-----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, SylTCaeIwcMKkCj6orkGm1Sf91iy3cJ8EdMisWqLul/kGVQ9zIN3gAeXlPtMbW6T yKuvs4RTB80fT0pNgK40Yw== 0000950134-00-001752.txt : 20000310 0000950134-00-001752.hdr.sgml : 20000310 ACCESSION NUMBER: 0000950134-00-001752 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000309 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVENTURES GROUP INC CENTRAL INDEX KEY: 0000826773 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 752233445 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 033-19322 FILM NUMBER: 564010 BUSINESS ADDRESS: STREET 1: ONE EVERTRUST PLAZA STREET 2: 8TH FLOOR CITY: JERSEY CITY STATE: NJ ZIP: 07302 BUSINESS PHONE: 2012005515 MAIL ADDRESS: STREET 1: 6959 ARAPAHO STREET 2: SUITE 122 CITY: DALLAS STATE: TX ZIP: 75248 FORMER COMPANY: FORMER CONFORMED NAME: ADINA INC DATE OF NAME CHANGE: 19920703 10-Q/A 1 AMENDMENT TO FORM 10-Q FOR PERIOD ENDED 12/31/99 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ---------------- FORM 10-Q/A (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_____________to ______________ COMMISSION FILE NUMBER 33-19435 eVENTURES GROUP, INC. (Exact name of registrant as specified in its charter) DELAWARE 5-2233445 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation) ONE EVERTRUST PLAZA, 8th FLOOR JERSEY CITY, NEW JERSEY 07302 (201) 200-5515 (Address and telephone number of principal executive offices) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (1) Yes No X ---------- --------- (2) Yes X No ---------- --------- On February 18, 2000, 45,799,832 shares of the registrant's Common Stock were outstanding. The accompanying notes are an integral part of these consolidated financial statements 2 eVENTURES GROUP, INC. TABLE OF CONTENTS
PAGE NO. PART I: FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - June 30, 1999 and December 31, 1999 (unaudited) 3 Consolidated Statements of Operations - Three and six months ended December 31, 1998 and 1999 (unaudited) 4 Consolidated Statement of Shareholders' Equity (Deficit) - Six months ended December 31, 1999 (unaudited) 5 Consolidated Statements of Cash Flows - Six months ended December 31, 1998 and 1999 (unaudited) 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of 10 Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk 14 PART II: OTHER INFORMATION Item 1. Legal Proceedings 15 Item 2. Changes in Securities 15 Item 3. Defaults Upon Senior Securities 16 Item 4. Submission of Matters to a Vote of Securities Holders 16 Item 5. Other Information 16 Item 6. Exhibits and Reports on Form 8-K Exhibits 16 Reports on Form 8-K 17
WHEN USED IN THIS REPORT, THE WORDS "INTEND," "EXPECTS," "PLANS," "ESTIMATES," "ANTICIPATES," "PROJECTS," "BELIEVES," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SPECIFICALLY, STATEMENTS INCLUDED IN THIS REPORT THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS ABOUT THE COMPANY'S BELIEFS AND EXPECTATIONS ABOUT ITS BUSINESS AND ITS INDUSTRY ARE FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS OR OUTCOMES TO DIFFER MATERIALLY. SUCH RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, OUR LIMITED OPERATING HISTORY, THE RAPID EVOLUTION OF THE MARKET FOR OUR PRODUCTS AND SERVICES, AND OUR UNCERTAIN ABILITY TO RAISE SUFFICIENT CAPITAL TO MEET OUR CAPITAL EXPENDITURE REQUIREMENTS THAT MAY ADVERSELY AFFECT THE COMPANY'S ABILITY TO FINANCE ITS FUTURE OPERATIONS, TO COMPETE EFFECTIVELY AGAINST BETTER CAPITALIZED COMPETITORS AND TO WITHSTAND DOWNTURNS IN ITS BUSINESS OR THE ECONOMY GENERALLY; AND OTHER FACTORS DISCUSSED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. FORWARD-LOOKING STATEMENTS INCLUDED IN THIS REPORT SPEAK ONLY AS OF THE DATE HEREOF AND THE COMPANY UNDERTAKES NO OBLIGATION TO REVISE OR UPDATE SUCH STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. 2 3 ITEM 1: FINANCIAL STATEMENTS eVENTURES GROUP, INC. CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31, ASSETS 1999 1999 ------------ ------------ (UNAUDITED) CURRENT ASSETS Cash and cash equivalents $ 39,379 $ 6,269,893 Accounts receivable 6,129 1,574,165 Other receivables 11,164 63,124 Prepaid expenses and other 13,250 136,814 Deposits 242,310 603,752 VAT receivable 2,757,368 1,781,354 ------------ ------------ 3,069,600 10,429,102 ------------ ------------ LONG-TERM ASSETS Restricted cash 1,107,437 750,000 Property and equipment, net 6,219,874 12,880,498 Investments 2,191,498 2,758,531 Goodwill, net 3,072,908 30,695,787 Other -- 521,800 ------------ ------------ 12,591,717 47,606,616 ------------ ------------ $ 15,661,317 $ 58,035,718 ============ ============ LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 4,609,806 $ 4,228,708 Accrued other 1,477,757 1,423,101 Accrued interest payable 383,163 569,042 Customer deposits and deferred revenues 1,272,682 634,532 Notes payable -- 26,875 Capital leases, current portion 1,916,761 2,937,621 ------------ ------------ 9,660,169 9,819,879 ------------ ------------ LONG-TERM LIABILITIES Debentures 6,828,948 -- Capital leases, net of current portion 2,031,513 5,250,370 ------------ ------------ 8,860,461 5,250,370 ------------ ------------ STOCKHOLDERS' EQUITY (DEFICIT) Common stock 36 917 Preferred stock -- -- Additional paid-in capital 4,310,144 64,339,007 Accumulated deficit (7,169,493) (19,284,726) Deferred compensation -- (2,089,729) ------------ ------------ (2,859,313) 42,965,469 ------------ ------------ $ 15,661,317 $ 58,035,718 ============ ============
The accompanying notes are an integral part of these consolidated financial statements 3 4 eVENTURES GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED DECEMBER 31, ------------------------------- ------------------------------ 1998 1999 1998 1999 ------------ ------------ ------------ ------------ (UNAUDITED) (UNAUDITED) Revenues $ 8,808,038 $ 13,986,119 $ 13,013,700 $ 22,661,838 Direct costs 6,250,017 13,030,262 9,745,604 21,759,782 ------------ ------------ ------------ ------------ Gross profit (loss) 2,558,021 955,857 3,268,096 902,056 Selling, general and administrative expense 1,853,821 8,538,776 3,442,347 10,354,808 ------------ ------------ ------------ ------------ Income (loss) from operation, before other (income) expenses 704,200 (7,582,919) (174,251) (9,452,752) ------------ ------------ ------------ ------------ Other (income) expenses Interest expense, net 376,443 78,831 735,878 598,062 Write off of unamortized debt discount -- -- -- 917,615 Equity in loss of affiliate -- 13,089 -- 31,819 Foreign currency (gain) loss 393 4,470 8,631 (2,032) Other (25,797) 7,662 (17,851) 1,074 ------------ ------------ ------------ ------------ 351,039 104,052 726,658 1,546,538 ------------ ------------ ------------ ------------ Net income (loss) 353,161 (7,686,971) (900,909) (10,999,290) Imputed preferred dividend -- (1,115,943) -- (1,115,943) ------------ ------------ ------------ ------------ Net income (loss) available to common shareholders $ 353,161 $ (8,802,914) $ (900,909) $(12,115,233) ============ ============ ============ ============ Net income (loss) per share (basic and diluted) $ 0.03 $ (0.20) $ (0.08) $ (0.40) Weighted average number of shares outstanding 11,365,614 44,309,461 11,365,614 30,428,396
