NEVADA
(State
or other jurisdiction of
incorporation
or organization)
|
88-0397234
(I.R.S.
Employer Identification No.)
|
o
|
Local
and regional ISPs and Computer Companies;
|
o
|
National
Internet Service Providers, such as, AOL Time Warner, MSN (Microsoft
Network) and EarthLink;
|
o
|
Local,
regional and national broadband cable providers, such as
Comcast and
Cox Communications;
|
o
|
Providers
of Web hosting, co-location and other Internet-based business
services;
|
o
|
Computer
hardware and other technology companies that provide Internet connectivity
with their own or other products, including IBM and
Microsoft;
|
o
|
National
telecommunication providers, such as Verizon, AT&T and
Qwest;
|
o
|
Regional
Bell Operating Companies and local telephone companies;
|
o
|
Providers
of free or discount Internet service, including United Online;
|
o
|
Terrestrial
wireless and satellite providers, such as Hughes DIRECTWAY;
and
|
o
|
Non-profit
or educational ISPs.
|
|
High
|
Low
|
|||||
2006
|
|
||||||
For
the quarter ended March 31, 2006
|
$
|
0.11
|
$
|
0.10
|
|||
For
the quarter ended June 30, 2006
|
$
|
0.07
|
$
|
0.06
|
|||
For
the quarter ended September 30, 2006
|
$
|
0.07
|
$
|
0.07
|
|||
For
the quarter ended December 31, 2006
|
$
|
0.07
|
$
|
0.07
|
|||
2007
|
|||||||
For
the quarter ended March 31, 2007
|
$
|
0.13
|
$
|
0.06
|
|||
For
the quarter ended June 30, 2007
|
$
|
0.13
|
$
|
0.11
|
|||
For
the quarter ended September 30, 2007
|
$
|
0.16
|
$
|
0.10
|
|||
For
the quarter ended December 31, 2007
|
$
|
0.12
|
$
|
0.09
|
PURCHASES
OF EQUITY SECURITIES
|
||||
Period
|
(a)
Total Number of Shares (or Units) Purchased
|
(b)
Average Price Paid per Share (or Unit)
|
(c)
Total Number of Shares (or Units) Purchased as Part of Publicly Announced
Plans or Programs
|
(d)
Maximum Number (or Approximate Dollar Value) of Shares (or Units)
that May
Yet Be Purchased Under the Plans or Programs
|
December
31, 2006
|
2,000,000
|
$0.100
|
|
|
For
the year ended December 31, 2007
|
||||||||||
Corporate
|
Internet
|
Total
|
||||||||
Revenue
|
$
|
-
|
$
|
6,567,264
|
$
|
6,567,264
|
||||
Cost
of revenue
|
-
|
2,244,184
|
2,244,184
|
|||||||
Gross
profit
|
-
|
4,323,080
|
4,323,080
|
|||||||
Operating
expenses
|
61,812
|
3,305,098
|
3,366,910
|
|||||||
Income
(loss) from operations
|
(61,812
|
)
|
1,017,982
|
956,170
|
||||||
Other
income (expense)
|
-
|
(166,198
|
)
|
(166,198
|
)
|
|||||
Net
income (loss)
|
$
|
(61,812
|
)
|
$
|
851,784
|
$
|
789,972
|
For
the year ended December 31, 2006
|
||||||||||
Corporate
|
Internet
|
Total
|
||||||||
Revenue
|
$
|
-
|
$
|
5,597,330
|
$
|
5,597,330
|
||||
Cost
of revenue
|
-
|
1,602,180
|
1,602,180
|
|||||||
Gross
profit
|
-
|
3,339,150
|
3,995,150
|
|||||||
Operating
expenses
|
77,616
|
2,737,857
|
2,815,473
|
|||||||
Income
(loss) from operations
|
(77,616
|
)
|
1,257,293
|
1,179,677
|
||||||
Other
income (expense)
|
-
|
(187,292
|
)
|
(187,292
|
)
|
|||||
Net
income (loss)
|
$
|
(77,616
|
)
|
$
|
1,070,001
|
$
|
992,385
|
|
For
the year ended December 31, 2007
|
|||||||||
|
Corporate
|
Internet
|
Total
|
|||||||
EBITDA
|
$
|
(61,812
|
)
|
$
|
2,690,974
|
$
|
2,629,162
|
|||
Interest
expense
|
-
|
(158,734
|
)
|
(158,734
|
)
|
|||||
Taxes
|
-
|
-
|
-
|
|||||||
Depreciation
|
-
|
(58,534
|
)
|
(58,534
