U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO
______________
COMMISSION FILE NUMBER: 33-68570
eConnect
(Exact name of registrant as specified in its charter)
Nevada 43-1239043
(State or jurisdiction of incorporation I.R.S. Employer
or organization) Identification No.)
2500 Via Cabrillo Marina, Suite 112, San Pedro, California 90731
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (310) 514-9482
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$0.001 Par Value; Class A Warrants
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) been
subject to such filing requirements for the past 90 days. Yes X No.
As of September 30, 2001, the Registrant had 358,025,108 shares of common
stock issued and outstanding (1).
Transitional Small Business Disclosure Format (check one): Yes No X.
(1) See Other Information
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS 2
CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2001
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000
CONSOLIDATED STATEMENT OF
STOCKHOLDERS' DEFICIT FOR THE
THREE MONTHS AND NINE ENDED SEPTEMBER 30, 2001
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ITEM 2. PLAN OF OPERATION 9
PART II - OTHER INFORMATION 13
ITEM 1. LEGAL PROCEEDINGS 13
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 14
ITEM 5. OTHER INFORMATION 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURE
PART I.
ITEM 1. FINANCIAL STATEMENTS.
eCONNECT
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30, 2001
----------------------
ASSETS
Current assets
Accounts receivable $ 2,500
--------------
Total current assets 2,500
Fixed assets, net 241,935
Other assets
Intangible asset, net 217,530
Purchased software, net 972,505
Deposit 249,819
Other assets 23,683
--------------
1,463,537
--------------
Total assets $ 1,707,972
==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 2,092,970
Accrued liabilities 3,344,707
Due to consultants 24,000
Due to related parties 2,332,400
Settlement liabilities 1,460,000
Advance on equity funding line 437,623
Notes payable 2,697,247
--------------
Total current liabilities 12,388,947
--------------
Total liabilities 12,388,947
Stockholders' deficit
Common stock; $.001 par value; 500,000,000
shares authorized, 358,025,108 shares
issued and outstanding 358,025
Additional paid-in capital 151,431,782
Common stock issued for prepaid consulting
services (2,402,732)
Minority interest in consolidated subsidiary (274,785)
Accumulated deficit (159,793,265)
--------------
Total stockholders' deficit (10,680,975)
--------------
Total liabilities and stockholders' deficit $ 1,707,972
==============
See Accompanying Notes to Consolidated Financial Statements
eCONNECT
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the three months ended September 30, For the nine months ended September 30,
---------------------------------------- ---------------------------------------
2001 2000 (RESTATED) 2001 2000 (RESTATED)
------ ----------------- ------ ----------------
Revenue
E-Commerce sales $ 689 $ -- $ 2,293 $ --
------------ ------------- ------------- -------------
Gross loss 689 -- 2,293 --
Operating expenses
Stock based compensation 2,004,402 12,614,120 7,355,302 60,181,537
Bad debt 44,101 5,000 44,101 5,000
Consulting 368,638 -- 713,082 2,886,875
Public relations 15,201 102,986 98,361 786,119
Professional fees 3,112 405,966 344,769 743,207
Research and development 15 998,745 54,315 1,912,818
Wages 388,340 358,970 1,387,704 1,236,247
Amortization and depreciation 262,784 575,036 934,252 1,360,163
General and administrative 159,528 179,706 636,937 2,298,753
------------ ------------- ------------- -------------
Total operating expenses 3,246,121 15,240,529 11,568,823 71,410,719
------------ ------------- ------------- -------------
Net loss from operations (3,245,432) (15,240,529) (11,566,530) (71,410,719)
Other income (expense)
Interest income -- -- 18,659 193,885
Interest expense (154,070) (570,835) (344,993) (827,947)
Loss on investments -- (2,196,416) (233,770) (2,269,516)
Settlement expense (145,026) (255,000) (1,884,732) (255,000)
Cancellation fee -- -- (526,212) --
Loss on equity method investees -- -- -- (280,366)
------------ ------------- ------------- -------------
Total other income (expense) (299,096) (3,022,251) (2,971,048) (3,438,944)
Net loss before provision for income taxes (3,544,528) (18,262,780) (14,537,578) (74,849,663)
Provision for income taxes -- -- -- --
------------ ------------- ------------- -------------
Net loss from continuing operations (3,544,528) (18,262,780) (14,537,578) (74,849,663)
Discontinued operations
Loss from gaming operations (net of income tax
benefit which is fully allowed for) -- (512,002) (215,086) (1,072,793)
Estimated loss on disposal of gaming operations
including losses during the phase-out period (net
of income tax benefit which is fully allowed for) -- -- (96,661) --
------------ ------------- ------------- -------------
-- (512,002) (311,747) (1,072,793)
Net loss $ (3,544,528) $ (18,774,782) $ (14,849,325) $ (75,922,456)
============ ============= ============= =============
Earning per share
Loss from continuing operations $ (0.01) $ (0.10) $ (0.05) $ (0.48)
Loss from discontinued operations $ -- $ -- $ -- $ (0.01)
Loss on abandonment of gaming operations $ -- $ -- $ -- $ --
------------ ------------- ------------- -------------
Net loss $ (0.01) $ (0.11) $ (0.05) $ (0.48)
============ ============= ============= =============
Basic and diluted weighted average
common shares outstanding 343,058,541 178,032,457 283,633,356 157,247,680
============ ============= ============= =============
See Accompanying Notes to Consolidated Financial Statements
eCONNECT
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
(UNAUDITED)
Common shares Common shares
------------------------- Additional Issued for Prepaid
Number of Paid-in Consulting
Shares Amount Capital Services
------------------------- --------------- ------------------
Balance, December 31, 2000 214,074,197 $ 214,074 $ 131,758,828 $ (1,271,655)
Common shares issued for
prepaid consulting services 31,100,000 31,100 5,235,450 (5,266,550)
Amortization of prepaid
consulting services -- -- -- 4,135,473
Common shares issued in
satisfaction of due to
related parties 8,000,000 8,000 3,688,243 --
Common shares issued in
satisfaction of due
to consultants 2,400,000 2,400 2,018,047 --
Common shares issued for
cash related to exercise
of options and warrants 1,337,313 1,337 78,764 --
Common shares issued for
cash, weighted average
price of $0.109 8,689,150 8,689 515,311 --
Common shares issued for
cancellation fee 3,600,000 3,600 522,612 --
Common shares issued in
satisfaction of due
to related party related
to exercise of warrants
with a strike price of $0.04 2,000,000 2,000 83,000 --
Common shares issued for services
related to exercise of warrants
with a strike price of $0.26 74,113 74 19,102 --
Common shares issued in
satisfaction of advance
on equity funding line 16,719,857 16,720 1,480,757 --
Common shares issued for
receivable from equity
funding line 2,501,538 2,502 241,398 --
Common shares issued for expenses 21,221,806 21,222 1,986,044 --
Common shares issued for interest 2,140,615 2,141 182,623 --
Common stock issued in
satisfaction of due to
related party, including
interest of $681,951 37,673,186 37,673 2,805,644 --
Warrants granted for interest -- -- 9,275 --
Warrants granted in satisfaction
of promissory note payable,
including interest of $265,447 -- -- 325,447 --
Common shares issued in satisfaction
of promissory note payable,
including interest of $51,950 3,333,333 3,333 148,617 --
Common shares issued in satisfaction
of accrued interest 1,160,000 1,160 77,548 --
Common shares issued in satisfaction
of settlement liability 2,000,000 2,000 255,072 --
Net loss -- -- -- --
------------ ---------- ------------- ------------
Balance, September 30, 2001 358,025,108 $ 358,025 $ 151,431,782 $ (2,402,732)
============ ========= ============= ============
Minority
Interest In Total
Consolidated Accumulated Stockholders'
Subsidiary Deficit Deficit
-------------- -------------- ---------------
Balance, December 31, 2000 $ (92,308) $ (145,126,417) $ (14,517,478)
Common shares issued for
prepaid consulting services -- -- --
Amortization of prepaid
consulting services -- -- 4,135,473
Common shares issued in
satisfaction of due to
related parties -- -- 3,696,243
Common shares issued in
satisfaction of due
to consultants -- -- 2,020,447
Common shares issued for
cash related to exercise
of options and warrants -- -- 80,101
Common shares issued for
cash, weighted average
price of $0.109 -- -- 524,000
Common shares issued for
