As filed with the Securities and Exchange Commission on September 24, 1999.
Registration No.0-26999
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
General Form for Registrants of Securities of Small Business Issuers
Under Section 12 (b) or (g) of the Securities Exchange Act of 1934
GLOBAL WEB, INC.
(Name of Small business Issuer in its charter)
Utah
State or other jurisdiction of Incorporation or organization.
87-0427550
I.R.S. Employer Identification No.
11781 South Lone Peak Parkway, No. 110
Draper, Utah 84020
(Address of principal executive offices)(Zip code)
Issuer's telephone number: (801)523-1003
Securities to be registered under Section 12 (b) of the Act:
Title of each security Name of each exchange on which
to be registered: Each class is to be registered:
N/A N/A
Securities to be registered under Section 12 (g) of the Act:
Common Stock, par value of $.001 per share.
(Title of class)
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GLOBAL WEB, INC.
FORM 10-SB
TABLE OF CONTENTS
PAGE
PART I
ITEM 1. Description of the Business .......................
ITEM 2. Management's Discussion and Analysis of Plan of
Operation .......................................
ITEM 3. Description of Property ...........................
ITEM 4. Security Ownership of Certain Beneficial
Owners and Managers .............................
ITEM 5. Directors, Executive Officers, Promoters,
And Control Persons .............................
ITEM 6. Executive Compensation ............................
ITEM 7. Certain Relationships and Related Transactions ....
ITEM 8. Description of Securities .........................
PART II
ITEM 1. Market Price of and Dividends on Registrant's
Common Equity and Other Shareholder Matters .....
ITEM 2. Legal Proceedings .................................
ITEM 3. Changes in and Disagreements with Accountants .....
ITEM 4. Recent sales of unregistered securities ...........
ITEM 5. Indemnification of Directors and Officers .........
PART F/S
Financial statements ......................................
PART III
ITEM 1. Index to Exhibits .................................
ITEM 2. Description of exhibits ...........................
Signatures ................................................
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PART I
Except as otherwise specified, the information in this Registration
reflects the 100 to one reverse stock split of the Common Stock in March 1999.
ITEM 1.
Business Development
Global Web, Inc. (the "Company") was organized on September 6, 1985, under
the laws of the State of Utah as BP 150, Inc., having the purpose of investing
in a business opportunity. The Company sold 150,000 shares of its common
stock in a public offering in January 1986. In 1987 the Company invested its
funds in a restaurant franchise area. At that time the Company changed its
name to American Restaurant Management, Inc. In 1989 the restaurant venture
failed. The Company was inactive from 1989 until March 1998.
In March 1999 the Company acquired all of the issued and outstanding shares
of Global Web, Inc., a Nevada corporation, in exchange for a controlling
interest in the Company. Action was taken by shareholder action approving
amendments to the Articles of Incorporation changing the name of the Company
to Global Web, Inc., and changing the capitalization to 95,000,000 shares with
90,000,000 shares of Common Stock, par value of $.001 per share and 5,000,000
shares of Preferred Stock, par value of $.001 per share. Also, the reverse
split was approved. New directors were appointed.
Global Web was incorporated in August 1997. Global Web develops and
markets Internet services to Internet users and prospective users. In
particular, Global Web provides services to customers who believe that the
Internet will assist their business or that the Internet may be used to market
products and services.
When a person or other entity subscribes to a web site hosted by the
Company, it then has access to and the use of the Company's software called
"Web Builder." A subscriber uses Web Builder to construct or build the web
site. A subscribe gains access to the Web Builder through the Internet and
must provide a personal access code to build the web site or to make changes.
Web Builder is not downloaded or sold separately as a software program.
Access is available only as a subscriber. Web Builder allows a customer to
build a web page according to choices
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provided in the software. Much of the web page is assembled by designating
the choice from the options offered. The options offered are menu based and
the customer selects merely by pointing and clicking. Options include such
things as background colors, type faces for text, page location, and graphics.
Through the software a subscriber may make changes to the web page as needed
or desired. Presently the Company is servicing approximately 3,000
subscribers for web sites and approximately 1,000 subscribers for Purchase
Here. The Company is not dependent upon a few major customers.
The Company offers different packages to assist businesses and individuals
to establish web pages and web sites using Web Builder. The price per month
ranges from approximately $14.95 to $200.00. Generally, the more services
provided, the higher will be the price. Packages differ by the services
provided such as numbers of web pages, E-mail accounts, classified ads, number
of graphics, amount of text, and other eCommerce services provided. Also, the
Company offers other services such as consultation and online training.
Generally the Company provides guidance to subscribers to assist in the
development and use of web sites and web pages. The Company for a fee
provides additional training. The Company's experience has been to sell more
packages in the lower price ranges. The Company offers other value-added
services as well as Web Builder.
The Company offers a service call "Purchase Here" to those selling goods
and services on their web sites. Purchase Here allows people to shop on the
Internet and purchase items from different vendors. The customer pays for the
purchases at one time using a credit card or check. Purchase Here is used in
connection with a national merchant account vendor. The Company has different
variations of the Purchase Here with additional features and enhancements.
The Company has a web-based real-time database accessible through the
Internet. This product allows customers in a secured environment to search
(by different options), open, edit, update, and delete information, such as
customer records, using an Internet connection and any web browser. As
changes are submitted to the database record, the results are posted on a
real-time basis. The changes are instantly made on the web server. Changes
to the database can be accessed by anyone with authorization to access the web
site. The data comprising the database may be customized according to
customer specifications and requirements. Also, specific reports can be
created based on the information in the database.
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In the next few months the Company anticipates that it will commence to
market through mass media advertising its product called ZipWeb and
Beattlebug.com. ZipWeb provides a choice of web site features and
characteristics that simplify the process of creating a web page. Further
because of the variety of choices available, web sites will differ. The
Company has committed limited funds to the advertising project and the Company
will assess the advertising dollars spent against the revenues generated. If
the revenues from the media campaign are less than anticipated, the Company
may cancel or change the advertising program. Beattlebug encourages traffic
to the Company's web site.
The Company recently made a trademark filing for "Web Builder" and
anticipates making other filings in the future. The Company has made only a
preliminary search regarding the availability and its rights to these names.
The Company has filed for domain names which relate to services offered.
Generally, the Company's rights to these names may be challenged in the future
by others which may adversely affect the Company's business. If a name the
Company was using were unavailable, the Company would have to rename the
service provided and would thereby lose any name identification established
and good will associated with the name.
The Company hosts web sites for subscribers who have their own domain name
or URL also known as a Uniform Resource Locator. A URL is the address on the
Internet. Every URL is a series of numbers which directs access to the web
site whether it is hosted by the Company or a competitor. If a subscriber
changes to a different host, the subscriber will then have to make
arrangements to change the URL. The Company believes that because of the
inconvenience of changing the URL, it discourages subscribers from changing to
another host.
