SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the fiscal year ended: December 31, 1999
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or
[] Transition report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the transition period from: to
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Commission file number: 33-5902-NY
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JUSTWEBIT.COM, INC.
(Exact name of registrant as specified in its charter)
Nevada 22-2774460
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
201 South Main Street, Suite 900
Salt Lake City, Utah 84111
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (801) 595-0104
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001
Class A Preferred Stock, Par Value $0.001
(Title of Each Class)
Indicate by check mark whether the registrant (1) has filed all reports
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best or registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.
[ ]
The aggregate market value of voting stock held by non-affiliates of
the registrant on March 30, 2000 was $11,172,381 based on a closing price of
$3.125.
The number of shares outstanding of the registrant's Common Stock on
March 30, 2000 was 5,512,106.
DOCUMENTS INCORPORATED BY REFERENCE
None
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INDEX
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Page
Number
PART I.
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Item 1. Business. 3
Item 2. Properties. 11
Item 3. Legal Proceedings. 11
Item 4. Submission of Matters to a Vote of Security Holders. 11
PART II.
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters. 11
Item 6. Selected Financial Data. 12
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 12
Item 8. Financial Statements and Supplementary Data. 15
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure. 15
PART III.
Item 10. Directors and Executive Officers of the Registrant. 15
Item 11. Executive Compensation. 16
Item 12. Security Ownership of Certain Beneficial Owners and Management. 16
Item 13. Certain Relationships and Related Transactions. 17
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. 18
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PART I.
Our Annual Report on form 10-KSB ("10-KSB") contains forward-looking
statements made within the meaning of Section 27A of the Securities Act of 1933,
as amended (the "Act") and Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Such statements are not based on historical
facts and are based on current expectations, including, but not limited to,
statements regarding the Company's plans for future development and the
operation of its business. Words such as "anticipates," "expects," "intends,"
"plans," "believes," "seeks," "estimates," and similar expressions identify such
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks and uncertainties that could cause
actual results to differ materially from those expressed or forecasted. Among
the factors that could cause actual results to differ materially are the
following: a lack of sufficient capital to finance our business plan on
commercially acceptable terms; changes in labor, equipment and capital costs;
our inability to attract strategic partners; general business and economic
conditions; and the other risk factors described from time to time in our
reports filed with the Securities and Exchange Commission ("SEC"). You should
not rely on these forward-looking statements, which reflect only our opinion as
of the date of this 10-KSB. We do not assume any obligation to revise
forward-looking statements. You should also carefully review the risk factors
set forth in other reports or documents we file from time to time with the
Securities and Exchange Commission, particularly the quarterly reports on Form
10-QSB and any current reports on Form 8-K.
ITEM 1. BUSINESS
THE COMPANY
JustWebit.com offers small to mid-sized businesses an end-to-end
solution that addresses the challenges associated with implementing a successful
e-commerce strategy. The Company offers any business access to its free
e-commerce web site builder and sells a comprehensive suite of products and
services designed to assist businesses create a successful online presence. As
of December 31, 1999, the Company hosted in excess of 3,000 e-commerce web
sites.
BACKGROUND
The Company was incorporated in Nevada in 1984 under the name Ventures
Diversified, Ltd. The name was changed to MVID International Corporation in
1987.
On March 14, 1994, in accordance with the terms of a certain Purchase
Agreement dated as of March 14, 1994, by and between the Company and Marrco,
6,500,000 shares of the Company's Common Stock were issued to Marrco in
consideration of Marrco's sale, assignment and transfer to the Company of all
rights, title and interest of Marrco subject to the assumption by the Company of
all debts and liabilities of Marrco. Pursuant to the Agreement, the business of
the Company that existed on March 13, 1994, was distributed to Monroe Arndt, the
President and a director of the Company, prior to his resignation on March 14,
1994.
On October 25, 1996, the name of the Company was changed to Superior
Wireless Communications, Inc. and each of the 6,004,836 shares of then issued
and outstanding common stock of the Company were exchanged for one share of
Class A Convertible Cumulative Preferred Stock, par value of $.001 per share
(the "Class A Preferred Stock"). Pursuant to the terms of the Class A Preferred
Stock, each share of Class A Preferred Stock outstanding as of October 16, 1998
(the "Automatic Conversion Date"), was automatically converted into five shares
of the Company's Common Stock on the Automatic Conversion Date. Holders of an
additional 3,767,501 shares of Class A Preferred Stock that were issued after
the Automatic Conversion Date agreed to convert their shares into shares of the
Company's Common Stock at the same conversion rate.
Effective August 18, 1999, the Company effectuated a reverse 1 for 20
stock split of the Common Stock. In connection with the reverse stock split, all
previously outstanding shares of Class A Preferred Stock were converted into
shares of Common Stock.
As of December 31, 1999, the Company had 5,383,129 shares of its Common
Stock outstanding.
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INDUSTRY BACKGROUND
Rapid Growth of the Internet and E-Commerce
The Internet has grown in less than a decade from a limited research
tool into a global network consisting of hundreds of millions of computers and
users. The Internet is an increasingly significant medium for communication,
information and commerce. International Data Corporation, or IDC, estimates that
at the end of 1998 there were over 62 million web users in the United States and
over 142 million web users worldwide and that by the end of 2003 the number of
web users will increase to 177 million in the United States and to over 502
million worldwide.
The rapid growth of the Internet has given businesses, merchants and
shoppers the opportunity to conduct an increasing amount of commerce online. The
Company believes that e-commerce offers numerous advantages to businesses,
merchants and shoppers. Shoppers receive increased selection, competitive prices
and the convenience of being able to shop on the Internet 24 hours a day, 7 days
a week from the location of their choice. The Internet enables merchants to
reach a global audience and operate with limited infrastructure, reduced
overhead and greater economies of scale. Merchants can customize web site
content to match the needs and preferences of individual shoppers by
transparently personalizing content for each shopper. By facilitating access to
information, the Internet enables merchants to give customers more detailed
product information while affording merchants the opportunity to obtain detailed
information about the purchasers of their products. In addition, online
merchants can reduce selling costs by reducing or eliminating investments in
physical retail locations and automating much of the interaction with their
customers. These advantages are resulting in a dramatic increase in the amount
of commerce conducted over the Internet and the number of businesses and
merchants advertising and selling goods and services online. According to IDC,
worldwide transactions on the Internet are expected to increase from
approximately $111 billion in 1999 to approximately $1.3 trillion in 2003, with
the total number of users who purchase products and services online increasing
from approximately 48 million to approximately 182 million worldwide during the
same period.
Challenges to Conducting Commerce over the Internet
Businesses and merchants increasingly are determining that they need an
online presence to take advantage of the rapid growth and benefits of
e-commerce. To conduct commerce online effectively and efficiently, however,
businesses and merchants must address a number of challenges:
o WEB SITE PLANNING AND STOREFRONT DESIGN: Businesses and
merchants must design and implement the look and feel of their
online stores and custom web sites in a way that provides a
rich, easy-to-use and generally satisfying end-user experience
that fosters buying and repeat visits. Storefront design must
promote the merchants' brands, identities and product
information through the use of graphics, images and text
content.
o VISIBILITY AND CUSTOMER ACQUISITION: Merchants need to
effectively communicate with their targeted online audience to
maximize the number of visits to, and purchases from, their
web sites. Both online merchants seeking to establish a brand
and traditional merchants with established brands need to
create visibility online and to distinguish themselves from
the significant number of competitors selling products and
services on the Internet. Achieving widespread brand
recognition and customer loyalty in a crowded market where
consumers are inundated with Internet-related advertising
requires a comprehensive and focused marketing strategy to
reach the desired audience. These efforts require a broad
range of both online and traditional techniques ranging from
banner and hyperlink advertisements or e-mail communications
to traditional methods, such as direct mail. In order to
attract the highest number of desired online shoppers,
merchants need to employ creative marketing solutions that
position their products and services more effectively than
those of their many competitors.
o TRANSACTION PROCESSING: Businesses and merchants must
implement solutions that enable them to efficiently and
effectively process orders once they are placed. Online
transaction processing is complex and involves a number of
elements including secure, dependable, automated real-time
payment authorization, calculation of tax and shipping
charges, order tracking and customer service. Online orders
for physical goods must be transmitted to fulfillment centers,
distributors or merchant- owned distribution centers for
shipment of the goods. In light of these challenges,
businesses and merchants who choose to internally develop and
maintain an e-commerce presence must invest a significant
amount of capital and technical resources. E-commerce
technology evolves rapidly,
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necessitating timely implementation and upgrades. The lengthy
and often cost-prohibitive nature of in-house development and
maintenance has caused an increasing number of businesses and
merchants to outsource some or all of their e-commerce
capability development to third-party service providers.
