U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] Annual report under section 13 or 15 (d) of the Securities Exchange Act of
1934 for the fiscal year ended December 31, 1999.
[ ] Transition report under section 13 or 15 (d) of the Securities Exchange Act
of 1934 for the transition period from to
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Commission file number: 0-26999
GLOBAL WEB, INC.
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(Name of small business issuer in its charter)
Utah 87-0427550
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State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
11781 South Lone Peak Parkway, No. 110
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Draper, Utah 84020
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(Address of principal executive offices)
Registrant's telephone number, including area code:(801)523-1003
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Securities registered pursuant to Section 12(b) of the Act: None
Title of each class registered: N/A.
Name of each exchange on which registered: N/A
Securities to be registered under section 12(g) of the Act: None
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such report(s), and (2) has been subject to such filing requirements for the
past 90 days. [X} Yes [ ] No
Check if disclosure of delinquent filers in response to Item 405 of
Regulations S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State the registrant's net revenue (loss) for its most recent fiscal year:
$71,855.
The aggregate market value of voting stock held by non-affiliates of the
registrant on December 31, 1999, was approximately $67,500.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: as of December 31, 1999, there
were outstanding 8,564,500 shares of registrant's Common stock, par value of
$.001 per share.
Documents incorporated by reference: Exhibits, Item 13.
Transitional Small business Disclosure Format Yes [ ] No [X]
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PART I.
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THE COMPANY
Exact corporate name: Global Web, Inc.
State and date of incorporation: Utah - September 6, 1985.
Street address of principal office: 11781 South Lone Peak
Parkway, No. 110, Draper, Utah 84020.
Company telephone number:(801) 523-1003.
Fiscal year:December 31
PART I
Item 1. Description of Business.
Global Web, Inc., a Utah corporation (hereinafter "Registrant" or "Company"
or "we" or other forms of the personal pronoun first person plural) based in
Draper, Utah, develops and markets Internet services to Internet users including
commercial businesses. In particular, we provide 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 us, it
then has access to and the use of our 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 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.
We offer 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 we offer 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
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graphics, amount of text, and other eCommerce services provided. From time to
time we may vary the packages offered by prices, services or options provided
depending on past results, market conditions, and anticipated sales. Also, we
offer other services such as consultation and online training. Generally we
provide guidance to subscribers to assist in the development and use of web
sites and web pages. For a fee we provide additional training. Our experience
has been to sell more packages in the lower price ranges. Other value-added
services are offered. Management believes that our products have application for
small businesses in the business to business market.
We offer a service call "ZowieWeb" to those selling goods and services on
their web sites. Our services and products allow 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. Our products are used in connection
with a national merchant account vendor. Our products have different variations
with additional features and enhancements.
We have a web-based real-time database accessible through the Internet for
seminar sponsor and telemarketing firms. This database allows the user in a
secured environment to search (by different options), open, edit, update, and
delete information, such as purchaser 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 and 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 specifications and requirements. Also, specific reports can be
created based on the information in the database. New features may be added over
time.
In the next few months we anticipate that we will commence to market
through mass media advertising products called ZowieWeb and FreeBeattlebug.com.
ZowieWeb 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. We have committed limited funds to the
advertising project and will assess the advertising dollars spent against the
revenues generated. If the revenues from the media campaign are less than
anticipated, we may cancel or change the advertising program. FreeBeattlebug
encourages traffic to our web site. Also, we intend to offer a web site called
FreeFordFocus.com. FreeBeattlebug and FreeFordFocus will be vehicles to sell
advertising space either on the main page or as banner advertising.
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We made one trademark filing for "Web Builder" and anticipate making other
filings in the future. We have made only a preliminary search regarding the
availability and rights to these names. We have filed for domain names which
relate to services offered. Generally, our rights to these names may be
challenged in the future by others which, if successful, may adversely affect
our business. If a name used by us were unavailable, we would have to rename the
product provided and would thereby lose any name identification established and
good will associated with that particular name.
We host 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. We
believe that because of the inconvenience of changing the URL, it discourages
subscribers from changing to another host.
We have 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.
We are unable to determine when or if the development of this service will be
completed. It will depend on funds available for development and developmental
problems.
In 1999 we spent approximately $42,686 and in 1998 we 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 our business. We cannot
state a percentage of its revenues derived from Web Builder. Our products are
bundled with other services and products provided by us and others and marketed
as a package.
