SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-KSB
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999.
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to __________.
COMMISSION FILE NUMBER 000-21571
-----------------
WORLD WIDE VIDEO, INC.
(Exact name of registrant as specified in its charter)
COLORADO 54-1921580
--------------------------- -----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
102A NORTH MAIN STREET, CULPEPER, VA 22701
--------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (540) 727-7551
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Title of class
Common 100,000,000 Shares of Common Stock, Par Value $.0001 Per Share,
11,011,368 outstanding as of September 30,1999
<PAGE>
TABLE OF CONTENTS
PAGE
PART I
ITEM 1. DESCRIPTION OF BUSINESS 1
ITEM 2. PROPERTIES 11
ITEM 3. LEGAL PROCEEDINGS 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
PART II
ITEM 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND
RELATED STOCKHOLDER MATTERS 12
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 13
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 15
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE 16
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 16
ITEM 10. EXECUTIVE COMPENSATION 17
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT 17
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 20
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FROM 10-K 20
SIGNATURES 21
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
World Wide Video, Inc. (the "Issuer" or "Company" or "WWV") was organized under
the laws of the Commonwealth of Virginia on July 16, 1997. There was no activity
on fiscal 1997. On April 9, 1998, the Company was reincorporated in the State of
Colorado. The Company designs and manufactures technology and products for the
video communication market. WWV is a development stage company designing and
developing custom ultra high speed and low cost hardware for the video
communication market. The initial product will be based on the International
Telecommunication Union (ITU) Standard, H.324, and will perform over normal
telephone lines. This technology allows for bi-directional audio, video, and
data over normal analog phone lines. Future products will support H.320 (for
ISDN, ATM, ADSL, Satellites) and H.323 (for ETHERNET and INTERNET). The key
portion of the Company's technology is being built around a series of new CoDec
(audio/video Compression/Decompression) technology. The Company's technology is
based on new and emerging custom chips, video compression algorithms, and
support technologies. The Company's technology is designed to produce faster,
smaller, and better performing video communication products at a lower cost than
is currently available in the market place. Furthermore, the company's
technology and products will be tailored (customized) to meet specific client
applications and market niches.
In anticipation of market introduction, the founders have developed several
versions of prototype products, written proprietary enabling software/firmware,
presented the products to large potential customers, developed an INTERNET WEB
site (WWW.WWV-USA.COM) and identified potential strategic partners/distributors
in the United States and other parts of the world.
Several delays have occurred in World Wide Video's planned production schedule
due to lateness of key components (newly developed hardware chips, circuitry and
firmware) from large chip manufacturers and the deletion of some of the existing
chips. It appears that these component problems will be resolved shortly and
production for the first in a series of products is scheduled for spring of
2000. Only prototype products have been produced as of this filing. As of
September 30, 1999 the Company had no income. The Company has numerous clients
interested in its products. The Company also has obtained four custom product
contracts with three customers, in addition to the standard products discussed
below. These contracts are late due to the delays discussed above, but are in
process of being completed. The Company has over $1M in potential product
backlog. All orders and contracts are contingent upon an acceptable performance
of the production units. Marketing channels will include distributors in the
USA, Canada, South Africa, Australia, New Zealand, Malaysia, Singapore, Europe,
Asia, and South America. In addition, the Company plans to launch an E-COMMERCE
sales effort to directly sell some of its products to customers.
THE COMPANY BUSINESS
Substantially all of the Company's operations have been in connection with the
establishment of a new business. Those operations were restricted to design of
products and development of prototypes for custom designed contracts. Most of
that time was spent focusing on the design and development of new video
communication products for market introduction. Several delays have occurred, as
outlined above, but it appears that the issues are being resolved and production
should begin in the spring of 2000.
The Company's products deliver high-speed audio, video and data information over
the plain old telephone system (POTS) lines. The market potential for video
communications includes every desktop computer, home computer and every business
that needs to communicate, especially as video systems become more and more
affordable. Multimedia Research Group forecasts that the video phone and video
conferencing markets will total over $15 billion within the next five years, as
the video technology becomes more common place. The Company's technology is
1
<PAGE>
designed to provide video telephony for the individual user (home), small to
large businesses, the security/surveillance, and tele-medicine markets. WWV
expects the market growth of these systems to be similar to that of the modem.
At first modems were only used by highly paid business people who traveled
extensively and needed to connect to their office computer while they were away.
Now most computer users use modems to hook to the "Internet," to access
electronic bulletin boards and to conduct research. Modems have become standard
equipment for most computers, and video may also become standard equipment.
The International Telecommunication Union H.324 standard permits video, voice
and data to be shared simultaneously over a simple telephone modem connection.
It is the first standard to specify interoperability over a single analog phone
line. Because of the H.324 standard, the next generation of video communication
products will be able to talk to one another and provide a foundation for
massive market expansion.
The Company's products operate over traditional, business and residential copper
wire telephone systems commonly referred to as Plain Old Telephone Systems
(POTS). POTS represent over 87% of the world's present telephone networks. POTS
lines have a major cost advantage over digital lines as local calls are almost
free and most long distance calls range from $.04 to $.08 cents per minute.
Digital line rates range from approximately $.25 to $.75 cents per minute. The
Company's technology compresses video and data at a higher rate than any
competitor in the industry at this time. This gives the Company a tremendous
advantage in frame rate and quality, which has been one of the limiting factors
on widespread acceptance of the technology. The Company's products will provide
video service at a new plateau in availability, video quality and at a lower
cost than is presently available.
THE COMPANY PRODUCT LINES
PRODUCT NAME: CENTURION
Target Markets: Security and Surveillance
This is a major market segment for the Company's technology. Surveillance and
security information consisting of data, control, audio and high quality video
images can be transmitted over POTS between cities, states, and countries or
across the world.
The Centurion product family provides the first complete integrated system
allowing data, audio and video surveillance from remote locations. Centurion is
a small self-contained hardware module that does not require a PC. At 4" x 6" x
1.5" inches and 5 watts of power, it is the smallest compression/decompression
(codec) available to OEM designers and end-users. The Centurion product family
supports the International Telecommunication Union (ITU) H.324 standard for low
bandwidth video over normal (analog) telephone lines.
Spectator(TM) is a co-companion to Centurion that provides one-way video
transmission for low cost surveillance applications. Both Centurion and
Spectator(TM) are designed to be compatible with future hardware and software
releases from WWV. Other Centurion family products, in the development stage,
will support the ITU standards such as H.320 (for ISDN, ATM, T.1) and H.323 (for
Internet and Ethernet). A high performance PCI computer card will support all
three ITU standards. A proprietary "Wavelet" runtime and still video compression
algorithm will be added to provide superior performance using either analog or
digital telephone lines.
Using standard telephone lines, the Centurion puts any site, no matter how
distant, within customer access. The unique 2-way video motion provides complete
communication for virtually any surveillance or conferencing application. For
security monitoring, there will be fewer unknown false alarms. For monitoring
cash related activities, Centurion can provide an interface for POS (Point of
Sale) scanners. Centurion can control remotely situated pan-tilt-zoom (PTZ)
cameras as well as interface with security alarm equipment and other devices to
verify a triggered alarm.
2
<PAGE>
PRODUCT NAME: RAV(TM) MEDICAL
Target Markets: Remote Audio/Video/Data Tele-Medicine, Home Care Medical
Monitoring, Doctor and Nursing Facilities, Private Care
The RAV(TM) Medical will be a series of custom products that allow health care
professionals to keep abreast of new procedures, consult on X-rays or other
visual documents, obtain health information by monitoring home-bound patients
and participate in conferences with specialists using normal analog telephone
lines (POTS). RAV(TM) Medical's transportable convenience can inexpensively
improve the quality of medical care that is provided to patients in remote areas
by linking them to experts at distant medical centers. The trend of HMOs and
insurance companies insisting on home recovery instead of in-hospital recovery
has opened a new market for the home monitoring of patients' vital signs. A
number of US and Japanese medical firms are providing vital sign monitors
connected to the phone network for checking patient conditions at random times.
RAV(TM) Medical now provides the missing link: a two-way video connection
between the patient and the care provider.
