U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: October 31, 1999
Commission File Number: 0-24590
E-NET FINANCIAL CORPORATION
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
84-1273503
(IRS Employer Identification No.)
2102 Business Center Dr.
Irvine, CA
(Address of principal executive offices)
92612
(Zip Code)
(949) 253-4633
(Issuer's Telephone Number)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days:
Yes X No ____.
The number of shares of the registrant's only class of common stock issued and
outstanding, as of OCTOBER 31, 1999 was 4,500,000 shares.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
e-Net Financial Corporation and Subsidiaries
(A Development Stage Company)
Consolidated Balance Sheet
October 31 April 30
1999 1999
-------- --------
ASSETS
CURRENT ASSETS
Cash and equivalents 6,193 4,282
Accounts receivable 0 611
Note receivable 87,500 87,500
Other current assets 23,540 13,807
-------- --------
Total Current Assets 117,233 106,200
EQUIPMENT, net 35,604 40,030
INVESTMENT IN MARKETABLE EQUITY SECURITIES 162,500 162,500
OTHER ASSETS 119,466 18,800
-------- --------
Total Assets 434,803 327,530
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Current portion of deferred revenue 83,300 83,300
Notes payable 156,322 38,606
Accounts payable and accrued expenses 196,196 56,754
Income Tax Liability 17,700 17,700
-------- --------
TOTAL CURRENT LIABILITIES 453,518 196,360
DEFERRED REVENUE 33,806 75,458
-------- --------
TOTAL LIABILITIES 487,324 271,818
-------- --------
SHAREHOLDER'S EQUITY
Preferred stock, 1,000,000 shares authorized,
no par value, none issued and outstanding
Common stock, 20,000,000 shares authorized,
$.001 par value, 4,500,000 shares issued
and outstanding 4,500 4,500
$1.00 par value, 210,000 shares issued
and outstanding 210,000 0
Additional paidin capital 45,175 45,175
Retained earnings (312,196) 6,037
-------- --------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (52,521) 55,712
-------- --------
434,803 327,530
======== ========
Unaudited Statement of Condition Compiled
From Books and Records of Company
<PAGE>
e-Net Financial Corporation and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Operations
6 Months 3 Months 3 Months
Ended Ended Ended
---------------------- ------------
October 31, 1999 Oct 31, 1998
REVENUES
Consulting Revenue 41,652 20,826 20,825
Other Revenue 3,092 0 0
-------- -------- --------
TOTAL REVENUES 44,744 20,826 20,825
-------- -------- --------
OPERATING EXPENSES
General and administrative 422,373 271,864 0
-------- -------- --------
TOTAL OPERATING EXPENSES 422,373 271,864 0
-------- -------- --------
INCOME (LOSS) FROM OPERATIONS (377,629) (251,038) 20,825
OTHER INCOME (EXPENSE)
Interest Income 9,741 4,591 0
Interest Expense (6,595) (3,900) 0
-------- -------- --------
TOTAL OTHER INCOME (EXPENSE) 3,146 691 0
-------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES (374,482) (250,347) 20,825
Income Taxes 0 0 3,750
-------- -------- --------
NET INCOME (LOSS) (374,482) (250,347) 17,075
======== ======== ========
Unaudited Statement of Condition Compiled
From Books and Records of Company
<PAGE>
<TABLE>
<CAPTION>
e-Net Financial Corporation and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Shareholders' Equity
From inception (August 18, 1988) to October 31, 1999
Retained
Common Stock (1) Earnings
Amount Additional During the Total
Number Per Paid-in Development Shareholders'
of Shares Share Total Capital Stage Equity
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Initial capitalization 2,000,000 $ 0.001 2,000 0 0 2,000
Net loss for 1997 0 (2,000) (2,000)
------------------------------------------------
Balance, April 30, 1997 2,000,000 2,000 0 (2,000) 0
Net income for 1998 0 0 5,242 5,242
--------- ------------------------------------------------
Balance, April 30, 1998 2,000,000 2,000 0 3,242 5,242
Contributed capital 0 0 10,000 0 10,000
e-Net reorganization 2,500,000 $ 0.001 2,500 35,175 0 37,675
