SECURITIES AND EXCHANGE COMMISSION
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AMENDMENT NO. 2 TO 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 (2) 4,000,000 $0.10 $ 400,000 $ 47.08
Total 13,700,000 $0.10 $1,370,000 $161.43
(1) Represents shares held by our selling security holders.
(2) Represents the resale of 4,000,000 shares of common stock underlying the
options pursuant to our Stock Option Agreement with Christopher Lee Miles,
our President, Chief Executive Officer, Chief Financial Officer, and
Chairman of the Board of Directors. These shares underlying the options are
in addition to the 4,000,000 shares currently held by Mr. Miles that are
also being registered.
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 as well as the shares underlying the option to
Christopher Lee Miles 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 AUGUST 25, 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.
9,700,000 SHARES OF COMMON STOCK
4,000,000 SHARES OF COMMON STOCK UNDERLYING STOCK OPTIONS
The selling shareholders named in this prospectus are offering a total of
9,700,000 shares of our common stock offered through this prospectus. In
addition, we are registering the resale of an additional 4,000,000 shares of our
common stock underlying the options issued to Christopher Lee Miles pursuant to
our Stock Option Agreement with Mr. Christopher Lee Miles. Our common stock is
presently not traded on any market or securities exchange. The 9,700,000 shares
of our common stock and the 4,000,000 shares of common stock underlying the
options issued to Mr. Miles 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: August 25, 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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ABOUT OUR COMPANY
We were incorporated under the laws of the State of Nevada on October 13, 1999
as Atlantic Capital Ventures, Inc. and filed a certificate of amendment in the
State of Nevada changing our name to Wimax EU Ltd. on 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. We are considered to be in the development
stage (a development stage company) since we are devoting substantially all of
our efforts to establishing a new business.
We will offer a rapidly developing technology which provides the "last mile" of
broadband internet service. More accurately, this technology is intended to
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.
Wimax is a terminology used to describe the technology of providing wireless
broadband internet service over two way antennas and covering an area of
approximately 296 sq miles per antenna. (Intel Technology Journal, Volume 8,
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Issue 3, August 2004). By connecting antennas in series using line of sight
microwave transmission, even greater areas can be connected to a single internet
connection. In addition to the broadcast antenna used by the provider, each user
also utilizes a two way wireless antenna to receive and broadcast data to and
from the central antenna. The user's antenna hooks directly to either the user's
computer or local area network (LAN).
Although there are several forms of "WiMax like" technologies currently in use,
the term "WiMax" more accurately refers to the latest Intel technology, first
launched in September 2004, and designated as 802.16. We believe that this
technology appears to represent the future in wireless internet connectivity. As
telephones and other systems 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 wireless broadband
services using all available and developing technologies in the European market
that, according to Internet World Stats, a professional source of information
about global internet usage, has a population exceeding 460 Million people with
only 48% of the people using the internet and far fewer than that currently
using broadband connectivity. This compares to approximately 296 Million people
in the US with approximately 68.5% of them using the internet. There is also a
large market in the former Eastern-bloc countries that have recently joined the
EU. These countries have a largely non-existent telecoms infrastructure outside
of the major cities. However as the economy in these countries develops there
will be an increased need for high-bandwidth Internet access.
As WIMAX is basically a last mile(s) solution we will also need to be
purchasing/leasing bandwidth for our network backbone. This can be done by a
variety of means; in some countries we can use the existing digital mobile
telephony network. In other countries we can purchase connectivity from
companies that own fibre-optic networks. There are several companies to choose
from and some of them offer a whole range of extra services as well as bandwidth
such as internet telephony (VOIP). All this combined may allow us to offer our
potential customers a competitive service.
We intend on leasing space on existing cell phone towers, buildings or other
suitable locations where we will install and maintain our own antennas. These
antennas will be connected to the internet either through wireless or wired
backhaul connections. Access to the internet will be purchased through various
primary suppliers depending on the area. We will then resell this internet
service to individuals or businesses who desire to access the internet through
our broadband wireless service. Users will be required to either purchase or
lease an antenna in order to connect to our service. We intend on providing
those antenna in connection with our providing our customers with internet
service. Like WiFi, WiMax is not limited to line of sight transmissions.
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In addition to providing wireless broadband internet service to our customers,
we may also offer additional services such as web hosting, web design and
internet telephony (voice over internet protocol) in those areas where we feel
there is sufficient demand to create profitability.
Although we are a development stage company, both the market we intend to serve
and the technology we will utilize in serving it are well developed. According
to CNN, the "EU has been very successful in convincing European
telecommunications companies to develop a single standard for mobile phones."
Conversely, "In the U.S., the mobile phone market has multiple phone standards
as companies fight for market share. A dominant standard has not emerged under
this free-market approach. American consumers face at least three competing
digital standards with many users still using analog phones that use yet another
standard." Additionally, according to ZDnet Research, an established source of
technology information, cell phone usage in Western Europe has reached 90% and
is expected to grow to 98% by the end of 2006. Further, the EU's statistics
agency, Eurostat, found that for every 100 E.U. citizens, approximately 80 had
one or more mobile phone subscriptions in 2003. By comparison, US cell phone
penetration is currently pegged at about 54% as of December 2004 according to PC
Magazine. This penetration documents a well developed cell phone network
throughout Europe and suggests that there is an opportunity to utilize the
existing cellular network infrastructure for backhaul and antenna placement. We
intend to contract with the owners of this infrastructure for both antenna
location leases and bandwidth usage for backhaul.