cancellation fee -- -- 526,212
Common shares issued in
satisfaction of due
to related party related
to exercise of warrants
with a strike price of $0.04 -- -- 85,000
Common shares issued for services
related to exercise of warrants
with a strike price of $0.26 -- -- 19,176
Common shares issued in
satisfaction of advance
on equity funding line -- -- 1,497,477
Common shares issued for
receivable from equity
funding line -- -- 243,900
Common shares issued for expenses -- -- 2,007,266
Common shares issued for interest -- -- 184,764
Common stock issued in
satisfaction of due to
related party, including
interest of $681,951 -- -- 2,843,317
Warrants granted for interest -- -- 9,275
Warrants granted in satisfaction
of promissory note payable,
including interest of $265,447 -- -- 325,447
Common shares issued in satisfaction
of promissory note payable,
including interest of $51,950 -- -- 151,950
Common shares issued in satisfaction
of accrued interest -- -- 78,708
Common shares issued in satisfaction
of settlement liability -- -- 257,072
Net loss $ (182,477) (14,666,848) (14,849,325)
------------ -------------- -------------
Balance, September 30, 2001 $ (274,785) $ (159,793,265) $ (10,680,975)
============ ============== =============
See Accompanying Notes to Consolidated Financial Statements
eCONNECT
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
For the nine months ended September 30,
-----------------------------------------
2001 2000 (RESTATED)
------- ----------------
Cash flows from operating activities:
Net loss $(14,849,325) $(75,922,456)
Adjustments to reconcile net loss to net
cash used by operating activities:
Amortization and depreciation 934,252 1,360,163
Stock based compensation 7,355,302 60,181,537
Cancellation fee 526,212 --
Loss on investments 233,770 2,269,516
Equity losses on investees -- 280,366
Estimated loss on disposal of gaming operations 96,661 --
Changes in operating assets and liabilities:
Change in stock subscription receivable -- 220,176
Change in due from related party -- (156,562)
Change in due from related party -
secured by Company's common stock -- (1,499,536)
Change in deposits (210,999) (24,819)
Change in receivable from equity funding line 243,900
Change in accounts receivable 14,258 --
Change in other assets 81,929 (238,192)
Change in accounts payable 533,235 2,304,614
Change in accrued liabilities 599,323 2,684,790
Change in due to related parties 1,042,172 2,635,827
Change in due to consultants 24,000 --
Change in settlement liabilities 1,640,000 --
------------ ------------
Net cash used by operating activities (1,735,310) (5,904,576)
Cash flows from investing activities:
Purchase of fixed assets (41,798) (720,837)
Purchase of purchased software -- (2,168,892)
Cost of investments -- (1,000,000)
------------ ------------
Net cash used by investing activities (41,798) (3,889,729)
Cash flows from financing activities:
Proceeds from issuance of notes payable 337,500 999,950
Principal payments on notes payable (906,000) --
Proceeds from minority interest in consolidated subsidiary -- 15,625
Proceeds from equity funding line 1,728,500 --
Proceeds from issuance of common stock 604,101 8,708,802
------------ ------------
Net cash provided by financing activities 1,764,101 9,724,377
------------ ------------
Net decrease in cash (13,007) (69,928)
Cash, beginning of period 13,007 126,172
------------ ------------
Cash, end of period $ -- $ 56,244
============ ============
Supplemental disclosure of cash flow:
Cash paid for interest $ 107,000 $ --
============ ============
Cash paid for taxes $ -- $ --
============ ============
Schedule of non-cash investing and financing activities:
2,501,538 common shares issued for receivable
from equity funding line $ 243,900 $ --
============ ============
See Accompanying Notes to Consolidated Financial Statements
eCONNECT
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
For the nine months ended September 30,
-----------------------------------------
2001 2000 (RESTATED)
------- ----------------
31,100,000 common shares issued for prepaid
consulting services $ 5,266,550 $ --
============ ============
8,000,000 common shares issued in satisfaction
of due to related parties $ 3,696,243 $ --
============ ============
2,400,000 common shares issued in satisfaction
of due to consultants $ 2,020,447 $ --
============ ============
2,000,000 common shares issued in satisfaction of due
due to related party related to exercise of warrants
with a strike price of $0.04 $ 85,000 $ --
============ ============
16,719,857 common shares issued in satisfaction
of advance on equity funding line $ 1,497,477 $ --
============ ============
37,673,186 common shares issued in satisfaction of
due to related party, not including interest of $681,951 $ 2,161,366 $ --
============ ============
Warrants granted in satisfaction of promissory
note payable, not including interest of $265,447 $ 60,000 $ --
============ ============
3,333,333 common shares issued in satisfaction of
promissory note payable, not including interest
of $51,950 $ 100,000 $ --
============ ============
1,160,000 common shares issued in satisfaction of
accrued interest $ 78,708 $ --
============ ============
2,000,000 common shares issued in satisfaction of
settlement liability $ 257,072 $ --
============ ============
Remaining consideration of the second half acquisition of
Top Sports, S.A. recorded as Due to related parties $ -- $ 2,785,868
============ ============
1,000,000 common shares cancelled during renegotiation
of 99.94% of Top Sports, S.A. recorded as portion of
due to related parties $ -- $ (73,100)
============ ============
8,000,000 common shares issued
related to the acquisition of Powerclick, Inc. $ -- $ 1,300,000
============ ============
666,667 common shares issued for
accounts payable $ -- $ 550,000
============ ============
6,000,000 common shares issued for
officer bonus payable $ -- $ 4,800,000
============ ============
495,000 common shares issued for
stock subscription payable $ -- $ 81,546
============ ============
200,000 common shares issued
related to the acquisition of Top Sports, S.A $ -- $ 47,032
============ ============
See Accompanying Notes to Consolidated Financial Statements
eCONNECT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with Securities and Exchange Commission requirements for interim
financial statements. Therefore, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. The financial statements should be read in
conjunction with the Form 10-KSB for the year ended December 31, 2000 of
eConnect ("the Company").
The results of operations for the interim periods shown in this report are
not necessarily indicative of results to be expected for the full year. In
the opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim
periods a fair statement of such operation. All such adjustments are of a
normal recurring nature.
New accounting pronouncements - On July 20, 2001, the Financial Accounting
-----------------------------
Standards Board (FASB) issued Statement of Financial Accounting Standards
(SFAS) 141, Business Combinations, and SFAS 142, Goodwill and Intangible
Assets. SFAS 141 is effective for all business combinations completed after
June 30, 2001. SFAS 142 is effective for fiscal years beginning after
December 15, 2001; however, certain provisions of this Statement apply to
goodwill and other intangible assets acquired between July 1, 2001 and the
effective date of SFAS 142. Major provisions of these Statements and their
effective dates for the Company are as follows:
. all business combinations initiated after June 30, 2001 must use the
purchase method of accounting. The pooling of interest method of
accounting is prohibited except for transactions initiated before July
1, 2001.
. intangible assets acquired in a business combination must be recorded
separately from goodwill if they arise from contractual or other legal
rights or are separable from the acquired entity and can be sold,
transferred, licensed, rented or exchanged, either individually or as
part of a related contract, asset or liability.
. goodwill, as well as intangible assets with indefinite lives, acquired
after June 30, 2001, will not be amortized. Effective January 1, 2002,
all previously recognized goodwill and intangible assets with
indefinite lives will no longer be subject to amortization.
. effective January 1, 2002, goodwill and intangible assets with
indefinite lives will be tested for impairment annually and whenever
there is an impairment indicator.
. all acquired goodwill must be assigned to reporting units for purposes
of impairment testing and segment reporting.
