FORM 10-Q-SB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the Quarter ended March 31, 2000
Commission File Number: 0-13409
legalopinion.com
formerly Eurotronics Holdings, Inc.
Nevada 87-0550824
(Incorporation) (IRS Number)
3855 South Valley View #1, Las Vegas NV 89103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (206) 652-3390
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: 31,083,942
Yes[x] No[ ] (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.)
[ ] (Indicate by check mark whether if disclosure of delinquent filers (SEC
229.405) is not and will not to the best of Registrant's knowledge be contained
herein, in definitive proxy or information statements incorporated herein by
reference or any amendment hereto.)
As of March 31, 2000 the aggregate number of shares held by non-affiliates was
1,792,833 shares.
As of March 31, 2000 the number of shares outstanding of the Registrant's Common
Stock was 31,083,942.
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PART I: FINANCIAL INFORMATION
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Item 1. Financial Statements.
Attached hereto and incorporated herein by this reference are consolidated
unaudited financial statements (under cover of Exhibit QF1-00) for the three
months ended March 31, 2000.
Item 2. Management's Discussion and Analysis or Plan of Operation.
(a) Plan of Operation for the next twelve months.
(1) Cash Requirements and of Need for additional funds, twelve months. In order
for the Company to carry out and institute new service and programs plus to
continue to attract consumers to its Web site additional capital will be
required. Over the next 12 months the Company will require up to $3,000,000 to
institute these new programs and services plus utilize a major portion of the
remaining $32,000,000 of the stock for advertising contract. Approximately
$1,000,000 will be utilized in establishing new business-to-business (B2B)
marketing teams, $1,000,000 for new product and program development and
$1,000,000 for infrastructure equipment and working capital. Management
believes that as much as $2,000,000 more capital will be required in the second
year of the business plan. With the first quarter of 2000 traffic substantially
below original projections, advertising will be focused towards four regional US
markets with relatively high concentration of Internet users. New collateral
marketing pieces and promotional programs targeted at small to mid-sized
business users will focus our sales efforts on growing the business-to-business
(B2B) internet niche in conjunction with new product and services programs.
To drive traffic to the website, strategic alliances and joint ventures will
supplement direct sales efforts in concert with the Company's targeted media
campaign. In the estimates of management, the Company will need a total of $5
million over the next two years in order to establish a direct
business-to-business regional sales force, introduce new products and programs,
develop the corporate infrastructure to support such activities and build a
revenue stream sufficient to operate profitably.
To secure this funding, the company will access venture capital resources,
initiating a Private Placement to fund its growth strategy. The company has
redefined it's business model to include the development of additional profit
centers and programs which should, in the opinion of management, drive a
consistent stream of users to the site to sustain consistent profitable business
operations within the next 24 months.
Reference is made to Note 1 (a) of our auditor's report for the year ended
December 31, 1999, that we have generated insignificant revenue and have
accumulated a deficit since inception. This factor, among others raises doubt
about our ability to continue as a going concern. Our ability to continue as a
going concern is dependent on our ability to generate future profitable
operations and receive financial support from stockholders and other investors.
(2) Summary of Product Research and Development. As the software and website
have already been completed and the majority of the development work is
complete, on-going changes and enhancements may be made as the Company receives
feedback from both lawyers and consumers and to accommodate new programs and
services.
(3) Expected purchase or sale of plant and significant equipment. None at this
time
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(4) Expected significant change in the number of employees. We will staff 5 new
positions within the next 12 months. Further employees may be required if
demand increases significantly for customer support and sales.
(b) Discussion and Analysis of Financial Condition and Results of Operations.
Our principal activity for 1997 and 1998 and the first two quarters of 1999
had been to revivify our corporate franchise and bring our securities filing and
reporting current. The Company was not an operating entity, until the last half
of 1999. Therefore comparison of current periods with corresponding previous
periods would not be meaningful or useful, in the judgment of management. After
the acquisition of our current business on August 9, 1999, the Company continued
to incur expenses to develop our website. No revenues were generated until after
the site became operational on October 31, 1999. Only $439 was generated from
that time until year-end, December 31, 1999.
For the quarter ending March 31,2000, the Company had total expenses of
$3,204,323 of which $3,006,796 was for the initial advertising and promotion of
the website. $2,955,172 of this advertising and promotion expense was a non-cash
expense as a result of a 1999 stock-for-adverting transaction. Additional
expenses were generated from the development and maintenance of the website of
$29,134, attorney directory enrollment of $34,825 and general and administrative
expenses of $133,568 which is detailed within the attached financial statements.
