SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter ended January 31, 2000
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.)
83 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, 2000 15,998,097 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 Sheets (unaudited)as of January 31, 2000
and (audited)July 31, 1999 3
Unaudited Statements of Operations
3 months ended January 31, 2000 and 1999 4
Unaudited Statements of Cash Flows
3 months ended January 31, 2000 and 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 Form 8-K 11
E-COMMERCE WEST CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS January 31, 2000 July 31, 1999
(unaudited) (audited)
Current Assets
Cash and cash equivalents $ 887 $ 9,493
Note receivable - officer 33,000 33,000
Notes receivable 9,000 9,000
Inventories 15,405 16,352
Prepaid legal expense 116,665 141,667
Prepaid expenses & other assets 7,747 8,969
Total current assets 182,704 218,481
Fixed Assets
Property and equipment, net 70,190 85,704
Total Assets $ 252,894 $ 304,185
January 31, 2000 July 31, 1998
LIABILITIES AND SHAREHOLDERS'
DEFICIT
Current liabilities
Accounts payable $ 150,042 $ 125,434
Accrued payroll & payroll taxes 244,838 224,516
State tax payable 100 -
Note payable officer 53,313 27,561
Accrued other 1,229 -
Net liabilities of discontinued
operations 133,427 132,326
Total current liabilities 582,949 509,837
Commitments & contingencies
Shareholders' deficit
Preferred Stock,$0.001 par value
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;
15,998,097 and 12,404,502 shares
issued and outstanding 15,998 12,404
Additional Paid in Capital 6,589,184 6,466,220
Accumulated deficit (6,936,337) (6,685,376)
Total shareholders' deficit ( 330,055) ( 205,652)
Total liabilities & shareholders'
deficit $ 252,894 $ 304,185
E-COMMERCE WEST CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
3 Months Ended 6 Mo. Ended
Jan. 31/00 Jan.31/99 Jan. 31/00 Jan. 31/99
Revenues $ 19,246 $ 5,334 $ 21,140 $ 5,334
Cost of goods sold ( 8,352) ( 1,899) ( 9,419) ( 1,899)
Gross Profit 10,894 3,435 11,721 3,435
Selling, general &
administrative expenses 131,118 186,151 256,873 263,240
Depreciation/amortization 6,827 1,669 13,841 4,098
Loss from continuing
operations ( 127,051) ( 184,385) ( 258,993) ( 263,903)
OTHER INCOME (EXPENSE)
Interest income 1,149 1,041 1,897 1,615
Interest expense ( 1,530) ( 424) ( 2,645) ( 2,037)
Gain on sale of assets 3,661 - 3,661 3,000
Other Income 5,118 - 5,118 -
Total other income (expense) 8,398 617 8,031 2,578
Loss from continuing
operations before
income taxes ( 118,653) ( 183,768) ( 250,962) ( 261,325)
Net loss from continuing
operations ( 118,653) ( 183,768) ( 250,962) ( 261,325)
Discontinued Operations:
Loss from operations - ( 7,262) - ( 8,147)
Gain (loss) from
disposition of operations - 0 - 5,535
Net loss ( 118,653) ($191,030) ( 250,962) ($ 263,937)
Basic (loss) Per Share ($0.01) ($0.02) ($0.01) ($0.03)
Weighted-average common
shares outstanding 14,231,856 9,280,976 12,435,058 9,022,670
E-COMMERCE WEST CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
3 Months Ended 6 Months ended
Jan.31/00 Jan.31/99 Jan.31/00 Jan.31/99
Cash flows from
operating activities:
Net loss from
continuing operations ($ 118,653) ($ 183,768) ($250,962) ($ 261,325)
Adjustments to reconcile
net loss from continuing
operations to net cash used
in operating activities
Depreciation & amortization 6,784 1,669 13,798 3,337
Issuance of stock for
services rendered 14,687 25,460 24,687 31,960
Gain on sale of assets ( 3,000)
(Increase) decrease in:
Prepaid expenses & other
current assets 5,004 ( 6,363) 19,869 21,793
Accounts receivable 2,072 19,698 2,072 2,628
Inventories 835 ( 18,198) 947 ( 18,198)
Increase (decrease) in:
Accounts payable 11,510 14,554 24,610 ( 53,266)
Accrued Payroll/
Other liabilities 67,270 57,819 123,521 144,354
Net cash provided by (used in)
continuing operations ( 10,491) ( 89,129) ( 41,458) ( 131,717)
Net cash provided by (used in)
discontinued operations 1,141 ( 3,933) 1,101 ( 2,262)
Net cash used in operating
Activities ( 9,350) ( 93,062) ( 40,357) ( 133,979)
Cash flows from
investing activities:
Notes receivable 45,000
Sale of equipment 6,000 6,000
Acquisitions of
property & equipment ( 2,520) ( 2,520)
Loans to officers ________ ( 3,000) _______ ( 16,000)
Net cash provided by
(used in) investing
activities 6,000 ( 5,250) 6,000 ( 26,480)
Cash flows from
financing activities:
Loans from officers 4,704 3,211 25,751 3,655
Issuance of common stock 75,000 75,000
Book overdraft ( 467) ________ ________ _________
Net cash provided (used in)
financing activities 4,237 78,211 25,751 78,655
Net increase (decrease)
in cash and cash
equivalents 887 ( 20,101) ( 8,606) ( 28,844)
Cash and cash equivalents
beginning of period - 62,872 9,493 71,615
Cash and cash equivalents
end of period $ 887 $ 42,771 $ 887 $ 42,771
Supplemental Disclosure of non-cash investing and financing activities:
Accrued officer's salaries exchanged for 3,395,650 shares of restricted
common stock valued at $101,870
E-COMMERCE WEST CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED January 31, 2000
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying interim consolidated 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 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, 1999 and the notes
