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================================================================================
UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-QSB
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1999
Commission File Number 000-25799
FINANCIALWEB.COM, INC.
(Exact name of registrant as specified in its charter)
Nevada 93-1202428
(State or other jurisdiction or (IRS Employer Identification
incorporation or organization) Number)
201 Park Place, Altamonte Springs, Florida 32701
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (407) 834-4443
The number of shares outstanding of the registrant's common stock as of
September 30, 1999 was 5,457,839
Transitional Small Business Disclosure Format: Yes [ ] No [x]
<PAGE>
FORM 10-QSB
For the Quarter Ended September 30, 1999
INDEX
<TABLE>
<CAPTION>
Part I. Financial Information
Item 1. Financial Statements Page
----
<S> <C>
a) Statement of Operations
For the Three and Nine Months Ended September 30, 1999 and
1998 .......................................................... 3 - 4
b) Balance Sheets
As of September 30, 1999 and December 31, 1998 ................ 5
c) Cash Flows Statements
For the Nine Months Ended September 30, 1999 and 1998 ......... 6
d) Notes to Financial Statements.................................. 7 - 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 10 - 13
Part II. Other Information ............................................. 14
Item 1. Legal Proceedings
See Notes to Financial Statements
Item 2. Changes in Securities and use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submissions of matters to a vote of Security holders
Item 5. Other information
Item 6. Exhibits and Reports on Form 8-K
Signature............................................................... 15
</TABLE>
2
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Part 1. Financial Information
Item 1. Financial Statements
FINANCIALWEB.COM, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET REVENUES $ 131,770 $ 53,063 $ 287,003 $ 94,993
Cost of Revenues 76,411 68,065 312,004 132,434
---------- ---------- ----------- -----------
GROSS MARGIN 55,359 (15,002) (25,001) (37,441)
Selling, General and
Administrative Expenses 692,986 609,845 2,352,647 1,141,515
Interest Expense 69,244 18,638 164,362 30,562
---------- ---------- ----------- -----------
NET LOSS $ (706,871) $ (643,485) $(2,542,010) $(1,209,518)
========== ========== =========== ===========
</TABLE>
3
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FINANCIALWEB.COM, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998
(CONTINUED)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
September 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
BASIC (LOSS) PER COMMON SHARE
(Loss) available to Common Stockholders $ (706,871) $ (643,485)
============= ============
Weighted Weighted
Shares Fraction Average Shares Fraction Average
Dates Outstanding Outstanding of Period Shares Outstanding of Period Shares
----------------------------- ------------ ------------------------ ---------
July 1 - September 8 5,457,839 70 / 92 4,152,704 3,498,000 70 / 92 2,661,522
September 9 - September 30 5,457,839 22 / 92 1,305,135 3,898,000 22 / 92 93,213
------------ ---------
Weighted-average shares 5,457,839 2,754,735
============ =========
BASIC (LOSS) PER COMMON SHARE $ (0.13) $ (0.23)
============= ============
</TABLE>
The equation for computing basic loss per common share is:
Loss available to common stockholders / Weighted-average shares
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
BASIC (LOSS) PER COMMON SHARE
(Loss) available to Common Stockholders $ (2,542,010) $ (1,209,518)
============= ============
Weighted Weighted
Shares Fraction Average Shares Fraction Average
Dates Outstanding Outstanding of Period Shares Outstanding of Period Shares
----------------------------- ------------ ------------------------ ---------
January 1 - February 5 4,973,000 36 / 273 655,780 2,680,000 36 / 273 353,407
February 6 - March 6 4,973,000 29 / 273 528,267 2,880,000 29 / 273 305,934
March 7 - April 23 4,948,385 48 / 273 870,046 2,880,000 48 / 273 506,374
April 24 - May 2 4,948,385 9 / 273 163,134 3,098,000 9 / 273 102,132
May 3 - May 16 4,957,839 14 / 273 254,248 3,098,000 14 / 273 158,872
May 17 - May 19 5,457,839 3 / 273 59,976 3,098,000 3 / 273 34,044
May 20 - September 8 5,457,839 112 / 273 2,239,113 3,498,000 112 / 273 1,435,077
September 9 - September 30 5,457,839 22 / 273 439,826 3,898,000 22 / 273 314,125
------------ ---------
Weighted-average shares 5,210,390 3,209,965
============ =========
BASIC (LOSS) PER COMMON SHARE $ (0.49) $ (0.38)
============= ============
</TABLE>
The equation for computing basic loss per common share is:
Loss available to common stockholders / Weighted-average shares
4
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FINANCIALWEB.COM, INC.
BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 209,109 $ 322,480
Prepaid Expenses 35,227 113,515
Deposits 5,780 5,580
------------- -----------
Total Current Assets 250,116 441,575
------------- -----------
PROPERTY AND EQUIPMENT 205,753 188,745
------------- -----------
OTHER ASSETS:
Intellectual Property 267,650 186,947
------------- -----------
TOTAL ASSETS $ 723,519 $ 817,267
============= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued Expenses $ 489,464 $ 266,203
Notes Payable 2,975,436 750,436
------------- -----------
Total Current Liabilities 3,464,900 1,016,639
------------- -----------
TOTAL LIABILITIES 3,464,900 1,016,639
============= ===========
STOCKHOLDERS' EQUITY:
Common Stock, $.001 Par Value, 100,000,000 Shares Authorized,
5,457,839 and 4,973,000 Shares, Respectively, Issued and Outstanding 5,458 4,973
Additional Paid-In Capital 1,869,910 2,070,395
Stock Subscription Receivable - (200,000)
Accumulated (Deficit) (4,616,749) (2,074,740)
------------- -----------
TOTAL STOCKHOLDERS' EQUITY (2,741,381) (199,372)
------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 723,519 $ 817,267
============= ===========
</TABLE>
5
<PAGE>
FINANCIALWEB.COM, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1999 1998
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) $ (2,542,010) $ (1,209,518)
Adjustments to reconcile Net (Loss)
to Net Cash Used by Operating Activities
Depreciation and Amortization 73,841 42,565
Stock Issued for Employee Services - 73,750
Stock Warrants Issued for Consulting Fees - 326,075
Decrease in Prepaid Expenses 78,288 35,395
(Increase) in Deposits (200) (5,100)
(Increase) in Loans Receivable - (8,750)
Increase in Accrued Expenses
223,261 102,503
------------- -------------
Net Cash Used by Operating Activities (2,166,820) (643,080)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (171,551) (175,619)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Notes Payable 2,225,000 315,000
Stock Issuance's - 700,100
------------- -------------
Net Cash Flows from Financing Activities 2,225,000 1,015,100
------------- -------------
NET DECREASE IN CASH (113,371) 196,401
CASH AT BEGINNING OF YEAR 322,480 82,802
------------- -------------
CASH AT SEPTEMBER 30, 1999 AND 1998 $ 209,109 $ 279,203
============= =============
Supplemental Information:
Amortization of Prepaid Consulting Fees acquired
in exchange for shares of Common Stock $ 50,000 $ 50,000
============= =============
</TABLE>
6
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FINANCIALWEB.COM, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
Organization Background
FinancialWeb.com, Inc., f/k/a Axxess, Inc., designs, develops, purchases and
manages internet based business publications. The Company's corporate offices
are in Altamonte Springs, Florida.
The Company was incorporated on May 16, 1983 in the State of Utah under the name
of Vital Technologies, Inc., then re-domiciled itself in Nevada in 1988. The
Company was inactive from 1991 through 1996. On March 3, 1997 the Company
changed its name to Axxess, Inc., reverse split the issued and outstanding
shares in a one for twenty-five transaction, changed directors and entered the
business of multimedia publishing and communications. On January 4, 1999 the
Company adopted its current name, in order to more accurately reflect its core
business.
