<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the Quarterly Period Ended September 30, 2000.
Commission file number 0-15992
e.NVIZION COMMUNICATIONS GROUP LTD.
(Exact name of small business issuer as specified in its charter)
Colorado 84-1031311
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 17th Street, Suite 950S, 80202
Denver, Colorado (Zip Code)
(Address of principal executive offices)
(303) 260-6482
(Issuer's telephone number)
Not applicable (Former name, former address and former fiscal year, if
changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 No X
----- -----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
As of December 22, 2000, 39,180,288 shares of common stock were
outstanding.
<PAGE> 2
INDEX
<TABLE>
<S> <C>
PART I FINANCIAL INFORMATION....................................................................2
Item 1 Financial Statements................................................................2
Consolidated Balance Sheet
as of September 30, 2000...............................................................2
Consolidated Statements of Operations for the three
month periods ended September 30, 2000 and 1999........................................3
Consolidated Statements of Cash Flows for the three
month periods ended September 30, 2000 and 1999........................................4
Notes to Consolidated Financial Statements..............................................5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............................................6
PART II OTHER INFORMATION.....................................................................12
Items 1 through Items 6....................................................................12
Signature.......................................................................................13
</TABLE>
<PAGE> 3
CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-QSB and the information incorporated
by reference may include "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. In
particular, your attention is directed to Part I, Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operation. We
intend the disclosure in these sections and throughout the Quarterly Report on
Form 10-QSB to be covered by the safe harbor provisions for forward-looking
statements. All statements regarding our expected financial position and
operating results, our business strategy, our financing plans and the outcome of
any contingencies are forward-looking statements. These statements can sometimes
be identified by our use of forward-looking words such as "may," "believe,"
"plan," "will," "anticipate," "estimate," "expect," "intend" and other phrases
of similar meaning. Known and unknown risks, uncertainties and other factors
could cause the actual results to differ materially from those contemplated by
the statements. The forward-looking information is based on various factors and
assumptions.
Although we believe that our expectations that are expressed in these
forward-looking statements are reasonable, we cannot promise that our
expectations will turn out to be correct. Our actual results could be materially
different from our expectations, including the following:
o we may lose customers or fail to grow our customer base;
o we may not be able to sustain our current growth or to successfully
integrate new customers or assets obtained through acquisitions;
o we may fail to compete with existing and new competitors;
o we may not adequately respond to technological developments impacting
the Internet;
o we may fail to implement proper security measures to protect our
network from inappropriate use, which could overload our network's
capacity and cause us to experience a major system failure;
o we may issue a substantial number of shares of our common stock,
thereby causing significant dilution in the value of your investment;
o we may not be able to obtain needed financing.
This list is intended to identify some of the principal factors that
could cause actual results to differ materially from those described in the
forward-looking statements included elsewhere in this report. These factors are
not intended to represent a complete list of all risks and uncertainties
inherent in our business, and should be read in conjunction with the more
detailed cautionary statements included in our Annual Report on Form 10-KSB for
the fiscal year ended June 30, 2000 under the caption "Item 1. Business - Risk
Factors" and in our other SEC filings and our press releases.
