SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For Quarter Ended: September 30, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File No. 000-26731
Pacific WebWorks, Inc.
(Exact name of registrant as specified in its charter)
Nevada 87-0627910
(State of incorporation) (I.R.S. Employer
Identification No.)
1760 Fremont Drive
Salt Lake City, Utah 84104
(801) 578-9020
(Address and telephone number of principal executive offices and
principal place of business)
180 South 300 West, Suite 400
Salt Lake City, Utah 84101
(Former Address)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
As of October 27, 2000, the Registrant had a total of 14,858,342 shares of
common stock issued and outstanding.
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TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements..............................................3
Item 2: Management's Discussion and Analysis or Plan of Operations........10
PART II: OTHER INFORMATION
Item 2: Changes in Securities and Use of Proceeds..........................14
Item 5: Other Events.......................................................14
Item 6: Exhibits and Reports filed on Form 8-K ...........................15
Signatures.................................................................16
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PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Accounting Changes
In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." SAB 101 clarifies application of generally accepted accounting
principles to revenue transactions. The Company changed its accounting method
during the third quarter 2000 to conform to the views of the SEC staff as
documented in SAB 101. The change involves that of accounting for up-front
fees and, in accordance with SAB 101, the company is amortizing such fees over
one year, which generally represents the longer of the contractual period or
the expected life of the customer relationship. There is no cumulative effect
adjustment for the change in the first quarter 2000 as there were not
significant up-front fees relating to the change prior to January 1, 2000.
Pursuant to this new accounting policy the company has deferred revenue of
$2,967,088 at September 30, 2000 some of which was reported as revenues in
prior quarters. The Company has also deferred costs paid in connection with
the deferred revenues and has recorded prepaid expenses of $362,350 at
September 30, 2000.
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Pacific Webworks, Inc.
And Subsidiaries
Consolidated Financial Statements
September 30, 2000
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Pacific Webworks, Inc.
Consolidated Balance Sheets
September 30 December 31
2000 1999
------------ ------------
(Unaudited)
Assets
Current Assets (unaudited)
Cash and Cash Equivalents $ 72,044 $ 153,898
Accounts Receivable (net of allowance of
$12,798 and $3,798 respectively) 232,483 101,429
Employee Receivable 3,924 4,578
Prepaid Expenses 362,350 16,333
Accounts Receivable - Related Party - 6,800
Notes Receivable - Related Party - 166,046
Note Receivable - -
------------ ------------
Total Current Assets 670,801 449,084
------------ ------------
Property and Equipment 443,826 171,393
------------ ------------
Other Assets
Goodwill, net 4,283,939 -
Deposits 5,250 5,250
Computer Software Costs 342,534 4,832
------------ ------------
Total Other Assets 4,631,723 10,082
------------ ------------
Total Assets $ 5,746,350 $ 630,559
============ ============
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $ 473,599 $ 74,550
Accrued Expenses 271,485 70,177
Notes Payable - 500,000
Notes Payable - Related Party 216,580 -
Deferred Revenue 2,967,088 -
------------ ------------
Total Current Liabilities 3,928,752 644,727
Minority Interest - -
------------ ------------
Stockholders' Equity
Common Stock, authorized 50,000,000 shares of no
par value, issued and outstanding 10,400,342 and
10,395,679 shares 14,858 10,396
Deferred Compensation - (13,216)
Paid in Capital 9,763,603 2,775,404
Retained Deficit (7,960,863) (2,786,752)
------------ ------------
Total Stockholders' Equity 1,817,598 (14,168)
------------ ------------
Total Liabilities and Stockholders' Equity $ 5,746,350 $ 630,559
============ ============
F-2
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Pacific WebWorks, Inc.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the three For the nine
months ended months ended
September30 September 30 September30 September 30
2000 1999 2000 1999
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
SALES $ 1,682,669 $ 72,151 $ 3,273,508 $ 111,281
COST OF GOODS SOLD 116,235 8,316 212,597 19,684
------------ ------------ ------------ -------------
GROSS PROFIT 1,566,434 63,835 3,060,911 91,597
------------ ------------ ------------ -------------
OPERATING EXPENSES
General And Administrative
Expenses 650,710 240,083 2,255,464 554,405
Sales 737,804 102,689 4,503,581 206,551
Research and Development 246,972 100,673 645,372 205,946
------------ ------------ ------------ -------------
TOTAL OPERATING EXPENSES 1,635,486 443,445 7,404,417 966,902
------------ ------------ ------------ -------------
OPERATING INCOME (LOSS) (69,052) (379,610) (4,343,506) (875,305)
------------ ------------ ------------ -------------
OTHER INCOME AND (EXPENSES)
Amortization (307,875) 95,841 (641,484) (1,230,300)
Depreciation (41,149) (4,045) (88,568) (12,248)
Interest Expense (40,226) (4,861) (100,553) (4,861)
Minority Interest - - - -
------------ ------------ ------------ -------------
Total Other income and (Expenses) (389,250) 86,935 (830,605) (1,247,409)
------------ ------------ ------------ -------------
NET INCOME (LOSS) $ (458,302) $ (292,675) $(5,174,111) $ (2,122,714)
============ ============ ============ =============
NET INCOME (LOSS) PER SHARE (0.03) (0.03) (0.41) (0.22)
============ ============ ============ =============
WEIGHTED AVERAGE NUMBER OF 14,267,212 9,447,556 12,504,532 9,447,556
COMMON SHARES ============= ============ ============ =============
F-4
</TABLE>
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Pacific WebWorks, Inc.
