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 December 31, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to _________
Commission file number 000-28335
Web4Boats.com, Inc.
____________________________________________________________
(Exact name of small business issuer as specified in its charter)
Delaware
____________________________________________________________
(State or other jurisdiction of incorporation or organization)
84-1080043IRS
____________________________________________________________
(Employer Identification No.)
P.O. Box 1028
Cheyenne, Wyoming 92038
____________________________________________________________
(Address of principal executive offices)
(866) 932-2628
____________________________________________________________
(Issuer's telephone number)
____________________________________________________________
(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:
December 31, 2001, 27,082,089 shares.
Transitional Small Business Format (Check one): Yes [ ] No [x]
WEB4BOATS.COM, INC.
FORM 10-QSB
TABLE OF CONTENTS
Page PART I--FINANCIAL INFORMATION
Item 1. Financial Statements----------------------------------------- 3
Independent Accountant's Review Report-------------------------------- 3
Balance Sheets-------------------------------------------------------- 4
Statements of Operations---------------------------------------------- 6
Statements of Cash Flows---------------------------------------------- 8
Notes to Financial Statements----------------------------------------- 9
Item 2. Management's Discussion and Analysis or Plan of Operation---- 13
PART II OTHER INFORMATION-------------------------------------------- 17
Item 1. Legal Proceedings------------------------------------------- 17
Item 2. Changes in Securities--------------------------------------- 17
Item 3. Defaults Upon Senior Securities----------------------------- 17
Item 4. Submission of Matters to a Vote of Security Holders--------- 17
Item 5. Other Information------------------------------------------- 18
Item 6. Exhibits and Reports on Form 8-K---------------------------- 18
Signatures------------------------------------------------------------ 18
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements.
Independent Accountant's Review Report
January 25, 2002
To the Board of Directors and Shareholders
of Web4Boats.com, Inc.:
I have reviewed the accompanying balance sheets of Web4Boats.com, Inc. as of
December 31, 2000 and 2001, and the related statements of operations for each
of the three months and nine months then ended, and the related statements of
cash flows for each of the nine months then ended. These financial
statements are the responsibility of the Company's management.
I conducted my review in accordance standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing 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 6
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
Topanga, California
Web4Boats.com, Inc.
Balance Sheets
December 31, 2000 and 2001
December 31, December 31,
2000 2001
_____________________________________________________________________________
Assets
Current assets
Cash $ 23,612 $ 692
Loan to shareholder 0 1,000
Prepaid assets 258,694 27,500
Total current assets 282,306 29,192
Property and equipment
Equipment 2,444 2,444
Accumulated depreciation ( 610) ( 1,098)
Property and equipment, net 1,834 1,346
Other assets
Trademarks, net 8,020 5,837
Total other assets 8,020 5,837
Total assets $ 292,160 $ 36,375
See accompanying notes to financial statements
- - Unaudited -
Web4Boats.com, Inc.
Balance Sheets
December 31, 2000 and 2001
December 31, December 31,
2000 2001
_____________________________________________________________________________
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 311,941 $ 13,681
Accrued expenses 7,661 22,539
Accrued litigation settlement 42,500 42,500
Short-term borrowings 201,885 155,281
Total current liabilities 563,987 234,001
Shareholders' equity (deficit)
Preferred stock, par value $.001,
20,000,000 shares authorized,
0 and 70,000 issued and
outstanding at December 31, 2000
and 2001, respectively 0 70
Common stock, par value $.001,
100,000,000 shares authorized,
13,698,693 and 27,082,089 issued
and outstanding at December 31, 2000
and 2001, respectively 13,699 27,082
Paid in capital 3,359,858 4,216,381
Accumulated deficit (3,645,384) (4,441,159)
Total shareholders' equity (deficit) ( 271,827) ( 197,626)
Total liabilities and shareholders' equity $ 292,160 $ 36,375
See accompanying notes to financial statements
- - Unaudited -
Web4Boats.com, Inc.
