SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2003
Commission File Number 33-96638-A
eCom eCom.com, Inc.
- -----------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Florida 65-0538051
- ------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2700 PGA Boulevard, Suite 103
Palm Beach Gardens, Florida 33410
- -----------------------------------------------------------------------------
(Address of principal executive offices)
(561) 622-4395
- -----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the 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 [ X ] No [ ]
As of August 31, 2003 the issuer had 37,816,112 shares of common stock,
$.0001 Par Value, outstanding.
Transitional Small Business Disclosure format: Yes [ ] No [ X ]
eCom eCom.com, Inc. Form 10-QSB August 31, 2003
INDEX
PAGE NO.
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Independent Accountant's Report 3
Consolidated Balance Sheets:
August 31, 2003 and May 31, 2003 (Unaudited) 4
Consolidated Statements of Operations:
Three Months Ended August 31, 2003 and
2002 (Unaudited) 5
Consolidated Statements of Shareholders' Deficit:
Years Ended May 31, 2002 and 2001 and the
Three Months Ended August 31, 2003 (Unaudited) 6
Consolidated Statements of Cash Flows:
Three Months Ended August 31, 2003 and
2002 (Unaudited) 7
Notes to Consolidated Financial Statements 9
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 20
ITEM 3 CONTROLS AND PROCEDURES 23
PART II OTHER INFORMATION
ITEMS 1-6 24
SIGNATURES AND CERTIFICATIONS 26
Exhibit 31.1 Certification required under Section 302 of 27
the Sarbanes-Oxley Act of 2002 by the CE0
Exhibit 31.2 Certification required under Section 302 of 28
the Sarbanes-Oxley Act of 2002 by the CFO
Exhibit 32 Certification of CEO and CFO Pursuant to
Section 906 of the Sarbanes-Oxley Act 29
2
Wieseneck, Andres & Company, P.A.
Certified Public Accountants
772 U. S. Highway 1, Suite 100
North Palm Beach, Florida 33408
(561) 626-0400
Thomas B. Andres, C.P.A.*, C.V.A. FAX (561) 626-3453
Paul M. Wieseneck, C.P.A.
*Regulated by the State of Florida
Independent Accountant's Report
To the Board of Directors and Stockholders eCom eCom.com, Inc.
We have reviewed the accompanying Balance Sheets of eCom eCom.com, Inc. as of
August 31, 2003 and May 31, 2003, and the related consolidated statements of
operations, for the three-month periods ended August 31, 2003 and 2002, the
consolidated statement of stockholders' deficit from May 31, 2001 through
August 31, 2003, and the consolidated statement of cash flows for the three-
month periods ended August 31, 2003 and 2002. These financial statements are
the responsibility of the company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with U.S. generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in the notes to the
financial statements, the Company's current liabilities exceed the current
assets by $774,688 and the Company has incurred net operating losses since
inception. These conditions raise substantial doubt about its ability to
continue as a going concern. Management's plans regarding those matters are
described in the notes. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Wieseneck, Andres & Company, P.A.
October 14, 2003
3
eCOM eCOM.COM, INC
CONSOLIDATED BALANCE SHEETS
(Unaudited)
August 31, 2003 May 31, 2003
--------------- --------------
ASSETS
Current Assets
Cash and cash equivalents $ 532 $ 111
Accounts receivable other 347 347
Inventories 165,748 147,389
Prepaid expenses 3,433 3,624
------------ ------------
Total Current Assets 170,060 151,471
------------ ------------
Property and Equipment, net 40,357 47,292
------------ ------------
Other Assets
Intangible assets, net 71,747 74,978
Other assets 9,383 9,383
------------ ------------
Total Other Assets 81,130 84,361
------------ ------------
Total Assets $ 291,547 $ 283,124
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 317,079 $ 270,585
Accrued expenses 16 2,694
Other Current Liabilities 1,765 1,402
Current portion of long-term debt 620,420 600,888
Interest accrued on current portion 5,468 -
------------ ------------
Total Current Liabilities 944,748 875,569
Notes Payable, Net of Current Portion - -
------------ ------------
Total Liabilities 944,748 875,569
------------ ------------
Stockholders' Equity
Common stock, $.0001 par value, 50 million
shares authorized, 37,816,112 and
36,393,112 shares issued and outstanding 3,781 3,639
Paid-in capital 6,063,490 6,048,622
Accumulated deficit (6,720,472) (6,644,706)
Treasury stock - -
------------ ------------
Total Stockholders' Deficit (653,201) (592,445)
------------ ------------
Total Liabilities and Stockholders' Equity $ 291,547 $ 283,124
============ ============
See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
4
ECOM ECOM.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
August 31, 2003 August 31, 2002
______________ _______________
Revenues
Net Sales $ 12,809 $ 40,775
Cost of Sales (13,753) (35,243)
______________ _______________
Gross Profit (944) 5,532
______________ _______________
Other Operating Expenses
Sales and marketing 1,408 8,120
Product development 4,500 14,335
General and administrative 55,613 174,398
Amortization 5,232 5,062
______________ _______________
Total Operating Expenses 66,753 201,915
______________ _______________
Loss from Operations (67,697) (196,383)
Other Income (Expense)
Interest income - -
Interest expense (8,069) (2,487)
______________ _______________
Net Other Expenses (8,069) (2,487)
______________ _______________
Net Loss $ (75,766) (198,870)
============== ===============
Net Loss Per Common Share $ (.002) (.007)
============== ===============
Weighted Average Shares Outstanding 37,692,373 27,847,031
============== ===============
See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
