U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB/A
(Mark One)
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-15745
MYWEB INC.COM
(Name of Small Business Issuer in Its Charter)
NEVADA 88-0207089
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Block G, Unit G606, Phileo Damansara 1
No. 9, Jalan 16/11
Off Jalan Damansara, 46350 Petaling Jaya
Selangor, Malaysia
(Address of principal executive offices)
(603) 460-9282
Issuer's telephone number (including area code)
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock American Stock Exchange
Securities registered under Section 12(g) of the Exchange Act:
--------------------------------------------------------------------------------
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes....X....
No........
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB/A or any amendment to this Form 10-KSB/A. [ ]
State issuer's revenues for its most recent fiscal year: $3,512,000
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The aggregate market value of the voting equity (common stock) held by
non-affiliates of the Registrant on March 31, 2000 was approximately $48,974,880
based on the closing price of $12.87 of such stock on such date, as reported by
the American Stock Exchange ("AMEX"). Shares of common stock held by each of our
officers and directors, the directors of our subsidiary, TecnoChannel
Technologies Sdn. Bhd. and by each person who owns 10% or more of the
outstanding common stock have been excluded as such persons may be deemed to be
affiliates. This determination is not conclusive and does not constitute an
admission of affiliate status.
ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PAST FIVE YEARS
Check whether the issuer has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes ...X... No ........
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes of common
equity as of March 31, 2000:
11,121,357 shares of common stock, par value $0.01 per share
Transitional Small Business Disclosure Format (check one):
Yes ........ No ....X....
Certain statements under item "Management's Discussion and Analysis of
Operations" and elsewhere in this Form 10KSB/A constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are typically identified by their inclusion of phrases
such as "we anticipate," "we believe" and other phrases of similar meaning. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others: general economic and business conditions; competition; political
changes in international markets; operating costs; costs of capital equipment;
changes in foreign currency exchange rates; changes in business strategy or
expansion plans; quality of management; availability, terms and development of
capital; fluctuating interest rates and other factors referenced in this Form
10KSB/A.
PART I
Item 1. Description of Business
History
We were incorporated under the laws of the State of Nevada, The United
States of America, on February 20, 1985 as a limited liability company under the
name Sperzel-NV, Inc. From 1985 until 1992, we manufactured, distributed and
sold a proprietary line of accessories for use by handicapped individuals.
On May 21, 1992, we filed a petition for relief under Chapter 11 of the
federal bankruptcy laws in the United States Bankruptcy Court for the District
of Nevada. The Bankruptcy Court confirmed our plan of reorganization on January
31, 1994. Pursuant to our plan of reorganization, we purchased the assets of
Asia Media Communications, Ltd. and changed our name from Sperzel-NV, Inc. to
Asia Media Communications, Ltd. ("Asia Media"). The assets we purchased
consisted primarily of a video library that was intended to be distributed in
the Far East. The video library proved commercially unexploitable during 1995.
Beginning in 1995, our principal activity consisted of exploring
opportunities in other business ventures, including:
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(i) In March 1996, a merger with Kremlyovskaya Group, Inc., a
privately held Delaware corporation with a subsidiary company
involved in the distribution of vodka and other products in
foreign markets; and
(ii) In December 1996, the acquisition of IPC Corporation
(Australia) Pty., Ltd. ("IPC .Australia"), an Australian
company by our wholly-owned subsidiary, AMC International
Holdings Ltd, a British Virgin Islands Corporation ("AMC
Holdings").
By mutual consent, the merger with Kremlyovskaya Group, Inc. was
rescinded in August 1996. AMC Holdings was sold in September 1997 to an
unrelated party, effective as of December 31, 1996, the date of the acquisition
of the capital stock of IPC Australia.
Acquisition of TecnoChannel
On February 23, 1999, we effected a one-for-one hundred reverse split
of our outstanding common stock, so that each one hundred shares of our common
stock issued and outstanding on such date was deemed to be one share of common
stock.
On February 24, 1999, we acquired all of the issued and outstanding
stock of TecnoChannel Technologies Sdn. Bhd., a privately-held Malaysian
corporation ("TecnoChannel"), in exchange for 8,500,000 shares of our common
stock which we issued to the shareholders of TecnoChannel. We also issued
440,000 shares of our common stock to GEM Ventures Ltd. for its services as our
financial adviser in connection with this transaction. As a result of the
reverse split of our outstanding common stock on February 23, 1999 and
subsequent issues of our common stock on February 24, 1999, the aggregate
shareholdings of those persons who were our shareholders before these
transactions were reduced to less than 1% of our issued and outstanding common
stock immediately after these transactions. Our acquisition of TecnoChannel
allowed us to adopt and focus on the business of TecnoChannel. In April 1999, we
changed our name from Asia Media Communications, Ltd. to MyWeb Inc.com.
Business Overview
We are a major Asian Internet online service and portal company that
uses alternative access devices as an additional means of distributing our
portal services. Our main portals are currently in the People's Republic of
China (the "PRC" or "China"), Singapore and Malaysia, each of which are focused
on delivering locally-targeted, local content and electronic commerce. Our
portals are principally accessed through co-branded television set-top boxes and
through personal computers.
The Business of Online Services ("Portals")
Portals are gateways or entrances to the Internet. They have the
potential to be central hubs for content, communication, community, and commerce
on the Internet. Portals have come to typically describe a starting point page
with a hierarchical, topical directory, a search window, and added features like
news headlines and stock quotes. In this respect, all default pages that get
loaded upon connection and which provide features like search engines could
generally be termed Portals. Typical examples include Yahoo, Netscape and
America Online ("AOL").
Portals generally provide a comprehensive, intuitive and user-friendly
online guide to web navigation and aggregated information content. It would
usually include a hierarchical, subject-based directory of websites, which
enables Web users to locate and access desired information and services through
hypertext links included in the directory. Portals also normally incorporate a
rich set of current and reference information from leading content providers,
including real-time news, stock quotes, business profiles, stock investing
commentary, sports scores, television listing, weather information, maps with
driving directions, searchable yellow pages, People Search white pages and
e-mail listing.
Generally, the main revenue generators for portals are advertising on
the Internet and electronic commerce ("e-commerce") revenues.
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a. Advertising on the Internet
The Internet offers web-based advertising, which has significant
advantages over traditional advertising mediums in a number of ways. In
addition to allowing an advertiser to target a specific audience, the
Internet also enables users to interact with the advertising messages
presented on the web sites. The Internet also allows the advertiser to
track the number of impressions or times that an advertising message
appears in page views downloaded by users, which is verifiable by an
independent third-party auditor. Advertisers can also measure the
effectiveness of advertising in generating "click-through" or user
requests for additional information made by clicking on the
advertiser's banner linking the user to the advertiser's websites.
b. E-commerce
The Internet enables features and functions that are unavailable in
traditional media which include permitting online retailers to interact
effectively with customers and advertisers to target specific
demographic groups by capturing valuable data on customer tastes,
preference and shopping patterns.
We seek to become an internationally-recognized brand for providing
high-quality, localized content, services and e-commerce. This entails offering
an international one-stop information and lifestyle content in traditional
Chinese and English, providing access to entertainment, news, e-commerce,
business, finance, health education and a myriad of other services to serve the
needs of a diverse group of people and cultures within the Asian region. Through
strategic alliances with hardware manufacturers, we provide set-top boxes as a
means of capturing users onto our Internet portal.
Our current focus markets are China, Malaysia and Singapore. We plan to
further expand our operations into Thailand, Indonesia and Latin America within
the next 12 months.
Our Business Model
In developing our business strategy, we have sought to integrate our
business lines by becoming involved in what we believe are the four fundamental
layers of technology within the Internet field. In the context of set-top boxes
for Internet television access, the four fundamental layers of technology are:
- Software Layer: this involves providing interfacing software to enable set-
top boxes to access the Internet and perform interactive functions and a
software that enables Internet service providers ("ISPs") to serve set-top
box users. This means that the software used within the set-top box must be
compatible with the software used by the ISPs to host and deliver Internet
content to the end-user.
- Device Layer: this involves cooperating with hardware manufacturers in the
design, production and distribution of the set-top box, the hardware that
connects the user to the Internet through the television via a modem. We
participate in the device layer through our co-branded set-top boxes, which
are manufactured by our strategic alliances with our partners.
- Communications Layer: this involves collaborating with telecommunication
companies ("Telcos") and ISPs, who offer a delivery channel to the
Internet.
- Content Layer: this involves providing information, applications, links and
material, both in static and interactive formats, whether free or for a
price. Content can also be in the form of advertising and electronic
commerce.
We are primarily involved in the software and content layers. However
we also work with ISPs and Telcos (the communications layer) and hardware
manufacturers (the device layer) to drive the deployment of MyWeb services to
the end customers. Our primary involvement in the software layer is through our
Thunder software which allows set-top boxes to function and our ThunderServ
software which allows ISPs and Telcos to offer television Internet access to
their subscribers. Our primary involvement in the content layer is through our
portals.
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In taking part in the four layers, we have actively sought to build
strategic alliances with third parties, including manufacturers, ISPs and
content and application providers. This has enabled us to focus our research and
development expenditure and exploit the marketing potential of each alliance's
existing distribution channels and customer base.
The products and services that we offer, in terms of these four layers
of technology, are set forth below.
a. The Software Layer
Software for set-top boxes: Thunder
We design and develop the software solution that enables set-top boxes
to function. This software, called Thunder, can be adopted by any
set-top box manufacturer. All of the manufacturers involved in the
production and distribution of our set-top boxes to date have used our
Thunder technology. For a description of our strategic alliances with
these manufacturers, see "The Device Layer", below.
We are currently developing an alternative version of the Thunder
software based on the Linux platform. A prototype version has been
developed. However, commercial production of co-branded set-top boxes
based on the Linux platform has yet to commence.
Software for ISPs: ThunderServ
We also designed and developed a software solution that provides an
interface between the set-top box and the ISP. We license this
software, called ThunderServ, to ISPs with whom we have developed
strategic relationships.
ThunderServ software currently incorporates the following features:
- Integrated electronic billing module for completely automated and
paper-free billing;
- Personalization module to allow personalization of MyWeb Online
Services for subscribers;
- User access control based on a password for restricting unauthorized
usage;
- Remote upgrade module to allow remote online upgrading of client
software; and
- Parental control for blocking access to specified sites.
We have strategic alliances with ISPs in China and Malaysia that
license our ThunderServ software to provide television Internet access
to their subscribers. In each market we seek to identify and establish
relationships with leading ISPs in order to gain access to the broadest
subscriber base. We have relationships with MIMOS Berhad in Malaysia,
HKNet in Hong Kong and Beijing Telecom in China. We recently
established a relationship with Turnaround Technology Ltd. in Indonesia
("Turnaround") and Asia Infonet Co. Ltd. ("Asia Infonet") in Thailand.
These relationships are discussed more fully under "The Communications
Layer."
b. The Device Layer
The set-top box is an Internet access device that is designed to sit on
top of the television. A built-in modem connects the television to the
Internet via an ordinary telephone line. To install the set-top box,
the user simply connects the television and telephone to the set-top
box. Once connected through an ISP, the user can surf the Internet with
an infrared remote control, aimed at the television screen, which
functions like a mouse, and allows the user to "point and click."
Alternatively, the user can use a cordless infrared keyboard to enter
text and navigate within the portal.
Set-top boxes are generally low-cost and easy to use products that
deliver one or more interactive benefits. Consumers use set-top boxes
to supplement personal computers and, to a certain extent, replace
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personal computers. Set-top boxes can also offer consumers a range of
services, from the provision of basic functions such as teletext (a
one-way content), to complete interactive services such as
video-on-demand, web browsing and e-mail.
Rather than manufacture the set-top boxes ourselves or source through a
single supplier, we have chosen to enter into strategic relationships
with different manufacturers. We have done so in order to ensure that
MyWeb set-top boxes will be available in the market to a greater number
of users who wish to access the Internet using televisions. Under these
arrangements, the manufacturers principally drive the marketing and
sales process through the co-branding of MyWeb set-top boxes. We
believe that these arrangements are advantageous for us because the
manufacturers are responsible for carrying any inventory of the set-top
boxes and we therefore are not affected by any holding costs associated
with this activity. Having a variety of manufacturers is also
beneficial for us because it helps us to penetrate the marketplace with
the MyWeb brand-name and portal, to facilitate greater acceptance of
and compatibility for our Thunder software, and also to better realise
our vision of broadening the use of the television as an alternative
means of access to the Internet.
Generally, we seek to establish non-exclusive relationships with
well-known manufacturers in each market in which we operate. We
currently have business arrangements, as further described below, with
Philips Consumer Electronics ("Philips"), Qingdao Haier Computer Co.,
Ltd. ("Haier") and Soyea Technology Company Ltd. ("Soyea") to jointly
develop non-PC access devices and/or manufacture set-top boxes that
carry the MyWeb brand. In order to further expand our distribution
network, we are currently exploring opportunities with other
manufacturers in our markets.
Philips: We established our first strategic alliance for the
manufacture of set-top boxes with Philips in December 1997. Under the
first arrangement, Philips produced, manufactured and distributed the
Philips MyWeb TM brand of set-top box. The arrangement was terminated
upon the expiry of the agreement in 1999. We continue to work with
Philips to develop an embedded Internet television functionality card,
which is a printed circuit board or PCB card that can be installed
inside television sets and which would allow users to access the
Internet through the television.
Soyea: Soyea, a company listed on the Shenzhen Stock Exchange and a
subsidiary of the West Lake Electronics Group, is one of China's major
television manufacturers. We entered into an agreement dated May 18,
1999 with Soyea, pursuant to which we agreed to provide the Thunder
Software and manufacturing specifications and details for the set-top
boxes. Soyea, in return, agreed to provide the manufacturing
infrastructure, marketing and transportation of the end product
throughout China. We have also agreed to undertake joint research and
development with Soyea, as well as to share the technology of our
future projects developed with Soyea.
Haier: Haier is one of China's major consumer electronics and
whitegoods manufacturers, based in Shanhong, China. We entered into a
joint venture agreement in July 1999 with Haier to cooperate in product
development, marketing and promotion, the provision of content and
e-commerce and the joint development of the television Internet market.
Under this agreement, Haier has agreed to manufacture MyWeb set-top
boxes, and we have agreed to provide software and technical support,
product licensing, recommendations on marketing as well as subsidies
for the set-top boxes. We believe we will benefit from this strategic
relationship because of Haier's strong brand recognition and wide
distribution network in China.
In January 2000, TecnoChannel entered into a license agreement with
MyWeb Beijing to license our Thunder software and other intellectual
property related to the production of our set-top boxes to MyWeb
Beijing. Due to regulations in China relating to the importation and
licensing of foreign technology, such licensing agreements between a
Chinese company and a foreign company are required to be approved by
relevant regulatory authorities. We have applied for and are waiting
for such approval to be granted. MyWeb Beijing subsequently entered
into a sub-licensing agreements with Soyea and Haier in February 2000.
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The Thunder software provided to Soyea and Haier is programmed to have
our MyWeb websites as the default home page once the Internet is
accessed through these set-top boxes. Through this arrangement we
secure visitors who use the co-branded MyWeb set-top boxes, to the
MyWeb websites.
c. The Communications Layer
Telecommunication companies and ISPs act as the delivery channel
through which owners of MyWeb set-top boxes access the Internet. We
offer ISPs and Telcos an attractive low-cost solution for increasing
subscribers to their networks. All set-top boxes users require an ISP
account to access the Internet. ISPs receive a direct benefit from
their partnership with us.
From our perspective, linking up with these companies will help
distribute MyWeb set-top boxes to a captive fixed-line subscriber
market and to the market of potential Internet users who may be unable
to afford or unwilling to pay for a personal computer. From the
viewpoint of a purchaser of a MyWeb set-top box, the box will come
already hooked up with an ISP. All the purchaser needs to do is to
simply "plug and play."
We have established strategic alliances with ISPs in several countries
to provide maintenance and updating of software, joint promotions, and
increasing consumer awareness. Depending on the arrangements with each
ISP, we may receive certain fees which are further described below. In
return for providing the ThunderServ software, we receive marketing
benefits, such as advertising space on the ISP's websites.
Details of our arrangements with these ISPs are set forth below.
Jaring (Malaysia): Jaring, the ISP arm of MIMOS Berhad, is a large ISP
in Malaysia. My Web has an informal arrangement with MIMOS Berhad for
Jaring to be the default ISP provider for the set-top box users to
access the Internet. For the Jaring subscribers we service, we charge
an initial registration fee and a 10% fee based on the access fees paid
through us.
ChinaNet (China): ChinaNet, a major ISP in China, is the ISP arm of
Beijing Telecom, the Chinese national telecommunications company. Under
the terms of our agreement with Beijing Telecom, which we entered into
in April 1999, we have agreed to jointly promote the Chinese portal of
MyWeb Online Services with Beijing Telecom. Beijing Telecom has placed
a MyWeb banner advertisement on its ChinaNet home page since we
commenced co-marketing activities.
Turnaround (Indonesia): On December 3, 1999, we entered into a license
agreement with Turnaround licensing the use of our Thunderserv software
to Turnaround. Under the agreement, we will jointly manage and market
the Indonesian version of our MyWeb Online Service and share
advertising and transaction revenues. We will also jointly market MyWeb
set-top boxes in Indonesia. The term of the license is from January 1
to December 31, 2000, and Turnaround is to pay to us $2 million in
license fees for the period of the license.
Asia Infonet (Thailand): Asia Infonet is an ISP in Thailand. On
February 22, 2000, we entered into an agreement with Asia Infonet to
jointly distribute and market a co-branded portal in Thailand,
localized in Thai language. Under the terms of the agreement, Asia
Infonet has agreed to provide consumers with local access to MyWeb's
portal and allow MyWeb access to its distribution channels at no cost
to distribute and market the product and MyWeb has agreed to provide
logos and icon links to Asia Infonet's websites on its portal.
d. The Content Layer
We established the MyWeb Online Service in October 1997. The MyWeb
Online Service is an internet lifestyle and business content provider
of information and interactive applications, such as e-commerce,
financial services, educational services, games and chat rooms. Portals
for the MyWeb Online Service are available in each country in which we
operate, and are customized to provide services and information in the
local language, for local users.