Outsourced solutions offer convenience and savings but most
service providers specialize in specific, limited aspects of
an Internet merchant's business. Merchants who outsource their
e-commerce capability development typically must devote
significant technical expertise and other resources to
coordinate multiple vendors and integrate the various
components.
As e-commerce solutions evolve and online businesses and merchants
proliferate, need and demand increase for outsourced e-commerce solutions that
seamlessly integrate every aspect of an online business from storefront
development to marketing services, transaction processing and fulfillment.
The JustWebit.com Solution
JustWebit.com offers an end-to-end user-friendly e-commerce web site
builder that can be accessed by any business desiring to sell products online.
The Company provides a comprehensive package of products and services designed
to assist small to mid-sized businesses and merchants to create, support and
grow an efficient, scaleable and reliable online presence. Our marketing
services use both traditional and online methods to bring businesses, merchants
and shoppers together, while our other e-commerce products and services enable
businesses and merchants to develop and complete online transactions. Our
e-commerce platform includes custom application and online store development and
design, hosting and maintenance, fraud prevention and payment processing.
Key benefits of our solution include:
o END-TO-END INTEGRATED SOLUTION. The Company provides
businesses and merchants with the essential tools they need to
conduct commerce online. We offer businesses and merchants a
comprehensive host of e-commerce products, marketing tools,
support and services to assist them to successfully conduct
online commerce.
o QUICK TIME TO MARKET. The pace of change and the rate of
growth of the Internet require greater speed in implementation
of e-commerce solutions. The JustWebit.com e-commerce web site
builder enables our customers to build a new e-commerce web
site or add e-commerce and shopping cart functions to an
existing web site in a matter of hours.
o IMMEDIATE AND LONG-TERM SAVINGS. The Company's strategy is to
enable businesses and merchants to build there own e-commerce
web site, thereby generating a large savings to the customer.
Further the Company does not charge a monthly hosting fee to
clients without a registered domain name. This allows the
customer the opportunity to invest those savings into
marketing or other cost-effective tools that JustWebit.com
offers for sale to its customers.
o COMPREHENSIVE TECHNOLOGY PLATFORM. JustWebit.com provides a
flexible technology platform which can be implemented into
existing web sites or can be used to build an e-commerce web
site from scratch. The Company's platform is a combination of
third-party technologies and technologies that have been
developed internally. The Company also has serving and hosting
capabilities that enable our clients to outsource the storage
and transmission functions of their e- commerce operations.
This technology provides merchants a high level of
reliability, 24 hours a day, 7 days a week. Using data centers
with redundant servers, continuous monitoring and high speed
Internet connections, Justwebit.com provides clients with the
performance they require for uninterrupted e-commerce
operations.
STRATEGY
The Company's goal is to be a leading company in e-commerce solutions
for small to mid-sized businesses and merchants. The following strategies will
be used to achieve this goal:
o ENHANCE AND EXTEND OUR E-COMMERCE ENABLING PRODUCTS AND
SERVICES. The Company intends to continue to add new features
to our web site and to continually enhance the current
e-commerce enabling solutions offered by the Company.
JustWebit believes that, for little incremental cost, we can
easily integrate into our package of products new features
that will
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contribute additional revenues from lead generation,
advertising, upselling merchant services and cross promotion.
o CREATION OF A JUSTWEBIT.COM MARKETPLACE AND MALL. The Company
is currently developing a marketplace for a broader exposure
to its customers and merchants. The Company plans on marketing
and promoting the marketplace in order to promote a high
volume of shopper traffic to increase the number of quality
customer leads generated for listed merchants.
o PROMOTION OF BRAND NAME VISIBILITY. The Company will continue
to promote the JustWebit.com name as the best way for small to
mid-sized businesses and merchants to conduct commerce on the
Internet. To accelerate the acceptance and penetration of the
JustWebit.com name among businesses, merchants and shoppers,
the Company will continue to advertise through both online and
traditional channels such as magazines, radio and newspapers.
Online efforts include placing banner and other hyperlink
advertisements on portal and other destination web sites. To
reach a mass audience, the Company plans on commencing a
national advertising campaign in traditional media. The
JustWebit.com name will also be promoted through trade
publication advertisements, direct mail and promotional
activities, trade shows and media events.
o PURSUE ACQUISITIONS AND STRATEGIC BUSINESS RELATIONSHIPS.
JustWebit intends to make acquisitions and enter into business
relationships that enhance the effectiveness of its products
and services and the quality of its online presence. The focus
of these acquisitions and strategic relationships will be to
provide the Company access to improved technology, new
domestic and international markets and prospective clients.
Additionally, the Company is pursuing strategic relationships
that will enable the Company to maximize its revenues from its
existing and future customer bases.
o INTERNATIONAL EXPANSION. The Company is looking toward
expanding its customer base well beyond the United States
market. A Spanish version of the JustWebit.com web site and
technology is currently being created and should be launched
in the first quarter of 2000. This will enable the Company to
tap into the growing Spanish speaking audience on the
Internet. The Company will expand its international presence
by entering into strategic alliances with foreign businesses.
Additionally, the Company plans on expanding by registering
its web site on international search engines, seeking out
relationships with foreign portal web sites, and by developing
other foreign-language user interfaces.
OUR PRODUCTS AND SERVICES
Merchant Services
JustWebit.com offers businesses and merchants a wide variety of
enabling products and services, including:
o SECURE PAYMENT AND ORDER PROCESSING. Through a third-party
merchant account, the Company offers its customers online
payment ability. This is done via the JustWebit.com online
payment and order processing software and services. This
software assists merchant clients with credit card
authorization, address verification, automated tax and
shipping calculations, order tracking and customer service.
The payment processing system currently interacts with several
credit card processors. For security, advanced encryption
methods are utilized. To exchange information with merchants
and shoppers, the Company's network servers use software that
complies with the Secure Sockets Layer specification, the
predominant method for managing the security of transmissions
over a network.
o FRAUD PREVENTION. The Company's fraud prevention services use
artificial intelligence programs, a database of historical
transactions and validation by an authorized financial
institution to confirm shoppers' identities and to assess
their credit status..
o E-COMMERCE HOSTING AND MAINTENANCE. The Company provides
services to operate and maintain online stores on behalf of
our listed merchants. We use data centers with redundant
servers, 24-hour monitoring and support, and high-speed
Internet connections to provide customers with continuous
e-commerce operations.
