1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
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 33-19435
eVENTURES GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2233445
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
ONE EVERTRUST PLAZA, 8th FLOOR
JERSEY CITY, NEW JERSEY 07302
(201) 200-5515
(Address and telephone number of principal executive offices)
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) has been subject to such filing
requirements for the past 90 days.
(1) Yes No X
----- -----
(2) Yes X No
----- -----
On February 18, 2000, 45,799,832 shares of the registrant's Common Stock were
outstanding.
The accompanying notes are an integral part of these consolidated financial
statements
Page 1 of 18
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eVENTURES GROUP, INC.
TABLE OF CONTENTS
Page No.
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1999 and December 31, 1999 (unaudited) 3
Consolidated Statements of Operations - Three and six months ended December 31,
1998 and 1999 (unaudited) 4
Consolidated Statement of Shareholders' Equity (Deficit) - Six months
ended December 31, 1999 (unaudited) 5
Consolidated Statements of Cash Flows - Six months ended December 31,
1998 and 1999 (unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk 14
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Securities Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K
Exhibits 16
Reports on Form 8-K 16
WHEN USED IN THIS REPORT, THE WORDS "INTEND," "EXPECTS," "PLANS,"
"ESTIMATES,""ANTICIPATES," "PROJECTS," "BELIEVES," AND SIMILAR EXPRESSIONS ARE
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SPECIFICALLY, STATEMENTS
INCLUDED IN THIS REPORT THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS
ABOUT THE COMPANY'S BELIEFS AND EXPECTATIONS ABOUT ITS BUSINESS AND ITS INDUSTRY
ARE FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS OR OUTCOMES TO DIFFER MATERIALLY.
SUCH RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, OUR LIMITED
OPERATING HISTORY, THE RAPID EVOLUTION OF THE MARKET FOR OUR PRODUCTS AND
SERVICES, AND OUR UNCERTAIN ABILITY TO RAISE SUFFICIENT CAPITAL TO MEET OUR
CAPITAL EXPENDITURE REQUIREMENTS THAT MAY ADVERSELY AFFECT THE COMPANY'S ABILITY
TO FINANCE ITS FUTURE OPERATIONS, TO COMPETE EFFECTIVELY AGAINST BETTER
CAPITALIZED COMPETITORS AND TO WITHSTAND DOWNTURNS IN ITS BUSINESS OR THE
ECONOMY GENERALLY; AND OTHER FACTORS DISCUSSED IN THE COMPANY'S FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION. FORWARD-LOOKING STATEMENTS INCLUDED IN THIS
REPORT SPEAK ONLY AS OF THE DATE HEREOF AND THE COMPANY UNDERTAKES NO OBLIGATION
TO REVISE OR UPDATE SUCH STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE
DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
Page 2 of 18
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eVENTURES GROUP, INC.
CONSOLIDATED BALANCE SHEETS
ITEM 1: FINANCIAL STATEMENTS
June 30, December 31,
ASSETS 1999 1999
------------ -------------
(unaudited)
Current Assets:
Cash $ 39,379 $ 7,042,377
Accounts receivable 6,129 1,574,165
Other receivables 11,164 63,124
Prepaid expenses and other 13,250 136,814
Deposits 242,310 603,752
VAT receivable 2,757,368 1,781,354
----------- -----------
3,069,600 11,201,586
----------- -----------
Long-term Assets
Restricted cash 1,107,437 750,000
Property and equipment, net 6,219,874 12,880,498
Investments 2,191,498 2,758,531
Goodwill, net 3,072,908 30,394,986
Other -- 521,800
----------- -----------
12,591,717 47,305,815
----------- -----------
Total Assets $15,661,317 $58,507,401
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable $ 4,609,806 $ 4,223,758
Accrued other 1,477,757 1,423,101
Accrued interest payable 383,163 569,042
Customer deposits and deferred revenues 1,272,682 634,532
Notes payable -- 26,875
Capital leases, current portion 1,916,761 2,937,621
----------- -----------
9,660,169 9,814,929
----------- -----------
Long-term Liabilities
Debentures 6,828,948 --
Capital leases, net of current portion 2,031,513 5,250,370
----------- -----------
8,860,461 5,250,370
----------- -----------
Stockholders' Equity (Deficit)
Common stock 36 953
Preferred stock -- --
Additional paid-in capital 4,310,144 62,051,448
Accumulated deficit (7,169,493) (18,195,049)
Deferred compensation -- (415,250)
----------- -----------
(2,859,313) 43,442,102
----------- -----------
Total Liabilities & Stockholders' Equity (Deficit) $15,661,317 $58,507,401
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements
Page 3 of 18
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eVENTURES GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended December 31, Six Months Ended December 31,
------------------------------ -----------------------------
1998 1999 1998 1999
------------ ------------ ----------- ------------
(unaudited) (unaudited)
Revenues $8,808,038 $ 13,986,119 $13,013,700 $22,661,838
Direct costs 6,250,017 13,030,262 9,745,604 21,759,782
---------- ------------ ----------- ------------
Gross profit (loss) 2,558,021 955,857 3,268,096 902,056
Selling, general and administrative
expense 1,853,821 7,449,099 3,442,347 9,265,131
---------- ------------ ----------- ------------
Loss from operations 704,200 (6,493,242) (174,251) (8,363,075)
Other (income) expenses
Interest expense, net 376,443 78,831 735,878 598,062
Write off of unamortized debt discount -- -- -- 917,615
Equity in loss of affiliate -- 13,089 -- 31,819
Foreign currency (gain) loss 393 4,470 8,631 (2,032)
Other (25,797) 7,662 (17,851) 1,074
---------- ------------ ----------- ------------
351,039 104,052 726,658 1,546,538
---------- ------------ ----------- ------------
Net income (loss) 353,161 (6,597,294) (900,909) (9,909,613)
Series B Preferred dividends -- (1,115,943) -- (1,115,943)
---------- ------------ ----------- ------------
Net income (loss) available to
Common Shareholders $ 353,161 $ (7,713,237) $ (900,909) $(11,025,556)
========== ============ =========== ============
