================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) Of
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to __________
Commission File Number 1-15745
MYWEB INC.COM
(Exact name of Small Business Issuer as Specified in its Charter)
NEVADA 88-0207089
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
Block G, Unit 606
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
------------------
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
------ ------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check whether the registrant 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 ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of September 30, 2000, the
registrant had 11,121,357 shares of Common Stock outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
------ ------
<PAGE>
MYWEB INC.COM
FORM 10-QSB
For the Quarter Ended September 30, 2000
<TABLE>
<CAPTION>
INDEX Page Number
PART I FINANCIAL INFORMATION
<S> <C> <C>
Item 1 Condensed Consolidated Balance Sheets at September 30, 2000 and at December 31, 1999 3
(unaudited for September 30, 2000)
Condensed Consolidated Statements of Operations for the three month periods 4
ended September 30, 2000 and September 30, 1999 and the nine month periods
ended September 30, 2000 and September 30, 1999 (unaudited)
Condensed Consolidated Statements of Cash Flows for the nine 5
month periods ended September 30, 2000 and
September 30, 1999 (unaudited)
Notes to Condensed Consolidated Financial Statements (unaudited) 6
Item 2 Management's Discussion and Analysis of Financial Condition and Results
Of Operations 11
PART II OTHER INFORMATION
Item 1 Legal Proceedings 17
Item 2 Changes in Securities 17
Item 3 Defaults Upon Senior Securities 17
Item 4 Submission of Matters to a Vote of Security Holders 17
Item 5 Other Information 18
Item 6 Exhibits and Reports on Form 8-K 18
</TABLE>
Certain statements under the caption "Management's Discussion and Analysis" and
elsewhere in this Form 10-QSB 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 "the
Company anticipates," "the Company believes" and other phrases of similar
meaning. Such forward looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the company to be materially different from any future
results, performance or achievements express 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 10-QSB.
2
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MYWEB INC.COM
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT FOR SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
September December
Assets 30, 2000 31, 1999
-------
<S> <C> <C>
Current Assets:
Cash and cash equivalents 577 2,362
Accounts receivable, net 2,108 1,818
Inventories 1,141 43
Prepaid expenses and other current assets 263 466
--------- ---------
Total Current Assets 4,089 4,689
Property and equipment, net 624 352
Goodwill on consolidation 879 -
--------- ---------
$ 5,592 $ 5,041
======== =========
Liabilities and Shareholders' Equity
------------------------------------
Current Liabilities:
Accounts payable, trade 2,586 1,861
Other accounts payable 4,176 1,369
Due to directors 181 198
Deferred revenue 62 26
Short term Borrowings 362 -
Income taxes payable 8 -
Deferred Tax Liability 5 -
--------- ---------
Total Current Liabilities 7,380 3,454
--------- ---------
Commitments and Contingencies (Note 9)
Minority Interest 175 7
Shareholders' Equity:
Common stock, par value $.01; authorized
100,000,000 shares; issued and outstanding 11,121,357
shares in 2000 and 11,070,135 in 1999 111 111
Additional paid-in capital 16,456 14,749
Accumulated deficit (18,551) (13,272)
Other comprehensive income (loss) 21 (8)
--------- ---------
Total Shareholders' Equity (1,963) 1,580
--------- ---------
$ 5,592 $ 5,041
========= =========
</TABLE>
3
<PAGE>
MYWEB INC.COM
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNT)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Revenues:
Net Sales $ 1,507 $ 1,507 $ 4,495 $2,392
Interest and Other Income 122 36 178 78
---------- ---------- ---------- ----------
Total Revenues 1,629 1,543 4,673 2,470
---------- ---------- ---------- ----------
Costs and Expenses:
Cost of sales 1,286 1,782 3,699 2,733
