U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
March 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________
COMMISSION FILE NUMBER: 000-9071
eCom.com, Inc.
(Exact name of registrant as specified in its charter)
Nevada 74-2026624
(State or jurisdiction of incorporation I.R.S. Employer
or organization) Identification No.)
3900 Birch Street, Suite 113, Newport Beach, California 92660
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (877) 613-3131
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) been subject to such filing
requirements for the past 90 days. Yes X No .
As of March 31, 2001, the Registrant had 40,603,990 shares
of common stock issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEET AS OF MARCH 31, 2001 3
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED
MARCH 31, 2001 AND MARCH 31, 2000 4
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
MARCH 31, 2001 AND MARCH 31, 2000 5
NOTES TO FINANCIAL STATEMENTS 6
ITEM 2. PLAN OF OPERATION 11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 13
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 13
ITEM 5. OTHER INFORMATION 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURE 14
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCAL STATEMENTS.
eCom.com, Inc.
BALANCE SHEET
March 31, 2001
(Unaudited)
ASSETS
Current Assets:
Cash $ 0
Fixed Assets
Equipment 534,886
Less Accumulated Depreciation (534,886)
Net Fixed Assets 0
Other Assets
eSearchB2B Web Crawler 1,250,000
Rights' Title, net of amortization 1
Product Development Expenditures 60,962
Total Other Assets 1,310,963
Total Assets $1,310,963
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 1,800
Long-Term Liabilities
Debenture Payable, Bearer 666,571
Shareholders' Equity:
Common Stock , $0.01 par value
190,000,000 shares authorized,
40,603,990 issued and outstanding 4,726,079
Preferred Shares 10,000,000 - none issued
Paid-In-Capital (in excess of par value) 21,909,869
Accumulated Deficit (25,905,356)
Shareholders' Equity 642,592
Total Liabilities & Shareholders' Equity 1,310,963
The accompanying notes are an integral part of these financial statements
eCom.com, Inc.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Six Months
Ended Ended
March 31 March 31 March 31 March 30
2001 2000 2001 2000
Revenue 0 0 0 0
General and Administrative
Expenses:
Auto Expenses 3,000 3,000 6,000 6,000
Consulting Fees 0 0 50,000 21,000
Rent Expense 12,600 12,600 25,200 25,200
Telephone Expense 9,000 9,000 18,000 18,000
Travel and Promotions 45,000 45,000 90,000 90,000
Total General and
Administrative Expenses 69,600 69,600 189,200 160,200
Other (Income) Expenses
Write-off of Accounts Payable 0 0 0 (82,007)
Interest Expense 18,401 11,028 38,505 31,540
Total Other (Income) Expenses 18,401 11,028 38,505 (50,467)
Net Income (Loss) (88,001) (80,628) (227,705) (109,733)
Basic and Diluted
Earnings Per Share (.002) (.003) (.003) (.004)
Weighted Average Shares
Outstanding 39,812,324 21,445,054 39,269,990 20,823,479
The accompanying notes are an integral part of these financial statements
eCom.com, Inc.
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
March 31 2001 March 31 2000
Cash Flows From Operating Activities:
Net Loss for the period (227,705) (109,733)
Adjustments to reconcile net loss to
net cash used by operating activities:
Decrease in accounts payable 0 (122,007)
Net cash used by operations (227,705) (231,740)
Cash Flows From Investing
Activities: 0 0
Cash Flows From Financing Activities:
Increase (decrease) in debenture payable (72,794) (268,260)
Issuance of common stock 50,000 500,000
Net cash used in financing (22,794) 231,740
Net Increase (Decrease) in Cash (250,499) 0
Beginning Cash Balance 250,499 0
Ending Cash Balance 0 0
The accompanying notes are an integral part of these financial statements
eCom.com, Inc.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in
accordance with U.S. Securities and Exchange Commission ("SEC")
requirements for interim financial statements. Therefore, they
do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. The financial statements should be read in
conjunction with the year ended September 30, 2000 financial
statements of eCom.com, Inc. (formerly E.T. Capital, Inc.)
("Registrant") included in the Form 10-KSB filed with the SEC by
the Registrant.