5
ECOM ECOM.COM, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT FOR THE YEARS ENDED MAY 31,
2003 AND 2002 AND THE THREE MONTHS ENDED AUGUST 31, 2003
(Unaudited)
Number At Add'l Total
of Par Paid In Accum'd Treasury Stockholder
Shares Value Capital Deficit Stock Deficit
---------- ------ ---------- ----------- -------- -----------
Balance,
May 31, 2001 19,010,836 $1,901 $4,127,083 $(4,391,382)$ - $ (262,398)
Issuance of
Common Stock 7,728,686 773 1,628,684 - - 1,629,457
Net Loss - - - (1,482,533) - (1,482,533)
---------- ------ ---------- ----------- -------- -----------
Balance,
May 31, 2002 26,739,512 $2,674 $5,755,767 $(5,873,915)$ - $ (115,474)
Issuance of
Common Stock 9,653,600 965 292,855 - - 293,820
Net Loss - - - (770,791) - (770,791)
---------- ------ ---------- ----------- -------- -----------
Balance,
May 31, 2003 36,393,112 $3,639 $6,048,622 $(6,644,706)$ - $ (592,445)
Issuance of
Common Stock 1,423,000 142 14,868 - - 15,010
Net Loss - - - (75,766) - (75,766)
---------- ------ ---------- ----------- -------- -----------
Balance,
Aug 31, 2003 37,816,112 $3,781 $6,063,490 $(6,720,472)$ - $ (653,201)
========== ====== ========== =========== ======== ===========
See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
6
eCOM eCOM.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 31, 2003 AND 2002
(Unaudited)
August 31, 2003 August 31, 2002
_______________ _______________
Cash Flows From Operating Activities
Cash received from customers 12,809 40,775
Cash paid to suppliers and employee (21,807) (112,142)
Interest paid (6,532) (2,170)
_______________ _______________
Net Cash Flows Used in
Operating Activities (15,530) (73,537)
_______________ _______________
Cash Flows From Investing Activities
Purchase of equipment (701) 0
_______________ _______________
Net Cash Flows Provided By
(Used In) Investing Activities (701) 0
_______________ _______________
Cash Flows From Financing Activities
Proceeds from note receivable 0 15,000
Proceeds of loans from stockholders 16,653 52,378
Repayment of loans to stockholders 0 (6,410)
Issuance of note receivable 0 0
_______________ _______________
Net Cash Flows Provided By
(Used In) Financing Activities 16,653 60,968
_______________ _______________
Net Decrease in Cash 421 (12,569)
Cash and Cash Equivalents at
Beginning of Period 111 12,803
_______________ _______________
Cash and Cash Equivalents at
End of Period 532 234
=============== ===============
Supplemental Disclosures
- ------------------------
Non-Cash transactions
Stock issued for payment of services 10,421 78,520
Stock issued for purchase of intangible 0 90,000
Stock issued for repayment of debt 4,590 0
See accompanying summary of accounting policies, notes to financial statements
and independent accountants' review report.
7
eCOM eCOM.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 31, 2003 AND 2002
(Unaudited)
Reconciliation of Net Loss to Net Cash Flows Used in Operating Activities:
August 31, 2003 August 31, 2002
_______________ _______________
Net Loss (75,766) (198,871)
Add items not requiring outlay of cash:
Depreciation and amortization 12,868 16,325
Expenses paid by issuing stock 10,421 89,905
Cash was increased by:
Decrease in inventory 0 7,456
Decrease in prepaid expenses 191 13,958
Decrease in deposits 0 1,500
Increase in accrued interest pa 5,468 2,152
Increase in accounts payable 46,494 0
Increase in inventory (18,359) 0
Decrease in accounts payable 0 (5,743)
Decrease in accrued expenses (2,678) (219)
Decrease in other current liabilities 364 0
Decrease in accrued interest payable 5,468 0
_______________ _______________
Net Cash Flows Used In
Operating Activities (15,530) (73,537)
=============== ===============
See accompanying summary of accounting policies, notes to financial statements
and independent accountants' review report.
8
ECOM ECOM.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED AUGUST 31, 2003 AND 2002
NOTE A - NATURE OF OPERATIONS
eCom eCom.com, Inc. ("eCom" or "the Company") was incorporated in the State of
Florida on June 14, 1994. eCom recently changed its direction to focus on
separating three of its current business segments, USA SportsNet, Inc., USA
Performance Products, Inc., and MyZipSoft, Inc. which was established on March
3, 2003.
This plan was undertaken for the purposes of allowing the management and
employees the opportunity to operate each segment independently. Also, to
have the ability for each segment, to raise its own funding for growth and
expansion. The Company is considering a partnership arrangement or spin-off
for each division.
The business segments are described below.
1. USA SportsNet Company, Palm Beach Gardens, Florida
Product Line: e-Commerce business through Internet auction, sale and swapping
of sports memorabilia. Articles are both company owned as well as those listed
by private parties. It also owns the National High School All American
Football Bowl and ComCard/ProCard concept.
2. USA Performance Products, Inc., Riviera Beach, Florida
Product Line: Manufacture and distribution of the Viper M1 paintball gun line.
An M16 look alike gun which fires in all weather and is made entirely in the
USA.
3. MyZipSoft, Inc., Palm Beach Gardens, Florida
Product Line: Development and distribution of software. Its first product is
a high-compression software called MyPhotoZip (TM). The Company considers this
product "the ultimate image compression tool", that enables compression of
still images up to 2000 to 1 without loss of quality. This has increased from
1500 to 1. The Company is also developing other cutting edge applications
including video compression which could be introduced later this year. The
Company has entered into a marketing agreement with Digital River for its
on-line sales of MyPhotoZip (TM).
