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 the quarter ended September 30, 2000
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-29989
GREAT BASIN WATER COMPANY
(Exact name of small business issuer as specified in its charter)
Nevada 86-0889096
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
2950 E. Flamingo Rd., Suite F
Las Vegas, NV 89121
(Address of principal executive offices)
(702) 214-8440
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the
past 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 [ ]
As of November 10, 2000, 21,934,973 shares of Common Stock and 7,500
shares of Series B Preferred Stock were outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [X]
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GREAT BASIN WATER COMPANY
Form 10-QSB
INDEX
Page
Number
------
Part I Financial Information
Item 1 Financial Statements
Condensed Consolidated Balance Sheet
as of September 30, 2000 3
Condensed Consolidated Statements of
Operations for the three and nine
months ended September 30, 2000 and 1999 4
Condensed Consolidated Statements of
Cash Flows for the nine months ended
September 30, 2000 and 1999 5
Notes to Condensed Consolidated
Financial Statements 6
Item 2 Management's Discussion and Analysis
or Plan of Operation 7
Part II Other Information 10
Item 1 Legal Proceedings 10
Item 2 Changes in Securities and Use of
Proceeds 10
Item 3 Defaults upon Senior Securities 10
Item 4 Submission of Matters to a Vote of
Security Holders 10
Item 5 Other Information 10
Item 6 Exhibits and Reports on Form 8-K 11
Signatures 11
2
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GREAT BASIN WATER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 2000
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 3,402
Accounts receivable 2,300
Land Escrow 5,000
Loan Receivable 5,403
Other Receivables 2,500
-----------
Total current assets 18,605
Fixed Assets
Property and equipment, net 14,833
Wells including water rights 750,000
Capitalized costs 249,046
Land 55,000
-----------
Total fixed assets 1,068,879
Total assets $ 1,087,484
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued liabilities $ 16,628
Other payables 317
-----------
Total current liabilities 16,945
Long-Term Liabilities
Notes Payable 49,401
Loans from shareholders 184,078
-----------
Total long-term liabilities 233,479
Total liabilities 250,424
Stockholders' equity
Common Stock, $.001 par value -
24,000,000 shares authorized; 10,369,973
shares issued and outstanding 10,370
Preferred stock, $100 par value -
1,000,000 shares authorized; 7,500 shares
issued and outstanding 750,000
Paid-in capital 511,938
Accumulated deficit (435,248)
-----------
Total stockholders' equity 837,060
-----------
Total liabilities and stockholders' equity $ 1,087,484
===========
The accompanying notes are an integral part of this statement
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GREAT BASIN WATER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine months Ended
September 30 September 30
-------------------------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $ - $ - $ - $ -
Operating expenses:
Rents 1,612 3,703 6,192 8,999
Payroll and payroll related 2,000 2,000 3,320 6,050
Taxes, licenses and fees 402 355 3,659 3,255
Services 15,561 7,201 59,582 16,121
Administrative and general expenses 8,828 8,001 33,685 60,514
Depreciation 915 900 2,745 2,719
-------------------------------------------------
Total operating expenses 29,318 22,160 109,183 97,658
Loss from operations (29,318) (22,160) (109,183) (97,658)
Other income (expense):
Interest income - - - -
Interest expense - - (1,060) -
-------------------------------------------------
Total other expense - - (1,060) -
-------------------------------------------------
Net Loss $ (29,318) $ (22,160) $ (110,243) $ (97,658)
=================================================
Basic and diluted net loss per common share $ (0.00) $ (0.00) $ (0.01) $ (0.02)
-------------------------------------------------
Weighted average shares outstanding 10,060,098 5,183,713 8,248,615 5,183,713
-------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements
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GREAT BASIN WATER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30
---------------------------
2000 1999
---- ----
Cash flows from operating activities:
Net cash used in operating activities $ (146,243) $ (24,716)
Cash flows from investing activities:
Capital Expenditures - -
Costs related to acquisition - -
---------------------------
Net cash used in investing activities - -
Cash flows from financing activities:
Proceeds from issuance of common stock 196,780 -
Stock issued in payment of services 13,878 -
Short-term borrowings (46,646) 7,087
Long-term borrowings (16,000) 16,000
---------------------------
Net cash provided by (used in)
financing activities 148,012 23,087
---------------------------
Net decrease in cash and cash equivalents 1,769 (1,629)
Cash and cash equivalents, beginning of period 1,633 4,799
---------------------------
Cash and cash equivalents, end of period $ 3,402 $ 3,170
===========================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 1,060 $ -
Income taxes $ - $ -
The accompanying notes are an integral part of these statements
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GREAT BASIN WATER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying unaudited condensed consolidated financial
statements of the Company for the three and nine months
ended September 30, 2000 and 1999 have been prepared on the same
basis as the audited financial statements. In the opinion
of management, such unaudited information includes all
adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation of this interim
information. Operating results and cash flows for interim
periods are not necessarily indicative of results for the
entire year. Certain prior period amounts have been
reclassified to conform to the current period presentation.
