SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
Form 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------------------------------------------
RBID.COM, INC.
(Name of Small Business Issuer as specified in its Charter)
Florida 33-0857311
------- ----------
(State of Incorporation) (IRS Employer ID No.)
24461 Ridge Route Drive, 2nd Floor
Laguna Hills, California 92663
----------------------------------------
(Address of Principal Executive Offices)
(949) 470-4550
----------------------------------------
(Registrant's Telephone Number)
Securities registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act: 8,378,500
Common shares $0.001 Par Value
<PAGE>
PART I
ITEM 1: DESCRIPTION OF BUSINESS
I. INTRODUCTION
------------
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 $1,526,858 at
September 30, 1999, which was generated over the period of October 4, 1988
through September 30, 1999, as a result of research website, marketing expense
and general and administration expenses and development costs.
II. RBID's SUPERSITE MALL.
----------------------
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 automall (R-automall), an online homeguide (R-homeguide), online
classifieds (R-freeads), and general 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 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.
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.
2
<PAGE>
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 on 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"), is paid to the
Company.
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.
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.
3
<PAGE>
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 Installation Fees and Monthly
Service Fees. SuperSite Tenants have the right to set
up "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 $99.95. 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 Company in all
commissions on revenues generated by Sub Tenant
Stores and Subtier SuperSite Tenants they bring into
their Subtier SuperSite.
The Subtier SuperSite Tenant who purchases his
Subtier SuperSite from the Company's Super Site
Tenant, in turn can add Stores and Subtier SuperSites
to his Subtier SuperSite, and so on down a
traditional multi-level marketing distribution chain.
This multilevel marketing structure has been put in
place in order to promote rapid growth in the
community of stores integrated with RBID's SuperSite
Mall. However, the primary business of the SuperSite
Mall is the operation of the E-Commerce retail stores
and the sale of Advertising and other Mall services.
4
<PAGE>
RBID's multi-level marketing plan with regard to
Supersite Tenants may be diagramed as follows:
RBID.Com, Inc.
<TABLE>
<CAPTION>
SuperSite Mall
<S> <C> <C> <C> <C>
Independent Tenant SuperSite Tenants
Stores Stores
One Permitted
Subtier Subtier Tenant Store
Tenant SuperSite
Stores Tenants
One Permitted
Tenant Store
Subtier Subtier
Tenant SuperSite
Stores Tenants
</TABLE>
And so on down a traditional multi-level marketing program
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. Free "Non Fee" 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 free services to
the Internet public. These free services are as follows:
1. Auction Services: The Company's auction services
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. Registrant does not charge for this
service which is available to anyone accessing the
RBID Super Mall.
5
<PAGE>
2. Freeads: This service, which is also free to anyone
visiting the RBID Super Mall, is a free classified
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.
3. The Automall: The Automall is an online service for
buying and selling automobiles enabling individual
buyers and sellers to list and purchase cars for sale
as well as to access dealers and manufacturers and
related financing, insurance and other services. The
service is offered without charge to the visitor as
an inducement to increase traffic. This type of
online service is subject to state law regulation in
some states and therefore may not be fully available
to consumers in all states. The Company collects no
revenues from providing these services.
4. The Homeguide: The Homeguide is a free online service
devoted to serving buyers and sellers in the retail
market for homes. The service is offered without
charge to the visitor as an inducement to increase
traffic. The Company collects no revenues from these
services.
5. 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.
6. 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.
7. Internet Search: The SuperMall provides free access to all the Internet
search engines, including Go.com, Yahoo.com, Lycos.com and Excite.com.
8. Chat Forums. The SuperMall provides chat rooms online
without charge, where members of the public can
participate in online chats.
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, 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 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.
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 is provided with
"tracking" software that enables the SuperSite purchaser to monitor a
broad range of activity taking place on his individual SuperSite.
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<PAGE>
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
------------------------------------------------------------
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;
(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").
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.
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.
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<PAGE>
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.
E. 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
auction 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.
F. 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.
At this stage, R-way is using direct marketing as the principal method
for promoting RBID's products and services. R-way has focused on establishing
relationships with marketing organizations which already have and/or are
committed to recruiting a substantial number of members, potential customers and
vendors that can market, purchase or sell the products and services offered
through the Registrant's SuperMall. R-way is also pursuing one on one sales
directly to Store Tenants and SuperSite Tenants.
G. Current Traffic Levels and Revenues
-----------------------------------
(i) Traffic. The total traffic through the Registrant's
SuperMall from November 5, 1999, when it was opened through January 31,
2000, totals 254,355.
