UNITED STATES 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 December 31, 1997.
[ ] TRANSACTION REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transaction period from To
Commission File Number 0-14213
GLOBAL VENTURE FUNDING, INC.
(Name of small business issuer in its charter)
Colorado 84-0990371
(State or other jurisdiction (IRS Employer
of incorporation Identification No.)
or organization)
6965 El Camino Real, Suite 105-279, Carlsbad, CA 92009
(Address of principal executive offices)
Issuer's telephone number (760) 436-5485
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 issuer was
required to file such report), 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.
Class
Outstanding at January 31, 1997
Common Stock $.0001 par value 1,676,373
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GLOBAL VENTURE FUNDING, INC.
BALANCE SHEETS
December 31, September 30,
1997 1997
ASSETS (Unaudited) (Audited)
Current assets:
Cash $ 3,000 $ 1,700
Prepaid expenses
and Other Assets 48,100 28,000
Total current assets 51,100 29,700
Plant and Equipment
(Note 2) 36,200 36,200
Investment in and
advances to unconsolidated
subsidiary (Note 4) --
Deferred Tax Assets
Total assets $ 87,300 $ 65,900
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable
(Note 3) $ 18,500 $ 75,400
Accounts payable and
accrued liabilities 39,000 88,300
Net Liabilities of
discontinued operation
(Note 4) 76,900
Total current liabilities 57,500 240,600
Long-term debt, related parties
Stockholders' deficit (Note 5):
Convertible preferred stock, $.10 par value;
authorized 20,000,000 shares:
Series II; authorized 500,000 shares; issued
and outstanding 22,506 and 22,519 shares
(aggregate liquidation preference of $22,506
and $ 22,519) 2,252 2,300
Series B; authorized 500,000 shares; issued
and outstanding 18,655 and 18,655 shares
(aggregate liquidation preference of $18,655
and $18,655) 1,866 1,900
Series C; authorized 50,000 shares; issued
and outstanding 11,840 and 3,240 shares
(aggregate liquidation preference of $1,184,000
and $324,000) 654 300
Series D; authorized 50,000 shares; issued
and outstanding 33,450 and 17,138 shares
(no liquidation reference) 3,345 1,700
Common stock $0001 par value; authorized
150,000,000 shares; issued and outstanding
1,668,054 and 1,447,929 164 200
Additional paid-in capital 2,188,064 1,928,000
Stock options 216,170 187,700
Treasury Stock (1,000) (1,000)
Accumulated defici (2,381,715) (2,295,800)
Total stockholders' surplus/deficit 29,800 (174,700)
Total liabilities and
stockholders' deficit $ 87,300 $ 65,900
=========================================================
GLOBAL VENTURE FUNDING, INC.
STATEMENTS OF OPERATIONS
For the Three
Months Ended Dec 31,
1997 1996
Revenues $ 0 $ 0
Cost of revenues 0 0
Gross profit 0 0
Selling, general, and
administrative expenses 52,760 98,273
Loss from operations (52,760) (98,273)
Other expenses:
Interest expense, related
parties -- (7,141)
Interest expense 33,140
Depreciation
Net loss from continuing
operations before taxes (85,900) (105,414)
Provision for income taxes
Net loss from continuing
operations (85,900) (105,414)
Discontinued operations
Net loss before
extraordinary item (85,900) (105,414)
Extraordinary item
Net loss $ (85,900) $ (105,414)
Net loss per common share
Net Loss $ (0.13) $ (0.40)
Weighted average common
shares outstanding 665,137 145,272
=========================================================
GLOBAL VENTURE FUNDING, INC.
