SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the Fiscal Year Ended October 31, 2010
Commission File Number 0-50092
(Name of Small Business Issuer in Its Charter)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 requirement for the past 90 days.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of January 31, 2011 was $0, since our common equity does not trade.
The number of shares of our common stock outstanding on January 28, 2011 was 39,462,750.
TABLE OF CONTENTS
CAUTIONARY STATEMENT REGARDING
From time to time, we may make written statements that are "forward-looking," including statements contained in this report and other filings with the Securities and Exchange Commission, reports to our stockholders and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "projects," "forecasts," "may," "should," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors on which such statements are based are assumptions concerning uncertainties, including but not limited to uncertainties associated with the following:
(a) volatility or decline of our stock price;
(b) potential fluctuation in quarterly results;
(c) our failure to earn revenues or profits;
(d) inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement its business plans;
(e) inadequate capital to continue business;
(f) changes in demand for our products and services;
(g) rapid and significant changes in markets;
(h) litigation with or legal claims and allegations by outside parties; or
(i) insufficient revenues to cover operating costs.
There is no assurance that we will be profitable, we may not be able to successfully develop, manage or market our products and services, we may not be able to attract or retain qualified executives and technology personnel, our products and services may become obsolete, government regulation may hinder our business, additional dilution in outstanding stock ownership may be incurred due to the issuance of more shares, warrants and stock options, or the exercise of warrants and stock options, and other risks inherent in the our businesses.
We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the factors described in other documents we file from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q and Annual Report on Form 10-K and any Current Reports on Form 8-K filed by us. All forward-looking statements attributable to us are expressly qualified in their entirety by the cautionary statement above.
We were incorporated under the laws of the State of Delaware on August 15, 1996, as "Westergaard Online Systems, Inc." On February 18, 1999, we formally changed our name to Westergaard.com, Inc. We commenced operations on January 1, 1996. Our principal business address is 17 State Street, Suite 1610, New York, New York 10004. Our telephone number is (212) 732-7184. We have a wholly owned subsidiary, Westergaard Broadcasting Network.com, Inc., which was an investment research, publishing and broadcasting venture but is now inactive.
We initially sought to engage in the business of online publishing primarily to provide investment research on publicly traded Micro-Mid Cap companies. The service was designed to assist in creating market liquidity and shareholder value for such companies. We also intended to sponsor conferences focusing on Micro-Mid Cap companies. We currently have no business or operations and are seeking to acquire, through a merger or similar transaction, an operating business.
On January 9, 2001, all of the members of our Board of Directors, except for John Westergaard, resigned. On September 3, 2002, John Westergaard stepped down as our sole director. Immediately prior to his resignation, he appointed Anne H. Straton, Louis E. Taubman and Wenke B. Thoman to serve as our directors. Ms. Straton and Mr. Taubman were also appointed to serve as our interim executive officers. Ms. Straton serves as our Principal Executive Officer & Principal Financial Officer; Mr. Taubman serves as our Executive Vice President and Secretary.
We have never been a party to any bankruptcy, receivership, or similar proceeding.
We have not been subject to any material reclassification, merger, consolidation, purchase or sale of a significant amount of assets not in the ordinary course of business.
We have not had ongoing business operations since 2000. We thus became a shell or “blank check company,” run by Ms. Straton, Mr. Taubman and Ms. Thoman. As defined in Section 7(b) (3) of the Securities Act of 1933, a “blank check company” is one that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or an acquisition with an unidentified company or companies and is issuing “penny stock" securities as defined in Rule 3(a) (51) of the Securities Exchange Act of 1934, in that connection. The Securities and Exchange Commission and many states have enacted statutes, rules and regulations limiting the sale of securities of blank check companies.
On July 22, 2005 we received correspondence from the Securities and Exchange Commission that we were not in compliance with our reporting requirements under Section 13(a) of the Securities Exchange Act of 1934. One of the available responses to this letter was to terminate our registration under the Securities Exchange Act of 1934. After several discussions with the staff of the Securities and Exchange Commission, we determined that it was in our best interest to implement such a response because we did not have an ongoing business and had not for approximately the past four years. Accordingly, we executed an Order Instituting Proceedings, making Findings, and Revoking Registration of Securities pursuant to Section 12(j) of the Securities Exchange of 1934 on September 8, 2005. Pursuant to that Order, the registration of each class of our securities registered pursuant to Section 12 of the Exchange Act was revoked. Consequently, we ceased reporting under the Securities Exchange Act of 1934.
However, we decided to once again seek, investigate, and if warranted, acquire an interest in a business opportunity. Therefore, we voluntarily filed a registration statement on Form 10-SB on June 26, 2007 to once again, register our common stock pursuant to Section 12(g) of the Securities Exchange Act of 1934; such registration became effective on August 27, 2007 and as a result, we are obligated to file this periodic report, as well as other interim and periodic reports on an ongoing basis. As a reporting company, we may be more attractive to a private acquisition target because our common stock may thereby be eligible to be quoted on the OTC Bulletin Board or other markets or exchanges. We anticipate that we will continue to file such reports as required under the Exchange Act. On January 22, 2009, our stock was approved for trading on the OTC Bulletin Board. Our new trading symbol is WSYS and our cusip number is 957556 103.
