<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____________to ______________
COMMISSION FILE NUMBER 33-19435
eVENTURES GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 5-2233445
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
ONE EVERTRUST PLAZA, 8th FLOOR
JERSEY CITY, NEW JERSEY 07302
(201) 200-5515
(Address and telephone number of principal executive offices)
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.
(1) Yes No X
---------- ---------
(2) Yes X No
---------- ---------
On February 18, 2000, 45,799,832 shares of the registrant's Common Stock were
outstanding.
The accompanying notes are an integral part of these
consolidated financial statements
<PAGE> 2
eVENTURES GROUP, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1999 and December 31, 1999 (unaudited) 3
Consolidated Statements of Operations - Three and six months ended December 31,
1998 and 1999 (unaudited) 4
Consolidated Statement of Shareholders' Equity (Deficit) - Six months
ended December 31, 1999 (unaudited) 5
Consolidated Statements of Cash Flows - Six months ended December 31,
1998 and 1999 (unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of 10
Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk 14
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Securities Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K
Exhibits 16
Reports on Form 8-K 17
</TABLE>
WHEN USED IN THIS REPORT, THE WORDS "INTEND," "EXPECTS," "PLANS,"
"ESTIMATES," "ANTICIPATES," "PROJECTS," "BELIEVES," AND SIMILAR EXPRESSIONS ARE
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SPECIFICALLY, STATEMENTS
INCLUDED IN THIS REPORT THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS
ABOUT THE COMPANY'S BELIEFS AND EXPECTATIONS ABOUT ITS BUSINESS AND ITS INDUSTRY
ARE FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS OR OUTCOMES TO DIFFER MATERIALLY.
SUCH RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, OUR LIMITED
OPERATING HISTORY, THE RAPID EVOLUTION OF THE MARKET FOR OUR PRODUCTS AND
SERVICES, AND OUR UNCERTAIN ABILITY TO RAISE SUFFICIENT CAPITAL TO MEET OUR
CAPITAL EXPENDITURE REQUIREMENTS THAT MAY ADVERSELY AFFECT THE COMPANY'S ABILITY
TO FINANCE ITS FUTURE OPERATIONS, TO COMPETE EFFECTIVELY AGAINST BETTER
CAPITALIZED COMPETITORS AND TO WITHSTAND DOWNTURNS IN ITS BUSINESS OR THE
ECONOMY GENERALLY; AND OTHER FACTORS DISCUSSED IN THE COMPANY'S FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION. FORWARD-LOOKING STATEMENTS INCLUDED IN THIS
REPORT SPEAK ONLY AS OF THE DATE HEREOF AND THE COMPANY UNDERTAKES NO OBLIGATION
TO REVISE OR UPDATE SUCH STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE
DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
2
<PAGE> 3
ITEM 1: FINANCIAL STATEMENTS
eVENTURES GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1999 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 39,379 $ 6,269,893
Accounts receivable 6,129 1,574,165
Other receivables 11,164 63,124
Prepaid expenses and other 13,250 136,814
Deposits 242,310 603,752
VAT receivable 2,757,368 1,781,354
------------ ------------
3,069,600 10,429,102
------------ ------------
LONG-TERM ASSETS
Restricted cash 1,107,437 750,000
Property and equipment, net 6,219,874 12,880,498
Investments 2,191,498 2,758,531
Goodwill, net 3,072,908 30,695,787
Other -- 521,800
------------ ------------
12,591,717 47,606,616
------------ ------------
$ 15,661,317 $ 58,035,718
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 4,609,806 $ 4,228,708
Accrued other 1,477,757 1,423,101
Accrued interest payable 383,163 569,042
Customer deposits and deferred revenues 1,272,682 634,532
Notes payable -- 26,875
Capital leases, current portion 1,916,761 2,937,621
------------ ------------
9,660,169 9,819,879
------------ ------------
LONG-TERM LIABILITIES
Debentures 6,828,948 --
Capital leases, net of current portion 2,031,513 5,250,370
------------ ------------
8,860,461 5,250,370
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock 36 917
Preferred stock -- --
Additional paid-in capital 4,310,144 64,339,007
Accumulated deficit (7,169,493) (19,284,726)
Deferred compensation -- (2,089,729)
------------ ------------
(2,859,313) 42,965,469
------------ ------------
$ 15,661,317 $ 58,035,718
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
3
<PAGE> 4
eVENTURES GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED DECEMBER 31,
------------------------------- ------------------------------
1998 1999 1998 1999
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues $ 8,808,038 $ 13,986,119 $ 13,013,700 $ 22,661,838
Direct costs 6,250,017 13,030,262 9,745,604 21,759,782
------------ ------------ ------------ ------------
Gross profit (loss) 2,558,021 955,857 3,268,096 902,056
Selling, general and administrative
expense 1,853,821 8,538,776 3,442,347 10,354,808
------------ ------------ ------------ ------------
Income (loss) from operation, before other
(income) expenses 704,200 (7,582,919) (174,251) (9,452,752)
------------ ------------ ------------ ------------
Other (income) expenses
Interest expense, net 376,443 78,831 735,878 598,062
Write off of unamortized debt discount -- -- -- 917,615
Equity in loss of affiliate -- 13,089 -- 31,819
Foreign currency (gain) loss 393 4,470 8,631 (2,032)
Other (25,797) 7,662 (17,851) 1,074
------------ ------------ ------------ ------------
351,039 104,052 726,658 1,546,538
------------ ------------ ------------ ------------
Net income (loss) 353,161 (7,686,971) (900,909) (10,999,290)
Imputed preferred dividend -- (1,115,943) -- (1,115,943)
------------ ------------ ------------ ------------
Net income (loss) available to
common shareholders $ 353,161 $ (8,802,914) $ (900,909) $(12,115,233)
============ ============ ============ ============
Net income (loss) per share (basic and
diluted) $ 0.03 $ (0.20) $ (0.08) $ (0.40)
Weighted average number of shares
outstanding 11,365,614 44,309,461 11,365,614 30,428,396
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
4
<PAGE> 5
eVENTURES GROUP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
--------------------------- --------------------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1999 -- $ -- 3,600 $ 36 $ 4,310,144 $ (7,169,493)
Period ended December 31, 1999
is Unaudited:
Net effect of acquisitions -- -- 39,623,010 756 31,588,059 --
Intrinsic value of stock
options -- -- -- -- 3,265,500 --
Amortization of deferred
compensation -- -- -- -- -- --
Net effect of the purchase of
