<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, 2000
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ___________________ to ___________________
Commission file number 000-27185
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 [X] No [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 11,222,750 as of September
30, 2000.
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-1.
ITEM 2. PLAN OF OPERATION
During the three and nine months ended September 30, 2000 we had
revenues of approximately $69,000 and $164,000, respectively. Revenues for the
three months ended September 30, 2000 were less than anticipated. A major strike
by one of our customers diminished anticipated revenues by approximately
$210,000. In addition, although the summer months are historically a slow period
for advertising overall, our interactive advertising revenues were adversely
affected by the general downturn of Internet companies. Such downturn commenced
in March 2000 and continued through the three months ended September 30, 2000.
Cost of revenues of approximately $50,000 and $125,000 during the three
and nine months ended September 30, 2000, respectively, consist primarily of
payments to newspapers for advertising space on their websites.
Selling, general and administrative expenses were approximately
$506,000 and $1,100,000 during the three and nine months ended September 30,
2000, respectively, and consist primarily of sales and marketing costs in
connection with the solicitation of customers, sales and marketing expenses
related to newspaper verification revenues, and expenses associated with
operating and maintaining our web site. In addition, selling, general, and
administrative expenses include salaries and professional fees primarily for
legal, investment banking, and investment relation consultants. Selling, general
and administrative expenses, comprised primarily of promotional expenditures
relating to the initial solicitation of customers and other incidental start-up
costs, aggregated $160,772 for the three months ended September 30, 1999.
During the three months ended September 30, 2000, we continued to test
the accuracy of our live verification software resulting in beta verification
with Mediaplex and The New York Daily News. Our goal is that our proprietary
software will be at such a high level of attraction to advertising agencies and
newspapers that we may achieve "industry standard status".
2
<PAGE> 3
LIQUIDITY AND CAPITAL RESOURCES
From August 1999 through the date of this report, we raised a total of
approximately $2,540,000, net of approximately $199,000 in fees, from the
following securities offerings:
<TABLE>
<S> <C> <C>
August 1999 $ 200,000 Sale of 100,000 shares of common stock and warrants to
purchase an additional 400,000 shares of common stock
at a price of $2 per share at any time until February 5, 2000
August 1999 $ 200,000 Sale of 100,000 shares of common stock pursuant to exercise
of warrants
February and March 2000 $1,768,250 Sale of 1,388,000 shares of common stock
September 2000 $ 372,000 Sale of 212,250 shares of common stock
</TABLE>
In August 2000, 10,000 shares of common stock having an aggregate fair
value of $60,000 were issued in exchange for services. In addition, during the
six months ended June 30, 2000, options to purchase 550,000 shares of common
stock at $.93 per share with an aggregate fair value of $396,000 were issued in
exchange for services.
At September 30, 2000, we had working capital of approximately
$1,128,000. Our principal cash requirements are for the continual development of
our business and solicitation of new customers. We have no debt.
We anticipate that our working capital, together with our projected
cash flows from results of operations, will be sufficient to satisfy our cash
requirements for at least twelve, and up to twenty-four, months. In the event
that our plans change due to unanticipated expenses or difficulties or
otherwise, or if our working capital and projected cash flow otherwise prove
insufficient to fund operations, we could be required to seek additional
financing sooner than we currently anticipate. There can be no assurance that
additional financing will be available to us if needed, whether on commercially
reasonable terms or at all. An inability to obtain such additional financing
would likely have a material adverse effect on our long term liquidity.
We do not believe that our business is subject to inflation. On an
ongoing basis, we will attempt to minimize any effect of inflation on our
operating results by controlling operating costs and whenever possible, seeking
to insure that our customer contracts reflect increases in costs due to
inflation.
YEAR 2000 READINESS DISCLOSURE
As of the date of this report, we have not experienced any significant
year 2000 problems, but we cannot be sure that such problems will not arise in
the future, whether arising out of own systems or those of third parties.
Accordingly, we are continuing to monitor the situation. We do not have a
contingency plan in place to deal with year 2000 problems that may
3
<PAGE> 4
occur in the future, nor do we intend to implement such a plan. If year 2000
problems do arise, our business and our financial condition could be adversely
effected.
As of the date of this report, we have not incurred any material
expense relating to or arising out of the year 2000 problem.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
During September 2000, the Company entered into agreements to sell a
total of 212,250 shares of common stock for total consideration of
$424,500 or $2.00 per share through private placements to individual
investors intended to be exempt from registration under the Securities
Act of 1933 (the "Act") pursuant to Rule 506 promulgated under the Act.