<PAGE> 4
PART I - ITEM 1 FINANCIAL STATEMENTS
e.NVIZION COMMUNICATIONS GROUP LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 2000
ASSETS
(UNAUDITED)
<TABLE>
<S> <C>
CURRENT ASSETS
Cash and cash equivalents ....................................... $ (0)
Accounts receivable ............................................. 282,919
Due from related party .......................................... 203,720
Prepaid expenses ................................................ 45,039
-----------
TOTAL CURRENT ASSETS ....................................... 531,678
CUSTOMER LIST, net of $1,063,331 accumulated amortization ............. 3,477,490
PROPERTY & EQUIPMENT, net of $167,955 accumulated depreciation ........ 403,887
-----------
$ 4,413,055
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ................................................ $ 183,177
Accrued expenses ................................................ 41,584
Unearned revenue ................................................ 230,242
Note payable .................................................... 1,030,000
Current portion of capital leases payable ....................... 15,461
Due to related party ............................................ 47,948
-----------
TOTAL CURRENT LIABILITIES .................................. 1,548,411
CAPITAL LEASES PAYABLE ................................................ 55,415
-----------
TOTAL LIABILITIES ......................................... 1,603,826
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 20,000,000 shares authorized;
-0- shares issued and outstanding ............................. --
Common stock, $.0001 par value; 150,000,000 shares authorized;
39,180,288 shares issued and outstanding ...................... 3,918
Additional paid in capital ...................................... 7,626,540
Deferred stock compensation ..................................... (33,331)
Accumulated deficit ............................................. (4,787,898)
-----------
TOTAL SHAREHOLDERS' EQUITY ................................. 2,809,229
-----------
$ 4,413,055
===========
</TABLE>
See accompanying notes to the unaudited condensed
consolidated financial statements
2
<PAGE> 5
e.NVIZION COMMUNICATIONS GROUP LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended September 30,
----------------------------------------
2000 1999
---------------- ----------------
<S> <C> <C>
REVENUE .................................................... $ 343,317 $ --
COSTS AND EXPENSES
Cost of revenue ........................................ 105,043 --
Stock-based compensation, consulting fees .............. 20,000 --
Depreciation and amortization .......................... 425,124 21,286
General and administrative ............................. 195,690 26,080
------------ ------------
TOTAL COSTS AND EXPENSES ........................... 745,857 47,366
------------ ------------
NET LOSS BEFORE OTHER INCOME (EXPENSE) ............. (402,540) (47,366)
OTHER INCOME (EXPENSE)
Interest expense ....................................... (118,548) (893,043)
Interest income ........................................ -- 20,814
Unrealized gain on investments ......................... -- 3,062
------------ ------------
NET LOSS BEFORE INCOME TAXES ....................... (521,088) (916,533)
INCOME TAXES ............................................... -- --
------------ ------------
NET LOSS ........................................... $ (521,088) $ (916,533)
============ ============
NET LOSS PER COMMON SHARE:
Basic and diluted ...................................... $ (0.01) $ (0.05)
============ ============
SHARES USED FOR COMPUTING NET LOSS PER COMMON SHARE:
Basic and diluted ...................................... 39,180,288 18,000,288
============ ============
</TABLE>
Shares retroactively restated for 3:1 split
See accompanying notes to the unaudited condensed
consolidated financial statements.
3
<PAGE> 6
e.NVIZION COMMUNICATIONS GROUP LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended September 30,
----------------------------------------
2000 1999
--------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES ......................... 22,228 (141,967)
----------- -----------
INVESTING ACTIVITIES
Cash paid for equipment ........................... (492) --
----------- -----------
NET CASH USED IN
INVESTING ACTIVITIES ......................... (492) --
----------- -----------
FINANCING ACTIVITIES
Principal payments on capital leases .............. (4,727) --
Principal payments on note payable ................ (30,000) --
----------- -----------
NET CASH (USED IN)
FINANCING ACTIVITIES ......................... (34,727) --
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS ............... (12,991) (141,967)
Cash and cash equivalents, beginning .................. 12,991 2,211,784
----------- -----------
Cash and cash equivalents, ending ..................... $ 0 $ 2,069,817
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ................................ $ 102,298 $ 112,500
=========== ===========
Cash paid for income taxes ............................ $ -- $ --
=========== ===========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Equipment acquired under capital lease ................ $ 10,524 $ --
=========== ===========
</TABLE>
See accompanying notes to the unaudited condensed
consolidated financial statements.
4
<PAGE> 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2000
NOTE A: BASIS OF PRESENTATION
The interim financial statements presented herein have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. The interim
financial statements should be read in conjunction with the Company's annual
financial statements, notes and accounting policies thereto included in the
Company's annual report on Form 10-K as filed with the SEC.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the year.
Interim financial data presented herein are unaudited.
NOTE B: SHAREHOLDERS' EQUITY
Common stock dividend
On August 10, 2000, the Company's Board of Directors declared a three for one
stock dividend, resulting in the distribution of two additional shares of common
stock for each share common stock held as of the record date (September 15,
2000). The unaudited condensed consolidated financial statements have been
retroactively restated to reflect this transaction for all periods presented.
