<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 of 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1999
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _____ to _____
Commission file number 0-27185
Global Network, Inc.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in Its Charter)
Nevada 88-0367123
- ------------------------ ---------------------------------
(State of Incorporation) (IRS Employer Identification No.)
575 Madison Ave., 10th Floor, New York, New York 10022
- ------------------------------------------------ ----------
(Address of Principal Executive Offices) (Zip Code)
(212) 605-0431
- --------------------------------------------------------------------------------
(Issuer's Telephone Number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes No X
--- ---
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 10,801,000
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
See financial statements beginning on Page F-I.
ITEM 2. MANAGEMENT'S DISCUSSION OR PLAN OF OPERATION
Plan of operation
The Company intends to derive its revenues from the sale of interactive
advertising on the web. Secondary revenues are expected to be generated through
the development of proprietary software designed for the direction, creation,
and measurement of Internet ads on the network the Company is expanding.
The Company plans to have its suppliers and distribution channels in
place during the quarter ending December 31, 1999. The Company has made initial
contact with, and will continue to make contacts with, major interactive clients
and their advertising agencies through a series of mailings, presentations, and
web site demonstrations. The Company's strategy is to solicit the major
potential advertisers in industries including, but not limited to, the
following: automobile, entertainment, package goods, financial services,
politics, and technology.
The Company intends to out-source research, marketing, computer
programming, and graphic design functions to expert individuals with whom
management has prior experience and in whom management has an acceptable level
of confidence. Through outsourcing, management believes it can achieve maximum
results while keeping overhead expenses at a minimum.
The Company had no revenues during the period from April 26, 1999
(inception) through September 30, 1999. Selling, general and administrative
expenses of $160,772 for the period April 26, 1999 (inception) through September
30, 1999 consist primarily of promotional expenditures relating to the initial
solicitation of customers, development of the Company's proprietary software and
other incidental start up costs.
Liquidity and capital resources
The Company raised $200,000 through the sale of 100,000 shares of the
Company's common stock and warrants to purchase 400,000 shares of common stock
at a price of $2 per share through February 5, 2000. On August 10, 1999, the
Company raised an additional $200,000 through the exercise of 100,000 of these
warrants.
At September 30,1999 the Company had working capital of $204,228
including cash of $128,291. The Company's principal cash requirements are for
the continual development of the Company and solicitation of new customers.
The Company has yet to generate any revenues and has incurred an
accumulated loss of $160,772 in the development stage. Although the Company had
$204,228 of working capital at September 30, 1999, that amount may not be
sufficient to fund the Company's operations through at least September 30, 2000
and thereafter unless the Company can reduce costs, generate sufficient
operating revenues and cash flows and/or obtain additional debt or equity
financing. These, conditions, among others, raise substantial doubts about the
ability of the Company to continue as a going concern.
2
<PAGE> 3
Management believes that the Company's commercial success and ability
to continue as a going concern will depend on its ability to reduce the
Company's operating costs, obtain advertising contracts to generate revenues and
cash flows from operations on a sustained basis and/or obtain additional debt or
equity financing. To enable the Company to control its costs and cash outlays,
its executive officers agreed to reduce their compensation from an aggregate
annual amount of $545,000 as originally reported in the Company's Form 10-SB to
$270,000 commencing August 5, 1999 (there were no charges for executive
compensation prior to August 5, 1999). In addition, in November 1999, the
Company obtained its first advertising contract, which is expected to generate
revenues of at least $15,000. If the Company is able to complete additional
phases of the contract, it could receive additional revenues, although there can
be no guarantee that the Company will be able to do so.
In the event that the Company's plans change (due to unanticipated
expenses or difficulties or otherwise), or if the working capital and projected
cash flow otherwise prove insufficient to fund operations, the Company could be
required to seek additional financing sooner than is currently anticipated.
However, there can be no assurance that additional financing will be available
to the Company when needed, on commercially reasonable terms, or at all. The
Company's inability to obtain such additional financing could have a material
adverse effect on the Company's long term liquidity.
Year 2000 Readiness Disclosure
The Company is in the process of implementing and executing a Year 2000
assessment with the objective of having all of its business systems including
those used by outsourcing outfits functioning properly with respect to the Year
2000 issue before January 1, 2000.
The Company has not yet developed a contingency plan to address
situations that may result if it is unable to achieve Year 2000 compliance. The
cost of developing implementing such a plan, if necessary, could be material.