Consolidated Statements of Cash Flows
Unaudited)
For the nine
months ended
September 30 September 30
2000 1999
------------- -------------
Cash Flows From Operating Activities
Net income (loss) $ (5,174,111) $ (2,122,714)
Adjustments to Reconcile Net Income (Loss) to
Net Cash Used in Operating Activities:
Depreciation & Amortization 730,051 1,249,773
Bad Debt 18,000 -
Minority Interest - -
Loss on Investments 25,000 -
Change in Assets and Liabilities (Net of
effects of acquisition of WCN)
(Increase) Decrease in:
Accounts Receivable (96,616) (49,251)
Other Receivables 1,595 -
Prepaid Expenses (346,018) -
Increase/(decrease) in:
Accounts Payable and Accrued Expenses 71,071 48,261
Deferred Expenses - -
Deferred Revenue 2,719,588 -
------------- -------------
Net Cash Provided (Used) by Operating Activities (2,051,440) (873,931)
------------- -------------
Cash Flows from investing Activities
Cash paid for Notes Receivable - -
Purchase of Property and Equipment (244,150) (110,621)
Cash paid for deposits (500) -
Cash acquired in acquisition 9,718 750,000
------------- -------------
Net Cash Provided (Used) by Investing Activities (234,932) 639,379
------------- -------------
Cash Flows from Financing Activities
Proceeds from debt financing 597,446 500,000
Principal payments on debt financing (18,873) (250,000)
Proceeds from Issuance of Stock 1,625,945 -
Warrants issued for services - -
------------- -------------
Net Cash Provided (Used) by Financing Activities 2,204,518 250,000
------------- -------------
Net increase (Decrease) in Cash and
Cash Equivalents (81,854) 15,448
------------- -------------
Cash and Cash Equivalents Beginning of Period 153,898 9,306
------------- -------------
Cash and Cash Equivalents
End of Period $ 72,044 $ 24,754
============= =============
F-5
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Pacific Webworks, Inc.
September 30, 2000
NOTES TO FINANCIAL STATEMENTS
Pacific Webworks, Inc. (the "Company") has elected to omit
substantially all footnotes to the financial statements for the nine months
ended September 30, 2000, since there have been no material changes (other
than indicated in other footnotes) to the information previously reported by
the Company in their Annual Report filed on Form 10-K for the fiscal year
ended December 31, 1999.
UNAUDITED INFORMATION
The information furnished herein was taken from the books and
records of the Company without audit. However, such information reflects all
adjustments which are, in the opinion of management, necessary to properly
reflect the results of the period presented. The information presented is not
necessarily indicative of the results from operations expected for the full
fiscal year.
ACQUISITION OF WORLD COMMERCE NETWORK, LLC
Effective January 1, 2000, the Company issued 4,663 shares of its
common stock to U.S. Merchant Systems, Inc. for 1% of the outstanding stock of
World Commerce Network, LLC. (WCN) The shares were valued at $9,180. The
issuance increases the Company's ownership in WCN to 51% and WCN therefore
becomes a subsidiary of the Company. The operations of WCN have been
consolidated with the Company's operations effective January 1, 2000. Prior
to the additional 1% purchase, the Company owned 50% of WCN and recorded its
investment using the equity method. The balance at December 31, 1999 was $0.
ACQUISITION OF INTELLIPAY, INC.
