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 June 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
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 June 30, 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 June 30, 2000, and the results of our operations from January 1, 2000
through June 30, 2000, and from January 1, 1999, through June 30, 1999. The
results of our operations for such interim period is not necessarily indicative
of the results to be expected for the entire year.
2
<PAGE>
GLOBAL WEB, Inc. (a Utah Corporation)
Including the accounts of its wholly-owned subsidiary
GLOBAL WEB, Inc. (a Nevada Corporation)
Consolidated Financial Statements
June 30, 2000
F-1
<PAGE>
GLOBAL WEB, Inc.
Condensed Consolidated Balance Sheet
June 30, 2000 and December 31, 1999
ASSETS
Unaudited Audited
June 30, 2000 December 31, 1999
--------- ---------
Current Assets:
Cash $ 212,798 $ 212,182
Accounts receivable--net of $0 allowance
for doubtful accounts 180,788 25,475
Prepaid expenses 11,870 30,273
Receivable - related party 0 32,740
--------- ---------
Total Current Assets 405,456 300,670
Property and Equipment 235,805 187,752
Less: Accumulated depreciation (96,117) (78,914)
--------- ---------
Net Property and Equipment 139,688 108,838
Other Assets:
Depository reserves 118,264 66,303
Deposit 7,143 5,463
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Total Other Assets 125,407 71,766
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Total Assets $ 670,551 $ 481,274
========= =========
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-2
<PAGE>
GLOBAL WEB, Inc.
Condensed Consolidated Balance Sheet
June 30, 2000 and December 31, 1999
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS EQUITY
Unaudited Audited
June 30, 2000 December 31, 1999
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<S> <C> <C>
Liabilities:
Current Liabilities:
Accounts payable $ 71,107 $ 217,442
Payroll withholdings and taxes payable 28,633 17,421
Wages payable 21,030 -0-
Accrued liabilities 32,179 10,280
Deferred revenue 12,335 20,092
Income taxes payable 100,764 17,441
Line of credit 35,000 8,892
Current portion of long-term liabilities 7,292 7,292
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Total Current Liabilities 308,340 298,860
Long Term Liabilities:
Deferred tax liability 10,168 10,168
Lease payable 6,668 12,437
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Total Long Term Liabilities 16,836 22,605
Total Liabilities 325,176 321,465
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 23,829 (133,737)
--------- ---------
Total Stockholders Equity 345,375 159,809
Total Liabilities and Stockholders Equity $ 670,551 $ 481,274
========= =========
</TABLE>
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-3
<PAGE>
GLOBAL WEB, Inc.
Consolidated Statements of Operations
For the Three Months Ended June 30, 2000 and 1999
2000 1999
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Revenues $2,138,833 $ 519,901
General and Administrative Expenses 2,032,740 454,943
Net Income from Operations 106,093 64,958
Interest Expense 198 35
Net Income Before Income Taxes 105,895 64,923
Provision for Income Taxes 41,338 22,100
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Net Income $ 64,557 $ 42,823
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Income Per Share $ .01 $ .01
Weighted Average Shares Outstanding 8,611,167 8,564,500
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SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-4
<PAGE>
GLOBAL WEB, Inc.
Consolidated Statements of Operations
For the Six Months Ended June 30, 2000 and 1999
2000 1999
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Revenues $3,484,186 $1,135,772
General and Administrative Expenses 3,224,597 1,063,840
Net Income from Operations 259,589 71,932
Interest Expense 1,220 36
Net Income Before Income Taxes 258,369 71,896
Provision for Income Taxes 100,803 23,500
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Net Income $ 157,566 $ 48,396
========== ==========
Income Per Share $ .02 $ .01
Weighted Average Shares Outstanding 8,611,167 8,564,500
========== ==========
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-5
<PAGE>
GLOBAL WEB, Inc.
Consolidated Statements of Cash Flows
For the Three Months Ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
Cash Flows From Operating Activities 2000 1999
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<S> <C> <C>
Net Income $ 64,557 $ 42,823
Adjustments to reconcile net income to net cash provided by (used for)
operating activities:
Increase in accounts receivable 6,614 43,175
Depreciation 11,803 13,000
Issued stock for services -0- -0-
Decrease (increase) in prepaid expenses 78,808 (5,098)
Increase (decrease) in accounts payable (56,260) (75,537)
Increase (decrease) in deferred revenue (5,799) 5,684
Increase in taxes payable 27,648 24,793
Increase in current liabilities 12,664 15,649
Net Cash Provided by (used for) Operating Activities 140,035 64,489
Cash Flows From Investing Activities
Increase in depository reserves (37,063) (62,175)
Purchases of property and equipment (39,326) (40,017)
Net Cash Used for Investing Activities (76,389) (102,191)
Cash Flows From Financing Activities
Increase in long term debt (3,272) (819)
Net Cash Provided by Financing Activities (3,272) (819)
Net Increase (Decrease) in Cash 60,374 (38,521)
Cash Balance - beginning of period 152,424 89,355
Cash Balance - end of period 212,798 50,834
========= =========
Supplemental Disclosure Information:
Cash paid during the quarter for interest $ 198 35
Cash paid during the quarter for income taxes -0- -0-
</TABLE>
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-6
<PAGE>
GLOBAL WEB, Inc.