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o CUSTOM APPLICATION AND ONLINE STORE DEVELOPMENT. The Company
provides businesses and merchants with access to its
e-commerce web site builder free of charge. For additional
charges, the Company offers custom design and technical
development services for customer's web sites and online
stores.
o MARKETING SERVICES. The Company also offers a host of
marketing services available to its customers. These marketing
services are designed to enable merchants to enhance their
visibility on the Internet, facilitate customer acquisition
and retention, and increase sales.
The various merchant services can be purchased as a package or
individually, which allows businesses and merchants to tailor their service
package to their particular needs. Fee arrangements are based on the specific
service purchased and may be computed on a project basis, a monthly fee basis, a
per transaction basis or a combination thereof.
Employees
As of December 31, 1999, the Company and its subsidiary had a total of
13 employees.
FACTORS AFFECTING OUR OPERATING RESULTS, OUR BUSINESS AND OUR STOCK PRICE
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW AND THE OTHER
INFORMATION IN THIS ANNUAL REPORT. WHILE WE HAVE ATTEMPTED TO IDENTIFY ALL RISKS
THAT ARE MATERIAL TO OUR BUSINESS, ADDITIONAL RISKS THAT WE HAVE NOT YET
IDENTIFIED OR THAT WE CURRENTLY THINK ARE IMMATERIAL MAY ALSO IMPAIR OUR
BUSINESS OPERATIONS. THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE DUE TO
ANY OF THESE RISKS. IN ASSESSING THESE RISKS, YOU SHOULD ALSO REFER TO THE OTHER
INFORMATION IN THIS ANNUAL REPORT, INCLUDING THE CONSOLIDATED FINANCIAL
STATEMENTS AND RELATED NOTES.
RISKS RELATED TO OUR BUSINESS
Recent Entry into the E-Commerce Field
JustWebit.com recently changed the focus of its business to assist
businesses and merchants to conduct commerce over the Internet. In October 1999,
the JustWebit.com web site was launched as an automated e-commerce web site
builder to be used by prospective customers. Prospective investors and
shareholders should consider the risks, expenses and difficulties that may be
encountered as a young company in a rapidly evolving market.
The Company Has a History of Losses and Expects Future Losses
The Company incurred net losses of $(340,102) for the year ended
December 31, 1999. Prior to entering into its current line of business, the
Company had a history of operating losses. At December 31, 1999, the Company had
an accumulated deficit of $(4,733,653). The Company plans on investing heavily
in sales and marketing, technology infrastructure and research and development.
As a result, significant revenues must be generated in order to achieve and
maintain profitability. The Company expects that its sales and marketing
expenses, research and development expenses and general and administrative
expenses will continue to increase in absolute dollars and may increase as a
percentage of revenues. In addition, the Company may incur substantial expenses
in connection with future acquisitions.
Future Revenues are Unpredictable and May Fluctuate
The Company's business model has only been applied since the fourth
quarter of 1999 and continues to evolve. Therefore the Company's management has
limited experience in planning the financial needs and operating expenses of the
business. It is difficult for the Company to accurately forecast our revenues in
any given period. Revenue growth rates may not be able to be sustained and
sufficient revenues may not be generated to achieve profitability. If revenues
in a particular period fall short of expectations, the Company will likely be
unable to quickly adjust spending in order to compensate for that revenue
shortfall.
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Operating results and revenues are likely to fluctuate substantially
from period to period as a result of a number of factors, such as:
o declines in the number of businesses and merchants to which
the Company provides its products and services;
o the amount and timing of operating costs and expenditures
relating to expansion of operations; and
o the mix of products and services that are sold.
In addition, factors beyond the Company's control may also cause
operating results to fluctuate, such as:
o the announcement or introduction of new or enhanced products
or services by competitors; and
o the pricing policies of competitors.
Period-to-period comparisons of the Company's operating results may not
be a good indicator of future performance. It is likely that operating results
in some quarters may not meet the expectations of stock market analysts and
investors and this could cause the Company's stock price to decline.
Business Model is Unproven and Changing
The Company's business model consists of providing businesses and
merchants with e-commerce enabling solutions. The Company and its management
have limited experience. Accordingly, the business model may not be successful,
and may need to be changed. The Company's ability to generate sufficient
revenues to achieve profitability will depend, in large part, on its ability to
successfully market its e-commerce products and services to businesses and
merchants that may not be convinced of the need for an online presence or may be
reluctant to rely upon third parties to develop and manage their e-commerce
offerings and marketing efforts.
The Company's Success Depends Upon Achieving Adequate Market Share to Increase
Revenues and Become Profitable
The Company's success depends upon achieving significant market
penetration and acceptance of its e- commerce enabling products and services.
The Company has only recently begun to expand its marketing efforts designed to
promote the use of its free web site builder and hosting services to businesses
and merchants. The Company is dependant upon its customers buying upgraded
services in order to generate adequate revenues. The Company also needs to
increase its customer base substantially in order to increase revenues and
become profitable. The Company may not currently have adequate market share to
successfully execute its business plan. If it is unable to reach and retain
substantial numbers of businesses and merchants, the business model may not be
sustainable.
The Company Faces Significant Competition
The market for e-commerce enabling products and services is highly competitive,
and competition is expected to intensify in the future. Barriers to entry are
not significant. Failure to compete effectively could result in the following:
o fewer businesses and merchants relying upon our enabling
solutions;
o decrease in product upsales and revenues generated therefrom;
o decrease in the ability for the Company to sell its banner
advertising space;
o the obsolescence of the technology underlying the Company's
products and services;
The number of companies providing e-commerce enabling products and
services is large and increasing at a rapid rate. Additional companies which to
date have not had a substantial commercial presence on the Internet or in the
Company's markets will offer competing products and services.
Many competitors and potential competitors may have substantial
competitive advantages as compared to the Company, including:
o larger customer or user bases;
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o the ability to offer a wider array of e-commerce products and
solutions;
o greater name recognition and larger marketing budgets and
resources;
o substantially greater financial, technical and other
resources; and
o larger production and technical staffs.
These advantages may enable competitors to adapt more quickly to new
technologies and customer needs, devote greater resources to the promotion or
sale of their products and services, take advantage of acquisition or other
opportunities more readily, or develop and expand their product and service
offerings more quickly.
In addition, as the use of the Internet and online products and
services increases, larger well-established and well-financed entities may
continue to acquire, invest in or form joint ventures with providers of
e-commerce enabling solutions, and existing providers may consolidate. Any of
these trends would increase competition faced by the Company.
If Strategic Relationships are not Entered into Business may Suffer
An important element of the Company's strategy involves entering into
business relationships with other companies. The success of the Company is
dependent on developing new strategic relationships. These contractual
relationships typically involve joint marketing, licensing or promotional
arrangements. Although these relationships are an important factor in the
business strategy because they will enable the Company to enhance product and
service offerings, the parties with which the Company contracts may not view
this relationship as significant to their own businesses. To date, the Company
has not derived material revenue from these relationships, and some of these
relationships may impose substantial obligations on the Company. It is not
certain that the benefits will outweigh our obligations. If strategic business
relationships cannot be formed or are discontinued for any reason, the business
and results of operations may be significantly harmed.
If the Company fails to Effectively Manage the Rapid Growth of Operations
Business Will Suffer
The Company's ability to successfully offer e-commerce enabling
products and services and implement its business plan in a rapidly evolving
market requires an effective planning and management process. The scope of the
Company's operations are increasing and expected to continue to increase. The
total number of employees has grown from one at the beginning of 1999 to 13 as
of December 31, 1999. This growth has placed and will continue to place a
significant strain on management systems, infrastructure and resources. The
Company will need to continue to improve financial and managerial controls and
reporting systems and procedures, and will need to continue to expand, train and
manage our workforce. Furthermore, the Company expects that it will be required
to manage an increasing number of relationships with various customers and other
third parties. Any failure to expand any of the foregoing areas efficiently and
effectively could cause business to suffer.
