<PAGE> 1
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: July 31, 1999
Commission File Number: 0-24590
E-NET FINANCIAL CORPORATION
(f/k/a E-NET 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 Cent. 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 [ ] No [X].
The number of shares of the registrant's only class of common stock issued and
outstanding, as of JULY 31, 1999 was 4,500,000 shares.
<PAGE> 2
PART I
ITEM 1. FINANCIAL STATEMENTS.
E-NET FINANCIAL CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
July 31 April 30
1999 1999
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 2,774 $ 4,282
Accounts receivable 1,464 0
Note receivable 92,825 87,500
Other current assets 21,821 14,418
--------- ---------
TOTAL CURRENT ASSETS 118,884 106,200
EQUIPMENT, net 38,757 40,030
INVESTMENT IN MARKETABLE EQUITY SECURITIES 175,000 175,000
OTHER ASSETS 74,270 18,800
--------- ---------
$ 406,911 $ 340,030
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Current portion of deferred revenue $ 87,500 $ 87,500
Notes payable 178,663 38,606
Accounts payable and accrued expenses 120,023 56,754
Income tax liability 17,700 17,700
--------- ---------
TOTAL CURRENT LIABILITIES 403,886 200,560
DEFERRED REVENUE 34,376 80,208
--------- ---------
TOTAL LIABILITIES 438,262 280,768
--------- ---------
SHAREHOLDERS' 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
Additional paid-in capital 45,175 45,175
Retained earnings (81,026) 9,587
--------- ---------
TOTAL SHAREHOLDERS' EQUITY (31,351) 59,262
--------- ---------
$ 406,911 $ 340,030
========= =========
</TABLE>
<PAGE> 3
E-NET FINANCIAL CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended
July 31,
------------------------------
1999 1998
<S> <C> <C>
REVENUES
Consulting fee revenue $ 11,459 $ 11,459
Other revenue 3,092 0
----------- -----------
TOTAL REVENUES 14,551 11,459
OPERATING EXPENSES
General and administrative 111,994 0
----------- -----------
TOTAL OPERATING EXPENSES 111,994 0
----------- -----------
INCOME (LOSS) FROM OPERATIONS (97,443) 11,459
OTHER INCOME (EXPENSE)
Interest expense (2,695) 0
Interest income 9,525 0
----------- -----------
TOTAL OTHER INCOME (EXPENSE) 6,830 0
INCOME (LOSS) BEFORE INCOME TAXES (90,613) 11,459
Income Taxes 0 4,000
----------- -----------
NET INCOME (LOSS) $ (90,613) $ 7,459
=========== ===========
BASIC AND DILUTED NET LOSS PER SHARE $ 0.00 $ 0.00
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 2,417,808 2,417,808
=========== ===========
</TABLE>
<PAGE> 4
Consolidated Statements of Shareholders' Deficit
From inception (November 20, 1996) to July 31, 1999
<TABLE>
<CAPTION>
Preferred Stock Common Stock
------------------------------- -------------------------------------
Amount Amount
-------------------- ------------------------
Number Per Number Per
of Shares Share Total of Shares Share Total
--------- --------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Initial capitalization, as restated (1) - $ - $ - 2,000,000 $ .001 $ 2,000
Net loss for 1997 - - - - - -
========= ========= ========= =========
Balance, April 30, 1997 - - - 2,000,000 2,000
Unrealized losses on available for sale securities - - - - - -
Net loss for 1998 - - - - - -
========= ========= ========= =========
Balance, April 30, 1998 - - - 2,000,000 2,000
Unrealized losses on available for sale securities - - - - - -
Contributed capital - - - - - -
E-net reorganization - - - 2,500,000 .023 2,500
Net loss for 1999 - - - - - -
--------- --------- --------- ---------
Balance, July 31, 1999 - - - 4,500,000 - $ 4,500
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Accumulated
Additional Additional Unrealized Deficit
Paid-in Paid-in losses on During the Net
Capital- Capital- Available for Development Shareholders'
Common Preferred Sale Securities Stage Deficit
---------- --------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Initial capitalization, as restated (1) $ - $ - $ - $ 2,000
Net loss for 1997 - - - (2,000) (2,000)
========= ========= ========= ========= =========
Balance, April 30, 1997 - - - (2,000) -
Unrealized losses on available for sale securities - - $ (46,860) - (46,860)
Net loss for 1998 - - - (98,542) (98,542)
========= ========= ========= ========= =========
Balance, April 30, 1998 - - (46,860) (100,542) (145,402)
Unrealized losses on available for sale securities - - $ (78,140) - (78,140)
Contributed capital 10,000 - - - 10,000
E-net reorganization 35,175 - - - 37,675
Net loss for 1999 - - - (3,005) (3,005)
--------- --------- --------- --------- ---------
Balance, July 31, 1999 $ 45,175 $ - $(125,000) $(103,547) $(178,872)
========= ========= ========= ========= =========
</TABLE>
(1) Share capital and additional paid in capital have been retroactively
restated to give effect to the E-net reorganization.
