As Filed with the Securities and Exchange Commission on February 21, 2000
File No. 333-95407
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
Post-Effective Amendment No. 1
to
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
(Including a Form S-8 Prospectus)
----------------
E-Net FINANCIAL.COM CORPORATION
-------------------------------
(Exact Name of Registrant as Specified in its Charter)
Nevada 84-1273503
------ ----------
(State or Other Jurisdiction of (IRS Employer ID No.)
Incorporation or Organization)
2102 BUSINESS CENTER DRIVE, SUITE 115E IRVINE, CALIFORNIA 92612
---------------------------------------------------------------
(Address of Principal Executive Offices)
----------------
2000 Stock Compensation Program
(Full Title of the Plan)
----------------
MICHAEL ROTH, PRESIDENT E-NET FINANCIAL.COM CORPORATION
2102 BUSINESS CENTER DRIVE, SUITE 115E IRVINE, CALIFORNIA 92612
---------------------------------------------------------------
(Name and Address of Agent for Service)
(949) 253-4633
--------------
(Telephone Number, Including Area Code,of Agent for Service)
================================================================================
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Securities Amount Maximum Maximum Amount of
to be to be Offering Price Aggregate Registration
Registered Registered Per Share Offering Price Fee
- --------------------------------------------------------------------------------
Common Stock 1,000,000 $2.84 (1) $2,840,000 $750.75
TOTAL 1,000,000 NA $2,840,000 $750.75 (2)
================================================================================
<PAGE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rules 457(h) and 457(c) under the Securities Act of 1933,
as amended and based upon an average of the high and low prices reported on
the Nasdaq Over the Counter Bulletin Board on January 18, 2000.
(2) The registration fee of $750.75 has previously been paid.
EXPLANATORY NOTE
E-Net Financial.Com Corporation ("E-Net") has previously filed a registration
statement in accordance with the requirements of Form S-8 under the Securities
Act of 1933, as amended (the "1933 Act"), to register certain shares of stock,
$.001 par value, to be issued to certain selling shareholders.
Under cover of this Post-Effective Amendment No. 1 to Form S-8 is a Reoffer
Prospectus that E-Net has prepared in accordance with Part I of Form S-3 under
the 1933 Act. The Reoffer Prospectus may be utilized for reofferings and resales
of up to 1,000,000 shares of common stock acquired by the selling shareholders.
<PAGE>
REOFFER PROSPECTUS
E-NET FINANCIAL.COM CORPORATION
2102 BUSINESS CENTER DRIVE, SUITE 115E
IRVINE, CALIFORNIA 92612
(949) 253-4633
1,000,000 SHARES OF COMMON STOCK
The shares of common stock, $.001 par value, of E-Net Financial.Com Corporation
("E-Net" or the "Company") offered hereby (the "Shares") will be sold from time
to time by the individuals listed under the Selling Shareholders section of this
document (the "Selling Shareholders"). The Selling Shareholders acquired the
Shares pursuant to the Company's 2000 Stock Compensation Program for employment
or consulting services that the Selling Shareholders provided to E-Net.
The sales may occur in transactions on the Nasdaq over-the-counter market at
prevailing market prices or in negotiated transactions. E-Net will not receive
proceeds from any of the sale of the Shares. E-Net is paying for the expenses
incurred in registering the Shares.
The Shares are "restricted securities" under the Securities Act of 1933 (the
"1933 Act") before their sale under the Reoffer Prospectus. The Reoffer
Prospectus has been prepared for the purpose of registering the Shares under the
1933 Act to allow for future sales by the Selling Shareholders to the public
through compliance with Rule 144. To the knowledge of the Company, the Selling
Shareholders have no arrangement with any brokerage firm for the sale of the
Shares. The Selling Shareholders may be deemed to be an "underwriter" within the
meaning of the 1933 Act. Any commissions received by a broker or dealer in
connection with resales of the Shares may be deemed to be underwriting
commissions or discounts under the 1933 Act.
E-Net's common stock is currently traded on the Nasdaq Over-the-Counter Bulletin
Board under the symbol "ENNT." The common stock is also listed on the Berlin
Stock Exchange under the symbol "ENNT.DE."
- -------------------------
This investment involves a high degree of risk. Please see "Risk Factors"
beginning on page 11. Certain statements contained in this Prospectus,
including, without limitation, statements containing the words "believes,"
"anticipates," "estimates," "expects," and words of similar import, constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements relate to our future plans,
objectives, expectations and intentions. In evaluating these statements, you
should consider the various factors identified in "Risk Factors" section
contained herein, which identify important considerations that could cause
actual results to differ materially from those contained in the forward-looking
statements. Such forward-looking statements speak only as of the date the
statement is made, and the forward-looking information and statements should not
be regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED WHETHER
THIS REOFFER PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------
February 21, 2000
2
<PAGE>
TABLE OF CONTENTS
Where You Can Find More Information ....................................... 4
Incorporated Documents .................................................... 4
The Company ............................................................... 5
Risk Factors .............................................................. 11
Use of Proceeds ........................................................... 16
Selling Shareholders ...................................................... 16
Plan of Distribution ...................................................... 17
Legal Matters ............................................................. 17
Experts ................................................................... 17
3
<PAGE>
You should only rely on the information incorporated by reference or prvoided in
this Reoffer Prospectus or any supplement. We have not authorized anyone else to
provide you with different information. The common stock is not being offered in
any state where the offer is not permitted. You should not assume that the
information in this Reoffer Prospectus or any supplement is accurate as of any
date other than the date on the front of this Reoffer Prospectus.
WHERE YOU CAN FIND MORE INFORMATION
The Company is required to file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission
(the "SEC") as required by the Securities Exchange Act of 1934, as amended (the
"1934 Act"). You may read and copy any reports, statements or other information
we file at the SEC's Public Reference Rooms at: (i) 450 Fifth Street, N.W.,
Washington, D. C. 20549; and (ii) Seven World Trade Center, 13th Floor, New
York, N.Y. 10048. Please call the SEC at 1-800-SEC-0330 for further information
on the Public Reference Rooms. Our filings are also available to the public from
commercial document retrieval services and the SEC website (http://www.sec.gov).
INCORPORATED DOCUMENTS
The SEC allows the Company to "incorporate by reference" information into this
Reoffer Prospectus, which means that E-Net can disclose important information to
you by referring to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this Reoffer
Prospectus, except for any information superseded by information in this Reoffer
Prospectus. The following documents previously filed with the Securities and
Exchange Commission are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year ended April
30, 1999;
(b) The Company's Quarterly Reports on Form 10-QSB for the fiscal quarters ended
July 30, 1999 and October 31, 1999; and
(c) The Company's Reports on Form 8-K dated March 5, 1999 and January 27, 2000.
(d) All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated herein by reference and to be part
hereof from the date of filing of such documents.
The Company will provide without charge to each person to whom a copy of this
Reoffer Prospectus is delivered, upon oral or written request, a copy of any or
all documents incorporated by reference into this Reoffer Prospectus (excluding
exhibits unless the exhibits are specifically incorporated by reference into the
information the Reoffer Prospectus incorporates). Requests should be directed to
Investors Relations at E-Net's executive offices, located at 2102 Business
Center Drive, Suite 115E, Irvine, California 92612. The Company's telephone
number is (949) 253-4633. The Company's corporate Web site address is
http://www.e-netfinancial.com.
4
<PAGE>
THE COMPANY
General
E-Net Financial Corporation, f/k/a E-Net Corporation and Suarro
Communications, Inc. (the "Company") was incorporated on August 18, 1988, under
the laws of the State of Nevada to engage in any lawful corporate undertaking.
