UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark one)
XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
- ---------- EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
- ---------- OF 1934
For the transition period from ____________ to ___________
Commission File Number: 33-40848-A
----------
WorldWideWeb Institute.com, Inc.
(Exact name of small business issuer as specified in its charter)
Florida 65-0260247
- ------------------------ ----------------------
(State of incorporation) (IRS Employer ID Number)
6245 N. W. 9th Avenue, Ft. Lauderdale FL 33309
----------------------------------------------
(Address of principal executive offices)
(954) 776-8444
---------------------------
(Issuer's telephone number)
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
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: February 14, 2000: 9,588,250
Transitional Small Business Disclosure Format (check one): YES NO X
-- --
<PAGE>
WorldWideWeb Institute.com, Inc.
(formerly Spectrum Pharmaceutical Corporation)
Form 10-QSB for the Quarter ended December 31, 1999
Table of Contents
Page
----
Part I - Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 15
Part II - Other Information
Item 1 Legal Proceedings 17
Item 2 Changes in Securities 17
Item 3 Defaults Upon Senior Securities 18
Item 4 Submission of Matters to a Vote of Security Holders 18
Item 5 Other Information 18
Item 6 Exhibits and Reports on Form 8-K 18
Signatures 18
2
<PAGE>
Part 1 - Item 1 - Financial Statements
WorldWideWeb Institute.com, Inc.
(formerly Spectrum Pharmaceutical Corporation)
Balance Sheets
December 31, 1999 and 1998
(Unaudited)
-----------
1999 1998
----------- -----------
ASSETS
------
Current Assets
Cash on hand and in bank $ 189,452 $ 100,193
Accounts receivable, net of allowance for
doubtful accounts of $-0-, respectively
Trade 66,576 --
Other 17,250 --
Prepaid and other expenses 15,221
Due from related parties 1,429,378 11,512
Due from unrelated entities 200,000 --
Total current assets 1,917,877 111,705
----------- -----------
Property and equipment - at cost
Computer equipment 537,538 101,269
Other 183,890 37,322
----------- -----------
721,428 138,591
Accumulated depreciation (122,870) (8,175)
----------- -----------
Net property and equipment 598,558 130,416
----------- -----------
Other Assets
Investments in other entities 1,508,872 --
Other 5,014 22,223
----------- -----------
Total other assets 1,513,886 22,223
----------- -----------
Total Assets $ 4,030,321 $ 264,344
=========== ===========
- Continued -
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
3
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WorldWideWeb Institute.com, Inc.
(formerly Spectrum Pharmaceutical Corporation)
Balance Sheets - Continued
December 31, 1999 and 1998
(Unaudited)
-----------
1999 1998
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Current maturities of capital lease payable $ -- $ 2,699
Accounts payable - trade 38,289 17,498
Other accrued liabilities 637,598 36,676
Income taxes payable 187,293 141
Deferred revenues 142,518 --
Due to officer/shareholder 322,812 472,500
------------ ------------
Total current liabilities 1,328,510 529,514
------------ ------------
Commitments and Contingencies
Shareholders' Equity
Common stock - $0.00001 par value. 50,000,000
shares authorized. 9,212,250 and 5,716,250
issued and outstanding, respectively 92 57
Additional paid-in capital 3,203,709 947,586
Accumulated deficit (501,090) (1,211,913)
------------ ------------
2,702,711 (264,270)
Stock subscription receivable (900) (900)
------------ ------------
Total shareholders' equity 2,701,811 (265,170)
------------ ------------
Total Liabilities and Shareholders' Equity $ 4,030,321 $ 264,344
============ ============
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
4
<PAGE>
<TABLE>
<CAPTION>
WorldWideWeb Institute.com, Inc.
(formerly Spectrum Pharmaceutical Corporation)
Statements of Operations and Comprehensive
Income Nine and Three months ended December 31, 1999 and 1998
(Unaudited)
Nine months Nine months Three months Three months
ended ended ended ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 6,083,581 $ 1,598,694 $ 1,774,291 $ 939,557
Cost of Sales 1,012,146 133,787 296,102 100,809
----------- ----------- ----------- -----------
Gross Profit 5,071,435 1,464,907 1,478,188 838,748
----------- ----------- ----------- -----------
Operating Expenses
Selling 2,321,617 806,015 684,333 502,098
General and administrative expenses 2,362,452 665,048 884,795 304,601
Depreciation 30,294 8,175 (2,399) --
----------- ----------- ----------- -----------
Total operating expenses 4,714,363 1,479,238 1,566,729 806,699
----------- ----------- ----------- -----------
Income (loss) from operations 357,072 (14,331) (88,541) 32,049
Other income (expense)
Litigation settlement (20,000) -- -- --
Forgiveness of accrued
compensation under
employment agreement 550,000 -- -- --
----------- ----------- ----------- -----------
Net Income (Loss)
before Income Taxes 887,072 (14,331) (88,541) 32,049
Income tax provision 179,363 -- (105,993) --
----------- ----------- ----------- -----------
Net Income (Loss) 707,709 (14,331) 17,452 32,049
Other comprehensive income -- -- -- --
----------- ----------- ----------- -----------
Comprehensive Income (Loss) $ 707,709 $ (14,331) $ 17,452 $ 32,049
=========== =========== =========== ===========
Income (Loss) per share of
common stock outstanding,
computed on net loss
Basic $ 0.08 .00 $ 0.00 $ 0.01
=========== =========== =========== ===========
Fully diluted $ 0.08 .00 $ 0.00 $ 0.01
=========== =========== =========== ===========
Weighted-average number
of shares outstanding
basic 8,236,426 5,716,250 8,914,386 5,716,250
=========== =========== =========== ===========
fully diluted 8,468,767 5,716,250 9,146,727 5,716,250
=========== =========== =========== ===========
</TABLE>
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
5
<PAGE>
<TABLE>
<CAPTION>
WorldWideWeb Institute.com, Inc.
