================================================================================
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter period ended June 30, 2000.
- OR -
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number
WAMEX HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact Name of small business issuer as specified in its charter)
DELAWARE 650789306
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1 WORLD TRADE CENTER, SUITE 7707, NEW YORK, NY 10048
- --------------------------------------------------------------------------------
(Address of principal executive offices)
212-432-6062
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of during the past 12 months (or for
such shorter periods 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 common stock, $.01 par value, outstanding as of
August 7, 2000 was 119,677,660.
================================================================================
FORWARD LOOKING INFORMATION
This report on Form 10-QSB contains various forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 and information that is based on management's
beliefs and assumptions, as well as information currently available to
management. When used in this document, the words "anticipate," "estimate,"
"expect," and similar expressions are intended to identify forward-looking
statements.
Although WAMEX Holdings, Inc. ("WAMEX" or the "Company"), believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to be correct. Such
statements are subject to certain risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated or expected. Among the key factors that may cause actual
results to differ materially from those projected in forward-looking statements
include regulatory and legal matters, fluctuations in the economy, the degree
and nature of competition, fluctuations in interest rates, adverse regulatory
changes in the Company's existing and future markets, and the Company's ability
to expand its business, including its ability to complete acquisitions and
integrate the operations of acquired businesses, to recruit and retain qualified
employees, to expand into new markets and to maintain profit margins in the face
of competition. All forward-looking statements included in this report are based
on information available to the Company on the date hereof, and the Company
assumes no obligation to update any such forward-looking statement. Prospective
investors should also consult the risk described from time to time in the
Company's reports on forms 10-QSB and 10-KSB.
LEGAL PROCEEDINGS.
Corporate
In June, 2000, the Securities and Exchange Commission (SEC) subpoenaed documents
and testimony from the Company and its Officers. Subsequently, on June 14, the
SEC temporarily suspended trading in the Company's securities because of
questions about the accuracy and adequacy of publicly disseminated information
concerning, among other things, WAMEX's ability to comply with the Commission's
regulations regarding the operation of its Alternative Trading System and funds
purportedly raised by WAMEX from private investors. In addition, the SEC stated
that recent market activity in WAMEX securities may be the result of
manipulative conduct or other illegal activity. On June 27, trading resumed when
the SEC suspension order expired. The Company has retained legal counsel to
advise it on regulatory and other corporate legal matters.
The Company cannot make any assurances as to the outcome of these matters.
Management is attempting to resolve outstanding issues between it and the SEC.
However, it is important to note, that the Company cannot predict the
satisfactory conclusion of these matters. Therefore, there is a possibility of
future litigation.
It is Management's desire and intent to resolve these matters in a manner which
would avoid litigation. However, Management can make no assurance as to the
Company's ability to succeed with such an approach. It is important to note the
Company has limited resources and management warns that further investigations,
unsuccessful outcomes, complaints levied or future prolonged litigation
involving the Company could prevent the Company from operating efficiently and
could seriously jeopardize the Company's viability.
Officers and Directors
On June 14, 2000, criminal complaints were filed in United States District Court
for the Southern District of New York, alleging that Mitchell H. Cushing, Chief
Executive Officer (CEO) and a director and Russell Chimenti, Chief
Administrative Officer (CAO) and a director of the Company, were involved in a
conspiracy to commit securities fraud. These Officers have represented to the
Company that, to their knowledge, they have not participated in any of the
alleged activities.
In mid-July 2000, the Company received additional subpoenas from the SEC
directing Sascha Mundstein, the Chief Operating Officer ("COO")and a director,
and Hans-Michael Schobinger, Chief Technology Officer ("CTO") and a director, to
provide additional documents and information. These Officers have, to the best
of the Company's knowledge, complied with this request. The Company has resolved
to indemnify, support and assist any Officer or Director that has been alleged
to be involved in any of these matters.
As of the date of this filing, the Company is unaware of a final resolution
involving these complaints. It is important to note that proceedings against any
Officer or Director could have serious and adverse ramifications for the Company
including, but not limited to, damage to the Company's reputation; inability to
raise additional funding; loss of key personnel vital to the
success of the organization; inability to retain future key personnel; and loss
of vendor support, any of which alone or in combination could have adverse
financial consequences for the Company.