Presently we service approximately 8,000 subscribers for web sites and our
other products. We are not dependent upon a few major customers.
We service for StarGate Global, Inc., approximately 40 accounts that
participate on the StarGate Marketplace, an Internet mall. We provide the
hosting service and customer service for the mall accounts. We service these
accounts for costs plus ten per cent. Over time the number of subscribers to
StarGate Marketplace has declined. Presently we receive revenues of
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approximately $1,500 to $2,000 per month. We anticipate 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 also our four primary
shareholders.
Background.
Global Web, Inc. 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. We sold 150,000 shares of common stock in a public offering in
January 1986. In 1987 we invested these funds in a restaurant franchise area. At
that time we changed our name to American Restaurant Management, Inc. In 1989
the restaurant venture failed. We were inactive from 1989 until March 1998.
In March 1999 we acquired all of the issued and outstanding shares of
Global Web, Inc., a Nevada corporation, ("Global Web") in exchange for a
controlling interest. 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, a reverse split
of 100 shares for one share was approved and became effective. New directors
were appointed.
Competition.
Our competitors are numerous and diverse. We compete with several large,
well-capitalized companies which host and offer web sites, such as YahooShop,
Tripod, Geoshop from Geocities, and GoBizGo 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. We are not a major force within the Internet industry. We believe that
we 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 us an advantage.
- When available, ZowieWeb may provide a competitive
advantage.
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No assurance can be given that ZowieWeb will provide the expected, anticipated
benefit and positive results.
Marketing
We presently market our product through seminars, telemarketing firms and
resellers. Historically, our primary emphasis for gaining new subscribers or
customers has been through seminars. The sponsor of the seminar sells our
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 retains at least more than half of
the revenues generated and we receive the remainder and any monthly fees and
costs for hosting the web sites.
Also, we sponsor seminars. We are responsible for the up-front costs such
as printing, postage, site rental, and travel expenses, but we receive the
revenues generated from sales at the seminars. At the seminars we may also sell
the products of other vendors. We may also pay commissions to others.
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.
We entered into oral agreements with telemarketing firms to market web
sites and other products. Depending on the product or service sold we pay
approximately fifty per cent of the sales to the telemarketing firm. We provide
hosting and any other service sold and receives all hosting fees. Presently we
have as telemarketers Global Marketing Alliance. Telemarketers contact people
who have attended the seminars or who have previously used the products.
Telemarketers sell our products and services. Also, telemarketers use names from
other sources. Sales through telemarketing in the year 1999 provided
approximately thirteen per cent of revenues.
We may also allow other companies to use our products under a different
name or a private label, but we will always provide the hosting service in that
the Web Builder software will be on our server and all web sites that may be
offered or sold under the private label will be hosted exclusively on our
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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 we have no active arrangement for selling our
products under a private label, but we may do so in the future.
In addition, we are producing an infomercial to market our products and
services. The infomercial is not completed. The marketing plan using the
infomercial has not been finalized although it is anticipated that the
infomercial will be tested and evaluated in several markets. Adjustments may be
made to the infomercial. One by one markets will be selected to show the
infomercial. To be successful we must sell more than the cost to present the
infomercial.
No assurance can be provided that our new services under development or
that the new services will be marketed successfully or accepted and become
commercially viable.
Cancellations
We experience cancellations by our 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 our experience. Once the accounts become established, we experience
a lower rate of cancellations. We have 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 we continue to add new
subscribers regularly. If we failed to add new subscribers, the 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 our
services.
Merchant Account and Credit Card Charges.
We and the other entities selling our products typically receive payments
through credit cards. Almost all of our revenues are from sales paid for by
credit card accounts. Because of the high volume of transactions, the financial
institutions 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
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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 us to experience cash liquidity difficulties. We try to monitor the
status of the funds in the merchant accounts so that cash flows will be
sufficient to fund operations. Our finance department monitors the merchant
accounts almost daily.
Government Regulation
Our 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.
Our 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. We grant
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 we ascertain if it complies with the state
statute.
To the extent that this report contains forward-looking statements actual
results could vary because of difficulties in developing commercially viable
products based on the Company's technologies. The Company undertakes no
obligation to release publicly the revisions of any forward-looking statements
or circumstances or to report the non-occurrence of any anticipated events.