We are not restricting our search for an acquisition target to any particular industry or geographical area. We may therefore engage in essentially any business in any industry. Our management has unrestricted discretion in seeking and participating in a business opportunity, subject to the availability of such opportunities, economic conditions and other factors. Because we have no specific business plan or expertise, our activities are subject to several significant risks. In particular, any business acquisition or participation we pursue will likely be based on the decision of management without the consent, vote, or approval of our shareholders. Our future success will be dependent upon our ability to locate and consummate a merger or acquisition with an operating company and, ultimately, to attain profitability. There is no assurance that we will be successful in consummating a merger or acquisition with an operating company or that we will attain profitability.
Research and Development
We are not engaged in any research and development activities.
We expect to encounter substantial competition in our efforts to acquire a business opportunity. The primary competition is from other companies organized and funded for similar purposes, small venture capital partnerships and corporations, small business investment companies and wealthy individuals.
Almost all of our employees were terminated on August 15, 2000. Our only employees are our officers and directors: Ms. Straton, Mr. Taubman and Ms. Thoman. We do not anticipate hiring additional employees until our operations resume and expand to such a degree that necessitates hiring auxiliary staff. Our current employees have not received any salary or other remuneration since 2003. None of our employees is represented by a labor union and we consider our relationships with our employees to be good.
We have not conducted any operations in approximately the last six years. Additionally, we have not performed any services or earned any revenue during this time period.
Need for Government Approval
Since we do not have any operations, we do not currently require the approval of any government agency. However, such approval may become necessary based upon the type of business we ultimately engage in.
We do not face any environmental compliance issues or costs.
ITEM 2. DESCRIPTION OF PROPERTY
When we ceased operations in 2000, we terminated all of our leases. Our current officers and directors work out of their individual offices, which are located throughout New York City. The officers communicate regularly via telephone and will meet together at their respective offices when required. Our corporate office is currently the office of Leser, Hunter, Taubman and Taubman, which our Vice President, Mr. Taubman, agreed to provide us free of charge.
ITEM 3. LEGAL PROCEEDINGS
We were subject to a formal order of investigation dated February 13, 1998 pursuant to Rule 7(a) of the SEC Rules relating to investigations. The investigation concerned certain allegations that we may have failed to make appropriate disclosures on our web pages.
In connection with the SEC’s review of our web pages and certain press releases, the SEC provided us with a draft complaint alleging claims under Section 17(b) of the Securities Exchange Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and also with forms of proposed consents and judgments. In July 2000, the SEC agreed in principle not to pursue the 10(b) claim asserted against us and provided us with its final comments to the draft complaint mentioned above. The SEC comments deleted the 10(b) claim against us. The final settlement did not provide for monetary relief but did include a permanent injunction restraining us from violating SEC Rule Section 17(b).
Other than as disclosed herein, we are not a party to any material legal proceeding and we are unaware that any such proceeding is contemplated.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We did not submit any matters to a vote of our security holders during the fourth quarter of the fiscal year covered by this Report. However, on January 13, 2010 our directors consented, via unanimous written consent to effect a reverse stock split on a ratio of up to 1:100, which 83.9% of our shareholders also approved via written consent on January 13, 2010.
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
Principal Market or Markets
Our securities began trading on the Nasdaq Bulletin Board under the symbol "WSYS" on June 12, 1997; it was later removed from the Bulletin Board on March 8, 2001 to the pink sheets and ceased trading on February 16, 2006. On January 22, 2009, our stock was approved for trading on the OTC Bulletin Board; our stock trades under the symbol: WSYS.
Approximate Number of Holders of Common Stock
The number of holders of record of our common stock is estimated to be 109.
The holders of our common stock are entitled to receive such dividends as may be declared by our Board of Directors. We have not paid any dividends on the common stock nor do we anticipate paying dividends on our common shares in the foreseeable future.
The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock.
Securities authorized for issuance under equity compensation plans
In March 1998, we established a Stock Option Plan. However, due to our lack of operations and business, our board of directors terminated such Plan on April 1, 2007; after which there were 200,000 options outstanding, all of which expired in March 2008. Due to the termination of the Plan, no further options may be granted under the Plan.
