SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2001
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________.
Commission file number 1-12293
ESOFTBANK.COM INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 87-0394313
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
Flat A, United Plaza, 5022 Binhe Main Street
Futian District Shenzhen, PRC 518026
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(Address of principal executive offices)
011-86-755-255-1130
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(Issuer's Telephone Number, including Area Code)
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 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.
Yes [X] No [_]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, $.001 Par Value - 12,920,000 shares as of May 22, 2001
Index
ESOFTBANK.COM, INC. and Subsidiaries
Page No.
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Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets--March 31, 2001
and December 31, 2000 3
Condensed consolidated statements of operations--
Three months ended March 31, 2001 and 2000 4
Condensed consolidated statements of cash flows--
Three months ended March 31, 2001 and 2000 5
Notes to condensed consolidated financial statements--
March 31, 2001 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results Of Operations 8
Part II. Other Information
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ESOFTBANK.COM, INC. AND SUBSIDIARIES
Condensed CONSOLIDATED BALANCE SHEETS
March 31, 2001 and December 31, 2000
(Unaudited)
December 31 March 31,
2000 2001 2001
(Unaudited) (Unaudited)
Rmb Rmb US$
----------- --------- -----------
ASSETS
CURRENT ASSETS
Cash 3,221,718 1,567,408 188,845
Accounts receivable 640,900 1,834,980 221,082
Deposits and other 1,000,271 646,561 77,899
Advances to employees 427,395 461,699 55,626
Costs and estimated earnings in excess of
billings on uncompleted contracts 207,944 315,684 38,034
Due from a related party -- 95,352 11,488
----------- ----------- ----------
TOTAL CURRENT ASSETS 5,498,228 4,921,684 592,974
----------- ----------- ----------
NONCURRENT ASSETS
Long-term investment 2,800,000 2,800,000 337,349
Product development costs, net 852,995 924,823 111,425
Fixed assets 2,929,976 2,784,636 335,498
Other 265,068 71,453 8,609
----------- ----------- ----------
TOTAL NONCURRENT ASSETS 6,848,039 6,580,912 792,881
----------- ----------- ----------
TOTAL ASSETS 12,346,267 11,502,596 1,385,855
=========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term loan 16,000,000 16,000,000 1,927,711
Accounts payable 159,900 159,900 19,265
Accrued expenses -- -- --
Salaries,wages and other compensation 669,171 1,102,407 132,820
Employee frings benefits 635,988 694,633 83,691
Taxes 355,713 322,053 38,801
Other 1,588,513 1,502,755 183,224
Customer deposits 41,000 30,000 3,614
Billings in excess of costs and estimated
earnings on uncompleted contracts 57,890 316,012 38,074
Due to director 2,316,408 2,887,801 347,928
Due to related party -- 200,000 24,096
----------- ----------- ----------
TOTAL CURRENT LIABILITIES 21,824,583 23,233,561 2,799,224
----------- ----------- ----------
MINORITY INTEREST 261,925 441,260 53,164
----------- ----------- ----------
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock - Par value US$.001; issued and
outstanding - 12,920,000 shares 107,236 107,236 12,920
Additional paid-in capital 52,715,431 52,715,431 6,351,257
Reserve funds 347,148 347,148 41,825
Accumulated deficit (62,910,056) (65,342,040) (7,872,535)
------------ ----------- ----------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (9,740,241) (12,172,225) 1,466,533)
------------ ----------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 12,346,267 11,502,596 1,385,855
============ =========== ==========
See notes to condensed consolidated financial statements.
