U.S. SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
Commission File Number 0-25433
KWIKWEB.COM, INC.
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(Exact name of small business issuer as specified in its charter)
NEVADA 88-0377059
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
374 N. Coast Highway, Suite F-14, Encinitas, California 92024
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(Address of principal executive offices) (Zip Code)
760-436-5436
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(Issuer's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
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 [ ]
As of August 20, 2001, the Registrant had 4,500,000 shares of its common stock,
par value $0.001, issued and outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Page
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Unaudited Condensed Consolidated Balance Sheet at June 30, 2001...............2
Unaudited Condensed Consolidated Statement of Operations for the
three-month and six month periods ended June 30, 2001 and 2000 .............3
Unaudited Condensed Consolidated Statement of Cash Flows for the
six month period ended June 30, 2001 and 2000...............................4
Notes to Condensed Consolidated Financial Statements..........................5
KWIKWEB.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
JUNE 30,
2001
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ASSETS
CURRENT ASSETS
Cash $ 42,398
Accounts Receivable 7,800
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TOTAL CURRENT ASSETS 50,198
COMPUTER EQUIPMENT, LESS ACCUMULATED DEPRECIATION
OF $2,527 4,472
INVESTMENTS IN AFFILIATES 22,750
INTERNET DOMAIN NAMES AND WEB SITES 205,634
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$ 283,054
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LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 26,779
Accrued interest - related party 17,253
Due to related parties 648,000
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TOTAL CURRENT LIABILITIES 692,032
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COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' DEFICIT
Common stock, $.001 par value; 25,000,000 shares
authorized, 4,500,000 shares issued and outstanding 4,500
Additional paid-in capital 960,902
Accumulated deficit (1,374,380)
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TOTAL STOCKHOLDERS' DEFICIT (408,978)
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$ 283,054
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The accompanying notes are an integral part of these financial statements.
KWIKWEB.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
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2001 2000 2001 2000
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REVENUES $ 41,393 $ - $ 56,563 $ -
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COSTS AND EXPENSES
Cost of revenue 25,123 - 35,123 -
Research and development - 53,937 - 99,312
Selling, general and administrative 289,063 72,827 415,395 204,457
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TOTAL EXPENSES 314,186 126,764 450,518 303,769
LOSS FROM OPERATIONS (272,793) (126,764) (393,955) (303,769)
INTEREST - RELATED PARTY 17,253 - 17,253 -
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LOSS BEFORE MINORITY INTERESTS (290,046) (126,764) (411,208) (303,769)
MINORITY INTERESTS 11,250 - 11,250 -
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NET LOSS $ (278,796) $ (126,764) $ (399,958) $ (303,769)
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BASIC AND DILUTED NET LOSS PER SHARE $ (0.06) $ (0.01) $ (0.09) $ (0.03)
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BASIC AND DILUTED WEIGHTED AVERAGE
NUMBER OF SHARES OUTSTANDING 4,500,000 9,910,000 4,483,000 9,910,000
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The accompanying notes are an integral part of these financial statements.
KWIKWEB.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR SIX MONTHS ENDED
JUNE 30,
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2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(399,958) $(303,769)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 1,167 6,227
Issued common stock of subsidiary for services 11,250 -
Minority interest (11,250) -
(Increase) decrease in accounts receivable (7,800) -
Decrease (increase) in prepaid expenses - 6,021
Increase (decrease) in accounts payable 12,783 (1,754)
(Decrease) increase in accrued liabilities 17,253 9,277
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Net cash used by operating activities (376,555) (283,998)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of domain names and web sites (74,360) -
Purchases of equipment - (13,524)
Loan to affiliate 3,500 (88)
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Net cash provided by investing activities (70,860) (13,612)
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CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 100,000 -
Due to related parties 370,000 60,000
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Net cash provided by financing activities 470,000 60,000
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Net (decrease) increase in cash 22,585 (237,610)
CASH, BEGINNING OF PERIOD 19,813 262,828
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CASH, END OF PERIOD $ 42,398 $ 25,218
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The accompanying notes are an integral part of these financial statements.
KWIKWEB.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
(UNAUDITED)
1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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Background
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KwikWeb.com, Inc., a Nevada corporation, was formed on October 9, 1997.
