U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ___________ to ___________
Commission File Number: 0-26701
eCom Corporation
--------------------------------------------
(Name of small business issuer in its charter)
Nevada 88-0406874
- -------------------------------- --------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification
No.)
1776 Park Avenue, Unit #4, Park City, UT 84060
--------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 580-2855
--------------
Securities registered under Section 12(b) of the Exchange Act:
Title of each class registered: None Name of each exchange on which
registered: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.001
-----------------------------
(Title of class)
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 [ ]
Check if no disclosure of delinquent filers in response to Item 405
of Regulation S-B is contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
The issuer is a developmental stage company, and as such has yet to
generate any revenues.
Based on the average if the closing bid and asked prices of the issuer's
common stock on December 31, 1999, the aggregate market value of the voting
stock held by non-affiliates of the registrant on that date was $311,175.
As of December 31, 1999, the issuer had 17,437,450 shares of common
Stock outstanding.
Documents incorporated by reference: None
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
1
<PAGE>
CONTENTS
PAGE
PART I
Item 1. Description of Business........................................3
Item 2. Description of Property.......................................13
Item 3. Legal Proceedings.............................................13
Item 4. Submission of Matters to a Vote of Security Holders...........13
PART II
Item 5. Market for Common Equity and Related Stockholder Matters......14
Item 6. Management's Discussion and Analysis or Plan of Operation.....15
Item 7. Financial Statements..........................................18
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure........................20
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the
Exchange Act...............................................21
Item 10. Executive Compensation........................................22
Item 11. Security Ownership of Certain Beneficial Owners and
Management.................................................22
Item 12. Certain Relationships and Related Transactions................24
Item 13. Exhibits and Reports on Form 8-K..............................25
SIGNATURES ..............................................................26
Forward-Looking Statements
This report contains forward-looking statements. The forward-looking statements
include all statements that are not statements of historical fact. The
forward-looking statements are often identifiable by their use of words such
as "may," "expect," "believe," "anticipate," "intend," "could," "estimate," or
"continue," "Plans" or the negative or other variations of those or comparable
terms. Our actual results could differ materially from the anticipated results
described in the forward-looking statements. Factors that could affect our
results include, but are not limited to, those discussed in Item 6,
"Management's Discussion and Analysis or Plan of Operation" and included
elsewhere in this report.
2
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
(a) BUSINESS DEVELOPMENT
(i) Business Development, Organization and Acquisition Activities
- -----------------------------------------------------------------
eCom Corporation, hereinafter referred to as the ("Company") or ("eCom"), was
organized by the filing of Articles of incorporation with the Secretary of
State of the State of Nevada on October 6, 1998. The articles of the Company
Authorized the issuance of twenty million (20,000,000) shares of Common Stock
at a par value of $0.001 per share.
The Company is a developmental stage company with a principal business
objective to provide reliable and cost efficient business Internet
connectivity in the form of "website packages" for the business-to-business
sector to use as rewards, coupons, or rebates. The Company's focus will be
to provide reliable and cost efficient Internet connectivity and other
enhanced, easy-to-use Internet services for small- to medium-sized
businesses. The growth of the Internet has accelerated the price sensitivity
and commodity nature of this market. Industry analysts expect the size of
the online market segment to grow rapidly as businesses increase their use
of the Internet as a business marketing tool.
Marketing services as offered by the Company include the various components
critical to a website's success; marketing in search engines with gateway
sites, the utilization of metatags and creation of reciprocating links between
websites. Additionally, the Company intends on marketing via e-mail with
opt-in email lists -for example, the creation of a form for our clients to
have on their websites which enables the end user to complete and send to
the marketing department to be included on future mailings. Marketing via
satellite sites-separate websites for each of core service area. eCom
assists clients in executing these services as well as providing marketing
assistance in the integration of traditional media types.
The Company plans to offer packages to business-to-business marketers who
then may distribute the packages in the form of rebates, coupons and rewards.
This distribution program will work much like the airlines and their
partnerships with long distance companies (another highly commoditized area).
This helps off-set two of the primary difficulties of advertising a
technology product - distribution and complex message. The distribution
component seeks to utilize the relationships of the eCom package customers
to build eCom's total customer account base. The package customers will
purchase these internet monthly website packages to give them a boost in
their own competitive environment whether it is printing, advertising
sales, travel companies, pharmaceutical sales, etc. Additionally,
this approach blends into serving the web designer market. The typical web
designer manages from 3 to 50 accounts. By creating a package that is easy
to buy, the web designer can concentrate on selling their creative services.
The Company seeks to solve the complex message problem by using a "website
packaging" approach, which uses the package client to pass along the rewards,
coupons or rebates to their customers - explaining the product as required.
eCom intends to provide the necessary marketing collateral for each package
client to help present the program.
The Company believes that small and medium sized businesses represent an
attractive target market for the provision of Internet services and website
hosting due to this market's low current penetration levels and customer
churn rates, and the expanding Internet needs of these businesses. Churn
rate refers to the rate or frequency at which customers tend to switch
service providers. Large ISP's do not generally have customers visiting their
local office and can not generally commit a high-level of support to their
customers. The Company believes that it can offer a more intimate level
of service to is local clients by virtue of its focused market niche and
commitment to service quality.
3
<PAGE>
Small and medium-sized businesses also typically require hands-on local
support and highly reliable turn-key solutions for mission critical
applications because of their limited internal technical resources.
eCom's management believes that its untapped form of business-to-business
incentives will help to build the Company's client base and give the
Company a base to then cross-sell additional services such as statistics
reports, search engine indexing, banner marketing, link programs and web
marketing.
eCom believes it has a competitive advantage in serving small and medium
sized business customers - primarily located in Nevada - through a
combination of technical competency, hands-on support, and entrepreneurial
culture that the larger national ISPs are unable to provide. The Company
plans on hopes to build its customer base by: (i) offering its customers a
high-speed, highly reliable Internet service at a fraction of the costs
generally lower than other ISPs charge; (ii) through partnering and providing
superior customer service and pricing to other local website developers and
Internet providers that do not currently have the web server and other
Internet infrastructure in place that eCom will have; (iii) through the
development of its "website package" program and (iv) through strategic
acquisitions of other local and regional ISPs with a similar customer
focus as eCom. The Company is marketing focused. It principal officer has
a traditional media marketing background and is familiar with the needs
of small business. While there can be no guarantee that this experience is
sufficient to successfully attract customers, it is one element the
Company hopes will facilitate its near and long-term growth.
The goal of the Company is to become a dominant, full-service regional
provider (Nevada initially) of Internet connectivity and enhanced Internet
services to small and medium sized businesses. Key elements of the Company's
strategy are to: (i) consolidate the independent ISP industry in Nevada by
acquiring additional local and regional ISPs focused on the Company's target
market; (ii) integrate the operations of its ISPs focused on the operational
economies of scale by leveraging its infrastructure and support services;
(iii) develop and offer additional high-margin enhanced services to increase
revenues from existing and future customers; and (iv) build customer loyalty
and gain market share by expanding the Company's local technical, distribution
and service capabilities and establishing eCom's regional brand name
recognition.
