Full Motion Beverage 10QSB 2007 Q2 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the Quarter Period Ended
June 30, 2007

Commission File No. 000-29462

WEB2 CORP

(Exact name of Registrant as specified in its Charter)

Delaware		13-4127624
(State or jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

100 West Lucerne Circle, Suite 600, Orlando, Florida		32801
(Address of Principal Executive Office)		(Zip Code)

Registrant’s telephone number, including area code: (407) 540-0452

Former name, former address and former fiscal year, if changed since last report:

Indicate by check mark whether the registrant (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 a 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 o

The number of shares issued and outstanding of the Registrant’s Common Stock, $.001 par value, as of July 27, 2007 was 41,273,889.

PART I - FINANCIAL INFORMATION

Item 1: Financial Statements (Unaudited)

Condensed Consolidated Balance Sheet			F-1

Condensed Consolidated Statements of Operations Six Months			F-2

Condensed Consolidated Statements of Operations Three Months			F-3

Condensed Consolidated Statements of Cash Flows			F-4

Notes to the Condensed Consolidated Financial Statements			F6-F16

F-1

WEB2 CORP AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

	June 30, 2007
ASSETS
CURRENT ASSETS
Cash	$	42,633
Accounts receivable - net (related parties)		183,390
Total Current Assets		226,023
PROPERTY AND EQUIPMENT, Net		364,735

Non marketable securities		251,900
Other assets		7,040
TOTAL ASSETS	$	849,698

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	739,233
Convertible debentures		310,000
Due to stockholders and affiliates		2,001,198
TOTAL CURRENT LIABILITIES		3,050,431

COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' DEFICIENCY
Common stock - $0.001 par value; 100,000,000 shares authorized; 41,273,889 shares issued and outstanding		41,273
Treasury stock (33,333 shares @$1.05)		(35,000	)
Additional paid in capital		9,953,313
Accumulated deficit		(12,160,319	)
TOTAL STOCKHOLDERS' DEFICIENCY		(2,200,733	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY	$	849,698

The Accompanying Notes Are An Integral Part Of These Condensed Consolidated Financials Statements

F-2

WEB2 CORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Six Months Ended June 30
	2007			2006
REVENUE	$	349,786		$	263,064

COSTS AND EXPENSES
Cost of revenue		25,057			279,426
Compensatory element of stock		99,000			199,338
Depreciation and amortization		108,106			115,142
Selling and administrative expenses		1,151,449			310,874
TOTAL COSTS AND EXPENSES		1,383,612			904,780

OPERATING LOSS		(1,033,826	)		(641,716	)

OTHER INCOME (EXPENSES)
Interest		(244,361	)		(158,153	)
Preferred dividend series AA		-			(15,030	)
NET LOSS	$	(1,278,187	)	$	(814,899	)

Basic and Diluted Net Loss Per Share	$	(0.05	)	$	(0.06	)

Weighted Average Number of Common Shares Outstanding - Basic and Diluted		27,733,782			14,269,199

The Accompanying Notes Are An Integral Part Of These Condensed Consolidated Financials Statements

F-3

WEB2 CORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended June 30
	2007			2006
REVENUE	$	256,398		$	182,531

COSTS AND EXPENSES
Cost of revenue		11,012			105,569
Compensatory element of stock		99,000			199,338
Depreciation and amortization		47,013			61,763
Selling and administrative expenses		667,815			176,685

TOTAL COSTS AND EXPENSES		824,840			543,355

OPERATING LOSS		(568,442	)		(360,824	)

OTHER INCOME (EXPENSES)
Interest		(131,995	)		(77,462	)
Preferred dividend series AA		-			(7,365	)
NET LOSS	$	(700,437	)	$	(445,651	)

Basic and Diluted Net Loss Per Share	$	(0.03	)	$	(0.03	)

Weighted Average Number of Common Shares Outstanding - Basic and Diluted		25,937,137			14,269,199

The Accompanying Notes Are An Integral Part Of These Condensed Consolidated Financials Statements

F-4

WEB2 CORP AND SUBSIDIARY

(Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Six Months Ended June 30
	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,278,187	)	$	(814,899	)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred preferred dividend		--			15,030
Depreciation and amortization		108,106			115,142
Compensatory element of stock transactions		99,000			199,338
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		--			(47,128	)
Accounts receivable		(24,628	)		--
Converiosn of accrued interest to equity		487,691			--
Accounts payable and accrued expenses		(592,061	)		232,544

