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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Commission file number 0-25022
EBONLINEINC.COM
(Exact name of small business issuer as specified in its charter)
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NEVADA 72-1148906
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
15825 Shady Grove Road, Suite 50, Rockville, Maryland 20850
(Address of principal executive offices) (Zip Code)
(301) 947-0100
(Registrant's telephone number, including area code)
CERX VENTURE CORPORATION
(Former Name)
90 MADISON STREET, SUITE 707, DENVER, COLORADO
80206 (Former Address)
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Check whether the issuer: (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) has been subject to such filing requirements for the past
90 days. Yes [ ] No [X]
Transitional Small Business Disclosure Format: Yes [ ] No [x]
The total number of shares of the registrant's Common Stock, $.001 par value,
outstanding on August 22, 1999, was 5,500,000.
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EBONLINEINC.COM
Page
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Historical Financial Statements
Balance Sheets
As of June 30, 1999 and December 31, 1998.......................... 3
Statements of Operations
Six Month Periods Ended June 30, 1999 and 1998 and
Cumulative from inception (April 4, 1989) through June 30, 1999.. 4
Statements of Cash Flows
Six Month Periods Ended June 30, 1999 and 1998 and
Cumulative from inception (April 4, 1989) through June 30, 1999.. 5
Notes to Consolidated Financial Statements........................... 6
Item 2. Management's Discussion and Analysis or Plan of Operation......... 10
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................................. 13
Signature................................................................. 14
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EBONLINEINC.COM
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
JUNE 30, DECEMBER 31,
1999 1998
------------ ------------
(UNAUDITED) (AUDITED)
ASSETS
Current Assets
Cash $ 1,353 $ 1,014
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Total Assets $ 1,353 $ 1,014
============= =============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 2,580 $ 2,580
Advances 20,193 14,590
Accrued interest 25,106 18,741
Promissory notes to an officer/stockholder 159,372 159,372
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Total liabilities $ 207,251 $ 195,283
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Commitments and contingencies
Shareholders' equity
Preferred stock; $.001 par value; authorized
15,000,000 shares; issued - none - -
Common stock; $.001 par value; authorized
50,000,000 shares; issued and outstanding
5,002,838 shares 5,003 5,003
Additional paid in capital 220,992 220,992
Deficit accumulated during development stage (431,893) (420,264)
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Total shareholders' equity (205,898) (194,269)
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Total Liabilities and Shareholders' Equity $ 1,353 $ 1,014
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See accompanying notes to financial statements
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EBONLINEINC.COM
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
APRIL 4, 1989
FOR THE SIX MONTHS (INCEPTION) TO
ENDED JUNE 30, JUNE 30,
1999 1998 1999
--------------- -------------- --------------
Costs and expenses
Costs related to attempted $ - $ - $ 192,020
business acquisitions
General and administrative 5,264 6,631 148,302
Interest 6,365 3,920 25,107
Offering Costs - - 66,464
-------------- -------------- --------------
Total costs and expenses 11,629 10,551 431,893
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Net loss $ (11,629) $ (10,551) $ (431,893)
============== ============== ==============
Loss per common share $ (nil) $ (nil)
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Weighted average common shares outstanding 5,002,838 5,002,838
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See accompanying notes to financial statements
- 4 -
EBONLINEINC.COM
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
APRIL 4, 1989
FOR THE SIX MONTHS (INCEPTION) TO
ENDED JUNE 30, JUNE 30,
1999 1998 1999
--------- --------- ----------
Cash flows from operating activities
Net loss $(11,629) $(10,551) $(431,893)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Capital contributed by an
officer/stockholder - - 53,343
Common stock issued for cost advanced and
services - - 151,112
Changes in operating assets and liabilities
Accounts payable - 3,316 2,580
Accrued interest 6,365 3,920 25,106
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Net cash used in operating activities (5,264) (3,315) (199,752)
--------- --------- ----------
Cash flows from financing activities
Proceeds from promissory notes - 30,350 159,372
Short term loan 5,603 (30,000) 20,193
Proceeds from sale of common stock - - 21,540
Net cash provided by financing activities 5,603 350 201,105
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Net increase (decrease) in cash 339 (2,965) 1,353
Cash and cash equivalents, beginning of period 1,014 4,609 -
--------- --------- ----------
Cash and cash equivalents, end of period $ 1,353 $ 1,644 $ 1,353
========= ========= ==========
See accompanying notes to financial statements
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EBONLINEINC.COM
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A. INTERIM REPORTING
The financial statements of EBonlineinc.com ("EBonline" or the "Company") for
the six month period ended June 30, 1999 have been prepared by the Company, are
unaudited, and are subject to year-end adjustments. These unaudited financial
statements reflect all known adjustments (which included only normal, recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial position, results of operations, and cash flows
for the periods presented in accordance with generally accepted accounting
principles. The results presented herein for the interim periods are not
necessarily indicative of the actual results to be expected for the fiscal year.
