UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended: December 31, 1999
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[ ] 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: 000-26139
NEVADA 91-1937382
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3633 Camino Del Rio South, #107., San Diego, CA 92108
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(Address of principal executive offices) Zip Code)
(619) 584-3100
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(Registrant's telephone number, including area code)
Securities Registrant pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.05 Par Value
-----------------------------
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 12 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 [ ]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is contained in this form, and no disclosure will be
contained to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[X]
The issuer's revenues for the year ended December 31, 1999 were $0.00
As of April 10, 2000, there were 11,268,507 shares of the Registrant's
Common Stock outstanding and the aggregate market value of such shares held by
non-affiliates of the Registrant (based on the closing sale price of such shares
on the OTC Bulletin Board on April 10, 2000) was approximately $265,876.
Documents Incorporated by Reference: See Exhibit list.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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MLM WORLD NEWS TODAY, INC.
FORM 10-KSB
For The Fiscal Year Ended December 31, 1999
INDEX
PART I
Page
----
Item 1. Description of Business..................................... 3
Item 2. Description of Properties................................... 14
Item 3. Legal Proceedings.......................................... 15
Item 4. Submission of Matters to a Vote of Security Holders......... 15
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.... 15
Item 6. Management Discussion and Analysis or Plan of Operation..... 16
Item 7. Financial Statements........................................ 21
Item 8. Changes in and Disagreements with Accountants on Accounting
And Financial Disclosures................................... 34
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act. 34
Item 10. Executive Compensation...................................... 36
Item 11. Security Ownership of Certain Beneficial Owners and
Management................................................. 37
Item 12. Certain Relationships and Related Transactions.............. 38
Item 13. Exhibits and Reports on Form 8-K............................ 38
Signatures .......................................................... 39
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This Annual Report on Form 10-KSB and the documents incorporated herein by
reference contain forward-looking statements that have been made pursuant to the
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations, estimates and
projections about MLM World News Today, Inc., and its management's beliefs, and
assumptions made by management. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates," variations of such words
and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict; therefore, actual results and outcomes may differ materially from what
is expressed or forecasted in any such forward-looking statements. Such risks
and uncertainties include those set forth herein under "Risk Factors" on pages
11 through 14 as well as those noted in the documents incorporated herein by
reference. Unless required by law MLM World News Today, Inc., undertakes no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.
PART I
------
Item 1. Description of Business
A. Business Development and Summary
MLM WORLD NEWS TODAY, INC., a Nevada Corporation, hereinafter referred to
as the "Company," was originally incorporated under the name Global-Link
Enterprises, Inc., in the state of Nevada on November 20, 1998.
The Company is a developmental stage company with a business objective to
provide original content focused on the Network Marketing Industry. The Company
has begun to design a Web site called "MLM World News Today" (the "Site") at
"www.mlmworldnewstoday.com" that provides editorial content, news, headlines,
and customizable data related to the Network Marketing industry. The Company
believes that its primary revenue source will be generated from several selected
on line products and services along with the sale of advertising, through
Network Marketing organizations. In addition, the Company plans on branding its
own private label Internet service via its current Internet Service Provider
(ISP) and offer the following additional Internet-related products and services:
(i) web site design and development services; (ii) web site hosting; (iii)
Domain name registration; [iv[ and several additional related services as they
become available. The Company believes that these services offer an opportunity
for businesses to increase the effectiveness of their marketing campaigns. The
Company believes this because in the opinion of management of the Company, the
cost of marketing over the Internet is dramatically lower than those of
traditional marketing techniques.
The Company plans to initially focus its efforts, however, on the
development of an online newspaper focusing on Network Marketing content on its
Site. In particular, Company's priorities for its first twelve months of
operations will be as follows: provide compelling Network Marketing content,
develop marketing awareness and brand recognition, leverage its Network
Marketing content to enhance sales of Company and outside opportunities, create
value for advertisers, leverage the Company's brand, infrastructure, and
existing relationships, enhance and add products and services, begin to generate
and increase advertising revenues, pursue acquisitions and strategic alliances
if available and strategic, and maintain and improve the Company's technological
focus and expertise.
The Company believes that its Internet services will solidify the scope of
Company's services, and that the central point of convergence for its product
and service offerings will be www.mlmworldnewstoday.com. In short, the Company
plans on utilizing its Internet services and related capability to provide
real-time news, editorial content, headlines and customized programming related
to the Network Marketing industry via the World Wide Web.
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B. Business of Issuer
Principal Products and Services and Principal Markets
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The Company intends to establish an Internet newspaper on its Web site,
www.mlmworldnewstoday.com, with Network Marketing based content. The Site seeks
to be an editorial site focused exclusively on providing coverage of breaking
news and scheduled events, in-depth analyses and original reporting related to
Network Marketing programs. The Company's site will be designed to provide broad
coverage of the industry and to appeal to Network Marketing program
professionals. The Site will compete with weekly trade publications by offering
more current news and information and by integrating text, audio and video to
deliver high quality content. The Company plans to provide users with access to
a collection of products and services to generate content and attract
subscribers to the Site.
Site Content and Strategy
-------------------------
The Company will seek to provide current, comprehensive and entertaining
editorial content through its Internet site, "MLM World News Today,"
("www.mlmworldnewstoday.com") and to provide a quality "Free" online service,
with the objective of building a loyal audience of repeat Internet users.
Additionally, the Company will seek to capitalize on available Network Marketing
content to create a compelling Internet resource and to enhance the sales
opportunities of the Company along with outside opportunities.
The Company believes that its future success depends largely upon its
ability to deliver original and compelling program content and core services in
order to attract and retain users. There can be no assurance that the Company's
content and services will be attractive to a sufficient number of Internet users
to generate advertising revenues. There also can be no assurance that the
Company will be able to anticipate, monitor and successfully respond to rapidly
changing consumer tastes and preferences so as to attract a sufficient number of
users to its site. Internet users can freely navigate and instantly switch among
a large number of Internet sites, many of which offer competing content and
services, making it difficult for the Company to distinguish its content and
services and to attract users. In addition, many other Internet sites offer very
specific, highly targeted content that could have greater appeal than the
Company's site to particular subsets of the Company's target audience. If the
Company is unable to develop Internet content and services that allow it to
attract, retain and expand a loyal user base possessing demographic
characteristics attractive to potential advertisers, the Company will be unable
to generate advertising revenues, and its business, financial condition and
operating results will be materially adversely affected.
Free Services
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The Company intends to provide a range of free services to its members
through which they are able to personalize their online experience. By providing
free services, the Company plans to create an online resource for those Web
users interested in Network Marketing programs. The Company intends to provide
excellent customer service and high-quality site performance. The Company
believes that the provision of free services is critical to maintaining
membership growth.
Partnerships
------------
The Company intends to establish relationships and strategic alliances with
partners who pay an additional fixed monthly fee in order to receive prominent
placement on the Company's Web site. Management plans to offer partnership
agreements which will typically run for a period of six months to three years
and will be renewable at the option of the partner. However, due to the
development stage nature of its operations, it is important to note that the
Company currently has no partnership agreements in place.
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Member Subscriptions
--------------------
The Company intends to offer additional Internet services, over and above
the services available without charge, through certain membership packages.
These packages will provide services such as access to highly detailed research
and other such content and the ability for members to publish and post documents
on the Site. Management of the Company intends to make member subscriptions
available for a fee priced according to the level of service desired.
Customer Service and Support
----------------------------
The Company believes that the strength of its customer service and
technical support operations will be critical to its success in attracting
members, maintaining its membership base, increasing membership and encouraging
repeat usage. The Company intends to establish a team of customer service and
technical support professionals who will process inquiries and monitor the
status of membership accounts and advertisement packages. Members will be able
to access customer service by e-mail and customers can access a toll-free
telephone number. The Company intends to enhance and automate the e-mail
response portions of its customer service and technical support operations in
the future.
Internet Services
-----------------
In addition, the Company plans on branding its own private label Internet
service via its current Internet Service Provider (ISP) and offer the following
Internet-related products and services: (i) web site design and development
services; (ii) web site hosting; and (iii) Domain Name registration: (iv) other
e-commerce products and services. The Company believes that these Internet
services offer an opportunity for businesses to increase the effectiveness of
their marketing campaigns. The Company believes this because in the opinion of
management of the Company, the cost of marketing over the Internet is
dramatically lower than those of traditional marketing techniques. Company
management believes that through its Internet service offerings, the Company is
positioned to provide a full range of Internet services for its clients, to
include providing a vehicle via the World Wide Web (i.e., web site development
and hosting) related to the marketing campaigns of its clients.
Additionally, the Company believes that its Internet services will solidify
the scope of Company's services, and that the central point of convergence for
its product and service offerings will be www.mlmworldnewstoday.com. In short,
the Company plans on utilizing its Internet services and related capability to
provide real-time news, editorial content, headlines and customized programming
related to the MLM industry via the World Wide Web.
Distribution Methods of the Products or Services
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Advertising Sale and Design
---------------------------
The Company will also seek to distinguish itself from its competition
through the creation of unique advertising and sponsorship opportunities that
are designed to build brand loyalty for its corporate Network Marketing sponsors
by integrating their advertising messages into the Company's content. Management
believes that through close relationships with the end user, the Company will
have the ability to deliver advertising to a specific industry segment within
the Site's themed content areas, allowing advertisers to single out and
effectively deliver their messages to their respective target audiences. For
example, a company can target an advertisement solely to patrons looking for a
long-distance sales Network Marketing opportunity. The Company believes that
such sophisticated targeting is a critical element for capturing Network
Marketing advertising budgets for the Internet. Additionally, the Company
intends to expand the amount and type of demographic information it collects
from its members, which will allow it to offer more specific data to its
advertising clients.
