As filed with the Securities and Exchange Commission on ^ November 9, 2000
Registration No. 333-39520
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. ^ 2
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
eNEXI HOLDINGS, INC.
(formerly Silver King Resources, Inc.)
(Exact name of small business Issuer as specified in its charter)
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Delaware 65-0884085 6770
(State or other jurisdiction of (I.R.S. Employer Identification Number) (Primary Standard Industrial
incorporation or organization) Classification Code Number)
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30 Corporate Park
Suite 455
Irvine, California 92606
(949) 756-8181
(Address and telephone number of principal executive offices)
Mr. Larry Mayle
30 Corporate Park
Suite 4555
Irvine, California 92606
(949) 756-8181
(Name, address and telephone number of agent for service)
Copies of all communications to:
Gregory Sichenzia, Esq.
Thomas A. Rose, Esq.
Sichenzia Ross & Friedman, LLP
135 West 50th Street
New York, New York 10022
Telephone No.: (212) 664-1200
Facsimile No.: (212) 664-7329
Approximate date of proposed sale to the public:
From time to time after the effective date of this Registration Statement
in light of market conditions and other factors.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. X
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. []
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. []
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. []
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Title of Each Offering Aggregate Amount of
Class of Securities Amount to be Price Per Offering Registration
to be Registered Registered Share (1) Price Fee
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Common Stock, $.0001 par value 4,628,449 $3.125 $14,463,903 $3,818
------------------------------ --------- ------ ----------- ------
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1. Based upon bid price of the common stock on June 14, 2000.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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eNEXI HOLDINGS, INC.
Cross Reference Sheet
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Form SB-2 Item Number and Caption Captions In Prospectus
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1. Front of Registration Statement and Outside Front Cover of Prospectus Cover Page
2. Inside Front and Outside Back Cover Pages of Prospectus Cover Page, Inside Cover Page,
Outside Back Page
3. Summary Information and Risk Factors Prospectus Summary, Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Cover Page, Risk Factors
6. Dilution Not Applicable
7. Selling Securityholders Selling Securityholders, Plan of
Distribution
8. Plan of Distribution Prospectus Summary, Selling
Securityholders
9. Legal Proceedings Business
10. Directors, Executive Officers, Promoters and Control Persons Management, Principal Stockholders
11. Security Ownership of Certain Beneficial Owners and Management Principal Stockholders
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Legal Matters
14. Disclosure of Commission Position on Indemnification for Securities Act Liabilities
Management
15. Organization Within Last Five Years Not Applicable
16. Description of Business Prospectus Summary, Business
17. Management's Discussion and Analysis or Plan of Operation Management's Discussion and
Analysis of
Financial
Condition and Results
of Operations
18. Description of Property Business
19. Certain Relationships and Related Transactions Certain Transactions
3
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20. Market for Common Equity and Related Shareholder Matters Front Cover Page, Description of
Securities
21. Executive Compensation Management
22. Financial Statements Financial Statements
23. Changes in and Disagreements with Accounts on Accounting and Financial Disclosure
Not Applicable
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^
4
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Subject To Completion. Dated November 9, 2000
eNEXI HOLDINGS, INC.
^
4,628,449 shares of common stock
eNexi Holdings, Inc.: o Our principal executive offices are located
at 30 Corporate Park, Suite 455, Irvine,
California 92606, and our telephone number is
(949) 756-8181.
o Over the Counter Electronic Bulletin Board
Market Symbol: SVKG
The Offering: o All of the shares of common stock being sold
are offeed by selling stockholders. We will
not receive any proceeds from the sale of the
shares by the selling stockholders. However,
we will receive the sale price of any common
stock that we sell pursuant to common stock
purchase warrants described in this prospectus
o A total ^ of4,628,449 shares of our common
stock are being offered.
o The selling stockholders may sell all or any
portion of the shares in this offering in one
or more transactions by a variety of methods,
including through the Over The Counter
Bulletin Board or in negotiated transactions.
The selling stockholders will determine the
selling price of the shares. The selling
stockholders will also pay any broker or
dealer commission, fee or other compensation
or underwriter discount.
Your investment in our common stock involves a high degree of risk. Before
investing in our common stock, you should consider carefully the risks described
under "Risk Factors" beginning on page 6.
------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is complete or accurate. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is , 2000
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TABLE OF CONTENTS
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PAGE
Prospectus Summary
Summary Financial Information
Risk Factors:
Our Limited Operating History Makes it Difficult for You to
Evaluate our Future Potential.
Our History of Net Operating Losses May Raise Doubt About
Our Ability to Become Profitable in the Future.
Our Underdeveloped Subscriber and Advertiser Base Makes it
More Difficult to Achieve Profitable Operations.
Our Lack of Long-Term Contractual Arrangements May Impede
Our Ability to Plan Future Customer Needs and Costs.
Spamming Could Result in Unanticipated Liabilities, Which Could
Adversely Affect Our Financial Results.
We May Need Additional Financing Which May Not be Available,
Resulting in the Necessity of Curtailing or Ceasing Operations.
Forward Looking Statements
Use of Proceeds
Dividend Policy
Capitalization
Dilution
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Business
Management
Certain Transactions
Principal Stockholders
Description of Capital Stock
Shares Eligible for Future Sale
Underwriting
Legal Matters
Experts
Where You Can Find More Information
Index to Consolidated Financial Statements
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--------------
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
different information. This document may only be used where it is legal to sell
these securities. The information in this document may not be accurate after the
date of this document.
Dealer Prospectus Delivery Obligation
Until ______________, all dealers that effect transactions in these
securities, whether or not participation in this offering, may be required to
deliver a prospectus. This is in addition to the dealer' obligation to deliver a
prospectus when acting as underwriters and with respect to unsold allotments or
subscriptions.
<PAGE>
PROSPECTUS SUMMARY
eNexi Holdings, Inc. is a holding company for our wholly-owned subsidiary,
eNexi Inc. We were originally formed as Silver King Resources, Inc. to identify
private business opportunities that would capitalize on our status as a public
corporation. From early 1999 until March 2000, we conducted initial stage
exploration of silver-producing properties in Mexico. On May 19, 2000, we
acquired eNexi Inc, a company that provides internet-related services, and
changed our name to eNexi Holdings, Inc. on July 17, 2000. ^
SUMMARY FINANCIAL INFORMATION
The following summary of financial information should be read in
conjunction with the Financial Statements and notes thereto appearing elsewhere
in this Prospectus.
SUMMARY OF FINANCIAL DATA
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From inception Six months ended
through June 30, 2000
December 31, 1999 (Consolidated)
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Statement of Income and Expense
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Net revenues .............................. $ 27,192 $ 369,277
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Operating costs and expense:
Cost of recurring revenues ............. 98,626 149,341
Sales and marketing .................... 310,480 505,701
General and administrative ............. 1,098,927 887,708
Depreciation ........................... 22,846 24,196
Organization expense ................... -- (99,416)
---------- ----------
Total operating costs and expenses ........ 1,530,879 1,666,362
---------- ----------
Loss from operations ...................... (1,503,687) (1,297,085)
Other income (expense)
Interest expense ....................... (9,141) (12,204)
Interest income ........................ 17,285 48,987
---------- ----------
Loss before provision for income taxes . (1,495,543) (1,260,302)
---------- ----------
Provision for income taxes ............. -- --
---------- ----------
Net loss .................................. $(1,495,543) $(1,260,302)
========== ==========
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3
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Net income (loss) per common share:
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Basic .................................. $ ^(2.07) $ ^(1.00)
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Weighted average common shares outstanding:
Basic .................................. ^ 722,905 ^ 1,264,818
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Supplemental Data:
Depreciation .............................. $ 22,846 $ 24,196
Capital expenditures ...................... (203,875) (161,660)
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As of
As of June 30, 2000
December 31, Consolidated
1999 (unaudited)
---------- ----------
Balance Sheet Data
Cash and cash equivalents $1,196,675 $ 4,502,494
Total assets ............. 1,441,834 5,109,643
Total liabilities ........ 491,857 777,128
Total stockholders' equity 949,977 4,332,515
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RISK FACTORS
Prospective investors should carefully consider the following factors, in
addition to the other information contained in this prospectus, in connection
with investments in the securities offered hereby. This prospectus contains
certain forward-looking statements which involve risks and uncertainties. Our
actual results could differ materially from those anticipated in the
forward-looking statements as a result of certain factors, including those set
forth below and elsewhere in this prospectus. An investment in the securities
offered hereby involves a high degree of risk.
Our Limited Operating History Makes it Difficult for You to Evaluate our
Future Potential. Due to the absence of an established operating history, there
is material uncertainty concerning our ability to operate successfully. We are
subject to all risks inherent in a developing business enterprise. A limited
operating history makes it difficult for subscribers to evaluate the services
provided and for businesses to assess the targeted audience's response to the
advertisements delivered to our subscribers. The likelihood of our success must
be considered in light of the problems, expenses and difficulties frequently
encountered by a new business in general and those specific to the information
technology sector, such as the competitive and rapidly changing environment in
which we will operate.
Our History of Net Operating Losses May Raise Doubt About Our Ability to
Become Profitable in the Future. For its fiscal year ended December 31, 1999 and
six months ended June 30, 2000, eNexi incurred net losses of $1,495,543 and
$1,260,302, respectively. We expect to continue to incur operating losses since
we have not yet built a significant subscriber and advertiser revenue base. This
may continue until we reach a greater level of maturity. It is possible that our
revenues may never exceed expenses. If operating losses continue beyond the
short term, our operations will be in jeopardy.
Our Underdeveloped Subscriber and Advertiser Base Makes it More Difficult
to Achieve Profitable Operations. We expect to continue to derive substantially
all of our revenues from the sale of online advertisements. Advertisers pay us
for the number of advertisements displayed, for the number of times subscribers
click on advertisements or based on other criteria, such as the amount of
purchases made by subscribers. We do not have a broad subscriber or advertiser
base due to the early stages of our development. If we cannot build a wide
subscriber base, retailers will be less inclined to advertise on our
dollars4mail system, or will not be willing to pay higher advertising rates. In
light of these factors, we may not generate sufficient advertising or other
revenues to reach profitability.
Our Lack of Long-Term Contractual Arrangements May Impede our Ability to
Plan Future Customer Needs and Costs. We do not have contractual arrangements
with many of our customers. Our relationships with customers is based upon
course of dealing and can be terminated at any time. The agreements which we do
have with some of our customers may generally be terminated by the customer on
short notice. We cannot be sure that any of our customers will continue to do
business with us. The loss of significant customers would have a material
adverse effect on our business, financial condition and results of operations.
Spamming Could Result in Unanticipated Liabilities, Which Could Adversely
Affect Our Financial Results. We rely on subscriber referrals to add to our
subscriber base. This referral program could motivate subscribers to send
unsolicited bulk e-mails, or spam, in order to encourage other computer users to
subscribe to our online communities. Since it is difficult for us to monitor the
use of e-mail by subscribers soliciting referrals, spamming may result and
damage our reputation or result in violation of legislation restricting
spamming. While we have instituted an anti-spam policy, there can be no
assurances that significant spamming will not occur, or that if it does, that it
may have an adverse effect on our business. ^
5
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We May Need Additional Financing Which May Not be Available, Resulting in
the Necessity of Curtailing or Ceasing Operations. We may not have sufficient
capital resources to develop and implement our business plan. Therefore, our
ultimate success may depend upon our ability to raise additional capital. We
have not investigated the current availability, sources or terms of acquiring
additional capital, and the Board of Directors will not in all likelihood do so
until it has determined a need for such additional capital. If additional
capital is needed, there is no assurance that such capital will be available
from any source or, if available, made or proposed on terms which are acceptable
to us. If such capital is not available, it will be necessary for us to limit
our operations to those that can be financed with existing financial resources.
^
Forward Looking Statements
This prospectus contains forward-looking statements that address, among
other things, our expansion and acquisition strategy, business development, use
of proceeds, projected capital expenditures, liquidity, and our development of
additional revenue sources. The forward-looking statements are based on our
current expectations and are subject to risks, uncertainties and assumptions. We
base these forward-looking statements on information currently available to us,
and we assume no obligation to update them. Our actual results may differ
materially from the results anticipated in these forward-looking statements, due
to various factors.
