8-K/A 1 0001.txt OMB APPROVAL OMB Number: 3235-0060 Expires: May 31, 2000 Estimated average burden hours per response 5.00 -------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) June 22, 2000 -------------- e-financial depot.com, Inc. ----------------------------- (Exact name of registrant as specified in its charter) Delaware 000-26899 33-0809711 -------- --------- ---------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 150 - 1875 Century Park East, Century City, California 90067 -------------------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (877) 739-3812 --------------- (Former name or former address, if changed since last report.) ITEM 1. CHANGES IN CONTROL OF REGISTRANT. Not applicable. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On June 22, 2000 the Registrant entered into an agreement (the "Share Purchase Agreement") with Westcor Mortgage Inc. ("Westcor") and Patricia Kirkham and Dennis Petersen, both business persons of Calgary, Alberta (the "Vendors") pursuant to which the Registrant acquired all of the issued common shares of Westcor (the "Vendors Shares"). Westcor is a private Alberta company which carries on the mortgage brokerage business. The assets of Westcor are primarily goodwill in the form of an operating brokerage which received commissions for placing approximately US$97 million in mortgages in 1999. The direct consideration for the purchase of the Vendors Shares (the "Transaction") was the payment of US$600,000 by the issue of two promissory notes totalling US$592,636 and a holdback retained by the Registrant of US$7,364. The promissory notes are secured by a pledge of the Vendors Shares in an agreement between the Vendors and the Registrant dated for reference February 29, 2000 (the "Hypothecation Agreement"). Prior to the acquisition of the Vendors Shares, Westcor issued to the Vendors 295520 Exchangeable shares of Westcor which are exchangeable into an equal number of common shares of the Registrant at a deemed price of US$4.25 per share. In addition, the Registrant issued 73880 common shares of the Registrant at the same deemed price to a financial intermediary, Oxford Capital Corp. ("Oxford"). Accordingly, the value of shares of the Registrant into which the Exchangeable shares may be exchanged was approximately US$1,255,960 and the total effective consideration for the Vendors Shares was US$2,169,950 of which US$313,990 in the form of common shares of the registrant was received by Oxford. All of the Exchangeable shares are held in escrow pending the completion of an audit of Westcor pursuant to an escrow agreement among the Registrant, the Vendors and Oxford dated for reference February 29 2000 (the "Escrow Agreement"). If the value of Westcor's assets as disclosed by the audit is less than that shown on Westcor's management prepared financial statements for the nine month period ending January 31, 2000, a proportionate number of Exchangeable shares will be cancelled prior to the release of Exchangeable shares from escrow. The consideration paid by the Registrant for the Vendors Shares was determined by negotiation with the Vendors. Prior to the closing of the Transaction the Vendors were completely at arms length from the Registrant and its affiliates. The Registrant intends to discharge its obligations under the promissory notes by carrying out one or more private placements of its common shares. In addition to the Share Purchase Agreement, the Hypothecation Agreement and the Escrow Agreement, the Registrant entered into two other agreements relating to the Transaction both dated for reference February 29, 2000. In an agreement with Westcor (the "Support Agreement") the Registrant agreed to refrain from making corporate distributions or alterations without protecting the holders of the Exchangeable shares by ensuring that they receive the equivalent value on any such distribution or alternation as they would have received if they had held common shares of the Registrant directly. The Registrant also agreed to ensure that Westcor is able to meet its obligation to deliver common shares of the Registrant on the exchange of the Exchangeable Shares. Pursuant to an agreement (the "Voting Trust and Exchange Agreement") with Westcor, the Vendors and Miller Thomson as trustee , the trustee will be issued one special voting share of the Registrant on behalf of the Vendors which will effectively allow the Vendors, as holders of Exchangeable Shares, to have one vote per each such share at general meetings of the Registrant. In addition, certain rights to exchange Exchangeable Shares for common stock of the Registrant are granted. The Voting Trust and Exchange Agreement also contains a grant by the Registrant to the Vendors of certain "piggy-back" rights to have the common shares of the Registrant which they receive on the exchange of their Exchangeable Shares registered concurrently with the registration of new issues of the Registrant's common stock. ITEM 3. BANKRUPTCY OR RECEIVERSHIP Not applicable. ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT Not applicable. ITEM 5. OTHER EVENTS Not applicable. ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS Not applicable. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Businesses Acquired Westcor Mortgage Inc. April 30, 2000 and 1999 (U.S. dollars) REPORT OF INDEPENDENT AUDITORS To the Board of Directors of Westcor Mortgage Inc. We have audited the accompanying balance sheets of Westcor Mortgage Inc. as at April 30, 2000 and 1999 and the related statements of income (loss) and comprehensive income (loss) and retained earnings (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westcor Mortgage Inc. as at April 30, 2000 and 1999 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States. Ernst & Young LLP -------------------- /s/ Ernst & Young LLP Chartered Accountants Calgary, Canada July 13, 2000 Westcor Mortgage Inc.