Sales and marketing 612 1,095 2,519 1,563
Product development 156 141 503 249
General administration 686 547 3,132 1,114
---------- ---------- ---------- ----------
Total Costs and Expenses 2,740 3,565 9,853 5,659
---------- ---------- ---------- ----------
Minority Interest (13) - (98) -
----------- ---------- ---------- ----------
Loss before income taxes (1,124) (2,022) (5,278) (3,189)
Income Taxes (1) - (1) -
---------- ---------- ---------- ----------
Net Loss $ (1,125) $ (2,022) $ (5,279) $ (3,189)
========== ========== ========== ==========
Loss per share $ (0.10) $ (0.19) $ ( 0.48) $ (0.31)
Average number of
common shares outstanding 11,112,285 10,178,243 11,112,285 10,178,243
</TABLE>
4
<PAGE>
MYWEB INC.COM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
2000 1999
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (5,279) $ (3,189)
Adjustments:
Depreciation 120 21
Non-cash Expense 1,621 (1)
Common stock issuance for consulting services - 4
Disposition of equipment 23 3
Amortization of goodwill 293 -
Gain on disposal of fixed assets (4) -
Minority Interest 98 -
Bad Debts 2 -
Working Capital Adjustments:
Increase in inventories (452) (5)
Decrease (Increase) in accounts receivable, trade 459 (337)
Decrease (Increase) in prepaids and others 229 (396)
(Decrease) Increase in accounts payable (142) 1,788
Increase in deferred revenue 36 -
Tax paid (1) -
--------- ---------
Cash Used In Operating Activities (2,997) (2,112)
--------- ---------
Cash Flows from Investing Activities:
Acquisition of property and equipment (266) (271)
Acquired cash in Asia Media - 11
Proceeds from disposal of equipment 21 -
Cash acquired in acquisitions 6 -
--------- ---------
Cash Used In Investing Activities (239) (260)
--------- ---------
Cash Flows from Financing Activities:
Proceeds on issuance of common stock - 4,690
(Payments) proceeds on due to directors (19) 51
Net change in short term borrowings 362 -
Proceeds on minority share in subsidiaries 11 -
Share Application Money received 1,100 -
--------- ---------
Cash Flows from Financing Activities 1,454 4,741
Effect of exchange rate changes on cash (3) -
(Decrease) Increase in cash and cash equivalents (1,785) 2,369
Cash balance, beginning 2,362 -
--------- ---------
Cash balance, end $ 577 $ 2,369
========= =========
</TABLE>
5
<PAGE>
MYWEB INC.COM
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: Basis of Presentation
The accompanying financial statements report the consolidated accounts of MyWeb
Inc.com. (formerly Asia Media Communications, Ltd.) and its wholly-owned
subsidiaries, TecnoChannel Technologies Sdn. Bhd. (a Malaysian corporation) and
its subsidiary companies, MyWeb Asia Pte. Ltd. (a Singapore corporation), MyWeb
Network System (Beijing) Co., Ltd. (a Chinese corporation) and MyWeb America
Inc. (a Delaware corporation), and Easy2Bid Pte. Ltd. (a Singapore corporation).
Pursuant to the acquisition described in Note 4 hereto, the Company has treated
the acquisition of TecnoChannel as a reverse acquisition and, accordingly, has
reported TecnoChannel Technologies' 1998 statements as continuous. The Company
was incorporated on February 20, 1985 pursuant to the laws of the State of
Nevada, and presently has an administrative office in San Francisco, California,
and operations offices in Kuala Lumpur and Beijing.
The accompanying financial statements have been prepared on the assumption that
the Company will continue as a going concern. Management's plans in regard to
these matters are described in Note 10 below.
Note 2: Unaudited Financial Statements
The consolidated financial statements as of September 30, 2000 and for the
periods ended September 30, 2000 and 1999, included herein are unaudited;
however, such information reflects all adjustments consisting of normal
recurring adjustments, which are, in the opinion of management, necessary for a
fair presentation of the information for such periods. In addition, the results
of operations for the interim periods are not necessarily indicative of results
for the entire year. The accompanying financial statements are in condensed form
and should be read in conjunction with the Company's annual report filed on Form
10-KSB and any amendments thereto.
