UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2005.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _______ to _______
Commission File Number: 0-27083
W3 GROUP, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 84-1108035
-------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
60 East 42nd Street, Suite 1163, New York, NY 10165
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(Address of Principal Executive Offices)
(212) 750-7878
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(Issuer's Telephone Number)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 1,601,167 shares of
Common Stock, $.0001 par value, outstanding on September 30, 2005.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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W3 GROUP, INC.
Form 10-QSB Quarterly Report
For Quarterly Period Ended September 30, 2005
Table of Contents
Page
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PART I FINANCIAL INFORMATION 2
Item 1. Financial Statements 2
Unaudited Balance Sheet at September 30, 2005 and
Audited Balance Sheet at December 31, 2004 2
Unaudited Statements of Operations
For Three and Nine Months Ended
September 30, 2005 and September 30, 2004 3
Unaudited Statements of Cash Flows
For Nine Months Ended
September 30, 2005 and September 30, 2004 4
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Item 3. Controls and Procedures 14
PART II OTHER INFORMATION 15
SIGNATURE 16
1
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
W3 GROUP, INC.
BALANCE SHEETS
--------------
September 30, 2005 December 31, 2004
(Unaudited) (Audited)
------------------ -----------------
ASSETS
------
Current assets:
Cash $ 0 $ 0
----------------- -----------------
Total current assets 0 0
----------------- -----------------
Total assets $ 0 $ 0
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable & accrued expenses $ 27,850 $ 24,850
----------------- -----------------
Total Current Liabilities: $ 27,850 $ 24,850
================= =================
Shareholder loan payable $ 68,254 $ 65,854
Stockholders' equity: (See Notes 3 and 4)
Common stock - $.0001 par value,
authorized 100,000,000 shares;
1,601,167 issued and outstanding
at September 30, 2005 and
1,550,943 at December 31, 2004 160 155
Additional paid-in-capital 2,511,342 2,511,346
Accumulated deficit (2,607,606) (2,602,205)
----------------- ---------------
Total shareholders' equity (96,104) (90,704)
----------------- ---------------
Total Liabilities &
Shareholders' Equity $ 0 $ 0
================= ===============
The accompanying notes are an integral part of these financial statements.
2
W3 GROUP, INC.
STATEMENTS OF OPERATIONS
------------------------
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
---------------------- ----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Revenues: $ 0 $ 0 $ 0 $ 0
========== ========== ========== ==========
General and
Administrative Expenses:
Consulting $ 0 $ 0 $ 0 $ 36,000
Administration $ 0 $ 0 $ 1,801 $ 3,918
---------- ---------- ---------- ----------
Total General and
Administrative Expenses $ 0 $ 0 $ 1,801 $ 39,918
---------- ---------- ---------- ----------
Loss From Operations $ 0 0 $ (1,801) $ (39,918)
========== ========== ========== ==========
Other Income and (Expenses):
Interest (Expense) $ (1,200) $ (1,200) $ (3,600) $ (3,600)
---------- ---------- ---------- ----------
Total Other Income
and (Expenses) $ (1,200) $ (1,200) $ (3,600) $ (3,600)
---------- ---------- ---------- ----------
Net Loss Before Provision
For Income Taxes $ (1,200) $ (1,200) $ (5,401) $ (43,518)
========== ========== ========== ==========
Provision For Income Taxes $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ----------
Net Loss $ (1,200) $ (1,200) $ (5,401) $ (43,518)
========== ========== ========== ==========
Net Loss Per Share
Basic and Fully Diluted $ 0.0008 $ 0.0008 $ 0.0035 $ 0.0390
========== ========== ========== ==========
Weighted Average
Number of Shares
Basic and Fully Diluted 1,584,252 1,550,943 1,550,943 1,115,613
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
3
W3 GROUP, INC.
