U.S. SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
Commission File Number 0-25433
KWIKWEB.COM, INC.
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(Exact name of small business issuer as specified in its charter)
NEVADA 88-0377059
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
374 N. Coast Highway, Suite F-14,
Encinitas, California 92024
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(Address of principal executive offices) (Zip Code)
760-436-5436
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(Issuer's telephone number)
(2155 Newcastle Ave., Cardiff by the Sea, California 92007 (former address)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
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 May 14, 2000, the Registrant had 4,500,000 shares of its common stock, par
value $0.001, issued and outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
KWIKWEB.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
March 31,
ASSETS 2001
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CURRENT ASSETS
Cash and equivalents $ 94,891
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TOTAL CURRENT ASSETS 94,891
COMPUTER EQUIPMENT, LESS ACCUMULATED DEPRECIATION OF $1,944 5,056
INVESTMENTS IN AFFILIATES 13,750
INTERNET DOMAIN NAMES AND WEB SITES 135,990
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$ 249,687
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LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 41,776
Due to related parties 278,000
Note payable to shareholder 60,000
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TOTAL CURRENT LIABILITIES 379,776
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COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' DEFICIT
Common stock, $.001 par value, 25,000,000 shares authorized,
4,500,000 shares issued and outstanding 4,500
Additional paid-in capital 960,902
Deficit accumulated during the development stage (1,095,491)
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TOTAL STOCKHOLDERS' DEFICIT (130,089)
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$ 249,687
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
KWIKWEB.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED MARCH 31,
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2001 2000
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REVENUE $ 15,170 $ -
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COSTS AND EXPENSES
Cost of revenue 10,000 -
Research and development - 45,375
Selling, general and administrative 126,228 131,630
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136,228 177,005
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NET LOSS $ (121,058) $ (177,005)
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BASIC AND DILUTED NET LOSS PER SHARE $ (0.03) $ (0.02)
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BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 4,466,667 9,910,000
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
KWIKWEB.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
THREE MONTHS ENDED MARCH 31,
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2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(121,058) $(177,005)
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation 583 2,972
Changes in assets and liabilities
Prepaid expenses - 1,092
Accounts payable 27,769 7,346
Accrued liabilities - (14,843)
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Net cash used by operating activities (92,706) (180,438)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of domain names & web sites (4,716) -
Purchases of equipment - (11,075)
Loan to affiliate 12,500 (275)
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Net cash used by investing activities 7,784 (11,350)
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CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 100,000 -
Proceeds from note payable to shareholder 60,000 -
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Net cash provided by financing activities 160,000 -
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Net increase in cash 75,078 (191,788)
CASH, BEGINNING OF PERIOD 19,813 262,828
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CASH, END OF PERIOD $ 94,891 $ 71,040
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
KWIKWEB.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
(Unaudited)
1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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Background
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KwikWeb.com, Inc., a Nevada corporation, was formed on October 9, 1997.
In August 1999, Kwik Web, Inc. and G.P. Properties, Inc. ("G.P.
Properties") agreed to merge whereby G.P. Properties issued 6,000,000
shares of common stock in exchange for all of the outstanding common
shares of Kwik Web, Inc. G. P. Properties, a public shell Nevada
Corporation formed in 1989, retained all its 3,510,000 shares of common
stock. G.P. Properties had no assets, liabilities or operations and
management of Kwik Web, Inc. retained control of the merged entity.
Accordingly, Kwik Web, Inc. was deemed the accounting acquiror of G.P.
Properties. The Company began the development of proprietary software
that allows on-line users to easily create and build their own
customized websites using a user friendly "point and click" format. In
January 2000, the Company changed its name to KwikWeb.com, Inc. In June
2000, the Company formed Internet Properties Development Corp., a
wholly owned subsidiary, to pursue the development and incubation of
emerging Internet-based business. In August 2000, the Company completed
a reorganization whereby it transferred its website design and
management activities to Kwik Commerce, Inc. in exchange for 2,500,000
shares of Kwik Commerce common stock and the cancellation of 6,000,000
KwikWeb.com, Inc. common shares previously held by Ric Kaestner and
Alex Tsakiris. The Company is engaged in the business of providing
domain-name registry operations and services and operating consumer
information portals on the Internet. The Company also seeks to develop
and incubate emerging Internet-based businesses.
