As filed with the Securities and Exchange Commission on October 1999.
Registration No.0-26999
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A - Amendment No. 2
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
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PART I
ITEM 1. Description of the Business ....................... 3
ITEM 2. Management's Discussion and Analysis of Plan of
Operation ....................................... 10
ITEM 3. Description of Property ........................... 14
ITEM 4. Security Ownership of Certain Beneficial
Owners and Managers ............................. 14
ITEM 5. Directors, Executive Officers, Promoters,
And Control Persons ............................. 15
ITEM 6. Executive Compensation ............................ 17
ITEM 7. Certain Relationships and Related Transactions .... 17
ITEM 8. Description of Securities ......................... 17
PART II
ITEM 1. Market Price of and Dividends on Registrant's
Common Equity and Other Shareholder Matters ..... 18
ITEM 2. Legal Proceedings ................................. 21
ITEM 3. Changes in and Disagreements with Accountants ..... 22
ITEM 4. Recent sales of unregistered securities ........... 22
ITEM 5. Indemnification of Directors and Officers ......... 22
PART F/S
Financial statements ...................................... F-1 - F-10
PART III
ITEM 1. Index to Exhibits ................................. 23
ITEM 2. Description of exhibits ........................... 23
Signatures ................................................ 24
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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. Description of Business
Business Development
Global Web, Inc. ("Global" or 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, ("Global Web") 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 provided in the software. Much of the web page is assembled
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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.
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 $69,95. Presently the Company offers three
different packages with monthly fees of $14.95, $34.95 and $69.95 and the
percentages of subscribers are 39%, 43% and 18% respectively. 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. The
Company from time to time may vary the services or options provided in the
packages offered depending on past results and anticipated sales. 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.
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Presently, Web Builder is the main component of the Company's business. The
Company cannot state a percentage of its revenues 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 and
others.
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.
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 the following:
- With Web Builder subscribers can build and change web sites with ease.
- Monthly subscription fees are competitive.
- Marketing through seminars may give The Company an
advantage.
- When available, ZipWeb may provide a competitive advantage.
No assurance can be given that ZipWeb will provide the anticipated benefit.
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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 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
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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 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
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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 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 and
general business laws. In addition, the seminars are subject to business
opportunity laws enacted by approximately 23 states. The applicability of these
laws is determined by the dollar amount to purchase the operating business
opportunity. The Company's policy is to keep the price of the business
opportunity below the dollar amount that makes the law applicable. Under the
federal statute if a business opportunity sells for less than $500.00, it is
deemed to be exempt from being a franchise. In addition, under federal
regulation there is a requirement for a cooling off period during which a
purchaser can cancel the agreement. The Company grants to each purchaser the
right to cancel the purchase agreement for three days from the date of the
purchase. Prior to a seminar in a particular state, the applicable law is
reviewed and the Company ascertains if it 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 opera tions.
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.
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The Company has approximately nineteen full-time and part-time employees.
These employees are web designers, software programers, customer service
representatives, and administrators. The Compan 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.
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 using additional distributors.
Also, the Company increased its use of telemarketing. Also, the Company
decreased the prices for the web sites and management believes that the volume
of revenues increased. For the near term management believes that it can
maintain or increase sales without additional price decreases. Management
believes that the overall trend is that monthly subscription rates for hosting
web sites will decrease. To offset this trend the Company may choose to offer
more services at the same subscription rate. 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 the 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 $48,645. Current liabilities
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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.
For the six month period ended June 30, 1999, the Company had revenues of
$1,135,772 compared to revenues of $228,148 for the same period a year earlier
and selling, general and administrative expenses were $1,063,877 compared to
$185,864 and net income was $48,395 and $37,584. Revenues increased five fold
for the six month period ended June 30, 1999, because in 1998 the Company had
one distributor and it now has four distributors. Also, the Company has used
telemarketing regularly while in 1998 the use of telemarketers was sporadic. The
Company also sent a mailer to its current and former subscribers. The Company
anticipates that revenues will remain at the current level. The Company is
evaluating its marketing plan and in the near term will test radio advertising
to market its services. Expenses increased because the Company increased its
sales activities, hired new personnel and incurred costs in consolidating its
offices from two offices into one. The Company also purchased equipment and
furniture in the six months ended June 30, 1999. The Company anticipates that
expenses will remain at current levels.
