10QSB/A 1 gsv_10qsba-81502.txt AMENDMENT TO 6-30-02 10QSB FORM 10-QSB/A SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 /x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2002 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 0-23901 GSV, INC. (Exact name of registrant as specified in its charter) Delaware 13-3979226 -------- ---------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 191 Post Road West, Westport, CT 06880 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (203) 221-2690 Indicate by check mark whether 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / / The number of shares of the Registrant's common stock, par value $.001 per share, outstanding on August 13, 2002 was 2,640,090 shares, excluding 168,600 shares of our common stock held in Treasury. The Registrant hereby amends the following items, financial statements, exhibits or other portions of its Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2002, as set forth in the pages attached hereto: PART I. FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K PART I. FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Commencing in June 2001, we changed the direction of our business. The business operations since June include entering into new business operations through acquisitions or mergers and managing existing investments including the recent oil and gas acquisitions. A limiting factor has been the pending class action litigation brought against the Company. This class action lawsuit was dismissed in March 2002 with prejudice subject to the right of appeal by the plaintiffs. This right of appeal expired on April 18, 2002. We believe that because the litigation is no longer pending, our opportunities for completing successful business transactions have been greatly enhanced. However, we cannot assure you that such opportunities will continue to be available to us on acceptable terms. Effective June 1, 2002, the Company acquired working interests in two oil and gas wells in the state of Louisiana pursuant to an asset purchase agreement with Polystick U.S. Corp., a privately held New York corporation. The consideration consisted of $550,000 in cash and 850,000 shares of the Company's common stock valued at $0.25 per share. Additionally, the Company acquired an option, including a right of first refusal, to purchase other oil and gas properties held by Polystick U.S. Corp. Concurrent with the asset purchase agreement, the Company signed a management agreement with Polystick U.S. Corp. to assist the Company in the management of its oil and gas working interests and the development of new oil and gas activities. The agreement is for one year with an annual consulting fee of $150,000, paid in monthly installments. In June 2001, we sublet to Nekema.com our former offices in Jersey City, New Jersey through December 31, 2008. Over the term of the 90-month sublease, we will realize revenue for the sublease, after commissions of approximately $167,000, of approximately $1,503,000. We have been informally advised of potential difficulties with Nekema.com. The rent for the sublet is guaranteed through May 2003. If Nekema.com defaults on the sublease and becomes insolvent, after May 2003 we would have to obtain another tenant and would have to absorb the cost of the lease. Prior to June 2001, we had sought to identify and develop attractive early stage internet companies in exchange for equity positions in such companies. In connection with this activity, we made investments in Fasturn, Inc., Weema Technologies, Inc., Telephone.com, Inc., MeetChina.com. Inc. and e-Commerce Solutions, Inc. We have since made substantial write downs of our investments to more accurately reflect current market valuations, and our investments do not represent a significant asset. As of December 31, 2001, our investments were valued at approximately 6.3% of the total value of our assets. We are presently investigating whether or not there is any way we can realize material value from these investments. 2 Results of Operations Three Months Ended June 30, 2002 compared to Three Months Ended June 30, 2001. General and administrative: General and administrative expenses consisted primarily of payroll and payroll related expenses for administrative, information technology, accounting, and management personnel, recruiting, legal fees, and general corporate expenses. General and administrative expenses decreased by 74%, or $585,253 to $200,747 in the second quarter of 2002 from $786,000 in the second quarter of 2001. The decrease from the prior period was primarily due to expenses related to the management transition that occurred in 2001, including $250,000 in severance payments and $167,000 in commissions related to the brokerage of the Company's sublease in 2001. Interest income, net: Interest income decreased $21,944 to $5,056 in the second quarter of 2002 from $27,000 in the second quarter of 2001. The decrease was primarily the result of a decrease in average cash and cash equivalents. Net Losses: Net loss decreased by $1,181,072 from $1,316,000 in the second quarter of 2001, or ($0.73) per basic and diluted common share, to $134,928 in the second quarter of 2002, or ($0.07) per basic and diluted common share. The decrease is due to the above