U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: September 30, 1999
Commission File Number: 0-23485
RETAIL HIGHWAY.COM, INC.
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
98-0177646
(IRS Employer Identification No.)
430 Peninsula Avenue, Suite 1
San Mateo, California
(Address of principal executive offices)
94401
(Zip Code)
(650) 685-9926
(Issuer's Telephone Number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities 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 ____.
The number of shares of the registrant's only class of common stock issued and
outstanding, as of September 30, 1999 was 9,221,867 shares.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the three month period
ended September 30, 1999, are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with
the Financial Statements and notes thereto included herein. In connection with,
and because it desires to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, the Company cautions readers
regarding certain forward looking statements in the following discussion and
elsewhere in this report and in any other statement made by, or on the behalf of
the Company, whether or not in future filings with the Securities and Exchange
Commission. Forward looking statements are statements not based on historical
information and which relate to future operations, strategies, financial results
or other developments. Forward looking statements are necessarily based upon
estimates and assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
beyond the Company's control and many of which, with respect to future business
decisions, are subject to change. These uncertainties and contingencies can
affect actual results and could cause actual results to differ materially from
those expressed in any forward looking statements made by, or on behalf of, the
Company. The Company disclaims any obligation to update forward looking
statements.
OVERVIEW
The Company was incorporated on February 17, 1993 under the
name "LBF Corporation" pursuant to the laws of the State of Nevada to engage in
any lawful corporate purpose. In December 1997, the Company filed a registration
statement with the US Securities and Exchange Commission on Form 10-SB,
registering its common stock under the Securities Exchange Act of 1934, as
amended (the "34 Act"). The Company's intention at that time was to seek to
acquire assets or shares of an entity actively engaged in business which
generated revenues or provided a business opportunity, in exchange for its
securities. In effect, this filing caused the Company to be a full "reporting
company" under the 34 Act.
Effective June 19, 1998, the Company acquired certain patent
application rights (the "Assets") from FES Innovations, Inc., a British
Columbia, Canada corporation ("FES"). The relevant terms of the transaction
provided for the Company to (i) undertake a "forward split" of its common stock,
whereby 10 shares of common
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stock were issued in exchange for each share of common stock issued and
outstanding, in order to establish the number of issued and outstanding common
shares of the Company at Closing to be 5,000,000 shares; and (ii) issue to FES
and its assigns an aggregate of 12,500,000 "restricted" common shares (post
split), representing approximately 71.4% of the Company's outstanding common
stock.
Effective as of March 31, 1999, the Company and FES entered
into a Rescission Agreement, whereby the Company and FES agreed to rescind the
FES acquisition, and FES tendered back to the Company's treasury an aggregate of
12,500,000 "restricted" common shares issued pursuant to the acquisition. FES
also agreed to repay a former principal of the Company for certain loans made to
the Company application to the rescission and other related activities of the
Company. The principal reason for this rescission was the anticipated time and
costs associated with bringing the product to market.
Thereafter, effective April 17, 1999, the Company acquired
certain assets owned by Michael Levine, including a proposed electronic commerce
web site and the right to certain business names, including
"Shopshopshopping.com," "Retailhighway.com" and "Greatestmall on earth.com" (the
"Assets"). The Company issued 2,500,000 shares of its common stock equal to
ownership of approximately 33% of its then outstanding shares, in exchange for
all of the Assets. In addition, the Company's shareholders approved an amendment
to the Company's Articles of Incorporation, changing the name of the Company to
"Retail Highway.com, Inc." The then management of the Company resigned their
respective positions with the Company and were replaced by the Company's current
management.
As a result of this acquisition, the Company's principal
business objective was changed to becoming a primary portal and transaction
point for online extensions of "Bricks and Mortar" ("BAM") retail stores.
Plan of Operation
The Company generated no revenues during the three month
period ended September 30, 1999. While no assurances can be provided, as of the
date of this report it is not anticipated that the Company will commence
generating revenues until completion of its proposed web site as detailed below.
The Company's business plan is to establish an "Internet
shopping portal" by providing personalized, intuitive, interactive shopping
features combined with entertainment, community news and information services.
Management intends to utilize the latest Internet technologies to support
multi-vendor shopping carts, powerful search capabilities, streaming multimedia
entertainment and personalized content. The graphic design and navigation
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features of the proposed site are expected to provide a clean and simple user
friendly interface free of cluttered displays and information overload. Revenues
are expected to be derived from the sales of advertising and a percentage of
sales from its vendor partners.