The Company's financial affairs may be influenced by the Year 2000 issue. 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 tested its systems and operations for Year 2000 problems.
The Company has received information from the public utilities that they are
prepared and ready for the year 2000. Assuming that electrical and telephone
services are not interrupted the Company believes that the Year 2000 will not
adversely impact its operations, its financial position, cash flow or
operational results. The Company received assurances from the manufacturers of
its hardware and software that the all is Y2K compliant. The Company follows a
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practice of periodically duplicating sensitive information on an independent
data storage medium.
Availability of basic electrical and telephone services are material and
critical to the Company's operations. The Company lacks the information and
expertise to make an independent assessment of the risks that the utility
companies may be unable to provide services. If these vital services are
interrupted, the Company will have personnel ready to commence operations as
soon as the services are restored. If the electrical and telephone services were
unavailable for an extended period of time, 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.
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, 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.
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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.
The 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.
The 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 equity securities or some form of borrowing, such as
promissory notes. No assurance can be given that the Company will be able to
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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.
The Company's Success is Dependent Upon Key Personnel. 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.
The 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, Second Amendment.
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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.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership Of Class(1)
<S> <C> <C>
Lee Burbidge 2,008,000 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
</TABLE>
(1) Based on 8,564,500 shares of common stock outstanding as of June
30, 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 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.
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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 the
Company. Those shareholders are Brae Burbidge, Lee Burbidge, Bret Burbidge, and
Wallace Boyack. The Company 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
- --------------------------------------------------------------------------------
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)
17
<PAGE>
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. The Company's shares had a listing on the National
Association of Securities Dealers Electronic Bulletin Board. The Company was
delisted from the Electronic Bulletin Board on approximately August 1, 1999.
18
<PAGE>
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 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
19
<PAGE>
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 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.
20
<PAGE>
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 the Company 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 the
Company.
In April 1999 Global Web was named as a defendant in the state courts of Utah
in an action captioned Hudson Printing Company v. 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
21
<PAGE>
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. Unaudited financial
statements for the six month period ended June 30, 1999, are included which were
prepared by the Company.
22
<PAGE>
GLOBAL WEB, INC.
Consolidated Financial Statements
June 30, 1999, December 31, 1998 and 1997
<PAGE>
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
F-1
<PAGE>
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.
</TABLE>
F-2
<PAGE>
Global Web, Inc. and Subsidiary
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Six For the For the For the Period
Months Ended Year Ended Year Ended August 14, 1997
June 30, June 30, December 31, to December 31,
1999 1998 1998 1997
---------------- -------------- ------------- ----------------
<S> <C> <C> <C>
REVENUE
Internet & Seminar Services $ 1,135,772 $ 228,148 $ 1,180,652 $ 110,190
EXPENSES
Selling, General & Administrative 1,063,877 185,864 1,099,133 147,578
------------- ------------- ------------ ------------
NET INCOME (LOSS)-Before Taxes $ 71,895 $ 42,284 $ 81,519 $ (37,388)
Taxes (Note 1) 23,500 4,700 8,826 -
------------- ------------- ------------ -------------
INCOME (LOSS) $ 48,395 $ 37,584 $ 72,693 $ (37,388)
============= ============= ============ ============
Income (Loss) Per Share $ - $ - $ - $ -
============= ============= ============ ============
Average Outstanding Shares 8,564,500 16,000,000 16,000,000 16,000,000
============= ============= ============ ============
The accompanying notes are an integral part of these financial statements.
F-3
</TABLE>
<PAGE>
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.
</TABLE>
F-4
<PAGE>
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.
F-5
</TABLE>
<PAGE>
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.
F-6
<PAGE>
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.
F-7
<PAGE>
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.
F-8
<PAGE>
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> <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.
F-9
<PAGE>
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.
F-10
<PAGE>
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-filed on September 24, 1999.
27 Financial Data Summary-filed on September 24, 1999.
23
<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: October 28, 1999.
By /s/Brae Burbidge
-------------------------------
Brae Burbidge, President and Chief
Financial officer
24
