-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NQKBcXiQmEms4pFL8tuVoAGC5UTwtArw70NZTK7mSv6vNQaqvi2W+OkKlM52vrfH GaYeIONooXNF0JnCGBxCqg== /in/edgar/work/20000821/0001015402-00-002336/0001015402-00-002336.txt : 20000922 0001015402-00-002336.hdr.sgml : 20000922 ACCESSION NUMBER: 0001015402-00-002336 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000821 FILER: COMPANY DATA: COMPANY CONFORMED NAME: E FINANCIAL DEPOT COM CENTRAL INDEX KEY: 0001092310 STANDARD INDUSTRIAL CLASSIFICATION: [9995 ] IRS NUMBER: 330809711 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-26899 FILM NUMBER: 706708 BUSINESS ADDRESS: STREET 1: 1005-750 W PENDER CITY: VANCOUVER BC V6 2TB STATE: A1 BUSINESS PHONE: 6046816186 MAIL ADDRESS: STREET 1: 1875 CENTURY PARK EAST SUITE 150 CITY: CENTURY CITY STATE: CA ZIP: 90067 FORMER COMPANY: FORMER CONFORMED NAME: BALLYNAGEE ACQUISITION CORP DATE OF NAME CHANGE: 19990730 10QSB 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 --------------- TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from to --------- --------- Commission file number 000-26899 --------- E-FINANCIAL DEPOT.COM, INC. - -------------------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) DELAWARE 33-0809711 - --------------------------------------- -------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 150 - 1875 CENTURY PARK EAST CENTURY CITY, CALIFORNIA 90067 - -------------------------------------------------------------------------------- (Address of principal executive offices) (877) 739-3812 - -------------------------------------------------------------------------------- (Issuer's telephone number) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. [ ] Yes [ ] No APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 19,221,180 common shares issued and outstanding as of July 21, 2000 Transitional Small Business Disclosure Format (Check one): [ ] Yes [X] No E FINANCIAL DEPOT.COM, INC. Quarterly Report on Form 10-QSB for the Quarterly Period Ending June 30, 2000 Table of Contents PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets: June 30, 2000 and December 31, 1999 3 Consolidated Statements of Losses and Comprehensive Losses: Three Months Ended June 30, 2000 and 1999 Six Months Ended June 30, 2000 and 1999 4 Consolidated Statements of Cash Flows: Three Months Ended June 30, 2000 and 1999 Six Months Ended June 30, 2000 and 1999 5 Notes to Consolidated Financial Statements: June 30, 2000 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION Item 1. Legal Proceedings. Item 2. Changes in Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K EXHIBITS Exhibit 10.3 Exhibit 10.4 Exhibit 10.5 Exhibit 10.8 Exhibit 27 -2- PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. e-Financial Depot.com, Inc.'s (the "Company") financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
E FINANCIAL DEPOT.COM, INC. CONSOLIDATED BALANCE SHEET JUNE 30,2000 December 31, 1999 ASSETS (UNAUDITED) -------------- ------ -------------- Current assets: Cash and equivalents $ 245,643 $ 11,859 Accounts receivable, less allowance for doubtful accounts 1,091,229 119,610 Marketable securities available for sale 91,475 51,836 Accrued tax benefit - 17,980 Prepaid expenses - 35,005 -------------- -------------- Total current assets 1,428,347 236,290 Property and equipment - at cost, less accumulated depreciation 532,920 31,156 Other assets: Note receivable 1,000,000 - Financing charges net of amortization 274,926 - Deposits 11,710 - Goodwill and other intangible assets, net 14,467,300 - -------------- -------------- $ 17,715,203 $ 267,446 ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------- Current liabilities: Accounts payable and accrued expenses $ 1,714,090 $ 105,188 Unearned revenues - 30,750 Deferred income tax expense - 44,610 -------------- -------------- Total current liabilities 1,714,090 180,548 Convertible debenture 3,100,000 - Stockholders' equity Preferred stock - - Common stock 18,700 12,500 Additional paid-in capital 17,178,326 - Deficiency in retained earnings (4,259,319) 96,907 Unrealized gain or (loss) on securities available-for-sale (36,594) (22,509) -------------- -------------- Total stockholders' equity 12,901,113 86,898 -------------- -------------- $ 17,715,203 $ 267,446 ============== ============== The accompanying notes are an integral part of these financial statements
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E FINANCIAL DEPOT.COM, INC. CONSOLIDATED STATEMENTS OF LOSSES AND COMPREHENSIVE LOSSES (UNAUDITED) For the Three For the Three For the Six For the Six Months Ended Months Ended Months Ended Months Ended June 30 June 30 June 30 June 30 2000 1999 2000 1999 --------------- --------------- -------------- -------------- Fee income $ 449,625 $ 409,133 $ 464,825 $ 572,833 Costs and expenses: Selling, general and administrative 4,111,276 600,194 4,775,586 652,040 Interest expense 36,885 - 61,065 - --------------- --------------- -------------- -------------- 4,148,161 600,194 4,836,651 652,040 --------------- --------------- -------------- -------------- Operating loss (3,698,536) (191,061) (4,371,826) (79,207) Interest income 1,203 - 18,854 - Realized gain or (loss) on securities available (11,192) --------------- --------------- -------------- -------------- for sale 12,592 (3,254) 19,142 --------------- --------------- -------------- -------------- Net loss before provision for income tax (3,708,525) (178,469) (4,356,226) (60,065) Income tax (benefit) or expense - - - - --------------- --------------- -------------- -------------- Net Loss $ (3,708,525) $ (178,469) $ (4,356,226) $ (60,065) =============== =============== ============== ============== Other comprehensive income, net of tax: Unrealized holding gains (losses) on securities available-for-sale arising during the period (90,658) - (14,085) 4,586 --------------- --------------- -------------- -------------- Comprehensive Loss $ (3,799,183) $ (178,469) $ (4,370,311) $ (55,479) =============== =============== ============== ============== Net loss per common share (basic and assuming dilution) $ (.27) $ (.01) $ (.33) $ (.00) =============== =============== ============== ============== Weighted average common shares outstanding)* 14,058,388 12,500,000 13,228,392 12,500,000 *Restated to reflect re-capitalization in September, 1999 The accompanying notes are an integral part of these financial statements
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E FINANCIAL DEPOT.COM, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) For the Six Months For the Six Months Ended June 30,2000 Ended June 30,1999 -------------------- -------------------- Cash flows from operating activities: Net income (loss) from operating activities $ (4,356,226) $ (60,065) Adjustments to reconcile net income to net cash: Deferred income taxes - (10,400) Realized loss (gain) on securities available for sale 3,254 - Depreciation and amortization 40,458 - Common stock issued in exchange for services 3,097,040 - Provision for uncollectible receivables 43,625 516,300 (Increase) decrease in: Accounts receivable (971,619) (287,020) Other assets and adjustments (733,637) 7,196 Marketable securities (39,639) (161,288) Increase (decrease) in: Accounts payable and accrued expenses 1,533,542 (26,672) -------------------- -------------------- Net cash used by operating activities (1,383,202) (21,949) Cash flows used in investing activities: Capital expenditures (501,764) (6,986) Note receivable (1,000,000) - -------------------- -------------------- Net cash used in investing activities (1,501,764) (6,986) Cash flows (used in)/provided by financing activities: Proceeds from loans - 26,344 Repayment of loans - - Proceeds from convertible debentures 3,100,000 - Proceeds from sale of common stock 18,750 - -------------------- -------------------- Net cash flows from financing activities 3,118,750 26,344 Net increase (decrease) in cash and cash equivalents 233,784 (2,591) Cash and cash equivalents at beginning of period 11,859 6,436 -------------------- -------------------- Cash and cash equivalents at end of period $ 245,643 $ 3,845 ==================== ==================== Supplemental Information: Interest paid $ 61,065 $ - Taxes paid - - Common stock issued in exchange for services 3,097,040 - Common stock issued in exchange for acquisitions 13,005,000 - The accompanying notes are an integral part of these financial statements
-5- E FINANCIAL DEPOT.COM, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2000 (UNAUDITED) NOTE A - SUMMARY OF ACCOUNTING POLICIES General - ------- The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-QSB, and therefore, do not include all the information necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ended June 30, 2000 are not necessarily indicative of the results that may be expected for the year ended March 31, 2001. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's December 31, 1999 annual report included in SEC Form 10-KSB Basis of Presentation - ----------------------- The consolidated financial statements include the accounts of the Company, and its wholly owned subsidiaries, RJI Ventures, Inc. (formerly Talk Stock with Me, Inc.),Trade-Fast, Inc. and FDPO Insurance (U.S.A.), IncSignificant intercompany transactions have been eliminated in consolidation. Acquisition - ----------- On June 8, 2000 the Company acquired in an exchange for 5,000,000 shares of the Company's unregistered common stock Trade-fast, Inc. in a transaction accounted for using the purchase method of accounting. The total purchase price and carrying value of the net assets acquired and liabilities assumed of Trade-Fast, Inc. were as follows: Stock issued $ 13,005,000 Excess of liabilities assumed over assets acquired 419,931 ------------- Total consideration paid $ 13,424,931 ============= The Company has recorded the carryover basis of the net assets acquired, which did not differ materially from their fair value. The results of operations subsequent to the date of acquisition are included in the Company's consolidated statement of operations. The estimated fair value of the assets acquired and the liabilities assumed relating to the Trade-Fast, Inc. acquisition may be subject to further refinement, based upon the completion of further valuation studies. The excess costs of the over the fair value of the assets acquired of $ 13,424,931 is being amortized over a twenty year period, using the straight line method subject to impairment write-offs determined by underlying cash flows. Reclassification - ---------------- Certain reclassifications have been made to conform to prior periods' data to the current presentation. These reclassifications had no effect on reported earnings. -6- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. The following discussion should be read in conjunction with the Company's Consolidated Financial Statements and Notes thereto, included elsewhere within this Report. Description of Company - ------------------------ The Company is an Internet financial portal, offering a full spectrum of financial services and investment information on the World Wide Web. The Company is developing a proprietary information system consisting of integrated financial web pages and featuring an online investment-related community through Talk-stock.com (the "Talk Stock Website")and online trading services through Trade-Fast, Inc. ("Trade-Fast"). Forward Looking Statements - ---------------------------- This Quarterly Report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements included in this Quarterly Report that address activities, events or developments that the Company expects, believes, estimates, plans, intends, projects or anticipates will or may occur in the future, are forward-looking statements. Actual events may differ materially from those anticipated in the forward-looking statements. Important risks that may cause such a difference include: general domestic and international economic business conditions and increased competition in the Company's markets and products. Other factors may include the availability and terms of capital for financing the research and development of the Company's products, and/or increases in operating and supply costs. Market acceptance of existing and new products, rapid technological changes, availability of qualified personnel may also be factors. Changes in the Company's business strategies and development plans and changes in government regulation could adversely affect the Company. Although the Company believes that the assumptions underlying the forward-looking statements contained in this Quarterly Report are reasonable, any of the assumptions could be inaccurate. There can be no assurance that the forward-looking statements included in this Quarterly Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company that the objectives and expectations of the Company would be achieved. THREE MONTHS ENDED JUNE 30, 2000 AND 1999 - ------------------------------------------------ Revenue - ------- The Company's revenues increased $ 40,492, or 9.9% to $ 449,625 during the second quarter of 2000 as compared to $ 409,133 of revenues during the same period in 1999. In order to be more competitive in the market place, the Company revised its pricing for services provided by Talk Stock With Me. Com to its clients during 2000 and as a result, fee revenues decreased approximately $ 348,000 during the three months ended June 30, 2000 as compared to similar period in 1999. The Company offset this decrease with revenues generated by its Trade-Fast subsidiary. Trade-Fast, which was purchased on June 8, 2000, generated approximately $ 389,000 of revenues subsequent to the acquisition date through June 30, 2000. Costs and Expenses - -------------------- The Company's costs and expenses increased from $ 600,194 during the quarter ended June 30, 1999 to $ 4,148,161 during the second quarter of 2000. Selling, general and administrative expenses increased $ 3,511,082. In addition to incurring costs associated with implementing the Company's business plan (i. e., travel, transportation, professional fees, and consulting fees) during the three months ended June 30, 2000; the Company issued common stock to consultants and employees in lieu of compensation. The value of the Company's common stock issued was $ 3,097,040, which approximated the market value of the stock at the time the services were rendered. -7- SIX MONTHS ENDED JUNE 30, 2000 AND 1999 - ---------------------------------------------- Revenue - ------- The Company's revenues for the six months ended June 30, 2000 decreased $ 108,000, or 18.8%, to $ 464,825 as compared to $ 572,833 during the fist six months of 1999. In order to be more competitive in the market place, the Company revised its pricing for services provided by Talk Stock With Me. Com to its clients during 2000 and as a result, fee revenues decreased approximately $ 477,000 during the first six months of 2000 as compared to similar period in 1999. The Company offset this decrease with revenues generated by its Trade-Fast subsidiary. Trade-Fast, which was purchased on June 8, 2000, generated approximately $ 389,000 of revenues subsequent to the acquisition date through June 30, 2000. Costs and Expenses - -------------------- The Company's costs and expenses increased from $ 652,040 during the six months ended June 30, 1999 to $ 4,836,651 during the same period in 2000. Selling, general and administrative expenses increased $ 4,184,611. In connection with the implementation of its business plan, the Company incurred the following significant costs during the six months ended June 30, 2000 which were not incurred in 1999: Common stock issued to consultants and Employees in lieu of cash $ 3,097,040 Management and consulting fees 203,954 Professional fees 106,915 Travel and transportation 91,642 During the six months ended June 30, 2000, the Company incurred $ 61,065 of interest expense as a result of placing $ 3,100,000 of interest bearing convertible debt during the first quarter of 2000. LIQUIDITY AND CAPITAL RESOURCES - ---------------------------------- As of June 30, 2000, the Company had a deficit in working capital of $ 285,743 compared to available working capital of $ 55,742 at December 31, 1999, a decrease in working capital of $ 341,485. The decrease in working capital was substantially due to the increase in obligations to vendors at June 30, 2000 as compared to December 31, 1999. As a result of the Company's operating loss of $ 4,356,226 during the six months ended June 30, 2000, the Company generated cash flow deficits of $ 1,388,202 from operating activities, adjusted principally for depreciation and amortization of $ 40,458, a provision for uncollectible accounts receivable of $ 43,625 and the value of common stock issued to consultants and employees for services in the amount of $ 3,097,040. The Company invested $ 500,000 in furniture, equipment, software, and leasehold improvements utilized in the operations of the Trade-Fast subsidiary and advanced in the form of a note receivable $ 1,000,000 to an entity controlled by the former owners of Trade-Fast. The Company met its cash requirements during the first six months of 2000 through the private placement of $ 3,100,000 of convertible debentures net of placement costs. In addition, the Company sold 15,000 shares of its common stock for $ 18,750 during the six months ended June 30, 2000. While the Company has raised capital to meet its working capital requirements, additional