SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
-----------------
Pursuant to Section 12(g) of
The Securities Exchange Act of 1934
WORLD WIDE VIDEO, INC.
(Exact name of registrant as specified in its charter)
Colorado 54-1921580
- -------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
102A North Main Street, Culpeper, VA 22701
- ---------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(540) 727-7551
--------------------------
Registrant's telephone number, including area code:
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Title of class
Common 100,000,000 Shares of Common Stock
TABLE OF CONTENTS
PART I
Page
Item 1. Description of Business..........................................1
Item 2. Management Discussion & Analysis of Operations..................12
Item 3. Properties......................................................18
Item 4. Security Ownership of Certain
Beneficial Owners and Management...............................19
Item 5. Directors and Executive Officers................................20
Item 6. Executive Compensation..........................................23
Item 7. Certain Relationships and Related
Transactions....................................................25
Item 8. Description of Securities.......................................25
PART II
Item 1. Market Price of and Dividends on
Registrants Common Equity and
Related Stockholder matters....................................26
Item 2 Legal Proceedings......................................................27
Item 3. Disagreements with accountants on accounting and
financial disclosure............................................27
Item 4. Recent Sales of Unregistered Securities.........................28
Item 5. Indemnification of Directors and Officers.......................35
Financial Statements and Exhibits...............................36
Index to Financial Statements...................................41
Exhibit Index............................................42
Signatures...............................................43
ITEM 1. DESCRIPTION OF BUSINESS
World Wide Video, Inc. (the "Issuer" or "Company" or "WWV") was organized
under the corporate laws of the State of Colorado on April 9, 1998. The Company
designs and manufactures technology and products for the Video Telephony market.
WWV has been a development stage company during the final design and delivery of
custom ultra high speed hardware H.324 Codec (audio/video
compression/decompression) technology. During the period to date, the founders
have developed prototype products, written proprietary enabling
software/firmware, presented the products to large potential customers, and
established strategic partners/distribution channels throughout the United
States in anticipation of market introduction of its products. The Company
acquired 100% of World Wide Video, Inc. of Virginia in a share exchange in 1998.
World Wide Video, Inc. of Virginia was the predecessor company which commenced
the product design.
Research and product design was conducted by the two key principals, John
Perry and Frank Maas, over the last four years. World Wide Video, Inc. of
Virginia was established in July of 1997, and ongoing work by Messrs Perry and
Maas in the area of video over the plain old telephone system (POTS) was
contributed to the Virginia Corporation.
(a) The Company owns one subsidiary: World Wide Video Inc. of Virginia. The
Company currently maintains its offices 102A North Main Street, Culpeper, VA
22701. Its telephone number is (540) 727-7551.
(b) Parents and Subsidiaries
Parent
WORLD WIDE VIDEO, INC., a Colorado corporation.
1
Subsidiary
- ----------
World Wide Video, Inc., a Virginia corporation 100% wholly owned.
Financing of Product Development Activities.
- -------------------------------------------
The Company offered and sold 200,000 shares at $.50 per share pursuant to
Regulation D in early 1998. In the spring of 1998, the Company sold 75,000
shares at $2.00 per share to capitalize its initial product development. In
mid-1998 into 1999, the Company sold 233,987 shares at $2.75 per share to
capitalize its product development to date.
(d) Narrative Description of Business.
THE COMPANY BUSINESS
The Company has had very limited operations within the last two years, and such
operations have been restricted to design of products and small consulting and
development contracts. Most of the last two years, WWV has been developing new
video telephony products. Production for the first in a series of products is
scheduled for mid-1999.
The Company products deliver high speed television signals over the plain old
telephone system lines (POTS). The market potential for video communications
included every desktop computer, home computer and every business that needs to
communicate, especially as video systems become more and more affordable.
Multimedia Research Group forecasts that the video phones market and video
conferencing markets will total over $15 billion within the next five years as
the video technology becomes more common place. The Company's technology is
designed to provide video telephony for the individual user (home), small to
large businesses, the security, and tele-medicine markets. WWV expects the
market growth of these systems to be similar to that of the modem. At first
modems were only used by highly paid business people who traveled extensively
2
and needed to connect to their office computer while they were away. Now most
computer users use modems to hook to the "Internet," to access electronic
bulletin boards and to conduct research. Modems have become standard equipment
for most computers, and video may become standard equipment.
The International Telecommunication Union H.324 standard permits video,
voice and data to be shared simultaneously over a simple telephone modem
connection. It is the first standard to specify interoperability over a single
analog phone line. Because of the H.324 standard, the next generation of video
phones products will be able to talk to one another and provide a foundation for
gross market expansion.
The Company's products operate over traditional, business and residential copper
wire telephone systems commonly referred to as Plain Old Telephone Systems
(POTS). POTS represent over 87% of the world's present telephone networks. The
Company's technology compresses video and data at a higher rate than anyone else
in the industry at this time. This gives the Company a tremendous advantage in
frame rate and quality, which has been one of the limiting factors on widespread
acceptance of the technology. The Company's products will provide video service
at a new plateau in availability, video quality and at a lower cost than is
available now.
The primary initial focus of business operations will be to complete
product development of the products described under "Business" and market such
products to target industry prospects.
3
COMPANY'S PRODUCT LINES
Product Name: Centurion(TM)
Target Markets: Security and Surveillance
This is a major market segment for The Company's technology. Surveillance and
security information consisting of data, control, audio and high quality video
images can be transmitted over POTS between cities, states, and countries or
across the world.
The Centurion(TM) product family provides the first complete integrated system
allowing data, audio and video surveillance from remotely located sites.
Centurion is a small self contained hardware module that does not require a PC.
At 4" x 6" x 1.5" inches and 5 watts of power, it is the smallest
compression/decompression (codec) available to OEM designers and end-users. The
Centurion(TM) product family supports the International Telecommunication Union
(ITU) H.324 standard for low bandwidth video over normal (analog) telephone
lines.
Spectator(TM) is a co-companion to Centurion(TM) that provides one-way video
transmission for low cost surveillance applications. Both Centurion(TM) and
Spectator(TM) are designed to be compatible with future hardware and software
releases from WWV. Other Centurion(TM) family products, in the development
stage, will support the ITU standards such as H.320 (for ISDN, ATM, T.1) and
H.323 (for Internet and Ethernet) will be supported. A high performance PCI
computer card will support all three ITU standards. "Wavelet" runtime and still
video compression will be added to provide superior performance using either
analog or digital telephone lines.
Using standard telephone lines, the Centurion(TM) puts any site, no matter how
distant, within customer access. The unique 2-way video motion provides complete
communication for virtually any surveillance or conferencing application. For
security monitoring there will be fewer unknown false alarms. For monitoring
cash related activities Centurion(TM) can provide an interface for POS (Point of
Sale) scanners. Centurion(TM) can control remotely situated pan-tilt-zoom (PTZ)
4
cameras and can be interfaced to security alarm equipment and other devices to
verify a triggered alarm.
Product Name: RAV(TM) Medical
Target Markets: Remote Audio/Video/Data Tele-Medicine, Home Care Medical
Monitoring, Doctor and Nursing Facilities, Private Care
The RAV(TM) Medical allows health care professionals to keep abreast of new
procedures, consult on X-rays or other visual documents, obtain health
information by monitor home-bound patients and participate in conferences with
specialists using normal analog POTS telephone lines. RAV(TM) Medical
transportable convenience can inexpensively improve the quality of medical care
that provided to patients in remote areas and link patients to experts at
distant medical centers. The trend of HMOs and insurance companies to insist on
home recovery instead of in-hospital recovery has opened a new market for the
home monitoring of patient vital signs. A number of US and Japanese medical
firms are providing vital sign monitors connected to the phone network for
checking patient condition at random times. RAV(TM) Medical now provides the
missing link: a two-way video connection between the patient and the care
provider.
Product Name: RAV(TM) Notebook
Target Markets: Portable Video Conferencing
The RAV(TM) Notebook (RAV(TM)) is a complete multimedia computer system in a
notebook. The RAV(TM) is designed as a tool for the business person. The system
is designed to provide the full range of typical multimedia computing (windows,
modems, color display, fax, microphone, speakers) plus full portable video
conferencing (shared files, shared applications, shared white boards and camera)
using POTS or an option for cellular video communication. The RAV(TM) is the
first Remote Audio-Video notebook that includes a custom removable ITU H.324
compatible hardware video compression/decompression (codec) module that frees up
the CPU and provides the highest quality video conferencing. For video
conferencing simply, plug a phone line into the RAV(TM) and use all the features
of a "top of the line" notebook:
5
Pentium II MMX/366 MHZ with 64 - 128MB RAM, 512KB L2 Cache
Brilliant 15.1" active 1024x768x16M color display with 4MB controller
Data Storage includes 6.4 GB HDD, DVD, 3.5" FDD
Keyboard &Trackpad & 2 PCMCIA slots
Sound support includes built-in microphone and speakers
Communication includes:
56 Kbps fax/modem,
IR Transceiver and
Inputs/Output ports includes Audio In, Audio Out, Headphone Out, Video In,
and S-Video Out
Software includes: Windows 98 including Net Meeting
Dragon Speech Recognition Software
ITU T.120 Whiteboard, File Transfer, and Shared Application
1 Year Depot Warranty
Battery & Leather Carrying Case
In addition, the RAV(TM) includes an integrated high resolution color camera and
a removable video codec module that contains multiple high speed digital signal
processors to provide unparalleled frame rate and quality using the
International Telecommunication Union H.324 standard for low bit rate video
conferencing. Using the H.324 protocol, the RAV(TM) Notebook video conferencing
is Microsoft Net Meeting and International Telecommunication Union's T.120
software that provides for file transfers, shared applications, and shared white
boards.
Product Name: RAV(TM) STB
Target Markets: Video Communication (non-computer based) over POTS
The RAV(TM) STB (Set-Top-Box) does not require a computer for video, audio, and
data communication simultaneously over POTS. The RAV(TM) STB uses the industry
6
H.324 standards and operates using a standard television and telephone, and
operates with an internal video camera or an external standard NTSC video
camera. The telephone set is capable of making normal voice only calls when it
is not being utilized as a RAV(TM) STB. RAV(TM) STB near real-time, very high
quality, video imagery at a speed of approximately 10 to 20 frames per second is
displayed in a user sizable window on the TV screen. Web Browser capabilities
will be added in the near future as an option.
