<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
--------------
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number: 000-27139
---------
e-commerce group, Inc.
----------------------
(Exact name of registrant as specified in its charter)
Nevada 88-0293704
------ ----------
(State of incorporation) (I.R.S. Employer Identification No.)
3675 Pecos-McLeod, Suit 1400, Las Vegas, NV 89121
- ------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(702) 866-2500
--------------
(Registrant's telephone number, including area code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No ___
---
As of March 31, 2000, 6,000,000 shares of the registrant's Common Stock, $.001
par value, were outstanding.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
- -----------------------------
The response to Item 1 has been submitted as a separate section of this Report
beginning on page F-1.
Item 2. Management's Discussion and Analysis or Plan of Operation.
- ------------------------------------------------------------------
Information contained in this Report contains forward-looking statements such as
statements of the Company's plans, objectives, expectations and intentions, that
can often be identified by the use of forward-looking terminology, such as
"may," "will," "expect," "anticipate," "believe," "plan," "intend," "could,"
"estimates," "is being" or "goal" or other variations of these terms or
comparable terminology. All forward-looking statements involve risks and
uncertainties, and actual results could differ materially from those set forth
in the forward-looking statements. The cautionary statements made in this Report
should be read as being applicable to all forward-looking statements wherever
they appear in this Report. The Company's actual results could differ materially
from those discussed herein.
The Company's plan of operation is to seek, investigate, and if such
investigation warrants, acquire an interest in one or more business
opportunities presented to it. Although the Company is not required to restrict
its search to any specific business, industry, or geographical location, it has
recently decided to focus its search on companies engaged in the electronic
commerce ("e-commerce") industry. Management is currently in the process of
identifying suitable candidates for acquisition. However, if management
subsequently decides that these companies are not suitable candidates, or if a
suitable candidate in another industry is located, management reserves the right
to complete transactions with another company or companies including those in
other industries.
Since its inception on January 7, 1993, the Company has engaged in no
significant operations other than undertaking organisational activities, filing
a registration statement for small business issuers on Form 10-SB with the SEC,
complying with periodical SEC reporting requirements and attempting to identify
suitable merger or acquisition candidates. As of March 31, 2000, the Company had
not signed any letters of intent or entered into any agreements with suitable
acquisition candidates. The Company has generated no revenue since its
inception.
In the coming quarters, the Company intends to continue its efforts to identify
suitable acquisition candidates, and, when a suitable candidate is found, to
complete a business acquisition. The Company anticipates incurring a loss for
the fiscal year as a result of expenses associated with (1) locating and
evaluating acquisition candidates; (2) completing one or more business
acquisitions; (3) complying with the reporting requirements of the Securities
Exchange Act of 1934; and (4) attending to general and administrative matters.
The Company does not expect to generate revenues until a
-1-
<PAGE>
business acquisition has been completed. Further, the Company may continue to
operate at a loss after completing the acquisition, depending on the performance
of the acquired business.
In order to cover the costs described above, the Company believes that it will
require additional capital in the amount of approximately $3,500,000. This
additional capital will be required whether or not the Company is able to
complete a business acquisition during the current fiscal year. Further, once a
business acquisition is completed, the Company's need for additional financing
is likely to increase substantially. The Company has no current plans, proposals
or understandings to raise additional capital through the sale or issuance of
additional securities. To the extent that additional funds are required to cover
Company expenses, the Company anticipates receiving funds in the form of loans
from financial institutions. However, there can be no assurance that any
additional funds will be available to the Company to allow it to cover its
expenses.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
- --------------------------
The Company is not a party to any material pending legal proceedings and, to the
best of its knowledge, no such action by or against the Company has been
threatened.
Item 2. Changes in Securities.
- ------------------------------
None.
Item 3. Defaults Upon Senior Securities.
- ----------------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
- ------------------------------------------------------------
None.
Item 5. Other Information.
- --------------------------
In order to effectuate the Company's plan to seek, investigate and acquire an
interest in one or more business opportunities, the Company appointed Mr.
Anthony Arnold as CEO of the Company on March 7, 2000. The Company expects that
Mr. Arnold will help it to realise its goals of identifying suitable acquisition
candidates, and, when a suitable candidate is found, completing a business
acquisition.
-2-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
- -----------------------------------------
Financial Statements.
- ---------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Assets.............................................................. F-1
Liabilities and Stockholders' Equity................................ F-2
Statement of Operations............................................. F-3
Statement of Stockholders' Equity................................... F-4
Statements of Cash Flows............................................ F-5
Notes to Financial Statements....................................... F-6
</TABLE>
Exhibits.
- ---------
(3) Articles of Incorporation and By-Laws.
3.1A Original Articles of Incorporation*
3.1B Amended Articles of Incorporation*
3.1C Amended Articles of Incorporation*
3.2 By-Laws*
(4) Instruments Defining the Rights of Security Holders, Including
Indentures.**
(10) Material Contracts
10.1 Memorandum of Agreement Between e-commerce group, Inc. and
Greenfield Ventures Ltd. for e-commerce group, Inc. Corporate
Introduction Services, dated 25 October 1999.*
10.2 Memorandum of Agreement Between e-commerce group, Inc. and
Greenfield Ventures Ltd. for e-commerce group, Inc. Recruitment
Services, dated 25 October 1999.*
10.3 Agreement Between e-commerce group, Inc. and Tony Arnold dated
March 5, 2000.
10.4 Convertible Promissory Note, in the Original Principal Amount of
$352,500, Payable to S.C. Management Ltd., dated March 7, 2000.
10.5 General Security Agreement Between e-commerce group, Inc. and
S.C. Management Ltd., dated March 7, 2000.
(27) Financial Data Schedule.
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<PAGE>
* In accordance with Rule 12b-32 under the Securities Exchange Act of
1934, as amended, reference is made to the documents previously filed with
the Securities and Exchange Commission, which documents are hereby
incorporated by reference.
** Instruments defining the rights of Security Holders have been included
in 3.1A, 3.1B, 3.1C and 3.2 above.
Reports on Form 8-K.
--------------------
The Company did not file any current reports on Form 8-K during the quarter
ending March 31, 2000.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorised.
________________________________________________________________________________
e-commerce group, Inc.
/s/ Tony Arnold
By _____________________________________________________________________________
Tony Arnold, CEO
17 May 2000
Date ___________________________________________________________________________
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<PAGE>
E-COMMERCE GROUP INC
(FORMERLY DALTON INTERNATIONAL RESOURCES INC.)
