UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____.
COMMISSION FILE NUMBER: 333-30914
XTREME WEBWORKS
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 88-0394012
---------------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8100 West Sahara, Suite 200
Las Vegas, Nevada 89117
---------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
N/A
---------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant: 1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and 2) has been subject to such filing requirements for
the past 90 days.
YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
At June 30, 2000, there were outstanding 464,992 shares of the
Registrant's Common Stock, $.001 par value.
Transitional Small Business Disclosure Format (check one):
YES [ ] NO [X]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
XTREME WEBWORKS
Financial Reports
(Reviewed)
December 31, 1999
June 30, 2000
TABLE OF CONTENTS
Page
------
Independent Accountant's Report 2
Financial Statements
Balance Sheets 3
Statements of Operations 4
Statements of Stockholders' Equity 5
Statements of Cash Flows 6-7
Notes to Financial Statements 8-10
-1-
<PAGE>
Independent Accountant's Report
To the Board of Directors
Xtreme Webworks
Las Vegas, Nevada
I have reviewed the accompanying balance sheet of Xtreme Webworks as of
June 30, 2000 and the related statements of operations, stockholders' equity,
and cash flows for the six-month period then ended. These financial statements
are the responsibility of the Company's management.
I conducted my review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
Kyle L. Tingle
Certified Public Accountant
October 16, 2000
Henderson, Nevada
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<PAGE>
XTREME WEBWORKS
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 69 $ 1,678
Accounts receivable 22,550 0
Officer receivable 54,032 101,218
Notes receivable 14,290 21,748
Prepaid assets 0 0
----------- -----------
TOTAL CURRENT ASSETS $ 90,941 $ 124,644
PROPERTY AND EQUIPMENT, NET $ 2,400 $ 2,708
NON-MARKETABLE SECURITIES $ 49,100 $ 72,330
----------- -----------
TOTAL ASSETS $ 142,441 $ 199,682
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 9,046 $ 0
Accrued liabilities 7,379 0
Subscriptions collected in advance 25,000 31,000
----------- -----------
TOTAL CURRENT LIABILITIES $ 41,425 $ 31,000
LONG-TERM DEBT $ 0 $ 0
STOCKHOLDERS' EQUITY
Common stock: $.001 par value
authorized 50,000,000 shares;
issued and outstanding
334,436 shares at December 31, 1999; $ 334
464,992 shares at June 30, 2000; $ 465
Additional Paid in Capital $ 464,993 $ 334,101
Accumulated deficit (364,442) (165,753)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY $ 101,016 $ 168,682
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 142,441 $ 199,682
=========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
-3-
<PAGE>
XTREME WEBWORKS
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES $ 79,669 $ 17,228 $ 118,934 $ 22,165
INTEREST INCOME 1,519 2,836 3,918 5,228
----------- ----------- ----------- -----------
$ 81,188 $ 20,064 $ 122,852 $ 27,393
OPERATING EXPENSES
Selling, general and administrative $ 176,201 $ 26,825 $ 298,003 $ 46,169
Depreciation 154 49 308 98
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES $ 176,355 $ 26,874 $ 298,311 $ 46,267
----------- ----------- ----------- -----------
(LOSS) FROM OPERATIONS $ (95,167) $ (6,810) $ (175,459) $ (18,874)
OTHER INCOME (EXPENSE)
Loss on non-marketable securities $ (23,230) $ 0 $ (23,230) $ 0
Interest expense $ 0 $ 0 $ 0 $ 0
----------- ----------- ----------- -----------
(LOSS) BEFORE INCOME TAXES $ (118,397) $ (6,810) $ (198,689) $ (18,874)
Income Taxes $ 0 $ 0 $ 0 $ 0
----------- ----------- ----------- -----------
NET PROFIT (LOSS) $ (118,397) $ (6,810) $ (198,689) $ (18,874)
=========== =========== =========== ===========