Basis of Presentation
The Company's financial statements have been presented on the basis of a going
concern, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company incurred net losses of
$1,666,592 and $372,266 for the years ended December 31, 1998 and 1997,
respectively, and cumulative losses since inception of $4,616,749. At September
30, 1999 the Company has a working capital deficit of $3,214,784. The Company's
continuation as a going concern is dependent upon its ability to obtain
suitable, sufficient financing or equity investment. There is no assurance that
the Company will be successful in this endeavor. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Earnings (Loss) per Share
Earnings (loss) per share are computed on the basis of the weighted average
number of common shares outstanding.
Summary of Significant Accounting Policies
Cash - The Company considers all highly liquid debt instruments purchased with a
maturity of ninety days or less to be the equivalent of cash for financial
statement purposes.
Prepaid Expenses - Prepaid Expenses are stated at cost. Amortization is computed
over the estimated period of benefit, normally less than one year. The Company
recorded Prepaid Consulting Fees, pursuant to an agreement dated March 8, 1997
wherein consulting services for the thirty six months ended March 7, 2000 were
exchanged for shares of common stock.
Property and Equipment - Property and Equipment are stated at cost. Depreciation
is calculated on the various asset classes over their estimated useful lives as
follows:
Equipment, Furniture and Fixtures 5 - 7
Computer Equipment 5
Intellectual Property - Intellectual Property is stated at cost. Amortization is
computed using the straight-line method over five years.
7
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Stock Options, Warrants and Compensation - The Company accounts for stock
options and warrants granted as compensation at the fair market value of the
stock on the close of business on the day granted pursuant to the provisions of
Financial Accounting Standards Board Statement 123.
Revenue and Cost Recognition - Revenues and the related Cost of Revenues are
recognized upon publication of the customer's advertising on the Company's Web
sites or for design services pursuant to agreement.
Income Taxes - The Company accounts for income taxes pursuant to Statement of
Financial Accounting Standards No. 109. Under such standard, deferred taxes are
computed based on the tax liability or benefit in future years of the reversal
of temporary differences in the recognition of income or deduction of expenses
between financial and tax reporting purposes. The principal item resulting in
the difference is depreciation. The net difference, if any, between the
provision for taxes and taxes currently payable is reflected in the balance
sheet as deferred income taxes. Deferred tax assets and/or liabilities are
classified as current or noncurrent based on the classification of the related
asset or liability for financial reporting purposes, or on the expected reversal
date for deferred taxes that are not related to an asset or liability. A
valuation allowance is provided for deferred tax assets that do not meet a "more
likely than not" criterion.
Use of Estimates - Management of the Company uses estimates and assumptions in
preparing financial statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported amounts of
assets and liabilities as well as revenues and expenses. Actual results could
vary from the estimates management has utilized.
Commitments and Contingencies
Employment Agreements - The Company has employment agreements with its officers
providing for base salaries totaling $282,417, $364,166 and $367,667 in the
years ending December 31, 1999, 2000 and 2001 respectively. Additionally, the
Company had an agreement with a consultant totaling $10,000 per month that
expired in March 1999.
Facilities Lease - FinancialWeb.com, Inc. leases its office space pursuant to a
month to month agreement dated October 1, 1999. Monthly rent amounts to
approximately $5,600. Rent expense for the nine months ended September 30, 1999
amounted to $72,226.
Litigation - The Company continues to defend two separate claims brought by
plaintiffs alleging defamation resulting from published reports on
FinancialWeb's StockDetective.com Web site, as detailed on page 19 of the
Company's First Amended Form 10-SB filed on August 10, 1999. The status of those
cases is as follows: 1) The corporate Plaintiff in the Great White case has
filed a motion with the Court seeking to voluntarily dismiss its complaint
against the Company, and the attorneys for the individual plaintiff, Colin
Smith, have filed a motion to withdraw as his counsel, since, according to court
documents, he "....has vanished." 2) The Company has entered the discovery phase
of the Ziasun case, which is proceeding in the normal course.
On October 28, 1999, Agora Inc. filed a complaint in the U.S. District Court for
the District of Maryland alleging defamation due to the inclusion of one of
Plaintiff's publications on the list of promoters published by the Company's
Stock Detective Web site.