3
ESOFTBANK.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
2000 2001 2001
------------ ------------ -----------
Rmb Rmb US$
REVENUE -- 2,117,926 $ 255,172
COST OF SALES (371,322) (1,443,985) (173,974)
----------- ----------- ----------
GROSS PROFIT (LOSS) (371,322) 673,941 81,198
SELLING AND ADMINISTRATIVE
EXPENSES (2,947,130) (2,818,282) (339,552)
----------- ----------- ----------
LOSS FROM OPERATIONS (3,318,452) (2,144,341) (258,354)
----------- ----------- ----------
OTHER INCOME (EXPENSE)
INTEREST EXPENSE -- (256,864) (30,947)
OTHER INCOME, NET 13,021 161,535 19,462
---------- ----------- ----------
TOTAL OTHER INCOME (EXPENSE), NET 13,021 (95,329) (11,485)
---------- ----------- ----------
LOSS BEFORE TAXES (3,305,431) (2,239,670) (269,839)
TAXES -- 12,979 1,564
---------- ----------- ----------
INCOME (LOSS) BEFORE
MINORITY INTEREST (3,305,431) (2,252,649) (271,403)
MINORITY INTEREST 658,674 (179,335) (21,607)
---------- ----------- ----------
NET LOSS (2,646,757) (2,431,984) (293,010)
========== =========== ==========
Basic and diluted net loss per share (.21) (.19) $ (.02)
========== =========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 12,800,000 12,920,000 12,920,000
========== =========== ===========
See notes to condensed consolidated financial statements.
4
ESOFTBANK.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
2000 2001 2001
Rmb Rmb US$
----------- ----------- -----------
Cash Flows from Operating Activities
Net income (loss) (2,646,757) (2,431,984) $(293,010)
----------- ----------- -----------
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation 37,840 147,340 17,752
Amortization of product development costs 85,152 98,136 11,823
Provision for losses on receivables - Customers 75,653 265,089 31,938
Minority interest (658,674) 179,335 21,607
(Increase) decrease in
Accounts receivable (124,653) (1,265,554) (152,476)
Deposits and other (1,263,518) 353,710 42,616
Costs and estimated earnings in excess of
billings on uncompleted contracts -- (107,740) (12,981)
Advances to employees 8,411 (34,304) (4,133)
Increase (decrease) in
Accounts payable and accrued expenses (233,868) 390,463 47,044
Customer deposits 5,986,729 (11,000) (1,325)
Billings in excess of costs and estimated
earnings on uncompleted contracts -- 258,122 31,099
Net repayments to director (33,015) -- --
---------- ----------- ----------
Total Adjustments 3,880,057 273,597 32,964
---------- ----------- ----------
Net Cash Provided by (Used in) Operating
Activities 1,233,300 (2,158,387) (260,046)
---------- ----------- ----------
Cash Flows from Investing Activities
Capital expenditures (559,675) (2,000) (241)
Capitalized expenditures for product development
costs (123,763) (169,964) (20,478)
Net repayments from shareholders 1,485,426 -- --
Initial investment of minority shareholder 240,000 (95,352) (11,488)
Other (73,196) - -
---------- ----------- ----------
Net Cash Provided by (Used In) Investing
Activities 968,792 (267,316) (32,207)
---------- ----------- ----------
Cash Flows from Financing Activities
Net borrowings from SiTech Holding 1,508,161 200,000 24,096
Net short term borrowings 5,144,995 - -
Net borrowings from director - 571,373 68,843
Capital contributions 207,108 - -
---------- ----------- ----------
Net Cash Provided by Financing Activities 6,860,264 771,393 92,939
---------- ----------- ----------
Net Increase (Decrease) in Cash 9,062,356 (1,654,310) (199,314)
Cash, Beginning of Period 629,351 3,221,718 388,159
---------- ----------- ----------
Cash, End of Period 9,691,707 1,567,408 $ 188,845
========== =========== ==========
See notes to condensed consolidated financial statements.
