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 September 30, 2000
Commission File Number 0-26999
GLOBAL WEB, INC.
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(Exact name of registrant as specified in its charter)
UTAH 87-0427550
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11781 South Lone Peak Parkway, No. 110
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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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
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As of September 30, 2000, Registrant had 8,679,500 shares of common stock, par
value of $.001 per share, issued and outstanding.
<PAGE>
PART I
ITEM I - FINANCIAL STATEMENTS
The following condensed consolidated 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. The following
financial statements as required to be filed with this Form 10-QSB fairly
present our financial condition and operations.
In our opinion, all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the financial position of the Company
as of September 30, 2000, and the results of our operations from July 1, 2000,
through September 30, 2000, and from January 1, 2000, through September 30,
2000, have been made. The results of our operations for such interim period is
not necessarily indicative of the results to be expected for the entire year.
In accordance with the Securities and Exchange Commission's Audit
Committee Disclosure requiring that companies' independent auditors review
companies' financial information prior to filing quarterly reports on Form 10-Q
or Form 10-QSB with the Commission, our auditor, Mantyla Mc Reynolds, Certified
Public Accountants has reviewed and has kept a copy of these financial
statements, but has offered no opionion regarding their accuracy, completeness
or conformance to applicable accounting standards.
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<PAGE>
GLOBAL WEB, Inc. (a Utah Corporation)
Including the accounts of its wholly-owned subsidiaries
GLOBAL WEB, Inc. (a Nevada Corporation)
and National First Financial, Inc.
Condensed Consolidated Financial Statements
September 30, 2000
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<TABLE>
<CAPTION>
GLOBAL WEB, Inc.
Condensed Consolidated Balance Sheet
September 30, 2000 and December 31, 1999
Unaudited Audited
ASSETS September 30, December 31,
2000 1999
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Current Assets:
<S> <C> <C>
Cash $ 143,567 $ 212,182
Accounts Receivable--net of $0 allowance for doubtful accounts 55,890 25,475
Prepaid Expenses 140,518 30,273
Receivable - Related Party 32,740
Current portion of Merchant Acct Lease Receivable 144,555 -0-
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Total Current Assets 484,530 300,670
Property and Equipment 257,316 187,752
Less: Accumulated Depreciation (105,748) (78,914)
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Net Property and Equipment 151,568 108,838
Other Assets:
Merchant Acct Lease Receivable--net of $206,423 allowance for
doubtful accounts 474,713 -0-
Depository Reserve 106,179 66,303
Deposits 7,143 5,463
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Total Other Assets 588,035 71,766
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Total Assets $ 1,224,133 $ 481,274
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</TABLE>
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-1
<PAGE>
<TABLE>
<CAPTION>
GLOBAL WEB, Inc.
Condensed Consolidated Balance Sheet
September 30, 2000 and December 31, 1999
Unaudited Audited
LIABILITIES AND STOCKHOLDERS' EQUITY September 30, December 31,
2000 1999
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<S> <C> <C>
Liabilities:
Current Liabilities
Accounts Payable $ 210,490 $ 217,442
Payroll Withholding and Taxes Payable 30,879 17,421
Wages Payable 46,289 -0-
Accrued Liabilities 74,114 10,280
Deferred Revenue 12,335 20,092
Income Tax Payable 233 17,441
Line of Credit 24,764 8,892
Current portion of long-term debt 8,245 7,292
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Total Current Liabilities 407,349 298,860
Long-Term Liabilities:
Deferred Tax Liability 221,015 10,168
Key Bank Lease 3,255 12,437
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Total Long-Term Liabilities 224,270 22,605
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Total Liabilities 631,619 321,465
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; 8,679,500 and 8,564,500 shares issued and outstanding 8,680 8,565
Additional Paid In Capital 307,866 284,981
Accumulated Surplus/(Deficit) 275,968 (133,737)
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Total Stockholders' Equity 592,514 159,809
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Total Liabilities & Stockholders' Equity $1,224,133 $ 481,274
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SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-2
<PAGE>
GLOBAL WEB, Inc.
Consolidated Statements of Operations
For the Three Months Ended September 30, 2000 and 1999
2000 1999
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Revenues $2,957,675 $ 643,071
General and Administrative Expenses 2,594,554 636,015
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Net Income from Operations 363,121 7,056
Interest Expense 667 1,240
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Net Income Before Income Taxes 362,454 5,816
Provision for Income Taxes 110,316 1,900
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Net Income $ 252,138 $ 3,916
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Income Per Share $ .03 $ .00
Weighted Average Shares Outstanding 8,665,056 8,564,500
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SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-3
<PAGE>
GLOBAL WEB, Inc.