Although it is still reviewing the provisions of these Statements,
management's preliminary assessment is that these Statements will not have
a material impact on the Company' financial position or results of
operations.
2. DISCONTINUED OPERATIONS
During June 2001, the Company adopted a formal plan to abandon its gaming
operations. As of June 30, 2001, the Company completed the closing of all
walk-in sports book located in the Dominican Republic. The assets abandoned
consisted primarily of fixed assets with a net book value of approximately
$26,000 and other assets of approximately $68,000 which has been recognized
as part of the estimated loss on disposal of gaming operations including the
losses during the phase-out period (net of income tax benefit which is fully
allowed for). The Company has liabilities the gaming operations accrued of
approximately $792,000. Operating results of the gaming operations for the
three and nine months ended September 30, 2001 and 2000 are shown separately
in the accompanying statement of operations.
eCONNECT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. CANCELLATION FEE
During October 2000, the Company entered into an agreement to acquire all
the assets of Broadband Video, Inc. in exchange for 10,000,000 shares of
common stock, 3,000,000 warrants to purchase common stock for $1.00 per
share which expire on December 31, 2001. The Company did not complete nor
intends to complete this transaction and has agreed to issue 3,600,000
shares of common stock as a cancellation fee. For the six months ended June,
2001, the Company has recorded an expense related to this fee totaling
$526,212 which is reflected in the consolidated statements of operations.
4. PURCHASED SOFTWARE
During July 2001, the company returned the purchased software acquired
during fiscal year 2000, which represents licenses to use the Connex
software system used in procession eCommerce transactions. The licenses were
recorded at its historical cost of approximately $2,169,000 and accumulated
amortization expense of $1,196,519 at September 30, 2001 amortized on a
straight line basis over 3 years. The Company is currently negotiating the
terms of this transaction with regards to being absolved of liabilities
totaling $2,264,865 at September 30, 2001, reflected as Notes payable on the
balance sheet, recorded in Fiscal 2000 for the purchase of such software.
The Company will continue to reflect this purchased software on its balance
sheet since the liability incurred will also be reflected. The Company
believes the negotiation regarding the return of this purchased software
will substantially release the company from these liabilities. The Company
believes the negotiation will be completed during the 4th quarter of fiscal
year 2001.
5. DUE TO RELATED PARTY
During May and July 2001, the Company issued 9,723,529 and 27,949,657
shares, respectively, of common stock to satisfy balances due Richard
Epstein and Alliance Equities (hereafter referred to as "Alliance"),
totaling $2,843,317 (including interest of $681,951). As of September 30,
2001, the balance due Alliance totaled $200,000.
6. STOCK BASED COMPENSATION
For the three months ended September 30, 2001 and 2000, the Company incurred
expenses resulting from stock warrants and common stock issued totaling
$2,004,402 and $12,614,120, respectively. For the nine months ended
September 30, 2001 and 2000, the Company incurred expenses resulting from
stock warrants and common stock issued totaling, $7,355,302 and $60,181,537,
respectively. The following table summarizes the Company's stock based
compensation activities based on the accounts shown on the consolidated
statements of operations:
Three months ended September 30, Nine months ended September 30,
-------------------------------- -------------------------------
2001 2000 2001 2000
---------- ----------- ---------- -----------
Consulting $1,564,517 $10,708,417 $6,161,915 $50,955,270
Public relations -- -- -- 2,677,381
Research and development -- 613,022 -- 3,002,701
Wages -- -- -- 210,938
Interest 439,885 961,832 1,193,387 961,832
Financing fees -- -- -- 716,139
Professional fees -- 330,849 -- 608,015
Investor relations -- -- -- 1,049,261
---------- ----------- ---------- -----------
Total stock based
compensation $2,004,402 $12,614,120 $7,355,302 $60,181,537
========== =========== ========== ===========
eCONNECT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
7. GOING CONCERN
The Company incurred a net loss of approximately $3,545,000 and $14,849,000
for the three and nine months ended September 30, 2001, respectively. The
Company's current liabilities exceed its current assets by approximately
$12,386,000 as of September 30, 2001. These factors create an uncertainty
about the Company's ability to continue as a going concern. The Company's
management has developed a plan to complete the development of technology
products and create their respective markets to generate future revenues.
The Company will also seek additional sources of capital through the
issuance of debt and equity financing, but there can be no assurance that
the Company will be successful in accomplishing its objectives.
The ability of the Company to continue as a going concern is dependent on
additional sources of capital and the success of the Company's plan. The
financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
ITEM 2. PLAN OF OPERATION
Twelve Month Plan of Operation.
The Company has now completed the full end to end Bank Eyes Only System which
refers to the deployment of working eCashPads affecting card swiped credit card
"present" transactions over the Internet. These transactions are first received
by the eConnect Server System and then routed to VeriSign for gating into the
credit card network for card authorization. Initially, we licensed software from
Connex, but we soon realized that we did not need such an extensive software
support system for the Bank Eyes Only system and then began to work on our own
in house version which we now call the Merchant Integration Kit. We do not
have to use any software from any other suppliers in order to process eCommerce
transactions. Our own software has been developed to support the Bank Eyes Only
system.
The Company expects to implement the additional service of ATM card with PIN
entry on line debit transactions within the fourth quarter. EConnect has no
agreements with ATM card networks to date. The STAR ATM card network sent
eConnect a proposal to begin a pilot program but to date we have not yet found a
STAR member sponsor bank that can sponsor a web merchant to receive a PIN
entered on line Internet transaction. We are diligently working on this and are
discussions with various financial institutions. Until we have the STAR member
sponsor bank formally sponsoring the web merchants, the proposed pilot will not
start. Investors are cautioned against attributing undue certainty to
management's assessments. The Company posted a Roll Out Schedule at the company
web site http://www.econnectholdings.com. In the latter part of November, the
Company will begin to send out the eCashPad USB to recipients on a 30 day tryout
period. At the end of the 30 days, the recipients will either pay us with their
eCashPad by simply swiping their credit card, which is a Bank Eyes Only payment
or they will return the eCashPad in the free envelope provided.
The Company is presently receiving on going daily orders by deployed eCashPads
at the Company eConnect store which is a proof of concept site. The eCashPad is
presently being sold for $59.95.
The company's commitments over a twelve month period include about
$3,200,000. That is the sum of manufacturing of eCashPads ($1,500,000),
advertising ($700,000) and about $1,000,000 for operations. The company will
from time to time elect to access equity funding from Alpha and also expects to
begin generating revenues over the next 12 months from sales and ongoing
transaction usage of eCashPads effecting Bank Eyes Only payments to web
merchants. We do not anticipate the need to raise any additional funds. The
company currently has 12 full time employees. The company anticipates no
significant changes in the number of employees at this time.
"Bank Eyes Only" refers to a direct Internet connection between the consumer's
terminal and the company's bank card authorization system by which the consumer
will order an item from an Internet merchant, but the credit card data or ATM
data will go directly to the company's server and then to the bank, bypassing
the merchant. Thus, this service will enable customers to pay for Internet
purchases, bill payments and other types of transactions from home by physically
swiping either credit cards or ATM cards with PIN entry. These "Bank Eyes Only"
transactions can be processed over the Internet without the cardholder account
information being stored at the merchant's web site, nor does
the merchant have ready access to the consumer's bank card information.
The company believes that "Bank Eyes Only" transaction processing system will
effectively address Internet consumers' concerns regarding personal and
financial information security. The company plans to publish the "Bank Eyes
Only" web merchant install download documentation during the fourth quarter and
is confident that based on present web merchant responses to adding on the
alternative payment solution of "Bank Eyes Only", that substantial numbers of
web merchants will be accessible to payment by an eCashPad.
The company plans to distribute a substantial number of promotional eCashPads
during the fourth quarter. Presently, the eCashPad effects credit card
transactions only. There is no current usage other than at the eConnect Store
web site which we do not regard as more than demo transactions and not
production level eCashPad USB transactions. No other web merchant is active with
the eCashPad but we are working hard on activating multiple web merchants to
receive eCashPad payments before the release of the 30 day try out campaign.