The shares were offered privately by the Company. As of September 30,
2000, the Company had received aggregate gross proceeds of $289,500 for
the sale of the 144,750 shares of common stock. The balance of $135,000
attributable to the sale of the remaining 67,500 shares was received by
the Company in October of 2000.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(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.
4
<PAGE> 5
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.
Dated: November 20, 2000 GLOBAL NETWORK, INC.
/s/ James C. Mason
------------------------------------
James C. Mason
President, CEO and Principal
Financial Officer
5
<PAGE> 6
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
I N D E X
PAGE
--------
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000 (Unaudited) F-2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION) THROUGH
SEPTEMBER 30, 1999, THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2000 AND PERIOD FROM APRIL 26, 1999
(DATE OF INCEPTION) THROUGH SEPTEMBER 30, 2000 (Unaudited) F-3
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND PERIOD FROM
APRIL 26, 1999 (DATE OF INCEPTION) THROUGH SEPTEMBER 30, 2000
(Unaudited) F-4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION) THROUGH
SEPTEMBER 30, 1999, NINE MONTHS ENDED SEPTEMBER 30, 2000
AND PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 2000 (Unaudited) F-5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS F-6/F-10
* * *
F-1
<PAGE> 7
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000 (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 992,400
Accounts receivable 81,949
Stock subscriptions receivable 135,000
Advances to officers 93,332
Other current assets 18,000
-----------
Total current assets 1,320,681
Capitalized software development costs 397,699
Other assets 37,198
-----------
Total $ 1,755,578
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities - accounts payable and accrued expenses $ 193,140
-----------
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; 11,222,750 shares issued and outstanding 11,223
Additional paid-in capital 2,931,702
Deficit accumulated in the development stage (1,380,487)
-----------
Total stockholders' equity 1,562,438
-----------
Total $ 1,755,578
===========
See Notes to Condensed Consolidated Financial Statements.
F-2
<PAGE> 8
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 1999, THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2000 AND PERIOD FROM APRIL 26, 1999
(DATE OF INCEPTION) THROUGH SEPTEMBER 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Period From
April 26,
1999 Three Months Nine Months
Through Ended Ended Cumulative
September 30, September 30, September 30, from
1999 2000 2000 Inception
------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Revenues $ 69,286 $ 163,717 $ 178,717
Cost of revenues 49,396 125,275 136,576
------------ ------------ -----------
Gross profit 19,890 38,442 42,141
Selling, general and administrative expenses $ 160,772 505,932 1,100,348 1,461,769
------------ ------------ ------------ -----------
Loss from operations (160,772) (486,042) (1,061,906) (1,419,628)
Interest income 13,684 39,141 39,141
------------ ------------ ------------ -----------
Net loss $ (160,772) $ (472,358) $ (1,022,765) $(1,380,487)
============ ============ ============ ===========
Basic net loss per common share $ (.02) $ (.04) $ (.09)
============ ============ ============
Basic weighted average common shares
outstanding 9,622,049 10,994,860 10,956,262
============ ============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-3
<PAGE> 9
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND PERIOD FROM
APRIL 26, 1999 (DATE OF INCEPTION) THROUGH SEPTEMBER 30, 2000
(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 on September 9, 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
Effects of issuance of common stock
in exchange for services 35,000 35 8,090 8,125
Effects of issuance of stock options
in exchange for services 76,050 76,050
Net loss $ (357,722) (357,722)
---------- ------- ----------- ----------- ----------- ----------
Balance, December 31, 1999 10,811,000 10,811 -- 438,364 (357,722) 91,453
Sale of shares of common stock,
net of expenses of $198,500 1,576,750 1,577 2,036,173 2,037,750
Cancellation of shares of
common stock (1,175,000) (1,175) 1,175
Effects of issuance of common
stock in exchange for services 10,000 10 59,990 60,000
Effects of issuance of stock
options in exchange for services 396,000 396,000
Net loss (1,022,765) (1,022,765)
---------- ------- ----------- ----------- ----------- ----------
Balance, June 30, 2000 11,222,750 $11,223 $ -- $ 2,931,702 $(1,380,487) $1,562,438
========== ======= =========== =========== =========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-4
<PAGE> 10
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 1999, NINE MONTHS ENDED
SEPTEMBER 30, 2000 AND PERIOD FROM
APRIL 26, 1999 (DATE OF INCEPTION) THROUGH SEPTEMBER 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Period From