PRODUCT NAME: RAV(TM) NOTEBOOK
Target Markets: Portable Video Conferencing
The RAV(TM) Notebook (RAV(TM)) is a complete multimedia computer system in a
notebook. The RAV(TM) is designed as a tool for the businessperson. The system
is designed to provide the full range of typical multimedia computing functions
(windows, modems, color display, fax, microphone, speakers) plus full portable
video conferencing (shared files, shared applications, shared white boards and
camera) using POTS or an option for cellular video communication. The RAV(TM) is
the first Remote Audio-Video notebook to include a custom removable ITU H.324
compatible hardware video compression/ decompression (codec) module that frees
up the CPU and provides the highest quality video conferencing. For video
conferencing, simply plug a phone line into the RAV(TM) and use all the features
of a "top of the line" notebook:
Pentium III MMX/400 MHZ with 128MB RAM, 512KB L2 Cache
Brilliant 15.1" active 1024x768x16M color display with 4MB controller
Data Storage includes 6.4 GB HDD, DVD, 3.5" FDD
Keyboard & Trackpad & 2 PCMCIA slots
Sound support includes built-in microphone and speakers
Communication includes:
56 Kbps fax/modem,
IR Transceiver and
Inputs/Output ports include Audio In, Audio Out, Headphone
Out, Video In, and S-Video Out
Software includes: Windows 2000 including Net Meeting
Dragon Speech Recognition Software
ITU T.120 Whiteboard, File Transfer, and Shared Application
1 Year Depot Warranty
Battery & Leather Carrying Case
In addition, the RAV(TM) includes an integrated high resolution color camera and
a removable video codec module that contains multiple high speed digital signal
processors to provide unparalleled frame rate and quality using the
International Telecommunication Union H.324 standard for low bit rate video
conferencing. Using the H.324 protocol, the RAV(TM) Notebook video conferencing
has Microsoft Net Meeting and International Telecommunication Union's T.120
software that provides file transfers, shared applications, and shared white
boards.
3
<PAGE>
PRODUCT NAME: RAV(TM) STB
Target Markets: Video Communication (non-computer based) over POTS
The RAV(TM) STB (Set-Top-Box) does not require a computer for simultaneous
video, audio, and data communication over POTS. The RAV(TM) STB uses the
industry H.324 standards and operates using a standard television and telephone,
and with an internal video camera or an external standard NTSC video camera. The
telephone set is capable of making normal voice only calls when it is not being
utilized as a RAV(TM) STB. RAV(TM) STB's near real-time, very high quality video
imagery, at a speed of approximately 10 to 20 frames per second, is displayed in
a user sizable window on the TV screen. Web Browser capabilities will be added
in the near future as an option.
PRODUCT NAME: RAV(TM) PCI
Target Markets: Video Communication (computer based) over POTS
The RAV(TM) PCI board is a low cost; high quality alternative to dedicated video
conferencing systems. It can be used for commercial applications as diverse as
desktop video conferencing and tele-medicine to consumer personal use. The
RAV(TM) PCI is a standard half sized board that plugs into a PCI bus slot in a
personal computer (PC). It can be utilized for both consumer and business video
communications. It comes with software that is loaded into the PC and has a
simple user interface. The RAV(TM) PCI installed in a workstation can make
industry standard H.324 video phone calls to any computer already using Intel's
ProShare software. The RAV(TM) PCI will also support white boarding, file
transfers and application sharing using the T.120 standard.
INDUSTRY OVERVIEW
The hottest general growth area is in computer and communication systems
(perhaps as high as $100 billion over the next 5 years). Video communication is
one of the largest markets within those general areas. The Company's products
will address all of the major communication media like INTERNET, POTS, ETHERNET,
Satellite, ADSL, ISDN, ATM, Cellular, and etc. Areas like security, medical,
distance learning and video conferencing are all high growth potential. This
means that the Company is poised for a potential unbridled growth pattern.
Just for video conferencing, Frost & Sullivan of New York estimates that the
video conferencing market is worth $250 million and the video telephone market
alone is worth $210 million. Alternately, the market research firm Multi-Media
Research Group forecasts that both markets will total over $15 billion within
the next five years, as the video communication technology becomes more
commonplace. Frost and Sullivan reports that the video conferencing system
market is growing at a relatively fast pace. Four critical trends are allowing
vendors to meet the needs of the customer, and these same factors will continue
to drive the industry:
1. Technological advances affecting voice, data and video compression.
2. A sharp decrease in component prices.
3. Connectivity: the ability to call any location without special equipment.
4. The adoption and widespread implementation of international standards.
These factors will lead to a tremendous increase in the demand for Video
Conferencing systems, and revenues will continue to grow at a high rate. The
revenue growth rate for the years 1995 to 2002 is expected to be 43.2%. Because
the industry cuts across several markets, there have been a variety of entrants
ranging from large telecommunications and information systems companies to small
entrepreneurs.
Over the next few years, the competition within the marketplace will increase
and market share will go to those companies that offer quality and convenience
at the lowest cost. According to industry experts, products will be competing
based on "user friendliness", the ability to share information easily, and, most
importantly, price.
4
<PAGE>
WWV believes that video conferencing has already grown past group meetings into
the desktop segment of the market. Success in this market will depend on
improved quality and significant decreases in price. Eventually the market will
grow so that every desktop will be considered a "video phone". Applied Business
Telecommunications (ABTC) has compiled a comprehensive report on desktop video
conferencing. They estimate an installed base of almost 18,000 units as of Aug.
1999. The average growth rate over the last three years has been approximately
60%; more than 2,000 companies have utilized video conferencing to overcome
competitive pressures and improve global communications.
Personal Technology Research, cited in ABTC's report, believes that there will
be a trend in video conferencing to develop a comprehensive network
infrastructure between large groups, small groups and desktop systems,
particularly for specialized applications such as distance learning,
telecommuting and training. They see the four primary market segments emerging
in the first wave of desktop video conferencing within the next one to three
years. Those markets are:
1. Standards-based products enabling desktop video conferencing between group
systems and desktop computers/workstations.
2. General business computer-based applications enabling low cost desktop
video conferencing across multiple operating systems and platforms via
ISDN, switched digital services, LANs and PSTN.
3. The "Video Phone" Market.
4. Video Communication via regular telephone lines and digital lines.
WWV agrees that the market potential for desktop video conferencing includes
every desktop computer in every business that needs to communicate, especially
as systems become more and more affordable. Eventually the market will grow to
include the home market. The number of individuals who need to communicate with
another location only limits the market size. WWV expects the market growth of
these systems to be similar to that of the modem. At first modems were only used
by highly paid business people who traveled extensively and needed to connect to
their office computer while they were away. Now most computer users use modems
to hook to the "INTERNET", to access electronic bulletin boards and to conduct
research. Modems have become standard equipment for most computers, and so too
will desktop video conferencing equipment become standard equipment.
INTERNET
The Internet has rapidly grown from a network connecting a limited number of
government, research and educational institutions to a global medium accessed by
millions of users to communicate and exchange information. Growth in the
Internet has been fueled by an increasing usage of personal computers at home
and in the workplace, improvements in the performance and speed of personal
computers and modems, improvements in network infrastructure, enhanced ease of
access to the Internet provided by service providers, consumer-oriented on-line
services and long-distance telephone companies, emergence of standards for
Internet navigation and information access, declining costs of Internet service
due to increased competition among access providers and increased awareness of
the Internet among businesses and consumers. Growth in Internet usage by
non-technical users in particular has also been fueled by the emergence of the
Web, which uses browser technology and simplifies the retrieval and transmission
of information.
As the Internet has become more accessible, functional and widely used by
consumers and businesses, its commercial potential has grown. The Internet is
emerging as a medium through which businesses can interactively inform, educate,
entertain and conduct business with millions of individuals. Thousands of
companies have created corporate Web sites that feature information about their
product offerings and advertise employment opportunities. Through the Web,
Internet content providers are able to deliver timely, personalized content in a
manner not possible through traditional media. Internet content can be
continuously updated, and accessed by users at any time.