remaining 1/3 of e.Volve -- -- 5,831,253 117 11,662,389 --
Issuance of preferred stock 7,000 -- -- -- 6,997,500 --
Imputed preferred dividend -- -- -- -- 1,115,943 (1,115,905)
Issuance of common stock
as payment for accounts
payable -- -- 376,799 8 5,339,472 --
Net loss -- -- -- -- -- (10,999,290)
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 1999 7,000 $ -- $ 45,834,662 $ 917 $ 64,339,007 $(19,284,726)
(Unaudited) ============ ============ ============ ============ ============ ============
<CAPTION>
DEFERRED
COMPENSATION TOTAL
------------ ------------
<S> <C> <C>
Balance, June 30, 1999 $ -- $ (2,859,313)
Period ended December 31, 1999
is Unaudited:
Net effect of acquisitions -- 31,588,815
Intrinsic value of stock
options (3,265,500) --
Amortization of deferred
compensation 1,175,771 1,175,771
Net effect of the purchase of
remaining 1/3 of e.Volve -- 11,662,506
Issuance of preferred stock -- 6,997,500
Imputed preferred dividend -- --
Issuance of common stock
as payment for accounts
payable -- 5,399,480
Net loss -- (10,999,290)
------------ ------------
Balance, December 31, 1999
(Unaudited) $ (2,089,729) $ 42,965,469
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
5
<PAGE> 6
eVENTURES GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31,
------------------------------
1998 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (900,909) $(10,999,290)
Adjustments to reconcile net income to net cash used in
net operating activities:
Depreciation and amortization 882,882 3,187,038
Other expenses 370,689 852,205
Bad debt -- 23,895
Foreign currency (gain) loss 11,162 (2,032)
Equity in loss of unconsolidated affiliate -- 31,819
Change in operating assets and liabilities:
Accounts receivable (488,189) (582,920)
Other receivables (89,318) (51,960)
Prepaid expenses and other (26,315) (30,257)
VAT receivable (1,347,608) 976,014
Restricted cash (1,080,806) 1,107,437
Accounts payable 1,124,102 3,760,810
Accrued other (450) 220,647
Accrued interest payable 33,063 185,879
Customer deposits (200,000) (1,214,650)
------------ ------------
Net cash used in operating activities (1,711,697) (2,535,365)
------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES:
Deposits 4,728 (361,442)
Proceeds from sale of available-for-sale securities 246,580 --
Purchases of property and equipment (993,394) (1,667,894)
Net cash acquired in acquisitions -- 299,687
Long term investments -- (475,000)
Investments in affiliates (25,000) (598,852)
------------ ------------
Net cash used in investing activities (767,086) (2,803,501)
------------ ------------
CASH FLOW FROM FINANCING ACTIVITIES:
Advances - shareholders (60,920) (246,560)
Issuance of common stock and preferred stock -- 13,224,850
Proceeds from the issuance of debentures 850,000 --
Repayment of loan -- (823,278)
Payments on capital leases (240,993) (585,632)
------------ ------------
Net cash provided by financing activities 548,087 11,569,380
------------ ------------
Net change in cash (1,930,696) 6,230,514
CASH AND CASH EQUIVALENTS, beginning of period 2,417,216 39,379
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 486,520 $ 6,269,893
============ ============
Supplemental disclosure of cash flows information:
Cash paid for:
Interest $ 192,000 $ 258,000
============ ============
Taxes $ -- $ --
============ ============
Supplemental schedule of non-cash investing and
Financing activities
Purchases of equipment under capital leases $ 1,808,683 $ 5,206,790
============ ============
Fair value of original issue discount on revaluation
of Company at July 1, 1998, arising from change
in ownership $ 2,000,000 $ --
============ ============
Goodwill arising from change in ownership
and acquisitions settled through the issuance of stock $ 3,414,343 $ 28,824,974
============ ============
Net assets of subsidiary acquired through an
issue of stock $ -- $ 196,169
============ ============
Stock issued for settlement of accounts payable $ -- $ 5,399,480
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
6
<PAGE> 7
1. ORGANIZATION AND BUSINESS:
eVentures Group, Inc. ("eVentures" or the "Company") was incorporated in the
state of Delaware on June 24, 1987 and was a public shell with no operations
prior to the transactions consummated on September 22, 1999, which are
described below. The Company was formerly known as Adina, Inc.
On September 22, 1999, the Company acquired all of the outstanding shares of
AxisTel Communications, Inc. ("AxisTel"), approximately 66.67% of the
outstanding shares of e.Volve Technology Group, Inc. ("e.Volve"),
approximately 17% of the outstanding shares of i2v2.com, Inc. ("i2v2.com")
(collectively the "Acquired Entities"), and $8,540,159 notes receivable from
e.Volve including accrued interest ("Notes") held by Major Shareholders (as
defined below). All the acquisitions and the purchase of the Notes were
settled through issuance of stock of eVentures (the "Transaction"). As a
result of the Transaction, approximately 77% of the common stock of the
Company outstanding after the Transaction was owned by three shareholders
that are affiliated with each other (the "Major Shareholders") on September
22, 1999. In October 1999, the remaining 33.33% of e.Volve was acquired by
the Company.
Prior to the Transaction, the Major Shareholders had directly and indirectly
held interests in the Acquired Entities, as follows: 66.67% of e.Volve, 21%
of i2v2.com, and 0.7% of AxisTel plus options to purchase a further 49.3% of
Axistel. In August of 1999, the interest in i2v2.com held by the Major
Shareholders was diluted to 17%. Immediately after exercising the options
in AxisTel, these interests, along with the Major Shareholders' Notes
receivable from e.Volve, were directly and indirectly transferred to
eVentures in exchange for the Company's stock. The remaining 50% of AxisTel
was then purchased from AxisTel's founding shareholders.
On October 19, 1999, eVentures acquired the remaining 33.3% of e.Volve,
through an extension of its original offer at the time of the Transaction.
This purchase was settled through an issuance of 5,831,253 shares of
eVentures' Common Stock.
The Company operates a private convergence network which consists of digital
switching, routing and signal management equipment, as well as digital fiber
optic cable lines. The network incorporates software, programming and
switching Dec Agreed to this technology which was originally developed for
or in relation to the Internet.
