UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Quarterly Period Ended March 31, 2000
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________ to ____________
Commission file number 0-22808
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SILVER KING RESOURCES, INC.
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(Exact name of small business issuer as specified in its charter)
DELAWARE 65-0884085
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
6025 South Eaton Lane
Littleton, Colorado 80123
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(Address of principal executive offices)
(303) 798-2980
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(Issuer's telephone number)
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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
--- ---
Shares of the Registrant's Common Stock, par value $.0001 per share,
outstanding as of November 18, 1999: 43,075,000.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
<PAGE>
SILVER KING RESOURCES, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets
March 31, 2000 (unaudited) and December 31, 1999..............................................3
Consolidated Statements of Operations
Three months ended March 31, 2000 and 1999 (unaudited), and August 23, 1988
(date of inception) through March 31, 2000 (unaudited)........................................4
Consolidated Statements of Stockholders' Equity (Deficit)
August 23, 1988 (date of inception) through March 31, 2000 (unaudited)........................5
Consolidated Statements of Cash Flows
Three months ended March 31, 2000 and 1999 (unaudited), and August 23, 1988
(date of inception) through March 31, 2000 (unaudited)........................................6
Notes to Consolidated Financial Statements..........................................................7
Item 2 - Management's Discussion and Analysis or Plan of Operation......................................10
PART II. OTHER INFORMATION
Item 1 - Legal proceedings..............................................................................14
Item 2 - Changes in securities and use of proceeds......................................................14
Item 3 - Defaults upon senior securities................................................................14
Item 4 - Submission of matters to a vote of security holders............................................14
Item 5 - Other events...................................................................................14
Item 6 - Exhibits and reports on Form 8-K...............................................................14
</TABLE>
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<PAGE>
SILVER KING RESOURCES, INC. AND SUBSIDIARY
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
December 31, March 31,
1999 2000
------------ ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 2,853 $ 2,271
Loan receivable from related party 665,000 --
--------- ---------
667,853 2,271
DEFERRED OFFERING COST -- 3,000
--------- ---------
TOTAL ASSETS $ 667,853 $ 5,271
========= =========
LIABILITIES
CURRENT LIABILITIES
Loan payable to related party $ 820,000 $ 107,000
Accounts payable 26,057 39,299
--------- ---------
TOTAL LIABILITIES 846,057 146,299
--------- ---------
STOCKHOLDERS' DEFICIT
PREFERRED STOCK - $0.0001 par value, authorized 15,000,000 shares;
none issued and outstanding -- --
COMMON STOCK - $.0001 par value, authorized 50,000,000 shares;
issued and outstanding 18,075,000 shares at December 31, 1999 and
43,075,000 shares at March 31, 2000 1,807 4,307
ADDITIONAL PAID-IN-CAPITAL 596,527 714,427
WARRANTS OUTSTANDING 14,000 14,000
DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE (790,538) (873,762)
--------- ---------
TOTAL STOCKHOLDERS' DEFICIT (178,204) (141,028)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 667,853 $ 5,271
========= =========
</TABLE>
See the accompanying notes.
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<PAGE>
SILVER KING RESOURCES, INC. AND SUBSIDIARY
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
August 23, 1988
Three Months Ended Inception
March 31, Through
-------------------------- March 31,
1999 2000 2000
----------- ----------- ---------------
<S> <C> <C> <C>
COSTS AND EXPENSES
Exploration costs $ -- $ 1,055 $ 363,097
Right of first refusal -- -- 131,250
Impairment loss -- 36,492 152,896
Administrative expenses 1,491 14,954 67,885
Consulting expenses 14,500 -- 28,500
Financing fees -- -- 50,000
Depreciation -- 300 1,100
Legal and accounting -- 45,035 170,670
Minority interest -- (7,671) (87,613)
Interest expense -- -- 2,918
Other -- 4,432 4,432
----------- ----------- ---------
LOSS FROM OPERATIONS (15,991) (94,597) (885,135)
INTEREST INCOME -- 11,373 11,373
----------- ----------- ---------
NET LOSS $ (15,991) $(83,224) $(873,762)
=========== =========== =========
BASIC AND DILUTED LOSS PER COMMON SHARE $ -- $ --
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES 11,000,000 34,741,667
</TABLE>
See the accompanying notes.