On July 10, 2000, counsel was informed that there is an outstanding Warrant
issued in Austria for the arrest of Mr. Mitchell H. Cushing, the Company's CEO.
Mr. Cushing has represented to the Company that he was previously unaware of the
existence of the Austrian warrant. The Company has been informed that this
Warrant has been issued subsequent to civil action taken against Mr. Cushing for
Credit Card debt. Subsequently, Mr. Cushing retained legal counsel in Austria to
investigate the circumstances surrounding the issuance of the warrant. Mr.
Cushing has informed the Company that the warrant was issued subsequent to civil
action in Austria against Mr. Cushing for credit card debt incurred from 1997
through 1998. Mr. Cushing has represented to the Company that he attempted to
resolve the issue of this debt over a year ago and was not informed by the
creditor of the outcome. Mr. Cushing's counsel in Austria has contacted the
creditor and is in the process of resolving this issue and is researching the
existence of any other outstanding complaints, violations or warrants that may
involve Mr. Cushing.
Corporate Affiliations
On June 14, 2000, the Company was informed that 2 Principals of affiliated
entities, Randolph Management and iNYC (both of New York) have been served with
criminal complaints related to the matters discussed above. iNYC was the
Company's proposed vendor for high-speed DSL connectivity for its potential
subscriber base and Randolph Management is the Company's venture capital and
funding advisor. Both matters are presently under investigation, therefore the
Company elects not to discuss these issues any further at this time.
MATERIAL EVENTS
Trading and Listing
On June 14, 2000, the SEC temporarily suspended trading in the Company's common
stock (symbol WAMX) because of questions about the accuracy and adequacy of
publicly disseminated information concerning, among other things, WAMEX's
ability to comply with the Commission's regulations regarding the operation of
its Alternative Trading System and funds purportedly raised by WAMEX from
private investors. In addition, the SEC stated that recent market activity in
WAMEX securities may be the result of manipulative conduct or other illegal
activity.
On June 27, 2000, trading resumed when the SEC suspension order expired. To the
best of the Company's knowledge, the stock is, at the time of this filing,
trading in a "Telephone Market". The Company believes that this market has
limited access by investors and that stock trading in this market may be subject
to large price swings in inter-day and intra-day trading.
The Company is attempting to have its common stock again quoted on the
Over-The-Counter Bulletin Board ("OTCBB"). There can be no assurance that the
Company will be successful in its efforts in having its common stock quoted on
the OTCBB. Failure to have the Company's stock quoted on the OTCBB could have an
adverse material effect on the Company because it may not be able to raise
sufficient investment capital to operate.
Partners and Vendors
On 17 June 2000, the Company was asked by Abovetrade to remove their name and
logo from the Company Website located at www.wamx.com. The Company honored the
request. The Company was informed that Abovetrade.com removed all references of
the Company from their Website located at www.abovetrade.com. The relationship
between the companies is reciprocal marketing, advertising and
cross-introduction of users and subscribers. The Companies are reevaluating
their approach based on factors that include the Company's ATS Access strategy
and its ability employ this strategy effectively.
On 17 June 2000, the Company was asked by Tradetrek to remove their name and
logo from the Company Website located at www.wamx.com. The Company honored the
request. The Company was informed that tradetrek.com removed all references of
the Company from their Website located at www.tradetrek.com. The relationship
between the companies is reciprocal marketing, advertising and
cross-introduction of users and subscribers. The Companies are reevaluating
their approach based on factors that include the Company's ATS Access strategy
and its ability employ this strategy effectively.
On June 17, 2000, the Company was asked by IBChannel.com to remove their name
and logo from the Company Website located at www.wamx.com. The Company honored
the request. The Company was informed that IBChannel.com removed all references
of the Company from their Website located at www.ibchannel.com. The relationship
between the companies is a partnership involving marketing, advertising and
cross-introduction of users and subscribers. The Companies are reevaluating
their approach based on factors that include the Company's ATS Access strategy
and its ability employ this strategy effectively.
On July 10, 2000, the Company was asked by iNYC.com to remove their name and
logo from the Company Website located at www.wamx.com. The Company honored the
request. The relationship between the companies is reciprocal marketing,
advertising and cross-introduction of users and subscribers as well as high
speed DSL connectivity. Both Companies have mutually agreed to terminate their
relationship.
