Edgar Filing: BANKENGINE TECHNOLOGIES INC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-QSB

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended February 28, 2002

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-27773

BANKENGINE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Florida 59-3134518
----------------------- ------------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)
-

725 Port St. Lucie Blvd., Suite 201, Port St. Lucie, FL, 34984
--------------------------------------------------------------
(Address of principal executive offices, including zip code)

(888) 672-5935
(Registrant's telephone number, including area code)

Check 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, and (2) has been subject to such filing requirements for
the past 90 days. Yes |X| No |_|

The number of shares outstanding of the registrant's Common Stock,
$.001 Par Value, on April 12, 2002, was 19,015,893 shares.

BANKENGINE TECHNOLOGIES, INC.

FEBRUARY 28, 2002 QUARTERLY REPORT ON FORM 10-QSB

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION
Page Number

Item 1. Financial Statements................................................. 2
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................ 13

PART II OTHER INFORMATION

Item 1. Legal Proceedings.................................................... 17
Item 2. Changes in Securities and Use of Proceeds............................ 17
Item 3. Defaults Upon Senior Securities...................................... 17
Item 4. Submission of Matters to a Vote of Security Holders.................. 17
Item 5. Other Information.................................................... 17
Item 6. Exhibits and Reports on Form 8-K..................................... 17

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-QSB contains forward-looking
statements as defined by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, future events or performance and underlying assumptions and
other statements, which are other statements of historical facts. These
statements are subject to uncertainties and risks including, but not limited to,
product and service demand and acceptance, changes in technology, economic
conditions, the impact of competition and pricing, government regulation, and
other risks defined in this document and in statements filed from time to time
with the Securities and Exchange Commission. All such forward-looking statements
are expressly qualified by these cautionary statements and any other cautionary
statements that may accompany the forward-looking statements. In addition,
BankEngine Technologies, Inc. disclaims any obligations to update any
forward-looking statements to reflect events of circumstances after the date
hereof.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
As of February 28, 2002
(Amounts Expressed in US Dollars)
(Unaudited)

ASSETS

Current

Cash and cash equivalents $210,124
Funds held on deposit 211,935
Accounts receivable 3,242
Prepaid expenses and sundry 5,200
430,501

CAPITAL ASSETS, net of accumulated depreciation 22,090

452,591

LIABILITIES

Current

Accounts payable 359,092
Income taxes payable 46,732
405,824

LOANS FROM STOCKHOLDER 119,436
525,260

CONTINGENCIES AND COMMITMENTS

STOCKHOLDERS' EQUITY (DEFICIENCY)

Common stock authorized
50,000,000 Class Common Stock with a par value of $.001 each 17,216

Additional paid in capital 433,590

Accumulated deficit -511,999
Accumulated other comprehensive income (loss) net of tax -11,476

-72,669

452,591

The accompanying notes are an integral part of these consolidated financial
statements.

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
For the three and six month periods ended February 28, 2002 and 2001
(Amounts Expressed in US Dollars)
(Unaudited)

For the three month periods ended For the six month periods ended
February 28, February 28,
----------------------------------- -------------------------------
2002 2001 2002 2001
---- ---- ---- ----

Revenue $ 63 $ 135,026 $ 6,075 $ 295,057

Cost of sales - 26,940 7,940 51,062

Gross profit (loss) 63 108,086 (1,865) 243,995

Selling, general and administrative expenses 71,519 34,735 116,638 156,237
Depreciation 1,526 2,636 -
73,045 34,735 119,274 156,237

Net income (loss) before other (72,982) 73,351 (121,139) 87,758
Interest income 895 - 895 -
Net income (loss) (72,087) 73,351 (120,244) 87,758

Net income (loss) per common share ($0.00) $0.00 ($0.01) $0.01

Weighted average number of
Common shares outstanding 17,164,208 15,069,536 17,139,782 13,526,289

The accompanying notes are an integral part of these consolidated financial
statements

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated statements of changes in Stockholders' Equity (Deficiency)
For the six month periods ended February 28, 2002 and 2001
(Amounts expressed in US Dollars)
(Unaudited)