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<PAGE>
SILVER KING RESOURCES, INC. AND SUBSIDIARY
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
AUGUST 23, 1988 (INCEPTION) THROUGH MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Deficit
Accumulated Total
Additional During the Stockholders'
Common Paid-In- Warrants Exploration Equity
Stock Capital Outstanding Stage (Deficit)
------ ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, AUGUST 23, 1988 (INCEPTION) THROUGH DECEMBER 31, 1998 $ 1,000 $ 5,834 $ -- $ (31,834) $ (25,000)
Issuance of common stock 17,025 524,475 14,000 -- 555,500
Issuance of 50,000 shares of common stock as financing fee 50 49,950 -- -- 50,000
Recapitalization upon reincorporation in the state of Delaware (16,268) 16,268 -- -- --
Net loss for the year ended December 31, 1999 -- -- -- (758,704) (758,704)
-------- -------- ------- --------- ---------
BALANCE AT DECEMBER 31, 1999 1,807 596,527 14,000 (790,538) (178,204)
Issuance of Common Stock, net of offering costs of $4,600 2,500 117,900 -- -- 120,400
Net loss for the three months ended March 31, 2000 -- -- -- (83,224) (83,224)
-------- -------- ------- --------- ---------
$ 4,307 $714,427 $14,000 $(873,762) $(141,028)
======== ======== ======= ========= =========
</TABLE>
See the accompanying notes.
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<PAGE>
SILVER KING RESOURCES, INC. AND SUBSIDIARY
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended August 23, 1988
March 31, (Inception)
---------------------- Through
1999 2000 March 31, 2000
--------- -------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (15,991) $(83,224) $(873,762)
Adjustments to reconcile net loss to net cash
used in operating activities
Issuance of common stock as financing fee -- -- 50,000
Reincorporation fee paid by stockholder -- -- 1,834
Depreciation -- 300 1,100
Impairment loss -- 36,492 152,896
Changes in net assets and liabilities, net of
effects from acquisition
Increase in tax receivable -- -- (16,266)
Increase in accounts payable -- 13,242 83,774
--------- -------- --------
Net cash used in operating activities (15,991) (33,190) (600,424)
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in subsidiary (156,250) -- --
Mining concessions -- -- (40,000)
Cost of acquisition -- (48,000) (284,317)
--------- -------- --------
Net cash used in investing activities (156,250) (48,000) (324,317)
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Miority interest -- 11,208 22,028
Loan receivable -- 665,000 --
Repayment of stockholder loans -- -- 120,084
Proceeds from loan payable 272,500 -- 820,000
Repayment of loan payable -- (713,000) (713,000)
Proceeds from issuance of common stock, net
of offering costs 30,500 120,400 680,900
Deferred offering costs -- (3,000) (3,000)
Cash overdraft (25,000) -- --
--------- -------- --------
Net cash provided by financing activities 278,000 80,608 927,012
--------- -------- --------
NET INCREASE (DECREASE) IN CASH 105,759 (582) 2,271
CASH - BEGINNING OF PERIOD -- 2,853 --
--------- -------- --------
CASH - END OF PERIOD $ 105,759 $ 2,271 $ 2,271
========= ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD FOR:
Interest $ -- $ -- $ 2,918
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Issuance of common stock as financing fee $ -- $ -- $ 50,000
======== ======== ========
</TABLE>
See the accompanying notes.
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<PAGE>
SILVER KING RESOURCES, INC. AND SUBSIDIARY
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 2000
(UNAUDITED)
NOTE 1 - INTERIM FINANCIAL INFORMATION
The financial statements of Silver King Resources, Inc. and Subsidiary (the
"Company") as of March 31, 2000 and for the three months ended March 31, 2000,
and 1999 and related footnote information are unaudited. All adjustments
(consisting only of normal recurring adjustments) have been made which, in the
opinion of management, are necessary for a fair presentation. Results of
operations for the three months ended March 31, 2000 and 1999 are not
necessarily indicative of the results that may be expected for any future
period. The balance sheet at December 31, 1999 was derived from audited
financial statements.
