SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter ended January 31, 1999
Commission File No. 0-10315
E-COMMERCE WEST CORP.
(Name of Registrant as specified in its charter)
Utah 95-4091368
(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
152 Sherman St.
Deadwood, SD 57732
(Address of principal executive offices)
(605) 578-1299 (605) 578-1298
(Registrant's telephone number) (Registrant's fax number)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 Par
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) has been
subject to such filing requirements for the past 90 days.
[x] Yes [ ] No
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
[x] Yes [ ] No
As of January 31, 1999 9,573,063 shares of registrant's $0.001 par
value common stock were outstanding.
E-COMMERCE WEST CORP.
INDEX
Page
Number
PART 1 FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Balance Sheet
as of January 31, 1999 3
Statement of Operations
as of January 31, 1999 4
Statement of Cash Flows
as of January 31, 1999 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART 11 OTHER INFORMATION
Item 2. Change in Securities 11
Item 6. Exhibits and Reports on From 8-K 11
E-COMMERCE WEST CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS Jan. 31, 1999 July 31, 1998
Current Assets
Cash and cash equivalents $ 42,771 $ 71,615
Accounts receivable 302 2,930
Note receivable - officer 25,000 9,000
Notes receivable 9,000 51,000
Inventories 18,198 0
Prepaid expenses & other assets 16,497 38,290
Total current assets 111,768 172,835
Fixed Assets
Property and equipment 47,916 45,396
Accumulated depreciation ( 15,860) ( 12,523)
Fixed Assets, Net 32,056 32,873
Total assets $ 143,824 $ 205,708
Jan. 31, 1999 July 31, 1998
LIABILITIES AND SHAREHOLDERS'
DEFICIT
Current liabilities
Accounts payable $ 100,537 $ 153,803
Accrued liabilities 287,264 140,248
Note payable officer 3,655 0
Net liabilities of discontinued
operations 134,130 136,392
Total current liabilities 525,586 430,343
Equity
Preferred Stock, 100,000,000
authorized; 1,100,000 Series A
convertible shares issued and
outstanding 1,100 1,100
Common Stock, $0.001 par value,
150,000,000 shares authorized;
9,573,063 and 8,642,102 shares
issued and outstanding 9,573 8,642
Additional Paid in Capital 5,962,719 5,856,840
Accumulated deficit (6,355,154) (6,091,217)
Total shareholders' deficit ( 381,762) ( 224,635)
Total liabilities & shareholders'
deficit $ 143,824 $ 205,708
E-COMMERCE WEST CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
3 Months Ended 6 Mo. Ended
Jan. 31/99 Jan.31/98 Jan. 31/99 Jan. 31/98
Revenues $ 5,334 $ 5,334
Cost of goods sold 1,899 1,899
Gross Profit 3,435 3,435
Selling, general &
administrative expenses 186,151 $ 136,235 263,240 $ 329,998
Depreciation/amortization 1,669 1,863 4,098 3,726
Loss from continuing
operations ( 184,385) ( 138,098) ( 263,903) ( 333,724)
OTHER INCOME (EXPENSE)
Interest income 1,041 1,615 419
Interest expense ( 424) ( 4,453) ( 2,037) ( 12,524)
Realized gain 7,318
Gain on sale of assets 3,000
Loss on abandoned projects ( 5,409)
Total other income (expense) 617 ( 4,453) 2,578 ( 10,196)
Loss from continuing
operations before
income taxes ( 183,768) ( 142,551) ( 261,325) ( 343,920)
Income tax provision 0 0 0 0
Net loss from continuing
operations ( 183,768) ( 142,551) ( 261,325) ( 343,920)
Discontinued Operations:
Loss from operations ( 7,262) ( 167,828) ( 8,147) ( 272,540)
Gain (loss) from
disposition of operations 0 ( 1,519,647) 5,535 ( 1,519,647)
Net loss ($191,030) ($1,830,026) ($ 263,937) ($2,136,107)
Basic (loss) Per Share
From continuing operations ($0.02) ($0.03) ($0.03) ($0.10)
From discontinued operations 0.00 ( 0.31) 0.00 ( 0.30)
Total basic loss per share ($0.02) ($0.34) ($0.03) ($0.40)
Weighted-average common
shares outstanding 9,280,976 5,393,128 9,022,670 5,325,784
E-COMMERCE WEST CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
3 Months Ended 6 Months ended
Jan.31/99 Jan.31/98 Jan.31/99 Jan.31/98
Cash flows from
operating activities:
Net loss from
continuing operations ($ 183,768) ($ 142,551) ($ 261,325) ($ 343,920)
Adjustments to reconcile
net loss to net cash used
in operating activities
Depreciation & amortization 1,669 1,863 3,337 3,726
Issuance of stock for
services rendered 25,460 11,166 31,960 92,983
Gain on sale of assets ( 3,000)
