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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the fiscal year ended December 31, 1999.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from __________________ to _________________.
Commission File No. 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
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(Issuer's Telephone Number)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock
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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
The issuer had revenues of $15,000 for the fiscal year ended December 31, 1999.
The aggregate market value of the voting stock held by non-affiliates on March
31, 2000 was approximately $32,927,760, based on the average of the bid and
asked prices of the issuer's Common Stock in the over-the-counter market on such
date as reported by the OTC Bulletin Board.
As of March 31, 2000, 10,979,000 shares of the issuer's Common Stock were
outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
DOCUMENTS INCORPORATED BY REFERENCE
None.
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Global Network, Inc.
Form 10K-SB
NOTE REGARDING FORWARD LOOKING STATEMENTS
Some of the statements in this Annual Report are forward-looking
statements within the meaning of the federal securities laws. Generally
forward-looking statements can be identified by the use of terms like "believe,"
"may," "will," "expect," "anticipate," "plan," "hope" and similar words,
although this is not a complete list and we may express some forward-looking
statements differently. Discussions relating to our plan of operation, our
business strategy and our competition, among others, contain such statements.
Actual results may differ materially from those contained in our forward-looking
statements for a variety of reasons including those expressly detailed under the
heading "Risk Factors" from time to time in our filings with the SEC.
Throughout this report, when we refer to "GNI," "Global Network" or
"the Company," or when we speak of ourselves generally, we are referring
collectively to Global Network, Inc. and its subsidiary unless the context
indicates otherwise or as otherwise noted.
PART I
ITEM 1 - DESCRIPTION OF BUSINESS
OUR BUSINESS
We package and sell online banner advertising on newspaper web sites to
national advertisers. We intend to create the first cyberlinked network of
online newspaper web sites in order to bring national advertisers and leading
newspapers together on the Internet. In September 1999 we began development of a
proprietary software system - the GNI System - which allows us to purchase
advertising space and place online advertisements on multiple newspaper web
sites. In February 2000 we filed for a patent to protect our rights to the GNI
System.
National advertisers have traditionally avoided newspaper advertising
because of newspapers' limited, local audience and because it is difficult for
advertisers to efficiently place advertising in multiple newspapers.
Increasingly, however, newspapers are offering content on the Internet, which we
feel provides a significant, and as yet largely untapped, potential market for
national advertisers.
We intend to capitalize on this market potential by purchasing unused
space on these newspaper web sites and, using our proprietary software,
packaging and reselling it as online banner advertising to national advertisers.
In doing so we believe that we provide benefits for both advertisers and the
newspapers.
To advertisers and their ad agencies, we offer the benefit of cost
efficient one-stop shopping. The GNI System allows advertisers to place
demographically and geographically targeted banner ads in multiple newspaper
markets, thereby eliminating multi-market negotiations and simplifying ordering,
auditing and billing.
We have the ability to purchase unused page views from virtually every
newspaper which maintains a web site. Currently, a majority of these page views
go unsold or are sold for less than optimal rates. To these newspapers, we offer
potential increases in volume, value and market share by exposing them to
national advertisers who are using the GNI System to market nationally but sell
locally.
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OUR SOFTWARE
Our software is a key to our business. We believe that it is unique in
its ability to link to multiple pages on multiple newspaper web sites, thereby
allowing national ad agencies to purchase targeted advertising on specific sites
in major markets. Using the GNI System, advertisers can target their ads by
demographic criteria, day, date and time of day. This allows the advertisers to
match the message with the medium by tying the sales message to the pages
editorial content.
We believe that the GNI System is the only system that allows the
advertiser to place, track, measure, change, test, compare, rotate and audit any
and all of its banner ads on, if needed, an hourly basis. Accordingly, we feel
that the GNI System is currently superior to the software maintained by other
Internet marketing companies.
We filed for a patent on our software in February 2000.
OUR TEAM
We employ three full time employees, each of whom is an executive
officer. Each of our officers has a combination of large corporate and
entrepreneurial experience in marketing and/or publishing, as more fully
detailed in Part II, Item 9, below. We intend to capitalize on our officers'
industry experience and executive contacts therein to establish and expand our
business.