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The current internet properties in the MyWeb Online Service family are:
- www.mywebinc.com
- www.myweb.com.sg (Singapore)
- www.myweb.com.my (Malaysia)
- www.myweb.com.cn (China)
- www.myweb.com.hk (Hong Kong)
We are in the process of launching several new internet properties that
will join our existing family of MyWeb Online Service properties.
Our internet strategy involves partnering with third-party content
providers, to allow their content to be accessible from within our
portal. We believe that this will assist us in making our portals
attractive and self-contained, so that users will find all of their
internet interests within our portal, leading to longer time within our
portal and more repeat visits. The provision of interesting and
appealing content, offering e-commerce possibilities and ensuring a
high visit rate to MyWeb's portals will help generate e-commerce and
advertising revenues. To this end, we have formed business
relationships with providers in several fields, including Unilever
(Malaysia) Holdings Sdn. Bhd. ("Unilever"), MPH Bookstores, Tanjung
Golden Village, United Artists Cinemas, The China People's University,
Xinhua News Agency, China Sci-Technologies International Trust and
Investment Co. Ltd. Such relationships are not pursuant to any formal
documentation.
The MyWeb Online Service family has local content targeted at local
internet users and is generally organised into six channels. A summary
of the main content in each channel is described below:
--------------------- -------------------------------------------------
Channel Content
--------------------- -------------------------------------------------
Business - Financial information from major financial
and Finance centres
- Stock market and economic commentary in the
regional markets
- Bulletin board to host financial discussions
and forums
- Access to online stockbroking through
partnership with Hwang DBS Securities (in
Malaysia only)
- Access to online banking for set-top box users
through partnership with RHB Bank (in Malaysia
only)
--------------------- -------------------------------------------------
Education and - Educational content through partnership with
Career Beijing Cybton Technology Development Co. Ltd.
("Cybton") (China only)
- Directory of educational learning institutes
and online tutorials for students (Malaysia
only)
- Company directory and articles on professional
industries
- Career advice and job listings
- Resume bank facility
- Career fair, resume administration programme,
and job search through a recruitment and career
development website (Jobpolitan), developed by
MyWeb in Malaysia
--------------------- -------------------------------------------------
Food and - Food recipes
Entertainment - Listing of entertainment events
- Movie synopses, cinema movie listings and
screening schedules of certain local movie
theatres
- Celebrity news
- Music reviews
- Tips on computer games
- Book reviews
- Special interest chat rooms
- Online quizzes (China only)
- Horoscopes, comics, jokes and opinion polls
----------------------- -------------------------------------------------
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--------------------- -------------------------------------------------
E-Shopping - Movie ticketing
(currently in - Music CDs
Malaysia only) - Bakery and cakes
- Household consumer products
- Books through partnership with MPH Bookstore
- Stationery and office supplies
- Online promotional coupons and discount
vouchers
--------------------- -------------------------------------------------
Health - Discussions with health and beauty industry
and Beauty professionals
- Medical information
- General education for baby care (China only)
- Health advice
- Beauty tips
- Special women's section dedicated to covering
career, relationships, money and parenting
(Malaysia only)
--------------------- -------------------------------------------------
News - News through links with local and international
news providers
- Sports news through partnership with Sharkwave
Information Technologies Company Limited,
an internet-based provider of sports content
(China only)
--------------------- --------------------------------------------------
Other Facilities - Travel articles and general advice
- Bargains and special offers for travel and
tours
- Travel ticket reservations
- Auction site (www.easy2bid.com)
- Electronic planning calendars and greeting
cards (Scheduler)
- Classifieds
- E-mail
--------------------- -------------------------------------------------
Our Key Strategies
We envisage advertising and e-commerce to be the two main sources of
our revenue going forward. Consequently, our key strategy is to increase
advertising and e-commerce activities by continuing to develop our portal
content and to expand its distribution by enlarging our set-top box distribution
network. This entails continuing the development of our set-top box software and
server applications technologies to serve consumers.
a. Advertising
The Internet has become a new means of communication, marketing and
distribution for the advertising industry. The volume of traffic
generated by our portal network by our products and services allows our
portal network to be an attractive vehicle to host advertising for
targeted audiences. We are able to generate significant revenue by
hosting advertisements on, and soliciting sponsorship for, our
myweb.com portals in China, Malaysia and Singapore.
The principal forms of advertising that we offer are:
- banner ads (small, rectangular graphics that appear on most consumer
websites, with either static or moving graphics);
- button ads (small, squarish ads that are usually at the bottom of a
webpage and contain only a corporate name or brand, and which link
the webpage directly to the corporate homepage of the advertiser);
and
- sponsorship or co-branded channels (advertising that links companies'
brands and products with the editorial content on targeted websites).
We use a range of pricing and products to sell advertising content on
our portals. Our advertising rates, which are often negotiated on a
case-by-case basis, vary according to several factors, including the
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duration of the advertising contract, the cost per million of page
views, commission negotiated and channel sponsorship.
In the past, our main advertising customers have been:
In China: Compaq, Kodak, JiDa, Yingdong Studio.
In Malaysia: Universal Music, Jaring, MPH Bookstores, KL Mutual Fund,
Noel Gifts, Star Online, Mines Wonderland, I-Bhd.
b. E-commerce
We believe that e-commerce is a natural extension of our portal
network. Currently, e-commerce is not developed within Asia nearly to
the extent it is in the United States and we have only begun to
generate revenues from e-commerce in 1999 in Malaysia. We believe this
is due to several factors, including purchase fulfilment and payment
processing. Our transaction driven e-commerce business generates
revenue by selling products or services on the Internet. Our e-commerce
business is currently operated by our subsidiary companies, Unioffice
Sdn. Bhd. ("Unioffice") and MyWeb E-Commerce Sdn. Bhd. ("MyWeb
E-Commerce").
Unioffice is engaged in the online sales of office stationery supplies
while MyWeb E-Commerce is an online shop for fast moving consumer
goods. MyWeb E-Commerce mainly distributes Unilever, Kao and Indocafe
branded products.
To expand our e-commerce business, in January 2000, we acquired a 95.0%
interest in Easy2Bid Pte. Ltd. ("Easy2Bid"), an internet auction
company incorporated in Singapore, in exchange for 6,200 shares of our
common stock at the agreed value of S$32.26 per share. Easy2Bid
operates the online auction site, www.easy2bid.com. We plan to expand
Easy2Bid's business in Singapore and use it as a base to start online
auction sites in Malaysia and China.
We entered into a sales and purchase agreement, dated January 2, 2000,
to acquire a 66.67% interest in Pacific Office Supplies Sdn. Bhd.
("Pacific Office"), a Malaysian corporation, for cash consideration of
Malaysian Ringgit ("RM") 4,666,667. The amount of the consideration is
subject to renegotiation if, upon the completion of satisfactory due
diligence, the revenue and net tangible assets of Pacific Office varies
by more than 3% as compared to its revenues and net tangible assets as
at the date of the agreement. Pacific Office is engaged in the
stationery and office supplies trading business. We plan to develop an
online sales operations for Pacific Office and integrate such online
operations into our portals to expand our e-commerce operations.
As part of our efforts to enhance our image and increase our public
awareness, we engaged Merger Communications, Inc. ("Merger
Communications") for a one year period, beginning September 28, 1999,
to provide media relation services in the United States. In
consideration for such services, we issued Merger Communications 15,000
shares of our common stock.
Customers
Our major customers (that account for more than 5% of our total revenue) for our
two main business lines are the following.
% Contribution to total
Major Customers 1999 revenue
--------------- -----------------------
Advertising Cyber Village Pte. Ltd. 9.5%
Alam Teknokrat Sdn. Bhd. 0.9%
Compaq (China Investment Co. Ltd.) 0.2%
TA Decor Sdn. Bhd. 0.2%
Wonder Snow Sdn. Bhd. 0.2%
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E-commerce Hangzhou Westlake Electronics 26.5%
Import and Export Co. Ltd.
Pemasaran Jaya Mas Sdn. Bhd. 5.4%
Saw Beng Swee Sdn. Bhd. 8.5%
Visan Holdings Sdn. Bhd. 8.5%
Elemkay Resources Sdn. Bhd. 5.5%
E-commerce revenue from Hangzhou Westlake, which contributed 26% of our
total revenue for the year 1999, represented non-recurring sales of set-top
boxes manufactured by Philips, which were ordered through our portal in China.
We are not dependent upon any single customer or supplier in our business.
Licenses
We currently license the use of the QNX operating system with no
termination date for our Thunder software installed in each of our set-top
boxes, at a price based on the number of set-top boxes produced. There are
alternative operating systems available, for example, Linux; hence, subject to
the redevelopment of the Thunder software on alternative operating systems, we
are not dependent on any particular licensing agreement or contract.
Competition
Our co-branded set-top boxes, which are manufactured and distributed by
set-top box manufacturers with whom we have entered into strategic partnerships
may compete with set-top boxes manufactured by other companies. However, as we
are essentially a portal business, we consider other set-top box manufacturers
in Asia as our potential partners rather than competitors of our operations.
Our MyWeb Online Service family of Internet properties operates in a
highly competitive product market. Our competitors for Internet traffic and
advertising include other existing Internet portal sites. We believe the
principal competitive factors in the consumer online services industry include:
- product features
- brand recognition
- ease of use
- ease of access through distribution channels such as Internet search engines
and links on other Internet properties
- types and manner of advertising
- quality of content
We believe that our Internet properties currently compete effectively
in these areas and that we have a competitive advantage over our competition.
Our competitive advantage comes from two main sources: we have strategic
partnerships with companies that will help direct traffic to our online
properties; and we customize our Internet properties for each of our target
markets. Most significantly, the main differentiation that sets us apart from
our competitors is the localization of the language and content of the MyWeb
Online Service. This brings us much closer to the user in that the user's local
needs and requirements could be met much more easily. This is of particular
significance in our biggest priority market, China, where the majority of the
population speaks Mandarin while the majority of the web content on the Internet
is in English and is catered to the US and European market.
Our most significant existing competition in our target markets comes
from existing Chinese language Internet portal sites, including:
- Sina.com (Chinese);
- Netease (Chinese);
- 263.net (Chinese);
- Sohu (Chinese);
- GB Yahoo! (Chinese);
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Other potential competitors are:
- Eastnet (English);
- 21cn (Chinese);
- Shanghai Online (Chinese);
- ChinaByte (Chinese);
- Hong Kong Telecom's Navigator (Chinese);
- Catcha.com (English);
- Lycos Asia (English);
- The Star Online (English);
- e-Media (English).
There has been a proliferation recently in the number of internet entities
that provide free services and rely on advertising for their revenue, each of
which also competes with us for advertising revenue. We may also encounter
competition from ISPs, Web site operators and providers of Web browser software
(such as Netscape or Microsoft) that incorporate search and retrieval features
into their offerings. Our internet properties compete for user traffic
principally on the basis of ease of use and functionality. We compete for
advertising revenues with other internet properties and advertising outlets
principally on the basis of cost and results. In addition to our internet based
competition, we also compete with traditional offline media such as television,
radio, billboards, magazines, and newspapers for a share of advertiser's total
advertising budgets.
Our Thunder and ThunderServ software applications compete with similar
software applications developed by other companies, such as Microsoft's Venus
(which is already available on the Chinese market) and NUWA, which is developed
by the People's Republic of China's Science and Research Institute. We compete
with such software on the basis of cost, functionality, support, and
reliability.
Our co-branded set-top boxes, which are manufactured and distributed by
set-top box manufacturers with whom we have entered into strategic partnerships
may compete with set-top boxes manufactured by other companies in sales, and
consequently, Internet user traffic that is directed to our portal network
through our set-top boxes. Microsoft's WebTV was the first company to target the
market for set-top boxes through a combination of software applications for use
in set-top boxes, co-branding of set-top boxes with manufacturers of set-top
boxes, and branded internet properties targeted towards users of set-top boxes.
We do not consider WebTV as our competitor, as it currently does not operate in
the Asian market that we are in. However, competition may arise from Asian
set-top box manufacturers such as TCL International Holdings Limited and Legend
Holdings Limited. Although we are not a set-top box manufacturer, we may compete
with these companies in directing internet user traffic to our portal through
our set-top boxes.
Competition may also arise from companies which provide alternative access
systems and devices to the Internet, including high speed broadband satellite
service, WAP (wireless application protocol) devices and local multi-point
distribution systems in the Asian market.
Recent developments
On February 15, 2000, we entered into a license and service agreement
with MyWeb Americas, Inc. ("MyWeb Americas"). The agreement allows MyWeb
Americas to develop, offer and promote television Internet access and Spanish
and Portuguese versions of our MyWeb Online Services to markets in Latin
America. Under the agreement, MyWeb Americas may use our Thunder and Thunderserv
software, and our intellectual property rights relating to our MyWeb Online
Service, and may also sub-license and promote our technology within the Latin
American markets. The agreement and license is valid for a term of five years,
after which the agreement and license will automatically be extended for
successive three-year terms. Either party may terminate the agreement and
license by providing at least 90 days' notice before the end of a term. In
accordance with the agreement, MyWeb Americas is to issue to us 3,405,405 shares
of its common stock. MyWeb Online Services for the Latin American market are
still being developed, and we anticipate that they will be ready by the end of
2000.
We have entered into a Shareholders' Agreement, dated February 15,
2000, among all of the shareholders of MyWeb Americas (the "Shareholders'
Agreement"). Subject to certain exceptions, the Shareholders' Agreement provides
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shareholders with a right of first refusal to purchase any shares of MyWeb
Americas that any shareholder wishes to sell and tag-along rights to include a
pro-rata portion of their shares in any proposed sale of shares by any
shareholder. Shareholders who wish to transfer their shares are required to
obtain an opinion of counsel that such transfer may be effected without
registration under the U.S. Securities Act of 1933, as amended, or that such
shares have been registered with the Securities Exchange Commission under an
effective registration statement. Subject to certain terms and conditions, the
shareholder of MyWeb Americas' Series A preferred shares has an option to
purchase additional Series A preferred shares and a right of first offer to
subscribe for additional shares that MyWeb Americas proposes to issue. In
addition, certain actions cannot be taken, including, but not limited to,
altering the rights or privileges of MyWeb Americas' Series A preferred shares,
entering into any transaction with an affiliate and the incurrence or guaranty
of indebtedness in excess of $500,000, without the vote of the directors elected
by such shareholder owning the Series A preferred shares.
On March 22, 2000, we entered into an agreement to acquire a strategic
equity stake of 25% - 36% in Jingqi.com, one of the largest retail bookstore
chains in China. Jingqi.com has launched its online bookstore and has signed on
as a merchant on MyWeb's E-Commerce shopping mall, which is to be launched in
2000. Pursuant to this agreement, MyWeb will manage the online payment and
direct Internet traffic to the Jingqi.com website.
Governmental Regulation
The Internet largely operates outside the scope of U.S. government
regulation. Standards are set by an inter-related group of independent,
non-profit bodies, but no U.S. agency or organization exerts formal regulatory
control over the market.
We are subject to governmental regulation in the countries in which we
conduct business. The countries currently include: China, Malaysia, and
Singapore. The types of governmental regulation to which our business is subject
include regulation of currency conversion, regulation of telecommunications
services, regulation of information and content, and regulation of electronic
commerce.
Regulation of the PRC Internet Industry
Overview. The PRC is currently our largest and most important market.
At present, there is no legislation in the PRC directly addressing the Internet
businesses we are engaged in. However, certain areas related to the Internet,
such as telecommunications, international connections for computer information
networks, information security and censorship, as well as foreign investment in
those areas, are covered in detail by a number of existing laws and regulations.
Some of these existing laws and regulations, which may impact foreign investment
in various Internet businesses in China, are promulgated by various governmental
authorities, such as the Ministry of Information Industry ("MII") (formerly the
Ministry of Posts and Telecommunications, or MPT), the State Administration for
Industry and Commerce ("SAIC"), or the Ministry of Public Security.
The PRC legislature and regulatory authorities are currently in the
process of preparing new legislation that will govern or affect the PRC Internet
sector. For example, the SAIC is currently considering adopting new regulations
governing online advertising. We cannot predict the timing and effects of such
new regulations and may be adversely affected by one or more of the following:
- new laws or regulations, or different interpretation of existing laws
and regulations;
- pre-emption of provincial or local laws by national laws;
- our ability to timely obtain the necessary administrative approvals
and licences;
- our ability to comply with applicable administrative requirements;
- content restrictions on our Internet properties;
- confiscatory taxation;
- restrictions on imports;
- restrictions on foreign investments;
- currency devaluations;
- expropriation or nationalization of our operations, which could
result in the total loss of ownership and control of any assets or
operations that we develop in China; and
- adoption of measures intended to reduce inflation, such as price
controls.
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There are substantial uncertainties regarding the proper interpretation
of existing PRC laws and regulations relating to the Internet Industry and there
are likely to be new PRC laws and regulations relating to the Internet sector
adopted in the future. In particular, the PRC does not have a well-developed
body of laws governing foreign enterprises, such as those relating to the
permissible percentage of foreign investments. Official Chinese statements
regarding these evolving policies have been conflicting and are subject to broad
interpretation and modification.
The legal issues, risks and uncertainties relating to the PRC
government laws and regulations generally relate to the legality of MyWeb
Beijing's ownership structure, whether the PRC government will restrict or
prohibit the distribution of content over the Internet, whether the imposition
of additional regulatory requirements may result in our non-compliance with
applicable law, whether we will be able to acquire future licenses or permits
necessary to conduct our operations in the PRC. Some of these issues, risks and
uncertainties include the following:
- Various officials of the MII have, during 1999, stated publicly that
foreign investment is prohibited in the PRC Internet sector, including
in Internet service providers and Internet content providers.