(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:
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<PAGE>
Store Sales Commissions
Revenues To RBID
---------------------------------
11/5/99 - 12/31/99 $ 0 $ 0
-------- --------
January 2000 $ 0 $ 0
-------- --------
<TABLE>
<CAPTION>
(iii) Revenues from Tenants
---------------------
Store Tenant SuperSite Tenant SuperSiteTenant
Monthly Installation Monthly
Service Fees Fees Service Fees
Number $ Number $
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11/5/99 - 12/31/99 0 0 $ 95,395 0 0
---- ---- --------- ---- ----
January 2000 0 0 $ 158,960 0 0
---- ---- --------- ---- ----
(iv) Advertising Revenues
--------------------
No. Of
Revenues Advertisers
------------------------------
11/5/99 - 12/31/99 $ 0 0
--------- ---------
January 2000 $ 0 0
--------- ---------
(v) Click Through Revenues
Click Through
Revenues Count
------------------------------
11/5/99 - 12/31/99 $ 0 0
--------- ---------
January 2000 $ 0 0
--------- ---------
(vi) Internet Service Provider Fees
------------------------------
No. Of
Revenues Customers
------------------------------
11/5/99 - 12/31/99 $ 0 0
--------- ---------
January 2000 $ 0 0
--------- ---------
</TABLE>
H. 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. RBID pays a flat
fee of $50.00 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.
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<PAGE>
K. Research and Development Activities
-----------------------------------
The Company expended over $177,705 in 1999, in research and
development in order to develop the software for its SuperMall. The
software is now complete and the Company does not anticipate expending
material amounts in further 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.
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.
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.
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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.
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.
11
<PAGE>
ITEM 2: 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 was inactive from inception in 1988 to August 1998 and
incurred a loss of $4,819 from inception through December 31, 1998. The Company
had no revenues and an operating loss from operation from inception in October,
1988, through September, 1999 of $1,526,858. The Company had initial revenue of
$95,395 in December 1999 upon acceptance of initial mall site subscribers and
other Internet services (Email and etc.), and $158,960 in revenues in January
2000..
RESULTS OF OPERATIONS
Revenue
The Development Stage Company recorded initial revenue in 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.
Significant Costs and Expenses
The Company developed a website with employees and outside consultants
at a development cost totaling $177,705 during the nine months ended September
30, 1999. 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 to several companies, which shares were
valued at $1.00 per share in a Regulation D exempt offering in March and April
of 1999.
During the nine months ended September 30, 1999 the Company expended
$158,790 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 development expense. Costs
and expenses totaled $1,522,039 for the nine months ended September 30, 1999
compared to $3,622 for the nine months ended September 30, 1998. The accumulated
loss from inception in 1988 through December 31, 1998 totaled $4,819.
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 $1,220 for the nine months ended September 30, 1999, and
resulted primarily from depreciation of the Company's internal personal
computers (cost $18,602). Software is expensed when acquired except for the
initial software purchased in August, 1999, at a cost of $15,660 which is being
depreciated over five years.
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<PAGE>
Income Taxes
The Company expects to have a net operating loss carryforward of
approximately $1,600,000 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.
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<PAGE>
<TABLE>
<CAPTION>
Set out below is a Summary of Financial Information for the Company at various
periods indicated:
(Audited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Inception - Quarter Quarter Quarter 9 Months Inception -
10/4/88 10/4/88
Through 3/31/99 6/30/99 9/30/99 9/30/99 Through
12/31/98 9/30/99
<S> <C> <C> <C> <C> <C> <C>
Revenue $ $ $ $ $ $
Costs and
Expenses
Website costs 3,819 94,686 83,019 177,705 181,524
Advertising &
Marketing 375,000 299,095 77,949 752,044 752,044
General and
Administrative 1,000 15,000 502,672 73,398 591,070 592,070
Depreciation 290 930 1,220 1,220
Total Costs
And Expenses 4,819 390,000 896,743 235,296 1,522,039 1,526,858
Loss $(390,000) $ (896,743) $ (235,296) $ (1,522,039) $(1,526,858)
============================================================================================
Loss Per Share $ (0.06) $ (0.11) $ (0.03) $ (0.20) $ (0.91)
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company at September 30, 1999 had cash in the bank totaling $9,563.
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 nine months ended September 30, 1999, received net
proceeds of $252,000 from an exempt private equity security offering. In
addition a shareholder loaned the Company $131,000 in the nine months period
ended September 30, 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. The sale of
additional equity securities will result in additional dilution to the Company's
stockholders.
Disclosure Regarding Forward-Looking Statements. This Form 10SB
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.
14
<PAGE>
ITEM 3. PROPERTIES
------------------
The Company has corporate and administrative offices, as well as research
facilities and facilities to maintain its Super Mall housed in its 950 square
foot headquarters in Laguna Hills, 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
$2795.00 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.
15
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------
The following table sets forth information regarding beneficial ownership
as of February 15, 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.
Beneficial 1 Percentage
Name and Address Ownership of Class 1
- ---------------- --------- ----------
Horst Danning, Chairman, CEO
and a Director2 4,108,576 3 34%
24461 Ridge Route Drive, 2nd Floor1
Laguna Hills, California 92633
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
16
<PAGE>
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
----------------------------------------
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 61 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.
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.
17
<PAGE>
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:
ITEM 6. 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 $100,000.