The accompanying notes are an integral part of these consolidated financial statements 4 5 eVENTURES GROUP, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
PREFERRED STOCK COMMON STOCK ADDITIONAL --------------------------- --------------------------- PAID-IN ACCUMULATED SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT ------------ ------------ ------------ ------------ ------------ ------------ Balance, June 30, 1999 -- $ -- 3,600 $ 36 $ 4,310,144 $ (7,169,493) Period ended December 31, 1999 is Unaudited: Net effect of acquisitions -- -- 39,623,010 756 31,588,059 -- Intrinsic value of stock options -- -- -- -- 3,265,500 -- Amortization of deferred compensation -- -- -- -- -- -- Net effect of the purchase of remaining 1/3 of e.Volve -- -- 5,831,253 117 11,662,389 -- Issuance of preferred stock 7,000 -- -- -- 6,997,500 -- Imputed preferred dividend -- -- -- -- 1,115,943 (1,115,905) Issuance of common stock as payment for accounts payable -- -- 376,799 8 5,339,472 -- Net loss -- -- -- -- -- (10,999,290) ------------ ------------ ------------ ------------ ------------ ------------ Balance, December 31, 1999 7,000 $ -- $ 45,834,662 $ 917 $ 64,339,007 $(19,284,726) (Unaudited) ============ ============ ============ ============ ============ ============ DEFERRED COMPENSATION TOTAL ------------ ------------ Balance, June 30, 1999 $ -- $ (2,859,313) Period ended December 31, 1999 is Unaudited: Net effect of acquisitions -- 31,588,815 Intrinsic value of stock options (3,265,500) -- Amortization of deferred compensation 1,175,771 1,175,771 Net effect of the purchase of remaining 1/3 of e.Volve -- 11,662,506 Issuance of preferred stock -- 6,997,500 Imputed preferred dividend -- -- Issuance of common stock as payment for accounts payable -- 5,399,480 Net loss -- (10,999,290) ------------ ------------ Balance, December 31, 1999 (Unaudited) $ (2,089,729) $ 42,965,469 ============ ============
The accompanying notes are an integral part of these consolidated financial statements 5 6 eVENTURES GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED DECEMBER 31, ------------------------------ 1998 1999 ------------ ------------ (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (900,909) $(10,999,290) Adjustments to reconcile net income to net cash used in net operating activities: Depreciation and amortization 882,882 3,187,038 Other expenses 370,689 852,205 Bad debt -- 23,895 Foreign currency (gain) loss 11,162 (2,032) Equity in loss of unconsolidated affiliate -- 31,819 Change in operating assets and liabilities: Accounts receivable (488,189) (582,920) Other receivables (89,318) (51,960) Prepaid expenses and other (26,315) (30,257) VAT receivable (1,347,608) 976,014 Restricted cash (1,080,806) 1,107,437 Accounts payable 1,124,102 3,760,810 Accrued other (450) 220,647 Accrued interest payable 33,063 185,879 Customer deposits (200,000) (1,214,650) ------------ ------------ Net cash used in operating activities (1,711,697) (2,535,365) ------------ ------------ CASH FLOW FROM INVESTING ACTIVITIES: Deposits 4,728 (361,442) Proceeds from sale of available-for-sale securities 246,580 -- Purchases of property and equipment (993,394) (1,667,894) Net cash acquired in acquisitions -- 299,687 Long term investments -- (475,000) Investments in affiliates (25,000) (598,852) ------------ ------------ Net cash used in investing activities (767,086) (2,803,501) ------------ ------------ CASH FLOW FROM FINANCING ACTIVITIES: Advances - shareholders (60,920) (246,560) Issuance of common stock and preferred stock -- 13,224,850 Proceeds from the issuance of debentures 850,000 -- Repayment of loan -- (823,278) Payments on capital leases (240,993) (585,632) ------------ ------------ Net cash provided by financing activities 548,087 11,569,380 ------------ ------------ Net change in cash (1,930,696) 6,230,514 CASH AND CASH EQUIVALENTS, beginning of period 2,417,216 39,379 ------------ ------------ CASH AND CASH EQUIVALENTS, end of period $ 486,520 $ 6,269,893 ============ ============ Supplemental disclosure of cash flows information: Cash paid for: Interest $ 192,000 $ 258,000 ============ ============ Taxes $ -- $ -- ============ ============ Supplemental schedule of non-cash investing and Financing activities Purchases of equipment under capital leases $ 1,808,683 $ 5,206,790 ============ ============ Fair value of original issue discount on revaluation of Company at July 1, 1998, arising from change in ownership $ 2,000,000 $ -- ============ ============ Goodwill arising from change in ownership and acquisitions settled through the issuance of stock $ 3,414,343 $ 28,824,974 ============ ============ Net assets of subsidiary acquired through an issue of stock $ -- $ 196,169 ============ ============ Stock issued for settlement of accounts payable $ -- $ 5,399,480 ============ ============
The accompanying notes are an integral part of these consolidated financial statements 6 7 1. ORGANIZATION AND BUSINESS: eVentures Group, Inc. ("eVentures" or the "Company") was incorporated in the state of Delaware on June 24, 1987 and was a public shell with no operations prior to the transactions consummated on September 22, 1999, which are described below. The Company was formerly known as Adina, Inc. On September 22, 1999, the Company acquired all of the outstanding shares of AxisTel Communications, Inc. ("AxisTel"), approximately 66.67% of the outstanding shares of e.Volve Technology Group, Inc. ("e.Volve"), approximately 17% of the outstanding shares of i2v2.com, Inc. ("i2v2.com") (collectively the "Acquired Entities"), and $8,540,159 notes receivable from e.Volve including accrued interest ("Notes") held by Major Shareholders (as defined below). All the acquisitions and the purchase of the Notes were settled through issuance of stock of eVentures (the "Transaction"). As a result of the Transaction, approximately 77% of the common stock of the Company outstanding after the Transaction was owned by three shareholders that are affiliated with each other (the "Major Shareholders") on September 22, 1999. In October 1999, the remaining 33.33% of e.Volve was acquired by the Company. Prior to the Transaction, the Major Shareholders had directly and indirectly held interests in the Acquired Entities, as follows: 66.67% of e.Volve, 21% of i2v2.com, and 0.7% of AxisTel plus options to purchase a further 49.3% of Axistel. In August of 1999, the interest in i2v2.com held by the Major Shareholders was diluted to 17%. Immediately after exercising the options in AxisTel, these interests, along with the Major Shareholders' Notes receivable from e.Volve, were directly and indirectly transferred to eVentures in exchange for the Company's stock. The remaining 50% of AxisTel was then purchased from AxisTel's founding shareholders. On October 19, 1999, eVentures acquired the remaining 33.3% of e.Volve, through an extension of its original offer at the time of the Transaction. This purchase was settled through an issuance of 5,831,253 shares of eVentures' Common Stock. The Company operates a private convergence network which consists of digital switching, routing and signal management equipment, as well as digital fiber optic cable lines. The network incorporates software, programming and switching Dec Agreed to this technology which was originally developed for