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
In November 1999 the Company issued 25,000 shares of its common stock
to its attorneys, Day & Campbell, LLP, in exchange for services. The issuance of
such securities was exempt from registration under the Securities Act of 1933
pursuant to Section 4(2) thereof and/or Regulation D promulgated thereunder. The
number of shares outstanding set forth on the cover page of this Quarterly
Report reflects the issuance of these shares.
ITEM 5. OTHER INFORMATION.
In September and October 1999, certain shareholders of the Company
agreed to the cancellation of an aggregate of 21,156,934 shares of the Company's
common stock held by such shareholders, thereby reducing the number of shares of
the Company's common stock outstanding. The number of shares outstanding set
forth on the cover page of this Quarterly Report reflects the cancellation of
these shares.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
27 -- Financial Data Schedule
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the quarter for
which this report is filed.
3
<PAGE> 4
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GLOBAL NETWORK, INC.
Date: November 15, 1999 /s/ James C. Mason
------------------------------
James C. Mason
President, CEO and Principal
Financial Officer
4
<PAGE> 5
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS PAGE
----------------------------- ------
<S> <C>
Financial Statements
Consolidated Balance Sheet at September 30, 1999 (Unaudited) F-2
Consolidated Statement of Operations
Period from April 26, 1999 (Date of Inception)
through September 30, 1999 (Unaudited) F-3
Consolidated Statement of Stockholders' Equity
Period from April 26, 1999 (Date of Inception) through
September 30, 1999 (Unaudited) F-4
Consolidated Statement of Cash Flows
Period from April 26, 1999 (Date of Inception) through
September 30, 1999 (Unaudited) F-5
Notes to Consolidated Financial Statements F-6/12
</TABLE>
* * *
F-1
<PAGE> 6
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash $128,291
Advances to officers 97,911
--------
Total $226,202
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities - accounts payable $ 21,974
--------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value; 5,000,000 shares
authorized; none issued --
Common stock, $.001 par value; 50,000,000 shares
authorized; 10,776,000 shares issued and outstanding 10,776
Additional paid-in capital 354,224
Deficit accumulated in the development stage (160,772)
---------
Total stockholders' equity 204,228
---------
Total $226,202
========
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE> 7
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
General and administrative expenses $ 160,772
---------
Net loss $(160,772)
=========
Basic net loss per common share $ (.02)
=========
Basic weighted average common shares outstanding 9,622,949
=========
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE> 8
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Stock Additional in the
------------------- Subscription Paid-in Development
Shares Amount Receivable Capital Stage Total
--------- ------- ------------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Initial issuance of shares on April 26, 1999
(as retroactively adjusted to reflect shares
effectively issued prior to reverse
acquisition on August 5, 1999 and the effects
of certain agreements in September 1999) 9,000,000 $ 100 $ (100)
Effects of reverse acquisition 1,576,000 10,476 100 $(45,576) $ (35,000)
Sale of units of shares of common stock and
warrants through private placement 100,000 100 199,900 200,000
Exercise of warrants 100,000 100 199,900 200,000
Net loss $(160,772) (160,772)
---------- ------- -------- -------- --------- ---------
Balance, September 30, 1999 10,776,000 $10,776 $ -- $354,224 $(160,772) $ 204,228
========== ======= ======== ======== ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE> 9
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 1999 (Unaudited)
Operating activities:
Net loss $(160,772)
Adjustments to reconcile net loss to net cash used in
operating activities:
Changes in operating assets and liabilities:
Advances to officers (97,911)
Accounts payable 21,974
---------
Net cash used in operating activities (236,709)
---------
Financing activities:
Proceeds from sale of units of common stock and warrants 200,000
Proceeds from exercise of warrants 200,000
Payments of costs in connection with reverse acquisition (35,000)
---------
Net cash provided by financing activities 365,000
---------
Increase in cash and cash, end of period $ 128,291
=========
See Notes to Consolidated Financial Statements.
F-5
<PAGE> 10
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1 - Organization and business and basis of presentation:
Global Network, Inc. ("Global Nevada") was originally incorporated in August
1996 in Nevada as Bargain Brokers, Inc. to develop operations as a liquidator of
closeouts, factory overruns, seconds and insurance salvage goods. However,
Global Nevada never generated any significant revenues or expenses in connection
with such operations, and it was an inactive "shell company" whose common shares
were publicly traded at the time of the exchange of shares described below.
Global Network, Inc. ("Global New York") was originally incorporated on April
26, 1999 in New York to develop an advertising network of online local newspaper
web sites for the purpose of purchasing unused page views on these sites and
reselling them to national advertisers. During the period from its inception on
April 26, 1999 through September 30, 1999, Global New York did not generate any
revenues and, accordingly, it was in the development stage as of September 30,
1999.