<TABLE>
<CAPTION>
Summary Compensation
--------------------------------------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Other Secur-
Name Annual Restricted ities All Other
and Compen- Stock Underlying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) $ ($) SARs (#) ($) ($)
- ----------- ------ --- --- ----------------------------------------------------- ---------
Horst
Danning
Chairman
of the Bd
<S> <C> <C> <C> <C> <C> <C> <C> <C>
& CEO 1999 none none none none none none none
1998 " " " " " " "
1997 " " " " " " "
Peter
James
Ferras
Prior
CEO 1999 120,000 none none none none none none
1998 none " " " " " "
1997 none " " " " " "
Fred
Wallace
CFO 1999 60,000 none none none none none none
1998 none " " " " " "
1997 " " " " " " "
Debra
Martinez
Secy. 1999 60,000 none none none none none none
1998 " " " " " " "
1997 " " " " " " "
</TABLE>
18
<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;
19
<PAGE>
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.
20
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND 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 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.
4. 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 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.
5. 1998 Issuance of Shares for Services. In August and September of
1998, the Company issued 700,000 restricted common stock shares to
various subcontractors for consulting services fully rendered and
valued at $1,890. 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.
6. 1999 Shares Issued for Consulting Services. In March of 1999, the
Company issued 390,000 shares of restricted Common Stock for $1.00
per share or $390,000 for consulting services fully rendered to
Market Survey International, Inc. and Moltern, Fisher & Rosenthal,
P.C..
In the quarter ended September 30, 1999, the Company issued 240,000
common shares for consulting services to Netvest Ltd., and Bernard
Schmitt at an agreed value of $1.00 per share, or $240,000.
In the quarter ended September 30, 1999, the Company 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.
7. 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.
8. Loan from Principal Shareholder. During the three months ended
September 30, 1999, the Company's primary shareholder loaned the
Company a net amount of $131,055 on an unsecured loan having a
ninety day maturity term, and without interest. This loan remained
unpaid and outstanding at February 1, 2000.
21
<PAGE>
9. 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.
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.
10. 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 the 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.
22
<PAGE>
ITEM 8. DESCRIPTION OF REGISTRANT'S SECURITIES
TO BE REGISTERED
The Company has only one type of security, Common Stock with par value
equal to U.S.$0.001. There are 50,000,000 authorized shares of Common Stock of
which 8,378,500 shares were issued/outstanding as of December 31, 1999.
The holders of Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the holders of Capital
Stock. Holders of Common Stock are entitled to receive ratably such dividends as
may be declared by the Board of Directors out of funds legally available
therefor. In the event of a liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preference of any
preferred stock that might be issued in the future. Holders of Common Stock have
no preemptive or subscription rights, and there are no redemption or conversion
rights with respect to such shares. All outstanding shares of Common Stock are
fully paid and nonassessable.
23
<PAGE>
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS
ON REGISTRANT'S COMMON STOCK
EQUITY AND RELATED STOCKHOLDER MATTERS
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
February 1, 2000, was $2.00.
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 - - - -
1st Quarter 1998 - - - -
At February 1, 2000, the Company had approximately 145 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.
ITEM 2. LEGAL PROCEEDINGS
There is no litigation outstanding, and management is not aware of any
potential claims which might be asserted.
24
<PAGE>
ITEM 3. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
<TABLE>
<CAPTION>
All Common Stock.
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 Rule 504
------------------
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.
25
<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).
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.
Online Auto Mall: A virtual mall where consumers can list cars for sale, can
shop for various makes of automobiles by online visits to virtual dealerships
and can also have online access to businesses that furnish accessories and
services related to automobiles such as parts, insurance, repairs and finance
and can link to search engines that specialize in seeking out such services that
are available online.
26
<PAGE>
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-Home Guide: A comprehensive site on Company's website for buyers and sellers
of residential real estate including a listing service, a home search engine,
realtors, insurance, mortgage rates and availabilities, title insurance and a
mortgage interest calculator.
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.
27
<PAGE>
Item 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Florida General Corporation Law, under which the Company is incorporated,
gives a corporation the power to indemnify any of its directors, officers,
employees, or agents who are sued by reason of their service in such capacity to
the corporation provided that the director, officer, employee, or agent acted in
good faith and in a manner he believed to be in or not opposed to the best
interests of the corporation. With respect to any criminal action, he must have
had no reasonable cause to believe his conduct was unlawful.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES
ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS AND CONTROLLING PERSONS OF
THE REGISTRANT PURSUANT TO THE FOREGOING PROVISIONS OR OTHERWISE, THE REGISTRANT
HAS BEEN ADVISED THAT IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION
SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS,
THEREFORE, UNENFORCEABLE, IN THE EVENT THAT A CLAIM FOR INDEMNIFICATION AGAINST
SUCH LIABILITIES (OTHER THAN THE PAYMENT BY THE REGISTRANT OF EXPENSES INCURRED
OR PAID BY A DIRECTOR, OFFICER OR CONTROLLING PERSON OF THE REGISTRANT IN THE
SUCCESSFUL DEFENSE OF ANY ACTION, SUIT OR PROCEEDING) IS ASSERTED BY SUCH
DIRECTOR, OFFICER OR CONTROLLING PERSON IN CONNECTION WITH THE SECURITIES BEING
REGISTERED, THE REGISTRANT WILL, UNLESS IN THE OPINION OF ITS COUNSEL THE MATTER
HAS BEEN SETTLED BY CONTROLLING PRECEDENT, SUBMIT TO A COURT OF APPROPRIATE
JURISDICTION THE QUESTION WHETHER SUCH INDEMNIFICATION BY IT IS AGAINST PUBLIC
POLICY AS EXPRESSED IN THE ACT AND WILL BE GOVERNED BY THE FINAL ADJUDICATION OF
SUCH ISSUE.