The Company has under development a service targeted for real estate brokers
and agents which is preliminarily called RealtySearch.Net. Real estate agents
would have their web site which would have information about the agent and
listings. The Company is unable to determine when or if the development of
this service will be complete. It will depend on funds available for
development and developmental problems. In 1997 the Company spent
approximately $11,536 and in 1998 the Company had no expenditures for research
and development. Subscribers do not directly bear any research and
development costs.
Presently, Web Builder is the main component of the Company's business. The
Company cannot state a percentage of its revenues
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derived from Web Builder and Purchase Here. These services are bundled with
other services and products provided by the Company and others and marketed as
a package. by the Company others.
Presently the Company services for Stargate Global, Inc., approximately 100
accounts that participate on the Stargate Marketplace, an Internet mall. The
Company provides the hosting service and customer service for the mall
accounts. The Company services these accounts for its costs plus ten per
cent. Over time the number of subscribers to Stargate Marketplace has
declined. Presently the Company receives revenues of approximately $3,000 to
$8,000 per month. The Company anticipates that over time the revenues from
servicing the mall accounts will decline. Stargate Global is a related party
because the owners of Stargate Global are the four primary shareholders of the
Company.
Competition
The Company's competitors are diverse. The Company competes with several
large, well-capitalized companies which host and offer web sites, such as
YahooShop, Tripod, Geoshop from Geocities, and Sitematic from U.S. West. In
addition, numerous small companies compete in providing Internet services.
Many of these competitors have greater financial resources and more
experienced personnel which enables these competitors to have greater
credibility and viability in the market. The Company is not a major force
within the Internet industry. The Company believes that it can compete
because of Web Builder and the ease with which subscribers can build and
change web sites. Also, the Company believes that its monthly subscription
fees are competitive in the marketplace. Also, the Company believes that
marketing through seminars provides a unique marketing opportunity. Also, the
Company believes that ZipWeb when it becomes available will provide the
Company with a competitive advantage. No assurance can be given that ZipWeb
will provide the anticipated benefit.
Marketing
The Company presently markets its product through seminars, telemarketing
firms and resellers. Historically, the Company's primary emphasis for gaining
new subscribers or customers has been through seminars. The sponsor of the
seminar sells the Company's products with other products. At the seminar web
sites are sold as a business opportunity. The purchaser then becomes a
reseller of web sites and eCommerce services and Internet services. Although
arrangements have differed significantly, the
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seminar sponsor typically keeps at least more than half of the revenues
generated and the Company receives the remainder and the monthly fee and cost
for hosting the web sites.
The Company intends to sponsor the seminars with others on a preliminary
basis. It is hoped that these seminars will be successful. The Company will
be responsible for a portion of the up-front costs such as printing, postage,
site rental, and travel expenses, but will receive the revenues generated from
sales of its products and services. The Company will also have to pay
commissions.
To stage a business opportunity seminar a site for the seminar is selected.
Typically a lecture hall at a hotel is reserved for a date certain. Then the
sponsor secures mailing lists for persons who may have interest to attend a
business opportunity seminar. The sponsor then mails advertising materials to
the people on the mailing list. Advertisements may also be placed in the
local newspapers. The seminar is held as planned and the products are
presented and sold.
The Company has entered into oral agreements with telemarketing firms to
market web sites and other products. Depending on the product or service sold
the Company pays approximately fifty per cent of the sales to the
telemarketing firm. The Company provides hosting and any other service sold
and receives all hosting fees. The telemarketers are Global Marketing
Alliance and International Marketing Group. The telemarketers contact people
who have attended the seminars or who have previously used the Company's
products. The telemarketers sell the services the Company provides. Also,
these firms use names from other sources. Sales through telemarketing in the
year 1998 provided approximately twenty-seven per cent of revenues.
The Company may also allow other companies to use its products under a
different name or a private label, but the Company will always provide the
hosting service in that the Web Builder software will be on the Company's
server and all web sites that may be offered or sold under the private label
will be hosted exclusively on the Company's server. A customer seeking a
private label relationship may want a different look, different graphics or
different templates, but the functionality of the Web Builder software will
not be changed. Compensation terms will be negotiated on a case by case
basis. Presently the Company has no active arrangement for selling its
products under a private label, but the Company may do so in the future.
The Company markets its Purchase Here through others. In the
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past Home Business Solutions, Inc.; Home, Inc.; and Internet Business
Solutions have sold Purchase Here. Purchase Here is bundled with web sites.
It may also be bundled with other services sold by the vendors. The Company
receives a portion of the revenues for including Purchase Here in the bundle
of services ranging from twenty to thirty per cent, but the percentage may
vary depending upon the situation.
No assurance can be provided that the Company new services under development
or that the new services will be marketed successfully or accepted and become
commercially viable.
Cancellations
The Company experiences cancellations by its subscribers. These
cancellations may be permanent or may be for a limited time. In the first
three to eight days after the sale typically thirty per cent of the
subscribers cancel. This figure is based on the Company's experience. Once
the accounts become established, the Company experiences a lower rate of
cancellations. The Company has not had sufficient operating experience to
determine cancellation patterns or percentages after the first three to eight
days. Management believes it is vital and essential that the Company continue
to add new subscribers regularly. If the Company fails to add new
subscribers, its subscriber base over time will decrease causing costs to
increase and profits to decline or become losses. Also, at times subscribers
who have canceled reinstate the Company's service.
Merchant Account
The Company and the other entities selling its products typically receive
payments through credit cards. Almost all of the Company's revenues are from
sales paid for by credit card accounts. Because of the high volume of
transactions, the financial institutions at which the Company or the other
entities have their merchant accounts place restrictions on the volume of
credit card vouchers which can be processed. Also, the financial institution
will process the credit card vouchers and then place a hold or restriction on
the funds in the accounts. Typically the financial institution will hold back
five per cent of the Company's volume of credit card vouchers. These
institutions are concerned about charge backs against the merchant account. A
charge back occurs when the purchaser, the cardholder, refuses to pay for the
products purchased and demands that the credit card company issue a credit for
the amount billed. The restrictions or the placing of a hold on the funds in
these merchant accounts
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may cause the Company to experience cash liquidity difficulties. The Company
seeks to monitor the status of the funds in the merchant accounts so that cash
flows will be sufficient to fund operations. The Company's finance department
monitors the merchant accounts almost daily.
Government Regulation
The Company's business activities are subject to governmental regulations.
The Company's activities are subject to general business laws. In addition,
the seminars are subject to business opportunity laws enacted by many states.
These laws vary from state to state. Prior to a seminar, the applicable law
is reviewed and the Company ascertains if its presentation complies with the
state statute.