Our intention is to eventually roll out all of the divisions for the purposes
of attracting management and operational staff. Our mission is to make each
of our divisions profitable and to grow on their own.
On April 9, 2002 we announced that we had signed a new agreement for use of
high power compression encoding technology developed by MeVis Technology of
Germany. The first product released using the new technology is MyPhotoZip(tm).
MyPhotoZip(tm) provides a better quality image than JPEG and other compression
products now on the market. We are moving ahead as quickly as possible to
develop and market an array of compression products using this new technology
while it is still the state of the art. Software Development Kits (SDK's) are
also available.
See accompanying independent accountants' review report.
9
ECOM ECOM.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED AUGUST 31, 2003 AND 2002
NOTE A - NATURE OF OPERATIONS (CONTINUED)
The company continues to renegotiate a teaming agreement that was
entered into on June 18, 2002 with World Data Group LLC, of Boca Raton,
Florida. The original agreement provided revenue sharing in the amount of 10%
of all World Data Group's income derived from MeVis Technology integrations.
In addition, any of the integrated products to be offered for commercial sale
will be made available to eCom eCom to resell.
On July 15, 2002 we announced the availability of MyPhotoZip(tm) for download
from our new website, www.myphotozip.com. In addition, we provided details of
the primary marketing strategy for all of our company's compression products
which is based on an agreement signed with Plugin Technologies of the United
Kingdom. Using Plugin's network of thousands of sales affiliates, ECOM's
product lines will be promoted globally to a variety of market segments. While
broadening the target audience to international markets, this approach takes
advantage of the Internet without incurring the heavy cost of traditional
Internet-based advertising programs.
On December 12, 2002 we signed a contract to purchase the software rights to
FotoCrazy from Interveloce.net. FotoCrazy is an on-line subscription based
photo-album system, which will allow users to post and organize digital images
on their own web pages. This product will be renamed MyAlbumZip and is
scheduled to be released in 2003.
In February 2003, the company signed a Master Distributor Agreement with Artera
Group, Inc., of Westport CT, a subsidiary of NCT Group, Inc. (OTCBB:NTCI). The
agreement covers the distribution of Artera Turbo Web Accelerator for Internet
access. The company will market the product as MyNetZip for a monthly
subscription fee. MyNetZip will have the MyPhotoZip technology imbedded to
provide DSL speed over dial-up internet connections. MyNetZip can be used with
all Internet connections and especially Internet access which is normally
enhanced to the DSL level of service.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation, Use of Estimates
The Company maintains its accounts on the accrual basis of accounting. The
preparation of financial statements in conformity with U.S. 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.
See accompanying independent accountants' review report.
10
ECOM ECOM.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED AUGUST 31, 2003 AND 2002
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Consolidation
The consolidated financial statements of the Company include the accounts of
USA Performance Products, Inc. The Company formed USA Performance Products,
Inc. as a separate wholly owned subsidiary on January 20, 1998 and
transferred all assets related to the manufacture and sale of the Viper M1
paintball marker and accessories to this new corporation. We expanded the
activities of USA Performance Products in 1999 by selling other paintball
products through use of the 800-PAINTBALL toll-free telephone number and
related website acquired by USASC.
Revenue Recognition
Revenue from the sale of paintball markers and accessories is recognized at
the time title is transferred which is normally on shipment of the goods.
Revenue from the sale of compression products is also recognized at the
time the products are shipped or downloaded. Revenue received from contracts
for web site development services is recorded as unearned revenue until
development of the related web site is complete and accepted by the client.
Cash
Cash consists of deposits in banks and other financial institutions having
original maturities of less than ninety days.
Allowance for Doubtful Accounts
It is the policy of management to review the outstanding accounts receivable
at year end, as well as the bad debt write-offs experienced in the past, and
establish an allowance for doubtful accounts for uncollectible amounts.
Depreciation
Property and equipment is recorded at cost and is depreciated over the
estimated useful lives of the related assets. Depreciation is computed using
the straight-line method.
Amortization
Intangible assets consisting of rights to technology and associated
trademarks are amortized using the straight-line method over five years.
Inventories
Inventories are stated at the lower of cost or market using the first in
first out method.
See accompanying independent accountants' review report.
11
ECOM ECOM.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED AUGUST 31, 2003 AND 2002
NOTE C - INVENTORIES
Inventories consist principally of paintball markers and paintball
accessories and sports-related memorabilia. Inventories are carried at cost,
which is considered to be less than market value.
On August 31, 2003, inventory consisted of the following:
Finished goods $ 4,630
Work in process 161,118
Raw materials 0
----------
Total inventory $ 165,748
==========
NOTE D - PREPAID EXPENSES
Prepaid expenses consist principally of amounts paid for rent, subscriptions
and domain name registrations.
NOTE E - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment recorded in the
financial statements at cost less depreciation as of August 31, 2003 and May
31, 2003:
August 31, 2003 May 31, 2003
----------------- ------------
Computer hardware $ 150,812 $ 150,111
Computer software 56,308 56,308
Furniture, fixtures and equipment 47,760 47,760
Tools, dies and fixtures 57,401 57,401
---------------- ------------
Total Cost 312,281 311,580
Accumulated Depreciation 271,925 264,288
------------ ------------
Total Net Property and Equipment $ 40,357 $ 47,292
============ ============
Depreciation expense included in the cost
of sales for the periods ended are: $ 7,636 $ 45,053
The useful lives assigned to property and equipment to compute depreciation
are:
Computer Hardware 5 years
Computer Software 5 years
Furniture, fixtures and equipment 7 years
Tools, dies and fixtures 5 years
See accompanying independent accountants' review report.