Beyond our executive officers, we have turned to outside consultants
and independent contractors for sales, financial, and technical services so as
to minimize overhead and most efficiently use our capital. To date, we have
engaged advertising sales representative organizations in San Francisco, Los
Angeles, Chicago and Detroit. We anticipate, although we cannot guarantee, that
we will engage additional advertising sales representatives in Atlanta, Dallas,
Toronto, London and Paris in the future.
Each of our sales representative organizations is independent and has
been selected based on a combination of our management's personal experience and
the representative's knowledge of the industry and the local markets which they
serve. Our representatives are under non-exclusive contracts, terminable at will
at any time by either party. These contracts provide for compensation based on a
20% commission which will be paid in a combination of cash and stock options.
We have entered into an oral agreement with IMEX Exchange Inc, a
designer and developer of web sites, to assist us in further developing our web
site and proprietary software. We have also entered into an oral agreement with
Donald Radcliffe to provide financial consulting services. Both of these
agreements are non-exclusive and terminable at will by either party at any time.
OUR BUSINESS & MARKETING STRATEGIES
We plan to establish and grow our business by implementing the
following key strategies:
Focus on Newspaper Web Sites
We believe that there is a potentially large untapped market for
national advertising on newspaper web sites. We intend to focus on the pursuit
and development of this market in an effort to become the leading Internet
advertising company dedicated to the newspaper industry.
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Target our Marketing to National Advertisers
We intend to focus our marketing on national advertisers and their ad
agencies. We plan to demonstrate to these advertisers the power of our network
of local newspaper advertising as a potentially formidable competitor to
magazines and television. Specific industries which we intend to target
initially include automobiles, entertainment, financial, insurance,
pharmaceuticals, politics and packaged goods, among others.
Develop and Use our Leading Edge Proprietary Software
Our software allows our advertisers to target, place and track online
advertising on our network based on a number of demographic, geographic and
other criteria. We have attempted to design our software to allow us to most
efficiently meet the needs of our advertisers. We intend to continue to develop
our software as technology and the marketplace expands so as to best serve our
customers and distinguish ourselves from our competitors.
Capitalize on an Experienced Management Team
We intend to capitalize on our management team's industry contacts and
relationships to attract major national advertisers. Rather than relying on
inexperienced salesmen, we are looking to our management to pursue the 20
leading interactive ad agencies and the 50 leading interactive advertisers. We
will further supplement their efforts by relying on experienced independent
sales representatives in target sales locations around the country and Canada.
Direct Marketing Techniques
We intend to implement a direct marketing program by using available
lists of key marketing executives' email addresses. We intend to pursue
arrangements with list providers to obtain these addresses and are also
beginning negotiations with facilitators who can process our direct marketing
mailings in mass format.
Maximize Customer Satisfaction and Renewals
We believe that, upon demonstrating the effectiveness of advertising
through GNI, we will enjoy a high level of customer satisfaction and renewals.
Accordingly, a key element of the GNI System, and a continued goal of further
development, is the ability to track, measure and report this effectiveness.
Pursue Strategic Relationships with Select Interactive and National Advertising
Agencies
We believe that use of the GNI System is attractive to a variety of
major interactive and national advertising agencies and we have pursued and will
continue to pursue strategic relationships with agencies such as Interpublic,
True North, Saatchi & Saatchi, J.W. Thompson and others.
ADVERTISING AND OUR NEWSPAPER NETWORK
We purchase page views from newspaper web sites which have excess
inventories of monthly page views. Our primary focus is on newspapers in the top
25 domestic markets which have monthly traffic in excess of 1.5 billion page
views. Our typical agreement with such newspapers is based on their available
inventory and our desire to purchase and re-sell such page views for $24-$32 per
thousand impressions. While we cannot guarantee the continued availability to us
of such page views, to date such inventory has been widely available despite
increasing activity and we believe that this will continue to be the case.