Accumulated Other
Stock Additional paid Accumulated Comprehensive Comprehensive
Common Shares Amount in capital deficit income (loss) income (loss)
------------- ------ --------------- ------------ -------------- ---------------

Balance, August 31, 2000 12,000,000 $ 12,000 $ 200,849 $-209,314 $ $ 1,767

Shares issued on acquisition 5,115,893 5,116 230,341

Net income for the period 87,758 87,758

Foreign currency translation
Adjustment 14,581 14,581

Balance, February 28, 2001 17,115,893 17,116 431,190 -121,556 102,339 16,348

Balance, August 31, 2001 17,115,893 17,116 431,190 -391,755 -12,326

Shares issued in exchange for services 100,000 100 2,400

Net loss for the period -120,244 -120,244

Foreign currency translation
Adjustment 850 850

Balance, February 28, 2002 17,215,893 17,216 433,590 -511,999 -119,394 -11,476

The accompanying notes are an integral part of these consolidated financial
statements.

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
For the six month periods ended February 28, 2002 and 2001
(Amounts Expressed in US Dollars)
(Unaudited)

2002 2001
--------- ----------

OPERATING ACTIVITIES

Net income (loss) $-120,244 $ 87,758
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities

Depreciation 2,636 1,048
Decrease in accounts receivable 3,395 28,282
Shares issued for services rendered 2,500 0
Decrease in funds on deposit 68,677 0
Decrease in prepaid expenses and sundry assets 187 0
Increase in accounts payable 17,995 0
Increase in income taxes payable 0 50,000
Total adjustments 95,390 79,330
Net cash provided by (used in) operating activities -24,854 167,088

Investing activities
Acquisition of capital assets -12,964 0
Net cash (used in) investing activities -12,964 0

Financing activities
Advances (repayments) of loans 2,071 -89,989
Issuance of capital stock 0 106,946
Net cash provided by (used in) financing activities 2,071 16,957

Effects of changes in foreign currency rates -10,499 0

Increase (decrease) in cash -46,246 184,045
Cash and cash equivalents, beginning of year 256,370 51,785
Cash and cash equivalents, end of year 210,124 235,830

Interest paid Nil Nil
Income taxes paid Nil Nil

The accompanying notes are an integral part of these financial statements

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002 and 2001
(AMOUNTS EXPRESSED IN US DOLLARS)
(UNAUDITED)

1. BASIS OF PRESENTATION

On January 5, 2001, Callmate Telecom International, Inc. ("Callmate")
acquired all of the issued and outstanding shares of common stock of
WebEngine Technologies, Inc. ("WebEngine") in exchange for 12,000,000
common shares of Callmate in a reverse acquisition. 9,200,000 common
shares of Callmate held by previous shareholders of Callmate were
cancelled in exchange for all of the shares of its subsidiaries which
carry on the UK operations of Callmate. The acquisition by the
shareholders of WebEngine of a majority of the shares of Callmate has
been accounted for as a reverse acquisition. As Callmate became
substantially a shell after the removal of the UK operations, no
goodwill has been reflected on this acquisition. Although Callmate is
the legal acquirer, WebEngine is treated as having acquired Callmate
for accounting purposes.

WebEngine was incorporated in November 2000 in order to hold the shares
of Cyberstation Computers and Support Inc. ("Cyberstation"). The
shareholders of Cyberstation became the shareholders of WebEngine and
therefore WebEngine has been considered to be a successor to
Cyberstation.

The historical financial statements of BankEngine (the "Company") are
those of Cyberstation as the Company has been accounted for as the
successor to Cyberstation.

The estimated income tax costs of the divestiture of the UK operations
has been treated as a reduction of the assets acquired on the
acquisition of the shell company and has been included in income taxes
payable.

On March 5, 2001 the Callmate changed its name to BankEngine
Technologies, Inc.

WebEngine changed its name to Critical Commerce Inc. in November of
2001.