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While the Company's competition generally provides banner advertising as
its primary delivery system, the Company plans to offer an assortment of
advertising options to its clients, allowing them to take advantage of the
Company's unique relationship with its users and rapidly growing membership
base. In addition to direct response indicators like "click-throughs," the
Company plans to specialize in providing innovative and aggressive selling
services and a number of "branding" and "beyond the banner" sponsorship packages
for its advertisers at higher premiums, such as: banner advertising,
sweepstakes, button advertising, content development, contextual links within
relevant content, affinity packages for advertising partners, pop up and log out
interstitials, opt-in direct marketing/lead generation, e-mail sponsorship
programs, celebrity event sponsorships, and pre- and post-campaign market
research.
The Company believes that its prospective Internet advertising customers
have only limited experience with the Internet as an advertising medium and
neither such customers nor their advertising agencies have devoted a significant
portion of their advertising budgets to Internet-based advertising in the past.
In order for the Company to generate advertising revenues, advertisers and
advertising agencies must direct a significant portion of their Network
Marketing advertising budgets to the Internet and, specifically, to the
Company's Internet site. There can be no assurance that advertisers or
advertising agencies will be persuaded to allocate or continue to allocate
significant portions of their budgets to Internet-based advertising, or, if so
persuaded, that they will find Internet-based advertising to be more effective
than advertising in traditional media such as print, broadcast ad cable
television, or in any event decide to advertise or continue to advertise on the
Company's Internet site. If Internet-based advertising is not widely accepted by
advertisers and advertising agencies, the Company's business, financial
condition and operating results will be materially adversely affected.
Status of Any Announced New Product or Service
----------------------------------------------
The Company has not announced any recent additions to the existing products
and services it plans to offer through its Internet Web site,
www.mlmworldnewstoday.com. To date, however, the Company has established its
offices in San Diego, California and has begun to execute its business plan.
Additionally, the Company has begun work on its "MLM World News Today" Web site
and created the foundation for its Internet service offerings. This work
includes working with a Web site builder to create the Company's site and aid in
the site's e-commerce strategy as well as begin to hire the technical staff
needed to execute the Company's web site development, hosting, and other
Internet service offerings. The Company has also began interviewing journalists,
writers and authors - most of which the Company believes will provide editorial
and other content for the Company on a freelance basis.
Industry Background
-------------------
The Company believes that a significant opportunity exists to provide
Internet content related to Network Marketing programs. Growing use of the
Internet and the World Wide Web (the "Web") has created opportunities for
content providers and their advertising customers to reach and interact with
millions of Internet users. This is due to its complementary and, in several
respects, superior reach in terms of its ability to provide targeted content to
consumers and to generate cost-effective results for certain advertisers to
traditional television and print media.
Growth of the Internet
----------------------
The Internet has emerged as a global medium, enabling millions of people
worldwide to share information, communicate and conduct business electronically.
IDC estimates that the number of Web users will grow from approximately 69
million worldwide in 1997 to approximately 320 million worldwide by the end of
2000. This growth is expected to be driven by the large and growing number of
PCs installed in homes and offices, the decreasing cost of PCs, easier, faster
and cheaper access to the Internet, improvements in network infrastructure, the
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proliferation of Internet content and the increasing familiarity with the
acceptance of the Internet by businesses and consumers. The Internet possesses a
number of unique characteristics that differentiates it from traditional media:
a lack of geographic or temporal limitations; real-time access to dynamic and
interactive content; and instantaneous communication with a single individual or
with groups of individuals. As a result of these characteristics, Web usage is
expected to continue to grow rapidly. The proliferation of users, combined with
the Web's reach and lower cost of marketing, has created a powerful direct sales
and marketing channel.
E-Commerce and Advertising
--------------------------
The Internet enables advertisers to target advertising campaigns utilizing
sophisticated databases of information on the users of various sites and to
directly generate revenues from these users through online transactions. As a
result, the Internet has become a compelling means to advertise and market
products and services. The Company believes that the market for content relating
to Network Marketing content is growing rapidly and is emerging as an area
well-suited to an Internet programming approach. According to Jupiter
Communications, the market for U.S. advertising on the Internet was
approximately $560 million in 1997, up from $260 million in 1996, and is
expected to grow to over $5 billion by the year 2000.
The advertising model that is emerging on the Internet is similar to the
model prevalent in print and television media and involves the payment by
advertisers to Internet content and service providers of advertising fees, based
primarily on the demographics of the audience and the number of impressions
delivered. The Company believes that the opportunities for Internet content
providers to generate advertising revenues are growing due to increasing
Internet usage by businesses and consumers and the growing recognition by
advertisers of the potential advantages of Internet-based advertising over
advertising in traditional media.
Marketing Opportunities on the Internet
---------------------------------------
The Internet allows marketers to collect meaningful demographic information
and feedback from consumers, and to rapidly respond to this information with new
messages. This offers a significant new opportunity for businesses to increase
the effectiveness of their marketing campaigns. The effectiveness of these
campaigns is dependent upon the quality of consumer data used to develop and
place consumer advertisements. The costs of marketing over the Internet are
dramatically lower than those of traditional marketing techniques. As a result,
Internet-based marketing campaigns can be profitable at response rates that are
a fraction of the rates for traditional campaigns.
Raw Materials and Suppliers
---------------------------
The Company is an e-commerce, on-line Network Marketing content provider,
web site developer and host, and a private label Internet Service Provider
(ISP), and thus does not use raw materials or have any principal suppliers.
Customers
---------
The Company believes that the vast majority of its customers will be
Network Marketing opportunity providers, users of those Network Marketing
products and services, and small to medium-sized businesses looking to utilize
the Company's Internet services to create a more cost-effective, on-line
marketing strategy for their companies. The Company plans to reach these
customers via network marketing, direct mail, telemarketing, seminars, trade
shows, the Internet, word-of-mouth and the referral process. As of April 10,
1999, no sales revenues have been generated by the Company. In addition, the
Company does not anticipate that its revenues will be dependent on any one or
even a few major customers.
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Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements,
or Labor Contracts
---------------------------------------------------------------------------
The Company does not currently own or have any patents, trademarks,
licenses, franchises or concessions or royalty agreements. However, the Company
believes that its success and ability to compete will be dependent, in part, on
the protection of its original content for the Internet and on the goodwill
associated with potential trademarks, trade names, service marks and other
proprietary rights. The Company plans to rely on copyright laws to protect the
original content that it and its users develop for the Internet site, including
editorial features and the various databases of information that are maintained
by the Company and made available through its Internet site. In addition, the
Company intends to rely on federal trademark laws to provide additional
protection for the appearance of its Internet site. A substantial amount of
uncertainty exists concerning the application of copyright and trademark laws to
the Internet, and there can be no assurance that existing laws will provide
adequate protection for the Company's original content or its Internet domain
name. In addition, because copyright laws do not prohibit independent
development of similar content, there can be no assurance that copyright laws
will provide any competitive advantage to the Company.
The Company intends to rely on trade secret and copyright laws to protect
the proprietary technologies that it plans to develop to manage and improve its
Internet site and advertising services, but there can be no assurance that such
laws will provide sufficient protection to the Company, that other will not
develop technologies that are similar of superior to the Company's, or that
third parties will not copy or otherwise obtain and use the Company's
technologies without authorization. The Company intends to file patent
application with respect to certain of its software systems, methods and related
technologies, but there can be no assurance that such applications will be
granted or that any future patents will not be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide a competitive
advantage for the Company. In addition, the Company plans to rely on certain
technology licensed from third parties, and may be required to license
additional technology in the future, for use in managing its Internet site and
providing related services to users and advertising customers. There can be no
assurance that these third party technology licenses will be available or will
continue to be available to the Company on acceptable terms or at all. The
inability to enter into and maintain any of these technology licenses could have
a material adverse effect on the Company's business, financial condition or
operating results.
Policing unauthorized use of the Company's proprietary technology and other
intellectual property rights could entail significant expense and could be
difficult or impossible, particularly given the global nature of the Internet
and the fact that the laws of other countries may afford the Company little or
no effective protection of its intellectual property. In addition, there can be
no assurance that third parties will not bring claims of copyright or trademark
infringement against the Company or claim that the Company's use of certain
technologies violates a patent. The Company anticipates an increase in patent
infringement claims involving Internet-related technologies as the number of
products and competitors in this market grows and as related patents are issued.
Further, there can be no assurance that third parties will not claim that the
Company has misappropriated their creative ideas or formats or otherwise
infringed upon their proprietary rights in connection with its Internet content.
Any claims of infringement, with or without merit, could be time consuming to
defend, result in costly litigation, divert management attention, require the
Company to enter into costly royalty or licensing arrangements to prevent the
Company from using important technologies or methods, any of which could have a
material adverse effect on the Company's business, financial condition or
operating results.
Regulation
-----------
The Company is subject to certain federal and state laws and regulations
that are applicable to certain activities on the Internet. Legislative and
regulatory proposals under consideration by federal, state, local and foreign
governmental organizations concern various aspects of the Internet, including,
but not limited to, online content, user privacy, taxation, access charges,
liability for third-party activities and jurisdiction. Such government
regulation may place the Company's activities under increased regulation,
increase the Company's cost of doing business, decrease the growth in Internet
use and thereby decrease the demand for the Company's services or otherwise have
a material adverse effect on the Company's business, results of operations and
financial condition.
