U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number 333-34308
NEWAVE, INC.
(Exact name of small business issuer as specified in its charter)
Utah 87-0520575
---------- --------------
(state of (IRS Employer
incorporation) I.D. Number)
404 EAST 1ST STREET, #1345
LONG BEACH, CA 90802
(Address and telephone number of principal executive offices)
(562) 983-5331
--------------
(Issuer's telephone number)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for 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 ___
As of March 31, 2005, the Issuer had 10,464,785 shares of common stock
outstanding.
Transitional Small Business Disclosure Format (check one): Yes ___ No X
NEWAVE, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
- --------------------------------
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Item 3. Controls and Procedures.
PART II. OTHER INFORMATION
- ----------------------------
Item 1. Legal Proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
NEWAVE, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
March 31 December 31,
2005 2004
---- ----
ASSETS:
CURRENT ASSETS:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 169,336 $ 210,361
Accounts Receivable. . . . . . . . . . . . . . . . . . . . 406,461 514,956
Allowance for Doubtful Accounts. . . . . . . . . . . . . . (215,000) (215,000)
Other Receivables. . . . . . . . . . . . . . . . . . . . . 290,305 724,865
Inventory. . . . . . . . . . . . . . . . . . . . . . . . . 83,670 39,796
Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . 83,175 199,150
------------ ------------
Total Current Assets. . . . . . . . . . . . . . . . . . 817,947 1,474,128
------------ ------------
FIXED ASSETS:
Equipment. . . . . . . . . . . . . . . . . . . . . . . . . 226,286 213,664
Furniture & Fixtures. . . . . . . . . . . . . . . . . . . 76,123 74,798
Computers & Software . . . . . . . . . . . . . . . . . . . 224,907 163,138
Leasehold Improvements . . . . . . . . . . . . . . . . . . 102,523 89,922
------------ ------------
Total Fixed Assets . . . . . . . . . . . . . . . . . . 629,839 541,522
Less: Accumulated Depreciation . . . . . . . . . . . . (151,914) (119,053)
------------ ------------
Net Fixed Assets . . . . . . . . . . . . . . . . . 477,925 422,469
------------ ------------
OTHER ASSETS:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . 66,392 66,390
------------ ------------
Total Other Assets. . . . . . . . . . . . . . . . . . . 66,392 66,390
------------ ------------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . $ 1,362,264 $ 1,962,987
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable. . . . . . . . . . . . . . . . . . . . . $ 375,235 $ 391,918
Notes Payable . . . . . . . . . . . . . . . . . . . . . . 141,321 165,429
Notes Payable - related party . . . . . . . . . . . . . . 216,211 150,000
Deferred Revenue. . . . . . . . . . . . . . . . . . . . . 118,369 70,563
Convertible Debentures - current. . . . . . . . . . . . . - 434,200
------------ ------------
Total current liabilities . . . . . . . . . . . . . . 851,136 1,212,110
------------ ------------
LONG-TERM DEBT
Convertible Debentures - Long Term. . . . . . . . . . . . 1,025,737 526,803
------------ ------------
Total long-term debt. . . . . . . . . . . . . . . . . 1,025,737 526,803
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 10,000,000 share authorized
zero shares issued and outstanding. . . . . . . . . . . . - -
Common Stock, $.001 par value; 100,000,000 shares authorized
34,885,117 shares issued and outstanding in 2005. . . . . 34,885 11,297
11,295,039 shares issued and outstanding in 2004
Additional paid-in Capital. . . . . . . . . . . . . . . . . . 6,487,442 4,868,061
Stocks to be Issued . . . . . . . . . . . . . . . . . . . . . 579 541
Stock subscription receivable . . . . . . . . . . . . . . . . (1,150,090) (59,880)
Accumulated Deficit . . . . . . . . . . . . . . . . . . . . . (5,887,425) (4,595,945)
------------ ------------
Total stockholders' equity. . . . . . . . . . . . . . . (514,609) 224,074
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. . . . . . . . . . $ 1,362,264 $ 1,962,987
============ ============
NEWAVE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Three-Months Ended
March 31,
---------
2005 2004
---- ----
REVENUE:
Membership Revenue . . . . . . . . . $ 879,941 $ 356,009
Upsell Revenue . . . . . . . . . . . 237,904 344,619
Lead Revenue . . . . . . . . . . . . 65,317 122,793
Other Revenue. . . . . . . . . . . . 75,454 3,395
------------ ------------
Total Revenue . . . . . . . . . . 1,258,616 826,816
------------ ------------
Cost of Goods Sold . . . . . . . . . 50,120 66,278
------------ ------------
NET REVENUE . . . . . . . . . . . . . . 1,208,496 760,538
------------ ------------
EXPENSES:
Salaries. . . . . . . . . . . . . . 749,048 479,716
Advertising . . . . . . . . . . . . 733,651 452,241
Directors Fees. . . . . . . . . . . - 1,548,000
Consulting Fees . . . . . . . . . . 95,392 45,571
Rent. . . . . . . . . . . . . . . . 84,119 43,571
Professional Fees . . . . . . . . . 85,096 18,785
Financing Inducment Fees. . . . . . 159,451 -
Internet Expense. . . . . . . . . . 35,977 -
Investor Relations. . . . . . . . . 161,373 96,768
Telephone . . . . . . . . . . . . . 19,482 -
Payroll Taxes . . . . . . . . . . . 48,357 -
Webhosting Fees . . . . . . . . . . - -
Insurance . . . . . . . . . . . . . 41,085 -
Bad Debt Expense. . . . . . . . . . - -
Depreciation and Amortization . . . 32,891 15,281
Other operating expenses. . . . . . 125,005 105,404
------------ ------------
Total Expenses. . . . . . . . . 2,370,927 2,805,337
------------ ------------
PROFIT (LOSS) FROM OPERATIONS . . . . . (1,162,431) (2,044,799)
------------ ------------
OTHER INCOME/EXPENSE
Interest Expense. . . . . . . . . . (129,049) (554,813)
------------ ------------
NET LOSS. . . . . . . . . . . . . . . . (1,291,480) (2,599,612)
============ ============
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.04) $ (0.08)
============ ============
BASIC AND DILUTED WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING. 34,345,673 31,394,355
============ ============
NEWAVE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Three-Months Ended
March 31,
---------
2005 2004
---- ----
Cash Flows from Operating Activities:
Net Loss . . . . . . . . . . . . . . . . . . . . . $(1,291,480) $(2,599,612)