The acquisition of Callmate, as a reverse acquisition, was reflected as
follows;

Funds on deposit $601,457
Accounts payable (316,000)
Income taxes payable (50,000)
--------
Capital stock issued $235,457
--------

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002 and 2001
(AMOUNTS EXPRESSED IN US DOLLARS)
(UNAUDITED)

2. MANAGEMENT INTENTIONS

The Company has sustained recurring operating losses and negative cash
flows from operations. Management plans to mitigate these adverse
conditions through the following activities;

a) The Company has developed a new software product, the Critical
Commerce Suite. The Critical Commerce Suite is a sophisticated
online entertainment database and billing system that manages
an entire online entertainment business. From the serving and
management of video streaming, management of images for
viewing, and sale, the Critical Commerce Suite provides
cutting edge management tools for sophisticated management
oversight. The Critical Commerce Suite can either be offered
as a service, whereby the Company manages a series of sites
and content for a monthly fee, or is licensed with fees
corresponding to the number clients managed and services
offered. The Company has finalized development and is
currently concentrating its efforts on marketing this new
product..

b) The Company is disputing the amount of $170,000 included in
accounts payable. This figure represents an amount invoiced by
the former auditors of the Company. As discussed in note 6,
the Company does not believe that its former auditors, who
have taken no action beyond sending invoices, will file a
claim. The Company intends to resolve this dispute shortly.

c) As discussed in note 7, the Company has acquired a subsidiary,
Platinum Telecommunications Inc.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Principal business activities

The Company carries on the business of software development
for its Critical Commerce Suite to provide video streaming
analysis tools and computer consulting, through its wholly
owned subsidiaries, Critical Commerce Inc., a Delaware
corporation, and Cyberstation, a company operating in Canada.

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002 and 2001
(AMOUNTS EXPRESSED IN US DOLLARS)
(UNAUDITED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

b) Basis of consolidated financial statement presentation

In the opinion of management of the Company (the
"Management"), all adjustments consisting only of normal
recurring adjustments necessary for a fair statement of (a)
the results of operations for the six month periods ended
February 28, 2002 and 2001, (b) the financial position at
February 28, 2002, and (c) cash flows for the six-month
periods ended February 28, 2002 and 2001, have been made. The
results of operations for the six-month period ended February
28, 2002 are not necessarily indicative of those to be
expected for the entire year. The unaudited consolidated
financial statements and notes are presented as permitted by
Form 10-QSB. Accordingly, certain information and note
disclosures normally included in consolidated financial
statements prepared in accordance with accounting principles
generally accepted in the United States of America have been
omitted.

The audited financial statements at August 31, 2001, which are
included in the Company's Annual Report on Form 10-KSB, should
be read in conjunction with these consolidated financial
statements.

The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. The earnings of
the subsidiaries are included from the date of acquisition for
acquisitions accounted for using the purchase method. All
significant intercompany accounts and transactions have been
eliminated.

c) Net Income (Loss) Per Weighted Average Common Stock

Net income (Loss) per share of common stock is computed by
dividing net income (loss) for the period by the weighted
average number of shares of common stock outstanding during
the period.

The Company has adopted Statement No.128, Earnings Per Share,
which requires presentation, in the consolidated statement of
income, of both basic and diluted earnings per share.

d) Foreign Currency

Assets and liabilities recorded in foreign currencies are
translated at the exchange rate on the balance sheet date for
the convenience of the reader. Translation adjustments
resulting from this process are charged or credited to other
comprehensive income. Revenue and expenses are translated at
average rates of exchange prevailing during the year. Gains
and losses on foreign currency transactions are included in
financial expenses. No representation is made that the foreign
currency amounts could have been, or could be, converted into
United States dollars at the rates on the respective dates and
or at any other certain rates.

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002 and 2001
(AMOUNTS EXPRESSED IN US DOLLARS)
(UNAUDITED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

e) Use of Estimates

The preparation of consolidated financial statements in
conformity with accounting principles generally accepted in
the United States of America requires Management to make
estimates and assumptions that affect certain reported amounts
of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates. These estimates are reviewed periodically and
as adjustments become necessary, they are reported in earnings
in the period in which they become known.

f) Computer software development

The Company accounts for the cost of developing computer
software for sale as research and development expenses until
the technological feasibility of the product has been
established. To date all costs have been expensed. In the
future, at the end of each year the Company will compare any
unamortized capital costs to the net realizable value of the
product to determine if a reduction in carrying value will be
warranted.

