SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[x] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
[ ] Transitional Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended June 30, 1999
Commission File No. 0-23485
RETAIL HIGHWAY.COM, INC.
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(Name of small business issuer in its charter)
INTERNATIONAL FUEL SOLUTIONS, INC.
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(Former Name of Issuer)
Nevada 98-0177646
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
430 Peninsula Avenue, Suite One
San Mateo, California 94401
(650) 685-9926
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(Address, including zip code and telephone number, including area
code, of registrant's executive offices)
Securities registered under Section 12(b) of the Exchange Act:
none
Securities registered under Section 12(g) of the Exchange Act:
Common Stock
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(Title of class)
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 preceding 12
months (or for such shorter period that the Company was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
--- ---
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. X
---
(Continued on Following Page)
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Issuer's revenues for its most recent fiscal year: $ -0-
State the aggregate market value of the voting stock held by non-affiliates,
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: As of November 3, 1999:
$-0-.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of November 3, 1999 there were
9,221,867 shares of the Company's common stock issued and outstanding.
Documents Incorporated by Reference: None
This Form 10-KSB consists of Forty Seven pages.
Exhibit Index is Located at Page Forty Six.
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TABLE OF CONTENTS
FORM 10-KSB ANNUAL REPORT
RETAIL HIGHWAY.COM, INC.
PAGE
Facing Page
Index
PART I
Item 1. Description of Business.................................... 4
Item 2. Description of Property.................................... 11
Item 3. Legal Proceedings.......................................... 11
Item 4. Submission of Matters to a Vote of
Security Holders....................................... 11
PART II
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters........................ 12
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................................. 12
Item 7. Financial Statements....................................... 23
Item 8. Changes in and Disagreements With
Accountants on Accounting
and Financial Disclosure............................... 37
PART III
Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with
Section 16(a) of the Exchange Act...................... 37
Item 10. Executive Compensation..................................... 40
Item 11. Security Ownership of Certain Beneficial
Owners and Management.................................. 41
Item 12. Certain Relationships and Related
Transactions........................................... 43
PART IV
Item 13. Exhibits and Reports on Form 8-K........................... 43
SIGNATURES............................................................ 45
EXHIBIT INDEX ........................................................ 46
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Retail Highway.com, Inc., f/k/a International Fuel Solutions, Inc., f/k/a
LBF Corporation (the "Company"), was incorporated on February 17, 1993 under the
laws of the State of Nevada to engage in any lawful corporate purpose. Until
June 1998, other than issuing shares to its shareholders, the Company never
commenced any other operational activities. On June 25, 1998, the Company
acquired certain patent application rights (the "FES 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 stock were issued in
exchange for each share of common stock then issued and outstanding, in order to
establish the number of issued and outstanding common shares of the Company 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 then outstanding common stock. The patent rights acquired
in the FES Assets consists of a patent application for a fuel heating apparatus
which is integrated into the fuel line of an internal combustion engine.
Effective March 31, 1999, the Company entered into a rescission agreement
with FES, whereby the Company and FES did agree to rescind the previous asset
acquisition agreement entered into between the aforesaid parties in June 1998.
As part of the terms of this rescission, FES and its assigns did agree to tender
back into the Company's treasury the 12,500,000 "restricted" common shares
previously issued. FES also agreed to repay a former principal of the Company
for certain loans made to the Company applicable 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 this 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. See Part III, Item 9, "Directors, Executive Officers, Promoters and
Control Persons" below.
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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.
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).
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 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.
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Shopping functions at the site will use technology provided by one of the
leading e-commerce software suites, Commerce Exchange from InterWorld
Corporation, which provides comprehensive capabilities for product
merchandising, account management and order management. Commerce Exchange is
unique among the leading e- commerce packages in that it is based on a
"process-centric" methodology that allows it to be easily customized and adapted
to any business model. This is particularly important for the Company in
accommodating the wide range of requirements imposed by the need to interface to
a large number of different retailer systems. Commerce Exchange also supports
personalizing the customer experience based on user preferences, registration
profiles, geographic location and other data. Major e-commerce sites currently
using Commerce Exchange include Nike, Brooks Brothers and Micro Warehouse.
The terms of the agreement between the Company and Interworld Corporation
provide for the Company to pay to Interworld a non-refundable fee of $317,300
(which represents $250,500 in net license fees and $66,800 in first year support
and maintenance fees) in exchange for a non-exclusive, perpetual,
non-transferable license to use the Interworld software.
The Company has also been involved in discussions with other entities in
order to create a demonstration model of its web site and believes that
applicable agreements with all parties necessary to establish the Company's web
site will be concluded within the time parameters referenced herein, in order to
allow the Company to begin implementation of its business plan in a timely
manner.
While online-only stores, such as Amazon, Priceline, and CDNow, have
enjoyed great recent success, management believes that online extensions of BAM
stores will ultimately dominate the Internet channel. For the future growth of
e-commerce, the progress of traditional BAM retailers will be crucial. According
to the Boston Consulting Group, multichannel retailers now account for 62% of
online revenues, compared to 38% for online only retailers. Given that
multichannel BAM retailers benefit from established brand imagery and a large
base of loyal customers, their lead is expected to widen. Management believes
that for current and future cybershoppers, online extensions of familiar BAM
stores are the logical choice since these are the same retail establishments
they have frequented throughout their shopping lives, BAM Retailers can exploit
the established shopping habits of consumers within familiar channels online,
strong brand equities already exist in contrast to the very high spending levels
required by online only stores to establish themselves, BAM retailers realize
significant synergies between their online extensions, existing infrastructures
and physical stores and compared to online-only stores, BAM Retailers have
higher profit margins, because their customers are more interested in quality
and selection than price.
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Management anticipates that aggressive advertising and promotional
campaigns will drive high volumes of consumer traffic to the site.
Community-building programs should generate additional traffic. A rich portfolio
of entertainment content is expected to extend the duration of site visits and
it is hoped that an abundance of product information will stimulate frequent,
high- value purchases.