Management of the Company has had limited experience in the operation of a
public company and the management of a commercial enterprise large in scope.
Our business may require us to develop or modify our products and perhaps
even enter new fields of endeavor and new industries. We have lack significant
capital resources and it may be difficult in the future to enter into new
businesses. If we seek funds from other sources, such funds may not be available
on acceptable terms. Success will be dependent on the judgment and skill of
management and the success of the development of any new products.
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The Company's success depends, and is expected to continue to depend, to a
large extent, upon the efforts and abilities of its managerial employees,
particularly Brae Burbidge, our President, and Lee Burbidge our Secretary. The
loss of either Brae Burbidge or Lee Burbidge would have a substantial, material
adverse effect on us. Presently we have no employment contract with key
employees.
The Company is not insured against all risks or potential losses which may
arise from the Company's activities because insurance for such risks is
unavailable or because insurance premiums, in the judgment of management, would
be too high in relation to the risk. If the Company experiences an uninsured
loss or suffers liabilities, the Company's operating funds would be reduced and
may even be depleted causing financial difficulties for the Company.
Employees
We have approximately thirty full-time employees and part-time employees.
Item 2. Description of the Property and Facilities
We lease approximately 5,000 square feet of office and research facilities
in Draper, Utah. The three year lease has adjustments and currently is $3,400
per month.
Item 3. 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. Recently the
parties entered into a settlement agreement whereby the litigation will be
dismissed with prejudice upon the completion of a $22,000 payment schedule.
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.
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Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the final
quarter of the most recently completed fiscal year.
PART II.
Item 5. Market for Common Equity and Related Stockholder Matter
Presently our common stock is traded on the NASD Electronic Bulletin Board,
also known as the "OTCEBB" under the symbol "ZWEB". The table below sets forth
the closing high and low bid prices at which our 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 transactions. During some of the time periods shown below
our common stock was traded on the National Quotations Bureau pink sheets.
High Low
1998
December 31 $6.25 $6.25
1999
March 31 $6.25 $.20
June 30 $1.75 $.50
September 30 $1.25 $.20
December 31 $3.00 $.50
As of December 31, 1999, there were approximately 100 shareholders of our
common stock.
Our shares are significantly volatile and subject to broad price movements
and fluctuations and our shares should be considered speculative and volatile
securities. The stock price may also be affected by broader market trends
unrelated to the our activities.
As of December 31, 1999, we had 8,564,500 shares of common stock issued and
outstanding. Of these shares approximately 156,000 shares were free trading
shares. The remaining shares are held by affiliates, but certain of these shares
may be available for resale pursuant to the provisions of Rule 144 promulgated
under the 1933 Act.
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Sales pursuant to the provisions of Rule 144 sold into the trading market
could adversely affect the market price. The Company's shares trade on the NASD
Electronic Bulletin Board. The per share price in an auction market is based in
part on supply and demand. If more shares are available for sale into the
market, the market price of the shares of common stock of the Company will be
adversely affected.
On March 6, 2000, our Board of Directors adopted resolutions issuing a
total of 140,000 shares of common stock. Shares were issued to the following
persons in the amounts stated: Douglas Owen, 50,000; Ryan Spencer, 15,000; Jeff
Peery, 15,000; Rob Mulford, 15,000; Sean Burbidge, 10,000; Dan Owen, 10,000; and
25,000 shares will be issued to deJong and Associates, a public relations firm.
In addition, deJong and Associates was granted a three year option to purchase
75,000 shares of common stock at $1.125 per share and the option becomes
exercisable when certain events occur.
We have not declared or paid any dividends to holders of its common stock.
In the future it is unlikely that we will pay any dividends.
Item 6. Management's Discussion and Analysis.
Because we have only a limited operating history our revenues may not
continue in the future and the future operations may generate less revenues than
current operations. For the period ended December 31, 1999, we had revenues of
$2,587,480 compared to $1,180,652 for the year ended December 31, 1998, and had
net income of $71,855 compared to $72,693. Revenues increased by $1,406,828
because we spent additional funds on marketing by sponsoring our own seminars
and using additional distributors. Also, we increased our use of telemarketing.
Also, we decreased the prices for the web sites and management believes that the
volume of revenues increased. Management believes that the overall trend is that
monthly subscription rates for hosting web sites will decrease. To offset this
trend we may choose to offer more services at the same subscription rate.