NET PROFIT (LOSS) PER SHARE $ (0.2746) $ (0.0268) $ (0.4880) $ (0.0743)
=========== =========== =========== ===========
Average Number of Shares
of Common Stock Outstanding 431,103 253,986 407,145 253,986
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
-4-
<PAGE>
XTREME WEBWORKS
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the period from inception to December 31, 1998, the year ended
December 31, 1999 and the six months ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Common Stock
---------
Number Additional
of Paid-In Accumulated
Shares Amount Capital (Deficit)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1998 253,986 $ 254 $ 253,732 $ (83,108)
Various 1999 dates 80,450 $ 80 $ 80,369
Issued for cash
Net (Loss), 12-31-99 $ (82,145)
----------- ----------- ----------- -----------
Balance at December 31, 1999 334,436 $ 334 $ 334,101 $ (165,753)
January 1, 2000
Common stock issued for cash 31,000 $ 31 $ 30,969
January 1, 2000
Issued for services 17,750 $ 18 $ 17,732
May 8, 2000, issued for cash 52,800 $ 53 $ 52,747
May 8, 2000, issued for service 29,473 $ 29 $ 29,444
Net (Loss), 06-30-00 $ (198,689)
----------- ----------- ----------- -----------
Balance at June 30, 2000 465,459 $ 465 $ 464,993 $ (364,442)
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
-5-
<PAGE>
XTREME WEBWORKS
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities
Cash received from customers $ 59,419 $ 17,228 $ 96,384 $ 22,165
Cash paid to suppliers and vendors (130,890) (26,825) (234,354) (46,169)
----------- ----------- ----------- -----------
Interest received
Net cash provided by (used in)
operating activities $ (71,471) $ (9,597) $ (137,970) $ (24,004)
Cash Flows From Investing Activities
Net borrowings (payments to)
related parties $ 41,161 $ (5,100) $ 58,561 $ (6,641)
Purchase of equipment 0 (450) 0 (450)
Purchase of investment securities 0 0 0 0
----------- ----------- ----------- -----------
Net cash provided by (used in)
investing activities $ 41,161 $ (5,550) $ 58,561 $ (7,091)
Cash Flows From Financing Activities
Issuance of common stock $ 52,800 $ 33,850 $ 52,800 $ 33,850
Proceeds from subscriptions in advance (26,600) (17,350) 25,000 0
----------- ----------- ----------- -----------
Net cash provided by financing activities $ 26,200 $ 16,500 $ 77,800 $ 33,850
Net increase (decrease) in cash $ (4,110) $ 1,353 $ (1,609) $ 2,755
Cash and cash equivalents
at beginning of period $ 4,179 $ 1,898 $ 1,678 $ 496
----------- ----------- ----------- -----------
Cash and cash equivalents
at end of period $ 69 $ 3,251 $ 69 $ 3,251
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements
-6-
<PAGE>
XTREME WEBWORKS
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Reconciliation of net loss to net cash (used in)
operating activities
Net loss $ (118,397) $ (6,810) $ (198,689) $ (18,874)
Adjustments to reconcile net (loss) to cash
(used in) operating activities:
Depreciation 154 49 308 98
Loss on write-off of non-marketable securities 23,230 0 23,230 0
Stock issued as compensation 29,473 0 47,224 0
Change in assets and liabilities
(Increase) in accounts receivable (10,250) 0 (22,550) 0
(Increase) decrease in officers
and notes receivable (1,519) (2,836) (3,918) (5,229)
Decrease in prepaid assets 1,500 0 0 0
Increase in accounts payable 4,338 0 9,046 0
Increase in accrued liabilities 0 0 7,379 0
----------- ----------- ----------- -----------
Net cash provided by (used in)
operating activities $ (71,471) $ (9,597) $ (137,970) $ (24,004)
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
-7-
<PAGE>
XTREME WEBWORKS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. Nature of Business and Significant Accounting Policies
------------------------------------------------------
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Regulation
S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements.
