FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
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 000-17637
eVision USA.Com, Inc.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 45-0411501
------------------------------ -------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1700 Lincoln Street, Suite 3200, Denver, CO 80203
-------------------------------------------------
(Address of principal executive offices)
(303) 860-1700
--------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
The registrant had 22,724,873 shares of its $.01 par value common stock
outstanding as of May 10, 2000.
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements Page No.
a. Unaudited Consolidated Balance Sheets as of March 31, 2000
and September 30, 1999......................................... 3
b. Unaudited Consolidated Statements of Operations for the six
months and three months ended March 31, 2000 and 1999......... 5
c. Unaudited Consolidated Statements of Comprehensive Income (Loss)
for the six months ended March 31, 2000 and 1999............... 6
d. Unaudited Consolidated Statement of Stockholders' Equity (Deficit)
for the six months ended March 31, 2000 ....................... 7
e. Unaudited Consolidated Statements of Cash Flows for the six
months ended March 31, 2000 and 1999........................... 8
f. Notes to Unaudited Consolidated Financial Statements............ 11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations....................................................... 22
Item 3. Quantitative and Qualitative Disclosures about Market Risks......... 26
PART II - OTHER INFORMATION
Item 1. Legal Proceedings................................................... 27
Item 2. Change in Securities................................................ 27
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits........................................................ 28
b. Reports on Form 8-K............................................. 28
Signatures................................................................... 29
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
eVISION USA.COM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
March 31, September 30,
ASSETS 2000 1999
--------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents .......................................... $ 17,639,590 7,593,772
Certificate of deposit, restricted ................................. -- 575,000
Receivables from brokers or dealers and clearing
organizations .................................................... 898,110 --
Credit card receivables, net of discount ........................... 7,741,733 --
Trade receivables:
Trade receivables ............................................. 93,006 1,009,918
Trade receivables, related party .............................. 70,919 --
Other receivables .................................................. 461,113 484,439
Accrued interest receivable:
Notes receivable .............................................. 312,935 50,770
Notes receivable, related party ............................... 19,265 7,000
Securities owned, at market value .................................. 1,285,152 1,495,701
Notes receivable ................................................... 4,300,000 3,150,000
Notes receivable, related party .................................... 5,100,000 3,400,000
Investments in debt securities, available-for-sale,
at market value ............................................... -- 1,991,258
Other assets ....................................................... 785,223 271,026
------------ -------------
Total current assets ............................................ 38,707,046 20,028,884
PROPERTY, FURNITURE AND EQUIPMENT, net ................................ 1,124,417 1,233,360
FINANCING COSTS, net of accumulated amortization
of $207,572 and $141,232 .......................................... 851,472 917,812
OTHER LONG-TERM ASSETS ................................................ 871,514 559,995
------------ -------------
Total assets .................................................... $ 41,554,449 22,740,051
============ =============
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
<CAPTION>
eVISION USA.COM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS (CONTINUED)
March 31, September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 2000 1999
-------- -------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses ................................................ $ 2,895,295 3,040,653
Amount due on purchase of credit card receivables .................................... 3,096,693 --
Accrued dividends payable on Convertible Series B-1 Preferred Stock .................. 579,675 48,154
Accrued interest payable ............................................................. 132,633 132,633
Accrued interest payable to related party ............................................ 420,139 212,111
Accrued income taxes payable ......................................................... 629,859 196,409
Payable to clearing organization ..................................................... -- 128,040
Current portion of capital lease obligations ......................................... 38,544 70,812
Current portion of convertible debentures to related party ........................... 500,000 500,000
Other current liabilities ............................................................ 240,960 273,029
------------ ------------
Total current liabilities ......................................................... 8,533,798 4,601,841
CAPITAL LEASE OBLIGATIONS, net of current portion ....................................... 95,242 89,351
CONVERTIBLE DEBENTURES .................................................................. 6,788,607 6,747,383
CONVERTIBLE DEBENTURES TO RELATED PARTY ................................................. 7,500,000 7,500,000
DEFERRED RENT CONCESSIONS ............................................................... 1,483,685 1,540,715
------------ ------------
Total liabilities ................................................................. 24,401,332 20,479,290
------------ ------------
MINORITY INTEREST IN SUBSIDIARIES ....................................................... 6,750,264 6,191,241
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT) :
PREFERRED STOCK, 25,000,000 shares authorized, $0.10 par value;
Convertible Series B-1, 1,500,780 shares issued and outstanding ................. 150,078 --
Convertible Series B, 110,500 shares issued and outstanding ..................... -- 11,050
COMMON STOCK, 100,000,000 shares authorized, $0.01 par value;
22,680,874 and 19,838,299 shares issued and outstanding ........................ 226,809 198,383
Additional paid-in capital ........................................................... 26,917,080 13,106,401
Accumulated deficit .................................................................. (16,846,230) (17,144,251)
Accumulated other comprehensive income (loss) ........................................ (44,884) 247,937
Unearned ESOP shares ................................................................. -- (350,000)
------------ ------------
Total stockholders' equity (deficit) .................................................... 10,402,853 (3,930,480)
------------ ------------
Total liabilities and stockholders' equity (deficit) .................................... $ 41,554,449 22,740,051
============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
eVISION USA.COM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Six months ended March 31, Three months ended March 31,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE:
Brokerage commissions ................................... $ 11,690,151 9,671,542 7,435,806 5,696,175
Investment banking ...................................... 452,793 536,244 347,138 407,125
Trading profits, net .................................... 4,932,771 870,506 4,483,629 409,107
Other broker/dealer ..................................... 930,786 1,025,977 486,250 470,362
Computer hardware and software operations ............... 1,602,745 4,946,664 152,973 1,987,108
Interest income ......................................... 871,384 760,347 528,296 499,087
Unrealized gain (loss) on securities .................... (14,018) 333,916 (16,292) 99,981
Realized gains on sales of investment securities ........ 356,492 -- 356,492 --
Other ................................................... 51,468 34,872 51,468 29,615
------------ ------------ ------------ ------------
20,874,572 18,180,068 13,825,760 9,598,560
------------ ------------ ------------ ------------
COST OF SALES AND OPERATING EXPENSES:
Broker/dealer commissions ............................... 6,933,500 5,955,727 4,478,242 3,575,673
Computer cost of sales .................................. 967,643 4,504,195 92,051 1,774,213
Interest expense on convertible debentures .............. 486,712 509,539 243,805 220,615
General and administrative .............................. 8,973,258 7,281,444 4,947,644 3,725,968
Stock based compensation ................................ 1,177,991 -- 800,883 --
Depreciation and amortization ........................... 229,460 208,841 114,660 102,491
------------ ------------ ------------ ------------
18,768,564 18,459,746 10,677,285 9,398,960
------------ ------------ ------------ ------------
Operating income (loss) ............................... 2,106,008 (279,678) 3,148,475 199,600
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest income ....................................... 435,196 40,385 199,582 21,013
Interest expense ...................................... (16,872) (18,107) (12,044) (11,108)
Interest expense to related party ..................... (420,139) (405,611) (208,029) (207,499)
Other ................................................. 76,357 (64,946) 82,628 (64,946)
------------ ------------ ------------ ------------
Total other income (expense) .......................... 74,542 (448,279) 62,137 (262,540)
------------ ------------ ------------ ------------
Income (loss) before minority interest and
income taxes .......................................... 2,180,550 (727,957) 3,210,612 (62,940)
Minority interest in earnings .............................. (663,691) (129,148) (684,695) (116,370)
------------ ------------ ------------ ------------
Income (loss) before income taxes .......................... 1,516,859 (857,105) 2,525,917 (179,310)
Income tax expense ......................................... 616,966 79,169 640,901 57,768
------------ ------------ ------------ ------------
Net income (loss) .......................................... 899,893 (936,274) 1,885,016 (237,078)
Preferred dividends ........................................ 601,872 -- 503,936 --
------------ ------------ ------------ ------------
Net income (loss) attributable to common shareholders ...... $ 298,021 (936,274) 1,381,080 (237,078)
============ ============ ============ ============
Basic and diluted income (loss) per common share:
Basic earnings (loss) per share ......................... $ 0.01 (0.05) 0.06 (0.01)
============ ============ ============ ============
Diluted earnings (loss) per share ....................... $ 0.01 (0.05) 0.03 (0.01)
============ ============ ============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
eVISION USA.COM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Six months ended March 31, Three months ended March 31,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET INCOME (LOSS) .......................................... $ 899,893 (936,274) 1,885,016 (237,078)
Other comprehensive income (loss):
Reclassification adjustment for gains arising
during the period, net of tax of $158,517
and $228,839 ..................................... (247,937) -- (357,927) --
Foreign currency translation .......................... (56) -- (56) --
Unrealized loss on available-for-sale
securities, net of tax of $28,661 ................. (44,828) -- 44,828) --
---------- --------- ---------- ---------
COMPREHENSIVE INCOME (LOSS) ................................ $ 607,072 (936,274) 1,482,205 (237,078)
========== ========= ========== =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
eVISION USA.COM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Convertible Convertible
Series B-1 Series B Additional
Preferred Preferred Common Paid-in
Stock Stock Stock Capital
----------- ----------- ------ ----------
<S> <C> <C> <C> <C>
Balances at September 30, 1999 ........... $ -- 11,050 198,383 13,106,401
Exchange of Convertible Series
B Preferred Stock for Convertible
Series B-1 Preferred Stock ............ 11,050 (11,050) -- --
Issuance of Convertible Series B-1
Preferred Stock, net of issuance
costs of $1,855,445 ................... 138,950 -- -- 11,900,605
Stock-based compensation due to
change in terms of option grant ......... -- -- -- 668,750
Conversion of Convertible Series B-1
Preferred Stock to Common Stock ....... (250) -- 250 --
Issuance of common stock for
payment of interest .................... -- -- 4,286 207,825
Issuance of common stock on
exercise of options and warrants ..... -- -- 23,890 1,000,996
Payment of ESOP note ..................... -- -- -- --
Preferred stock dividends ................ 328 -- -- 32,503
Other comprehensive income (loss):
Unrealized gain (loss) on
available-for-sale securities ....... -- -- -- --
Foreign currency translation .......... -- -- -- --
Net income ............................... -- -- -- --
----------- ----------- ----------- -----------
Balances at March 31, 2000 ............... $ 150,078 -- 226,809 26,917,080
=========== =========== =========== ===========
See accompanying notes to unaudited consolidated financial statements.