5
ESOFTBANK.COM, INC. AND SUBSIDIARIES
NOTES TO Condensed CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2001
NOTE 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
The Company also believes that the interim financial statements contain all
adjustments necessary for a fair presentation of the results for such interim
periods. All of these adjustments are normal recurring adjustments. The results
of operations for interim periods do not necessarily predict the operating
results for the full year. The consolidated balance sheet as of December 31,
2000 has been derived from audited financial statements but does not include all
disclosures required by generally accepted accounting principles as permitted by
interim reporting requirements. The information included in this report should
be read in conjunction with Management's Discussion and Analysis of Financial
Condition and Results of Operations, the audited financial statements and
related notes included in the Company's 2000 Form 10-KSB and the audited
financial statements in the Form 10-KSB.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-KSB for the
year ended December 31 2000.
6
ESOFTBANK.COM, INC. AND SUBSIDIARIES
NOTE 2 - LONG-TERM DEBT
On May 29, 2000 the Company entered into a one-year credit facility with
Shenzhen Commercial Bank for RMB 16 million at 5.3125%. The credit facility is
secured by shares in the Company owned by Dr. Lan, director and shareholder of
the Company.
7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS of Financial Condition and Results
of Operations
Forward-Looking Statements
The following presentation contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These statements are
based on our current expectations and relate to anticipated future events that
are not historical facts, such as our business strategies and their intended
results. Our actual results could differ materially from those set forth in the
forward-looking statements as a result of (i) changes in general economic
conditions, (ii) changes in the assumptions used in making these statements,
(iii) our lack of a long-term operating history, (iv) competition generally, and
in the technology sector in particular, (v) our ability to attract, hire, train
and retain competent personnel in a variety of functions, (vi) our ability to
raise sufficient capital to fund our expansion, and (vii) our ability to attract
sub-contractors, software engineers, development teams to our website, and setup
a nation-wide collaborative platform for software outsourcing in China.
Overview
ESOFTBANK.COM, Inc. is a Chinese online software development &
sub-contracting services provider. We offer a wide range of value-added services
including IT consulting, project outsourcing, quality control and software
releasing. Our focus is on various e-commerce, network management and resource
control systems for business and government enterprises. Our website,
HTTP://www.eSoftBank.com, is a registry for Chinese web page designers and
e-commerce developers, as well as institutions requiring the services of these
people, on which we provide a cost-efficient platform for job exchanges and
assignments. It is an interactive and integrated virtual software community
offering technical databank, knowledge exchange, job subcontracting, software
testing and support services. Through the website, we offer independent software
engineers a source of business opportunities and web space, while companies are
able to select from a variety of software engineers and software companies. Our
revenues are derived from commissions on transaction volume on the platform, as
well as handling fees and service charges for software engineering and technical
support services. Our headquarters are in Shenzhen, China.
We changed our company's name from Natural Way Technologies, Inc. to
ESOFTBANK.COM, Inc. on March 31, 2000 when we acquired (the "Acquisition") all
of the issued and outstanding shares of World Concept Development Limited
("WCD"). WCD owns the software development and Internet-based software
subcontracting platform operations conducted in China under the name
ESOFTBANK.COM.
The Acquisition has been accounted for using the purchase method of
accounting as a reverse acquisition, whereby the company issuing its shares to
effect a business combination is determined to be the acquiree in the business
combination. This occurs when the shareholders of the issuer have less than a
majority of voting control of the combined entity. The company whose
shareholders retain the majority voting interest in the combined entity is
presumed the acquirer. In the Acquisition, the then-existing shareholders of
Natural Way retained a 27% voting interest in the combined entity on completion
of the Acquisition. Accordingly, WCD is deemed to be the acquirer and the assets
of Natural Way are required to be fair valued at acquisition. As Natural Way had
no assets (other than obligations due from a shareholder) or operations during
1999 and 2000 (prior to March 31st), no fair value adjustments were required and
there are no changes to the WCD financial statements that would require a pro
forma analysis. Additionally, because WCD is deemed to be the acquirer, the
historical financial statements of Natural Way (now ESOFTBANK.COM Inc.) have
been restated, and now reflect the historical operations of WCD and its
subsidiaries.