12
ECOM ECOM.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED AUGUST 31, 2003 AND 2002
NOTE F - INTANGIBLE ASSETS
In February 1999, the Company acquired two Internet websites, AclassifiedAd
and Swapandshop, for a total cost of $11,200. These assets are amortized over
five years. Accumulated amortization related to these assets was $9,990 and
$9,430 as of August 31, 2003 and May 31, 2003, respectively.
On July 1, 2002, the Company acquired the licensing rights to Pandora and
Virtual Protect from Internet Security Solutions, for a total cost of $56,250.
This asset is being amortized over five years. Accumulated amortization
related to this asset is $14,063 as of August 31, 2003.
On July 1, 2002, the Company paid Peter Tamayo, Jr. to work with MeVis
Technologies to complete the development of MyPhotoZip, for a total cost of
$33,750. This asset is being amortized over five years. Accumulated
amortization related to this asset is $8,438 as of August 31, 2003.
On September 18, 2002, the Company issued 25,000 shares of stock as payment
towards the purchase of FotoCrazy software. This deposit was recorded as
$1,125.
NOTE G - OTHER ASSETS
Other assets consist primarily of security deposits on the lease of office
facilities, an employee advance and utility deposits.
NOTE H - LONG-TERM DEBT
Long-term debt as of August 31, 2003 and May 31, 2003 consisted of:
August 31, 2003 May 31, 2003
--------------- ------------
A non-interest bearing, non-collateralized loan
from an offshore corporation that is due on
demand. 184,220 184,220
Three non-interest bearing, non-collateralized
loans from stockholders. The loans are due on
demand. 436,200 416,668
---------- ----------
Total Long-Term Debt 620,420 600,888
Less Current Portion 620,420 (600,888)
---------- ----------
Net Long-term Debt $ 0 $ 0
========== ==========
The long-term loans payable mature as follows:
May 31, 2004 620,420 600,888
---------- ----------
$ 620,420 $ 600,888
========== ==========
See accompanying independent accountants' review report.
13
ECOM ECOM.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED AUGUST 31, 2003 AND 2002
NOTE I - COST OF SALES
Included in the cost of sales are the following:
August 31, 2003 May 31, 2003
------------ ------------
Shipping and handling costs $ 42 $ 0
Packaging costs 124 460
------------ ------------
Total $ 166 $ 460
============ ============
Shipping income $ 845 $ 8,946
============ ============
NOTE J - COMMITMENTS AND CONTINGENCIES
The Company leases office facilities under an operating lease one which
expires on March 31, 2004. The Company leases its manufacturing facility under
an operating lease which expires June 30, 2004. Future minimum lease payments
including sales tax as of August 31, 2003 are:
Fiscal Years ending:
May 31, 2004 $ 36,785
May 31, 2005 1,855
May 31, 2005 0
-------
Total Minimum Lease Payments $ 38,640
Rent expense for the three month period ending August 31, 2003 and 2002 are
$15,466 and $19,705 respectively.
We are party to lawsuits in the normal course of our business. Litigation can
be expensive and disruptive to normal business operations; the results of
legal proceedings are difficult to predict.
Our dispute with four companies had similar suits of non-payment against either
eCom eCom.com or it's subsidiary USA Performance Products. Each of these
suits were initially settled during the fiscal year ending May 31, 2002.
However two matters have recently come to light. The first matter concerning
National Paintball which has notified us through their attorney that the
issuance of stock agreed upon in the settlement was insufficient to cover the
settlement. The company is currently trying to determine the circumstances
which lead to the shortfall. The second matter is the attorney for Renick
Enterprises Inc. has notified us of his contention that the company failed to
complete its agreement by the appropriate date. Management feels that the
claim is unfounded and that the company met its obligation timely.
See accompanying independent accountants' review report.
14
ECOM ECOM.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED AUGUST 31, 2003 AND 2002
NOTE J - COMMITMENTS AND CONTINGENCIES (CONTINUED)
On May 15, 2002 a settlement was reached with Renick Enterprises, Inc. As
part of the settlement USAPP received cash, notes receivable, inventory,
and cancellation of accounts payable. USA Performance products gave up
raw material located at Renick.
National Paintball Supply, Inc. filed a complaint against USA Performance
Products and eCom eCom.com, Inc. in the State of South Carolina, Greenville
County Court of Common Pleas on May 14, 2001. The complaint alleged that an
amount of $85,743.35 is owed to the complainant. National Paintball Supply
handled paintball fulfillment requests for USA Performance products. USA
Performance Products contended that many requests for fulfillment were not
completed while some requests were shipped twice. USA Performance Products
has recorded a balance due of $69,373.36 as of May 31, 2001. As part of the
SB-2 dated August 8, 2002, stock was registered to pay-off this debt. As of
February 28, 2003 all stock that had previously been held in an Attorney
escrow account, had been sold and transferred to National Paintball. The
balance owed National Paintball as of August 31, 2003 is 59,475.83.
NOTE K - RELATED PARTY TRANSACTIONS
On January 10, 1998, the Company's Board of Directors approved an agreement
with Axis Enterprises, Ltd., a Bahamian corporation of Nassau, Bahamas, to
retain Axis for a period of three years to provide certain financing,
marketing and management services in support of the Company's subsidiary,
USA Performance Products, Inc. In exchange for performance of these services,
Axis was granted 1,500,000 shares of common stock. The final marketing and
management agreement was executed on April 8, 1998. Derek D. Panaia, son of
David J. Panaia, CEO of the Company, was retained as a consultant to provide
management oversight of USAPP in connection with this agreement. In 1999,
Axis loaned the Company $296,000, and this indebtedness was reduced by
$111,780 through the issuance of 150,000 shares of the Company's common stock.