Interviews with consumers to whom we sent the demo eCashpad model to gives us
reasonable confidence that the eCashPad USB will be used on a frequent basis to
effect Bank Eyes Only payments, but until we actually begin multiple
transactions with the eCashPad USB, we have no concrete information as to what
will actually happen. Investors should be cautioned that managements assessments
may prove to be invalid.
In the fourth quarter, the company is targeting ATM card with PIN regional
pilots with the eCashPad will begin which will enable the company to offer
instant electronic cash payments by debit POS to web merchants. The company also
has reason to believe that a substantial number of additional web merchants will
become accessible to the service of ATM card with PIN immediate payments.
Industries such as mortgage, insurance, telecommunications, collections,
charity, entertainment, finance and others will begin to place upward pressure
on their client base to pay by ATM card with PIN entry cash transactions. This
will add more "Bank Eyes Only" accessible web merchants and will increase the
monthly usage of the eCashPad.
Registration of "Bank Eyes Only" web merchants will be pursued by a team of
specialists to be hired who understand their specific industry such as phone or
cable or collections and who will fully develop the pertinent "Bank Eyes Only"
applications for that industry and who will develop strategic alliances within
their specific industry. In addition, the company has structured a networking
approach for mass market consumer participation in finding "Bank Eyes Only"
merchants along with sales teams to sign on local web merchants. Using a revenue
sharing plan from the flat fee, the company will incentivize private labels of
eCashPads with expected advertising and marketing of these private label
eCashPads by the vendors to their consumer base. The company is projecting an
average transaction revenue of 50 cents per usage which is charged to the web
merchant.
The company is presently selling the eCashPad for $59.95 and expects to
substantially lower the price in the fourth quarter.
The company also plans to activate the EzyShop service in the first quarter next
year in which the eCashPad will be placed in public walk-in locations such as
national chains of high traffic coffee shops. Working with a strategic partner
who will provide the monitor and PC to enable Internet access, the company is
confident that consumers will use the eCashPad to shop at "Bank Eyes Only" web
merchant sites.
The company envisions the usage of the eCashPad to affect Internet cash wagers
by either ATM card with PIN or by chip card payments. Global Internet Cash Games
will be a service of the company which will provide support services for
Internet companies offering games of skill and games of chance whereby players
are using their eCashPad with ATM card and PIN entry to effect on line cash
transactions. One projected gaming service will be the "International", which
will be a four country real time "Bank Eyes Only" with ATM card and PIN entry
game between the countries of the Dominican Republic, Ireland, Australia, and
China, whereby consumers within those countries will be able to use the eCashPad
to effect same day gaming with ATM card and PIN entry.
Artaste.com, a business unit of the company will be able to accept "Bank Eyes
Only" transactions in the fourth quarter. In the Gallery, juried exhibitions of
nationally recognized artists who bring their own following will begin. Special
exhibits from collectors will also be presented. To this date, artaste.com has
served as a vehicle to offer the eCashPad for sale and to generate a growing
list of registered members that can be contacted for both eCashPad sales and the
install of "Bank Eyes Only" at their web site. It is the plan of the company to
use 10% discounts for purchases from artaste.com as an incentive for consumers
to buy an eCashPad.
Top Sports was a business unit of the company, which we closed in the second
quarter of 2001. The company will not incur any more expenses as a result of
closing down Top Sports.
Forward Looking Statements.
Some of the information in this Form 10-QSB contains "forward looking
statements" within the meaning of Rule 175 under the Securities Act of 1933, as
amended, and Rule 3b-6 under the Securities Act of 1934, as amended, including
statements regarding, among other items, the company's business strategies,
continued growth in the company's markets, projections, and anticipated trends
in the company's business and the industry in which it operates. The words
"believe," "expect," "anticipate," "intends," "forecast," "project," and similar
expressions identify forward-looking statements. These forward-looking
statements are based largely on the company's expectations and are subject to a
number of risks and uncertainties, certain of which are beyond the company's
control. The company cautions that these statements are further qualified by
important factors that could cause actual results to differ materially
from those in the forward looking statements, including, among others, the
following: reduced or lack of increase in demand for the company's products,
competitive pricing pressures, changes in the market price of ingredients used
in the company's products and the level of expenses incurred in the company's
operations. In light of these risks and uncertainties, there can be no assurance
that the forward-looking information contained herein will in fact transpire or
prove to be accurate. The company disclaims any intent or obligation to update
"forward looking statements."
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Previously reported.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Sales of Unregistered Securities.
Sales of unregistered securities occurring on or before Jujy 16, 2001, have been
previously reported.
On July 16, 2001, the company issued 2,000,000 shares of common stock to one
firm for a loan due valued at $257,072.
On July 17, 2001, the company issued 105,000,000 shares of common stock in
connection with a common stock purchase agreement. These shares were issued and
are held in escrow pursuant to the terms of an agreement with Alpha Fund.
Consideration for this is determined under the terms of the agreement, but
cannot exceed $20,000,000.
On July 19, 2001, the company issued 20,000 shares of common stock to Matthew
Ospeck in connection with a penalty due of $1,266 for the nonpayment of a loan
to the company.
On July 19, 2001, the company issued 50,000 shares of common stock to Rich
Powell in connection with services rendered valued at $3,164.
On July 19, 2001, the company issued 50,000 shares of common stock to David
Powell in connection with services rendered valued at $3,164.
On August 9, 2001, the company issued 15,000,000 shares of common stock to
Richard Epstein in connection with prepaid consulting services valued at
$849,150.
On September 5, 2001, the company issued to Terry Roslington 3,333,333 shares of
common stock in connection with repayment of a loan of $100,000.
On September 12, 2001, the company issued to Dorothy Truesdale 5,500 shares of
common stock in connection with interest due of $243 on a loan of $10,000.
On September 12, 2001, the company issued to Travis Truesdale 500 shares of
common stock in connection with interest of $22 on a loan of $1,000.
On September 19, 2001, the company issued to Hughes Net Income Charitable Trust
9,000,000 shares of common stock in repayment of a sale of similar shares to
AlphaFund.
No commissions or fees were paid in connection with these sales.
These transactions were exempt from the registration requirements under the
Securities Act of 1933 based on Rule 506 of Regulation D, and similar provisions
under state securities laws and regulations by the fact that:
. The sales were made to sophisticated investors as defined in Rule 502;
. The information specified in paragraph (b)(2)(ii)(B) and paragraph
(b)(2)(ii)(C) of this section was provided to each investor;
. The company gave each purchaser the opportunity to ask questions and receive
answers concerning the terms and conditions of the offering and to obtain any
additional information that the Company possessed or could acquire without
unreasonable effort or expense that is necessary to verify the accuracy of
the information furnished;
. At a reasonable time prior to the sale of securities, the company advised the
purchasers of the limitations on resale in the manner contained in paragraph
Rule 502(d)(2) of this section;
. Neither the company nor any person acting on its behalf sold the securities
by any form of general solicitation or general advertising;
. The company exercised reasonable care to assure that the purchasers of the
securities are not underwriters within the meaning of section 2(11) of the
Securities Act of 1933 in compliance with Rule 502(d).
Use of Proceeds.
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On July 12, 2001, a Special Meeting of the Shareholders was called for the sole
purpose of voting for an amendment to the Articles of Incorporation. This
proposed amendment, which was offered by the Board of Directors after adopting
an appropriate resolution, was to increase the authorized Shares of common stock
of the registrant to 500,000,000 from 300,000,000. The amendment passed and
appropriate forms were subsequently filed with the Nevada Secretary of State to
formally adopt the amendment.
ITEM 5. OTHER INFORMATION.
Information regarding previous equity lines has been previously reported.
Further information regarding continuous funding for the registrant via a Common
Stock Purchase Agreement is previously reported in the SB-2 filed with the
Commission on July 30, 2001.
ITEM 6. EXHBITS AND REPORTS ON FORM 8-K.