STATEMENTS OF CASH FLOWS
For the Three
Months Ended Dec 31,
1997 1996
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (85,900) $ (105,414)
Depreciation --
Adjustments to reconcile net (loss) to
net cash (used) by operating activities:
(Increase) decrease in:
Inventory --
Stock options exercised 30,000
Accounts receivable &
notes receivable (20,100) --
Prepaids, deposits,
other assets (6,404)
Increase (decrease) in:
Accounts payable (47,460) 16,125
Accrued expenses (1,840) --
Net Liabilities of
discontinued operation (76,900)
Net cash (used) by operating
activities (232,200) (65,693)
Cash flows from financing activities:
Issuance of stock in
exchange for services 290,400 1,501
Proceeds from issuance
of debt 98,500
Repayments of long-term debt (31,789)
Repayments of notes payable (56,900) (3,069)
Net cash provided by
financing activities 233,500 65,143
Cash flows from investing activities
Purchase of leasehold improvements
and equipment (6,225)
INCREASE (DECREASE)
IN CASH 1,300 (6,775)
CASH AT BEGINNING OF PERIOD 1,700 49,800
CASH AT END OF PERIOD $3,000 $ 43,025
Supplemental disclosure of cash flow information
Cash paid for income taxes
Schedule of non-cash investing and financing
activities
Preferred stock issued in
exchange for services $1,500 $
==========================================================
GLOBAL VENTURE FUNDING, INC.
NOTES TO FINANCIAL STATEMENTS
For The Quarter Ended December 31, 1997
1. Basis of presentation and accounting policies:
Organization and basis of presentation:
Global Venture Funding, Inc. (the "Company" or "GVF") was
incorporated in Colorado on December 7, 1984 under the name of
Venture Funding Corporation. The Company was formed for the
purpose of acquiring or merging with a privately held business.
The Company completed its registered offering on form S-18 on
October 17, 1985. The stock was traded in the OTC market.
On May 8, 1992, a "Certificate of Assumed or Trade Name" was
filed with the Colorado Secretary of State to record the trade
name of "Global Venture Funding, Inc." Global Venture Funding
Inc. (GVF) is the name under which the Company transacts its
business. On June 18,1993, the Articles of Incorporation were
amended and the name of the Company was changed to Global
Venture Funding, Inc.
From May 1996 to October 1997, GVF was pursuing opportunities
in the prepaid cellular communications business via an acquired
subsidiary in Atlanta, a national support center in Las
Vegas, and a retail store operation in Houston, TX. The
Atlanta operation was closed in 1996 and the national support
center in 1997. The Houston operation was sold to its existing
management in December 1997 with an effective date of October
31, 1997. The company does not intend to pursue the cellular
communications business in the future.
On July 17, 1997, Robert Brehm became CEO and changed the
direction of the company. The Board of Directors authorized a
one for twenty reverse split of all classes of the stock
effective on August 20, 1997. GVF has a fiscal year ending in
September and is currently building an environmental
conglomerate based upon the microbial technology acquired from
XyclonyX.
In August 30, 1997, GVF acquired XyclonyX, a microbial
technology company with headquarters
in La Jolla, CA. The agreement calls for the exchange of
250,000 shares of the Company's
Common Stock and a commitment of minimum licensing fees to
XyclonyX's technology licensor.
XyclonyX was acquired to capitalize on the prior commercial
success of the existing management
with microbial technology applications in oil recovery,
environmental cleanup, hazardous waste
management and agricultural applications. GVF intends to
operate XyclonyX as a separate profit
center with its own management and technology. During fiscal
1998, GVF intends to create
another subsidiary, West Coast Fermentation Center, which will
cultivate microbial cultures to be
sold to outside licensees and other subsidiaries of GVF. In
November 1997, GVF formed
Sub-Surface Waste Management, a wholly owned subsidiary whose
purpose is to manufacture
and sell the patented Bio-RaptorTM technology licensed from
XyclonyX.
The Company is in the process of arranging and obtaining
private and public financing for
additional equity to provide working capital for current
overhead costs as well as to finance
start-up costs of its West Coast Fermentation Center, XyclonyX,
and Sub-Surface Waste
Management operating subsidiaries.
Consolidated Subsidiaries:
The financial statements include the accounts of the XyclonyX
and the Sub-Surface Waste
Management, Inc. subsidiaries. Both are wholly owned
subsidiaries. All material intercompany
transactions have been eliminated in consolidation.
Prepaid Expenses:
Various consultants have been prepaid for services to be
performed through March 31, 1998.