5
<PAGE>
The next version of the Company's product will be INTERNET compatible. The
product is current running in prototype form and will improve to support initial
speeds up to 128Kbps and up to 384Kbps in the second version.
In additional to utilizing normal marketing distribution channels, the Company
also plans to launch an E-COMMERCE approach on its Web home page
(WWW.WWV-USA.COM) to directly sell some of its user oriented products.
SALES AND MARKETING
The Company has two employees focused on its sales, marketing and customer
service efforts worldwide. (Francis Updike performed those activities as an
independent contractor and became a fulltime employee (Vice President of Sales &
Marketing) on January 1, 2000. Rebecca Nabal joined the Company as a Marketing
Associate during September 1999. The Company's sales and marketing plan is to
concentrate on:
1. Medium and Large OEM, Value Added Resellers, and Systems Integrators.
2. Medium and large clients for customized products.
3. National and International Distributors.
4. E-Commerce for standard products that can be sold directly to end users.
The Company plans to have distributors in the United States, Europe, Malaysia,
Asia, Canada, Australia, New Zealand, and Africa.
PRODUCTS, SERVICES, MARKETS, METHODS OF DISTRIBUTION AND REVENUES. Digital
electronic products, based on audio/video compression, are presently the
principal products to be produced by the company. The Company has commenced
shipping some prototype products. The first production units are planned for
Spring of 2000. The security and medical markets appear very strong and growing.
MARKETING AND ADVERTISING. Currently, marketing is by trade shows, word of mouth
and by Internet web page. A series of Press Releases are planned for the Spring
of 2000 in conjunction with various product launches.
CLIENTS. The Company is still in the product development phase and has no
product sales to date. The Company has four custom product development contracts
signed from three clients. The contracts are late due to delays as discussed
previously. These contracts have a potential value over $1.7M during the first
year of production. There are also several more clients that have expressed
serious interest in additional custom products. In addition to the custom
contracts, the Company has a list of over 100 potential clients that have either
issued a purchased order, a no cost evaluation purchase order or have expressed
serious interest in the Company's standard products. The potential Client list
includes:
Custom Products:
1. MetroBook Computer Corporation, Inc.
2. Help Innovations, Inc. (2 products)
3. Transaction Verification Systems
Standard Products:
1. DataPower USA, Inc.
2. Boeing Information Services
3. Andries Tek, Inc.
4. ABM IT
5. FBI
6. US Department of State
7. Access Family TV
8. Delta Information Systems, Inc.
9. NR PTY LIMITED, Australia
6
<PAGE>
All potential sales, including Purchase Orders, Contract(s), No Cost POs and
Letters of Intent, are contingent upon the performance, availability and
acceptance of the prototype units. There is the possibility that the customer no
longer has the requirement for these types of products. Another issue could be
the customer's ability to pay for the production product. The company has had
several delays in completing the production units. As of 9/30/99, it appears
that the technical problems have been overcome and production units should be
shipped in the Spring of 2000. The Company has complete arrangements to
manufacture the production units subject to additional working capital
requirements.. In the opinion of management, there are no technical problems to
produce and satisfy the potential backlog of orders. Additional Working Capital
may be needed.
Once the Company starts to deliver product, it will initially be dependent upon
a single customer or a few customers. Over the first year after the start of the
production, the Company does not foresee any one client representing more than
10% of the total sales for that year.
The company does not have any government contracts at this time.
The video electronics industry is highly competitive. The Company faces
competition from a variety of large and small companies, both public and
private. Many of the competitive companies so engaged possess greater financial
and human resources than the Company and therefore have greater leverage in
acquiring prospective development and marketing personnel. Accordingly, a high
degree of competition in these areas is expected to continue. The markets for
video electronic products have increased dramatically in recent years and so
have the competitors in those markets. There is no assurance that the Company's
revenues, if any ever develop, will not be adversely affected by such factors.
VIDEO COMMUNICATION PRODUCT PRICING AND MARKET SHARE
The industry has been waiting for a video system that can offer high quality at
a reasonable price. So far no one has been able to do that, but WWV can and will
have the best opportunity in the industry to offer high quality at the lowest
price. WWV realizes that this will remain a major advantage, and it must keep
the R&D effort going to maintain market share.
As with most new high technology, the average industry price will continue to
fall over the next decade. According to PictureTel (the current industry leader
for ISDN based solutions), video conferencing prices are currently falling at
20% a year. Industry experts predict that they will continue to do so at least
until the year 2005.
WWV represents new technologies. Video communication systems have been available
for over ten years, but only now are offering affordable and high quality video
conferencing via existing desktop terminals. WWV's key competitive advantage
lies in the ability to:
1. Use any telephone line analog or digital, or use existing local area
networks (LANs) like ETHERNET, or wide area networks (WAN) like
INTERNET.
2. High performance, clearer and more frames per second at higher
resolution.
3. Requires less bandwidth than competitors. WWV's products will continue
to function at speeds as low as 9,600 baud as compared to 21,600 baud
required by others.
4. Smaller size and a lower power requirement mean that WWV's technology
can be placed in more locations, like notebooks, inside VCRs, TVs and
automatic teller machines.
5. WWV's technology is uniquely applicable to many markets. WWV's
technology could compliment and compete with products in new markets.
Because video communication is an embryonic industry, the market place for such
technology is still evolving. Unlike a computer or a piece of athletic
equipment, which have specific, statistically measurable user-populations, the
video communication user-population seems unlimited.
In fact, as the "information superhighway" develops and interactive multimedia
becomes part of the INTERNET, anyone who owns a PC or television and telephone
could become an end user.
7
<PAGE>
COMPETITION
The video conferencing industry is one that is based on research and
development, with new products being introduced into the market on a regular
basis. The market competes primarily on the basis of video and audio quality,
ease of use and price. Management believes that WWV's systems supersede
competition by offering a superior design and performance at a lower bill of
materials (BOM) price and in a smaller form factor (size). In the future,
competition will be based primarily on performance and features, as price will
reach a low plateau. Management believes that WWV will stay ahead of the
competition by concentrating its efforts on research and development and
improving the efficiency of WWV's designs. WWV also offers numerous technical
advantages, and one of these is the system's ability to use analog, digital and
wireless as a transport medium.
The POTS (Plain Old Telephone System) hardware based (DSP) solution is only
offered by two competitors at this time. Both are based on slower DSP based
systems. See Section 9.0 for a detailed competitive analysis. WWV is using
technology that compresses video and data at a higher rate than any other
company in the industry. The compression rate of video is about 3-4:1 better
than our fastest competitors. This high rate of compression gives WWV a
tremendous advantage in frame rate and quality at any given bandwidth. This
advantage will initially be used to provide better products in the POTS area,
and the ISDN version products will quickly follow the POTS product. This means
that WWV's ISDN based products will provide the same quality over 2 ISDN
channels at a lower price than the current ISDN competitors can do today over 6
ISDN channels. (Two ISDN line charges versus 6 ISDN lines charges).
WWV recognizes that the competition in this industry is intense. There are only
two H.324 hardware based codec manufacturers. Both have focused on the consumer
video conferencing market. The POTS industry players are 8x8, Inc. (see below
for more details) and to a lessor degree C-Phone, Inc. They have directed their
marketing efforts toward the home video phone environment. The home based
conferencing market competes mainly on price. WWV has identified that video
communication is most valuable to businesses, not home users.
The WWV marketing approach will be directed toward industries that need remote
monitoring, as in security and surveillance, and quality video conferencing.
Industry applications such as the security market are more dependent upon
acceptable video quality and video performance. World Wide Video's hardware
provides superior video quality using newer digital technology. In addition to
the quality of the video, WWV's initial products will be priced equal to or less
than the competition.
8x8, Inc. (formerly IIT) is the main competitor to WWV. 8x8 has been in the
business of selling video compression chips for about ten years. About four
years ago, they starting producing a consumer POTS Set-Top-Box, which is a H.324
codec with a built-in camera to be used with a standard TV for video display and
audio. The 8x8 and C-Phone frame rate is slow (according to their advertising
-theoretical maximum is 15 SQCIF frames per second) and the minimum bandwidth is
19.2 Kbps. WWV's Centurion product is about 1/4 the physical size and requires
about 1/4 the power. The Centurion frame rate is better (theoretical maximum is
20 SQCIF frames per second) and the minimum bandwidth required is 9.6 Kbps.
About a year ago 8x8 starting developing POTS based security products using the
same chip designs. They have not made much progress again for the same reasons.