Note 3: Inventories
Inventories of the Company primarily consist of fast moving consumer products
and office stationery products. All inventories are stated at the lower of cost
or realizable values. Cost of these inventories is primarily determined on a
weighted average basis.
Note 4: Acquisition
On February 24, 1999, the Company acquired 100% of the issued and outstanding
capital stock of TecnoChannel Technologies Sdn. Bhd. ("TSB"), a Malaysian
corporation, in exchange for an aggregate of 8,500,000 shares of common stock.
In connection with such acquisition, the Company issued an aggregate of 440,000
shares of its common stock to GEM Ltd. for its services as financial advisor to
the Company.
6
<PAGE>
MYWEB INC.COM
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 4: Acquisition - Continued
TSB, which was formed in April of 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, which utilize software
developed by TSB, are marketed and sold by Philips and other third parties. 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 users of personal computers and set-top boxes.
The Company accounted for the acquisition of TSB 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.
On January 3, 2000, the Company acquired 95% of the issued and outstanding
capital stock of Easy2Bid Pte. Ltd. ("E2B") and issued 6,200 shares of common
stock of the Company to the shareholders of E2B at a total purchase
consideration of approximately $164,000. The Company accounted for the
acquisition of E2B using the purchase method of accounting. Accordingly, the
purchase price has been assigned to the fair values of the acquired assets and
liabilities, resulting in the recognition of goodwill in the amount of $139,000,
which is being amortized over a three year period.
On January 2, 2000, the Company's subsidiary, TSB, acquired 66.67% of the issued
and outstanding capital stock of Pacific Office Supplies Sdn. Bhd. ("POS") for a
total purchase consideration of approximately $1.23 million, payable in cash.
The Company accounted for the acquisition of POS using the purchase method of
accounting. Accordingly, the purchase price has been assigned to the fair values
of the acquired assets and liabilities, resulting in the recognition of goodwill
in the amount of $1.03 million, which is being amortized over a three year
period.
Note 5: Goodwill
As part of the acquisition of E2B and POS as described in Note 4 above, the
Company recorded an intangible asset related to goodwill in the amount of $1.17
million. This asset is being amortized over a three year period beginning
January 2000.
Note 6: Other Accounts Payable
Of other accounts payable balances at September 30, 2000, approximately $1.03
million represents amounts owing to vendors, in connection with the purchase of
POS.
Note 7: Short Term Borrowings
The short term borrowings represent a short term loan obtained by MyWeb Network
System (Beijing) Co., Ltd. from the China Construction Bank. The short term
borrowing bears interest at the rate of 6.44% per annum and the principal amount
is payable in full on January 13, 2001. Interest is payable quarterly commencing
March 21, 2000.
7
<PAGE>
MYWEB INC.COM
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 8: Certain Transactions
Private placements:
The Company completed a private placement of 250,000 shares of common stock on
March 23, 2000 for aggregate proceeds of $2.5 million. Under the terms of the
agreement, the Company received $1.0 million on April 4, 2000 and was to receive
a further $1.5 million in aggregate proceeds on or before June 15, 2000. The
Company and the investor have agreed to defer the payment of the remaining $1.5
million of the investment until the fourth quarter of 2000.
The Company entered into a Licensing and Shareholder Agreement, dated March 29,
2000 (the "Adgator Agreement"), with Adgator.com Co., Ltd. and Adgator Inc.
(collectively, "AC/AI"). Under the terms of the Adgator Agreement, AC/AI has
agreed to purchase, and the Company has agreed to sell to AC/AI, within three
(3) months following the date of the agreement, $1.0 million worth of the
Company's common stock at a price per share equal to a 30% discount from the one
week average price from the agreement date. The Company received a
non-refundable deposit of $100,000 from AC/AI in April 2000. AC/AI have
indicated that they will not proceed with the purchase of the Company's common
stock and the deposit of $100,000 has been forfeited.
