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 June 30, 2000
--------- 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)
200 Camino Aguajito, Suite 200, 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
June 30, 2000: 27,507,000.
----------
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
To the Board of Directors
Home Web, Incorporated
Monterey, California
I have reviewed the accompanying balance sheets of Home Web, Incorporated, as of
June 30, 2000 and 1999 and the related statement of operations stockholders'
equity and the statement of cash flows for the six 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 inquiries 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 as opinion.
Based on my review, I am not aware of any material modifications that should be
made to the accompanying financial statements and the cumulative results of
operations and cash flows in order for them to be in conformity with generally
accepted accounting principles.
August 15, 2000
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
BALANCE SHEET
JUNE 30, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
ASSETS
Current assets
Cash in bank $ (50) $ 3
Non-trade receivable 1,450 1,450
Total current assets 1,400 1,453
Equipment
Coolers and equipment 40,308 40,308
Office equipment 9,841 9,841
50,149 50,149
Accumulated depreciation (9,288) (7,927)
Total equipment 40,861 42,222
Other assets
Trade name 11,000 11,000
Total other assets 11,000 11,000
TOTAL ASSETS $ 53,261 $ 54,675
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 17,073 $ 17,641
California Franchise Tax payable 2,262 3,116
Loan from affiliate 5,054 2,825
Total current liabilities 24,389 23,582
Shareholders' equity
Capital stock 27,507 27,507
Paid in capital 1,347,493 1,347,493
Deficit accumulated during development stage (1,346,128) (1,343,907)
Total shareholders' equity 28,872 31,093
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 53,261 $ 54,675
</TABLE>
See accompanying notes and accountant's review report
2
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY
JUNE 30, 2000 and 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
During
Common Stock Paid in Development
Shares Amount Capital Stage Total
------ ------ ------- ----- -----
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1998 27,497,000 $ 27,497 $ 1,347,003 $ (1,315,513) $ 58,987
Common stock issued 10,000 10 490 500
Net loss for the period
ended June 30, 1999 (28,394) (28,394)
27,507,000 $ 27,507 $ 1,347,493 $ (1,343,907) $ 31,093
2000
Balance,
December 31, 1999 27,507,000 $ 27,507 $ 1,347,493 $ (1,345,278) $ 29,722
Net loss for the period
ended June 30, 2000 (850) (850)
27,507,000 $ 27,507 $ 1,347,493 $ (1,346,128) $ 28,872
</TABLE>
See accompanying notes and accountant's review report
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the three months and six months ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
June 30, 2000
Deficit
Accumulated
During
Three months ended Six months ended Development
2000 1999 2000 1999 Stage
---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Sales $ 0 $ 0 $ 0 $ 528 $ 18,887
Cost of Sales 0 0 0 523 15,091
Gross Margin 0 0 0 5 3,796
Expenses
Advertising 856
Amortization 1,584
Consulting fees 4,500 5,500 11,196
Equipment rental 2,339
Depreciation 1,321 2,642 9,288
Licenses and taxes 145 145 370
Office help 1,591 1,591 12,432
Office supplies 26 384 50 585 3,810
Postage 81 673
Travel, meals and entertainment 54 54 2,679
Rent, utilities and telephone 248 248 3,591
Organization and start up costs 15,318 41,674
Compensation due stock issuance 1,254,500
Total expenses 26 8,324 50 26,083 1,344,992
(Loss) from operations (26) (8,324) (50) (26,078) (1,341,196)
Other income (expense)
Interest 50
Nondeductible penalties 716 716 882
State tax expense 800 800 1,600 4,000
Total other expenses 0 1,516 800 2,316 4,932
Net loss (26) $ (9,840) $ (850) $ (28,394) $ (1,346,128)
Loss per share
of common stock $ (0.0004) $ (0.0004) $ (0.0010) $ (0.0010) $ (0.0490)
Weighted average of
shares outstanding 27,507,000 27,157,000 27,507,000 27,157,000 27,157,000
</TABLE>
See accompanying notes and accountant's review report
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
STATEMENT OF CASH FLOWS-INDIRECT METHOD
For the three months and six months ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
June 30, 1999
Cash flows
Accumulated
During
Three months ended Six months ended Development
2000 1999 2000 1999 Stage
---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (26) $ (9,840) $ (850) $ (28,394) $ (1,346,128)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 1,321 2,642 9,288
Stock issued for services 1,254,500
Expensing of organization costs 2,366 2,366
Attorney fees for stock 500 500
Increase in accounts receivable (1,450)
Increase in current liabilities (7) 8,440 783 22,792 24,389
NET CASH PROVIDED BY OPERATING
ACTIVITIES (33) (79) (67) (94) (56,535)
INVESTING ACTIVITIES
Increase in other assets 13,366
Purchase of equipment 50,149
NET CASH USED IN INVESTING ACTIVITIES 63,515
FINANCING ACTIVITIES
Sale of common stock 120,000
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (33) (79) (67) (94) (50)
Cash and cash equivalents at the beginning of the
period (17) 82 17 97 0
CASH AND CASH EQUIVALENTS AT THE END OF
THE PERIOD $ (50) $ 3 $ (50) $ 3 $ (50)
Supplemental disclosure of cash flows
Taxes paid $ 1,654 $ 1,654 $ 1,654
</TABLE>
See accompanying notes and accountant's review report
<PAGE>
HOME WEB, INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
Summary of Significant Accounting Policies
June 30, 2000 and 1999
Development Stage Company
-------------------------
Home Web, Inc. (the "Company") is a development stage company as defined in
the Financial Accounting Standards Board No. 7. The Company is devoting
substantially all of its present efforts in securing and establishing a new
business, and although planned principal operations have commenced,
substantial revenues have yet to be realized.