Recent 8x8 announcements indicate that they may be leaving the consumer POTS
area and that now 8x8 is concentrating on industrial/commercial markets.
8
<PAGE>
WORKING CAPITAL NEEDS
The working capital needs of the company consist primarily of operating capital,
product development capital and marketing capital. These requirements may be met
by private placement of stock or loans or by the sale of working interests. The
Company will need to develop additional working capital for future operations
including setting up production lines. Presently, it has no definite source or
commitment for any additional funds.
With the closeness of the first three different production units becoming a
reality, the Company has greatly improved the probability of more private funds
becoming available. Several companies and organizations have expressed interest
in investing. The Company is attempting to minimize the cash requirement needed
for the start of production for two custom contracts (2 of the initial three
production products) by requesting down payments, delivery order and accounts
payable financing. WWV has been able to negotiate extended payments to some of
its key electronic component product and contract manufacturers.
World Wide Video, Inc. is pursuing private placements from various sources. The
target is to obtain an additional $700,000 by 3/1/00 and a total of $3,000,000
or more by 6/1/00. The Common Stock Regulation D Rule 504 was closed on 4/6/99.
Based on the analysis of funds available and funds required to complete the
initial production of product and associated production costs, research and
development, the company decided to raise the additional required working
capital by a Regulation D Rule 506 offering of Class A preferred stock. In June
1999, WWV started the preferred offering and is still underway. The target is to
raise up to $900,000 with the sale of 150,000 preferred shares and 300,000
preferred warrants to qualified investors. The preferred offering consist of
selling a unit for $6. A unit includes one preferred share and 2 preferred
warrants. The preferred warrants will be for $6 and must be executed within one
year of the offering closing date. There is a dividend of 6% per year payable
every 6 months. At the close of the preferred offering, WWV will provide the
option to convert the preferred shares to common stock at a ratio of 2 common
shares for one preferred share. The first preferred stock was sold in July and
over $319K had been raised as of 12/31/99.
Y2K READINESS
The company is ready for Y2K. All of the Company's computer, communication and
network resources have been upgraded to be fully year 2000 ready. WWV has
confirmed with its key sub-contractors and contract manufacturers that they are
Y2K compliant. Year 2000 potential issues do not directly effect WWV's products.
The Company could be indirectly effected by Y2K such as banks and public
utilities, but WWV feels that these possible issues are unlikely and the
duration would be short and not seriously effect WWV.
SPONSORED RESEARCH AND DEVELOPMENT
The Company has no sponsored research and development contracts at this time.
INTELLECTUAL PROPERTY
All of the Product underlying hardware/firmware designs belong to the Company
and are protected by United States Copyright laws. The Company also has
developed unique chips that are not available in the general market place. All
of the User Interface and controlling software belongs to WWV and is
copyrighted. Also, only binary licenses will be sold in conjunction with the
products. The Company, in its hardware design, has used a variety of
anti-reversing techniques. Nevertheless, there can be no assurance that
copyright laws and other procedures will provide any competitive advantage to
the Company.
The Company has applied to the United States Patent and Trademark Office for the
registration of two trademarks. The two trademarks are "Spectator" and "RAV".
Approval for these trademarks is in the final phase, which is the publication of
them in the open literature. There is a high probability of approval for those
trademarks by the PTO. The Company also asserts common law protection on certain
names and marks that it has used in connection with its business activities.
9
<PAGE>
The Company uses standard industry confidentially agreements in all of its
contracts and sub-contracts as protection from industrial espionage. Contractors
and sub-contractors are carefully screened and selected for trustworthiness
before being engaged. Nevertheless, technology protection is difficult if not
impossible to obtain.
GOVERNMENT REGULATION
COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS.
The operations of the Company are subject to local, state, and national laws and
regulations in the USA. To date, compliance with these regulations by the
Company has had no material effect on the Company's operations, capital,
earnings, or competitive position, and the cost of such compliance has not been
material. The Company is unable to assess or predict at this time what effect
such regulations or legislation could have on its activities in the future.
(a) State and Local Regulation - None.
The Company cannot determine to what extent future operations
and earnings of the Company may be affected by new legislation, new regulations
or changes in existing regulations at state or local level.
(b) National Regulation - None.
The Company cannot determine to what extent future operations
and earnings of the Company may be affected by new legislation, new regulations
or changes in existing regulations at a national (U.S.) level.
(c) Environmental Matters - None at the date of this registration
statement.
(d) Other Industry Factors - None at the date of this registration
statement.
EMPLOYEES
As of January 1, 2000, the Company had five full time employees and two new
hires due to report in February-March, 2000. The Company's employees are not
represented by a labor union or collective bargaining agreement. The Company
regards its employee relations as excellent.
COMPANY HISTORY
World Wide Video, Inc. (the "Issuer" or "Company" or "WWV") was organized under
the laws of the Commonwealth of Virginia on July 16, 1997. World Wide Video,
Inc. reincorporated under the corporate laws of the State of Colorado on April
9, 1998. From April 1998 - April 1999 the company raised over $900,000 via a
Regulation D, Rule 504. As part of the Rule 504, the Company completed the first
private placement of 200,000 shares consisting of common stock @ $.50 per unit
for operating capital. With the Offering Price amended on May 1, 1998, the
Company completed a second private placement consisting of 75,000 shares of
common stock @ $2.00 per unit for operating capital. The Offering Price was
amended again of July 1, 1998 to $2.75 per unit. The Company completed the final
private placement consisting of 233,987 shares of common stock @ $2.75 per unit
for operating capital in late 1998 and early 1999 and closed the Rule 504
Offering on April 6, 1999.
In August 1999, the Company filed a F-10SB with the SEC. In July 1999, the
Company started a Preferred Stock Offering, at $6 per unit, via Regulation D,
Rule 506, with the goal of raising $900,000. A unit includes one preferred share
and 2 preferred warrants. The preferred warrants will be for $6.00 and must be
executed within one year of the closing date. There is a dividend of 6% per year
payable every 6 months. Also, at the close of the private offering, WWV will
provide the option to convert the preferred shares to common stock at a ratio of
2 common shares for one preferred share. No options for conversion to common
shares will be granted until all the preferred shares have been sold. The first
preferred stock was sold in July and over $319K has been raised as of 12/31/99.
The Company is in the process of attempting to be placed on the Over-the-Counter
Bulletin Board (OTC BB).
10
<PAGE>
ITEM 2. PROPERTIES
Substantially all offices of the Company are located in leased premises.
The Company's principal office is located at 102A North Main Street, Culpeper,
Virginia, 22701, where it occupies approximately 3,000 square feet of space
under a lease expiring in July 2000. Monthly payments under the lease currently
are $1,650.00 and escalate during the term of the lease.
ITEM 3. LEGAL PROCEEDINGS
The Company believes that it is not involved in any ongoing, pending or
threatened legal proceedings that could reasonably be expected to have a
material adverse effect on the Company's financial condition or operations.
The Company hereby discloses a possible dispute with an entity, Albemarle
Investments, Ltd., regarding a purported consulting arrangement under which
claims have been made for $45,000 and issuance of common shares totaling
500,000. The claim was received in the form of a letter directly from the
principal of Albemarle Investments, Ltd. and no other communication or no legal
action have occurred since receipt of the letter on September 14, 1998. The
Company disputes that any monies or shares are due and is prepared to assert
legal defense in the event any legal action should to be taken.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fiscal year covered by this report to
a vote of security holders of the Company, through the solicitation of proxies
or otherwise.