To date, we have conducted interviews with prospective executives, legal council
to assist with licensing in the various markets, technologists, public relations
specialist in both the United States and Europe. No agreements have been reached
with any parties to date. We have also reviewed sites for location of the
corporate headquarters to determine which country and/or facility brings the
most benefit with respect to personnel, taxes, and cost of doing business. We
have also continued to review the latest available technologies, including other
ISP providers for acquisition to assist in a rapid buildup of customer base.
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.
All of our current shareholders are listed as selling shareholders in
this prospectus.
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.
Although we are not contractually obligated to register the shares, we are
registering these shares, at our expense, in furtherance of our goal to have our
shares quoted on the OTC Bulletin Board, so that we can obtain additional
funding and acquire other businesses within our industry. Once this registration
statement has been deemed effective by the Securities and Exchange Commission,
we will be a reporting company, required to make regular annual, quarterly, and
event specific disclosures. We are required to be a reporting company to be
listed on the OTC Bulletin Board.
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. The
statement of operations and balance sheet data for the three months ended June
30, 2005 are derived from our unaudited financial statements.
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Year Ended Year Ended From Inception- For the six
December 31, December 31 October 13, 1999 through months ended
2004 2003 December 31, 2004 June 30, 2005
(Audited) (Audited) (Audited) (Unaudited)
STATEMENT OF OPERATIONS
Revenues $ 0 $ 0 $ 0 $ 0
Net Income $ 0 $ 0 $ 0 $ 0
Total Operating Expenses $ 6,500 $ 0 $ 23,639 $ 221,683
Net Loss $ (6,500) $ 0 $ (23,639) $ 221,683
As of As of
December 31, June 30,
2004 2005
(Audited) (Unaudited)
BALANCE SHEET DATA
Cash $ 2,641 $ 48,968
Total Assets $ 2,641 $ 48,968
Total Liabilities $ 0 $ 6,135
Stockholders' Equity (Deficiency) $ 2,641 $ 42,833
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.
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.
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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. The expression of the going concern by our auditor may make
it more difficult to obtain financing, enter into contracts with service or
products providers or acquire other entities in the industry. The failure to
obtain additional funding or enter into contracts with service or product
providers would impair out ability to successfully implement our business plan.
TECHNOLOGICAL ADVANCEMENTS COULD BRING ADDED COMPETITION TO OUR PROPOSED 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 proposed service offerings.
Additional competition could result in reductions in our potential 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 potential
subscriber base as services 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.
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
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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 THEIR CONTINUED SERVICE, WE MAY BE FORCED TO INTERRUPT OR EVENTUALLY
CEASE OUR OPERATIONS.
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. Christopher Lee Miles is also our sole employee and therefore is
essential to our development. We currently do not have an employment agreement
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.
OUR CURRENT OFFICERS AND DIRECTORS DO NOT HAVE ANY EXPERIENCE WITH THE WIMAX
TECHNOLOGY; THEREFORE, WE WILL NEED TO HIRE ADDITIONAL EMPLOYEES WITH THE
REQUISITE TECHNOLOGICAL KNOWLEDGE OR WE WILL NOT BE ABLE TO ADVANCE OUR BUSINESS
PLAN.
Our current officers and directors do not have any experience with the Wimax
technology. Therefore, we are currently looking to hire additional employees and
management with the requisite technological knowledge. If we are not able to
retain such qualified personnel, we may not be able to continue the development
of our business.
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.
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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.
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.
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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.
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.
7
SELLING SHAREHOLDERS
The shares being offered for resale by the selling stockholders consist of the
9,700,000 shares of our common stock held by 50 shareholders, and a total of
4,000,000 shares of our common stock underlying the options issued pursuant to
our Stock Option Agreement with Christopher Lee Miles, our President, Chief
Executive Officer, Chief Financial Officer, and Chairman of the Board of
Directors.
Such shareholders include the holders of the shares sold in our Regulation D
offering in October 1999. In this offering 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 common stock. All of our shareholders,
including Christopher Miles, owning more than 2001 shares agreed to retire their
shares received under the February 2005 forward split as an in-kind contribution
back to us. This increased the amount of shares held by the shareholders, not
including Mr. Miles shares, to 215,000 shares.
The shares being sold by the seller security holders also include the shares
sold to investors in an offering in January 2005. This offering was sold
pursuant to Section 4(2) of the Securities Act of 1933 and pursuant to same we
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.
