SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1O-QSB
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2000.
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 No.0-23965
easyQual.com, Inc.
------------------
formerly known as Centennial Banc Share Corp.
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Colorado 84-1374481
--------------- ------------------------
(State or other (IRS Employer File Number)
jurisdiction of
incorporation)
6795 E. Tennessee Ave., 5th Floor 80224
-------------------------------------- --------
(Address of principal executive offices) (zip code)
(303) 840-2000
--------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) had 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
--- ---
The number of shares outstanding of Registrant's common stock, par value
$.0000001 per share, as of September 30, 2000 were 15,994,941 common shares.
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM I. Financial Statements
See attached financial statements
ITEM 2. Managements Discussion and Analysis of Financia
Condition and Results of
Operations.
Forward-Looking Statements
The following discussion contains forward-looking statements regarding
us, our business, prospects and results of operations that are subject to
certain risks and uncertainties posed by many factors and events that could
cause our actual business, prospects and results of operations to differ
materially from those that may be anticipated by such forward-looking
statements. Factors that may affect such forward-looking statements include,
without limitation: our ability to successfully develop new products for new
markets; the impact of competition on our revenues, changes in law or regulatory
requirements that adversely affect or preclude customers from using our products
for certain applications; delays in our introduction of new products or
services; and failure by us to keep pace with emerging technologies.
When used in this discussion, words such as "believes", "anticipates",
"expects", "intends" and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
report. We undertake no obligation to revise any forward-looking statements in
order to reflect events or circumstances that may subsequently arise. Readers
are urged to carefully review and consider the various disclosures made by us in
this report and other reports filed with the Securities and Exchange Commission
that attempt to advise interested parties of the risks and factors that may
affect our business.
Results of Operations
For the nine months ended September 30, 2000, we had revenues of
$4,164,886 compared to revenues of $2,010,578 for the same period ended
September 30, 1999. Total operating expenses for the nine months ended September
30, 2000 were $4,915,496, compared to expenses of $2,716,758 for the same period
ended September 30, 1999. Our major components of operating expenses are
independent contractor fees, office salaries and associated payroll costs,
general and health insurance costs, rent and telephone expenses.
As a result, we had a net loss of $750,610, or a loss of $0.05 per
share, for the nine months ended September 30, 2000, compared to $706,180, or a
loss of $0.23 per share, for the same period ended September 30, 1999.
During the reporting period, we continued to increase our loan
origination staff and mortgage infrastructure to handle the increased business.
Additionally, we have continued development of our Internet application service
provider. Our increased revenues are tied directly to significantly greater
mortgage originations from the previous year. We generate wholesale mortgage
originations as Entrust Mortgage and retail originations as Mortgage 2000.
During the reporting period, we entered into a contract with a major
financial institution to offer unsecured lines of credit to consumers with
marginal credit scores and for loan amounts up to $50,000.
<PAGE>
This loan features thirty-minute approval and immediate funding. The loan is
offered online through our easyQual.com web page or by phone in which calls come
into an easyQual.com toll free number, but the calls are handled by our partner
call center at no cost to the Company.
Also, during the reporting period, we entered into a contract with
eBoatsloans.com, Inc., to assist in the financing of boat loans.
Our basic strategy remains to develop a program to deliver into the
U.S. mortgage industry automated underwriting and loan application processing.
The present mortgage industry conducts its business through many manual steps,
in an antiquated system prone to mistakes. Our planned system will be set up to
permit the mortgage customer to process an application much quicker, typically
one to three minutes. Currently, the pre-approval and stipulations for a
mortgage in the industry typically need one to two days to complete before
sending out. The more loan programs offered by the mortgage company, the more
complexity sets in, pushing those averages out.
In the competitive loan environment providing a diverse range of
programs, for every 10 applications that the underwriter pre-approves, a
significant number are pre-approved for the wrong program. On average five
pre-approvals per day have to be redone.
On average, out of every 10 loans submitted, one-half are pre-qualified
and generate a customer list of stipulations. Of the customers receiving a list
of stipulations, only one half return a full package. The time delays to get
pre-approval encourage the customer to shop around for other product. Document
completion by the customer (assisted by the broker) can take another 7 to 10
days on average. Of the customers responding to the stipulations completely,
one-half actually close their loans. On average, out of ten initial mortgage
loan applications submitted, fewer than one (.833) is funded in an industry
completion process of 18 days.