4. INVESTMENT IN NON-CONTROLLED INVESTEE

The Company has a 50% interest in X-Tech International Solutions
Limited ("X-Tech"), a company operating in the UK. The Company has no
involvement with the management of X-Tech and it is intended that
X-Tech be wound up in the near future. The Company has no obligation to
fund any shortfalls and therefore no amount has been reflected for its
investment in X-Tech. As at September 30, 2001, X-Tech had a total
shareholders' deficiency of approximately $6,000 and had realized net
losses of approximately $6,000 for the period February 2000 to
September 30, 2001.

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002 and 2001
(AMOUNTS EXPRESSED IN US DOLLARS)
(UNAUDITED)

5. CAPITAL STOCK

a) Authorized

50,000,000 Common stock with a $.001 par value

b) Common stock

The Company had issued and outstanding shares of 14,315,893
common stock at the time of the reverse acquisition in January
2001. As detailed in note 1, the Company issued 12,000,000
shares of Common Stock to the shareholders of WebEngine. A
total of 9,200,000 such shares were cancelled in exchange for
the UK operations in January 2001. The current outstanding
shares total 17,215,893, as follows:

Shares outstanding prior to the
reverse acquisition 14,315,893

Issued to shareholders of WebEngine 12,000,000

Cancelled for UK operations (9,200,000)

Shares issued in the current year end 100,000
----------

Shares currently outstanding 17,215,893
----------

The shares of the UK companies were estimated to have a very
limited value and therefore the exchange of these shares for
9,200,000 shares of BankEngine was approved by the Board of
Directors.

All other assets held by the Company continue to be held for
its benefit and therefore the value attributable to the
remaining shareholders is reflected by these other assets. The
other assets were funds held on deposit by a bank in the UK to
provide security for credit card transactions of the UK
operations. As the UK operations have since ceased, the
security deposits may be released to the Company in accordance
with the credit card agreements. The capital stock reflects
additions to paid in capital for the estimated value of these
funds net of estimated liabilities payable to the credit card
company, accounts payable to the previous auditors of the
Company and net of the estimated income tax liability arising
on the disposition of the UK companies for an addition to paid
in capital totaling $235,457.

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002 and 2001
(AMOUNTS EXPRESSED IN US DOLLARS)
(UNAUDITED)

6. CONTINGENCIES AND COMMITMENTS

As discussed in the Capital Stock note, the Company is liable for
shortfalls which may arise upon the settlement with the credit card
company. The credit card company has agreed that the limit of the
Company's liability is the amount of security held on hand which at the
period end amounted to the equivalent of $211,935. This amount has been
reflected as Funds held on deposit. An amount of $141,290 has been
included in accounts payable which is the estimate of the liability.
The settlement will be based on the transactions to December 31, 2001.
Management anticipates that the liability will be settled by mid 2002.

Included in accounts payable is the amount of $170,000 which represents
the amount invoiced by the former auditors of the Company. The Company
is disputing this amount. The Company does not believe that its former
auditors, who have taken no action beyond sending invoices, will file a
claim. If a claim were to be raised, the Company would vigorously
dispute the action as well as consider its own options.

The Company has signed a lease commitment for its office space in
Toronto, Canada which expires August 31, 2002. The annual rent payable
therefor is $46,500.

7. SUBSEQUENT EVENTS

On April 5, 2002, the Company, through its Canadian subsidiary,
acquired 70% of the outstanding share capital of Platinum
Telecommunications Inc. a company operating in Ontario in consideration
for 1,800,000 shares of Common Stock of the Company.

8. NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" (SFAS 142), which is effective for fiscal years
beginning after December 15, 2001, except goodwill and intangible
assets acquired after June 30, 2001 are subject immediately to the
non-amortization and amortization provisions of this Statement. Under
the new rules, goodwill and intangible assets deemed to have indefinite
lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statement. Other intangible
assets will continue to be amortized over their useful lives.

In August 2001, the Financial Accounting Standards Board Issued
Statement of Financial Accounting Standards No. 143 "Accounting for
Asset Retirement Obligations", effective for fiscal years beginning
after June 15, 2002. This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible
long-lived assets and the associated retirement costs.