The revenues from the first quarter of 2000 were only $3,875. Therefore, the net
loss for the quarter was $3,200,448. The reason for such a modest result must
be seen in terms of the lack of previous marketing efforts.
During the quarter ending March 31, 2000, the Company operated on funds
provided through additional shareholder loans in the amount of $ 326,881.
Subsequent to the end of the quarter $698,250 of the shareholder loans were
converted to common stock as part of the Regulation D, 506 Private Placement at
$1.75 per share. This financing raised a total of $819,000.
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PART II: OTHER INFORMATION
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Item 1. Legal Proceedings
None
Item 2. Change in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to Vote of Security Holders
None
Item 5. Other Information
None
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Item 6. Exhibits and Reports on Form 8-K
None
Exhibit Index
Financial Statements and Documents
Furnished as a part of this Registration Statement
Exhibit QF1-00 Financial Statements (Un-Audited) March 31, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Form 10-Q Report for the Quarter ended March 31, 2000, has been signed below by
the following person on behalf of the Registrant and in the capacity and on the
date indicated.
legalopinion.com
formerly Eurotronics Holdings, Inc.
Dated: May 12, 2000
/s/ /s/
John Marencik David Emerick
President/Director Chief Financial Officer
/s/ /s/ /s/
Don Crompton Rae Meier Brian Lovig
DIRECTOR SECRETARY/DIRECTOR CHAIRMAN/DIRECTOR
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Exhibit QF1-00
Un-Audited Financial Statements
for the three months Ended March 31, 2000
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Consolidated Financial Statements of
LEGALOPINION.COM
(A Development Stage Enterprise)
For the three months ended March 31, 2000
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LEGALOPINION.COM
(A Development Stage Enterprise)
Consolidated Balance Sheet
$ United States
March 31, 2000 and December 31, 1999
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2000 1999
(Unaudited-Prepared
by Management)
Assets
Current assets
Cash $ 56,851 $ 23,080
Prepaid expenses (note 3) 7,025,669 10,000,920
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7,082,520 10,024,000
Fixed assets (note 4) 25,433 25,558
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$ 7,107,953 $ 10,049,558
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 73,941 $ 141,979
Long -term debt
Stockholders' loans (note 5) 854,780 527,899
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928,721 669,878
Stockholders' equity
Capital stock
Authorized:
200,000,000 common shares with a par value
of $0.0001 per share
Issued:
31,083,942 common shares 31,084 31,084
Additional paid-in capital 10,000,516 10,000,516
Deficit accumulated during the development stage (3,852,368) (651,920)
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6,179,232 9,379,680
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$ 7,107,953 $10,049,558
See accompanying notes to consolidated financial statements
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LEGALOPINION.COM
(A Development Stage Enterprise)
Consolidated Statement of Loss
$ United States
For the three month period ended March 31, 2000
(Unaudited - Prepared by Management)
From inception
(April 17, 1999) to
March 31, 2000 2000
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Revenue
Directory fees $ 4,314 $ 3,875
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4,314 3,875
Expenses
Accounting and legal 116,099 36,676
Advertising and promotion 3,075,279 3,006,796
Attorney directory enrollment 93,275 34,825
Cost of recapitalization (note 2) 100,000 0
Credit card commissions 3,908 1,006
Depreciation 6,175 1,879
Foreign exchange gain (151) (401)
General and administrative 25,580 13,353
Investor relations 56,517 28,043
Management fees paid to related party (note6) 99,287 38,648
Travel and legal conventions 35,825 8,309
Wages and employee benefits 6,055 6,055
Web-site and technology maintenance 238,833 29,134
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3,856,682 3,204,323
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Net loss $ (3,852,368) $ (3,200,448)
Weighted average number of shares 31,083,942
Loss per share $ (0.10)
See accompanying notes to consolidated financial statements
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LEGALOPINION.COM
(A Development Stage Enterprise)
Consolidated Statement of Cash Flows
$ United States
For the three month period ended March 31, 2000
(Unaudited - Prepared by Management)
From inception
(April 7, 1999) to
March 31, 2000 2000
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Operating activities
Net loss $ (3,852,368) $ (3,200,448)
Items non-involving cash
Advertising paid with share consideration 2,975,172 2,975,172
Depreciation 6,175 1,879
Changes in non-cash working capital
Prepaid expenses (841) 79
Accounts payable and accrued liabilities 60,791 (68,038)
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(811,071) (291,356)
Financing