Nature of business
------------------
Xtreme Webworks ("Company") was organized August 14, 1994 under the
laws of the State of Nevada, under the name Shogun Investment Group,
Ltd. The Company designs and hosts Internet websites, and designs and
publishes online and printed newsletters. On May 10, 1998, the Company
changed it name to Xtreme Webworks.
A summary of the Company's significant accounting policies is as
follows:
Estimates
---------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Cash
----
For the Statements of Cash Flows, all highly liquid investments with
maturity of three months of less are considered to be cash equivalents.
There were no cash equivalents as of June 30, 2000 and December 31,
1999.
Income taxes
------------
Deferred taxes are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets
and liabilities and their tax basis. Deferred tax assets are reduced by
a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted
for the effect of changes in tax laws and rates on the date of
enactment.
Due to the inherent uncertainty in forecasts of future events and
operating results, the Company has provided for a valuation allowance
in an amount equal to gross deferred tax assets resulting in no net
deferred tax assets at June 30, 2000 and December 31, 1999.
-8-
<PAGE>
XTREME WEBWORKS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. Nature of Business and Significant Accounting Policies (continued)
------------------------------------------------------------------
Property and Equipment
----------------------
Property and Equipment is stated at cost. Depreciation is recorded
using the straight line method over the useful life of the assets of
seven years.
Officer and Notes Receivable
----------------------------
Officer receivables represent advances to directors or officers of the
Company. Compensation to the officers are expensed as services are
performed. The receivables bear an interest rate of 10% per annum.
Notes receivable represents loans companies controlled or owned by
directors or officers of the Company. The notes are unsecured and due
on demand by the Company. The notes bear an interest rate of 10% per
annum.
Non-Marketable Securities
-------------------------
The Company holds stock interest in non-marketable securities,
primarily in non-public companies controlled or owned by directors or
officers of the Company. Investments are held at cost.
Revenue Recognition
-------------------
The Company hosts web sites or places advertising on the internet for
clients. These services require the payment of monthly or quarterly
fees by the customers. Revenues are recognized on a monthly basis, as
the fees become due or non-refundable to the client. The Company also
designs web sites and assists in publishing both online and printed
newsletters. Revenue for these services is recognized as services are
performed and accepted by the client and collection of the resulting
receivable is reasonably assured.
Software Development Costs
--------------------------
Website development and other computer software costs are primarily
marketed for use by clients. The Company expenses these costs in the
period incurred in accordance with Statement of Financial Accounting
Standard (SFAS) No. 86, "Accounting for the Costs of Computer Software
to be Sole, Leased, or Otherwise Marketed."
Note 2. Stockholders' Equity
--------------------
Common stock
------------
The authorized common stock of the Company consists of 50,000,000
shares with par value of $0.001. The company had stock issued and
outstanding on June 30, 2000, 465,459 shares; June 30, 1999, 253,986
shares; and December 31, 1999, 334,436 shares. The Company has not
authorized any preferred stock
-9-
<PAGE>
XTREME WEBWORKS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Net loss per common share
-------------------------
Net loss per share is calculated in accordance with SFAS No. 128,
"Earnings Per Share." The weighted-average number of common shares
outstanding during each period is used to compute basic loss per share.
Diluted loss per share is computed using the weighted averaged number
of shares and dilutive potential common shares outstanding. Dilutive
potential common shares are additional common shares assumed to be
exercised.
Basic net loss per common share is based on the weighted average number
of shares of common stock outstanding. Weighted average number of
shares outstanding for the six months ended June 30, 2000 and 1999 were
407,145 and 253,986 respectively. Weighted average number of shares
outstanding for the three months ending June 30, 2000 and 1998 were
431,103 and 253,986 respectively. As of June 30, 2000 and 1999 and
December 31, 1999, the Company had no dilutive potential common shares.
Note 3. Related Party Transactions
--------------------------
During the six months ended June 30, 2000, the Company published an
online magazine for a related party and began design work on an
internet web site for the same related party. Related party revenues
and expenses recorded for the six month period ending June 30, 2000
were $100,180 and $77,662, respectively. Related party revenues and
expenses for the three month period ending June 30, 2000 were $62,680
and 53,572, respectively. Accounts receivable from related parties
included in trade receivables is $20,000 at June 30, 2000.