Additionally, certain information and footnote disclosures
normally included in a full set of financial statements
have been condensed or omitted pursuant to the Securities
and Exchange Commission rules and regulations. The
information included in this report should be read in
conjunction with the Company's audited financial statements
and notes thereto for the year ended December 31, 1999
included in the Company's Report on Form 10SB12(g)A,
previously filed with the Securities and Exchange Commission.
2. The Company currently has no operating revenue, and is
showing a loss for the current year of $110,243.
3. Cash for operations was received this period through sales
of stock to various private investors. Through these
sales, the Company raised $196,780. The majority of the
proceeds were used to pay accounts payable, and current
operating expenses. The Company increased outstanding
stock to 10,369,973 shares, and the additional paid in
capital increased to $511,938 for the nine months ended
September 30, 2000.
4. The Company has 7,500 shares of Preferred Stock valued at
$100 per share, paying dividends at 8% per annum. These
shares were originally issued as part of an agreement for
the purchase of water shares and related equipment. This
agreement has been revised as of October 12, 2000 to reflect
the real party in interest that conveyed the assets to the
Company and to modify the Preferred Stock such that the
payment of the annual dividend will only occur in those
years in which the water shares are actually used by the
Company's subsidiary, Shadow Ridge Water Company, for the
provision of water service.
5. The Company currently has $175,283 in notes outstanding to
Darryl Shutteloffel. These notes are due to the
shareholder, and will be paid when the Company begins to
collect revenues. The Company also has a note payable to
Ray Warren in the amount of $8,795 which does not bear
interest and is callable only when the Company is profitable.
6. The Company has a note outstanding in the amount of
$49,401, to Darrel Christensen. The note is for the land
that holds Well #1. No payments have been made on this
note in the current year.
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Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
RECENT EVENTS
-------------
The following information should be read in conjunction with
the interim financial statements and the notes thereto included
in Part 1, Item 1 of this Quarterly Report and the financial
statements and notes thereto contained in the Company's Form
10SB12(g)/A Amended Registration Statement. However, please note
that the Company's Plan of Operation has materially changed
as set forth below.
The Company's original plan of operation forecasted a
construction start for housing developments in the franchise area
of the Company's subsidiary, Shadow Ridge Water Company
(hereinafter "Shadow Ridge"), for March of 2000. Construction
of the housing developments has not occurred. Due to a
disagreement between the developers and the City of Mesquite,
Nevada (hereinafter the "City of Mesquite"), the City of Mesquite
refused to allow refuse from the planned developments to be
deposited in the land fill operated by the City of Mesquite.
This dispute precluded the issuance of building permits from
Mohave County, Arizona for the proposed developments. This delay
in the issuance of building permits has created further problems
for the developers and they have lost their financing. Due to this
loss of financing on the part of the developers, it cannot be
predicted when the developments will be started. The Company has
been informed that the developments may be refinanced and proceed
at some point late in the year 2001. Consequently, all activities
of the Shadow Ridge franchise have ceased. The Company will resume
operations of the Shadow Ridge Franchise once a viable housing
project is underway.
Additionally, the operating water facilities and companies
that the Company was originally considering for acquisition have
not been consummated. The negotiations for these facilities ended
when the consideration demanded made the acquisition uneconomic.
As a result of these setbacks the Company sought out and hired an
experienced Vice President of Acquisitions to assist in the
execution of its business plan. This addition to the management
team resulted in an analysis of the Company's current resources,
both physical and in personnel. As a result of this analysis the
Company determined that there were unused personnel assets that
could be utilized in the short term to achieve profitability.