On July 11, 1994 we submitted our Form 10-SB to the Securities and Exchange
Commission, which was declared effective on December 22, 1994, at which time we
became a reporting company under Section 12(g) of the 1934 Securities and
Exchange Act. On August 16, 1996 we changed our name to Suarro Communications,
Inc., and on February 12, 1999 and May 12, 1999, respectively, we changed our
name to E-Net Corporation and E-Net Financial Corporation. More recently, we
changed our name to E-Net. Com Corporation on January 18, 2000, and most
recently, effective February 2, 2000, we changed our name to E-Net Financial.Com
Corporation. The name changes were made to more accurately reflect our evolving
business strategies.
Recent Change in Business Strategy and Change in Control
Effective March 1, 1999 we acquired E-Net Mortgage Corporation, a Nevada
Corporation, and City Pacific International, U.S.A., Inc., a Nevada corporation
("City Pacific"), in exchange for 2,500,000 restricted shares of our common
stock (allocated two million shares for the mortgage company and 500,000 shares
for City Pacific). Pursuant to the Share Exchange Agreement and Plan of
Reorganization dated March 1, 1999, we issued these shares in exchange for all
of the issued and outstanding shares of both entities. Since March 1, 1999 E-Net
Mortgage Corporation and City Pacific have been operated as our wholly owned
subsidiaries. E-Net Mortgage operates from our Company's offices at 2102
Business Center Dr., Suite 115E, Irvine, California and branch offices in Costa
Mesa, San Jose and Las Vegas and City Pacific operates from the Company's
offices located at 1061 East Flamingo Road, Suite 3, Las Vegas, Nevada. On or
about February 1, 2000 we changed the name of City Pacific to VPNCOM.NET
Corporation ("VPN").
Our prior Board of Directors resigned after the acquisitions of E-Net Mortgage
Corporation and VPN were completed. The following persons were appointed to the
Board of Directors and elected as officers: Michael P. Roth, President and Ted
A. Bohrer, Vice-President. Additionally, Jean Oliver was appointed as
Secretary-Treasurer and Controller.
We intend to act as a technology driven financial resource to serve the needs of
both the commercial and consumer markets in supplying fast and affordable
mortgages and telecommunications via the Internet and through strategic
alliances and partnering with established industry leaders. We will engage in
the business of providing mortgage products and services on both the retail and
wholesale levels, as well as providing telecommunications products and services
for commercial and residential customers, directly or through joint ventures
with strategic partners. With respect to its mortgage business, the approach to
accomplishing our goals is to utilize innovative technological products to
improve the mortgage-related processes. This will enable E-Net Mortgage
Corporation to be more responsive to its customer base by rapidly providing top
quality products and services. In our telecommunications subsidiary, we intend
to act as a facilitator to other telecommunications companies to provide them
with resources such as equipment and financing in strategic alliances with
customers.
Through E-Net Mortgage Corporation, which is licensed with the California
Department of Real Estate, we will offer residential mortgages for both owner
occupied properties as well as residential income properties. The services to be
offered will include a paperless on-line system over the internet allowing an
immediate direct relationship between the point of sale, customer, and the
investor community.
Through VPN we intend 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.
5
<PAGE>
Recent Activities of the Company
Activities of the Parent Company
On December 21, 1999 we acquired VPN.COM JV PARTNERS ("VPN Partners"), a
company involved in vertically integrated communications systems. VPN is in the
business of providing comprehensive broadband networks and connectivity. These
networks facilitate customized telephone, video teleconferencing, internet
access, and data transfer. VPN provides vertically integrated solutions to
commercial businesses, multiple dwelling unit concerns, and the hospitality
industry. All assets, including but not limited to, tangible ones such as
computers, servers, and related telecommunications equipment, as well as
non-tangible assets such as contracts, on-going business relationships, and
"goodwill," are included in the acquisition. VPN has existing contracts with a
number of businesses, including the Best Western Mikado Hotel in Los Angeles.
This is part of an on-going program to provide service to additional Best
Western locations.
We will pay $145,000 over a one year period, and 500,000 shares of EMB
Corporation common stock (the "EMB Shares") for the acquisition of VPN Partners.
The value of the EMB Shares was set at $0.27 per share, or $135,000 for 500,000
shares. The present value of the $145,000 cash payment, discounted at 6% is
$136,300. The total, $271,300, represents approximately three (3) times the
projected annual earnings of the acquisition and is estimated to be
approximately half of the total investment necessary to operate VPN Partners
over the projected period.
Fifty percent of VPN Partners was acquired from Digital Integrated Systems, Inc.
(DIS), a Nevada Corporation and fifty percent of VPN Partners was acquired from
EMB Corporation, a Hawaii Corporation ("EMB"). DIS received $145,000 in return
for its fifty percent interest in VPN Partners, payable in installments over a
one year period. EMB received 500,000 EMB Shares in return for its fifty percent
interest in VPN Partners. Paul Stevens is the President and Chief Executive
Officer of VPN Partners. Mr. Stevens is also the sole owner of DIS. The Company
acquired 500,000 EMB Shares (the common stock used to compensate EMB for its
interest in VPN Partners) from Mr. Stevens. Mr. Stevens received, in return for
this stock, 125,000 shares of our Common Stock.
Many of the assets acquired are computer hardware and software, and
telecommunications equipment. These are used by VPN Partners in their business
of supplying vertically integrated communications to their customers. It is our
intention to continue and expand this business. The equipment will be used for
the same purposes. E-Net does not intend to make any material changes in the
operations of VPN Partners.
On January 12, 2000, we entered into an agreement with EMB, whereby we will
acquire certain assets of EMB. The assets being sold to us constitute the
financial services subsidiaries of EMB. The agreement contemplates that we will
acquire all of the outstanding stock, currently held by EMB, of American
Residential Funding, Inc., Residential Mortgage Corporation and Bravo Real
Estate, Inc. In addition, EMB will transfer to us all of the rights of EMB to
acquire Titus Asset Management ("Titus"), under an existing Letter of Intent
between EMB and Titus. In exchange, EMB will receive 7,500,000 shares of our
Common Stock and cash in the amount of $4,000,000.
The consummation of the transaction is subject to standard closing conditions
and (a) our filing of a Registration Statement with the Securities and Exchange
Commission, (b) the effectiveness of the Registration Statement and (c) our
receipt of minimum net proceeds of $20,000,000 from the sale to the public of
the common stock which we register under the Registration Statement. Our
purchase of these assets from EMB is still in the process of final negotiation.
There are no assurances that the purchase will be consummated and no third party
should rely upon finalization of this sale in making other business decisions.
On January 31, 2000 we completed an exchange of stock and other securities to
acquire Titus Real Estate Corporation ("Titus"), the management company for
Titus Capital Corporation, a California REIT. We issued 300,000 shares of Common
Stock and 100,000 shares of convertible preferred stock (convertible at a future
date into 1,000,000 shares of Common Stock to acquire Titus. At the present
6
<PAGE>
time, Titus Capital is an equity REIT. We plan to convert it into a hybrid REIT
as soon as possible. Our objective is for Titus Capital to not only have equity
holdings, but to also provide mortgage warehouse facilities for our mortgage
subsidiaries and other mortgage originators as well. It is anticipated that
Titus will provide residential mortgage funds and commercial funding for senior
healthcare facilities.
On February 3, 2000 we entered into a letter of intent to acquire Loan Net, a
Kentucky Corporation. Terms of the acquisition were established as $2,000,000 of
our Common Stock. Loan Net is a new mortgage company that has three offices in
Kentucky, and Indiana and is in the process of becoming licensed in Tennessee."
The transaction closed on February 4, 2000. Loan Net expects to fund
approximately $5,000,000 in new loans in February, 2000 and has in excess of
$10,000,000 in loan applications currently being processed.