As of August 5, 1999, Global Nevada had, effectively, 1,576,000 shares of common
stock outstanding, with a par value of $.001 per share. As of that date, Global
Nevada issued 9,000,000 shares of common stock to acquire all of the 9,000,000
shares of common stock, which had no par value, of Global New York that were,
effectively, then outstanding (the "Exchange"). All references to numbers of
shares and per share amounts in these notes and the accompanying unaudited
consolidated financial statements have been retroactively restated, where
appropriate, for shares cancelled as a result of (i) the issuance of shares upon
the exercise of warrants on August 10, 1999 and (ii) the September 1999
agreements (the "Cancellation Agreements") pursuant to which certain
stockholders waived their right to receive and/or agreed to the cancellation of
certain shares which had been held in escrow, as further explained in Note 5. As
a result of the Exchange, Global New York became a wholly-owned subsidiary of
Global Nevada, and Global Nevada had 10,576,000 shares of common stock
outstanding, of which 9,000,000 shares, or 85.1%, were owned by the former
stockholders of Global New York and 1,576,000 shares, or 14.9%, were owned by
the former stockholders of Global Nevada. However, since the former stockholders
of Global New York became the owners of a majority of the outstanding common
shares of Global Nevada after the Exchange and Global Nevada had no significant
operating activities or assets and liabilities prior to the Exchange, the
Exchange was treated effective as of August 5, 1999 as a "purchase business
combination" and a "reverse acquisition" for accounting purposes in which Global
Nevada was the legal acquirer and Global New York was the accounting acquirer.
As a result, the assets and liabilities of the accounting acquirer, Global New
York, continued to be recorded at their historical carrying values as of August
5, 1999; however, common stock and additional paid-in capital were adjusted as
of August 5, 1999 to reflect the $.001 per share par value of the shares of the
legal acquirer,
F-6
<PAGE> 11
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)
Note 1 - Organization and business and basis of presentation (continued):
Global Nevada, and all references to the number of shares of common stock of
Global New York as of dates or for periods prior to the Exchange have been
restated to reflect the ratio of the number of common shares of Global Nevada
effectively exchanged for common shares of Global New York. In addition, the
accompanying consolidated financial statements for the periods prior to August
5, 1999 are comprised, effectively, of the historical financial statements of
Global New York.
The "Company" as used herein refers to Global New York prior to August 5, 1999
and Global Nevada together with Global New York subsequent to that date. The
Company's year-end will be December 31st.
In the opinion of management, the accompanying unaudited consolidated financial
statements reflect all adjustments, consisting of normal recurring accruals,
necessary to present fairly the financial position of the Company as of
September 30, 1999, and its results of operations, changes in stockholders'
equity and cash flows for the period from April 26, 1999 (date of inception)
through September 30, 1999. The Company's results of operations for the three
months ended September 30, 1999 were, effectively, the same as its results of
operations for the period from April 26, 1999 through September 30, 1999 and,
accordingly, a separate statement of operations for the three months ended
September 30, 1999 has not been presented. The Company's results of operations
for the period from April 26, 1999 through September 30, 1999 are not
necessarily indicative of the results of its operations for the period from
April 26, 1999 through December 31, 1999 (the date of the Company's year end).
The Company previously filed a Form 10-SB (the "Form 10-SB") with the Securities
and Exchange Commission (the "SEC") which included audited consolidated
financial statements as of August 15, 1999 and for the period from April 26,
1999 through August 15, 1999. Accordingly, these unaudited consolidated
financial statements should be read in conjunction with the consolidated
financial statements, notes to the consolidated financial statements and the
other information included in the Form 10-SB.
The accompanying unaudited consolidated financial statements have been prepared
based on the assumption that the Company will continue as a going concern.
However, the Company did not generate any revenues and it incurred a loss of
$160,772 during the period from its inception through September 30, 1999.
Although the Company had $204,228 of working capital at September 30, 1999, that
amount may not be sufficient to fund the Company's operations through at least
September 30, 2000 and thereafter unless the Company can reduce costs, generate
sufficient operating revenues and cash flows and/or obtain additional debt or
equity financing. These conditions, among others, raise substantial doubts about
the ability of the Company to continue as a going concern.