In addition, included in that amount are shares issued to the following various
consultants pursuant to consulting agreements and issued pursuant to an
exemption from registration at Section 4(2) of the Securities Act of 1933. 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. On October 1,
2004, we entered into a royalty agreement with Eurotech Capital Ventures, Ltd.
pursuant to which we agreed to issue 100,000 shares of our common stock. Such
shares were not issued until January 2005 and at such time we agreed to issue
EuroTech a total of 1,000,000 shares based upon the amount of shares they would
have received after the 10-1 forward split undertaken by us on October 15, 2004.
On January 15, 2005, we issued 1,500,000 shares to Global Internet Marketing
Corp. pursuant to our consulting agreement with Global.
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 July 5, 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
- --------------------------------------------------------------------------------------------------------------
35215 Yukon, Inc. (1) 200,000 200,000 0 0
Kenneth Bornstein 300,000 300,000 0 0
35216 Yukon, Inc. (2) 300,000 300,000 0 0
Marquis Investments (3) 700,000 700,000 0 0
Natural Venture Corp. (4) 1,000,000 1,000,000 0 0
Global Internet Marketing Corp. (5) 1,500,000 1,500,000 0 0
Eurotech Capital Ventures (6) 1,000,000 1,000,000 0 0
Margot Miles 500,000 500,000 0 0
Christopher Miles (7) 12,001,000 4,000,000 8,001,000 44.16%
Fred Quadros Jr 5,000 5,000 0 0
Desert-AU, Inc. (8) 5,000 5,000 0 0
William Shine 5,000 5,000 0 0
8
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) In addition to the 4,000,000 shares of common stock being registered for
Mr. Miles, we are also registering an additional 4,000,000 shares of common
stock underlying the options issued to Mr. Miles.
(8) 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.
Christopher Lee Miles is the uncle of Margot Miles; the brother of Abigail Miles
and the father of Chandra Cholakian and Cassia Miles. Neither Christopher Miles
or Margot Miles are related to any of our other selling security holders and
neither individual is a broker dealer or an affiliate of a broker-dealer. The
only relationship that the selling security holders have with us is as
shareholders except for those shareholders who have consulting agreements with
us.
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:
9
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.
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 $37,500.
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 July 5, 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. Mr. Miles is the sole proprietor of
Maxwell Media Marketing which specializes in creating and developing media
marketing strategies for startups in the golf industry with an emphasis on
building sound sales strategies and creating synergy with all forms of golf
media, both Public relations and paid advertising. He also was CEO/Director of
Dorado Capital Ventures, Inc. from 2000 until April 2004. In such capacity he
handled all corporate affairs for Dorado and assisted in locating and
negotiating a merger with Electric Moto Corp. which is an electric motorcycle
company out of Oregon. Prior to the merger, Dorado was a dormant entity with no
business operations. Mr. Miles is also the CEO/Director of Edmonds & Edmonds,
Ltd. a corporation with no practical activity or business since 2000. Since
10
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.
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 July 5, 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) 16,001,000 67.80%
356 Pine Avenue, Apt. 1
Pacific Grove, CA 93950
Common Stock Margot Miles 500,000 2.82%
481 Herbert Street
Ashland, OR 97520
Common Stock Natural Venture Corp. 1,000,000 5.65%
PO Box 873
Wickhams Cay 1
Road Town, Tortola BV1
Common Stock Global Internet Marketing Corp. 1,500,000 8.47%
11 D Lower Dorset Street
Dublin 1
Ireland
Common Stock Eurotech Capital Ventures 1,000,000 5.65%
Box 11143
SE-40423 Goteborg
Sweden
Common Stock All executive officers 12,501,000 70.63%
and directors as a group
The percent of class is based on 17,701,000 shares of common stock issued and
outstanding as of July 5 , 2005.
(1) Includes 4,000,000 shares to be issued to Mr. Miles pursuant to his stock
option agreement with the Company for a period of two years expiring January 10,
2007 at $.50 a share. The 4,000,000 shares are not included in the percentage or
outstanding shares total since the shares have not been issued to date.
11
(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 July 5, 2005, 17,701,000 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.
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.
12
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.
DESCRIPTION OF BUSINESS
General
We were incorporated under the laws of the State of Nevada on October 13, 1999.
Our original business plan was to develp an e-commerce business; however, the
plan was abandoned at the outset with the collapse of the internet market in
early 2000. From 2000 until 2004, we had no business activities. In October
2004, we began developing a business plan in the wireless broadband industry. We
are now 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 intend to 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.
We are committed to participating in the expansion of wireless broadband
services using all available and developing technologies in the European
market that, according to Internet World Stats, a professional source of
information about global internet usage, has a population exceeding 460
Million people with only 48% of the people using the internet and far
fewer than that currently using broadband connectivity. This compares to
approximately 296 Million people in the US with approximately 68.5% of
them using the internet.
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.
13
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. We will look to acquire existing independent internet providers who are
interested in joining our company and becoming our subsidiary for a specific
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.
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.
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.
We anticipate the initial roll out of Wimax EU would require at least an
additional investment of $2 Million in addition to the capital we already
raised. To date none of that amount has been raised nor have potential sources
for the funding been identified.