- Foreign investment is prohibited in businesses providing "value-added
telecommunication services", including "computer information services"
or "electronic mail box services". However, the relevant regulation is
silent as to whether the Internet business is included in these
businesses in which foreign investment is prohibited.
- The MII has stated recently that it intends to adopt new laws or
regulations governing foreign investment in the PRC Internet sector in
the near future. At this time, we do not know the timing or terms of
these new laws or regulations or whether or how they will apply to us.
- According to press reports, under the agreement reached in November
1999 between China and the United States concerning the United States'
support of China's entry into the World Trade Organization ("WTO"),
foreign investment in PRC Internet services will be liberalized at the
same rate as other key telecommunications services. In addition,
according to press reports, key telecommunication services in the PRC
will be subject to a foreign ownership limit of 49% for the first two
years after China's entry into the WTO and 50% thereafter. We do not
know if this agreement will in fact be implemented, the timing thereof,
the terms of any new laws or regulations resulting from such
implementation, or whether our Internet business in China will be
subject to these foreign ownership limits.
- The MII has stated recently that the activities of Internet content
providers are also subject to regulation by various PRC government
authorities, depending on the specific activities conducted by the
Internet content provider. According to press reports, various
government authorities are in the process of preparing new laws and
regulations that will govern these activities. The areas of regulation
may include online advertising and online news reporting.
- A PRC wholly foreign-owned enterprise is prohibited from engaging in
the business of providing or distributing advertisements as defined
under the 1994 PRC Advertising Law. The relevant law is silent as to
whether online advertising is covered by the law.
Ownership Structure and Restrictions on Foreign Investment. The MII has
promulgated regulations restricting foreign investment in the telecommunications
sector in China, including:
- Provisional Administrative Measures Regarding the Examination and
Approval of Deregulated Telecommunications Operations (1993);
- Provisional Regulations for the Administration of the Deregulated
Telecommunications Operations Market (1995); and
- Definitions of Various Deregulated Telecommunications Operations
(1995).
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These regulations prohibit a foreign person or entity, including any
foreign investment enterprise established in the PRC, such as MyWeb Beijing,
from investing in, or operating or participating in the operation of, any
business that provides "value-added telecommunications services", which is
defined to include, among other services, "computer information services" and
"electronic mail box services". However, these regulations were promulgated and
the definitions were adopted, prior to the general emergence of the Internet in
China, and the relevant regulation is silent as to whether our Internet business
is included in these businesses in which foreign investment is prohibited.
Foreign investment in advertising companies is also restricted, and
proposed investment projects in these areas must be approved on a project by
project basis. Under the relevant restrictions, non-PRC investors are restricted
from holding a majority of voting shares in an advertising company. No
regulations have yet been adopted specifically governing online advertising in
the PRC and the PRC laws and regulations are silent as to whether they cover
online advertising. The SAIC, the PRC government agency regulating advertising
activities, has not expressly issued regulations or rules stating that the
Internet is considered an advertising media. However, if the SAIC were to do so,
MyWeb Beijing, as a wholly foreign-owned enterprise in the PRC, could be
required to apply to the SAIC for authorization to conduct advertising business
in accordance with its rules. We cannot guarantee that such application, if
required, would be approved by the relevant authorities. If we were unable to
obtain required approvals, our ability to generate advertising revenues could be
seriously restricted. If the relevant regulatory authorities were to take the
position that our operations are in violation of existing regulations, we could
be subjected to penalties, including being prohibited from engaging in online
advertising and having our earnings from such activities confiscated. In
addition, if we are deemed to be an "advertisement publisher", we will be held
responsible for ensuring the content of an advertisement complies with the
regulations of PRC laws.
The interpretation and application of existing PRC laws and
regulations, the stated positions of the MII relating to the prohibition of
foreign investments in PRC Internet companies, and the likely possibility of the
introduction of new laws or regulations, have created substantial uncertainties
regarding the legality of existing and future foreign investments in, and the
businesses and activities of, PRC Internet businesses, including our business.
We cannot be sure that our current ownership structure and activities
relating to MyWeb Beijing will be viewed by PRC regulatory authorities as in
compliance with applicable PRC laws or regulations. Our businesses in the PRC
will be adversely affected if our business license is revoked as a result of
non-compliance with the relevant regulations. It is possible that the relevant
PRC authorities could, at any time, assert that any portion or all of our
existing or future ownership structure and business in China violate existing or
future PRC laws and regulations. In addition, new laws and regulations may be
retroactively applied to us. For example, China's potential entry into the WTO
will likely affect the terms of any new laws and regulations, and may result in
the PRC government adopting a 49% or 50% limit on foreign investment in Internet
businesses, including limits on foreign investments in PRC Internet content
providers, as well as affect the interpretation of existing regulations relating
to the PRC Internet sector.
Information Security and Censorship. The principal PRC regulations
concerning information security and censorship are:
- The Law of the People's Republic of China on the Preservation of State
Secrets (1988) and its implementing rules (1990);
- The Law of the People's Republic of China on State Security (1993) and
its implementing rules (1994);
- Rules of the People's Republic of China for Protecting the Security of
Computer Information Systems (1994);
- Notice Concerning Work Relating to the Filing of Computer Information
Systems with International Connections (1996);
- Administrative Measures for Protecting the Security of Computer
Information Network with International Connections (1997); and
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- Regulations for the Protection of State Secrets for Computer Information
Systems on the Internet (2000).
These regulations specifically prohibit the use of Internet
infrastructure which results in a breach of public security or the provision of
socially destabilizing content or transmission of state secrets.
- "A breach of public security" includes breach of national security or
disclosure of state secrets, infringement on state, social or
collective interests or the legal rights and interests of citizens, and
illegal or criminal activities.
- "Socially destabilizing content" includes any action that incites
defiance or violation of Chinese laws and regulations, incites
subversion of state power and the overturning of the socialist system,
fabricates or distorts the truth, spreads rumours or disrupts social
order, spreads feudal superstition, involves obscenities, pornography,
gambling, violence, murder or horrific acts, or instigates criminal
acts.
- "State secrets" are defined as "matters that affect the security and
interest of the state". The term covers such broad areas as national
defense, diplomatic affairs, policy decisions on state affairs,
national economic and social development, political parties and "other
state secrets that the State Secrets Bureau has determined should be
safeguarded".
China has enacted regulations governing Internet access and the
distribution of news and other information. In the past, the PRC government has
stopped the distribution of information over the Internet that it believes
violated PRC laws or regulations, including content that is obscene, incites
violence, endangers national security, is contrary to the national interest or
is defamatory. The Ministry of Public Security also has the authority to cause
any local Internet service provider to block any Web site maintained outside
China at its sole discretion. In addition, the Propaganda Department of the
Chinese Communist Party has been given the responsibility to censor news
published in China to ensure, supervise and control proper political ideology.
The State Secrecy Bureau, which is directly responsible for the
protection of state secrets of all PRC government and Chinese Communist Party
organizations, is also authorized to block any website it deems to be leaking
state secrets or failing to meet the relevant regulations relating to the
protection of state secrets in the distribution of online information.
Specifically, Internet companies in China with bulletin board systems, chat
rooms or new services must apply for the approval of the State Secrets Bureau.
As the implementing rules for the regulations have not been issued, however,
details concerning how Internet companies should comply with these regulations
remain to be clarified.
The MII has also published implementing regulations that subject online
information providers such as us to potential liability for content included on
their portals and the actions of subscribers and others using their systems,
including liability for violation of Chinese laws prohibiting the distribution
of content deemed to be socially destabilizing. Furthermore, we are required to
delete content that clearly violates the laws, regulations or policies of the
PRC and report content that we suspect may violate such laws, regulations or
policies.
Because many Chinese laws, regulations and legal requirements with
regard to the Internet are relatively new and untested, their interpretation and
enforcement may involve significant uncertainty. In addition, the Chinese legal
system is a civil law system in which decided legal cases have limited binding
force as legal precedents. As a result, in many cases it is difficult for us to
determine the type of content that may result in liability for a website
operator.
According to applicable regulations, Internet companies in China are
required to complete security filing procedures with the local public security
bureau and to regularly update the local public security bureau regarding
information security and censorship systems for their websites. MyWeb has
adopted security maintenance measures, including employing personnel to be
responsible for its security systems, and exchanging information with the local
public security bureau with regard to sensitive or censored information and
websites on a regular basis.
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International Connections for Computer Information Networks. The State
Council and the MII have promulgated regulations governing international
connections for PRC computer networks, including:
- Provisional Regulations of the People's Republic of China for the
Administration of International Connections to Computer Information
Networks (1997) and their Implementing Measures (1998);
- Measures for the Administration of International Connections to China's
Public Computer Interconnected Networks (1996); and
- Reply Concerning the Verification and Issuance of Operating Permits for
Business Relating to International Connections for Computer Information
Networks and for Public Multimedia Telecommunications Business (1998).
Under these regulations, any entity seeking access to international
connections for computer information networks in China, such as MyWeb, must
comply with the following requirements:
- be a PRC legal person;
- have the appropriate equipment, facilities and technical and
administrative personnel;
- have implemented and registered a system of information security and
censorship; and
- effect all international connections with an authorized Internet
service provider in China.
We believe that MyWeb Beijing is in proper compliance with all of these
requirements.
Encryption Software. In October 1999, the State Encryption
Administration Commission promulgated the Regulations for the Administration of
Commercial Encryption, which was followed in November 1999 by the Notice of the
General Office of the State Encryption Administration Commission. Both of these
regulations address the use in China of software with encryption functions.
According to these regulations, encryption products purchased for use without
the permission of the state encryption administration departments and foreign
encryption products purchased for use must be reported. Violation of the
encryption regulations may result in the issuance of a warning, levying of a
penalty, confiscation of the encryption products and even criminal liabilities.
Because these regulations do not specify what constitutes encryption products,
and there are currently no official interpretations of, or detailed implementing
rules for, these regulations, we are unsure as to whether or how they may apply
to us.
Business License and Approval for Foreign Investment. Under current PRC
law, the legal establishment of a technology company such as MyWeb Beijing must
be approved by the relevant local Commission for Foreign Economic Relations and
Trade. MyWeb Beijing has obtained such approval. MyWeb Beijing is also required
to have a business license issued by the SAIC. MyWeb Beijing's business license
has lapsed and renewal of the business license is dependent on MyWeb Beijing
passing the annual inspection by the SAIC.
If we are found to be in violation of any existing or future PRC laws,
regulations or policies, the relevant PRC authorities would have broad
discretion in dealing with such a violation, including, without limitation, the
following:
- levying fines;
- revoking our business license;
- requiring us to restructure our ownership structure or operations;
and/or
- requiring us to discontinue any portion or all of our Internet
business or our investment in MyWeb Beijing.
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In addition, governmental agencies in China may:
- require us to obtain licenses in order to commence or continue our
business;
- revoke or suspend any licenses we may have;
- regulate the rates that we will be permitted to charge for
telecommunications services; or
- impose or change the tariffs or fees on our operations.
Any of these actions could have a material adverse effect on our
business, results of operations and financial condition.
Research and Development
The amount we spent on research and development in 1998 and 1999 was
approximately $313,000 and $418,000, respectively. Research and development is a
critical element in our business. We are currently working on several research
and development projects, both in-house and in collaboration with our partners
to improve our service delivery, including the following:
- designing a set-up box which is lower in cost than the currently
available set-up boxes. We believe this will increase the cost
competitiveness of the set-top boxes we co-brand with our
partners. We are also working to design a set-top box that allows
for broadband cable and ADSL access, which may allow these set-top
boxes to process digital media, in addition to its current media.
We are also working on a design board that has the functions of a
set-top box which can be integrated into a television set.
- developing a financial services software package that enables
financial transactions to be conducted through our co-branded
set-up boxes in a secure environment at a commercially acceptable
speed. We are also developing a web storage software which can
allow subscribers to store certain electronic data from the
Internet, effectively allowing our users to have a virtual "hard
disk" on the Internet.
- developing with our partner, a Chinese version of a popular
instant messaging software which can allow our subscribers to
interact with other existing users through this instant messaging
platform on their set-top boxes.
- developing an application suite for our subscribers containing an
organizer, a document creation software, spreadsheet and web
storage facility which will allow users to access their
information regardless of their physical location as long as they
have access to the Internet. In addition, we intend that
subscribers will be able to have access to a "unified mailbox"
which can receive short messaging system ("SMS"), pager, e-mail,
voice and fax messages.
- developing a customized e-commerce engine for vertical portals to
be hosted on our existing portals.
Intellectual Property
Although our success depends on maintaining and protecting our
intellectual property, including our software and our trademarks and tradenames,
we have not registered any of our trademarks in the United States or abroad. We
are currently in the process of registering our trademark of MyWeb in Malaysia,
China, Hong Kong, Singapore, Thailand, Indonesia, Philippines and India.
We have entered into agreements with some of our employees, business
partners, licensees and others which provide for certain protections of our
intellectual property. Despite these precautions, it may be possible for a third
party to copy or otherwise obtain and use our licensed services or technology
without authorization, or to develop similar technology independently. Policing
unauthorized use of our intellectual property is difficult and we have no
assurance that the steps we have taken to protect our proprietary rights will be
adequate because:
- effective trademark, copyright, and trade secret protection may not be
available in every country in which our products and Internet
properties are distributed or made available through the Internet, and
the global nature of the Internet makes it currently virtually
impossible to control the ultimate destination of our products;
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- while we try to ensure that our licensees maintain the quality of our
brand, our licensees may take actions that could materially and
adversely affect the value of our proprietary rights or the reputation
of our products and Internet properties; and
- protection of the distinctive elements of MyWeb may not be available
under copyright law.
Our proprietary information and technology is not patented and may not
be patentable. We believe that the success of our business depends in part on
our proprietary technology, information, processes and know-how. We generally
try to protect our intellectual property rights based on trade secrets and
patents as part of our ongoing research, development, and manufacturing
activities. However, we have no assurance that:
- we have adequately protected or will be able to adequately protect our
technology;
- our competitors will not be able to utilize our existing technology or
develop similar technology independently;
- the claims allowed on any patents held by us will be broad enough to
protect our technology; or
- foreign intellectual property laws will adequately protect our
intellectual property rights.
The "www.myweb.com" and "www.myweb.net" URLs in the United States,
among other URLs which contain "myweb" in their URL names, are currently owned
by unrelated third parties. There is no assurance that these third parties will
not make a claim against us in the future. The current law regarding Internet
user names remains unclear. We may be required to defend the use of our name
within the United States in a future litigation suit. This could result in
significant legal costs and expenses, which may have a material adverse effect
on our business, results of operation and financial condition.
We entered into a two-year Binary License and Redistribution Agreement
with Sun Microsystems, Inc. ("Sun") in March 1999 (the "Sun Agreement"). The Sun
Agreement permits us to reproduce and redistribute Sun's "JavaOS for Consumers"
and its "Personal Applications Browser". We have not incorporated the licensed
Java technology of Sun into any of our co-branded set-top boxes, due primarily
to technical issues, and we have no intention to do so in the future. For the
"JavaOS for Consumers", the royalties payable under the Sun Agreement in the
first and second year are $234,000 and $360,000, respectively. For the "Personal
Applications Browser", the royalties payable in the first and second years are
$22,750 and $35,000, respectively. As of December 31, 1999, we accrued costs
related to the Sun Agreement in the amount of $256,750 under Cost of Revenues
for the 1999 Period. However, we have not made any payment under the Sun
Agreement and are disputing our obligation to pay any amounts under the
agreement. We are in discussions with Sun to resolve this matter.
Our Thunder software is based on the QNX operating system. We have a
licensing arrangement with QNX which allows us to use its QNX software for
installation in our co-branded set-top boxes. The cost of licensing this
software is $15.15 per set-top box. There is no termination date for this
agreement.
Employees
At December 31, 1999, we employed a total of 109 full-time employees,
including approximately 40 in sales and marketing, 48 in design and technical
positions, and 21 in finance and administration. Of these full-time employees,
47 are based in China (covering Hong Kong as well), 58 are based in Malaysia
(covering Singapore as well), 3 are based in Singapore and 1 is based in USA.
As of the end of December 1998, we employed 14 full-time employees
based in Malaysia, of which 3 are in sales and marketing, 5 are in design and
technical positions and 6 are in general administration. As of the end of 1997,
we employed 16 full-time employees based in Malaysia, including 4 in sales and
marketing, 7 in design and technical positions, and 5 in general administration.
We presently plan to expand our personnel base in such areas as
management, marketing, research and development, and multimedia designs. We do
not foresee any serious difficulties in hiring these additional employees. From
time to time, we also employ independent contractors to support our research and
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development. None of our employees are covered by a collective bargaining
agreement, and we believe our employee relations are good.
Item 2. Description of Property
We currently do not own any property. We lease our office in Kuala
Lumpur, Malaysia. We have entered into lease arrangements with Woi Seen Chin
Enterprises Sdn. Bhd. and Selekta Bakti Sdn. Bhd. Our lease with Woi Seen Chin
Enterprises is for approximately 5,000 square feet of commercial office space
located at Unit G506 & G606, Blk G, Phileo Damansara I, Jalan Damansara,
Malaysia. Our lease with Selekta Bakti is for approximately 5,000 square feet of
commercial office space located at G505 & G605, Blk G, Phileo Damansara I, Jalan
Damansara, Malaysia.
We have also entered into lease arrangements with Beijing Chongwen-New
World Properties Development Co. Ltd. for our Beijing office. In addition, we
have entered into lease arrangements with Alliance/Interoffice San Francisco,
LLC for our offices in San Francisco. For our Singapore offices, we use office
space on a rent-free basis, provided to us by a personal associate of a director
of MyWeb Inc.com, Danny Teow Teck Toe.
Our significant asset investment is in our computer servers and
computer systems. In the year 1999, the cumulative expenditures on computer
servers and computer systems amounted to $117,000. Capital expenditure on
computer servers and systems in 2000 is expected to be incurred for the expected
launch of the portal in Thailand and the planned expansion in China. We own all
of our servers and computer systems. We currently have more than 25 servers in
aggregate in Malaysia, Singapore and China.
