UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended: December 31, 1999
Commission File Number: 0-027957
RBID.COM, INC.
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(Exact name of registrant as specified in its charter)
Florida 33-0857311
-------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2030 Main Street, Suite 150
Irvine, California 92614
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(Address of principal executive offices)
(949) 838-0111
--------------------------
(Issuer's Telephone Number)
24461 Ridge Route Drive, Laguna Hills, CA 92663
(Former Name, Former Address and Former Fiscal Year, if Changed Since
Last Report)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirement for the past 90 days. YES X No
--- ---
State issuer's revenues for its most recent fiscal year: $95,395
Check if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-B contained in this report and no disclosure will be
contained to the best of registrant's knowledge in definitive proxy or
information statements incorporated by reference in Part 111 of this Form 10-KSB
or any amendment to this Form 10-KSB: [ X ]
As of July 1, 2000, the aggregate market value of the voting stock held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity as of a
specified date within the past 60 days (June 30, 2000): $4,072,500.
State the number of shares outstanding of each of the issuer's common
equity, as of the latest practicable date: 12,662,363 as of July 1, 2000
Transitional Small Business Format: YES NO X
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TABLE OF CONTENTS
PART I
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Item 1. Description of Business............................................ 3
Item 2. Description of Property............................................ 20
Item 3. Legal Proceedings.................................................. 20
Item 4. Submission of Matters to a Vote of Security Holders................ 20
PART II
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Item 5. Market for Common Equity........................................... 20
Item 6. Selected Financial Data............................................ 21
Item 7. Management's Discussion and Analysis............................... 21
Item 8. Financial Statements............................................... 24
Item 9. Changes In and Disagreements With Accountants on Accounting
and Financial Disclosure......................................... 26
PART III
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Item 10. Directors and Executive Officers................................... 27
Item 11. Executive Compensation............................................ 29
Item 12. Security Ownership of Certain Beneficial Owners and Management.... 31
Item 13. Certain Relationships and Related Transactions.................... 32
Item 14. Exhibits and Reports.............................................. 34
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PART I
ITEM 1: DESCRIPTION OF BUSINESS
I. INTRODUCTION
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RBID.com, Inc., a Florida corporation ("RBID" or the "Company" or the
"Registrant"), is a development stage company with no earnings and minimal
revenues, engaged in the development, ownership, operation and promotion of an
e-commerce Super Mall on the Internet; and also holds itself out to provide
consulting services in the design, development and sale of software and business
solutions to persons who desire to set up an e-commerce business on the
Internet.
RBID was originally organized in 1988 in Florida under the name GCST,
Inc. The Registrant was dormant and had no revenues from inception through the
period ending September 30, 1999.
In August, 1998, the Registrant entered into a reorganization agreement
with Secure America, Inc., a Delaware corporation, pursuant to which the
Registrant issued 5,800,000 shares of common stock to the shareholders of Secure
America, Inc., in exchange for one hundred percent of the shares of common stock
of Secure America, Inc., thereby acquiring software important to its business.
Prior to and following the merger Secure America, Inc. has remained an inactive
corporation and currently has no assets.
On April 14, 1999, the corporation changed its name from GCST, Inc. to
RBID.com, Inc., in order to better reflect its intended business.
In 1998, the Registrant formulated its business plan for its E-Commerce
Super Mall and began to develop the necessary software and protocols. The
Registrant has spent the last two years refining its Super Mall concept,
developing proprietary software for the SuperMall business, and implementing the
first Super Mall Site. The Company had an accumulated deficit of $2,823,640 at
December 31, 1999, which was generated over the period of October 4, 1998
through December 31, 1999, as a result of website research, marketing expense
and general and administration expenses and development costs.
II. RBID's SUPERSITE MALL.
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RBID's Super Mall is an Internet portal which gives the Internet public
access to an online shopping mall (R-mall), an online auction house (R-auction),
an online travel guide (R-travel), an online homeguide (R-homeguide), online
classifieds (R-classifieds), an online travel agency (R-travel), an online
search engine for products and services (R-active shopper), yellow pages, and
various other Internet services including e-mail, chatrooms and games.
These products and services are bundled and offered as a platform for
businesses which wish to establish virtual business establishments on the
Internet. These businesses, or virtual "Tenants" in the virtual Super Mall
(hereinafter collectively the "Tenants"), lease virtual space, form their own
Websites, and set up their own stores which are then integrated with the stores
of other Tenants in the Super Mall. These virtual stores are also integrated
with the bundle of other products and services provided to the Internet public
by RBID at its Super Mall, in order to attract Internet traffic to the Super
Mall and to the Tenant's stores.
E-commerce tenants in Registrant's Super Mall are categorized as
"Independent Stores", as "Tenant Stores" and "Supersite Tenants". Independent
Stores are pre-existing Website businesses who may have a presence in a variety
of competing Web malls, and have opted to join Registrant's Super Mall. Tenant
Stores represent businesses new to e-commerce over the Net, who have elected to
establish their first e-commerce net store at the Registrant's Super Mall. Super
Site Tenants are Tenant Store operators who desire to expand the products and
services they offer over the Net by recruiting additional new Tenant Store
operators to join with them in their own subtier Super Site, to create a
combined multi-store presence which is integrated into the Registrant's Super
Mall.
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The Company commenced test operations in May, 1999 and began commercial
operations in November, 1999.
A. Revenues Producing Services
RBID's Super Mall has been designed to create revenues for the
Company in several different ways. The revenue sources from the
Company's SuperSite Mall are as follows:
1. Independent Store Commissions. Much like a bricks and
mortar shopping mall, the SuperMall consists of a
growing list, currently numbering approximately 218
of independent, general and specialized retailers
from which purchases online can be made. These
independent stores all have their own Websites and a
pre-existing commercial presence on the Internet and
have been recruited for inclusion in the SuperMall by
Registrant.
These retailers include such well-known names brands
as Disney, Dell Computers, JC Penny, Maidenform,
Borders Books, Sony Music, Sharper Image, Compaq,
Staples.com, and also include such services as
Priceline.com, Quicken, ReliQuote.com, stamps.com,
and others.
Registrant has entered into agreements with these
merchants for the inclusion of their online sites in
the Company's Super Mall in exchange for a sales
commission which is a negotiated percentage of each
sale by such merchants through retail stores
affiliated with the SuperMall, varying from merchant
to merchant and product or service to product or
service and ranging from 2% to 25% (hereinafter
"Independent Retail Commissions").
2. Tenant Store Commissions. RBID has an ongoing program
of recruiting new stores for its Super Mall who fall
into a different category, called "Tenant Stores".
These are typically new businesses, or established
businesses, who do not yet have a commercial presence
on the Internet. RBID enters into an agreement
whereby it assists these Tenant Stores in
establishing their commercial presence on the Web,
and receives a 10% commission on the sale of all
merchandise and services by the stores integrated
into its Super Mall (hereinafter "Retail
Commissions").
3. Site Advertising Revenues. RBID receives revenues
from banner advertising displayed throughout the
SuperMall Sites and StoreSites (Advertising
Revenues), based on click through traffic through the
SuperMall and its various stores, products and
services.
4. Click Through Revenues. The Company receives revenues
from other unrelated Internet sites based on
so-called "Click Through" traffic which the SuperMall
and its collective sites send to such other sites, as
a result of advertisements, promotions, informational
listings and other inducements displayed on the
SuperMall and its collective sites.
5. Store Tenant Monthly Service Fees. RBID receives one
time installation fees, and thereafter monthly
service fees from its Tenants. In this regard,
Tenants are classified as "Store Tenants" or
SuperSite Tenants. Store Tenants pay a monthly fee of
$29.95 for their affiliation in the SuperSite Mall,
as well as Retail Commissions through their store
sales noted above.
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The $29.95 monthly store owner fee includes the use
of customized software products and services of the
Registrant to build a store Website, including the
Company's Proprietary Website Store Builder Software.
An individual merchant can utilize Registrant's Store
Building Software to build his store based on a menu
of available templates and can customize it in a
matter of minutes (and modify and update it quickly
at any time) to present the store owner's products
and services and to enable customers to purchase
those products or services online.
The Company also provides the service of QuikTrack, a
transaction manager with point-and-click online
access to the current status of traffic activity at
an individual's store. QuikTrack utilizes proprietary
software developed by Registrant.
All revenues generated by an individual Store Tenant
are retained by the Store Tenant, less the 10%
commission paid to the Company. The Store Tenant has
the advantage of being located "next to" (in a
virtual sense) the two hundred-plus established
Independent Stores.
The pricing for individual Store Tenants of their own
products is up to their individual discretion.
Likewise they are responsible for the fulfillment of
all orders to their online customers.
6. SuperSite Tenants Monthly Service Fees. SuperSite
Tenants are required to set up at least "one" Tenant
Store (the "Permitted Tenant Store") but also have
the additional opportunity to both create additional
levels or subtiers of "SuperSite", and to locate and
add additional subtenants who desire to establish
their own Virtual Tenant Stores under the direction
and account of the SuperSite Tenant.
SuperSite Tenants pay an installation fee of $995,
and a monthly fee of $39.95. SuperSite Tenants are
not required to pay any commissions to the Company on
sales through their one "Permitted" Tenant Store.
SuperSite Tenants share with the Registrant and
others in all commissions on revenues generated by
any Sub Tenant Stores they bring into their Subtier
SuperSite.
This structure has been put in place in order to
promote rapid growth in the community of stores
integrated with RBID's SuperSite Mall.
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<TABLE>
<CAPTION>
RBID's structure with regard to Supersite Tenants may
be diagramed as follows:
RBID.COM, INC.
SuperSite Mall
<S> <C> <C> <C>
Independent Stores Tenant Stores SuperSite Tenants
One Permitted Store
Subtier
Subtier One SuperSite One Permitted Store
SuperSite Permitted Tenant
Tenant Tenant
Store
Subtier
Subtier One SuperSite One Permitted Store
SuperSite Permitted Tenant
Tenant Store
And So On Down an Organizational Chain
</TABLE>
<
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7. Basic Internet Service Provider. Registrant offers
basic Internet service at a cost of $19.95 per month,
both to the Internet public at large, and to all its
Tenants. The Tenants are not required to utilize the
Company's Internet service, and may use any other
Internet service provider.
The Company's Internet service includes free email,
free chatrooms, free Net games, and a game site which
includes links to other game sites. While some
competitors are now offering basic Internet access
services for free, Registrant believes the price it
is charging is justified in view of the additional
features included.