This complementary mix of content is intended to differentiate the Company
from the "shopping-only" format of current sites and is designed to be a major
traffic builder, attracting site visitors for entertainment features and
converting them to shoppers. While no assurances can be so provided, the
"stickiness" factor is expected to increase the frequency and value of
transactions, stimulate word-of-mouth referrals and attract high levels of
repeat visitors. When the full complement of content is in place, the Company
envisions its desktop icon being in place on millions of computer screens for
instant linking to its shopping destination.
The home page of the Company's web site will provide "off- ramp" access to
category-specific groups of retailers. Consumers can choose the exit most
relevant to their interest and then conduct specific product searches from among
a database of stores, which specialize in that area. Category diversification
across familiar anchor and branded specialty stores also provides insulation
from the downside of focusing on price-competitive, low- margin categories.
While the range of stores and products is expected to be broad, the Company's
site is being developed with the idea that navigation among the various BAM
retailers who agree to market their products on the Company's web site will be
easy and the checkout process is being designed to be simple and secure.
The consumer marketing plan is designed to achieve the following
objectives: (i) 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; (ii) significant transaction fee revenues derived from
exceeding the industry- standard look-to-buy ratio, currently 2%; and (iii)
above-average "time-on-site" metrics, increasing store visits and significant
revenues from both advertising and transaction fees.
For a more detailed description of the Company's business plan, see "Part
II, Item 6, Management's Discussion and Analysis of Financial Condition and
Results of Operations - Plan of Operation."
Private Offering of Securities
In order to provide the Company with the capital deemed necessary by
management to implement the business plan described herein, in April 1999, the
Company successfully consummated a private offering of its common stock pursuant
to Regulation S and Regulation D promulgated under the Securities Act of 1933,
as
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amended, 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.
Employees
The Company presently has two (2) employees, including its President,
Michael Levine, and a general manager. See "Part III, Item 9, Directors,
Executive Officers, Promoters and Control Persons" below. The Company intends to
employ additional persons once the Company implements its business plan
described herein. While no assurances can be provided that additional employees
will be retained in the future, management has projected that the Company will
require an additional 39 employees during the calendar year ending December 31,
2000, including employees in technology, sales, advertising, promotions,
customer service, accounting and other support staff persons.
Management believes that its relationship with the Company's employees is
good. No employee is a member of any union.
Competition
Consumers are confronted with a wide range of options when shopping online,
including Online-only Stores, such as Amazon.com and CDNow; Online Extensions of
BAM Retailers, including L.L. Bean, Barnes & Noble and Toys R Us; "Horizontal"
Portals, including AOL, Yahoo and MSN; and Dedicated Shopping Destinations,
including iMall.com and fashionmall.com. Many of the sites operate largely or
entirely on the click-through model, essentially offering product information
and search capabilities but not selling products directly.
Online-only Stores are largely responsible for driving the recent growth of
the e-commerce industry. These destinations generally focus on a single product
category, although Amazon, for example, is attempting to broaden its reach. They
provide a consumer-friendly experience and in many cases are technically
excellent. Using aggressive promotion and marketing, a few of these online-only
stores have been extremely successful. For example, Amazon.com is competitive
with the top horizontal portals in online market reach (10%) This success is
measured in category dominance, phenomenal growth and huge market valuations,
but not necessarily in profitability. IPO capital has funded expansion through
acquisition and the addition of new product categories. However, ongoing (and
anticipated future) operating losses are the result of very high expenses
associated with brand building and cutthroat price competition within their
commodity categories.
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Horizontal Portals leverage their extremely heavy traffic to generate
click-throughs from their shopping "channels." Typically, visitors click-through
to individual retailer sites. After a purchase is made, the shopper must then
navigate back to the shopping channel to visit another store. Portals derive
revenue from a combination of click-through charges and commissions on each
transaction. The major portals also charge their retailing partners large rental
fees for prominent positions on their site.
Dedicated Shopping destinations operate in a similar way to the horizontal
portals, except that the sites are shopping- specific. The business proposition
is aggregation of traffic to provide click-throughs to retailer sites in return
for fees and commissions. These sites also spend heavily in advertising to
generate traffic on behalf of their affiliated retailers. Many of these sites
promote the large number of retailers they represent without any apparent
concern for quality or brand prominence. For example, imall.com features in
their store listings for electronics such household names as Eddie & Mac's
Discount Electronics and FM Sounds In-the-Ear Radio.
Management believes that there are four important differences between the
Company and competitive online shopping sites including:
(i) The Company will represent only BAM Retailers. As a
result, customers will have a sense of familiarity, comfort and
security.
(ii) The Company will not operate on the click-through model.
All retailer product data will reside with the Company and customers
can make multiple purchases at different stores without ever leaving
the site and becoming "lost in cyberspace." Product searches should be
faster and more effective, resulting in higher visitor retention rates,
transaction size and look-to-buy ratio.
(iii) Shoppers will use a multi-vendor shopping cart and
single checkout transaction, regardless of the number of stores from
which purchases are made.
(iv) The Company will provide extensive entertainment,
news/information and community-oriented features to establish the
"one-stop lifestyle destination."
The Company believes that these advantages will make its web site a
compelling destination for online shoppers across a broad demographic range and
attract quality BAM Retailer partners to
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establish or enhance their online presence. The key factors for competitive
insulation are a successful and timely launch, fast growth and the development
of a commanding brand presence. No assurances can be provided that the Company
will successfully establish these factors within the time parameters described
herein, or at all.
However, despite the aforesaid discussion, the industry is highly
competitive. The Company has and will continue to encounter competition from
numerous other firms and established institutions, many of which are larger,
have longer histories of operations and have greater financial, marketing and
other resources than that of the Company. No assurances can be provided that the
Company will be successful in its efforts to maintain market acceptance or that,
even if successful, will be able to attract sufficient sales to make its
operations commercially profitable.
Trademarks
The Company holds the rights to the names "Shopshopshopping.com,"
"Retailhighway.com" and "Greatestmall on earth.com." In addition, on July 16,
1999, the Company submitted an application to the US Patent and Trademark office
to register the mark "RetailHighway.com." Subsequently, the US Patent and
Trademark Office assigned the serial number 75/755804 to the Company's
application. The Company does not utilize any other trademarks or patent rights
in its business.