Exhibits.
Exhibits included or incorporated by reference herein are set forth in
the attached Exhibit Index.
Reports on Form 8-K.
There were no reports on Form 8-K filed during the first quarter of
the fiscal year covered by this Form 10-QSB
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
eConnect
Dated: November 14, 2001 By: /s/ Thomas S. Hughes
------------------------------------
Thomas S. Hughes, Chairman, CEO
EXHIBIT INDEX
Exhibit Description
No.
Exhibit No. Description
- ----------- -----------
2 Agreement and Plan of Merger, dated June 1, 1999 (incorporated by
reference to Exhibit 2 of the Form 10-KSB filed on May 9, 2000).
3.1 Articles of Incorporation, March 8, 1999 (incorporated by
reference to Exhibit 3.1 of the Form SB-2/A filed on July 22,
1999).
3.2 Certificate of Amendment of Articles of Incorporation, dated May
25, 1999 (incorporated by reference to Exhibit 3.2 of the Form
SB-2/A filed on July 22, 1999).
3.3 Certificate of Amendment of Articles of Incorporation, dated
August 20, 1999 (incorporated by reference to Exhibit 3.3 of the
Form SB-2/A filed on September 3, 1999).
3.4 Certificate of Amendment of Articles of Incorporation, dated
November 20, 2000 (incorporated be reference to Exhibit 3.4 of the
Form SB-2/A filed on May 3, 2001).
3.5 Certificate of Amendment of Articles of Incorporation, dated July
13, 2001 (incorporated by reference to Exhibit 3.5 of the Form
SB-2 filed July 30, 2001).
3.6 Bylaws, dated May 14, 1999 (incorporated by reference to Exhibit
3.3 of the Form SB-2/A filed on July 22, 1999).
3.7 Amended and Restated Bylaws, dated September 15, 2000
(incorporated by reference to Exhibit 3.5 of the Form 10-QSB filed
on November 14, 2000).
4.1 Class A Warrant Agreement (incorporated by reference to Exhibit
4.2 of the Form S-1 filed on October 28, 1993).
4.2 Retainer Stock Plan for Non-Employee Directors and Consultants,
dated April 26, 1999 (incorporated by reference to Exhibit 4.1 of
the Form S-8 filed on May 14, 1999).
4.3 Consulting and Service Agreement between the company and James
Wexler, dated May 20, 1998 (incorporated by reference to Exhibit
4.2 of the Form S-8 filed on May 14, 1999).
4.4 Consulting Agreement between the company and Rogel Patawaran,
dated March 18, 1998 (incorporated by reference to Exhibit 4.3 of
the Form S-8 filed on May 14, 1999).
4.5 Consulting Agreement between the company and David Ninci, dated
February 22, 1999 (incorporated by reference to Exhibit 4.4 of the
Form S-8 filed on May 14, 1999).
4.6 Consulting Agreement between the company and Harry Hargens, dated
January 17, 1999 (incorporated by reference to Exhibit 4.5 of the
Form S-8 filed on May 14, 1999).
4.7 Consulting Agreement between the company and Charlene Charles,
dated March 10, 1999 (incorporated by reference to Exhibit 4.6 of
the Form S-8 filed on May 14, 1999).
4.8 Internet Consulting Services Agreement between the company and
Steve Goodman, dated May 3, 1999 (incorporated by reference to
Exhibit 4.2 of the Form S-8 filed on July 2, 1999).
4.9 Consulting Agreement between the company and Rogel Patawaran,
dated June 8, 1999 (incorporated by reference to Exhibit 4.3 of
the Form S-8 filed on July 2, 1999).
4.10 Consulting and Service Agreement between the company and Edward
Wexler, dated May 20, 1999 (incorporated by reference to Exhibit
4.4 of the Form S-8 filed on July 2, 1999).
4.11 Consultant Agreement between the company and Richard Epstein,
dated June 3, 1999 (incorporated by reference to Exhibit 4.5 of
the Form S-8 filed on July 2, 1999).
4.12 Consultant Agreement between the company and Ezzat Jallad, dated
March 10, 1999 (incorporated by reference to Exhibit 4.6 of the
Form S-8 filed on July 2, 1999).
4.13 Consultant Agreement between the company and Shar Offenberg, dated
June 20, 1998 (incorporated by reference to Exhibit 4.7 of the
Form S- 8 filed on July 2, 1999).
4.14 Consultant Agreement between the company and Richard Parnes, dated
May 10, 1999 (incorporated by reference to Exhibit 4.8 of the Form
S-8 filed on July 2, 1999).
4.15 Consulting Contract between the company and Robert Bragg, dated
August 19, 1999 (incorporated by reference to Exhibit 4.2 of the
Form S-8 filed on August 31, 1999).
4.16 Consultant Agreement between the company and Dominique Einhorn,
dated August 9, 1999 (incorporated by reference to Exhibit 4.3 of
the Form S-8 filed on August 31, 1999).
4.17 Consultant Agreement between the company and Richard Epstein,
dated August 16, 1999 (incorporated by reference to Exhibit 4.4 of
the Form S-8 filed on August 31, 1999).
4.18 Consultant Agreement between the company and Jane Hauser, dated
August 16, 1999 (incorporated by reference to Exhibit 4.5 of the
Form S-8 filed on August 31, 1999).
4.19 Form of Debenture issued by the company to CALP II, LP, dated June
9, 1999 (incorporated by reference to Exhibit 4.3 of the Form
SB-2/A filed on July 22, 1999).
4.20 Registration Rights Agreement between the company and CALP II, LP,
dated June 9, 1999 (incorporated by reference to Exhibit 4.2 of
the Form SB-2/A filed on July 22, 1999).
4.21 Form of Warrant issued by the company to CALP II, LP, dated June
9, 1999 (incorporated by reference to Exhibit 4.4 of the Form
SB-2/A filed on July 22, 1999).
4.22 Common Stock Purchase Agreement between the company and Alpha
Venture Capital, Inc., dated September 28, 1999 (incorporated by
reference to Exhibit 4.2 of the Form SB-2 POS filed on September
29, 1999).
4.23 Registration Rights Agreement between the company and Alpha
Venture Capital, Inc., dated September 28, 1999 (incorporated by
reference to Exhibit 4.3 of the Form SB-2 POS filed on September
29, 1999).
4.24 Warrant issued by the company to Alpha Venture Capital, Inc.,
dated September 28, 1999 (incorporated by reference to Exhibit 4.4
of the Form SB-2 POS filed on September 29, 1999).
4.25 General Form of Warrant issued by the company to various
individuals and companies (incorporated by reference to Exhibit
4.25 of the Form SB-2/A filed on May 3, 2001).
4.26 Amended and Restated Retainer Stock Plan for Non-Employee
Directors and Consultants, dated February 1, 2000 (incorporated by
reference to Exhibit 4.1 of the Form S-8 filed on February 10,
2000).
4.27 Consulting Services Agreement between the company and Laurel-Jayne
Yapel Manzanares, dated February 1, 2000 (incorporated by
reference to Exhibit 4.2 of the Form S-8 filed on February 10,
2000).
4.28 Consulting Services Agreement between the company and Marcine Aniz
Uhler, dated February 1, 2000 (incorporated by reference to
Exhibit 4.3 of the Form S-8 filed on February 10, 2000).
4.29 Consulting Services Agreement between the company and William
Lane, dated February 7, 2000 (incorporated by reference to Exhibit
4.4 of the Form S-8 filed on February 10, 2000).
4.30 Consulting Services Agreement between the company and Earl
Gilbrech, dated February 7, 2000 (incorporated by reference to
Exhibit 4.5 of the Form S-8 filed on February 10, 2000).
4.31 Consulting Services Agreement between the company and Dominique
Einhorn, dated February 7, 2000 (incorporated by reference to
Exhibit 4.6 of the Form S-8 filed on February 10, 2000).
4.32 Consulting Services Agreement between the company and Edward James
Wexler, dated February 7, 2000 (incorporated by reference to
Exhibit 4.7 of the Form S-8 filed on February 10, 2000).