Product Name: RAV(TM) PCI
Target Markets: Video Communication (computer based) over POTS
The RAV(TM) PCI board is a low cost; high quality alternative to dedicated video
conferencing systems. It can be used for commercial applications as diverse as
desktop video conferencing and Tele-medicine to consumer personal use. The
RAV(TM) PCI is a standard half sized board that plugs into a PCI bus slot in a
personal computer (PC). It can be utilized for both consumer and business video
communications. It comes with software that is loaded into the PC and has a
simple user interface. The RAV(TM) PCI installed in a workstation can make
industry standard H.324 video phone calls to any computer already using Intel's
ProShare software. The RAV(TM) PCI will also support white boarding, file
transfers and application sharing using the T.120 standard.
See also (c) "Business."
Products, Services, Markets, Methods of Distribution and Revenues. Digital
electronic products are presently the principal products sought to be produced
by the company. The Company has commenced limited production for orders in hand
with first shipments in June 1999.
Curently, marketing is by trade shows and word of mouth and by Internet web
page.
7
Working Capital Needs. The working capital needs of the company consist
primarily of: operating capital, product development capital and marketing
capital (see "Operating Budget"). These requirements may be met by private
placement of stock or loans or sale of working interests. The Company will need
to develop additional working capital for future operations. At present time it
has no source or commitment for any additional funds.
Budget for Next Twelve Months
Personnel $285,000
Rent 9,000
Office & Administration 7,000
Communications 21,000
Travel 17,000
Professional Services 11,000
Stock Transfer & Filing 8,000
Product Development 355,000
Marketing 115,000
TOTAL $828,000
(3) Dependence on a Single Customer or a Few Customers
a) Revenues - $0 for fiscal year ended September 30, and the
quarter ended March 31, 1998
Current Customers
1. MetroBook Computer Corporation, Inc.
2. Help Innovations, Inc. (largest single)
3. DataPower USA, Inc.
4. Boeing Information Services
5. Andries Tek, Inc.
8
6. ABM IT
7. DataPoint, Inc.
8. MTS, Inc.
b) Client Services Revenues - None
During the five (5) years ending September 30, 1998 and
through nine months ended June 30, 1999, no revenues were
generated from client services.
(4) Backlog of Orders.
1. MetroBook Computer Corporation, Inc. $100,000
2. Help Innovations, Inc. $1 million order
(conditional upon
sales)
3. DataPower USA, Inc. $100,000
4. Boeing Information Services $2,000
5. Andries Tek, Inc. $2,000
6. ABM IT $4,000
7. DataPoint, Inc. $2,000
8. MTS, Inc. $5,000
(5) Government Contracts. None.
(6) Competitive Conditions. The video electronics industry is highly
competitive. The Company faces competition from large numbers of large and small
companies, both public and private. Many of the competitive companies so engaged
possess greater financial and personnel resources than the Company and therefore
have greater leverage to use in acquiring prospects, hiring personnel
development and marketing. Accordingly, a high degree of competition in these
areas is expected to continue. The markets for video
9
electronic products have increased substantially in recent years, and
competitors in such markets have increased substantially.
There is no assurance that the Company's revenues, if any ever develop, will
not be adversely affected by these factors.
WORLD WIDE VIDEO, INC.
COMPETITION
WWV recognizes that the competition in this industry is intense. There are only
two H.324 hardware based codec manufacturers. Both have focused on the consumer
video conferencing market. The POTS industry players are 8x8, Inc. (see below
for more details) and to a lessor degree C-Phone, Inc. They have directed their
marketing toward the home video phone environment. The home based conferencing
market competes mainly on price. WWV has identified that video communication is
most valuable to businesses, not home users.
The WWV marketing approach will be directed toward industries that need remote
monitoring, as in security and surveillance, and quality video conferencing.
Industry applications such as the security market are more dependent upon
acceptable video quality and video performance. World Wide Video hardware
provides superior video quality using newer digital technology. In addition to
the quality of the video, WWV initial products will be priced equal to or less
than the competition.
8x8, Inc. (formerly IIT) is the main competitor to WWV. 8x8 has been in the
business of selling video compression chips for about ten years. About four
years ago, they starting producing a consumer POTS Set-Top-Box, which is a H.324
codec with a built-in camera to be used with a standard TV for video display and
audio. The 8x8 quality is poor, the frame rate is slow (theoretical maximum is
15 SQCIF frames per second) and the minimum bandwidth is 19.2 Kbps. WWV's
Centurion(TM) product is about 1/4 the physical size and requires about 1/4 the
power. The Centurion(TM) frame rate is better (theoretical maximum is 20 SQCIF
10
frames per second) and the minimum bandwidth required is 9.6 Kbps. About a year
ago 8x8 starting developing POTS based security products using the same chip
designs. They have not made much progress again for the same reasons. Recent 8x8
announcements indicate that they may be leaving the consumer POTS area and that
now 8x8 is concentrating on industrial/commercial markets.
(7) Registrant Sponsored Research and Development. The Company has continuing
product development for which some research is required. The initial product
production is planned for mid-1999.
(8) Compliance with Environmental Laws and Regulations. The operations of the
Company are subject to local, state, and national laws and regulations in the
USA. To date, compliance with these regulations by the Company has had no
material effect on the Company's operations, capital, earnings, or competitive
position, and the cost of such compliance has not been material. The Company is
unable to assess or predict at this time what effect such regulations or
legislation could have on its activities in the future.
(a) State and Local Regulation - None.
The Company cannot determine to what extent future operations and
earnings of the Company may be affected by new legislation, new regulations or
changes in existing regulations at state or local level.
(b) National Regulation - None.
The Company cannot determine to what extent future operations and
earnings of the Company may be affected by new legislation, new regulations or
changes in existing regulations at a national (U.S.) level.
(c) Environmental Matters - None at the date of this registration
statement.
11
(d) Other Industry Factors - None at the date of this registration
statement.
(9) Number of Persons Employed. As of June 30, 1999, the Company had two full
time employees:
John G. Perry
Frank A. Maas
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND CHANGES
IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's only primary income source at this time is its limited product
sales. Capital from private placements or borrowing against assets are required
to fund future operations. The Company completed a private offering of Stock in
May of 1999.
The Company revenues for the twelve month period ending September 30, 1998,
were none. The Company commenced limited business operations in 1998 and showed
a significant net loss from operations for year ended September 30, 1998
resulting from costs of developing its products. The Company may continue to
show losses resulting from the start up of operations for an indeterminate time.
RESULTS OF OPERATIONS
During its operations ended September 30, 1998, the Company incurred expenses in
irregular amounts through year ended September 30, 1998. By "irregular," the
Company is referring to the fact that due to operations, fixed expenses such as
rent, general and administrative, accounting, telephone, etc. have been
variable, and sporadic. The Company has generated no business revenue from
operations up to September 30, 1998, but had sales revenues of $876 in the
quarter ended March 31, 1999. The Company has commenced limited production for
orders in hand with shipments in Summer 1999.
The Company incurred the following expenses in the past fiscal year end and six
months ended March 31, 1999.
13
Fiscal Year Ended Quarter Ended
September 30, 1998 March 31, 1999
------------------ --------------
Operating expenses
Product Development $373,928 $ 68,875
General and Administrative 97,148 47,134
-------- ---------
Total operating costs $468,326 $116,009
Cost of sales 0 6,497
It is expected that expenses will continue at a significantly increased rate
due to costs of developing and marketing products.
Cash Flows for Year Ended September 30, 1998:
The Company achieved no revenues from operations during the fiscal year, ending
September 30, 1998.
The income from operations for prior years compares as follows: Fiscal year
ended September 30, 1997 (none) and to fiscal year ended September 30, 1998
(none). The Company has never had any profits.
At this time, the Company is dependent upon private placements or loans for
future operations and funding. Therefore it will have to either borrow money, if
possible, or raise funds through subsequent public or private offerings to
continue operations until when, or if, it ever develops sufficient revenue from
its assets to maintain operations. If such revenues are not generated, or
participants not found the Company will be forced to develop another line of
business, or to finance its operations through borrowed funds, the sale of
assets it has, or enter into the sale of stock for additional capital none of
which may be feasible when needed. The Company has no management ability, and no
14
financial resources or plans to enter any other business as of this date
although the Company will be open to suggestion and opportunity.
CHANGES IN FINANCIAL CONDITION
At fiscal year ended September 30, 1998 the Company's assets increased to
$343,056 compared to $0 at September 30, 1997. The increase was a result of
shareholder contributions and private placement of common shares.
The liabilities, all of which are current liabilities, increased significantly
as a result of product development costs to $175,780, at year end September 30,
1998, an increase over the year ended September 30, 1997 liabilities of $0.
Stockholders' equity at year ended September 30, 1998 was $167,276, an increase
in the 1997 stockholder's equity of $0. This was caused by the Company's failure
to generate any revenues from any source, in spite of continued expenses and
product investment and development costs which were funded from the proceeds of
private placements.
From the aspect of whether the Company can continue toward its business goal of
commencing production and sales of its products, the Company is deficient in
needed capital. Without continued capital infusions or loans or a combination of
capital and loans, the Company may not be able to carry out its business goals
to market products for future fiscal years.
Comparison of Results of Operation for the Fiscal Years Ended September 30, 1998
and 1997
The Corporation had no operating revenues in 1998 or 1997. The Company incurred
product development costs of $373,928 and operating expenses, all of which are
general and administrative in nature, totaling $97,148 in fiscal year ended
September 30, 1998 as compared to $0 in 1997. As a result of having no operating
15
income, the Company incurred operating losses of $(468,326) in year ended
September 30, 1998 and $0 in year ended September 30, 1997. The Company
anticipates that the trend of net losses will continue in 1999 as it continues
to incur major expenses in attempting to develop and market its products.
General and Administrative costs increased in the year ended September 30, 1998
to $97,148 from a total of $0 in 1997. Expenses of a General and Administrative
nature will increase substantially as a result of registering its common stock
under the Securities and Exchange Act of 1934, increased audit costs and
expenses related to private placements to fund product development and marketing
costs and miscellaneous operations costs.
Office expenses, including telephone, were $12,388 in fiscal year ended
September 30, 1998 and $0 in 1997. These expenses were paid from shareholder
contributions. This will increase in 1999 due to expanded operations.