Net income (loss) per share (basic and
diluted) $ 0.03 $ (0.17) $ (0.08) $ (0.36)
Weighted average number of shares
outstanding (basic and diluted) 11,365,614 46,215,687 11,365,614 30,623,956
The accompanying notes are an integral part of these consolidated financial
statements
Page 4 of 18
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eVENTURES GROUP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
Preferred Stock Common Stock Additional
---------------------------- ------------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
---------- ----------- ---------- ----------- ----------- ------------
Balance, June 30, 1999 -- -- 3,600 $ 36 $ 4,310,144 $ (7,169,493)
Net effect of acquisitions -- -- 39,623,010 792 32,170,568 --
Intrinsic value of stock options -- -- -- -- 453,000 --
Net effect of the purchase of
remaining 1/3 of e.Volve -- -- 5,831,253 117 11,662,389 --
Issuance of Preferred Stock 7,000 -- -- -- 8,115,943 (1,115,943)
Issuance of Common Stock -- -- 376,799 8 5,339,404 --
Net Loss -- -- -- -- -- (9,909,613)
------ -------- ---------- ----------- ----------- ------------
Balance, December 31, 1999 7,000 $ -- 45,834,662 $ 953 $62,051,448 $(18,195,049)
====== ======== ========== =========== =========== ============
Deferred
Compensation Total
------------ -----------
Balance, June 30, 1999 $ -- $(2,859,313)
Net effect of acquisitions -- 32,171,360
Intrinsic value of stock options (415,250) 37,750
Net effect of the purchase of
remaining 1/3 of e.Volve -- 11,662,506
Issuance of Preferred Stock -- 7,000,000
Issuance of Common Stock -- 5,339,412
Net Loss -- (9,909,613)
--------- -----------
Balance, December 31, 1999 $(415,250) $43,442,102
========= ===========
The accompanying notes are an integral part of these consolidated financial
statements
Page 5 of 18
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eVENTURES GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended December 31,
------------------------------
1998 1999
-------------- --------------
(unaudited)
Cash Flows From Operating Activities:
Net loss $ (900,909) $ (9,909,613)
Adjustments to reconcile net income to net cash (used in)
provided by net operating activities:
Depreciation and amortization 882,882 3,187,038
Other expenses 370,689 (285,816)
Bad Debt -- 23,895
Foreign currency (gain) loss 11,162 (2,032)
Equity in unconsolidated affiliate -- 31,819
Change in operating assets and liabilities:
Accounts receivable (488,189) (582,920)
Other receivables (89,318) (51,960)
Prepaid expenses and other (26,315) (30,257)
VAT receivable (1,347,608) 976,014
Restricted cash (1,080,806) 1,107,437
Accounts payable 1,124,102 3,755,860
Accrued other (450) 220,647
Accrued interest payable 33,063 185,879
Customer deposits (200,000) (1,214,650)
----------- -------------
Net cash used in operating activities (1,711,697) (2,588,659)
----------- -------------
Cash Flow From Investing Activities
Deposits 4,728 (361,442)
Proceeds from sale of available-for-sale securities 246,580 --
Purchase of property and equipment (993,394) (1,667,894)
Net cash acquired in acquisitions -- 299,687
Long term investments -- (475,000)
Investments in affiliates (25,000) (598,852)
----------- -------------
Net cash used in investing activities (767,086) (2,803,501)
----------- -------------
Cash Flow From Financing Activities
Advances - shareholders (60,920) (246,560)
Issuance of common stock and preferred stock -- 13,227,350
Proceeds from the issuance of debentures 850,000 --
Payments on capital leases (240,993) (585,632)
----------- -------------
Net cash provided by financing activities 548,087 12,395,158
----------- -------------
Net change in cash (1,930,696) 7,002,998
Cash and cash equivalents, beginning of period 2,417,216 39,379
----------- -------------
Cash and cash equivalents, end of period $ 486,520 $ 7,042,377
=========== =============
Supplemental schedule of non-cash investing and
financing activities
Purchases of equipment under capital leases $ 1,808,683 $ 5,206,790
=========== =============
Fair value of original issue discount on revaluation
of Company at July 1, 1998, arising from change
in ownership $ 2,000,000 $ --
=========== =============
Goodwill arising from change in ownership
and acquisitions settled through the issuance of stock $ 3,414,343 $ 28,302,477
=========== =============
Net assets of subsidiary acquired through an
issue of stock $ -- $ 1,241,162
=========== =============
Stock issued for settlement of accounts payable $ -- $ 5,399,480
=========== =============
The accompanying notes are an integral part of these consolidated financial
statements
Page 6 of 18
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eVENTURES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND BUSINESS:
eVentures Group, Inc. ("eVentures" or the "Company") was incorporated in
the state of Delaware on June 24, 1987 and was a public shell with no
operations prior to the transactions consummated on September 22, 1999,
which are described below. The Company was formerly known as Adina, Inc.
On September 22, 1999, the Company acquired all of the outstanding shares
of AxisTel Communications, Inc. ("AxisTel"), approximately 66.67% of the
outstanding shares of e.Volve Technology Group, Inc. ("e.Volve"),
approximately 17% of the outstanding shares of i2v2.com, Inc.
("i2v2.com") (collectively the "Acquired Entities"), and $8,540,159 notes
receivable from e.Volve including accrued interest ("Notes") held by
Major Shareholders (as defined below). All the acquisitions and the
purchase of the Notes were settled through issuance of stock of eVentures
(the "Transaction"). As a result of the Transaction, approximately 77% of
the common stock of the Company outstanding after the Transaction was
owned by three shareholders that are affiliated with each other (the
"Major Shareholders") on September 22, 1999. In October 1999, the
remaining 33.33% of e.Volve was acquired by the Company.