28
<PAGE>
PART F/S
FINANCIAL STATEMENTS AND EXHIBITS
Report of Independent Certified Public Accountants
Consolidated Financial Statements
Audited Balance Sheet for Fiscal Year ended December
31, 1998;
Audited Balance Sheet for Fiscal Year ended December
31, 1997;
Unaudited Balance Sheet for period commencing January
1, 1999 and ending September 30, 1999;
Unaudited Balance Sheet for period commencing January
1, 1998 and ending September 30, 1998;
Audited Statement of Operations for Fiscal Year ended
December 31, 1998, and 1997, and Inception to
December 31, 1998
Unaudited Statement of Operations for period
commencing January 1, 1999 and ending September 30,
1999; Unaudited Statement of Operations for period
commencing January 1, 1998 and ending September 30,
1998, and 1977, and Inception to September 30, 1999
Audited Statement of Cash Flows for Fiscal Year ended
December 31, 1998, and 1997, and Inception to
December 31, 1998
Unaudited Statement of Cash Flows for period
commencing January 1, 1999 and ending September 30,
1999 Unaudited Statement of Cash Flows for period
commencing January 1, 1998 and ending September 30,
1998; and Inception through September 30, 1999.
Audited Statement of Stockholders' Equity for
Inception to December 31, 1998;
Audited Statement of Stockholders' Equity for Fiscal
Year ended December 31, 1997;
Unaudited Statement of Stockholders' Equity for
period commencing January 1, 1999 and ending
September 30, 1999; and Inception to September 30,
1999
Notes to Consolidated Financial Statements
29
<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, 1998, and the related statements of
operations, stockholders' equity, and cash flows for the year ended Decem ber
31, 1998 and for the period October 4, 1988 (Inception) to December 31, 1998.
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 audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rbid.com, Inc. (A Development
Stage Company) as of December 31, 1998, and the results of its operations, and
its cash flows for the year ended December 31, 1998 and for the period October
4, 1988 (Inception) to December 31, 1998, in conformity with generally accepted
accounting principles.
Stark Tinter & Associates, LLC
Englewood, Colorado
October 25, 1999
30
<PAGE>
Rbid.com, Inc.
(A Development Stage Company)
Balance Sheet
December 31, 1998
ASSETS
Software $ 15,660
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 1,772
--------
Commitments and contingencies
Stockholders' equity
Common stock, $0.001 par value,
50,000,000 shares authorized;
6,928,500 shares issued and
outstanding 6,928
Additional paid in capital 11,779
Deficit accumulated during the
development stage (4,819)
--------
Total stockholders' equity 13,888
--------
$ 15,660
========
See accompanying notes to consolidated financial statements
31
<PAGE>
Rbid.com, Inc.
(A Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
Period
October 4, 1988
Year ended Year ended (Inception) to
December 31, December 31, December 31,
1998 1997 1998
--------------------- --------------------- --------------------
<S> <C> <C> <C>
Revenue $ - $ - $ -
--------------------- --------------------- --------------------
Expenses:
General and administrative 4,819 - 4,819
--------------------- --------------------- --------------------
Total operating expenses 4,819 - 4,819
--------------------- --------------------- --------------------
Operating (loss) (4,819) - (4,819)
--------------------- --------------------- --------------------
Net (loss) $ (4,819) $ - $ (4,819)
===================== ===================== ====================
Per share information:
Weighted average shares
outstanding - basic and diluted 3,286,896 1,000,000 1,207,900
===================== ===================== ====================
Net (loss) per common share - basic
and diluted $ NIL $ - $ NIL
===================== ===================== ====================
</TABLE>
See accompanying notes to consolidated financial statements
32
<PAGE>
Rbid.com, Inc.
(A Development Stage Company)
Statements of Stockholders' Equity
For the period October 4, 1988 (Inception) to
December 31, 1998
<TABLE>
<CAPTION>
Accumulated
Deficit
Additional during the
Common Stock Paid in Development
Shares Amount Capital Stage Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at October 4, 1988 -- $ -- $ -- $ -- $ --
Issuance of stock for services
September 1, 1989 1,000 1 999 (1,000) --
Forward stock split 1,000 to 1
May 19, 1998 999,000 999 (999) -- --
Issuance of stock to purchase
software August 24, 1998 5,800,000 5,800 9,860 -- 15,660
Redemption of common stock
August 24, 1998 (1,000,000) (1,000) -- 1,000 --
Issuance of stock for services
rendered August 25, 1998 through
December 31, 1998 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
========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements
33
<PAGE>
Rbid.com, Inc.