Government Regulations
The Company is not currently subject to direct federal, state, or local
regulation and laws or regulations applicable to access to, or commerce on, the
Internet, other than regulations applicable to business generally. However, due
to the increasing popularity and use of the Internet and other on-line services,
it is possible that a number of laws and regulations may be adopted with respect
to the Internet or other on-line services covering issues such as user privacy,
"indecent" materials, freedom of expression, pricing, content and quality of
products and services, taxation, advertising, intellectual property rights and
information security. The adoption of any such laws or regulations might also
decrease the rate of growth of Internet use, which in turn could decrease the
demand for the Company's products and services or increase the cost of doing
business or in some other manner have a material adverse affect on the Company's
business, results of operations and financial condition. In addition,
applicability to the Internet of existing laws governing issues such as property
ownership, copyrights and other intellectual property issues, taxation, libel,
obscenity and personal privacy is uncertain. The vast majority of
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such laws were adopted prior to the advent of the Internet and related
technologies and, as a result, do not contemplate or address the unique issues
of the Internet and related technologies. The Company does not believe that such
regulations, which were adopted prior to the advent of the Internet, govern the
operations of the Company's business nor have any claims been filed by any state
implying that the Company is subject to such legislation. There can be no
assurance, however, that a state will not attempt to impose these regulations
upon the Company in the future or that such imposition will not have a material
adverse affect on the Company's business, results of operations and financial
condition.
ITEM 2. DESCRIPTION OF PROPERTY
Facilities. The Company's principal place of business located at 430
Peninsula Avenue, Suite One, San Mateo, California 94401, which consists of
approximately 800 square feet of executive office space. This space is provided
to the Company on a rent free basis by Joseph Owens, a director of the Company.
In addition, the Company also maintains an office at 478 Queen St. East,
Toronto, Ontario, Canada M5A 1T7, which consists of approximately 3,200 square
feet of executive office space. It pays a monthly rent of $1,566 (CDN)
(approximately $6 per square foot) pursuant to a written lease which expires in
August 2004. The cost for this location increases by $1.00 per square foot per
year (CDN) each year of the lease term. The Company's principal office's
telephone number is (650) 685-9926 and facsimile number is (650) 685-9930.
The Company neither owns nor leases any other properties, either real or
personal.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings which are pending or have been
threatened against the Company of which management is aware.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In April 1999, the shareholders approved an amendment to the Articles of
Incorporation of the Company to change the name of the Company to its present
name, by consent of a majority of the issued and outstanding stock.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
(a) Market Information. There is presently no trading market for any of the
Company's securities. Management does intend to file an application to list the
Company's common stock for trading after the Company has concluded its fund
raising activities. See "Part II, Item 6, Management's Discussion and Analysis
of Financial Condition and Results of Operations - Liquidity and Capital
Resources." However, there can be no assurances that the Company will raise the
amount of funds projected to be necessary to fully implement its business plan
described herein, or if it does so, that it will file an application to trade
the Company's securities, or if it does, that the Company's application will be
approved.
(b) Holders. There are 98 holders of the Company's Common Stock, not
including those persons who hold their securities in "street name."
(c) Dividends. The Company has not paid any dividends on its Common Stock
since its inception. The Company does not foresee that the Company will have the
ability to pay a dividend on its Common Stock in the fiscal year ended June 30,
2000.
ITEM 6. 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
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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.
In April 1999, the Company successfully consummated an acquisition of
certain assets owned by Michael Levine, including an electronic commerce web
site and the rights to business and domain names, including
"Shopshopshopping.com," "Retailhighway.com" and "Greatestmall on earth.com" (the
"Assets"). In exchange for the Assets, the Company agreed to issue 2,500,000
shares of its common stock equal to ownership of approximately 33% of its
outstanding shares, in exchange for all of the Assets. The acquisition was
successfully consummated effective April 17, 1999, and the Company changed its
name to "Retail Highway.com, Inc."
Plan of Operation
The Company generated no revenues during the fiscal year ended June 30,
1999. Management of the Company anticipates that the Company will not generate
any significant revenues until the Company implements its new business plan.
While no assurances can be so provided, as of the date of this report, it is not
anticipated that the Company will commence generating revenues until it fully
implements its business plan described herein, which is expected to occur during
the fiscal year ending June 30, 2000.
The Company's new 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 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
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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 Company's concept in a positive
manner; however, they have
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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, email, 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.
15
<PAGE>
As noted by Ernst & Young, Goldman Sachs, Jupiter Research and other
leading researchers, BAM retailers have in 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."
16
<PAGE>
- Online chat, e-mail and other portal services.
- Toll-free phone customer service features coordinated
with participating Retailers.
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
17
<PAGE>
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 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.
18
<PAGE>
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 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
19
<PAGE>
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 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
20
<PAGE>
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.
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 fiscal year ended June 30, 1999, the Company incurred losses of
($137,642) ($.02 per share) as a result of its incurring ongoing research and
development costs related to attempting to implement its prior business plan of
developing, production and marketing of a heat exchange unit, as well as 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
21
<PAGE>
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 investment bankers and
venture capitalists who have expressed an interest in providing this funding to
the Company, but no definitive agreement has been reached 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, who assumed their positions with the Company subsequent to
March 31, 1999, will begin receiving nominal salaries in the near future. It is
further anticipated that the Company will continue to incur expenses without
corresponding revenues for at least the next six to twelve months.
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 securities for trading on a national
exchange once the Company has completed its financings described hereinabove.
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 fiscal year ended June 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 nominal computer
equipment valued at approximately $6,000. All of this equipment 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 proposed
consultants have
22
<PAGE>
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 web sites that direct consumers to the
Company's website will be Year 2000 compliant. In this regard, it is noted that
the Company's proposed web site 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.
ITEM 7. FINANCIAL STATEMENTS
23
<PAGE>
RETAIL HIGHWAY.COM, INC.
(formerly International Fuel Solutions, Inc.)