As of the date of this report, the Company has completed an
agreement with Siegel & Gale, Inc. ("S&G"), a top ten interactive and branding
agency, whereby S&G agreed to provide the Company with web site development and
market posturing services. The applicable agreement requires the Company to pay
S&G the sum of One Hundred Seventy Five Thousand ($175,000) Dollars in
incremental payments, with 40% ($70,000) due upon kick-off of the project,
another 40% due upon completion of brand definition and the balance due upon
completion of the project.
In addition, in October 1999, the Company executed a contract
with Q Strategies, LLC. ("QS"), a West Coast based customizing company that
specializes in Interworld Commerce Exchange packages, whereby QS has agreed to
provide the Company with planning and systems design services and integration of
third party support services to support the Company's Internet-based electronic
commerce. In exchange for the same, the Company agreed to issue to QS an
aggregate of 116,677 shares of its common stock, 20,000 of which was to be
issued upon execution of the agreement and an aggregate of 96,677 additional
restricted shares of the Company's common stock subject to completion of phases
of services to be performed as more fully detailed in the agreement, including
(i) completion of design project (13,333 shares); (ii) start of implementation
project (25,000 shares); (iii) beta site launch (25,000 shares); and (iv)
production of site launch (33,334 shares).
It is anticipated that the Company will enter into a contract
with an e-commerce solution supplier in the near future, as negotiations with
various companies have commenced. Web site specifications are being completed
and, while no assurances can be provided, it is anticipated that the Company's
site development will commence during the fourth calendar quarter of 1999. It is
also in the process of negotiating with BAM retailer partners for their
inclusion on the Company's web site. The Company has initiated exploratory
discussions with a select group of retailer candidates and begun development of
strategic relationships with retail industry organizations. In the first
calendar quarter of 2000, the Company will launch a public relations campaign
targeting the retail industry, placing ads in retailer publications and
participating in trade events. The objective will be to generate awareness and
inquiries and accelerate the addition of new retailers after initial site
launch. The campaign will also focus on corporations with multiple chains of
branded stores, such as Federated Stores and Williams-Sonoma/Pottery Barn.
Management believes that these prospective retailer clients have received the
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Company's concept in a positive manner; however, they have indicated that they
wished to review how the prospective web site will operate before they commit to
contracting with the Company.
To the best knowledge of management, there are no other
virtual malls which exclusively possess the brand name "bricks and mortar"
retailers. Most of the virtual malls simply offer hyperlinks to a retailer's web
site. The Company, through its web site, expects to be able to provide Internet
shoppers access to a collection of what management perceives as the best
retailers in the world, fast access to the products which consumers want to
purchase and a responsive customer service environment. In order to draw
shoppers to the Company's web site, the Company will implement an aggressive
combination of marketing strategies, including both standard advertising,
Internet solutions and mass media.
The Company concurs with industry analysts that BAM retailers
will ultimately be the big winners in online shopping. With existing high levels
of brand-awareness, huge bases of loyal and trusting customers and, in many
cases, efficient mail-order infrastructures in place, BAM retailers are poised
to capitalize on the e-commerce boom.
BAM Retailers are continually seeking high-traffic locations
for new stores, and the Company intends to provide them with a unique and
compelling opportunity. In addition to directing large numbers of shoppers to
its BAM partners, the Company's highly targeted advertising will ensure that
site visitors have a high propensity for spending online. Transaction rates will
be enhanced by featuring a wide variety of product information and entertainment
content on the site, including product reviews, lifestyle articles, music, movie
and game downloads, category- specific news, "how-to" segments, e-mail,
messaging and more. This featured content will keep shoppers on-site longer and
continually provide reasons to buy. Additionally, listings of retailers'
physical store locations will provide benefits by building incremental traffic
at the BAM stores. The ability for customers to pick up orders, make returns or
exchanges, and capitalize on synergistic online/real-world promotions will
provide BAM retailers with a significant advantage over their online-only
competition.
According to ComputerWorld, the average cost of an e- commerce
web site is now more than $1 million. RetailHighway offers retailers a turnkey
solution at no cost other than a fee paid on each sale made. The Company absorbs
all operational costs for marketing, advertising, site development and hosting,
and where necessary will provide consultation on fulfillment and other
supply-chain requirements.