financing is required in order to complete the acquisition of related businesses. The Company is seeking financing in the form of equity and debt in order to provide for these acquisitions and for working capital. There are no assurances the Company will be successful in raising the funds required. In prior periods, the Company has borrowed funds from significant shareholders of the Company in the past to satisfy certain obligations. -8- As the Company continues to expand, the Company will incur additional costs for personnel. In order for the Company to attract and retain quality personnel, the Company anticipates it will continue to offer competitive salaries, issue common stock to consultants and employees, and grant Company stock options to current and future employees The effect of inflation on the Company's revenue and operating results was not significant The Company's operations are located primarily in North America and there are no seasonal aspects that would have a material effect on the Company's financial condition or results of operations GENERAL - ------- The Company is an internet financial portal, which will offer a full spectrum of financial services and investment information on the World Wide Web through its website "www.efinancialdepot.com" (the "Website"). The Company is currently developing a proprietary information system consisting of integrated financial web pages and featuring an online investment-related community through the Talk Stock Website. The Website and the Talk Stock Website are collectively referred to in this Quarterly Report as the "Websites". The Company's goal is to use the Websites to disseminate information available over the internet to service the growing need for a centralized source of information and services for the rapidly increasing number of online investors, brokers, and investment students. Unlike many of its competitors, who first build a website and then attempt to drive traffic to it, the Company has already created the Talk Stock Website. The Company's target market includes individual investors of all sophistication levels, professional investors such as brokers, analysts and money managers, and general online enthusiasts looking for investment information, education and professional financial services. The Company is continuing priority efforts on the European and Asia fronts for build out of its business plan for a comprehensive financial portal connecting Europe and Asia with the North American hub as well as each other. The Company intends to provide an easily navigable, consumer friendly, vertically integrated destination website offering a wide variety of financial products and services, including: - unbiased streaming news; - full service investment support, on-line trading, estate planning, life insurance and mortgage banking; - commentary on-line radio; and - extensive investor education. Another area of growth among Internet use is the online community, which has brought users together to communicate with one another and share information. This particular Internet medium has personalized the Internet for its users. To date, a typical internet user's experience has been essentially one-way searching and viewing websites containing professionally created content on topics of general interest, such as current events, sports, finance, politics and weather. While internet search and navigational sites have improved users' abilities to seek out aggregated Internet content, these sites are not primarily focused on providing a platform for publishing the rapidly increasing volume of personalized content created by users with similar interests, or enabling such users to interact with one another. In contrast, through the Websites, the Company can offer users aggregated web content aimed directly at their needs, such as investment information and financial services. Products & Services News Media Communications - --------------------------- The Company intends to provide unbiased news and information in a user-friendly environment which will be available 24 hours a day. Beginning with the launch of the Website (scheduled for a September 19, 2000, launch date) and continuing thereafter, original content is planned to bring both topical and educational materials to all subscribers. Through the Talk Stock Website, the Company will host and profile companies actively trading on the NYSE, AMEX, NASDAQ, as well as the OTC:BB. The Company, through the Websites, intends to provide: -9- - hosting and profiling of public companies; - online radio services; - hosting of annual meeting, global audience, live streaming audio or video; - banner advertisements; - Conference Rooms; and - original, topical financial and success site content. Trading Offices/Systems & On Line Financial Services - ---------------------------------------------------------- Through TradeFast, the Company's wholly owned subsidiary with management contracts with New World Securities (an electronic stock brokerage that leverages direct-access communications with the stock exchanges), the Company intends to continue the business of trading on the New York Stock Exchange and NASDAQ markets. Management plans to market its services and anticipates members opening accounts and utilizing its competitive online discount brokerage firm. There are currently two TradeFast trading offices; up to seven more trading offices are currently planned. Once an account is open and a client is cleared for trading, he or she can come into one of the Company's investor services offices during market hours and trade live utilizing TradeFast's licensed software system, TradeCast, which provides NASDAQ Level II service. Unlike traditional online brokerage trades where a trade is placed and then enters "cyberspace", with confirmation received at a later time, at TradeFast, clients can actually see the trade go directly to the market maker or specialist and get executed. Screens in the offices display trading ideas through pre-set parameters, such as those stocks that have made new highs or lows since the previous day's close, those having record volume, or those hitting a certain number of consecutive buy orders (momentum plays). The Company is contemplating the integration of TradeFast into the Website by branding the online trading operation as the "Financial Depot Trade Station". Management's plans include strategically locating the "Financial Depot Trade Stations" in locations with heavy business traffic and visibility. The Company anticipates that this union of services and visibility will attract customers, as well as provide a destination for the professional traders to work daily in a convenient and energetic atmosphere, in addition to allowing them the opportunity to share their strategies and ideas with fellow traders. Management anticipates that the Financial Depot Trade Stations will draw new traders, as well as professional traders and those traders that are currently working independently from their homes. In the TradeFast offices, Financial Depot Trade Station banners and screens will be prominently displayed. On the Websites, Financial Depot Trade Station will be prominently displayed with banners and buttons. The Company also intends to feature live newswire service during market hours to initially attract traders and other uses, and to maintain the attractiveness of the Websites as return destinations for traders and other users. It is expected that this live news service will attract quality traffic to the Websites, thereby increasing advertising rates and expanding e-commerce opportunities. TradeFast will provide the management holding company for internet-based trading. The Company intends to offer online brokerage, traditional brokerage services and possibly fee-based investment advice. To summarize, the Company intends to provide: - online and traditional brokerage; - fee-based investment advisory services; and - financial planning, including tax planning and tax advantaged investing. -10- Specialty Financial Services The Company is currently developing the ability to provide the following specialty financial services: - mortgage banking ; - real estate services; - insurance sales and services; - tax preparation; - full service securities broker, real estate agent, insurance agent, mortgage banker directories; - consulting services, such as information with respect to securities laws or becoming a public company; - e-commerce; and - tutorials and investment schools. Investor Education In addition to the above services, the Company intends to provide a series of investor education materials and financial seminars designed to educate the public on investment topics, such as learning about the markets, equities, bonds, mutual funds, and the capital markets in general. In addition to providing education, the Company will offer educational programs for both professionals and others with general interest in learning more about investing, investment risks, finance and financial markets. Need for Additional Financing Based on its current operating plan, the Company anticipates that it will require additional financing of approximately $10,000,000 by December 31, 2000, in order to finance increased promotion and marketing of the Websites and to complete anticipated acquisitions. Beyond that, the Company does not anticipate that it will require further financing between January 1, 2001 and December 31, 2001. The Company may need to raise additional capital sooner, to fund more rapid expansion, to develop new or enhanced services or to respond to competitive pressures. The Company anticipates that it will raise equity through the equity markets of North America, Europe and Asia. The Company's ability to continue in business depends significantly upon its operating profits and continued ability to obtain financing. There can be no assurance that any such financing will be available upon terms and conditions acceptable to the Company, if at all. The inability to obtain additional financing in a sufficient amount when needed and upon acceptable terms and conditions could have a materially adverse effect upon the Company. Although the Company believes that it can raise financing sufficient to meet its immediate needs, it will require funds to finance its development, marketing and operating activities in the future. There can be no assurance that such funds will be available or available on terms satisfactory to the Company. If additional funds are raised by issuing equity securities, further dilution to existing or future stockholders is likely to result. If adequate funds are not available on acceptable terms when needed, the Company may be required to delay, scale-back or eliminate its promotional and marketing campaign, its development programs or even its operations until such funds become available. Inadequate funding also could impair the Company's ability to compete in the marketplace and could result in its dissolution. -11- Product Research and Development Over the 12 months ending June 30, 2001, the Company anticipates that it will carry out certain product research and/or development, including research and development with respect to internet banking applications, trading platforms, online security and educational remote delivery devices. Purchases or Sales (Plant or Equipment) The Company anticipates that, prior to June 30, 2001, it will purchase hardware and software to facilitate an 800% increase in the Company's network capacity to 120,000 transactions per minute (2,000 transactions per second), which is scheduled as part of the hard site launch in December of 2000. The Company does not anticipate that it will purchase a plant, or sell any significant equipment over the 12 months ending June 30, 2001. Changes in Employees The Company anticipates a significant change in its current number of employees over the 12 months ending June 30, 2001, due to growth of the Company through acquisitions previously announced, and acquisitions currently under consideration by the Company. The Company anticipates that it will hire 6 management personnel for its Trading division, 24 marketing and sales personnel for its Mortgage Banking division, 12 marketing and sales personnel for its Insurance division, a total of 6 management personnel and educators for its Education division, and 4 senior managers for its Corporate division. FACTORS THAT MAY AFFECT FUTURE RESULTS Forward Looking Statements When included in this Quarterly Report on Form 10-QSB, the words "expects," "intends," "plans," "projects," and "estimates," and analogous or similar expressions are intended to identify forward-looking statements. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-QSB. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Penny Stock Rules The Company's common shares are subject to rules promulgated by the SEC relating to "penny stocks," which apply to companies whose shares are not traded on a national stock exchange or on the NASDAQ system, trade at less than $5.00 per share, or who do not meet certain other financial requirements specified by the SEC. These rules require brokers who sell "penny stocks" to persons other than established customers and "accredited investors" to complete certain documentation, make suitability inquiries of investors, and provide investors with certain information concerning the risks of trading in the such penny stocks. These rules may discourage or restrict the ability of brokers to sell the Company's common shares and may affect the secondary market for the Company's common shares. These rules could also hamper the Company's ability to raise funds in the primary market for the Company's common shares. Uncertainty of and Inability to Generate Significant Revenues The Company's ability to generate significant revenues is uncertain. The Company's short and long-term prospects depend upon it ability to: - develop a base of users of the Websites; - continue its global growth in the online trading business; - facilitate transactions of businesses listing products and services for sale on the Websites; -12- - continue its growth in the specialty financial services sectors; - develop and operate the Websites; - develop high value internet banking applications; - develop a base of businesses who will pay to advertise their products and services on the Websites; - continue the development of high value content for the Websites; and - develop a base of users and businesses who will pay to use banner ads and page sponsorships on the Websites. The Company has projected that a significant portion of its revenues will be generated from relationships with Website users and advertisers, and the activities that result from those relationships. Accordingly, the Company's success is highly dependent on such relationships and activities and the Company may never generate significant revenues if it does not establish such relationships and activities. As its business evolves, the Company expects to introduce a number of new products and services. With respect to both current and future product and service offerings, the Company expects to significantly increase its marketing and operating expenses in an effort to increase its user base, enhance the image of the Websites and support its infrastructure. In order for the Company to make a profit, its revenues will need to increase significantly to cover these and other future costs. Even if it becomes profitable, the Company may not sustain or increase its profits on a quarterly or annual basis in the future. Unpredictability of Future Revenues As a result of the Company's limited operating history and the emerging nature of the markets in which it competes, the Company is unable to accurately forecast its revenues. The Company's current and future expense levels are based largely on its investment plans and estimates of future revenues and are to a large extent fixed. Sales and operating results generally depend on the Company's ability to develop a base of users and businesses who will pay to utilize the Websites or to advertise their products and services on the Websites. The Company may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in estimated revenues in relation to the Company's planned expenditures would have an immediate, adverse effect on the Company's business, prospects, financial condition and results of operations. Further, as a strategic response to changes in the competitive environment, the Company may from time to time make certain pricing, service or marketing decisions that could have a materially adverse effect on its business and financial condition and results of operations. Liquidity and Capital Resources While the Company has, in the past, raised capital to meet its working capital requirements, additional financing is required in order to complete the acquisition of related businesses. The Company continues to seek financing in the form of equity and debt in order to provide for these acquisitions and for working capital. There are no assurances the Company will be successful in raising the funds required. In the past, the Company has borrowed funds from an entity related to a significant shareholder of the Company share's to satisfy certain obligations. Limited Operating History The Company recently initiated the Website, and as a result, it has only a limited operating history. The Company's prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development, particularly companies in new and