-----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, NALuAh+x1fVi70Bq3QT6O20QAYh8d1mt6EJjChQSQwdjOJqBa+kMPHUhRjhnMkSB CIQOhSb0LLVLKj79ief+ug== 0001085037-00-000122.txt : 20000516 0001085037-00-000122.hdr.sgml : 20000516 ACCESSION NUMBER: 0001085037-00-000122 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 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: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-26899 FILM NUMBER: 635408 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 OMB APPROVAL ------------ OMB Number 3235-0416 ---------------------- Expires: May 31, 2000 Estimated average burden hours per response: 9708.0 ----------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 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: 13,040,000 common shares issued and outstanding as of April 28, 2000 - ------------------------------------------------------------------------------ Transitional Small Business Disclosure Format (Check one): Yes No [X] 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. The financial statements are attached to this Quarterly Report (see Part II, Item 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, included in Part II, Item 6 of this Quarterly 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 its talk-stock.com. website (the "Talk Stock Website"). Unlike many dot.com businesses which take a single point and develop around one idea, the Company is a comprehensive financial services portal incorporating four principle revenue engines: (a) Global markets - trading both hosted and online. (b) Specialty financial services - mortgages, insurance, foreign exchange, commodities (c) News, media & communication with our on line community "TALK STOCK". (d) Education and Investor preparedness focusing on Risk Analysis, Investment and trading techniques. 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 herein 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, increased competition in the Company's markets and products. Other factors may include, availability and terms of capital, and/or increases in operating and supply costs. Market acceptance of existing and new products, rapid technological changes, availability of qualified personnel also could 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 herein are reasonable, any of the assumptions could be inaccurate. There can be no assurance that the forward-looking statements included in this filing 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. Revenue For the three months ended March 31, 2000, revenue from continuing operations, which are comprised exclusively of client fee income, was $15,200. Total revenues from continuing operations decreased by $155,050, or 91%, from $170,250 for the period ended March 31, 1999. The decrease in the Company's revenues during the period ended March 31, 2000 compared to March 31, 1999 was due to the Company's management changing its focus to providing investors information on equity issues. The Company reported net loss from continuing operations for the three months ended March 31, 2000 of $647,701 compared to net income of $ 125,426 for the three months ended March 31, 1999. The decrease in net income is due to the increased costs associated with the startup of the Company's internet financial portal and a change in the focus of the Company from an investor relations services provider to a provider of comprehensive financial information. Costs and Expenses The Company's expenses from operations for the three months ended March 31, 2000 increased $637,116 or 1,240% to $688,490 from $51,374 during the same period in 1999. Selling, general and administrative expenses increased $612,936, or 1,193% to $ 664,310 during the first 3 months of 2000 from $ 51,374 in the first 3 months of 1999. The increase was due to the Company incurring start up costs in connection with establishing its world wide web information site and an increase in personnel costs. The Company recognized a net gain from the sale of securities available for sale in the first 3 months of 2000 in the amount of $7,938 as compared to a net gain of $6,550 in the first 3 months of 1999. The Company periodically receives securities from clients in exchange for services. It is the Company's policy to liquidate the securities when it is in the best interest of the Company. LIQUIDITY AND CAPITAL RESOURCES Three Months Ended March 2000 As of March 31, 2000, the Company had a deficit in working capital of $86,451 compared to available working capital of $55,742 at March 31, 1999, a decrease in working capital of $142,193. The decrease in working capital was substantially due to the decrease in client accounts receivable and an increase in loans from shareholders at March 31, 2000 as compared to 1999. The Company's negative cash flow from operations was $536,718 for the three months ended March 31, 2000 . The negative cash flow from operating activities for the three months ended March 31, 2000 is primarily attributable to the Company's $603,091 loss from operations, adjusted for $13,889 of amortization and a $43,625 provision for uncollectible accounts receivable. Cash flows used in investing activities was $1,966,563 during the three months ended March 31, 2000. The Company advanced $2,000,000 in funds to TradeFast, Inc. during the three months ended March 31,2000. The advance is in the form of a note receivable at March 31, 2000. Cash flows provided from financing activities $2,516,093 during the three months ended March 31, 2000. The principal source of financing during the period was the proceeds of $2,350,000 of convertible debentures, net of placement costs. The debenture pays the holders 6%, payable annually redeemable at the option of the Company after one year of issuance and once the average daily closing price of the Company's common stock is $10.00 per share for twenty (20) consecutive trading days. The convertible debenture is in convertible at the option of the holder of such debenture at any time after March 2, 2000 at a price per share equal to the lesser of (i) 80% of the average closing bid price of the Company's common stock for five days proceeding the date of conversion notice is tendered, or (ii) five ($5.00) dollars per share. In no event shall the conversion price be lower than $3.00 per share. Subsequent to March 31,2000, the Company received notice from the convertible debenture holders exercise their rights to convert the convertible debentures to the Company's common stock. See Part II, Item 2 for further details. 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. 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 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 in the southeastern United States 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 offers 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 intends to provide an easily navigable, consumer friendly, vertically integrated destination website offering a wide variety of financial products and services, including: - - extensive investor education; - - unbiased streaming news; - - full service investment support, on-line trading, estate planning, life insurance and mortgage banking; and - - commentary on-line radio. 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 the end of the Company's second quarter, 2000), and continuing thereafter, original content is planned to bring both topical and educational materials to all subscribers. In addition, the Company will provide public relations activities on behalf of publicly traded companies. The Company, through the Talk Stock Website, 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: - - hosting and profiling of public companies, paid on a monthly basis; - - online radio services paid for on a lump sum and monthly basis; - - hosting of annual meeting, global audience, live streaming audio or video; - - banner advertisements; - - attendance fees for Conference Rooms; and - - original, topical financial and success site content. Trading Offices/Systems & On Line Financial Services - ---------------------------------------------------------- Through TradeFast Inc. ("TradeFast"), a holding company 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. A model location for the Financial Depot Trade Stations has been selected, and services available inside a Financial Depot Trade Station may include a cafe, ATM machine, travel services, insurance services, mortgage banking services, state of the art trading stations and discount brokerage and commodities desks. 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. 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 June 30, 2000 in order to finance increased promotion and marketing of the Websites and to complete anticipated acquisitions. The Company does not anticipate that it will require any further financing between July 1, 2000 and March 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 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 continued ability to obtain financing. There can be no assurance that any such financing would 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 material 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. Product Research and Development Over the 12 months ending March 31, 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 March 31, 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). The Company does not anticipate that it will purchase or sell a plant, or sell any significant equipment over the 12 months ending March 31, 2001. Changes in Employees The Company anticipates a significant change in its current number of employees over the 12 months ending March 31, 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, 14 marketing and sales personnel for its Mortgage Banking division, 6 marketing and sales personnel for its Insurance division, a total of 4 management personnel and educators for its Education division, and 2 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; - - 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 such relationships and activities. 