Item 3. Legal Proceedings
From time to time we expect to be subject to legal proceedings and
claims in the ordinary course of our business. Such legal proceedings or claims,
even if not meritorious, could result in the expenditure of significant
financial and managerial resources. See Note 7 to the Consolidated Financial
Statements on page F-12.
In 1999, MyWeb Beijing set up a music channel on its website, which
contained links to websites on the internet with MP3 music, enabling users to
listen to or download MP3 songs through its search engine. Four member companies
of the International Federation of the Panographic Industry ("IFPI"), namely,
Sony Music Entertainment (Hong Kong) Records Ltd., Warner Records Ltd.,
Universal Records Ltd. and China Records Guangzhou Ltd., each sued MyWeb's
hyperlink service in the Beijing Second Intermediate People's Court for
copyright infringement from the end of November to early December 1999. MyWeb
and IFPI, as well as its four member companies, have reached a settlement
agreement. Under the terms of the agreement, we have paid an agreed settlement
figure as compensation which included the legal costs, notarization cost and
attorney's fees of the four member companies.
In February 1999, we engaged Merger Communications to provide us with
media relation services. A dispute subsequently arose regarding the compensation
that Merger Communications was to receive under the agreement. We have entered
into a settlement agreement pursuant to which we paid $30,000 and issued 30,000
shares of our common stock to Merger Communications.
Except as otherwise disclosed herein, neither MyWeb Inc.com nor any of
its subsidiaries is engaged in any legal or arbitration proceedings either as a
plaintiff or defendant in respect of any amounts or claims which could have a
material adverse effect on our business, financial condition or results of
operations. Except as otherwise disclosed herein, we are not aware of any legal
or arbitration proceedings pending or threatened against us or any of our
subsidiaries or any facts likely to give rise to any such proceedings which
might materially affect our business, financial condition or results of
operations.
20
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Market Information
Our common stock was included for quotation on the OTC Bulletin Board
under the symbol "ASMC" during fiscal 1997 and 1998. During fiscal 1997 and
1998, there was essentially no trading in the common stock. From February 23,
1999 until March 23, 1999, our common stock traded on the OTC Bulletin Board
under the symbol "ASMC(D)." From March 24, 1999 until March 12, 2000, our common
stock traded on the OTC Bulletin Board under the symbol "MYWB." Since March 13,
2000, our common stock has traded on the AMEX under the symbol "MWB". The
following table sets forth the high and low closing bid prices for transactions
on common stock for the periods indicated. The quotations shown reflect inter-
dealer prices, without retail mark-up, mark-down or commissions and may not
represent actual transactions.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Period High Bid Price Low Bid Price
1998................................. (1/1 - 12/31) 2.00 0.03
1Q (1/1 - 3/31) 2.00 0.03
2Q (4/1 - 6/30) 2.00 0.03
3Q (7/1 - 9/30) 0.06 0.06
4Q (10/1 - 12/31) 0.06 0.06
1999................................. (1/1 - 12/31) 30.13 0.06
1Q (1/1 - 3/31) 24.75 0.06
2Q (4/1 - 6/30) 21.50 8.25
3Q (7/1 - 9/30) 13.38 8.25
4Q (10/1 - 12/31) 30.13 10.88
2000................................. 1Q (1/1 - 3/31) 27.00 12.88
January 27.00 12.88
February 21.00 14.75
March 18.06 12.88
</TABLE>
Over the first quarter of 1999, our stock price rose dramatically. This
increase was due to the acquisition of TecnoChannel. Trading of our shares
commenced thereafter in the first quarter of 1999.
Holders
As of March 31, 2000, there were approximately 1,400 holders of record
of our common stock each holding 100 shares or more.
Dividends
We did not declare any cash dividends on our common stock during the
most recent two fiscal years. It is our present policy not to pay cash dividends
on the common stock but to retain earnings, if any, to fund growth and
expansion. Any payment of cash dividends on the common stock in the future will
be dependant on our financial condition, results of operations, current and
anticipated cash requirements, plans for expansion, as well as other factors
that the Board of Directors deems relevant.
21
<PAGE>
Recent Sales of Unregistered Securities
There were no sales of unregistered shares in the fourth quarter of
1999. Sales of unregistered shares in the first three quarters of 1999 have
already been reported in our quarterly filings.
We entered into a subscription agreement, dated March 23, 2000, with
Asia Internet Assets, Inc. ("Asia Internet") pursuant to which Asia Internet
agreed to subscribe for 250,000 shares of our common stock at a price of $10 per
share, in an unregistered offering pursuant to section 4(2) or 3(b) of the 1933
Securities Act. Asia Internet paid $1,000,000 of the total purchase price on
April 4, 2000, and is to pay the remaining sum of $1,500,000 million within 30
days thereafter. Asia Internet is an accredited investor as such term is defined
in Rule 501 of Regulation D, and the shares are being purchased for their own
account and not for distribution or resale to others.
In addition, on March 23, 2000, Samsung Asia Pte. Ltd., a Singapore
corporation, confirmed their acceptance to subscribe to 100,000 shares of our
common stock at a price of $8 per share for a total consideration of $800,000 in
a private placement pursuant to section 4(2) or 3(b) of the 1933 Securities Act.
The completion of this private placement is pending the preparation and
execution of a formal subscription agreement.
Item 6. Management's Discussion and Analysis or Plan of Operations
Management's Discussion and Analysis of Financial Conditions and
Results of Operations
We were essentially inactive in 1997 and 1998. In February 1999, we
acquired all of the capital stock of TecnoChannel. Following our acquisition of
TecnoChannel, we revised our business plan. Our current business plan is to
devote all of our resources to the development and expansion of our business in
China and in other emerging markets that have the following characteristics:
- a high percentage of television usage;
- a high level of consumer demand for the Internet;
- a low percentage of personal computer use;
- a low level of personal computer literacy;
- a high cost for personal computers; and
- a pre-existing cable and telecommunications infrastructure.
As discussed below, during the fiscal year 1999, we generated
increasing revenues from our operations and incurred increasing expenses as a
result of our expansion into China. As part of our expansion strategy, we have
entered into strategic relationships with:
- Chinese manufacturers of set-top Internet terminals;
- Chinese content providers; and
- Chinese Internet service providers.
We expect these strategic relationships to help us attract an
increasing number of Chinese Internet users to our Internet properties, which we
anticipate will lead to increasing advertising revenues from our Internet
properties. We also have implemented a brand development and promotion strategy
that we expect will attract additional Internet users to our Internet
properties. As part of our brand development and promotion strategy, we
increased our advertising and brand development expenditures during fiscal year
1999. Our expenditures during fiscal year 1999 exceeded our revenues resulting
in a net operating loss during that period. We expect to continue to incur
operating losses during the continued expansion of our products and services in
China and other emerging markets.
We have a limited operating history upon which to base an evaluation of
our business and prospects. We have yet to achieve significant revenues, and our
ability to generate significant revenues in the future is uncertain. Further, in
view of the rapidly evolving nature of our business and our limited operating
history, it is not possible to forecast future revenues. We believe, therefore,
that period-to-period comparisons of our financial results are not necessarily
meaningful, and you should not rely upon them as an indication of future
performance.
22
<PAGE>
Our business and prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in their early
stages of development, particularly companies in new and rapidly evolving
markets such as the Internet and e-commerce. In addition, our revenues depend
substantially upon the level of activity on our Internet properties and our
ability to successfully create brand name awareness and market recognition for
our products and services. Although we have experienced growth in our revenues
since our merger with TecnoChannel in February 1999, there can be no assurance
that our revenues will continue at their current rate of growth or that we will
be able to operate profitably.
Consolidated Results of Operations
Revenues
The following table and discussion highlights our revenues for the
years ended December 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
---------------------------------------------------
Revenues: (in thousands of dollars)
Advertising and design work $ 498 $ 303 -
Electronic commerce 2,940 - -
Subscription services, Licensing and others 74 1,008 102
--------- ------- --------
Total Revenue $3,512 $1,311 $102
--------- ------- --------
========= ======= ========
</TABLE>
Our business is principally in Asia. We currently generate three main
types of revenues: advertising and design work, e-commerce,
licensing/subscription services and others. Advertising, electronic commerce and
other revenues are generated mainly from businesses marketing to the Internet
users of our online properties. Advertising, electronic commerce and other
revenues mainly consist of advertising and related revenues, fees associated
with electronic commerce and the sale of merchandise. Subscription services
revenues are generated from our set-top Internet terminal customers. There are
no significant seasonality factors in advertising and e-commerce, our primary
businesses.
Costs and Expenses
The following table and discussion highlights our costs and expenses
for the years ended December 31, 1999, 1998 and 1997.
23
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
--------------------------------------------------
(in thousands of dollars)
Costs and expenses:
Costs of revenues $3,530 $109 $ 0
Sales and marketing 6,326 224 37
Product Development 4,396 313 204
General administration 2,659 289 114
------- ------- -------
Total costs and expenses $16,911 $935 $355
------- ------- -------
======= ======= =======
Comparison of the year ended December 31, 1999 to the year ended December 31, 1998
</TABLE>
Total Revenues
An important component of our business strategy in our Interactive
Online Services business is an increasing reliance on advertising, commerce and
other revenues. These revenues include advertising and electronic commerce
revenues, the sale of merchandise and development revenues. The growth of
advertising, electronic-commerce and other revenues is important to our business
objectives, as these revenues provide an important contribution to our operating
results. Advertising revenues are expected to grow in importance as we continue
to leverage its large, active and growing user base in the emerging market.
Revenues increased from $1.31 million in the year ended December 31,
1998 (the "1998 Period") to $3.51 million in the year ended December 31, 1999
(the "1999 Period"), an increase of 168%. This increase was attributable to
revenue generated from e-commerce transactions in the amount of $2.94 million.
No one customer accounted for more than 10% of total revenues during the year
ended 1999, except for Hangzhou Westlake Electronics Import and Export Co. Ltd.
which accounted for approximately 26% of our total revenue during 1999.
Cost of Revenues
Cost of revenues includes the costs of merchandise sold and royalties
paid for licensed technologies. Cost of revenues increased 3,138% from $109,000
in the 1998 Period to $3.53 million in the 1999 Period. This increase was due to
the increase in e-commerce transactions and sales of set-top boxes. We have also
recognized expenses related to the royalties for licensed technologies from Sun
Microsystems, Inc. for a total amount of $256,750 for the 1999 Period. However,
we have not made any payment under the agreement and are disputing our
obligation to pay any amounts under the agreement.
Total Operating Expenses
Total operating expense increased 1,520% from $826,000 in the 1998
Period to $13.38 million in the 1999 Period. The increase was primarily
attributable to an increase in:
i) Sales and marketing expense from $224,000 in the 1998 Period to
$6.33 million in the 1999 Period;
ii) Product development expenses from $313,000 in the 1998 Period to
$4.40 million in the 1999 Period; and
iii) General administration expenses from $289,000 in the 1998 Period
to $2.66 million in the 1999 Period.
Sales and marketing expenses include the non-monetary stock
compensation expense, employee compensation, the costs to acquire and retain
subscribers, and advertising and other promotion and marketing related expenses.
The sales and marketing expenses increased 2,724% from $224,000 in the 1998
Period to $6.33 million in the 1999 Period, and increased as a percentage of
total revenues from 17% in the 1998 Period to 180% in the 1999 Period. The
increase was primarily attributable to the stock compensation expense of $4.6
million for the 1999 Period in connection with certain of our sales and
marketing employees allowed to exercise their options without paying the
exercise price (cashless exercise) as well as the excess of the fair value over
the exercise prices of options granted to certain of the sales and marketing
employees which became immediately exercisable on the date of the grant. The
increase was also attributable to the increase in the number of personnel, the
costs associated with our aggressive brand building strategy in China and an
increase in advertising and promotion/marketing related expenses in China and
other emerging market countries in 1999.
Product development costs consist primarily of the non-monetary stock
compensation expense, employee compensation relating to developing and enhancing
features of the MyWeb online service properties and our products and the
outsourcing of certain research and development work.
24
<PAGE>
Product development costs increased 1,304% from $313,000 in the 1998
Period to $4.40 million in the 1999 Period, and increased as a percentage of
total revenues from 24% in the 1998 Period to 125% in the 1999 Period. The
increase in product development costs was primarily due the stock compensation
expense of $3.9 million for the 1999 Period in connection with certain of our
product development employees allowed to exercise their options without paying
the exercise price (cashless exercise) as well as the excess of the fair value
over the exercise prices of options granted to certain of the product
development employees which became immediately exercisable on the date of the
grant. The increase was also attributable to the increase in the number of
technical employees that develop and enhance MyWeb online media properties. We
have expensed all internal product development costs as incurred and expect to
incur increased product development costs in future periods in order to remain
competitive. The decrease in product development costs as a percentage of total
revenues was primarily a result of the substantial growth in revenues.
General and administration expenses increased 820% from $289,000 in the
1998 Period to $2.66 million in the 1999 Period, and increased as a percentage
of total revenues from 22% in the 1998 Period to 76% in the 1999 Period. General
administration expenses consist primarily of fees for professional services and
employee compensation. The increase in general and administrative costs for the
1999 Period, was primarily attributable to higher fees due to the increase in
professional services required in 1999, an increase in personnel costs due to
the increase in the number of employees, charges incurred for settlement of a
claim, stock compensation expenses of $0.4 million arising from excess of the
fair value over the exercise prices of options granted to certain of the general
and administrative employees which became immediately exercisable on the date of
the grant and a general increase in operational expenses of newly incorporated
subsidiaries in Beijing, San Francisco and Singapore.
Stock-based Compensation Expense
We have recorded total stock based compensation expense of $9.0 million
for the 1999 Period in connection with certain of our employees who were allowed
to exercise their options without paying the exercise price and the excess of
the fair value over the exercise price of options granted to other employees.
The cashless exercise is treated similarly to a stock appreciation right and the
difference between the fair value of the stock and the exercise price of the
option is recognized as compensation expense. We do not expect this to be a
recurring expense item in the future, as all options will be required to be
exercised by payment of the exercise price. The stock compensation expense has
been allocated to the various categories of expenditure based on the job
function of the employees.
Net Income (Loss)
We recorded a net loss of $13.40 million or $1.31 per share, for the
1999 Period (based on the weighted average outstanding shares of 10,241,352 for
the year ended December 31, 1999) compared to net income of $376,000, or $0.04
per share for the 1998 Period (based on the total outstanding shares of
8,500,000 during December 31, 1998). This was primarily attributable to an
increase in the sales and marketing expenses and general administrative expenses
in the 1999 Period that was greater than the increase in revenue.
Comparison of the year ended December 31, 1998 to the nine
month period ended December 31, 1997
Total Revenues
Revenues increased from $102,000 in the nine month period beginning on
TecnoChannel's date of inception (April 5, 1997) and ended on December 31, 1997
(the "1997 Period") to $1.31 million in the fiscal year ended December 31, 1998
(the "1998 Period"), an increase of 1,185%. This increase was attributable to
the increasing acceptance in the marketplace of the products and services of
TecnoChannel, which were introduced in the fourth quarter of 1997. One customer,
Wizoffice Pte. Ltd., accounted for approximately 90% of revenues during the
1997 Period, while one customer, Philips Consumer Electronics (and subsidiaries
thereof), accounted for approximately 77% of revenue during the 1998 Period.
Cost of Revenues
Cost of revenue increased from $0 in the 1997 Period to $109,000 in the
1998 Period. The increase in cost of revenue was primarily due to the increase
in sales of our products and services during such period.
25
<PAGE>
Total Operating Expenses
Total operating expenses increased 133% from $355,000 in the 1997
Period to $826,000 in the 1998 Period. The increase was primarily attributable
to an increase in sales and marketing expenses from $37,000 in the 1997 Period
to $224,000 in the 1998 Period, and to an increase in product development
expenses from $204,000 in the 1997 Period to $313,000 in the 1998 Period.
Furthermore, the 1998 Period consists of twelve months of operations as compared
to the nine months of operation in the 1997 Period.
The sales and marketing expenses consist primarily of employee
compensation relating to marketing and promotion activities, advertising, and
other promotion and marketing expenses. The increase in absolute dollars from
the 1997 period is primarily attributable to the costs associated with the
increased marketing activities in connection with the promotion of our products
and services.
Product development expenses consist primarily of employee compensation
relating to developing and enhancing features of our online service properties
and our products. The increase in absolute dollars from the 1997 Period is
primarily a result of the increase in the number of engineers responsible for
product development. We have expensed, as incurred, all internal product
development costs and expect to incur increased product development costs in
absolute dollars in future periods to remain competitive.
Product development costs increased 53% from $204,000 in the 1997
Period to $313,000 in the 1998 Period. However, product development costs
decreased as a percentage of total revenues from 200% in the 1997 Period to 24%
in the 1998 Period. The increase in product development costs was primarily due
to an increase in the number of technical employees as well as an increase in
research and development expenses incurred in the 1998 Period. The decrease in
product development costs as a percentage of total revenues was primarily a
result of the substantial growth in revenues.
General and administration expenses increased 154% from $114,000 in the
1997 Period to $289,000 in the 1998 Period due primarily to higher fees due to
the increase in professional services required in 1998 and an increase in
personnel costs. However, general and administration expense decreased as a
percentage of total revenues from 111% in the 1997 Period to 22% in the 1998
Period due to a substantial growth in revenues.
Net Income (Loss)
We recorded net income of $376,000 or $0.04 per share, for the 1998
Period (based on the total of 8,500,000 outstanding shares of TecnoChannel as at
December 31, 1998) compared to a net loss of $253,000, or $0.03 per share, for
the 1997 Period (based on the total of 8,500,000 outstanding shares of
TecnoChannel Technologies as at December 31, 1997) . This was primarily
attributable to an increase in sales revenue that was greater than the increase
in our cost of sales and operating expenses.