B. Business of Issuer
(1) Principal Products and Services and Principal Markets
Overview
eCom has a principal business objective to provide reliable and cost efficient
business Internet connectivity in the form of "website packages" for the
business-to-business sector to use as rewards, coupons, or rebates. The
Company's focus will be to provide reliable and cost efficient Internet
connectivity and other enhanced, easy-to-use Internet services for small-to
medium-sized businesses. The growth of the Internet has accelerated the
price sensitivity and commodity nature of this market. Industry analysts
expect the size of the online market segment to grow rapidly as businesses
increase their use of the Internet as a business marketing tool.
In addition, the Company seeks to become a leading Internet service provider
("ISP") that will host business websites for a monthly fee.
4
<PAGE>
The Company plans on focusing its market particularly with the State of
Nevada, and its business enterprises. Marketing efforts are expected to
include promotional tie-ins as well as radio and print media advertising.
Additionally, the Company intends on securing a number of websites to
cross-market its services though there is no assurance that the Company
will be successful in so doing.
The Company currently offers the following products and services to its
customers:
1. The Company currently offers packages of web sites to business-to-
business marketers who then may distribute their purchased sites in the form
of rebates, coupons and rewards. This distribution program works much like the
airlines in their partnerships with long distance companies. Management
believes
that this helps off-set two of the primary difficulties of advertising a
technology product - distribution and complex message. The distribution
component seeks to utilize the relationships of eCom package customers to
build eCom's customer base. Management believes that the Company's package
customers will purchase these internet monthly web site packages to give
them a boost in their own competitive environment whether it is printing,
advertising sales, travel companies, pharmaceutical sales, etc.
2. Providing businesses with free web site hosting and then cross-
selling or up-selling web site and related marketing services is another
service the Company plans to offer. The Company believes that this approach
will bring ubiquity, speed to market, predatory and competitive pricing
and placing so as to place eCom as a value player to the customer and
out of in what management believes is a commodity driven internet-only
realm. The Company gives away free sites so as to secure the business and
the capacity to cross-sell additional services - link service, satellite
sites, commerce activity, response forms, template sites and other
product and services for which we charge fees. While the Company has
determined that this may be an optimal strategy, there can be no guarantee
that the Company will in fact succeed in implementing such a strategy.
3. Finally, the Company believes that its above products and services
will blend into serving the web designer market. The Company believes
that the typical web designer manages from 3 to 50 accounts. By creating a
package that is easy to buy, the Company believes that a web designer can
concentrate on selling their own individual creative services. The complex
message component the Company seeks to solve by using its "web site
packaging" approach, is done by using the package client of the Company
to pass along these rewards, coupons or rebates to their customers -
explaining it along the way. eCom will then provide the necessary
marketing collateral for each package client to help present the program.
eCom Strategy
The principal components of the Company's strategy are as follows:
Rapidly Expand its Customer Base
eCom believes that a key to success in the competitive ISP market is to
expand its customer base as rapidly as possible to establish a revenue
base, thereby enhancing its ability to enter into favorable arrangements
with affinity marketing partners and providers of content, network access
and software enhancements. To accomplish this, the Company plans to devote
5
<PAGE>
significant effort and much of its limited financial resources on sales
and marketing. The Company plans to utilize print advertising in major
computer magazines, develop radio advertising, seek to establish an
affinity marketing program, develop a presence at national, regional
and local trade shows and offer economic incentives to customers who
refer new clients. The Company plans to establish a door to door sales
force, similar to the model of MCI Direct back in 1995. The Company
believes that this traveling sales force will canvass the Las Vegas
business community in targeted areas to sign-up new subscribers. The
Company's management believes that MCI & Frontier Communications both
used this approach to rapidly increase their market share of business
long distance service. Also, the Company believes that a team of part-time
employees will handle in-bound calls and order fulfillment during its
start-up stage. The Company intends to set-up each account and give a
confirmation to all affected parties. Invoices will be sent out monthly
and clearly identify what services have been performed.
Retain the Company's Existing Customers
The Company believes that the sales, marketing and other costs to the
Company of acquiring new customers are substantial relative to the monthly
fee derived from such customers. Accordingly, the Company believes that
its long-term success largely depends on maintaining customer satisfaction
with its services. Therefore, eCom plans to devote resources to enhancing
its network operations capability, its web site and its service offerings.
In addition, the Company plans to expand its technical support staff and
enhance the staff's effectiveness by providing software tools that can
assist it in identifying and solving customer problems.
Develop Additional Service Offerings
eCom believes that the introduction of additional service offerings can
serve not only to expand and maintain its customer base, but also enhance
revenues. Management of the Company believes that small and medium sized
businesses are purchasing an increasing number of enhanced products and
services as these businesses deploy mission critical applications on the
Internet. As a result, the Company believes that it will be able to derive
incremental revenue from these customers by selling an expanding array of
enhanced services and additional bandwidth to support these services.
Accordingly, the Company intends to introduce a variety of services for
business consumers, including enhanced business web sites, web site
marketing packages, and performance enhancing packages.
Consolidation Through Acquisitions
The Company believes that there are numerous opportunities to deepen and
broaden its market presence and to expand its strength by acquiring or
making significant investments in other business-focused ISPs. Management
believes that ISPs may be attracted to the benefits of consolidation, due
to the increasing competitive pressures in the ISP market. In addition, the
Company believes that these acquisitions, if successful, will result in
synergistic opportunities, and may increase the Company's revenue and income
growth. No specific acquisition candidates have been identified, however,
and no assurance can be given that any transactions will be effected, or if
effected, will be successful.
6
<PAGE>
Barriers to Entry
It must be noted that barriers to entry for the Company are quite significant.
The market offers substantial competition from other companies offering
similar products and services. These major companies include but are not
limited to: Access Nevada, Verio, ValueWeb, InterLand, and Las Vegas
Internet. While there can be no guarantee that that the Company will
successfully compete in such a market, the Company believes that it
has the requisite resources. Monetary barriers to entry include the cost
of technical assistance, design engineers, and other persons as well as the
cost of band-width or the actual space on the internet controlled by the
Company. The Company believes that its strategy as outlined herein is
sufficient to successfully service it geographical and market niche.
Notwithstanding such a belief, the Company faces significant risk in not
being able to surmount known and unknown barriers to entry and unforeseen
events or circumstances. (See Risk Factors.)
(2) Distribution Methods of the Products or Services
General
The Company currently provides business Internet connectivity and enhanced
Internet services in package form or at a premium to individual buyers
(its "customers"). The Company's goal is to first bring a customer's web
site on to its eCom servers and then cross-sell or up-sell them with
marketing services.
Example packages to business-to-business purchasers are as follows:
(i) 10 @ $20 = $200 for a 6 month contract; (ii) 25 @ $14 = $350 for a 12
month contract; and (iii) 5 @ $25 = $125 for a 3 month contract. However,
customer pricing is also negotiated on a per contract basis. Additionally,
the Company's prices vary depending on market demand and client needs.
Upon purchase of each package, eCom's clients receive pre-printed numeric
sequenced rebate slips for inclusion in monthly statements or for sales
representative distribution. This is accompanied with a packet on the program
and how to implement it. All web site packages come with a full unconditional
money back guarantee for unsatisfactory service. This does not allow, however,
a client company to trade back in unused numeric certificates. If eCom's
customer's client is not satisfied with eCom's web site hosting service, a
refund is issued and notice is given to the hosted client. However, no more
than two refunds will be issued to the same client during a contract period.
