U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[x] Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2003
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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: 000-49795
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World Information Technology, Inc.
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(Name of small business issuer in its charter)
Nevada 80-0001653
------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
500 N. Rainbow, Suite 300 Las Vegas, NV 89107
------------------------------------------ --------------
(Address of principal executive offices) (zip code)
Issuers telephone number: (702) 221-1952
----------------
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 12
months (or such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the Registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
1
Common Stock, $0.001 par value per share, 60,000,000 shares authorized,
34,811,048 issued and outstanding as of June 30, 2003. Preferred Stock,
$0.001 par value per share, 15,000,000 shares authorized, none issued nor
outstanding as of June 30, 2003.
Traditional Small Business Disclosure Format (check one)
Yes [ ] No [X]
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Independent Accountants' Review Report .............. 4
Consolidated Balance Sheet (unaudited)............... 5
Consolidated Statements of Operations (unaudited).... 6
Consolidated Statements of Cash Flows (unaudited).... 7
Notes to Financial Statements........................ 8-11
Item 2. Management's Discussion and Analysis of Plan
of Operation......................................... 12
Item 3. Controls and Procedures.............................. 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................... 18
Item 2. Changes in Securities and Use of Proceeds............ 18
Item 3. Defaults upon Senior Securities...................... 18
Item 4. Submission of Matters to a Vote
of Security Holders.................................. 18
Item 5. Other Information.................................... 19
Item 6. Exhibits and Reports on Form 8-K..................... 20
Signatures..................................................... 21
3
Beckstead and Watts, LLP
- ----------------------------
Certified Public Accountants
3340 Wynn Road, Suite B
Las Vegas, NV 89102
702.257.1984
702.362.0540 fax
INDEPENDENT ACCOUNTANTS REVIEW REPORT
August 18, 2003
Board of Directors
World Information Technology, Inc.
Las Vegas, NV
We have reviewed the accompanying balance sheet of World Information
Technology, Inc. (a Nevada corporation) as of June 30, 2003 and the related
statements of operations for the six-months and three-months ended June 30,
2003 and 2002 and statements of cash flows for the six-months ended June 30,
2003 and 2002. These financial statements are the responsibility of the
Company's management.
We conducted our reviews in accordance with 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
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying financial statements referred to above for
them to be in conformity with generally accepted accounting principles in the
United States of America.
Beckstead and Watts, LLP has previously audited, in accordance with generally
accepted auditing standards, the balance sheet of World Wide Web, Inc. as of
December 31, 2002, and the related statements of operations, stockholders'
equity, and cash flows for the year then ended (not presented herein) and in
our report dated April 10, 2003, we expressed an unqualified opinion on those
financial statements.
Beckstead and Watts, LLP
4
World Information Technology, Inc.
Consolidated Balance Sheet
(Expressed in US dollars, unless otherwise stated)
(Unaudited)
Consolidated Balance Sheet
June 30,
2003
------------
Assets
Cash and equivalents $ 65,000
Short-term investments 1,000
Trade accounts receivable, net of allowance for doubtful
accounts of $1,366,000 5,464,000
Inventories 27,000
Other current assets 825,000
------------
Total current assets 6,382,000
------------
Long-term investments 2,553,000
Fixed assets, net 2,820,000
Other assets 50,000
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$ 11,805,000
============
Liabilities and stockholders' equity
Trade accounts payable 112,000
Notes payable 44,000
Income tax payable 1,449,000
Accrued expense 179,000
Other payables and customer deposits 58,000
------------
Total current liabilities 1,842,000
------------
Deferred revenue 170,000
Other liabilities 204,000
------------
2,216,000
------------
Commitments and contingencies -
Stockholders' equity
Series A preferred stock, $.001 par value, 5,000,000 shares
authorized, zero share issued and outstanding -
Series B preferred stock, $.001 par value, 5,000,000 shares
authorized, zero share issued and outstanding -
Series C preferred stock, $.001 par value, 5,000,000 shares
authorized, zero share issued and outstanding -
Common stock, $0.001 par value, 500,000,000 shares
authorized, 34,811,048 shares issued and outstanding 35,000
Additional paid-in capital 5,408,000
Retained earnings 4,135,000
Accumulated other comprehensive income -
foreign currency translation adjustment 11,000
------------
9,589,000
------------
$ 11,805,000
============
The accompanying notes are an integral part of these financial statements.
