SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended: June 30, 2000.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from _________ to __________.
Commission File No. 0-28833
NetWeb OnLine.Com Inc.
----------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Texas 75-2767933
------------------------------- -----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3350 N.W. 2nd Avenue, Suite A28, Boca Raton, FL 33431
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(Address of Principal Executive Offices)
(561)-289-5175
-----------------------
(Issuer's Telephone Number, Including Area Code)
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 past 90 days.
Yes X No
--- ---
(The Company became subject to the reporting requirements on January 20,
2000)
APPLICABLE ONLY TO CORPORATE ISSUERS
As of July 30, 2000, the issuer had 6,247,447 shares of its common
stock, par value $0.001 per share, issued and outstanding and 47,677 shares
of Series I Preferred Stock issued and outstanding.
Each outstanding share of Series I Preferred Stock is convertible at any time
into three (3) shares of the Company's Common Stock.
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
1
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NETWEB ONLINE.COM INC
INDEX TO FORM 10-QSB
PART I -FINANCIAL INFORMATION PAGE NO.
Item 1 Financial statements p. 3
Balance Sheets at June 30, 2000
and September 30, 1999 p. 3
Statements of Operations for the three
months ended June 30, 2000 and
1999 (Unaudited) p. 4
Statement of Income for the nine
months ended June 30, 2000 and
1999 (Unaudited) p. 5
Statement of Cash Flows for the nine months
ended June 30, 2000 p. 6
Notes to Financial Statements p. 7
Item 2 Management's discussion and analysis or plan
of operation p. 12
PART II - OTHER INFORMATION p. 12
Item 1 Legal proceedings p. 12
Item 2 Changes in Securities and use of proceeds p. 12
Item 3 Defaults upon senior securities p. 12
Item 4 Submission of matters to a vote of
security holders p. 12
Item 5 Other events p. 12
Item 6(a) Exhibits p. 13
Item 6(b) Reports on Form 8-K p. 13
Signatures p. 14
2
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PART I
FINANCIAL INFORMATION
NETWEB ONLINE.COM, INC.
BALANCE SHEETS
JUNE 30, 2000 (UNAUDITED) AND SEPTEMBER 30, 1999 (AUDITED)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
2000 1999
(UNAUDITED) (AUDITED)
------------ ------------
<S> <C> <C> <C>
ASSETS
Current Assets
Cash $ 7,745 $ 883
Note receivable related parties -- 1,250
Inventory -- 51,830
Deferred advertising cost -- 181,791
Prepaid expenses 8,000 2,189
---------- -------------
Total Current Assets 15,745 237,943
Intangible assets
Patents net of amortization of
$ 5,605 -- 61,656
---------- ------
Other assets
Investments 14,500 --
Other assets 2,500 --
---------- --------------
$ 32,745 $ 299,599
========== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 10,785 $ 7,326
Current portion of note payable -- 40,000
---------- ---------------
to related parties
Total Current Liabilities 10,785 47,326
Long Term liabilities
Note payable related parties -- 35,000
Redeemable Preferred stock -- 200,000
Shareholders' equity
Common Stock, $0.001 par value 30
million shares authorized,
4,147,447 and 4,064,447 issued
and 28,966 outstanding 4,147 4,058
respectively
Preferred stock, $0.001 par value
5 million shares authorized:
Series I convertible, 777,729
and 28,966 outstanding,
respectively 748 29
Additional paid in capital 443,464 921,487
Less: Subscriptions receivable (4,905) (634,000)
Retained deficit (421,494) (274,301)
---------- ---------------
21,960 17,273
---------- ---------------
$ 32,745 $ 299,599
========== ===============
</TABLE>
See notes to financial statements
3
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NETWEB ONLINE.COM, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
JUNE 30, 2000 AND 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD
ENDED JUNE 30,
2000 1999
-------------- -------------
<S> <C> <C>
Revenue
Sales, net of discounts and returns $ --
Cost of Goods Sold --
-------------- -------------
Gross Profit -- --
Expenses
Accounting and legal 10,080 --
General and administrative 23,236 --
Consulting 250 --
Royalties
Amortization
-------------- -------------
33,566 --
-------------- -------------
Net loss from continuing operations (33,566) --
Discontinued Operations
Loss from operation of discontinued
golf business (27,891) (36,252)
Loss on disposal of golf related assets (19,759) --
-------------- -------------
(47,650) --
-------------- -------------
Net loss $ (81,216) $ (36,252)
============== =============
Net loss per common share
Net loss from continuing operations $ (0.0075) --
Discontinued operations (0.0106) $ (0.0106)
-------------- -------------
Net loss $ (0.0181) $ (0.0106)
-------------- -------------
</TABLE>
See notes to financial statements
4
<PAGE>
NETWEB ONLINE.COM, INC.
