UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1924
For the transition period from ___________ to ___________
Commission file number 000-28335
WEB4BOATS.COM, INC.
(Name of Small Business Issuer in its Charter)
DELAWARE 84-1080043
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification Number)
organization)
P.O. BOX 1028
LA JOLLA, CALIFORNIA 92038
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (858) 459-2628
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which
registered
None None
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK
(Title of Class)
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 is not contained in this form, and no disclosure will
be contained, to the best of the registrant's knowledge, in definitive proxy
or information statements incorporated by reference I Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
State the issuer's revenues for its most recent fiscal year. $-0-
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days. $623,400 as of June
14, 2000, at closing price of $.18 per share.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes ____ No ____
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date ____________
DOCUMENTS INCORPORATED BY REFERENCE
***
Transitional Small Business Disclosure Format (check one):
Yes ____ No __X__
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Web4Boats.com, Inc. is dedicated to becoming one of the leading Internet
websites for boating and water sports enthusiasts and the boating industry.
(An Internet "website" is a specific electronic address on the Internet at
which a person can maintain information accessible to other persons connected
to the Internet.) The Company commenced its current operations in April,
1999, and launched its website on the Internet at www.Web4Boats.com in
September, 1999. The Company's website currently delivers an easy to use
classified advertisement database advertising boats for sale, and provides
links to other boating and water sports industry related websites and
services. (A link is a website marker that allows a user at one website to
point to other markers and immediately bring up a view of the linked
website.) Web4Boats.com plans to continuously make enhancements and
additions to its website. Currently, visitors to the website are able to
search through classified advertisements for over 30,000 boats for sale using
a variety of search criteria. In addition, the Company's first six
advertisers on its website are Amazon.com for books, iGoFish for fishing
tackle, iiCaptain.com for nautical gear and equipment, Key Marine Finance (a
division of Key Bank USA, N.A.) for boat financing), Marine Express for boat
shipping and Voyage Marine Insurance.
HISTORY
Web4Boats.com, Inc. was incorporated in Delaware in 1988 under the name
Windom, Inc. as a wholly owned subsidiary of a publicly traded business
development company, Vintage Group, Inc. As the consequence of the
settlement of a class action law suit in August, 1991, a substantial portion
of the shares (120,000) of Windom were distributed to the class members
(consisting of Vintage Group, Inc. shareholders) and their lawyer. From its
incorporation until 1997, Windom had no assets or business operations.
In 1997 Windom was the surviving entity in a merger with New York Bagel
Exchange, Inc., a Delaware corporation, and changed its name to New York
Bagel Exchange, Inc. For accounting purposes, however, the merger resulted
in a continuation of the bagel company's operations, which involved a single
bagel delicatessen restaurant.
The bagel business continued for one year seven months. In March, 1999,
due to continuing losses in the bagel business, all the bagel business assets
and operations were sold for $120,000 to a person unaffiliated with the
Company. Also at about that time, all the bagel business management and
directors were replaced with Dennis Schlagel, the Company's current President
and a Director. In April, 1999, the Company changed its name from New York
Bagel Exchange, Inc. to Webboat.com, Inc. Later in April 1999, it was
changed to Windom.com, Inc. and then to its current name, Web4Boats.com, Inc.
The name changes were part of the negotiated items in the termination of the
bagel business management.
BUSINESS
Web4Boats.com, Inc. is dedicated to becoming one of the leading Internet
websites for boating enthusiasts and the boating industry. Management
believes that Internet companies are evolving into at least two rough
categories, (1) companies that offer information and services (generally for
free) to persons perusing ("surfing") the Internet, and (2) companies that
offer (and generally sell) products that are delivered by other means of
transportation. The lines between the two categories are not altogether
clear and many companies are both. Web4Boats.com, however, is clearly a
business of the first category.
A business model in the first category that is being developed by many
Internet companies, and the primary one that is being followed by
Web4Boats.com, is a model based upon the establishment of a website that has
a wealth of information or compelling entertainment features that attract the
Internet surfer. Under this model, the ability to attract Internet surfers
then becomes what in fact the Internet company has to sell to others in the
form of advertisement space. This is the business model followed by YAHOO!
Inc., a provider of an enormous amount of information and services. While
the business model appears to work for a company with a solid brand name that
offers myriad services in thousands of categories, there has thus far been
limited experience with this business model by industry or niche focused
companies. A great number of companies, however, including Web4Boats.com,
have embarked upon the development of the industry or niche focused version
of this business model. Based upon informal observations by Web4Boats.com of
other industry or niche focused websites and public discussions at Internet
industry meetings by Internet industry spokespersons, the acceptance of the
industry or niche focused websites by advertisers as a good opportunity for
the placement of advertisements is gaining momentum. Advertisers of products
directed to particular industries or niches should be naturally attracted to
a corresponding industry or niche website. See "Market," below.
Web4Boats.com believes, however, that much of its success will depend upon
the Company's ability to establish awareness of its website among the boating
public, the achievement of which cannot be assured, but to which
Web4Boats.com will devote much of its efforts.
Web4Boats.com has commenced to organize its website into four areas: (1)
classified advertisements; (2) information services: (3) user services; and
(4) maintaining space in its website pages for fee based advertisement
placement by outside vendors. (A website page is just one view of several or
even thousands of available programmed views of the information at the
website that is being viewed by the customer on his or her computer monitor.)
The first three items are those that are designed primarily to attract the
customer, while the first item (serving a dual purpose) and fourth item are
the ones from which the Company plans to derive most its revenue. The
Company opened its website in September, 1999, and had received or accrued
less than $100 of revenue as of March 31, 2000.
CLASSIFIED ADVERTISEMENTS
Typical local newspaper publications feature less than 200 boats-for-
sale advertisements in their classified ads. Web4Boats.com currently has
over 30,000 boats-for-sale classified ads in its database. The large number
of boat advertisements provides boating enthusiasts with a variety of boats
to shop. Management believes that the size of its classified database will
attract additional sellers of boats to place their ads with Web4Boats.com.
The theory is that the mere massiveness of the database of boats for sale
will attract buyers. The Company has insufficient experience with its
classified advertisement operations to determine if its theory is correct.
As of January 17, 2000, Web4Boats.com stopped adding advertisements by
copying them from other publications and displaying them for free. All new
ads for thirty days of display on the website will be charged a fee to a
credit card of $19.95 or $14.95 if no photograph of the boat is included--a
ninety-day promotion is currently in effect at $39.90 and $29.90,
respectively. Web4Boats.com classified advertisement software is designed to
allow anyone visiting the website to place an ad without any outside help.
The user simply fills out a form on-line. Further enhancements might include
the ability to manipulate the images to allow the potential buyer to see the
side view or the back view of a boat and the ability for contact to be made
by the seller or buyer directly via the ad for the purpose of asking
questions about the product or other conversation. The customer who places
an ad receives a pin (personal identification number) for continued access to
his or her advertisement to make changes and to secure the ad from outside
interference. Because the Web4Boats.com ads are classified ads, the Company
has no plans to charge commissions to the parties as a consequence of any
sale of products made as a result of the ads.
With respect to the ads that Web4Boats.com has been displaying without
charge, beginning July 1, 2000 (a delay from the originally anticipated start
date of February 15 resulting from the Company's change to a new website
hosting arrangement), the Company plans to begin a telemarketing campaign
(operated by an independent telemarketing firm) to solicit continued display
of the ad based on the above fees. The costs for such telemarketing are
planned to be covered by commissions to the telemarketing firm based on ads
retained. Advertisers who decline to pay the fee will be deleted from the
displayed advertisement database. All currently displayed advertisers will
be contacted over the months after implementation of the program in July.
Another facet of the telemarketing campaign will be to turn into new leads
for adding paid advertising the information that has, up to this point, been
used to load the Company's database with fee ads.
The Web4Boats.com classified ad system has the following principal
features:
Search Ads - By a variety of criteria such as boat type, size,
year, geographic location, price, etc.
Place Ads - Automatically, from any Internet browser in the world
Edit Ads - Advertiser receives a PIN when an ad is placed,
providing security against outside interference as well as
continued access for editing purposes
Notify - Communicate with Web4Boats.com staff to facilitate answers
to special questions, etc.
Help - Online help system provides technical support
OTHER CLASSIFIEDS
The Web4Boats.com classified ad system is presently designed for pre-
owned boats only. Management has changed its plans and has decided not to
expand the system in the near future to accommodate other classified ad items
such as employment opportunities, used nautical equipment and other privately
offered items. Such expansion, however, may occur in the long term.
ADVERTISEMENT SEARCH CAPABILITIES
The Web4Boats.com classified advertisement database may be searched by
the customer. The Company's searching software makes it very convenient for
people to search for a boat that most closely matches their needs. People
are able to search by keyword so that any word put into the system can become
the basis for the search. Visitors to the website can also search boats by
the following pre-defined categories:
Boat Type: Powerboat, Sailboat, JetSki, Houseboat, Pontoon,
Inflatable, Canoe, Fishing Boat, or Other.
Year of boat
Length of boat
Price of boat
City
State
Telephone area code
Postal zip code
Plans for the next six months include the addition of capabilities to
the Web4Boats.com website that enables the buyer to organize a search based
upon how far he is willing to travel from his home to purchase his boat.
INFORMATION SERVICES
The Web4Boats.com website is linked to other websites (such as stock
quotes, accuweather, houseboating.com) on the Internet to allow the boating
enthusiast to conveniently move from Web4Boats.com to other websites. As of
March 31, 2000, Web4Boats.com maintained eight website links. In addition,
Management also plans over the next 90 days to maintain a directory of direct
dial information resources not currently available on the Internet. One
example could be providing access to a database that stores ocean maps or
other specialized information. This will allow the search for boating
information to be expanded into a much wider spectrum and allow the
Web4Boats.com website to become especially useful for locating information
that is otherwise difficult to obtain.