Statements of Operations
For the Nine Months Ended December 31, 2000 and 2001
9 Months Ended 9 Months Ended
December 31, December 31,
2000 2001
_____________________________________________________________________________
Revenues $ 3,997 $ 638
Operating expenses:
Salaries 46,875 0
Marketing 285,381 38,500
General and administrative 971,571 220,532
Total operating expenses 1,303,827 259,032
Net loss (1,299,830) (258,394)
Basic and dilutive loss per share $ (.15) $ (.01)
See accompanying notes to financial statements
- - Unaudited -
Web4Boats.com, Inc.
Statements of Operations
For the Three Months Ended December 31, 2000 and 2001
3 Months Ended 3 Months Ended
December 31, December 31,
2000 2001
_____________________________________________________________________________
Revenues $ 2,149 $ 29
Operating expenses:
Salaries 15,625 0
Marketing 57,417 15,000
General and administrative 295,694 72,377
Total operating expenses 368,736 87,377
Net loss $ (366,587) $ ( 87,348)
Basic and dilutive loss per share $ (.03) $ (.004)
See accompanying notes to financial statements
- - Unaudited -
Web4Boats.com, Inc.
Statements of Cash Flows
For the Nine Months Ended December 31, 2000 and 2001
9 Months Ended 9 Months Ended
December 31, December 31,
2000 2001
______________________________________________________________________________
Cash flows from operating activities
Net loss $(1,299,830) $ (258,394)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 2,001 2,004
Common stock issued for services 732,011 182,700
Changes in operating assets and
liabilities
Loans to shareholder 0 (1,000)
Prepaid expenses 97,833 4,750
Accounts payable 155,289 (9,389)
Accrued expenses 5,255 12,370
Short-term borrowings 154,881 4,400
Net cash provided by (used in) operating
Activities (152,560) (62,559)
Cash flows from investing activities
Sale of fixed assets 26,187 0
Net cash provided by (used in) investing
Activities 26,187 0
Cash flows from financing activities
Proceeds from issuance of common stock 10,000 56,000
Issuance of preferred stock in payment of
Interest 0 7,000
Issuance of common stock in payment of
Interest 118,925 0
Net cash provided by (used in) financing
Activities 128,925 63,000
Net increase (decrease) in cash 2,552 441
Cash, beginning of period 21,060 251
Cash, end of period $ 23,612 $ 692
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
bagel 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 recognized on the realized date of April 19, 1999 and is
therefore included as "Other income" in the Statement of Operations for the
nine months ended December 31, 1999.
During fiscal year 1999, 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. Subsequently, through November 30,
2001, the Company continued to invest substantially in website development
and related costs. While all such development costs were expensed as
incurred, the Company expected, as a going concern, to realize future
benefits from these costs.
On December 1, 2001, the Company ended its pursuit of developing an
internet boating site. The much slower than anticipated growth in popularity
of its website, with correspondingly minimal revenues, has rendered putting
further resources into internet boating unviable. Accordingly, the website
was closed in January, 2002. Presently, the Company is making plans to enter
the small business and home security industry. This is an industry that has
shown consistent growth over the last decade and, with the recent terrorist
events and expected future security threat, the imposition of stricter
security in many everyday activities is seen as representing a new and viable
opportunity to the Company. The Company expects to pursue acquisition of
existing security companies who are already marketing and implementing small
business and home security products and services such as alarm and monitoring
systems, guards, door to door security checks, security for special
locations, and other related activities.
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 nine months ended December 31,
2000.
Income taxes
The Company has net operating loss carryforwards from fiscal years 2000
and earlier of approximately $1,988,000 and $1,983,000 for federal and
California state tax purposes, respectively. With additional loss for the
nine months ended December 31, 2001, the Company has total net operating loss
carryforwards at December 31, 2001 of approximately $2,057,000 and $2,050,000
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 nine month period.
NOTE 2 Shareholders' equity
Compensatory stock issuance
During the nine months ended December 31, 2000, the Company received
salary compensation valued at $46,875 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 December 31, 2001. The number of shares represented by
stock options outstanding at December 31, 2001 are 3,536,000 shares with an
option price of $.07 to $1.00 per share, and $1,478,840 in total, and with a
market price at date of grant of $.06 to $2.00 per share, and $2,028,810 in
total. Outstanding options expire on various dates from January, 2002 to
March, 2003. Included in stock options outstanding at December 31, 2001, are
1,500,000 shares which were determined to have a fair value per option of
$.073 as of the date of grant using the Black-Scholes option pricing model
with the following assumptions: expected price volatility of 57.7%, expected
option lives of three years, risk free interest rate of 6.0%.
