICING
We intend to provide basic residential service for approximately (euro)35- 50
per month depending on the region and the market. Users will be able to purchase
or lease, for an additional fee, the antenna necessary to receive our signal.
Our rate to subscribers will be determined by the fixed costs necessary to
provide this service. Commercial service will be higher and will reflect the
additional bandwidth necessary to service the accounts.
13
PROMOTION
Through the use of our WiMAX-EU and "WiMAX-yourcountry" brand names, we will
focus on establishing ourselves as an international company with local roots.
This will allow us to support our local offices with international promotions
establishing our WiMAX EU brand to support their individual promotional efforts.
We have acquired the "wimax-eucountry.com" URL in both English along with the
native spelling for each of the EU countries plus Switzerland and the US.
Additionally, we will enter a market with a very low introductory rate for a
limited period of time allowing users to experience the convenience of wireless
broadband at a reduced risk. In doing so, we can more quickly attract an initial
subscriber base sufficient to provide positive cash flow after the initial
introductory period is over.
THE INTERACTIVE WEBSITE
Our wireless service will be further enhanced as well as promoted through an
interactive and intuitive community website customized for the individual locals
whenever we enter a market. These "family friendly" community based websites
will be designed to offer B2C and B2B listings in addition to providing a wide
range of community and charity based listings designed to encourage regular
visitation from local internet users as well as out of town internet users
looking for local goods and services. This is a trend which has proven quite
successful in the US yet which has not been fully implemented in the EU. This
offers us a unique additional opportunity.
This site will act as a profit center as well as a powerful marketing tool and
will feature our branding along side that of the sites developer. We currently
are working with a new international company that has developed this site and is
preparing to launch its product in the US and Australia with the idea of
introducing this site into the EU in conjunction with our wireless internet
service.
Through this multi media approach, WiMAX EU will be visible to both internet and
non internet users establishing us as a easily recognized name for affordable
wireless internet service backed by first rate customer service.
SALES STRATEGY
Sales will be initiated by a combination of billboard ads coupled with flyers
and emails. Bulk mail is also being considered as it is a more popular method of
advertising than in the US. In addition to accepting subscribers in local
offices, a call center will also be established for both incoming and outbound
telemarketing. By centralizing our call center, we can reduce our cost per sale
and more effectively utilize our operational team. If possible, we intend to
further reduce our fixed overhead by outsourcing our sales, if a suitable vendor
can be located. We currently are interviewing candidates.
ALTERNATIVE SALES STRATEGY
We accept the possibility that certain regions may develop the wireless market
to a point where competing head on with existing providers may not be justified.
In that instance, we are prepared to approach that market with one of two
strategies which will still allow us to create a profit center in that area.
We will first always look at the possibility of acquiring the existing provider
if positive cash flow will result and if the acquisition can be accretive.
Alternatively, we will look to establish ourselves as a provider of installation
and technical support, in essence partnering up with the existing provider and
generating income through subcontracted labor.
OPERATIONS
Our administrative operations, corporate accounting, centralized billing and
product will be handled from our headquarters. This will allow for economies of
scale while focusing local subsidiaries on sales, delivery and customer support.
As we will focus on those wireless frequencies not requiring licensing
assignments, we do not expect to encounter significant bureaucratic
difficulties. Where permitting is required as well as obtaining individual
business permits, this will be handled primarily through local management.
14
SUBSIDIARIES
Local subsidiaries will operate as individual profit centers in a truly
entrepreneurial fashion. All employees will be given an opportunity to earn
equity, based upon performance, in the parent company thereby creating a highly
motivated, company oriented workforce. Many of the countries that recently
joined the EU are still learning about capitalism and entrepreneurship and we
feel we can not only set an example for others, our commitment to our employees
will also provide us with a significant competitive and recruiting edge over any
potential competitors.
COMPANY ORGANIZATION
We will operate based upon a geographic structure with the parent company
holding the Executive offices and with subsidiaries operating in each country
within the EU. Currently our offices are provided at no cost by Christopher Lee
Miles. In addition to our executive offices, we are responsible for all
accounting fees, product development and acquisition, centralized technical
support and centralized Marketing.
Regional Subsidiaries
Each country that we do business in will have its own corporate identity through
the use of subsidiaries. Each subsidiary will have its own administrative team
and will be responsible for: sales and installation, customer service and local
technical support.
Competition
Although deployment of WiMax wireless broadband services is limited at this
time, both regular internet and WiFi wireless internet access is currently being
provided in all major metropolitan cities within Europe. It is provided by a
variety of companies. Most of these companies are considerably larger and better
funded than we are. Additionally, internet service is provided in some countries
by a single dominant source and in those situations, all internet companies
provide their service through these single providers. Although these single
source providers may not currently be offering wireless internet service, they
are extremely well financed and dominant and could choose to enter the market at
any time. Further, wireless cell phone companies are also multi-national in
scope and often directly affiliated with the single source internet providers.
These cell phone companies are also much larger than we are and are very well
funded and could choose to enter the Wimax market as well at any time.