Income taxes:
The Company has implemented the provisions on SFAS No. 109,
"Accounting for Income
Taxes." SFAS No. 109 requires that income tax accounts be
computed using the liability method.
Deferred taxes are determined based upon the estimated future
tax effects of differences between
the financial reporting and tax reporting bases of assets and
liabilities given the provisions of
currently enacted tax laws. The adoption of this provision by
the Company has not required any
adjustment to the financial statements presented.
Net loss per common share:
Net loss per common share is computed by dividing net loss by
the weighted average number of
shares of common stock and dilutive common stock equivalents
outstanding during the year.
Dilutive common stock equivalents consist of shares issuable
upon conversion of convertible
preferred shares and the exercise of the Company's stock
options (calculated using the treasury
stock method). During 1997 and 1996, common stock equivalents
are not considered in the
calculation of the weighted average number of common shares
outstanding because they would be
anti-dilutive, thereby decreasing the net loss per common
share.
In February 1997, the Financial Accounting Standards Board
issued Financial Accounting
Standards No. 128 ("SFAS 128"), Earnings Per Share, which is
effective for periods ending after
December 15, 1997. At that time, the Company will be required
to change the method currently
used to compute earnings per share and to restate all prior
periods. Under the new requirements
for calculating primary earnings per share, which will be
referred to as basic earnings per share,
the dilutive effect of stock options and warrants will be
excluded. Diluted earning per share as
defined in SFAS 128 is similar to fully diluted earnings per
share as defined in APBO No. 15
"Earnings Per Share". The impact of SFAS 128 on the
calculation of basic and diluted earnings
per share for 1997 and 1996 is not expected to be material.
Pervasiveness of 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.
Fair value of financial instruments:
Based on the borrowing rates currently available to the
Company, the carrying value of long-term
debt, related parties approximates fair value.
2. Property and Equipment
Property and equipment consists principally of a fermentor and
related accessories that were
acquired as part of the Company's acquisition of XyclonyX. As
of December 31, 1997, the assets
have not been placed in service.
3. Notes Payable
Notes payable consists of two unsecured notes due in December
1997. Both of these notes were
paid in January 1998.
4. Business acquisition and discontinued operations:
On August 30, 1997, the Company completed the acquisition of
XyclonyX in a transaction
accounted for in a manner similar to a purchase. In accordance
with accounting principles
associated with a transaction where the acquired company is
considered a promoter in the
founding and organizing of the business, the acquired business
assets were recorded at the
historical cost basis of the predecessor. XyclonyX became a
wholly owned subsidiary of the
Company through the exchange of 250,000 shares of common stock
for all of the outstanding
stock of XyclonyX. XyclonyX was formed on August 14, 1997 and
had no significant
operations prior to its acquisition by the Company.
On October 31, 1997, the Company adopted a formal plan to sell
its Houston, Texas cellular
phone products store. The sale was effective as of October 31,
1997 with the buyer assuming all
liabilities for products or services entered into from November
1, 1997 forward. The assets of
this operation consisted of inventories, deposits and leasehold
improvements.
Assets and liabilities of the discontinued operation consisted
of the following at September 30,
1997:
Inventories $ 2,600
Deposits and other assets 3,700
Leasehold improvements 14,800
Total assets 21,100
Accounts payable and accrued
expenses 98,000
Net liabilities $(76,900)
Net liabilities to be disposed of have been separately
classified in the balance sheet at September
30, 1997 and have been expenses in the quarter ending December
31, 1997.
The disposal of the cellular operation was completed upon the
asset and liability exchange and the
exchange of 80,000 shares of the Company's common stock on
December 30, 1997.
5. Stockholders' Surplus:
On August 20, 1997, the Board of Directors authorized a
one-for-twenty (1:20) reverse stock
split of all shares of outstanding common and preferred stock.
The effect was a reduction in the
number of issued and outstanding common shares from 11,173,898
to 558,695 and preferred
shares from 843,599 to 42,180. All references in the
accompanying financial statements to the
number of common and preferred shares and per share amounts
have been restated to reflect the
above reverse stock split.
