SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[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
[_] 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 0-27753
FIRST ECOM.COM, INC.
(exact name of registrant as specified in its charter)
Nevada 98-0206979
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
902 Henley Building
5 Queen's Road Central
Hong Kong SAR
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code)
011 (852) 2801 5181
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Sections 13 and 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes _X_ No___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. As of May 10, 2000 the Company
had one class of Common Stock with $.0001 par value, of which 18,210,037 shares
were issued and outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
First Ecom.com, Inc. and subsidiaries
(a group of companies in development stage)
Unaudited condensed consolidated balance sheets
at March 31, 2000 and December 31, 1999
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Note March 31, 2000 December 31, 1999
<S> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents 37,714,352 11,099,606
Amounts due from stockholders -- 12,540
Prepaid financial advisory fees 420,431 672,022
Prepayment for purchase of equipment 500,000 --
Other receivables and prepaid expenses 616,443 375,778
-------------- -----------------
Total current assets 39,251,226 12,159,946
Property and equipment 4 1,129,132 1,046,237
Intangible assets 7 1,552,799 --
-------------- -----------------
Total assets 41,933,157 13,206,183
============== =================
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
First Ecom.com, Inc. and subsidiaries
(a group of companies in development stage)
Unaudited condensed consolidated balance sheets)
At March 31, 2000 and December 31, 1999 (continued)
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
March 31, December 31,
Note 2000 1999
Liabilities and stockholders' equity
<S> <C> <C> <C>
Current liabilities
Bank overdraft 120,190 --
Short term loan -- 27,007
Current instalments of obligations under capital lease 9,458 1,624
Accounts payable 300,794 304,480
Accrued expenses 2,559,201 574,896
Amounts due to related companies 8 110,434 273,673
Deferred income 9,937 18,075
---------- ------------
Total current liabilities 3,110,014 1,199,755
Deferred rent 60,356 62,017
Obligations under capital lease, excluding current
instalments 16,119 2,164
---------- ------------
Total liabilities 3,186,489 1,263,936
Stockholders' equity
Common stock, $0.001 par value
Authorised
200,000,000 shares at March 31, 2000
and December 31, 1999
Issued and outstanding shares As of March 31, 2000
- 18,210,037 shares As of
December 31, 1999 -
14,956,667 shares 18,211 14,957
Additional paid-in capital 47,970,054 18,716,175
Deficit accumulated during the development stage (9,241,597) (6,788,885)
---------- ------------
Total stockholders' equity 38,746,668 11,942,247
---------- ------------
Total liabilities and stockholders' equity 41,933,157 13,206,183
=========== ============
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
First Ecom.com, Inc. and subsidiaries
(a group of companies in development stage)
Unaudited condensed consolidated statements of operations
for the quarters ended March 31, 2000 and March 31, 1999, and accumulated since
inception (Expressed in United States Dollars)
<TABLE>
<CAPTION>
Period from
September 16, 1998
(inception) to March Quarter ended Quarter ended
31, 2000 March 31, 2000 March 31, 1999
<S> <C> <C> <C>
Revenue
Set up fee & processing income 7,436 4,802 --
Operating expenses
Staff costs (2,637,439) (912,248) (110,323)
Stock compensation costs (844,948) (198,416) --
Organisational costs (300,000) -- (300,000)
Advertising and promotion (403,093) (150,914) (5,290)
Legal and professional fees (2,370,392) (511,647) (84,318)
Travelling and entertainment (630,728) (221,948) (36,511)
Depreciation (380,703) (130,321) --
Operating lease charges in respect of properties (403,874) (127,443) (4,610)
Write-down of fixed and other assets (134,318) (134,318) --
Other operating expenses (888,214) (249,598) (5,228)
----------- ----------- -----------
(8,986,273) (2,632,051) (546,280)
Other income/(expenses)
Interest income 216,364 179,603 5,745
Interest expense (471,688) (264) --
----------- ----------- -----------