With our planned system, the industry standard would change. Out of ten
initial loan applications, we believe three will close in a major positive shift
in cost and time. In our planned system, the loan application is a "smart
application." One long, tedious form no longer fits every customer. As the
computer asks the broker (or customer) a question, the response determines the
next question. Each new question fits the applicant's prior responses in a
design to limit questions to what is directly relevant. Broker data input time
is thereby reduced.
By integrating the smart application into an automated underwriting
program, our search engine would be able to examine a thousand loan programs, if
necessary, to find an exact match for each customer profile without mistakes.
Pre-approval and document stipulations are complete in about 6o seconds, not two
days.
With our planned system, management evaluation of a sales person's
prospect is eliminated. Back office data entry is also eliminated. Applications
that would sit for two days in a back office file disappear as well. There is
only one human interface in the underwriting process involving a review of the
authenticity of tax returns and the other stipulated documents. With our planned
system, the cost of back office personnel would go down, providing margins for
employing a higher quality personnel using systems that ensure an efficient
document review process. Consequently, everything is speeded up without error.
Our planned system turns an inexperienced loan officer into a seemingly
experienced loan officer, able to provide the customer with definite answers
instantaneously without the customary mistakes. With every requirement of the
loan process scripted, the customer gets accurate information from the broker
who no longer has to constantly call the home office for answers. With our
planned system, a loan officer's time is released to sell rather than study
<PAGE>
dozens of loan programs offered by the firm. The system also removes the
insecurity that currently prevails when an inexperience sales person attempts to
describe complex loan options. In addition, the current limits on the number of
loans a top producer or any producer can manage is dramatically expanded. The
confidence that the lender has for the integrity of the underwriting/loan
process is enhanced as well.
Automated underwriting can be found currently in limited pockets of the
industry. For the "prime market"--offering standard, government generated
mortgages to the creditworthy customer--automated underwriting is now available
on a limited basis. The "prime market," however, represents one-fourth of the
total mortgage business. For the "sub-prime" market involving more complexity,
including credit issues and the need for individual loan tailoring, the manual
mortgage system prevails everywhere in the industry.
The sub-prime market representing three-fourths of the total U.S.
mortgage origination business provides three to four times the profit margins of
the prime market. That is the market in which we are seeking to create a new
standard and, by this standard, and to establish a new industry leadership.
Our market roll-out of this new system is expected to target both the
wholesale and retail mortgage industry. Bringing our automated system into the
small to medium brokerage office currently operating in every rural and urban
region of the United States should be the basis of substantial business. Small
mortgage brokers dominate this industry.
Our plan for the U.S. wholesale mortgage industry uses relationships
with brokerage office which do require to giving up autonomy, name, ownership or
loan programs to participate in our mortgage origination program.
With the completion of the development of this program, which we expect
to occur in the fourth quarter of our current fiscal year, we intend to begin
providing this system to the mortgage industry through industry publications and
other media outlets, a web site, an industry newsletter and a team of account
executives.
We also continue development of FocVs Technologies, which is to be our
Technology Solutions Provider (TSP) company subsidiary. FocVs is being created
to provide full service software application service to select vertical markets.
The first selected markets are planned to be the mortgage brokerage community,
small financial planners, and the temporary staffing industry.
Our TSP will provide contractual services, offering to display, host,
manage, and lease access to software applications from a centrally managed
Network Operations Center to select vertical markets. Our TSP is anticipated to
minimize the cost of ownership, to provide total mobility, to eliminate the cost
of retaining skilled IT staff, and to provide instantaneous scalability. The ASP
market has been touted by many Internet experts as the next major Internet
expansion area, but implementation of most ASPs has been more costly than
projected. FocVs has modified its business structure to better monetize
customers and to eliminate much of the capital structure involving ASP's. Our
change to functioning as a TSP partially underscores these differences. FocVs'
initial clients are expected to come from the Entrust Mortgage broker client
base and from other affinity relationships. FocVs has already negotiated ASP
pricing models with most of its required software providers and expects to offer
its customers software usage at a much lower cost than current competitive
pricing structures. We expect FocVs to begin generating revenues during the
fourth fiscal quarter of our current fiscal year.
A portion of current unprofitability came as a result of the effects of
the fraud perpetrated upon us by Vision One Technologies (Vision). As we
previously reported, the Vision fraud cost us $508,000 in payments to Vision
<PAGE>
and approximately $400,000 of additional expenses for the discontinued
operations. We filed a civil suit against Vision, its principals, and their
attorney. The principals of Vision have been convicted of the numerous charges
associated with the fraud perpetrated upon us. We identified assets of the
perpetrators of the fraud and remain hopeful of being able to ultimately recover
a substantial portion of the losses, although we have not recovered any losses
as yet.
