U.S. 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
JUNE 30, 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: 000-9071
eCom.com, Inc.
(Exact name of registrant as specified in its charter)
Nevada 74-2026624
(State or jurisdiction of incorporation I.R.S. Employer
or organization) Identification No.)
3900 Birch Street, Suite 113, Newport Beach, California 92660
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (877) 613-3131
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 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) been subject to such filing
requirements for the past 90 days. Yes X No .
As of June 30, 2000, the Registrant had 24,595,739 shares of
common stock issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X .
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2000 3
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS
ENDED JUNE 30, 2000 AND JUNE 30, 1999 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2000
AND JUNE 30, 1999 5
NOTES TO FINANCIAL STATEMENTS 6
ITEM 2. PLAN OF OPERATION 11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 13
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS 13
ITEM 5. OTHER INFORMATION 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURE 14
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCAL STATEMENTS.
eCom.com, Inc.
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
June 30, 2000
Current Assets:
Cash $ 0
Total Current Assets 0
Fixed Assets
Equipment 534,886
Less Accumulated Depreciation (534,886)
Net Fixed Assets 0
Other Assets
eSEarchB2B Web Crawler 1,250,000
Rights' Title, net of amortization 1
Product Development Expenditures 121,922
Total Other Assets 1,371,923
Total Assets 1,371,923
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable 0
Long-Term Liabilities
Debenture Payable, Bearer 1,878,488
Shareholders' Equity:
Common Stock , $0.01 par value
10,000,000,000 shares authorized,
24,595,739 issued and outstanding 4,566,079
Paid-In-Capital (in excess of par value) 20,519,869
Accumulated Deficit (25,592,513)
Shareholders' Equity (506,565)
Total Liabilities & Shareholders' Equity $ 1,371,923
See Accompanying Notes to Unaudited Financial Statements
eCom.com, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
June 30 June 30 June 30 June 30
2000 1999 2000 1999
Revenue $ 0 $ 0 $ 0 $ 0
General and
Administrative
Expenses:
Auto Expenses 3,000 3,000 9,000 9,000
Consulting Fees 58,190 0 79,190 0
Rent Expense 12,600 12,600 37,800 37,800
Telephone Expense 9,000 257,833 27,000 27,000
Travel and Promotions 45,000 45,000 135,000 135,000
Total General and
Administrative
Expenses 127,790 69,600 287,990 208,800
Other (Income)
Expenses
Write-off of
Accounts Payable 0 0 (82,007) 0
Interest Expense 13,770 16,649 45,310 43,684
Total Other
(Income) Expenses 13,770 16,649 (36,697) 43,684
Net Income (Loss) $(141,560) $(86,249) $(251,293) $(252,484)
Basic and Diluted
Earnings Per Share $(.005) $(.001) $(.01) $(.004)
Weighted Average
Shares
Outstanding 24,595,739 58,787,216 24,595,739 58,787,216
See Accompanying Notes to Unaudited Financial Statements
eCom.com, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Nine Months
Ended Ended
June 30, 2000 June 30, 1999
Cash Flows From Operating Activities:
Net Loss $ (251,293) $(252,484)
Adjustments to reconcile net loss to
net cash used by operating activities
Decrease in accounts payable (122,007) 0
Net cash used by operations (373,300) (252,484)
Cash Flows From Investing
Activities:
Purchase of eSearchB2B web
crawler proprietary software (1,250,000) 0
Net cash used in investing (1,250,000) 0
Cash Flows From Financing
Activities:
Increase in debenture payable 1,123,300 252,584
Purchase of internet timeshare interest 0 (100)
Issuance of common stock 500,000 0
Net cash used in financing 1,623,300 252,484
Net Increase (Decrease) in Cash 0 0
Beginning Cash Balance 0 50,327
Ending Cash Balance 0 50,327
See Accompanying Notes to Unaudited Financial Statement
eCom.com, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been
prepared in accordance with U.S. Securities and Exchange
Commission ("SEC") requirements for interim financial statements.
Therefore, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. The financial statements
should be read in conjunction with the year ended September 30,
1999 financial statements of eCom.com, Inc. (formerly E.T.
Capital, Inc.) ("Registrant") included in the Form 10-K filed
with the SEC by the Registrant.
The results of operations for the interim periods shown in this
report are not necessarily indicative of results to be expected
for the full year. In the opinion of management, the information
contained herein reflects all adjustments necessary to make the
results of operations for the interim periods a fair statement of
such operation. All such adjustments are of a normal recurring
nature.
NOTE 2 - RELATED PARTY TRANSACTIONS
Due to related parties at June 30, 2000 consist of the following:
Advances payable to an entity controlled by an
officer and shareholder of the Registrant represent
advances, secured with floating debenture and due
on demand $1,878,488
Total due to related parties $1,878,488
ITEM 2. PLAN OF OPERATION.