or in relation to the Internet. The Acquired Entities provide communications services and operate communications networks based on Internet Protocol ("IP") and Asynchronous Transfer Mode ("ATM") technologies. The Acquired Entities provide high quality communications services, offering international voice, data, Internet access and other value-added applications over private fiber optic networks and the Internet. The customers of the Company include corporate and governmental communications service providers and individual business customers in the United States and the Company's foreign markets. Both the e.Volve and Axistel networks are scalable networks built around digital packet switching equipment. This switching equipment, together with other components of the networks, incorporate ATM and IP technologies. The networks meet voice over internet protocol ("VOIP") standards. Internationally, the Company's networks offer communications services through leased or owned fiber optic cable under direct operating agreements with telecommunications authorities and Internet service providers ("ISP"). Investments As of December 31, 1999, the Company has made investments in the following companies:
COMPANY NAME ACCOUNTING METHOD % OWNERSHIP ------------ ----------------- ----------- Innovative Calling Technologies LLC equity basis 50.0% i2v2.com (d/b/a PhoneFree.com) cost basis 16.0% FonBox, Inc. cost basis 8.0%
7 8 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: INTERIM FINANCIAL DATA The consolidated balance sheet as of December 31, 1999, the consolidated statements of operations for the three and six month periods ended December 31, 1998 and 1999, consolidated statements of shareholders' equity flows for the six month period ended December 31, 1999, and the consolidated statements of cash flows for the six month periods ended December 31, 1998 and 1999 have been prepared by the Company without audit. In the opinion of management, all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the consolidated financial position, results of operations and cash flows have been made. The results of operations for the interim periods are not necessarily indicative of the results for the full year. The accompanying financial statements should be read with the Company's consolidated financial statements included in the Company's Form 10/A filed with the Securities and Exchange Commission on March 8, 2000. USE OF ESTIMATES The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. PROPERTY AND EQUIPMENT: Property and equipment consists of the following at December 31, 1999: Property and Equipment: Leasehold improvements $ 334,559 Network equipment under capital leases 11,146,106 Other equipment 3,047,440 Furniture and fixtures 27,862 ------------ 14,555,967 Accumulated depreciation and amortization (1,675,469) ------------ $ 12,880,498 ============
Depreciation and amortization expense related to the above property and equipment was $374,619 and $775,016 for the six months ended December 31, 1998 and 1999, respectively. 4. NET INCOME (LOSS) PER SHARE: The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 128 ("SFAS#128"), Earnings Per Share ("EPS"). SFAS#128 requires dual presentation of basic EPS and diluted EPS on the face of all income statements issued after December 15, 1997 for all entities with complex capital structures. Basic EPS is computed as net income divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants and convertible debentures. Diluted EPS has not been presented for the effects of stock options, warrants, convertible debentures and preferred stock as the effect would be antidilutive. Accordingly, basic and diluted EPS did not differ for any period presented. For purposes of computation of EPS, the shares issued for the acquisition of e.Volve (11,365,614 shares) are deemed to have been in existence for the entire period. 5. SIGNIFICANT TRANSACTIONS. On October 14, 1999, the Company paid $1.1 million cash and issued 239,299 shares of eVentures' common stock to Avantel S.A. in satisfaction of accounts payable to Avantel of $4.3 million. As part of the September 22, 1999 Transaction (see Note 1), the Company acquired the remaining 33.3% of e.Volve on October 19, 1999 through an extension of eVentures original offer. This purchase was settled through an issuance of 5,831,253 shares of eVentures' common stock. 8 9 On November 19, 1999, November 26, 1999 and December 15, 1999 the Company issued 7,000 shares of Series B Convertible Preferred Stock at a price of $1,000 per share. The par value of shares of Series B Convertible Preferred Stock is $0.00002. The shares of Series B Convertible Preferred Stock are convertible into shares of the Company's common stock at a price of $13.80 per share, subject to certain anti-dilution adjustments. The conversion price was determined using the average of the closing bid price per share of eVentures common stock for the 10 trading days ended October 29, 1999. Due to the beneficial conversion feature of these securities, an imputed preferred dividend of $1.1 million has been recorded during the three months ended December 31, 1999. On November 30, 1999 the Company terminated its marketing agreement with Corpovision, S.A. The Company settled its liability to Corpovision with respect to the termination of this agreement through the issuance of 137,500 shares of eVentures common stock. As a result, the Company recorded a charge in the statement of operations of approximately $1.1 million in November, 1999 related to the difference between the value of the shares issued and the book value of the note payable to Corpovision. 6. SUBSEQUENT EVENTS In a series of transactions closed between January 6 and February 4, 2000, the Company issued 15,570 shares of Series C Convertible Preferred Stock, par value $0.00002 per share, to 8 accredited investors, at a price of $1,000 per share. The shares are convertible into Common Stock at a price of $17.90 per share, subject to certain anti-dilution adjustments. The conversion price was determined using the average of the closing bid prices per share of the Company's common stock for the 20 trading days ended December 10, 1999. The effect of the favorable conversion rate will be recorded as an imputed preferred dividend in the third quarter of fiscal 2000. On January 31, 2000, the Company exercised its option to purchase approximately 23% of Fonbox, Inc., in addition to the approximately 8% already owned by the Company, for $1.0 million cash and the issuance of 27,860 shares of The Company's common stock. As of February 11, 2000, the Company owns approximately 31% of Fonbox. On January 28, 2000, the Company purchased membership interests in LC39 Group, LLC for $1.0 million. These interests represent less than 5% ownership in LC39. LC39 is the legal name of Launch Center 39. On February 11, 2000, the Company executed definitive documentation regarding its investment in Televant, Inc., which owns and operates the Callrewards.com(TM) website. As part of this transaction, the Company also completed an initial funding of $750,000 for a 30% interest in Callrewards. The Company's investment anticipates an additional $3.5 million of funding during 2000. The further funding is conditioned on Callrewards achieving certain operational targets. 7. PRO FORMA FINANCIAL DATA On September 22, 1999, the Company acquired all of the outstanding shares of AxisTel, approximately 66.7% of the outstanding shares of e.Volve, the e.Volve debentures, and a minority interest in i2v2.com. On October 19, 1999, the Company acquired the remaining 33.3% of the outstanding shares of e.Volve. All of the acquisitions were settled through the issuance of stock of the Company. Set forth below is the Company's unaudited pro forma condensed statement of operations for the year ended June 30, 1999 and the six months ended December 31, 1999 as though the Transaction had occurred on July 1, 1998, after adjustments related to goodwill, amortization of intangible assets and debt discount and interest expense relating to the e.Volve debentures. The unaudited pro forma results are not necessarily indicative of either actual results of operations that would have occurred had the acquisitions been made on July 1, 1998 or of future results.
