SECURITIES AND EXCHANGE COMMISSION FORM 10-K/A Annual report pursuant to section 13 and 15(d) [amend] Filing Date: 2003-02-12 | Period of Report: 2001-12-31 SEC Accession No. 0001047469-03-004998 (HTML Version on secdatabase.com) FILER STARMEDIA NETWORK INC Mailing Address Business Address 29 WEST 36TH STREET FIFTH 29 WEST 36TH STREET 5TH CIK:1057334| IRS No.: 061461770 | State of Incorp.:DE | Fiscal Year End: 1231 FLOOR FL Type: 10-K/A | Act: 34 | File No.: 000-31138 | Film No.: 03554951 NEW YORK NY 10018 NEW YORK NY 10018 SIC: 7374 Computer processing & data preparation 2125489600 Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document <Page> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K/A ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001 COMMISSION FILE NUMBER 1-5015 ------------------------ STARMEDIA NETWORK, INC. (Exact Name of Registrant as Specified in its Charter) <Table> <S> <C> DELAWARE 06-1461770 (State of Incorporation) (I.R.S. Employer Identification No.) 999 BRICKELL AVE. MIAMI, FL 33131 (305) 938-3000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) </Table> SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK $.001 PAR VALUE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 / / 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. Yes / / No /X/ The aggregate market value of voting stock held by non-affiliates of the registrant as of July 2, 2002 was $630,166 (based on the last reported sale price on Pink Sheets, LLC of $0.015 per share on July 2, 2002). The number of shares of the registrant's common stock outstanding as of July 1, 2002 was 79,970,177. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- <Page> STARMEDIA NETWORK, INC. 2001 FORM 10-K ANNUAL REPORT TABLE OF CONTENTS <Table> <S> <C> <C> PART I.................................................................. 3 ITEM 1. Business.................................................... 6 ITEM 2. Properties.................................................. 25 ITEM 3. Legal Proceedings........................................... 25 ITEM 4. Submission of Matters to a Vote of Security Holders......... 27 PART II................................................................. 28 ITEM 5. Market for Registrant's Common Equity and Related 28 Stockholder Matters......................................... ITEM 6. Selected Consolidated Financial Data........................ 28 ITEM 7. Management's Discussion and Analysis of Financial Condition 30 and Results of Operations................................... ITEM 7A. Quantitative and Qualitative Disclosures about Market 42 Risk........................................................ ITEM 8. Financial Statements and Supplementary Data................. 42 Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document ITEM 9. Changes in and Disagreements with Accountants on Accounting 42 and Financial Disclosure.................................... PART III................................................................ 43 ITEM 10. Directors and Executive Officers of the Registrant.......... 43 ITEM 11. Executive Compensation...................................... 45 ITEM 12. Security Ownership of Certain Beneficial Owners and 52 Management.................................................. ITEM 13. Certain Relationships and Related Transactions.............. 54 PART IV................................................................. 58 ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 58 8-K......................................................... </Table> THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS BASED ON OUR CURRENT EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS ABOUT THE COMPANY AND OUR INDUSTRY. THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SUCH FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, AS MORE FULLY DESCRIBED IN THIS SECTION AND ELSEWHERE IN THIS REPORT. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON, EVEN IF NEW INFORMATION BECOMES AVAILABLE OR OTHER EVENTS OCCUR IN THE FUTURE. EXPLANATORY NOTE THIS AMENDMENT IS BEING FILED TO INCLUDE ADDITIONAL DISCLOSURE AND INFORMATION IN CERTAIN SECTIONS IN RESPONSE TO COMMENTS RECEIVED BY THE SEC AND AFTER CONSULTATION WITH THE COMPANY'S AUDITORS. IN ORDER TO PRESERVE THE NATURE AND CHARACTER OF THE DISCLOSURES SET FORTH IN THE ANNUAL REPORT ON FORM 10-K AS ORIGINALLY FILED, THIS AMENDMENT CONTINUES TO SPEAK AS OF THE DATE OF THE ORIGINAL FILING WITH THE SEC ON JULY 11, 2002, AND THE COMPANY HAS NOT UPDATED THE DISCLOSURES IN THIS REPORT TO SPEAK AS OF A LATER DATE. ALL INFORMATION CONTAINED IN THIS AMENDMENT IS SUBJECT TO UPDATE AND SUPPLEMENT BY THE COMPANY'S REPORTS FILED WITH THE SEC FOR PERIODS SUBSEQUENT TO THE DATE OF THE ORIGINAL FILING OF THE ANNUAL REPORT ON FORM 10-K. 2 <Page> PART I RESTATEMENT INFORMATION The Company, in consultation with its independent accountants, determined to restate its audited consolidated financial statements for the year ended December 31, 2000, which includes adjustments to the fiscal quarters ended March 31, June 30, September 30 and December 31, 2000, and its unaudited consolidated financial statements for the quarters ended March 31 and June 30, 2001, respectively. The Company initially announced its intention to restate its consolidated financial statements on November 19, 2001. That announcement related to the preliminary conclusion of a Special Committee of the Board of Directors that approximately $10,000,000 in revenues was improperly recognized by two of the Company's Mexican subsidiaries during the period October 1, 2000 through June 30, 2001. Subsequent to that announcement, the Special Committee authorized the Company's management to undertake an additional investigation in order to confirm whether any additional accounting irregularities occurred during the periods in question. The Company's restatements of its audited consolidated financial statements for the fiscal year ended December 31, 2000 and the quarters therein and its unaudited consolidated financial statements for the quarters ended March 31, 2001 and June 30, 2001 contain adjustments that fall into five categories. The first category of adjustments arise from the independent investigation conducted by a Special Committee of the Board of Directors and referred to in the Company's November 19, 2001 announcement. The findings of the Special Committee's investigation indicate that the Company improperly recognized certain revenues and pre-paid expenses. The majority of these revenues and pre-paid expenses were recognized by its Mexican subsidiary, SMN de Mexico (d/b/a StarMedia Mexico). The remainder was recognized by its other Mexican subsidiary, AdNet, S.A. de C.V. ("AdNet"). The transactions in question involved transactions in which StarMedia Mexico and AdNet sold advertising to third parties with the assistance of two former shareholders of AdNet and, at the same time, made payments to such former shareholders in apparent anticipation of future services rendered, which payments were booked as pre-paid expenses. Based in part on failure to receive confirmations of sales from the third party purchasers of advertising and the failure to substantiate the delivery and value of services that were pre-paid, the Special Committee determined to restate such transactions. The other categories of adjustments arise from management's additional investigation to confirm the accuracy of the consolidated financial statements to be restated based on the Special Committee's investigation. The findings of management's investigation indicate that the following accounting regularities occurred in addition to those identified by the independent investigation Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document conducted by the Special Committee: (A) The Company improperly recognized approximately $9.8 million of revenues and related expenses that should have been classified as barter transactions in accordance with U.S. GAAP. These revenues and expenses were all recognized by AdNet, and also involved sales of advertising made with the assistance of AdNet's former shareholders and payments