On September 22, 1999, Softcell Marketing Inc. and Gary Gould filed a complaint
in the U.S. District Court for the Southern District of New York, claiming that
the Company breached a one year consulting
8
<PAGE>
agreement it had with Mr. Gould, wherein he was to provide Internet marketing
consulting services in return for the sum of $5,000 per month plus an option to
purchase 10,000 shares of common stock, the price and conditions for which were
to be determined by the Company.
In management's opinion, based on the advice of legal counsel, the ultimate
outcome of these lawsuits will not have a material adverse effect on the
Company's financial statements.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion contains forward-looking statements that are subject to
significant risks and uncertainties. There are several important factors that
could cause actual results to differ materially from historical statements. The
Company has sought to identify the most significant risks to its business, but
cannot predict whether or to what extent any of such risks may be realized nor
can there be any assurance that the Company has identified all possible risks
that might arise.
OVERVIEW
The Company designs, develops, purchases and manages internet based business
publications. From March 1997 to date, the Company's operating activities have
related primarily to developing its Internet products, recruiting personnel and
purchasing operating assets.
The Company has yet to achieve significant revenue and its ability to generate
significant revenue is uncertain. Further, in view of the rapidly evolving
nature of the Internet industry and a limited operating history, the Company has
little experience forecasting its revenues. Therefore, the Company believes that
period-to-period comparisons of its financial results are not necessarily
meaningful and you should not rely upon them as an indication of future
performance. To date, the Company has incurred substantial costs to create,
introduce and enhance its services, to develop content, and to grow its
business. As a result, it has incurred operating losses in each fiscal quarter
since it was formed. The Company expects operating losses and negative cash
flows to continue for the foreseeable future as it intends to significantly
increase its operating expenses to expand its business. It may also incur
additional costs and expenses related to content creation, technology, marketing
or acquisitions of businesses and technologies to respond to changes in this
rapidly changing industry. These costs could have an adverse effect on the
Company's future financial condition or operating results.
RESULTS OF OPERATIONS
NET REVENUE
Net revenues are primarily derived from the sale of advertising on the Company's
Web sites. The Company earned net revenues for the three months ended September
30, 1998 and 1999 of $53,063 and $131,770 respectively. Net revenues of $94,993
and $287,003, respectively, were earned for the nine month periods ended
September 30, 1998 and September 30, 1999. The 148% increase in revenues for the
three month period ending September 30, 1999 and the 202% increase in revenue
for the nine month period ended September 30, 1999 over the comparable periods
in 1998 were due primarily to increases in the number of banner and sponsorship
ads placed on our Web sites. The increases were caused by an increase in the
number of advertisers, as well as increased users on the Company's Web sites and
resultant page views with advertisements contained on those pages.
The Company's advertising customers purchase advertising under short-term
contracts. They can cease advertising on short notice without penalty.
Advertising revenues would be adversely affected if the Company were unable to
renew advertising contracts with existing customers or obtain new customers. The
Company expects to continue to derive a majority of net revenues from selling
advertisements. The market for Web advertising is intensely competitive, and
advertising rates could be subject to pricing pressure in the future. If the
Company was forced to reduce its advertising rates as a result of such
competition or if it were to experience a drop in traffic for other reasons,
future revenues could be adversely affected.
10
<PAGE>
The Company believes that future revenues will result largely from the sale of
advertising space on the Company's Web sites, related sponsorship programs, as
well as co-branding and private labeling services.