Finally, during the period we did a mailer to our database of present and former
subscribers which resulted in additional sales.
Total assets as of December 31, 1999, were $481,274 compared to $133,015 as
of December 31, 1998, for an increase of $348,259. Assets increased because of
an increases in cash of $209,993 and in accounts receivable of $41,471. Current
liabilities increased by $253,700 from $45,061 as of December 31, 1998 to
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$298,860 as of December 31, 1999. Accounts payable during the period increased
by $202,570 because of increased operations. We are dependent upon future sales
and maintaining our present level of subscribers to fund operations. Our primary
objective is to increase the number of subscribers. Presently we have
approximately 8,000 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 December 31, 1999, the Company current ratio 1.0 compared
to 1.8 as of December 31, 1998.
For the period ended December 31, 1998, we 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. The Company is evaluating its marketing plan and
in the near term may consider other methods of selling its products. 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 year ended
December 31, 1999. The Company anticipates that expenses will continue to
increase as revenues increase.
Item 7. Financial Statements
The financial statements are filed as part of this Annual Report on Form
10-KSB.
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GLOBAL WEB, Inc. (a Utah Corporation)
Including the accounts of its wholly-owned subsidiary
GLOBAL WEB, Inc. ( a Nevada Corporation)
Financial Statements
and
Independent Auditors' Report
December 31, 1999
<PAGE>
GLOBAL WEB, Inc. (a Utah Corporation)
Including the accounts of its wholly-owned subsidiary
Global Web, Inc. (a Nevada Corporation)
TABLE OF CONTENTS
Page
Independent Auditors' Report F-1
Consolidated Balance Sheet -- December 31, 1999 F-2 - F-3
Consolidated Statements of Operations for the Years
Ended December 31, 1999 and 1998 F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1999 and 1998 F-5
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1999 and 1998 F-6
Notes to Financial Statements F-7 -- F-10
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
GLOBAL WEB, Inc.
We have audited the accompanying consolidated balance sheets of Global Web, Inc.
(a Utah Corporation) and its wholly-owned subsidiary, Global Web, Inc. (a Nevada
corporation) as of December 31, 1999, and the related consolidated statements of
operations, stockholders' equity and cash flows for the years ended December 31,
1999 and 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of Global Web,
Inc. as of December 31, 1998 were audited by other auditors whose report dated
February 13, 1999, expressed an unqualified opinion on these statements.
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 financial statements referred to above present fairly, in
all material respects, the financial position of Global Web, Inc. as of December
31, 1999, and the results of operations and cash flows for the years ended
December 31, 1999 and 1998, in conformity with generally accepted accounting
principles.
By:/s/Mantyla McReynolds
------------------------
Mantyla McReynolds
Salt Lake City, Utah
March 24, 2000
F-1
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GLOBAL WEB, Inc.
Consolidated Balance Sheet
December 31, 1999
ASSETS
Current Assets:
Cash $ 212,182
Accounts receivable--net of $0
allowance for doubtful accounts 25,475
Prepaid expenses 30,273
Receivable from related party - Note 3 32,740
- ---------
Total Current Assets 300,670
---------
Property and Equipment - Note 4 187,752
Less: Accumulated depreciation (78,914)
---------
Net Property and Equipment 108,838
---------
Other Assets:
Depository reserves - Note 9 66,303
Deposit 5,463
---------
Total Other Assets 71,766
---------
Total Assets $ 481,274
=========
See accompanying notes to financial statements.
F-2
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GLOBAL WEB, Inc.
Consolidated Balance Sheet
December 31, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current Liabilities:
Accounts payable - Note 8 $ 217,442
Payroll withholdings and taxes payable 17,421
Accrued liabilities 10,280
Deferred revenue - Note 7 20,092
Income taxes payable - Note 2 17,441
Line of credit - Note 11 8,892
Current portion of long-term liabilities - Note 10 7,292
---------
Total Current Liabilities 298,860
---------
Long Term Liabilities:
Deferred tax liability - Note 2 10,168
Lease payable - Note 10 12,437
---------
Total Long Term Liabilities 22,605
---------
Total Liabilities 321,465
---------
Stockholders' Equity:
Preferred stock--5,000,000 shares authorized, $.001 par
value,-0- shares outstanding -0-
Common stock -- 90,000,000 shares authorized, $.001 par
value; 8,564,500 shares issued and outstanding 8,565
Additional Paid-In Capital 284,981
Accumulated Deficit (133,737)
---------
Total Stockholders' Equity 159,809
---------
Total Liabilities and Stockholders' Equity $ 481,274
=========
See accompanying notes to financial statements.