On February 11, 2000 we signed a letter of intent to acquire First Guaranty
Financial Corporation, a mortgage wholesale banking institution. Terms of the
acquisition were established as 100,000 shares of our convertible preferred
stock which is convertible at a future date into 1,000,000 shares of our Common
Stock. It is anticipated that the First Guaranty Financial acquisition will
provide a mortgage banking capability to fund the loans we originate through our
loan origination subsidiaries. In 1999, First Guaranty funded over $500,000,000
in loans in its primary markets, California, Texas and Florida, with an emphasis
on government production. First Guaranty has made product balance and
administrative streamlining a major goal for calendar year 2000. All corporate
functions have been moved to its Costa Mesa, California headquarters. Its
lending activities in 2000 will focus on structured "A" and "Alt-A" paper and
super jumbo loans up to $4.0 Million. Additionally, First Guaranty will continue
to emphasize conventional loan products in targeted new housing markets to
balance our consistent government correspondent lending production. First
Guaranty is an approved desktop underwriter with Fannie Mae, a FHA Direct
Endorsement and Insurer, and a VA Automatic LAP. It also has 15 major investor
conduits for funding, and at the present time it has a $45 million dollar
warehouse line of credit.
Activities of E-Net Mortgage Corporation
This subsidiary has opened branch offices in San Jose, Las Vegas and Costa
Mesa in May, June and August 1999, respectively. The offices are part of a
planned series of efficient, high technology facilities based on a dynamically
improved business model in the real estate financing industry. The model
implements the use of modern website and network technologies and procedures to
speed up the loan process, reduce costs and increase client satisfaction. Six
additional satellite office facilities are planned during the remainder of this
year. Each satellite office will be strategically located near its client base
in order to maintain that personal service touch so vital in a people-oriented
industry.
This subsidiary will work with our recently acquired American Residential
Funding subsidiary to originate new mortgage loans. We have retained ProVantEdge
Technologies, Inc., to design new websites to generate on-line mortgage
originations. The sites are designed to target niche products, not currently
being marketed heavily in the on-line arena. The first wave of sites will target
exclusively FHA and VA loans. The next wave will focus on zero down home loans
and sub prime lenders. The first three sites are currently in beta testing and
will be on-line shortly. The websites will accept loan applications over the
Internet without any interaction with a loan representative. At the same time
the site will provide for human interaction, should the borrower desire.
Activities of VPNCOM.NET Corporation (formerly City Pacific International,
U.S.A., Inc.)
On February 25, 1999 this subsidiary executed a joint venture contract with
Omnetrix International Inc., a Los Angeles-based communications company. One of
the first projects to be launched is the "500 Minute Prepaid Calling Card." This
card will provide for fifteen cents per minute calls within the continental
United States and additionally an international service at unusually competitive
rates. Marketing strategies are aimed at corporations, businesses as well as
public consumers, attracted through the Internet ads, the Omnetrix web site,
print media, and direct mail.
7
<PAGE>
Business Strategy of E-Net Mortgage Corporation
Business Concept
E-Net Mortgage's core strategy is a new management model for the mortgage
industry. A team of two specialists will staff each office. The first is the
Loan Officer. The Loan Officer is the licensee and is ultimately responsible for
the loan process. The second team member is the marketer. It is the
responsibility of this individual to get the deals. Other functions will be
handled by outside consultants.
It is projected that the team will close an average of one loan per day. Each
loan will be originated, processed and closed within ten business days.
Achieving this rate will reduce production costs to approximately 50% of the
industry standard. This efficiency will be achieved through the specialization
just described. Each office will be semi-autonomous. But, it will be
electronically linked to corporate management on a virtual private network.
Local offices will be organized in "Stars." Each office will be a satellite of a
Star. Each Star will be a cluster of five satellites. Stars will be placed
strategically, nationwide, in areas of high property value. This will assure a
high average loan amount. Continuing the metaphor, E-Net will be a nationwide
galaxy of semi-autonomous but uniformly run mortgage offices.
E-Net will establish its first satellite office in the heart of the Silicon
Valley at the San Jose International Jet Center. The Silicon Valley was selected
as the first unit because of the favorable demographics and because of the
availability of qualified personnel. The San Jose International Jet Center
compliments the image presented by E-Net's new business model. About the time
that the fourth and fifth satellites are coming on line in the Silicon Valley
Star, E-Net will begin deploying additional Stars in Orange County, Los Angeles,
Las Vegas, Austin, San Diego, Honolulu and similar locations. As of the date of
this report, offices have been set up and are being staffed in Orange County and
Las Vegas in addition to the San Jose facility.
Products and Services
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 we believe that we will be able to offer a wide range of
mortgage loan products and services.
E-Net Mortgage is active as a mortgage broker, using the trade name "E-Net
Mortgage". E-Net Mortgage originates its own loans on a retail basis and
provides lending services to its satellite offices. E-Net Mortgage assists its
brokers by reviewing their activities and business development plans on a
continuing basis. E-Net Mortgage management regularly meets with its loan
officers and staff to train, develop rapport, explain objectives, and describe
methods of operation. In addition, after set up, E-Net Mortgage provides loan
origination, processing support, and underwriting assistance to ensure efficient
and timely closings.
8
<PAGE>
In addition to initial training, continuous retraining and activity monitoring,
E-Net Mortgage will provide each broker with a Policies and Procedures Manual.
This outlines and explains E-Net's method of operation and quality control
guidelines. These policies and procedures, when followed, should significantly
reduce the incidence of problems that cause delay in loan processing. E-Net
Mortgage expects to finalize the Policies and Procedures Manual in the near
future. E-Net Mortgage provides its brokers with current mortgage product
descriptions and guidelines, continuously updating the rates for all of its
products on its virtual private network.
Target Markets
E-Net Mortgage is mainly in the residential mortgage business, providing
residential mortgages at the retail level. At the present time, the retail
business is providing 100% of current revenue. The wholesale business is under
development. E-Net Mortgage's current target market is direct consumers.
Currently, E-Net Mortgage is hiring and training personnel who will service this
customer base. This direct relationship enables E-Net Mortgage to establish
point-of-sale opportunities to originate and process mortgage loans.
E-Net Mortgage plans to expand its market base by including a commercial
element. Potentially, it plans to target: developers and builders, housing
manufacturers, lawyers and accountants, insurance companies, the securities
industry, and credit counseling agencies.
Business Strategy of VPNCOM.NET Corporation
Business Concept
VPNCOM.NET Corporation ("VPN"), is a telecommunications company. This subsidiary
takes advantage of rapid changes in the industry to offer innovative, cost
effective, quality products and services more quickly than can larger, more
traditional companies. VPN's business focuses on providing its customers
products and telecommunication services that are innovative, timely, and cost
effective. VPN constantly reassesses its marketing campaigns, sales tools, and
product packages. It works continuously to identify reliable marketing and
distribution channels.
Target Markets
Latin America is of special interest. VPN has identified an opportunity to
create a unique competitive advantage over major telecommunication service
providers by providing wholesale telecommunication services to carriers. AT&T,
for example, does not have its own network to Mexico. AT&T purchases this
traffic directly from TelMex. The focus of this project is to take advantage of
the wholesale market for terminating long distance telecommunications traffic
into Mexico from the United States.
VPN will phase in a number of switch sites in Mexico, including Mexico City,
Monterey, Nueva Laredo, Ciudad Juarez, and Guadalajara. The Mexican government
prohibits voice transmission into Mexico. However, voice over data transmission
is allowed. This project will achieve this edge by dividing voice bit streams
and compressing them into data packets. These compressed voice packets are
transmitted over data lines, providing toll-quality sound and network
reliability.
9
<PAGE>
Products and Services
In the telecommunications industry, equipment and products not only change
rapidly but constantly. In today's global marketplace, a broadly based
telecommunications organization must offer a wide range of products and services
- - debit cards, internet access, local and long distance services, voice response
units, information services, and many other products and services.
Telecommunications is experiencing explosive growth as well as rapid
technological change.
Our Prior Business History
Prior to the acquisitions of E-Net Mortgage Corporation and VPN we were
inactive. We operated as a shell company without revenues, while we sought an
appropriate merger with a private company.
