UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OF 15(d)OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 2000
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 000-28335
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Web4Boats.com, Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 84-1080043
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
P.O. BOX 1028
LA JOLLA, CALIFORNIA 92038
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(Address of principal executive office)
(858) 459-2628
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(Issuer's telephone number)
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(Former name, former address, and former fiscal year, if changed since last
report)
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date:
Transitional Small Business Format (Check one): Yes [ ] No [x]
WEB4BOATS.COM, INC.
FORM 10-QSB
TABLE OF CONTENTS
Page
PART I--FINANCIAL INFORMATION---------------------------------------1
Item 1. Financial Statements---------------------------------------1
Independent Accountant's Review Report-------------------------1
Balance Sheets-------------------------------------------------2
Statements of Operations---------------------------------------4
Statements of Cash Flows---------------------------------------5
Notes to Financial Statements----------------------------------6
Item 2. Management's Discussion and Analysis or Plan of Operation-10
PART II--OTHER INFORMATION-----------------------------------------15
Item 1. Legal Proceedings-----------------------------------------15
Item 2. Changes in Securities-------------------------------------15
Item 3. Defaults Upon Senior Securities---------------------------16
Item 4. Submission of Matters to a Vote of Security Holders-------16
Item 5. Other Information-----------------------------------------16
Item 6. Exhibits and Reports on Form 8-K--------------------------16
10(1) Consulting Agreement between Hector Beltran----------17
and Web4Boats.com, Inc.
27 Financial Data Schedule--------------------------------
Signatures---------------------------------------------------------18
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements.
Independent Accountant's Review Report PRIVATE
August 4, 2000
To the Board of Directors and Shareholders
of Web4Boats.com, Inc.:
I have reviewed the accompanying balance sheets of Web4Boats.com, Inc. as of
June 30, 2000 and 1999, and the related statements of operations and cash
flows for each of the three months then ended, in accordance with Statements
on Standards for Accounting and Review Services issued by the American
Institute of Certified Public Accountants. All information included in these
financial statements is the representation of the management of
Web4Boats.com,
Inc.
A review consists principally of inquiries of Company personnel and
analytical
procedures applied to financial data. It is substantially less in scope than
an audit in accordance with generally accepted accounting standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
Web4Boats.com, Inc. will continue as a going concern. As discussed in Note 7
to the financial statements, the Company has suffered recurring losses from
operations and has a net capital deficiency that raise substantial doubt
about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
Carl S. Sanko
Chatsworth, California
Web4Boats.com, Inc.
Balance Sheets
June 30, 2000 and 1999
June 30, June 30,
2000 1999
Assets
Current assets
Cash $ 50,627 $ 4,046
Total current assets 50,627 4,046
Property and equipment
Equipment 2,444 0
2,444 0
Accumulated depreciation ( 366) ( 0)
Property and equipment, net 2,078 0
Other assets
Trademarks, net 9,110 10,000
Total other assets 9,110 10,000
Total assets $ 61,815 $ 14,046
See accompanying notes to financial statements
- Unaudited -
Web4Boats.com, Inc.
Balance Sheets
June 30, 2000 and 1999
June 30, June 30,
2000 1999
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 150,980 $ 37,050
Accrued expenses 4,171 1,669
Accrued litigation settlement 42,500 42,500
Short-term borrowings 139,000 5,000
Total current liabilities 336,651 86,219
Shareholders' equity (deficit)
Preferred stock, par value $.001,
20,000,000 shares authorized,
10,000 and 0 shares issued and
outstanding at June 30, 2000
and 1999, respectively 10 0
Common stock, par value $.001,
100,000,000 shares authorized,
6,253,460 and 4,683,460 issued
and outstanding at June 30, 2000
and 1999, respectively 6,253 4,683
Paid in capital 2,302,284 1,804,536
Accumulated deficit (2,583,383) (1,881,392)
Total shareholders' equity ( 274,836) ( 72,173)
Total liabilities and shareholders' equity $ 61,815 $ 14,046
See accompanying notes to financial statements
- Unaudited -
Web4Boats.com, Inc.
