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 June 30, 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
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(Address of principal executive offices)
(303) 860-1700
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(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 25,312,846 shares of its $.01 par value common stock
outstanding as of July 28, 2000.
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements Page No.
a. Unaudited Consolidated Balance Sheets as of June 30, 2000
and September 30, 1999.......................................... 3
b. Unaudited Consolidated Statements of Operations for the three months
and nine months ended June 30, 2000 and 1999.................... 5
c. Unaudited Consolidated Statements of Comprehensive Income (Loss) for
the three months and nine months ended June 30, 2000 and 1999... 6
d. Unaudited Consolidated Statement of Stockholders' Equity (Deficit) for
the nine months ended June 30, 2000............................. 7
e. Unaudited Consolidated Statements of Cash Flows for the nine months
ended June 30, 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................................................... 28
Item 2. Changes in Securities and Use of Proceeds........................... 28
Item 4. Submission of Matters to a Vote of Security Holders................. 29
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits........................................................ 29
b. Reports on Form 8-K............................................. 29
Signatures................................................................... 30
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
June 30, September 30,
2000 1999
-------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .............................................. $11,468,086 7,593,772
Certificate of deposit, restricted ..................................... -- 575,000
Receivable from brokers or dealers and clearing
organizations ....................................................... 177,391 --
Credit card receivable, net ............................................ 3,857,799 --
Accounts receivable:
Accounts receivable ............................................... 414,175 1,009,918
Accounts receivable, related party ................................ 1,054,759 --
Other accounts receivable .............................................. 674,469 484,439
Accrued interest receivable:
Notes receivable .................................................. 84,498 50,770
Notes receivable, related party ................................... 399,126 7,000
Securities owned, at market value ...................................... 1,379,897 1,495,701
Notes receivable ....................................................... 4,196,292 3,150,000
Notes receivable, related party ........................................ 5,400,000 3,400,000
Investments in unconsolidated subsidiaries, at cost .................... 750,000 --
Investments in debt securities, available-for-sale,
at market value ..................................................... -- 1,991,258
Other assets ........................................................... 318,963 271,026
----------- -----------
Total current assets ................................................ 30,175,455 20,028,884
PROPERTY, FURNITURE AND EQUIPMENT, net .................................... 2,944,618 1,233,360
FINANCING COSTS, net of accumulated amortization
of $240,743 and $141,232 ............................................... 818,301 917,812
OTHER LONG-TERM ASSETS .................................................... 992,291 559,995
----------- -----------
Total assets ........................................................ $34,930,665 22,740,051
=========== ===========
See accompanying notes to unaudited consolidated financial statements.
3
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<CAPTION>
eVISION USA.COM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS (CONTINUED)
June 30, September 30,
2000 1999
------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses ....................................... $ 1,871,249 3,040,653
Accrued dividends payable on Convertible Series B-1 Preferred Stock ......... 384,416 48,154
Accrued interest payable .................................................... 308,250 132,633
Accrued interest payable to related party ................................... 209,806 212,111
Accrued income taxes payable ................................................ 651,957 196,409
Payable to clearing organization ............................................ -- 128,040
Current portion of capital lease obligations and long term debt ............. 69,400 70,812
Current portion of convertible debentures to related party .................. 500,000 500,000
Other current liabilities ................................................... 127,150 273,029
------------ ------------
Total current liabilities ................................................ 4,122,228 4,601,841
CAPITAL LEASE OBLIGATIONS AND LONG TERM DEBT,
net of current portion .................................................... 891,491 89,351
CONVERTIBLE DEBENTURES ......................................................... 6,330,217 6,747,383
CONVERTIBLE DEBENTURES TO RELATED PARTY ........................................ 7,500,000 7,500,000
DEFERRED RENT CONCESSIONS ...................................................... 1,455,170 1,540,715
------------ ------------
Total liabilities ........................................................ 20,299,106 20,479,290
------------ ------------
MINORITY INTEREST IN SUBSIDIARIES .............................................. 6,686,551 6,191,241
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT) :
PREFERRED STOCK, 25,000,000 shares authorized, $0.10 par value;
Convertible Series B-1, 1,531,536 shares issued and outstanding, ....... 153,154 --
Convertible Series B, 110,500 shares issued and outstanding ............ -- 11,050
COMMON STOCK, 1,000,000,000 shares authorized, $0.01 par value;
23,700,046 and 19,838,299 shares issued and outstanding ................ 237,001 198,383
Additional paid-in capital .................................................. 27,717,638 13,106,401