(a development stage company)
INDEX TO FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report F-2
Balance sheet F-3
Statements of operations F-4
Statement of stockholders' equity (deficit) F-5
Statements of cash flows F-6
Notes to financial statements F-7 - F-12
F-1
24
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Retail Highway.com, Inc.
San Mateo, California
We have audited the accompanying balance sheet of Retail Highway.com, Inc.
(formerly International Fuel Solutions, Inc.) (a development stage company), as
of June 30, 1999 and the related statements of operations, shareholders' equity
(deficit), and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit. The
financial statements of Retail Highway.com, Inc. (formerly International Fuel
Solutions, Inc.) for the year ended June 30, 1998 and the period February 17,
1993 (inception) through June 30, 1998, were audited by other auditors whose
report dated September 10, 1998, expressed an unqualified opinion.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Retail Highway.com, Inc.
(formerly International Fuel Solutions, Inc.) (a development stage company) at
June 30, 1999 and the results of its operations and its cash flows for the year
then ended, in conformity with generally accepted accounting principles.
HORTON & COMPANY, L.L.C.
Wayne, New Jersey
October 7, 1999, except for the last two
paragraphs of Note 5, as to which the
date is October 28, 1999
F-2
25
<PAGE>
<TABLE>
RETAIL HIGHWAY.COM, INC.
(formerly International Fuel Solutions, Inc.)
(a development stage company)
BALANCE SHEET
June 30, 1999
<CAPTION>
ASSETS
<S> <C>
Cash and equivalents $1,250,408
Prepaid expenses 10,369
----------
Total assets $1,260,777
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 18,756
Loan payable-officer 15,213
----------
Total liabilities 33,969
----------
Stockholders' equity:
Common stock, $.001 par value
50,000,000 shares authorized
9,211,867 shares issued and outstanding 9,219
Additional paid-in capital 1,443,148
Deficit accumulated during the development stage (225,559)
----------
Total stockholders' equity 1,226,808
----------
Total liabilities and stockholders' equity $1,260,777
==========
See notes to financial statements
</TABLE>
F-3
26
<PAGE>
<TABLE>
RETAIL HIGHWAY.COM, INC.
(formerly International Fuel Solutions, Inc.)
(a development stage company)
STATEMENTS OF OPERATIONS
<CAPTION>
February 17, 1993
(inception)
Year ended June 30, Through
1999 1998 June 30, 1999
---------- ---------- -----------
<S> <C> <C> <C>
Revenues $ - $ - $ -
---------- ---------- -----------
Operating expenses:
Professional and consulting 51,971 28,324 90,295
Research and development 48,784 44,714 93,498
Business development and travel 26,457 3,951 30,408
Office 15,809 418 16,737
---------- ---------- -----------
143,021 77,407 230,938
Interest income (5,379) - (5,379)
---------- ---------- -----------
Net loss $ (137,642) $ (77,407) $ (225,559)
========== ========== ===========
Basic loss per share $ (0.02) $ (0.02) $ (0.06)
========== ========== ===========
Weighted average common
shares outstanding 5,792,129 5,000,000 3,738,120
========== ========== ===========
See notes to financial statements
</TABLE>
F-4
27
<PAGE>
<TABLE>
RETAIL HIGHWAY.COM, INC.
(formerly International Fuel Solutions, Inc.)
(a development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<CAPTION>
Deficit
Number of Accumulated
Shares Additional During the
Common Common Paid-in Development
Stock Stock Capital Stage Total
--------- ------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Balance at February 17, 1993 - $ - $ - $ - $ -
Stock issued for cash
advances made on behalf
of the Company and services
provided at $.0002
per share 1,500,000 1,500 (1,200) - 300
Net loss - - - (300) (300)
--------- ------ ---------- --------- ----------
Balance at June 30,
1993 and 1994 1,500,000 1,500 (1,200) (300) -
Stock issued for cash
advances made on behalf
of the Company and services
provided at $.00006
per share 3,500,000 3,500 (3,290) - 210
Net loss - - - (210) (210)
--------- ------ ---------- --------- ----------
Balance at June 30, 1995 5,000,000 5,000 (4,490) (510) -
Expenses paid by
shareholders on behalf
of the Company - - 10,000 - 10,000
Net loss - - - (10,000) (10,000)
--------- ------ ---------- --------- ----------
Balance at June 30,
1996 and 1997 5,000,000 5,000 5,510 (10,510) -
Patent and related costs
contributed at $.004
per share - - 51,644 - 51,644
Net loss - - - (77,407) (77,407)
--------- ------ ---------- --------- ----------
Balance at June 30, 1998 5,000,000 5,000 57,154 (87,917) (25,763)
Obligations assumed by
shareholders on behalf
of the Company - - 113,378 - 113,378
Stock issued to acquire
intangible assets 2,500,000 2,500 (2,500) - -
Stock issued in
private placement 1,711,867 1,719 1,282,181 - 1,283,900
Costs incurred in connection
with private placement - - (7,065) - (7,065)
Net loss - - - (137,642) (137,642)
--------- ------ ---------- --------- ----------
Balance at June 30, 1999 9,211,867 $9,219 $1,443,148 $(225,559) $1,226,808
========= ====== ========== ========= ==========
See notes to financial statements
</TABLE>
F-5
28
<PAGE>
<TABLE>
RETAIL HIGHWAY.COM, INC.
(formerly International Fuel Solutions, Inc.)