The Company Depends on Key Management Personnel for Successful Operations
The Company's success depends on the skills, experience and performance
of its management and other key personnel. Business could also suffer if key
personnel are not retained.
Additional Funds will be Required to Successfully Operate and Expand
Current liquid resources may not be adequate to sustain the Company's
current level of growth. Consequently, additional funds may be required. This
financing may not be available on favorable terms or at all. If additional funds
are raised by selling stock, the percentage ownership of the then current
shareholders will be reduced. If adequate funds to satisfy our capital
requirements can not be raised, the Company may have to limit operations
significantly.
RISKS RELATED TO OUR INDUSTRY
Success is Dependent on Continued Increases in the Use of the Internet as a
Commercial Medium
The Company depends greatly on the growing use and acceptance of the
Internet by businesses, merchants and shoppers as a medium of commerce. Rapid
growth in the use of and interest in the Internet and online products and
services is a recent development. No one can be certain that acceptance and use
of the Internet and online products
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and services will continue to develop or that a sufficiently broad base of
businesses, merchants and shoppers will adopt and continue to use the Internet
and online products and services as a medium of commerce.
The Internet may fail as a commercial marketplace for a number of
reasons, including potentially inadequate development of the necessary network
infrastructure or delayed development of enabling technologies, including
security technology and performance improvements. For example, if technologies
such as software that stops advertising from appearing on a web user's computer
screen gain wide acceptance, the attractiveness of the Internet to advertisers
would be diminished, which could harm the Company's business.
The Company is Dependent on the Internet Infrastructure Provided by Others to
Operate its Business
The Company's success depends in large part on other companies
maintaining the Internet infrastructure. In particular, the Company relies on
other companies to maintain a reliable network backbone that provides adequate
speed, data capacity and security and to develop products that enable reliable
Internet access and service. If the Internet continues to experience significant
growth in the number of users, frequency of use and amount of data transmitted,
the Internet infrastructure of thousands of computers communicating via
telephone lines, coaxial cable and other telecommunications systems may be
unable to support the demands placed on it, and the Internet's performance or
reliability may suffer as a result of this continued growth. If the performance
or reliability of the Internet suffers, Internet users could have difficulty
obtaining access to the Internet. In addition, data transmitted over the
Internet, including information and graphics contained on web pages, could reach
Internet users much more slowly. This could result in frustration of Internet
users, which could decrease online traffic and cause advertisers to reduce their
Internet expenditures.
Future Governmental Regulation and Privacy Concerns Could Adversely Affect the
Company
The Company is not currently subject to direct regulation by any
government agency, other than regulations applicable to businesses generally,
and there are currently few laws or regulations directly applicable to access to
or commerce on the Internet. However, due to the increasing popularity and use
of the Internet, a number of legislative and regulatory proposals are under
consideration by federal, state, local, and foreign governmental organizations,
and it is possible that a number of laws or regulations may be adopted with
respect to the Internet relating to issues such as user privacy, taxation,
infringement, pricing, quality of products and services, and intellectual
property ownership. The adoption of any laws or regulations that have the effect
of imposing additional costs, liabilities, or restrictions relating to the use
of the Internet by businesses or consumers could decrease the growth in the use
of the Internet, which could, in turn, decrease the demand for the Company's
products and services, decrease traffic on our online marketplaces, increase the
cost of doing business, or otherwise have a material adverse effect on the
Company's business.
Moreover, the applicability to the Internet of existing laws governing
issues such as property ownership, copyright, trademark, trade secret,
obscenity, libel, and personal privacy is uncertain and developing. Any new
legislation or regulation, or application or interpretation of existing laws,
could have a material adverse effect on business.
The Federal Communications Commission is currently reviewing its
regulatory positions on the privacy protection given to data transmissions over
telecommunications networks and could seek to impose some form of
telecommunications carrier regulation on telecommunications functions of
information services. State public utility commissions generally have declined
to regulate information services, although the public service commissions of
some states continue to review potential regulation of such services. Future
regulation or regulatory changes regarding data privacy could have an adverse
effect on our business by requiring us to incur substantial additional expenses
in order to comply with this type of regulation.
A number of proposals have been made at the federal, state and local
level that would impose additional taxes on the sale of goods and services over
the Internet and certain states have taken measures to tax Internet-related
activities. Foreign countries also may tax Internet transactions. The taxation
of Internet-related activities could have the effect of imposing additional
costs on companies, such as JustWebit.com, that conduct business over the
Internet. This, in turn, could lead to increased prices for products and
services, which could result in decreased demand for the Company's e-commerce
solutions.
10
<PAGE>
RISKS RELATED TO AN INVESTMENT IN OUR STOCK
Our Stock Price May be Volatile
The stock market in general, and the stock prices of Internet-related
companies in particular, have recently experienced extreme volatility, which has
often been unrelated to the operating performance of any particular company or
companies. The Company's stock price could be subject to wide fluctuations in
response to factors such as the following:
o actual or anticipated variations in quarterly results of
operations;
o the addition or loss of merchants and shopper traffic;
o announcements of technological innovations, new products, or
services by the Company or its competitors;
o conditions or trends in the Internet, e-commerce, and
marketing industries;
o changes in the market valuations of other Internet or online
service or software companies;
o our announcements of significant acquisitions, strategic
relationships, joint ventures, or capital commitments;
o additions or departures of key personnel;
o sales of our common stock;
o general market conditions; and
o other events or factors, many of which are beyond the
Company's control.
These broad market and industry factors may materially and adversely
affect the Company's stock price, regardless of its operating performance. The
trading prices of the stocks of many technology companies are at or near
historical highs and reflect price to earnings ratios substantially above
historical levels. These trading prices and price- to-earnings ratios may not be
sustained.
ITEM 2. PROPERTIES
The Company currently rents 4,300 square feet of office space for its
operating offices in Orem, Utah. The monthly rent on this space is currently
$4,728 per month and the lease runs through September of 2002. The Company also
rents 300 square feet of office space for its corporate offices, under a rental
arrangement with the Company's President. This rent is accrued at a rate of $500
per month.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's Common Stock is trading on the Over-the-Counter Bulletin
Board under the symbol "JTWB." As of March 29, 2000, the Company had 756 holders
of record. The following table sets forth, on a per share basis for the period
shown, the high and low prices of the Common Stock and the Preferred Series A
Stock as reported on the OTC Bulletin Board. The prices reflected below have
been adjusted for the conversion of the Preferred Series A Stock into Common
Stock and a reverse stock split that was made effective on August 18, 1999. The
following quotations reflect inter-dealer prices, without retail mark-up,
mark-down, or commission and may not represent actual transactions, nor a liquid
trading market.
11
<PAGE>
Closing
Price
High Low
Fiscal Year Ended December 31, 1997
First Quarter $ 2.00 $ 0.25
Second Quarter $ 1.00 $ 0.25
Third Quarter $ 1.00 $ 0.25
Fourth Quarter $ 1.00 $ 0.125
Fiscal Year Ended December 31, 1998
First Quarter $ 2.00 $ 0125
Second Quarter $ 1.00 $ 0.125
Third Quarter $ 1.00 $ 0.125
Fourth Quarter $ 1.00 $ 0.125
Fiscal Year Ended December 31, 1999
First Quarter $ 0.20 $ 0.125
Second Quarter $ 1.00 $ 0.80
Third Quarter $ 1.125 $ 0.75
Fourth Quarter $ 7.50 $ 0.75
Fiscal Year Ended December 31, 2000
First Quarter (through March 29, 2000) $ 3.00 $ 4.50
The Company has never declared or paid any cash dividends on the Common
Stock and does not presently intend to pay cash dividends on the Common Stock in
the foreseeable future. The Company intends to retain any future earnings for
reinvestment in its business.