5
World Information Technology, Inc.
Consolidated Statements of Operations
(Expressed in US dollars, unless otherwise stated)
(Unaudited)
Consolidated Statements of Operations
For the six months ended For the three months ended
June 30, June 30,
------------------------ --------------------------
2003 2002 2003 2002
----------- ----------- ----------- -------------
Net sales $ 3,531,000 $ 1,186,000 $ 2,630,000 $ 844,000
Cost of goods sold 50,000 51,000 34,000 24,000
----------- ----------- ----------- -------------
Gross profit 3,481,000 1,135,000 2,596,000 820,000
Bad debt expense 465,000 126,000 465,000 126,000
Selling, general and
administrative 908,000 281,000 659,000 66,000
----------- ----------- ----------- -------------
Net income before
income taxes 2,108,000 854,000 1,472,000 754,000
Other income or (losses) 140,000 (23,000) 140,000 -
Income tax expense 527,000 213,500 368,000 117,800
----------- ----------- ----------- -------------
Net income $ 1,721,000 $ 640,500 $ 1,244,000 $ 636,200
=========== =========== =========== =============
Weighted average number of
common shares outstanding -
basic 34,811,048 34,811,048 34,811,048 34,811,048
=========== =========== =========== =============
Net income per share -
basic $ 0.05 $ 0.02 $ 0.04 $ 0.02
=========== =========== =========== =============
Weighted average number of
common shares outstanding -
fully diluted 34,898,005 34,811,048 34,898,005 34,811,048
=========== =========== =========== =============
Net income per share -
fully diluted $ 0.05 $ 0.02 $ 0.04 $ 0.02
=========== =========== =========== =============
The accompanying notes are an integral part of these financial statements.
6
World Information Technology, Inc.
Consolidated Statements of Cash Flow
(Expressed in US dollars, unless otherwise stated)
(Unaudited)
Consolidated Statements of Cash Flow
For the six months ended
June 30,
------------------------
2003 2002
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,721,000 $ 640,500
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization expense 103,000 69,000
Unrealized loss on short-term investments 45,000 94,000
Loss on disposal of investments 90,000 -
Provision of bad debt expense 465,000 126,000
Change in assets and liabilities:
Accounts receivable (2,136,000) 220,500
Notes receivable 175,000 -
Inventories 7,000 (2,000)
Other current assets (733,000) (52,000)
Other assets 9,000 -
Notes payable 44,000 (47,000)
Trade accounts payable 108,000 2,000
Income tax payables 407,000 7,000
Other current liabilities 22,000 (216,000)
Deferred revenue 47,000 62,000
Other liabilities 200,000 14,000
----------- -----------
Net cash provided by (used in) operating activities 574,000 918,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in short-term investments, net 203,000 (21,000)
(Increase) decrease in long-term investments (732,000) (896,000)
------------ ------------
Net cash provided (used) by investing activities (529,000) (917,000)
------------ ------------
Net increase (decrease) in cash and equivalents 45,000 1,000
Cash and equivalents at beginning of the period 20,000 60,000
----------- -----------
Cash and equivalents at end of the period $ 65,000 $ 61,000
=========== ===========
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for interest $ - $ -
=========== ===========
Cash paid during the year for income taxes $ - $ -
=========== ===========
The accompanying notes are an integral part of these financial statements.
7
World Information Technology, Inc.