Wimax is a terminology used to describe the technology of providing wireless
broadband internet service over two way antennas and covering an area of
approximately 296 sq miles per antenna. By connecting antennas in series using
line of sight microwave transmission, even greater areas can be connected to a
single internet connection. In addition to the broadcast antenna used by the
provider, each user also utilizes a two way wireless antenna to receive and
broadcast data to and from the central antenna. The user's antenna hooks
directly to either the user's computer or local area network (LAN).
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.
In November 2004, we purchased 40 URL addresses which we intend to use to
develop a consistent brand name when launching our service in the various
individual EU countries whil still allowing for a local presence. We have
published web pages on two of those URLs in order to receive feedback as to
design and effectiveness. With the limited funds available at this time, we are
continuing to plan our strategies and research the market and have not taken any
additional active steps to develop our operations further.
14
WIMAX WIRELESS BROADBAND INTERNET
"WiMAX" is short for "Worldwide Interoperability for Microwave Access" and
describes the latest technologies for delivering the last several miles of
wireless broadband internet service to end users. All products feature a
centralized antenna which is connected to the internet and another antenna at
the end user's location to receive and broadcast data from computers that are
connected to the antenna either individually or through a local area network.
We intend to utilize all available WiMAX and WiMAX-like technologies depending
upon the various markets we enter. Wimax is similar to WiFi in that they both
provide wireless access to the network. The primary difference between the two
technologies, is that Wimax is designed to provide coverage over a broader
geographical area than WiFi. Whereas WiFi is designed for areas known as "hot
spots" and is normally designed to provide service within a radius of between
100 to 300 feet of an antenna, a single Wimax antenna can provide access over an
area of approximately 296 sq miles.
However, Wimax does require an antenna that is considerably larger and more
powerful than a typical WiFi system because of the greater distances. With the
rapidly changes in technology, we cannot determine specifically how large or how
expensive the antenna will be when we decide to purchase them but we believe the
additional cost of these antenna could negatively affect our ability to provide
services in areas of low population density.
We do not hold the rights to any technology at this time.
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. We have entered into preliminary discussions with Aperto
Networks with regard to developing a business alliance. Aperto Networks supplies
hardware and support services for the primary technologies we intend to utilize.
With changes in the development of Wimax technologies, we may later choose not
to create alliances with Aperto Networks or may attempt to create other
relationships in addition to Aperto Networks. To date, no material agreements
have been entered into.
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.
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.
15
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.
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.
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.
16
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.
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 an accepted method of
advertising in Europe. 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.
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.
According to the Wimax Forum, which is a group comprised of industry leaders who
are committed to the open interoperability of all products used for broadband
wireless access, Wimax technology is being designed to operate in both licensed
and license-exempt spectrums primarily in the 5.8GHz, 3.5GHz and 2.5GHz range.
The 5 GHz band is internationally designated, including throughout Europe, as a
"license-exempt" band and is further recognized as suitable for Wimax services.
We intend to focus our business exclusively toward providing service using
products configured to operate in this license-exempt band.
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.
17
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 part-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 4-6 months. The new management will be responsible
for additional hires as necessary. The anticipated cost for the recruitment of
the personnel is approximately $2,500.
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 8 months
and we anticipate the cost for the new headquarters will be $25,000.
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 10 months
and anticipate the cost to create the alliances to be around $5,000.
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 and we anticipate the cost to be around
$2,000.
18
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. In order to achieve our above stated
objectives we will be required to raise an additional $ 1,000,000. We expect to
raise these funds from private sale of stock or through the exercise of existing
options. Additionally, 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. The space consists of approximately
150 Square feet of office space in Mr. Miles' residence which is shared with
Maxwell Media Marketing. 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, 2000, 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.
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. We decided to grant this repurchase option to make us more attractive
to prospective executives who might be interested in a management position with
us in the future and to possibly reduce the number of shares outstanding to make
it easier to obtain funding. In consideration for the repurchase option, we
agreed to grant Mr. Miles the 4,000,000 stock options.
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, 2000, 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 as compensation for
accepting the position and the incumbent responsibility as our officers and
directors. 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.
19
In February 2005, we approved a 5-1 forward split of our outstanding shares.
Christopher Miles agreed to retire his shares received under the February 2005
forward split as an in-kind contribution back to us. 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 wherein Natural Venture Corp.
agreed to consult with us regarding capital formation strategies and locating
suitable targets for possible business combinations for a period of 12 months.
Such shares were increased to 1,000,000 shares in our 10-1 forward split on
October 15, 2004. In February 2005, we approved a 5-1 forward split of all our
outstanding common shares. Natural Ventures agreed to retire its shares received
under the February 2005 forward split as an in-kind contribution back to us. 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 agreed to issue 100,000 shares to Eurotech Capital
Ventures, Ltd. pursuant to a 99 year royalty agreement with Eurotech whereby we
obtained 40 URL's and an accompanying business strategy for developing a market
for the delivery of wireless broadband internet services in Europe. Such shares
were not issued until January 2005 and at such time we agreed to issue EuroTech
a total of 1,000,000 shares based upon the amount of shares they would have
received after the 10-1 forward split undertaken by us on October 15, 2004. In
February 2005, we approved a 5-1 forward split of all our outstanding common
shares. Eurotech agreed to retire their shares received under the February 2005
forward split as an in-kind contribution back to us. 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 wherein Global agreed to
provide consulting services relating to the development of the effective
marketing of internet services in Europe for a period of 24 months. In February
2005, we approved a 5-1 forward split of all our outstanding common shares.
