FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
|X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended: April 30, 2000
|_| Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from: ________ to: ________
Commission file number 0-28313
RHINO ECOSYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0939751
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
40 Trowers Road, Woodbridge, Ontario, Canada L4L 7K6
(Address of principal executive offices)
(905) 264-0198
(Issuer's telephone number)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes of
stock, as of the latest practicable date.
At April 30, 2000 there were 6,525,539 shares of common stock, $.0001 par value,
outstanding of a total authorized 25,000,000 shares.
1
<PAGE>
RHINO ECOSYSTEMS, INC.
Page
----
PART I FINANCIAL INFORMATION
Item 1 - Financial Statements . . . . . . . . . . . . . . . . . . . 3
Balance Sheet as of April 30, 2000 (unaudited), . . . . . . 4
Income Statement for Period February 1, 2000
to April 30, 2000 . . . . . . . . . . . . . . . . . . . . 5
Statement of Shareholder`s Equity (Deficiency) . . . . . . 6
Statement of Cash Flows for period February 1, 2000
to April 30, 2000 . . . . . . . . . . . . . . . . . . . . 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 8
PART II OTHER INFORMATION
Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . 10
Item 6 - Exhibits and Reports on Form . . . . . . . . . . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2
<PAGE>
PART I. Financial Information
Item 1. Financial Statements
Certain information and footnote disclosures required under generally accepted
accounting principles have been condensed or omitted from the following
financial statements pursuant to the rules and regulations of the Securities
Exchange Commission. It is suggested that the following financial statements be
read in conjunction with the year-end consolidated financial statements and
notes thereto included in the Company's registration statement on Form 10-SB for
the year ended July 31, 1999.
The results of operations for the third quarter period (February 1, 2000 to
April 30,2000) and nine months ending April 30, 2000, are not necessarily
indicative of the results to be expected for the entire fiscal year or for any
other period.
3
<PAGE>
Rhino Ecosystems Inc.
Third Quarter Fiscal 2000
Period of February 1, 2000 to April 30, 2000
United States Dollars
Un-audited Statement
<TABLE>
<CAPTION>
Audited Fiscal
2000
Fiscal 9 months
Y/E 99 ending
Balance Sheet July 31'99 Apr.30'00
- --------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash $ 0 $ 0
Accounts Receivable - Trade 0 16,767
Goods & services tax recoverable 6,298 21,432
Investment tax credits 26,675 0
Inventory 37,917 188,734
Prepaid Expenses & Deposits 11,402 15,381
----------- -----------
Subtotal Current Assets $ 82,292 $ 242,314
Fixed assets (net) 277,647 156,777
Patents 77,691 94,114
Total Assets $ 437,630 $ 493,205
----------- -----------
Liabilities
Current Liabilities
Bank Indebtedness $ 34,532 $ 78,627
Accounts payable & accrued liabilities 181,376 173,028
Current portion L/T Debt 20,746 20,746
Due to related parties 111,468 106,006
----------- -----------
Subtotal Current Liabilities $ 348,122 $ 378,407
Long Term Debt 127,935 114,686
Other Obligations 311,946 0
Shareholders' equity(deficiency)
Share Capital
Common Stock, $0.0001 par value: authorized - 25,000,000 shares;
Issued - 5,525,539 and 6,525,539 respectively 553 653
736,387 1,596,126
Deficit Accumulated (1,081,316) (1,616,760)
Audited Fiscal
2000
Fiscal 9 months
Y/E 99 ending
Balance Sheet July 31'99 Apr. 30'00
----------- -----------
Other accumulated income/(loss) (5,444) 20,746
----------- -----------
Total Liabilities & Shareholder Equity $ 437,630 $ 493,205
----------- -----------
</TABLE>
*Note: In November 1999, Rhino Ecosystems Inc. (a Florida Corporation)
acquired substantially all of the shares of Rhino Ecosystems Inc. Canada
(a private corporation) through a one for one share exchange agreement
because both companies were under common control the exchange is treated
in a manner similar to a pooling of interest.
4
<PAGE>
Rhino Ecosystems Inc.