NET CASH USED IN OPERATING ACTIVITIES		(1,200,079	)		(299,973	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(13,557	)		--
Cash received in recapitalization		--			(5,759	)
NET CASH USED IN INVESTING ACTIVITIES		(13,557	)		(5,759	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of loans from shareholder		1,242,000			307,500
Proceeds from sale of common stock		--			106,000
Repayment of principal on debt		--			(52,275	)

NET CASH PROVIDED BY FINANCING ACTIVITIES	$	1,242,000		$	361,225

The Accompanying Notes Are An Integral Part Of These Condensed Consolidated Financials Statements

F-5

WEB2 CORP AND SUBSIDIARY

(Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

	For the Periods Ended June 30
	2007		2006
NET INCREASE IN CASH	$	28,364	$	55,493

CASH - Beginning		14,269		141,764

CASH - Ending	$	42,633	$	197,257


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the years for:
Interest	$	-	$	-
Taxes	$	--	$	311

Non-cash investing and financing activities:

Conversion of accrued liabilites	$	210,000	$	108,247
Conversion of debt to equity	$	2,576,250	$	412,266
Conversion of preferred stock	$	-	$	102,732
Issuance of common stock in connection with employment agreements	$	-	$	(30,000	)

The Accompanying Notes Are An Integral Part Of These Condensed Consolidated Financials Statements

F-6

WEB2 CORP AND SUBSIDIARY

(formerly 110 Media Group, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - Going Concern and Managements Plans

The accompanying consolidated financial statements have been prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As reported in the consolidated financial statements, the Company has incurred losses of approximately $12,160,319 from inception of the Company through June 30, 2007, has negative cash flows from operations, and is in default on certain convertible notes payable. The Company's stockholders' deficiency at June 30, 2007 was $2,200,733 and its current liabilities exceeded its current assets by $2,694,408.These factors combined, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans to address and alleviate these concerns are as follows:

The Company's management continues to develop a strategy of exploring all options available to it so that it can develop successful operations and have sufficient funds to be able to operate over the next twelve months. As a part of this plan, management is currently in negotiations with their target industries' key players to develop additional business opportunities. In addition, management is exploring options in order to raise additional operating capital through debt and/or equity financing. No assurance can be given that funds will be available, or, if available, that it will be on terms deemed satisfactory to management.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually attain profitable operations. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of these uncertainties.

F-7

WEB2 CORP AND SUBSIDIARY

(formerly 110 Media Group, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - Summary of Significant Accounting Policies

This summary of significant accounting policies of the Company is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. The following policies are considered to be significant:

a. Accounting Method

The Company recognizes income and expenses based on the accrual method of accounting. Accordingly, revenues are recognized when earned and expenses are recognized when incurred. The Company has elected a December 31 year-end.

b. Cash and Cash Equivalents

Cash equivalents are generally comprised of certain highly liquid investments with original maturities of less than three months.

c. Use of Estimates in the Preparation of Consolidated Financial Statements

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.

F-8

WEB2 CORP AND SUBSIDIARY

(formerly 110 Media Group, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - Summary of Significant Accounting Policies, continued

d. Revenue Recognition Policy

Revenue recognized through June 30, 2007 represents revenue from its redirect traffic and other media entertainment. The Company receives a fee for revenue generated under the sale of other media entertainment that is recognized upon shipment of the merchandise. Sales generated from list services are recognized upon completion of services. Revenues generated from Web1000.com site consists of monthly fees paid to the Company for redirect traffic.

e. Allowance for Doubtful Accounts

Accounts receivable are recorded net of the allowance for doubtful accounts. The Company generally offers 30-day credit terms on sales to its customers and requires no collateral. The Company maintains an allowance for doubtful accounts which is determined based on a number of factors, including each customer's financial condition, general economic trends and management judgment. As of June 30, 2007, the allowance for doubtful accounts was $123,281. Bad debt expense was $0 for the period ended June 30, 2007 and -0- for the period ended June 30, 2006.

f. Basic Net Loss per Share of Common Stock

In accordance with Financial Accounting Standards No. 128, "Earnings per Share," basic net loss per common share is based on the weighted average number of common shares and common share equivalents outstanding during the periods presented. Diluted earnings per share is computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period.