The Securities Enforcement and Penny Stock Reform Act of 1990
Our common stock may be considered a "penny stock" as defined in certain rules under the Securities Exchange Act of 1934. In general, a security which is not quoted on NASDAQ or has a market price of less than $5 per share where the issuer does not have in excess of $2,000,000 in net tangible assets is considered a penny stock. Unless we can acquire substantial assets and trade at over $5.00 per share on the bid, it is more likely than not that our securities, for some period of time, would be defined under the Act as a “penny stock.” The Commission's Rule 15g-9 regarding penny stocks imposes additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally persons with net worth in excess of $1,000,000 or an annual income exceeding $200,000 or $300,000 jointly with their spouse). For transactions covered by the rules, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale. Thus, the rules affect the ability of broker-dealers to sell our common stock, if it is a penny stock, should they wish to do so because of the adverse effect that the rules have upon liquidity of penny stocks. Unless the transaction is exempt under the rules, under the Securities Enforcement Remedies and Penny Stock Reform Act of 1990, broker-dealers effecting customer transactions in penny stocks are required to provide their customers with (i) a risk disclosure document; (ii) disclosure of current bid and ask quotations if any; (iii) disclosure of the compensation of the broker-dealer and its sales personnel in the transaction; and (iv) monthly account statements showing the market value of each penny stock held in the customer's account. These requirements present a substantial burden on any person or brokerage firm who plans to trade out securities and would thereby make it unlikely that any liquid trading market would ever result in our securities while provisions of this Act might be applicable to those securities. In addition, various state securities laws impose restrictions on transferring "penny stocks".
Blue Sky Compliance
The securities laws of the several states, Blue Sky laws, may restrict trading of penny stock companies. Management is aware that a number of states currently prohibit the unrestricted trading of penny stock companies absent the availability of exemptions, which are in the discretion of the states’ securities administrators. The effect of these states’ laws would be to limit the trading market, if any, for our shares and to make resale of shares acquired by investors more difficult.
Recent Sales of Unregistered Securities
During the past three years, we effected the following transactions in reliance upon exemptions from registration under the Securities Act as amended. Unless stated otherwise: (i) that each of the persons who received these unregistered securities had knowledge and experience in financial and business matters which allowed them to evaluate the merits and risk of the receipt of these securities, and that they were knowledgeable about our operations and financial condition; (ii) no underwriter participated in, nor did we pay any commissions or fees to any underwriter in connection with the transactions; (iii) the transactions did not involve a public offerings; and (iv) each certificate issued for these unregistered securities contained a legend stating that the securities have not been registered under the Act and setting forth the restrictions on the transferability and the sale of the securities.
On September 11, 2009, we entered into an Exchange Agreement with our largest creditor to exchange approximately $725,000 of debt in consideration for 36,252,482 shares of our common stock. The shares were issued to the creditor, an accredited investor, pursuant to the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of the Securities Act for sales of securities made not in connection with a public offering. The securities issued have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
ITEM 7. PLAN OF OPERATION
The following discussion should be read in conjunction with our financial statements and the notes thereto which appear elsewhere in this report. The results shown herein are not necessarily indicative of the results to be expected in any future periods. This discussion contains forward-looking statements based on current expectations, which involve uncertainties. Actual results and the timing of events could differ materially from the forward-looking statements as a result of a number of factors. Readers should also carefully review factors set forth in other reports or documents that we file from time to time with the Securities and Exchange Commission.
From our inception in 1996 through the present, we have considered ourselves a development stage company. Our primary activities prior to our ceasing our operations consisted of the following:
However, since 2000, when we formally ceased operations, we have had no business or operations. Recently, our management determined that it was in the best interests of our shareholders to seek an operating company to acquire. All of our efforts are now focused on finding such an acquisition candidate, although we do not currently have any candidates identified, and we have only had very preliminary negotiations regarding potential candidates.
Comparison of results for the fiscal years ended October 31, 2010 and 2009.
Total revenues for the year ended October 31, 2010 was $0. This was unchanged from the net revenues for the year ended October 31, 2009.
Operating expenses consist primarily of administrative costs as well as professional services and fees related to maintaining the corporate entity. These expenses include audit and tax accounting fees and transfer agent costs. Total operating expenses for the year ended October 31, 2010 was approximately $12,800 as compared to roughly $16,600 for the same period in 2009.
LIQUIDITY AND CAPITAL RESOURCES.
We have incurred losses since inception and at the year ended October 31, 2010 we had an accumulate deficit of approximately $3,749,000. Since we have been unable to generate sufficient funds from our operations to finance our expenses, we have relied upon cash that was originally raised from private financings and shareholder loans to fund our operations. As a result, we are contemplating an acquisition of an ongoing business to increase the value of our shareholders.
As a smaller reporting company, we are not required to provide the information required by this item.