(A Development Stage Company)
Statements of Cash Flows
<TABLE>
<CAPTION>
Period
Oct. 4, 1988
Year ended Year ended (Inception) to
Dec. 31, Dec. 31, Dec. 31,
1998 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $ (4,819) $ -- $ (4,819)
-------- -------- --------
Adjustments to reconcile net (loss) to
net cash provided by (used in) operating
activities:
Consulting services contributed 3,047 -- 3,047
Changes in assets and liabilities:
Increase in accounts payable 1,772 -- 1,772
-------- -------- --------
Total adjustments 4,819 -- 4,819
-------- -------- --------
Net cash (used in) operating
activities -- -- --
-------- -------- --------
Cash flows from investing activities:
Purchase of fixed assets --
-------- -------- --------
Net cash (used in) investing activities -- -- --
-------- -------- --------
Cash flows from financing activities:
Net proceeds from issuance of common
stock, net of issuance costs -- -- --
-------- -------- --------
Net cash provided by financing activities -- -- --
-------- -------- --------
Net increase in cash -- -- --
Cash, beginning -- -- --
-------- -------- --------
Cash, ending $ -- $ -- $ --
======== ======== ========
Non-cash transactions
Issuance of common stock for
software $ 15,660 $ 15,660
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
34
<PAGE>
Rbid.com
(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.
Net income per share
The net income per share is computed by dividing the net income for the period
by the weighted average number of common shares outstanding for the period. For
the years ended December 31, 1998 and 1997 and for the period October 4, 1988
(Inception) to December 31, 1998, potential common shares and the computation of
diluted earnings per share are not considered as their effect would be
anti-dilutive.
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.
Impairment of long-lived assets
The Company accounts for the carrying value of long-lived assets in accordance
with the requirements of FAS 121 "Accounting for the Impairment of Long-Lived
Assets". As of December 31, 1998, no asset impairment needs to be recognized.
35
<PAGE>
Comprehensive Income
There were no items of other comprehensive income in the years ended December
31, 1998 and 1997 and the period October 4, 1988 (Inception) to December
31,1998; thus, net income is equal to comprehensive income for the period.
Note 2. STOCKHOLDERS' EQUITY
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.
Also, in 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.
In 1998 the Company issued 5,800,000 shares of common stock for software valued
at $15,660. Prior stockholders of common stock of the 1,000,000 outstanding
shares were redeemed in 1998.
In addition, the Company in 1998 issued 1,128,500 shares to consultants for
services rendered valued at $3,047.
Note 3. INCOME TAXES
The Company has a Federal net operating loss carryforward of approximately
$5,600, which will expire in the year 2018. The tax benefit of this net
operating loss of approximately has been offset by a full allowance for
realization.
Note 4. YEAR 2000
The Company has assessed its exposure to date sensitive computer software
programs that may not be operative subsequent to 1999 and has implemented a
requisite course of action to minimize Year 2000 risk and ensure that neither
significant costs nor disruption of normal business operations are encountered.
However, because there is no guarantee that all systems of outside vendors or
other entities on which the Company's operations rely will be 2000 compliant,
the Company remains susceptible to consequences of the Year 2000 issue.
Note 5. SUBSEQUENT EVENTS
In 1999 the Company received funds of approximately $252,000 from an exempt
securities offering pursuant to Regulation D Rule 504. Common stock was issued
based on a subscription price of $1.00 per share for the 1,000,000 share
offering. The costs of the offering of approximately $118,000 was recorded as a
reduction to additional paid in capital. Consulting service shares issued
totaled 630,000. The Company also issued 450,000 restricted shares for services
in 1999 at $1.00 per share.
36
<PAGE>
In 1999, the President of the Company entered into a stock purchase agreement
with an unrelated company pursuant to which the President agreed to sell and the
unrelated company agreed to purchase 2,300,000 shares of common stock of the
President's in the Company for a total consideration of $750,000. The unrelated
company assumed control of the Company and the directors and officers of the
Company resigned and new directors and officers were elected.
Note 5. SUBSEQUENT EVENTS (Continued)
The Company entered into an operating lease for office space in July 1999. The
lease has a six month term with monthly payments of $2,794.
Note 6. COMMITMENTS AND CONTINGENCIES
The Company entered into a marketing agreement dated April, 1999, with a firm to
market website sales. The agreement has been terminated based on terms of the
agreement due to a change in management. Certain claims are outstanding which
are being settled by the Company as they occur and based on the development
stage of the Company are considered material by management.
37
<PAGE>
GCST CORP.