NOTE C: EXTENSION OF NOTE PAYABLE
During November 2000, the Company completed negotiations with its note holder to
extend the terms of the original note. The new/replacement note in exchange for
the original note in the principal amount of $1,000,000, together with interest
at the rate of ten percent per year will be payable beginning with principal
installments of $250,000 plus accrued interest on January and March 2001.
Principal installments of $125,000 plus accrued interest will be payable on May,
July, September and November 2001.
A monthly forbearance fee will be paid to the holder in the amount of $10,000
beginning November 2000 and monthly thereafter through February 2001. An
extension/modification fee will be paid in the form of the Company issuing
500,000 shares of its restricted common stock to the holder.
The replacement note will be secured by a collateral assignment of certain of
the Company's account receivables and a security interest in certain fixed
assets of the Company.
5
<PAGE> 8
PART I. -- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS
INTRODUCTION
The financial information discussed below is from the Company's
unaudited Consolidated Financial Statements included in this Form 10-QSB. This
information should be read in conjunction with those Statements and the Notes
thereto. Also of critical importance, is to read the Statements and Notes and
the following discussion in the context that: (1) in the quarter ended September
30, 1999, we were still a "development stage company," which had no operations
and no revenue from operations; and (2) the Statements include both capitalized
and non-capitalized extraordinary expenses related our February 29, 2000
acquisition of e.NVIZION WEB SOLUTIONS LTD. ("WEB SOLUTIONS"), which is our
wholly-owned Internet service provider ("ISP") subsidiary.
REVENUE
Through our wholly-owned, operating ISP subsidiary, WEB SOLUTIONS, we
derive revenue primarily from subscriptions and set-up fees charged to
individuals and small businesses for dial-up access to the Internet.
Subscription and set-up fees vary by billing plan within our subscriber base. We
also earn revenue by providing co-location services, dedicated Internet access,
and Web hosting and Web page design services. Finally, we earn revenue in the
form of "reciprocal compensation" from the providers of our leased, dial-up
telephone lines, which is based on the number of minutes our customers use those
lines.
Subscription revenue is recognized over the period in which dial-up
Internet Access is provided. The same is true for co-location services,
dedicated Internet Access and Web Hosting services. Fee revenue for set-up
services and Web page design services are recognized as those services are
performed. The Company carries on its balance sheet an item entitled "unearned
revenue," which represents prepaid customer subscriptions. As of September 30,
2000, unearned revenue was $230,242. "Teleco compensation revenue" is recognized
monthly as reported by the providers of our leased telephone lines. Revenue is
reported "net refunds and allowances," it being our policy to refund prepaid
subscriptions for whole months in which we do not provide Internet access or Web
hosting services. In addition, existing customers receive one month free access
for each new customer they refer to us.
We do not anticipate any adverse change in existing revenue. WEB
SOLUTIONS' basic rates for dial-up Internet access and Web hosting are $9.95/mo.
(unlimited access, no set-up fee, four e-mail addresses, 10mb of "our domain"
web space) and $19.95/mo. ($50 one-time set-up fee, 25mb of web space, two
e-mail addresses), respectively. In the markets we serve, we believe these are
the lowest rates available for dial-up Internet access other than "free," and
also for Web hosting. These rates are substantially less than the rate charged
by national/larger ISPs, e.g.,
6
<PAGE> 9
America Online charges $21.95/mo. for dial-up Internet access. While we do
anticipate that teleco ("reciprocal") compensation revenue will decline over
time as a result of the re-negotiation of interconnect and reciprocal
compensation agreements under existing reinterpretations of The
Telecommunications Act of 1996, our most important contract in this regard does
not expire until November 1, 2001. In addition, we anticipate that our strategy
to become a facilities-based Competitive Local Exchange Carrier ("CLEC") in the
areas we offer dial-up Internet access, will, as a result of cost savings and
the creation of other sources of "teleco" revenue, offset decline in teleco
reciprocal compensation revenue.
Our strategy to increase revenue is four fold: (1) Aggressively pursue
our acquisition strategy which is discussed in detail elsewhere in this Form
10-QSB. (2) Aggressively pursue the deployment of broadband Internet access
technology and infrastructure so as to be able to offer higher-margin Internet
access and other broadband services. (3) Aggressively pursue the deployment of
our own "private" fiber backbone transport and data center network, which is
currently being designed by AT&T Network Solutions, so as to be able to offer a
full suite of bundled and unbundled communications and Internet services to both
existing ISP customers and new "ICP" customers ("ICP" is the acronym for
Integrated Communications Provider). (4) While the build-out and ramp-up of
strategies "(2)" and "(3)" proceed, aggressively market our low cost/high value
existing ISP services to potential customers in our New York State market.