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 Company shareholder of the Company in the past to satisfy certain obligations. Limited Operating History The Company recently initiated the Website, and as a result, it only has 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 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. 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 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 to consider is 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 - - 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 material 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 engine 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 technology and transaction processing systems; - - network infrastructure to accommodate increased traffic on its web site; 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. 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, 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 in 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. 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 material 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 and perform such new products and 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 manage successfully such expanded operations. Failure to manage anticipated growth effectively and efficiently could have a material 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 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 governing 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 Website and services, 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 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 like 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 our business. Market for the Company's Securities and Possible Volatility of Share Prices The trading price of the Company's 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 often 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 Company's 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 (a) On January 28, 2000, the Company issued 10,000 common shares to Patricia Kirkham, pursuant to a Letter of Intent dated January 19, 2000 between the Company and Westcor Mortgage (the "Westcor Letter of Intent). The Company issued the shares to Ms. Kirkham relying upon Regulation S of the Securities Act of 1933. These shares are being held in trust as a deposit in connection with the acquisition of Westcor Mortgage. Further information with respect to the Westcor Letter of Intent can be found in the Company's Form 10-KSB Annual Report, filed on April 14, 2000. (b) On January 28, 2000, the Company issued 500,000 common shares to Oxford Capital Corporation ("Oxford"), which shares are held in escrow pursuant to an agreement dated February 2, 2000. The shares secure the obligations of the Company in respect of the Debentures (see paragraph (c) below for the definition of the "Debentures"). The agreement between the Company and Oxford, and its terms, are described in the following paragraph (c). (c) On January 31, 2000, the Company entered into a funding agreement (the "Funding Agreement") with Oxford, which funding was completed on February 24, 2000 (the "Closing Date"). Pursuant to the Funding Agreement and relying on Regulation S of the Securities Act of 1933, the Company issued to Oxford 6% Convertible Debentures (the "Debentures") and a two year warrant to purchase 250,000 shares of common stock in the capital of the Company at US$5.00 per share (the "Warrants"), in exchange for funding in the amount of $2,500,000. The Debentures are due January 31, 2003 and bear interest at the rate of 6% per year, payable upon conversion, redemption or maturity, whichever occurs first. Interest is payable, at Oxford's option, in cash or in shares of the Company's common stock (the "Common Stock"). Pursuant to the Funding Agreement, the Debentures are convertible into shares of Common Stock from time to time, in amounts specified by, any time after the Closing Date, as follows: The lower of: (i) 80% (not lower than a floor price of US$3.00) of the average closing bid price of the Common Stock for the five (5) trading days preceding the Conversion Date; or (ii) US$5.00. In addition, the Debentures are subject to a forced conversion into Common Stock when the share price has traded above US$10.00 for 20 consecutive trading days and the liquidity covenants have not been broken. The underlying warrants will be acquired and paid for within 30 trading days after forced conversion. The Debentures are exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to SEC Regulation S. The Company must prepare and file, within 60 days of January 31, 2000, a Registration Statement covering 200% of the shares the Debentures are currently convertible into, and all of the shares underlying the Warrants. The Company will attempt to ensure that the Registration Statement is declared effective within 120 days. In the event that the Registration Statement is not filed within 60 days or declared effective within 120 days, the Company will pay damages to Oxford of 2% of the principal value of the Debentures or equity outstanding every 30 day period, or a pro rata portion thereof. If at any time following the 120 day period after the Closing Date, the market value of the volume of stock trades less than $100,000 in value for 20 consecutive trading days, Oxford has the right to return the unconverted Debentures to the Company at a premium of 30% of the principal outstanding. Following the end of the first quarter, on May 5, 2000, the Company received a notice for the conversion of 2.5 million debentures into common shares. Pursuant to the Agreement, the Debentures, the Warrants and the Common Stock underlying the Debentures and Warrants have been delivered to Oxford Capital Corporation, Calgary (the "Escrow Holder"). As security for the Debentures, the Company deposited 500,000 shares of restricted common stock with the Escrow Holder, which shares will be released upon conversion of the Debentures or in the event that the Company defaults on the Debentures. In addition and upon funding, the Company paid 10% of the gross amount of the Debentures to Oxford Capital Corporation, Calgary (the "Placement Agent"), and issued a one year warrant to purchase 50,000 shares of Common Stock at US$5.00 per share. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 5. OTHER INFORMATION. On March 27, 2000, the Company entered into an agreement with JAWS Technologies Inc. ("JAWS"), a provider of secure information management solutions. The Company expects that JAWS will play an integral role in the launch of the Website, and in the Company's business generally thereafter. On March 30, 2000, Robert J. Kubbernus joined the Company's Advisory Board. Mr. Kubbernus has 16 years of financial and management experience with high-technology firms in North America and Europe, and also sits on the boards of Electronic Substrate Systems, YourNet FutureLink, Unity Wireless and JAWS (of which he is also the Chairman and CEO), and is a principal of Oxford Capital Corporation. Between 1992 and 1997, Mr. Kubbernus was the President and CEO of Bankton Financial Corporation. Prior to 1992, he was the CFO and Chief Development Officer of Bankers Capital Group. On April 27, 2000, the Company signed a Letter of Agreement (the "Letter of Agreement") with Dan Kovatch as owner of eZnow Insurance.com ("eZnow"), pursuant to which the Company agreed to acquire eZnow. eZnow is a webpage, located at www.eznowinsurance.com, that offers a wide range of insurance services, including life, home, rental, commercial, auto, boat, casualty and health policies. At the eZnow website, customers can request free quotes, access customer service, submit claims, pay premiums or change contact or policy information. eZnow is the online customer interface for Kovatch Insurance Systems Inc. ("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. The Letter of Agreement provides for a purchase price of 50,000 restricted shares of the Company's stock, and has provisions for a share in revenues between Kovatch Insurance and the Company, based on new business generated by the eZnow website. Kovatch Insurance will continue to operate independently as an insurance brokerage, while Dan Kovatch will become an exclusive employee of the newly formed insurance entity, which will be a subsidiary of the Company. On March 30, 2000, the Company and CobraTech Industries Inc. ("CobraTech") entered into an agreement (the "CobraTech Agreement"), pursuant to which CobraTech agreed to assist the Company in pursuing a relationship with China.com,so as to integrate the Company's securities trading platform into China.com's website (the "Project"). CobraTech also agreed to assist the Company in its pursuit of relationships similar in form to the Project in connection with other websites, targeting other parts of the