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2002 and 2001
(AMOUNTS EXPRESSED IN US DOLLARS)
(UNAUDITED)

8. NEW ACCOUNTING PRONOUNCEMENTS (Cont'd)

In October 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144 "Accounting for the
Impairment or Disposal of Long-lived Assets", effective for fiscal
years beginning after December 15, 2001. This statement addresses
financial accounting and reporting for the impairment or disposal of
long-lived assets.

The Company has not yet determined what the effects of these Statements
will be on its financial position and results of operations.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following discussion should be read in conjunction with the Company's
consolidated financial statements and related notes included elsewhere in this
Form 10-QSB.

This filing contains forward-looking statements. The words "anticipated,"
"believe," "expect, "plan," "intend," "seek," "estimate," "project," "will,"
"could," "may," and similar expressions are intended to identify forward-looking
statements. These statements include, among others, information regarding future
operations, future capital expenditures, and future net cash flow. Such
statements reflect the Company's current views with respect to future events and
financial performance and involve risks and uncertainties, including, without
limitation, general economic and business conditions, changes in foreign,
political, social, and economic conditions, regulatory initiatives and
compliance with governmental regulations, the ability to achieve further market
penetration and additional customers, and various other matters, many of which
are beyond the Company's control. Should one or more of these risks or
uncertainties occur, or should underlying assumptions prove to be incorrect,
actual results may vary materially and adversely from those anticipated,
believed, estimated, or otherwise indicated. Consequently, all of the
forward-looking statements made in this filing are qualified by these cautionary
statements and there can be no assurance of the actual results or developments.

Callmate Telecom International, Inc. ("Callmate") acquired WebEngine
Technologies International, Inc. ("WebEngine") pursuant to a Share Purchase
Agreement effective as of January 5, 2001. Callmate acquired all 12,000,000
shares of common stock of WebEngine in a share exchange, which exchange was
effected on a one-for-one basis. The transaction was reported on a Form 8-K
filed with the Securities and Exchange Commission (the "SEC") on January 16,
2001. Subsequent thereto, Callmate changed its name to BankEngine Technologies,
Inc. (the "Company") as reported on Schedule 14C. The Company filed the
Definitive 14C on March 5, 2001.

The Company decided to move away from the telecommunications business in the UK
due to its growing indebtedness and the increased competitiveness in the
international telecommunications industry. This trend was particularly strong in
the UK. Management of the Company (the "Management") currently believes,
however, that the telecommunications industry has recently displayed initial
signs of recovery.

The strategic decision to shed the telecom business in the UK, while canceling
9.2 million shares of common stock (the "Common Stock") as part of the original
payment for the telecom assets, both alleviated most of the debt burden of the
Company and reduced its outstanding share capital. The Company has chosen to
focus on the business of acting as a solution provider for the purposes of
processing online transactions for online merchants as well as a solution
provider for online content management systems. Management believes that the
Company's acquisition of CyberStation Computers and Support Inc.
("Cyberstation") and its access to the BankEngine Suite of software (the
"BankEngine Suite") will help the Company secure sufficient market share in both
areas. Management believes that the BankEngine Suite is mature and adaptable
while the new Critical Commerce Suite is innovative and novel. The Company has
recently completed development of its Critical Commerce Suite and is
concentrating its marketing efforts on this product.

CRITICAL COMMERCE

The Critical Commerce suite (the "Critical Commerce Suite") is a sophisticated
online entertainment database and billing system that manages an entire online
entertainment business and represents, to an extent, an upgraded version of the
BankEngine Suite (described below). From the serving and management of video
streaming, management of images for viewing, and sale, the Critical Commerce
Suite provides cutting edge management tools for sophisticated management
oversight. The Critical Commerce Suite can either be offered as a service,
whereby the Company manages a series of sites and content for a monthly fee, or
is licensed with fees corresponding to the number of clients managed and
services offered. The Company has finalized development and is currently
implementing marketing.

Connectivity management of online video streaming services

The Critical Commerce Suite offers complete management of statistical data
derived from viewer access to a variety of popular online video streaming
platforms at the choice of merchants. The Critical Commerce Suite's
sophisticated databases can manage access to a full range of access data derived
from customer viewing patterns and habits.