Note 4. Subsequent Event
-----------------
On September 5, 2000, the Board of Directors approved a forward stock
split of three and one-half to one, increasing the number of shares
outstanding to 4,002,317.
-10-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
GENERAL OVERVIEW
Xtreme Webworks (the "Company") is a growing Internet business promotion
company, specializing in the travel and entertainment business. As a commercial
website marketing company, it focuses on Internet-based technology solutions for
small to mid-sized businesses. The Company performs website hosting, design and
development, as well as publishing assistance for online and printed
newsletters.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED
JUNE 30, 1999
REVENUES. For the three months ended June 30, 2000, revenues were
approximately $79,000, an increase of approximately $63,000, or 370%, versus
revenues of approximately $17,000 for the three months ended June 30, 1999. The
increase in revenues for the 2000 period was due primarily to an increase in the
Company's price for its product, and additional clients, primarily creating
publications for World Stock Watch, a financial publication.
OPERATING EXPENSES. Operating expenses, as a percentage of revenues,
increased to 221% for the three months ended June 30, 2000 as compared to 156%
for the three months ended June 30, 1999. This increase in operating expenses
for the three months ended June 30, 2000 occurred primarily due to the increase
of research and development personnel, production equipment and software, and
outpacing new accounts.
NET PROFIT (LOSS). Net loss for the three months ended June 30, 2000
increased by approximately $111,600 from the comparable period in the prior year
as a result of the aforementioned increase in overhead expenses due to expansion
of the Company.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED
JUNE 30, 1999
REVENUES. For the six months ended June 30, 2000, revenues were
approximately $119,000, an increase of approximately $97,000, or 441%, versus
revenues of approximately $22,000 for the six months ended June 30, 1999. The
increase in revenues for the 2000 period was due primarily to improvement of the
Company's product, resulting in increased product cost and the building of
clientele, primarily the publication of two financial publications for World
Stock Watch, a financial publication.
OPERATING EXPENSES. Operating expenses, as a percentage of revenues,
increased to 250% for the six months ended June 30, 2000 as compared to 208% for
the six months ended June 30, 1999. This increase in operating expenses for the
six months ended June 30, 2000 occurred primarily due to the expansion of the
Company's resources, including its staff and research and development
operations.
-11-
<PAGE>
NET PROFIT (LOSS). Net loss for the six months ended June 30, 2000
increased by approximately $180,000 from the comparable period in the prior year
as a result of the aforementioned increase in overhead expenses due to the
expansion of the Company's product and services.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW. Management believes that the Company will be able to raise
additional capital through the sale of stocks or procurements of loans in order
to provide sufficient liquidity on a short-term basis to continue expansion. On
a long-term basis, management of the Company believes that, depending on future
cash flow from operations, the Company may be required to secure additional
financing.
ASSETS AND LIABILITIES. As of June 30, 2000, the Company had assets of
approximately $142,000, compared to $200,000 as of December 31, 1999. This
decrease was due primarily to the decrease in Officer receivables and decrease
in non-marketable securities. The Company's current liabilities increased from
approximately $31,000 as of December 31, 1999 to $41,425 as of June 30, 2000,
due primarily to an increase in accounts payable and accrued liabilities
resulting from expansion of the Company.
STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included herein contains statements that may be
considered forward-looking, such as statements relating to anticipated
performance and financing sources. Any forward-looking statement made by the
Company necessarily is based upon a number of estimates and assumptions that,
while considered reasonable by the Company, is inherently subject to significant
business, economic and competitive uncertainties and contingencies, many of
which are beyond the control of the Company, and are subject to change. Actual
results of the Company's operations may vary materially from any forward-looking
statement made by or on behalf of the Company. Forward-looking statements should
not be regarded as a representation by the Company or any other person that the
forward-looking statements will be achieved. Undue reliance should not be placed
on any forward-looking statements. Some of the contingencies and uncertainties
to which any forward-looking statement contained herein is subject include, but
are not limited to, those relating to dependence on existing management,
Internet regulation, leverage and debt service, domestic or global economic
conditions and changes in federal or state tax laws or the administration of
such laws.