(FORMERLY ADVANCED SUSPENSION TECHNOLOGIES INC.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
--------------------
March 31 2000
December 31 1999
December 31 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ASSETS 1
LIABILITIES AND STOCKHOLDERS' EQUITY 2
STATEMENT OF OPERATIONS 3
STATEMENT OF STOCKHOLDERS' EQUITY 4
STATEMENT OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-8
</TABLE>
<PAGE>
BALANCE SHEET
-------------
ASSETS
------
March December December
31, 2000 31, 1999 31, 1998
CURRENT ASSETS $ 93,330 $ 0 $ 0
TOTAL CURRENT ASSETS $ 93,330 $ 0 $ 0
OTHER ASSETS $ 0 $ 0 $ 0
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
TOTAL ASSETS $ 93,330 $ 0 $ 0
======== ======== ========
The accompanying notes are an integral part of these financial statements
Page F-1
<PAGE>
BALANCE SHEET
-------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
March December December
31, 2000 31, 1999 31, 1998
CURRENT LIABILITIES
Promissory note $ 165,000 $ 0 $ 0
Officers Advances (Note #6) $ 4,855 $ 3,755 $ 0
Accounts Payable $ 1,965 $ 0 $ 0
--------- --------- ---------
TOTAL CURRENT LIABILITIES $ 171,820 $ 3,755 $ 0
STOCKHOLDERS' EQUITY (Note #1)
Common stock, $.001 par value
Authorised 100,000,000 shares
Issued and outstanding at
December 31, 1998 - 6,000,000 shs $ 6,000
December 31, 1999 - 6,000,000 shs $ 6,000
March 31, 2000 - 6,000,000 shs $ 6,000
Additional paid in Capital -3,500 -3,500 -3,500
Deficit accumulated during the
development stage 80,990 -6,255 -2,500
TOTAL STOCKHOLDERS' EQUITY $ 78,490 $ -3,755 $ 0
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 93,330 $ 0 $ 0
The accompanying notes are an integral part of these financial statements
STATEMENT OF OPERATIONS
-----------------------
Page F-2
<PAGE>
Jan 1 2000 to Year ended Year ended Jan 7 1993
Mar 31 2000 Dec 31 1999 Dec 31 1998 (inception) to
Mar 31 2000
- -------------------------------------------------------------------------------
REVENUE: $ 0 $ 0 $ 0 $ 0
EXPENSES:
General, Selling
And administrative $ -73,635 $ 3,755 $ 0 $ 80,990
Total Expenses $ -73,635 $ 3,755 $ 0 $ 80,990
Net Profit/Loss (-) $ -73,636 -3,755 $ 0 $ 80,990
========== =========== =========== ==========
Net loss per share-
Basic $ -0,012 $ -,0006 NIL $ ,0135
Diluted $ -0.012 $ $ $
========== =========== =========== ==========
Weighted average
number of common
shares outstanding 6,000,000 6,000,000 6,000,000 6,000,000
Diluted common
Shares outstanding 6,400,000
The accompanying notes are an integral part of these financial statements
Page F-3
<PAGE>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
--------------------------------------------
Additional Accumu-
Common Stock paid-in lated
------------
Shares Amount Capital Deficit
Balance
December 31 1997 6,000,000 $ 6,000 $ -3,500 $ -2,500
Net loss year ended
December 31 1998 0
---------- ------- --------- ----------
Balance
December 31 1998 6,000,000 $ 6,000 $ -3,500 $ -2,500
Net loss year ended
December 31 1999 -3,755
--------- ------- --------- ----------
Balance
December 31 1999 6,000,000 $ 6,000 $ -3,500 $ -6,255
Net loss
January 1 2000 to
March 31 2000 -73,635
--------- ------- --------- ----------
Balance
March 31 2000 6,000,000 $ 6,000 $ -3,500 $ -80,990
========= ======= ========= ==========
The accompanying notes are an integral part of these financial statements
Page F-4
<PAGE>
STATEMENT OF CASH FLOWS
-----------------------
Jan 2000 to Year ended Year ended Jan 7 1993
Mar 31 2000 Dec 31 1999 Dec 31 1998 (inception) to
Mar 31 2000
-----------------------------------------------------
Cash Flows from
Operating Activities
Net Loss $ -74,735 $ -3,755 $ 0 $ -80,990
Adjustment to
reconcile net loss
to net cash
provided by operating
activities +1,965 0 0 +1,965
Changes in assets and
liabilities
Officers Advances +1,100 +3,755 0 +4,855
----------- ---------- ------- -----------
Net cash used in
operating activities $ -71,670 $ 0 $ 0 $ -74,170
Cash Flows from
investing activities 0 0 0 0
Cash Flows from
Financing Activities
Issuance of common
Stock 0 0 0 +2,500
Promissory notes +165,000 +165,000
----------- ---------- ------- -----------
Net increase (decrease)
in cash $ 93,330 $ 0 $ 0 $ 93,330
Cash
beginning of period 0 0 0 0
----------- ---------- ------- -----------
Cash
end of period $ 93,330 $ 0 $ 0 $ 93,330
=========== ========== ======= ===========
The accompanying notes are an integral part of these financial statements
Page F-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
-----------------------------
March 31 2000, December 31 1999 and December 31 1998
NOTE 1 - HISTORY AND ORGANISATION OF THE COMPANY
The Company was organized January 7 1993 under the laws of the State of Nevada,
as Advanced Suspension Technologies Inc. The company currently has no operations
and, in accordance with SFAS #7, is considered a development stage company.
On January 7 1993 the company issued 2,000,000 shares of its $.001 par value
common stock for services of $2,500.00
On June 21 1996, the State of Nevada approved the Company's restated Articles of
Incorporation, which increased its capitalization from 3,000,000 common shares
to 50,000,000 common shares, the par value remained unchanged at $.001.
On December 27 1996 the State of Nevada approved the Company's restated Articles
of Incorporation, which increased its capitalization from 50,000,000 common
shares to 100,000,000 common shares, the par value remained unchanged at $.001.
On December 27 1996, the company forward split its common stock 3:1, thus
increasing the number of outstanding common stock shares from 2,000,000 shares
to 6,000,000 shares.
On December 27 1996, the Company changed its name to Dalton International
Resources Inc.
On August 12 1999, the Company changed its name to e-commerce Group Inc.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except as follows:
1. The company uses the accrual method of accounting.
2. Earnings per share is computed using the weighted average of shares of
common stock outstanding.
3. The company has not yet adopted any policy regarding payment of dividends.
No dividends have been paid since inception.
Page F-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
---------------------------------------
March 31 2000, December 31 1999 and December 31 1998
NOTE 3 - GOING CONCERN
The company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional capital
through a merger with an existing operating company.