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Internet Privacy
-----------------
The United States government currently has limited authority over the
collection and dissemination of personal data collected online. The Federal
Trade Commission Act (the "Act") prohibits unfair and deceptive practices in and
affecting commerce. The Act authorizes the Federal Trade Commission (the "FTC")
to seek injunctive and other equitable relief, including redress, for violations
of the Act, and provides a basis for government enforcement of certain fair
information practices.
Any new legislation or regulation enacted by federal, state or foreign
governments regulating online privacy or the application or interpretation of
existing laws and regulations could affect the way in which the Company is
allowed to conduct its business, especially those aspects that contemplate the
collection or use of members' personal information.
Internet Taxation
-----------------
A number of proposals have been made at the federal, state and local level,
and by certain foreign governments, that would impose additional taxes on the
sale of goods and services over the Internet, and certain states have taken
measures to tax Internet-related activities.
There can be no assurance that any such legislation will be adopted by
Congress or that new taxes will not be imposed upon e-commerce after any
moratorium adopted by Congress expires or that current attempts at taxing or
regulating commerce over the Internet would not substantially impair the growth
of Internet commerce and as a result adversely affect the Company's opportunity
to derive financial benefit from such activities.
Liability for Information Retrieved from or Transmitted over the Internet
-------------------------------------------------------------------------
Materials may be downloaded and publicly distributed over the Internet by
the Internet services operated or facilitated by the Company or by the Internet
access providers with which the Company has relationships. These third-party
activities could result in potential claims against the Company for defamation,
negligence, copyright or trademark infringement or other claims based on the
nature and content of such materials. The CDA provides that no provider or user
of an interactive computer service shall be treated as the publisher or speaker
of any information provided by another information content provider.
Future legislation or regulations or court decisions may hold the Company
liable for listings accessible through its Web site, for content and materials
posted by members on their respective personal Web pages, for hyperlinks from or
to the personal Web pages of members, or through content and materials posted in
the Company's chat rooms or bulletin boards. Such liability might arise from
claims alleging that, by directly or indirectly providing hyperlink text links
to Web sites operated by third parties or by providing hosting services for
members' sites, the Company is liable for copyright or trademark infringement or
other wrongful actions by such third parties through such Web sites. If any
third-party material on the Company's Web site contains informational errors,
the Company may be sued for losses incurred in reliance on such information.
While the Company attempts to reduce its exposure to such potential liability
through, among other things, provisions in member agreements, user policies and
disclaimers, the enforceability and effectiveness of such measures are
uncertain.
Domain Names
------------
Domain names are the user's Internet "addresses." Domain names have been
the subject of significant trademark litigation in the United States. The
Company has register the domain name "mlmworldnewstoday.com" "mlmwnt.com"
"mlmall.com" "mlmail.com" along with several related domains. There can be no
assurance that third parties will not bring claims for infringement against the
Company for the use of this trademark. Moreover, because domain names derive
value from the individual's ability to remember such names, there can be no
assurance that the Company's domain names will not lose their value if, for
example, users begin to rely on mechanisms other than domain names to access
online resources.
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The current system for registering, allocating and managing domain names
has been the subject of litigation and of proposed regulatory reform. There can
be no assurance that the Company's domain names will not lose their value, or
that the Company will not have to obtain entirely new domain names in addition
to or in lieu of its current domain names, if such litigation or reform efforts
result in a restructuring in the current system.
Jurisdiction
-------------
Due to the global reach of the Internet, it is possible that, although
transmissions by the Company over the Internet originate primarily in the State
of California, the governments of other states and foreign countries might
attempt to regulate Internet activity and the Company's transmissions or take
action against the Company for violations of their laws. There can be no
assurance that violations of such laws will not be alleged or charged by state
or foreign governments and that such laws will not be modified, or new laws
enacted, in the future. Any of the foregoing could have a material adverse
effect on the Company's business, results of operations and financial condition.
Effect of Existing or Probable Government Regulations
-----------------------------------------------------
Future legislation or regulations or court decisions may hold the Company
liable for listings accessible through its Web site, for content and materials
posted by members on their respective personal Web pages, for hyperlinks from or
to the personal Web pages of members, or through content and materials posted in
the Company's chat rooms or bulletin boards. Such liability might arise from
claims alleging that, by directly or indirectly providing hyperlink text links
to Web sites operated by third parties or by providing hosting services for
members' sites, the Company is liable for copyright or trademark infringement or
other wrongful actions by such third parties through such Web sites. If any
third-party material on the Company's Web site contains informational errors,
the Company may be sued for losses incurred in reliance on such information.
While the Company attempts to reduce its exposure to such potential liability
through, among other things, provisions in member agreements, user policies and
disclaimers, the enforceability and effectiveness of such measures are
uncertain. See Part I-Item 1-B (8) above.
Research and Development Activities
-----------------------------------
At this time, the company is not engaged in the research and/or development
of any product or service. Management of the company is of the belief that
compelling subscriber services can be deployed at the web site through the
utilization of private branding, co-branding and affiliate partnership
agreements. The company plans to rely on these strategic partnerships to provide
its subscribers with compelling services
Impact of Environmental Laws
----------------------------
The Company is not aware of any federal, state or local environmental laws
which would effect its operations.
Employees
---------
The Company presently has two (2) full time employees and one (1) part time
employee. The Company's employees are currently not represented by a collective
bargaining agreement, and the Company believes that its relations with its
employees are good.
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Risks Factors
- -------------
The Company's present and proposed business operations will be highly
speculative and subject to the same types of risks inherent in any new or
unproven venture, as well as risk factors particular to the industries in which
it will operate, and will include, among other things, those types of risk
factors outlined below.
In any business venture, there are substantial risks specific to the
particular enterprise which cannot be ascertained until a potential acquisition,
reorganization or merger candidate has been identified; however, at a minimum,
the Company's present and proposed business operations will be highly
speculative and subject to the same types of risks inherent in any new or
unproven venture, and will include those types of risk factors outlined below.
Risks of "Penny Stock."
------------------------
The Company's common stock may, at some future time, be deemed to be "penny
stock" as that term is defined in Rule 3a51-1 of the Exchange Act of 1934. Penny
stocks are stocks (i) with a price of less than five dollars per share; (ii)
that are not traded on a "recognized" national exchange; (iii) whose prices are
not quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks must
still meet requirement (i) above); or (iv) of an issuer with net tangible assets
less than US$2,000,000 (if the issuer has been in continuous operation for at
least three years) or US$5,000,000 (if in continuous operation for less than
three years), or with average annual revenues of less than US$6,000,000 for the
last three years. A principal exclusion from the definition of a penny stock is
an equity security that has a price of five dollars ($5.00) of more, excluding
any broker or dealer commissions, markups or markdowns. As of the date of this
Registration Statement the Company's common stock has a price in excess of $5.00
and would not be deemed a penny stock.
If the Company's Common Stock were deemed a penny stock, section 15(g) and
Rule 3a51-1 of the Exchange Act of 1934 would require broker-dealers dealing in
the Company's Common Stock to provide potential investors with a document
disclosing the risks of penny stocks and to obtain a manually signed and dated
written receipt of the document before effecting any transaction in a penny
stock for the investor's account. Potential investors in the Company's common
stock are urged to obtain and read such disclosure carefully before purchasing
any shares that are deemed to be "penny stock."
Moreover, Rule 15g-9 of the Exchange Act of 1934 Commission requires
broker-dealers in penny stocks to approve the account of any investor for
transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker-dealer to (i) obtain from the investor
information concerning his or her financial situation, investment experience and
investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the
investor has sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (iii) provide the investor
with a written statement setting forth the basis on which the broker-dealer made
the determination in (ii) above; and (iv) receive a signed and dated copy of
such statement from the investor, confirming that it accurately reflects the
investor's financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for investors in
the Company's common stock to resell their shares to third parties or to
otherwise dispose of them.
Limited and Volatile Market for Common Stock.
---------------------------------------------
The Company's common stock is quoted on the OTC Bulletin Board of the
National Association of Securities Dealers, Inc. (the "NASD") under the symbol
"MLMS", however, there is a limited and thinly traded market for the common
stock and there can be no assurance that an active market will ever develop or
be maintained. Any market price for shares of common stock of the Company is
likely to be very volatile, and numerous factors beyond the control of the
Company may have a significant effect. In addition, the stock markets generally
have experienced, and continue to experience, extreme price and volume
fluctuations which have affected the market price of many small capital
companies and which have often been unrelated to the operating performance of
these companies. These broad market fluctuations, as well as general economic
and political conditions, may adversely affect the market price of the Company's
common stock in any market that may develop.
11
<PAGE>
The performance of the Company's server and networking hardware and
software infrastructure is critical to the Company's business and reputation and
its ability to attract Web users, advertisers, new members and commerce partners
to the Company's Web site. Any system failure that causes an interruption in
service or a decrease in responsiveness of the Company's Web site could result
in less traffic on the Company's Web site and, if sustained or repeated, could
impair the Company's reputation and the attractiveness of its brand. Any
disruption in Internet access or any failure of the Company's server and
networking systems to handle high volumes of traffic would have a material
adverse effect on the Company's business, results of operations and financial
condition. The Company expects to experience system failures related to capacity
constraints. An increase in the use of the Company's Web site could strain the
capacity of its systems, which could lead to slower response time or system
failures. System failures or slowdowns adversely affect the speed and
responsiveness of the Company's Web site and would diminish the experience for
the Company's members and visitors and reduce the number of impressions received
by advertisers, and, thus, could reduce the Company's commerce and advertising
revenue. The ability of the Company to provide effective Internet connections or
of its systems to manage substantially larger numbers of customers at higher
transmission speed is as yet unknown, and, as a result, the Company faces risks
related to its ability to scale up to its expected customer levels while
maintaining superior performance. Despite the implementation of network security
measures by the Company, its servers may be vulnerable to computer viruses,
break-ins, and similar disruptions from unauthorized tampering. The Company
expects to experience attempts by experienced programmers or "hackers" to
penetrate the Company's network security, some of which may succeed. The
occurrence of any of these events could result in interruptions, delays or
cessations in service, which could have a material adverse effect on the
Company's business, results of operations and financial condition. In addition,
the Company's reputation and its brand could be materially and adversely
affected.