Facilities, Equipment and Employees
The Company has office and research facilities located in Draper, Utah. It
leases approximately 5,000 square feet. The lease is for three years with
lease payments subject to adjustment of approximately $3,400 per month. The
Company has no product liability insurance policy for its anticipated
operations. Insurance may not be available on terms and conditions which will
allow the Company to obtain coverage to meet its requirements. If the Company
were subject to a products liability claims or claims, the Company's financial
strength may be impaired by defending or satisfying any claim.
The Company has approximately nineteen full-time and part-time employees.
These employees are web designers, software programers, customer service
representatives, and administrators. The Company has computers and related
equipment to develop and provide its services. Presently the equipment is
adequate for the present level of operations and for anticipated future
operations.
The Company believes that inflation has little impact on its business
affairs.
The Year 2000 issue exists because computer systems and applications use a
two digit date to designate a year. Date sensitive systems may recognize the
year 2000 as 1900. The Company has assessed its status regarding the Year
2000 issue and the impact on its operations. The financial impact on the
Company will not materially affect the Company's financial position, cash flow
or operational results. The Company received assurances from the
manufacturers of the Company's hardware that
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the equipment is Y2K compliant. Also, the Company determined that its
software should not cause problems when the date becomes 2000. The Company
follows a practice of periodically duplicating sensitive information on an
independent data storage medium.
The Company's main suppliers are public utilities providing electrical and
telephone services. The Company received assurances that these companies that
their critical systems are ready for the year 2000. If the Company had no
electrical power or telephone services, it would be unable to host the web
sites for its subscribers until these services were restored. Also, if
subscribers experienced problems, they may cancel or suspend their
subscription for hosting services. If the electrical and telephone services
were unavailable for a protracted period, it would have a material adverse
effect on the Company. No assurance can be given that all systems of
suppliers, customers and other external business partners will function
adequately.
ITEM 2.Management's Discussion and Analysis or Plan of Operation.
The following information should be read in conjunction with the consolidated
financial statements and notes thereto appearing elsewhere in the Form 10-SB.
Management's Discussion and Analysis.
Because the Company has only a limited operating history the revenues it has
experienced may not continue in the future and the future operations may
generate less revenues than current operations. For the sixth month period
ended June 30, 1999, the Company had revenues of $1,135,772 compared to
$1,180,652 for the year ended December 31, 1998, and had net income of $48,395
compared to $72,693. Revenues increased because the Company is spending
additional funds on marketing by sponsoring its own seminars and the Company
has increased telemarketing. Also, the Company decreased the prices for the
web sites and management believes that the volume of revenues increased.
Finally during the first six months the Company did a mailer to its database
of subscribers and former subscribers which resulted in additional sales.
During the six month period ended June 30, 1999, the contribution to revenues
from servicing the mall accounts of StarGate Marketplace was approximately
$12,000 compared to $99,000 for the year ended December 31, 1998. Management
anticipates that the contribution to Company's revenues from the mall accounts
will continue to decrease.
Total assets as of June 30, 1999, were $305,937 compared to $133,015 as
of December 31, 1998. Assets increased because of an increase in accounts
receivable of $90,755 and cash increased by
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48,645. Current liabilities increased from $45,061 as of December 31, 1998 to
$169,687 as of June 30, 1999. Accounts payable during the period increased
$68,709 because of increased operations. The Company is dependent upon future
sales and maintaining its present level of subscribers to fund its operations.
The Company's primary objective is to increase the number of subscribers.
Presently the Company has approximately 3,000 subscribers. The number of
subscribers is subject to change and fluctuation because of new sales and
cancellations. The number of subscribers has remained stable in that new sales
have kept pace with cancellations. As of June 30, 1999, the Company current
ratio 1.3 compared to 1.8 as of December 31, 1998. Further, the quick ratio
as of June 30, 1999, was .3 compared to .04 as of December 31, 1998.
As previously discussed, if the Company were to experience problems because
of the Year 2000 issue, its financial position, results of operations and cash
flows would be adversely affected.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard ("SFAS") No. 128, "Earnings Per Share" and Statement of
Financial Accounting Standards No. 129 "Disclosures of Information About an
Entity's Capital Structure." SFAS No. 128 provides a different method of
calculating earnings per share than is currently used in accordance with
Accounting Principles Board Opinion No. 15 "Earnings Per Share." SFAS no. 128
provides for the calculation of "Basic" and Dilutive" earnings per share.
Basic earnings per share includes no dilution is computed by dividing income
available to common shareholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per share reflects the
potential dilution of securities that could share in the earnings of an
entity, similar to fully diluted earnings per share. SFAS No. 129 establishes
standards for disclosing information about an entity's capital structure.
SFAS No. 128 and No. 129 are effective for financial statements issued for
periods ending after December 15, 1997.
The Financial Accounting Standards Board has also issued SFAS No. 130,
"Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 130 establishes standards
for reporting and displaying comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all changes
in equity except those resulting from investments by owners and distributions
to owners. Among other disclosures,
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SFAS No. 130 requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income be reported
in a financial statement that displays with the same prominence as other
financial statements. SFAS No. 131 supersedes SFAS No. 14 "Financial
Reporting for segments of a Business Enterprise." SFAS No. 131 establishes
standards on the way that public companies report financial information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosure regarding
products and services, geographic areas and major customers. SFAS No. 131
defines operating segments as components of a company about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in
assessing performance.
SFAS Nos. 130 and 131 are effective for financial statements for period
beginning after December 15, 1997 and requires comparative information for
earlier years to be restated. Because of the recent issuance of the standard,
management has been unable to fully evaluate the impact, if any, the standard
may have on future financial statement disclosures. Results of operations and
financial position, however, will be unaffected by implementation of the
standard.
Inflation
In the opinion of management, inflation has not had a material effect on the
operations of the Company.
Risk Factors and Cautionary Statements
The Company's operations are subject to the following risk factors.
Company is a New Venture and May Lack Stability.
------------------------------------------------
The Company is a relatively new venture and lacks significant operating
history. Because of its limited operating history the Company may lack
stability and unforeseen problems may arise which will hinder or stifle the
Company's operations and its potential growth.
Company May be Unable to Arrange Future Funding When Required.
-------------------------------------------------------------
The Company has had only minimal revenues. In the future the Company may
require additional funding to continue operations and to have sufficient
working capital to implement its any marketing plan. Future funding may be
accomplished through the sale of
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equity securities or some form of borrowing, such as promissory notes. No
assurance can be given that the Company will be able to obtain future funding
at all or on terms and conditions acceptable to the Company. No assurance can
be given that the Company will operate profitably in the future or that its
products and services will be accepted in the marketplace.
Company's Success is Dependent Upon Key Personnel.