The notes accompanying the consolidated financial statements in the Company's
Annual Report on Form 10-KSB for the year ended March 31, 1999 include
accounting policies and additional information pertinent to an understanding of
these interim financial statements.
NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
The financial statements presented are those of EBonlineinc.com, a development
stage company (the "Company"). The Company was incorporated on April 4, 1989
under the laws of the State of Nevada. On March 23, 1998, the Company's name was
changed from CERX Entertainment Corporation to CERX Venture Corporation. On July
12, 1999, the Company effected a merger with EBonlineinc.com, Inc., a Delaware
Corporation. In conjunction with the merger, the Company changed its name to
EBonlineinc.com.
The Company's activities to date have been directed towards the raising of
capital and attempted business acquisitions.
The audit report of the Company's independent accountants reporting on the
Company's financial statements for the year ended December 31, 1998, expressed
doubt regarding the Company's ability to continue as a going concern in light of
the Company's recurring losses and current liabilities, unless the Company
obtains future profitable operations or additional financing. The financial
statements do not include any adjustments that might be necessary should the
Company be unable to continue in existence.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reporting amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
DEFERRED INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the year in which those temporary
differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date.
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EBONLINEINC.COM
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
LOSS PER COMMON SHARE
Loss per common share is computed by dividing the net loss by the weighted
average shares outstanding during the period.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's payables, accrued interest and promissory notes
due to an officer/shareholder is not practicable to estimate due to the related
party nature of the underlying transactions and the indefinite payment terms.
COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standard Number 130 (SFAS 130) "Reporting Comprehensive
Income" that establishes standards for reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.
There were no items of comprehensive income as defined by SFAS 130 for any of
the periods presented.
CASH AND CASH EQUIVALENTS
For purposes of the consolidated financial statements, the Company considers all
demand deposits held in banks and certain highly liquid investments with
maturities of 90 days or less other than those held for sale in the ordinary
course of business to be cash equivalents.
RECLASSIFICATIONS
Certain amounts in prior periods have been reclassified to conform to the
current presentation.
NOTE C. STOCKHOLDERS' EQUITY
PREFERRED STOCK
On February 10, 1997, the Company's Board of Directors designated 4,000,000
shares of preferred stock as the Series A, 6.75% Non-Voting Convertible
Preferred Stock. No shares of the Series A, 6.75% Non- Voting Convertible
Preferred Stock have been issued. On March 31, 1998, the Company cancelled the
designation of the Series A, 6.75% Non-Voting Convertible Preferred Stock.
The Company has a total of 15,000,000 preferred shares, $.001 par value,
authorized. Dividends, voting rights and other terms, rights and preferences of
these preferred shares have not been designated but may be designated by the
Board of Directors from time to time.
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EBONLINEINC.COM
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE C. STOCKHOLDERS' EQUITY (CONTINUED)
1994 COMPENSATORY STOCK OPTION PLAN
The Company has adopted a compensatory stock option plan (the "CSO Plan") which
allows for the issuance of options to purchase up to 5,000,000 shares (1,750,000
shares after giving effect to the July 8, 1999 3.5-for-10 reverse stock split)
of stock to employees, officers, directors and consultants of the Company. The
CSO Plan is not intended to qualify as an "incentive stock option plan" under
Section 422 of the Internal Revenue Code. Options will be granted under the CSO
Plan at exercise prices to be determined by the Board of Directors or other CSO
Plan administrator. The Company will incur compensation expense to the extent
that the market value of the stock at date of grant exceeds the amount the
grantee is required to pay for the options. No options have been granted under
the CSO Plan to date.