Statements of Operations
For the Three Months Ended June 30, 2000 and 1999
3 Months Ended 3 Months Ended
June 30, June 30,
2000 1999
Revenues $ 189 $ 0
Cost of sales 0 0
Gross profit 189 0
Operating expenses:
Salaries 15,625 15,625
General and administrative 222,394 39,630
Total operating expenses 238,019 55,255
Loss from operations (237,830) ( 55,255)
Other income:
Gain on disposed operations 0 72,551
Net income (loss) $ (237,830) $ 17,296
Basic and dilutive income (loss) per share $ (.04) $ .00
See accompanying notes to financial statements
- Unaudited -
Web4Boats.com, Inc.
Statements of Cash Flows
For the Three Months Ended June 30, 2000 and 1999
3 Months Ended 3 Months Ended
June 30, June 30,
2000 1999
Cash flows from operating activities
Net income (loss) $ (237,830) $ 17,296
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 667 0
Common stock issued for services 152,453 15,625
Gain on disposal of segment 0 (72,552)
Changes in operating assets and
liabilities
Accounts receivable 0 3,028
Inventory 0 5,340
Accounts payable (5,675) (28,020)
Accrued expenses 1,765 10,869
Short-term borrowings 92,000 (45,000)
Net cash provided by (used in) operating
Activities 3,380 (93,414)
Cash flows from investing activities
Sale of business operations 0 100,282
Sale of fixed assets 26,187 0
Purchases of trademarks 0 (10,000)
Deposits refunded 0 6,316
Net cash provided by (used in) investing
Activities 26,187 96,598
Cash flows from financing activities
Payment for redemption of common stock 0 (121)
Net cash provided by (used in) financing
Activities 0 (121)
Net increase (decrease) in cash 29,567 3,063
Cash, beginning of period 21,060 983
Cash, end of period $ 50,627 $ 4,046
See accompanying notes to financial statements
- Unaudited -
NOTES TO FINANCIAL STATEMENTS
NOTE 1 Summary of significant accounting policies
Organization and business
Web4boats.com, Inc. ("the Company"), a Delaware Corporation, was
incorporated on February 4, 1994 as New York Bagel Exchange, Inc. Commencing
September 26, 1995, the Company has operated in the business of wholesale and
retail sales of bagels, sandwiches, baked goods, specialty coffees and related
items. On August 22, 1997, the Company acquired the assets and liabilities of
Windom, Inc., a non-operating public shell, resulting in the retirement of all
the common and preferred shares of both companies, and the reissuance, by
the Company, of 2,594,560 shares of common stock. The merger was accounted
for,in substance, as an issuance of stock for the net monetary asets of
Windom,Inc. on August 22, 1997, and the financial statements presented are
those of New York Bagel Exchange, Inc. since the date of its formation.
Subsequent to the merger, the Company continued its wholesale and retail
operations. On January 26, 1999, New York Bagel Exchange, Inc. changed its
name to Webboat.com, Inc., on April 2, 1999, Webboat.com, Inc. changed its
name to Windom.com, Inc., and on April 20, 1999, Windom.com, Inc. changed
its name to Web4boats.com, Inc.
On March 22, 1999, the Board of Directors approved sale of the
Company's inventory and fixed assets for $120,000. The Company ceased its
business operations on March 25, 1999. The actual disposal date of assets
subject to the sale was on April 19, 1999. A gain of approximately $72,000
resulted upon the disposition. Per Accounting Principles Board opinion
No. 30,since the disposal date occurred subsequent to fiscal year 1999,
the gain is to be recognized when realized, which was in the quarter ended
June 30, 1999
During fiscal year 1998, the Company began making plans to develop a
commercial internet site in which boat builders, manufacturers, dealers,
marinas, individual buyers and sellers would come to advertise sales and
services related to the boating industry. In fiscal 1998, the Company
incurred $259,375 of expense for marketing, consulting and other services
related to development of the Company's new business operations. In April,
1999, the Company issued 1,010,000 shares of its common stock as full
payment for these services. Subsequently, for the year ended March 31,
2000 and through the three months ended June 30, 2000, the Company has
continued to invest substantially in website development and related costs.
The Company expects, as a going concern, to realize future benefits from
these costs. However, all such development costs are expensed as incurred.
The Company had no revenues from its internet site for the three months
ended June 30, 1999 and only minimal revenues for the three months ended June
30, 2000. The Company expects, as a going concern, to derive substantial
revenues from the sale of advertisements in the remaining quarters of fiscal
year 2000.