USER SERVICES
Web4Boats.com has abandoned its plans to offer a complimentary email
service. (Email is a communication system allowing messages to be sent over
the Internet to other Internet users.) This decision was made after
determining that there are a substantial number of such services (e.g.,
Hotmail.com) and the cost/benefit analysis does not support implementing such
a system by the Company at this time.
ADVERTISEMENT PLACEMENT
There are a substantial number of products currently available through
vendors affiliated with the Web4Boats.com website. These affiliates
generally pay a commission of from 8-15% on products purchased by persons
that arrive at their website directly from Web4Boats.com's link to that
website. The Company plans to seek a broader and more expansive range of
product availability to add to its website, and as these relationships
develop, they will become a primary revenue source for the Company. Less
than $100 of commissions had accrued as of March 31, 2000.
BANNER ADVERTISING
Management was unable to obtain numbers relevant to online advertising
dollars spent by the boating industry, but management believes that the
potential for corporately sponsored advertising on the Web4Boats.com website
is quite substantial. Therefore, online advertising revenues are expected to
contribute substantially to the overall revenue base, assuming that website
ad space remains a viable method for generating revenue on the Internet.
There appears to be precedence established on the Internet with regards to
valuing the ad space based upon the volume of customer traffic at the
website. Web4Boats.com intends to follow pricing strategies that are
utilized by the majority of Internet based companies and is considering a
price range between $25-$100 per 1,000 impressions, a substantial decrease
over the past six months. (Each Internet user's electronic request to view a
website page is an impression.)
MARKET
Recreational boating is an enormous industry in the United States. $23
billion dollars were spent at retail in 1999 for new and used boats, motors
and engines, accessories, and other related items. There were over 12.5
million boat registrations as of December 31, 1998, for the United States and
its territories. It is estimated that there are over 16 million boats
currently in use. Over 115,000 marinas, boatyards, yacht clubs,
dockomimiums, parks, etc. is ample evidence of America's love for boating.
(A docominium is a boat docking slip sold like a condominium.) Following is
a chart based primarily on information available in January, 2000, from the
National Marine Manufacturer's Association (NMMA) website that provides a
breakdown of the recreational boating industry.
1998 1999
Participants in Boating 74,847,000 77,841,000
All Boats in Use 16,824,000 16,833,900
Total Retail Sales $19.15 billion $22.99 billion
New Boat, Motor $8.54 billion $9.3 billion
Trailer & Acces. Sales
Pleasure Boat Exports $672.8 million $674.8 million
New Product Category Annual
Unit Sales 1998 1999
Outboard Boats 200,900 233,900
Outboard Motors 314,000 331,900
Boat Trailers 174,000 168,000
Inboard Runabouts 6,900 8,200
Inboard Cruisers 6,600 6,800
Stern-drive Boats 91,000 96,200
Canoes 107,800 121,000
Personal Watercraft 130,000 106,000
Sailboats* 19,400 27,800
______________
*Source: 1998 Annual Sailing Business Review, 1999 forecasted.
Management believes that the most powerful and influential use of the
Internet is cost effective communication to a global audience. Management
has gathered very preliminary surveys of potential advertisers. According to
an article published by eMarketer, it is estimated that Internet marketers
will spend $6.1 billion in 2000. Total online advertising revenues are
expected to rise to $21 billion by the year 2004.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
There are currently few laws or regulations directly applicable to
access to or commerce on the Internet. Due to the increasing popularity and
use of the Internet, it is possible that laws and regulations may be adopted,
covering issues such as user privacy, defamation, pricing, taxation, content
regulation, quality of products and services, and intellectual property
ownership and infringement. Such legislation could dampen the growth in use
of the Internet, decrease the acceptance of the Internet as a communications
and commercial medium, or require Web4Boats.com to incur significant expense
in complying with any new regulations. Other nations, including Germany,
have taken actions to restrict the free flow of material deemed to be
objectionable on the Internet. The European Union has recently adopted
privacy and copyright directives that may impose additional burdens and costs
on its international operations. In addition, several telecommunications
carriers, including America's Carriers' Telecommunications Association, are
seeking to have telecommunications over the Internet regulated by the FCC in
the same manner as other telecommunications services. Because the growing
popularity and use of the Internet has burdened the existing
telecommunications infrastructure and many areas with high Internet
use have begun to experience interruptions in phone service, local telephone
carriers, such as Pacific Bell, have petitioned the FCC to regulate ISPs and
OSPs and to impose access fees. Increased regulation or the imposition of
access fees could substantially increase the Company's costs of communicating
on the Internet to both users and service providers, potentially decreasing
the demand for products and media properties. A number of proposals have
been made at the federal, state and local level that would impose additional
taxes on the sale of goods and services through the Internet. Such
proposals, if adopted, could substantially impair the growth of electronic
commerce, and could adversely affect the Company's opportunity to derive
financial benefit from such activities. Web4Boats.com cannot currently
predict the effect, if any, that such legislation will have on its business.
There can be no assurance that such legislation will not impose significant
additional costs on its business or subject Web4Boats.com to additional
liabilities.
PROMOTION
The Company's mission is to become the preferred portal for the
professionals and enthusiasts in the boating industry. The Company plans to
increase consumer awareness and in the national branding of its website
through some or all of the following methods:
Internet
Advertisements in Boating Classified Sections of Publications
Radio
Print Advertisements
Public Relations
Television
Trade Shows
Other Advertising
SALES
The Company currently has no advertising sales staff. The Company
intends to build an in-house sales force to solicit viable industry and
related product manufacturers, suppliers, etc. to purchase banner space on
the Web4Boats.com site. Company expects to charge between $25 to $100 per
1,000 impressions. The Company's revenue will increase from advertising as
the traffic coming to the website increases.
TECHNOLOGY
The Internet and electronic commerce markets are characterized by rapid
technological change, changes in user and customer requirements, frequent new
service and product introductions embodying new technologies and the
emergence of new industry standards and practices that could render our
existing website and technology obsolete. Management believes that its focus
should be on delivering ease of use and convenience combined with
capabilities designed to personalize business or pleasure transacted over the
Internet. To meet the need to quickly adapt to technological change, in
April, 2000, the Company transferred management of its website to
HostproNETlimited. The obligation to meet technological change on a timely
basis, therefore, has been outsourced to a specialized service provider.
Thereafter, the Company transferred ownership of its server computer to (plus
$5,000) to its former website management company in payment of the former
management company's accrued fees.
All of our primary servers are located at HostPro's location and are
vulnerable to interruption by damage from fire, earthquake, flood, power
loss, telecommunications failure, break-ins and other events beyond our
control. In the event that we experience significant system disruptions, our
business, results of operations and financial condition would be materially
and adversely affected. We have, from time to time, experienced periodic
systems interruptions and anticipate that such interruptions will occur in
the future. The Company does not maintain business interruption insurance.
In the event of a prolonged interruption, the Company will suffer losses
which cannot be determined at this time. The Company may, in the future,
obtain such insurance coverage.
COMPETITION
Classified ads for boats as well as other items already have use on the
Internet, with the majority of websites offering a free listing to sellers.
While the opportunity presented is tremendous, the competitive environment is
substantial.
WEB4BOATS.COM'S MARKETS ARE HIGHLY COMPETITIVE
The market for Internet products and services is highly competitive.
There are no substantial barriers to entry in these markets, and
Web4Boats.com expects that competition will continue to intensify. Our boat
and recreational equipment purchasing services compete against a variety of
Internet and traditional boat and recreational equipment purchasing services
as well as boat and yacht brokers. Therefore, we are affected by the
competitive factors faced by both Internet commerce companies as well as
traditional, offline companies within the boating and recreational equipment
and boating-related industries. To compete successfully as an Internet-based
commercial entity, we must significantly increase awareness of our services
and brand name.
We compete with other entities which maintain similar commercial
websites including buymarine.com; yachtworld.com; boating.com;
boattraderonline; boatowners.com; and boat-yachts.com. In addition, all
major boat and recreational equipment manufacturers have their own websites
and many have recently launched or announced plans to launch online buying
services. We also compete with boat insurers, lenders and lessors as well as
other dealers that are not part of our network. Such companies may already
maintain or may introduce websites which compete with ours.
Web4Boats.com competes with meta-search services (e.g., Yahoo!,
AltaVista, Lycos and Excite) and software applications that allow a user to
search the databases of several directories and catalogs simultaneously.
Web4Boats.com also competes indirectly with database vendors that offer
information search and retrieval capabilities with their core database
products. The effect of competitors' strategic plans on Web4Boats.com cannot
be predicted with certainty, but all of these competitors are aligned with
companies that are significantly larger or more well established than
Web4Boats.com.
In addition, providers of software and other Internet products and
services are incorporating search and retrieval features into their
offerings. For example, Internet browsers offered by Netscape and Microsoft
increasingly incorporate pre-loaded shortcuts or displays that appear on the
opening screen of the Internet browser and direct search traffic to competing
services. These shortcut features are relatively expensive to purchase from
Internet browser vendors and not expected to be a reasonable expenditure by
Web4Boats.com for the foreseeable future. The use of such features by
competitors, however, could make it more difficult for Internet users to find
Web4Boats.com's products and services. In addition, entities that sponsor or
maintain high-traffic websites or that provide an initial point of entry for
Internet users, such as the Regional Bell Operating Companies, long-distance
providers and cable companies such as AT&T/TCI through @Home Networks and
Excite, Inc., or Internet Service Providers ("ISPs") such as Microsoft and
AOL, currently offer and could further develop, acquire or license Internet
search and navigation functions and community and communications services
that compete with those Web4Boats.com offers.