The largest multi-national providers of internet and wireless internet at this
time are T-Mobil and Vodafone. These companies provide a substantial portion of
the digital mobile phone and WiFi service throughout Europe and are well
situated to enter the Wimax market at will. These are major corporations with
significant income and capital resources and we would be unable to compete
effectively against them if offering similar products and services.
Employees
We currently have one full-time employee.
MANAGEMENT DISCUSSION AND ANALYSIS
Plan of Operations
During the next twelve months, we expect to take the following steps in
connection with the further development of our business and the implementation
of our plan of operations:
Recruit key personnel - We are currently conducting a search for top management
positions to implement our business plan. We expect to have selected the first
two key individuals within 3-4 months. The new management will be responsible
for additional hires as necessary.
Locate and establish new headquarters in Europe - With the successful
recruitment of our key management personnel, we intend to locate and secure
suitable offices in Europe to continue with the implementation of our business
plan. We may also choose to establish our headquarters by means of a strategic
alliance or acquisition of an existing ISP. The choice of countries will be
determined by the management chosen or the company acquired, if that strategy if
used. We intend to have our European headquarters established within 6 months.
15
Create alliances - We intend to create alliances with strategic businesses in
the first two or three countries as part of our overall plan to create alliances
in all European countries. With the establishment of our executive offices in
Europe, we will focus on recruiting companies and people to join our team in the
various countries in Europe for the further implementation of our business plan.
We intend to have the first two or three alliances established within 9 months.
Develop relationships with hardware suppliers - As we are developing
relationships and establishing the marketing and support side of our business,
we will simultaneously be continuing to work with manufacturers who will be
providing us with the hardware required to implement our business plan. We
intend to develop relationships with more than one supplier and to monitor the
industry to continually upgrade the hardware we offer in order to remain
competitive. Establishing relationships with suppliers will be an ongoing
process throughout the entire 12 months.
Although we do have sufficient cash on hand to maintain our current operations
for the next 12 months, we currently do not have enough cash to support our
growth objectives during our first year. We will need to raise approximately
$500,000 to fund our growth prior to initiating our product-roll out. We will
require additional funds to implement our marketing phase and, to expand
operations. No significant purchases of equipment are anticipated until the roll
out phase which will commence in year 2.
DESCRIPTION OF PROPERTY
Our executive offices are located at 356 Pine Avenue, Apt. 1, Pacific Grove,
California 93950. This office space is subleased to us for no rent from
Christopher Miles, our officer and director. We believe that this space is
sufficient and adequate to operate our current business.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We currently use space at 356 Pine Avenue, Apt. 1, Pacific Grove, California
93950. We sublease such space for no rent from Christopher Miles, our officer
and director.
On October 5, 2002, Christopher Lee Miles was appointed as President and
Director and Margot Miles was appointed as Secretary and Director. On such date,
we issued 1,200,000 shares to Christopher Lee Miles and 50,000 shares to Margot
Miles for services rendered valued at par value $.001. In addition, Christopher
Lee Miles owned 100 shares purchased in our 1999 offering. On October 15, 2004,
we undertook a 10-1 forward split increasing the amount of shares held by
Christopher Lee Miles to 12,001,000 shares and the shares held by Margot Miles
to 500,000 shares.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No Public Market for Common Stock
There is presently no public market for our common stock. We anticipate applying
for trading of our common stock on the Over the Counter Bulletin Board upon the
effectiveness of the registration statement of which this prospectus forms a
part. However, we can provide no assurance that our shares will be traded on the
Bulletin Board or, if traded, that a public market will materialize.
Holders of Our Common Stock
As of the date of this registration statement, we had 50 registered
shareholders.
On October 5, 2002, Christopher Lee Miles was appointed as President and
Director and Margot Miles was appointed as Secretary and Director. On such date,
we issued 1,200,000 shares to Christopher Lee Miles and 50,000 shares to Margot
Miles for services rendered valued at par value $.001.
16
In October 1999, we completed a Regulation D Offering in which we issued a total
of 4,400 shares of our common stock to a total of 42 investors at a price per
share of $3.30 for an aggregate offering price of $14,520. Christopher Lee
Miles, our current President, purchased 100 shares in this offering. On October
15, 2004, we approved a 10-1 forward split of our outstanding shares which
increased the shares held by these shareholders to 44,000 shares. In February
2005, we approved a 5-1 forward split of all our shareholders holding less than
2001 shares. All of the shareholders owning more than 2001 signed off on a
document waiting their right to receive additional shares pursuant to this
forward split. Christopher Miles shares were not included in this forward split
since he owned more than 2001 shares. This increased the amount of shares held
by the shareholders, not including Mr. Miles shares, to 215,000 shares.