ITEM 8. FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
To the Board of Directors of
New York, NY
We have audited the accompanying consolidated balance sheets of Westergaard.com, Inc. (the “Company”) as of October 31, 2010 and 2009, and the related consolidated statements of operations, stockholders' deficit, and cash flows for each of the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Westergaard.com, Inc. as of October 31, 2010 and 2009, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 2 to the consolidated financial statements, the Company's absence of significant revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2011 raise substantial doubt about its ability to continue as a going concern. The 2010 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ LBB & Associates Ltd., LLP
LBB & Associates Ltd., LLP
January 24, 2011
See Accompanying Notes to Consolidated Financial Statements
See Accompanying Notes to Consolidated Financial Statements
See Accompanying Notes to Consolidated Financial Statements
See Accompanying Notes to Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
Nature of business
We were incorporated under the laws of the State of Delaware on August 15, 1996, as "Westergaard Online Systems, Inc." On February 18, 1999, we formally changed our name to Westergaard.com, Inc. (the “Company”). We commenced operations on January 1, 1996. We initially sought to engage in the business of online publishing primarily to provide investment research on publicly traded Micro-Mid Cap companies. The service was designed to assist in creating market liquidity and shareholder value for such companies. We also intended to sponsor conferences focusing on Micro-Mid Cap companies. We currently have no business or operations and are seeking to acquire, though merger or similar transaction, an operating business.
We have not had ongoing business operations since 2000. We thus became a shell or “blank check company”. As defined in Section 7(b) (3) of the Securities Act of 1933, a “blank check company” is one that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or an acquisition with an unidentified company or companies and is issuing "penny stock" securities as defined in Rule 3(a) (51) of the Securities Exchange Act of 1934, in that connection. The Securities and Exchange Commission and many states have enacted statutes, rules and regulations limiting the sale of securities of blank check companies.
On July 22, 2005 we received correspondence from the Securities and Exchange Commission that we were not in compliance with our reporting requirements under Section 13(a) of the Securities Exchange Act of 1934. One of the available responses to this letter was to terminate our registration under the Securities Exchange Act of 1934. After several discussions with the Securities and Exchange Commission, we determined that it was in our best interest to implement such a response because we did not have an ongoing business and had not for approximately the past four years. Accordingly, we executed an Order Instituting Proceedings, Making Findings, and Revoking Registration of Securities pursuant to Section 12(j) of the Securities Exchange of 1934 on September 8, 2005. Pursuant to that Order, the registration of each class of our securities registered pursuant to Section 12 of the Exchange Act was revoked. Consequently, we ceased reporting under the Securities Exchange Act of 1934. However, we decided to once again seek, investigate, and if warranted, acquire an interest in a business opportunity. Accordingly, we voluntarily filed a registration statement on Form 10-SB with the SEC on June 26, 2007 to once again, register our common stock pursuant to Section 12(g) of the Securities Exchange Act of 1934. As a result of filing such registration statement, we are obligated to file this periodic report, as well as other interim and periodic reports on an ongoing basis.
FASB Establishes Accounting Standards Codification ™
In June 2009, the FASB issued Accounting Standards Update No. 2009-01, “Generally Accepted Accounting Principles” (ASC Topic 105) which establishes the FASB Accounting Standards Codification (“the Codification” or “ASC”) as the official single source of authoritative U.S. generally accepted accounting principles (“GAAP”). All existing accounting standards are superseded. All other accounting guidance not included in the Codification will be considered non-authoritative. The Codification also includes all relevant Securities and Exchange Commission (“SEC”) guidance organized using the same topical structure in separate sections within the Codification.
Following the Codification, the Financial Accounting Standards Board will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASU”) which will serve to update the Codification, provide background information about the guidance and provide the basis for conclusions on the changes to the Codification.
The Codification is not intended to change GAAP, but it will change the way GAAP is organized and presented. The Codification is effective for our third-quarter 2009 financial statements and the principal impact on our financial statements is limited to disclosures as all future references to authoritative accounting literature will be referenced in accordance with the Codification. In order to ease the transition to the Codification, we are providing the Codification cross-reference alongside the references to the standards issued and adopted prior to the adoption of the Codification.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Westergaard.com, Inc. and its wholly owned subsidiary, Westergaard Broadcasting Network.com, Inc. All inter-company accounts and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash and all highly liquid financial instruments with original purchased maturities of three months or less.
Fair Value of Financial Instruments
Our financial instruments consist of cash and accounts payable. The carrying amount approximates fair value.
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Basic Loss Per Share
Basic loss per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.
Stock Based Compensation
We adopted the provisions of ASC 718 in the first quarter of fiscal 2006 which requires all share-based payments to employees and directors to be recognized in the financial statements based on their fair values, using prescribed option-pricing models. We used the modified prospective method of adoption and continue to use the Black-Scholes option pricing model to value share-based payments. The modified prospective method requires companies to recognize compensation cost beginning with the effective date of adoption based on (a) the requirements for all share-based payments granted after the effective date of adoption and (b) the requirements for all unvested awards granted to employees prior to the effective date of adoption.
Recent Accounting Pronouncements
All recent accounting pronouncements have been reviewed and are not material or applicable to the Company.