Austral-Asia region (the "Secondary Projects"). As compensation for the services rendered by CobraTech with respect to the Project, the Company agreed to: 1. issue to CobraTech 200,000 common shares (the "Common Shares") in the capital stock of the Company, said shares being issued subject to the resale restrictions set out in Rule 144 as promulgated under the Securities Act of 1933 ("Rule 144"); 2. issue to CobraTech a further 800,000 Common Shares provided that it is acknowledged that 800,000 of such Common Shares (the "Escrow Shares") shall be held in escrow and shall only be released to CobraTech upon successful completion of the Project as evidenced by an executed agreement between the Company and China.com and, in circumstances where the Escrow Shares have not been released by June 30, 2000, the Escrow Shares shall be returned to the Company for cancellation; 3. issue to CobraTech a further 1,000,000 Common Shares at such time as 200,000 securities transactions per month have been effected through the China.com web site utilizing the Company's securities trading platform for 3 consecutive months. As compensation for services rendered by CobraTech pursuant to the CobraTech Agreement in connection with the Secondary Projects, the Company agreed to compensate CobraTech in a manner equivalent to 2 and 3 above, taking into consideration factors such as the relative size of the market which is the subject of any Secondary Project and the price of the Common Shares at the time of successful completion of any Secondary Project relative to their current price. On March 28, 2000, the Company and Cobra Capital Limited ("Cobra") entered into an agreement (the "Cobra Capital Agreement"), pursuant to which Cobra agreed to assist the Company in the areas of strategic development, mergers and acquisitions, and corporate finance, with particular emphasis on Asia. As compensation for services rendered pursuant to the Cobra Capital Agreement, the Company agreed to: 1. issue to Cobra, or as directed by Cobra, a warrant (the "Warrant") entitling the holder to acquire 300,000 common shares in the capital stock of the Company, at a price of $5.00 per share, said Warrant having a term of 5 years; and 2. issue to Cobra, or as directed by Cobra, 8,500 common shares in the capital of the Company per month, as at the last day of each and every month during the term of the Cobra Capital Agreement. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. Reports of Form 8-K On February 25, 2000, the Company filed a current report on Form 8-K announcing that it had engaged Stefanou & Company, LLP Certified Public Accountants as its independent accountants to audit its financial statements. The Company's Board of Directors approved the change of accountants to Stefanou & Company, LLP Certified Public Accountants on February 21, 2000. During the Company's two most recent fiscal years, and any subsequent interim periods preceding the change in accountants, there were no disagreements with Gregory M. Montagna, CPA, P.C. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope procedure. The report on the financial statements prepared by Gregory M. Montagna, CPA, P.C. for either of the last two years did not contain an adverse opinion or a disclaimer of opinion (except that his report for the fiscal year ended December 31, 1998 contained an explanatory paragraph regarding the substantial doubt about the Company's ability to continue as a going concern), nor was it qualified or modified as to uncertainty, audit scope or accounting principals. Gregory M. Montagna, CPA, P.C. provided the Company with a letter addressed to the SEC stating that he agreed with the statements made in the Form 8-K. The Company has engaged the firm of Stefanou & Company, LLP Certified Public Accountants as of February 21, 2000. Stefanou & Company, LLP Certified Public Accountants was not consulted on any matter relating to accounting principles to a specific transaction, either completed or proposed or the type of audit opinion that might be rendered on the Company's financial statements. Following the end of the Company's first quarter, on April 28, 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. The Debentures are due January 31, 2003 and bear interest at the rate of 6% per year, payable upon conversion, redemption or maturity, whichever occurs first. Interest is payable, at Oxford's option, in cash or Common Stock. Pursuant to the Funding Agreement, the Debentures are convertible into shares of Common Stock from time to time, in amounts specified by Oxford, any time after the Closing Date, as follows: The lower of: (i) 80% (not lower than a floor price of US$3.00) of the average closing bid price of the Common Stock for the five (5) trading days preceding the Conversion Date; or (ii) US$5.00. In addition, the Debentures are subject to a forced conversion into Common Stock when the share price has traded above US$10.00 for 20 consecutive trading days and the liquidity covenants have not been broken. The underlying warrants will be acquired and paid for within 30 trading days after forced conversion. The Debentures are exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to SEC Regulation S. The Company must prepare and file, within 60 days of January 31, 2000, a Registration Statement covering 200% of the shares the Debentures are currently convertible into, and all of the shares underlying the Warrants. The Company will ensure that the Registration Statement is declared effective within 120 days. In the event that the Registration Statement is not filed within 60 days or declared effective within 120 days, the Company will pay damages to Oxford of 2% of the principal value of the Debentures outstanding every 30 day period, or a pro rata portion thereof. If at any time following the 120 day period after the Closing Date, the market value of the volume of stock trades less than $100,000 in value for 20 consecutive trading days, Oxford has the right to return the unconverted Debentures to the Company at a premium of 30% of the principal outstanding. Pursuant to the Funding Agreement, the Debentures, the Warrants and the Common Stock underlying the Debentures and Warrants have been delivered to the Escrow Holder. As security for the Debentures, the Company deposited 500,000 shares of restricted common stock with the Escrow Holder, which shares will be released upon conversion of the Debentures or in the event that the Company defaults on the Debentures. In addition and upon funding, the Company paid 10% of the gross amount of the Debentures to the Placement Agent, and issued a one year warrant to purchase 50,000 shares of Common Stock at US$5.00 per share. Financial Statements Filed as a Part of the Quarterly Report The Company's unaudited financial statements include: Consolidated Balance Sheets (March 31, 2000 and December 31, 1999) Consolidated Statements of Operations (Three Months Ended March 31, 2000 and 1999) Consolidated Statements of Cash Flows (Three Months Ended March 31, 2000 and 1999) Notes to Consolidated Financial Statements (March 31, 2000)
E FINANCIAL DEPOT.COM, INC. CONSOLIDATED BALANCE SHEET (Unaudited) ASSETS March 31, 2000 December 31, 1999 Current assets: Cash and equivalents . . . . . . . . . . . . . . . . . . . $ 24,671 $ 11,859 Accounts receivable, less allowance for doubtful accounts of $401,935 and $358,310 on March 31, 2000 and December 31, 1999 respectively. 26,835 119,610 Marketable securities available for sale . . . . . . . . . 165,239 51,836 Accrued tax benefit. . . . . . . . . . . . . . . . . . . . - 17,980 Prepaid expenses and deposits. . . . . . . . . . . . . . . 23,934 35,005 Current portion of note receivable . . . . . . . . . . . . - - ----------- --------- 240,679 236,290 Property and equipment - at cost: Office equipment . . . . . . . . . . . . . . . . . . . . . 39,740 35,176 Less accumulated depreciation. . . . . . . . . . . . . . . 4,020 4,020 ----------- --------- 35,720 31,156 Other assets: Note receivable. . . . . . . . . . . . . . . . . . . . . . 2,000,000 Financing charges net of amortization of $13,889 at March 31, 2000 . . . . . . . . . . . . . . . . . . 236,111 ----------- 2,236,111 - ----------- --------- $2,512,510 $267,446 =========== ========= LIABILITIES Current liabilities: Accounts payable and accrued expenses. . . . . . . . . . . $ 85,834 $ 36,898 Unearned revenues. . . . . . . . . . . . . . . . . . . . . 30,750 30,750 Notes payable related parties. . . . . . . . . . . . . . . 169,313 28,220 Income tax payable . . . . . . . . . . . . . . . . . . . . 40,070 40,070 Deferred income tax expense. . . . . . . . . . . . . . . . 1,163 44,610 ----------- --------- 327,130 180,548 Convertible debenture. . . . . . . . . . . . . . . . . . . 2,600,000 - Stockholders' equity: Preferred stock, par value, $.001 per share; 10,000,000 shares authorized; none issued at March 31, 2000 or December 31, 1999 Common stock, par value, $.001 per share; 20,000,000 shares authorized; 12,520,000 and 12,500,000 issued at March 31, 2000 and December 31, 1999, respectively . . . . . . . . . 12,520 12,500 Additional paid-in capital . . . . . . . . . . . . . . . . 24,980 - Retained earnings. . . . . . . . . . . . . . . . . . . . . (506,184) 96,907 Unrealized gain or (loss) on securities available-for-sale 54,064 (22,509) ----------- --------- (414,620) 86,898 ----------- --------- $2,512,510 $267,446 =========== =========
The accompanying notes are an integral part of these financial statements.
