-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O+Z9Lec3PQnFoJ6yJICxcLvsLlzq/FFqhPx/jzCzOLR2QNtqXOSoILMPmb+9GRFh Z53QYpZ3B94dFNdHtZ6SaQ== 0001013993-03-000018.txt : 20030515 0001013993-03-000018.hdr.sgml : 20030515 20030515115508 ACCESSION NUMBER: 0001013993-03-000018 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GSV INC CENTRAL INDEX KEY: 0001051591 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 133979226 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-23901 FILM NUMBER: 03702260 BUSINESS ADDRESS: STREET 1: 191 POST ROAD WEST CITY: WESTPORT STATE: CT ZIP: 06880 BUSINESS PHONE: 2125323553 MAIL ADDRESS: STREET 1: 191 POST ROAD WEST CITY: WESTPORT STATE: CT ZIP: 06880 FORMER COMPANY: FORMER CONFORMED NAME: CYBERSHOP INTERNATIONAL INC DATE OF NAME CHANGE: 19971217 10QSB 1 gsv03310310qsb.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 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, 2003 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 small business issuer 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, Connecticut 06880 (Address of principal executive offices) (Zip Code) Issuer's telephone number (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 May 15, 2003 was 2,640,090 shares, excluding 168,592 shares of our common stock held in Treasury. GSV, INC. AND SUBSIDIARIES INDEX TO FORM 10-QSB Page PART I. FINANCIAL INFORMATION Number ------ Item 1. Financial Statements: Consolidated Balance Sheet 2 Consolidated Statements of Operations for the Three Months ended March 31, 2003 and 2002 3 Consolidated Statements of Cash Flows for the Three Months ended March 31, 2003 and 2002 4 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Item 3. Controls and Procedures 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 10 SIGNATURES 11 CERTIFICATIONS 12 PART I. FINANCIAL INFORMATION Item 1. - Financial Statements GSV, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET March 31, 2003 ASSETS Current Assets: Cash and cash equivalents $ 547,492 Prepaid expenses and other current assets 33,031 -------------- Total current assets 580,523 Investments 65,000 Option to purchase oil and gas properties 80,210 Investments - oil & gas wells, net 122,031 Property and equipment, net 169,054 Other assets 35,599 -------------- Total assets $ 1,052,417 ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 92,311 Tenant security deposit 51,250 Dividends payable 63,800 -------------- Total current liabilities 207,361 -------------- Total liabilities 207,361 -------------- Stockholders' equity: 12% Series A Preferred stock, $.001 par value; 636,365 shares authorized; 363,637 shares issued and outstanding 380,000 Common stock, $.001 par value; 75,000,000 shares authorized; 2,808,690 issued; 2,640,090 outstanding 2,809 Additional paid-in capital 38,220,679 Treasury stock (558,998) Accumulated deficit (37,199,434) -------------- Total stockholders' equity 845,056 -------------- Total liabilities and stockholders' equity $ 1,052,417 ============== The accompanying notes to the unaudited consolidated financial statements are an integral part of these consolidated statements. 2 GSV, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended March 31, ----------------------------------- 2003 2002 --------------- --------------- Sublease income $ 51,638 $ 50,629 Oil and gas income 27,728 --- --------------- --------------- 79,366 50,629 Operating expenses: General and administrative 222,264 150,415 --------------- --------------- Total operating expenses 222,264 150,415 --------------- --------------- Loss from operations before other income and expense (142,898) (99,786) Interest income, net 890 4,872 --------------- --------------- Loss from operations (142,008) (94,914) --------------- --------------- Net loss $ (142,008) $ (94,914) =============== =============== Basic and diluted net loss per common share: Loss per common share from operations $ (0.05) $ (0.05) =============== =============== Weighted average common shares outstanding, basic and diluted 2,640,090 1,790,090 =============== =============== The accompanying notes to the unaudited consolidated financial statements are an integral part of these consolidated statements. 3 GSV, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, ----------------------------------- 2003 2002 ---------------- --------------- Cash flows from operating activities: Net loss $ (142,008) $ (94,914) Adjustments to reconcile net loss to net cash from operating activities: Depreciation 14,568 16,617 Depletion 22,139 --- Increase (decrease) in cash from changes in: Prepaid expenses and other current assets 39,537 25,000 Accounts payable 14,789 (23,306) --------------- -------------- Net cash from operating activities (50,975) (76,603) --------------- -------------- Cash flows from investing activities: - - Cash flows from financing activities: - - Net decrease in cash (50,975) (76,603) Cash and cash equivalents, beginning of period 598,467 1,312,343 --------------- -------------- Cash and cash equivalents, end of period $ 547,492 $ 1,235,740 =============== ============== The accompanying notes to the unaudited consolidated financial statements are an integral part of these consolidated statements. 4 GSV, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Description of the Business and Basis of Presentation Commencing in June 2001, GSV, Inc. and Subsidiaries ("the Company") changed the direction of its business. The Company's business operations since June 2001 include entering into new business operations through acquisitions or mergers and managing existing investments including the recent oil and gas acquisitions. Prior to June 2001, the Company had sought to identify and develop attractive early stage Internet companies in exchange for equity positions in such companies. In connection with this activity, the Company made investments in Fasturn, Inc., Weema Technologies, Inc., Telephone.com, Inc., MeetChina.com, Inc., and e-Commerce Solutions, Inc. The Company has since made substantial write downs of its internet investments to more accurately reflect current market valuations, and these investments do not represent a significant asset. In September 2002 the Company restructured its investment in Telephone.com, Inc. and received $75,000 in cash and 358,000 shares of common stock of Telephone.com, Inc. in exchange for 600,000 shares of series A preferred stock of Telephone.com. The Company is presently investigating whether or not there are any business prospects through which material value can be realized from its internet investments. 