Certain information and footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting principles,
have been omitted. These financial statements should be read in conjunction with
the financial statements and notes for the year ended December 31, 1999.
NOTE 2 - BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company and
its Subsidiary. All material intercompany balances and intercompany transactions
have been eliminated.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis which contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business. As discussed in
Note 4, the Company has suspended its exploration activities and upon completion
of its proposed merger (Note 7) will discontinue its exploration activities. The
Company has not commenced its proposed business activities, nor has it received
any revenues from operations. These factors raise substantial doubt about the
ability of the Company to continue as a going concern.
The Company intends to raise additional capital through a private offering in
order to complete its proposed merger.
The balance sheet does not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classifications of liabilities that might be necessary in the event the Company
cannot continue in existence.
NOTE 4 - IMPAIRMENT LOSS
During 1999, the Company conducted initial stage exploration of silver-producing
properties in Mexico through its subsidiary. Since recent geologic results
indicated concentration of potential mineral deposits less than amounts expected
by management, the Company has elected to suspend any further exploration
activities and, shortly after completion of the merger (Note 7), plans to
discontinue all such operations.
In accordance with SFAS No. 121, the Company recorded an impairment loss of
$36,492 for the three months ended March 31, 2000, related to the write-down of
its recorded net assets.
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<PAGE>
SILVER KING RESOURCES, INC. AND SUBSIDIARY
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 2000
NOTE 5 - RELATED PARTY TRANSACTIONS
During 1999, the Company loaned $665,000 on a short-term basis to a related
corporation which was repaid during the quarter ended March 31, 2000.
During 1999, the Company borrowed $820,000 on a short-term basis from a
shareholder and repaid $713,000 during the quarter ended March 31, 2000.
NOTE 6 - CAPITAL STOCK
Common Stock
In May 1998, the State of Florida approved the Company's restated Articles of
Incorporation, which increased its capitalization from 7,500 common shares
authorized to 50,000,000 common shares. The par value changed from $1.00 per
share to $0.001 per share.
Upon recapitalization, the Company forward split its common stock on a two
hundred for one basis. This stock split increased the number of outstanding
common stock shares from 5,000 shares to 1,000,000 shares.
In January 1999, the Company sold 14,500,000 shares of its common stock under a
subscription agreement at a price of $0.001 per share.
In January 1999, the Company also sold 2,000,000 shares of its common stock
under a subscription agreement at a price of $0.008.
In April 1999, the Company sold 525,000 shares of its common stock under a
subscription agreement at a price of $1.00 per share.
On June 24, 1999, the Company merged with its wholly-owned subsidiary, Silver
King Resources (Delaware), Inc. After the merger, Silver King Resources
(Delaware), Inc., the surviving corporation, changed its name to Silver King
Resources, Inc. In conjunction with the merger, the par value of the common
stock was changed to $.0001 and the Company is authorized to issue up to
15,000,000 shares of preferred stock, $.0001 par value per share, in one or more
series, and to fix, as to any such series, the dividend rate, redemption prices,
preferences on liquidation or dissolution, sinking fund terms, conversions
rights, voting rights, and any other preference or special rights and
qualifications. There are presently no shares of preferred stock issued.
In February 2000, the Company sold 25,000,000 units at $.005 per unit
represented by one share of common stock and two warrants, each warrant
entitling the holder to purchase one share of its common stock at a price of
$.01 per share. The total gross proceeds amounted to $125,000. The warrants were
assigned no value and were subsequently cancelled.
All references to number of shares and per share amounts on the balance sheets
have been adjusted to give retroactive effect to the recapitalizations and stock
splits.
Warrants
From time to time, the Board of Directors of the Company may issue warrants to
purchase its common stock to parties other than employees and directors.