Use of Proceeds
Because this prospectus is solely for the purpose of permitting the selling
stockholders to offer and sell shares, we will not receive any proceeds from the
sale of the shares being offered. The selling stockholders will receive all the
proceeds. We have, however, previously received proceeds from the original
issuance of the shares covered by this prospectus.
Determination of Offering Price
This offering is solely for the purpose of allowing selling stockholders to
sell shares. The selling stockholders may elect to sell some or all of their
shares when they choose, in the near future or at a later date, at the price at
which they choose to sell. As the market develops, the selling stockholders will
determine the price for their shares.
Dividends
To date, we have paid no dividends on any shares of common stock and our
Board of Directors has no present intention of paying any dividends on the
common stock in the foreseeable future. The payment by us of dividends on the
common stock in the future, if any, rests solely within the discretion of the
6
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Board of Directors and will depend upon, among other things, our earnings,
capital requirements and financial condition, as well as other factors deemed
relevant by our Board of Directors. Although dividends are not limited currently
by any agreements, it is anticipated that future agreements, if any, with
institutional lenders or others may also limit our ability to pay dividends on
the common stock.
Market for Securities
The high and low bid price and offered quotations for the common stock, as
reported by brokerage firms listed on the specified dates by the OTC Bulletin
Board as making markets in our securities are listed in the following chart.
These quotations are between dealers, do not include retail mark-ups, markdowns
or other fees and commissions, and may not represent actual transactions. As of
^ November 1, 2000, we had approximately 380 holders of record of our common
stock.^
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Date Low Bid Price High Bid Price
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1st Quarter - 1998 * *
2nd Quarter - 1998 * *
3rd Quarter - 1998 * *
4th Quarter - 1998 * *
1st Quarter - 1999 ^ $25.00 $68.75
------ ------
2nd Quarter - 1999 ^ $7.80 $145.00
----- -------
3rd Quarter - 1999 ^ $25.00 $121.88
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4th Quarter - 1999 ^ $53.90 $125.00
------ -------
1st Quarter - 2000 $0.25 ^ $62.50
------
2nd Quarter - 2000 $1.00 $25.00
3rd Quarter - 2000^ $3.50 $25.00
4th Quarter - 2000 $1.125 $5.00
--- -------- ---- ------ -----
(through November 1)
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* No bids or trades reported
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
We are an Internet company that creates company-owned direct response and
content delivery web sites. There are two web sites currently in operation:
dollars4mail.com and myquickinfo.com.
Dollars4mail.com provides subscribers with an opportunity to earn money
while using their free web-based email account, while shopping on any one of the
400 affiliated shopping sites, and while playing casino and action games.
Subscribers can also earn money by signing up for other online programs or for
online sweepstakes that are affiliated with the site.
7
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Dollars4mail.com generates revenues by providing Internet advertisers with
a targeted audience for opt-in emails and banner ads and shares revenues with
those subscribers who utilize some or all of the services offered on its web
sites. It also shares a portion of the revenues generated by other subscribers
that they have referred to the site.
Myquickinfo.com, launched on July 31,2000, allows subscribers to create
individualized newsletters from approximately 1,500 headline news links on the
Internet. The web site generates revenues from banner ads placed in the
newsletters and from the sales created through the affiliated shopping sites
that are linked in the newsletters.
During the ^ six months ended June 30, 2000, we also operated the
company-owned web site virtuallyfreeinternet.com, a nationwide Internet service
provider. Revenues from virtuallyfreeinternet.com were $66,093 for the quarter
ended June 30, 2000, and $126,378 for the six months then ended. On June 28,
2000, the Company signed an agreement to sell the subscriber base to Galaxy
Internet. The sale was consummated on July 10, 2000 in exchange for 342,253
shares of Galaxy common stock. 85,563 shares of the common stock were
unrestricted and those shares were immediately sold. The remaining 256,690
shares are restricted for 24 months.
The total number of subscribers to our web sites increased from
approximately 30,000 subscribers at March 31, 2000 to approximately ^ 407,000 as
of ^ October 2000.
We are the surviving entity of a merger that occurred on May 19, 2000,
pursuant to which eNexi Inc. merged with and into Silver King Resources, Inc.
Pursuant to the terms of the merger agreement, we acquired 100% of the
outstanding capital stock of eNexi Inc. for a purchase price consisting of
6,000,000 newly-issued shares of our series A convertible preferred stock, which
converted into 6,000,000 shares of our common stock, or approximately 61% of the
outstanding shares of common stock. In addition, as part of the merger, we
agreed to assume the existing eNexi warrants which, permit the issuance of
1,000,000 shares of common stock at an exercise price of $2.50 per warrant. In
conjunction with the merger closing, a private placement offering was completed
for 2,009,864 newly issued shares of series B convertible preferred stock, and
the shares converted into an aggregate 2,009,864 shares of common stock. The
series B shares were sold at a price of $2.50 per share to accredited investors
and raised gross proceeds of $5,024,660. The proceeds of the offering will be
used to fund our operations.
Results of Operations
From May 14, 1999 (Inception) to December 31, 1999
Net revenues; losses. We derived revenues from monthly access fees charged
to members of VirtuallyFreeInternet.com. We earned $27,192 in revenues from
VirtuallyFreeInternet.com following its launch in September 1999 and incurred
operating losses of $1,495,543 from May to December of 1999.
Cost of revenues. The cost of revenues consist of the cost of connecting
members to the Internet, providing email services, points of presence or POP's
(dial-up telephone access), commissions earned by our members, and credit card
processing fees. We incurred $179,073 in dial-up service expenses in the period.
Sales and marketing. Sales and marketing costs consist of the cost of
Internet advertisements purchased to attract new members to our web sites, new
market penetration costs, and public relations costs. Advertising costs were
$310,480 in the period.
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Administrative costs. During the period ended December 31, 1999,
administrative costs consisted mainly of legal fees, labor and consultant costs
required to develop our proprietary software. Labor and consultant costs
incurred in the period ended December 31, 1999 were $561,480 collectively.
Interest expense. Interest expense incurred for the period ended December
31, 1999 amounted to $9,141 and were derived from the notes due to related
parties.
For the Three ^ and Six Month Periods Ended June 30, 2000
Revenues; Losses. During the period, our revenues were derived from two
company-owned web sites: dollars4mail.com and virtuallyfreeinternet.com. Gross
revenues from dollars4mail.com for the three and six month periods were $206,812
and $242,899, representing 75.8% and 65.8% of the total. ^ Gross revenues from
virtuallyfreeinternt.com for the three and six month periods were $66,093 and
$126,378, representing 24.2% and 34.8% of the total. From April 1, 2000 to June
30, 2000, we incurred a loss of $572,812 and from January 1, 2000 to June 30,
2000, we incurred a loss of $1,260,302.
Cost of Sales. Cost of sales consist of the costs associated with
connecting members to the Internet, providing email services, points of presence
or POP's (dial-up telephone access), commissions earned by subscribers on all
company-owned web sites, and credit card processing fees. We incurred a total of
$100,973 ^ and $149,341in cost of sales of which $22,065 and $71,787 were
associated with virtuallyfreeinternet.com during the three and six month periods
ended June 30, 2000.
Sales and Marketing. Sales and marketing expenses consist of the cost of
Internet advertisements purchased to attract new subscribers to the
company-owned web sites, and new market penetration costs. Total marketing costs
for the ^ three and six months ended June 30, 2000 were $262,787 and $595,700,
of which $56,971 $299,884 was associated with virtuallyfreeinternet.com.
Administrative. During the ^ three and six months ended June 30, 2000,
administrative expenses were $513,509 and $1,214,298. Of the total, labor costs
were ^ $282,477 and $514,899, and consulting costs were ^ $36,829 and $42,885.
Administrative costs directly related to virtuallyfreeinternet.com were $15,729
and $720,082 for the three and six month periods.
We recorded $99,416 of organization costs related to the merger for the six
months ended June 30, 2000.
On July 1, 2000, we signed a new lease and subsequently moved into a larger
location, approximately 7,000 square feet. The lease term is two years with an
option for three additional years.
Interest Expense. Interest expense for the ^ three and six month periods
ended June 20, 2000, was $6,131 and $12,204 and was incurred from notes due to
related parties.
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Liquidity and Capital Resources
eNexi was originally capitalized by selling 10,052 shares of common stock
for a purchase price of $10 per share. In September of 1999, we sold 204,500
shares of common stock for a purchase price of $10 a share. The shares were sold
to accredited investors. In addition to the capital investment, we received
several loans from founding shareholders, Larry A. Mayle and Roger L. Miller as
well as through other related parties. The total borrowings amounted to
$694,884. In December of 1999, $300,000 of the loans was converted to equity.
The balance of the notes payable totaling $394,884 were paid off on July 24,
2000 that included interest at 6%.
We currently have no additional plans to utilize any other external sources
of liquidity and the Company has no material commitments for capital
expenditures.
As of June 30, 2000, we had cash and cash equivalents of $4,502,494 and
receivables of $166,138. The increase in accounts receivable relates to
dollars4mail.com and the additional sales from advertising companies whose terms
range from 30 to 90 days.
On, May 19, 2000, we completed a reverse merger with Silver King Resources,
Inc. In conjunction with the reverse merger, we closed a private placement
selling 2,009,864 shares of series B convertible preferred stock in exchange for
receiving gross proceeds of $5,024,660. We incurred organization costs in
completing this reverse merger of $99,416 that was based on the value of common
stock shares of 1,046,868 at an exercise price of $.10 per share. ^
Business
History
We originally incorporated under the laws of the State of Florida under the
name Arngre, Inc. On June 24, 1999, we 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, we changed our name to Silver King Resources, Inc.
On May 19, 2000, Silver King Acquisitions, Inc., a Delaware corporation and
a wholly owned subsidiary of us, merged with and into eNexi Inc., a Delaware
corporation. eNexi Inc., as the surviving entity after the merger, is a wholly
owned subsidiary of us. On July 17, 2000, we changed our name to eNexi Holdings,
Inc. to reflect the change in our business plan.
Recent Change of Business
Until recently, we were an exploration stage mineral resource holding
company. From inception through 1998, we were inactive, having been formed to
identify private business opportunities that would capitalize on our status as a
public corporation. Commencing in early 1999, we began operations as an
exploration-stage mineral resource holding company operating through its Mexican
subsidiary, International Capri Resources, S.A. de C.V., a joint venture in
which we owned a 60% interest. During 1999, the Mexican subsidiary conducted
initial stage exploration of silver-producing properties in Zacualpan, Mexico.
Because recent geologic results at the Zacualpan project indicated concentration
of potential mineral deposits less than the amounts expected by management, we
elected to temporarily suspend any further exploration activities and explore
other business opportunities. Toward that end, on March 21, 2000, we entered
into an Agreement and Plan of Merger with eNexi Inc., a company that provides
Internet-related services. Pursuant to the terms of the merger Agreement, Silver
King Acquisition, Inc., a newly formed Delaware corporation and wholly owned
subsidiary of us, merged with and into eNexi. As the surviving entity of the
merger, eNexi is a wholly owned subsidiary of us. Since the completion of the
merger on May 19, 2000, we discontinued all mining operations in full and sold
our interest in the Zacualpan project for the cancellation of debt in the
approximate amount of $107,000.
