FORM 10-Q-SB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the Quarter ended March 31, 2000 Commission File Number: 0-13409 legalopinion.com formerly Eurotronics Holdings, Inc. Nevada 87-0550824 (Incorporation) (IRS Number) 3855 South Valley View #1, Las Vegas NV 89103 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (206) 652-3390 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: 31,083,942 Yes[x] No[ ] (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.) [ ] (Indicate by check mark whether if disclosure of delinquent filers (SEC 229.405) is not and will not to the best of Registrant's knowledge be contained herein, in definitive proxy or information statements incorporated herein by reference or any amendment hereto.) As of March 31, 2000 the aggregate number of shares held by non-affiliates was 1,792,833 shares. As of March 31, 2000 the number of shares outstanding of the Registrant's Common Stock was 31,083,942. 1 - -------------------------------------------------------------------------------- PART I: FINANCIAL INFORMATION - -------------------------------------------------------------------------------- Item 1. Financial Statements. Attached hereto and incorporated herein by this reference are consolidated unaudited financial statements (under cover of Exhibit QF1-00) for the three months ended March 31, 2000. Item 2. Management's Discussion and Analysis or Plan of Operation. (a) Plan of Operation for the next twelve months. (1) Cash Requirements and of Need for additional funds, twelve months. In order for the Company to carry out and institute new service and programs plus to continue to attract consumers to its Web site additional capital will be required. Over the next 12 months the Company will require up to $3,000,000 to institute these new programs and services plus utilize a major portion of the remaining $32,000,000 of the stock for advertising contract. Approximately $1,000,000 will be utilized in establishing new business-to-business (B2B) marketing teams, $1,000,000 for new product and program development and $1,000,000 for infrastructure equipment and working capital. Management believes that as much as $2,000,000 more capital will be required in the second year of the business plan. With the first quarter of 2000 traffic substantially below original projections, advertising will be focused towards four regional US markets with relatively high concentration of Internet users. New collateral marketing pieces and promotional programs targeted at small to mid-sized business users will focus our sales efforts on growing the business-to-business (B2B) internet niche in conjunction with new product and services programs. To drive traffic to the website, strategic alliances and joint ventures will supplement direct sales efforts in concert with the Company's targeted media campaign. In the estimates of management, the Company will need a total of $5 million over the next two years in order to establish a direct business-to-business regional sales force, introduce new products and programs, develop the corporate infrastructure to support such activities and build a revenue stream sufficient to operate profitably. To secure this funding, the company will access venture capital resources, initiating a Private Placement to fund its growth strategy. The company has redefined it's business model to include the development of additional profit centers and programs which should, in the opinion of management, drive a consistent stream of users to the site to sustain consistent profitable business operations within the next 24 months. Reference is made to Note 1 (a) of our auditor's report for the year ended December 31, 1999, that we have generated insignificant revenue and have accumulated a deficit since inception. This factor, among others raises doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to generate future profitable operations and receive financial support from stockholders and other investors. (2) Summary of Product Research and Development. As the software and website have already been completed and the majority of the development work is complete, on-going changes and enhancements may be made as the Company receives feedback from both lawyers and consumers and to accommodate new programs and services. (3) Expected purchase or sale of plant and significant equipment. None at this time 2 (4) Expected significant change in the number of employees. We will staff 5 new positions within the next 12 months. Further employees may be required if demand increases significantly for customer support and sales. (b) Discussion and Analysis of Financial Condition and Results of Operations. Our principal activity for 1997 and 1998 and the first two quarters of 1999 had been to revivify our corporate franchise and bring our securities filing and reporting current. The Company was not an operating entity, until the last half of 1999. Therefore comparison of current periods with corresponding previous periods would not be meaningful or useful, in the judgment of management. After the acquisition of our current business on August 9, 1999, the Company continued to incur expenses to develop our website. No revenues were generated until after the site became operational on October 31, 1999. Only $439 was generated from that time until year-end, December 31, 1999. For the quarter ending March 31,2000, the Company had total expenses of $3,204,323 of which $3,006,796 was for the initial advertising and