4.33 Consulting Agreement between the company and R. Scott Hatfield,
dated March 6, 2000 (incorporated by reference to Exhibit 4.32 of
the Form SB-2 POS filed on September 12, 2000).
4.34 Consulting Services Agreement between the company and Chris
Jensen, dated April 24, 2000 (incorporated by reference to Exhibit
4.33 of the Form SB-2 POS filed on September 12, 2000).
4.35 Consulting Agreement between the company and Robert Graham, dated
May 11, 2000 (incorporated by reference to Exhibit 4.34 of the
Form SB-2 POS filed on September 12, 2000).
4.36 Consulting Agreement between the company and Richard Epstein,
dated May 20, 2000 (incorporated by reference to Exhibit 4.35 of
the Form SB-2 POS filed on September 12, 2000).
4.37 Warrant Agreement between the company, GunnAllen Financial, Inc.,
and David Kern Peteler, dated May 24, 2000 (incorporated by
reference to Exhibit 4.43 of the Form 10-QSB filed on November 14,
2000).
4.38 Consulting Agreement between the company and Richard Epstein,
dated June 2, 2000 (incorporated by reference to Exhibit 10.1 of
the Form S- 8 filed on July 10, 2000).
4.39 Consulting Services Agreement between the company and Rogel
Patawaran, dated June 2, 2000 (incorporated by reference to
Exhibit 10.2 of the Form S-8 filed on July 10, 2000).
4.40 Consulting Agreement between the company and Elle Travis, dated
June 2, 2000 (incorporated by reference to Exhibit 10.3 of the
Form S-8 filed on July 10, 2000).
4.41 Consulting Agreement between the company and Charles Yourshaw,
dated June 5, 2000 (incorporated by reference to Exhibit 10.1 of
the Form S- 8 filed on July 10, 2000).
4.42 Consulting Agreement between the company and Nick Gorenc, dated
June 5, 2000 (incorporated by reference to Exhibit 10.2 of the
Form S-8 filed on July 10, 2000).
4.43 Consulting Agreement between the company and Louis Sabatasso,
dated June 10, 2000 (incorporated by reference to Exhibit 10.1 of
the Form S-8 filed on July 10, 2000).
4.44 Consulting Agreement between the company and Laurie Belger, dated
June 10, 2000 (incorporated by reference to Exhibit 10.2 of the
Form S-8 filed on July 10, 2000).
4.45 Consulting Services Agreement between the company and Richard
Epstein, dated July 21, 2000 (incorporated by reference to Exhibit
4.1 of the Form S-8 filed on October 10, 2000).
4.46 Amended and Restated Stock Incentive Plan, dated September 1, 2000
(incorporated by reference to Exhibit 4.1 of the Form S-8 filed on
September 12, 2000).
4.47 Amended and Restated Non-Employee Directors and Consultants
Retainer Stock Plan (Amendment No. 2), dated September 1, 2000
(incorporated by reference to Exhibit 4.2 of the Form S-8 filed on
September 12, 2000).
4.48 Consulting Services Agreement between the company and Richard
Epstein, dated September 6, 2000 (incorporated by reference to
Exhibit 4.3 of the Form S-8 filed on September 12, 2000).
4.49 Consulting Services Agreement between the company and Chris
Jensen, dated September 6, 2000 (incorporated by reference to
Exhibit 4.4 of the Form S-8 filed on September 12, 2000).
4.50 Consulting Services Agreement between the company and Jim Pugh,
dated September 12, 2000 (incorporated by reference to Exhibit 4.2
of the Form S-8 filed on September 28, 2000).
4.51 Consulting Services Agreement between the company and Darrel
Dixon, dated September 14, 2000 (incorporated by reference to
Exhibit 4.3 of the Form S-8 filed on September 28, 2000).
4.52 Consulting Services Agreement between the company and Robert
Graham, dated September 14, 2000 (incorporated by reference to
Exhibit 4.4 of the Form S-8 filed on September 28, 2000).
4.53 Consulting Services Agreement between the company and David
Weiler, dated September 14, 2000 (incorporated by reference to
Exhibit 4.2 of the Form S-8 filed on October 10, 2000).
4.54 Consulting Services Agreement between the company and Nathaniel
Adams, dated September 18, 2000 (incorporated by reference to
Exhibit 4.5 of the Form S-8 filed on September 28, 2000).
4.55 Consulting Services Agreement between the company and Chris
Jensen, dated October 12, 2000 (incorporated by reference to
Exhibit 4.3 of the Form S-8 filed on October 10, 2000).
4.56 Consulting Services Agreement between the company and Quinn Brady,
dated October 12, 2000 (incorporated by reference to Exhibit 4.4
of the Form S-8 filed on October 10, 2000).
4.57 Addendum To Existing Common Stock Purchase Agreement Dated
September 28, 1999 between the company and Alpha Venture Capital,
Inc., dated October 23, 2000 (incorporated by reference to Exhibit
4.57 of the Form SB-2/A filed on May 3, 2001).
4.58 Amended and Restated Non-Employee Directors and Consultants
Retainer Stock Plan (Amendment No. 3), dated November 1, 2000
(incorporated by reference to Exhibit 4.2 of the Form S-8 filed on
November 20, 2000).
4.59 Consulting Services Agreement between the company and Michael
Sitrick, dated November 4, 2000 (incorporated by reference to
Exhibit 4.3 of the Form S-8 filed on November 20, 2000).
4.60 Consulting Services Agreement between the company and Paul Francis
Peter Egan Pugh, dated November 4, 2000 (incorporated by reference
to Exhibit 4.4 of the Form S-8 filed on November 20, 2000).
4.61 Consulting Services Agreement between the company and James Wong,
dated November 4, 2000 (incorporated by reference to Exhibit 4.5
of the Form S-8 filed on November 20, 2000).
4.62 Consulting Services Agreement between the company and Matthew
Owens, dated November 4, 2000 (incorporated by reference to
Exhibit 4.2 of the Form S-8 filed on December 12, 2000).
4.63 Consulting Services Agreement between the company and Marisa
Yance, dated November 4, 2000 (incorporated by reference to
Exhibit 4.3 of the Form S-8 filed on December 12, 2000).
4.64 Amended and Restated Stock Incentive Plan (Amendment No. 2), dated
November 7, 2000 (incorporated by reference to Exhibit 4.1 of the
Form S-8 filed on November 20, 2000).
4.65 Consulting Services Agreement between the company and Tony
Sandalier, dated November 8, 2000 (incorporated by reference to
Exhibit 4.6 of the Form S-8 filed on November 20, 2000).
4.66 Consulting Services Agreement between the company and Chi-Yuan
Chiu, dated November 8, 2000 (incorporated by reference to Exhibit
4.7 of the Form S-8 filed on November 20, 2000).
4.67 Consulting Services Agreement between the company and Hsien-Hsiang
Tsai, dated November 8, 2000 (incorporated by reference to Exhibit
4.8 of the Form S-8 filed on November 20, 2000).
4.68 Consulting Services Agreement between the company and Richard
Epstein, dated November 8, 2000 (incorporated by reference to
Exhibit 4.9 of the Form S-8 filed on November 20, 2000).
4.69 Consulting Services Agreement between the company and Bill West,
dated November 8, 2000 (incorporated by reference to Exhibit 4.10
of the Form S-8 filed on November 20, 2000).
4.70 Consulting Services Agreement between the company and Clinton
Wong, dated November 8, 2000 (incorporated by reference to Exhibit
4.11 of the Form S-8 filed on November 20, 2000).
4.71 Consulting Agreement between the company and Antonio Cardenas Jr.,
dated November 9, 2000 (incorporated by reference to Exhibit 4.12
of the Form S-8 filed on November 20, 2000).
4.72 Consulting Services Agreement between the company and William
Haseltine, dated November 29, 2000 (incorporated by reference to
Exhibit 4.4 of the Form S-8 filed on December 12, 2000).