Warrants may be issued as an incentive to help the Company achieve its goals, or
in consideration for cash or services rendered to the Company, or a combination
of the above.
In January 1999, as part of the subscription for 2,000,000 shares of common
stock, the Company issued warrants to purchase 2,000,000 shares of its common
stock at a price of $4.00 per share. The warrants were valued at $0.007 per
warrant.
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<PAGE>
SILVER KING RESOURCES, INC. AND SUBSIDIARY
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 2000
NOTE 7 - PLAN OF MERGER AND PRIVATE PLACEMENT OFFERING
On March 21, 2000, the Company agreed to acquire eNexi Inc. though its
newly-formed subsidiary, Silver King Acquisition, Inc. in consideration for
6,000,000 newly-issued shares of the Company's Series A Convertible Preferred
Stock, par value $.0001 per share, convertible into 150,000,000 shares of the
Company's common stock, par value $.0001 per share. In addition, the Company
will assume existing common stock purchase warrants (the "Assumed Warrants")
from eNexi Inc., which will be exercisable for shares of the Company's common
stock at an exercise price of $0.10 per share. A principal condition to the
merger closing is that the Company receive in escrow at least $5,000,000 in
subscription funds for the Series B Convertible Preferred Stock pursuant to a
private placement offering of 2,000,000 shares at $2.50 per share, convertible
into 50,000,000 shares of common stock. Since the former shareholders of eNexi
Inc. will acquire control of the Company upon the merger closing, the merger
will be accounted for as a reverse acquisition. Accordingly, for financial
statement purposes, eNexi Inc. will be considered the accounting acquiror and
the related business combination will be considered as a recapitalization of
eNexi Inc., rather than an acquisition by the Company. The Company plans to
recapitalize its common stock shortly following the merger. The recapitalization
will take the form of either a reverse split or an increase in authorized
capital stock sufficient to fully convert the Series A shares and the Series B
shares and fully honor the exercise of the Assumed Warrants.
-9-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PRIVATE SECURITIES LITIGATION REFORM ACT
The information contained in this Report on Form 10-QSB and in other public
statements by the Company and Company officers include or may contain certain
forward-looking statements. When used in this Report or in such statements, the
words "estimate," "project," "intends," "expects," "believes" and similar
expressions are intended to identify forward-looking statements regarding events
and financial trends which may affect the Company's future operating results and
financial position. Such statements are not guarantees of future performance and
are subject to risks and uncertainties that could cause the Company's actual
results and financial position to differ materially from those included within
the forward-looking statements. Such factors are described in detail in the
Company's Annual Report on Form 10-KSB under the caption "RISK FACTORS." Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date made. The Company undertakes no obligation to
publicly release the results of any revision to these forward-looking statements
to reflect events or circumstances after the date made or to reflect the
occurrence of unanticipated events.
OVERVIEW
The Company is a exploration stage mining resource holding company with
certain rights to acquire mining concessions at properties located in southern
Mexico through its Mexican subsidiary, International Capri Resources S.A. de
C.V. ("ICRM"). As none of these properties are in production, the Company has no
current operating income or cash flow.
The Company is the surviving entity of a merger that occurred on June 24,
1999 pursuant to which Silver King Resources, Inc., formerly known as Arngre,
Inc., a Florida corporation ("Arngre"), merged with and into Silver King
Resources (Delaware), Inc., a newly-formed Delaware corporation. Silver King
(Delaware), Inc., the surviving corporation of the merger, was formed for the
purpose of the merger and had no prior operating history. Immediately after the
completion of the merger, Silver King (Delaware), Inc. changed its name to
"Silver King Resources, Inc."
Prior to the merger, Arngre was an inactive company whose shares were
listed for quotation on the OTC Bulletin Board. Since the former stockholders of
Arngre acquired a controlling interest in Silver King (Delaware), Inc. in the
merger, the merger has been accounted for as a "reverse acquisition."
Accordingly, for financial statement presentation purposes, Arngre is viewed as
the continuing entity and the related business combination is viewed as a
recapitalization of Arngre, rather than an acquisition by Silver King
(Delaware), Inc. Prior to the fourth quarter of 1998, the Company was inactive
and had no prior operating history.