1998 expense for accounting totaled $2,670, while in 1997 accounting and other
professional expenses were $0. Likewise, accounting and other professional
expenses in 1999 will be materially larger due to efforts required to keep the
Company's SEC filings current. It should be expected that legal and accounting
expenses will increase substantially for 1999.
The per-share loss amounted to ($.06) in fiscal year ended September 30, 1998
as compared to $.00 in 1997.
16
RESULTS OF OPERATIONS FOR QUARTER ENDED MARCH 31, 1999 COMPARED TO SAME PERIOD
IN 1998
The Company generated revenues totaling $2,189 in the second quarter of the
fiscal year compared to $4,500 in revenues in the period in 1998. The cost of
goods sold was ($750) for net sales of $2,315 in the quarter in 1999 compared to
a cost of goods sold of 43,931 and net sales of $569 in 1998.
The Company had product development costs of $9,806 in the second quarter in
1999 compared to $20,000 in the same quarter in 1998. The general and
administrative expenses in the quarter in 1999 were $91,344 compared to $23 in
the same quarter in 1998. The Company had net operating losses of ($98,515) in
the second quarter in 1999 compared to ($19,454) in the same quarter in 1998.
The Company, at quarter end, needed additional capital infusion, and only had
cash of $4,032 and total current assets of $259,832 which were mostly illiquid.
Its current liabilities at quarter end were $236,882.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1999
The Company generated $10,562 in sales and income revenue in the six months
period ended March 31, 1999 as compared to $4,500 in sales revenue in the same
period ended March 31, 1998. The Company incurred cost of goods of $1,750 in the
period ended March 31, 1999 as compared to 43,931 in cost of goods sold in the
same period ended March 31, 1998. The Company incurred 4138,671 in general and
administrative expenses in the period ended as compared to $23 in general and
administrative expenses in the same period in 1998. The Company had product
develeopment expenses of $77,961 in the six month period ended March 31, 1999 as
compared to $20,000 in the same period in 1998. The Company incurred a loss on
operations in the six month period ended March 31, 1999 of ($207,820) as
compared to a loss on operations in the six month period ended March 31, 1998 of
($19,454).
17
LIQUIDITY
- ---------
The Company expects that its need for liquidity will increase for the coming
year due to its anticipation of expending funds for product marketing and
development.
Short Term
----------
On a short term basis, the Company does not generate enough revenue to cover
operations. Based on prior experience, the Company believes it will continue to
have insufficient revenue to satisfy current and recurring liabilities as it
seeks to increase sales and produce product. For short term needs the Company
will be dependent on receipt, if any, of private placement proceeds or loans.
The Company's current assets were $259,832 at March 31, 1999 and its current
liabilities are $236,882. Of the current liabilities, $60,000 was owed to
officer shareholders. The Company had cash of $4,039 at March 31, 1999 and
inventory of $131,570 and accounts receivable of $37,323. It has recently
completed a private placement of its securities for additional capital.
Long Term
---------
On a long-term basis, the Company had non-current assets consisting of
property, equipment, and other assets of $74,299 at March 31, 1999.
The Company has a start-up business at this time from which it generates small
income. Its operations have negative cash flow at this time. It is reliant upon
success of product marketing, at this time, for possibility of future income.
18
CAPITAL RESOURCES
- -----------------
The primary capital resources of the Company are its stock only. Stock may be
illiquid because it is restricted in an unproved company with limited assets and
a start-up business.
The Company completed a private placement of 200,000 shares consisting of
common shares @ $.50 per unit for operating capital. The Offering ceased as of
May 1, 1998.
The Company completed a private placement of 75,000 shares consisting of common
shares @ $2.00 per unit for operating capital. The Offering ceased as of July 1,
1998.
The Company completed a private placement of 233,987 shares consisting of
common shares @ $2.75 per unit for operating capital in late 1998 and early
1999.
As of the date of the registration statement, the Company has plans for capital
expenditures within the next year to manufacture product, which amounts exceed
its available capital by over $200,000.
Need for Additional Financing
The Company does not have capital sufficient to meet the Company's cash needs
for continuing operations. The Company will have to seek loans or equity
placements to cover such cash needs. In the event the Company is able to
complete a business combination during this period, lack of its existing capital
will be a sufficient impediment to allow it to accomplish the goal of
completeing a business combination. There is no assurance, however, that the
available funds will ultimately prove to be adequate to allow it to complete a
business combination, and once a business combination is compeleted, the
Company's needs for additional financing are likely to increase substantially.
19
No commitments to provide additional funds have been made by management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to the Company to allow it to cover its expenses.
The Company discloses hereby that it is in a dispute with an entity, Albemarle
Investments, Ltd. regarding a purported consulting arrangement under which claim
has been made for $45,000 and issuance of common shares totaling 500,000. There
has been no further assertion of claim since September 14, 1998. The Company
disputes that any monies or shares are due and is prepared to assert legal
defenses in the event any legal action were to be taken.
ITEM 3. PROPERTIES
(a) Real Estate. The Company rents office space of 1,000 sq. ft. from a non-
affiliate.
(b) Title to properties. None.
(c) Oil and Gas Drilling Activities. None.
(d) Oil and Gas Production. None.
(e) Oil and Gas Reserves. None
(f) Present value of Estimated future Net Reserves From Proved Developed
Oil and Gas Reserves. None.
(g) Reserves Reported to Other Agencies. None.
(h) Natural Gas Gathering/Processing Facilities. None.
20
(i) Present Activities and Subsequent Events:
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AS OF
MAY 20, 1999
Security Ownership of Certain Beneficial Owners and Management
As of June 30, 1999, the Company had issued and outstanding 10,911,368 shares of
its common stock, $.0001 par value. The following tabulates holdings of common
stock of the Company by each person who holds of record or is known by
management of the Company to own beneficially more than five percent (5%) of the
common stock outstanding, and, in addition, by all directors and officers of the
Company individually, and as a group. The shareholders listed below have sole
voting and investment power, except as otherwise noted.
(a) Beneficial owners of five percent (5) or greater, of the
Registrant's Common Stock. The following sets forth information with respect to
ownership by holders of more than five percent (5%) of the Company's Common
Stock known by the Company based upon 10,911,368 shares outstanding at June 30,
1999.
Title Name and Amount and Percent
of Address of Nature of of
Class Beneficial Owner Beneficial Interest Class
- ----- ---------------- ------------------- -------
Common John G. Perry 5,000,000 45.82%
14327 Smith Road
Culpeper, VA 22701
Common Frank A. Maas 5,000,000 45.82%
808 Culpeper Street
Fredericksburg, VA 22405
21
b) The following sets forth information with respect to the Company's
Common Stock beneficially owned by each Officer and Director, and by all
Directors and Officers as a group.
Title Name of Amount and Percent
of Beneficial Nature of of
Class Owner Beneficial Ownership Class
- ----- ---------- -------------------- -------
Common John G. Perry 5,000,000 45.82%
Common Ronald Cropper 0 0%
Common Frank A. Maas 5,000,000 45.82%
------
Officers and Directors as a goup 91.64%
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
(a) The following table furnishes the information concerning the
directors of the Company as of June 30, 1999. The directors of the Company are
elected every year and serve until their successors are elected and qualify.
Name Age Title Term
- ---- --- ----- ----
John G. Perry 53 President and Director Annual
Frank A. Maas 54 Secretary, Director, Annual
and Chairman
Ronald Cropper 52 Director Annual
22
The term of office for each director is one (1) year, or until his/her
successor is elected at the Company's annual meeting and qualified. The term of
office for each officer of the Company is at the pleasure of the board of
directors.
The board of directors has no nominating, auditing committee but has
set up a compensation committee. Therefore, the selection of person or election
to the board of directors was neither independently made nor negotiated at arm's
length.
The term of office for each director is one (1) year, or until his/her
successor is elected at the Company's annual meeting and qualified. The term of
office for each officer of the Company is at the pleasure of the board of
directors.
(c) Identification of Certain Significant Employees.
There are no employees other than the executive officers disclosed
above who make, or are expected to make, significant contributions to the
business of the Company, the disclosure of which would be material.
(d) Family Relationships. None.
(e) Business Experience. None.
The following is a brief account of the business experience during the
past five years of each director and executive officer of the Company, including
principal occupations and employment during that period and the name and
principal business of any corporation or other organization in which such
occupation and employment were carried on.
23
MANAGEMENT EXPERIENCE
JOHN G. PERRY, age 53, President and Director of the Company and its predecesor
since 1997, has over 34 years of experience in the management, analysis, design,
research, development, and implementation of complex, networked computer
systems. Possesses a thorough knowledge of computer science and systems
engineering, and a broad spectrum of computer technologies. Experience covers a
wide variety of projects including research and development of highly
sophisticated weapons and ballistics systems for DoD and Intelligence agencies,
design and development of wide area and local area networks, development and
application of standards, technology and project management, and marketing of
secure products. He possesses in depth knowledge of federal computer
acquisition, Life Cycle Management (LCM), Information Resource Management (IRM),
Government Open System Interconnect Profile (GOSIP) and computer and
communications security. Work experience has required detailed working knowledge
of LANs, WANs, FIPS, EDI, CALS, Video, and DoD Security. Mr. Perry has been the
President of IMProCOM (a publicly reporting company), Inc., 1994-1996. Mr. Perry
has a B. S. Mathematics, Randolph-Macon College, 1967, M. S. Computer Science,
University of Maryland, 1976.
FRANK A. MAAS, age 54, for more than 28 years, Mr. Maas has participated in a
large number of research and development programs for the U.S. Navy and
industry. He has extensive experience in the design, development, fabrication,
test, evaluation, and operational installation and maintenance of electronic,
mechanical, and electro-optical (E-O) components, equipment, and systems in
support of pointing and tracking, surveillance, missile and gun system, chemical
and biological defense, intelligence gathering, and electronic and infrared
countermeasures programs for the U.S. Navy. He was recently involved in the
successful design and implementation of a desktop Video-teleconferencing (VIC)
system that featured links to distant CFTC systems over POTS and ISDN and has
developed a portable video-teleconferencing system. Mr. Maas has been Vice
President of Engineering for Mesa, Inc. (1983-94) and Pixels, Inc. (1994-95),
two companies in the communication industry. Mr. Maas has a B. S. Electrical
24
Engineering, Case Institute of Technology, 1968. Mr. Maas has been Chariman,
Director, and Secretary of the Company and its predecessor since 1997.