Accumulated deficit ......................................................... (20,146,730) (17,144,251)
Accumulated other comprehensive income (loss) ............................... (16,055) 247,937
Unearned ESOP shares ........................................................ -- (350,000)
------------ ------------
Total stockholders' equity (deficit) .................................. 7,945,008 (3,930,480)
------------ ------------
Total liabilities and stockholders' equity (deficit) .................. $ 34,930,665 22,740,051
============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
eVISION USA.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended June 30, Nine months ended June 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Brokerage commissions ................................... $ 3,260,519 4,417,153 14,950,670 14,088,695
Investment banking ...................................... 8,618 378,985 461,411 915,229
Trading profits (loss), net ............................. (212,086) 265,891 4,720,685 1,136,397
Other broker/dealer ..................................... 301,103 538,007 1,231,889 1,563,984
Computer hardware and software operations ............... -- 3,078,874 1,602,745 8,025,538
Interest income on investments and loans ................ 580,475 440,707 1,451,859 1,201,051
Unrealized gain (loss) on securities .................... (20,076) 856,824 (34,094) 1,190,740
Professional fees ....................................... 199,139 -- 250,607 --
Realized gain on sales of investment securities ......... -- -- 356,492 --
Other ................................................... 32,835 29,023 32,835 63,895
------------ ------------ ------------ ------------
4,150,527 10,005,464 25,025,099 28,185,529
------------ ------------ ------------ ------------
COST OF SALES AND OPERATING EXPENSES:
Broker/dealer commissions ............................... 1,702,848 2,666,735 8,636,348 8,622,462
Computer cost of sales .................................. -- 2,810,516 967,643 7,314,711
Interest expense on convertible debentures .............. 228,977 252,461 715,689 762,001
General and administrative .............................. 4,720,863 4,065,884 13,694,121 11,347,328
Stock-based compensation ................................ -- -- 1,177,991 --
Depreciation and amortization ........................... 148,960 107,303 378,420 316,144
------------ ------------ ------------ ------------
6,801,648 9,902,899 25,570,212 28,362,646
------------ ------------ ------------ ------------
Operating income (loss) ............................... (2,651,121) 102,565 (545,113) (177,117)
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest income ....................................... 170,468 16,725 605,664 57,110
Interest expense ...................................... (19,738) (9,505) (36,610) (27,612)
Interest expense to related party ..................... (211,583) (209,806) (631,722) (615,416)
Other ................................................. 24,112 (558) 100,469 (65,505)
------------ ------------ ------------ ------------
(36,741) (203,144) 37,801 (651,423)
------------ ------------ ------------ ------------
Loss before minority interest and income taxes ............. (2,687,862) (100,579) (507,312) (828,540)
Minority interest in (earnings) loss ....................... (21,366) 23,384 (685,057) (105,764)
------------ ------------ ------------ ------------
Loss from continuing operations before income taxes ........ (2,709,228) (77,195) (1,192,369) (934,304)
Income tax expense ......................................... (22,098) (36,370) (639,064) (115,539)
------------ ------------ ------------ ------------
Net loss ................................................... (2,731,326) (113,565) (1,831,433) (1,049,843)
Preferred dividends ........................................ (569,174) -- (1,171,046) --
------------ ------------ ------------ ------------
Net loss attributable to common shareholders ............... $ (3,300,500) (113,565) (3,002,479) (1,049,843)
============ ============ ============ ============
Basic and diluted loss per common share .................... $ (0.14) (0.01) (0.14) (0.06)
============ ============ ============ ============
Weighted average number of common shares
outstanding ........................................... 23,357,830 18,587,843 21,515,508 18,122,941
============ ============ ============ ============
</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)
Three months ended Nine months ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET LOSS ................................................... $(2,731,326) (113,565) (1,831,433) (1,049,843)
Other comprehensive income (loss):
Reclassification adjustment for gains
arising during the period, net of tax benefit
of $158,517 ........................................ -- -- (247,937) --
Foreign currency translation .......................... 884 -- 828 --
Unrealized gain (loss) on available-for-sale
securities, net of tax (expense) benefit of
$(17,866), $(97,393), $10,794 and $(97,393)......... 27,945 152,333 (16,883) 152,333
----------- ----------- ----------- -----------
COMPREHENSIVE INCOME (LOSS) ................................ $(2,702,497) 38,768 (2,095,425) (897,510)
=========== =========== =========== ===========
</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 $1,852,672 ............. 138,950 -- -- 11,903,378
Stock-based compensation due to
change in terms of option grant.. -- -- -- 668,750
Conversion of Convertible Series B-1
Preferred Stock to Common Stock.. (750) -- 750 --
Issuance of common stock for
payment of interest .............. -- -- 12,811 621,217
Issuance of common stock on
exercise of options and warrants -- -- 25,057 1,032,229
Payment of ESOP note ............... -- -- -- --
Preferred stock dividends .......... 3,904 -- -- 385,663
Other comprehensive income (loss):
Unrealized gain (loss) on
available-for-sale securities.. -- -- -- --
Foreign currency translation .... -- -- -- --
Net loss ........................... -- -- -- --
----------- ----------- ----------- -----------
Balances at June 30, 2000 .......... $ 153,154 -- 237,001 27,717,638
=========== =========== =========== ===========
See accompanying notes to unaudited consolidated financial statements.
