SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10QSB
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended Commission File Number
June 30, 2000 10-86519
WORLD WIDE VIDEO, INC.
----------------------
(Exact name of registrant as specified in its charter)
Colorado 54-1921580
-------- ----------
(State of incorporation) (I.R.S. Employer
Identification No.)
102A North Main Street, Culpeper, Virginia 22701
------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (540) 727-7551
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 the filing
requirements for at least the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
11,337,768 Common Shares Issued as of as of June 30, 2000. 70,274 Warrants @
$2.75, expiration date of April 5, 2001, or 1 year after public trading begins,
whichever is later.
105,068 Preferred Shares Issued as of June 30, 2000. 210,136 Warrants @ $6.00,
expiration date of August 31, 2001.
<PAGE>
Part I: FINANCIAL INFORMATION
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
BALANCE SHEETS
June 30, 2000 and September 30, 1999
(Stated in US Dollars)
June 30, September 30,
2000 1999
ASSETS
CURRENT ASSETS
Cash in banks $ 139,610 $ 18,788
Cash on hand 12,000 -
Accounts receivable 7,375 8,033
Inventory 123,790 119,290
Prepaid expenses 16,470 86,121
Deferred offering costs 3,000 3,000
--------- ---------
Total current assets $ 302,245 $ 235,232
--------- ---------
PROPERTY AND EQUIPMENT
Computer equipment $ 79,804 $ 20,866
Furniture and fixtures 1,100 -
Software 13,668 13,668
--------- ---------
$ 94,572 $ 34,534
Less accumulated depreciation 16,764 7,129
--------- ---------
$ 77,808 $ 27,405
--------- ---------
OTHER ASSETS
Licenses, net of accumulated
amortization $ 61,406 $ 33,750
Artwork 2,445 -
Deposits 1,150 1,150
Travel advances 8,693 -
--------- ---------
$ 73,694 $ 34,900
--------- ---------
$ 453,747 $ 297,537
========= =========
See Notes to Financial Statements.
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
BALANCE SHEETS
June 30, 2000 and September 30, 1999
(Stated in US Dollars)
June 30, September 30,
2000 1999
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 54,417 $ 58,209
Due to officers and employees 369,769 213,164
Deferred revenue 67,500 75,000
Preferred dividends payable 5,029 1,020
Accrued stock 69,250 --
--------- ---------
Total current liabilities $ 565,965 $ 347,393
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value, 100,000,000 shares
authorized; 11,337,768 issued and outstanding
at June 30, 2000 and 11,106,900 at September
30, 1999 $ 1,134 $ 1,101
Preferred stock, $.01 par value, 10,000,000
shares authorized, 105,068 and 23,500 issued
and outstanding, respectively 1,051 235
Additional paid in capital 2,561,963 1,339,041
Deficit accumulated during the development stage (2,156,966) (1,390,233)
---------- ----------
$ (407,182) $ (49,856)
---------- ----------
$ 973,147 $ 297,537
========== =========
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For the Three Months and Nine Months ended
June 30, 2000 and 1999 and from July 16, 1997
(Date of Inception) to June 30, 2000
(Stated in US Dollars)
(Unaudited)
<S> <C> <C> <C> <C> <C>
Cumulative
from
Three months Nine Months July 16, 1997
ended ended Date of
Inception)
June 30, June 30, to June 30,
2000 1999 2000 1999 2000
---- ---- ---- ---- ----
SALES $ -- $ -- $ -- $ -- $ --
-------- -------- ------- ------- ----------
PRODUCT DEVELOPMENT COSTS
Salaries $ 103,682 $ 60,000 $ 288,271 $ 120,000 $ 470,062
Subcontractors 109,797 1,061 130,522 62,660 774,017
Other development costs 41,493 11,398 103,513 29,726 421,883
--------- --------- --------- -------- ----------
$ 254,972 $ 72,459 $ 522,306 $ 212,386 $ 1,665,962
--------- --------- --------- -------- ----------
OPERATING EXPENSES
Office $ 11,239 $30,239 $ 22,684 $ 44,900 $ 74,042
Marketing and sales 12,035 1,798 35,745 22,274 127,553
Legal and
professional 11,179 665 67,652 17,200 100,289
Occupancy 14,538 3,147 31,430 11,243 52,243