Liquidity and Capital Resources
At December 31, 1999, we had cash and cash equivalents totaling $2.36
million compared to $270 at December 31, 1998. For the 1999 Period, cash used in
operating activities of $2.77 million was primarily due to the net loss of
$13.40 million in such period.
Cash used in investing activities was $336,000 for the 1999 Period
compared to $20,000 for the 1998 Period. The capital expenditure of $347,000 for
the 1999 Period consisted of the purchase of computer hardware and software and
other office equipment.
For the 1999 Period, cash provided by financing activities of $5.46
million was derived primarily from the private placement of shares of common
stock, from which we received gross proceeds of $3.78 million, and the issuance
of 200,000 shares of our common stock upon the exercise of a stock option, for
which we received $1.50 million. As we experienced negative cash flow from
operations in the 1999 period and we anticipate that we will continue to incur
negative cash flow during the continued expansion of our products and services
in China and the other emerging markets, we may require additional capital. The
sale of additional equity or convertible debt securities, if required, may
26
<PAGE>
result in additional dilution to the holders of our common stock. There
can be no assurance that additional financing, if required, will be available on
terms and conditions acceptable to us, if available at all.
The Company completed a private placement of 250,000 shares of our
common stock on March 23, 2000 for aggregate proceeds of $2.50 million. Under
the terms of the agreement, we have received $1.0 million on April 4, 2000 and
will receive a further $1.50 million in aggregate proceeds within the next 30
days. The Company has also secured another private placement of 100,000 shares
of our common stock where we will receive $800,000 upon the signing of the
agreement. However, the Company is continuing to pursue leads for additional
possible investors. The Company believes that with the additional funds of $3.30
million, it will be able to meet its current expenditure requirements and
achieve its business goals for the next 12 months. Any additional funds raised
will determine the speed with which promotion and enhancements are pursued.
Our principal capital expenditures currently in progress relate to the
planned expansion of our business in Latin America, Indonesia and Thailand. We
plan to fund this expansion through our existing internal sources of funds. We
are also currently actively looking for opportunistic acquisitions and/or joint
ventures which could complement our existing businesses. Any such acquisitions
or joint venture would be funded through our existing funds or new capital
raised where appropriate. In the past three years, the amount of principal
capital expenditures (used for communication equipment, office equipment,
furniture and leasehold improvements) was $54,000, $21,000 and $348,000 in 1997,
1998 and 1999, respectively.
At December 31, 1999, we had working capital of $1.20 million, compared
to working capital of $306,000 at December 31, 1998 and net deficit of $273,000
at December 31,1997. Current assets increased by $3.58 million, from $1.11
million at December 31, 1998 to $4.69 million at December 31, 1999, while
current liabilities increased by $2.65 million, from $800,000 to $3.45 million,
over this same period. The increase in current assets was primarily attributable
to an increase in cash generated from the private placement of shares of common
stock. The change in current liabilities was due to increases in other accrued
expenses and liabilities, primarily related to our new subsidiaries in China and
Singapore.
Plan of Operation
The Company's operations in 1999 incurred an operating expenditure of
$4.40 million and a non-operating expenditure of $9.0 million arising from the
stock compensation expense as compared to Net Revenues of $3.51 million. While
the Company does not expect to incur similar non-operating expenditure for the
stock compensation expense in 2000, it expects to incur operating expenditure of
$3.0 to $4.0 million in 2000 for its operations in the emerging markets.
As a result, the Company believes that its significant cash outlay over
the next twelve months will be for the advertising and marketing expenses. It
also expects to incur significant cash outlay for general and administration
expenses as a result of the operational expenditure for its offices in the
emerging markets.
Year 2000
Our comprehensive program to address Year 2000 issues was successful in
that our business activities continued without disruption through the days
before and after January 1, 2000 and February 29, 2000. In terms of supply chain
readiness, on the basis of the information available to us, we do not expect
disruptions caused by the failures of third parties to remediate their Year 2000
issues. We will continue to monitor its computer applications throughout the
Year 2000 to ensure that any latent Year 2000 matters that may arise are
addressed promptly.
Inflation
We believe that inflation has not had, and will not have in the future,
a material effect on our results of operations.
27
<PAGE>
Item 7. Financial Statements and Supplementary Data
The consolidated financial statements of MyWeb Inc.com and the Report
of Independent Auditors thereon are included as part of this report beginning on
page F-1 attached hereto.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
On March 22, 2000, MyWeb Inc.com ("MyWeb") dismissed Wlosek &
Braverman, L.L.C. ("Wlosek & Braverman"), the independent accountants that had
audited the financial statements of Asia Media Communications, Inc. ("Asia
Media"), MyWeb's predecessor, for the fiscal years ended December 31, 1997 and
December 31, 1998. The reports of Wlosek & Braverman on Asia Media's financial
statements for such periods did not contain an adverse opinion or a disclaimer
of opinion, nor was it qualified or modified as to uncertainty, audit scope, or
accounting principles, except that each such expressed an uncertainty as to the
ability of Asia Media to continue as a going concern and the financial
statements did not include any adjustments to reflect the effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the possible inability of Asia Media to
continue as a going concern. The dismissal of Wlosek & Braverman, L.L.C., was
approved by MyWeb's Board of Directors. There were no disagreements between Asia
Media or MyWeb and Wlosek & Braverman on any matter of accounting principles or
practice, financial statement disclosure, or auditing scope or procedure. Wlosek
& Braverman did not advise Asia Media or MyWeb with respect to any of the
matters set forth in item 304(a)(1)(iv)(B) of Regulation S-B promulgated by the
Securities and Exchange Commission.
On March 22, 2000, MyWeb engaged Arthur Andersen as the principal
accountant to audit MyWeb's financial statements for the fiscal year ended
December 31, 1999.
Subsequent to its appointment in March 1999 as auditors of TecnoChannel
Technologies Sdn. Bhd. ("TecnoChannel"), a wholly-owned subsidiary of MyWeb,
Arthur Andersen consulted with management of TecnoChannel, in the normal course
of its audit, on various accounting and reporting issues, including
TecnoChannel's arrangement with third parties pursuant to which it provides
access to TecnoChannel's Web-TV technology to third parties in exchange for
directing users to TecnoChannel's web-site ("barter transactions"). Arthur
Andersen advised TecnoChannel that barter transactions should be accounted for
in accordance with Accounting Principles Board (APB) Opinion No. 29, Accounting
for Non Monetary Transactions, which states in part that, in general, accounting
for nonmonetary transactions should be based on the fair values of the assets
(or services) involved which is the same basis as that used in monetary
transactions. Thus, the cost of a nonmonetary asset acquired in exchange for
another nonmonetary asset is the fair value of the asset surrendered to obtain
it, and a gain or loss should be recognized on the exchange. The fair value of
the asset received should be used to measure the cost if it is more clearly
evident than the fair value of the asset surrendered. Similarly, a nonmonetary
asset received in a nonreciprocal transfer should be recorded at the fair value
of the asset received. If the fair values of the assets/services surrendered or
received in the transaction are not readily determinable, the book value of the
asset surrendered should be used to record the transaction.
In its financial statements for the first three fiscal quarters of
1999, MyWeb had recorded gross revenues from barter transactions at the value of
the transactions stated in the contracts between MyWeb and the third parties
with whom it entered into the barter transactions. As a result of TecnoChannel's
consultations with Arthur Andersen, MyWeb has determined that the fair value of
the assets/services surrendered or received in the barter transactions were not
readily determinable and the book value of the asset surrendered by MyWeb in the
barter transactions was zero. MyWeb has decided to restate its previously filed
financial statements for the first three fiscal quarters of 1999 to show that
its revenues from barter transactions were zero. The effect of the restatement
will be a reduction in revenues from barter transactions with a corresponding
reduction in advertising expense and a net effect of zero to net income.
Wlosek & Braverman was not consulted with respect to the accounting
treatment of the barter transaction.
28
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
The following table sets forth, the names, ages and positions of our
directors and executive officers as at March 31, 2000. Their respective
backgrounds are described below.
Name Age Position
---- --- --------
Nin Contreras 45 President and Chief Executive Officer
Wong Thean Soon 29 Chairman and Director
Danny Teow Teck Toe 30 Executive Director
Victor Fook Ai Ng 52 Executive Director, Chief Financial
Officer, Treasurer and Secretary
Alvin Roy Granoff 52 Independent Director
George S. Bayoud, Jr. 45 Independent Director
K. Shanmugam* 40 Independent Director
Alex Jorge 28 Vice President
Pan Dong 41 Vice President
-----------
*Nominated but not appointed
Nin Contreras Mr. Contreras was appointed President and Chief
Executive Officer in March 2000. Mr. Contreras is an
accomplished technology executive with over twenty
years of professional international business
experience throughout Asia Pacific, the U.S., and
Europe. Mr. Contreras was formerly the general
manager of Sunbeam, Latin America, where he had
bottom-line responsibility for the full product
portfolio of Sunbeam products in this region. Prior
to that, he worked 13 years with the Dutch consumer
electronics company, Philips, where his last
position was Director of Marketing and Sales of
Internet television products worldwide. Mr.
Contreras holds a degree in B.Sc. from the
University of York (UK) and an MBA from IMI (Geneva,
Switzerland).
Thean Soon Wong Mr. Wong was appointed as Chairman of our Board of
Directors in February 1999. Mr. Wong is a co-founder
of TecnoChannel Technologies Sdn. Bhd. From 1997 to
March 2000, Mr. Wong was a director and the chief
executive officer of TecnoChannel. From 1996 until
1997, Mr. Wong was the executive director of
Cybersource Pte, Ltd., a privately-held internet
consulting firm. In 1995, Mr. Wong graduated from
the National University of Singapore with a Bachelor
of Electrical Engineering degree.
Danny Teow Teck Toe Prior to becoming MyWeb's Chief Operating Officer
in April 1999, Mr. Toe was the co-founder and Chief
Operating Officer of TecnoChannel since April 1997.
From 1996 until 1997, Mr. Toe was a Senior Officer
at the Economic Development Board of Singapore,
where he worked at the Enterprise Development
Division. He has also held marketing positions with
3M Inc. in Singapore. Mr. Toe holds a first class
degree in Electronics Engineering from the National
University of Singapore.
Victor Fook Ai Ng Mr. Ng was appointed as a director in February 1999.
From 1989 until June 1999, Mr. Ng was the general
manager (institutional sales) of J.M. Sassoon, a
regional securities brokerage firm headquartered in
Singapore. Mr. Ng is on the Board of Directors of
The Nanyang Insurance Company Limited,
Asiacabletv.com Inc. and Asiapower Investments
Limited. Mr. Ng holds a Bachelor of Science
(Economics) degree and a Masters of Science
(economics) degree from the University of London.
29
<PAGE>
Alvin Roy Granoff Mr. Granoff was appointed as an independent director
in November 1999. Mr. Granoff is an attorney by
profession. From 1983-1995, Mr. Granoff served as an
elected member of the Texas House of
Representatives. Mr. Granoff also serves as an
executive officer in Granoff Law Offices PC, Granoff
Company, Stoneleigh Hotel and River City Hotel LP.
Mr. Granoff holds a Juris Doctor from SMU School of
Law and a Bachelor of Arts degree from Beloit
College.
George S. Bayoud, Jr. Mr. Bayoud was elected as an independent director in
November 1999. Mr. Bayoud is the managing partner of
Texas Ltd., an investment company. Mr. Bayoud
founded and is the President of Raven Interests of
Texas Inc., a real estate company. Mr. Bayoud is
also part of the Board of Directors of the Beck
Group, a construction and real estate company and of
Great Lodge.Com. He was previously appointed to the
board of the Texas National Research Laboratory
Commission (Superconducting Super Collider). In
1996, Mr. Bayoud served as President of First
Southwest Holdings, Inc., a leading investment bank
in the Southwest. Mr. Bayoud is a graduate of St.
Mark's School of Texas and The University of Texas
at Austin.
K. Shanmugam Mr. Shanmugan has been nominated as a director. Mr.
Shanmugam is a Partner and Deputy Head of Litigation
at the Singapore law firm of Allen & Gledhill. Since
January 1993, Mr. Shanmugam has served as a director
of Eastern Development Pte, Ltd. Mr Shanmugam has
served as a director of SembCorp Industries Ltd.
since July 1998. He has also served as Director of
Asia Food & Properties Ltd. and Golden Agri-Resources
Ltd. since July 1997 and May 1999, respectively. He
is a mediator with the panel of mediators of the
Singapore Mediation Centre, a Fellow of the Singapore
Institute of Arbitrators and Chartered Institute of
Arbitrators, as well as a Member of the Pabek of
Accredited Arbitrators of the Singapore International
Arbitration Centre. He was appointed a Senior Counsel
of the Singapore Bar on January 19, 1998. Mr
Shanmugam graduated with a first class Honors degree
from the National University of Singapore in 1984. It
is intended that Mr. Shanmugan's appointment will be
formalized in April 2000.
Alex Jorge Mr. Jorge was appointed Vice President in September
1999. Mr. Jorge was formerly a Test Center
Performance Analyst for PC World Magazine, analysing
hardware component testing, benchmark development,
objective analysis and vendor product development.
He was also a contributing Editor for Hardware and
Software systems review for both print and online
divisions. Mr. Jorge has an Associates Degree from
Diablo Valley College and is currently pursuing
another degree from California State University, San
Francisco.
Pan Dong Mr. Dong was appointed Vice President in March 2000.
Mr. Dong was previously employed by General Electric
Company offices in Shanghai and Beijing for a total
of 4 years prior to joining MyWeb. His other
previous employment history included a joint venture
in a PVC Window Company, China Project Department,
China Machinery Import and Export Corporation,
National Institute of Building Materials, Accuride
Canada Inc. He was primarily involved in the
implementation and monitoring of operations and
productivity issues, business developments,
investment projects, joint ventures and
partnerships, among others. Mr. Dong has an MBA from
the University of Western Ontario, Canada and a
Master of Science in Industrial Engineering from
Wuhan Technology University, China.
Section 16(A) Beneficial Ownership Reporting Compliance
To our knowledge, based on a review of the copies of the reports which have been
furnished to us, the following persons are directors, officers, or beneficial
owners of 10% or more of our common stock subject to Section 16(a) of the
Exchange Act that failed to file on a timely basis Forms 3, 4 and/or 5, with
respect to our 1999 fiscal year.
30
<PAGE>
Thean Soon Wong had a reportable event in 1999 and has not filed a Form 4
or Form 5. Victor Ng had reportable events in 1999 and has not filed Forms 4 or
a Form 5. Danny Teow Teck Toe had reportable events in 1999 and has not filed
Forms 4 or a Form 5. Alex Jorge has not filed a Form 3, and a Form 4 or Form 5
for a reportable event in 1999. Alvin Roy Granoff had a reportable event in 1999
and has not filed a Form 4 or Form 5. George S. Bayoud, Jr. had a reportable
event in 1999 and has not filed a Form 4 or Form 5. Neutron Enterprises Inc. had
a reportable event in 1999 and has not filed a Form 4 or Form 5. Chew Giak Sim,
who owns 50.1% of Neutron Enterprises Inc., if required to do so, has not field
a Form 3, or a Form 4 or Form 5 for the above-mentioned event that is reportable
by Neutron Enterprises Inc.
Item 10. Executive Compensation
Compensation of Executive Officers
The following table sets forth the total compensation paid for the last
three completed fiscal years to Mr. Thean Soon Wong, our Chief Executive Officer
during the last completed fiscal year. No one serving as an executive officer
during the last completed fiscal year received total annual salary and bonus of
$100,000 or more during any of the last three completed fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C>
-------------------------- -------- ---------------------------------------------- -----------------------------------
Annual Compensation Long-Term Compensation
------------- ------------- ------------------ ----------------- -----------------
Awards Payout
----------------- -----------------
Name and Principal Securities
Position Other Annual Under-lying All Other
Year Salary Bonus Compensation Options/SARs Compensation
($) ($) ($) (#) ($)
(a) (b) (c) (d) (e) (g) (i)
-------------------------- -------- ------------- ------------- ------------------ ----------------- -----------------
Thean Soon Wong - 1999 53,684 5,263 105,263(1) 100,000 7,074(2)
Chairman of MyWeb
Inc.com and CEO of
TecnoChannel
-------------------------- -------- ------------- ------------- ------------------ ----------------- -----------------
1998 25,263 2,105 31,579(1) 0 3,284(2)
-------------------------- -------- ------------- ------------- ------------------ ----------------- -----------------
1997 18,947 2,105 0 0 2,274(2)
-------------------------- -------- ------------- ------------- ------------------ ----------------- -----------------
</TABLE>
----------
Note:
(1) Represents Mr. Wong's fees for services as a director of TecnoChannel
Technologies.
(2) Represents the Company's contribution to Mr Wong's Employee Provident Fund
which is required under Malaysian law.
31
<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<S> <C> <C> <C> <C> <C>
----------------------- ------------------ ------------------------- --------------- ------------------- -------------
Number of Percent of Total
Securities Options / SARs Granted Market Price on
Underlying to Employees In Fiscal Exercise Or Date of Grant
Name Options / SARs Year Base Price ($/Sh) Expiration
(a) Granted (#) (c) ($/Sh) (e) Date
(b) (d) (f)
----------------------- ------------------ ------------------------- --------------- ------------------- -------------
Thean Soon Wong 100,000 6.89% 6.00 16.81(1) 11/06/2004
----------------------- ------------------ ------------------------- --------------- ------------------- -------------
</TABLE>
----------
Note:
(1) Grant date present value $2,380,000
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
<S> <C> <C> <C> <C>
------------------------ ------------------ ------------------ ------------------------------ ------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Shares acquired Options / SARs at FY-End (#) Options/SARs At FY-End
Name on exercise Value realized Exercisable / Unexercisable ($) Exercisable /
(#) ($) Unexercisable
(d)
(a) (b) (c) (e)
------------------------ ------------------ ------------------ ------------------------------ ------------------------
------------------------ ------------------ ------------------ ------------------------------ ------------------------
Thean Soon Wong 0 0 Exercisable: 100,000 Exercisable: 2,100,000
------------------------ ------------------ ------------------ ------------------------------ ------------------------
</TABLE>
Compensation of Directors
Standard Arrangements. The aggregate remuneration and emoluments
(including fees, salaries, bonuses and commissions) paid to Directors for
services rendered for the financial year ended December 31, 1999 was $241,284.