ITEM 6. SELECTED FINANCIAL DATA
The selected historical financial data presented below as of December
31, 1998 and 1999 and for the years ended December 31, 1998 and 1999 were
derived from the consolidated financial statements of the Company, which were
audited by Smith & Company, independent certified public accountants, and which
are included elsewhere in this Form 10-KSB. This selected consolidated financial
data should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's consolidated
financial statements (including the notes thereto) included elsewhere in this
Form 10-KSB.
JustWebit.com, Inc.
Summary of Operations
December 1999
1999 1998
-------------- ---------
Total Assets.......................$ 801,424 $ 351,806
Revenues........................... 98,923 7,000
Operating Expenses................. 617,745 906,005
Net Earnings (Loss)................ (340,102) (530,139)
Per Share Data Earnings (Loss)..... (.55) (1.33)
Average Common Shares
outstanding...................... 622,794 397,339
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
The Company was incorporated on July 24, 1984, in Nevada as Diversified
Ventures, Ltd. On March 27, 1987, the name was changed to M.V.I.D. International
Corporation. On April 6, 1994, the name was changed to Micro-Lite Television.
Prior to March 14, 1994, the Company sold an automobile anti-theft protection
system to customers through an arrangement with dealerships, principally in New
Jersey. On March 16, 1994, the Company acquired the assets and liabilities of
Marrco Communications, Inc. ("Marrco") and is continuing the business activities
of Marrco. Prior business operations were assumed by the former President of the
Company. Marrco was founded on December 12, 1991, for purposes of accumulating
Wireless Cable Rights in domestic markets.
On October 25, 1996, the name of the Company was changed to Superior
Wireless Communications, Inc. and each of the 6,004,836 shares of then issued
and outstanding common stock of the Corporation were exchanged for one share of
preferred stock designated as Class A Convertible Cumulative Preferred Stock
(the "Class A Preferred Stock"), par value of $.001 per share. The Class A
Preferred Stock carried a ten percent (10%) dividend,
12
<PAGE>
which could be paid in common stock, and was convertible into Common Stock of
the Company as of October 25, 1998 (the "Conversion Date"). Under the terms of
the Class A Preferred Stock, all shares outstanding as of October 16, 1998,
automatically converted into common stock at a rate of five shares of common
stock for every one share of Class A Preferred Stock. This resulted in the
automatic conversion of 6,541,416 shares of Class A Preferred Stock into
32,707,080 shares of common stock. Simultaneously with the reverse stock split
described below, the holders of an additional 3,767,501 shares of Class A
Preferred Stock that were issued after October 16, 1998, converted their shares
at the same rate of five shares of common stock for every one share of Class A
Preferred Stock.
Effective August 18, 1999, the Company effectuated a reverse stock
split at a rate of twenty-to-one. This resulted in 2,577,229 shares of common
stock being outstanding as of that date and no preferred shares were
outstanding.
On August 1, 1999, the Company acquired Media Rage of Utah, Inc. as a
wholly owned subsidiary.
As of December 31, 1999, there were 5,383,129 shares of common stock
outstanding.
Results of Operations for the Two Years Ended December 31, 1999
Revenues
The Company currently did not have any ordinary and significant source
of revenues during the 1998 fiscal year. However, the Company did sell some of
its wireless cable channels rights and other assets. The Company recorded
revenues of approximately $7,000 for the year ended December 31, 1998 from sale
of assets and licenses. The Company also recorded $369,366 in income for
forgiveness of indebtedness in the year ended December 31, 1998.
As part of its redirection of the Company's focus line of business, all
wireless cable channel rights and transmission equipment related thereto were
sold to a related party. The Company recognized $308,092 in revenues as a result
of these sales. The Company also recognized $194,000 in income from collections
on a note receivable that had previously been written-off. During the 1999
fiscal year, the Company reported income of approximately $12,000 from
forgiveness of debt and approximately $60,000 in income from gains on
extinguishing debt.
With the acquisition of the Media Rage subsidiary and the launching of
the JustWebit.com web site, the Company began reporting revenues from operations
in August of 1999. With this development, the Company is no longer considered a
development stage enterprise. The Company reporting operating revenues of
$98,923 for the fiscal year ended December 31, 1999.
Cost of Sales
The net book value of the fixed assets sold for the period ended
December 31, 1998 was zero. The book value of the assets sold in the year ended
December 31, 1999 was equal to $190,793. This resulted in a gross profit of
$117,299.
Selling, General and Administrative Expenses
The Company incurred total general and administrative expenses ("G&A")
of $642,611 for the year ended December 31, 1999 as compared to $95,672 for the
fiscal year ended December 31, 1998. This represents an increase of 672% in G&A
expenses. The increase was due to the Company's acquisition of Media Rage and
the development of the JustWebit.com web site. During the 1998 fiscal year, the
Company had only one employee who accrued a salary of $72,000 per year. This
accrued salary was converted into common stock in July of 1999 at a post
reverse- split rate of $1.50 per share.
Depreciation and Amortization
Depreciation and amortization for the year ended December 31, 1998 was
equal to $104,487. This is dramatically higher than the depreciation and
amortization of $8,653 expensed in the year ended December 31, 1999. The
decrease is due to the sale of the wireless cable licenses that were being
amortized over a five-year period.
13
<PAGE>
Interest Expense
The Company incurred interest expense of $240,363 in the fiscal year
ended December 31, 1998. The majority of notes and interest bearing debt was
converted into stock in 1999. This significantly reduced the Company's interest
expense for the year ended December 31, 1999 to $142,121.
In December of 1999 the Company received a note in the amount of
$250,000 from Newport Federal Financial. This note carries an interest rate of
12% and is due and payable on January 2, 2001. As an incentive for entering into
the note agreement, the Company issued 180,000 shares of its common stock to
Newport Federal Financial.
Income Tax Benefit
For the fiscal year ending December 31, 1998, the Company had net
operating loss carryforwards equal to approximately $4,200,000. Approximately
$1,000,000 of this net operating loss was carried forward from the business of
Marrco and is limited under Internal Revenue Code Section 381. This limits the
use of this portion of the Company's net operating loss carryforward to
approximately $70,000 per year. The Company has not recognized any of this tax
benefit as an asset due to uncertainty of future income.
Net Loss
The Company recorded a net loss of $(340,102) for the fiscal year ended
December 31, 1999, as compared to a net loss of $(530,139) for the fiscal year
ended December 31, 1998.
Liquidity and Capital Resources
The Company had working capital of $331,470 as of December 31, 1999.
The Company has continued to raise capital through various private placement
offerings of its stock. The Company believes that future equity sales or other
financings can be achieved to adequately finance its growth.
Certain Indebtedness
In 1994, the Company began a private placement of certain Convertible
Notes that entitled the purchasers to convert the notes into stock of the
Company at various terms. As of December 31, 1994, the Company had received
gross proceeds of $51,000 from one individual. During the first quarter of 1995,
the Company received an additional $150,000. During 1996, the Company received
additional proceeds of $566,100. All of these notes, including interest accrued
thereon, were converted into Class A Preferred Stock in 1999.
Income Tax Matters
The Company has had no material state or Federal income tax since its
inception. As of December 31, 1999, the Company had approximately $4.7 million
in net operating loss carryforwards for tax purposes, expiring in years 2006
through 2014. The Internal Revenue Code of 1986, as amended (the "Code"), limits
the amount of loss carryforwards that a company can use to offset future income
upon the occurrence of certain changes in ownership. As a result of the purchase
of Marrco and the subsequent issuance of shares of the Company's common stock,
the Company has undergone more than a 50% change in ownership and will therefore
be limited in its utilization of its tax loss carryforwards. About $1 million of
the net operating loss carryforward is subject to this limitation.