The Acquired Entities provide communications services and operate
communications networks based on Internet Protocol ("IP") and Asynchronous
Transfer Mode ("ATM") technologies. The Acquired Entities provide high
quality communications services, offering international voice, data,
Internet access and other value-added applications over private fiber optic
networks and the Internet. The customers of the Company include corporate
and governmental communications service providers and individual business
customers in the United States and the Company's foreign markets.
Both the e.Volve and Axistel networks are scalable networks built around
digital packet switching equipment. This switching equipment, together with
other components of the networks, incorporate ATM and IP technologies. The
networks meet voice over internet protocol ("VOIP") standards.
Internationally, the Company's networks offer communications services
through leased or owned fiber optic cable under direct operating agreements
with telecommunications authorities and Internet service providers ("ISP").
Investments
As of December 31, 1999, the Company has made investments in the following
companies:
<TABLE>
<CAPTION>
COMPANY NAME ACCOUNTING METHOD % OWNERSHIP
------------ ----------------- -----------
<S> <C> <C>
Innovative Calling Technologies LLC equity basis 50.0%
i2v2.com (d/b/a PhoneFree.com) cost basis 16.0%
FonBox, Inc. cost basis 8.0%
</TABLE>
7
<PAGE> 8
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
INTERIM FINANCIAL DATA
The consolidated balance sheet as of December 31, 1999, the consolidated
statements of operations for the three and six month periods ended December
31, 1998 and 1999, consolidated statements of shareholders' equity flows for
the six month period ended December 31, 1999, and the consolidated
statements of cash flows for the six month periods ended December 31, 1998
and 1999 have been prepared by the Company without audit. In the opinion of
management, all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the consolidated financial
position, results of operations and cash flows have been made. The results
of operations for the interim periods are not necessarily indicative of the
results for the full year. The accompanying financial statements should be
read with the Company's consolidated financial statements included in the
Company's Form 10/A filed with the Securities and Exchange Commission
on March 8, 2000.
USE OF ESTIMATES
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure 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.
3. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following at December 31, 1999:
<TABLE>
<S> <C>
Property and Equipment:
Leasehold improvements $ 334,559
Network equipment under capital leases 11,146,106
Other equipment 3,047,440
Furniture and fixtures 27,862
------------
14,555,967
Accumulated depreciation and amortization (1,675,469)
------------
$ 12,880,498
============
</TABLE>
Depreciation and amortization expense related to the above property and
equipment was $374,619 and $775,016 for the six months ended December 31,
1998 and 1999, respectively.
4. NET INCOME (LOSS) PER SHARE:
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128 ("SFAS#128"), Earnings Per Share ("EPS").
SFAS#128 requires dual presentation of basic EPS and diluted EPS on the face
of all income statements issued after December 15, 1997 for all entities
with complex capital structures. Basic EPS is computed as net income divided
by the weighted average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur from common
shares issuable through stock options, warrants and convertible debentures.
Diluted EPS has not been presented for the effects of stock options,
warrants, convertible debentures and preferred stock as the effect would be
antidilutive. Accordingly, basic and diluted EPS did not differ for any
period presented. For purposes of computation of EPS, the shares issued for
the acquisition of e.Volve (11,365,614 shares) are deemed to have been in
existence for the entire period.
5. SIGNIFICANT TRANSACTIONS.
On October 14, 1999, the Company paid $1.1 million cash and issued 239,299
shares of eVentures' common stock to Avantel S.A. in satisfaction of
accounts payable to Avantel of $4.3 million.
As part of the September 22, 1999 Transaction (see Note 1), the Company
acquired the remaining 33.3% of e.Volve on October 19, 1999 through an
extension of eVentures original offer. This purchase was settled through an
issuance of 5,831,253 shares of eVentures' common stock.
8
<PAGE> 9
On November 19, 1999, November 26, 1999 and December 15, 1999 the Company
issued 7,000 shares of Series B Convertible Preferred Stock at a price of
$1,000 per share. The par value of shares of Series B Convertible Preferred
Stock is $0.00002. The shares of Series B Convertible Preferred Stock are
convertible into shares of the Company's common stock at a price of $13.80
per share, subject to certain anti-dilution adjustments. The conversion
price was determined using the average of the closing bid price per share of
eVentures common stock for the 10 trading days ended October 29, 1999. Due
to the beneficial conversion feature of these securities, an imputed
preferred dividend of $1.1 million has been recorded during the three months
ended December 31, 1999.
On November 30, 1999 the Company terminated its marketing agreement with
Corpovision, S.A. The Company settled its liability to Corpovision with
respect to the termination of this agreement through the issuance of 137,500
shares of eVentures common stock. As a result, the Company recorded a charge
in the statement of operations of approximately $1.1 million in November,
1999 related to the difference between the value of the shares issued and
the book value of the note payable to Corpovision.
6. SUBSEQUENT EVENTS
In a series of transactions closed between January 6 and February 4, 2000,
the Company issued 15,570 shares of Series C Convertible Preferred
Stock, par value $0.00002 per share, to 8 accredited investors, at a price
of $1,000 per share. The shares are convertible into Common Stock at a price
of $17.90 per share, subject to certain anti-dilution adjustments. The
conversion price was determined using the average of the closing bid prices
per share of the Company's common stock for the 20 trading days ended
December 10, 1999. The effect of the favorable conversion rate will be
recorded as an imputed preferred dividend in the third quarter of fiscal
2000.
On January 31, 2000, the Company exercised its option to purchase
approximately 23% of Fonbox, Inc., in addition to the approximately 8%
already owned by the Company, for $1.0 million cash and the issuance of
27,860 shares of The Company's common stock. As of February 11, 2000, the
Company owns approximately 31% of Fonbox.
On January 28, 2000, the Company purchased membership interests in LC39
Group, LLC for $1.0 million. These interests represent less than 5%
ownership in LC39. LC39 is the legal name of Launch Center 39.
On February 11, 2000, the Company executed definitive documentation
regarding its investment in Televant, Inc., which owns and operates the
Callrewards.com(TM) website. As part of this transaction, the Company also
completed an initial funding of $750,000 for a 30% interest in Callrewards.
The Company's investment anticipates an additional $3.5 million of funding
during 2000. The further funding is conditioned on Callrewards achieving
certain operational targets.