On April 4, 2000, the Company completed an Agreement and Plan of
Reorganization between Pacific Webworks, Inc. a public Nevada corporation (the
Company) and Intellipay, Inc. a private Delaware corporation (Intellipay).
The Company issued 2,400,000 shares of common stock valued at $4,320,000 for
all of the outstanding shares of Intellipay. Thereby Intellipay became a
wholly owned subsidiary of the Company. The transaction was recorded using the
purchase method of accounting.
COMMON STOCK
On June 30, 2000, the Company's $1,000,000 notes payable and $37,536
accrued interest were converted to 1,040,000 shares of common stock at $1.00
per share.
F-5
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Pacific Webworks, Inc.
September 30, 2000
On September 20, 2000, the Company's $600,000 notes payable were
converted to 600,000 shares of common stock at $1.00 per share.
REVENUE RECOGNITION
The company receives revenue from the sales of access to its web-based
applications, the performance of consulting and training and from the
continual hosting of its client's web sites. The initial term of all
agreements into which the company enters with its clientele for its web-based
applications is one year. The revenues related to these contracts are,
therefore, recognized ratably over the initial term of the contract. The
monthly charges related to hosting and gateway access are recognized when
billed in accordance with SOP 97-2. Any additional consulting fees or
training fees, outside of the initial contract, related to any Visual WebTools
products are recognized as the service is delivered.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." SAB 101 clarifies application of generally accepted accounting
principles to revenue transactions. The Company changed its accounting method
during the third quarter 2000 to conform to the views of the SEC staff as
documented in SAB 101. The change involves that of accounting for up-front
fees and, in accordance with SAB 101, the company is amortizing such fees over
one year, which generally represents the longer of the contractual period or
the expected life of the customer relationship. There is no cumulative effect
adjustment for the change in the first quarter 2000 as there were not
significant up-front fees relating to the change prior to January 1, 2000.
Pursuant to this new accounting policy the company has deferred revenue of
$2,967,088 at September 30, 2000, some of which was reported as revenues in
prior quarters. The Company has also deferred commissions paid in connection
with the deferred revenues and has recorded prepaid expenses of $362,350 at
September 30, 2000.
F-6
In this report references to "Pacific WebWorks," "we," "us," and "our"
refer to Pacific WebWorks, Inc.
FORWARD LOOKING STATEMENTS
This Form 10-Q contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. For this
purpose any statements contained in this Form 10-Q that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate," or "continue" or comparable terminology are intended
to identify forward-looking statements. These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
Pacific WebWork's control. These factors include but are not limited to
economic conditions generally and in the industries in which Pacific WebWorks
may participate; competition within Pacific WebWork's chosen industry,
including competition from much larger competitors; technological advances and
failure by Pacific WebWorks to successfully develop business relationships.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
Pacific WebWorks develops business software technologies for Internet
merchants and its wholly-owned subsidiary, IntelliPay, Inc., provides online,
secure, and real-time payment processing. Pacific WebWorks also owns World
Commerce Network, LLC, which promotes and sells products from Pacific
WebWorks, IntelliPay Inc. and other vendors as Pacific may choose.
For the nine-month period ended September 30, 2000, Pacific WebWorks
recorded revenues of $3,273,508. This was a significant increase compared to
the $111,281 in revenues for the nine-month period ended September 30, 1999.
Our net loss was $5,174,111, or $0.41 per share, for the third quarter of 2000
compared to $2,122,714, or $0.22 per share, for the third quarter of 1999.
Revenues were low in 1999 because we did not have significant sales of our
products until the third quarter of 1999.
We have posted net losses from our inception and our independent auditors
reported that this history of losses raised doubts about our ability to
continue as a going concern without financing. Management has taken several
steps to restructure our operations with the intent to generate profits within
the next quarter. These steps include consolidation of operations of Pacific
WebWorks and its related companies, reductions in the number of employees, and
continued growth of our sales and marketing channels. Sales projections may
be down throughout the remainder of fiscal 2000 due to the alteration of our
short-term goals.
Acquisitions.
On September 29, 2000, we signed a letter of intent to acquire the
outstanding stock of Logio, Inc., a Nevada corporation in a share for share
exchange. We are now in the midst of our due diligence process and expect
that that process will be completed in a timely manner. Subject to the
satisfactory completion of the due diligence, we plan to immediately initiate
the process of obtaining shareholder approval for the proposed transaction.