E FINANCIAL DEPOT.COM, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE 3 MONTHS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED) March 31, 2000 March 31, 1999 ---------------- --------------- Fee net income . . . . . . . . . . . . . . . . . . $ 15,200 $ 170,250 Costs and expenses: Selling, general and administrative. . . . . . . . 664,310 51,374 Interest expense . . . . . . . . . . . . . . . . . 24,180 - ---------------- --------------- 688,490 51,374 ---------------- --------------- Operating loss . . . . . . . . . . . . . . . . . . (673,290) 118,876 Interest income. . . . . . . . . . . . . . . . . . 17,651 - Realized gain or (loss) on securities available for sale. . . . . . . . . . . . . . 7,938 6,550 ---------------- --------------- Net loss before provision for income tax . . . . . (647,701) 125,426 Income tax (benefit) or expense. . . . . . . . . . 44,610 43,000 ---------------- --------------- Net income . . . . . . . . . . . . . . . . . . . . $ (603,091) $ 82,426 Other comprehensive income, net of tax: Unrealized holding gains on securities available-for-sale arising during the period. 76,573 4,586 ---------------- --------------- Comprehensive income . . . . . . . . . . . . . . . $ (526,518) $ 87,012 ================ =============== Net income (loss) per common share (basic and assuming dilution). . . . . . . . . . . $ (.05) $ .01 ================ =============== Weighted average common shares outstanding . . . . 12,510,000 12,500,000
The accompanying notes are an integral part of these financial statements.
E FINANCIAL DEPOT.COM, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED) 2000 1999 ------------ --------- Cash flows from operating activities: Net income from operating activities. . . . . . . . $ (603,091) $ 82,426 Adjustments to reconcile net income to net cash: Deferred income taxes. . . . . . . . . . . . . (44,610) 43,000 Realized gain on securities available for sale (7,938) (6,550) Amortization of financing charges. . . . . . . 13,889 - Provision for uncollectible receivables. . . . 43,625 - Securities available-for-sale received in lieu of cash for services rendered . . (47,750) (56,465) Change in: Receivables. . . . . . . . . . . . 49,150 (56,500) Prepaid expenses and other assets . . . . 11,071 - Accounts payable and accrued expenses . . 48,936 396 ------------ --------- (536,718) 6,307 Cash flows used in investing activities: Capital expenditures. . . . . . . . . . . . . . . . (4,564) - Cash loaned to TradeFast, Inc.. . . . . . . . . . . (2,000,000) Proceeds from sale of securities available-for-sale 38,001 - ------------ --------- (1,966,563) - Cash flows (used in)/provided by financing activities: Proceeds from loans from stockholders . . . . . . . 141,093 - Repayment of stockholder loans. . . . . . . . . . . (1,000) Proceeds from convertible debentures. . . . . . . . 2,350,000 - Proceeds from sale of common stock. . . . . . . . . 25,000 - ------------ --------- 2,516,093 (1,000) Net increase in cash and cash equivalents. . . . . . . . 12,812 5,307 ------------ --------- Cash and cash equivalents at January 1 . . . . . . . . . 11,859 6,436 Cash and cash equivalents at March 31. . . . . . . . . . $ 24,671 $ 11,743 ============ =========
The accompanying notes are an integral part of these financial statements. E FINANCIAL DEPOT.COM, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 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 three month period ended March 31, 2000 are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. 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 On September 20, 1999, RJI Ventures, Inc. , formerly Talk Stock With Me, Inc. ("RJI") completed a merger with Ballynagee Acquisition Corp. ("Ballynagee"), in a transaction accounted for using the purchase method of accounting. Subsequent to the merger, Ballynagee was re-named eFinancial Depot.Com, Inc. ("Company"). From its inception, Ballynagee was an inactive corporation with no significant assets or operations. From its inception in September, 1998, RJI has developed, marketed and operated an internet web site devoted to the research of U. S. and Canadian equity issues. Effective with the merger, all previously outstanding common stock of RJI was exchanged for common stock of Ballynagee , resulting in the previous security holders of RJI owning approximately 80% of the voting stock of the Company in an exchange ratio of 1 share of RJI common stock for 2,000 shares of Ballynagee common stock. In accordance with APB Opinion 16, the consolidated financial statements include the accounts of RJI as the acquiring entity and Ballynagee Acquisition Corp. as the wholly owned subsidiary. Significant intercompany transactions have been eliminated in consolidation. Exhibits Required by Item 601 of Regulation S-B 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) 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 Letter of Intent between the Company and Westcor Mortgage Inc., dated January 19, 2000 (filed on March 31, 2000 as an exhibit to the Company's Annual Report on Form 10-KSB, and incorporated herein by reference) 10.2 Consulting Agreement between the Company and Oxford Capital Corporation, dated January 27, 2000 (filed on March 31, 2000 as an exhibit to the Company's Annual Report on Form 10-KSB, and incorporated herein by reference) 10.3 Registration Rights Agreement between the Company and Oxford Capital Corporation, dated February 2, 2000 (filed on March 31, 2000 as an exhibit to the Company's Annual Report on Form 10-KSB, and incorporated herein by reference) 10.4 Debenture Purchase Agreement between the Company and Oxford Capital Corp., dated February 2, 2000 (filed on April 14, 2000 as an exhibit to the Company's current report on Form 8-K, and incorporated herein by reference) 10.5 Escrow Agreement between the Company and Oxford Capital Corp., dated February 2, 2000 (filed on April 14, 2000 as an exhibit to the Company's current report on Form 8-K, and incorporated herein by reference) 10.6 Letter of Intent between the Company and Dan Kovatch, dated April 27, 2000 10.7 Agreement between the Company and JAWS Technologies Inc. (undated) 10.8 Agreement between the Company and CobraTech Industries Inc., dated March 30, 2000 10.9 Agreement between the Company and Cobra Capital Limited, dated March 28, 2000 (20) Other 20.1 e-financial depot.com, Inc. 6% Convertible Debenture, dated February 2, 2000 (filed on March 31, 2000 as an exhibit to the Company's Annual Report on Form 10-KSB, and incorporated herein by reference) 20.2 The Company's Form of Placement Agent Warrant Certificate (filed on April 14, 2000 as an exhibit to the Company's current report on Form 8-K, and incorporated herein by reference) 20.3 Placement Agent's Warrant - Oxford Capital Corp., Holder (filed on April 14, 2000 as an exhibit to the Company's current report on Form 8-K, and incorporated herein by reference) 20.4 e-financial depot.com, Inc. 6% Convertible Debenture, dated February 2, 2000 (filed on April 14, 2000 as an exhibit to the Company's current report on Form 8-K, and incorporated herein by reference) (21) Subsidiary of the Company Talk Stock With Me, Inc. is a 100% wholly owned subsidiary of the Company. (27) Financial Data Schedule 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: May 15, 2000 By: /s/ Christina Cepeliauskas ---------------------------- Christina Cepeliauskas, Chief Financial Officer Date: May 15, 2000 By: /s/ Randy Doten ----------------- Randy Doten, Director Date: May 15, 2000 EX-10.6 2 - 1 - D/LMC/95446.1 D/LMC/95446.1 e-financial depot.com April 27, 2000 Letter of Agreement By and between e-financial depot.com (hereinafter FDPO) and Dan Kovatch, licensed insurance broker and Owner of EZ NOW INSURANCE.COM URL and web site (hereinafter Kovatch). This letter outlines the agreement between the two parties FDPO and Kovatch for the purchase of EZ Now Insurance.com URL and web site, which is described as fully functional and doing web based insurance placement now. The consideration for this purchase is 50,000 shares of FDPO paid as regulation 144 restricted shares. Also included in the share consideration is an unspecified amount as inducement for Dan Kovatch to join e-financial depot as our Insurance Manager, with a mandate to build the web based Insurance business. Compensation for Kovatch will be a base salary of $5,000/month plus 20% of the commissions earned on the insurance he writes. When the commission