The Company formed a joint venture in May 1999 with ICRM, International
Capri Resources Ltd., a British Columbian company ("ICR"), and Zacualpan
Minerals, LLC, a Colorado limited liability company ("Zacualpan LLC"), to
acquire, explore and, if warranted,
-10-
<PAGE>
develop mining concessions in Mexico with prospective silver mineralization
called the Zacualpan Project. The Company has a 60% equity interest in ICRM.
During 1999, ICRM conducted initial stage exploration at the Zacualpan
Project. Since recent geologic results at the Zacualpan Project indicated
concentration of potential mineral deposits less than the amounts expected by
management, the Company has elected to temporarily suspend any further
exploration activities and explore other business opportunities. Toward that
end, on March 21, 2000, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with eNexi Inc., a development stage company that
provides Internet-related services ("eNexi"). Pursuant to the terms of the
Merger Agreement, Silver King Acquisition, Inc., a newly formed Delaware
corporation and wholly owned subsidiary of the Company ("Sub"), intends to merge
(the "Merger") with and into eNexi. As the surviving entity of the Merger, eNexi
will be a wholly owned subsidiary of the Company. Upon completion of the Merger,
the Company will discontinue all mining operations in full and divest its
interest in ICRM through a sale or liquidation event.
Pursuant to the terms of the Merger Agreement, the Company will acquire
100% of the outstanding capital stock of eNexi for a purchase price consisting
of 6,000,000 newly-issued shares of the Company's Series A Convertible Preferred
Stock, par value $.0001 per share ("Series A Shares"), which are presently
convertible into 150,000,000 shares of the Company's common stock, par value
$.0001 per share ("Common Stock"), or approximately 61% of the outstanding
shares of Common Stock. In addition, as part of the Merger, the Company has
agreed to assume existing eNexi warrants which, following the Merger will permit
the issuance of 25,000,000 shares of Common Stock at an exercise price of $.10
per warrant (the "Assumed Warrants"). The Merger is scheduled to close (the
"Merger Closing") on the earlier of June 15, 2000, or once certain conditions to
the Merger are satisfied or waived. The principal conditions to the Merger
Closing are: (i) the completion of a due diligence review by each of the parties
to the Merger; and (ii) the completion by the Company of a private placement
offering (the "Offering") for a minimum of 2,000,000 newly-issued shares of the
Company's Series B Convertible Preferred Stock, par value $.0001 per share
("Series B Shares"), which are convertible into an aggregate 50,000,000 shares
of Common Stock. The Company expects to offer the Series B Shares at a price of
$2.50 per share to accredited investors to raise gross proceeds of $5,000,000.
The proceeds of the Offering would be used to fund operations of eNexi following
the Merger.
Under the terms of the Offering, the Company will conduct a closing for
purchases of Series B Shares (the "Offering Closing") simultaneous with the
Merger Closing. Neither the Offering Closing or the Merger Closing can occur
unless and until the Company receives minimum aggregate subscriptions of
$5,000,000 for the Series B Shares during the offering period, which will expire
on June 15, 2000. Accordingly, there can be no assurances that the Merger will
occur. In the event that the Merger Closing occurs, the Company will continue
the operations of eNexi and proceed with the divestiture of its interest in
ICRM. In the event that the Merger Closing does not occur, the Company may
likely phase out of its mining activities and investigate other possible
business opportunities to capitalize on its status as a public corporation.
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<PAGE>
As of March 31, 2000, the Company had only nominal cash. At the parent
level, the Company has only nominal expenses to preserve its corporate
existence, but incurs expenses for legal and accounting services to comply with
securities disclosure regulations. Due to the Company's lack of revenues,
suspension of its mining exploration activities and the fact that it has not yet
commenced the proposed business activities of eNexi, the Company's independent
auditors included an explanatory paragraph in their report for the year ended
December 31, 1999 as to the substantial doubt about the Company's ability to
continue as a going concern.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000 As Compared to March 31, 1999
REVENUES; LOSSES. The Company does not produce silver or any other mineral
products, has no revenues from product sales and has suspended its mining
exploration business pending the proposed merger with eNexi. During the three
months ended March 31, 2000, the Company incurred a net loss of $83,224, as
compared to a net loss of $15,991 for the same prior year period. From August
23, 1988, its date of incorporation, through March 31, 2000, the Company has
incurred a total net loss of $873,762.
