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: June 30, 2004 Commission File Number 0-32353
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EASYWEB, INC.
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(Exact name of registrant as specified in its charter)
COLORADO 84-1475642
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6025 South Quebec Street, Suite 135, Englewood, Colorado 80111
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(Address of principal executive offices) (Zip code)
(720) 493-0303
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(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 5,746,200
Class Number of shares outstanding at August 20, 2004
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This document is comprised of 10 pages.
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FORM 10-QSB
2ND QUARTER
INDEX
Page
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PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed balance sheet, June 30, 2004 (unaudited)......................3
Condensed statements of operations, three and six months
ended June 30, 2004 (unaudited) and 2003 (unaudited).................4
Condensed statements of cash flows, six months ended
June 30, 2004 (unaudited) and 2003 (unaudited).......................5
Notes to unaudited condensed financial statements.......................6
Item 2. Plan of Operation..............................................8
Item 3. Controls and Procedures........................................9
PART 2 - OTHER INFORMATION
Item 1. Legal Information..............................................9
Item 2. Changes in Securities..........................................9
Item 3. Defaults Upon Senior Securities................................9
Item 4. Submission of Matters to a Vote of Security Holders............9
Item 5. Other Information..............................................9
Item 6. Exhibits and Reports on Form 8-K...............................9
Signatures.............................................................10
2
EASYWEB, INC.
CONDENSED BALANCE SHEET
(UNAUDITED)
JUNE 30, 2004
ASSETS
Current Assets:
Cash ........................................................ $ 27
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued liabilities .................... $ 4,527
Due to affiliate (Note 2) ................................... 9,130
---------
Total current liabilities ..................... 13,657
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Shareholders' deficit (Note 4):
Common stock ................................................ 156,050
Stock options outstanding - 100,000 ......................... 20,600
Additional paid-in capital .................................. 78,906
Retained deficit ............................................ (269,186)
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Total shareholders' deficit ................... (13,630)
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$ 27
=========
See accompanying notes to condensed financial statements.
3
EASYWEB, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Operating expenses:
Contributed rent (Note 2) ............ $ 1,500 $ 1,500 $ 3,000 $ 3,000
Contributed administrative
support (Note 2) .................. 2,925 2,745 5,925 5,745
Administrative support (Note 2) ...... 75 255 75 255
Stock-based compensation (Note 4) .... 10,000 -- 10,000 --
Professional fees .................... 1,299 1,705 3,127 3,470
Web site consulting and maintenance .. -- -- 60 60
Dues and subscriptions ............... -- -- -- 2,975
Depreciation and amortization ........ -- 213 -- 427
Other ................................ 429 200 682 604
----------- ----------- ----------- -----------
Total operating expenses 16,228 6,618 22,869 16,536
----------- ----------- ----------- -----------
Loss before income taxes (16,228) (6,618) (22,869) (16,536)
Income tax provision (Note 3) ............ -- -- -- --
----------- ----------- ----------- -----------
Net loss ............... $ (16,228) $ (6,618) $ (22,869) $ (16,536)
=========== =========== =========== ===========
Basic and diluted loss per share $ (0.00) $ (0.00) $ (0.00) $ (0.00)
=========== =========== =========== ===========
Basic and diluted weighted average
common shares outstanding 5,479,533 4,706,200 5,132,867 4,639,533
=========== =========== =========== ===========
See accompanying notes to condensed financial statements.
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EASYWEB, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
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2004 2003
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Net cash used in
operating activities $ (6,006) $ (9,234)
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Cash flows from financing activities:
Repayment of related party loans - (650)
Proceeds from the sale of common stock 6,000 10,000
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Net cash provided by
financing activities 6,000 9,350
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Net change in cash (6) 116
Cash, beginning of period 33 15
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Cash, end of period $ 27 $ 131
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Supplemental disclosure of cash flow information:
Cash paid for income taxes $ - $ -
Cash paid for interest $ - $ -
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Non-cash investing and financing transactions:
Common stock issued to in exchange for debt
owed to a related party (Note 2) $ 10,000 $ -
=========== ===========
See accompanying notes to condensed financial statements.
5
EASYWEB, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
The financial statements presented herein have been prepared by the Company in
accordance with the accounting policies in its Form 10-KSB dated December 31,
2003, 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.