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INDUSTRY OVERVIEW AND COMPETITION
Internet marketing and advertising is an intensely competitive
business. An increasing number of dedicated Internet marketing companies are
competing for online advertising dollars, and we face competition from
traditional marketing and advertising firms as well. We expect competition from
both sources to intensify and increase in the future.
Our competition for Internet advertising dollars includes the major
Internet advertising companies such as DoubleClick, 24/7 Media and Flycast, as
well as companies such as ValueClick, Advertising.com, eAds, Datacomm and
ClickAgents. Many of these and our other current and potential competitors have
greater name recognition, financial, technical or marketing resources, and more
extensive customer bases than we do, all of which could be leveraged to gain
market share to our detriment. To date, however, it appears that these companies
have not focused on our primary target - re-selling page views on online
newspaper sites to national advertisers. While we are certain that these
Internet marketing companies as well as traditional marketing and advertising
firms will eventually look to take advantage of this market, we feel that our
early entry into this market offers an initial competitive advantage.
OUR HISTORY
Global Network, Inc. was incorporated in the State of New York on April
20, 1999. On August 5, 1999 we were acquired by Bargain Brokers, Inc., which
subsequently changed its name to Global Network, Inc. Bargain Brokers was
incorporated in Nevada in August 1996 to act as a wholesale liquidator of
closeouts, factory overruns, seconds and insurance salvage goods. Bargain
Brokers did not break out of the development stage, however, and was an inactive
business when it acquired us. The original Global Network, Inc. (the New York
corporation) is now a wholly owned subsidiary of the new Global Network, Inc.
(the Nevada corporation formerly known as Bargain Brokers, Inc.).
CONTACT INFORMATION
Our address is 575 Madison Avenue, New York, New York 10022. Our
telephone number is (212) 605-0431. Our Internet address is
http://www.dgonn.com.
ITEM 2 - DESCRIPTION OF PROPERTY
Our principal office is located at 575 Madison Avenue, New York, NY
10022. This office houses all of our employees and the majority of our
operations including investor relations, management, sales, marketing and
accounting. We lease our office space on a month to month basis and we pay rent
of approximately $1,000 per month. Donald Radcliffe, one of our stockholders,
owns a minority interest in the lessor.
ITEM 3 - LEGAL PROCEEDINGS
We are not currently a party to any pending law suits or similar
administrative proceedings and, to the best of our knowledge, there is presently
no basis for any such suit or proceeding.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We did not submit any matter to a vote of security holders during the
fourth quarter of our 1999 fiscal year.
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PART II
ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock trades in the over-the-counter market on the OTC
Bulletin Board. We began trading under the symbol "GNNU" on August 15, 1999.
Prior to that date, the stock was traded under the symbol "BRGB" with only
limited and sporadic trading. The following table shows the high and low bid
prices for our common stock for each quarter from August 15, 1999 through March
31, 2000. Such quotations reflect inter-dealer prices, without retail mark-up,
markdown or commission, and may not represent actual transactions. The average
daily trading volume during this period was approximately 42,000 shares, with a
high daily volume of 427,000 shares and a low of 34 shares.
High Low
---- ---
Third Quarter 1999 (August 15 through September 30) $7.35 $5.00
Fourth Quarter 1999 (October 1 through December 31) $4.50 $0.50
First Quarter 2000 (January 1, 2000 through March 31, 2000) $12.00 $0.50
As of March 31, 2000, there were approximately 50 stockholders of
record of our common stock. On March 31, 2000, the closing bid price for our
common stock was $9.00.
We have never paid any cash dividends on our common stock and we do not
anticipate paying dividends in the near future. Any payment of future cash
dividends will be determined by our board of directors based upon conditions
then existing, including our financial condition, capital requirements, cash
flow, profitability, business outlook and other factors. In addition, our future
credit arrangements may restrict the payment of dividends.
RECENT SALES OF UNREGISTERED SECURITIES
We have made the following sales of unregistered securities within the
last three years:
In October 1997, at which time we were known as Bargain Brokers, Inc.,
we sold 2,000,000 shares of our common stock for aggregate consideration of
$20,000. The sale of such securities was exempt from registration under the
Securities Act of 1933 pursuant to Rule 504 of Regulation D promulgated
thereunder.