7. PRO FORMA FINANCIAL DATA
On September 22, 1999, the Company acquired all of the outstanding shares of
AxisTel, approximately 66.7% of the outstanding shares of e.Volve, the
e.Volve debentures, and a minority interest in i2v2.com. On October 19,
1999, the Company acquired the remaining 33.3% of the outstanding shares of
e.Volve. All of the acquisitions were settled through the issuance of stock
of the Company.
Set forth below is the Company's unaudited pro forma condensed statement of
operations for the year ended June 30, 1999 and the six months ended
December 31, 1999 as though the Transaction had occurred on July 1, 1998,
after adjustments related to goodwill, amortization of intangible assets and
debt discount and interest expense relating to the e.Volve debentures. The
unaudited pro forma results are not necessarily indicative of either actual
results of operations that would have occurred had the acquisitions been
made on July 1, 1998 or of future results.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1999
<S> <C> <C> <C>
Revenues $9,979,203 $ 14,829,347 $ 28,403,640
Net loss $ (239,498) $ (3,839,602) $(11,821,902)
Net loss per share $ (0.01) $ (0.09) $ (0.27)
</TABLE>
9
<PAGE> 10
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The financial information and other statistical data set out below represent
the financial condition and results of operations of the accounting acquirer
pursuant to a series of reorganization transactions completed on September 22,
1999 and October 19, 1999 (the "Reorganization") described herein for all
periods from July 1, 1998 through September 22, 1999. As a result, throughout
this Form 10 Q/A, our financial statements as of any date and for any period
beginning July 1, 1998 and ending on or prior to September 22, 1999 reflect the
financial condition and results of operations of e.Volve as if we had acquired
the interest of the Infinity Entities in e.Volve on July 1, 1998, except that
(a) our balance sheet as of June 30, 1999 reflects the acquisition of our
minority interest in PhoneFree.com. Financial information and other data
subsequent to September 22, 1999 reflects the acquisition of AxisTel.
REVENUES. We generate revenues through the sale of international and domestic
Internet telephony minutes on a wholesale basis to other U.S. long-distance
providers and to distributors of prepaid calling cards. In addition, we sell
data bandwidth to other carriers and corporate customers. Our agreements with
our wholesale customers are short term in duration and the rates we charge
customers are subject to change from time to time. Due to increasing
competition, management expects these rates to decline, which could result in
lower revenues and increased losses. Our three largest customers accounted for
79.3% of our revenues during the six months ended December 31, 1999.
DIRECT COSTS. Direct costs include per minute termination charges and lease
payments and fees for fiber optic cable. Prior to September 1999, we provided
international telecommunication services only from the United States to Mexico.
The majority of our termination fees and certain fiber optic lease payments were
payable in Mexican pesos. As a result we were exposed to exchange rate risk due
to the fluctuation of the Mexican peso compared to the U.S. dollar. Continued
fluctuation in the exchange rate may make it cheaper or more expensive for us to
purchase pesos to meet our peso denominated expenses. Two vendors in Mexico
provide substantially all of our terminating capabilities in Mexico. If either
of these vendor relationships were terminated, our ability to conduct operations
in Mexico would be limited.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. These expenses include corporate
expenses and management salaries, depreciation and amortization expenses, sales
and marketing expenses, travel and development expenses, benefits, occupancy
costs, and administrative expenses. We maintain a corporate office and several
switch facilities. Due to the international nature of our business, travel and
development costs have been significant and could continue to increase as we
seek to expand our network.
10
<PAGE> 11
SUMMARY OF OPERATING RESULTS
The table below summarizes our operating results
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
-------------------------------------------------------
1998 % 1999 %
------------ -------- ------------ --------
(unaudited)
<S> <C> <C> <C> <C>
Revenues $ 8,808,038 100.0% $ 13,986,119 100.0%
Direct costs 6,250,017 71.0% 13,030,262 93.2%
------------ -------- ------------ --------
Gross profit 2,558,021 29.0% 955,857 6.8%
Selling, general and
administrative expenses 1,853,821 21.0% 8,538,776 61.1%
Loss from operations, before ------------ -------- ------------ --------
other (income) expenses 704,200 8.0% (7,582,919) (54.2)%
------------ -------- ------------ --------
Other (income) expenses
Interest expense, net 376,443 4.3% 78,831 0.6%
Write off of unamortized
debt discount -- 0.0% -- 0.0%
Equity in loss of affiliate -- 0.0% 13,089 0.1%
Foreign currency (gain)
loss 393 0.0% 4,470 0.0%
Other (25,797) (0.3)% 7,662 0.1%
------------ -------- ------------ --------
351,039 4.0% 104,052 0.7%
------------ -------- ------------ --------
Net income (loss) $ 353,161 4.0% $ (7,686,971) (55.0)%
============ ======== ============ ========
<CAPTION>
SIX MONTHS ENDED DECEMBER 31,
-------------------------------------------------------
1998 % 1999 %
------------ -------- ------------ --------
(unaudited)
<S> <C> <C> <C> <C>
Revenues $ 13,013,700 100.0% $ 22,661,838 100.0%
Direct costs 9,745,604 74.9% 21,759,782 96.0%
------------ -------- ------------ --------
Gross profit 3,268,096 25.1% 902,056 4.0%
Selling, general and
administrative expenses 3,442,347 26.5% 10,354,808 45.7%
Loss from operations, before ------------ -------- ------------ --------
other (income) expenses (174,251) (1.3)% (9,452,752) (41.7)%
------------ -------- ------------ --------
Other (income) expenses
Interest expense, net 735,878 5.7% 598,062 2.6%
Write off of unamortized
debt discount -- 0.0% 917,615 4.0%
Equity in loss of affiliate -- 0.0% 31,819 0.1%
Foreign currency (gain)
loss 8,631 0.1% (2,032) (0.0)%
Other (17,851) (0.1)% 1,074 0.0%
------------ -------- ------------ --------
726,658 5.6% 1,546,538 6.8%
------------ -------- ------------ --------
Net income (loss) $ (900,909) (6.9)% $(10,999,290) (48.5)%
============ ======== ============ ========
</TABLE>
THREE AND SIX MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THREE AND SIX MONTHS
ENDED DECEMBER 31, 1998
REVENUES. Revenues increased to $14.0 million and $22.7 million during the three
and six months ended December 31, 1999 from $8.8 million and $13.0 million
during the three and six months ended December 31, 1998, respectively, an
increase of 58.8% and 74.1%, respectively. The increase in revenues in our
second quarter and during the six months ended December 31, 1999 primarily
resulted from the acquisition of AxisTel in September 1999 which increased
revenues by $5.6 million during the second quarter. In addition, an increase in
traffic contributed the remainder of the increase in revenues, offset by a
decrease in the average price per minute that we charged. During the three and
six months ended December 31, 1999 we transmitted 94.0 million and 171.0 million
minutes, respectively, excluding the 47.3 million minutes transmitted by AxisTel
during the second quarter compared with 45.8 million and 64.4 million minutes
during the comparable periods in 1998. The average price per minute we charged
for these minutes decreased to $0.10 during the three and six months ended
December 31, 1999 from $0.19 and $0.20 during the comparable periods in 1998.