(255,324) 179,339 5,745
----------- ----------- -----------
Net loss for the period (9,241,597) (2,452,712) (540,535)
=========== =========== ===========
Basic and diluted loss per share
applicable to common stockholders (0.15) (0.06)
Weighted average shares used in
computing per share amounts 15,879,359 9,789,111
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements
<PAGE>
First Ecom.com, Inc. and subsidiaries
(a group of companies in development stage)
Unaudited condensed consolidated statement of
stockholders' equity for the quarter ended March 31, 2000
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Total
Common Additional Accumulated stockholders'
Note stock paid-in capital deficit equity
<S> <C> <C> <C> <C> <C>
Balance at January 1, 2000 14,957 18,716,175 (6,788,885) 11,942,247
Sixth common stock offering of
3,228,500 shares and warrants 6 3,229 28,431,500 -- 28,434,729
Stock-based compensation -- 198,416 -- 198,416
Shares issued in business
combination 7 25 623,963 -- 623,988
Net loss for the period -- -- (2,452,712) (2,452,712)
--------------------------------------------------------
Balance at March 31, 2000 18,211 47,970,054 (9,241,597) 38,746,668
========================================================
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements
<PAGE>
First Ecom.com, Inc. and subsidiaries
(a group of companies in development stage)
Unaudited condensed consolidated statements of cash flows
for the quarters ended March 31, 2000 and March 31, 1999, and accumulated since
inception (Expressed in United States Dollars)
<TABLE>
<CAPTION>
Period from
September 16,
1998 Quarter Quarter
(inception) ended ended
to March 31, March 31, March 31,
2000 2000 1999
<S> <C> <C> <C>
Net loss for the period (9,241,597) (2,452,712) (540,535)
Organisational costs in excess of cash paid 300,000 -- 300,000
Stock compensation costs 844,948 198,416 --
Depreciation of property and equipment 380,703 130,321 --
Loss on disposal of equipment 4,443 639 --
Payment of financial advisory fee (1,500,000) -- --
Amortisation of financial advisory fee 1,079,569 251,591 --
Write-down of fixed and other assets 53,326 53,326 --
Increase in other receivables and prepaid expenses (519,381) (143,603) (156,964)
Decrease in amounts due form stockholders -- 12,540 --
Increase in amounts due to employees and stockholders -- -- 14,074
Accretion of discount of loan 410,000 -- --
Increase in accounts payable 257,294 55,900 9,006
Increase in accrued expenses 260,471 124,325 77,926
Increase/(decrease) in deferred income 9,937 (8,138) --
Increase/(decrease) in amounts due to related
companies 110,434 (163,239) --
Increase/(decrease) in deferred rent 60,356 (1,661) --
----------- ----------- -----------
Net cash used in operating activities (7,489,497) (1,942,295) (296,493)
----------- ----------- -----------
Cash flows from investing activities
Purchase of property and equipment (1,765,379) (566,207) (11,372)
Proceeds from disposal of equipment 6,541 735 --
Effect of acquisition of subsidiary on cash (1,161,571) (1,161,571) --
----------- ----------- -----------
Net cash used in investing activities (2,920,409) (1,727,043) (11,372)
----------- ----------- -----------
Cash flows from financing activities
Proceeds from issuance of common stock 48,803,750 30,670,750 2,008,000
Share issue costs paid (678,003) (359,253) --
Proceeds from short term loans 1,750,000 -- --
Repayment of short term loans (1,750,000) (27,007) --
Principal payments under capital lease obligations (1,489) (406) --
----------- ----------- -----------
Net cash provided by financing activities 48,124,258 30,284,084 2,008,000
----------- ----------- -----------
Net increase in cash and cash equivalents 37,714,352 26,614,746 1,700,135
Cash and cash equivalents at beginning of period -- 11,099,606 --
----------- ----------- -----------
Cash and cash equivalents at end of period 37,714,352 37,714,352 1,700,135
=========== =========== ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements
<PAGE>
The Group paid $264 and $Nil for interest for the quarters ended March 31, 2000
First Ecom.com, Inc. and subsidiaries
(a group of companies in development stage)
Unaudited condensed consolidated statements of cash flows
for the quarters ended March 31, 2000 and March 31, 1999 (continued)
(Expressed in United States Dollars)
and March 31, 1999 respectively.