In August 1999, at which time we were known as Bargain Brokers, Inc.,
we issued 27,732,934 shares of our common stock to the stockholders of Global
Network, Inc. in exchange for all of the outstanding shares of Global Network,
Inc. 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.
In August 1999, at which time we were known as Bargain Brokers, Inc.,
we sold to one offshore investor for an aggregate purchase price of $200,000:
(i) 100,000 shares of our common stock and (ii) warrants to purchase an
additional 400,000 shares of our common stock at a price of $2.00 per share.
100,000 of these warrants were exercised in August 1999 and pursuant thereto we
issued 100,000 shares of common stock for $200,000. The remaining 300,000 of
these warrants have expired as of the date of this filing. The sale of these
securities was exempt from registration under the Securities Act of 1933
pursuant to Regulation S promulgated thereunder.
In August 1999, we issued 25,000 shares of our common stock to our
corporate attorneys for services rendered. The issuance of these securities was
exempt from registration under the Securities Act of 1933 pursuant to Section
4(2) thereof and/or Regulation D promulgated thereunder.
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In December 1999, we issued 10,000 shares of our common stock to our
intellectual property attorneys for services rendered. The issuance of these
securities was exempt from registration under the Securities Act of 1933
pursuant to Section 4(2) thereof and/or Regulation D promulgated thereunder.
In the period from December 1999 through February 2000, we granted
options to purchase an aggregate of 745,000 shares of our common stock at prices
ranging from $0.50 to $0.93 to a limited number of service providers in
consideration for such services. The grant of such options option was exempt
from registration under the Securities Act of 1933 pursuant to Section 4 (2)
thereof and/or Regulation D promulgated thereunder.
In February and March 2000, we sold an aggregate of 1,338,000 shares of
our common stock to 30 accredited investors for a total purchase price of
$1,768,250. The sale of these securities was exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2), Regulation D and/or Regulation
S promulgated thereunder.
In February 2000, we issued 5,000 shares of our common stock to a
consultant for services rendered. The issuance of these securities was exempt
from registration under the Securities Act of 1933 pursuant to Section 4(2)
thereof and/or Regulation D promulgated thereunder.
RECENT CANCELLATIONS OF CERTAIN SHARES
In September and October 1999, certain of our shareholders, including
each of our executive officers, agreed to cancel an aggregate of 21,156,934
shares of our common stock which they held at the time, thereby reducing the
number of shares of our common stock outstanding. In March 2000, our president
canceled an additional 1,175,000 shares of our common stock which he held at the
time, again reducing the number of shares of the our common stock outstanding.
The number of shares outstanding set forth on the cover page of this report
reflects the cancellation of these shares. The cancellation of these shares in
conjunction with the recent private placements discussed above allowed us to
raise approximately $1.75 million while minimizing shareholder dilution.
ITEM 6 - PLAN OF OPERATION
The following discussion should be read in conjunction with the
consolidated financial statements and the notes to those statements that appear
later in this annual report. The following discussion contains forward-looking
statements that reflect our plans, estimates and beliefs. Our actual results
could differ materially from those discussed in the forward-looking statements.
We had revenues of $15,000 during the period from April 26, 1999
(inception) through December 31, 1999 and incurred costs of $11,301 in
connection with such revenues. Selling, general and administrative expenses of
$361,421 for the period April 26, 1999 through December 31, 9199 consist
primarily of promotional expenditures relating to the initial solicitation of
customers and other incidental start up costs.
Going forward, we intend to derive our revenues from the sale of
interactive advertising on the web and the development of proprietary software
designed for the direction, creation, and measurement of Internet
advertisements. Through March 2000, we had entered into contracts with our first
ten advertisers and we anticipate that we will begin to generate additional
revenues shortly.
During the quarter ending March 31, 2000, we pulled our initial
suppliers and distribution channels into place and we have begun to accept
interactive advertising. We have 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. Our
strategy is to solicit the major potential advertisers, including but
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not limited to the following industries: automobile, entertainment, package
goods, financial services, political, and technology.