The results of operations for the interim periods shown in this
report are not necessarily indicative of results to be expected
for the full year. In the opinion of management, the information
contained herein reflects all adjustments necessary to make the
results of operations for the interim periods a fair statement of
such operation. All such adjustments are of a normal recurring nature.
NOTE 2 - RELATED PARTY TRANSACTIONS
Due to related parties at March 31, 2001 consist of the following:
Advances payable to an entity controlled by an
officer and shareholder of the Registrant represent
advances, secured with floating debenture and due on demand $666,571
Total due to related parties $666,571
ITEM 2. PLAN OF OPERATION.
The following discussion should be read in conjunction with the
financial statements of the Registrant and notes thereto
contained elsewhere in this report.
Twelve-Month Plan of Operation.
The Registrant is continuing to expand its entry into "not-
for-profit" fund raising using "1-900" "pay-per-call" telephone
numbers as outlined in the Registrant's business plan in its Form
10-KSB. With campaign finance reform a central issue in the
Congress, the Registrant is negotiating agreements for the use of
the Registrant's two political "1-900" fund raising numbers: 1-
900-DEMOCRAT and 1-900-REPUBLICAN. These numbers could raise
hundreds of millions of dollars for both the Democratic and
Republican parties. To assist in the development process, the
Registrant has retained the services of Benjamin Cohen to attempt
to procure a contract with the Democratic National Committee for
the exclusive use by the DNC of the "pay-per-call" telephone
number 1 900 "DEMOCRAT" (see Exhibit 10.2 to this Form 10-QSB;
(although this agreement was executed in July 2000, it was
finalized by the initial payment of shares of common stock,
pursuant to a Form S-8, to Mr. Cohen in December 2000)).
To develop cash flow from the "1-900" concept, the Registrant
will continue to rely on Xanthos Management Corporation to
finance the Registrant's ongoing overhead under the terms of the
bearer debenture it holds until fund raising contracts have been
signed (see notes to September 30, 2000 audit as filed and as
part of the September 30, 2000 Form 10-KSB). The Registrant has
sufficient cash funds to maintain operations for the next twelve months.
The Registrant's internet timeshare web sites
"timeshareonlinerealty.com" and "timeshareunitsales.com" are in
the final development stage. Once the sites are completed, the
Registrant will actively solicit registration of timeshare
properties from around the world to list for sale through these
web sites using the Registrant's new browser "esearchb2b.com".
The Registrant has previously acquired proprietary software for
an Internet Meta Crawler, "eSearchB2B". This web search engine
searches other search engines for users input. Revenues sources
from this web search engine are projected to start in 2001 from
this acquisition.
The Registrant continues in its efforts to finance the Paraguayan
hydrocarbon concessions. During early 2000, the increase in the
world price of oil and gas has led to an increase in interest in
hydrocarbon exploration and development. Activity in this field
has historically been cyclical and the Registrant considers that
this has already been taken into account.
Capital Expenditures.
There were no material capital expenditures during the
quarter ended March 31, 2001.
Risk Factors Connected with Plan of Operation.
(a) Limited Prior Operations.
The Registrant has only had limited prior operations and has
embarked on a new business direction within the past few years,
which has not generated any revenue for the Registrant. The
Registrant has incurred losses from operations: $227,705 for the
six months ended March 31, 2001, $424,431 for the fiscal year
ended September 30, 2000 and $403,642 for the fiscal year ended
September 30, 1999. At March 31, 2000, the Registrant had an
accumulated deficit of $25,905,356. Thus, the Registrant is
subject to all the risks inherent in the creation of a new
business. The likelihood of the success of the Registrant must
be considered in the light of the problems, expenses,
difficulties, complications, and delays frequently encountered in
connection with the expansion of a business and the competitive
environment in which the Registrant operates. Unanticipated
delays, expenses and other problems such as setbacks in product
development, and market acceptance are frequently encountered in
connection with the expansion of a business.