|
)
|
|||||
Amortization
|
-
|
(1,621,922
|
)
|
(1,621,922
|
)
|
|||||
Net
income (loss)
|
$
|
(61,812
|
)
|
$
|
851,784
|
$
|
789,972
|
|
For
the year ended December 31, 2006
|
|||||||||
|
Corporate
|
Internet
|
Total
|
|||||||
EBITDA
|
$
|
(77,616
|
)
|
$
|
2,321,537
|
$
|
2,243,921
|
|||
Interest
expense
|
-
|
(206,854
|
)
|
(206,854
|
)
|
|||||
Taxes
|
-
|
-
|
-
|
|||||||
Depreciation
|
-
|
(71,687
|
)
|
(71,687
|
)
|
|||||
Amortization
|
-
|
(972,995
|
)
|
(972,995
|
)
|
|||||
Net
income (loss)
|
$
|
(77,616
|
)
|
$
|
1,070,001
|
$
|
992,385
|
|
2007
|
2006
|
|||||
EBITDA
for the year ended December 31,
|
$
|
2,629,162
|
$
|
2,243,921
|
|||
Interest
expense
|
(158,734
|
)
|
(206,854
|
)
|
|||
Taxes
|
-
|
-
|
|||||
Depreciation
|
(58,534
|
)
|
(71,687
|
)
|
|||
Amortization
|
(1,621,922
|
)
|
(972,995
|
)
|
|||
Net
income for the year ended December 31,
|
$
|
789,972
|
$
|
992,385
|
|
2007
|
2006
|
|||||||||||
Current
|
$
|
171,446
|
57.2
|
%
|
$
|
87,399
|
51.2
|
%
|
|||||
30
+
|
72,337
|
24.1
|
%
|
44,574
|
26.1
|
%
|
|||||||
60
+
|
56,080
|
18.7
|
%
|
38,653
|
22.7
|
%
|
|||||||
90
+
|
-
|
-
|
%
|
-
|
-
|
%
|
|||||||
Total
|
$
|
299,863
|
100.0
|
%
|
$
|
170,626
|
100.0
|
%
|
|
Page
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
20
|
|
|
FINANCIAL
STATEMENTS
|
|
|
|
Consolidated
Balance Sheets as of December 31, 2007 and 2006
|
21-22
|
|
|
Consolidated
Statements of Income for the Years Ended December 31, 2007 and
2006
|
23
|
|
|
Consolidated
Statements of Stockholders' Equity for the Years Ended December 31,
2007
and 2006
|
24
|
|
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2007 and
2006
|
25
|
|
|
Notes
to Consolidated Financial Statements
|
26-43
|
CURRENT
ASSETS
|
2007
|
2006
|
|||||
Cash
and cash equivalents
|
$
|
232,249
|
$
|
129,453
|
|||
Accounts
receivable, net of allowances of $22,641 and $15,695
|
299,863
|
170,626
|
|||||
Prepaid
expenses
|
16,529
|
23,676
|
|||||
Total
current assets
|
548,641
|
323,755
|
|||||
PROPERTY
AND EQUIPMENT, net
|
236,782
|
274,269
|
|||||
CUSTOMER
LIST, net of accumulated amortization of $5,237,054 and
$3,716,215
|
5,480,635
|
1,721,233
|
|||||
GOODWILL,
net
|
1,288,559
|
1,288,559
|
|||||
OTHER
ASSETS
|
677,267
|
437,197
|
|||||
|
|||||||
TOTAL
ASSETS
|
$
|
8,231,884
|
$
|
4,045,013
|
CURRENT
LIABILITIES
|
2007
|
2006
|
|||||
Accounts
payable
|
$
|
78,713
|
$
|
105,814
|
|||
Accrued
expenses
|
138,021
|
426,216
|
|||||
Deferred
revenue
|
1,361,606
|
588,766
|
|||||
Notes
payable, current portion
|
1,268,866
|
286,114
|
|||||
Note
payable - stockholders, current portion
|
-
|
46,861
|
|||||
Total
current liabilities
|
2,847,206
|
1,453,771
|
|||||
|
|||||||
NOTES
PAYABLE, less current portion
|
1,694,836
|
63,113
|
|||||
NOTES
PAYABLE - STOCKHOLDERS, less current portion
|
686,687
|
814,946
|
|||||
|
|||||||
TOTAL
LIABILITIES
|
5,228,729
|
2,331,830
|
|||||
|
|||||||
STOCKHOLDERS'
EQUITY
|
|||||||
Preferred
Stock, $0.001 par value, 10,000,000 shares authorized, 0 shares
issued
and outstanding
|
—
|
—
|
|||||
Common
Stock, $0.001 par value, 300,000,000 shares authorized, 91,326,463
and 88,063,305 shares issued and outstanding
|
91,326
|
88,063
|
|||||
Additional
paid-in capital
|
13,880,947
|
13,651,157
|
|||||
Treasury
Stock, $0.001 par value, 2,955,147 and 8,218,305 common