F-3
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GLOBAL WEB, Inc.
Consolidated Statements of Operations
For the Years Ended December 31, 1999 and 1998
1999 1998
----------- -----------
Revenues $ 2,587,480 $ 1,180,652
General and Administrative Expenses 2,462,206 1,099,133
----------- -----------
Net Income from Operations 125,274 81,519
Interest Expense (3,809) -0-
Legal settlement - Note 8 (22,000) -0-
----------- -----------
Net Income Before Income Taxes 99,465 81,519
Provision for Income Taxes - Note 2 27,610 8,926
----------- -----------
Net Income $ 71,855 $ 72,593
=========== ===========
Income Per Share $ .01 $ .01
=========== ===========
Weighted Average Shares Outstanding 8,564,500 8,564,500
=========== ===========
See accompanying notes to financial statements.
F-4
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GLOBAL WEB, Inc.
Consolidated Statements of Stockholders' Equity
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
Number Additional Total
of Common Paid-in Accumulated Stockholders'
Shares Stock Capital Deficit Equity
----------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 8,564,500 $ 8,565 $ 284,111 $(278,285) 14,391
Company expenses paid by
major shareholder -- -- 870 -- 870
Net income for the year ended
December 31, 1998 -- -- -- 72,693 72,693
----------- -------- ---------- -------- --------
Balance, December 31, 1998 8,564,500 8,565 284,981 (205,592) 87,954
Net income for the year ended
December 31, 1999 -- -- -- 71,855 71,855
----------- -------- ---------- -------- --------
Balance, December 31, 1999 8,564,500 $ 8,565 $ 284,981 $(133,737) $ 159,809
=========== ======== ========== ======== ========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
GLOBAL WEB, Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
Cash Flows Provided by Operating Activities 1999 1998
--------- ------
<S> <C> <C>
Net Income $ 71,855 $ 72,593
Adjustments to reconcile net income to net cash provided by
operating activities:
Increase in accounts receivable (41,471) (16,744)
Depreciation 35,484 30,650
Decrease (increase) in prepaid expenses 22,962 (53,235)
Decrease (increase) in inventory 7,836 (7,836)
Increase (decrease) in deferred revenue 8,746 (6,075)
Increase in taxes payable -0- 11,957
Increase in current liabilities 239,037 12,037
Expenses paid by shareholder -0- 870
--------- ------
Net Cash Provided by Operating Activities 344,449 44,217
Cash Flows Used for Investing Activities
Rent deposit (5,463) -0-
Merchant reserves (66,303) -0-
Purchases of property and equipment (91,311) (44,667)
--------- ------
Net Cash Used for Investing Activities (163,077) (44,667)
Cash Flows Provided by Financing Activities
Increase in long term debt 28,621 -0-
--------- ------
Net Cash Provided by Financing Activities 28,621 -0-
Net Increase (Decrease) in Cash 209,993 (450)
Beginning Cash Balance 2,189 2,639
--------- ------
Ending Cash Balance $ 212,182 $ 2,189
========= ======
Supplemental Disclosure Information:
Cash paid during the year for interest $ 3,809 $ -0-
Cash paid during the year for income taxes $ 8,926 $ 970
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
GLOBAL WEB, Inc.
Notes to Consolidated Financial Statements
December 31, 1999
NOTE 1 ORGANIZATION AND 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
business opportunities. 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 did not engage in any business
from that date until March 1999, when the Company acquired all
of the outstanding shares of Global Web, Inc. (Subsidiary).
Global Web, Inc. (Subsidiary) was originally created on August
14, 1997 in the state of Utah for the purpose of providing
hosting, design, and consultation services for web pages on
the Internet.
In October 1997, Global Web, Inc. (Subsidiary) created and
merged with a Nevada corporation having the same name, with
the ultimate operating entity being a Nevada corporation. At
the same time, the Utah corporation (Global Web, Inc.) was
dissolved.
Global Web, Inc. (Subsidiary) 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.