Net income for 1999 0 0 0 2,795 2,795
--------- ------------------------------------------------
Balance, April 30, 1999 4,500,000 4,500 45,175 6,037 55,712
Stock issued for debt reduction 150,000 $ 1.00 150,000 0 0 150,000
Private Placement 60,000 $ 1.00 60,000 0 0 60,000
Early extinguishment of debt 0 0 0 56,250 56,250
Net income for 2000 0 0 (374,483) (374,483)
--------- ------------------------------------------------
Balance, October 31, 1999 4,710,000 214,500 45,175 (312,196) (52,521)
========= ================================================
(1) Common stock and additional paid in capital have been retroactively restated to give effect
to the e-Net reorganization.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
E-NET FINANCIAL CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
6 Months 3 Months 3 Months
Ended Ended Ended
Oct 31, 1999 Oct 31, 1999 Oct 31, 1998
------------ ------------ ------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income (loss) (374,483) (250,346) 17,075
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Decrease in accounts receivable 611 1,464
(Increase) in accrued receivables (775) (4,536)
(Increase)/Decrease in note receivable 775 (87,500)
(Increase) in deposits (8,108) (5,558)
(Increase)/Decrease in prepaid expenses (850) 4,000
Depreciation 6,926 3,640
(Increase) in other assets
Increase in accounts payable 19,559 15,796
Increase in accrued expenses 119,883 58,185
Increase in income tax liability 3,750
(Decrease) in deferred revenue (41,652) (20,826) (20,825)
-------- -------- --------
Net cash used by operating activities (278,889) (197,406) (87,500)
-------- -------- --------
Cash flows from investing activities:
Purchases of equipment 2,500 2,500
Negotiable Stock 87,500
Joint venture investments 100,666 45,196
-------- -------- --------
Net cash used by investing activities 103,166 47,696 87,500
-------- -------- --------
Cash flows from financing activities:
Net Proceeds from borrowings on shortterm loans 117,634 93,129
Proceeds from issuance of common stock by
private placement 60,000 60,000
-------- -------- --------
Proceeds received from stockholders
Net cash provided by financing activities 177,634 153,129 0
-------- -------- --------
Net increase in cash 1,911 3,419 0
Cash, beginning of period 4,282 2,774 0
-------- -------- --------
Cash, end of period 6,193 6,193 0
======== ======== ========
Non-cash investing and financing activities:
Issuance of common stock for debt reduction 150,000 150,000
Early extinguishment of debt 56,250 56,250
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATIONS
PLAN OF OPERATIONS
The Company's business plan provides for the Company to develop and deliver
through the internet and through other means, mortgage loan brokerage services
and telecommunications (voice and data) services and other related services. The
Company does this through developing, acquiring and joint venturing with
appropriate organizations and businesses. It is the Company's intention to serve
as an incubator to cutting edge, technologically innovative companies; to marry
their innovation to the resources necessary to bring to market new products in
new ways.
Activities of E-Net Mortgage Corp.
E-NET MORTGAGE CORP, is the Company's wholly owned subsidiary; it provides
Mortgage loan brokerage services. E-NET MORTGAGE CORP. conducts business on the
Internet and through conventional methods. It has, at present, three offices:
San Jose, Costa Mesa and Las Vegas. Revenue has begun in the San Jose office.
The other offices are in the process of being staffed..
E-NET MORTGAGE CORP has established a web site on the internet. At present it is
informational only. The Company will make the site interactive: potential
clients will be able to complete applications on line, and will be able to check
progress of their loan applications through the Web Site.
Six additional satellite office facilities are planned during the remainder of
this fiscal year.