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The Company is substantially dependent upon the efforts and abilities of its
officers, Lee Burbidge and Brae Burbidge. The loss of the services of any of
these individuals would materially and adversely affect the operations and
financial condition of the Company. At present, the Company has no key-man
life insurance on its officers or key personnel.
Management has Limited Experience.
----------------------------------
Management of the Company has only limited business experience. Also,
management has no experience in operating a public company. In implementing a
successful marketing plan for the Company's services, management lacks
experience. Additional management skills and knowledge will be required to
operate the Company's business profitably if sales volumes and revenues
increase, and the number of employees grows.
Company's Products May Become Obsolete.
---------------------------------------
The Company's products and services may become obsolete as products and
procedures are developed by others. The Company's services may become obsolete
at any time. The Company is engaged in providing products relating to the
creating and hosting of web site and web pages. These activities are subject
to strong competition.
This Registration Statement contains certain forward-looking statements.
The Company wishes to advise readers that actual results may differ
substantially from such forward-looking statements. Forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially from those expressed in or implied by the statements,
including but not limited to, the following: the ability of the Company to
maintain a sufficient customer base to have sufficient revenues to fund and
maintain its operations., the ability of the Company to meet its cash and
working capital needs and to have sufficient revenues to continue operations.
ITEM 3. Description of Property
This information required by this Item 3, Description of Property as set
forth in Item 1 - Description of Business, of this Form 10 SB/A.
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ITEM 4.Security Ownership of certain beneficial Owners and Management
The following table sets forth information, to the best of the Company's
knowledge, as of June 30, 1999, with respect to each person known by the
Company to own beneficially more than 5% of the issued and outstanding common
stock, each director and all directors and officers as a group.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership Of Class(1)
Lee Burbidge 2,000,000 23
11781 So. Lone Peak
Parkway, No. 1110
Draper, Utah
Brae Burbidge 2,000,000 23
11781 So. Lone Peak
Parkway, No. 1110
Draper, Utah
Bret Burbidge 2,000,000 23
6299 Jamestown Circle
Salt Lake City, Utah 84121
Wallace Boyack 2,408,490 28
350 South 400 East, No. 105
Salt Lake City, Utah
All Executive Officers & 4,000,000 46
Directors as a
Group
(1) Based on 8,564,500 shares of common stock outstanding as of June 31,
1999.
Lee Burbidge is the father of Brae Burbidge and Bret Burbidge.
ITEM 5. Directors, Executive Officers, Promoters and Control Persons
The executive officers and directors of the Company are as follows:
Name, Age and Office
---------------------
Lee Burbidge, 58, Chairman of the Board of Directors and Secretary
Brae Burbidge, 31, Director and President
Douglas Owen 58, Director
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The following are biographical summaries of the experience of the officers
and directors of the Company.
Lee Burbidge attended the University of Utah and Brigham Young University
taking courses in Hispanic-American relations, management and business. Mr.
Burbidge is one of founders of the Company. Over the past twenty-five years
Mr. Burbidge has been activity in real estate development for projects in
which he has an interest and for others. Mr. Burbidge is the sole owner of
Lee Burbidge, Inc., a corporation that offers for sale an audio-visual
workbook called "For Sale by Owner", a service designed to assist individual
homeowners to sell their real property without hiring a real estate agent.
Mr. Burbidge is an officer and a director of StarGate Global, Inc., a Utah
corporation.
Brae Burbidge received in 1992 a bachelor of arts degree from the University
of Utah in political science and accounting. Mr. Burbidge while at the
University of Utah was an intern at the U.S. Supreme Court. From 1991 to 1995
he worked for Financial Freedom Report, a Utah corporation. During 1995 and
1996 he was director of seminars for Home Business Group. In 1996 he founded
and developed Stargate Marketplace, an Internet mall. Mr. Burbidge is an
officer and a director of StarGate Global, Inc., a Utah corporation.
Douglas Owen attended the University of Utah Business Administration and
Marketing. For the past twenty years he has specialized in real estate
development and marketing in Utah, Washington, California, New York, Kentucky,
Tennessee, and Arizona. Mr. Owen is a licensed real estate agent in Arizona
and California. He has provided consulting services to several major
corporations. Presently, Mr. Owen is the President of Uni-Med Realty
Advisors, Inc.
All directors hold office until the next annual meeting of stockholders and
until their successors have been duly elected and qualified. There are no
agreements with respect to the election of directors. The Company does not
have any standing committees.
None of the officers or directors of the Company has during the past five
years, been involved in any events (such as petitions in bankruptcy,
receivership or insolvency, criminal proceedings or proceedings relating to
securities violations).
Director Compensation
The Company's directors are not compensated for attending
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meetings of the Board of Directors. In the future the directors may be
compensated for their services. No decision has been made as to the manner or
type of future compensation.
ITEM 6. Executive Compensation
Brae Burbidge and Lee Burbidge receive compensation of $5,000 per month. In
addition, both receive assistance in the payment of the health insurance
benefits. Lee and Brae Burbidge are the only employees who receive a salary at
the rate of $60,000 per year. Both are full-time employees of the Company.
ITEM 7. Certain Relationships and Related Transactions
Bret Burbidge received compensation of approximately $63,500 in connection
with the operation of the seminars. Lee Burbidge is the father of Brae and
Bret. Wallace Boyack received compensation of approximately $4,680 for legal
services. Relatives of the Burbidges, who are employees, received total
compensation of less than $60,000 per year. In addition, Business Marketing
Systems, Inc., a company owned and controlled by Bret Burbidge shared office
space with the company in Draper, Utah, and sponsored business opportunity
seminars at which the Company's products were sold. Business Marketing
Services, Inc., ceased its operations in approximately March 1999. Presently,
Bret Burbidge maintains an office at the Company's offices. Bret Burbidge
trades the Company leads for its seminars for the office space.
In addition, the Company hosts Stargate Market Place, an Internet mall owned
by Stargate Global, Inc., a company owned by the four shareholders of Global.
Those shareholders are Brae Burbidge, Lee Burbidge, Bret Burbidge, and Wallace
Boyack. Global is paid its costs plus ten per cent for its services.
Three children of Wallace Boyack are part-time employees of the Company.
Dan Owen, the son of Douglas Owen, a director, is the Company's accountant.
No one receives compensation in excess of $60,000 per year.
ITEM 8. Description of Securities
The following table sets forth the capitalization of the Company as of June
30, 1999.
PRESENT AMOUNT
TITLE OF CLASS AMOUNT AUTHORIZED OUTSTANDING
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Common Stock 90,000,000 8,564,500
(par value of $.001 per share)
Preferred Stock 5,000,000 none
(par value of $.001 per share)
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DESCRIPTION OF COMMON AND PREFERRED STOCK
The Company is presently authorized to issue up to 95,000,000 shares of
stock, 5,000,000 shares of preferred stock, par value of $.001 per share and
90,000,000 shares of common stock, par value of $.001 per share. No shares of
preferred stock are issued and outstanding. As of June 30, 1999, the Company
had 8,564,500 shares of common stock issued and outstanding.