NOTE 4 - RELATED PARTY TRANSACTION
The Company neither owns or leases any real or personal property. Office
services are provided without charge by a director. Such costs are immaterial to
the financial statements and, accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other business activities
and may, in the future, become involved in other business opportunities. If a
specific business opportunity becomes available, such persons may face a
conflict of selecting between the Company and their other business interests.
The Company has not formulated a policy for the resolution of such conflicts.
NOTE 5 - WARRANTS AND OPTIONS
There are no warrants or options outstanding save those described in note 7 to
acquire any additional shares of common stock.
NOTE 6 - OFFICERS ADVANCES
While the Company is seeking additional capital through a merger with an
existing operating company, an officer of the company has advanced funds to the
Company to pay for any costs incurred by it. These funds are interest free.
NOTE 7 - CONVERTIBLE PROMISORY NOTE
A promissory note for $352,500 has been made by the company to S C Management
Limited.
Page F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
---------------------------------------
March 31 2000, December 31 1999 and December 1998
The note is repayable either on demand or on February 28 2002 whichever is the
sooner and incurs interest at 9% per annum.
The promissory note may be converted by the lender into units up to the limit of
200,000. If some of the note has been repaid the units will be issued in
proportion to the amounts outstanding.
A unit consists of one share of common stock at $0.001 par value and a warrant
to purchase one share at $2.00. The warrant will expire 28 February 2002.
The option to purchase may also be exercisable on a "cashless" basis. The holder
therefore may pay cash for Shares at the rate of $2.00 per Share or
alternatively and without payment of cash, receive that number of Shares which
is equal to X in the following equation:
X=Y(A-B)
------
A
Where:
X = the number of Shares to be issued to the holder of the Warrant;
Y = the number of Warrants which are being exercised;
A = the greater of $2.00 and the fair market value of one Share as at the date
the notice of exercise of the Warrant is received by e-commerce group inc;
and
B = $2.00
As security for the note the company has issued a floating charge over its
assets.
Page F-8
<PAGE>
EXHIBIT 10.3
e-commerce group Inc.
3675 Pecos-McLeod
Suite 1400
Las Vegas, U.S.A. 89121-3881
March 5, 2000
Arnold & Associates (UK) Limited
Shantasree
134 Hilmanton
Reading
Berkshire
RG8 4HJ
Attention: Mr. Anthony Arnold, Esq.
Dear Mr. Arnold
This letter sets forth our agreement that, as compensation for the consulting
services you are performing for e-commerce group Inc. (the "Company"), we agree
to pay you $225,000 and to issue you 500,000 shares of common stock of the
Company. The delivery of such payment and issuance of shares of common stock
shall not occur until and unless the consummation occurs of the acquisition by
the Company of each of Intensive Networks Ltd. and www.WindowKiosk.com, Ltd.,
each a corporation organised under the laws of the United Kingdom.
If the above properly sets forth the terms of our agreement, please sign the
enclosed copy of this letter and return it to us.
e-commerce group Inc.
By /s/ D. Wood
-----------------------
Name DIRECTOR
Title
By /s/ David Wong
----------------------
Name
Title
AGREED AND ACCEPTED:
ARNOLD & ASSOCIATES (UK) LIMITED
/s/ Tony Arnold
- -------------------------
<PAGE>
Exhibit 10.4
NEITHER THIS CONVERTIBLE PROMISSORY NOTE NOR THE SECURITIES ISSUABLE HEREUNDER
HAVE BEEN REGISTERED UNDER APPLICABLE U.S. FEDERAL OR STATE SECURITIES LAWS
(INCLUDING THE U.S. SECURITIES ACT OF 1933, AS AMENDED) OR THE SECURITIES LAWS
OF ANY OTHER JURISDICTION. NO SALE OR DISTRIBUTION OF THIS NOTE OR OF THE
EFFECTIVE REGISTRATION STATEMENT UNDER U.S. FEDERAL AND STATE SECURITIES LAWS OR
UNLESS THE MAKER HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE MAKER THAT SUCH REGISTRATION IS NOT REQUIRED OR THAT THE PROPOSED
TRANSACTION WILL BE EXEMPT FROM REGISTRATION, QUALIFICATION AND FILING UNDER
SUCH LAWS.
CONVERTIBLE PROMISSORY NOTE
---------------------------
March 7, 2000
FOR VALUE RECEIVED, e-commerce group, inc. a Nevada corporation (the "Maker")
hereby promises to pay to the order of S.C. Management Ltd., a corporation
organized under the laws of the Bahamas (the "Lender"), an aggregate principal
amount of up to Three Hundred and Fifty Two Thousand Five Hundred Dollars
($352,500) of lawful money of the United States of America, or such lesser
amount as amount as shall have been advanced by Lender hereunder (the "Loan"),
not later than the date (the "Maturity Date") which is the earlier to occur of
(i) the date which is the fifth business day following receipt by the Maker of
written demand for payment from the Lender, and (ii) February 28, 2002. The
principal balance of this note outstanding from time to time shall bear interest
at a rate equal to nine percent (9%) per annum, compounded annually. Interest
shall be calculated on the basis of a 365-day year and shall accrue and be due
and payable on the Maturity Date or on such earlier date as this Note is
converted into "Units", as described below. In no event shall interest payable
hereunder exceed the highest rate permitted by applicable law. To the extent
any interest received by the Lender exceeds the maximum amount permitted by
applicable law, such payment shall be credited to principal, and any excess
remaining after full payment of principal shall be refunded to the Maker.
The Maker and all guarantors and endorsers hereby waive presentment, demand,
notice, protest, and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, and assent to
extensions of the time of payment or forbearance or other indulgences without
notice. No delay or omission of the Lender in exercising any right or remedy
hereunder shall constitute a waiver of any such right or remedy. Acceptance by
the Lender of any payment after demand shall not be deemed a waiver of such
demand. A waiver on one occasion shall not operate as a bar to or waiver of any
such right or remedy on any future occasion.
1. RIGHT TO PREPAY
---------------
Notwithstanding the right of the Lender to demand repayment of the Loan at any
time on five business days' prior notice, under no circumstances will the Maker
have the right to pay all or any portion of the principal amount outstanding
under this note from time to time before the
<PAGE>
-2-
Maturity Date Lender at least 15 business days' prior written notice. During
the 15 business day period following notice of prepayment, the Lender will be
free to issue a Conversion Notice (as hereinafter defined) and if a Conversion
Notice is issued by the Lender during such 15 business day period, the Borrower
will have the right to prepay only so much of the principal amount of the Loan
as is not being converted pursuant to such Conversion Notice, if any.