We cannot assure that we can compete successfully against current or
future competitors, many of which have substantially more capital, existing
brand recognition, resources and access to additional financing.
PRINCIPAL COMPETITIVE FACTORS.
Web4Boats.com believes that the principal competitive factors in its
markets are:
(1) brand recognition
(2) ease of use
(3) comprehensiveness
(4) personalization
(5) independence
(6) quality and responsiveness of search results and other services
(7) the availability of high-quality, targeted content and focused
value-added products and services
(8) access to end users
(9) with respect to advertisers and sponsors, the number of users,
duration and frequency of visits, and user demographics
The Company believes that the importance of brand recognition will
increase as more companies engage in commerce over the Internet. Development
and awareness of the Web4Boats.com website will depend largely on our ability
to obtain a leadership position in Internet commerce. If Internet users do
not perceive us as an effective channel for increasing boat and recreational
equipment sales and purchases and do not perceive us as offering reliable
information concerning new and pre-owned boats and recreational equipment, as
well as referrals to high quality dealers, in a user-friendly manner that
reduces the time spent for purchases, we will be unsuccessful in promoting
and maintaining our brand recognition. Our brand recognition may not be able
to gain widespread acceptance among consumers or dealers. Furthermore, in
the event of any breach or alleged breach of security or privacy involving
its services, or if any third party undertakes illegal or harmful actions
utilizing its community, communications or commerce services, Web4Boats.com
could suffer substantial adverse publicity and impairment of its brand and
reputation.
STAFF
As of March 31, 2000, the Company had no full-time employees and 1 part-
time person (its President). Hiring of other management and staff will occur
incrementally as funds become available and the need arises.
The Company's day-to-day operations are conducted by consultants,
including and Internet Advisors Group, Inc. In April, 2000, all rights and
obligations of Internet Advisors Group, Inc. under the agreement were
assigned to Blair Merriam, its sole shareholder and employee. In addition,
the agreement was renewed for a period to expire March 31, 2001. See Item 9,
below.
KEY PERSONNEL
Web4Boats.com expects that it will need to hire personnel in all areas.
The competition for such personnel in its industry is intense, particularly
where its corporate headquarters are located. Web4Boats.com expects to
experience difficulties in hiring personnel with the right training or
experience, particularly in technical areas. Web4Boats.com does not maintain
key person life insurance for any of its personnel.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company is located at the home of a major shareholder of the
Company, Dori Merriam, at 6150 La Jolla Mesa Drive, La Jolla, California
92037. Its telephone number is (858) 459-6268. The Company occupies this
space on a rent-free basis. The Company believes its facilities are adequate
to meet current and short-term future business needs. The Company is looking
for suitable office space, 2,000 to 3,000 sq. ft., in a commercial facility.
If the Company develops according to its plan, then it is anticipated that
additional office space will be needed within the next twelve months.
Leasing costs have yet to be determined.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock trades under the symbol "EBOT" on the OTC
Electronic Bulletin Board. Trading commenced in the second quarter of 1998.
The following table sets forth the high and low bid prices per share of the
Common Stock for the last two fiscal years as reported by the OTC Electronic
Bulletin Board. These prices reflect inter-dealer prices, without retail
mark-ups, mark-downs or commissions, and may not necessarily represent actual
transactions.
HIGH LOW
FISCAL 1998
First Quarter $1.0625 $0.5625
Second Quarter $1.0625 $0.1875
Third Quarter $0.3125 $0.04
Fourth Quarter $0.875 $0.20
HIGH LOW
FISCAL 1999
First Quarter $0.5625 $0.1875
Second Quarter $1.00 $0.50
Third Quarter $0.5625 $0.3125
Fourth Quarter $0.10 $0.625
The Company has been informed by its transfer agent that as of March 31,
2000, there were approximately 161 record owners of its Common Stock.
The Company has not paid any dividends on its Common Stock since
inception. It is the present policy of the Company not to pay cash dividends
and to retain future earnings to support the Company's growth. Any payment
of cash dividends in the future will be dependent upon the amount of funds
legally available therefor, the Company's earnings, financial condition,
capital requirements and other factors that the Board of Directors may deem
relevant. The Company does not anticipate paying any cash dividends in the
foreseeable future.
RECENT SALES OF UNREGISTERED SECURITIES
(1) On November 5, 1999, the Company issued 250,000 shares of Common Stock
to Stockholder Relations for future public relations services. These shares
were valued at $75,000.
(2) On March 2, 2000, the Company sold 100,000 shares of Common Stock to Ken
Cottle for $25,000 cash.
(3) On April 1, 2000, the company issued 10,000 shares of Common Stock to
Mr. Delgado under the terms of the agreement with Web-Light Design, the
Company's former website service company. These shares were valued at
$4,914.
(4) On April 1, 2000, the company issued 10,000 shares of Common Stock to
Mr. Sommer under the terms of the agreement with Web-Light Design, the
Company's former website service company. These shares were valued at
$4,914.
(5) On April 1, 2000, the Company issued Blair Merriam/Internet Advisors
Group, Inc. 1,150,000 shares of Common Stock in satisfaction of the Company's
accrued compensation obligation for management services of $115,000.
(6) On April 19,2000 the Company issued 50,000 shares of Common Stock to
Everything Communicates as part of its fee agreement. These shares were
valued at $27,500.
The Company believes transactions (1) through (6) were exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended, as privately negotiated, isolated, non-recurring transactions not
involving any public solicitation. The purchasers in each case represented
their intentions to acquire the securities for investment only and not with a
view to the distribution thereof. Appropriate restrictive legends are
affixed to the stock certificates issued in such transactions. In addition,
the purchases described in item (5) was "accredited investors" as that term
is defined in Rule 501(a)(3) of Regulation D.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
You should read the following discussion of our results of operations
and financial condition in conjunction with our consolidated financial
statements and related notes included elsewhere in this Form 10-KSB. Unless
specified otherwise as used herein, the terms "we," "us" or "our" refers to
Web4Boats.com, Inc.
OVERVIEW
Prior to entering into the Internet market and boating industry, the
Company, as a non-operating entity, merged with a business known as New York
Bagel Exchange, Inc. in September 1997. (For accounting purposes, the merger
resulted in a continuation of the bagel company's operations.) The Company
engaged in the business of wholesale and retail sales of bagels, sandwiches,
baked goods, specialty coffee and related items at a single store. The
Company's Board of Directors approved the sale of the Company's inventory and
fixed assets and ceased the bagel-related operations on March 25, 1999. The
actual sale of assets was on April 19, 1999. All management of New York
Bagel Exchange, Inc. resigned and new management was subsequently appointed.
On April 20, 1999, the Company changed its name (and direction of its
business) to Web4Boats.com, Inc. and commenced developing a commercial
Internet site in which boat dealers, marinas, individual buyers and sellers
would come to advertise sales and services related to the professional and
recreational boating industry.
Use of any comparison data derived from the Company's accompanying
financial statements is misleading because the Company disposed of its assets
in New York Bagel Exchange, Inc. in April, 1999, (within days after the
change of the Company's fiscal year) and subsequently began to pursue a
completely different business than that of the predecessor company.
Therefore, the financial statements have no comparative information that
would be helpful in this regard. Instead, the Company will focus on the
forward looking aspects of our financial condition and any risks involved in
entering these uncharted waters.
To date, the Company has had almost no revenue from any of its website
or related operations. We are currently set up to derive revenue from fees
and commissions from affiliate programs, such as Amazon.com, iiCaptain.com,
iGoFish.com, and Marine Express. We expect to add to these revenue
generating opportunities with future revenues from fees paid by banner
advertisement placements and links to other websites. It is anticipated that
the enhancement of the website would include Boat Dealers/Brokers, Boat
Builders/Manufacturers, Marinas, and other recreational suppliers having
access to our program and services by paying initial placement fees, as well
as ongoing monthly fees based upon, among other things, the size of
territory, demographics and the transmittal of purchase requests to them.
We anticipate that we will derive direct revenue from the volume of
purchases made as a result of visiting our website. We also believe our
ability to attract subscribing dealers/brokers and other affiliates for our
website, is directly related to the volume of visits and subsequent purchases
we expect to occur as a result of a visit to our website. For the month
ended June 11, 2000, we have had an average of 3,671 impressions per day with
1,934 unique users at the Web4Boats.com website. Much of this early volume,
however, can be accounted for by the Company and its website design service
company.
It is anticipated that sales and marketing costs will consist primarily
of promotion and advertising to build brand awareness and encourage potential
customers to visit our website. We will use Internet advertising, as well as
traditional media, such as television, radio and print. The majority of our
Internet advertising is expected to be comprised of sponsorship and banner
advertising agreements with Internet portals such as Alta Vista, Excite, and
Lycos as well as advertising and marketing affiliations with online boating
and recreational information providers. The Internet portals and online
boating and recreational information providers charge a combination of set-
up, initial, annual, monthly and variable fees. Set-up fees are incurred for
the development of the link between our website and their website. No such
banner advertising is currently in place.
From April, 1999, to September, 1999, the Company's operating activities
related primarily to engaging consulting personnel, raising capital,
purchasing operating assets, performing product development and investing in
sales and marketing programs. The Company began accruing commissions from
products being purchased by Web4Boats.com viewers being linked to the
company's affiliation program in September, 1999. Revenues from that buying
through March 31, 2000, however, are less than $100.