described decrease in general and administrative expenses and the writedown of investments in 2001 totaling $585,000. Six Months Ended June 30, 2002 compared to Six Months Ended June 30, 2001. General and administrative: General and administrative expenses consisted primarily of payroll and payroll related expenses for administrative, information technology, accounting, and management personnel, recruiting, legal fees, and general corporate expenses. General and administrative expenses decreased by 69%, or $771,838 to $351,162 in the first six months of 2002 from $1,123,000 in the same period of 2001. The decrease in the current period is the result of the scaling back of operations and change in management focus. Interest income, net: Interest income decreased $50,072 to $9,928 in the first six months of 2002 from $60,000 in the same period of 2001. The decrease is primarily the result of a decrease in average cash and cash equivalents. Net Losses: Net loss decreased by $2,090,158 from $2,320,000 in the first six months of 2001, or ($1.27) per basic and diluted common share, to $229,842 in the same period of 2002, or ($0.12) per basic and diluted common share. The decreased loss was primarily due to no additional writedown of the Company's investments in its incubator stocks, which resulted in a six month charge to operations of $1,285,000 in 2001, as well as the decrease in general and administrative expenses. Liquidity and Capital Resources Net cash used in operations decreased by 80%, or $850,373 to $213,627 for the six months ended June 30, 2002, from $1,064,000 for the six months ended June 30, 2001, primarily as a result of a reduction in our overall activity. Current assets other than cash increased by $67,249 from $25,000 at December 31, 2001, 3 to $92,249 at June 30, 2002, reflecting an increase in prepaid insurance premiums, due to higher premiums, and oil and gas revenue receivable. Accounts payable and dividends payable increased by $50,230 due to the accrual of the first half of the preferred stock dividend and the payables related to insurance premiums and the management agreement. Net cash used in investing activities increased by $550,000 due to the purchase of oil and gas wells in 2002. Net cash provided by financing activities during the first six months of 2002 was $0 as compared to $335,000 in the same period of the prior year. Sources of cash during the first six months of 2001 were attributable to the sale of preferred stock, net of repurchases of common stock during the period. We believe that our existing capital resources will enable us to maintain our operations at existing levels for at least the next twenty-four months. The sufficiency of our capital resources is substantially dependent upon our future acquisitions. Accordingly, it is difficult to project our capital needs. However, we will evaluate potential acquisitions in terms of our then existing capital resources and the availability of additional debt or equity financing. There can be no assurance that any additional financing or other sources of capital will be available to us upon acceptable terms, if at all. The inability to obtain additional financing, when needed, would have a material adverse effect on our business, financial condition and operating results. Forward-Looking Statements: Some of the statements in this report are forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements about our plans, objectives, expectations, intentions and assumptions that are not statements of historical fact. You can identify these statements by the following words: - "may" - "will" - "should" - "estimates" - "plans" - "expects" - "believes" - "intends" and similar expressions. We cannot guarantee our future results, performance or achievements. Our actual results and the timing of corporate events may differ significantly from the expectations discussed in the forward-looking statements. You are cautioned not to place undue reliance on any forward- looking statements. Potential risks and uncertainties that could affect our future operating results include, but are not limited to, the risk described in Exhibit 99.1 to this report, including our limited operating history, history of losses, need to raise additional capital, the high risk nature of our business and our dependence on a few managed medical groups, as well as our ability to protect our intellectual property rights. 4 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits- 99.1 Certification of Chief Executive Officer and President of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.2 Certification of Chief Executive Officer and President of the Company, 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 On June 5, 2002, we filed a report on Form 8-K announcing the purchase of interests in oil and gas wells in Louisiana. We filed an amendment to the report on August 12, 2002. 5 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this amended report to be signed on its behalf by the undersigned hereunto duly authorized. Date: August 15, 2002 By: /s/ Gilad Gat Gilad Gat Chief Executive Officer and President (Principal Executive Officer) Date: August 15, 2002 By: /s/ Harvey Doliner Harvey Doliner Chief Financial Officer (Principal Financial and Accounting Officer) 6