COSTS AND EXPENSES
Cost of revenue consisted primarily of the costs of maintaining
sufficient capacity to provide Internet access to our customers. For an ISP,
capacity is a measurement of the ISP's ability to connect subscribers to the
Internet. These costs included:
o The cost of leased routers and access servers and recurring
telecommunications costs, including the cost of leased telephone lines
to carry customer calls to our points of presence, or "POPs;"
o The costs associated with leased telephone lines connecting our POPs
directly to the Internet or to our operations centers and connecting
the operations centers to the Internet; and
o Internet backbone costs, which are the amounts we pay to Internet
backbone providers for bandwidth, which allows us to transmit data
from the Internet to our customers and allows our customers to
transmit data to others on the Internet.
We expect the cost of maintaining sufficient Internet access capacity
to increase over time on an absolute basis as our customer base grows. As we
execute our acquisition strategy, we expect, however, to leverage the combined
scale of our ISPs to lower these costs as a percentage of revenue by:
o Negotiating one or more relationships with national backbone providers
to connect our ISPs to the Internet;
7
<PAGE> 10
o Negotiating favorable local loop contracts and establishing
co-location arrangements with local exchange carriers;
o Establishing relationships to reduce costs and improve access and
reliability for our subscribers; and
o Negotiating discounts with equipment vendors.
Cost of revenue also consisted of the costs of providing customer
service and technical support to our ISP customers. During the quarter ended
September 30, 2000, these services, which had been previously outsourced on a
cost per customer basis to a national provider, were moved to our own,
"in-house" call center, at an approximate saving of $4,400/month.
We expect the cost of providing customer service and technical support
to increase over time on an absolute basis to support new customers and expand
existing customers' level and quality of service. New customers tend to have
particularly heavy initial customer service and technical support requirements.
Because we anticipate rapid growth in our customer base to continue, these costs
are expected to comprise an increased percentage of revenue in the near term. In
addition, we intend to implement a customer care center strategy which will
provide customer service and technical support 24 hours a day, seven days a week
in all markets we serve. This strategy will also increase these costs in the
near term. In the longer term, and as we execute our acquisition strategy, we
expect, however, to leverage the combined scale of our ISPs to lower these costs
of revenue as a percentage of revenue.
Our policy is to depreciate assets over their estimated useful lives on
a straight-line basis. Our expense for depreciation is expected to increase as
we make capital expenditures to expand our operations and/or as we acquire
additional ISPs. Specifically, we anticipate that financial resources will be
utilized to acquire additional communications and network equipment and for
improvements to technology that will allow our network to grow to support new
and acquired customers, build network operation and customer care centers, and
integrate common billing, customer service and financial reporting systems.
General and administrative expenses consisted primarily of:
o The salaries, payroll taxes and benefits of our management and
administrative employees;
o The cost of consulting and professional fees related to acquisitions
(non-capitalized), the integration of acquired entities and legal
compliance matters; and
o The cost of such items as advertising and marketing, credit card
processing fees, travel and entertainment, equipment and office
rental, utilities and other items ordinarily classified as general and
administrative expenses.
We expect general and administrative expenses to increase over time on
an absolute basis as we grow. Because we expect growth in our customer base to
continue, these expenses are expected to comprise an increased percentage of
revenue in the near term, particularly, as we
8
<PAGE> 11
execute our acquisition strategy, and it becomes necessary to integrate our
operations with the operations of other ISPs by establishing network operations
centers and customer care centers, and by implementing common billing, customer
service and financial reporting systems. In the longer term, we expect, however,
to leverage the combined scale of our ISPs to lower these expenses as a
percentage of revenue as efficiencies from integration are realized.