BALANCE SHEETS (all amounts expressed in U.S. dollars) As at April 30 2000 1999 $ $ ---------------------------------------------------------------- --------- -------- ASSETS Current Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 34 Term deposits [note 3] . . . . . . . . . . . . . . . . . . . . . 7,306 7,045 Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . 51,827 111,286 Prepaid expenses and deposits. . . . . . . . . . . . . . . . . . 2,447 2,479 Due from stockholders [note 4] . . . . . . . . . . . . . . . . . 3,323 84,518 --------- -------- 64,937 205,362 Capital assets [note 5]. . . . . . . . . . . . . . . . . . . . . 12,485 17,428 77,422 222,790 --------- -------- LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY Current Bank indebtedness [note 6] . . . . . . . . . . . . . . . . . . . 39,553 36,744 Accounts payable and accrued liabilities . . . . . . . . . . . . 48,934 84,919 Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . 6,030 8,880 Income taxes payable [note 9]. . . . . . . . . . . . . . . . . . 10,810 7,922 Notes payable [note 7] . . . . . . . . . . . . . . . . . . . . . 43,219 43,776 --------- -------- 148,546 182,241 --------- -------- Commitments [note 10] Stockholders' (deficiency) equity Share capital [notes 8 and 15] . . . . . . . . . . . . . . . . . 70 70 Authorized Unlimited number of Class A common voting shares, Class B common voting shares, and Class C redeemable preferred shares Outstanding 100 no par value Class A common voting shares Cumulative translation adjustment. . . . . . . . . . . . . . . . 233 (251) Retained earnings (deficit). . . . . . . . . . . . . . . . . . . (71,427) 40,730 --------- -------- (71,124) 40,549 --------- -------- 77,422 222,790 --------- -------- See accompanying notes
On behalf of the Board: --------------- --------------- Director Director Westcor Mortgage Inc.
STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) AND RETAINED EARNINGS (DEFICIT) (all amounts expressed in U.S. dollars) For the years ended April 30 2000 1999 $ $ ---------- -------- REVENUE 511,959 713,653 ----------------------------------------- ---------- -------- EXPENSES Advertising and promotion 29,653 12,492 Amortization 4,848 3,937 Appraisals, credit reports and searches 10,030 13,369 Automobile 8,156 7,942 Bad debts 8,683 8,156 Commission 177,373 268,164 Dues, fees and memberships 3,042 830 Forgiven stockholder debt [note 4] 78,408 - Interest and bank charges 3,902 4,626 Office 20,786 19,973 Professional fees 17,894 8,671 Rent, insurance and taxes 28,621 28,076 Salaries 214,542 290,734 Telephone 18,178 19,070 ---------- -------- 624,116 686,040 ---------- -------- Income (loss) before income taxes (112,157) 27,613 Income tax expense [note 9] - 5,835 ----------------------------------------- ---------- -------- Net income (loss) (112,157) 21,778 Other comprehensive gain (loss) Foreign currency translation adjustment 484 307 ---------- -------- Comprehensive income (loss) (111,673) 22,085 ----------------------------------------- ---------- -------- Retained earnings, beginning of year 40,730 18,952 Net income (loss) (112,157) 21,778 ---------- -------- Retained earnings (deficit), end of year (71,427) 40,730 ----------------------------------------- ---------- -------- Earnings per common share (1,122) 218 ----------------------------------------- ---------- -------- See accompanying notes
Westcor Mortgage Inc.