Rapid Changes in Technology and Industry Standards
--------------------------------------------------
To be competitive, the Company must introduce, enhance and improve the
responsiveness, functionality and features of its site and introduce and develop
features to meet customer needs. Introducing new technology into the Company's
systems involves numerous technical challenges and substantial amounts of
personnel resources, and could often times take many months to complete. There
can be no assurance that the Company will be successful at integrating such
technology into its Web site on a timely basis or without degrading the
responsiveness and speed of its Web site or that, once integrated, such
technology will function as expected. In addition, the Internet is characterized
by rapid technological change, changes in user and customer requirements and
preferences, frequent new product and service introductions and the emergence of
new industry standards and practices that could render the Company's Web site,
technology and systems obsolete. The Company's success will depend, in part, on
its ability to license leading technologies useful in its business, enhance its
existing services, develop new services and technology that address the needs of
its customers, and respond to technological advances and emerging industry
standards and practices on a cost-effective and timely basis. If the Company
were unable to use new technologies effectively or adapt its Web site,
proprietary technology and transaction-processing systems to customer
requirements or emerging industry standards, it would be materially adversely
affected.
Competition
-----------
The market for members, users and Internet advertising is new and rapidly
evolving, and competition for members, users and advertisers is intense and is
expected to increase significantly. Barriers to entry are relatively
insubstantial and the Company may face competitive pressures from many
additional companies both in the United States and abroad.
12
<PAGE>
The Company believes that the principal competitive factors for companies
seeking to create Network Marketing-focused Web sites on the Internet are
critical mass, functionality of the Web site, brand recognition, member affinity
and loyalty, broad demographic focus and open access for visitors. In the
future, Internet Web sites may be developed or acquired by companies currently
operating Web directories, search engines, shareware archives and content sites,
and by commercial online service providers ("OSPs"), Internet service providers
("ISPs") and other entities, certain of which may have more resources than the
Company. The Company competes for users and advertisers with other content
providers and with thousands of Web sites operated by individuals, the
government and educational institutions. Such providers and sites include
America Online, Inc. ("AOL"), Angelfire Communications ("Angelfire"), CNET, Inc.
("CNET"), CNN/Time Warner, Inc. "CNN/Time Warner"), Excite, Inc. ("Excite"),
Hotmail Corporation ("Hotmail"), Infoseek Corporation ("Infoseek"), Lycos, Inc.
("Lycos"), Microsoft Corporation ("Microsoft"), Netscape Communications
Corporation ("Netscape"), Switchboard Inc. ("Switchboard"), Xoom Inc. ("Xoom")
and Yahoo! Inc. ("Yahoo!"). In addition, the Company could face competition in
the future from traditional media companies, such as newspaper, magazine,
television and radio companies, a number of which, including The Walt Disney
Company ("Disney"), CBS Corporation ("CBS") and The National Broadcasting
Company ("NBC"), have recently made significant acquisitions of or investments
in Internet companies.
The Company believes that the principal competitive factors in attracting
advertisers include the amount of traffic on its Web site, brand recognition,
customer service, the demographics of the Company's members and users, the
Company's ability to offer targeted audiences and the overall cost effectiveness
of the advertising medium offered by the Company. The Company believes that the
number of Internet companies relying on Internet-based advertising revenue, as
well as the number of advertisers on the Internet and the number of users, will
increase substantially in the future. Accordingly, the Company will likely face
increased competition, resulting in increased pricing pressures on its
advertising rates, which could have a material adverse effect on the Company.
Many of the Company's existing and potential competitors, including
companies operating Web directories and search engines, and traditional media
companies, have longer operating histories in the Internet market, greater name
recognition, larger customer bases and significantly greater financial,
technical and marketing resources than the Company. Such competitors may be able
to undertake more extensive marketing campaigns for their brands and services,
adopt more aggressive advertising pricing policies and make more attractive
offers to potential employees, distribution partners, e-commerce companies,
advertisers and third party content providers. Furthermore, the Company's
existing and potential competitors may develop Web sites that are equal or
superior in quality to, or that achieve greater market acceptance than, the
Company's site. There can be no assurance that the Company will be able to
compete successfully against its current or future competitors or that
competition will not have a material adverse effect on the Company's business,
results of operational and financial condition.
Dependence on Key Employees.
----------------------------
The Company is dependent on the ability of its President and Chief
Executive Officer, James C. Frans, a well as its CFO and Treasurer, Paul A.
Harbison, to contribute essential technical and management experience. In the
event of future growth in administration, marketing, and customer support
functions, the Company may have to increase the depth and experience of its
management team by adding new members. The Company's success will depend to a
large degree on the active participation of its key officers and employees. Loss
of services of any of the current officers and directors could have a
significant adverse effect on the operations and prospects of the Company. There
can be no assurance that it will be able to employ qualified persons on
acceptable terms to replace officers that become unavailable.
Future Capital Requirements. Uncertainty of Future Funding.
----------------------------------------------------------
The Company's plan of operation calls for additional capital to facilitate
growth and support its long term development and marketing programs. It is
likely that the Company would need to seek additional financing through
subsequent future public or private sales of its securities. The Company may
also seek funding for the development and marketing of its products through
strategic partnerships and other arrangements with investment partners. There
13
<PAGE>
can be no assurance, however, that such collaborative arrangements or additional
funds will be available when needed, or on terms acceptable to the Company, if
at all. Any such additional financing may result in significant dilution to
existing stockholders. If adequate funds are not available, the Company may be
required to curtail one or more of its future programs.
Intense Competition and Rapid Technological Change.
---------------------------------------------------
The industry in which the Company operated is highly competitive, rapidly
growing and the Company will have to compete with a multitude of similar
companies, possessing substantially greater financial, personnel, technological
and marketing resources.
Year 2000 Issues.
-----------------
The Year 2000 presents concerns for business and consumer computing. Aside
from the well-known problems with the use of certain 2-digit date formats as the
year changes from 1999 to 2000, the Year 2000 is a special case leap year, and
dates such as 9/9/99 were used by certain organizations for special functions.
The problem exists for many kinds of software and hardware, including
mainframes, mini-computers, PCs, and embedded systems. The consequences of the
Year 2000 issue may include systems failures and business process interruption.
Even though none of the Company's products use dates, and therefore there
are no Year 2000 issues over which the Company has direct control, the Company
is continuing to test its products and gather and produce information about the
Company impacted by the Year 2000 transition.
The Year 2000 issue also affects the Company's internal systems, such as
billing and word processing. The Company is assessing the readiness of its
systems for handling the Year 2000, and has started the remediation and
certification process. Although assessment, testing, and remediation is still
underway, management currently believes that all material systems will be
compliant by the Year 2000 and that the cost to address the issues is not
material. Nevertheless, the Company will be creating contingency plans for
critical processes that rely on internal systems.
Given that the Company's products operate on certain hardware platforms and
within certain software operating systems and environments, the Company must
rely upon the efforts of the hardware and software vendors and manufacturers to
be in the vanguard with respect to OS and Platform issues relating to the Year
2000 compliance. The Company is undertaking steps to identify and assess whether
hardware and software vendors and manufacturers have brought their products into
Year 2000 compliance, or if any of its customers, suppliers or service providers
will be so affected. The Company will with its key vendors, distributors, and
direct resellers to avoid any business interruptions in 2000. Failure of the
Company's software resulting from a hardware or software vendor to be Year 2000
compliant, or that of its customers, suppliers or service providers could have a
material adverse impact on the Company's business, financial condition and
result of operations.
ITEM 2. DESCRIPTION OF PROPERTY
Description of Property
-----------------------
The Company's corporate headquarters are located at 3633 Camino Del Rio
South - Suite 107, San Diego, California 92108. These facilities consist of
approximately 2,500 square feet of standard office space. The Company has no
additional facilities, and these facilities are provided by an officer and
director of the Company at no cost to the Company.
Lease Agreement - Warehouse
---------------------------
On May 3, 1999 the Company entered into a five-year lease agreement with
Octavio and Leticia Sanchez for a 10,000 square foot warehouse in Chula Vista,
California. A copy of the Lease Agreement between the Company and Octavio and
Leticia Sanchez is attached hereto and incorporated herein by this reference.
14
<PAGE>
Sublease Agreement - Warehouse
------------------------------
On May 3, 1999 the Company entered into a five-year sublease agreement with
Direct Technologies, Inc., d/b/a California Pacific Trading Co, Inc. for a
10,000 square foot warehouse in Chula Vista, California.
Sublease Agreement - Warehouse
------------------------------
On August 1, 1999 the sublease agreement with Direct Technologies, Inc.
d/b/a California Trading Pacific Co., Inc., dated May 3, 1999, was terminated.
Lease Agreement - Retail Space
------------------------------
On May 28, 1999 the Company entered into a ten-year lease with R.V.S.
Retail, LP, a California Limited Partnership for a 1080 sq. ft. retail space. .
Sublease Agreement - Retail Space
---------------------------------
On May 28, 1999 the Company entered into a ten-year sublease with Gourmet
Gardens Soup and Salad Bars, Inc. to sublease a 1080 sq. ft. retail space.