2. CONVERSION
----------
At any time after the date hereof and prior to the Maturity Date, at the
election of the Lender (in its sole discretion) and upon delivery to the maker
of written notice (a "Conversion Notice"), all or such portion of the
outstanding principal amount of the Loan as may be designated in the Conversion
Notice shall be converted on a pro rata basis into Units, as hereinafter
defined, provided that regardless of the principal amount of the Loan which may
be converted, under no circumstances will the aggregate number of Units to be
issued to the Lender pursuant to this Note exceed 200,000 Units, such that:
(a) if the Lender has advanced the entire principal amount of $352,000 and
then elects to convert such entire amount, such amount shall be
converted into 200,0000 Units;
(b) if the Lender elects to convert less than $352,000, such amount shall
be converted into that number of Units equal to the product of 200,000
multiplied by a fraction, the numerator of which shall be the amount
of outstanding principal which the Lender has elected to convert and
the denominator of which shall be the total amount of principal then
outstanding hereunder; and
(c) any balance of the outstanding principal and all accrued interest
shall, at the option of the Lender and as stipulated in the Conversion
Notice (A) remain outstanding and repayable or convertible into Units
in accordance with the terms of this Note or (B) be due and payable on
the date five business days following receipt by the Maker of the
Conversion Notice.
In the event that the Lender elects to convert all or a portion of the
outstanding principal of the Loan as provided above, the Maker shall deliver to
the Lender the Units into which such amount is convertible hereunder within 14
days from the date of the applicable Conversion Notice together with interest
accrued on the principal amount converted, to the date of conversion.
For purposes of this Note, a "Unit" consists of one share of common stock, $.001
par value (a "Share"), of the Maker and a warrant to purchase an additional
Share (a "Warrant"), at a price of $2.00. The Warrants will be in form as
prepared by the Maker and approved by the Lender, each acting reasonably, and
shall be exercisable on a "cashless" basis on any business day following the
date of issuance thereof and shall expire, to the extent not previously
exercised, at 12:01 AM on February 28, 2002. The parties agree that by
describing the Warrants as exercisable on a "cashless" basis, they mean that in
case of the exercise of a Warrant, the holder thereof shall be entitled, at the
holder's option, to pay cash for Shares at the rate of $2.00 per share or
alternatively and without payment of cash, receive that number of Shares which
is equal to X in the following equation:
<PAGE>
-3-
X=Y(A-B)
------
A
where:
X= the number of Shares to be issued to the holder of the Warrant;
Y= the number of Warrants which are being exercised;
A= the greater of $2.00 and the fair market value of one Share as at the date
the notice of exercise of the Warrant is received by the Maker; and
B= $2.00
Provided that there has been no demonstrated effort on the part of any person to
condition the market for Shares, "fair market value" in respect of the Shares
for the purpose of calculating a conversion thereof on a cashless basis means
the weighted twenty day trading price of Shares on, as applicable, the "pink
sheets", on the "over the counter" market or on any public exchange on which the
Shares may be listed, ending on the third trading day prior to the day on which
a Conversion Notice has been issued.
3. EVENTS OF DEFAULT
-----------------
The occurrence of any of the following events or circumstances shall constitute
an "Event of Default" under this Note:
(a) if the Maker ceases to pay its debts as they become due or admits its
inability to pay its debts generally or any proceeding is instituted against the
Maker in any jurisdiction to adjudicate it a bankrupt or insolvent person or
which seeks its liquidation, winding up, reorganization or corporate
arrangement, or moratorium or adjustment of indebtedness, protection or relief
from creditors or the appointment of a receiver or receiver-manager or similar
official having conduct of the Maker's affairs generally or with respect to a
material part of its property or undertaking or if the Maker takes any corporate
action to authorize any of such actions:
(b) if, save as permitted hereby, the security interest granted by the
Maker pursuant to the Security Agreement (as hereinafter defined) ceases to be a
first priority security interest in substantially all of the present and
after-acquired property of the Maker, perfected in accordance with local law in
such jurisdictions as may be appropriate in light of the location of the Maker's
property and principal place of business and chief executive office, provided
that if the Maker obtains conventional loan financing from a bank or other
regulated, deposit taking financial institution and it is a condition of such
financing that the Maker grant to the Lender first priority security interests
in all or any portion of the property of the Maker, the Lender will provide to
such lender a priority agreement confirming the priority of such lender's
security over the Security Agreement, and in the event that financing is
arranged by the Maker with a lender which is not a bank or other regulated,
deposit taking financial institution, the Lender shall act reasonably in
considering any request by such lender for priority in respect of any security
interest granted to it by the Maker;
<PAGE>
-4-
(c) if the Maker ceases to carry on business or sells all or substantially
all of its assets of undertaking;
(d) if the Maker merges or amalgamates or otherwise combines its business,
assets or undertaking with any other corporate entity unless the Maker
has first given to the Lender 15 business days' prior written notice
of the terms upon which the Maker intends to do so and received the
consent of the Lender thereto, not to be unreasonably withheld;
(e) if the Maker enters into any agreement to issue Shares (otherwise than
pursuant to any agreement in existence as of the date hereof of which
the Lender has knowledge) unless the Maker has first given to the
Lender 15 business days' prior written notice of the terms upon which
the Maker intends to issue such Shares and received the consent of the
Lender thereto, not to be unreasonably withheld;
(f) if the Maker enters into any sort of transaction the effect of which
is to "split" or "consolidate" its outstanding Shares, unless the
Maker has first given to the Lender 15 business days' prior written
notice of the terms upon which the Maker intends to make such "split"
or "consolidation" and received the consent of the Lender thereto, not
to be unreasonably withheld; or
(g) if any event or circumstance or series of events or circumstances
occurs which has a materially adverse effect upon the business, assets
or revenues of the Maker or seriously impairs the ability of the Maker
to perform its obligations hereunder and under the Security Agreement.
In the event of an Event of Default, the Lender may require that all
outstanding principal and accrued interest be paid in any combination of cash
and/or Units. If the Lender elects to have all or a portion of such amount paid
in Units, the applicable number of Units shall be determined in accordance with
the provisions of Section 2 above.
After the occurrence and during the continuance of an Event of Default, the
principal outstanding hereunder shall bear interest at a fixed rate equal to
twenty four percent (24%) per annum which interest shall be payable on demand,
and if not so paid, shall compound monthly until paid.
4. PAYMENT ON MATURITY
-------------------
On the Maturity Date, the Maker shall pay any outstanding principal and accrued
interest in cash at the address of the Lender set forth below, or at such other
place as the holder hereof shall have designated to the Lender in writing.