(a development stage company)
STATEMENTS OF CASH FLOWS
<CAPTION>
February 17, 1993
(inception)
Year ended June 30, through
1999 1998 June 30, 1999
---------- -------- ----------
<S> <C> <C> <C>
Net loss $ (137,642) $(77,407) $ (225,559)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Expenses of Company paid by
officer 15,213 20,338 45,551
Obligations assumed by
stockholders 68,040 - 68,040
Issuance of common stock
for services/assets - 51,644 52,154
Increase in prepaid expenses (239) - (239)
Increase in accounts payable 8,051 10,705 18,756
---------- -------- ----------
Net cash provided by (used
in) operating activities (46,577) 5,280 (41,297)
---------- -------- ----------
Cash flows from investing activities:
Purchase of applied for patent - (10,130) (10,130)
---------- -------- ----------
Net cash used in
investing activities - (10,130) (10,130)
---------- -------- ----------
Cash flows from financing activities:
Net proceeds from private
placement of common stock 1,276,835 - 1,276,835
Loan advances received - 25,000 25,000
---------- -------- ----------
Net cash provided by
financing activities 1,276,835 25,000 1,301,835
---------- -------- ----------
Net increase in cash and
equivalents 1,230,258 20,150 1,250,408
Cash and equivalents,
beginning of period 20,150 - 20,150
---------- -------- ----------
Cash and equivalents,
end of period $1,250,408 $ 20,150 $1,270,558
========== ======== ==========
See notes to financial statements
</TABLE>
F-6
29
<PAGE>
RETAIL HIGHWAY.COM, INC.
(formerly International Fuel Solutions, Inc.)
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
1. Summary of significant accounting policies
This summary of significant accounting policies of Retail Highway.com, Inc.
(hereinafter "Retail Highway" or the "Company") is presented to assist in
understanding the financial statements. The financial statements and notes
are representations of the management of Retail Highway which is
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.
History and business activity
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 and 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 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 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. In July 1998, the Company filed amended articles
of incorporation and changed its name to International Fuel Solutions, Inc.
F-7
30
<PAGE>
1. Summary of significant accounting policies (continued)
History and business activity (continued)
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 FES tendered back to the Company's treasury an aggregate of
12,500,000 "restricted" common shares issued pursuant to the acquisition
and the Company returned the patent application rights it had acquired. FES
also agreed to repay certain balances incurred by the Company applicable to
the recession and other related activities.
On March 31, 1999, the Company entered into a letter of intent with an
unrelated party, whereby the Company agreed, in principle, to acquire
certain assets owned by the seller, including the concept for an electronic
commerce web site and the rights to business and domain names, including
"Shopshopshopping.com", "Retail Highway.com" and "Greatestmallonearth.com"
(the "Assets"). In exchange for the Assets, the Company agreed to issue
2,500,000 shares of its common stock, equal to ownership of approximately
33% of its outstanding shares, in exchange for all of the Assets. The
acquisition was successfully consummated effective April 17, 1999, and the
Company changed its name to "Retail Highway.com, Inc."
The Company's 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
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.
The Company is currently accepting bids from among what management believes
are the best web site builders and Internet hosting companies currently in
existence, to construct a web site in accordance with the Company's
technical specifications. While no assurances can be provided, management
estimates that a final contract will be completed in this regard on or
before October 31, 1999, with the web site becoming fully functional on or
before April 1, 2000.
As of the date on this report, management has initiated discussions with
several major retailers in order to establish their interest in becoming a
member of the Company's "mall" concept. To the best knowledge of
management, there are no other virtual malls which possess the brand name
"bricks and mortars" 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.
F-8
31
<PAGE>
1. Summary of significant accounting policies (continued)
Development stage
The Company has been a development stage company since its inception on
February 17, 1993. Currently, the Company is seeking to establish an
"Internet shopping portal" as described above.
Concentration of credit risk
The Company currently maintains cash balances with one bank in excess of
limits insured by the Federal Deposit Insurance Corporation (FDIC). At June
30, 1999, the Company's cash balance exceeded the FDIC insured limit by
approximately $1,100,000. The Company also maintains cash in a money market
account with an investment fund company. The Company has not experienced
any losses in such accounts and believes they are not exposed to any
significant credit risk on cash.
Cash and equivalents
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments purchased with an original
maturity date of three months or less to be cash equivalents.
Basic loss per common share
Basic loss per common share is computed by dividing the net loss applicable
to common shareholders by the weighted average number of shares outstanding
during the period. Diluted loss per share amounts are not presented because
they are anti-dilutive.
Basic loss per common share has been restated for the year ended June 30,
1998, to give retroactive effect to the Stock Recession Agreement described
in Note 2.
Research and development
Research and development costs are charged to operations when incurred and
are included in operating expenses.
Reclassifications
Certain reclassifications have been made to the financial statements for
the year ended June 30, 1998 and the period February 17, 1993 (inception)
through June 30, 1998, to conform to the presentation for the year ended
June 30, 1999.
F-9
32
<PAGE>
2. Stockholders' equity (deficit)
Capitalization
The Company initially authorized 2,500 shares of no par value common stock.
In May 1993, the Company issued 300 shares of common stock valued at $300
or $1.00 per share for services and cash advances paid on behalf of the
Company. In October 1995 the Company issued 700 shares of common stock
valued at $210 or $.30 per share for services and cash advances paid on
behalf of the Company.
In August 1996 the Company's board of directors and shareholders authorized
an increase in the Company's authorized stock to 50,000,000 shares of $.001
par value common stock and 25,000,000 shares of $.001 par value preferred
stock with preferences to be determined by the board of directors at the
time of issuance. The Secretary of the State of Nevada issued a Certificate
of Amendment to the Articles of Incorporation in September 1997 relative to
the increase in the authorized shares of stock.
In August 1997 the board of directors of the Company approved a 500 to 1
forward split making the outstanding common stock equal to 500,000 shares.
On June 19, 1998 the board of directors of the Company approved a 10 to 1
forward split making the outstanding common stock equal to 5,000,000
shares.
1998 share issuance and subsequent rescission
On June 19, 1998 the Company purchased certain patent application rights
from an unrelated party in exchange for 12,500,000 shares of its common
stock. The transaction was valued at predecessor cost of $51,644 or $.004
per share.
Effective March 31, 1999, the Company entered into a Rescission Agreement
whereby the 12,500,000 shares were returned to the Company's treasury. The
number of shares outstanding at June 30, 1998 and for the period from the
original issuance of the shares (June 18, 1998) through the effective date
of the Rescission (March 31, 1999) have been restated to give retroactive
effect to the Rescission Agreement. As a result, the Company's
stockholders' equity is presented as if the shares had never been issued.