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Pursuant to the terms of the merger agreement, we acquired 100% of the
outstanding capital stock of eNexi for a purchase price consisting of 6,000,000
newly-issued shares of our series A convertible preferred stock, which
subsequently converted into 6,000,000 shares of our common stock, or
approximately 61% of the outstanding shares of common stock. In addition, as
part of the merger, we agreed to assume existing eNexi warrants which permit the
issuance of 1,000,000 shares of common stock at an exercise price of $2.50 per
warrant. Concurrently with the closing of the merger, we completed the private
placement sale of 2,009,864 shares of series B convertible preferred stock which
subsequently converted into an aggregate 2,009,864 shares of common stock. We
received approximately $5,024,660 of gross proceeds from the offering which will
be used to fund our operations.
eNexi
eNexi was incorporated in Delaware in May 1999. We initially developed an
automated sign-up, authentication, and multi-tiered tracking and accounting
system for Internet access accounts and marketing programs. We sold the
subscribers for this internet service provider in July 2000 to Galaxy Online,
Inc. We modified our proprietary infrastructure for use with our current primary
activities found at www.dollars4mail.com and www.MyQuickInfo.com. We acquire
subscribers to these two services in order to disseminate targeted advertising
on an opt-in basis both in the form of banner ads and directed e-mails. The
advertisers pay us based on the number of times the advertisements appear on the
users' screens or the number of times the users click on the advertisements to
view an advertiser's web site. In turn, we share our advertising revenue with
the dollars4mail subscribers, who receive cash compensation for referrals to the
dollars4mail system and for visits they and their referrals make to the websites
of advertisers on the system. dollars4mail.com is supported by our
patent-pending proprietary software that permits fully automated online sign-up,
authentication of subscribers, automated credit card billing and processing of
multi-tiered referral compensation.
In our dollars4mail program, a subscriber obtains a free Web-based e-mail
account. While accessing that account, he or she can earn income by opening an
e-mail sent to the subscriber's free e-mail account, said e-mail containing an
offer to sign up for another program, usually Web based. In addition, if a
subscriber plays action games or casino games, that person earns income based on
time spent on our site in those pages. In essence, we share advertising revenues
with our subscribers. Subscribers can also purchase a multitude of goods through
our shopping site, which now has over 400 participating merchants. Subscribers
obtain cash-back rebates, from which we earn a 20 percent commission. The same
is true for monies earned by subscribers when they are paid to sign up for other
programs off of our site and when they are paid to enter sweepstakes. This
system commenced operations in mid March 2000 and as of ^ October 2000, has over
^ 407,000 subscribers.
Subscribers can create a referral-earnings network if they obtain other
subscribers for us. This constitutes a viral marketing system, thus ensuring a
certain amount of subscriber growth in the absence of any directly paid-for
marketing actions. As our subscriber base grows, the dollars4mail program will
become more valuable to advertisers. When subscribing to the program, a user
must voluntarily complete a detailed information form about interests and
socio-economic status. This information allows our advertisers to target
specific audiences for better response rates. Our patent-pending proprietary
software is compatible with the program, including the multi-tiered compensation
aspect for each dollars4mail.com subscriber.
11
<PAGE>
The dollars4mail.com program is marketed in a variety of way, all on the
Web. In some situations, we pay for banner ads on a cost per thousand impression
basis, and sometimes on a cost per click basis. In other situations we pay a
flat fee for an active subscriber sign-up, but always through Web advertising
only. Under the dollars4mail.com site, the multilevel marketing structure for
the site is a very nominal part of our revenue. The way it works is that if a
member subscriber uses the advertisers/sponsors programs available and in turn
refers other people to the site using their subscriber ID number assigned to
them, they will receive compensation for each direct referral who participates
in the advertisers/sponsors programs available. These referral subscribers who
in turn refer members to the site who participate in the programs available will
enable the original subscriber to subsequently receive an additional
compensation for each level of referral up to a maximum of four additional
levels.
All subscribers to the dollars4mail program are sent a variety of daily and
weekly e-mail newsletters on an opt-in basis, depending on their interests,
which they provided during the sign-up process. These newsletters are from our
MyQuickInfo site, which features headline news links to over 1,500 sources
available on the Web. We earn revenues from banner ads placed in these
newsletters as well as from special advertising devices. Finally, each
newsletter features several shopping specials from the dollars4mail shopping
site, which are accessed through specially created hotlinks. Users of
MyQuickInfo can change the newsletters they receive, recommend the service to
friends, and also easily send specific articles to others. In all such cases,
subscribers obtain additional entries into a drawing for a prize. We will soon
be offering its newsletter service to other Internet communities on a
private-branded basis.
At the present time, substantially all of our revenues are generated by the
dollars4mail site. We believe that as the MyQuickInfo matures, it will begin to
generate more substantial revenues, but there can be no assurance of its
success. Since the downturn in the Internet starting in April 2000, we have
suffered from reduced revenue enhancing possibilities. Consequently, we have
reduced our marketing efforts and expenses until advertising spending on sites
such as ours increases, of which there can be no assurance.
There are many competitors that offer products similar to ours on their
sites. Indeed, there are hundreds of advertising-enabled portals offering Web
surfers the chance to make money on the Web. One of the biggest is
AllAdvantage.com, which offers members payments to view ads in an adbar that is
active while they surf the Web. We do not offer such a product, but the
principle is the same: sharing advertising revenues with users of the system.
Spree.com is a company that offers cash rebates to members. We do the same.
Spedia.com offers, among other things, an adbar similar to what AllAdvantage.com
offers, and in addition pays people for signing up with other programs. We offer
a similar product on our site. There are other sites that offer members payments
to send out jokes, to send out e-mails, etc. We compete with other companies
based upon the specific content of our sites. In particular, we believe that our
dollars4mail site contains a greater variety of content, including games and
shopping, which our competitors do not have. Our MyQuickInfo site allows users
to earn money and win prizes, unlike other information sites. We do note that
many competitors have greater resources that we do and may create methods to
acquire subscribers at a faster rate than we can. More importantly though, the
major competitors for advertising revenues on the Web, such as AOL and Yahoo,
have been able to increase advertising revenues while small portals such as ours
have seen advertising revenues per subscriber fall.
12
<PAGE>
The principle methods of competition to attract advertisers include, but
are not limited to, offering banner ads, button ads, e-mail ads and other
Web-related advertising vehicles at a lower price per impression , per click or
per subscriber: offering a better set of demographics to potential advertisers;
offering a more heavily used Web site or sites; and offering better payment
terms to potential advertisers. In particular, potential advertisers look
maximize the rate of return on their advertising dollars
We are solely responsible for the ^ design and input the content of our
sites. ^ We maintain our servers and related equipment in our Irvine, California
offices.
We have no intellectual property except the domain registrations of
www.dollars4mail.com and www.MyQuickInfo.com , as well as other names which we
are not presently using.
We do not devote any material resources to research and development. All
technical and programming costs are expensed during the period in which they
occur.
We are not subject to any particular governmental regulation other than
regulations affecting most corporations, such as corporate governance and
taxation.
Properties
We currently rent approximately 7,000 square feet of office space for our
corporate headquarters in Irvine, California for $14,757 per month, which lease
runs through May 2002. ^
Employees
As of ^ October 1, 2000, we had ^ 12 full-time employees. None of our
employees are currently covered by collective bargaining agreements. We believe
that relations with our employees are good.
Legal Proceedings
We are not currently involved in any material litigation or legal
proceedings and ^ are not aware of any potentially material litigation or
proceeding threatened against us.
13
<PAGE>
Management
Directors and Executive Officers
Our directors and executive officers are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Larry Mayle 57 Co-Chairman, Chief Executive Officer,
-
Chief Financial Officer and Director
Dr. Roger LeRoy Miller 57 Co-Chairman, President and Director
^
</TABLE>
Set forth below is a brief background of our executive officers and
directors, based on information supplied by them.
Larry Mayle co-founded eNexi and has served as its Co-Chairman and Chief
Executive Officer since its formation in May 1999. During the five years prior
to co-founding eNexi, Mr. Mayle owned and managed Rally Chevrolet and other
General Motors' dealerships in Southern California, where he developed automated
management systems for the operation of his dealerships. Mr. Mayle holds a
Bachelor of Science degree from the University of Southern California.
Dr. Roger LeRoy Miller co-founded eNexi and has served as its Co-Chairman
and President since its formation in May 1999. During the five years prior to
founding eNexi, Dr. Miller owned and managed Unicor, Inc., a Florida corporation
that provides manuscripts and marketing materials for college textbooks in
economics, business law and political science. Through Unicor, Dr. Miller
developed interactive CD-ROM and Web-based educational systems for several
publishers, including HarperCollins, West and McGraw-Hill. Dr. Miller holds a
Ph.D. in economics and business from the University of Chicago and a Bachelor of
Arts degree in economics from the University of California at Berkeley.
^
Messrs. Mayle and Miller were appointed as our Directors on May 19, 2000.
Our Directors hold office until the next annual meeting of our stockholders
and until their successors have been elected and duly qualified. Executive
officers are elected by the Board of Directors annually and serve at the
discretion of the Board.
Compensation of Directors
Directors will receive no salary for their services and no fee for their
participation in meetings, although all Directors are reimbursed for reasonable
travel and other out-of-pocket expenses incurred in attending meetings of the
Board.
<PAGE>
14
Executive Compensation
Larry Mayle and Roger Miller earned, accrued or received no compensation in
the year 1999. No other officer earned, accrued or received compensation in
excess of $100,000 during the most recent two fiscal years.
<TABLE>
<CAPTION>
Long Term
Compensation
Name and Principal Other Annual All Other Awards/Securities
------------------- ------ ------ ---------- -----------------
Position Year Salary ($) Compensation Bonus Compensation Underlying Options(#)
-------- ---- ---------- ------------ ----- ------------ ---------------------
Larry Mayle, Chief
Executive Officer
<S> <C> <C> <C> <C> <C> <C>
1999 - - - - -
---- - - - - -
1998 - - - - -
---- - - - - -
</TABLE>
Employment Arrangements
We entered into one year employment agreements with Messrs. Mayle and
Miller providing annual salaries of $180,000 and $120,000 respectively, and
other customary benefits and provisions.
Employee Stock Option Plan
Our Board of Directors recently adopted the 2000 Employee Stock Option
Plan. Under the 2000 plan, 1,500,000 shares of common stock have been authorized
for issuance as Incentive Stock Options or Non-Incentive Stock Options. The 2000
plan anticipates qualifying under Section 423 of the Internal Revenue Code of
1986, as an "employee stock purchase plan." Under the 2000 plan, options may be
granted to our key employees, officers, directors or consultants.
The purchase price of the common stock subject to each Incentive Stock
Option shall not be less than the fair market value (as determined in the 2000
Plan), or in the case of the grant of an Incentive Stock Option to a principal
stockholder, not less that 110% of fair market value of such common stock at the
time such option is granted. The purchase price of the common stock subject to
each Non-Incentive Stock Option shall be determined at the time such option is
granted, but in no case less than 85% of the fair market value of such shares of
common stock at the time such option is granted.
The 2000 plan shall terminate 10 years from the earlier of the date of its
adoption by the Board of Directors or the date on which the 2000 plan is
approved by the affirmative vote of the holders of a majority of the outstanding
shares of our capital stock entitled to vote thereon, and no option shall be
granted after termination of the 2000 plan. Subject to certain restrictions, the
2000 plan may at any time be terminated and from time to time be modified or
amended by the affirmative vote of the holders of a majority of the outstanding
shares of our capital stock present, or represented, and entitled to vote at a
meeting duly held in accordance with the applicable laws of the State of
Delaware.
15
<PAGE>
Principal Stockholders
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of ^ November 1, 2000, as adjusted to reflect
the conversion of the series A and series B preferred stock, by
<TABLE>
<CAPTION>
<S> <C>
o each person who, to our knowledge, beneficially owns more than 5% of the our common stock;
o each of our directors; and
o all of our executive officers and directors as a group:
</TABLE>
<TABLE>
<CAPTION>
Amount of
Name and Address of Beneficial Percentage of
Beneficial Owner Ownership Beneficial Ownership
<S> <C> <C>
Larry Mayle 2,757,707 25.7%
c/o eNexi Inc.
30 Corporate Park, Suite 455
Irvine, CA 92606
Dr. Roger LeRoy Miller ^ 1,880,571 17.5%
--------- -----
c/o eNexi Inc.
30 Corporate Park, Suite 455
^
Irvine, CA 92606
Haywood Securities, Inc. 1,080,000 10.0%
400 Burrard Street
Vancouver, BC
Canada V6C 3A6
Trinity Pacific Investments, Inc. 546,000 5.1%
(Beneficially owned by United Nations
International Children's Emergency Fund
(UNICEF) and International Committee of the
Red Cross, Geneva, Switzerland)
All Directors and Executive Officers as a ^ 4,638,278 43.2%
--------- -----
Group ^(2 persons)
--
----------------------
o Less than 1%.