5. SECURITY
--------
As security for its obligation to repay the Loan and issue the Units and issue
Shares pursuant to the Warrants, the Maker will grant to the Lender a general
security agreement (the "Security Agreement") which will give to the Lender a
first priority security interest in all present and after acquired property
and/or a floating charge on the assets and undertakings of the Maker. The Lender
is hereby authorized to record the Security Agreement or such financing
statements, financing change statements and notices thereof as the Lender deems
appropriate from time to
<PAGE>
-5-
time in any jurisdiction the Lender sees fit with respect to the Security
Agreement, and to the extent permitted by law, the Maker waives its right to
receive copies of same, and where appropriate, the Maker appoints the Lender as
its attorney in fact to execute on its behalf such financing statements,
financing change statements and notices. Whenever the Lender deems it
appropriate, the Maker will enter into such additional or alternative security
agreements, debentures, assignments or other forms of mortgages, charges,
hypotheques and pledges as the Lender, acting reasonably, deems appropriate in
order to confer upon the Lender the benefit of the Security Agreement in any
jurisdiction in which the Borrower may have an office or carry on business or
have material property.
6. AGREEMENTS OF LENDER
--------------------
In the event that the Lender elects to convert all or a portion of the
outstanding principal amount of the Loan into Units as provided above, the
Lender agrees to execute such mutually acceptable documents, including a
subscription agreement, as the Maker shall reasonably request, to ensure
compliance with applicable laws, including U.S. Federal and state securities
laws. The obligations of the Maker to issue securities to the Lender hereunder
shall be contingent upon Lender's execution of such documents.
7. APPLICABLE LAW
--------------
The provisions of this Note shall be goverened by, and construed and enforced in
accordance with, the substantive laws of the state of Nevada, excluding the body
of law relating to choice of laws.
IN WITNESS WHEREOF, the parties have executed this Note on the date written
above.
E-COMMERCE GROUP, INC.
By: /s/ David Wong
---------------------------------
Name:
Title:
By: /s/ D. Wood
---------------------------------
Name:
Title:
Acknowledged:
S.C. MANAGEMENT LTD.
By: /s/ Christine Ferguson
---------------------------------
Name:
Title:
Address: Suite L, King's Court
Nassau, Bahamas
<PAGE>
EXHIBIT 10.5
GENERAL SECURITY AGREEMENT
--------------------------
THIS SECURITY AGREEMENT is dated for reference March 7, 2000
BETWEEN:
e-comerce group, inc., a Nevada corporation, having a place of
business at 3675 Pecos-McLeod, Suite 1400, Las Vegas, Nevada, U.S.A.
89121-3881
(the "Debtor")
AND:
S.C. MANAGEMENT LTD,, a corporation organized under the laws of
the Bahamas and having a place of business at Suite L, King's Court,
Nassau, Bahamas
(the "Secured Party")
1. SECURITY INTEREST
-----------------
1.1 For consideration and as security for the payment and performance of
the Obligations referred to in Clause 3 hereof, the Debtor, subject to the
exceptions set out in Clause 2, hereby mortgages, charges, assigns and transfers
to the Secured Party, and grants to the Secured Party a security interest in,
all the Debtor's right, title and interest in and to all presently owned or held
and after acquired or held personal property, assets and undertaking of the
Debtor (including real property), of whatever nature or kind and all proceeds
thereof and therefrom (all of which is hereinafter collectively called the
"Collateral") including without limitation, the following:
(a) all equipment of whatsoever nature and kind, including, without
limitation, all machinery, tools, plant, furniture, supplies and
vehicles of whatsoever nature and kind, and all parts, components,
attachments, accessories, accessions, replacements, substitutions,
additions and improvements to any of the foregoing (all of which is
hereinafter collectively call the "Equipment");
(b) heating, ventilating and air-conditioning equipment; hot water tanks;
interior doors and partitions; screen windows and screen doors; light
fixtures; suspended ceiling tiles; wall-to-wall carpeting; built-in
furniture; plumbing fixtures; communication systems; control
equipment; escalators and elevators; air filtering devices; awnings;
window blinds; curtain rods and runners; tracks and valances; fixed
mirrors; sprinkler equipment; fire fighting equipment; and all other
fixtures;
(c) all debts, accounts, claims, moneys and choses in action which now
are, or which may at any time hereafter be, due or owing to or owned
by the Debtor, including, without limitation, all rents payable and
all books, records, documents, papers and
<PAGE>
electronically recorded data recording, evidencing or relating to the
said debts, accounts, claims, moneys and choses in action or any part
thereof (all of which are hereinafter collectively called the
"Accounts");
(d) all documents of title, chattel paper, instruments, securities and
money, including prepaid rents and rental and damage deposits, and all
other goods of the Debtor that are not Equipment or Accounts; and
(e) all contractual rights, licenses, goodwill, patents, trademarks,
trade names, copyrights, know-how, software and other intellectual
property of the Debtor, including all service, leasing and management
contracts, and all other choses in action of the Debtor of every kind
which now are, or which may at any time hereafter be, due or owing to
or owned by the Debtor, and all other intangible property of the
Debtor which is not Accounts, chattel paper, instruments, documents
of title securities or money.
2. EXCEPTIONS
----------
2.1 The last day of the term created by any lease or agreement therefor
is hereby excepted out of any charge or security interest created by this
Security Agreement but the Debtor will stand possessed of the reversion thereby
remaining upon trust to assign and dispose thereof to any third party as the
Secured Party shall direct.
2.2 There shall be excluded from the security interests hereby created
any consumer goods of the Debtor.
3. OBLIGATIONS SECURED
-------------------
3.1 This Security Agreement and the security interests hereby created are
in addition to and not in substitution for any other security interest now or
hereafter held by the Secured Party from the Debtor or from any other person
whomsoever and will be general and continuing security for the payment of all
indebtedness and liability of the Debtor to the Secured Party (including
interest thereon), any ultimate balance thereof, including all future
advances and re-advances and the performance of all obligations under that
certain convertible promissory not made by the Debtor in favour of the Secured
Party in the stated principal amount of U.S.$352,500, as the same may be
amended, modified, supplemented, restated or replaced from time to time (all of
which indebtedness, liability, and obligations are hereinafter collectively
called the "Obligations").
4. PROHIBITIONS
------------
4.1 Without the prior written consent of the Secured Party the Debtor
will not have power to
(a) create or permit to exist any security interest in, charge,
encumbrance or lien over, or claim against any of its property, assets, or
undertaking which ranks or could in any event rank in priority to or pari passu
with any security interest created by this Security Agreement, or
<PAGE>
(b) grant, sell, or otherwise assign its chattel paper.
5. ATTACHMENT
----------
5.1 The Debtor acknowledges that the security interests hereby created attach
upon the execution of this Security Agreement (or in the case of any after
acquired property, upon the date of acquisition thereof), that value has been
given, and that the debtor has, or in the case of after acquired property will
have, rights in the collateral.