The Company is currently indebted to Axis for $184,220.
The Company has received cash advances from David J. Panaia, Chairman and CEO
of the Company, in varying amounts and at various times subsequent to the
inception of the Company. These shareholder loans were non-interest bearing,
non-collateralized and due on demand.
On May 10, 2001, 1,286,359 shares of restricted stock were issued to Mr.
Panaia in return for cancellation of $437,362 ($.34 per share) of the debt
owed to him. The balance owed to Mr. Panaia at August 31, 2003 was $277,692.
The Company has received cash advances from Bonnie Crum, daughter of David J.
Panaia, CEO of the Company, in varying amounts and at various times subsequent
to May 31, 2001. These related party loans were non-interest bearing, non-
collateralized and due on demand. The balance owed to Ms. Crum as of August
31, 2003 is $40,000.
See accompanying independent accountants' review report.
15
ECOM ECOM.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED AUGUST 31, 2003 AND 2002
NOTE L - BUSINESS SEGMENTS
The Company's reportable segments are strategic business units that offer
different products and services. The Company has two reportable segments:
electronic commerce and software. The electronic commerce segment has provided
an e-commerce infrastructure to enable small businesses to expand to the
Internet. The e-commerce segment focuses on classifieds, auctions and
its paintball gun company. The software segment focuses on the design
and resale of secure software applications for compression and transmission of
large data files.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. There have been no
intersegment sales or transfers. Revenues from sales of the Company's
paintball products over the Internet are reported within the paintball
segment.
The following is a summary of segment activity:
Electronic
Paintball Commerce Totals
Three Months Ended: ---------- --------- -----------
August 31, 2003
- ------------------
Revenues $ 12,023 $ 786 12,809
Interest expense 163 7,906 8,069
Depreciation 3,844 3,793 7,637
Amortization - 5,232 5,232
Segment loss (18,799) (56,967) (75,766)
Segment assets 193,235 98,311 291,547
Electronic
Paintball Commerce Totals
Three Months Ended: ---------- --------- ----------
August 31, 2002
- - -----------------
Revenues $ 37,718 $ 3,057 40,775
Interest expense 169 2,318 2,487
Depreciation 5,786 5,477 11,263
Amortization - 5,062 5,062
Segment loss (18,202) (180,669) (198,871)
Segment assets 402,569 372,179 774,748
See accompanying independent accountants' review report.
16
ECOM ECOM.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED AUGUST 31, 2003 AND 2002
NOTE M - RECOVERABILITY OF ASSETS AND GOING CONCERN
These financial statements are presented on the basis that the Company is a
going concern. Going concern contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a
reasonable length of time. The accompanying financial statements show that
current liabilities exceed current assets by $774,688 at August 31, 2003 and
by $724,098 at May 31, 2003 and that the Company has incurred net operating
losses since inception.
eCom will have to fund future operations and software development through
product sales, asset sales, shareholder loans and private sales of company
stock. The sales of MyPhotoZip began on July 31, 2002, the product was released
with a 30 day free trial. Subsequent to May 31, 2003, eCom contracted with
Digital River Inc to market and distribute MyPhotoZip. USA Performance Products
completed its approval with the United States General Services Administration.
The Viper M-1 paintball gun can now be purchased through GSA Advantage, the
Federal Government's online purchasing system. eCom is continuing to look for
buyers for the USA Performance Products division.
In accordance with the May 2001 agreement to sell the 1-800-PAINTBALL
number, the Company agreed not to sell paintball accessories for a period of
three years. The company continues to manufacture and sell the Viper paintball
gun. The Company is currently focusing its efforts on the design
and resale of MyPhotoZip (tm) software that compresses, stores, protects and
transmits large data files.
NOTE N - INCOME TAXES
Deferred income taxes are provided for temporary differences between the
financial reporting and income tax basis of the Company's assets and
liabilities. Temporary differences, net operating loss carry forwards
and valuation allowances comprising the net deferred taxes on the balance
sheets is as follows:
August 31, 2003
--------------
Loss carry forward for tax purposes $ 6,710,431
==============
Deferred tax asset (34%) 2,281,547
Valuation allowance (2,281,547)
--------------
Net deferred tax asset -
==============
Through August 31, 2003, the Company had a federal income tax net
operating loss carry forward of approximately $6,710,000 which will expire
through the year 2023.
See accompanying independent accountants' review report.
17
ECOM ECOM.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED AUGUST 31, 2003 AND 2002
NOTE 0 - INCOME TAXES
No provision for federal and state income taxes has been recorded because the
Company has incurred net operating losses since inception. The Company's net
operating loss carry-forward as of August 31, 2003 was approximately
$6,710,000. These carry-forwards, which will be available to offset future
taxable income, will expire through the year 2023.
The Company does not believe that the realization of the related net deferred
tax asset meets the criteria required by generally accepted accounting
principles and, accordingly, the deferred income tax asset arising from such
loss carry forward has been fully reserved.
NOTE P - EFFECTS OF INFLATION
To date, inflation has not had a material impact on the Company's
consolidated financial results.
NOTE Q - RECENT ACCOUNTING PRONOUNCEMENTS
The FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations with
an effective date for financial statements issued for fiscal years beginning
after June 15, 2002. The statement addresses financial accounting and
reporting for obligations related with the retirement of tangible long-lived
assets and the costs associated with asset retirement. The statement requires
the recognition of retirement obligations which will, therefore, generally
increase liabilities; retirement costs will be added to the carrying value of
long-lived assets, therefore, assets will be increased; and depreciation and
accretion expense will be higher in the later years of an assets life than in
earlier years. The Company adopted SFAS No. 143 at January 1, 2002. The
adoption of SFAS No. 143 had no impact on the Company's operating results or
financial positions.
