SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE 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 1-23845
GO ONLINE NETWORKS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 33-0873993
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5681 BEACH BOULEVARD, SUITE 101/100
BUENA PARK, CALIFORNIA 90621
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (714) 736-0988
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 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 requirements for the past 90 days. Yes __X__ No _____.
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT JUNE 30, 2000
----- -----------------------------
Common stock, no par value 83,960,343
Transitional Small Business Disclosure Format. Yes _____ No __X__.
1
<PAGE>
GO ONLINE NETWORKS CORPORATION
INDEX
PAGE NO.
PART I Financial Information
------- ----------------------
Review Report of Independent Certified Public Accountants 3
Consolidated Balance Sheets as of June 30, 2000 (Unaudited)
and December 31, 1999 4
Consolidated Statements of Operations, Three Months Ended
June 30, 2000, and June 30, 1999 (Unaudited) 5
Consolidated Statements of Operations, Six Months Ended
June 30, 2000, and June 30, 1999 (Unaudited) 6
Consolidated Statements of Cash Flows, Six Months Ended
June 30, 2000, and June 30, 1999 (Unaudited) 7
Notes to Condensed Consolidated Financial Statements 8
Management's Discussion and Analysis of Financial Conditions
and Results of Operations 10
PART II Other Information
-------- ------------------
Item 1 Legal Proceedings 13
Item 2 Changes in Securities 13
Item 3 Defaults Upon Senior Securities 13
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 14
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL INFORMATION
REVIEW REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
--------------------------------------------------------
The Board of Directors
Go Online Networks Corporation
Buena Park, California 90621
We have reviewed the accompanying balance sheet of Go Online Networks
Corporation and Consolidated Subsidiaries as of June 30, 2000, and the related
consolidated statements of income and cash flows for the three months and 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 Go Online Networks Corporation.
A review of interim financial statements consists principally of inquiries of
Company personnel responsible for financial matters and analytical procedures
applied to financial data. It is substantially less in scope than an audit
conducted 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, we do not express such an opinion.
Based on our review, we are 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.
Miller and McCollom
Certified Public Accountants
7400 West 14th Avenue, Suite 10
Lakewood, CO 80215
August 11, 2000
3
<PAGE>
GO ONLINE NETWORKS CORPORATION AND
CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
<BTB>
<S> <C> <C>
June 30 December 31
2000 1999
------------ -----------
(Unaudited)
Current Assets
Cash $ 94,942 $ 25,921
Other current assets 64,749 18,503
------------ -----------
Total Current Assets 159,691 44,424
Designs and trademarks, net of accumulated amortization of
$32,500 and $29,164 at June 30, 2000 and December 31, 1999,
respectively 12,500 20,833
Security deposits 5,282 5,282
Equipment, net of accumulated depreciation of $192,873 and
$96,569 at June 30, 2000 and December 31, 1999, respectively 814,888 758,812
----------- ----------
Total Assets $ 992,361 $ 829,351
=========== ==========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses $ 418,453 $ 505,399
Notes payable and accrued interest 175,655 136,467
Unearned revenue 8,750 120,000
Advance from and accrued expenses to officer 319,202 492,688
Current portion of Series A, 8% convertible note payable 500,000 -
----------- ----------
Total Current Liabilities 1,422,060 1,254,553
----------- ----------
Series A, 8% convertible promissory note (Note 7) 500,000 -
Convertible debentures (Notes 7) - 538,462
----------- ----------
Total Liabilities 1,922,060 1,793,015
----------- ----------
Commitments and contingencies (Notes 1, 2, 6 and 7)
Stockholders' (Deficit): (Notes 4 and 5)
Convertible preferred stock, no par value, 10,000,000 shares
authorized, 652,333 and 638,333 shares issued and outstanding
as of June 30, 2000 and December 31, 1999, respectively 173,783 168,883
Common Stock, no par value, 100,000,000 shares authorized,