B. Additional Services Provided
In order to increase traffic to the Super Mall and thereby
increase Advertising Revenue and store sales and commissions,
the Company's Super Mall provides a number of additional
services, some of which are free and some of which provide
opportunity for the Registrant to earn additional income.
These services are as follows:
1. Auction Services: The Company's auction services
(R-auction) offers consumers the ability to list
items for sale at no charge for the listing. The
listing includes a product description and, at the
seller's election, an image or photograph, along with
price and payment information. The Company provides
this service through U-Bid, an independent company,
utilizing a link to U-Bid's site, under a revenue
sharing agreement which provides $1.00 for every new
customer. Users are not charged a fee to list items
for sale, but a 2% fee is collected upon consummation
of a sale transaction.
2. Freeads: (R-classifieds). This service, which is free
to anyone visiting the RBID Super Mall, is an
advertising service which can be used in much the
same way as conventional newspaper classified
advertising services and is offered without charge,
as an inducement to attract traffic to the
Registrant's Super Mall. There is no limit to the
number of free ads an individual can place. This
service is provided by InfoSpace, an independent
company, through a link to the InfoSpace Website.
Registrant has a revenue sharing agreement with
InfoSpace whereby Registrant receives 35% of all
click through revenues from users sent to InfoSpace's
site.
3. Games: The SuperMall makes various Internet games
available for playing by the general Internet public
without charge. It also provides a link to a
multiparty game playing site over the Web.
4. E-mail: The SuperMall provides free E-mail services
to the general public, permitting them to send and
receive E-mail from the SuperMall's site.
5. Internet Search: The SuperMall provides free access
to all the Internet search engines, including Go.com,
Yahoo.com, Lycos.com and Excite.com.
6. R-Travel: Links users to FareBetter, a comprehensive
system designed to exhaustively search fares offered
by airlines, discounted airfare offers, and exclusive
White Label(TM) fares. RBID has entered into private
label deal with FareBetter whereby RBID receives a
commission on revenue generated by user activity.
7. R-Active Shopper: Another InfoSpace link which serves
as a search engine for products and services
available on the Internet.
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8. R-Chat: A chat site featuring chats in English and
eight other languages, French, German, Chinese,
Japanese, Spanish, Korean, Philippino and Italian.
R-Chat is established under a private label agreement
with Webmaster, Inc. (available to all Website
visitors).
9. R-Web Search, an Open Directory search engine link
service powered by InfoSpace.
10. R-Finance, an InfoSpace powered link to various
financial services and information.
11. R-Maps, an InfoSpace powered link to international
map services.
12. R-Yellow Pages, an InfoSpace powered link to business
listings.
13. R-White Pages, an InfoSpace powered link to
individual listings.
14. R-Community Beach, the site where Internet users can
sign up to avail themselves of the free services
provided by the Super Mall. Once a user signs up he
becomes a "free community member".
15. R-Island, an online business building system for
SuperSite owners. RBID charges a one-time fee of $195
for this product. (The income is not redistributed
under the Comp Plan.)
16. R-Benefits, a Website which offers prepaid packaged
services for health and health related services,
travel and travel related services, lifestyle,
including convenience services, physicians and
hospitals, including discount pharmaceuticals and
legal and tax advice services.
17. R-Entertainment, a comprehensive listing of various
forms of entertainment, games and general amusements.
18. R-News, an InfoSpace powered listing of top news
stories both national and international, and in
various focus areas provided by Comtex.
19. R-Business Services, an InfoSpace powered site
featuring business to business services. Income from
commissions is pooled and redistributed.
20. R-Stock, a link to Bloomberg.com providing financial
information, stock quotes, news and related services
to interested users.
C. Services Provided to SuperSite Tenants
Registrant offers anyone the opportunity to purchase an
individual SuperSite and in doing so to become the online equivalent of
a shopping mall owner and operator and portal owner, but with the bulk
of the software development already done, and a maintenance service in
place, for a monthly fee. Further, the work of assembling "anchor
tenants" and a collection of retail stores is already done.
The SuperSite purchaser can immediately create both his own
store and his personal shopping mall and portal for future customers.
The Super Site purchaser receives a web page and a SuperSite
personalized for the purchaser, but within certain general design
specifications developed and maintained by the Registrant. Upon the
completion of the purchaser's personalized SuperSite, the purchaser is
then able to solicit his own customers to purchase goods and services,
and to solicit potential store owners who wish to operate within his
SuperSite, and to solicit the purchase of additional Subtier
SuperSites.
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Each SuperSite contains the basic features of the SuperSite
prototype, but from that point is personalized and evolves into an
entity which takes its own shape and attracts its own customers,
primarily through the activities of its owner and those whom its owner
recruits to take part as customers, Subtier Store Tenants and perhaps
Subtier SuperSite Tenants.
In addition the SuperSite purchaser will provide "tracking"
software that enables the SuperSite purchaser to monitor a broad range
of activity taking place on his individual SuperSite.
These features are all combined in the RBID SuperMall with
what are currently the more conventional uses and expectations of
Internet users, such as basic Internet access, including most search
engines, e-mail and chat forums.
From November 5, 1999, through December 31, 1999, the
Registrant leased 84 SuperSites to SuperSite Tenants. The Registrant
delivered these SuperSites in the last quarter of 1999.
D. Redistribution of Certain Revenues to Tenants and Site
Users/R-bid's Network Referral Marketing Plan
70% of the Company's revenues from the following three sources are
reallocated to its Tenants and the Internet public who use the
SuperMall Site and its free services, on a monthly basis:
(1) Revenues generated by the payment of commissions by
independent stores and Tenant Stores on merchandise and
services sales;
(2) Revenues generated by paid advertising on the SuperMall and
its SuperSites and free services sites;
(3) Revenues generated by Click Through activity paid by other
sites to which Internet visitors are referred.
These reallocated revenues are combined each month, and divided 10% to
Site Users, 40% to SuperSite Tenants based on their site usage, and 50% to
SuperSite Tenants based on their Subtier SuperSite Tenants (hereinafter also
referred to as "Team Members") as follows:
1. The 10% of these reallocated revenues allocated to Site users,
are allocated among all members of the general Internet public
who set up a free personal account as an e-mail user or
personal homepage. The 10% is reallocated to the account of
these Site users on a biweekly basis, pro rata, based on the
ratio of usage or traffic of their site. These revenue
allocations are accrued until a minimum of $25.00 is payable,
and then periodically paid out.
2. The 40% of these reallocated revenues allocated to SuperSite
tenants based on their Site usage, are allocated among the
SuperSite Tenants in the ratio that total activity at their
site, bears to the aggregate of all activity at all
SuperSites.
3. The 50% of these reallocated revenues allocated to SuperSite
Tenants based on subtier SuperSites, are allocated based upon
the number of subtier SuperSite Tenants or Team Members, each
SuperSite Tenant has brought in as a subtier Tenant. Revenues
are allocated in the ratio that the number of subtier Tenants
the SuperSite Owner has brought in (up to a maximum of seven
subtier SuperSite Tenants), bears to the number of all
SuperSite Tenants at the end of the monthly period.
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By way of example, if 50% of reallocated revenues were
$100,000, and there were 229 tenants in the tenant community
team, we would divide the $100,000 by the 229 tenants with a
resulting total of $436.68 per tenant. As explained above,
there is a maximum of 7 sub-tier SuperSite Tenants. For
allocation purposes, the $436.68 per tenant is divided by the
7 subtenant levels resulting in $62.38 per tenant allocation.
Total allocation of funds is summarized as follows:
229 tenants times $62.38 = $14.286 Total sub
allocations ($14.286 times 7 levels = $100,000)
In any month in which the aggregate reallocated revenues to
any SuperSite Owner does not exceed $10, the Company has
elected to pay such SuperSite Owner a minimum of $10 per
month.
E. No Assurance of Profitable SuperSite Operation
The Company management recognizes that once a SuperSite has been set up
and is operational by the Tenant, there is no assurance the SuperSite
Tenant will be able to attract Store Tenants and establish a profitable
business. It can be difficult to attract Tenants to set up Stores on
the Internet, because of the newness of e-commerce, the technical
aspects of computers and the Internet, and the competition from other
providers of Internet commerce, among other factors.
F. Monitoring of Tenant Activities
Registrant has developed the following procedures to remove
advertisers that misrepresent their products or themselves or otherwise
run afoul of the law.
First, the Registrant's staff monitors all advertising and
chat activity. Second it has created a complaint department that allows
a prospective purchaser to lodge an e-mail complaint with the
Registrant. Until such time as the complaint is investigated, the
Registrant will mark the advertisement or item with a special symbol to
advise customers that purchase is halted pending a review of the
product or service. The Registrant will then e-mail the seller and
forward the received complaint. The seller will have five (5) business
days to respond. If the seller fails to respond, the ad or item will be
deleted. If the seller responds, the response will be forwarded on to
the complaining consumer. The complaining consumer will have five days
to respond to seller's explanation. If the consumer does not respond,
the item or ad will continue to be offered and the notation will be
removed. If the consumer continues to complain, the advertisement will
be deleted by the Registrant and the advertiser notified unless
registrant receives reasonable assurance that the complaint is
spurious.
G. Marketing
RBID utilities it wholly-owned subsidiary, R-way
Corporation, a Delaware corporation ("R-way"), to
market its SuperMall to potential Store Tenants and
SuperSite Tenants, as well as to subtier Store
Tenants and subtier SuperSite Tenants. R-way provides
marketing services, sale services, and support
services in assisting Tenants in building their
Stores and their SuperSites.
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R-way has been using direct marketing as the principal method for
promoting RBID's products and services. However, R-way has now developed the
R-bid Network Referral Marketing Plan, in order to expand the number of sites
associated with Registrant's Super Mall. R-way markets RBID's products and
services through a network referral marketing concept where individuals and
business owners may become marketing affiliates by completing an Affiliate
Agreement and making an initial payment of $29 for a starter kit. (The $29.00 is
estimated to cover the costs to RBID of establishing an Affiliate Account.) A
Marketing Affiliate's job is to seek out and sign up Store Tenants, Super Site
Tenants, and new affiliates who will further assist in the signing up of Store
Tenants and Super Site Tenants for Registrant's Super Mall. Marketing Affiliates
are paid sales commissions based on the sale proceeds from new Store Tenants and
Super Site Tenants they sign up, and on the sales proceeds from new Marketing
Affiliates they recruit who in turn sign up Store Tenants and Super Site Tenants
as well as on their level of achievement within the Company's incentive
compensation plan (the "Plan"). As Marketing Affiliates accumulate increasing
Website sales, Marketing Affiliates are qualified to receive greater personal
sales commissions and commission overrides on their downlines' affiliates' site
sales activity.