Inflation
The Company's Management does not believe that inflation has had or is
likely to have any significant impact on the Company's operations. Management
believes that the Company will be able to increase subscriber rates after its
wireless systems are launched, if necessary, to keep pace with inflationary
increases in costs.
Other
The Company does not provide post-retirement or post-employment
benefits requiring charges under Statements of Financial Accounting Standards
Nos. 106 and 112.
14
<PAGE>
ITEM 8. FINANCIAL STATEMENTS
The financial statements of the Company are set forth immediately
following the signature page to this Form 10-KSB.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Position
Jon R. Marple 33 Chairman and President.
Chief Financial Officer
and Director since October 16, 1996.
Brooks M. Freeman 56 Director since October 16, 1996.
Dr. Charles Bartell 76 Director since March 14, 1994. Director
of Marrco since its inception in 1991.
Jon Richard Marple, age 33, has served as a director of the Company
since 1996. Mr. Marple is currently serving as President and Chairman of the
Company. He has also been the Vice President, Treasurer and Chief Financial
Officer of the Company since 1996. Prior to that time, he was the Company's Vice
President of Wireless Operations overseeing the launch of the Company's first
wireless cable system in Beaumont, Texas. He has also been involved with
license/lease and purchase negotiations as well as assisting the Company in
obtaining interim financing. From 1989-1993, Mr. Marple was a tax manager with
the accounting firm of KPMG Peat Marwick. He worked in the firm's Oakland,
Seattle and San Diego offices before resigning to pursue various wireless
telecommunications ventures. Mr. Marple has a Bachelors degree in Economics from
the University of California at Berkeley.
Dr. Charles Bartell, age 76, has been a director of the Company since
1994. Dr. Bartell graduated from the University of Kansas Medical School. He
fulfilled his internship at the U.S. Naval Hospital in Great Lake, Illinois and
he fulfilled his surgical residence at Memorial Hospital Long Beach, California.
During the Korean War, Dr. Bartell was Lt. Commander and Regimental Surgeon of
the 5th Marine Regiment. Dr. Bartell subsequently served as Chief of Surgery and
Chief of Staff at Alondra Community Hospital in Bellflower, California. He was
also a former President of the Rocky Mountain Traumatic Surgical Society. He
retired from medical practice in 1985 and has since become active in commercial
real estate, operating offices in Newport Beach, California and Aspen, Colorado,
and investments in the United States and Russia. He brings his experience in
human relations, business management and personnel to the Board.
Brooks M. Freeman, age 56, has been a director of the Company since
1996. Mr. Freeman is the Managing Partner of Freeman & Associates, a networking
consulting partnership. He also acts as the Managing Consultant of Caminito
Cellular Partnership, a cellular telephone business, and is a principle in a
wireless data services project. From 1992 to 1996, Mr. Freeman acted as General
Manger of Client/Server Computing for IBM's Asia Pacific Service Corporation in
Hong Kong, responsible for implementing wire and wireless network computing
systems, encompassing eleven Asian countries. He also was a North American
Director of Technical Computing at IBM (Engineering and Scientific Computing, a
$400 million business unit), and was instrumental in the development of IBM's
RISC System/6000 workstations. Mr. Freeman retired from IBM in 1998.
Board of Directors and Committees
The Board of Directors meets during its fiscal year to review
significant developments affecting the Company and to act on matters requiring
board approval. The Board of Directors met and acted by unanimous written
consent six (6) times during the 1999 fiscal year. During such period, all
members of the Board participated in 100% of all Board meetings.
15
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the annual and long-term cash and
non-cash compensation paid and payable by the Company for services rendered in
all capacities during the fiscal years ended December 31, 1999, 1998 and 1997,
to the Company's interim Chairman and President.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Awards Payouts
Name and Year Salary Bonus Other annual Restricted Securities LTIP All other
principal position ($) ($) compensation stock Underlying payouts compensation
($) award(s) Options/ ($) ($)
($) SARs (#)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jon R. Marple, 1999 36,000(1) -0- $3,000(2) -0- -0- -0- -0-
Chairman, 36,000(3) $3,000(3)
President and 1998 72,000(1) -0- $6,000(2) -0- -0- -0- -0-
Chief Financial 1997 72,000(1) -0- $3,000(2) -0- -0- -0- -0-
Officer
- ------------------ ------- ---------- --------- --------------- ------------- ------------- ----------- ----------------
</TABLE>
(1) Represents accrued salary that was accrued and not paid as of December
31, 1997. This compensation and all other amounts owed to Mr. Marple
were converted into shares of Class A Preferred Stock in July, 1999.
(2) Represents charges for rent of home office space that is currently the
principal office of the Company. This amount was converted into shares
of Class A Preferred Stock in July, 1999.
(3) Included $36,000 of accrued salary and 3,000 of accrued rent that was
accrued and not paid as of December 31, 1999.
Directors of the Company who are also employees do not receive cash
compensation for their services as directors or members of the committees of the
Board of Directors. All directors may be reimbursed for their reasonable
expenses incurred in connection with attending meetings of the Board of
Directors or management committees.
The Company has not entered into any written employment agreement with
its President or any of its other officers or employees.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Owners and Management
The following tables set forth information, as of December 31, 1999,
concerning shares of the Company's Common Stock beneficially owned by (i) each
stockholder known by the Company to be the beneficial owner of more than five
percent (5 %) of the Company's Outstanding Common Stock, (ii) each stockholder
known by the Company to be the beneficial owner of more than five percent (5%)
of the Company s Preferred Stock, (iii) each director and officer of the
Company, and (iv) all officers and directors of the Company as a group. Unless
otherwise indicated, each person listed has sole voting and investment power
over the shares beneficially owned by him.
Shares of Percentage
Common Stock Common Stock
Beneficially Beneficially
Owned(1) Owned (2)
Jon H. Marple & Mary E. Blake
3419 Via Lido, Suite 619
Newport Beach, CA 92663................. 1,122,296 20.4%
Jon R. Marple
9 Mesa Lane
Colorado Springs, CO 80906............... 808,705 14.7%
16
<PAGE>
Brooks M. Freeman
634 Cribbs Drive
Coppell, TX 75019....................... 110,943 2.0%
Charles Bartell
43 Canyon Drive
Newport Beach, CA 92663................. 12,000 -
Officers and Directors as a group
(3 individuals).......................... 931,648 16.9%
---------------- -----------
(1) Reflects the effects of the reverse 1 for 20 stock split which became
effective on August 18, 1999.
(2) Beneficial ownership is determined in accordance with the applicable rules
under the Securities Exchange Act of 1934 ("Exchange Act"). In computing
the number of shares beneficially owned by a person and the percentage
ownership of that person, shares of Common Stock subject to options held by
that person that are currently exercisable, or become exercisable within 60
days from the date hereof, are deemed outstanding. However, such shares are
not deemed outstanding for purposes of computing the percentage ownership
of any other person. Percentage ownership is based on 5,512,106, shares of
Common Stock outstanding as of March 29, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Relationships and Related Transactions
From 1994 through 1998, the Company borrowed funds from certain
officers, directors and related parties to finance the cost of its ongoing
operations. All such loans accrued interest at 12 percent per annum. Mr. Brooks
Freeman, a director of the Company, loaned a total principal amount of $101,000,
which had accrued interest approximately in the amount of $40,008 as of July 31,
1999. The Company has also borrowed $558,226 from 720 Wireless, Inc., a Nevada
corporation, which had accrued interest in the amount of $173,222, as of July
31, 1999. Mr. Jon H. Marple, one of the Company's largest shareholders, is also
the sole shareholder of 720 Wireless, Inc. In addition, Mr. Jon R. Marple, the
Company's President and Chairman, has advanced $68,748 to pay for certain
expenses, which had accrued approximately $19,462 of interest as of July 31,
1999.