As noted by Ernst & Young, Goldman Sachs, Jupiter Research and
other leading researchers, BAM retailers have in
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general been late in developing an Internet presence. Without strong initiatives
in this relatively new arena, they face significant competitive pressures from
online-only merchants. BAM retailers are currently making a shift to this
multichannel strategy. The Company intends to provide a turnkey solution to BAM
retailers by becoming a primary aggregation point for online store extensions
and high levels of consumer traffic. The Company believes that both wired and
non-wired retailers should benefit from a cost-efficient e-commerce solution
that will allow them to sell online while maintaining their individual brand
imagery. This is expected to be achieved through:
- Single-site shopping at a broad range of quality Bricks and
Mortar retailers. The Company intends to represent only
branded Bricks and Mortar Retailers. As a result, customers
will have a unique sense of familiarity, comfort and security.
- Turnkey e-commerce solutions for those BAM retailers not yet
online. The Company expects to be the only shopping site on
the Internet which will not require retailers to have their
own web site as a pre-requisite for participation.
- Fast intuitive shopping without "click-throughs" to
individual retailer sites. All retailer product data will
reside at RetailHighway.com and customers will make multiple
purchases at different stores without ever leaving the site.
The risk of becoming "lost in cyberspace" is eliminated.
- A single shopping cart for all stores on the site. Shoppers
will use a single multi-vendor shopping cart and single
check-out transaction, regardless of the number of stores from
which purchases are made.
- A one-time, highly secure credit card transaction process.
- Rich entertainment and information content to generate
traffic, increase purchases and build community among
shoppers. The Company intends to provide extensive
entertainment, news/information and community-building
features to establish itself as the "one-stop shopping and
lifestyle destination."
- Online chat, e-mail and other portal services.
- Toll-free phone customer service features coordinated with
participating Retailers.
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While no assurances can be provided, by providing these
features and benefits, management believes that the Company's site should become
a preferred online equivalent of physical mall locations. The primary revenue
source will be transaction fees charged to retailers as a percentage of gross
sales, equivalent to those paid to real-world mall operators. Additional
revenues will be derived from advertising on the site.
The Company's web site is expected to be populated exclusively
by retailers with physical real-world store locations. While early adopters of
online shopping have been primarily price- driven, management believes that the
larger, emerging wave of online consumers is predisposed to the same quality,
selection and trust that they currently enjoy at their favorite real-world
retailers. This is fundamental to the Company's strategy of providing familiar
cyber-environments designed to enhance the comfort and security of shoppers.
What the Company will provide is convenient access to the familiar
"One-Stop-Shopping At Your Favorite Stores."
The Company will operate as a facilitator and will neither
invest in product inventory nor provide product fulfillment services. Industry
analysts call this model the "sweet spot" in consumer e-commerce. While
RetailHighway.com will transact all orders, the individual BAM retailers will
handle product shipment.
At present Web sites such as iMall and Shop.com offer web site
building and hosting for companies wishing to establish an e- commerce presence
on the Internet. In addition, click-through sites such as fashionmall.com will,
for a fee, direct traffic from their site to the e-commerce site of a retailer
or e-tailer. In all cases, retailers wishing to sell on the Internet are
required to dedicate significant financial resources to an Internet e-commerce
strategy. Management believes that the Company's competitive advantage will come
from its ability to offer aggregation of a large number of shoppers drawn by its
unique combination of great stores, speed, convenience, and
information/entertainment content to those BAM retailers already online and to
provide a turnkey solution for non-wired BAM retailers to implement an
e-commerce strategy without the need for their own web site.
Key objectives of the Company's retailer acquisition plan
include: (i) broad product coverage to position the Company as the "one-stop"
online shopping destination; (ii) an initial complement (at site launch) of
high-quality BAM partners which provides a basis for growth in traffic and
transactions; and (iii) rapid addition of BAM Retailer partners to realize
competitive ownership of key product categories.
The Company has secured the expertise of key advisors from the
retail sector to develop the business-to-business sales strategy. Given the
importance of time-to-market, particular
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emphasis will be put on identifying category-specific retailers who have fully
embraced online selling, can make fast partnering decisions and whose product
content can easily be integrated into the Company's database. The Company
believes that a successful site launch will require an initial store count of
30-50 with a balanced mix of key product categories. Initially only a subset of
a particular retailer's inventory may be available so that more stores will be
on-site early, with their remaining products to be added after site launch.