For the current financial year ending December 31, 2000, the estimated amount
payable to the Directors is approximately $500,000.
Stock options were also granted to George Bayoud and Alvin Granoff for
50,000 shares at an exercise price of $12 per share. These were granted on
November 6, 1999 and will expire on November 6, 2009.
Other Arrangements. We reimburse each member of our board of directors
for out of pocket expenses incurred in connection with attending board meetings.
No member of our board of directors currently receive any additional cash
compensation.
Employment Contracts and Termination of Employment, and Change-in-
Control Arrangements
In April 1997, we entered into an employment agreement with T.S. Wong.
The agreement does not specify Mr. Wong's term of employment. Either party can
terminate this agreement by providing the other party with one month's written
notice.
In May 1999, we entered into an employment agreement with Danny Teow
Teck Toe to serve as our Chief Operating Officer. The agreement does not specify
Mr. Toe's term of employment. Mr. Toe's annual compensation is $84,000. Mr. Toe
resigned as Chief Operating Officer in oMarch 2000. The Board of Directors
appointed Mr. Toe to serve as a director in November 1999.
32
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
The following table sets forth information regarding beneficial
ownership of our common stock by all shareholders who own 5% or more of our
common stock. The ownership reflected in the table is accurate as of March 31,
2000.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Direct Interest Indirect Interest Total Interest
Shareholders No. of shares No. of shares No. of shares (%)
------------------------------------------ ----------------- ------------------- ------------------- --------
Holders of 5% or more
T S Wong (1) 100,000 2,675,950 2,775,950 24.8
Block G, Unit G606
Phileo Damansara 1
46350 Petaling Jaya
Malaysia
Neutron Enterprises Inc. (2) 1,450,000 - 1,450,000 13.1
Incubator 2, Unit G3
Technology Park Malaysia
57000 Kuala Lumpur, Malaysia
Meng Fui Cheah 97,000 850,000(3) 947,000(4) 8.5
Incubator 2, Unit G3,
Technology Park Malaysia
Lebuhraya Puchong-Sungei Besi,
Bukit Jalil
Victor Ng (5) 78,032 789,550 867,582 7.8
Block G, Unit G606
Phileo Damansara 1
46350 Petaling Jaya
Malaysia
Dr. Ahmad Mustaffa Babjee 20,000 850,000(6) 870,000(7) 7.8
Incubator 2, Unit G3,
Technology Park Malaysia
Lebuhraya Puchong-Sungei Besi,
Bukit Jalil
Free Earth Investments Ltd. (8) 789,550 - 789,550 7.1
612, Telok Blangah Road
#01-03, Fairways Condominium
Singapore
</TABLE>
-------
Note:
(1) Of such shares, 2,675,950 are owned of record by Star Channel Systems Sdn.
Bhd., of which Mr. Wong owns 76.5% of the outstanding stock.
(2) Neutron Enterprises Inc. is a company which is 50.1% owned by Mr. Sim Chew
Gaik.
(3) Owned of record by Jerisle Ltd., of which Mr. Cheah owns 100% of the
outstanding stock.
(4) Inclusive of 20,000 shares Mr. Cheah has the right to acquire beneficial
ownership within 60 days.
(5) Of such shares, 789,550 are owned of record in the name of Free Earth
Investments Ltd. Doris Poh Heem Huang (now deceased) was the owner of Free
Earth Investments Ltd. Mrs. Poh was the wife of Mr. Ng. Under the will of
Mrs. Poh, the only beneficiary of these shares is Ng E-Ming Joyce, the
daughter of Mr. Ng and Mrs. Poh. Mr. Ng disclaims beneficial ownership of
these shares.
33
<PAGE>
(6) Owned of record by Ambang Dinamik Sdn. Bhd., of which Dr. Babjee owns 100%
of the outstanding stock.
(7) Inclusive of 20,000 shares Dr. Babjee has the right to acquire beneficial
ownership within 60 days.
(8) Doris Poh Heem Huang (now deceased) was the owner of Free Earth Investments
Ltd. Mrs. Poh was the wife of Victor Ng, one of our directors and officers.
Mr. Ng disclaims beneficial ownership of these shares. Under the will of
Mrs. Poh, the only beneficiary of these shares is Ng E-Ming Joyce, the
daughter of Mr. Ng and Mrs. Poh. Does not include shares which are subject
to options held by Mr. Ng.
Security Ownership of Management
The following table lists the number and percentage of our outstanding
shares of common stock beneficially owned, directly or indirectly, by each
director and named executive officers, and by all of our directors and officers
as a group as at March 31, 2000:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Direct Interest Indirect Interest Total Interest
Shareholders No. of shares No. of Shares No. of shares (%)
----------------------------------------- ------------------ -------------------- ------------------- --------
Directors
T S Wong (1) 100,000 2,675,950 2,775,950 24.8
Block G, Unit G606
Phileo Damansara 1
46350 Petaling Jaya
Malaysia
Victor Ng (2) 78,032 789,550 867,582 7.8
Block G, Unit G606
Phileo Damansara 1
46350 Petaling Jaya
Malaysia
Danny Toe Teow Teck 103,473 425,000(3) 528,473 4.8
Block G, Unit G606
Phileo Damansara 1
46350 Petaling Jaya
Malaysia
Alvin Roy Granoff 50,000 17,000 67,000(4) 0.6
3013 Fairmount
Dallas, Texas
United States of America
George S. Bayoud, Jr. 50,000 - 50,000(5) 0.4
3909 Maramar Ave.
Dallas, Texas 75205
United States of America
All executive officers and directors as 381,505 3,907,500 4,289,005
a group
</TABLE>
-----
Note:
(1) Of such shares, 2,675,950 are owned of record by Star Channel Systems Sdn.
Bhd., of which Mr. Wong owns 76.5% of the outstanding stock.
(2) Of such shares, 789,550 are owned of record in the name of Free Earth
Investments Ltd. Doris Poh Heem Huang (now deceased) was the owner of Free
Earth Investments Ltd. Mrs. Poh was the wife of Mr. Ng. Under the will of
Mrs. Poh,
34
<PAGE>
the only beneficiary of these shares is Ng E-Ming Joyce, the daughter of Mr.
Ng and Mrs. Poh. Mr. Ng disclaims beneficial ownership of these shares.
(3) Owned of record by Mdm. Tan Sew Lan as trustee for her son, Mr. Toe
(4) Inclusive of 50,000 shares that Mr Granoff has the right to acquire
beneficial ownership of within 60 days.
(5) Inclusive of 50,000 shares that Mr. Bayoud has the right to acquire
beneficial ownership of within 60 days.
We only have one class of shares which is the common stock, par value of $0.01
each.
Item 12. Certain Relationships and Related Transactions
In 1997, 1998 and 1999, some of our directors and shareholders made
loans to us for working capital purposes. As of December 31, 1999, we owed
$151,037 to Thean Soon Wong (our chairman), $24,573 to Danny Teow Teck Toe (our
director), $911 to Dr. Ahmad Mustaffa Babjee (a shareholder), and $20,990 to
Meng Fui Cheah (a shareholder). These loans were made to us on an interest-free
basis, and have no specified repayment terms.
With respect to our office arrangements, we use space for our Singapore
offices on a rent-free basis, provided to us by a personal associate of Danny
Teow Teck Toe, one of our directors. Until September 1999, we had offices in New
York. Our former chairman and director allowed us to use this space on a
rent-free basis.
Item 13. Exhibits, List and Reports on Form 8-K
Exhibits
Number Description
2. * Plan of Reorganization incorporated by reference to the Report
on Form 10-SB of Asia Media Communications, Ltd. as filed with
the Commission on February 16, 1994.
3.1(a) * Articles of Incorporation of Sperzel-NV, Inc. incorporated by
reference to the Report on Form 10-SB of Asia Media
Communications, Ltd. as filed with the Commission on February
23, 1994.
3.1(b) * Certificate Amending Articles of Incorporation of Sperzel-NV,
Inc. incorporated by reference to the Report on Form 10-SB of
Asia Media Communications, Ltd. as filed with the Commission on
February 23, 1994.
3.1(c) * Certificate of Amendment of Articles of Incorporation of
Sperzel-NV, Inc. incorporated by reference to the Report on
Form 10-SB of Asia Media Communications, Ltd. as filed with the
Commission on February 23, 1994.
3.1(d) * Certificate of Amendment of Articles of Incorporation of Asia
Media Communications, Ltd. incorporated by reference to the
Registration Statement on Form S-8 of MyWeb Inc.com
(Registration No. 333-81823) filed with the Commission on June
29, 1999.
3.1(e) * Certificate of Amendment of Articles of Incorporation of Asia
Media Communications, Ltd., incorporated by reference to the
Registration Statement on Form SB-2 of MyWeb Inc.com, filed on
October 28, 1999.
3.1(f) * Restated Articles of Incorporation of MyWeb Inc.com,
incorporated by reference to the Registration Statement on
Form SB-2 of MyWeb Inc.com, filed on October 28, 1999.
3.1(g) * Certificate of Correction to Restated Articles of
Incorporation, incorporated by reference to the Annual Report
on Form 10-KSB of MyWeb Inc.com, as filed with the Commission
on April 14, 2000.
35
<PAGE>
3.2 * MyWeb Inc.com's By-laws incorporated by reference to its Report
on Form 10-SB as filed with the Commission on February 16,
1994.
10.1 * Agreement and Plan of Merger, dated March 18, 1996, by and
among Asia Media Communications, Ltd., AMC Merger Co., Inc.,
Kremlyovskaya Group, Inc., Riccardo Franchini and Richard
Gaspar, incorporated by reference to the Current Report on Form
8-K of Asia Media Communications, Ltd. (Commission File No.
0-23462) filed with the Commission on April 2, 1996
10.2 * Rescission Agreement, dated as of August 15, 1996, by and among
Asia Media Communications, Ltd., Kremlysovskaya Group Inc.,
Kremlyovskaya Group NV, Riccardo Franchini, Richard Gaspar,
Yakov Tillman, Tadeus Tonley, Valentin Kassatkine, Guerman
Liberman, Youri Bychovski, Wengen Investments Ltd., Redwatch
Investments Inc. SA, Safine A.G., Wallflower Investments Inc.,
SA, Able Investments Ltd., Whitehall Investments Company Inc.
and Merton Trustees Limited, incorporated by reference to the
Current Report on Form 8-K of Asia Media Communications Ltd.
(Commission File No. 0-23462) filed with the Commission on
October 15, 1996.
10.3 * Consulting Agreement, dated as of October 30, 1996, between
Asia Media Communications, Ltd. and Ian Rice, incorporated by
reference to the Current Report on Form 8-K of Asia Media
Communications Ltd. (Commission File No. 0-23462) filed with
the Commission on November 7, 1996.
10.4 * Option Agreement, dated as of December 26, 1996, between Asia
Media Communication, Ltd. and AMC International Holdings, Ltd.,
incorporated by reference to the Annual Report on Form 10-KSB
of Asia Media Communications Ltd. (Commission File No. 0-23462)
for the fiscal year ended December 31, 1996, filed with the
Commission on December 30, 1998.
10.5 * Written Consent of the Sole Director of AMC International
Holdings, Ltd. dated as of December 27, 1996, incorporated by
reference to the Annual Report on Form 10-KSB of Asia Media
Communications Ltd. (Commission File No. 0-23462) for the
fiscal year ended December 31, 1996, filed with the Commission
on December 30, 1998.
10.6 * Share Acquisition Agreement, dated December 1996, among IPC
Corporation, Asia Media Communications, Ltd. and AMC
International Holdings, Ltd., incorporated by reference to the
Annual Report on Form 10-KSB of Asia Media Communications, Ltd.
(Commission File No. 0-23462) for the fiscal year ended
December 31, 1996, filed with the Commission on December 30,
1998.
10.7 * Letter Agreement, dated April 1, 1997, between AMC
International Holdings, Ltd. and IPC Corporation, incorporated
by reference to the Annual Report on Form 10-KSB of Asia Media
Communications, Ltd. (Commission File No. 0-23462) for the
fiscal year ended December 31, 1996, filed with the Commission
on December 30, 1998.
10.8 * Warrant, dated August 1, 1997, to purchase 1,000,000 shares of
the common stock of Asia Media Communications, Ltd. issued to
Ocean Strategic Holdings Limited, incorporated by reference to
the Annual Report on Form 10-KSB of Asia Media Communications
Ltd. (Commission File No. 0-23462) for the fiscal year ended
December 31, 1996, filed with the Commission on December 30,
1998.
10.9 * Share Purchase Agreement, dated September 1, 1997, by and
between Parthanon Investment Corporation and Asia Media
Communications, Ltd., incorporated by reference to Registrant's
report on Form 10-KSB filed with the Commission on December 30,
1998.
36
<PAGE>
10.10 * Acquisition Agreement, dated February 24, 1999, by and among
Asia Media Communications, Ltd., TecnoChannel Technologies Sdn.
Bhd., all shareholders of TecnoChannel Technologies Sdn. Bhd.
and GEM Ventures Ltd., incorporated by reference to the Current
Report on Form 8-K of Asia Media Communications, Ltd.
(Commission File No. 0-23462), filed with the Commission on
March 11, 1999.
10.11 * 1999 Non-Qualified Stock Option Plan of MyWeb Inc.com,
incorporated by reference to the Registration Statement on Form
S-8 of MyWeb Inc.com (Registration No. 333-81823), filed with
the Commission on June 29, 1999.
10.12 * Asia Media Communications, Inc. 1999 Incentive Program,
incorporated by reference to the Registration Statement on Form
S-8 of Asia Media Communications, Ltd. (Registration No.
333-76289), filed with the Commission on April 14, 1999.
10.13 * Employment Agreement, dated April 2, 1997, between T.S. Wong
and TecnoChannel Sdn. Bhd., incorporated by reference to the
Registration Statement on Form SB-2 of MyWeb Inc.com, filed on
October 28, 1999.
10.14 * Tenancy Agreement, dated April 28, 1999, by and between Selekta
Bakti Sdn. Bhd. and TecnoChannel Technologies Sdn. Bhd.,
incorporated by reference to the Registration Statement on Form
SB-2 of MyWeb Inc.com, filed on October 28, 1999.
10.15 * Tenancy Agreement, dated April 28, 1999, by and between Woi
Seen Chin Enterprises Sdn. Bhd. and TecnoChannel Technologies
Sdn. Bhd., incorporated by reference to the Registration
Statement on Form SB-2 of MyWeb Inc.com, filed on October 28,
1999.
10.16 * Rental of Storage Space Agreement, dated March 16, 1999, by and
between Woo Ah Lek and TecnoChannel Technologies Sdn. Bhd.,
incorporated by reference to the Registration Statement on Form
SB-2 of MyWeb Inc.com, filed on October 28, 1999.
10.17 * Office Service Agreement, dated June 3, 1999, by and between
Alliance/Interoffice San Francisco, LLC and MyWeb Inc.com.,
incorporated by reference to the Registration Statement on Form
SB-2 of MyWeb Inc.com, filed on October 28, 1999.
10.18 * Lease Agreement, dated April 29, 1999, by and between MyWeb
Asia Pte, Ltd. and Lee Wing Han, incorporated by reference to
the Registration Statement on Form SB-2 of MyWeb Inc.com, filed
on October 28, 1999.
10.19 * + Binary License and Redistribution Agreement, dated March 28,
1999, by and between Sun Microsystems, Inc. and TecnoChannel
Sdn. Bhd., incorporated by reference to the Registration
Statement on Form SB-2 of MyWeb Inc.com, filed on October 28,
1999.
10.20 * + License Agreement, dated January 4, 1999, by and between
TecnoChannel Technologies Sdn. Bhd. and NetChina,
incorporated by reference to the Registration Statement on Form
SB-2 of MyWeb Inc.com, filed on October 28, 1999.
10.21 * + Memorandum of Understanding, dated March 15, 1999, by and
between MyWeb Inc.com and Masslink, incorporated by reference
to the Registration Statement on Form SB-2 of MyWeb Inc.com,
filed on October 28, 1999.
10.22 * * Agreement, dated June 16, 1999, by and between MyWeb Inc.com
and Xin Hua Organization.
10.23 * + Joint Venture Agreement, dated July 12, 1999, by and between
MyWeb Inc.com and Qingdao Haier Computer Co., Ltd.,
incorporated by reference to the Registration Statement on Form
SB-2A of MyWeb Inc.com, filed on November 12, 1999.
37
<PAGE>
10.24 * + Memorandum of Understanding, dated April 8, 1999, by and
between MyWeb Inc.com and Lang Chao Computer Co., incorporated
by reference to the Registration Statement on Form SB-2A of
MyWeb Inc.com, filed on November 12, 1999.
10.25 * + Service Agreement, dated January 2, 1999, by and between
TecnoChannel Technologies Sdn. Bhd. and Unilever (Malaysia)
Holdings Sdn. Bhd., incorporated by reference to the
Registration Statement on Form SB-2A of MyWeb Inc.com, filed on
November 12, 1999.
10.26 * + Agreement, dated December 8, 1997, by and between TecnoChannel
Technologies Sdn. Bhd. and Philips Consumer Electronics B.V.,
incorporated by reference to the Registration Statement on Form
SB-2A of MyWeb Inc.com, filed on November 12, 1999.
10.27 * + Joint Venture Agreement, dated April 12, 1999, by and between
Asia Media Communications, Ltd. and Beijing Telecom
Communication Ltd., incorporated by reference to the
Registration Statement on Form SB-2A of MyWeb Inc.com, filed on
November 12, 1999.