STATEMENTS OF CASH FLOWS (all amounts expressed in U.S. dollars) For the year ended April 30 2000 1999 $ $ ---------- --------- Cash flows from (used in) operating activities Net income (loss). . . . . . . . . . . . . . . . . . . . . (112,157) 21,778 Items not affecting cash Forgiven stockholder debt. . . . . . . . . . . . . . . . . 78,408 - Amortization . . . . . . . . . . . . . . . . . . . . . . . 4,848 3,937 Foreign currency translation adjustment. . . . . . . . . . 484 307 ---------- --------- (28,417) 26,022 Net change in non-cash working capital balances [note 11]. 23,544 11,198 ---------- --------- (4,873) 37,220 ---------- --------- Cash flows used in investing activities Purchase of capital assets . . . . . . . . . . . . . . . . - (12,504) Proceeds from disposal of capital assets . . . . . . . . . 95 - Increase in term deposits. . . . . . . . . . . . . . . . . (261) (63) ---------- --------- (166) (12,567) ---------- --------- Cash flows from (used in) financing activities Repayment (loans issued to) by stockholders. . . . . . . . 2,787 (55,800) Increase in bank indebtedness. . . . . . . . . . . . . . . 2,809 32,055 Decrease in notes payable. . . . . . . . . . . . . . . . . (557) (909) ---------- --------- 5,039 (24,654) ---------- --------- Increase (decrease) in cash. . . . . . . . . . . . . . . . - (1) Cash, beginning of year. . . . . . . . . . . . . . . . . . 34 35 ---------- --------- Cash, end of year. . . . . . . . . . . . . . . . . . . . . 34 34 ---------- --------- Interest paid. . . . . . . . . . . . . . . . . . . . . . . 3,902 4,626 Income taxes paid. . . . . . . . . . . . . . . . . . . . . 5,123 ---------- --------- See accompanying notes
BASIS OF PRESENTATION Westcor Mortgage Inc. (the "Company") was incorporated on February 18, 1994 under the Alberta Business Corporation's Act as 600455 Alberta Ltd. On May 25, 1994, 600455 Alberta Ltd. changed its name to Westcor Mortgage Inc. The company's business purpose is to provide mortgage brokering services. The Company was acquired on June 16, 2000 by EFinancial Depot.com. The Company is dependent upon Efinancial Depot.com to provide funding to support its continuing operations as it works towards sustained profitability. Significant Accounting Policies The financial statements have, in management's opinion, been properly prepared in accordance with accounting principles generally accepted in the United States. Use of estimates Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which would affect the amount of recorded assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates. Capital assets Capital assets are recorded at cost and are depreciated at the following annual rates which are designed to amortize the cost of the assets over their estimated useful lives: Furniture and fixtures - 20% diminishing balance Computer hardware - 30% diminishing balance Computer software - 100% diminishing balance Leasehold improvements - straight line over the lease term Revenue and unearned revenue Commissions from mortgage brokering are recognized when the lending institution and client have finalized an agreement to provide mortgage funds. Brokerage fees, application fees and direct expense reimbursements received in advance of a final agreement are recorded as unearned revenue. Advertising Advertising costs are expensed as incurred. Income taxes The Company follows the liability method of accounting for the tax effect of temporary differences between the carrying amount and the tax basis of the company's assets and liabilities. Temporary differences arise when the realization of an asset or the settlement of a liability would give rise to either an increase or decrease in the Company's income taxes payable for the year or later period. Deferred income taxes are recorded at the income tax rates that are expected to apply when the deferred tax liability is settled or the deferred tax asset is realized. When necessary, valuation allowances are established to reduce deferred income tax assets to the amount expected to be realized. Income tax expense is the tax payable for the period and the change during the period in deferred income tax assets and liabilities. Foreign currency translation The financial statements are prepared in US dollars whereas the functional currency of the Company is the Canadian dollar. Accordingly, assets and liabilities are translated at the year-end exchange rate and revenues and expenses are translated at average exchange rates. Gains and losses arising from the translation of the financial statements are recorded in Cumulative Translation Adjustment in stockholder's equity and are included in comprehensive income. 3. TERM DEPOSITS The term deposits mature in February, 2001 and bear interest at 4.0 percent (1999 - 3.0 percent) per annum. The term deposits are required to be held as a condition of the Company's line of credit [see Note 6]. 4. DUE FROM STOCKHOLDERS The stockholder loan is non-interest bearing and has no fixed repayment terms. As at February 1, 2000, $78,408, the balance of the loan as at that date, was forgiven by the Company.