6. REPRESENTATIONS AND WARRANTIES
------------------------------
6.1 The Debtor, if a company or partnership, represents and warrants that this
Security Agreement is granted in accordance with resolutions of the directors
(and of the shareholders as applicable) or of the partners, as the case may be,
of the Debtor and all other matters and things have been done and performed so
as to authorize and make the execution and delivery of this Security Agreement,
and the performance of the Debtor's obligations hereunder, legal, valid and
binding.
6.2 The Debtor represents and warrants that the Debtor lawfully owns and
possesses all presently held Collateral and has good title thereto, free from
all security interests, charges, encumbrances, liens and claims, save only the
charges or security interests, which may have been disclosed to the Secured
Party and consented to in writing by the Secured Party, and the Debtor has good
right and lawful authority to grant a security interest in the Collateral as
provided by this Security Agreement.
7. COVENANTS OF THE DEBTOR
-----------------------
7.1 The Debtor covenants that at all times while this Security Agreement
remains in effect the Debtor will:
(a) defend the title to the Collateral for the benefit of the Secured
Party against the claims and demands of all persons;
(b) fully and effectually maintain and keep maintained the security
interests hereby created valid and effective;
(c) maintain insurance on the Collateral with an insurer, of kinds, for
amounts and payable to such person or persons, all as the Secured
Party may require;
(d) maintain the Collateral in good order and repair;
(e) forthwith pay:
(i) all taxes, assessments, rates, duties, levies, government fees,
claims and dues lawfully levied, assessed or imposed upon it or
the Collateral when due, unless the Debtor shall in good faith
contest its obligations so to pay and will furnish such security
as the Secured Party may require; and
<PAGE>
(ii) all security interests, charges, encumbrances, liens and claims
which rank or could in any event rank in priority to any
security interest created by this Security Agreement, other
than the charges or security interests, if any, shown in the
Schedule hereto and those consented to in writing by the
Secured Party;
(f) forthwith pay all costs, charges, expenses and legal fees and
disbursements (on a solicitor and his own client basis) which may be
incurred by the Secured Party in:
(i) inspecting the Collateral;
(ii) negotiating, preparing, perfecting and registering this
Security Agreement and other documents, whether or not relating
to this Security Agreement;
(iii) investigating title to the Collateral;
(iv) taking, recovering, keeping possession of and insuring the
Collateral; and
(v) all other transactions and proceedings taken in connection with
the preservation of the Collateral and the enforcement of this
Security Agreement and of any other security interest held by
the Secured Party as security for the Obligations;
(g) at the Secured Party's request at any time and from time to time
execute and deliver such further and other documents and instruments
and do all acts and things as the Secured Party in its absolute
discretion requires in order to confirm and perfect, and maintain
perfection of, the security interests and charges hereby created in
favor of the Secured Party upon any of the Collateral;
(h) notify the Secured Party promptly of;
(i) any change in the information contained herein relating to the
Debtor, its address, its business or the Collateral;
(ii) the details of any material acquisition of the Collateral;
(iii) any material loss or damage to the Collateral;
(iv) any material default by any account debtor in payment or other
performance of his obligations to the Debtor with respect to
any Accounts; and
(v) the return to or repossession by the Debtor of the Collateral
where such return or repossession of the Collateral is material
in relations to the business of the Debtor;
<PAGE>
(i) prevent the Collateral from being sold, leased, or otherwise disposed
of except as permitted hereby, or from being or becoming an accession
to other property not covered by this Security Agreement;
(j) permit the Secured Party and its representatives, at all reasonable
times, access to all its property, assets and undertaking and to all
its books of account and records for the purpose of inspection and
render all assistance necessary for such inspections; and
(k) deliver to the Secured Party from time to time promptly upon request:
(i) any documents of title, instruments, securities and chattel
paper constituting, representing or relating to Collateral;
(ii) all books of account and all records, ledgers, reports,
correspondence, schedules, documents, statements, lists and other
writings relating to the Collateral for the purpose of
inspecting, auditing, or copying the same;
(iii) all financial statements prepared by or for the Debtor regarding
its operations; and
(iv) all policies and certificates of insurance relating to the
Collateral.
7.2 The Debtor, if a company, covenants that at all times while this
Security Agreement remains in effect it will not, without the prior written
consent of the Secured Party:
(a) alter any of its constating instruments or its corporate organization,
(b) become a party to any transaction whereby all or a substantial part of
the Collateral would become the property of any other person, whether
by way of reconstruction, reorganization, amalgamation, merger,
transfer, sale, lease or otherwise; or
(c) materially change the nature of the Debtor's business or operations.
8. PERFORMANCE OF OBLIGATIONS
--------------------------
8.1 If the Debtor fails to perform its Obligations hereunder, the Secured
Party may, but will not be obligated to, perform any or all of such Obligations
without prejudice to any other rights and remedies of the Secured Party
hereunder, and any payments made and any costs, charges, expenses and legal fees
and disbursements (on a solicitor and his own client basis) incurred in
connection therewith will be payable by the Debtor to the Secured Party
forthwith with interest until paid at the highest rate borne by any of the
Obligations and such amounts will be a charge upon and security interest in the
Collateral in favor of the Secured Party prior to all claims subsequent to this
Security Agreement.
<PAGE>
9. RESTRICTIONS ON SALE OR DISPOSAL OF COLLATERAL
----------------------------------------------
9.1 Except as herein provided, the Debtor will not, without the prior
written consent of the Secured Party:
(a) sell, lease or otherwise dispose of the Collateral;
(b) release, surrender or abandon possession of the Collateral: or
(c) move or transfer the Collateral from its present location,
save in the ordinary course of the Debtor's business.