As of the date of this report, the Company has initiated
exploratory discussions with a select group of retailer candidates. A
demonstrator model of the site will be completed for use in formal retailer
presentations. The Company has also begun development of strategic relationships
with industry organizations such as the National Retail Federation. During
January 2000, the Company intends to launch a public relations campaign
targeting the retail industry, placing ads in retailer publications and
participating in trade events. The objective will be to generate awareness and
inquiries and accelerate the addition of new retailers after initial site
launch. The campaign will also focus on corporations with multiple chains of
branded stores, such as Federated Stores and Williams-Sonoma/Pottery Barn.
Key selection criteria for targeted retailers include category
leadership, effective product-fulfillment infrastructure, broad brand-awareness
and quality image, ease of database conversion, quality customer service, broad
product selection, progressive corporate culture and aggressive marketing.
Prospective BAM partners currently conducting mail order, catalogue or Internet
operations will receive the highest priority. Prospective retailers will also be
evaluated for their adherence to high standards in customer service, problem
resolution, product return, and customer privacy practices.
Promotional incentives being considered to foster rapid
engagement of initial BAM retailers include a period of reduced or eliminated
transaction fees on customer purchases, credits for on-site advertising as
visitor traffic reaches threshold levels, prominent mentions in the Company's
consumer advertising campaign and limited-time exclusivity in specific product
categories.
Management believes that a strong brand presence is crucial to
the aggregation of consumer traffic. The Company's goal of category dominance
requires it to quickly and effectively establish powerful brand recognition by
consumers. To accomplish this, management has designed a marketing and
communications strategy that relies on both online impressions as well as strong
real-world initiatives. All advertising will focus on inextricably linking the
Company's URL with "shopping" in the mind of the consumer and establishing the
Company as the site which replicates the real-world shopping experience online.
Specific brand
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attributes such as speed, ease of navigation, security and fun will also be
emphasized. The Company's consumer marketing plan employs strategies designed to
achieve high levels of visitors at introduction and sustaining traffic to
generate a long-term reach of 4.5% among the rapidly growing audience of online
households, significant transaction fee revenues derived from exceeding the
industry-standard "look-to-buy" ratio (currently 2%) and above-average
"time-on-site" metrics, increasing store visits and significant revenues from
both advertising and transaction fees.
Management also believes that the simplicity of the Company's
message is conducive to efficient media spending. Many online shopping sites
spend enormous advertising budgets to establish their reason-for-being and
develop brand imagery. RetailHighway believes that it can spend proportionately
less to achieve its objectives because its message is straightforward and
directly addresses the primary motivators of online shoppers: speed, value,
convenience, choices and fun. In addition, the highly memorable and relevant
name of those BAM's anticipated to be part of the Company's web site should
allow easy recognition and allow for efficient media spending with a
cost-effective mix of ad unit sizes, combining larger print and longer broadcast
ads to educate the public with high-frequency insertions of smaller and shorter
ads to maximize share-of-mind. The inclusion of high-quality branded retailers
is expected to enhance consumer recall, accelerate response rates and help to
mitigate security concerns for online shoppers.
Advertising will target both men and women with equal weight,
an age range of 25-54, and households with incomes greater than $50,000. These
demographics are consistent with those of current online shoppers. RetailHighway
will closely monitor online user data to ensure that advertising continues to be
precisely targeted.
To verify that advertising spending is optimized for the
lowest cost of customer acquisition, frequent market tests of media mix and
spending levels will be conducted. This testing will be executed within multiple
markets to continually tune national spending levels. Likewise, ad campaign
concepts will be subjected to focus group and market-testing research prior to
broad deployment. The objective of this testing is to define the combination of
ad designs and media spending which generates the lowest ratio of sales to
marketing cost.