Basic loss per share for the year ended June 30, 1998, has also been
restated.
In conjunction with the Rescission agreement, certain shareholders agreed
to assume obligations incurred on behalf of the Company. The assumption of
Company obligations was recorded as a capital contribution, resulting in an
increase in additional paid-in capital of $113,378.
1999 share issuance
On April 17, 1999, the Company issued 2,500,000 shares of its common stock
to acquire certain assets, including an electronic commerce web site and
the rights to business and domain names (Note 1). No assets were recorded
in the transaction because the seller had incurred only nominal costs for
the assets and had no operations.
F-10
33
<PAGE>
2. Stockholders' equity (deficit) (continued)
Private placement
During May through July 1999, the Company conducted a private placement
under which it issued a total of 1,721,867 shares of its common stock at a
purchase price of $0.75 per share. As of June 30, 1999, a total of
1,711,867 of such shares had been issued with total proceeds of $1,283,900
received. The remaining 10,000 shares were issued and $7,500 of proceeds
received in July 1999.
The Company anticipates using the proceeds of the private placement to fund
the development of its web site and related operating and marketing
expenses.
3. Related party transactions
Loan payable-officer represents an unsecured, non-interest bearing loan
which arose from expenses paid on behalf of the Company by its president.
Such loans are repaid in the ordinary course of business.
During the years ended June 30, 1999 and 1998, and since inception, the
Company has maintained a mailing address at a shareholder's place of
business at no cost to the Company.
4. Income taxes
The Company accounts for income taxes using the ability method in
accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." Under this method, deferred tax assets and
liabilities are determined based on differences between financial reporting
and tax bases of assets and liabilities and are measured using enacted tax
rates and laws that will be in effect when the differences are expected to
reverse. There were no significant temporary differences leading to
deferred tax assets or liabilities as of June 30, 1999.
As of June 30, 1999, the Company has a deferred tax asset of $45,000 which
arises from a net operating loss carryforward of approximately $225,000.
Because of the uncertainty of the Company's ability to generate taxable
income in the future to utilize the net operating loss carryforward, such
deferred tax asset has been fully reserved through a valuation allowance.
The net change in the valuation allowance for the years ended June 30, 1999
and 1998 was $27,510 and $15,388, respectively.
The Company's net operating loss carryforward expires in the years 2006
through 2019.
F-11
34
<PAGE>
5. Commitments
Software license agreement
On August 10, 1999, the Company entered into an agreement whereby it
purchased a non-exclusive, perpetual and non-transferable license to
utilize certain software. Such software is to be used to enable on-line
users to access information about, and to order electronically, products
and services offered by the Company on its web site. The Company paid a
total of $317,300, consisting of $250,500 in net license fees and $66,800
in first year support and maintenance fees.
The Company has capitalized the license fee which it will amortize over a
five-year period representing the software's estimated useful life. The
support and maintenance fee will be expensed ratably over the one-year term
of the support agreement.
Leasing agreements
Effective August 1, 1999, the Company entered into an operating lease
agreement for the rental of office space. In connection therewith, the
Company paid a $10,233 security deposit. Such deposit is to be applied, in
part, to future rental payments with the balance to be held as a refundable
security by the landlord. The lease is for a five year and two month term
ending September 30, 2004.
Future minimum payments under this operating lease are as follows:
Year ending
June 30,
-----------
2000 $11,160
2001 16,834
2002 18,966
2003 21,098
2004 23,230
Thereafter 5,852
-------
$97,140
=======
In addition, the Company is obligated for certain increases in the
landlord's operating costs and real estate taxes.
Patent application
On July 16, 1999, the Company submitted an application to the U.S. Patent &
Trademark Office to register the mark "RETAIL HIGHWAY.COM".
F-12
35
<PAGE>
5. Commitments (continued)
Brand development
During October 1999, the Company entered into an agreement with a marketing
firm to develop the Retail Highway.com brand. The fees for the project
total $175,000 with $70,000 to be paid upon commencement of the project and
the balance to be paid within approximately 60 to 90 days.
System design
During October 1999, the Company also entered into agreement with a
computer systems design and consulting firm to plan and design systems to
support Internet-based electronic commerce, customer service, fulfillment
interfaces and content management. It is estimated that the fees for such
services will total $525,000 plus 116,667 shares of the Company's common
stock. Fees of $60,000 plus 20,000 shares of the Company's common stock are
payable at the commencement of the project with the balance of the payments
in cash and stock payable over the term of the project which is not
expected to exceed five months.
F-13
36
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
In September 1999, the Company filed a Form 8-K, advising of the change in
independent certified accountants, changing from Kish, Leake & Associates to
Horton & Company LLP, who have audited the Company's financial statements
appearing elsewhere in this report. There were no disagreements with Kish, Leake
& Associates on accounting and/or financial disclosure.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.
Directors are elected for one-year terms or until the next annual meeting
of shareholders and until their successors are duly elected and qualified.
Officers continue in office at the pleasure of the Board of Directors.
The Directors and Officers of the Company as of the date of this report are
as follows:
Name Age Position
---- --- --------
Michael Levine 50 CEO, President, Secretary
and Director
Joseph T. Owens 49 Director
Louis Mann 49 Director
All Directors of the Company will hold office until the next annual meeting
of the shareholders and until successors have been elected and qualified.
Officers of the Company are elected by the Board of Directors and hold office
until their death or until they resign or are removed from office.
There are no family relationships among the officers and directors. There
is no arrangement or understanding between the Company (or any of its directors
or officers) and any other person pursuant to which such person was or is to be
selected as a director or officer.
37
<PAGE>
(b) Resumes:
Michael Levine, Chief Executive Officer, President, Secretary and a
director of the Company, assumed his positions with the Company in April 1999.
In addition to his positions with the Company, since 1976, Mr. Levine has also
been President of Golden Groove Production, Inc., Toronto, Canada, a privately
held Canadian corporation which is engaged in the collection of royalties and
contract administration for record albums. From June 1995 through the present,
Mr. Levine has been a partner in TRC Records, Mississauga, Ontario, Canada,
where he negotiates worldwide distribution contracts of pre-recorded discs and
coordinated the company's manufacturing process. Mr. Levine received a OAC
degree from Sir J.A. MacDonald Collegiate in 1966. He devotes substantially all
of his business time to the business of the Company.