7(a)
<PAGE>
<CAPTION>
Accumulated
Other
Accumulated Comprehensive Unearned
Deficit Income ESOP stock Total
----------- ------------- ---------- -----
<S> <C> <C> <C> <C>
Balances at September 30, 1999 ........... (17,144,251) 247,937 (350,000) (3,930,480)
Exchange of Convertible Series
B Preferred Stock for Convertible
Series B-1 Preferred Stock ............ -- -- -- --
Issuance of Convertible Series B-1
Preferred Stock, net of issuance
costs of $1,855,445 ................... -- -- -- 12,039,555
Stock-based compensation due to
change in terms of option grant ......... -- -- -- 668,750
Conversion of Convertible Series B-1
Preferred Stock to Common Stock ....... -- -- -- --
Issuance of common stock for
payment of interest .................... -- -- -- 212,111
Issuance of common stock on
exercise of options and warrants ..... -- -- -- 1,024,886
Payment of ESOP note ..................... -- -- 350,000 350,000
Preferred stock dividends ................ (601,872) -- -- (569,041)
Other comprehensive income (loss):
Unrealized gain (loss) on
available-for-sale securities ....... -- (292,765) -- (292,765)
Foreign currency translation .......... -- (56) -- (56)
Net income ............................... 899,893 -- -- 899,893
----------- ----------- ----------- -----------
Balances at March 31, 2000 ............... (16,846,230) (44,884) -- 10,402,853
=========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
7(b)
<PAGE>
<TABLE>
<CAPTION>
eVISION USA.COM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended March 31,
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Net income (loss) ............................................................... $ 899,893 (936,274)
Adjustments to reconcile net loss to net cash provided
by (used in) continuing
operations:
Realized gains on sales of investment securities............................ (356,492) --
Gains on sale of assets .................................................... (74,123) --
Stock based compensation expense ........................................... 1,177,991 --
Issuance of common stock for payment of interest ........................... 212,111 355,222
Depreciation and amortization .............................................. 229,460 208,841
Amortization of financing costs ............................................ 66,340 50,055
Amortization of deferred rent .............................................. (57,030) (57,020)
Accretion of discount on investments in debt securities .................... (185,491) (472,404)
Accretion of original issue discount on convertible
debentures ............................................................... 41,224 58,662
Unrealized (gain) loss on securities ....................................... 14,018 (333,916)
Minority interests in earnings ............................................. 663,691 129,148
Changes in operating assets and liabilities:
Increase in receivables from brokers or dealers
and clearing organizations .......................................... (1,026,150) (399,610)
Decrease (increase) in trade receivables .............................. 869,620 (500,365)
Increase in accrued interest receivable ............................... (274,430) --
Decrease in other receivables ......................................... 23,170 279,599
Decrease in securities owned, net ..................................... 403,915 228,669
Increase in other assets .............................................. (506,296) (121,803)
Increase in accounts payable and accrued expenses ..................... 760,737 1,433,624
Decrease in deferred revenue .......................................... -- (118,800)
Increase (decrease) in other current liabilities ...................... (101,509) 412,550
------------ ------------
Net cash provided by operating activities ................................. 2,780,649 216,178
------------ ------------
(Continued)
See accompanying notes to unaudited consolidated financial statements.
8
<PAGE>
<CAPTION>
eVISION USA.COM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Six months ended March 31,
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of credit card receivables .......................................... $ (4,645,040) --
Purchase of property, furniture and equipment ................................ (172,627) (99,076)
Proceeds from sale of property, furniture and equipment ...................... 85,160 --
Redemption of certificate of deposit ......................................... 575,000 --
Purchase of available for sale securities .................................... (252,212) --
Purchases of debt securities ................................................. -- (4,635,275)
Proceeds from sale of investment securities ................................. 2,204,608 331,250
Advances on notes receivable ................................................. (1,150,000) (2,700,000)
Advances on notes receivable, related party .................................. (1,700,000) --
Acquisition of option relating to LIL Capital ................................ (250,000) --
Proceeds from repayment of ESOP note ......................................... 350,000 --
Purchase of subsidiary minority interest ..................................... (101,664) --
Other investing activities ................................................... (169,714) (174,217)
------------ ------------
Net cash used in investing activities ........................................ (5,226,489) (7,277,318)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of cash dividends .................................................... (37,520) --
Principal payments on borrowings ............................................. (26,377) (30,437)
Net proceeds from issuance of convertible debentures ......................... -- 531,334
Net proceeds from issuance of convertible debentures
to related party ............................................................ -- 1,000,000
Net proceeds from issuance of Convertible Series B-1
and Series B Preferred Stock, net of offering costs ........................ 12,039,555 103,716
Proceeds from exercises of common stock options
and warrants .............................................................. 515,645 --
Other financing activities ................................................... -- (95,890)
------------ ------------
Net cash provided by financing activities .................................... 12,491,303 1,508,723
------------ ------------
(Continued)
See accompanying notes to unaudited consolidated financial statements.
9
<PAGE>
<CAPTION>
eVISION USA.COM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Six months ended March 31,
2000 1999
---- ----
<S> <C> <C>
EFFECT OF EXCHANGE RATE ON CASH AND
CASH EQUIVALENTS ............................................................. 355 --
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ............................................................. 10,045,818 (5,552,417)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD ....................................................................... 7,593,772 9,112,652
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD ........................................ $ 17,639,590 3,560,235
============ ============
<CAPTION>
SUPPLEMENTAL DISCLOSURES RELATED TO STATEMENTS OF CASH FLOWS:
Six months ended March 31,
2000 1999
---- ----
<S> <C> <C>
Cash payments for interest ...................................................... $ 503,584 375,533
============ ============
Cash payments for income taxes .................................................. $ 25,000 --
============ ============
Other investing and financing activities:
Common stock issued for guarantee of dividends ............................... $ -- 62,500
============ ============
Preferred stock issued for payment of dividends ............................. $ 32,831 --
============ ============
Dividends accrued on Convertible Series B-1 Preferred Stock .................. $ 569,041 --
============ ============
Amounts due on credit card receivables ....................................... $ 3,096,693 --
============ ============
Unearned discount on credit card receivables ................................. $ 1,601,976 --
============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
10
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eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements of eVision USA.Com,
Inc. and subsidiaries (eVision or the Company) have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the
opinion of management, these financial statements reflect all adjustments (which
include only normal recurring adjustments) necessary for a fair presentation of
the results of operations and financial position for the interim periods
presented.
The consolidated subsidiaries include all of eVision's majority owned or
controlled companies. All significant intercompany transactions have been
eliminated.
The preparation of interim financial statements 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.
These interim financial statements should be read in conjunction with the Annual
Report on Form 10-K for the year ended September 30, 1999. Operating results for
the six months and three months ended March 31, 2000, are not necessarily
indicative of the results that may be expected for the year ending September 30,
2000. Certain reclassifications have been made to prior period's consolidated
financial statements to conform to current period presentation.
NOTE 2. ORGANIZATION
eVision is a holding company that was incorporated under the laws of the state
of Colorado on September 14, 1988. eVision's consolidated subsidiaries include
companies that operate as a fully disclosed securities broker/dealer; intend to
provide transaction processing, networking and internet based services, and
provide leveraged financing, including financing over the Internet.
American Fronteer Financial Corporation
American Fronteer Financial Corporation (American Fronteer or AFFC) is
registered as a broker/dealer with the Securities and Exchange Commission
(Commission), is a member of the NASD and the Boston Stock Exchange, is an
associate member of the American Stock Exchange, and is registered as a
securities broker/dealer in all 50 states. American Fronteer's business consists
of providing retail securities brokerage and investment services, trading fixed
income and equity securities, providing investment banking services to corporate
and municipal clients, managing and participating in underwriting corporate and
municipal securities, and selling a range of professionally managed mutual funds
and insurance products.
11
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
eBanker USA.com, Inc.
Fronteer Development Finance Inc., a Delaware corporation (Fronteer
Development), was incorporated in the state of Delaware in March 1998 to operate
as a finance company. Fronteer Income Growth Inc. (FIGI), a wholly owned
subsidiary of Fronteer Development, was incorporated in September 1998 under the
International Business Companies Ordinances of the Territory of the British
Virgin Islands. In March 1999, Fronteer Development was merged into eBanker
USA.com, Inc. (eBanker), a Colorado corporation, formed primarily for the
purpose of effectuating a name change to eBanker and becoming a Colorado
corporation. eBanker is a consolidated subsidiary of eVision. eVision owns all
of the outstanding preferred stock of eBanker which entitles eVision to 50% of
the votes to elect the members of the board of directors. During the quarter
ended March 31, 2000, eVision purchased 10,000 shares of eBanker common stock,
50,000 common stock warrants and a $100,000 convertible debenture from an
eBanker shareholder for $101,664. eVision also purchased 307,692 shares of
common stock of eBanker for $1,999,998. As a result, eVision owned 38% of the
outstanding common stock of eBanker as of March 31, 2000. Subsequent to March
31, 2000, eVision purchased an additional 46,000 shares of eBanker common stock,
230,000 common stock warrants and convertible debentures of $460,000 from
eBanker shareholders for $367,437, resulting in eVision owning 40% of the
outstanding common stock of eBanker.
In March 2000, eBanker acquired from MBf Card International Limited of Hong Kong
Master Card, a credit card accounts receivable portfolio, for a total
consideration of $7,741,733. The book value of the credit card accounts
receivable portfolio as of January 31, 2000 was $9,343,709. Under the terms of
the agreement, eBanker purchased the total of most receivables (principal and
interest) due to MBf. The portfolio, as of January 31, 2000, consisted of
approximately 92% of current accounts receivable and approximately 8% of 1 to 30
days past due accounts receivable. Sixty percent of the initial consideration,
or $4,645,040, was paid at the time of closing with the remainder of $3,096,693
due in September 2000. The purchase discount of $1,601,976 is being amortized to
income.
Skyhub Far East, Inc.
On January 24, 2000, eVision entered into an agreement whereby eVision agreed to
issue 1,185,209 shares of eVision's common stock in exchange for 60% of the
outstanding common shares of Gemtron International Global Ltd., which was
renamed Skyhub Far East, Inc. (Skyhub). Skyhub was incorporated in the British
Virgin Islands on December 28, 1998 and its only operations during 1999
consisted of contracts for services, which grossed approximately $200,000 in
revenues.
eVision was required to issue the 1,185,209 shares if eVision's shareholders
approved an amendment to eVision's Articles of Incorporation that increased the
number of shares of common stock eVision is authorized to issue. On May 5, 2000,
the shareholders of eVision approved the amendment to eVision's Articles of
Incorporation that increased the number of shares of common stock eVision is
authorized to issue. On May 10, 2000, eVision issued 1,185,209 restricted shares
of eVision's common stock to Skyhub.
12
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In the interim period between the date of the agreement and the annual meeting
of the shareholders on May 5, 2000, eVision agreed to provide Skyhub with
approximately $3,000,000 in financing for the 60% interest in Skyhub. eBanker
loaned Skyhub $1,500,000 which bears interest at 12% per annum, as part of the
$3,000,000 financing commitment of eVision, to be paid back when additional
funding is available or through the issuance and sale of the Company's common
stock by Skyhub. eVision agreed that the value of the 1,185,209 shares of
eVision common stock would be no less than $3,000,000 when sold in an orderly
manner in the open market. Any shortfall will be made up by eVision in cash.
eBiz Web Solutions, Inc.
eBiz Web Solutions, Inc. (eBiz Web Solutions), formerly NeuroWeb Canada, Inc., a
Canadian corporation and a wholly owned subsidiary of eVision, has commenced
operations as a website development company. In addition to website development
for the parent and subsidiaries, eVision, eBanker and AFFC, eBiz Web Solutions
contracts with other commercial enterprises. There are approximately 30
employees of eBiz Web Solutions and their offices are located in Vancouver,
British Columbia Canada.