The Company intends to implement a disciplined geographical
rollout plan designed to measure consumer-response rates and identify system
performance issues. Introduction of the Company's service will be initiated via
Beta test in early Spring 2000 in three major markets, including Chicago,
Illinois, San Francisco, California and Dallas, Texas and will span a two-month
market measurement period. This should provide ample time for
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advertising awareness to build. Additional markets will be added over the
ensuing months building to top-20 market coverage. During this rollout period,
national coverage will be achieved through targeted advertising on the Internet
and Cable TV to reach upper- income Internet users. Media will run at heavier
weights in these top 20 "wired" markets, which contain over 80% of America's
Internet-connected homes. These markets include the top US areas of dominant
influence ("ADI's"). San Francisco/San Jose will receive added local emphasis in
order to significantly penetrate the Silicon Valley community. New York will
also be targeted to impact the Wall Street financial community.
Concurrent with this effort, research tracking studies
measuring consumer awareness, attitudes and response rates will be conducted.
Findings from this introductory phase will be used to make required adjustments
to advertising messages, media mix and spending levels. System
performance-tuning requirements will also be identified and addressed during
this period.
The Company's advertising campaign is designed to generate
broad awareness of the RetailHighway.com brand while establishing its compelling
consumer proposition. Media selection will be based on the target audience of
upwardly mobile consumers, busy but Internet-literate, who use the Net for
information as well as entertainment. The plan will target "purchasers" as well
as "shoppers" with limited leisure time who are looking for a fast, easy, secure
and efficient way to shop online. The technology sector, including users and
investors, will also be targeted.
Media selection will include both national and local
components. The national component will enable the message to be communicated to
all users of online services. The focus of local advertising will be on the
twenty key "wired" markets where the majority of online users reside.
Relevant to the Company's national media plan, it is
anticipated that this will involve cable television, rather than the broadcast
networks, which management believes will target key consumers more effectively
and efficiently. Cable networks under consideration include CNN, CNBC, MSNBC,
Headline News, Bloomberg Business Report, and CNNfn. The campaign will use
10-second spots to promote the RetailHighway.com URL in very high-frequency
rotation. The plan includes as many as 200 spots per station over the launch
period in the early-morning, prime time and late-night dayparts. Additionally,
national magazines skewed to the Internet user, business and investor class will
also be used. Publications under consideration include Fast Company, Business
Week, Industry Standard, Forbes, Fortune, Red Herring and Wired. Other national
publications including The Wall Street Journal, USA Today, Time, Newsweek, GQ,
Details, Maxim, Cosmopolitan and the New Yorker, which provide broader reach to
the Company's target market are also expected to be utilized.
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Internet advertising will be used for continuity of brand
presence among Internet users currently adopting cybershopping and the new
consumers coming to the Internet. Given that the cost of banner ads on
well-trafficked sites is very expensive and average click-through rates have
fallen to below 1%, the Company will conduct frequent "run-of-net" testing to
evaluate which sites are best for ad placements. These evaluations will be based
on cost- per-converted-lead versus traditional cost-per-thousand views.
Direct-mail initiatives tied to credit card and
participating-retailer account mailings will target a defined demographic
segment of online shoppers. Special offers and incentives will be available to
consumers via the direct-mail campaign.
Liquidity and Capital Resources
During the three month period ended September 30, 1999, the
Company incurred losses of ($75,583) ($.01 per share) as a result of incurring
research and development costs related to its current business plan described
herein and other general and administrative expenses.
In order to implement the business plan described herein,
management obviously recognized the need for operating capital. In response to
this need, in April 1999, the Company successfully consummated a private
offering of its common stock whereby the Company sold 1,721,867 shares of its
common stock at an offering price of $.75 per share, for total proceeds of
approximately $1,291,400. These funds are estimated by management to be
sufficient to allow the Company to commence implementation of its business plan
described herein. However, management has estimated that, in order to fully
implement the Company's business plan, it will be necessary for the Company to
raise additional funds of up to $35 million, in either debt, equity or a
combination of the same. To date, management has undertaken discussions with
various parties who have expressed an interest in providing this funding to the
Company, but no definitive agreement has been reach between the Company and any
other entity to provide such funding to the Company and no assurances can be
provided that such an agreement will be reached in the future.
Because the Company is not currently required to pay salaries
to any of its officers or directors, management believes that the Company has
sufficient funds to continue operations through the foreseeable future. It is
anticipated that current management will begin receiving nominal salaries in the
near future.
As of September 30, 1999, the Company owed Michael Levine,
President and a director of the Company, the principal balance of $2,392. During
the three month period ended September
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30, 1999, the Company repaid $12,821 to Mr. Levine. This loan is non-interest
bearing and is due upon demand.