Utilities and
telephone 5,691 2,489 13,171 8,489 28,564
Depreciation 10,490 3,691 19,480 11,073 42,858
Other 36,630 2,851 42,083 7,409 60,124
--------- -------- --------- -------- ----------
$ 101,802 $ 44,880 $ 232,245 $ 122,588 $ 485,673
--------- -------- --------- -------- ----------
Net operating loss $(356,774) $(117,339) $(754,551) $(334,974) $(2,151,635)
OTHER INCOME -- -- 3,051 5,114 10,915
FINANCIAL INCOME AND EXPENSE
Interest income -- 10 -- 10 10
Interest expense ( 42) -- (168) -- (167)
--------- --------- --------- -------- ----------
Net loss $(356,816) $(117,329) $(751,668)$ (329,850) $(2,140,877)
========= ========== ======== ========= ==========
Net loss per share $ (.03) $ (.02) $ (.07)$ (.06) $ (.20)
========== ========== ========== ========= ===========
Weighted average number
of common shares
outstanding 11,011,368 5,620,099 11,011,368 5,620,099 11,011,368
=========== ========= ========== ========= ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
For the Period July 16, 1997, Inception,
to June 30, 2000
(Stated in US Dollars)
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Cumulative Additional Deficit During
Common Stock Preferred Paid In Development
Shares Amount Par Capital Stage Total
------ ------ ------- ----- ----- -----
Issuance of share capital
to Founders, July 16, 1997 200 $ -- -- $ 200 $ -- $ 200
Net loss, period ended
September 30, 1997 -- -- -- -- -- --
------- ------- -------- ------- ------- -------
Balance, September 30, 1997 200 -- -- $ 200 -- $ 200
Exchange of shares, issuance
of new shares, May 12, 1998 9,999,800 1,000 -- (200) -- 800
Sale of common stock, April 3,
through September 8, 1998 443,737 44 -- 634,558 -- 634,602
Net loss, year ended September 30,
1998 -- -- -- -- (468,326) (468,326)
---------- ------- ------- -------- --------- --------
Balance, September 30, 1998 10,443,737 1,044 -- 634,558 (468,326) 167,276
Sale of common stock 315,250 32 -- 213,433 -- 213,465
Sale of preferred stock -- -- 235 140,765 -- 141,000
Contributed services 252,381 25 -- 350,285 -- 350,310
Dividend, cumulative preferred shares -- -- -- -- (1,020) (1,020)
Net loss, year ended September 30,
1999 -- -- -- -- (920,887) (920,887)
---------- ------- -------- --------- --------- ---------
Balance, September 30, 1999 11,011,368 $1,101 $ 235 $1,339,041 $(1,390,233) $( 49,856)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
For the Period July 16, 1997, Inception,
to June 30, 2000
(Stated in US Dollars)
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Cumulative Additional Deficit During
Common Stock Preferred Paid In Development
Shares Amount Par Capital Stage Total
------ ------ ------- --------- ----- -------
Sale of common stock 95,556 10 -- 214,990 -- 215,000
Sale of preferred stock -- -- 816 488,555 -- 489,371
(105,068 shares)
Dividend, cumulative preferred shares -- -- -- -- (15,065) (15,065)
Net loss, nine months ended June 30,
2000 -- -- -- -- (751,668) (751,668)
---------- ------ ------ --------- --------- ----------
Balance, June 30 11,337,768 $1,111 $1,051 $2,042,586 $(2,156,966) $( 112,218)
========== ====== ====== ========= ========== ==========
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended June 30, 2000 and 1999
and July 16, 1997 (Date of Inception) to June 30, 2000
(Stated in US Dollars)
(Unaudited)
<S> <C> <C> <C>
Cumulative for
July 16, 1997
(Date of
Nine months ended Inception)
June 30, June 30, to June 30,
2000 1999 2000
---- ---- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
RECONCILIATION OF NET LOSS TO NET
CASH USED IN OPERATING ACTIVITIES
Net loss $(751,668) $(329,850) $ (2,140,877)
Adjustments to reconcile net
loss to net cash used in operating
activities:
Depreciation and amortization 19,480 11,073 42,858
Change in assets and liabilities:
Accounts receivable 657 (5,602) ( 7,376)
Inventory (4,500) (22,062) (123,790)
Prepaid expenses 69,651 19,750 (16,470)
Deposits -- -- (1,150)
Deferred charges -- (10,850) (3,000)