On November 22, 2000, we issued a total of 100,000 shares to Natural Venture
Corp. pursuant to a consulting agreement with us. Such shares were increased to
1,000,000 shares in our 10-1 forward split on October 15, 2004. Natural Venture
Corp. shares were not included in this forward split since they owned more than
2001 shares and Natural Ventures signed off on a document waiving their right to
receive additional shares pursuant to this forward split. In consideration for
the registration of their shares, Natural Venture entered into a one year lock
up agreement with us in which they agreed to not sell more than ten (10%)
percent of their outstanding shares every month.
On October 1, 2004, we issued 100,000 shares to Eurotech Capital Ventures, Ltd.
pursuant to our royalty agreement with Eurotech. Such shares were increased to
1,000,000 Based upon our 10-1 forward split undertaken on October 15, 2004.
Eurotech Capital shares were not included in this forward split since they owned
more than 2001 shares and Eurotech Capital signed off on a document waiving
their right to receive additional shares pursuant to this forward split. In
consideration for the registration of their shares, Eurotech entered into a one
year lock up agreement with us in which they agreed to not sell more than ten
(10%) percent of their outstanding shares every month
On January 15, 2005, we issued 1,500,000 shares to Global Internet Marketing
Corp. pursuant to our consulting agreement with Global. Global Internet
Marketing Corp. shares were not included in this forward split since they owned
more than 2001 shares and Global Internet signed off on a document waiving their
right to receive additional shares pursuant to this forward split. In
consideration for the registration of their shares, Global Internet entered into
a one year lock up agreement with us in which they agreed to not sell more than
ten (10%) percent of their outstanding shares every month
In January 2005, we completed an offering pursuant to Section 4(2) of the
Securities Act of 1933 issued a total of 1,500,000 shares to four investors at a
price per share of $.10 for a total of $150,000. We have used the initial price
per share of $.10 as our fixed offering price. These shares were not included in
this forward split since they owned more than 2001 shares and these shareholders
signed off on a document waiving their right to receive additional shares
pursuant to this forward split. In consideration for the registration of their
shares, these shareholders entered into a one year lock up agreement with us in
which they agreed to not sell more than ten (10%) percent of their outstanding
shares every month.
Rule 144 Shares
As of March, 2005, the 215,000 shares held by the shareholders who purchased
their shares in the Regulation D offering by us in 1999 are available for resale
to the public and in accordance with the volume and trading limitations of Rule
144 of the Act. In addition, the 12,001,000 shares held by Christopher Lee
Miles, the 500,000 shares held by Margot Miles, the 1,000,000 shares held by
Natural Venture Corp. are available for resale to the public and in accordance
with the volume and trading limitations of Rule 144 of the Act. After October 1,
2005, the 1,000,000 shares held by Eurotech Capital Ventures are available for
resale to the public and in accordance with the volume and trading limitations
of Rule 144 of the Act. After January 2006, the 200,000 shares held by 35215
Yukon, Inc., the 300,000 shares held by Kenneth Bornstein, the 300,000 shares
held by 35216 Yukon, Inc. and the 700,000 shares held by Marquis Investments
will become available for resale to the public and in accordance with the volume
and trading limitations of Rule 144 of the Act. In general, under Rule 144 as
currently in effect, a person who has beneficially owned shares of a company's
common stock for at least one year is entitled to sell within any three month
period a number of shares that does not exceed 1% of the number of shares of the
company's common stock then outstanding which, in our case, would equal
approximately 17,715 shares as of the date of this prospectus.
17
Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about the
company. Under Rule 144(k), a person who is not one of the company's affiliates
at any time during the three months preceding a sale, and who has beneficially
owned the shares proposed to be sold for at least two years, is entitled to sell
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
Stock Option Grants
Christopher Lee Miles has an option to purchase 4,000,000 shares of our common
stock of our common stock for a period of two years expiring January 10, 2007 at
$.50 a share. There are no other options to purchase our securities outstanding.
We may in the future establish an incentive stock option plan for our directors,
employees and consultants.
Registration Rights
We have not granted registration rights to the selling shareholders or to any
other persons.
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us from the date of our inception until March 14, 2005.
ANNUAL COMPENSATION LONG TERM COMPENSATION
RESTRICTED OPTION
OTHER ANNUAL STOCKS/PAYOUTS SARS LTIP ALL OTHER
NAME TITLE YEAR SALARY BONUS COMPENSATION AWARDED ($) COMPENSATION COMPENSATION
- ---- ----- ---- ------ ----- ------------ ------- ----- ------------ ------------
Christopher Miles President 2004 0 0 0 12,001,000 shares 0 0 0
CEO and of common stock (1)
Chairman
Margot Miles Treasurer 2003 0 0 0 500,000 shares 0 0 0
of common stock (2)
(1) The 12,001,000 shares issued to Christopher Miles are valued at $.001 per
share for a total value of $120,010.
(2) The 500,000 shares issued to Margot Miles are valued at $.001 per share,
for a total value of $5,000.
Stock Option Grants
Christopher Lee Miles has an option to purchase 4,000,000 shares of our common
stock of our common stock for a period of two years expiring January 10, 2007 at
$.50 a share.