Global Growth Management Inc.
In January 2000, eVision acquired 100% of the outstanding stock of Global Growth
Management Inc. (Global Growth), a Canadian corporation, from Robert H. Trapp,
an officer and director of eVision, for $1. There were no assets or liabilities
of Global Growth. In January 2000, Global Growth entered into an agreement to
purchase real property in Vancouver, British Columbia Canada, for approximately
$1.4 million, subject to certain general conditions. The property is commercial
real estate that would serve as the offices for eBiz Web Solutions. In May 2000,
the sale was completed in the amount of $1,379,800, being paid in cash of
$517,425 and a mortgage note payable in the amount of $862,375, that is due May
5, 2005, bearing interest at 9.6% per year for a term of five years.
Q6 Technologies, Inc.
Q6 Technologies, Inc. (Q6 Technologies), is a Colorado corporation formed in
March 1999 by Q6 Group, LLC, a Pennsylvania limited liability company, and
eVision. On June 18, 1999, Q6 Technologies acquired from eVision 72.8% of the
outstanding common stock of Secutron Corp., a Colorado corporation that designs,
develops, installs, markets and supports software systems for the securities
brokerage industry (Secutron). Q6 Technologies' interests in Secutron were
acquired in the early formation and capitalization of Q6 Technologies with
eVision. Q6 Technologies subsequently increased its ownership of Secutron to
approximately 78% in September 1999 and 97% in December 1999 primarily in
connection with the settlement of a lawsuit by eVision and Secutron. Q6
Technologies determined that the businesses of Secutron and its wholly owned
subsidiary, MidRange Solutions Corp. (MidRange), were not an appropriate part of
Q6 Technologies' long-term business strategy.
13
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Effective December 17, 1999, Q6 Technologies transferred its ownership interests
in Secutron and MidRange, back to eVision in return for the cancellation of
5,000,000 shares of Class B Common Stock of Q6 Technologies previously held by
eVision and certain contractual concessions. eVision continues to hold 944,444
shares of Class A Common Stock and 555,556 shares of Class B Common Stock of Q6
Technologies. As a result of this transaction, eVision owns approximately 12% of
Q6 which is accounted for using the cost method of accounting for investments in
common stock.
On December 29, 1999, Q6 Technologies commenced a private placement of
4,000,000, subsequently amended to 2,000,000 shares of its Class B Common Stock
at $3.00 per share. AFFC is acting as placement agent and will receive a
commission of 10% and a nonaccountable expense reimbursement of 3% of the gross
proceeds. In addition, AFFC may receive up to 1,500,000, as amended to 500,000
shares of the Class B Common Stock for nominal consideration if certain
placement targets are met. The offering will continue until all 2,000,000 shares
are sold or until May 31, 2000, unless extended by mutual agreement between AFFC
and Q6 Technologies.
NOTE 3. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share for the six and three months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
Six months ended March 31, Three months ended March 31,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average number of shares used
in the basic earnings per share computation ............... 21,042,036 17,875,490 22,040,213 18,117,084
Effect of dilutive securities:
Common stock options ...................................... 11,425,905 -- 12,484,969 --
Common stock warrants ..................................... 1,807,904 -- 4,161,570 --
Convertible debentures, related party ..................... 28,276,012 -- 31,060,374 --
Convertible Series B-1 Preferred Stock .................... 4,382 -- 9,552,449 --
---------- ---------- ---------- ----------
Dilutive potential common shares .......................... 41,514,203 -- 57,259,362 --
---------- ---------- ----------
Adjusted weighted average number of
shares used in diluted earnings per
share computation ......................................... 62,556,239 17,875,490 79,299,575 18,117,084
========== ========== ========== ==========
</TABLE>
The effects of potentially dilutive securities for the six and three months
ended March 31, 1999 have not been presented as the effects were antidilutive.
14
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. SALE OF FRONTEER CAPITAL INC.
On July 30, 1999, eVision entered into a Stock Purchase Agreement with Ladsleigh
Investments Limited, BVI whereby eVision agreed to sell and Ladsleigh agreed to
purchase 100% of the stock of Fronteer Capital Inc., now known as LIL Capital
Inc., for $3,000,000, excluding cash and warrants to purchase equity in a
publicly traded company. The primary assets were approximately 122,084,000
shares of the common stock of Online Credit International Limited (Online
International) that were originally purchased in open market transactions on the
Hong Kong Stock Exchange and that were accounted for as trading securities. The
purchase price was paid in cash of $150,000 and in the form of a promissory note
for $2,850,000, which bears interest at 14% and is due July 30, 2000. To secure
the promissory note, eVision holds all the primary assets of LIL Capital in
escrow. Prior to the transaction, there was no material relationship between
Ladsleigh and eVision or any of its affiliates, and directors or officers.
On March 2, 2000, Ladsleigh sold the Company a ten year option to reacquire all
of the outstanding stock of LIL Capital. The price of the option was $250,000.
eVision may exercise the option by canceling the $2,850,000 promissory note and
all accrued interest thereon that was issued by Ladsleigh to eVision in
connection with the purchase by Ladsleigh of LIL Capital. The assets of LIL
Capital consist primarily of the assets previously sold to Ladsleigh. Call
options for 109,600,000 shares of Online International that are included as a
part of the assets of LIL Capital have been sold by LIL Capital to unaffiliated
parties. An option for 100,000,000 shares has an exercise price of approximately
$0.046 per share and an option for 4,600,000 shares has an exercise price of
approximately $0.052 per share. Neither of these two options may be exercised
until the common stock of Online International trades at approximately $0.19 per
share or higher. The remaining option for 5,000,000 shares is exercisable at an
average price of approximately $0.052 per share. All of the options expire on
July 25, 2000.
15
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. CONVERTIBLE SERIES B-1 PREFERRED STOCK
On October 16, 1998, eVision commenced a private placement of 1,500,000 shares
of its Series B Preferred Stock at a price of $10.00 per share. Before the
offering was terminated, 25,500 shares were sold. On May 12, 1999, eVision
commenced a second private placement of 1,500,000 shares of its Convertible
Series B Preferred Stock at $10.00 per share. The 25,500 shares of Series B
Preferred Stock sold in eVision's first offering were exchanged for Convertible
Series B Preferred Stock. Including the shares exchanged from the first
offering, 110,500 shares of Convertible Series B Preferred Stock were sold in
the second offering before it was terminated. The Convertible Series B Preferred
Stock was offered by American Fronteer, which received a commission of 10% and a
nonaccountable expense allowance of 3% of the total amount sold in the offering.
On September 27, 1999, eVision commenced a private offering of 1,500,000 shares
of its Convertible Series B-1 Preferred Stock at a price of $10.00 per share and
the 1,500,000 shares include 110,500 shares that were being offered in exchange
for the Convertible Series B Preferred Stock outstanding on a one-for-one basis.
The Convertible Series B-1 Preferred Stock was offered by American Fronteer,
which was issued 150,000 warrants that allow the holder to purchase shares of
eVision's Convertible Series B-1 Preferred Stock at a purchase price of $12.00
per share for five years. American Fronteer also received a commission of 10%
and a nonaccountable expense allowance of 3% of the total amount sold in the
offering. During the six month period ended March 31, 2000, the Company received
approximately $12,039,555, net of offering costs of $1,855,445.
The Convertible Series B-1 Preferred Stock has a cumulative annual dividend rate
payable semi-annually of 8% in cash and 7% in additional shares of Convertible
Series B-1 Preferred Stock. Online International has guaranteed the payment of
any cash dividends that accrue on the Convertible Series B-1 Preferred Stock
through October 31, 2002. The semi-annual dividend payable on shares of
Convertible Series B-1 Preferred Stock will be equivalent to three and one-half
one hundredths of a share of Convertible Series B-1 Preferred Stock for each
outstanding share of Convertible Series B-1 Preferred Stock. Any Convertible
Series B-1 Preferred Stock issued as a dividend on the Convertible Series B-1
Preferred Stock will have the same dividend and other terms as the Convertible
Series B-1 Preferred Stock. The dividend on Convertible Series B-1 Preferred
Stock is payable semi-annually beginning October 31, 1999, and continuing each
April 30 and October 31 thereafter, when and if declared by the Board of
Directors. Each share of Convertible Series B-1 Preferred Stock is immediately
convertible by the holder into 10 shares of eVision's common stock which is
equivalent to a price of $1.00 per share of common stock. In addition, each
share of Convertible Series B-1 Preferred Stock will be automatically converted
into 10 shares of common stock at $1.00 per share at such time as the closing
bid price of the common stock is at least $4.00 per share for 30 consecutive
trading days. The Convertible Series B-1 Preferred Stock is redeemable by
eVision on or after October 1, 2003, at a price of $12.50 per share plus any
accrued and unpaid dividends.
16
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Effective as of October 31, 1999, the Company paid total dividends of $70,350
comprised of $37,520 paid in cash and $32,831 paid in shares of Convertible
Series B-1 Preferred Stock. Of this amount, $48,154 had been accrued during the
year ended September 30, 1999.
On April 26, 2000, the board of directors declared a semi-annual dividend of 8%
in cash and 7% in shares of the Convertible Series B-1 Preferred Stock payable,
to be paid by May 19, 2000 to the stockholders of record on April 30, 2000.
Total accrued dividends as of March 31, 2000 were $579,675, which were included
in the dividend payment of $764,433 in May 2000. The dividend payment included
cash of $407,698 and 35,753 shares of Convertible Series B-1 Preferred Stock.
NOTE 6. STOCKHOLDERS' EQUITY
As of September 30, 1999, the Employee Stock Ownership Plan of eVision had a
note payable to eVision that was secured by shares of eVision common stock.
During the quarter ended December 31, 1999, the loan amount of $350,000 plus
accrued interest of $212,007 was paid in full.
During the six months ended March 31, 2000, the Company issued a total of
2,388,992 shares of common stock upon the exercise of stock options and
warrants. Cash proceeds for the exercises were $515,645. Included in the total
shares are 739,768 shares of common stock that were issued in cashless exercises
of options to purchase 1,040,000 shares of common stock and resulted in
stock-based compensation expense of $509,241.
During the six months ended March 31, 2000, the Company granted options to
employees to purchase 2,161,000 shares of the Company's common stock at prices
ranging from $0.20 to $2.87 per share. The options vest over 0 to 5 years and
are exercisable for a period of ten years.
On January 16, 2000, options were granted to certain officers and directors to
purchase 750,000 shares of eVision common stock at an exercise price equal to
the market price of the shares on the grant date of $2.875 per share. The
options vest immediately and are exercisable for a period of ten years. On the
same date, the Board of Directors and these officers agreed to cancel previously
issued options for the purchase of 250,000 shares of common stock of eVision at
$0.20 per share, which were exercisable only if eVision achieved basic earnings
of $0.10 per share beginning with the year ended September 30, 1999.