In August, 1996, we acquired all of the issued and outstanding common stock
of Suarro Communications, Inc., a Texas corporation ("Suarro"), wherein we
undertook a forward split of our issued and outstanding common stock such that
twenty (20) shares of common stock were issued in exchange for each share of
common stock previously issued and outstanding. Thereafter, we acquired all of
the issued and outstanding securities of Suarro in exchange for our issuance of
5,200,000 shares of "restricted" common stock to Suarro shareholders. The
consideration given and received was determined by arms-length negotiations
between the our managemetn and principals of Suarro. As part of the terms of the
aforesaid transaction, we also changed our name to "Suarro Communications, Inc."
Various disputes arose subsequent to the closing of the Suarro transaction
referenced above. Applicable thereto, an action was filed in the Second Judicial
District Court of the State of Nevada, in and for the County of Washoe, entitled
Lee R. Goldberg v. Suarro Communications, Inc. et al., Cause No. CV-97-05053,
relevant to certain claims held by our shareholders relating to representations
made by the shareholders of Suarro in the reorganization between the companies.
A stipulation, Mutual Release and Indemnity Agreement was reached in relation to
such action, with the results of such settlement being that the Suarro
transaction described above was rescinded effective September 9, 1997, with all
of the 5,200,000 shares issued in favor of the Suarro shareholders being
returned to us.
Certain additional matters were undertaken by the Company at the time of
the Suarro transaction described above, including the shareholders undertaking
adoption of an amendment to the Company's Articles of Incorporation whereby the
Company's shareholders increased the number of shares of common stock authorized
for issuance from 1,000,000 common shares, par value $0.001 per share, to
20,000,000 common shares, par value $0.001 per share. Additionally, 1,000,000
shares of preferred stock, no par value per share, were also authorized.
Further, as a result of the rescission of the Suarro transaction, management of
the Company changed.
Competition
Many of our current and potential competitors have longer operating histories,
larger customer bases, greater brand recognition and significantly greater
financial, marketing and other resources than we do and may enter into strategic
or commercial relationships with larger, more established and well-financed
companies. Some of our competitors may be able to enter into such strategic or
commercial relationships on more favorable terms. In addition, new technologies
and the expansion of existing technologies may increase competitive pressures on
us. Increased competition may result in reduced operating margins and loss of
market share.
Government Regulation
Our mortgage origination and banking business is subject to state and federal
regulation and E-Net Mortgage Corporation is licensed with the California
Department of Real Estate. Additionally, our telecommunications business is
subject to varying state and federal regulations through state public utility
commissions and certain federal agencies. Our focus on utilizing the Internet to
deliver certain services to our customers also subjects us to possible
regulation. Although there are currently few laws and regulations directly
applicable to the Internet and e-commerce, it is possible that a number of laws
and regulations may be adopted with respect to the Internet or e-commerce
covering issues such as user privacy, pricing, content, copyrights,
distribution, antitrust and characteristics and quality of products and
services. Further, the growth and development of the market for Internet
10
<PAGE>
services may prompt calls for more stringent consumer protection laws that may
impose additional burdens on those companies conducting business online. The
adoption of any additional laws or regulations may impair the growth of the
Internet or commercial online services, which could, in turn, decrease the
demand for certain of our products and services and increase our cost of doing
business, or otherwise have a material adverse effect on our business, operating
results and financial condition. Moreover, the applicability to the Internet of
existing laws in various jurisdictions governing issues such as property
ownership, sales and other taxes, libel and personal privacy is uncertain and
may take years to resolve. Any such new legislation or regulation, the
application of laws and regulations from jurisdictions whose laws do not
currently apply to our business or the application of existing laws and
regulations to the Internet could have a material adverse effect on our
business, operating results and financial condition.
Employees
As of January 31, 2000 we employed four executive personnel (our President,
Vice President and Secretary/Treasurer and the President of VPN) and two
non-executive personnel. We believe that our relations with our employees are
good.
Facilities
We presently operate our primary executive offices from 2102 Business
Center Drive, Suite 115E, Irvine, California. The lease is on a month-to-month
basis commencing February 19, 1999 for a monthly rental of $1,195. We also
executed a lease for a term of 38 months commencing August 15, 1999 for 2,071
square feet located at 3200 Bristol Street, Suite 700, Costa Mesa, California,
where the monthly rental is $4,660. This latter office will become our primary
executive office as of February 21, 2000. We also have an office in Las Vegas,
Nevada on a month-to-month basis wherein the rental is $850 per month. Our E-Net
Mortgage division also maintains a separate branch office in San Jose and
operates its executive offices and other branch offices, respectively, in our
Irvine, Costa Mesa and Las Vegas offices. The San Jose office lease is
month-to-month for a rental of $850 per month. Our VPN division maintains its
executive offices at the our offices in Las Vegas. We maintain certain business
property at each of these locations consisting of office furniture, computers,
software, copiers, telecommunications equipment, and internet and networking
systems.
RISK FACTORS
In this section we highlight some of the risks associated with E-Net's business
and operations. Prospective investos should carefully consider the following
risk factors when evaluating an investment in the common stock offered by this
Reoffer Prospectus.
You May be Unable to Effectively Evaluate Our Company for Investment Purposes
Because Our Businesses Have Existed for Only a Short Period of Time
11
<PAGE>
We began our current operations in March 1999. As a result, we have only a
limited operating history upon which you may evaluate our business and
prospects. In addition, you must consider our prospects in light of the risks
and uncertainties encountered by companies in an early stage of development in
new and rapidly evolving markets. Our financial statements accompanying this
report have been prepared assuming that we will continue as a going concern,
which contemplates the realization of assets and liquidation of liabilities in
the normal course of business. The financial statements do not include any
adjustment that might result from the outcome of this uncertainty. We had no
revenues from operations prior to the acquisition of our E-Net Mortgage and VPN
subsidiaries in March 1999. In addition, we had no significant assets or
financial resources prior to these acquisitions. The success of the our proposed
plan of operation will depend to a great extent on the operations, financial
condition and management of these recently acquired subsidiaries. Our ability to
integrate these subsidiaries' activities into our consolidated operations is
uncertain. The success of our operations may be dependent upon numerous factors
beyond our control. No person should invest in this offering unless they can
afford to lose their entire investment.
Your Investment May Not Increase In Value Unless We Are Able to Become
Profitable
Your investment may not increase in value unless we are able to become
profitable. We have incurred losses in our business operation since inception.
We expect to continue to lose money for the foreseeable future, and we cannot be
certain when we will become profitable, if at all. Failure to achieve and
maintain profitability may adversely affect the market price of our common
stock.
Competition
Many of our current and potential competitors have longer operating
histories, larger customer bases, greater brand recognition and significantly
greater financial, marketing and other resources than we do and may enter into
strategic or commercial relationships with larger, more established and
well-financed companies. Some of our competitors may be able to enter into such
strategic or commercial relationships on more favorable terms. In addition, new
technologies and the expansion of existing technologies may increase competitive
pressures on us. Increased competition may result in reduced operating margins
and loss of market share. Competition is vigorous in all sectors of the markets
in which we compete. There can be no assurance that the we can effectively
compete with any or all of its competitors in any of our business lines.
Our Business Depends on a Few Key Individuals and May be Negatively Affected if
We Are Unable to Keep Our Key Personnel
Our future success depends in large part on the skills, experience and efforts
of our key marketing and management personnel. The loss of the continued
services of any of these individuals could have a very significant negative
effect on our business. In particular, we rely upon the experience of Michael
Roth, our chief executive officer and Theodore Bohrer and E. G. Marchi, our
other senior managers, respectively. We do not currently maintain a policy of
key man life insurance on any of our employees or management team.