(formerly Spectrum Pharmaceutical Corporation)
Statements of Cash Flows
Nine months ended December 31, 1999 and 1998
(Unaudited)
-----------
1999 1998
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities
Net income (loss) $ 707,709 $ (14,331)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 30,294 8,175
Lawsuit settlement paid with transfer of assets 20,000 --
Common stock issued for consulting fees 18,000 --
Forgiveness of accrued compensation on employment contract (550,000) --
(Increase) Decrease in
Accounts receivable - trade (25,325) --
Accounts receivable - other (7,250) --
Prepaid expenses and other 108,042 (2,223)
Increase (Decrease) in
Accounts payable (12,092) 17,498
Other accrued liabilities 523,130 36,676
Due to former officer/shareholder -- 75,000
Income taxes payable 96,906 141
Deferred revenues (42,610) --
----------- -----------
Net cash provided by operating activities 866,804 120,936
----------- -----------
Cash Flows from Investing Activities
Purchase of property and equipment (407,840) (138,591)
----------- -----------
Net cash used in investing activities (407,840) (138,591)
----------- -----------
Cash Flows from Financing Activities
Proceeds from private placements of
common stock - net of selling expenses 2,118,415 --
Cash advanced by officer and shareholder 422,812 --
Change in advances to affiliates - net (1,316,647) 115,049
Advances to other entities (200,000) --
Cash paid for investments in other entities (1,508,872) --
Proceeds from capital lease payable -- 7,950
Payments on capital lease payable (1,379) (5,251)
----------- -----------
Net cash used in financing activities (485,671) 117,748
----------- -----------
Increase in Cash and Cash Equivalents (26,707) 100,093
Cash and cash equivalents at beginning of period 216,159 100
----------- -----------
Cash and cash equivalents at end of period $ 189,452 $ 100,193
=========== ===========
</TABLE>
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
6
<PAGE>
WorldWideWeb Institute.com, Inc.
(formerly Spectrum Pharmaceutical Corporation)
Statements of Cash Flows
Nine months ended December 31, 1999 and 1998
(Unaudited)
-----------
1999 1998
-------- --------
Supplemental Disclosures of Interest and Income Taxes Paid
Interest paid during the period $ - $ 191
======== ========
Income taxes paid (refunded) $ 82,457 $ -
======== ========
Supplemental Disclosure of Non-Cash
Investing and Financing Activities
Settlement of lawsuit with transfer of a patent $ 20,000 $ -
======== ========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
7
<PAGE>
WorldWideWeb Institute.com, Inc.
(formerly Spectrum Pharmaceutical Corporation)
Notes to Financial Statements
Note 1 - Basis of Presentation
WorldWideWeb Institute.com, Inc. (Company) was incorporated on May 29, 1990 as
Interamerican Pharmaceutical Corporation under the laws of the State of Florida.
The Company changed its name to Spectrum Pharmaceutical Corporation in April
1991. The Company was originally formed to engage in the development and
marketing of certain products utilizing the chemical compound procaine
hydrochloride for the treatment of tinnitus, certain symptoms of Alzheimer's
Disease and cocaine addiction. The Company was assigned a patent covering its
products for the specifically named conditions and diseases.
On June 29, 1999, as filed on July 30, 1999, the Company amended its Articles of
Incorporation to issue up to 50,000,000 shares of $0.00001 par value Common
Stock and to effect a one (1) for ten (10) reverse stock split, with no
fractional shares being issued. All issued and outstanding share amounts in the
accompanying financial statements have been restated to reflect the effect of
this reverse stock split as of the first day of the first period presented. The
Company also changed its corporate name to WorldWideWeb Institute.com, Inc.
On July 2, 1999, the Agreement and Plan of Reorganization and Stock Purchase
Agreement among Spectrum Pharmaceutical Corp. ("Acquiror"), the principal
shareholder of the Acquiror, WorldWideWeb Institute, Inc. ("WorldWideWeb") and
the shareholders of WorldWideWeb was completed. As part of the acquisition, the
shareholders of WorldWideWeb acquired 5,025,000 shares of the Acquiror's Common
Stock in exchange for all of the capital stock of WorldWideWeb and, in addition,
acquired 1,815,000 shares of the Acquiror from the principal shareholder of the
Acquiror, Halter Capital Corporation, in consideration for $350,000. As a result
of this transaction, the shareholders of WorldWideWeb received an aggregate of
6,840,000 shares or approximately 89.6% of the total outstanding Common Stock of
the Acquiror. The exchange of consideration involved resulted from arms-length
bargaining and there was no previous relationship between the Acquiror and its
principal shareholder and WorldWideWeb and its shareholders. The cash portion of
the consideration was derived from personal funds.