THREE MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1999 Revenues $9,979,203 $ 14,829,347 $ 28,403,640 Net loss $ (239,498) $ (3,839,602) $(11,821,902) Net loss per share $ (0.01) $ (0.09) $ (0.27)
9 10 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The financial information and other statistical data set out below represent the financial condition and results of operations of the accounting acquirer pursuant to a series of reorganization transactions completed on September 22, 1999 and October 19, 1999 (the "Reorganization") described herein for all periods from July 1, 1998 through September 22, 1999. As a result, throughout this Form 10 Q/A, our financial statements as of any date and for any period beginning July 1, 1998 and ending on or prior to September 22, 1999 reflect the financial condition and results of operations of e.Volve as if we had acquired the interest of the Infinity Entities in e.Volve on July 1, 1998, except that (a) our balance sheet as of June 30, 1999 reflects the acquisition of our minority interest in PhoneFree.com. Financial information and other data subsequent to September 22, 1999 reflects the acquisition of AxisTel. REVENUES. We generate revenues through the sale of international and domestic Internet telephony minutes on a wholesale basis to other U.S. long-distance providers and to distributors of prepaid calling cards. In addition, we sell data bandwidth to other carriers and corporate customers. Our agreements with our wholesale customers are short term in duration and the rates we charge customers are subject to change from time to time. Due to increasing competition, management expects these rates to decline, which could result in lower revenues and increased losses. Our three largest customers accounted for 79.3% of our revenues during the six months ended December 31, 1999. DIRECT COSTS. Direct costs include per minute termination charges and lease payments and fees for fiber optic cable. Prior to September 1999, we provided international telecommunication services only from the United States to Mexico. The majority of our termination fees and certain fiber optic lease payments were payable in Mexican pesos. As a result we were exposed to exchange rate risk due to the fluctuation of the Mexican peso compared to the U.S. dollar. Continued fluctuation in the exchange rate may make it cheaper or more expensive for us to purchase pesos to meet our peso denominated expenses. Two vendors in Mexico provide substantially all of our terminating capabilities in Mexico. If either of these vendor relationships were terminated, our ability to conduct operations in Mexico would be limited. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. These expenses include corporate expenses and management salaries, depreciation and amortization expenses, sales and marketing expenses, travel and development expenses, benefits, occupancy costs, and administrative expenses. We maintain a corporate office and several switch facilities. Due to the international nature of our business, travel and development costs have been significant and could continue to increase as we seek to expand our network. 10 11 SUMMARY OF OPERATING RESULTS The table below summarizes our operating results
THREE MONTHS ENDED DECEMBER 31, ------------------------------------------------------- 1998 % 1999 % ------------ -------- ------------ -------- (unaudited) Revenues $ 8,808,038 100.0% $ 13,986,119 100.0% Direct costs 6,250,017 71.0% 13,030,262 93.2% ------------ -------- ------------ -------- Gross profit 2,558,021 29.0% 955,857 6.8% Selling, general and administrative expenses 1,853,821 21.0% 8,538,776 61.1% Loss from operations, before ------------ -------- ------------ -------- other (income) expenses 704,200 8.0% (7,582,919) (54.2)% ------------ -------- ------------ -------- Other (income) expenses Interest expense, net 376,443 4.3% 78,831 0.6% Write off of unamortized debt discount -- 0.0% -- 0.0% Equity in loss of affiliate -- 0.0% 13,089 0.1% Foreign currency (gain) loss 393 0.0% 4,470 0.0% Other (25,797) (0.3)% 7,662 0.1% ------------ -------- ------------ -------- 351,039 4.0% 104,052 0.7% ------------ -------- ------------ -------- Net income (loss) $ 353,161 4.0% $ (7,686,971) (55.0)% ============ ======== ============ ======== SIX MONTHS ENDED DECEMBER 31, ------------------------------------------------------- 1998 % 1999 % ------------ -------- ------------ -------- (unaudited) Revenues $ 13,013,700 100.0% $ 22,661,838 100.0% Direct costs 9,745,604 74.9% 21,759,782 96.0% ------------ -------- ------------ -------- Gross profit 3,268,096 25.1% 902,056 4.0% Selling, general and administrative expenses 3,442,347 26.5% 10,354,808 45.7% Loss from operations, before ------------ -------- ------------ -------- other (income) expenses (174,251) (1.3)% (9,452,752) (41.7)% ------------ -------- ------------ -------- Other (income) expenses Interest expense, net 735,878 5.7% 598,062 2.6% Write off of unamortized debt discount -- 0.0% 917,615 4.0% Equity in loss of affiliate -- 0.0% 31,819 0.1% Foreign currency (gain) loss 8,631 0.1% (2,032) (0.0)% Other (17,851) (0.1)% 1,074 0.0% ------------ -------- ------------ -------- 726,658 5.6% 1,546,538 6.8% ------------ -------- ------------ -------- Net income (loss) $ (900,909) (6.9)% $(10,999,290) (48.5)% ============ ======== ============ ========