Twelve Month Plan of Operation.
The following discussion should be read in conjunction with the
financial statements of the Registrant and notes thereto
contained elsewhere in this report.
The Registrant is continuing to expand its entry into "not-for-
profit" fund raising using "1-900" "pay-per-call" telephone
numbers. With campaign finance reform a central issue in both
the Congress and the Senate, the Registrant is negotiating
agreements for the use of the Registrant's two political "1-900"
fund raising numbers: 1-900-DEMOCRAT and 1-900-REPUBLICAN.
These numbers could raise hundreds of millions of dollars
for both the Democratic and Republican parties. If contracts are
concluded with either of the Democrats or Republicans,
projections indicate the Registrant could earn over $2.00 per
share from each number.
To develop cash flow from the "1-900" concept, the
Registrant will continue to rely on Xanthos Management
Corporation to finance the Registrant's ongoing overhead under
the terms of the bearer debenture it holds until fund raising
contracts have been signed (see Notes 3 and 4 to the September
30, 1999 audit as filed and as part of the fiscal 1999 Form 10-K
with regard to this related party transaction). The Registrant
has sufficient cash funds to maintain operations for the next
twelve months.
The company's internet timeshare web sites
"timeshareonlinerealty.com" and "timeshareunitsales.com" are in
the final development stage. Once the sites are completed, the
Registrant will actively solicit registration of timeshare
properties from around the world to list for sale through these
web sites using the Registrant's new browser esearchb2b.com (see
next Paragraph).
The Registrant has recently acquired proprietary software
for an Internet Web Crawler, "eSearchB2B". This web search
engine searches other search engines for users input. Revenues
sources from this web search engine are projected to start by
2001 from this acquisition.
The Registrant continues in its efforts to finance the
Paraguayan hydrocarbon concessions. During this fiscal year, the
Registrant and its counsel continue to take the position that
individuals, corporations and/or financial institutions that
either profited from or participated in the hydrocarbon financing
transaction should compensate the Registrant for the unauthorized
use of its securities and for breach of the original contractual
agreements. The Registrant's lawyers are investigating the
Registrant's remedies as a result of these transactions and are
confident that the Registrant will be successful.
There were no significant capital expenditures made by the
Registrant during the quarter ended June 30, 2000. Except as
previously disclosed, the Registrant is not aware of any known
trends, demands, commitments, events or uncertainties that will
result in or that are reasonably likely to result in the
Registrant's liquidity increasing or decreasing in any material
way.
Risk Factors Connected with Plan of Operation.
(a) Only Limited Prior Operations.
The Registrant has only limited operations and is subject to all
the risks inherent in the creation of a new business. Since the
Registrant's principal activities to date have been limited to
organizational activities and prospect development, it has no
record of any revenue-producing operations. Consequently, there
is only a limited operating history upon which to base an
assumption that the Registrant will be able to achieve its
business plans. In addition, the Registrant has only limited
assets. As a result, there can be no assurance that the
Registrant will generate significant revenues in the future; and
there can be no assurance that the Registrant will operate at a
profitable level. If the Registrant is unable to obtain
customers and generate sufficient revenues so that it can
profitably operate, the Registrant's business will not succeed.
(b) Need for Additional Financing May Affect Operations.
Since 1992, the Registrant has financed operations
primarily through private placements of common stock and through
its ongoing debenture with Xanthos Management Corporation. The
Registrant has significant ongoing liquidity needs to support its
existing business and continued growth. The Registrant's
continued operations therefore will depend upon its ability to
raise additional funds through bank borrowings, equity or debt
financing. Adequate funds may not be available when needed or
may not be available on favorable terms. If funding is
insufficient at any time in the future, the Registrant may be
unable to develop or enhance its service offering, take advantage
of business opportunities or respond to competitive pressures,
any of which could have a negative impact on the business,
operating results and financial condition. In addition, if
additional shares were issued to obtain financing, current
shareholders may suffer a dilutive effect on their percentage of
stock ownership in the Registrant.
(c) Substantial Competition.
The Registrant may experience substantial competition in its
efforts to locate and attract customers for its products. Many
competitors in its industry have greater experience, resources,
and managerial capabilities than the Registrant and may be in a
better position than the Registrant to obtain access to
attractive products. There are a number of larger companies
which will directly compete with the Registrant. Such
competition could have a material adverse effect on the
Registrant's profitability or viability.
(d) Other External Factors May Affect Viability of Registrant.