RONALD CROPPER, age 51, has been the President of RPC International, Inc., since
June of 1998 when he started the Company. RPC International is an international
business and consulting company with experience in merger and acquisition of
technical companies. RPC has provided it's services to companies with over one
hundred countries during the past ten years. from November of 1976 through June
of 1988 he was President of United Technical Institute and was responsible for
establishing this international training company he took the Company from
startup to over fourteen million dollars of annual sales during his Presidency.
United Technical Institute specialized in training in the disciplines of
business computers, medical, electronics and distance learning. Mr. Cropper is a
graduate of Georgetown University with a Bachelors, International Business and
he participated in the Harvard University Accelerated MBA Program. Mr. Cropper
has received numerous Awards and has published articles relating to education
and distance learning. Mr. Cropper has been Director of the Company since early
1998.
Directors Compensation
Members of the Board of Directors of the Company receive no compensation at
this. Each Director is reimbursed reasonable outside travel expenses for each
Board meeting he attends and for each Committee meeting he attends during the
fiscal year. Directors who are also officers of the Company receive no
compensation for services as a director.
ITEM 6. EXECUTIVE COMPENSATION
(a) Cash Compensation.
Compensation paid by the Company for all services provided during the fiscal
year ended September 30, 1998, (1) to each of the Company's five most highly
25
compensated executive officers whose cash compensation exceeded $60,000 and (2)
to all officers as a group: None. directors.
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
Name and Year Salary Bonus Other Restricted Securities
Principal ($) ($) Stock Underlying
Position Annual Award(s) ($)
Compen- Options
sation ($) SARs (#)
- ---------------------------------------------------------------------------------------------------------------------------------
John G. Perry, 1997* 0 0 0 0 0
President and
Director
---------------------------------------------------------------------------------------------------------
1998 90,000 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Frank A. Maas, 1997* 0 0 0 0 0
Secretary and
Director
---------------------------------------------------------------------------------------------------------
1998 90,000 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
* Frank A. Maas and John G. Perry purchased founder shares in WWV of Virginia
(1997), and those shares were exchanged for 5,000,000 shares each in WWV of
Colorado (1998).
(b) Compensation Pursuant to Plans. None.
(c) Other Compensation. None. No stock appreciation rights or warrants exist to
management.
(d) Compensation of Directors.
Compensation paid by the Company for all services provided during the fiscal
year ended September 30, 1998, (1) to each of the Company's directors whose cash
compensation exceeded $60,000 and (2) to all directors as a group is set forth
below: None.
26
(e) Termination of Employment and Change of Control Arrangements. None
(f) KEY EMPLOYEES INCENTIVE STOCK OPTION PLAN: None at this time.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Certain Transactions
- --------------------
A Director, Ronald Cropper, of the Company was engaged to assist in the raising
of capital. He is compensated on the basis of a percentage (from two to five
percent) of the completed transaction. During the same period ended September
30, 1998, he was paid $23,435 under this contract. The contact was terminated as
of August 1998. In addition, the same Director has been prepaid $16,000 under a
product marketing agreement.
John Perry and Frank Maas were sole owners of World Wide Video, Inc. a Virginia
corporation (WWVa). Mssrs. Perry and Maas entered into a Share Exchange
Agreement with Registrant May 12, 1998 in which they exchanged 100% of WWVa to
Registrant in exchange for 10,000,000 shares of common stock of Registrant.
John Perry and Frank Maas were each employed by the Company at a consulting fee
of $10,000 per month for 9 months ended September 30, 1998. They were paid
$115,000 total to September 30, 1998 and deferred $65,000. Both Mr. Perry and
Mr. Maas are now employees of the Company at a salary of $10,000 per month.
ITEM 8. DESCRIPTION OF SECURITIES
The Company is presently authorized to issue hundred million (100,000,000)
shares of its $.0001 par value common shares in such classes as the Board may
determine. As of June 30, 1999 ten million nine hundred eleven thousand three
hundred sixty-eight (10,911,368) Common Shares are presently issued and
outstanding.
27
Preferred Stock
- ---------------
10,000,000 shares of preferred stock are authorized. The Board of Directors has
total discretion as to the extablishment of the series or classes of preferred
stock and the rights and privileges of such classes. This type of discretion for
Preferred Stock is often referred to as "Blank Check." The Company has not, as
of the date hereof, determined any class or series of shares nor any rights or
privileges. No preferred shares are outstanding as of June 30, 1999.
Common Shares
- -------------
All shares, when issued, will be fully paid and non-assessable. All shares are
equal to each other with respect to voting, liquidation, and dividend rights.
Special shareholders' meetings may be called by the officers or director, or
upon the request of holders of at least one-tenth (1/10th) of the outstanding
shares. Holders of shares are entitled to one vote at any shareholders' meeting
for each share they own as of the record date fixed by the board of directors.
There is no quorum requirement for shareholders' meetings. Therefore, a vote of
the majority of the shares represented at a meeting will govern even if this is
substantially less than a majority of the shares outstanding. Holders of shares
are entitled to receive such dividends as may be declared by the board of
directors out of funds legally available therefor, and upon liquidation are
entitled to participate pro rata in a distribution of assets available for such
a distribution to shareholders. There are no conversion, pre-emptive or other
subscription rights or privileges with respect to any shares. Reference is made
to the Company's Articles of Incorporation and its By-Laws as well as to the
applicable statutes of the State of Colorado for a more complete description of
the rights and liabilities of holders of shares. It should be noted that the
By-Laws may be amended by the board of directors without notice to the
shareholders. The shares of the Company do not have cumulative voting rights,
which means that the holders of more than fifty percent (50%) of the shares
voting for election of directors may elect all the directors if they choose to
do so. In such event, the holders of the remaining shares aggregating less than
fifty percent (50%) of the shares voting for election of directors may not elect
all the directors if they choose to do so. In each event, the holders of the
remaining shares aggregating less than fifty percent (50%) will not be able to
elect directors.
28
Warrants
- --------
The Company had 70,274 common share purchase warrants outstanding. Such warrants
allow the holder to purchase common shares @ $2.75 per share for a period of two
years from date of issue. The warrants are non-transferable.
PART II
ITEM 1. (a) MARKET PRICE OF AND DIVIDENDS ON REGISTRANTS COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's common stock is not now traded on the "Over-the-Counter" market,
but when traded may be quoted on the NASD Electronic Bulletin Board. The
following table sets forth high and low bid prices of the Company's common stock
for the two (2) years ended June 30, 1999 and 1998 (note: Company did not exist
in 1996) as follows:
1999 High Low
First Quarter 0 0
Second Quarter 0 0
High Low
1998
First Quarter 0 0
Second Quarter 0 0
Third Quarter 0 0
Fourth Quarter 0 0
29
High Low
1997
First Quarter 0 0
Second Quarter 0 0
Third Quarter 0 0
Fourth Quarter 0 0
(b) As of June 30, 1999, the Company had 61 shareholders of record of the common
stock.
(c) No dividends on outstanding common stock have been paid within the last two
fiscal years, and interim periods. The Company does not anticipate or intend
upon paying dividends for the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
No legal proceedings were pending at date of Registration Statement.
ITEM 3. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
a) None
b) In connection with audits of two most recent fiscal years and any
interim period preceding resignation, no disagreements exist with any former
accountant on any matter of accounting principles or procedure, which
disagreements if not resolved to the satisfaction of the former accountant would
have caused him to make reference in connection with his report to the subject
matter of the disagreement(s).
30
c) The principal accountant's report on the financial statements for
any of the past two years contained no adverse opinion or a disclaimer of
opinion nor was qualified as to uncertainty, audit scope, or accounting
principles except for the "going concern" qualification.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
UNREGISTERED STOCK SALES IN THE THREE YEAR PERIOD PRIOR TO THIS REGISTRATION
STATEMENT.
Founders Purchase Amount of
Shareholder Price Shares Consideration
- ----------- -------- --------- -------------
John G. Perry 0.0 5,000,000 Exchange of shares of World Wide Video
dated May 12, 1998
Frank A. Maas 0.0 5,000,000 Exchange of shares of World Wide Video
dated May 12, 1998
All of the following sales were made in Reliance upon the exemption provided
under Regulation D, Rule 504.
31
Private Placements in April 1, 1998 - April 20, 1999
Shareholder Purchase Amount of Consideration
Price Shares
---------------------------------------------------------------------------------------------------------------