Also on January 16, 2000, a similar earnings requirement provision for options
held by certain directors was eliminated. The grants, previously made to two
directors for a total of 250,000 shares, had a provision that earnings per share
had to be $0.10 before any options would vest. The exercise price was not
amended and this resulted in stock-based compensation expense of $668,750 for
the six month period ended March 31, 2000.
During the quarter ended December 31, 1999, eVision paid the interest accrued to
Online Credit Limited (Online Credit) as of September 30, 1999 in the amount of
$212,111 by the issuance of 428,583 shares of common stock of eVision. In May
2000, the Company issued a total of 852,507 shares of its common stock to Online
Credit Limited (Online Credit) in payment of accrued interest on the convertible
debentures, related party for the six months ended March 31, 2000 of $420,139.
17
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7. REALIZED GAINS ON SALES OF INVESTMENT SECURITIES
As of September 30,1999, eVision had investments in debt securities of Asian
corporations traded on the Hong Kong Stock Exchange which had a fair value of
$1,991,258. During the six months ended March 31, 2000, the investments were
sold for proceeds of $2,204,608. The Company recognized realized gains from the
sales of $356,492 during the six months ended March 31, 2000.
NOTE 8. COMMITMENTS AND CONTINGENCIES
Global Med Technologies, Inc.
As of March 31, 2000 and September 30, 1999, eVision had loaned a total of
$5,100,000 and $3,400,000, respectively, to Global Med Technologies, Inc.
(Global Med) under three separate agreements as follows:
<TABLE>
<CAPTION>
March 31, September 30,
2000 1999
--------- ------------
<S> <C> <C>
Promissory notes on initial lines of credit with eBanker .............. $2,650,000 $2,650,000
Promissory notes on $2,000,000 line of credit with eBanker ............ 1,700,000 --
Bridge loan with eBanker .............................................. 750,000 750,000
---------- ----------
Financing agreements ................................................. $5,100,000 $3,400,000
========== ==========
</TABLE>
The $2,650,000 loan had been extended from April 15, 1999 until April 15, 2000,
with the previous default conversion price of $0.05 per share increased to $0.25
per share. In April 2000, the principal and interest on the loan was further
extended to January 2001, the conversion feature was increased to the then
market price per share of the common stock of $1.6875, in consideration of a
financing fee payable in 78,519 shares of common stock of Global Med. If the
loan's accrued interest or principal is not repaid in 270 days the loan's
interest and principal due date will be automatically extended to April 15,
2001. The loan will become a straight loan, without conversion features.
Interest will continue to accrue on the balance at 12% interest per annum and
ten year warrants exercisable for common shares of Global Med at an exercise
price of $0.50 will be issued to eBanker. The number of warrants will be equal
to the entire principal and interest amount divided by the new exercise price.
18
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In October 1999, the Company entered into an agreement with Global Med and
Online Credit for a bridge loan in the amount of $2,000,000, originally extended
by Online Credit to Global Med. The line of credit was convertible, at Online
Credit's option, into shares of Global Med's common stock at a price $1.15 per
share. As of March 31, 2000, Global Med had drawn $1,700,000 on this line of
credit. In April 2000, the principal and interest on the loan was further
extended to January 2001, in consideration of a financing fee payable in 59,259
shares of common stock of Global Med. If the loan's accrued interest or
principal is not repaid in 270 days the loan's interest and principal due date
will be automatically extended to April 15, 2001. The loan will become a
straight loan, without conversion features. Interest will continue to accrue on
the balance at 12% per annum, and ten year warrants exercisable for common
shares of Global Med at an exercise price of $0.50 will be issued to eBanker.
The number of warrants will be equal to the entire principal and interest amount
divided by the new exercise price. As of March 31, 2000, Global Med had drawn
$1,700,000 on this line of credit and has $300,000 available.
The $750,000 bridge loan, as revised on May 7, 1999, bears interest at 12% and
was due and payable December 31, 1999. The maturity date had been extended from
December 31, 1999 to September 30, 2000 in consideration of a fee of an
additional 13,275 shares of common stock of Global Med and a change in the
conversion rate to $0.50 per share. In April 2000, the principal and interest on
the loan was further extended to January 1, 2001, in consideration of a
financing fee payable in 22,222 shares of common stock of Global Med.
Lockup Agreement
On October 28, 1999, Global Med entered into a Lockup Agreement with eBanker and
a Lockup Agreement with eVision. The agreements provide that eBanker and eVision
will not, between October 28, 1999 and October 28, 2000, without Global Med's
prior written consent, publicly offer, sell, contract to sell, grant any option
for the sale of, or otherwise dispose of, directly or indirectly, (i) warrants
to purchase 9,000,000 shares of Global Med's common stock at $0.25 per share
held by eBanker or warrants to purchase 1,000,000 shares of Global Med's common
stock at $0.25 per share held by eVision and (ii) any shares (the Shares, and,
together with the warrants, the Securities) of common stock issuable upon the
exercise of the warrants; provided, however, that eBanker or eVision may offer,
sell, contract to sell, grant an option for the sale of, or otherwise dispose of
all or any part of the Securities or other such security or instrument of Global
Med during such period if such transaction is private in nature and the
transferee of such Securities or other securities or instruments agrees, prior
to such transaction, to be bound by all of the provisions of the lockup
agreements. In exchange for entering into the agreements, eBanker and eVision
were issued 450,000 shares and 50,000 shares of common stock of Global Med,
respectively.
In addition, the agreements provide (i) eBanker and eVision will not be
restricted from disposing of the Securities in the event that an unaffiliated
third party commences a tender offer for the outstanding common stock, and (ii)
eBanker and eVision will not be restricted from disposing of 450,000 and 50,000,
respectively, of the Securities in the aggregate if the closing sale price for
the Global Med common stock on the principal market on which it then trades
equals or exceeds $5.00 per share for any ten consecutive trading day period
preceding the date of such sale, and (iii) that there will be no restrictions
upon the ability of eBanker or eVision to exercise the warrants.
19
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Online Credit Limited
The Company previously issued Online Credit a ten year $4,000,000 10%
Convertible Debenture that is convertible into shares of common stock of the
Company and an option to purchase an $11,000,000 12% Convertible Debenture that
is convertible into shares of common stock of the Company. The current balance
of the convertible debentures is $8,000,000. The option to purchase the
$11,000,000 12% Convertible Debenture has $7,000,000 available under option. The
principal is due in ten years except for one installment of $500,000 that was
due in March 2000. In consideration of a fee of $15,000, the due date of this
installment has been extended to March 2001.
Other
On December 23, 1996, AFFC received notification of an arbitration award in NASD
Arbitration No. 95-05062, Chang, et al. v. AFFC that was originally filed on
October 21, 1995. The allegations in the case related to a private placement
sold by a former broker at AFFC. In 1996, AFFC provided for damages that were
awarded in the amount $424,824 against AFFC, which AFFC appealed. During the
year ended September 30, 1999, AFFC lost the first appeal and the court ordered
AFFC to place on deposit, in a restricted cash account, the amount of $575,000.
On January 25, 2000, the case was settled for the amount of $517,000. The
certificate of deposit was released from restriction and partially redeemed for
payment of the settlement.
AFFC is a defendant in certain arbitration and litigation matters arising from
its activities as a broker/dealer. In the opinion of management, these matters
including any damages awarded against AFFC have been adequately provided for in
the accompanying consolidated financial statements, and the ultimate resolution
of these arbitration and litigation matters will not have a significant adverse
effect on the consolidated results of operations or the consolidated financial
position of the Company.
In April 2000, eBanker made available, to an unaffiliated individual in
Singapore, $1,000,000 under a short term revolving loan facility, that is due
December 30, 2000, bears interest at 18% per annum and is due and payable upon
maturity.
20
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. SEGMENT DISCLOSURE
<TABLE>
<CAPTION>
For the Six Months Ended March 31, 2000
Q6
Technologies
and
Consolidated AFFC Secutron eBanker Others Eliminations Total
- ------------ ---- ------------- ------- ------ ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Revenues from
unaffiliated customers ................ $ 16,824,088 1,202,745 2,043,320 804,419 -- 20,874,572
Intersegment revenues .................... -- -- 109,460 745,344 (854,804) --
----------- ----------- ----------- ----------- ---------- ------------
Total revenues ........................... 16,824,088 1,202,745 2,152,780 1,549,763 (854,804) 20,874,572
=========== =========== =========== =========== ========== ============
Operating income (loss) .................. 2,709,925 (19,749) 1,497,791 (1,909,839) (172,120) 2,106,008
Other income (expense), net .............. 39,017 85,138 84,173 (243,246) 109,460 74,542
----------- ----------- ----------- ----------- ---------- ------------
Income (loss) from operations
before minority interest and
income taxes .......................... 2,748,942 65,389 1,581,964 (2,153,085) (62,660) 2,180,550
=========== =========== =========== =========== ========== ============
Depreciation and
amortization .......................... 199,443 11,323 -- 18,694 -- 229,460
=========== =========== =========== =========== ========== ============
Capital expenditures ..................... $ 55,207 2,159 -- 115,261 -- 172,627
=========== =========== =========== =========== ========== ============
Identifiable assets as of
March 31, 2000 ........................ $ 9,297,724 408,578 23,408,997 19,312,762 (9,271,636) 43,156,425
=========== =========== =========== =========== ========== ============
<CAPTION>
For the Six Months Ended March 31, 1999
Q6
Technologies
and
Consolidated AFFC Secutron eBanker Others Eliminations Total
- ------------ ---- --------------- ------- ------ ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Revenues from
unaffiliated customers ................ $ 12,104,270 4,946,664 741,272 387,862 -- 18,180,068
Intersegment revenues .................... -- 250,000 247,888 200,000 (697,888) --
----------- ----------- ----------- ----------- ---------- ----------
Total revenues ........................... 12,104,270 5,196,664 989,160 587,862 (697,888) 18,180,068
=========== =========== =========== =========== ========== ============
Operating income (loss) .................. (558,422) 294,101 190,651 (206,008) -- (279,678)
Other expense, net ....................... (21,123) (2,322) (26,528) (398,306) -- (448,279)
----------- ----------- ----------- ----------- ---------- ----------
Income (loss) from operations
before minority interest and
income taxes .......................... (579,545) 291,779 164,123 (604,314) -- (727,957)
=========== =========== =========== =========== ========== ============
Depreciation and
amortization .......................... 187,808 18,920 -- 2,113 -- 208,841
=========== =========== =========== =========== ========== ============
Capital expenditures ..................... $ -- -- -- 99,076 -- 99,076
=========== =========== =========== =========== ========== ============
Identifiable assets as of
March 31, 1999 ........................ $ 5,061,375 2,200,072 10,136,190 8,221,293 (6,461,308) 19,157,622
=========== =========== =========== =========== ========== ============
</TABLE>
21
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 2000 COMPARED TO SIX MONTHS ENDED MARCH 31, 1999.