SiTech Hainan Ltd. (Haikou) is the only company that existed prior to 2000
that is reflected in our consolidated financial statements. WCD, ESOFTBANK
Shenzhen and Beijing were formed in the fourth quarter of 1999 and only became
operational in the first quarter of 2000. While for the first quarter of 2001,
revenues come from WCD and ESOFTBANK Shenzhen, Beijing, Haikou.
8
The business of ESOFTBANK.COM is currently conducted in Renminbi, the
currency of China ("RMB"), which for purposes of this section and our financial
statements are converted at an exchange rate of $1.00 = RMB 8.30.
Results of Operations
We had revenues of $255,172 from operations during the first quarter of 2001,
compared to $0 for the same periods of 2000, when we put all our resources into
developing our outsourcing platform (http://www.eSoftBank.com), The increased
revenues over the respective periods of 2001 reflect the services that ESOFTBANK
Shenzhen, Beijing, and Haikou provided to Shenzhen Huawei Technologies Co. Ltd.
(hereinafter referred to as "Huawei") under a $534,939 service contract with
Huawei, of which $207,871 was completed and billed in the first quarter of 2001.
Other projects, including several B2B website projects in Hong Kong which
generated (Chinagator.com and local government) approximately $28,431 in
revenues and a project from the United States that generated approximately
$18,869 in revenues.
We believe that our current contracts signal the growing software
outsourcing and e-commerce market that our business model is viewed favorably in
China and has the potential to compete in both domestic and international
markets. We also expect to generate revenues from our international expansion.
Our cost of sales were $173,974 in the first quarter of 2001, compared to
$44,738 for the corresponding period of 2000. The increases resulted from our
being engaged in more projects than last year, increased salaries, and the
continued development of our new platform operations. Salaries for the first
quarter of 2001 increased over the same period of 2000 primarily because we
hired more software programmers and because of increasing salary levels of our
incumbent programmers. Gross margin as a percentage of sales was 31.5% in the
first quarter of 2001
Our selling and administrative expenses ("SGA") decreased by $15,524 to
$339,552 in the first quarter of 2001 from $355,076 in the comparable period of
2000. The decrease is due to increases in staffing and marketing efforts since
the third quarter of 2000, management has also imposed stricter controls on
advertising expenses. We expect these controls to continue contributing to
decreasing SGA expenses in the future and in an effort to make our distribution
system more efficient, we have also established strategic alliances with
established companies that will assist us in distributing our services. See
"Recent Developments."
We incurred interest expense of $30,947 for the first quarter of 2001. We had
no interest expense for the first quarter of 2000. We incurred interest expense
on our short-term loan from the Bank.
Other income, net consist of recovery of prior expenses, foreign currency
gain or losses and miscellaneous income. For the first quarter of 2001, we had
other income of $19,462 compared to $1,569 for the corresponding period of 2000,
principally reflecting reduced foreign currency losses and miscellaneous income.
Our income taxes increased to $1,564 for the first quarter of 2001. We had no
tax liability for the corresponding period of the prior year. We incurred income
tax expenses, even though we had an operating loss because income taxes in the
People's Republic of China are a function of gross sales and not of net income.
The minority interest represents the 20% interest in eSoftBank (Beijing)
Software Systems Co. Ltd. and the 47.6% of SiTech Hainan Ltd. not owned by the
Company.
9
We incurred a loss from operations for the first quarter of 2001 of $258,354
and a net loss of $293,010 compared to an operating loss of $399,813 and a net
loss of $318,887 of the same period of 2000, a decrease in the net loss
of$25,857. The decreased operating losses in the first quarter of 2001 over the
first quarter of 2000 were due to our incomes from projects are growing faster
than our cost. We believe that these trends will continue as our revenues
increase and expenses decrease. We also expect that our operations from being a
software outsourcing services provider and subcontracting platform will produce
additional revenues and, ultimately, profitability. Notwithstanding our
expectations, however, there is no assurance that we will ever become
profitable.