COST OF REVENUES
Cost of revenue primarily consists of costs related to data feeds over telephone
lines, sums paid to content providers, Web site infrastructure costs, and
programming. For the three months ended September 30, 1998 and 1999, the Company
incurred costs of revenues of $68,065 and $76,411, respectively. Cost of
revenues for the nine months ended September 30, 1998 and 1999 were $132,434 and
$312,004 respectively. The 12% increase in costs of revenues for the three month
period ended September 30, 1999 and the 136% increase in cost of revenue for the
nine month period ended September 30, 1999 over the comparable periods in 1998
were due principally to significant costs associated with the acquisition of
additional data contracted and utilized on the Company's Web site. The Company
expects that future costs of revenues will increase due to the additional
network communications lines required to accommodate increased traffic on our
sites, increased equipment and programming costs, and increased costs for
writers who contribute editorial content.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses includes various overhead costs
such as payroll, professional fees, insurance, rent and depreciation. For the
three months ended September 30, 1998 and September 30, 1999, the Company
incurred selling, general and administrative expenses of $609,845 and $692,986
respectively. Selling, general and administrative expenses for the nine months
ended September 30, 1998 and 1999 were $1,141,515 and $2,352,647, respectively.
The $83,141 increase (14%) in selling, general and administrative expenses for
the three month period ended September 30, 1999 and the $1,211,132 increase
(106%) in selling, general and administrative expenses for the nine month period
ended September 30, 1999 over the comparable periods in 1998 resulted primarily
from the following items: a) increases in payroll and payroll taxes expensed to
acquire the additional staff necessary to develop and maintain the Company's Web
sites; b) increases in outside consulting fees paid for assistance in developing
additional sources of capitalization as well as assistance in developing the
Company's Web sites; c) increases in professional fees paid for services such as
legal fees, accounting fees and Web site design fees; d) increases in
amortization and depreciation of the Company's substantial property and
equipment acquisitions; e) increases in rent due to the Company's leasing of
additional office facilities necessitated by the increase in personnel.
A major component of selling, general and administrative expenses is the
amortization of the $200,000 of prepaid consulting fees originally recorded
pursuant to a consulting services agreement dated March 8, 1997. The Company
exchanged 400,000 common shares, at the then fair market value of $.50 a share,
totaling $200,000 for consulting services. The prepaid consulting services are
amortized over the 36-month term of the agreement. Amortization of these
consulting fees amounted to $16,667 for the three-month period ended September
30, 1998 and $16,667 for the three month period ended September 30, 1999. The
amortization for the nine months ended September 30, 1998 and September 30, 1999
amounted to $50,000 each period.
The Company is dependent upon raising additional financing in order to continue
or increase the level of sales and marketing activities from that undertaken by
the Company to date. The level of sales and marketing activities that the
Company pursues will be substantially impacted by the amount of additional
financing, if any, that the Company is able to raise. Assuming that adequate
funding is available, the Company currently intends, among other matters, to
promote its Web sites through strategic alliances, external advertising, Web
site direct promotion, and trade shows. The Company expects that the costs
related to such activities will consist principally of advertising, personnel,
and consulting expenses.
11
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The Company expects general and administrative expenses to continue to increase
in absolute dollars as the Company expands its staff and incurs additional costs
related to the growth of its business.
FUTURE OUTLOOK
FWEB continues to focus on increasing market share by meeting users' demands for
a wider range of frequently updated, high quality financial information on Web
sites which are easy to use and quick to download. Meanwhile, the dissemination
of financial information over the Internet has been characterized by frequent
product introductions and increased competition.
The Company expects to experience significant challenges in future periods which
may cause fluctuations in operating results due to a variety of factors,
including, but not limited to: (a) the Company's ability to create, license, and
deliver compelling financial and other content; (b) the level of traffic on the
Company's Web sites (c) the Company's ability to upgrade and develop its systems
and infrastructure in a timely and effective manner: (d) technical difficulties,
system downtime or telecommunications server interruption; (e) the Company's
ability to attract customers at a steady rate and maintain customer
satisfaction; (f) the amount and timing of operating costs and capital
expenditures relating to expansion of the Company's business, operations, and
infrastructure; (g) the implementation of marketing programs, key agreements and
strategic alliances; (h) the seasonality of advertising sales; (i) the success
of Company promotions and sales programs (j) the level of returns experienced by
the Company; and (k) general economic conditions and economic conditions
specific to the Internet, online commerce, and the financial industry.