Stock redeemed and issued
In April, 1999, 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 for services which were fully rendered as of March 31, 2001.
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 December 31,
20010.
In August, 2000, the outstanding 10,000 shares of Series A preferred
stock were converted to 1,000,000 shares of common stock. The Series A
preferred shares were then cancelled and returned to the status of authorized
and unissued.
In November, 2001, 70,000 shares of Series A preferred stock were
issued as incentive to four related parties for providing the Company with
operating loans totaling $70,000.
NOTE 3 Related parties
Short term borrowings
At December 31, 2000, the Company had unsecured promissory notes,
inclusive of accrued interest, of $209,546, payable to ten shareholders, and
that bear annual interest at rates of 10% to 12%.
During the year ended March 31, 2001, the Company received $140,000
from eight lenders, two of which were related parties, in exchange for
promissory notes with interest at 12% per year and terms ranging from seven
days to six months. As inducement to obtain the unsecured loans, the Company
issued a total of 560,000 shares of common stock, valued at $123,800, which
was recorded as interest expense during the year ended March 31, 2001.
At December 31, 2001, the Company had unsecured promissory notes,
inclusive of accrued interest, of $174,821, payable to ten shareholders, that
bear annual interest at rates of 10% to 12%.
Stock options
Represented in outstanding stock options are 3,320,000 shares at
December 31, 2001 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 nine months ended December 31, 2000, the Company issued
6,705,233 shares of its common stock, of which 3,133,333 shares were to
related parties. The shares were compensation in exchange for $827,813 in
services, of which $124,828 had been accrued at March 31, 2000 and $258,694
is a prepaid expense at December 31, 2000.
During the nine months ended December 31, 2001, the Company issued
6,490,000 shares of its common stock of which 4,690,000 shares were to
related parties. The shares were compensation in exchange for $184,700 in
services and $6,000 in interest of which $11,250 is a prepaid expense at
December 31, 2001.
Interest paid
During the nine months ended December 31, 2000, the Company charged to
operations interest expense of $130,389 and paid $4,531 of interest in cash.
During the nine months ended December 31, 2001, the Company charged to
operations interest expense of $15,870 and paid no interest.
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, 2002. For the year
ended March 31, 2001, $4,000 in cash and 1,233,333 shares of common stock,
valued at $116,000 were issued as payment of services received from April
through March, 2001. For the nine months ended December 31, 2001, $4,500 in
cash and 2,790,000 shares of common stock, valued at $83,700 were issued as
payment of services received from April through December, 2001.
Service commitments
The Company had entered into various contracts for professional
services related to managing and promoting its website. Commitments as of
December 31, 2001 under these contracts total $49,333 with all contracts
expiring by July 17, 2002.
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 December 31, 2000 and
2001.
NOTE 6 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 the current quarter ended December 31, 2001, as a
result of considering the unviability of remaining in the internet boating
industry, and as described in Note 1 above. the Company saw no alternative
but to cease activities in that industry and look for a new economic
opportunity. Note 1 also describes management's plans in regard to
perpetuating its existence through this new opportunity related to the small
business and home security 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. As reflected in the Statement of Cash Flows for the current period,
the Company has been able to significantly reduce its cash outlays for
operating expenses, as well, and expects such outlays to be minimal during
the next 12 months. While such plans and fundraising ability seem to
mitigate the effect of prior years' losses and deficits, the Company is
essentially only beginning to develop 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.
RESULTS OF OPERATIONS
As of November 30, 2001, the Company had very little revenue from any
of its website or related operations. The Company's two revenue streams
were: (1) affiliate programs and (2) advertising, particularly classified
advertising of boats for sale. Due to the lack of growth in revenue and the
Company's inability to arrange financing to promote its website, on December
1, 2001, the Company ended its pursuit of developing an internet boating
site. Accordingly, the website was closed in January, 2002. In short, the
Company is planning, at least for the foreseeable future, to again become a
non-operating entity as it was prior to the acquisition of the bagel company
described above.