Employment Agreements
We do not have an employment agreements with Christopher Miles or Margot Miles
our officers and directors.
18
AVAILABLE INFORMATION
We have filed a registration statement on Form SB-2 under the Securities Act of
1933 with the Securities and Exchange Commission with respect to the shares of
our common stock offered through this prospectus. This prospectus is filed as a
part of that registration statement and does not contain all of the information
contained in the registration statement and exhibits. We refer you to our
registration statement and each exhibit attached to it for a more complete
description of matters involving us, and the statements we have made in this
prospectus are qualified in their entirety by reference to these additional
materials. You may inspect the registration statement and exhibits and schedules
filed with the Securities and Exchange Commission at the Commission's principal
office in Washington, D.C. Copies of all or any part of the registration
statement may be obtained from the Public Reference Section of the Securities
and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the Commission at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. The Securities and Exchange Commission also
maintains a web site at http://www.sec.gov that contains reports, proxy
statements and information regarding registrants that file electronically with
the Commission. In addition, we will file electronic versions of our annual and
quarterly reports on the Commission's Electronic Data Gathering Analysis and
Retrieval, or EDGAR System. Our registration statement and the referenced
exhibits can also be found on this site as well as our quarterly and annual
reports. We will not send the annual report to our shareholders unless requested
by the individual shareholders.
19
WIMAX EU, LTD.
(A Development Stage Enterprise)
FINANCIAL STATEMENTS
Table of Contents
Report of Independent Registered Public Accounting Firm....................F - 2
Balance Sheets ............................................................F - 3
Statements of Operations for the years ended December 31,2004 and 2003 ....F - 4
and for the period from October 14 1999 (inception) through December
31, 2004
Statements of Changes in Shareholder's Equity for the periods from ........F - 5
October 14, 1999 ( inception) through December 31, 2004
Statements of Cash Flows for years ended December 31, 2004 and 2003........F - 6
and for the period from October 14, 1999 (inception) through December
31, 2004
Notes to Financial Statements... ......................................F - 7 -11
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and board of directors Wimax EU Ltd.:
We have audited the accompanying balance sheet of Wimax EU, ltd. (hereinafter
referred to as "the Company") as of December 31, 2004 and the related statements
of operations, changes in shareholder's deficiency and cash flows for year then
ended and the period October 14, 1999 (inception) through December 31, 2004.
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 audit.
We conducted our audits in accordance with auditing standards of Public Company
Accounting Oversight Board (United States). 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 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 Wimax EU, ltd. as of December
31, 2004, and the results of their operations and their cash flows for the
periods then ended December 31, 2004 and 2003 and for the period October 14,
1999 (inception) through December 31, 2004 in conformity with accounting
principles generally accepted in the United States.
The accompanying financial statements referred to above have been prepared
assuming that the Company will continue as a going concern. As more fully
described in Note A, the Company needs to seek new sources or methods of
financing or revenue to pursue its business strategy, raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
as to these matters are also described in Note A. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
JEWETT, SCHWARTZ & ASSOCIATES
Hollywood, Florida
March 7, 2005
F - 2
WIMAX EU, LTD.
(A Development Stage Enterprise)
BALANCE SHEET
December 31, 2004
ASSETS
CURRENT ASSETS
Other receivable $ 2,641
----------------
TOTAL CURRENT ASSETS 2,641
----------------
TOTAL ASSETS $ 2,641
================
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES
CURRENT LIABILITIES
TOTAL CURRENT LIABILITIES $ 6,500
----------------
TOTAL LIABILITIES 6,500
----------------
SHAREHOLDERS' EQUITY
Common Stock, $0.001 par value, 50,000,000 shares authorized
13,541,000 issued and outstanding. 13,541
Additional paid-in capital 6,239
Deficit accumulated during the development stage (23,639)
----------------
TOTAL SHAREHOLDERS' EQUITY (3,859)
----------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 2,641
================
The accompanying notes are an integral part of these financial statements.
F-3
WIMAX EU, LTD.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
Period from
October 14, 1999
For the years ended December 31 (Inception)
------------------------------- to December
2004 2003 2004
------------ ------------ ------------
REVENUES $ -- $ -- $ --
------------ ------------ ------------
OPERATING EXPENSES
Professional services - related party -- -- 16,750
Professional fees 6,500 -- 6,500
Other expenses -- -- 389
------------ ------------ ------------
TOTAL OPERATING EXPENSES 6,500 -- 23,639
LOSS BEFORE TAXES (23,639)
INCOME TAXES -- -- --
------------ ------------ ------------
NET LOSS $ (6,500) $ -- $ (23,639)
============= ============ =============
NET LOSS PER SHARE - Basic and diluted $ (0.00) $ -- $ (0.00)
============= ============ =============
Weighted average shares outstanding - basic and diluted 13,541,000 13,541,000 13,541,000
============= ============ =============
The accompanying notes are an integral part of these financial statements.
F-4
WIMAX EU, LTD.