All shares of stock, when issued, will be fully-paid and nonassessable. All
shares of common stock are equal to each other with respect to voting,
liquidation and dividend rights. Holders of shares of common stock are
entitled to one vote for each share they own at any stockholders' meeting.
Holders of shares of common stock are entitled to receive such dividends as
may be declared by the Board of Directors out of funds legally available
therefor, and upon liquidation are entitled to participate pro rata in a
distribution of assets available for such a distribution to stockholders.
There are no conversion, preemptive, redemption, or other rights or privileges
with respect to any shares. Reference is made to the Company's Articles of
Incorporation and its By-Laws as well as to the applicable statutes of the
State of Utah for a more complete description of the rights and liabilities of
holders of common stock. The common stock of the Company has no cumulative
voting rights which means that fifty per cent of the shareholders may elect
all of the directors of the Company to be elected at a shareholders meeting if
they choose to do so. In such event, the holders of the remaining shares
aggregating less than 50% will be unable to elect any directors. The
preferred stock may be issued in series with rights and privileges as
determined by resolution of the Board of Directors.
PART II
ITEM 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
No shares of the Company have previously been registered with the Securities
and Exchange Commission. Presently the Company's
17
<PAGE>
shares have a listing on the National Association of Securities Dealers
Electronic Bulletin Board. The Company may be delisted from the Electronic
Bulletin Board on approximately August 1, 1999. When this Form becomes
effective and not having any deficiencies, the Company anticipates applying
for listing on the EBB. The Company's application will consist of current
corporate information, financial statements and other documents as required by
Rule 15c2-11 of the Securities Exchange Act of 1934, as amended. It is
anticipated that a listing on the OTC Electronic Bulletin Board permits price
quotations for the Company's shares to be published by such service. Prior to
the date hereof the Company's shares traded from time to time on the OTC
Electronic Bulletin Board. As of August 1, 1999, transactions in the
Company's shares are not reported on the EBB. The table below states the
closing high and low bid prices at which the Company's shares of common stock
were quoted during the quarter identified. The trades are in U.S. dollars but
may be inter-dealer prices without retail mark-up, mark down, or commission
and may not even represent actual trades.
High Low
1998
December 31 $6.25 $6.25
1999
March 31 $6.25 $.20
June 30 $1.75 $.50
The Company's shares may be volatile and subject to broad price movements.
Further, the Company's shares are subject to the provisions of Section 15(g)
and Rule 15g-9 of the Securities Exchange Act of 1934 ("Exchange Act"),
commonly referred to as the "Penny Stock" rule. Section 15(g) states certain
requirements for transactions in penny stocks and Rule 15g-9(d)(1)
incorporates the definition of penny stock as used in Rule 3a51-1 of the
Exchange Act.
Generally a penny stock is defined as any equity security that has a market
price of less than $5.00 per share, subject to certain limited exceptions.
Rule 3a51-1 provides that any equity security is considered to be a penny
stock unless that security is registered and traded on a national securities
exchange meeting certain criteria set by the Commission; authorized for
quotation on The NASDAQ Stock Market; issued by a registered investment
company; excluded from the definition on the basis of price (at least $5.00
per share) or the issuer's net tangible
18
<PAGE>
assets; or exempted from the definition by the Commission. Once shares are
deemed to be a penny stock, trading in the shares then becomes subject to
additional rules relating to sales practices for broker-dealers who sell penny
stocks to persons other than established customers and accredited investors.
An accredited investor has assets in excess of $1,000,000 or annual income
exceeding $200,000, or with spouse annual income of $300,000.
For transactions covered by these rules, broker-dealers must make a special
suitability determination for the purchase of such securities and must have
received prior to the purchase the purchaser's written consent for the
transaction. Additionally, for any transaction involving a penny stock,
unless exempt, he rules require the delivery of a risk disclosure document
relating to the penny stock market prior to the first transaction. A
broker-dealer must also disclose the commissions payable to both the
broker-dealer and the registered representative, and current quotations for
the security. Finally, monthly statements must be sent disclosing recent
price information for the penny stocks held in the account and information on
the limited market in penny stocks. These rules may restrict the ability of
broker-dealers to trade and/or maintain the Company's common stock and may
affect the ability of shareholders to sell their shares.
As of June 30, 1999, there were approximately 89 holders of record of the
Company's common stock, which number does not include shareholders whose
certificates are held in the name of Broker-dealers or other nominees.
Before the reverse split of 100 for 1 which became effective on March 8,
1999, the Company had 56,450,000 of common stock issued and outstanding.
After the reverse split and the closing of the transaction there were
8,564,500 shares of common stock issued and outstanding. Wallace Boyack, who
may be deemed an affiliate of the Company (as the term "affiliate"is defined
in the Act), presently owns approximately 408,490 shares which are eligible
for resale pursuant to the provisions of Rule 144 promulgated under the
Securities Act of 1933. Generally Rule 144 provides that a person or persons
who acquired stock in a non-public transaction and has owned the stock for
more than one year prior to the proposed sale may sell within a three month
period no more than one per cent of the then issued and outstanding shares of
common stock or the average weekly reported trading volume on all national
securities exchange and through NASDAQ during the four calendar weeks
preceding the proposed sale. Up to 85,645 shares owned by the shareholder may
be sold pursuant to the provisions of Rule 144 during a three month period.
Any shares sold pursuant to Rule 144 may adversely affect the market price
19
<PAGE>
of the Company's common stock. Sales under Rule 144 may adversely affect the
market price for the shares of the Company's common stock in any market that
may exist.
The Company issued 8,000,000 shares to acquire the shares of Global Web,
Inc. on or about March 8, 1999. The Company believes that this transaction
was exempt from registration under the Act pursuant to Section 4(2). The
other shares were issued prior to 1990. The Company believes that these prior
issuances are not relevant to the registration statement.
Dividend Policy
The Company has not declared nor paid cash dividends nor made distributions
in the past. The Company does not anticipate that it will pay cash dividends
or make distributions in the foreseeable future. The company currently
intends to retain and invest any future earning to finance operations.
ITEM 2. Legal Proceedings
In July 1998 Global Web, Inc., a Nevada corporation and a wholly owned
subsidiary of the Company, Brae Burbidge and Lee Burbidge were named as
defendants in an adversary proceeding complaint filed in the bankruptcy
proceeding of Laservend, Inc. The litigation is in the federal bankruptcy
court in Utah and is captioned Gary E. Jubber v. Brae Burbidge et al. having
docket no Bankruptcy No. 97A-26878 and Adversary Proceeding No. 98PA-2239.