83,960,343 and 75,181,843 shares issued and outstanding
as of June 30, 2000 and December 31, 1999, respectively 9,020,774 7,678,689
Accumulated (deficit) (10,124,256) (8,811,236)
----------- ----------
Total Stockholders' (Deficit) (929,699) (963,664)
----------- ----------
Total Liabilities and Stockholders' (Deficit) $ 992,361 $ 829,351
=========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
GO ONLINE NETWORKS CORPORATION AND
CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
<BTB>
<S> <C> <C>
Three Months Three Months
Ended June 30, Ended June 30,
2000 1999
------------- ------------
Revenue
Sales and other revenue $ 147,259 $ 374
Less: Cost of sales 2,319 -
------------- -----------
144,940 374
Expenses:
Amortization and depreciation 53,697 9,546
Rent 5,354 7,976
Legal and professional fees 96,744 15,962
Contract services, salaries and payroll taxes 97,596 18,350
Compensation, officer 24,000 24,000
Kiosk operating expense 173,557 -
Other 46,722 69,294
------------- -----------
Total Operating Expenses 497,670 145,128
------------- -----------
Net (loss) before other income (expense) (352,730) (144,754)
Other income (expense):
AMS option buy back - (343,750)
Gain from sale of Auctionomics, Inc. (Note 8) 139,280 -
Settlement of lawsuit (23,000) -
Interest expense (19,594) (36,921)
Interest income 3 -
------------- -----------
Net (loss) $ (256,041) $ (525,425)
------------- -----------
(Loss) per common share $ * $ (.01)
============= ===========
Weighted Average Number of Shares Outstanding 81,328,551 56,419,086
============= ===========
</TABLE>
*(Loss) per common share is less than $(.01)
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
GO ONLINE NETWORKS CORPORATION AND
CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
<BTB>
<S> <C> <C>
Six Months Six Months
Ended June 30, Ended June 30,
2000 1999
------------- ------------
Revenue
Sales and other revenue $ 256,481 $ 374
Less: Cost of sales 11,110 -
------------- -----------
245,371 374
Expenses:
Amortization and depreciation 103,952 22,538
Rent 13,769 9,021
Legal and professional fees 240,408 38,924
Contract services, salaries and payroll taxes 277,032 33,850
Compensation, officer 48,000 48,000
Kiosk operating expense 300,807 -
Other 69,988 125,635
------------- -----------
Total Operating Expenses 1,053,956 277,968
------------- -----------
Net (loss) before other income (expense) (808,585) (277,594)
Other income (expense):
AMS option buy back - (343,750)
Gain from sale of Auctionomics, Inc. (Note 8) 139,280 -
Acquisition expense for public reporting (450,000) -
Consulting services for corporate acquisition (120,000) -
Loan costs, net of discounts (11,538) -
Settlement of lawsuit (23,000) -
Interest expense (39,193) (36,921)
Interest income 3 -
------------- -----------
Net (loss) $ (1,313,033) $ (658,265)
------------- -----------
(Loss) per common share $ (.02) $ (.01)
============= ===========
Weighted Average Number of Shares Outstanding 81,328,551 56,419,086
============= ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
GO ONLINE NETWORKS CORPORATION AND
CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
<BTB>
<S> <C> <C>
Six Months Six Months
Ended June 30, Ended June 30,
2000 1999
------------- --------------
Operating Activities:
Net (loss) $(1,313,033) $ (658,265)
Adjustments to reconcile net (loss) to
net cash (used in) operating activities
Amortization and depreciation 103,952 22,538
(Decrease) in accounts payable and accrued
expenses (86,946) (23,436)
Increase (decrease) in unearned revenue (111,250) 3,044
Discount on debenture 38,462 -
(Increase) in accounts receivable (46,246) -
Common stock issued for expenses charged 735,000 -
Preferred stock issued for expenses charged 23,000 -
Other 167,957 16,799
----------- -----------
Net Cash (Used in) Operating Activities (489,104) (639,320)
----------- -----------
Investing Activities:
Investments in equipment (151,694) (181,131)
(Increase) in escrow account - (265,762)
Decrease in escrow account - 265,762
----------- -----------
Net Cash (Used in) Investing Activities (151,694) (181,131)
----------- -----------
Financing Activities:
Proceeds from loan 3,588 98,588
Repayment of convertible debentures and loans (538,462) (32,200)
Preferred stock converted (5,600) -
Common stock issued 255,600 1,006,708
Proceeds from convertible debentures 1,000,000 -
----------- -----------
Net Cash Provided by Financing Activities 715,126 1,073,096