April 26,
1999 Nine Months
Through Ended Cumulative
September 30, September 30, from
1999 2000 Inception
------------- ------------- -----------
<S> <C> <C> <C>
Operating activities:
Net loss $(160,772) $(1,022,765) $(1,380,487)
Adjustments to reconcile net loss to net cash
used in operating activities:
Costs of services paid through issuance of
common stock and stock options 132,000 216,175
Changes in operating assets and liabilities:
Accounts receivable (66,949) (81,949)
Advances to officers (97,911) (7,129) (93,332)
Other current assets (18,000) (18,000)
Accounts payable and accrued expenses 21,974 169,083 193,140
--------- ----------- -----------
Net cash used in operating activities (236,709) (813,760) (1,164,453)
--------- ----------- -----------
Investing activities:
Payments for capitalized software development costs (73,699) (73,699)
Increase in other assets (37,198) (37,198)
----------- -----------
Net cash used in investing activities (110,897) (110,897)
----------- -----------
Financing activities:
Proceeds from sale of common stock 1,902,750 1,902,750
Proceeds from sale of units of common stock and warrants 200,000 200,000
Proceeds from exercise of warrants 200,000 200,000
Payments of costs in connection with reverse acquisition (35,000) (35,000)
--------- ----------- -----------
Net cash provided by financing activities 365,000 1,902,750 2,267,750
--------- ----------- -----------
Net increase in cash and cash equivalents 128,291 978,093 992,400
Cash and cash equivalents, beginning of period -- 14,307 --
--------- ----------- -----------
Cash and cash equivalents, end of period $ 128,291 $ 992,400 $ 992,400
========= =========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-5
<PAGE> 11
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Organization and business:
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,
2000, Global New York did not generate any significant revenues and,
accordingly, it was in the development stage as of September 30, 2000.
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 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.
F-6
<PAGE> 12
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Organization and business (concluded):
The "Company" as used herein refers to Global New York prior to August
5, 1999, the date of the Exchange, and Global Nevada together with
Global New York subsequent to that date.
In the opinion of management, the accompanying unaudited condensed
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, 2000, and its results of
operations for the period from April 26, 1999 (date of inception)
through September 30, 1999 and the three and nine months ended
September 30, 2000, changes in stockholders' equity for the nine months
ended September 30, 2000, cash flows for the period from April 26, 1999
(date of inception) through September 30, 1999 and the nine months
ended September 30, 2000 and the related cumulative amounts for the
period from April 26, 1999 (date of inception) through September 30,
2000. The accompanying unaudited condensed consolidated financial
statements do not include a consolidated statement of operations for
the three months ended September 30, 1999 because the Company did not
commence operations of a commercial nature until August 1999 and,
accordingly, the results of operations for the three months ended
September 30, 1999 would not differ materially from the results of
operations presented for the period from April 26, 1999 (date of
inception) through September 30, 1999. Certain terms used herein are
defined in, the audited financial statements of the Company as of
December 31, 1999 and for the period from April 26, 1999 (date of
inception) through December 31, 1999 (the "Audited Financial
Statements") included in the Company's Annual Report on Form 10-KSB
(the "10-KSB") for the year ended December 31, 1999 that was previously
filed with the United States Securities and Exchange Commission (the
"SEC"). Pursuant to the rules and regulations of the SEC, certain
information and disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted from these unaudited condensed
consolidated financial statements unless significant changes have taken
place since the end of the most recent fiscal year. Accordingly, these
unaudited condensed consolidated financial statements should be read in
conjunction with the Audited Financial Statements and the other
information also included in the 10-KSB.
For additional information related to the Exchange and the basis of
presentation of the Company's consolidated financial statements, see
Notes 1 and 5 of the notes to the condensed consolidated financial
statements in the 10-KSB.
The results of the Company's operations for the three and nine months
ended September 30, 2000 are not necessarily indicative of the results
of operations for the full year ending December 31, 2000.
Note 2 - 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 options and warrants, were
issued during the period.