(Increase) decrease in:
Prepaid expenses & other
current assets ( 6,363) 116,597 21,793 0
Accounts receivable 19,698 16,799 2,628 ( 74,322)
Inventories ( 18,198) 10,029 ( 18,198) 0
Other Assets ( 78,075) ( 19,547)
Increase (decrease) in:
Accounts payable 14,554 228,753 ( 53,266) 51,610
Accrued liabilities 57,819 18,197 144,354 63,733
Net cash provided by (used in)
continuing operations ( 89,129) 182,778 ( 131,717) ( 225,737)
Net cash provided (used in)
discontinued operations ( 3,933) ( 158,563) ( 2,262) 130,117
Cash flows from
investing activities:
Notes receivable 45,000
Acquisitions of
property & equipment ( 2,520) 0 ( 2,520) ( 7,459)
Loans to officers ( 3,000) 0 ( 16,000) 20,000
Net cash used in investing
activities ( 5,250) 0 ( 26,480) ( 12,541)
Cash flows from
financing activities:
Loans from officers 3,211 3,655 13,372
Issuance of common stock 75,000 75,000
Payments on notes payable 0 ( 39,218) 0 0
Net cash provided (used in)
financing activities 78,211 ( 39,218) 78,655 ( 13,372)
Net increase (decrease)
in cash and cash
equivalents ( 20,101) ( 15,003) ( 28,844) ( 69,707)
Cash and cash equivalents
beginning of period 62,872 22,905 71,615 77,609
Cash and cash equivalents
end of period $ 42,771 7,902 $ 42,771 $ 7,902
E-COMMERCE WEST CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED January 31, 1999
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying interim financial statements of E-COMMERCE WEST
CORP. (the Company) are unaudited; however, in the opinion of
Management, all adjustments necessary for a fair presentation of such
financial statements have been reflected in the interim periods
presented. Such adjustments consisted only of normal recurring items.
The Company experienced no revenues during the transition period
from a gaming company in January 1998, when the Company discontinued
operations of and subsequently liquidated Goldiggers Hotel and Gaming
Est., to an Internet company with the launch of its first Internet Web
site that occurred during this quarter. This Web site was seasonal and
only operated for 30 days prior to Christmas. Revenues are anticipated
to resume in the first calendar quarter of 1999 coinciding with the
planned launch of the Company's first permanent retail Web site.
Consequently, operating results for the three months ended January 31,
1999 are not necessarily indicative of the results that may be expected
for the year ended July 31, 1999. The significant accounting policies
and certain financial information which are normally included in
financial statements prepared in accordance with generally accepted
accounting principles, but which are not required for interim reporting
purposes, have been condensed or omitted. The accompanying financial
statements of the Company should be read in conjunction with the
Company's audited financial statements for the year ended July 31, 1998
and the notes thereto, included in the Company's annual report on Form
10-K.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General Financial Condition
The Company does not have any current revenue streams from
operations, although modest revenues were achieved during a brief 30
day period during the Christmas season from the launch of the Company's
first seasonal web site. Revenues are anticipated to commence with the
launch of the Company's first permanent Internet retail Web site that
is scheduled to occur in the first quarter of calendar year 1999. Due
to the potential for competition on the Internet, the Company is not
revealing the nature of this site until the actual launch has occurred.
The Company does anticipate revenues within the current fiscal year to
be derived from its Internet niche Web sites although there can be no
assurances as to the amount of revenues or if the revenues will be
sufficient to satisfy ongoing corporate operating expense.
The Company's direct expenses throughout the quarter have been
made from cash on hand and from funds provided through financing
activities. The Company is currently seeking financing to sustain
operations. Current cash on hand is not sufficient to meet ongoing
operating expenses, however the Company is optimistic that financing in
the amount and on the terms acceptable to the Company will be available
within the time frame required.