Stockholders' loans 854,780 326,881
Investing
Issuance of shares 45,000 0
Purchase of fixed assets (31,608) (1,754)
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13,392 (1,754)
Change in foreign currency denominated
cash balance (250) 0
Increase in cash 56,851 33,771
Cash, beginning of period 0 23,080
Cash, end of period $ 56,851 $ 56,851
Supplementary information:
Interest paid 0 0
Income taxes paid 0 0
Non-cash investing and financing activities:
Issuance of capital stock for services to
be received 10,000,000 0
Issuance of common stock for common stock
of a private corporation 900 0
See accompanying notes to consolidated financial statements
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LEGALOPINION.COM
(A Development Stage Enterprise)
Consolidated Statement of Stockholders' Equity
$ United States
Period from date of Inception (April 7, 1999) to March 31, 2000
(Unaudited - Prepared by Management)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Accumulated
Additional During the Total
Number Paid in Development Stockholders'
of shares Amount Capital Stage Equity
Issued for cash on April 7, 1999 100 $ 45,000 $ 0 $ 0 $ 45,000
Adjustment to record capital
transaction (note2) 26,083,842 (14,416) 1,016 0 (13,400)
Net loss for the period ended
December 31, 1999 0 0 0 (651,920) (651,920)
Issuance of shares for services
(note3) 5,000,000 500 9,999,500 0 10,000,000
Balance, December 31, 1999 31,083,942 31,084 10,000,516 (651,920) 9,379,680
Net Loss for the period ended
March 31, 2000 0 0 0 (3,200,448) (3,200,448)
Balance, March 31, 2000
(Unaudited) 31,083,942 $ 31,084 $10,000,516 ($3,852,368) $ 6,179,232
</TABLE>
See accompanying notes to consolidated financial statements
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LEGALOPINION.COM
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
For the three month period ended March 31, 2000
(Unaudited - Prepared by Management)
legalopinion.com was incorporated under the laws of the State of Utah for the
primary purpose of investigating and evaluating prospective mineral properties
for possible acquisition. Effective August 9, 1999, the Company acquired 100%
of the outstanding shares of legalopinion.com, Inc., a private corporation
incorporated on April 7, 1999 under the laws of Alberta. Prior to the
acquisition, LegalOpinion.com was a non-operating public shell corporation with
nominal net assets. For accounting purposes this transaction has been accounted
for as a recapitalization of legalopinion.com, Inc. (see note 2). As part of a
capital transaction with legalopinion.com, Inc., the Company continued its
registration jurisdiction from Utah to Nevada and changed its principal activity
to the development of an online directory service that provides consumers and
attorneys the ability to interact.
1. SIGNIFICANT ACCOUNTING POLICIES:
a) Going concern
These financial statements have been prepared on the going concern basis, which
assumes the realization of assets and liquidation of liabilities in the normal
course of business. As shown in the consolidated financial statements, the
Company has generated insignificant revenues and has accumulated a deficit since
inception of $3,852,368. This factor, among others raises substantial doubt
about the Company's ability to continue as a going concern. The Company's
ability to continue as a going concern is dependent on its ability to generate
future profitable operations and receive continued financial support from its
stockholders and other investors.
Management's plans with respect to generating future profitable operations
include the launch of an external advertising campaign (see note 3), the
anticipated results of which are sales sufficient to cover operating expenses.
Management is also anticipating certain stockholders to provide additional funds
in the form of stockholders loans.
b) Translation of financial statements
The Company's wholly owned subsidiary, legalopinion.com, Inc. operates in the
United States and Canada and accordingly, a portion of its operations are
conducted in Canadian currency.
The method of translation applied is as follows:
i) Monetary assets and liabilities are translated at the rate of exchange in
effect at the balance sheet date, being US $1.00 per Cdn. $1.46 (December 31,
1999 - $1.44).
ii) Non-monetary assets and liabilities are translated at the rate of
exchange in effect at the time of acquisition of the assets or assumption of the
liabilities.
iii) Revenues and expenses are translated at the exchange rate in effect at
the transaction date.
iv) Foreign exchange gains and losses on translation are included in income.
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LEGALOPINION.COM
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
For the three month period ended March 31, 2000
(Unaudited - Prepared by Management)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
c) Basis of presentation and consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary. All material inter-company transactions and
balances have been eliminated.
To March 31, 2000, the Company is primarily focused on the process of developing
its business and no significant revenues have been generated to date.