Stock issued for directors fees. . . . . . . . . - 1,548,000
Depreciation . . . . . . . . . . . . . . . . . . 32,861 123,888
Bad Debt Expense . . . . . . . . . . . . . . . . - -
Debt inducement expense. . . . . . . . . . . . . 552,793 337,291
Debt conversion feature expense. . . . . . . . . - 202,000
Adjustments to reconcile net loss to net cash used
by operating activities
Changes in operating assets and liabilities:
(Increase) Decrease in accounts receivable. . . 108,495 (18,506)
Decrease in other receivables . . . . . . . . . 434,560 -
Decrease in Prepaid Expenses. . . . . . . . . . 115,975 -
(Increase) in deposits. . . . . . . . . . . . . 2 (20,711)
Increase Deferred Revenue . . . . . . . . . . . 47,806 -
(Decrease) accounts payable and accruals. . . . (16,683) (28,422)
------------ ------------
Net Cash Flows Used by Operating Activities. . . . (15,671) (456,072)
------------ ------------
Cash Flows from Investing Activities:
Purchase of Fixed Assets. . . . . . . . . . . . (88,317) (8,432)
Increase (Decrease) in Inventory. . . . . . . . (43,874) 3,983
------------ ------------
Net Cash Flows Provided by Investing Activities. . (132,191) (4,449)
------------ ------------
Cash Flows from Financing Activities:
Payment for acquisition . . . . . . . . . . . . - (150,000)
Payment on Notes payable. . . . . . . . . . . . (24,108) (446,438)
Proceeds from notes payable - related . . . . . 66,211 738,000
Payment of notes payable - related. . . . . . . - (155,000)
Proceeds from line of credit. . . . . . . . . . - 515,178
Proceeds from notes payable . . . . . . . . . . - 28,000
Payment of long-term debt . . . . . . . . . . . - (890)
Proceeds from convertible debentures. . . . . . 64,734 -
Issuance of Common Stock. . . . . . . . . . . . - -
------------ ------------
Net Cash Flows Provided by Financing Activities. . 106,837 528,850
------------ ------------
Net Increase (Decrease) in Cash. . . . . . . . . . (41,025) 68,329
------------ ------------
Cash at Beginning of Period. . . . . . . . . . . . 210,361 -
------------ ------------
Cash at End of Period. . . . . . . . . . . . . . . $ 169,336 $ 68,329
============ ============
Supplemental Disclosure of Cash Flows Information:
Cash paid for interest . . . . . . . . . . . . $ 45,136 $ 4,394
============ ============
Cash paid for taxes. . . . . . . . . . . . . . $ - $ 800
============ ============
Stock
Addi- Subscrip-
tional Shares tions Accum-
Pre- Paid-In To Be Receiv- ulated
ferred Stock Common Stock Capital Issued able Deficit Total
------- ---------- ---------- -------- ----------- -------- ------------ ------------ ------------
# of # of
Shares Amount Shares Amount
------- ---------- ---------- --------
Balance -
December 31, 2003 - - 27,590 28 144,972 - - (605,386) (460,386)
------- ---------- ---------- -------- ----------- -------- ------------ ------------ ------------
Issuance of stock
for Reverse Merger. . 94 - 572,159 574 (153,997) - (59,880) (105,697) (319,000)
Issuance of stock
for preferred stock . (94) - 9,418,000 9,418 (9,418) - - - -
Issuance of stock
for services. . . . . - - 430,000 430 1,128,670 250 - - 1,129,350
Issuance of stock
for director's
expense. . . . . . . - - 750,000 750 1,547,250 - - - 1,548,000
Conversion on
convertible
debenture. . . . . . - - - - 655,616 50 - - 655,666
Conversion
of debentures . . . . - - 77,290 77 252,835 88 - - 253,000
Issuance of
stock warrants. . . . - - 20,000 20 1,302,133 153 - - 1,302,306
Net Loss for Year . . - - - - - - (3,884,862) (3,884,862)
------- ---------- ---------- -------- ----------- -------- ------------ ------------
Balance -
December 31, 2004 - - 11,295,039 11,297 4,868,061 541 (59,880) (4,595,945) 224,074
------- ---------- ---------- -------- ----------- -------- ------------ ------------ ------------
Issuance of stock
for inducement. . . . - - - - 40,181 38 - - 40,219
Issuance of stock
for equity line . . . - - 139,000 139 274,930 (69) - - 275,000
Issuance of stock
for cash. . . . . . . - - 61,000 59 342,151 - (342,210) - -
Stock split (3 for 1) - - 22,990,078 22,990 (22,990) - - - -
Issuance of stock
for equity line . . . - - - - 207,529 49 - - 207,578
Issuance of stock
for cash. . . . . . . - - 400,000 400 747,600 - (748,000) - -
Issuance of stock
for equity line . . . - - - - 29,980 20 - - 30,000
Net Loss for Period . - - - - - - - (1,291,480) (1,291,480)
------- ---------- ---------- -------- ----------- -------- ------------ ------------ ------------
Balance -
March 31, 2005 - $ - 34,885,117 $ 34,885 $6,487,442 $ 579 $(1,150,090) $(5,887,425) $ (514,609)
======= ========== ========== ======== =========== ======== ============ ============ ============
NEWAVE, INC.
(FORMERLY UTAH CLAY TECHNOLOGY, INC.)
FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS.
Board of Directors
NeWave, Inc.
Long Beach, CA
We have reviewed the accompanying consolidated balance sheets of NeWave, Inc.,
as of March 31, 2005 and 2004, and the related statements of operations and cash
flows for the three-months ended March 31, 2005 and 2004, include in the
accompanying Securities and Exchange Commission 10-QSB for the period ended
March 31, 2005. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards of the Public Company
Accounting Oversight Board (United States). The review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquires of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 3 to the
financial statements, conditions exist which raise substantial doubt about the
Company's ability to continue as a going concern unless it is able to generate
sufficient cash flows to meet its obligations and sustain its operation. The
Company lost $5,887,425 from operations through March 31, 2005. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Denver, Colorado
May 23, 2005
NEWAVE, INC.
(Formerly Utah Clay Technology, Inc.
Notes to Financial Statements
March 31, 2005
Note 1 - Organization and Summary of Significant Accounting Policies:
------------------------------------------------------------------
Organization:
- -------------
Utah Clay Technology, Inc. (the "Company"), a Utah corporation, was incorporated
on March 1, 1994. On December 24, 2003 the Company entered into an Agreement and
Plan of Reorganization with Ne.Wave, Inc. a Nevada corporation, pursuant to
which the Company agreed that NeWave, Inc. would become the wholly-owned
subsidiary subject to the parties to the Agreement meeting certain conditions.