4/3/98 Nublan Zaky Yusoff $0.50 200,000 $100,000.00
PJS 19/1, Jalan Lagoon T
Kumper Lumpor
Malaysia
4/17/98 Vidid Resources, Inc. $2.00 25,000 $50,000.00
4370 LaJolla
San Diego, CA92122
4/18/98 George and Janet Camberis $2.00 75,000 $15,000.00
40 Trish Court
Danville, CA 94506
5/8/98 Patrick D. Lee $2.00 12,500 $25,000.00
319 Oak Drive South
Green Grove Springs, FL
32043
5/8/98 Frederick E. Roughton $2.00 30,000 $60,000.00
POB 454
Middleburg, VA 20118
7/16/98 Dante Berry $2.75 728 $2,000.00
3FA Lerkenlard
St. Thomas, USVI 00801
7/11/98 Marcia Leonard $2.75 364 $1,001.00
c/o Carribean Cowgirl
St. Thomas, USVI 00802
32
7/14/98 Anne Borne $2.75 2,000 $5,500.00
3700 Vills OLGIA
St. Thomas, USVI 00802
7/13/98 Molly Mills Fuch $2.75 11,000 $30,250.00
P.O. Box 9965
St. Thomas, USVI 00801
7/14/98 Dennis M. Vollmer $2.75 2,000 $5,500.00
P.O. Box 306417
St. Thomas, USVI 00803
7/15/98 Charles Berry $2.75 1,819 $5,000.00
P.O. Box 11583
St. Thomas USVI 00801
7/15/98 Stephen Bajor $2.75 725 $1,993.75
6263 EST Nazareth
St. Thomas, USVI 00802
7/15/98 Sandra R. Tate $2.75 364 $1,001.00
6501 Red Hook Plaza #23
St. Thomas, USVI 00802-1306
7/15/98 Antionette B. Day $2.75 364 $1,000.00
C5-28 Sorgenfri Estate
St. Thomas, USVI 00803
7/16/98 Matthew J. McCormack $2.75 364 $1,000.00
501-4009 Raphine Hill
St. Thomas, USVI 00802
33
7/17/98 Gigi Anne Zaccagnino $2.75 127,273 $350,000.00
2850 Pleasant Hill Rd.
Kissimmee, FL 34746
7/17/98 Bruce M. Berry, Jr. $2.75 365 $1,003.75
372 Wintbert
St. Thomas, USVI 00805
7/17/98 Mary C. Deering $2.75 728 $2,000.00
1823 Mahogany Run
St. Thomas, USVI
00801/00803
7/16/98 Joe Stull $2.75 728 $2,000.00
P.O. Box 305021
St. Thomas, USVI 00803
7/15/98 Donald B. Callaway $2.75 1,455 $4,000.00
308 Crown Bay Marina
St. Thomas, USVI 00802
7/17/98 Linda Carlisi-Lugo $2.75 364 $1,000.00
P.O. Box 3751
St. Thomas, USVI 00802
7/16/98 Diane M. Aamodt $2.75 400 $1,100.00
6501 Red Hook Plaza #201
St. Thomas, USVI 00802
7/16/98 Geoffrey Deering $2.75 364 $1,000.00
19031 NW 89th Court
Miami, FL 33108
34
7/16/98 Sandra DeSimone $2.75 546 $1,500.00
P.O. Box 306631
St. Thomas, USVI 00803
7/15/98 Matt D. Pierson $2.75 364 $1,000.00
601 Red Hook Plaza #201
St. Thomas, USVI 00802
7/16/98 Franklin Danziger $2.75 7,500 $20,625.00
2020 E. Colter Street
Phoenix, AZ 85016
7/16/98 Cathy Lyn Wilde $2.75 4,000 $11,000.00
4737 E. Sheena Drive
Phoenix, AZ 85032
7/23/98 Stephen Speranza $2.75 400 $1,100.00
36 Sunset Bridge Drive
East Hardford, CT 6118
7/23/98 Kenneth Young $2.75 728 $2,002.00
228 Columbia Street
Ithace, NY 14850
7/20/98 Gary Holland $2.75 2,000 $5,500.00
5859 Dovetail Drive
Aurora Hills, CA 91301
8/31/98 Jerry A. Stangohr $2.75 1,800 $4,950.00
9801 Rosewood Hill Drive
Vienna, VA 22182
35
10/2/98 Charles Bonanno $0.00 125,000 services
P.O. Box 11180
St. Thomas, USVI 00801
12/13/98 DataPower USA, Inc. $0.00 250,000 exchange
101-1425 West Pender St.
Vancouver, BC Canada V6G2S3
11/5/98 Alfred W. McClelland $2.75 725 $1,993.75
10 Cobblestone Road
Greenville, SC 29615
12/16/98 Lawrence F. Kahn $2.75 2,000 $5,500.00
105 Woodfall Way
Lilburn, GA 30047
1/11/99 Betty W. Jones $2.75 200 $5,500.00
3819 N. Wakefield Street
Arlington VA 22207
1/17/99 Jeannine Atalay Harvey $2.75 200 $5,500.00
7216 Poplar Street
Annandale, VA 22003
1/17/99 Roy & Laura Weinstock $2.75 2,000 $5,500.00
10405 Amberst Court
Fredricksburg, VA 22408
1/17/99 Michael Atalay $2.75 200 $550.00
31 Stablemere Court
Baltimore, MD 21209
36
1/17/99 Bulent Atalay $2.75 1,100 $3,025.00
10202 N. Hampton Lane
Fredericksburg, VA 22408
1/17/99 Joseph Ratnam $2.75 1,000 $2,750.00
BLK 816 Yishun ST
81 #11-712
Singapore 760816
1/17/99 Lowis Chelliah $2.75 1,000 $2,750.00
BLK 141, #08-275
Lorong AH, S00
Singapore 530141
1/17/99 Bulent & Carol Jean Atalay $2.75 1,500 $4,125.00
10202 N. Hampton Lane
Fredericksburg, VA 22408
1/19/99 Thomas N. Slutsker $2.75 500 $1,375.00
6 Emerson Court
Morristown, NJ 07960
1/29/99 Rochele Hirsch $2.75 15,682 $43,123.90
510 Seminole Avenue
Atlanta, GA 30307
1/29/99 Thomas & Dennie Stansell $2.75 1,000 $2,750.00
30110 Via Rivera
Rancho Palos Verdes, CA
90275
37
1/29/99 McKenzie A. Perry, Jr. $2.75 1,000 $2,750.00
510 Seminole Avenue
Atlanta, GA 30307
1/29/99 Rochele Hirsch $0.00 27,381 services
510 Seminole Avenue
Atlanta, GA 30307
2/16/99 Duane & Cheryl Clayton $2.75 2,000 $5,500.00
6733 Estate Lane
Fredericksburg, VA 22407
3/15/99 C.J. Zielinski $2.75 3,637 $10,000
7,274
warrants
4/2/99 Summit Limited Partnership $2.75 5,000* $13,750
19045 Clair Manor Drive
10,000
Culpeper, VA 22701 warrants
4/5/99 Jerrold W. Hoehn $2.75 3,500* $9,625
HC72 Box 543A 7,000
warrants
Locust Grove, VA 22508
4/6/99 Leonard C. Feldman $2.75 2,000* $5,500
2155 Laurel Lane 4,000
warrants
N. Miami, VA 22701
4/6/99 Auby D. Curtis $2.75 6,000* $16,500
16068 Rocky Road 12,000
warrants
Culpeper, VA 22701
38
4/6/99 John D. Zaleski II $2.75 3,000* $8,250
11249 Pimilico Circle 6,000
warrants
Culpeper, VA 22701
4/6/99 Stephanie Mendlow, M.D. & $2.75 4,000* $11,000
Leighton B. Brown
8,000
H.C.R. 2, Box 540 warrants
Madison, VA 22727
4/6/99 H. Lee Kirk, Jr. & Kim M. $2.75 2,000* $5,500
Kirk 19301 Bleumont Court
4,000
Culpeper, VA 22701 warrants
4/6/99 E. Francis Updike $2.75 4,000* $11,000
12305 Hidden Lakes 8,000
warrants
Culpeper, VA 22701
4/6/99 Jonathan M. & June M. Brick $2.75 2,000* $5,500
11211 Pimilco Circle
4,000
Culpeper, VA 22701 warrants
No other sales have occurred in the three years preceding filing of this
registration statement.
With respect to all sales of securities to persons other than the founders, Data
Power, Inc., Charles Bonanno, and Rochele Hirsch the Registrant relied on the
provisions of Rule 504 of Regulation D promulgated under the Securities Act of
1933, as amended (the "Act"). The offering was not made by means of any general
solicitation, shares were acquired without a view toward distribution thereof
and all purchasers represented that they were able to bear the economic risk of
their investment, and a representation letter to that effect was obtained from
each purchaser. The shares were issued with an investment legend thereon, and
stop transfer instructions were noted on the Registrant's stock transfer
records. Aggregate sales were less than $1,000,000. No offerings of unregistered
securities are currently being offered. Data Power, Inc. obtained shares through
39
a share exchange exempt under Section 4(2), and Charles Bonanno and Rochele
Hirsch received shares for services rendered as an exempt transaction under
Section 4(2), but Rochele Hirsch separately purchased 15,682 shares pursuant to
Reg. D., Rule 504.
* In addition to shares, an aggregate total of 70,274 warrants to purchase
common shares at $2.75 per share were issued to those persons marked with an *.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Colorado Corporation Act and Company by-laws offer protection by way of
indemnification to any officer, director or employee of the Company. The
indemnification extends to expenses, including attorney's fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred in connection
with an action, suit or proceeding if the party acted in good faith and in a
manner reasonably believed to be in or not opposed to the best interests of the
Company and with respect to any criminal proceeding if the party had no
reasonable cause to believe the conduct was unlawful.
The general effect of the above indemnification provisions allow the employees,
directors, and officers of the Company to function and engage in the day to day
business activities of the Company knowing the Company will offer protection
against the threat or event of litigation subject to the limitations that said
individual must exercise good faith and reasonableness.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 or Securities Exchange Act of 1934 may be permitted to directors, officers
and controlling persons of the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
40
FINANCIAL STATEMENTS AND EXHIBITS
The following documents are filed as a part of this report:
1) Financial Statements: (See Financial Exhibits Index below and Financial
Exhibits furnished as Pages F-1 through F-20).
2) Financial Statement Schedules: None
3) SK Exhibits: (See SK Exhibits Index SK, page 23, and SK Exhibits, SK-3.0
through SK- 24.2.)
4) Supplemental Oil and Gas Information - None.
41
FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
INDEX TO FINANCIAL STATEMENTS
AND SUPPORTING SCHEDULES
Page
Reports of Independent Public Accountants F-2
I. Financial Statements (audited):
Consolidated Balance Sheets, Sept. 30, F-3
1998 and since inception
Consolidated Statements of Operations, F-4
Sept. 30, 1998 and since inception
Statement of Equity F-5 - F-6
Statement of Cash Flows F-7 - F-8
Notes to Consolidated Financial Statements F-9 - F-11
Interim Financial Statements (unaudited)
Period ended March 31, 1999
Balance Sheet F-12
Statement of Operations F-13
Statement of Cash Flows F-14
Notes to Financial Statements F-15-20
42
INDEX
SK EXHIBITS
3.1 Articles of Incorporation of World Wide Video, Inc. (Colorado)
3.2 Bylaws of World Wide Video, Inc. (Colorado)
3.3 Articles of Incorporation of World Wide Video, Inc. (Virginia)
3.4 Bylaws of World Wide Video, Inc. (Virginia)
10.1 Agreement with Data Power, Inc.
10.2 Share Exchange Agreement
24.1 Consent of Accountant
SUPPLEMENTAL OIL AND GAS INFORMATION
None.
43
SIGNATURES:
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
DATED: August 17, 1999
World Wide Video, Inc.
/s/ John G. Perry
by:----------------------------------
John G. Perry, President
Directors:
/s/ Frank A. Maas
-------------------------------------
Frank A. Maas, Secretary and Director
/s/ John G. Perry
------------------------------------
John G. Perry, Director
/s/ Ronald Cropper
------------------------------------
Ronald Cropper, Director
44
WORLD WIDE VIDEO, INC.
