UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: September 30, 2001 Commission File Number 0-32353
------------------ -------
EASYWEB, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
COLORADO 84-1475642
-------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6025 South Quebec Street, Suite 150, Englewood, Colorado 80111
-------------------------------------------------------- ----------
(Address of principal executive offices) (Zip code)
(720) 489-8873
-----------------------------------------------------
(Registrant's telephone number, including area code)
(Former name, former address and former
fiscal year, if changed since last report.)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, no par value 3,590,200
-------------------------- ------------------------------------------------
Class Number of shares outstanding at October 22, 2001
--------------------------------------------------------------------------------
This document is comprised of 9 pages.
--------------------------------------------------------------------------------
FORM 10-QSB
2ND QUARTER
INDEX
Page
----
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed balance sheet, September 30, 2001 (unaudited) ............... 3
Condensed statements of operations, three months ended
September 30, 2001 (unaudited) and 2000 (unaudited),
nine months ended September 30, 2001 (unaudited)
and 2000 (unaudited), and September 24, 1998
(inception) through September 30, 2001 (unaudited) ................. 4
Condensed statements of cash flows, nine months ended
September 30, 2001 (unaudited) and 2000 (unaudited),
and September 24, 1998 (inception) through
September 30, 2001 (unaudited) ..................................... 5
Notes to unaudited condensed financial statements ..................... 6
Item 2. Plan of Operation ............................................ 7
PART 2 - OTHER INFORMATION
Item 1. Legal Information ............................................ 8
Item 2. Changes in Securities ........................................ 8
Item 3. Defaults Upon Senior Securities .............................. 8
Item 4. Submission of Matters to a Vote of Security Holders .......... 8
Item 5. Other Information ............................................ 8
Item 6. Exhibits and Reports on Form 8-K ............................. 8
Signatures ............................................................ 9
Part 1. Item 1. Financial Information
------- ---------------------
EASYWEB, INC.
(A Development Stage Company)
Condensed Balance Sheet
(Unaudited)
September 30, 2001
Assets
Current assets:
Cash ......................................................... $ 824
Accounts receivable .......................................... 465
Prepaid rent, paid to related party (Note B) ................. 2,000
---------
Total current assets 3,289
Web site development costs, net ................................... 1,156
---------
$ 4,445
=========
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable and accrued liabilities ..................... $ 2,387
Indebtedness to related parties (Note B) ..................... 6,015
---------
Total current liabilities 8,402
---------
Common stock subject to rescission,
16,000 shares (March 2000) ................................... 4,000
---------
Shareholders' deficit:
Common stock ................................................. 89,050
Additional paid-in capital ................................... 33,105
Deficit accumulated during development stage ................. (130,112)
---------
Total shareholders' deficit (7,957)
---------
$ 4,445
=========
See accompanying notes to condensed financial statements
3
EASYWEB, INC.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
September 24,
1998
Three Months Ended Nine Months Ended (Inception)
September 30, September 30, through
------------------------ ------------------------ September 30,
2001 2000 2001 2000 2001
---------- ---------- ---------- ---------- ----------
Revenue:
Commissions, related party ............. $ -- $ 4,000 $ -- $ 4,000 $ 4,000
Commissions, other ..................... 543 -- 1,456 -- 2,707
---------- ---------- ---------- ---------- ----------
Total revenue 543 4,000 1,456 4,000 6,707
---------- ---------- ---------- ---------- ----------
Operating expenses:
Rent (Note B) .......................... 1,000 1,333 2,000 1,333 4,333
Contributed rent (Note B) .............. 500 167 2,500 1,667 10,167
Administrative support (Note B) ........ 375 2,667 864 2,667 6,064
Contributed administrative support
(Note B) ............................ 2,625 333 8,136 3,333 22,936
Salaries and payroll taxes ............. -- 8,988 -- 8,988 20,729
Professional fees ...................... 2,134 2,075 15,667 2,785 32,856
Web site consulting and maintenance .... 409 7,370 1,115 7,370 11,250
Information technology agreement ....... -- -- -- -- 8,269
Advertising ............................ -- 8,229 -- 8,382 11,914
Depreciation and amortization .......... 188 247 563 247 1,252
Other .................................. 240 1,718 2,724 1,718 7,049
---------- ---------- ---------- ---------- ----------
Total operating expenses (7,471) (33,127) (33,569) (38,490) (136,819)
---------- ---------- ---------- ---------- ----------
Operating loss (6,928) (29,127) (32,113) (34,490) (130,112)
Income taxes (Note C) ....................... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net Loss $ (6,928) $ (29,127) $ (32,113) $ (34,490) $ (130,112)
========== ========== ========== ========== ==========
Basic and diluted loss per common share $ * $ * $ * $ (0.01)
========== ========== ========== ==========
Basic and diluted weighted average
common shares outstanding 3,590,200 3,590,200 3,590,200 3,482,367
========== ========== ========== ==========
* Less than $.01
See accompanying notes to condensed financial statements
4
EASYWEB, INC.