The accompanying consolidated financial statements include the accounts
of KwikWeb.com, Inc. and its wholly owned subsidiaries Kwik Web, Inc.,
Wireless Properties Development Corp., Faciliforce Inc., Basic Fusion,
Inc. and Internet Properties Development Corp. (collectively, the
"Company"). All material intercompany transactions and balances have
been eliminated.
Interim periods
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The accompanying unaudited consolidated financial statements have been
prepared in accordance with instructions of Form 10-QSB and do not
include all of the information required by generally accepted
accounting principles for complete financial statements. In the opinion
of the Company's management, all necessary adjustments (consisting of
normal recurring adjustments) for a fair presentation have been
included. Operating results for the three months ended March 31, 2001,
are not necessarily indicative of results for any future period. These
statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Form
10-KSB for the year ended December 31, 2000.
KWIKWEB.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
(Unaudited)
2. COMMON STOCK
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In January 2001, the Company sold 1,000 units, each unit consisting of
100 shares of its common stock and a warrant to purchase an additional
20 shares of its common stock at an exercise price of $2.00 per share,
to its Chairman. This issuance was exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2) thereof, and there was
no underwriter involved in the transaction.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
Our business is to provide Internet domain-name registry operations and
services, operate consumer information portals on the Internet, and provide
facilities management services for commercial real estate owners. We have
recently begun operations for our registry operations and services division, and
we are currently operating our consumer information portals. We have not yet
begun providing facilities management services.
We are a holding company, and we operate through our wholly-owned
subsidiaries, Internet Properties Development Corp. and Faciliforce, Inc., and
our majority-owned subsidiary, Basic Fusion, Inc. We also seek to develop
emerging Internet-based businesses. We currently own minority interests in two
companies: .KIDS Domains, Inc. and Minority Business Alliance, LLC.
We recently achieved meaningful revenue from the sale of one
second-level domain name. We have commenced revenue-producing operations in our
registry operations and services division, but these operations have not begun
producing revenues. We have not generated any revenue in any of our other lines
of business.
From inception to 1999, we were engaged in the business of developing
residential financial analysis software. From August 1999 to August 2000, we
were engaged in the business of developing software applications for the
creation of Internet websites. As of August 2000, we had divested our financial
software and Internet website software operations.
We began implementing our current business in August 2000. To date, our
activities in our registry operations and solutions division have consisted of
developing our basic registry operation solution, hiring personnel, and
beginning marketing efforts for the sale our solution. In our consumer
information portals division, we have acquired and begun operating certain
consumer information portals. In our facilities management services division, we
have developed the basic business model for the division.
In addition to the activities within our three main divisions, we have
acquired certain Internet domain-names, one of which we have resold. We may
continue to resell these domain names in the future. We have also acquired
minority equity interests in certain emerging-growth businesses, including .KIDS
Domains and Minority Business Alliance.
We have also entered into a letter of intent to purchase the remaining
outstanding interest in .KIDS Domains. To date, .KIDS Domains has submitted an
application to ICANN to be the operator and registry of a ".kids" top-level
domain. ICANN did not grant this application; however, it reserved the right to
consider the application in the future. In addition, .KIDS Domains has entered
into an agreement with New.net to be the exclusive registry within the New.Net
system for ".kids" second-level domain names on the New.net system.
We intend to generate revenue through the following:
o sales of our registry operations solutions, services, gateways systems
and upgrades;
o sales of second and third-level domain names;
o advertising income from third party advertisers at our consumer
information portals;
o sponsorship sales from third party sponsors at our consumer information
portals;
o commissions earned on the sale of products through our consumer
information portals;
o service fees derived from outsourcing commercial real estate facilities
management services; and
o commissions earned on the sale of products through our consumer
information portals;
In the event we consummate the acquisition of .KIDS Domains, we also
intend to generate revenue through the sale of second-level domain names within
the ".kids" top-level domain.
RESULTS OF OPERATIONS
REVENUES
For the three months ended March 31, 2001, revenues were $15,170,
compared to $0 for the same period in fiscal 2000. The revenues results from the
sale of one second-level domain name. Our ability to increase revenue for the
remainder of the fiscal year is dependent on our ability to successfully
implement our plan of operation.
GROSS PROFIT
Gross profit was $5,170 for the three months ended March 31, 2001,
compared to $0 for the same period in fiscal 2000.