The Company expects to derive substantially all of its revenues from the
sale of advertisements. Advertising revenues are recognized in the period in
which the advertisement is displayed, provided that no significant Company
obligations remain and collection of the resulting receivable is probable.
Company obligations typically include guarantees of a minimum number of
"impressions," or times that any advertisement appears on pages where the
user views the advertising banner on the Web4Boats.com website. To the
extent minimum guaranteed impressions are not met, the Company defers
recognition of the corresponding revenues until guaranteed impression levels
are achieved. Deferred revenue is comprised of billings in excess of
recognized revenue relating to advertising contracts. The Company's revenues
are derived principally from the sale of advertisements on short-term
contracts. The Company's standard rates for advertising currently range from
$25-100 per 1,000 impressions. The Company currently has no banner
advertisers and its impressions are currently running about 3,671 per day.
The Company has an extremely limited operating history as an Internet
company, and its prospects are subject to the risks, expenses and
difficulties frequently encountered by companies in the new and rapidly
evolving markets for Internet products and services. To address these risks,
the Company must, among other things, continue to respond to competitive
developments, attract, retain and motivate qualified personnel, implement and
successfully execute its advertising sales strategy, develop and market
additional media properties, upgrade its technologies and commercialize
products and services incorporating such technologies. There can be no
assurance that the Company will be successful in addressing such risks. The
extremely limited operating history of the Company makes the prediction of
future results of operations difficult or impossible. The Company currently
expects to significantly increase its operating expenses to expand its sales
and marketing operations, to fund greater levels of product development and
to develop and commercialize additional media properties.
The Company's operating results may fluctuate significantly in the
future as a result of a variety of factors, many of which are outside the
Company's control. These factors include the level of usage of the Internet,
demand for Internet advertising, seasonal trends in both Internet usage and
boat advertising placements, the advertising budgeting cycles of individual
advertisers, the amount and timing of capital expenditures and other costs
relating to the expansion of the Company's operations, the introduction of
new products or services by the Company or its competitors, pricing changes
in the industry, technical difficulties with respect to the use of
Web4Boats.com, general economic conditions and economic conditions specific
to the Internet and online media. As a strategic response to changes in the
competitive environment, the Company may from time to time make material
pricing, service or marketing decisions that effect the Company's business.
Due to all of the foregoing factors, in some future quarter the Company's
operating results may fall below the expectations.
RESULTS OF OPERATIONS
Revenues for the fiscal year ended March 31, 1999 were $554,451 and are
related to the Bagel store operation that has been discontinued. For the
fiscal year ended March 31, 2000 revenues were $-0-. The $3,770 of revenue
shown for the six month period ended September 30 1999, set forth in the
Company's Form 10SB has been, because it relates to the bagel business,
included in the gain on the sale of those operations. The $27 of revenue for
the three months ended December 31, 1999, set forth in the Company's Form 10-
QSB is now included in the $98 of interest income. The $21,060 of cash at
the year ended March 31, 2000 is loan proceeds and is the balance remaining
from the $47,000 of short term borrowings from two shareholder/affiliates.
Operating expenses consisted of salaries and general and administrative
expenses. General and administrative expense primarily consists of
executive, consulting, financial and legal expenses and related costs.
General and administrative expense was $701,338 and $357,015 in the fiscal
year ended March 31, 1999, and 2000 respectively. The first amount is
related entirely to the bagel store operations. Virtually all of the second
amount is related to development of the website business and includes
$115,000 to Internet Advisors Group, Inc. for day-to-day management services
which was subsequently met with the issuance of 1,150,000 shares of Common
Stock. The $115,000 owed to Internet Advisors Group, Inc. and $11,750 owed
to a former website management company accounts for most of the Accounts
Payable. The latter was also paid off in April, 2000, with return of the
Company's server computer and $5,000 to meet the obligation due at that time
($15,500) and consisted of approximately $22,000 of the Company's equipment
assets. Current website management is being done at a service provider that
uses its own server computers which Management has determined to be more cost
efficient. The cost efficiency is a result of avoidance of the continuing
technology and software upgrading expenses to the Company if it had continued
to own its own computers. Salaries for all periods set forth in the
financial statements are related solely to the bagel store operation.
Executive compensation in the form of Common Stock and Common Stock
options has been granted to Mr. Dennis Schlagel, the Company's President
since the end of the bagel store operation, and Mr. Blair J. Merriam, with
whom the Company contracted through Internet Advisors Group, Inc. In April,
2000, all rights and obligations of Internet Advisors Group, Inc. under the
agreement were assigned to Blair Merriam, its sole shareholder and employee.
In addition, the agreement was renewed for a period to expire March 31, 2001.
See Item 10, below.
The Company has net operating loss carryforwards from years 1997 and
earlier of approximately $188,000 and $94,000 for federal and California
state tax purposes, respectively. With additional losses for fiscal years
1998 and 1999, the Company has total net operating loss carryforwards at
March 31, 2000 of approximately $1,650,000 and $825,000 for federal and
California state tax purposes, respectively. A deferred asset for these
amounts has not been accrued due to the uncertain nature of its being
realized. Net operating loss carryforwards begin to expire in fiscal year
2011.
The Company does not have any non-officer employees, and no cash
salaries or wages are currently being paid. However, the President of the
Company, Dennis Schlagel, received 500,000 shares of restricted Rule 144
stock in lieu of compensation and a Stock Option in April 1999, for 500,000
shares of common stock exercisable at the price of $0.50 per share. The
stock and stock options were granted to Mr. Schlagel because the Company did
not have sufficient cash available to induce Mr. Schlagel to join the Company
in an officer and director capacity. See "Security Ownership Of Certain
Beneficial Owners and Management" Item 11 below, "Executive Compensation"
Item 6 below, and "Certain Relationships and Related Transactions" Item 12
below.
The Company issued 10,000 shares of restricted Rule 144 common stock to
Daniel Thornton in April 1999, in exchange for consulting services. The
stock was granted to Mr. Thornton because the Company did not have sufficient
cash available to induce Mr. Thornton to join the Company in the capacity of
director. See "Security Ownership Of Certain Beneficial Owners and
Management" Item 11 below, and "Certain Relationships and Related
Transactions" Item 12 below.
The Company's day to day operations are provided by Mr. Blair J. Merriam
under a contract with Internet Advisors Group, Inc. In April, 2000, all
rights and obligations of Internet Advisors Group, Inc. under the agreement
were assigned to Blair Merriam, its sole shareholder and employee. In
addition, the agreement was renewed for a period to expire March 31, 2001.
Website maintenance, hosting and design are performed on a contract basis
with HostproNETlimited. See "Certain Relationships and Related Transactions,
Item 12, below. The Company expects to continue these arrangements at least
until summer of 2000. Depending on the success of the operation and the
availability of funds the Company hopes at that time to begin to establish an
internal management team and staff. Poor business results could delay this
plan indefinitely. Under the terms of the agreement with Internet Advisors
Group, Inc. the Company is obligated to pay ten thousand dollars ($10,000)
per month that "may be made in either cash, stock, or any combination
thereof." Because the fees may be paid in stock, the Company does not
believe it will have any problems meeting its payment obligations under this
agreement over the next twelve months. In April, 2000, the Company satisfied
its March 31, 2000, $115,000 obligation to Internet Advisors Group, Inc.
through the issuance of 1,150,000 shares of Common Stock.
In April 1999, we granted stock options (not under any plan) to purchase
1,000,000 shares of common stock. These stock options were granted to
employees, directors and consultants at exercise prices of fifty cents
($0.50) per share which were below the fair market value at the date of
grant. See "Security Ownership of Certain Beneficial Owners and Management"
Item 11 below, "Executive Compensation", Item 10 below, and "Certain
Relationships and Related Transactions", Item 12 below.
LIQUIDITY AND CAPITAL RESOURCES
Although the Company's auditor has issued an opinion questioning the
Company's ability to continue as a going concern, we believe our current cash
and cash equivalents are sufficient to meet our anticipated cash needs for
working capital and capital expenditures for at least the next 12 months.
In August, 1999, the Company received $100,000 from a shareholder in
exchange for 10,000 shares of Series A Preferred Stock. A portion of the
cash has been used primarily to pay for hardware, software, programming and
other operating expenses to launch its website and other daily operating
costs. Additionally, the Company borrowed $47,000 from two shareholders which
were paid off through the issuance of Common Stock. The Company anticipates
that capital expenditures in the fiscal year ending March 31, 2001 will be
approximately $250,000, primarily for additions to the Company's networking
and computer infrastructure, leasehold improvements and furniture and website
design and service. The Company has no current plans on how to obtain
funding for the expected expenditures and is evaluating various alternatives.
Inability to obtain funding will substantially slow development of the
Company's operations.
In June 1999, we authorized the creation of a class of Preferred shares.
The Twenty Million (20,000,000) shares of Preferred Stock have a par value of
one-tenth cent ($.001) per share, bringing the total number of common and
preferred shares authorized by the Company to One Hundred Twenty Million
(120,000,000) shares. The Company's Board of Directors may divide and issue
the Preferred Shares in series.
In August 1999, the Company designated a portion of the Preferred Stock
as Series A Preferred Stock. Such Series A Preferred Stock consists of
10,000 shares of the authorized Preferred Shares. At the option of the
holder, the purchaser may convert said Series A Preferred Stock into Common
Stock of the Company no sooner than one (1) year after the purchase date.