rapidly evolving markets like the one faced by the Company. Some of these risks and uncertainties relate to the Company's ability to attract and maintain a large base of users, develop and introduce desirable services and original content to users, establish and maintain relationships with advertisers and -13- advertising agencies, respond effectively to competitive and technological developments, and build an infrastructure to support the Company's business. The Company cannot be sure that it will be successful in addressing these risks and uncertainties and its failure to do so could have a material adverse effect on its financial condition. Potential Fluctuations in Quarterly Operating Results The Company expects to experience significant fluctuations in its future quarterly operating results due to a variety of factors, many of which are outside the Company's control. Factors that may adversely affect the Company's quarterly operating results include but are not limited to: - - the Company's ability to retain existing users of the Websites, attract new users at a steady rate and maintain user satisfaction; - - the Company's ability to develop a base of businesses willing to pay to advertise their products and services on the Websites; - - the Company's ability to develop a base of businesses willing to utilize the Websites to conduct transactions; - - the announcement or introduction of new services and products by the Company and its competitors; - - the continued use of the Internet and online services and increasing consumer acceptance of the Internet and other online services for the purchase of consumer products and services such as those offered by the Company; - - the Company's ability to upgrade and develop its systems and infrastructure in connection with the Website and attract new personnel in a timely and effective manner; - - the level of traffic on the Websites; - - technical difficulties, system downtime or Internet outages; - - the amount and timing of operating costs and capital expenditures relating to expansion of the Company's business, operations and infrastructure; - - governmental regulation; - - general economic conditions; and - - economic conditions specific to the Internet and online commerce. Seasonality The Company expects that it will experience seasonality in its business, reflecting a combination of seasonal fluctuations in Internet usage and traditional retail seasonality patterns. Due to the foregoing factors, one or more future quarters the Company's operating results may fall below the expectations of securities analysts and investors. In such event, the financial performance of the Company would likely be materially adversely affected. Capacity Constraints A key element of the Company's strategy is to generate a high volume of traffic on, and use of, the Websites. Accordingly, the satisfactory performance, reliability and availability of the Websites, transaction processing systems and network infrastructure are critical to the Company's reputation and its ability to attract and retain users and maintain adequate user service levels. -14- The Company's revenues depend on the number of users who visit and purchase goods and services through the Websites and the number of businesses who utilize the Websites to advertise and sell their products and services. Any system interruptions that result in the unavailability of the Websites or reduced order fulfilment performance would reduce the volume of goods sold and the attractiveness of the Company's product and service offerings. Any substantial increase in the volume of traffic on the Websites or the number of businesses utilizing the Websites will require the Company to expand and upgrade further its technology, transaction-processing systems and network infrastructure. There can be no assurance that the Company will be able to accurately project the rate or timing of increases, if any, in the use of the Websites or timely expand and upgrade its systems and infrastructure to accommodate such increases. Marketing The Company has not incurred significant advertising, sales and marketing expenses to date. To increase awareness for the Websites, the Company expects to spend significantly more on advertising, sales and marketing in the future. If the Company's marketing strategy is unsuccessful, it may not be able to recover these expenses or even generate any revenues. The Company will be required to develop a marketing and sales campaign that will effectively demonstrate the advantages of the Websites, services and products. To date, the Company's experience with respect to marketing the Websites is very limited. The Company may also elect to enter into agreements or relationships with third parties regarding the promotion or marketing of the Websites, and the products and services available through the Websites. There can be no assurance that the Company will be able to establish adequate sales and marketing capabilities, that it will be able to enter into marketing agreements or relationships with third parties on financially acceptable terms, or that any third parties with whom it enters into such arrangements will be successful in marketing and promoting the Websites, and the products and services offered on the Websites. Dependence on Continued Growth of Online Commerce The Company's future revenues and its ability to generate profits in the future are substantially dependent upon the widespread acceptance and use of the Internet and other online services as an effective medium of commerce. The rapid growth surrounding the Internet and online services is a relatively recent phenomenon. There can be no assurance that acceptance and use of the Internet will continue to develop or that a sufficiently broad base of consumers will continue to use the Internet and other online services as a medium of commerce. Demand and market acceptance for recently introduced services and products over the Internet are subject to a high level of uncertainty and relatively few proven services and products exist. The Company relies on consumers who have historically used traditional means of commerce to purchase merchandise. For the Company to be successful, these consumers must accept and utilize novel ways of conducting business and exchanging information. In addition, the Internet and other online services may not be accepted as viable commercial marketplaces for a number of reasons, including potentially inadequate development of the necessary network infrastructure or delayed development of enabling technologies and performance improvements. In addition, the Internet or other online services could lose their viability due to delays in the development or adoption of new standards and protocols required for handling of increased levels of Internet activity. Another factor which must be considered is the possibility of increased governmental regulation. Changes in or insufficient availability of telecommunications services to support the Internet or other online services also could result in slower response times and adversely affect usage of the Internet and other online services generally and the Company in particular. The Company's business, prospects, financial condition and results of operations could be materially adversely affected if: - - use of the Internet and other online services does not continue to grow or grows more slowly than expected; - - the infrastructure for the Internet and other online services does not effectively support growth that may occur; or -15- - - the Internet and other online services do not become viable commercial marketplaces for the products and services offered or intended to be offered through the Websites. Online Commerce Security Risks A significant barrier to online commerce and communications is the secure transmission of confidential information over public networks. The Company relies on encryption and authentication technology licensed from third parties to provide the security and authentication necessary to effect secure transmission of confidential information, such as customer credit card numbers. There can be no assurance that advances in computer capabilities, new discoveries in the field of cryptography, or other events or developments will not result in a compromise or breach of the algorithms used by the Company to protect customer transaction data. If any such compromise of the Company's security were to occur, it could have a materially adverse effect on the Company's reputation, business, prospects, financial condition and results of operations. A party who is able to circumvent the Company's security measures could misappropriate proprietary information or cause interruptions in the Company's operations. The Company may be required to expend significant capital and other resources to protect against such security breaches or to alleviate problems caused by such breaches. Concerns over the security of the Internet and other online transactions, and the privacy of users may also inhibit the growth of the Internet and other online services generally, and the Internet in particular, especially as a means of conducting commercial transactions. To the extent that activities of the Company or third-party contractors involve the storage and transmission of proprietary information, such as credit card numbers, security breaches could damage the Company's reputation and expose the Company to a risk of loss or litigation and possible liability. There can be no assurance that the Company's security measures will prevent security breaches or that failure to prevent such security breaches will not have a materially adverse effect on the Company's business, prospects, financial condition and results of operations. Reliance on Internally Developed Systems & System Development Risks Wherever possible, the Company will use off-the-shelf products for the Websites, search engines and substantially all aspects of transaction processing, including order management, cash and credit card processing, purchasing, inventory management and shipping. The Company does, however, expect that it will have to develop some custom software to support its requirements. Further, the Company's inability to: - add additional software and hardware; - develop and upgrade further its existing echnology and transaction processing systems; - network infrastructure to accommodate increased traffic on the Websites; and/or - increase sales volume through its transaction processing systems; may cause: - unanticipated system disruptions; - slower response times; - degradation in levels of customer service; - impaired quality and speed of order fulfilment; and - delays in reporting accurate financial information. -16- In addition, although the Company works to prevent unauthorized access to Company data, it is impossible to completely eliminate this risk. There can be no assurance that the Company will be able to effectively upgrade and expand its transaction-processing system or to integrate smoothly any newly developed or purchased modules with its existing systems in a timely manner. Any inability to do so could have a materially adverse effect on the Company's business, prospects, financial condition and results of operations. System Failure The Company's success, and in particular its ability to successfully receive orders and provide high-quality customer service for its users, largely depends on the efficient and uninterrupted operation of its computer and communications hardware systems. The Company's systems and operations are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, break-ins, earthquake and similar events. The Company does not presently have redundant systems or a formal disaster recovery plan and does not carry sufficient business interruption insurance to compensate it for losses that may occur. Despite the implementation of network security measures by the Company, its servers are vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which could lead to interruptions, delays, loss of data or the inability to accept and fulfil customer orders. The occurrence of any of the foregoing risks could have a materially adverse effect on the Company's business, prospects, financial condition and results of operations. Rapid Technological Change To remain competitive, the Company must continue to enhance and improve the responsiveness, functionality and features of the Company's online services. The Internet and the online commerce industry are characterized by factors such as rapid technological change, changes in user and customer requirements and preferences, frequent new product and service introductions embodying new technologies and the emergence of new industry standards and practices. These changes could render the Websites as they currently exist, and proprietary technology and systems, obsolete. The Company's success will depend, in part, on its ability to license leading technologies useful to its business, enhance its existing services, develop new services and technology to address the increasingly sophisticated and varied needs of its prospective customers, and respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis. The development of the Websites and other proprietary technology entails significant technical and business risks. There can be no assurance that the Company will successfully use new technologies effectively or adapt the Websites, proprietary technology and transaction processing systems to customer requirements or new emerging industry standards. If the Company is unable to adapt in a timely manner to technical, legal, financial changing market conditions or customer requirements, its business, prospects, financial condition and results of operations could be materially adversely affected. Risks Associated with Entry into New Business Areas The Company may choose to expand its operations by improving the Websites or even developing new websites, promoting new or complementary products or sales formats, expanding the breadth and dept of products and services offered on the Websites or expanding its market presence through relationships with third parties. In addition, the Company may pursue the acquisition of new or complementary businesses, products or technologies, although it has no present understandings, commitments or agreements with respect to any material acquisitions or investments. There can be no assurance that the Company would be able to expand its efforts and operations in a cost-effective or timely manner or that any such efforts would increase overall market acceptance. -17- Expansion of the Company's operations in this manner would also require significant additional expenses and development, operations and editorial resources and may strain the Company's management, financial and operational resources. The lack of market acceptance of such efforts or the Company's inability to generate satisfactory revenues from such expanded services or products to offset their cost could have a materially adverse effect on the Company's business, prospects, financial condition and results of operations. Uncertain Ability to Manage Growth The Company's ability to achieve its planned growth is dependent upon a number of factors including, but not limited to, its ability to hire, train and assimilate management and other employees, the adequacy of the Company's financial resources, the Company's ability to identify and efficiently provide such new products and perform services as the Company's customers may require in the future, and its ability to adapt its own systems to accommodate its expanded operations. In addition, there can be no assurance that the Company will be able to achieve its planned expansion or that it will be able to successfully manage such expanded operations. Failure to manage anticipated growth effectively and efficiently could have a materially adverse effect on the Company. Dependence Upon Key Personnel The Company's future success depends in large part on the continued services of its key product development, technical, marketing, sales and management personnel, and its ability to continue to attract, motivate and retain highly qualified employees. Although the Company's management personnel serve at the pleasure of the Board of Directors, there can be no assurance that such arrangements will continue in the future. Competition for such employees is intense, and the process of locating key technical, product development and management personnel with the combination of skills and attributes required to execute the Company's strategy is often lengthy. Accordingly, the loss of services of key personnel or an inability to attract additional personnel as needed could have a material adverse effect upon the Company. The success of the Company is therefore dependent to a large degree upon its ability to identify, hire and retain additional qualified personnel, for whose services the Company will be in competition with other prospective employers, many of which may have significantly greater resources than the Company. Additionally, demand for qualified personnel conversant with certain technologies is intense and may outstrip supply as new and additional skills are required to keep pace with evolving telecommunications technology. There can be no assurance that the Company will be able to hire and, if so, retain such additional qualified personnel. Failure to attract and retain such personnel could have a materially adverse effect upon the