Prior to the Transaction, the Major Shareholders had directly and
indirectly held interests in the Acquired Entities, as follows: 66.67% of
e.Volve, 21% of i2v2.com, and 0.7% of AxisTel plus options to purchase a
further 49.3% of Axistel. Immediately after exercising the options in
AxisTel, these interests, along with the Major Shareholders' Notes
receivable from e.Volve, were directly and indirectly transferred to
eVentures in exchange for the Company's stock. The remaining 50% of
AxisTel was then purchased from AxisTel's founding shareholders.
The Company operates in one business segment, the provision of
Internet-based communications services and operation of Internet-based
communications networks based on Internet protocol ("IP") and
asynchronous transfer mote ("ATM") technologies. The Company currently
has network facilities and points of presence in the United States and
five foreign countries: Mexico, India, Syria, Sri Lanka and the United
Kingdom.
The Acquired Entities provide communications services and operate
communications networks based on IP and ATM technologies. The Acquired
Entities provide high quality communications services, offering
international voice, data, Internet access and other value-added
applications over private fiber optic networks and the Internet. The
customers of the Company include corporate and governmental
communications service providers and individual business customers in the
United States and the Company's foreign markets.
Both the e.Volve and Axistel networks are scalable networks built around
digital packet switching equipment. This switching equipment, together
with other components of the networks, incorporate ATM and IP
technologies. The networks meet voice over internet protocol ("VOIP")
standards. Internationally, the Company's networks offer communications
services through leased or owned fiber optic cable under direct operating
agreements with telecommunications authorities and Internet service
providers ("ISP").
Page 7 of 18
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eVENTURES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Strategic Investments
As of February 17, 2000, the Company has made strategic investments in
the following companies:
Company Name Accounting Method % Ownership
------------ ----------------- -----------
Innovative Calling Technologies LLC equity basis 50.0%
i2v2.com (d/b/a PhoneFree.com) cost basis 16.0%
FonBox, Inc. cost basis 31.0%
Launch Center39 cost basis 5.0%
Televant cost basis 30.0%
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
INTERIM FINANCIAL DATA
The consolidated balance sheet as of December 31, 1999, the consolidated
statements of operations for the three and six month periods ended
December 31, 1998 and 1999, consolidated statements of shareholders'
equity flows for the six month period ended December 31, 1999, and the
consolidated statements of cash flows for the six month periods ended
December 31, 1998 and 1999 have been prepared by the Company without
audit. In the opinion of management, all adjustments, consisting of only
normal recurring adjustments, necessary to present fairly the
consolidated financial position, results of operations and cash flows
have been made. The results of operations for the interim periods are not
necessarily indicative of the results for the full year. The accompanying
financial statements should be read with the Company's consolidated
financial statements included in the Company's 8K-A and Form 10 filed
with the Securities and Exchange Commission on December 9, 1999 and
December 20, 1999, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates and
assumptions that affect the reported 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 reporting period. Actual results could differ from those
estimates.
3. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following at December 31, 1999:
Property and Equipment:
Leasehold improvements $ 334,559
Network equipment under capital leases 11,146,106
Other equipment 3,047,440
Furniture and fixtures 27,862
-----------
14,555,967
Accumulated depreciation and amortization (1,675,469)
-----------
$12,880,498
===========
Depreciation and amortization expense was $374,619 and $775,016 for the
six months ended December 31, 1998 and 1999, respectively.
4. NET INCOME (LOSS) PER SHARE:
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 128 ("SFAS#128"), Earnings Per Share
("EPS"). SFAS#128 requires dual presentation of basic EPS and diluted EPS
on the face of all income statements issued after December 15, 1997 for
all entities with complex capital structures. Basic EPS is computed as
net income divided by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution
that could occur from common shares issuable through stock options,
warrants and convertible debentures. Diluted EPS has not been presented
for the effects of stock options, warrants, convertible debentures and
preferred stock as the effect would be antidilutive. Accordingly, basic
and diluted EPS did not differ for any period presented. For purposes of
computation of EPS, the shares issued for the acquisition of e.Volve
(11,365,614 shares) are deemed to have been in existence for the entire
period.
5. SIGNIFICANT TRANSACTIONS.
On October 14, 1999, eVentures paid $1,107,967 cash and issued 239,299
shares of eVentures' common stock to Avantel S.A. in satisfaction of
accounts payable to Avantel of $4,307,437.
To consummate the September 22, 1999 Transaction (see Note 1), eVentures
acquired the remaining 33.3% of e.Volve on October 19, 1999 through an
extension of eVentures original offer. This purchase was settled through
an issuance of 5,831,253 shares of eVentures' common stock.
On November 18, 1999, eVentures issued 2,500 shares of Series B
Convertible Preferred Stock and on November 24, 1999 eVentures issued
3,725 shares of Series B Convertible Preferred Stock, both at a price of
$1,000 per share. The par value of shares of Series B Convertible
Preferred Stock is $0.00002. The shares of Series B Convertible Preferred
Stock are convertible into shares of the Company's common stock at a
price of $13.80 per share, subject to certain anti-dilution adjustments.
The conversion price was determined using the average of the closing bid
price per share of eVentures common stock for the 10 trading days ended
October 29, 1999. Due to the beneficial conversion feature of these
securities, a preferred dividend of $1,115,943 has been recorded during
the three months ended December 31, 1999.
On November 30, 1999 the Company terminated its marketing agreement with
Corpovision, S.A. The Company settled its liability to Corpovision with
respect to the termination of this agreement through the issuance of
137,500 shares of eVentures common stock. As a result, the Company
recorded a charge in the statement of operations of approximately
$1,100,000 in November, 1999 related to the difference between the value
of the shares issued and the book value of the note payable to
Corpovision.
Page 8 of 18
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eVENTURES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. SUBSEQUENT EVENTS
In a series of transactions closed between January 6 and February 4,
2000, the Company issued 15,570 shares of our Series C Convertible
Preferred Stock, par value $0.00002 per share, to 8 accredited investors,
at a price of $1,000 per share. The shares are convertible into Common
Stock at a price of $17.90 per share, subject to certain anti-dilution
adjustments. The conversion price was determined using the average of the
closing bid prices per share of the Company's common stock for the 20
trading days ended December 10, 1999.