In March 1999, the Company (Global Web, Inc. (Parent)) changed
its name from American Restaurant Management, Inc. to Global
Web, Inc. (Parent) and did a reverse stock split of 1 for 100
shares. After the reverse split was effected, 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 1998 and 1999 are
presented with the reverse stock split and the issuance of the
8,000,000 shares to give the effect as if the transaction had
occurred prior to the actual 1999 transaction date.
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. (Subsidiary) is treated as a "reverse acquisition"
whereby the stockholders of the acquired corporation (Global
Web, Inc. (Subsidiary)) took control of the parent corporation
(Global Web, Inc. (Parent)). The financial statements at
December 31, 1999 and December 31, 1998 presented herein, of
the two corporations, are combined into one, similar to a
"pooling of interest method of accounting". At the time of the
name change, Global Web, Inc. (Parent) also effected 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.
INCOME PER SHARE
----------------
The computation of income per share of common stock is based
on the weighted average number of shares outstanding during
the period.
F-7
<PAGE>
GLOBAL WEB, Inc.
Notes to Consolidated Financial Statements
December 31, 1999
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 the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
PROPERTY & EQUIPMENT
--------------------
Property and equipment are recorded at cost. Repairs and
maintenance are charged to operations and renewals and
additions are capitalized. Depreciation is based on the
estimated useful life of the asset, either on a straight line
or declining balance basis.
NOTE 2 INCOME TAXES
------------
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 109 [the Statement], Accounting for
Income Taxes, as of August 8, 1997. The parent company has a
net operating loss carryforward of approximately $160,000 at
December 31, 1999. No affect has been shown in the financial
statements for the net operating loss carryforward as the
future tax benefit from such net operating loss carryforward
is not presently determinable. The net operating loss will
begin to expire in 2000. Accrued income taxes at December 31,
1999 are calculated on the subsidiary's operations. The
deferred income tax liability is due to a temporary difference
in book depreciation and income tax depreciation. The current
year provision for income taxes is summarized below:
Beginning deferred tax asset/(liability) $ -0-
--------
Accrued taxes payable for 1999 17,441
Deferred tax liability 10,169
--------
Ending provision for income taxes $ 27,610
NOTE 3 RELATED-PARTY TRANSACTIONS
--------------------------
The Company has entered into transactions with another entity
that is owned by a major shareholder. The Company purchases
mailing lists from the related party. In addition, the Company
entered into a short term agreement with the related party to
help with expenses in conjunction with seminars hosted by the
Company, in return for a share of the revenue from the
seminars. For the year, 1999, the Company paid $168,054 to the
related party with a balance owing of $97,780. The Company
billed the related party $32,740 for the reimbursement of
expenses incurred in hosting the seminars.
F-8
<PAGE>
NOTE 4 PROPERTY AND EQUIPMENT
----------------------
The major classes of assets as of the balance sheet date are
as follows:
Accumulated Total
Asset Class Cost Depreciation
----------- ---- ------------ --------
Office & Computer Equipment $117,694 $ 59,679 $ 58,015
Furniture & Fixtures 27,372 3,867 23,505
Software 42,686 15,368 27,318
-------- -------- --------
Total $187,752 $ 78,914 $108,838
======== ======== ========
NOTE 5 OFFICE LEASE
------------
In May, 1999 the Company entered into an operating lease with
an unrelated party for its facilities. The lease is for a
period of three years. The annual total of rent payments for
the term of the lease are as follows:
2000 $93,435
2001 $93,435
2002 $ 7,791
NOTE 6 SIGNIFICANT CONCENTRATION OF CREDIT RISK
----------------------------------------
The Company has no single customer that represents a
significant portion of total revenues. The Company's
activities are limited only by access to the Internet and not
by any geographic boundaries. The Company maintained cash
balances with one financial institution. Accounts at this
institution are insured by the Federal Deposit Insurance
Corporation up to $100,000. The Company had cash balances in
excess of the FDIC insurance limits at December 31, 1999.
NOTE 7 DEFERRED REVENUE
----------------
The company provides internet services on a monthly prepaid
basis. Deferred revenue represents billings for which services
will be provided in January 2000.