Consequently, the Company has modified its Plan of Operation to
allow for the expansion into other businesses where the experience
base of its personnel may be utilized to leverage available assets
into profitability. The Company's current personnel base has
experience in e-commerce, Internet services, publishing, the media
entertainment business, real estate, and water utilities. With
this experience base the Company identified several business
opportunities and has acquired assets for the purpose of beginning
a publishing division and an Internet service division with
e-commerce capabilities.
The Company acquired its publishing division assets on October
23, 2000. This acquisition was made due to the availability of
publishing assets that came to the Company's attention. With the
Company's in-house experience in the publishing business the Company
determined that the acquisition of the House of Fire Press name and
assets fit the Company's business expansion model. The assets
consisted of approximately 2,000 copies of one book, its printing
plates and the printing plates for the publishing of a second book
title. This acquisition was disclosed on November 1, 2000 in a
Form 8-K Current Report filed with the Securities and Exchange
Commission. The Company will market the current printed inventory
through Internet e-commerce sites. The Company plans to print the
second title and obtain additional titles in order to market books
through traditional book marketing including wholesalers and independent
book stores. To further this plan, the Company has retained the
services of the prior owner of the House of Fire Press to develop
additional titles for publishing. The Company's plan for publishing
follows the original plan that the House of Fire press developed, but
was unable to capitalize on due to a lack of marketing and distribution.
That plan is to adapt book titles that have passed into the public
domain into a present day format, and obtain a copyright for the
adapted version. The Company believes that there are a number of
books in the public domain that are relatively unknown, but yet can
be enjoyed by today's reading population in the same manner that
Charles Dicken's stories are still popular. The Company will also
seek out authors who desire to have their works published that have
not had success with the major publishing houses.
On November 10, 2000 the Company consummated the acquisition of
several Internet site assets. Those assets are: UpWeGo.com,
OTCVision.com, Equityminded.com, and Dictionaryhill.com. This
acquisition is described in the Company's Form 8-K Current Report
filed with the SEC on November 13, 2000. This acquisition, as
discussed in the Form 8-K resulted in a change in control of the
Company. This change in control also resulted in the Company's
Vice President of Acquisitions becoming a major shareholder in the
Company due to his prior ownership interest in the assets acquired.
This was a related party transaction that was fully disclosed to the
Board
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of Directors prior to consummation of the acquisition.
UpWeGo.com is designed as the entrepreneur's 21st Century
marketplace. It is an e-commerce site that allows for the exposure
and sale of products for entrepreneurs that need an Internet marketing
arm. Designed to support small businesses, UpWeGo.com manages the
web development, growth, marketing, credit card processing and customer
service needs of its clients. The Company's book titles will be one
of the products featured on UpWeGo.com. The Company plans to market
this service aggressively to entrepreneurs that need an e-commerce venue
to sell their products. On the other side, the Company will market the
site to the public as a unique market place for the latest products that
entrepreneurs have to offer which will not be available through typical
mass marketing venues. Revenues will be generated primarily through a
fee on all sales of products that occur through the site. Fees will
also be charged for the set up and maintenance of the client's web
presence on UpWeGo.com.
OTCVision.com is a financial information and research web site for
people interested in non-biased information with no sales pitches for
securities. OTCVision.com provides a synergistic interaction of
information where interested persons may learn about small companies
and at the same time providing an informational outlet for small companies
seeking greater corporate exposure. Revenues are developed through fees
collected from client companies that are profiled on the web site.
Equityminded.com is a web portal designed to allow the viewer an
opportunity to access a variety of research and informational web sites
related to investment and money management matters. It provides the
experienced investor web site links to find information, and allows the
novice a place to begin the learning process necessary for making money
management decisions. These opportunities are expressly provided in an
environment devoid of market buying or selling suggestions. Presently,
revenues are generated through advertising banners and click through
fees associated with other internet sites that have banners or icons
located on the site that allow a user to go to that identified web site.
DictionaryHill.com is an Internet service provider (ISP) and Internet
web site designer. As an Internet service provider, DictionaryHill.com
offers both dial up and digital subscriber line (DSL) access to the
Internet. As a web site designer, DictionaryHill.com uses advanced
technology that is capable of providing exciting and informative web
pages for its clients. DictionaryHill.com has recently focused on
niche marketing to provide native language service and web design.
Its first expansion in this area has resulted in the provision of
ISP and web page design services in Farsi, tailored for the Persian-
American community. Revenues are generated through ISP subscriptions
and through fees for web site designs.