Company. Government Regulation Although there are few laws and regulations directly applicable to the Internet, it is likely that new laws and regulations will be adopted in the United States and elsewhere, to govern issues such as music licensing, broadcast license fees, copyrights, privacy, pricing, sales taxes and characteristics and quality of Internet services. It is possible that governments will enact legislation that may be applicable to the Company in areas such as content, network security, encryption and the use of key escrow, data and privacy protection, electronic authentication or "digital" signatures, illegal and harmful content, access charges and retransmission activities. The adoption of restrictive laws or regulations could slow Internet growth. The application of existing laws and regulations governing Internet issues such as property ownership, libel, defamation, content, taxation and personal privacy is also uncertain. The majority of such laws were adopted before the widespread use and commercialization of the Internet and, as a result, do not contemplate or address the unique issues of the Internet and related technologies. Any new law or regulation pertaining to the Internet, or the application or interpretation of existing laws, could decrease demand for the Websites and services provided by the Company, increase its cost of doing business or otherwise have a materially adverse effect on its success and continued operations. Laws and regulations may be adopted in the future that address Internet-related issues, including online content, user privacy, pricing and quality of products and services. The growing popularity and use of the -18- Internet has burdened the existing telecommunications infrastructure in many areas, as a result of which local exchange carriers have petitioned the FCC to regulate Internet service providers in a manner similar to long distance telephone carriers and to impose access fees on the Internet service providers. The Company cannot guarantee that the United States, Canada or foreign nations will not adopt legislation aimed at protecting Internet users' privacy. Any such legislation could negatively affect the Company's business. Moreover, it may take years to determine the extent to which existing laws governing issues such as property ownership, libel, negligence and personal privacy are applicable to the Internet. Liability for Website Information The Company may be subjected to claims for negligence, copyright, patent, trademark, defamation, indecency and other legal theories based on the nature and content of the materials that it broadcasts. Such claims have been brought, and sometimes successfully litigated, against Internet content distributors. In addition, the Company could be exposed to liability with respect to the content or unauthorized duplication or broadcast of content. Any imposition of liability that is not covered by insurance, is in excess of insurance coverage or is not covered by an indemnification by a content provider could adversely affect the Company's business. Market for the Company's Securities and Possible Volatility of Share Prices The trading price of the Company's common shares (the "Common Shares") has been and may continue to be subject to wide fluctuations. Trading prices of the Common Shares may fluctuate in response to a number of factors, many of which are beyond the Company's control. In addition, the stock market in general, and the market for Internet-related and technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies. The trading prices of many technology companies' stocks are at or near historical highs and reflect price earnings ratios substantially above historical levels. There can be no assurance that these trading prices and price earnings ratios will be sustained. These broad market and industry factors may adversely affect the market price of the Common Shares, regardless of the Company's operating performance. In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has sometimes been instituted. Such litigation, if instituted, could result in substantial costs for the Company and a diversion of management's attention and resources. Dilution and Dividend Policy The grant and exercise of warrants of creditors or otherwise or stock options would likely result in a dilution of the value of the Common Shares. Moreover, the Company may seek authorization to increase the number of its authorized shares and to sell additional securities and/or rights to purchase such securities at any time in the future. Dilution of the value of the Common Shares would likely result from such sales. Anti-Takeover Provisions At the present time, the Company's Board of Directors has not adopted any shareholder rights plan or any anti-takeover provisions in its Articles. PART II- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Company knows of no material, active or pending legal proceedings against it, nor is the Company involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any director, officer or affiliate of the Company, or any registered or beneficial shareholder is an adverse party of has a material interest adverse to the Company. ITEM 2. CHANGES IN SECURITIES. Recent Sales of Unregistered Securities -19- (a) On April 13, 2000, the Company issued 10,000 common shared to John Coleridge. The Company issued the shares to Mr. Coleridge pursuant to the Company's 1999 Stock Option Plan (the "Plan") which was registered pursuant to the Registration Statement on Form S-8 filed with the United States Securities and Exchange Commission on March 28, 2000. (b) On May 3, 2000, the Company issued 5,000 common shares to John Coleridge. The Company issued the shares to Mr. Coleridge pursuant to the Plan. (c) On June 16, 2000, the Company issued 50,000 common shares to Dan Kovatch Insurance, pursuant to a Domain Name and Website Purchase Agreement, dated June 9, 2000, between the Company and Dan Kovatch Insurance (the "eZnow Agreement"). The Company issued the shares to Dan Kovatch Insurance relying on Regulation D of the Securities Act of 1933. (d) On June 26, 2000, the Company issued 73,880 common shares to Oxford Capital Corporation, pursuant to the directions of Westcor Mortgage Inc. ("Westcor"), in connection with the Company's pending acquisition of Westcor. The Company issued the shares relying on Regulation S of the Securities Act of 1933. (e) On June 30, 2000, the Company issued 1,000,000 common shares to John Huguet, pursuant to the Employment Agreement, dated as of September 1, 1999, between the Company and John Huguet. The Company issued the shares relying on Regulation S of the Securities Act of 1933. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 5. OTHER INFORMATION. On June 9, 2000, further to the Letter Agreement between the Company and Dan Kovatch, dated April 27, 2000, and as reported in its Quarterly Report on Form 10-QSB for the quarter end March 31, 2000, the Company entered the eZnow Agreement pursuant to which the Company acquired the eZnowinsurance.com domain name and website located at www.eznowinsurance.com (the "eZnow Website"). Pursuant to the terms and conditions of the eZnow Agreement, the Company paid a purchase price of $150,000 payable by issuance of 50,00 restricted shares of the Company's stock. At the eZnow website, customers are offered a wide range of insurance services, including life, home, rental, commercial, auto, boat, casualty and health policies. Also, while at the eZnow Website, customers can request free quotes, access customer service, submit claims, pay premiums or change contact or policy information. The eZnow Website is the online customer interface for Kovatch Insurance Services ("Kovatch Insurance"), which has its headquarters in Los Angeles, CA, and is licenced as an insurance broker in California, Arizona, Colorado and Florida. Kovatch Insurance expects to achieve licencing in all 50 states within the next few months. On June 9, 2000, further to the Letter Agreement between the Company and Dan Kovatch, dated April 27, 2000, and as reported in its Quarterly Report on Form 10-QSB for the quarter end March 31, 2000, FDPO Insurance (USA), Inc. ("FDPO Insurance") a wholly owned subsidiary of the Company, and Dan Kovatch, owner of Kovatch Insurance, entered into an employment agreement (the "Kovatch Employment Agreement"), pursuant to which the Company agreed to engage Mr. Kovatch as General Manager of FDPO Insurance. Pursuant to the terms and conditions of the Kovatch Employment Agreement, FDPO Insurance has agreed to compensate Mr. Kovatch at an annual rate of $60,000 per year, payable in equal monthly instalments as a base salary (the "Base Salary"). In addition to the Base Salary, FDPO Insurance has agreed that Mr. Kovatch is entitled to have control and direction over 20% of the commissions earned on insurance placed by FDPO Insurance (the "Commissions"). Provided however that in circumstances where the Commissions earned by Mr. Kovatch are equal or greater than 150% of the Base Salary, as calculated monthly, for three consecutive months, then FDPO will cease paying the Base Salary and the Commissions will be the sole source of compensation to Mr. Kovatch. -20- Effective March 17, 2000, the Company entered into an agreement (the "e-DGM Agreement") with e-DGM Consulting B.V. ("e-DGM"), pursuant to which e-DGM will provide services to the Company until February 28, 2001, in the area of identifying and developing business opportunities in Europe for the Company's financial services business In consideration for the services provided to the Company by e-DGM, and at the direction of e-DGM, the Company agreed to issue to or at the direction of e-DGM, a total of 36,000 common shares in the Company (the "e-DGM Shares") according to the following schedule: 1. 6,000 shares as at March 31, 2000 and as April 30, 2000; and 2. 2,400 shares as at the last day of each and every month up to and including February 28, 2001. In addition to the e-DGM Shares, the Company may, but is not obligated to further compensate e-DGM for the successful identification and consummation of business opportunities in Europe. On June 22, 2000, the Company filed with the SEC a Registration Statement on Form S-8 registering the e-DGM Shares and the 52,000 shares and 300,00 warrants issuable pursuant to the agreement between the Company and Cobra Capital Limited, and as reported in its Quarterly Report on Form 10-QSB for the quarter end March 31, 2000. On June 21, 2000, the Company entered into a consulting agreement (the "Merryvale Agreement") with The Merryvale Group International ("Merryvale"), pursuant to which Merryvale will provide the following services (among others) to the Company for a period of 4 months from the date of the Merryvale Agreement: 1. develop Phase 1 plan for funding $5,000,000 for use in expansion operations or as working capital; 2. position the Company to begin Phase 2 of funding of additional capital; 3. effect a network base in the United States, Canada, Great Britain and Asia; 4. perform promotional services; and 5. assistance in the preparation of corporate documentation In return for the above-noted services, the Company agreed to compensate Merryvale with an initial disbursement of 25,000 common shares in the capital of the Company (restricted), along with a retainer in the amount of $15,000. In addition, Merryvale is to receive commission in the amount of 5% of the first $1 million raised by Merryvale. Commission on the remaining $4 million is subject to the Lehman Scale (4% of the first $2 million, 3% of the third $1 million, 2% of the fourth $1 million and 1% thereafter). Finally, upon completion of the $5 million funding, the Company will provide a further 50,000 common shares in the capital of the Company to Merryvale. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. Reports of Form 8-K On April 28, 2000, and as reported in its Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000, the Company filed a Current Report on Form 8-K announcing that on January 31, 2000, the Company entered into the Funding Agreement with Oxford. Pursuant to the Funding Agreement, and relying on Regulation S of the Securities Act of 1933, the Company issued the Debentures to Oxford, and a two year warrant to purchase the Warrants, in exchange for funding in the amount of $2,500,000. For further information, please refer to the Company's Current Report on Form 8-K filed April 28, 2000, or the Company's Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000, filed on May 15, 2000. -21- On May 23, 2000, the Company filed a Current Report on Form 8-K announcing that on May 15, 2000, the Board of Directors of the Company approved the change of the Company's fiscal year end from December 31 to March 31. The Company did not file a Form 10-QSB for the "transition period", as the Form 10-QSB Quarterly Report for the Company's first quarter ended March 31, 2000, which was filed on May 15, 2000, covers the transition period. On June 23, 2000, the Company filed a Current Report on Form 8-K, announcing that effective June 8, 2000, the Company completed the acquisition of all of the issued and outstanding shares of Trade-Fast, pursuant to a share purchase agreement dated November 30, 1999, as amended by an amending agreement dated June 8, 2000 (together, the "Agreement"), between the Company and the two shareholders of Trade-Fast (the "Shareholders), Alan Cohen, a businessperson resident in New York, and Winford Holdings Group Limited, a closely held corporation ("Winford"). Pursuant to the Agreement, the Company agreed to issue a total of 5,000,000 common shares to the Shareholders, at a deemed price per share of $4.50 per share, as to 1,000,000 to Alan Cohen and as to 4,000,000 to Winford. The number of shares issuable to the Shareholders under the Agreement is subject to adjustment in circumstances where the Company issues shares, other than pursuant to existing agreements or pursuant to the exercise of bona fide stock options granted to directors, officers and consultants, at a price of less than $4.50 per share. The Company also agreed to loan a total of $1,500,000 to Winford, said loan to bear interest at 6% per annum with a term of three years from the date of initial advance and to be secured by a pledge of 1,000,000 of the shares issuable to Winford by the Company, with such shares being the sole recourse of the Company in the event of default by Winford. To date, the Company has advanced $1,000,000 of the loan. The Agreement also requires that the Company invest a total of $3,500,000, in the development of the business of Trade-Fast during the period ending November 30, 2000. To date, a total of $1,000,000 has been so invested. Financial Statements Filed as a Part of the Quarterly Report The Company's unaudited financial statements include: Consolidated Balance Sheets (June 30, 2000 and December 31, 1999) Consolidated Statements of Operations (Six Months Ended June 30, 2000 and 1999) Consolidated Statements of Cash Flows (Six Months Ended June 30, 2000 and 1999) Notes to Consolidated Financial Statements (June 30, 2000) Exhibits Required by Item 601 of Regulation S-B Plan of Acquisition, reorganization, arrangement, liquidation or succession 2.1 Share Purchase Agreement between the Company and Alan Cohen and Winford Holdings Group Limited, dated November 30, 1999 (filed as an exhibit to the Company's Form 8-K filed on June 23, 2000, and incorporated herein by reference). 2.2 Letter Agreement between the Company and Alan Cohen and Winford Holdings Group Limited, dated June 8, 2000 (filed as an exhibit to the Company's Form 8-K filed on June 23, 2000, and incorporated herein by reference). Articles of Incorporation and Bylaws 3.1 Certificate of Incorporation of the Company (filed as exhibit 3.1 to the Company's Registration Statement on Form 10SB (file# 000-26899) on July 30, 1999, and incorporated herein by reference). -22- 3.2 Bylaws of the Company (filed as exhibit 3.2 to Registration Statement on Form 10-SB (file#000-26899) on July 30, 1999, and incorporated herein by reference). 3.3 Certificate of Amendment of Certificate of Incorporation dated November 2, 1999 (filed as exhibit 3 (a) to the Company's Quarterly Report on Form 10-QSB (file # 000-26899) on November 22, 1999, and incorporated herein by reference). (10) Material Contracts 10.1 1999 Stock Option Plan (filed on March 28, 2000, as an exhibit to the Company's Registration Statement on Form S-8, and incorporated herein) 10.2 Letter of Intent between the Company and Dan Kovatch, dated April 27, 2000 (filed on May 15, 2000 as an exhibit to the Company's Quarterly Report on Form 10-QSB, and incorporated herein by reference). 10.3 Domain Name and Website Purchase Agreement between the Company and Dan Kovatch Insurance, dates as of June 9, 2000. 10.4 Employment Agreement between FDPO and Dan Kovatch, dated as of June 9, 2000. 10.5 Letter of Intent between the Company and Westcor Mortgage Inc., dated January 19, 2000 (filed on April 14, 2000, as an exhibit to the Company's Annual Report on Form 10-KSB, and incorporated herein by reference). 10.6 Employment Agreement between the Company and John Huguet, dated as of September 1, 1999. 10.7 Agreement between the Company and e-DGM Consulting B.V., dated March 17, 2000 (filed on June 22, 2000, as an exhibit to the Company's Registration Statement on Form S-8, and incorporated herein by reference). 