11
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS
(a) The Registrant's common stock is traded on the NASD Electronic Bulletin
Board. The following table sets forth high and low bid prices of the
Registrant's common stock for years ended September 30, 1997, September 30,
1998 and September 30, 1999 as follows:
Bid (U.S. $)
------------
1999
----
High Low
---- ---
First Quarter $ 0 $ 0
Second Quarter $ 0 $ 0
Third Quarter $ 0 $ 0
Fourth Quarter $ 0 $ 0
1998
----
First Quarter $ 0 $ 0
Second Quarter $ 0 $ 0
Third Quarter $ 0 $ 0
Fourth Quarter $ 0 $ 0
1997
----
First Quarter $ 0 $ 0
Second Quarter $ 0 $ 0
Third Quarter $ 0 $ 0
Fourth $ 0 $ 0
Such Bulletin Board quotations reflect interdealer prices, without mark
up, mark down or commission and may not necessarily represent actual
transactions.
(b) As of September 30, 1999, the Registrant had approximately 65
shareholders of record of the common stock.
(c) No dividends on outstanding common stock have been paid within the last
two fiscal years, and interim periods. The Registrant does not anticipate or
intend upon paying dividends for the foreseeable future.
12
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
WWV is a development stage company designing and developing custom ultra high
speed and low cost hardware for the video communication market. As of September
30, 1999 the Company had no income. As a result of the ongoing product
development, the Company had a net loss of $920,887 for the year ended September
30, 1999. Several delays have occurred in the planned production schedule due to
lateness of key components (newly developed hardware chips, circuitry and
firmware) from large chip manufacturers and the deletion of some of the existing
chips. Now it appears that these component problems will be resolved shortly and
production for the first in a series of products is scheduled for spring of
2000. The Company has not started production of any of its products as of this
filing. The Company has clients from around the world interested in its
products. The Company is currently engaged in negotiations with several
potential strategic investors/partners to raise the capital needed to fund
production activities to satisfy that demand for product. {One of these
strategic partners manufactures medical equipment and has signed a tentative
agreement to make an initial investment of $734,000 in WWV for its video
capabilities in the medical monitoring market. Such an alliance would
immediately open markets in the United States and several South American
Countries where this partner has established clients. Enhancements to existing
products and the introduction of new customized products in the medical field
could generate an additional investment of several million dollars from this
party during 2000. Another strategic investor/partner has signed a letter of
intent to raise $2.5 million for marketing/manufacturing with the Company to
penetrate the Canadian and Asian Rim markets for WWV's POTS products. Even
though the Company has a high level of confidence that at least one of these
investor/partner actions will materialize, there is no assurance that either one
will be carried through to fruition. Since most of the world's population has
virtually no access to the information "superhighway" and is fortunate to have
telephone service, the potential international market for WWV's products is
immeasurable. Even in the United States, the accessibility of that information
age technology has been concentrated in the cities and metropolitan areas where
various supporting infrastructures exist. The rural and remote areas must rely
heavily, if not exclusively, upon other technological means, such as POTS, to
access distant medical or learning centers, etc.
The Company also has four custom product contracts in additional to the standard
products being developed. These custom contracts are late due to the delays
discussed above but are in process of being completed. The pre-production units
for the home medical monitoring contract ($1M) were shipped to the customer for
evaluation and testing in December 1999. That process is ongoing as of the date
of this filing and final acceptance of the total contract is contingent upon the
performance of the product. Pre-production units for the ATM Banking machine
contract ($500,000) are scheduled for shipment to the customer in mid February
2000. Again, these units are subject to testing and evaluation prior to final
acceptance of the production contract by the customer. The Company does not
13
<PAGE>
anticipate any non-resolvable issues that would cancel the contract with either
of these clients. The Company also has identified over $1M in potential product
orders. All potential orders and contracts are contingent upon evaluation and
acceptable performance of the pre-production units. (See the two Production
Schedules below for appropriate product timetables). The Company has potential
distribution channels in the United States, Canada, South Africa, Australia, New
Zealand, Malaysia, Singapore, Europe, Asia, and South America. In addition, the
Company also plans to launch an E-COMMERCE sales approach to directly sell some
of its products. To date, the Company has functioned on equity investments.
Without continuing investments or loans, the survivability of the Company is at
risk.
CUSTOM PRODUCT SCHEDULE
Product R&D Cost Production Cost Production Date
--------------- ------------------ ---------------------------- ----------------
HELP (Enabler) $20,000 $100,000 April 2000
--------------- ------------------ ---------------------------- ----------------
TVS (ATM) 20,000 100,000 May 2000
--------------- ------------------ ---------------------------- ----------------
HELP (HIM) 50,000 100,000 June 2000
--------------- ------------------ ---------------------------- ----------------
RAV NOTEBOOK 50,000 50,000 July 2000
--------------- ------------------ ---------------------------- ----------------
*Factors outlined in this document could impact the implementation of this
schedule.
STANDARD PRODUCT SCHEDULE
Product R&D Cost Production Cost Production Date
-------------------- -------------- ---------------------- ---------------------
Centurion $50,000 $300,000 March 2000
-------------------- -------------- ---------------------- ---------------------
Centurion (revision) 200,000 200,000 July 2000
-------------------- -------------- ---------------------- ---------------------
RAV PCI 50,000 50,000 July 2000
-------------------- -------------- ---------------------- ---------------------
Spectator 200,000 50,000 Aug 2000
-------------------- -------------- ---------------------- ---------------------
Centurion-ISDN/Internet 300,000 300,000 Sept 2000
-------------------- -------------- ---------------------- ---------------------
*Factors outlined in this document could impact the implementation of this
schedule.
RESULT OF OPERATIONS
THE YEAR ENDED SEPTEMBER 30, 1999 COMPARED TO THE YEAR ENDED SEPTEMBER 30, 1998.
The Company had no sales for the years ended September 30, 1999 and 1998 due to
still being in the development stage.
Product development costs increased to $769,728 for the year ended September 30,
1999 from $373,928 for the year ended September 10, 1998, an increase of 106%.
The primary cause for this overall increase was increased salaries and
subcontractor costs. Salaries and related costs increased to $181,791 for the
year ended September 30, 1999, from $0 for the year ended September 30, 1998.
Subcontractor costs increased to $446,628, representing an increase of 127%.
These increases were due to increased pre-production efforts and the need for
additional personnel as the initial phases of the pre-production process begins.
Product and development costs represented 83% of total expenses for the year
ended September 30, 1999, up from 79% for the previous year.
General and administrative expenses increased $59,135 to $156,283 for the year
ended September 30, 1999, representing an increase of 61%. This amount was 17%
of total expenses for the year, as compared to 21% for the year ended September
30, 1998. The decrease in the percentage is attributable to increased costs
incurred in the product development area discussed above. The increase in
general and administrative expenses was primarily due to increased professional
fees (up to $29,937 from $2,700) related to required SEC filings as well as
increased overhead resulting from expanded activities and staff. Rent and
utilities increased $18,418 to $27,312, a 207% increase, due to the need for
expanded facilities. Marketing and sales expenses decreased from $58,981 to
$32,827 because the Company attended fewer trade shows during the year ended
September 30, 1999.
14
<PAGE>
The company is ready for Y2K. All of the Company's computer, communication and
network resources have been upgraded to be fully year 2000 ready. WWV has
confirmed with its key sub-contractors and contract manufacturers that they are
Y2K compliant. WWV's products are not directly affected by any year 2000
potential issues. The Company could be indirectly affected by Y2K, such as banks
and public utilities, but WWV feels that these possible issues are unlikely and
the duration would be short and not seriously effect WWV.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements have been to fund design of
products, working capital and marketing of products being designed.
Net cash used in operating activities for the years ended September 30, 1999 and
1998 were $306,191 and $579,364, respectively. The decrease in cash used in
operating activities in 1999 was primarily due to services contributed in
exchange for stock and increases in accounts payable, due to officers and
employees and deferred revenue.
Net cash used in investing activities for the years ended September 30, 1999 and
1998 were $13,620 and $77,914, respectively. The decrease in cash used in
investing activities was primarily the result of decreased purchases of property
and equipment, as well as technology licenses during the year ended September
30, 1999.
Net cash provided by financing activities for the years ended September 30, 1999
and 1998 were $310,275 and $685,402, respectively. This decrease was the result
of a decrease in overall stock sales (common and preferred combined) in the
amount of $275,127.