The industry of the Registrant in general is a speculative
venture necessarily involving some substantial risk. There is no
certainty that the expenditures to be made by the Registrant will
result in commercially profitable business. The marketability of
its products will be affected by numerous factors beyond the
control of the Registrant. These factors include market
fluctuations, and the general state of the economy (including the
rate of inflation, and local economic conditions). The exact
effect of these factors cannot be accurately predicted, but the
combination of these factors may result in the Registrant not
receiving an adequate return on invested capital.
(e) Success of Registrant Dependent on Management.
The Registrant's success is dependent upon the hiring and
retention of key personnel. None of the officers or directors
has any employment or non-competition agreement with the
Registrant. Therefore, there can be no assurance that these
personnel will remain employed by the Registrant. Should any of
these individuals cease to be affiliated with the Registrant for
any reason before qualified replacements could be found, there
could be material adverse effects on the Registrant's business
and prospects.
In addition, all decisions with respect to the management of
the Registrant will be made exclusively by the officers and
directors of the Registrant. Investors will only have rights
associated with minority ownership interest rights to make
decision which effect the Registrant. The success of the
Registrant, to a large extent, will depend on the quality of the
directors and officers of the Registrant. Accordingly, no person
should invest in the Shares unless he is willing to entrust all
aspects of the management of the Registrant to the officers and
directors.
(f) Conflicts of Interest May Affect Independence of Officers
and Directors.
The officers and directors have other interests to which they
devote time, either individually or through partnerships and
corporations in which they have an interest, hold an office, or
serve on boards of directors, and each will continue to do so
notwithstanding the fact that management time may be necessary to
the business of the Registrant. As a result, certain conflicts of
interest may exist between the Registrant and its officers and/or
directors which may not be susceptible to resolution.
In addition, conflicts of interest may arise in the area of
corporate opportunities which cannot be resolved through arm's
length negotiations. All of the potential conflicts of interest
will be resolved only through exercise by the directors of such
judgment as is consistent with their fiduciary duties to the
Registrant. It is the intention of management, so as to minimize
any potential conflicts of interest, to present first to the
Board of Directors to the Registrant, any proposed investments
for its evaluation.
(g) Limitations on Liability, and Indemnification, of
Directors and Officers May Result in Expenditures by the
Registrant.
The Registrant's Articles of Incorporation include
provisions to eliminate, to the fullest extent permitted by the
Nevada Revised Statutes as in effect from time to time, the
personal liability of directors of the Registrant for monetary
damages arising from a breach of their fiduciary duties as
directors. The By-Laws of the Registrant include provisions to
the effect that the Registrant may, to the maximum extent
permitted from time to time under applicable law, indemnify any
director, officer, or employee to the extent that such
indemnification and advancement of expense is permitted under
such law, as it may from time to time be in effect. Any
limitation on the liability of any director, or indemnification
of directors, officer, or employees, could result in substantial
expenditures being made by the Registrant in covering any
liability of such persons or in indemnifying them.
(h) Absence of Cash Dividends.
The Board of Directors does not anticipate paying cash
dividends on the common stock for the foreseeable future and
intends to retain any future earnings to finance the growth of
the Registrant's business. Payment of dividends, if any, will
depend, among other factors, on earnings, capital requirements
and the general operating and financial conditions of the
Registrant as well as legal limitations on the payment of
dividends out of paid-in capital.
(i) No Cumulative Voting.
Holders of the shares of common stock of the Registrant are not
entitled to accumulate their votes for the election of directors
or otherwise. Accordingly, the holders of a majority of the
shares present at a meeting of shareholders will be able to elect
all of the directors of the Registrant, and the minority
shareholders will not be able to elect a representative to the
Registrant's board of directors.
(j) No Assurance of Continued Public Trading Market; Risk
of Low Priced Securities.
There is only a limited public market for the common
stock of the Registrant. The common stock of the Registrant is
currently quoted on the Over the Counter Bulletin Board. As a
result, an investor may find it difficult to dispose of, or to
obtain accurate quotations as to the market value of the
Registrant's securities. In addition, the common stock is subject
to the low-priced security or so called "penny stock" rules that
impose additional sales practice requirements on broker-dealers
who sell such securities. The Securities Enforcement and Penny
Stock Reform Act of 1990 ("Reform Act") requires additional
disclosure in connection with any trades involving a stock
defined as a penny stock (generally, according to recent
regulations adopted by the U.S. Securities and Exchange
Commission, any equity security that has a market price of less
than $5.00 per share, subject to certain exceptions), including
the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the
risks associated therewith. The regulations governing low-
priced or penny stocks sometimes limit the ability of broker-
dealers to sell the Registrant's common stock and thus,
ultimately, the ability of the investors to sell their securities
in the secondary market.
(k Effects of Failure to Maintain Market Makers.