Outlook
General
We believe that we are well positioned for growth in the rapidly
developing information technology ("IT") industry in China and internationally.
Our web site is currently visited and utilized by individuals and companies in
Beijing, Shenzhen, Hainan and other cities in China and our outsourcing platform
has been accepted by Chinese software venders and buyers. Approximately, 300
projects were traded on our platform in 2000 but we only recorded those projects
which our employees are involved and provided value-added service in our annual
audit report of 2000.
There are three other types of projects from which we do not generate
revenues, the first are projects where we serve as a middle-man, and introduce
external IT software engineers to outsourcing project owners (clients). The
client will make payment directly to the external IT engineers and we do not
charge a commission in order to attract more IT engineers and projects. Second,
we split some projects into small packages and recommend these packages to
external IT engineers without any commission; and third direct transaction
signed between external IT engineers and outsourcing project owners. The total
annual amount for these 3 types of projects in 2000 was $796K (unaudited),
managed by ESOFTBANK and finished by a third party, $995K(unaudited), managed by
ESOFTBANK and be outsourced to a third party) and $1,721K (unaudited, managed
and finished by a third party) respectively. And we are confident with the
functioning of our project management platform, external IT engineers will turn
to use our service and IT tools, while outsourcing project owners will be
attracted to our offline program management and development services to ensure
timely, qualified and efficient outsourcing. All these will produce more
services revenues in Year 2001.
We also expect that our revenues will increase as a result of our
software-outsourcing model as an integration of our online
software-subcontracting platform and our onsite project management center. We
have already established four project management centers in China:
o Huawei Project Management Center to provide software outsourcing services
in telecommunication industry;
o BKB Project Management Center, to access the Japanese software outsourcing
market;
o Beijing Project Management Center will be focus on American software
outsourcing market this s a department under ESOFTBANK (Beijing) Software
Systems Co., Ltd.;
o SiTech Project Management Center provides e-business solutions for the
China and Hong Kong markets. They have recently developed one of the
largest investment e-commerce systems (http://www.Chinagator.com) in China.
Recent Developments
We believe that the recent developments described below will have a positive
impact on our future results of operations. However, there is no assurance that
these benefits will be realized or that, if realized, these benefits will reach
the levels we anticipate.
10
1. We have entered a strategic partnership with Huawei Technologies Co.,
Ltd. to provide software development services for the telecommunication
industry.
Huawei Technologies Co. Ltd. is one of the leading telecom equipment provides
and one of the largest network solutions providers in Asia. Under this
agreement, ESOFTBANK is required to build a multi-layer and object-oriented
automatic testing platform. The platform is primarily used to provide black box
testing with high automation. It also provides a system-integrated testing
platform which has an open interface for various testing tools and completes
various testing tasks such as system function testing, integrated testing and
reliability testing.
We have established a special Project Management Center (PMC) to provide
software outsourcing services to the telecommunication industry, and annual
revenue from this PMC are estimated to be over US$ 1 millions.
2. We are discussing an acquisition for Beijing Kebao Systems Co., Ltd.
(BKB) which will enable ESOFTBANK to tap the Japanese software outsourcing
market.
BKB was formed in 1992 by Beijing Computation Center (a Beijing Municipal
Governmental Research Institute) and Kawasaki (KSI) Steel System Incorporations,
Japan. Its principal business is outsourcing projects from Japanese markets.
BKB has been successful in many fields, and had provided customers with many
products, including Network Management Information System, Bank Remittance
System, Business Management Information System, and Factory Automation System.
Through their software developing experience, BKB has accumulated a set of
software developing standards both in developing procedure and quality control.
As the result of this endeavor, BKB has grown into a leading software developing
company in remote development and its achievements were rewarded when BKB became
the first software company to get the certificate of ISO9001 and passed the
verification of UKAS.