1994 EMPLOYEE STOCK COMPENSATION PLAN
The Company has adopted an employee stock compensation plan (the "ESC Plan")
which allows for the issuance of up to 5,000,000 shares (1,750,000 shares after
giving effect to the July 8, 1999 3.5-for-10 reverse stock split) of stock to
employees, officers, directors and consultants of the Company. The Company will
incur compensation expense to the extent the market value of the stock at date
of grant exceeds the amount the employee is required to pay for the stock (if
any). The ESC Plan will be administered by the Board of Directors through a
committee of directors. As of December 31, 1998, the Company has awarded
2,012,853 (before giving effect to the July 8, 1999 3.5-for-10 reverse stock
split) shares of common stock under the ESC Plan.
RELATED PARTY TRANSACTIONS
During 1998, John D. Brasher Jr., the Company's majority shareholder and
president, loaned the Company $61,850 and these funds subsequently were used to
partially repay advances of $60,000.
On June 30, 1999, the Company owed John D. Brasher Jr. an aggregate of $159,372
in demand promissory notes and $25,106 of accrued interest (8% simple interest
per annum) for cash loans and advances of $20,193 for expenses of the Company.
On December 31, 1997, Brasher & Company, a law firm owned by the Company's
President, forgave $53,343 of accrued legal fees and expenses advanced on behalf
of the Company. The Company has recorded this debt forgiveness as a capital
contribution.
The Company utilizes office space provided by Brasher & Company at no charge.
NOTE D. SUBSEQUENT EVENTS
MERGER
In July 1999, CERX Venture Corporation ("CERX") acquired 100 percent of the
outstanding capital stock of EBonlineinc.com, Inc. in exchange for 3,866,773
shares of CERX common stock. The value assigned to this transaction by the Board
of Directors was $1,000, the fair value of the net assets acquired.
- 8 -
EBONLINEINC.COM
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE D. SUBSEQUENT EVENTS (CONTINUED)
MERGER (CONTINUED)
In conjunction with this merger and immediately prior to the acquisition of
EBonline, CERX announced a reverse split of its outstanding common stock in the
ratio of 3.5 new shares of common stock in exchange for every 10 shares of
common stock. The number of shares outstanding immediately after this
transaction was 1,633,227. The total shares outstanding upon completion of the
merger was 5,500,000.
Also in connection with this merger, the majority shareholder of CERX agreed to
forgive his cash loans and advances together with accrued interest.
EBONLINEINC.COM
EBonline is a Web-based business consisting of a website, globally accessible
via the Internet, designed to facilitate merger, acquisition and corporate
finance activity. The site attracts businesses looking to sell, make an
acquisition, seek a merger or joint venture partner, obtain debt or equity
capital or simply gain exposure within the international investment banking
community. In addition, the site attracts accredited investors looking for
investment opportunities.
The combination of finance and the internet is expected to differentiate
EBonline from its competition. Other similarly focused sites offer business
listings and matching services, but none are backed by an international group of
emerging growth financial specialists such as EBonline.
In July 1999, EBonline launched its website at URL address
http://www.EBonlineinc.com. EBonline has retained EBI Securities, an affiliated
company, as its investment banker for the purposes of raising capital in the
quarter ending September 30, 1999. EBonline's common shares trade in the
over-the-counter market under the symbol "EBOL". The additional equity capital
is expected to be utilized for expansion and marketing.