Third Quarter Fiscal 2000
Period of February 1, 2000 to April 30, 2000
United States Dollars
Un-audited Statements
<TABLE>
<CAPTION>
Audited Fiscal 2000 Fiscal 2000
Fiscal 3 Months 9 Months
Y/E Feb.1'00 to Nov.1'99 to
1999 Apr.30'00 Apr. 30'00
----------- ------------ ------------
<S> <C> <C> <C>
Income Statement
Sales & other income $ 28,998 $ 52,272 $ 136,083
Expenses
Cost of Goods Sold $ 13,384 $ 25,733 $ 43,395
Sales/Marketing/Trade Show Exp. 156,788 114,878 184,263
Professional & consulting 115,454 133,287 195,509
Amortization of fixed assets 115,253 37,293 84,558
Office salaries, benefits & services 92,502 9,304 34,248
Research & development 45,087 9,334 26,726
Rent 37,505 13,050 32,335
Travel & Entertainment 25,925 3,938 6,134
Interest on long term debt 15,679 3,039 12,616
Bank charges & interest 14,104 477 10,581
Office & general expenses 13,667 10,072 28,927
Telephone 10,475 3,122 12,228
Utilities 3,563 2,134 3,797
Insurance 2,310 385 857
IPO expenses 0 8,588 27,446
Exchange (gain)/loss 0 (21,030) (36,567)
Total Expenses $ 661,696 353,604 $ 672,053
----------- ------------ ------------
Net income/(loss) $ (632,698) $ (301,332) $ (535,970)
Loss Per Common Share $ (0.11) $ (0.05) $ (0.08)
</TABLE>
5
<PAGE>
Rhino Ecosystems Inc.
Third Quarter Fiscal 2000
Period of February 1, 2000 to April 30, 2000
United States Dollars
Un-audited Statements
Statements of Shareholders' Equity (Deficiency)
<TABLE>
<CAPTION>
Deficit
accumulated Accumulated
during other
Common development comprehensive
Shares stage income (loss) Total
----------- ------------- ------------------ ------------
<S> <C> <C> <C> <C>
Balance, Jan. 31, 00 $ 1,504,063 $(1,315,428) $ (17,140) $ (170,969)
----------- ------------ ------------------ ------------
Income (Loss) for period (301,322) (301,332)
Shares Issued for cash 92,063 92,063
Foreign, currency translation 37,886 37,886
Balance, April 30,00 $ 1,596,126 $ (1,616,760) $ 20,746 $ 112
</TABLE>
6
<PAGE>
Rhino Ecosystems Inc.
Third Quarter - Fiscal 2000
Period of February 1, 2000 to April 30,2000
United States Dollars
Un-audited Statements
<TABLE>
<CAPTION>
Audited Fiscal 2000 Fiscal 2000
Fiscal 3 months 9 months
Statement of Cash Flows Y/E '99 Feb, 1'00 to Nov.1'99 to
July 31'99 Apr. 30'00 Apr.30'00
----------- -------------- -------------
<S> <C> <C> <C>
Cash Flows provided by (used in):
Operations:
Loss for the period -$632,698 $ (301,322) $ (535,970)
Adjustments to reconcile loss
for the period to net cash:
Amortization of fixed assets $ 115,253 $ 37,293 $ 84,558
Goods & services tax recoverable 38,837 (10,319) (15,134)
Investment tax credits (99) 27,729 26,675
Inventory (17,434) (85,098) (150,817)
Prepaid expenses & deposits 23,941 (2,148) (3,979)
Due from related parties 38,233 0 0
Accounts payable & accrued
liabilities 59,231 44,855 (8,348)
Due to related parties 109,445 22,508 (5,462)
----------- -------------- -------------
subtotal $ (265,291) $ (266,512) $ 608,477
Financing:
Bank Indebtedness $34,532 $69,322 44,095
Principal payments on L/T Debt (16,674) (5,276) (15,289)
Other obligations 311,946 (6,454) (311,946)
Inssuance of share capital 0 92,063 859,739
Share issue costs 0 (8,588) (27,446)
----------- -------------- -------------
subtotal $329,804 $ 141,067 $ 548,613
Investments:
Due from Le Group De Recuperation $ 99,213 $ 0 $ 0
Expenditures on fixed assets (50,296) 169,519 36,312
Accounts Receivable Trade Accounts 0 (1,410) 16,767
Accounts payable for fixed assets (97,817) (36,918) 0
Expenditures on patent (48,386) 4,075 16,423
----------- -------------- -------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Audited Fiscal 2000 Fiscal 2000
Fiscal 3 months 9 months
Statement of Cash Flows Y/E '99 Feb. 1'00 to August 1'99 to
July 31'99 Apr. 30'00 Apr. 30'00
----------- ------------- --------------
<S> <C> <C> <C>
subtotal $ (97,286) $ 135,266 $ 69,502
Other
Foreign currency translation $ 7,946 (9,821) (9,638)
----------- ------------- --------------
Increase (decrease) in cash $ (24,827) $ 0 $ 0
Cash, beginning of period 24,827 0 0
----------- ------------- --------------
Cash, end of period $ 0 $ 0 $ 0
----------- ------------- --------------
Interest paid $ 18,165 $ 3,516 $ 23,197
----------- ------------- --------------
Income taxes paid $ 0 $ 0 $ 0
----------- ------------- --------------
Total Common Shares Outstanding
Restricted Shares 5,525,539 5,525,539 5,525,539
Free Trading Shares 0 1,000,000 1,000,000
----------- ------------- --------------
Total Common Shares Issued 5,525,539 6,525,539 6,525,539
</TABLE>
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations
The following discussion and analysis of the Company's consolidated financial
condition and results of operation for the fiscal year ended July 31, 1999, and
quarter ending April 30, 2000, should be read in conjunction with the Company's
consolidated financial statements included elsewhere herein. When used in the
following discussions, the words "believes," "anticipates," "intends,"
"expects," and similar expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks and uncertainties,
which could cause results to differ materially from those projected.