shares
|
(63,030
|
)
|
(329,977
|
)
|
|||
Accumulated
deficit
|
(10,906,088
|
)
|
(11,696,060
|
)
|
|||
Total
stockholders' equity
|
3,003,155
|
1,713,183
|
|||||
|
|||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
8,231,884
|
$
|
4,045,013
|
|
2007
|
2006
|
|||||
REVENUE
|
$
|
6,567,264
|
$
|
5,597,330
|
|||
|
|||||||
COST
OF REVENUE
|
2,244,184
|
1,602,180
|
|||||
|
|||||||
GROSS
PROFIT
|
4,323,080
|
3,995,150
|
|||||
|
|||||||
OPERATING
EXPENSES
|
|||||||
Selling,
general and administrative expenses
|
3,236,860
|
2,763,969
|
|||||
Customer
list impairment
|
130,050
|
51,504
|
|||||
TOTAL
OPERATING EXPENSES
|
3,366,910
|
2,815,473
|
|||||
|
|||||||
INCOME
FROM OPERATIONS
|
956,170
|
1,179,677
|
|||||
|
|||||||
OTHER
INCOME (EXPENSES)
|
|||||||
Gain
on disposal of assets
|
(7,464
|
)
|
19,562
|
||||
Interest
expense
|
(158,734
|
)
|
(206,854
|
)
|
|||
TOTAL
OTHER INCOME (EXPENSES)
|
(166,198
|
)
|
(187,292
|
)
|
|||
|
|||||||
INCOME
BEFORE INCOME TAXES
|
789,972
|
992,385
|
|||||
|
|||||||
INCOME
TAXES
|
-
|
-
|
|||||
|
|||||||
NET
INCOME
|
$
|
789,972
|
$
|
992,385
|
|||
|
|||||||
BASIC
AND DILUTED INCOME PER SHARE
|
$
|
0.01
|
$
|
0.01
|
|||
|
|||||||
WEIGHTED
AVERAGE SHARES
OUTSTANDING
- BASIC AND DILUTED
|
87,819,037
|
88,050,778
|
|
Common
Stock
|
Additional
|
|
|
|
||||||||||||||
|
|
Paid-in
|
Treasury
|
Accumulated
|
|
||||||||||||||
|
Shares
|
Amount
|
Capital
|
Stock
|
Deficit
|
Total
|
|||||||||||||
|
|
|
|
|
|
|
|||||||||||||
Balance
at December 31, 2005
|
86,013,305
|
$
|
86,013
|
$
|
13,450,207
|
$
|
(129,977
|
)
|
$
|
(12,536,311
|
)
|
$
|
(869,932
|
)
|
|||||
Issuance
of shares for subsidiary
|
2,050,000
|
2,050
|
200,950
|
-
|
-
|
203,000
|
|||||||||||||
Issuance
of shares for subsidiary
|
-
|
-
|
-
|
(200,000
|
)
|
-
|
(200,000
|
)
|
|||||||||||
Purchase
of subsidiary
|
-
|
-
|
-
|
-
|
(152,134
|
)
|
(152,134
|
)
|
|||||||||||
Net
income
|
-
|
-
|
-
|
-
|
992,385
|
992,385
|
|||||||||||||
Balance
at December 31, 2006
|
88,063,305
|
88,063
|
13,651,157
|
(329,977
|
)
|
(11,696,060
|
)
|
1,713,183
|
|||||||||||
Repurchase
of acquisition shares
|
(2,000,000
|
)
|
(2,000
|
)
|
(198,000
|
)
|
200,000
|
-
|
|||||||||||
Issuance
of shares
|
5,263,158
|
5,263
|
427,790
|
66,947
|
500,000
|
||||||||||||||
Net
income
|
789,972
|
789,972
|
|||||||||||||||||
Balance
at December 31, 2007
|
91,326,463
|
$
|
91,326
|
$
|
13,880,947
|
$
|
(63,030
|
)
|
$
|
(10,906,088
|
)
|
$
|
3,003,155
|
|
2007
|
2006
|
|||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|||||
Net
income
|
$
|
789,972
|
$
|
992,385
|
|||
Adjustments
to reconcile net income to
|
|||||||
net
cash provided by operating activities:
|
|||||||
Depreciation
and amortization expense
|
1,680,456
|
1,096,186
|
|||||
Bad
debt expense
|
6,947
|
1,860
|
|||||
(Increase)
decrease in accounts receivable
|
(136,184
|
)
|
(28,569
|
)
|
|||
(Increase)
decrease in prepaid expenses
|
7,147
|
(23,676
|
)
|
||||
Increase
(decrease) in accounts payable
|
(27,101
|
)
|
25,630
|
||||
Increase
(decrease) in accrued expenses
|
(288,194
|
)
|
134,262
|
||||
Increase
(decrease) in deferred revenue
|
772,840
|
267,211
|
|||||
Net
cash provided by operating activities
|
2,805,883
|
2,465,289
|
|||||
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchases
of property and equipment
|
(21,033
|
)
|
(31,175
|
)
|
|||
Purchase
of customer list
|
(5,280,242
|
)
|
(1,251,173
|
)
|
|||
(Purchase)
sale of assets held for resale
|
48,833
|
4,000
|
|||||
Purchase
of subsidiary
|
-
|
(152,134
|
)
|
||||
Purchase
of domain name for resale
|
-
|
(200,000
|
)
|
||||
Purchase
of non-competition agreements
|
(390,000
|
)
|
(25,000
|
)
|
|||
Net
cash used in investing activities
|
(5,642,442
|
)
|
(1,655,482
|
)
|
|||
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Net
proceeds from notes payable - stockholders
|
23,386
|
136,287
|
|||||
Net
proceeds from notes payable
|
3,411,002
|
887,488
|
|||||
Issuance
of common stock
|
500,000
|
||||||
Repayment
of notes payable
|
(796,527
|
)
|
(1,572,452
|
)
|
|||
Repayment
of notes payable - stockholders
|
(198,506
|
)
|
(167,724
|
)
|
|||
Net
cash used in financing activities
|
2,939,355
|
(716,401
|
)
|
||||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
102,796
|
93,406
|
|||||
CASH
AND CASH EQUIVALENTS - BEGINNING OF YEAR
|
129,453
|
36,047
|
|||||
CASH
AND CASH EQUIVALENTS - END OF YEAR
|
$
|
232,249
|
$
|
129,453
|
|
2007
|
2006
|
|||||
Gross
accounts receivable
|
$
|
322,504
|
$
|
186,321
|
|||
Less
allowance for doubtful accounts
|
(22,641
|
)
|
(15,695
|
)
|
|||
|
$
|
299,863
|
$
|
170,626
|
|
2007
|
2006
|
|||||
Net
income available to common shareholders
|
$
|
789,972
|
$
|
992,385
|
|||
Weighted
average number of common shares
|
87,819,037
|
88,050,778
|
|||||
Basic
and diluted income per share
|
$
|
.01
|
$
|
.01
|
Customer
list
|
$
|
594,535
|
||
Non-compete
agreement
|
10,000
|
|||
Purchase
price
|
$
|
604,535
|
Accounts
receivable
|
$
|
4,310
|
||
Fixed
assets
|
5,500
|
|||
Customer
list
|
92,029
|
|||
Non-compete
agreement
|
5,000
|
|||
Deferred
revenue
|
(16,839
|
)
|
||
Purchase
price
|
$
|
90,000
|
|
2006
|
|||
Net
sales
|
$
|
5,699,866
|
||
Gross
profit
|
$
|
4,065,262
|
||
Selling,
general and administrative expenses
|
$
|
2,867,460
|
||
Net
income
|
$
|
990,948
|
||
Basic
income per share
|
$
|
0.01
|
Domain
name
|
$
|
200,000
|
||
Accounts
receivable
|
31,732
|
|||
Customer
list
|
564,425
|
|||
Non-compete
agreement
|
10,000
|
|||
Deferred
revenue
|
(231,815
|
)
|
||
Purchase
price
|
$
|
574,342
|
|
2006
|
|||
Net
sales
|
$
|
6,221,332
|
||
Gross
profit
|
$
|
4,421,833
|
||
Selling,
general and administrative expenses
|
$
|
3,166,993
|
||
Net
income
|
$
|
1,048,046
|
||
Basic
income per share
|
$
|
0.01
|
Customer
list
|
$
|
93,992
|
||
Non-compete
agreement
|
10,000
|
|||
Equipment
|
10,000
|
|||
Deferred
revenue
|
(5,522
|
)
|
||
Purchase
price
|
$
|
108,470
|
|
2006
|
|||
Net
sales
|
$
|
5,744,550
|
||
Gross
profit
|
$
|
4,095,817
|
||
Selling,
general and administrative expenses
|
$
|
2,903,079
|
||
Net
income
|
$
|
981,849
|
||
Basic
income per share
|
$
|
0.01
|
Accounts
receivable
|
$
|
(2,098
|
)
|
|
Customer
list
|
870,680
|
|||
Non-compete
agreement
|
25,000
|
|||
Equipment
|
10,000
|
|||
Deferred
revenue
|
(101,130
|
)
|
||
Purchase
price
|
$
|
802,452
|
|
2006
|
|||
Net
sales
|
$
|
6,772,019
|
||
Gross
profit
|
$
|
4,798,384
|
||
Selling,
general and administrative expenses
|
$
|
3,369,594
|
||
Net
income
|
$
|
1,166,898
|
||
Basic
income per share
|
$
|
0.01
|
|
2006
|
|||
Net
sales
|
$
|
5,659,883
|
||