Major non-cash transactions
Quarter ended March 31, 2000:
(a) During the quarter ended March 31, 2000, $198,416 in compensation expense
was recorded for options granted.
(b) 24,870 shares of the Company's common stock were issued on March 31, 2000
as part of the consideration paid for acquiring a 100% interest in the
issued share capital of Asia Internet Limited ("AIL").
The preliminary estimates of the fair values of assets and liabilities of
AIL acquired are as follows:
<TABLE>
<CAPTION>
<S> <C>
Cash $ 38,429
Other receivables and prepaid expenses 97,060
Property and equipment 43,443
Bank overdraft (120,190)
Obligations under capital lease (22,194)
Accounts payable and accrued expenses (36,548)
-----------
Net assets acquired $ --
===========
Cash outflow from acquisition of subsidiary is made up of:
Cash consideration paid $ 1,200,000
Cash acquired (38,429)
-----------
$ 1,161,571
===========
</TABLE>
(c) In connection with the issue of shares on March 6, 2000, warrants to
purchase 250,848 shares of the Company's common stock are issuable to an
investment bank in addition to cash commission (see note 6).
<PAGE>
See accompanying notes to unaudited condensed consolidated financial statements.
First Ecom.com, Inc. and subsidiaries
(a group of companies in development stage)
Notes to unaudited condensed consolidated financial statements for the quarters
ended March 31, 2000 and March 31, 1999
(Expressed in United States Dollars)
1 Background and nature of business
First Ecom.com, Inc. and subsidiaries (together "the Group") was
established to facilitate electronic payment processing of e-commerce
transactions for merchants and banks across the Internet. The Group has
developed an electronic gateway to convert consumers' credit card
information collected by merchants on the Internet into a format that can
be processed by banks. The Group will act as an intermediary payment system
service provider between on-line merchants, consumers and banks. The
principal geographic area in which the Group initially intends to provide
its services is throughout Asia.
Since its inception the Group has been in the development stage. The Group
is in the process of acquiring and developing its software and hardware,
training its personnel, performing research and development activities, and
developing its markets. Through March 31, 2000 the Group generated
processing income of $614 and recognised set up fee income of $4,188 from
merchant customers. The Group decided to focus its core business on
establishing and providing services to banks and plans to refer to those
banks all merchants currently enjoying the "master merchant" relationship.
As a result, the Group may not generate processing fee and set up fee
income from the "master merchant" arrangement with the Bank of Bermuda in
the longer term. The Group intends to charge banks service fees to process
transactions through its gateway. The Group's ability to emerge from
development stage is ultimately dependent upon the successful start-up of
operations, including placing in service the Group's operating software and
hardware as well as developing sufficient markets.
2 Basis of Preparation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements. The results of operations
reflect interim adjustments, all of which are of a normal recurring nature
and which, in the opinion of management, are necessary for a fair
presentation of the results for such interim period. The results reported
in these condensed consolidated financial statements should not be regarded
as necessarily indicative of results that may be expected for the entire
year. Certain information and note disclosure normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the
Securities and Exchange Commission's rules and regulations. These unaudited
condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999.
<PAGE>
First Ecom.com, Inc. and subsidiaries
(a group of companies in development stage)
Notes to unaudited condensed consolidated financial statements for the quarters
ended March 31, 2000 and March 31, 1999 (continued)
(Expressed in United States Dollars)
3 Summary of significant accounting policies
(a) Principles of consolidation
The accompanying condensed consolidated financial statements include the
financial statements of the Company and its subsidiaries (the "Group"). All
companies in which the parent has a controlling financial interest through
direct or indirect ownership of a majority voting interest are
consolidated. All significant intercompany balances and transactions have
been eliminated on consolidation.
(b) Business combinations
Business combinations have been accounted for under the purchase method of
accounting. The results of operations of the acquired business from the
date of acquisition are included in the results of the Group. Net assets of
the companies acquired are recorded at their fair value to the Group at the
date of acquisition.