During this period, the Company has received a great deal of support from its
key vendors. Work on major projects during this period has continued and is
close to overall completion. However, there have been significant delays in the
completion of the overall implementation and presentation phases of the
company's business strategies. Key factors associated with these delays were;
criminal complaints against Officers, concerns of Regulators involving the
NIPHIX transaction, inability to format linking platform software, insufficient
capital and the redirecting of corporate and business strategies that focus on
the Company's ATS Access strategy.
Due to events discussed elsewhere, during, and subsequent to, the reporting
period, the Company has had great difficulty in meeting its capital
requirements. The key vendors of the Company are working on large scale projects
with sensitive timelines and these projects require additional funding in order
to be completed and integrated into the Company's products and strategies.
Management can make no assurance as to the success of acquiring additional
capital and as such, can make no assurance of the completion of key projects
from vendors. Failure to obtain additional capital on reasonable terms would
have an adverse material effect on the Company and would delay the final
application of its products and services.
NIPHIX Investments
In February 2000, the Company entered into an agreement with NIPHIX Investments,
Inc. ("NII") and NIPHIX Systems, Inc. ("NSI") (collectively "NIPHIX")to exchange
about 461,252 shares of the Company's restricted common stock for all of the
shares of NII and NSI. Under the agreement, the Company was to acquire NIPHIX's
NASD Broker Dealer license and its approval to operate an ATS. The completion of
the transaction in whole, was contingent upon the completion of further due
diligence by both organizations. Key goals of the acquisition were to obtain
approval to operate an ATS through NII, retain an established NASD Member Broker
Dealer through NII, obtain an Alternative Listing System ("ALS") through NIPHIX
Systems, Inc. (NSI), obtain an existing clearing agreement, acquire more ATS
technology and software, gain a revenue base and to retain the expertise of
senior NIPHIX personnel.
The 461,252 shares were delivered to escrow and of the total amount of shares,
NIPHIX was entitled to "Put" back to the Company 166,052 shares (in 25,000 share
lots over a 210 day period) at a per share price of $10.84, for a total of $1.8
million.
The Agreement permitted NIPHIX 2 "Puts" prior to closing. One "Put" was actually
done and the Company made payment of $272,000 in exchange for 25,000 shares
(split adjusted). In addition, payments were made of approximately $100,000 to
provide for operational working capital to NIPHIX.
In mid-June, this transaction came under regulatory scrutiny. NIPHIX and the
Company are presently reviewing the transaction to determine if it could be
restructured in a manner which would meet regulatory concerns.
Because of the reevaluation of the its relationship with NIPHIX, at this time
the Company does not have or own an "Approved ATS" or a registered Broker-Dealer
in the United States.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This Period
It was the objective of the Company during this period to do the following;
Gain additional funding, secure an operational facility, launch its ATS Website,
acquire clients, close several strategic agreements, continue research and
development on peripheral products and programs and to generate revenue through
its products, services and advertising.
The circumstances regarding recent events that relate to the Company or its key
personnel had an extremely adverse effect on the Company's ability to operate
effectively. As a result, the Company did not meet its goals or objectives for
this period.
Funding
During the reporting period, the Company announced that it had obtained $6.9
million in funding from an Investor Group. This subscription agreement basically
incorporated the sale of restricted stock to these investors for $6.9 million
which was to be periodically provided to the Company between late April 2000 and
mid-October 2000. Although the Company did receive a portion of the funding,
these investors have elected not to participate with
the remainder of the funding agreement because the stock is not trading on the
OTCBB, regulatory concerns, legal matters related to key personnel, and concerns
of operational viability.
The Company is presently seeking short term bridge financing as well as long
term operational capital. The Company intends to pursue all funding options.
Client Acquisition Marketing and Advertising
During this period, the Company was able to obtain indications of interest from
prospective users of its technology. Additionally, the Company arranged several
agreements with partners and affiliates to expose the WAMEX name and brand to
Internet users and over television viewers. The Company has yet to employ the
bulk of its advertising strategies. Management feels that the Company is
positioned to acquire clients for its services when the Company is prepared to
present its products.