ACQUISITIONS
Acquisitions have historically been and will continue to be a
significant part of our growth strategy. During the quarter ended September 30,
2000, "Letters of Intent" to acquire two ISPs located in the Northeast and the
customer base of a third ISP located in the Midwest expired without the
consummation of the transactions contemplated by them. Negotiations continue,
however, for the acquisition of the two Northeast ISPs. Management hopes to be
able announce the execution of new Letters of Intent and/or formal contracts for
the acquisition of these two ISPs in the very near future. The Company continues
identifying and investigating potential ISP acquisition candidates in the
Northeast.
COMPARISON OF RESULTS OF OPERATIONS FOR THE QUARTERS ENDED SEPTEMBER 30, 1999
AND 2000
Revenue. Revenue from operations increased from $0 for the quarter
ended September 30, 1999 to $343,317 for the quarter ended September 30, 2000.
The increase was exclusively due to the acquisition of WEB SOLUTIONS and the
undertaking of its continued operations. We had approximately 10,000 customers
at September 30, 2000 compared to -0- customers at September 30, 1999.
Cost of Revenue. For the quarter ended September 30, 2000, cost of
revenue increased by $105,043. We had no cost of revenue in the quarter ended
September 30, 1999. The increase was exclusively due to the acquisition of WEB
SOLUTIONS and the undertaking of its continued operations.
Stock-based compensation, consulting fees. For the quarter ended
September 30, 2000, stock-based compensation, consulting fees, increased by
$20,000. We granted no comparable compensation in the quarter ended September
30, 1999. The increase was due to our desire to generate more investor exposure
and possible sources of acquisition and working capital.
Depreciation and Amortization. For the quarter ended September 30,
2000, depreciation and amortization increased by $403,838 to $425,124. The
increase was primarily due to the acquisition of WEB SOLUTIONS and the
undertaking of its continued operations.
General and administrative expenses. For the quarter ended September
30, 2000, general and administrative expenses increased by $169,610 to $195,690.
The increase was primarily due to the acquisition of WEB SOLUTIONS and the
undertaking of its continued operations.
Interest expense. For the quarter ended September 30, 2000, interest
expense decreased by $774,495 to $118,548. This decrease was primarily due the
conversion of our Series A
9
<PAGE> 12
Preferred Stock on June 16, 2000, and, thus, the end of the recognition of its
associated "[interest] accretion expense" charged to account for the former
mandatory redemption provisions of that stock. Details regarding the conversion
were reported in our Form 10-KSB for the year ended June 30, 2000. The former
holder of the preferred stock remains entitled to a dividend at the rate of nine
percent per year of the original stated value of the preferred stock
($225,000/yr.) until June 11, 2002.
Net loss. We incurred a net loss and anticipate that we will continue
to incur losses until sufficient revenues are generated to offset the
substantial up-front expenditures (capital and non-capital) and operating costs
associated with attracting and retaining additional customers whether by
acquisition or organically, and the substantial up-front expenditures (capital
and non-capital) necessary to build-out and deploy our planned transport
network/data center infrastructure. For the quarters ended September 30, 2000
and 1999, we incurred net losses of $(402,540) and $(47,366), respectively. It
should be noted, however, that $(425,124) or 105.61% of our net loss for the
quarter ended September 30, 2000 was attributable to depreciation and
amortization (i.e., non-cash expenses). "EBITDA," i.e., Earnings before Income
Taxes, Depreciation and Amortization, for the quarter ended September 30, 2000
was $22,584.
LIQUIDITY AND CAPITAL RESOURCES
Our working capital at September 30,2000 was $(1,016,733) compared to
working capital of $2,296,004 at September 30, 1999. This change in working
capital was due almost exclusively to the acquisition of WEB SOLUTIONS and the
undertaking of its continued operations. A significant portion of our current
working capital deficit is attributable to the principal balance due under a
note payable assumed by WEB SOLUTIONS when it acquired certain liabilities of
the former owner of the assets of XZ HOLDINGS LTD. (Formerly, A-Z NET. COM,
INC.). Included in those liabilities was a note payable for $1,300,000 due
November 1, 2000. The note called for principal payments of $15,000 per month
beginning January 1, 2000. As of September 30, 2000, WEB SOLUTIONS was current
in its obligations under the note, and the principal balance due under the note
was $1,030,000. In November 2000, we completed negotiations with the note holder
to extend the note beyond November 1, 2000. A new/replacement note in exchange
for the original note in the principal amount of $1,000,000, together with
interest at the rate of ten percent per year, will be payable beginning with
principal installments of $250,000 plus accrued interest in January and March
2001. Principal installments of $125,000 plus accrued interest will be payable
in May, July, September and November 2001. We continue to work on raising the
capital necessary to pay this obligation and/or to renegotiate its terms.