DIRECT COSTS. Direct costs increased to $13.0 million and $21.8 million during
the three and six months ended December 31, 1999 from $6.3 million and $9.7
million during the three and six months ended December 31, 1998, respectively,
an increase of 108.5% and 123.3%, respectively. The increase in direct costs in
our second quarter and during the six months ended December 31, 1999 resulted
from a $5.2 million increase in direct costs attributable to the operations of
AxisTel during our second quarter of 1999. In addition, direct costs increased
during the three and six months ended December 31, 1999 by $1.3 million and $6.8
million, respectively, as a result of increased traffic volumes discussed above,
offset by lower per minute termination costs. The average cost per minute to
terminate calls decreased to $0.08 and $0.09 during the three and six months
ended December 31, 1999, respectively from $0.11 and $0.12 during the comparable
periods in 1998. Direct costs also increased during the three months ended
December 31, 1999 by approximately $300,000 as a result of fixed circuit cost
increases due to our new Indian routes offset by savings on our fixed circuit
costs on our Mexico routes. As a percentage of revenues, direct costs during the
three months ended December 31, 1999 increased to 93.2% from 71.0% during the
three months ended December 31, 1998. As a percentage of revenues, direct costs
during the six months ended December 31, 1999 increased to 96.0% from 74.9%
during the six months ended December 31, 1998. The increase in direct costs as a
percentage of revenues results primarily because our wholesale prices per minute
decreased faster than our cost per minute for termination, offset by higher
volumes of traffic over fixed cost circuits.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses increased to $8.5 million and $10.4 million during the three and six
months ended December 31, 1999 from $1.9 million and $3.4 million during the
three and six months ended December 31, 1998, respectively, an increase of
360.6% and 200.8%, respectively. These increases in selling, general and
administrative expenses during the three and six months ended December 31, 1999
resulted primarily from expenses related to our termination of a marketing
agreement ($1.5 million and $1.7 million, respectively), the incurrence of
severance costs ($325,000 in our
11
<PAGE> 12
second quarter), an increase in goodwill expense related to the purchase of
AxisTel and 1/3 of e.Volve ($700,000 in our second quarter), an increase in
professional and printing fees related to the auditing of our Company for three
years and legal work related to the Reorganization and purchase of 1/3 of
e.Volve ($780,000 in our second quarter), an increase in depreciation expense of
($185,000 and $450,000, respectively), an increase in payroll ($40,000 and
$200,000, respectively), the recording of a compensation charge related to the
issuance of option below market ($1.2 million in our second quarter) and charges
related to consulting and professional fees in Mexico ($625,000 in our second
quarter). In addition, the acquisition of AxisTel increased expenses by $1.4
million in our second quarter, corporate overhead added an additional $230,000.
These increases in expenses were offset by decreases in travel and other
consulting expenses ($330,000 during our second quarter and $365,000 during the
six months ended December 31, 1999).
INTEREST EXPENSE, NET. Interest expense, net decreased to $78,831 and $598,062
during the three and six months ended December 31, 1999 from $376,443 and
$735,878 during the three and six months ended December 31, 1998. This decrease
was a result of the elimination of $8.0 million of debentures as a result of our
acquisition of e.Volve's outstanding debentures on September 22, 1999 and the
resulting consolidation of accounts, and due to interest income on higher cash
balances maintained out of proceeds of private placements completed during our
second quarter, offset by higher charges related to capital leases for equipment
leased after December 31, 1998.
WRITE OFF OF UNAMORTIZED DEBT DISCOUNT. The write off of unamortized debt
discount during the six months ended December 31, 1999 resulted from our
purchase of e.Volve's outstanding debentures and the subsequent elimination of
these debentures in our consolidated balance sheet.
EQUITY IN LOSS OF UNCONSOLIDATED AFFILIATE. Equity in loss of unconsolidated
affiliate was $13,089 and $31,819 during the three and six months ended December
31, 1999. These losses occurred at a joint venture formed with e.Volve in April
1999.
FOREIGN CURRENCY (GAIN) LOSS. Foreign currency (gain) loss during the three and
six months ended December 31, 1999 was a loss of $4,470 and a gain of $2,032
compared with a loss of $393 and a loss of $8,631 during the three and six
months ended December 31, 1998.
OTHER. Other expenses of $7,662 and $1,074 during the three and six months ended
December 31, 1999 compares with other income of $25,797 and $17,851 during the
three and six months ended December 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Since July 1, 1999, we have funded our operations primarily through cash from
operations and from private placements of common stock, preferred stock,
warrants to purchase common stock and debt. During the six months ended December
31, 1999, we have raised a total $12.9 million through private placements of
common stock and preferred stock, $287,350 from the exercise of options and $5.2
million through capital leases to finance operations and to fund capital
expenditures.
On September 28, 1999, we completed a private placement of common and preferred
stock of approximately $5.9 million. Proceeds from this placement were used for
general corporate purposes and for use as capital for new investments and
projects.
On November 19 and 26, 1999, we completed two private placements of preferred
stock with aggregate proceeds of approximately $6.2 million. Proceeds from these
issuances are for general corporate purposes and for use as capital for new
investments and projects.
On December 15, 1999, we completed a private placement of preferred stock with
aggregate proceeds of approximately $775,000. Proceeds from this issuance are
for general corporate purposes and for use as capital for new investments and
projects.
The preferred stock issued on November 19, 1999, November 26, 1999 and December
15, 1999 were issued at a discount to the market value of our common stock into
which it is convertible. We have recognized this discount by accounting for it
as an imputed preferred dividend of $1.1 million in our second quarter.
Our principal uses of cash are to fund working capital requirements, capital
expenditures and operating losses.