Loans to shareholders (8,693) -- (8,693)
Accounts payable (3,792) (15,780) 54,417
Salaries payable 156,605 120,000 369,769
Deferred revenue (7,500) 10,000 67,500
Convertible loan -- 50,000 --
Accrued stock 69,250 -- 69,250
--------- --------- -----------
Net cash used in operating
activities $(460,510) $(251,621) $ (1,697,562)
--------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment and software $ (60,038) $ ( 3,237) $ (94,572)
Purchase of licenses (37,500) -- (87,500)
Purchase of artwork ( 2,445) -- ( 2,445)
--------- --------- ------------
Net cash used in investing
activities $ (99,983) $ ( 3,237) $ (184,517)
--------- -------- ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended June 30, 2000 and 1999
and July 16, 1997 (Date of Inception) to June 30, 2000
(Stated in US Dollars)
(Unaudited)
<S> <C> <C> <C>
Cumulative for
July 16, 1997
(Date of
Nine months ended Inception)
June 30, June 30, to June 30,
2000 1999 2000
---- ---- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of
common stock $ 215,000 $ 229,429 $ 1,933,776
Proceeds from issuance of
preferred stock 489,373 -- 630,371
Dividends paid (11,058) -- (11,058)
--------- --------- -----------
Net cash provided by
activities $ 693,315 $ 229,429 $ 2,553,089
--------- -------- ------------
Net increase (decrease) in cash $ 132,822 $ (25,429) $ 671,010
CASH
Beginning 18,788 28,324 --
--------- --------- -----------
Ending $ 151,610 $ 2,895 $ 671,010
========= ======== ============
</TABLE>
See Notes to Financial Statements
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Stated in US Dollars)
(Unaudited)
Note 1. Interim Reporting
These financial statements have not been audited or reviewed and have
been prepared on a compilation basis only. The statements have been
prepared in accordance with generally accepted accounting principles
for interim reporting and with the instructions to Form 10-QSB of
Regulation S-X. Accordingly, these financial statements do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
management's opinion, these financial statements include all
adjustments necessary to present fairly the financial position,
result of operations and changes in cash flows for the interim period
presented. It is suggested that these financial statements be read in
conjunction with the September 30, 1999 audited financial statements
and notes thereto.
Note 2. Nature and Continuance of Operations
World Wide Video, Inc., was organized under the laws of the
Commonwealth of Virginia on July 16, 1997. On April 9, 1998, he
Company was reincorporated in the State of Colorado. The Company
intends to design and manufacture technology and products for
the video telephony market. These financial statements have been
prepared on a going concern basis. The company has accumulated a
deficit of $2,156,966 since inception. Its ability to continue
as a going concern is dependent upon the ability of the company
to generate profitable operations in the future and/or to obtain
the necessary financing to meet its obligations and repay its
liabilities arising from normal business operations when they
come due.
The Company's continued existence is dependent upon its ability
to raise additional funds to complete products in development.
The Company conducted a private securities offering which closed
April 6, 1999. At June 30, 2000, the Company had sold 11,337,768
shares of common stock at prices ranging from $.50 to $2.75 per
common share.
After the completion of the above private securities offering,
the Company began pursuing private placements from other
sources. Based on the analysis of funds available and funds
required to complete the initial production of product and
associated productions cost, research and development, the
Company decided to raise additional required working capital by
a Regulation D Rule 506 offering of preferred stock. As of June
30, 2000, the Company had sold 105,068 shares of preferred stock
at $6.00 per share, for a total of $630,400.