</TABLE>
The securities "beneficially owned" by a person are determined in
accordance with the definition of "beneficial ownership" set forth in the rules
and regulations promulgated under the Securities Exchange Act of 1934.
Beneficially owned securities may include securities owned by and for, among
others, the spouse and/or minor children of an individual and any other relative
who has the same home as such individual. Beneficially owned securities may also
include other securities as to which the individual has or shares voting or
investment power or which such person has the right to acquire within 60 days
pursuant to the conversion of convertible equity, exercise of options, or
otherwise. Beneficial ownership may be disclaimed as to certain of the
securities.
16
<PAGE>
The foregoing table is based upon 10,732,864 shares of common stock
outstanding as of ^ November 1, 2000, assuming no other changes in the
beneficial ownership of the our securities, except the issuance of 1,000,000
shares of common stock pursuant to the exercise of outstanding warrants.
The shares attributed to Mr. Mayle includes 24,072 shares owned by Mr.
Mayle's wife. Mr. Mayle disclaims beneficial ownership of such shares. ^
Of the shares attributed to Haywood Securities, Inc., 1,000,000 are
issuable upon exercise of presently exercisable warrants.
Restrictions Upon Resale
In addition to any prohibition on transfers or sales under applicable
federal or state securities laws, Larry Mayle and Roger Miller have agreed not
to sell, transfer, encumber or otherwise dispose of (i) 3,000,000 shares of
series A preferred stock; or (ii) the shares of common stock issuable upon the
conversion of such shares, during the period commencing on May 19, 2000, and
ending on the earlier to occur of (x) the date on which we have at least 500,000
subscribers in our online communities or (y) August 2002.
Voting Arrangements
In the event that we do not have 500,000 subscribers to our online
communities by August 2002, then Messrs. Mayle and Miller shall give a voting
proxy with respect to 3,000,000 shares of common stock to Haywood Securities
until the earlier to occur of (x) 90 days thereafter; or (y) the date on which
we attain 500,000 subscribers to our online communities.
Certain Transactions
On August 31, 1999, the demand loans set forth in the following table were
made to eNexi. Such loan were repaid, with 6% interest, on July 24, 2000:
<TABLE>
<CAPTION>
Lender Loan Amount Amount Repaid
---------------------------------------------------------------- -------------------- ------------------
<S> <C> <C>
Rally Automotive Group, of which Larry A Mayle is President $220,431 $232,612
Unicor, Inc., of which Dr. Roger L. Miller is President
$128,000 $135,073
Larry A. Mayle
$18,839 $ 19,880
Dr. Roger L. Miller
$27,614 $ 29,139
---------------------------------------------------------------- -------------------- ------------------
</TABLE>
17
<PAGE>
In March 2000, Howard Appel, a stockholder, loaned us an aggregate of
$107,000 for working capital on an unsecured basis, with interest payable at 8%
per year.
Description of Securities
Our authorized capital consists of 50,000,000 shares of common stock, par
value $0.001 per share, 15,000,000 shares of preferred stock, par value $0.001
per share, which may be issued in one or more series at the discretion of the
Board of Directors. As of ^ November 1, 2000, 9,732,864 shares of common stock
were issued and outstanding.
Common Stock
Holders of shares of common stock are entitled to one vote per share on
each matter submitted to vote at any meeting of stockholders. Shares of common
stock do not carry cumulative voting rights and, therefore, holders of a
majority of the outstanding shares of shares of common stock will be able to
elect the entire Board of Directors, and, if they do so, minority stockholders
would not be able to elect any members to the Board of Directors. Our Board of
Directors has authority, without the action by the our shareholders, to issue
all or any portion of the authorized but unissued shares of common stock, which
would reduce the percentage ownership of our present stockholders and which may
dilute the book value of the shares of common stock.
Our stockholders have no pre-emptive rights to acquire additional shares of
common stock. The shares are not subject to redemption and carry no subscription
or conversion rights. In the event of liquidation, the shares of common stock
are entitled to share equally in corporate assets after satisfaction of all
liabilities. All of the shares of common stock currently issued and outstanding
are fully paid and non-assessable.
Holders of shares 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. We have not paid dividends on our shares
of common stock and there can be no assurance that it will pay dividends in the
foreseeable future.
Preferred Stock
In connection with our purchase and merger with eNexi, Inc., we issued to
the principal stockholders of eNexi, Inc. 6,000,000 shares of our series A
convertible preferred stock. Concurrently therewith, we completed a private
placement of 2,009,864 shares of series B convertible preferred stock in
exchange for approximately $5,200,000 in gross proceeds. Upon effectiveness of
our 1-for-25 stock split, all shares of series A and series B convertible
preferred stock were converted into shares of our common stock. There are
currently no shares of preferred stock issued or outstanding.
Shares of preferred stock may be issued from time to time in one or more
series as may from time to time be determined by our Board of Directors. Our
Board of Directors has authority, without action by the stockholders, to
determine the voting rights, preferences as to dividends and liquidation,
conversion rights and any other rights of such series.
18
<PAGE>
Certain Anti-takeover Devices
We are subject to Section 203 of the Delaware General Corporation Law,
which restricts certain transactions and business combinations between a
corporation and an Interested Stockholder owning 15% or more of the
corporation's outstanding voting stock for a period of three years from the date
the stockholder becomes an interested stockholder. Subject to certain
exceptions, unless the transaction is approved by the Board of Directors and the
holders of at least 66-2/3% of the outstanding voting stock of the corporation,
excluding shares held by the interested stockholder, Section 203 prohibits
significant business transactions such as a merger with, disposition of assets
to, or receipt of disproportionate financial benefits by the interested
stockholder, or any other transaction that would increase the interested
stockholder's proportionate ownership of any class or series of the
corporation's stock. The statutory ban does not apply if, upon consummation of
the transaction in which any person becomes an interested stockholder, the
interested stockholder owns at least 85% of the outstanding voting stock of the
corporation, excluding shares held by persons who are both directors and
officers or by certain stock plans.
Transfer Agent and Registrar
Interwest Transfer Company has been appointed as the transfer agent and
registrar for our common stock. Its telephone number is (801) 272-9294.
Shares Eligible for Future Sale
As of ^ November 1, 2000, we had 9,732,864 shares of common stock
outstanding. All of the ^ 4,628,449 shares of common stock sold in this offering
will be freely transferable by persons other than our "affiliates", as that term
is defined under the Securities Act of 1933.
Less than 10% of the outstanding shares of common stock are "restricted
securities" within the meaning of Rule 144 under the Securities Act of 1933 and
may not be sold in the absence of a registration under the Securities Act of
1933 unless an exemption from registration is available, including the exemption
contained in Rule 144. In general, under Rule 144 as currently in effect, a
person who has beneficially owned restricted securities for a period of at least
one year, including an "affiliate" as that term is defined in Rule 144, is
entitled to sell, within any three-month period a number of "restricted" shares
that does not exceed the greater of 1% of the then outstanding shares of common
stock or the average weekly trading volume during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain manner of
sale limitations, notice requirements and the availability of current public
information about us. Rule 144(k) provides that a person who is not deemed an
"affiliate" and who has beneficially owned shares for at least two years is
entitled to sell such shares at any time under Rule 144 without regard to the
limitation described above.
19
<PAGE>
Selling Stockholders
The following table gives information on the selling stockholders based on
the number of outstanding shares of common stock as of ^ November 1, 2000. The
number of shares to be beneficially owned following completion of the offering
is based on the assumption that the stockholder will sell all of the shares that
may be offered for the stockholder's account in this offering, and that the
stockholder will not purchase or sell any other shares. Stockholders are not
required to sell the shares that may be offered in this offering. Under
Securities and Exchange Commission rules, beneficial ownership includes all
shares of common stock issuable within 60 days after the date of this prospectus
upon exercise of outstanding options, warrants, convertible securities or other
rights.
<TABLE>
<CAPTION>
Percent of No. of
No. of Outstanding Shares
Shares Shares No. of Owned After
Beneficial Beneficially Represented by Shares Sale
Name Owner Owned Total Offered
<S> <C> <C> <C> <C> <C>
Seawolf LTD Benjamin Hsu 114,627 1.2% 114,627 0
Clyde Perlee 57,313 * 57,313 0
Woodside Financial ^ Roger Kirwan 114,627 1.2% 114,627 0
------------
Services
John S. Morton 28,656 * 28,656 0
Larry Sisson 57,313 * 57,313 0
Stephen Clarke 28,656 * 28,656 0
David Lyall 57,313 * 57,313 0
JIBE Holdings, Inc. Bernard Leroux 28,656 * 28,656 0
ScouterHoldings,1nc. Eric Savics 57,313 * 75,313 0
Clarion Finanz AG Carlo Civelli 57,313 * 57,313 0
John Tognetti 57,313 * 57,313 0
FEI-Brent Investments LTD Fei Disbrow and 28,656 * 28,656 0
Brent Disbrow
Peripatetic Investments Kim Kawaguchi 57,313 * 57,313 0
LTD
William Hunter 14,328 * 14,328 0
Steven Clayton 28,656 * 28,656 0
James Hattori 14,328 * 14,328 0
Don Simpson 28,656 * 28,656 0
Glen Pountney 28,656 * 28,656 0
John Meisenbach 28,656 * 28,656 0
Richard Grafton 28,656 * 28,656 0
Greg Boland 57,313 * 57,313 0
Jeff Brotman 28,656 * 28,656 0
Laiy Limited Douglas Anfossi 28,656 * 28,656 0
Michael Goldfarb 14,328 * 14,328 0
Mark Johnson 114,627 1.2% 114,627 0
20
<PAGE>
Gary Corbett 26,732 * 26,732 0
Deans Knight Capital 200,000 2.0% 200,000 0
Management
Greg Boland 40,000 * 40,000 0
Kaimar Investment Corp. Peter Kains 40,000 * 40,000 0
Ken Downie 40,000 * 40,000 0
Deano 2000 Holdings, Inc. Wayne Deans 40,000 * 40,000 0
Glenarriff Investment George Galbraith 36,000 * 36,000 0
Val De Sol Inc. Trevor Wilson 40,000 * 40,000 0
Bodejo Investments Ltd. Lawrence Bloomberg 42,000 * 42,000 0
^ ^ ^ ^ ^ ^
Grafton Family Trust Rick Grafton 80,000 * 80,000 0
C. Channing Buckland 40,000 * 40,000 0
Fei Brent Investments Ltd. Fei Disbrow and Brent 27,200 * 27,200 0
Disbrow
Robert Disbrow 40,000 * 40,000 0
Marna Disbrow 27,200 * 27,200 0
Patricia Poutney 60,000 * 60,000 0
Largo Flight Limited Brian and Scott Lines 60,000 * 60,000 0
California Bank & Trust Jonathan Andron Roth 100,000 1.0% 100,000 0
Agent FBO Johnathon IRA
Andron Roth IRA John Adron
Jibe Holdings Ltd. Bernard Leroux 44,000 * 44,000 0
Trinity Pacific United Nations 546,000 5.6% 546,000 0
Investments International
Children's Emergency
Fund (UNICEF) and
International Committee
of the Red Cross,
Geneva, Switzerland
Can-oro Consulting Carolyn Cross 40,000 * 40,000 0
Winton Capital Holdings Marc Belzberg 100,000 1.0% 100,000 0
Ltd.
Adolf H. Lundin 40,000 * 40,000 0
Holnik Capital Inc. Dawn Peck 26,732 * 26,732 0
^ Edelman Value 90,000 * 90,000 0
Partners, L.P.
The Wimbledon Edelman 20,000 * 20,000 0
21
<PAGE>
Select Opportunities
Hedged Fund Ltd.
Edelman Value Partners, 90,000 * 90,000 0
L.P.