Notes
Note 1 - Basis of Presentation
The consolidated interim financial statements included herein, presented in
accordance with United States generally accepted accounting principles and
stated in US dollars, have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate
to make the information presented not misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments, which, in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that these
consolidated interim financial statements be read in conjunction with the
financial statements of the Company for the year ended December 31, 2002 and
notes thereto included in the Company's 10-KSB annual report. The Company
follows the same accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual
results.
Note 2 - Short term investment
As of December 31, 2002, short-term investments totaled $204,000. The Company
recognized the loss of $87,000 from the sale of short-term investments in 2003.
It was offset by the reserve for loss on decline of market value. The
remaining balance of short-term investment is $46,000, of which $45,000 was
reserved as of June 30, 2003.
Note 3 - Accounts receivable
Accounts receivable totaled $6,830,000 and allowance for doubtful accounts
totaled $1,366,000 as of June 30, 2003.
Note 4 - Deferred revenue
Deferred revenue for the six months ended June 30, 2003 totaled $279,000.
Deferred revenue amortized and revenue recognized during the six months ended
June 30, 2003 totaled $109,000. The net remaining balance of deferred revenue
as of June 30, 2003 was $170,000.
8
World Information Technology, Inc.
Notes
Note 5 - Income taxes
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), which
requires use of the liability method. SFAS No. 109 provides that deferred
tax assets and liabilities are recorded based on the differences between the
tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences. Deferred tax assets
and liabilities at the end of each period are determined using the currently
enacted tax rates applied to taxable income in the periods in which the
deferred tax assets and liabilities are expected to be settled or realized.
As of June 30, 2003, income tax payable to Taiwan taxing authorities totaled
$1,449,000 and income tax expense totaled $527,000 for the six months ended
June 30, 2003.
Note 6 - Reverse merger
On March 13, 2003, the Company, a State of Nevada publicly traded company,
formerly EZ Travel, Inc. ("WRLI"), effected a Merger and Reorganization
Agreement (the "Agreement") with World Information -China Taiwan private
company ("World China"). Pursuant to the Agreement, WRLI acquired 80.75% of
the outstanding common stock of the World China. As consideration for the
shares, WRLI transferred 27,611048 (post split adjusted per Note 7 below)
shares of its $0.001 par value common stock. The acquisition was accounted for
using the purchase method of accounting as applicable to reverse acquisitions
because the former stockholders of the World China controlled the WRLI's common
stock immediately upon conclusion of the transaction. Under reverse
acquisition accounting, the post-acquisition entity was accounted for as a
recapitalization of the Company.
9
World Information Technology, Inc.
Notes
Note 7 - Equity
On August 12, 2003, the Company's board of directors approved a two-for-one
forward stock split of the common stock. This increases the issued and
outstanding common shares from 19,922,696 to 39,845,392 shares. The number of
shares issued and outstanding during the periods reported have been
retroactively adjusted to reflect the stock split.
On June 1, 2003, the Company entered into a Promissory Note with Vantage
Consulting Group, LLC ("Vantage") which had paid $250,000 of certain legal fees
on behalf of the Company and had provided consulting services to the Company.
The Line of Credit Promissory Note represented the accumulation of money lent
and services provided during that period. This action was later adopted and
approved by the Board of Directors of the Company on June 23, 2003. This
Promissory Note became due and payable in full on June 23, 2003.
Also on June 23, 2003, the Company entered into an Equity-For-Debt Exchange
Agreement with Vantage for the exchange of $250,000 principal amount of the
Line of Credit Promissory note for warrants to purchase 1,000,000 shares
(adjusted for the share split in Note 7 above) of common stock of the Company
at $.25 (adjusted for the share split in Note 7 above) per share.
The value of the exchange has been determined in two parts: the value of the
legal and consulting expenses incurred plus an estimated intrinsic value. The
$250,000 Promissory Note was issued in an amount equal to the legal expenses
paid plus the estimated Fair Market Value of the consulting services performed.