5. CAPITAL ASSETS 2000 ---- Accumulated Net Book Cost Depreciation Value $ $ $ ------- ------- ------- ------- ------- ------- Furniture and fixtures 9,129 5,593 3,536 Computer hardware. . . 17,173 9,231 7,942 Computer software. . . 699 699 - Leasehold improvements 3,096 2,089 1,007 ------- ------- ------- 30,097 17,612 12,485 ------- ------- -------
1999 ---- Accumulated Net Book Cost Depreciation Value $ $ $ ------- ------- ------- ------- ------- ------- Furniture and fixtures 9,203 4,709 4,494 Computer hardware. . . 17,173 5,828 11,345 Computer software. . . 699 633 66 Leasehold improvements 3,096 1,573 1,523 ------- ------- ------- 30,171 12,743 17,428 ------- ------- -------
6. BANK INDEBTEDNESS The Company has a $33,765 ($50,000 Cdn.) line of credit with its bank which was fully drawn at April 30, 2000 (1999 - $34,200 was drawn). This line of credit is repayable on demand and bears interest at the bank's prime rate plus one and one-half percent (prime rate - 7.00%). The Company is required to hold $7,306 (1999 - $7,045) in term deposits [see note 3]. A registered general security agreement over assets has been pledged as collateral. In addition to amounts drawn on its line of credit, the Company has a bank overdraft at April 30, 2000 of $5,788 (1999 - $2,544). 7. NOTES PAYABLE The notes bear interest at 20% per annum payable monthly. On June 1, 2000, the note payable was renegotiated to require a principal repayment of $23,478 on September 1, 2000 with the remaining $21,610 due on March 15, 2001. The principal repayments include penalties for the renegotiation. The estimated fair value of the notes payable is $25,047. This is based on the estimated present value of the principal and interest under the notes payable. A personal asset of the shareholder has been pledged as collateral. 8. Share Capital Authorized Unlimited number of no par value Class A common voting shares Unlimited number of no par value Class B common voting shares Unlimited number of no par value Class C redeemable preferred shares 2000 1999 $ $ Issued and outstanding 100 common shares 70 70 ----------------- 9. Income Taxes The income tax expense differs from the amount computed by applying the Canadian federal statutory tax rates to the loss before income taxes for the following reasons:
2000 1999 $ $ --------- ------ Income tax expense at the Canadian statutory rate. (21,444) 5,256 Increase (decrease) in taxes resulting from: Change in deferred tax asset valuation allowance . 5,903 - Non-deductible expenses. . . . . . . . . . . . . . 538 579 Forgiven stockholder debt. . . . . . . . . . . . 15,003 - -------------------------------------------------- --------- ------ Income tax expense (recovery). . . . . . . . . . . - 5,835 -------------------------------------------------- --------- ------
Future income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company's future tax assets are as follows:
April 30, April 30, 2000 1999 $ $ -------- ----- Future tax assets: Net operating loss carryforwards (5,894) - Organization costs . . . . . . . (47) (51) Depreciation . . . . . . . . . . 38 51 ---------------------------------- -------- ----- Net future tax assets. . . . . . . 5,903 - Valuation allowance. . . . . . . . (5,903) - Net future tax assets. . . . . . . - - ---------------------------------- -------- -----
The Company has provided a valuation allowance for the full amount of future tax assets in light of its operating loss in the current year. The Company has Canadian operating losses carried forward of $30,665 which expire in 2007. 10. Commitments The Company is committed to the following annual minimum lease payments under operating leases for premises and equipment: $ ------ 2001 45,045 2002 40,056 2003 8,621 11. net change in non-cash working capital
2000 1999 $ $ --------- --------- Accounts receivable. . . . . . . . . . . 59,459 (12,929) Prepaid expenses and deposits. . . . . . 32 51 Accounts payable and accrued liabilities (35,985) 24,757 Unearned revenue . . . . . . . . . . . . (2,850) (1,691) Income taxes payable . . . . . . . . . . 2,888 1,010 ---------------------------------------- --------- --------- Change relating to operating activities. 23,544 11,198 ---------------------------------------- --------- ---------