Other eCom packages will include: (i) server co-location-$350-$650 per month
for dedicated client servers; and (ii) individual business hosting solution
sales-$89.95 per month. Additionally, eCom plans to assist companies with
the utilization of the concept of satellite sites. A satellite site is a
web site similar to a customer's main web site but works more like a direct
mail piece to focus on a very targeted audience. By indexing these niche
sites which directly point to a customer's main site, the Company believes
that its customers will be able to draw more direct traffic to its main
site.
Advertising and Promotion
The Company's advertising will focus primarily on the Las Vegas market
during product introduction. Promotional activity will be in the form of
the marketing collateral, mouse pads to package purchasing clients and
thank you cards. Promotions in conjunction with package clients, and a
portion of eCom's current clients will be in effect.
7
<PAGE>
Sales
eCom's eventual phone sales representative will be focused on handling
each of the product types described above and their perspective target
markets.
Database
Additionally, a database of web sites, contacts, past sales and usage will
be available for marketing and analysis.
eCom Regional Network Opportunities
The company believes that when there are at least 50 business web sites
on its network, eCom might be able to begin to help (cross-sell service)
these companies to generate additional revenue by placing banner advertising
on the web sites. As business-to-business marketers look for additional
avenues of advertising, the Company believes that these smaller niche sites
can become a great instrument to carry its message.
Customer and Technical Support
The Company believes that reliable customer and technical support is
critical to retaining existing and attracting new customers. The Company
plans to achieve a high level of quality, responsiveness and productivity
while focusing on developing relationships with customers. At this time,
only telephone support during regularly-scheduled business hours and 24
e-mail support will be available.
The Company expects growth to place a significant strain on its managerial,
operational, financial and information system resources. The Company expects
demand on its network infrastructure, technical staff, and resources to grow
rapidly as the Company expands its customer base. There can be no assurance
that the Company's infrastructure, information systems, technical staff and
resources will be adequate to facilitate the Company's growth. Presently,
the Company's infrastructure can service approximately one-hundred (100)
web site clients.
(3) Status of Any Announced New Product or Service
The Company has not announced any recent additions to the existing products
and services it currently offers. Additionally, as a development stage
company with very little operating history, the Company does not believe
that it can accurately announce any status as to its current products or
services as well.
(4) Industry Background
Network Infrastructure
The Internet is a collection of computer networks linking millions of
public and private computers around the world. Historically, the Internet
was used by government agencies and academic institutions to exchange
information, public research, and transfer electronic mail. A number of
factors, including the interface software and the wide accessibility of
an increasingly robust network infrastructure, have combined to allow
non-technical users to easily access the Internet and, in turn, have
produced rapid growth in the number of Internet users.
8
<PAGE>
The availability of Internet connectivity, advances in technologies
required to navigate the Internet, and the proliferation of content and
applications available over the Internet have attracted a rapidly growing
number of users. Technological advances such as increases in microprocessor
speeds, the introduction of innovative software tools and the development
of higher bandwidth data networking technology have led to rapid innovation
and development of enhanced Internet services.
The rapid development and growth of the Internet has resulted in a highly
fragmented industry of over 4,000 national and local ISPs in the United
States, with no dominant ISP serving the needs of small and medium sized
businesses. The large national ISPs have primarily focused on the large
businesses or consumer markets and lack the local presence to provide the
customized, hands-on service required by small and medium sized businesses.
The Company believes that independent local and regional ISPs generally have
been more adept at serving can effectively serve the small and medium sized
businesses, and that these ISPs are often the source of innovative Internet
products and services.
The Emergence of the Internet
The emergence of the World Wide Web, the graphical, multimedia environment
of the Internet, has resulted in the development of the Internet as a new
mass communications medium. The ease and speed of publishing, distributing
and communicating text, graphics, audio and video over the Internet has
led to a proliferation of Internet-based services, including chat, online
magazines, news feeds, interactive games and a wealth of educational and
entertainment information, as well as to the development of online
communities. In addition, the reduced cost of executing transactions over
the Internet provides individuals and organizations with a new means to
conduct business.
The deregulation of the telecommunications industry and advances in
telecommunications technology have significantly increased the attractiveness
of providing data communication applications and services over public networks.
Market for Internet Services
Internet connectivity and enhanced Internet services represent two of the
fastest growing segments of the telecommunications services market.
Businesses are increasingly recognizing that the Internet can significantly
enhance communications among geographically distributed offices and employees
as well as with customers and suppliers. In addition, the Internet presents
a compelling profit opportunity for businesses as it enables them to reduce
operating costs, access valuable information and reach new markets. As a
result, businesses increasingly are utilizing the Internet for important
applications such as sales, customer service and project coordination.
The surge in Internet usage has created a rapidly growing market for Internet
services. Industry analysts have reported that small and medium sized
businesses represent a potential market of over seven million customers
in the US, and use of the Internet by this market segment is expected to
grow substantially from its current low level of market penetration.
9
<PAGE>
Industry analysts predict that dedicated connections to the Internet for
small and medium sized businesses will grow from approximately 90,000 in
1996 to just under 800,000 in 2000, representing a 73% compounded annual
growth rate. Small and medium sized businesses generally seek an ISP
with locally based personnel who are readily available to respond to
technical issues, who can assist in developing and implementing the
customer's effective use of the Internet, and with whom they can establish
a stable and long-term relationship. The Company believes that the next
phase of growth in the Internet services market will require providers to
address the needs of business users. Businesses may desire greater attention
to detail and an increasing need for customized services. It is important
to note that while it may be true that the industry as a whole may or may
not continue to grow, there can be no certainty that the Company itself will
be successful in participating in this growth. (See Risk Factors.)
(5) Raw Materials and Suppliers
The Company is an internet service provider, web site host and marketing
company, and thus does not use raw materials or have any principal
suppliers other than its present or future agreements with various low-cost
internet service providers whose services and access we resell.
(6) Customers
The Company's focus is to provide reliable and cost efficient internet
connectivity and other enhanced, easy-to-use internet services for small
to medium-sized businesses. The Company plans to reach these customers via
direct mail, telemarketing, seminars, trade shows, the Internet and the
referral process. The Company does not anticipate that its revenues will be
dependent on any one or even a few major customers.
(7) Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements, or Labor Contracts
The Company has filed a trade name filing with the Secretary of State of
Nevada - eCom.com. Although the Company may file an application for national
registry of the internet trade name, there can be no guarantee that the
Company will in fact do so prior to an attempt by others to register the
same or similar names. While the Company hopes that its first use and
registration of the domain name is sufficient to protect its interests, it may
be the case that a successful national registry application is requisite to
securing the future and/or continued use of the name eCom.
Additionally, the Company believes that its success is dependent in part on
its technology and its continuing right to use such technology. The Company
plans to rely primarily on a combination of copyright, trademark and trade
secret laws and contractual restrictions to establish and protect its
proprietary rights. There can be no assurance that the steps taken by
the Company will be sufficient to prevent misappropriation of its technology
and other proprietary rights or that the Company's competitors will not
independently develop technologies that are substantially equivalent or
superior to the Company's technology.