The parties to the Agreement satisfied the required conditions to close on
January 15, 2004, including transfer of all funds. On January 15, 2004, all
outstanding shares of Utah Clay Technology, Inc. common stock were acquired by
NeWave, Inc. The purchase price consisted of $150,000 and the assumption of
$165,000 in convertible debt for 576,968 shares of NeWave, Inc. dba
Onlinesupplier.com's common stock. Although from a legal perspective, NeWave,
Inc. acquired NeWave dba Onlinesupplier.com, the transaction is viewed as a
recapitaliztion of NeWave dba Onlinesupplier.com accompanied by an issuance of
stock by NeWave dba Onlinesupplier.com for the net assets of NeWave, Inc. This
is because NeWave, Inc. did not have operations immediately prior to the
transaction, and following the reorganization, NeWave dba Onlinesupplier.com was
the operating company. Effective February 11, 2004 the Company changed its name
from Utah Clay Technology, Inc. to Newave, Inc. The company offers a
comprehensive line of products and services at wholesale prices through an
online club membership. Additionally, the Company creates, manages and
maintains effective website solutions for eCommerce.
Basis of Accounting:
- ----------------------
The accompanying financial statements have been prepared on the accrual basis of
accounting in accordance with generally accepted accounting principles.
Cash and Cash Equivalents:
- ----------------------------
The Company considers all highly liquid debt instruments, purchased with an
original maturity of three months or less, to be cash equivalents.
Use of Estimates:
- -------------------
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Property & Equipment:
- -----------------------
Property and equipment are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the related assets,
generally three to seven years.
NEWAVE, INC.
(Formerly Utah Clay Technology, Inc.)
Notes to Financial Statements
March 31, 2005
Note 1 - Organization and Summary of Significant Accounting Policies (cont):
--------------------------------------------------------------------
Income Taxes:
- --------------
Deferred income tax assets and liabilities are computed annually for differences
between the financial statements and tax basis of assets and liabilities that
will result in taxable or deductible amounts in the future based on enacted laws
and rates applicable to the periods in which the differences are expected to
affect taxable income (loss).
Basic and Diluted Net Loss per Share:
- -------------------------------------------
Net loss per share is calculated in accordance with the Statement of financial
accounting standards No. 128 (SFAS 128), Earnings per share. SFAS No. 128
superseded Accounting Principles Board Opinion No. 15 (APB 15). Net loss per
share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average
number of common shares outstanding. Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method.
Under this method, options and warrants are assumed to be exercised at the
beginning of the period (or at the time of issuance, if later), and as if funds
obtained thereby were used to purchase common stock at the average market price
during the period.
Stock Based Compensation:
- ---------------------------
The Company has adopted the disclosure provisions only of SFAS No. 123 and
continues to account for stock based compensation using the intrinsic value
method prescribed in accordance with the provisions of APB No. 25, "Accounting
for Stock Issued to Employees", and related interpretations. Common stock
issued to employees for compensation is accounted for based on the market price
of the underlying stock, generally the average low bid price.
Fair Value of Financial Instruments:
- ----------------------------------------
Statement of financial accounting standards No. 107, "Disclosures about Fair
Value of Financial Instruments", requires that the Company disclose estimated
fair values of financial instruments. The carrying amounts reported in the
statements of financial position for current assets and current liabilities
qualifying as financial instruments are a reasonable estimated of fair value.
Comprehensive Income:
- ---------------------
Statement of financial accounting standards No. 130, "Reporting Comprehensive
Income", (SFAS No. 130), establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity, except those resulting from
investments by owners and distributions to owners. Among other disclosures,
SFAS No. 130 requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income be reported
in a financial statements that is displayed with the same prominence as other
financial statements. The Company adopted this standard in 1998 and the
implementation of this standard did not have a material impact on its financial
statements.
NEWAVE, INC.
(Formerly Utah Clay Technology, Inc.)
Notes to Financial Statements
March 31, 2005
Note 1 - Organization and Summary of Significant Accounting Policies (cont):
--------------------------------------------------------------------
Accounts Receivable:
- ---------------------
The Company maintains an allowance for doubtful accounts for estimated losses
that may arise if any of its customers are unable to make required payments.
Management specifically analyzes the age of customer balances, historical bad
debt experience, customer credit-worthiness, and changes in customer payments
terms when making estimates of the uncollectibility of the Company's trade
accounts receivable balances. If the Company determines that the financial
conditions of any of its customers deteriorated, whether due to customer
specific or general economic issues, an increase in the allowance will be made.
Accounts receivable are written off when all collection attempts have failed.
Inventory:
- ----------
Inventories consist of a variety of wholesale goods purchased for individual
resale and are stated at the lower of cost, determined by the first-in,
first-out ("FIFO") method, or market.
Revenue Recognition:
- ---------------------
In 2003, the Company had four revenue streams: membership fees earned from web
hosting and other web-based services provided to the Company's customers, cross
selling of services provided by affiliated service providers, sales of customer
lead information generated from potential customers who decide not to use the
Company's services and lastly, product sales from the Company's online store. In
2004, the Company added additional revenue streams: advertising income and
commissions earned from referrals to affiliated credit card processing service
providers. The Company does not provide multiple deliverables to its customers
as described in EITF 00-21. Instead, the Company generally uses one revenue
stream to develop potential revenues from another source, not from the same
source. As such, the Company does not anticipate that the adoption of EITF 00-21
has a material effect on the financial statements.
The Company's revenues earned from membership setup fees and monthly charges are
recorded when the credit card transaction is processed and the Company has
received the cash proceeds from the credit card processor. The Company does not
recognize the revenues earned related to membership fees charged to credit cards
until the revenue is collected. This is due to the uncertainty surrounding the
credit card transactions and the varying percentage of credit card chargebacks.
Current terms of the onlinesupplier.com membership agreement stipulate that the
customer pays a nonrefundable $6.95 fee to set up an account. The customer then
has a fourteen day period to review the Company's offerings. If the customer
does not cancel the service within the fourteen day window, a charge of $29.95
is billed to the customer's credit card on a monthly basis.
The Company initiates the sale of products for its affiliates during the process
of selling the Company's own products, normally when an individual calls the
Company's sales or customer service department. The Company's internal system
maintains records of each sale of an affiliate's product. The affiliate
completes the sales process by fulfilling the particular product. Payments are
forwarded to the Company, plus or minus two percent of actual billings, when the
affiliate has completed the fulfillment of their product and has approved the
cross selling revenue due to the Company. The Company notes that on a
historical basis, its affiliates have generally approved all sales initiated by
the Company. The Company recognizes cross selling revenues once it has
reconcilied its internal records of cross selling sales with the affiliate's
records. The Company has several contracts with affiliates. The terms of each
contract are varied but in most cases, a minimum/flat amount of revenue is
earned per sale based on a certain volume being reached.
The Company generates leads for Applied Merchant as potential customers of the
Company contact the Company's customer service department. The Company can not
reasonably determine the actual incremental cost incurred in the process of
generating each telephone call from a potential customer. Therefore costs are
expensed as incurred.
The Company recognizes income when the products are received by the customer.
The Company applies the provisions of SEC Staff Accounting Bulletin ("SAB") No.