Secondary Listing in Singapore
The Company, in May 2000, obtained approval from the Singapore Exchange
Securities Trading Limited ("SGX") for secondary listing of the Company's common
stock on the Stock Exchange of Singapore in May 2000. Because of market
conditions, the Company has deferred the secondary listing of the common stock
on the SGX until a later date to be determined.
Note 9: Commitments and Contingencies
Option agreement:
Pursuant to a proposed acquisition in 1996 which was never completed, the
Company had granted 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.
Marketing Agreement:
The Company executed an agreement with a public relations consulting firm,
providing for the firm to provide certain services over a twelve month term. The
Company is charging the value of the shares issued for such arrangement of
approximately $283,000 over the agreement term. As of September 30, 2000, the
total amount of the advance fee has been charged to operations. Such services
included the preparation of product and corporate literature, as well as
services related to media distribution.
8
<PAGE>
MYWEB INC.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 9: Commitments and Contingencies - Continued
1999 Stock Incentive Plan
In February 1999, the Company's stockholders approved the adoption of the
Company's 1999 Incentive Program (the `Program') pursuant to which various types
of awards may be made. In June 1999, the directors of the Company adopted the
1999 Non-Qualified Stock Option Plan (the "Plan") pursuant to which only
non-qualified stock options may be granted.
Under the Company's stock incentive plans, the Company may grant stock options
and incentive awards to executives, directors and employees as a method of
boosting motivation to further the Company's success and increase shareholder
value. Incentive or non-qualified stock options granted under the Company's
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. Certain options granted in 1999
became exercisable immediately. Option holders are required to tender cash or
shares of the Company's common stock that they already own equal to the
aggregate exercise price of the options at the time of exercise or in the
alternative, at the discretion of the plans' administrator, option holders may
exercise options on a "cashless" basis. The total number of shares outstanding
pursuant to options granted under the plans may not exceed 15% of the total
number of outstanding shares of the Company at any time and the total number of
option shares that may be granted under each plan may not exceed 1,000,000. At
September 30, 2000, the number of shares available for future awards under the
Company's plans were 1,112 shares. For the three month and nine month period
ended September 30, 2000, the Company recognized compensation expense of
$252,000 and $1,260,000, respectively, relating to the intrinsic value at the
date of grant of certain options.
Joint Venture and Shareholders' Agreement
On April 27, 2000, the Company's subsidiary, TSB, entered into a Joint Venture
and Shareholders' Agreement with three other parties (the "Joint Venture
Agreement") to form a joint venture for the purpose of undertaking and engaging
in the business of providing Electronic Delivery Services to, and as a Service
Provider for, the Electronic Government Project in Malaysia. Under the Joint
Venture Agreement, the Company is obligated to subscribe for 35% of the total
issued and paid up capital of the Joint Venture Company which amounts to
Malaysian Ringgit ("RM") 350,000 or approximately $92,000. Pursuant to the
agreement, the Company is to undertake a lead role in the planning, management,
organization and implementation of the Electronic Data Services and Service
Provider for the Electronic Government Project. The first phase of the
Electronic Government Project is targeted to be completed in the first quarter
of year 2001.
9
<PAGE>
MYWEB INC.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 10: Management Plans
The Company is continuing to pursue leads for additional possible investors. The
Company believes that with additional funds, it will be able to meet its current
expenditure requirements and achieve its targets as mentioned below for the year
2000. Any additional funds raised will determine the speed with such operations
are pursued.
The Company's management targets 2001 to achieve breakeven status in its Asian
operations by expanding its services in the emerging Asian markets it currently
operates. Recently, the Company has expanded its services to include system
integration services and e-commerce consultancy services, in addition to its
established operations, to capitalize on the demand for such services in the
Asian region. By providing a range of integrated services along with running its
portal services in the emerging markets, the Company expects to obtain a
competitive edge over its competitors in its operating markets.