12
<PAGE>
Our Business Plan Requires Additional Personnel and May Be Negatively Affected
If We Are Unable to Hire and Retain New Skilled Personnel
Qualified personnel are in great demand throughout our industries. Our success
depends in large part upon our ability to attract, train, motivate and retain
highly skilled sales and marketing personnel, and other senior personnel. Our
failure to attract and retain the highly trained technical personnel that are
integral to our direct sales, product development, service and support teams may
limit the rate at which we can generate sales and develop new products and
services or product and service enhancements. This could hurt our business,
operating results and financial condition.
If We Are Unable to Raise Sufficient Capital in the Future, We May Not Be Able
to Stay in Business
Currently, our capital is insufficient to conduct our business and if we
are unable to obtain needed financing, we will be unable to promote our products
and services, engage in and exploit potential business opportunities and
otherwise maintain our competitive position. Since we intend to grow our
business rapidly, it is certain that we will require additional capital. We have
not thoroughly investigated whether this capital would be available, who would
provide it, and on what terms. If we are unable to raise the capital required to
fund our growth, on acceptable terms, our business maybe seriously harmed or
even terminated. Any financing, would in all likelihood, result in our issuing a
substantial amount of new Common Shares to third parties. The issuance of
previously authorized and unissued Common Shares would result in reduction in
percentage of shares owned by present and prospective shareholders and may
result in a change in control or management of E-Net.
Our Officers and Directors May Have Conflicts of Interest
Officers and directors of the Company may in the future participate in
business ventures which could be deemed to compete directly with the Company.
Additional conflicts of interest and non-arms length transactions may also arise
in the future in the event the Company's officers or directors are involved in
the management of any firm with which the Company transacts business.
Our Business Operations Are Subject to Rapid Technological Change and Dependence
on New Products and Services
The Company's activities in the mortgage loan and telecommunications
businesses will continue to be subject to frequent and rapid changes in
technology and customer preferences. Customers may delay purchases in
anticipation of technological changes. Any failure by the Company to anticipate
or respond adequately to the changes in technology and customer preferences, or
to develop and introduce new products or services in a timely fashion, could
materially adversely affect the Company's business and operating results.
13
<PAGE>
We May Incur A Loss of Revenues and Costs If We Cannot Maintain The Security of
Internet Related Services
Certain of our mortgage banking and brokerage services rely on encryption and
authentication technology to provide the security and authentication necessary
to effect secure transmission of confidential information. There can be no
assurance that advances in computer capabilities, new discoveries in the field
of crytography or other developments will not result in a compromise or breach
of the algorithms used by companies to protect consumer's transaction data. If
any such compromise of this security were to occur, it could have a material
adverse effect on our potential clients, business, prospects, financial
condition and results of operations. A party who is able to circumvent security
measures could misappropriate proprietary information or cause interruptions in
operations. We may be required to expend significant capital and other resources
to protect against such security breaches or to alleviate problems caused by
such breaches. Concerns over the security of transactions conducted on the
Internet and the privacy of users may also hinder the growth of online services
generally. To the extent that our activities or third-party contractors involve
the storage and transmission of proprietary information, such as credit card
numbers, or personal data information, security breaches could damage our
reputation and expose us to a risk of loss or litigation and possible liability.
We cannot be sure that our security measures will not prevent security breaches
or that failure to prevent such security breaches will not have a material
adverse effect on our business.
You May Not Be Able to Sell Your Stock, Or May Be Forced to Sell At Reduced
Prices, Because the Market for Our Common Stock is Very Volatile
Our stock is presently trading on the OTC bulletin board maintained by Nasdaq
under the symbol ENNT. Nevertheless, there has been limited volume in trading in
the public market for the common stock, and there can be no assurance that a
more active trading market will develop or be sustained. The market price of the
shares of common stock is likely to be highly volatile and may be significantly
affected by factors such as fluctuations in our operating results, announcements
of technological innovations or new products and/or services by us or our
competitors, governmental regulatory action, developments with respect to
proprietary rights and general market conditions.
Risks Related to This Offering and Ownership of Our Stock
Our Board of Directors can issued preferred stock and has done so, without
shareholder consent. Such preferred stock issuances will dilute or otherwise
significantly affect the rights of existing shareholders. Our articles of
incorporation provide that preferred stock may be issued from time to time in
one or more series. Our board of directors is authorized to determine the
rights, preferences, privileges and restrictions granted to and imposed upon any
wholly unissued series of preferred stock and the designation of any such
shares, without any vote or action by our shareholders. The board of directors
may authorize and issue preferred stock with voting power or other rights that
could adversely affect the voting power or other rights of the holders of common
stock. In addition, the issuance of preferred stock could have the effect of
delaying, deferring or preventing a change in control, because the terms of
preferred stock that might be issued could potentially prohibit the consummation
of any merger, reorganization, sale of substantially all of its assets,
liquidation or other extraordinary corporate transaction without the approval of
the holders of the outstanding shares of the preferred stock. We will not offer
preferred stock to promoters except on the same terms as it is offered to all
other existing shareholders or to new shareholder or unless the issuance is
approved by a majority of our independent directors who do not have an interest
in the transactions and who have access, at our expense, to our legal counsel or
independent legal counsel.
14
<PAGE>
We Could Lose Revenue and Incur Significant Costs if Our Computer Systems or the
Computer Systems of Third Parties Are Not Year 2000 Complaint
As of February 18, 2000 we have not incurred any Year 2000 computer service
disruptions. Our E-Net Mortgage computers consist of a mixture of personal
computers and Macintoshes that are Y2K ready. Mission critical software (Loan
processing program called Point by Calyx Software Company) is also Y2K ready
compliant. Point is also compliant with the Fannie Mae and Freddie Mac
interfaces, certified Y2K compliant by both organizations.
Any business disruptions to E-Net Mortgage would be the result of Y2K
conflicts from our lenders, credit reporting agency, or title companies. We rely
substantially on each of these service providers for business continuity. There
can be no assurance that such third party software will be free of errors and
defects or be Year 2000 compliant. Any business interruptions of third party
service suppliers could result in loss of revenues, and could adversely affect
our market penetration and reputation, any of which could have a material
adverse effect on our business, financial condition and results of operations.
Our operations in our VPN subsidiary are not believed to have any material Year
2000 concerns as the telecommunications equipment utilized by this subsidiary
have been deemed Y2K compliant by the manufacturers.
Although January 1, 2000 has passed and there have been no disruptions there can
be no assurance that we have successfully identified all year 2000 problems in
our computer systems before they occur or that we will be able to remedy any
problems that are discovered. Our efforts to identify and address year 2000
problems, and the expenses we may incur as a result of such problems, could have
a material adverse effect on our business, financial condition and results of
operations. In addition, the revenue stream and financial stability of existing
customers may be adversely impacted by year 2000 problems, which could cause
fluctuations in our revenue. If we fail to identify and remedy year 2000
problems, we could also be at a competitive disadvantage relative to companies
that have corrected such problems. Any of these outcomes could have significant
adverse effects on our business, financial condition and results of operations.
Forward Looking Statements
Except for historical information, the discussion in this registration statement
contains some forward-looking statements that involve risks and uncertainties.
These statements may refer to our future plans, objectives, expectations and
intentions. These statements maybe identified by the use of the words such as
expect, anticipate, believe, intend, plan and similar expressions. Our actual
results could differ materially from those anticipated in such forward-looking
statements.
15
<PAGE>
USE OF PROCEEDS
E-Net will not receive any of the proceeds form the sale of shares of
common stock by the Selling Shareholders.
SELLING SHAREHOLDERS
The Shares of the Company to which this Reoffer Prospectus relates are
being registered for reoffers and resales by the Selling Shareholders, who
acquired the Shares pursuant to a compensatory benefit plan with E-Net for
employment and consulting services they provided to E-Net. The Selling
Shareholders may resell all, a portion or none of such Shares from time to time.