10. DEFAULT
-------
10.1 The Debtor will be in default under this Security Agreement,
unless waived by the Secured Party, in any of the following events:
(a) the Debtor makes default in payment when due of any indebtedness
or obligation of the Debtor to the Secured Party or the Debtor is
in breach of any term, condition, obligation or covenant to the
Secured Party and the Debtor fails to cure such default or breach
within ten (10) business days after receiving notice thereof from
the Secured Party;
(b) the Debtor fails to observe or perform any of the provisions of
any agreement or commitment pursuant to which any moneys were
advanced by the Secured Party to the Debtor, and the Debtor fails
to cure such obligation within ten (10) business days after
receiving notice thereof from the Secured Party;
(c) any representation or warranty made by the Debtor or any of its
officers or directors in connection with any indebtedness or
liability of the Debtor to the Secured Party hereby secured
proves at any time to be materially incorrect as of the date
made;
(d) the Debtor becomes bankrupt or insolvent or makes an assignment
for the benefit of, a proposal to, or an arrangement with its
creditors, or any action is taken or proceeding instituted
whether by the Debtor or any other person whereby the Debtor may
be dissolved, wound-up, reorganized, or declared bankrupt or
insolvent;
(e) a receiver or receiver-manager is appointed in respect of the
Debtor or any part of the Collateral;
(f) any execution, sequestration, extent, or any other process of any
kind is levied or enforced upon or against the Collateral or any
part thereof and remains unsatisfied for a period of 10 days;
<PAGE>
(g) without the prior written consent of the Secured Party, the Debtor
creates or permits to exist any charge, encumbrance or lien on, or
claim against or any security interest in, any of the Collateral which
ranks or could in any event rank in priority to or pari passu with any
security interest or charge created by this Security Agreement;
(h) the holder of any other charge, encumbrance or lien on, or claim
against, or security interest in, any of the Collateral does anything
to enforce or realize on such charge, encumbrance, lien, claim or
security interest;
(i) if the Debtor is a company or a partnership, an order is made or an
effective resolution is passed for the winding up of the Debtor;
(j) the Debtor, if a company, enters into any reconstruction,
reorganization, amalgamation, merger or other similar arrangement with
any other person;
(k) the Debtor ceases or threatens to cease to carry on its business;
(l) the Debtor, if an individual, dies or is declared incompetent by a
court of competent jurisdiction; or
(m) the Secured Party, acting reasonably, believes that there has been a
material adverse change in the financial condition of the Debtor or
that any of the Collateral is or is about to be placed in jeopardy.
11. ENFORCEMENT
-----------
11.1 Upon any default under this Security Agreement the Secured Party may
declare any or all of the Obligations not payable on demand to become
immediately due and payable and the security hereby constituted will immediately
become enforceable. To enforce and realize on the security constituted by this
Security Agreement the Secured Party may take any action permitted by law or in
equity, as in may deem expedient, and in particular without limiting the
generality of the foregoing, the Secured Party may do any of the following:
(a) appoint by instrument a receiver, receiver and manager or a
receiver-manager (the person so appointed is hereinafter called the
"Receiver") of the Collateral, with or without bond as the Secured
Party may determine, and from time to time in its absolute discretion
remove such Receiver and appoint another in its stead;
(b) enter upon any premises of the Debtor and take possession of the
Collateral with power to exclude the Debtor, its agents and its
servants therefrom, without becoming liable as a mortgagee in
possession;
(c) preserve, protect and maintain the Collateral and make such
replacements thereof and repairs and additions thereto as the Secured
Party may deem advisable;
(d) sell, lease or otherwise dispose of all or any part of the Collateral,
whether by public or private sale or lease or otherwise, in such
manner, at such price as can
<PAGE>
be reasonably obtained therefor and on such terms as to credit and
with such conditions of sale and stipulations as to title or
conveyance or evidence of title or otherwise as to the Secured Party
may seem reasonable, provided that if any sale is on credit the Debtor
will not be entitled to be credited with the proceeds of any such
sale, lease or other disposition until the moneys therefor are
actually received; and
(e) exercise all of the rights and remedies of a secured party under the
UCC or any other jurisdiction as may afford to the Secured Party
rights against the Debtor or the Collateral.
11.2 A Receiver appointed pursuant to this Security Agreement will be the
agent of the Debtor and not of the Secured Party and, to the extent permitted by
law or to such lesser extent permitted by its appointment, will have all the
powers of the Secured Party hereunder, and in addition will have power to carry
on the business of the Debtor and for such purpose form time to time to borrow
money either secured or unsecured, and if secured by a security interest on any
of the Collateral; such security interest may rank before or pari passu with or
behind any security interest created by this Security Agreement, and if it does
not so specify such security interest will rank before the security interests
created by this Security Agreement.
11.3 Subject to the claims, if any, of the creditors of the Debtor ranking
in priority to this Security Agreement, all amounts realized from the
disposition of Collateral pursuant to this Security Agreement will be applied as
the Secured Party, in its absolute discretion, may direct as follows:
(a) in payment of all costs, charges and expenses (including legal fees
and disbursements on a solicitor and his own client basis) incurred by
the Secured Party in connection with or incidental to:
(i) the exercise by the Secured Party of all or any of the powers
granted to it pursuant to this Security Agreement; and
(ii) the appointment of the Receiver and the exercise by the Receiver
of all or any of the powers granted to it pursuant to this
Security Agreement, including the Receiver's reasonable
remuneration and all outgoings properly payable by the Receiver;
(b) in or toward payment to the Secured Party of all principal and other
moneys (except interest) due in respect of the Obligations; and
(c) in or toward payment to the Secured party of all interest remaining
unpaid in respect of the Obligations.
Subject to applicable law and the claims, if any, of other creditors of the
Debtor, any surplus will be paid to the Debtor.
<PAGE>
12. DEFICIENCY
----------
12.1 If the amounts realized from the disposition of the Collateral are not
sufficient to pay the Obligations in full the Debtor will immediately pay to the
Secured Party the amount of such deficiency.
13. RIGHTS CUMULATIVE
-----------------
13.1 All rights and remedies of the Secured Party set out in this Security
Agreement are cumulative and no right or remedy contained herein is intended to
be exclusive but each will be in addition to every other right or remedy
contained herein or in any existing or future security agreement or now or
hereafter existing at law, in equity or by statute, or pursuant to any other
agreement between the Debtor and the Secured Party that may be in effect from
time to time.
14. LIABILITY OF SECURED PARTY
--------------------------
14.1 The Secured Party will not be responsible or liable for any debts
contracted by it, for damages to persons or property or for salaries or
non-fulfilment of contracts during any period when the Secured Party shall
manage the Collateral upon entry, as herein provided, nor will the Secured Party
be liable to account as mortgagee in possession or for anything except actual
receipts or be liable for any loss on realization or for any default or omission
for which a mortgagee in possession may be liable. The Secured Party will not be
bound to do, observe or perform or to see to the observance or performance by
the Debtor of any obligations or covenants imposed upon the Debtor nor will the
Secured Party, in the case of securities, instruments or chattel paper, be
obliged to preserve rights against other persons, nor will the Secured Party be
obliged to keep any of the Collateral identifiable. The Debtor hereby waives any
applicable provision of law permitted to be waived by it which imposes higher or
greater obligations upon the Secured Party than aforesaid.
15. APPOINTMENT OF ATTORNEY
-----------------------
15.1 The Debtor hereby irrevocably appoints the Secured Party or the
Receiver, as the case may be, with full power of substitution, to be the
attorney of the Debtor for and in the name of the Debtor to sign, endorse or
execute under seal or otherwise any deeds, documents, transfers, cheques,
instruments, demands, assignments, assurances, consents, financing statements,
financing change statements or notices that the Debtor is obliged to sign,
endorse or execute and generally to use the name of the Debtor and to do all
things as may be necessary or incidental to the exercise of all or any of the
powers conferred on the Secured Party or the Receiver, as the case may be,
pursuant to this Security Agreement.
