FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
Of the Securities Exchange Act of 1934
For Quarter Ended March 31, 2000
Commission File Number 0-26999
GLOBAL WEB, INC.
(Exact name of registrant as specified in its charter)
UTAH 87-0427550
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11781 South Lone Peak Parkway, No. 110
Draper, Utah 84020
------------------
(Address of principal executive offices)
Registrant's telephone number
including area code (801)523-1003
Not Applicable
Former Address, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the proceeding 12 months (or such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
As of March 31, 2000, Registrant had 8,704,500 shares of common stock, par value
of $.001 per share, issued and outstanding.
<PAGE>
PART I
ITEM I - FINANCIAL STATEMENTS
The condensed financial statements included herein have been prepared
by Global Web, Inc. (the "Company", "Registrant", "we", "us", or "our"), without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although we believe that the disclosures are adequate to make the
information presented not misleading.
In our opinion, all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the financial position of the Company
as of March 31, 2000, and the results of our operations from January 1, 2000,
through March 31, 2000. The results of our operations for such interim period is
not necessarily indicative of the results to be expected for the entire year.
<PAGE>
GLOBAL WEB, Inc. (a Utah Corporation)
Including the accounts of its wholly-owned subsidiary
GLOBAL WEB, Inc. ( a Nevada Corporation)
Consolidated Financial Statements
March 31, 1999
<PAGE>
GLOBAL WEB, Inc.
Condensed Consolidated Balance Sheet
March 31, 2000 and December 31, 1999
Unaudited Audited
March 31, December 31,
ASSETS 2000 1999
--------- ---------
Current Assets:
Cash 152,424 $ 212,182
Accounts receivable--net of $0
allowance for doubtful accounts 154,662 25,475
Prepaid expenses 90,678 30,273
Receivable - related party 32,740 32,740
--------- ---------
Total Current Assets 430,504 300,670
Property and Equipment 196,479 187,752
Less: Accumulated depreciation (84,314) (78,914)
--------- ---------
Net Property and Equipment 112,165 108,838
Other Assets:
Depository reserves 82,881 66,303
Deposit 5,463 5,463
--------- ---------
Total Other Assets 88,344 71,766
--------- ---------
Total Assets 631,013 $ 481,274
========= =========
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-1
<PAGE>
GLOBAL WEB, Inc.
Condensed Consolidated Balance Sheet
March 31, 2000 and December 31, 1999
LIABILITIES AND STOCKHOLDERS EQUITY
Unaudited Audited
March 31, December 31,
2000 1999
-------- --------
Liabilities:
Current Liabilities:
Accounts payable $ 153,961 $ 217,442
Payroll withholdings
and taxes payable 24,843 17,421
Wages payable 11,295 0
Accrued liabilities 15,320 10,280
Deferred revenue 18,135 20,092
Income taxes payable 76,906 17,441
Line of credit 22,336 8,892
Current portion of
long-term liabilities 7,292 7,292
-------- --------
Total Current Liabilities 330,088 298,860
Long Term Liabilities:
Deferred tax liability 10,168 10,168
Lease payable 9,939 12,437
-------- --------
Total Long Term Liabilities 20,107 22,605
-------- --------
Total Liabilities 350,195 321,465
Stockholders Equity:
Preferred stock--5,000,000
shares authorized, $.001 par
value,-0- shares outstanding 0 0
Common stock -- 90,000,000 shares
authorized, $.001 par
value; 8,704,500 and 8,564,500
shares issued and outstanding 8,705 8,565
Additional Paid-In Capital 312,841 284,981
Accumulated Deficit (40,728) (133,737)
Total Stockholders Equity 280,818 159,809
-------- --------
Total Liabilities and Stockholders Equity $ 631,013 $ 481,274
======== ========
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-2
<PAGE>
GLOBAL WEB, Inc.
Consolidated Statements of Operations
For the Three Months Ended March 31, 2000 and 1999
2000 1999
--------- ---------
Revenues $ 1,345,353 $ 615,871
General and Administrative Expenses 1,191,856 608,899
--------- ---------
Net Income from Operations 153,497 6,972
Interest Expense (1,023) 0
--------- ---------
Net Income Before Income Taxes 152,474 6,972
Provision for Income Taxes 59,465 1,400
--------- ---------
Net Income $ 93,009 $ 5,572
========= =========
Income Per Share $ .01 $ 0
========= =========
Weighted Average Shares Outstanding 8,611,167 8,564,500
========= =========
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-3
<PAGE>
GLOBAL WEB, Inc.
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2000 and 1999
2000 1999
--------- ---------
Cash Flows From Operating Activities
Net Income $ 93,009 $ 5,572
Adjustments to reconcile net income to
net cash provided by (used for) operating
activities:
Increase in accounts receivable (129,187) (133,931)
Depreciation 5,400 10,500
Issued stock for services 28,000 0
Decrease (increase) in prepaid expenses (60,405) 53,235
Increase (decrease) in accounts payable (39,724) 0
Increase (decrease) in deferred revenue (1,957) 4,140
Increase in taxes payable 49,297 5,650
Increase in current liabilities 0 144,979
--------- ---------
Net Cash Provided by (used for) (55,567) 90,145
Operating Activities
Cash Flows From Investing Activities
Increase in depository reserves (16,578) 0
Purchases of property and equipment (8,727) (2,979)
--------- ---------
Net Cash Used for Investing Activities (25,305) (2,979)
Cash Flows From Financing Activities
Increase in long term debt 21,114 0
--------- ---------
Net Cash Provided by Financing Activities 21,114 0
--------- ---------
Net Increase (Decrease) in Cash (59,758) 87,166
Cash Balance - beginning of period 212,182 2,189
--------- ---------
Cash Balance - end of period 152,424 89,355
========= =========
Supplemental Disclosure Information:
Cash paid during the quarter for interest $ 1,023 0
Cash paid during the quarter for income taxes 0 0
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-4
<PAGE>
GLOBAL WEB, Inc.