The table below sets forth with respect to the Selling Shareholders, based
upon information available to the Company as of February 14, 2000, the number of
Shares owned, the number of Shares registered by this Reoffer Prospectus and the
number and percent of outstanding Shares that will be owned after the sale of
the registered Shares assuming the sale of all of the registered Shares.
<TABLE>
<CAPTION>
Number of Shares Number of Percentage of Shares
Number of Shares Registered by Shares Owned Owned by Shareholder
Selling Shareholders Owned Before Sale Prospectus(2) After Sale After Sale(3)
- -------------------- ----------------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
H-Group LLC (1) 4,120,800 120,800 4,000,000 37.5%
Michael Roth (1) 4,120,800 120,800 4,000,000 37.5%
E. G. Marchi 949,000 122,000 827,000 7.8%
Theodore Bohrer 92,665 92,665 0 *
Richard Jarnat 68,003 68,003 0 *
Karen Conway 60,731 60,731 0 *
Loretta Davenport 1,000 1,000 0 *
Larry Roberts 60,000 60,000 27,500 *
Jean Oliver 52,209 52,209 0 *
John L. C. Thomson 5,000 5,000 0 *
Vithya Loeun 5,000 5,000 0 *
Paul Stevens 255,000 5,000 250,000 2.3%
David M. Griffith 5,000 5,000 0 *
(1) Michael Roth is the beneficial owner of 100% of the stock of H-Group LLC.
(2) Subject to adjustment for stock splits.
(3) Based upon 10,664,437 shares outstanding as of February 14, 2000.
* Represents less than 1.0% of the outstanding shares of common stock.
16
</TABLE>
<PAGE>
PLAN OF DISTRIBUTION
The Selling Shareholders may sell the Shares for value from time to time
under this Reoffer Prospectus on one or more transactions on the
Over-the-Counter Bulletin Board maintained by Nasdaq, or other exchange, in a
negotiated transaction or in a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at prices otherwise negotiated. Such sales shall be compliance
with all of the requirements of Rule 144. The Selling Shareholders may effect
such transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Shareholders and/or the purchasers
of the Shares for whom such broker-dealers may act as agent (which compensation
may be less than or in excess of customary commissions).
The Selling Shareholders and any broker-dealers that participate in the
distribution of the Shares may be deemed to be "underwriters within the meaning
of Section 2(11) of the 1933 Act, and any commissions received by them and any
profit on the resale of the Shares owned by them may be deemed to be
underwriting discounts and commissions under the 1933 Act. All selling and other
expenses incurred by the Selling Shareholders will be borne by the Selling
Shareholders.
There is no assurance that the Selling Shareholders will sell all or any portion
of the Shares offered.
The Company will pay all expenses in connection with this offering and will not
receive any proceeds from sale of any shares by the Selling Shareholders.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Law Office of David M. Griffith, a Professional Corporation, counsel
to the Company. Mr. Griffith is the beneficial owner of 5,000 shares of the
Company's Common Stock.
EXPERTS
The consolidated financial statements of the Company as of April 30, 1999,
have been incorporated by reference in this Registration Statement in reliance
on the report of Cacciamatta Accountancy Corporation, independent accountants,
given on the authority of that firm as experts in accounting and auditing.
17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE REGISTRATION STATEMENT
ITEM 8. EXHIBITS.
4 Amendment No. 1 to 2000 Employee Stock Compensation Program.
5 Opinion of the Law Office of David M. Griffith, a Professional Corporation,
as to the validity of the securities registered hereunder.
23.1 Consent of the Law Office of David M. Griffith, a Professional Corporation
(set forth in the opinion filed as Exhibit 5 to this Registration
Statement).
23.2 Consent of Cacciamatta Accountancy Corporation (1).
- --------------------------
(1) Previously filed and incorporated by reference to the Registrant's Form
S-8, as filed on or about January 26, 2000 with the Commission.
18
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant has duly caused this Post-Effective Amendment No. 1 to the
Registration Statement to be signed on its behalf by the undersigned, in the
City of Irvine, State of California on February 21, 2000.
E-NET FINANCIAL CORPORATION
By: /s/ MICHAEL ROTH
--------------------
MICHAEL ROTH
President and Chief
Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ MICHAEL ROTH Chairman of the Board, February 21, 2000
- ---------------- President and Chief Executive Officer
MICHAEL ROTH (Principal Executive Officer)
/s/ JEAN OLIVER Treasurer, Secretary and Director February 21, 2000
- --------------- (Principal Financial and
JEAN OLIVER Accounting Officer)
/s/ THEODORE BOHRER Vice President and Director February 21, 2000
- -------------------
THEODORE BOHRER
19
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
4 Amendment No. 1 to 2000 Employee Stock Compensation Program.
5 Opinion of the Law Office of David M. Griffith, a Professional
Corporation, as to the validity of the securities registered
hereunder.
23.1 Consent of the Law Office of David M. Griffith, a Professional
Corporation (set forth in the opinion filed as Exhibit 5 to this
Registration Statement).
23.2 Consent of Cacciamatta Accountancy Corporation (previously filed).
20
EXHIBIT 4
E-NET FINANCIAL.COM CORPORATION
AMENDMENT NO. 1 TO 2000 EMPLOYEE STOCK COMPENSATION PROGRAM
a) The Title of the program will be e-Net Financial.Com Corporation 2000 Stock
Compensation Program
b) Section 2 of the plan shall be amended to read:
Section 2. Elements of the Program
In order to maintain flexibility in the award of stock benefits the program
will consist of a several plans. The Program Administrators are hereby
authorized to periodically add plans to this program consistent with this
objective. The first part is the Stock Bonus Plan (Bonus Plan) under which (i)
common stock shares are granted to key employees and consultants as a bonus for
performing duties essential in the growth of the company in its initial year.
The second part is the Stock Deferral Plan (Deferral) in which (i) payments of
deferred compensation in the form of shares of common stock (deferred payments)
are granted; and (ii) rights to receive cash or shares of common stock based on
the amount of income owed deferred (up to 1/3 of gross income). The third part
is the Executive Stock Bonus Option Plan (the "Executive Bonus Plan") under
which (i) units representing the equivalent of shares of Common Stock (the
"Performance Shares") are granted; (ii) payments of compensation in the form of
shares of Common Stock (the "Stock Payments") are granted; and (iii) rights to
receive cash or shares of Common Stock as a bonus, based on the performance of
the executive or Key Independent Contractor (Bonus Shares).
c) PART III
Executive Stock Bonus Option Plan
(Executive Bonus Plan)
Section 1. Terms and Conditions. The purpose of the e-Net Financial.Com
Corporation Executive Stock Bonus Option Plan (the "Executive Bonus Plan") is to
promote the growth and general prosperity of the Company by permitting the
Company to grant restricted shares to help attract and retain superior personnel
for positions of substantial responsibility with the Company and its
subsidiaries to provide individuals with an additional incentive to the success
of the Company. This plan is restricted to Executives and Key Independent
Contractors (Key Independent Contractor status shall be determined by the
Program Administrators). The terms and conditions of Performance Shares, Stock
Payment share or Bonus Shares rights granted under this Executive Bonus Plan may
differ from one another as the Program Administrators shall, in their
discretion, determine in each Executive Stock Bonus Option Agreement (the
"Executive Agreement"). Unless any provision herein indicates to the contrary,
this Executive Bonus Plan shall be subject to the General Provisions of the
Program, and terms used but not defined in this Executive Stock Bonus Option
Plan shall have the meanings, if any, ascribed thereto in the General Provisions
of the Program.
Section 2. Duration. Each Performance Share or Stock Payment or Bonus Shares and
all rights thereunder granted pursuant to the terms of the Executive Bonus Plan
shall expire on the date determined by the Program Administrators as evidenced
by the Executive Agreement, but in no event shall any Performance Shares or
Stock Payment Share or Bonus Share Right expire later than five (5) years from
the date on which the Performance Shares or Stock Payment Share or Bonus Rights
are granted. In addition, each Performance Share, Stock Payment or Bonus Share
shall be subject to early termination as provided in the Executive Bonus Plan.