On January 31, 2000, the Company exercised its option to purchase
approximately 23% of Fonbox, Inc., in addition to the approximately 8%
already owned by the Company, for $1.0 million cash and the issuance of
27,860 shares of eVentures common stock. As of February 11, 2000, the
Company owns approximately 31% of Fonbox.
On January 28, 2000, the Company purchased membership interests in LC39
Group, LLC for $1.0 million. These interests represent less than 5%
ownership in LC39. LC39 is the legal name of Launch Center 39, a New York
City based incubator for Internet start-ups.
On February 11, 2000, the Company executed definitive documentation
regarding its investment in Televant, Inc., which owns and operates the
Callrewards.com(TM) website. As part of this transaction, the Company
also completed an initial funding of $750,000 for a 30% interest in
Callrewards. The Company's investment anticipates an additional $3.5
million of funding during 2000. The further funding is conditioned on
Callrewards achieving certain operational targets.
7. PRO FORMA FINANCIAL DATA
On September 22, 1999, the Company acquired all of the outstanding shares
of AxisTel, approximately 66.67% of the outstanding shares of e.Volve,
and approximately 17% of the outstanding shares of i2v2.com. On October
19, 1999, the Company acquired the remaining 33.33% of the outstanding
shares of e.Volve. All of the acquisitions were settled through the
issuance of stock of eVentures.
Set forth below is the Company's unaudited pro forma condensed statement
of operations for the three and six months ended December 31, 1998 and
the six months ended December 31, 1999 as though the acquisition of
AxisTel had occurred on July 1, 1998, after adjustments related to
goodwill, amortization of intangible assets and debt discount and
interest expense relating to the e.Volve debentures. The unaudited pro
forma results are not necessarily indicative of either actual results of
operations that would have occurred had the acquisitions been made on
July 1, 1998 or of future results.
SIX MONTHS ENDED SIX MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, 1998 DECEMBER 31, 1999 DECEMBER 31, 1998
Total revenues $ 14,829,347 $ 28,403,640 $ 9,979,203
Net loss $ (3,839,602) $ (10,367,384) $ (239,498)
Net loss per share $ (0.09) $ (0.23) $ (0.01)
Page 9 of 18
10
eVENTURES GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
eVentures Group, Inc. ("eVentures" or the "Company") was incorporated in the
state of Delaware on June 24, 1987 and was a public shell with no operations
prior to the transactions consummated on September 22, 1999, which are described
below. The Company was formerly known as Adina, Inc.
On September 22, 1999, the Company acquired all of the outstanding shares of
AxisTel Communications, Inc. ("AxisTel"), approximately 66.67% of the
outstanding shares of e.Volve Technology Group, Inc. ("e.Volve"), approximately
17% of the outstanding shares of i2v2.com, Inc. ("i2v2.com") (collectively the
"Acquired Entities"), and $8,540,159 notes receivable from e.Volve including
accrued interest ("Notes") held by Major Shareholders (as defined below). All
the acquisitions and the purchase of the Notes were settled through issuance of
stock of eVentures (the "Transaction"). As a result of the Transaction,
approximately 77% of the common stock of the Company outstanding after the
Transaction was owned by three shareholders that are affiliated with each other
(the "Major Shareholders") on September 22, 1999. In October 1999, the remaining
33.33% of e.Volve was acquired by the Company.
Prior to the Transaction, the Major Shareholders had directly and indirectly
held interests in the Acquired Entities, as follows: 66.67% of e.Volve, 21% of
i2v2.com, and 0.7% of AxisTel plus options to purchase a further 49.3% of
Axistel. Immediately after exercising the options in AxisTel, these interests,
along with the Major Shareholders' Notes receivable from e.Volve, were directly
and indirectly transferred to eVentures in exchange for the Company's stock. The
remaining 50% of AxisTel was then purchased from AxisTel's founding
shareholders.
NET REVENUES. Net revenues are generated through the sale of international and
domestic Internet telephony minutes on a wholesale basis to other U.S.
long-distance providers and to distributors of prepaid calling cards. In
addition, we sell data bandwidth to other carriers and corporate customers. Our
agreements with our wholesale customers are short term in duration and the rates
charged to customers are subject to change from time to time. Due to increasing
competition, management expects these rates to decline, which could result in
lower revenues and increased losses. Our three largest customers accounted for
79.3% of its net revenues during the six months ended December 31, 1999.
DIRECT COSTS. Direct costs include per minute termination charges and lease
payments and fees for fiber optic cable. Prior to September 1999, we provided
international telecommunication services only from the United States to Mexico.
The majority of our termination fees and certain fiber optic lease payments were
payable in Mexican pesos. As a result we were exposed to exchange rate risk due
to the fluctuation of the Mexican peso compared to the U.S. dollar. Continued
fluctuation in the exchange rate may make it cheaper or more expensive for us to
purchase pesos to meet our peso denominated expenses. Two vendors in Mexico
provide substantially all of our terminating capabilities in Mexico. If either
of these vendor relationships were terminated, our ability to conduct operations
in Mexico would be limited.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. These expenses include corporate
expenses and management salaries, depreciation and amortization expenses, sales
and marketing expenses, travel and development expenses, benefits, occupancy
costs, and administrative expenses. We maintain a corporate office and several
switch facilities. Due to the international nature of our business, travel and
development costs have been significant and could continue to increase as we
seek to expand our network.