F-7
<PAGE> 12
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)
Note 1 - Organization and business and basis of presentation (concluded):
To enable the Company to continue to operate as a going concern, management is
attempting to reduce the Company's operating costs, obtain advertising contracts
to generate revenues and cash flows from operations on a sustained basis and/or
obtain additional debt or equity financing. In November 1999, the Company
obtained an advertising contract pursuant to which it will receive revenues of
at least $15,000. If the Company is able to complete additional phases of the
contract, it could receive additional revenues. Management is continuing to
market the Company's advertising services and attempting to negotiate additional
contracts. Management does not believe that the Company will incur substantial
direct costs or incremental selling, general and administrative expenses as a
result of its obligations under the advertising contract it has obtained or any
other contracts it may obtain. Management also believes that the Company could
obtain additional financing, if necessary, through the private placement of debt
or equity securities.
However, management cannot assure that the Company will be able to develop a
successful marketing strategy that will generate revenues and net cash flows on
a sustained basis, reduce its costs and/or obtain any additional financing it
may need to continue to operate as a going concern. The accompanying
consolidated financial statements do not include any adjustments related to the
recoverability and classification of assets or the amounts and classification of
liabilities that might be necessary should the Company be unable to continue its
operations as a going concern.
Note 2 - Summary of accounting policies:
Use of estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Principles of consolidation:
The accompanying consolidated financial statements include the accounts of
Global Nevada from its acquisition on August 5, 1999 and Global New York, its
wholly-owned subsidiary, from April 26, 1999, the date of its inception. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
F-8
<PAGE> 13
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)
Note 2 - Summary of accounting policies (continued):
Income taxes:
Prior to the Exchange on August 5, 1999, Global New York, with the consent of
its stockholders, had elected to be treated as an "S" Corporation under the
Internal Revenue Code. Accordingly, prior to that date, the Company's losses
were allocated to Global New York's stockholders for inclusion in their personal
income tax returns and the Company was not required to record any provision or
credit for income taxes.
The Company accounts for income taxes pursuant to the asset and liability method
which requires deferred income tax assets and liabilities to be computed
annually for temporary differences between the financial statement and tax bases
of assets and liabilities that will result in taxable or deductible amounts in
the future based on enacted tax laws and rates applicable to the periods in
which the differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. The income tax provision or credit is the tax
payable or refundable for the period plus or minus the change during the period
in the deferred tax assets and liabilities.
Net earnings (loss) per common share:
The Company presents "basic" earnings (loss) per common share and, if
applicable, it will present "diluted" earnings per common share pursuant to the
provisions of Statement of Financial Accounting Standards No. 128, Earnings per
Share. Generally, basic earnings (loss) per common share is calculated by
dividing net income or loss by the weighted average number of common shares
outstanding during each period. The calculation of diluted earnings per common
share is similar to that of basic earnings per common share, except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if all potentially dilutive common shares, such as
those issuable upon the exercise of warrants, were issued during the period.
The weighted average number of common shares of 9,622,949 used in the
computation of basic net loss per common share for the period from April 26,
1999 (date of inception) through September 30, 1999: (i) includes the effects of
the issuance of the 1,576,000 shares of common stock to the owners of Global
Nevada as a result of the Exchange and the reverse acquisition by Global New
York for the period subsequent to August 5, 1999, the date of the Exchange, and
(ii) excludes the effects of the 21,156,934 shares of common stock owned by the
founders of Global New York and Global Nevada that were cancelled as a result of
the issuance of shares upon the exercise of warrants on August 10, 1999 and the
Cancellation Agreements in September 1999, as further explained in Note 5.
F-9
<PAGE> 14
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)
Note 2 - Summary of accounting policies (concluded):
Net earnings (loss) per common share (concluded):
Since the Company had a loss for the period from April 26, 1999 through
September 30, 1999, the assumed effect of the exercise of warrants outstanding
at September 30, 1999 would have been anti-dilutive and, therefore, a diluted
per share amount has not been presented in the accompanying consolidated
statement of operations.
Note 3 - Advances to officers:
Advances to officers of $97,911 as of September 30, 1999 were noninterest
bearing and due on demand.
Note 4 - Income taxes:
Prior to the Exchange on August 5, 1999, Global New York had elected to be
treated as an "S" Corporation under the applicable sections of the Code. The "S"
Corporation election terminated as a result of the Exchange.
The Company had net operating loss carryforwards of approximately $161,000
available to reduce future Federal taxable income as of September 30, 1999.
There were no other material temporary differences as of that date. If not used,
net operating loss carryforwards as of September 30, 1999 will expire in 2019.
Deferred tax assets of approximately $55,000 attributable to the potential
benefits from the net operating loss carryforwards as of September 30, 1999 were
offset by an equivalent valuation allowance due to the uncertainties related to
the extent and timing of the Company's future taxable income and, accordingly,
the Company did not recognize a credit for income taxes for the period from
April 26, 1999 through September 30, 1999.