CASH FLOW STATEMENTS
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FOR NINE MONTHS ENDED SEPTEMBER 30
----------------------------------
2005 2004
(Unaudited) (Unaudited)
----------------- ----------------
Operating Activities:
Net loss $ (5,401) $ (43,518)
Adjustments to reconcile
net income items not requiring
the use of cash:
Administration expense 0 0
Changes in other operating
assets and liabilities:
Accounts payable & accrued expenses 5,401 (43,518)
----------------- --------------
Net cash used by operations $ 0 $ 0
Net increase (decrease) in cash
during the period
Cash balance at
beginning of the period $ 0 $ 0
----------------- --------------
Cash balance at
end of the period $ 0 $ 0
----------------- --------------
Supplemental disclosures of
cash flow information:
Interest paid during the period $ 0 $ 0
Income taxes paid during the period $ 0 $ 0
The accompanying notes are an integral part of these financial statements.
4
W3 GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2005
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1. Organization of the Company and Significant Accounting Principles
W3 Group, Inc. ("the Company") was incorporated in the State of Colorado in
February 1988. The Company has no business operations at present and its
activities since inception are primarily related to its initial public
offering and merger activities.
In May 2003, the Company changed its state of incorporation to Delaware.
Use of Estimates - The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
reasonable estimates and assumptions that affect the reported amounts of the
assets and liabilities and disclosure of contingent assets and liabilities
and the reported amounts of revenues and expenses at the date of the
financial statements and for the period they include. Actual results may
differ from these estimates.
Income taxes - The Company accounts for income taxes in accordance with the
Statement of Accounting Standards No. 109 (SFAS No. 109), Accounting for
Income Taxes". SFAS No. 109 requires an asset and liability approach to
financial accounting and reporting for income taxes. Deferred income tax
assets and liabilities are computed annually for differences between
financial statement and income tax bases of assets and liabilities that will
result in taxable income or deductible expenses 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 and liabilities to
the amount expected to be realized. Income tax expense is the tax payable or
refundable for the period adjusted for the change during the period in
deferred tax assets and liabilities.
Development Stage Company - the Company has had no operations or revenues
since its inception and therefore qualifies for treatment as a development
stage company as per Statement of Financial Accounting Standards (SFAS) No.
7. As per SFAS No.7, financial transactions are accounted for as per
generally accepted accounted principles. Costs incurred during the
development stage are accumulated in "losses accumulated during the
development stage" and are reported i n the Stockholders' Equity section of
the balance sheet.
Recent Accounting Pronouncements -
EITF 03-16: In March 2004, the EITF reached a consensus regarding Issue No.
03-16, "Accounting for Investments in Limited Liability Companies" ("EITF
03-16"). EITF 03-16 requires investments in limited liability companies
("LLCs") that have separate ownership accounts for each investor to be
accounted for similar to a limited partnership investment under Statement
of Position No. 78-9, "Accounting for Investments in Real Estate Ventures."
Investors are required to apply the equity method of accounting to their
investments at a much lower ownership threshold than the 20% threshold
applied under APB No. 18, "The Equity Method of Accounting for Investments
in Common Stock." The adoption of EITF 03-16 did not have a material impact
on the financial condition or results of operations.
5
EITF 04-1: In September 2004, the EITF reached a consensus regarding Issue
No. 04-1, "Accounting for Preexisting Relationships Between the Parties to a
Business Combination" ("EITF 04-1"). EITF 04-1 requires an acquirer in a
business combination to evaluate any preexisting relationship with the
acquiree to determine if the business combination in effect contains a
settlement of the preexisting relationship. A business combination between
parties with a preexisting relationship should be viewed as a multiple
element transaction. EITF 04-1 is effective for business combinations after
October 13, 2004, but requires goodwill resulting from prior business
combinations involving parties with a preexisting relationship to be tested
for impairment by applying the guidance in the consensus. The adoption of
EITF 04-1 did not have a material impact on the financial condition or
results of operations.
SFAS No. 123R: In December 2004,the FASB issued SFAS No. 123 (revised 2004),
"Share-Based Payment" ("SFAS No. 123R"), which replaces SFAS No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123") and supercedes
APB Opinion No. 25, "Accounting for Stock Issued to Employees." SFAS No.