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED
JUNE 30, 2000 AND 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTH PERIOD
ENDED JUNE 30,
2000 1999
---------- ----------
<S> <C> <C>
Revenue
Sales, net of discounts and returns $ -- $ --
Cost of Goods Sold -- --
---------- ----------
Gross Profit -- --
Expenses
Accounting and legal 43,012 --
General and administrative 50,281 --
Consulting 6,250 --
Royalties -- --
Amortization -- --
---------- ----------
99,543 --
---------- ----------
Net loss from continuing operations (99,543) --
Discontinued Operations
Loss from operation of discontinued
golf business (27,891) (108,756)
Loss on disposal of golf related assets (19,759) --
---------- ----------
(47,650) 108,756
---------- ----------
Net loss $(147,193) $(108,756)
========== ==========
Net loss per common share
Net loss from continuing operations $ (0.0222) --
Discontinued operations (0.0106) $ (0.0319)
---------- ----------
Net loss $ (0.0328) $ (0.0319)
---------- ----------
</TABLE>
See notes to financial statements
5
<PAGE>
NETWEB ONLINE.COM, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net loss $(147,193)
----------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Loss on sale of assets 19,759
(Increase) decrease in prepaid expenses (5,811)
(Increase) decrease in inventories 51,830
(Increase) decrease in other receivables 1,250
(Increase) decrease in trademarks and website costs 61,656
(Increase) decrease in other assets 181,791
(Increase) decrease in accounts payables 3,459
(Increase) decrease in other payables (75,000)
----------
Total adjustments 238,934
----------
Net cash provided by operating activities 91,741
----------
Cash flows from investing activities:
Cash payments for the purchase of property (17,000)
----------
Net cash used by investing activities (17,000)
----------
Cash flows from financing activities:
Proceeds from notes receivable 143,500
Proceeds from issuance of common and preferred stock 125,223
Proceeds from shares retired in connection with sale
of golf related assets (336,602)
----------
Net cash used by financing activities (67,879)
----------
Net increase (decrease) in ash and cash equivalents 6,862
Cash and cash equivalents, beginning of period 883
----------
Cash and cash equivalents, end of period $ 7,745
==========
</TABLE>
See notes to financial statements
6
<PAGE>
NETWEB ONLINE.COM, INC.
NOTES TO FINANCIAL STATEMENTS
QUARTER ENDED JUNE 30, 2000
NOTE 1 UNAUDITED FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Rule 310(b) of Regulation SB.
Accordingly, they do not include all of the information and footnote disclosures
normally included in complete financial statements prepared in accordance with
generally accepted accounting principles. For further information, such as
significant accounting policies followed by the Company, refer to the notes to
the Company's audited financial statements.
In the opinion of management, the unaudited financial statements include all
necessary adjustments (consisting of normal, recurring accruals) for a fair
presentation of the financial position, results of operations and cash flow for
the interim periods presented. Preparing financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses. Actual results may differ from
these estimates. Interim results are not necessarily indicative of results for
a full year. The results of operations for the nine-month periods ended June
30, 2000 and 1999 are not necessarily indicative of operating results to be
expected for a full year.
NOTE 2 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NetWeb Online.Com, Inc. (the "Company") was incorporated in the State of Texas
under the name GEAC, Inc. on November 5, 1997. In July 1999 its Articles of
Incorporation were amended to change its name to The Golfing Network.Com, Inc.