We intend to continue to out-source research, marketing, computer
programming, and graphic design functions to expert individuals with whom our
management has prior experience and in whom our management has an acceptable
level of confidence. Through outsourcing, we believe that we can maximize
results while keeping overhead expenses at a minimum.
LIQUIDITY AND CAPITAL RESOURCES
From August 1999 through the date of this report, we have raised a
total of approximately $2,168,000, net of approximately $102,000 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
</TABLE>
At March 31, 2000 we had working capital of approximately $1,570,000.
Our principal cash requirements are for the continual development of our
business and solicitation of new customers.
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 seasonal trends or
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 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.
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ITEM 7 - FINANCIAL STATEMENTS
Our financial statements are attached to this report beginning on
page F-1.
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART II
ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
OFFICERS AND DIRECTORS
Following is certain information about our executive officers and
directors. We have not entered into employment agreements with any of our
executive officers.
James C. Mason, President, CEO and Director
Mr. Mason, age 55, has over 30 years of senior management experience in
both large corporation and entrepreneurial enterprises. Mr. Mason began his
career with McGraw-Hill in 1967 and rose through the ranks until 1974 when he
joined Business Week magazine as a sales executive. In 1980-82, Mr. Mason opened
a consultancy business and worked in the development of small magazines. In
1983, Mr. Mason rejoined Business Week as Worldwide Director of Marketing
overseeing all sales and marketing. In 1985, Mr. Mason joined the partnership
which was purchasing U.S. News and World Report. He remained at U.S. News and
World Report as Associate Publisher and a Partner until 1987 when he joined The
New York Daily News as Executive Vice President, Sales & Marketing. In 1991, Mr.
Mason ran several entrepreneurial companies and consulted to numerous investment
banking and publishing institutions. Mr. Mason incorporated the Company in 1999.
John F. Grant, Executive Vice President, Treasurer and Director
Mr. Grant, age 62, began his career in publishing in 1966 when he
joined National Geographic as International Director, a position which he held
until 1980. During his tenure, Mr. Grant launched two international operations.
In 1980, Mr. Grant joined Knapp Communications as Publisher for GEO, a startup
magazine. In 1985, Mr. Grant started his own real estate firm, Jacpa Equities,
which he ran from 1985-1988. In 1988, Mr. Grant returned to publishing as Sales
Manager for Scientific American magazine until 1990 when he became Vice
President of Harper's magazine. His last venture prior to joining GNI was with
Mutual Funds magazine, which he co-founded in 1994.
Arnold R. Behrman, Executive Vice President, Secretary and Director
Mr. Behrman, age 57, has spent 35 years in executive positions with
major advertising agencies and publishing organizations. Starting in media in
1964, Mr. Behrman joined Compton Advertising, now a subsidiary of Saatchi &
Saatchi. Mr. Behrman rose through the ranks until achieving total responsibility
for all print media decisions at Compton. Mr. Behrman became a specialist in
package goods and personally directed all print advertising for Proctor &
Gamble, and directed print strategies over all ten of their agencies. Mr.
Behrman left to join the Newspaper Association of America as Vice President. Mr.
Behrman's responsibilities included the
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coordination of all the member newspapers. In 1998, Mr. Behrman started his own
consulting firm where he remained until April 1999 when he joined Global Network
as Executive Vice President.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based solely on a review of Forms 3, 4 and 5 and amendments thereto
furnished to us during or relating to the past fiscal year, the following
persons failed to timely file the reports described below.
James Mason, John Grant and Arnold Behrman, each of whom is an
executive officer and director, were several weeks late in filing their Initial
Statements of Beneficial Ownership of Securities on Form 3.
ITEM 10 - EXECUTIVE COMPENSATION
We did not pay any compensation prior to August, 1999. In August 1999
we began paying our officers as follows:
Name Title Salary
- ---- ----- ------
James C. Mason President and CEO $90,000/yr
John F. Grant Executive Vice President $90,000/ry
Arnold R. Behrman Executive Vice President $90,000/yr
The members of our board of directors are reimbursed for actual expense
incurred in attending board meetings. There are no other arrangements for
compensation to directors.