Although the Company believes that its products and services do not infringe
on any copyright or any other proprietary rights of third parties, there
can be no assurance that those parties will not assert that eCom's services
infringe their proprietary rights. The Company has no assurance that third
parties will not obtain, or do not have, patents covering features of the
Company's products, in which event the Company or its customers might be
required to obtain licenses to use such features. If a patent holder refuses
to grant a license on reasonable terms or at all, the Company may be required
to alter certain products or stop marketing them.
10
<PAGE>
(8) Regulation
The Company provides Internet services, in part, through data transmissions
over public telephone lines. These transmissions are governed by regulatory
policies establishing charges and terms for wire line communications. The
Company currently is not subject to direct regulation by any governmental
agency, however, other than regulations applicable to businesses in general.
However, in the future, the Company could become subject to regulation by
the FCC or another regulatory agency as a provider of basic
telecommunications services.
(9)Effect of Existing or Probable Government Regulations
Due to the increasing use of the Internet, it is possible that additional
laws and regulations may be adopted with respect to the Internet, covering
issues such as content, user privacy, pricing and copyright and intellectual
property protection and infringement. Changes in the regulatory environment
relating to the Internet access industry, including regulatory changes that
directly or indirectly affect telecommunications costs, could have an adverse
material effect on the Company.
(10) Research and Development Activities
The Company has yet to incur any research and development costs from October
6, 1998 (date of inception) through December 31, 1999.
(11) Impact of Environmental Laws
The Company is not aware of any federal, state or local environmental laws
which would effect its operations.
<PAGE>
12) Employees
The Company currently has one (1) employee: one President. The Company
has no intention at this time to add employees.
(i) The Company's performance is substantially dependent on the performance of
its corporate secretary, Ian Archibald. In particular, the Company's success
depends on his ability to develop, design and create strategies for the company.
(ii) The Company does not carry key person life insurance on any of its
personnel. The loss of the services of any of its executive officers or other
key employees could have a material adverse effect on the business, results of
operations and financial condition of the Company. The Company's future
success also depends on its ability to retain and attract highly qualified
technical and managerial personnel.
(iii) There can be no assurance that the Company will be able to retain its
key managerial and technical personnel or that it will be able to attract and
retain additional highly qualified technical and managerial personnel in the
future. The inability to attract and retain the technical and managerial
personnel necessary to support the growth of the Company's business, due to,
among other things, a large increase in the wages demanded by such personnel,
could have a material adverse effect upon the Company's business, results of
operations and financial condition.
11
<PAGE>
13) Year 2000 Implications
The Year 2000 issue is the potential for system and processing failures of
date-related data and the result of computer-controlled systems using two
digits rather than four to define the applicable year. For example,
computer programs that have time-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result in
system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transaction
The Company may be affected by Year 2000 issues related to non-compliant
information technology ("IT") systems or non-IT systems operated by the
Company or by third parties.
The Company plans to design its own Web site, utilizing software from
Microsoft, titled Front Page. This is the only system the company
assessed for Year 2000 compliance. Company has not completed any assessment
of internal and external (third-party) IT systems and non-IT systems. At this
point, the Company is not currently aware of any Year 2000 problems relating
to systems operated by the Company or by third parties that would have a
material effect on the Company's business, results of operations or
financial condition, without taking into account the Company's efforts to
avoid such problems. Based on its assessment to date, the Company does not
anticipate that costs associated with remediating the Company's non-compliant
IT systems or non-IT systems will be material, although there can be no
assurance to such effect.
Such a failure could prevent the Company from operating its business, prevent
users from accessing the Company's Web site, or change the behavior of
advertising customers or persons accessing the Company's Web site.
The Company believes that the primary business risks, in the event of such
failure, would include, but not be limited to, lost of potential revenues,
increased operating costs, loss of customers or persons accessing the
Company's Web site, or other business interruptions of a material nature, as
well as claims of mismanagement, misrepresentation, or breach of contract,
any of which could have a material adverse effect on the Company's business,
results of operations and financial condition.
14) The Industry & Potential Effect on the Company's Plan of Operations
The rapid adoption of the Internet as a means to gather information,
communicate, interact and be entertained, combined with the vast
proliferation of Web sites, has made the Internet an important new mass
medium. Industry estimates that the number of Web users exceeded 68 million in
1997, and will grow to over 319 million by 2002. The Internet enables
advertisers to target advertising campaigns utilizing sophisticated databases
of information on the users of various sites. As a result, the Internet has
become a compelling means to advertise and market products and services. With
the volume of sites and vast abundance of information available on the
Internet, users are increasingly seeking an online home where they can
interact with others with similar interests and quickly find information,
products and services related to a particular interest or need.
These community sites offer a single location where users can build their
personal Web sites and place them among the sites of others having similar
interests. In addition, community sites generally offer services including
access to e-mail accounts, chat rooms, news, and entertainment services,
among other features. By satisfying the needs of its users, communities seek
to establish a close relationship with their audience. As a result, the
Company believes that users tend to be loyal to and spend more time online at
community sites. The Company hopes to advertise their products at these
community sites.
12
<PAGE>
The market for Internet products and services is characterized by rapid
technological developments, evolving industry standards and customer demands,
and frequent new product introductions and enhancements. These market
characteristics are exacerbated by the emerging nature of the market and the
fact that many companies are expected to introduce new Internet products and
services in the near future. The Company's future success will depend in
part on its ability to continually improve the performance, features and
reliability of the site in response to both evolving demands of the
marketplace and competitive product and service offerings; and, there can be
no assurance that the Company will be successful in doing so. Accordingly,
the Company's future success will depend on its ability to adapt to rapidly
changing technologies, to adapt to evolving industry standards and to
continually improve the performance, features and reliability of its service
in response to competitive service and product offerings and evolving demands
of the marketplace. The failure of the Company to adapt to such changes would
have a material adverse effect on the Company's business, results of
operations and financial condition. In addition, the widespread adoption of
new Internet, networking or telecommunications technologies or other
technological changes could require substantial expenditures by the Company
to modify or adapt its services or infrastructure, which could have a
material adverse effect on the Company's business, results of operations and
financial condition.
<PAGE>
ITEM 2. DESCRIPTION OF PROPERTY.
The Company's corporate headquarters are located at: 1776 Park Avenue, Suite
#4, Park City, UT 84060. Registrant's telephone number, including area code:
(801) 580-2855. The office space is provided by one of the Directors of the
Company at no cost to the Company.
ITEM 3. LEGAL PROCEEDINGS.
As of the date hereof, eCom Corporation is not a party to any material
legal proceedings, and none are known to be contemplated against eCom,
Inc.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 1999.
13
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(i) Market Information
- ----------------------
Until October 27, 1999, there was no public trading market for the Company's
stock. On that day the Company's common stock was cleared for trading on the
OTC Bulletin Board system under the symbol ECCM. A very limited market exists
for the trading of the Company's common stock.
The table below sets forth the high and low bid prices of our common stock for
each quarter shown, as provided by the Nasdaq Trading and Market Services
Research Unit. Quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
<TABLE>
<CAPTION>
FISCAL 1999 HIGH LOW
- -------------------------------- ---- ----
<S> <C> <C>
Quarter Ended March 31, 1999 N/A N/A
Quarter Ended June 30, 1999 N/A N/A
Quarter Ended September 30, 1999 N/A N/A
Quarter ended December 31, 1999 $2.00 $0.37
</TABLE>
Holders
- -------
The approximate number of holders of record of common stock as of December 31,
1999 was fifty-seven (57).