10.8 Agreement between the Company and Cobra Capital Limited, dated March 28, 2000 filed on May 15, 2000 as an exhibit to the Company's Quarterly Report on Form 10-QSB, and incorporated herein by reference). 10.9 Agreement between the Company and The Merryvale Group International, dated June 21, 2000. (21) Subsidiary of the Company FDPO Insurance (USA), Inc. is a 100% wholly owned subsidiary of the Company. RJI Ventures, Inc. (formerly Talk Stock With Me, Inc.) is a 100% wholly owned subsidiary of the Company. Trade-Fast, Inc. is a 100% wholly owned subsidiary of the Company. (27) Financial Data Schedule -23- SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. E-FINANCIAL DEPOT.COM, INC. By: /S/ John Huguet ------------------------------------------- John Huguet, President/Director Date: August 21, 2000 By: /S/ Christina Cepeliauskas ------------------------------------------- Christina Cepeliauskas, Chief Financial Officer Date: August 21, 2000 By: /S/ Randy Doten ------------------------------------------- Randy Doten, Director Date: August 21, 2000 -24- EX-10.3 2 0002.txt DOMAIN NAME AND WEBSITE PURCHASE AGREEMENT THIS AGREEMENT is made as of the 9th day of June, 2000. BETWEEN: DAN KOVATCH INSURANCE, a proprietorship having a principal place of business at 8936 South Sepulveda Blvd., Suite 202, Los Angeles, CA 90045 (the "Vendor") AND: E-FINANCIAL DEPOT.COM, INC., a Delaware corporation having a principal place of business at Suite 1005 - 750 West Pender Street, Vancouver, British Columbia V6C 2T8 (the "Purchaser") WHEREAS: A. The Vendor has adopted, used and registered with Network Solutions, Inc. ("NSI") the domain name eznowinsurance.com (the "Domain Name"); B. The Vendor owns the website located at www.eznowinsurance.com, as more particularly described in Schedule "A" hereto (the "Website"), including, without limitation, all related software, images, files and other content; and C. The Vendor desires to sell, and the Purchaser desires to buy, all of the Vendor's right, title and interest in and to the Domain Name and the Website (collectively, the "Assets"); and D. The parties wish to enter into this Agreement to define their respective rights and obligations with respect to the purchase of the Assets by the Purchaser from the Vendor. NOW THEREFORE, in consideration of the Purchase Price (defined herein) and other good and valuable consideration now paid by the Purchaser to the Vendor, the receipt and sufficiency of which is hereby acknowledged by the Vendor, the parties hereto agree as follows: 1. The Vendor hereby irrevocably agrees to grant, bargain, sell, assign, transfer, and set over unto the Purchaser, or its assigns, all worldwide right, title, and interest of the Vendor in the Assets as of June __9___, 2000 (the "Closing Date"). 2. The Purchaser will, on the Closing Date, pay to the Vendor the sum of $150,000 (the "Purchase Price"), payable by issuance of 50,000 common shares in the capital of the Purchaser (the "Shares"), said Shares to be restricted under Rule 144 as promulgated under the Securities Act of 1933, as amended (the "Act"). 3. On the Closing Date, the Vendor will forthwith deliver to the Purchaser the source code versions of all software programs that operate and comprise the Website. 4. Vendor acknowledges that: (a) none of the Shares have been registered under the Act, or under any state securities or "blue sky" laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Regulation S under the Act ("Regulation S"), except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Act; (b) it understands and agrees that the Purchaser will refuse to register any transfer of the Shares not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the Act or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Act; (c) it understands and agrees that a legend may be placed on the certificates representing any of the Shares to the effect that the Shares represented by such certificates are restricted from transfer as otherwise detailed herein; (d) that the Purchaser has not undertaken, and will have no obligation, to register any of the Shares under the Act; (e) the decision to execute this Agreement and acquire the Shares agreed to be acquired hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Purchaser and such decision is based entirely upon a review of the any public information which has been filed by the Purchaser with the Securities and Exchange Commission ("SEC") in compliance, or intended compliance, with applicable securities legislation. If the Purchaser has presented a business plan to the Vendor, the Vendor acknowledges that the business plan may not be achieved or be achievable; (f) it has been advised to consult its own legal, tax and other advisors with respect to the merits and risks of an investment in the Shares and with respect to applicable resale restrictions and it is solely responsible (and the Purchaser is not in any way responsible) for compliance with applicable resale restrictions; (g) none of the Shares are listed on any stock exchange and no representation has been made to the Vendor that any of the Shares will become listed on any stock exchange, except that currently certain market makers make market in the common shares of the Purchaser on the Over-the-counter Bulletin Board; (h) neither the SEC nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Shares; (i) it is acquiring the Shares as principal for its own account, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof, in whole or in part, and no other person has a direct or indirect beneficial interest in such Shares; (j) no documents in connection with the sale of the Shares hereunder have been reviewed by the SEC or any state securities administrators; (k) there is no government or other insurance covering any of the Shares; (l) the issuance and sale of the Shares to the Vendor will not be completed if it would be unlawful or if, in the discretion of the Purchaser acting reasonably, it is not in the best interests of the Purchaser; and (m) in this Agreement, the term "U.S. Person" shall have the meaning ascribed thereto in Regulation S. 5. Vendor warrants and represents that: (a) it is a U.S. Person; (b) this Agreement has been duly executed and delivered by the Vendor and constitutes a valid and binding obligation of the Vendor enforceable against it in accordance with its terms; (c) it is acquiring the Shares for its own account for investment purposes only and not for the account of any other person and not for distribution, assignment or resale to others, and no other person has a direct or indirect beneficial interest is such Shares, and the Vendor has not subdivided his interest in the Shares with any other person; (d) the Vendor is aware that an investment in the Purchaser is speculative and involves certain risks, including the possible loss of the investment; (e) the Vendor (i) has adequate net worth and means of providing for its current financial needs and possible personal contingencies, (ii) has no need for liquidity in this investment, and (iii) is able to bear the economic risksof an investment in the Shares for an indefinite period of time and can afford the complete loss of such investment; (f) the Vendor has made an independent examination and investigation of an investment in the Shares and the Purchaser and has depended on the advice of its legal and financial advisors and agrees that the Purchaser will not be responsible in anyway whatsoever for the Vendor's decision to invest in the Shares and the Purchaser; (g) it has the requisite knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Shares and the Purchaser and it is providing evidence of such knowledge and experience in these matters through the information requested in the Questionnaire; (h) all information which the Vendor has provided to the Purchaser in the Questionnaire is correct and complete as of the date the Questionnaire is signed; and agrees that if any of such acknowledgements, representations and agreements are no longer accurate or have been breached, it shall promptly notify the Purchaser; (i) no person has made to the Vendor any written or oral representations: (i) that any person will resell or repurchase any of the Shares; (ii) that any person will refund the acquisition of price of any of the Shares; or (iii) as to the future price or value of any of the Shares; (j) the Vendor has the authority to transfer the Assets to the Purchaser on the terms set out herein; (k) the Assets are free and clear of all liens, charges, encumbrances, claims, and demands of every nature and kind whatsoever; (l) the Vendor's use of the Domain Name and its operation of the Website has not violated the intellectual property or other rights of any third party; (m) the Vendor has not received any notice of a third party threatening or invoking any trade-mark, copyright, patent, trade secret or other intellectual property infringement proceedings or the ICANN Uniform Domain Name Dispute Resolution Policy in relation to the Website or the Domain name and is not ware of any circumstances that may give rise to any such proceedings; (n) the Vendor properly registered the Domain Name with NSI without committing fraud or misrepresentation; (o) the Vendor's account with NSI is up to date and paid in full as of the Closing Date and the Vendor is not in breach of any agreement with NSI relating to the Domain Name registration; (p) the Vendor has not used the Domain Name for any illegal purpose; (q) the Vendor is the exclusive owner or a licensed user of all the software, content and other works operating on or contained in the Website, including the Website's layout, and other visual elements that constitute the "look and feel" of the Website; (r) the Vendor is entitled to modify the Website without restriction and has obtained for valuable consideration an enforceable waiver of moral rights from the author or authors of all materials created for and/or incorporated into the Website; (s) there are no third party trade-marks that are used in an unauthorized or infringing manner on the Website and the Website does not contain any unauthorized links to third party websites; (t) the Website does not contain any references to any third party trade-marks or trade names in its metatag file, nor has the metatag file for the Website been copied from the contents of the metatag file of another website; and (u) the hosting and maintenance agreements with respect to the Website are assignable and in good standing. 6. The Vendor hereby covenants and agrees to and with the Purchaser that: (a) the Purchaser is entitled to rely on the representations and warranties and the statements and answers of the Vendor contained in this Agreement and the Questionnaire, if and as applicable, and the Vendor will hold harmless the Purchaser from any loss or damage it or they may suffer as a result of the Vendor's failure to correctly complete this Agreement or the Questionnaire; (b) it will indemnify and hold harmless the Purchaser and, where applicable, their respective directors, officers, employees, agents, advisors and shareholders from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the Vendor contained herein or in any document furnished by the Vendor to the Purchaser in connection herewith being untrue in any material respect or any breach or failure by the Vendor to comply with any covenant or agreement made by the Vendor to the Purchaser in connection therewith; (c) up to the Closing Date, the Vendor will: (i) preserve, protect and maintain the Website in its ordinary course of business and in compliance with all applicable laws; (ii) not suffer or permit any encumbrance to attach to or affect the Assets; and (iii)not enter into any transaction which could cause any representation or warranty of the Vendor contained herein to be incorrect or constitute a breach of any covenant or agreement of the Vendor contained herein; (d) the Vendor will indemnify and save harmless the Purchaser from and against all liens, charges, encumbrances, claims and demands (and the Purchaser may, but will not be bound to, pay and satisfy same as the Purchaser deems fit) and from and against all actions, suits, proceedings, assessments, judgements, penalties, costs, and expenses (including the full amount of any legal expenses invoiced to the Purchaser) which arise or are made or claimed against or suffered or incurred by the Purchaser in connection with the Assets and all monies expended by the Purchaser in so paying or satisfying or defending against same; (e) if any use of the Assets by the Purchaser is held to constitute an infringement of a third party's rights, and such use by the Purchaser is enjoined, the Vendor will, at its expense, use its commercially reasonable efforts to procure the right for the Purchaser to use the Assets without infringing such third party's rights and will promptly take or cause to be taken all other actions requested by the Purchaser, including modifying or replacing the infringing items so that they are non-infringing so that the Purchaser may continue to carry on its business with a minimum of delay or inconvenience to the Purchaser; (f) the Vendor will cooperate with NSI and the Purchaser, and follow the Purchaser's instructions, in order to effectuate the transfer of the Domain Name registration in a timely manner. Specifically, Vendor agrees to prepare, have notarized and transmit the necessary NSI Registrant Name Change Agreement attached as Schedule "B" hereto and correspond with NSI to authorize transfer of the Domain Name and facilitate the filing and processing of all forms and other formalities necessary to complete the transfer of the Domain Name registration; (g) the Vendor will cause the current Administrative and Technical Contracts for the Domain Name registration to execute and deliver all necessary documents to effect the change of such contacts to the Administrative and Technical contacts designated by the Purchaser; (h) the Vendor will from time to time and at all times hereafter upon the reasonable request of the Purchaser, but at the expense of the Purchaser, make, do, and execute, or cause or procure to be made, done, and executed all such further acts, deeds, and assurances to give effect to the transfer of the Assets to the Purchaser in the manner herein provided in accordance with the intent and meaning of this Agreement as may be reasonably required by the Purchaser; (i) the Vendor will not register a domain name which is similar to or confusing with the Domain Name, including, without limitation, with any other generic or geographic top level domain name; and (j) the Vendor will not operate a website which competes with the Website, either as an investor, consultant, employee or in any other capacity. 7. The Vendor acknowledges that the representations and warranties contained herein are made by it with the intention that such representations and warranties may be relied upon by the Purchaser and their legal counsel in determining the Vendor's eligibility to purchase the Shares under applicable securities legislation, or (if applicable) the eligibility of others on whose behalf it is contracting hereunder to purchase the Shares under applicable securities legislation. The Vendor further agrees that by accepting delivery of the certificates representing the Shares on the Closing Date, it will be representing and warranting that the representations and warranties contained herein are true and correct as at the Closing Date with the same force and effect as if they had been made by the Vendor on the Closing Date and that they will survive the purchase by the Vendor of Shares and will continue in full force and effect notwithstanding any subsequent disposition by the Vendor of such Shares. 8. This Agreement, including without limitation the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the parties hereto notwithstanding the completion of the acquisition of the Shares by the Vendor pursuant hereto. 9. This Agreement is not transferable or assignable. 10. The invalidity or unenforceability of any particular provision of this Subscription Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Subscription Agreement. 11. It is hereby expressly agreed between the parties hereto that all grants, covenants, provisos, agreements, rights, powers, privileges, and liabilities contained in this Agreement will be read and held as made by and with, granted to and imposed upon, the respective parties hereto, and their respective heirs, executors, and administrators. 12. Except as expressly provided in this Agreement and in the agreements, instruments and other documents contemplated or provided for herein, this Agreement contains the entire agreement between the parties with respect to the sale of the Assets and acquisition of the Shares by the Vendor and there are no other terms, conditions, representations or warranties, whether expressed, implied, oral or written, by statute or common law, by the Purchaser or by anyone else. 13. This Agreement is governed by the internal substantive laws of the State of Delaware and the parties submit to the jurisdiction of the Courts in the State of Delaware. If any provision of this Agreement is found to be invalid by any court having competent jurisdiction, the invalidity of such provision shall not affect the validity of the remaining provisions of this Agreement, which shall remain in full force and effect. No waiver of any term of this Agreement shall be deemed a further or continuing waiver of such term or any other term. This Agreement constitutes the entire agreement between the Vendor and Purchaser with respect to this transaction. Any changes to this Agreement must be made in writing, signed by an authorized representative of both parties. 