All 10,000 shares were sold for $100,000 on August 13, 1999. The conversion
rate for said stock shall be at the rate of One Hundred (100) shares of
Common Stock for every one (1) share of Series A Preferred Stock. One
Million (1,000,000) shares of Common Stock have been reserved and such shares
shall be issued only in conversion of the Series A Preferred Stock as
provided by the terms of the designation.
With respect to fiscal years beyond March 31, 2000, we may be required
to raise additional capital to meet our long term operating requirements.
Although our revenues have decreased since implementation of the
Web4Boats.com business, our expenses have continued to, and in the
foreseeable future are expected to, exceed our revenues. Accordingly, we do
not expect to be able to fund our operations from internally generated funds
for the foreseeable future.
Our cash requirements depend on several factors, including:
(1) the level of expenditures on marketing and advertising
(2) the rate of market acceptance
(3) the ability to expand our customer base
(4) the ability to increase the volume of sales with our
affiliates
(5) the cost of contractual arrangements with online
information providers, search engines, and other referral
sources.
The Company currently has no material commitments. The Company
anticipates a substantial increase in its capital expenditures and operating
lease arrangements in 2000 consistent with its anticipated growth. We cannot
accurately predict the timing and amount of our cash requirements. If
capital requirements vary materially from those currently planned, we may
require additional financing sooner than anticipated. We have no commitments
for any additional financing, and there can be no assurance that any such
commitments can be obtained on favorable terms, if at all.
Any additional equity financing may be dilutive to our stockholders, and
debt financing, if available, may involve restrictive covenants with respect
to dividends, raising capital and other financial and operational matters
which could restrict our operations or finances. If we are unable to obtain
additional financing as needed, we may be required to reduce the scope of our
operations or our anticipated expansion, which could have a material adverse
effect on our business, results of operations and financial condition.
PLAN OF OPERATION
Over the next twelve months the Company plans to devote most of its
efforts and financial resources toward increasing awareness of its website
among the boating public and professionals. Initial focus, however, must be
on installation of the core features of the website.
The volume of classified advertisements has reached the point that
management believes it is sufficient, because of its size, to attract boat
buyers and others to the website. In addition, management also believes that
the website traffic will now justify fees for all new ads placed on the
website. Finally, with respect to the classified ads, in July the Company
will commence a telemarketing campaign with an independent telemarketing firm
(the firm has not yet been selected) to contact all current classified
advertisers collected by the Company and displayed on the website with the
proposal of a fee for continued display of the ad. In this way all non-
paying advertisers are expected to be dropped from the displayed data base
over the next 60 days.
Concurrent with the telemarketing campaign directed at classified
advertisers will be the initial concerted efforts at increasing awareness of
the website among the boating public and professionals. The Company plans to
initially arrange most of its links from other websites and magazines through
a barter arrangement under which the other website or magazine will receive a
reciprocal link to its website or services thereby reducing cash outlays.
The Company expects that its significant cash outlays over the next 90
days will be for completion of development of the core elements of its
website. This amount is expected to be $50,000 to $100,000. Sources of
theses funds have not been located as of the date hereof, but the Company is
pursuing leads for possible lenders and investors. There can be no assurance
at this time that these funds or any funds will be available to the Company
on terms that it can afford. Failure to acquire these funds at this point in
the Company's development would make it difficult for the Company to achieve
its business goals over the next six months. See Financial Statements.
Assuming that the Company acquires the $50,000 to $100,000 it is seeking
and completes development of the core elements of its website over the next
90 days, management believes that the Company should have begun to bring in
significant revenue from its monthly fees in its classified advertisement
sector. At this point the Company will begin to seek a significant infusion
of capital, $1 - 5 million, to increase awareness of the website among the
boating public and professionals and to continue development of the website.
There can be no assurance that such funding will be available to the Company.
In the event that such funding is not available to the Company, then
Web4Boats.com would be forced to use whatever cash is generated, mostly by
its classified advertisement sector, for enhancement of the website and its
promotion. Such a process of development would likely be much slower than
what could be achieved with the infusion of substantial new investments.
Management believes, however, that the Company's business is relatively
easily scalable. In other words, once the core elements of the website are
in place in the next 90 days, the website will be able to achieve its
purpose. Thereafter, additional funds are devoted mostly to promotion of the
website and enhancement of the core elements. The availability of funds
determines the speed with which promotion and enhancements are pursued.
Depending upon the ability of the Company to arrange additional
financing, the Company expects to add full time management and staff by the
end of 2000. Development of the Company's business could significantly alter
the timing of the need for staff and current plans are tentative. In
addition, competition for qualified internet technology and sales personnel
is intense, which is expected to make it difficult to add personnel on short
notice and at the optimal time for the Company.
KNOWN RISKS AND TRENDS
SEASONALITY
We expect our business to experience the seasonality of the boating and
warm weather recreational equipment industry as it matures.
LIABILITY FOR THE COMPANY'S SERVICES
Web4Boats.com hosts a wide variety of information, community,
communications and commerce services that enable individuals to exchange
information, generate content, conduct business and engage in various online
activities. The laws relating to the liability of providers of these online
services for activities of their users is currently unsettled. Claims could
be made against Web4Boats.com for defamation, negligence, copyright or
trademark infringement, personal injury or other theories based on the nature
and content of information that may be posted online by its users. Such
claims have been brought, and sometimes successfully pressed, against online
service providers in the past. In addition, Web4Boats.com could be exposed
to liability with respect to the selection of listings that may be accessible
through its Web4Boats.com-branded products and media properties, or through
content and materials that may be posted by users in classifieds, message
boards, clubs, chat rooms, or other interactive community-building services.
Any such finding of liability against Web4Boats.com could have a material
adverse effect on the Company's business.
RELIANCE ON ADVERTISING REVENUES AND UNCERTAIN ADOPTION OF THE
INTERNET AS AN ADVERTISING MEDIUM
Web4Boats.com expects to derive a majority of its revenues from the sale
of advertisements on its website pages under short-term contracts. Most of
its advertising customers have limited experience with the Internet as an
advertising medium. Web4Boats.com's continuing ability to generate
significant advertising revenues will depend upon, among other things: - -
advertisers' acceptance of the Internet as an effective and sustainable
advertising medium; - - the development of a large base of users of its
services possessing demographic characteristics attractive to advertisers;
and - - its ability to continue to develop and update effective advertising
delivery and measurement systems. No standards have yet been widely accepted
for the measurement of the effectiveness of Internet-based advertising.
Web4Boats.com cannot be certain that such standards will develop sufficiently
to support Internet-based advertising as a significant advertising medium.
In addition, adverse economic conditions can significantly impact advertisers
ability and willingness to spend additional amounts on advertising generally,
and on Internet-based advertising specifically.
YEAR 2000 ISSUE
Because many computer applications have been written using two digits
rather than four to define the applicable year, some date-sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000.
This "Year 2000 issue" could result in system failures or miscalculations
causing disruptions of operations, including disruptions of our website or
normal business activities.
Non-information technology systems include accounts receivable/payable,
payroll, banking, postal bar code, and other software that support our daily
business activities. Although we have not conducted a survey, we believe
there is no material exposure to our non-information technology systems. We
believe that we do not have any other non-information, embedded technology
systems, with potential Year 2000 issues.
We do not believe that we have material exposure to the Year 2000 issue
with respect to our own information systems since our existing systems
correctly define the Year 2000 with four digits. As of March 31, 2000, we
had no problems with the change to the Year 2000. Thus far, we do not believe
that there is any need for alternative plans to deal with the Year 2000
issues. The worst case scenario pertaining to the Year 2000 issue would be
an overall failure of the national Internet and telecommunications
infrastructure. This may require alternative means for users to gain
connection to our servers.
ITEM 7. FINANCIAL STATEMENTS.
(see following page)
Report of Independent Auditor
May 18, 2000
To the Board of Directors and Shareholders of Web4Boats.com., Inc.:
I have audited the accompanying balance sheets of Web4Boats.com, Inc. as of
March 31, 2000 and 1999, and the related statements of operations, cash
flows, and shareholders' equity for each of the two years ended March 31,
2000 and 1999. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I 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. I believe that my audits provide a
reasonable basis for my opinion.
In my opinion, such financial statements present fairly, in all material
respects, the financial position of Web4Boats.com, Inc. as of March 31, 2000
and 1999, and the results of operations and their cash flows for each of the
two years ended March 31, 2000 and 1999 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that
Web4Boats.com, Inc. will continue as a going concern. As discussed in Note 7
to the financial statements, the Company has suffered recurring losses from
operations and has a net capital deficiency that raise substantial doubt
about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Notes 1 and 7. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
Carl S. Sanko
Chatsworth, California
Web4Boats.com, Inc.
Balance Sheets
March 31, 2000 and 1999
March 31, March 31,
2000 1999
Assets
Current assets
Cash $ 21,060 $ 983
Accounts receivable 0 3,028
Inventory 0 5,340
Total current assets 21,060 9,351
Property and equipment
Furniture and fixtures 0 2,808
Equipment 33,604 134,172
Vehicles 0 0
Leasehold improvements 0 120,650
33,604 257,630
Accumulated depreciation (5,217)
(229,900)
Property and equipment, net 28,387 27,730
Other assets
Trademarks, net 9,655 0
Deposits 0 6,316
Total other assets 9,655 6,316
Total assets $ 59,102 $ 43,397
See accompanying notes to financial statements
Web4Boats.com, Inc.