A Colorado Corporation
A Development Stage Enterprise
Financial Statements
PERIOD ENDED SEPTEMBER 30, 1998
AND FROM INCEPTION
(Audited)
F-1
THOMPSON,
GREENSPON
& Co., P.C.
Certified Public Accountants
Management Consultants
INDEPENDENT AUDITOR'S REPORT
To the Shareholders
World Wide Video, Inc.
A Colorado Corporation
Culpeper, Virginia
We have audited the accompanying balance sheet of World Wide Video, Inc. (a
Colorado Corporation), a development stage enterprise, as of September 30, 1998,
and the related statement of operations and retained earnings and cash flows
from July 16, 1997, inception through September 30, 1998, These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of World Wide Video, Inc. (a
Colorado Corporation), as of September 30, 1998, and the results of its
operations and its cash flows from July 16, 1997, inception, through September
30, 1998, in conformity with generally accepted accounting principles.
Fairfax, Virginia
January 21, 1999
F-2
WORLD WIDE VIDEO, INC.
(A Colorado corporation)
(A Development Stage Enterprise)
BALANCE SHEET
SEPTEMBER 30, 1998
1998 1997
---- ----
---------------------------------------------------
ASSETS
Current Assets $ $
Cash and cash equivalents 28,324 200
Inventories 122,448 -
Prepaid assets and fees 107,134 -
---------------------------------------------------
Total Current Assets 257,906 200
---------------------------------------------------
Property and Equipment
Computer and equipment 7,746 -
Software 13,668 -
---------------------------------------------------
Total Cost 21,414 -
Less accumulated depreciation (2,364) -
---------------------------------------------------
Net Property and Equipment 19,050 -
---------------------------------------------------
Other Assets
Technology license, net of 43,750 -
amortization
15,850 -
Deferred offering costs
650 -
Deposits
5,850 -
Prepaid rent, non-current
---------------------------------------------------
Total Other Assets 66,100 -
---------------------------------------------------
TOTAL ASSETS $ 343,056 $ 200
===================================================
The Notes to Financial Statements are an integral part of this statement.
Prepared by THOMPSON, GREENSPON & CO., P.C.
F-3
WORLD WIDE VIDEO, INC.
(A Colorado corporation)
(A Development Stage Enterprise)
LIABILITIES AND STOCKHOLDERS' EQUITY
FROM JULY 16, 1997, INCEPTION, THROUGH SEPTEMBER 30, 1998
1998 197
-----------------------------------------------
Current Liabilities
Accounts payable $ 75,780 $ -
Deferred revenue 50,000 -
Convertible loan 50,000 -
-----------------------------------------------
Total Current Liabilities 175,780 -
-----------------------------------------------
Stockholders' Equity
Common stock, par value $0.0001;
100,000,000 shares
1,044 200
authorized; 10,443,737 issued and
outstanding
Preferred stock, par value $0.01;
10,000,000 shares authorized; no
shares issued or outstanding
Additional paid-in capital
Accumulated deficit during - -
development stage
634,558 -
(468,326) -
-----------------------------------------------
Total Stockholders' Equity 167,276 200
-----------------------------------------------
Total Liabilities and Stockholders' $343,056 $200
Equity
===============================================
F-4
WORLD WIDE VIDEO, INC.
(A Colorado corporation)
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1998 AND
FROM JULY 16, 1997, INCEPTION, THROUGH
SEPTEMBER 30, 1998 AND 1997
July 16, 1997, July 16, 1997,
Year Ended Inception to Inception, to
September September 30, September 30,
30,
1997 1998
1998
Sales $- $- $-
-----------------------------------------------------------------------------------
Product Development Costs
Subcontractors 196,867 - 196,867
Other development costs 177,061 - 177,061
-----------------------------------------------------------------------------------
Total Product Development Costs 373,928 - 373,928
-----------------------------------------------------------------------------------
General and Administrative Expenses
Marketing and sales 54,615 - 54,615
Office 12,388 - 12,388
Depreciation and amortization 8,614 - 8,614
Printing 4,366 - 4,366
Occupancy 5,903 - 5,903
Utilities and telephone 2,991 - 2,991
Other 8,271 - 8,271
-----------------------------------------------------------------------------------
Total General & Administrative
Expenses
97,148 - 97,148
-----------------------------------------------------------------------------------
Total Costs and Expenses (471,076) - (471,076)
Other Income 2,750 - 2,750
-----------------------------------------------------------------------------------
Loss before Income Taxes (468,326)
Income Taxes -
-----------------------------------------------------------------------------------
Net Loss ($468,326) $- ($468,326)
===================================================================================
Net Loss Per Share ($0.06) $- ($0.06)
===================================================================================
Average Common and Common Equivalent
Shares Outstanding
7,556,726 - 7,556,726
===================================================================================
The Notes to Financial Statements are an Integral Part of This Statement.
F-5
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1998 AND
FROM JULY 16, 1997, INCEPTION, THROUGH
SEPTEMBER 30, 1998 AND 1997
July 16, 1997, July 16, 1997,
Year Ended Inception, to Inception, to
September 30, September 30, September 30,
1997 1997
1998
---------------------------------------------------------------------------------------
Sales $- $- $-
---------------------------------------------------------------------------------------
Product Development Costs
Subcontractors 196,867 - 196,867
Other development costs 177,061 - 177,061
---------------------------------------------------------------------------------------
Total Product Devel. Costs 373,928 - 373,928
---------------------------------------------------------------------------------------
General & Admin. Expenses
Marketing & sales 54,615 - 54,615
Office 12,388 - 12,388
Depreciation & amortization 8,614 - 8,614
Printing 4,366 - 4,366
Ocupancy 5,903 - 5,903
Utilitites & telephone 2,991 - 2,991
Other 8,271 - 8,271
---------------------------------------------------------------------------------------
Total General & Admin. Expenses 97,148 - 97,148
---------------------------------------------------------------------------------------
Total Costs & Expenses (471,076) - (471,076)
Other Income 2,750 - 2,750
---------------------------------------------------------------------------------------
Loss before Income Taxes (468,326) - (468,326)
Income Taxes - - -
---------------------------------------------------------------------------------------
Net Loss ($468,326) $- ($468,326)
=======================================================================================
Net Loss Per Share ($0.06) $- ($0.06)
=======================================================================================
Average Common & Common Equivalent
Shares Outstanding
7,556,726 - 7,556,726
=======================================================================================
The Notes to Financial Statements are an integral part of this statement.
F-6
WORLD WIDE VIDEO, INC.
(A Colordo Corporation)
(A Development Stage Enterprise)
STATMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1998 AND
FROM JULY 16, 1997, INCEPTION, THROUGH
SEPTEMBER 30, 1998 AND 1997
July 16, 1997, July 16, 1997,
Year Ended Inception, to Inception, to
September 30, September 30, September 30,
1998 1997 1998
---------------------------------------------------------------------------
Cash Flows from Operating
Activities
Net loss ($468,326) $- ($468,326)
Noncash items included in
net loss
Depreciation 2,364 - 2,364
Amortization 6,250 - 6,250
Changes in assets &
liabilities
(Increase) in
Inventory (107,134) - (122,448)
Prepaid expenses (122,448) - (107,134)
Increase in
Accounts payable 75,780 - 75,780
Deferred revenue 50,000 - 50,000
---------------------------------------------------------------------------
Net Cash Used During
Development Stage
(563,514) - (563,514)
---------------------------------------------------------------------------
Cash Flows from Investing
Activities
Purchase of equipment &
software
(21,414) - (21,414)
Purchase of technology
license
(50,000) - (50,000)
F-7
WORLD WIDE VIDEO, INC.
(A Colordo Corporation)
(A Development Stage Enterprise)
STATMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1998 AND
FROM JULY 16, 1997, INCEPTION, THROUGH
SEPTEMBER 30, 1998 AND 1997
Continued
Purchase of other assets (22,350) - (22,350)
---------------------------------------------------------------------------
Net Cash Used by Investing
Activities
(93,764) - (93,764)
---------------------------------------------------------------------------
Cash Flows from Financing
Activities
Proceeds from Common Stock 635,402 200 635,602
Convertible Loan 50,000 - 50,000
---------------------------------------------------------------------------
Net Cash Provided by
Financing Activities
685,402 200 685,602
---------------------------------------------------------------------------
Net Increase in Cash & Cash
Equivalents
28,124 200 28,324
Cash & Cash Equivalents,
beginning of period
200 -
---------------------------------------------------------------------------
Cash & Cash Equivalents, end
of period
$28,324 $200 $28,324
===========================================================================
The Notes to Financial Statements are an Integral Part of these Statements.
F-8
WORLD WIDE VIDEO, INC.
(A Colordo Corporation)
(A Development Stage Enterprise)
STATMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1998 AND
FROM JULY 16, 1997, INCEPTION, THROUGH
SEPTEMBER 30, 1998 AND 1997
Accumulated
Deficit During
Development
Stage
Additional Paid
in Capital
Shares Common Stock Totals
--------------------------------------------------------------------------------------------
Issuance of share capital to
Founders, July 16, 1997
200 $- $200 $- $200
Net loss, period ended September
30, 1997
- - - - -
--------------------------------------------------------------------------------------------
Balance Sheet September 30, 1997 200 - 200 - 200
Exchange of shares, issuance of
new hsares, May 12, 1998
9,999,800 1,000 (200) - 800
Sale of common Stock, April 3
through September 8, 1998
443,737 44 634,558 - 634,602
Net loss, year ended September 30,
1998
- - - (468,326) (468,326)
--------------------------------------------------------------------------------------------
Balance, September 30, 1998 10,443,737 $1,044 $634,558 ($468,326) $167,276
============================================================================================
The Notes to Financial Statements are an integral part of these statements.
F-9
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Company and Purpose
World Wide Video, Inc. was organized under the laws of the Commonwealth of
Virginia on July 16, 1997. World Wide Video, Inc. was organized under the laws
of the State of Colorado on April 9, 1998. On May 12, 1998, the Companies
adopted a plan of reorganization in which the Virginia corporation was merged
into the Colorado corporation. The surviving Company, World Wide Video, Inc. (a
Colorado Corporation), intends to design and manufacture technology and products
for the video telephony market. The principal activities of the Company since
inception have been raising capital, conducting research and product
development. The Company conducts its operations from offices in Culpeper,
Virginia.