14. This Agreement may be executed in any number of counterparts, each of which, when so executed and delivered, shall constitute an original and all of which together shall constitute one instrument. 15. The Purchaser shall be entitled to rely on delivery by facsimile machine of an executed copy of this Subscription Agreement and acceptance by the Purchaser of such facsimile copy shall be equally effective to create a valid and binding agreement between the Vendor and the Purchaser in accordance with the terms hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed this _____ day of June, 2000. DAN KOVATCH INSURANCE Per: /s/ Dan Kovatch ----------------- Authorized Signatory E-FINANCIAL DEPOT.COM, INC. Per: /s/ John Huguet ----------------- Authorized Signatory SCHEDULE "A" DESCRIPTION OF WEBSITE URL: www.eznowinsurance.com IP Address: Files: [list or attach diskette(s) with all software directory files] Schedule "B" Form of Network Solutions "Registrant Name Change Agreement, Version 3.0 Transfers" Schedule "C" ACCREDITED INVESTOR QUESTIONNAIRE --------------------------------- All capitalized terms herein, unless otherwise defined, have the meanings ascribed thereto in the Domain Name and Website Purchase Agreement. This Questionnaire is for use by each potential shareholder who is a US person (as that term is defined Regulation S of the United States Securities Act of 1933 (the "1933 Act")) and has indicated an interest in purchasing or otherwise acquiring Shares of e-Financial Depot.com, Inc. (the "Company"). The purpose of this Questionnaire is to assure the Company that each potential shareholder will meet the standards imposed by the 1933 Act and the appropriate exemptions of applicable state securities laws. The Company will rely on the information contained in this Questionnaire for the purposes of such determination. The Shares will not be registered under the 1933 Act in reliance upon the exemption from registration afforded by Section 3(b) and/or Section 4(2) and Regulation D of the 1933 Act. This Questionnaire is not an offer of Shares or any other securities of the Company in any state other than those specifically authorized by the Company. All information contained in this Questionnaire will be treated as confidential. However, by signing and returning this Questionnaire, each potential shareholder agrees that, if necessary, this Questionnaire may be presented to such parties as the Company deems appropriate to establish the availability, under the 1933 Act or applicable state securities law, of exemption from registration in connection with the sale of the Shares hereunder. The Vendor covenants, represents and warrants to the Company that: 1. it is not aware of any advertisement of any of the Shares and is not acquiring the Shares as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and 2. it satisfies one or more of the categories of "Accredited Investors", as defined by Regulation D promulgated under the 1933 Act, as indicated below: (Please initial in the space provide those categories, if any, of an "Accredited Investor" which the Subscriber satisfies) ___ Category 1 An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of US $5,000,000; ___ Category 2 A natural person whose individual net worth, or joint net worth with that person's spouse, on the date of purchase exceeds US $1,000,000; ___ Category 3 A natural person who had an individual income in excess of US $200,000 in each of the two most recent years or joint income with that person's spouse in excess of US $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; ___ Category 4 A "bank" as defined under Section (3)(a)(2) of the 1933 Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (United States); an insurance company as defined in Section 2(13) of the 1933 Act; an investment company registered under the Investment Company Act of 1940 (United States) or a business development company as defined in Section 2(a)(48) of such Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958 (United States); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors; ___ Category 5 A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (United States); ___ Category 6 A director or executive officer of the Company; ___ Category 7 A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act; ___ Category 8 An entity in which all of the equity owners satisfy the requirements of one or more of the foregoing categories; Note that prospective shareholders claiming to satisfy one of the above categories of Accredited Investor may be required to supply the Company with a balance sheet, prior years' federal income tax returns or other appropriate documentation to verify and substantiate the potential shareholder's status as an Accredited Investor. If the potential shareholder is an entity which initialled Category 8 in reliance upon the Accredited Investor categories above, state the name, address, total personal income from all sources for the previous calendar year, and the net worth (exclusive of home, home furnishings and personal automobiles) for each equity owner of the said entity: --------------------------------------------------------------- ----------------- --------------------------------------------------------------- ----------------- The Vendor hereby certifies that the information contained in this Questionnaire is complete and accurate and the Vendor will notify the Company promptly of any change in any such information. IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the day of June, 2000. - ------------------------------------ Signature - ------------------------------------ Print or Type Name - ------------------------------------ Social Security/Tax I.D. No. EX-10.4 3 0003.txt EMPLOYMENT CONTRACT ------------------- THIS is made as of 9th day of June, 2000. BETWEEN: FDPO INSURANCE (USA), INC., a corporation incorporated under the laws of Delaware and having a principal place of business at Suite 1005 - 750 West Pender Street, Vancouver, British Columbia, V6C 2T8 (hereinafter referred to as the "Corporation") OF THE FIRST PART AND: DAN KOVATCH, of 8939 S. Sepulveda Boulevard, Suite 262, Los Angeles, CA 90045 (hereinafter referred to as the "Executive") OF THE SECOND PART WHEREAS the Executive and the Corporation wish to record the terms and conditions upon which the Executive will be employed by the Corporation; NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: ARTICLE 1 GENERAL DEFINITIONS 1.1 As used in this Agreement, the following words shall have the following meanings respectively: (a) "Base Salary" has the meaning ascribed thereto in Section 4.1 hereof; (b) "Board of Directors" means the Board of Directors of the Corporation; (c) "Business" means any business venture involving or being concerned with the placing of insurance; (d) "Cause" has occurred if: (i) the Executive fails to substantially perform his duties to the Corporation after thirty (30) days notice of such failure; (ii) the Executive engages in serious misconduct in the course of his duties which is injurious to the Corporation or any of its subsidiaries or affiliates; (iii)the Executive is convicted with respect to a crime which constitutes a felony offence; (iv) in carrying out his duties hereunder, the Executive (i) is wilfully or grossly negligent, or (ii) commits wilful and gross misconduct or, (iii) fails to comply with an instruction or directive from the Board of Directors and which is not cured within fifteen (15) days; (v) the Executive breaches a material term of this Agreement and which is not cured within fifteen (15) days; (vi) the Executive becomes bankrupt or a receiving order (or any analogous order under any applicable law) is made against the Executive or in the event the Executive makes any general disposition or assignment for the benefit of his creditors; (vii)the Executive is diagnosed as being afflicted by chronic alcoholism or drug addiction; or (viii) the occurring of any other circumstance which would entitle the Corporation at law to terminate the Executive's services without notice or payment in lieu of notice; (e) "Commissions" means the commissions payable under Section 4.2 herein. (f) "Effective Date" means the effective date of this agreement, being the date first above written; (g) "Parent" means "e-Financial Depot.com, Inc."; (h) "person" means an individual body corporate, corporation, partnership, syndicate or other form of unincorporated association, trust, government and its agencies or instrumentalities, entity or group whether or not having legal personality and any of the foregoing acting in any derivative, representative or fiduciary capacity; (i) "Term" has the meaning ascribed thereto in Section 3.1 hereof; (j) "Termination Payment" has the meaning ascribed thereto in Section 5.1(b) hereof; and (k) "Total Monthly Compensation" during any year of the Term means one twelfth of the sum of the Base Salary for such year plus one twelfth of the Commissions paid to the Executive in respect of the previous calendar year. ARTICLE 2 SERVICES 2.1 ENGAGEMENT. The Corporation hereby engages the Executive as General Manager of the Corporation. During the Term the Executive will perform the duties normally associated with the office of General Manager president in accordance with the terms and conditions contained in this Agreement, and the Executive hereby agrees to perform such services. 2.2 In the performance of his duties, the Executive shall comply with applicable corporate legislation and the Corporation's constating documents and provide to the Corporation his services on a full-time basis. The Executive shall faithfully serve the Corporation and use his best efforts to promote the interests of the Corporation during the Term of this Agreement. 2.3 REPORTING. The Executive shall comply with all lawful and reasonable orders given to him by, and shall supply such information and reports as from time to time may be requested of him, to the Board of Directors or any person or committee designated by the Board of Directors. ARTICLE 3 TERM OF AGREEMENT 3.1 TERM. The term of this Agreement (the "Term") shall commence on the Effective Date and shall continue thereafter until terminated as provided herein. ARTICLE 4 REMUNERATION AND BENEFITS 4.1 BASE SALARY. For services rendered by the Executive during the Term, the Executive shall be paid a salary, payable in equal monthly instalments at the end of each month, at an annual rate of $60,000 (the "Base Salary"). 4.2 COMMISSION. In addition to the Base Salary the Executive shall be entitled to have control and direction over 20% of the commissions earned on insurance placed by the Corporation in the United States in any one month, said Commissions payable within 15 days of the end of such month to be paid to the Executive and the salespersons of the Corporation in such proportions as the Executive, in his sole discretion shall determine, provided that, in circumstances where the Commissions earned are equal to or greater than 150% of the Base Salary, as calculated monthly, for three consecutive months, the Executive's entitlement hereunder to the Base Salary shall cease and then Commissions shall form the sole source of the Executive's compensation hereunder. 4.3 TAXES, ETC. All payments made to the Executive in connection with his services hereunder shall be subject to, without limitation, all applicable income and withholding taxes, if any, and other applicable deductions and taxes. If for any reason any amount required to be withheld is not at the Executive's request so withheld, the Executive agrees to reimburse and indemnify the Corporation for any taxes, penalties or costs arising therefrom. 4.4 STOCK OPTIONS. The Executive shall be permitted to participate in a stock option plan established by the Parent for its senior employees. 4.5 OTHER BENEFITS. The Executive shall be permitted to participate in any non-salary benefit plans provided by the Corporation for its executives. 4.6 REIMBURSEMENT OF REASONABLE EXPENSES. The Executive will be reimbursed for all reasonable expenses incurred by him in connection with the conduct of the business of the Corporation. Such expenses shall be reimbursed within thirty (30) days following presentation of sufficient evidence of such expenditures, provided that the expenditures are consistent with the policies and directives of the Board of Directors from time to time. 4.7 VACATION AND HOLIDAYS. The Executive shall be entitled to a number of days paid vacation during each year of the Executive's employment hereunder as is agreed from time to time between the Executive and the Corporation. Such vacation shall be utilized by the Executive at such time or times as do not materially interfere with the ongoing conduct of the Corporation's business and operations. ARTICLE 5 TERMINATION OF EMPLOYMENT 5.1 TERMINATION WITHOUT CAUSE. The Corporation shall be entitled to terminate the Executive's employment at any time without Cause by: (a) giving the Executive twelve (12) months notice; or (b) paying the Executive a lump sum amount equal to twelve times the Total Monthly Compensation in respect of the calendar year in which the termination occurs (the "Termination Payment"). 5.2 CONSEQUENCES OF TERMINATION WITHOUT CAUSE. In the event of termination of the Executive's employment hereunder without Cause: (a) the Executive shall be immediately relieved of all of his responsibilities and authorities as an officer, director and employee of the Corporation and, if applicable, of the Corporation's subsidiaries and affiliates, effective as of the date of termination of the Executive's employment fixed by the Corporation; (b) subject as hereinafter provided, for a period of thirty (30) days following the termination of the Executive's employment, the Corporation shall continue benefits to the Executive and/or the Executive's family under benefit plans equal to any which would have been provided to the Executive and them if the Executive's employment had not terminated; and (c) subject to any required regulatory and shareholder approvals, all of the stock options granted to the Executive by the Parent and outstanding on the date of termination of the Executive's employment shall be governed by the terms of the applicable stock option plan(s) and stock option agreement(s). 5.3 TERMINATION FOR CAUSE. The Corporation shall be entitled to terminate the Executive's employment at any time for Cause without notice and without any payment in lieu of notice. In the event of a termination of the Executive's employment for Cause, the Corporation's obligations hereunder shall immediately cease and terminate and the Executive shall be immediately relieved of all of his responsibilities and authorities as an officer, director and employee of the Corporation and, if applicable, its subsidiaries and affiliates, and in such an event there will be no continued salary payments by the Corporation to the Executive and any rights and benefits of the Executive under any employee benefit plans and programs of the Corporation will immediately terminate in accordance with the terms of such plans and programs. 5.4 EFFECTIVE DATE OF TERMINATION FOR CAUSE. Termination of the Executive's employment for Cause shall be effective upon the date of the notice of termination given to the Executive and the lapse of any applicable cure period without remedy of the matters set out in such notice. 5.5 DISABILITY, ETC. The Executive's employment shall terminate automatically upon written notice from the Corporation in the event of the Executive's absence or inability to render the services required hereunder due to disability, illness, incapacity or otherwise for an aggregate of one hundred eighty (180) days during any twelve (12) month period of the Term. In the event of any such absence or inability, the Executive shall be entitled to receive the compensation provided for herein for the first ninety (90) days thereof, whereafter the Executive shall only be entitled to receive such compensation, if any, as may be determined by the Board of Directors. 5.6 DEATH. In the event of the death of the Executive during the Term of this Agreement, the Executive's salary will be paid to the Executive's spouse through the end of the third month following the month in which the Executive's death occurs. Rights and benefits of the Executive under employee benefit plans and programs of the Corporation will be determined in accordance with the terms and conditions of any such plans and programs. 5.7 OTHER POSITIONS. Upon termination of his employment for any reason whatsoever, the Executive shall, at the request of the Corporation, forthwith execute any and all documents appropriate to evidence resignations from all his positions with the Corporation and its subsidiaries and affiliates. The Executive shall not be entitled to any payments in respect of such resignations in addition to those provided herein. 5.8 TAXES, ETC. All payments made to the Executive pursuant to this Article 5 shall be subject to, without limitation, all applicable income and withholding taxes, if any, and other applicable deductions and taxes. 