In March of 2000 we acquired an additional 1% interest in World Commerce
Network LLC, a marketing company we formed to promote and sell products from
Pacific WebWorks, U.S. Merchant Systems, and IntelliPay, Inc. This additional
1% gave us a 51% total interest in World Commerce Network. In August of 2000,
we acquired
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the remaining 49% of World Commerce Network. Our initial intent was to
partner with companies having experience in seminar marketing. We believed
this would allow us to enter the market quickly and efficiently by minimizing
the time required to develop an effective seminar marketing strategy and
presentation. Management believes World Commerce Network will continue to
improve our revenue generation through the acquisition of new merchants and
through resale opportunities to existing merchants.
On April 4, 2000, we signed a reorganization agreement to acquire all of
the outstanding shares of IntelliPay, Inc., a Delaware corporation. We issued
2,400,000 common shares, valued at $8,400,000, in exchange for 1000 shares of
IntelliPay held by 18 shareholders. IntelliPay became our wholly owned
subsidiary. We have been involved in a joint venture with IntelliPay to
establish MainStreetSquare.com, an online shopping portal. Management
believes this acquisition will combine merchant bases of Pacific WebWorks and
IntelliPay, which opens up marketing and revenue opportunities. In addition,
IntelliPay will become a key source of payment technologies for future
products of Pacific WebWorks.
Results of Operations.
The following table summarizes the results of our operations for the
three and nine months ended September 30, 2000 and 1999. The following
discussions are based on consolidated financial statements of Pacific WebWorks
and its wholly owned subsidiary IntelliPay and include the consolidation of
former 51% interest in World Commerce Networks.
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
------------ ------------- ------------ ------------
Sales $ 1,682,669 $ 72,151 $ 3,273,508 $ 111,281
Cost of Goods Sold 116,235 8,316 212,597 19,684
Gross Profit 1,566,434 63,835 3,060,911 91,597
Operating Expenses 650,710 240,083 2,255,464 554,405
General & Administrative 737,804 102,689 4,503,581 206,551
Sales 246,972 100,673 645,372 205,946
Research and Development 1,635,486 443,445 7,404,417 966,902
Total Operating Expenses
Net Income (Loss) $ (458,302) $ (292,675) $(5,174,111) $(2,122,714)
5
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We receive revenues from the sale of access to our software technology
sold by us or by all our resale channels. We also receive revenues from
services provided for website design, training, education and consulting.
During the first quarter we began seeing significant revenues from our joint
venture in World Commerce Network. The success of the initial seminars
conducted early in the first quarter of 2000 led us to expand our seminar
funding to include a second team. Seminars conducted by our second team began
late in the first quarter of 2000. We determined during the third quarter,
the increased benefit of having a partner process all of the lease
documentation and merchant account paperwork was minimized by the difficulties
involved with remote operations. Revenue growth fell short of initial
projections because of the difficulties in getting clients to expedite the
paperwork required for processing their merchant accounts, and leases. We
agreed with our partner, U.S. Merchant Systems, to complete our scheduled
seminars and then Pacific WebWorks would assume the outstanding ownership of
World Commerce Network held by US Merchant Systems and continue forward with
World Commerce Network operations. We discontinued the second team as of
mid-July and all remaining seminar sales as of the end of July. We anticipate
beginning seminar operation again in the future. We continue to focus on
sales growth through all other channels.
Recognized revenue follows approximately three weeks after the sale is
written at a seminar event. Only after merchant account approval and lease
funding is revenue recognized. We generated $ 1,682,669 in sales for the 2000
quarter, compared to $ 72,151 in the same quarter of 1999. Annual revenues as
of September 30, 2000 showed extraordinary growth from $ 111,281 in 1999 to $
3,273,508 in 2000. This completes our seventh straight quarter of significant
revenue growth. This growth is due to our marketing efforts through World
Commerce Network and the continued growth of our existing sales channels.
Cost of goods sold for the third quarter of 2000 decreased to 6.9% of
revenues compared to 11.5% of revenues for the comparable quarter of 1999.
Accordingly, cost of goods sold were 6.5% of revenues for the nine month
period of 2000 compared to 17.7% of revenues for the 1999 nine month period.
The decrease was primarily due to renegotiated lower prices for merchant
accounts and other third party products.
Our gross profit was 93.1% of revenues for the 2000 third quarter and
93.5% of revenues for the 2000 nine month period, compared to 88.5% of
revenues for the 1999 third quarter and 82.3% of revenues for the 1999 nine
month period.
