UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
- SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended March 31, 1999
- - --------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _______
Commission file number: 001-14889
HOME.WEB, INC.
--------------
(exact name of registrant as specified in its charter)
NEVADA 77-0454933
- - ------ ----------
(State or other (IRS Employer
jurisdiction of Identification No.)
incorporation or
organization)
380 Foam Street, Suite 210, Monterey, California 93940
- - ------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (831) 375-6209
--------------
Indicate by check mark whether the registrant: (1) has filed all reports
required 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 reports), and (2) has been subject to such filing for the
past 90 days. Yes X No
The number of shares of the Registrant's Common Stock, $0.001 par value, as of
March 31st, 1999: 27,147,000.
----------
<PAGE>
HOME.WEB, INC.
FORM 10-QSB, QUARTER ENDED March 31, 1999
INDEX
PART I FINANCIAL INFORMATION
----------------------------
ITEM 1 FINANCIAL STATEMENTS
Accountant's Review Report F-2
Balance Sheet, March 31, 1999 F-3
Statement of Operations, Three months
Ending March 31, 1999 F-4
Statement of Retained Earnings
March 31, 1999 F-5
Statement of Cash Flows,
March 31, 1999 F-6
Summary of Significant Accounting Policies F-7
Notes to Financial Statements F-8
Item 2 Management's Discussion and Analysis or Plan of Operations
PART II OTHER INFORMATION
Item 1 Legal Proceedings . .. . . . . . . . . . . . . . . . . . . . . . . 12
Item 2 Changes in Securities . . . . . . . . . . . . .. . . . . . . . . . 12
Item 3 Defaults Upon Senior Securities . . . . . . . . . .. . . . . . . . 12
Item 4 Submission of Matters to a Vote of Security Holders . .. . . . .. 13
Item 5 Other Information . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 6 Exhibits and Reports on Form 8-K . . . . . . . .. . . . . . . . . .13
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . .13
<PAGE>
Item 1 FINANCIAL STATEMENTS
HOME WEB, INCORPORATED
(A Development Stage Company)
Index to Financial Statements
Page
Accountant's Review Report F-2
Balance Sheet, March 31, 1999 F-3
Statement of Operations, Three month
Ending March 31, 1999 F-4
Statement of Retained Earnings
March 31, 1999 F-5
Statement of Cash Flows,
March 31, 1999 F-6
Summary of Significant Accounting Policies F-7
Notes to Financial Statements F-8
<PAGE>
HAWKINS ACCOUNTING
- - --------------------------------------------------------------------------------
CERTIFIED PUBLIC ACCOUNTANT 341 MAIN STREET 0 SALINAS CA 93901
(831) 758-1694 0 FAX (831) 758-1699
To the Board of Directors and Shareholders
Home Web, Incorporated
Monterey, California
I have reviewed the accompanying balance sheet of Home Web, Incorporated as of
March 31, 1999, and the related statements of income and retained earnings and
cash flows for the three months then ended, in accordance with Statements on
Standards for Accounting and review Services issued by the American Institute of
Certified Public Accountants. All information included in these financial
statements is the representation of the management of Home Web, Incorporated.
A review consists principally of inquires of Company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should be
made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
/s/
April 1, 1999
F-2
<PAGE>
HOME WEB, INCORPORATED
----------------------
(A Development Stage Company)
BALANCE SHEET
March 31, 1999
ASSETS
Current Assets
Cash in bank-First National $ 82
Accounts receivable 1,450
-----
Total Current Assets 1,532
Equipment
Coolers and equipment 40,308
Office equipment 9,841
-----
50,149
Accumulated depreciation (6,606)
-------
Total Equipment 43,543
Other assets
Organizational expenses 37,392
Business start up 5,876
Trade name 11,000
------
54,268
Accumulated amortization (7,226)
-------
Total Other Assets 47,042
------
TOTAL ASSETS $ 92,117
------
LIABILITIES AND CAPITAL
Current liabilities
Accounts payable $ 13,452
California Franchise Tax 1,600
Loan from affiliate 100
----
Total Current Liabilities 15,152
TOTAL LIABILITIES 15,152
Common stock 120,000
Retained earning (43.035)
-------
TOTAL CAPITAL 76,965
-------
TOTAL LIABILITIES AND CAPITAL $ 92,117
-------
See accompanying notes and accountant's report
F-3
<PAGE>
HOME WEB, INCORPORATED
----------------------
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the three months ending March 31, 1999
Revenue
Sales $ 528
Cost of sales 523
-----
Gross margin 5
Expenses
Amortization 1,515
Bank charges 40
Depreciation 1,321
Office supplies 80
Professional fees 500
-----
Total expenses 3,456
(Loss) from operations (3,451)
-------
Other expenses
State corporate tax expense 800
-----
Net loss $ (4,251)
-------
See accompanying notes and accountant's report
F-4
<PAGE>
HOME WEB, INCORPORATED
----------------------
(A Development Stage Company)
STATEMENT OF RETAINED EARNINGS
March 31, 1999
Beginning retained earning $ (38,784)
(Loss) for the three month period ending March 31, 1999 (4,251)
Balance as of March 31, 1999 $ (43,035)
See accompanying notes and accountant's report
F-5
<PAGE>
HOME WEB, INCORPORATED
----------------------
(A Development Stage Company)
STATEMENT OF CASH FLOWS-INDIRECT METHOD
For the three months ending March 31,1999
Net income (loss) $ (4,251)
Adjustment to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 2,836
Increase in accounts payable and other current liabilities 14,352
------
NET CASH PROVIDED BY OPERATING ACTIVITIES 12,937
INVESTING ACTIVITIES
Increase in other assets 12,952
------
NET CASH USED IN INVESTING ACTIVITIES 12,952
FINANCING ACTIVITIES 0
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (15)
Cash and cash equivalents at beginning of the year 97
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 82
------
See accompanying notes and accountant's report
F-6
<PAGE>
HOME WEB, INCORPORATED
----------------------
(A DEVELOPMENT STAGE COMPANY)
Summary of Significant Accounting Policies
March 31, 1999
Development Stage Comany
- - ------------------------
Home Web, Inc.(the "Company") is in the development stage in accordance with
Statement of Financial Accounting Standards (SFAS) No.7.