(A Development Stage Enterprise)
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
Common Stock
50,000,000 shares authorized
----------------------------
Shares Par Value Additional
Issued $.001 per Paid-in Accumulated
share Capital Deficit Total
-------------- ----------- ----------- ------------ ------------
BALANCE - OCTOBER 14, 1999 (inception) -- $ -- $ -- $ -- $ --
Issuance of common stock to founders at par 118,000 118 -- -- 118
Issuance of common stock at $3.30 per share 4,100 4 13,526 -- 13,530
Net loss -- -- -- (389) (389)
-------------- ----------- ----------- ------------ ------------
BALANCE - DECEMBER 31, 1999 122,100 122 13,526 (389) 13,259
============== =========== =========== ============ ============
Issuance of common stock to new directors at par 1,250,000 1,250 -- -- 1,250
Surrender of founders shares (118,000) (118) -- -- (118)
Stock issued for consulting services 100,000 100 4,900 -- 5,000
Net loss -- -- -- (16,750) (16,750)
-------------- ----------- ----------- ------------ ------------
BALANCE - DECEMBER 31, 2000 1,354,100 1,354 18,426 (17,139) 2,641
============== =========== =========== ============ ============
Net loss -- -- -- -- --
BALANCE - DECEMBER 31, 2001 1,354,100 1,354 18,426 (17,139) 2,641
============== =========== =========== ============ ============
Net loss -- -- -- -- --
-------------- ----------- ----------- ------------ ------------
BALANCE - DECEMBER 31, 2002 1,354,100 1,354 18,426 (17,139) 2,641
============== =========== =========== ============ ============
Net loss -- -- -- -- --
-------------- ----------- ----------- ------------ ------------
BALANCE - DECEMBER 31, 2003 1,354,100 1,354 18,426 (17,139) 2,641
============== =========== =========== ============ ============
10 for 1 Forward Split 12,186,900 12,187 (12,187) -- --
Net loss -- -- -- (6,500) (6,500)
-------------- ----------- ----------- ------------ ------------
BALANCE - DECEMBER 31, 2004 13,541,000 $ 13,541 $ 6,239 $ (23,639) $ (3,859)
============== =========== =========== ============ ============
The accompanying notes are an integral part of these financial statements.
F-5
WIMAX EU, LTD.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
Period from
October 14, 1999
For the years ended December 31 (Inception)
-------------------------------- to December 31,
2004 2003 2004
--------- -------- ---------
Cash flows from operating activities:
Net loss $ (6,500) $ -- $(23,639)
Adjustments to reconcile net loss to net
cash used by operating activities:
Common stock issued for services -- -- 5,000
Common stock issued to founders -- -- 1,250
Changes in assets and liabilities:
Increase in other receivable (2,641) -- --
Increase in accrued expenses 6,500 -- (2,641)
--------- -------- ---------
Total adjustments 3,859 -- 3,609
--------- -------- ---------
Net cash used by operating activities (2,641) -- (20,030)
--------- -------- ---------
Cash flows from investing activities -- -- --
--------- -------- ---------
Cash flows from financing activities
Proceeds from issuance of common stock -- -- 13,530
--------- -------- ---------
Net cash provided by financing activities -- -- 13,530
--------- -------- ---------
NET (DECREASE) IN CASH (2,641) -- (6,500)
CASH AT BEGINNING OF PERIOD 2,641 2,641 --
--------- -------- ---------
CASH AT END OF PERIOD $ -- $ 2,641 $ (6,500)
========= ======== =========
Supplemental disclosures:
Non-cash investing and financing activities:
Common stock issued for services and to founders $ -- $ -- $ 6,250
========= ======== =========
The accompanying notes are an integral part of these financial statements.
F-6
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 AND FOR THE PERIOD
FROM OCTOBER 14, 1999 (INCEPTION) TO DECEMBER 31, 2004
NOTE A. DESCRIPTION OF ORGANIZATION
Organization - Atlantic Capital Ventures, inc. was formed in Nevada on October
- ------------
14, 1999. The Company has not commenced its planned principal operations through
December 31, 2004. In December 2004 the Company filed a Certificate of Amendment
to its Articles of Incorporation to change its name to WIMAX EU, Ltd.
("hereinafter referred to as "the Company" or "WIMAX"). The intended business
purpose of WIMAX is for providing wireless broadband internet service to
commercial and residential customers primarily within countries that are members
of the European Union. As of December 31, 2004, its planned principal operations
have not yet commenced.
Development Stage Enterprise: The Company is currently devoting substantially
- ----------------------------
all of its efforts to establishing a new business and its planned principle
operations have not commenced as of December 31, 2004. In their efforts to
establish a new business, management is commencing with design of its business
and marketing plans that include the following: preparation of a financial plan,
cash forecast and operating budget; identifying markets to raise additional
equity capital and debt financing; embarking on research and development
activities; performing employment searches, recruiting and hiring technicians
and management and industry specialists; acquiring operational and technological
assets; and, developing market and distribution strategies. General and
administrative expenses include professional fees, internet service charges, and
other related operating expenses. Marketing and promotional expenses include
costs incurred in connection with raising capital and promoting the Company.