123R requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the financial statements based
on their fair values, beginning with the first interim or annual period
after June 15, 2005, with early adoption encouraged. In addition, SFAS No.
123R will cause unrecognized expense (based on the amounts in our pro forma
footnote disclosure) related to options vesting after the date of initial
adoption to be recognized as a charge to results of operations over the
remaining vesting period. The adoption of SFAS No. 123R did not have a
material impact on the financial condition or results of operations.
2. Fair Value of Financial Instruments
The value of accounts payables and accrued expenses and shareholder loans
payable are estimated to approximate fair market value at September 30, 2005
and December 31, 2004.
3. Preferred Stock
On April 14, 2005, the Board of Directors passed a resolution, which was
approved by shareholder action, to implement mandatory conversion of all of
the Company's issued and outstanding Series B Convertible Preferred Stock
effective April 25, 2005 for shareholders of record on April 20, 2005, on
the basis of one share of common stock for each two (2) shares of preferred
stock. Accordingly, 1,478,901 shares of Series B Preferred Stock were
converted to 739,451 shares of Common Stock effective April 25, 2005. These
shares of Common Stock were subsequently subjected to a 1 - 15 reverse split
of all common stock effective May 9, 2005. (See Note 4)
6
4. Issuance of Common Stock
On February 8, 2005, 20,000 shares of Series B convertible preferred stock
were converted to 10,000 shares of common stock.
On January 5, 2004, 159 shares of Series B preferred stock were converted to
79 shares of common stock.
On May 18, 2004, the Company issued 5,314,216 shares of common stock valued
at $159,426 to vendors and consultants to settle unpaid debt.
On May 18, 2004, the Company issued 6,357,766 shares of common stock valued
at $190,733 to a consultant to settle unpaid debt.
On May 18, 2004, the Company issued 1,200,000 shares of common stock valued
at $36,000 to a director of the Company for services performed.
On April 14, 2005, the Board of Directors unanimously approved a reverse
split of the Company's common stock on the basis of one (1) share for each
fifteen (15) shares held on the record date, May 8, 2005, effective May 9,
2005, which was approved by shareholders' action.
On April 25, 2005, 1,478,901 shares of Series B Convertible Preferred Stock
were converted to 739,451 shares of Common Stock. (See Note 3)
On May 9, 2005, the Company effected a one for fifteen reverse stock split
of the 24,013,596 outstanding shares of common stock. All common share and
per share information included in these financial statements have been
retroactively adjusted to reflect this reverse split.
5. Addendum to the Consolidated Statement of Cash Flows
The following transactions occurring during the fiscal year ended December
31, 2004 and were excluded from the calculation of the statement of cash
flows since they did not involve a transfer of cash.
On May 18, 2004, the Company issued 5,314,216 shares of common stock valued
at $159,426 to vendors and consultants to settle unpaid debt.
On May 18, 2004, the Company issued 6,357,766 shares of common stock valued
at $190,733 to a consultant to settle unpaid debt.
On May 18, 2004, the Company issued 1,200,000 shares of common stock valued
at $36,000 to a director of the Company for services performed.
6. Net Loss per Share
The Company applies SFAS No. 128, "Earnings per Share" to calculate loss per
share. In accordance with SFAS No. 128, basic net loss per share has been
computed based on the weighted average of common shares outstanding during
the years.
7
As of September 30, 2005, there are no financial instruments outstanding
convertible into common stock.
7. Related Party Transactions
The Company currently utilizes office space provided by a director of the
Company at no cost.
At September 30, 2005 and September 30, 2004, the Company is indebted to
four shareholders, including one director of the Company for notes payable
in the amount of $40,000. The loans are unsecured and due on demand and
at 12% interest. Accordingly, the Company recorded $1,200 interest expense
on the loans for the quarters ended September 30, 2005 and 2004.