The intrinsic value was calculated under the premise that some amount in excess
to the fair market value of the legal expenses and consulting services were
granted to Vantage in consideration for the high risk nature of the Promissory
Note that Vantage was willing to enter into at that time. This intrinsic value
is difficult to measure because of the minimal trading volumes of the Company
historically and at this time. Therefore, the Black Scholes valuation
methodology does not provide a valuation for the warrants issued.
Because the Company has been unable to obtain an independent value for these
warrants before the filing deadline of the 2nd quarter 10Q, the Company has
deemed it appropriate to take a conservative approach to recording the value of
these warrants. The Company has deemed that the minimum value of the warrants
would be equal to its book value or the net value of its assets. The Company
also has deemed that an intrinsic value should be added to the book value in
order to determine the value of the Company. The Company has concluded to use
a 2X multiple of the Company's book value in order to account for both the book
value and the intrinsic value of the Company at that time. The Company's book
value per share at the time of the warrants was approximately $.42. Adjusted
for the stock split, 1,000,000 shares of stock at a 2X multiple of book value
would therefore equal $421,245.50.
The $250,000 is recorded to G&A expense in order to properly account for the
legal and consulting expenses incurred. The net amount of $171,245.50 is
recorded to compensation expense in order to account for the value of the
warrants in excess to the fair market value of the legal and consulting
expenses incurred.
10
World Information Technology, Inc.
Notes
Note 9 - Subsequent events
On July 1, 2003 the Company obtained a line of credit loan not to exceed
$500,000.00 (five hundred thousand dollars), approved by the board of
directors, from Pacific Commercial Group LLC ("Pacific"). For each draw, the
borrower will issue a convertible promissory note. The convertible promissory
notes will bear a 6% interest rate per year through its maturity date of
December 1, 2004. The promissory note is convertible into shares of common
stock of the Company at $4.00 per share or 50% of the closing bid price on the
conversion date, whichever is least price yielding the most shares, subject to
adjustment (including the stock split described above). As of the August 19,
2003, the Company had borrowed $68,000 from this Note.
On July 2, 2003 the Company issued 70,000 shares of common stock, subject to
adjustment (including the stock split described above) to Charterbridge
Financial Group Inc. for a Financial and Public Relations Agreement with
Charterbridge Financial Group.
On July 2, 2003 the Company issued 100,000 shares of common stock, subject to
adjustment (including the stock split described above) to May Davis Group for
an Advisory and Investment Banking Agreement with May Davis Group.
On July 14, 2003, the Company issued 5,054,344 (adjusted for the share split in
Note 7 above) shares of common stock under Rule Regulation S to 382 individuals
in exchange for the remaining 19.25% ownership in World Information China.
Note 10 - Related party transactions
Mr. Gary Morgan, the Company's Chairman and CEO, effective August 1, 2003 is
the majority shareholder in Vantage and Pacific and became a related party as a
result of his employment.
11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
World Information Technology, Inc., ("the Company") formerly known as EZ
Travel, Inc., was organized by the filing of Articles of Incorporation with
the Secretary of State of the State of Nevada on December 27, 2001. The
articles of the Company authorize the issuance of sixty million (60,000,000)
shares of Common Stock at par value of $0.001 per share and fifteen million
(15,000,000) shares of Preferred Stock at par value of $0.001.
World Information Technology Inc., a wholly subsidiary ("World Info China")
operating in Taiwan and main land China, World Info China has introduced its
first all-around online video streaming solution for integrated TV
postproduction live custom programming. The Company has developed proprietary
interactive real-time two-way data communications. The Company has set up
various online shopping channels at http://www.24hh.com and has become a
dominant force in e-commerce in Taiwan. World Info China established a service
enabling Internet users to create their own Web sites. The Company strives to
improve the online experience of its users.