SUMMARY OF OPERATING RESULTS
The table below summarizes our operating results
Page 10 of 18
11
eVENTURES GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Three Months Ended December 31, Six Months Ended December 31,
------------------------------------------ ----------------------------------------
1998 % 1999 % 1998 % 1999 %
---------- ----- ----------- ----- ----------- ----- ----------- -----
(unaudited) (unaudited)
Revenues $8,808,038 100.0% $13,986,119 100.0% $13,013,700 100.0% $22,661,838 100.0%
Direct costs 6,250,017 71.0% 13,030,262 93.2% 9,745,604 74.9% 21,759,782 96.0%
---------- ----- ----------- ----- ----------- ----- ----------- -----
Gross profit (loss) 2,558,021 29.0% 955,857 6.8% 3,268,096 25.1% 902,056 4.0%
Selling, general and administrative
expenses 1,853,821 21.0% 7,449,099 53.3% 3,442,347 26.5% 9,265,131 40.9%
---------- ----- ----------- ----- ----------- ----- ----------- -----
Loss from operations 704,200 8.0% (6,493,242) (46.4%) (174,251) (1.3%) (8,363,075) (36.9%)
Other (income) expenses
Interest expense, net 376,443 4.3% 78,831 0.6% 735,878 5.7% 598,062 2.6%
Write off of unamortized debt - 0.0% - 0.0% - 0.0% 917,615 4.0%
Equity in loss of affiliate - 0.0% 13,089 0.1% - 0.0% 31,819 0.1%
Foreign currency (gain) loss 393 0.0% 4,470 0.0% 8,631 0.1% (2,032) (0.0%)
Other (25,797) (0.3%) 7,662 0.1% (17,851) (0.1%) 1,074 0.0%
---------- ----- ----------- ----- ----------- ----- ----------- -----
351,039 4.0% 104,052 0.7% 726,658 5.6% 1,546,538 6.8%
---------- ----- ----------- ----- ----------- ----- ----------- -----
Net income (loss) $ 353,161 4.0% $(6,597,294) (47.2%) $ (900,909) (6.9%) $(9,909,613) (43.7%)
========== ===== =========== ===== =========== ===== =========== =====
THREE AND SIX MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THREE AND SIX MONTHS
ENDED DECEMBER 31, 1998
REVENUES. Revenues increased to $14.0 million and $22.7 million during the three
and six months ended December 31, 1999 from $8.8 million and $13.0 million
during the three and six months ended December 31, 1998, respectively, an
increase of 58.8% and 74.1%, respectively. The increase in revenues in our
second quarter and during the six months ended December 31, 1999 primarily
resulted from the acquisition of AxisTel in September 1999 which increased
revenues by $5.6 million during the second quarter. In addition, an increase in
traffic to Mexico and India contributed to the increase, offset by a decrease in
the average price per minute that we charged.
DIRECT COSTS. Direct costs increased to $13.0 million and $21.8 million during
the three and six months ended December 31, 1999 from $6.3 million and $9.7
million during the three and six months ended December 31, 1998, respectively,
an increase of 108.5% and 123.3%, respectively. The increase in direct costs in
our second quarter and during the six months ended December 31, 1999 primarily
resulted from a $5.2 million increase in direct costs attributable to the
operations of AxisTel during the second quarter and an increase in termination
fees associated with the increase in traffic transmitted to Mexico. In addition,
direct costs increased due to additional costs related to the termination of
traffic in India and an increase in costs for fiber optic connections between
our points of presence. As a percentage of revenues, direct costs during the
three months ended December 31, 1999 increased to 93.2% from 71.0% during the
three months ended December 31, 1998. As a percentage of revenues, direct costs
during the six months ended December 31, 1999 increased to 96.0% from 74.9%
during the six months ended December 31, 1998. The increase in direct costs as a
percentage of revenues results primarily because our wholesale prices per minute
decreased faster than our cost per minute for termination, offset by higher
volumes of traffic over fixed cost circuits.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses increased to $7.4 million and $9.3 million during the three and six
months ended December 31, 1999 from $1.9 million and $3.4 million during the
three and six months ended December 31, 1998, respectively, an increase of
301.8% and 169.2%, respectively. These increases resulted primarily from the
aggregate expenses related to our termination of a marketing agreement, the
incurrence of severence costs, and charges related to consulting and
professional fees in Mexico totaling $2.3 million in our second quarter and
$325,000 in our first quarter, and expenses of $1.4 million in our second
quarter related to the acquisition of AxisTel. In addition, an increase in
operating staff and general operating activities, and an increase in
depreciation and amortization expense contributed to the increase in selling,
general and administrative expense.
INTEREST EXPENSE, NET. Interest expense, net decreased to $78,831 and $598,062
during the three and six months ended December 31, 1999 from $376,443 and
$735,878 during the three and six months ended December 31, 1998. This decrease
was a result of the
Page 11 of 18
12
eVENTURES GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
elimination of $8.0 million of debentures as a result of our acquisition of
e.Volve's outstanding debentures on September 22, 1999 and the resulting
consolidation of accounts, and due to interest income on higher cash balances
maintained out of proceeds of private placements completed during our second
quarter, offset by higher charges related to capital leases for equipment
leased after December 31, 1998.
WRITE OFF OF UNAMORTIZED DEBT DISCOUNT. The write off of unamortized debt
discount during the six months ended December 31, 1999 resulted from our
purchase of e.Volve's outstanding debentures and the subsequent elimination of
these debentures in our consolidated balance sheet.
EQUITY IN LOSS OF UNCONSOLIDATED AFFILIATE. Equity in loss of unconsolidated
affiliate was $13,089 and $31,819 during the three and six months ended December
31, 1999. These losses occurred at a joint venture formed e.Volve in April 1999.
FOREIGN CURRENCY (GAIN) LOSS. Foreign currency (gain) loss during the three and
six months ended December 31, 1999 was a loss of $4,470 and a gain of $2,032
compared with a loss of $393 and a loss of $8,631 during the three months ended
September 30, 1998.
OTHER. Other expenses of $7,662 and $1,074 during the three and six months ended
December 31, 1999 compares with other income of $25,797 and $17,851 during the
three and six months ended December 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Since July 1, 1999, we have funded our operations primarily through cash from
operations and from the private placement of common stock, preferred stock,
warrants to purchase common stock and debt. During the six months ended December
31, 1999, we have raised a total $12.9 million through private placements of
common stock and preferred stock, $287,350 from the exercise of options and
$5.2 million through capital leases to finance operations and to fund capital
expenditures.