The action seeks to recover the value of an asset which it is claimed was
taken from LaserVend. Management believes the claims lack merit and intends
to vigorously defend the allegations. Even though the attorney representing
the Defendants believes that the defense of the litigation will be successful,
no assurance can be given that when the matters are adjudicated that the
defendants will not be found to have liability and have damages assessed
against them individually or collectively including the Company's wholly owned
subsidiary.
In April 1999 the Company in the state courts of Utah commenced an action
captioned Global Web, Inc. v. Home Business Solutions, Inc. and Joseph
Appleton seeking to enforce a contract between Global and Home and seeking
damages against Appleton for the appropriation of sensitive and confidential
information of Global Web. Home Business has filed a counterclaim seeking
damages from Global.
In April 1999 Global Web was named as a defendant in the state courts of
Utah in an action captioned Hudson Printing Company v.
20
<PAGE>
Global Web, Inc. Hudson Printing was seeking the payment of a disputed invoice
for printing work from the Company. The Company counterclaimed. On September
8, 1999, Global and Hudson stipulated to a settlement and on September 14,
1999, the action was dismissed. Each party released the other and Global paid
$13,500 to Hudson as settlement.
ITEM 3. Changes in and Disagreements with Accountants
There have been no changes in or disagreements with accountants.
ITEM 4. Recent Sales of Unregistered Securities
On March 8, 1999, the Company issued a total of eight million shares to
the shareholders of Global Web, Inc., to acquire all of the issued and
outstanding shares of that corporation. This stock issuance was not
registered with the Commission because it was believed to be exempt from the
registration requirements of the Act under Section 4(2). No other shares of
the Company's common stock have been issued during the preceding three fiscal
years.
ITEM 5. Indemnification of Directors and Officers
As permitted under the statutes of the State of Utah the Company has the
power to indemnify any officer or director who, in their capacity as such is
made a party to any suit or proceeding, whether criminal, civil or
administrative if such director or officer acted in good faith and in a manner
reasonably believed to be in, or not opposed to, the corporation's best
interests. Advances of expenses is permitted pursuant to Section 16-10a-904
of the Utah Code. Further, the Utah Code allows for the purchase of liability
insurance for officers and directors. The Company's Bylaws provide that the
Company shall provide indemnification of an officer or a directors unless the
claim or liability arises out of his own negligence or willful misconduct.
Transfer Agent
The Company's Transfer Agent is Atlas Stock Transfer Company, 5899 South
State Street, Murray, Utah 84106, telephone number 801-266-7151.
PART FINANCIAL STATEMENTS
The Company's financial statements for the fiscal years ended December 31,
1998 and 1997 have been examined by Orton and Company. Also, provided are pro
forma financial statements showing the effect of the acquisition of Global
Web, Inc., in March 1999. Unaudited financial statements for the six month
period ended June 30, 1999, are included which were prepared by the Company.
<PAGE>21
GLOBAL WEB, INC.
Consolidated Financial Statements
June 30, 1999, December 31, 1998 and 1997
<PAGE> 22
<Letterhead of
ORTON & COMPANY
----------------------------
Certified Public Accountants
A Professional Corporation
50 West Broadway, Suite 1130, Salt Lake City, Utah 84101
(801) 537-7044, Fax (801) 363-0615
INDEPENDENT AUDITOR'S REPORT
To the Stockholders of
Global Web, Inc.
We have audited the accompanying consolidated balance sheets of Global Web,
Inc. (a Utah corporation) as of December 31, 1998 and 1997 and the related
consolidated statements of operations, stockholders' equity, and cash flows
for the periods then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Global
Web, Inc. as of December 31,1998 and 1997 and the results of its operations
and its cash flows for the periods then ended in conformity with generally
accepted accounting principles.
/s/ Orton & Company
Orton & Company
Salt Lake City, Utah
August 3, 1999
<PAGE> 23
Global Web, Inc. and Subsidiary
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS
------
June 30, December 31,
1999 1998 1997
----------------- ------------------ ---------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash $ 50,834 $ 2,189 $ 2,639
Accounts Receivable (Net of $0
and $0 allowance for Doubtful
account) 107,499 16,744 -
Prepaid Expenses & other 67,260 53,235 -
Inventory (Note 1) 7,836 7,836 -
----------------- ------------------ ---------------
233,429 80,004 2,639
PROPERTY PLANT & EQUIPMENT (NOTE 1) 72,508 53,011 38,994
----------------- ------------------ ---------------
TOTAL ASSETS $ 305,937 $ 133,015 $ 41,633
================= ================== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable & accrued
expenses $ 83,581 $ 14,872 $ 2,835
Taxes payable 17,060 10,117 6,116
Income taxes payable (Note 1) 32,226 8,726 -
Deferred revenue (Note 5) 21,170 11,346 17,421
Short term debt 15,650 - -
----------------- ------------------ ---------------
169,687 45,061 26,372
CONTINGENCIES (Note 6) - - -
STOCKHOLDERS' EQUITY
Preferred Stock 5,000,000 shares
authorized, $.001 par value,
0 shares outstanding - - -
Common Stock 90,000,000 shares
authorized at $.001 par value;
8,564,500 and 16,000,000 shares
issued and outstanding 8,565 16,000 16,000
Capital in Excess of Par Value 284,982 36,649 36,649
Retained (Deficit) Earnings (157,297) 35,305 (37,388)
----------------- ------------------ ---------------
Total Stockholders' Equity 136,250 87,954 15,261
----------------- ------------------ ---------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 305,937 $ 133,015 $ 41,633
================= ================== ===============
The accompanying notes are an integral part of these financial statements.
3
</TABLE>
<PAGE> 24
Global Web, Inc. and Subsidiary
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Six For the For the Period
Months Ended Year Ended August 14, 1997
June 30, December 31, to December 31,
1999 1998 1997
---------------- --------------- ----------------
<S> <C> <C> <C>
REVENUE
Internet & Seminar Services $ 1,135,772 $ 1,180,652 $ 110,190
EXPENSES
Selling, General & Administrative 1,063,877 1,099,133 147,578
---------------- --------------- ----------------
NET INCOME (LOSS)-Before Taxes $ 71,895 $ 81,519 $ (37,388)
Taxes (Note 1) 23,500 8,826 -
---------------- --------------- ----------------
INCOME (LOSS) $ 48,395 $ 72,693 $ (37,388)
================ =============== ================
Income (Loss) Per Share $ .01 $ - $ -
================ =============== ================
Average Outstanding Shares 8,564,500 16,000,000 16,000,000
================ =============== ================
The accompanying notes are an integral part of these financial statements.