A change in control of the Company and the simultaneous July 2, 1999 acquisition
of WorldWideWeb Institute, Inc. involved common ownership and management.
Accordingly, the acquisition was accounted for pursuant to Interpretation #39 of
Accounting Principles Board Opinion # 16, "Business Combinations", whereby the
combination of entities under common control are accounted for on an
"as-if-pooled" basis. The combined financial statements of the Company and its
wholly-owned subsidiary became the historical financial statements of the
Company as of the first day of the first period presented.
On December 8, 1999, the Company acquired 100.0% of the issued and outstanding
stock of World Wide Web Institute of Canada, Inc., a Canadian corporation
located in Toronto, Canada ("WWWC"), for the conversion of all loans by the
Company to WWWC of approximately $844,000, into equity ownership of WWWC. The
Company's President and controlling shareholder was a minority shareholder and a
member of the Board of WWWC and the Company provided significant amounts of
working capital to support WWWC's operations during its initial 12 months of
operation through the date of acquisition by the Company. Due to the ownership
and funding issues, the acquisition of WWWC by the Company was accounted for on
an "as if pooled" basis, pursuant to the requirements of Interpretation #39 of
Accounting Principles Board Opinion # 16 for entities under common control.
Accordingly, the combined financial statements of the Company, its wholly-owned
subsidiary discussed in the preceding paragraph and WWWC have become the
historical consolidated financial statements of the Company as of the first day
of the first period presented.
The Company will retain its March 31 year-end for all future periods.
8
<PAGE>
WorldWideWeb Institute.com, Inc.
(formerly Spectrum Pharmaceutical Corporation)
Notes to Financial Statements - Continued
Note 1 - Basis of Presentation - continued
During interim periods, the Company follows the accounting policies set forth in
its Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act
of 1934 on Form 10-KSB and the accounting policies of WorldWideWeb Institute,
Inc. on Form 8-K/A filed with the U. S. Securities and Exchange Commission. The
information presented herein does not include all disclosures required by
generally accepted accounting principles and the users of financial information
provided for interim periods should refer to the annual financial information
and footnotes contained in its Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934 on Form 10-KSB and the Form 8-K/A filed
containing the historical financial statements of WorldWideWeb Institute, Inc.
when reviewing the interim financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the instructions for Form 10-QSB, are unaudited and
contain all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial condition, results of
operations and cash flows of the Company for the respective interim periods
presented. The current period results of operations are not necessarily
indicative of results which ultimately will be reported for the full fiscal year
ending March 31, 2000.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2 - Summary of Significant Accounting Policies
a.) Cash and cash equivalents and foreign currency translation
The Company considers all cash on hand and in banks, including accounts in
book overdraft positions, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
World Wide Web Institute, Inc. (Canada) ("WWWC") maintains funds in
Canadian financial institutions in Canadian dollar (CN$) transaction
accounts. All transactions reflected in the accompanying financial
statements have been converted into US dollar equivalents, as of the end of
each respective quarter at the Wall Street Journal published exchange rate
on the last day of the fiscal quarter, for CN$ accounts.
b.) Income taxes
The Company filed a separate corporate federal income tax return through
December 31, 1998. Due to the changes in control occurring in 1999, the
Company has no net operating loss carry forwards available to offset
financial statement or tax return taxable income in future periods.
The Company uses the asset and liability method of accounting for income
taxes. At December 31, 1999 and 1998, respectively, the deferred tax asset
and deferred tax liability accounts, as recorded when material to the
financial statements, are entirely the result of temporary differences.
Temporary differences represent differences in the recognition of assets
and liabilities for tax and financial reporting purposes, primarily
non-deductible accrued compensation amounts payable to an officer.
9
<PAGE>
WorldWideWeb Institute.com, Inc.
(formerly Spectrum Pharmaceutical Corporation)
Notes to Financial Statements - Continued
Note 2 - Summary of Significant Accounting Policies
c.) Income (Loss) per share
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later.
d.) Reclassifications
Certain amounts in the accompanying financial statements have been
reclassified to better reflect the Company's operations, in the opinion of
management. These reclassifications have been reflected in all amounts
shown in the accompanying financial statements.
Note 3 - Due from Related Parties
The Company has made short term loans in the form of unsecured advances,
provided services or paid certain expenses on behalf of affiliated marketing and
production companies located in, Melbourne, Australia, and Sao Paulo, Brazil
totaling approximately $1,203,106 and $1,000 as of December 31, 1999 and 1998,
respectively. These two foreign companies also provide additional lower cost
production facilities for the Company, as well as providing a gateway for
introduction of strategic marketing partnering arrangements with large local
companies and international organizations. These companies are presently
independently owned by local management, and Messrs. Hudson and Sansoni who are
members of the Company's Management. As of December 31, 1999, these advances are
due upon demand and bear an interest rate of 4% per annum. The Company's Board
has approved the acquisition of these Companies, but has left the timing of the
acquisition up to management, subject to due diligence, business evaluation and
other considerations.
Note 4 - Due from Unrelated Parties
World Wide Web Institute, Inc. (Canada) has made short term loans in the form of
unsecured advances, provided services or paid certain expenses on behalf of the
Internet Resource Center Inc., a Canadian online training company. Such advances
are expected to be repaid within one year.