To attract new users to host their websites, World Info China established a
service enabling internet users to create their own web sites. The Company
strives to improve the online experience of its users. For example, the users
are provided with disk space for personal web sites, web-page publishing and
communication tools to create their own fully customized, multimedia-rich
content and e-mail, chat and bulletin board services. Users are offered an
opportunity to participate in commercial activities, which include affiliate
programs with major merchants. World Info China's objective is to be the
Republic of China's leading member-created online community for people on the
Web.
The management of World Info China feels confident that it will capture a good
portion of the market share in the near future with their current business
model and aggressive planning for the expected improvement in the economy.
With less Internet competition, the company hopes to achieve growth by setting
up China operations to capture the vast market that is just beginning to
flourish with the internet and e-commerce. World Info China plans to expand
its internet business globally.
World Info China's objective is to be the Republic of China's leading member-
created online community for people on the web. The Company has designed a
multi-level marketing program to recruit website hosting. World Info China's
strategies to achieve its objective to continue to increase the number of
users and concentrate on member affinity programs to maintain its position as
a leading provider of personal web sites and to continue to grow its
membership base include offering easier-to-use web-page publishing tools,
allowing its users to easily create and enhance personal web sites, including
the integration of e-commerce opportunities and World Info China affiliate
programs, promoting http://www.24hh.com, its home website as a destination
point on the web by augmenting its existing distribution alliances and
launching brand-name promotional campaigns to drive both growth in membership
and traffic to its members' personal web sites.
12
In addition, World Info China intends to introduce more value-added member
services and strengthen and expand the number of affinity programs and
affiliate management tools that it offers. Management believes that its
focus on the needs of its users and enhancing their experience within the
World Info China's website community will produce continued growth in, and
foster loyalty among, its membership base. Management believes that a large
and growing base of committed users organized on a contextual basis provides
advertisers and e-commerce merchants with an attractive market to target
promotion and sales of their products and services, thereby creating added
advertising and commerce revenue opportunities for World Info China.
The Company had no dilutive common stock equivalents such as stock options
or warrants as of June 30, 2003.
Results of Operations
- ---------------------
Consolidated net sales for the six months ended June 30, 2003 were $3,531,000
versus $1,186,000 for the same period last year. Net sales for the six month
period increased by $2,345,000. For the Second Quarter ended June 30, 2003, the
Company generated net sales of $2,630,000 versus $844,000 for the same period
last year. Management attributes this increase to its expansion of its
customer base for website hosting.
Cost of goods sold, for the six months ended June 30, 2003, as a percentage
of sales was approximately 1.4%, while in the same period for 2002 it
approximated 4.3%. This decrease in cost of sales was primarily due to
economies of scale, through increased efficient use of company equipment.
Selling, general and administrative expenses increased from $281,000 in
2002 to $908,000 for the six months ended June 30, 2003. Based on
increased revenues generated, management felt that the increase in selling,
general and administrative expenses were in line with its operations.
For the six months ended June 30, 2003, the consolidated results of operations
reflected a net income after income taxes of $1,721,000 or $0.05 per share.
This compares to a net income of $640,500 or $0.02 per share for the same period
last year. For the Second Quarter ended June 30, 2003, the consolidated results
of operations reflected a net income after income taxes of $1,244,000 or $0.04
per share. This compares to a net income of $636,200 or $0.02 per share for the
same period last year. Management believes the Company achieved increased
profitability in a very difficult time for internet related companies and the
effect of Severe Acute Respiratory Syndrome ("SARS"), impacting mostly Hong
Kong and Taiwan, where the Company conducts its business.
13
The management of World Info China feels confident that they will continue to
capture a good portion of the market share in the near future with the current
business model and aggressive planning for the expected improvement in the
economy. As internet based companies continue to close their operations,
this could mean less competition on the horizon. The Company is looking to
achieve high growth with the possibility of setting up China operations to
capture the Chinese market that is just beginning to flourish in internet and
e-commerce. Management cautions, that there are no assurances the company will
be able to duplicate these increased results in future Quarters. Failure to
expand the Company's customer base can have an adverse effect on the Company's
future.