(FORMERLY GULF COAST SECURITIES TRANSFER, INC.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
May 20, 1998
December 31, 1997
December 31, 1996
TABLE OF CONTENTS
INDEPENDENT AUDITORS' REPORT . . . . . . . . . . . . F-1
ASSETS . . . . . . . . . . . . . . . . . . F-2
LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . . . . . . . F-3
STATEMENT OF OPERATIONS . . . . . . . . . . . .F-4
STATEMENT OF STOCKHOLDERS' EQUITY . . . . . . F-5
STATEMENT OF CASH FLOWS . . . . . . . . . . . .F-6
NOTES TO FINANCIAL STATEMENTS . . . . . . . .F-7 - F-8
38
<PAGE>
BARRY L. FRIEDMAN, P.C.
Certified Public Accountant
1682 Tulita Drive Office: (702) 361-8414
Las Vegas, Nevada 89123 Fax No: (702) 896-0278
INDEPENDENT AUDITORS' REPORT
Board of Directors May 22, 1998
GCST Corp.
Orlando, Florida
I have audited the accompanying Balance Sheet of GCST Corp,, (Formerly
Gulf Coast Securities Transfer, Inc.), (A Development Stage Company), as of May
20, 1998, December 31, 1997, and December 31, 1996, and the related statements
of operations, stockholders' equity and cash flows for the two years ended
December 31, 1997, December 31, 1996, and the period January 1, 1998 to May 20,
1998. Those financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the Financial position of GCST Corp.,
(Formerly Gulf Coast Securities Transfer, Inc.), (A Development Stage Company)
as of May 20, 1998, December 31, 1997, and December 31, 1996, and the results of
its operations and cash flows for the two years ended December 31, 1997, and
December 31, 1996, and the period January 1, 1998 to May 20, 1998, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
company will continue as a going concern. As discussed in Note 4 to the
financial statements, the Company has no established source of revenue. This
raises substantial doubt about its ability to continue as a going concern.
Management's plan in regards to these matters are also described in Note 4. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/Barry L. Friedman
- --------------------
Barry L. Friedman
Certified Public Accountant
39
<PAGE>
GCST CORP.
(FORMERLY GULF COAST SECURITIES TRANSFER, INC.)
(A Development Stage Company)
BALANCE SHEET
-------------
ASSETS
------
<TABLE>
<CAPTION>
May 20, December December
1998 31, 1997 31, 1996
------------ ---------------- -------------
<S> <C> <C> <C>
CURRENT ASSETS: $ 0 $ 0 $ 0
------------- ------------- -------------
TOTAL CURRENT ASSETS $ 0 $ 0 $ 0
------------- ------------- -------------
OTHER ASSETS: $ 0 $ 0 $ 0
------------- ------------- -------------
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
------------- ------------- -------------
TOTAL ASSETS $ 0 $ 0 $ 0
============= ============= =============
</TABLE>
See accompanying notes to financial statements & audit report
40
<PAGE>
GCST CORP.
(FORMERLY GULF COAST SECURITIES TRANSFER, INC.)
(A Development Stage Company)
BALANCE SHEET
-------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
May 20, December December
1998 31, 1997 31, 1996
------------ ------------- ------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Account Payables $ 1,772 $ 0 $ 0
------------ ------------- ------------
TOTAL CURRENT LIABILITIES $ 1,772 $ 0 $ 0
------------ ------------- ------------
STOCKHOLDERS' EQUITY (Note 1)
Common stock, $.001 per value
Authorized 1,000 Shares issued
And outstanding at
December 31, 1996 - 1,000 shares $ 0 $ 0 $ 1
------------ ------------- ------------
December 31, 1997 - 1,000 shares $ 0 $ 1 $ 0
------------ ------------- ------------
Common stock, $001 per value
Authorized 50,000,000 shares
Issued and outstanding at
May 20, 1998 - 1,000,000 shares $ 1,000 $ 999 $ 999
Additional Paid in Capital $ 0 $ 0 $ 0
Accumulated Loss $ -2,772 $ -1,000 $ -1,000
------------ ------------- ---------
TOTAL STOCKHOLDERS' EQUITY $ -1,772 $ 0 $ 0
------------ ------------- ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 0 $ 0 $ 0
============ ============= ============
</TABLE>
See accompanying notes to financial statements & audit report
F-2
41
<PAGE>
GCST CORP.
(FORMERLY GULF COAST SECURITIES TRANSFER, INC.)
(A Development Stage Company)
STATEMENT OF OPERATIONS
-----------------------
<TABLE>
<CAPTION>
Jan. 1 Year Year Oct 4, 1988
1998 to Ended Ended (inception)
May 20, December December May 20,
1998 31, 1997 31, 1996 1998
---------- ---------- --------------- ------------
<S> <C> <C> <C> <C>
INCOME:
Revenue $ 0 $ 0 $ 0 $ 0
---------- ---------- --------------- ------------
EXPENSES:
General Selling &
Administrative $ 1,772 $ 0 $ 0 $ 2,772
---------- ---------- --------------- ------------
Total Expenses $ 1,772 $ 0 $ 0 $ 2,772
---------- ---------- --------------- ------------
Net Loss $ -1,772 $ 0 $ -2,772
========== ========== =============== ============
Net Loss per weighted share (Note 2) $ -.0008 $ .0000 $ .0000 $ -.0028
========== ========== =============== ============
Weighted average number of common
Shares outstanding 1,000,000 1,000,000 1,000,000 1,000,000
========== ========== =============== ============
</TABLE>
See accompanying notes to financial statements & audit report
42
<PAGE>
GCST CORP.