To address such factors, since May 1999, the following projects have been
completed:
1) The Company's Internet infrastructure and content development processes have
become 100% redundant, i.e., there now exists automatic rollover to a
redundant component in the event of any primary component failure. Security
has also been enhanced through the installation of a state-of-the art
firewall which prevents unauthorized access to the Company's systems by
"hackers" and others. These improvements have resulted in a higher quality
system, thus providing users with more reliable access to the Company's Web
sites.
2) The Company's Web sites have been redesigned. The new design provides users
with sites which are faster to load, easier to navigate through the use of a
search tool, and contain more streamlined and logically ordered content.
3) The Company has co-located its server equipment at the Sprint Advanced
Network Service Center in Winter Park, Florida. This arrangement provides the
Company with the ability to quickly increase its bandwidth capacity for the
delivery of information directly from the Internet's backbone. It eliminates
several system failure points, and reduces costs related to telephone line
transmissions and in-house monitoring personnel. The additional cost of the
co-location at Sprint is offset by the aforementioned cost reductions.
12
<PAGE>
The Company now has the ability to provide Internet products to end users which
are significantly easier to understand and navigate, as well as faster to load.
The Company has a bandwidth capacity of over 100 million page views per month,
as opposed to its previous monthly capacity of approximately 10 million page
views. The Company believes this will enable it to increase market share into
the foreseeable future, as well as to offer co-branded and private label sites
and other services to larger entities within the Internet information industry.
Although the Company believes that the above described advances will assist in
enabling it to compete as a provider of financial information over the Internet,
negative cash flows and operating losses are expected to continue into the
foreseeable future.
LIQUIDITY AND CAPITAL RESOURCES
The Company received $1,015,100 and $2,225,000 from its financing activities
during the nine months ended September 30, 1998 and 1999. Net cash used by
operating activities for those periods was $643,080 and $2,166,820,
respectively. The Company anticipates modest increases in revenues as it
continues marketing its banner advertising. However, on-going development and
maintenance of its 18 Web sites is expected to result in operating losses for
the foreseeable future. The Company's notes payable total $2,975,436 as of
September 30, 1999. These notes will become due and payable between December 13,
1999 and April, 2000 according to terms of each note, unless the note holders
exercise their rights to convert any portion of their balances to common stock
pursuant to the provisions of their convertible instruments.
On September 30, 1999, the Company had approximately $209,000 cash on hand,
which is considered sufficient to continue current operations for only about 6
weeks. Cash receipts totaling $131,770 were collected in the three months ended
September 30, 1999. Expenditures in the same period totaled $629,043.
The principal significant change in the balance sheet between the latest fiscal
year end (December 31, 1998) and September 30, 1999 is the $2,225,000 increase
in new convertible debt. The funds have been used to acquire new equipment and
intellectual property as well as pay registration costs and fund normal business
operations.
The Company had no material commitments for capital expenditures or prospective
plans for other capital outlays as of September 30, 1999.
The Company's financial statements have been presented on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The Company incurred net losses of $1,666,592
and $372,266 for the years ended December 31, 1998 and 1997, respectively, and
cumulative losses through September 30, 1999 amounting to $4,616,749. At
September 30, 1999 the Company had a working capital deficit of $3,214,784. At
October 31, 1999 the cash on hand was approximately $28,000, which is considered
sufficient to continue current operations for only about one week. The Company's
continuation as a going concern is dependent upon its ability to obtain suitable
sufficient financing or equity investment. Although external sources have
provided funding in previous periods, those events should not be relied upon as
an indication that external funding will be obtained in the future.
13
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Part II. Other Information
Item 1. Legal Proceedings
See Notes to Financial Statements
Item 2. Changes in Securities and use of Proceeds None
Item 3. Defaults upon Senior Securities None
Item 4. Submissions of matters to a vote of Security holders None
Item 5. Other information None
Item 6. Exhibits and Reports on Form 8-K None
14
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Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FinancialWeb.com, Inc.
Date: November 5, 1999 By: /s/ James P. Gagel
-------------------- --------------------------
Executive Vice President
15