Revenues for the six months ended March 31, 2000 were $20,874,572, an increase
of $2,694,504 or 14.8% over the revenues of $18,180,068 for the six months ended
March 31, 1999. The increase primarily relates to increased brokerage
commissions of $2,018,609; an increase in trading profits of $4,062,265; and
$356,492 of realized gains on sales of investment securities, offset primarily
by decreases in computer hardware and software operations of $3,343,919.
The increase in brokerage commissions of $2,018,609 is due primarily to an
increase in trading activity. Customer transactions and the average commission
per transaction ticket increased approximately 13.6% and 5.3%, respectively, for
the six months ended March 31, 2000 compared to the six months ended March 31,
1999. The primary reasons for the increased activity were general market
conditions and positive results from the Company's research recommendations that
were acted upon by customers.
Trading profits increased $4,062,265 due primarily to general market conditions
and sales of the Company's positions in certain securities at a significant
profit.
The realized gain on the sale of investment securities primarily relates to the
sale of the investments in debt securities held by eBanker; which were sold
during the six months ended March 31, 2000. The unrealized gains on investments
in securities decreased $347,934 primarily because the investments to which they
related to were sold and the resulting gains are classified as realized gains.
Computer hardware and software revenues for the six months ended March 31, 2000
and 1999 were $1,602,745 and $4,946,664, respectively. In December 1999, the
Company's computer technology segment shifted its focus from the operations of
Secutron, which is mainframe or minicomputer based, to Corporate Net Solutions
and eBiz Web Solutions, which are in their initial stages of development of
network and Internet related applications for personal computers.
During the six months ended March 31, 1999, the Company invested, through its
subsidiary, eBanker, in debt securities of various corporations, which are
traded on foreign stock exchanges. The debt securities carried a premium
redemption value over the face amount of each security. If the security were
held-to-maturity, the Company would have received a guaranteed premium above the
face value. The purchase discount and the premium for holding each security to
maturity were being accreted to interest income over the remaining life of the
security. Interest income for the six months ended March 31, 2000 and 1999 was
$871,384 and $760,347, respectively. For the six months ended March 31, 1999,
interest income included interest on these investments in debt securities and
interest on notes receivable.
Interest income for the six months ended March 31, 2000 primarily consists of
the interest paid on the repayment of the ESOP note, and interest on the
outstanding notes receivable and notes receivable, related party as the
investments in debt securities were sold during the latter part of the year
ended September 30, 1999 and during the quarter ended March 31, 2000.
22
<PAGE>
A portion of the proceeds of the $4,000,000 convertible debenture purchased by
Online Credit in December 1997 was used to purchase approximately 116,430,000
shares of the common stock of Online International in open market transactions
on the Hong Kong Stock Exchange at an average price of approximately $0.02 per
share. For the six months ended March 31, 1999 the Company had recognized an
unrealized gain of $333,916 on the investment. For the six months ended March
31, 2000, the loss of $14,018 pertained to various other investments.
The increase in broker/dealer commissions expense of $977,773 or 16.4% for the
six months ended March 31, 2000 over the prior period correlates to the increase
in brokerage commissions of $2,018,609 or 20.8% over the six months ended March
31, 1999.
Interest expense on the convertible debentures of eBanker for the six months
ended March 31, 2000 and 1999 was $486,712 and $509,539, respectively.
The increase in general and administrative expenses for the six months ended
March 31, 2000 of $1,691,814 or 23.2% over the comparable prior period reflects
increased expenses associated with the addition of staff assigned to eBiz Web
Solutions and Corporate Net Solutions, and legal and accounting fees associated
with the filing of certain registration documents with the SEC.
Interest income increased from $40,385 to $435,196 for the six month period
ended March 31, 1999 and 2000, respectively. The increase is due to the higher
levels of investable cash during the six months ended March 31, 2000 resulting
from sales of Convertible Series B-1 Preferred Stock and sales of investments in
debt and equity securities.
The minority interest in earnings primarily represents the minority interest
investments in eBanker.
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
Revenues for the three months ended March 31, 2000 were $13,825,760, an increase
of $4,227,200 or 44.0% over the revenues of $9,598,560 for the three months
ended March 31, 1999. The increase primarily relates to increased brokerage
commissions of $1,739,631; an increase in trading profits of $4,074,522; and
$356,492 of realized gain on the sales of investment securities, offset by a
decrease in computer hardware and software operations of $1,834,135.
The increase in brokerage commissions of $1,739,631 is due primarily to an
increase in trading activity. Customer transactions and the average commission
per transaction ticket increased approximately 15.7% and 10.6%, respectively,
for the three months ended March 31, 2000 compared to the three months ended
March 31, 1999. The primary reasons for the increased activity were general
market conditions and positive results from the Company's research
recommendations that were acted upon by customers.
Trading profits increased $4,074,522 due primarily to general market conditions
and sales of the Company's positions in certain securities at a significant
profit.
Computer hardware and software revenues for the three months ended March 31,
2000 and 1999 were $152,973 and $1,987,108, respectively. In December 1999, the
Company's computer technology segment shifted its focus from the operations of
Secutron, which is mainframe or minicomputer based, to Corporate Net Solutions
and eBiz Web Solutions, which are in their initial stages of development of
network and Internet related applications for personal computers.
During the first quarter of the fiscal year ended September 30, 1999, the
Company, through its subsidiary, eBanker, invested in debt securities of various
corporations, which are traded on foreign stock exchanges. The debt securities
carry a premium redemption value over the face amount of each security. If the
security were held-to-maturity, the Company would have received a guaranteed
23
<PAGE>
premium above the face value. The purchase discount and the premium for holding
each security to maturity were being accreted to interest income over the
remaining life of the security. Interest income for the three months ended March
31, 2000 and 1999 was $528,296 and $499,087, respectively. For the three months
ended March 31, 1999, interest income included interest on these investments in
debt securities and interest on notes receivable.
Interest income for the three months ended March 31, 2000 primarily consists of
the interest on the outstanding notes receivable and notes receivable, related
party as the investments in debt securities were sold during the latter part of
the year ended September 30, 1999 and during the quarter ended March 31, 2000.
A portion of the proceeds of the $4,000,000 convertible debenture purchased by
Online Credit in December 1997 was used to purchase approximately 116,430,000
shares of the common stock of Online International in open market transactions
on the Hong Kong Stock Exchange at an average price of approximately $0.02 per
share. For the three months ended March 31, 1999, the Company had recognized an
unrealized gain of $99,981 on the investment. For the three months ended March
31, 2000, the unrealized loss of $16,292 pertained to various other investments.
The increase in broker/dealer commissions expense for the three months ended
March 31, 2000 compared to the prior 1999 period of $902,569 or 25.2% correlates
to the increase in brokerage commission revenues of 30.5%.
The increase in general and administrative expenses for the three months ended
March 31, 2000 of $1,221,676 or 32.8% over the comparable prior period reflects
increased expenses associated with the addition of staff assigned to eBiz Web
Solutions and Corporate Net Solutions, and legal and accounting fees associated
with the filing of certain registration documents with the SEC.
The minority interest in earnings primarily represents the minority interest
investment in eBanker.
Liquidity and Capital Resources
The Company, as of March 31, 2000, had $17,639,590 in cash and cash equivalents
and $30,173,248 in working capital. Cash used by investing activities of
$5,226,489 consisted primarily of $1,700,000 in loan advances on short-term
notes receivable, related party, advances on notes receivable of $1,150,000, and
purchase of credit card receivables for $4,645,040, net of proceeds from the
sale of investment securities of $2,204,608. Net proceeds from issuance of
Convertible Series B-1 Preferred Stock of $12,039,555 primarily provided cash to
fund other operating activities.
The Company previously issued Online Credit a ten year $4,000,000 10%
Convertible Debenture that is convertible into shares of common stock of the
Company and an option to purchase an $11,000,000 12% Convertible Debenture that
is convertible into shares of common stock of the Company. The current balance
of the convertible debentures is $8,000,000. The option to purchase the
$11,000,000 12% Convertible Debenture has $7,000,000 available remaining under
option. The principal is due in ten years except for one installment of $500,000
due in March 2001.
On September 27, 1999, eVision commenced a private offering of 1,500,000 shares
of its Convertible Series B-1 Preferred Stock at a price of $10.00 per share.
Included in the 1,500,000 shares were 110,500 shares that were being offered in
exchange for the Convertible Series B Preferred Stock outstanding on a
one-for-one basis. For the six months ended March 31, 2000, 1,389,500 shares of
Convertible Series B-1 Preferred Stock were sold for proceeds of $12,039,555,
net of offering costs of $1,855,445. The Convertible Series B-1 Preferred Stock
was offered by American Fronteer, which was issued 150,000 warrants that allow
the holder to purchase shares of eVision's Convertible Series B-1 Preferred
Stock at a purchase price of $12.00 per share for five years. American Fronteer
also received a commission of 10% and a nonaccountable expense allowance of 3%
of the total amount sold in the offering.
24
<PAGE>
During 1998, eBanker extended Global Med a line of credit in the amount of
$2,650,000 which is due January 2001, bears interest at the rate of 12% per
annum and is convertible into common shares of Global Med at $1.6875 per share.
In May 1999, eBanker extended Global Med a $750,000 bridge loan, as amended
December 31, 1999, that is due January 1, 2001 and that accrues interest at an
interest rate of 12% per annum. The loan can be converted into shares of common
stock of Global Med at any time prior to the due date at $0.50 per share. On
October 4, 1999, eBanker extended Global Med a $2,000,000 bridge loan
commitment, of which a total of $1,700,000 has been drawn. Outstanding principal
amounts under the loan are due January 2001 and accrue interest at an interest
rate of 12% per annum. The loan can be converted into shares of common stock of
Global Med at any time prior to the due date at $1.15 per share.
A good portion of the Company's assets are highly liquid, consisting mainly of
assets that are readily convertible into cash. These assets are financed by the
Company's equity capital and convertible debentures. Changes in the amount of
securities owned by the Company and receivables from brokers or dealers and
clearing organizations directly affect the amount of the Company's financing
requirements.
Management believes that the Company's cash flows from operations and cash on
hand will be sufficient to fund its debt service, expected capital costs and
other liquidity requirements for the foreseeable future.
Inflation
The effect of inflation on the Company's operations is not material and is not
anticipated to have any material effect in the future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk generally represents the risk of loss that may result from the
potential change in the value of a financial instrument as a result of
fluctuations in interest and currency exchange rates, equity and commodity
prices, changes in the implied volatility of interest rates, foreign exchange
rates, equity and commodity prices and also changes in the credit ratings of
either the issuer of the financial instrument or its related country of origin.