equals 150% of salary, the salary will be eliminated, and straight commission will apply. Please signify your agreement by signing below. Yours truly, e-financial depot.com, Inc. /s/ John Huguet John F. Huguet President and CEO Agreed /s/ Dan Kovatch Dan Kovatch EX-10.7 3 JAWS TECHNOLOGIES INC. Mr. John Huguet President and CEO e-Financial Depot.com 1875 Century Park East, Suite 150 Century City, California 90067 Dear John: Re: Letter of engagement for JAWS Technologies Inc. On Friday, February 25, 2000, Rick Langley, Brett O'Keefe (e-financial depot.com - - FDPO), Tej Minhas, Peter Labrinos, Vijay Sachdeva and Joseph Iuso (JAWS Technologies Inc. - JAWS) participated in a conference call. The purpose of the call was for FDPO to give JAWS a quick overview of the activities already underway, and scope at a high level JAWS' short and long term roles in FDPO's initiative to become the "one stop shop" for financial services and investment information on the World Wide Web. We are very excited to have the opportunity to work with e-financial depot.com (FDPO). In the long term, we envisage our role will be to provide assistance and leadership in the areas of project management, co-ordination of resources involved in the project, especially with vendors, validating the technical direction FDPO is pursuing, and the overall design, development, integration and implementation of the various systems and services. We understand that FDPO is well equipped to assess the business issues of the effort underway. However, if we can provide any assistance on the business impacts of the technical direction chosen we would be quite happy to do so at your request. In the short term, as agreed in the conference call, JAWS will immediately undertake the following activities: 1. A site visit (March 1-2, 2000) to FDPO offices in Los Angeles to further understand the initiatives already underway; 2. Review activities underway and identify any gaps in the required goals and the direction being pursued by FDPO; 3. Determine timeframe for security assessment by the JAWS security group of the current FDPO technical infrastructure; 4. Prepare a proposal that will encompass a description of JAWS' role going forward, a project plan depicting resource utilization, activities and the associated time frames to accomplish integration of critical systems and services in the short term, and additional systems and services in the long term. 1 Concorde Gate, Suite 307 Don Mills, Ontario M3C 3N6 CANADA Tel: 416-444-4442 Fax: 416-444-9273 We expect the aforementioned activities to be completed by March 13. Joseph Iuso, senior consultant, and myself will be the primary JAWS resources focused on these deliverables. The cost of these deliverables to FDPO will be $15,000 USD. Please note that this cost is exclusive of travel, lodging and applicable taxes. I have discussed the time frame and cost of these immediate deliverables with Rick and he is in agreement. Kindly provide your acceptance and acknowledgement by signing below and faxing a copy to my attention at 416-444-9273. Once again we are really excited to be working with FDPO on this very exciting initiative. Kind regards, Yours truly, Vijay Sachdeva Director, e-business JAWS Technologies Inc. Accepted: /s/ John Huguet John Huguet President & CEO e-Financial Depot.com Dated: Feb cc: Mr. Rick Langley, e-Financial Depot.com Mr. Peter Labrinos, JAWS Technologies Inc. 1 Concorde Gate, Suite 307 Don Mills, Ontario M3C 3N6 CANADA Tel: 416-444-4442 Fax: 416-444-9273 EX-10.8 4 THIS AGREEMENT is made effective as of the day of March, 2000 BETWEEN: EFINANCIAL DEPOT.COM, INC. - ---------------------------- 150 - 1875 Century Park East Century City, California, 90067 (hereinafter referred to as the "Company") OF THE FIRST PART AND: COBRATECH INDUSTRIES INC. - --------------------------- (hereinafter referred to as the "Contractor") OF THE SECOND PART WHEREAS: A. The Company desires to retain the Contractor to assist the Company in pursuing a strategic relationship with China.com and the Contractor has agreed to so assist the Company on the terms and conditions of this Agreement. NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each, the parties hereto agree as follows: ARTICLE 1 APPOINTMENT AND AUTHORITY OF CONTRACTOR 1.1 Appointment of Contractor The Company hereby appoints the Contractor to perform certain services for the benefit of the Company as hereinafter set forth, and the Company hereby authorizes the Contractor to exercise such powers as provided under this Agreement. The Contractor accepts such appointment on the terms and conditions herein set forth. 1.2 Authority of Contractor The Contractor shall have no right or authority, express or implied, to commit or otherwise obligate the Company in any manner whatsoever except to the extent specifically provided herein or specifically authorized in writing by the Company. 1.3 Independent Contractor In performing its services hereunder, the Contractor shall be an independent contractor and not an employee or agent of the Company, except that the Contractor shall be the agent of the Company solely in circumstances where the Contractor must be the agent to carry out its obligations as set forth in this Agreement. Nothing in this Agreement shall be deemed to require the Contractor to provide its services exclusively to the Company and the Contractor hereby acknowledges that the Company is not required and shall not be required to make any remittances and payments required of employers by statute on the Contractor's behalf and the Contractor or any of its agents or employees shall not be entitled to the fringe benefits provided by the Company to its employees. ARTICLE 2 CONTRACTOR'S AGREEMENTS 2.1 General The services to be provided by the Contractor to the Company shall involve: (a) assisting the Company in pursuing and securing a strategic relationship with China.com so as to integrate the securities trading platform of the Company into the China.com web site on substantially the terms set out in that letter of intent entered into between the parties dated February 16, 2000, a copy of which is attached as Schedule "A" hereto (the "Project"); and (b) assisting the Company in connection with pursuing and securing strategic relationships similar in form to the Project in connection with other web sites targeting other parts of the Austral-Asia region (the "Secondary Projects"); and in so assisting the Company, the Contractor shall at all times be subject to the direction of the Company and shall keep the Company informed as to all matters concerning the Contractor's activities. 2.2 Expense Statements The Contractor shall on or before the 15th day of each calendar month during the term hereof, or if a Saturday, Sunday or holiday the next following business day, render to the Company an itemized statement and accounting for the previous calendar month, together with such supporting documents as and when the Company may reasonably require, of all expenses which the Company is obligated by this Agreement to reimburse. The Contractor may incur expenses in the name of the Company up to an amount per month as agreed in advance by the Company, such expenses to relate solely to the carrying out of the Contractor's duties hereunder. The Contractor will immediately forward all invoices for expenses incurred on behalf of and in the name of the Company and the Company agrees to pay said invoices directly on a timely basis. ARTICLE 3 COMPANY'S AGREEMENTS 3.1 Compensation of Contractor As compensation for the services rendered by the Contractor pursuant to this Agreement in connection with the Project, the Company shall: (a) issue to the Contractor 200,000 common shares (the "Common Shares") in the capital stock of the Company, said shares being issued subject to the resale restrictions set out in Rule 144 as promulgated under the Securities Act of 1933 ("Rule 144"); (b) issue to the Contractor a further 800,000 Common Shares provided that it is acknowledged that 800,000 of such Common Shares (the "Escrow Shares") shall be held in escrow and shall only be released to the Contractor upon successful completion of the Project as evidenced by an executed agreement between the Company and China.com and, in circumstances where the Escrow Shares have not been released by June 30, 2000, the Escrow Shares shall be returned to the Company for cancellation; (c) issue to the Contractor a further 1,000,000 Common Shares at such time as 200,000 securities transactions per month have been effected through the China.com web site utilizing the Company's securities trading platform for 3 consecutive months. As compensation for services rendered by the Contractor pursuant to this Agreement in connection with the Secondary Projects, the Company shall compensate the contractor in a manner equivalent to (b) and (c) above, taking into consideration factors such as the relative size of the market which is the subject of any Secondary Project and the price of the Common Shares at the time of successful completion of any Secondary Project relative to their current price. 