Balance Sheets
March 31, 2000 and 1999
March 31, March 31,
2000 1999
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 156,655 $ 65,070
Accrued expenses 2,406 307,888
Accrued litigation settlement 42,500 42,500
Short-term borrowings 47,000 50,000
Total current liabilities 248,561 465,458
Commitments and contingencies
Shareholders' equity (deficit)
Convertible preferred stock, par value
$.001, 20,000,000 shares authorized,
10,000 issued and outstanding at
March 31, 2000 and none at March 31,
1999. Aggregate liquidation preference
of $1,000,000 at March 31, 2000 10 0
Common stock, par value $.001,
100,000,000 shares authorized,
5,033,460 and 5,018,870 issued
and outstanding at March 31, 2000
and 1999, respectively 5,033 5,019
Paid in capital 2,151,051 1,571,608
Accumulated deficit (2,345,553) (1,998,688)
Total shareholders' equity (189,459) (422,061)
Total liabilities and shareholders' equity $ 59,102 $ 43,397
See accompanying notes to financial statements
Web4Boats.com, Inc.
Statements of Operations
For the Years Ended March 31, 2000 and 1999
Year Ended Year Ended
March 31, March 31,
2000 1999
Revenues $ 0 $ 554,451
Cost of sales 0 203,152
Gross profit 0 351,299
Operating expenses:
Salaries 62,500 221,663
General and administrative 357,015 701,338
Total operating expenses 419,515 923,001
Loss from continuing operations (419,515) (571,702)
Other income:
Gain on disposal of segment 72,552 0
Interest income 98 0
Total other income 72,650 0
Net loss $ (346,865) $ (571,702)
Beneficial conversion feature on
preferred stock 100,000 0
Net loss applicable to common stock
Shareholders $ (446,865) $ (571,702)
Basic and dilutive loss per share $ (.09) $ (.13)
See accompanying notes to financial statements
Web4Boats.com, Inc.
Statements of Cash Flows
For the Years Ended March 31, 2000 and 1999
Year Ended Year Ended
March 31, March 31,
2000 1999
Cash flows from operating activities
Net loss $ (346,865) $ (571,702)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 6,472 50,606
Common stock issued for services 137,500 173,750
Gain on disposal of segment (72,552) 0
Loss on disposal of vehicle 0 988
Changes in operating assets and
liabilities
Accounts receivable 3,028 7,594
Inventory 5,340 3,289
Accounts payable 91,585 41,042
Accrued expenses (38,394) 288,865
Short term borrowings 47,000 0
Net cash provided by (used in) operating
Activities (166,886) (5,568)
Cash flows from investing activities
Sale of business operations 100,282 0
Purchases of property and equipment (33,604) 0
Purchases of trademarks (10,910) 0
Deposits 6,316 11,510
Net cash provided by (used in) investing
Activities 62,084 11,510
Cash flows from financing activities
Proceeds from issuance of preferred stock 100,000 0
Proceeds from issuance of common stock 25,000 0
Payment for redemption of common stock (121) 0
Net cash provided by (used in) financing
Activities 124,879 0
Net increase (decrease) in cash 20,077 5,942
Cash, beginning of year 983 (4,959)
Cash, end of year $ 21,060 $ 983
See accompanying notes to financial statements
Web4Boats.com, Inc.
Statements of Shareholders' Equity
For the Years Ended March 31, 2000 and 1999
Year Ended Year Ended
March 31, March 31,
2000 1999
Convertible preferred stock:
Balance, beginning of year $ 0 $ 0
Convertible preferred stock issues 10 0
Balance, end of year 10 0
Common stock and paid in capital:
Balance, beginning of year 1,576,627 1,402,877
Common stock issued 579,457 173,750
Balance, end of year 2,156,084 1,576,627
Accumulated deficit:
Balance, beginning of year (1,998,688) (1,426,986)
Net loss (346,865) (571,702)
Balance, end of year (2,345,553) (1,998,688)
Total shareholders' equity $ (189,459) $ (422,061)
See accompanying notes to financial statements
NOTES TO FINANCIAL STATEMENTS
NOTE 1 Summary of significant accounting policies
Organization and business
Web4boats.com, Inc. ("the Company"), a Delaware Corporation, was
incorporated on February 4, 1994 as New York Bagel Exchange, Inc. Commencing
September 26, 1995, the Company has operated in the business of wholesale and
retail sales of bagels, sandwiches, baked goods, specialty coffees and
related items. On August 22, 1997, the Company acquired the assets and
liabilities of Windom, Inc., a non-operating public shell, resulting in the
retirement of all the common and preferred shares of both companies, and the
reissuance, by the Company, of 2,594,560 shares of common stock. The merger
was accounted for, in substance, as an issuance of stock for the net monetary
assets of Windom, Inc. on August 22, 1997, and the financial statements
presented are those of New York Bagel Exchange, Inc. since the date of its
formation. Subsequent to the merger, the Company continued its wholesale and
retail operations. On January 26, 1999, New York Bagel Exchange, Inc.
changed its name to Webboat.com, Inc. Subsequent to fiscal 1999, on April 2,
1999, Webboat.com, Inc. changed its name to Windom.com, Inc., and on April
20, 1999, Windom.com, Inc. changed its name to Web4boats.com, Inc.
On March 22, 1999, the Board of Directors approved sale of the
Company's inventory and fixed assets for $120,000. The Company ceased its
business operations on March 25, 1999. The actual disposal date of assets
subject to the sale was on April 19, 1999. A gain of approximately $72,000
resulted upon the disposition. Per Accounting Principles Board opinion No.
30, since the disposal date occurred subsequent to fiscal year 1999, the gain
is to be recognized when realized, which was in fiscal year 2000.
During fiscal year 1999, the Company began making plans to develop a
commercial internet site in which boat dealers, marinas, individual buyers
and sellers would come to advertise sales and services related to the boating
industry. Included in accrued payables at March 31, 1999, is $259,375 of
marketing, consulting and other services provided to the Company in fiscal
1999 and related to development of the Company's new business operations.
In April, 1999, the Company issued 1,010,000 shares of its common stock
as full payment for these services. Subsequently, for the year ended March
31, 2000, the Company has continued to invest substantially in website
development and related costs. While there have been no revenues for the
year ended March 31, 2000 related to the new business operations, the Company
expects, as a going concern, to realize future benefits from these costs.
However, all such development costs are expensed as incurred.
Property and equipment
Equipment is recorded at cost and depreciated over estimated useful
lives of three to five years using the straight-line method. Trademarks are
recorded at cost and amortized over estimated useful lives of five years
using the straight-line method.
Income taxes
The Company has net operating loss carryforwards from years 1998 and
earlier of approximately $1,093,000 and $546,000 for federal and California
state tax purposes, respectively. With additional losses for fiscal years
ending 2000 and 1999, the Company has total net operating loss carryforwards
at March 31, 2000 of approximately $2,312,000 and $1,156,000 for federal and
California state tax purposes, respectively. A deferred asset for these
amounts has not been accrued due to the uncertain nature of its being
realized. Net operating loss carryforwards begin to expire in fiscal year
2011.
Earnings per share
The computation of loss per share of common stock is based on the
weighted average number of shares outstanding during each fiscal year.
NOTE 2 Shareholders' equity
Compensatory stock issuance
During fiscal year 2000, the Company received officer salary
compensation of $62,500 and professional services valued at $75,000 in
exchange for common stock. During fiscal year 1999, the Company received
officer salary compensation of $43,125, and professional services valued at
$173,750 in exchange for common stock.
Stock options
During fiscal year 1998, the Company recorded a charge to operations of
$687,500 for marketing and other services in exchange for issuance of stock
options. The value for such services was computed as the difference between
the quoted market price at the option's measurement date and the option
price. Additionally, stock options for 500,000 shares, with no compensation
element, were issued in April, 1999. All options were exercisable at time of
grant and no options have been exercised as of March 31, 2000. The number of
shares represented by stock options outstanding at March 31, 1999 is
1,500,000 shares with an option price of $.50 to $1.00 per share, and
$1,000,000 in total, and with a market price at date of grant of $.56 to
$2.00 per share, and $1,687,500 in total. The number of shares represented
by stock options outstanding at March 31, 2000 is 2,000,000 shares with an
option price of $.50 to $1.00 per share, and $1,250,000 in total, and with a
market price at date of grant of $.19 to $2.00 per share, and $1,781,250 in
total. Outstanding options expire on various dates from September 24, 2002
to April 2, 2004.
Stock redeemed and issued
In April, 1999, the Company contractually redeemed, at par value,
1,215,000 shares of common stock, representing all the outstanding stock held
by a former officer of the Company. The Company then issued 500,000 shares
of restricted common stock and stock options representing 500,000 shares of
common stock to a new officer as consideration for future services to be
rendered.
Issuance of convertible preferred stock
In June, 1999, the Company authorized the issuance of 20,000,000 shares
of $.001 par value, preferred stock. In August, 1999, 10,000 shares of
preferred stock was designated as Series A preferred stock with conversion
rights of one share of Series A preferred to 100 shares of common stock.
Subsequently, the 10,000 shares of Series A preferred was sold for $100,000
to a related party. A beneficial conversion feature of $100,000 was present
in the transaction and is reflected in stockholders' equity at March 31,
2000.
NOTE 3 Related parties
Short term borrowings
At March 31, 2000, the Company had unsecured promissory notes,
inclusive of accrued interest, of $47,806, payable to two shareholders. The
notes bear annual interest at a rate of 10%.
At March 31, 1999, the Company had unsecured promissory notes,
inclusive of accrued interest, of $57,713, payable to two shareholders. The
notes bear annual interest at rates of 10% to prime plus two percent. The
notes were exchanged for 150,000 shares of stock in April, 1999.