In August 1999, Kwik Web, Inc. and G.P. Properties, Inc. ("G.P.
Properties") agreed to merge whereby G.P. Properties issued 6,000,000
shares of common stock in exchange for all of the outstanding common
shares of Kwik Web, Inc. G. P. Properties, a public shell Nevada
Corporation formed in 1989, retained all its 3,510,000 shares of common
stock. G.P. Properties had no assets, liabilities or operations and
management of Kwik Web, Inc. retained control of the merged entity.
Accordingly, Kwik Web, Inc. was deemed the accounting acquiror of G.P.
Properties. The Company began the development of proprietary software
that allows on-line users to easily create and build their own
customized websites using a user friendly "point and click" format. In
January 2000, the Company changed its name to KwikWeb.com, Inc. In June
2000, the Company formed Internet Properties Development Corp., a
wholly owned subsidiary, to pursue the development and incubation of
emerging Internet-based business. In August 2000, the Company completed
a reorganization whereby it transferred its website design and
management activities to Kwik Commerce, Inc. in exchange for 2,500,000
shares of Kwik Commerce common stock and the cancellation of 6,000,000
KwikWeb.com, Inc. common shares previously held by Ric Kaestner and
Alex Tsakiris. The Company is engaged in the business of providing
domain-name registry operations and services and operating consumer
information portals on the Internet. The Company also seeks to develop
and incubate emerging Internet-based businesses.
The accompanying consolidated financial statements include the accounts
of KwikWeb.com, Inc., its wholly-owned subsidiaries Kwik Web, Inc.,
Wireless Properties Development Corp., Faciliforce Inc., Internet
Properties Development Corp. and its majority-owned subsidiary Basic
Fusion, Inc. (collectively, the "Company"). All material intercompany
transactions and balances have been eliminated.
Interim periods
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The accompanying unaudited consolidated financial statements have been
prepared in accordance with instructions of Form 10-QSB and do not
include all of the information required by generally accepted
accounting principles for complete financial statements. In the opinion
of the Company's management, all necessary adjustments (consisting of
normal recurring adjustments) for a fair presentation have been
included. Operating results for the three and six months ended June 30,
2001, are not necessarily indicative of results for any future period.
These statements should be read in conjunction with the consolidated
financial statements and notes thereto for the year ended December 31,
2000 included in the Company's Form 10-KSB.
KWIKWEB.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
(UNAUDITED)
2. COMMON STOCK
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In January 2001, the Company sold 1,000 units, each unit consisting of
100 shares of its common stock and a warrant to purchase an additional
20 shares of its common stock at an exercise price of $2.00 per share,
to its Chairman. This issuance was exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2) thereof, and there was
no underwriter involved in the transaction.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
Our business is to provide Internet domain-name registry operations and
services, operate consumer information portals on the Internet, and provide
facilities management services for commercial real estate owners. We have begun
operations for our registry operations and services division, and we are
operating our consumer information portals. We have not yet begun providing
facilities management services.
We are a holding company, and we operate through our wholly-owned
subsidiaries, Internet Properties Development Corp. and Faciliforce, Inc., and
our majority-owned subsidiary, Basic Fusion, Inc. We also seek to develop
emerging businesses. We currently own minority interests in three companies:
.KIDS Domains, Inc., Minority Business Alliance, LLC., and Kwik Commerce, Inc.
We recently achieved meaningful revenue from the sale of second-level
domain names and from providing consulting services to .KIDS Domains. We have
also commenced revenue-producing operations in our registry operations and
services division and have recently begun generating revenues in that division
from a software solution license sale. We have not generated any revenue in any
of our other lines of business.
From our inception to 1999, we were engaged in the business of
developing residential financial analysis software. From August 1999 to August
2000, we were engaged in the business of developing software applications for
the creation of Internet websites. As of August 2000, we had divested our
financial software and Internet website software operations.
We began implementing our current business in August 2000. To date, our
activities in our registry operations and solutions division have consisted of
developing our basic registry operation solution, hiring personnel, and
commencing marketing and sales of our solution . We have also acquired
additional office space and established a DNS server in Virginia. In addition,
in connection with our purchase of certain assets from Seniors.com, Inc., we
acquired the rights to the second-level domain name "seniors.com," and we have
begun operating a second-level domain name registry for the sale of third-level
domain names in the following form: "example.seniors.com." We are currently in
the "sunrise period" for the "seniors.com" registry, where we allow priority
registration of third-level domain names to those entities who can establish
intellectual property rights in connection with the proposed domain name.