-12-
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit No. Description
---------- -----------------------
27.1 Financial Data Schedule
99.1 Financial Statements (December 31, 1998;
December 31, 1999;
April 30, 2000)
(b) Reports on Form 8-K
The Company filed a report on Form 8-K on October 17, 2000
regarding a change of accountants.
-13-
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
XTREME WEBWORKS
Date: October 17, 2000 By: /s/ Shaun Hadley
-------------------------
SHAUN HADLEY
PRESIDENT
Date: October 17, 2000 By: /s/ Paul Hadley
-------------------------
PAUL HADLEY
SECRETARY OF THE BOARD
-14-
<PAGE>
EXHIBIT 99.1
XTREME WEBWORKS
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1998
December 31, 1999
April 30, 2000
TABLE OF CONTENTS
Page
------
Independent Auditor's Report 1
Financial Statements
Balance Sheets 2
Statements of Operations 3
Statements of Stockholders' Equity 4
Statements of Cash Flows 5-6
Notes to Financial Statements 7-9
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Xtreme Webworks
Las Vegas, Nevada
I have audited the accompanying balance sheets of Xtreme Webworks (a
development stage company) as of April 30, 2000, December 31, 1999 and December
31, 1998 and the related statements of operations, stockholders' equity, and
cash flows for each of the years then ended and the four month period ended
April 30, 2000. 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 audit.
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 audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Xtreme Webworks (A
Development Stage Company) as of April 30, 2000, December 31, 1999 and December
31, 1998, and the results of its operations and cash flows for the years then
ended and the period ended April 30, 2000, in conformity with generally accepted
accounting principles.
Kurt D. Saliger
Certified Public Accountant
May 16, 2000
Las Vegas, Nevada
-1-
<PAGE>
XTREME WEBWORKS
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
April 30, December 31, December 31,
2000 1999 1998
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 4,055 $ 1,678 $ 496
Accounts receivable 17,200 0 0
Officer receivable 70,454 101,218 73,633
Notes receivable 15,009 21,748 24,000
Prepaid assets 1,500 0 0
----------- ----------- -----------
TOTAL CURRENT ASSETS $ 108,218 $ 124,644 $ 98,129
PROPERTY AND EQUIPMENT, NET $ 2,503 $ 2,708 $ 394
NON-MARKETABLE SECURITIES $ 72,330 $ 72,330 $ 72,355
----------- ----------- -----------
TOTAL ASSETS $ 183,051 $ 199,682 $ 170,878
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 6,015 $ 0 $ 0
Accrued liabilities 7,379 0 0
Subscriptions collected in advance 61,600 31,000 0
----------- ----------- -----------
TOTAL CURRENT LIABILITIES $ 74,994 $ 31,000 $ 0
LONG-TERM DEBT $ 0 $ 0 $ 0
STOCKHOLDERS' EQUITY
Common stock: $.001 par value;
authorized 50,000,000 shares;
issued and outstanding
253,986 shares at December 31, 1998 $ 254
334,436 shares at December 31, 1999; $ 334
383,186 shares at April 30, 2000; $ 383
Additional Paid In Capital $ 382,802 $ 334,101 $ 253,732
Accumulated deficit during development stage $ (275,128) $ (165,753) $ (83,108)
----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY $ 108,057 $ 168,682 $ 170,878
----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 183,051 $ 199,682 $ 170,878