Connectivity to video libraries

The Critical Commerce Suite offers complete management over libraries of video
clips and larger, downloadable segments.

Customer account management

The Critical Commerce Suite offers a wide range of customer consumption data so
as to provide accurate billing information. In addition, the Critical Commerce
Suite tracks referral activity for reselling purposes and more accurate billing.

Bandwidth usage and tracking

The Critical Commerce Suite offers effective analysis of bandwidth usage and
consumption. The control of this type of information is, in the opinion of
Management, vital to the success of online content stores and content
distribution providers.

BANKENGINE

The Company continues to market its BankEngine suite (the "BankEngine Suite") of
electronic commerce banking products for Internet merchants and financial
institutions. Management believes that the Critical Commerce Suite and the
BankEngine Suite (collectively, the "Technology") will allow merchants to
process payments and screen against fraud and banks to manage their merchants
and screen against fraud. The Technology is capable of supporting merchants and
merchant banks worldwide, provided that these merchants and merchant banks have
developed their own internal systems to a level where compatibility with the
Technology is possible. While some merchants and merchant banks have elaborated
sufficiently advanced systems, many have not and some may never do so, in which
case they do not constitute plausible customers of the Company.

The Company has been providing online electronic transactions and fraud
prevention since 1996. The BankEngine Suite consists of a complete, turnkey
suite of secure electronic commerce banking solutions for Internet merchants and
financial institutions. The BankEngine Suite includes CertEngine(TM),
CardEngine(TM), CheqEngine(TM), ATMEngine(TM), BankEngine(TM), BankWeb(TM) and
BankAdmin(TM).

Using the Internet to bridge the gap between merchants and banks, the Company
has been supporting merchants and merchant banks worldwide. The Company can
support member banks in Canada, the United States, Central America, the
Caribbean, Western Europe, Australia and the Asia Pacific region. In addition,
the BankEngine Suite can support 173 different currencies. Merchants are issued
merchant accounts from their choice of BankEngine Suite-enabled member banks and
can perform transactions with their accounts using the Internet, regardless of
where in the world they are located. Merchants can easily integrate the
BankEngine Suite into their automated Internet servers and use the it for their
manual & batch processing.

In addition, BankEngine client software works with any type of Internet
connection, and runs on multiple operating systems including Win32
(95/98/2000/NT) and most flavors of Unix, under a variety of computer hardware.
BankEngine Suite client software can be used with any programming language. The
BankEngine Suite is, in the belief of Management, powerful enough and robust
enough to allow each merchant to transact simultaneously from multiple Internet
computers, multiple manual operators and multiple batches. The BankEngine Suite
protects the secrecy of each and every transaction and report synchronization,
using its high level of security, which includes PKI authentication and 2048 bit
TLS cryptography.

PLATINUM TELECOMMUNICATIONS

After careful consideration and examination of the evolving international market
trends in the telecommunications industry, which Management believes have
recently become more favorable, the Company has determined to re-enter the
telecommunications business with the acquisition of Platinum Telecommunications
Inc. ("Platinum"). Platinum represents a new opportunity for the Company due to
the relatively low cost of acquisition combined with existing expertise within
the Company, which Management anticipates may lead to positive synergies.
Internationally, many telecommunications companies have ceased operations, which
has diminished competition in the industry and lowered the barriers to entry.
Consequently, Management believes that the opportunity exists for small,
cost-conscious, operators who can utilize the latest Internet Protocol ("IP")
based technology to leap-frog some competitors and achieve a viable business.
Platinum owns an IP-based switch for the purposes of buying and selling long
distance telephone time. When combined with the substantial IP expertise
possessed by the Company, Management believes that the opportunity exists to
succeed in this niche-based market place and that risk can be mitigated to an
acceptable degree.

Because of BankEngine's expertise in the area of online development and
transaction processing research/development, the Company believes that the
possible benefits derived from the acquisition will, if the expected synergies
are realized to the extent Management anticipates, be in the best interests of
both the Company and its shareholders.