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Stated in US Dollars)
(Unaudited)
In addition to selling preferred stock, the Company will issue
stock to certain key individuals for services rendered in lieu
of cash payments. In management's opinion, such efforts should
provide sufficient funds to continue operations for the next
year.
Note 3. Summary of Significant Accounting Policies
A summary of significant accounting policies follows:
Development Stage Company
The company is a development stage company as defined in
Statement of Financial Accounting Standards No. 7. The
Company has elected early adoption of Statement of
Position 98-5, which requires expensing costs of start-up
activities, including organization costs, as incurred.
All losses accumulated since inception have been
considered as part of the company's development stage
activities.
Method of Accounting
The financial statements are presented on the accrual
basis of accounting. Under this method of accounting,
revenues are recognized when they are earned as opposed
to when cash is actually received. Likewise, expenses are
recognized when they are incurred as opposed to when they
are actually paid.
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 as of 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.
Cash and Cash Equivalents
The statements of cash flows classify changes in cash or
cash equivalents (short-term, highly liquid investments
readily convertible into cash with a maturity of three
months or less) according to operating, investing, or
financing activities.
Property and Equipment
Property and equipment are recorded at cost and
depreciated over their estimated useful lives.
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Stated in US Dollars)
(Unaudited)
Leases which meet certain specified criteria are accounted
for as capital assets and liabilities, and those not meeting
the criteria are accounted for as operating leases.
Expenditures for maintenance, repairs, and improvements
which do not materially extend the useful lives of property
and equipment are charged to earnings. When property or
equipment is sold or otherwise disposed of, the cost and
related accumulated depreciation or amortization is removed
from the accounts, and the resulting gain or loss is
reflected in earnings.
Income Taxes
The Company uses the liability method of accounting for
income taxes. The liability method accounts for deferred
income taxes by applying enacted statutory rates in effect
at the balance sheet date to differences between financial
statement amounts and tax bases of assets and liabilities.
The resulting deferred income tax liabilities are adjusted
to reflect changes in tax laws and rates.
Temporary differences consist of the difference in financial
and income tax bases for accounting for start up and
organizational costs. Deferred income taxes related to an
asset or liability are classified as current or non-current
based on the classification of the related asset or
liability.
Loss Per Share
The Company has adopted Statement of Financial Accounting
Standards (SFAS) No. 128, which established standards for
computing and presenting earnings per share (EPS) for
entities with publicly held common stock. The standard
requires presentation of two categories of earnings per
share, basis EPS and diluted EPS. Basic EPS excludes
dilution and is computed by dividing income (loss) available
to common shareholders by the weighted average number of
common shares outstanding for the year. Diluted EPS reflects
the potential dilutions that could occur of securities or
other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the
Company. This computation excludes securities which are
antidilutive.
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Stated in US Dollars)
(Unaudited)
The following table sets forth the computation of basic and
diluted loss per share:
Three Months Nine Months
Ended Ended
June 30, 2000 June 30, 2000
Numerator:
Net loss plus preferred
dividends $(363,267) $(766,737)
Denominator
Weighted average shares
outstanding 11,011,368 11,011,368
Basic and diluted EPS $ (.03) $ (.07)
Note 3. Summary of Significant Accounting Policies (continued)
Fair Value of Financial Instruments
The carrying value of cash, accounts receivable and
accounts payable approximates current fair value for the
period ended June 30, 2000.
Technology Licenses
The Company capitalizes technology licenses when
purchased. Technology licenses are carried at cost less
accumulated amortization. Amortization is taken on the
straight line basis over the estimated useful life of the
licenses. The Company evaluates recoverability of its
intangible assets as current events or circumstances
warrant to determine whether adjustments are needed to
carrying values. There have been no material adjustments
to the carrying values of intangible assets resulting from
these evaluations.