Financial data presented herein are unaudited.
NOTE 2: RELATED PARTY TRANSACTIONS
Rent
An affiliate contributed office space to the Company during the six months ended
June 30, 2004. The Company's management has estimated the fair market value of
the office space at $500 per month, which is included in the accompanying
condensed financial statements as Contributed Rent with an offsetting credit to
Additional Paid-in Capital.
Administrative support
An affiliate contributed administrative services to the Company during the six
months ended June 30, 2004. The Company's management has estimated the fair
market value of the services at $1,000 per month, which is included in the
accompanying condensed financial statements as Contributed Administrative
Support with an offsetting credit to Additional Paid-in Capital. During the
three months ended June 30, 2004, the Company paid $75 for services, which
reduced the amount of contributed services for the quarter from $3,000 to
$2,925.
Indebtedness to related parties
At December 31, 2003, the Company owed an affiliate $18,111 for professional
fees and other administrative expenses paid on behalf of the Company. During the
six months ended June 30, 2004, the affiliate paid expenses totaling $1,019 on
behalf of the Company. On May 13, 2004, the Company issued 400,000 restricted
common shares to the affiliate valued at $10,000, or $.025 per share. The shares
were valued based on contemporaneous sales to unrelated third party investors.
As of June 30, 2004, the Company owed the affiliate $9,130, which is included in
the accompanying condensed financial statements as Due to Affiliate.
Common stock issuances
During May 2004, the Company issued 200,000 to the brother of the Company's
principal executive officer in exchange for corporate governance services. The
shares were valued based on contemporaneous sales to unrelated third party
investors, or $.025 per share. The Company recorded stock-based compensation of
$5,000 related to the transaction.
During May 2004, the Company issued 200,000 to a director in exchange for
director fees. The shares were valued based on contemporaneous sales to
unrelated third party investors, or $.025 per share. The Company recorded
stock-based compensation of $5,000 related to the transaction.
6
NOTE 3: 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
all periods presented resulting in a deferred tax asset, which was fully allowed
for; therefore, the net benefit and expense resulted in $-0- income taxes.
NOTE 4: SHAREHOLDER'S DEFICIT
During March 2004, the Company sold 240,000 shares of its common stock to one
investor for $6,000, or $.025 per share.
Following is a schedule of changes in shareholders' deficit for the six months
ended June 30, 2004:
Deficit
Accumulated
Common stock Outstanding Additional During
--------------------- Stock Paid-In Development
Shares Amount Options Capital Stage Total
--------- --------- --------- --------- --------- ---------
Balance, January 1, 2004 .......... 4,706,200 $ 130,050 $ 20,600 $ 69,981 $(246,317) $ (25,686)
March 2004, sale of common
stock at $.025 per share ...... 240,000 6,000 -- -- -- 6,000
May 2004, common stock issued
to an affiliate to repay debt,
$.025 per share ............... 400,000 10,000 -- -- -- 10,000
May 2004, common stock issued
to a related party in exchange
for services, $.025 per share . 200,000 5,000 -- -- -- 5,000
May 2004, common stock issued
to a director in exchange for
director fees, $.025 per share 200,000 5,000 -- -- -- 5,000
Office space and administrative
support contributed by an
affiliate ..................... -- -- -- 8,925 -- 8,925
Net loss for the six months
ended June 30, 2004 ........... -- -- -- -- (22,869) (22,869)
--------- --------- --------- --------- --------- ---------
Balance, June 30, 2004 5,746,200 $ 156,050 $ 20,600 $ 78,906 $(269,186) $ (13,630)
========= ========= ========= ========= ========= =========
7
EASYWEB, INC.
PART I. ITEM 2. PLAN OF OPERATION
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PLAN OF OPERATION
EasyWeb's business plan is to design, market, sell and maintain customized and
template, turnkey sites on the Internet, hosted by third parties. Our business
plan is prepared based upon the popularity of the Internet and the growing
number of businesses interested in advertising and marketing online. We have
generated only $9,547 in revenue and have a retained deficit of $259,186 through
June 30, 2004. We have not performed any services or earned any revenue during
2004 or 2003.