There are seven levels of qualification. At the foundation of
the Plan is the requirement that in order to receive Plan Compensation,
the Marketing Affiliate must have and maintain: At least five site
tenants, either Tenant Stores or Super Site Tenants are actually
engaged in retail commerce over the Internet from their Tenant Sites,
and whom the Marketing Affiliate has brought into the Super Mall as
paying tenants.
Levels of achievement for Affiliates have been established as
follows:
1. Marketing Affiliate: Must purchase a $29 starter kit and
sign a Marketing Affiliates Agreement.
2. Area Manager: Must have sold five Super Site
Tenants.
3. Area Director: Must have sold twenty five Super Site
Tenants and have established two
additional Marketing Affiliates who
have become Area Managers.
4. Regional Director: Must have sold 100 Super Site Tenants
and established two additional
Marketing Affiliates who have become
Area Directors.
5. National Director: Must have sold 500 Super Site Tenants
and established two Regional
Directors.
6. Continental Director Must have sold 2500 Super Site Tenants
and established three National
Directors.
7. International Director Must have sold 10,000 Super Site
Tenants and established three
Continental Directors.
8. Infinity Director: Must have sold 25,000 Super Site
Tenants and established three
International Directors.
Under the Plan, Affiliates may earn referral sales commissions several
ways:
1. Referral Commission Income: A $400 sales commission
is paid to the Affiliate who personally sells a Super
Site and whose ID number is entered on the sales
order for the new Super Site Tenant.
2. CV Bonus. All RBID private branded retail products
and services such as Super Sites, Site Hosting,
Online Training and Equipment, are assigned a CV
(Commission Value) amount. Affiliates may earn 8% to
10% of the assigned CV amount of each product or
service sold within their qualified groups. A
Qualified Group is defined as their eligible levels
of qualification. Affiliates earn this commission on
up to ten levels below them, based on their level of
Achievement under the Plan.
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The CV on a Super Site Tenant sale is $300.00, and is
shared among the Seller and up to nine upline
individuals.
3. Infinity Global Bonus Pools: Marketing Affiliates who
qualify for the Company's three highest levels of
achievement will qualify to receive a monthly
pro-rata share of a total of 9% of the Company's
overall CV amount. The three shared pools are 2%, 3%
and 4% of total worldwide CV.
4. E-Commerce Bonus Pool Revenue Sharing: RBID also
generates additional revenues from the traffic that
is built through the RBID Website, from retail
customers, e-mail users, browsers, and other
marketing affiliates. E-commerce revenue sources
include Web site click throughs, banner advertising,
paid e-mail messages, and online mall referral
commissions. Seventy percent of the total e-commerce
gross profit generated by the worldwide organization
is shared among the qualified Marketing Affiliates
and Free Community Members. (A Free Community Member
is defined as a non-affiliate who is given access to
some of the R-BID portal benefits.)
Free Community Members share in 20% of this pool,
based on pro-rata usage. Qualified Marketing
Affiliates share in 40% of the pool on a pro-rata
usage basis. Qualified Marketing Affiliates also
receive a Matching Bonus equal to the amount of
E-Commerce Revenue Sharing received by their
front-line Marketing Affiliates, defined as
individuals they personally enrolled.
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These commission payments may be summarized as follows:
<TABLE>
<CAPTION>
RBID Compensation Plan - Effective July 1, 2000
Marketing Area Area Regional National Continental International Infinity
Position Affiliate Manager Director Director Director Director Director Director
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Qualification: Starter Kit 5 Sales 25 Sales 100 Sales 500 Sales 2500 Sales 10000 Sales 25000 Sales
(SuperSite $29 & 2 Area & 2 Area & 2 Reg'l & 3 Nat'l & 3 Contn'l &3 Internat'l
Retail Sales) Mgrs. Legs Dir. Legs Dir. Legs Dir. Legs Dir. Legs Dir. Legs
Personal Sales
Commission $400 $400 $400 $400 $400 $400 $400 $400
Residual Income Plan: Based on CV (Commission Value on all products and
services). Qualified Levels with 100 CV and 5 Customers per month.
1st Level 10% 10% 10% 10% 10% 10% 10% 10%
2nd Level 8% 8% 8% 8% 8% 8% 8% 8%
3rd Level 8% 8% 8% 8% 8% 8% 8% 8%
4th Level 8% 8% 8% 8% 8% 8% 8% 8%
5th Level 8% 8% 8% 8% 8% 8% 8%
6th Level 8% 8% 8% 8% 8% 8%
7th Level 8% 8% 8% 8% 8%
8th Level 8% 8% 8% 8%
9th Level 8% 8% 8%
10th Level 8% 8%
Leadership Infinity Override (limited) 2% 2-4% 2 -6%
Infinity Global Pools (Pro-rata share of CV) 2% 3% 4%
Car Allowance Leadership Bonus: (must maintain qualifications) $1,000 per month
PLUS - Shared Revenues from Ad Banners, Click-throughs, Paid e-mail, Virtual
Mall Purchases, etc: 20% to Community Members, 40% to SuperSite Owners, and 40%
Matching Bonus to SuperSite Owner Sponsors.
</TABLE>
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H. Current Traffic Levels and Revenues
(i) Traffic. The total traffic through the Registrant's
SuperMall from November 5, 1999, when it was opened through March 31,
2000, totals 7,706,187.
(ii) Commissions from Store Revenues. Prior to November 5,
1999, the Company had no revenues from sales. Since November 5, 1999,
the sales volume at the SuperMall's stores, and resulting commissions
have been as follows:
Store Sales Commissions
Revenues To RBID
11/5/99 - 12/31/99 $0 $0
1/1/00-3/31/00 $0 $0
(iii) Revenues from Tenants
Store Tenant SuperSite Tenant SuperSiteTenant
Monthly Installation Monthly
Service Fees Fees Service Fees
------- ---- ---- ------------
Number $ Number $
11/5/99 - 12/31/99 0 0 $ 95,395 0 0
1/1/00 - 3/31/00 0 0 $1,154,374 0 0
(iv) Advertising Revenues
No. Of
Revenues Advertisers
-------- -----------
11/5/99 - 12/31/99 $0 0
1/1/00-3/31/00 $0 0
(v) Click Through Revenues
Click Through
Revenues Count
-------- -----
11/5/99 - 12/31/99 $0 0
1/1/00-3/31/00 $0 0
(vi) Internet Service Provider Fees
No. Of
Revenues Customers
-------- ---------
11/5/99 - 12/31/99 $0 0
1/1/00-3/31/00 $0 0
14
<PAGE>
I. Key Service Providers Utilized by the Company
1. Concentric Contract. Pursuant to a contract executed
with Concentric Network Corporation ("Concentric"),
Concentric provides the Company's Super Mall with
computer "servers", including an OC3 Internet
connection with the ability to handle millions of
shoppers, online auction bidders and other visitors.
Concentric has over 2,000 local ISP connection sites
in the United States and Canada running mostly at
acceptably fast 56k and ISDN speeds.
The Contract has an initial one year term, which
commenced on June 12, 1999, automatically renews for
successive one year terms unless canceled by either
party, and provides for services to RBID on a monthly
basis at approximately $1200 per month.
2. Credit Card Contract: The Registrant has contracted
with Card Service International for provision for
over-the-net credit card services for VISA and Master
Card. RBID pays a flat fee of $0.05 per month for
each customer, plus a percentage of credit card
revenues to Card Service International on all "over
the Net" credit card purchases utilizing these
facilities, which varies between 2% and 4%, depending
on which credit card is used.
J. Patents, Copyrights and Trademarks
The Registrant holds no copyrights, patents or trademarks.
K. Research and Development Activities
The Company expended over $206,579 in 1999, in research and
development in order to develop the software for its SuperMall. The
software is now complete but the Company will continue to upgrade for
technological changes software development in the future for its
SuperMall. None of this software has been patented or copyrighted.
The Company also holds itself out as an independent consultant
to assist third parties in their development of Internet sites,
including development of required software.
L. Competition
The electronic commerce market is a new, rapidly evolving and
competitive business. Registrant, as a startup Company, competes with
numerous online sales and services organizations which offer customers
the same, similar or alternative methods of shopping for goods and
services.
The market is extremely competitive and includes many large,
well financed businesses spending millions of dollars in advertising,
combined, in some cases, with subsidized free Internet access service.
There are no significant barriers to entry into the market by other
companies.
15
<PAGE>
Registrant needs to gain a sufficiently broad base of
customers and users of its Super Mall and collective sites to be able
to generate click-through revenue and banner advertising revenue as
important revenue streams, for it to grow and sustain its operations.
There is no assurance Registrant will gain or ultimately hold a
significant share in this market. However, management is optimistic
that it can deliver a superior Net portal for the Tenants at a
competitive price and thereby gain an increase market share in this new
industry.
M. Government Regulation
At the present time, the Registrant is (not) required to seek
the review of any local, state, federal or international regulatory
body for its use of the Internet for telephone calls. At the present
time, the Registrant is (not) required to obtain the consent or the
permission from any companies which own the transmission lines or other
means of transmission before commencing its use of the telephone line
services.
N. Seasonal Factors
Registrant believes that due to the nature of the products and
services sold through its Super Mall it is likely that sales and
revenues will fluctuate seasonally, with a strong emphasis on the
Christmas shopping season. It is possible that this seasonality of
business may cause revenue and operating results to fluctuate, and the
Company may not be able to generate sufficient revenue in certain
quarters to offset expenses.
O. Costs and Effects of Compliance with Environmental Laws.
The Registrant is not engaged in any business which would
presently require compliance with Federal or State environmental
agencies.
P. Markets for Products and Services
The potential market for the products and services provided by
the Registrant is potentially global and consists of all persons,
wherever situated, who utilize the Internet, as well as those who
desire to set up their own virtual business on the Net.
III. CONSULTING SERVICES
-------------------
RBID holds itself as an independent consultant to advise third parties
on how to design, implement and market e-commerce sites on the Internet, and to
provide software development services to such third parties in connection with
implementation of their Sites.