As of December 31, 1999, we had current assets of $10.4 million, including cash,
cash equivalents and short-term investments of $6.3 million, and a working
capital surplus of $609,233. Current assets included a tax refund receivable of
$1.8 million.
12
<PAGE> 13
Since December 31, 1999, we have raised additional funds through subsequent
private placements of preferred stock. In a series of transactions between
January 6 and February 4, 2000, we completed a private placement of preferred
stock with aggregate proceeds of approximately $15.6 million. Proceeds from this
issuance are for general corporate purposes and for use as capital for new
investments and projects.
CASH FLOWS FROM OPERATING ACTIVITIES:
Our operating activities used cash of $2.5 million during the six months ended
December 31, 1999. During the six months ended December 31, 1999 cash flow used
by operating activities primarily resulted from net losses, the reduction of
customer deposits, and an increase in accounts receivable, offset by
depreciation and amortization charges, a decrease in restricted cash, and a
decrease in accounts payable (funded through the issuance of our common stock to
vendors of $5.4 million) and an increase in other accrued liabilities.
CASH FLOWS FROM INVESTING ACTIVITIES:
We used cash for investing activities of $2.8 million during the six months
ended December 31, 1999. During the six months ended December 31, 1999 cash used
by investing activities primarily consisted of cash used to purchase equipment
($1.7 million), fund affiliates, and make other long term investments, offset by
net cash acquired in the acquisitions.
CASH FLOWS FROM FINANCING ACTIVITIES:
Our cash flow from financing activities was $11.6 million during the six months
ended December 31, 1999. During the six months ended December 31, 1999 cash
provided by financing activities was attributable to the issuance of common
stock and preferred stock ($13.2 million), offset by the repayment of a bridge
loan and capital lease payments.
GENERAL
Our business plans will continue to require a substantial amount of capital to
fund our expansion in existing and recently acquired markets, to continue our
development of our network and to fund our operating losses and debt and capital
lease service requirements. We also continue to make strategic investments and
to evaluate acquisitions in light of our long range plans. Such strategic
investments and acquisitions, if realized, could require expenditure of a
material portion of our financial resources and would accelerate the need for
raising additional capital. Sources of funding for our financing requirements
may include vendor financing, bank loans and public offerings or private
placements of equity and/or debt securities. There can be no assurance that
additional financing will be available or, if available, that financing can be
obtained on a timely basis and on acceptable terms. The failure to obtain such
financing on acceptable terms could significantly reduce our ability to fund our
expenses, development, investments and operations.
Our cash and cash equivalents are expected to provide sufficient liquidity to
meet our capital requirements for approximately the next twelve months.
EQUIPMENT LEASING AND FINANCING. We have leased equipment manufactured by
various equipment manufacturers including Siemens A.G., Network Equipment
Technologies, Inc. and Harris Corporation. As of December 31, 1999 we have
entered into an aggregate of approximately $10.3 million of capital leases with
(i) Telecommunications Finance Group, a subsidiary of Siemens A.G., (ii) BA
Capital Corp., (iii) Ascend Credit Corporation, and (iv) Arrendadora
BankAmerica, S.A.
SUBSEQUENT EVENTS:
In a series of transactions closed between January 6 and February 10, 2000, we
issued 15,570 shares of our Series C Convertible Preferred Stock, par value
$0.00002 per share, to eight accredited investors, at a price of $1,000 per
share. The shares are convertible into shares of our common stock at a price of
$17.90 per share, subject to certain anti-dilution adjustments. The conversion
price was determined using the average of the closing bid prices per share of
our common stock for the 20 trading days ended December 10, 1999. The effect of
the favorable conversion rate will be recorded as an imputed preferred dividend
in our third quarter.
On January 31, 2000, our Company exercised its option to purchase an additional
23% of Fonbox, Inc. for $1.0 million cash and the issuance of 27,860 shares of
eVentures common stock. As of February 11, 2000, we own approximately 31% of
Fonbox.
13
<PAGE> 14
On January 28, 2000, we purchased membership interests in LC39 Group, LLC for
$1.0 million. These interests represent less than 5% ownership in LC39. LC39 is
the legal name of Launch Center 39, a New York City based incubator for Internet
start-ups.
On February 11, 2000, we executed definitive documentation regarding our
investment in Televant, Inc., which owns and operates the Callrewards.com(TM)
website. As part of this transaction, we also completed an initial funding of
$750,000 for a 30% interest in Callrewards. Our investment anticipates an
additional $3.5 million of funding during 2000. The further funding is
conditioned on Callrewards achieving certain operational targets.
EFFECTS OF INFLATION
Management does not believe that its business is impacted by inflation to a
significantly different extent than is the general economy. However, there can
be no assurances that inflation will not have a material effect on the Company's
operations in the future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to the impact of political instability, foreign currency, and
other risks.
Political Instability Risks. We have relationships with foreign suppliers in
Syria, Mexico, India, Sri Lanka and other countries. We have not experienced any
negative economic consequences as a result of relationships with foreign
suppliers in these countries, but may be negatively affected should political
instability in any of these countries develop.
Foreign Currency Risks. Since the agreements we have has entered into with
foreign suppliers in Syria, India, Sri Lanka and other countries are denominated
in U.S. dollars, we are not exposed to risks associated with fluctuations in
these foreign currencies. However, because our agreements with Mexican suppliers
are denominated in Mexican pesos, we may be exposed to fluctuations in Mexican
pesos, as well as to downturns in the Mexican economy, all of which may affect
profitability. During the six months ended December 31, 1999, $13.7 million of
our direct costs were denominated in Mexican pesos.
Other Market Risks. We are also exposed to potential risks in dealing with
foreign suppliers in foreign countries associated with potentially weaker
protection of intellectual property rights, unexpected changes in regulations
and tariffs, and varying tax consequences.
14
<PAGE> 15
PART II
Item 1. Legal Proceedings
In September 1999, Yurie Systems Inc. filed a lawsuit in the United States
District Court of Maryland against e.Volve, claiming e.Volve owed Yurie Systems
approximately $283,497 arising from a previous sale of telecommunications
equipment from Yurie Systems to e.Volve in June and July of 1997. e.Volve denies
the claim because it never agreed to accept the equipment. The equipment has
failed field testing and did not meet either e.Volve's or Yurie Systems'
standards. e.Volve filed a counterclaim for lost business opportunities and lost
profits in an amount to be determined at trial. On February 3, 2000, we reached
an agreement with Yurie Systems to settle this litigation in exchange for a
payment by us of $140,000.
