UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For quarterly period ended March 31, 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.
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(Exact name of registrant as specified in its charter)
Nevada 77-0454933
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization
200 Camino Aguajito, #200 Monterey, California 93940
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(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.
__X__Yes No
The number of shares of the Registrant's Common Stock, $.001 par value, as of
March 31, 2000 was 27,147,000 outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
HAWKINS ACCOUNTING
CERTIFIED PUBLIC ACCOUNTANT 341 MAIN STREET SALINAS CA 93901
(831) 758-1694 FAX (831) 758-1699
To the Board of Directors and Shareholders
Homc Web, Incorporated
Monterey, California
I have reviewed the accompany balance sheet of Home Web, Incorporated as of
March 31 2000 and 1999, and the related statements of income and shareholders'
equity and cash flows for the three months then ended, in accordance with
Statements on Standards fox 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 an opinion.
Based on my review, I am not aware of any material modiications 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.
/s/ Hawkins Accounting
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May 12, 2000
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
BALANCE SHEET
March 31, 2000 and 1999
<TABLE>
ASSETS
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Current Assets
Cash in bank-First National (17) $ 82
Accounts receivable 1,450 1,450
Total Current Assets 1,433 1,532
Equipment
Coolers and equipment 40,308 40,308
Office equipment 9,841 9,841
50,149 50,149
Accumulated depreciation 9 288 6,606
Total Equipment 40,861 43,543
Other assets
Trade name 11,000 11,000
Total Other Assets 11,000 11,000
TOTAL ASSETS 53,294 $ 56,075
LIABILITIES AND CAPITAL
Current liabilities
Accounts payable 17,655 13,442
Loan from affiliate 2,825 100
California Franchise Tax 3,916 1,600
Total Current Liabilities 24,396 15,142
TOTAL LIABILITIES 24,396 15,152
Common stack 27,507 27,507
Paid in capital 1,347,493 1,347,493
Deficit accumulated during development stage 1,346,102 1,334,067
TOTAL CAPITAL 28,898 40,933
TOTAL LIABILITIES AND CAPITAL 53,294 $ 58,075
</TABLE>
See accompanying notes and accountant's report
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the three months ending March 31, 2000 and 1999
<TABLE>
<CAPTION>
March 31, 2000
Deficit
Accumulated
During
Development
2000 1999 Stage
---- ---- -----
<S> <C> <C> <C>
Revenue
Sales $ 0 $ 528 18,887
Cost of sales 0 523 15,091
Gross margin 0 5 3,796
Expenses
Advertising 849
Amortization 1,584
Consulting fees 1,000 6,696
Equipment rental 2,339
Depreciation 1,321 6,606
License and taxes 225
Meals and entertainment 848
Office help 10,841
Office supplies 24 120 3,316
Postage 673
Travel 1,777
Rent 2,100
Business start up costs 26,356
Compensation due stock issuance 1,254,500
Telephone and utilities 1,243
Development stage expense 12,952 12,952
Organization casts 2,366 2,366
Total expenses 24 17,759 1,335,271
(Loss) from operations (24) (17,754) (1,331,475)
Other income (expense)
Interest (50)
Nondeductible penalties (166)
State tax expense (800) (800) (3,200)
Total other expenses (800) (800) (3,416)
Net loss $ (824) $ (18,554) $ (1,334,891)
Loss per share
of common stock $ ($0.0000) $ (0,0007) $ (0,0491)
Weighted average of
shares outstanding 27,507,000 27,157,000 27,157,000
</TABLE>
See accompanying notes and accountant's report
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY
March 31, 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
Options exercised 0 0
Common stock
issued 10,000 10 490 500
Net loss for the
period ended
March 31, 1999 (18,554) (18,554)
27,507,000 $ 27,507 1,347,493 $ (1,334,067) $ 40,933
Balance,
December 31, 999 27,507,000 27,507 1,347,493 (1,345,278) 29,722
Net loss for the
period ended
March 31,2000 (824) (824)
27,507,000 27,507 1,347,493 (1,346,102) 28,898
</TABLE>
See accompanying notes and accountant's report
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
STATEMENT OF CASH FLOWS-INDIRECT METHOD
For the three months ending March 31, 1999 and 1998
<TABLE>
<CAPTION>
March 31, 1999
Deficit
Accumulated
During
Development
2000 1999 Stage
---- ---- -----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) $ (824) $ (18,554) $ (1,344,067)
Adjustment to reconcile net income to net cash
provided by operating activities
Depreciation 1,321 8,190
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 800 14,352 15,152
NET CASH PROVIDED BY OPERATING ACTIVITIES (24) (15) (54,809)
INVESTING ACTIVITIES
Increase in other assets 14,960
Purchase of property, plant and equipment 50,149
NET CASH USED IN INVESTING ACTIVITIES 65,109
FINANCING ACTIVITIES
Sale of common stock 120,000
INCREASE(DECREASE) IN CASH AND CASH
EQUIVALENTS (24) (15) 82
Cash and cash equivalents at the beginning
of the period 7 97 0
CASH AND CASH EQUIVALENTS AT THE END
OF THE PERIOD $ (17) $ 82 $ 82
</TABLE>
Supplemental schedule of noncash operating
and financing activities
The Company issued 10,000 shartes of
common stock with a par value of $.001 and
a market value of $.05 for legal fees.