On 14 June, 2000 the Company, in association with Ibchannel.com, launched a
national television advertising campaign. The commercials were shown on CNBC
twice. Subsequent to the events mentioned, the commercials were pulled off the
air by the network. After numerous retractions involving inaccurate reporting
concerning these events, the Company was notified that the commercials could
re-air immediately. Management has elected to delay the re-launch of its
commercials until such time as it has addressed all regulatory concerns,
re-lists on the OTC-BB and develops a coordinated and viable business strategy
to compliment the advertisement.
On 5 July 2000, the Company launched an ATS information site located at the URL
address of www.wamex.com. Although the Website did not show all of its proposed
content and functionality, management felt it necessary to complete the proposed
launch of its ATS Website on time. The Company intends to launch a more
comprehensive ATS Access site during this period. The Website will be a
comprehensive registration site and management intends to present its first
premium product at that time. The launch of the new Website is wholly dependant
on the Company's financial condition at the time and management can make no
assurances that it will be able to launch the Website or present its premium
products.
The Product
During this period, the Company spent a great deal of time and resources on
completing Web design, software programs, construction of databases, Broker
Dealer operations, hiring key personnel and preparing to deploy its Websites.
Due to unforeseen events described elsewhere and lack of funding the Company was
delayed in completing these goals. While there have been some positive
developments this period, much of the work done in the previous quarters had to
be modified to incorporate the Company's ATS Access strategy.
During this period, the Company has pursued licensing situations outside of the
continental U.S. The interest has been encouraging. Management feels that the
strategy of becoming an ATS Gateway for the global financial community more
closely reflects the identity of the Company.
Property
The Company conducts it's primary operations at a sub-leased suite in The World
Trade Center in New York. In the last reporting period, The Company
envisioned operating in a larger location on Wall Street in New York City. In
April 2000, The Company entered into lease arrangements with the management firm
of the location.
The facility, located at 14 Wall Street in New York City is approximately. 8,500
sq. feet. In May 2000, the Company secured the lease with a $400,000 security
deposit subsequent to finalizing the lease agreement. Due to cash flow problems
arising from events described elsewhere, as well as reevaluation of the
Company's business strategies, the Company has elected not occupy the premises
covered by the lease. The Company is negotiating settlement of its obligations
under the lease and the recovery of a portion of the security deposit.
PLAN OF OPERATION
Management is currently focusing on raising additional capital, signing
licensing and joint venture agreements, re-locating to an appropriate facility,
presentation of the ATS technology, continued development of the IOMS software
program and creating a revenue stream from products and operations.
Due to recent events discussed elsewhere, Management feels that it is essential
to rehabilitate the Company's reputation and standing in the industry.
Management has retained counsel to review aspects of the Company's transactions
and is in the process of reviewing all internal operating procedures. Management
is aware of its responsibility to provide necessary expertise so that similar
problems may be avoided in the future. Therefore, Management is seeking both
industry and non industry personnel to provide necessary skills and to assist
the Company.
CERTAIN TRANSACTIONS
The Company recently received a short term loan of approx. $17,600 in cash and
credit extension from the CEO Mitchell H. Cushing. Terms of repayment have not
been arranged as of the date of this filing.
Share Issuance
The Company entered into an advertising and marketing partnership with
Interactive Business Channel (IBC)(www.ibchannel.com) of Irvine, California.
Subsequent to this agreement, the Company issued 3,000,000 shares of restricted
common stock to IBC. The agreement affords the Company, a primary strategic
partner in the development of the Company's marketing plan through radio, print,
television campaigns and Internet advertising. The agreement includes the
following; Co-Branding, corporate profiling, weekly newsletters, links to
company sites, press releases, mailings and other significant exposure
opportunities.
Conflicts of Interest
The Company has retained counsel to answer concerns expressed by regulators.
Officers and Directors of the Company have been advised to obtain separate
counsel for personal representation.
Key Personnel
The Company has retained the services of Mr. Christof Wessely as the Chief of
Information Technology (CIT). Mr. Wessely will be tasked to provide the vital
linking capabilities for the ATS, the participating brokers and WAMEX as an
information transfer agent. Additionally, Mr. Wessely will be responsible for
providing the complete design and implementation of any WAMEX infrastructure.
Christof Wessely joined WAMEX in 1997 and was the Senior Database Designer at
WAMEX. He left WAMEX in September of 1999 for personal reasons. He was
responsible for the technical design, functionality and implementation of the
Company's software and database management platform. Prior to that, Mr. Wessely
served as the CEO of SPW Inc., a software consulting and database design
corporation in Austria.