It had been anticipated that the website would include Boat
Dealers/Brokers, Boat Builders/Manufacturers, Marinas, and other
recreational suppliers having access to our program and services that would
pay 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. Due to the inability of the Company to
arrange financing, it was unable to promote its website or engage in any
sustained sales efforts directed at such companies. Furthermore, although
as of June 30, 2001, we had an historic daily average over the preceding
month of approximately 15,000 impressions with an historic daily average of
approximately 297 user sessions per day, that level of activity was
insufficient to generate interest by advertisers and few of the website's
visitors transacted any business on the website. Substantially all of the
Company's revenue was derived from the sale of advertisements, particularly
classified advertisements of boats for sale, and these revenues failed to
reach a level upon which to continue the business.
Presently, the Company is considering entering the small business and
home security industry. This is an industry that management believes has
shown consistent growth over the last decade and, with the recent terrorist
events and expected future security threat, the imposition of stricter
security in many everyday activities is seen as representing a new and viable
opportunity to the Company. The Board in January, 2002, authorized its
General Manager to commence a search for one or more acquisitions of
companies engaged in the security business. The Company expects to pursue
acquisition of existing security companies that are already marketing and
implementing small business and home security products and services such as
alarm and monitoring systems, guards, door to door security checks, security
for special locations, and other related activities. As of February 12,
2002, the Company had made no contacts with any such companies or made
selections of any such companies to pursue.
RESULTS OF OPERATIONS
Revenues for the three months ended December 31, 2001 were $29.
Operating expenses consist of salaries, marketing 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 $72,377 for the three months
ended September 30, 2001, an approximate $223,317 decrease from the end of
the September 30, 2000, three month period. Without revenues, however, the
reduction in General and administrative expense could not support a decision
to continue the business.
Virtually all of the amounts up until September 30, 2001, were related
to development of the website business and include amounts owed to Internet
Advisors Group, Inc. or Blair Merriam, its sole shareholder and employee,
for day-to-day management services which has generally been met with the
issuance of shares of Common Stock. The expenses subsequent to September
30, 2001, were mostly for operations. Most of this expense has been paid
with the issuance of the Company's common stock, both restricted and
registered under Form S-8. The resulting net loss for the three months
ended December 31, 2001, was $(87,348) or $(.004) 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. The parties plan to reverse this assignment to
accommodate Mr. Merriam's personal financial interests which should have no
effect on the Company. In addition, the agreement was renewed for a period
to expire March 31, 2002. Mr. Merriam's current principal duties are to
maintain the Company's reporting requirements under the Securities Exchange
Act of 1934 and to seek out and evaluate an acquisition candidate.
The Company does not have any non-officer employees, and no cash
salaries or wages are currently being paid. 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. These shares
have been registered under Form S-8 and such issuances in the future will
generally be so registered. During the nine months ended December 31, 2000,
the Company received salary compensation valued at $46,875 in exchange for
Common Stock. This amount included compensation for Dennis Schlagel, the
Company's President, of $46,875.
The accounts payable at December 31, 2001, consisted mainly of
accounting and legal--$13,681. Accrued expenses of $22,539 consist of
interest payable. See Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
The Company's auditor has issued an opinion questioning the Company's
ability to continue as a going concern, and we believe our current cash and
cash equivalents are, in fact, not sufficient to meet our anticipated cash
needs for working capital and capital expenditures. The Company intends to
meet its needs through borrowing from or through the issuance of common
stock to its current management until an acquisition can be accomplished at
which time new management is expected to take office.
In November 2001, the Company sold 70,000 shares of its Series A
Preferred Stock to four related parties for $70,000 to meet current
obligations. Each of these shares is convertible into 100 shares of Common
Stock after one year after issuance of the Series A Preferred.
PLAN OF OPERATION
Company Name Change
In furtherance of its plan to change businesses, the Company's Board
has determined that it should change its name to one more closely associated
with that new business. The Company's Board of Directors proposes to change
the Company's name as soon as a shareholder meeting could be convened from
Web4Boats.com, Inc. to Federal Security Protection Services, Inc. through an
amendment to its Articles of Incorporation. The Company is also seeking a
new management team to develop its new business direction.