RBID is currently discussing with two potential clients the providing
of such consulting services, but to date no consulting contracts have been
signed, and no consulting services have been performed.
16
<PAGE>
IV. CAPITAL
-------
Registrant's capital is currently insufficient to conduct its business.
If it is unable to obtain additional capital, Registrant will be unable to
promote its SuperMall, or otherwise maintain a competitive position. The
sources, availability and terms for additional capital to sustain the Company's
operations are unknown at this date, and there is no assurance the Company will
be able to locate sufficient capital to carry forward its business and implement
its business plan.
V. EMPLOYEES
---------
Registrant employs 11 full time employees. None of its employees
belongs to a collective bargaining group or union.
17
<PAGE>
GLOSSARY
Banner Advertising: A banner is an advertisement in the form of a graphic image
that typically runs across a Web page or is positioned in a margin or other
space reserved for ads.
Chat Room: A virtual "room" or location, with varying limitations on its size,
i.e. on the number of people it can accommodate, found on different Websites,
which may be "entered" and "visited" by people who while there can exchange
typed messages with each other as if at a virtual cocktail party or simply
remain "quiet" and read and observe the dialogue between others.
Click Through Revenue: A click is "when a visitor interacts with an
advertisement." This does not mean simply interacting with a rich media ad, but
actually clicking on it so that the visitor is headed toward the advertiser's
destination. (It also does not mean that the visitor actually waits to fully
arrive at the destination, but just that the visitor started going there.)
A clickthrough is what is counted by the sponsoring site as a result of an ad
click. In practice, click and clickthrough tend to be used interchangeably. A
clickthrough, however, implies that the user actually received the page. Some
advertisers are willing to pay only for clickthroughs rather than for ad
impressions.
Clickthrough Revenue is a commission paid by the destination site for each
Clickthrough person, to the origination site.
E-commerce (electronic commerce or EC): is the buying and selling of goods and
services on the Internet, especially the World Wide Web.
E-mail: (electronic mail) is the exchange of computer-stored messages by
telecommunication. E-mail was one of the first uses of the Internet and is still
the most popular use. E-mail can be distributed to lists of people as well as to
individuals.
Independent Store: A general or specialized retailer of goods and services
having their own websites and a pre-existing commercial presence on the Internet
which has entered into an agreement with the Company to have its store included
in the Company's SuperMall pay the Company a negotiated percentage of revenues
("Independent Stores") ranging generally from 2.5% to 25% on their sales through
the SuperMall..
Portal (Internet Portal): 1) Portal is a new term, generally synonymous with
gateway, for a World Wide Web site that is or proposes to be a major starting
site for users when they get connected to the Web or that users tend to visit as
an anchor site. There are general portals and specialized or niche portals. Some
major general portals include Yahoo, Excite, Netscape, Lycos, CNET, Microsoft
Network, and America Online's AOL.com. Examples of niche portals include
Garden.com (for gardeners), Fool.com (for investors), and SearchNT.com (for
Windows NT administrators).
18
<PAGE>
A number of large access providers offer portals to the Web for their own users.
Most portals have adopted the Yahoo style of content categories with a
text-intensive, faster loading page that visitors will find easy to use and to
return to. The term portal space is used to mean the total number of major sites
competing to be one of the portals.
Online Auction House: A virtual auction house accessed on the Internet where one
can list items to be sold, usually with accompanying photographs and
descriptions, and where would-be buyers can contact the seller by e-mail and
make offers to buy the items. The seller can then sell to the highest bidder or
otherwise choose which offer to accept and make arrangements with the buyer for
payment and delivery.
Quik Track aka R-track: The Company's proprietary customized software which
monitors traffic on the Company's website and which can be used by Store Tenants
or SuperSite Tenants to access information about traffic to the Company's
website and by SuperSite Tenants to access such information specific to the
individual SuperSite Tenant's own SuperSite.
R-eMail: The Company's free e-mail service available to subscribers to the
Company's basic Internet service as well as to SuperSite Tenants. The service
includes an e-mail address and the ability to send and receive e-mail over the
Internet.
R-Fun&Games: A site on the Rbid.com website where visitors can access and play a
variety of games and be linked to other sites on other websites for access to
additional games and can also access other features such as greeting cards,
cartoons, a chatroom and various sources of music over the Internet.
SuperMall: The virtual shopping mall created by Company which comprises
independent general and specialized retailers of goods and services (Independent
Stores) as well as Store Tenants and SuperSite Tenants.
Store Tenants: A business owner renting a virtual store located in the SuperMall
for the purpose of conducting e-commerce. A Store Tenant pays $29.95 per month
plus a 10% commission to Company on all sales made in his virtual store. For no
additional charge a Store Tenant has the use of Company's Website Store Builder
Software.
Subtier SuperSite Tenants: Persons who acquire a SuperSite (usually for a fee of
$995 plus a monthly maintenance fee of $99.95) sold to them by the SuperSite
Tenant, or thereafter sold to them by the Subtier SuperSite Tenant, and who
thereby become part of a revenue sharing group with the initial SuperSite Tenant
and with each other.
SuperSite: A SuperSite is an individual Website that can be acquired by
SuperSite Tenants. SuperSites incorporate the basic features of Rbid's website
but can be customized and separately marketed by the SuperSite Tenant who is
afforded the opportunity to market and generate traffic on his SuperSite and to
participate in revenues generated by Company through the activity on his
SuperSite.
SuperSite Tenants: Those persons who acquire a SuperSite and with it the right
to operate one Permitted Tenant Store and the right to lease out other Subtier
Tenant Stores and Subtier SuperSites, and to share in revenues and commissions
generated by Company from its various revenue sources.
Tenant Monthly Service Fee: The monthly payment of $29.95 by Tenant Store owners
for the privilege of operating a Tenant Store in the SuperMall and the ongoing
use of the Webstore Builder to establish, modify and update the Tenant Store.
Tenant Store: The virtual store owned and operated by those persons who pay the
monthly Tenant Installation Fee plus a 10% commission paid to Company on all
merchandise and service sales.
Website: A Web site is a collection of Web files on a particular subject that
includes a beginning file called a home page. From the home page, you can get to
all the other pages on the site.
19
<PAGE>
ITEM 2. PROPERTIES
----------------------
The Company has corporate and administrative offices, as well as
research facilities and facilities to maintain its Super Mall housed in its 7500
square foot headquarters in Irvine, California. Management believes its facility
is adequate for the Company's current level of operations.
The facility is leased on a month to month lease at a current rental of
$6000.00 per month, plus common area expenses. There are currently similar
facilities at similar long-term rents available to the Company in the adjacent
area, and management does not anticipate a problem in replacing this lease if
required.
ITEM 3. LEGAL PROCEEDINGS
-----------------------------
Except for the following, there is no litigation outstanding, and
management is not aware of any potential claims which might be asserted. The
Company has one lawsuit in dispute regarding a marketing contract. Management of
the Company believes the legal dispute can be settled without a material effect
on future operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
---------------------------------------------
AND RELATED STOCKHOLDER MATTERS
A. The Company's Common Stock traded over-the-counter on the NASD
Bulletin Board Market under the symbol "RBID" until December 2, 1999. The
Company's Common Stock now trades on The Pink Sheets. The closing sales price as
of June 30, 2000, was $2.29.
Set forth below is the high and low bid information for the Company's
Common Stock for each full quarterly period within the two most recent fiscal
years.
High Low High Low
Period Bid Bid Ask Ask
------ --- --- --- ---
4th Quarter 1999 4.25 .21 4.25 .21
3rd Quarter 1999 9.50 4.25 9.50 4.25
2nd Quarter 1999 16.75 3.31 16.75 3.31
1st Quarter 1999 5.00 1.25 5.00 1.25
4th Quarter 1998 3.31 1.12 3.31 1.12
3rd Quarter 1998 3.00 1.75 3.00 1.75
2nd Quarter 1998 No Trading
1st Quarter 1998 No Trading
20
<PAGE>
At July 1, 2000, the Company had approximately 197 Shareholders of
record.
The Company has not paid a dividend since its incorporation, and
management does not anticipate the Company will pay dividends in the near
future.
B. Recent Sales of Registered Securities since inception of the
Company have been of Common Stock and are as follows:
<TABLE>
<CAPTION>
Amount of Class of Persons Total Total
Date Securities Sold to Whom Sold Offering Price Commission Exemption
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
8/24/98 5,800,000 1 $15,660 In computer soft ware 0 4(2)
8/25/98-
9/30/98 700,000 2 $1890 In Services 0 4(2)
10/1/98-
12/31/98 428,500 3 $1,157In Services 0 4(2)
11/1/99-
3/31/99 390,000 4 $390,000 In Services 0 Rule 504
4/1/99-
6/30/99 370,000 Accredited $370,000 In Cash $118,000 Rule 504
4/99-6/99 240,000 5 $240,000 In Services 0 4(2)
4/99-6/99 450,000 6 $450,000 In Services 0 4(2)
-------------------------------------------------------------------------------------------------------------------
Total 8,378,500
</TABLE>
(1) On August 24, 1998, the Company issued 4,247,000 shares of restricted
common stock to CEO Peter J. Ferras, an employee, and other accredited
investors in exchange for computer software at a price of $.0027.
(2) The Company in August, 1998 and September, 1998 issued 700,000 shares
of restricted common stock to individuals for services at a price of
$.0027 per share.
(3) The Company from October, 1998 through December, 1998 issued 428,500
shares of restricted common stock to various individuals for services
at a price of $.0027 per share.
(4) In an exempt Rule 504 offering, the Company in March, 1999 issued
390,000 shares of common stock to Market Survey International, Inc. for
market services, and to Moltern, Fisher & Rosenthal, P.C. for other
services at $1.00 per share.
(5) In an exempt Rule 504 offering, the Company from April, 1999 through
June 1999, issued 240,000 shares of common stock for services at a
price of $1.00 per share.
(6) The Company from April 1999 through June 1999 issued 450,000 shares of
restricted common stock for services at $1.00 per share.
ITEM 6. SELECTED FINANCIAL DATA
-------------------------------
Fiscal Year Ended December 31:
1999 1998 1997
-------------------------------
Operating Revenues 95,395 -- --
(Loss) from Continuing Operations (2,818,821) (4,819) --
(Loss) from Continuing Operations per
Common Share (0.36) -- --
Total Assets 82,203 15,660 None
Long Term Obligations None None None
Cash Dividends per Common Share None None None
All financial data above reports the Company as a development stage
Company from inception October 1988 through December 31, 1999 with
significant expenditures occurring in 1999. Starting January 1, 2000
the Company is operating as a fully reporting entity.