Consolidated Statements of Operations
For the Nine Months Ended September 30, 2000 and 1999
2000 1999
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Revenues $6,441,861 $1,778,843
General and Administrative Expenses 5,819,151 1,699,855
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Net Income from Operations 622,710 78,988
Interest Expense 1,886 1,276
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Net Income Before Income Taxes 620,824 77,712
Provision for Income Taxes 211,119 25,400
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Net Income $ 409,705 $ 52,312
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Income Per Share $ .05 $ .01
Weighted Average Shares Outstanding 8,665,056 8,564,500
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SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-4
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<TABLE>
<CAPTION>
GLOBAL WEB, Inc.
Consolidated Statements of Cash Flows
For the Three Months Ended September 30, 2000 and 1999
2000 1999
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<S> <C> <C>
Cash Flows From Operating Activities
Net Income $ 252,138 $ 3,916
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation 9,631 15,000
Allowance for doubtful leases receivable 206,423 -0-
Cancel stock previously issued for services (5,000) -0-
Decrease (increase) in accounts receivable 124,898 (85,504)
(Increase) decrease in prepaid expenses (128,647) 650
Increase in accounts payable 139,384 57,704
Increase (decrease) in deferred revenue -0- (2,566)
(Decrease) in income taxes payable (100,531) (6,925)
Increase in other current liabilities 69,440 3,786
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Net Cash Provided by (used for) Operating Activities 567,736 (13,939)
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Cash Flows From Investing Activities
Increase in leases receivable (825,692) -0-
Decrease in depository reserves 12,085 1,476
Purchases of property and equipment (21,511) (7,371)
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Net Cash Used for Investing Activities (835,118) (5,895)
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Cash Flows From Financing Activities
Decrease in short term debt (10,236) (1,152)
(Decrease) Increase in long term debt (2,460) 20,841
Increase in deferred taxes 210,847 -0-
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Net Cash Provided by Financing Activities 198,151 19,689
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Net (Decrease) in Cash (69,231) (145)
Cash Balance - beginning of period 212,798 50,834
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Cash Balance - end of period 143,567 50,689
========= =========
Supplemental Disclosure Information:
Cash paid during the quarter for interest $ 667 1,240
Cash paid during the quarter for income taxes -0- 8,825
</TABLE>
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-5
<PAGE>
<TABLE>
<CAPTION>
GLOBAL WEB, Inc.
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2000 and 1999
2000 1999
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<S> <C> <C>
Cash Flows From Operating Activities
Net Income $ 409,705 $ 52,312
Adjustments to reconcile net income to net
cash provided by (used for) operating activities:
Depreciation 26,834 38,500
Allowance for doubtful leases receivable 206,423 -0-
Issued stock for services 23,000 -0-
(Increase) in accounts receivable (30,415) (176,259)
(Increase) decrease in prepaid expenses (110,245) 48,800
Decrease in receivable-related party 32,740 -0-
(Decrease) increase in accounts payable (6,951) 132,707
(Decrease) increase in deferred revenue (7,757) 7,258
(Decrease) increase in taxes payable (17,208) 16,674
Increase in other current liabilities 123,581 5,155
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Net Cash Provided by (used for) Operating Activities 649,707 125,147
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Cash Flows From Investing Activities
Increase in Leases receivable (825,692) -0-
Increase in depository reserves (39,876) (60,699)
Increase in deposits (1,680) -0-
Purchases of property and equipment (69,564) (50,467)
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Net Cash Used for Investing Activities (936,812) (111,166)
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Cash Flows From Financing Activities
Increase in short term debt 15,872 14,497
(Decrease) Increase in long term debt (8,229) 20,022
Increase in deferred taxes 210,847 -0-
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Net Cash Provided by Financing Activities 218,490 34,519
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Net (Decrease) Increase in Cash (68,615) 48,500
Cash Balance - beginning of period 212,182 2,189
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Cash Balance - end of period 143,567 50,689
========= =========
Supplemental Disclosure Information:
Cash paid during the period for interest $ 1,886 1,276
Cash paid during the period for income taxes 17,441 8,825
</TABLE>
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-6
<PAGE>
GLOBAL WEB, Inc.
Notes to Consolidated Financial Statements
September 30, 2000
NOTE 1 BASIS OF PRESENTATION
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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
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On March 6, 2000 the Board of Directors adopted a resolution
issuing a total of 140,000 shares of the Company's 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. On July 14, 2000
the Company terminated that vendor relationship. The termination
resulted in the return of 25,000 shares of the Company's common
stock, which were cancelled together with the options referred
to above.