ADMINISTRATIVE. Administrative expenses were $14,954 for the three months
ended March 31, 2000, compared to $1,491 in administrative expenses for the
three months ended March 31, 1999. The increase in administrative expenses is
the result of office and travel expenses.
CONSULTING. The Company did not incur any expenses for consulting fees
during the three months ended March 31, 2000. Consulting expenses were $14,500
for the three months ended March 31, 1999 in connection with retaining an
administrative consultant.
LEGAL AND ACCOUNTING. Legal and accounting fees were $45,035 for the three
months ended March 31, 2000, compared to no legal or accounting fees for the
three months ended March 31, 1999. This increase was due to costs associated
with private placement offerings of the Company's securities, the preparation of
securities filings in compliance with securities disclosure regulations and the
negotiation of a merger agreement with eNexi.
INTEREST EXPENSES. The Company did not incur any interest expenses for the
three months ended March 31, 2000 and 1999.
IMPAIRMENT LOSS. Impairment loss for the three months ended March 31, 2000
was $36,492 compared with no impairment loss for the three months ended March
31, 1999. The impairment loss represents additional write-down of recorded net
assets and expenses related to discontinuation of the Company's mining
operations.
EXPLORATION COSTS. Exploration expenses for the three months ended March
31, 2000 were $1,055, compared with no exploration expenses for the three months
ended March 31, 1999. The Company does not expect to incur exploration expenses
going forward as it plans to change its business from mineral resource
exploration to the provision of Internet related services during the second
quarter of fiscal 2000.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, the Company had cash and cash equivalents of $2,271,
as compared to cash and cash equivalents and receivables of $667,853 as of
December 31, 1999. The decrease in the three months ended March 31, 2000
relative to December 31, 1999 was due to the repayment of a $665,000 loan
receivable during the first quarter of fiscal 2000. The Company used those funds
toward the repayment of a short-term loan during the first quarter of fiscal
2000.
The Company received an aggregate of $125,000 in gross proceeds from a
private placement of its securities completed in February 2000 in which it sold
25,000,000 units of common stock and warrants at $.005 per unit. Each unit
consisted of one share of the Company's common stock and two warrants, with each
warrant entitling the holder to purchase one share of the Company's common
stock. The warrants were subsequently cancelled.
The net cash used in operating activities increased from $15,991 for the
three months ended March 31, 1999 to $33,190 for the three months ended March
31, 2000. The increase in the net cash used in operating activities was due to
installment payments made toward the acquisition of mining concessions by ICRM
and related expenses. As it expects to change its line of business during the
second quarter of 2000, the Company does not anticipate making further payments
on the option contract to acquire the mining concessions. Accordingly, it is not
likely that the Company will acquire any mining concessions.
The net cash provided by financing activities was $80,608 for the three
months ended March 31, 2000, compared with $278,000 for the three months ended
March 31, 1999. The net cash provided by financing activities during the first
quarter of 2000 was due principally to a private placement of the Company's
securities completed in February 2000 in which the Company received gross
proceeds of $125,000, as well as repayment of a loan receivable of $665,000.
This net cash was offset by payment of a $713,000 loan payable.
The net cash used in investing activities decreased from $156,250 for the
three months ended March 31, 1999 to $48,000 for the three months ended March
31, 2000. The $48,000 represented costs incurred by the Company as additional
capital contributions to ICRM.
The Company does not currently have a line of credit with any financial
institutions. The Company currently owes $107,000 on a short-term loan from FAC
Enterprises, Inc., a principal stockholder.
The Company has a working capital deficit and is not generating revenues.