Section 3. Grant. Subject to the terms and conditions of each individually
executed Executive Agreement, the Program Administrators may grant Performance
Shares, Stock Payments or Bonus Share Rights as provided under the Executive
Bonus Plan. Each grant of Performance Shares, Bonus Shares or Stock Payments
shall be evidenced by a Executive Agreement, which shall state the terms and
conditions of each as the Program Administrators, in their sole and absolute
discretion, deem are not inconsistent with the terms of the Executive Bonus
Plan.
<PAGE>
Section 4. Performance Shares. Performance Shares shall become payable to a Plan
Participant based upon the achievement of specified Performance Objectives and
upon such other terms and conditions as the Program Administrators may determine
and specify in the Executive Agreement evidencing such Performance Shares. Each
grant shall satisfy the conditions for performance-based awards hereunder and
under the General Provisions of the Program. A grant may provide for the
forfeiture of Performance Shares in the event of termination of employment or
other events, subject to exceptions for death, disability, retirement or other
events, all as the Program Administrators may determine and specify in the
Executive Agreement for such grant. Payment may be made for the Performance
Shares at such time and in such form as the Program Administrators shall
determine and specify in the Executive Agreement and payment for any Performance
Shares may be made in full in cash or by certified cashier's check payable to
the order of the Company or, if permitted by the Program Administrators, by
shares of the Company's Common Stock or by the surrender of all or part of an
award, or in other property, rights or credits deemed acceptable by the Program
Administrators or, if permitted by the Program Administrators, by a combination
of the foregoing. If any portion of the purchase price is paid in shares of the
Company's Common Stock, those shares shall be tendered at eighty-five (85)
percent of their then Fair Market Value. Fair Market Value to be determined by
the average daily low bid of the preceding thirty days. Payment in shares of
Common Stock includes the automatic application of shares of Common Stock
received upon the exercise or settlement of Performance Shares or other option
or award to satisfy the exercise or settlement price.
Section 5. Stock Payments. The Program Administrators may grant Stock Payments
to a person eligible to receive the same as a bonus or additional compensation
or in lieu of the obligation of the Company or a subsidiary to pay cash
compensation under the compensatory arrangements, only with the election of the
eligible person. A Plan Participant shall have all the voting, dividend,
liquidation and other rights with respect to shares of Common Stock issued to
the Plan Participant as a Stock Payment upon the Plan Participant becoming
holder of record of such shares of Common Stock; provided, however, the Program
Administrators may impose such restrictions on the assignment or transfer of
such shares of Common Stock as they deem appropriate and as are evidenced in the
Executive Agreement for such Stock Payment. Such shares paid to participants
hereunder, shall be subject to any subsequent dividend, split or
re-capitalization.
Section 6. Bonus Rights. The Program Administrators may grant Bonus Rights in
tandem with the grant of all other registered plans. A Bonus Right granted in
tandem with another award may be evidenced by the agreement for such other
award; otherwise, a Bonus Right shall be evidenced by a separate Executive
Agreement. Payment may be made by the Company in cash or by shares of the
Company's Common Stock or by a combination of the foregoing, may be immediate or
deferred and may be subject to such employment, performance objectives or other
conditions as the Program Administrators may determine and specify in the
Executive Agreement for such Bonus Rights. The total payment subject to a Bonus
Right shall not exceed Thirty Five percent (35%) of the Executives or Key
Independent Contractors' annual salary.
Section 7. Compliance with Securities Laws. Securities shall not be issued with
respect to any award under the Executive Bonus Plan, unless the issuance and
delivery of the securities pursuant thereto shall comply with all applicable
provisions of foreign, state and federal law, including, without limitation, the
Securities Act of 1933, as amended, and the Exchange Act, and the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
<PAGE>
upon which the securities may then be listed, and shall be further subject to
the approval of counsel for the Company with respect to such compliance. The
Program Administrators may also require a Plan Participant to furnish evidence
satisfactory to the Company, including a written and signed representation
letter and consent to be bound by any transfer restrictions imposed by law,
legend, condition, or otherwise, that the securities are being acquired only for
investment purposes and without any present intention to sell or distribute the
securities without registration in violation of any state or federal law, rule,
or regulation. Further, each Plan Participant shall consent to the imposition of
a legend on the securities subject to his or her award and the imposition of
stop-transfer instructions restricting their transferability as required by law
or by this Section 7.
Section 8. Continued Employment or Service. Each Plan Participant, if requested
by the Program Administrators, must agree in writing as a condition of receiving
his or her award, to remain in the employment of, or service to, the Company or
any of its subsidiaries following the date of the granting of that award for a
period specified by the Program Administrators. Nothing in this Executive Bonus
Plan in any award granted hereunder shall confer upon any Plan Participant any
right to continued employment by, or service to, the Company or any of its
subsidiaries, or limit in any way the right of the Company or any subsidiary at
any time to terminate or alter the terms of that employment or service
arrangement.
Section 9. Rights Upon Termination of Employment or Service. If a Plan
Participant under this Executive Bonus Plan ceases to be employed by, or provide
service to, the Company or any of its subsidiaries for any reason his or her
award shall immediately terminate.
d) E-NET FINANCIAL.COM CORPORATION
EXECUTIVE STOCK BONUS OPTION PLAN AGREEMENT
(Executive Agreement)
(GRANT OF BONUS OPTION)
Date of Grant: ____________________, ____
THIS GRANT, dated as of the date of grant first stated above (the "Date of
Grant") , is delivered by e-Net Financial.Com Corporation, a Nevada corporation
(the "Company"), to ____________________ (the "Optionee"), who is an Executive
or Key Independent Contractor of the Company or one of its subsidiaries (the
Optionee's employer is sometimes referred to herein as the "Employer").
WHEREAS, the Board of Directors of the Company (the "Board") on February 15,2000
adopted the e-Net Financial.Com Corporation, Executive Stock Bonus Option Plan
(the " Executive Bonus Plan");
WHEREAS, the Executive Bonus Plan provides for the granting of Bonus stock
options by the Board or Program Administrators to employees or key Independent
Contractors of the Company or any subsidiary of the Company to exercise certain
rights with respect to, shares of the Common Stock of the Company, no par value
(the "Stock"), in accordance with the terms and provisions thereof; and
WHEREAS, the Program Administrators consider the Optionee to be a person who is
eligible for a grant of bonus stock options under the Executive Bonus Plan, and
have determined that it would be in the best interest of the Company to grant
the bonus stock options documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree
as follows:
1. Grant of Option.
Subject to the terms and conditions hereinafter set forth, the Company, with the
approval and at the direction of the Program Administrators, hereby grants to
the Optionee, as of the Date of Grant, an option to receive a number of shares
(not to exceed 35% of total annual income earned) of Stock at a price of $1.00
per share, on the date of Grant. Such option is hereinafter referred to as the
"Option" and the amount of shares of stock shall be determined by the Executive
Bonus Plan administrators base on the annual performance of the Optionee
hereinafter sometimes referred to as the "Bonus Shares."
<PAGE>
3. Termination of Option.
(a) Subject to the other provisions of this Grant, the Option and all rights
hereunder with respect thereto, to the extent such rights shall not have been
exercised, shall terminate and become null and void after the expiration of five
years from the Date of Grant (the "Option Term").
(b) Notwithstanding anything else to the contrary contained herein, upon the
occurrence of the Optionee ceasing for any reason to be employed by the Employer
(such occurrence being a "termination of the Optionee's employment"), the
Option, to the extent not previously exercised, shall terminate and become null
and void within thirty (30) days after the date of such termination of the
Optionee's employment, except (1) in the event employment is terminated for
cause as defined by applicable law, in which case Optionee's Option shall
terminate and become null and void immediately or (2) in a case where the
Program Administrators may otherwise determine in their sole and absolute
discretion for up to ninety (90) days following the termination of employment.