promotion of the website. $2,955,172 of this advertising and promotion expense was a non-cash expense as a result of a 1999 stock-for-adverting transaction. Additional expenses were generated from the development and maintenance of the website of $29,134, attorney directory enrollment of $34,825 and general and administrative expenses of $133,568 which is detailed within the attached financial statements. The revenues from the first quarter of 2000 were only $3,875. Therefore, the net loss for the quarter was $3,200,448. The reason for such a modest result must be seen in terms of the lack of previous marketing efforts. During the quarter ending March 31, 2000, the Company operated on funds provided through additional shareholder loans in the amount of $ 326,881. Subsequent to the end of the quarter $698,250 of the shareholder loans were converted to common stock as part of the Regulation D, 506 Private Placement at $1.75 per share. This financing raised a total of $819,000. 3 - -------------------------------------------------------------------------------- PART II: OTHER INFORMATION - -------------------------------------------------------------------------------- Item 1. Legal Proceedings None Item 2. Change in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to Vote of Security Holders None Item 5. Other Information None 4 Item 6. Exhibits and Reports on Form 8-K None Exhibit Index Financial Statements and Documents Furnished as a part of this Registration Statement Exhibit QF1-00 Financial Statements (Un-Audited) March 31, 2000 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-Q Report for the Quarter ended March 31, 2000, has been signed below by the following person on behalf of the Registrant and in the capacity and on the date indicated. legalopinion.com formerly Eurotronics Holdings, Inc. Dated: May 12, 2000 /s/ /s/ John Marencik David Emerick President/Director Chief Financial Officer /s/ /s/ /s/ Don Crompton Rae Meier Brian Lovig DIRECTOR SECRETARY/DIRECTOR CHAIRMAN/DIRECTOR 5 - -------------------------------------------------------------------------------- Exhibit QF1-00 Un-Audited Financial Statements for the three months Ended March 31, 2000 - -------------------------------------------------------------------------------- 6 Consolidated Financial Statements of LEGALOPINION.COM (A Development Stage Enterprise) For the three months ended March 31, 2000 13 7 LEGALOPINION.COM (A Development Stage Enterprise) Consolidated Balance Sheet $ United States March 31, 2000 and December 31, 1999 - -------------------------------------------------------------------------------- 2000 1999 (Unaudited-Prepared by Management) Assets Current assets Cash $ 56,851 $ 23,080 Prepaid expenses (note 3) 7,025,669 10,000,920 - -------------------------------------------------------------------------------- 7,082,520 10,024,000 Fixed assets (note 4) 25,433 25,558 - -------------------------------------------------------------------------------- $ 7,107,953 $ 10,049,558 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities $ 73,941 $ 141,979 Long -term debt Stockholders' loans (note 5) 854,780 527,899 - -------------------------------------------------------------------------------- 928,721 669,878 Stockholders' equity Capital stock Authorized: 200,000,000 common shares with a par value of $0.0001 per share Issued: 31,083,942 common shares 31,084 31,084 Additional paid-in capital 10,000,516 10,000,516 Deficit accumulated during the development stage (3,852,368) (651,920) - -------------------------------------------------------------------------------- 6,179,232 9,379,680 ================================================================================ $ 7,107,953 $10,049,558 See accompanying notes to consolidated financial statements 8 LEGALOPINION.COM (A Development Stage Enterprise) Consolidated Statement of Loss $ United States For the three month period ended March 31, 2000 (Unaudited - Prepared by Management) From inception (April 17, 1999) to March 31, 2000 2000 - -------------------------------------------------------------------------------- Revenue Directory fees $ 4,314 $ 3,875 - -------------------------------------------------------------------------------- 4,314 3,875 Expenses Accounting and legal 116,099 36,676 Advertising and promotion 3,075,279 3,006,796 Attorney directory enrollment 93,275 34,825 Cost of recapitalization (note 2) 100,000 0 Credit card commissions 3,908 1,006 Depreciation 6,175 1,879 Foreign exchange gain (151) (401) General and administrative 25,580 13,353 Investor relations 56,517 28,043 Management fees paid to related party (note6) 99,287 38,648 Travel and legal conventions 35,825 8,309 Wages and employee benefits 6,055 6,055 Web-site and technology maintenance 238,833 29,134 - -------------------------------------------------------------------------------- 3,856,682 3,204,323 ================================================================================ Net loss $ (3,852,368) $ (3,200,448) Weighted average number of shares 31,083,942 Loss per share $ (0.10) See accompanying notes to consolidated financial statements 9 LEGALOPINION.COM (A Development Stage Enterprise) Consolidated Statement of Cash Flows $ United States For the three month period ended March 31, 2000 (Unaudited - Prepared by Management) From inception (April 7, 1999) to March 31, 2000 2000 - -------------------------------------------------------------------------------- Operating activities Net loss $ (3,852,368) $ (3,200,448) Items non-involving cash Advertising paid with share consideration 2,975,172 2,975,172 Depreciation 6,175 1,879 Changes in non-cash working capital Prepaid expenses (841) 79 Accounts payable and accrued liabilities 60,791 (68,038) - -------------------------------------------------------------------------------- (811,071) (291,356) Financing Stockholders' loans 854,780 326,881 Investing Issuance of shares 45,000 0 Purchase of fixed assets (31,608) (1,754) - -------------------------------------------------------------------------------- 13,392 (1,754) Change in foreign currency denominated cash balance (250) 0 Increase in cash 56,851 33,771 Cash, beginning of period 0 23,080 Cash, end of period $ 56,851 $ 56,851 Supplementary information: Interest paid 0 0 Income taxes paid 0 0 Non-cash investing and financing activities: Issuance of capital stock for services to be received 10,000,000 0 Issuance of common stock for common stock of a private corporation 900 0 See accompanying notes to consolidated financial statements 10 LEGALOPINION.COM (A Development Stage Enterprise) Consolidated Statement of Stockholders' Equity $ United States Period from date of Inception (April 7, 1999) to March 31, 2000 (Unaudited - Prepared by Management) Accumulated Additional During the Total Number Paid in Development Stockholders' of shares Amount Capital Stage Equity Issued for cash on April 7, 1999 100 $ 45,000 $ 0 $ 0 $ 45,000 Adjustment to record capital transaction (note2) 26,083,842 (14,416) 1,016 0 (13,400) Net loss for the period ended December 31, 1999 0 0 0 (651,920) (651,920) Issuance of shares for services (note3) 5,000,000 500 9,999,500 0 10,000,000 Balance, December 31, 1999 31,083,942 31,084 10,000,516 (651,920) 9,379,680 Net Loss for the period ended March 31, 2000 0 0 0 (3,200,448) (3,200,448) Balance, March 31, 2000 (Unaudited) 31,083,942 $ 31,084 $10,000,516 ($3,852,368) $ 6,179,232 See accompanying notes to consolidated financial statements 11 LEGALOPINION.COM (A Development Stage Enterprise) Notes to Consolidated Financial Statements $ United States For the three month period ended March 31, 2000 (Unaudited - Prepared by Management) legalopinion.com was incorporated under the laws of the State of Utah for the primary purpose of investigating and evaluating prospective mineral properties for possible acquisition. Effective August 9, 1999, the Company acquired 100% of the outstanding shares of legalopinion.com, Inc., a private corporation incorporated on April 7, 1999 under the laws of Alberta. Prior to the acquisition, LegalOpinion.com was a non-operating public shell corporation with nominal net assets. For accounting purposes this transaction has been accounted for as a recapitalization of legalopinion.com, Inc. (see note 2). As part of a capital transaction with legalopinion.com, Inc., the Company continued its registration jurisdiction from Utah to Nevada and changed its principal activity to the development of an online directory service that provides consumers and attorneys the ability to interact. 1. SIGNIFICANT ACCOUNTING POLICIES: a) Going concern These financial statements have been prepared on the going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of business. As shown in the consolidated financial statements, the Company has generated insignificant revenues and has accumulated a deficit since inception of $3,852,368. This factor, among others raises substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent on its ability to generate future profitable operations and receive continued financial support from its stockholders and other investors. Management's plans with respect to generating future profitable operations include the launch of an external advertising campaign (see note 3), the anticipated results of which are sales sufficient to cover operating expenses. Management is also anticipating certain stockholders to provide additional funds in the form of stockholders loans. b) Translation of financial statements The Company's wholly owned subsidiary, legalopinion.com, Inc. operates in the United States and Canada and accordingly, a portion of its operations are conducted in Canadian currency. The method of translation applied is as follows: i) Monetary assets and liabilities are translated at the rate of exchange in effect at the balance sheet date, being US $1.00 per Cdn. $1.46 (December 31, 1999 - $1.44). ii) Non-monetary assets and liabilities are translated at the rate of exchange in effect at the time of acquisition of the assets or assumption of the liabilities. iii) Revenues and expenses are translated at the exchange rate in effect at the transaction date. iv) Foreign exchange gains and losses on translation are included in income. 