Note 5 - Investments in Other Entities
The Company has made investments in several entities. The Company regards these
strategic partnerships as a cost-effective way of extending its services or
developing fast growing new markets. It has made its investments as either
direct capital contributions, as equity for services, or as equity for
expenditures made. These include TekLaunch, Inc., a marketer and developer of
high end web sites, Low Cost Hosting.com, Inc., a provider of low cost hosting,
Internet Sales Products.com, Inc., a network marketing re-seller of bundled web
site and web site products and services, and WWT Services Corp., DBA E-Online
Marketing.com,. an online marketing services and consulting firm. In each of
these cases, the Company has a current minority interest of approximately 20%
together with an option to acquire 80-100% ownership.
10
<PAGE>
WorldWideWeb Institute.com, Inc.
(formerly Spectrum Pharmaceutical Corporation)
Notes to Financial Statements - Continued
Note 6 - Other Accrued Liabilities
The Company's accrued liabilities as of December 31, 2000 were approximately
$67,556 of accrued vacation expense, $76,129 of accrued or deferred payroll,
$10,865 in accrued commission and $483,046 in accrued payroll taxes. Certain of
these liabilities involved timing differences. As of February 15, 2000, the
Company's accrued payroll tax liability was approximately $221,000.
Note 7 - Common stock transactions
On June 29, 1999, as filed on July 30, 1999, the Company amended its Articles of
Incorporation to issue up to 50,000,000 shares of $0.00001 par value Common
Stock and to effect a one (1) for ten (10) reverse stock split. All issued and
outstanding share amounts in the accompanying financial statements have been
restated to reflect the effect of this reverse stock split as of the first day
of the first period presented.
On April 1, 1999, the Company, then known as Spectrum Pharmaceuticals issued
18,000,000 pre-reverse split shares (1,800,000 post-reverse split shares, as
discussed below) of unregistered, restricted common stock to its former
President in settlement of a consulting contract for providing various services
to the Company in preserving the corporate entity during preceding years.
On April 15, 1999, the Company issued 125,000 post-reverse split shares of
restricted, unregistered common stock in settlement of a consulting agreement,
valued at approximately $6,000, which approximates the value of the services
rendered and the "fair value" of the shares on the issue date, as compensation
for various services rendered to the Company for the purpose of identifying a
suitable merger candidate for the Company and for paying certain reactivation
expenses on behalf of the Company.
On July 2, 1999, the Company issued approximately 5,025,000 shares of
post-reverse split stock to acquire 100% of the issued and outstanding stock of
WorldWideWeb Institute, Inc. (a privately owned Florida corporation).
WorldWideWeb Institute, Inc. then became a wholly-owned operating subsidiary of
the Company.
In August 1999, the Company sold 1,000,000 Units under a Private Placement
Memorandum, consisting of one (1) share of common stock and one (1) warrant to
purchase one (1) share of common stock. Each Unit sold for $1.00 per share. Each
warrant is exercisable at $2.25 per share and expires two (2) years from the
date of issuance. The Company realized net proceeds of approximately $900,000 in
this transaction. In November, 2000, the Company permitted the conversion of a
$100,000 note into 100,000 units consisting of 100,000 shares and 100,000
warrants.
In September 1999, the Company had an additional private placement offering of
units, consisting of one (1) share of common stock and one (1) warrant to
purchase one (1) share of common stock. As of December 31, 1999, the Company has
sold 639,500 Units at $2.00 per Unit for total gross and net proceeds of
approximately $1,279,000. Each warrant is exercisable at $2.25 per share and
expires two (2) years from the date of issuance. Subsequent to December 31,
1999, the Company completed the offering by the sale of an additional 207,500
units under this offering and received net proceeds of $415,000.
In January 4, 2000, the Company made a limited 45-day offer to holders of its
2-year warrants with a $2.25 exercise price. For each warrant exercised into
common stock during this period, the Company offered to issue an additional
2-year warrant exercisable at $8 per share. The Company has received an
additional $610,200 from the exercise of 271,200 warrants.
11
<PAGE>
WorldWideWeb Institute.com, Inc.
(formerly Spectrum Pharmaceutical Corporation)
Notes to Financial Statements - Continued
Note 8 - Contingencies
Employment Agreement
On June 1, 1992, the Company, entered into an Employment Contract (Contract)
with an individual to serve as the Company's President. The Contract required a
annual base salary, as specified to use the Contract's anniversary dates, as
follows:
June 1, 1992 to May 31, 1993 $ 85,000
June 1, 1993 to May 31, 1994 105,000
June 1, 1994 to May 31, 1995 115,000
June 1, 1995 to May 31, 1996 125,000
June 1, 1996 to May 31, 1997 135,000
June 1, 1997 to May 31, 1998 145,000
June 1, 1998 to May 31, 1999 155,000
Additionally, the Contract provided for discretionary bonuses, paid vacation and
sick leave time, use of a Company automobile or reimbursement for the use of a
personal automobile and various normal insurance coverage for life and health.