----------- -----------
Increase (decrease) in cash 74,328 252,645
Cash, Beginning of Period 25,921 2,271
----------- -----------
Cash, End of Period $ 100,249 $ 254,916
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
GO ONLINE NETWORKS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
NOTE 1 - FINANCIAL STATEMENTS
The financial statements included herein have been prepared by Go Online
Networks Corporation (Company) without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted as allowed by such rules and regulations, and Go Online Networks
Corporation believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these financial statements be
read in conjunction with the December 31, 1999 audited financial statements and
the accompanying notes thereto. While management believes the procedures
followed in preparing these financial statements are reasonable, the accuracy of
the amounts are in some respects dependent upon the facts that will exist, and
procedures that will be accomplished by Go Online Networks Corporation later in
the year. The results of operations for the interim periods are not necessarily
indicative of the results of operations for the full year.
NOTE 2 - BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION
The Company operates in the high technology and e-commerce business operating in
two divisions. The internet kiosk division installs internet kiosks in the
mid-priced hotel market providing internet access to the hotel guests, the Shop
Go Online.com division provides an internet website offering a variety of
products and services.
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which contemplates continuation of the
Company as a going concern. However, the Company has sustained operating losses
since its inception and has a net capital deficiency. Management's plan to
continue in operation is to continue to attempt to raise additional debt or
equity capital until such time the Company is able to generate sufficient
operating revenue.
In view of these matters, realization of certain of the assets in the
accompanying financial statements is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financial requirements, raise additional capital, and the success of its future
operations. Management believes that its ability to raise additional capital
provides the opportunity for the Company to continue as a going concern.
NOTE 3 - CORPORATE ACQUISITION
On January 10, 2000, the Company entered into an agreement with Westlake Capital
Corporation (Westlake) pursuant to which 3,000,000 shares of newly issued shares
were given to acquire Westlake.
8
<PAGE>
GO ONLINE NETWORKS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
NOTE 4 - STOCK ISSUED FOR SERVICES
During January 2000, the Company issued 800,000 shares at $0.15 per share for
services in connection with the acquisition of Westlake mentioned above. In
addition, the Company issued 225,000 in payment of legal services and 250,000
shares in accordance with a consulting agreement. During April 2000, the
Company issued 125,000 shares for services. During June 2000, the Company
issued 2,740,000 shares of its common stock to the Company's President for
unpaid salaries, at $0.11 per share.
NOTE 5 - SALE OF STOCK
During January 2000, the Company sold 2,500,000 shares of its common stock for
$250,000.
NOTE 6 - SUBSEQUENT EVENTS
On August 4, 2000, the Company entered into an agreement, subject to completion
of certain requirements prior to the Closing, to acquire all of the outstanding
stock of Digital West Marketing, Inc. (Digital West), currently in the computer
refurbishing business. In consideration for acquiring the stock of Digital West
Marketing, Inc., the Company shall pay $825,000 to be utilized to pay bank and
other accounts payable and accrued expenses of Digital West. In addition, the
Company shall issue 750,000 shares of its common stock, a warrant to purchase an
aggregate of 750,000 shares of the Company's stock for a period of two years at
$0.22 per share, and the Company shall issue 2,000 shares of its newly
authorized Series B $100 Principal Amount Convertible Preferred Stock. Prior to
the Closing, Digital West shall spin-off all of its accounts receivable and
inventory as of the closing date to a new subsidiary, and the subsidiary shall
assume all commissions payable (other than $20,000 in accrued expenses) and all
notes payable outstanding as of the Closing date.