Common Stock
As of December 31, 1997, there were 1,668,054 shares of Common
Stock outstanding. Holders
of Common Stock are entitled to one vote for each share held of
record on all matters submitted
to a vote of the stockholders. Holders of Common Stock are
entitled to receive ratably such
dividends as may be declared by the Board of Directors out of
funds legally available therefor. In
the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock
are entitled to share ratably in all assets remaining after
payment of liabilities and the liquidation
preference of any then outstanding Common stock, if any.
Holders of Common Stock have no
right to convert their Common Stock into any other securities.
The Common Stock has no
preemptive or other subscription rights. There are no
redemption or sinking fund provisions
applicable to the Common Stock. All outstanding shares of
Common Stock are, and the Common
Stock to be outstanding upon completion of this Offering will
be, duly authorized, validly issued,
fully paid and non-assessable.
Preferred Stock
The Board of Directors has the authority, without further
action of the stockholders, to issue up
to 20,000,000 shares of non-voting Preferred Stock, $.10 par
value, as follows:
500,000 shares have been designated as Series II, of which
22,506 shares of Series II are currently
issued and remain outstanding. Each share of Series II
preferred stock is entitled to preference
upon liquidation of $1.00 per share for any unconverted shares.
Each Series II preferred share
may be converted to Common stock after a specified holding
period as follows: after one year,
two shares of Common stock; after two years, five shares of
Common stock; after three years, ten
shares of Common stock. In November 1996, the Board of
Directors changed the conversion
schedule as follows : Commencing January 1, 1997, each
shareholder shall be entitled to convert
250 shares (or 5%) of each 5,000 share unit to 2,500 shares of
common stock. The shareholder
shall be entitled to convert the balance of each unit of Series
II Preferred shares at the conversion
rate of 475 shares of each unit during each six-month period
thereafter beginning July 1, 1997.
500,000 shares have been designated as Series B, of which
18,655 shares of Series B are currently
issued and remain outstanding. Each share of Series B preferred
stock is entitled to preference
upon liquidation of $1.00 per share for any unconverted shares.
Each Series B preferred share
may be converted to Common stock after a specified holding
period as follows: after one year,
two shares of Common; after two years, five shares of Common
stock. In November 1996, the
Board of Directors changed the conversion schedule as follows:
Commencing January 1, 1997,
each shareholder shall be entitled to convert 250 shares (or
5%) of each 5,000 share unit to 1,250
shares of common stock. The shareholder shall be entitled to
convert the balance of each unit of
Series B Preferred shares at the conversion rate of 475 shares
of each unit during each six-month
period thereafter beginning July 1, 1997.
50,000 shares have been designated as Series C, of which 11,840
shares of Series C are currently
issued. Each share of Series C preferred stock is entitled to
preference upon liquidation of $100
per share for any unconverted shares, and the liquidation
preference is junior only to that of all
previously issued preferred shares. Each Series C preferred
share may be converted to 100 shares
of Preferred stock after a specified holding period of one
year.
50,000 shares have been designated as Series D, of which 33,450
shares of Series D are currently
issued and remain outstanding. The Series D preferred stock
carries no liquidation preferences
and is subject to forfeiture prior to conversion. Each Series
D preferred share may be converted
to 100 shares of Preferred stock after a specified holding
period of one year.
The Company has reserved 17,500,000 shares of its $.0001 par
value Common stock for
conversion of Preferred stock and exercise of stock options.
The Board of Directors of the Company has authority to issue
all or a portion of the authorized
but unissued preferred stock in one or more series and to fix
the rights, preferences, privileges and
restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of
redemption, liquidation preferences and the number of shares
constituting any series or the
designation of such series. The issuance of Preferred Stock
could adversely affect the voting
power of holders of Common Stock and could have the effect of
delaying, deferring or preventing
a change in control of the Company.
Stock options:
For the period beginning January 1, 1996 and ending December
31, 1996:
On July 26, 1996, the Company issued options to purchase 15,000
common shares to an
individual in exchange for a management consulting agreement
scheduled to terminate on May 26,
1997. The option agreement provides for an exercise price of
$2 per share commencing July 26,
1996 until July 26, 1998 or 24 months after the filing and
acceptance of this issuance with the
Securities and Exchange Commission, whichever date is later.