8. Concentration of Credit Risk
The president and directors of the Company provide various administrative
services on behalf of the Company in addition to providing necessary funds
to pay for administrative services. A withdrawal of their financial support
could have a material adverse impact on the financial condition of the
Company and its ability to operate as a going concern.
9. Income taxes
There is no provision for federal or state income taxes for the three month
periods ended September 30, 2005 and 2004, since the Company incurred losses
from inception.
As of September 30, 2005, the Company has a net operating loss carry forward
of $2,606,406 which expires in various years through 2023. Should the
Company undergo an ownership change as defined in Section 382 of the
Internal Revenue Service Code, utilization of its tax net operating
loss carry forwards may be limited.
10. Going Concern Considerations
The accompanying financial statements have been presented in accordance with
generally accepted accounting principals, which assume the continuity of the
Company as a going concern. However, during the nine months ended September
30, 2005 and during the prior several fiscal years, the Company has
experienced, and continues to experience, certain going concern issues
related to profitability. The Company incurred a net loss of $2,607,606
since its inception and has no cash balances and no business operations.
Management's plans with regard to this matter include the search for an
operating entity for a business combination with the Company. There can be
assurance that management will be successful in finding a candidate suitable
for a business combination or that such business combination could be
successfully consummated.
8
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations
The following discussion and analysis should be read in conjunction with the
unaudited financial statements and notes thereto included in Part I - Item 1
of this report, and Management's Discussion and Analysis of Financial
Conditions and Results of Operations and General Risk Factors Affecting
us contained in our annual report for the year ended December 31, 2004
as filed with the Securities and Exchange Commission on March 30, 2005.
Forward-Looking Statements
Some of the information contained in this report may constitute forward-
looking statements or statements within the meaning of the Private
Securities Litigatio n Reform Act of 1995. Any such forward-looking
statements are based on current expectations and projections about future
events. The words, estimate, plan, intend, expect, anticipate and similar
expressions are intended to identify forward-looking statements which
involve, and are subject to, known and unknown risks, uncertainties and
other factors which could cause our actual results, financial or operating
performance, or achievements to differ materially from future results,
financial or operating performance, or achievements expressed or implied by
such forward-looking statements. Projections and assumptions contained and
expressed herein were reasonably based on information available to us at the
time so furnished and as of the date of this filing. All such projections
and assumptions are subject to significant uncertainties and contingencies,
many of which are beyond our control, and no assurance can be given that the
projections will be realized. Readers are cautioned not to place undue
reliance on any such forward-looking statements, which speak only as of the
date hereof. Careful consideration should be given to the General Risk
Factors contained in our Form 10-KSB for the year ended December 31, 2004.
We undertake no obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Present Overview
We intend to acquire, finance, and restructure operating companies that are
interested in a business combination. We are seeking to acquire companies
that would become wholly owned, or majority owned, subsidiaries of W3 and
intend to concentrate on existing companies that have proven markets,
profitability, and management.
Our approach is to develop "partnerships" with companies having exceptional
management in order to improve the long-term value of a business. The
participation of management through equity based compensation and stock
ownership is a crucial ingredient of our plan.
Results of Operations
We did not have any revenue during the three month period ended September 30,
2005, or during the comparable period for the prior year, and have not had
any revenue since the first quarter of 1999.
9
The net loss for the three month period ended September 30, 2005 was $1,200,
no change from the comparable period in the prior year. The net loss for the
nine month period ended September 30, 2005 was $5,401 compared to a net loss
of $43,518 for the prior year comparable period, a decreased loss of $38,117
resulting from decreased consulting fees of $36,000 and decreased
administrative costs of $2,117.
We had no cash at September 30, 2005 and at December 31, 2004.