Basis of Presentation and Going Concern: In accordance with SFAS No.7, the
- ------------------------------------------
Company's policy regarding the preparation of these financial statements
includes the presenting, in addition to its statements of operations, changes in
shareholders' (deficiency) equity and cash flows, the cumulative amounts of
revenues and expenses, stockholder equity transactions and cash flows since
inception through December 31, 2004.
The Company's independent accountants are including a "going concern" paragraph
in their accountants' report accompanying these financial statements that
cautions the users of the Company's financial statements that these statements
do not include any adjustments that might result from the outcome of this
uncertainty because the Company is a development stage enterprise that has not
commenced its planned principal operations. Furthermore, the "going concern"
paragraph states that the Company's ability to continue is also dependent on its
ability to, among other things, obtain additional debt and equity financing,
identify customers, secure vendors and suppliers, and establish an
infrastructure for its operations.
Even though the Company has not commenced planned principal operations or
generated revenues from prospective customers nor has it secured the funding
necessary to meet its current working capital needs, management believes that,
despite the extent of the financial requirements and funding uncertainties going
forward, it has a business plan under development that, if
F - 7
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 AND FOR THE PERIOD
FROM OCTOBER 14, 1999 (INCEPTION) TO DECEMBER 31, 2004
successfully funded and executed as an integral part of a financial structuring,
the Company can overcome the concerns of the independent accountants within the
next twelve months. Management continues to actively seek various sources and
methods of short and long-term financing and support; however, there can be no
assurances that some or all of the necessary financing can be obtained.
Management continues to explore alternatives that include seeking strategic
investors, lenders and/or technology partners and pursuing other transactions
that, if consummated, might ultimately result in the dilution of the interest of
the current shareholders.
Because of the nature and extent of the uncertainties, many of which are outside
the control of the Company, there can be no assurances that the Company will be
able to ultimately consummate planned principal operations or secure the
necessary financing.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
- -------------------------
The Company considers all highly liquid debt securities purchased with original
or remaining maturities of three months or less to be cash equivalents. The
carrying value of cash equivalents approximates fair value.
Revenue Recognition
- -------------------
The Company has adopted and follows the guidance provided in the Securities and
Exchange Commission's Staff Accounting Bulletin ("SAB") No. 104, which provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements.
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 these financial statements,
and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Income Taxes
- ------------
The Company uses the asset and liability method of accounting for income taxes
as required by SFAS No. 109 "Accounting for Income Taxes". SFAS No. 109 requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of temporary differences between the carrying amounts and the
tax basis of certain assets and liabilities. Deferred income tax assets and
liabilities are computed annually for the difference between the financial
statement and tax bases of assets and liabilities that will result in taxable or
deductible
F - 8
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 AND FOR THE PERIOD
FROM OCTOBER 14, 1999 (INCEPTION) TO DECEMBER 31, 2004
amounts in the future, 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 tax
assets to the amount expected to be realized. Income tax expense is the tax
payable or refundable for the period, plus or minus the change during the period
in deferred tax assets and liabilities.
Loss Per Share
- --------------
The Company computed basic and diluted loss per share amounts for December 31,
2004 and 2003 pursuant to the Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share." There are no potentially dilutive shares
outstanding and, accordingly, dilutive per share amounts have not been presented
in the accompanying statements of operations.
Stock-Based Compensation
- ------------------------
The Company accounts for stock options issued to employees in accordance with
the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations. As
such, compensation cost is measured on the date of grant as the excess of
current market price of the underlying stock over the exercise price. Such
compensation amounts are amortized over the respective vesting periods of the
option grant. The Company adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," and SFAS No. 148, "Accounting for
Stock Based Compensation - Transition and Disclosure,' which allows entities to
provide pro forma net income (loss) and pro forma earnings (loss) per share
disclosures for employee stock option grants as if the fair-valued based method
defined in SFAS No. 123 has been applied.
The Company accounts for stock options or warrants issued to non-employees for
goods or services in accordance with the fair value method of SFAS 123. Under
this method, the Company records an expense equal to the fair value of the
options or warrants issued. The fair value is computed using an options pricing
model.
Fair Value of Financial Instruments
- -----------------------------------
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," requires disclosures of information regarding
the fair value of certain financial instruments for which it is practicable to
estimate the value. For purpose of this disclosure, the fair value of a
financial instrument is the amount at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced sale of
liquidation.
F - 9
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 AND FOR THE PERIOD
FROM OCTOBER 14, 1999 (INCEPTION) TO DECEMBER 31, 2004
Recent Authoritative Pronouncements
- -----------------------------------
In May 2003, the FASB issued Statement No. 149; "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". This Statement establishes
standards for certain changes in the accounting treatment of derivative
contracts. SFAS 149 is effective for contracts entered into or modified after
June 30, 2003, except for certain provisions that relate to Statement No. 133
implementation issues that have been effective for fiscal quarters that began
prior to June 15, 2003, which should continue to be applied in accordance with
their respective effective dates. The guidance should be applied prospectively.