Haywood Securities, Inc. 1,080,000 10.0% ^ 980,000 100,000
------- -------
KAB Investments, Inc. Kathy Bartlett 60,000 * 60,000 0
Milworth Investments, ^ Vicki Walters, 414,000 4.3% 414,000 0
---------------
Inc. Trustee
-------
SPH Investments, Inc. Stephen P. Harrington 60,000 * 60,000 0
* Less than 1%. ^
</TABLE>
Plan of Distribution
We are registering this offering of shares on behalf of the selling
stockholders. We will pay all costs, expenses and fees related to the
registration, including all registration and filing fees, printing expenses,
fees and disbursements of its counsel, blue sky fees and expenses. The selling
stockholders will pay any underwriting discounts and selling commissions in
connection with the sale of the shares.
The selling stockholders may sell the shares covered by this prospectus
from time to time in one or more transactions through the OTC Bulletin Board or
an interdealer quotation system, on one or more securities exchanges, in
alternative trading markets or otherwise, at prices and at terms then prevailing
or at prices related to the then current market price, or in negotiated
transactions. The selling stockholders will determine the prices at which they
sell their shares in these transactions. The selling stockholders may effect the
transactions by selling the shares to or through broker-dealers. In effecting
sales, broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate in the resales. The shares may be sold by one or
more, or a combination, of the following:
<TABLE>
<CAPTION>
<S> <C>
- a block trade in which the broker-dealer attempts to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction,
- purchases by a broker-dealer as principal and resale by the broker-dealer for its account,
- ordinary brokerage transactions and transactions in which the broker solicits purchasers, and
- privately negotiated transactions.
</TABLE>
The selling stockholders may enter into hedging transactions with
broker-dealers. In these transactions, broker-dealers may engage in short sales
of the common stock in the course of hedging the positions they assume with the
selling stockholders. The selling stockholders also may sell the common stock
short pursuant to this prospectus and redeliver the shares to close out these
short positions. The selling stockholders may enter into option or other
transactions with broker-dealers that require the delivery to the broker-dealer
of the shares covered by this prospectus. The broker-dealer may then resell or
otherwise transfer the shares pursuant to this prospectus. The selling
stockholders also may loan or pledge the shares to a broker-dealer. The
broker-dealer may then sell the loaned shares or, upon a default by the selling
stockholder, the broker-dealer may sell the pledged shares pursuant to this
prospectus.
22
<PAGE>
The selling stockholders may engage in other financing transactions that
may include forward contract transactions or borrowings from financial
institutions in which the shares are pledged as security. In connection with any
of these forward contract transactions, the selling stockholders would pledge
shares to secure their obligations and the counterparty to these transactions
would sell the common stock short to hedge its transaction with the selling
stockholder. Upon a default by the selling stockholder under any of these
financings, including a forward contract transaction, the pledgee or its
transferee may sell the pledged shares pursuant to this prospectus. Any such
pledgee or its transferee will be identified in this prospectus by
post-effective amendment to the registration statement of which it is a part.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling stockholder.
Broker-dealers or agents may also receive compensation from the purchasers of
the shares for whom they act as agents or to whom they sell as principals, or
both. Compensation to a particular broker-dealer may be in excess of customary
commissions and will be in amounts to be negotiated with a selling stockholder
in connection with the sale. Broker-dealers or agents, any other participating
broker-dealers and the selling stockholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act of 1933 in connection
with sales of the shares. Accordingly, any commission, discount or concession
received by them and any profit on the resale of the shares purchased by them
may be deemed to be underwriting discounts or commissions under the Securities
Act of 1933. Because the selling stockholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act of 1933, the selling
stockholders will be subject to the prospectus delivery requirements of the
Securities Act of 1933. Each selling stockholder has advised us that the
stockholder has not yet entered into any agreements, understandings or
arrangements with any underwriters or broker-dealers regarding the sale of the
shares.
The selling stockholders have agreed to sell the shares only through
registered or licensed brokers or dealers if required under applicable state
securities laws. In addition, in certain states the shares may not be sold
unless they have been registered or qualified for sale in the applicable state
or an exemption from registration or qualification is available and is complied
with.
The selling stockholders will be subject to applicable provisions of the
Securities Exchange Act of 1934 and the associated rules and regulations,
including Regulation M. These provisions may limit the timing of purchases and
sales of shares of the common stock of Silver King by the selling stockholders.
Silver King will make copies of this prospectus available to the selling
stockholders and has informed them of the need for delivery of copies of this
prospectus to purchasers at or before the time of any sale of the shares.
Legal Matters
Certain legal matters in connection with this offering will be passed upon
for us by Sichenzia, Ross & Friedman LLP, New York, New York.
Experts
Our financial statements as of December 31, 1999, and for the year then
ended and our balance sheet as of December 31, 1999 have been included herein
and in the registration statement in reliance upon the reports of Mendoza,
Berger & Company, independent certified public accountants, appearing elsewhere
herein, and upon the authority of such firm as experts in accounting and
auditing.
23
<PAGE>
Additional Information
We are subject to the informational requirements of the Securities Exchange
Act of 1934, and in accordance therewith file reports, proxy or information
statements and other information with the Securities and Exchange Commission.
Such reports, proxy statements and other information can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the
following regional offices: Seven World Trade Center, New York, New York 10048,
and Citicorp Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.20549, at
prescribed rates. In addition, the Commission maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
Commission's web site is http://www.sec.gov.
We have filed with the Commission, a registration statement on Form SB-2
under the Securities Act of 1933 with respect to the common stock being offered
hereby. As permitted by the rules and regulations of the Commission, this
prospectus does not contain all the information set forth in the registration
statement and the exhibits and schedules thereto. For further information with
respect to the Company and the common stock offered hereby, reference is made to
the registration statement, and such exhibits and schedules. A copy of the
registration statement, and the exhibits and schedules thereto, may be inspected
without charge at the public reference facilities maintained by the Commission
at the addresses set forth above, and copies of all or any part of the
registration statement may be obtained from such offices upon payment of the
fees prescribed by the Commission. In addition, the registration statement may
be accessed at the Commission's web site. Statements contained in this
prospectus as to the contents of any contract or other document are not
necessarily complete and, in each instance, reference is made to the copy of
such contract or document filed as an exhibit to the registration statement,
each such statement being qualified in all respects by such reference.
24
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Independent Auditors' Report..................................................................................F - 1
Balance Sheet.................................................................................................F - 2
Statement of Income and Expense...............................................................................F - 4
Statement of Stockholders' Equity.............................................................................F - 5
Statement of Cash Flows.......................................................................................F - 7
Notes to the Financial Statements.............................................................................F - 9
</TABLE>
<PAGE>
Independent Auditors' Report
To the Board of Directors and Stockholders
of eNexi Holdings, Inc.
We have audited the accompanying balance sheet of eNexi Holdings, Inc.
(formerly known as Silver King Resources, Inc. and eNexi, Inc.) (a Delaware
corporation) as of December 31, 1999, and the related statements of income and
expense, stockholders' equity, and cash flows from inception (May 14, 1999)
through December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we 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 statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of eNexi Holdings, Inc. as of
December 31, 1999, and the results of its operations and its cash flows for the
period from inception through December 31, 1999 in conformity with generally
accepted accounting principles.
Mendoza Berger & Company, LLP
Laguna Hills, California
March 16, 2000, except for Notes 1, 6, 9, 10 and 11, as to which the date is
August 18, 2000
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as eNexi Holdings, Inc.)
BALANCE SHEET
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
ASSETS
June 30, 2000
December 31, 1999 consolidated
(unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 1,196,675 $ 4,502,494
Accounts receivable 1,336 166,138
Other current assets 10,267 44,107
--------------------- ------------------------
Total current assets 1,208,278 4,712,739
--------------------- ------------------------
Property and equipment - net (Notes 2 and 3) 181,029 318,494
--------------------- ------------------------
Other assets
Deposits 52,527 78,410
--------------------- ------------------------
Total assets $ 1,441,834 $ 5,109,643
===================== ========================
</TABLE>
F - 2
The accompanying notes are an integral part of these financial statements
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
BALANCE SHEET
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, 2000
consolidated
December 31, 1999 (unaudited)
--------------------- ------------------------
Current liabilities:
<S> <C> <C>
Accounts payable $ 88,994 $ 218,181
Accrued liabilities 7,979 -
Notes payable (Note 4) 394,884 522,069
Other current liabilities - 36,878
--------------------- ------------------------
Total current liabilities 491,857 777,128
--------------------- ------------------------
Commitments and contingency (Note 6) - -
Stockholders' equity: (Notes 5 and 11)
Preferred Stock
Convertible Series A: $0.0001 par value,
6,000,000 shares authorized, 0 shares
issued and outstanding at June 30, 2000 - -
Convertible Series B: $0.0001 par value,
3,000,000 shares authorized, 0 shares
issued and outstanding at June 30, 2000 - -
Common stock
$.01 par value, 1,200,000 shares authorized,
1,048,868 shares issued and outstanding at
December 31, 1999,
$0.0001 par value, 50,000,000 shares
authorized, 9,732,864 shares issued and
outstanding at June 30, 2000, respectively 10,489 974
Additional paid-in capital 2,435,031 7,073,386
Warrants outstanding - 14,000
Accumulated deficit (1,495,543) (2,755,845)
--------------------- ------------------------
Total stockholders' equity 949,977 4,332,515
--------------------- ------------------------
Total liabilities and stockholders' equity $ 1,441,834 $ 5,109,643
===================== ========================
</TABLE>
F - 3
The accompanying notes are an integral part of these financial statements
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
STATEMENT OF INCOME AND EXPENSE
FROM INCEPTION (MAY 14, 1999) THROUGH DECEMBER 31, 1999 AND FOR THE
SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Six months ended
From inception June 30, 2000
through consolidated
December 31, 1999 (unaudited)
--------------------- ------------------------
<S> <C> <C>
Net revenues $ 27,192 $ 369,277
--------------------- ------------------------
Operating costs and expense:
Cost of recurring revenues 98,626 149,341
Sales and marketing 310,480 505,701
General and administrative 1,098,927 887,708
Depreciation 22,846 24,196
Organization costs (Note 11) - 99,416
---------------------------- - ------
--------------------- ------------------------
Total operating costs and expenses 1,530,879 ^ 1,666,362
--------------------- ------------------------
Loss from operations (1,503,687) ^
^ (1,297,085)
-----------
Other income (expense)
^
Interest expense (9,141) (12,204)
Interest income 17,285 48,987
--------------------- ------------------------
Loss before provision for income taxes (1,495,543) (1,260,302)
--------------------- ------------------------
Provision for income taxes (Note 7) - -
--------------------- ------------------------
Net loss $ (1,495,543) $ (1,260,302)
====================== =========================
Net loss per share $ ^(2.07) $ ^(1.00)
------ ------
====================== =========================
Weighted average shares outstanding ^ ^
722,905 1,264,818
------- ---------
====================== =========================
</TABLE>
F - 4
The accompanying notes are an integral part of these financial statements
<PAGE>
eNexi
HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
STATEMENT OF STOCKHOLDERS' EQUITY
FROM INCEPTION (MAY 14, 1999) THROUGH DECEMBER 31, 1999 AND FOR THE
SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Series A Convertible Series B Convertible Common Stock
Preferred Stock Preferred Stock
Additional Retained
Number of Par Value Number of Par Value Number Par Value Paid-in Warrants Earnings
Shares Shares of Shares Capital Outstanding (Deficit)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, May 14, 1999 - $ - - $ - - $ - $ - $ - $ -
Issuance of stock for cash - - - - 10,052 101 100,419 - -
Stock dividend (Note 5) - - - - 834,316 8,343 (8,343) - -
Conversion of debt - - - - - - 300,000 - -
to equity (Note 5)