	Six Months Ended June 30,
	2007			2006
Net loss (numerator)	$	(1,148,187	)	$	(814,899	)
Weighted average shares outstanding (denominator)		27,733,782			14,269,199
Net loss per share amount	$	(0.04	)	$	(0.06	)

Securities that could potentially dilute basic earnings per share ("EPS") in the future that were not included in the computation of diluted EPS because to do so would have been anti-dilutive for the periods presented consist of the following:

	No. of Shares
Convertible debentures (assumed conversion at $.15)		61,905
Warrants to purchase common stock - finders		1,750
Warrants to purchase common stock - debentures		33,542
Warrants issued to consultant		16,667
Total as of June 30, 2007		113,864

F-9

WEB2 CORP AND SUBSIDIARY

(formerly 110 Media Group, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - Summary of Significant Accounting Policies, continued

g. Recent Accounting Pronouncements

In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments — an amendment of FASB Statements No. 133 and 140.” SFAS 155 amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” and related interpretations. SFAS 155 permits fair value re-measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation and clarifies which interest-only strips and principal-only strips are not subject to recognition as liabilities. SFAS 155 eliminates the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS 155 is effective for the Company for all financial instruments acquired or issued beginning January 1, 2007. The adoption of this standard is not expected to have a material effect on the Company's financial position or results of operations.

In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets - an amendment of FASB Statement No. 140.” SFAS 156 requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset. It also requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable. SFAS 156 permits an entity to use either the amortization method or the fair value measurement method for each class of separately recognized servicing assets and servicing liabilities. SFAS 156 is effective for the Company as of January 1, 2007. The adoption of this standard is not expected to have a material effect on the Company's financial position or results of operations.

In March, 2006, the FASB issued Interpretation No. 48, (“FIN 48”) Accounting for Uncertainty in Income Taxes, an interpretation of SFAS No. 109, Accounting for Income Taxes. FIN 48 prescribes criteria for the recognition and measurement of a tax position taken or expected to be taken in a tax return. Accordingly, tax positions are analyzed to determine whether it is more likely than not they will be sustained when examined by the appropriate tax authority. Positions that meet the more-likely-than-not criteria are measured to determine the amount of benefit to be recognized, whereas those positions that do not meet the more-likely-than-not criteria are derecognized in the financial statements. The adoption of FIN 48 has not materially affected the Company’s reported loss, financial condition, or cash flows.

In September, 2006, the FASB issued SFAS No. 157, Fair Value Measurements. The statement defines fair value, determines appropriate measurement methods, and expands disclosure requirements about those measurements. The adoption of SFAS No. 157 has not materially affected the Company’s reported loss, financial condition, or cash flows.

In September, 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans. This statement requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year of change through comprehensive income. In addition, SFAS No. 158 requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position. The adoption of SFAS No. 158 has not materially affected the Company’s reported loss, financial condition, or cash flows.

F-10

WEB2 CORP AND SUBSIDIARY

(formerly 110 Media Group, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - Summary of Significant Accounting Policies, continued

h. Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards Board (SFAS) No. 109, "Accounting for Income Taxes." Under this method, deferred income taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which differences are expected to reverse. In accordance with the provisions of SFAS No. 109, a valuation allowance would be established to reduce deferred tax assets if it were more likely than not that all or some portion of such deferred tax assets would not be realized. A full allowance against deferred tax assets was provided as of June 30, 2007.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to its future use by the Company.

i. Advertising Costs

Advertising costs are expensed as incurred. For the periods ended June 30, 2007 and 2006 advertising expenses were $31,045 and $15,597, respectively.

j. Principles of Consolidation

The consolidated financial statements include the accounts of Web2 Corp and its wholly-owned subsidiary Global Portals Online, Inc. from the date of the merger. All significant intercompany accounts and transactions have been eliminated in the consolidation.

F-11

WEB2 CORP AND SUBSIDIARY

(formerly 110 Media Group, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. When assets are disposed of, the cost and accumulated depreciation (net book value of the assets) are eliminated and any resultant gain or loss reflected accordingly. Betterments and improvements are capitalized over their estimated useful lives whereas repairs and maintenance expenditures on the assets are charged to expense as incurred.

Property and equipment consists of the following at June 30, 2007:

Computer equipment	$	372,602
Office equipment		12,168
Websites		625,000
Total		1,009,770
Less: accumulated depreciation		(645,035	)
Property and Equipment, Net		364,735

Depreciation and amortization expense for the period ended June 30, 2007 and 2006 was $108,106 and $115,142, respectively.