The number of shares issuable
under the agreement are subject to adjustment to take into
account reorganizations,
recapitalization, mergers or other similar corporate events.
In addition, the Company agreed to
reserve 15,000 shares of its $.0001 par value common stock for
the exercise of this option. This
agreement was valued at $30,000 and was amortized over the life
of the consulting agreement.
These options were exercised during December 1996.
An additional 5,000 shares were issued to a consultant per a
services contract and are exercisable
at $20.00 per share. A prior employee of the company was also
granted an employee stock
option for 5,000 shares at $.50 per share.
For the period beginning January 1, 1997 and ending December
31, 1997:
The Company issued options during the year for consulting
services, fees in connection with
obtaining financing and various other services to employees and
non-employees.
Stock options and warrants summary information:
Activity of options and warrants granted is as follows:
Options and warrants outstanding Weighted
Shares average
exercise price
Balance, December 31, 1995
$ --
Granted
25,000
6.20
Balance December 31, 1996
25,000 6.20
Granted
1,480,400 2.59
Exercised
(15,000)
2.00
Balance December 31, 1997
1,490,400 $ 2.77
Exercisable, December 31, 1997
1,445,400 $ 2.79
The following is a summary of options and warrants outstanding
at December 31, 1997:
Options and warrants outstanding
Options and warrants exercisable
===============================================================
=====
Weighted
Range of Number Average
Weighted Number Weighted
exercise prices Outstanding remaining
average exercisable average
contractual
life exercise price exercise price
(years)
===============================================================
====
$ .10 - .75 342,900 .94
$ 0.61 302,900 $0.68
1 325,000 4.71
1.00 325,000 1.00
2 200,000 4.86
2.00 200,000 2.00
3 200,000 4.86
3.00 200,000 3.00
4 200,000 4.86
4.00 200,000 4.00
5 200,000 4.86
5.00 200,000 5.00
10 3,150 4.10
10.00 3,150 10.00
20 10,000 3.04
20.00 5,000 20.00
60 9,350 1.76
60.00 9,350 60.00
------------ ----------
----------- ----------- -------
1,490,400 3.89
$ 2.77 1,445,400 $ 2.79
===============================================================
======
The Company accounts for stock compensation to non-employees
under the provisions of FAS
123, "Accounting for Stock-Based Compensation." As allowed by
FAS 123, the company has
elected to continue to follow Accounting Principals Board
Opinion No. 25, "Accounting For
Stock Issued To Employees" (APB 25) in accounting for its
employee stock option plans. Under
APB 25, the company does not recognize compensation expense on
the issuance of its stock
options because the option terms are fixed and the exercise
price equals the market price of the
underlying stock on the grant date.
As required by FAS 123, the company has determined the
pro-forma information as if the
company had accounted for stock options under the fair value
method of FAS 123. Had the fair
value method of accounting been applied to the company's stock
option plan, the tax-effected
impact would be as follows:
Quarter ending 12/31/97
Net Income as reported
$ (85,900)
Estimated fair value of the option grants,
net of tax
$ (112,345)
Net Income Adjusted
$ (198,245)
Adjusted net income per share
$ (.30)
The fair value of each option and warrant is estimated as of
the date of the grant using the
Black-Sholes option pricing model with the following
assumptions :
Expected stock price volatility
307.02%
Expected option/warrant lives
1-5 years
Expected dividend yields
--
Risk-free interest rates
5.68 - 6.59%
The weighted average fair value of options/warrants granted was
$.16.
6. Related party transactions:
Licensing agreements (Ending 12/31/96):
During the quarter ended December 31, 1996, the Company entered
into an agreement with
Cellular 99, a Nevada corporation under the control of the
president of the Company, whereby it
obtained an exclusive license to rent cellular phones in the
State of Texas using the proprietary
marketing technology of Cellular 99. The Company exchanged 500
shares of Series D
Convertible Preferred Stock for these licensing rights. These
rights were valued at $1,000 or
$2.00 per share.