As described in our Schedule 14C Information Statement dated August 22, 2005
distributed to all shareholders, on July 19, 2005, we entered into an
Acquisition Agreement (the "Agreement") with Aftersoft Group, Inc., a
Delaware corporation ("Aftersoft") and Auto Data Network, Inc., a Delaware
corporation and the sole shareholder of Aftersoft. Pursuant to the
Agreement we will acquire all of the outstanding shares of common stock of
Aftersoft in exchange for the issuance by us of 32,500,000 newly issued
shares of our common stock to the Aftersoft Shareholder. It is anticipated
that following the consummation of the transaction, our current shareholders
will own approximately 4.7% of the total outstanding shares. The
consummation of the transaction is subject to the satisfaction of due
diligence and customary conditions in similar transactions, and no assurance
can be given that such conditions will be met. Refer to Form 8-K and exhibit
thereto filed on July 22, 2005 for the full text of the Agreement. Aftersoft
is in the automotive software business and provides a broad range of supply
chain management solutions to automotive parts manufacturers, distributors
and retailers.
In regard to the above proposed acquisition transaction, the Board of
Directors approved an amendment to our Certificate of Incorporation to
change the Company's name to Aftersoft Group, Inc., the filing of such
amendment subject to the closing of the acquisition. On August 1, 2005, we
received the written consent, in lieu of a meeting of sharehooders, from
holders of a majority of the shares of our common stock approving the
amendment. Refer to Part II of this quarterly report, Item 4. "Submission of
matters to a Vote of Security Holders" and Schedule 14C Information
Statement filed on August 22, 2005, which is available on the SEC's website
at www.sec.gov.
Liquidity and Capital Resources
At September 30, 2005, we had no cash. We have received an audit opinion,
which includes a "going concern" risk, which raises substantial doubt
regarding our ability to continue as a going concern. (See Financial
Statements, "Note 10 - Going Concern Considerations".) Management is
reevaluating business opportunities and looking for a new business direction.
10
Risk Factors Affecting the Company
We have not had any business operations since the divestiture of our former
operating subsidiary, L'Abbigliamento, Ltd., effective March 31, 1999. Any
investment in our common stock involves a high degree of risk. You should
consider carefully the following information about the risks, together with
the other information contained in this report, before you decide to buy
our common stock. The risks and uncertainties described below are not the
only ones we face. Additional risks and uncertainties not presently known
to us or that we currently deem immaterial may also impair our operations.
If any of the following risks actually occur, our business would likely
suffer and our results could differ materially from those expressed in any
forward-looking statements contained in this report. In such case, the
trading price of our common stock could decline, and you may lose all or
part of the money you paid to buy our common stock.
1. We have no operations and no revenue.
We have no operations or revenue and therefore are subject to all the risks
inherent in such a business venture, many of which are beyond our control,
including the inability to implement successful operations, lack of capital
to finance acquisitions and failure to achieve market acceptance. In
addition, we face significant competition from many companies virtually all
of which are larger, better financed and have significantly greater market
recognition than us.
2. The ability to attract and retain highly qualified personnel to operate
and manage our business is extremely important and our failure to do so
could adversely affect us.
Presently, we are totally dependent upon the personal efforts of our current
management. The loss of any of our officers or directors could have a
material adverse effect upon our business and future prospects. We do not
presently have key-person life insurance upon the life of any of our
officers or directors. Further, all decisions with respect to management of
our affairs will be made exclusively by current management. We may also
employ independent consultants to provide business and marketing advice.
Such consultants have no fiduciary duty to us or our stockholders, and may
not perform as expected. Our success will, in significant part, depend upon
the efforts and abilities of management, including such consultants as may
be engaged in the future. Additionally, as we implement our planned
acquisition of commercial operations, we will require the services of
additional skilled personnel. There can be no assurance that we can attract
persons with the requisite skills and training to meet our future needs or,
even if such persons are available, that they can be hired on terms
favorable to us.
3. Our financial statements contain a "going concern" qualification and our
operations are dependent upon our ability to raise additional working
capital.
11
We may not be able to operate as a going concern. The independent auditor's
report accompanying our financial statements contains an explanation that
our financial statements have been prepared assuming that we will continue
as a going concern. We are in need to raise funds to implement our plans.
As of September 30, 2005, we had no cash and a total deficit of $2,607,606.