The Company believes that its current funds, together with the cash generated by
its operations, will be sufficient to meet its working capital requirements for
the fourth quarter of 2000. The Company does not expect to incur any significant
capital expenditures in the fourth quarter of 2000. The additional funds of $1.5
million, which the Company expects to receive in December 2000, should be
sufficient to sustain the Company's operations until it achieves breakeven
status in its operations in 2001, although there can be no assurance that this
will be the case. In order to provide for any potential or unanticipated need
for additional financing, the Company currently is in negotiations with several
parties to obtain additional funds, however, there can be no assurance that such
financing will be available on terms and conditions acceptable to the Company,
if available at all. If such financing is necessary and cannot be obtained, the
Company would be required to reduce or postpone expenditures and curtail
operations. Any such postponement could have a material adverse effect on the
Company's business and results of operations.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
THE FOLLOWING ANALYSIS OF THE OPERATIONS AND FINANCIAL CONDITION OF THE COMPANY
SHOULD BE READ IN CONJUNCTION WITH THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO, OF THE COMPANY CONTAINED ELSEWHERE IN
THIS FORM 10-QSB.
Overview
--------
The Company was inactive during 1997 and 1998. In February 1999, the Company
acquired all of the capital stock of TecnoChannel Technologies Sdn. Bhd., a
Malaysian corporation ("TSB").
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, which utilize software
developed by TSB, are marketed and sold by third parties, primarily Philips
Consumer Electronics. 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 users of
both personal computers and set-top boxes. The Company has recently expanded the
services in its Asian operations to include system integration services and
e-commerce consultancy services to capitalize on the demand for such services in
the Asian markets.
The Company's current business plan is to devote all of its resources to the
development and expansion of TSB's business in China and 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 of personal
computers; and a pre-existing cable and telecommunications infrastructure. The
Company is also providing a range of integrated services along with operating
its portals to obtain a competitive edge over its competitors in the emerging
markets which it operates.
On February 22, 2000, the Company entered into an agreement with Asia Infonet
Co., Ltd., an Internet service provider in Thailand, 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 the MyWeb portal and allow the Company to access to its distribution
channels, at no cost, to distribute and market the product. The Company has
agreed to provide logos and icon links to Asia Infonet's websites on its portal.
On February 15, 2000, the Company entered into a license and service agreement
with MyWeb Americas, Inc. ("MyWeb Americas"), an affiliate company. The
agreement allows MyWeb Americas to develop, offer and promote television
Internet access and Spanish and Portuguese versions of the MyWeb Online Services
to markets in Latin America. Under the agreement, MyWeb Americas may use the
Company's Thunder and Thunderserve software, and its intellectual property
rights relating to the MyWeb Online Service, and may also sub-license and
promote the Company's technology within the Latin American markets. MyWeb
Americas has begun operations in the Latin American market during the third
quarter of 2000, however, there can be no assurances that MyWeb Americas will be
able to generate significant revenues or that it will be able to operate
profitably.
11
<PAGE>
As discussed below, the three month period ended September 30, 2000 was
characterized by decreased expenses incurred in connection with the Company's
cost of revenue, advertising and promotion/marketing related expenses, as well
as a decrease in personnel and employee compensation expenses. The Company
believes it is well placed to capture a portion of the Internet users in China
and other emerging markets through the deployment of the set-top boxes, as they
offer easy and affordable Internet access compared to PCs for which prices
remain high relative to average income levels in such markets. The Company has
entered into strategic alliances with local Chinese partners, i.e.,
manufacturers, content providers and Internet service providers, for the
deployment of the set-top boxes, and for the MyWeb localized portal site in
China. The Company has continued on its brand building strategy in China by
advertising and promoting its MyWeb brand. The Company expects to continue to
incur operating losses for the year 2000 in China and other emerging markets.
However, the Company is aiming to break even by capitalizing on the growing
demand for system integration and e-commerce consultancy services in Asia by
providing and expanding such services in its Asian operations.
The Company has a limited operating history upon which to base an evaluation of
its business and prospects. The Company has yet to achieve significant revenues,
and the Company's ability to generate significant revenues in the future is
uncertain. Further, in view of the rapidly evolving nature of this business and
the Company's limited operating history, it is not possible to forecast future
revenues. The Company believes, therefore, that period-to-period comparisons of
its financial results are not necessarily meaningful, and investors should not
rely on them as an indication of future performance.