As of September 30, 1999, the Company owed salaries to officers in the amount of
$175,000, up from $65,000 as of September 30, 1998. During the year ended
September 30, 1999, the Company began repaying amounts due to officers and
expects to continuing reducing this debt during the year ended September 30,
2000.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is included as a separate Exhibit to this report.
Please see pages F-1 through F-15.
15
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
In connection with the audits of the most recent fiscal years and any
interim period preceding resignation, no disagreements exist with any former
accountant on any matter of accounting principles or procedure, which
disagreements if not resolved to the satisfaction of the former accountant would
have caused them to make reference in connection with their report to the
subject matter of the disagreement(s).
The principal accountant's report on the financial statements for any of
the past two years contained no adverse opinion or a disclaimer of opinion nor
was qualified as to uncertainty, audit scope or accounting principles.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
NAME AGE POSITION
---- --- --------
John G. Perry 54 President, and Director
Frank A. Maas 55 Vice President of Engineering,
Secretary, Treasurer,
Chairman of the Board and Director
Francis Updike 55 Vice President of Sales & Marketing
Charles E. Snyder 49 Production Manager
Ronald P. Cropper 53 Director
JOHN G. PERRY founded World Wide Video, Inc. of Virginia, in 1997, and World
Wide Video, Inc. of Colorado, in 1998, and has served as President and on the
Board of Directors since that time. Mr. Perry has a B.S. in Mathematics, 1967,
from Randolph-Macon College and a M.S. in Computer Science, 1976, from the
University of Maryland.
FRANK A. MAAS founded World Wide Video, Inc. of Virginia, in 1997, and World
Wide Video, Inc. of Colorado, in 1998, and has served as Vice President of
Engineering and as the Chairman of the Board of Directors since that time. Mr.
Maas has a B.S. in Electrical Engineering, 1967, from Case Institute of
Technology. Mr. Maas has over 35 years in computer and communication systems
research and over 10 years experience in video compression.
FRANCIS UPDIKE joined the Company in 1999 as Vice President of Sales and
Marketing. Mr. Updike has a B.S. in Management from VPI & SU, 1967, and a M.B.A.
in Management from the University of Southern Mississippi, 1970. Mr. Updike has
extensive experience in managing marketing programs in the public utility,
modular housing, livestock trade association and restaurant franchise
industries.
CHARLES E. SNYDER joined the Company in 1999 as Production Manager. Mr. Snyder
has a B.S. Science Education, Virginia Polytechnic and State University, 1973,
and a M.S. Management/Logistics (MBA equivalent), Florida Institute of
Technology, 1988.
RONALD P. CROPPER has served on the Board of Directors since 1998. Mr. Cropper
has a B.S. from Georgetown University, 1969, and participated in the Harvard
University Accelerated MBA Program. Mr. Cropper has received numerous awards and
has published articles relating to education and distance learning.
16
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Annual Long-term Other
Name Compensation Compensation Compensation
--------------- ------------------ ----------------- ---------------
John Perry $120,000 None None
Frank Maas $120,000 None None
*Francis Updike
*Francis Updike received $24,000 and 68,000 shares of common stock during
calendar year 1999 as an independent contractor. Updike accepted fulltime
employment with the Company as Vice President of Sales & Marketing on January 1,
2000. His compensation will be $72,000 annually plus bonus (TBD) and Employee
Stock Options.
There have been no activities in these areas to date:
Life Premiums Paid
Retirement Plans
Termination Payments
Stock Options/SAR Grants
Aggregate/SAR Exercise and Fiscal Year-End Options/SAR Value
Long-Term Incentive Plan
Pension Plan
Compensation for Directors
World Wide Video, Inc. stock is not publicly traded.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
COMMON STOCK
The following sets forth information with respect to the Company's Common Stock
beneficially owned by each Officer and Director, and by all Directors and
Officers as a group. There are no other entities that owns over 5% of the
11,001,368 outstanding shares of Common Stock as of September 30, 1999.
Officers and Directors
Title Name of Amount Percent
of Beneficial Nature of of
Class Owner Beneficial Ownership Class
----- ---------- -------------------- --------- ------
Common John G. Perry Founder, President, & Director 5,000,000 45.41%
14327 Smith Road
Culpeper, VA 22701
Common Frank A. Maas Founder, Vice President, & 5,000,000 45.41%
808 Culpeper Ave. Chairman of the Board
Fredericksburg, VA 22405
Common Ronald Cropper Director 10,000 0.09%
POB 797053
Dallas, TX 75379
Common Francis Updike V.P. of Sales & Marketing 54,000 0.49%
12305 Hidden Lake
Culpeper, Virginia 22701
---------- -----
Officers and Directors as a group 10,064,000 91.40%
17
<PAGE>
COMMON WARRANTS (non voting until exercised)
Officers and Directors
Title Name of Amount Percent
of Beneficial Nature of of
Class Owner Beneficial Ownership Class
----- ---------- -------------------- --------- ------
Warrants Francis Updike V.P. of Sales $ Marketing 8,000 11.38%
12305 Hidden Lake ($2.75 per share; expires 4/6/01)
Culpeper, VA 22701
--------- ------
Officers and Directors as a group 8,000 11.38%
PREFERRED STOCK (ongoing offering, Regulation D Rule 506)
The following sets forth information with respect to the Company's Preferred
Stock beneficially owned by each Officer and Director, and by all Directors and
Officers as a group. All other entities that own over 5% of the 23,500
outstanding shares of Preferred Stock as of September 30, 1999 are included.
Officers and Directors
Title Name of Amount Percent
of Beneficial Nature of of
Class Owner Beneficial Ownership Class
----- ---------- -------------------- ---------- ------
Preferred Francis Updike V.P. of Sales & Marketing 1,000 4.26%
12305 Hidden Lake
Culpeper, VA 22701
---------- ------
Officers and Directors as a group 1,000 4.26%
Other Entities
Preferred Linda M. Cramer Investor 2,000 8.51%
19455 Old Orange Road
Culpeper, Virginia 22701
Preferred Sidney R. Rothrock Investor 2,000 8.51%
POB 490244
Key Biscayne Florida 33149
Preferred POPREP, Inc. Investor 2,000 8.51%
POB 212
Kearny, Mo 64060
Preferred Apex Appliance Investor 3,000 12.77%
1612 Diamond NE
Grand Rapid, MI 49505
Preferred Mike and Lori Sassen Investor 3,000 12.77%
15428 Windsor Drive
Omaha, NE 68154
------ ------
Other Entries as a group 12,000 51.06%
18
<PAGE>
PREFERRED WARRANTS (non voting until exercised)
Officers and Directors
Title Name of Amount Percent
of Beneficial Nature of of
Class Owner Beneficial Ownership Class
----- ---------- -------------------- ---------- ------
Warrants Francis Updike V.P. of Sales & Marketing 2,000 4.26%
12305 Hidden Lake ($6.00 per share; expires TBD)
Culpeper, VA 22701
--------- ------
Officers and Directors as a group 2,000 4.26%
Other Entities
Warrants Linda M. Cramer Investor 4,000 8.51%
19455 Old Orange Road
Culpeper, VA 22701
Warrants Sidney R. Rothrock Investor 4,000 8.51%
POB 490244
Key Biscayne Florida 33149
Warrants POPREP, Inc. Investor 4,000 8.51%
POB 212
Kearny, Mo 64060
Warrants Apex Appliance Investor 6,000 12.77%
1612 Diamond NE
Grand Rapid, MI 49505
Warrants Mike and Lori Sassen Investor 6,000 12.77%
15428 Windsor Drive
Omaha, NE 68154 --------- -------
Other Entries as a group 24,000 51.06%
19
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None, except those covered in employment and subcontractor as discussed
elsewhere.
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 10-K
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements and Schedules. The following financial statements
and schedules for the Registrant as of September 30, 1999 are filed as part
of this report.
(1) Financial statements of World Wide Video, Inc.