Property and equipment
Equipment is recorded at cost and depreciated over estimated useful
lives of five years using the straight-line method. Trademarks are recorded
at cost and amortized over estimated useful lives of five years using the
straight line method.
Sale of operating assets
In April, 2000, the Company paid $5,000 and returned $31,160 in
computer equipment it had purchased in July, 1999, from a vendor involved in
the development of the Company's e-commerce website in settlement of $15,500
in payables to the vendor, of which $11,750 was accrued as of March 31, 2000.
The sale resulted in a loss of $15,687 for the quarter ended June 30, 2000.
Income taxes
The Company has net operating loss carryforwards from fiscal years 2000
and earlier of approximately $2,237,000 and $2,002,000 for federal and
California state tax purposes, respectively. With additional loss for the
three months ended June 30, 2000, the Company has total net operating loss
carryforwards at June 30, 2000 of approximately $2,476,000 and $2,240,000
for federal and California state tax purposes, respectively. A deferred
asset for these amounts has not been accrued due to the uncertain nature of
its being realized. Net operating loss carryforwards begin to expire in
fiscal year 2011 and 2004 for federal and California state tax purposes,
respectively.
Earnings per share
The computation of loss per share of common stock is based on the
weighted average number of shares outstanding during each three month period
NOTE 2 Shareholders' equity
Compensatory stock issuance
During the three months ended June 30, 1999, the Company received
salary compensation and professional services valued at $16,625 in exchange
for common stock. During the three months ended June 30, 2000, the Company
received salary compensation of $27,625 in exchange for common stock.
Stock options
During fiscal year 1998, the Company recorded a charge to operations of
$687,500 for marketing and other services in exchange for issuance of stock
options. The value for such services was computed as the difference between
the quoted market price at the option's measurement date and the option price.
All options were exercisable at time of grant and no options have been
exercised as of June 30, 2000. The number of shares represented by stock
options outstanding at June 30, 2000 are 2,071,667 shares with an option
price of $.20 to $1.00 per share, and $1,267,083 in total, and with a market
price at date of grant of $.19 to $2.00 per share, and $1,798,450 in total.
Outstanding options expire on various dates from June 15, 2001 to March 10,
2003.
Stock redeemed and issued
In April, 1999, the Company contractually redeemed, at par value,
1,215,000 shares of common stock, representing all the outstanding stock held
by a former officer of the Company. The Company then issued 500,000 shares
of restricted common stock and stock options representing 500,000 shares of
common stock to a new officer as consideration for future services to be
rendered.
\ Issuance of preferred stock
In June, 1999, the Company authorized the issuance of 20,000,000 shares
of $.001 par value, preferred stock. In August, 1999, 10,000 shares of
preferred stock was designated as Series A preferred stock with conversion
rights of one share of Series A preferred to 100 shares of common stock.
Subsequently, the 10,000 shares of Series A preferred was sold for $100,000
to a related party. A beneficial conversion feature of $100,000 was present
in the transaction and is reflected in stockholders' equity at June 30,
2000.
NOTE 3 Related parties
Short term borrowings
At March 31, 1999, the Company had unsecured promissory notes,
inclusive of accrued interest, of $57,713, payable to two shareholders. The
notes bear annual interest at rates of 10% to prime plus two percent. The
notes were exchanged for 150,000 shares of stock in April, 1999. At June 30,
2000, the Company had unsecured promissory notes, inclusive of accrued
interest, of $141,571, payable to six shareholders, and that bear annual
interest at rates of 10% to 12%.
Stock options
Represented in outstanding stock options are 1,820,000 shares at June
30, 2000, to related parties.
NOTE 4 Statements of Cash Flows
Financial instruments
The Company considers all liquid interest-earning investments with a
maturity of three months or less at the date of purchase to be cash
equivalents.
Noncash transactions
During the three months ended June 30, 1999, the Company issued
1,010,000 shares of its common stock to third parties as compensation for
$259,375 in services accrued as of March 31, 1999, and 150,000 shares to
related parties in cancellation of $57,713 in short term borrowings and accrued
interest.
During the three months ended June 30, 2000, the Company issued
1,220,000 shares of its common stock, of which 1,115,000 shares was to a
related party. The shares were compensation in exchange for $136,828 in
services, of which $124,828 had been accrued at March 31, 2000.
Interest paid
During the three months ended June 30, 1999 and 2000, the Company
charged to operations interest expense of $69 and $709, respectively. No
interest was paid for either period.