NOTE 2 - FINANCIAL CONDITION AND GOING CONCERN
At October 31, 2010, our accumulated deficit was approximately $3,749,000. We will still require additional working capital. We are in the process of locating a suitable merger candidate and enter into a reverse merger to continue its business operations.
These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a going concern.
NOTE 3 – INCOME TAXES
For the years ended October 31, 2010 and 2009, we incurred net losses and, therefore, have no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $3,749,000 at October 31, 2010, and will begin expiring in the year 2028. Our net operating loss carry forward may be subject to certain utilization limitations in the future as a result of a change in ownership.
The provision for refundable Federal income tax at the rate of 34% for the years ended October 31, 2010, and 2009 consists of the following:
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amounts at October 31, 2010 and 2009 is as follows:
NOTE 4 – COMMON STOCK
We are authorized to issue 100,000,000 shares of common stock at a par value of $0.001 per share. These shares have full voting rights. We have not paid a dividend to our shareholders.
In March 1998, we established a Stock Option Plan (the “Plan”), however all options pursuant to the Plan expired in March 2008. Furthermore, our board of directors terminated the Plan on April 1, 2007, and no further options may be granted under the Plan.
NOTE 5 – CONTINGENCIES
In connection with the SEC’s review of our Web pages and certain press releases, the SEC provided us with a draft complaint alleging claims under Section 17(b) of the Securities Exchange Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and also with forms of proposed consents and judgments. In July 2000, the SEC agreed in principle not to pursue the 10(b) claim asserted against us and provided us with its final comments to the draft complaint mentioned above. The SEC comments deleted the 10(b) claim against us. The final settlement did not provide for monetary relief but did include a permanent injunction restraining us from violating SEC Rule Section 17(b).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
We have had no disagreements with our certified public accountants with respect to accounting practices or procedures or financial disclosure.
Item 9A. Controls and Procedures
Quarterly Evaluation of Controls As of the end of the period covered by this annual report on Form 10-K, the Company evaluated the effectiveness of the design and operation of (i) their disclosure controls and procedures, and (ii) their internal control over financial reporting. The evaluators who performed this evaluation were our Principal Executive Officer & Principal Financial Officer, Anne Straton; their conclusions, based on and as of the date of the Evaluation (i) with respect to the effectiveness of our Disclosure Controls and (ii) with respect to any change in our Internal Controls that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect our Internal Controls are presented below.
Certifications Attached to this annual report, as Exhibits 31.1 and 31.2, are certain certifications of the Principal Executive Officer & Principal Financial Officer, which are required in accordance with the Exchange Act and the Commission’s rules implementing such section (the "Rule 13a-14(a)/15d-14(a) Certifications"). This section of the annual report contains the information concerning the Evaluation referred to in the Rule 13a-14(a)/15d-14(a) Certifications. This information should be read in conjunction with the Rule 13a-14(a)/15d-14(a) Certifications for a more complete understanding of the topic presented.
Disclosure Controls and Internal Controls Disclosure Controls are procedures designed with the objective of ensuring that information required to be disclosed in the Company's reports filed with the Securities and Exchange Commission under the Securities Exchange Act, such as this annual report, is recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms. Disclosure Controls are also designed with the objective of ensuring that material information relating to the Company is made known to the Principal Executive Officer & Principal Financial Officer by others, particularly during the period in which the applicable report is being prepared. Internal Controls, on the other hand, are procedures which are designed with the objective of providing reasonable assurance that (i) the Company's transactions are properly authorized, (ii) the Company’s assets are safeguarded against unauthorized or improper use, and (iii) the Company's transactions are properly recorded and reported, all to permit the preparation of complete and accurate financial statements in conformity with accounting principles generally accepted in the United States.
Limitations on the Effectiveness of Controls
The Company's management does not expect that their Disclosure Controls or their Internal Controls will prevent all error and all fraud. A control system, no matter how well developed and operated, can provide only reasonable, but not absolute assurance that the objectives of the control system are met. Further, the design of the control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of a system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or because the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Scope of the Evaluation
The Principal Executive Officer & Principal Financial Officer’s evaluation of the our Disclosure Controls and Internal Controls included a review of the controls’ (i) objectives, (ii) design, (iii) implementation, and (iv) the effect of the controls on the information generated for use in this annual report. In the course of the Evaluation, the Principal Executive Officer & Principal Financial Officer sought to identify data errors, control problems, acts of fraud, and they sought to confirm that appropriate corrective action, including process improvements, was being undertaken. This type of evaluation is done on a quarterly basis so that the conclusions concerning the effectiveness of our controls can be reported in our quarterly reports on Form 10-Q and annual reports on Form 10-K. The overall goals of these various evaluation activities are to monitor our Disclosure Controls and Internal Controls, and to make modifications if and as necessary. Our external auditors also review Internal Controls in connection with their audit and review activities. Our intent in this regard is that the Disclosure Controls and the Internal Controls will be maintained as dynamic systems that change (including improvements and corrections) as conditions warrant.