The Company needs to raise additional funds in the next twelve months in order
to continue its operations. As a condition to the merger with eNexi, the Company
must receive gross proceeds of $5 million from a private placement offering of
its Series B Convertible Preferred Stock. In the event that the merger with
eNexi is consummated, the Company will use the net proceeds from the placement
of the Series B Convertible Preferred Stock to fund the operations of eNexi.
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<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Neither the Company nor any of its property is a party to any pending or
threatened legal proceedings.
Item 2. Changes in Securities and Use of Proceeds
In February 2000, the Company sold 25,000,000 units at $.005 per unit for
aggregate sales consideration of $125,000. Each unit consisted of one share of
the Company's common stock and two common stock purchase warrants at an exercise
price of $.01. The units were sold to accredited investors in a private
placement transaction exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended, and Rule 506 of Regulation D as an issuer
transaction not involving a public offering. The warrants granted as part of the
private placement transaction were subsequently cancelled.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Events
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Exhibit Method of Filing
----------- ------- ----------------
<S> <C> <C> <C>
10.19 Amendment to Agreement and Plan of Merger dated as Filed herewith
of April 18, 2000 by and among Silver King Resources,
Inc., Silver King Acquisition, Inc., eNexi Inc. and
the Principal Stockholders of eNexi Inc.
27 Financial Data Schedule Filed herewith
(b) Reports on Form 8-K
None.
</TABLE>
-14-
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 15, 2000 Silver King Resources, Inc.
/s/ Alan Stier
-------------------------
Alan Stier, President
-15-
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C>
10.19 Amendment to Agreement and Plan of Merger dated as of April 18, 2000 by and among Silver King
Resources, Inc., Silver King Acquisition, Inc., eNexi Inc. and the Principal Stockholders of
eNexi Inc.
27 Financial Data Schedule
</TABLE>
-16-
This Amendment (this "Amendment") to the Agreement and Plan of Merger
(the "Agreement"), is made and entered into as of April 18, 2000, by and among
SILVER KING RESOURCES, INC., a Delaware corporation ("Acquiror"), SILVER KING
ACQUISITION, INC., a Delaware corporation and wholly owned subsidiary of
Acquiror ("Newco"), ENEXI INC., a Delaware corporation ("eNexi"), and Dr. Roger
LeRoy Miller and Larry Mayle, the principal stockholders of eNexi (collectively,
the "Principal Stockholders").
RECITALS
A. WHEREAS on March 21, 2000, the Parties hereto entered into the Agreement
under which Newco shall merge with and into eNexi; and
B. WHEREAS the parties have agreed to extend the deadline for the closing
date of the Merger from April 30, 2000 to June 15, 2000.
AGREEMENTS
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree to amend the
Agreement as follows.
1. Closing Date. Subclause (b) at the end of Section 2.1 of the Agreement
is hereby amended to read as follows: "at such other time, date and place as the
parties may agree, but in no event shall such date be later than June 15, 2000."
2. Counterparts. This Amendment may be executed in one or more
counterparts, each of which, when so executed and delivered, will be an original
instrument, and such counterparts together will constitute a single agreement.
3. Amendments. Except as modified by this Amendment, all other terms and
provisions of the Agreement shall remain in full force and effect.
4. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the laws
that might otherwise govern under principles of conflicts of laws applicable
thereto.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has signed or has caused this
Agreement to be signed by their respective officers hereunto duly authorized,
all as of the date first written above.
SILVER KING RESOURCES, INC.,
a Delaware Corporation
By: /s/ Alan Stier
--------------
Name: Alan Stier
Title: President
SILVER KING ACQUISITION, INC.,
a Delaware Corporation
By: /s/ Alan Stier
--------------
Name: Alan Stier
Title: President
ENEXI INC., a Delaware Corporation
By: /s/ Roger LeRoy Miller
----------------------
Name: Roger LeRoy Miller
Title: President
/s/ Roger LeRoy Miller
----------------------
Roger LeRoy Miller
/s/ Larry Mayle
---------------
Larry Mayle
2
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0
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