21
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND PLAN OF OPERATION
----------------------------------------------------------
OVERVIEW
RBID began test marketing its SuperMall concept and attendant software
system in May 1999 through September 30, 1999.
The Company (A Development Stage Company) was inactive from inception
in 1988 to August 1998 and incurred a loss of $4,819 from inception through
December 31, 1998. The Company (A Development Stage Company) had revenues of
$95,395 and an operating loss from operation from inception through December
1999 of $2,823,640. The Company had initial revenue of $95,395 in November and
December 1999 upon acceptance of initial mall site subscribers and other
Internet services (Email and etc.).
RESULTS OF OPERATIONS
Revenue
The Development Stage Company recorded initial revenue in November and
December 1999 primarily from SuperSite tenant installation fees totaling
$95,395. The Company expects future revenues from independent store commissions,
tenant store commissions, site advertising, revenue tenant installation and
monthly service fees, SuperSite installation fees and monthly service fees,
basic Internet service provider monthly fees, and escrow fee revenue.
Cost of Revenues
Cost of revenues are primarily for commissions paid for direct
marketing and are expected to approximate seventy percent (70%) of revenue after
the initial startup period.
Significant Costs and Expenses
The Company developed a website with employees and outside consultants
at a development cost totaling $206,579 during the year ended December 31, 1999
compared to $4,819 for 1998. The website was test marketed May 1999 through
September 1999 and the Company incurred net marketing costs of $152,044 during
this period. Also recorded as marketing expenses were the issuance of 600,000
shares of restrictive common stock of the Company issued at $1.00 per share. The
Company agreed to settle claims relating to a marketing agreement and recorded
$786,808 as marketing expense in the month of December 1999. Marketing and
advertising expenses for the year ended December 31, 1999 totaled $1,835,823
excluding $152,044 for market test of sites for a total of $1,987,867
During the year ended December 31, 1999 the Company expended $711,069
on general and administration costs consisting of legal expenses, rent, office,
salaries, travel, supplies and other expenses. The Company issued 433,500 shares
valued at $1.00 and accounted for as general and administrative development
expenses. Costs and expenses totaled $2,914,216 for the year ended December 31,
1999 compared to $4,819 for the year ended December 31, 1998.
The $2,914,216 in costs and expenses for the year ended December 31, 1999
included the following:
Summary of Expenses For The Year 1999
Website Costs $ 206,579
Marketing and Selling Expense $1,835,823
Test of Sites $ 152,044
General & Administrative Expenses $ 711,069
Depreciation $ 8,701
----------
Total $2,914,216
The accumulated loss from inception in 1988 through December 31, 1999
totaled $2,823,640.
22
<PAGE>
Depreciation and Amortization
Depreciation from network equipment is minimal because all of the
equipment is rented under contract. The Company has a contract with a major
Internet computer processing company that serves many other Internet companies.
Depreciation was $8,701 for the year ended December 31, 1999. Software costing
$26,660 is depreciated over three years.
Income Taxes
The Company expects to have a net operating loss carryforward of
approximately $2,600,000 available for future years after December 31, 1999.
FACTORS AFFECTING OPERATING RESULTS
As a result of the Company's limited operating history, the Company
does not have historical financial data for a significant number of periods on
which to base planned operating expenses. Accordingly, the Company's expense
levels are based in part on its expectations as to future revenues and to a
large extent are fixed. However, the Company typically operates with no backlog.
As a result, quarterly sales and operating results generally depend on the
volume and timing of revenue received within the quarter, which are difficult to
forecast. The Company may be unable to adjust spending in a timely manner to
compensate for any unexpected revenue shortfall. Accordingly, any significant
shortfall of demand for the Company's products and services in relation to the
Company's expectations would have an immediate adverse impact on the Company's
business, operating results and financial condition. As a result, the Company
believes that period-to-period comparisons of its results of operations are not
necessarily meaningful and should not be relied upon as any indication of future
performance.
Set out below is a Summary of Financial Information for the Company at various
periods indicated:
(Audited) Audited)
Inception - Inception -
10/4/88 (Audited) 10/4/88
Through Year Ended Through
12/31/98 12/31/99 12/31/99
------------------------------------------------
Revenue $ -- $ 95,395 $ 95,395
-------
Costs and
Expenses
Website costs 4,819 206,579 211,398
Advertising &
Marketing -- 1,987,867 1,987,867
General and
Administrative -- 711,069 711,069
Depreciation $ -- 8,701 $ 8,701
------------------------------------------------
Total Costs and Expenses $ 4,819 $ 2,914.216 $ 2,919,035
------------------------------------------------
Net (Loss) $ (4,819) $(2,818,821) $(2,823,640)
================================================
(Loss) Per Share $ -- $ (.36) $ (1.53)
================================================
LIQUIDITY AND CAPITAL RESOURCES
The Company at December 31, 1999 had cash in the bank totaling $21,484.
Through December 1999, $400,000 in additional capital was raised by the sale of
stock to affiliates. These funds were used for marketing expenses, website
operations and general and administration expenses.
The Company during the year ended December 31, 1999, received net
proceeds of $252,000 from an exempt private equity security offering. In
addition shareholders loaned the Company $114,324 for the year ended December
31, 1999.
Management believes the Company will be able to raise capital by the
private sale of additional shares sufficient to fund its capital needs over the
next 12 months, but there are currently no binding agreements for such funds and
no assurance the Company will be able to obtain this capital. This sale of
additional equity securities will result in additional dilution to the Company's
stockholders.
Disclosure Regarding Forward-Looking Statements. This Form 10-KSB
Registration Statement includes "forward-looking statements". All statements
other than statements of historical fact included herein, including, without
limitation, the statements under "Business" and Management's Discussion and
Analysis of Financial Condition, Results of Operations and Plan of Operations,
regarding the Company's strategies, plans, objectives, expectations, and other
matters, are all forward-looking statements. Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable at
this time, it can give no assurance that such expectations will prove to have
been correct.
23
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
---------------------------------------------------
Rbid.com, Inc.
(A Development Stage Company)
As of December 31, 1999
and for the years ended
December 31, 1999 and 1998
and for the period October 4, 1988 (Inception)
to December 31, 1999
24
<PAGE>
Rbid.com, Inc.
(A Development Stage Company)
Table of Contents
Report of Independent Auditors F-1
Balance Sheet F-2
Statements of Operations F-3
Statement of Changes in Stockholders' (Deficit) F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 - F-11
25
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Rbid.com, Inc.
Laguna Hills, California
We have audited the accompanying balance sheet of Rbid.com, Inc. (A Development
Stage Company) as of December 31, 1999, and the related statements of
operations, stockholders' (deficit) and cash flows for the years ended December
31, 1999 and 1998 and for the period October 4, 1988 (Inception) to December 31,
1999. 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.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 significant estimates by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide 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 Rbid.com, Inc. as of December
31, 1999, and the results of its operations, and its cash flows for the years
ended December 31, 1999 and 1998 and for the period October 4, 1988 (Inception)
to December 31, 1999, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
aggregating $2,823,640 through December 31, 1999 and has a working capital
deficit of $747,583 and a stockholders' deficit of $686,864 at December 31,
1999. These factors raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also discussed in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Stark Tinter & Associates, LLC
---------------------------------
Stark Tinter & Associates, LLC
Denver, Colorado
June 7, 2000
F-1
<PAGE>
ASSETS
------
Current Assets:
Cash $21,484
Software less accumulated amortization
of $6,139 20,521
Equipment less accumulated depreciation
of $2,562 27,590
Deposits 12,608
-------
60,719
$82,203
=======
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
---------------------------------------
Current liabilities
Accounts payable and accrued expenses $ 391,743
Accounts payable - related party 35,000
Notes payable - related party 114,324
Escrow advance payable 228,000
-----------
Total current liabilities 769,067
Stockholders' (deficit)
Common stock, $0.001 par value,
50,000,000 shares authorized;
8,378,500 shares issued and
outstanding 8,378
Additional paid in capital 2,128,398
Deficit accumulated during the
development stage (2,823,640)
-----------
Total stockholders' (deficit) (686,864)
-----------
$ 82,203
===========
See accompanying notes to financial statements
F-2
<PAGE>
<TABLE>
<CAPTION>
Rbid.com, Inc.
(A Development Stage Company)
Statements of Operations
Period
October 4, 1988
Year ended Year ended (Inception) to
December 31, December 31, December 31,
1999 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Revenue $ 95,395 $ -- $ 95,395
----------- ----------- -----------
Expenses:
General and administrative 2,905,515 4,819 2,910,334
Depreciation and amortization 8,701 -- 8,701
----------- ----------- -----------
2,914,216 4,819 2,919,035
----------- ----------- -----------
Net (loss) $(2,818,821) $ (4,819) $(2,823,640)
=========== =========== ===========
Per share information:
Weighted average shares
outstanding - basic and diluted 7,751,000 3,286,896 1,842,057
=========== =========== ===========
Net (loss) per common share - basic
and diluted $ (0.36) $ -- $ (1.53)
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
Rbid.com, Inc.
(A Development Stage Company)
Statement of Stockholders' (Deficit)
For the Period October 4, 1988 (Inception) to December 31, 1999
Deficit
Accumulated
Additional during the
Common Stock Paid in Development
Shares Amount Capital Stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at October 4, 1988 -- $ -- $ -- $ -- $ --
Issuance of stock for services
September 1, 1989 at $.001 per share 1,000,000 1,000 -- (1,000) --
----------- ----------- ----------- ----------- -----------
Balance December 31, 1997 1,000,000 1,000 -- (1,000) --
Issuance of stock to purchase software
at $.003 per share 5,800,000 5,800 9,860 -- 15,660
Redemption of common stock (1,000,000) (1,000) -- 1,000 --
Issuance of stock for services rendered
at $.003 per share 1,128,500 1,128 1,919 -- 3,047
Net loss for the year ended
December 31, 1998 -- -- -- (4,819) (4,819)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1998 6,928,500 6,928 11,779 (4,819) 13,888
Issuance of stock for cash at $1.00
per share, net of issuance costs 370,000 370 250,891 -- 251,261
Issuance of stock for services rendered
at $1.00 per share 1,080,000 1,080 1,078,920 -- 1,080,000
Settlement of lawsuit -- -- 786,808 -- 786,808
Net loss for the year ended
December 31, 1999 -- -- -- (2,818,821) (2,818,821)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1999 8,378,500 $ 8,378 $ 2,128,398 $(2,823,640) $ (686,864)
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
Rbid.com, Inc.