Global agreed to retire their shares received under the February 2005 forward
split as an in-kind contribution back to us. 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. In February 2005, we approved a
5-1 forward split of all our outstanding common shares. All of the shareholders
who received shares in the January 2005 offering agreed to retire their shares
received under the February 2005 forward split as an in-kind contribution back
to us. 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 July 5, 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
20
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 17,700 shares as of the date of this prospectus.
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
$.50 a share. We are registering the resale of the 4,000,000 shares underlying
the options in this prospectus. There are no other options to purchase our
securities outstanding.
We may in the future establish an incentive stock option plan for our directors,
employees and consultants.
Registration Rights
We have not granted registration rights to the selling shareholders or to any
other persons.
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
since October 2000 when the new officers and directors were appointed until July
5, 2005.
ANNUAL COMPENSATION LONG TERM COMPENSATION
RESTRICTED OPTION
OTHER ANNUAL STOCKS/PAYOUTS SARS LTIP ALL OTHER
NAME TITLE YEAR SALARY BONUS COMPENSATION AWARDED ($) 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
$.50 a share. We are registering the resale of the 4,000,000 shares underlying
the options in this prospectus.
21
OPTIONS GRANTS IN LAST FISCAL YEAR
(Individual Grants)
Number of securities Percent of total Exercise
underlying options options granted to or base
granted employees in last price
Expiration Name (#) fiscal year ($/Share) Date
- --------------- ---------------- ----------- --------- -------
Christopher Lee Miles - 4,000,000 - 100% $50 1/10/07
Margot Miles - 0 - N/A N/A N/A
Aggregated Option Exercises and Fiscal Year-End Option Value Table. The
following table sets forth certain information regarding stock options exercised
during fiscal 2004 and held as of July 5, 2005, by the executive officers named
in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options at
Options at Fiscal
Fiscal Year-
Name Year-End(#) End($)
- -------------------------- ------------------- ----------------- --------------- -------------
Shares acquired on Value realized ($) Exercisable/ Exercisable/
exercise (#) Unexercisable Unexercisable
------------------ ------------------ --------------- -------------
Christopher Lee Miles - 0 - N/A 4,000,000 -0-
Margot Miles - 0 - N/A N/A N/A
Employment Agreements
We do not have an employment agreements with Christopher Miles or Margot Miles
our officers and directors.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
There have been no disagreements with or changes in accountants to date.
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.
22
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
CONTENTS
PAGE 1 CONDENSED BALANCE SHEET AS OF JUNE 30, 2005 (UNAUDITED)
PAGE 2 CONDENSED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED
JUNE 30, 2005 AND 2004 AND FOR THE PERIOD FROM OCTOBER 14,
1999 (INCEPTION) TO JUNE 30, 2005 (UNAUDITED)
PAGES 3 - 4 CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(DEFICIENCY) FOR THE PERIOD FROM OCTOBER 14, 1999
(INCEPTION) TO JUNE 30, 2005 (UNAUDITED)
PAGE 5 CONDENSED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED
JUNE 30, 2005 AND 2004 AND FOR THE PERIOD FROM OCTOBER 14,
1999 (INCEPTION) TO JUNE 30, 2005 (UNAUDITED)
PAGES 6 - 11 NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED BALANCE SHEET
AS OF JUNE 30, 2005
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash $ 48,968
------------------
TOTAL ASSETS $ 48,968
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 6,135
------------------
TOTAL CURRENT LIABILITIES 6,135
------------------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 50,000,000 shares authorized,
17,701,000 shares issue and outstanding 17,701
Additional paid in capital 395,079
Deferred stock compensation (121,625)
Accumulated deficit during development stage (248,322)
------------------
Total Stockholders' Equity 42,833
------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 48,968
==================
See accompanying notes to condensed financial statements.
1
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Period
from
For the Six For the Six October 14, 1999
Months Ended Months Ended (Inception) to
June 30, 2005 June 30, 2004 June 30, 2005
------------ ----------------- ------------
REVENUES $ -- $ -- $ --
OPERATING EXPENSES
Payroll expense 8,000 -- 8,000
Professional fees 87,171 -- 76,921
Professional services- related party -- -- 16,750
Consulting expense 128,875 -- 128,875
General and administrative 637 -- 1,026
------------ ----------------- ------------
Total Operating Expenses 224,683 -- 248,322
------------ ----------------- ------------
Loss Before Provision for Income Taxes (224,683) -- (248,322)
Provision for Income Taxes -- -- --
------------ ----------------- ------------
NET LOSS $ (224,683) $ -- $ (248,322)
============ ================= ============
Net loss per share - basic and diluted $ (0.17) $ -- $ --
============ ================= ============
Weighted average number of shares outstanding
during the period - basic and diluted 1,291,667 67,705,000 58,438,493
============ ================= ============
See accompanying notes to condensed financial statements.