The accounting and reporting policies of World Wide Video, Inc. (the Company)
conform with generally accepted accounting principles and reflect practices
appropriate to a development stage enterprise. These policies are summarized
below.
Development Stage Enterprise
Substantially all of the Company's operations have been in connection with the
establishment of a new business. The Company has elected early adoption of
Statement of Position 98-5 which permits expensing of costs of start-up
activities, including organization costs, as incurred.
Method of Accounting
The financial statements are presented on the accrual basis of accounting.
Financial Statement Estimates
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 disclosures of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenue and expenses during the reporting period. Due to
their prospective nature, actual results could differ from those estimates.
Cash and Cash Equivalents
The statements of cash flows classify changes in cash or cash equivalents
(short-term, highly liquid investments readily convertible into cash with a
maturity of three months or less) according to operating, investing or financing
activities.
There were no income taxes or interest paid during the period ended September
30, 1998.
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Inventory
Inventory, which consists primarily of raw materials, is stated at the lower of
cost or market, with cost being determined on a first-in, first-out basis.
Property and Equipment
Property and equipment are recorded at cost and depreciated over their estimated
useful lives.
Leases which meet certain specified criteria are accounted for as capital assets
and liabilities, and those not meeting the criteria are accounted for as
operating leases.
Expenditures for maintenance, repairs, and improvements which do not materially
extend the useful lives of property and equipment are charged to earnings. When
property or equipment is sold or otherwise disposed of, the cost and related
accumulated depreciation or amortization is removed from the accounts, and the
resulting gain or loss is reflected in earnings.
Depreciation expense for the period ended September 30, 1998 was $2,364.
Technology Licenses
The Company capitalizes technology licenses. Technology licenses are carried at
cost less accumulated amortization. Amortization is taken on the straight line
basis over five years.
Amortization expense for the period ended September 30, 1998 was $6,250.
Deferred Offering Costs
Deferred offering costs represent costs incurred in connection with raising
capital. Upon completion of an offering, the amount of the proceeds credited to
additional paid in capital is reduced by the deferred offering costs. Should an
offering be unsuccessful, these costs are charged to expense.
Deferred Revenue
The Company has deferred recognition of revenue from licenses sold until
marketable products are available for sale.
Income Taxes
The Corporation utilizes the liability method for accounting for income taxes.
The liability method accounts for deferred income taxes by applying enacted
statutory rates in effect at the balance sheet date to differences between
financial statement amounts and tax bases of assets and liabilities. The
resulting deferred income tax liabilities are adjusted to reflect changes in tax
laws and rates.
Temporary differences consist of the difference in financial statement and
income tax bases for accounting for start up and organizational costs. Deferred
income taxes related to an asset or liability are classified as current or
noncurrent based on the classification of the related asset or liability.
Prior to April 1, 1998, the Corporation, with the consent of its stockholders,
had elected S corporation status under Section 1372 of the Internal Revenue Code
and similar sections of the state income tax laws. On April 1, 1998, the Company
terminated its S election and is now subject to corporate income tax rates.
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997
2. NEED FOR ADDITIONAL CAPITAL
The Company's continued existence is dependent upon its ability to raise
additional funds to complete products in development. The Company is concluding
a private securities offering in which it has raised $635,602, net of offerings
costs of $78,624 to date. Additional funds will be raised through similar
private offerings, which in Management's opinion, will provide sufficient
capital resources to complete current product development and initial product
marketing.
3. PREPAID ASSETS AND FEES
Included in Prepaid Expenses is $50,000, which is on deposit with Analog
Devices, Inc., the Company's principal supplier of raw materials, for custom
engineering support in connection with product development. The Company also has
$15,000 on deposit with the same vendor for raw materials to be delivered in the
next year. Prepaid product marketing costs of $16,000 are expected to be
expensed in the next year. The Company also has $8,900 in deposits on equipment
and inventory and $7,800 in prepaid rent.
4. INVENTORY
Inventory consists principally of raw materials, chipsets, which are purchased
from Analog Devices, Inc.
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997
5. OTHER ASSETS
The Company has acquired a technology license at a cost of $50,000, from Analog
Devices, Inc., that is being amortized over a period of five years. The license
agreement permits the Company to use certain proprietary reference designs and
software in the development of video telephony products. The net carrying value
of the license at September 30, 1998 was $43,750.
In connection with a private securities offering, the Company has deferred costs
of $15,850 associated with certain filing requirements that are expected to be
completed in the near future. These charges will be netted against proceeds of
the offering when filings are completed.
6. CONTRIBUTED CAPITAL
In connection with the reorganization of the Company, the original stockholders
received 10,000,000 shares of common stock in exchange for their shares of a
predecessor corporation. After the reorganization, the Company sold 200,000
shares of common stock at $0.50 per share, 75,000 shares at $2.00 per share, and
168,737 shares at $2.75 per share, in a private offering of securities. After
deducting costs of $78,624, the Company has realized proceeds of $635,602.
Additional costs of $15,850 have been deferred until completion of certain
filings.
7. CONVERTIBLE DEBT
A Canadian company has advanced the Company $50,000 (non interest bearing) under
an agreement to develop products. The agreement granted the Canadian corporation
an exclusive option to market these products for a specified term. In addition,
the debt is convertible to 250,000 shares of common stock upon achievement of
certain milestones. At that time, the Company would contribute 250,000 shares of
its stock and the Canadian Corporation would forgive the debt.
8. OPERATING LEASE
The Company leases office space in Culpeper, Virginia, under a two-year lease
agreement commencing July 7, 1998 and expiring July 6, 2000. Monthly rent is
$650. The rent for the leased premises is $15,600 for the term of the lease,
which the Company prepaid. The Company has made a security deposit of $650.
Rent expense was $1,950, for the period ended September 30, 1998.
9. RELATED PARTIES
A Director of the Company has been engaged to assist in the raising of capital.
He is compensated on the basis of a percentage (from 2 to 5 per cent) of the
completed transaction. During the period ended September 30, 1998, he was paid
$23, 435 under this contract. In addition, the same Director has been prepaid $
16,000 under a product marketing agreement. The two majority stockholders have
agreements to provide services. During the period ended September 30, 1998, they
earned $180,000 under these agreements, of which $65,000 remains unpaid at
September 30, 1998.
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
10. COMMITMENTS AND CONTINGENCIES
The Company has entered into several agreements and contracts in connection with
the raising of capital and product development.
Raising Capital
The Company has engaged several consultants to assist in the effort to raise
additional capital. Certain of these contracts require payment of fees
calculated as a percentage of completed transactions (see Notes 6 and 9). Other
contracts require compensation in the form of stock. No stock compensation has
been earned as of September 30, 1998.
Product Development
Under an agreement to develop certain products, the Company has deferred revenue
of $50,000 pending achievement of contract milestones. Successful completion of
contract milestones will result in additional payments of up to $50,000.
Several other product development arrangements are in negotiation.
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
Interim Financial Statements
for Period Ended
March 31, 1999
(Unaudited)
WORLD WIDE VIDEO, INC.
Balance Sheet (unaudited)
For Quarter Ended March 31, 1999
ASSETS March 31, September 30,
1999 1998
CURRENT ASSETS
Cash $ 4,039 -
Inventory 131,570 28,324
Accounts Receivable 37,323 122,448
Prepaid 86,900 107,134
-------------------------- -------------------------
Total Current Assets $259,832 257,906
PROPERTY AND EQUIPMENT
Computer Software $ 13,668 7,746
Computer and Equipment 7,746 13,668
Less Accumulated Depreciation (2,364) (2,364)
-------------------------- -------------------------
NET PROPERTY & EQUIPMENT 19,049 19,050
OTHER ASSETS
Technology Licenses $ 43,750 43,750
Deferred Charges 5,000 15,850
Deposits 650 650
Prepaid Rent-Non-Current 5,850 5,850
TOTAL OTHER ASSETS $ 55,250 66,100
-------------------------- -------------------------
TOTAL ASSETS $ 334,131 $ 343,056
====================== =========================
LIABILITIES
Accounts Payable $ 99,882 $ 75,780
Deferred Revenue 77,000 50,000
Salary Payable 60,000 50,000
-------------------------- -------------------------
TOTAL LIABILITIES $236,882 175,780
WORLD WIDE VIDEO, INC.
Balance Sheet (unaudited)
For Quarter Ended March 31, 1999
Continued
Stockholders Equity
Common stock, par value
$0.0001; 100,000,000
shares authorized;
10,443,737 issued or
outstanding @ Sept.
30, 1998 1,044
and 10,911,365 issued and
outstanding @ March 31,
1999 authorized;
Preferred stock, par value 1,091
$0.01; 10,000,000 shares; no
shares issued or outstanding
Additional Paid-In Capital $ 777,325 634,558
Accumulated deficit during
developement stage
(676,145) (468,326)
-------------------------- -------------------------
Total Stockholders' Equity
$97,271 $167,276
-------------------------- -------------------------
Total Liabilities & Shareholders' $ 334,131 $ 343,056
========================== =========================
Equity
World Wide Video, Inc.
(A Development Stage Company)
Statement of Operations (unaudited)
Quarter Ended 03-31-99
Three Months Three Months
Ended Ending
March 31, March 31,
1999 1998
----------------------------------------------------------
SALES
Income $ 2,189 0
Sales 876 4,500
Cost of Goods Sold (750) 3,931
-------------------------- -------------------------
TOTAL SALES 2,315 569
COSTS
PRODUCT DEVELOPMENT COSTS
Subcontractors 686 20,00
Contract Expense 8,400 -
TOTAL PRODUCT DEVELOPMENT COSTS 9,086 20,000
GENERAL & ADMIN. EXPENSES
Slaries 60,000 -
Marketing 9,156 -
Office 40,700 20
TOTAL GENERAL & ADMIN. EXPENSES 91,344 23
TOTAL COSTS & EXPENSES 100,830 20,023
NET INCOME (98,515) (19,454)
Net income (lossI) (.01) .00
Per share
Weighted Average Shares
Outstanding 10,443,737 7,392,000
The accompanying notes are an integral part of the financial statements.
World Wide Video, Inc.
