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 JUNE 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO
______________
COMMISSION FILE NUMBER: 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 June 30, 2001, the Registrant had 14,060,399 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 JUNE 30, 2001 3
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED
JUNE 30, 2001 AND JUNE 30, 2000 4
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
JUNE 30, 2001 AND JUNE 30, 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
June 30, 2001
(Unaudited)
ASSETS
Current Assets: $ 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: 0
Long-Term Liabilities
Debenture Payable, Bearer 59,039
Shareholders' Equity:
Common Stock , $0.01 par value
190,000,000 shares authorized,
14,060,399 issued and outstanding 4,796,079
Preferred Shares 10,000,000 - none issued
Paid-In-Capital (in excess of par value) 22,539,869
Accumulated Deficit (26,084,024)
Shareholders' Equity 1,251,924
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 Nine Months
Ended Ended
June 30 June 30 June 30 June 30
2001 2000 2001 2000
Revenue $ 0 $ 0 $ 0 $ 0
General and Administrative
Expenses:
Auto Expenses 3,000 3,000 9,000 9,000
Consulting Fees 0 58,190 50,000 79,190
Rent Expense 12,600 12,600 37,800 37,800
Telephone Expense 9,000 9,000 27,000 27,000
Travel and Promotions 45,000 45,000 135,000 135,000
Total General and
Administrative Expenses 69,600 127,790 258,800 287,990
Other (Income) Expenses
Write-off of Accounts
Payable 0 0 0 (82,007)
Interest Expense 21,068 13,770 59,573 45,310
Total Other (Income)
Expenses 21,068 13,770 59,573 (36,697)
Net Income (Loss) (90,668) (141,560) (318,373) (251,293)
Basic and Diluted
Earnings Per Share (.004) (.005) (.01) (.01)
Weighted Average Shares
Outstanding 23,310,923 24,595,739 34,204,330 21,973,827
The accompanying notes are an integral part of these financial statements
eCom.com, Inc.
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
June 30, 2001 June 30, 2000
Cash Flows From Operating Activities:
Net Loss for the period $(318,373) $(251,293)
Adjustments to reconcile net loss to
net cash used by operating activities:
Decrease in accounts payable (1,800) (122,007)
Net cash used by operations (320,173) (373,300)
Cash Flows From Investing Activities:
Purchase of eSearchB2B Web Crawler
Proprietary Software 0 (1,250,000)
Cash Flows From Financing Activities:
Increase (decrease) in debenture payable (680,326) 1,123,300
Issuance of common stock 750,000 500,000
Net cash used in financing 69,674 1,623,300
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 B 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 B RELATED PARTY TRANSACTIONS NOTE 2 O RELATED PARTY TRANSACTIONS
Due to related parties at June 30, 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 $59,039
Total due to related parties $59,039
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 still in the
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 2000 and early 2001, 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
June 30, 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: $318,373 for the nine months ended June 30, 2001, $424,431 for the
fiscal year ended September 30, 2000 and $403,642 for the fiscal year ended
September 30, 1999. At June 30, 2001, the Registrant had an accumulated
deficit of $26,084,024. 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) 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.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) 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.
(k) 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.
(l) Shares Eligible For Future Sale.
All of the 175,423 (post reverse split) 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 B 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.
(a) On April 30, 2001, the Company consolidated the issued and
outstanding common shares of the Company on the basis of one new share for ten
old shares.
(b) On June 4, 2001, the Company sold to Rukos Security Advice AG 10
million restricted common shares at a purchase price of $0.07 per share and a
share purchase warrant allowing Rukos to purchase an additional 10 million
shares at a price of $0.10 per share for a period of three years from the date
of issuance. The proceeds of this financing will be used for the repayment of
corporate debt and general working capital purposes.
This offering was undertaken under Regulation S by the fact that:
the sale was made in an offshore transaction;
no directed selling efforts were made in the United States by the
Registrant; and
offering restrictions were implemented in compliance with Rule 902(g)
under the Securities Act of 1933, the sale was not made to a U.S.
person or for the account or benefit of a U.S. person, and the sale was
made pursuant under the following conditions:
the purchaser certified that it is not a U.S. person and is not
acquiring the securities for the account or benefit of any U.S. person;
the purchaser agreed to resell such securities only in accordance with
the provisions of Regulation S, pursuant to registration under the
Securities Act of 1933, or pursuant to an available exemption from
registration; and agrees not to engage in hedging transactions with
regard to such securities unless in compliance with the Act;
the securities contain a legend to the effect that transfer is
prohibited except in accordance with the provisions of Regulation S,
pursuant to registration under the Act, or pursuant to an available
exemption from registration; and that hedging transactions involving
those securities may not be conducted unless in compliance with the
Act; and
the Registrant is required by contract to refuse to register any
transfer of the securities not made in accordance with the provisions
of Regulation S, pursuant to registration under the Act, or pursuant to
an available exemption from registration.
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 third 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: July 26, 2001 By: /s/ Sidney B. Fowlds
Sidney B. Fowlds, President
EXHIBIT INDEX
Exhibit Description
No.
2.1 Bearer Debenture issued by the Registrant (formerly known as Texas
Petroleum Corporation) and held by Xanthos Management Corporation
(formerly known as Texas Petroleum Corporation), 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).