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
September 24,
1998
Nine Months Ended (Inception)
September 30, through
---------------------- September 30,
2001 2000 2001
--------- --------- ---------
Net cash (used in) operating activities ......................... $ (25,883) $ (32,315) $ (93,868)
--------- --------- ---------
Cash flows from investing activities:
Equipment purchase ......................................... -- (400) (400)
Payments for intangible assets ............................. -- (2,250) (2,458)
--------- --------- ---------
Net cash (used in) investing activities . -- (2,650) (2,858)
--------- --------- ---------
Cash flows from financing activities:
Proceeds on advances from related parties .................. -- -- 6,000
Proceeds from the sale of common stock ..................... -- 97,050 101,550
Proceeds from the sale of common stock subject
to rescission ........................................... -- 4,000 4,000
Payments for offering costs ................................ -- -- (14,000)
--------- --------- ---------
Net cash provided by financing activities -- 101,050 97,550
--------- --------- ---------
Net change in cash .............................................. (25,883) 66,085 824
Cash, beginning of period ....................................... 26,707 1,091 --
--------- --------- ---------
Cash, end of period $ 824 $ 67,176 $ 824
========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ................................................ $ -- $ -- $ --
========= ========= =========
Income taxes ............................................ $ -- $ -- $ --
========= ========= =========
Non-cash financing activity:
Stock issued for satisfaction of debt ................... $ -- $ -- $ 1,500
========= ========= =========
See accompanying notes to condensed financial statements
5
EASYWEB, INC.
(A Development Stage Company)
Notes to Unaudited Condensed Financial Statements
Note A: Basis of presentation
The financial statements presented herein have been prepared by the Company in
accordance with the accounting policies in its amended Form 10-SB dated December
31, 2000 and updated through March 31, 2001, and should be read in conjunction
with the notes thereto.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the year.
The Company is in the development stage in accordance with Statements of
Financial Accounting Standards (SFAS) No. 7 "Accounting and Reporting by
Development Stage Enterprises". As of September 30, 2001, the Company has
devoted substantially all of its efforts to financial planning, raising capital
and developing markets.
Financial data presented herein are unaudited.
Note B: Related party transactions
Prepaid rent
------------
The Company paid an affiliate $4,000 during April 2001 to rent office space for
the period from April 1, 2001 through March 31, 2002. As of September 30, 2001,
$2,000 is expensed as rent and $2,000 is capitalized as prepaid expense in the
accompanying condensed unaudited financial statements. The Company's management
estimated the fair market value of the office space at $500 per month.
Therefore, an additional $2,500 was expensed as rent during the nine months
ended September 30, 2001, with an offsetting credit to additional paid-in
capital.
Indebtedness to related parties
-------------------------------
The Company paid an affiliate $864 during the nine months ended September 30,
2001 for administrative services performed on behalf of the Company. The
Company's management estimated the fair value of the services at $1,000 per
month. Therefore, an additional $8,136 was expensed as contributed
administrative support during the nine months ended September 30, 2001, with an
offsetting credit to additional paid-in capital. The Company owed the affiliate
$15 for the administrative expenses at September 30, 2001, which is included in
the accompanying condensed balance sheet as due to affiliate. The Company repaid
the affiliate in October 2001.