Reverse Stock Split
The Company's Board of Directors has also proposed to its shareholders
a reverse split of its Common Stock such that each holder of Common Shares
at the close of business on March 25, 2002, will receive one(1) share of
Common Stock in exchange for each ten (10) shares currently owned. The par
value per share of Common Stock ($.001) will not change. Due to the large
number of shares outstanding, the Company's Board of Directors has
determined that it's future acquisition plans and any financing arrangement
that might be accompanied with such an acquisition would be more easily
accomplished if the Company had fewer shares outstanding as a percent of its
authorized shares. The Board believes that any future first acquisition of
an operating company will require the issuance of a large portion of the
Company's Common Stock relative to what is then outstanding thereby leaving
relatively few shares then available for the Company to engage in any equity
financing.
Presently, the Company has outstanding approximately twenty-seven
percent (27%) of its authorized Common Stock--approximately 27,000,000
shares are outstanding of its 100,000,000 shares of Common Stock authorized
in its Articles of Incorporation. It is not uncommon for an acquisition
such as the Company contemplates to require the issuance of shares such that
the shareholders of the acquired company then own eighty or ninety percent
(80-90%) of the acquiring Company's outstanding shares (resulting in a so-
called reverse merger). Such an acquisition would not be possible for the
Company with the current level of outstanding shares. The Board believes
that reducing the number of outstanding shares to two-and-seven-tenths
percent (2.7%) of the Company's authorized shares of Common Stock will give
the Board and the Company much more flexibility in its search for an
acquisition target and improve the Company's ability to provide a return to
its Shareholders. The Company's management has no acquisition targets
selected, but believes that preparation for such an acquisition at this time
will improve the Company's ability to negotiate a favorable transaction.
The shareholders' meeting to vote on the proposed name change and the
reverse stock split is scheduled for March 12, 2002. Due to the large
shareholdings of the Company's General Manager and its Board of Directors,
it is anticipated that both proposals will be passed by shareholders.
Although the par value ($.001 per share) will not change, the effect
on the financial statements in the balance sheet's equity section will be
minimal because the par value is so low. In particular, ninety percent
(90%) of the capital in "Common Stock" on the balance sheet will be moved to
"Paid in Capital, an amount of approximately $24,300.
KNOWN RISKS AND TRENDS
The reverse split, if approved, will substantially increase
Management's ability to dilute the interests of current security holders
without further Shareholder approval. The dilution will result from the
issuance of shares of Common Stock merely through Board approval. All
holders of outstanding shares of Common Stock will on a per share basis be
affected identically. Some Shareholders, however, will, as a practical
matter, have a negative effect because the reverse split may leave that
Shareholder with partial shares, fewer than 100 shares or some other amount
of shares which will make it uneconomical to sell such shares because of the
small amount of gross proceeds from such a sale as compared with the fees
imposed by selling agents or brokers making such a sale for the Shareholder.
Although it is reasonable to expect that upon effectiveness of the reverse
split that the market price per share will increase by a factor of ten (ten
times the market price just prior to the effectiveness of the reverse
split), there can be no assurance that the market price will not thereafter
decline.
The Company has no present business plan for its own operations other
than to seek an acquisition with another company that has ongoing
operations. Such a plan contains many risks, including the inability of the
Company to expend funds to perform an in-depth investigation of potential
acquisition candidates, management's unfamiliarity with the small business
and home security industry and the lack of assets to offer to a company
considering such an acquisition. As a result of these factors, it is likely
that the management of an acquisition target will continue to be management
of the combined entities and that control of the Company will be acquired by
the shareholders of the acquisition candidate. The probable loss of control
of the Company by present management and shareholders will result in those
persons placing all of the Company's future viability on persons that are
presently unknown to the Company and of which the Company will be unable to
thoroughly investigate due to lack of funds. Shareholders will be relying
on present management to make an acquisition choice without many of the
resources that might otherwise be allocated to such a task by a well-funded
company.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
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.
None.
EXHIBITS
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: February 13th, 2002 /s/ Dennis Schlagel
________________ __________________________
Dennis Schlagel, President