Dividends
- ---------
Holders of common stock are entitled to receive such dividends as the board of
directors may from time to time declare out of funds legally available for the
payment of dividends. No dividends have been paid on our common stock, and we do
not anticipate paying any dividends on our common stock in the foreseeable
future.
(a) There is currently no Common Stock which is subject to outstanding
options or warrants to purchase, or securities convertible into, the
Company's common stock.
(b) There is currently no common stock of the Company which could be sold
under Rule 144 under the Securities Act of 1933 as amended or that the
registrant has agreed to register for sale by security holders.
14
<PAGE>
(iv) Recent Sales of Unregistered Securities
- --------------------------------------------
On February 1, 1999, the Company completed a direct public offering of shares
of common stock of the Company pursuant to Regulation D, Rule 504, of the
Securities Act of 1933, as amended, whereby it sold 207,450 shares of the
Common Stock of the Company to 57 unaffiliated shareholders of record.
The purchase price of the shares for each shareholder was $0.10 or ten
cents. The Company filed an original Form D with the Securities and Exchange
Commission on or about December 15, 1998, and an amended, final Form D with
the Securities and Exchange Commission on or about February 15, 1999. Mr.
Anthony Mello and Mr. Bert Blevins on May 1st acquired 1,000,000 shares a
piece at price of $0.01 per share for a total capital investment of $20,000.
On December 13, 1999, a Buying Group, lead by CashCom Services Corporation, a
Canadian Corporation, acquired 2,000,000 shares of eCom Corporation's common
stock, pursuant to an Share Purchase Agreement by and between Janeva
Corporation and Campbell Mello Associates Corporation The Buying Group paid
to Janeva Corporation and Campbell Mello Associates Corporation the sum of
two hundred ninety thousand dollars ($290,000.00) for the common shares. The
source of the funds was paid by cash wire transfer. eCom Corporation, in
reliance upon an exemption from the registration provisions of Section 5 of
the Securities Act of 1993, as amended, pursuant to Regulation D, Rule 506,
of the Act, issued 12,000,000 restricted shares of its common stock, on
December 17, 1999, at one (1) cent per share for a Note which totaled one
hundred twenty thousand ($120,000) dollars, along with interest in the amount
of ten (10) percent. The restricted stock was sold to Lori Bird.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
(i) General
- -----------
(1) During the twelve month operating period ended December 31, 1999, the
Company incurred a net loss of $46,018 for general and administrative
expenses related to start-up operations. In addition, the Company has
generated revenues from operations through December 31, 1999 of $8,985.
On October 8, 1998, founding shareholders purchased 3,230,000 shares of
the Company's authorized treasury stock for cash. Additionally, on February 1,
1999, the Company completed a direct public offering of 207,450 shares of the
Common Stock of the Company to approximately fifty-seven (57) unaffiliated
shareholders. This offering was made in reliance upon an exemption from the
registration provisions of Section 4(2) of the Securities Act of 1993
(the "Act"), as amended, pursuant to Regulation D, Rule 504 of the Act.
On May 3, 1999, pursuant to Regulation D, Rule 504, of the Securities
Act of 1933 as amended, the Company sold to an unaffiliated shareholder of
record 1,000,000 Shares of Common Stock for cash at a price of $.01 per share
for a total amount raised of $10,000.00.
On May 3, 1999, the Company issued 1,000,000 Shares of Common Stock to
a Director in exchange for services worth $10,000.00 at the rate of $0.01.
As of the date of this filing, the Company has approximately five million
four-hundred thirty-seven thousand four-hundred and fifty (5,437,450) shares
of its $0.001 par value common voting stock issued and outstanding which are
held by approximately fifty-nine (59) shareholders of record. Management
anticipates that the proceeds from financing transactions delineated above
will be sufficient to provide for the Company's capital needs for the next
approximately three (3) to six (6) months.
15
<PAGE>
In addition, management of the Company believes that the need for additional
capital going forward will be derived somewhat from internal revenues and
earnings generated from the sale of its products and services. If the Company
is unable to begin to generate more revenues from its current products and
services than it has to date, however, management believes the Company will
need to raise additional funds to meet its cash requirements. In the mean
time, management of the Company plans to advance funds to the Company on an
as-needed basis although there are no definitive or legally binding
arrangements to do so. The Company currently has no arrangements or
commitments for accounts and accounts receivable financing. There can be no
assurance that any such financing can be obtained or, if obtained, that
it will be on reasonable terms.
The Company believes that its initial revenues will be primarily dependent
upon the number of customers it has, the number of web sites that it hosts,
and the marketing-related products and services each of those customers
currently purchases from eCom.
Realization of significant sales of the Company's products and services
during the fiscal year ending December 31, 1999 is vital to its plan of
operations. To this end, management is currently executing its strategy as
previously delineated in this Registration Statement.
(2) No engineering, management or similar report has been prepared or
provided for external use by the Company in connection with the offer of
its securities to the public.
(3) Management believes that the Company's future growth and success
will be largely dependent on its ability to expand its customer base,
convince its existing and future customer base to purchase the Company's
marketing-oriented products and services that help to market and promote a
customer's web site, develop additional product and service offerings that
will expand the Company's revenue base, and deepen and broaden eCom's market
presence by acquiring or partnering with other business-focused ISP's.
The Company has yet to incur any research and development costs from October
6, 1998 (date of inception) through December 31, 1999, and the Company does
not expect to incur any significant research and development expenses during
the fiscal year ending December 31, 1999.
(4) The Company currently does not expect to purchase or sell any of its
facilities or equipment.
(5) Management anticipates that it will hire and add full time employees over
the next twelve (12) months.
(6) There are no definitive or legally binding arrangements for management to
provide liquidity now or in the future for the Company. There are likewise,
no such arrangements with any other parties.
(ii) Results of Operations
- --------------------------
As a developmental stage Company, the Company generated minimal revenues.
In addition, the Company does not expect to generate any significant revenues
over the next approximately to twelve (12) months. During calendar year,
1999, the Company experienced net losses $46,018 against revenues of $8,985.
The bulk of these expenses were for general and administrative costs. The
Company does not have any material commitments for capital expenditures.
16
<PAGE>
(iii) Liquidity and Capital Resources
- -------------------------------------
On February 1, 1999, the Company completed a direct public offering of shares
of common stock of the Company pursuant to Regulation D, Rule 504, of the
Securities Act of 1933, as amended, whereby it sold 207,450 shares of the
Common Stock of the Company to 57 unaffiliated shareholders of record.
The purchase price of the shares for each shareholder was $0.10 or ten
cents. The Company filed an original Form D with the Securities and Exchange
Commission on or about December 15, 1998, and an amended, final Form D with
the Securities and Exchange Commission on or about February 15, 1999. Mr.
Anthony Mello and Mr. Bert Blevins on May 1st acquired 1,000,000 shares a
piece at price of $0.01 per share for a total capital investment of $20,000.