7(a)
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
<CAPTION>
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (continued)
Accumulated
Other
Accumulated Comprehensive Unearned
Deficit Income (Loss) 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 $1,852,672 ............. -- -- -- 12,042,328
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 .............. -- -- -- 634,028
Issuance of common stock on
exercise of options and warrants -- -- -- 1,057,286
Payment of ESOP note ............... -- -- 350,000 350,000
Preferred stock dividends .......... (1,171,046) -- -- (781,479)
Other comprehensive income (loss):
Unrealized gain (loss) on
available-for-sale securities.. -- (264,820) -- (264,820)
Foreign currency translation .... -- 828 -- 828
Net loss ........................... (1,831,433) -- -- (1,831,433)
----------- ----------- ----------- -----------
Balances at June 30, 2000 .......... (20,146,730) (16,055) -- 7,945,008
=========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
7(b)
<PAGE>
<TABLE>
<CAPTION>
eVISION USA.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended June 30,
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .................................................... $ (1,831,433) (1,049,843)
Adjustments to reconcile net loss to net cash used in
continuing operations:
Allowance for loan impairment ......................... 425,000 --
Realized gains on sales of investment securities ...... (356,492) --
Gains on sales of assets .............................. (79,123) --
Stock based compensation .............................. 1,177,991 --
Issuance of common stock in payment of interest ....... 634,028 562,722
Issuance of common stock for guarantee ................ -- 62,500
Depreciation and amortization ......................... 378,420 316,144
Amortization of financing costs ....................... 99,511 73,850
Amortization of deferred rent ......................... (85,545) (85,535)
Accretion of discount on investments in debt securities (185,491) (782,945)
Accretion of original issue discount on convertible
debentures ...................................... 57,987 91,101
Accretion of discount on credit card receivable ....... (41,992) --
Minority interests in earnings ........................ 685,057 105,764
Changes in operating assets and liabilities:
Decrease (increase) in receivables from brokers or
dealers and clearing organizations ............ (305,431) 279,847
Decrease (increase) in accounts receivable .......... 329,206 (990,700)
Decrease (increase) in other accounts receivable .... (190,112) 381,364
Increase in accrued interest receivable ............. (867,246) (72,585)
Decrease (increase) in securities owned, net ........ 351,133 (1,600,605)
Increase in other assets ............................ (505,744) (204,231)
Increase (decrease) in accounts payable and accrued
expenses ...................................... (201,500) 1,614,591
Decrease in deferred revenue ........................ -- (109,670)
Increase (decrease) in other current liabilities .... (215,319) 458,940
------------ ------------
Net cash used in operating activities ....................... (727,095) (949,291)
------------ ------------
(Continued)
See accompanying notes to unaudited consolidated financial statements.
8
<PAGE>
<CAPTION>
eVISION USA.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(Unaudited)
Nine months ended June 30,
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of credit card receivable ....................... $ (4,645,040) --
Purchase of property, furniture and equipment ............ (1,309,399) (139,186)
Proceeds from sale of property, furniture and equipment .. 90,160 --
Redemption of certificate of deposit ..................... 575,000 --
Purchases of available for sale securities ............... (252,212) --
Purchases of debt securities ............................. -- (4,635,275)
Proceeds from sale of debt securities .................... 2,204,608 331,250
Acquisition of option relating to LIL Capital ............ (250,000) --
Investment in common stock of related party .............. (500,000) --
Proceeds from repayment of ESOP note ..................... 350,000 --
Advances on notes receivable ............................. (1,150,000) --
Advances on notes receivable, related party .............. (2,000,000) (2,700,000)
Purchases of convertible debentures ...................... (475,153) --
Purchases of subsidiary minority interest ................ (84,925) --
Other investing activities ............................... 18,361 (103,641)
------------ ------------
Net cash used in investing activities .................... (7,428,600) (7,246,852)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of cash dividends ................................ (526,694) --
Principal payments on borrowings ......................... (40,251) (47,283)
Net proceeds from issuance of convertible debentures,
net of offering costs .............................. -- 531,334
Net proceeds from issuance of convertible debentures to
related party ...................................... -- 1,000,000
Net proceeds from issuance of Convertible Series B
and B-1 preferred stock, net of offering costs ..... 12,042,328 788,412
Net proceeds from exercise of stock options .............. 413,045 22,619
Proceeds from sale of eBanker Second Private Placement
Units, net of offering costs ....................... -- 2,155,938
Proceeds from exercise of warrants ....................... 135,000 27,435
Other financing activities ............................... -- (40,526)
------------ ------------
Net cash provided by financing activities ................ 12,023,428 4,437,929
------------ ------------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
eVISION USA.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(Unaudited)
Nine months ended June 30,
2000 1999
---- ----
<S> <C> <C>
EFFECT OF EXCHANGE RATE ON CASH
AND CASH EQUIVALENTS .................................................... $ 6,581 --
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
AND CASH EQUIVALENTS .................................................... 3,874,314 (3,758,214)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD .................................................................. 7,593,772 9,112,652
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD ................................... $11,468,086 5,354,438
=========== ===========
SUPPLEMENTAL DISCLOSURES RELATED TO STATEMENTS OF CASH FLOWS
Cash payments for interest ................................................. $ 795,800 384,603
=========== ===========
Cash payments for income taxes ............................................. $ 25,000 --
=========== ===========
Other investing and financing activities:
Common stock issued for interest ........................................... $ 634,028 562,722
=========== ===========
Common stock issued for guarantee .......................................... $ -- 62,500
=========== ===========
Equipment financed under capital lease ..................................... $ -- 180,867
=========== ===========
Preferred stock issued for payment of dividends ............................ $ 389,567 --
=========== ===========
Amounts due on credit card receivable purchase ............................. $ 2,980,022 --
=========== ===========
Purchase of real estate under mortgage financing ........................... $ 862,375 --
=========== ===========
Unearned discount on credit card receivable ................................ $ 1,855,863 --
=========== ===========
</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 nine months and three months ended June 30, 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 periods' consolidated
financial statements to conform to current period presentation.
Recent Accounting Pronouncements
In December 1999, the Securities and Exchange Commission (Commission) issued
Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements," which provides guidance with respect to revenue recognition issues
and disclosures. As amended by SAB No. 101B, the Company is required to
implement the provisions of SAB No. 101 no later than the fourth quarter of the
fiscal year ending September 30, 2001. The Company does not believe SAB No. 101
will have a material impact on its financial statements.