This condition raises substantial doubt about our ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty. As a result, our ability
to continue to operate as a going concern will depend upon our ability to
raise additional working capital. Our failure to raise funds would
materially and adversely affect our ability to continue as a going concern.
4. Our ability to execute our acquisition strategy will require us to obtain
additional working capital.
Our business strategy will require that substantial capital investment and
adequate financing be available to us for the completion of acquisitions,
development and integration of operations and technology as needed. In the
event that we cannot obtain the necessary capital to fund our operations as
planned, we may need to limit our operations and activities. We cannot
guarantee that such capital investment will be available to us at all or on
terms that are acceptable to us. Our failure to obtain the necessary amount
of capital to fund our operations as currently anticipated could have a
material, adverse effect upon our capacity to continue operations.
5. The means by which we raise capital could cause substantial dilution to
stockholders or result in significant interest expense or restrictive
covenants.
Our ability to operate as a going concern and to fund our planned
acquisition activities will require that we obtain substantial capital. We
may raise these funds by selling additional shares of our common stock or by
incurring additional debt. Depending on the terms negotiated with potential
investors, such shares of common stock may be issued at a price per share
less than the trading prices listed for our common stock on the OTC Bulletin
Board and thus may be significantly dilutive to our current stockholders. In
addition, such dilution could likely have a depressive effect on the market
price of our common stock, should a public market continue for our shares of
common stock. In addition, any debt financing that we are able to obtain, if
any, may involve significant interest expense or restrictive covenants that
may limit our activities.
6. Our business strategy depends upon our ability to acquire operating
companies and our failure to successfully do so would have a material
adverse affect upon our business.
Our acquisition plan depends on our ability to identify suitable acquisition
candidates, effectively integrate acquired companies into our organization,
retain personnel and customers in the acquired companies and obtain
necessary financing on acceptable terms. There can be no assurances that any
transactions will be consummated on the terms proposed. Our failure
to consummate such transactions on the terms proposed could have a material,
adverse effect on our business.
12
7. Our failure to successfully integrate any companies that we acquire would
materially and adversely affect our business.
Any acquisition that we complete or will contemplate, is accompanied by
risks which include difficulty assimilating the operations and personnel of
acquired businesses, maximizing our financial and strategic position through
the successful incorporation and integration of acquired personnel and
customers, maintaining uniform standards and preventing the impairment of
relationships with employees and customers. Additionally, as we implement
our plan, there can be no assurance that there will not be substantial
unanticipated costs and expenses associated with the start-up and
implementation of such acquisition plan. Our failure to integrate these
businesses satisfactorily or to consummate such transactions on the terms
proposed could have a material, adverse effect on our business.
8. The successful implementation of our business strategy depends upon the
ability of our management to monitor and control costs.
With respect to our planned operations, management cannot accurately project
or give any assurance with respect to our ability to control development and
operating costs and/or expenses in the future. Consequently, even if we are
successful in implementing our acquisition plan, of which there can be no
assurance, management still may not be able to control costs and expenses
adequately, and such operations may generate losses.
9. We may become subject to governmental regulations and oversight, which
could adversely affect our ability to continue or expand our business
strategy.
Although our acquisition plans are currently not subject to any regulations,
it is possible that, in the future, such regulations may be legislated.
Although we cannot predict the extent of any such future regulations, a
possibility exists that future or unforeseen changes may have an adverse
impact upon our ability to continue or expand our business as presently
planned.
10. We do not foresee issuing any cash dividends.
We have not paid any dividends to date nor, by reason of our present financial
status and contemplated financial requirements, do we anticipate paying any
dividends in the foreseeable future.