104, "Revenue Recognition in Financial Statements" which provides guidance on
the recognition, presentation and disclosure of revenue in financial statements.
SAB No. 104 outlines the basic criteria that must be met to recognize revenue
and provides guidance for the disclosure of revenue recognition policies. The
Company's revenue recognition policy for sale of products is in compliance with
SAB No. 104. Revenue from the sale of products is recognized when a formal
arrangement exists, the price is fixed or determinable, the delivery is
completed and collectibility is reasonably assured. Generally, the Company
extends credit to its customers and does not require collateral. The Company
performs ongoing credit evaluations of its customers and historic credit losses
have been within management's expectations. The Company accounts for sales
returns related to product sales on an individual basis, as they occur. Sales
returns related to product sales have not been significant in the past.
Note 2 - Federal Income Taxes:
-----------------------
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards Number 109 ("SFAS 109"). "Accounting for Income
Taxes", which requires a change from the deferred method to the asset and
liability method of accounting for income taxes. Under the asset and liability
method, deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates applicable to
future years to differences between the financial statement carrying amounts and
the tax basis of existing assets and liabilities.
2004 2003
------- --------
Deferred tax assets
Net operating loss carryforwards $ 5,886,425 $ 4,595,945
Valuation allowance (5,886,425) (4,595,945)
------------- -------------
Net deferred tax assets $ 0 $ 0
============= =============
NEWAVE, INC.
(Formerly Utah Clay Technology, Inc.)
Notes to Financial Statements
March 31, 2005
Note 2 - Federal Income Taxes (cont):
-------------------------------
At March 31, 2005, the Company had net operating loss carryforwards of
approximately $7,189,256 for federal income tax purposes. These carryforwards
if not utilized to offset taxable income will begin to expire in 2010.
Note 3 - Going Concern:
---------------
The Company's financial statements have been prepared on the basis that it is a
going concern, which contemplated the realization of assets and the satisfaction
of liabilities in the normal course of business.
The Company incurred a net loss of $1,291,480 for the period ended March 31,
2005. The financial statements do not include any adjustments that might be
necessary should the Company be unable to continue as a going concern. The
Company plans to finance the continued operations for the next year through
private funding and funding from officers of the Company.
Note 4 - Accounts Receivables:
----------------------
As of March 31, 2005, the Company had accounts receivable of $406,461 and other
receivables in the amount of $290,305 made up of the following:
Accounts Receivable
Impact Legal $316,963
Platinum Values 72,256
Misc. Receivables 15,242
----------
$404,461
========
Other Receivables
ACH Credit Card Payments 25,927
Employee loans 8,564
Concorde Payment Systems 315,814
---------
350,305
Less: Allowance (60,000)
---------
$290,305
=========
Note 5 - Accounts Payable & Accrued Expenses:
----------------------------------------
Accounts Payable and Accrued Expenses $246,753
Accrued Payroll and Payroll Taxes 114,605
---------
$361,358
========
Note 6 - Notes Payable - Related Parties and Others:
-------------------------------------------------
Notes Payable - Others:
- --------------------------
Notes Payable to others, unsecured, bearing an interest
rate of 9% per annum, unsecured and due on demand. $ 50,000
Notes Payable to others, unsecured, bearing an interest
rate of 9% per annum, unsecured and due on demand. 2,094
----------
$ 52,094
==========
Notes Payable - Related Parties:
- ------------------------------------
Note Payable to a majority shareholder, unsecured,
bearing an interest rate of 10%, due on demand. $ 125,000
Note Payable to a majority shareholder, unsecured,
none interest bearing and due on demand. 78,074
Note Payable to a majority shareholder, unsecured,
none interest bearing and due April 11, 2005. 66,211
Note Payable to a majority shareholder, unsecured,
bearing an interest rate of 6%, due on demand. 25,000
Note Payable to a majority shareholder, unsecured,
bearing an interest rate of 6%, due on demand. 25,000
----------
$ 319,285
==========
NEWAVE, INC.
(Formerly Utah Clay Technology, Inc.)
Notes to Financial Statements
March 31, 2005
Note 7 - Convertible Debentures:
------------------------
On January 15, 2004 the Company issued $250,000 worth of 6%, 5-year Term,
Convertible Debentures, (the "Debentures), on January 25, 2004 the Company
issued $355,000 worth of 6%, 5-year Term, Convertible Debentures, on January 26,
2004 the Company issued $50,000 worth of 6%, 5-year Term Convertible Debentures,
on March 3, 2004 the Company issued $28,000 worth of 6%, 5-year Term,
Convertible Debentures, on April 1, 2004 the Company issued $180,000 worth of
8%, 5-year Term, Convertible Debentures, on May 5, 2004 the Company issued
$180,000 worth of 8%, 5-year Term, Convertible Debentures, on July 7, 2004 the
Company issued $180,000 worth of 8%, 5-year Term, Convertible Debentures, on
August 18, 2004 the Company issued $204,000 worth of 8%, 5-year Term,
Convertible Debentures, on September 25, 2004 the Company issued $282,000 worth
of 8%, 5-year Term, Convertible Debentures, on October 25, 2004 the Company
issued $60,000 worth of 8%, 5-year Term, Convertible Debentures, on November 11,
2004 the Company issued $162,000 worth of 8%, 5-year Term, Convertible
Debentures, on December 28, 2004 the Company issued $240,000 worth of 8%, 5-year
Term, Convertible Debentures.
The Debentures shall pay six percent (6%) or eight percent (8%) cumulative
interest, in cash or in shares of common stock, par value $.001 per share, of
the Company, at the Company's option, at the time of each conversion. The
Company shall pay interest on the unpaid principal amount of this Debenture at
the time of each conversion until the principal amount hereof is paid in full or
has been converted. If the interest is to be paid in cash, the Company shall
make such payment within five (5) business days of the date of conversion. If
the interest is to be paid in Common Stock, said Common Stock shall be delivered
to the Holder, or per Holder's instructions, within five (5) business days of
the date of conversion. The Debentures are subject to automatic conversion at
the end of five (5) years from the date of issuance at which time all Debentures
outstanding will be automatically converted based upon the formula set forth in
the agreement
The principal amount of this Debenture is secured by shares pledged as
collateral pursuant to the terms of a Security Agreement. This Debenture is a
full recourse loan being made by the Holder and the Company is liable for any
deficiency.
Note 8 - Capital Stock
--------------
Common Stock
- -------------
In January 2004, the Company increased the authorized shares of common stock to
300,000,000.
During the year ended March 31, 2005, the following shares of common stock were
issued by the Company:
The Company issued 278,000 shares of the Company's common stock for $512,578 in
connection with the Equity Line Agreeemnet dated _______________ with Preston
Capital Partners.