- 9 -
PART I -- FINANCIAL INFORMATION (CONTINUED)
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Certain information set forth in this report under this caption
"Management's Discussion and Analysis or Plan of Operation" includes "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. In addition, from time to time, we may publish
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of
1934, as amended, or make oral statements that constitute forward-looking
statements. These forward-looking statements may relate to such matters as
anticipated financial performance, future revenues or earnings, business
prospects, projected ventures, new products, anticipated market performance and
similar matters. The words "budgeted", "anticipate", "project", "estimate",
"expect", "may", "believe", "potential" and other similar statements are
intended to be among the statements that are considered "forward looking"
statements. Readers are cautioned not to place undue reliance on these forward
looking statements, which are made as of the date hereof. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor, we caution
readers that a variety of factors could cause our actual results to differ
materially from the anticipated results or other expectations expressed in our
forward-looking statements. These risks and uncertainties, many of which are
beyond our control, include, but are not limited to: (i) transaction volume in
the securities markets, (ii) the volatility of the securities markets, (iii)
fluctuations in interest rates, (iv) changes in regulatory requirements which
could affect the cost of doing business, (v) fluctuations in currency rates,
(vi) general economic conditions, both domestic and international, (vii) changes
in the rate of inflation and related impact on securities markets, (viii)
competition from existing financial institutions and other new participants in
the securities markets, (ix) legal developments affecting the litigation
experience of the securities industry, (x) changes in federal and state tax laws
which could affect the popularity of products sold by us, (xi) significant and
rapid changes in technology which could negatively affect our internet related
projects and (xii) the risks and uncertainties set forth under the caption "Risk
Factors" which appears in our Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998 (the "Report"). We undertake no obligation to release
publicly any revisions to the forward looking statements to reflect events or
circumstances after the date hereof or to reflect unanticipated events or
developments.
This Form 10-QSB for the quarterly period ended June 30, 1999, makes
reference to our Report. The Report includes information necessary or useful to
an understanding of our businesses and financial statement presentations.
References to "us", "our", or "we" collectively refer to EBonlineinc.com
("EBonline").
GENERAL OVERVIEW
EBonlineinc.com ("EBonline" or the "Company") was incorporated in the State
of Nevada on April 4, 1989, under the name Chelsea Atwater, Inc. On March 19,
1997, the Company changed its name to Cerx Entertainment Corporation, and on
March 23, 1998, changed its name again to CERX Venture Corporation ("CERX"). On
July 12, 1999, the Company effected a merger with EBonlineinc.com, Inc., a
Delaware Corporation. In conjunction with the merger, the Company changed its
name to EBonlineinc.com. EBonline has no significant assets and is in the
development stage in accordance with Financial Accounting Standards Board
Standard No. 7. The Company intends to either raise funds to originate a
business or, alternatively, enter into a business combination with one or more
as yet unidentified privately held businesses.
Our business was to either acquire a small to medium-size business (or its
assets) actively engaged in a business generating revenue or having the
immediate prospect of generating revenue, or to originate a business. Due to our
current lack of cash, we acquired EBonlineinc.com, Inc by issuing shares of our
stock in a merger.
We anticipate generating an asset base sufficient to support a listing on a
national securities exchange or quotation on the NASDAQ Small Cap Market. There
can be no assurance that we will be successful in
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generating a sufficient asset base or that we will acquire or originate any
additional businesses. We are in the process of developing our operations and
additional sources of revenue.
LIQUIDITY AND CAPITAL RESOURCES
Through June 30, 1999, we have funded our operations exclusively through
cash loans and cash advances provided by shareholders. We are currently in the
process of raising additional cash through equity financing in the form of a
private placement. We have no line of credit or similar credit facility
available as a short-term borrowing facility. Through June 30, 1999, we paid no
salaries or rent, have had little in the way of general and administrative
overhead expenses, and have no material capital commitments. As of June 30,
1999, we had an accumulated a deficit (net loss) of $431,893 since inception and
had $1,353 in cash on hand but no other significant assets. We were indebted to
our majority shareholder at June 30, 1999, for $179,565 in cash loans and
$25,106 in interest. The Company has no long-term liabilities.
RESULTS OF OPERATIONS
During the six months ended June 30, 1999, we incurred a net loss of
$11,629. Expenses in the first six months are related primarily to accounting
fees and costs relating to the Company's SEC filings. The Company paid no rent
or salaries during the six month period.