F-12

WEB2 CORP AND SUBSIDIARY

(formerly 110 Media Group, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - Convertible Debentures

Convertible debentures at June 30, 2007 consist of the following:

a. Convertible debenture, due on demand, bearing interest at 8% per annum. The debenture contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a conversion price equal to 70% of the average closing bid price per share of common stock for the five-day period prior to such conversion. The related beneficial conversion feature has been fully charged to interest expense by Dominix in prior years.	$	100,000

b. On July 18, 2006 the Company entered into a convertible debt agreement with Empire Financial Group, Inc. , due one year from closing, bearing interest at 15% per annum. The dentures contain a provision for conversion, at the holder’s option including accrued interest at a conversion price 50% of the price of the shares sold in a secondary offering. The convertible includes a warrant in the event they have not converted in the secondary offering, or if no such offering shall have been completed, to purchase one dollars’ worth of common stock for every two dollars of debenture principal purchased by them in the Offering, at an exercise price for 120% of the closing bid price of shares of Common Stock on the date hereof.		210,000

Total convertible debentures		310,000
Less: current portion		310,000

Long-Term, Net of Current Portion	$	--

F-13

WEB2 CORP AND SUBSIDIARY

(formerly 110 Media Group, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - Notes Payable to Stockholders

As of June 30, 2007, certain stockholders had advanced to the Company $3,479,851 for working capital purposes. The Company agreed to pay interest at 8% per annum and the notes are all due November 15, 2006. Certain shareholders converted accrued interest of $101,717 and principal of $387,265 into 2,867,086 shares of common. On December 7, 2006, a debt holder entered into an Amended and Restated Debt Conversion Agreement with the company. Pursuant to this agreement, among other things, the interest rate on certain convertible debt was increased from 8% to 18% effective as of June 9, 2004. On December 7, 2006 the debt holder converted principal and interest of $72,610 into 484,071 shares of the company’s common stock. On January 21, 2007 the debt holder converted principal and interest of $528,750 into 3,525,000 shares of the company’s common stock. On May 23, 2007 the debt holder converted $1,860,000 into 12,400,000 shares of the company’s common stock. On June 21, 2007 the debt holder converted $187,500 into 1,250,000 shares of the company’s common stock.

As of June 30, 2007 William Mobley, Chairman of the Board and Andre Ford, President advanced the Company $744,006 and $263,503, respectively. Interest at 6% per annum and due in full January 2007 and currently in default. The company is renegotiating this note and has confidence an agreement will be finalized.

As of June 30, 2007 two stockholders advanced the Company $37,000 and $8,750, respectively. Interest at 6% per annum and due in full January 2007 and on demand, respectively. The company is renegotiating this note and has confidence an agreement will be finalized. The $37,000 note is currently in default.

As of June 30, 2007 related company advanced the Company $279,853. Interest at 6% per annum and due in full January 2007 and currently in default. The company is renegotiating this note and has confidence an agreement will be finalized.

Accrued interest as of June 30, 2007 on these notes amounted to $188,803 and is included in accounts payable and accrued expenses. (see Note 6)

NOTE 6 - Accounts Payable and Accrued Expenses Accounts payable and accrued expenses at June 30, 2007 consist of the following:

Interest	$	375,113
Payroll taxes payable		35,190
Accrued Compensation		321,262
Other		7,668
	$	739,233

F-14

WEB2 CORP AND SUBSIDIARY

(formerly 110 Media Group, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - Commitments and Contingencies

Employment Agreements

On December 22, 2005 the Company entered into an employment agreement with William Mobley. The term of the agreement is for five (5) years commencing on December 22, 2005. Mr. Mobley will serve as the Company's Chairman of the Board. During the term of the agreement, the Company shall pay Mr. Mobley an annual salary of $120,000 with adjustments governed by the Consumer Price Index. Mr. Mobley shall also be entitled to a performance bonus to be determined by the Board of Directors.

On December 22, 2005 the Company entered into an employment agreement with Andre Forde. The term of the agreement is for five (5) years commencing on December 22, 2005. Mr. Ford will serve as the Company's President. During the term of the agreement, the Company shall pay Mr. Forde an annual salary of $120,000 with adjustments governed by the Consumer Price Index. Mr. Mobley shall also be entitled to a performance bonus to be determined by the Board of Directors.

Consulting Agreements

The Company has agreed to compensate CBMS $30,000 as well as issue the consultant 30,000 shares of its common stock for each six (6) month term as renewed. During the term of the consulting agreement, the principal shareholder of the consultant, Mr. Darren J. Cioffi, will act as the Company's Chief Financial Officer.