Contemporaneously with the acquisition of a Florida entity known as NetWeb
Online.Com, Inc., the Company changed to its present name on December 14, 1999
through the filing with the Texas Department of State of an amendment to its
Articles of Incorporation.
The Company was formed for the purpose of engaging in the marketing and sale of
golf and related products, including the purchase of the patent rights to the
Wonderstick(r). The Company subsequently expanded its business purposes to
include the development, acquisition and operation of a variety of Internet web
sites. On June 30, 2000, the Company sold the golf related assets (See Note 6).
7
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NOTE 2 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Income Taxes
-------------
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, which requires a liability approach to calculating
deferred income taxes.
Use of Estimates in Preparation of Financial Statements
--------------------------------------------------------------
The preparation of the accompanying financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that directly affect the results of reported assets
and liabilities and disclosure of contingent assets and liabilities as of the
balance sheet date, and the reported amounts of revenues and expenses for the
period presented. Actual results could differ from these estimates.
Cash and Cash Equivalents
----------------------------
The Company considers as cash and cash equivalents highly liquid investments
with an original maturity of three months or less to be cash equivalents.
Credit Risk
------------
Financial instruments that potentially subject the Company to credit risk
include cash on deposit with one financial institution amounting to $7,745 at
June 30, 2000, which was insured for us to $100,000 by the U.S. Federal Deposit
Insurance Corporation (FDIC).
Advertising
-----------
Advertising costs are charged to operations when incurred. There was no
advertising expense for the quarter ended June 30, 2000.
NOTE 3 COMMON STOCK AND PREFERRED STOCK
On December 15, 1999, the Company issued 2,310,000 shares of Common Stock in
exchange for all of the issued and outstanding shares of Capital Stock of NetWeb
Online.Com, Inc. (a Florida corporation). As part of that transaction, the
Company also issued 700,00 shares of its Series I $0.001 par value Convertible
Preferred Stock to the former shareholders of the Florida corporation. Each
share of Series I preferred stock is convertible into three shares of the
Company's common stock, any time after 12 months from the date of issuance at
the option of the preferred stockholder, and pays no dividends.
8
<PAGE>
NOTE 3 COMMON STOCK AND PREFERRED STOCK (CONTINUED)
On December 6, 1999, in exchange for a 90% interest in the website E-Trade
Golf.Com, the Company issued 33,737 shares of its Series I Preferred stock.
Each share is convertible into three (3) shares of its common stock on or after
October 1, 2000.
On June 30, 2000, the Company retired 500,000 shares of common stock, 200,000
shares of its Preferred Stock. Series II and 15,026 shares of its Preferred
Stock, Series I in connection with the sale of golf related assets (See Note 6).
On June 30, 2000, the Company, with the approval of its board of directors,
reduced the price of remaining warrants from $1.00 to $0.001, for a total value
of $485,595.
NOTE 4 REDEEMABLE PREFERRED STOCK
Pursuant to the resolution adopted by the board of directors on May 14, 1998,
200,000 shares of authorized Preferred Stock were issued as Series II Redeemable
Preferred Stock. These shares shall be redeemable by the Company at the option
of the board of directors at a price of $1.50 per share subject to
a) the expiration of a period of two years or
b) the Company achieving a net equity of two million dollars.
The Preferred Stock has been redeemed in connection with the sale of the golf
related assets (See Note 6).
NOTE 5 INCOME TAXES
Deferred tax assets and liabilities at June 30, 2000 and September 30, 1999
consist of the following:
<TABLE>
<CAPTION>
June 30, September 30,
2000 1999
---------- ---------------
<S> <C> <C>
Current deferred tax asset $ 67,208 $ 67,208
Current deferred tax liability
(67,208) (67,208)
---------- ---------------
$ -- $ --
========== ===============
Non-current tax asset $ 155,826 $ 101,409
Valuation allowance (155,826) (101,409)
---------- ---------------
$ -- $ --
========== ===============
</TABLE>
9
<PAGE>
NOTE 5 INCOME TAXES (CONTINUED)
The current deferred tax liability results from capitalized advertising costs,
which were previously deductible for income tax purposes. The non-current
deferred tax assets result from the net operating loss carryforward, which
approximates $593,193 on June 30, 2000, and $446,000 at September 340, 1999.