4
</TABLE>
<PAGE> 25
Global Web, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
From August 14, 1997 (inception) through June 30, 1999
<TABLE>
<CAPTION>
Capital in
Common Common Excess of Retained
Shares Stock Par Value Deficit
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance, August 14, 1997 - $ - $ - $ -
Shares issued for cash
at $.001 per share 16,000,000 16,000 - -
Equipment contributed by
shareholders (Note 2) - - 36,649 -
Loss for the period - - - (37,388)
------------ ------------ ------------ ------------
Balance, December 31, 1997 16,000,000 $ 16,000 $ 36,649 $ (37,388)
Income for the period - - - 72,693
------------ ------------ ------------ ------------
Balance, December 31, 1998 16,000,000 16,000 36,649 35,305
Shares issued by Global Web, Inc.
(Utah) for 100% of outstanding
stock of Global Web, Inc.
(Nevada) (Note 1) 8,564,500 8,565 284,982 (240,997)
Income for the period - - - 48,395
------------ ------------ ------------ ------------
Balance, June 30, 1999 8,564,500 $ 8,565 $ 284,982 $ (157,297)
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
5
</TABLE>
<PAGE> 26
Global Web, Inc. and Subsidiary
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Six For the For the Period
Months Ended Year Ended August 14, 1997
June 30, December 31, to December 31,
1999 1998 1997
---------------- --------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Income (Loss) $ 48,395 $ 72,693 $ (37,388)
Depreciation 23,500 30,650 12,780
Change in Accounts Receivable (90,755) (16,744) -
Change in Accounts Payable 68,709 12,037 2,835
Change in Taxes Payable 30,343 12,727 6,116
Change in Deferred Revenue 9,824 (6,075) 17,421
Change in Prepaid Expenses (14,025) (53,235) -
Change in Inventory - (7,836) -
---------------- --------------- ----------------
75,991 44,217 1,764
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of Fixed Assets (42,996) (44,667) (15,125)
---------------- --------------- ----------------
(42,996) (44,667) (15,125)
CASH FLOWS FROM
FINANCING ACTIVITIES
Issuance of common stock for Cash - - 16,000
Cash from short term debt 15,650 - -
---------------- --------------- ----------------
15,650 - 16,000
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 48,645 (450) 2,639
CASH AND CASH EQUIVALENTS
AT THE BEGINNING OF PERIOD 2,189 2,639 -
---------------- --------------- ----------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 50,834 $ 2,189 $ 2,639
============== ============== ==============
CASH PAID DURING THE PERIOD FOR:
Interest $ 35 $ - $ -
Income Taxes $ - $ 100 $ -
The accompanying notes are an integral part of these financial statements.
6
</TABLE>
<PAGE> 27
Global Web, Inc. and Subsidiary
Notes to the Consolidated Financial Statements
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company (Global Web, Inc.-Parent) was organized under the laws of the
state of Utah on September 6, 1985 as BP 150, Inc. The Company was
incorporated for the purpose of investing in a business opportunity. In 1987,
the Company changed its name to American Restaurant Management, Inc. and
invested in and operated a restaurant franchise. The restaurant enterprise
failed in 1989 and the Company has not engaged in any business since that date
until March 1999, when the Company acquired all of the outstanding shares of
Global Web, Inc., a Nevada Corporation.
Global Web, Inc. (Nevada-Subsidiary) was created on August 14, 1997 in
the state of Utah. Global Web, Inc.-Subsidiary is in the business of
assisting individuals and businesses to design and maintain web sites on the
internet. The Company hosts those web sites through its telecommunications
and computer equipment that is linked to the internet. The Company also
sponsors seminars where individuals and business can learn the general
operations of the internet, how to do business on the internet, design and
maintain their own web site on the internet, and market their products or
provide information through that web site.
In October 1997, Global Web, Inc.-Subsidiary created and merged with a
Nevada subsidiary by the same name. Global Web, Inc.-Subsidiary now is a
Nevada corporation with Utah operations.
Global Web, Inc-Subsidiary corporation was created with two classes of
stock: 45,000,000 shares authorized of common stock and 5,000,000 shares of
preferred stock, each with $.001 par value. The preferred stock has the
voting rights of one thousand votes per share, but has no preferences or
rights as to dividends, redemptions, dissolutions, distributions, conversions,
or exchanges.
At the time of the acquisition the Company (Global Web, Inc-Parent)
changed its name to Global Web, Inc. and did a reverse stock split of 1 for
100 shares. After the reverse split was affected, Global Web, Inc.-Parent
issued 8,000,000 shares of common stock for all of the outstanding stock of
Global Web, Inc.-Subsidiary. The consolidated financial statements for 1997
and 1998 are the financial statements of the subsidiary operation - Global
Web, Inc. (Nevada). The financial statements of 1999 are the combined
financial statements of the parent from March 31, 1999 (there was no activity
in the parent company) and the subsidiary from January 1, 1999.
Together the two companies (Parent and Subsidiary) are combined into
Global Web, Inc , a consolidated group of corporations known in this report as
the Company. The accounting for the acquisition of all the stock of Global
Web, Inc. (Nevada) is treated as a "reverse acquisition" whereby the control
parties of the acquired corporations (Global Web, Inc. (Nevada)) take control
of the parent corporation (Global Web, Inc. (Utah)). At the time of the name
change, Global Web, Inc-Parent also affected a change in the capital
structure. The capitalization of the Company was changed to common stock
authorized 90,000,000 shares, $.001 par value and preferred stock authorized
5,000,000 shares, $.001 par value.
7
<PAGE> 28
Global Web, Inc. and Subsidiary
Notes to the Consolidated Financial Statements
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income (Loss) Per Share
--------------------------
The computation of income (loss) per share of common stock is based
on the weighted average number of shares outstanding during the period.
Income Taxes
-------------
The Company adopted Statement of Financial Standards No. 109
"Accounting for Income taxes" in the fiscal year ended December 31, 1997.
Statement of Financial Accounting Standards No. 109 " Accounting for
Income Taxes" requires an asset and liability approach for financial
accounting and reporting for income tax purposes. This statement recognizes
(a) the amount of taxes payable or refundable for the current year and (b)
deferred tax liabilities and assets for future tax consequences of events that
have been recognized in the financial statements or tax returns.
Deferred income taxes result from temporary differences in the
recognition of accounting transactions for tax and financial reporting
purposes. There were no temporary differences at December 31, 1998 and
earlier years; accordingly, deferred tax liabilities have not been recognized
for any year.
The Company (Parent) has cumulative net operating loss carryforwards
of approximately $160,000 at December 31, 1998. No effect has been shown in
the financial statements for the net operating loss carryforwards as the
likelihood of future tax benefit from such net operating loss carryfowards is
not presently determinable. Accordingly, the potential tax benefits of the
net operating loss carryforwards have been offset by valuation reserves of the
same amount. Accrued income taxes for all years are estimated for the
subsidiary operation.
