SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 2000
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[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
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Commission file number 0-27043
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E-VIDEOTV, INC.
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(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 51-0389325
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(State or Other Jurisdiction of IRS Employer
Incorporation or Organization) Identification No.)
7333 East Doubletree Ranch Road, Suite 205, Scottsdale, AZ 85258
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(Address of Principal Executive Offices)
480-905-5838
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(Issuer's Telephone Number, Including Area Code)
8360 East Via de Ventura, Building L-200, Scottsdale, AZ 85258
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(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common shares, as of the latest practicable date: 16,757,072
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Transitional Small Business Disclosure Format (check one):
Yes No X
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E-VIDEOTV, INC.
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 2
Item 1. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 2
Item 2. Management's Discussion and Analysis and Plan of Operation. . . . 8
PART II OTHER INFORMATION. .. . . . . . . . . . . . . . . . . . . . . . . . 10
Item 1. Legal Proceedings.. . . . . . . . . . . . . . . . . . . . . . . . 10
Item 2. Changes in Securities.. . . . . . . . . . . . . . . . . . . . . . 10
Item 3. Defaults Upon Senior Securities.. . . . . . . . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote of Security Holders.. . . . . . . 10
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . 10
SIGNATURES. . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 11
PART I
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FINANCIAL INFORMATION
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<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS.
The following financial statements are included as part of this quarterly report:
<S> <C>
Unaudited Consolidated Balance Sheet at June 30, 2000 and December 31, 1999. . . . . . . . . . 3
Unaudited Consolidated Statement of Operations for the period from inception, March 5,
1999, to June 30, 2000, the six months ended June 30, 2000, the period from inception to
June 30, 1999, the quarter ended June 30, 2000 and the quarter ended June 30, 1999 . . . . . . 4
Unaudited Consolidated Statement of Cash Flows for the period from inception, March 5,
1999, to June 30, 2000, the six months ended June 30, 2000 and the period from inception
to June 30, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Unaudited Consolidated Statement of Shareholders' Equity for the period from inception,
March 5, 1999, to June 30, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Unaudited Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . 7
</TABLE>
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<TABLE>
<CAPTION>
E-VIDEOTV, INC.
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED BALANCE SHEET
UNAUDITED
<S> <C> <C>
U.S. DOLLARS JUNE 30, DECEMBER 31,
2000 1999
------------ -------------
$ $
ASSETS
CURRENT ASSETS
Cash 68,244 105,002
Accounts receivable 6,727 -
Prepaid expenses 2,800 2,904
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TOTAL CURRENT ASSETS 77,771 107,906
OFFICE EQUIPMENT 10,556 3,334
DISTRIBUTION RIGHTS AND SOFTWARE DEVELOPMENT 1,987,027 756,478
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TOTAL ASSETS 2,075,354 867,718
============ =============
LIABILITIES
CURRENT LIABILITIES
Accounts payable 144,881 248,899
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SHAREHOLDERS' EQUITY
SHARE CAPITAL (note 2)
Authorized
- 100,000,000 shares of common stock, $0.0001 par value
- 5,000,000 shares of preferred stock, $0.0001 par value
Issued and outstanding
- 16,757,072 common shares (1999 - 15,588,359) 1,676 1,559
Additional paid in capital 2,935,553 1,095,297
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TOTAL SHARE CAPITAL 2,937,229 1,096,856
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (1,006,756) (478,037)
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NET SHAREHOLDERS' EQUITY 1,930,473 618,819
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 2,075,354 867,718
============ =============
CONTINUANCE OF OPERATIONS (NOTE 1)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
<TABLE>
<CAPTION>
E-VIDEOTV, INC.
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
U.S. DOLLARS
INCEPTION, SIX MONTHS INCEPTION, QUARTER QUARTER
MARCH 5, 1999, ENDED MARCH 5, ENDED ENDED
TO JUNE 30, JUNE 30, TO JUNE 30, JUNE 30, JUNE 30,
2000 2000 1999 2000 1999
---------------- ------------ ------------- ---------- ---------
$ $ $ $ $
GENERAL AND ADMINISTRATIVE
EXPENSES
<S> <C> <C> <C> <C> <C>
Corporate promotion 107,847 65,710 1,045 25,289 1,045
General corporate expenses 103,734 48,122 1,299 28,158 1,299
Management and consulting fees 442,477 285,837 7,473 152,210 7,473
Office expenses 44,307 30,028 - 18,888 -
Professional fees 196,831 30,910 1,700 11,564 1,700
Rent 39,765 15,937 834 4,964 834
Travel 81,843 53,365 1,433 33,887 1,433
---------------- ------------ ------------- ---------- ---------
TOTAL GENERAL AND
ADMINISTRATIVE EXPENSES 1,016,804 529,909 13,784 274,960 13,784
INTEREST INCOME (10,048) (1,190) (688) (113) (688)
---------------- ------------ ------------- ---------- ---------
NET LOSS FOR THE PERIOD 1,006,756 528,719 13,096 274,847 13,096
================ ============ ============= ========== =========
Weighted Average Number of
Shares Outstanding 9,294,601 515,747 9,789,056 663,103
------------ ------------- ---------- ---------
NET LOSS PER SHARE 0.06 0.03 0.03 0.02
============ ============= ========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
<TABLE>
<CAPTION>
E-VIDEOTV, INC.