The FASB also issued SFAS No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets and is effective for financial statements issued for
fiscal years beginning January 1, 2002. This statement addresses financial
accounting and reporting for the impairment or the disposal of long-lived
asset. An impairment loss is recognized if the carrying amount of a long-
lived group exceeds the sum of the undiscounted cash flow expected to result
from the use and eventual disposition of the asset group. Long-lived assets
should be tested at least annually or whenever changes in circumstances
indicate that its carrying amount may not be recoverable. This statement
does not apply to goodwill and intangible assets that are not amortized.
The Company adapted SFAS No. 144 in the first quarter of 2002. The adoption
of SFAS No. 144 had no impact on the Company's operating results or
financial position.
See accompanying independent accountants' review report.
18
ECOM ECOM.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED AUGUST 31, 2003 AND 2002
NOTE Q - RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In April 2002, the FASB issued SFAS No. 145, "Rescission of the FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections"
("SFAS No. 145"). SFAS No. 145 eliminates the requirement to classify gains and
losses from the extinguishment of indebtedness as extraordinary, requires
certain lease modifications to be treated the same as a sale-leaseback
transaction, and makes other non-substantive technical corrections to existing
pronouncements. SFAS No. 145 is effective for fiscal years beginning after May
15, 2002. SFAS No. 145 was adopted on June 1, 2003 and did not have a material
effect on the Company's financial position or results of operations.
Goodwill and intangible assets acquired prior to July 1, 2001 will continue to
be amortized and tested for impairment in accordance with pre- SFAS No. 142
requirements until adoption of SFAS No. 142. Under the provision of SFAS No.
142, intangible assets with definite useful lives will be amortized to their
estimated residual values over those estimated useful lives in proportion to
the economic benefits consumed. Such intangible assets remain subject to the
impairment provisions of SFAS No. 121. Intangible assets with indefinite
useful lives will be tested for impairment annually in lieu of being
amortized. The Company's current yearly amortization of intangible assets is
approximately $20,927. The impact of adopting SFAS Nos. 141 and 142 will not
cause a material change in the Company's consolidated financial statements as
of the date of this report.
See accompanying independent accountants' review report.
19
ECOM ECOM.COM, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the accompanying
consolidated financial statements for the three-month periods ended August
31, 2003 and 2002 and the Form 10-KSB for the fiscal year ended May 31, 2003.
Special Note Regarding Forward-Looking Statements
Certain statements in this report and elsewhere (such as in other filings by
the Company with the Securities and Exchange Commission ("SEC"), press
releases, presentations by the Company or its management and oral statements)
may constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates," and
"should," and variations of these words and similar expressions, are intended
to identify these forward-looking statements. The Company's actual results
could differ materially from those anticipated in these forward-looking
statements. Factors that might cause or contribute to such differences
include, among others, competitive pressures, the growth rate of the
paintball industry and electronic commerce, constantly changing technology
and market acceptance of the Company's products and services. The Company
undertakes no obligation to publicly release the result of any revisions to
these forward-looking statements, which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Overview
The results of its operations during the three months ended August 31, 2003
were a reflection of the continued evolution of its business model.
eCom recently changed its direction to focus on three of its current business
segments, USA SportsNet, Inc., USA Performance Products, Inc., and MyZipSoft,
Inc. which was established on March 3, 2003.
This plan was undertaken for the purposes of allowing the management and
employees the opportunity to operate each segment independently. Also, to have
the ability for each segment, to raise its own funding for growth and expansion.
The business segments are described below.
1. USA SportsNet Company, Palm Beach Gardens, Florida
Product Line: e-Commerce business through Internet auction, sale and swapping
of sports memorabilia. Articles are both company owned as well as those listed
by private parties.
2. USA Performance Products, Inc., Riviera Beach, Florida
Product Line: Manufactures and distribution of the Viper M1 paintball gun line.
An M16 look alike gun which fires in all weather and is made entirely in the
USA.
20
ECOM ECOM.COM, INC.
3. MyZipSoft, Inc., Palm Beach Gardens, Florida
Product Line: Development and distribution of software. Its first product is
a high-compression software called MyPhotoZip (TM). The Company considers this
product "the ultimate image compression tool", that enables compression of
still images up to 2000 to 1 without loss of quality
The Company is also developing other cutting edge applications including video
compression which could be introduced later this year. The Company has entered
into a marketing agreement with Digital River for its on-line sales of
MyPhotoZip (tm). It is too early in this arrangement to measure results.
Previously, eCom developed an e-commerce infrastructure that provided an
affordable, user-friendly technological platform to facilitate web business
development. It also operated an on-line business as a test model, using
Company developed e-commerce concepts to sell paintball products.
However, the current business model was revised with the intention to eventually
separate the e-commerce business segment, which is described above, along with
the previously operated programs, for the purpose of allowing each of the three
business segments the opportunity to grow on its own. The company realizes that
it presently does not have the proper resources to develop all three segments
simultaneously and is looking towards a partnership for each business segment
so that it may obtain the necessary outside resources. The separation was also
a result of past experiences which indicated that potential business partners
desire to be involved with only one of the business segments.
Two realities have been made clear: 1) investor appetite for technology stocks
diminished dramatically; and 2) e-commerce spending declined. eCom radically
restructured its business operations to preserve the Company's future in these
difficult markets. This transformation continues today. As a result of this
focused execution, we believe we have set the stage to propel eCom's future
business. The transitional architecture consists of creating three business
segments and seeking management and operational partners for each either
through a merger or spin-off.