RESEARCH & DEVELOPMENT EXPENSE
Research and development expenses were $0 for the three months ended
March 31, 2001, compared to $45,375 for the same period in fiscal 2000. The
research and development expenses were incurred in connection with our former
web hosting business, which we discontinued in 2000. We may increase research
and development in connection with implementing our plan of operation in future
periods.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE
Selling, general, and administrative expenses were $126,228 for the
three months ended March 31, 2001, compared to $131,630 for the same period in
fiscal 2000, a decrease of $5,402, or 4.1%.
PLAN OF OPERATION
We have begun to market our registry operation solutions, which include
a proprietary software solution to allow registries of top-level domains to
automate their registry databases and increase scalability as their business
grows. We are marketing our solution primarily to registry operators of
country-code top level domains. As of the date of this report, we have not
achieved any sales of our registry operation solution.
Over the next 12 months, we intend to continue to offer outsourced
registry services, turn-key registry solutions, payment gateways for registries,
enhanced billing systems and multilingual domain name services. In addition, we
intend to provide our registry operator clients with customer support for our
software solution. In order to provide our solution, we intend to establish four
global DNS servers, one in North America, Africa, Europe and Australia. Through
these DNS servers, we believe we will have the ability to access and service the
servers and host the registries for whom we provide solutions from one
geographic location. We also intend to hire up to 5 additional employees in our
registry solutions division for additional development and testing of our
software solutions, for customer support and for marketing.
.KIDS Domains recently entered into a definitive agreement with New.net
to be the exclusive registry within the New.net system for the ".kids" top-level
domain. .KIDS Domains intends to commence marketing efforts for sale of
second-level domain names within the ".kids" top-level domain. .KIDS Domains may
hire additional marketing personnel in order to further its marketing efforts
for the ".kids" top-level domain.
Within our Consumer Information Portals division, we intend to continue
to upgrade our content available on the information portals. We also intend to
offer advertising space on the portals and offer sponsorships for the portals.
In addition, we will continue to offer products on an e-commerce, resale basis
on our portals. Sales made through such portals would generate a e-commerce fee
for us.
Within our Facilities Management Services division, we intend to begin
marketing our facilities management services to seek to enter into service
agreements with commercial real estate owners.
LIQUIDITY AND CAPITAL RESOURCES
Since 1999, we have financed our activities through the sale of our
securities. As of March 31, 2001, we had a working capital deficit of $284,885.
We believe that we will require significant additional capital in order
to fund the development and launch of our registry operations solutions and
consumer information portal divisions. We anticipate that we will need
approximately $500,000 in additional working capital over the next 12 months in
order to sustain operations and fund the development and launch of our registry
operations solutions and consumer information portal divisions. If we are unable
to obtain additional financing in sufficient amounts or on acceptable terms, we
may not be able to continue as a going concern. We intend to seek private equity
financing in the second quarter of 2001.
However, our expectations regarding our capital requirements are based
on certain assumptions concerning the costs involved in further developing our
software solutions, marketing, retention of key personnel, and time and expense
involved in commencing revenue producing operations. These assumptions concern
future events and circumstances which our officers believe to be significant to
our operations and upon which our working capital requirements will depend. Some
assumptions will invariably not materialize and some unanticipated events and
circumstances occurring subsequent to the date of this prospectus may affect
other assumptions. As a result, our actual working capital requirements may vary
from our presently anticipated working capital requirements, and the variations
may be material. In the event that we require additional working capital, there
can be no assurance that we will be able to obtain sufficient additional capital
in order to fund our working capital requirements in a timely manner.
SAFE HARBOR
This report contains various forward-looking statements that are based
on our beliefs, assumptions which we have made, and information currently
available to us. When used in this report, we intend the words "believe,"
"expect," "anticipate," "estimate," and similar expressions to identify
forward-looking statements. Such statements are subject to certain risks,
uncertainties and assumptions referred to herein, including, without limitation,
the early stage nature of our operations and the risks and uncertainties
concerning the market acceptance of our services and products; technological
changes; increased competition; and general economic conditions. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated, or projected. We caution potential investors not to
place undue reliance on any such forward-looking statements, all of which only
speak as of the date made.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In January 2001, we sold 1,000 units, each unit consisting of 100
shares of our common stock and a warrant to purchase an additional 20 shares of
our common stock at an exercise price of $2.00 per share, to our chairman, H.
Page Howe, for $100,000. This issuance was exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2) thereof, and there was no
underwriter involved in the transaction.
ITEM 6. EXHIBITS AND REPORTS ON FROM 8-K.
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
KWIKWEB.COM, INC.
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(Registrant)
Dated: May 18, 2001 By /S/ Matthew Hayes
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Matthew Hayes
President