Among other matters, the Evaluation was to determine whether there were any significant deficiencies or material weaknesses in our Internal Controls, which are reasonably likely to adversely affect our ability to record, process, summarize and report financial information, or whether the Evaluators identified any acts of fraud, whether or not material, involving management or other employees who have a significant role in our Internal Controls. This information was important for both the Evaluation, generally, and because the Rule 13a-14(a)/15d-14(a) Certifications, Item 5, require that the Principal Executive Officer & Principal Financial Officer disclose that information to our Board (audit committee), and our independent auditors, and to report on related matters in this section of the annual report. In the professional auditing literature, "significant deficiencies" are referred to as "reportable conditions". These are control issues that could have significant adverse affect on the ability to record, process, summarize and report financial data in the financial statements. A "material weakness" is defined in the auditing literature as a particularly serious reportable condition where the internal control does not reduce, to a relatively low level, the risk that misstatement cause by error or fraud may occur in amounts that would be material in relation to the financial statements and not be detected within a timely period by employee in the normal course of performing their assigned functions. The Evaluators also sought to deal with other controls matters in the Evaluation, and in each case, if a problem was identified, they considered what revisions, improvements and/or corrections to make in accordance with our ongoing procedures.
Based upon the Evaluation, as of October 31, 2010, our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives. Based upon the Evaluation, our Principal Executive Officer & Principal Financial Officer concluded that (i) our disclosure controls and procedures are effective in ensuring that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission, and are effective in providing reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including its Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure and (ii) that our Internal Controls are effective at that assurance level to provide reasonable assurance that our financial statements are fairly presented in conformity with accounting principles generally accepted in the United States. Additionally, there has been no change in our Internal Controls that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to affect, our Internal Controls.
Management’s Report on Internal Controls Over Financial Reporting
Board of Directors and Westergaard.com, Inc.:
The management of Westergaard.com, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U. S. generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U. S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and, (iii) provide reasonable assurance regarding prevention of timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Internal control over financial reporting includes the controls themselves, monitoring and internal auditing practices and actions taken to correct deficiencies as identified.
Because of its inherent limitations, internal control over financial reporting, no matter how well designed, may not prevent or detect misstatements. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, the effectiveness of internal control over financial reporting was made as of a specific date. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of October 31, 2010, based on criteria for effective internal control over financial reporting described in “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included an evaluation of the design of the Company’s internal control over financial reporting and testing of the operational effectiveness of its internal control over financial reporting. Management reviewed the results of its assessment with the Audit Committee of the Company’s Board of Directors.
Based on this assessment, management determined that, as of October 31, 2010, Westergaard.com, Inc. maintained effective internal control over financial reporting, although we did recognize a significant deficiency. A significant deficiency is a deficiency, or a combination of deficiencies, that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant’s financial reporting. Although currently we do not identify any material weaknesses in the process of self assessment, we have recognized a significant deficiency in our internal controls. Currently we do not have sufficient in-house expertise in US GAAP reporting. Instead, we rely very much on the expertise and knowledge of external financial advisors in US GAAP conversion. External financial advisors have helped prepare and review the consolidated financial statements. Although we have not identified any material errors with our financial reporting or any material weaknesses with our internal controls, no assurances can be given that there are no such material errors or weaknesses existing. Once we find an adequate merger candidate, we expect to recruit experienced professionals to augment and upgrade our financial staff to address issues of timeliness and completeness in US GAAP financial reporting. In addition, we do not believe we have sufficient documentation with our existing financial processes, risk assessment and internal controls. We plan to work closely with external financial advisors to document the existing financial processes, risk assessment and internal controls systematically.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report. Westergaard.com, Inc.
/s/ Anne Straton
Principal Executive Officer & Principal Financial Officer
Item 9B. Other Information
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table and text set forth the names and ages of all directors and executive officers as of January 22, 2010. The Board of Directors is comprised of only one class. All of the directors will serve until the next annual meeting of shareholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. There are no family relationships among our directors and executive officers. Also provided herein are brief descriptions of the business experience of each director, executive officer and advisor during the past five years and an indication of directorships held by each director in other companies subject to the reporting requirements under the Federal securities laws.
Anne H. Straton, President and Treasurer, Principal Executive Officer & Principal Financial Officer & Principal Accounting Officer, Director: Ms. Straton is currently a consultant specializing in strategic planning for privately held companies. Until recently, Ms. Straton was a Partner of Ameraudi Investment Services and Senior Vice President and Director of Ameraudi Asset Management Inc., a New York State registered investment advisor and wholly owned subsidiary of Interaudi Bank. Prior to Ameraudi, Ms. Straton served as Executive Vice President and General Manager of Westergaard.com and is currently the Executive Vice President of the Westergaard.com subsidiary Westergaard Broadcasting Network. Formerly, Ms. Straton worked for the United States Embassy in Bonn, Germany, where she managed the English speaking television network, ACT Entertainment, and for CNN International in London, UK where she worked in Business News. In addition to her work in finance, Ms. Straton owns and operates an independent film production company, and has written, directed and produced both documentary and feature films for over 10 years. Ms. Straton received a Master of Arts in International Communication from the European Institute for International Communication in Maastricht, The Netherlands in 1993, and a Bachelor of Arts from the University of Vermont in 1985.