Subsequent Event -- Accounts Receivable
- -----------------------------------------
During the Second Quarter, the collections of Accounts Receivable slowed
dramatically due to the severe effect of SARS, impacting mostly Hong Kong and
Taiwan. Since quarter's end, the Company has collected $2,580,000 of the
outstanding accounts receivable balance of $6,200,000 at as of June 30, 2003.
Management believes that collections of the previous quarter's revenue will be
strong as the business climate has improved. Further, management believes that
collections will be normal going forward and receivable balances will average
below 90 days outstanding.
Liquidity and Capital Resources
- -------------------------------
On June 1, 2003, the Company entered into a Promissory Note with Vantage
Consulting Group, LLC ("Vantage") which had paid $250,000 of certain legal
fees on behalf of the Company and had provided consulting services to the
Company. The Line of Credit Promissory Note represented the accumulation
of money lent and services provided during that period. This action was later
adopted and approved by the Board of Directors of the Company on June 23,
2003. This Promissory Note became due and payable in full on June 23, 2003.
Also on June 23, 2003, the Company entered into an Equity-For-Debt Exchange
Agreement with Vantage for the exchange of $250,000 principal amount of the
Line of Credit Promissory note for warrants to purchase 1,000,000 shares
(adjusted for the August 14, 2003 two for one stock split) of common stock of
the Company at $.25 (adjusted for the August 14, 2003 two for one stock split)
per share. A charge was incurred during the second quarter for the $250,000
in legal expenses paid and the estimated Fair Market Value of the consulting
services performed, plus an additional $171,243 for the estimated Fair Market
Value of the warrants in excess of the Fair Market Value of the legal and
consulting expenses incurred.
14
Subsequent Event
- ----------------
On July 1, 2003 the Company obtained a line of credit loan not to exceed
$500,000.00 (five hundred thousand dollars), approved by the board of directors,
from Pacific Commercial Group LLC ("Pacific"). For each draw, the borrower will
issue a convertible promissory note. The convertible promissory notes will bear
a 6% interest rate per year through its maturity date of December 1, 2004. The
promissory note is convertible into shares of common stock of the Company at
$4.00 per share or 50% of the closing bid price on the conversion date,
whichever is least price yielding the most shares, subject to adjustment
(including the stock split described above). As of the August 19, 2003, the
Company had borrowed $68,000 from this Note.
Related Party Transactions
- --------------------------
Mr. Gary Morgan, the Company's Chairman and CEO, effective August 1, 2003,
see subsequent events, is the majority shareholder in Vantage and Pacific and
became a related party as a result of his employment.
Market For Company's Common Stock
- ---------------------------------
The Company's Common Stock is traded on the OTC Bulletin Board under the
symbol "WRLT." A limited market exists for the trading of the Company's
common stock. During the Second Quarter ending June 30, 2003, there has
been limited trading activity in the Common Stock, however, there are no
assurances this trading activity will continue in the future for the Common
Stock.
(a) There is currently no Common Stock which is subject to outstanding
options or warrants to purchase, or securities convertible into, the
Company's common stock.
(b) There is currently no common stock of the Company which could be sold
under Rule 144 under the Securities Act of 1933 as amended or that the
registrant has agreed to register for sale by security holders.
Dividends
- ---------
Holders of common stock are entitled to receive such dividends as the board of
directors may from time to time declare out of funds legally available for the
payment of dividends. No dividends have been paid on our common stock, and we
do not anticipate paying any dividends on our common stock in the foreseeable
future.
15
Forward-Looking Statements
- --------------------------
This Form 10-QSB includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included or incorporated by reference
in this Form 10-QSB which address activities, events or developments which
the Company expects or anticipates will or may occur in the future,
including such things as future capital expenditures (including the amount
and nature thereof), finding suitable merger or acquisition candidates,
expansion and growth of the Company's business and operations, and other
such matters are forward-looking statements. These statements are based
on certain assumptions and analyses made by the Company in light of its
experience and its perception of historical trends, current conditions and
expected future developments as well as other factors it believes are
appropriate in the circumstances. However, whether actual results or
developments will conform with the Company's expectations and predictions
is subject to a number of risks and uncertainties, general economic market
and business conditions; the business opportunities (or lack thereof) that
may be presented to and pursued by the Company; changes in laws or
regulation; and other factors, most of which are beyond the control of the
Company.