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
Cash Flows From Operating Activities 2000 1999
--------- ---------
<S> <C> <C>
Net Income $ 157,566 $ 48,396
Adjustments to reconcile net income to net cash provided by (used for)
operating activities:
Increase in accounts receivable (123,035) (90,755)
Depreciation 17,203 23,500
Issued stock for services 28,000 -0-
Decrease (increase) in prepaid expenses 18,864 48,150
Increase (decrease) in accounts payable (103,405) 69,429
Increase (decrease) in deferred revenue (7,757) 9,824
Increase in taxes payable 94,535 30,443
Increase in current liabilities 26,108 15,649
Net Cash Provided by (used for) Operating Activities 108,079 154,636
Cash Flows From Investing Activities
Increase in depository reserves (53,641) (62,175)
Purchases of property and equipment (48,053) (42,997)
Net Cash Used for Investing Activities (101,694) (105,172)
Cash Flows From Financing Activities
Increase in long term debt (5,769) (819)
Net Cash Provided by Financing Activities (5,769) (819)
Net Increase (Decrease) in Cash 616 48,645
Cash Balance - beginning of period 212,182 2,189
Cash Balance - end of period 212,798 50,834
========= =========
Supplemental Disclosure Information:
Cash paid during the quarter for interest $ 1,220 35
Cash paid during the quarter for income taxes -0- -0-
</TABLE>
SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-7
<PAGE>
GLOBAL WEB, Inc.
Notes to Consolidated Financial Statements
June 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 presen ted. 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'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.
NOTE 3 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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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.
F-8
<PAGE>
GLOBAL WEB, Inc.
Notes to Consolidated Financial Statements
June 30, 2000
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,
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
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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 three month period
ending June 30, 2000, the Company paid $221,284 to the related
party. For the six month period ending June 30, 2000, the Company
paid $368,436 to the related party with a balance owing of
$35,526. The Company received $32,740 in receipts from the
related party for the reimbursement of expenses incurred in
hosting the seminars in 1999 during the same period.
F-9
<PAGE>
GLOBAL WEB, Inc.
Notes to Consolidated Financial Statements
June 30, 2000
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
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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 Laser Vend, Inc. The
litigation is in the federal bankruptcy court in Utah and is
captioned Gary E. Jubber v. Brae Burbidge et al. having docket
number Bankruptcy No. 97A-26878 and Adversary Proceeding No.
98PA-2239. The 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. The Company has performed pursuant to the
settlement agreement and in June 2000 the Bankruptcy court
entered an order dismissing the complaint with prejudice. 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
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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 8 SUBSEQUENT EVENT
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On July 14, 2000 the Company terminated a vendor relationship.
The termination resulted in the return of 25,000 shares of the
Company's common stock which will be cancelled.
F-10
<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 six month period ended June 30, 2000, we had
revenues of $3,484,186 compared to $1,135,772 for the same period in 1999, for
an increase of $2,348,414. During the six month period we had income (after
taxes) of $157,566 compared to $48,396 for a increase of $109,170. Revenues
increased because we are spending additional funds on marketing by sponsoring
seminars and using other marketing activities. Also, we increased our use of
telemarketing. We decreased the prices for web sites and management believes
that the volume of revenues increased. For the near term management believes
that we can maintain or increase sales without additional price decreases.
Management believes that the overall trend is a decrease in monthly subscription
rates for hosting web sites. To offset this trend we may choose to offer more
services at the same subscription rate. Income increased because of the
substantial increase in sales.
For the three month period ended June 30, 2000, we had revenues of
$2,138,833 compared to revenues of $519,901 for the same period a year earlier
for an increase of $1,618,932 and we had income (after taxes) of $64,557
compared to income (after taxes) of $42,833. The increase in profits was slowed
by increased marketing expenses and other expenses. Revenue increase is
attributable to the factors previously discussed. Expenses increased from
$2,032,740 to $454,943 for an increase of $1,577,797.
Total assets as of June 30, 2000, were $670,551 compared to $481,274 as
of December 31, 1999. Assets increased because of an increase in accounts
receivable of $155,303 and an increase in property and equipment of $48,053.
Current liabilities increased from $308,340 as of June 30, 2000, from $298,860
as of December 31, 1999. 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
8,000 subscribers. The number of subscribers is subject to change and
fluctuation because of new sales and cancellations. As of June 30, 2000, our
current ratio was 1.46 compared to 1.0 as of December 31, 1999.
Expenses increased because sales activities increased, additional new
personnel were hired, and costs were incurred expanding our offices by an
additional 1,600 square feet for a total of 7,800 square feet. We also purchased
equipment and furniture in the six months ended June 30, 2000.
3
<PAGE>
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.
4
<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. In January 2000
we entered into a settlement agreement the terms of which were completed. In
June 2000, the complaint was dismissed with prejudice.
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
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3(i) Articles of Incorporation-filed on August 11, 1999.
3(ii) Amendments to Articles of Incorporation-filed on August 11,
1999.
3(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
B. Reports on Form 8-K.
During the period we filed an Amended Form 8-K on approximately April
12, 2000.
5
<PAGE>
Signatures
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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 August 15, 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