- - - - 204,500 2,045 2,042,955 - -
Issuance of stock for cash
Net loss - - - - - - - - (1,495,543)
Balance, December 31, 1999 - - - - 1,048,868 10,489 2,435,031 - (1,495,543)
Purchase of stock - - - - (2,000) (20) (19,980) - -
for cash (Note 5)
Shares issued for
common stock 6,000,000 600 - - 43,075,000 4,308 813,843 14,000 (873,762)
(Note 11)
Adjusting entries to
reflect reverse
acquisition (Note 11) - - - - (1,046,868) (10,469) (863,893) - 873,762
Issuance of Series B
Preferred Stock for
cash (Note 11) - - 2,009,864 201 - - 4,704,250 - -
1 for 25 reverse
stock split (Note 5) - - - - (41,352,000) (4,135) 4,135 - -
Issuance of common
stock for conversion
of Series A and Series B
Preferred Stock (Note 11) (6,000,000) (600) (2,009,864) (201) 8,009,864 801 - - -
Net loss - - - - - - - - (1,260,302)
------------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2000 -
consolidated (unaudited) - $ - - $ - 9,732,864 $ 974 $7,073,386 $ 14,000 $(2,755,845)
=========== ====== ========== ===== ============ ======== ========== ========== ===========
</TABLE>
<PAGE>
eNexi
HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
STATEMENT OF STOCKHOLDERS' EQUITY
FROM INCEPTION (MAY 14, 1999) THROUGH DECEMBER 31, 1999 AND FOR THE
SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Total
Stockholders'
Equity
<S> <C>
Balance, May 14, 1999 $ -
Issuance of stock for cash 100,520
Stock dividend (Note 5) -
Conversion of debt 300,000
to equity (Note 5)
2,045,000
Issuance of stock for cash
Net loss (1,495,543)
Balance, December 31, 1999 949,977
Purchase of stock (20,000)
for cash (Note 5)
Shares issued for
common stock (41,011)
(Note 11)
Adjusting entries to
reflect reverse
acquisition (Note 11) (600)
Issuance of Series B
Preferred Stock for
cash (Note 11) 4,704,451
1 for 25 reverse
stock split (Note 5) -
Issuance of common
stock for conversion
of Series A and Series B
Preferred Stock (Note 11) -
Net loss (1,260,302)
-----------
Balance, June 30, 2000 -
consolidated (unaudited) $ 4,332,515
============
</TABLE>
F-5
The accompanying notes are an integral part of these financial statements
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
STATEMENT OF CASH FLOWS
FROM INCEPTION (MAY 14, 1999) THROUGH DECEMBER 31, 1999 AND FOR THE SIX MONTHS
ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------ ---------------------- ---- ---------------------
Six months ended
From inception June 30, 2000
through consolidated
December 31, 1999 (unaudited)
--------------------- ------------------------
Cash flows provided by operating activities:
<S> <C> <C>
Net loss $ (1,495,543) $ (1,260,302)
----------------------- ------------------------
Adjustment to reconcile net loss to net cash used by operations:
Depreciation 22,846 24,196
Organization costs - 99,416
Changes in assets and liabilities:
Accounts receivable (1,336) (164,803)
Other current assets (10,267) (28,569)
Deposits (52,527) (25,881)
Accounts payable 88,994 89,888
Accrued liabilities 7,979 (7,979)
Other current liabilities - 36,879
----------------------- ------------------------
Total adjustments 55,689 23,147
----------------------- ------------------------
Net cash used by operations (1,439,854) (1,237,155)
----------------------- ------------------------
Cash flows used by investing activities:
Purchase of property and equipment (203,875) (161,660)
----------------------- ------------------------
Net cash used by investing activities (203,875) (161,660)
----------------------- ------------------------
Cash flows provided by financing activities:
Proceeds from notes payable 394,884 20,183
Purchase of treasury stock - (20,000)
Issuance of common stock 2,445,520 -
Issuance of preferred stock - 4,704,451
----------------------- ------------------------
Net cash provided by financing
Activities 2,840,404 4,704,634
----------------------- ------------------------
Net increase in cash and cash
Equivalents 1,196,675 3,305,819
----------------------- ------------------------
Cash and cash equivalents, beginning of period - 1,196,675
----------------------- ------------------------
Cash and cash equivalents, end of period $ 1,196,675 $ 4,502,494
======================= =========================
</TABLE>
F - 6
The accompanying notes are an integral part of these financial statements
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
STATEMENT OF CASH FLOWS
FROM INCEPTION (MAY 14, 1999) THROUGH DECEMBER 31, 1999 AND FOR THE SIX MONTHS
ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Six months ended
From inception June 30, 2000
through consolidated
December 31, 1999 (unaudited)
--------------------- ------------------------
Supplemental disclosures of cash flow information
<S> <C> <C>
Cash paid during the period for:
Interest expense $ - $ 12,204
====================== =========================
Supplemental schedule of non cash operating,
investing, and financing activities:
Stock dividend $ 8,343 $ -
====================== =========================
Conversion of long-term debt to common stock $ 300,000 $ -
====================== =========================
Issuance of stock for net assets acquired $ - $ 104,687
====================== =========================
</TABLE>
F - 7
The accompanying notes are an integral part of these financial statements
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
1. NATURE OF BUSINESS AND ORGANIZATION
eNexi Holdings, Inc. (formerly known as Silver King Resources, Inc. and
eNexi, Inc.) (the "Company") was incorporated in Delaware in May 1999.
It is an Internet company that creates company-owned direct response
and content delivery web sites with dollars4mail.com and
myquiickinfo.com as its current web sites. Prior to the sale of its
virtuallyfreeinternet.com site in July 2000, it had also provided free
e-mail accounts through its Web-based e-mail system. Advertisers pay
the Company, which in turn, shares its advertising revenue with its
dollars4mail subscribers, who receive cash compensation for referrals
to the dollars4mail system and for visits they and their referrals make
to the websites of advertisers on the system.
As disclosed in Note 11, the Company consummated a merger on May 19,
2000, which was accounted for as a reverse acquisition, and a
recapitalization of the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Revenues with its virtuallyfreeinternet.com site consisted of monthly
fees charged to members for Internet access and were recognized as
services provided. The Company offered a 30 day free trial period to
use its Internet services and recognized the monthly revenues once the
30-day period has expired. Its current revenues with dollars4mail.com
are generated from disseminating targeted advertising on an opt-in
basis both in the form of banner ads and directed e-mails. It recently
began a new website, myquickinfo.com which allows users to earn money
and win prizes with the Company to generate revenue from advertisers
for space purchased on the Company's website as services are provided.
Cash Equivalents
Cash equivalents consist of short-term, highly liquid investments which
are readily convertible into cash within ninety (90) days of purchase.
F - 8
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
------------------------------------------
Property and Equipment
Property and equipment are stated at cost and depreciated using the
straight-line method over the estimated useful life of the assets,
which is generally five years. The Company has no equipment under
capital leases.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash deposits in
excess of $100,000. The Company places its cash deposits with
high-credit quality financial institutions. At times, balances in the
Company's cash accounts may exceed the Federal Deposit Insurance
Corporation's (FDIC) limit of $100,000. The Company's cash investment
policies limit investments to short-term, investment grade investments.
The Company is dependent upon other third parties for credit card
processing, dial-up connectivity, and for the hosting of its system
infrastructure and database servers. If the services of any of these
third parties is interrupted, it could have a material adverse impact
on the Company's operations.
Advertising
The cost of advertising is expensed as incurred. The Company incurred
advertising expense of $277,000 and $391,022 (unaudited) for the
periods ended December 31, 1999 and June 30, 2000, respectively.
Income Taxes
The Company recognizes deferred tax assets and liabilities based on
differences between the financial reporting and tax bases of assets and
liabilities using the enacted tax rates and laws that are expected to
be in effect when the differences are expected to be recovered. A
valuation allowance has been provided for deferred tax assets when it
is more likely than not that all or some portion of the deferred tax
asset will not be realized. The Company has established a full
valuation allowance on the aforementioned deferred tax assets due to
the uncertainty of realization.
F-9
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
------------------------------------------
Interim Financial Information and Basis of Presentation
The unaudited consolidated financial information furnished herein
reflects all adjustments, consisting only of normal recurring
adjustments, which in the opinion of management, are necessary to
fairly state the Company's financial position, the results of their
operations and cash flows for the periods presented. The unaudited
results of operations for the six months ended June 30, 2000, are not
necessarily indicative of results for the entire fiscal year ending
December 31, 2000.
The unaudited interim financial statements include the accounts of the
Company and its Subsidiary. All material intercompany transactions
have been eliminated.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts of assets and
liabilities and the disclosures of contingent assets and liabilities at
the date of the financial statements as well as the reported amounts of
revenues and expenses during the reporting period. Accordingly, actual
results could differ from those estimates.
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance
with generally accepted accounting principals. For certain of the
Company's financial instruments, including cash, accounts payable, and
other accrued liabilities, the carrying amounts approximate fair value
due to their short maturities. The amounts shown for notes payable also
approximate fair value because current interest rates offered the
Company for debt of similar maturities are substantially the same.
F-10
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
------------------------------------------
Net Loss Per Share
Net loss per share is calculated based on the weighted average number
of common shares outstanding. Warrants outstanding have not been
included in the net loss per share calculation since their effect would
be antidilutive.
All references to number of shares and per share amounts on the balance
sheet have been adjusted to give retroactive effect to the
recapitalization and stock splits.
Reclassification
Certain reclassifications have been made to previously reported amounts
to conform to the current - period presentation.
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at:
<TABLE>
<CAPTION>
June 30, 2000
December 31, 1999 (unaudited)
<S> <C> <C>
Equipment $ 203,875 $ 365,536
Less: accumulated depreciation (22,846) (47,042)
-------------------- ------------------
$ 181,029 $ 318,494
==================== ==================
</TABLE>
Depreciation expense for the period ended December 31, 1999 and June
30, 2000 was $22,846 and $24,196 (unaudited), respectively.
(left intentionally blank)
F-11
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
4. NOTES PAYABLE
The following is a summary of notes payable at:
<TABLE>
<CAPTION>
June 30, 2000
December 31, 1999 (unaudited)
-------------------- ------------------
<S> <C> <C>
Unsecured short-term loan payable to related
party, H. Appel $ - $ 107,000
6% note payable, due upon demand to Rally
Automotive Group. Larry A Mayle, President of Rally
Automotive Group is also Co-chairman
and Chief Executive Officer of eNexi Inc. 220,431 231,698
6% note payable, due upon demand to Unicor, Inc. Dr. Roger
L. Miller, President of Unicor, Inc. is
also Co-chairman and President of eNexi Inc. 128,000 134,542
6% note payable, due upon demand to Larry A. Mayle,
Co-chairman and Chief Executive
Officer of eNexi, Inc. 18,839
^
6% note payable due upon demand to Dr. Roger L. Miller,
Co-chairman and President of eNexi, Inc. 27,614 19,804
------
29,025
-------------------- ------------------
$ 394,884 $ ^ 522,069
-------
==================== ===================
</TABLE>
5. CAPITAL STOCK
Stock Dividend
On September 1, 1999, the Company distributed 834,316 shares of common
stock in connection with a ^ 8,400% stock dividend. As a result of the
stock dividend, common stock was increased and additional paid in
capital was decreased by $8,343, respectively. All references in the
accompanying financial statements to the number of common shares and
per-share amounts have been restated to reflect the stock dividend.
F - 12
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
5. CAPITAL STOCK (Continued)
-------------
Conversion of Debt to Equity
On September 1, 1999, the Company converted a $180,000 and a $120,000
promissory note due to the Chairman/CEO and President, respectively,
into capital. This was done as part of the original capitalization of
the Company and no additional shares were issued in conjunction with
this transaction.
Warrants
In December, 1999, the Company agreed to issue 1,000.3 warrants, for
every 1,000 shares of any type of stock issued. The warrants enable the
holders to purchase one share of the Company's common stock and are
exercisable within five years at a strike price equal to the stock's
market value at the time any additional shares are issued. The warrants
were canceled as of the date of the merger (Note 11).
Retirement of Stock (unaudited)
On March 29, 2000, the Company purchased 2,000 shares of common stock
from two stockholders for the purchase price of $10 per share. The
shares were immediately retired.
Reverse Stock Split (unaudited)
On May 25, 2000, the Company's Board of Directors authorized a 1 for 25
reverse stock split of the Company's $0.0001 par value common stock
effective June 26, 2000, for all common stockholders of record at June
23, 2000. As a result of the reverse split, 41,352,000 shares of common
stock were returned to the Company, and an additional paid-in capital
was increased by $4,135. All references in the accompanying financial
statements to the number of common shares and per share amounts for
June 30, 2000 and the six months then ended have been restated to
reflect the reverse stock split.