The Company's 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, the Company's revenues
depend substantially upon the level of activity on its Internet properties and
its ability to successfully create brand name awareness and market recognition
for its products and services. Although the Company has experienced growth in
its revenues since our merger with TSB in February 1999, there can be no
assurance that its revenues will continue at their current rate or that the
Company will be able to operate profitably.
12
<PAGE>
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2000 TO THE THREE MONTHS
ENDED SEPTEMBER 30, 1999.
Revenues
--------
Revenues were $1.63 million, including $122,000 of interest and other income, in
the three month period ended September 30, 2000 (the "2000 Third Quarter")
compared to $1.54 million, including $36,000 of interest income, in the three
month period ended September 30, 1999 (the "1999 Third Quarter"). The increase
in revenues of 6% in the 2000 Third Quarter as compared to the 1999 Third
Quarter was primarily due to an increase in interest and other income which
consisted mainly of the deposit that was forfeited by AC/AI as described in Note
8 above. Revenues for the 2000 Third Quarter consisted primarily of e-commerce
transactions of $1.44 million, set top box revenue of $38,000 and advertising
and design work of $20,000. No customer accounted for more than 10% of total
revenues during the 2000 Third Quarter. No customer accounted for more than 10%
of total revenues during the 1999 Third Quarter except for Hangzhou Westlake
Electronics Import and Export Co.Ltd.
Cost of Sales
-------------
Cost of sales was $1.29 million in the 2000 Third Quarter compared to $1.78
million in the 1999 Third Quarter. The decrease in cost of sales of $496,000 in
the 2000 Third Quarter compared to the 1999 Third Quarter was primarily due to
the decrease in the cost of licensing of the set top box software as we are now
using a software which is more cost effective.
Total Operating Expenses
------------------------
Total operating expenses were $1.45 million in the 2000 Third Quarter compared
to $1.78 million in the 1999 Third Quarter. The decrease in total operating
expenses of 18% in the 2000 Third Quarter compared to the 1999 Third Quarter was
primarily attributable to a decrease in sales and marketing expenses from $1.10
million in the 1999 Third Quarter to $612,000 in the 2000 Third Quarter. This
was offset by the increase in general and administration expenses from $547,000
in the 1999 Third Quarter to $686,000 in the 2000 Third Quarter.
Sales and marketing expenses consisted primarily of employee compensation,
advertising and other promotion/marketing related expenses. The decrease in
absolute dollars from the 1999 Third Quarter is primarily attributable to a
decrease in the Company's advertising and promotion/marketing related expenses
in China and Malaysia and employee related expenses.
General administration expenses increased 25% from $547,000 in the 1999 Third
Quarter to $686,000 in the 2000 Third Quarter. General administration expenses
in the 2000 Third Quarter consisted primarily of employee compensation, employee
related expenses and fees for professional services. The increase in absolute
dollars from the 1999 Third Quarter is primarily a result of an increase in
employee compensation, fees for professional services and other operational
expenses.
Net Loss
--------
The Company recorded a net loss of $1.13 million or $0.10 per share for the 2000
Third Quarter compared to a net loss of $2.02 million or $0.19 per share for the
1999 Third Quarter. The decrease in net loss of 44% in the 2000 Third Quarter
compared to the 1999 Third Quarter was primarily attributable to the decrease in
cost of revenue, advertising and promotion/marketing related expenses,
especially in the Company's operations in China, as well as a decrease in
personnel and employee compensation expenses.
13
<PAGE>
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2000 TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1999
Total Revenue
-------------
Revenues increased from $2.47 million, including interest and other income of
$78,000, in the nine month period ended September 30, 1999 (the "1999 Period")
to $4.67 million, including interest and other income of $178,000, in the nine
month period ended September 30, 2000 (the "2000 Period"), an increase of 89%.