The Company cancelled almost all of its existing partnerships and teaming
agreements. It has settled all but two legal actions. Both the Renick and
National Paintball cases were settled but were reopened by the plaintiffs. The
Company feels that neither case will have a major adverse effect and will be
settled soon.
Our company's reengineering dictated the need to sell or spin off certain
divisions. With the sale last year of our 1-800-PAINTBALL business and the Star
Dot Marketing subsidiary, the only significant revenue-generating product line
left from our previous business model was the Viper M1 paintball marker. As
discussed below, our current operating results reflect this temporary cessation
of revenues. However, we believe that the potential revenue and profit to be
realized from our focus on MyPhotoZip(tm) and other software products will
confirm that the current lull in revenue generation is a minor inconvenience.
21
ECOM ECOM.COM, INC.
Results of Operations
Comparison of the three months ended August 31 2003 with the three months
ended August 31, 2002.
Revenue for the three-month period ended August 31, 2003 was $12,809
compared to $40,775 of revenue recorded during the same period of the prior
year. Current year revenues were recorded from sales of the Viper M1 paintball
marker and accessories and sales of MyPhotoZip (TM). Our USA Performance
Products subsidiary had entered into a proposed sale of the Viper product line
during February 2001. In order to comply with the terms of the sales contract,
all Viper inventory was taken out of production in preparation for shipment
during April 2001. The sale subsequently was canceled. We intend to rebuild
Viper sales volume in anticipation of the eventual sale of this product line.
Gross profit decreased from $5,532 in the prior year period to $(944) in
the current three-month period. Depreciation expense contributed $7,636 to the
current deficit in gross profit. Depreciation expense was 60% of revenue in
the current year and only 28% of sales in the prior year.
The company continues to make improvements in cutting its operating costs.
Cost reduction was achieved in all major expense categories. Sales and
marketing expense dropped from $8,120 in the three months ended August 31,
2003 to $1,408 in the current three-month period. Product development
expenses were cut from $14,335 in the prior year period to $4,500 in the
current three-month period. General and administrative costs dropped from
$174,398 in prior year to $55,614 in the current three-month period. Most
of this cost savings was generated from a reduction in personnel and overhead.
Amortization expense increased from $5,062 to $5,232 as a result of
increases in intangible assets. During the current three-month period, the
company acquired the rights to license Virtual Protect and Pandora from
Internet Security Solutions, Inc. The company also acquired the rights to
the www.fotocrazy.com internet domain name. The fotocrazy.com web site will
be an online digital photo album site were customers will be able to store
and share their pictures.
The company incurred net interest expense of $8,069 in the current three month
period compared to a net interest expense of $2,487 in the prior year three
month period. This was primarily due to the increased need to borrow funds to
finance current operations.
Our operations for the three months ended August 31, 2003 resulted in a net
loss of $77,766, a $123,104 improvement over the net loss of $198,870
recorded during the three months ended August 31, 2002.
Liquidity and Capital Resources
At August 31, 2003, current assets totaled $170,060 compared to $151,471 at
the end of the prior fiscal year. Of the $18,589 increase in total current
assets, inventory accounted for $18,359 of the increase.
22
ECOM ECOM.COM, INC.
Accounts Payable increased $46,494 to $317,079 during the current three
months. This increase in accounts payable helped fund the increase in
inventory and funded the operating loss of the company.
Current liabilities increased from $875,569 at the end of the prior fiscal
year to $944,748 at the end of the current quarter, an increase of $69,179.
Net cash used in operating activities was $15,530 during the current three-
month period compared to $73,537 during the same period of the prior year.
The principal use of cash in both periods was to fund our net loss from
operations. The issuance of stock contributed $15,011 towards our operating
deficit during the current three-month period.
Financing activities provided net cash of $16,653 during the first three
months of the current year, consisting primarily of loans from stockholders.
The Company continues to be reliant on the combination of revenues, loans from
stockholders and capital contributions to fund operations. The equity line
agreement that was established with Swartz Private Equity, LLC was scheduled
to end on April 28, 2003. The agreement was terminated on October 15, 2001
with a final sale of stock to Swartz to cover the outstanding account payable
due to Swartz of $77,000.
To the extent that additional funds are required to support operations or to
expand our business, we may sell additional equity, issue debt or obtain other
credit facilities through financial institutions. Any sale of additional
equity securities will result in dilution to our shareholders.
Until the Company obtains sufficient funds necessary to capitalize the growth
of its existing operations, expenditures required to increase revenues,
including advertising and promotion of compression software and Viper M1
paintball products, will be substantially limited. Should the Company be
unable to obtain continued funding, its operations may be adversely affected.
ITEM 3. CONTROLS AND PROCEDURES
Evaluation of the Company's Disclosure Controls and Internal Controls:
Within the 90 days prior to the date of this Quarterly Report on Form 10-QSB,
the Company evaluated the effectiveness of the design and operation of its
'disclosure controls and procedures'("Disclosure Controls"). This 'evaluation'
("Controls Evaluation") was done under the supervision and with the
participation of management, including the Chief Executive Officer ("CEO")and
Chief Financial Officer ("CFO"). As a result of this review, the Company
adopted guidelines concerning disclosure controls and the establishment of a
disclosure control committee made up of senior management.
Limitations on the Effectiveness of Controls:
The Company's management, including the CEO and CFO, does not expect that its
Disclosure Controls or its 'internal controls and procedures for financial
reporting' ("Internal Controls")will prevent all error and all fraud. A control
23
ECOM ECOM.COM, INC.
system, no matter how well conceived and managed, can provide only reasonable
assurance that the objectives of the control system are met. The design of a
control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of
the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the control. The design of any
system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions;
over time, control may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may deteriorate.
Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.
Conclusions:
Based upon the Controls Evaluation, the CEO and CFO have concluded that, subject
to the limitations noted above, the Disclosure Controls are effective to timely
alert management to material information relating to the Company during the
period when its periodic reports are being prepared.
In accordance with SEC requirements, the CEO and CFO note that, since the date
of the Controls Evaluation to the date of this Quarterly Report, there have
been no significant changes in Internal Controls or in other factors that could
significantly affect Internal Controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
Our dispute with four companies had similar suits of non-payment against either
eCom eCom.com or it's subsidiary USA Performance Products. Each of these
suits were initially settled during the fiscal year ending May 31, 2002.
However two matters have recently come to light. The first matter concerning
National Paintball which has notified us through their attorney that the
issuance of stock agreed upon in the settlement was insufficient to cover the
settlement. The company is currently trying to determine the circumstances
which lead to the shortfall. The second matter is the attorney for Renick
Enterprises Inc. has notified us of his contention that the company failed to
complete its agreement by the appropriate date. Management feels that the
claim is unfounded and that the company met its obligation timely.
On May 15, 2002 a settlement was reached with Renick Enterprises, Inc. As part
of the settlement USAPP received cash, notes receivable, inventory, and
cancellation of accounts payable. USA Performance products gave up raw
material located at Renick.
24
ECOM ECOM.COM, INC.
National Paintball Supply, Inc. filed a complaint against USA Performance
Products and eCom eCom.com, Inc. in the State of South Carolina, Greenville
County Court of Common Pleas on May 14, 2001. The complaint alleged that an
amount of $85,743.35 is owed to the complainant. National Paintball Supply
handled paintball fulfillment requests for USA Performance products. USA
Performance Products contended that many requests for fulfillment were not
completed while some requests were shipped twice. USA Performance Products
has recorded a balance due of $69,373.36 as of May 31, 2001. As part of the
SB-2 dated August 8, 2002, stock was registered to pay-off this debt. As of
February 28, 2003 all stock that had previously been held in an Attorney
escrow account, had been sold and transferred to National Paintball. The
balance owed National Paintball as of August 31, 2003 is 59,475.83.
ITEM 2. Changes in Securities.
None
ITEM 3. Defaults Upon Senior Securities.
None
ITEM 4. Submission of Matters to a Vote of Security Holders.
None
ITEM 5. Other Events.
The company is in the process of replacing its attorney, Carol Ann Plowman who
had notified the company that she will no longer be practicing in the
securities field. Several attorneys are under consideration.
The company was notified that its lead market maker, Equitrade Securities Inc.
of Lake Forest CA was shutting down its operations. The company is presently
looking for a replacement, however there are currently over 40 companies
making markets in our stock.
The company signed an agreement with Digital River to provide e-marketing
services for on-line sales of all of its software products. Results thus far
have been minimal. A software partner is being sought to assist in this portion
of the Company.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit 31.1 Certification required under Section 302 of
the Sarbanes-Oxley Act of 2002 by the CE0 on page 27
Exhibit 31.2 Certification required under Section 302 of
the Sarbanes-Oxley Act of 2002 by the CFO on page 28
Exhibit 32 Certification of CEO and CFO Pursuant to
Section 906 of the Sarbanes-Oxley Act on page 29
(b) Reports on Form 8-K:
None
25
ECOM ECOM.COM, INC.
SIGNATURE
Pursuant to 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 hereunder duly authorized.
eCom eCom.com, Inc.
April 15, 2003 By: /s/ David J. Panaia
David J. Panaia,
Chief Executive Officer
April 15, 2003 By: /s/ Richard C. Turner
Richard C. Turner,
Chief Financial Officer
26
Exhibit 31.1
CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, David J. Panaia, certify that:
1. I have reviewed this quarterly report on Form 10-Q of eCom eCom.com Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls.
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: October 14, 2003
/s/ David J. Panaia
- --------------------------
David J. Panaia
Chief Executive Officer
27
Exhibit 31.2
CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Richard C. Turner, certify that:
1. I have reviewed this quarterly report on Form 10-Q of eCom eCom.com Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls.
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: October 14, 2003
/s/ Richard C. Turner
- ---------------------------
Richard C. Turner
Chief Financial Officer
28
Exhibit 32
CERTIFICATIONS OF CEO AND CFO PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Quarterly Report of eCom eCom.com Inc., a Florida
corporation (the "Company"), on Form 10-QSB for the period ending August 31,
2003, as filed with the Securities and Exchange Commission (the "Report"),
David J. Panaia, Chief Executive Officer of the Company and Richard C. Turner,
Chief Financial Officer of the Company, respectively, do each hereby certify,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350),
that to his knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
/s/ David J. Panaia
David J. Panaia
Chief Executive Officer
October 14, 2003
/s/ Richard c. Turner
Richard C. Turner
Chief Financial Officer
October 14, 2003
[A signed original of this written statement required by Section 906 has been
provided to eCom eCom.com Inc. and will be retained by eCom eCom.com Inc.
and furnished to the Securities and Exchange Commission or its staff upon
request.]
Exhibits to Form 10-QSB will be provided to shareholders of the Registrant
upon written request addressed to eCom eCom.com, Inc., 2700 PGA Boulevard,
Suite 103, Palm Beach Gardens, Florida 33410. Any exhibits furnished are
subject to a reasonable photocopying charge.
The Securities and Exchange Commission has not approved or disapproved of
this Form 10-QSB nor has it passed upon its accuracy or adequacy.
29