The Company agreed to issue 75,000 shares of the Company's common stock valued
at $40,219 to a majority shareholder as an inducement to provide financing to
the Company.
The Company issued 522,000 shares of the Company's common stock for $1,090,210
to a majority shareholder. The proceeds had not yet been received by the
Company as of the date of these financial statements.
NEWAVE, INC.
(Formerly Utah Clay Technology, Inc.)
Notes to Financial Statements
March 31, 2005
Note 8 - Capital Stock (cont):
-----------------------
The Company effectuated a 3 for 1 forward stock split on February 18, 2005. All
shares have been stated to retroactively affect this reverse stock split.
Preferred Stock
- ----------------
Effective September30, 1996, the Company authorized 10,000,000 share of
preferred stock at par value of $.001. There are no preferred stock outstanding
as of March 31, 2005.
Note 9 - Financial Accounting Developments:
------------------------------------
Recently issued Accounting Pronouncements
In February 2003, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 150, "Accounting for Certain Financial Instruments with Characteristics of
Both Liabilities and Equity". SFAS 150 is effective for financial instruments
entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. This
statement establishes new standards of how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. SFAS 150 requires that an issuer classify a financial instrument that
is within the scope of this statement as a liability because the financial
instrument embodies an obligation of the issuer. This statement applies to
certain forms of mandatorily redeemable financial instruments including certain
types of preferred stock, written put options and forward contracts. SFAS 150
did not materially effect the financial statements.
In December 2003, the FASB issued FASB Interpretation No. 146, (revised
December 2003) "Consolidation of Variable Interest Entities" (FIN 146) which
addresses how a business enterprise should evaluate whether it has a controlling
financial interest in an entity through means other than voting rights and
accordingly should consolidate the entity. FIN No. 146R replaces FASB
Interpretation No. 146, "Consolidation of Variable Interest Entities", which was
issued in January 2003. Companies are required to apply FIN No. 146R to
variable interests in variable interest entities ("VIEs") created after December
31, 2003. For variable interest in VIEs created before January 1, 2004, the
Interpretation is applied beginning January 1, 2005. For any VIEs that must be
consolidated under FIN No. 146R that were created before January 1, 2004,the
assets, liabilities and non-controlling interests of the VIE initially are
measured at their carrying amounts with any difference between the net amount
added to the balance sheet and any previously recognized interest being
recognized as the cumulative effect of an accounting change.
NEWAVE, INC.
(Formerly Utah Clay Technology, Inc.)
Notes to Financial Statements
March 31, 2005
Recently issued Accounting Pronouncements (cont):
If determining the carrying amounts is not practicable, fair value at the date
FIN No. 146R first applies may be used to measure the assets, liabilities and
non-controlling interest of the VIE. The Company doe not have any interest in
any VIE.
In March 2003, the FAS issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". SFAS 149 is effective for
contracts entered into or modified after June 30, 2003. This statement amends
and clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
133, "Accounting for Derivative Instruments and Hedging Activities". SFAS
149did not materially effect the financial statements.
In December 2004, the FASB issued SFAS No. 123(R)(revised 2004), "Share Based
Payment" which amends FASB Statement No. 123 and will be effective for public
companies for interim or annual periods after January 15, 2005. The new
standard will require entities to expense employee stock options and other
share-based payments. The new standard may be adopted in one of three ways -
the modified prospective transition method, a variation of the modified
prospective transition method or the modified retrospective transition method.
The Company is to evaluate how it will adopt the standard and evaluate the
effect that the adoption of SFAS 123(R) will have on our financial position and
results of operations.
In November 2004, the FASB issued SFAS NO. 151, "Inventory Costs, an amendment
of ARB No 43, Chapter 4". This statement amends the guidance in ARB No. 43,
Chapter 4 Inventory Pricing, to clarify the accounting for abnormal amounts of
idle facility expense, freight, handling cost, and wasted material (spoilage).
Paragraph 5 of ARB No. 43, Chapter 4, previously stated that, "under some
circumstances, items such as idle facility expense, excessive spoilage, double
freight and rehandling costs may be so abnormal as to require treatment as
current period charges." SFAS No. 151 requires that those items be recognized
as current-period charges regardless of whether they meet the criterion of "so
abnormal". In addition, this statement requires that allocation of fixed
production overheads to the costs of conversion be based on the prospectively
and are effective for inventory costs incurred during fiscal years beginning
after June 5, 2005, with earlier application permitted for inventory costs
incurred during fiscal years beginning after the date this Statement was issued.
The adoption of SFAS No. 151 is not expected to have a material impact on the
Company's financial position and results of operations.
In December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary
Assets, an amendment of APB Opinion No. 29. The guidance in APB Opinion 29,
Accounting for Non-monetary Transactions, is based on the principle that
exchange of non-monetary assets should be measured based on the fair value of
assets exchanged. The guidance in that Opinion, however, included certain
exceptions to that principle. This Statement amends Opinion 29 to eliminate the
exception for non-monetary exchanges of similar productive assets that do not
have commercial substance. A non-monetary exchange has commercial substance if
the future cash flows of the entity are expected to change significantly as a
result of the exchange. SFAS No. 153 is effective for non-monetary exchanges
occurring in fiscal periods beginning after June 15, 2005. The adoption of SFAS
No. 153 is not expected to have a material impact on the Company's financial
position and results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The discussion and financial statements contained herein are for the three
months ended March 31, 2005 and March 31, 2004. The following discussion should
be read in conjunction with our financial statements and the notes thereto
included herewith.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Report on Form 10-QSB contains forward-looking statements, including,
without limitation, statements concerning possible or assumed future results of
operations and those preceded by, followed by or that include the words
"believes," "could," "expects," "intends," "anticipates," or similar
expressions. Our actual results could differ materially from these anticipated
in the forward-looking statements for many reasons including: materially adverse
changes in economic conditions in the markets that we and our subsidiary serve;
competition from others in the markets and industry segments occupied by us and
our subsidiary; the ability to enter, the timing of entry and the profitability
of entering new markets; greater than expected costs or difficulties related to
the integration of the businesses acquired by our subsidiary; and other risks
and uncertainties as may be detailed in our 10-KSB for the year ended December
31, 2004 and from time to time in our public announcements and SEC filings.
Although we believe the expectations reflected in the forward-looking statements
are reasonable, they relate only to events as of the date on which the
statements are made, and our future results, levels of activity, performance or
achievements may not meet these expectations. We do not intend to update any of
the forward-looking statements after the date of this document to conform these
statements to actual results or to changes in our expectations, except as
required by law.
OVERVIEW
We incorporated in the State of Utah on March 1, 1994 as Utah Clay Technology,
Inc. From our formation until January 15, 2004, our business plan included:
(1) locating kaolin deposits in Utah;
(2) obtaining the legal rights to these deposits;
(3) conducting exploratory operations;
(4) testing the extracted minerals in the laboratory; and
(5) selling samples of the processed form of our kaolin to a commercial company
for market evaluation.