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 Commission, is a member of the National
Association of Securities Dealers, Inc. (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. eCredit Income Growth, Inc., formerly Fronteer Income
Growth Inc. (eCredit), 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 nine months ended June 30, 2000, eVision
purchased 56,000 shares of eBanker common stock, 280,000 common stock warrants
and convertible debentures of $560,000 from eBanker shareholders for $571,628.
eVision also purchased 307,692 shares of common stock of eBanker for $1,999,998.
As a result, eVision owned 39% of the outstanding common stock of eBanker as of
June 30, 2000.
In March 2000, eBanker acquired from MBf Card International Limited (MBf) a
credit card receivable for a total consideration of $7,625,062. The book value
of the credit card receivable as of January 31, 2000 was approximately
$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, which was
subject to certain adjustments to the purchase price. 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. Of the total purchase discount of
$1,601,976, $800,000 was allocated to an allowance for doubtful accounts and the
remainder is being amortized to income over a period of 18 months.
Online Credit Limited has since acquired MBf and changed the name of MBf to
Online Credit Card Limited (OCCL). OCCL processes the credit card transactions
for eBanker, which includes collections of principal and interest. On a monthly
basis, OCCL remits their collections to eBanker. eBanker has agreed to terms
with OCCL whereby eBanker earns 10% interest on the outstanding credit card
receivable in lieu of OCCL remitting collected interest and charging a fee for
processing collections. As of June 30, 2000, OCCL had collected approximately
$3.9 million on behalf of eBanker. eBanker has reflected the remaining amount
due in September 2000 on the purchase with the cash collected by OCCL. The
result was a net receivable from OCCL of $829,233, which is included in the
accompanying balance sheet in accounts receivable, related party. Approximately
$700,000 of this balance has been subsequently remitted to eBanker.
12
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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). The Skyhub shares were issued in April
2000; of the 60% of the outstanding shares of Skyhub issued, 57% were issued to
eVision and 3% were issued to eBanker for providing a loan commitment to Skyhub
on behalf of eVision as described below. Skyhub was incorporated in the British
Virgin Islands on December 28, 1998 and its only operations during 1999
consisted of minimal contracts for services. 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.
In May 2000, eVision issued 1,185,209 restricted shares of eVision's common
stock to 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.
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. eVision
agreed to make available to Skyhub a short term loan in the maximum amount of
$1,500,000 pursuant to one or more promissory notes from Skyhub to eVision or a
subsidiary or affiliate of eVision and subject to certain additional terms,
provisions and conditions. On February 18, 2000, eBanker entered into a loan
commitment agreement with Skyhub and eVision. eBanker committed to loan Skyhub,
on behalf of eVision, up to $1,500,000. The loan will bear interest at the rate
of 12% per annum, payable every six months, with the principal due one year from
the date of the draw on the loan. On February 18, 2000, eBanker advanced Skyhub
$1,000,000 of the loan commitment. The $1,000,000 is due February 17, 2001.
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 32
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, 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 purchase was completed in
the amount of $1,379,800, which was paid in cash of $517,425 and the balance was
paid with a mortgage note in the amount of $862,375, that is due May 5, 2005,
and bears interest at 9.6% per year for a term of five years.
13
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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
designed, developed, installed, marketed and supported software systems for the
securities brokerage industry (Secutron). Q6 Technologies' interest in Secutron
was acquired in the early formation and capitalization of Q6 Technologies. 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.
Effective December 17, 1999, Q6 Technologies transferred its ownership interest
in Secutron, which included 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 Technologies, 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 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 received
500,000 shares of the Class B Common Stock. The offering will continue until all
2,000,000 shares are sold or until August 18, 2000, unless extended by mutual
agreement between AFFC and Q6 Technologies. The 500,000 shares of Class B Common
Stock owned by AFFC represent approximately 4% of the total outstanding common
shares. Consequently, eVision and AFFC own a total of 16% of the outstanding
common shares of Q6 Technologies.
NOTE 3. INVESTMENTS IN SUBSIDIARIES
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 bore interest at 14% and was due July 30, 2000. To secure
the promissory note, eVision held all the primary assets of LIL Capital in
escrow.
14
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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.
On July 1, 2000, eVision exercised the option by canceling the $2,850,000
promissory note and the accrued interest thereon of $371,292 that was issued by
Ladsleigh to eVision in connection with the purchase by Ladsleigh of LIL
Capital. The assets of LIL Capital consisted primarily of the assets previously
sold to Ladsleigh. Call options for 109,600,000 shares of Online International
that were 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 had an
exercise price of approximately $0.046 per share and an option for 4,600,000
shares had an exercise price of approximately $0.052 per share. Neither of these
two options could be exercised until the common stock of Online International
traded at approximately $0.19 per share or higher. The remaining option for
5,000,000 shares was exercisable at an average price of approximately $0.052 per
share. All of the options expired on July 25, 2000. As of June 30, 2000, LIL
Capital's assets consisted primarily of 123,294,000 shares of common stock and
24,416,800 common stock warrants of Online International. As of June 30, 2000,
the assets had a market value of approximately $3,046,147, and a book value of
$3,471,292. Consequently eVision has recorded an asset impairment allowance for
$425,000. Subsequent to June 30, 2000, eVision may record an additional $550,000
as unrealized loss on securities based on the current market.