This Form 10-QSB contains statements that constitute "forward-looking
statements." These forward-looking statements can be identified by the use of
predictive, future-tense or forward-looking terminology, such as "believes,"
"anticipates," "expects," "estimates," "plans," "may," "will," or similar
terms. These statements appear in a number of places in this Registration and
include statements regarding the intent, belief or current expectations of
the Company, its directors or its officers with respect to, among other
things: (i) trends affecting the Company's financial condition or results of
operations for its limited history; (ii) the Company's business and growth
strategies; and, (iii) the Company's financing plans. Investors are cautioned
that any such forward-looking statements are not guarantees of future
performance and involve significant risks and uncertainties, and that actual
results may differ materially from those projected in the forward-looking
statements as a result of various factors. Factors that could adversely
affect actual results and performance include, among others, the Company's
limited operating history, potential fluctuations in quarterly operating
results and expenses, government regulation, technological change and
competition.
Consequently, all of the forward-looking statements made in this Form 10-QSB
are qualified by these cautionary statements and there can be no assurance
that the actual results or developments anticipated by the Company will be
realized or, even if substantially realized, that they will have the expected
consequence to or effects on the Company or its business or operations. The
Company assumes no obligations to update any such forward-looking statements.
16
Item 3. Controls and Procedures
As of the end of the period covered by this report, the Company conducted an
evaluation, under the supervision and with the participation of the principal
executive officer and principal financial officer, of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation,
the principal executive officer and principal financial officer concluded that
the Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms. There was no change in the Company's internal control over financial
reporting during the Company's most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
17
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company from time to time may be involved in litigation incident to the
conduct of its business. Certain litigation with third parties and present
and former shareholders of the Company are routine and incidental.
ITEM 2. Changes in Securities and Use of Proceeds
On July 2, 2003 the Company issued 70,000 shares of common stock, subject to
adjustment (including the stock split described above) for a Financial and
Public Relations Agreement with Charterbridge Financial Group.
On July 2, 2003 the Company issued 100,000 shares of common stock, subject to
adjustment (including the stock split described above) for an Advisory and
Investment Banking Agreement with the May Davis Group.
On July 14, 2003, the Company issued 5,054,344 (adjusted for the August 14, 2003
two for one forward split) shares of common stock under Rule Regulation S to 382
individuals in exchange for the remaining 19.25% ownership in World Information
China.
On August 12, 2003, at the Company's annual shareholders meeting the Company
approved a two-for-one forward stock split of the common stock. This forward
stock split took effect on August 14, 2003.
ITEM 3. Defaults upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
During the quarter ended June 30, 2003, no matters were submitted to the
Company's security holders.
Subsequent Event:
The Company's annual shareholder meeting was held on August 12, 2003. The
following proposals were submitted to a vote and approved by, the Company's
shareholders. At the Meeting, Fourteen Million One Hundred Thirteen Thousand
Five Hundred Eighty-three (14,113,583) shares were present and voted in favor
of each of the following proposals. The results were tabulated and certified
by John Dean Harper, Esq., the corporation's special counsel. This represents
70.8% of the 19,922,696 issued and outstanding shares. No votes were cast
against any proposal and no broker non-votes were received.
PROPOSAL NO. 1: Approval of a two-for-one forward stock split of the
common stock. This increases the issued and outstanding common shares from
19,922,696 to 39,845,392 shares.
18
PROPOSAL NO. 2: To increase the Board of Directors to nine (9) members
by a vote of 14,108,583. The original proposal was to increase the number of
Board of Directors to eight (8) members. The shareholders approved a nine (9)
member Board.