2
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIOD FROM OCTOBER 14, 1999 (INCEPTION) TO JUNE 30, 2005
(UNAUDITED)
Accumulated
Additional Deficit During
Common Stock Paid-In Deferred Stock Development
Shares Amount Capital Compensation Stage Total
----------- ----------- ----------- ----------- ----------- -----------
Balance, October 14, 1999 (inception) -- $ -- $ -- $ -- $ -- $ --
Issuance of common stock to founders at
$.00002 per share 5,900,000 5,900 (5,782) -- -- 118
Issuance of common stock at $.066
per share 205,000 205 13,325 -- -- 13,530
Net loss, 1999 -- -- -- -- (389) (389)
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 6,105,000 6,105 7,543 -- (389) 13,259
Issuance of common stock to new directors
at $.00002 per share 62,500,000 62,500 (61,250) -- -- 1,250
Surrender of founder shares (5,900,000) (5,900) 5,782 -- -- (118)
Stock issued for consulting services at
$.00002 per share 5,000,000 5,000 -- -- -- 5,000
Net loss, 2000 -- -- -- -- (16,750) (16,750)
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 2000 67,705,000 67,705 (47,925) -- (17,139) 2,641
----------- ----------- ----------- ----------- ----------- -----------
Net loss, 2001 -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 2001 67,705,000 $ 67,705 $ (47,925) $ -- $ (17,139) $ 2,641
See accompanying notes to condensed financial statements.
3
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIOD FROM OCTOBER 14, 1999 (INCEPTION) TO JUNE 30, 2005
(UNAUDITED)
Accumulated
Additional Deficit During
Common Stock Paid-In Deferred Stock Development
Shares Amount Capital Compensation Stage Total
----------- ----------- ----------- ----------- ----------- -----------
Net loss, 2002 -- $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 2002 67,705,000 67,705 (47,925) -- (17,139) 2,641
Net loss, 2003 -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 2003 67,705,000 67,705 (47,925) -- (17,139) 2,641
Net loss, 2004 -- -- -- -- (6,500) (6,500)
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 2004 67,705,000 67,705 (47,925) -- (23,639) (3,859)
Surrender of shares (54,004,000) (54,004) 54,004 -- -- --
Common stock issued at $.10
per share 1,300,000 1,300 128,700 -- -- 130,000
Common stock issued for services at
$.10 per share 1,500,000 1,500 148,500 (121,625) -- 28,375
Common stock issued at $.05 per share 200,000 200 9,800 -- -- 10,000
Common stock issued for services at
$.10 per share 1,000,000 1,000 99,000 -- -- 100,000
In-kind contribution of services -- -- 3,000 -- -- 3,000
Net loss for the six months ended June 30, 2005 -- -- -- -- (224,683) (224,683)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, JUNE 30, 2005 17,701,000 $ 17,701 $ 395,079 $ (121,625) $ (248,322) 42,833
=========== =========== =========== =========== =========== ===========
See accompanying notes to condensed financial statements.
4
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Period from
For the Six For the Six October 14, 1999
Months Ended Months Ended (Inception) to
June 30, 2005 June 30, 2004 June 30, 2005
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(224,683) $ -- $(245,322)
Adjustments to reconcile net loss to net cash used in operating
activities:
Common stock issued for services 128,375 -- 134,625
In-kind contribution of services 3,000 -- 3,000
Changes in operating assets and liabilities:
Other receivables 2,641 -- --
Accrued liabilities (365) -- 6,135
--------- ----------- ---------
Net Cash Used In Operating Activities (91,032) -- (104,562)
--------- ----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES -- -- --
--------- ----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 140,000 -- 153,530
--------- ----------- ---------
Net Cash Provided By Financing Activities 140,000 -- 153,530
--------- ----------- ---------
NET INCREASE IN CASH 48,968 -- 48,968
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD -- -- --
--------- ----------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 48,968 $ -- $ 48,968
========= =========== =========
SUPPLEMENTAL DISCLOSURE OF NON- CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for services $ 128,375 $ -- $ 134,625
========= =========== =========
See accompanying notes to condensed financial statements.
5
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
-------------------
(UNAUDITED)
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 March 31,
2005. 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 June 30, 2005, 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 June 30, 2005. 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 Statement of Financial Accounting Standards ("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 June 30, 2005.
As reflected in the accompanying financial statement, the financial statements
do not include any adjustments that might result from the outcome of this
uncertainty because the Company. 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.
6
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
-------------------
(UNAUDITED)
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 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.
Interim Financial Statements
- ----------------------------
The accompanying interim unaudited financial information has been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such
rules and regulations, although management believes that the disclosures are
adequate to make the information presented not misleading. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the financial position of the Company as of June 30,
2005 and the related operating results and cash flows for the interim period
presented have been made. The results of operations of such interim period are
not necessarily indicative of the results of the full year.