Transmission Control Protocol ("TCP"), which is sometimes referred to as the
"backbone language" of the Internet, serves as an apt illustration of
Management's expectations. The advent of TCP/IP-based solutions for telephony
over the last two years will, if properly designed and implemented, allow the
Company to contribute substantially to the technological improvements required
to further develop Platinum's business. Management believes that the Company
possesses excellent resources in the area of programming of IP-telephony, which
it sees as one of the most important components of IP-based telephony companies.
Nonetheless, there can be no assurance that Management's beliefs and predictions
will prove accurate or, even if they do, that their accuracy will lead to
positive results for the Company.

Results of Operations

THREE MONTHS ENDED FEBRUARY 28, 2002 COMPARED TO THREE MONTHS ENDED FEBRUARY 28,
2001

Revenues

Revenue for the three-month period ended February 28, 2002 totaled $63, a
decrease of 100% from the comparable period in 2001. This decrease is
attributable to the temporary change in the Company's focus away from computer
consulting and online transaction processing to software development of its
Critical Commerce Suite, an investment Management believes was central to the
Company's future prospects. In addition to its BankEngine Suite of tools, the
Company has now developed its Critical Commerce Suite of tools for analyzing
video streaming and is currently marketing it to potential corporate users.

Cost of Sales

The cost of sales for the three-month period ended February 28, 2002 totaled
nil, a decrease of 100% from the comparable period in 2001. The decrease is due
to the temporary change in the Company's business activity from computer
consulting and online transactions to software development, resulting in no
current sales volume and no related cost of sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three-month period ended
February 28, 2002 amounted to $71,519 as compared to $34,735 for the comparable
period in 2001. The 106% increase in selling, general and administrative
expenses is principally attributable to professional fees and travel expenses
incurred.

Net Loss

Net loss for the three months ended February 28, 2002 amounted to $72,087 as
compared to a net income of $73,351 for the comparable period in 2001. This
increase in net loss is principally attributable to the reduction in sales
volume.

SIX MONTHS ENDED FEBRUARY 28, 2002 COMPARED TO SIX MONTHS ENDED FEBRUARY 28,
2001

Revenues

Revenue for the six-month period ended February 28, 2002 totaled $6,075, a
decrease of 98% from the comparable period in 2001. This decrease is
attributable to the temporary change in the Company's focus away from computer
consulting and online transaction processing to software development of its
Critical Commerce Suite, an investment Management believes was central to the
Company's future prospects.

Cost of Sales

The cost of sales for the six-month period ended February 28, 2002 totaled
$7,940, a decrease of 84% from the comparable period in 2001. The decrease is
due to the temporary change in the Company's business activity from computer
consulting and online transactions to software development, as reflected by the
reduced sales volume.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the six-month period ended
February 28, 2002 were $116,638 as compared to $156,237 for the comparable
period in 2001. The 25% reduction in selling, general and administrative
expenses is principally attributable to the reduced sales volume.

Net Loss

Net loss for the six months ended February 28, 2002 amounted to $120,244 as
compared to a net income of $87,758 for the comparable period in 2001. This
increase in net loss is principally attributable to the reduction in sales
volume.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

For the six-months ended February 28, 2002, net cash used by operating
activities amounted to $24,854, as compared to net cash provided by operating
activities of $167,088 for the comparable period in 2001. The decrease in cash
provided by operating activities is primarily the result of the reduction in
volume as a result of the change in the Company's emphasis in favor of software
development and marketing initiatives.

Financing Activities

At February 28, 2002, the Company does not have any material commitments for
capital expenditures other than for those expenditures incurred in the ordinary
course of business. The Company believes that its current operations and cash
balances will be sufficient to satisfy its currently anticipated cash
requirements for the next 12 months. However, additional capital could be
required in excess of the Company's liquidity, requiring it to raise additional
capital through an equity offering or secured or unsecured debt financing. The
availability of additional capital resources will depend on prevailing market
conditions, interest rates and the existing financial position and results of
operations of the Company, among other factors.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
Not applicable.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.

ITEM 3. DEFAULTS IN 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) 19. Reports Furnished to Security Holders

None.

(b) Reports on Form 8-K.

None

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

BankEngine Technologies, Inc.

Dated: April 12, 2002 By: /s/ Joseph J. Alves
------------------------------------------
Joseph Alves
Chairman and Chief Executive Officer

EXHIBIT INDEX

None.