Consequently, there is only a limited operating history upon
which to base an assumption that the Registrant will be able to
achieve its business plans. In addition, the Registrant has only
limited assets. As a result, there can be no assurance that the
Registrant will generate significant revenues in the future; and
there can be no assurance that the Registrant will operate at a
profitable level. If the Registrant is unable to obtain
customers and generate sufficient revenues so that it can
profitably operate, the Registrant's business will not succeed.
As a result of the fixed nature of many of the
Registrant's expenses, the Registrant may be unable to adjust
spending in a timely manner to compensate for any unexpected
delays in the development and marketing of the Registrant's
products or any capital raising or revenue shortfall. Any such
delays or shortfalls will have an immediate adverse impact on the
Registrant's business, operations and financial condition.
(b) Significant Working Capital Requirements.
The working capital requirements associated with the
plan of business of the Registrant will continue to be
significant. The Registrant anticipates, based on currently
proposed assumptions relating to its operations (including with
respect to costs and expenditures and projected cash flow from
operations), that it can generate sufficient financing through a
floating debenture with Xanthos Management Corporation to
continue its operations for an indefinite period at the current
level without requiring additional financing. The Registrant
does not anticipate, at the present time, needing to raise any
additional capital in the next twelve months to implement its
sales and marketing strategy and grow. In the event that the
Registrant's plans change or its assumptions change (due to
unanticipated expenses, technical difficulties, or otherwise),
the Registrant would be required to seek additional financing
sooner than currently anticipated or may be required to
significantly curtail or cease its operations.
(c) Success of Registrant Dependent on Management.
The Registrant's success is dependent upon the hiring of key
administrative personnel. None of the Registrant's officers,
directors, and key employees have an employment agreement with
the Registrant; therefore, there can be no assurance that these
personnel will remain employed by the Registrant after the
termination of such agreements. Should any of these individuals
cease to be affiliated with the Registrant for any reason before
qualified replacements could be found, there could be material
adverse effects on the Registrant's business and prospects. In
addition, management has no experience is managing companies in
the same business as the Registrant.
In addition, all decisions with respect to the management of
the Registrant will be made exclusively by the officers and
directors of the Registrant. Investors will only have rights
associated with minority ownership interest rights to make
decision which effect the Registrant. The success of the
Registrant, to a large extent, will depend on the quality of the
directors and officers of the Registrant. Accordingly, no person
should invest in the shares unless he is willing to entrust all
aspects of the management of the Registrant to the officers and
directors.
(d) Control of the Registrant by Officers and Directors.
The Registrant's officers and directors beneficially
own approximately 4% of the outstanding shares of the
Registrant's common stock. As a result, such persons, acting
together, have the ability to influence over all matters
requiring stockholder approval (especially since the remainder of
the 40,603,990 issued and outstanding shares are owned by over
9,000 shareholders). Accordingly, it could be difficult for an
individual investor to effectuate control over the affairs of the
Registrant. Therefore, it should be assumed that the officers,
directors, and principal common shareholders who control the
majority of voting rights will be able, by virtue of their stock
holdings, to control the affairs and policies of the Registrant.
(f) Indemnification of Directors and Officers.
The Registrant's Articles of Incorporation include
provisions to eliminate, to the fullest extent permitted by the
Nevada Revised Statutes as in effect from time to time, the
personal liability of directors of the Registrant for monetary
damages arising from a breach of their fiduciary duties as
directors. The By-Laws of the Registrant include provisions to
the effect that the Registrant may, to the maximum extent
permitted from time to time under applicable law, indemnify any
director, officer, or employee to the extent that such
indemnification and advancement of expense is permitted under
such law, as it may from time to time be in effect. Any
limitation on the liability of any director, or indemnification
of directors, officer, or employees, could result in substantial
expenditures being made by the Registrant in covering any
liability of such persons or in indemnifying them.
(h) Potential Conflicts of Interest Involving Management.
The officers and directors have other interests to which they
devote time, either individually or through partnerships and
corporations in which they have an interest, hold an office, or
serve on boards of directors, and each will continue to do so
notwithstanding the fact that management time may be necessary to
the business of the Registrant. As a result, certain conflicts of
interest may exist between the Registrant and its officers and/or
directors which may not be susceptible to resolution. All of the
potential conflicts of interest will be resolved only through
exercise by the directors of such judgment as is consistent with
their fiduciary duties to the Registrant. It is the intention of
management, so as to minimize any potential conflicts of
interest, to present first to the board of directors to the
Registrant, any proposed investments for its evaluation.