Market risk is inherent to many non-derivative financial instruments and,
accordingly, the scope of eVision's market risk management procedures includes
all market risk sensitive financial instruments. eVision's exposure to market
risk is directly related to its role as a financial intermediary in
customer-related transactions and to its proprietary trading activities.
eVision, through American Fronteer, is an active market maker and conducts
block-trading activities in the listed and over-the-counter equity markets. In
connection with these activities, eVision may be required to maintain
significant inventories in order to ensure availability and to facilitate
customer order flow.
eVision faces three types of market risk: foreign exchange rate risk, equity
price risk and interest rate risk.
Foreign Exchange Rate Risk. Foreign exchange rate risk arises from the
possibility that changes in foreign exchange rates will impact the value of
financial instruments. When eVision buys or sells a financial instrument
denominated in a currency other than US dollars, exposure exists from a net open
currency position. eVision is then exposed to a risk that the exchange rate may
move against it. As of March 31, 2000 and September 30, 1999, the currency
creating foreign currency risk for eVision was the Hong Kong dollar.
25
<PAGE>
Equity Price Risk. eVision is exposed to equity price risk as a consequence
of making markets in equity securities. Equity price risk results from changes
in the level or volatility of equity prices, which affect the value of equity
securities or instruments that derive their value from a particular stock, a
basket of stocks or a stock index. eVision attempts to reduce the risk of loss
inherent in its inventory of equity securities by entering into transactions
designed to mitigate eVision's market risk profile.
Interest Rate Risk. eVision is exposed to interest rate risk in both notes
receivable and convertible debentures, as well as in notes payable, as a result
of lending and borrowing funds. Interest rate risk results when the market rate
of the debt instruments increases for notes receivable or decreases for
convertible debentures and notes payable. eVision attempts to reduce the risk
which exists in its borrowing and lending portfolio by analyzing changes in the
market conditions for similar debt instruments for entities with similar
financial attributes. The interest rate risk associated with notes receivable is
also mitigated by the short term of the notes.
eVision utilizes a wide variety of market risk management methods, including:
limits for each trading activity; marking all positions to market on a daily
basis; daily profit and loss statements; position reports; aged inventory
position reports; and independent verification of inventory pricing.
Additionally, management of each trading department reports positions, profits
and losses, and trading strategies to management on a daily basis. eVision
believes that these procedures, which stress timely communication between
trading department management and senior management, are the most important
elements of the risk management process.
Efforts to further strengthen eVision's management of market risk are
continuous, and the enhancement of risk management systems is a priority of
eVision. This includes the development of quantitative methods, profit and loss
and variance reports, and the review and approval of pricing models.
The table below provides a comparison of the carrying amount to the fair value
of the securities owned by eVision that are classified as trading and available
for sale securities and the instruments which have associated interest rate
risk.
<TABLE>
March 31, 2000 September 30, 1999
----------------------------------- -----------------------------------
Fair Value Carrying Value Fair Value Carrying Value
---------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
Foreign Exchange Rate Risk:
Equity securities ................... $ 69,347 69,347 621,171 621,171
Debt securities ..................... -- -- 1,991,258 1,991,258
Equity Price Risk:
Equity securities* .................. 1,285,152 1,285,152 1,495,701 1,495,701
Credit Risk:
Debt securities ..................... -- -- 1,991,258 1,991,258
Interest Rate Risk
Convertible debentures .............. 6,788,607 6,788,607 6,747,383 6,747,383
Convertible debentures,
related party .................. 8,000,000 8,000,000 8,000,000 8,000,000
Notes receivable .................... 4,300,000 4,300,000 3,150,000 3,150,000
Notes receivable,
related party .................. 5,100,000 5,100,000 3,400,000 3,400,000
</TABLE>
*Includes the equity securities of the Asian corporations.
26
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
AFFC is a defendant in certain arbitration and litigation matters arising from
its activities as a broker/dealer. In the opinion of management, these matters
including any damages awarded against AFFC have been adequately provided for in
the accompanying consolidated financial statements, and the ultimate resolution
of these arbitration and litigation matters will not have a significant adverse
effect on the consolidated results of operations or the consolidated financial
position of the Company.
ITEM 2. CHANGES IN SECURITIES
Recent Sales of Unregistered Securities
On September 27, 1999, eVision commenced an offering of 1,500,000 shares of its
Convertible Series B-1 Preferred Stock to holders of Convertible Series B
Preferred Stock who exchanged their Convertible Series B Preferred Stock for
Convertible Series B-1 Preferred Stock and to others at a purchase price of
$10.00 per share. The offering was completed on January 15, 2000. The sales of
preferred stock were made in reliance upon the exemptions from registration
provided by Section 4(2) of the Securities Act of 1933, as amended, and Rule 506
of Regulation D adopted under the 1933 Act. The purchasers had access to full
information concerning eVision and represented that they acquired the shares for
the purchasers' own accounts and not for the purpose of distribution. The
certificates for the shares contain a restrictive legend advising that the
shares may not be offered for sale, sold or otherwise transferred without having
first been registered under the 1933 Act or pursuant to an exemption from
registration under the 1933 Act. American Fronteer was the sales agent for the
offering and received a 10% commission in addition to a 3% nonaccountable
expense allowance and warrants.
During the three months ended March 31, 2000, 2,500 shares of Convertible Series
B-1 Preferred Stock of eVision were converted to 25,000 shares of common stock
of eVision. The issuance of the common stock was made in reliance upon the
exemptions from registration provided by Section 4(2) of the Securities Act of
1933, as amended. The purchasers had access to full information concerning
eVision and represented that they acquired the shares for the purchasers' own
accounts and not for the purpose of distribution. The certificates for the
shares contain a restrictive legend advising that the shares may not be offered
for sale, sold or otherwise transferred without having first been registered
under the 1933 Act or pursuant to an exemption from registration under the 1933
Act.
During the three months ended March 31, 2000, warrants to purchase 90,000 shares
of common stock of eVision were exercised. The issuances of the common stock
were made in reliance upon the exemptions from registration provided by Section
4(2) of the Securities Act of 1933, as amended. The purchasers had access to
full information concerning eVision and represented that they acquired the
shares for the purchasers' own accounts and not for the purpose of distribution.
The certificates for the shares contain a restrictive legend advising that the
shares may not be offered for sale, sold or otherwise transferred without having
first been registered under the 1933 Act or pursuant to an exemption from
registration under the 1933 Act.
27
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits:
3.1 Articles of Amendment to eVision's Articles of Incorporation
dated May 5, 2000
10.1 Agreement between eBanker and Global Med Technologies dated April
12, 2000 pertaining to the extension of the $2,000,000 note
receivable
10.2 Agreement between eBanker and Global Med Technologies dated April
14, 2000 pertaining to the extension of the $2,650,000 note
receivable
10.3 Agreement between eBanker and Global Med Technologies dated April
14, 2000 pertaining to the extension of the $750,000 note
receivable
10.4 Mortgage Agreement between North Shore Credit Union and Global
Growth Management Inc. dated April 28, 2000
10.5 Indemnity Agreement between eBiz Web Solutions Inc. and eVision
dated April 28, 2000
10.6 Third Amendment to eVision's September 1996 Incentive and
Nonstatutory Stock Option Plan
27.0 Financial Data Schedule
(b) Reports on Form 8-K:
There were no Current Reports on Form 8-K filed during the three months ended
March 31, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: May 22, 2000 eVISION USA.COM, INC.
a Colorado Corporation
By: /s/ Tony T.W. Chan
--------------------------------
Tony T.W. Chan
Chief Operating Officer
By: /s/ Gary L. Cook
--------------------------------
Gary L. Cook
Secretary, Treasurer and
Chief Financial Officer
28
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
eVISION USA.COM, INC.
Pursuant to the provisions of the Colorado Business Corporation Act
("Act"), the undersigned corporation adopts the following Articles of Amendment
to its Articles of Incorporation:
FIRST: The name of the Corporation is eVision USA.Com, Inc.
SECOND: The following amendment to the Articles of Incorporation was duly
adopted by the board of directors of the corporation on January 26, 2000 and by
the shareholders of the corporation on May 5, 2000 as prescribed by the Act. The
number of votes cast for the amendment by each voting group entitled to vote
separately on the amendment was sufficient for approval by that voting group.
Article VII, Section 7.1 of the Articles of Incorporation is amended in its
entirety so that as amended it reads as follows:
"Section 7.1 The aggregate number of shares of which the
Corporation shall have the authority to issue is 1,025,000,000
shares, of which 25,000,000 shares shall be Preferred Stock and
shall be issued at a par value of $.10 per share, and 1,000,000,000
shares shall be Common Stock which shall be issued at $.01 par value
per share. No share shall be issued until it has been paid for, and
it shall thereafter be nonassessable."
THIRD: The amendment does not involve any exchange, reclassification, or
cancellation of issued shares.
Dated this 5th day of May, 2000.
eVISION USA.COM, INC.,
a Colorado corporation
By: /s/ Gary L. Cook
-------------------------------------
Gary L. Cook, Secretary and Treasurer
EXHIBIT 10.1
To: The Board of eBanker USA.com, Inc.
From: Michael Ruxin, Director, Chairman and CEO; Gordon Segal, Director;
and Gerald Willman, Director, Global Med Technologies, Inc.
Global Med Technologies, Inc. (Global) Hereby Requests the Proposed Terms for a
Loan Extension from eBanker USA.com, Inc. (eBanker)
April 12, 2000
Loan: $2,000,000 loan, convertible into shares of Global at $1.15
(the original loan's previous conversion price), at 12%
interest per annum, interest and principal due in 270 days
following the date of this agreement. eBanker will have the
right to elect conversion on the due date prior to repayment
being accepted. Global will provide eBanker with 30-days
advance notice should it choose to repay of the Loan early.
In that time eBanker will have the right to elect for
conversion or repayment.
Commitment Fee: 59,259 free common shares of Global (5% fee, based on a
price of $1.6875).
Auto Extension: If the Loan's accrued interest or principal is not repaid in
270 days the Loan's interest and principal due date will be
automatically extended to April 15, 2001. The Loan will
become a straight loan, without conversion features.
Interest will continue to accrue on the balance at 12%
interest per annum. If the Loan's accrued interest or
principal is not repaid in 270 days, 10-year warrants
convertible into common shares of Global at an exercise
price of $0.50 will be issued to eBanker. The quantity will
be equal to the entire principal and interest amount divided
by the new exercise price.
Underlying
Registration: The Global agrees to provide all eBanker-owned common stock
and derivatives on common stock with piggyback registration
rights. Global commits to completing this registration prior
to 180 days follow the date of this agreement. Global
commits to maintain registration of all Global eBanker-owned
common stock and derivatives on common stock.
Confirmation
of Terms
of Underlying
Agreement: Except for the terms above, the terms of the underlying loan
agreement, including but not limited to the default and
remedy provisions, shall remain unaffected, unchanged, and
unimpaired by reason of this amendment
<PAGE>
EXHIBIT 10.1 (CONTINUED)
For and on Behalf of:
Global Med Technologies, Inc.
/s/ Michael Ruxin /s/ Gordon Segal
- ----------------------------------- -----------------------------
Michael Ruxin, Director Gordon Segal, Director
Date: April 21, 2000 Date: April 21, 2000
/s/ Gerald Willman
- -----------------------------------
Gerald Willman, Director
Date: April 21, 2000
Agreed and accepted by:
eBanker USA.com, Inc.