Accordingly, the Company is considered to be a development state enterprise for
financial reporting purposes.
d) Fixed assets
Fixed assets are recorded at cost. Depreciation is provided using the following
methods and annual rates which are intended to amortize the cost of the assets
over their estimated useful life:
Asset Method Rate
Computer equipment Declining balance 30%
Furniture and fixtures Declining balance 20%
e) Income taxes
The Company accounts for income taxes by the asset and liability method. Under
the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carry forwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
f) Management estimates
The preparation of financial statements in conformity with United States
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures 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.
g) Financial instruments
The fair values of the Company's cash and accounts payable and accrued
liabilities approximate their carrying values due to the relatively short
periods to maturity of the instruments. It is not possible to arrive at a fair
value for stockholders' loans as a maturity date is not determinable, there is
not a ready market for such instruments and given the nature of the relationship
between the stockholder and the Company. The maximum credit risk exposure for
all financial assets is the carrying amount of those assets.
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LEGALOPINION.COM
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
For the three month period ended March 31, 2000
(Unaudited - Prepared by Management)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
h) Loss per share
Loss per share has been calculated using the weighted average number of common
shares outstanding during the period.
i) Accounting standards change
In June 1998, the Financial Accounting Standards Board issued SFAS no. 133,
"Accounting for Derivative Instruments and Hedging Activities." Adoption of
this statement is not expected to have a significant impact on the Company's
results of operations or financial position.
2. CAPITAL TRANSACTION:
Effective August 9, 1999, the Company acquired 100% of the outstanding common
shares of LegalOpinion.Com, Inc., a private corporation incorporated on April 7,
1999 under the laws of Alberta, Canada for cash consideration of $100,000 and
the issuance of 9,000,000 common shares from treasury. The transaction has been
accounted for as if it were a capital transaction, effectively as if
LegalOpinion.com, Inc. had issued shares for the net assets of the Company.
Accordingly, this transaction has been measured at the carrying amount of the
assets and liabilities of the Company with the excess of the carrying amount
reflected as a charge to operations. In addition, the from inception figures
presented on the consolidated statement of loss, stockholders' equity and cash
flows reflect the results from operations and cash flows of LegalOpinion.com,
Inc. for the period from incorporation on April 7, 1999 to March 31, 2000,
combined with those of the legal parent from the date of acquisition on August
9, 1999.
3. PREPAID EXPENSES:
The Company entered into an agreement on November 22, 1999 whereby an
advertising service provider agreed to provide $40,000,000 of advertising
services in exchange for common shares of the Company. As at March 31, 2000,
5,000,000 common shares were issued to the advertising service provider. This
transaction has been recorded at $10,000,000, the estimated fair value of the
advertising services to be received. As at March 31, 2000, $2,975,172 of the
committed advertising had ran leaving $7,024,828 ($10,000,000 as at December 31,
1999) still recorded as a prepaid expense.
This agreement for delivery of advertising services was renegotiated during the
first quarter. Under the revised agreement, the Company will no longer issue
blocks of shares in advance but will only issue shares for the value of specific
advertising as it is approved and booked. The advertising service provider has
agreed to provide up to $32,000,000 of additional advertising prior to June 1,
2001 subject to a thirty (30) day cancellation provision. The price per share
is calculated based on a 25% discount to the average closing price during the
last month of each calendar quarter during 2000.
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LEGALOPINION.COM
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
For the three month period ended March 31, 2000
(Unaudited - Prepared by Management)
4. FIXED ASSETS:
2000 1999
Accumulated Net book Net book
Cost amortization value value
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Computer equipment $ 26,204 $ 5,602 $ 20,602 $22,273
Furniture and fixtures 5,404 573 4,831 3,285
$ 31,608 $ 6,175 $ 25,433 $25,558
5. STOCKHOLDERS' LOANS:
Stockholders' loans are unsecured, do not bear interest and have no specified
terms of repayment. As the stockholders have indicated in writing that they
will not request repayment in the next fiscal year, the entire amount has been
shown as a long term liability.
6. INCOME TAXES:
At December 31, 1999, the Company had a net operating loss carry forward for
United States income tax purposes of approximately $4,500,000 and a non-capital
loss carry forward for Canadian income tax purposes of approximately $3,800,000.
The net operating loss and non-capital loss carry forward expire in increments
beginning in 2000 and 2006 respectively. No amount has been reflected on the
balance sheet for future income taxes as any future income tax asset has been
fully offset by a valuation allowance.
7. SUBSEQUENT EVENT:
In April 2000, the Company issued 468,000 common shares at $1.75 per share for
total consideration of $819,000 paid as follows:
Cash $ 120,750
Repayment of stockholders' loans 698,250
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$ 819,000
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