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
- -------------------
7
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
-------------------
(UNAUDITED)
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 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 June 30, 2005
and 2004 pursuant to SFAS No. 128, "Earnings Per Share". As of June 30, 2005 and
2004, common share equivalents of 4,000,000 stock options were anti-dilutive and
not used in the calculation of diluted net loss per share.
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
8
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
-------------------
(UNAUDITED)
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
- -----------------------------------
SFAS 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.
Financial Instruments
- ---------------------
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.
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 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
9
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
-------------------
(UNAUDITED)
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.
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 - STOCKHOLDERS' EQUITY
During 2005, pursuant to a two-year consulting agreement with Global Internet
Marketing, the Company issued 1,500,000 shares of common stock valued at a
recent cash offering price of $0.10 per share. The Company recorded consulting
expense of $28,375 and deferred consulting expense of $121,625 for the six
months ended June 30, 2005. The Company will amortize the agreement over the
life if the contract term.
During 2005, the Company issued 1,300,000 shares of common stock for cash of
$130,000 ($.10 per share) to three investors. In addition, the Company issued
200,000 shares of common stock for cash of $10,000 ($.05 per share).
During 2005, pursuant to a consulting agreement, the Company issued 1,000,000
shares of common stock valued at a recent cash offering price of $0.10 per
share. The Company recorded consulting expense of $100,000 for the six months
ended June 30, 2005.
During 2005, the Company issued 4,000,000 stock options to its President and CEO
for compensation at an exercise price of $0.50 per share. The fair value of the
options was estimated on the grant date using the Black-Scholes option pricing
model as required by SFAS 123 with the following assumptions: expected dividend
yield 0%, volatility 0%, risk-free interest rate of return of 3.5% and expected
life of two years. The value was immaterial and therefore no expense was
included in the statement of operations.
During 2005, the Company issued a two-year put option to its officer and
director to repurchase up to 8,000,000 common shares at an exercise price of
$200,000 or $.025 per share. The option gives the Company the right, but not the
obligation to repurchase the shares of common stock any amount. The put option
expires June 10, 2007.
10
WIMAX EU, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
-------------------
(UNAUDITED)
During February 2005, the Company declared a 5 for 1 common stock split effected
to stockholders of record on February 15, 2005. Per share and weighted average
share amounts have been retroactively restated in the accompanying financial
statements and related notes to reflect this stock split. Also on February 15,
2005, stockholders' returned 54,004,000 shares of common stock to the Company
which was recorded as an in-kind contribution.
During 2005, the Company recorded an in-kind contribution of $500 per
month for services contributed by its Chief Executive Officer. As of
June 30, 2005, the Company has recorded $3,000 for these services.
11
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 Deficiency 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 -12
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 years then
ended December 31, 2004 and 2003 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 DEFICIENCY
LIABILITIES
CURRENT LIABILITIES
TOTAL CURRENT LIABILITIES $ 6,500
----------------
TOTAL LIABILITIES 6,500
----------------
SHAREHOLDERS' DEFICIENCY
Common Stock, $0.001 par value, 50,000,000 shares authorized
67,705,000 issued and outstanding. 67,705
Additional paid-in capital (47,925)
Deficit accumulated during the development stage (23,639)
----------------
TOTAL SHAREHOLDERS' DEFICIENCY (3,859)
----------------
TOTAL LIABILITIES AND SHAREHOLDER'S DEFICIENCY $ 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) $ (0.00)
============= ============ =============
Weighted average shares outstanding - basic and diluted 67,705,000 67,705,000 55,848,305
============= ============ =============
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 DEFICIENCY
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 5,900,000 5,900 (5,782) -- 118
Issuance of common stock at $3.30 per share 205,000 205 13,325 -- 13,530
Net loss -- -- -- (389) (389)
-------------- ----------- ----------- ------------ ------------
BALANCE - DECEMBER 31, 1999 6,105,000 6,105 7,543 (389) 13,259
============== =========== =========== ============ ============
Issuance of common stock to new directors at par 62,500,000 62,500 (61,250) -- 1,250
Surrender of founders shares (5,900,000) (5,900) 5,782 -- (118)
Stock issued for consulting services 5,000,000 5,000 -- -- 5,000
Net loss -- -- -- (16,750) (16,750)
-------------- ----------- ----------- ------------ ------------
BALANCE - DECEMBER 31, 2000 67,705,000 $ 67,705 (47,925) (17,139) 2,641
============== =========== =========== ============ ============
Net loss -- -- -- -- --
BALANCE - DECEMBER 31, 2001 67,705,000 $ 67,705 $ (47,925) (17,139) 2,641
============== =========== =========== ============ ============
Net loss -- -- -- -- --
-------------- ----------- ----------- ------------ ------------
BALANCE - DECEMBER 31, 2002 67,705,000 $ 67,705 $ (47,925) (17,139) 2,641
============== =========== =========== ============ ============
Net loss -- -- -- -- --
-------------- ----------- ----------- ------------ ------------
BALANCE - DECEMBER 31, 2003 67,705,000 $ 67,705 $ (47,925) (17,139) 2,641
============== =========== =========== ============ ============
Net loss -- -- -- (6,500) (6,500)
-------------- ----------- ----------- ------------ ------------
BALANCE - DECEMBER 31, 2004 67,705,000 $ 67,705 $ (47,925) $ (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) -- (2,641)
Increase in accrued expenses 6,500 -- 6,500
--------- -------- ---------
Net cash used by operating activities (2,641) -- (13,530)
--------- -------- ---------
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) -- --
CASH AT BEGINNING OF PERIOD 2,641 2,641 --
--------- -------- ---------
CASH AT END OF PERIOD $ -- $ 2,641 $ --
========= ======== =========
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-.