4.73 Consulting Services Agreement between the company and Nick Gorenc,
dated November 29, 2000 (incorporated by reference to Exhibit 4.5
of the Form S-8 filed on December 12, 2000).
4.74 Consulting Services Agreement between the company and Peter
Kokiousis, dated November 29, 2000 (incorporated by reference to
Exhibit 4.6 of the Form S-8 filed on December 12, 2000).
4.75 Consulting Services Agreement between the company and Kris
Narayan, dated November 29, 2000 (incorporated by reference to
Exhibit 4.7 of the Form S-8 filed on December 12, 2000).
4.76 Common Stock Purchase Agreement between the company and Alpha
Venture Capital, Inc., dated December 8, 2000 (incorporated by
reference to Exhibit 4.76 of the Form SB-2/A filed on May 3,
2001).
4.77 Warrant to Purchase Shares of Common Stock, issued by the company
to Alpha Venture Capital, Inc., dated December 8, 2000
(incorporated by reference to Exhibit 4.77 of the Form SB-2/A
filed on May 3, 2001).
4.78 Addendum to Common Stock Purchase Agreement between the company
and Alpha Venture Capital, Inc., dated February 13, 2001
(incorporated by reference to Exhibit 4.78 of the Form SB-2/A
filed on May 3, 2001).
4.79 Line of Credit Agreement between the company and Alliance
Equities, dated March 5, 2001 (incorporated by reference to
Exhibit 4.79 of the Form SB-2/A filed on May 3, 2001).
4.80 Debenture issued by the company to Alliance Equities, dated March
20, 2001 (incorporated by reference to Exhibit 4.80 of the Form
SB-2/A filed on May 3, 2001).
4.81 Amended and Restated Non-Employee Directors and Consultants
Retainer Stock Plan (Amendment No. 4), dated April 27, 2001
(incorporated by reference to Exhibit 4.1 of the Form S-8 filed on
May 2, 2001).
4.82 Consulting Services Agreement between the company and Francis
Mecoli, dated March 19, 2001 (incorporated by reference to Exhibit
4.2 of the Form S-8 filed on May 2, 2001).
4.83 Consulting Services Agreement between the company and William
West, dated March 20, 2001 (incorporated by reference to Exhibit
4.3 of the Form S-8 filed on May 2, 2001).
4.84 Consulting Services Agreement between the company and Marc Tow,
dated March 20, 2001 (incorporated by reference to Exhibit 4.4 of
the Form S-8 filed on May 2, 2001).
4.85 Consulting Services Agreement between the company and Felix
Campos, dated March 20, 2001 (incorporated by reference to Exhibit
4.5 of the Form S-8 filed on May 2, 2001).
4.86 Consulting Services Agreement between the company and Marc Christ,
dated March 20, 2001 (incorporated by reference to Exhibit 4.6 of
the Form S-8 filed on May 2, 2001).
4.87 Consulting Services Agreement between the company and Thomas A.
Sandelier, dated March 20, 2001 (incorporated by reference to
Exhibit 4.7 of the Form S-8 filed on May 2, 2001).
4.88 Consulting Services Agreement between the company and Prince Saud
Al- Faisal, dated March 20, 2001 (incorporated by reference to
Exhibit 4.8 of the Form S-8 filed on May 2, 2001).
4.89 Consulting Services Agreement between the company and Ralph
DiFelice, dated March 20, 2001 (incorporated by reference to
Exhibit 4.9 of the Form S-8 filed on May 2, 2001).
4.90 Common Stock Purchase Agreement between the company and Alpha
Venture Capital, Inc., dated October 6, 2001 (incorporated by
reference to the SB-2 filed on October 6, 2001).
10.1 Promissory Note between Electronic Transactions & Technologies and
Unipay, Inc., dated April 26, 1999 (incorporated by reference to
Exhibit 10.5 of the Form 10-KSB filed on May 9, 2000).
10.2 Joint Venture Agreement between the company and First
Entertainment Holding Corp., dated April 29, 1999 (incorporated by
reference to Exhibit 10.6 of the Form 10-KSB filed on May 9,
2000).
10.3 Letter of Commitment between the company and Rogel Technologies,
dated May 6, 1999 (incorporated by reference to Exhibit 2 to the
Form 8-K filed on November 15, 1999).
10.4 Acquisition Agreement between the company and eBet.com, Inc.,
dated August 12, 1999 (incorporated by reference to Exhibit 2 to
the Form 8- K/A filed on November 15, 1999).
10.5 Consulting Agreement between the company and eMarkit,
Incorporated, dated August 16, 1999 (incorporated by reference to
Exhibit 10.9 of the Form 10-KSB filed on May 9, 2000).
10.6 Stock Exchange Agreement between the company, La Empresa Ranco
Plasticos Limitada, Michael Lanes, and Jamie Ligator, dated August
31, 1999 (incorporated by reference to Exhibit 2.1 to the Form 8-K
filed on November 16, 1999).
10.7 Amendment to Agreement to License Assets dated February 18, 1997
between the company, Electronic Transactions & Technologies, and
James Clinton, dated September 1, 1999 (incorporated by reference
to Exhibit 10.7 of the Form SB-2/A filed on May 3, 2001).
10.8 Agreement and Plan of Acquisition between the company and
PowerClick, Inc., dated September 9, 1999 (incorporated by
reference to Exhibit 10.11 of the Form 10-KSB filed on May 9,
2000).
10.9 Consulting Agreement between the company and International
Investor Relations Group, Inc., dated September 24, 1999
(incorporated by reference to Exhibit 10.12 of the Form 10-KSB
filed on May 9, 2000).
10.10 Agreement between the company and Kanakaris Communications, dated
October 21, 1999 (incorporated by reference to Exhibit 10.13 of
the Form 10-KSB filed on May 9, 2000).
10.11 Letter of Commitment between the company and Rogel Technologies,
dated October 23, 1999 (incorporated by reference to Exhibit 10.14
of the Form 10-KSB filed on May 9, 2000).
10.12 Capital Contribution Agreement between the company and
SafeTPay.com, dated November 5, 1999 (incorporated by reference to
Exhibit 10.15 of the Form 10-KSB filed on May 9, 2000).
10.13 Agreement between the company and Rogel Technologies, dated
November 23, 1999 (incorporated by reference to Exhibit 10.16 of
the Form 10- KSB filed on May 9, 2000).
10.14 Contract of Partnership between the company and Top Sports, S.A.,
dated November 20, 1999 (incorporated by reference to Exhibit
10.17 of the Form 10-KSB filed on May 9, 2000).
10.15 Agreement between the company and Alliance Equities, dated
November 29, 1999 (incorporated by reference to Exhibit 10.18 of
the Form 10- KSB filed on May 9, 2000).
10.16 Secured Promissory Note issued to the company by Electronic
Transactions & Technologies and Thomas S. Hughes, dated December
1, 1999 (incorporated by reference to Exhibit 10.19 of the Form
10-KSB filed on May 9, 2000).
10.17 Security Agreement between the company, Electronic Transactions &
Technologies, and Thomas S. Hughes, dated December 1, 1999
(incorporated by reference to Exhibit 10.20 of the Form 10-KSB
filed on May 9, 2000).
10.18 Business Cooperation Agreement between the company and Top Sports,
S.A., dated December 9, 1999 (incorporated by reference to Exhibit
10.21 of the Form 10-KSB filed on May 9, 2000).
10.19 Consulting Agreement between the company and Michael Leste, dated
December 10, 1999 (incorporated by reference to Exhibit 10.22 of
the Form 10-KSB filed on May 9, 2000).
10.20 Consulting Agreement between the company and Michael Kofoed, dated
December 10, 1999 (incorporated by reference to Exhibit 10.23 of
the Form 10-KSB filed on May 9, 2000).
10.21 Agreement between the company and Top Sports S.A., dated December
16, 1999 (incorporated by reference to Exhibit 10.24 of the Form
10-KSB filed on May 9, 2000).