On September 28, 1999, we completed a private placement of common and preferred
stock of approximately $5.9 million. Proceeds from these issuances were used
for general corporate purposes and for use as capital for new investments and
projects.
On November 19 and 26, 1999, we completed two private placements of preferred
stock with aggregate proceeds of approximately $6.2 million. Proceeds from these
issuances are for general corporate purposes and for use as capital for new
investments and projects.
On December 15, 1999, we completed a private placement of preferred stock with
aggregate proceeds of approximately $775,000. Proceeds from this issuance are
for general corporate purposes and for use as capital for new investments and
projects.
Our principal uses of cash are to fund working capital requirements, capital
expenditures and operating losses.
As of December 31, 1999, we had current assets of $11.2 million, including cash,
cash equivalents and short-term investments of $7.0 million, and a working
capital surplus of $1.4 million. Current assets included a tax refund receivable
of $1.8 million.
Since December 31, 1999, we have raised additional funds through subsequent
private placements of preferred stock. In a series of transactions between
January 6 and February 4, 2000, we completed a private placement of preferred
stock with aggregate proceeds of approximately $15.6 million. Proceeds from this
issuance are for general corporate purposes and for use as capital for new
investments and projects.
CASH FLOWS FROM OPERATING ACTIVITIES:
Our operating activities used cash of $2.6 million during the six months ended
December 31, 1999. During the six months ended December 31, 1999 cash flow used
by operating activities primarily resulted from net losses, the reduction of
customer deposits, and an increase in accounts receivable, off-set by
depreciation and amortization charges, a decrease in restricted cash, and a
decrease in accounts payable (funded through the issuance of our common stock to
vendors) and an increase in other accrued liabilities.
CASH FLOWS FROM INVESTING ACTIVITIES:
We used cash for investing activities of $2.8 million during the six months
ended December 31, 1999. During the six months ended December 31, 1999 cash used
by investing activities primarily consisted of cash used to purchase equipment,
fund affiliates, and make other long term investments, off-set by net cash
acquired in the acquisitions.
CASH FLOWS FROM FINANCING ACTIVITIES:
Our cash flow from financing activities was $12.4 million during the six months
ended December 31, 1999. During the six months ended December 31, 1999 cash
provided by financing activities was attributable to the issuance of common
stock and preferred stock, offset by capital lease payments.
Page 12 of 18
13
GENERAL
Our business plans will continue to require a substantial amount of capital to
fund our expansion in existing and recently acquired markets, to continue our
development of our network and to fund our operating losses and debt and capital
lease service requirements. We also continue to make strategic investments and
to evaluate acquisitions in light of our long range plans. Such strategic
investments and acquisitions, if realized, could require expenditure of a
material portion of our financial resources and would accelerate the need for
raising additional capital. Sources of funding for our financing requirements
may include vendor financing, bank loans and public offerings or private
placements of equity and/or debt securities. There can be no assurance that
additional financing will be available or, if available, that financing can be
obtained on a timely basis and on acceptable terms. The failure to obtain such
financing on acceptable terms could significantly reduce our ability to fund our
expenses, development, investments and operations.
Our cash and short-term investments are expected to provide sufficient liquidity
to meet our capital requirements for approximately the next twelve months.
EQUIPMENT LEASING AND FINANCING. We have leased equipment manufactured by
various equipment manufacturers including Siemens A.G., Network Equipment
Technologies, Inc. and Harris Corporation. We have entered into an aggregate of
approximately $10.3 million of capital leases with (i) Telecommunications
Finance Group, a subsidiary of Siemens A.G., (ii) BA Capital Corp., (iii) Ascend
Credit Corporation, and (iv) Arrendadora BankAmerica, S.A.
SUBSEQUENT EVENTS:
In a series of transactions closed between January 6 and February 4, 2000, we
issued 15,570 shares of our Series C Convertible Preferred Stock, par value
$0.00002 per share, to eight accredited investors, at a price of $1,000 per
share. The shares are convertible into shares of our common stock at a price of
$17.90 per share, subject to certain anti-dilution adjustments. The conversion
price was determined using the average of the closing bid prices per share of
our common stock for the 20 trading days ended December 10, 1999.
On January 31, 2000, our Company exercised its option to purchase an additional
23% of Fonbox, Inc. for $1.0 million cash and the issuance of 27,860 shares of
eVentures common stock. As of February 11, 2000, we own approximately 31% of
Fonbox.
On January 28, 2000, we purchased membership interests in LC39 Group, LLC for
$1.0 million. These interests represent less than 5% ownership in LC39. LC39
is the legal name of Launch Center 39, a New York City based incubator for
Internet start-ups.
On February 11, 2000, we executed definitive documentation regarding our
investment in Televant, Inc., which owns and operates the Callrewards.com(TM)
website. As part of this transaction, we also completed an initial funding of
$750,000 for a 30% interest in Callrewards. Our investment anticipates an
additional $3.5 million of funding during 2000. The further funding is
conditioned on Callrewards achieving certain operational targets.
EFFECTS OF INFLATION
Management does not believe that its business is impacted by inflation to a
significantly different extent than is the general economy. However, there can
be no assurances that inflation will not have a material effect on the Company's
operations in the future.
Page 13 of 18
14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to the impact of political instability, foreign currency, and
other risks.
Political Instability Risks. We have relationships with foreign suppliers in
Syria, Mexico, India, Sri Lanka and other countries. We have not experienced any
negative economic consequences as a result of relationships with foreign
suppliers in these countries, but may be negatively affected should political
instability in any of these countries develop.