Liquidity and Capital Resources
As of the end of the reporting period, we had cash or cash equivalents
of $123,034, compared to cash or cash equivalents of $732,155 at September 30,
1999..
Net cash used by our operating activities was $1,093,541 for the nine
months ended September 30, 2000, compared to net cash used of $1,826,562 for the
nine months ended September 30, 1999.
Cash flows used for our investing activities provided $53,042 for the
nine months ended September 30, 2000, compared to $367,291 for the nine months
ended September 30, 1999.
Cash flows from our financing activities accounted for $1,205,050 for
the nine months ended September 30, 2000, compared to $2,914,410 for the nine
months ended September 30, 1999. These amounts came from the sale of our
securities.
Our current cash and cash equivalents are not sufficient to completely
meet our business plan objectives, particularly the funding of our mortgage
origination program. We plan to raise additional capital through a private
placement, by leveraging our assets and utilizing internally generated profits
to recover our cash position over the short-term. These funds will be necessary
for the funding of our mortgage origination program. Over the long term, we
remain convinced that we can recover a substantial portion of the fraud losses.
Our mortgage business is profitable. We do not project overall company net
profits until full implementations of our technology services and completion of
first phase sales of our easyQual homes Southwest Florida development.
We do not intend to pay dividends in the foreseeable future.
PART II- OTHER INFORMATION
ITEM 1. Legal Proceedings
We have a pending lawsuit in the Colorado District Court for the City and
County of Denver against Stephen B. Torres, J. Scott Oler, Berkley Rasband, and
Vision One Technologies, Inc. seeking damages and injunctive relief in
connection with our acquisition of the assets of Vision One Technologies, Inc.
We have alleged deceit based upon fraud, fraud in connection with the purchase
of securities, misappropriation of trade secrets, among other claims. We are
seeking actual and punitive damages, as well as injunctive relief against the
defendants. The case in the preliminary stages and no answer has been filed by
the defendants. We are a defendant in a suit with PCMD, Dan and Diane King,
pertaining to payment of equipment and services purported to be sold to Vision
One. This suit was filed in the Colorado District Court for the City and County
of Denver. The suit pertains to who is responsible for payment, and we are also
seeking recovery from PCMD by counterclaim monies paid to them and an accounting
of their liability regarding their role in perpetrating the fraud.
<PAGE>
Otherwise, no legal proceedings of a material nature to which we are a
party were pending during the reporting period, and we know of no legal
proceedings of a material nature pending or threatened or judgments entered
against any of our directors or officers in his capacity as such.
ITEM 2. Changes in Securities and Use of Proceeds.
On May 5, 1999, we issued a Convertible Promissory Note for $500,000, with
an interest rate of 10% per annum. The Note was due May 5, 2000. A total of
$150,000 of the Note, plus accrued interest, was converted on June 7, 2000 into
225,000 common shares, and the remaining Note was extended for an additional six
months.
ITEM 3. Defaults upon Senior Securities. None.
ITEM 4. Submission of Matters to a Vote of Security Holders. None
ITEM 5. Other Information. None.
ITEM 6. Exhibits and Reports on Form 8-K. None
Exhibit No. 27.1 - Financial Data Schedule
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
easyQual.com, Inc.
Dated: 11/20/00 By: /s/ Patricia W. Saunders
------------------------------------------
Patricia W. Saunders
Secretary
<PAGE>
EASYQUAL.COM.INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
<PAGE>
REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
EasyQual.Com.Inc.
Denver, CO
We have reviewed the accompanying consolidated balance sheet of
EasyQual.Com.Inc. and subsidiaries as of September 30, 2000 and the related
consolidated statement of income and cash flow for the nine-months ended
September 30, 2000, included in the accompanying Securities and Exchange
Commission Form 10-Q for the period ended September 30, 2000. These consolidated
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the consolidated financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as December 31, 1999 and the related
consolidated statements of income, stockholders' equity and cash flows for the
year then ended (not presented herein). In report dated March 22, 2000, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying consolidated balance
sheet as of September 30, 2000 is fairly stated in all material respects in
relation to the consolidated balance sheet from which it has been derived.
Michael Johnson & Co., LLC
Denver, CO
November 17, 2000
F-1
<PAGE>
<TABLE>
<CAPTION>
EasyQual.Com, Inc.