NOTE 5 Commitments and Contingencies
Contract commitments
On April 15, 1999, the Company entered into a one year consulting
agreement, with a related party, under which the Company agreed to pay $10,000
per month, payable in cash or stock, for management and advisory services.
The contract was renewed through March 31, 2001 and $30,000 has been accrued
as current liabilities at June 30, 2000. In July, 2000, 333,333 shares of
common stock, valued at $50,000 was issued as payment of both the $30,000
liability and the value of services to be received per the contract for July
and August, 2000.
On April 10, 2000, the Company entered into a three month service
agreement, with a third party, under which the Company agreed to pay $6,000 per
month for website hosting services. The contract has automatic six month
renewal terms that can extend the contract through March, 2005. The Company's
contractual commitment at June 30, 2000 is $36,000.
Litigation
During fiscal 1999, a lawsuit was filed against the Company in which
the plaintiff, a former officer, claimed breach of employment contract related
to fiscal year 1998. In May, 1999, the dispute was settled for $42,500.
The unpaid settlement amount is accrued as of June 30, 2000 and 1999.
NOTE 6 Subsequent events
Contract commitments
On July 10, 2000, the Company entered into contract with a third party
ad agency, under which terms the Company will receive $3,000,000 in advertising
placed in various media in exchange for $150,000 in cash and $2,850,000 in
Company stock. The Company estimates that costs under the contract will be
incurred in increments of $250,000 every six months with a contract completion
date of June, 2006.
Short term borrowings
On June 30, 2000, the Company received $25,000 each from two related
parties. On July 1, 2000, a 60-day promissory note was issued to each of these
lenders promising interest at 12% per year. During July, 2000, the Company
received an additional $25,000 each from two other related parties and issued
similar 60-day promissory notes at 12% annual interest. As inducement to
obtain the unsecured loans, the Company issued a total of 400,000 shares of
common stock, valued at $71,000, to these lenders in July, 2000.
Stock issued
In July, 2000, the Company issued 525,000 shares of common stock to two
related parties in payment of $78,750 in management services accrued at June
30,2000.
NOTE 7 Going concern
The Company has suffered recurring losses from operations and has a net
capital deficiency that raise substantial doubt about its ability to continue
as a going concern. During fiscal year ended March 31, 1999, as a result of
not
being able to meet its obligations as they became due, the Company saw no
alternative but to sell its operating assets, as described in Note 1 above.
Note 1 also describes management's plans in regard to perpetuating its
existence through new operations related to internet marketing and the
boating industry. The Company has the ability to raise funds through the
public equity market and, as stated in Notes 2, 3 and 4, has paid
significant liabilities to related and other parties with common stock and
raised substantial funds from a related party in the private sector as well.
While such plans and fundraising ability seem to mitigate the effect of
prior years' losses and deficits, the Company is essentially only beginning
to market in a new industry. The inability to assess the likelihood of the
effective implementation of management's plans in this new environment also
raises substantial doubt about its ability to continue as a going concern.
Item 2. Management's Discussion and Analysis or Plan of Operation.
You should read the following discussion of our results of operations
and financial condition in conjunction with our consolidated financial
statements and related notes included elsewhere in this Form 10-QSB. Unless
specified otherwise as used herein, the terms "we," "us" or "our" refers to
Web4Boats.com, Inc.
The following Management's Discussion and Analysis or Plan of Operation
contains certain forward-looking statements regarding future financial
condition and results of operations and the company's business operations.
We have based these statements on our expectations about future events. The
words "may," "intend," "will," "expect," "anticipate," "objective,"
"projection," "forecast," "position" or negatives of those terms or other
variations of them or comparable terminology are intended to identify
forward-looking statements. We have based these statements on our current
expectations about future events. Although we believe that our expectations
reflected in or suggested by our forward-looking statements are reasonable,
we cannot assure you that these expectations will be achieved. Our actual
results may differ materially from what we currently expect. Important
factors which could cause our actual results to differ materially from the
forward-looking statements include, without limitation: (1) general economic
and business conditions, (2) effect of future competition, and (3) failure to
raise needed capital.