=========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
-2-
<PAGE>
XTREME WEBWORKS
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the four months For the year August 14, 1994
ended April 30 ended December 31 (inception) to
April 30,
2000 1999 (unaudited) 1999 1998 2000
----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
REVENUES $ 48,541 $ 8,227 $ 30,824 $ 20,351 $113,972
INTEREST INCOME 2,898 3,224 9,442 6,541 23,970
----------------- ----------------- ----------------- ----------------- -----------------
$ 51,439 $ 11,451 $ 40,266 $ 26,892 $137,942
OPERATING EXPENSES
Selling, general and administrative $160,608 $ 24,719 $122,296 $ 47,154 $411,264
Depreciation 205 66 615 197 1,806
----------------- ----------------- ----------------- ----------------- -----------------
TOTAL OPERATING EXPENSES $160,814 $ 24,785 $122,911 $ 47,351 $413,070
----------------- ----------------- ----------------- ----------------- -----------------
(LOSS) FROM OPERATIONS $(109,375) $ (13,334) $ (82,645) $ (20,460) $(275,128)
OTHER INCOME (EXPENSE)
Gain on sales of assets 0 0 0 0 0
Interest expense 0 0 0 0 0
----------------- ----------------- ----------------- ----------------- -----------------
(LOSS) BEFORE INCOME TAXES $(109,375) $ (13,334) $ (82,645) $ (20,460) $(275,128)
Income Taxes 0 0 0 0 0
----------------- ----------------- ----------------- ----------------- -----------------
NET PROFIT (LOSS) $(109,375) $ (13,334) $ (82,645) $ (20,460) $(275,128)
================= ================= ================= ================= =================
NET PROFIT (LOSS) PER SHARE $ (0.2854) $ (0.0525) $ (0.2947) $ (0.1079) $ (1.3544)
================= ================= ================= ================= =================
Average Number of Shares
of Common Stock Outstanding 383,186 253,986 280,428 189,565 203,136
================= ================= ================= ================= =================
</TABLE>
See Accompanying Notes to Financial Statements.
-3-
<PAGE>
XTREME WEBWORKS
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the period from inception to December 31, 1997, the years ended
December 31, 1999 and 1998 and the four months ended April 30, 2000
<TABLE>
<CAPTION>
Common Stock (Deficit)
------------- Additional Accumulated
Number of Paid-In During
Shares Amount Capital Development Stage
------------------ ------------------ ------------------- ------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1997 183,586 $ 184 $ 183,402 $ (62,648)
Various 1998 dates
Issued for cash 70,400 $ 70 $ $70,330
Net (Loss), 12-31-98 (20,460)
------------------ ------------------ ------------------- ------------------
Balance at December 31, 1998 253,986 $ 254 $ 253,732 $ (83,108)
Various 1999 dates
Issued for cash 80,450 $ 80 $80,369
Net (Loss), 12-31-99 (82,145)
------------------ ------------------ ------------------- ------------------
Balance at December 31, 1999 334,436 $ 334 $ 334,101 $(165,753)
January 1, 2000
Common stock issued for cash 31,000 $ 31 $30,969
January 1, 2000
Issued for services 17,750 $ 18 $17,732
Net (Loss), 04-30-00 (109,375)
------------------ ------------------ ------------------- ------------------
Balance at April 30, 2000 383,186 $ 383 $ 382,802 $(275,128)
================== ================== =================== ==================
</TABLE>
See Accompanying Notes to Financial Statements.