Total expense $500. The Company expensed
in the current year in accordance with SOP 98-05
organization costs with a net
book value of $ 2,366.
See accompanying notes and accountant's report
<PAGE>
HOME WEB, INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
Summary of Significant Accounting Policies
March 31, 2000 and1999
Development Stage Company
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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
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The preparation of the financial statements in confomity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ frond these estimates.
Cash equivalents
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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
inn accordance with SOP 98-5. Management made the election to expense the
costs fox years beginzdn January 1, 1999.
Income Taxes
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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
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Common stock is at .001, par value with 50,000,000 shares authorized,
27,507,000 outstanding as of March 31, 2000.
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
March 31, 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 March 31, 1999
the Company had sales and incurred expenses against those sales, but the
activity was immaterial for the purposes of SEAS No. 7.
Note B: Related Party Transactions
There were no material related patty transactions for the three month
period ending March 31, 1999 and 2000.
Note C: Income taxes
The benefit for income taxes from operations consisted of the following
components: current tax benefit of $ 15,783 for March 31 2000 and $ 2,783
as of March 31, 1999 resulting from a net loss before income taxes, and
deferred tax expenses of $ 15,783 and 2,783 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 tic asset is no
longer required.
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000 and 1999
NOTE C: Public stock offering
During the periods ending March 31, 2000 and 1999, 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
March 31, 1999 was 10,000 shares of stock issued to the corporate counsel
in exchange for legal services to the corporation.
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 MV1. 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 March 31, 1998 MVI exercised its stock options as
did one of the founders and a key employee of MV1. Two of the remaining
founders did not exercise their options during the year.
There were no options exercised during the three-month period ending March
31, 1999.
Note E: Property, equipment and depreciation
Property and equipment are recorded at cost. Maintenance and repairs are
expensed as incurred; major renewals and bettennents are capitalized. When
items of property acrd equipment are sold or retired, the related casts and
accumulated depreciation are removed from the accounts and any gain or loss
is included in income,
Depreciation expense for the period endiag March 31, 1999 $1,321 there was
no depreciation during 2000.
<PAGE>
HOME WEB, INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
March 31, 2000 and 1999
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.
NOTE G: Going concern
As of March 31, 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, Ink
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 cart 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 terra 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. Ire. 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.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
During the first quarter, net sales for the first three months that ended
March 31, 2000 were $0.00 compared to $528.00 for the first quarter of 1999.
This decrease is attributable to purchase orders received then canceled by a key
customer. This customer was in the process of completing major changes to their
business due to poor fourth quarter sales in 1999.
The company will introduce a new product line in June of 2000 during the
next major Fancy Food Show located in Philadelphia. The company is currently
working on the new product lines.
Gross profit for the first quarter amounted to $0.00, compared to $528.00
for the corresponding period in 1999. The decrease in the gross margin from the
corresponding period of the prior year is principally attributable to the
canceled order by a key customer and the lack of revenue.
Selling, general and administrative expenses were $24.00 for the first
quarter, compared to $17,759 for the corresponding period in 1999. These
expenses decreased due to the major drop in sales.
No material commitments for capital expenditures were made during the first
quarter and none are expected in the second quarter. There is no research and
development underway or planned at this time.
There were no changes in the mix of sources between equity, debt and
off-balance sheet financing arrangements. The Company has no plans to receive
capital from any third party. All capital to cover operating expenses will be
received from principals of the Company in the form of loans.
The company is in the process of adding new product lines and revamping its
marketing efforts. The company would also consider a joint venture with another
company on co-brand with other companies.
<PAGE>
The company anticipates that its selling and operating costs will increase
because of changes to its marketing and revamping of the product lines. There
have been no material increases in net sales or revenue. The company has been a
development stage company for the past three years and therefore has not felt
the effect of inflation. The primary inflationary concern involves milk prices.
Should prices increase the company will have to increase its cost of sales.
Item 3. Liquidity and Capital Resources.
As of March 31, 2000, the company had a cash equivalence of ($17.00). The
capital resource available would come from the principals of the company.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
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Item 2. Changes in Securities.
None.
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Item 3. Defaults Upon Senior Securities.
None.
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Item 4. Submission of Matters to a Vote of Security Holders.
None.
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Item 5. Other Information.
None.
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Item 6. Exhibits and Reports on Form 8-K
None.
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<PAGE>
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.
Dated: May 18, 2000 /s/ Dennis Davis
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NAME: Dennis Davis
TITLE: President