Although we did obtain certain legal rights to properties possibly containing
kaolin, due to a lack of capital, we never commenced mining operations. As a
result, we have had no revenues since our inception. On January 15, 2004, we
abandoned our business plan. On the same date, pursuant to an Agreement and Plan
of Reorganization with NeWave, Inc., a Nevada corporation, we changed our name
to NeWave, Inc. and OnlineSupplier.com became our wholly-owned subsidiary. We
own and operate an online membership club that offers a comprehensive line of
products and services at wholesale prices through our membership program. As a
result of this change in our focus and direction, the entire former management
team and board of directors resigned and we employed a new management team and
appointed a new board of directors.
On January 30, 2004, the State of Utah recognized our name change to NeWave,
Inc. We acquired our operating subsidiary, Onlinesupplier.com, on January 15,
2004 and its operations are therefore not reflected on our financial statements
for the fiscal year ending December 31, 2003. We did not generate any revenues
in the fiscal year ending December 31, 2003.
THREE MONTHS ENDED MARCH 31, 2005 AS COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 2004.
REVENUES
We generated revenues of $1,258,616 for the three months ended March 31, 2005,
as compared to $826,816 for the three months ended March 31, 2004. The increase
in revenue is due to our increased marketing and sales efforts. We have
increased our advertising budget and sales campaigns as well as hired new
approximately 100 employees. The increase in operations has lead to the increase
in Revenue.
OPERATING EXPENSES
- -------------------
We incurred costs of $2,370,927 for the three months ended March 31, 2005 as
compared to $2,805,337 for the three months ended March 31, 2004. The decrease
in Operating Expenses was due to a decrease in directors fees which totaled
$1,548,000 in the first quarter of 2004. There was an increase in advertising,
salaries and financing inducement fees.
Net loss
- ---------
We had a net loss of $1,291,480 for the three months ended March 31, 2005 as
compared to $2,599,612 for the three months ended March 31, 2004. The decrease
in expenses due to the factors above contributed mainly to the decrease in our
loss as well.
Basic and diluted loss per share
- -------------------------------------
Our basic and diluted loss per share for the three months ended March 31, 2005
was ($0.04) as compared to ($0.08) for the three months ended March 31, 2004.
LIQUIDITY AND CAPITAL RESOURCES
- ----------------------------------
We must continue to raise capital to fulfill our plan of acquiring companies and
assisting in the development of those companies internally. If we are unable to
raise any additional capital, our operations will be curtailed. As of March 31,
2005, we had total Current Assets of $817,947. We had Current Liabilities of
$851,106 for the three months ended March 31, 2005. Cash and cash equivalents
were $169,336 for the three months ended March 31, 2005. Our Stockholder's
Deficit at March 31, 2005 was ($514,609).
We had a net usage of cash due to operating activities in as of March 31, 2005
of ($482,071) as compared to ($452,089) for the same period ended 2004. The
increase was due to an increase in accounts and other receivable and prepaid
expenses while directors fees decreased substantially. We had net cash provided
by financing activities of $529,365 in the three months ended March 31, 2005
including $512,578 of proceeds for the equity line and $300,000 from
related-party borrowings; as compared to $528,850 for the same period ended
2004.
FINANCING ACTIVITIES
- ---------------------
On February 11, 2005, we issued a Note to Dutchess Private Equities Fund, II, in
the amount of $360,000. The Note has a 0% interest rate and is due on June 11,
2005.
SUBSIDIARIES
- ------------
As of March 31, 2004, we have two subsidiaries, Onlinesupplier.com, Inc.
and Auction Liquidator.
ITEM 3. CONTROLS AND PROCEDURES.
Evaluation of disclosure controls and procedures. Our management, with the
participation of our principal executive officer and principal financial
officer, has evaluated the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended) as of the end of the
period covered by this Quarterly Report on Form 10-QSB. Based on this
evaluation, our principal executive officer and principal financial officer
concluded that these disclosure controls and procedures are effective and
designed to ensure that the information required to be disclosed in our reports
filed or submitted under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the requisite time periods.
Changes in internal controls. There was no change in our internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Securities Exchange Act of 1934, as amended) that occurred during our last
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On February 20, 2004, we initiated legal proceedings in Superior Court, County
of Santa Barbara, Anacapa Division against Paydirt, L.P., a Utah limited
partnership, alleging causes of action for usury, unfair business practices and
unfair competition in connection with loan agreements entered into with Paydirt
in September and November 2003. This action is entitled NeWave, Inc. et al. v.
Paydirt, Case No. 01156046 (S.B.S.C.). The parties to the lawsuit dispute
whether we currently owe Paydirt the sum of $225,829. Paydirt retained
California counsel, who removed our superior court action to the United States
District Court, Central District of California. On April 5, 2004, Paydirt filed
a motion to dismiss our action. While this motion was pending, Paydirt initiated
an action in the State of Utah, Washington County entitled Paydirt, LP v.
NeWave, Inc. et al., Civil No. 040500597 (Wash. County, Utah). On May 3, 2004,
the District Court dismissed our complaint without prejudice to our filing the
action in Utah. Subsequently, we have settled the lawsuit by agreeing to make an
aggregate payment to Paydirt of $180,000.
We believe that there are no other claims or litigation pending, the outcome of
which could have a material adverse effect on our financial condition or
operating results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
NOT APPLICABLE.
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.
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
- ---------------------------------------------
2.1 Agreement and Plan of Reorganization between Utah Clay Technology, Inc. and
NeWave, Inc., D.B.A. Online Supplier NeWave Shareholders and Dutchess Advisors,
Ltd., dated December 24, 2003 (included as Exhibit 2.1 to the Form 8-K filed
February 12, 2004, and incorporated herein by reference).
3.1 Articles of Incorporation (included as Exhibit 3.(i) to the Form SB-2/A
filed April 11, 2000, and incorporated herein by reference).
3.2 Amended Articles of Incorporation (included as Exhibit 3.(i) to the Form
10-QSB filed November 14, 2001, and incorporated herein by reference).
3.3 Articles of Amendment to Articles of Incorporation, dated January 30, 2004
(included as Exhibit 3.2 to the 10-QSB filed May 24, 2004, and incorporated
herein by reference).
3.4 By-laws (included as Exhibit 3.(ii) to the Form SB-2/A filed April 11, 2000,
and incorporated herein by reference).
4.1 Debenture Agreement between the Company and Dutchess Private Equities Fund,
dated January 5, 2004 (included as Exhibit 4.1 to the Form 10-QSB filed May 24,
2004, and incorporated herein by reference).