Use of estimates
- - ----------------
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from these estimates.
Cash equivalents
- - ----------------
For the purpose of the statement of cash flows, the company considers all highly
liquid debt instruments purchased with the original maturity of three months or
less to be cash equivalents.
Organization and Business Start Up and Amortization
- - ---------------------------------------------------
Organization costs and start up costs are recorded at cost. Amortization is
calculated by the straight-line method over a period of sixty months.
Amortization for the three months ending March 31, 1999 was $1,515.
Income Taxes
- - ------------
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the recorded book basis and tax basis
of assets and liabilities for financial and income tax reporting. The deferred
tax assets and liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settle. Deferred taxes are also recognized for
operating losses that are available to offset future taxable income and tax
credits that are available to offset future federal income taxes.
Common Stock
- - ------------
Common stock is at .05 par value with 50,000,000 shares authorized, 27,147,000
outstanding as of March 31, 1999.
F-7
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
March 31, 1999
Note A: Background
-----------
The Company was incorporated under the laws of the State of Nevada on
September 15, 1995. The principal activities of the Company, from the
beginning of the development stage, have been organizational matters
and the sale of stock. The Company was formed to sell retail gourmet and
specialty cheese on the Internet. During the three months ending March 31,
1999 the Company had sales and incurred expenses against those sales, but
the activity was immaterial for the purposes of SFAS No. 7.
Note B: Related Party Transactions
--------------------------
There were no material related party transaction during the three months
period ending March 31, 1999.
Note C: Sales commitments
-----------------
During the period ending March 31, 1999 the Company entered into an
agreement with an unrelated third party to sell goods to that party for a
one percent markup. There was only one transaction of this nature during
the period ended.
Note D: Income Taxes
------------
The benefit for income taxes from operations consisted of the following
components: current tax benefit of $638, resulting from a net loss before
income taxes, and deferred tax expenses of $638 resulting from a valuation
allowance recorded against the deferred tax asset resulting from net
operating losses. Net operating loss carryforward will expire in 2014.
The valuation allowance will be evaluated at the end of each year,
considering positive and negative evidence about whether the asset
will be realized. At the time, the allowance will either be increased
or reduced; reduction would result in the complete elimination of the
allowance if positive evidence indicates that the value of the deferred
tax asset is no longer required.
Note E: Going Concern
-------------
As of March 31, 1999, the Company had net operating losses since inception
and negative cash flows from operating activities which raise substantial
doubt about its ability to continue as a going concern.
F-8
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
March 31, 1999
Note E: Going Concern (con't)
--------------------
The Company is in the process of raising initial working capital through
a public offering of its common stock, which is expected to provide
liquidity until operations become profitable. The Company's ability
to continue as a going concern is dependent upon successful public
offering and ultimately achieving profitable operations. There is no
assurance that the Company will be successful in its efforts to raise
additional proceeds or achieve profitable operations. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
Note F: Property, equipment and depreciation
------------------------------------
Property and equipment are recorded at cost. Maintenance and repairs
are expensed as incurred; major renewals and betterments are capitalized.
When items of property and equipment are sold or retired, the related
costs and accumulated depreciation are removed from the accounts and any
gain or loss is included in income.
Depreciation expense for the three months ended was $1,312.
F-9
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
When used in this discussion, the words "believes", "anticipates", "expects" and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties, which would, could
cause actual results to differ materially from those projected. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. The Company undertakes no obligation to
republish revised forward- looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
Readers are also urged to carefully review and consider the various disclosures
made by the Company which attempt to advise interested parties of the factors
which affect the Company's business, in this report, as well as the Company's
periodic reports on Forms 10-K, 10Q and 8-K filed with the Securities and
Exchange Commission.