This increase was attributable to e-commerce transactions and advertising,
system integration and design work. Revenues for the 2000 Period consisted
primarily of e-commerce transactions of $4.19 million, set top box revenue of
$55,000 and advertising, system integration and design work of $160,000. No
customer accounted for more than 10% of total revenues during the 2000 Period.
No customer accounted for more than 10% of total revenues during the 1999 Period
except for Hangzhou Westlake Electronic Import & Export.Co.Ltd. and Saw Beng
Swee.
Cost of Sales
-------------
Cost of sales increased from $2.73 million in the 1999 Period to $3.70 million
in the 2000 Period, an increase of 35%. The increase in cost of sales was
primarily due to the cost of goods for e-commerce transactions and advertising
and design work in the 2000 Period in line with the increase in revenue over the
same period.
Total Operating Expenses
------------------------
Total operating expenses increased 110% from $2.93 million in the 1999 Period to
$6.15 million in the 2000 Period. The increase was primarily attributable to an
increase in sales and marketing expenses from $1.56 million in the 1999 Period
to $2.52 million in the 2000 Period, an increase of 61%, and general
administration expenses from $1.11 million in the 1999 Period to $3.13 million
in the 2000 Period, an increase of 181%.
Sales and marketing expenses consisted primarily of employee compensation,
advertising and other promotion/marketing related expenses. The increase in
absolute dollars from the 1999 period is primarily attributable to an increase
in personnel costs and the costs associated with the Company's advertising and
promotion/marketing related expenses in China and employee related expenses.
Product development expenses increased 102% from $249,000 in the 1999 Period to
$503,000 in the 2000 Period. Product development expenses consisted primarily of
employee compensation relating to developing and enhancing features of the MyWeb
online service properties. The increase in absolute dollars is primarily a
result of the increase in the number of engineers responsible for the product
development and employee related expenses.
General administration expenses increased 181% from $1.11 million in the 1999
Period to $3.13 million in the 2000 Period. General administration expenses
consisted primarily of employee compensation, employee related expenses,
amortization of goodwill and fees for professional services. The increase in
absolute dollars is primarily a result of an increase in employee compensation,
goodwill expense amortized and an increase in fees for professional services,
primarily related to the Company's application for a Secondary Listing on the
Singapore Stock Exchange amounting to approximately $700,000 and other
operational expenses.
14
<PAGE>
Net Loss
--------
The Company recorded a net loss of $5.28 million or $0.48 per share for the 2000
Period compared to net loss of $3.20 million or $0.31 per share for the 1999
Period. The increase in net loss was primarily attributable to the increase in
cost of revenue, advertising and promotion/marketing related expenses especially
in the Company's operations in China, as well as the increase in personnel,
employee compensation expenses and fees for professional services.
Liquidity and Capital Resources
-------------------------------
At September 30, 2000, the Company had cash and cash equivalents totaling
$577,000 compared to $2.37 million at September 30, 1999. Cash used in operating
activities of $2.99 million for the nine months ended September 30, 2000 was
primarily due to the net loss of $5.28 million for the 2000 Period. Cash used in
investing activities was $239,000 for the 2000 Period compared to cash used in
investing activities of $260,000 for the 1999 Period. The capital expenditures
of $266,000 for the 2000 Period consisted primarily of the purchases of computer
hardware and software and office equipment. Cash provided by financing
activities of $1.45 million during the 2000 Period was primarily from share
application money received from investors and short-term borrowings while
$19,000 was used to repay the amount due to directors.
The Company completed a private placement of 250,000 shares of its common stock
on March 23, 2000 for aggregate proceeds of $2.5 million. Under the terms of the
agreement, the Company has received $1.0 million on April 4, 2000 and was to
receive a further $1.5 million on or before June 15, 2000. The Company and the
investor have agreed to defer the payment of the remaining $1.5 million of the
investment until the fourth quarter of 2000.