THREE AND SIX MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THREE AND SIX MONTHS ENDED DECEMBER 31, 1998 REVENUES. Revenues increased to $14.0 million and $22.7 million during the three and six months ended December 31, 1999 from $8.8 million and $13.0 million during the three and six months ended December 31, 1998, respectively, an increase of 58.8% and 74.1%, respectively. The increase in revenues in our second quarter and during the six months ended December 31, 1999 primarily resulted from the acquisition of AxisTel in September 1999 which increased revenues by $5.6 million during the second quarter. In addition, an increase in traffic contributed the remainder of the increase in revenues, offset by a decrease in the average price per minute that we charged. During the three and six months ended December 31, 1999 we transmitted 94.0 million and 171.0 million minutes, respectively, excluding the 47.3 million minutes transmitted by AxisTel during the second quarter compared with 45.8 million and 64.4 million minutes during the comparable periods in 1998. The average price per minute we charged for these minutes decreased to $0.10 during the three and six months ended December 31, 1999 from $0.19 and $0.20 during the comparable periods in 1998. DIRECT COSTS. Direct costs increased to $13.0 million and $21.8 million during the three and six months ended December 31, 1999 from $6.3 million and $9.7 million during the three and six months ended December 31, 1998, respectively, an increase of 108.5% and 123.3%, respectively. The increase in direct costs in our second quarter and during the six months ended December 31, 1999 resulted from a $5.2 million increase in direct costs attributable to the operations of AxisTel during our second quarter of 1999. In addition, direct costs increased during the three and six months ended December 31, 1999 by $1.3 million and $6.8 million, respectively, as a result of increased traffic volumes discussed above, offset by lower per minute termination costs. The average cost per minute to terminate calls decreased to $0.08 and $0.09 during the three and six months ended December 31, 1999, respectively from $0.11 and $0.12 during the comparable periods in 1998. Direct costs also increased during the three months ended December 31, 1999 by approximately $300,000 as a result of fixed circuit cost increases due to our new Indian routes offset by savings on our fixed circuit costs on our Mexico routes. As a percentage of revenues, direct costs during the three months ended December 31, 1999 increased to 93.2% from 71.0% during the three months ended December 31, 1998. As a percentage of revenues, direct costs during the six months ended December 31, 1999 increased to 96.0% from 74.9% during the six months ended December 31, 1998. The increase in direct costs as a percentage of revenues results primarily because our wholesale prices per minute decreased faster than our cost per minute for termination, offset by higher volumes of traffic over fixed cost circuits. SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative expenses increased to $8.5 million and $10.4 million during the three and six months ended December 31, 1999 from $1.9 million and $3.4 million during the three and six months ended December 31, 1998, respectively, an increase of 360.6% and 200.8%, respectively. These increases in selling, general and administrative expenses during the three and six months ended December 31, 1999 resulted primarily from expenses related to our termination of a marketing agreement ($1.5 million and $1.7 million, respectively), the incurrence of severance costs ($325,000 in our 11 12 second quarter), an increase in goodwill expense related to the purchase of AxisTel and 1/3 of e.Volve ($700,000 in our second quarter), an increase in professional and printing fees related to the auditing of our Company for three years and legal work related to the Reorganization and purchase of 1/3 of e.Volve ($780,000 in our second quarter), an increase in depreciation expense of ($185,000 and $450,000, respectively), an increase in payroll ($40,000 and $200,000, respectively), the recording of a compensation charge related to the issuance of option below market ($1.2 million in our second quarter) and charges related to consulting and professional fees in Mexico ($625,000 in our second quarter). In addition, the acquisition of AxisTel increased expenses by $1.4 million in our second quarter, corporate overhead added an additional $230,000. These increases in expenses were offset by decreases in travel and other consulting expenses ($330,000 during our second quarter and $365,000 during the six months ended December 31, 1999). INTEREST EXPENSE, NET. Interest expense, net decreased to $78,831 and $598,062 during the three and six months ended December 31, 1999 from $376,443 and $735,878 during the three and six months ended December 31, 1998. This decrease was a result of the elimination of $8.0 million of debentures as a result of our acquisition of e.Volve's outstanding debentures on September 22, 1999 and the resulting consolidation of accounts, and due to interest income on higher cash balances maintained out of proceeds of private placements completed during our second quarter, offset by higher charges related to capital leases for equipment leased after December 31, 1998. WRITE OFF OF UNAMORTIZED DEBT DISCOUNT. The write off of unamortized debt discount during the six months ended December 31, 1999 resulted from our purchase of e.Volve's outstanding debentures and the subsequent elimination of these debentures in our consolidated balance sheet. EQUITY IN LOSS OF UNCONSOLIDATED AFFILIATE. Equity in loss of unconsolidated affiliate was $13,089 and $31,819 during the three and six months ended December 31, 1999. These losses occurred at a joint venture formed with e.Volve in April 1999. FOREIGN CURRENCY (GAIN) LOSS. Foreign currency (gain) loss during the three and six months ended December 31, 1999 was a loss of $4,470 and a gain of $2,032 compared with a loss of $393 and a loss of $8,631 during the three and six months ended December 31, 1998. OTHER. Other expenses of $7,662 and $1,074 during the three and six months ended December 31, 1999 compares with other income of $25,797 and $17,851 during the three and six months ended December 31, 1998. LIQUIDITY AND CAPITAL RESOURCES Since July 1, 1999, we have funded our operations primarily through cash from operations and from private placements of common stock, preferred stock, warrants to purchase common stock and debt. During the six months ended December 31, 1999, we have raised a total $12.9 million through private placements of common stock and preferred stock, $287,350 from the exercise of options and $5.2 million through capital leases to finance operations and to fund capital expenditures. On September 28, 1999, we completed a private placement of common and preferred stock of approximately $5.9 million. Proceeds from this placement were used for general corporate purposes and for use as capital for new investments and projects. On November 19 and 26, 1999, we completed two private placements of preferred stock with aggregate proceeds of approximately $6.2 million. Proceeds from these issuances are for general corporate purposes and for use as capital for new investments and projects. On December 15, 1999, we completed a private placement of preferred stock with aggregate proceeds of approximately $775,000. Proceeds from this issuance are for general corporate purposes and for use as capital for new investments and projects. The preferred stock issued on November 19, 1999, November 26, 1999 and December 15, 1999 were issued at a discount to the market value of our common stock into which it is convertible. We have recognized this discount by accounting for it as an imputed preferred dividend of $1.1 million in our second quarter. Our principal uses of cash are to fund working capital requirements, capital expenditures and operating losses. As of December 31, 1999, we had current assets of $10.4 million, including cash, cash equivalents and short-term investments of $6.3 million, and a working capital surplus of $609,233. Current assets included a tax refund receivable of $1.8 million. 