Gross
profit
|
$
|
4,037,923
|
||
Selling,
general and administrative expenses
|
$
|
2,851,643
|
||
Net
income
|
$
|
977,530
|
||
Basic
income per share
|
$
|
0.01
|
Accounts
receivable
|
$
|
3,880
|
||
Customer
list
|
58,549
|
|||
Non-compete
agreement
|
5,000
|
|||
Deferred
revenue
|
(21,800
|
)
|
||
Purchase
price
|
$
|
45,629
|
Customer
list
|
$
|
4,292,656
|
||
Non-compete
agreement
|
350,000
|
|||
Deferred
revenue
|
(892,656
|
)
|
||
Purchase
price
|
$
|
3,750,000
|
|
2006
|
|||
Net
sales
|
$
|
6,408,497
|
||
Gross
profit
|
$
|
4,549,814
|
||
Selling,
general and administrative expenses
|
$
|
3,108,632
|
||
Net
income
|
$
|
1,222,576
|
||
Basic
income per share
|
$
|
0.01
|
|
2007
|
2006
|
|||||
Land
|
$
|
10,000
|
$
|
10,000
|
|||
Building
|
213,366
|
213,366
|
|||||
Automobile
|
9,500
|
9,500
|
|||||
Computer
equipment
|
1,129,061
|
1,108,028
|
|||||
Furniture
and fixtures
|
59,862
|
59,862
|
|||||
|
1,421,789
|
1,400,756
|
|||||
Less
accumulated depreciation
|
(1,185,007
|
)
|
(1,126,487
|
)
|
|||
|
$
|
236,782
|
$
|
274,269
|
|
2007
|
2006
|
|||||
Bank
note payable in monthly interest and principal payments of $1,784.
Interest is payable prime plus 4.5%, (9.75% and 9.75% as of December
31,
2007 and 2006 respectively). The note is guaranteed by a stockholder
of the Company and secured by a deed of trust against personal residences
of three stockholders. Also, the bank has a blanket lien against all
other current and future assets of Sitestar.net.
|
$
|
58,242
|
$
|
74,573
|
|||
Bank
note paid in monthly interest and principal payments of $2,400 and
due
November 2008. Interest was payable at an annual rate of prime plus
1.5% (6.75% as of December 31, 2004). The note was secured by a
deed of trust against personal residences of three stockholders and
the
Company’s building. Also, the bank had a blanket lien against all other
current and future assets of Sitestar.net. This note was refinanced
on
February 9, 2004 into a line of credit due on February 1, 2005 with
a
principal limit of $165,000 and daily deposit account sweeps. On
February
1, 2005, February 1, 2006 the note was renewed for another year.
However,
on February 1, 2007 the note was paid in full and not renewed. Interest
was payable at an annual rate of prime plus .75% (8.0%
as of December 31, 2006). The note was secured by a deed of trust
on the
Company’s building and was personally guaranteed by officers and directors
of the Company.
|
-
|
57,362
|
|||||
|
|||||||
Non-interest
bearing amount due on acquisition of NetRover Inc. was paid in eleven
monthly installments of $16,856; a balloon payment was paid in January
2007 of $217,292.
|
-
|
217,292
|
Bank
line of credit issued on April 12, 2007 with a principal limit of
$300,000. Interest is payable at an annual rate of prime plus .25%
(7.50%
as of December 31, 2007). The note is secured by a deed of trust
on the
Company’s building and is personally guaranteed by officers and directors
of the Company. In April 2008 the principal balance was
zero.
|
300,000
|
||||||
|
|||||||
Non-interest
bearing amount due on acquisition of AlaNet Internet Services payable
in
eleven monthly installments of $4,276 through April 2008.
|
20,807
|
||||||
Bank
note payable in twelve monthly interest and principal payments of
$30,650.