10.28 * + License Agreement, dated May 4, 1999, by and between
TecnoChannel Technologies Sdn. Bhd. and HKNet Co. Ltd.,
incorporated by reference to the Registration Statement on Form
SB-2A of MyWeb Inc.com, filed on November 12, 1999.
10.29 * + Memorandum of Understanding, dated May 19, 1999, by and between
MyWeb Inc.com and China Sci-Technologies International Trust &
Investment Co. Ltd., incorporated by reference to the
Registration Statement on Form SB-2A of MyWeb Inc.com, filed on
November 12, 1999.
10.30 * + Lease Agreement, dated June 2, 1999, by and between MyWeb
Inc.com and Beijing Chongwen-New World Properties Development
Co. Ltd., incorporated by reference to the Annual Report on
Form 10-KSB of MyWeb Inc.com, as filed with the
Commission on April 14, 2000.
10.31 * + Letter of Agreement, dated June 22, 1999, by and between MyWeb
Inc.com and Ogilvy Public Relations Worldwide., incorporated by
reference to the Registration Statement on Form SB-2A of MyWeb
Inc.com, filed on November 12, 1999.
10.32 + Co-operation Agreement, dated May 18, 1999, between SOYEA Ltd.
and MyWeb Inc.com
10.33 * Agreement, dated June 28, 1999, between Ncore Technology and
TecnoChannel Technologies Sdn. Bhd., incorporated by reference
to the Registration Statement on Form SB-2A of MyWeb Inc.com,
filed on November 12, 1999.
10.34 * + Letter of Intent, dated October 25, 1999, between Infosto
Information Technology (Beijing) Co. Ltd. and MyWeb Network
System (Beijing) Co., Ltd., incorporated by reference to the
Annual Report on Form 10-KSB of MyWeb Inc.com, as filed with
the Commission on April 14, 2000.
10.35 * + Agreement, dated October 23, 1999, between TVSN China
(Holdings) Ltd. and MyWeb Inc.com., incorporated by reference
to the Registration Statement on Form SB-2A of MyWeb Inc.com,
filed on November 12, 1999.
10.36 + Co-operation Agreement between Beijing Yinjian Industry Co.,
Ltd. and MyWeb Network Systems (Beijing) Co., Ltd., effective
as of October 1, 1999.
10.37 * + Agreement between Beijing Goyoyo Technology Development, Ltd.
and MyWeb Inc.com., incorporated by reference to the Annual
Report on Form 10-KSB of MyWeb Inc.com, as filed with the
Commission on April 14, 2000.
10.38 + Website Co-operation Agreement between Shenzhen Prosperity
Systems Co., Ltd. and MyWeb Network Systems (Beijing) Co.,
Ltd., effective as of October 30, 1999.
38
<PAGE>
10.39 * + Agreement between www.158.com.ch (Beijing Hairong Information
System Ltd.) and MyWeb Inc.com, incorporated by reference to
the Annual Report on Form 10-KSB of MyWeb Inc.com, as filed
with the Commission on April 14, 2000.
10.40 * Employment Agreement, dated May 1, 1999, between Danny Toe Teow
Teck and MyWeb Inc.com., incorporated by reference to the
Registration Statement on Form SB-2A of MyWeb Inc.com, filed on
November 12, 1999.
10.41 * + Media Relations Cooperation Agreement, dated February 23, 1999,
between Merger Communications, Inc. and Asia Media
Communications, Ltd., incorporated by reference to the
Registration Statement on Form SB-2A of MyWeb Inc.com, filed on
November 12, 1999.
10.42 * Settlement Agreement between Merger Communications, Inc. and
MyWeb Inc.com, incorporated by reference to the Annual Report
on Form 10-KSB of MyWeb Inc.com, as filed with the Commission
on April 14, 2000.
10.43 + Media Relations Cooperation Contract, dated September 28, 1999,
between Merger Communications, Inc. and MyWeb Inc.com.
10.44 * + Sale and Purchase Agreement dated January 3, 2000 between
MyWeb Inc.com and Deepa Nilkanth Mahajan for purchase of 95%
of outstanding and issued shares in Easy2Bid Pte, Ltd.,
incorporated by reference to the Annual Report on Form 10-KSB
of MyWeb Inc.com, as filed with the Commission on April 14,
2000.
10.45 * + Sale and Purchase Agreement dated January 2, 2000 between MyWeb
Inc.com and Tan Tian Sin and Chew Siau Fong for purchase of
13,334 shares representing 66.67% of the issued and paid-up
capital of Pacific Office Supplies Sdn. Bhd., incorporated by
reference to the Annual Report on Form 10-KSB of MyWeb Inc.com,
as filed with the Commission on April 14, 2000.
10.46 ** Co-marketing Agreement dated February 22, 2000 between MyWeb
Inc.com and Asia Infonet Co., Ltd.
10.47 * + License Agreement dated February 15, 2000 between MyWeb
Inc.com and MyWeb Americas, Inc., incorporated by reference to
the Annual Report on Form 10-KSB of MyWeb Inc.com, as filed
with the Commission on April 14, 2000.
10.48 [Not Used]
10.49 [Not Used]
10.50 * Agreement for Bank Loan between MyWeb (Beijing) and China
Construction Bank, incorporated by reference to the Annual
Report on Form 10-KSB of MyWeb Inc.com, as filed with the
Commission on April 14, 2000.
10.51 * Mortgage Agreement between MyWeb (Beijing) and China
Construction Bank, incorporated by reference to the Annual
Report on Form 10-KSB of MyWeb Inc.com, as filed with the
Commission on April 14, 2000.
10.52 [Not Used]
10.53 [Not Used]
10.54 [Not Used]
10.55 ** Component Sale and Purchase Agreement, dated July 9, 1999,
between Philips Singapore Pte, Ltd. and TecnoChannel
Technologies Sdn. Bhd.
39
<PAGE>
10.56 * + Service Agreement, dated May 24, 1999, between CorpCom Services
Sdn. Bhd. and TecnoChannel Technologies Sdn. Bhd., incorporated
by reference to the Annual Report on Form 10-KSB of MyWeb
Inc.com, as filed with the Commission on April 14, 2000.
10.57 + Service Agreement, dated October 1, 1999, between De Flower
Shop and TecnoChannel Technologies Sdn. Bhd.
10.58 + Service Agreement, dated November 1, 1999, between MPH
Bookstores Sdn. Bhd. and TecnoChannel Technologies Sdn. Bhd.
10.59 * + Distribution Agreement, dated July 15, 1999, between KL Mutual
Fund Bhd. and TecnoChannel Technologies Sdn. Bhd., incorporated
by reference to the Annual Report on Form 10-KSB of MyWeb
Inc.com, as filed with the Commission on April 14, 2000.
10.60 ** Advertising Contract, dated November 1, 1999, between GWCom
Information Technology (Shanghai) Co. and MyWeb (Beijing)
10.61 ** Cooperation Agreement, dated September 8, 1999, between GWCom
Information Technology (Shanghai) Co. and MyWeb (Beijing)
10.62 * + QNX OEM Licensing Agreement dated April 5, 2000 between QNX
Software Systems Ltd. and TecnoChannel Technologies Sdn. Bhd.,
incorporated by reference to the Annual Report on Form 10-KSB
of MyWeb Inc.com, as filed with the Commission on April 14,
2000.
10.63 * Subscription Agreement, dated March 23, 2000, for Asia
Internet Assets, Inc. to subscribe for MyWeb Inc.com's common
stock, incorporated by reference to the Annual Report on Form
10-KSB of MyWeb Inc.com, as filed with the Commission on April
14, 2000.
10.64 * Letter, dated March 23, 2000, confirming Samsung Asia Pte,
Ltd.'s acceptance of MyWeb Inc.com's offer to subscribe for
MyWeb Inc.com common stock, incorporated by reference to the
Annual Report on Form 10-KSB of MyWeb Inc.com, as filed with
the Commission on April 14, 2000.
16. * Letter, from Wlosek & Braverman, LLC, the Registrant's former
principal accountants, to the Securities and Exchange
Commission pursuant to Item 304(a)(3) of Regulation S-B,
incorporated by reference to the Current Report on Form 8-K of
MyWeb Inc.com, filed on March 24, 2000 .
21. * Subsidiaries of the Company, incorporated by reference to the
Annual Report on Form 10-KSB of MyWeb Inc.com, as filed with
the Commission on April 14, 2000.
23. * Consent of Experts, incorporated by reference to the Annual
Report on Form 10-KSB of MyWeb Inc.com, as filed with the
Commission on April 14, 2000.
24. Power of attorney (included on signature page hereto).
27. Financial Data Schedule for the year ending December 31, 1999,
and restated for the years ending December 31, 1998 and 1997.
----------
* Previously filed with the Commission and incorporated by reference.
** To be filed by amendment.
+ Portions of these exhibits have been omitted pursuant to a request for
confidential treatment.
40
<PAGE>
Reports on Form 8-K filed during the last quarter of 1999
As previously disclosed in the Registrant's Form 8-K, dated March 22,
2000, the Registrant dismissed Wlosek & Bravemen, L.L.C. as its independent
accountants and engaged Arthur Andersen as its new independent accountants,
effective March 22, 2000. The Registrant's Form 8-K, dated March 22, 2000, is
incorporated herein by reference.
41
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MyWeb Inc.com
By: /s/ Thean Soon Wong
------------------------------
Thean Soon Wong
Director and Chairman
Date: July 10, 2000
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
/s/ Thean Soon Wong Chairman and Director July 10, 2000
-------------------------------
Thean Soon Wong
/s/ Danny Teow Teck Toe Director July 10, 2000
-------------------------------
Danny Teow Teck Toe
/s/ Victor Fook Ai Ng Director and July 10, 2000
------------------------------- Chief Financial Officer
Victor Fook Ai Ng
/s/ Kasiviswanathan Shanmugam Director July 10, 2000
-------------------------------
Kasiviswanathan Shanmugam
/s/ Nin Contreras Chief Executive Officer July 10, 2000
-------------------------------- and President
Nin Contreras
POWER OF ATTORNEY
Each person whose signature appears above severally hereby constitute
and appoint Thean Soon Wong, Victor Fook Ai Ng and each of them, their true and
lawful attorneys-in-fact and agents, with full powers of substitution and
resubstitution, for them and in their names, places and steads, in any and all
capacities indicated above, to sign the Amendment No.1 to the Annual Report on
Form 10-KSB/A of MyWeb Inc.com for the fiscal year ending December 31, 1999 and
all amendments to such Amendment No. 1 to the Annual Report on Form 10-KSB/A,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, each acting alone, full power and authority
to do and perform to all intents and purposes as they might or could do in
person, hereby ratifying all that said attorneys-in-fact and agents, each acting
alone, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
<PAGE>
MYWEB INC.COM
Item 7. Financial Statements and Supplementary Data
The following financial statements of the Company are included in Item 7.
Report of Independent Public Accountants.....................................F-2
Consolidated Balance Sheets as of December 31, 1999 and 1998.................F-3
Consolidated Statements of Operations for the years ended
December 31, 1999 and 1998, and the nine months ended
December 31, 1997...................................................... F-4
Consolidated Statements of Changes in Stockholders' Equity for the
years ended December 31, 1999 and 1998, and the nine months
ended December 31, 1997.................................................F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1999 and 1998, and the nine months ended
December 31, 1997.......................................................F-7
Notes to Consolidated Financial Statements...................................F-8
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF MYWEB INC.COM:
We have audited the accompanying consolidated balance sheets of MYWEB
INC.COM (a Nevada corporation) and subsidiaries as of December 31, 1999, 1998
and 1997 and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for the years ended December 31, 1999 and
1998 and the nine-month period ended December 31, 1997. 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 the auditing standards
generally accepted in the United States. 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 the 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 MYWEB INC.COM and
subsidiaries as of December 31, 1999, 1998 and 1997 and the results of their
operations and their cash flows for the years ended December 31, 1999 and 1998
and the nine-month period ended December 31, 1997 in conformity with the
accounting principles generally accepted in the United States.
ARTHUR ANDERSEN
Kuala Lumpur
April 13, 2000
F-2
<PAGE>
<TABLE>
<CAPTION>
MYWEB INC.COM
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31
(IN THOUSANDS OF DOLLARS, EXCEPT PAR VALUE)
<S> <C> <C> <C>
-------------- -------------- --------------
1999 1998 1997
-------------- -------------- --------------
Assets:
Current Assets:
Cash and cash equivalents 2,362 - 6
Accounts receivable 1,818 1,100 100
Inventories 43 - -
Prepaid expenses and other current assets 466 6 6
-------------- -------------- --------------
Total Current Assets 4,689 1,106 112
-------------- -------------- --------------
Property and equipment 352 54 46
-------------- -------------- --------------
5,041 1,160 158
============== ============== ==============
Liabilities and Shareholders' Equity:
Current Liabilities:
Accounts payable, trade 1,861 408 187
Other accounts payable 1,369 355 27
Due to directors 198 37 171
Deferred Revenue 26 - -
-------------- -------------- --------------
Total Current Liabilities 3,454 800 385
-------------- -------------- --------------
Commitments and contingencies (Note 7) - - -
Minority Interests 7 - -
Shareholders' Equity:
Common stock, par value $0.01; authorized
100,000,000 shares;
Issued and outstanding 11,070,135 shares in 1999 and
and 8,500,000 in 1998 and 1997 111 85 85
Additional paid-in capital 14,749 152 (59)
Retained earnings (deficit) (13,272) 123 (253)
Other comprehensive loss (8) - -
-------------- -------------- --------------
Total Shareholders' Equity 1,580 360 (227)
-------------- -------------- --------------
5,041 1,160 158
============== ============== ==============
The accompanying notes are an integral part of these consolidated balance sheets
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
MYWEB INC.COM
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998,
AND THE NINE MONTHS ENDED DECEMBER 31, 1997
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNT)
<S> <C> <C> <C>
1999 1998 1997
-------------------- ----------------- ------------------
Net Revenues 3,512 1,311 102
Cost of revenues 3,530 109 -
-------------------- ----------------- ------------------
Gross profit (loss) (18) 1,202 102
-------------------- ----------------- ------------------
Operating Expenses:
Sales and marketing 6,326 224 37
Product development 4,396 313 204
General administration 2,659 289 114
-------------------- ----------------- ------------------
Total operating expenses 13,381 826 355
-------------------- ----------------- ------------------
Minority Interest (4) - -
Net Income (Loss) (13,395) 376 (253)
==================== ================= ==================
Income (Loss) per share, Basic and Diluted (1.31) 0.04 (0.03)
==================== ================= ==================
Average number of common shares
outstanding 10,241,352 8,500,000 8,500,000
==================== ================= ==================
The accompanying notes are an integral part of these consolidated statements
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
MYWEB INC.COM
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998,
AND THE NINE MONTHS ENDED DECEMBER 31, 1997
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Common Additional other Total
Stock paid in Retained comprehensive Stockholders'
Shares Amount capital earnings income (loss) Equity
------ ------ ---------- -------- ------------- -------------
Capitalization of 8,500,000 85 (59) - - 26
TecnoChannel
Comprehensive loss
Net Loss for 1997 (253) (253)
Total Comprehensive loss (253)
---------- --------- --------- -------- ------------ -----------
Balance as at December 31, 1997 8,500,000 85 (59) (253) - (227)
Capital contribution 211 211
Comprehensive income
Net Income for 1998 376 376
Total Comprehensive income 376
---------- --------- --------- -------- ------------ -----------
Balance as at December 31, 1998 8,500,000 85 152 123 360
Acquisition of MyWeb Inc.com 55,356 1 (1) -
Issuance of common stock 440,000 4 (4) -
Issuance of common stock in 1,000,000 10 10
connection with exercise of
warrants
Issuance of common stock in 526,250 5 3,775 3,780
connection with private
placement
Issuance of common stock in 200,000 2 1,498 1,500
connection with exercise of
options
Shares issued for litigation - - 330 330
Issuance of common stock in 348,529 4 6,343 6,347
connection with options
exercised for compensation
F-5
<PAGE>
Compensation for stock option - - 2,656 2,656
grants
Comprehensive Loss:
Net Loss for 1999 (13,395) (13,395)
Foreign currency translation (8) (8)
-----------
Total comprehensive loss (13,403)
--------- ------- --------- ------- --------- -----------
Balance as at December 31, 1999 11,070,135 111 14,749 (13,272) (8) 1,580
============ ========== ======================================================
The accompanying notes are an integral part of these consolidated statements
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
MYWEB INC.COM
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998
AND THE NINE MONTHS ENDED DECEMBER 31, 1997
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
1999 1998 1997
----------------- ------------------ -------------------
Operating Activities
Net income (loss) (13,395) 376 (253)
Reconciliation to net cash used in operating
activities
Depreciation 45 12 9
Non cash expenses 9,333 - -
Minority interest in net income(loss) (4) - -
Unrealized loss on foreign exchange - 13 -
Loss on sale of equipment 3 - -
Changes in Operating Working Capital
Accounts receivable, trade (705) (1,014) (100)
Inventories (43) - -
Prepaids and other current assets (460) - (6)
Accounts payable 2,434 550 214
Deferred revenue 26 -
----------------- ------------------ -------------------
Net cash used in operating (2,766) (63) (136)
activities
----------------- ------------------ -------------------
Investing Activities
Acquisition of property and equipment (347) (20) (55)
Acquired cash in Asia Media 11 - -
----------------- ------------------ -------------------
Net cash used in Investing (336) (20) (55)
Activities
----------------- ------------------ -------------------
Financing Activities:
Proceeds on issuance of common stock 5,290 211 26
Proceeds from minority shareholders 11 - -
Borrowings from (repayments to) directors 163 (134) 171
----------------- ------------------ -------------------
Net cash provided by Financing 5,464 77 197
Activities
----------------- ------------------ -------------------
Increase (decrease) in cash and cash equivalents 2,362 (6) 6
Cash, beginning of year - 6 -
----------------- ------------------ -------------------
Cash, end of year 2,362 - 6
================= ================== ===================
The accompanying notes are an integral part of these consolidated statements
</TABLE>
F-7
<PAGE>
MYWEB INC.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999, 1998 AND 1997
NOTE 1 THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY. MyWeb Inc.com (the "Company") was incorporated in the
State of Nevada in February 20, 1985 under the name Sperzel-NV, Inc.