Office space and administrative support:
Since July, 1997, the Company is provided office space and
other administrative support services
at a cost of $750 per month by various corporations under the
control of the president of the
Company, a principal stockholder.
Notes payable to related party:
For 12/31/96, Notes payable to a related party consisted of
various notes payable to a Director of
the Company, and a corporation under the control of Director.
For period ending 12/31/97, The
notes were unsecured, and due to related party shareholders in
December 1997. They were paid
in January 1998.
Legal fees:
Certain stockholders of the Company are affiliated with firms
who currently provide or have
provided legal services to the Company in prior years. During
the quarters ended December 31,
1997 and 1996, the outstanding balances due these firms totaled
approximately $(5,072) and
$31,353, respectively. As of December 31, 1997, the Company had
a credit in the firm's trust
account of $5,072.
7 . Extraordinary item:
None this period
PART I - Item 2
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
During Fiscal 1996 and 1997, GVF attempted to enter the prepaid
cellular communications
market with operations of AllCell in Atlanta Georgia, Cellular
99 of Houston and a national
support center in Las Vegas. After numerous attempts at
starting retail cellular operations, and a
failure to raise sufficient operating capital, the company was
on the verge of bankruptcy in July
1997. At that time Robert Brehm took over as President, and
redirected the company into the
environmental technology field with an acquisition of XyclonyX
and out of the unprofitable
cellular operations. For the most part, the operations results
through September 1997 reflect the
significant losses incurred in the cellular operations, the
write-off of Cellular 99 of Houston, and
prepaid consulting contracts attributable to subsidiaries
without revenue in 1997 and to expenses
associated with the change of industry from cellular to
environmental technology. The
conservative nature of the new management with respect to
financial statements, is reflected in the
write-off of any questionable asset and the inclusion of
potential liabilities on the balance sheet.
During the quarter ended December 31, 1997, the Company efforts
were directed to fund raising,
building organizational infrastructure, and selling the
Cellular 99 of Houston assets and starting
environmental technology sales efforts. The company also
formed Sub-Surface Waste
Management, Inc. and its sales efforts resulted in receiving a
letter of intent for Bio-Raptor sales
in an amount of $4,500,000 plus the cost of microbial blends
over a period of three years subject
to certain conditions including the ability to deliver
sufficient microbial blends for operation of the
Bio-Raptors.
The company intends to establish its manufacturing operations
in the second quarter and build
inventory for delivery in subsequent quarters. Currently the
company utilizes existing inventory
acquired with the purchase of XyclonyX and augmented with
blends from outside vendors for its
revenue generating operations which commenced in January, 1998.
Results of Operations
Quarter Ended December 31, 1997 compared to the December 31,
1996.
During the quarter ended December 31, 1996 the Company was
developing its retail store
strategy and had no revenues and an operating loss of
$(98,273). During the quarter ended
December 31, 1997, the Company was developing its manufacturing
plans, raising capital and
orchestrating a strategic plan for its subsidiaries. No sales
were recognized and an operating loss
of $(52,760) was incurred.
Selling, general and administrative (S, G & A) expenses for the
quarter ending on December 31,
1996 totaled $98,273. Selling, general and administrative
expenses were comprised mainly of
legal and accounting expenses arising from the preparation of
SEC reporting forms for public
disclosure, consulting fees, filing fees and general office
expenses incurred in starting up an
on-going operation which has been dormant for several years. S,
G & A expenses for the period
ending December 31, 1997 were comprised of accounting, legal,
and expenses associated with
moving the business from Las Vegas to California.
Interest expense for related parties was $7,141 during the
first quarter of fiscal 1996. The interest
is related to notes payable to related parties. These notes,
due in 18 months from the date of
issuance, bear interest at the rate of 10% per annum. Interest
expense for the quarter ending
December 31, 1997 consisted of interest associated with notes
from investors and shareholders
associated with the turnaround of the business from cellular to
environmental technology. All
notes have been subsequently converted to stock or paid off.