Foreign Currency Risks. Since the agreements we have has entered into with
foreign suppliers in Syria, India, Sri Lanka and other countries are denominated
in U.S. dollars, we are not exposed to risks associated with fluctuations in
these foreign currencies. However, because our agreements with Mexican suppliers
are denominated in Mexican pesos, we may be exposed to fluctuations in Mexican
pesos, as well as to downturns in the Mexican economy, all of which may affect
profitability. During the six months ended December 31, 1999, $13.7 million of
our direct costs were denominated in Mexican pesos.
Other Market Risks. We are also exposed to potential risks in dealing with
foreign suppliers in foreign countries associated with potentially weaker
protection of intellectual property rights, unexpected changes in regulations
and tariffs, and varying tax consequences.
Page 14 of 18
15
PART II
Item 1. Legal Proceedings
In September 1999, Yurie Systems Inc. filed a lawsuit in the United
States District Court of Maryland against e.Volve, claiming e.Volve owed Yurie
Systems approximately $283,497 arising from a previous sale of
telecommunications equipment from Yurie Systems to e.Volve in June and July of
1997. e.Volve denies the claim because it never agreed to accept the equipment.
The equipment has failed field testing and did not meet either e.Volve's or
Yurie Systems' standards. e.Volve filed a counterclaim for lost business
opportunities and lost profits in an amount to be determined at trial. On
February 3, 2000, we reached an agreement with Yurie Systems to settle this
litigation in exchange for a payment by us of $140,000.
We are involved in legal proceedings from time to time, none of which
management believes, if decided adversely to us, would have a material adverse
effect on the business, financial condition or results of operations of the
Company.
Item 2. Changes in Securities
In the past four months, we have issued and sold unregistered securities
in the transactions described below.
On October 14, 1999, we issued 239,229 shares of our common stock to
Avantel S.A. to settle accounts payable due to Avantel in the amount of $3.2
million in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) of the Securities Act.
On October 19, 1999, in connection with our reorganization, we issued and
sold an aggregate of 5,831,253 shares to 27 shareholders of e.Volve in exchange
for the outstanding shares of capital stock of e.Volve not owned by eVentures in
a transaction exempt from the registration requirements of the Securities Act
pursuant to Rule 506 of Regulation D under the Securities Act. No general
solicitations were made in connection with this transaction, and 22 accredited
and 5 non-accredited investors participated in this transaction. All
non-accredited investors were represented in connection with this transaction by
purchaser representatives.
On November 19, 1999, we issued and sold 2,500 shares of our Series B
preferred stock to an accredited investor for $2,500,000 in a transaction exempt
from the registration requirements of the Securities Act pursuant to Rule 506 of
Regulation D under the Securities Act. No general solicitations were made in
connection with this transaction.
On November 26, 1999, we issued and sold 3,725 shares of our Series B
preferred stock to an accredited investor for $3,725,000 in a transaction exempt
from the registration requirements of the Securities Act pursuant to Rule 506 of
Regulation D under the Securities Act. No general solicitations were made in
connection with this transaction.
On November 30, 1999, we issued 137,500 shares of our common stock to
Corpovision, S.A. to settle a note payable due to Corpavision in the amount of
$1.1 million in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) of the Securities Act.
On December 15, 1999, we issued and sold an aggregate of 775 shares of
our Series B preferred stock to 14 accredited investors for $775,000 in a
transaction exempt from the registration requirements of the Securities Act
pursuant to Rule 506 of Regulation D under the Securities Act. No general
solicitations were made in connection with this transaction.
On December 21, 1999, we issued 200,000 shares of our common stock upon
conversion of 1,000 shares of our Series A preferred stock in a transaction
exempt from the registration requirements of the Securities Act pursuant to
Section 3(a)(9) of the Securities Act.
In a series of transactions closed between January 6 and February 4,
2000, we issued 15,570 shares of our Series C Convertible Preferred Stock, par
value $0.00002 per share, to eight accredited investors, at a price of $1,000
per share in a transaction exempt from the registration requirements of the
Securities Act pursuant to Rule 506 of Regulation D under the Securities Act. No
general solicitations were made in connection with this transaction. The shares
are convertible into shares of our common Stock at a price of $17.90 per share,
subject to certain anti-dilution adjustments. The conversion price was
determined using the average of the closing bid prices per share of our common
stock for the 20 trading days ended December 10, 1999.
On January 31, 2000, we issued and sold an aggregate of 27,860 shares to
two shareholders of Fonbox in exchange for 700,000 shares of Fonbox common stock
in a transaction exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) of the Securities Act.
Page 15 of 18
16
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 Agreement and Plan of Exchange, dated as of October
19, 1999, among eVentures Group, Inc., and the
persons set forth on Schedule 1 thereto (incorporated
by reference to Exhibit 2.1 to the report filed on
Form 8-K on November 3, 1999).
3.1 Amended and Restated Certificate of Designation of
Rights, Preferences and Privileges of Series A
Convertible Preferred Stock, dated October 14, 1999
(incorporated by reference to Exhibit 3.6 to the
registration statement filed on Form 10 on December
20, 1999).
3.2 Certificate of Designation of Rights, Preferences and
Privileges of Series B Convertible Preferred Stock,
dated as of November 10, 1999 (incorporated by
reference to Exhibit 3.7 to the registration
statement filed on Form 10 on December 20, 1999).
3.3 Certificate of Amendment, dated as of December 15,
1999, to the Certificate of Designation of Rights,
Preferences and Privileges of Series B Convertible
Preferred Stock (incorporated by reference to Exhibit
3.8 to the registration statement filed on Form 10 on
December 20, 1999).
3.4 Certificate of Designation, Preferences, Rights, and
of Series C Convertible Preferred Stock.
4.1 Registration Rights Agreement, dated as of September
22, 1999, among the Registrant and the persons and
entities set forth on Schedule 1 thereto (the "First
Registration Rights Agreement") (incorporated by
reference to Exhibit 4.1 to the report filed on Form
8-K on October 7, 1999).
4.2 Addendum to the First Registration Rights Agreement,
dated as of October 19, 1999, among eVentures Group,
Inc., the persons set forth on Schedule 1 thereto and
the other parties to the First Registration Rights
Agreement (incorporated by reference to Exhibit 4.2
to the registration statement filed on Form 10 on
December 20, 1999).