NOTE 7 - ISSUANCE OF SERIES 2000BA NOTES PAYABLE
Effective January 10, 2000, the Company entered into a Securities Purchase
Agreement whereby the buyer agreed to buy from the Company $1,000,000 of its
Series 2000-A Eight Percent (8%) convertible notes, maturing March 31, 2002, and
payable in quarterly installments in arrears on March 31, June 30, September 30,
and December 31 of each year during the term of the note, with the first such
payment to be made August 31, 2000. Accrual of interest may be payable either
in cash or common stock at the holder's option. If interest is paid in common
stock, the number of shares to be delivered in payment will be determined by
taking the dollar amount of interest being paid divided by the average.
NOTE 8 - SALE OF AUCTIONOMICS,INC.
During May 2000, the Company sold its subsidiary, Auctionomics, Inc., which had
not been operational, for $140,000.
9
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS.
CAUTIONARY STATEMENTS:
This Quarterly Report on Form 10-QSB contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. The Company intends that such
forward-looking statements be subject to the safe harbors created by such
statutes. The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties. Accordingly, to
the extent that this Quarterly Report contains forward-looking statements
regarding the financial condition, operating results, business prospects or any
other aspect of the Company, please be advised that the Company actual financial
condition, operating results and business performance may differ materially from
that projected or estimated by the Company in forward-looking statements. The
differences may be caused by a variety of factors, including but not limited to
adverse economic conditions, intense competition, including intensification of
price competition and entry of new competitors and products, adverse federal,
state and local government regulation, inadequate capital, unexpected costs and
operating deficits, increases in general and administrative costs, lower sales
and revenues than forecast, loss of customers, customer returns of products sold
to them by the Company, termination of contracts, loss of supplies,
technological obsolescence of the Company's products, technical problems with
the Company's products, price increases for supplies and components, inability
to raise prices, failure to obtain new customers, litigation and administrative
proceedings involving the Company, the possible acquisition of new businesses
that result in operating losses or that do not perform as anticipated, resulting
in unanticipated losses, the possible fluctuation and volatility of the
Company's operating results, financial condition and stock price, inability of
the Company to continue as a going concern, losses incurred in litigating and
settling cases, adverse publicity and news coverage, inability to carry out
marketing and sales plans, loss or retirement of key executives, changes in
interest rates, inflationary factors and other specific risks that may be
alluded to in this Quarterly Report or in other reports issued by the Company.
In addition, the business and operations of the Company are subject to
substantial risks that increase the uncertainty inherent in the forward-looking
statements. The inclusion of forward looking statements in this Quarterly
Report should not be regarded as a representation by the Company or any other
person that the objectives or plans of the Company will be achieved.
GENERAL OVERVIEW
Go Online Networks Corporation operates in the high technology and
e-commerce business utilizing a three-tiered revenue model. In initiating our
strategy, we acquired and currently operate two distinct divisions, each
described below:
10
<PAGE>
Internet Kiosk Division
-------------------------
We are pursuing a strategy in the installation of internet kiosks in the
mid-priced hotel market. Our internet kiosks, designed in three primary models,
are installed in the hotel lobby or an alternative centralized public access
room. Our kiosk division has developed two suppliers capable of manufacturing
small, integrated kiosks that can provide pay-as-you-use stand-alone internet
access. At no cost to the hotel owner and sharing revenues with us and the
owner, our internet kiosks have been and will continue to be marketed to these
mostly mid-priced hotels by sales agent organizations employed by our kiosk
division. Presently, 415 hotels have signed contracts and 254 kiosks have been
installed in 237 locations in 40 states and one Canadian province as of June 30,
2000. We have 18 units presently in transit. We believe that we will have many
more by year end and hope to reach our goals of installation of enough kiosks to
make us profitable by the first quarter of 2001.