Notes to Consolidated Financial Statements
March 31, 2000lidated Financial Statements
NOTE 1 BASIS OF PRESENTATION
---------------------
The Company has prepared the accompanying condensed
consolidated financial statements, without audit, according to
the applicable regulations of the Securities and Exchange
Commission. Certain information and disclosures normally
included in those financial statements prepared according to
generally accepted accounting principles have been condensed
or omitted. The Company believes that the disclosures are
adequate and not misleading. These unaudited condensed
consolidated financial statements reflect all adjustments
(consisting only of normal recurring adjustments) that, in the
Company=s opinion, are necessary to present fairly the
financial position and results of operations of the Company
for the periods presented. It is suggested that these
unaudited condensed consolidated financial statements are read
in conjunction with the consolidated financial statements and
the notes thereto included in the company=s Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1999.
NOTE 2 COMMON STOCK/OPTIONS
--------------------
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.
NOTE 3 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 1999 and as of March 31,
F-5
<PAGE>
GLOBAL WEB, Inc.
Notes to Consolidated Financial Statements
March 31, 2000lidated Financial Statements
2000 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.
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 4 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. For the period ending
March 31, 2000, the Company paid $147,152 to the related party
with a balance owing of $58,456. The Company billed the
related party $32,740 for the reimbursement of expenses
incurred in hosting the seminars in 1999.
NOTE 5 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 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 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
F-6
<PAGE>
GLOBAL WEB, Inc.
Notes to Consolidated Financial Statements
March 31, 2000lidated Financial Statements
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.
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.
NOTE 7 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.
F-7
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
We have only a limited operating history and past revenue levels may not
continue in the future and future operations may generate less revenues than
current operations. For the three month period ended March 31, 2000, we had
revenues of $1,345,353 compart to revenues of $643,071 for the same period a
year earlier for an increase of $702,282 an increase of one hundred and nine per
cent (109%). Our income (after taxes) was $110,089 compared to income (after
taxes) of $5,572, an increase of almost twenty times. The increases in revenues
and profits are attributable to increased and more efficient marketing
activities. During the period expenses increased from $1,163,856 compared to
$608,899 for the same period a year earlier. Expenses increased $554,957, an
increase of ninety-one percent (91%).
As of March 31, 2000, our total assets were $631,013 compared to $481,274 as of
December 31, 1999. Assets increased because of an increase in accounts
receivable of $176,259 and an increase in pre-paid expenses. Current liabilities
increased from $298,860 as of December 31, 1999 to $341,008 as of March 31,
2000. Accounts payable during the period decreased from $217,442 to $153,961
because of increased cash flows from operations. Shareholders equiry during the
period increased from $159,809 to $269,898 for an increase of $110,089. We are
dependent upon future sales and maintaining current subscribers to fund
operations. Our primary objective is to increase the number of subscribers,
profits and revenues. Presently we have approximately 5,600 active subscribers.
The number of subscribers is subject to change and fluctuation because of new
sales and cancellations. As of March 31, 2000, our current ratio was 1.3
compared to 1.1 as of December 31, 1999.
Expenses increased because sales activities increased and additional new
personnel were hired.
This Report makes certain forward-looking statements. We 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: our ability to maintain
a sufficient revenues to fund and maintain our operations and to meet our cash
and working capital needs and to have sufficient revenues to continue
operations.
3
<PAGE>
Part II.
Item 1. 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 which was approved by the Bankruptcy
Court pursuant to which the litigation will be dismissed with prejudice upon the
completion of a $22,000 payment schedule.
In April 1999 in the state courts of Utah we commenced an action
captioned Global Web, Inc. v. Home Business Solutions, Inc. and Joseph Appleton
seeking to enforce a contract between Home Business and us and seeking damages
from Appleton for the appropriation of our sensitive and confidential
information. Home Business has filed a counterclaim seeking damages from us.
Item 2. Changes in Securities.
On March 6, 2000, the Company issued 140,000 shares of common stock and
issued to a vendor an option to purchase 75,000 shares of restricted common
stock at $1.125 per share for a term of three years. Under the option the
underlying shares vested as follows: 25,000 when the vendor agreement was
signed, 25,000 when the trading price reaches $2.00 per share, and 25,000 when
the trading price reaches $2.50 per share.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Matters Submitted to a Vote of the Company's
Shareholders.
None.
Item 5. Other Information.
Recently we organized a wholly-owned subsidiary which will be used for our
marketing and finance operations. The subsidiary is a Utah corporation and is
named e-Market Consultant, Inc.
Item 6. Exhibits and Reports on Form 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 on December 16, 1999.
4
<PAGE>
B. Reports on Form 8-K.
During the period we filed a report on Form 8-K and filed an amended
report on Form 8-K dated March 8, 2000, and April 12, 2000, respectively.
5
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date May 4, 2000
Global Web, Inc.
By /s/Brae Burbidge
----------------
President and Chief Executive Officer
6
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 152424
<SECURITIES> 0
<RECEIVABLES> 187402
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 430504
<PP&E> 196479
<DEPRECIATION> (84314)
<TOTAL-ASSETS> 631013
<CURRENT-LIABILITIES> 330088
<BONDS> 9939
0
0
<COMMON> 8705
<OTHER-SE> 281113
<TOTAL-LIABILITY-AND-EQUITY> 631013
<SALES> 0
<TOTAL-REVENUES> 1345353
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1191856
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1023
<INCOME-PRETAX> 152474
<INCOME-TAX> 959465
<INCOME-CONTINUING> 93009
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93009
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