We are involved in legal proceedings from time to time, none of which
management believes, if decided adversely to us, would have a material adverse
effect on the business, financial condition or results of operations of the
Company.
Item 2. Changes in Securities
In the past four months, we have issued and sold unregistered securities in
the transactions described below.
On September 22, 1999, in connection with our reorganization, we issued and
sold:
(i) an aggregate of 14,562,193 shares of common stock to IEO Investments,
Limited and Infinity Emerging Subsidiary Limited as merger
consideration for all of the equity interests in IEO Holdings Limited;
(ii) an aggregate of 6,381,000 shares of common stock to certain
shareholders of AxisTel in exchange for the outstanding shares of
capital stock of AxisTel not owned by IEO Holdings Limited; and
(iii) 5,682,807 shares of common stock to Infinity Investors Limited in
exchange for shares of capital stock of e.Volve representing
approximately one-third of the outstanding capital stock of e.Volve.
The issuance of such shares was exempt from the registration requirements of
the Securities Act pursuant to Rule 506 of Regulation D promulgated pursuant to
the Securities Act. No general solicitations were made in connection with this
transaction, and three accredited, eight non-accredited and three foreign
investors participated in this transaction. All non-accredited investors were
represented in connection with this transaction by purchaser representatives.
On September 28, 1999, we issued and sold 1,000 shares of Series A
Convertible Preferred stock to an accredited investor for $1.0 million in a
transaction exempt from the registration requirements of the Securities Act
pursuant to Rule 506 of Regulation D promulgated pursuant to the Securities Act.
No general solicitations were made in connection with this transaction.
On September 28, 1999, we issued and sold an aggregate of 2,470,000 shares
of common stock to 25 investors for $4.9 million in a transaction exempt from
the registration requirements of the Securities Act pursuant to Rule 506 of
Regulation D promulgated pursuant to the Securities Act. No general
solicitations were made in connection with this transaction, and only accredited
investors participated in this transaction.
On October 14, 1999, we issued 239,229 shares of our common stock to Avantel
S.A. to settle accounts payable due to Avantel in the amount of $3.2 million in
a transaction exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) of the Securities Act. These shares were issued for
consideration of $13.125 per share, which was 75% of the closing price of our
common stock on the date of issuance, and which represented the fair market
value of our common stock. The price per share was determined following
negotiations with Avantel.
On October 19, 1999, in connection with our reorganization, we issued and
sold an aggregate of 5,831,253 shares to 27 shareholders of e.Volve in exchange
for the outstanding shares of capital stock of e.Volve not owned by eVentures in
a transaction exempt from the registration requirements of the Securities Act
pursuant to Rule 506 of Regulation D under the Securities Act. No general
solicitations were made in connection with this transaction, and 22 accredited
and 5 non-accredited investors participated in this transaction. All
non-accredited investors were represented in connection with this transaction by
purchaser representatives.
On November 19, 1999, we issued and sold 2,500 shares of our Series B
preferred stock to an accredited investor for $2.5 million in a transaction
exempt from the registration requirements of the Securities Act pursuant to Rule
506 of Regulation D under the Securities Act. No general solicitations were made
in connection with this transaction.
On November 26, 1999, we issued and sold 3,725 shares of our Series B
preferred stock to an accredited investor for $3.7 million in a transaction
exempt from the registration requirements of the Securities Act pursuant to Rule
506 of Regulation D under the Securities Act. No general solicitations were made
in connection with this transaction.
On November 30, 1999, we issued 137,500 shares of our common stock to
Corpovision, S.A. to settle a note payable due to Corpovision in the amount of
$1.1 million in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) of the Securities Act. These shares were
issued for consideration of $8.00 per share, which was below the market price of
our common stock on the date of issuance. We took a charge of $1.1 million
during our second fiscal quarter in connection with this transaction. The price
per share was determined following negotiations with Corpovision.
On December 15, 1999, we issued and sold 775 shares of our Series B
preferred stock to an aggregate of 14 accredited investors for $775,000 in a
transaction exempt from the registration requirements of the Securities Act
pursuant to Rule 506 of Regulation D promulgated pursuant to the Securities Act.
No general solicitations were made in connection with this transaction.
On December 21, 1999, we issued 200,000 shares of our common stock upon
conversion of 1,000 shares of our Series A preferred stock in a transaction
exempt from the registration requirements of the Securities Act pursuant to
Section 3(a)(9) of the Securities Act.
15
<PAGE> 16
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 Agreement and Plan of Exchange, dated as of October 19, 1999, among
eVentures Group, Inc., and the persons set forth on Schedule 1
thereto (incorporated by reference to Exhibit 2.1 to the report filed
on Form 8-K on November 3, 1999).
3.1 Amended and Restated Certificate of Designation of Rights,
Preferences and Privileges of Series A Convertible Preferred Stock,
dated October 14, 1999 (incorporated by reference to Exhibit 3.6 to
the registration statement on Form 10 filed on December 20, 1999).
3.2 Certificate of Designation of Rights, Preferences and Privileges of
Series B Convertible Preferred Stock, dated as of November 10, 1999
(incorporated by reference to Exhibit 3.7 to the registration
statement on Form 10 filed on December 20, 1999).
3.3 Certificate of Amendment, dated as of December 15, 1999, to the
Certificate of Designation of Rights, Preferences and Privileges of
Series B Convertible Preferred Stock (incorporated by reference to
Exhibit 3.8 to the registration statement on Form 10 filed on
December 20, 1999).
3.4 Certificate of Designation, Preferences and Rights of Series C
Convertible Preferred Stock (incorporated by reference to exhibit 3.4
to the Quarterly Report on Form 10-Q for the period ended December
31, 1999, filed on February 20, 2000).
4.1 Registration Rights Agreement, dated as of September 22, 1999, among
the Registrant and the persons and entities set forth on Schedule 1
thereto (the "First Registration Rights Agreement") (incorporated by
reference to Exhibit 4.1 to the report filed on Form 8-K on October
7, 1999).
4.2 Addendum to the First Registration Rights Agreement, dated as of
October 19, 1999, among eVentures Group, Inc., the persons set forth
on Schedule 1 thereto and the other parties to the First Registration
Rights Agreement (incorporated by reference to Exhibit 4.2 to the
registration statement on Form 10 filed on December 20, 1999).