All of the above web sites were designed to allow for cross
pollination of clients and services. Clients of OTCVision.com that
have products for sale will have the opportunity to place products on
UpWeGo.com. As Clients of both OTCVision.com and UpWeGo.com need web
design services, Dictionaryhill.com will be able to provide those
services. The Company has entered into contracts with individuals to
assist in the development and marketing of these Internet services, and
as growth permits the Company will make offers of employment to these
individuals or hire others as needed to bring all of the functions from
development to sales in-house. As these Internet ventures are not
capital intensive and the assets were purchased in completed form, no
additional development expenses on the part of the Company will be
expended. The Company intends to utilize current resources to create
revenues that can self-fund anticipated marketing needs. However, until
revenues are derived from these new acquisitions, some amount of working
capital will need to be financed as discussed below in the Liquidity and
Capital Resources section. As the revenue capability of the sites are
proven, the Company will seek additional investment funding to finance a
national marketing campaign to fully capitalize on these assets.
As water projects become available for development or acquisition
the Company will work on developing funding to acquire or develop those
projects through either a joint venture form, through additional equity
funding, or through internally generated revenues. The Company believes
that its recent acquisitions will be the foundation for creating value
for the Company's shareholders and will allow the original business plan
to be acted upon. Our expanded Plan of Operation provides the Company
with a short-term plan of action that will ultimately allow for the
execution of its long-term water plans. This is important as the Company
still believes that development in the Arizona Strip as previously
contemplated will occur, but not on the time table previously envisioned.
An additional matter associated with the Company's original business
plan arose in the examination of the cessation of development activities
in the Arizona Strip south of Mesquite, Nevada. It was found that the
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Company's ownership in the water shares and related wells that were
purchased in 1998 were not owned by the seller, but by an affiliate
of the seller. This affiliated entity, Town Square LLC, is also an
affiliate of Great Basin Water Company by virtue of the common ownership
of Town Square LLC and the Company through the Company's Directors
Darryl Schuttloffel and Ray Warren. Upon this discovery the prior
contract with Melvin Hughes purportedly transferring the rights to
the water shares described in that document was cancelled and the
Preferred Stock that was issued to Mr. Hughes was likewise cancelled.
Thereafter, on October 12, 2000 the Company entered into a new contract
for the purchase of the water shares and related well equipment from
Town Square LLC. The relationship interests of Directors Schuttloffel
and Warren in Town Square LLC, were acknowledged in the Board of
Directors meeting wherein a new contract for the purchase of the water
shares was approved. The original contract was simply amended with one
renegotiated matter regarding the consideration. In the contract with
Town Square LLC, the annual $60,000 dividend for the 7,500 shares of
$100 Preferred Stock was conditioned on the actual use of water from
the wells by the Shadow Ridge franchise. Consequently, unless
development occurs in the Shadow Ridge franchise area such that water
from the wells is actually used and sold by Shadow Ridge to water
service customers, then no dividend will be required, declared or
issued. Furthermore, the Preferred Shares issued to Town Square LLC
are redeemable by the Company at any time for the face stated value of
$100 per share. As a result of this transaction, there will be no change
in the Company's balance sheet.
With the changes in the Company's Plan of Operation and the downturn
in the development activities in the Shadow Ridge franchise area the
Company's Chief Executive Officer, Darryl Schuttloffel determined that
he would step down and resign from the Board of Directors and as an
Officer of the Company. Mr. Schuttloffel has decided to turn his
attention to development activities in the Shadow Ridge franchise area
through Town Square LLC. To assist the Company in going forward with
its limited utility activities Mr. Schuttloffel agreed to cancel his
note with the Company. The cancellation of the $175,000 note will be
recorded in the fourth quarter.
Forward-looking Statements
In addition to the historical information contained herein, this
Form 10-QSB contains forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are subject to risks and
uncertainties, including risks and uncertainties set forth in this Form
10-QSB that may cause actual results to differ materially. These forward-
looking statements speak only as of the date hereof. The Company
disclaims any intent or obligation to update these forward-looking
statements.
RESULTS OF OPERATIONS
---------------------
Three months ended September 30, 2000
as compared to three months ended September 30, 1999
The Company is still in the development stage and has not had
any revenues for the three months ended September 30, 2000. This
represents no change from the prior period. The Company's loss from
operations has shown an increase to $29,318 for the three months
ended September 30, 2000, from $22,160 for the three months ended
September 30, 1999. This increase is consistent with the Company's
activities in conjunction with the preparation of plans for
construction of the Shadow Ridge water and wastewater facilities.