Deferred Offering Costs
Deferred offering costs represent costs incurred in
connection with raising capital. Upon completion of an
offering, the amount of the proceeds credited to
additional paid in capital is reduced by the deferred
offering costs. Should an offering be unsuccessful, these
costs are charged to expense. In connection with a
private securities offering (Rule 504), the Company has
deferred costs of $3,000 associated with certain filing
requirements that are expected to be completed in the
near future. These charges will be netted against the
proceeds of the offering when filings are completed.
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Stated in US Dollars)
(Unaudited)
Deferred Revenue
License revenues are generally recognized upon delivery
of the licensed technology to the customer, provided no
significant future obligations exist and collection is
probable. Payments for nonrecurring engineering costs are
recognized upon acceptance of prototypes by the customer,
provided no significant future obligations exist and
collections is probable.
Note 4. Prepaid Expenses
Prepaid expenses as of June 30, 2000 consist of the following:
Prepaid inventory $12,450
Commissions 3,156
Other 864
-------
$16,470
=======
Note 5. Other Assets
The Company has acquired a technology license at a cost of
$50,000, from Analog Devices, Inc., that is being amortized over
a period of five years. The license agreement permits the
Company to use certain proprietary reference designs and
software in the development of video telephony products. The net
carrying value of the license at June 30, 2000 was $26,250.
In June, 2000, the Company acquired a second technology license
from Databeam Corporation for $37,500. The license permits the
Company to use certain software programs for the purpose of
creating enhanced software products. The license expires at the
end of three years and is being amortized over that period. As
of June 30, 2000, the net carrying value of the license was
$35,156.
In connection with a private securities offering, the Company
has deferred costs of $3,000 associated with certain filing
requirements that are expected to be completed in the near
future. These charges will be netted against proceeds of the
offering when filings are completed.
Note 6. Contributed Capital
In connection with the re-incorporation of the Company, the
original stockholders received 10,000,000 shares of common
stock. In March, 1998, the Company entered into an agreement in
which they agreed to provide 250,000 shares of common stock at
$.20 per share in return for a convertible loan, provided
certain conditions could be satisfied. In April, 1998, the
Company sold
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Stated in US Dollars)
(Unaudited)
200,000 shares of common stock at $.50 per share, and 75,000
shares at $2.00 per share.
In April 1998, the Company commenced a private offering of
315,250 common shares at $2.75 per share. After deducting costs
of $94,574, the Company realized proceeds of $798,070. The
offering was concluded on April 6, 1999. In connection with this
offering, 70,274 warrants entitling the holder to purchase one
share of common stock at $2.75 were issued with the sale of the
last 70,274 shares. Those warrants must be exercised by April 5,
2001.
In July 1999, the Company commenced a private offering of
150,000 cumulative preferred shares at $6.00 per unit. Each unit
included one share of cumulative preferred stock and 2 warrants
entitling the holder to purchase a share of cumulative preferred
stock at $6.00 per share. The preferred stock earns a dividend
at the rate of 6% per annum, payable semi-annually. As of June
30, 2000, the Company had sold 105,068 shares of preferred
stock. Upon conclusion of the offering, the holders of the
preferred shares will be offered two shares of common stock for
each share of cumulative preferred stock and must exercise those
warrants within one year. At the close of the private offering,
each cumulative preferred share is convertible into 2 shares of
common stock.
During the year ended September 30, 1999, the Company entered
into several agreements in which shares were exchanged for
services. Stock so issued was valued at the current sales price
of common stock.
In April, 2000, the Company entered into an agreement for a
private sale of common stock. The agreement was revised in
August, 2000. The Company agreed to sell 5,786,400 shares of
common stock at $2.25 per share for a total of $13,019,400, to
be received in three installments. As of June 30, 2000, the
Company had received a portion of the first installment in the
amount of $215,000. The balance of the first installment in the
amount of $519,400 and the second installment in the amount of
$1,035,000 are due by August 25, 2000. The third installment in
the amount of $11,250,000 is due by September 29, 2000. As of
September 11, 2000, the remainder of the first installment and
the second installment had not been received.