NOTE E - STOCKHOLDERS EQUITY
During 1999, the Company issued 5,900,000 shares of common stock to founders for
services with a fair value of $118 ($0.00002 per share).
During 1999, the Company issued 205,000 shares of common stock to individuals
for cash of $13,530 ($0.066 per share).
During 2000, founders of the Company returned 5,900,000 shares of founders stock
as an in kind contribution of stock. The stock was valued at its par value.
During 2000, the Company issued 62,500,000 shares of common stock to directors
for services with a fair value of $1,250 ($0.00002 per share)
During 2000, the Company issued 5,000,000 shares of common stock to a consultant
for services with a fair value of $5,000 ($0.005 per share).
F - 11
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
During October 2004, the Company declared a 10 for 1 common stock split effected
to stockholders of record on October 15, 2004. Per share and weighted average
share amounts have been retroactively restated in the accompanying financial
statements and related notes to reflect this stock split. During February 2005,
the Company declared a 5 for 1 common stock split effected to stockholders of
record on February 15, 2005. Per share and weighted average share amounts have
been retroactively restated in the accompanying financial statements and related
notes to reflect this stock split.
NOTE E - COMMITMENTS AND CONTINGENCIES
During 2000, the Company entered into an agreement with a consultant to provide
services for a period of one year. The agreement called for compensation of
5,000,000 shares with a fair value of $5,000. During 2004, the Company entered
into a share lockup agreement with the consultant. In exchange for the Company
including the shares issued to the consultant in a registration statement, the
consultant agreed to sell not more than 10% of their outstanding shares each
month for a period of one year.
During 2004, as amended on January 3, 2005, the Company entered into a 10 year
royalty agreement with a company to license and use all URL's owned by the
licensor. The agreement calls for the company to pay 1.5% of the gross
revenue.In addition, the agreement called for the issuance of 1,000,000 shares
of stock. The Company recorded the fair value of $10,000 based on recent cash
offering prices ($0.01 per share). The agreement also requires the company to
have an effective registration statement prior to November 30, 2005 or the
license becomes extinguished.
NOTE G - SUBSEQUENT EVENTS
During 2005, the Company entered into an agreement with a consultant to provide
services for a period of two years. The agreement calls for compensation of
7,500,000 shares of common stock. The shares were valued at a recent cash
offering price of $150,000 ($0.02 per share). The value of the services will be
amortized over the period of the contact. During 2005, the Company entered into
a share lookup agreement with the consultant. In exchange for the Company
including the shares issued to the consultant in a registration statement, the
consultant agreed to sell not more than 10% of their outstanding shares each
month for a period of one year.
During 2005, the Company issued 1,500,000 shares of common stock for cash of
$150,000 ($0.02 per share).
During 2005, the Company issued an option to its officer for 4,000,000 shares of
common stock with an exercise price of $0.50 per share. The stock options vested
upon issuance and are exercisable for a period of two years. The Company applies
APB Opinion No. 25 and related interpretations in accounting for stock options
issued to employees.
During 2005, the Company issued a two year put option to its officer and
director to repurchase up to 8,000,000 common shares at an excise price of
$200,000 or $0.025 per share. The put option expires on January 10, 2007.
During February 2005, the Company declared a 5 for 1 common stock split effected
to stockholders of record on February 15, 2005. Per share and weighted average
share amounts have been retroactively restated in the accompanying financial
statements and related notes to reflect this stock split. Also on February 15,
2005, stockholders owning 54,004,000 shares of common stock were returned to the
Company by stockholders and recorded as an In Kind Contribution.
F - 12
WIMAX EU, LTD
14,200,000 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.
23
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 entered into a royalty agreement with Eurotech Capital
Ventures, Ltd. pursuant to which we agreed to issue 100,000 shares of our common
stock. Such shares were not issued until January 2005 and at such time we agreed
to issue EuroTech a total of 1,000,000 shares based upon the amount of shares
they would have received after the 10-1 forward split undertaken by us 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.
II-1
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.*
10.6 Addendum to Royalty Agreement between the Company and Eurotech
Capital Ventures Ltd.
10.7 Lock-up Agreement
10.8 Waiver Agreement
21 Subsidiaries*
23.1 Consent of Jewett Schwartz & Associates
23.2 Consent of Counsel, as in Exhibit 5.1
* Filed as part of the original SB-2 Registration Statement with the SEC on
March 16, 2005.
II-2
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;
(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.
II-3
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 August 25, 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: August 25, 2005
II-4