16. ACCOUNTS
--------
16.1 Notwithstanding any other provision of this Security Agreement, the
Secured Party may collect, realize, sell or otherwise deal with the Accounts or
any part thereof in such manner, upon such terms and conditions and at such time
or times, whether before or after default, as may seem to be advisable, and
without notice to the Debtor, except in the case of disposition after default
and then subject to the provisions of the UCC or other applicable law.
<PAGE>
All moneys or other forms of payment received by the Debtor in payment of any
Account will be received and held by the Debtor in trust for the Secured Party.
17. APPROPRIATION OF PAYMENTS
-------------------------
17.1 Any and all payments made in respect of the Obligations from time to
time and moneys realized from any security interests held therefor (including
moneys collected in accordance with or realized on any enforcement of this
Security Agreement) may be applied to such part or parts of the Obligations as
the Secured Party may see fit, and the Secured Party may at all times and from
time to time change any appropriation as the Secured party may see fit.
18. LIABILITY TO ADVANCE
--------------------
18.1 None of the preparation, execution, perfection and registration of
this Security Agreement or the advance of any moneys will bind the Secured
Party to make any advance or loan or further advance or loan, or renew any note
or extend any time for payment of any indebtedness or liability of the Debtor to
the Secured Party.
19. WAIVER
------
19.1 The Secured Party may from time to time and at any time waiver in
whole or in part any right, benefit or default under any clause of this Security
Agreement but any such waiver of any right, benefit or default on any occasion
will be deemed not to be a waiver of any such right, benefit or default
thereafter, or of any right, benefit or default, as the case may be.
20. NOTICE
------
20.1 Notice may be given to either party by sending it through the post in
prepaid mail or delivered to the party for whom it is intended, at the
principal address of such party set out on the first page hereof or at such
other address as may be given in writing by such party to the other, and any
notice if posted will be deemed to have been given at the expiration of three
business days after posting and if delivered, on delivery.
21. EXTENSIONS
----------
21.1 The Secured Party may grant extensions of time and other indulgences,
take and give up security, accept compositions, compound, compromise, settle,
grant releases and discharges, refrain from perfecting or maintaining perfection
of security interests, and otherwise deal with the Debtor, account debtors of
the Debtor, sureties and others and with the Collateral and other security
interests as the Secured Party may see fit without prejudice to the liability of
the Debtor or the Secured Party's right to hold and realize on the security
constituted by this Security Agreement.
22. NO MERGER
---------
22.1 This Security Agreement will not operate so as to create any merger or
discharge of any of the Obligations, or any assignment, transfer, guarantee,
lien, contract, promissory note,
<PAGE>
bill of exchange or security interest of any form held or which may hereafter be
held by the Secured party from the Debtor or from any other person whomsoever.
The taking of a judgment with respect to any of the Obligations will not operate
as a merger of any of the covenants contained in this Security Agreement.
23. ASSIGNMENT
----------
23.1 The Secured Party may, without further notice to the Debtor, at any
time assign, transfer or grant a security interest in this Security Agreement
and the security interests granted hereby. The Debtor expressly agrees that the
assignee, transferee or secured party, as the case may be, will have all of the
Secured Party's rights and remedies under this Security Agreement and the Debtor
will not assert any defence, counterclaim, right of set-off or otherwise any
claim which it now has or hereafter acquires against the Secured Party in any
action commenced by such assingee, transferee or secured party, as the case may
be, and will pay the Obligations to the assignee, transferee or secured party,
as the case may be, as the Obligations become due.
24. SATISFACTION AND DISCHARGE
--------------------------
24.1 Any partial payment or satisfaction of the Obligations, or any ceasing
by the Debtor to be indebted to the Secured Party, will be deemed not to be a
redemption or discharge of this Security Agreement. The Debtor will be entitled
to a release and discharge of this Security Agreement upon full payment and
satisfaction of all Obligations and upon written request by the Debtor and
payment to the Secured party of all costs, charges, expenses and legal fees and
disbursements (on a solicitor and his own client basis) incurred by the Secured
Party in connection with the Obligations and such release and discharge.
25. ENUREMENT
---------
25.1 This Security Agreement will enure to the benefit of the Secured Party
and its successors and assigns, and will be binding upon the respective heirs,
executors, personal representatives, successors and permitted assigns of the
Debtor.
26. INTERPRETATION
--------------
26.1 In this Security Agreement:
(a) "Collateral" has the meaning set out in Clause 1 hereof and any
reference to Collateral will, unless the context otherwise requires,
be deemed a reference to Collateral as a whole or any part thereof;
(b) "Debtor" and the personal pronoun "it" or "its" and any verb
relating thereto and used therewith will be read and construed as
required by and in accordance with the context in which such words
are used depending upon weather the Debtor is one or more
individuals, corporations or partnerships and, if more than one, will
apply and be binding upon each of them severally; and
(c) "the UCC" means the Uniform Commercial Code applicable in Nevada and
all regulations thereunder as amended from time to time.
<PAGE>
26.2 Words and expressions used herein that have been defined in the UCC
will be interpreted in accordance with their respective meanings given in the
UCC unless otherwise defined herein or unless the context otherwise requires.
26.3 The invalidity or unenforceability of the whole or any part of any
clause of this Security Agreement will not affect the validity or enforceability
of any other clause or the remainder of such clause.
26.4 The headings of the clauses of this Security Agreement have been
inserted for reference only and do not define, limit, alter or enlarge the
meaning of any provision of this Security Agreement.
26.5 This Security Agreement will be governed by the laws of Nevada,
excluding the body of law relating to choice of laws.
27. COPY OF AGREEMENT AND FINANCING STATEMENT
-----------------------------------------
27.1 The Debtor hereby:
(a) acknowledges receipt of a copy of this Security Agreement, and
(b) waives all rights to receive from the Secured Party a copy of any
financing statement, financing change statement or verification
statement filed at any time in respect of this Security Agreement.
IN WITNESS WHEREOF the Debtor has executed this Security Agreement as of the
date set forth below.
e-commerce group, inc.
Per: /s/ David Wong Per: /s/ D. Wood
------------------------------ ------------------------------
Signature Signature
Dated: March 7, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMBINED
BALANCE SHEETS, STATEMENT OF OPERATIONS AND STATEMENT OF CASH FLOWS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
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<PERIOD-END> MAR-31-2000
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0
0
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</TABLE>