12 LEGALOPINION.COM (A Development Stage Enterprise) Notes to Consolidated Financial Statements $ United States For the three month period ended March 31, 2000 (Unaudited - Prepared by Management) 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): c) Basis of presentation and consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All material inter-company transactions and balances have been eliminated. To March 31, 2000, the Company is primarily focused on the process of developing its business and no significant revenues have been generated to date. Accordingly, the Company is considered to be a development state enterprise for financial reporting purposes. d) Fixed assets Fixed assets are recorded at cost. Depreciation is provided using the following methods and annual rates which are intended to amortize the cost of the assets over their estimated useful life: Asset Method Rate Computer equipment Declining balance 30% Furniture and fixtures Declining balance 20% e) Income taxes The Company accounts for income taxes by the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. f) Management estimates The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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. g) Financial instruments The fair values of the Company's cash and accounts payable and accrued liabilities approximate their carrying values due to the relatively short periods to maturity of the instruments. It is not possible to arrive at a fair value for stockholders' loans as a maturity date is not determinable, there is not a ready market for such instruments and given the nature of the relationship between the stockholder and the Company. The maximum credit risk exposure for all financial assets is the carrying amount of those assets. 13 LEGALOPINION.COM (A Development Stage Enterprise) Notes to Consolidated Financial Statements $ United States For the three month period ended March 31, 2000 (Unaudited - Prepared by Management) 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): h) Loss per share Loss per share has been calculated using the weighted average number of common shares outstanding during the period. i) Accounting standards change In June 1998, the Financial Accounting Standards Board issued SFAS no. 133, "Accounting for Derivative Instruments and Hedging Activities." Adoption of this statement is not expected to have a significant impact on the Company's results of operations or financial position. 2. CAPITAL TRANSACTION: Effective August 9, 1999, the Company acquired 100% of the outstanding common shares of LegalOpinion.Com, Inc., a private corporation incorporated on April 7, 1999 under the laws of Alberta, Canada for cash consideration of $100,000 and the issuance of 9,000,000 common shares from treasury. The transaction has been accounted for as if it were a capital transaction, effectively as if LegalOpinion.com, Inc. had issued shares for the net assets of the Company. Accordingly, this transaction has been measured at the carrying amount of the assets and liabilities of the Company with the excess of the carrying amount reflected as a charge to operations. In addition, the from inception figures presented on the consolidated statement of loss, stockholders' equity and cash flows reflect the results from operations and cash flows of LegalOpinion.com, Inc. for the period from incorporation on April 7, 1999 to March 31, 2000, combined with those of the legal parent from the date of acquisition on August 9, 1999. 3. PREPAID EXPENSES: The Company entered into an agreement on November 22, 1999 whereby an advertising service provider agreed to provide $40,000,000 of advertising services in exchange for common shares of the Company. As at March 31, 2000, 5,000,000 common shares were issued to the advertising service provider. This transaction has been recorded at $10,000,000, the estimated fair value of the advertising services to be received. As at March 31, 2000, $2,975,172 of the committed advertising had ran leaving $7,024,828 ($10,000,000 as at December 31, 1999) still recorded as a prepaid expense. This agreement for delivery of advertising services was renegotiated during the first quarter. Under the revised agreement, the Company will no longer issue blocks of shares in advance but will only issue shares for the value of specific advertising as it is approved and booked. The advertising service provider has agreed to provide up to $32,000,000 of additional advertising prior to June 1, 2001 subject to a thirty (30) day cancellation provision. The price per share is calculated based on a 25% discount to the average closing price during the last month of each calendar quarter during 2000. 14 LEGALOPINION.COM (A Development Stage Enterprise) Notes to Consolidated Financial Statements $ United States For the three month period ended March 31, 2000 (Unaudited - Prepared by Management) 4. FIXED ASSETS: 2000 1999 Accumulated Net book Net book Cost amortization value value - -------------------------------------------------------------------------------- Computer equipment $ 26,204 $ 5,602 $ 20,602 $22,273 Furniture and fixtures 5,404 573 4,831 3,285 $ 31,608 $ 6,175 $ 25,433 $25,558 5. STOCKHOLDERS' LOANS: Stockholders' loans are unsecured, do not bear interest and have no specified terms of repayment. As the stockholders have indicated in writing that they will not request repayment in the next fiscal year, the entire amount has been shown as a long term liability. 6. INCOME TAXES: At December 31, 1999, the Company had a net operating loss carry forward for United States income tax purposes of approximately $4,500,000 and a non-capital loss carry forward for Canadian income tax purposes of approximately $3,800,000. The net operating loss and non-capital loss carry forward expire in increments beginning in 2000 and 2006 respectively. No amount has been reflected on the balance sheet for future income taxes as any future income tax asset has been fully offset by a valuation allowance. 7. SUBSEQUENT EVENT: In April 2000, the Company issued 468,000 common shares at $1.75 per share for total consideration of $819,000 paid as follows: Cash $ 120,750 Repayment of stockholders' loans 698,250 - ----------------------------------- ------- $ 819,000 15