Revenues exceeded total operating expenses by $47,183 for the 2000 third
quarter compared to total operating expenses exceeding revenues by $379,610
for the 1999 quarter. Total operating expenses for the 2000 nine month period
exceeded revenues by $4,130,909 compared to $875,305 for the 1999 nine month
period. Total operating expenses for the 2000 nine month period included
$2,227,165 in expenses for Pacific WebWorks, $4,434,023 in expenses for World
Commerce Network and $743,229 in expenses for Intellipay.
Consolidated general and administrative costs increased $410,627 in the
third quarter of 2000 compared to the 1999 third quarter. The general and
administrative costs increased $1,701,059 for the 2000 nine month period
compared to the 1999 nine month period. Growth in general and administrative
costs is primarily attributed to the $1,178,092 overhead in World Commerce
Network.
Sales expenses, which include both sales and marketing expenses, grew
$635,115 in the 2000 third quarter over 1999 and $4,297,030 in the nine month
period from the comparable nine months in 1999. The 2000 nine month
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period increase included radio advertising on the Utah Jazz radio network, and
direct mail of approximately 100,000 mail pieces per week. Sales expenses
grew due to investments into World Commerce Network seminar teams and
increased commissions paid to existing Pacific WebWorks sales channels. Over
$300,000 of expenses in World Commerce Network for the nine month period were
dedicated to funding the second team.
Research and development expenses, including all costs for product
design, programming, and quality control were $146,299 higher for the 2000
third quarter and $439,426 higher for the 2000 nine month period compared to
the 1999 third quarter and nine month period. The costs were related to
research and development of IDDS , V4 , and BizWiz as well as the ongoing
development and improvements to the IntelliPay gateway.
Our net loss was 27.2% of revenues for the 2000 third quarter and 158.1%
for the 2000 nine month period compared to 405.6% of revenues for 1999 third
quarter and 1907.5% of revenues for the 1999 nine month period. The primary
source of our losses relates to our investment in the growth of our marketing
subsidiary, World Commerce Network. During the 2000 nine month period, the
loss attributable to Pacific WebWorks operations was $0.145 per share, the
loss relating to World Commerce Network was $.227 per share and the loss
relating to IntelliPay was $.042 per share.
Liquidity and Capital Resources.
For the quarter ended September 30, 2000, we had $72,044 cash on hand
with total current assets of $670,801 compared to $153,898 cash on hand and
total current assets of $449,084 for the year ended December 31, 1999. 34.7%
of the total current assets for the 2000 nine month period was allocated to
accounts receivable. For the year ended December 31, 1999, 36.9% of the total
current assets were allocated to notes receivable from IntelliPay and 22.6% to
accounts receivable. The IntelliPay note receivable represents our
commitments to their operations both during the period we were discussing the
potential acquisition of their operations and the period immediately following
the acquisition. The acquisition was completed in the third quarter of 2000.
Prepaid expenses represented 54.0% of current assets at the end of the third
quarter 2000. This asset primarily represents the deferral of product costs
to be recognized at the time the related revenues are recognized.
Total current liabilities increased $3,284,025 for the 2000 nine-month
period from the 1999 year end. Of this total, $216,580 was a note payable to
the former minority partner in World Commerce Network. Trade accounts payable
of $473,599 made up 12.1% of these liabilities. $2,967,088 of the current
liabilities relate to deferred revenue which we have deferred in accordance
with SAB101 and recognized on a ratable basis over the term of our client's
agreements.
Net cash used by operating activities for the nine months ended September
30, 2000 was $2,051,440. Net cash used by investing activities was $234,932,
which was primarily used for the purchase of capital equipment. Net cash
provided by financing activities was $2,204,518 from both the issuance of
stock and debt financing.
In January 2000, we issued 400,000 warrants to Columbia Financial at a
strike price of $3.50 for investor-relation services to be provided for us
during the year 2000. Currently Columbia holds 800,000 warrants to purchase
our common stock. We entered into a registration rights agreement with
Columbia Financial in February of 2000 and have registered the shares to be
issued upon exercise of these warrants when, and if, Columbia Financial
decides to exercise the warrants. As of the date of this filing, 150,000
warrants at a strike price of $2.50 were exercised. The warrants were all
exercised during the fourth quarter of 2000.