-4-
<PAGE>
XTREME WEBWORKS
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the four months For the year August 14, 1994
ended April 30 ended December 31 (inception) to
April 30,
2000 1999 1999 1998 2000
(unaudited)
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Cash Flows From Operating Activities
Cash received from customers $ 41,341 $ 8,227 $ 30,824 $ 20,351 $ 106,771
Cash paid to suppliers and vendors (140,964) (4,719) (122,296) (47,155) (353,630)
Interest received 734
--------------- --------------- --------------- --------------- ---------------
Net cash provided by (used in) $ (99,623) $ 3,508 $ (91,472) $ (26,804) $(246,125)
operating activities
Cash Flows From Investing Activities
Net borrowings (payments to) $ 40,400 $ (22,840) $ (15,866) $ (43,208) $ (62,227)
related parties
Purchase of equipment 0 0 (2,930) 0 (4,309)
Purchase of investment securities 0 0 0 0 (72,330)
--------------- --------------- --------------- --------------- ---------------
Net cash provided by (used in) $ 40,400 $ (22,840) $ (18,796) $ (43,208) $(138,866)
investing activities
Cash Flows From Financing Activities
Issuance of common stock $ 0 $ 0 $ 80,450 $ 70,400 $296,446
Proceeds from subscriptions in advance 61,600 20,350 3,100 0 92,600
--------------- --------------- --------------- --------------- ---------------
Net cash provided by financing $ 61,600 $ 20,350 $111,450 $ 70,400 $389,046
activities
Net increase (decrease) in cash $ 2,377 $ 1,018 $ 1,182 $ 388 $ 4,055
Cash and cash equivalents
at beginning of period $ 1,678 $ 496 $ 496 $ 108 $ 0
--------------- --------------- --------------- --------------- ---------------
Cash and cash equivalents
at end of period $ 4,055 $ 1,514 $ 1,678 $ 496 $ 4,055
=============== =============== =============== =============== ===============
</TABLE>
See Accompanying Notes to Financial Statements
-5-
<PAGE>
XTREME WEBWORKS
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the four months For the year August 14, 1994
ended April 30 ended December 31 (inception) to
April 30,
2000 1999 1999 1998 2000
(unaudited)
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Reconciliation of net loss to net cash
(used in) operating activities
Net loss $(109,375) $ (13,334) $ (82,645) $(20,460) $ (275,128)
Adjustments to reconcile net (loss) to
cash (used in) operating activities:
Depreciation 205 66 615 197 1,806
Stock issued as compensation 17,751 0 0 0 55,491
Change in assets and liabilities
(Increase) in accounts receivable (17,200) 0 0 0 (17,200)
(Increase) decrease in officers and
notes receivable (2,898) 16,776 (9,442) (6,541) (22,988)
(Increase) in prepaid assets (1,500) 0 0 0 (1,500)
Increase in accounts payable 6,015 0 0 0 6,015
Increase in accrued liabilities 7,379 0 0 0 7,379
--------------- --------------- --------------- --------------- ---------------
Net cash provided by (used in)
operating activities $ (99,623) $ 3,508 $ (91,472) $(2,103) $(246,125)
=============== =============== =============== =============== ===============
</TABLE>
See Accompanying Notes to Financial Statements.
-6-
<PAGE>
Xtreme Webworks
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Nature of Business and Significant Accounting Policies
Nature of business
Xtreme Webworks ("Company") was organized August 14, 1994 under the laws of the
State of Nevada, under the name Shogun Investment Group, Ltd. The Company
designs and hosts Internet websites, and designs and publishes online and
printed newsletters. On May 10, 1998, the Company changed it name to Xtreme
Webworks. The Company currently has insignificant operations and, in accordance
with Statement of Financial Accounting Standard (SFAS) No. 7, "Accounting and
Reporting by Development Stage Enterprises," is considered a development stage
company. In the development stage, all pre-operating costs have been expensed as
incurred.
A summary of the Company's significant accounting policies is as follows:
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Interim Financial Statements
The financial statements for the four months ended April 30, 1999 are unaudited
and should be read in conjunction with the Company's annual financial statements
for the years ended December 31, 1999 and 1998 and the four months ended April
30, 2000. Such interim statements have been prepared in conformity with the
rules and regulations of the Securities and Exchange Commission. Certain
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations pertaining to interim financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation have been included. The
results of operations of any interim period are not necessarily indicative of
the results of operations for the full year.
Cash
For the Statements of Cash Flows, all highly liquid investments with maturity of
three months of less are considered to be cash equivalents. There were no cash
equivalents as of April 30, 2000, April 30, 1999, December 31, 1999, December
31, 1998.