The Company's securities are currently not liquid. There are
no market makers in the Company's securities. However, it is anticipated that
the Company will file an application to list its common stock for trading on an
established exchange in the near future. However, there can be no assurances
that the Company's common stock will be approved for trading if and when such an
application is so filed.
INFLATION
Although management expects that the operations of the Company
will be influenced by general economic conditions once the Company commences
generating revenues, the Company does not believe that inflation had a material
effect on the results of operations during the three month period ended
September 30, 1999.
YEAR 2000 DISCLOSURE
Many existing computer programs use only two digits to
identify a year in the date field. These programs were designed and developed
without considering the impact of the upcoming change in the century. If not
corrected, many computer applications could fail or create erroneous results by
or at the Year 2000. As a result, many companies will be required to undertake
major projects to address the Year 2000 issue. The Company presently owns less
than $6,000 worth of computers, all of which has been tested for Year 2000
compliance. It anticipates utilizing outside contractors for the bulk of its
computer work, if any, until after January 1, 2000. These consultants have
advised the Company that they have made all necessary revisions to their
software to avoid any potential problems arising in the year 2000. As of the
date of this report, the Company is relying upon Interworld for its computer
services. The applicable agreement between the Company and Interworld provides
for the Company being indemnified for any year 2000 liabilities. However, there
can be no assurance that the computer systems necessary to maintain the
viability of the Internet or any of the websites that direct consumers to the
Company's website will be year 2000 compliant. In this regard, it is noted that
the Company's proposed website will not be operational until after January 1,
2000 and, as a result, the Year 2000 impact is anticipated to be nominal on the
Company.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - NONE
ITEM 2. CHANGES IN SECURITIES - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
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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
EX-27 Financial Data Schedule
(b) Reports on Form 8-K
On September 28, 1999, the Company filed a report on Form 8-K,
advising of a change in the Company's independent accountants. The Company
engaged the accounting firm of Horton & Company LLP, independent public
accountants, to audit the Company's fiscal year ended June 30, 1999, as well as
future financial statements, to replace the firm of Kish, Leake & Associates,
P.C., which was the principal independent public accountant as reported in the
Registrant's Form 10-KSB for the fiscal year ended June 30, 1998, as filed with
the Securities & Exchange Commission. This change in independent accountants was
approved by the Board of Directors of the Registrant.
There were no disagreements within the last two fiscal years
and subsequent periods with Kish, Leake & Associates, P.C., on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope of procedure, which disagreement(s), if not resolved to the satisfaction
of Kish, Leake & Associates, P.C., would have caused that firm to make reference
in connection with its reports to the subject matter of the disagreement(s) or
any reportable events.
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<TABLE>
RETAIL HIGHWAY.COM, INC.
(formerly International Fuel Solutions, Inc.)
(a development stage company)
CONDENSED BALANCE SHEETS
ASSETS
<CAPTION>
(Unaudited) (Audited)
September 30, June 30,
1999 1999
---------- ----------
<S> <C> <C>
Cash and equivalents $ 850,139 $1,250,408
Prepaid expenses 66,036 10,369
---------- ----------
Total current assets 916,175 1,260,777
Office equipment and computer software,
net of accumulated depreciation 271,654 -
---------- ----------
Total assets $1,187,829 $1,260,777
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 26,712 $ 18,756
Loan payable-officer 2,392 15,213
---------- ----------
Total current liabilities 29,104 33,969
---------- ----------
Stockholders' equity:
Common stock, $.001 par value
50,000,000 shares authorized
9,221,867 shares issued and
outstanding at September 30, 1999;
9,211,867 shares issued and
outstanding at June 30, 1999 9,222 9,212
Additional paid-in capital 1,450,645 1,443,155
Deficit accumulated during the
development stage (301,142) (225,559)
---------- ----------
Total stockholders' equity 1,158,725 1,226,808
---------- ----------
Total liabilities and
stockholders' equity $1,187,829 $1,260,777
========== ==========
</TABLE>
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<TABLE>
RETAIL HIGHWAY.COM, INC.
(formerly International Fuel Solutions, Inc.)