FINANCIALS
WAMEX Holdings, Inc.
(A Development Stage Company)
Balance Sheets at June 30,
Unaudited 2000 1999
=========================================================================================================================
Assets
Current Assets
Cash $45 $250
-----------------------------------------------------------
Total Current Assets 45 250
===========================================================
Office fixtures & computer equipment 112,980 112,980
Less accumulated deprecation (64,007) (51,095)
Organization costs less accumulated 16,700 22,900
Trading system (ATS) 1,901,970 1,509,931
Prepaid Expenses 435,650 -
Stock Purchase 272,600 -
-----------------------------------------------------------
Total Assets 2,675,938 1,594,966
===========================================================
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable & accrued expenses 97,655 189,023
Loan from stockholders 80,890 55,890
-----------------------------------------------------------
Total Current Liabilities 178,545 244,913
-----------------------------------------------------------
Stockholders' Equity
Common stock , par value $0.0012,
100,000,000 shares authorized, 13,385 13,385
116,130,660 shares and 119,677,660
shares are outstanding at June 30
1999 and 2000 respectively
Additional paid-in capital 5,428,833 3,261,418
Retained (deficit) during the development stage (2,944,825) (1,924,750)
-----------------------------------------------------------
Total Stockholders' Equity 2,497,393 1,350,053
-----------------------------------------------------------
Total Liabilities and Stockholders' Equity $2,675,938 $1,594,966
===========================================================
WAMEX Holdings, Inc.
(A Development Stage Company)
Statements of Operations
For The Quarter Ended June 30
Unaudited 2000 1999
================================================================================================
Revenues - -
-------------------------------------------------
- -
-------------------------------------------------
Costs and Expenses
Compensation of Officers 79,000 -
Compensation of Employees 5,281 -
Office Maintenance 22,050 33,850
Rents 61,527 12,500
Registration Fees - -
Promotions - -
Depreciation 3,228 3,228
Amortization 1,550 1,550
Travel 12,755 -
Website Design 201,100 14,300
Telephone 906 1,220
Consultants 70,200 46,220
Insurance 1,027 -
Professional Fees 58,100 20,000
Bank Charges - -
Relocation Expenses - 6,450
Automotive Expenses 825 -
Supplies 13,369 -
-------------------------------------------------
Total Costs and Expenses 530,918 139,318
-------------------------------------------------
Net (Loss) ($530,918) ($139,318)
=================================================
Net Loss Per Common Share (-0.00444)
WAMEX Holdings, Inc.
(A Development Stage Company)
Statements of Operations
For 6 Months Ended June 30
Unaudited 2000 1999
================================================================================================
Revenues - -
-------------------------------------------------
- -
-------------------------------------------------
Costs and Expenses
Compensation of Officers 141,000 -
Compensation of Employees 5,281 -
Office Maintenance 32,550 67,700
Rents 66,527 25,000
Registration Fees 3,407 -
Promotions - 6,300
Depreciation 6,456 6,456
Amortization 3,100 3,100
Travel 19,605 2,456
Website Design 238,200 20,300
Telephone 2,123 4,760
Consultants 119,200 134,220
Insurance 3,970 -
Professional Fees 99,231 75,000
Bank Charges - 120
Relocation Expenses 12,000 11,020
Automotive Expenses 3,300 -
Supplies 28,799 -
-------------------------------------------------
Total Costs and Expenses 784,749 356,432
-------------------------------------------------
Net (Loss) ($784,749) ($356,432)
=================================================
Net Loss Per Common Share YTD (-0.00667)
Item 6 Exhibits and Report on Form 8-K
(a) Exhibits
Exhibit No. Description
- ----------- -----------
10 Material Contracts
Agreement of lease between W12/14 Wall
Acquisition Associates llc and Wamex
Holdings, Inc
27 Financial Data Schedule*
- ------------------
* Filed herewith.
(b) Report on Form 8-K
There were no Reports on Form 8-K filed by the Company during the
three months ended June 30, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
WAMEX HOLDINGS, INC.
By: /s/ Mitchell Cushing
-------------------------------------
Mitchell Cushing
Chief Executive Officer
Dated: August 14, 2000