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. 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. The consideration consisted of $550,000 in cash and 850,000 shares of the Company's common stock valued at $0.25 per share. Concurrent with the asset purchase agreement, the Company signed a management agreement with Polystick U.S. Corp. to assist the Company in the managment 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. The information presented as of March 31, 2003 and for the three-month periods ending March 31, 2003 and 2002, is unaudited, but, in the opinion of management of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) which the Company considers necessary for the fair presentation of the Company's financial position as of March 31, 2003, the results of its operations for the three-month periods ended March 31, 2003 and 2002 and its cash flows for the three-month periods ended March 31, 2003 and 2002. The consolidated financial statements included herein have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and accompanying notes for the year ended December 31, 2002, included in the Company's Annual Report on Form 10-KSB as filed with the Securities and Exchange Commission. Certain prior period amounts have been reclassified to conform to the current period presentation. 5 2. Investments The Company has investments in five internet-related companies which have been accounted for using the cost method. During the quarter ended March 31, 2003, the Company recorded no charge to operations for any further impairment of these investments. As described above, the Comany acquired working interests in two oil and gas wells effective June 1, 2002 for $550,000 in cash and common stock of the Company valued at $212,500, for a total investment of $762,500. The asset is depleted on a periodic basis using the units of production method. Depletion expense for the quarter ended March 31, 2003 ws $22,139. In the fourth quarter of 2002, the properties exhibited a marked decrease in the volume of oil and gas produced. Based upon an independent reserve study performed effective March 2003, the Company reduced the carrying amount of its oil and gas properties by approximately $479,000 for the year ended December 31, 2002. 3. Stockholders' Equity Pursuant to the terms of the Asset Purchase Agreement with Polystick U.S. Corp. effective June 1, 2002, the Company issued 850,000 shares of common stock valued at a price of $0.25 per share, the closing price on May 28, 2002, to Polystick U.S. Corp. 4. Net Loss Per Common Share Basic and diluted net loss per common share is calculated by dividing Net loss per common share after effect of preferred stock dividends by the weighted average number of shares of common stock outstanding during the period as follows: For the Three Months Ended March 31, - ------------------------------------------------------------------------------- 2002 2002 ----------------------------------------------- ---------------------------------- Per Per Loss Shares Share Loss Shares Share Loss from operations $(142,008) 2,640,090 $ (0.05) $ (94,914) 1,790,090 $ (0.05) Effect of preferred stock dividends --- -- --- -- --------- --------- ------- --------- ---------- ------ Net loss available for common shareholders $(142,008) 1,790,090 $ (0.05) $ (94,914) 1,790,090 $ (0.05) ========= ========= ======= ========= ========= =======
6 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. ("Polystick"), 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 a one-year option, including a right of first refusal, to purchase other oil and gas properties held by Polystick. Concurrent with the asset purchase agreement, the Company signed a management agreement with Polystick 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. On April 8, 2003, we signed a term sheet with Polystick for the purchase by the Company of all oil and gas related properties owned by Polystick. Pursuant to the term sheet, the consideration to be paid by the Company, valued at $2.65 million, will consist of 4,500,000 shares of common stock of the Company valued at $0.25 per share and 1,500,000 shares of Series B convertible preferred stock of the Company. The Series B convertible preferred stock will be convertible into shares of the Company's common stock at a price of $1.00 per share, subject to certain anti-dilution adjustments. Polystick will have the right, pursuant to the terms of the Series B preferred stock, to elect up to three members of the Company's board of directors. The purchase price is subject to adjustment based on the Company's due diligence investigation of Polystick and its assets. Consummation of the transaction is subject to the completion of due diligence and the negotiation and execution of a definitive purchase agreement. Consummation of the transaction is also subject to the prior repurchase or redemption of all of the outstanding shares of the Company's existing Series A preferred stock. 