F-7
<PAGE> 13
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2 - Net earnings (loss) per common share (concluded):
Since the Company had a loss for the period from April 26, 1999 (date
of inception) through September 30, 1999 and the three and nine months
ended September 30, 2000, the assumed effect of the exercise of options
and warrants outstanding at September 30, 2000 would have been
anti-dilutive and, therefore, diluted per share amounts have not been
presented in the accompanying condensed consolidated statements of
operations for those periods.
Note 3 - Advances to officers:
Advances to officers of $93,332 as of September 30, 2000 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.
As of September 30, 2000, the Company had net operating loss
carryforwards of approximately $1,380,000 available to reduce future
Federal taxable income which, if not used, will expire at various dates
through 2020. The Company had no other material temporary differences
as of that date. Due to the uncertainties related to, among other
things, the changes in the ownership of the Company, which could
subject those loss carryforwards to substantial annual limitations, and
the extent and timing of its future taxable income, the Company offset
the deferred tax assets attributable to the potential benefits of
approximately $469,000 from the utilization of those net operating loss
carryforwards by an equivalent valuation allowance as of September 30,
2000.
The Company had also offset the potential benefits from net operating
loss carryforwards by an equivalent valuation allowance during the
period from April 26, 1999 through December 31, 1999. As a result of
the increase in the valuation allowance of $55,000, $160,000 and
$309,000 during the period from April 26, 1999 (date of inception)
through September 30, 1999 and the three and nine months ended
September 30, 2000, respectively, no credits for income taxes are
included in the accompanying condensed consolidated statements of
operations for those periods.
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 with a par value of $.001 per
share. 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, 2000.
F-8
<PAGE> 14
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 5 - Stockholders' equity (continued):
Issuances and cancellations of common stock, options and warrants:
During February 2000, the Company received proceeds of $1,666,250, net
of related costs and expenses of $102,500, from the sales of 1,338,000
shares of common stock that were made through a private placement
intended to be exempt from registration under the Securities Act of
1933 (the "Act"). Pursuant to the agreements related to the private
placement, the Company is obligated to register certain of the shares
under the Act and incur the costs of such registration. In connection
with the private placement, one of the founders of the Company agreed
to return 1,175,000 shares of common stock to the Company, and the
Company agreed to cancel those shares. The Company also issued 5,000
shares of common stock for financial services related to the private
placement.
During September 2000, the Company entered into agreements to sell a
total of 212,250 shares of common stock for total consideration of
$424,500 or $2.00 per share through private placements intended to be
exempt from registration under the Act. As of September 30, 2000, it
had received aggregate gross proceeds of $289,500 for 144,750 shares.
The balance of $135,000 attributable to the sale of the remaining
67,500 shares was received by the Company during October 2000.
Accordingly, the balance of $135,000 was reflected as a subscription
receivable in current assets and in common stock in the accompanying
condensed balance sheet as of September 30, 2000.
During the nine months ended September 30, 2000, the Company issued
10,000 shares of common stock in exchange for public and investor
relations services. Accordingly, the fair value of those shares, which
totaled approximately $60,000, was charged to expense during the nine
months ended September 30, 2000.
During the nine months ended September 30, 2000, the Company issued
options to purchase 550,000 shares of common stock in exchange for
consulting services. The options are exercisable at $.93 per share at
any time prior to their expiration on February 28, 2003. The options
had an approximate aggregate fair value of $396,000 as determined by
using a Black-Scholes option-pricing model (see Note 5 of the notes to
the consolidated financial statements in the 10-KSB). Certain of the
options with an approximate aggregate fair value of $324,000 were
issued for services provided in connection with the development of the
Company's proprietary software and, accordingly, the fair value of
those options, which totaled approximately $324,000, was capitalized
and the fair value of the remaining options, which totaled
approximately $72,000, was charged to expense during the nine months
ended September 30, 2000.
F-9
<PAGE> 15
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 5 - Stockholders' equity (concluded):
Issuances and cancellations of common stock, options and warrants
(concluded): The issuances of shares of common stock and options to pay
for services were noncash transactions and, accordingly, they are not
reflected in the accompanying condensed consolidated statements of cash
flows as of September 30, 2000.
Note 6 - Other related party transactions and commitments:
General and administrative expenses include charges by related parties
for client entertainment, office and secretarial services and other
office expenses totaling approximately $2,000, $75,000 and $149,000 for
the three and nine months ended September 30, 2000 and for the period
from April 26, 1999 through September 30, 2000, respectively.
* * *
F-10
<PAGE> 16
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
27 Financial Data Schedule