3.2 Indemnity by Company The Company hereby agrees to indemnify, defend and hold harmless the Contractor, from and against any and all claims, demands, losses, actions, lawsuits and other proceedings, judgments and awards, and costs and expenses (including reasonable legal fees), arising directly or indirectly, in whole or in part, out of any matter related to any action taken by the Contractor within the scope of its duties or authority hereunder, excluding only such of the foregoing as arise from the fraudulent, gross negligence, reckless or wilful act or omission of the Contractor, its officers, directors, agents or employees or as arise in respect of the Contractor's office overhead or the Contractor's general administrative expenses, and the provisions of this Section 3.2 shall survive termination of this Agreement. ARTICLE 4 DURATION, TERMINATION AND DEFAULT 4.1 Effective Date This Agreement shall become effective as of the date hereof, and shall continue on subject to termination as provided for herein. 4.2 Termination This Agreement may be terminated by either party by giving the other 30 days written notice of such termination. Notwithstanding the generality of the foregoing, the Agreement shall terminate in circumstances where the Project has not been successfully completed by June 30, 2000. Notwithstanding the termination of the Agreement, the Contractor shall be entitled to receive the applicable compensation provided for herein in circumstances where the Company completes a Project or a Secondary Project within 6 months of termination of this Agreement unless such termination has been effected by the Contractor. 4.3 Duties Upon Termination Upon termination of this Agreement for any reason, the Contractor shall promptly deliver the following in accordance with the directions of the Company: (a) a final accounting, reflecting the balance of expenses incurred on behalf of the Company as of the date of termination; and (b) all documents pertaining to the Company or this Agreement, including but not limited to, all books of account, correspondence and contracts, provided that the Contractor shall be entitled thereafter to inspect, examine and copy all of the documents which it delivers in accordance with this provision at all reasonable times upon three (3) days' notice to the Company. ARTICLE 5 CONFIDENTIALITY 5.1 Ownership of Work Product All reports, documents, concepts, products and processes together with any marketing schemes, business or sales contracts, or any business opportunities prepared, produced, developed, or acquired, by or at the direction of the Contractor, directly or indirectly, in connection with or otherwise developed or first reduced to practice by the Contractor performing the services (collectively, the "Work Product") shall belong exclusively to the Company which shall be entitled to all right, interest, profits or benefits in respect thereof. No copies, summaries or other reproductions of any Work Product shall be made by the Contractor or any of its agents or employees without the express permission of the Company, provided that the Contractor is hereby given permission to maintain one copy of the Work Product for its own use. 5.2 Confidentiality The Contractor shall not, except as authorized or required by its duties, reveal or divulge to any person or companies any of the trade secrets, secret or confidential operations, processes or dealings or any information concerning the organization, business, finances, transactions or other affairs of the Company, which may come to its knowledge during the term of this Agreement and shall keep in complete secrecy all confidential information entrusted to him and shall not use or attempt to use any such information in any manner which may injure or cause loss, either directly or indirectly, to the Company's business or may be likely so to do. This restriction shall continue to apply after the termination of this Agreement without limit in point of time but shall cease to apply to information or knowledge which may come into the public domain. The Contractor shall comply, and shall cause its agents and employees to comply, with such directions as the Company shall make to ensure the safeguarding or confidentiality of all such information. The Company may require that any agent or employee of the Contractor execute an agreement with the Company regarding the confidentiality of all such information. 5.3 Devotion to Contract During the term of this Agreement, the Contractor shall devote sufficient time, attention, and ability to the business of the Company, and to any associated company, as is reasonably necessary for the proper performance of its services pursuant to this Agreement. Nothing contained herein shall be deemed to require the Contractor to devote its exclusive time, attention and ability to the business of the Company. During the term of this Agreement, the Contractor shall, and shall cause each of its agents or employees assigned to performance of the services on behalf of the Contractor to,: (a) at all times perform its services faithfully, diligently, to the best of its abilities and in the best interests of the Company; (b) devote such of its time, labour and attention to the business of the Company as is necessary for the proper performance of the Contractor's services hereunder; and (c) refrain from acting in any manner contrary to the best interests of the Company or contrary to the duties of the Contractor as contemplated herein. ARTICLE 6 MISCELLANEOUS 6.1 Waiver; Consents No consent, approval or waiver, express or implied, by either party hereto, to or of any breach of default by the other party in the performance by the other party of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such other party of the same or any other obligations of such other party or to declare the other party in default, irrespective of how long such failure continues, shall not constitute a general waiver by such party of its rights under this Agreement, and the granting of any consent or approval in any one instance by or on behalf of the Company shall not be construed to waiver or limit the need for such consent in any other or subsequent instance. 6.2 Piggyback Registration Rights If, at any time du ring the 2 years following the issuance of any Common Shares to the Contractor, as contemplated hereunder the Company proposes to file a registration statement qualifying the issuance of or resale of certain of the Company's securities, the Company shall, subject to the objections of any underwriter involved in such share issuance, include any Common Shares issued to the Contractor hereunder in such registration statement. This provision shall survive any termination of this Agreement. 6.3 Governing Law This Agreement and all matters arising thereunder shall be governed by the laws of the State of Delaware and the parties attorn to the exclusive jurisdiction of the Courts thereof. 6.4 Successors, etc. This Agreement shall enure to the benefit of and be binding upon each of the parties hereto and their respective heirs, successors and permitted assigns. 6.5 Assignment This Agreement may not be assigned by any party except with the written consent of the other party hereto. 6.6 Entire Agreement and Modification This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements and undertakings, whether oral or written, relative to the subject matter hereof. To be effective any modification of this Agreement must be in writing and signed by the party to be charged thereby. 6.7 Headings The headings of the Sections and Articles of this Agreement are inserted for convenience of reference only and shall not in any manner affect the construction or meaning of anything herein contained or govern the rights or liabilities of the parties hereto. 