The Company (parent) has available $160,000 in net operating loss
carryforwards that will begin to expire in the year 2000. The Company has
accrued an estimated $12,041 federal and state income taxes for the first six
months of 1999. The taxes accrued from the subsidiary is not offset by any
net operating loss carryforward from the parent since such carryforwards are
limited and may not be available to offset any future profits of the
subsidiary.
Cash and Cash Equivalents
-------------------------
For the purposes of the statements of cash flows, cash and cash
equivalents are defined as demand deposits at banks and certificates of
deposits with original current maturities less than three months.
8
<PAGE> 29
Global Web, Inc. and Subsidiary
Notes to the Consolidated Financial Statements
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Property and Equipment
---------------------
Property and equipment are recorded at cost. Repairs and maintenance
are charged to operations, and renewals and additions are capitalized. The
Company capitalizes software development costs according to SFAS 86, which
requires capitalization of software costs once a product becomes
technologically feasible or is considered a significant improvement in
existing software used by the Company in the marketing of its services. In
the first six months of 1999, the Company capitalized $25,956 in software
development costs and will be amortized when the improved on line web site
builder comes on line in the later part of 1999.
Property and equipment consists of the following:
June 30, December 31,
1999 1998 1997
------------ ----------- -----------
Computer Equipment $ 83,330 $ 66,289 $ 32,584
Computer Software Costs 25,956 - -
Furniture & Office Equipment 30,152 30,152 19,190
------------ ----------- -----------
139,438 96,441 51,774
Less: Accumulated Depreciation (66,930) (43,430) (12,780)
------------ ----------- -----------
$ 72,508 $ 53,011 $ 38,994
============ =========== ===========
Depreciation is based on the estimated useful life of the asset
either on a straight line basis (Furniture & Office Equipment) or declining
balance basis (Computer Equipment). Computers are being depreciated over 3
years, while furniture and office equipment are being depreciated over 5
years.
Depreciation expense for 1997 was $12,780. Depreciation expense for
1998 was $30,650. Depreciation expense for the six months 1999 was $23,500.
Inventory
---------
Inventory consists of printed marketing and seminar materials.
Inventory is stated at cost.
Revenue Recognition
--------------------
The Company recognizes revenue when the services are performed. Web
site hosting fees are assessed and recognized on a monthly basis, web site
building fees and seminar revenue is recognized when the services (web site
building or seminar attendance) is provided.
NOTE 2 - RELATED PARTY TRANSACTIONS
During 1997, the shareholders of the Company donated various pieces
of furniture and computer equipment for use in the business, The Equipment was
valued at cost or their market value, whichever was lower.
9
<PAGE> 30
Global Web, Inc. and Subsidiary
Notes to the Consolidated Financial Statements
NOTE 3 - USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial statements
and revenues and expenses during the reporting period. In these financial
statements, assets, liabilities and earnings involve extensive reliance on
management's estimates. Actual results could differ from those estimates.
NOTE 4 - FAIR VALUES OF FINANCIAL INSTRUMENTS
The following listing of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosure About Fair Value of Financial Instruments", The carrying amounts
and fair value of the Company's financial instruments at December 31, 1998 and
1997 are as follows:
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998 December 31, 1997
------------------ --------------------- --------------------
Carrying Fair Carrying Fair Carrying Fair
Amounts Values Amounts Values Amounts Values
--------- -------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Cash and
Cash Equivalents $ 50,834 $ 50,834 $ 2,189 $ 2,189 $ 2,639 $ 2,639
</TABLE>
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and Cash Equivalents
-------------------------
The carrying amounts reported on the balance sheet for cash and cash
equivalents approximate their fair value.
NOTE 5 - DEFERRED REVENUE
The Company provides internet services on a monthly prepaid basis.
Deferred revenue represents part of services that have been collected and
services to be provided for January 1998 and 1999 and July 1999, respectively.
10
<PAGE> 31
Global Web, Inc. and Subsidiary
Notes to the Consolidated Financial Statements
NOTE 6 - CONTINGENCIES
In July 1998, Global Web, Inc. a Nevada corporation and a wholly owned
subsidiary of the Company, Brae Burbidge and Lee Burbidge were named as
defendants in an adversary proceeding complaint filed in a bankruptcy
proceeding of LaserVend, Inc. The litigation is in the federal bankruptcy
court in Utah and is captioned Gary E. Jubber v. Brae Burbidge et al. having
docket number Bankruptcy No. 97A-26878 and Adversary Proceeding No. 98PA-2239.
The action seeks to recover the value of an asset which it is claimed was
taken from LaserVend. Management believes the claims lack merit and intend to
vigorously defend the allegations. Even though the attorney representing the
Defendants believes that the defense of the litigation will be successful, no
assurance can be given that when the matters are adjudicated that the
defendants will not be found to have liability and have damages assessed
against them individually or collectively including the Company's wholly owned
subsidiary.
In April 1999, the Company in the state courts of Utah commenced an
action captioned Global Web, Inc. v. Home Business Solutions, Inc. and Joseph
Appleton seeking to enforce a contract between Global and Home and seeking
damages against Appleton for the appropriation of sensitive and confidential
information of Global Web. Home Business has filed a counterclaim seeking
damages from Global. Also, in April 1999, Global Web was named as a defendant
in an action captioned Hudson Printing Company v. Global Web, Inc. seeking
collection. Global believes that the litigation lacks merit, has filed a
counterclaim and intends to defend the matter vigorously.
NOTE 7 - INTERIM FINANCIAL STATEMENTS
The consolidated financial statements for the six months ended June
30, 1999 were prepared from the books and records of the Company. Management
believes that all adjustments have been made to the financial statements to
make a fair presentation of the financial condition of the Company as of June
30, 1999. The results of the three months are not indicative of a full year
of operation for the Company.
NOTE 8 - RESEARCH AND DEVELOPMENT COSTS
In 1997, the Company expended $11,536 in research and development
costs in computer software development of its Web Builder program.
11
<PAGE> 32
EXHIBITS
No. Description
3(i) Articles of Incorporation-filed on August 11, 1999.
(ii) Amendments to Articles of Incorporation-filed on August 11, 1999.
(iii)Bylaws-filed on August 11, 1999.
10 Stock Purchase Agreement-filed on August 11, 1999.
21 Subsidiary of the Registrant.
27 Financial Data Summary
<PAGE>
Signatures
In accordance with Section 12 of the Securities Exchange act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Global Web, Inc.
Date: September 24,1999.
By s/Brae Burbidge
Brae Burbidge, President and Chief
Financial officer
Exhibit 21
Subsidiary of Registrant
Global Web, Inc., incorporated under the laws of the State of Nevada.
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