Sublease Agreement - Warehouse
------------------------------
On August 1, 1999 the Company entered into a four-year ten-month sublease
agreement with FarmPac Trading Co., Inc. for the 10,000 square foot warehouse in
Chula Vista, California.
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently involved in any legal proceedings nor does it
have knowledge of any threatened litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the Company's fourth quarter of the fiscal
year covered by this report to a vote of the security holders, through the
solicitation of proxies, or otherwise.
PART II.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
Market Information.
-------------------
The Company's Common Stock is listed and traded on the OTC Bulletin Board
under the symbol "MLMS". The following table represents the high and low closing
prices for the Company's Common Stock for each quarter of the fiscal year ended
December 31, 1999.
Fiscal 1999 High Low
-----------------------------------------
Fourth Quarter* $0.81 $0.125
*Company did not begin actively trading until November 10, 1999.
Holders.
-------
As of April 10, 1999, the Company had 57 stockholders of record.
15
<PAGE>
Dividends.
---------
The Company has not paid any dividends to date. In addition, it does not
anticipate paying dividends in the immediate foreseeable future. The board of
directors of the Company will review its dividend policy from time to time to
determine the desirability and feasibility of paying dividends after giving
consideration to the Company's earnings, financial condition, capital
requirements and such other factors as the board may deem relevant.
Recent Sales of Unregistered Securities
---------------------------------------
During 1999, due to the Company's limited cash reserves and at the request
of the Company, Wenthur & Chachas agreed to accept shares of the restricted
Common Stock of the Company for certain legal services provided to the Company.
Accordingly, the Company issued 11,097 restricted shares of its Common Stock to
Wenthur & Chachas as follows:
10 /20/99 619 shares
11/24/99 106 shares
11/24/99 1319 shares
12/01/99 609 shares
21/08/99 9,254 shares
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATION RESULTS
As of April 10, 1999, no sales revenue has been generated by the Company.
Accordingly, no table showing percentage breakdown of revenue by business
segment or product line is included.
As of December 31, 1998, the Company had an accumulated deficit of
$104,604. It can be expected that the future operating results will continue to
be subject to many of the problems, expenses, delays and risks inherent in the
establishment of a new business enterprise, many of which the Company cannot
control.
The Company has formulated its business plans and strategies based on
certain assumptions of the Company's management regarding the size of the market
for the products and/or services which the Company will be able to offer, the
Company's anticipated share of the market, and the estimated prices for and
acceptance of the Company's products and/or services. The Company continues to
believe its business plans and the assumptions upon which they are based are
valid. Although these plans and assumptions are based on the best estimates of
management, there can be no assurance that these assessments will prove to be
correct. No independent marketing studies have been conducted on behalf of or
otherwise obtained by the Company, nor are any such studies planned.
Any future success that the Company might enjoy will depend upon many
factors, including factors which may be beyond the control of the Company or
which cannot be predicted at this time. These factors may include product
obsolescence, increased levels of competition, including the entry of additional
competitors and increased success by existing competitors, changes in general
economic conditions, increases in operating costs including cost of supplies,
personnel and equipment, reduced margins caused by competitive pressures and
other factors, and changes in governmental regulation imposed under federal,
state or local laws.
The Company's operating results may vary significantly due to a variety of
factors including changing customers profiles, the introduction of new products
and/or by the Company or its competitors, the timing of the Company's
advertising and promotional campaigns, pricing pressures, general economic and
industry conditions that affect customer demand, and other factors.
16
<PAGE>
Operation Results
- -----------------
During the 1999 fiscal year the focus of the Company's efforts has been on
development of the Company's Web Site and value based services at
www.mlmwnt.com. The Company is continuing its design focus on the software and
hardware that will be required to effectively implement the various services to
be found at the web site. The first phase of design and development was
completed in December 1999 and has revealed useful data and marketing
information. The second phase of design and development is expected to be
completed in February 2000. Final design and Bata testing is expected to be
completed in March 2000. The first phase of the Company's web site is expected
to be available to begin accepting subscribers the first week of March 2000.
Other services will be added to the site as quickly as they can be implimented.
Management is implementing changes prior to the acceptance of
subscriptions. Management is also in negotiations with suppliers for added
support products and/or services to be offered to subscribers. The Company
expects that it will implement these upgrades as well as new services on an
on-going basis.
For the year ended December 31, 1999, the Company reported a loss of
$104,533, or $.01 per share. This loss was due in large part because of the
Costs associated with the development of the portal.
Liquidity and Capital Resources
--------------------------------
For the year ending, December 31, 1999 the Company incurred a net loss of
$104,533 for sales, general and administrative expenses related to start-up
operations. It has yet to receive any revenues from operations. Additionally, on
February 4, 1999, the Company completed an offering of one million thirty one
thousand and six hundred (1,031,600) shares of the common stock of the company
to approximately fifty-five (55) unafilliated shareholders. This offer was made
in reliance upon an exemption from the registration provision of Section 4(2) of
the Securities Act of 1993 (the "Act"), as amended, pursuant to Regulation D,
Rule 504 of the Act. As of the date of this Registration Statement, the Company
has approximately eleven million two hundred sixty eight thousand, five hundred
and seven (11,268,507) shares of its $0.001 par value common voting stock issued
and outstanding which are held by approximately fifty-seven (57) shareholders of
record.
In addition, management believes the need for additional capital going
forward will be derived somewhat from internal revenues and earning generated
from its Internet Web site as revenues from the "fee" services as they ramp up.
If the company is unable to generate sufficient revenues to meet expenses,
management of the company will seek additional operating capital through the
issuance of stock. The Company has no arrangement or commitments for accounts
receivable financing. There can be no assurance that any such financing can be
obtained, or if obtained, that it will be at reasonable terms.
The Company believes that its initial revenues will be dependent upon the
sale of revenues generated through e-commerce arrangements with service partners
and co-branding affiliates programs. Realization of significant sales of the
Company's services during the coming fiscal year is vital to the operation of
the Company. To this end, management is currently emphasizing the rapid
deployment of the company's web site and the revenue generating services
planned.
17
<PAGE>
No engineering management or similar reports have been prepared or provided
for external use by the Company in connection with the offer of its securities
to the public.
Management believes that the Company's future growth and success will be
largely dependant on its ability to develop its Network Marketing content
oriented web site along with its ability to cost effectively market to the
Network Marketing Industry the service at the site. Success of the web site will
be largely dependent upon rapidly expanding the subscriber base and translating
this base to revenue generating services. Principle elements of the Company's
approach to accomplish this task is included in the following.
Member Loyalty
--------------
The Company plans to offer it's users a variety of Free service. Management
of the Company believes that the provision of Free services is critical to
attracting subscribers and retaining them as regular users of the services.
Member Development Content
--------------------------
The majority of the content at the web site will be developed by users on a
voluntary basis. As a result, the Company feels that it will be able to avoid a
major cost of providing compelling information.
Internet Services Offering
--------------------------
The Company plans on branding its own label Internet Services via its
current Internet Service Provider (ISP) and offering the following internet
services: (i) Internet Service (ISP) (ii) web site hosting (iii) web site design
and (iv) Domain name registration and hosting. The Company believes that the
future of the Internet will be centered around the Business to Business (B2B)
services inherent in these services.
In addition, management feels that its Internet Services via its current
provider will solidify the scope of the company's central point of convergence.
In short, the company plans to utilize its Internet services and related
capability to provide relative news editorial content, headlines and customized
programming to attract and capture subscriber information to more effectively
market to the Network Marketing Industry.
The Company currently does not expect to sell any of its facilities or
equipment.
Management anticipates that it will hire and add full time employees over
the next twelve (12) months.
Segment Data
------------
As of December 31, 1999, no sales revenue has been generated by the
Company. Accordingly, no table showing percentage breakdown of revenue by
business segment or product line is included.
18
<PAGE>
CAUTIONARY FORWARD - LOOKING STATEMENT
- --------------------------------------
Statements included in this Management's Discussion and Analysis of
Financial Condition and Results of Operations, and in future filings by the
Company with the Securities and Exchange Commission, in the Company's press
releases and in oral statements made with the approval of an authorized
executive officer which are not historical or current facts are "forward-looking
statements" made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. The following
important factors, among others, in some cases have affected and in the future
could affect the Company's actual results and could cause the Company's actual
financial performance to differ materially from that expressed in any
forward-looking statement: (i) the extremely competitive conditions that
currently exist in the three dimensional software development marketplace are
expected to continue, placing further pressure on pricing which could adversely
impact sales and erode profit margins; (ii) many of the Company's major
competitors in its channels of distribution have significantly greater financial
resources than the Company; and (iii) the inability to carry out marketing and
sales plans would have a materially adverse impact on the Company's projections.
The foregoing list should not be construed as exhaustive and the Company
disclaims any obligation subsequently to revise any forward-looking statements
to reflect events or circumstances after the date of such statements or to
reflect the occurrence of anticipated or unanticipated events.
19
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
GLOBAL-LINK ENTERPRISES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1999
C O N T E N T S
Page
----
Independent Auditors' Report ........................................... 21
Balance Sheet........................................................... 22
Statements of Operations................................................ 24
Statements of Stockholders' Equity (Deficit)............................ 25
Statements of Cash Flows................................................ 27
Notes to Financial Statements........................................... 28
20
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
Global-Link Enterprises, Inc.
(A Development Stage Company)
San Diego, California
We have audited the accompanying balance sheet of Global-Link Enterprises, Inc.
(a development stage company) as of December 31, 1999 and the related statements
of operations, stockholders' equity (deficit) and cash flows for the years ended
December 31, 1999 and 1998 and from inception on November 20, 1998 through
December 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Global-Link Enterprises, Inc.