OVERVIEW
Prior to entering into the Internet market and boating industry, the
Company, as a non-operating entity, merged with a business known as New York
Bagel Exchange, Inc. in September 1997. (For accounting purposes, the merger
resulted in a continuation of the bagel company's operations.) The Company
engaged in the business of wholesale and retail sales of bagels, sandwiches,
baked goods, specialty coffee and related items at a single store. The
Company's Board of Directors approved the sale of the Company's inventory and
fixed assets and ceased the bagel related operations on March 25, 1999. The
actual sale of assets was on April 19, 1999. All management of New York
Bagel Exchange, Inc. resigned and new management was subsequently appointed.
On April 20, 1999, the Company changed its name (and direction of its
business) to Web4Boats.com, Inc. and commenced developing a commercial
Internet site in which boat dealers, marinas, individual buyers and sellers
would come to advertise sales and services related to the professional and
recreational boating industry.
To date, the Company has had almost no revenue from any of its website
or related operations. The Company's two revenue streams are: (1) affiliate
programs and (2) advertising, particularly classified advertising of boats
for sale.
We are currently set up to derive revenue from fees and commissions from
affiliate programs, such as Amazon.com, iiCaptain.com, iGoFish.com, and
Marine Express. We expect to add to these revenue generating opportunities
with future revenues from fees paid by banner advertisement placements and
links to other websites. It is anticipated that the enhancement of the
website would include Boat Dealers/Brokers, Boat Builders/Manufacturers,
Marinas, and other recreational suppliers having access to our program and
services by paying initial placement fees, as well as ongoing monthly fees
based upon, among other things, the size of territory, demographics and the
transmittal of purchase requests to them.
We anticipate that we will derive direct revenue from the volume of
purchases made as a result of visiting our website. We also believe our
ability to attract subscribing dealers/brokers and other affiliates for our
website, is directly related to the volume of visits and subsequent purchases
we expect to occur as a result of a visit to our website. For the seven days
ended August 5, 2000, we have had an average of 7,500 impressions per day
with an average of 416 user sessions per day.
It is anticipated that sales and marketing costs will consist primarily
of promotion and advertising to build brand awareness and encourage potential
customers to visit our website. We will use Internet advertising, as well as
traditional media, such as television, radio and print. The majority of our
Internet advertising expense is expected to be comprised of sponsorship and
banner advertising agreements with Internet portals such as Alta Vista,
Excite, and Lycos as well as advertising and marketing affiliations with
online boating and recreational information providers. The Internet portals
and online boating and recreational information providers charge a
combination of set-up, initial, annual, monthly and variable fees. Set-up
fees are incurred for the development of the link between our website and
their website. No such banner advertising is currently in place.
The Company began accruing commissions from products being purchased by
Web4Boats.com viewers being linked to the company's affiliation program in
September, 1999. Revenues from that buying through June 30, 2000, however,
are less than $100.
The Company expects to derive substantially all of its revenues from the
sale of advertisements, particularly classified advertisements of boats for
sale. The Company's revenues are derived principally from the sale of
advertisements on short-term contracts. The Company's standard rates for
advertising currently range from $25-100 per 1,000 impressions. The Company
currently has no banner advertisers and its impressions are currently running
about 7,500 per day.
The Company has an extremely limited operating history as an Internet
company, and its prospects are subject to the risks, expenses and
difficulties frequently encountered by companies in the new and rapidly
evolving markets for Internet products and services. The Company's operating
results may fluctuate significantly in the future as a result of a variety of
factors, many of which are outside the Company's control. These factors
include the level of usage of the Internet, demand for Internet advertising,
seasonal trends in both Internet usage and boat advertising placements, the
advertising budgeting cycles of individual advertisers, the amount and timing
of capital expenditures and other costs relating to the expansion of the
Company's operations, the introduction of new products or services by the
Company or its competitors, pricing changes in the industry, technical
difficulties with respect to the use of Web4Boats.com, general economic
conditions and economic conditions specific to the Internet and online media.
As a strategic response to changes in the competitive environment, the
Company may from time to time make material pricing, service or marketing
decisions that effect the Company's business. Due to all of the foregoing
factors, in some future quarter the Company's operating results may fall
below the expectations.
RESULTS OF OPERATIONS
Revenues for the three months ended June 30, 1999 were $189. The
$50,627 of cash at the period end is loan proceeds and is the balance
remaining from the $139,000 of short term borrowings outstanding at the end
of the three month period from six shareholders.