General Discussion of the Company
The Company is primarily engaged in the design, development, assembly, marketing
and sale of a unique patent-pending wet waste interceptor plumbing product
called the RINO(TM) System. During the fiscal years July 31, 1999 ("fiscal
1999"), as well as prior years, the Company's management has concentrated its
time and efforts on ensuring that the Rhino wet waste interceptor product line
be designed and developed into a product line that can be manufactured
efficiently and consistently to meet a wide variety of end users needs.
During the first nine months of fiscal 2000, the Company started an aggressive
sales and marketing program throughout North America. The Company has attended
hospitality, restaurant and plumbing related trade shows aimed at increasing the
public's awareness of the Company's patented wet waste interceptor product line
and to attract new dealers/distributors for the product line.
During this time period, the Company attended shows in Toronto, Myrtle Beach,
Nashville, and Orlando. Additional trade shows are planned in Vancouver,
Moncton, New York, Boston, Chicago, San Francisco and Anaheim. The Company is
concentrating on the hospitality and food service market sector as this is a
market area that can realize an immediate savings from the installation of a
Rhino Wet Waste Interceptor.
To aid in qualifying the show attendance at the Rhino booth at these various
trade shows, a telemarketing/sales team within the Company is being used to
promote its product line before and after each show. Rhino dealers/distributors
have been established in the Bahamas, Hawaii, Nova Scotia, British Columbia,
metro Toronto and Montreal, Canada as a result of this sales and marketing
campaign. Additional dealer/distributor locations are in the final stages of
completion.
The Company intends to continue this sales and marketing approach to raise the
general public's awareness of the Rhino wet waste interceptor product line and
to obtain a distribution network of exclusive and non-exclusive dealers. The
Company intends to supply quality, manufactured product line to a professionally
trained and dedicated dealer network.
As of the end of fiscal 1999, the Company has had no significant revenue derived
from operations. The Company's cumulative net loss to the end of the quarter
ended April 30, 2000 totals $1,616,760. The Company intends to enlarge the
dealership base and resulting sales throughout the remainder of fiscal 2000.
Liquidity and Capital Resources
During the past three fiscal years, the Company has financed its operations
primarily through cash provided through various short and long term credit
facilities and through the private sale of its securities pursuant to applicable
offering exemptions. The Company intends to complete its first public offering
of shares during fiscal 2000. The Company's management believes that sufficient
funds will be raised from future operations so as to minimize the need for
future equity capitalization.
9
<PAGE>
In addition, management of the Company believes the needs for additional capital
going forward will be derived somewhat from internal revenues and earnings
generated from the sale of its products and services. If the Company is unable
to begin to generate revenues from its anticipated products, management believes
the Company will need to raise additional funds to meet its cash requirements.
This document and other documents filed by the Company with the Securities and
Exchange Commission (the "SEC") contain certain forward-looking statements under
the Private Securities Litigation Reform Act of 1995 with respect to the
business of the Company. These forward-looking statements are subject to certain
risks and uncertainties, including those mentioned above, which may cause actual
results to differ significantly from these forward-looking statements. The
Company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements which may be necessary to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events. An investment in the Company involves various risks,
including those mentioned above and those which are detailed from time to time
in the Company's SEC filings.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no pending or threatened legal proceedings against the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27.1 Financial Data Schedule
(b) There were no reports on Form 8-K filed by the registrant for the
quarter ending April 30, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, hereunto duly
authorized.
RHINO ECOSYSTEMS, INC.
Dated: May 15, 2000 By: /s/ Mark Wiertzema
---------------------------
Mark Wiertzema, President
and Chief Financial Officer
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Rhino
Ecosystems, Inc. and subsidiary financial statements at January 31, 2000 and the
three months then ended and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> APR-30-2000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 16767
<ALLOWANCES> 0
<INVENTORY> 188734
<CURRENT-ASSETS> 242314
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 493205
<CURRENT-LIABILITIES> 378407
<BONDS> 114686
0
0
<COMMON> 1596126
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 493205
<SALES> 52272
<TOTAL-REVENUES> 52272
<CGS> 25733
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 353332
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3516
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