/s/ Robert Trapp
- -----------------------------------
Robert Trapp, Director
Date: April 25, 2000
2
EXHIBIT 10.2
To: The Board of eBanker USA.com, Inc.
From: Michael Ruxin, Director, Chairman and CEO; Gordon Segal, Director;
and Gerald Willman, Director, Global Med Technologies, Inc.
Global Med Technologies, Inc. (Global) Hereby Requests the Proposed Terms for a
Loan Extension from eBanker USA.com, Inc. (eBanker)
April 14, 2000
Loan: $2,650,000 loan, convertible into shares of Global at
$1.6875 (market close on 4/14/2000), at 12% interest per
annum, interest and principal due in 270 days following the
date of this agreement. eBanker will have the right to elect
conversion on the due date prior to repayment being
accepted. Global will provide eBanker with 30-days advance
notice should it choose to repay of the Loan early. In that
time eBanker will have the right to elect for conversion or
repayment.
Commitment Fee: 78,519 free common shares of Global (5% fee, based on a
market price of $1.6875).
Auto Extension: If the Loan's accrued interest or principal is not repaid in
270 days the Loan's interest and principal due date will be
automatically extended to April 15, 2001. The Loan will
become a straight loan, without conversion features.
Interest will continue to accrue on the balance at 12%
interest per annum. If the Loan's accrued interest or
principal is not repaid in 270 days, 10-year warrants
convertible into common shares of Global at an exercise
price of $0.50 will be issued to eBanker. The quantity will
be equal to the entire principal and interest amount divided
by the new exercise price.
Underlying
Registration: The Global agrees to provide all eBanker-owned common stock
and derivatives on common stock with piggyback registration
rights. Global commits to completing this registration prior
to 180 days follow the date of this agreement. Global
commits to maintain registration of all Global eBanker-owned
common stock and derivatives on common stock.
Confirmation
of Terms
of Underlying
Agreement: Except for the terms above, the terms of the underlying loan
agreement, including but not limited to the default and
remedy provisions, shall remain unaffected, unchanged, and
unimpaired by reason of this amendment
<PAGE>
EXHIBIT 10.2 (CONTINUED)
For and on Behalf of:
Global Med Technologies, Inc.
/s/ Michael Ruxin /s/ Gordon Segal
- ---------------------------------- -----------------------------------
Michael Ruxin, Director Gordon Segal, Director
Date: April 21, 2000 Date: April 21, 2000
/s/ Gerald Willman
- ----------------------------------
Gerald Willman, Director
Date: April 21, 2000
Agreed and accepted by:
eBanker USA.com, Inc.
- ----------------------------------
/s/ Robert Trapp
Robert Trapp, Director
Date: April 25, 2000
2
EXHIBIT 10.3
To: The Board of eBanker USA.com, Inc.
From: Michael Ruxin, Director, Chairman and CEO; Gordon Segal, Director;
and Gerald Willman, Director, Global Med Technologies, Inc.
Global Med Technologies, Inc. (Global) Hereby Requests the Proposed Terms for a
Loan Extension from eBanker USA.com, Inc. (eBanker)
April 14, 2000
Loan: eBanker agrees to commit to extend the $750,000 convertible
loan at 12% interest per annum with interest and principal
due January 1, 2001. eBanker will have the right to elect
conversion on the due date prior to repayment being
accepted. Global will provide eBanker with 30-days advance
notice should it choose to repay of the Loan early. In that
time eBanker will have the right to elect for conversion or
repayment.
Commitment Fee: 22,222 free common shares of Global (5% fee, based on a
market price of $1.6875).
Underlying
Registration: The Global agrees to provide all eBanker-owned common stock
and derivatives on common stock with piggyback registration
rights. Global commits to completing this registration prior
to 180 days follow the date of this agreement. Global
commits to maintain registration of all Global eBanker-owned
common stock and derivatives on common stock.
Confirmation
of Terms
of Underlying
Agreement: Except for the terms above, the terms of the underlying loan
agreement, including but not limited to the default and
remedy provisions, shall remain unaffected, unchanged, and
unimpaired by reason of this amendment
<PAGE>
EXHIBIT 10.3 (CONTINUED)
For and on Behalf of:
Global Med Technologies, Inc.
/s/ Michael Ruxin /s/ Gordon Segal
- ---------------------------------- --------------------------------
Michael Ruxin, Director Gordon Segal, Director
Date: April 21, 2000 Date: April 21, 2000
/s/ Gerald Willman
- ----------------------------------
Gerald Willman, Director
Date: April 21, 2000
Agreed and accepted by:
eBanker USA.com, Inc.
- ----------------------------------
/s/ Robert Trapp
Robert Trapp, Director
Date: April 25, 2000
2
EXHIBIT 10.4
LAND TITLE ACT
FORM B
(Section 719.1)
Province of British Columbia
MORTGAGE - PART (This area for Land Title Office use) Page 1 of 4 pages
- --------------------------------------------------------------------------------
1. APPLICATION: (Name, address, phone number and signature of applicant,
applicant's solicitor or agent)
GRAHAM A. PORTEOUS, of WEBSTER HUDSON & AKERLY
Barristers and Solicitors
1600 - 1075 West Georgia Street
Vancouver, British Columbia, V6E 3C9 (Tel: 682-3488) ---------------------
File No. 40002 107 Graham A. Porteous,
Applicant's Solicitor
- --------------------------------------------------------------------------------
2. PARCEL IDENTIFIER(S) AND LEGAL DESCRIPTION(S) OF LAND:*
(PID) (LEGAL DESCRIPTION)
SEE SCHEDULE
- --------------------------------------------------------------------------------
3. BORROWER(S) [MORTGAGOR(S)]: (including partial address(es) and postal
code(s)):*
GLOBAL GROWTH MANAGEMENT INC. (Inc. No. 411712), having its registered and
records offices at Suite 1088 - 650 West Georgia Street, P. O. Box 11586,
Vancouver Centre, Vancouver, British Columbia V6B 4N8
- --------------------------------------------------------------------------------
4. LENDER(S) [MORTGAGOR(S)]: (including partial address(es) and postal
code(s)):*
NORTH SHORE CREDIT UNION (FI18), a credit union having a branch office and
postal address at 1567 Marine Drive, West Vancouver, British Columbia V7V
1H9
- --------------------------------------------------------------------------------
5. PAYMENT PROVISION(S):**
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
(a) Payment Amount: (b) Interest Rate: (c) Interest Adjustment Y M D
$1250,000.00 9.60% per annum Date: 2000 05 05
- ---------------------------------------------------------------------------------------------------------------------
(d) Interest Calculation Period: (e) Payment Date: (f) First Payment Date:
Semi-Annually, 5th day of each and 2000 06 05
Not in Advance every month
- ---------------------------------------------------------------------------------------------------------------------
(g) Amount of each periodic (h) Interest Act (Canada) (i) Last Payment Date:
payment: Statement: 2000 05 05
$10,847.00 The equivalent rate of
interest calculated half yearly
not in advance is 9.60%
per annum.
- ---------------------------------------------------------------------------------------------------------------------
(j) Assignment of Rents which the (k) Place of Payment: (l) Balance Due Date:
applicant wants registered? POSTAL ADDRESS SET 2000 05 05
YES [X] NO [ ] OUT IN ITEM 4
If YES, page and paragraph
number: Pages: 14 to 16
Paragraph: 40
D.F.MT 900472
- ---------------------------------------------------------------------------------------------------------------------
* If space insufficient, enter "SEE SCHEDULE" and attach Schedule in Form E.
** If space in any box insufficient, enter "SEE SCHEDULE" and attach Schedule in Form E.
</TABLE>
<PAGE>
MORTGAGE - PART 1 Page 2
- --------------------------------------------------------------------------------
6. MORTGAGE contains floating 7. MORTGAGE secures a current or
charge on land? running account?
YES [ ] NO [X} YES [ ] NO [X}
- --------------------------------------------------------------------------------
8. INTEREST MORTGAGED:
Freehold [X]
Other (specify) [ ]
- --------------------------------------------------------------------------------
9. MORTGAGE TERMS:
Part 2 of this mortgage consists of (select one only):
(a) Prescribed Standard Mortgage terms [ ]
(b) Filed Standard Mortgage Terms [X] D.F. Number: MT900472
(C) eXPRESS mORTGAGE tERMS [ ] (annexed to this mortgage as
Part 2)
A selection of (a) or (b) includes any additional or modified items
referred to in Item 10 or in a schedule annexed to this mortgage.
- --------------------------------------------------------------------------------
10. ADDITIONAL OR MODIFIED TERMS:*
SEE SCHEDULE
- --------------------------------------------------------------------------------
11. PRIOR ENCUMBRANCES PERMITTED BY LENDER:*
Easement and Indemnity Agreement 265151M, Covenants GC98965 & GC98970,
Restrictive Covenant GC98971. Statutory Right of Way GC98974, Covenants
BG40226 & BG402433, Easement and Indemnity Agreement BJ47965 and Statutory
Right of Way BM4145
- --------------------------------------------------------------------------------
12. EXECUTION(S):** This mortgage charges the Borrower's interest in the land
mortgaged as security for payment of all money due and performance of all
obligations in accordance with the mortgage terms referred to in Item 9 and
the Borrower(s) and every other signatory agree(s) to be bound by, and
acknowledge(s) receipt of a true copy of, those terms.
Execution Date
--------------------
Officer Signature(s) Y M D Borrower(s) Signature(s)
2000 04 28
GLOBAL GROWTH
/s/ Anthony H.S. Knight MANAGEMENT INC.
- ----------------------- by its authorized signatory(ies):
Anthony H.S. Knight
Barrister & Solicitor /s/ Mark Holman
LANG MICKENER LAWRENCE & SHAW ----------------------------------
1600-1085 West Georgia Street Print Name: Mark Holman
P. O. Box 11117
VANCOUVER, B.C. V6E 4N7 ----------------------------------
Telephone (604) -------- Print Name.
OFFICER CERTIFICATION:
Your signature constitutes a representation that you are a solicitor, notary
public or other person authorized by the Evidence Act, R.S.B.C. 1996, c. 124, to
take affidavits for use in British Columbia and certifies the matters set out in
Part 5 of Land Title Act as they pertain to the execution of this instrument.
* If space insufficient, enter "SEE SCHEDULE" and attach Schedule in Form E.
** If space insufficient, continue executions ion additional page(s) in Form D.
<PAGE>
LAND TITLE ACT
FORM E
SCHEDULE Page 3
- --------------------------------------------------------------------------------
ENTER THE REQUIRED INFORMATION IN THE SAME ORDER AS THE INFORMATION MUST APPEAR
ON THE FREEHOLD TRANSFER FORM, MORTGAGE FORM OR GENERAL DOCUMENT FORM.