(A Development Stage Company)
Statements of Cash Flows
Period
October 4, 1988
Year ended Year ended (Inception) to
December 31, December 31, December 31,
1999 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $(2,818,821) $ (4,819) $(2,823,640)
----------- ----------- -----------
Adjustments to reconcile net (loss)
to net cash
(used in) operating activities:
Services contributed for common stock 1,080,000 3,047 1,083,047
Settlement of lawsuit for common stock 786,808 -- 786,808
Depreciation and amortization 8,701 -- 8,701
Changes in assets and liabilities: --
Increase in deposits (12,608) -- (12,608)
Increase in accounts payable and accrued expenses 424,971 1,772 426,743
----------- ----------- -----------
Total adjustments 2,287,872 4,819 2,292,691
----------- ----------- -----------
Net cash (used in) operating
activities (530,949) -- (530,949)
----------- ----------- -----------
Cash flows from investing activities:
Purchase of software (11,000) -- (11,000)
Purchase of fixed assets (30,152) -- (30,152)
----------- ----------- -----------
Net cash (used in) investing activities (41,152) -- (41,152)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from escrow borrowings 328,000 -- 328,000
Proceeds from notes payable 114,324 -- 114,324
Repayments of escrow borrowings (100,000) - (100,000
Net proceeds from issuance of common
stock, net of issuance costs 251,261 -- 251,261
----------- ----------- -----------
Net cash provided by financing activities 593,585 -- 593,585
----------- ----------- -----------
Net increase in cash 21,484 -- 21,484
Cash, beginning -- -- --
----------- ----------- -----------
Cash, ending $ 21,484 $ -- $ 21,484
=========== =========== ===========
Non-cash transactions
Issuance of common stock for
software $ -- $ (15,660) $ (15,660)
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE>
Rbid.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated on October 4, 1988 in the State of Florida
under the name of Gulf Coast Securities Transfer, Inc. On May 19, 1998
the Company's name was changed to GCST Corp. and amended Articles of
Incorporation were filed. The name was again changed to Rbid.com, Inc.
on April 6, 1999 and a second set of amended Articles of Incorporation
was filed with the State of Florida. The Company is a development stage
company. The Company's primary concentrations are in providing internet
access services, e-commerce solutions, online shopping, online auctions
and classified advertising of consumers and small to medium sized
businesses.
Software and web site development costs
The software asset represents the cost of online mall development
software acquired and is being amortized using the straight line method
over three years. There was $6,139, $0 and $6,139 in amortization
expense of the software asset expensed to operations for the years
ended December 31, 1999 and 1998, and for the period October 4, 1988
(Inception) to December 31, 1999, respectively.
Software and website development costs incurred in developing the
Company's website are accounted for in accordance with SOP 98-1.
Software and website development costs include amounts incurred by the
Company to develop, enhance, manage, monitor and operate the Company's
website. External direct costs of materials and services consumed in
developing or obtaining internal-use computer software, payroll and
payroll-related costs for employees who devote time directly related to
the internal-use computer software project, and interest costs incurred
while developing internal-use computer software are capitalized.
Product development costs, preliminary project and past implementation
product costs are expensed as incurred. Internal costs for upgrades and
enhancements that result in probable additional functionality are
capitalized.
Property and equipment
Property and equipment are depreciated or amortized using the
straight-line method over the following estimated useful lives:
Furniture and office equipment 5 years
Depreciation expense for the years ended December 31, 1999 and 1998 and
for the period October 4, 1988 (Inception) to December 31, 1999 was
$2,562, $0 and $2,562, respectively.
F-6
<PAGE>
Rbid.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
Fair value of financial instruments
Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of
December 31, 1999. The respective carrying value of certain
on-balance-sheet financial instruments approximated their fair values.
These financial instruments include cash, accounts payable and accrued
expenses, accounts payable - related party, notes payable - related
party and escrow advance payable. Fair values were assumed to
approximate carrying values for these financial instruments because
they are short term in nature and their carrying amounts approximate
fair values or they are receivable or payable on demand.
Impairment of long-lived assets
The Company periodically reviews the carrying amount of its
identifiable assets to determine whether current events or
circumstances warrant adjustments to such carrying amounts. If an
impairment adjustment is deemed necessary, such loss is measured by the
amount that the carrying value of such assets exceeds their fair value.
Considerable management judgement is necessary to estimate the fair
value of assets, accordingly, actual results could vary significantly
from such estimates. Assets to be disposed of are carried at the lower
of their financial statement carrying amount or fair value less costs
to sell. As of December 31, 1999, management does not believe there is
any impairment of the carrying amounts of assets.
Revenue recognition
Commissions from store revenues represent referral fees for purchases
made on independent or tenant stores from the Company's website. The
Company recognizes commissions from store revenues when received.
Revenues from tenants consist of installation fees and monthly service
fees charged to store tenants and supersite tenants for installation of
store or supersite software and for use of the software and affiliation
to the Company's supersite mall. The Company recognizes revenues from
tenants over the period that services are provided.
Advertising and click through revenues represent referral fees paid by
unrelated websites for click through traffic to unrelated websites that
are generated from banner ad, promotion, informational listing and
other inducement links that are displayed on the Company's website. The
Company recognizes advertising and click through revenues when
received.
Internet service provider fees represent monthly fees charged for
internet service. The Company recognizes revenues from internet service
provider fees over the period that services are provided.
Advertising costs
The Company expenses all costs of advertising incurred.
F-7
<PAGE>
Rbid.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
Income taxes
The Company follows Statement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") for recording the
provision for income taxes. Deferred tax assets and liabilities are
computed based upon the difference between the financial statement and
income tax basis of assets and liabilities using the enacted marginal
tax rate applicable when the related asset or liability is expected to
be realized or settled. Deferred income tax expenses or benefits are
based on the changes in the asset or liability each period. If
available evidence suggests that it is more likely than not that some
portion or all of the deferred tax assets will not be realized, a
valuation allowance is required to reduce the deferred tax assets to
the amount that is more likely than not to be realized. Future changes
in such valuation allowance are included in the provision for deferred
income taxes in the period of change.
Net (Loss) per Common Share
The Company calculates net income (loss) per share as required by SFAS
No. 128, "Earnings per Share." Basic earnings (loss) per share is
calculated by dividing net income (loss) by the weighted average number
of common shares outstanding for the period. Diluted earnings (loss)
per share is calculated by dividing net income (loss) by the weighted
average number of common shares and dilutive common stock equivalents
outstanding. During the periods presented common stock equivalents were
not considered as their effect would be anti- dilutive.
Comprehensive Income
The Company follows Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130
establishes standards for reporting and display of comprehensive income
and its components in the financial statements.
Segment Reporting
The Company follows Statement of Financial Accounting Standards No.
131, "Disclosures About Segments of an Enterprise and Related
Information." The Company operates as a single segment and will
evaluate additional segment disclosure requirements as it expands its
operations.
Estimates
The preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires the Company's
management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.
F-8
<PAGE>
Rbid.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
Recent Pronouncements
The FASB recently issued Statement No 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of FASB
Statement No. 133". The Statement defers for one year the effective
date of FASB Statement No. 133, "Accounting for Derivative Instruments
and Hedging Activities". The rule now will apply to all fiscal quarters
of all fiscal years beginning after June 15, 2000. In June 1998, the
FASB issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," which is required to be adopted in years beginning
after June 15, 1999. The Statement permits early adoption as of the
beginning of any fiscal quarter after its issuance. The Statement will
require the Company to recognize all derivatives on the balance sheet
at fair value. Derivatives that are not hedges must be adjusted to fair
value through income. If the derivative is a hedge, depending on the
nature of the hedge, changes in the fair value of derivatives will
either be offset against the change in fair value of the hedged assets,
liabilities, or firm commitments through earnings or recognized in
other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair
value will be immediately recognized in earnings. The Company has not
yet determined if it will early-adopt and what the effect of SFAS No.
133 will be on the earnings and financial position of the Company.
Note 2. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern which
contemplates the recoverability of assets and the satisfaction of
liabilities in the normal course of business. As noted above, the
Company is in the development stage and, accordingly, has not yet
generated substantial revenues from operations. Since its inception,
the Company has been substantially engaged in bringing its product and
services to a state of technical feasibility and commercial viability,
incurring substantial costs and expenses. As a result, the Company
incurred a net loss during the period from inception to December 31,
1999 of $2,823,640. In addition, the Company's current liabilities
exceed its current assets by $747,583. The Company's development
activities since inception have been financially sustained by a
combination of contributions from the private offerings and debt. The
ability of the Company to continue as a going concern is dependent upon
its ability to raise additional capital from the sale of common stock
and, ultimately, the achievement of operating revenues. The
accompanying financial statements do not include any adjustments that
might be required should the Company be unable to recover the value of
its assets or satisfy its liabilities.
Management's plans include pursuing financing for its operations and
seeking additional private placement investments. The Company then
intends to invest in website development and begin operations. Failure
to secure such financing or to raise additional private placement
investment may result in the Company depleting its available funds and
not being able pay its obligations or begin operations.
Note 3. SOFTWARE ASSET
In August 1998, the Company entered into an agreement to purchase
online mall development software in exchange for 5,800,000 shares of
common stock at the predecessor cost of the asset which was $15,660.
This transaction has been accounted for as the purchase of a software
asset.
F-9
<PAGE>
Rbid.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
Note 4. STOCKHOLDERS' EQUITY
During 1998, the Company amended its Articles of Incorporation, which
increased its capitalization from 1,000 common shares to 50,000,000
common shares. The par value was unchanged at $.001.
Also, during 1998, the Company forward split its common stock 1,000:1,
thus increasing the number of outstanding common stock shares from
1,000 to 1,000,000 shares. All share and per share amounts have been
restated to give effect to the split.
During 1998 the Company issued 5,800,000 shares of common stock for
software valued at $15,660.
During 1998 prior stockholders holding 1,000,000 common shares returned
these shares to the Company for no consideration and the Company
cancelled the shares.
During 1998 issued 1,128,500 shares to consultants for services
rendered valued at $3,047.