The development and expansion of our business will require substantial
capital investment for the design, procurement and construction of our planned
transport network/data center infrastructure. Outside of the acquisition of WEB
SOLUTIONS, capital expenditures were negligible in the quarters ended September
30, 1999 and 2000. We expect capital expenditures to be significantly higher in
future periods.
10
<PAGE> 13
Our capital requirements may vary based upon the timing and success of
our acquisition and transport network/data center rollout strategies; or as a
result of regulatory, technological and competitive developments; or if:
o Demand for our services or our anticipated cash flow from operations
is less or more than expected; or
o Development plans or projections change or prove to be inaccurate; or
o We engage in any acquisitions; or
o We accelerate deployment of our transport network/data centers or
otherwise alters the schedule or targets of our rollout plan.
We intend to continue to expand its operations at a rapid pace and
expects to continue to operate at a loss for the foreseeable future. The nature
of the expenses contributing to our future losses will include network and
related service costs in existing and new markets; legal, marketing and selling
expenses as we enter each new market; payroll-related expenses as we continue to
add employees; general overhead to support increases in the scale of our
operations; and interest expenses arising from financing capital expenditures
(acquisition- and non-acquisition-related) and working capital requirements.
We will seek additional capital before June 30, 2001, the timing of
which will depend upon, among other things, market conditions. The actual amount
and timing of our future capital requirements may differ materially from our
estimates as a result of, among other things, the demand for our services and
regulatory, technological and competitive developments, including additional
market developments and new opportunities in our industry. We may also need
additional financing if: we alter the schedule, targets or scope of our
transport network/data center rollout plan; our plans or projections change or
prove to be inaccurate; or we acquire other companies or businesses. We may
obtain additional financing through commercial bank borrowings, equipment
financing or the private or public sale of equity or debt securities. We may be
unable to raise additional capital on terms that we consider acceptable, that
are within the limitations contained in our existing financing agreements or
that will not impair our ability to develop our business. If we fail to raise
sufficient funds, we may need to modify, delay or abandon some planned future
expansion or expenditures, which, in turn, could have a material adverse effect
on our business, prospects, financial condition and results of operations. We
can not assure you we will be able to raise additional capital as necessary.
Our primary capital requirements are to payoff current portions of our
debt, fund acquisitions of ISP/ICP customers and related infrastructure and
lines of businesses, design, purchase and deploy transport network/data center
infrastructure and for working capital. To date, we have financed our capital
requirements primarily through the issuance of debt instruments. We do not have
any lines of credit. The availability of capital resources is dependent upon
prevailing market conditions, interest rates and our financial condition. We
expect our capital expenditures to increase as we continue to expand our
operations. We anticipate that financial resources will be utilized to acquire
additional transport network/data center
11
<PAGE> 14
infrastructure and improvements to technology that will allow our transport
network/data center infrastructure to grow to support new customers, and to
integrate billing, customer service and financial reporting systems.
We are currently pursuing, and intend to continue to pursue, additional
acquisitions, which we expect to be funded through a combination of cash and the
issuance of shares of our common stock. To the extent we elect to pursue
acquisitions involving the payment of significant amounts of cash to fund the
purchase price of such acquisitions and the repayment of assumed indebtedness,
we are likely to require additional sources of financing to fund such
non-operating cash needs. We may determine to raise additional debt or equity
capital to finance potential acquisitions and/or to fund accelerated growth. Any
significant acquisitions or increases in our growth rate could materially affect
our operating and financial expectations and results, liquidity and capital
resources. We can not assure you we will be able to raise additional capital to
finance our operations and for our anticipated growth.
PART II -- OTHER INFORMATION
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 EVENTS
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
27 Financial Data Schedule
12
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
e.NVIZION COMMUNICATIONS GROUP LTD.
DATE: December 22, 2000 BY: /s/ RANDY PHILLIPS
---------------------------------
Randy Phillips
Chairman and CEO
13
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