Purchase Agreement

On July 27, 2006 the Company signed a purchase agreement with Securenext Softwares Private Limited, an Indian Corporation to purchase Intellectual property for $80,000 dollars and 250,000 shares of common stock. As of June 30, 2007 phase I and phase II of the purchase agreement has been completed and the company made a good faith payment of $80,000 and issuance of 100,000 shares of the company’s common stock per the agreement. No revenues or expenses have been realized as of June 30, 2007.

Lease Obligations

The Company leases 1,851 square feet of office space at 100 Lucerne Circle, Orlando Florida. The original agreement was dated February 10, 2004 and expired on February 9, 2006. The Company extended the lease on March 1, 2006 for an additional 24 months. The Company makes monthly lease payments of $4,348.

F-15

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW

On December 22, 2005, the Company reorganized by entering into a stock purchase agreement with Global Portals Online, Inc. ("Global") whereby the Company issued 11,442,446 shares of its common stock in exchange for all of the outstanding common stock of Global. Immediately prior to executing the stock purchase agreement the Company had 1,961,399 shares of common stock and 438,000 shares of Series AA preferred stock issued and outstanding. The reorganization was accounted for as a recapitalization of Global because the shareholders of Global controlled the Company immediately after the acquisition. Therefore, Global is treated as the acquiring entity. Accordingly there was no adjustment to the carrying value of the assets or liabilities of Global. The Company is the acquiring entity for legal purposes and Global is the surviving entity for accounting purposes. Effective July 26, 2006, the company's name was changed to Web2 Corp. Effective July 31, 2006, the company's symbol for listing on the Over the Counter bulletin board was changed to WBTO.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosures. A summary of those accounting policies can be found in the footnotes to the consolidated financial statements included elsewhere in this report. Certain of our accounting policies are considered critical as they are both important to the portrayal of our financial condition and results of operations and require judgments on the part of management about matters that are uncertain. We have identified the following accounting policies that are important to the presentation of our financial condition and results of operations.

REVENUE RECOGNITION

RESULTS OF OPERATIONS -

The following discussion relates to the historical financial statements of Web2 Corp and subsidiary and should be read in conjunction with the consolidated financial statements and related notes.

Results of Operations - Comparison of Three Months Ending June 30, 2007 and 2006

Net revenues increased from $182,531 for the three months ended June 30, 2006 to $256,398 for the period ended June 30, 2007. The improvement in revenues was a result of the additional web development and support of business properties.

Depreciation and amortization decreased from $61,763 for the period ended June 30, 2006 to $47,013 for the period ended June 30, 2007. The decrease is due to an adjustment to an over-accrual in the first quarter of this year.

Selling, general and administrative expenses increased from $176,685 for the three months ended June 30, 2006, to $667,815 for the year ended June 30, 2007. The increase is due to the addition of 10 employees, increase in office equipment and space needed to implement the company’s initiatives.

Interest expense increased from $77,462 for the three months ended June 30, 2006, to $136,995 for the period ended June 30, 2007.The increase is due to the increase in borrowings to support operations.

Results of Operations - Comparison of Six Months Ending June 30, 2007 and 2006

Net revenues increased from $263,064 for the six months ended June 30, 2006 to $349,786 for the period ended June 30, 2007. The improvement in revenues was a result of the additional web development and support business.

Depreciation and amortization increased from $115,142 for the six months ended June 30, 2006 to $108,106 for the period ended June 30, 2007. The decrease is due to certain assets becoming fully depreciated.

Selling, general and administrative expenses increased from $310,874 for the period ended June 30, 2006, to $1,151,449 for the six months ended June 30, 2007. The increase is due to the addition of 10 employees, increase in office equipment and space needed to implement the company’s initiatives.

Interest expense increased from $158,153 for the period ended June 30, 2006, to $244,361 for the period ended June 30, 2007. The increase is due to the increase in borrowings to support operations.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2007, our cash totaled $42,633.

Net cash used in operating activities was $1,200,079 for the period ended June 30, 2007 compared to $299,972 for the period ended June 30, 2006. The increase in cash used relates to the company launching production initiatives.

Net cash used by Investing activities was $13,557 for the period ended June 30, 2007 compared to net cash used by investing activities of $ 5,759 for the same period last year. The increase in cash flows from Investing Activities was due to the acquisition of equipment needed to support operations.

Net cash provided from financing activities was $1,242,000 for the period ended June 30, 2007 as compared to net cash provided in financing activities of $361,225 for the period ended June 30, 2006. The $1,242,000 represents loans made to the Company by related parties.