ShopGoOnline.com
----------------
Utilizing online video and audio technology to assist with customer review,
our ShopGoOnline.com internet website offers a variety of products and services
via the world wide web. ShopGoOnline.com sells products such as jewelry, coins,
collectibles, electronics, computers, skin care and beauty products, and
personal fitness products. At ShopGoOnline.com, the customer can search for
products we have to sell by category or by product name and obtain a full
description of the product offer including a complete audio presentation of the
product as well as a video demonstration when appropriate.
RESULTS OF OPERATIONS OF THE COMPANY
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
Our net loss during the three months ended June 30, 2000 was ($256,041),
compared to ($525,425) for the same period in 1999. The reduction in this loss
is attributable to an increase in sales of both the kiosk and ShopGoOnline
divisions offset by increased expenses (primarily in our kiosk division), and a
non-recurring gain from the sale of Auctionomics.
Sales were $147,259 for the three months ended June 30, 2000, compared to
$374 for the three months ended June 30, 1999. Approximately twenty percent of
the sales was generated by our ShopGoOnline.com division, and the other eighty
percent by our Internet kiosk business.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
Our net loss during the six months ended June 30, 2000 was ($1,313,033),
compared to ($658,265) for the same period in 1999. The increase in this loss
is attributable to acquisition expenses in connection with the Company's
acquisition of Westlake Capital Corporation and consulting services in
connection with that transaction, increased expenses (primarily in our kiosk
division), increased legal and professional fees, increased salaries, offset by
an increase in sales of both the kiosk and ShopGoOnline divisions and a
non-recurring gain from the sale of Auctionomics.
Sales were $256,481 for the six months ended June 30, 2000, compared to
$374 for the six months ended June 30, 1999. Approximately twenty percent of
the sales was generated by our ShopGoOnline.com division, and the other eighty
percent by our Internet kiosk business.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2000, we had assets of $992,361, compared to $829,351 as
of December 31, 1999. This increase was attributable to an increase in cash
from financing activities, and equipment.
11
<PAGE>
Our current liabilities increased from $1,254,553 as of December 31, 1999
to $1,422,060 as of June 30, 2000, due primarily to an increase in the current
portion of the Series A, 8% convertible note issued in January 2000. Total
liabilities also increased, from $1,793,015 as of December 31, 1999 to
$1,922,060 as of June 30, 2000, again due primarily to the issuance of the
Series A, 8% convertible note issued in January, offset by the cancellation of
$538,462 in convertible debentures.
As of June 30, 2000, our accumulated deficit was $10,124,256, while our
stockholders deficit was $929,699, as compared to $8,811,236 and $963,664,
respectively, as of December 31, 1999. The accumulated deficit and stockholders
deficit increases are attributable to our continuing operating losses, as set
forth above.
Effective January 10, 2000, the Company entered into a Securities Purchase
Agreement whereby the buyer agreed to buy from the Company $1,000,000 of its
Series 2000-A Eight Percent (8%) convertible notes, maturing March 31, 2002, and
payable in quarterly installments in arrears on March 31, June 30, September 30,
and December 31, of each year during the term of the note, with the first such
payment to be made June 30, 2000. Accrual of interest may be payable either in
cash or common stock at the holder's option. If interest is paid in common
stock, the number of shares to be delivered in payment will be determined by
taking the dollar amount of interest being paid divided by the average of the
closing bid prices for the common stock for the ten trading days prior to the
due date of such interest. The notes are convertible into common stock, upon
certain registration, and for prices determined at various dates as defined in
the agreement. The purchase price was $500,000 in cash and cancellation of the
$538,462 of the convertible debentures outstanding as of December 31, 1999. The
notes were issued in two parts, one of which was issued during March 2000, and
payment dates were deferred based upon date of issuance.
The Company made no material capital expenditures during the quarter ended
June 30, 2000.
During the second quarter of operations GoOnline's management made a
strategic business decision to relocate 27 operational kiosks from hotels which
had contracted for Go Online's services that were deemed "under productive" by
management. Management reviewed the entire network and found after 90 days of
operations the potential for future income did not warrant continued
operations in these locations. The network will be reviewed quarterly and if
other sites are not meeting expected revenue expectations the units will be
relocated to new sites.