Employment Agreement
Effective April 1, 1999, this individual and the Company executed an Agreement
whereby all accrued compensation under this Agreement were forgiven by the
individual with no further liability to the Company. Accordingly, the reversal
of these accruals resulted in a one-time income item of $550,000. Pursuant to
the Internal Revenue Code, none of these accrued amounts were eligible for
deduction for income tax purposes in the initial year of accrual and no income
tax effect is realized as a result of this forgiveness.
Litigation
The Company, then known as Spectrum Pharmaceutical and its then President were
defendants in a case initiated in August 1992 in Circuit Court for the 15th
Judicial Circuit for Palm Beach County, Florida seeking damages related to the
termination of a partnership which was the predecessor to the Company. In
February 1999, this litigation was authorized to be settled by the Company's
Board of Directors through the transference of the patent assigned to the
Company to the plaintiff. This lawsuit was settled during May 1999 with the
physical transfer of the patent assigned to the Company to the plaintiffs in the
case.
As of December 31, 1999, the Company is involved in two lawsuits in the
Seventeenth Judicial Circuit of Broward County, Florida. The first case is
styled WorldWideWeb Institute, Inc., et. al. v. Carole Fletcher Hudson, Case
99-009287(05). This case involves the Company's filing of a complaint alleging
Fletcher's breach of contract related to non-compete and non-disclosure issues
upon her termination of employment from the Company. The second case is styled
WorldWideWeb Institute, Inc. v. USAWEB Technology, Inc., Valentin Flores, Andrew
Bessio and Gary Weston, Case 99-07925(12). This case seeks recovery of damages
and injunctive relief in connection with USAWEB's solicitation of the Company's
employees to resign from the Company and accept employment positions with USAWEB
in violation of the respective employee's non-disclosure and non-compete clauses
in their employment contracts. As of February 10, 2000, discovery is still in
process in each case and no prediction of the ultimate outcome can be made. The
Company is vigorously pursuing each case and no material negative financial or
economic impact is anticipated.
12
<PAGE>
WorldWideWeb Institute.com, Inc.
(formerly Spectrum Pharmaceutical Corporation)
Notes to Financial Statements - Continued
Consulting Agreement
On April 1, 1999, the Company, then known as Spectrum Pharmaceutical, executed a
consulting agreement with an individual, who became an officer of the Company on
May 20, 1999. This contract was settled on April 15, 1999 with the issuance of
125,000 post-reverse split shares of unregistered, restricted common stock,
valued at approximately $6,000, which approximates the value of the services
rendered and the "fair value" of the shares on the issue date, as compensation
for various services rendered to the Company for the purpose of identifying a
suitable merger candidate for the Company and for paying certain reactivation
expenses on behalf of the Company.
Note 9 - Commitments
During the third quarter of Fiscal 2000, the Company acquired 100.0% of the
issued and outstanding stock of World Wide Web Institute, Inc. ("WWWC"), a
Canadian corporation for the conversion of all loans by the Company of
approximately $844,000 into equity in WWWC. The Company's President and
controlling shareholder was a minority shareholder in WWWC, and assigned his
interest to the Company without compensation. The Company provided significant
amounts of working capital to support WWWC's operations during its initial 12
months of operation through the date of acquisition by the Company. Due to the
ownership and funding issues, the acquisition of WWWC by the Company was
accounted for on an "as if pooled" basis, pursuant to the requirements of
Interpretation #39 of Accounting Principles Board Opinion # 16 for entities
under common control. Accordingly, the combined financial statements of the
Company, its wholly-owned subsidiary discussed in the preceding paragraph and
WWWC have become the historical consolidated financial statements of the Company
as of the first day of the first period presented.
In June, 1999, the Company initially entered into an strategic agreement with
Low Cost Hosting.com, Inc. whereby it would refer both leads and provide
administrative and technical support. Low Cost Hosting, agreed to designate
WorldWideWeb Institute.com as its exclusive hosting source, and give it a 20%
equity interest. In August, 1999, Low Cost Hosting reconfirmed the right of the
Company to acquire the remaining 80% at a future date in exchange for direct
investment or conversion of advances of $200,000.
On August 2, 1999, the Company entered into an agreement with Internet Sales
Products.com, Inc. ("ISP")., a Florida corporation owned by a current Company
shareholder. Under this agreement, the Company becomes the exclusive producer of
all web sites sold by ISP. The Company also agrees to provide financial advances
to ISP which includes administrative and accounting support and marketing leads
of approximately $450,000 on behalf of Internet Sales Products, Inc. ISP grants
the Company a 20% equity interest and gives the Company the right to convert
these advances into an 80% interest in the Company, and to buy the remaining
shares with the issuance of 172,000 shares of Company common stock, subject to a
fairness opinion.
In November 1999, the Company entered into an agreement with TekLaunch, Inc.
which markets and develops high end web sites. The agreement provides for the
Company to be the exclusive production contractor, to provide administrative and
accounting support, and marketing leads. Under the agreement, the Company owns a
20% stake and has the right to acquire up to 80% of the issued and outstanding
stock of TekLaunch, Inc., a Florida corporation involved in the development and
marketing of "high-end" web sites, for $200,000.
On November 1999, the Company entered into an agreement to buy the outstanding
stock of Cross Country Logistics Inc. (a Florida Corporation) which developed
and owned a proprietary web site building software application for $100,000
cash, and up to 50,000 shares of WorldWideWeb common stock. The amount of cash
paid by the Company and number of shares will be subject to the Cross Country's
ability to meet technical specifications, performance milestones and other
conditions.