(c) Use of estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that reflect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
<PAGE>
First Ecom.com, Inc. and subsidiaries
(a group of companies in development stage)
Notes to unaudited condensed consolidated financial statements
for the quarters ended March 31, 2000 and March 31,1999 (continued)
(Expressed in United States Dollars)
4 Property and equipment
Details of the Group's property and equipment are as follows:
March 31, December
2000 31, 1999
Leasehold improvements 318,227 318,227
Computer equipment and processing system 974,872 835,752
Furniture, fixtures and office equipment 241,896 141,819
Motor vehicle 31,333 --
---------- ----------
1,566,328 1,295,798
Less accumulated depreciation (437,196) (249,561)
---------- ----------
1,129,132 1,046,237
========== ==========
Depreciation expense charged to results of operations was $130,321 for the
quarter ended March 31, 2000 (quarter ended March 31, 1999: $Nil).
Additionally, $53,326 was included in write-down of fixed and other assets.
5 Stock options
On February 1, 2000 the board of directors approved the granting of share
options to a further group of employees of the Group. Under this stock
option plan, the grantees are allowed to purchase up to 787,500 shares of
the Company's common stock at a price of $9.90 per share. Further, a
director was granted options to purchase 15,000 shares of the Company's
common stock at a price of $9.90 per share on 24 February 2000. The fair
value of the shares at the dates of grant was $10.13 and $30.0
respectively. 50% of these options are exercisable on and after February 1,
2001 and the remaining 50% are exercisable on and after February 1, 2002.
All of these options, if remaining unexercised, will expire on February 1,
2005.
<PAGE>
First Ecom.com, Inc. and subsidiaries
(a group of companies in development stage)
Notes to unaudited condensed consolidated financial statements
for the quarters ended March 31, 2000 and March 31, 1999 (continued)
(Expressed in United States Dollars)
6 Issuance of common stock with warrants
On March 6, 2000 the Company issued a total of 3,228,500 units, each comprising
one share of common stock and one five-year warrant to purchase one third of one
share of common stock for $11.40 per whole share. These units were issued at a
price of $9.50 each. The warrants are exercisable at any time up to March 6,
2004. Total share issue costs paid and accrued amounted to $2,236,021.
In connection with the share issue, warrants to purchase 26,923 shares at $7.80
per share, and 223,925 shares at $11.40 per share, of the Company's common stock
are issuable to an investment bank in addition to the above issue costs. These
warrants will be exercisable for a period of five years from the date of issue.
Details of the Company's previous common stock offerings are set out in the Form
10-K for the year ended December 31, 1999.
7 Purchase business combination
On March 31, 2000, the Company completed the acquisition of all the issued
shares of Asia Internet Limited ("AIL") for $1,200,000 cash and 24,870 shares of
the Company's common stock with a fair value of $623,988, less extinguishment of
amount payable to AIL of $290,714. The Company also incurred direct costs of
$19,525 in respect of the acquisition.
AIL is a Hong Kong based Internet Service Provider and is engaged in the
provision of Internet dial-up access, information systems consulting and other
related services.
The acquisition has been accounted for using purchase accounting, and
accordingly, the results of operations of AIL will be included in the Company's
consolidated financial statements from April 1, 2000 onward. The excess of the
purchase price and direct costs over the preliminary estimates of the fair value
of the identifiable net assets acquired of $1,552,799 has been recorded as
goodwill and will be amortised on a straight-line basis over 3 years.
<PAGE>
First Ecom.com, Inc. and subsidiaries
(a group of companies in development stage)
Notes to unaudited condensed consolidated financial statements
for the quarters ended March 31, 2000 and March 31, 1999 (continued)
(Expressed in United States Dollars)
7 Purchase business combination (continued)
The following unaudited pro forma financial information presents the combined
results of operations of the Company and AIL as if the acquisition has occurred
as of the beginning of 2000 and 1999, after giving effect to certain
adjustments, including amortisation of goodwill. The unaudited pro forma
financial information does not necessarily reflect the results of operations
that would have occurred had the Company and AIL constituted a single entity
during such periods.