Global Med Technologies, Inc.
In June 2000, eVision purchased 1,000,000 shares of restricted common stock of
Global Med Technologies, Inc. (Global) for $500,000.
NOTE 4. 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.
The 1,500,000 shares include 110,500 shares that were being offered in exchange
for the outstanding Convertible Series B Preferred Stock 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. The offering closed on January 15, 2000. For the period October 1,
1999 through the closing, 1,389,500 shares of Convertible Series B-1 Preferred
Stock were sold for adjusted proceeds of $12,042,328, net of offering costs of
$1,852,672.
15
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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.
Effective as of October 31, 1999, the Company had 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.
Effective as of April 30, 2000, the Company had paid total dividends of
$764,434, comprised of $407,698 paid in cash and $356,736 paid in shares of
Convertible Series B-1 Preferred Stock.
NOTE 5. STOCKHOLDERS' EQUITY (DEFICIT)
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 nine months ended June 30, 2000, the Company issued a total of
2,505,657 shares of common stock upon the exercise of stock options and
warrants. Cash proceeds for the exercises were $548,045. 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 nine months ended June 30, 2000, the Company granted options to
employees to purchase 2,369,000 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.
16
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 nine month period ended June 30, 2000.
During the nine months ended June 30, 2000, eVision paid the interest accrued to
Online Credit Limited (Online Credit) on the convertible debentures, related
party through March 31, 2000 by the issuance of 1,281,090 shares of common stock
of eVision. Accrued interest on the convertible debentures as of June 30, 2000
was $209,806, which was paid by the issuance of 423,924 shares of common stock
in July 2000.
NOTE 6. NOTES RECEIVABLE
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, and bears interest at 18% per annum that is due and payable
upon maturity. Accrued interest at June 30, 2000 was $45,000.
NOTE 7. NOTES RECEIVABLE, RELATED PARTY
Global Med Technologies, Inc.
As of June 30, 2000 and September 30, 1999, eBanker had loaned a total of
$5,400,000 and $3,400,000, respectively, to Global under three separate
agreements as follows:
<TABLE>
<CAPTION>
June 30, 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 ........... 2,000,000 --
Bridge loan with eBanker ............................................. 750,000 750,000
---------- ----------
$5,400,000 $3,400,000
========== ==========
</TABLE>
17
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The $2,650,000 loan which was originally due April 15, 1999, was extended until
April 15, 2000, and 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 10, 2001, and the conversion feature was
increased to the then $1.6875 market price per share of the common stock, in
consideration of a financing fee payable in 78,519 shares of common stock of
Global. 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, at which time the conversion features will terminate. Interest
will continue to accrue on the balance at 12% interest per annum and ten year
warrants exercisable for common shares of Global 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.
In October 1999, the Company entered into an agreement with Global and Online
Credit for a bridge loan in the amount of $2,000,000, originally extended by
Online Credit to Global. The line of credit was convertible, at Online Credit's
option, into shares of Global's common stock at a price $1.15 per share and was
originally due on April 12, 2000. In April 2000, the principal and interest on
the loan was extended to January 7, 2001, in consideration of a financing fee
payable in 59,259 shares of common stock of Global. 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, at which
time the conversion features will terminate. Interest will continue to accrue on
the balance at 12% per annum, and ten year warrants exercisable for common
shares of Global 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 June 30, 2000, Global had drawn the
entire $2,000,000 on this line of credit.
The $750,000 bridge loan bears interest at 12% and was originally due and
payable December 31, 1999. The maturity date was 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 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.
Accrued interest receivable from Global as of June 30, 2000 was $171,698.
NOTE 8. 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 nine months ended June 30, 2000, the investments were
sold for proceeds of $2,204,608. The Company recognized realized gains from the
sales of $356,492 during the nine months ended June 30, 2000.
18
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. COMMITMENTS AND CONTINGENCIES
Lockup Agreement
On October 28, 1999, Global 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'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's common stock at $0.25 per share held by
eBanker or warrants to purchase 1,000,000 shares of Global'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
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, 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 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.
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 was 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.
19
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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.
NOTE 10. SEGMENT DISCLOSURE
For the Nine Months Ended June 30, 2000
<TABLE>
<CAPTION>
Q6 and
Consolidated AFFC eServices* eBanker Others Eliminations Total
------------ ---- --------- ------- ------ ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Revenues from
unaffiliated customers .................. $20,182,242 1,355,073 2,502,094 985,690 -- 25,025,099
Intersegment revenues ...................... -- 91,644 139,460 1,205,865 (1,436,969) --
----------- ----------- ----------- ----------- ----------- -----------
Total revenues ............................. 20,182,242 1,446,717 2,641,554 2,191,555 (1,436,969) 25,025,099
=========== =========== =========== =========== =========== ===========
Operating income (loss) .................... 1,047,491 (379,930) 1,495,431 (2,535,251) (172,854) (545,113)
Other income (expense), net ................ 84,601 105,140 143,196 (392,899) 97,763 37,801
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) from operations
before minority interest and
income taxes ............................ 1,132,092 (274,790) 1,638,627 (2,928,150) (75,091) (507,312)
=========== =========== =========== =========== =========== ===========
Depreciation and
amortization ............................ 303,751 49,980 -- 24,689 -- 378,420
=========== =========== =========== =========== =========== ===========
Capital expenditures ....................... $ 111,013 475,967 -- 1,572,271 -- 2,159,251
=========== =========== =========== =========== =========== ===========
Identifiable assets as of
June 30, 2000 .......................... $ 6,650,830 1,757,576 19,309,862 20,999,761 (13,787,364) 34,930,665
=========== =========== =========== =========== =========== ===========
</TABLE>
*Q6 Technologies was consolidated for only a portion of the nine months ended
June 30, 2000.