5.9 RELEASE. The Executive agrees that the Termination Payment by the Corporation as provided in this Article, as applicable, shall be a full and final settlement of any and all manner of actions, causes of action, suits, claims and demands whatsoever which he has or may have against the Corporation, its affiliates or subsidiaries, and any of their directors, officers, employees and their successors and assigns with respect to his employment. 5.10 CONFIDENTIALITY OF SETTLEMENT. The Executive agrees that any settlement pursuant to this Article shall remain confidential as between the Executive and the Corporation and shall not be disclosed by the Executive to any person, corporation, group or organization whatsoever with the exception of the Executive and his legal and financial advisors. ARTICLE 6 CONFIDENTIAL INFORMATION 6.1 CONFIDENTIAL INFORMATION. The Executive hereby agrees to maintain in confidence and not to disclose to any person, corporation, group or organization whatsoever, during the Term and after his termination, any information respecting the business affairs, prospects, operations, strategic plans, data and trade secrets respecting the Corporation or its affiliates or subsidiaries or any other confidential information gained in the course of the services provided under this Agreement or otherwise, and not otherwise publicly available or disclosed. ARTICLE 7 NON-COMPETING AND NON-SOLICITATION COVENANTS 7.1 NON-COMPETITION. Notwithstanding termination of this Agreement, whether or not for cause, the Executive shall not engage in any line of business similar to the Business or engage in employment for any person, firm or corporation engaged in the Business in the same or similar line of business within the United States for a period of one (1) year from the time of termination of this agreement, except as specifically approved in writing by the Corporation in advance of such activities. 7.2 NON-SOLICITATION. For a period of three (3) years from the time of termination of this agreement, the Executive shall refrain from interfering with the employment arrangements between the Corporation or any of its affiliates or subsidiaries and their employees and will not in any way solicit, recruit, hire, assist others in recruiting or hiring, or discuss employment with any employees of the Corporation of any of its affiliates or subsidiaries and shall refrain from soliciting, contracting with, making presentations to or otherwise being concerned with the customers of the Corporation or any of its affiliates or subsidiaries. ARTICLE 8 MISCELLANEOUS PROVISIONS 8.1 INDEPENDENT ADVICE. This Agreement was prepared by the Corporation. The Executive has been asked to obtain independent legal advice before signing this Agreement and the Executive represents by signing this Agreement that he has either obtained such advice or waived such advice. 8.2 AMENDMENT AND WAIVER. No amendment, modification or waiver of any provision of this Agreement or consent to any departure by the parties from any provision of this Agreement is effective unless it is in writing and signed by the parties and then the amendment, modification, waiver or consent is effective only in the specific instance and for the specific purpose for which it is given. 8.3 FURTHER ASSURANCES. The Executive and the Corporation shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered such further acts and documents as shall be reasonably required to accomplish the intention of this Agreement. 8.4 APPLICABLE LAW AND JURISDICTION. This Agreement and all of the rights and obligations arising herefrom shall be interpreted and applied in accordance with the laws of Delaware and the courts of Delaware shall have exclusive jurisdiction to determine all disputes relating to this Agreement and all of the rights and obligations created hereby. The Executive and the Corporation hereby irrevocably attorn to the jurisdiction of the courts of Delaware. 8.5 PROHIBITIVE PROVISIONS. In the event that any provision or any part of any provision hereof is deemed to be invalid by reason of the operation of any law or by reason of the interpretation placed thereon by a court, this Agreement shall be construed as not containing such provision or part of such provision and the invalidity of such provision or such part shall not affect the validity of any other provision or the remainder of such provision hereof. All other provisions hereof which are otherwise lawful and valid shall remain in full force and effect. 8.6 NOTICE PROVISIONS. (a) Except as otherwise expressly provided herein, all notices shall be in writing and either delivered personally or by registered or certified mail, telegram or telecopier. In the case of the Corporation, notice shall be delivered to the Chairman of the Board of Directors at the Parent's head office. In the case of the Executive, notice shall be delivered to the most current residence address of the Executive on file with the Corporation. (b) Any notice which is delivered personally shall be effective when delivered and any notice which delivered by telecopier or telegram shall be effective on the business day following the day of sending; (c) Any notice given by telecopier or telegram shall immediately be confirmed by registered or certified mail. 8.7 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties as to the matters dealt with herein. There are not and shall not be any oral statements, representations, warranties, undertakings or agreements between the parties. This Agreement may not be amended or modified in any respect except in accordance with Section 8.2 herein. 8.8 BINDING EFFECT. This Agreement and all of its provisions shall enure to the benefit of and be binding upon the parties, the successors and assigns of the Corporation and the heirs, executors and personal representatives of the Executive. 8.9 ASSIGNMENT. This Agreement may not be assigned by either party without the prior consent in writing of the other, except that the Corporation may assign this Agreement without such consent to any of its subsidiaries or affiliates provided that it agrees to guarantee such assignee's obligations hereunder. IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed and delivered as of the date first above written. FDPO INSURANCE (USA), INC. - ------------------------------ Per: /s/ John Huguet --------------------- Authorized Signatory SIGNED, SEALED and DELIVERED by ) DAN KOVATCH in the presence of: ) ) /s/ Leona M. Odatey ) - -------------------------------- ) Signature ) Leona M. Odatey ) /s/ Dan Kovatch - -------------------------------- ) --------------------------------- Print Name ) DAN KOVATCH 8923 So. Sepuloeda Blvd ) - -------------------------------- ) Address ) Los Angeles, CA 90045 ) - -------------------------------- ) ) Notary Public ) - -------------------------------- ) Occupation ) EX-10.6 4 0004.txt EMPLOYMENT AGREEMENT -------------------- THIS made as of the 1st day of September, 1999. BETWEEN: E-FINANCIAL DEPOT.COM, INC. with offices at 150 - 1875 Century Park East, Century City, California, 90067 (hereinafter referred to as the "Company") OF THE FIRST PART AND: JOHN F. HUGUET, c/o 1005 - 750 West Pender Street, Vancouver, British Columbia, Canada V6C 2T8 (hereinafter referred to as "Contractor") OF THE SECOND PART A. it has been understood and agreed between the Contractor and the Company that an employment agreement would be drawn up and submitted to the Contractor and the Company for approval; and B. the Contractor and the Company now wish to formally record the terms and conditions upon which the Contractor will continue to be employed by the Company and that they have agreed to the terms and conditions set forth in this Agreement, as evidenced by their execution hereof. NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and agreements herein contained and for other good and other valuable consideration, the parties agree as follows: 1. Employment. ------------ The Contractor shall be employed by the Company in the position of, and shall perform the functions of, President and Chief Executive Officer of the Company. 2. Term. ----- The term of employment under this Agreement shall commence and shall continue thereafter until terminated as hereinafter provided. 3. Inducement to Hiring In consideration of the Contractor agreeing to enter into this Contract the Company shall: (a) issue to the Contractor 1,000,000 shares in the capital stock of the Company, said shares being subject to restrictions under Rule 144; and (b) grant to the Contractor an option to acquire 1,000,000 common shares of the Company at a price of $1.25 per share, said option exercisable for a term of 5 years and subject to "topping up" upon any partial exercise in accordance with the terms of the option with any subsequent options granted to have an exercise price equal to the market price of the Company's shares at the time of such grants. 4. Salary. ------- The Contractor shall receive a base salary of $150,000.00 U.S. Dollars, subject to such annual increases as the board of directors of the Company shall determine, together with such annual bonus based upon performance as shall, at the sole discretion of the Company's compensation committee, be awarded. 5. Termination. This Agreement may be terminated only as follows: (a) by the death of the Contractor; (b) by the Company upon six months' written notice if the Contractor becomes unable to render or perform duties and responsibilities which the Contractor is to discharge hereunder by reason of total or permanent physical or mental disability; (c) by the Contractor upon 30 days' written notice or such shorter period as may be agreed to by the Company and the Contractor; (d) by the Company in the circumstances in which there is no "cause" upon the Company complying with the provisions of paragraphs 6, 7 and 8 hereof; (e) by the Contractor in the circumstances and upon the terms described in paragraph 10 hereof, whether or not there has been a "Change of Control", as defined in paragraph 9 hereof. For clarity, if the Company terminates the employment of the Contractor as a result of the Contractor's refusal to physically relocate, the termination shall not be for cause and the provisions of subparagraph 5(e) will apply. The Company shall not dismiss the Contractor pursuant to subparagraphs 5(b), 5(c) or 5(e) unless such dismissal is specifically approved by the directors of the Company. 6. Severance. ---------- If the employment of the Contractor is terminated: (a) under subparagraph 5(e), other than as contemplated under (b), herein the Company shall pay to the Contractor the following lump sum severance payment: (i) in circumstances where the Contractor has been employed by the Company for more than two years but less than 3 1/2 years, an amount equal to 9 months of base salary and monetary benefits together with an amount equal to 3/4 of the most recent annual bonus paid to the Contractor; (ii) in circumstances where the Contractor has been employed by the Company for more than 3 1/2 years but less than 4 years, an amount equal to 12 months of base salary and monetary benefits together with an amount equal to the most recent annual bonus paid to the Contractor; (iii)in circumstances where the Contractor has been employed by the Company for more than 4 years but less than 5 years, an amount equal to 15 months of base salary and monetary benefits together with an amount equal to 1 1/4 times the most recent annual bonus paid to the Contractor; (iv) in circumstances where the Contractor has been employed by the Company for more than 5 years, an amount equal to 18 months of base salary and monetary benefits together with an amount equal to 1 1/2 times the most recent annual bonus paid to the Contractor; (b) under subparagraph 5(e), as contemplated under paragraph 9, or under subparagraph 5(e) in circumstances where a Change of Control (as hereinafter defined) occurs within 120 days following the Contractor's termination, the Company shall promptly pay to the Contractor a lump sum severance payment in an amount equal to 18 months of base salary and monetary benefits together with an amount equal to 1 1/2 times the most recent annual bonus paid to the Contractor 7. Benefits. --------- During the term of this Agreement the Contractor shall receive such executive benefit plans and other compensation programs as the Company generally provides its other salaried executives. If the employment of the Contractor is terminated under subparagraphs 5(d) or 5(e) the Company shall continue to pay contributions to the Contractor's medical, dental and health plans, pension or group or individual RRSP plans and insurance, shall maintain executive loans and continue to pay all privileges including automobile allowances and other benefits generally available to other Contractor executives of the Company for a period equal to the period of severance payments determined in accordance with paragraph 6 hereof provided that, if the Contractor no longer qualifies for inclusion in any medical, dental, health or other benefit plans of the Company, the Company shall pay to the Contractor such amounts as are necessary for the Contractor to arrange to obtain such benefits privately for the remainder of such period. 8. Stock Options. --------------- If the employment of the Contractor is terminated under subparagraphs 5(d) or 5(e) then the term during which any option to purchase common shares of the Company and the term during which any option to purchase common shares any other corporation, if such option was granted to the Contractor in relation to the Contractor's employment with the Company, shall be extended in every case to the later of the expiry date of such options (collectively the "Options") and the end of the period of severance payments determined in accordance with paragraph 6 hereof. In addition, any provisions which restricts the exercise of the Options before a particular date shall be waived. Subject to required regulatory approvals, if the exercise price of any option granted at the same time as any option granted to the Contractor is reduced, the exercise price of the option granted to the Contractor shall be reduced to the lowest price at which common shares of the corporation granting the option may be purchased pursuant to any repriced option. The terms of any option agreement shall be deemed to be amended to reflect the provisions of this paragraph 8. 9. Change of Control. -------------------- If a "Change of Control" (as hereinafter defined) occurs the Contractor may, within 180 days of the effective date of the Change in Control, give notice (the "Termination Election") to the Company that he has elected to treat the Change of Control as a termination of this Agreement. The Company at that time shall for all purposes be deemed to have terminated this Agreement without cause in accordance with subparagraph 5(d) hereof and the Contractor shall be entitled to the benefit of the provisions of paragraphs 6(b), 7 and 8 hereof. If no Termination Election is received by the Company within 180 days of the effective date of a Change of Control, the Contractor shall be deemed to have elected to continue his employment with the Company under the terms of this Agreement subject to the provisions of paragraph 10. For the purposes of this subparagraph and subparagraph 5(e) of this Agreement, a "Change of Control" of the Company shall have occurred when: (a) any Person (as defined in the Securities Act (British Columbia), as amended from time to time) or combination of Persons acquires or becomes the beneficial owner of, directly or indirectly, whether through the acquisition of previously issued and outstanding voting securities or of voting securities which have not been previously issued, or any combination thereof or any other transaction having a similar effect, a sufficient number of securities of the Company to affect materially the control of the Company or 20% or more of the voting securities of the Company; (b) any resolution is passed or any action or proceeding is taken with respect to the liquidation, dissolution or winding-up of the Company; (c) 20% or more of the issued and outstanding voting securities of the Company become subject to a voting trust; (d) the Company consolidates or merges with or into, amalgamates or enters into a statutory arrangement with any other Person; (e) the Company sells, leases or otherwise disposes of property or assets aggregating more than 50% of the consolidated assets of the Company measured by book or fair market value, whether pursuant to one or more transactions; (f) any Person not part of existing management of the Company or any Person not controlled by the Company or any affiliate of the Company, enters into any arrangement to provide all or substantially all the management services to the Company; (g) there shall be a change in a majority of the board of directors of the Company whether as a result of a shareholders meeting or as a result of appointments made in filling vacancies caused by resignations of members of the board of directors; or (h) the Company enters into any transaction or arrangement which would have the same or similar effect as the transactions referred to in (b),(d),(e) or (f) above. 