Results of Operations:
E-Commerce West
The quarter was spent in the continuing research into the Internet
in general and electronic commerce specifically plus the development,
launch and operation of the Company's initial seasonal retail Web site
www.echristmastrees.com. Additionally, efforts were devoted to product
procurement and the design of the Company's first permanent retail Web
site to launch in the first calendar quarter of 1999. Funds were
expensed and are expected to continue to be expensed in the ongoing
development and planned operation, marketing, advertising, promotion
and new product procurement in addition to continuous improvements to
the Web site and the research, planning, development and launch of
other niche Web sites.
echristmastrees.com
On November 18, 1998 the Company launched the first of what the
Company plans are several seasonal web sites. The site,
www.echristmastrees.com, sold two varieties of Christmas trees in
various sizes plus two types of Holiday wreaths. The company's goal
this year was to `brand' the site. As such, the Company purchased over
4 million banner ads on popular Web sites, such as AltaVista, GeoCities
and `www.usatoday.com'. To announce the launch, the Company
retained the services of the Internet public relations firm that
promoted the launch of `Amazon.com', `CoolShopping', `ONSALE" and
`LinkExchange', all successful Web sites. The Company was the
beneficiary of significant publicity including an article in Business
Week Online, an article which was syndicated to over 800 newspapers by
Bloomberg, a review by Yahoo's `Daily News', an article in USA Today
newspaper plus a corresponding article on their Web site, a television
feature on ZDTV plus a corresponding report on their Web site and
others. Of significance was the large number of measurable banner ad
responses as click-throughs from Internet users in over 85 foreign
countries. The Company interprets these results as extremely
encouraging as to its ability to create interesting Web sites, creative
advertising and promotions that produces results and an array of
products generating significant world-wide appeal, as that is the
future of the Internet. Although first year sales were modest, the
Company believes it succeeded in its pre-launch goal to `brand' the
site, which the Company believes will be reflected through increased
sales in future years.
New Internet Web Site
The Company continues to apply its time and resources to the
development of its second retail Web site. Suppliers and distribution
arrangements are taking form. The Company anticipates the launch will
occur in the first quarter of calendar year 1999. The Company will
offer a product line currently not offered on the Internet. The site
will be a year round retail site, have international appeal and,
although it is premature to project the amount of revenues, the Company
believes the site will be successful.
The Company is also developing it's third Web site, anticipated to
launch in the second calendar quarter of 1999.
Domain Name Ownership
The Company owns, as intellectual property, over 20 Web site
addresses consistent with the Company's plans to continue to develop
and launch Web sites designed to appeal to a niche segment of the
market.
Proposed Wyatt, Missouri Riverboat Casino
In 1994 the Company, through its current wholly owned subsidiary
Royal Casino Group, responded to a Request For Proposals issued by the
City of Wyatt, Missouri. Royal Casino Group won the RFP and
subsequently entered into an exclusive 25-year agreement with the City
to develop "The Royal Missourian", a riverboat casino entertainment
center, on the Mississippi River at the confluence of the Ohio River.
The Company acquired 50 acres of land on the Mississippi River with a
site acceptable in Missouri's constitution permitting gaming
riverboats. In April, 1993, the Company applied to the Army Corps of
Engineers for it's 404 docking permit which is necessary prior to the
commencement of any construction related to the Company's proposed
development. During the ensuing years, the Company continued obtaining
various regulatory approvals, such as a Water Certification Permit from
the Missouri Department of Natural Resources which has been issued to
the Company. In January, 1999, the Company received its long-awaited
Army Corps' permit. Virtually all the components are in place to
proceed with the application to the Missouri Gaming Commission and when
and if selected for review by the Commission, the commencement of the
construction of the development could begin. However, it is the
intention of the Company to explore all it's options in addition to
firming the Company's funding for the project prior to submitting its
application for licensing to the Missouri Gaming Commission. Although
actively pursuing all avenues related to the development, the Company
can not realistically project a time frame for submission of the
application.
Stock Issuances
The Company issued the following shares this quarter: from S-8
Registration Number 333-32415: to Dan French on December 18th 3,572
common shares his consulting services on the Wyatt project and to Joy
Nissenson on January 22nd 3,410 common shares for her consulting
services on echristmastrees.com. Further from S-8 Registration Number
333-59975: to Lucky Management on Nov. 17th, Dec. 18th and Jan. 20th a
total of 50,625 common shares for their consulting services; to Arthur
Lovett on November 17th 8,422 common shares for his consulting services
for the Company's EDGAR filings; to Dalton & Mathias on January 20th
7,729 common shares for their accounting services; to Robinson, Diamant
and Brill on January 20th 10,417 for their legal services. During the
quarter the Company, through 3 private placements, issued an aggregate
total of 583,333 restricted common shares for a total of $75,000.
Corporate Loans
Jon Elliott, the Company's President/CEO has not received any cash
compensation per the terms of his Employment Agreement for the 20-month
period from June, 1997 through January, 1999. He owes the Company a
total of $25,000 per loans taken which have an interest rate of 9%,
simple interest, calculated annually.
Equipment Rental, Overhead Reimbursement, Rent, Support Services
The Company leases approximately 640 square feet for its corporate
headquarters in Deadwood, South Dakota for $400 per month on a lease
through April, 1999.