(a development stage company) as of December 31, 1999 and the results of its
operations and its cash flows for the years ended December 31, 1999 and 1998 and
from inception on November 20, 1998 through December 31, 1999 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company is a development stage company with no
significant operating results to date, which raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 3. The financial statements do not include
any adjustments that might result from the outcome of the uncertainty.
/S/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
April 14, 2000
21
<PAGE>
GLOBAL-LINK ENTERPRISES, INC.
(A Development Stage Company)
Balance Sheet
<TABLE>
<CAPTION>
ASSETS
December 31,
1999
------------
<S> <C>
CURRENT ASSETS
Lease payments receivable $ 7,913
------------
Total Current Assets 7,913
------------
PROPERTY AND EQUIPMENT, NET (Note 7) 1,221
------------
OTHER ASSETS
Website development (Note 6) 48,750
Deposits 6,387
------------
Total Other Assets 55,137
------------
TOTAL ASSETS $ 64,271
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
GLOBAL-LINK ENTERPRISES, INC.
(A Development Stage Company)
Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
<TABLE>
<CAPTION>
ASSETS
December 31,
1999
------------
<S> <C>
CURRENT LIABILITIES
Bank overdraft $ 3,497
Accounts payable 55,186
Accrued liabilities 1,106
Notes payable - related parties (Note 4) 7,693
Notes payable (Note 5) 33,715
------------
Total Current Liabilities 101,197
------------
LONG-TERM LIABILITIES
Lease deposits payable - related party 3,957
Note payable - related party (Note 4) 95
------------
Total Long-Term Liabilities 4,052
------------
Total Liabilities 105,249
------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.001 par value,
5,000,000 shares authorized;
-0- shares issued and outstanding -
Common stock, $0.001 par value,
20,000,000 shares authorized;
11,268,507 shares issued and outstanding 11,269
Additional paid-in capital 52,357
Deficit accumulated during the development stage (104,604)
------------
Total Stockholders' Equity (Deficit) (40,978)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 64,271
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
GLOBAL-LINK ENTERPRISES, INC.
(A Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
For the From Inception on
Year Ended November 20, 1998 Through
December 31, December 31,
----------------------------------------
1999 1998 1999
----------------------------------------
<S> <C> <C> <C>
REVENUES $ - $ - $ -
----------------------------------------
OPERATING EXPENSES
General and administrative 138,082 - 138,082
Depreciation 279 - 279
----------------------------------------
Total Operating Expenses 138,361 - 138,361
----------------------------------------
OTHER INCOME (EXPENSE)
Interest expense (1,159) (71) (1,230)
Rent income 34,987 - 34,987
----------------------------------------
Total Other Income (Expense) 33,828 (71) 33,757
----------------------------------------
LOSS FROM OPERATIONS (104,533) - (104,604)
INCOME TAX EXPENSE - - -
----------------------------------------
NET LOSS $ (104,533) $ (71) $ (104,604)
========================================
BASIC LOSS PER SHARE $ (0.01) $ (0.00)
============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 11,159,540 5,496,195
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
GLOBAL-LINK ENTERPRISES, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Deficit
Accumulated
Preferred Stock Common Stock Additional During the
------------------------------------------------------ Paid-In Development
Shares Amount Shares Amount Capital Stage
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at inception on
November 20, 1998 - $ - - $ - $ - $ -
Issuance of common stock
for cash at $0.001 per share -
November 20, 1998 - - 10,200,000 10,200 - -
Issuance of common stock for
cash at $0.05 per share
- December 23, 1998 - - 118,000 118 5,782 -
Net loss from inception on
November 20, 1998 through
December 31, 1998 - - - - - (71)
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 1998 - - 10,318,000 10,318 5,782 (71)
Issuance of common stock issued
for cash at $0.05 per share
- January 12, 1999 - - 105,000 105 5,145 -
Issuance of common stock issued
for cash at $0.05 per share
- January 13, 1999 - - 23,600 24 1,156 -
Issuance of common stock issued
for cash at $0.05 per share
- January 15, 1999 - - 30,000 30 1,470 -
Issuance of common stock issued
for cash at $0.05 per share
- January 19, 1999 - - 105,000 105 5,145 -
Issuance of common stock issued
for cash at $0.05 per share
- January 22, 1999 - - 100,000 100 4,900 -
Issuance of common stock issued
for cash at $0.05 per share
- January 28, 1999 - - 40,000 40 1,960 -
Issuance of common stock issued
for services at $0.05 per share
- January 29, 1999 - - 5,000 5 245 -
Issuance of common stock issued
for services at $0.05 per share
- February 3, 1999 - - 500,000 500 24,500 -
------------ ------------ ------------ ------------ ------------ ------------
Balance forward - $ - 11,226,600 $ 11,227 $ 50,303 $ (71)
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
GLOBAL-LINK ENTERPRISES, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Preferred Stock Common Stock Additional During the
------------------------------------------------------ Paid-In Development
Shares Amount Shares Amount Capital Stage
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance forward - $ - 11,226,600 $ 11,227 $ 50,303 $ (71)
Issuance of common stock
for cash at $0.05 per share
- February 4, 1999 - - 5,000 5 245 -
Issuance of common stock
for services at $0.05 per share
- March 30, 1999 - - 25,000 25 1,225 -
Issuance of common stock
for services at $0.05 per share
- October 20, 1999 - - 619 1 30 -
Issuance of common stock
for services at $0.05 per share
- November 24, 1999 - - 1,425 1 70 -
Issuance of common stock
for services at $0.05 per share
- December 1, 1999 - - 609 1 30 -
Issuance of common stock
for services at $0.05 per share
- December 8, 1999 - - 9,254 9 454 -
Net loss for the year ended
December 31, 1999 - - - - - (104,533)
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 1999 - $ - 11,268,507 $ 11,269 $ 52,357 $ (104,604)
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
GLOBAL-LINK ENTERPRISES, INC.
(A Development Stage Company)
Statements of Cash Flows
<TABLE>
<CAPTION>
For the From Inception on
Year Ended November 20, 1998 Through
December 31, December 31,
----------------------------------------
1999 1998 1999
----------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (104,533) $ (71) $ (104,604)
Adjustments to reconcile net (loss) to net cash
used in operating activities:
Depreciation 279 - 279
Stock issued for services 26,846 - 26,846
Changes in operating assets and liabilities:
(Increase) decrease in lease payments receivable (7,913) - (7,913)
(Increase) decrease in deposits (6,387) - (6,387)
Increase (decrease) in accounts payable 44,686 10,500 55,186
Increase (decrease) in accrued interest 1,106 - 1,106
Increase (decrease) in lese deposit payable 3,957 - 3,957
----------------------------------------
Net Cash (Used) by Operating Activities (41,959) 10,429 (31,530)
----------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,500) - (1,500)
Website development costs incurred (23,250) (25,500) (48,750)
----------------------------------------
Net Cash (Used) by Investing Activities (24,750) (25,500) (50,250)
----------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of notes payable 33,715 - 33,715
Proceeds from the issuance of notes payable
- related party 9,656 15,100 24,756
Payments on notes payable - related party (2,544) (14,424) (16,968)
Common stock issued for cash 20,680 16,100 36,780
------------ ------------ ------------
Net Cash Provided by Financing Activities 61,507 16,776 78,283
----------------------------------------
NET INCREASE (DECREASE) IN CASH (5,202) 1,705 (3,497)
CASH AT BEGINNING OF PERIOD 1,705 - -
----------------------------------------
CASH AT END OF PERIOD $ (3,497) $ 1,705 $ (3,497)
============ ============ ============
CASH PAID FOR:
Interest expense $ 55 $ - $ 55
Income taxes $ - $ - $ -
----------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
GLOBAL-LINK ENTERPRISES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 1 - NATURE OF ORGANIZATION
The financial statements presented are those of Global-Link Enterprises,
Inc. (a development stage company) (the Company). The Company was organized
under the laws of the State of Nevada on November 20, 1999. The Company was
organized to develop a multi-level marketing resource web site to offer web
site hosting and development services as well as a news portal for the
multi-level marketing community.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year end.
b. Basic Loss Per Share
The following is an illustration of the reconciliation of the numerators
and denominators of the basic loss per share calculation:
<TABLE>
<CAPTION>
For the Years Ended
December 31,
--------------------------
1999 1998
--------------------------
<S> <C> <C>
Net (loss) (numerator) $ (104,533) $ (71)
Weighted average shares outstanding
(denominator) 11,159,540 5,496,195
Basic loss per share $ (0.01) $ (0.00)
==========================
</TABLE>
Fully diluted loss per share is not presented as there are no potentially
dilutive items outstanding.
c. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
28
<PAGE>
GLOBAL-LINK ENTERPRISES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Revenue Recognition Policy
The Company will develop its revenue recognition policies when planned
principle operations commence.
f. Income Taxes
As of December 31, 1999, the Company had a net operating loss carryforward
for federal income tax purposes of approximately $104,600 that may be used
in future years to offset taxable income. The net operating loss
carryforward will expire in 2019. The tax benefit of the cumulative
carryforwards has been offset by a valuation allowance of the same amount.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course
of business. However, the Company does not have significant operations to
date, nor does it have an established source of revenues sufficient to
allow it to continue as a going concern. It is the intent of the Company to
seek additional working capital for the Company through the issuance of
stock.
When the Company becomes fully operational, the central convergence of the
enterprise will be centered on a global news and information web portal
that focuses on the needs of the worldwide Network Marketing Industry.
Principle features of the web site will include international and national
news and information related to over 1,000 companies engaged in this
industry, free web based e-mail, chat rooms, message boards, and a personal
calendar. Revenue generating services at the site will include internet
services as an ISP, web site design, web site hosing, domain name
registration, communications services, a credit repair membership program
and an e-commerce mall. Additional services will be added, as they become
economically viable.