4.2 Debenture Agreement between the Company and Dutchess Private Equities Fund,
dated January 25, 2004 (included as Exhibit 4.2 to the Form 10-QSB filed May 24,
2004, and incorporated herein by reference).
4.3 Debenture Agreement between the Company and eFund Capital Partners, LLC,
dated January 26, 2004 (included as Exhibit 4.3 to the Form 10-QSB filed May
24, 2004, and incorporated herein by reference).
4.4 Debenture Agreement between the Company and eFund Capital Partners, LLC,
dated February 19, 2004 (included as Exhibit 4.4 to the Form 10-QSB filed May
24, 2004, and incorporated herein by reference).
4.5 Debenture Agreement between the Company and Preston Capital Partners, LLC,
dated March 3, 2004 (included as Exhibit 4.5 to the Form 10-QSB filed May 24,
2004, and incorporated herein by reference).
4.6 Debenture Agreement between the Company and Dutchess Private Equities Fund,
II, dated April 1, 2004 (included as Exhibit 4.6 to the Form 10-QSB filed August
23, 2004, and incorporated herein by reference).
4.7 Debenture Agreement between the Company and eFund Capital Partners, dated
April 2, 2004 (included as Exhibit 4.7 to the Form 10-QSB filed August 23, 2004,
and incorporated herein by reference).
4.8 Debenture Agreement between the Company and Dutchess Private Equities Fund,
II, dated May 5, 2004 (included as Exhibit 4.8 to the Form 10-QSB filed August
23, 2004, and incorporated herein by reference).
4.9 Debenture Agreement between the Company and eFund Capital Partners, dated
May 5, 2004 (included as Exhibit 4.9 to the Form 10-QSB filed August 23, 2004,
and incorporated herein by reference).
4.10 Warrant Agreement between the Company and Dutchess Private Equities Fund,
II, LP, dated April 1, 2004 (included as Exhibit 4.10 to the Form SB-2 filed
October 8, 2004, and incorporated herein by reference).
4.11 Warrant Agreement between the Company and eFund Capital Partners, dated
April 2, 2004 (included as Exhibit 4.11 to the Form SB-2 filed October 8, 2004,
and incorporated herein by reference).
4.12 Warrant Agreement between the Company and Dutchess Private Equities Fund,
II, LP, dated May 5, 2004 (included as Exhibit 4.12 to the Form SB-2 filed
October 8, 2004, and incorporated herein by reference).
4.13 Warrant Agreement between the Company and eFund Capital Partners, dated
May 5, 2004 (included as Exhibit 4.13 to the Form SB-2 filed October 8, 2004,
and incorporated herein by reference).
4.14 Warrant Agreement between the Company and Dutchess Private Equities Fund,
II, LP, dated July 9, 2004 (included as Exhibit 4.14 to the Form SB-2 filed
October 8, 2004, and incorporated herein by reference).
4.15 Debenture Agreement between the Company and Dutchess Private Equities Fund
II, LP, dated July 9, 2004 (included as Exhibit 4.15 to the Form SB-2 filed
October 8, 2004, and incorporated herein by reference).
4.16 Debenture Agreement between the Company and Dutchess Private Equities Fund
II, LP, dated August 15, 2004 (included as Exhibit 4.16 to the Form SB-2 filed
October 8, 2004, and incorporated herein by reference).
4.17 Debenture Agreement between the Company and eFund Small Cap Fund, LP,
dated August 15, 2004 (included as Exhibit 4.17 to the Form SB-2 filed October
8, 2004, and incorporated herein by reference).
4.18 Warrant Agreement between the Company and Dutchess Private Equities Fund,
II, LP, dated August 18, 2004 (included as Exhibit 4.18 to the Form SB-2 filed
October 8, 2004, and incorporated herein by reference).
4.19 Warrant Agreement between the Company and eFund Small Cap Fund, LP, dated
August 18, 2004 (included as Exhibit 4.19 to the Form SB-2 filed October 8,
2004, and incorporated herein by reference).
4.20 Debenture Agreement between the Company and Dutchess Private Equities
Fund, LP, dated September 25, 2004 (included as Exhibit 4.20 to the Form SB-2
filed October 8, 2004, and incorporated herein by reference).
4.21 Debenture Agreement between the Company and eFund Small Cap Fund, LP,
dated September 25, 2004 (included as Exhibit 4.21 to the Form SB-2 filed
October 8, 2004, and incorporated herein by reference).
4.22 Warrant Agreement between the Company and Dutchess Private Equities Fund,
LP, dated September 25, 2004 (included as Exhibit 4.22 to the Form SB-2 filed
October 8, 2004, and incorporated herein by reference).
4.23 Warrant Agreement between the Company and eFund Small Cap Fund, LP, dated
September 25, 2004 (included as Exhibit 4.23 to the Form SB-2 filed October 8,
2004, and incorporated herein by reference).
4.24 Debenture Agreement between the Company and Dutchess Private Equities Fund,
dated February 4, 2004 (included as Exhibit 4.24 to the Form SB-2 filed December
9, 2004, and incorporated herein by reference).
4.25 Debenture Agreement between the Company and Dutchess Private Equities
Fund, II, LP, dated October 25, 2004 (included as Exhibit 4.25 to the
Form 10-KSB filed April 15, 2005, and incorporated herein by reference).
4.26 Warrant Agreement between the Company and Dutchess Private Equities Fund,
II, LP, dated October 25, 2004 (included as Exhibit 4.26 to the Form
10-KSB filed
April 15, 2005, and incorporated herein by reference).
4.27 Debenture Agreement between the Company and Dutchess Private Equities
Fund, II, LP, dated November 11, 2004 (included as Exhibit 4.27 to the
Form 10-KSB filed April 15, 2005, and incorporated herein by reference).
4.28 Warrant Agreement between the Company and Dutchess Private Equities Fund,
LP, dated November 11, 2004 (included as Exhibit 4.28 to the Form 10-KSB
filed
April 15, 2005, and incorporated herein by reference).
4.29 Debenture Agreement between the Company and Dutchess Private Equities
Fund, II, LP, dated December 28, 2004 (included as Exhibit 4.29 to the
Form 10-KSB filed April 15, 2005, and incorporated herein by reference).
4.30 Warrant Agreement between the Company and Dutchess Private Equities Fund,
LP, dated December 28, 2004 (included as Exhibit 4.30 to the Form 10-KSB
filed
April 15, 2005, and incorporated herein by reference).
4.31 Promissory Note between the Company and Dutchess Private Equities
Fund, II, LP, dated February 11, 2005 (filed herewith).
10.1 2000 Stock Option Plan (included as Exhibit 9 to the Form SB-2/A filed
April 11, 2000, and incorporated herein by reference).