Year 1999
--------- Page
----
Cover Page F-1
Index to Financial Statements F-2
Independent Auditor's Report for years ended
September 30, 1999 and 1998 F-3
Balance Sheet F-4-F-5
Statement of Operations F-6
Statement of Stockholders' Equity F-7
Statement of Cash Flows F-8
Notes to Financial Statements F-9-F-15
(2) Financial Statement Schedules:
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
SK EXHIBITS
3.1 Articles of Incorporation of World Wide Video, Inc. (Colorado)*
3.2 Bylaws of World Wide Video, Inc. (Colorado)*
3.3 Articles of Incorporation of World Wide Video, Inc. (Virginia)*
3.4 Bylaws of World Wide Video, Inc. (Virginia)*
10.1.1 Agreement with National Executive Trade, Inc. (amended by 10.1.2)*
10.1.2 Agreement with Data Power, Inc.*
10.2 Share Exchange Agreement*
23.1 Consent of Accountant
* Incorporated by reference to Exhibits to the Registration Statement on Form
10-SB/A.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
July 13, 2000
WORLD WIDE VIDEO, INC.
/s/John G. Perry
----------------------------------
John G. Perry, President
Directors:
/s/Frank A. Maas
-------------------------------------
Frank A. Maas, Secretary and Director
/s/John G. Perry
------------------------------------
John G. Perry, Director
/s/Ronald Cropper
------------------------------------
Ronald Cropper, Director
21
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Enterprise)
FINANCIAL REPORT
YEARS ENDED SEPTEMBER 30, 1999 AND 1998
F-1
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page
----
Cover Page F-1
Index to Financial Statements F-2
Independent Auditor's Report for years ended
September 30, 1999 and 1998 F-3
Balance Sheet F-4-F-5
Statement of Operations F-6
Statement of Stockholders' Equity F-7
Statement of Cash Flows F-8
Notes to Financial Statements F-9-F-15
F-2
<PAGE>
THOMPSON,
GREENSPON
& Co., P.C.
Certified Public Accountants
Management Consultants
INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS
To the Stockholders
World Wide Video, Inc.
Culpeper, Virginia
We have audited the accompanying balance sheets of World Wide Video, Inc., a
development stage enterprise, and the related statements of operations and
retained earnings and cash flows for the years ended September 30, 1999 and
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of World Wide Video, Inc. (a
Colorado Corporation), and the results of its operations and its cash flows for
the years ended September 30, 1999 and 1998, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Corporation will continue as a going concern. As discussed in Note 2 to the
financial statements, the Corporation has suffered continued losses from
operations that raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/THOMPSON, GREENSPON & CO., P.C.
January 7, 2000
Fairfax, Virginia
F-3
<PAGE>
WORLD WIDE VIDEO, INC.
(A Colorado corporation)
(A Development Stage Enterprise)
BALANCE SHEETS
SEPTEMBER 30, 1999 AND 1998
1999 1998
---- ----
ASSETS
Current Assets
Cash and cash equivalents $ 18,788 $28,324
Inventories 119,290 122,448
Accounts receivable, other 8,033 2,434
Prepaid assets and fees 86,121 104,700
Deferred offering costs 3,000 15,850
-----------------------------
Total Current Assets 235,232 273,756
------------------------------
Property and Equipment
Computer and equipment 20,866 7,746
Software 13,668 13,668
------------------------------
Total Cost 34,534 21,414
Less accumulated depreciation (7,129) (2,364)
-------------------------------
Net Property and Equipment 27,405 19,050
-------------------------------
Other Assets
Technology license, net of 33,750 43,750
amortization
Deposits 1,150 650
Prepaid rent, non-current - 5,850
-------------------------------
Total Other Assets 34,900 50,250
-------------------------------
TOTAL ASSETS $297,537 $ 343,056
===============================
The Notes to Financial Statements are an integral part of these statements.
F-4
<PAGE>
WORLD WIDE VIDEO, INC.
(A Colorado corporation)
(A Development Stage Enterprise)
BALANCE SHEETS
SEPTEMBER 30, 1999 AND 1998
1999 1998
-------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 58,209 $ 10,780
Due to officers and employees 213,164 65,000
Deferred revenue 75,000 50,000
Convertible loan - 50,000
Preferred dividend payable 1,020 -
-------------------------------------
Total Current Liabilities 347,393 175,780
-------------------------------------
Stockholders' Equity
Common stock, par value $0.0001;
100,000,000 shares authorized;
11,011,368 issued and outstanding at
September 30, 1999 and 10,443,737
issued and outstanding
at September 30, 1998 1,101 1,044
Preferred stock, par value $0.01;
10,000,000 shares authorized; 23,500
shares, each with two warrants,
issued or outstanding at September 30,
1999; no shares issued and outstanding
at September 30, 1998 235 -
Additional paid-in capital 1,339,041 634,558
Accumulated deficit during development stage (1,390,233) (468,326)
--------------------------------------
Total Stockholders' Equity (49,856) 167,276
--------------------------------------
Total Liabilities and Stockholders' $297,537 $343,056
Equity
======================================
The Notes to Financial Statements are an integral part of these statements.
F-5
<PAGE>
WORLD WIDE VIDEO, INC.
(A Colorado corporation)
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, 1999 AND 1998
1999 1998
Sales $- $ -
----------------------------------
Product Development Costs
Salaries and benefits 181,791 -
Subcontractors 446,628 196,867
Other development costs 141,309 177,061
----------------------------------
Total Product Development Costs 769,728 373,928
----------------------------------
General and Administrative Expenses
Office 38,971 12,388
Marketing and sales 32,827 58,981
Professional services 29,937 2,700
Occupancy 14,909 5,903
Depreciation and amortization 14,765 8,614
Utilities and telephone 12,403 2,991
Other 12,471 5,571
----------------------------------
Total General & Administrative Expenses 156,283 97,148
----------------------------------
Total Costs and Expenses (926,011) (471,076)
Other Income 5,124 2,750
----------------------------------
Loss before Income Taxes (920,887) (468,326)
Income Taxes - -
----------------------------------
Net Loss $(920,887) $(468,326)
==================================
Dividends, Preferred Stock 1,020 -
ILoss Available to Common Stockholders $(921,907) $(468,326)
Basic and Diluted Net Loss Per Share $ (0.09) $ (0.06)
==================================
Average Common and Common Equivalent
Shares Outstanding 10,558,840 7,556,726
==================================
The Notes to Financial Statements are an integral part of these statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1999 AND 1998
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Cumulative Additional Deficit During
Common Preferred Paid In Development
Shares Stock Par Capital Stage Totals
---------------------------------------------------------------------------------
Issuance of share capital to
Founders, July 16, 1997 200 $- $200 $200 $- $200
Net loss, period ended September
30, 1997 - - - - -
----------------------------------------------------------------------------------
Balance Sheet September 30, 1997 200 - 200 - 200
Exchange of shares, issuance of
new shares upon reincorporation
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 -
Sale of cumulative Preferred stock - 235 140,765 -
Contributed services 252,381 25 350,285 -
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)
==================================================================================
The Notes to Financial Statements are an integral part of these statements.
F-7
</TABLE>
<PAGE>
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1999 AND 1998
1999 1998
-----------------------------
Cash Flows from Operating Activities
Net loss $(920,887) ($468,326)
Noncash items included in net loss
Depreciation 4,765 2,364
Amortization 10,000 6,250
Contributed services 350,310 -
Changes in assets & liabilities
Decrease (Increase) in
Inventory 3,158 (122,448)
Accounts receivable-other (5,599) (2,434)
Prepaid expenses 18,579 (104,700)
Deferred offering costs 12,850 (15,850)
Increase in
Accounts payable 47,429 10,780
Due to officers and employees 148,164 65,000
Deferred revenue 25,000 50,000
----------------------------------
Net Cash Used by Operating Activities (306,231) (579,364)
----------------------------------
Cash Flows from Investing Activities
Purchase of equipment & Software (13,120) (21,414)
Purchase of technology license - (50,000)
Purchase of other assets (500) (6,500)
----------------------------------
Net Cash Used by Investing Activities (13,620) (77,914)
Cash Flows from Financing Activities
Proceeds from sales of common stock 213,465 635,402
Proceeds from sale of preferred stock 141,000 -
Convertible loan - 50,000
----------------------------------
Net Cash Provided by Financing Activities 354,465 685,402
----------------------------------
Net (Decrease) Increase in Cash and
Cash Equivalents (9,536) 28,124
Cash and Cash Equivalents, beginning of year 28,324 200
----------------------------------
Cash and Cash Equivalents, end of year $18,788 $28,324
==================================
The Notes to Financial Statements are an integral part of these statements.