All such amounts owed to the Company's directors, officer and principal
shareholders were converted into 1,545,847 shares of Class A Preferred Stock as
of July, 1999.
In addition, since July 1997 the Company has been renting approximately
300 square feet of office space from the Company's President. The Company
accrued rent at $500 per month. As of July 1999, the Company had accrued a total
of $12,000 in rental expenses. See Item 2. Properties.
17
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents Filed as Part of the Report
1. Financial Statements
The following financial statements are filed as part of this Form
10-KSB:
PAGE
Independent Auditors Report........................................F-1
Consolidated Balance Sheet as of December 31, 1999.................F-2
Consolidated Statements of Operations for the two years ended
December 31, 1999...............................................F-3
Consolidated Statements of Changes in Stockholders Equity
for the two years ended December 31, 1999.......................F-4
Consolidated Statements of Cash Flows for the two years
ended December 31, 1999.........................................F-5
Consolidated Notes to the Financial Statements.....................F-6
2. Financial Statement Schedules
None
3. Exhibits
None
(b) Reports on Form 8-K
None
18
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on the 13th day of
April, 2000.
JustWebit.com, Inc.
By:
Jon Richard Marple
Chairman of the Board and President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on the 13th day of April 2000, by the following
persons in the capacities indicated:
Signature Title
Chairman of the Board,
Jon Richard Marple Director and President
(Principal Executive Officer
and Principal Financial Officer)
Director
Brooks M. Freeman
Director
Charles Bartell
19
<PAGE>
Smith
&
Company
A Professional Corporation of Certified Public Accountants
Board of Directors
JustWebit.com, Inc.
Salt Lake City, Utah
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of JustWebit.com, Inc. and
Subsidiary as of December 31, 1999, and the related statements of operations,
changes in stockholders' equity (deficit), and cash flows for the years ended
December 31, 1999 and 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of JustWebit.com, Inc. and
Subsidiary as of December 31, 1999, and the results of its operations, changes
in stockholders' equity (deficit), and its cash flows for the years ended
December 31, 1999 and 1998 in conformity with generally accepted accounting
principles.
/s
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
March 28, 2000
10 West 100 South, Suite 700o Salt Lake City, Utah 84101-1554
Telephone: (801) 575-8297o Facsimile: (801) 575-8306
E-mail: [email protected]
Members: American Institute of Certified Public Accountants
o Utah Association of Certified Public Accountants
F-1
<PAGE>
JustWebit.com, Inc. and Subsidiary
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
December 31,
1999
----------------
CURRENT ASSETS
<S> <C>
Cash in bank $ 172,356
Marketable securities 246,875
Accounts Receivable - Trade 6,419
Prepaid expenses 202,949
Stockholder receivables 124,000
----------------
TOTAL CURRENT ASSETS 752,599
PROPERTY AND EQUIPMENT (Net of depreciation of $5,014) (Note 1) 43,448
OTHER ASSETS
Deposits 5,377
----------------
$ 801,424
================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 71,088
Accrued liabilities 17,960
Notes payable (Note 5) 26,375
Deferred Revenue 226,302
Payable - related parties (Note 3) 79,404
----------------
TOTAL CURRENT LIABILITIES 421,129
Note Payable (Note 5) 251,644
----------------
TOTAL LIABILITIES 672,773
STOCKHOLDERS' DEFICIT
Common stock, $.001 par value;
Authorized 50,000,000 shares;
Issued and outstanding 5,383,129 shares 5,383
Additional paid-in capital 4,856,921
Retained earnings (deficit) (4,733,653)
----------------
TOTAL STOCKHOLDERS' EQUITY 128,651
----------------
$ 801,424
================
</TABLE>
See Auditor's Report and Notes to Financial Statements.
F-2
<PAGE>
JustWebit.com, Inc. and Subsidiary
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years ended December 31,
1999 1998
------------- --------------
<S> <C> <C>
Sales $ 98,923 $ 7,000
Cost of sales 10,360 0
------------- --------------
GROSS PROFIT 88,563 7,000
Costs associated with abandoned projects 0 465,483
Loss on investments 4,995 0
Bad debt (Recovery) (180,635) 0
General and administrative expenses 642,611 95,672
Depreciation and amortization (Note 1) 8,653 104,487
Interest and bank charges (net of interest income) 142,121 240,363
------------- --------------
617,745 906,005
------------- --------------
Net income (loss) before income taxes (529,182) (899,005)
Income tax expense (benefit) (Note 4) 100 500
------------- --------------
NET (LOSS) FROM CONTINUING OPERATIONS (529,282) (899,505)
DISCONTINUED OPERATIONS
Gain on disposal of discontinued operations 117,299 0
------------- --------------
NET (LOSS) BEFORE EXTRAORDINARY ITEM (411,983) (899,505)
EXTRAORDINARY ITEM
Gain on extinguishment of debt 71,881 369,366
------------- --------------
NET (LOSS) $ (340,102) $ (530,139)
============= ==============
EARNINGS (LOSS) PER COMMON SHARE
(Loss) from continuing operations $ (.85) $ (2.26)
Income from discontinued operations .19 0
Income from extraordinary items .11 .93
------------- --------------
NET (LOSS) $ (.55) $ (1.33)
============= ==============
Weighted average number of common shares used to compute net income
(loss) per weighted average share 622,794 397,339
============= ==============
</TABLE>
See Auditor's Report and Notes to Financial Statements.
F-3
<PAGE>
JustWebit.com, Inc. and Subsidiary
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
December 31, 1998
<TABLE>
<CAPTION>
Common Stock Additional Retained
Par Value $.001 Paid-in earnings
Shares Amount Capital (deficit)
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Balances at 12/31/97 1,498,815 1,499 2,106,181 (3,863,412)
Issuance of common stock to settle debt at $1.00 7,768 8 963
Issuance of common stock to settle debt at $3.07 123,312 123 15,674
Sale of common stock in private placement at $1.60 50,000 50 79,950
Net loss for year (530,139)
------------- ------------- -------------- -------------
Balances at 12/31/98 1,679,895 1,680 2,202,768 (4,393,551)
Issuance of restricted common stock
To settle debt at $1.00 2,082,429 2,082 2,087,286
For services at $.77 135,000 135 103,615
For cash at $.18 808,168 808 143,992
To acquire subsidiary at $.50 375,000 375 187,500
Adjustment to eliminate subsidiary goodwill (244,689)
Issuance of S-8 common stock
For services at $1.57 152,637 153 239,099
Options exercised at $.75 50,000 50 37,450
Options exercised at $1.00 100,000 100 99,900
Net loss for year (340,102)
------------- ------------- -------------- -------------
Balances at 12/31/99 5,383,129 $ 5,383 $ 4,856,921 $ (4,733,653)
============= ============= ============== =============
</TABLE>
See Auditor's Report and Notes to Financial Statements.