10. Material Changes ----------------- Subsequent to a Change of Control, the Contractor may by written notice to the Company elect to terminate the Contractor's employment and the Contractor shall be entitled to the benefit of the provisions of paragraphs 6(b),7 and 8 hereof if there occurs within one year of a Change of Control one or more of the following events: (a) an adverse material change in the Contractor's duties and responsibilities such that the Contractor is required to assume duties that are not consistent with or relinquish responsibilities that are consistent with, those performed by the Contractor prior to the Change of Control; (b) an adverse material change in the salary or benefits of the Contractor from those received by the Contractor prior to the Change of Control; (c) a diminution of the title of the Contractor as it exists immediately prior to the Change in Control; or (d) a change in the person or body to whom the Contractor reports immediately prior to the Change of Control, except if such person is of equivalent rank or stature or such change is as a result of the resignation or removal of such persons, provided that this shall not include a change resulting from a promotion in the normal course of business. 11. Relocation Expenses. --------------------- If the Contractor moved to California to accept employment with the Company and if the Contractor has been resident in California for less than 12 months at the time that the Contractor becomes entitled to a payment pursuant to paragraphs 6, 7 or 8 hereof as a result of the termination or deemed termination of employment under subparagraph 5(d) or 5(e) or paragraph 10, the Company shall reimburse the Contractor for all reasonable expenses incurred in relocating himself and his immediate family and their household effects back to the location from which the Contractor moved. 12. Business Expenses. ------------------- The Contractor will be reimbursed by the Company for all reasonable business expenses incurred by the Contractor in connection with his duties within previously approved budgets upon submission of a monthly statement of expenses. 13. Vacation. --------- The Contractor shall be entitled to periods of vacation during the term of this Agreement upon terms and conditions as established by the Company (or any assignee Company pursuant to Paragraph 12 hereof) and consistently applied for its other salaried Contractors. 14. Disclosure of Information. ---------------------------- The Contractor shall not, at any time during the employment of the Contractor by the Company and/or at any time thereafter, directly or indirectly, disclose, communicate, divulge, furnish or make accessible or available, in whole or in part, to any person, firm, company, corporation or other entity, or use in any fashion, other than in the discharge and performance of the duties and responsibilities of the Contractor to the Company, any confidential information, material or matter relating to the business of, or any other trade secrets of, the Company or any firm, company, corporation or other entity related to the Company (Company's Affiliates") obtained or acquired while in the employ of the Company. The Contractor and the Company hereby specifically acknowledge and agree that any information concerning (a) the business, operation or methods of the Company and the Company's Affiliates, (b) the customers or clients of the Company and the Company's Affiliates, (c) the past present or future research done by the Company and the Company's affiliates, and (d) any method and/or procedure relating to or pertaining to projects developed by the Company and the Company's Affiliates or contemplated by the Company and the Company's Affiliates, are of material importance and significance to the business of the Company. Accordingly, the Contractor and the Company agree that all of the above not readily available from an unrelated third part are to the maximum extent permitted by law to be regarded as information or material which is of a confidential nature; that trade secrets of the Company or the Company's Affiliates shall be deemed to include any and all processes, equipment, machinery, devices, techniques, methods, designs, inventions, materials, formula and the like (whether patentable or not) used by the Company or the Company's Affiliates in the conduct of its or their business, and all data, know-how, drawings, plans, written instructions or other writings, relating or pertaining thereto or to any other aspect of the business of the Company or the Company's Affiliates, which are not in the "public domain" or not generally know throughout the industry of which the Company of the Company's Affiliates are a part; that any and all such confidential information, material or matter, or trade secrets, from time to time disclosed, divulged, communicated, furnished or made available to the Contractor is solely for the purpose of enabling the Contractor to perform and discharge the duties and responsibilities of the Contractor to the Company; that no such disclosure, divulgence, communication or the like shall in any manner whatsoever be deemed or construed to derogate from or affect any of the provision set forth herinabove; and that it is the specific intent of the Company and the Contractor that each and all of the provision set forth herein shall be valid and enforceable as specifically set forth herein. If it shall be judicially determined that any of the provisions set forth herein shall not be valid or enforceable as specifically set forth herein, such provision shall not be declared invalid but rather shall be modified in such manner so as to result in the same being valid and enforceable to the maximum extent permitted by law. In the event of a breach or threatened breach by the Contractor of the provisions of this Paragraph, the Company may, in addition to any other remedies it may have, obtain injunctive relief in any court of appropriate jurisdiction to enforce this Paragraph. The provisions of this Paragraph shall survive the expiration or termination, for any reasons, of this Agreement and shall be separately enforceable. 15. General ------- (a) Assignment. ----------- The rights and obligations of the Contractor hereunder are not assignable. If the Contractor has not elected to terminate the Contractor's employment in accordance with the terms of this Agreement, this Agreement shall be assigned by the Company to any successor corporation of the Company and shall be binding upon such successor corporation. The Company shall ensure that the successor corporation shall continue the provisions of this Agreement as if it were the original party in place of the Company; provided however that the Company shall not thereby be relieved of any obligation to the Contractor pursuant to this Agreement. If there occurs a Change in Control, the Company shall be obligated to ensure that the successor corporation honours this Agreement as if the Contractor had exercised his maximum rights hereunder as of the effective date of such transaction. (b) Entire Agreement. ------------------ This Agreement shall supercede and replace any prior contract of employment that exists between the Company or any subsidiary of the Company and the Contractor. (c) Independent Advice. -------------------- This Agreement was prepared by the Company. The Contractor has been asked to obtain independent legal advice before signing this Agreement and the Contractor represents by signing this Agreement that he has either obtained such advice or waived such advice. (d) Controlling Law. ----------------- The validity and construction of this Agreement or any of its provisions shall be determined under the laws of the Province of British Columbia. The invalidity or unenforceability of part or all of any provisions of this Agreement shall not affect or limit the validity and enforceability of the remainder of such provision and other provisions of this Agreement. (e) Counterparts and by Facsimile. --------------------------------- This Agreement may be executed in one or more counterparts, any counterpart delivered via facsimile shall be deemed an original, and all such counterparts, taken together, shall constitute one and the same instrument. (f) Miscellaneous. -------------- This Agreement may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. (g) Headings. --------- The headings herein are inserted only as a matter of convenience and reference, and in no way define, limit or describe the scope of this Agreement or the intent of the provisions thereof. (h) Currency. --------- All references to monetary amounts in this Agreement are to lawful money in Canada. (i) Damages. -------- All payments provided for herein shall be in lieu of other notice or damage claims as regards the dismissal or termination of employment with the Company or any subsidiary of the Company of the Contractor after a Change in Control and the arrangements provided for herein shall be considered in any judicial determination of appropriate damages at common law for dismissal without cause, other than as provided for in this Agreement. (j) Beneficiaries. -------------- In the event that the Contractor dies prior to the satisfaction of all the obligations of the Company under this Agreement, any remaining amounts payable to the Contractor by the Company and any rights of the Contractor including, without limitation, pursuant to the Options, shall be paid to or exerciseable by the person or persons previously designated by the Contractor to the Company for such purposes. Any such designation of beneficiaries shall be made in writing, signed by the Contractor and dated and filed with the Secretary of the Company. In the event that no designation is made, all such amounts shall be paid by the Company to the estate of the Contractor. (k) Further Assurances. -------------------- Each of the Company and the Contractor agrees to make, do and execute or cause to be made, done and executed all such further and other things, acts, deeds, documents, assignments and assurances as may be necessary or reasonably required to carry out the intent and purpose of this Agreement fully and effectually. Without limiting the generality of the foregoing, the Company shall take all reasonable steps in order to structure the payment or payments provided for in this Agreement in the manner most advantageous to the Contractor with respect to the provisions of the Income Tax Act (Canada) or similar legislation in place in the jurisdiction of residence of the Contractor. (l) Notices. -------- Any election or designation to be made by the Contractor pursuant to the terms of this Agreement shall be by notice in writing pursuant to the terms of this Agreement shall be by notice in writing addressed to the attention of the President of the Company and shall be delivered to the Company at its address above, or such other address as the Company may notify the Contractor in writing. (m) Severability. ------------- Any provision of this Agreement which contravenes any applicable law or which is found to be unenforceable shall, to the extent of such contravention or unenforceability, be deemed severable and shall not cause this Agreement to be held invalid or unenforceable or affect any other provision or provisions of this Agreement. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first written above. John Huguet E-FINANCIAL DEPOT.COM, INC. /s/ John Huguet By /s/ John Huguet - ----------------- ----------------- (signature) President & CEO J.F. Huguet - -------------- Name (Please print) EX-10.9 5 0005.txt The Merryvale Group International Private Merchant Bankers Post Office Box 1361 Tiburon, California 94920 E-mail: merchantbank@aol.com W.P. Berini Telephone (415) 435-2136 President Facsimile (415) 435-2137 June 21, 2000 e-financial depot.com John Huguet, CEO 750 West Pender Street #1005 Vancouver, BC V6C 2T8 Canada Dear John, It has been a pleasure speaking with you. I look forward to a successful working relationship with e-.financial depot.com. I am optimistic, given your experience and this environment will realize a mutual benefit to our success. This document shall serve as the agreement between e-financial depot.com, ("EFD") and The Merryvale Group, ("MGI"), whereby MGI agrees to provide consulting services to EFD over the next 120 days (4 months). - - Scope of Services: 1. Develop Phase 1 plan for funding $5,000,000 (Five Million Dollars US) to be used for expanding operations/working capital. 2. Position the Corporation to begin Phase 2 of funding an additional infusion of Capital, should that become necessary. 3. Effect a network base in the United States, Canada, Great Britain and Asia. 4. Perform promotional services as directed by the corporation and mutually agreed upon. 5. Assist EFD with drafting corporate resolutions, board minutes and shareholder meeting minutes for review by corporate counsel; assist in coordinating shareholder meetings, when applicable. 6. Oversee relations with contacts on behalf of EFD. 7. Other assignments as mutually agreed upon. - - Corporate Goal: The goal of EFD, is to effect increased revenues consistently over the years to come. MGI is prepared to assist the corporation and its assigns, with achieving this goal. The services outlined herein are directed toward accomplishing Phase 1 and to position the company for Phase 2 funding. - - Personnel Assigned by MGI: William Paul Berini, President of The Merryvale Group and Associates will be assigned to provide services to EFD. These services shall include, but are not limited to the contract and maintenance of the Private Equity services for the express purpose of raising a minimum of $5,000,000 (Five Million Dollars US) to fund EFD and its assigns expanding operations. - - Fees and Expenses: Service for the four-month period shall be an initial disbursement of 25,000 shares of Restricted Reg. 144 Stock OTC BB: "FDPO". It is the policy of The Merryvale Group, to collect a three-month retainer in advance, before work, can begin on any project; subsequently, the agreed upon amount of $15,000 (Fifteen Thousand Dollars US) shall be wired to MGI, (DTC and Wire Instructions to follow.) Our commission schedule, will be as follows: 5% (Five Percent) of the 1st (Million Dollars US) raised by Merryvale. Compensation on the remaining $4,000,000 (Four Million Dollars US) will be subject to the Lehman Scale, which we employ: 4% of the 2nd Million, 3% of the 3rd Million 2% of the next Million and 1% thereafter. The following will also apply: 1. Cash Success Fee. A cash fee of the agreed upon percentages of the funds raised shall be payable to MGI or its assigns out of the proceeds of the Financing. A Cash Fee is payable, by e-financial depot.com on a pro-rata basis according to funds raised. 2. Balance of 50,00 Shares of Commons Stock. The balance of 50,000 (Fifty Thousand) shares of the aforementioned common stock, shall be transferred to Merryvale, at the completion of funding $5,000,000 (Five Million Dollars US). 3. Indemnity. E-financial.com or its assigns, agrees to indemnify MGI, its officers, directors and agents, from any claim or damages asserted by third parties, including legal fees, except to the extent that such changes arise solely from the gross negligence or willful malfeasance of MGI. All expenses above $250.00 will be pre-approved by the corporation. MGI will be reimbursed for all out-of-pocket expenses, reasonable to the performance of services contemplated by this agreement. Budget for such expenses, will be reviewed with the corporation, prior to such expenditure. - - Terms: The terms of this agreement shall commence upon receipt of the initial disbursement of stock and cash to The Merryvale Group account(s) at Union Securities and People's Bank. DTC and Wire instructions are as follows: 1. DTC #5099 2. FINS T006 3. FOR THE ACCOUNT OF UNION SECURITIES LTD. 4. FOR FURTHER CREDIT TO ACCOUNT #021425U5 5. MERRYVALE GROUP INC. N.B. THE ABOVE DTC INSTRUCTIONS MUST BE FOLLOWED TO THE LETTER TO AVOID DELIVERY PROBLEMS. Wire Instructions: 1. People's Bank 2. 850 Main Street 3. Bridgeport, Connecticut 06606 4. ABA Bank Routing #221172186 5. For Further Credit to The Merryvale Group International 6. Account # 020 700 7586 MGI would be pleased to provide additional services to GTV, and plans to discuss such requirements with you prior to the expiration date of this agreement. While there are no guarantees, we believe that with our best efforts, we have access to the markets and investors to complete the aforementioned in the allotted time frame. It is understood that EFD has reasonable expectations to believe the fund raising efforts will be completed in as short a time frame as possible. We appreciate the opportunity to be of service to EFD in assisting you to reach your financial goals and look forward to a favorable association. Please indicate your concurrence with this agreement by signing a duplicate copy in the space provided, and completing the appropriate instructions, which will place this agreement in effect. Sincerely, The Merryvale Group International e-financial.com Agreed to this 26th day of June, 00 Agreed to this 28th day of June, 00 William Paul Berini, President John Huguet, CEO By: /s/ signed By: /s/ John Huguet EX-27 6 0006.txt
5 This schedule contains summary financial information extracted from the balance sheets and statements of operations found on pages 2 and 5 of the Company's Form 10-QSB for the period ended June 30, 2000, and is qualified in its entirety by reference to such financial statements. 1 6-MOS DEC-31-1999 JAN-01-2000 MAR-31-2000 245,643 91,475 1,493,164 401,935 0 1,428,347 539,740 6,820 17,715,203 1,714,090 0 0 0 18,700 12,882,413 17,175,203 464,825 464,825 0 0 4,775,586 0 61,065 (4,356,226) 0 (4,356,226) 0 0 0 (4,356,226) (.330) (.330)
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