4.3 Registration Rights Agreement, dated as of November
19, 1999, between eVentures Group, Inc. and Geronimo
Partners, L.P. (incorporated by reference to Exhibit
4.3 to the registration statement filed on Form 10 on
December 20, 1999).
4.4 Schedule identifying other agreements, the dates
thereof and the parties thereto, substantially
identical to the Registration Rights Agreement, dated
as of November 19, 1999, between eVentures Group,
Inc. and Geronimo Partners, L.P. (incorporated by
reference to Exhibit 4.4 to the registration
statement filed on Form 10 on December 20, 1999).
4.5 Registration Rights Agreement, dated as of December
31, 1999, between eVentures Group, Inc. and the
persons and entities signatories thereto.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
Reports on 8-K
1) On October 7, 1999, the Company filed a report on Form 8-K announcing that it
had acquired (i) all of the outstanding shares of AxisTel, (ii) approximately
two-thirds of the outstanding shares of e.Volve and (iii) approximately 17% of
the outstanding shares of i2v2.com Inc. pursuant to the Reorganization.
2) On November 3, 1999, the Company filed a report on Form 8-K announcing that
on October 19, 1999 it had acquired the remaining one-third interest of e.Volve,
making eVolve a wholly owned subsidiary of the Company.
3) On December 7, 1999, the Company filed a report on Form 8-K/A which amends
the Form 8-K previously filed on October 7, 1999. The Form 8-K/A reported that
the Company was unable to provide historical financial information statements
and pro forma financial information statements as of December 6, 1999 as was
previously planned, but anticipated filing the historical financial information
statements and pro forma financial information statements on or prior to
December 9, 1999.
4) On December 9, 1999, the Company filed a report on Form 8-K/A which amends
the Form 8-K previously filed on October 7, 1999, as later amended on December
7, 1999. The Form 8-K/A filed on December 9, 1999 included the historical
financial information statements and pro forma financial information statements,
as well as unaudited financial statements of the Company as of September 30,
1999 and for the three months ended September 30, 1999 and September 30, 1998.
5) On December 14, 1999, the Company filed a report on Form 8-K announcing that
(i) it had engaged BDO Seidman LLP at its auditors and dismissed Larry
O'Donnell, C.P.A. as of December 9, 1999 and (ii) it had changed its fiscal year
end date from April 30, 1999 to June 30, 1999. Page 17 of 20
6) On December 20, 1999, the Company filed a report on Form 8-K/A which amends
the financial statements reported in the December 9, 1999 Form 8-K/A.
7) On December 28, 1999, the Company filed a report on Form 8-K/A which amends
the Form 8-K filed on December 14, 1999 in order to provide the letter addressed
to the Securities and Exchange Commission by the Company's former accountant
required pursuant to Item 304 of Regulation S-K.
Page 16 of 18
17
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
eVENTURES GROUP, INC.
Date: February 18, 2000 By: /s/ Fred A. Vierra
------------------------ ------------------------------------
Fred A. Vierra
Chairman of the Board
Date: February 18, 2000 By: /s/ Barrett N. Wissman
------------------------ ------------------------------------
Barrett N. Wissman
President and Chief Executive Officer
Date: February 18, 2000 By: /s/ John Stevens Robling Jr.
------------------------ ------------------------------------
John Stevens Robling Jr.
Chief Financial Officer
Page 17 of 18
18
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
2.1 Agreement and Plan of Exchange, dated as of October 19, 1999, among
eVentures Group, Inc., and the persons set forth on Schedule 1 thereto
(incorporated by reference to Exhibit 2.1 to the report filed on Form
8-K on November 3, 1999).
3.1 Amended and Restated Certificate of Designation of Rights, Preferences
and Privileges of Series A Convertible Preferred Stock, dated October
14, 1999 (incorporated by reference to Exhibit 3.6 to the registration
statement filed on Form 10 on December 20, 1999).
3.2 Certificate of Designation of Rights, Preferences and Privileges of
Series B Convertible Preferred Stock, dated as of November 10, 1999
(incorporated by reference to Exhibit 3.7 to the registration
statement filed on Form 10 on December 20, 1999).
3.3 Certificate of Amendment, dated as of December 15, 1999, to the
Certificate of Designation of Rights, Preferences and Privileges of
Series B Convertible Preferred Stock (incorporated by reference to
Exhibit 3.8 to the registration statement filed on Form 10 on December
20, 1999).
3.4 Certificate of Designation, Preferences, Rights, and of Series C
Convertible Preferred Stock.
4.1 Registration Rights Agreement, dated as of September 22, 1999, among
the Registrant and the persons and entities set forth on Schedule 1
thereto (the "First Registration Rights Agreement") (incorporated by
reference to Exhibit 4.1 to the report filed on Form 8-K on October 7,
1999).
4.2 Addendum to the First Registration Rights Agreement, dated as of
October 19, 1999, among eVentures Group, Inc., the persons set forth
on Schedule 1 thereto and the other parties to the First Registration
Rights Agreement (incorporated by reference to Exhibit 4.2 to the
registration statement filed on Form 10 on December 20, 1999).
4.3 Registration Rights Agreement, dated as of November 19, 1999, between
eVentures Group, Inc. and Geronimo Partners, L.P. (incorporated by
reference to Exhibit 4.3 to the registration statement filed on Form
10 on December 20, 1999).
4.4 Schedule identifying other agreements, the dates thereof and the
parties thereto, substantially identical to the Registration Rights
Agreement, dated as of November 19, 1999, between eVentures Group,
Inc. and Geronimo Partners, L.P. (incorporated by reference to Exhibit
4.4 to the registration statement filed on Form 10 on December 20,
1999).
4.5 Registration Rights Agreement, dated as of December 31, 1999, between
eVentures Group, Inc. and the persons and entities signatories
thereto.
27.1 Financial Data Schedule