Note 7. Convertible Debt
On March 14, 1998, the Company entered into an agreement
with a Canadian company (Datapower, Inc.) to receive a
$50,000 (non-interest bearing) loan. The Canadian company
agreed to accept
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Stated in US Dollars)
(Unaudited)
250,000 shares of common stock of the Company in payment of the
debt, provided the Company could deliver two acceptable
prototype products within three months of the signing of the
agreement. Several extensions of the delivery requirement were
obtained. The prototypes were delivered and accepted in November
1998. The Company issued 250,000 shares of common stock in
satisfaction of the debt. The agreements also granted the
Canadian company an exclusive option to market and manufacture
these products in Canada until March 15, 2008.
Note 8. Operating Lease
The Company leases office space in Culpeper, Virginia, under a
two year lease agreement commencing July 7, 1998 and expiring
July 6, 2000. The Company has made security deposits of $1,150.
Rent expense was $10,650 for the quarter ended June 30, 2000.
Note 9. Related Parties
A majority stockholder is a member of the Board of Directors of
DataPower, Inc. (Note 7) In addition, a Director of the Company
has been engaged to assist in the raising of capital. He is
compensated on the basis of a percentage (from 2 to 5 percent)
of the completed transaction.
The two majority stockholders have employment agreements which
commenced January 1, 1999 and continue until December 20, 2004.
The agreements provide for annual salaries of $120,000. During
the three months ended June 30, 2000, the President and the
Vice-President of Engineering each earned $27,692 under each of
these agreements, for a total of $55,384. As of June 30, 2000,
$315,769 remains unpaid for accrued salaries. During the year
ended September 30, 1998, they earned $180,000 under earlier
agreements, of which $8,000 remains unpaid at June 30, 2000 and
$35,000 remained unpaid at September 30, 1999.
In January, 2000, the Company entered into an employment
agreement with a stockholder for the position of Vice-President
of Sales and Marketing. For the quarter ended June 30, 2000,
salary expense for this position was $16,615. As of June 30,
2000, $46,000 remains unpaid for accrued salaries.
Note 10. Commitments and Contingencies
The Company has entered into several agreements and contracts in
connection with the raising of capital and product development.
Raising Capital:
The Company has engaged several consultants to assist in the
effort to raise additional capital. Certain of these
contracts
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Stated in US Dollars)
(Unaudited)
require payment of fees calculated as a percentage of completed
transactions (see Notes 6 and 9). Other contracts require
compensation in the form of stock. As of June 30, 2000, the
company had $69,250 in common stock due to individuals for
services rendered.
Product Development:
Under an agreement to develop certain products, the Company has
deferred revenue of $67,500 pending achievement of contract
milestones. Successful completion of contract milestones will
result in additional payments of up to $50,000. The Company has
experienced delays in completing contract requirements.
Marketing and Technology Licenses:
In March 1998, the Company entered into an exclusive
manufacturing and marketing license agreement with National
Executive Trade, Inc. Consideration for the licenses was a loan
of $50,000 which could be repaid with the Company's common stock
if the Company could provide acceptable prototypes. In November,
1998, after several delays, the Company was able to provide
acceptable prototypes and agreed to issue 250,000 shares of
common stock in satisfaction of the debt.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2000
The Company earned no revenues for the period in 2000 or 1999,
due to products still being in the development stage. The
Company has incurred expenses of $356,774 and $117,339 for the
three month periods ended June 30, 2000 and 1999, respectively.
The major increases in expenses were salaries and other product
development costs. Salaries increased to $103,682 for the
quarter ended June 30, 2000, up from $60,000 during the same
quarter in 1999. Subcontractors and other development costs
increased from $12,459 in 1999 to $151,290 in the period in
2000. Both of these increases were due to increased emphasis on
completing the product development stage and the need for
additional employees and contractors in order to do so. Total
production costs increased to $254,972 for the quarter ended
June 30, 2000, up from $72,459 for the same quarter in 1999.