12 13 Since December 31, 1999, we have raised additional funds through subsequent private placements of preferred stock. In a series of transactions between January 6 and February 4, 2000, we completed a private placement of preferred stock with aggregate proceeds of approximately $15.6 million. Proceeds from this issuance are for general corporate purposes and for use as capital for new investments and projects. CASH FLOWS FROM OPERATING ACTIVITIES: Our operating activities used cash of $2.5 million during the six months ended December 31, 1999. During the six months ended December 31, 1999 cash flow used by operating activities primarily resulted from net losses, the reduction of customer deposits, and an increase in accounts receivable, offset by depreciation and amortization charges, a decrease in restricted cash, and a decrease in accounts payable (funded through the issuance of our common stock to vendors of $5.4 million) and an increase in other accrued liabilities. CASH FLOWS FROM INVESTING ACTIVITIES: We used cash for investing activities of $2.8 million during the six months ended December 31, 1999. During the six months ended December 31, 1999 cash used by investing activities primarily consisted of cash used to purchase equipment ($1.7 million), fund affiliates, and make other long term investments, offset by net cash acquired in the acquisitions. CASH FLOWS FROM FINANCING ACTIVITIES: Our cash flow from financing activities was $11.6 million during the six months ended December 31, 1999. During the six months ended December 31, 1999 cash provided by financing activities was attributable to the issuance of common stock and preferred stock ($13.2 million), offset by the repayment of a bridge loan and capital lease payments. GENERAL Our business plans will continue to require a substantial amount of capital to fund our expansion in existing and recently acquired markets, to continue our development of our network and to fund our operating losses and debt and capital lease service requirements. We also continue to make strategic investments and to evaluate acquisitions in light of our long range plans. Such strategic investments and acquisitions, if realized, could require expenditure of a material portion of our financial resources and would accelerate the need for raising additional capital. Sources of funding for our financing requirements may include vendor financing, bank loans and public offerings or private placements of equity and/or debt securities. There can be no assurance that additional financing will be available or, if available, that financing can be obtained on a timely basis and on acceptable terms. The failure to obtain such financing on acceptable terms could significantly reduce our ability to fund our expenses, development, investments and operations. Our cash and cash equivalents are expected to provide sufficient liquidity to meet our capital requirements for approximately the next twelve months. EQUIPMENT LEASING AND FINANCING. We have leased equipment manufactured by various equipment manufacturers including Siemens A.G., Network Equipment Technologies, Inc. and Harris Corporation. As of December 31, 1999 we have entered into an aggregate of approximately $10.3 million of capital leases with (i) Telecommunications Finance Group, a subsidiary of Siemens A.G., (ii) BA Capital Corp., (iii) Ascend Credit Corporation, and (iv) Arrendadora BankAmerica, S.A. SUBSEQUENT EVENTS: In a series of transactions closed between January 6 and February 10, 2000, we issued 15,570 shares of our Series C Convertible Preferred Stock, par value $0.00002 per share, to eight accredited investors, at a price of $1,000 per share. The shares are convertible into shares of our common stock at a price of $17.90 per share, subject to certain anti-dilution adjustments. The conversion price was determined using the average of the closing bid prices per share of our common stock for the 20 trading days ended December 10, 1999. The effect of the favorable conversion rate will be recorded as an imputed preferred dividend in our third quarter. On January 31, 2000, our Company exercised its option to purchase an additional 23% of Fonbox, Inc. for $1.0 million cash and the issuance of 27,860 shares of eVentures common stock. As of February 11, 2000, we own approximately 31% of Fonbox. 13 14 On January 28, 2000, we purchased membership interests in LC39 Group, LLC for $1.0 million. These interests represent less than 5% ownership in LC39. LC39 is the legal name of Launch Center 39, a New York City based incubator for Internet start-ups. On February 11, 2000, we executed definitive documentation regarding our investment in Televant, Inc., which owns and operates the Callrewards.com(TM) website. As part of this transaction, we also completed an initial funding of $750,000 for a 30% interest in Callrewards. Our investment anticipates an additional $3.5 million of funding during 2000. The further funding is conditioned on Callrewards achieving certain operational targets. EFFECTS OF INFLATION Management does not believe that its business is impacted by inflation to a significantly different extent than is the general economy. However, there can be no assurances that inflation will not have a material effect on the Company's operations in the future. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to the impact of political instability, foreign currency, and other risks. Political Instability Risks. We have relationships with foreign suppliers in Syria, Mexico, India, Sri Lanka and other countries. We have not experienced any negative economic consequences as a result of relationships with foreign suppliers in these countries, but may be negatively affected should political instability in any of these countries develop. Foreign Currency Risks. Since the agreements we have has entered into with foreign suppliers in Syria, India, Sri Lanka and other countries are denominated in U.S. dollars, we are not exposed to risks associated with fluctuations in these foreign currencies. However, because our agreements with Mexican suppliers are denominated in Mexican pesos, we may be exposed to fluctuations in Mexican pesos, as well as to downturns in the Mexican economy, all of which may affect profitability. During the six months ended December 31, 1999, $13.7 million of our direct costs were denominated in Mexican pesos. Other Market Risks. We are also exposed to potential risks in dealing with foreign suppliers in foreign countries associated with potentially weaker protection of intellectual property rights, unexpected changes in regulations and tariffs, and varying tax consequences. 