12. segmented information The Company's activities are conducted in one operating segment with all activities relating to mortgage brokering. All activities are carried out in Canada. 13. FINANCIAL INSTRUMENTS Financial instruments comprising term deposits, accounts receivable, amounts due from stockholders, deposits, bank indebtedness and accounts payable and accrued liabilities approximate their fair value. It is management's opinion that the Company is not exposed to significant currency or credit risks arising from these financial instruments. 14. RECENT PRONOUNCEMENTS In June, 1998, the FASB issued SFAS No. 133, "Accounting for Derivatives and Hedging Activities", which became effective June 30, 2000. The Company does not acquire derivatives or engage in hedging activities. In December, 1999, the SEC issued SAB 101, Revenue Recognition in Financial Statements, which will become effective December 31, 2000. The Company does not expect the standard to have a material effect on its results. 15. SUBSEQUENT EVENT On May 1, 2000, the Company amended its share capital such that 100,000 Class A common voting shares and 259,520 new non-voting exchangeable common shares were issued in exchange for the existing 100 common shares. Effective June 16, 2000, EFinancial Depot.com purchased all the outstanding Class A common voting shares of the Company in exchange for $592,636 to be paid over the next six months. The former shareholders still hold the 295,520 issued and outstanding non-voting exchangeable shares in the Company. (b) Pro Forma Financial Information. Consolidated Pro Forma Unaudited Balance Sheet as of December 31, 1999 Consolidated Pro Forma Unaudited Statement of Operations as of December 31, 1999 Notes to Condensed Pro Forma Unaudited Financial Statements as of December 31, 1999
EFINANCIAL DEPOT. COM, INC. CONSOLIDATED PROFORMA UNAUDITED BALANCE SHEET DECEMBER 31, 1999 ASSETS Pro forma Pro forma eFinancial Westcor Adjustments Consolidated ------------ --------- ------------ -------------- CURRENT ASSETS: Cash. . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,859 7,340 $ 19,199 Accounts Receivable, net of allowance . . . . . . . . . 119,610 51,827 171,437 Securities available for sale . . . . . . . . . . . . . 51,836 - 51,836 Accrued tax benefits. . . . . . . . . . . . . . . . . . 17,980 - 17,980 Prepaid expenses. . . . . . . . . . . . . . . . . . . . 35,005 2,447 37,452 Due from related parties. . . . . . . . . . . . . . . . - 3,323 3,323 ------------ --------- -------------- 236,290 64,937 301,227 PROPERTY AND EQUIPMENT, AT COST:. . . . . . . . . . . . . - Furniture and equipment , net . . . . . . . . . . . . . 31,156 12,485 43,641 OTHER ASSETS: Goodwill. . . . . . . . . . . . . . . . . . . . . . . . - - 1,580,151 (1) 1,580,151 ------------ --------- ---------- $ 267,446 $ 77,422 $ 1,925,019 ============ ========= ============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses . . . . . . . . . 152,328 65,774 7,364 (1) 225,466 Notes payable to seller . . . . . . . . . . . . . . . . 592,636 (1) 592,636 Notes payable . . . . . . . . . . . . . . . . . . . . . 28,220 82,772 110,992 ------------ --------- -------------- 180,548 148,548 929,094 STOCKHOLDERS' EQUITY: . . . . . . . . . . . . . . . . . . Common stock. . . . . . . . . . . . . . . . . . . . . . 12,500 70 (70) (1) 12,574 74 (2) Additional paid in capital . . . . . . . . . . . . . . . . 908,720 (1) 1,135,827 227,107 (1) Accumulated earnings/(deficit) . . . . . . . . . . . . . . 96,907 (71,427) 71,427 (1) (130,200) (227,107) (2) Unrealized loss on securities available for sale . . . . (22,509) - (22,509) Cumulative translation adjustment. . . . . . . . . . . . - 233 233 ------------ --------- -------------- 86,898 (71,124) 995,925 ------------ --------- -------------- $ 267,446 $ 77,424 $ 1,925,019 ============ ========= ============== See accompanying notes to pro forma financial information