During 1999, the Company issued 370,000 shares of common stock in a
Regulation D Rule 504 offering for $1 per share or $370,000 in cash
with issuance costs of $118,739.
During 1999, the Company issued 1,080,000 shares of common stock to
consultants for services rendered valued at $1 per share or $1,080,000
.
During 1999, the Company's principal shareholder transferred 788,938
shares to parties for the settlement of claims relating to a marketing
agreement. The difference between the principal shareholder's basis of
$2,130 and the fair value of the shares at $1 per share or $788,938 was
recorded as a capital contribution of $786,808 with the offsetting
expense recorded in general and administrative expense.
Note 5. INCOME TAXES
The Company has a Federal net operating loss carryforward of
approximately $2.6 million, which will expire between the years 2018
and 2019. The tax benefit of this net operating loss has been offset by
a full allowance for realization.
F-10
<PAGE>
Rbid.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
Note 6. STOCK PURCHASE AGREEMENT
In October 1999, the President of the Company entered into a stock
purchase agreement with an unrelated company pursuant to which the
President agreed to settle claims relating to a marketing agreement
with 788,938 of his personal shares and sell 2,300,000 of his personal
shares of common stock in the Company for a total consideration of
$500,000. The Company also agreed to issue 3,802,863 shares to the
unrelated party in exchange for $750,000 in cash or an irrevocable
letter of credit. The unrelated company assumed control of the Company
in October 1999 and the directors and officers of the Company resigned
and new directors and officers were elected. The monies and the
President's stock were placed in an escrow account in accordance with
the agreement. The Company borrowed $328,000 from the escrow account in
1999 for operating purposes and repaid $100,000 in accordance with the
agreement. The transaction did not close until March 2000.
Note 7. RELATED PARTY TRANSACTIONS
Accounts payable - related party are to the Chief Financial Officer of
the Company totaling $35,000 at December 31, 1999.
Notes payable - related party (dated December 31,1999) are to the Chief
Financial Officer the current President and the former President of the
Company totaling $114,324 at December 31, 1999. The notes are
non-interest bearing and are due December 31, 2000.
Note 8. LEASE COMMITMENTS
The Company has entered into an operating lease for office space.
Aggregate future minimum lease payments required under a non-cancelable
operating lease at December 31, 1999 are as follows:
2000 $ 86,817
2001 $154,980
2002 $154,980
2003 $ 12,915
Rent expense for the years ended December 31, 1999 and 1998 and for the
period October 4, 1988 (Inception) to December 31, 1999 was $51,710, $0
and $51,710, respectively.
Note 9. COMMITMENTS AND CONTINGENCIES
The Company has contingent liabilities related to legal proceedings and
other matters arising in the ordinary course of business. Although it
is reasonably possible the Company may incur losses upon conclusion of
such matters, an estimate of any loss or range of loss cannot be made.
In the opinion of management, it is expected that amounts, if any,
which may be required to satisfy such contingencies will not be
material in relation to the accompanying financial statements.
F-11
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
------------------------------------------------------
None.
26
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
-------------------------------------------------------
The names, ages and positions of the directors and executive officers of
the Company as of February 1, 2000, are as follows:
Name Age Position Since
Horst Danning 44 Chairman, CEO & a Director 10/99
Dr. Klaus Bartak 54 President and a Director 10/99
Fred Wallace 65 Chief Financial Officer 10/99
Emilio Francisco 51 Director 10/99
Debra Martinez 41 Secretary 10/99
The Directors serve until the next annual meeting of shareholders, or
until their successors are elected.
Mr. Horst Danning/CEO/CHAIRMAN OF THE BOARD
Mr. Danning began his career in practicing tax law for 5 years with the
renowned tax law firm, Treuhand Gesellschaft m.b.H. in Garmisch-Partenkirchen,
Germany, of which he was made a partner after 3 years. In 1974, Mr. Danning
established and owned his first media publishing company. Utilizing his Masters
Degree in economics and international business and trade from the Academyo
Henssler and the Handels and Wirtschaftschule Dr. Leopold, in 1974, Mr. Danning
formed his first consulting and trading company. In 1987 Mr. Danning united his
companies into one major international consulting and trading company, I.C.M.
(International Consulting & Marketing), of which he is Chairman. Mr. Danning's
worldwide travels and relationships led to international trade and consulting
for major companies. His ongoing relationships have been with companies and
officials in Israel, Saudi Arabia, United Arab Emirates, Dubai, Oman, Egypt,
Russia, various European Countries, Indonesia, Singapore, Thailand, Philippines,
China, the United States and Germany. Mr. Danning's consulting and trade in
these countries has ranged from consulting in business and finance, to trade in
natural resources and industrial goods. In 1996, Mr. Danning also become
Chairman and CEO of API, Inc., an entertainment company.
Dr. Klaus Bartak/PRESIDENT/DIRECTOR
Dr. Wagner-Bartak, Claus G.J.B.Sc., M.Sc., Dr. S.C., M.B., business
executive, polymath; e.Ludwig-Maximillian Univ., Munich B.Sc 1962, M.Sc. 1966,
Dr.Sc. 1969, Tech. Univ., Munich M.B. 1969. Dr. Claus G.J. Wagner-Bartak is an
internationally renowned expert in advanced technologies and an accomplished
executive. The span of his experience reaches from scientific, technical and
executive management of major multinational aerospace projects to the
development of computer data systems and the founding of several successful
business ventures, which are in the forefront of novel technological
developments. He received his scientific degrees from Ludwig-Maximillian
University of Munich. In industry, he had the following major positions:
Co-Founder, Director and Executive, BA Tech;, Inc. (formerly Structured
Biologicals, Inc., Diasyn Technologies, Inc.), Toronto - Atlanta, 1987 - 1999;
President, Energy Dynamics, Inc., Toronto - Munich, 1983 - 1998; Managing
Director, Innovations Council, Arlington, 1994; Director, Aquatic Cellulose
Ltd., 1997; Vice President and General Manager, Spar Aerospace Limited, Toronto
and Montreal, 1974-1983; Program Director, Corporate Director,
Messerschmitt-Boelkow-Blohn GmbH, Munich, 1969 - 1974. Expert consultant and
advisor to government and industry in frontier technologies, innovations and
business systems since 1982. Recipient of Engineering Medal (Association of
Professional Engineers) 1982, Public Service Medal (NASA) 1982, NASA Astronaut
Award 1983, NASA Group Achievement Awards (KSC and JSC) 1982, Engelberger
International Award 1986, Dauplin Award 1995.
27
<PAGE>
Mr. Emilio Francisco/DIRECTOR
Mr. Francisco is an attorney practicing in Newport Beach, California
with over 20 years experience in the legal aspects of financial matters, with an
emphasis in federal issues. His clients have included the Ministry of Higher
Education of Saudi Arabia. Mr. Francisco is also CEO of Uniglobe Aerospace, a
supplier of Boeing, Douglas and Airbus aircraft parts for commercial airlines.
Clients of Uniglobe Aerospace include Mexicana, Saudi Arabia Airlines, JAL,
Varig, Swissair, LTU, and Lanchile Airlines. Mr. Francisco speaks English,
Arabic and French fluently, and is conversant in Portuguese. Mr. Francisco has
recently been active in developing private telephone lines in the Middle East
and Latin America. Mr. Francisco is also Chairman of the Board of Satellite Link
Communications, Inc., a wholesale telecommunication carrier that specializes in
developing international private lines between the United States and Foreign
Markets.
Ms. Debra Martinez/SECRETARY
Ms. Martinez brings to the Registrant over 20 years of administrative
experience. For the past 10 years she has been providing administrative services
to several top Southern California companies under her company, Five Star
Services.
Mr. Fred Wallace/CFO
Mr. Wallace comes to the Registrant as a past auditor with Peat Marwick
Mitchell (KPMG) "top 6" accounting firm. His experience includes serving as an
officer in Companies and as a Certified Public Accountant to assist in
accounting and SEC solutions. His background as a CFO and Controller for several
major companies provides financial experience for Company planning.
There are no directors holding office in other reporting companies
following is a summary of other directorships of each of the Directors in other
reporting companies: None
28
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
-------------------------------
The following table sets forth the annual compensation paid and accrued by the
Company during its last three fiscal years to its Chief Executive Officer. No
other executive officer received annual salary and bonus in excess of $100,000.
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation
Annual Compensation Awards Payouts
Other Secur-
Name Annual Restricted ities All Other
and Compen- Stock Underlying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) $ ($)SARs (#) ($) ($)
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Horst
Danning
Chairman
of the Bd
& CEO 1999 none none none none none none none
1998 none none none none none none none
1997 none none none none none none none
Peter
James
Ferras
Prior
CEO 1999 120,000 none none none none none none
1998 none none none none none none none
1997 none none none none none none none
Fred
Wallace
CFO 1999 60,000 none none none none none none
1998 none none none none none none none
1997 none none none none none none none
Debra
Martinez
Secy. 1999 60,000 none none none none none none
1998 none none none none none none none
1997 none none none none none none none
</TABLE>
29
<PAGE>
Employment Contracts
Horst Danning
The Company entered into a two year employment contract with an
additional one year renewal term, with Horst Danning, its Chief Executive
officer, in October of 1999. The Employment Agreement provides for a base
salary of $250,000 per year, with a 10% annual increase in salary, based
on the prior year's salary, at the beginning of each subsequent year of
the term. Certain conditions precedent to commencement of this salary
were satisfied on February 1, 2000, and the salary has commenced to
accrue from that date.
In addition, the Employment Contract provides for the grant to Mr.
Danning of 1,000,000 restricted stock options to acquire the Company's
Common Stock at $1.00 per share, said options to expire in October of
2001. Such options vest as follows:
250,000 options when gross sales of the Company reach $10,000,000
for any 12 month period during the option term;
250,000 options when gross sales of the Company reach $50,000,000
for any 12 month period during the option term;
500,000 options when gross sales of the Company reach $100,000,000
for any 12 month period during the option term;
Once a total of 1,000,000 options have been granted, Mr. Danning is
entitled to a grant of an additional 1,000,000 options for each
$50,000,000 in gross sales of the Company thereafter over any 12
month period, during the term of the Agreement.
Mr. Danning also participates in all employee benefit plans under the
terms of the Employment Contract, receives $1000 per month in car
allowance and $1,000,000 in life insurance.