2. PARCEL IDENTIFIER(S) AND LEGAL DESCRIPTION(S) OF LAND:*
<TABLE>
<CAPTION>
(PID) (LEGAL DESCRIPTION)
<S> <C>
City of Vancouver
O24~48O~321 Strata Lot 359, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-339 Strata Lot 360, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-447 Strata Lot 361, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-355 Strata Lot 362, District Lot 54!, Group 1, NWD, Strata Plan LMS1866
024-480-363 Strata Lot 363, District Lot 541, Group 1. NWD, Strata Plan LMS1866
024-480-371 Strata Lot 364, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-380 Strata Lot 365, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-398 Strata Lot 366, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-401 Strata Lot 367, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-410 Strata Lot 368, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-428 Strata Lot 369, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-436 Strata Lot 370, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-444 Strata Lot 371, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-452 Strata Lot 372, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-461 Strata Lot 373, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-479 Strata Lot 374, District Lot 541, Group 1. NWD. Strata Plan LMS1866
024-480-487 Strata Lot 375, District Lot 541, Group 1, NWD. Strata Plan LMS1866
024-480-495 Strata Lot 376, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-509 Strata Lot 377, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-517 Strata Lot 378, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-525 Strata Lot 379, District Lot 541, Group 1, NWD, Strata Plan LMS1866
024-480-533 Strata Lot 380, District Lot 541, Group 1, NWD, Strata Plan LMS1866
</TABLE>
<PAGE>
LAND TITLE ACT
FORM E
SCHEDULE Page 4
- --------------------------------------------------------------------------------
ENTER THE REQUIRED INFORMATION IN THE SAME ORDER AS THE INFORMATION MUST APPEAR
ON THE FREEHOLD TRANSFER FORM, MORTGAGE FORM OR GENERAL DOCUMENT FORM.
2. PARCEL IDENTIFIER(S) AND LEGAL DESCRIPTION(S) OF LAND:*
<TABLE>
<CAPTION>
<S> <C>
O24-480-541 Strata Lot 381, District Lot 541, Group 1, NWD, Strata Plan LMS 1866
024-480-550 Strata Lot 382, District Lot 541, Group 1. NWD, Strata Plan LMS 1866
024-480-568 Strata Lot 383, District Lot 541, Group I, NWD, Strata Plan LMS 1866
024-480-576 Strata Lot 384, District Lot 541, Group 1, NWD, Strata Plan LMS 1866
024-430-584 Strata Lot 385, District Lot 541, Group 1, NWD, Strata Plan LMS 1866
024-430-592 Strata Lot 386, District Lot 541, Group 1, NWD, Strata Plan LMS 1866
024-480-614 Strata Lot 387, District Lot 541, Group 1, NWD, Strata Plan LMS 1866
024-480-622 Strata Lot 388, District Lot 541, Group 1, NWD, Strata Plan LMS 1866
024-480-631 Strata Lot 389, District Lot 541, Group 1, NWD, Strata Plan LMS 1866
024-480-649 Strata Lot 390, District Lot 541, Group 1, NWD, Strata Plan LMS 1866
</TABLE>
10. ADDITIONAL OR MODIFIED TERMS:*
PREPAYMENT
The Mortgagor, when not in default, will be entitled to prepay this
Mortgage, in whole or in part, upon 30 days written notice to the Mortgagee
and upon payment to the Mortgagee of a prepayment penalty of three months'
interest on the principal amount prepaid.
END OF DOCUMENT
EXHIBIT 10.5
INDEMNITY AGREEMENT
(EBIZ Web Solutions Inc.
and
eVision USA.Com, Inc.)
IN CONSD3ERATION of North Shore Credit Union (hereinafter called the "Lender")
dealing with Global Growth Management Inc. (hereinafter called the "Borrower"),
the undersigned hereby covenant(s), promise(s), and agrees(s) to and with the
Lender to pay or cause to be paid to the Lender all present and future debts,
obligations and liabilities, direct or indirect or otherwise, now or at any time
and from time to time hereafter due or owing to the Lender from or by the
Borrower, arising under or secured, inter alia, by a mortgage dated April 28,
2000 granted by the Borrower to the Lender securing the principal sum
$1,250,00O.O0 (the "Mortgage") charging that property situate, lying and being
in the City of Vancouver and being more particularly known and described as:
Strata Lots 359 to 390 inclusive
District Lot 541
Group 1
New Westminster District
Strata Plan LMS1866
(the 'Lands")
and whether incurred by the Borrower alone or jointly with any other
Corporation, person or persons, or otherwise howsoever.
IT IS AGREED that without limiting the generality of the foregoing, the
undersigned shall observe and perform or cause to be observed and performed all
the covenants, terms, provisos, stipulations and conditions contained in the
Mortgage and under any agreement, instrument, security and other obligation
collateral thereto, now or hereafter created and issued, granted or made to or
with the Lender as they may from time to time be supplemented or amended and in
effect (collectively the "Security') to be observed and performed by the
Borrower and shall indemnify, protect and save harmless the Lender from all
loss, costs, expenses and damage in respect of the Security and every matter and
thing therein contained including, without limitation, legal costs on a
solicitor and own client basis; provided that this Indemnity shall apply for the
full duration of the Security and any renewals thereof.
IT IS FURTHER AGREED that no change in the name, objects, capital stock or
constitution of the Borrower, shall in any way affect the liability of the
undersigned, or any of them (if more than one), either with respect to
transactions occurring before or after any such change, and the Lender shall not
be concerned to see or inquire into the powers of the Borrower or any of its
directors or other agents, acting or purporting to act on its behalf, and
moneys, advances, renewals or credits, in fact borrowed or obtained from the
Lender in professed exercise of such powers shall be deemed to form part of the
debts and liabilities which the undersigned has/have hereby covenanted, promised
and agreed to pay or cause to be paid, notwithstanding that such borrowing or
<PAGE>
obtaining of moneys, advances, renewals or credits shall be in excess of the
powers of the Borrower or of its directors or other agents aforesaid, or be in
any way irregular, defective or informal.
IT IS FURTHER AGREED that the Lender, without exonerating in whole or in part
the undersigned, or any of them (if more than one), may grant time, renewals,
extensions, indulgences, releases and discharges to, may take securities from
and give the same and any or all existing securities up to, may abstain from
taking securities from, or from perfecting securities of, may accept
compositions from, and may otherwise deal with the Borrower and all other
persons (including the undersigned, or any one of them, and any other covenantor
or guarantor) and Security, as the Lender may see fit.
AND IT IS FURTHER AGREED that the Lender shall not be obliged to exhaust its
recourse against the Borrower or other persons or the securities it may hold
before being entitled to payment from the undersigned of all and every of the
debts and liabilities which the undersigned has/have hereby covenanted, promised
and agreed to pay or cause to be paid. Every Certificate issued under the hand
of the Manager or Acting Manager of the Lender for the time being at the Branch
where the Borrower's account shall be kept, purporting to show the amount at any
particular time due and payable to the Lender, and covered by this indemnity,
shall be received as conclusive evidence as against the undersigned and each of
them (if more than one), and his or their respective executors, administrators
and legal representatives, that such amount is at such time so due and payable
to the Lender and is covered hereby.
THIS INDEMNITY shall be governed by and construed in accordance with the laws of
the Province of British Columbia and for the purpose of legal proceedings this
contract shall be deemed to have been made in the said Province and to be
performed there, and the Courts of that Province shall have jurisdiction over
all disputes which may arise under this contract, provided always that nothing
herein contained shall prevent the Lender from proceeding at its election
against the undersigned in the Courts of any other Province or country.
THE TAKING of judgment on any covenant contained herein shall not operate to
create any merger or discharge of any liability or obligation of the undersigned
hereunder or any of the Security.
IF ANY ONE OR MORE of the provisions contained in this Contract of Indemnity
should be determined to be invalid, illegal or unenforceable in any respect such
provision or provisions shall be severable from this Indemnity and the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
THIS INDEMNITY shall enure to the benefit of and be binding on the parties
hereto and their respective heirs, executors, successors, and assigns;
NOTWITHSTANDING any other provision of this Indemnity, the Lender may assign,
grant, pledge, sell or transfer any participation in this Indemnity or the
Security or any power, remedy or right of the Lender hereunder or thereunder and
<PAGE>
the obligations and liabilities of the Undersigned hereunder are undertaken for
the benefit of each such person as well as the Lender.
Dated at Vancouver, in the Province of British Columbia, this 28th day of April,
2000.
EBIZ Web Solutions Inc.
Per: /s/ Mark Holman
---------------------------------------
Authorized Signatory
eVision USA.Com, Inc.
Per: /s/ Robert H. Trapp
---------------------------------------
Authorized Signatory
EXHIBIT 10.6
THIRD AMENDMENT TO
eVISION USA.COM, INC.
SEPTEMBER 1996 INCENTIVE AND NONSTATUTORY
STOCK OPTION PLAN
THIS THIRD AMENDMENT ("Amendment") is made as of this 26th day of January,
2000 to the eVision USA.Com, Inc. ("Company") September 1996 Incentive and
Nonstatutory Stock Option Plan ("Plan"). In the event of any conflict between
the terms of this Amendment and the terms of the Plan, the terms of this
Amendment shall control. All capitalized terms not defined in this Amendment
shall have their respective meanings set forth in the Plan.
The Plan shall be amended as follows:
1. Stock Subject to the Plan. The first sentence of Section 3 of the Plan
is hereby deleted and replaced with the following sentence:
"Subject to the provisions of Section 11 of the Plan, the maximum
aggregate number of Shares which may be optioned and sold under the
Plan is 15,000,000 shares of Common Stock."
2. Amendment and Termination of the Plan. Subsection 13.a.(i) of the Plan
is hereby deleted and replaced with the following;
"(i) An increase in the number of Shares subject to the Plan above
15,000,000 Shares, other than in connection with an adjustment under
Section 11 of the Plan;"
3. Ratification. Except as modified herein, the terms and conditions of the
Plan are hereby ratified by this Amendment.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this Amendment effective as of the date first set forth above.
eVISION USA.COM, INC.,
a Colorado corporation
By: /s/ Robert H. Trapp
----------------------------------
Robert H. Trapp, Managing Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 17,639,590
<SECURITIES> 1,285,152
<RECEIVABLES> 18,997,081
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 38,707,046
<PP&E> 2,924,618
<DEPRECIATION> (1,800,201)
<TOTAL-ASSETS> 41,554,449
<CURRENT-LIABILITIES> 8,533,798
<BONDS> 14,788,607
0
150,078
<COMMON> 226,809
<OTHER-SE> 10,025,966
<TOTAL-LIABILITY-AND-EQUITY> 41,554,449
<SALES> 20,874,572
<TOTAL-REVENUES> 20,874,572
<CGS> 18,768,564
<TOTAL-COSTS> 18,768,564
<OTHER-EXPENSES> (511,553)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 437,011
<INCOME-PRETAX> 1,516,859
<INCOME-TAX> 616,966
<INCOME-CONTINUING> 899,893
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 899,893
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.01
</TABLE>