(a development stage company)
CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>
(Unaudited)
(Unaudited) February
Three-month 17, 1993
periods ended (inception)
September 30, through
---------------------- September
1999 1998 30, 1999
---------- ---------- ----------
<S> <C> <C> <C>
Revenues $ - $ - $ -
---------- ---------- ----------
Operating expenses:
Professional and consulting 23,981 36,812 114,276
Research and development 22,968 10,226 116,466
Business development and travel 14,046 1,945 44,454
Office 24,487 6,829 41,224
---------- ---------- ----------
85,482 55,812 316,420
Interest income (9,899) - (15,278)
---------- ---------- ----------
Net loss $ (75,583) $ (55,812) $ (301,142)
========== ========== ==========
Basic loss per share $ (0.01) $ (0.01) $ (0.08)
========== ========== ==========
Weighted average common
shares outstanding 9,221,324 5,000,000 3,956,310
========== ========== ==========
</TABLE>
15
<PAGE>
<TABLE>
RETAIL HIGHWAY.COM, INC.
(formerly International Fuel Solutions, Inc.)
(a development stage company)
CONDENSED STATEMENTS OF CASH FLOWS
<CAPTION>
(Unaudited)
February
(Unaudited) 17,1993
Three-month periods ended (inception)
ended September 30, through
--------------------- September
1999 1998 30, 1999
--------- --------- ---------
<S> <C> <C> <C>
Net loss $ (75,583) $ (55,812) $(301,142)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 4,534 - 4,534
Expenses of Company paid by officer (12,821) - 32,730
Loan obligations assumed by stockholders - - 68,040
Issuance of common stock for
services/assets - - 52,154
Increase in prepaid expenses (55,667) - (55,906)
Increase in accounts payable and
accrued expenses 7,956 14,366 26,712
--------- --------- ---------
Net cash used in operating activities (131,581) (41,446) (172,878)
--------- --------- ---------
Cash flows from investing activities:
Purchase of applied-for patent - - (10,130)
Purchase of office equipment and
computer software (276,188) (775) (276,188)
--------- --------- ---------
Net cash used in investing activities (276,188) (775) (286,318)
--------- --------- ---------
Cash flows from financing activities:
Net proceeds from private placement of
common stock 7,500 - 1,284,335
Loan advances received - 26,667 25,000
--------- --------- ---------
Net cash provided by financing
activities 7,500 26,667 1,309,335
--------- --------- ---------
Net decrease in cash and equivalents (400,269) (15,554) 850,139
Cash and equivalents, beginning of period 1,250,408 20,150 -
--------- --------- ---------
Cash and equivalents, end of period $ 850,139 $ 4,596 $ 850,139
========= ========= =========
</TABLE>
16
<PAGE>
RETAIL HIGHWAY.COM, INC.
Notes to Unaudited Financial Statements
For the Three Month Period Ended September 30, 1999
- ---------------------------------------------------
Note 1 - Unaudited Financial Information
- ----------------------------------------
The unaudited financial information included for the three month interim period
ended September 30, 1999 were taken from the books and records without audit.
However, such information reflects all adjustments (consisting only of normal
recurring adjustments, which are of the opinion of management, necessary to
reflect properly the results of interim periods presented). The results of
operations for the three month period ended September 30, 1999, are not
necessarily indicative of the results expected for the fiscal year ended June
30, 2000.
Note 2 - Financial Statements
- -----------------------------
Management has elected to omit substantially all footnotes relating to the
condensed financial statements of the Company included in the report. For a
complete set of footnotes, reference is made to the Company's Annual Report on
Form 10-KSB for the year ended June 30, 1999, as filed with the Securities and
Exchange Commission and the audited financial statements included therein.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 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.
RETAIL HIGHWAY.COM, INC.
(Registrant)
Dated: December 6, 1999
By: s/Michael Levine
----------------------
Michael Levine,
President and Secretary
18
<PAGE>
RETAIL HIGHWAY.COM, INC.
EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
EXHIBITS Page No.
EX-27 Financial Data Schedule..............................................20
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30,
1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 850,139
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 916,175
<PP&E> 271,654
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,187,829
<CURRENT-LIABILITIES> 29,104
<BONDS> 0
0
0
<COMMON> 9,222
<OTHER-SE> 1,149,503
<TOTAL-LIABILITY-AND-EQUITY> 1,187,829
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 85,482
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (75,583)
<INCOME-TAX> 0
<INCOME-CONTINUING> (75,583)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (75,583)
<EPS-BASIC> (.01)
<EPS-DILUTED> 0
</TABLE>