Consultants
The Company retained the services of the Ward Group to promote the
launch of its initial Web site, www.echristmastree.com. Additionally,
the Company retained the services of Lucky Management as an Internet
marketing consultant. Both organizations were retained in November
1998.
Year 2000 Compliance
The Company is conducting a comprehensive review of their computer
systems to identify all software applications that could be affected by
the inability of many existing computer systems to process time-
sensitive data accurately beyond the year 1999, referred to as the Year
2000 or Y2K issue. The Company expects to complete their internal Year
2000 compliance program by mid 1999 and anticipates that the total
expenditures on this program will not exceed $10,000. As the Company
launches its Internet retail Web sites, the Company will be marketing
products from several third party suppliers. As such, the Company is
attempting to ascertain from each supplier assurances of their Year
2000 compliance. However, since the Company will be dependant on its
suppliers computer systems and applications, particularly with respect
to shipping, accounting, billing and buying, the Company may experience
delays which could produce an adverse effect. While the company
believes its procedures and its suppliers efforts in this regard will
be successful, because of the complexity of the Year 2000 issue and the
interdependence of organizations using computer systems, the Company's
efforts, and those of its third parties with whom it interacts, may not
be satisfactorily completed in a timely fashion or may cost
substantially more to remedy than the amount anticipated. Failure by
the Company's suppliers to satisfactorily address the Year 2000 issue
could have a material adverse effect on the Company.
Other Matters
Despite providing his services exclusively to the Company, the
Company has been unable to pay a salary to Jon Elliott, the Company's
Chief Executive Officer and a Director per his Employment Agreement.
Therefore, in this quarter, as his sole source of income, Mr. Elliott
sold a total of 32,000 common shares in four separate transactions at
an average price of $0.52 on the open market. All appropriate forms
concerning the aforementioned transactions were filed in a timely
fashion with the Securities and Exchange Commission.
Subsequent Events
Stock Issuance
On February 2nd and February 24th the Company issued 3,106 common
shares to David Addison and 40,995 common shares to Harlan Schmidt
respectively for their legal services. These issuances were from the
Company's active S-8 registration number 333-59975. Further, in an
effort to improve the Company's balance sheet and reduce its current
liabilities, on February 19th pursuant to a resolution of the Board in a
February 19th meeting, the Company issued 800,000 restricted common
shares to Jon Elliott, the Company's President & CEO in exchange for
$100,000 owed to Mr. Elliott in salary pursuant to his Employment
Agreement. Mr. Elliott has not received any cash compensation per the
terms of his Employment Agreement in the previous 20-month period
beginning in June, 1997 despite providing his services exclusively to
the Company.
Goldigger's Regulatory Matters
In the quarter, the Company paid the mutually agreed upon amount
of $4,936.01 reached in a settlement with the South Dakota Department
of Revenue over an alleged underpayment of sales and use tax by
Goldiggers for the period 1994-1997. As previously reported, the
Company did not believe the amount stated as owed by the Department was
in fact owed. However, to avoid the expense of litigation and its
additional related costs, Atlantic-Pacific Corp., the Company's
subsidiary, settled for a substantially lesser amount. For
informational purposes, the Company's subsidiary did not own nor
operate Goldiggers for the periods 1994, 1995 and the first half of
1996.
PART II OTHER INFORMATION
Item 2. Changes in Securities
None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None
Exhibits other than those listed have been omitted because they
are nonexistent, inapplicable or because the information is given in
the financial statements of the Company.
b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed by the
undersigned thereunto duly authorized.
E-COMMERCE WEST CORP.
(Registrant)
By: /s/ Jon F. Elliott
Jon F. Elliott, President
and Chief Executive Officer
Date: March 15, 1999
4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedulle contains interim summary financial information extracted from the
Consolidated Balance Sheets and Statement of Operations of E-Commerce West
Corp. for the quarter ended January 31, 1999, which statements have been
compiled by management.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> JAN-31-1999
<CASH> 42,771
<SECURITIES> 0
<RECEIVABLES> 302
<ALLOWANCES> 0
<INVENTORY> 18,198
<CURRENT-ASSETS> 111,768
<PP&E> 47,916
<DEPRECIATION> 15,860
<TOTAL-ASSETS> 143,824
<CURRENT-LIABILITIES> 525,586
<BONDS> 0
0
1,100
<COMMON> 9,573
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 143,824
<SALES> 5,334
<TOTAL-REVENUES> 5,334
<CGS> 1,899
<TOTAL-COSTS> 1,899
<OTHER-EXPENSES> 187,820
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 424
<INCOME-PRETAX> (183,768)
<INCOME-TAX> 0
<INCOME-CONTINUING> (183,768)
<DISCONTINUED> (7,262)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (191,030)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