Overview
- - --------
Home Web plans to penetrate the gourmet/specialty foods market and to
maximize sales by wholesaling products to gourmet food stores, small grocery
chain stores and hotels. The product is currently sold through California
Season's company-owned retail stores, catalog and direct mail order, as well as
business and corporate sales programs.
The gourmet and specialty food industry has a history of growth. The
national revenue for the gourmet and specialty food industry exceeds
thirty-three billion dollars. Home Web is taking advantage of this market by
wholesaling and distributing varieties of handmade Monterey Jack Cheese.
The Company selected Monterey, California as its location because it
was the original home of Monterey Jack cheese. David Jacks of Monterey first
produced and marketed Monterey Jack cheese in 1882. This cheese is the only
native California cheese and one of only two cheeses native to the United
States. The Monterey Cheese Company is the only company offering handmade
Monterey Jack cheese made in Monterey, California.
The Company outsources the production of its cheese products to Sonoma
Cheese Factory ("Sonoma"). Sonoma is one of the oldest hand-rolled cheese
processing plants in California and is one of only two such plants still in
existence. Due to the quality of the cheeses produced by Sonoma and the fact
that it is difficult to duplicate hand-rolled cheeses, the Company will continue
to outsource its products for the foreseeable future. There is no written
agreement between Sonoma and the Company; instead, the Company purchases the
product from Sonoma on a cash-on-delivery basis. Sonoma ships the cheese without
labels, which the Company puts on upon delivery.
<PAGE>
Product
- - -------
Home Web, under the label "Monterey Jack Cheese," currently offers
twelve varieties of creamy, handmade cheeses in three pound wheels, one pound
wheels, nine ounce wedges and three ounce wedges. The varieties of cheese
include hand-rolled, original Monterey Jack, Dry Jack, Caraway, Pesto, Hot
Pepper Jack, Habanero Jack, Garlic Jack, Lite Jack, Cheddar, Chili Cheddar,
Vidalia Onion Jack and Teleme.
The Company's own research has shown that there is a niche demand for
its products because the cheeses are from Monterey and are of handmade quality.
The cheeses have been market-tested by the Company indicating consumer
acceptance. Current vendors offering these cheeses to the public include the
California Seasons chain of three retail stores, the California Seasons'
catalog, several luxury hotels in the Monterey and Big Sur area, a number of
Monterey convention groups, a distributor in Idaho, a chain of five upscale
gourmet food markets in the Los Angeles area, the Monterey Peninsula Airport
Gift Shop, a Carmel Valley, California store and several more retail stores.
Results of Operations
- - ---------------------
The Company had revenues of $528 for the three-month period ending March 31,
1999 compared to $0 for the three-month period ending March 31, 1998. To date,
the Company has not relied on any revenues for funding its activities and it
does not expect to receive significant revenues from operation in the immediate
future.
For the three-month period ending March 31,1999, the Company's general and
administrative expenses increased to $3,456 compared to $0 for the corresponding
period in 1998. The 1999 amount increase is due to the commencement of
operations.
The Company's net loss was $4,251, for the first quarter of 1999 compared to a
net loss of $0 for the corresponding period in 1998. This increase was primarily
due to the commencement of operations.
Liquidity and Capital Resources
- - -------------------------------
As of March 31, 1999, the Company's cash balance was $82, compared to $0 as of
March 31, 1998.
The Company's future funding requirements will depend on numerous factors. These
factors include the Company's ability to sell sufficient quantities of its
products to become profitable and the Company's ability to compete against other
better capitalized corporations who offer alternative or similar products.
Due to the "start up" nature of the Company's business, the Company expects to
incur losses as it expands its business. While the Company has enough cash to
fund its early stage expansion plans, the Company may choose to raise additional
funds through private or public equity investment in order to expand the range
and scope of its business operations. Even if the Company does not have an
immediate need for additional cash, it may seek access to the public equity
markets if and when conditions are favorable. There is no assurance that such
additional funds will be available for the Company to finance its operations on
acceptable terms, if at all.
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 6 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None
SIGNATURE PAGE
Pursuant to the requirements of section 13 or 15(d) 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.
HOME.WEB, INC.
/S/ Dennis Davis
-------------------------
Dennis Davis
President
Dated: May 17, 1999
<PAGE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 82
<SECURITIES> 0
<RECEIVABLES> 1450
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1532
<PP&E> 50,149
<DEPRECIATION> (6,606)
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0
120,000
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<OTHER-SE> 92,117
<TOTAL-LIABILITY-AND-EQUITY> 528
<SALES> 528
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<CGS> 3456
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<OTHER-EXPENSES> 0
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<NET-INCOME> 4251
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</TABLE>