13
<PAGE>
WorldWideWeb Institute.com, Inc.
(formerly Spectrum Pharmaceutical Corporation)
Notes to Financial Statements - Continued
Note 10 - Stock Option Plans
On July 1, 1999, the Company's Board of Directors and Shareholders approved a
Qualified and Non-Qualified Stock Option Plan which authorized a total of
740,000 shares of common stock to be issued to employees and key persons. As of
December 31, 1999, approximately 480,000 shares have been issued as part of the
non-qualified plan at an exercise price of $1.25 per share, a number which also
reflects adjustments for former employees no longer eligible for the plan.
The Company's Board of Directors and Shareholders also approved a one time grant
of non-qualified options to Smiley Sansoni the Company's President and Chief
Executive Officer to purchase up to 450,000 shares of the Company's common
stock. The vesting schedule of these option is 112,500 shares with the
anniversary date beginning July 1, 2000 through July 1, 2003.
On October 1, 1999, the Board of Directors adjusted the price of these options
to be $5 per share instead of being exercisable at prices ranging from
$1.25,$2.50,$3.75 and $5.00 respectively. On October 1, 1999, the Board also
granted options which totaled 150,000 shares, with an exercise price of $5 to
Mr. Brett Hudson, Vice President (75,000 options) and Ms. Dana Williams, Chief
Technology Officer (75,000 options). Each of the options vests over two years at
the rate of 50% per year with the anniversary date of October 1, 2000 through
October 1, 2001.
14
<PAGE>
Part I - Item 2
Part I, Item 2 Management's Discussion and Analysis of Financial Condition and
Operations
(1) Caution Regarding Forward-Looking Information
This quarterly report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or management as well as assumptions made by and information currently available
to the Company or management. When used in this document, the words,
"anticipate", "believe", "estimate", "expect", "intend" and similar expressions,
as they relate to the Company or its management, are intended to identify
forward-looking statements. Such statements reflect the current view of the
Company regarding future events and are subject to certain risks, uncertainties
and assumptions including the risks and uncertainties noted. Should one or more
of these risks or uncertainties materialize or should underlying assumptions
materially prove incorrect, actual results may vary from those described herein
as anticipated, believed, estimated, expected or intended.. In each instance,
forward-looking information should be considered in light of the accompanying
meaningful cautionary statements herein.
(2) General
On May 20, 1999, the Company's then majority shareholder, Dr. Howard I.
Wertheim, executed a stock purchase agreement where he sold 22,472,634 of the
24,911,165 pre-reverse split shares (2,247,263 of the 2,491,250 post-reverse
split shares) of common stock then issued and outstanding to Halter Capital
Corporation in a cash transaction. Halter Capital Corporation then became the
Company's controlling shareholder.
On July 2, 1999, Halter Capital Corp. executed a Stock Purchase Agreement
whereby they sold 1,815,000 of the 2,491,250 post-reverse shares of common stock
then issued and outstanding to Smiley Sansoni, Randall Denton, James Brett
Hudson, Dana Williams, Mira DeLane, Corporate Builders Inc. and Prosperity Power
Inc. (collectively New Shareholders). The New Shareholders then became the
Company's controlling shareholders. These individuals were also collectively the
controlling shareholders of WorldWideWeb Institute, Inc.
On July 2, 1999, concurrent with the above transaction, the Company issued
approximately 5,025,000 shares of post reverse split stock to acquire 100% of
the issued and outstanding stock of WorldWideWeb Institute, Inc. (a privately
owned Florida corporation). WorldWideWeb Institute, Inc. then became a
wholly-owned operating subsidiary of the Company.
In December 1999, the Company exercised its right to purchase 100% of an
independent sales marketing affiliate in Toronto, Canada, also named World Wide
Web Institute, Inc. (hereafter referred to as "WWWC") The Company agreed to
convert loans made to WWWC in the amount of $844,000 into equity. Management of
the Company is currently evaluating the acquisition as to which parameters it
falls within for SEC reporting guidelines. The Company expects to file the
appropriate financial statements for the Company on Form 8K within 60 days.
The acquisition of WorldWideWeb Institute, Inc. (USA) in July 1999, was
accounted for pursuant to the requirements of Interpretation #39 of Accounting
Principles Board Opinion #16, "Business Combinations", whereby the combination
of entities under common control is accounted for on an "as if pooled" basis.
The combined financial statements of the Company and its wholly-owned subsidiary
became the historical financial statements of the Company as of the first day of
the first period presented. The Company will retain its March 31 year end for
all future periods.
This interpretation has been applied to WWWC even though the Company did not
have controlling interest in the Company. An officer of the Company participated
on WWWC Board of Directors, and operations were substantially funded by advances
from the Company. Accordingly the Company's historical financial statements have
been restated to be included in the consolidated financial statements from the
Company's inception in November 1998.
(3) Results of Operations, Liquidity and Capital Resources
For the nine months ended December 31, 1999, the Company's revenues on a
consolidated basis were $6,083,581 compared to $1,598,694 for the previous year
period ending December 31, 1998. Net after tax earnings for the nine months
ended December 31, 1999 on a consolidated basis were $707,709 compared to
$(14,331).