(i) Influence of Other External Factors on Prospects for Registrant.
The industry of the Registrant in general is a speculative
venture necessarily involving some substantial risk. There is no
certainty that the expenditures to be made by the Registrant will
result in a commercially profitable business. The marketability
of its products will be affected by numerous factors beyond the
control of the Registrant. These factors include market
fluctuations, and the general state of the economy (including the
rate of inflation, and local economic conditions), which can
affect companies' spending. Factors which leave less money in
the hands of potential customers of the Registrant will likely
have an adverse effect on the Registrant. The exact effect of
these factors cannot be accurately predicted, but the
combination of these factors may result in the Registrant not
receiving an adequate return on invested capital.
(j) Non-Cumulative Voting
Holders of the shares are not entitled to accumulate their votes
for the election of directors or otherwise. Accordingly, the
holders of a majority of the shares present at a meeting of
shareholders will be able to elect all of the directors of the
Registrant, and the minority shareholders will not be able to
elect a representative to the Registrant's board of directors.
(k) Absence of Cash Dividends
The board of directors does not anticipate paying cash dividends
on the shares for the foreseeable future and intends to retain
any future earnings to finance the growth of the Registrant's
business. Payment of dividends, if any, will depend, among other
factors, on earnings, capital requirements, and the general
operating and financial condition of the Registrant, and will be
subject to legal limitations on the payment of dividends out of
paid-in capital.
(l) Limited Public Market for Registrant's Securities.
There has been only a limited public market for the shares of
common stock of the Registrant. There can be no assurance that
an active trading market will develop or that purchasers of the
shares will be able to resell their securities at prices equal to
or greater than the respective initial public offering prices.
The market price of the shares may be affected significantly by
factors such as announcements by the Registrant or its
competitors, variations in the Registrant's results of
operations, and market conditions in the retail, electronic
commerce, and internet industries in general. The market price
may also be affected by movements in prices of stock in general.
As a result of these factors, investors in the Registrant may not
be able to liquidate an investment in the shares readily, or at all.
(m) No Assurance of Continued Public Trading Market; Risk of Low
Priced Securities.
There has been only a limited public market for the
common stock of the Registrant. The common stock of the
Registrant is currently quoted on the Over the Counter Bulletin
Board. As a result, an investor may find it difficult to dispose
of, or to obtain accurate quotations as to the market value of
the Registrant's securities. In addition, the common stock is
subject to the low-priced security or so called "penny stock"
rules that impose additional sales practice requirements on
broker-dealers who sell such securities. The Securities
Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure in connection with any trades involving a
stock defined as a penny stock (generally, according to recent
regulations adopted by the U.S. Securities and Exchange
Commission, any equity security that has a market price of less
than $5.00 per share, subject to certain exceptions), including
the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the
risks associated therewith. The regulations governing low-
priced or penny stocks sometimes limit the ability of broker-
dealers to sell the Registrant's common stock and thus,
ultimately, the ability of the investors to sell their securities
in the secondary market.
(n) Effects of Failure to Maintain Market Makers.
If the Registrant is unable to maintain a National
Association of Securities Dealers, Inc. member broker/dealers as
market makers, the liquidity of the common stock could be
impaired, not only in the number of shares of common stock which
could be bought and sold, but also through possible delays in the
timing of transactions, and lower prices for the common stock
than might otherwise prevail. Furthermore, the lack of market
makers could result in persons being unable to buy or sell shares
of the common stock on any secondary market. There can be no
assurance the Registrant will be able to maintain such market
makers.
(o) Shares Eligible For Future Sale.