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 March 31, 2003, our investments were valued at approximately 6.2% of the total value of our assets. We are presently investigating as to whether or not there are any business prospects through which material value can be realized from our investments. Off-Balance Sheet Transactions In June 2001, we sublet to Nekema.com our former offices in Jersey City, New Jersey through December 31, 2008. The rent on the sublease is guaranteed by Lumbermens Mutual Casualty Company, d/b/a Kemper Insurance Company until May 2003. In September 2002 Nekema ceased business operations and defaulted on the sublease. Kemper Insurance Company has made all payments of rent due under the sublease through the date of this filing. We are actively seeking a replacement subtenant for the property. If we are unable to find a subtenant, unless we are able to negotiate a settlement with the landlord we will be obligated to pay rent on the space until our lease expires in December 2008. The lease contains automatic increases based upon the consumer price index. Estimated minimum future lease payments, including such increases, aggregate approximately $1,008,000. Contractual Obligations The following table summarizes the Company's contractual obligations as of the latest fiscal year end, December 31, 2002: Less than 1 to 3 to More than Total 1 Year 3 Years 5 Years 5 Years ---------- --------- -------- -------- --------- Operating Leases $1,065,668 $ 163,503 $337,237 $368,272 $ 196,656 Consulting contract $ 81,250 $ 81,250 $ - $ - $ - Preferred stock dividend (1) $ 63,800 $ 63,800 $ - $ - $ - ---------- --------- -------- -------- --------- Total $1,210,718 $ 308,553 $337,237 $368,272 $ 196,656 ========== ========= ======== ======== ========= (1) Preferred stock dividend is not obligated until declared each June 30 and December 31. 7 Results of Operations Three Months Ended March 31, 2003 compared to Three Months Ended March 31, 2002. Revenues: Revenues for the quarter increased by $28,737 over the corresponding period of the preceding year due to the addition of the oil and gas activity. General and administrative: General and administrative expenses consist primarily of payroll and payroll related expenses for administrative, information technology, accounting, and management personnel, legal fees, and general corporate expenses. General and administrative expenses increased by 48%, or $71,849, to $222,264 in the first quarter of 2003 from $150,415 in the first quarter of 2002. General and administrative expenses in the current period reflect general corporate overhead, as well as depletion of $22,139 and consulting expense of $37,500. Interest income, net: Interest income decreased $3,982 to $890 in the first quarter of 2003 from $4,872 in the first quarter of 2002. The decrease is primarily the result of a decrease in average cash and cash equivalents, as well as a decrease in interest rates. Net Losses: Loss from operations increased by $47,094 from $94,914 in the first quarter of 2002, or ($0.05) per basic and diluted common share, to $142,008 in the first quarter of 2003, or ($0.05) per basic and diluted common share. Liquidity and Capital Resources Net cash used in operations decreased by 33%, or $25,628, to $50,975 in the first quarter of 2003 from $76,603 in the first quarter of 2002, primarily as a result of increased revenues from the oil and gas activity offset by consulting and depletion expense. Current assets other than cash decreased by 54%, or $39,537, in the first quarter of 2003 from $72,568 at December 31, 2002, to $33,031 at March 31, 2003, reflecting a decrease in prepaid insurance premiums due to the timing of policy renewals and a decrease in accounts receivable. Net cash provided by investing activities during the first three months of 2003 was zero as compared to zero in the same period of the prior year. Net cash provided by financing activities during the first three months of 2003 was zero as compared to zero in the same period of the prior year. We believe that our existing capital resources will enable us to maintain our operations at existing levels for at least the next 12 months. The sufficiency of the 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. 8 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, our limited operating history, history of losses, need to raise additional capital, and the high risk nature of our business. Item 3. Controls and Procedures The Company's Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended) as of a date within 90 days of the filing of this quarterly report (the "Evaluation Date"), has concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures were effective to ensure the timely collection, evaluation and disclosure of information relating to the Company that would potentially be subject to disclosure under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. There were no significant changes in the Company's internal controls or in other factors that could significantly affect the internal controls subsequent to the Evaluation Date. 9 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. (b) Reports on Form 8-K On April 8, 2003, we filed a report on Form 8-K announcing under Item 9 thereof the signing of a term sheet between the Company and Polystick U.S. Corp. for the purchase by the Company of all oil and gas related properties owned by Polystick U.S. Corp. 10 SIGNATURES 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 hereunto duly authorized. Date: May 15, 2003 By: /s/ Gilad Gat Gilad Gat Chief Executive Officer and President (Principal Executive Officer) Chief Financial Officer (Principal Financial and Accounting Officer) 11 CERTIFICATIONS I, Gilad Gat, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of GSV, Inc.; 2. Based on my knowledge, this quarterly 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 quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2003 By: /s/ Gilad Gat Gilad Gat Chief Executive Officer Chief Financial Officer 12 EX-99 3 gsv_exh991.txt Exhibit 99.1 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 GSV, Inc. (the "Company") on Form 10-QSB for the period ending March 31, 2003 (the "Report"), I, Gilad Gat, Chief Executive Officer and Chief 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 requirement 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 Company's financial position and results of operations. /s/ Gilad Gat - ----------------------- Chief Executive Officer and Chief Financial Officer May 15, 2003 -----END PRIVACY-ENHANCED MESSAGE-----