During the six months ended June 30, 1998, we had no revenues and incurred
a net loss of $10,551. Expenses in the first six months of 1998 related
primarily to miscellaneous operating costs. Operating costs are primarily
related to general and administrative operating costs. The Company paid no
salaries or rent during the first six months of 1998.
ACQUISITIONS AND DISPOSITIONS SUBSEQUENT TO PERIOD END
EBONLINEINC.COM
In July 1999, we acquired 100 percent of the outstanding capital stock of
EBonlineinc.com, Inc. in exchange for 3,866,773 shares of our common stock. The
value assigned to this transaction by the Board of Directors was $1,000, the
fair value of the net assets acquired.
In conjunction with this merger and immediately prior to the acquisition,
we reverse split our outstanding common stock in the ratio of 3.5 new shares of
common stock in exchange for every 10 shares of common stock. The number of
shares outstanding immediately after this transaction was 1,633,227. The total
shares outstanding upon completion of the merger was 5,500,000.
Also in connection with this merger, one of our primary shareholders agreed
to forgive his cash loans and advances together with accrued interest.
EBonline is a Web-based business consisting of a website, globally
accessible via the Internet, designed to facilitate merger, acquisition and
corporate finance activity. Our site attracts businesses looking to sell, make
an acquisition, seek a merger or joint venture partner, obtain debt or equity
capital or simply gain exposure within the international investment banking
community. In addition, our site attracts accredited investors looking for
investment opportunities.
EBonline will derive its revenue from three initial sources: monthly
membership fees, banner advertising income and consulting fees from syndicate
members. Syndicate members will be made up of recognized financial services
firms that have been selected from around the world. They have met EBonline's
standards for professionalism and integrity and they have agreed to provide
financial advisory services, write research and expose the qualifying companies
to the investment community. The broad exposure provided to these companies may
attract institutional investors and public interest. The syndicate members will
also be able to electronically make available to all accredited investors of the
site any offering memoranda. We believe that
- 11 -
EBonline's approach to connecting businessmen and investors to a group of
recognized financial professionals is truly unique, cost effective and
efficient.
We believe that the combination of finance and the internet will
differentiate EBonline from its competition. Other similarly focused sites offer
business listings and matching services, but none are backed by an international
group of emerging growth financial specialists such as EBonline.
In July 1999, we launched our website at www.ebolineinc.com. We have
retained EBI Securities as our investment banker for the purposes of raising
capital in the quarter ending September 30, 1999. Our common shares trade in the
over-the-counter market under the symbol "EBOL". We are currently in the process
of raising additional equity capital for expansion and marketing.
NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128. The new standard replaces primary and fully diluted earnings per
share with basic and diluted earnings per share. SFAS No. 128 was adopted by us
beginning with the interim reporting period ended December 31, 1997. The
adoption did not impact previously reported earnings per share amounts.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement established standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general-purpose financial statements. There were no items of
comprehensive income as defined by SFAS 130 for any of the periods presented.
In June 1998, the FASB issued SFAS No. 133, "Accounting For Derivative
Instruments and Hedging Activities". This Statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. SFAS No.
133 is effective for fiscal years beginning after June 15, 2000. At this time,
we do not believe that this statement will have a significant impact on us.
- 12 -
PART II -- OTHER INFORMATION
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 28, 1999, the majority shareholder provided a written consent in
lieu of a meeting to approve the agreement and plan of merger of
EBonlineinc.com, Inc. a Delaware corporation, into the Company, the related
articles of merger and certificate of merger, the reverse split of common shares
(3.5 for 10 shares) and the amendment to the certificate of incorporation
changing the name of the corporation to EBonlineinc.com.
EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit No. Description
----------- -----------------------
(27) Financial Data Schedule (Electronic Filing Only).
b. There were no reports on Form 8-K filed during the quarterly period
ended June 30, 1999.
- 13 -
SIGNATURES
In accordance with the requirements 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.
EBONLINEINC.COM
(Registrant)
By /s/ Kevin D. McNeil
----------------------------------------------
Kevin D. McNeil
Secretary
Dated: August 23, 1999
- 14 -
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------------------
(27) Financial Data Schedule (Electronic Filing Only).
- 26 -