The following table sets forth certain summary information regarding
compensation paid to our executive officers during the fiscal year ended
December 31, 1999. None of our officers have been awarded any stock options,
stock appreciation rights or other long term or incentive compensation.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Annual Compensation
-------------------------------------------
Other
Fiscal Annual All Other
Name and Principal Position Year Salary Bonus Compensation Compensation
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
James C. Mason, President, 1999 $30,000 -- -- --
CEO and Director
John F. Grant, Executive 1999 $30,000 -- -- --
Vice President and Director
Arnold F. Behrman, Executive 1999 $30,000 -- -- --
Vice President, Secretary
and Director
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
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ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of our common stock as of March 31, 2000 by (i) each person
known to us to be the beneficial owner of more than five percent of our common
stock, (ii) each of our executive officers and directors, and (iii) all of our
executive officers and directors as a group.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Name and Address of Beneficial Owner Number of Shares Beneficially Owned Percentage of Class*
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
James C. Mason (President, CEO and Director)
575 Madison Avenue, 10th Floor 2,305,000 21%
New York, New York 10022
Arnold R. Behrman (Executive Vice President,
Secretary and Director)
575 Madison Avenue, 10th Floor 1,665,000 15.2%
New York, New York 10022
John F. Grant (Executive Vice President
and Director)
575 Madison Avenue, 10th Floor 2,205,000 20.0%
New York, New York 10022
All executive officers and directors as a
group (3 persons) 6,175,000 56.2%
Donald S. Radcliffe
239 Long Hill Road 750,000 6.8%
Little Falls, NJ 07424
Dennis Stillwell
120 East 36th Street 900,000 8.1%
New York, New York 10036
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
* Based on 10,979,000 shares outstanding as of March 31, 2000.
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as set forth below, we are not aware of any transaction during
the last two years, or proposed transactions, to which we were or are to be a
party, in which any director, executive officer, 5% security holder, or member
of the immediate family of any of the previously named persons had or is to have
a direct or indirect material interest.
GNI has entered into an oral consulting agreement with Donald
Radcliffe, a greater than 5% shareholder. The terms of the agreement provide
that Mr. Radcliffe will provide consulting services with respect to financing
and general startup and operating matters. As of the date of this report, Mr.
Radcliffe had received payment from the Company of approximately $75,000 and has
been reimbursed for his out of pocket costs. Mr. Radcliffe also owns a minority
interest in the company from which we lease our office space.
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We entered into an oral agreement with IMEX Exchange Inc., a designer
and developer of web sites, to assist us in further developing our web site and
creating proprietary software for the design, distribution, and measurement of
interactive advertising. Dennis Stillwell, the President and CEO of IMEX
Exchange Inc., holds more than 5% of our common stock.
Pixel Incorporated, one of our suppliers, is owned by Jill Mason, who
is the wife of our President, Jim Mason. Throughout 1999 and to the present,
Pixel has provided and continues to provide us with secretarial services and
assistance in connection with investor relations, responding to emails and the
preparation of financial information. During 1999, we paid Pixel approximately
$33,000 in compensation for services.
During 1999, we paid approximately $21,000 to Grant International, a
boat charter business owned by our Executive Vice President, John Grant, in
connection with several marketing and business development events.
PART III
ITEM 13 - EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) Exhibits
--------
3.1 Articles of Incorporation of Global Network, Inc., as amended*
3.2 Bylaws of Global Network, Inc.*
10.1 Agreement and Plan of Reorganization dated as of August 5,
1999 by and among Bargain Brokers, Inc., a Nevada corporation,
Global Network, Inc., a New York Corporation, and the
shareholders of Global Network, Inc.*
21.1 List of Subsidiaries*
27 Financial Data Schedule
- ------------------
* Filed as an exhibit to GNI's Registration Statement on Form 10-SB, filed on
August 30, 1999.
(b) Reports on Form 8-K
None.
12
<PAGE> 13
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GLOBAL NETWORK INC.