thereto, included in the Company's annual report on Form 10-KSB. The
results of operations for the three and six months ended January 31,
2000 are not necessarily indicative of the results that may be expected
for the fiscal year ended July 31, 2000.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General Financial Condition
Results of Operations:
E-Commerce West
The Company devoted much of it's energies and resources this
quarter to the research and development of a new business-to-business
Internet application which it anticipates bringing to market and to the
ongoing operations of westerngold.com, the Company's first year round
retail website, and eChristmastrees.com, the Company's seasonal website.
westerngold.com
www.westerngold.com , marketing quality western products, serves a
previously ignored Internet retail market segment currently generating
in excess of $2.75 billion in annual, domestic sales. The success of
this website, the first to market in its category, is substantially
dependant upon the ability of the Company to advertise and market the
website which in turn is dependant upon the Company's ability to attract
financing to westerngold.com in an amount sufficient to conduct a
consumer brand awareness campaign. Funding has been sought independently
from venture capitalists without success. Should the Company fail to
attract funding to sufficiently advertise and promote westerngold.com
then the Company will seek to sell the website or alternatively close the
site and realign the Company's resources to other corporate
opportunities. The Company has discontinued its advertising campaign
due to the lack of available funds. Traffic to the site is being
generated via the Company's 1,750+ affiliates together with repeat
visits from both members and non-members.
Average monthly unique visits to westerngold.com together with the
average number of sales per month, the average amount of each sale and
total revenues, increased in this quarter when compared to the previous
quarter however current revenues are not sufficient to continue to
support the website's ongoing expenses.
eChristmastrees.com
www.echristmastrees.com , the Company's first retail e-commerce
website, re-launched for the holiday season in November, 1999.
The Company had previously launched and operated the site for an
approximate 30 day period during 1998's holiday season where it met with
significant media coverage, critical acclaim and visitations from
individuals in 85 foreign countries. The website sells two varieties of
premium grade fresh-cut Christmas trees in various sizes plus two types
of Holiday wreaths. During the 1998 holiday season the Company placed
over 4 million banner ads in less than four weeks at significant
expense compared to revenues generated although the website benefited
from branding awareness. This year the Company eliminated banner
advertising preferring instead to create Multi-Merchant Marketing
Partnerships with larger, established, high-profile Internet merchants
such as OfficeMax.com, FlowersUSA,com, PrimeWine.com and GiftWrap.com
together with media marketing and outsourcing a website search engine
enhancement program. eChristmastrees.com was the beneficiary of
articles in the New York Times and Washington Post.
Sales and gross revenues, although not significant, increased
approximately 2 1/2 times over 1998's figures. As a result, although
modest, eChristmastrees.com showed a positive cash flow in just its
second selling season.
It is anticipated that participating Internet merchants in the
Multi-Merchant Marketing Program will return in the 2000 holiday
season. With the merchants having a better understanding of the
program's elements and with an earlier start in the promotion combined
with an earlier start in the website search engine enhancement program,
a much more effective marketing campaign is anticipated for the 2000
season. When combined with the public's increased comfort in purchasing
products such as Christmas trees on the Internet, a significant
increase in both the number of sales and revenues is anticipated for
2000's Christmas season.
Marketing
The Company believes its Multi-Merchant Marketing Program
represents a new and effective method to market retail websites.
Without cost to the individual Internet retailers, each partner, upon
completion of a sale, refers its customer to other partner sites where
the customer is further incentivized to complete a new purchase. Once
his second purchase is complete the customer is rewarded again by
receiving discounts at the other participating partner websites. The
customer is continually rewarded and incentivized to make additional
purchases while the partners' websites receive additional traffic
without marketing costs previously necessary to attract buyers. The
traffic generated by this program delivers buyers who have just
completed a purchase rather than browsers surfing the net. After the
success of the Company's Multi-Merchant Marketing Partnership, Barnes &
Noble.com announced it has teamed with seven web retailers including 1-
800-Flowers.com, LLBean.com and PlanetRx.com to help extend its market
share.