Consolidated Balance Sheet
September 30, 2000
(Unaudited)
September 30, December 31,
2000 1999
------------ ------------
ASSETS:
Current assets:
<S> <C> <C>
Cash $ 123,034 $ 64,567
Accounts Receivable 295,179 404,339
Note Receivable - Note 2 225,135 279,937
Prepaid Expenses 74,612 41,181
Title Co. Advances 172,498 112,900
Loans Receivable - Warehouse 8,813,950 12,006,590
------------ ------------
Total current assets 9,704,408 12,909,514
Fixed assets - Note 1
Computers & Equipment 338,749 206,578
Furniture & Fixtures 172,744 255,969
Leasehold Improvements 16,520 12,424
------------ ------------
Total fixed assets 528,013 474,971
Less accumulated depreciation (100,750) (50,005)
------------ ------------
Net fixed assets 427,263 424,966
Other assets:
Investments 148,000 148,000
Marketable Security 100,000 --
Intangible Assets 1,865,641 1,865,641
Loan Receivables 159,597 159,597
Deposit 13,396 13,028
------------ ------------
2,286,634 2,186,266
Less Amortization (160,084) (73,689)
------------ ------------
Total other assets 2,126,550 2,112,577
TOTAL ASSETS $ 12,258,221 $ 15,447,057
============ ============
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 206,427 $ 151,308
Accrued payables 1,146 97,254
Loans Payable - First Bank 2,759 --
Impounds 14,696 --
Loan Payables -- --
Notes Payable 188,688 94,104
Debenture Payable 15,000 500,000
Warehouse Line Payable 8,745,509 11,974,835
------------ ------------
Total current liabilities 9,174,225 12,817,501
Long-Term Liability
Loans Payable - Shareholders 24,000 --
------------ ------------
Total long-term liability 24,000 --
Stockholder's equity:
Preferred stock, $.0000001 Par Value
1,000,000 Shares Authorized. None Issued -- --
Common stock, $.0000001 Par Value
50,000,000 Shares Authorized, 15,994,941 were
issued and outstanding for 2000 and 3,397,983 were 1 1
issued and outstanding for1999
Additional Paid-In Cash 5,174,309 3,969,259
Retained (Deficit) (2,090,314) (1,339,704)
------------ ------------
Total Stockholders' Equity 3,083,996 2,629,556
TOTAL LIABILITIES & STOCKHOLDER'S EQUITY: $ 12,258,221 $ 15,447,057
============ ============
The accompanying notes are an integral part of these financial statements
F-2
</TABLE>
<PAGE>
EasyQual.Com, Inc.
Consolidated Statement of Operations
For the None-Months Ended September 30, 2000
(Unaudited)
For the For the
Nine Months Nine Months
September 30, September 30,
2000 1999
------------ ------------
REVENUE:
Loan Origination Fees $ 4,067,318 $ 2,010,172
Miscellaneous Income 97,568 406
------------ ------------
Total Revenue 4,164,886 2,010,578
OPERATING EXPENSES:
Loan Origination Costs 3,288,269 1,574,260
Payroll & Taxes 1,299,767 872,867
General & Administrative 327,460 269,631
------------ ------------
Total Operating Expenses 4,915,496 2,716,758
------------ ------------
NET LOSS $ (750,610) $ (706,180)
============ ============
NET LOSS PER COMMON STOCK $ (0.05) $ (0.23)
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 15,994,941 3,027,420
============ ============
The accompanying notes are an integral part of these financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
EasyQual.Com, Inc.