The adoption of Statement No. 149 is not expected to have a material impact on
the Company's financial position, results of operations, or liquidity.
In May 2003, the FASB issued Statement No. 150 "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". This Statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. The
Statement requires that an issuer classify a financial instrument that is within
its scope as a liability (or an asset in some circumstances). Many of those
instruments were previously classified as equity. The Company is currently
classifying financial instruments within the scope of this Statement in
accordance with this Statement. This Statement is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June 15,
2003. Management does not believe that this Statement will have a material
impact on the Company's financial statements.
In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities". This interpretation represents an interpretation of
Accounting Research Bulletin No. 51. The accounting research bulletin requires
that a Company's financial statements include subsidiaries in which the Company
has a controlling financial interest. Financial statement interpretation No. 46
gives guidance on identifying variable interest entities and on assessing
whether a Company's investment in a variable interest entity requires
consolidation thereof. This interpretation is effective immediately for
investments made in variable interest entities after January 31, 2003 and it is
effective in the first fiscal year or interim period beginning after June 15,
2003 for investments in variable interest entities made prior to February 1,
2003. The adoption of FASB Interpretation No. 46 is not expected to have a
material impact on the Company's financial position, results of operations or
liquidity.
F - 10
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 AND FOR THE PERIOD
FROM OCTOBER 14, 1999 (INCEPTION) TO DECEMBER 31, 2004
NOTE C - RELATED PARTY TRANSACTION
In January 2000, the Company paid $10,500 to certain officers and directors for
professional and consulting services performed.
NOTE D - INCOME TAXES
There was no income tax expense for the years ended December 31, 2004 and 2003
and for the period October 14, 1999 (inception) through December 31, 2004 due to
the Company's net losses.
The Company's tax expense (benefit) differs from the "expected" tax expense
(benefit) for the years ended December 31, 2004 and 2003 (computed by applying
the Federal Corporate tax rate of 34% to loss before taxes), as follows:
October 14,
1999
(inception)
Through
December 31,
2004 2003 2004
------------ ----------------- --------------
Computed "expected" tax expense (benefit) $ ( - ) $ ( - ) $ ( - )
Benefit of operating loss carryforwards - - -
------------ ----------------- --------------
$ - $ - $ -
============ ================= ==============
The effects of temporary differences that gave rise to significant portions of
deferred tax assets and liabilities at December 31, 2004 are as follows:
Deferred tax assets: 2004
---------------
Current deferred tax assets $ -
Net operating loss carryforward 6,900
---------------
Total gross deferred tax assets 6,900
Less valuation allowance (6,900)
---------------
Net deferred tax assets $ -
===============
The Company has a net operating loss carryforward of approximately $17,000
available to offset future taxable income through 2019.
The valuation allowance at December 31, 2004 was $6,900. The net change in
valuation allowance during the year ended December 31, 2003 was an increase of $
- -0-.
F - 11
WIMAX EU, LTD
13,715,000 Shares Common Stock
PROSPECTUS
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE
HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON
STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
Until _____________, all dealers that effect transactions in these securities
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
20
<Page>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS II-1
Our Bylaws provide that we may indemnify an officer or director who is made a
party to any proceeding, including a lawsuit, because of his position, to the
fullest extent permitted or authorized under law. In certain cases, we may
advance expenses incurred in defending any such proceeding. The indemnification
is intended to be to the fullest extent permitted by the laws of the State of
Nevada.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to our directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, we have been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Securities and Exchange Commission $ 161.43
registration fee
Federal Taxes $ 0
State Taxes and Fees $ 0
Transfer Agent Fees $ 5,000.00
Accounting fees and expenses $ 7,500.00
Legal fees and expenses $ 25,000.00
Blue Sky fees and expenses $ 0
Miscellaneous $ 0
Total $ 37,661.43
All amounts are estimates other than the Commission's registration fee. We are
paying all expenses of the offering listed above. No portion of these expenses
will be borne by the selling shareholders. The selling shareholders, however,
will pay any other expenses incurred in selling their common stock, including
any brokerage commissions or costs of sale.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On October 1, 2004, we issued 100,000 shares to Eurotech Capital Ventures, Ltd.
pursuant to our royalty agreement with Eurotech. Such shares were increased to
1,000,000 Based upon our 10-1 forward split undertaken on October 15, 2004. Such
shares were issued in reliance on an exemption from registration under Section
4(2) of the Securities Act of 1933.
These shares of our common stock qualified for exemption under Section 4(2) of
the Securities Act of 1933 since the issuance shares by us did not involve a
public offering. The offering was not a "public offering" as defined in Section
4(2) due to the insubstantial number of persons involved in the deal, size of
the offering, manner of the offering and number of shares offered. We did not
undertake an offering in which we sold a high number of shares to a high number
of investors. In addition, Eurotech had the necessary investment intent as
required by Section 4(2) since they agreed to and received a share certificate
bearing a legend stating that such shares are restricted pursuant to Rule 144 of
the 1933 Securities Act. This restriction ensures that these shares would not be
immediately redistributed into the market and therefore not be part of a "public
offering." Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of the Securities Act
of 1933 for this transaction.