(Registrant)
Date: April 12, 2000 By: /s/ James C. Mason
-------------------
James C. Mason
Its: President and CEO
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
/s/ James C. Mason April 12, 2000
- ---------------------------------
James C. Mason, President,
CEO and Director
(Principal Executive, Financial
and Accounting Officer)
/s/ Arnold R. Behrman April 12, 2000
- ------------------------------
Arnold R. Behrman
Executive Vice President,
Secretary and Director
/s/ John F. Grant April 12, 2000
- -----------------------------------
John F. Grant
Executive Vice President,
Treasurer and Director
13
<PAGE> 14
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
I N D E X
PAGE
----
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS F-2
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999 F-3
CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION) THROUGH
DECEMBER 31, 1999 F-4
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION) THROUGH
DECEMBER 31, 1999 F-5
CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION) THROUGH
DECEMBER 31, 1999 F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-7/12
* * *
F-1
<PAGE> 15
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
Global Network, Inc.
We have audited the accompanying consolidated balance sheet of GLOBAL NETWORK,
INC. AND SUBSIDIARY (a development stage company) as of December 31, 1999, and
the related consolidated statements of operations, stockholders' equity and cash
flows for the period from April 26, 1999 (date of inception) through December
31, 1999. 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 audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit 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 that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Global Network, Inc.
and Subsidiary as of December 31, 1999, and their results of operations and cash
flows for the period from April 26, 1999 (date of inception) through December
31, 1999, in conformity with generally accepted accounting principles.
J.H. COHN LLP
Roseland, New Jersey
March 22, 2000
F-2
<PAGE> 16
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
ASSETS
------
Current assets:
Cash $ 14,307
Accounts receivable 15,000
Advances to officers 86,203
---------
Total $ 115,510
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities - accounts payable and accrued expenses $ 24,057
---------
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;
10,811,000 shares issued and outstanding 10,811
Additional paid-in capital 438,364
Deficit accumulated in the development stage (357,722)
---------
Total stockholders' equity 91,453
---------
Total $ 115,510
=========
See Notes to Consolidated Financial Statements.
F-3
<PAGE> 17
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION)
THROUGH DECEMBER 31, 1999
Revenues $ 15,000
Cost of revenues 11,301
----------
Gross profit 3,699
Selling, general and administrative expenses 361,421
----------
Net loss $ (357,722)
==========
Basic net loss per common share $ (.04)
==========
Basic weighted average common shares outstanding 10,055,751
==========
See Notes to Consolidated Financial Statements.
F-4
<PAGE> 18
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION)
THROUGH DECEMBER 31, 1999
<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
========== ======= ===== ======== ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE> 19
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION)
THROUGH DECEMBER 31, 1999
<TABLE>
<S> <C>
Operating activities:
Net loss $(357,722)
Adjustments to reconcile net loss to net cash used in
operating activities:
Costs of services paid through issuance of common stock and
stock options 84,175
Changes in operating assets and liabilities:
Accounts receivable (15,000)
Advances to officers (86,203)
Accounts payable 24,057
---------
Net cash used in operating activities (350,693)
---------
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 $ 14,307
=========
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE> 20
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 December 31, 1999,
Global New York did not generate any significant revenues and,
accordingly, it was in the development stage as of December 31,
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 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-7
<PAGE> 21
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Organization and business (concluded):
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.
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.
Advertising and promotion:
The Company expenses the cost of advertising and promotion
as incurred. Advertising and promotion costs charged to
operations totaled approximately $59,000 during the period
from April 26, 1999 to December 31, 1999.
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 (the "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.
F-8
<PAGE> 22
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Summary of accounting policies (concluded):
Capitalized software costs:
The Company will capitalize the costs of purchased software
which is ready for service. Costs of purchased software are
amortized using the straight-line method over their
estimated useful lives which do not exceed three years.
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 10,055,751
used in the computation of basic net loss per common share
for the period from April 26, 1999 (date of inception)
through December 31, 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.
Since the Company had a loss for the period from April 26,
1999 through December 31, 1999, the assumed effect of the
exercise of warrants and options outstanding at December 31,
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 $86,203 as of December 31, 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.