In the interim, management of the Company is committed to meeting the
present and future needs of the Company.
NOTE 4 - RELATED PARTY TRANSACTIONS
Notes Payable
A related party loaned the Company $15,100 for web site development during
November 1998. The note payable has a maturity date of November 24, 2001
and accrues interest at 10% per annum. At December 31, 1999, the unpaid
principal balance was $95. Interest expense amounted to $32 at December 31,
1999.
29
<PAGE>
GLOBAL-LINK ENTERPRISES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 4 - RELATED PARTY TRANSACTIONS (Continued)
During 1999, a related party loaned the Company $8,856. The note has a
maturity date of December 31, 2000 and accrues interest at 10% per annum,
unsecured. At December 31, 1999, the unpaid principal balance was $6,893.
Interest expense amounted to $49 at December 31, 1999.
During 1999, a related party loaned the Company $800. The note is due upon
demand and accrues interest at 10% per annum, unsecured. At December 31,
1999, the unpaid principal balance was $800. Interest expense amounted to
$28 at December 31, 1999.
During 1999, the Company paid $17,260 in consulting fees to related
parties.
During 1999, the Company paid $31,153 in rent to a related party for its
office space.
During 1999, the Company subleased two properties to related parties. The
Company recorded $34,987 in rent income for the year (see Note 10).
NOTE 5 - NOTES PAYABLE
On December 31 1999, the Company borrowed $33,715. The note has a maturity
date of December 31, 2000 and accrues interest at 12% per annum, unsecured.
At December 31, 1999, the unpaid principal balance was $33,715.
NOTE 6 - WEB SITE DEVELOPMENT
The Company is developing a web site to provide web site development and
hosting services as well as a news portal to the multi-level marketing
community including home businesses and second income opportunity seekers.
The web site will be amortized when placed in service in 2000 over a period
of 60 months on the straight-line basis. A total of $48,750 has been
capitalized at December 31, 1999.
NOTE 7 - PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Major additions and
improvements are capitalized. Minor replacements, maintenance and repairs
that do not extend the useful life of the assets are expensed as incurred.
Depreciation of property and equipment is determined using the
straight-line method over the expected useful lives of the assets,
primarily from three to seven years. Property and equipment consisted of
the following at December 31, 1999:
December 31,
1999
------------
Office equipment $ 1,500
Accumulated depreciation 279
------------
$ 1,221
============
Depreciation expense for the year ended December 31, 1999 was $279.
30
<PAGE>
GLOBAL-LINK ENTERPRISES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 8 - ISSUANCE OF STOCK
During November 1998, the Company issued 10,200,000 shares of its
previously authorized but unissued common stock for cash of $10,200 (or
$0.001 per share).
During December 1998, the Company issued 118,000 shares of its previously
authorized but unissued common stock for cash of $5,900 (or $0.05 per
share).
During January 1999, the Company issued 105,000 shares of its previously
authorized but unissued common stock for cash of $5,250 (or $0.05 per
share).
During January 1999, the Company issued 23,600 shares of its previously
authorized but unissued common stock for cash of $1,180 (or $0.05 per
share).
During January 1999, the Company issued 30,000 shares of its previously
authorized but unissued common stock for cash of $1,500 (or $0.05 per
share).
During January 1999, the Company issued 105,000 shares of its previously
authorized but unissued common stock for cash of $5,250 (or $0.05 per
share).
During January 1999, the Company issued 100,000 shares of its previously
authorized but unissued common stock for cash of $5,000 (or $0.05 per
share).
During January 1999, the Company issued 40,000 shares of its previously
authorized but unissued common stock for cash of $2,000 (or $0.05 per
share).
During January 1999, the Company issued 5,000 shares of its previously
authorized but unissued common stock for cash of $250 (or $0.05 per share).
During February 1999, the Company issued 500,000 shares of its previously
authorized but unissued common stock for services of $25,000 (or $0.05 per
share).
During February 1999, the Company issued 5,000 shares of its previously
authorized but unissued common stock for cash of $250 (or $0.05 per share).
During March 1999, the Company issued 25,000 shares of its previously
authorized but unissued common stock for services of $1,250 (or $0.05 per
share).
During October 1999, the Company issued 619 shares of its previously
authorized but unissued common stock for services of $31 (or $0.05 per
share).
During November 1999, the Company issued 1,425 shares of its previously
authorized but unissued common stock for services of $71 (or $0.05 per
share).
During December 1999, the Company issued 609 shares of its previously
authorized but unissued common stock for services of $31 (or $0.05 per
share).
31
<PAGE>
GLOBAL-LINK ENTERPRISES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 8 - ISSUANCE OF STOCK (Continued)
During December 1999, the Company issued 9,254 shares of its previously
authorized but unissued common stock for services of $463 (or $0.05 per
share)
NOTE 9 - COMMITMENTS AND CONTINGENCIES
During November 1999, the Company entered into an agreement for web site
development. The agreement called for payment of $25,000 in installments of
50% due upon acceptance, 25% due on December 10, 1999 and 25% due upon
acceptance of the completed project. The Company paid $-0- toward this
contract at December 31, 1999, but negotiated to pay the balance in 2000.
NOTE 10 - LEASE COMMITMENT AND TOTAL RENTAL EXPENSE
The Company has leased property under a noncancellable operating lease
agreement which expires on May 31, 2004 and requires monthly rentals of
$3,957, plus yearly increases, plus 33.91% of the common area operating
expenses.
The Company has subleased a portion of the building to a another related
party company under a noncancellable agreement which expires on May 31,
2004 and requires monthly rentals of $3,957, plus yearly increases, plus
33.91% of the common area operating expenses.
The total minimum rental commitment at December 31, 1999 under the lease is
$226,971 which is due as follows:
Year Amount
---------- -----------
2000 $ 48,488
2001 50,214
2002 51,941
2003 53,667
2004 22,661
-----------
Total $ 226,971
===========
The preceding minimum rental commitment amounts have not been reduced by
the minimum rentals totaling $226,971 which are to be received in the
future under the sublease mentioned in the second paragraph.
The total rental expense included in the income statement for the year
ended December 31, 1999 is $27,697 and the net rental expense, after
deducting rental income of $27,697 from subleases is $0.
The Company was required to put a refundable security deposit of $3,957 on
the lease and required a security deposit on the sublease for the same
amount.
32
<PAGE>
GLOBAL-LINK ENTERPRISES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 10 - LEASE COMMITMENT AND TOTAL RENTAL EXPENSE (Continued)
The Company has leased property under a noncancellable operating lease
agreement which expires on September 30, 2009 and requires monthly rentals
of $2,430, plus yearly increases, plus approximately $443 per month in
common area operating expenses.
The Company has subleased a portion of the building to a another related
party company under a noncancellable agreement which expires on September
30, 2009 and requires monthly rentals of $2,430, plus yearly increases,
plus approximately $443 per month in common area operating expenses.
The total minimum rental commitment at December 31, 1999 under the lease is
$342,630 which is due as follows:
Year Amount
---------- -----------
2000 $ 29,484
2001 30,780
2002 32,076
2003 33,372
2004 34,668
Thereafter 182,250
-----------
Total $ 342,630
===========
The preceding minimum rental commitment amounts have not been reduced by
the minimum rentals totaling $342,630 which are to be received in the
future under the sublease mentioned in the second paragraph.
The total rental expense included in the income statement for the year
ended December 31, 1999 is $7,290 and the net rental expense, after
deducting rental income of $7,290 from subleases is $0.
The Company was required to put a refundable security deposit of $2,430 on
the lease and did not require a refundable security deposit on the
sublease.
NOTE 11 - SUBSEQUENT EVENTS
During January 2000, the Company authorized the issuance of 50,000 shares
of its previously authorized but unissued common stock for cash of $500 (or
$0.05 per share).
During February 2000, the Company effected a name change to MLM World News
Today, Inc.
33
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no change of the independent auditors of the Company and
there are no disagreements with such independent auditors.
PART III.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16 (a) OF THE EXCHANGE ACT
See Item 11 for information on the beneficial ownership of the Company's
securities.
(a) Identity of Directors and Executive Officers.
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position Term Served Since
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James C. Frans 49 President, 1 Year 1998
Chief Executive Officer
and Chairman
Paul A. Harbison 34 Treasurer, CFO and 1 Year 1998
Director
Robert L. Schultz 59 Secretary 1 Year 11/20/98
- --------------------------------------------------------------------------------
</TABLE>
(b) Work Experience
James C. Frans, President, CEO and Chairman of the Board - In 1983, Mr.
Frans became President and CEO of MAGCO Publishing, a sales and marketing
related publishing firm. In 1994, Mr. Frans co-founded Financial Help Centers,
Inc. ("FHC"), another sales organization that was able to expand throughout
Southern California; this company continues to grow today with a focus on a
program designed to decrease debt, increase income and help members generally
secure a more stable financial future. FHC's lifetime membership has helped many
people with credit and debt problems. Mr. Frans has also been involved with
Herbalife Corporation while working with Mr. Anthony Chow in Honolulu, Hawaii
and has successfully trained and managed employees from combined experience in
various organizations such as Neon Products, Inc. and Crush International. The
Company believes that Mr. Frans' background in sales, marketing and management,
coupled with his creative talent and professionalism, provide the Company with a
great deal of leadership.