The Company has also entered into a Licensing and Shareholder Agreement, dated
March 29, 2000 (the "Adgator Agreement"), with Adgator.com Co., Ltd. and Adgator
Inc. (collectively, "AC/AI"). Under the terms of the Adgator Agreement, AC/AI
has agreed to purchase, and the Company has agreed to sell to AC/AI, within
three (3) months of the date of the agreement, $1.0 million worth of the
Company's common stock at a price per share equal to a 30% discount from the one
week average price from the agreement date. The Company received a
non-refundable deposit of $100,000 from AC/AI in April 2000. Adgator has
indicated that they will not proceed with the purchase of the Company's common
stock and the deposit of $100,000 has been forfeited.
The Company is continuing to pursue leads for additional possible investors. The
Company believes that with additional funds, it will be able to meet its current
expenditure requirements and achieve its targets as mentioned below for the year
2000. Any additional funds raised will determine the speed with such operations
are pursued.
The Company's management targets 2001 to achieve breakeven status to its Asian
operations by expanding its services in the emerging Asian markets it currently
operates. Recently, the Company has expanded its services to include system
integration services and e-commerce consultancy services, in addition to its
established operations, to capitalize on the demand for such services in the
Asian region. By providing a range of integrated services along with running its
portal services in the emerging markets, the Company expects to obtain a
competitive edge over its competitors in its operating markets.
The Company believes that its current funds, together with the cash generated by
its operations, will be sufficient to meet its working capital requirements for
the fourth quarter of 2000. The Company does not expect to incur any significant
capital expenditures in the fourth quarter of 2000. The additional funds of $1.5
million, which the Company expects to receive in December 2000, should be
sufficient to sustain the Company's operations until it achieves breakeven
status in its operations in 2001, although there can be no assurance that this
15
<PAGE>
will be the case. In order to provide for any potential or unanticipated need
for additional financing, the Company currently is in negotiations with several
parties to obtain additional funds, however, there can be no assurance that such
financing will be available on terms and conditions acceptable to the Company,
if available at all. If such financing is necessary and cannot be obtained, the
Company would be required to reduce or postpone expenditures and curtail
operations. Any such postponement could have a material adverse effect on the
Company's business and results of operations.
The Company has also received notification from its auditors that they may be
unable to issue an opinion as a going concern on the Company's financial
statements for the year ending December 2000, if the Company's cash flow
deficiency is not adequately addressed by the time of filing of the 10-KSB in
2001.
16
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
No securities that were not registered under the Securities Act of
1933, as amended (the "Act") were issued or sold by the Company during the three
months ended September 30, 2000.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of the Company was held on
September 27, 2000 (the "Annual Meeting") in which two proposals were submitted
to a vote of the Company's stockholders. The proposals and results of voting
were as follows:
Proposal I.
----------
A proposal to elect the following persons to serve on the Company's Board
of Directors until the next annual meeting of stockholders and until their
successors are elected and qualified:
SHARES SHARES
Name FOR WITHHELD
---- --------- --------
George S. Bayoud, Jr. 6,403,408 9,158
Alvin Roy Granoff 6,403,408 9,158
Dr. Boh Soon Lim 6,403,408 9,158
Victor Fook Ai Ng 6,403,408 9,158
Kasiviswanathan Shanmugam 6,403,408 9,158
Danny Teow Teck Toe 6,403,108 9,458
Thean Soon Wong 6,402,408 10,158
17
<PAGE>
Proposal II.
-----------
A proposal to ratify the selection of Arthur Anderson LLP as the
independent auditors of the Company for the fiscal year ending December 31,
2000:
SHARES SHARES SHARES IN
FOR AGAINST ABSTENTION
--------- ------- ----------
Arthur Anderson LLP 6,412,173 393 - 0 -
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule for the Nine Months Ended September 30,
2000.
(b) Reports on Form 8-K
None
18
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
MYWEB INC.COM
(Registrant)
By: /s/ Nin Contreras
---------------------------------------
Nin Contreras
Chief Executive Officer
By: /s/ Roger Koh
---------------------------------------
Roger Koh
Acting Chief Financial Officer
Date: November 20, 2000
19