15
<PAGE>
For the three months ended December 31, 1999, the Company's revenues on a
consolidated basis were $1,774,291 compared to $939,557, in the previous year
period ending December 31, 1998. Net after tax earnings for the three months
ended December 31, 1999 on a consolidated basis were $17,452 compared to $32,049
for the period ending December 31, 1998.
For the nine months ended December 31, 1999, the Company's Canadian affiliate
added approximately $1.34 million to consolidated revenue, while posting income
of $99,534. The results of the Canadian affiliate, which has just completed its
first year, reflected initial start up and support expenses. For the three
months ended December 31, 1999, the Canadian affiliate posted revenues of
$625,494 which included license fees of $250,000 from its proprietary e-commerce
web site building software, and a profit of $264,418.
For the nine months ended, December 31, 1999, the Company's revenue growth
reflected a continuing strong demand for web site development, hosting, and
enhancements by small to medium-sized businesses and individuals. The Company
believes it is benefiting from greater acceptance of the need for smaller to
medium-sized businesses to have an Internet presence. For the three months
ended, December 31, 1999, the Company's overall revenue compared to previous
quarters was slightly down. Revenue for this period has historically been
effected by the Thanksgiving through Christmas holidays when customers are less
available or inclined to discuss prospective websites. During this holiday
period, the Company has allowed most of its staff to take compensating time off,
while working extended hours for most of the first three weeks of December.
For the nine months ended December 31, 1999, significantly higher general and
administrative costs of $2,321,617 compared to the previous year period of
$665,048 were reflective of higher production payroll costs and other related
production costs resulting from a higher level of business activity and the need
to add additional higher cost web designers for web site enhancement work,
additional supervisors and team leaders to help expedite production and manage
student interns, and for training production team members. For the three months
ended December 31, 1999, this trend continued. In addition, the extended hours
resulted in additional overtime costs for independent consultants. Such expenses
are also being incurred in anticipation of increasing demand for enhancement of
web sites and conversion of the basic six page web site to e-commerce
applications. During this period, the Company added senior level and staff
personnel to its customer service, administrative payroll to support and manage
the increased number of personnel and projects, and increased office, telephone
and other operating expenses reflecting the higher level of business activity
and growth.
The Company believes that it will need to continue to add to its personnel at
all levels to support what it anticipates will be a higher level of revenue
growth. However, it anticipates the general and administrative expenses as a
percentage of sales is not likely to increase and may even reflect the
restructuring efforts which the Company believes will allow it to operate more
efficiently. Management anticipates that its potential expenditures for
marketing, advertising and investment in vendors and companies that provide
synergistic revenue streams will increase significantly. Some of these
expenditures, relating to the efforts to gain additional market share both
domestically and abroad, may increase more rapidly than sales. The Company's
strategy is to maintain a difficult and often delicate balance of profitability
versus expenditures necessary to grow and gain market share.
For the nine months ended December 31, 1999, earnings per share were
approximately $0.08 per share compared to the previous year period of $0.00 per
share. The nine months results include a one time net gain of $530,000. Earnings
(loss) per share were $0.00 per share for the three months ended December 31,
1999 compared to $0.01 per share for the similar period ended December 31, 1998.
(4) Liquidity and Capital Resources
For the nine months ended December 31, 1999 and 1998, the Company generated net
cash flows from operations of $866,804 and $120,936. Due to its increased level
of business activity and number of customers, and the need to maintain a
technologically current production facility, the Company increased its
expenditures on equipment and property during the nine months ended December 31,
1999 to $407,840 from $138591 for the similar period ended December 31, 1998.
The Company anticipates increased further capital expenditures for computer and
network facilities in future periods. However, at this time, the exact amount,
if any to be expended on these facilities can not be predicted.
The Company raised $2,379,000 through the private sale of its securities as of
December 31, 1999. On August 10, 1999, the Company sold 1,100,000 units, each
unit consisting of one common share and one 2-year warrant at $1 per units with
16
<PAGE>
proceeds of $1,100,000. As of December 31, 1999, the Company sold 639,500 units,
each unit consisting of one common share and one 2-year warrant at $2 per unit
or gross proceeds of approximately $1,279,000.
Subsequent to the end of the quarter, the Company has signed a letter of intent
to move to an 84,000 square foot facility near its present 14,000 square foot
facilities, which it believes are currently inadequate to house its present
personnel and activities. The Company anticipates significant move-in expenses
as well as expenses necessary to customize some of the space to its needs.
The company expects that its current day to day operational financial needs will
be provided by on-going operations and equity capital. The Company anticipates
that its expanded level of business activity will require substantial additional
working capital, and it anticipates these needs to be met through private sale
of equity. Subsequent to the end of the quarter, the Company entered into an
investment banking relationship with the goal of meeting its anticipated capital
requirements.
Part II Other Information
Item 1 Legal Proceedings
The Company is a plaintiff in two cases in Broward County Court alleging former
Company employee violations of their non-compete, confidentiality and
non-circumvention agreements.
The first case is WorldWideWeb Institute. Inc. v. USAWEB Technology, Inc.,
Valentin Flores, Andrew Bessio and Gary Weston where the Company seeks the
recovery of damages and injunctive relief in connection with USA Web's
solicitation of employees to resign from the Company and accept positions at USA
Web in violation of their non-compete and non-disclosure agreements with the
Company. USAWEB has filed a counterclaim through which it seeks the recovery of
damages for the Company's alleged tortious interference with its relationships
with employees and third parties.