6.8 Notices All notices, requests and communications required or permitted hereunder shall be in writing and shall be sufficiently given and deemed to have been received upon personal delivery or, if mailed, upon the first to occur of actual receipt or forty-eight (48) hours after being placed in the mail, postage prepaid, registered or certified mail, return receipt requested, respectively addressed to the Company or the Contractor as follows: The Company: efinancial depot.com, Inc. 150 - 1875 Century Park East Century City, CA USA 90067 Attention: John Huguet The Contractor: CobraTech Industries Inc. Attention: Bill G. Calsbeck or such other address as may be specified in writing to the other party, but notice of a change of address shall be effective only upon the actual receipt. 6.9 Time of the Essence Time is of the essence. 6.10 Further Assurances The parties hereto agree from time to time after the execution hereof to make, do, execute or cause or permit to be made, done or executed all such further and other lawful acts, deeds, things, devices and assurances in law whatsoever as may be required to carry out the true intention and to give full force and effect to this Agreement. 6.11 Counterparts This Agreement may be executed in several counter-parts, each of which will be deemed to be an original and all of which will together constitute one and the same instrument. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first above written. EFINANCIAL DEPOT.COM, INC. Per: /s/ John Huguet ----------------- Authorized Signatory COBRATECH INDUSTRIES INC. Per: /s/ Stephen Koltai -------------------- Authorized Signatory EX-10.9 5 THIS AGREEMENT is made effective as of the 28th day of March, 2000 BETWEEN: EFINANCIAL DEPOT.COM, INC. - ---------------------------- 150 - 1875 Century Park East Century City, California, 90067 (hereinafter referred to as the "Company") OF THE FIRST PART AND: COBRA CAPITAL LIMITED - ----------------------- (hereinafter referred to as the "Contractor") OF THE SECOND PART WHEREAS: A. The Company desires to retain the Contractor to assist the Company in the areas of strategic development, mergers and acquisitions and corporate finance with particular emphasis on Asia and the Contractor has agreed to so assist the Company on the terms and conditions of this Agreement. NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each, the parties hereto agree as follows: ARTICLE 1 APPOINTMENT AND AUTHORITY OF CONTRACTOR 1.1 Appointment of Contractor The Company hereby appoints the Contractor to perform certain services for the benefit of the Company as hereinafter set forth, and the Company hereby authorizes the Contractor to exercise such powers as provided under this Agreement. The Contractor accepts such appointment on the terms and conditions herein set forth. 1.2 Authority of Contractor The Contractor shall have no right or authority, express or implied, to commit or otherwise obligate the Company in any manner whatsoever except to the extent specifically provided herein or specifically authorized in writing by the Company. 1.3 Independent Contractor In performing its services hereunder, the Contractor shall be an independent contractor and not an employee or agent of the Company, except that the Contractor shall be the agent of the Company solely in circumstances where the Contractor must be the agent to carry out its obligations as set forth in this Agreement. Nothing in this Agreement shall be deemed to require the Contractor to provide its services exclusively to the Company and the Contractor hereby acknowledges that the Company is not required and shall not be required to make any remittances and payments required of employers by statute on the Contractor's behalf and the Contractor or any of its agents or employees shall not be entitled to the fringe benefits provided by the Company to its employees. ARTICLE 2 CONTRACTOR'S AGREEMENTS 2.1 General The services to be provided by the Contractor for the Company shall include the following in relation to the Company's desire to expand its business in Asia: (a) assisting the Company in its strategic planning and development; (b) providing the Company with advise in connection with the raising of capital and the Company's affairs generally; (c) identifying potential merger and acquisition targets for the Company and assisting the Company in negotiating and consummating acquisitions; (d) implementing or causing to be implemented decisions of the Company in accordance with and as limited by this Agreement; (e) providing such other services as the Company may reasonably request; and in so assisting the Company, the Contractor shall at all times be subject to the direction of the Company and shall keep the Company informed as to all matters concerning the Contractor's activities. 2.2 Expense Statements The Contractor shall on or before the 15th day of each calendar month during the term hereof, or if a Saturday, Sunday or holiday the next following business day, render to the Company an itemized statement and accounting for the previous calendar month, together with such supporting documents as and when the Company may reasonably require, of all expenses which the Company is obligated by this Agreement to reimburse. The Contractor may incur expenses in the name of the Company up to an amount per month as agreed in advance by the Company, such expenses to relate solely to the carrying out of the Contractor's duties hereunder. The Contractor will immediately forward all invoices for expenses incurred on behalf of and in the name of the Company and the Company agrees to pay said invoices directly on a timely basis. ARTICLE 3 COMPANY'S AGREEMENTS 3.1 Compensation of Contractor As compensation for the services rendered by the Contractor pursuant to this Agreement, the Company shall: (a) issue to the Contractor, or as directed by the Contractor, a warrant (the "Warrant") entitling the holder to acquire 300,000 common shares in the capital stock of the Company (the "Common Shares") at a price of $5.00 per share, said Warrant having a term of 5 years; and (b) issue to the Contractor, or as directed by the Contractor, 8,500 Common Shares per month, as at the last day of each and every month during the term of this Agreement. 3.2 Indemnity by Company The Company hereby agrees to indemnify, defend and hold harmless the Contractor and Sherrin Lim, from and against any and all claims, demands, losses, actions, lawsuits and other proceedings, judgments and awards, and costs and expenses (including reasonable legal fees), arising directly or indirectly, in whole or in part, out of any matter related to any action taken by the Contractor within the scope of its duties or authority hereunder, excluding only such of the foregoing as arise from the fraudulent, gross negligence, reckless or wilful act or omission of the Contractor, its officers, directors, agents or employees or as arise in respect of the Contractor's office overhead or the Contractor's general administrative expenses, and the provisions of this Section 3.2 shall survive termination of this Agreement. ARTICLE 4 DURATION, TERMINATION AND DEFAULT 4.1 Effective Date This Agreement shall become effective as of the 1st day of March, 2000, and shall continue for a period ending August 31, 2000, subject to earlier termination as provided for herein. 4.2 Termination This Agreement may be terminated by either party by giving the other 30 days written notice of such termination provided that in circumstances where the Contractor would otherwise have been entitled to receive a payment pursuant to Section 3.1 herein within 30 days following termination of this Agreement the Company shall make such payment to the Contractor as if the Agreement had not been terminated. 4.3 Duties Upon Termination Upon termination of this Agreement for any reason, the Contractor shall upon receipt of all payments due and owing, promptly deliver the following in accordance with the directions of the Company: (a) a final accounting, reflecting the balance of expenses incurred on behalf of the Company as of the date of termination; and (b) all documents pertaining to the Company or this Agreement, including but not limited to, all books of account, correspondence and contracts, provided that the Contractor shall be entitled thereafter to inspect, examine and copy all of the documents which it delivers in accordance with this provision at all reasonable times upon three (3) days' notice to the Company. 