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 were expensed during the period ending March 31, 1999 in
accordance with SOP 98-5. Management made the election to expense the costs
for years beginning January 1, 1999.
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 .001 par value with 50,000,000 shares authorized,
27,507,000 outstanding as of June 30, 2000.
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
June 30, 2000 and 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 wholesale gourmet and
specialty cheese on the Internet. During the period ending June 30, 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 transactions for the six months period
ending June 30, 2000 and 1999.
Note C:Income taxes
-------------------
The benefit for income taxes from operations consisted of the following
components: current tax benefit of $ 8,500 for June 30, 2000 and $ 4,259 as
of June 30, 1999 resulting from a net loss before income taxes, and
deferred tax expenses of $ 8,500 and $ 4,259 respectively resulting from a
valuation allowance recorded against the deferred tax asset resulting from
net operating losses. Net operating loss carryforward will expire in 2013.
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 C:Public stock offering
----------------------------
During the periods ending March 31, 1999 and 1998, pursuant to an exemption
under Rule 504 of Regulation D of the Securities Act of 1933, as amended
(the Act), the Company sold solely to accredited and/or sophisticated
investors, its common stock. The only transaction during the period of June
30, 1999 was 10,000 shares of stock issued to the corporate counsel in
exchange for legal services to the corporation. There were no transaction
through June 30, 2000.
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
June 30, 2000 and 1999
Note D: Stock options
---------------------
It was also voted upon at the organizational meeting during 1997 to grant
options to officers of the corporation and MVI, an affiliated company along
with one of the employees of MVI. The options can be exercised at $.001.
The options to be exercised are 1,250,000 and have no expiration date.
These options are considered compensatory and the expense was recognized in
the prior year.
During the period ended June 30, 1998 MVI exercised its stock options as
did one of the founders and a key employee of MVI. Two of the remaining
founders did not exercise their options during the year.
There were no options exercised during the six month period ending June 30,
2000 and 1999.
Note E: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.
There was no activity for the six months ended June 30, 2000 so no
depreciation expense taken for the year. Depreciation expense for the
period ending June 30, 1999 was $2,642.
NOTE F:Major customer
---------------------
The Company had a purchase commitment to purchase the Company's merchandise
from a non-affiliated company. This customer is also to take physical
possession of the Company's major assets and use those assets in the
ordinary course of its business. Terms are discussed more fully in Note G.
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
June 30, 2000 and 1999
NOTE G:Going concern
--------------------
As of June 30, 2000, the Company had net losses from operating activities
which raise substantial doubt about its ability to continue as a going
concern.
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 has obtained a commitment
for up to $ 150,000 from a significant shareholder, Monterey Ventures, Inc
for funding over the next twelve months. The funds would be paid
distributed in increments per requests from the Company on an "as needed"
basis. Under the agreement, the Company can repay the borrowed funds in
increments as the Company receives payment from its' customers. Also in the
credit agreement is any funds needed for longer than twelve months would be
considered long term debt. This type of funding, if needed, would be
structured for a twenty four or thirty-six month payoff not to exceed $
25,000 in requests in the first year of operations.
The Company has signed an agreement with Internet Food Company to purchase
its' products. Internet Food Company has already penetrated the hotel and
gift basket market and has further developed a web site to market its
goods. The two companies are in the process of identifying specific
products that Home Web. Inc. would supply wholesale.
The Company's ability to continue as a going concern is dependent upon a
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 H:Stock Options
--------------------
Stock that is issued for services rendered is recorded at the fair value of
the stock in the year that the stock is given and recorded as an expense in
the same year.
NOTE I:Material Adjustments
---------------------------
Management represents that all material adjustments to the financial
statements have been made.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
During the third quarter, there was no significant change in the Company's
financial condition or operations. The Company had no sales revenues for the
quarter ending June 30, 2000 and for the year-to-date. During the second quarter
of 1999, the Company had revenue of $528. The Company's main customer had a
disappointing season and difficulties with a partnership venture which impacted
operations.
During the second quarter, the Company suspended operations so that Management
could review and refocus its direction. It has been considering several
alternatives, including selling solely through the Internet, wholesale only, or
wholesale/retail. Management recognizes that each approach presents
opportunities with significant associated costs. In addition, the Company has
been analyzing its financial needs and may consider raising additional capital
or, perhaps, a merger.
No material commitments for capital expenditures were made during the second
quarter and none are expected in the third quarter.
There were no changes in the mix of source between equity, debt, and off-balance
sheet financing arrangements.
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
<PAGE>
Item 5. Other Information
The officers, directors, 10% holders and other persons required to file Form 3,
Form 4 and Form 5 have not filed such reports.
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 singed on
its behalf by the undersigned, thereunto duly authorized.
HOME.WEB, INC.
/S/ Dennis Davis
----------------
Dennis Davis
President
Dated: 8/25/00