All of the 1,754,233 shares of common stock which are currently
held, directly or indirectly, by management have been issued in
reliance on the private placement exemption under the Securities
Act of 1933. Such shares will not be available for sale in the
open market without separate registration except in reliance upon
Rule 144 under the Securities Act of 1933. In general, under
Rule 144 a person (or persons whose shares are aggregated) who
has beneficially owned shares acquired in a non-public
transaction for at least one year, including persons who may be
deemed affiliates of the Registrant (as that term is defined
under that rule) would be entitled to sell within any three-month
period a number of shares that does not exceed the greater of 1%
of the then outstanding shares of common stock, or the average
weekly reported trading volume during the four calendar weeks
preceding such sale, provided that certain current public
information is then available. If a substantial number of the
shares owned by these shareholders were sold pursuant to Rule 144
or a registered offering, the market price of the common stock
could be adversely affected.
Forward Looking Statements.
The foregoing Plan of Operation contains "forward looking
statements" within the meaning of Rule 175 of the Securities Act
of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934,
as amended, including statements regarding, among other items,
the Registrant's business strategies, continued growth in the
Registrant's markets, projections, and anticipated trends in the
Registrant's business and the industry in which it operates. The
words "believe," "expect," "anticipate," "intends," "forecast,"
"project," and similar expressions identify forward-looking
statements. These forward-looking statements are based largely
on the Registrant's expectations and are subject to a number of
risks and uncertainties, certain of which are beyond the
Registrant's control. The Registrant cautions that these
statements are further qualified by important factors that could
cause actual results to differ materially from those in the
forward looking statements, including, among others, the
following: reduced or lack of increase in demand for the
Registrant's products, competitive pricing pressures, changes in
the market price of ingredients used in the Registrant's products
and the level of expenses incurred in the Registrant's
operations. In light of these risks and uncertainties, there can
be no assurance that the forward-looking information contained
herein will in fact transpire or prove to be accurate. The
Registrant disclaims any intent or obligation to update "forward
looking statements."
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Registrant and its counsel are taking the position that
certain individuals, corporations and/or financial institutions
that either profited from or participated in the hydrocarbon
financing transaction with the Registrant through Barclay's Bank
should compensate the Registrant for breach of the original
contractual agreements. The Registrant has consulted with
counsel and is considering all legal alternatives with regard to
this matter.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
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.
Exhibits.
Exhibits included or incorporated by reference herein are set
forth in the attached Exhibit Index.
Reports on Form 8-K.
No reports on Form 8-K was filed during the second quarter
of the fiscal year covered by this Form 10-QSB.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
eCom.com, Inc.
Dated: May 9, 2001 By: /s/ Sidney B. Fowlds
Sidney B. Fowlds, President
EXHIBIT INDEX
Exhibit Description
No.
2.1 Debenture issued by Xanthos Management Corporation (formerly
known as Texas Petroleum Corporation) to the Registrant, dated
October 31, 1992 (incorporated by reference to Exhibit 2.1 to the
Form 10-KSB filed on January 17, 2001).
2.2 Agreement and Plan of Merger between eCom.com, Inc., a
Colorado corporation, and eCom.com, Inc., a Nevada corporation
(incorporated by reference to Exhibit 2 to the Form 8-K filed on
August 21, 2000).
3.1 Articles of Incorporation of the Registrant, dated May
30, 2000 (incorporated by reference to Exhibit 3.1 of the Form
10-QSB filed on August 21, 2000).
3.2 Bylaws of the Registrant, dated June 10, 2000 (incorporated
by reference to Exhibit 3.2 of the Form 10-QSB filed on August
21, 2000).
4.1 Employee Stock Incentive Plan, dated June 1, 2000
(incorporated by reference to Exhibit 4.1 of the Form S-8 filed
on June 2, 2000).
4.2 Retainer Stock Plan for Non-Employee Directors and
Consultants, dated June 1, 2000 (incorporated by reference to
Exhibit 4.2 of the Form S-8 filed on June 2, 2000).
10.1 Acquisition Agreement between the Registrant and Rukos
Security Advice AG, dated June 5, 2000 (incorporated by reference
to Exhibit 10 of the Form 8-K filed on August 21, 2000).
10.2 Consulting Services Agreement between the Registrant and
Benjamin Cohen, dated July 15, 2000 (incorporated by reference to
Exhibit 10.2 of the Form 10-QSB filed on February 13, 2001).