Joseph T. Owens, director, assumed his position with the Company in April
1999. In addition, since February 1995, Mr. Owens has been President of Owens &
Associates, Inc., San Mateo, California, a privately held marketing consultant
firm which developed strategies for interactive entertainment and Internet
companies such as Sega, Electronic Arts, Crystal Dynamics, Yahoo and others.
From February 1994 through February 1995, Mr. Owens was Senior Vice President of
RC2, a division of Rogers/Cowan, Inc. a public relations firm located in New
York, Los Angeles and San Mateo, California, where his principal activities were
in marketing. He is the author of "Welcome to the Jungle" (Harper- Collins,
1994), a marketing handbook for the music industry, and is a frequent speaker at
interactive and entertainment industry events and conferences. Mr. Owens
received a Bachelor of Arts degree from York University in 1972. He devotes only
such time as necessary to the business of the Company.
Louis Mann, director, assumed his position with the Company in April 1999.
In addition, since October 1988, Mr. Mann has been a Senior Vice-President of
Capital Records, Inc., Hollywood, California, one of the music industry's
premiere recording companies and in June 1999, he became the President of the
Media Properties division of House of Blues International. Mr. Mann received a
Bachelor of Arts degree in Communications from the University of Maryland in
1973 and a Masters in Business Administration degree from UCLA in 1992. Mr. Mann
provides advice in the areas of entertainment content and content acquisition
for the Company and he devotes only such time as necessary to the business of
the Company.
38
<PAGE>
Key Employees and Advisors
Henry Silcock, Chief Technology Officer, is the founder and principal of
Cambridge Consulting Services, a New Jersey based independent consulting firm
providing strategic technology planning, market analysis and business
development services to high-tech companies. From February 1995 until April
1996, he was Vice President, Program Development, at Mikros Systems Corporation
in Princeton New Jersey, where he had business development responsibilities for
commercial wireless communications projects. Prior to his business development
projects, from March 1991 through January 1995, he was Vice President,
Engineering and Vice President, Advanced Development at Mikros Systems Corp.,
where he ran the engineering group for ten years. During this period he led
numerous programs in technical areas including digital wireless communications,
signal processing and microprocessor architecture, custom chip development,
systems and application software. Mr. Silcock has degrees from Cambridge
University and SUNY Albany and was formerly Adjunct Professor of Computer
Science at SUNY, Munro Scholar at Queens' College Cambridge and a researcher at
the Computer-Aided Design Center in Cambridge, England. He devotes substantially
all of his business time to the business of the Company.
Stanley A. Hirschman has over 20 years of senior management experience with
over half focused in technology and emerging products. For the last three years
he has consulted with companies that include Northern Telecom (Nortel),
MindSpring Enterprises, Netcom, CompUSA PC, Southwestern Bell Wireless and
Babbage's Etc. He is President of CPointe Associates, Inc., an executive
management and technology-consulting firm whose mission is to help its clients
successfully manage dominant channel strategies. His retail background includes
multi-store and executive management positions with The Gap, Banana Republic,
Lane Bryant, TJ Maxx culminating in seven years as Vice President, Store
Operations for Software Etc., a 394 store chain. He has the experience of
turnaround situations where "tough minded decisions" make the difference in the
life or death of a company and the "controlled nurturing" required when
harnessing the enthusiasm of technology startups. He believes in strong fiscal
management towards strategic, versus tactical, long-term return. In April 1995,
Mr. Hirschman was elected director of Mustang Software, Inc. (NASDAQ: MSTG) and
in January 1999 added the responsibilities of Chairman. He is active in
community affairs and serves on the Dallas Advisory Board of the Salvation Army
Adult Rehabilitation Centers. Mr. Hirschman provides consultation in the areas
of retailer acquisition and technology.
39
<PAGE>
ITEM 9B. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and person who own more than 10% of the Company's Common
Stock to file reports of ownership and changes in ownership with the Securities
and Exchange Commission. All of the aforesaid persons are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. No changes in the holdings of any officer, director or other person took
place and therefor, no reports were required to be filed.
ITEM 10. EXECUTIVE COMPENSATION.
Remuneration
The following table reflects all forms of compensation for services to the
Company for the fiscal years ended June 30, 1998 and 1999 of the Chief Executive
Officer of the Company.
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------------
Annual Compensation Awards Payouts
--------------------- -------------------- -------
Securities
Other Under- All
Name Annual Restricted lying Other
and Compen- Stock Options/ LTIP Compen-
Principal Salary Bonus sation Award(s) SARs Payouts sation
Position Year ($) ($) ($) ($) (#) ($) ($)
- ---------- ---- ------ ----- ------ -------- ------- ------- ------
Michael
Levine, 1999 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
President &
Director
Devinder(1)
Randhawa,
President 1998 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
- -------------------------
(1) None of the Company's officers and/or directors received any
compensation for their respective services rendered unto the
40
<PAGE>
Company prior to the asset acquisition which closed in April
1999. Mr. Randhawa resigned his positions with the Company at
that time.
The Company maintains a policy whereby the directors of the Company may be
compensated for out of pocket expenses incurred by each of them in the
performance of their relevant duties. The Company did not reimburse ant director
for out of pocket expenses during the fiscal years ended June 30, 1998 and 1999.
In addition to the cash compensation set forth above, the Company intends
to reimburse each executive officer for expenses incurred on behalf of the
Company on an out of pocket basis. The Company cannot determine, without undue
expense, the exact amount of such expense reimbursement. However, the Company
believes that such reimbursements did not exceed, in the aggregate, $10,000
during the fiscal years ended June 30, 1998 and 1999.
None of the Company's officers or directors serves pursuant to any
employment agreement and it is not anticipated that the Company will offer such
an agreement to any present officer or director in the immediate future.