20
<PAGE>
eVISION USA.COM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the Nine Months Ended June 30, 1999
<TABLE>
<CAPTION>
Q6 and
Consolidated AFFC eServices eBanker Others Eliminations Total
------------ ---- --------- ------- ------ ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Revenues from
unaffiliated customers .......... $ 17,704,304 8,025,538 1,196,420 1,259,267 -- 28,185,529
Intersegment revenues .............. -- 300,000 77,186 300,000 (677,186) --
------------ ------------ ------------ ------------ ------------ ------------
Total revenues ..................... 17,704,304 8,325,538 1,273,606 1,559,267 (677,186) 28,185,529
============ ============ ============ ============ ============ ============
Operating income (loss) ............ (1,082,318) 416,645 213,715 352,027 (77,186) (177,117)
Other expense, net ................. (11,691) (993) (26,528) (689,397) 77,186 (651,423)
------------ ------------ ------------ ------------ ------------ ------------
Income (loss) from operations
before minority interest and
income taxes .................... (1,094,009) 415,652 187,187 (337,370) -- (828,540)
============ ============ ============ ============ ============ ============
Depreciation and
amortization .................... 285,621 26,268 -- 4,255 -- 316,144
============ ============ ============ ============ ============ ============
Capital expenditures ............... $ 126,684 8,076 -- 4,426 -- 139,186
============ ============ ============ ============ ============ ============
Identifiable assets as of
June 30, 1999 .................. $ 5,444,721 2,867,487 13,351,602 9,526,853 (7,936,262) 23,254,401
============ ============ ============ ============ ============ ============
</TABLE>
The following is a summary of information regarding the Company's
operations by geographical area:
Nine months ended June 30,
2000 1999
---- ----
Revenue:
United States ....... $ 24,835,980 $ 28,185,529
Canada .............. 189,119 --
Asia ................ -- --
------------ ------------
$ 25,025,099 $ 28,185,529
============ ============
Operating income (loss):
United States ....... $ (214,834) $ (177,117)
Canada .............. (169,641) --
Asia ................ (160,638) --
------------ ------------
$ (545,113) $ (177,117)
============ ============
Identifiable assets:
United States ....... $ 32,227,200 $ 23,254,401
Canada .............. 1,824,424 --
Asia ................ 879,041 --
------------ ------------
$ 34,930,665 $ 23,254,401
============ ============
21
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NINE MONTHS ENDED JUNE 30, 2000 COMPARED TO NINE MONTHS ENDED JUNE 30, 1999.
Revenues for the nine months ended June 30, 2000 were $25,025,099, a decrease of
$3,160,430 or 11.2% from the revenues of $28,185,529 for the nine months ended
June 30, 1999. The decrease relates primarily to decreased computer hardware and
software operations of $6,422,793, decreased investment banking revenue of
$453,818, and decreased unrealized gain on securities of $1,224,834. These
decreases are partially offset by increased brokerage commissions of $861,975;
an increase in trading profits of $3,584,288; and $356,492 of realized gains on
sales of investment securities.
The increase in brokerage commissions of $861,975 or 6.1% is due primarily to an
increase in trading activity. Customer transactions increased 3.4% for the nine
months ended June 30, 2000 compared to the nine months ended June 30, 1999.
Trading profits increased $3,584,288 for the nine months ended June 30, 2000 due
primarily to general market conditions and sales of the 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 first and second quarters of the fiscal year ending September 30,
2000. The unrealized gains on investments in securities decreased $1,224,834
primarily because the investments to which they related were sold and the
resulting gains are classified as realized gains.
Computer hardware and software revenues for the nine months ended June 30, 2000
and 1999 were $1,602,745 and $8,025,538, respectively. The associated costs of
computer sales were $967,643 and $7,314,711 for the nine months ended June 30,
2000 and 1999, 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. Corporate
Net Solutions is a technology company which offers telecommunications products
and services, web hosting facilities, and the management of corporate local and
wide area networks. Coupled with Corporate Net Solutions is eBiz Web Solutions
which is a web development and software engineering company.
During the nine months ended June 30, 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, eBanker 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 nine months ended June 30, 2000 and 1999 was
$1,451,859 and $1,201,051, respectively. For the nine months ended June 30,
1999, interest income included interest on these investments in debt securities
and interest on notes receivable.
Interest income for the nine months ended June 30, 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 nine months ended June 30, 1999 the Company had recognized an
unrealized gain of $1,190,740 on the investment. For the nine months ended June
30, 2000, the loss of $34,094 pertained to various other investments.
Professional fees revenue of $250,607 for the nine months ended June 30, 2000
represents fees for services received by Corporate Net Solutions, eVision
Corporate Services and eBiz Web Solutions. Types of services provided include
computer networking, accounting and legal, and website development.
Interest expense on the convertible debentures of eBanker for the nine months
ended June 30, 2000 and 1999 was $715,689 and $762,001, respectively. The
decrease is due to the purchase of debentures outstanding by eVision.