Primarily, as a result of the above mentioned expenses, Net
Losses from Operations decreased by
$19,514 in the quarter ended December 31, 1997 compared to the
quarter ending December 31,
1996.
There was no provision for income taxes in either 1996 or 1997
due to the existence of net
operating loss carry forwards from prior years, and the
likelihood of the Company being able to
utilize these net operating losses in the future.
Net loss per share decreased from $(0.40) to $(0.13) in
December 31, 1997 primarily due to the
increase in the weighted average number of shares outstanding
in December 1997 compared to
December 1996.
The Company experienced losses from operations of $85,900
during the quarter ending December
31, 1997. However, the Company has also achieved a key
milestone by posting a positive
shareholder equity for the first time in many years. This
achievement marks the turning point in
the Company's history and illustrates the confidence investors
have in the company's management
and overall strategic game plan for restarting the
environmental operations acquired with
XyclonyX. In order to implement the company's strategic plan
with its subsidiaries, the Company
is planning on raising additional capital through the issuance
of stock in Global Venture Funding
or its subsidiaries. The funds are targeted to establish the
fermentations manufacturing operation
and the staffing of the sales subsidiaries. The Company is
also seeking new business
opportunities that may be acquired or developed internally.
Based on the current status of the
Company, additional capital will be required in order for the
Company to complete any business
acquisitions or development, or to maintain their ongoing
operations.
Liquidity and Capital Resources
Cash and equivalents totaled $3,000 and $1,700 at December 31,
1997 and September 30, 1997
respectively. During the quarter ending December 31, 1997, net
cash used by operating activities
totaled $232,200 compared to $65,693 in the same period in
1996. Operating activities includes
payments for accounting, legal fees and professional services.
Net Working Capital (Current Assets less Current Liabilities)
was ($6,400) as of December 31,
1997. As of September 30, 1996, net working capital was
$(210,900) including a $76,900
discontinued operation liability which was expensed during the
current quarter. The company
was able to convert most notes payable and much of the accounts
payable to stock at values of
approximately $1.00 per share during the quarter ending
December 31, 1997. This conversion
effort significantly reduced the outstanding current
liabilities.
The Company registered 210,000 shares of common stock for
services provided to the Company
or to be provided to the Company in the future. 100,000
shares were used to payoff accounts
payable debt of $95,000 and the balance was used to prepay
services in the amount of $47,500.
To date the Company has financed its operations principally
through borrowings and private
placements of equity securities and debt. During the second
quarter of 1997, the Company raised
$63,500 in a private placement for which series C, Preferred
stock was issued for 2,670 shares.
Net proceeds to the company after placement fee's was $62,900
The Company will need
additional capital to continue its existence and will endeavor
to raise sufficient funds through the
sale of shares, or other means.
Non-cash investing and financing activities
For the quarter ending December 31, 1997:
Debt to equity conversions.
Eight noteholders with notes totaling $40,000 plus interest at
10% with various maturities from
October 1997 to March 1998, exercised their options to convert
to Series C Preferred stock. The
company issued 800 shares of Series C preferred stock to said
noteholders.
Another noteholder exchanged his note of $10,400 for 120 shares
of Series C Preferred stock.
Several vendors exchanged their invoices totaling $33,174 for
$1,000 cash and 30,000 shares of
restricted common stock.
A preferred shareholder exercised his right to convert Series
II Preferred stock to common stock.
Under the conversion 250 shares of preferred were converted to
125 shares of common stock.
All exchanges were valued at $1.00 per share.
During the quarter, various employees were issued 16,000 shares
of Series D Preferred Stock for
services in lieu of salary. All exchanges were valued at $1.00
per share.
For the period ending December 31, 1996:
During the quarter ended June 30, 1996, the Company entered
into an agreement with Cellular
99, a Nevada corporation under the control of the president of
the Company, whereby it obtained
an exclusive license to rent cellular phones in the State of
Illinois, using the proprietary marketing
technology of Cellular 99. The Company exchanged 10,000 shares
of Series D Convertible
Preferred stock for these licensing rights. These rights were
valued at $1,000 or $.10 per share.