(FORMERLY GULF COAST SECURITIES TRANSFER, INC.)
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
--------------------------------------------
Additional
COMMON STOCK Paid in Accumulated
Shares Amount Capital Deficit
--------- --------- --------- -----------
Balance,
December 31, 1995 1,000 $ 1 $ 999 $ -1,000
Net loss year ended
December 31, 1996 0 $ 0 $ 0 $ 0
--------- --------- --------- -----------
Balance,
December 31, 1996 1,000 $ 1 $ 999 $ -1,000
Net loss year ended
December 31, 1997 0 $ 0 $ 0 $ 0
--------- --------- --------- -----------
Balance,
December 31, 1997 1,000 $ 1 $ 999 $ -1,000
May 19, 1998
Forward stock split 999,000 $ 999 $ -999 0
1,000:1
Net loss
January 1, 1998
To May 20, 1998 $ -1,772
--------- --------- --------- -----------
Balance,
May 20, 1998 1,000,000 $ 1,000 $ 0 $ -2,772
========= ========= ========= ===========
See accompanying notes to financial statements & audit report
43
<PAGE>
GCST CORP.
(FORMERLY GULF COAST SECURITIES TRANSFER, INC.)
(A Development Stage Company)
STATEMENT OF CASH FLOW
----------------------
<TABLE>
<CAPTION>
Jan. 1 Year Year Oct 4,1988
1998 to Ended Ended (inception)
May 20, December December May 20,
1998 31, 1997 31, 1996 1998
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Cash Flow from:
Operating Activities:
Net Loss $ -1,772 $ 0 $ 0 $ -2,772
Adjustment to reconcile
Net loss to net cash
Provided by operating
Activities 0 0 0 0
Changes in assets and liabilities:
Increase in current liabilities: $ +1,772 $ 0 $ 0 $ +1,772
--------- --------- ---------- ---------
Net cash used in operating activities $ 0 $ 0 $ 0 $ -1,000
Cash flow from investing activities $ 0 $ 0 $ 0 $ 0
Cash flows from Financing Activities:
Issuance of common stock for
Services $ 0 $ 0 $ 0 $ +1,000
---------- ---------- ---------- ----------
Net Increase (Decrease) in cash $ 0 $ 0 $ 0 $ 0
Cash, beginning of period $ 0 $ 0 $ 0 $ 0
---------- ---------- --------- ----------
Cash, end of period $ 0 $ 0 $ 0 $ 0
========== ========== ========== =========
</TABLE>
See accompanying notes to financial statements & audit report
44
<PAGE>
GCST CORP.
(FORMERLY GULF COAST SECURITIES TRANSFER, INC.)
(A Development Stage Company) May 20, 1998, December
31, 1997 and December 31, 1996
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - History and Organization of Company
The Company was organized October 4, 1988, under the laws of the State
of Florida as Gulf Coast Securities Transfer, Inc. The Company currently has no
operations and, in accordance with SFAS #7, is considered a development company.
On September 1, 1989, the Company issued 1,000 shares of its $.001 per
value common stock for services of $1,000.
On May 19, 1998, the State of Florida approved the Company's related
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.
On May 19, 1998, the Company forward split its common stock 1,000:1,
thus increasing the number of outstanding common stock shares from 1,000 shares
to l,000,000 shares.
On May 19, 1998, the Company changed its name to GCST Corp.
NOTE 2 - Accounting Policies and Procedures:
- --------------------------------------------
The Company has not determined its accounting policies and procedures,
except as follows:
1. The Company uses the actual method of accounting.
2. Earning or loss per share is calculated using the weighted averaged
number of common shares outstanding.
3. The Company has of yet adopted any policy regarding payments of
dividends. No dividends have been paid since inception.
NOTE 3 - Warrants and Opinions:
- ------------------------------
There are no warrants or options outstanding to issue any additional
shares of common stock of the Company.
NOTE 4 - Going Concern:
- -----------------------
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional capital
through a merger with an existing operating company.
NOTE 5 - Related Party Transactions:
- -----------------------------------
The Company neither owns or leases any real or personal property.
Office services are provided without charge by an officer. Such costs are
immaterial to the financial statements and accordingly, have not been reflected
therein. The officers and directors of the company are involved in other
business activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
45
<PAGE>
RBID.COM, INC.