10.2 Sublease between the Company and Pinnacle Sales Group, LLC, dated August
18, 2003 (included as Exhibit 10.1 to the Form 10-KSB filed April 14, 2004, and
incorporated herein by reference).
10.3 Sublease Agreement between the Company and Mammoth Moving Inc., dated July
14, 2003 (included as Exhibit 10.2 to the Form 10-KSB filed April 14, 2004, and
incorporated herein by reference).
10.4 Investment Agreement between the Company and Preston Capital Partners, LLC,
dated September 13, 2004 (included as Exhibit 10.3 to the Form SB-2 filed
October 8, 2004, and incorporated herein by reference).
10.5 Registration Rights Agreement between the Company and Preston Capital
Partners, LLC, dated September 13, 2004 (included as Exhibit 10.4 to the Form
SB-2 filed October 8, 2004, and incorporated herein by reference).
10.6 Placement Agent Agreement between the Company, Preston Capital Partners,
and Legacy Trading Co., LLC, Inc., dated September 13, 2004 (included as Exhibit
10.5 to the Form SB-2 filed October 8, 2004, and incorporated herein by
reference).
10.7 Registration Rights Agreement between the Company and Dutchess Private
Equities Fund, LP, dated January 14, 2004 (included as Exhibit 10.1 to the Form
10-QSB filed May 24, 2004, and incorporated herein by reference).
10.8 Registration Rights Agreement between the Company and Dutchess Private
Equities Fund, LP, dated January 26, 2004 (included as Exhibit 10.2 to the Form
10-QSB filed May 24, 2004, and incorporated herein by reference).
10.9 Registration Rights Agreement between the Company and eFund Capital
Partners, LLC, dated January 26, 2004 (included as Exhibit 10.3 to the Form
10-QSB filed May 24, 2004, and incorporated herein by reference).
10.10 Registration Rights Agreement between the Company and eFund Capital
Partners, LLC, dated February 19, 2004 (included as Exhibit 10.4 to the Form
10-QSB filed May 24, 2004, and incorporated herein by reference).
10.11 Registration Rights Agreement between the Company and Preston Capital
Partners, LLC, dated March 3, 2004 (included as Exhibit 10.5 to the Form 10-QSB
filed May 24, 2004, and incorporated herein by reference).
10.12 Consulting Agreement between the Company and Luminary Ventures, Inc.,
dated March 2, 2004 (included as Exhibit 99.1 to the Form S-8 filed March 11,
2004, and incorporated herein by reference).
10.13 Consulting Agreement between the Company and Jeffrey Conrad, dated January
30, 2004 (included as Exhibit 99.2 to the Form S-8 filed February 13, 2004, and
incorporated herein by reference).
10.14 Consulting Agreement between the Company and Catherine Basinger, dated
January 30, 2004 (included as Exhibit 99.3 to the Form S-8 filed February 13,
2004, and incorporated herein by reference).
10.15 Consulting Agreement between the Company and Barrett Evans, dated August
18, 2003 (included as Exhibit 10.11 to the Form 10-QSB filed August 23, 2004,
and incorporated herein by reference).
10.16 Consulting Agreement between the Company and Michael Hill, dated August
18, 2003 (included as Exhibit 10.12 to the Form 10-QSB filed August 23, 2004,
and incorporated herein by reference).
10.17 Lead Marketing Agreement between the Company and Vandalay Venture, Group,
Inc. d/b/a Applied Merchant, dated June 2004 (included as Exhibit 10.13 to the
Form 10-QSB filed August 23, 2004, and incorporated herein by reference).
10.18 Standard Multi-Tenant Office Lease between the Company and La Patera
Investors, dated April 9, 2004 (included as Exhibit 10.17 to the Form SB-2 filed
October 8, 2004, and incorporated herein by reference).
10.19 ASP Software Subscription Agreement between the Company and Net Chemistry,
dated August 11, 2004 (included as Exhibit 10.18 to the Form SB-2 filed October
8, 2004, and incorporated herein by reference).
10.20 Consulting Agreement between the Company and Pacific Shore Investments,
LLC, dated August 15, 2004 (included as Exhibit 10.19 to the Form SB-2 filed
October 8, 2004, and incorporated herein by reference).
10.21 Membership Agreement between the Company and Memberworks, dated September
30, 2003 (included as Exhibit 10.20 to the Form SB-2 filed October 8, 2004, and
incorporated herein by reference).
10.22 Amendment to Membership Agreement between the Company and Memberworks,
dated August 17, 2004 (included as Exhibit 10.21 to the Form SB-2 filed October
8, 2004, and incorporated herein by reference).
10.23 Revolving Credit Facility between the Company and Dutchess Private
Equities Fund and eFund, dated March 9, 2004 (included as Exhibit 10.23 to the
Form 10-QSB filed November 22, 2004, and incorporated herein by reference).
10.24 Line of Credit Agreement between the Company and Barrett Evans, dated
August 18, 2003 (included as Exhibit 10.23 to the Form SB-2 filed December 9,
2004, and incorporated herein by reference).
10.25 Debt Financing Agreement between the Company and Shirley Oaks, dated
January 26, 2004 (included as Exhibit 10.24 to the Form SB-2 filed December 9,
2004, and incorporated herein by reference).
10.26 Consulting Agreement between the Company and Aaron Gravitz, dated August
18, 2003 (included as Exhibit 10.25 to the Form SB-2 filed December 9, 2004, and
incorporated herein by reference).
10.27 Debt Financing Agreement between the Company and Sharon Paugh, dated
January 26, 2004 (included as Exhibit 10.26 to the Form SB-2 filed December 9,
2004, and incorporated herein by reference).
10.28 Debt Financing Agreement between the Company and Jennifer Strohl, dated
March 22, 2004 (included as Exhibit 10.27 to the Form SB-2 filed December 9,
2004, and incorporated herein by reference).
10.29 Business Services Agreement between the Company and Luminary Ventures,
Inc., dated March 3, 2005 (included as Exhibit 10.1 to the Form S-8 filed April
29, 2005, and incorporated herein by reference).
14.1 Code of Ethics (included as Exhibit 14.1 to the Form 10-KSB filed April 14,
2004, and incorporated herein by reference).
21.1 List of Subsidiaries (included as Exhibit 21.1 to the Form 10-KSB filed
April 15, 2005, and incorporated herein by reference).
23.1 Consent of Jaspers, Hall and Johnson, LP. Independent Auditors. (filed
herewith).
31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1 Certification of Officers pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Forms 8-K
On February 17, 2005, we filed an 8-K announcing that we changed auditors.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, hereunto duly
authorized.
Date: May 23, 2005 NeWave, Inc.
/s/ Michael Hill
-----------------------
Michael Hill, Chief Executive
Officer
Dated: May 23, 2005
/s/ Barrett Evans
---------------------
Barrett Evans, Interim Chief
Financial Officer