4.3 Registration Rights Agreement, dated as of November 19, 1999, between
eVentures Group, Inc. and Geronimo Partners, L.P. (incorporated by
reference to Exhibit 4.3 to the registration statement on Form 10
filed on December 20, 1999).
4.4 Schedule identifying other agreements, the dates thereof and the
parties thereto, substantially identical to the Registration Rights
Agreement, dated as of November 19, 1999, between eVentures Group,
Inc. and Geronimo Partners, L.P. (incorporated by reference to
Exhibit 4.4 to the registration statement on Form 10 filed on
December 20, 1999).
4.5 Registration Rights Agreement, dated as of December 31, 1999, between
eVentures Group, Inc. and the persons and entities signatories
thereto (incorporated by reference to exhibit 4.5 to Amendment No. 1
to the registration statement on Form 10 filed on March 8, 2000).
16
<PAGE> 17
27.1 Financial Data Schedule
(b) Reports on Form 8-K
Reports on 8-K
1) On October 7, 1999, the Company filed a report on Form 8-K announcing that it
had acquired (i) all of the outstanding shares of AxisTel, (ii) approximately
two-thirds of the outstanding shares of e.Volve and (iii) approximately 17% of
the outstanding shares of i2v2.com Inc. pursuant to the Reorganization.
2) On November 3, 1999, the Company filed a report on Form 8-K announcing that
on October 19, 1999 it had acquired the remaining one-third interest of e.Volve,
making eVolve a wholly owned subsidiary of the Company.
3) On December 7, 1999, the Company filed a report on Form 8-K/A which amends
the Form 8-K previously filed on October 7, 1999. The Form 8-K/A reported that
the Company was unable to provide historical financial information statements
and pro forma financial information statements as of December 6, 1999 as was
previously planned, but anticipated filing the historical financial information
statements and pro forma financial information statements on or prior to
December 9, 1999.
4) On December 9, 1999, the Company filed a report on Form 8-K/A which amends
the Form 8-K previously filed on October 7, 1999, as later amended on December
7, 1999. The Form 8-K/A filed on December 9, 1999 included the historical
financial information statements and pro forma financial information statements,
as well as unaudited financial statements of the Company as of September 30,
1999 and for the three months ended September 30, 1999 and September 30, 1998.
5) On December 14, 1999, the Company filed a report on Form 8-K announcing that
(i) it had engaged BDO Seidman LLP at its auditors and dismissed Larry
O'Donnell, C.P.A. as of December 9, 1999 and (ii) it had changed its fiscal year
end date from April 30, 1999 to June 30, 1999. Page 17 of 20
6) On December 20, 1999, the Company filed a report on Form 8-K/A which amends
the financial statements reported in the December 9, 1999 Form 8-K/A.
7) On December 28, 1999, the Company filed a report on Form 8-K/A which amends
the Form 8-K filed on December 14, 1999 in order to provide the letter addressed
to the Securities and Exchange Commission by the Company's former accountant
required pursuant to Item 304 of Regulation S-K.
17
<PAGE> 18
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.
eVENTURES GROUP, INC.
Date: March 8, 2000 By: /s/ Fred A. Vierra
---------------------- --------------------------------------
Fred A. Vierra
Chairman of the Board
Date: March 8, 2000 By: /s/ Barrett N. Wissman
---------------------- --------------------------------------
Barrett N.Wissman
President and Chief Executive Officer
Date: March 8, 2000 By: /s/ John Stevens Robling Jr.
---------------------- --------------------------------------
John Stevens Robling Jr.
Chief Financial Officer
18
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
2.1 Agreement and Plan of Exchange, dated as of October 19, 1999,
among eVentures Group, Inc., and the persons set forth on
Schedule 1 thereto (incorporated by reference to Exhibit 2.1
to the report filed on Form 8-K on November 3, 1999).
3.1 Amended and Restated Certificate of Designation of Rights,
Preferences and Privileges of Series A Convertible Preferred
Stock, dated October 14, 1999 (incorporated by reference to
Exhibit 3.6 to the registration statement filed on Form 10 on
December 20, 1999).
3.2 Certificate of Designation of Rights, Preferences and
Privileges of Series B Convertible Preferred Stock, dated as
of November 10, 1999 (incorporated by reference to Exhibit 3.7
to the registration statement filed on Form 10 on December 20,
1999).
3.3 Certificate of Amendment, dated as of December 15, 1999, to
the Certificate of Designation of Rights, Preferences and
Privileges of Series B Convertible Preferred Stock
(incorporated by reference to Exhibit 3.8 to the registration
statement filed on Form 10 on December 20, 1999).
3.4 Certificate of Designation, Preferences, Rights, and of Series
C Convertible Preferred Stock (incorporated by reference to
Exhibit 3.4 to the report filed on Form 10-Q, February 18,
2000).
4.1 Registration Rights Agreement, dated as of September 22, 1999,
among the Registrant and the persons and entities set forth on
Schedule 1 thereto (the "First Registration Rights Agreement")
(incorporated by reference to Exhibit 4.1 to the report filed
on Form 8-K on October 7, 1999).
4.2 Addendum to the First Registration Rights Agreement, dated as
of October 19, 1999, among eVentures Group, Inc., the persons
set forth on Schedule 1 thereto and the other parties to the
First Registration Rights Agreement (incorporated by reference
to Exhibit 4.2 to the registration statement filed on Form 10
on December 20, 1999).
4.3 Registration Rights Agreement, dated as of November 19, 1999,
between eVentures Group, Inc. and Geronimo Partners, L.P.
(incorporated by reference to Exhibit 4.3 to the registration
statement filed on Form 10 on December 20, 1999).
4.4 Schedule identifying other agreements, the dates thereof and
the parties thereto, substantially identical to the
Registration Rights Agreement, dated as of November 19, 1999,
between eVentures Group, Inc. and Geronimo Partners, L.P.
(incorporated by reference to Exhibit 4.4 to the registration
statement filed on Form 10 on December 20, 1999).
4.5 Registration Rights Agreement, dated as of December 31, 1999,
between eVentures Group, Inc. and the persons and entities
signatories thereto (incorporated by reference to Exhibit 4.5
to the registration statement filed on Form 10/A on March 8,
2000).
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1999 AND THE
STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
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