STOCKHOLDERS EQUITY
September 30, 2000
(Unaudited)
COMMON STOCKS Additional Retained Total
------------- Paid-In Earnings Stockholder's
Shares Amount Capital (Deficit) Equity
------ ------ ------- --------- -------
<S> <C> <C> <C> <C> <C>
Issuance of Stock for Cash & Services 6,953,406 $ 1 $ 108,510 $ -- $ 108,511
Net Loss (3,080) (3,080)
---------- ---------- ---------- ---------- ----------
Balance December 31, 1997 6,953,406 1 108,510 (3,080) 105,431
Issuance of Stock for Cash 12,900 -- 10,750 -- 10,750
Cancelled Stock (7,500) -- (6,250) -- (6,250)
Issuance of Stock for Cash 49,995 -- 24,998 -- 24,998
Net Loss -- -- -- (67,566) (67,566)
---------- ---------- ---------- ---------- ----------
Balance December 31, 1998 7,008,801 1 138,008 (70,646) 67,363
---------- ---------- ---------- ---------- ----------
April and Dec 1999 Issuance for Acquisition 5,100,000 -- 2,889,412 -- 2,889,412
Issuance for Cash 519,999 -- 520,000 -- 520,000
Issuance for Cash 733,200 -- 371,839 -- 371,839
Issuance for Services 300,000 -- 50,000 -- 50,000
Net Loss -- -- -- 1,269,058) (1,269,058)
---------- ---------- ---------- ---------- ----------
Balance December 31, 1999 13,662,000 1 3,969,259 (1,339,704) 2,629,556
---------- ---------- ---------- ---------- ----------
Issuance of Stock for Services 600,000 -- 100,000 -- 100,000
Issuance of Stock for Cash 225,000 -- 450,000 -- 450,000
Issuance of Stock for Services 40,000 -- 6,800 -- 6,800
Issuance to Repay Debenture 74,996 -- 50,000 -- 50,000
Issuance to Repay Debenture 867,945 -- 75,000 -- 75,000
Issuance to Repay Debenture 225,000 -- 150,000 -- 150,000
Issuance of Stock for Cash 300,000 -- 50,000 -- 50,000
Issuance to Repay Debenture 58,823 -- 10,000 -- 10,000
Issuance to Repay Debenture 150,000 -- 100,000 -- 100,000
Issuance to Repay Debenture 450,000 -- 75,000 -- 75,000
Issuance to Repay Debenture 300,000 -- 50,000 -- 50,000
Issuance to Repay Debenture 300,000 -- 50,000 -- 50,000
Issuance to Repay Debenture 225,000 -- 38,250 -- 38,250
Net Loss -- -- -- 750,610) (750,610)
---------- ---------- ---------- ----------- ----------
Balance June 30, 2000 17,478,764 $ 1 $5,174,309 $(2,090,314) $3,083,996
========== ========== ========== =========== ==========
The accompanying notes are an integral part of these financial statements
F-4
</TABLE>
<PAGE>
EasyQual.Com, Inc.
Consolidated Statement of Cash Flow
For the Nine-Months Ended September 30, 2000
(Unaudited)
Nine-Months Year
Ended Ended
Sept 30, 2000 Dec 31, 1999
----------- -----------
Cash Flows from Operating Activities:
Net Income (Loss) $ (750,610) $(1,269,058)
Depreciation and Amortization 50,745 121,411
Changes in Assets & Liabilities:
Notes Receivable (54,802) (279,937)
Accounts Receivable -- (404,339)
Loans Receivable (36,686) (191,352)
Deposits (368) (11,202)
Accounts Payable 55,119 150,966
Notes Payable (87,622) 71,604
Intangibles -- (1,865,641)
Debenture Payable (350,000) 500,000
Accrued Expenses 80,683 300,979
----------- -----------
Net Cash Provided by Operating Activities (1,093,541) (2,876,569)
Cash Flows Used for Investing Activities:
Capital Expenditures (53,042) (463,555)
----------- -----------
Net Cash Used for Investing Activities (53,042) (463,555)
Cash Flows from Financing Activities:
Issuance of Common Stocks 1,205,050 3,324,977
----------- -----------
Net Cash Provided by Financing 1,205,050 3,324,977
Net Increase in Cash & Cash Equivalents 58,467 (15,147)
Cash & Cash Equivalents at Beginning of Period 64,567 79,714
----------- -----------
Cash & Cash Equivalents at End of Period $ 123,034 $ 64,567
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest $ 56,302 $ 14,567
=========== ===========
Income Taxes $ -- $ --
=========== ===========
NON-CASH TRANSATIONS
Common stock issued in exchange for services $ -- $ 50,000
=========== ===========
The accompanying notes are an integral part of these financial statements
F-5
<PAGE>
EASYQUAL.COM.INC.
Notes to Financial Statements
September 30, 2000
(Unaudited)
Note 1 Presentation of Interim Information
In the opinion of the management of Easyqual.Com, Inc., the
accompanying unaudited financial statements include all normal
adjustments considered necessary to present fairly the financial
position as of September 30, 2000, and the results of operations for
the nine months ended September 30, 2000 and 1999, and cash flows for
the nine months ended September 30, 2000 and 1999. Interim results are
not necessarily indicative of results for a full year.
The financial statements and notes are presented as permitted by Form
10-Q, and do not contain certain information included in the Company's
audited financial statements and notes for the fiscal year ended
December 31, 1999.
F-6