Operating expenses consisted of salaries and general and administrative
expenses. General and administrative expense primarily consists of
executive, consulting, financial and legal expenses and related costs.
General and administrative expense was $222,394 and $39,630 for the three
months ended June 30, 2000, and 1999 respectively. Virtually all of these
amounts are related to development of the website business and includes
amounts owed to Internet Advisors Group, Inc. for day-to-day management
services which has generally been met with the issuance of shares of Common
Stock. The resulting net loss for the three months ended June 30, 200, was
$237,830 or $(0.04) per share. In April, 2000, all rights and obligations of
Internet Advisors Group, Inc. under the agreement were assigned to Blair
Merriam, its sole shareholder and employee. In addition, the agreement was
renewed for a period to expire March 31, 2001.
The Company does not have any non-officer employees, and no cash
salaries or wages are currently being paid. Depending on the success of the
operation and the availability of funds the Company hopes to begin to
establish an internal management team and staff. Poor business results could
delay this plan indefinitely. Under the terms of the agreement with Internet
Advisors Group, Inc. the Company is obligated to pay ten thousand dollars
($10,000) per month that "may be made in either cash, stock, or any
combination thereof." Because the fees may be paid in stock, the Company
does not believe it will have any problems meeting its payment obligations
under this agreement over the next twelve months. In April, 2000, the
Company satisfied its March 31, 2000, $115,000 obligation to Internet
Advisors Group, Inc. through the issuance of 1,150,000 shares of Common
Stock. In July, 2000, the Company issued 333,333 shares of Common Stock to
satisfy $50,000 of its obligation to Mr. Merriam.
LIQUIDITY AND CAPITAL RESOURCES
Although the Company's auditor has issued an opinion questioning the
Company's ability to continue as a going concern, we believe our current cash
and cash equivalents are sufficient to meet our anticipated cash needs for
working capital and capital expenditures for at least the next 12 months.
The Company anticipates that capital expenditures in the fiscal year
ending March 31, 2001 will be approximately $250,000, primarily for additions
to the Company's website design and service. The Company has no current
plans on how to obtain funding for the expected expenditures and is
evaluating various alternatives. Inability to obtain funding will
substantially slow development of the Company's operations.
With respect to fiscal years beyond March 31, 2000, we may be required
to raise additional capital to meet our long term operating requirements. If
we are unable to obtain additional financing as needed, we may be required to
reduce the scope of our operations or our anticipated expansion, which could
have a material adverse effect on our business, results of operations and
financial condition. Although our revenues have decreased since
implementation of the Web4Boats.com business, our expenses have continued to,
and in the foreseeable future are expected to, exceed our revenues.
Accordingly, we do not expect to be able to fund our operations from
internally generated funds for the foreseeable future.
Our cash requirements depend on several factors, including:
(1) the level of expenditures on marketing and advertising
(2) the rate of market acceptance
(3) the ability to expand our customer base
(4) the ability to increase the volume of sales with our
affiliates
(5) the cost of contractual arrangements with online
information providers, search engines, and other referral
sources.
PLAN OF OPERATION
Over the next twelve months the Company plans to devote most of its
efforts and financial resources toward increasing awareness of its website
among the boating public and professionals. In July, 2000, the Company
engaged the services of Mr. Hector Beltran to develop awareness of the
Company's business in the coastal resort areas of Mexico. Mr. Beltran is to
be paid 1,000,000 shares of the Company's Common Stock. Initial focus,
however, must be on installation of the core features of the website.
The volume of classified advertisements has reached the point that
management believes it is sufficient, because of its size, to attract boat
buyers and others to the website. In addition, management also believes that
the website traffic will now justify fees for all new ads placed on the
website. Finally, with respect to the classified ads, in July the Company
commenced a telemarketing campaign with an independent telemarketing firm
(the firm has not yet been selected) to contact all current classified
advertisers collected by the Company and displayed on the website with the
proposal of a fee for continued display of the ad. In this way all non-
paying advertisers are expected to be dropped from the displayed data base
over the next 60 days.
Concurrent with the telemarketing campaign directed at classified
advertisers will be the initial concerted efforts at increasing awareness of
the website among the boating public and professionals. The Company plans to
initially arrange most of its links from other websites and magazines through
a barter arrangement under which the other website or magazine will receive a
reciprocal link to its website or services thereby reducing cash outlays.