The increase in general and administrative expenses for the nine months ended
June 30, 2000 of $2,346,793 or 20.7% 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 statements with the SEC. In addition,
eVision recognized an asset impairment for LIL Capital of $425,000.
Interest income increased from $57,110 for the nine month period ended June 30,
1999 to $605,664 for the nine month period ended June 30, 2000. The increase is
due to the higher levels of investable cash during the nine months ended June
30, 2000 resulting from sales of Convertible Series B-1 Preferred Stock and
sales of investments in debt and equity securities.
The loss before minority interest and income taxes for the nine months ended
June 30, 2000 and 1999 was $507,312 and $828,540, respectively. The primary
reason for the decrease in the loss was due to increased interest income.
The minority interest in earnings primarily represents the minority interest
investments in eBanker. The provision for income taxes relates to eBanker's
earnings for the nine month periods ended June 30, 2000 and 1999.
For the nine month period ended June 30, 2000, the net loss attributable to
common shareholders was $3,002,479, or $0.14 per share, on revenues of
$25,025,099 compared to a net loss attributable to common shareholders for the
nine month period ended June 30, 1999 of $1,049,843, or $0.06 per share, on
revenues of $28,185,529. The primary reason for the increase in net loss was due
to preferred dividends, the decreases in unrealized gain on securities,
increases in general and administrative expenses and stock based compensation,
offset by trading profits.
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
Revenues for the three months ended June 30, 2000 were $4,150,527, a decrease of
$5,854,937 or 58.5% from the revenues of $10,005,464 for the three months ended
June 30, 1999. The decrease primarily relates to decreased computer hardware and
software operations revenue of $3,078,874; decreased brokerage commissions of
$1,156,634; decreased investment banking revenue of $370,367; decreased trading
profits of $477,977 and decreased unrealized gains on securities of $876,900,
partially offset by the increased professional fees revenue of $199,139.
The decrease in brokerage commissions of $1,156,634 or 26% is due primarily to
general market conditions. Customer transactions and the average commission per
transaction ticket decreased approximately 17.1% and 17.9%, respectively, for
the three months ended June 30, 2000 compared to the three months ended June 30,
1999.
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<PAGE>
Trading profits decreased $477,977 due primarily to general market conditions.
Computer hardware and software revenues for the three months ended June 30, 1999
were $3,078,874. 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, eBanker 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 three months ended June 30, 2000
and 1999 was $580,475 and $440,707, respectively. For the three months ended
June 30, 1999, interest income included interest on these investments in debt
securities and interest on notes receivable.
Interest income for the three months ended June 30, 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 June 30, 1999, the Company had recognized an
unrealized gain of $856,824 on these investments in Online International. For
the three months ended June 30, 2000, the unrealized loss of $20,076 pertained
to various other investments.
The decrease in broker/dealer commissions expense for the three months ended
June 30, 2000 compared to the prior 1999 period of $963,887 or 36.1% is
primarily the result of general market conditions and correlates to the decrease
in brokerage commission income.
The increase in general and administrative expenses for the three months ended
June 30, 2000 of $654,979 or 16.1% 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 statements with the SEC. In addition,
eVision recognized an asset impairment for LIL Capital of $425,000.
The minority interest in earnings primarily represents the minority interest
investment in eBanker. The provision for income taxes relates to eBanker's
earnings for the three month periods ended June 30, 2000 and 1999.
For the three months ended June 30, 2000, the Company's net loss attributable to
common shareholders was $3,300,500, or $0.14 per share, on revenues of
$4,150,527, compared to a net loss attributable to common shareholders of
$113,565, or $0.01 per share, on revenues of $10,005,464 for the three months
ended June 30, 1999. The primary reason for the increase in the net loss was due
to preferred dividends, the decreases in brokerage commissions, trading profits
and unrealized gains on securities as well as increases in general and
administrative expenses.
Liquidity and Capital Resources
The Company, as of June 30, 2000, had $11,468,086 in cash and cash equivalents
and $26,053,227 in working capital. Cash used by investing activities of
$7,428,600 consisted primarily of $2,000,000 in loan advances on short-term
notes receivable, related party; advances on notes receivable of $1,150,000;
purchases of property, furniture and equipment of $1,309,399; investment in
common stock of $500,000 and purchase of credit card receivable for $4,645,040,
net of proceeds from the sale of investment securities of $2,204,608. Adjusted
net proceeds from issuance of Convertible Series B-1 Preferred Stock of
$12,042,328 primarily provided cash to fund other operating activities.
24
<PAGE>
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. The offering closed on January 15, 2000. For the period
October 1, 1999 through the closing, 1,389,500 shares of Convertible Series B-1
Preferred Stock were sold for adjusted proceeds of $12,042,328, net of offering
costs of $1,852,672. 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 1998, eBanker extended Global a line of credit in the amount of
$2,650,000 which is now due January 2001, bears interest at the rate of 12% per
annum and is convertible into common shares of Global at $1.6875 per share. In
May 1999, eBanker extended Global a $750,000 bridge loan that is now due on
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 at any time
prior to the due date at $0.50 per share. On October 4, 1999, eBanker extended
Global a $2,000,000 bridge loan commitment. Outstanding principal amounts under
the loan are now due in January 2001 and accrue interest at a rate of 12% per
annum. The loan can be converted into shares of common stock of Global 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.