NOTE 8 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 the bankruptcy proceeding of LaserVend,
Inc. The litigation is in the federal bankruptcy court in Utah
and is captioned Gary E. Jubber v. Brae Burgidge et al. having
docket number Bankruptcy No. 97A-26878 and Adversary
Proceeding No. 98PA-2239. The Company has entered into a
settlement agreement to resolve litigation filed by the
LaserVend Bankruptcy Trustee in the U.S. Bankruptcy Court,
District of Utah. The Bankruptcy court approved the settlement
and the Company has accrued payments totaling $22,000. Upon
final payment the litigation will be dismissed with prejudice.
This amount is included in the Company's accounts payable as
of December 31, 1999.
F-9
<PAGE>
NOTE 8 CONTINGENCIES CONT.
-------------------
In April 1999, the Company 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 Business Solutions seeking damages against Appleton for
the appropriation of sensitive and confidential information of
Global Web. Home Business Solutions, Inc. has filed a
counterclaim seeking damages. The Company intends to defend
vigorously the counterclaim, and believes there will be no
unfavorable outcome.
In April 1999, Global Web, Inc. was named as a defendant in an
action captioned Hudson Printing Company v. Global Web. Inc.
As a result of the litigation, the company paid $13,500 on
September 8, 1999, and the action was settled on September 14,
1999.
NOTE 9 DEPOSITORY RESERVE
------------------
The Company has several merchant accounts for processing
credit card charges. Two of the accounts have stipulations
that the merchant account company will reserve a percentage of
all charges until the reserve reaches a balance of $150,000
for each account or for a total of $300,000.
NOTE 10 CAPITAL LEASE
-------------
In May 1999, the Company entered into a capital lease for the
purchase of office furniture & equipment. This is a three year
lease with monthly payments in the amount of $818.76. The
following table shows the required lease payments for the term
of the contract.
Year Interest Principal Total Payment
---- -------- --------- -------------
2000 $ 2,533 $ 7,292 $ 9,825
2001 $ 1,763 $ 8,062 $ 9,825
2002 $ 538 $ 4,375 $ 4,913
------- ------- -------
Totals $ 4,834 $19,729 $24,563
======= ======= =======
The total amount of lease payments made in 1999 was $5,731.
NOTE 11 LINE OF CREDIT
--------------
In February 1999 the Company secured a line of credit with a
local financial institution. The interest rate at inception
was 12.75%. The interest rate is a variable rate. This is an
open ended (revolving) loan with no maturity date. The credit
limit is $25,000. As of December 31, 1999, the balance was
$8,892.
NOTE 12 SUBSEQUENT EVENT
----------------
On March 6, 2000 the Board of Directors adopted a resolution
issuing a total of 140,000 shares of company common stock to
various employees and vendors. In addition, there was an
option issued to a vendor to purchase an additional 75,000
shares of common stock at $1.125 per share and the option
becomes exercisable when certain events occur.
F-10
<PAGE>
Item 8. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS
During the calendar year 1999 there were no changes or disagreements with
our accountants, although in March 2000 we changed auditors to Mantyla
McReynolds of Salt Lake City, Utah.
PART III.
Item 9. DIRECTORS AND OFFICERS OF THE REGISTRANT
The executive officers and directors of the Company are as follows:
Name, Age and Office
--------------------
Lee Burbidge, 58, Chairman, Board of Directors and Secretary
Brae Burbidge, 33, Director and President
Douglas Owen 59, Director
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.
13
<PAGE>
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 shareholders of
the Company or until their successors have been elected. All officers are
appointed annually by the Board of Directors and serve at the discretion of the
Board.
Directors will be reimbursed for any expenses incurred in attending
Directors' meetings. We also intend to obtain Officers and Directors liability
insurance, although no assurance can be given that we will be able to do so.
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.
Significant Employees and Managers
None.
Timely Reports
Based solely upon a review of the reports on Forms 4 and 5 received by us
pursuant to Rule 16a-3(e) it appears that a Bret Burbidge, a holder of more than
ten per cent of our issued and ourstanding shares did not file timely a report
on Form 4 involving one transaction. That report has been filed.
Item 10. Executive Compensation
Currently we have no employment agreement with any of our officers,
directors or employees. During the year ended December 31, 1999, Brae Burbidge
received compensation of $60,000 and benefits of approximately $5,698 and Brae
Burbidge received no other compensation. Mr. Lee Burbidge received compensation
of $60,000 and benefits of approximately $7,052 and Lee Burbidge received no
other compensation.