The primary increase in expenses is associated with outside services
which increased to $15,561 for the three months ended September 30,
2000, from $7,201 for the three months ended September 30, 1999.
Nine months ended September 30, 2000
as compared to nine months ended September 30, 1999
The Company is still in the development stage and has not had
any revenues for the nine months ended September 30, 2000. This
represents no change from the prior period. The Company's loss
from operations has shown an increase to $110,243 for the nine
months ended September 30, 2000 from $97,658 for the nine months
ended September 30, 1999. This increase is consistent with the
Company's increased activities with the preparation of plans for
construction of the Shadow Ridge water and wastewater facilities.
The primary increase in expenses is associated with outside services
and general and administrative expenses which combined increased to
$93,267 for the nine months ended September 30, 2000 from $76,635
for the nine months ended September 30, 1999. Due to
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reclassifications of expenses between general and administrative and
services between fiscal year 2000 and fiscal year 1999 the two
classifications are discussed on a combined basis. The primary
difference between the two fiscal periods is attributable to the
engagement of a transfer agent in fiscal year 2000.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company's operating activities used cash of $146,243 for the
nine months ended September 30, 2000 as compared to a use of $24,716
for the same period in 1999. The financing activities during the nine
months ended September 30, 2000 consisted of $196,780 for stock sold
by the Company in private placements. The Company also made loan
payments to its Director and CEO Darryl Schuttloffel in the amount of
$46,646 on his outstanding note during the nine months ended September
30, 2000.
The Company's current operations are cash flow negative and as of
September 30, 2000 the Company had working capital of $1,660. As
discussed in the Recent Events section above, the Company will not
presently need funds for the construction of facilities associated with
the Shadow Ridge franchise in the Arizona Strip. However, as the
Company attempts to ramp up revenues in its new Internet ventures,
the Company will need additional financing for working capital
purposes. The Company will attempt to minimize its cash needs through
stock compensation of employees and contractors necessary to operate
and market its new business ventures. Consequently the Company is
actively engaged in seeking out additional equity funding. However,
there can be no assurance that equity funding will be available, or
that, if available, capital can be obtained on terms favorable to the
Company. If adequate funds are not available, the Company's ability
to continue as a going concern would be impaired.
Part II. Other Information
-----------------
Item 1. Legal Proceedings
-----------------
None.
Item 2. Changes in Securities
---------------------
During the three months ended September 30, 2000 the Company
issued 836,433 shares of Common Stock. Of that amount, 508,333 shares
were issued in a private placement for an aggregate consideration of
$48,000. For services rendered by consultants or vendors, 228,100
shares of common stock were issued. The remaining 100,000 shares of
common stock were issued to Ron Drake for services rendered as a
Director.
As of November 10, 2000 the Company had issued 955,000 shares of
Common Stock for services rendered or to be rendered by consultants
and 605,000 to Directors and Officers of the Company in lieu of salaries.
In the acquisition of the assets and name of House of Fire Press
the Company issued 5,000 shares of Common Stock. Additionally, on
November 10, 2000 the Company issued 10,000,000 shares of Common Stock
for the purchase of certain assets from Round III Enterprises, discussed
above in Part I. An Executive Officer of the Company, Andrew S. Austin,
Vice President of Acquisitions, was a major shareholder of Round III
Enterprises and through the transaction became a significant shareholder
in the Company. The details of this transaction are discussed in Part I
hereof and in the Form 8-K filed on November 13, 2000 by the Company.
The Company's total outstanding shares of Common Stock on November 10,
2000 was 21,934,749.
Item 3. Defaults Upon Senior Securities
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
Item 5. Other Information
-----------------
None.
10
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Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
15.1 Accountant's Review Report
27 Financial Data Schedule - September 30, 2000
(b) Reports on Form 8-K
On November 1, 2000 the Company filed a current report on
Form 8-K with the Securities and Exchange Commission
reporting under Item 5 announcing the acquisition of
book publishing assets.
On November 13, 2000 the Company filed a current
report on Form 8-K with the Securities and Exchange
Commission reporting under Items 1 and 5 that on
November 10, 2000 a change in control had occurred in
relation to the asset purchase by the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: November 14, 2000
Great Basin Water Company
/s/ Thomas R. Warren
Thomas R. Warren
Vice President of Finance and Chief Financial Officer
(Principal Financial and Accounting Officer)
11