Conversion of Preferred Stock (unaudited)
The 1 for 25 reverse stock split authorized by the Company's Board of
Directors on May 25, 2000, will automatically convert the Company's
Series A and Series B Convertible Preferred Stock on a 1 for 1 basis
into shares of common stock, after the reverse stock split.
F-13
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
6. COMMITMENTS AND CONTINGENCY
Operating Leases and Agreements
The Company leases office and storage space under non-cancelable
operating leases which expire June and August, 2000, respectively and ^
require monthly lease payments totaling $13,868. On July 1, 2000, the
Company entered into a new non-cancelable operating lease for $14,757
per month through June 30, 2001 and $15,347 through June 30, 2002 for
its office space which expires June 30, 2002. The amount of rent
expense recorded for the periods ended December 31, 1999 and June 30,
2000, totaled $75,456 and $83,215 (unaudited), respectively.
The Company leases computer and office furniture under operating leases
which expire through August 2001 and require monthly lease payments
totaling $11,499. The amount of rent expense recorded for the periods
ended December 31, 1999 and June 30, 2000, totaled $63,612 and $78,195
(unaudited), respectively.
The Company has entered into an agreement with Apex Global Internet
Services (AGIS) to provide Internet ports. The term of the agreement is
12 months starting June 7, 1999 and requires a monthly payment of
$1,620, which will be increased as more ports are provided. This
agreement has not been renewed. ^ The amount of expense recorded for
the periods ended December 31, 1999 and June 30, 2000, was $108,700 and
$0 (unaudited), respectively. See related contingency note below.
The Company has entered into two agreements to provide Internet ports
which expire March and August, 2002, respectively and require monthly
payments totaling $22,600, which will be increased as more ports are
provided. The amount of expense recorded for the periods ended December
31, 1999 and June 30, 2000, totaled $45,315 and $145,160 (unaudited),
respectively.
F-14
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
6. COMMITMENTS AND CONTINGENCY (Continued)
Operating Leases and Agreements (Continued)
Future minimum lease and agreement payments are as follows as of
December 31, 1999:
<TABLE>
<CAPTION>
For the year ended Furniture and
December 31, Office Equipment Services Total
----------------------- -------------- ------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
2000 $ 194,527 $ 121,902 $ 287,440 $ 603,869
2001 180,622 63,168 290,640 534,430
2002 92,082 - 158,300 250,382
-------------- ------------------- --------------- ----------------
$ 467,231 $ 185,070 $ 736,380 $ 1,388,681
============== =================== =============== ================
</TABLE>
Employment and Consulting Agreements (unaudited)
The Company has entered into agreements dated December 1, 1999 with its
Co-Chairman and Chief Executive Officer and Co-Chairman and President.
The agreements call for monthly payments totaling $25,000 which began
once the Company received its second round of outside financing and
will continue for periods of one year, thereafter.
Contingency
AGIS, one of the vendors used by the Company to provide dial-up ports
to its customers, declared bankruptcy by filing for Chapter 11 in
February 2000. The Company has added an additional vendor that will
cover the potential loss of the ports provided by AGIS.
F-15
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
6. COMMITMENTS AND CONTINGENCY (Continued)
---------------------------
Contingency (Continued)
-----------
Additionally, the Company is in the process of clarifying the terms of
its agreement with AGIS based upon what management believes is
contradictory language in the contract. The agreement entered into in
June 1999, states that the Company will pay a monthly charge of $81,000
for the deployment of 1,000 ports, totaling $567,000 for the period
ended December 31, 1999. The Company asserts that it should be billed
only for ports used, which amounts to $1,620 per month. See operating
leases and agreements disclosure above. AGIS has not disputed the
Company's assertion, however, it has calculated the monthly billing
amount at $2,500. The Company has initially made a payment of $108,700,
which the Company asserts will be applied against any future resolution
and has been charged to expense during the six months ended June 30,
2000 (unaudited). AGIS has been in contact with Company management,
attempting to resolve this issue. The Company has not sought the
services of outside counsel.
7. INCOME TAXES
The Company incurred taxable losses for federal and state purposes for
the periods ended December 31, 1999 and June 30, 2000 (unaudited).
Accordingly, the Company did not incur any federal income tax expense
for those periods other than the minimum required taxes for state
purposes.
Prior to September 7, 1999, the Company was taxed as an S Corporation.
All tax benefits arising from operating losses as an S Corporation were
passed to the individual shareholders.
The Company's effective tax benefit on pretax loss differs from the
U.S. Federal Statutory tax rate for the periods ended December 31, 1999
and June 30, 2000, (unaudited) as follows:
<TABLE>
<CAPTION>
June 30, 2000
December 31, 1999 (unaudited)
-------------------- ------------------
<S> <C> <C>
Federal statutory tax (benefit) (34.00%) (34.00%)
State tax (benefit) (5.83%) (5.83%)
-------------------- ------------------
(39.83%) (39.83%)
==================== ==================
</TABLE>
F - 16
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
7. INCOME TAXES (Continued)
------------
Significant components of the Company's deferred tax asset at December
31, 1999 and June 30, 2000, (unaudited) are as follows:
<TABLE>
<CAPTION>
June 30, 2000
December 31, 1999 (unaudited)
-------------------- ------------------
<S> <C> <C>
Net operating loss carryforwards $ 307,000 $ 462,432
-------------------- ------------------
Gross deferred tax assets 307,000 462,432
Valuation allowance (307,000) (462,432)
-------------------- ------------------
Net deferred tax assets $ - $ -
==================== ==================
</TABLE>
At December 31, 1999 and June 30, 2000, (unaudited) the Company had net
operating loss carryforwards of approximately $772,000 and $1,160,887,
respectively related to federal and state income taxes which can be
used to offset future federal and state taxable income from operations.
These carryforwards will begin to expire in 2007 and substantially all
will expire in 2019.
As a result of the merger on May 19, 2000, (Note 11), the Company will
have combined net operating loss carryforwards of approximately
$1,840,000 related to federal and state income taxes which can be used
to offset future federal and state taxable income from operations. The
carryforwards will begin to expire in 2007, and substantially all will
expire in 2019. Additionally, at June 30, 2000, the Company had net
loss carryforwards of approximately $120,000 for Mexican income tax
purposes, which if not used will expire in 2009.
Under the Tax Reform Act of 1986, the benefits from net operating
losses carried forward may be impaired or limited in certain
circumstances. Events which may cause limitations in the amount of net
operating losses that the Company may utilize in any one year include,
but are not limited to, a cumulative ownership change of more than 50%
over a three year period. The impact of any limitations that may be
imposed for future issuances of equity securities, including issuances
with respect to acquisitions, have not been determined.
F-17
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
8. PROFIT SHARING PLAN
The Company has a profit sharing plan that covers all non-shareholder
employees. Contributions to the plan are at the discretion of
management. Management did not make a contribution to the plan for the
period ended December 31, 1999. The plan was canceled as of the date of
the merger (Note 11).
9. EMPLOYEE STOCK OPTION PLAN (unaudited)
As of January 1, 2000, the Company adopted a stock option plan under
which 15,000,000 shares of common stock are available for issuance with
respect to awards granted to officers, management, consultants, and any
other key employees of the Company. The options may be exercised at not
less than 85% of the fair market value of the shares on the date of
grant. The options expire after 10 years from the date of grant and 5
years from the date of grant for a ten percent shareholder, as defined.
The options are exercisable immediately ^ when granted and are subject
to restrictions on transfer, repurchase and right of first refusal.
Information with respect to the stock options is summarized below:
<TABLE>
<CAPTION>
<S> <C>
Outstanding at January 1, 2000 -
Granted 56,000
Exercised -
Expired -
-------------
Outstanding at June 30, 2000 56,000
=============
</TABLE>
The Company applies APB Opinion 25 and related interpretation in
accounting for stock options. The Company did not record any
compensation expense for the six months ended June 30, 2000.
10. SEGMENT AND GEOGRAPHIC INFORMATION
The Company has adopted SFAS No. 131, "Disclosures About Segments Of An
Enterprise And Related Information", in the period ended December 31,
1999. SFAS No. 131 establishes standards for reporting information
regarding operating segments in annual financial statements and
requires selected information for stockholders. SFAS No. 131 also
establishes standards for related disclosures about products and
services and geographic areas. Operating segments are identified as
components of an enterprise about which separate discrete financial
information is available for evaluation by the chief
F-18
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
10. SEGMENT AND GEOGRAPHIC INFORMATION (Continued)
----------------------------------
operating decision maker, or decision-making group, in deciding how to
allocate resources and assess performance.
The Company is an Internet service provider (ISP) and intermediary for
online advertising and marketing. Services are provided through free
e-mail accounts in a Web-based e-mail system, www.dollars4mail.com and
through the VirtuallyFreeInternet.com division, which provides analog
Internet access to subscribers for a monthly fee. In measuring
performance and allocating assets, the chief operating decision maker
reviews each segment by type of service provided.
<TABLE>
<CAPTION>
For the six months ended
June 30, 2000
(unaudited) VirtuallyFreeInternet Dollars4mail Total
------------------------------ ------------------------------ ----------------------- ---------------------
<S> <C> <C> <C>
Net revenues $ 126,378 $ 242,899 $ 369,277
Net loss $ (631,510) $ (628,792) $(1,260,302)
For the year ended December
31, 1999
------------------------------ ------------------------------ ----------------------- ---------------------
Net revenues $ 27,192 $ - $ 27,192
Net loss $ (1,495,543) $ - $ (1,495,543)
</TABLE>
11. SUBSEQUENT EVENTS
Merger and Private Placement (unaudited)
On May 19, 2000, the board of directors and stockholders of Silver King
Resources, Inc., a Delaware corporation ^(Silver King), approved and
adopted the Agreement and Plan of Merger, dated as of March 21, 2000,
(the ^ Agreement), by and among Silver King and Silver King
Acquisition, Inc. ^(Acquisition Corp), a wholly-owned subsidiary formed
for the purpose of the merger. Pursuant to the Agreement, Silver King
issued 6,000,000 shares of its Series A Convertible Preferred Stock,
par value $.0001 per share, convertible into ^ 6,000,000 shares of
Silver King's common stock, par value
F-19
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
11. SUBSEQUENT EVENTS (Continued)
-----------------
Merger and Private Placement (unaudited) (Continued)
----------------------------------------
$.0001 per share to the stockholders of eNexi, Inc., in exchange for
100% of the outstanding capital stock of eNexi, Inc. Simultaneously,
Silver King issued 2,009,864 shares at $2.50 per share of Series B
Convertible Preferred Stock, convertible to ^ 2,009,864 shares of
common stock. The Company recorded $99,416 of organization costs
related to the merger for the six months ended June 30, 2000.
In addition Silver King assumed existing common stock purchase warrants
from eNexi, Inc. which will be exchanged for ^ 1,000,000 shares of
common stock of Silver King at an exercise price of $.10 per share.
Since the former shareholders of eNexi, Inc. acquired control of the
Silver King through Acquisition Corp. upon the merger closing, the
merger was accounted for as a reverse acquisition. Accordingly, for
financial statement purposes, eNexi, Inc. was considered the accounting
acquiror and the related business combination was considered a
recapitalization of eNexi, Inc., rather than an acquisition by Silver
King. Silver King recapitalized its common stock shortly following the
merger, effective June 26, 2000, which took the form of a one-for-25
reverse split. The historical financial statements prior to May 19,
2000, will be those of eNexi, Inc. but the name of the corporation
going forward will be eNexi Holdings, Inc.
The following Unaudited Pro Forma Condensed Consolidated Statements of
Income and Expense reflect adjustments to eNexi Holdings, Inc.'s
historical financial statements as of the year ended December 31, 1999
and for the six months ended June 30, 2000, respectively, to give
effect to this merger.
The accompanying unaudited pro forma information is presented for
illustrative purposes only and is not necessarily indicative of the
financial position or results of operations which would actually have
been reported had the acquisition been in effect during the periods
presented, or which may be reported in the future.
The accompanying Unaudited Pro Forma Condensed Consolidated Financial
Statements should be read in conjunction with the historical financial
statements and related notes thereto for eNexi Holdings, Inc.