Interest is payable at an annual rate of 9.25%. The note is
guaranteed by stockholders of the Company and secured by shares of
Company
stock owned by the stockholders.
|
322,048
|
||||||
|
|||||||
Bank
note payable in twenty four monthly interest and principal payments
of
$21,167. Interest is payable at an annual rate of 8.5%. The note is
guaranteed by stockholders of the Company and secured by shares of
Company
stock owned by the stockholders.
|
438,264
|
||||||
Bank
bridge note payable on February 1, 2008. Interest is payable at an
annual
rate of 8.5%. The note was refinanced on February 21, 2008 at an
annual
interest rate of 8.5% and is payable in twelve payments of $21,760
and is
personally guaranteed by stockholders of the Company and secured
by real
estate owned by stockholders of the Company.
|
250,000
|
||||||
Non-interest
bearing amount due on acquisition of USA Telephone payable in thirty
six
monthly installments starting January 2008.
|
1,574,341
|
||||||
Less
current portion
|
(1,268,866
|
)
|
(286,114
|
)
|
|||
|
|||||||
Long-term
portion
|
$
|
1,694,836
|
$
|
63,113
|
Year
ending December 31, 2008
|
$
|
1,268,866
|
||
Year
ending December 31, 2009
|
365,382
|
|||
Year
ending December 31, 2010
|
160,903
|
|||
Year
ending December 31, 2011
|
73,907
|
|||
Year
ending December 31, 2012
|
1,094,644
|
|||
Thereafter
|
-
|
|||
Total
|
$
|
2,963,702
|
|
2007
|
2006
|
|||||
Note
payable to officer and stockholder on a line of credit of $750,000
at an
annual interest rate of 10% interest. The accrued interest and
principal are due on January 1, 2010.
|
$
|
527,117
|
$
|
663,242
|
|||
|
|||||||
Note
payable to stockholders issued as part of the Purchase price of Advanced
Internet Services, Inc. The note was repaid in 24 quarterly
installments of $51,078 beginning in September 2001 and is non-interest
bearing. The imputed annual interest rate for this note was
36%.
|
-
|
46,861
|
|||||
|
|||||||
Note
payable to stockholder. The note is payable on January 1, 2010 and
bears
interest at an annual rate of 8.0%.
|
104,585
|
96,720
|
|||||
Note
payable to stockholder. The note is payable on January 1, 2010 and
bears
interest at an annual rate of 8.0%.
|
54,985
|
54,984
|
|||||
686,687
|
861,807
|
||||||
|
|||||||
Less
current portion
|
-
|
(46,861
|
)
|
||||
|
|||||||
Long-term
portion
|
$
|
686,687
|
$
|
814,946
|
Year
ending December 31, 2008
|
$
|
-
|
||
Year
ending December 31, 2009
|
-
|
|||
Year
ending December 31, 2010
|
686,687
|
|||
Year
ending December 31, 2011
|
-
|
|||
Year
ending December 31, 2012
|
-
|
|||
Total
|
$
|
686,687
|
Year
ended December 31,
|
|
|||
2008
|
$
|
71,049
|
||
2009
|
15,444
|
|||
Total
|
$
|
86,493
|
|
2007
|
2006
|
|||||
Federal
income tax rate
|
34.0
|
%
|
34.0
|
%
|
|||
Effect
of net operating loss
|
(34.0
|
)%
|
(34.0
|
)%
|
|||
Effective
income tax rate
|
0.0
|
%
|
0.0
|
%
|
|
2007
|
2006
|
|||||
Accounts
receivable
|
$
|
4,000
|
$
|
4,000
|
|||
Intangible
assets
|
1,747,000
|
1,747,000
|
|||||
Loss
carry forwards
|
1,298,000
|
1,298,000
|
|||||
Less
valuation allowance
|
(3,049,000
|
)
|
(3,049,000
|
)
|
|||
|
$ |
-
|
$
|
-
|
December
31, 2007
|
||||||||||
Corporate
|
Internet
|
Consolidated
|
||||||||
Revenue
|
$
|
-
|
$
|
6,567,264
|
$
|
6,567,264
|
||||
Operating
income (loss)
|
$
|
(61,812
|
)
|
$
|
1,017,982
|
$
|
956,170
|
|||
Depreciation
and amortization
|
$
|
-
|
$
|
1,680,456
|
$
|
1,680,456
|
||||
Interest
expense
|
$
|
-
|
$
|
(158,734
|
)
|
$
|
(158,734
|
)
|
||
Goodwill
|
$
|
-
|
$
|
1,288,559
|
$
|
1,288,559
|
||||
Identifiable
assets
|
$
|
-
|
$
|
7,146,259
|
$
|
7,146,259
|
December
31, 2006
|
||||||||||
Corporate
|
Internet
|
Consolidated
|
||||||||
Revenue
|
$
|
-
|
$
|
5,597,330
|
$
|
5,597,330
|
||||
Operating
income (loss)
|
$
|
(77,616
|
)
|
$
|
1,257,293
|
$
|
1,179,677
|
|||
Depreciation
and amortization
|
$
|
-
|
$
|
1,044,682
|
$
|
1,044,682
|
||||
Interest
expense
|
$
|
-
|
$
|
(206,854
|
)
|
$
|
(206,854
|
)