The second case is WorldWideWeb Institute, Inc. et.al. v. Carole Fletcher Hudson
where the Company has filed a 9 count complaint for declaratory relief and
damages in connection with Fletcher's breach of non-compete and non-disclosure
agreements upon her termination from employment with WorldWideWeb. Fletcher has
counterclaimed for recovery of damages with her alleged ownership interest in
WorldWideWeb Florida and WorldWideWeb Canada, as well as for intentional
infliction of emotional distress and other allegations.
The Company does not believe, either case, regardless of outcome will materially
effect the results.
Item 2 Changes in Securities
On July 30, 1999, the Company amended its Articles of Incorporation to issue up
to 50,000,000 shares of $0.00001 par value Common Stock and to effect a one (1)
for ten (10) reverse stock split, with no fractional shares being issued. All
issued and outstanding share amounts in the accompanying financial statements
have been restated to reflect the effect of this reverse stock split as of the
first day of the first period presented.
On April 1, 1999, the Company executed a consulting agreement with an Kevin B.
Halter, Jr., an individual who became an officer of the Company on May 20, 1999.
This contract was settled on April 15, 1999 with the issuance of a to be
determined number of shares which would equal 125,000 post-reverse split shares
of unregistered, restricted common stock. This transaction was valued at
approximately $6,000, which approximates the value of the services rendered and
the "fair value" of the shares on the issue date, as compensation for various
services rendered to the Company for the purpose of identifying a suitable
merger candidate for the Company and for paying certain reactivation expenses on
behalf of the Company.
On May 20, 1999, the Company's then majority shareholder, Dr. Howard I.
Wertheim, executed a Stock Purchase Agreement whereby he sold 22,472,634 of the
24,911,165 pre-reverse split shares (2,247,263 of 2,491,250 post-reverse split
shares) of common stock then issued and outstanding to Halter Capital
Corporation in a cash transaction. Halter Capital Corporation then became the
Company's controlling shareholder.
On July 2, 1999, Halter Capital Corporation executed a Stock Purchase Agreement
whereby they sold 1,815,000 of the 2,491,250 post-reverse split shares of common
stock then issued and outstanding to Smiley J. Sansoni, Randall Denton, James
Brett Hudson, Dana Williams, Mira Delane, Corporate Builders, Inc. and
Prosperity Power, Inc. (collectively New Shareholders) in a cash transaction.
The New Shareholders then became the Company's controlling shareholders. These
individuals were also the controlling shareholders of WorldWideWeb Institute,
Inc.
17
<PAGE>
On July 2, 1999, concurrent with the above transaction, the Company issued
approximately 5,025,000 shares of post-reverse split stock to acquire 100% of
the issued and outstanding stock of WorldWideWeb Institute, Inc. (a privately
owned Florida corporation). WorldWideWeb Institute, Inc. then became a
wholly-owned operating subsidiary of the Company.
Item 3 - Defaults on Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
In August 1999, the Company sold 1,000,000 Units under a Private Placement
Memorandum, consisting of one (1) share of common stock and one (1) warrant to
purchase one (1) share of common stock. Each Unit sold for $1.00 per share. Each
warrant is exercisable at $2.25 per share and expires two (2) years from the
date of issuance. The Company realized net proceeds of approximately $900,000 in
this transaction. In November, 2000, the Company permitted the conversion of a
$100,000 note which was part of the earlier placement into 100,000 units
consisting of 100,000 shares and 100,000 warrants.
In September 1999, the Company had an additional private placement offering of
units, consisting of one (1) share of common stock and one (1) warrant to
purchase one (1) share of common stock. As of December 31, 1999, the Company has
sold 639,500 Units at $2.00 per Unit for total gross and net proceeds of
approximately $1,279,000. Each warrant is exercisable at $2.25 per share and
expires two (2) years from the date of issuance. Subsequent to December 31,
1999, the Company completed the offering through the sale of an additional
207,500 units under this offering and received net proceeds of $415,000.
In December, 1999, the Company acquired 100% of World Wide Web Institute, Inc.
based in Toronto, Canada for conversion of its $844,000 of loans into equity,
and assignment of shares to the Company. Management of the Company is currently
evaluating the acquisition as to which parameters it falls within for SEC
reporting guidelines. The Company expects to file the appropriate financial
statements for the Canadian company on Form 8K within 60 days.
In January 2000, the Company made a limited 45-day offer to holders of its
2-year warrants with a $2.25 exercise price. For each warrant exercised into
common stock during this period, the Company offered to issue an additional
2-year warrant exercisable at $8 per share. The Company has received an
additional $610,200 from the exercise of 271,200 warrants.
Item 6 - Exhibits and Reports on Form 8-K
None
- --------------------------------------------------------------------------------
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WorldWideWeb Institute.com, Inc.
February 14, 1999 /s/ Smiley J. Sansoni.
------------------------------------
Smiley J. Sansoni.
President, Director and
Chief Executive Officer
February 14, 1999 /s/ Ernest D. Chu
------------------------------------
Ernest D. Chu
Chief Financial Officer
and Director
18
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