<PAGE> 5
E-NET FINANCIAL CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended
July 31,
--------------------------
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) (90,613) $ 7,459
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
(Increase) in accounts receivable (1,462)
(Increase) in accrued receivables (11,781)
Decrease in notes receivable 94,675
(Increase) in deferred tax asset (6,075)
(Increase) in deposits (5,190)
(Increase) in prepaid expenses (4,850)
Depreciation 3,268
(Increase) in other assets (70)
Increase in accounts payable 4,963
Increase in accrued expenses 109,685
(Decrease) in deferred revenue (87,500)
Investment received as payment on consulting
agreement (114,389) (7,459)
--------- ---------
Net cash used by operating activities (109,339) 0
--------- ---------
Cash flows from investing activities:
Purchases of equipment (42,025)
Joint venture investments (74,200)
--------- ---------
Net cash used by investing activities (116,225) 0
--------- ---------
Cash flows from financing activities:
Proceeds from borrowings on short-term loans 178,663
Proceeds from issuance of common stock 4,500
Proceeds received from stockholders 45,175
--------- ---------
Net cash provided by financing activities 228,338 0
--------- ---------
Net increase in cash 2,774 0
Cash, beginning of period 0 0
--------- ---------
Cash, end of period $ 2,774 $ 0
========= =========
</TABLE>
<PAGE> 6
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.
Activities of E-Net Mortgage Corp.
The Company's wholly owned subsidiary, E-NET MORTGAGE CORP, 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. These offices are in the process of being staffed.
Revenue has begun in the San Jose office. Revenue has not yet been generated in
the Las Vegas or Costa Mesa offices.
E-NET MORTGAGE CORP has established a web site on the internet. At present it is
informational only. It is the Company's intention to 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 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 date 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.
Activities of the Parent Company
On July 1, 1999, the company entered into a joint venture with Genesis
Residential Healthcare Inc. for the purpose of developing residential healthcare
facilities under a limited partnership. Genesis will be providing in-depth
planning and study for a highly innovative national program for the 21st century
by creating well planned communities that provide the best services in
healthcare, social, spiritual, and financial benefits at an affordable cost. The
result of this cost-effective program will generate a substantial return on
investment while still providing the best in senior care.
<PAGE> 7
The company engaged Atlantic Union Distribution Ltd. as an investment-banking
consultant to access $20,000,000 from foreign sources under an investment
banking agreement. The purpose of this agreement is to finance the Genesis
project. Funds will go to the Limited Partnership.
Under this partnership agreement, the Company will act as the general partner
and pledge its preferred stock as security for investors. The terms and
conditions of this class of preferred stock have not yet been determined.
Effective July 1, 1999 D. Weckstein & Co., Inc. was retained to raise funds
through public or private offerings, of debt or equity securities. Under terms
of this agreement D. Weckstein & Co., Inc. will also seek merger and acquisition
candidates and serve as a financial consultant to The Company. The project is
currently in the developmental stage; operations have not yet started.
<PAGE> 8
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
EX-27 Financial Data Schedule
<PAGE> 9
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: September 20, 1999
By: /s/Michael Roth
Michael Roth
President
<PAGE> 10
e-Net Financial Corporation
Exhibit Index to Quarterly Report on Form 10-QSB
For the Quarter Ended July 31, 1999
<TABLE>
<CAPTION>
EXHIBITS Page No.
<S> <C> <C>
EX-27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . .11
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> MAY-01-1999
<PERIOD-END> JUL-31-1999
<CASH> 2,774
<SECURITIES> 0
<RECEIVABLES> 94,289
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 118,884
<PP&E> 42,025
<DEPRECIATION> 3,268
<TOTAL-ASSETS> 406,911
<CURRENT-LIABILITIES> 403,886
<BONDS> 0
0
0
<COMMON> 4,500
<OTHER-SE> 35,851
<TOTAL-LIABILITY-AND-EQUITY> 406,911
<SALES> 0
<TOTAL-REVENUES> 14,551
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 111,994
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,695
<INCOME-PRETAX> (90,613)
<INCOME-TAX> 0
<INCOME-CONTINUING> (90,613)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (90,613)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