On January 15, 2005, we issued 1,500,000 shares to Global Internet Marketing
Corp. pursuant to our consulting agreement with Global. Such shares were issued
in reliance on an exemption from registration under Section 4(2) of the
Securities Act of 1933.
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These shares of our common stock qualified for exemption under Section 4(2) of
the Securities Act of 1933 since the issuance shares by us did not involve a
public offering. The offering was not a "public offering" as defined in Section
4(2) due to the insubstantial number of persons involved in the deal, size of
the offering, manner of the offering and number of shares offered. We did not
undertake an offering in which we sold a high number of shares to a high number
of investors. In addition, Global had the necessary investment intent as
required by Section 4(2) since they agreed to and received a share certificate
bearing a legend stating that such shares are restricted pursuant to Rule 144 of
the 1933 Securities Act. This restriction ensures that these shares would not be
immediately redistributed into the market and therefore not be part of a "public
offering." Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of the Securities Act
of 1933 for this transaction.
In January 2005, we completed an offering pursuant to Section 4(2) of the
Securities Act of 1933 issued a total of 1,500,000 shares to four investors at a
price per share of $.10 for a total of $150,000. The following sets forth the
identity of the class of persons to whom we sold these shares and the amount of
shares for each shareholder:
35215 Yukon Inc. 200,000 shares
35216 Yukon Inc. 300,000 shares
Kenneth Bornstein 300,000 shares
Marquis Investments 700,000 shares
These shares of our common stock qualified for exemption under Section 4(2) of
the Securities Act of 1933 since the issuance shares by us did not involve a
public offering. The offering was not a "public offering" as defined in Section
4(2) due to the insubstantial number of persons involved in the deal, size of
the offering, manner of the offering and number of shares offered. We did not
undertake an offering in which we sold a high number of shares to a high number
of investors. In addition, 35215 Yukon Inc., 35216 Yukon Inc., Kenneth Bornstein
and Marquis Investments had the necessary investment intent as required by
Section 4(2) since they agreed to and received a share certificate bearing a
legend stating that such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. This restriction ensures that these shares would not be
immediately redistributed into the market and therefore not be part of a "public
offering." Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of the Securities Act
of 1933 for this transaction.
We have never utilized an underwriter for an offering of our securities. Other
than the securities mentioned above, we have not issued or sold any securities.
ITEM 27. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
3.1 Articles of Incorporation and Amendments
3.2 By-Laws
5.1 Opinion of Anslow & Jaclin, LLP
10.1 Consulting Agreement between the Company and Global Internet Marketing
Corporation dated January 15, 2005
10.2 Royalty Agreement between the Company and Eurotech Capital Ventures
Ltd. dated November 10, 2004
10.3 Consulting Agreement between the Company and Natural Ventures dated
December 1, 2000
10.4 Agreement dated January 10, 2005 between the Company and Christopher
Miles
10.5 Resolution dated January 10, 2005 approving the Stock Option Plan.
21 Subsidiaries
23.1 Consent of Jewett Schwartz & Associates
23.2 Consent of Counsel, as in Exhibit 5.1
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
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(b) To reflect in the prospectus any facts or events arising after the
effective date of this registration statement, or most recent
post-effective amendment, which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement; and Notwithstanding the foregoing, 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 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; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement
or any material change to such information in the registration
statement.
2. That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any of
the securities being registered hereby which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities, other than the
payment by us of expenses incurred or paid by one of our directors, officers, or
controlling persons in the successful defense of any action, suit or proceeding,
is asserted by one of our directors, officers, or controlling persons in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification is
against public policy as expressed in the Securities Act, and we will be
governed by the final adjudication of such issue.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant 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, in the City of Pacific
Grove, State of California on March 15, 2005.
By: /s/ Christopher Miles
---------------------------------
CHRISTOPHER MILES
President, Chief Executive Officer,
Chief Financial Officer and
Chairman of the Board of Directors
POWER OF ATTORNEY
ALL MEN BY THESE PRESENT, that each person whose signature appears below
constitutes and appoints Christopher Miles, true and lawful attorney-in-fact and
agent, with full power of substitution and re-substitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all pre- or
post-effective amendments to this registration statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any one
of them, or their or his substitutes, may lawfully do or cause to be done by
virtue hereof. In accordance with the requirements of the Securities Act of
1933, this registration statement was signed by the following persons in the
capacities and on the dates stated.
By: /s/ Christopher Miles President, Chief Executive Officer,
- ------------------------ Chief Financial Officer and
Christopher Miles Chairman of the Board of Directors
By: /s/ Margot Miles Treasurer and Director
- ------------------------
Margot Miles
Dated: March 15, 2005
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