In view of our accumulated deficit and recurring losses there is substantial doubt about our ability to continue as a going concern. In this regard management is adopting a plan for the development of our website product lines as well as seeking additional capital through the private sale of our debt or equity securities. There is no assurance that we will complete any financing or that we will achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We expect to fund development expenditures and incur losses until we are able to generate sufficient income and cash flows to meet such expenditures and other requirements. We do not currently have adequate cash reserves to continue to cover such anticipated expenditures and cash requirements. These factors, among others, raise substantial doubt about our ability to continue as a going concern.

Lease Obligations

The Company lease office 1,851 sq ft of office space at 100 Lucerne Circle, Orlando Florida. The original agreement was dated February 10, 2004 and expired on February 9, 2006. The Company extended the lease on March 1, 2006 for an additional 24 months.

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to income tax and marketing related agreements with our affiliates. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

FORWARD-LOOKING STATEMENTS; MARKET DATA

The discussion in this Quarterly Report on Form 10-QSB contains forward-looking statements that involve risks and uncertainties. The statements contained in this Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our expectations, beliefs, intentions or strategies regarding the future. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our actual results could differ materially from those described in our forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, our unproven business model and a limited operating history in a new and rapidly evolving industry; our ability to implement our business plan; and our ability to manage our growth, retain and grow our customer base and expand our service offerings.

We make forward-looking statements in the "Management's Discussion and Analysis of Financial Condition and, Results of Operations" above. These forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations, intentions and assumptions and other statements that are not historical facts. We generally intend the, words "expect", "anticipate", "intend", "plan", "believe", "seek", "estimate" and similar expressions to identify forward-looking statements.

This Quarterly Report on Form 10-QSB contains certain estimates and plans related to us and the industry in which we operate, which assumes certain events, trends and activities will occur and the projected information based on those assumptions. We do not know that all of our assumptions are accurate. In particular, we do not know what level of growth will exist in our industry, if any, and particularly in the foreign markets in which we operate, have devoted resources and in which we shall seek to expand. If our assumptions are wrong about any events, trends and activities, then our estimates for future growth for our business may also be wrong. There can be no assurances that any of our estimates as to our business growth will be achieved.

RECENT ACCOUNTING PRONOUNCEMENTS

Item 3: Controls and Procedures

We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in the reports filed under the Securities Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Based upon their evaluation as of the end of the period covered by this report, our chief executive officer and chief financial officer concluded that, our disclosure controls and procedures are effective to ensure that information required to be included in our periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.

Although we intend to conduct a rigorous review of our internal control over financial reporting to help achieve compliance with the Section 404 requirements of the Sarbanes-Oxley Act, if our independent registered public accounting firm is not satisfied with our internal control over financial reporting or with the level at which it is documented, designed, operated or reviewed, they may decline to attest to management’s assessment or may issue a qualified report identifying either a significant deficiency or a material weakness in our internal controls. This could result in significant additional expenditures responding to the Section 404 internal control audit, a diversion of management attention and potentially an adverse reaction to our common stock in the financial markets.

Limitations of Disclosure Controls and Procedures

Our management, including our chief executive officer and chief financial officer does not expect that our disclosure controls or internal control over financial reporting will prevent all errors or all instances of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II - OTHER INFORMATION

Item 1: Legal Proceedings

None.

Item 2: Changes in Securities

(a) None

(b) None

(d) Not Applicable.

Item 3.: Defaults upon Senior Securities

None.

Item 4.: Submission of Matters to a Vote of Security Holders

None

Item 5.: Other Information

None

Item 6.: Exhibits

(a)

The following exhibits are filed as part of this report:

31.1

Certification of Chief Executive Officer of Periodic Report pursuant to Rule 13a-14a and Rule 15d-14(a).

31.2

Certification of Chief Financial Officer of Periodic Report pursuant to Rule 13a-14a and Rule 15d-14(a).

32.1

Certification of Chief Executive Officer of pursuant to 18 U.S.C. - Section 1350.

32.2

Certification of Chief Financial Officer of pursuant to 18 U.S.C. - Section 1350.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Dated: August 14, 2007	WEB2 CORP

	By:	/s/ William Mobley
		William Mobley, Chief Executive Officer


	By:	/s/ Darren Cioffi
		Darren Cioffi, Chief Financial Officer

Full Motion Beverage (FMBV) Inactive 10QSB2007 Q2 Quarterly report (small business)