F-20
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
11. SUBSEQUENT EVENTS (Continued)
-----------------
Merger and Private Placement (unaudited) (Continued)
----------------------------------------
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF INCOME AND EXPENSE
<TABLE>
<CAPTION>
Pro Forma from For the
inception through six months ended
December 31, 1999 June 30, 2000
-------------------- ------------------
(unaudited) (unaudited)
<S> <C> <C>
Net revenues $ 27,192 $ 369,277
-------------------- ---------------------
Operating costs and expenses 1,530,879 1,666,362
---------
-------------------- ---------------------
Net loss from operations (1,503,687) (1,297,085)
-----------
-------------------- ---------------------
Other ^ income (expense) (91,272) 36,783
---------------- ------
-------------------- ---------------------
Net loss $ (1,594,959) $ (1,260,302)
-------------------- ---------------------
Net loss per share $ ^(2.21) $ ^(1.00)
------ ------
-------------------- ---------------------
Weighted average shares outstanding 722,905 1,264,818
-------- ---------
====================== =======================
</TABLE>
Extinguishment of Related Party Debt (unaudited)
In July 2000, the Company had agreed to exchange its 60% interest in
International Capri Resources, SA de CV, which has a carrying value of
$0 on the Company's books for $107,000, which was borrowed on a short
term basis from a former shareholder. The transaction will result in a
gain of $107,000 if consummated.
Payoff of Notes Payable (unaudited)
In July 2000, the Company paid off all of its notes payable totaling
$415,069 plus accrued interest of $1,636.
Sale of VirtuallyFreeInternet.com (unaudited)
In June 2000, the Company created a wholly owned subsidiary, Viaduct II
(an Indiana Corporation). The Company then sold its
VirtuallyFreeInternet.com subscriber base, data base of unserviced
affiliates, and its related domain names, "VirtuallyFreeInternet.com"
and "vfmail.com", to Viaduct II for $1.
F-21
<PAGE>
eNexi HOLDINGS, INC.
(Formerly know as Silver King Resources, Inc. and eNexi, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND SIX MONTHS ENDED
JUNE 30, 2000 (The information with respect to the
six months ended June 30, 2000 is unaudited)
11. SUBSEQUENT EVENTS (Continued)
-----------------
Sale of VirtuallyFreeInternet.com (unaudited) (Continued)
---------------------------------------------
On June 28, 2000, the Company entered into an agreement to sell its
wholly owned subsidiary, Viaduct II, to Galaxy Online, Inc. (a Yukon
Territory, Canada corporation). The Company exchanged all of the issued
and outstanding common stock of Viaduct II for 343,253 common shares of
Galaxy Online, Inc. The sale was effective and closed on July 10, 2000.
The Company received 85,563 common shares with a per share price of
$1.18 for a total market value of $100,964. In addition, the remaining
256,690 common shares of Galaxy Online, Inc. will be held in escrow
until June 28, 2002. On or before June 28, 2002, Galaxy Online, Inc.
has the option to give the Company the shares held in escrow or
$364,500 in cash.
The following are unaudited pro forma condensed income statements
showing the effects of the sale:
PRO FORMA CONDENSED INCOME STATEMENTS
<TABLE>
<CAPTION>
Pro Forma from Six months ended
inception through June 30, 2000
December 31, 1999 consolidated
(unaudited) (unaudited)
-------------------- ------------------
<S> <C> <C>
Revenue $ - $ 242,899
====================== ========================
Loss form continuing operations $ - $ ^(680,515)
---------
====================== ========================
Discontinued operations:
Loss from operations of disposed
business segment $ (147,261) $ (616,570)
^
Gain on disposal of business segment ^ 465,464 465,464
-------- - -------
-------------------- ------------------
Income (loss) from discontinued operations $ 318,203 $ (151,106)
------------------------------------------ - ------- - ---------
====================== ========================
Net income $ ^ 318,203 $ ^(794,838)
------- ---------
====================== ========================
Earnings per share assuming dilution (or diluted earnings per share):
Income from continuing operations $ - $ ^(.54)
-----
====================== ========================
Discontinued operations $ ^ .44 $ ^(.12)
----- -----
====================== ========================
</TABLE>
F-22
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation limits, to the maximum
extent permitted by Delaware law, the personal liability of directors for
monetary damages for breach of their fiduciary duties as a director. The
Company's Bylaws provided that the Company shall indemnify its officers and
directors and may indemnify its employees and other agents to the fullest extent
permitted by Delaware law.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify a director, officer, employee or agent made a party to
an action by reason of that fact that he or she was a director, officer employee
or agent of the corporation or was serving at the request of the corporation
against expenses actually and reasonably incurred by him or her in connection
with such action if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation and with respect to any criminal action, had no reasonable cause to
believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been advised that in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection
with the issuance and distribution of the securities offered hereby. All of such
expenses will be borne by the Company.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee....................................................................... $ 4,266
Printing and engraving..................................................................... 1,000
Accountant's fees and expenses............................................................. 10,000
Legal fees................................................................................. 30,000
Blue sky fees and expenses................................................................. 5,000
Miscellaneous.............................................................................. 1,734
Total.............................................................. $52,000
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
1. On January 27, 1999, Silver King issued and sold an aggregate of
14,500,000 shares of common stock to 43 purchasers to raise gross proceeds of
$14,500. This offering was undertaken by Silver King prior to any significant
operations. At that time Silver King was an inactive company with no assets or
liabilities. Investors in such offering were, therefore, subject to a number of
risks and uncertainties, including the material contingencies. These shares were
issued directly by Silver King without payment of any commissions to accredited
investors in a private placement transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof and Rule 506
of Regulation D promulgated thereunder.
<PAGE>
2. On January 27, 1999, Silver King issued and sold an aggregate of
2,000,000 units, each unit consisting of one share of common stock and five year
warrants to purchase four shares of common stock at an exercise price of $4.00
per share to raise gross proceeds of $16,000. This offering was undertaken by
Silver King prior to any significant operations. At that time Silver King was an
inactive company with no assets or liabilities. Investors in such offering were,
therefore, subject to a number of risks and uncertainties, including the
material contingencies associated with a new venture. These units were issued
directly by Silver King without payment of any commissions to two accredited
investors in a private placement transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof and Rule 506
of Regulation D promulgated thereunder.
3. On April 14, 1999, Silver King issued and sold an aggregate of
525,000 shares of common stock to raise gross proceeds of $525,000. This
offering was undertaken by Silver King prior to any significant operations. At
that time there were no assurances that Silver King would become an operating
company. Investors in such offering were, therefore, subject to a number of
risks and uncertainties. These shares were issued directly by Silver King
without payment of any commissions seven accredited investors in a private
placement transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof and Rule 506 of Regulation D
promulgated thereunder.
4. On April 15, 1999, Silver King issued 50,000 shares of common stock
to Founders Equity Group, Inc., as consideration for a $100,000 loan made to
Silver King, which was repaid in full on May 25, 1999. These shares were issued
directly by Silver King without payment of any commissions to Founders Equity in
a private placement transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof and Rule 506 of Regulation D
promulgated thereunder.
5. On February 3, 2000, Silver King sold an aggregate 25,000,000 units,
each unit consisting of one share of common stock and three year warrants to
purchase two shares of common stock at an exercise price of $0.01 per share. The
purchase price of a unit was $.005 per unit. The units were sold to three
accredited investors in a private placement transaction exempt from registration
pursuant to Section 4(2) of the Act and Rule 506 of Regulation D. All of the
warrants granted in this unit placement were subsequently forfeited.
6. On May 19, 2000, Silver King completed the sale of an aggregate of
2,009,864 shares of series B convertible preferred stock to 29 accredited
investors for gross proceeds of $5,024,660. These shares were issued directly by
Silver King without payment of any commissions seven accredited investors in a
private placement transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof and Rule 506 of Regulation D
promulgated thereunder.
Each of the foregoing transactions was made solely to persons the
Company deemed to be accredited investors, based upon representations each such
investor made to the Company. Each such purchaser was offered full access to
information concerning the Company, as well as the opportunity to ask questions
of management. In connection with the offerings stated to be pursuant to Rule
506 of Regulation D, the Company did not use general solicitation or advertising
to market the securities.
<PAGE>
7. On May 19, 2000, the board of directors and stockholders of Silver
King, approved and adopted the Agreement and Plan of Merger, dated as of March
21, 2000 (the "Agreement"), by and among Silver King, Silver King Acquisition,
Inc. ("Acquisition Corp."), a wholly-owned subsidiary formed for the purpose of
the merger, eNexi Inc. ("eNexi") and the principal stockholders of eNexi Inc.
Pursuant to the Agreement, Silver King issued 6,000,000 shares of its series A
convertible preferred stock to the historic stockholders of eNexi in exchange
for 100% of the outstanding capital stock of eNexi, which was acquired by
Acquisition Corp. The transaction was exempt from registration pursuant to
Section 4(2) of the Securities Act. Each investor was either accredited or
sophisticated and was given disclosure substantially the same as would be
required in a prospectus, including historical financial information of each
company as well as pro forma financial information with regard to the
combination of the constituent companies.
INDEX TO EXHIBITS
Exhibit No. Exhibit
<TABLE>
<CAPTION>
<S> <C>
2.1 Agreement and Plan of Merger, dated as of June 23, 1999, between Silver King Resources (Delaware), Inc. and Silver
King Resources, Inc. (1)
2.2 Agreement and Plan of Merger dated as of March 21, 2000, between Silver King Resources, Inc. and eNexi, Inc. (2)
3.1 Certificate of Incorporation, as amended (1)
3.2 Bylaws (1)
3.3 Certificate of Merger between Silver King Resources (Delaware), Inc. and Silver King Resources, Inc. (1)
3.4 Certificate of Merger between Silver King Resources (Delaware), Inc. and eNexi, Inc. (2)
5.1 Opinion of Sichenzia, Ross & Friedman LLP(4)
---
10.1 Employment Agreement between Silver King Resources, Inc. and Larry Mayle (4)
10.2 Employment Consulting Agreement between Silver King Resources, Inc. and Unicor, Inc.(4)
10.3 2000 Employee Stock Option Plan (4)
10.4 Agreement and Plan of Merger dated March 21, 2000 by among Silver King Resources, Inc., Silver King Acquisition,
Inc. eNexi Inc. and the Principal Stockholders of eNexi Inc. (3)
^
21.1 Subsidiaries of the Registrant(4)
---
23.1 Consent of Mendoza, Berger & Company
23.2 Consent of Sichenzia, Ross & Friedman LLP (included in Exhibit 5.1)
-------------------------------------
^
</TABLE>
II-3
<PAGE>
1. Incorporated by reference from the Registrant's Form 10-SB, filed on
July 8, 1999.
2. Incorporated by reference to the Registrant's Form 8-K filed on May 24,
2000.
3. Incorporated by reference to the Registrant's Form 10-KSB for the year
ended December 31, 1999.
4. Previously filed with this Registration Statement.
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file a post-effective amendment to this Registration Statement
during any period in which offers or sales are being made:
(i) to include any Prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually, or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) ((S)230.424(b) of this Chapter) if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement of any
material change to such information in the Registration Statement.
(2) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
this offering.
(3) To provide to the Underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the Underwriter to permit prompt delivery to each
purchaser.
(4) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and this offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) That, insofar as indemnification for liabilities arising from the
Securities Act may be permitted to directors, officers, and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
(6) That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or Rule
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
SIGNATURES
Pursuant to the requirements of the Act, the Company certifies that it has
reasonable grounds to believe that it meets all of the requirement for filing on
Form SB-2 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the State of
California, on ^ November 7, 2000.
ENEXI HOLDINGS, INC.
By:/s/ LARRY MAYLE
Larry Mayle,
Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
<S> <C> <C>
NAME TITLE DATE
/s/ LARRY MAYLE Co-Chairman, Chief Executive ^ November 7, 2000
Larry Mayle Officer, Chief Financial Officer
and Director (principal executive,
financial and accounting officer)
/s/ ROGER LEROY MILLER Co-Chairman, President and Director November 7, 2000
Roger LeRoy Miller
^
</TABLE>
II-5