11. There is a lack of an active public market for our common stock.
Our Common Stock trades under the symbol "WWWT" on the OTC Electronic
Bulletin Board. There can be no assurances, however, that a market will
develop or continue for our common stock. Our common stock may be thinly
traded, if traded at all, even if we achieve full operation and generate
significant revenue. In addition, our stock is defined as a "penny stock"
under Rule 3a51-1 adopted by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended. In general, a "penny stock"
includes securities of companies which are not listed on the principal stock
exchanges or the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") or National Market System ("NASDAQ NMS") and
have a bid price in the market of less than $5.00; and companies with net
13
tangible assets of less than $2,000,000 ($5,000,000 if the issuer has been
in continuous operation for less than three years), or which have recorded
revenues of less than $6,000,000 in the last three years. "Penny stocks"
are subject to rule 15g-9, which imposes additional sales practice
requirements on broker-dealers that sell such securities to persons other
than established customers and "accredited investors" (generally,
individuals with net worth in excess of $1,000,000 or annual incomes
exceeding $200,000, or $300,000 together with their spouses, or individuals
who are officers or directors of the issuer of the securities). For
transactions covered by Rule 15g-9, a broker-dealer must make a special
suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale. Consequently,
this rule may adversely affect the ability of broker-dealers to sell our
common stock, and therefore, may adversely affect the ability of our
stockholders to sell common stock in the public market.
12. Sales by our existing stockholders of shares of our common stock could
cause our stock price to decline.
A total of 1,601,167 shares of common stock were issued and outstanding as
of September 30, 2005, of which 1,402,050 shares thereof were "restricted
securities" as that term is defined under the Securities Act of 1933, as
amended. All such restricted shares must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from
registration becomes available. One exemption which may be available in the
future is Rule 144 adopted under the Securities Act. Generally, under Rule
144 any person holding restricted securities for at least one year may
publicly sell in ordinary brokerage transactions, within a 3 month period,
the greater of one (1%) percent of the total number of a company's shares
outstanding or the average weekly reported volume during the four weeks
preceding the sale, if certain conditions of Rule 144 are satisfied by the
company and the seller. Furthermore, with respect to sellers who are "non-
affiliates" of the company, as that term is defined in Rule 144, the volume
sale limitation does not apply and an unlimited number of shares may be
sold, provided the seller meets a holding period of 2 years.
Item 3. Controls and Procedures
Based on his evaluation, as of a date within 90 days of the filing of this
Form 10-QSB, the Company's Chief Executive Officer and Chief Financial
Officer has concluded the Company's disclosure controls and procedures (as
defined in Rules 13a-14 and 15d-14 under the Securities Exchange Act of
1934) are effective.
There have been no significant changes in internal controls or in other
factors that could significantly affect these controls subsequent to the
date of his evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
14
PART II
OTHER INFORMATION
Item 1. Legal Proceedings. Not Applicable
Item 2. Change in Securities. Not Applicable
Item 3. Defaults Upon Senior Securities. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Amendment to the Company's Certificate of Incorporation
-------------------------------------------------------
On July 19, 2005, our Board of Directors approved an amendment to the
Company's Certificate of Incorporation to change its name to Aftersoft
Group, Inc. On August 1, 2005, the proposal was approved by the written
consent, in lieu of a meeting of shareholders pursuant to Section 228 of
Delaware General Corporation Law, from the holders of 1,280,082 shares of
our common stock representing approximately 80 percent of our outstanding
voting stock. The Company's name change will be effective upon the filing of
a Certificate of Amendment to our Certificate of Incorporation with the
Delaware Secretary of State, which is subject to the closing of the
acquisition of Aftersoft Group, Inc.
Item 5. Other Information. None
Item 6. Exhibits and Reports of Form 8-K. None
(a) Exhibits
Exhibit No. Description
31 Certification Pursuant to Rule 13a-14 and 15d-14
Under the Securities Exchange Act of 1934, As
Amended
32 Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes
Oxley Act of 2002
15
(b) Reports on Form 8-K.
Form 8-K filed on July 22, 2005 Re: Entry into a Material
Difinitive Agreement, Changes in Control of Registrant and
Exhibit 10.1 Acquistion Agreement.
SIGNATURE
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: October 21, 2005 By: /s/ Robert Gordon
-----------------------------------
Robert Gordon
President
Principal Financial Officer
16