The net operating loss carryforward, which is subject to annual limitations as
prescribed by the Internal Revenue Code, is available to offset future taxable
income through 2020. A 100% valuation allowance has been recorded to offset the
net deferred tax asset due to uncertainty of generating future taxable income.
The Company's income tax expenses for the nine months ended June 30, 2000 and
the year ended September 30, 1999 differed from the statutory federal rate of
34% as follows:
<TABLE>
<CAPTION>
June 30, September 30,
2000 1999
---- ----
<S> <C> <C>
Statutory rate applied to
loss before income taxes $ (50,046) $ (44,896)
Increase (decrease) in
income taxes net of
federal income tax effect (4,371) (3,922)
Increase in valuation
allowance 54,417 49,369
Other -- (551)
-------- ---------
Income Tax Expense $ -- $ --
========= ==========
</TABLE>
NOTE 6 DIVESTITURES
On June 30, 2000 the Company sold its golf related assets to Theodore and Sylvia
Efimov and Bryan and Patricia Efimov for the return of the following equity:
500,000 shares of Common Stock
200,000 shares of Preferred stock, Series II
15,026 shares of Preferred Stock, Series I
The Company recorded a non-cash pre-tax book loss of $19,759. Management
intends to retire these shares. The golf business had net sales of $23,668 and
a net loss of $27,891 at June 30, 2000.
10
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NOTE 7 GOING CONCERN UNCERTAINTY
The ability of the Company to continue as a going concern is dependent on its
ability to raise the necessary capital to finance the implementation of its
business plan. The financial statements do not include any adjustments to
reflect the possible effects on the recoverability and classification of assets
or classification of liabilities which may result from the possible inability of
the Company to continue as a going concern. Management is seeking and will
continue to seek to raise the working capital to assure the Company's viability,
through private or public equity offerings and/or debt financing.
11
<PAGE>
Item 2. Management's Discussion and Analysis or
Plan of Operation.
PLAN OF OPERATIONS
--------------------
On June 30, 2000, the Company transferred ownership of its operating
subsidiary, The Golfing Network.Com, Inc., to NetWeb's former president, Bryan
Efimov, and members of his family, in exchange for all shares in NetWeb owned by
such individuals. That subsidiary represented the Company's sole operating
entity. As a result of that transfer, the Company no longer has an active
operation.
Management's current business plan is to continue to focus on
acquisitions and/or strategic partnerships with Internet related companies,
to develop the Company's Internet-related assets and to continue to seek
ways to enhance shareholder value.
The Company intends to continue to seek financing in the form of
equity, debt or strategic partnering to carry out its business plan.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not a party to any lawsuit, litigation or regulatory
proceeding of any kind, filed, pending or threatened.
Item 2. Changes in Securities and Use of Proceeds.
During the quarter ended June 30, 2000, the Company did not issue
any securities in transactions not registered under the Securities Act of 1933.
In July 2000, the Company, by resolution of the Board of Directors, eliminated
the time restriction on the conversion of its Series I Preferred Stock into
shares of Common Stock.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Events
On June 30, 2000, the Company transferred ownership of its
wholly-owned operating subsidiary, The Golfing Network.Com, Inc., to its former
president and members of his family in exchange for all shares of common stock
and preferred stock of NetWeb owned by such individuals. The shares received by
the Company in that transaction, 500,000 shares of common, 200,000 shares of
Series I Preferred and 15,026 shares of Series II Preferred, were all retired by
the Company. The Company recorded a pre-tax book loss of $19,759 in connection
with this transfer.
12
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits
There are no exhibits to this report.
B. Reports on Form 8-K
On July 10, 2000, the Company filed a current report dated June
30, 2000 with respect to the divestiture by NetWeb of its golf related
operations.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereto duly
authorized.
NETWEB ONLINE.COM, INC.
By /s/ Paul M. Galant
-------------------------
Paul M. Galant
Secretary/Treasurer
Date: August 11, 2000
14
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