(A Development Stage Company)
Statement of Operations (unaudited)
Quarter Ended 03-31-99
Six Months Six Months
Ended March Ended March 31,
31, 1999 1998
REVENUE
Income $2,189 $0
Sales 8,373 4,500
Costs of Goods Sold (1,750) (3,931)
------------------------------------------------------------------
NET SALES 8,812 569
Product Development Costs
Subcontractors 61,286 20,000
Contract Expense 16,675 0
------------------------------------------------------------------
TOTAL PRODUCT DEVELOPMENT COSTS 77,961 20,000
GENERAL & ADMIN EXPENSES
Salaries 60,000 0
Trade Show 0 0
Marketing Sales 6,989 0
Office 71,682 23
------------------------------------------------------------------
TOTAL GENERAL & ADMIN EXPENSES 138,671 23
TOTAL COSTS & EXPENSES 216,632 20,023
------------------------------------------------------------------
NET INCOME ($207,820) ($19,454)
Net income (loss) per share (.02) .00
Weighted average number of common shares 10,668,737 7,556,726
The accompanying notes are an integral part of the financial statements.
World Wide Video, Inc.
(A Development Stage Company)
Statement of Cash Flows
(unaudited)
Six Months Ending Six Months Ending
Mar. 31, 1999 Mar. 31, 1998
----------------------------------------------------------------------------
Cash flows from operating activities:
Net (loss) ($207,820) ($19,454)
Noncash items included in
net loss
0 0
Depreciation
0 0
Amortization
Changes in assets and
liabilities
(Increase) Decrease in 0 0
Inventory
(103,246) 0
Accounts receivable
85,125 0
Prepaid expenses
Increase (Decrease) in
Accounts payable 31,086 (46,800)
Net cash used during 61,102 41,995
----------------------------------- -----------------------------------
development stage
(133,758) (4,802)
Cash Flows from Financing
Activites
0 0
Proceeds from Sales of
Common Stock
137,792 2
Loan 0 0
Net Cash Provided by
Financing Activities
137,792 2
Net Decrease in Cash & 4,039 (24,254)
Cash Equivalents
Cash at Beginning of 0 0
Period
============================================================================
Cash at End of Period 4,039 (24,254)
============================================================================
The Notes to Financial Statements are an Integral part of this Statement.
World Wide Video, Inc.
(A Development Stage Company)
Statement of Cash Flows
(unaudited)
Three Months Ending Three Months Ending
Mar. 31, 1999 Mar. 31, 1998
----------------------------------------------------------------
Cash flows from operating activities:
Net (loss) ($98,515) ($19,454)
Noncash items included in net loss 0 0
Depreciation 0 0
Amortization 0 0
Changes in assets and liabilities 0 0
(Increase) Decrease in Inventory 7,582 0
Inventory 0 0
Accounts receivable (29,492) 0
Prepaid expenses and other assets 1,950 (46,800)
Increase (Decrease) in Accounts Payable 38,453 41,998
----------------------------------------------------------------
Net cash used during development stage (78,021) (4,802)
Cash flows from Financing Activities 0 0
Proceeds from sales of Common Stock 75,298 2
Loan 0 0
----------------------------------------------------------------
Net Cash provided by financing activities 75,298 2
Net Decrease in Cash & Cash Equivalents (2,723) (24,254)
Cash at Beginning of Period 6,782 0
================================================================
Cash at End of Period 4,039 (24,254)
================================================================
The Notes to Financial Statements are an Integral part of this Statement.
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Company and Purpose
World Wide Video, Inc. was organized under the laws of the Commonwealth of
Virginia on July 16, 1997. World Wide Video, Inc. was organized under the laws
of the State of Colorado on April 9, 1998. On May 12, 1998, the Companies
adopted a plan of reorganization in which the Virginia corporation was merged
into the Colorado corporation. The surviving Company, World Wide Video, Inc. (a
Colorado Corporation), intends to design and manufacture technology and products
for the video telephony market. The principal activities of the Company since
inception have been raising capital, conducting research and product
development. The Company conducts its operations from offices in Culpeper,
Virginia.
The accounting and reporting policies of World Wide Video, Inc. (the Company)
conform with generally accepted accounting principles and reflect practices
appropriate to a development stage enterprise. These policies are summarized
below.
Development Stage Enterprise
Substantially all of the Company's operations have been in connection with the
establishment of a new business. The Company has elected early adoption of
Statement of Position 98-5 which permits expensing of costs of start-up
activities, including organization costs, as incurred.
Method of Accounting
The financial statements are presented on the accrual basis of accounting.
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Financial Statement Estimates
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 disclosures of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenue and expenses during the reporting period. Due to
their prospective nature, actual results could differ from those estimates.
Cash and Cash Equivalents
The statements of cash flows classify changes in cash or cash equivalents
(short-term, highly liquid investments readily convertible into cash with a
maturity of three months or less) according to operating, investing or financing
activities.
There were no income taxes or interest paid during the period ended March 31,
1999.
Inventory
Inventory, which consists primarily of raw materials, is stated at the lower of
cost or market, with cost being determined on a first-in, first-out basis.
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Property and Equipment
Property and equipment are recorded at cost and depreciated over their estimated
useful lives.
Leases which meet certain specified criteria are accounted for as capital assets
and liabilities, and those not meeting the criteria are accounted for as
operating leases.
Expenditures for maintenance, repairs, and improvements which do not materially
extend the useful lives of property and equipment are charged to earnings. When
property or equipment is sold or otherwise disposed of, the cost and related
accumulated depreciation or amortization is removed from the accounts, and the
resulting gain or loss is reflected in earnings.
Technology Licenses
The Company capitalizes technology licenses. Technology licenses are carried at
cost less accumulated amortization. Amortization is taken on the straight line
basis over five years.
Deferred Offering Costs
Deferred offering costs represent costs incurred in connection with raising
capital. Upon completion of an offering, the amount of the proceeds credited to
additional paid in capital is reduced by the deferred offering costs. Should an
offering be unsuccessful, these costs are charged to expense.
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Deferred Revenue
The Company has deferred recognition of revenue from licenses sold until
marketable products are available for sale.
Income Taxes
The Corporation utilizes the liability method for accounting for income taxes.
The liability method accounts for deferred income taxes by applying enacted
statutory rates in effect at the balance sheet date to differences between
financial statement amounts and tax bases of assets and liabilities. The
resulting deferred income tax liabilities are adjusted to reflect changes in tax
laws and rates.
Temporary differences consist of the difference in financial statement and
income tax bases for accounting for start up and organizational costs. Deferred
income taxes related to an asset or liability are classified as current or
noncurrent based on the classification of the related asset or liability.
Prior to April 1, 1998, the Corporation, with the consent of its stockholders,
had elected S corporation status under Section 1372 of the Internal Revenue Code
and similar sections of the state income tax laws. On April 1, 1998, the Company
terminated its S election and is now subject to corporate income tax rates.
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
2. NEED FOR ADDITIONAL CAPITAL
The Company's continued existence is dependent upon its ability to raise
additional funds to complete products in development. The Company is concluding
a private securities offering in which it has raised $635,602, net of offerings
costs of $78,624 to date. Additional funds will be raised through similar
private offerings, which in Management's opinion, will provide sufficient
capital resources to complete current product development and initial product
marketing.
3. PREPAID ASSETS AND FEES
Included in Prepaid Expenses is $50,000, which is on deposit with Analog
Devices, Inc., the Company's principal supplier of raw materials, for custom
engineering support in connection with product development. The Company also has
$15,000 on deposit with the same vendor for raw materials to be delivered in the
next year. Prepaid product marketing costs of $16,000 are expected to be
expensed in the next year. The Company also has $8,900 in deposits on equipment
and inventory and $7,800 in prepaid rent.
4. INVENTORY
Inventory consists principally of raw materials, chipsets, which are purchased
from Analog Devices, Inc.
5. OTHER ASSETS
The Company has acquired a technology license at a cost of $50,000, from Analog
Devices, Inc., that is being amortized over a period of five years. The license
agreement permits the Company to use certain proprietary reference designs and
software in the development of video telephony products. The net carrying value
of the license at March 31, 1999 was $43,750.
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
5. OTHER ASSETS (cont'd)
In connection with a private securities offering, the Company has deferred costs
of $15,850 associated with certain filing requirements that are expected to be
completed in the near future. These charges will be netted against proceeds of
the offering when filings are completed.
6. CONTRIBUTED CAPITAL
In connection with the reorganization of the Company, the original stockholders
received 10,000,000 shares of common stock in exchange for their shares of a
predecessor corporation. After the reorganization, the Company sold 200,000
shares of common stock at $0.50 per share, 75,000 shares at $2.00 per share, and
168,737 shares at $2.75 per share, in a private offering of securities. After
deducting costs of $78,624, the Company has realized proceeds of $635,602.
Additional costs of $15,850 have been deferred until completion of certain
filings.
7. CONVERTIBLE DEBT
A Canadian company has advanced the Company $50,000 (non interest bearing) under
an agreement to develop products. The agreement granted the Canadian corporation
an exclusive option to market these products for a specified term. In addition,
the debt is convertible to 250,000 shares of common stock upon achievement of
certain milestones. At that time, the Company would contribute 250,000 shares of
its stock and the Canadian Corporation would forgive the debt.
8. OPERATING LEASE
The Company leases office space in Culpeper, Virginia, under a two-year lease
agreement commencing July 7, 1998 and expiring July 6, 2000. Monthly rent is
$650. The rent for the leased premises is $15,600 for the term of the lease,
WORLD WIDE VIDEO, INC.
(A Colorado Corporation)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
8. OPERATING LEASE (Cont'd)
which the Company prepaid. The Company has made a security deposit of $650. Rent
expense was $1,950, for the period ended March 31, 1999.
9. COMMITMENTS AND CONTINGENCIES
The Company has entered into several agreements and contracts in connection with
the raising of capital and product development.
Raising Capital
The Company has engaged several consultants to assist in the effort to raise
additional capital. Certain of these contracts require payment of fees
calculated as a percentage of completed transactions (see Notes 6 and 8). Other
contacts require compensation in the form of stock. No stock compensation has
been earned as of March 31, 1999.
Product Development
Under an agreement to develop certain products, the Company has deferred revenue
of $50,000 pending achievement of contract milestones. Successful completion of
contract milestones will result in additional payments of up to $50,000.
Several other product development arrangements are in negotiation.