On December 13, 1999, a Buying Group, lead by CashCom Services Corporation, a
Canadian Corporation, acquired 2,000,000 shares of eCom Corporation's common
stock, pursuant to an Share Purchase Agreement by and between Janeva Corp.
and Campbell Mello Associates Corporation The Buying Group paid to Janeva
Corporation and Campbell Mello Associates Corporation the sum of two hundred
ninety thousand dollars ($290,000.00) for the common shares. The source of
the funds was paid by cash wire transfer. eCom Corporation, in reliance upon
an exemption from the registration provisions of Section 5 of the Securities
Act of 1993, as amended, pursuant to Regulation D, Rule 506, of the Act,
issued 12,000,000 restricted shares of its common stock, on December 17,
1999, at one (1) cent per share for a Note which totaled one hundred twenty
thousand ($120,000) dollars, along with interest in the amount of ten (10)
percent. The restricted stock was sold to Lori Bird.
The Company has no material commitments for capital expenditures nor does it
foresee the need for such expenditures over the next year.
The Company has limited financial resources available, which has had an
adverse impact on the Company's liquidity, activities and operations. These
limitations have adversely affected the Company's ability to obtain certain
projects and pursue additional business. There is no assurance that the
proceeds of the Company will be able to raise sufficient funding to enhance
the Company's financial resources sufficiently to generate volume for the
Company.
17
<PAGE>
ITEM 7. FINANCIAL STATEMENTS.
eCom Corporation
(A Development Stage Company)
Balance Sheet
as of
December 31, 1999 and 1998
and
Income Statement,
Changes in Stockholders' Equity,
and Cash Flows
for the Year Ending December 31, 1999
and for the period
October 8, 1998 (Date of Inception)
through
December 31, 1999
18
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
Independent Auditor's Report F-1
Balance Sheet F-2
Income Statement F-3
Statement of Stockholders' Equity F-4
Statement of Cash Flows F-5
Footnotes F-6-8
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
G. BRAD BECKSTEAD
Certified Public Accountant
330 E. Warm Springs
Las Vegas, NV 89119
702.528.1984
425.928.2877 (efax)
INDEPENDENT AUDITOR'S REPORT
March 29, 2000
Board of Directors
eCom Corporation
Las Vegas, NV
I have audited the Balance Sheet of eCom Corporation (the "Company") (A
Development Stage Company), as of December 31, 1999 and 1998, and the related
Statements of Operations, Stockholders' Equity, and Cash Flows for the period
October 18, 1998 (Date of Inception) to December 31, 1999. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement presentation.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of eCom Corporation, (A
Development Stage Company), as of December 31, 1999 and 1998, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 6 to the financial
statements, the Company has had limited operations and have not commenced
planned principal operations. This raises substantial doubt about its ability
to continue as a going concern. Management's plan in regard to these matters
are also described in Note 6. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ G. Brad Beckstead, CPA
- ---------------------------
G. BRAD BECKSTEAD
Certified Public Accountant
330 E. Warm Springs
Las Vegas, NV 89119
702.528.1984
425.928.2877 (efax)
F-1
<PAGE>
eCom Corporation
(a Development Stage Company)
Balance Sheet
December 31, 1999 and 1998
<TABLE>
<CAPTION>
BALANCE SHEET
Assets
1999 1998
-----------------------
<S> <C> <C>
Current assets:
Cash $ 41 $ 3,981
-------- ---------
Total current assets 41 3,981
Other assets: 0 280
-------- ---------
Organization costs (net) 0 280
-------- ---------
Total other assets $ 41 $ 4,261
======== =========
Total Assets
Liabilities and Stockholders' Equity
Current liabilities:
Payroll taxes payable $ 1,053 $ 0
-------- ---------
Total current liabilities 1,053 0
Long-term debt 0 0
-------- ---------
Total Liabilities 1,053 0
-------- ---------
Stockholders' Equity:
Common stock, $0.001 par value,
20,000,000 shares authorized;
17,437,450 shares issued and
outstanding 17,437 3,230
Preferred stock, $0.001 par value,
5,000,000 shares authorized; no
shares issued and outstanding 0 0
Additional paid-in capital 149,308 2,770
Subscriptions receivable (120,000) 0
Deficit accumulated during development stage (47,757) (1,739)
--------- ----------
Total Stockholders' Equity (1,012) 4,261
--------- ----------
Total Liabilities and Stockholders' Equity $ 41 $ 4,261
========= ==========
</TABLE>
See Independent Auditor's Report and Notes to Financial Statements.
F-2
<PAGE>
eCom Corporation
(a Development Stage Company)
Income Statement
For the Year Ending December 31, 1999
and For the Period
October 6, 1998 (Date of Inception) to December 31, 1999
<TABLE>
<CAPTION>
INCOME STATEMENT
October 6, 1998 October 6, 1998
(Date of Inception) (Date of Inception)
to December 31, to December 31,
1999 1999 1998
-------------------------------------------------
<S> <C> <C> <C>
Revenue $ 8,985 $ 8,985 $
General Administrative
Expenses 55,003 56,742 1,739
----------- ----------- ----------
Net loss $ (46,018) $ (47,757) $ 1,739
=========== =========== ==========
Weighted average
number of common
shares outstanding 17,437,450 17,437,450 3,437,450
Net loss per share $ 0 $ 0 $ -
=========== =========== ==========
</TABLE>
See Independent Auditor's Report and Notes to Financial Statements.
F-3
<PAGE>
eCom Corporation
(a Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Year Ending December 31, 1999
and For the Period
October 8, 1998 (Date of Inception) to December 31, 1999
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Deficit
Accumulated Total
Common Stock Sub- Addit'l During Stock-
------------ scriptions Paid-in Development holders'
Shares Amt. Receivable Capital Stage Deficit
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Oct 8, 1998
Issued for
cash 3,230,000 $ 3,230 $ $ 2,770 $ $ 6,000
Net loss
Oct 8, 1998
(inception
to) Dec 31,
1998 (1,739) (1,739)
--------- -------- ---------- -------- ----------- --------
Balances as
of Dec 31,
1998 3,230,000 3,230 2,770 (1,739) 4,261
Feb 1, 1999
Issued for
cash 207,450 207 20,538 20,745
May 3, 1999
Issued for
cash 1,000,000 1,000 9,000 10,000
May 3, 1999
Issued for
services
provided 1,000,000 1,000 9,000 10,000
Dec 17, 1999
Issued for
note
receivable 12,000,000 12,000 (120,000) 108,000 0
Net loss
Jan 1, 1999
to Dec 31,
1999 (46,018) (46,018)
--------- -------- ---------- -------- ----------- --------
Balance as
of Dec 31,
1999 17,437,450 $17,437 $(120,000) $149,308 $(47,757) $(1,012)
===================================================================
</TABLE>
See Independent Auditor's Report and Notes to Financial Statements.