Paul A. Harbison, Treasurer, CFO and Director - Mr. Harbison has experience
in sales, marketing, management and finance. After completing his education at
San Diego State University, where he majored in business administration with an
emphasis in finance, Mr. Harbison pursued a career in communications,
specializing in streamlining for prominent corporations such as Sony, QualComm
and SAIC. In this area, Mr. Harbison's expertise includes two-way paging,
two-way radio, and cellular and long-distance services. Mr. Harbison was also
involved in the 1994 establishment of Financial Help Centers, Inc., where Mr.
Harbison is currently the President and CEO. This organization has helped people
better their lives with its lifetime membership program which is designed to
help consumers with their credit problems by decreasing their debts and
increasing their income - ultimately helping the consumers improve their
financial status. The Company believes that Mr. Harbison's various achievements
within the fields of finance, communications and network marketing, accompanied
with his aggressive work ethic and management skills, provides essential
leadership to the Company.
34
<PAGE>
Robert L. Schultz, Secretary, COO and Director - Mr. Schultz brings a
wealth of experience in marketing, sales and management to the company. After a
four year enlistment in the U. S. Air Force, Mr. Schultz attended The University
of Detroit and Wayne State University were he majored in Business administration
and Mass Communications. Before graduating he was recruited by the worlds
leading Incentive Marketing Company, The E. F. Mac Donald Company where he
served as Account Executive. During this time, Mr. Schultz had total
responsibility for the sales and management of 2 major Automotive Industry
accounts each billing in excess of $1.5 million. After 9 years as account
executive, Mr. Schultz was recruited by a major Corporate Meetings company as
National Account Director. He quickly became the Company's leading revenue
producer, billing in excess of 40% of the total Company revenue and was promoted
to Vice President, Sales and Marketing.
After 10 years on the road, Mr. Schultz married and settled down to a life
as District Sales and Training Manager for the Prudential Insurance Company.
While with the Prudential, Mr. Schultz was responsible for building one of the
largest and most successful sales staff in the country, earning him several
awards including a "Presidential Citation," the top recognition award given by
the company. Mr. Schultz was also responsible for District Agent training for
the Prudential as well as the for several other Insurance Companies under the
Life Underwriters Training Counsel and General Agents Management Counsel. During
this time Mr. Schultz and his wife Marcia also owned and operated several large
Fine Dining restaurants.
Mr. Schultz's outstanding business accomplishments in sales, marketing and
business management, accompanied with his tireless work ethic, provides
indispensable leadership to the Company.
(c) Family Relationships
None - Not Applicable.
(d) Involvement on Certain Material Legal Proceedings During the Last Five
Years
(1) No current or pending litigation, and no claims or counterclaims
involving the Company as a plaintiff or defendant exist.
(2) No director, officer, significant employee or consultant has been
convicted in a criminal proceeding, exclusive of traffic
violations.
(3) No director, officer, significant employee or consultant has been
permanently or temporarily enjoined, barred, suspended or
otherwise limited from involvement in any type of business,
securities or banking activities.
(4) No director, officer or significant employee has been convicted
of violating a federal or state securities or commodities law.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
- --------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"),requires the Company's directors and executive officers, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file with the SEC initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten percent beneficial owners are
required by SEC regulation to furnish the Company with copies of all reports
they file under Section 16(a).
To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representation that no other
reports were required, with respect to the year ended December 31,1999, all
Section 16(a) filing requirements applicable to each person who, at any time
during the fiscal year ended December 31,1999, was an officer, director and
greater than ten percent beneficial owner, were complied with.
35
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
- -------------------------------
The following table sets forth the aggregate compensation paid by the
Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
---------------------------
------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
------------------------------------------------------------------------------
Awards Payouts
------------------------------------------------------------------------------
Securities All
Other Underlying Other
Name and Year or Annual Restricted Options/ LTIP Compen-
Principal Period Salary Bonus Compen- Stock SAR's Payouts sation
Position Ended ($) ($) sation) Awards (#) ($) ($)
($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James C. Frans 1999 $ 10,610 0 0 0 0 0 0
President and CEO 1998 $ 0 0 0 0 0 0 0
Paul A. Harbison 1999 $ 6,650 0 0 0 0 0 0
CFO 1998 $ 0 0 0 0 0 0 0
Robert L. Schultz 1999 $ 0 0 0 0 0 0 0
1998 $ 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
EMPLOYMENT CONTRACTS/STOCK INCENTIVE PLANS
------------------------------------------
Management Employment Agreements and Compensation
All executive officers of the Company prior to April 10, 1999 did not draw
a salary from the Company. Over the next twelve months, however, each executive
officer is expected to draw the following annual compensation. The Company does
not currently have a stock option plan.
There were no arrangements pursuant to which any director of the Company
was compensated for the period from November 20, 1998 to April 10, 1999 for any
service provided as a director. In addition, no such arrangement is contemplated
for the foreseeable future, as the Company's only directors are its current
executive officers who are expected to draw a salary for the management of the
Company.
36
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
The following table sets forth security ownership information as of the
close of business on April 10, 1999, for any person or group, known by the
Company to own more than five percent (5%) of the Company's voting securities.
<TABLE>
<CAPTION>
Title of Name of Amount of Percent of
Class Beneficial Owner Ownership Class
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Common James C. Frans (1)
Chairman;
President & CEO 5,100,000 45.41%
Common Paul A. Harbison (1)
Treasurer; CFO;
Director 5,100,000 45.41%
</TABLE>
(b) Security Ownership of Management
The following table sets forth security ownership information, as of the
close of business on April 10, 1999, for any director, executive officer or
group of the Company's voting securities:
<TABLE>
<CAPTION>
Title of Name of Amount of Percent of
Class Beneficial Owner Ownership Class
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock James C. Frans 5,100,000 45.41%
3633 Camino Del Rio South
Suite 107
San Diego, CA 92108
Common Stock Paul A. Harbison 5,100,000 45.41%
3633 Camino Del Rio South
Suite 107
San Diego, CA 92108
Common Stock Robert L. Schultz 5,000 0.045%
1308 Sun Point Dr.
Las Vegas, NV 89108
Common Stock All Executive Officers and 10,205,000 90.87%
Directors as a Group (3 Persons)
</TABLE>
(c) Change in Control.
There are no present arrangements or pledges of the Company's securities
which may result in a change in control of the Company.
37
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
---------------------------------------
Company has conducted limited business transactions to date. Prior to this
Registration Statement, the Company has relied primarily upon founders and
initial shareholders of the Company as its sole source of capital and liquidity.
Because of the development stage nature of the Company and its relatively
recent inception, November 20, 1998, the Company has no relationships or
transactions to disclose.
TRANSACTIONS WITH PROMOTERS
---------------------------
There have been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which the
Company or any of its subsidiaries was or is to be a party, in which the amount
involved exceeded $60,000 and in which any promoter or founder, or any member of
the immediate family of any of the foregoing persons, had a material interest.
However, see the caption "Transactions with Management and Others" of this
Registration Statement Item 8. Sescription of Securities.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits attached or incorporated by referenced pursuant to
Item 601 of Regulation S-B.
Exhibit
Number Description*
- ------- -------------
(a) List of Exhibits attached or incorporated by referenced pursuant to
Item 601 of Regulation S-B.
(3) Articles of Incorporation and By-Laws
3.1 Articles of Incorporation of the Company filed September
29, 1998. (Incorporated by reference from the Company's
Registration Statement on Form 10-SB, filed May 20, 1999,
Commission File No. 000-26139.)
3.2 By-Laws of the Company adopted October 2, 1998.
(Incorporated by reference from the Company's Registration
Statement on Form 10-SB, filed May 20, 1999, Commission File
No. 000-26139.)
3.3 Statement of Designation of Foreign Corporation in
California filed September 3, 1999.
(10) Material Contracts
10.01 Warehouse Lease Agreement with Octavio and Leticia
Sanchez dated May 3, 1999.
10.02 Warehouse Lease Agreement with Direct Technologies,
Inc. d/b/a California Pacific Trading Co, Inc.
10.03 Retail Space Lease Agreement with R.V.S. Retail, LP, a
California Limited Partnership dated May 28, 1999.
10.04 Warehouse Lease Agreement with Gourmet Gardens Soup
and Salad Bars, Inc. dated May 3, 1999.
10.05 Warehouse Lease Agreement with FarmPac Trading
Company, Inc. dated August 1, 1999.
(27) Financial Data Schedule
27.01 Financial Data Schedule (submitted electronically for
SEC information only).
(b) There were no reports on Form 8-K filed during the period covered by
this report.
38
<PAGE>
EXHIBIT INDEX
-------------
The following Exhibit Index sets forth the Exhibits attached hereto.
Exhibit Description
None.
SIGNATURE
---------
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.
MLM WORLD NEWS TODAY, INC.
A Nevada Corporation
Date: April 14, 2000 /S/ James C. Frans
------------------------------
By: James C. Frans
Its: President and CEO
Date: April 14, 2000 /S/ Paul A. Harbison
------------------------------
By: Paul A. Harbison
Its: Chief Financial Officer
Date: April 14, 2000 /S/ Robert L. Schultz
------------------------------
By: Robert L. Schultz
Its: Secretary
39
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 7,913
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,913
<PP&E> 1,500
<DEPRECIATION> 279
<TOTAL-ASSETS> 64,271
<CURRENT-LIABILITIES> 101,197
<BONDS> 0
0
0
<COMMON> 11,269
<OTHER-SE> (52,247)
<TOTAL-LIABILITY-AND-EQUITY> 64,271
<SALES> 0
<TOTAL-REVENUES> 34,987
<CGS> 0
<TOTAL-COSTS> 138,361
<OTHER-EXPENSES> 1,159
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,159
<INCOME-PRETAX> (104,533)
<INCOME-TAX> 0
<INCOME-CONTINUING> (104,533)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (104,533)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