In November of 1996, the Company entered into a similar
agreement with Cellular 99, Inc. for the
State of Texas. The Company issued 10,000 shares of Series D
Preferred Stock to Cellular 99,
Inc. to obtain the exclusive licensing rights to the State of
Texas. The stock was valued at $.10
per share with a total value of $1,000.00.
Future Funding Requirements
The Company's working capital and other capital requirements
during the next year or more will
vary based on a number of factors, including the rate at which
microbial products are shipped and
generate profits, the level of sales and marketing activities
for environmental products, and the
level of effort needed to develop additional distribution
channels to the point of commercial
viability.
Continuation Of Business
In order for the Company to be successful, additional funding
will be required. The Company had
no significant revenues and has paid operating costs from
equity sales since July 19, 1997. The
failure of the company or its subsidiaries to successfully
obtain additional funds may jeopardize its
existence. The company intends to raise additional working
capital by the sale of common stock,
borrowings and/or possible licensing of its developed business
arrangements.
Employees
As of December 31, 1997, the Company had 3 full-time employees.
By September 30, 1998, the
Company expects to significantly increase the number of
employees, principally in microbial
manufacturing operations, sales and marketing and through
acquired operating subsidiaries. The
Company's employees are not represented by a labor union and
the Company believes its
employee relations are good.
On July 18, 1997, Roger Knight resigned as President of the
Company and Conrad Nagel
resigned as Treasurer. On July 18, 1997 the Board of Directors
named Robert C. Brehm as
President and Treasurer. On July 19, 1997 Robert C. Brehm was
elected to Chairman of the
Board to fill the seat vacated by Robert Dolan. On September
12, 1997 Sy Phillips resigned as a
Director, and the Board of Directors appointed Mery Robinson to
fill the place vacated by Mr.
Phillips.
Factors Affecting Future Performance
From time to time, in reports filed with the Securities and
Exchange Commission, in press
releases, and in other communications to shareholders or the
investing public, the Company may
comment on anticipated future financial performance. Such
forward looking statements are
subject to risks and uncertainties, including but not limited
to, the impact of competitive products
and services, technological changes in the Company's industry,
the ability of the Company to
develop and successfully deploy it's products through a
distribution network, the Company's
ability to attract and retain customers, product demand and
market acceptance risks, reliance on
key strategic alliances, fluctuations in operating results,
delays in development of highly complex
products and services and other risks detailed from time to
time in GVF's filing with the Securities
and Exchange Commission. These risks could cause the company's
actual results for 1998 and
beyond to differ materially from those expressed in any forward
looking statements made by, or
on behalf of, the Company.
Although the environmental technology opportunities are
numerous and the Company enjoys
Letters of Intent for its products, the ability to finance,
build and manufacture the microbial blends
has not yet commenced although plans to startup a pilot plant
operation indicate such a plant
could be in operation as soon as June 1998. The Company's
failure to operate such a plant in a
profitable manner could materially effect the financial results
and the amount of capital required to
operate the business in the future.
PART II
Item 1 - Legal Proceedings
There are no known legal proceedings to which the Company is a
party as of December 31, 1997
Item 2 - Changes In Securities
None
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Submission of Matters To A Vote Of Security Holders
None
Item 5 - Other Information - subsequent events
None
Item 6 - Exhibits And Reports On Form 8-K
(a) None
(b) Reports on Form 8-K - None filed during quarter ended
December 31, 1997.
(c) An additional, registration Statement on Form S-8
respecting the registration of shares of the
Common stock of the Company issued under the employee benefit
plans was filed with the
Securities Exchange Commission on December 23,1997.
(d) Subsidiaries of Registrant as of December 31, 1997
-XyclonyX - 100% owned, Sub-Surface
Waste Management, Inc. - 100% owned.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
Global Venture Funding, Inc.
Date: 02/19/98
By: /s/ Robert C. Brehm
Robert C. Brehm, President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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EXHIBIT 27 - FINANCIAL DATA SCHEDULE
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<LOSS-PROVISION> 0
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