At present, BKB has over 60 employees, among whom 95% hold bachelors and masters
degrees. Many of these are working in Japan or have once worked in Japan. We are
confident that the technological background, the strong sense of responsibility
of our staff and the software developing experience of our teams will lead us
into a new era.
Under the draft acquisition agreement, ESOFTBANK will acquire a major interest
in BKB while Beijing Computation Center will hold the remaining shares. The
expected revenue for BKB from Japan outsourcing market should be over US$1
million.
3. We are also negotiating with Hunan Xiangyou Technology Co., Ltd. to
establish a joint software development center to provide software outsourcing
services for the China Post Bureau
In 2000, ESOFTBANK (Shenzhen) Networks Co., Ltd. purchased a 2.67% equity share
(1.8 millions common shares) in Hunan Xiangyou Technology Co., Ltd. for about
$337,000. Xiangyou Technology plans to be listed on the Shanghai's Stock
Exchange at the end of this year. We believe that we can leverage our joint
development center with Xiangyou Technology into a broader technology base in
telecommunications and e-post services and generate stable revenues from our new
business model of the Project Management Center.
4. ESOFTBANK Beijing will focus on the American software outsourcing
market. It currently has a business partnership with ConnectedBrand (a media
company in Silicon Valley) and US Technical (a aero-consultant company in Los
Angeles). ESOFTBANK (Beijing) Software Systems Co., Ltd. provides
web-development services for ConnectedBrand, and database transfer services for
US Technical.
Liquidity and Capital Resources
At the end of the first quarter of 2001, we had cash of $188,845 and a deficit
in working capital of $2,206,250, in contrast to cash of $1,167,675 a deficit in
working capital of $284,431at the end of the first quarter of 2000. This
decreased our cash and decrease in working capital resulted from a combination
of our investment in Hunan Xiangyou Technology Co., Ltd. ($337,349),
eSoftBank.com web site, our OnTeam platform and project and an increase in
accounts receivable $221,082 from Huawei and other clients. (See "Recent
Developments")
11
Cash provided by (used in) operating activities decreased by $408,636 to
$260,046 used in operating activities for the first quarter of 2001 from
$148,590 provided by operating activities for the first quarter of 2000. This
change in attributable to a decline in net income and an increased depreciation
and amortization which was partially offset by changes in current accounts.
Net cash used in investing activities increased to $32,207 for the first
quarter of 2001 from net cash provided of $116,722 for the first quarter of
2000. This increase is attributable to increased expenditures for product
development and an advance from a related party which was partially offset by
reduced capital expenditures and no repayment of shareholder loans.
There was $826,538 of cash provided by financing activities in the first
quarter of 2000, compared to $92,939, of cash provided by financing activities
in the first quarter of 2001, all of which were from borrowings from a director
and a related party.
Our business is now generating more revenues from our project management
centers. However, management is now in the process of raising $534,940 capital
from investors in China, and believe that this funding will enable us to develop
our business and meet some of our operating cash needs. Under the terms and
conditions of a credit facility between ESOFTBANK Shenzhen and the Shenzhen
commercial bank, on June 30, 2000, ESOFTBANK Shenzhen borrowed $1.928 million
from the bank at an interest rate of 5.3125% and a term of one year. The loan is
collateralized by 3,193,660 of our shares issued to one of our principals, and
the bank has recently agreed to renew the loan to two years loan to May 29,
2002.
However, based on the current level of expenditures, it will be necessary for us
to seek additional funding over the next twelve months. Without such funding, we
will be unable to implement our business plan.
12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities and Use of Proceeds.
None
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.
Exhibits
None
Reports on Form 8-K
None.
13
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.
eSoftBank.com, Inc.
Dated: May 22, 2001 By: /s/ Dr. Hongbing Lan
----------------------------------
Dr. Hongbing Lan
Chief Executive Officer
Dated: May 22, 2001 By: /s/ Liao Qianzhi
----------------------------------
Liao Qianzhi
Principal Accounting Officer