As a retail mortgage broker, E-Net Mortgage has developed relationships with
many of the key mortgage lenders in the State of California. This subsidiary is
in the process of putting similar relationships in place nationwide. With these
relationships in place the Company will be able to offer a wide range of
mortgage loan products and services.
Activities of City Pacific International, U.S.A., Inc.
Through City Pacific International U.S.A., Inc., the Company intends to provide
products and interconnectivity to telecommunications companies by purchase of
essential equipment and/or lease of communication lines or satellite pathways to
enable the carriers to transport voice and data information. On the retail
level, through joint ventures with other providers, this subsidiary will offer
debit cards for corporate customers, calling card services, long distance
services and international termination. This entity will also provide switch
co-location and billing services.
On September 8, 1999, the Company executed a letter of intent on behalf of its
wholly owned subsidiary, City Pacific International, Inc., to acquire Special
Accounts Billing Group Inc. SABG is licensed in 49 states to provide long
distance telephone service, including billing customers, at the retail level.
<PAGE>
This acquisition will give the Company through its wholly owned subsidiary, City
Pacific International, Inc., the ability to provide long distance service in 49
states. This service will include 1 plus service, phone card calling, phone
clubs, local service (in several states), and regular long distance. These
activities will be conducted through City Pacific's joint venture partner,
Omnetrix International. The Company will provide service on a nation wide basis
at the retail level. This acquisition saves approximately two years of legal and
regulatory effort.
On November 5, 1999, the Company signed a letter of intent with Digital
Integrated Systems, Inc to acquire its joint venture position in VPN.COM JV
Partners, a Nevada Joint Venture. VPN.COM JV Partners has existing contracts
with a number of businesses and is currently generating revenue.
VPN.COM JV is in the business of providing comprehensive broadband networks and
connectivity. These networks facilitate customized telephone, video
teleconferencing , internet access, and data transfer. VPN.COM JV provides
vertically integrated solutions to commercial businesses, multiple dwelling unit
concerns, and the hospitality industry.
Activities of the Parent Company
On July 1, 1999, the Company entered into a joint venture with Genesis
Residential Healthcare Inc. to form a Limited Partnership for the purpose of
developing residential healthcare facilities.
On November 30, 1999 the Company finalized its termination of participation in
the Genesis partnership. On December 2, 1999 all parties signed a mutual release
of liabilities.
On October 31, 1999, the Company reduced $150,000 of its debt by issuing stock
to the following holders of e-Net Financials debt instruments at one dollar per
share.
Guaranty Financial Trust 108,000
Market Ability Incorporated 42,000
Effective November 30, 1999 the Company executed a 2:1 forward split of its
Common Stock. This increased the shares issued to 9,420,000.
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS - NONE
ITEM 2. CHANGES IN SECURITIES - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE
ITEM 5. OTHER INFORMATION - NONE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - NONE
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
e-Net Financial Corporation.
(Registrant)
Dated: December 6, 1999 By: /s/Michael Roth
- ----------------------- -------------------
Michael Roth
President
<PAGE>
e-Net Financial Corporation
Exhibit Index to Quarterly Report on Form 10-QSB
For the Quarter Ended July 31, 1999
EXHIBITS
EX-27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-01-2000
<PERIOD-START> MAY-01-1999
<PERIOD-END> OCT-31-1999
<CASH> 6,193
<SECURITIES> 0
<RECEIVABLES> 87,500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,540
<PP&E> 44,525
<DEPRECIATION> 8,921
<TOTAL-ASSETS> 434,803
<CURRENT-LIABILITIES> 453,518
<BONDS> 0
0
0
<COMMON> 214,500
<OTHER-SE> 45,175
<TOTAL-LIABILITY-AND-EQUITY> 434,803
<SALES> 0
<TOTAL-REVENUES> 44,744
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 422,373
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,595
<INCOME-PRETAX> (374,482)
<INCOME-TAX> 0
<INCOME-CONTINUING> (374,482)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (374,482)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