Income taxes
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax basis. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for the
effect of changes in tax laws and rates on the date of enactment.
-7-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Nature of Business and Significant Accounting Policies (continued)
Due to the inherent uncertainty in forecasts of future events and operating
results, the Company has provided for a valuation allowance in an amount equal
to gross deferred tax assets resulting in no net deferred tax assets at April
30, 2000, April 30, 1999, December 31, 1999 and December 31, 1998.
Property and Equipment
Property and Equipment is stated at cost. Depreciation is recorded using the
straight line method over the useful life of the asset of seven years.
Officer and Notes Receivable
Officer receivables represent advances to directors or officers of the Company.
Compensation to the officers are expensed as services are performed. The
receivables bear an interest rate of 10% per annum.
Notes receivable represents loans companies controlled or owned by directors or
officers of the Company. The notes are unsecured and due on demand by the
Company. The notes bear an interest rate of 10% per annum.
Non-Marketable Securities
The Company holds stock interest in non-marketable securities, primarily in
non-public companies controlled or owned by directors or officers of the
Company. Investments are held at cost.
Revenue Recognition
The Company hosts web sites or places advertising on the internet for clients.
These services require the payment of monthly or quarterly fees by the
customers. Revenues are recognized on a monthly basis, as the fees become due or
non-refundable to the client. The Company also designs web sites and assists in
publishing both online and printed newsletters. Revenue for these services is
recognized as services are performed and accepted by the client and collection
of the resulting receivable is reasonably assured.
Software Development Costs
Website development and other computer software costs are primarily marketed for
use by clients. The Company expenses these costs in the period incurred in
accordance with Statement of Financial Accounting Standard (SFAS) No. 86,
"Accounting for the Costs of Computer Software to be Sole, Leased, or Otherwise
Marketed."
Stockholders' Equity
Common stock
The authorized common stock of the Company consists of 50,000,000 shares with
par value of $0.001. The company had stock issued and outstanding on April 30,
2000, 383,186 shares; April 30, 1999, 253,986 shares; December 31, 1999, 334,436
shares; December 31, 1998 253,986 shares. The Company has not authorized any
preferred stock.
-8-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net loss per common share
Net loss per share is calculated in accordance with SFAS No. 128, "Earnings Per
Share." The weighted-average number of common shares outstanding during each
period is used to compute basic loss per share. Diluted loss per share is
computed using the weighted averaged number of shares and dilutive potential
common shares outstanding. Dilutive potential common shares are additional
common shares assumed to be exercised.
Basic net loss per common share is based on the weighted average number of
shares of common stock outstanding. Weighted average number of shares
outstanding for the four months ended April 30, 2000 and 1999 were 383,186 and
253,986 respectively. Weighted average number of shares outstanding for the
years ending December 31, 1999 and 1998 were 280,428 and 189,565 respectively.
Weighted average number of shares outstanding for the period from date of
inception through April 30, 2000 were 203,136 shares. As of April 30, 2000 and
1999 and December 31, 1999 and 1998, the Company had no dilutive potential
common shares.
Note 3. Related Party Transactions
During the four months ended April 30, 2000, the Company published an online
magazine for a related party and began design work on an internet web site for
the same related party. Related party revenues and expenses recorded for the
period ending April 30, 2000 were $37,500 and 24,090, respectively. Accounts
receivable from related parties included in trade receivables is $15,000 at
April 30, 2000.
Note 4. Restatement
In October 2000, the Company discovered accounting errors in the proper
treatment of certain transactions. As a result of these findings, the Company's
financial statements reflect amounts that are restated from those previously
reported in its interim report for the four months ended April 30, 2000, and the
fiscal years ended December 31, 1999 and 1998. Accumulated deficit at December
31, 1997 have been restated by net expenses of $34,233 to correct adjustments to
common stock. Net loss for the four months ended April 30, 2000 and the years
ended December 31, 1999 and 1998 were restated by $1,935, $42,927, and $2,001,
respectively for additional expenses.
-9-
<PAGE>