PROPOSAL NO. 3: To approve a new Board of Directors, which will hold
office until the 2004 annual meeting. The new Board consists of the following
members:
Hsueh Chu Lin
Yung Fen Cheng
Yu Yen Kuo
Wei Kuo Hsu Lin
Mei-Lin Shiu
Yu-Chi Cheng
Gary D. Morgan
Note: Gary Morgan was a write-in Board of Directors nominee on all received
proxy statements, which represented 14,113,583 shares that voted.
PROPOSAL NO. 4: The ratification of Beckstead and Watts, LLP, as the
Company's Independent Auditors.
PROPOSAL NO. 5: In the shareholders discretion, the appointed proxies
were authorized to vote upon such other business as may properly come before
the meeting. By written unanimous consent, as presented at the annual meeting
by the majority of the shareholders, as supplemented with their proxies as
other business, they voted to approve the following:
A. The Employment Agreement, dated as of July 24, 2003, between the
Corporation and Gary D. Morgan, including a Convertible Note Agreement, Note
and Indemnification Agreement (collectively the "Agreement") becomes effective
August 1, 2003. This Employment Agreement with Mr. Morgan calls for a $1.00
annual salary and significant equity based incentives. (See Exhibit 10.4 -
Agreement")
B. That any officer of the corporation is authorized and directed to execute
each of the documents referred to in the above paragraph and shall take such
other action and execute such other instruments as may be deemed necessary or
advisable to consummate the transaction or advisable to consummate this
Agreement.
C. The ratification of the appointment of Gary D. Morgan as Chief Executive
Officer and Chairman of the Corporation and as a member of the Board of
Directors.
D. The Independent Directors of the corporation representing the Compensation
Committee have approved this Agreement.
ITEM 5. Other Information
None.
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ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Title of Document
--------------------------------------------
31.1 Certifications of the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certifications of the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certifications of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
32.2 Certifications of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
The Company filed a Current Report dated January 3, 2003, pursuant to Item 9
("Regulation FD Disclosure") a Press Release entitled "EZ Travel, Inc. enters
into a Stock Purchase Agreement with World Information Technology Inc."
The Company also filed a Current Report dated January 3, 2003, pursuant to
Item 1 ("Changes in Control of Registrant"), Item 2 ("Acquisition of Disposition
of Assets"), and Item 7 "Exhibits" entitled "Stock Purchase Agreement by and
between EZ Travel and World Information Technology Inc."
The Company filed a Current Report on February 27, 2003, pursuant to Item 4
("Changes in Registrant's Certifying Accountants"), entitled "Resignation of
Public Accountant" and "Engagement of Beckstead and Watts, LLP;" and Item 7
("Exhibit") entitled "Letter of Resignation".
The Company amended its Current Report dated January 3, 2003, pursuant to
Item 1 ("Changes in Control of Registrant"), Item 2 ("Acquisition of Disposition
of Assets"), and Item 7 "Exhibits" entitled "Stock Purchase Agreement by and
between EZ Travel and World Information Technology Inc."
Subsequent Form 8-K Filings:
The Company filed a Current Report dated August 12, 2003, pursuant to Item 5
("Other Events"), entitled "Results of Annual Shareholders Meeting;" and, Item
7. ("Exhibits"), entitled "Employment Agreement."
The Company filed a Current Report dated August 15, 2003, pursuant to Item 5
("Other Events"), entitled "Asset Sale Agreement;" and, Item 7. ("Exhibits"),
entitled "Asset Sale Agreement."
20
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
WORLD INFORMATION TECHNOLOGY, INC.
----------------------------------
Registrant
Dated: August 18, 2003
By: /s/ Gary Morgan
----------------------------------
Gary Morgan
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
Dated: August 18, 2003
By: /s/ Gary Morgan
----------------------------------
Gary Morgan
Chief Executive Officer
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