Quarter ended March 31
2000 1999
Pro forma revenue $ 132,899 $ 51,018
=========== =========
Pro forma loss for the period $(2,772,342) $(698,564)
=========== =========
Basic pro forma loss per share $ (0.17) $ (0.07)
=========== =========
The basic pro forma loss per share amounts are based on the proforma loss for
the respective periods and the weighted average number of outstanding shares of
15,903,956 and 9,813,981 respectively.
<PAGE>
First Ecom.com, Inc. and subsidiaries
(a group of companies in development stage)
Notes to unaudited condensed consolidated financial statements
for the quarters ended March 31, 2000 and March 31, 1999 (continued)
(Expressed in United States Dollars)
8 Related party transactions
For the quarter ended March 31, 2000
(a) Asia Internet Limited ("AIL") was considered a related party to the
Group by virtue of a 30% shareholder of AIL being a director and
stockholder of the Group. AIL provided technical support, system
maintenance and other professional services to the Group and purchased
computer and office equipment on behalf of the Group. During the
quarter ended March 31, 2000 and prior to the acquisition of AIL by
the Group, the Group paid $91,871 to AIL for the above services. The
amounts charged by AIL to the Group for technical support, system
maintenance and other professional services and purchase of computer
and office equipment on the Group's behalf were $283,157 and $15,290
respectively.
On March 31, 2000, the Group completed the acquisition of AIL and its
assets and liabilities have been consolidated into the Group's balance
sheet as at that date.
(b) A director and shareholder of the Group is a partner in a firm of
solicitors to which the Group has paid legal fees in the ordinary
course of its business. The amount paid by the Group to the firm
during the quarter ended March 31, 2000 was $201,232 and the amount
charged by the firm was $152,523 (quarter ended March 31, 1999: $Nil
and $Nil respectively). As at March 31, 2000, the Group owed the firm
$110,434 (as at December 31, 1999: $80,308).
9 Commitments
On February 1, 2000 the Company and the Bank of Bermuda ("BOB") signed a
shareholder and share purchase agreement concerning the formation of First
Ecommerce Data Services Limited ("FEDS"), a joint venture operation to
house the Company's payment gateway and BOB's credit card switch business.
The Company committed to purchase a 40% interest in FEDS for a cash
consideration of $3,000,000 and the grant to BOB for FEDS employees options
to purchase 500,000 FECI shares for $11.01 per share. This transaction will
be accounted for under purchase accounting. Up to the date of this document
this transaction has not been completed.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with the accompanying
consolidated financial statements for the three-month periods ended March 31,
2000 and 1999 and the Form 10-K for the fiscal year ended December 31, 1999.
Special Note Regarding Forward-Looking Statements
Certain statements in this report and elsewhere (such as in other filings by the
Company with the Securities and Exchange Commission ("SEC"), press releases,
presentations by the Company of its management and oral statements) may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as "expects",
"anticipates," "intends," "plans," "believes," "seeks," "estimates," and
"should," and variations of these words and similar expressions, are intended to
identify these forward-looking statements. The Company's actual results could
differ materially form those anticipated in these forward-looking statements.
Factors that might cause or contribute to such differences include, among
others, competitive pressures, the growth rate of electronic commerce,
constantly changing technology and market acceptance of the Company's products
and services. The Company undertakes no obligation to publicly release the
results of any revisions to these forward-looking statements, which may be made
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
Results of Operations
Comparison of the three months ended March 31, 2000 with the three months ended
March 31, 1999
The Company generated processing income of $614 and recognized set up fee income
of $4,188 from merchant customers in the first quarter of fiscal year 2000
through its "master merchant" arrangement with the Bank of Bermuda. The Company
did not start to acquire merchants until the second quarter of 1999 and so there
were no revenues for the first quarter of 1999.