The Company expects that its significant cash outlays over the next 90
days will be for completion of development of the core elements of its
website. This amount is expected to be $50,000 to $100,000. Sources of
theses funds have not been located as of the date hereof, but the Company is
pursuing leads for possible lenders and investors. There can be no assurance
at this time that these funds or any funds will be available to the Company
on terms that it can afford. Failure to acquire these funds at this point in
the Company's development would make it difficult for the Company to achieve
its business goals over the next six months. See Financial Statements.
Assuming that the Company acquires the $50,000 to $100,000 it is seeking
and completes development of the core elements of its website over the next
60 days, management believes that the Company should have begun to bring in
significant revenue from its monthly fees in its classified advertisement
sector. At this point the Company will begin to seek a significant infusion
of capital, $1 - 5 million, to increase awareness of the website among the
boating public and professionals and to continue development of the website.
There can be no assurance that such funding will be available to the Company.
In the event that such funding is not available to the Company, then
Web4Boats.com would be forced to use whatever cash is generated, mostly by
its classified advertisement sector, for enhancement of the website and its
promotion. Such a process of development would likely be much slower than
what could be achieved with the infusion of substantial new investments.
Management believes, however, that the Company's business is relatively
easily scalable. In other words, once the core elements of the website are
in place in the next 60 days, the website will be able to achieve its
purpose. Thereafter, additional funds are devoted mostly to promotion of the
website and enhancement of the core elements. The availability of funds
determines the speed with which promotion and enhancements are pursued.
Depending upon the ability of the Company to arrange additional
financing, the Company expects to add full time management and staff by the
end of 2000. Development of the Company's business could significantly alter
the timing of the need for staff and current plans are tentative. In
addition, competition for qualified internet technology and sales personnel
is intense, which is expected to make it difficult to add personnel on short
notice and at the optimal time for the Company.
KNOWN RISKS AND TRENDS
SEASONALITY
We expect our business to experience the seasonality of the boating and
warm weather recreational equipment industry as it matures.
LIABILITY FOR THE COMPANY'S SERVICES
Web4Boats.com hosts a wide variety of information, community,
communications and commerce services that enable individuals to exchange
information, generate content, conduct business and engage in various online
activities. The laws relating to the liability of providers of these online
services for activities of their users is currently unsettled. Claims could
be made against Web4Boats.com for defamation, negligence, copyright or
trademark infringement, personal injury or other theories based on the nature
and content of information that may be posted online by its users. Such
claims have been brought, and sometimes successfully pressed, against online
service providers in the past. In addition, Web4Boats.com could be exposed
to liability with respect to the selection of listings that may be accessible
through its Web4Boats.com-branded products and media properties, or through
content and materials that may be posted by users in classifieds, message
boards, clubs, chat rooms, or other interactive community-building services.
Any such finding of liability against Web4Boats.com could have a material
adverse effect on the Company's business.
RELIANCE ON ADVERTISING REVENUES AND UNCERTAIN ADOPTION OF THE
INTERNET AS AN ADVERTISING MEDIUM
Web4Boats.com expects to derive a majority of its revenues from the sale
of advertisements on its website pages under short-term contracts. Most of
its advertising customers have limited experience with the Internet as an
advertising medium. Web4Boats.com's continuing ability to generate
significant advertising revenues will depend upon, among other things:
advertisers' acceptance of the Internet as an effective and sustainable
advertising medium; the development of a large base of users of its services
possessing demographic characteristics attractive to advertisers; and its
ability to continue to develop and update effective advertising delivery and
measurement systems. No standards have yet been widely accepted for the
measurement of the effectiveness of Internet-based advertising. Web4Boats.com
cannot be certain that such standards will develop sufficiently to support
Internet-based advertising as a significant advertising medium. In addition,
adverse economic conditions can significantly impact advertisers ability and
willingness to spend additional amounts on advertising generally, and on
Internet-based advertising specifically.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
Recent Sales of Unregistered Securities
(1) On April 1, 2000, the company issued 10,000 shares of Common Stock to
Mr. Delgado under the terms of the agreement with Web-Light Design, the
Company's former website service company. These shares were valued at
$4,914.
(2) On April 1, 2000, the company issued 10,000 shares of Common Stock to
Mr. Sommer under the terms of the agreement with Web-Light Design, the
Company's former website service company. These shares were valued at
$4,914.