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
U.S. DOLLARS
INCEPTION, SIX MONTHS INCEPTION,
MARCH 5, 1999, ENDED MARCH 5, 1999,
TO JUNE 30, JUNE 30, TO JUNE 30,
2000 2000 1999
---------------- ------------ ---------------
$ $ $
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net loss for the period (1,006,756) (528,719) (13,096)
Adjustments to reconcile net loss to net cash
used in operating activities:
- depreciation 740 493 -
- accounts receivable and prepaid expenses 3,077 (6,623) (1,685)
- accounts payable 112,651 (104,018) 6,977
---------------- ------------ ---------------
NET CASH USED IN OPERATING ACTIVITIES (890,288) (638,867) (7,804)
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FINANCING ACTIVITIES
Proceeds from sale of common shares 1,048,601 1,048,600 1
Loans from parent company prior to acquisition 115,000 - 115,000
Cash acquired on acquisition of parent company 1,001,481 - 1,001,481
---------------- ------------ ---------------
TOTAL CASH FLOW FROM FINANCING ACTIVITIES 2,165,082 1,048,600 1,116,482
---------------- ------------ ---------------
INVESTING ACTIVITIES
Distribution rights and software development (1,195,254) (438,776) (348,934)
Office equipment (11,296) (7,715) -
---------------- ------------ ---------------
TOTAL CASH USED IN INVESTING ACTIVITIES (1,206,550) (446,491) (348,934)
---------------- ------------ ---------------
INCREASE IN CASH DURING THE PERIOD 68,244 (36,758) 759,744
CASH AT THE BEGINNING OF THE PERIOD - 105,002 -
---------------- ------------ ---------------
CASH AT THE END OF THE PERIOD 68,244 68,244 759,744
================ ============ ===============
NON-CASH ACTIVITIES NOT INCLUDED
IN CASH FLOWS
Ascribed value of shares issued to
acquire copy protection license 791,773 791,773 -
Cancellation of loans from parent
company on acquisition 115,000 - 115,000
Ascribed value of shares issued in
excess of cash acquired on
acquisition of parent company 95,374 - 95,374
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
<TABLE>
<CAPTION>
E-VIDEOTV, INC.
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
INCEPTION, MARCH 5, 1999, TO JUNE 30, 2000
UNAUDITED
U.S. DOLLARS
ADDITIONAL TOTAL
NUMBER PAR PAID IN SHAREHOLDERS'
OF SHARES VALUE CAPITAL DEFICIT EQUITY
$ $ $ $
<S> <C> <C> <C> <C> <C>
Issuance of shares for cash on
incorporation 1 1 - - 1
Adjustment for change in share
structure resulting from acquisition
of eVideo U.S.A., Inc. 6,623,015 661 (661) - -
Shares outstanding at date of
acquisition of eVideo U.S.A., Inc.,
previously issued for cash, net of
issue costs 8,965,343 897 1,095,958 - 1,096,855
Net loss, inception to
December 31, 1999 - - - (478,037) (478,037)
----------- ------ ----------- ------------- -------------
Balance, December 31, 1999 15,588,359 1,559 1,095,297 (478,037) 618,819
Issuance of shares for cash 666,000 67 1,048,533 - 1,048,600
Issuance of shares to acquire
copy protection license 502,713 50 791,723 - 791,773
Net loss, six months ended
June 30, 2000 - - - (528,719) (528,719)
----------- ------ ----------- ------------- -------------
Balance, June 30, 2000 16,757,072 1,676 2,935,553 (1,006,756) 1,930,473
=========== ====== =========== ============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
E-VIDEOTV, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
UNAUDITED
U.S. DOLLARS
1. BASIS OF PRESENTATION
While the information presented in these interim consolidated financial
statements is unaudited, it includes all adjustments which are, in the
opinion of management, necessary to the fair presentation of the interim
periods reported. As certain information has been condensed or omitted from
the notes to the financial statements, these financial statements should
only be read in conjunction with the audited consolidated financial
statements for the period from inception, March 5, 1999, to December 31,
1999, contained in the company's annual report on Form 10-KSB.