Employment Agreements
We have no employment agreements or contracts with any employees. Each
employee has signed a non-disclosure agreement with us. We have no stock option
14
<PAGE>
or incentive plans. As of December 31, 1999, there were no warrants or options
issued or outstanding to officers or employees. In March 2000 the Board of
Directors for exemplary service awarded shares of common stock to the following
persons in the amount stated: Douglas Owen, 50,000; Ryan Spencer, 15,000; Jeff
Peery, 15,000; Rob Mulford, 15,000; Sean Burbidge, 10,000; and Dan Owen, 10,000.
Ryan Spencer is the son-in-law of Lee Burbidge and the brother-in-law of Brae
Burbidge. Both Lee Burbidge and Brae Burbidge are directors of the Company. Sean
Burbidge is the nephew and cousin of Lee Burbidge and Brae Burbidge,
respectively. Dan Owen is the son of Douglas Owen.
Item. 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information known to the Company
regarding beneficial ownership of the Company's Common Stock as of December 31,
1999, by (i) each person known by the Company to own, directly or beneficially,
more than 5% of the Company's Common Stock, (ii) each of the Company's
directors, and (iii) all officers and directors of the Company as a group.
Except as otherwise indicated, the Company believes that the beneficial owners
of the Common Stock listed below, based on information furnished by such owners,
have sole investment and voting power with respect to such shares, subject to
community property laws, where applicable.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership Of Class(1)
- ------------------- -------------------- -----------
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 2,002,700 23
6299 Jamestown Circle
Salt Lake City, Utah
Wallace Boyack 2,408,490 28
350 South 400 East
No. 105
Salt Lake City, Utah
All Executive Officers & 4,008,000 46
Directors as a Group
15
<PAGE>
(1) Based on 8,564,500 shares of common stock outstanding as of
December 31, 1999.
Lee Burbidge is the father of Brae Burbidge and Bret Burbidge.
Item 12. Certain Relationships and Related Transactions
During 1999 and 1998 Wallace Boyack performed legal services for us and in
each year received compensation less than $60,000 per year.
In addition, the following transactions occurred in which officers,
directors or five per cent shareholders had an interest.
Relatives of the Burbidges, who are employees, received total compensation
of less than $60,000 per year in each of the last two years. In addition, a
company owned and controlled in part by a major shareholder sold leads to us and
shared costs of sponsoring seminars and also shared in the proceeds. In 1999,
the company was paid $168,054 and has a balance owing of $97,780, and we have
billed the company $32,740 for expense eimbursement. In 1998, another company
controlled by a major shareholder had an office at our offices. Mailing lists
and leads were traded for rent. That company ceased operations in March 1999.
In 1999 three children of Wallace Boyack were part-time employees for us.
All received compensation less than $60,000. In addition, relatives of Lee
Burbidge and Bret Burbidge during 1998 and 1999 were our employees. None of them
during 1998 and 1999 received compensation in excess of $60,000. Dan Owen is our
comptroller and is the son of a director. During 1999 Mr. Owen's compensation
was less than $60,000.
In addition, the Company hosts StarGate Market Place, an Internet mall
owned by StarGate Global, Inc., a company owned by our four primary
shareholders. Those shareholders are Brae Burbidge, Lee Burbidge, Bret Burbidge,
and Wallace Boyack. We are paid our costs plus ten per cent for our services.
16
<PAGE>
PART IV
Item 13. Exhibits and Reports on From 8-K
a. 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 herewith.
b. Reports on Form 8-K.
On March 8, 2000, we filed a report on Form 8-K to report the change of
accountants and to disclose other matters.
17
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GLOBAL WEB, INC.
By s/Brae Burbidge
------------------
Brae Burbidge
Title: President, Chief Executive Officer, and
Chief Financial Officer (Principal Executive
and Financial Officer)
Date: March 29, 2000
--------------
DIRECTORS
/s/Brae Burbidge
- ----------------
BRAE BURBIDGE, DIRECTOR
Date: March 29, 2000
/s/Lee Burbidge
- ---------------
LEE BURBIDGE, Director
Date: March 29, 2000
18
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 212182
<SECURITIES> 0
<RECEIVABLES> 25475
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 300670
<PP&E> 187752
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<TOTAL-ASSETS> 481274
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