F-9
<PAGE> 23
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Income taxes (concluded):
The Company had net operating loss carryforwards of
approximately $274,000 available to reduce future Federal
taxable income as of December 31, 1999. There were no other
material temporary differences as of that date. If not used, net
operating loss carryforwards as of December 31, 1999 will expire
in 2019.
Deferred tax assets of approximately $93,000 attributable to the
potential benefits from the net operating loss carryforwards as
of December 31, 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 December 31, 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 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 December 31, 1999.
Issuances and cancellations of common stock, options and
warrants:
The Company's Articles of Incorporation also authorize the
issuance of 50,000,000 shares of common stock with a par
value of $.001 per share.
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.
F-10
<PAGE> 24
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5 - Stockholders' equity (continued):
Issuances and cancellations of common stock, options and
warrants (continued):
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.
During the period from April 26, 1999 through December 31,
1999, the Company issued 35,000 shares of common stock in
exchange for services. The shares had an aggregate estimate
fair value of $8,125.
During December 1999, the Company issued options to purchase
195,000 shares of common stock in exchange for consulting
services. The options are exercisable at $.50 per share at
any time prior to their expiration on December 31, 2002. The
options had an aggregate estimate fair value of $76,050, as
determined in accordance with Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," by using a Black-Scholes option-pricing model
with the following assumptions:
Expected years of option life 1.5
Risk free interest rate 6%
Dividend yield 0%
Volatility 113%
Accordingly, the Company charged $84,175 to general and
administrative expenses during the period from April 26,
1999 through December 31, 1999, and increased common stock
and additional paid-in capital by an equivalent aggregate
amount, based on the fair value of the shares and options
issued for legal and consulting services. The issuances of
shares and options for services are noncash transactions
that are not reflected in the accompanying consolidated
statement of cash flows.
F-11
<PAGE> 25
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6 - Other related party transactions and 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 management estimates will aggregate up to
approximately $75,000 for such services. General and
administrative expenses and costs of the reverse acquisition
include charges of $16,710 and $15,000, respectively, for
services provided by the stockholder under the oral agreement
during the period from April 26, 1999 through December 31, 1999.
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. The Company was
not charged for any of the services provided by the related
company during the period from April 26, 1999 through December
31, 1999.
General and administrative expenses include charges by related
parties for client entertainment, office and secretarial
services and other office expenses totaling approximately
$74,000 for the period from April 26, 1999 through December 31,
1999.
Note 7 - Subsequent events:
During the period from January 1, 2000 through March 22, 2000,
the Company received proceeds of $1,665,750, net of related
costs and expenses of $102,500, from the sale of 1,338,000
shares of common stock that were made through a private
placement exempt from registration under the Securities Act of
1933 (the "Act"). 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 the period from January 1, 2000 through March 22, 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). 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, will be capitalized.
F-12
<PAGE> 26
INDEX TO EXHIBITS
Exhibit
Number Description
------- -----------
3.1 Articles of Incorporation of Global Network, Inc., as amended*
3.2 Bylaws of Global Network, Inc.*
10.1 Agreement and Plan of Reorganization dated as of August 5,
1999 by and among Bargain Brokers, Inc., a Nevada corporation,
Global Network, Inc., a New York Corporation, and the
shareholders of Global Network, Inc.*
21.1 List of Subsidiaries*
27 Financial Data Schedule
- ------------------
* Filed as an exhibit to GNI's Registration Statement on Form 10-SB, filed on
August 30, 1999.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-26-1999
<PERIOD-END> DEC-31-1999
<CASH> 14,307
<SECURITIES> 0
<RECEIVABLES> 15,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 115,510
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 115,510
<CURRENT-LIABILITIES> 24,057
<BONDS> 0
0
0
<COMMON> 10,811
<OTHER-SE> 80,642
<TOTAL-LIABILITY-AND-EQUITY> 115,510
<SALES> 15,000
<TOTAL-REVENUES> 15,000
<CGS> 11,301
<TOTAL-COSTS> 11,301
<OTHER-EXPENSES> 361,421
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (357,722)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (357,722)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