At September 30, 2001, the Company owed an officer and two directors a total of
$6,000 ($2,000 each) for working capital advances. The advances are unsecured,
bear no interest and are due on demand.
Note C: Income taxes
The Company records its income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". The Company incurred net operating losses during
the nine months ended September 30, 2001 resulting in a deferred tax asset,
which was fully allowed for; therefore, the net benefit and expense resulted in
$-0- income taxes.
6
Part I. Item 2. Plan of operation
------ -----------------
EASYWEB, INC.
(A Development Stage Company)
PLAN OF OPERATION
-----------------
The Company plans to continue to design, market, sell and maintain customized
and turnkey web sites on the Internet that are hosted by third parties. To date,
revenues from these services have been minimal. The Company intends to generate
increased revenue through the expenditure of additional funds for marketing,
advertising and promotion. The Company believes that the revenue generated from
operations may not be sufficient to finance future activities and that it may be
necessary to raise additional funds through equity and/or debt financing in the
next twelve months. There is no assurance that the Company will be able to
generate additional capital for marketing, advertising and promotion and/or
other purposes. In the event that only limited additional financing is received,
the Company expects its opportunities in the design, marketing, and sale of
Internet web sites to be limited.
The Company filed a Registration Statement on Form 10-SB with the Securities and
Exchange Commission ("SEC") in February of 2001 to register its no par value
common stock and become a reporting company. To date, the SEC has not completed
its review of the Form 10-SB.
The Company does not intend to hire any additional employees in the foreseeable
future. The Company does not intend to make significant equipment purchases
within the next twelve months.
FINANCIAL CONDITION
-------------------
As of September 30, 2001, the Company had total assets of $4,445 as compared to
$28,426 at December 31, 2000. The decrease was a result of cash used to fund net
losses of $32,113 incurred during the nine months ended September 30, 2001.
RESULTS OF OPERATIONS
---------------------
During the nine months ended September 30, 2001, the Company recorded sales
totaling $1,456 as compared with $4,000 for the nine months ended September 30,
2000. However, sales to unrelated third parties increased to $1,456 for the nine
months ended September 30, 2001, as compared to $-0- for the nine months ended
September 30, 2000.
Operating expenses decreased from $38,490 for the nine months ended September
30, 2000 to $33,569 for the nine months ended September 30, 2001. The operating
expenses decreased because of (1) a decrease in salaries and payroll taxes, (2)
a decrease in advertising expenses, and (3) a decrease in web site expenses.
Management reduced these expenses because of the Company's limited working
capital.
7
Part I. Item 2. Plan of operation, continued
------- ----------------------------
EASYWEB, INC.
(A Development Stage Company)
Special note regarding forward-looking statements
-------------------------------------------------
This report contains forward-looking statements within the meaning of federal
securities laws. These statements plan for or anticipate the future.
Forward-looking statements include statements about our future business plans
and strategies, statements about our need for working capital, future revenues,
results of operations and most other statements that are not historical in
nature. In this Report, forward-looking statements are generally identified by
the words "intend", "plan", "believe", "expect", "estimate", and the like.
Investors are cautioned not to put undue reliance on forward-looking statements.
Except as otherwise required by applicable securities statues or regulations,
the Company disclaims any intent or obligation to update publicly these
forward-looking statements, whether as a result of new information, future
events or otherwise. Because forward-looking statements involve future risks and
uncertainties, these are factors that could cause actual results to differ
materially from those expressed or implied.
Part 2. Other Information
------ -----------------
Items 1 through 5 - No response required.
Item 6 - Exhibits and reports on Form 8-K.
There were no reports on Form 8-K.
8
SIGNATURES
The financial information furnished herein has not been audited by an
independent accountant; however, in the opinion of management, all adjustments
(only consisting of normal recurring accruals) necessary for a fair presentation
of the results of operations for the three and nine months ended September 30,
2001 have been included.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EASYWEB, INC.
(Registrant)
DATE: October 22, 2001 BY: /s/ David C. Olson
---------------- --------------------
David C. Olson
President
9