Our future success will be dependent upon our ability to (1) locate and
consummate a merger or acquisition with an operating company, (2) finance
Internet opportunities if we are allowed to trade publicly and raise capital
and, ultimately, (3) attain profitability. There is no assurance that we will be
successful in consummating a merger or acquisition with an operating company,
financing Internet investments, or attaining profitability. As of the date of
this filing, we have had no discussions and no agreements have been reached with
any third parties regarding such a business combination.
We are experiencing capital shortages and are currently dependent upon an
affiliate, Summit Financial Relations, Inc. ("Summit"), which has paid expenses
on our behalf, in order to maintain our limited operations. There is no
assurance that Summit will continue to pay our expenses in the future. On May
13, 2004, the Company issued 400,000 restricted common shares to Summit valued
at $10,000, or $.025 per share, to repay Summit for past disbursements. As of
June 30, 2004, we still owed Summit $9,130 for expenses paid on our behalf.
As a result of our inability to generate significant revenue, together with
sizeable continuing operating expenses, access to capital may be unavailable in
the future except from affiliated persons. If we are able to obtain access to
outside capital in the future, it is expected to be necessarily costly because
of high rates of interest and fees. Through June 30, 2004, in addition to the
expenses paid by Summit, we have been funded through the sale of our common
stock for gross proceeds in the amount of $136,050 including proceeds of $6,000
through the sale of 240,000 shares of our common stock ($.025 per share) during
March 2004.
While our independent auditor has presented our financial statements on the
basis that we are a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business over a
reasonable length of time, they have noted that our significant operating losses
and net capital deficit raise a substantial doubt about our ability to continue
as a going concern.
We do not intend to hire any additional employees in the foreseeable future. We
do not intend to make significant equipment purchases or conduct any research
and development within the next twelve months unless we become a market trading
entity. The Board may then make decisions as to the future of our business and
our assets.
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
8
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 I. ITEM 3. CONTROLS AND PROCEDURES
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EasyWeb, Inc. management, including the Principal Executive Officer and
Principal Financial Officer, has conducted an evaluation of the effectiveness of
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14(c) and
15d-14(c). This evaluation was conducted within 90 days prior to the filing of
this report. Based on that evaluation, the Principal Executive Officer and
Principal Financial Officer concluded that the disclosure controls and
procedures are effective in ensuring that all material information required to
be filed in this annual report has been made known to them in a timely fashion.
There have been no significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to the date the
Principal Executive Officer and Principal Financial Officer completed his
evaluation.
PART II. OTHER INFORMATION
Item 1 - Legal Information.
No response required.
Item 2 - Changes in Securities.
On May 13, 2004, we issued 400,000 restricted common shares to Summit
valued at $10,000, or $.025 per share. The shares were valued based on
contemporaneous sales to unrelated third party investors.
On May 13, 2004, we issued 200,000 to the brother of the Company's
principal executive officer in exchange for corporate governance
services. The shares were valued based on contemporaneous sales to
unrelated third party investors, or $.025 per share.
On May 13, 2004, we issued 200,000 to a director in exchange for
director fees. The shares were valued based on contemporaneous sales
to unrelated third party investors, or $.025 per share.
Item 3 - Defaults Upon Senior Securities.
No response required.
Item 4 - Submission of Matters to a Vote of Security Holders.
No response required.
Item 5 - Other Information.
No response required.
9
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits:
31. Certification of Principal Executive Officer and
Principal Financial Officer pursuant to Rule
13a-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32. Certification of Principal Executive Officer and
Principal Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K:
None.
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 six months ended June 30, 2004
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: August 20, 2004 BY: /s/ David C. Olson
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David C. Olson
President and CEO
10
EXHIBIT 31
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER and PRINCIPAL FINANCIAL OFFICER
I, David C. Olson, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of EasyWeb, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the small business issuer and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report
is being prepared;
b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter (the small business issuer's
fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the small business
issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the small business issuer's auditors and the audit committee of
the small business issuer's board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's
internal control over financial reporting.
Date: August 20, 2004
/s/ David C. Olson
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David C. Olson
Principal Executive Officer and Principal Financial Officer
EXHIBIT 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of EasyWeb, Inc. (the "Company") on Form
10-QSB for the period ending June 30, 2004, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, David C. Olson,
Principal Executive Officer and Principal Financial Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of
the Company.
/s/ David C. Olson
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David C. Olson
Principal Executive Officer and Principal Financial Officer
August 20, 2004