14 15 PART II Item 1. Legal Proceedings In September 1999, Yurie Systems Inc. filed a lawsuit in the United States District Court of Maryland against e.Volve, claiming e.Volve owed Yurie Systems approximately $283,497 arising from a previous sale of telecommunications equipment from Yurie Systems to e.Volve in June and July of 1997. e.Volve denies the claim because it never agreed to accept the equipment. The equipment has failed field testing and did not meet either e.Volve's or Yurie Systems' standards. e.Volve filed a counterclaim for lost business opportunities and lost profits in an amount to be determined at trial. On February 3, 2000, we reached an agreement with Yurie Systems to settle this litigation in exchange for a payment by us of $140,000. We are involved in legal proceedings from time to time, none of which management believes, if decided adversely to us, would have a material adverse effect on the business, financial condition or results of operations of the Company. Item 2. Changes in Securities In the past four months, we have issued and sold unregistered securities in the transactions described below. On September 22, 1999, in connection with our reorganization, we issued and sold: (i) an aggregate of 14,562,193 shares of common stock to IEO Investments, Limited and Infinity Emerging Subsidiary Limited as merger consideration for all of the equity interests in IEO Holdings Limited; (ii) an aggregate of 6,381,000 shares of common stock to certain shareholders of AxisTel in exchange for the outstanding shares of capital stock of AxisTel not owned by IEO Holdings Limited; and (iii) 5,682,807 shares of common stock to Infinity Investors Limited in exchange for shares of capital stock of e.Volve representing approximately one-third of the outstanding capital stock of e.Volve. The issuance of such shares was exempt from the registration requirements of the Securities Act pursuant to Rule 506 of Regulation D promulgated pursuant to the Securities Act. No general solicitations were made in connection with this transaction, and three accredited, eight non-accredited and three foreign investors participated in this transaction. All non-accredited investors were represented in connection with this transaction by purchaser representatives. On September 28, 1999, we issued and sold 1,000 shares of Series A Convertible Preferred stock to an accredited investor for $1.0 million in a transaction exempt from the registration requirements of the Securities Act pursuant to Rule 506 of Regulation D promulgated pursuant to the Securities Act. No general solicitations were made in connection with this transaction. On September 28, 1999, we issued and sold an aggregate of 2,470,000 shares of common stock to 25 investors for $4.9 million in a transaction exempt from the registration requirements of the Securities Act pursuant to Rule 506 of Regulation D promulgated pursuant to the Securities Act. No general solicitations were made in connection with this transaction, and only accredited investors participated in this transaction. On October 14, 1999, we issued 239,229 shares of our common stock to Avantel S.A. to settle accounts payable due to Avantel in the amount of $3.2 million in a transaction exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act. These shares were issued for consideration of $13.125 per share, which was 75% of the closing price of our common stock on the date of issuance, and which represented the fair market value of our common stock. The price per share was determined following negotiations with Avantel. On October 19, 1999, in connection with our reorganization, we issued and sold an aggregate of 5,831,253 shares to 27 shareholders of e.Volve in exchange for the outstanding shares of capital stock of e.Volve not owned by eVentures in a transaction exempt from the registration requirements of the Securities Act pursuant to Rule 506 of Regulation D under the Securities Act. No general solicitations were made in connection with this transaction, and 22 accredited and 5 non-accredited investors participated in this transaction. All non-accredited investors were represented in connection with this transaction by purchaser representatives. On November 19, 1999, we issued and sold 2,500 shares of our Series B preferred stock to an accredited investor for $2.5 million in a transaction exempt from the registration requirements of the Securities Act pursuant to Rule 506 of Regulation D under the Securities Act. No general solicitations were made in connection with this transaction. On November 26, 1999, we issued and sold 3,725 shares of our Series B preferred stock to an accredited investor for $3.7 million in a transaction exempt from the registration requirements of the Securities Act pursuant to Rule 506 of Regulation D under the Securities Act. No general solicitations were made in connection with this transaction. On November 30, 1999, we issued 137,500 shares of our common stock to Corpovision, S.A. to settle a note payable due to Corpovision in the amount of $1.1 million in a transaction exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act. These shares were issued for consideration of $8.00 per share, which was below the market price of our common stock on the date of issuance. We took a charge of $1.1 million during our second fiscal quarter in connection with this transaction. The price per share was determined following negotiations with Corpovision. On December 15, 1999, we issued and sold 775 shares of our Series B preferred stock to an aggregate of 14 accredited investors for $775,000 in a transaction exempt from the registration requirements of the Securities Act pursuant to Rule 506 of Regulation D promulgated pursuant to the Securities Act. No general solicitations were made in connection with this transaction. On December 21, 1999, we issued 200,000 shares of our common stock upon conversion of 1,000 shares of our Series A preferred stock in a transaction exempt from the registration requirements of the Securities Act pursuant to Section 3(a)(9) of the Securities Act. 15 16 Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 2.1 Agreement and Plan of Exchange, dated as of October 19, 1999, among eVentures Group, Inc., and the persons set forth on Schedule 1 thereto (incorporated by reference to Exhibit 2.1 to the report filed on Form 8-K on November 3, 1999). 3.1 Amended and Restated Certificate of Designation of Rights, Preferences and Privileges of Series A Convertible Preferred Stock, dated October 14, 1999 (incorporated by reference to Exhibit 3.6 to the registration statement on Form 10 filed on December 20, 1999). 3.2 Certificate of Designation of Rights, Preferences and Privileges of Series B Convertible Preferred Stock, dated as of November 10, 1999 (incorporated by reference to Exhibit 3.7 to the registration statement on Form 10 filed on December 20, 1999). 3.3 Certificate of Amendment, dated as of December 15, 1999, to the Certificate of Designation of Rights, Preferences and Privileges of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.8 to the registration statement on Form 10 filed on December 20, 1999). 3.4 Certificate of Designation, Preferences and Rights of Series C Convertible Preferred Stock (incorporated by reference to exhibit 3.4 to the Quarterly Report on Form 10-Q for the period ended December 31, 1999, filed on February 20, 2000). 4.1 Registration Rights Agreement, dated as of September 22, 1999, among the Registrant and the persons and entities set forth on Schedule 1 thereto (the "First Registration Rights Agreement") (incorporated by reference to Exhibit 4.1 to the report filed on Form 8-K on October 7, 1999). 