Occupancy expenses increased from $3,147 to $14,538 due to the
need for additional office space to house the extra employees
hired. In line with this increase was the increase in the
related utilities, which were $5,691 for the quarter ended June
30, 2000 as compared to $2,489 for the same quarter in the
previous year. In an effort to promote the Company's upcoming
product, marketing expenses increased from $1,798 in 1999 to
$12,035 for the same quarter in 2000. During the quarter ended
June 30, 2000, the Company recognized a bad debt of $18,000
(reported in other expenses). This was the result of marketing
expenses paid in advance that the Company no longer expects to
receive services for. Total operating expenses increased from
$44,880 for the quarter ended June 30, 1999 to $101,802 for the
quarter ended June 30, 2000.
Net losses for the quarters ended June 30, 2000 and 1999 were
$356,816 and $117,329, respectively. Loss per share was ($.03)
in the period in 2000 compared to ($.02) in the period in 1999.
The losses are expected to continue until adequate business
income from product sales can be achieved. The Company has
obtained additional capital to cover operating expenses until
product sales begin.
RESULTS OF OPERATIONS FOR THE NINE MONTH PERIOD ENDED JUNE 30, 2000
For the nine months ended June 30, 2000, salaries increased to
$288,271, up from $120,000 for the same period in 1999. Payments
to subcontractors also increased from $62,660 for the nine
months ended June 30, 1999 to $130,522 for the same period in
2000. In addition, other development costs increased to $103,513
from $29,726 in 1999. Total product development costs increased
approximately $310,000 in 2000 from the nine month period in
1999.
<PAGE>
Likewise, operating expenses also increased in 2000. Total
operating expenses were $232,245 for the nine months ended June
30, 2000, as compared to $122,587 for the same period in 1999.
This increase was due primarily to increased occupancy expenses
and professional fees. Occupancy expenses increased to $31,430,
in 2000, up from $11,243 in 1999. This increase was essentially
due to the need for expanded facilities to house the growing
number of employees within the Company. Legal and professional
fees increased from $17,200 in 1999 to $67,652 in 2000. This
increase was due to the need to hire additional professionals to
comply with required filings. Marketing expenses increased
approximately $13,500 in 2000 due to increased efforts at
promoting the Company's product.
The total net losses for the nine months ended June 30, 2000 and
1999 were $751,668 and $329,850, respectively. The loss per
share for the period was ($.07) in 2000 and ($.06) in 1999.
LIQUIDITY AND CAPITAL RESOURCES
The trend of operating losses will continue at the current rate
in future quarters until a fully marketable product is
completed, and the Company achieves significant sales, neither
of which can be assured.
As of June 30, 2000, the Company had $151,610 in cash capital.
An investor agreed to purchase shares and paid $215,000 under
the agreement and agreed to purchase an additional $12,785,000
(approximately) in common stock @ $2.25 per share. However, the
agreement is in default, has been renegotiated, and it is
uncertain whether the additional stock purchase will be made.
The cash on hand is sufficient for limited operations, but based
on prior operations, the cash will only last for a limited
period in the third quarter. The Company has $565,965 in current
liabilities and only $302,245 in current assets. In order to
continue its business plan, the Company urgently needs to
achieve additional equity capitalization, or it will not be able
to continue in business.
The Company will be reliant upon private placements of stock or
loans in order to continue operations until product sales can be
achieved. The Company has made several private placements of
stock in order to fund future operations until product sales can
begin and will continue to seek private placements of stock.
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Company)
PART II - OTHER INFORMATION
Item 1. Litigation - None
Item 2. Change in Securities - The Company has sold a total of 105,068 preferred
units for proceeds of $630,400. The preferred units consisted of one preferred
share and two warrants to purchase preferred shares @ $6.00 per share, which
expire August 31, 2001.
The Company relied upon Sections 4(2), 4(6), and Rule 506 as
exemptions to registration under the Securities Act of 1933 in the private
placement of preferred stock.
Item 3. Defaults upon senior securities - None
Item 4. Submission of matters to a vote of security holders - None
Item 5. Other information - None
Item 6. Exhibits and reports on Form 8-K - No reports were made on Form 8-K for
the period for which this report is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: September 20, 2000
World Wide Video, Inc.
/s/ John G. Perry
------------------------------
John G. Perry, President