Consolidated Corporate Information
Selling, general and administrative expenses for the three months
ended January 31, 2000 were $137,944 and consisted primarily of
salaries and web-site marketing and advertising charges. This is
approximately 3.75% more than the selling, general and administrative
expenses of $132,769 for the prior three months ended October 31, 1999.
Funds were expensed and are expected to continue to be expensed in the
ongoing research, development and introduction to market of the
Company's planned new Internet application.
Liquidity and Capital Resources
As of January 31, 2000, the Company had $887 in cash and cash
equivalents and a working deficit of $330,055. Since inception, the
Company has financed its operations primarily through private offerings
of equity securities and loans from officers.
Net cash used in continuing operating activities was $10,491 for the
quarter ended January 31, 2000.
Net cash provided by financing activities was $4,237 for the quarter
ended January 31, 2000. Net cash provided by financing activities
consisted of loans from officers.
The Company expects cash flows from operating activities to continue
to be negative over the next year. Depending on the success of the
Company's efforts to develop its websites and/or other Internet
applications, management believes that the Company's present working
capital will need to be supplemented to support the Company's operations
over the next 12 months. Current cash on hand is not sufficient to meet
ongoing operating expenses, however the Company is optimistic that
financing will be available, although no assurances can be given that any
financing can be obtained on terms favorable to the Company, or at all.
Additional working capital may be sought through equity private
placements and/or additional notes payable to related parties (officers,
directors or shareholders). The ability to raise financing will depend
upon many factors, including the Company's then current common stock
price, the nature and prospects of the Company's new Internet
application, any business to be acquired and the economic and market
conditions prevailing at the time financing is sought.
Stock Issuances
In this quarter the Company issued 45,487 common shares for legal
and accounting services valued at $8,187.50; 28,889 common shares for
website development and enhancement services valued at $4,000; 16,667
common shares for new business research consulting valued at $1,000
and 20,790 common shares for advertising services valued at $1,500 from
its active S-8 Registration #333-59975.
Equipment Rental, Overhead Reimbursement, Rent, Support Services
The Company leases approximately 3,600 square feet for its
corporate headquarters in Deadwood, South Dakota for $1,250 per month
on a lease through May, 2000. The company has an option for a second
year at a $1,500 per month.
Warrant Exercise Date Extension
At a January 22, 2000 Board of Directors Meeting, the Board
extended the exercise date for the Company's Class B Warrants six
months to July 26, 2000 with all other terms and conditions remaining
in effect.
Year 2000 Compliance
Prior to the end of 1999 the Company completed a comprehensive
review of its computer systems and determined all its computers and
related office equipment to be Year 2000 compliant. The Company
experienced one minor e-mail malfunction, which was not necessarily a
Y2K issue, which was quickly rectified with no loss of sales nor
information. The Company markets products from several third party
suppliers on its Internet retail websites. As of the date of this
filing the Company has not experienced any problems, nor does it
anticipate any problems, with any of its suppliers relative to Y2K
issues.
Other Matters
During the quarter, Jon Elliott, the Company's President/CEO, sold
117,000 common shares at an average price of $0.17 on the open market
with a portion of the proceeds used to support the Company's operating
overhead. All appropriate forms concerning the aforementioned
transactions were filed in a timely fashion with the Securities &
Exchange Commission.
In order to improve the Company's balance sheet and to reduce its
outstanding liabilities, the Company's President/CEO expressed his
willingness to assist the Company by converting $101,869.50 of back
salary due per his Employment Agreement through December, 1999 having
received no cash compensation throughout the entire year of 1999, to
restricted common stock discounted 50% from the bid price of the
Company's shares at close of market on January 5, 2000. This action,
approved by the Company's Board of Directors in a January 5, 2000
meeting, resulted in the issuance of 3,395,650 restricted common
shares.
Subsequent Events
Dissolution of Subsidiaries
As previously reported the Company had no further use for its
inactive Nevada subsidiary, Goldiggers Southern Nevada, Inc. and
planned to let it expire. However, the Company has decided to
reactivate the company and change its name to better reflect the
Company's new business-to-business Internet application.
Other Matters
The Company declined to exercise its option to extend its lease at
its corporate headquarters.
From the end of the quarter and prior to this filing Jon Elliott,
the Company's President/CEO, sold 57,000 shares at an average price of
$0.21 on the open market. All appropriate forms concerning the
aforementioned transactions were filed in a timely fashion with the
Securities & Exchange Commission.
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: _________________________
Jon F. Elliott, President
and Chief Executive Officer
Date: March 15, 2000
8
12
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This schedule 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, 2000 which statements have been compiled by
management.
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