Stock options
Represented in outstanding stock options at March 31, 2000 are
1,820,000 shares to related parties.
NOTE 4 Statements of Cash Flows
Financial instruments
The Company considers all liquid interest-earning investments with a
maturity of three months or less at the date of purchase to be cash
equivalents.
Noncash transactions
During the year ended March 31, 2000, the Company issued 1,010,000
shares of its common stock to third parties as compensation for $259,375 in
services accrued as of March 31, 1999, 250,000 shares as compensation for
services received during fiscal 2000, and 150,000 shares to related parties
in cancellation of $57,713 in short term borrowings and accrued interest.
Interest paid
In fiscal years 2000 and 1999, the Company charged to operations
interest expense of $2,064 and $5,075, respectively. Interest paid during
fiscal year ending March 31, 2000 was $1,258. No interest was paid during
fiscal year ending March 31, 1999.
NOTE 5 Commitments and Contingencies
Lease commitments
The Company leased its prior bagel facility under a long-term operating
lease. Rent expense for fiscal year 1999 was approximately $40,000.
Subsequent to March 31, 1999, the Company assigned its lease to a buyer of
its business assets. The assignment was with recourse in that the Company
was responsible if the new lessee failed to make lease payments. The lease
expired on March 31, 2000, and the Company has no remaining future minimum
lease payments at March 31, 2000. Additionally, the Company had no rent
expense for fiscal year 2000.
Service commitments
The Company has entered various contracts for professional services
related to managing and promoting its website. Commitments as of March 31,
2000 under these contracts total $198,000 for year ending March 31, 2001,
with no commitments thereafter.
Litigation
During fiscal 1999, a lawsuit was filed against the Company in which
the plaintiff, a former officer, claimed breach of employment contract
related to fiscal year 2000. Subsequent to March 31, 1999, the dispute was
settled for $42,500. The unpaid settlement amount is accrued as of March 31,
2000 and 1999.
NOTE 6 Subsequent Events
Sale of operating assets
In April, 2000, the Company paid $5,000 and returned $21,960 in
computer equipment it had purchased in July, 1999, from a vendor involved in
the development of the Company's e-commerce website in settlement of $15,500
in payables to the vendor, of which $11,750 was accrued as of March 31, 2000.
Stock issued
Subsequent to March 31, 2000, the Company issued 1,150,000 shares of
restricted common stock to a related party in payment of $115,000 in
management services rendered during fiscal year 2000 and accrued at March 31,
2000.
NOTE 7 Going concern
The Company has suffered recurring losses from operations and has a net
capital deficiency that raise substantial doubt about its ability to continue
as a going concern. During fiscal year ended March 31, 1999, as a result of
not being able to meet its obligations as they became due, the Company saw no
alternative but to sell its operating assets, as described in Note 1 above.
Note 1 also describes management's plans in regard to perpetuating its
existence through new operations related to internet marketing and the
boating industry. The Company has the ability to raise funds through the
public equity market and, as stated in Notes 2, 3 and 4, has paid significant
liabilities to related and other parties with common stock and raised
substantial funds from a related party in the private sector as well. While
such plans and fundraising ability seem to mitigate the effect of prior
years' losses and deficits, the Company is essentially only beginning to
market in a new industry. The inability to assess the likelihood of the
effective implementation of management's plans in this new environment also
raises substantial doubt about its ability to continue as a going concern.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Pursuant to the Company's Certificate of Incorporation and its By-Laws,
the members of the Board of Directors serve for one-year terms. The
Company's current directors and executive officers are:
Name Age Position
Blair J. Merriam(1) 42 General Manager
Dennis Schlagel(1) 60 President, Director,
Secretary, Treasurer
Daniel Thornton 40 Director
------------------
(1) Mr. Schlagel and Mr. Merriam are first cousins.
------------------
Mr. Blair J. Merriam has been General Manager of the Company since
April, 1999. Mr. Merriam presently devotes full time to the affairs of the
Company. For 6 years prior to joining the Company, Mr. Merriam worked for
himself in consulting and managing the sales and marketing of food products
companies producing products mainly in the United States and Mexico. Mr.
Merriam also recently formed Internet Advisors Group, Inc. through which he
has been consulting to the Company and operating as its General Manager. In
April, 2000, all rights and obligations of Internet Advisors Group, Inc.
under the agreement were assigned to Blair Merriam, its sole shareholder and
employee. In addition, the agreement was renewed for a period to expire
March 31, 2001.
Mr. Dennis Schlagel has been President, Secretary, Treasurer and a
director of the Company since the sale of the Company's bagel business in
April, 1999. Mr. Schlagel is semi-retired and lives from fall through spring
near Hermosillo, Mexico. He devotes only part of his time to the affairs of
the Company. Prior to joining the Company, Mr. Schlagel was from February,
1994, general manager of Beltropic, Inc., a Wyoming corporation engaged in
farming and the produce export, sales and distribution business in northern
Mexico. Prior to and after serving in the Army in 1961, Mr. Schlagel
attended Chico State College, California, and California Polytecnic,
respectively.
Mr. Daniel Thornton has been a director of the Company since October 1,
1999. In June, 2000, Mr. Thornton will assume a position as director of
sales and marketing and general manager of Capnet Gateway Online Services, an
internet-based healthcare information and management services portal for
Meridian Holdings, Inc. Mr. Thornton is a member of the board of directors
of Meridian subsidiary InterCare.com, Inc.. From September 1996 to April,
2000, Mr. Thornton has been Chief Executive Officer of BioSynergy
Nutriceuticals, Inc., a supplier of raw materials and secondary ingredients
to the dietary supplement industry. For 2 years prior to September 1996, he
was Chief Executive Officer of Stevion Co.
Directors occasionally consult on an informal basis and, under the
Company's bylaws, are to meet formally for the annual meeting of directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Blair Merriam failed to file on a timely basis one Form 4 for one
transaction. The Form 4 was filed approximately April 27, 2000.
ITEM 10. EXECUTIVE COMPENSATION.
The following tables contain compensation data for the Chief Executive
Officer and other named executive officers of the Company for the fiscal year
ended March 31, 2000. Neither person was employed in an executive capacity
with the Company for any period prior to April 1, 1999.
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards
--------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Name Other Securities
And Annual Restriced Under- All
Other
Principal Compen- Stock lying Compen-
Position Salary Bonus sation Awards Options sation
Blair J. Merriam $115,000(1) -0- -0- $193,750(2) -0- -0-
General Manager
Dennis Schlagel -0- -0- -0- $250,000(3) 500,000(4) -0-
President, Chief
Executive Officer,
Secretary, Treas.,
Director
-------------------
</TABLE>
(1) Cash compensation is pursuant to an Agreement with Internet Advisors
Group, Inc., which is 100% owned and operated by Mr. Merriam. This amount
may be paid in "cash, stock or any combination thereof. This amount was
accrued and unpaid at March 31, 2000. In April, 2000, this amount was "paid"
by issuance of 1,150,000 shares of Common Stock. In April, 2000, all rights
and obligations of Internet Advisors Group, Inc. under the agreement were
assigned to Blair Merriam, its sole shareholder and employee. In addition,
the agreement was renewed for a period to expire March 31, 2001."
(2) Issued to Mr. Blair J. Merriam or companies over which he has 100%
control and ownership. The value (based on closing price) of these shares
(800,000) at the end of the last completed fiscal year was $632,000. See
"Security Ownership of Certain Beneficial Owners and Management" in Item 11,
above and "Certain Relationships and Related Transactions" in Item 12, below.
(3) The value (based on closing price) of these shares (500,000) at the end
of the last completed fiscal year was $395,000
(4) Mr. Schlagel received options for 500,000 shares on April 20, 1999. The
exercise price of the options is $.50 per share and the market price of the
Company's Common Stock on the date of grant was $.50 per share. See
"Security Ownership of Certain Beneficial Owners and Management" in Item 11,
above and "Certain Relationships and Related Transactions" in Item 12, below.
------------------
No other executive officer of the Company receives an annual salary and
bonus in excess of $100,000.
EMPLOYMENT ARRANGEMENTS
The Company has no employment agreements with any of its employees. The
Company does, however, have an agreement with Internet Advisors Group, Inc.
upon which it depends heavily for its day to day operations. The Company
engaged Internet Advisors Group, Inc. to set up its business operations and
establish its website design parameters. In April, 2000, all rights and
obligations of Internet Advisors Group, Inc. under the agreement were
assigned to Blair Merriam, its sole shareholder and employee. In addition,
the agreement was renewed for a period to expire March 31, 2001. See
"Certain Relationships and Related Transactions" in Item 12, below.
STOCK OPTIONS AND WARRANTS
The following table sets forth options awarded for the fiscal year ended
March 31, 2000.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
<S> <C> <C> <C> <C>
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise or Base
Expiration
Name Granted (#) Current Year Price ($/sh) Date
Dennis Schlagel 500,000 100% $.50(1) 4/2/04
</TABLE>
------------------
(1) The market price on the date of grant was $.50.
------------------
The following tables contain option data for the Chief Executive Officer
and other named executive officers of the Company for the current fiscal year
ended March 31, 2000.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN CURRENT FISCAL YEAR
AS OF 3/31/00 AND OPTION VALUES AS OF 3/31/00
<S> <C> <C> <C>
Number of
Securities Value of
Underlying
Unexercised
Unexercised In-the-
Money
Options at Options at
3/31/00 3/31/00(1)
Shares Acquired Exercisable/
Exercisable/
Name on Exercised Unexercisable
Unexercisable
Blair J. Merriam(2) -0- 840,000/-0-
$203,000/$-0-
Dennis Schlagel -0- 500,000/-0-
$145,000/$-0-
</TABLE>
------------------
(1) Computed based on the differences between the fair market value (closing
price) on March 31, 2000, ($.79 per share) and aggregate exercise prices.