|
||
Goodwill
|
$
|
-
|
$
|
1,288,559
|
$
|
1,288,559
|
||||
Identifiable
assets
|
$
|
-
|
$
|
4,384,039
|
$
|
4,384,039
|
Name
|
|
Age
|
|
Position
|
|
Director
since
|
Frank
R. Erhartic, Jr.
|
|
39
|
|
President,
CEO, Director
|
|
October
2001
|
Julia
E. Erhartic
|
|
40
|
|
Secretary,
Director
|
|
October
2001
|
Daniel
Judd
|
|
51
|
|
CFO,
Director
|
|
June
2004
|
Director
|
Expiration
of term
|
Frank
R. Erhartic, Jr.
|
December
31, 2008
|
Julia
Erhartic
|
December
31, 2008
|
Dan
Judd
|
December
31, 2008
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards ($)
|
Option
Awards ($)
|
Non-Equity
Incentive Plan Compen-sation ($)
|
Change
in Pension Value and Non-qualified Deferred Compen-sation Earnings
($)
|
All
Other Compen-sation ($)
|
Total
($)
|
Frank
R, Erhartic, Jr., Principal Executive Officer (PEO)
|
2007
|
72,500
|
72,500
|
||||||
2006
|
72,500
|
72,500
|
|||||||
Daniel
Judd, Principal
Financial Officer (PFO)
|
2007
|
45,200
|
45,200
|
||||||
2006
|
40,000
|
40,000
|
|||||||
Julie
E. Erhartic, (Officer)
|
2007
|
13,000
|
13,000
|
||||||
2006
|
13,000
|
13,000
|
Name
|
Grant
Date
|
Estimated
Future Payouts Under
Non-Equity Incentive Plan Awards
|
Estimated
Future Payouts Under
Equity Incentive Plan Awards
|
All
Other Stock Awards: Number
of Shares Of
Stock or Units (#)
|
All
other Option
Awards: Number of Securities Under-Lying Options (#)
|
Exercise
of Base Price
of Option Awards ($/Sh)
|
||||
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
($)
|
Target
($)
|
Maximum
(#)
|
|||||
PEO
|
N/A
|
|||||||||
PFO
|
N/A
|
|||||||||
Officer
|
N/A
|
Option
Awards
|
Stock
Awards
|
||||||||
Name
|
Number
of securities Underlying Unexercised Options (#)
Exercisable
|
Number
of securities Underlying
Unexercised
Options (#) Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Number
of Shares of Units of Stock that have not vested (#)
|
Market
Value of Shares or Units of Stock that have not vested ($)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or other
rights
that have not vested (#)
|
Equity
Incentive Plan Awards Market or Payout Value of Unearned Shares,
Units of
other rights that have not vested ($)
|
PEO
|
N/A
|
||||||||
PFO
|
N/A
|
||||||||
Officer
|
N/A
|
Name
|
Fees
Earned or Paid in Cash ($)
|
Stock
Awards
($)
|
Option
Awards ($)
|
Non-Equity
Incentive Plan Compensation ($)
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings
($)
|
All
Other Compensation ($)
|
Total
($)
|
Frank
R, Erhartic, Jr., Director
|
$0.00
|
||||||
Daniel
Judd, Director
|
$0.00
|
||||||
Julie
E. Erhartic, Director
|
$0.00
|
Name
and Address of Beneficial
Owner
|
Number
of Shares Beneficially
Owned (1)
|
Percent
Of
Class
(2)
|
|||||
|
|
|
|||||
Frank
and Julie Erhartic
7109
Timberlake Road
Lynchburg,
VA 24502
|
24,583,980
|
26.92
|
%
|
||||
Daniel
A. Judd
7109
Timberlake Road
Lynchburg,
VA 24502
|
133,865
|
00.15
|
%
|
||||
All
directors and officers
As
a group (3 persons)
|
24,717,845
|
27.07
|
%
|
Exhibit
|
Description
|
Filed
|
3.1(i)
|
Articles
of Incorporation of the Registrant (December 17, 1992)
|
a
|
3.1(ii)
|
Amended
Articles of Incorporation (July 29, 1998)
|
a
|
3.1(iii)
|
Amended
Articles of Incorporation (October 26, 1998)
|
a
|
3.1(iv)
|
Amended
Articles of Incorporation (July 14, 1999)
|
a
|
3.1(v)
|
Amended
Articles of Incorporation (July 28, 1999)
|
a
|
3.2(i)
|
By-laws
of the Registrant (December 17, 1992)
|
a
|
|
|
|
4.2
|
Convertible
Debenture Purchase Agreement dated as of May 11, 2000 between the
investors named therein and the Registrant
|
c
|
4.3
|
12%
Convertible Debenture due May 11, 2001 made by the Registrant in
favor of
New Millenium Capital Partners II, L.L.C.