(3) On June 15, 2000, the Company issued options for 16,667 shares of Common
Stock to Everything Communicates as a pro rata share of the options to be
granted under the agreement with them at the time of cancellation of that
agreement. The options have an exercise price of $0.625 per share and expire
June 14, 2001. These options were valued at $0.00 because they were based on
the market price of the Company's Common Stock at the date of the agreement
to grant the options (April, 2000) which was substantially above the market
price on the date of grant.
(4) On June 15, 2000, the Company issued options for 10,000 shares of Common
Stock to Everything Communicates in consideration for cancellation of the
agreement with them. The options have an exercise price of $0.20 per share
and expire June 14, 2001. These options were valued at $0.00 because they
were based on the market price of the Company's Common Stock at the date of
grant.
(5) On June 15, 2000, the Company issued options for 45,000 shares of Common
Stock to 540 Degrees, Inc., d/b/a Gateway Art, for marketing, advertising and
communications services. The options have an exercise price of $0.25 per
share and expire June 14, 2001. These options were valued at $0.00 because
they were based on the market price of the Company's Common Stock at the date
of grant.
The Company believes transactions (1) through (3) were exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended, as privately negotiated, isolated, non-recurring transactions not
involving any public solicitation. The purchasers in each case represented
their intentions to acquire the securities for investment only and not with a
view to the distribution thereof. Appropriate restrictive legends are
affixed to the stock certificates issued in such transactions.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
Exhibits
10(1) Consulting Agreement between Hector Beltran
and Web4Boats.com, Inc.
27 Financial Data Schedule
Reports on Form 8-K
None
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed in its behalf by the undersigned, thereunto
duly authorized.
Web4Boats.com, Inc.
Date: August 11, 2000 /s/ Dennis Schlagel
-------------------- -----------------------
Dennis Schlagel, President
EXHIBITS
Exhibit 10(1)
CONSULTING AGREEMENT
This Agreement (the "Agreement") is made and entered into on July 17,
2000, by and between Web4Boats.com, Inc. ("the Corporation"), a Delaware
corporation, and Hector Beltran ("the Consultant")(herein collectively
referred to as "the Parties").
The Parties hereto agree to enter into this Agreement under the
following terms and conditions.
1) The Consultant shall render the following services to the
Corporation:
a) Sales and promotion of the Corporation and its services
throughout Mexico with special attention to Mexico's coastal resort areas;
b) Act as an advisor to the Corporation with respect to the
communications and information disseminated to the Mexican public;
c) Act as an advisor to the Corporation with respect to the
planning, designing, developing, organizing, and writing and distributing of
the materials and content required to develop and maintain the Corporation's
business in Mexico; and
d) Act as advisor to the Corporation with respect to hiring and
retaining outside consultants, outsource services, and any and all providers
necessary for the development and growth of the Corporation's business in
Mexico.
2) The Consultant shall not disclose to any third Party any
confidential non-public information furnished by the Corporation or otherwise
obtained by it with respect to the Corporation.
3) The Corporation shall use it's best efforts to promptly supply to
the Consultant full and complete copies of any and all documents and
information necessary for the Consultant to fulfill it's part of this
Agreement.
4) The Consultant shall be entitled to the following compensation for
services to be rendered:
a) 1,000,000 shares of the Corporation's Common Stock valued at
$0.15 per share (the closing bid price for the Corporation's Common Stock on
the effective date of this Agreement).
5) The term of this Agreement shall be one (1) year from the date set
forth above. The Parties shall have the option of renewing this Agreement
prior to the termination date set forth herein.
6) The Parties may not amend or modify this Agreement unless such
amendment or modification is in writing and signed by both Parties hereto.
7) This Agreement may be executed in any number of counterparts
delivered through facsimile transmission. All executed counterparts shall
constitute one Agreement notwithstanding that all signatories are not
signatories to the original or the same counterpart.
IN WITNESS WHEREOF, the Parties have executed this Agreement effect on
the date set forth above.
WEB4BOATS.COM HECTOR BELTRAN
P.O. Box 1028 Bahia Kino A.C.
La Jolla, CA 92038 Bahia Kino, Sonora
Mexico 83340
BY: /s/ Dennis Schlagel BY:/s/ Hector Beltran
Dennis Schlagel Hector Beltran
President