(2) Mr. Blair J. Merriam first obtained Common Stock in the Company in
August, 1997, and has since acquired a substantial holding of Common Stock
and Common Stock options. See "Certain Relationships and Related
Transactions" in Item 12, below.
------------------
DIRECTORS COMPENSATION
The Company's directors are reimbursed for expenses incurred on behalf
of the Company. The company presently has no compensation plan for
directors. In April, 1999, Mr. Daniel Thornton received 10,000 shares of
Common Stock in consideration for consulting services prior to becoming a
director of the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following tables sets forth the number and percentage of outstanding
shares of Company Common Stock and Series A Preferred Stock owned by (i) each
person known to the Company to beneficially own more than 5% of each class of
stock, (ii) each director, (iii) each named executive officer, and (iv) all
executive officers and directors as a group. The following calculations are
made according to the rules of the Securities and Exchange Commission. Share
ownership is deemed to include all shares that may be acquired through the
exercise or conversion of any other security immediately or within the next
sixty days. Such shares that may be so acquired are also deemed outstanding
for purposes of calculating the percentage of ownership for that individual
or any group of which that individual is a member. Shares outstanding were
determined as of June 12, 2000.
COMMON STOCK
NAME AND ADDRESS OF PERCENTAGE OF NUMBER OF SHARES OF
BENEFICIAL OWNER OWNERSHIP COMMON STOCK
BENEFICIALLY OWNED
Dennis Schlagel 14.8% 1,000,000(1)
P.O. Box 3171
Cheyenne, WY 82003
Daniel Thornton * 10,000
2658 Bridgeway Road
Sausalito, CA 94965
Blair J. Merriam 44% 3,120,000(2)
P.O. Box 5235
Cheyenne, WY 82003
Dori Merriam 16.1% 1,200,000(3)
6150 La Jolla Mesa Drive
La Jolla, California 92037
All executive officers and 54.4% 4,130,000(1)(2)
directors as a group
(3 persons)
------------------
* Indicates ownership of less than one percent.
(1) Includes 500,000 shares that may be acquired pursuant to the exercise of
options.
(2) Includes 200,000 shares that may be acquired pursuant to the exercise of
options and beneficial ownership of shares by the following entities that are
100% owned by Mr. Merriam: Spika Corporation - 465,000 shares direct and
640,000 shares that may be acquired pursuant to the exercise of options;
Internet Advisors Group, Inc. - 500,000 shares direct; BJM, Inc. - 165,000
direct.
(3) Dori Merriam's shares of Series A Preferred Stock are convertible within
sixty days. Blair Merriam is Dori Merriam's nephew through her husband's
family. Includes 200,000 shares that may be acquired through the exercise of
options held by her husband, James Merriam. Ms. Merriam disclaims beneficial
ownership of any shares of Common Stock beneficially owned by her husband.
See following table.
------------------
SERIES A PREFERRED STOCK
NAME AND ADDRESS OF PERCENTAGE OF NUMBER OF SHARES OF SERIES
BENEFICIAL OWNER OWNERSHIP A PREFERRED BENEFICIALLY
OWNED (1)
Dori Merriam 100% 10,000
6150 La Jolla Mesa Drive
La Jolla, California 92037
All executive officers and 0% 0
directors as a group
(0 persons)
------------------
(1) Each share of Series A Preferred Stock is convertible into 100 shares of
Common Stock after August 13, 2000. Ms. Merriam disclaims beneficial
ownership of any shares of Common Stock beneficially owned by her husband,
James Merriam.
------------------
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
STOCK REDEMPTION AND EMPLOYMENT TERMINATION AGREEMENT
For approximately 1 year and 7 months prior to April 1, 1999, the
Company was in the bagel business operating a bagel bakery and delicatessen.
The Company's board of Directors approved the sale of the Company's inventory
and fixed assets for $120,000 on March 22, 1999. The Company ceased its
business operations on March 25, 1999, and disposed of the assets subject to
the sale on April 19, 1999.
On April 1, 1999, all prior management involved in the bagel business of
the Company was terminated pursuant to the Stock Redemption and Employment
Termination Agreement. This Agreement is summarized as follows:
The Agreement was between Mark J. Horne and the Company. Mr. Horne was
at the time the Chief Executive Officer, President and sole Director of the
Company. Under the Agreement, all Mr. Horne's ownership in the Company
(1,215,000 shares of Common Stock) was redeemed for $121.50. Mr. Horne also
relinquished all his options for Company stock. Mr. Horne resigned all his
positions with the Company after appointing Dennis Schlagel as his
replacement in all Mr. Horne's officer positions and as a Director. Mr.
Horne also received a cash payment of $10,000. As part of the transaction,
the Company changed its name to Windom, Inc. and conveyed to Mr. Horne the
Internet domain name "Webboat.com . . . and all variations thereof which Mr.
Horne has reserved . . . ." The Company received the rights to the domain
names "Webbought.com and Webought.com and all legal rights to the name
'ebot'."
Mr. Horne and his father, George F. Horne, canceled, relinquished and
forgave all claims to accrued and unpaid compensation and indebtedness
represented by their loans to the Company in the aggregate amount of
$256,438.62. The Agreement also called for the Company to cancel its
sponsorship agreement with race car driver, Arie Luyendyk, a friend of Mr.
Horne. The Agreement contains mutual releases by each party of the other,
and the Company indemnifies Mr. Horne for any losses related to the Company's
breach of the Agreement or by reason of his relationship with the Company as
an officer, director or shareholder.
As a consequence of this Agreement, all of the executive compensation
for the fiscal year ended March 31, 1999, was reversed.
INTERNET ADVISORS GROUP, INC. CONSULTING AGREEMENT
On April 15, 1999, the Company entered into a 1 year consulting
agreement with Internet Advisors Group, Inc. Internet Advisors Group, Inc.
is wholly owned and operated by Blair J. Merriam who at the time the Company
entered into the Agreement was and who continues to be a major shareholder of
the Company. See "Security Ownership of Certain Beneficial Owners and
Management" in Item 11, above. The Agreement calls for Internet Advisors
Group, Inc. to provide the following services.
Day to day management of the corporate affairs and business
Liaison with website management firm
Public relations advisor
Planning, design, development, organization, writing and distributing
the materials and content required to develop and maintain the
website
Liaison with attorneys and accountants regarding Filing of this Form
10-SB
Hiring and retaining outside consultants, outsource services and other
service providers
Internet Advisors Group, Inc. is to be paid $10,000 per month in "cash,
stock, or any combination thereof" for these services. In April, 2000, all
rights and obligations of Internet Advisors Group, Inc. under the agreement
were assigned to Blair Merriam, its sole shareholder and employee. In
addition, the agreement was renewed for a period to expire March 31, 2001.
Also in April, 2000, the Company satisfied its $115,000 accrued and unpaid
obligation to Internet Advisors Group, Inc. by issuing it 1,150,000 shares of
Common Stock.
On April 2, 1999, the Company issued 500,000 shares of Common Stock to
Internet Advisors Group, Inc. for consulting services. The value of these
shares at the date of issuance was $100,000.
ADDITIONAL TRANSACTIONS
On April 6, 1999, the Company issued 10,000 shares of Common Stock to
Daniel Thornton for consulting services prior to his becoming a director of
the Company. These shares were valued at $3,128.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
The Company has had no filings on Form 8-K.
The following exhibits are filed as part of the Registration Statement:
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
2(1)* Articles of Incorporation and amendments thereto.
2(2)* By-laws
10(1)* 9/27/97 Option to Beltropic to acquire 180,000 shares of Common
Stock
10(2)* 9/27/97 Option to Latin Foods, Inc. to acquire 180,000 shares of
Common Stock
10(3)* 9/27/97 Option to Spika Corporation to acquire 140,000 shares of
Common Stock
10(4)* 12/30/97 Option to Spika Corporation to acquire 500,000 shares of
Common Stock
10(5)* 3/10/98 Option to Blair J. Merriam to acquire 200,000 shares of
Common Stock
10(6)* 3/10/98 Option to James A. Merriam to acquire 200,000 shares of
Common Stock
10(7)* 3/10/98 Option to Latin Foods, Inc. to acquire 100,000 shares of
Common Stock
10(8)* 4/2/99 Option to Dennis Schlagel to acquire 500,000 shares of
Common Stock
10(9)* 4/1/99 Stock Redemption and Employment Termination Agreement
10(10)* Consulting Agreement Between Web4Boats.com and Internet Advisors
Group, Inc.
10(12)* Web4Boats.com/Luvia.com Proposal
10(13) 3/7/2000 Cooperative Marketing and Commerce Agreement with Acacia
Marine, L.L.C.
10(14) 4/10/2000 Services Agreement with 540 Degrees, Inc. d/b/a/ Gateway
Arts
10(15) 4/12/2000 Website Hosting Agreement with HostproNETlimited
10(16) 4/19/2000 Consulting Agreement with Everything Communicates, LLC
* Incorporated by reference to Form 10SB.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act or
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
(Registrant) WEB4BOATS.COM, INC.
By: /s/ Dennis Schlagel
-------------------
Dennis Schlagel, President, Chief Executive Officer Chairman of the
Board
of Directors, Treasurer, Secretary
Date: ***
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By: /s/ Daniel Thornton
--------------------
Daniel Thornton, Director
Date: ***