NOTE 3 FORMATION OF NATIONAL FIRST FINANCIAL, INC.
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In July 2000, Global Web, Inc. formed a wholly owned subsidiary
known as National First Financial, Inc. This corporation was
formed to administer leases of virtual credit card terminals
sold in conjunction with merchant accounts, which the company
markets with their web-hosting services. The Company decided
that rather than selling the leases for their virtual credit
card terminals to a third party for immediate funding, they
would hold them in-house and collect the monthly lease payments
from their customers themselves. At September 30, the company
recorded the value of these leases on their books as sales-type
leases in accordance with the provisions of Statement of
Financial Accounting Standards No. 13, Accounting for Leases as
amended by SFAS No. 91 and 98. An allowance has been set up to
provide for uncollectible leases. Differences in accounting for
these lease contracts for book and tax purposes gives rise to
deferred taxes as shown on the financial statements.
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 nine month period ended September 30, 2000, we had
revenues of $6,441,861 compared to $1,778,843 for the same period in 1999, for
an increase of $4,663,018. During the nine month period we had income (before
taxes) of $620,824 compared to $77,712 for a increase of $543,112. Revenues
increased primarily because in approximately July 2000 we formed a wholly-owned
subsidiary to administer leases of virtual credit card terminals sold with
merchant accounts. Previously we received immediate funding for the leases on a
discounted basis from a third party, independent leasing company. Presently we
are holding the leases in the subsidary and collecting the monthly lease
payments. This causes us to receive less cash on a aggregate and per unit basis.
We will need to have sufficient liquidity to fund operations while the aggregate
monthly payments from the leases grows to levels to replace the funds received
from the sales of the discounted leases. Presently the leases are recorded on
the financial statements as sales-type leases. We have set up a significant
allowance for doubtful accounts. This allowance may be underestimated because we
lack any history or experience base to estimate more accurately the payment
history and experience. If our experience in collecting payments under these
sales leases is worse than estimated, both revenues and income will be reduced.
The holding and servicing of the leases through the wholly owned subsidary has
had a significant impact on our operations. Because our financial statements are
kept on an accrual basis, increases in revenues and income reflect these
accruals. Further, accrual of the leases has caused our assets to increase. We
continue to expend funds on increased marketing by sponsoring seminars and other
activities.
For the three month period ended September 30, 2000, we had revenues of
$2,957,675 compared to revenues of $643,071 for the same period a year earlier
for an increase of $2,314,604 and we had income (before taxes) of $362,454
compared to income (before taxes) of $5,816, for an increase of $356,638.
Revenue and income increases are attributable to the factors previously
discussed. Expenses increased from $636,015 to $2,594,554 for an increase of
$1,958,539.
Total assets as of September 30, 2000, were $1,224,133 compared to $481,274 as
of December 31, 1999. Assets increased because of an increase in Merchant
Account Lease Receiveables (net). Currents assets increased from $300,670 as of
December 31, 1999, to $484,530 as of September 30, 2000. Current liabilities
increased from $298,860 as of December 31, 1999 to $407,349 as of September 30,
2000.
3
<PAGE>
Wages Payable increased by $46,289 and accrued liabilities increased from
$10,280 to $74,114. As of September 30, 2000, our current ratio was 1.2 compared
to 1.0 as of December 31, 1999.
Presently we have approximately 10,000 subscribers for web hosting. The number
of subscribers is subject to change and fluctuation because of new sales and
cancellations.
Our financial affairs have not been 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. We tested our systems and operations for Year 2000 problems. To date we
have not encountered any problems based on any non-recognition of the year 2000
date. Our utility services have not experienced any interuption. Previously we
received assurances from the manufacturers of our hardware and software that
they are Y2K compliant and that has been our experience.
Any forward looking statements in this Report are made pursuant to the
"safe-harbor" provisions of the Private Securities Litigation Reform Act of
1995. We caution and advise investors, shareholders and 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 any
statements, including but not limited to, the following: our ability to maintain
sufficient revenues to fund and maintain our operations and to meet our cash and
working capital needs and to have sufficient revenues to continue or expand
operations.
4
<PAGE>
Part II.
Item 1. Legal Proceedings.
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.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Matters Submitted to a Vote of the Company's Shareholders.
None.
Item 5. Other Information.
None.
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-dated on November 10, 2000.
B. Reports on Form 8-K.
None.
5
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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 November 10, 2000
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Global Web, Inc.
By /s/Brae Burbidge
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Brae Burbidge
President and Chief Executive Officer
By /s/Brae Burbidge
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Brae Burbidge
Chief Financial Officer
6