25
<PAGE>
ITEM 3. 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 four types of market risk: foreign exchange rate risk, equity
price risk, interest rate risk and credit 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 June 30, 2000 and September 30, 1999, the currency
creating foreign currency risk for eVision was the Hong Kong dollar.
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.
Credit Risk. eVision is exposed to credit risk primarily in its lending
activities. Credit risk results when entities to which eVision has extended
loans or lines of credit are unable to repay the loans. eVision attempts to
reduce the risk which exists in its lending portfolios by analyzing the
attributes of the debtor entities.
26
<PAGE>
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>
<CAPTION>
June 30, 2000 September 30, 1999
Fair Value Carrying Value Fair Value Carrying Value
---------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
Foreign Exchange Rate Risk:
Equity securities ...................... $ 211,457 211,457 621,171 621,171
Debt securities ........................ -- -- 1,991,258 1,991,258
Credit card receivable, net ............ 3,857,799 3,857,799 -- --
Accounts receivable,
related party ..................... 829,233 829,233 -- --
Equity Price Risk:
Equity securities* ..................... 1,379,897 1,379,897 1,495,701 1,495,701
Credit Risk:
Debt securities ........................ -- -- 1,991,258 1,991,258
Credit card receivable, net ............ 3,857,799 3,857,799 -- --
Notes receivable ....................... 4,196,292 4,196,292 3,150,000 3,150,000
Notes receivable, related party ........ 5,400,000 5,400,000 3,400,000 3,400,000
Interest Rate Risk
Convertible debentures ................. 6,330,217 6,330,217 6,747,383 6,747,383
Convertible debentures,
related party ..................... 8,000,000 8,000,000 8,000,000 8,000,000
Notes receivable ....................... 4,196,292 4,196,292 3,150,000 3,150,000
Notes receivable, related party ........ 5,400,000 5,400,000 3,400,000 3,400,000
</TABLE>
*Includes the equity securities of the Asian corporations.
27
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A former candidate for employment, Jack F. Bruscianelli, filed claims on March
29, 1999 with the National Association of Securities Dealers, Inc. (NASD)
against AFFC, Robert H. Taggart, Robert H. Trapp, Jodee M. Brubaker, Gary L.
Cook, and John E. Shuster. The claims asserted AFFC and the individuals breached
an employment contract and implied obligations of good faith and fair dealing,
and asserted fraudulent inducement, misrepresentations and omissions. The former
candidate for employment was claiming $450,000 in actual damages; $900,000 in
punitive damages; and $30,000 in attorneys' fees. The Company does not admit to
the claims but believed it was in its best interest to settle the claims. On
July 27, 2000, the claims were settled in the amount of $115,000.
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
(c) Recent Sales of Unregistered Securities
The Company previously sold 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. Online Credit has purchased a total
of $8,000,000 in convertible debentures to date. The interest on the convertible
debentures as of March 31, 2000 was paid with 852,507 shares of common stock of
the Company during the three months ended June 30, 2000.
The issuance of shares for interest was made in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as amended
(1933 Act). The purchaser had access to full information concerning the Company
and represented that it purchased the shares for the purchaser's own account and
not for the purpose of distribution. The shares contain a restrictive legend
advising that the securities represented by the shares may not be offered for
sale, sold or otherwise transferred without having first been registered under
the 1933 Act or unless an exemption from the registration requirements of the
1933 Act is available. No underwriters were involved in the transaction.
During the three months ended June 30, 2000, 5,000 shares of Convertible Series
B-1 Preferred Stock of eVision were converted to 50,000 shares of common stock
of eVision. The issuance of the common stock was made in reliance upon the
exemption from registration provided by Section 4(2) of the 1933 Act 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 unless an exemption from the
registration requirements of the 1933 Act is available.
28
<PAGE>
During the three months ended June 30, 2000, 1,185,209 shares of common stock of
eVision were issued to Skyhub. The issuance of the common stock was made in
reliance upon the exemptions from registration provided by Section 4(2) of the
1933 Act. The purchasers had access to full information concerning eVision and
represented that they it acquired the shares for the purchaser's own accounts
and not for the purpose of distribution. The certificate for the shares contains
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 unless an exemption from the registration requirements of the 1933 Act is
available.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on May 5, 2000, the
following members were elected to the Board of Directors:
Votes Votes
For Withheld
----- --------
Fai H. Chan 20,403,415 68,398
Robert H. Trapp 20,402,415 69,398
Kwok Jen Fong 20,368,015 103,798
Jeffrey M. Busch, Esq. 20,403,415 68,398
Robert Jeffers, Jr. 20,402,415 69,398
Tony T.W. Chan 20,398,035 73,778
The stockholders voted to adopt an amendment to the Articles of Incorporation of
the Company to increase the number of shares of common stock that are authorized
to be issued from 100,000,000 to 1,000,000,000. There were 19,249,684 votes in
favor of the amendment; 1,118,921 votes against the amendment; and 103,208 votes
abstained.
The stockholders voted to adopt an amendment to the September 1996 Incentive and
Nonstatutory Stock Option Plan to increase the number of shares of common stock
of the Company that are authorized to be optioned and sold under such plan from
7,500,000 to 15,000,000. There were 12,873,422 votes in favor of the amendment;
1,509,354 votes against the amendment; 228,509 votes abstained; and 5,860,528
represented broker nonvotes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits:
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 June 30, 2000.
29
<PAGE>
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: August 21, 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
-------------------------------------
Secretary, Treasurer and
Chief Financial Officer
30