|
c
|
4.4
|
12%
Convertible Debenture due May 11, 2001 made by the Registrant in
favor of
AJW Partners, L.L.C.
|
c
|
4.5
|
Stock
Purchase Warrant dated as of May 11, 2000 issued by Registrant to
New
Millenium Capital Partners, L.L.C.
|
c
|
4.6
|
Stock
Purchase Warrant dated as of May 11, 2000 issued by Registrant to
AJW
Partners, L.L.C
|
c
|
4.7
|
Registration
Rights Agreement dated as of May 11, 2000 by and between the Registrant
and the investors named therein.
|
c
|
10.1
|
Lease
for Corporate Office
|
b
|
10.13
|
Statement
of changes in beneficial ownership of securities.
|
k
|
10.14
|
Definitive
Purchase Agreement to acquire certain assets of Idacomm, Inc, effective
September 16, 2005.
|
l
|
10.15
|
Definitive
Purchase Agreement to acquire Inc, effective January 1,
2006
|
m
|
10.16
|
Amendment
to report audited financial statements for Definitive Purchase Agreement
to acquire Inc.
|
n
|
10.17
|
Definitive
Purchase Agreement to acquire certain assets of First USA, Inc, effective
July 1, 2006.
|
o
|
10.18
|
Definitive
Purchase Agreement to acquire certain assets of OW Holdings, Inc,
effective February 28, 2007.
|
p
|
31.1
|
Certification
of Chief Executive Officer Pursuant to the Securities Exchange Act
of
1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302
of the
Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to the Securities Exchange Act
of
1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302
of the
Sarbanes-Oxley Act of 2002.
|
q
|
32.1
|
Certification
Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002
|
q
|
a |
Filed
as an exhibit to the Registrant's Form-10SB, as amended, initially
filed
with the Securities and Exchange Commission on October 22, 1999
and
incorporated herein by reference.
|
b |
Filed
as an exhibit to the Registrant's Form-10SB filed with the Securities
and
Exchange Commission on October 28, 2006 and incorporated herein by
reference.
|
c |
Filed
as an exhibit to the Registrant's SB-2 Registration Statement, File
No.
333-39660, filed on June 20, 2000 and incorporated herein by
reference.
|
k |
Filed
as an exhibit to Registrant’s Form SC 13G/A filed with the Securities and
Exchange Commission on February 9,
2005
|
l |
Filed
as an exhibit to Registrant’s Form 8-K filed with the Securities and
Exchange Commission on September 16,
2005
|
m |
Filed
as an exhibit to Registrant’s Form 8-K filed with the Securities and
Exchange Commission on January 1,
2006
|
n |
Filed
as an exhibit to Registrant’s Form 8-K/A filed with the Securities and
Exchange Commission on March 22,
2006
|
o |
Filed
as an exhibit to Registrant’s Form 8-K filed with the Securities and
Exchange Commission on July 6, 2006
|
p |
Filed
as an exhibit to Registrant’s Form 8-K filed with the Securities and
Exchange Commission on March 2,
2007
|
q |
Filed
herewith
|
SITESTAR
CORPORATION
|
|
|
|
By:
/s/ Frank Erhartic, Jr.
|
|
Frank
Erhartic, Jr.
President,
Chief Executive Officer
|
|
By:
/s/ Daniel A. Judd
|
|
Daniel
A. Judd
Chief
Financial Officer
|
Signature
|
Title
|
Date
|
|
|
|
/s/
Frank Erhartic, Jr.
|
President,
Chief Executive Officer,
|
May
16, 2008
|
Frank
Erhartic, Jr.
|
Director
(Principal
Executive Officer)
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/s/
Daniel A. Judd
|
Chief
Financial Officer
|
May
16, 2008
|
Daniel
A. Judd
|
(Principal
Financial Officer,
Principal
Accounting Officer)
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/s/
Julie Erhartic
|
Secretary,
Director
|
May
16, 2008
|
Julie
Erhartic
|
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