On August 4, 2000, the Company entered into an agreement, subject to
completion of certain requirements prior to the Closing, to acquire all of the
outstanding stock of Digital West Marketing, Inc. (Digital West), currently in
the computer refurbishing business. In consideration for acquiring the stock of
Digital West Marketing, Inc., the Company shall pay $825,000 to be utilized to
pay bank and other accounts payable and accrued expenses of Digital West. In
addition, the Company shall issue 750,000 shares of its common stock, a warrant
to purchase an aggregate of 750,000 shares of the Company's stock for a period
of two years at $0.22 per share, and the Company shall issue 2,000 shares
of its newly authorized Series B $100 Principal Amount Convertible Preferred
Stock. Prior to the Closing, Digital West shall spin-off all of its
accounts receivable and inventory as of the closing date to a new subsidiary,
and the subsidiary shall assume all commissions payable (other than $20,000 in
accrued expenses) and all notes payable outstanding as of the Closing date. The
Company is presently in negotiations with potential financing sources for the
completion of the funding required to complete the Digital West transaction.
We believe that proceeds from our previous financings, together with our
other resources and expected revenues, will be sufficient to cover working
capital requirements for at least six months. Should revenue levels expected by
us not be achieved, we would nevertheless require additional financing during
such period to support its operations, continued expansion of our business and
acquisition of products or technologies. Such sources of financing could
include capital infusions from some of our strategic alliance partners,
additional equity financings or debt offerings. Other than the proposed sale of
securities in this registration statement, we have made no arrangements or
commitments for such financing.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
On December 3, 1998, a default judgment was entered against us in the
approximate amount of $55,000 for alleged amounts owed by Real Estate Television
Network for which the plaintiff alleges was also owed by us. On July 14, 1999
the default judgement was set aside based on the fact that we were never
properly served with a summons and complaint. We contend that we are not liable
for the amounts due since Real Estate Television Network was a separate
corporation and we never guaranteed this obligation. Neverthless, in April
2000, we entered into a settlement agreement with the plaintiff and agreed to
pay him the sum of $12,500 in cash and 30,000 shares of Series A Preferred
Stock.
ITEM 2 CHANGES IN SECURITIES
On April 20, 2000, the Company issued 125,000 shares to three persons who
performed consulting and accounting services for the Company. These shares were
valued at $65,000 and were registered for resale in a Registration Statement on
Form S-8.
On May 19, 2000, the Company issued 560,000 shares to three persons who
performed consulting and legal services for the Company. These shares were
valued at $162,400 and were registered for resale in a Registration Statement on
Form S-8.
On June 14, 2000, the Company sold an aggregate of $250,000 in aggregate
principal amount of 10% Convertible Notes due June 14, 2002. These convertible
notes were sold to two accredited investors. The convertible notes are
convertible into common stock at the lower of (i) 60% of the average closing
price for the ten days prior to conversion or (ii) $0.18 per share. This sale
by the Company was completed in accordance with Section 4(2) of the Securities
Exchange Act of 1934, as amended.
On June 26, 2000, the Company issued and delivered an aggregate of
2,740,000 shares to Joseph M. Naughton, Chief Executive Officer of the Company,
in consideration for past due and unpaid salaries. These shares were issued in
accordance with an agreement with the Company and were valued at $0.11 per
share. These shares were registered for resale in a Registration Statement on
Form S-8.
ITEM 3 DEFAULTS UNDER SENIOR SECURITIES
None.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 OTHER INFORMATION
None.
13
<PAGE>
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
On May 25, 2000, the Company filed a Form 8-K reporting the sale of
Auctionomics, Inc. by the Company.
<PAGE>
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 authorized.
Dated: AUGUST 16, 2000 Go Online Networks Corporation
/s/ Joseph M. Naughton
Joseph M. Naughton,
Chief Executive Officer
and Director