In our consumer information portals division, we have acquired and
begun operating certain consumer information portals. In our facilities
management services division, we have developed the basic business model for the
division.
In addition to the activities within our three main divisions, we have
acquired certain Internet domain-names, some of which are resold to third
parties. We may continue to resell these domain names in the future. We have
also acquired minority equity interests in certain emerging-growth businesses,
including .KIDS Domains and Minority Business Alliance.
We have also entered into a letter of intent to purchase the remaining
outstanding interest in .KIDS Domains; however, we have not entered into a
definitive agreement with respect to that proposed purchase. To date, .KIDS
Domains has submitted an application to ICANN to be the operator and registry of
a ".kids" top-level domain. ICANN did not grant this application; however, it
reserved the right to consider the application in the future. In addition, .KIDS
Domains has entered into an agreement with New.net to be the exclusive registry
within the New.Net system for ".kids" second-level domain names on the New.net
system.
We intend to generate revenue through the following:
o sales of our registry operations solutions, services, gateways systems
and upgrades;
o sales of second and third-level domain names;
o advertising income from third party advertisers at our consumer
information portals;
o sponsorship sales from third party sponsors at our consumer information
portals; and
o service fees derived from outsourcing commercial real estate facilities
management services.
In the event we consummate the acquisition of .KIDS Domains, we also
intend to generate revenue through the sale of second-level domain names within
the ".kids" top-level domain.
RESULTS OF OPERATIONS
REVENUES
We recognized $41,373 and $56,563 in revenue for the three-month and
six-month periods ended June 30, 2001, respectively, compared to $0 for the same
periods in fiscal 2000, respectively. The revenues resulted from the sales of
second-level domain names and consulting fees paid to us by .KIDS Domains, Inc.,
an affiliated company. Our ability to increase revenue for the remainder of the
fiscal year is dependent on our ability to successfully implement our plan of
operation.
GROSS PROFIT
Gross profit was $16,270 and $21,440 for the three-month and six-month
periods ended June 30, 2001, respectively, compared to $0 for the same periods
in fiscal 2000, respectively.
RESEARCH & DEVELOPMENT EXPENSE
Research and development expenses were $0 for the three-month and the
six-month periods ended June 30, 2001, respectively, compared to $53,937 and
$99,312 for the same periods in fiscal 2000, respectively. The research and
development expenses were incurred in connection with our former web hosting
business, which we discontinued in 2000. We may increase research and
development in connection with implementing our plan of operation in future
periods.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE
Selling, general, and administrative expenses were $289,063 and
$415,395 for the three month and six-month periods ended June 30, 2001,
respectively, compared to $72,827 and $204,457 for the same respective periods
in fiscal 2000.
INTEREST
We incurred $17,253 in interest in the three-month and six-month
periods ending June 30, 2001, respectively, compared to $0 for the same periods
in 2000, respectively. The interest accrued on outstanding debt held by related
parties, including our chairman, H. Page Howe and certain of his affiliates.
PLAN OF OPERATION
We have begun to market our registry operation solutions, which include
a proprietary software solution to allow registries of top-level domains to
automate their registry databases and increase scalability as their business
grows. We are marketing our solution primarily to registry operators of
country-code top level domains.
Over the next 12 months, we intend to continue to offer outsourced
registry services, turn-key registry solutions, payment gateways for registries,
enhanced billing systems and multilingual domain name services. In addition, we
intend to provide our registry operator clients with customer support for our
software solution. In order to provide our solution, we have established a DNS
server in Virginia, and we intend to establish three more global DNS servers in
California, Europe and Australia. Due to lack of bandwidth availability. We no
longer intend to establish a DNS server in Africa. Through these DNS servers, we
believe we will have the ability to access and service the servers and host the
registries for whom we provide solutions from one geographic location. We have
also hired 2 employees in our registry solutions division for additional
development and testing of our software solutions, for customer support and for
marketing, and we intend to hire up to 3 additional employees.