10.22 Agreement between the company and eMarkit, Incorporated, dated
December 29, 1999 (incorporated by reference to Exhibit 10.25 of
the Form 10-KSB filed on May 9, 2000).
10.23 Shares Sales Contract between the company and Paul Egan, dated
January 1, 2000 (incorporated by reference to Exhibit 10.26 of the
Form SB-2 POS filed on September 12, 2000).
10.24 Consultancy Agreement between the company and Paul Egan, dated
January 1, 2000 (incorporated by reference to Exhibit 10.2 of the
Form 10-KSB filed on April 25, 2001).
10.25 Fee Agreement between the company and Red Iguana Trading Company,
Inc., dated January 2, 2000 (incorporated by reference to Exhibit
10.26 of the Form 10-QSB filed on May 30, 2000).
10.26 Consulting Services Agreement between the company and Richard
Epstein, dated January 3, 2000 (incorporated by reference to
Exhibit 10.4 of the Form 10-KSB filed on April 25, 2001).
10.27 Assignment of eSportsbet between the company and PowerClick, Inc.,
dated January 7, 2000 (incorporated by reference to Exhibit 10.27
of the Form 10-QSB filed on May 30, 2000).
10.28 Letter of Intent of Negotiation and Information Exchange between
eConnect2Trade.com, Incorporated, and Empire Financial Holdings,
Incorporated, dated January 21, 2000 (incorporated by reference to
Exhibit 10.28 of the Form 10-QSB filed on May 30, 2000).
10.29 Manufacturing Agreement between the company and Asia Pacific
Micro, Inc., dated January 21, 2000 (incorporated by reference to
Exhibit 10.29 of the Form 10-QSB filed on May 30, 2000).
10.30 Consulting Services Agreement between the company and Boardwalk
Associates, Inc., dated January 26, 2000 (incorporated by
reference to Exhibit 10.30 of the Form 10-QSB filed on May 30,
2000).
10.31 Consulting Services Agreement between the company and Coldwater
Capital L.L.C., dated January 26, 2000 (incorporated by reference
to Exhibit 10.31 of the Form 10-QSB filed on May 30, 2000).
10.32 Consultant Agreement between the company and Harvey M. Burstein,
dated February 2, 2000 (incorporated by reference to Exhibit 10.32
of the Form 10-QSB filed on May 30, 2000).
10.33 Consultant Agreement between the company and Terrie Pham, dated
February 2, 2000 (incorporated by reference to Exhibit 10.33 of
the Form 10-QSB filed on May 30, 2000).
10.34 Software License, Development, and Maintenance Agreement
(Dominican Republic) between the company and eFunds Corporation,
dated February 3, 2000 (incorporated by reference to Exhibit 10.34
of the Form 10-QSB filed on May 30, 2000).
10.35 Agreement between the company and Burbank Coach Works, dated
February 3, 2000 (incorporated by reference to Exhibit 10.35 of
the Form 10-QSB filed on May 30, 2000).
10.36 Software License, Development, and Maintenance Agreement (Ireland)
between the company and eFunds Corporation, dated February 4, 2000
(incorporated by reference to Exhibit 10.36 of the Form 10-QSB
filed on May 30, 2000).
10.37 Acquisition Agreement between the company and PowerClick, Inc.,
dated February 9, 2000 (incorporated by reference to Exhibit 10.37
of the Form 10-QSB filed on May 30, 2000).
10.38 Agreement between the company and Richard Epstein, dated February
12, 2000 (incorporated by reference to Exhibit 10.16 of the Form
10-KSB filed on April 25, 2001).
10.39 Loan Agreement between the company and Richard Epstein, dated
February 15, 2000 (incorporated by reference to Exhibit 10.38 of
the Form 10- QSB filed on May 30, 2000).
10.40 PocketPay Joint Venture Agreement between the company and Pilot
Island Publishing, Inc., dated March 1, 2000 (incorporated by
reference to Exhibit 10.39 of the Form 10-QSB filed on May 30,
2000).
10.41 Letter of Intent between the company and Real Solutions, Ltd.,
dated March 9, 2000 (incorporated by reference to Exhibit 10.40 of
the Form 10-QSB filed on May 30, 2000).
10.42 Consulting Agreement between the company and Ryan Kavanaugh, dated
March 10, 2000 (incorporated by reference to Exhibit 10.41 of the
Form 10-QSB filed on May 30, 2000).
10.43 Amended Employment Agreement between the company and Stephen E.
Pazian, dated March 21, 2000 (incorporated by reference to Exhibit
10.42 of the Form 10-QSB filed on May 30, 2000).
10.44 Amended and Restated Employment Agreement between the company and
Stanley C. Morris, dated March 22, 2000 (incorporated by reference
to Exhibit 10.43 of the Form 10-QSB filed on May 30, 2000).
10.45 China-Singapore-Hong Kong-Macao Joint Venture Agreement between
the company, and Raymond Kessler and Li-Wang Kessler, dated March
27, 2000 (incorporated by reference to Exhibit 10.44 of the Form
10-QSB filed on May 30, 2000).
10.46 Amended and Restated Secured Promissory Note issued to the company
by Electronic Transactions & Technologies and Thomas S. Hughes,
dated March 31, 2000 (incorporated by reference to Exhibit 10.45
of the Form 10-QSB filed on May 30, 2000).
10.47 Amended and Restated Security Agreement between the company,
Electronic Transactions & Technologies, and Thomas S. Hughes,
dated March 31, 2000 (incorporated by reference to Exhibit 10.46
of the Form 10-QSB filed on May 30, 2000).
10.48 Master Service Agreement between the company and REAL Solutions,
Ltd., dated April 13, 2000 (incorporated by reference to Exhibit
10.48 of the Form SB-2 POS filed on September 12, 2000).
10.49 Consulting and Services Agreement between the company and Peters
Entertainment.com, Inc., dated April 14, 2000 (incorporated by
reference to Exhibit 10.49 of the Form SB-2 POS filed on September
12, 2000).
10.50 Letter of Intent between the company and National Data Funding
Corporation, dated May 22, 2000 (incorporated by reference to
Exhibit 10.50 of the Form 10-QSB/A filed on October 19, 2000).
10.51 Agreement between the company and Top Sports, S.A., dated June 20,
2000 (incorporated by reference to Exhibit 10.51 of the Form
10-QSB/A filed on October 19, 2000).
10.52 Asset Purchase Agreement between the company and Broadband Video,
Inc., dated October 4, 2000 (incorporated by reference to Exhibit
10.52 of the Form SB-2/A filed on May 3, 2001).
10.53 Agreement for Sale and Plan of Reorganization between the company
and National Data Funding Corporation, dated October 29, 2000
(incorporated by reference to Exhibit 10.53 of the Form SB-2/A
filed on May 3, 2001).
10.54 Letter of Intent between the company and eConnect Caribbean. S.A.,
dated March 12, 2001 (incorporated by reference to Exhibit 10.54
of the Form SB-2/A filed on May 3, 2001).
10.55 Loan Agreement between the company and Perro Corp., dated March
26, 2001 (incorporated by reference to Exhibit 10.2 of the Form
10-QSB filed on May 22, 2001).
10.56 Purchasing Agreement between the company and 3Pea Technologies,
Inc., dated June 19, 2001 (incorporated by reference to Exhibit
10.56 of the Form SB-2 filed on July 30, 2001).
24 Special Power of Attorney (see signature page).
99.1 Patents: dated August 9, 1994, May 19, 1998, and September 15,
1998 (incorporated by reference to Exhibit 99.1 of the Form 10-KSB
filed on May 9, 2000).
99.2 Trademarks: filed March 31, 1997, February 16, 1999, May 6, 1999,
May 24, 1999, June 3, 1999, June 4, 1999, August 12, 1999, and
September 28, 1999 (incorporated by reference to Exhibit 99.2 of
the Form 10-KSB filed on May 9, 2000).
99.3 Trademark filed on March 15, 2000 (incorporated by reference to
Exhibit 99.3 of the Form 10-QSB filed on May 30, 2000).