Upon a termination of the Optionee's employment by reason of disability or
death, the Option may be exercised.
4. Exercise of Option.
(a) The Optionee may exercise the option with respect to all or any part of the
number of Option Shares then exercisable hereunder by giving the Secretary of
the Company written notice of intent to exercise. The notice of exercise shall
specify the number of Option Shares as to which the Option is to be exercised
against bonus compensation, and the date of exercise thereof.
(b) On the exercise date specified in the Optionee's notice or as soon
thereafter as is practicable, the Company shall cause to be delivered to the
Optionee, a certificate or certificates for the Option Shares then being
purchased. The obligation of the Company to deliver Stock shall, however, be
subject to the condition that if at any time the Program Administrators shall
determine in their discretion that the listing, registration or qualification of
the Option or the Option Shares upon any securities exchange or under any state
or federal law, or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection with, the Option
or the issuance or purchase of Stock thereunder, the Option may not be exercised
in whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Program Administrators.
5. Adjustment of and Changes in Stock of the Company.
In the event of a reorganization, recapitalization, change of shares, stock
split, spin-off, stock dividend, reclassification, subdivision or combination of
shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of capital stock of the Company, the Program
Administrators shall make such adjustment as may be required under the
applicable reorganization agreement in the number and kind of shares of Stock
subject to the Option or in the option price; provided, however, that no such
adjustment shall give the Optionee any additional benefits under the Option
prior to the issuance of shares thereunder. If there is no provision for the
treatment of the Option under an applicable reorganization agreement, the Option
may terminate on a date determined by the Program Administrators following at
least 30 days written notice to the Optionee.
6. No Rights of Stockholders.
Neither the Optionee nor any personal representative shall be, or shall have any
of the rights and privileges of, a stockholder of the Company with respect to
any shares of Stock purchasable or issuable upon the exercise of the Option, in
whole or in part, prior to the date of exercise of the Option.
7. Non-Transferability of Option.
During the Optionee's lifetime, the Option hereunder shall be exercisable only
by the Optionee or any guardian or legal representative of the Optionee, and the
Option shall not be transferable except, in case of the death of the Optionee,
by will or the laws of descent and distribution, nor shall the Option be subject
to attachment, execution or other similar process. In the event of (a) any
attempt by the Optionee to alienate, assign, pledge, hypothecate or otherwise
dispose of the option, except as provided for herein, or (b) the levy of any
attachment, execution or similar process upon the rights or interest hereby
conferred, the Company may terminate the Option by notice to the Optionee and it
shall thereupon become null and void.
<PAGE>
8. Restriction on Exercise.
The Option may not be exercised if the issuance of the Option Shares upon such
exercise would constitute a violation of any applicable federal or State
securities or other law or valid regulation. As a condition to the exercise of
the Option, the Company may require the Optionee exercising the Option to make
any representation or warranty to the Company as may be required by any
applicable law or regulation and, specifically, may require the Optionee to
provide evidence satisfactory to the Company that the Option Shares are being
acquired only for investment purposes and without any present intention to sell
or distribute the shares without registration in violation of any federal or
State securities or other law or valid regulation.
9. Employment Not Affected.
The granting of the Option or its exercise shall not be construed as granting to
the Optionee any right with respect to continuance of employment of the
Employer. Except as may otherwise be limited by a written agreement between the
Employer and the Optionee, the right of the Employer to terminate at will the
Optionee's employment with it at any time (whether by dismissal, discharge,
retirement or otherwise) is specifically reserved by the Company, as the
Employer or on behalf of the Employer (whichever the case may be), and
acknowledged by the Optionee.
10. Amendment of Option.
The Option may be amended by the Program Administrators at any time (i) if the
Program Administrators determine, in their sole and absolute discretion, that
amendment is necessary or advisable in the light of any addition to or change in
the Internal Revenue Code of 1986 or in the regulations issued thereunder, or
any federal or state securities law or other law or regulation, which change
occurs after the Date of Grant and by its terms applies to the Option; or (ii)
other than in the circumstances described in clause (i), with the consent of the
Optionee.
11. Notice.
All notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
by certified mail, return receipt requested, as follows:
To Company: e-Net Financial.Com Corporation
2102 Business Center Dr 115E
Irvine, Ca 92612
To Optionee:
------------------------------
------------------------------
------------------------------
12. Incorporation of Executive Stock Option Bonus Plan by Reference.
The Option is granted pursuant to the terms of the Executive Bonus Plan, the
terms of which are incorporated herein by reference, and the Option shall in all
respects be interpreted in accordance with, and shall be subject to, the
Executive Bonus Plan. The Program Administrators shall interpret and construe
the Executive Bonus Plan and this instrument, and its interpretations and
determinations shall be conclusive and binding on the parties hereto and any
other person claiming an interest hereunder, with respect to any issue arising
hereunder or thereunder.
<PAGE>
13. Governing Law.
The validity, construction, interpretation and effect of this instrument shall
exclusively be governed by and determined in accordance with the law of the
State of Nevada, except to the extent preempted by federal law, which shall to
the extent govern.
In Witness Whereof, the Company has caused its duly authorized officers to
execute this Executive Stock Bonus Option Plan Agreement, and to apply the
corporate seal hereto, and the Optionee has placed his or her signature hereon,
effective as of the Date of Grant.
This agreement may be executed in counterpart.
e-Net Financial.Com Corporation
a Nevada Corporation
By:
- ----------------------------------------
Michael Roth -President
ACCEPTED AND AGREED TO:
- ----------------------------------------
[Optionee]
EXHIBIT 5
LAW OFFICE OF DAVID M. GRIFFITH,
A PROFESSIONAL CORPORATION
ONE WORLD TRADE CENTER, SUITE 800
LONG BEACH, CA 90831-0800
TELEPHONE: 562-983-8017
FACSIMILE: 562-983-8122
February 21, 2000
E-Net Financial Corporation
2102 Business Center Drive, Suite 115E
Irvine, CA 92612
RE: E-Net Financial.Com Corporation
Reoffer Prospectus - Post Effective Amendment No. 1 to
Registration Statement on Form S-8
Ladies & Gentlemen:
This office represents E-Net Financial.Com Corporation, a Nevada
corporation (the "Registrant") in connection with the Registrant's Registration
Statement on Form S-8 under the Securities Act of 1933, as amended by
Post-Effective Amendment No. 1 thereto (the "Registration Statement"), which
relates to the resale of up to 1,000,000 shares H-Group LLC, Michael Roth, E. G.
Marchi, Theodore Bohrer, Richard Jarnat, Karen Conway, Loretta Davenport, Larry
Roberts, Jean Oliver, John L. C. Thomson, Vithya Loeun, Paul Stevens and David
M. Griffith (collectively, the "Selling Shareholders") in accordance with
various legal services, employment, and consulting agreements between the
Registrant and the Selling Shareholders (the "Registered Securities"). In
connection with our representation, we have examined such documents and
undertaken such further inquiry as we consider necessary for rendering the
opinion hereinafter set forth.
Based upon the foregoing, it is our opinion that the Registered Securities,
when issued as set forth in the Registration Statement, will be legally issued,
fully paid and nonassessable.
We acknowledge that we are referred to under the heading "Legal Matters" in
the Resale Prospectus which is a part of the Registrant's Form S-8 Registration
Statement relating to the Registered Securities, and we hereby consent to such
use of our name in such Registration Statement and to the filing of this opinion
as Exhibit 5 to the Registration Statement and with such state regulatory
agencies in such states as may require such filing in connection with the
registration of the Registered Securities for offer and sale in such states.
Sincerely,
/s/ DAVID M. GRIFFITH
- ---------------------
Law Office of David M. Griffith,
a Professional Corporation