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In February we agreed to sell 400,000 common shares for $1,000,000 with
warrants for the purchase of an additional 600,000 common shares at strike
prices ranging from $5.00 to $7.50 per share. Upon closing of this
transaction we realized $1 million and may also receive additional proceeds
from the exercise of the warrants in the future. However, the holders of the
warrants have total discretion whether or not they exercise the warrants. We
cannot assure that all of the warrants will be exercised before their
expiration in 2004 and 2005. If all our outstanding warrants are exercised we
would realize $6,375,000 in proceeds. As of the date of this filing, none of
these warrants have been exercised.
In June we entered into an agreement with the holders of a majority of
our debt to convert $1 million of short-term debt and $37,536 accrued
interest to common stock. The debt converted at one dollar per share for a
total of 1,040,000 shares. Likewise, in September we converted $600 thousand
of short-term debt to 600,000 shares of our common stock.
Based on our revenues for the 2000 nine-month period, our management
believes that we have sufficient resources available to continue our product
development efforts and to continue our sales, marketing, and promotional
activities for Visual WebTools . However, we operate in a very competitive
industry in which large amounts of capital are required in order to develop
and promote products. Many of our competitors have significantly greater
capital resources than we do. We believe we will need to continue to raise
additional capital, both internally and externally, in order to successfully
compete.
While we may be able to fund our operations through our revenues for the
short term, we currently anticipate using private placements of our common
stock. We intend to issue such stock pursuant to exemptions provided by
federal and state securities laws. The purchasers and manner of issuance will
be determined according to our financial needs and the available exemptions.
We also note that if we issue more shares of our common stock our shareholders
may experience dilution in the value per share of their common stock.
Factors Affecting Future Performance
As of October 2000 we have added fourteen new resellers to our nation
wide reseller group, resulting in 40 total resellers, and we acquired our
30,000th client. Management believes this growth will result in increased
revenues, however, actual revenue increases will depend on a number of
factors, including our ability to negotiate favorable licensing agreements
with resellers; the number of our resellers; the software and services for
which they subscribe; the nature and success of our products and services;
establishing brand recognition of our products; regulatory changes; and
changes in technology.
Additionally, management believes that a trend is developing in the
Internet market where e-commerce technology providers, merchant banks and
payment processors are forming alliances to better serve their clients needs
without one entity attempting to fill all roles. Pacific WebWorks has formed
alliances with such entities as Global Yellow Ads.com, who will market our
software to its clients and Live Person, Inc. to assist in customer support.
IntelliPay has formed an alliance with ROI Direct.com who can provide
e-Business applications for conducting e-commerce.
We currently estimate that we will require between $2,500,000 and
$3,500,000 to further and fully develop our products and services in
accordance with our business plan. Our actual expenses and revenues could
vary materially from the amounts we anticipate or budget, and such variations
may affect the additional financing needed for our operations. To the extent
that we acquire the amounts necessary to fund our business plan through the
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issuance of equity securities, our then-current shareholders may experience
dilution in the value per share of their equity securities. The acquisition
of funding through the issuance of debt could result in a substantial portion
of our cash flows from operations being dedicated to the payment of principal
and interest on that indebtedness, and could render us vulnerable to
competition or economic downturns.
PART II: OTHER INFORMATION
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS
The following discussion describes all securities sold without
registration by Pacific WebWorks from June 30, 2000 through October 27, 2000.
On August 21, 2000 we issued 18,000 shares valued at $26,000 to Don
Mayer, President of Universal Business Insurance, Inc. for directors and
officers insurance. The issuance of these shares was exempt from the
registration requirements of the Securities Act of 1933 by reason of Section
4(2) as a private transaction not involving a public distribution.
On September 20, 2000 we issued 600,000 shares valued at $600,000 to
Mutual Ventures Corporation to satisfy a note payable. The issuance of these
shares was exempt from the registration requirements of the Securities Act of
1933 by reason of Section 4(2) as a private transaction not involving a public
distribution.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Part I Exhibits.
Exhibit Description
27 Financial Data Schedule
(b) Reports on Form 8-K.
On September 1, 2000, we filed a current report on Form 8-K under Item 4
concerning the replacement of our auditor, Crouch, Bierwolf & Chisholm, with
Chisholm & Associates. No financial statements were filed.
On September 29, 2000 we filed a current report on Form 8-K under Item 5
regarding the signing of the letter of intent to acquire Logio, Inc. No
financial statements were filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Pacific WebWorks, Inc.
10/31/00 /s/ Christian Larsen
Date: ________________________ By: ________________________________
Christian Larsen, President, C.E.O.
10/31/00 /s/ Mat Dastrup
Date: ________________________ By: ________________________________
Mat Dastrup, Chief Financial Officer