.KIDS Domains recently entered into a definitive agreement with New.net
to be the exclusive registry within the New.net system for the ".kids" top-level
domain. .KIDS Domains intends to commence marketing efforts for sale of
second-level domain names within the ".kids" top-level domain. .KIDS Domains may
hire additional marketing personnel in order to further its marketing efforts
for the ".kids" top-level domain.
In addition, Internet Properties Development Corp. recently entered
into a definitive agreement with New.net to be the exclusive registry within the
New.net system for the ".golf" top-level domain. Internet Properties Development
Corp. intends to commence marketing efforts for sale of second-level domain
names within the ".golf" top-level domain. Internet Properties Development Corp.
may hire additional marketing personnel in order to further its marketing
efforts for the ".golf" top-level domain.
Within our Consumer Information Portals division, we continually update
our content available on the information portals. We also intend to offer
advertising space on the portals and offer sponsorships for the portals. We will
no longer continue to offer products on an e-commerce, resale basis on our
portals.
Within our Facilities Management Services division, we intend to begin
marketing our facilities management services to seek to enter into service
agreements with commercial real estate owners.
LIQUIDITY AND CAPITAL RESOURCES
Since 1999, we have financed our activities through the sale of our
securities and the issuance of short-term notes to related parties. As of June
30, 2001, we had a working capital deficit of $651,709.
We have financed our operations during the six-month period ending June
30, 2001 by the issuance of 1,000 units, each unit consisting 100 shares of our
common stock and a warrant to purchase an additional 20 shares of our common
stock at an exercise price of $2.00 per share, to H. Page Howe, our chairman,
for a purchase price of $100 per unit. In addition, we have issued short-term
notes in the aggregate principal amount of $370,000 to related parties,
including Mr. Howe and entities with whom Mr. Howe is affiliated. We believe
that we will require significant additional capital in order to continue to fund
the development and marketing of our registry operations solutions and consumer
information portal divisions. We anticipate that we will need approximately
$200,000 in additional working capital over the next 9 months in order to
sustain operations and fund the development and marketing of our registry
operations solutions and consumer information portal divisions. If we are unable
to obtain additional financing in sufficient amounts or on acceptable terms, we
may not be able to continue as a going concern.
However, our expectations regarding our capital requirements are
based on certain assumptions concerning the costs involved in further developing
our software solutions, marketing, retention of key personnel, and time and
expense involved in commencing revenue producing operations. These assumptions
concern future events and circumstances which our officers believe to be
significant to our operations and upon which our working capital requirements
will depend. Some assumptions will invariably not materialize and some
unanticipated events and circumstances occurring subsequent to the date of this
prospectus may affect other assumptions. As a result, our actual working capital
requirements may vary from our presently anticipated working capital
requirements, and the variations may be material. In the event that we require
additional working capital, there can be no assurance that we will be able to
obtain sufficient additional capital in order to fund our working capital
requirements in a timely manner.
SAFE HARBOR
This report contains various forward-looking statements that are based
on our beliefs, assumptions which we have made, and information currently
available to us. When used in this report, we intend the words "believe,"
"expect," "anticipate," "estimate," and similar expressions to identify
forward-looking statements. Such statements are subject to certain risks,
uncertainties and assumptions referred to herein, including, without limitation,
the early stage nature of our operations and the risks and uncertainties
concerning the market acceptance of our services and products; technological
changes; increased competition; and general economic conditions. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated, or projected. We caution potential investors not to
place undue reliance on any such forward-looking statements, all of which only
speak as of the date made.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FROM 8-K.
(a) Exhibits
10.1 Asset Purchase Agreement made and entered into as of
April 4, 2001 by and between Internet Properties
Development Corp. and Seniors.com, Inc.*
10.2 Registry Agreement by and among New.net, Inc. and
Internet Properties Development Corp.
* previously filed on Form 8-K on April 19, 2001
(b) Reports on Form 8-K
We filed a current report on Form 8-K on April 19, 2001,
reporting the acquisition of certain assets from Seniors.com, Inc.
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.
KWIKWEB.COM, INC.
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(Registrant)
Dated: August 20, 2001 By: /s/ Matthew Hayes
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Matthew Hayes
President