EFINANCIAL DEPOT. COM, INC. CONSOLIDATED PROFORMA UNAUDITED STATEMENT OF OPERATIONS DECEMBER 31, 1999 Pro forma Pro forma eFinancial Westcor Adjustments Consolidated ------------ ------------ ----------- -------------- Operating revenue . . . . . . . . . . . . . . . . . . . . $ 1,197,813 $ 511,959 $ 1,709,772 Operating expenses: General and administrative. . . . . . . . . . . . . . . 1,023,355 615,366 227,181 (2) 1,865,902 Depreciation and amortization . . . . . . . . . . . . . 3,520 4,848 79,008 (3) 87,376 ------------ ------------ ------------ 1,026,875 620,214 1,953,278 ------------ ------------ ----------- ------------ Operating income (loss) . . . . . . . . . . . . . . . . . 170,938 (108,255) (243,506) Interest expense. . . . . . . . . . . . . . . . . . . . . - (3,902) (3,902) Realized loss on securities available for sale. . . . . . (32,203) - (32,203) ------------ ------------ ----------- ------------ Net income (loss) before taxes . . . . . . . . . . . . . 138,735 (112,157) (279,611) Income tax (expense) benefit. . . . . . . . . . . . . . . (75,350) - (75,350) ------------ ------------ ----------- ------------ Net income (loss) . . . . . . . . . . . . . . . . . . . . $ 63,385 $ (112,157) $ (354,961) ============ ============ =========== ============ Other comprehensive income (loss): Foreign currency translation adjustment . . . . . . . . . 484 484 ------------ ------------ ------------- Comprehensive income (loss) . . . . . . . . . . . . . . . $ ( 111,673) $ (354,477) ============ ============ ============== Earnings (loss) per common share: Basic and diluted . . . . . . . . . . . . . . . . . . . $ 0.01 $ (0.03) ============ ============ Weighted average shares outstanding: Basic . . . . . . . . . . . . . . . . . . . . . . . . . 12,500,000 12,573,880 Diluted . . . . . . . . . . . . . . . . . . . . . . . . 12,500,000 12,869,400 See accompanying notes to proforma financial information
eFINANCIAL DEPOT.COM, INC. NOTES TO CONDENSED PROFORMA UNAUDITED FINANCIAL STATEMENTS December 31, 1999 The Proforma Unaudited Financial Statements have been prepared in order to present consolidated financial position and results of operations of eFinancial Depot.Com, Inc. (eFinancial) and Westcor Mortgage, Inc. (Westcor) as if the acquisition had occurred at the beginning of 1999. In consideration for the acquisition of all of the issued and outstanding shares of common stock of Westcor, eFinancial issued promissory notes totaling $ 592,636, a retainage holdback of $ 7,364 and 295,520 newly issued exchangeable shares of Westcor . The exchangeable shares are exchangeable into the Company's common stock on a one for one basis. The exchangeable stock issued in this transaction was valued at the average of the eFinancial stock closing price five days prior to June 22, 2000. Following is a description of the proforma adjustments that have been made to the financial statements. (1) To record the acquisition of Westcor for stock and notes payable. The significant components of this transaction are: Stock issued $ 908,724 Notes payable issued 592,636 Retainage payable 7,364 Excess of liabilities assumed over assets acquired 71,427 ------------- Total consideration paid $ 1,580,151 ========== (2) To record issuance of 73,880 shares of unregistered common stock in connection with financial advisory services rendered to the Company. The shares were valued at the average of the eFinancial stock closing price five days prior to June 22, 2000. (3) To record one year's amortization of intangibles arising from the acquisition of Westcor. The intangible assets acquired in the acquisition of Westcor are being amortized over a twenty-year period. (c) Exhibits (2) Plan of Acquisition, reorganization, arrangement, liquidation or succession 2.1 Share Purchase Agreement dated February 29, 2000 between Patricia Kirkham and Dennis Petersen and the Company 2.2 Support Agreement dated February 29, 2000 between the Registrant and Westcor Mortgage Inc. 2.3 Voting Trust and Exchange Agreement dated February 29, 2000 among the Registrant, Westcor Mortgage Inc., Miller Thomson, Patricia Kirkham and Dennis Petersen 2.4 Hypothecation Agreement dated February 29, 2000 among Patricia Kirkham, Dennis Petersen, Westcor Mortgage Inc., Miller Thomson and the Registrant 2.5 Escrow Agreement dated February 29, 2000 among the Registrant, Clark, Wilson, Patricia Kirkham, Dennis Petersen, Oxford Capital Corp. and Westcor Mortgage Inc. ITEM 8. CHANGE IN FISCAL YEAR Not applicable. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. E-FINANCIAL DEPOT.COM, INC. Date: August 31, 2000 /s/ John Huguet ----------------- John Huguet, President and CEO