Louis E. Taubman, Vice President & Secretary, Director. Mr. Taubman is a co-founder and member of TriPoint Capital Advisors, LLC, a company which specializes in mergers and acquisitions and corporate development, compliance and finance. Through this position, he manages all legal aspects of TriPoint including strategic planning for the firm. Mr. Taubman advises clients with regard to corporate restructuring, compliance, finance, and the structuring of individual mergers and acquisitions. Prior to working with TriPoint, Mr. Taubman was Executive Vice President and General Counsel of GroupNow!, Inc. where he managed all legal aspects including strategic planning for GroupNow! and structuring of its acquisitions. In addition to his position with Tripoint, Mr. Taubman maintains a law practice located in New York's Financial District. Prior to entering private practice, Mr. Taubman served as an attorney in the legal department of Prudential Securities, Inc. As part of his law practice, Mr. Taubman provides counsel to issuers, investors and underwriters with regard to public and private finance, periodic reporting under the Securities Exchange Act of 1934, Williams Act reporting, M&A transactions and corporate governance issues. Mr. Taubman graduated cum laude from New York Law School and is a member of the New York Bar.
Wenke B. Thoman, Director: Ms. Thoman is the Vice President of Industrial Mineral Holdings, Inc., a company whose principal holding; Industrial Insulation Group, LLC produces high temperature industrial insulation in Colorado, Georgia, Louisiana and Texas. From 1990 to 1995, she served as Chairman of Rain Hill Group, a consulting firm specializing in corporate development issues. She served as VP Corporate Finance at Paine Webber from 1987-1990, VP Merger and Acquisitions at American Can Company from 1985-1987, VP Investment Banking at Donaldson Lufkin & Jenrette from 1980 - 1985 and Director of Corporate Development at Chargeurs SA, a diversified French company from 1977 to 1979. She currently serves as Director of various companies and non-profit organizations. Ms. Thoman was born in Norway and raised in Canada. She received her MBA from INSEAD, France in 1977 and attended McGill University in Canada from 1964-1966.
Due to our lack of operations and size, we have not designated an Audit Committee. Furthermore, our common stock is not currently quoted on any exchange, so we are not subject to any listing requirements mandating the establishment of any particular committees. Our board of directors acts as our Audit Committee and performs equivalent functions, such as: recommending a firm of independent certified public accountants to audit the annual financial statements; reviewing the independent auditors independence, the financial statements and their audit report; and reviewing management's administration of the system of internal accounting controls. For these same reasons, we did not have any other separate committees during fiscal 2009; all functions of a nominating committee, audit committee and compensation committee are currently performed by our directors. Our Board believes that, considering our size and the members of our Board, decisions relating to director nominations can be made on a case-by-case basis by all members of the board without the formality of a nominating committee or a nominating committee charter. To date, we have not engaged third parties to identify or evaluate or assist in identifying potential nominees, although we reserve the right in the future to retain a third party search firm, if necessary. The Board does not have an express policy with regard to the consideration of any director candidates recommended by shareholders since the Board believes that it can adequately evaluate any such nominees on a case-by-case basis. Security holders wishing to recommended a director nominee for consideration should contact Ms. Anne Straton, at our offices in New York, New York and provide to Ms. Straton, in writing, the recommended director nominee's professional resume covering all activities during the past five years, the information required by Item 401 of Regulation S-K, and a statement of the reasons why the security holder is making the recommendation; we will evaluate shareholder-recommended candidates under the same criteria as internally generated candidates. We must receive such a recommendation sixty days before each of our year end.
Although the Board does not currently have any formal minimum criteria for nominees, substantial relevant business and industry experience would generally be considered important, as would the ability to attend and prepare for board, committee and shareholder meetings. Any candidate must state in advance his or her willingness and interest in serving on the board of directors.
We have not received any recommendations for a director nominee from any shareholder.
Since we ceased operations in 2000 and have not had any ongoing business since 2003, we have not deemed it necessary to have a financial expert. If and when we find a suitable merger candidate and commence operations, we will comply with the requirements of Item 407 (d)(5) of Regulation S-K as necessary.
We have three directors, none of whom are "independent" directors, as that term is defined in Section 803 of the NYSE Alternext US LLC Company Guide (formerly the American Stock Exchange's Listing Standards). Since we are not subject to any listing requirements, Item 407 (a)(1)(ii) of Regulation S-K requires us to apply the definition of “independent” used by an exchange that does have such a requirement, such as the NYSE Alternext.