F-4
<PAGE>
eCom Corporation
(a Development Stage Company)
Statement of Cash Flows
For the Year Ending December 31, 1999
and For the Period
October 8, 1998 (Date of Inception) to December 31, 1999
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
October 6, 1998 October 6, 1998
(Date of Inception) (Date of Inception)
to December 31, to December 31,
1999 1999 1998
-------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (46,018) $ (47,757) $ (1,739)
Amortization
Adjustments to reconcile
net income to net cash used
by operating activities:
(Increase) decrease in:
Organizational costs 280 0 (295)
Increase (decrease) in:
Payroll taxes payable 1,053 1,053
---------- ---------- -----------
Net cash used by operating
activities (44,685) (46,704) (2,019)
CASH FLOWS FROM INVESTING
ACTIVITIES
Net cash (used) by
investing activities 0 0 0
---------- --------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Issuance of capital stock 160,745 166,745 6,000
Installment note -
Subscriptions receivable (120,000) (120,000)
---------- ---------- -----------
Net cash provided by
financing activities 40,745 46,745 6,000
---------- ---------- -----------
Net(decrease) increase in cash (3,940) 41 3,981
Cash - beginning 3,981 0 -
---------- ---------- -----------
Cash-ending $ 41 $ 41 $ 3,981
========== ========== ===========
Supplemental disclosures:
Interest paid $ 0 $ 0 $ 0
========== ========== ===========
Income taxes paid 0 0 0
========== ========== ===========
Non cash investing and
financing activities:
Common stock issued in
exchange for services
rendered $ 10,000 $ 10,000 $ 0
Common stock issued in
exchange for installment
note 120,000 120,000 0
---------- ---------- -----------
Total noncash investing
and financing activities $ 130,000 $ 130,000
========== ========== ===========
</TABLE>
See Independent Auditor's Report and Notes to Financial Statements.
F-5
<PAGE>
eCom Corporation
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
Note 1 - History and Organization of the Company
The Company was organized on October 8, 1998 (Date of Inception) under the laws
of the State of Nevada, eCom Corporation. The Company has minimal operations
and in accordance with SFAS #7, the Company is considered a development stage
company. The Company is authorized to issue 20,000,000 shares of $0.001 par
value common stock and 5,000,000 shares of $0.001 par value preferred stock.
Note 2 - Summary of Significant Accounting Policies
Accounting policies and procedures have not been determined except as follows:
1. The Company uses the accrual method of accounting.
2. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ significantly
from those estimates.
3. The Company maintains a cash balance in a non-interest-bearing bank that
currently does not exceed federally insured limits. For the purpose of
the statements of cash flows, all highly liquid investments with the
maturity of three months or less are considered to be cash equivalents.
There are no cash equivalents as of December 31, 1999.
4. Earnings per share (EPS) is computed using the weighted average number of
shares of common stock outstanding during the period. Diluted EPS is
computed by dividing net income by the weighted average shares
outstanding, assuming all dilutive potential common shares were issued.
Since the Company has no common shares that are potentially issuable, such
as stock options, convertible preferred stock and warrants, basic and
diluted EPS are the same. The Company had no dilutive common stock
equivalents such as stock options as of December 31, 1999.
5. The Company has not yet adopted any policy regarding payment of dividends.
No dividends have been paid since inception.
6. The cost of equipment is depreciated over the estimated useful life of the
equipment utilizing the straight-line method of depreciation.
7. The Company will review its need for a provision for federal income tax
after each operating quarter and each period for which a statement of
operations is issued.
8. The Company has adopted December 31 as its fiscal year end.
Note 3 - Subscriptions Receivable
Subscriptions receivable represents a $120,000 installment note receivable for
stock issued. The note bears an interest rate of 10%, with one interest
payment of $12,000 due on March 15, 2000 and one principal payment of $120,000
due on December 16, 2000. The note is unsecured and, if not collected, the
common stock and additional paid-in capital accounts will be reduced
accordingly.
F-6
<PAGE>
eCom Corporation
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
Note 4 - Income Taxes
Income taxes are provided for using the liability method of accounting in
accordance with Statement of Financial Accounting Standards No. 109 (SFAS #109)
"Accounting for Income Taxes". A deferred tax asset or liability is recorded
for all temporary differences between financial and tax reporting. Deferred
tax expenses (benefit) results from the net change during the year of deferred
tax assets and liabilities.
There is no provision for income taxes for the year ended December 31, 1999,
due to the net loss and no state income tax in Nevada.
Note 5 - Stockholders' Equity
On October 8, 1998 the company issued 3,230,000 shares of its $0.001 par value
common stock to a former director for cash in the amount of $6,000.
On February 1, 1999, the Company initiated a public offering of securities
pursuant to Regulation D, Rule 504 of the Securities Act of 1933, as amended,
and exemptions from state registration pursuant to various state security
transactional exemptions. The Company sold 207,450 shares of Common Stock at a
price of $0.10 per share for a total cash amount raised of $20,745.
On May 3, 1999, pursuant to Regulation D, Rule 504 of the Securities Act of
1933, as amended, the Company sold 1,000,000 shares of Common Stock for a cash
price of $0.01 per share for a total amount raised of $10,000.
On May 3, 1999, the Company issued 1,000,000 shares of Common Stock to a former
director in exchange for services worth $10,000 at the rate of $0.01 per share.
On December 17, 1999, the Company issued 12,000,000 shares of Common Stock in
exchange for an installment note receivable.
There have been no other issuances of common or preferred stock.
Note 6 - Going Concern
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has not commenced its planned principal
operations. Without realization of additional capital, it would be unlikely
for the Company to continue as a going concern.
The officers and directors are involved in other business activities and may,
in the future become involved in other business opportunities. If a specific
business opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The Company
has not formulated a policy for the resolution of such conflicts.
Note 7 - Related Party Transactions
The Company does not lease or rent any property. Office services are provided
without charge by a director. Such costs are immaterial to the financial
statements and, accordingly, have not been reflected therein.
Note 8 - Warrants and Options
There are no warrants outstanding to acquire any additional shares of common
stock.
F-7
<PAGE>
eCom Corporation
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
Note 9 - Year 2000 Issue
The Year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information
using year 2000 dates is processed. In addition, similar problems may arise
in systems which use certain dates in 1999 to represent something other than
a date. The effects of the Year 2000 issue may be experienced before, on, or
after January 1, 2000, and if not addressed, the impact on operations and
financial reporting may range from minor errors to significant system failure
which could affect an entity's ability to conduct normal business operations.
It is not possible to be certain that all aspects of the Year 2000 issue
affecting the entity, including those related to the efforts of customers,
suppliers, or other third parties will be fully resolved.
F-8
<PAGE>
- -------------------------------------------------------------------------------
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
On March 20, 2000, the Company filed Form 8-K with the United Stated
Securities and Exchange Commission, in which the Company stated in Item
4 "Changes in Registrant's Certifying Account:"
"The registrant has engaged G. Brad Beckstead, CPA as its principal
accountant to replace its former principal account, James E. Slayton,
CPA. The decision to change accountant was approved by the Audit
Committee of the registrant. Neither of the reports of the former
principal accountants on the financial statements for the period
ending February 2, 1999 contained an adverse opinion or disclaimer of
opinion, nor was either qualified or modified as to uncertainty,
audit scope, or accounting principles. During the audited period
ending February 2, 1999 and the subsequent interim period through
March 15, 2000, there were no disagreements with the former accountant
on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of the former
account, would have in connection with his report. During the
audited period ending February 2, 1999 and the subject interim period,
the registrant has not consulted G. Brad Beckstead, CPA, regarding any
matter requiring disclosure under Regulation 8-K, Item 304(a)(2). The
registrant has provided James E. Slayton, CPA, a copy of this disclosure
and has requested that James E. Slayton, CPA, furnish it with a letter
addressed to the U. S. Securities and Exchange Commission dated
March 17, 2000 is filed as Exhibit No. 1 to this report on Form 8-K."