On February 24, 1999, we completed a reverse merger with TecnoChannel
Technologies Sdn. Bhd. ("TSB"), a privately-held Malaysian corporation, that was
formed in April 1997. Through the transaction, we acquired all of the issued and
outstanding capital stock of TecnoChannel Technologies, in exchange for
8,500,000 shares of our common stock. In connection with our acquisition of
TecnoChannel Technologies, we issued 440,000 shares of our common stock to GEM
Ventures Ltd. for its services as our financial advisor. TecnoChannel
Technologies is now a wholly-owned subsidiary of MyWeb Inc.com.
In February 1999, following our acquisition of TecnoChannel
Technologies, we changed our name from Asia Media Communications, Ltd. to MyWeb
Inc.com, and we revised our business plan to focus on the business of TSB. The
Company currently operates the MyWeb Online Service Internet Properties which
provides localized comprehensive information, communication, and shopping
services to Internet users in the emerging markets in Asia.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements
include the accounts of MyWeb Inc. com and its majority-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated. The
equity and net loss attributable to the minority shareholder interests that are
related to the Company's subsidiaries, are shown separately in the consolidated
balance sheets and consolidated statements of operations, respectively. Losses
in excess of the minority interest equity would be charged against the Company.
REVENUE RECOGNITION. The Company's revenues are derived principally
from the sale of banner advertising and electronic commerce including sales of
set-top boxes. To date, our banner advertising commitments have ranged from one
month to one year. Advertising revenues are recognized as services are
performed.
We also earn revenue on design and development work relating to the
design, and integration of customers' content and links into the MyWeb Online
Service media properties. These development fees are recognized as revenue once
the related activities have been performed. Electronic commerce revenues are
recognized when the goods are delivered. Barter transactions are recorded at the
fair value of the goods or services provided or received, whichever is more
readily determinable in the circumstances. To date, revenues from barter
transactions for design and development and electronic commerce have each been
less than 10% of net revenues, accounting for approximately 1% of total revenues
during the year.
No one customer accounted for 10% or more of net revenues during 1999,
except for Hangzhou Westlake Electronics Import and Export Co., Ltd. which
accounted for approximately 26% of total revenues during the year.
DEFERRED REVENUE. Deferred revenue is primarily comprised of billings
in excess of recognized revenue relating to sales of set-top boxes and
advertising contracts.
PROPERTY AND EQUIPMENT. Property and equipment are depreciated or
amortized using the straight-line method over the following estimated useful
lives:
F-8
<PAGE>
Communication equipment 8 years
Office equipment, furniture and fittings 5 to 10 years
Motor vehicles 6 years
Electrical fittings and equipment 4 years
Leasehold improvements 4 years
Effective July 1, 1998, the Company adopted Statement of Position (SOP) 98-1,
"Accounting for the Cost of Computer Software Developed or Obtained for Internal
Use", which requires that certain cost for the development of internal use
software should be capitalized, including the cost of coding, software
configuration, upgrades and enhancements. The adoption of this pronouncement did
not have a material effect on our financial results.
PRODUCT DEVELOPMENT. Costs incurred in the development and organization
of information within MyWeb Online Services Properties and the development of
new products and enhancements to existing products are charged to expense as
incurred. Material software development costs subsequent to the establishment of
technological feasibility are capitalized. Based upon our product development
process, technological feasibility is established upon completion of a working
model.
ADVERTISING COSTS. Advertising costs are expensed as incurred. We do
not incur any direct-response advertising costs. Advertising expense totaled
approximately $951,000, $137,000 and $7,000 for 1999, 1998 and 1997
respectively.
CASH AND CASH EQUIVALENTS. We consider all highly liquid investments
with an original maturity of three months or less when purchased to be cash
equivalent. We did not use cash to pay for interest or income taxes during any
of the periods in the financial statements.
CONCENTRATION OF CREDIT RISK. Financial instruments that potentially
subject the Company to significant concentration of credit risk consist
primarily of cash, cash equivalents, and accounts receivable. The carrying
amount of our cash and cash equivalents, other receivables, other assets
approximate fair value. Accounts receivable are typically unsecured and are
derived from revenues earned from customers primarily located in Asia. We
perform ongoing credit evaluations of our customers and maintain reserves for
potential credit losses; historically, such losses have been within management's
expectations. At December 31, 1999 and 1998, no one customer accounted for 10%
or more of the accounts receivable balance except Cyber-Village Pte. Ltd. and
Hangzhou Westlake Electronics Import and Export Co., Ltd. which accounted for
approximately 18% and 51% of total accounts receivable respectively.
INCOME TAXES. Income taxes are computed using the asset and liability
method. Under the asset and liability method, deferred income tax assets and
liabilities are determined based on the differences between the financial
reporting and tax bases of assets and liabilities and are measured using the
currently enacted tax rates and laws. A valuation allowance is provided for the
amount of deferred tax assets that, based on available evidence, are less likely
to be realized.
STOCK-BASED COMPENSATION. The Company accounts for stock-based employee
compensation arrangements in accordance with the provisions of Accounting
Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees", and complies with the disclosure provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation". Under APB 25, compensation cost is recognized over the vesting
period based on the excess, if any, on the date of grant of the fair value of
our stock and the amount an employee must pay to acquire the stock.
FOREIGN CURRENCY TRANSLATION AND INTERNATIONAL OPERATIONS. The local
currency of each of our subsidiaries is its reporting currency. Accordingly,
assets and liabilities of our wholly-owned foreign subsidiaries are translated
F-9
<PAGE>
into U.S. dollars at year-end exchange rates, and revenues and expenses are
translated at average rates prevailing during the year. Translation adjustments
are included as a component of stockholders' equity. Foreign currency
transaction gains and losses, which have been immaterial, are included in result
of operations.
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE. Basic net income (loss)
per share is computed using the weighted average number of common shares
outstanding during the period. Diluted net income (loss) per share is computed
using the weighted average number of common and common equivalent shares
outstanding during the period. Common equivalent shares consist of the
incremental common shares issuable upon the exercise of stock options and
warrants (using the treasury stock method). For 1999, common stock equivalents
were excluded as their effects would be anti-dilutive. For 1998, there were no
common stock equivalents outstanding.
BARTER TRANSACTIONS. The Company barters advertising for products and
services. Such transactions are recorded at the estimated fair value of the
products or services received or given. Revenue from barter transactions is
recognized when advertising is provided, and services are charged to expense
when used. Barter transactions are immaterial to our statement of operations for
all periods presented. In 1999, the Company entered into certain software
license agreements in exchange for fair value advertising and marketing
arrangements in kind. The duration of the agreements were for a period of twelve
months commencing in January 1999 and May 1999. The Company has determined that
the fair value of the assets/services surrendered or received in the barter
transactions were not readily determinable and the book value of the asset
surrendered by the Company in the barter transactions was zero. The Company has
decided to show that its revenues from these barter transactions were zero.
USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires the management to make
estimates and assumptions that affect the amounts reported in the financial
statements and disclosure of contingent assets and liabilities in accompanying
notes. Actual results could differ from those estimates.
ACQUISITION. On February 24, 1999, the Company acquired 100% of the
issued and outstanding capital stock of TSB in exchange for an aggregate of
8,500,000 shares of common stock. In connection with such acquisition, we issued
an aggregate of 440,000 shares of its common stock to GEM Ltd. for its services
as financial advisor to us.
TSB, which was formed in April 1997 and operates under the trade name, "MyWeb",
has developed with Philips Consumer Electronics set-top boxes that enable
Internet access via the television set. The boxes are marketed and sold by
Philips and other third parties and include software developed by TSB.
Approximately 25,000 of the boxes are installed in Malaysia and Singapore and
50,000 are installed in China. In addition, TSB has developed and provides
enabling technologies to manufacturers and Internet service providers serving
non-personal computer devices, (such as the set-top boxes), to enhance the
functionalities of such devices. TSB also operates multiple Internet portals
providing localized interactive applications, such as e-commerce, to both
personal computer users and set-top box users.
The Company accounted for the acquisition as a recapitalization under a reverse
acquisition procedure whereby TSB's operations and retained earnings are
reported as continuous. The value of the shares issued to GEM Ltd. has been
charged to additional paid-in capital.
F-10
<PAGE>
NOTE 2 BALANCE SHEET COMPONENTS (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Property and equipment: December 31,
1999 1998 1997
------------------- ------------------ -------------------
Communication equipment 28 4 3
Office equipment 137 33 32
Furniture & fittings 58 20 20
Motor vehicles 40 18
Electrical fittings & equipment 93 -
Leasehold improvements 62 -
------------------- ----------------- -------------------
418 75 55
Less: Accumulated depreciation (66) (21) (9)
------------------- ------------------ -------------------
352 54 46
=================== ================== ===================
Accrued expenses and other current liabilities:
Accrued compensation & related expenses 18 88 4
Accrued content, connect, other costs 646 162 23
Accrued sales & marketing related expenses 584 99 -
Accrued professional service expenses 121 6 -
------------------- ------------------ -------------------
1,369 355 27
=================== ================== ===================
</TABLE>
NOTE 3 RELATED PARTY TRANSACTIONS
The Company presently operates from offices on a rent-free basis utilized by a
director. Actual space utilization is minimal in nature and is non-reimbursable.
There are no pending lease arrangements at the present time.
NOTE 4 DUE TO DIRECTORS
Amounts due to directors represent short-term non interest bearing advances,
with no set repayment terms. These amounts will be repaid from operational cash
flows.
NOTE 5 SHAREHOLDERS' EQUITY
COMMON STOCK
During May 1999, the Company received $900,000 upon the exercise of an option
entitling the holder thereof to purchase 150,000 shares of our common stock for
$6.00 per share. During May 1999, the Company completed a private placement of
526,250 of shares of our common stock. We received $3,780,000 in aggregate
proceeds from the private placement. We used the proceeds to finance our
expansion in China. During December 1999, the Company received a further
$600,000 upon the exercise of an option entitling the holder thereof to purchase
50,000 of our shares for our common stock for $12.00 per share.
STOCK INCENTIVE PLAN
Under our Stock Incentive plans, we may grant stock options and incentive awards
to executives, directors and employees to provide motivation to enhance the
company's success and increase shareholder value. Incentive or non-qualified
stock options granted under our plans may be exercised up to 10 years from the
date the options were granted and vest over a period of up to two (2) years and
certain options granted in 1999 became exercisable immediately. Option holders
are required to tender cash or shares of our common stock that they already
owned equal to the aggregate exercise price of the options at the time of
exercise. Options outstanding under our plans may not exceed 15% of the total
F-11
<PAGE>
number of shares at any time outstanding and the total number of options that
may be granted under the plans may not exceed 1,000,000 under each plan. At
December 31, 1999, shares available for future awards under our plans were
547,862.
We apply APB Opinion 25 in accounting for our stock-based compensation programs.
Stock-based compensation expense recognized in connection with the plan was $9.0
million for the year ended December 31, 1999 and was related to certain of our
employees that we allowed to exercise their options without paying the exercise
price (cashless exercise) as well as the excess of the fair value over the
exercise prices of options granted which became exercisable immediately. Under
APB 25, a cashless exercise is treated similar to a stock appreciation right and
the excess of the fair value of the stock and the exercise price of the option
is recognized as compensation expense.
Had we accounted for the options underlying our plans in accordance with SFAS
123, pro forma net loss and loss per share would have been $23.8 million and
$2.32 respectively, for the year ended December 31, 1999. These pro forma
amounts are based upon estimated values of the options using the Black-Scholes
model with the following assumptions at the date of grant:
Expected life 10 years
Interest rate 5.5%
Volatility 80%
Dividend yield N/A
A summary of our stock option plan activity is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Shares Range of exercise prices
---------------- ------------------------
Balance at January 1, 1999........................... - $ -
Granted ............................................ 1,452,138 $6.00 to $12.00
Exercised............................................ (700,000) $6.00 to $12.00
Forfeited............................................ - $ -
--------------------
Balance at December 31, 1999......................... 752,138 $6.00 to $12.00
====================
</TABLE>
NOTE 6 INCOME TAXES
The Company has total net operating loss carryforward at December 31, 1999 of
approximately $13.4 million principally in international jurisdictions. A
deferred asset for these amounts has not been accrued since it is less likely to
be realized.
The Company's effective tax provision (benefit) differs from the amount that
would have been provided using the US Federal statutory tax rate of 34%. The
difference is related to the effects of valuation allowances, net operating loss
benefits and lower tax rates in international locations.
NOTE 7 COMMITMENTS AND CONTINGENCIES
OPERATING LEASES. During 1999, the Company entered into operating lease
arrangements for its offices in China and Malaysia. Future minimum lease
payments for these operating lease arrangements are approximately $80,000 for
2000. The lease arrangements expires in 2001 and certain of the agreements have
a two year renewal option from the date of expiration at lease payments to be
re-negotiated. Rent expense under operating leases totaled approximately
$128,000, $18,000 and $11,000 during 1999, 1998 and 1997, respectively.
LEGAL. From time to time the Company is subject to legal proceedings
and claims in the ordinary course of business, including claims of alleged
infringement of trademarks, copyrights and other intellectual property rights,
and a variety of claims arising in connection with the Company's email, message
boards, and other communications and community features, such as claims alleging
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<PAGE>
defamation and invasion of privacy. The Company is not currently aware of any
legal proceedings or claims that the Company believes will have, individually or
in aggregate, a material adverse effect on the Company's financial position or
results of operation.
Option agreement: Pursuant to a proposed acquisition in 1996 which was never
completed, the Company had granted in the acquisition agreement its then
subsidiary, AMC Holdings, an option to convert certain preference shares in the
acquisition agreement to 125,000 shares of the Company's common stock. The
proposed acquired company executed an agreement of forbearance whereby it was
agreed to never exercise such option. As management is presently uncertain as to
the legal binding effect of such an agreement upon an innocent purchaser for
value, and although management believes that no shares will be required to be
issued, an aggregate of 125,000 shares are reserved in the event that the
Company may be forced to issue such shares in the future.
NOTE 8 SETTLEMENT CHARGES
In September 1999, we settled a dispute with a firm that we had retained to
perform public relations work for us. The public relations firm claimed that we
had breached our contract with it. The terms of the settlement required us to
pay the public relations firm $30,000 and to issue at a later date 30,000 shares
of our common stock. The aggregate cost of the settlement of $360,000 has been
charged to expense. The shares were issued in the first quarter of 2000.
NOTE 9 SUBSEQUENT EVENTS
On January 6, 2000, the Company announced its acquisition of the majority
interest in one of Asia's pioneer online auction companies, Singapore-based
Easy2Bid Pte. Ltd. Under the terms of the agreement, the Company will issue and
allot to Easy2Bid Pte. Ltd. 6,200 ordinary shares at an agreed value of
Singapore $32.26 which is equivalent to approximately $120,000 as the purchase
consideration for the acquisition. The acquisition will be accounted for using
the purchase method of accounting.
The Company completed a private placement of 250,000 shares of our common stock
on March 23, 2000 for aggregate proceeds of $2.50 million. Under the terms of
the agreement, we have received $1.00 million on April 4, 2000 and will receive
a further $1.50 million in aggregate proceeds within the next 30 days. The
Company has also secured another private placement of 100,000 shares of our
common stock where we will receive $800,000 upon the signing of the agreement.
We intend to use the proceeds to finance our operations.
NOTE 10 LOSS FOR THE YEAR 1999 AND PLAN OF OPERATION FOR YEAR 2000
During the 1999 Period, the Company recorded a net loss of $13.40 million as
compared to a net income of $376,000 for the 1998 Period. The main reason for
the high net loss in 1999 was due to a non-cash expense related to employee
stock compensation expense of $9.0 million. Other attributable factors was the
increase in sales and marketing expenses and general administrative expenses in
1999 that was greater than the increase in revenue.
However, the Company does not expect to incur any significant stock compensation
expenses in 2000. Over the next 12 months, the Company plans to increase revenue
from advertising and electronic commerce by increasing awareness of its web
sites. The Company expects substantial cash outlay for sales and marketing as
well as general administration expenses. However, the Company intends to
maintain the operating expenses at a range of $3 to $4 million (unaudited) in
2000.
The Company completed a private placement of 250,000 shares of our common stock
on March 23, 2000 for aggregate proceeds of $2,500,000. Under the terms of the
agreement, we have received $1.0 million on April 4, 2000 and will receive a
further $1.5 million in aggregate proceeds within the next 30 days. The Company
has also secured another private placement of 100,000 shares of our common stock
where we will receive $800,000 upon the signing of the agreement. However, the
Company is continuing to pursue leads for additional possible investors. The
Company believes that with the additional funds of $3.3 million, it will be able
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<PAGE>
to meet its current expenditure requirements and achieve its business goals for
the next 12 months. Any additional funds raised will determine the speed with
which promotion and enhancements are pursued.
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<PAGE>
<TABLE>
<CAPTION>
QUARTERLY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<S> <C> <C> <C> <C>
Quarter Ended
March 31 June 30 September 30 December 31
--------------- ---------------- --------------- ----------------
Net Revenues $ 444 $ 482 $ 1,543 $ 1,043
--------------- ---------------- --------------- ----------------
Gross profit (Loss) $ 49 $ (74) $ (239) $ 246
Net Income (Loss) $ (256) $ (911) $ (2,022) $ (10,206)
--------------- ---------------- --------------- ----------------
Income (Loss) per share $ (0.03) $ (0.09) $ ( 0.20) $ (0.99)
--------------- ---------------- --------------- ----------------
Average number of shares
outstanding 9,375,743 10,126,576 10,178,243 10,241,352
=============== ================ =============== ================
</TABLE>
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