Note 5 - Stockholders' equity:
Preferred stock authorized:
The Company's Articles of Incorporation authorize the issuance of up to
5,000,000 shares of preferred stock, $.001 par value. The preferred stock may be
issued in one or more series, with terms and preferences to be determined by the
Company's Board of Directors. No shares of preferred stock had been issued as of
September 30, 1999.
Issuances and cancellations of common stock and warrants:
The Company's Articles of Incorporation also authorize the issuance of
50,000,000 shares of common stock, $.001 par value.
F-10
<PAGE> 15
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)
Note 5 - Stockholders' equity (concluded):
Issuances and cancellations of common stock and warrants (concluded):
On April 26, 1999, a total of 27,732,934 shares of common stock were issued,
effectively, to the founders of Global New York for nominal consideration.
On August 5, 1999: (i) 4,000,000 shares of common stock were initially issued to
the owners of Global Nevada as a result of the Exchange and the reverse
acquisition by Global New York, (ii) 21,732,934 shares of common stock owned by
the founders of Global New York were placed in escrow and became subject to
cancellation pursuant to an agreement that was initially due to expire on August
5, 2002, as further explained below, and (iii) the Company sold 100,000 shares
of common stock and warrants ("Warrants") to purchase 400,000 shares of common
stock, exercisable at $2.00 per share through February 5, 2000, pursuant to a
private offering of units for which it received total consideration of $200,000.
Of the 21,732,934 escrowed shares of common stock owned by the founders of
Global New York that were subject to cancellation, 12,000,000 shares and
9,732,934 shares were designated as "Earnout Shares" and "Penalty Shares,"
respectively. The Earnout Shares were to be released to the stockholders if the
Company had income before income taxes of not less than $1,000,000 during any
four consecutive quarters prior to the expiration of the escrow agreement or
upon the release of Penalty Shares. The Penalty Shares were to be released in
specified amounts if the Warrants were not exercised by specified dates.
On August 10, 1999, the Company received $200,000 upon the exercise of Warrants
for the purchase of 100,000 shares of common stock. As a result of the exercise
of those Warrants, a total of 2,433,234 Penalty Shares held in escrow became
subject to cancellation, and 29,499,700 shares of common stock remained
outstanding, including 19,299,700 shares held in escrow. In addition, Warrants
remained outstanding for the purchase of 300,000 shares of common stock.
As a result of the September 1999 Cancellation Agreements, (i) 2,424,000 shares
of the Company's common stock held by certain of the stockholders of Global
Nevada became subject to cancellation; (ii) 10,000,000 Earnout Shares and
6,299,700 Penalty Shares that were held in escrow became subject to
cancellation; and (iii) the remaining 2,000,000 Earnout Shares and 1,000,000
Penalty Shares that were held in escrow became subject to release to the
founders of Global New York that waived their rights to and agreed to the
cancellation of the 10,000,000 Earnout Shares and the 6,299,700 Penalty Shares.
As a result, the Company had, effectively, 10,776,000 shares of common stock
outstanding as of September 30, 1999 comprised of 1,576,000 shares that were
effectively issued to the former stockholders of Global Nevada, 9,000,000 shares
that were effectively issued to the founders of Global New York and 200,000
shares that had been issued as a result of the private placement and the
exercise of Warrants.
F-11
<PAGE> 16
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)
Note 6 - Commitments:
The Company has entered into an oral consulting agreement with one of its
stockholders whereby the stockholder will provide financial and other consulting
services to the Company in exchange for payments of up to approximately $75,000
for such services.
The Company has also entered into an oral agreement with a company that is a
designer and developer of web sites for assistance in the further development of
its web site and the creation of proprietary software for the design,
distribution and measurement of interactive advertising. One of the stockholders
of the Company is the president and chief executive officer of the web site
designer and developer.
* * *
F-12
<PAGE> 17
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-26-1999
<PERIOD-END> SEP-30-1999
<CASH> 128,291
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 226,202
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 226,202
<CURRENT-LIABILITIES> 21,974
<BONDS> 0
0
0
<COMMON> 10,776
<OTHER-SE> 193,452
<TOTAL-LIABILITY-AND-EQUITY> 204,228
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (160,772)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (160,772)
<INCOME-TAX> 0
<INCOME-CONTINUING> (160,772)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (160,772)
<EPS-BASIC> (.02)
<EPS-DILUTED> 0
</TABLE>