The Company announced in its Form 10-K filing on March 29 that it is now
focusing its services on the needs of banks in Asia. During the second quarter
of 2000 it plans to refer to those banks all merchants currently enjoying the
"master merchant" relationship. As a result, the Company may not generate
processing fee and set up fee income from the "master merchant" arrangement with
the Bank of Bermuda in the longer term. The Company has completed its internal
User Acceptance Testing of the systems it plans to provide to banks, but as of
the date of this document has not yet begun to provide these services.
Operating expenses for the first quarter of 2000 were 483% higher than for the
comparable period in 1999 and reflect the more mature stage of the Company's
development. The increase in operating expenses included an increase in legal
and professional fees of 607%, principally in respect of the engagement of
professional services associated with this more mature stage, such as software
development services from Asia Internet, legal fees associated with the
Company's ordinary course of business and investor relations services.
The Company had a total of 43 full time employees in the first quarter of 2000
as compared to only 4 full time employees in the first quarter of 1999. This
significant increase in employees is the main reason that staff costs have
increased 8.3 times over the comparable period in 1999. The Company did not
grant stock options to employees until June 22, 1999 and so there is no stock
<PAGE>
compensation expense in the quarter ended March 31, 1999 as compared to the same
quarter in 2000. The organization costs incurred in the first quarter of 1999
are not a recurrent item and so there is no comparable item in first quarter of
2000. The significant increase in operating lease charges in respect of
properties is due firstly to the Company starting to rent the premises in late
March 1999 and secondly due to the expansion of the office in July 1999. The
Company did not purchase fixed assets until the end of March 1999 and so there
is no depreciation charge for the first quarter of 1999. Interest income has
been generated from the fixed deposit monies raised from the recent private
placement exercise. The balance of a short-term loan arrangement was fully
repaid in early January, 2000.
Liquidity and Capital Resources
As of March 31, 2000 the Company's net current assets stood at $36.1 million
(December 31, 1999: $10.9 million). This placement brought net proceeds to the
Company of $30.3 million. Net cash used in operating activities increased from
$296,493 to $1.9 million, mainly due to the significant increase in operating
costs in the first quarter of 2000 as compared to the first quarter of 1999.
Net cash used in investing activities increased to $1,727,043, of which
$1,161,571 was due to the acquisition of Asia Internet Limited. The balance was
due to the purchase of property and equipment.
Net cash of $30,284,084 provided by financing activities consists mainly of a
major private placement closed on March 6, 2000, of which certain issue costs
amounting to approximately $1.9 million have not been paid. The placings closed
in the first quarter of 1999 comprised initial seed capital investments into the
Company of $2,008,000.
According to the Company's business plan and forecasts, operating cash flow is
not expected to turn positive until well into 2001. However, on the basis of
current and expected levels of operational expenditure, the Company's cash
resources are regarded as sufficient to fund the Company's operations for the
whole of the current year, even if no significant revenues are generated.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings which, in its opinion, after
consultation with legal counsel, could have a material adverse effect on the
Company. However, the Company is involved in ordinary routine litigation
incidental to its business.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On March 6, 2000 the Company issued 3,228,500 units, each of which consists of
one share of common stock and a five-year warrant to purchase one third of a
share of common stock for $11.40 per whole share, in a private placement to
certain investors outside the United States for $9.50 per unit. This issuance
was exempt from registration pursuant to Regulation S.
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
On March 16, 2000 the Company signed an agreement with the owners of Asia
Internet Limited to purchase the entire issued share capital of Asia Internet
Limited for a consideration of $1.2 million in cash and 24,870 shares in the
Company. The purchase was completed on March 31, 2000. Asia Internet Limited, of
which Mr. Daswani is a director and shareholder, provided technical support,
system maintenance and other professional services for the Company during the
year ended December 31, 1999 and in the period ended March 31, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Form 8-K Filed on January 10, 2000 in Regard to Private Placement Made in
December, 1999
Form 8-K Filed on March 17, 2000 in Regard to Private Placement Completed on
March 6, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIRST ECOM.COM, INC.
---------------------------------------
(Registrant)
By: /s/ John R. Brewer
---------------------------------------
Dated: May 15, 2000 John R. Brewer, Secretary &
Chief Financial Officer