Dr. Klaus Bartak
The Company entered into a two year employment contract with an
additional one year renewal term, with Dr. Klaus Bartak, one of its
Directors, in October of 1999. The Employment Agreement provides for a
base salary of $250,000 per year, with a 10% annual increase in salary,
based on the prior year's salary, at the beginning of each subsequent
year of the term. Certain conditions precedent to commencement of this
salary were satisfied on February 1, 2000, and the salary has commenced
to accrue from that date.
In addition, the Employment Contract provides for the grant to Dr. Bartak
of 1,000,000 restricted stock options to acquire the Company's Common
Stock at $1.00 per share, said options to expire in October of 2001. Such
options vest as follows:
250,000 options when gross sales of the Company reach $10,000,000
for any 12 month period during the option term;
250,000 options when gross sales of the Company reach $50,000,000
for any 12 month period during the option term;
500,000 options when gross sales of the Company reach $100,000,000
for any 12 month period during the option term;
Once a total of 1,000,000 options have been granted, Dr. Bartak is
entitled to a grant of an additional 1,000,000 options for each
$50,000,000 in gross sales of the Company thereafter over any 12 month
period, during the term of the Agreement.
Dr. Bartak also participates in all employee benefit plans under the
terms of the Employment Contract, receives $1000 per month in car
allowance and $1,000,000 in life insurance.
Except for the options granted pursuant to the above two Employment
Contracts, the Company has no stock option program, and no other options,
warrants or rights are outstanding at this date. The Company has no Long-Term
Incentive Plans and no Awards were made in its Last Fiscal Year
30
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF
------------------------------
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership
as of July 1, 2000, of the Company's Common Stock, by any person who is known to
the Company to be the beneficial owner of more than 5% of the Company's voting
securities, and by each director, and by officers and directors of the Company
as a group.
Beneficial1 Percentage
Name and Address Ownership of Class 1
---------------- --------- ----------
Horst Danning, Chairman, CEO
and a Director 2 4,108,576 3 34%
2030 Main St. Suite 150 1
Irvine, California 92614
Fred Wallace, Chief Financial Officer 16,200 4
Emilio Francisco, Director3 2,054,287 17%
Dr. Klaus Bartak, President and a Director
Debra Martinez, Secretary
All current directors and
officers as a group (6 persons) 6,179,063 51%
1 This address also applies to all persons listed.
2 Owned individually and through The Danning Family Trust, of which Horst
Danning is the Trustee.
3 Owned individually and through the EF Family Trust, of which Emilio Francisco
is the Trustee.
4 Owned individually.
The Company knows of no arrangements, including any pledge by any person
of securities of the Company, the operation of which may at a subsequent date
result in a change in control of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
On August 11, 2000, the Registrant is anticipating a Securities Exchange
Commission response to become a reporting company pursuant to Section 12(b) of
the Securities Exchange Act of 1934. All reports required under Section 16(a)
are believed to have been timely filed by the officers, directors and 10%
shareholders of the stock of the Company.
31
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------
(A) Related Transactions
1. Split of Company's Common Stock. In 1998, the State of Florida
approved the Company's Restated Articles of Incorporation, which
increased its capitalization from 1,000 common shares to 50,000,000
common shares. The par value was unchanged at $.001.
2. Redemption of Common Stock. In August of 1998, the Company redeemed
all 1,000,000 shares of its outstanding stock from existing
shareholders.
3. Acquisition of Secure America, Inc. In August, 1998, the Registrant
entered into a reorganization agreement with Secure America, Inc.,
a Delaware corporation, pursuant to which the Registrant privately
issued 5,800,000 shares of Common Stock to the shareholders of
Secure America, Inc., in exchange for 100% of the shares of common
stock of Secure America, Inc.
The purpose of the reorganization was to allow the Registrant to
acquire the software that had been developed and was held
personally by the principal shareholder of Secure America, Inc.,
Peter James Ferras, as well as the services of Mr. Ferras as
Registrant's President of Sales and Marketing. While the
reorganization agreement contemplated that Secure America, Inc.
would become an operating subsidiary of the Registrant, Secure
America, Inc. has not conducted any operations since it became a
wholly-owned subsidiary of the Registrant. Instead, Registrant is
treating the acquisition of the stock of Secure America, Inc. as an
asset acquisition pursuant to the requirements of Section 338 of
the Internal Revenue of 1986, as amended. Under SEC Reg. 210.3-05,
Secure America was an "insignificant subsidiary" and is in the
process of being liquidated.
4. Loan from Principal Shareholder. During the year ended December 31,
1999, the Company's primary shareholder loaned the Company a net
amount of $91,055 on an unsecured demand note without interest.
This loan remained unpaid and outstanding at February 1, 2000.
5. Acquisition of Control of the Company by AHC Limited of RBID.com,
Inc. Pursuant to a Stock Purchase Agreement dated October 19, 1999,
RBID.com founder James Ferras, agreed to sell 2,300,000 shares of
his personally held common stock of RBID.com, Inc. to AHC Limited,
a Turks and Caicos Company. Pursuant to the same agreement,
RBID.com agreed to separately sell 3,802,863 shares of its Common
Stock to AHC. In the aggregate, the transaction provided for the
sale of 6,200,000 shares of the Company's outstanding Common Stock,
representing 51% of its outstanding shares, to AHC.
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AHC in turn assigned its rights as purchaser under this three way
agreement, to AHC-1BT, a Nevada Business Trust ("AHC-1BT"). The
Trustee of AHC-1BT is Growth Capital Investments, Inc., a
California corporation. Neither Mr. Danning nor Mr. Francisco are
officers, directors or shareholders of Growth Capital Investments.
Rather, the beneficial interest holder of AHC-1BT are separate
trusts established by Messrs. Danning and Bartak, for the benefit
of certain of their family members. However, for purposes of
control, Mr. Danning and Mr. Francisco, individually and in the
aggregate with their family trusts, control directly or indirectly
51% of the outstanding capital stock of RBID, as a result of the
consummation of this purchase.
The amount of $750,000 due the Company had been paid in full by
AHC-1BT by February 3, 2000. As a result, the shares of the Company
have been issued to AHC-1BT, and AHC-1BT as of February 22, 2000,
owned 51% of the Company's outstanding Common Stock.
6. Settlement with Larry Thompson. On November 15, 1999, the
Company entered into a Settlement Agreement with Mr. Larry
Thompson, pursuant to which the Company settled the claims of Mr.
Thompson under a certain Marketing Agreement it had entered into
with Mr. Thompson in April of 1999. Pursuant to this Settlement
Agreement, 700,000 shares of the Company's Common Stock were to be
privately issued to Mr. Thompson. However, Mr. Peter James Ferras,
the former President of the Company, has agreed to deliver shares
of the Common Stock of the Company which he personally holds to Mr.
Thompson, in satisfaction of the terms of the Settlement Agreement.
In addition to the settlement of the claims of Mr. Thompson, the
Company has also resolved the claims of certain employees of Mr.
Thompson to these claimants, paying approximately $86,067.00 in
cash and privately issuing approximately 88,938 shares of Common
Stock of the Company to thee claimants. Mr. Peter James Ferras, the
former President of the Company, has agreed to deliver shares which
he holds to satisfy the terms of this settlement as well.
(B) Sales of Unregistered Securities
1. Acquisition of Software for Stock. In August, 1998, the Company
privately issued 5,800,000 shares of Common Stock to ten
individuals, in exchange for software valued at $15,660. The
software pertained to Internet portal processing.
2. 1998 Issuance of Shares for Services. In August and September of
1998, the Company privately issued 700,000 restricted common stock
shares to various subcontractors for consulting services fully
rendered and valued at $1,890, including 700,000 Shares to founding
shareholders for Website services. In the quarter ended December,
1998, the Company issued 428,500 restricted common shares to
various subcontractors, for consulting services fully rendered, and
valued at $1156, including Shares to founding shareholders for
Website services.
3. 1999 Shares Issued for Consulting Services. In March of 1999, the
Company privately issued 390,000 shares of restricted Common Stock
for $1.00 per share or $390,000 for consulting services fully
rendered, including 375,000 Shares to Market Surveys International,
Inc. for consulting services and 15,000 Shares to Mottern, Fisher &
Rosenthal for legal services.
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In the quarter ended June 30, 1999, the Company issued 240,000
common shares for consulting services at an agreed value of $1.00
per share, or $240,000, including 100,000 Shares to Netvest Ltd.
for marketing services, 75,000 Shares to Bernard Schmidt for
marketing services, and 50,000 Shares to Market Surveys
International Inc. for marketing services, and 15,000 shares to
Mottern Fisher & Rosenthal for legal services.
In the quarter ended June 30, 1999, the Company privately issued
450,000 shares of restricted Common Stock at an agreed value of
$1.00 per share (total of $450,000) to various subcontractors for
consulting services fully rendered, including 50,000 Shares to
Bernard Schmidt for management services, 240,000 Shares to Joe
Cornwell for management services, and 50,000 Shares to Stock
Exposure Inc. for management services and 75,000 shares to Chris
SArgiro for management services..
4. Rule 504 Private Placement. In 1999 the company received funds of
approximately $252,000 from an exempt securities offering pursuant
to Regulation D Rule 504 under the Securities Act of 1933. Common
Stock was issued at a subscription price of $1.00 per share and
$370,000 was raised. None of the Company's current or prior
officers, directors or 10% or more shareholders were purchasers in
this private placement.
All shares issued privately for services were issued in reliance upon the
exemption from registration provided by ss.4(2) of the Securities Act of
1933, and SEC Regulation D promulgated thereunder.
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K.
-------------------------------------------
None.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
RBID.COM, INC.
/s/ Horst Danning
-----------------
Horst Danning
Chief Executive Officer
/s/ Fred Wallace
----------------
Fred Wallace
Chief Financial Officer
Date: August 14, 2000
In accordance with the Securities Exchange Act of 1934, this report has been
duly signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Horst Danning Chairman of the Board, August 14, 2000
------------------- Director, and
Horst Danning Chief Executive Officer
/s/ Dr. Klaus Bartak President and a Director August 14, 2000
---------------------
Dr. Klaus Bartak
/s/ Fred Wallace Chief Financial Officer August 14, 2000
---------------
Fred Wallace
/s/ Emilio Francisco Director
--------------------
Emilio Francisco August 14, 2000
/s/ Debra Martinez Secretary
------------------
Debra Martinez August 14, 2000
35