Stock Plan
There are no bonus or incentive plans in effect, nor are there any
understandings in place concerning additional compensation to the Company's
officers and/or directors. It is anticipated that the Company will adopt a stock
option plan in the near future.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
(a) and (b) Security Ownership of Certain Beneficial Owners and Management.
The table below lists the beneficial ownership of the Company's voting
securities by each person known by the Company to be the beneficial owner of
more than 5% of such securities, as well as by all directors and officers of the
Company. Unless otherwise indicated, the shareholders listed possess sole voting
and investment power with respect to the shares shown.
41
<PAGE>
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent of
Class Owner Ownership Class
----- ----- --------- -----
Common Michael Levine(1) 2,160,000 23.4%
25 Cavell Ave.
Toronto, Ontario,
Canada M4K 1L5
Common Marshall Naify 1,900,000 20.6%
Revocable Trust DTD 2,3
172 Golden Gate Ave.
San Francisco, CA 94102
Common Temple Trust Co. 725,000 7.9%
2001 Leeward Hwy.
McLean Building
P.O. Box 62
Providenciales, Turk & Caicos
British West Indies
Common Joseph T. Owens (1) 675,000 7.3%
430 Peninsula Ave., #1
San Mateo, CA 94401
Common Betsy Heard 495,000 5.4%
3665 E. Bay Drive
Largo, FL 33771
Common Robert Hemmerling 490,000 5.3%
106-1460 Pandosy St.
Kelowna, B.C., Canada V1Y 1P3
Common Louis Mann(1) 10,000 *
23911 Aspen Way
Calabasas, CA 91302
Common All Officers & 2,845,000 30.9%
Directors as a Group
(3 persons)
- ---------------------
* Less than 1%
(1) Officer and director of the Company as of the date of this
report.
42
<PAGE>
The balance of the Company's outstanding Common Shares are held by 91
persons, not including those persons who hold their shares in "street name."
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Joseph Owens, a director of the Company, provides office space to the
Company on a rent free basis.
During the fiscal year ended June 30, 1999, Mr. Michael Levine, an officer
and director of the Company, loaned the Company $15,213, which loan is unsecured
and non-interest bearing. This loan arose from expenses paid on behalf of the
Company. As of the date of this report, this loan has been repaid in full.
Additionally, from inception of the Company through April 1999, RD Capital,
Inc., a corporation owned and controlled by Devinder Randhawa, former President,
Secretary and a director of the Company, loaned monies to the Company in order
to allow the Company to pay its accounts. These loans were made pursuant to
verbal agreements between the Company and Mr. Randhawa, were unsecured,
non-interest bearing and due upon demand. The Company believes that the terms of
these loans are more favorable to the Company than would have been available to
the Company through more established financial institutions. As of the date of
this report, all obligations owed to RD Capital, Inc. have been paid in full.
PART IV
Item 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27 Financial Data Schedule
The following Exhibits were filed with the Securities and Exchange
Commission in the Exhibits to Form 10-SB, filed on December 2, 1997 and are
incorporated by reference herein:
3.1 Certificate and Articles of Incorporation and Amendments thereto.
3.2 Bylaws
The following exhibits were filed with the SEC in the exhibits section to
the Company's Form 8-K dated April 17, 1999:
43
<PAGE>
2.4 Purchase and Sale Agreement between the Company and
Michael Levine
3.3 Certificate of Amendment to Articles of Incorporation
(b) Reports on Form 8-K
On or about April 6, 1999, the Company filed a Form 8-K Report dated March
31, 1999, which is incorporated herein by reference as though fully set forth,
reporting that the Company had entered into a rescission agreement with FES
Innovations, Inc. ("FES"), a privately held British Columbia, Canada
corporation, whereby the Company and FES agreed to rescind the previous asset
acquisition agreement entered into between the aforesaid parties in June 1998.
As part of the terms of the rescission, FES and its assignees did agree to
tender back into the Company's treasury an aggregate of 12,500,000 "restricted"
common shares, representing 71.4% of the Company's then outstanding common
stock. FES also agreed to repay certain balances incurred by the Company
applicable to the rescission and other related activities of the Company. The
Report further advised of the execution of a letter of intent with Michael
Levine ("Levine") of Toronto, Canada, wherein the Company agreed, in principle,
to acquire certain assets owned by Levine, including an electronic commerce web
site and the right to certain business names, including "Shopshopshopping.com,"
"Retailhighway.com" and "Greatestmall on earth.com" in exchange for the issuance
of 2,500,000 shares of its common stock equal to ownership of approximately 33%
of its then outstanding shares.
Thereafter and on or about April 30, 1999, the Company filed a Form 8-K
dated April 17, 1999, which is incorporated herein by reference as though fully
set forth, wherein it reported the consummation of the transaction with Levine,
the issuance of 2,500,000 shares of its common stock equal to ownership of
approximately 33% of its issued and outstanding shares in exchange for the
assets acquired, and a change in the Company's name to "Retail Highway.com,
Inc."
44
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Company caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on November 8, 1999.
RETAIL HIGHWAY.COM, INC.
(Registrant)
By:/s/ Michael Levine
---------------------
Michael Levine,
President and Secretary
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities
indicated on November 8, 1999.
/s/ Michael Levine
- --------------------------
Michael Levine, Director
/s/ Joseph T. Owens
- --------------------------
Joseph T. Owens, Director
/s/ Louis Mann
- --------------------------
Louis Mann, Director
45
<PAGE>
RETAIL HIGHWAY.COM, INC.
EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-KSB
FOR THE FISCAL YEAR ENDED JUNE 30, 1999
EXHIBITS Page No.
EX-27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . .47
46
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 1999, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,250,408
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,260,777
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,260,777
<CURRENT-LIABILITIES> 33,969
<BONDS> 0
0
0
<COMMON> 9,219
<OTHER-SE> 1,217,589
<TOTAL-LIABILITY-AND-EQUITY> 1,260,777
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<TOTAL-COSTS> 0
<OTHER-EXPENSES> 143,021
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (5,379)
<INCOME-PRETAX> (137,642)
<INCOME-TAX> 0
<INCOME-CONTINUING> (137,642)
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