4.2 Addendum to the First Registration Rights Agreement, dated as of October 19, 1999, among eVentures Group, Inc., the persons set forth on Schedule 1 thereto and the other parties to the First Registration Rights Agreement (incorporated by reference to Exhibit 4.2 to the registration statement on Form 10 filed on December 20, 1999). 4.3 Registration Rights Agreement, dated as of November 19, 1999, between eVentures Group, Inc. and Geronimo Partners, L.P. (incorporated by reference to Exhibit 4.3 to the registration statement on Form 10 filed on December 20, 1999). 4.4 Schedule identifying other agreements, the dates thereof and the parties thereto, substantially identical to the Registration Rights Agreement, dated as of November 19, 1999, between eVentures Group, Inc. and Geronimo Partners, L.P. (incorporated by reference to Exhibit 4.4 to the registration statement on Form 10 filed on December 20, 1999). 4.5 Registration Rights Agreement, dated as of December 31, 1999, between eVentures Group, Inc. and the persons and entities signatories thereto (incorporated by reference to exhibit 4.5 to Amendment No. 1 to the registration statement on Form 10 filed on March 8, 2000). 16 17 27.1 Financial Data Schedule (b) Reports on Form 8-K Reports on 8-K 1) On October 7, 1999, the Company filed a report on Form 8-K announcing that it had acquired (i) all of the outstanding shares of AxisTel, (ii) approximately two-thirds of the outstanding shares of e.Volve and (iii) approximately 17% of the outstanding shares of i2v2.com Inc. pursuant to the Reorganization. 2) On November 3, 1999, the Company filed a report on Form 8-K announcing that on October 19, 1999 it had acquired the remaining one-third interest of e.Volve, making eVolve a wholly owned subsidiary of the Company. 3) On December 7, 1999, the Company filed a report on Form 8-K/A which amends the Form 8-K previously filed on October 7, 1999. The Form 8-K/A reported that the Company was unable to provide historical financial information statements and pro forma financial information statements as of December 6, 1999 as was previously planned, but anticipated filing the historical financial information statements and pro forma financial information statements on or prior to December 9, 1999. 4) On December 9, 1999, the Company filed a report on Form 8-K/A which amends the Form 8-K previously filed on October 7, 1999, as later amended on December 7, 1999. The Form 8-K/A filed on December 9, 1999 included the historical financial information statements and pro forma financial information statements, as well as unaudited financial statements of the Company as of September 30, 1999 and for the three months ended September 30, 1999 and September 30, 1998. 5) On December 14, 1999, the Company filed a report on Form 8-K announcing that (i) it had engaged BDO Seidman LLP at its auditors and dismissed Larry O'Donnell, C.P.A. as of December 9, 1999 and (ii) it had changed its fiscal year end date from April 30, 1999 to June 30, 1999. Page 17 of 20 6) On December 20, 1999, the Company filed a report on Form 8-K/A which amends the financial statements reported in the December 9, 1999 Form 8-K/A. 7) On December 28, 1999, the Company filed a report on Form 8-K/A which amends the Form 8-K filed on December 14, 1999 in order to provide the letter addressed to the Securities and Exchange Commission by the Company's former accountant required pursuant to Item 304 of Regulation S-K. 17 18 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. eVENTURES GROUP, INC. Date: March 8, 2000 By: /s/ Fred A. Vierra ---------------------- -------------------------------------- Fred A. Vierra Chairman of the Board Date: March 8, 2000 By: /s/ Barrett N. Wissman ---------------------- -------------------------------------- Barrett N.Wissman President and Chief Executive Officer Date: March 8, 2000 By: /s/ John Stevens Robling Jr. ---------------------- -------------------------------------- John Stevens Robling Jr. Chief Financial Officer 18 19 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION ------- ----------- 2.1 Agreement and Plan of Exchange, dated as of October 19, 1999, among eVentures Group, Inc., and the persons set forth on Schedule 1 thereto (incorporated by reference to Exhibit 2.1 to the report filed on Form 8-K on November 3, 1999). 3.1 Amended and Restated Certificate of Designation of Rights, Preferences and Privileges of Series A Convertible Preferred Stock, dated October 14, 1999 (incorporated by reference to Exhibit 3.6 to the registration statement filed on Form 10 on December 20, 1999). 3.2 Certificate of Designation of Rights, Preferences and Privileges of Series B Convertible Preferred Stock, dated as of November 10, 1999 (incorporated by reference to Exhibit 3.7 to the registration statement filed on Form 10 on December 20, 1999). 3.3 Certificate of Amendment, dated as of December 15, 1999, to the Certificate of Designation of Rights, Preferences and Privileges of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.8 to the registration statement filed on Form 10 on December 20, 1999). 3.4 Certificate of Designation, Preferences, Rights, and of Series C Convertible Preferred Stock (incorporated by reference to Exhibit 3.4 to the report filed on Form 10-Q, February 18, 2000). 4.1 Registration Rights Agreement, dated as of September 22, 1999, among the Registrant and the persons and entities set forth on Schedule 1 thereto (the "First Registration Rights Agreement") (incorporated by reference to Exhibit 4.1 to the report filed on Form 8-K on October 7, 1999). 4.2 Addendum to the First Registration Rights Agreement, dated as of October 19, 1999, among eVentures Group, Inc., the persons set forth on Schedule 1 thereto and the other parties to the First Registration Rights Agreement (incorporated by reference to Exhibit 4.2 to the registration statement filed on Form 10 on December 20, 1999). 4.3 Registration Rights Agreement, dated as of November 19, 1999, between eVentures Group, Inc. and Geronimo Partners, L.P. (incorporated by reference to Exhibit 4.3 to the registration statement filed on Form 10 on December 20, 1999). 4.4 Schedule identifying other agreements, the dates thereof and the parties thereto, substantially identical to the Registration Rights Agreement, dated as of November 19, 1999, between eVentures Group, Inc. and Geronimo Partners, L.P. (incorporated by reference to Exhibit 4.4 to the registration statement filed on Form 10 on December 20, 1999). 4.5 Registration Rights Agreement, dated as of December 31, 1999, between eVentures Group, Inc. and the persons and entities signatories thereto (incorporated by reference to Exhibit 4.5 to the registration statement filed on Form 10/A on March 8, 2000). 27.1 Financial Data Schedule
EX-27.1 2 FINANCIAL DATA SCHEDULE
5 THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1999 AND THE STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS JUN-30-2000 OCT-01-1999 DEC-31-1999 6,269,893 0 1,574,165 0 0 10,429,102 14,555,967 1,675,469 58,035,718 9,819,879 0 0 0 917 0 58,035,718 13,986,119 13,986,119 13,030,262 0 8,538,776 0 78,831 (7,686,971) 0 0 0 0 0 (7,686,971) (0.20) (0.20)
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