4.4 Compensation of Contractor on Termination Upon termination of this Agreement, the Contractor shall be entitled to receive as its full and sole compensation in discharge of obligations of the Company to the Contractor under this Agreement all payments due and payable under this Agreement to the date of termination and the Contractor shall have no right to receive any further payments; provided, however, that the Company shall have the right to offset against any payment owing to the Contractor under this Agreement any damages, liabilities, costs or expenses suffered by the Company by reason of the fraud, negligence or wilful act of the Contractor, to the extent such right has not been waived by the Company. ARTICLE 5 CONFIDENTIALITY 5.1 Ownership of Work Product All reports, documents, concepts, products and processes together with any marketing schemes, business or sales contracts, or any business opportunities prepared, produced, developed, or acquired, by or at the direction of the Contractor, directly or indirectly, in connection with or otherwise developed or first reduced to practice by the Contractor performing the services (collectively, the "Work Product") shall belong exclusively to the Company which shall be entitled to all right, interest, profits or benefits in respect thereof. No copies, summaries or other reproductions of any Work Product shall be made by the Contractor or any of its agents or employees without the express permission of the Company, provided that the Contractor is hereby given permission to maintain one copy of the Work Product for its own use. 5.2 Confidentiality The Contractor shall not, except as authorized or required by its duties, reveal or divulge to any person or companies any of the trade secrets, secret or confidential operations, processes or dealings or any information concerning the organization, business, finances, transactions or other affairs of the Company, which may come to his knowledge during the term of this Agreement and shall keep in complete secrecy all confidential information entrusted to him and shall not use or attempt to use any such information in any manner which may injure or cause loss, either directly or indirectly, to the Company's business or may be likely so to do. This restriction shall continue to apply after the termination of this Agreement without limit in point of time but shall cease to apply to information or knowledge which may come into the public domain. The Contractor shall comply, and shall cause its agents and employees to comply, with such directions as the Company shall make to ensure the safeguarding or confidentiality of all such information. The Company may require that any agent or employee of the Contractor execute an agreement with the Company regarding the confidentiality of all such information. 5.3 Devotion to Contract During the term of this Agreement, the Contractor shall devote sufficient time, attention, and ability to the business of the Company, and to any associated company, as is reasonably necessary for the proper performance of its services pursuant to this Agreement. Nothing contained herein shall be deemed to require the Contractor to devote its exclusive time, attention and ability to the business of the Company. During the term of this Agreement, the Contractor shall, and shall cause each of its agents or employees assigned to performance of the services on behalf of the Contractor to,: (a) at all times perform its services faithfully, diligently, to the best of its abilities and in the best interests of the Company; (b) devote such of its time, labour and attention to the business of the Company as is necessary for the proper performance of the Contractor's services hereunder; and (c) refrain from acting in any manner contrary to the best interests of the Company or contrary to the duties of the Contractor as contemplated herein. 5.4 Other Activities The Contractor shall not be precluded from acting in a function similar to that contemplated under this Agreement for any other person, firm or company. ARTICLE 6 MISCELLANEOUS 6.1 Waiver; Consents No consent, approval or waiver, express or implied, by either party hereto, to or of any breach of default by the other party in the performance by the other party of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such other party of the same or any other obligations of such other party or to declare the other party in default, irrespective of how long such failure continues, shall not constitute a general waiver by such party of its rights under this Agreement, and the granting of any consent or approval in any one instance by or on behalf of the Company shall not be construed to waiver or limit the need for such consent in any other or subsequent instance. 6.2 Piggyback Registration Rights If at any time during the 2 years following the issuance of the Warrant or any Common Shares to, or at the direction of, the Contractor as contemplated hereunder the Company proposes to file a registration statement qualifying the issuance or resale of certain of the Company's securities, the Company shall, subject to the objection of any underwriter involved in such share issuances, include any securities issued to the Contractor hereunder in such registration statement. This provision shall survive any termination of this Agreement. 6.3 Governing Law This Agreement and all matters arising thereunder shall be governed by the laws of Delaware and the parties hereto agree to attorn to the jurisdiction of the Courts thereof 6.4 Successors, etc. This Agreement shall enure to the benefit of and be binding upon each of the parties hereto and their respective heirs, successors and permitted assigns. 6.5 Assignment This Agreement may not be assigned by any party except with the written consent of the other party hereto. 6.6 Entire Agreement and Modification This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements and undertakings, whether oral or written, relative to the subject matter hereof. To be effective any modification of this Agreement must be in writing and signed by the party to be charged thereby. 6.7 Headings The headings of the Sections and Articles of this Agreement are inserted for convenience of reference only and shall not in any manner affect the construction or meaning of anything herein contained or govern the rights or liabilities of the parties hereto. 6.8 Notices All notices, requests and communications required or permitted hereunder shall be in writing and shall be sufficiently given and deemed to have been received upon personal delivery or, if mailed, upon the first to occur of actual receipt or forty-eight (48) hours after being placed in the mail, postage prepaid, registered or certified mail, return receipt requested, respectively addressed to the Company or the Contractor as follows: The Company: efinancial depot.com, Inc. 150 - 1875 Century Park East Century City, CA USA 90067 Attention: John Huguet The Contractor: Cobra Capital Inc. Attention: or such other address as may be specified in writing to the other party, but notice of a change of address shall be effective only upon the actual receipt. 6.9 Time of the Essence Time is of the essence. 6.10 Further Assurances The parties hereto agree from time to time after the execution hereof to make, do, execute or cause or permit to be made, done or executed all such further and other lawful acts, deeds, things, devices and assurances in law whatsoever as may be required to carry out the true intention and to give full force and effect to this Agreement. 6.11 Counterparts This Agreement may be executed in several counter-parts, each of which will be deemed to be an original and all of which will together constitute one and the same instrument. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first above written. EFINANCIAL DEPOT.COM, INC. Per: /s/ John Huguet ----------------- Authorized Signatory COBRA CAPITAL CORP. Per: /s/ Stephen Koltai -------------------- Authorized Signatory EX-21 6 SUBSIDIARY OF THE COMPANY Talk Stock With Me, Inc. is a 100% wholly owned subsidiary of the Company. EX-27 7
5 1 YEAR DEC-31-1999 JAN-01-2000 MAR-31-2000 24671 165239 428770 401935 0 240679 39740 4020 2512510 327130 0 0 0 12520 (427140) 2512510 15200 40789 0 0 664310 0 24180 (647701) 44610 (603091) 0 0 0 (603091) (.05) (.05)
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