If and when we find a suitable merger candidate and commence operations, we will comply with the requirements of Item 407 of Regulation S-K as necessary.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires our officers, directors and persons who own more than 10% of any class of our securities registered under Section 12(g) of the Exchange Act to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
Based on our review of copies of such reports, we believe that there was compliance with all filing requirements of Section 16(a) applicable to our officers, directors and 10% stockholders during fiscal 2010.
Code of ethics
As of October 31, 2010, we had not adopted a code of ethics that applied to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions because we are not currently listed on an exchange and therefore are not subject to any listing requirements. As disclosed elsewhere throughout this Report, we have not had any business operations since 2000. On January 31, 2010, our stock was approved for trading on the OTC Bulletin Board under the symbol WSYS, but the OTCBB does not maintain any listing standards. However, we intend to adopt a code of ethics in the near term.
ITEM 11. EXECUTIVE COMPENSATION
No cash compensation has been awarded to, earned by or paid to Anne Straton, Louis Taubman, or Wenke B. Thoman for their services to us. It is anticipated that for the foreseeable future, Ms. Straton, Mr. Taubman and Mr. Thoman, will receive no compensation in any form for services they provide to us in their capacities as executive officer and/or director. Prior to August 2000, our directors received compensation of $200 per board meeting and were reimbursed for out-of-pocket expenses incurred while attending board meetings, however we will not pay any additional compensation to our directors at least until we successfully complete a business combination.
Outstanding Equity Awards at Fiscal Year-End
There are no outstanding equity awards as of the end of our most recently completed fiscal year.
Currently, no employment agreements exist with any officer or employee.
We do not have any plans or arrangements in place regarding the payment to any of our executive officers following such person’s retirement or resignation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Securities authorized for issuance under equity compensation plans.
Please see Part II, Item 5: “Market for Common Equity and Related Stockholder Matters” above.
Security Ownership of Certain Beneficial Owners and Management
As used in this section, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power (including the power to dispose of or direct the disposition of) with respect to the security through any contract, arrangement, understanding, relationship or otherwise, subject to community property laws where applicable.
The following sets forth the number of shares of our $.001 par value common stock beneficially owned by (i) each person who, as of the date hereof, was known by us to own beneficially more than five percent (5%) of our issued and outstanding common stock; (ii) each of the named Executive Officers; (iii) the individual Directors; and (iv) the Officers and Directors as a group. As of the date hereof, there are 39,462,750 common shares issued and outstanding.
Changes in Control
To the best of our knowledge, there are currently no arrangements that could cause a change in our control, although the ultimate business transaction we pursue may cause such a change.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have not conducted any business since 2000. Furthermore, no employees or people, other than Ms. Straton, Mr. Taubman, and Ms. Thoman have been involved with us since 2001. Therefore, we have not and are not involved in any transactions during the last two years in which any of our Officers or Directors had or will have a direct or indirect material interest.
We currently use office space donated to us by Mr. Taubman, for which he does not charge us any rent or other overhead.
Mr. Taubman is also currently acting as our legal counsel but has agreed not to charge any fees for such services until such time as we locate a suitable merger or acquisition candidate or otherwise commence meaningful operations.
Ms. Straton, Mr. Taubman and Ms. Thoman were members of Westergaard, LLC, an entity which was formed by our founder, John Westergaard, prior to his death and into which he placed all of his stockholdings in Westergaard.com. Pursuant to the dissolution of Westergaard, LLC on September 3, 2007, each member of the LLC received a portion of such stockholdings in proportion to such member’s percentage interest in the LLC. Accordingly, Ms. Straton received 656,472 shares; TriPoint Capital Advisors, LLC (a company in which Mr. Taubman holds a 30% indirect ownership interest) received 656,472 shares; and Ms. Thoman received 298,905 shares.
Transactions with Promoters
We have not conducted any transactions with promoters.
ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES
(1) AUDIT FEES
The aggregate fees billed for professional services rendered by LBB & Associates, Ltd., LLP (formerly Lopez, Blevins, Bork & Associates, LLP) for the audit of the registrant's annual financial statements and review of financial statements included in the registrant's Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for fiscal years 2010 and 2009 were approximately $5,500 and $14,000 respectively.
(2) AUDIT-RELATED FEES
$4,050 and $5,000 for the fiscal years 2010 and 2009, respectively.
(3) TAX FEES
(4) ALL OTHER FEES
(5) AUDIT COMMITTEE POLICIES AND PROCEDURES
The policy of our Audit Committee is to pre-approve all audit and permissible non-audit services to be performed by the Company’s independent auditors during the fiscal year.
No services related to Audit-Related Fees, Tax Fees or All Other Fees described above, were approved by the Audit Committee.
ITEM 15. EXHIBITS LIST
+ Filed herewith.
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.