20
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The following table sets forth the current officers and directors of eCom
Corporation:
<TABLE>
<CAPTION>
Name Age Position(s)
- ------------------------ --- -----------------------------
<S> <C> <C>
Ian Archibald 34 President, Secretary,
Treasurer, Director
</TABLE>
<PAGE>
IAN ARCHIBALD
Mr. Archibald served as an officer in the US Air Force from 1987
to 1996 as a fighter pilot and instructor pilot. His positions
included Safety Officer, maintenance test program developer, and
airshow display coordinator and director. Mr. Archibald has been a
commercial pilot and instructor for 16 years and has worked as a pilot
for Delta Airlines since leaving the Air Force in 1996. Mr. Archibald
received a Bachelor of Science degree in Engineering Mechanics from the
US Air Force Academy in 1987.
Directors are elected in accordance with our bylaws to serve until the next
annual stockholders meeting. eCom Corporation does not currently pay
compensation to directors for services in that capacity.
Officers are elected by the board of directors and hold office until their
successors are chosen and qualified, until their death or until they resign or
have been removed from office. All corporate officers serve at the discretion
of the board of directors. There are no family relationships between any
director or executive officer and any other director or executive officer of
eCom Corporation
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers, and persons who beneficially own more than ten percent of a
registered class of our equity securities (referred to as "reporting persons"),
to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of common stock and other
eCom Corporation equity securities. Reporting persons are required by
Commission regulations to furnish us with copies of all Section 16(a) forms
they file.
21
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.
As a result of our the Company's current limited available cash, no officer or
director received compensation during the fiscal year ended December 31, 1999.
eCom Corporation intends to pay salaries when cash flow permits. No officer
or director received stock options or other non-cash compensation during the
fiscal year ended December 31, 1999. The Company does have employment
agreements in place with each of its officer.
<TABLE>
<CAPTION>
Name Monthly Salary
- ---------------------------- ----------------
<S> <C>
Ian Archibald $ 1,000
</TABLE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the beneficial
ownership of our outstanding common stock as of December 31, 1999, by each
person known by eCom Corporation to own beneficially more than 5% of the
outstanding common stock, by each of our directors and officer and by all of
our directors and officers as a group. Unless otherwise indicated below, to
our knowledge all persons listed below have sole voting and investment
power with respect to their shares of common stock except to the extent
that authority is shared by spouses under applicable law.
<TABLE>
<CAPTION>
Name and Address Number of shares
of Beneficial Owner Beneficially Owned Percent of Class
- ----------------------- ------------------- ----------------
<S> <C> <C>
Lori Bird (1) 12,000,000 68.82%
CashCom Services Corporation (2) 1,900,000 10.89%
Campbell Mello Associates (3) 1,615,000 9.26%
Janeva Corporation (4) 1,615,000 9.26%
Ian Archibald (5) 100,000 0.006%
President, Secretary,
Treasurer and Director
-------------------------------------------------
17,230,000 98.236 %
</TABLE>
22
<PAGE>
All Officers and Directors (1 person)
- ------------------------
(1) Lori Bird, Box 770, Park City, UT 84060
(2) Cashcom Services Corporation, 1017 PD Tower, Edmonton, Alberta P5J2Z1
(3) Campbell Mello Associates Corporation, 3110 S. Valley View, Las Vegas, NV
89102
(4) Janeva Corporation, 3110 S. Valley View, Las Vegas, NV 89102
(5) Ian Archibald, 1815 Sun Park Dr. Park City, Utah 84098
B. Persons Sharing Ownership of Control of Shares
No person other than Lori Bird and CashCom Services Corporation owns or shares
the power to vote ten percent (10%) or more of the Company's securities.
C. Non-voting Securities and Principal Holders Thereof
The Company has not issued any non-voting securities.
D. Options, Warrants and Rights
There are no options, warrants or rights to purchase securities of the
Company.
E. Parents of Issuer
Under the definition of parent, as including any person or business entity
who controls substantially all (more than 80%) of the issuers of common
stock, the Company has no parents.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Through a Board Resolution, the Company hired the professional services
of G. Brad Beckstead, CPA, Certified Public Accountant, to perform audited
financials for the Company. Mr. Beckstead owns no stock in the Company. The
company has no formal contracts with its accountant, he is paid on a fee
for service basis.
24
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
The following documents are included or incorporated by reference as exhibits
to this report:
EXHIBIT
NO. DOCUMENT DESCRIPTION
- ------- ----------------------------------------------------------------------
(3) ARTICLES OF INCORPORATION AND BY-LAWS
3.1 Articles of Incorporation of the Company(1)
3.2 By-Laws of the Company(1)
(23) CONSENT OF EXPERTS AND COUNSEL
23.1 Letter of Consent from James Slayton, CPA(1)
(27) FINANCIAL DATA SCHEDULE
27.1 Financial Data Schedule
- ----------
(1) Previously filed as an exhibit to our registration statement on Form 10-SB
(the "Registration Statement"), which was originally filed on July 14,
1999, and incorporated herein by reference.
(b) REPORTS ON FORM 8-K
eCom Corporation filed one Form 8-K during the fiscal year ended December 31,
1999. The Current Report, dated December 17, 1999 on Form 8-K containing
information pursuant to Item 1, "Changes in Control of Registrant," pursuant
to Item 5, "Other Materially Important Events," pursuant to Item 6,
"Resignations of Registrant's Director's." These changes have been reflected
in this Form 10KSB filing. eCom also filed a Current Report, dated March 20,
2000, on Form 8-K containing information pursuant to Item 4 ("Changes in
Accountants") entitled "Changes in Registrant's Certifying Account." (See
Item 8 above, entitled, "Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure."
25
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: March 27, 2000
eCom Corporation
By: /s/ Ian Archibald
- ----------------------------
Ian Archibald, President
26
<PAGE>
TYPE: EX-23.3
eCom Corporation
EXHIBIT 23.3 Consent from G. Brad Beckstead, CPA
G. BRAD BECKSTEAD
Certified Public Accountant
330 E. Warm Springs
Las Vegas, NV 89119
702.528.1984
425.928.2877 (efax)
March 29, 2000
To Whom It May Concern:
The firm of G. Brad Beckstead, CPA, consents to the inclusion of my report of
March 29, 2000, on the Financial Statements of eCom Corporation for the period
October 18, 1998 (Date of Inception) to December 31, 1999, in any filings which
are necessary now or in the near future to be filed with the US Securities and
Exchange Commission.
Signed,
/s/ G. Brad Beckstead, CPA
- --------------------------
G. Brad Beckstead, CPA
Nevada License #2701
<PAGE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET, THE STATEMENT OF OPERATIONS, AND THE STATEMENT OF CASH FLOWS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 41
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 41
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 41
<CURRENT-LIABILITIES> 1,053
<BONDS> 0
0
0
<COMMON> 17,437
<OTHER-SE> (18,449)
<TOTAL-LIABILITY-AND-EQUITY> 41
<SALES> 0
<TOTAL-REVENUES> 8,985
<CGS> 0
<TOTAL-COSTS> 55,003
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (46,018)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (46,018)
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