F-4
<PAGE>
JustWebit.com, Inc. and Subsidiary
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31,
1999 1998
------------- --------------
OPERATING ACTIVITIES
<S> <C> <C>
Net (loss) $ (340,102) $ (899,505)
Adjustments to reconcile net (loss) to net cash
(required) by operating activities:
Stock issued for expenses 343,002 0
Stock issued to retire debt 0 386,134
Depreciation and amortization 8,653 104,487
Book value of assets sold 16,105 0
Changes in assets and liabilities:
Prepaid expenses (202,949) 0
Related party receivables (124,000) 0
Deposits (5,377) 0
Accounts payable (21,938) (27,616)
Accrued liabilities (345,493) (278,961)
Income taxes (1,100) 200
Deferred revenue 226,302 0
------------- --------------
NET CASH (REQUIRED) BY
OPERATING ACTIVITIES (446,897) (715,261)
INVESTING ACTIVITIES
Purchase of securities (246,875) 0
Sale of licenses 330,053 559,315
Purchase of equipment 0 (3,690)
------------- --------------
NET CASH PROVIDED (REQUIRED) BY
INVESTING ACTIVITIES 83,178 555,625
FINANCING ACTIVITIES
Loans - other 251,644 0
Loans - related parties 0 241,655
Loan repayments - other 0 (160,831)
Sale of common stock 282,300 80,000
------------- --------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 533,944 160,824
------------- --------------
(DECREASE) IN CASH AND
CASH EQUIVALENTS 170,225 1,188
Cash and cash equivalents at beginning of year 2,131 943
------------- --------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 172,356 $ 2,131
============= ==============
Supplemental Disclosures of Cash Flow Information Cash paid during the year for:
Interest $ 0 $ 0
Income taxes 1,100 300
</TABLE>
Noncash Investing and Financing Activities
During 1999, the Company issued 2,082,429 shares to retire liabilities in the
amount of $2,089,368, and 375,000 shares to acquire a subsidiary valued at
$187,500.
See Auditor's Report and Notes to Financial Statements.
F-5
<PAGE>
JustWebit.com, Inc. and Subsidiary
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity
JustWebit.com offers small to mid-sized businesses an end-to-end
solution that addresses the challenges associated with implementing
a successful e-commerce strategy. The Company offers any business
access to its free e-commerce web site builder and sells a
comprehensive suite of products and services designed to assist
businesses create a successful online presence. As of December 31,
1999, the Company hosted in excess of 3,000 web sites.
Accounting Methods
The Company recognizes income and expenses based on the accrual
method of accounting.
Revenue Recognition
Revenue is recognized when services are provided. In the case of
revenue recognition on long-term contracts, revenue is recognized
ratably over the life of the contracts.
Earnings (Loss) Per Share
Earnings (loss) per share amounts are calculated based on the
weighted average number of shares outstanding during the periods.
Property and Equipment
Property and equipment are depreciated over their estimated useful
lives. Depreciation and amortization are computed using
straight-line methods over an estimated life of five to seven
years.
Cash and Cash Equivalents
For financial statement purposes, the Company considers all highly
liquid investments with an original maturity of three months or
less when purchased to be cash equivalents.
Income Taxes
The Company records the income tax effect of transactions in the
same year that the transactions enter into the determination of
income, regardless of when the transactions are recognized for tax
purposes. Tax credits are recorded in the year realized.
The Company utilizes the liability method of accounting for income
taxes as set forth in Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" (SFAS 109). Under the
liability method, deferred taxes are determined based on the
difference between the financial statement and tax bases of assets
and liabilities using enacted tax rates in effect in the years in
which the differences are expected to reverse. An allowance against
deferred tax assets is recorded when it is more likely than not
that such tax benefits will not be realized.
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, liabilities, revenues, and expenses during the reporting
period. Estimates also affect the disclosure of contingent assets
and liabilities at the date of the financial statements. Actual
results could differ from these estimates.
NOTE 2: CAPITALIZATION
On July 12, 1999 the Board of Directors and a majority of the
shareholders approved a 1 to 20 reverse stock split, effective
August 16, 1999. These financial statements have been adjusted to
reflect these stock changes as if they had been effective as of the
earliest date reported therein.
F-6
<PAGE>
JustWebit.com, Inc. and Subsidiary
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999
NOTE 3: RELATED PARTY TRANSACTIONS
The officers and directors of the Company are involved in other
business activities and may, in the future, become involved in
other business opportunities. If a specific business opportunity
becomes available, such persons may face a conflict in selecting
between the Company and their other business interests. The Company
has not formulated a policy for the resolution of such conflicts.
At December 31, 1999 the Company owed $79,404 to related parties
for loans and payments made on behalf of the Company.
NOTE 4: INCOME TAXES
Income tax expense was $100 for the year ended December 31, 1999
($500 for 1998). Such amounts differ from the amounts computed by
applying the United States Federal income tax rate of 34% to loss
before income taxes as a result of the following:
<TABLE>
<CAPTION>
1999 1998
------------- --------
<S> <C> <C>
Computed "expected" tax benefit $ (115,601) $ (180,247)
Decrease (increase) in income tax benefit
resulting from:
Change in valuation allowance for
deferred federal, state, and local
income tax assets 139,508 217,857
State income taxes and other, net (23,807) (37,110)
------------- -------------
$ 100 $ 500
============= =============
</TABLE>
The tax effects of temporary differences that give rise to a
substantial portion of the deferred income tax assets are
presented below:
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Accrued officers' compensation and
related costs $ 0 $ 128,978
Net operating loss carryforwards 2,141,662 1,801,660
------------- -------------
Total gross deferred tax assets 2,141,662 1,930,638
Less valuation allowance (2,141,662) (1,930,638)
------------- -------------
Net deferred tax assets $ 0 $ 0
============= =============
</TABLE>
During the years ended December 31, 1999 and 1998, the Company
made no Federal income tax payments.
At December 31, 1999, the Company has approximately $4,700,000
available in net operating loss carryforwards for income tax
purposes. These carryforwards expire in 2006 through 2014. Due to
a change in control and business activity, the net operating loss
carryforwards will most likely never be realized.
NOTE 5: NOTES PAYABLE
At December 31, 1999, the Company owed several individuals a total
of $26,375. The notes bear interest at 12% per year. The Company
is in arrears on the repayment terms.
In December of 1999 the Company received a note in the amount of
$250,000 from Newport Federal Financial. This note carries an
interest rate of 12% and is due and payable on January 2, 2001. As
an incentive for entering into the note agreement, the Company
issued 180,000 shares of its common stock to Newport Federal
Financial.
F-7
<PAGE>
JustWebit.com, Inc. and Subsidiary
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999
NOTE 6: STOCK OPTION PLAN AND WARRANTS
At December 31, 1999, the Company set aside 1,000,000 shares of
its common stock for an incentive stock option plan. Options were
granted for 183,000 shares at $.75 and 100,000 shares at $1.00.
The options vest over a three year period starting August 1, 2000.
F-8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Superior Wireless, Inc. December 31, 1999 financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000793986
<NAME> JustWebit.com, Inc.
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1.00
<CASH> 172,356
<SECURITIES> 246,875
<RECEIVABLES> 130,419
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 752,599
<PP&E> 48,462
<DEPRECIATION> (5,014)
<TOTAL-ASSETS> 801,424
<CURRENT-LIABILITIES> 421,129
<BONDS> 251,644
0
0
<COMMON> 5,383
<OTHER-SE> 123,268
<TOTAL-LIABILITY-AND-EQUITY> 801,424
<SALES> 98,923
<TOTAL-REVENUES> 98,923
<CGS> 10,360
<TOTAL-COSTS> 617,745
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 142,121
<INCOME-PRETAX> (529,182)
<INCOME-TAX> 100
<INCOME-CONTINUING> (529,282)
<DISCONTINUED> 117,299
<EXTRAORDINARY> 71,881
<CHANGES> 0
<NET-INCOME> (340,102)
<EPS-BASIC> (.55)
<EPS-DILUTED> (.55)
</TABLE>