If the Registrant is unable to maintain a National
Association of Securities Dealers, Inc. member broker/dealers as
market makers, the liquidity of the common stock could be
impaired, not only in the number of shares of common stock which
could be bought and sold, but also through possible delays in the
timing of transactions, and lower prices for the common stock
than might otherwise prevail. Furthermore, the lack of market
makers could result in persons being unable to buy or sell shares
of the common stock on any secondary market. There can be no
assurance the Registrant will be able to maintain such market
makers.
(l) Uncertainty Due to Year 2000 Issue.
The Year 2000 issue arises because many computerized systems
use two digits rather than four to identify a year. Date
sensitive systems may recognize the year 2000 as 1900 or some
other date, resulting in errors when information using the year
2000 date is processed. In addition, similar problems may arise
in some systems which use certain dates in 1999 to represent
something other than a date. The effects of the Year 2000 issue
may be experienced before, on, or after January 1, 2000, and if
not addressed, the impact on operations and financial reporting
may range from minor errors to significant system failure which
could affect the Registrant's ability to conduct normal business
operations. This creates potential risk for all companies, even
if their own computer systems are Year 2000 compliant. It is not
possible to be certain that all aspects of the Year 2000 issue
affecting the Registrant, including those related to the efforts
of customers, suppliers, or other third parties, will be fully
resolved.
The Registrant currently believes that its systems are Year 2000
compliant in all material respects. Although management is not
aware of any material operational issues or costs associated with
preparing its internal systems for the Year 2000, the Registrant
may experience serious unanticipated negative consequences (such
as significant downtime for one or more of its web site
properties) or material costs caused by undetected errors or
defects in the technology used in its internal systems.
Furthermore, the purchasing patterns of advertisers may be
affected by Year 2000 issues as companies expend significant
resources to correct their current systems for Year 2000
compliance. The Registrant does not currently have any
information about the Year 2000 status of its advertising
customers. However, these expenditures may result in reduced
funds available for web advertising or sponsorship of web
services, which could have a material adverse effect on its
business, results of operations, and financial condition. The
Registrant's Year 2000 plans are based on management's best
estimates.
Forward Looking Statements.
The foregoing Plan of Operation contains "forward looking
statements" within the meaning of Rule 175 of the Securities Act
of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934,
as amended, including statements regarding, among other items,
the Registrant's business strategies, continued growth in the
Registrant's markets, projections, and anticipated trends in the
Registrant's business and the industry in which it operates. The
words "believe," "expect," "anticipate," "intends," "forecast,"
"project," and similar expressions identify forward-looking
statements. These forward-looking statements are based largely
on the Registrant's expectations and are subject to a number of
risks and uncertainties, certain of which are beyond the
Registrant's control. The Registrant cautions that these
statements are further qualified by important factors that could
cause actual results to differ materially from those in the
forward looking statements, including, among others, the
following: reduced or lack of increase in demand for the
Registrant's products, competitive pricing pressures, changes in
the market price of ingredients used in the Registrant's products
and the level of expenses incurred in the Registrant's
operations. In light of these risks and uncertainties, there can
be no assurance that the forward-looking information contained
herein will in fact transpire or prove to be accurate. The
Registrant disclaims any intent or obligation to update "forward
looking statements."
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Registrant is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Registrant has been threatened.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Reports on Form 8-K. A report on Form 8-K was filed during
the third quarter of the fiscal year covered by this Form 10-QSB
as follows:
A Form 8-K was filed on June 12, 2000 to reflect, effective on
June 1, 2000, that the Registrant has moved its principal
executive offices to 3900 Birch Street, Suite 113, Newport Beach,
California 92660. The telephone number for the Registrant will
remain (877) 613-3131.
(b) Exhibits. Exhibits included or incorporated by
reference herein: See Exhibit Index.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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.
eCom.com, Inc.
Dated: August 18, 2000 By: /s/ Sidney B. Fowlds
Sidney B. Fowlds, President
EXHIBIT INDEX
Exhibit. Description
No.
2 Agreement and Plan of Merger between eCom.com, Inc., a
Colorado corporation, and eCom.com, Inc., a Nevada corporation
(incorporated by reference to Exhibit 2 to the Form 8-K filed on
August 21, 2000).
3.1 Articles of Incorporation (see below).
3.2 Bylaws (see below).
4.1 Employee Stock Incentive Plan, dated June 1, 2000
(incorporated by reference to Exhibit 4.1 of the Form S-8 filed
on June 2, 2000).
4.2 Retainer Stock Plan for Non-Employee Directors and
Consultants, dated June 1, 2000 (incorporated by reference to
Exhibit 4.2 of the Form S-8 filed on June 2, 2000).
10 Acquisition Agreement between the Registrant and Rukos
Security Advice AG, dated June 5, 2000 (incorporated by reference
to Exhibit 10 of the Form 8-K filed on August 21, 2000).
27 Financial Data Schedule (see below).