The Company has not yet commenced its planned principal operations and it
has not yet earned any revenue. The Company's current operational focus is
to ensure that its electronic video delivery system is able to be
commercially exploited. To that end, management is devoting substantially
all of the Company's resources to the development of the system. The
electronic video delivery technology and software that it is in the process
of developing will require cash significantly in excess of its current
resources. The ability of the Company to develop this technology and
software into a marketable product is dependent on the Company's ability to
obtain adequate additional financing, develop a commercially saleable
process and to achieve profitable operations.
The Company is devoting significant efforts to obtaining private financing
to fund the continued development of its technology and software.
Significant additional cash will be required.
2. SHARE CAPITAL
The warrants that were outstanding that entitled their holder to purchase
up to 307,693 shares of common stock at $3.25 per share until May 25, 2000
expired without being exercised.
The Company has agreed to issue 3 common shares to the licensor of the
Company's copy protection software for each 97 shares the Company issues in
future to third parties.
3. RELATED PARTY TRANSACTIONS
<TABLE>
<CAPTION>
Inception, Six months
March 5, 1999, ended
to June 30, June 30,
2000 2000
--------------- ----------
$
<S> <C> <C>
Management and consulting fees paid to other companies that employ
directors and officers of the Company 323,501 169,852
Rent paid to a company that employed directors and
officers of the Company 34,801 10,973
</TABLE>
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.
On July 1, 2000, the Board of Directors appointed Mr. Charles Weber of Los
Angeles as President, CEO and a Director. Mr. Weber has an extensive background
in the Motion Picture Industry. Mr. Weber will direct the procurement of content
from both the major and independent studios.
At June 30, 2000 the Company had not as yet developed the systems necessary to
operate its content aggregation business model. It has completed its analysis of
the software required for its customer ordering system and intends to proceed to
a contract with an outside company to complete this software development. It
anticipates this will take about four months to complete.
In the next six months, the Company intends to spend $2,000,000 as follows:
Software and website development - $900,000
Hardware requirements 400,000
Marketing and general overhead 700,000
----------
$2,000,000
==========
To date, the Company has financed its development stage by private placements of
common stock. The Company recognizes that it will need additional capital and it
intends to complete a private placement financing to cover its requirements.
At June 30, 2000 the Company had cash on hand of $68,244. The Company
anticipates that it will need a minimum of $2,000,000 plus general working
capital in the next six months in order to meet its timetable. The Company's
development schedule will be delayed unless the additional capital required by
the Company is available when needed. Some of the capital expenditures will take
place early in 2001. The Company intends to spend at least $5,000,000 over the
next 12 months in the development of its system.
A critical factor in the Company's ability to market its video movies will be
developing digital set-top box specifications for cable and satellite TV systems
and obtaining manufacturers approval to include those specifications in their
set-top boxes. A digital set-top box capable of receiving and storing the
videos to be distributed by the Company is estimated to cost $500 - $600. Each
subscriber will require a digital set-top box in order to receive e-VideoTV.
The Company's proposed capital expenditures do not include the cost of
manufacturing and distributing the set-top boxes. The Company's business plan
contemplates that the costs associated with manufacturing the set-top boxes will
be financed by cable and satellite television providers, advertisers and
customers. The inability of the Company to arrange third party funding for the
cost of the set-top boxes will have a material adverse effect on the Company's
proposed operations.
Inflation has not been a factor during the quarter ending June 30, 2000. While
inflationary forces are moderately higher than in 1999, the increase in
inflation is not material and does not appear to be a factor in any contemplated
capital expenditures.
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<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no reportable legal proceedings.
ITEM 2. CHANGES IN SECURITIES.
There are no changes in the Company's securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
There have been no defaults upon senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the quarter ended
June 30, 2000.
ITEM 5. OTHER INFORMATION.
The Company has no other information to report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
The following exhibits are filed as part of this report.
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the quarter ended June
30, 2000.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed by the undersigned, thereunto duly authorized.
E-VIDEOTV, INC.
Date August , 2000 By /s/ Charles Weber
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Charles Weber
President
(Chief Executive Officer)
Date August , 2000 By /s/ Robert G. Dinning
----------------- --------------------------
Robert G. Dinning
Chief Financial Officer
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