F-8
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COMPANY AND PURPOSE
World Wide Video, Inc. (the Company) was organized under the laws of the
Commonwealth of Virginia on July 16, 1997. There was no activity in fiscal 1997.
On April 9, 1998, the Company was reincorporated in the State of Colorado. The
Company intends to design and manufacture technology and products for the video
telephony market. The principal activities of the Company since inception have
been raising capital, conducting research and product development. The Company
conducts its operations from offices in Culpeper, Virginia.
The accounting and reporting policies of World Wide Video, Inc. conform with
generally accepted accounting principles and reflect practices appropriate to a
development stage enterprise. These policies are summarized below.
DEVELOPMENT STAGE ENTERPRISE
Substantially all of the Company's operations have been in connection with the
establishment of a new business. The Company has adopted Statement of Position
98-5 which requires expensing of costs of start-up activities, including
organization costs, as incurred.
FINANCIAL STATEMENT 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 disclosures of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenue and expenses during the reporting period. Due to
their prospective nature, actual results could differ from those estimates.
FINANCIAL INSTRUMENTS
The estimated fair value of cash and cash equivalents, accounts receivable,
accounts payable and accrued expenses and other liabilities approximate their
carrying amounts in the financial statements.
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.
There were no income taxes or interest paid during the period ended September
30, 1998 or 1999.
F-9
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
INVENTORY
Inventory, which consists primarily of raw materials, is stated at the lower of
cost or market, with cost being determined on a first-in, first-out basis.
Inventory consists principally of raw materials, chipsets, which are purchased
from Analog Devices, Inc. The Company has no binding commitments to purchase
additional inventory.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated over their estimated
useful lives. 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.
Depreciation expense for the period ended September 30, 1999 was $4,765 and for
September 30, 1998 was $2,364.
TECHNOLOGY LICENSES
The Company capitalizes technology licenses. Technology licenses are carried at
cost less accumulated amortization. Amortization is taken on the straight line
basis over five years.
Amortization expense for the period ended September 30, 1998 was $10,000 and for
the period ended September 30, 1998 was $6,250.
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.
DEFERRED REVENUE
License revenues are generally recognized upon delivery of the licensed
technology 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 collection is probable.
F-10
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
INCOME TAXES
The Corporation utilizes the liability method for 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 statement 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
noncurrent based on the classification of the related asset or liability.
Prior to April 1, 1998, the Corporation, with the consent of its stockholders,
had elected S corporation status under Section 1372 of the Internal Revenue Code
and similar sections of the state income tax laws. On April 1, 1998, the Company
terminated its S election and is now subject to corporate income tax rates. The
Company had no retained earnings when the S election was terminated.
NET LOSS PER SHARE
Basic net loss per share is computed by dividing net loss available to common
stockholders (numerator) by the weighted average number of common shares and
potential common shares outstanding during the period (denominator). Diluted net
loss per share is computed using the weighted average number of common shares
and potential common shares outstanding during the period. Potential common
shares result from the assumed exercise, using the treasury stock method, of
outstanding convertible cumulative preferred stock having a dilutive effect.
The numerators for each period presented are equal to the reported net loss plus
cumulative preferred dividends. Neither the preferred or common warrants were
included in the computations of net loss per share because the effect on the
calculations would be antidilutive:
2. NEED FOR ADDITIONAL CAPITAL
The Company's continued existence is dependent upon its ability to raise
additional funds to complete products in development. The Company has concluded
a private securities offering in which it has raised $798,070, net of offerings
costs of $94,574. An offering of cumulative preferred shares is underway. As of
September 30, 1999, the Company has raised $141,000 in this offering. Additional
funds will be raised through similar private offerings, which in Management's
opinion, will provide sufficient capital resources to complete current product
development and initial product marketing.
F-11
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
3. PREPAID EXPENSES AND FEES
Included in Prepaid Expenses at September 30 are the following:
1999 1998
------- -------
Custom engineering support deposit $20,000 $50,000
Deposit on DataBeam license 17,500
Deposit on inventory purchases 18,390 23,900
Prepaid marketing expenses 18,000 18,000
Trade shows and other 6,381 5,000
PREPAID RENT 5,850 7,800
------- --------
$86,121 $104,700
======= ========
Custom engineering support is on deposit with Analog Devices, Inc., the
Company's principal supplier of raw materials, for custom engineering support in
connection with product development. The Company also has $15,000 on deposit
with the same vendor for raw materials to be delivered in the next year. Prepaid
product marketing costs of $18,000 are expected to be expensed in the coming
year
4. 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 expected
life of the agreement.. 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 September 30, 1999 was
$33,750 and at September 30, 1998, the carrying value was $43,750.
5. CONTRIBUTED CAPITAL
In connection with the reincorporation 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 $0.20 per share in return for a convertible loan, provided certain conditions
could be satisfied. (See Note 7). In April, 1998, the Company sold 200,000
shares of common stock at $0.50 per share, and 75,000 shares at $2.00 per share.
F-12
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
5. CONTRIBUTED CAPITAL (CONTINUED)
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 has
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.
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. 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. At the close of the
private offering each cumulative preferred share is convertible into 2 shares of
common stock.
During fiscal 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.
6. CONVERTIBLE DEBT
In March 1998, National Executive Trade, Inc. advanced the Company $50,000 (non
interest bearing) under an agreement that granted the lender the exclusive right
to manufacture and market products in Canada until March, 2008. Upon delivery of
prototypes, the debt was convertible to 250,000 shares of common stock. The
agreement was assigned to DataPower, Inc., a Canadian company. In November 1998,
the parties agreed that the prototypes were acceptable. At that time, the
Company agreed to issue 250,000 shares of its common stock in satisfaction of
the debt.
7. 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. Monthly rent is
$650. The rent for the leased premises is $15,600 for the term of the lease,
which the Company prepaid. The Company has made a security deposit of $650. In
September 1999, the Company entered into an agreement for additional space at
the rate of $500 per month on a month to month basis and made an additional
deposit of $500 to secure the additional space. Rent expense was $7,800 and
$1,950, respectively, for the years ended September 30, 1999 and 1998.
F-13
<PAGE>
WORLD WIDE VIDEO
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
8. RELATED PARTIES
A majority stockholder is a member of the Board of Directors of DataPower, Inc.
(See Note 6) 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. During the period ended September 30, 1998, he was
paid $23, 435 under this contract. In addition, the same Director has been
prepaid $ 18,000 under a product marketing agreement.
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 year ended September 30, 1999, the President
and the Vice-President of Engineering earned $90,000 each under these
agreements. Of this amount $175,000 remains unpaid at September 30, 1999.
During the year ended September 30, 1998, they earned $180,000 under earlier
agreements, of which $35,000 remains unpaid at September 30, 1999 and $65,000
remained unpaid at September 30, 1998.
9. 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 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. Stock compensation of
125,000 common shares was earned in the year ended September 31, 1999 and none
in the year ended September 30, 1998.
PRODUCT DEVELOPMENT
Under an agreement to develop certain products, the Company has deferred revenue
of $50,000 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. The contract
is in default.
The Company has deferred $25,000 in nonrecurring engineering payments received
in connection with product development contracts.
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.
F-14
<PAGE>
WORLD WIDE VIDEO, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
9. COMMITMENTS AND CONTINGENCIES
(CONTINUED)
The agreement was assigned to DataPower, Inc. and amended on August 31, 1998 to
include an additional marketing license in exchange for 250,000 common shares of
DataPower, Inc. At September 30, 1999 and 1998, the Company had determined that
collection of the consideration was not likely because of continued delays in
meeting the specifications of the contract with DataPower, Inc. In December,
1999 the Company was notified that DataPower, Inc. intended to issue its stock
as consideration for the license agreement.
F-15