(A Development Stage Company)
BALANCE SHEET
September 30, 1999
(Unaudited)
ASSETS
------
Current Assets
Cash $ 6,955
Deposits 2,608
-----------
Total Current Assets 9,563
-----------
Property and equipment, net of accumulated
depreciation 33,042
-----------
Total Assets $ 42,605
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $ 76,584
Payroll taxes payable 11,856
Loan payable, stockholder 131,055
-----------
Total Current Liabilities 219,495
-----------
Stockholders' Equity
Common stock, $0.001 par value, 50,000,000 shares
authorized; 8,378,500 shares issued and
outstanding 8,378
Additional paid in capital 1,341,590
Deficit accumulated during the development stage (1,526,858)
-----------
Total Stockholders' Equity (176,890)
-----------
Total Liabilities and Stockholders' Equity $ 42,605
===========
46
<PAGE>
RBID.COM, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Period
Nine months Nine months October 4, 1988
ended ended (Inception) to
September 30, September 30, September 30,
1999 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Revenue $ -- $ -- $ --
----------- ----------- -----------
Expenses:
General and administrative 1,520,819 3,662 1,525,638
Depreciation 1,220 -- 1,220
----------- ----------- -----------
Total Operating Expenses 1,522,039 3,662 1,526,858
----------- ----------- -----------
Operating Loss (1,522,039) (3,662) (1,526,858)
----------- ----------- -----------
Net Loss ($1,522,039) ($ 3,662) ($1,526,858)
=========== =========== ===========
Per Share Information:
Weighted Average Shares Outstanding -
Basic and Diluted 7,783,500 2,144,444 1,670,411
=========== =========== ===========
Net Loss Per Common Share - Basic and Diluted ($ 0.20) $ -- ($ 0.91)
=========== =========== ===========
</TABLE>
47
<PAGE>
RBID.COM, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the period October 4, 1988 (Inception) to September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at October 4, 1988 -- $ -- $ -- $ -- $ --
Issuance of stock for services
September 1, 1989 1,000 1 999 (1,000) --
Forward stock split 1,000 to 1
May 19, 1998 999,000 999 (999) -- --
Issuance of common stock to purchase
software August 24, 1998 5,800,000 5,800 9,860 -- 15,660
Redemption of Common Stock
August 24, 1998 (1,000,000) (1,000) -- 1,000 --
Issuance of stock for services
rendered August 25, 1998 through
December 31, 1998 1,128,500 1,128 1,919 -- 3,047
Net loss for the year ended
December 31,1998 -- -- -- (4,819) (4,819)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 6,927,500 6,928 11,779 (4,819) 13,888
----------- ----------- ----------- ----------- -----------
Issuance of Common Stock
Reg. D Rule 504 (Note 3) 1,000,000 1,000 880,261 -- 881,261
Issuance of Common Stock 450,000 450 449,550 -- 450,000
Net loss for the nine months ended
September 30, 1999 -- -- -- (1,522,039) (1,522,039)
----------- ----------- ----------- ----------- -----------
Balance, September 30, 1999 8,377,500 $ 8,378 $ 1,341,590 ($1,526,858) $ 176,890
=========== =========== =========== =========== ===========
</TABLE>
48
<PAGE>
RBID.COM, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Period
Nine months Nine months October 4, 1988
ended ended (Inception) to
September 30, September 30, September 30,
1999 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ($1,522,039) (3,662) ($1,526,858)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Consulting services contributed 1,080,000 1,890 1,083,047
Depreciation 1,220 -- 1,220
Increase in operating assets:
Deposits 2,608 -- 2,608
Accounts payable & taxes payable 88,440 1,772 90,212
----------- ----------- -----------
Net cash used in operating activities: ($ 349,771) 0 ($ 349,771)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (18,602) -- (18,602)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock,
net of issuance costs 251,261 -- 251,261
Loan payable, stockholder 124,067 -- 124,067
----------- ----------- -----------
Net cash provided by financing activities 375,328 -- 375,328
----------- ----------- -----------
NET INCREASE IN CASH $ 6,955 -- $ 6,955
CASH, beginning of year -- -- --
----------- ----------- -----------
CASH, end of period $ 6,955 $ -- $ 6,955
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the year for:
Interest $ --
Income taxes $ --
</TABLE>
49
<PAGE>
RBID.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
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. The name
was again changed to Rbid.com, Inc. on April 6, 1999 and a second set of Amended
Articles of Incorporation were 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 to consumers and small to medium businesses.
Net Income (Loss) Per Share
- ---------------------------
The net income (loss) per share is computed by dividing the net income (loss)
for the period by the weighted average of common shares outstanding for the
period. For the nine months ended September 30, 1999 and 1998, and for the
period October 4, 1998 (Inception) to September 30, 1999, potential common
shares and the computation of diluted earnings per share are not considered as
their effect would be anti-dilutive.
50
<PAGE>
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
significantly from those estimates.
Property, Equipment and Software
- --------------------------------
Property and equipment are recorded at cost. Depreciation has been calculated on
the accelerated cost recovery method at rates based on five to seven years
estimated lives. Software is being depreciated using the accelerated cost
recovery method over a life of three to five years. This depreciation method is
designed to expense the cost of the asset over its estimated useful life. The
Company has expensed software after December 31, 1998 and has adopted SOP-98.01
for years after December 15, 1998 initially beginning January 1, 1999.
Impairment of Long-Lived Assets
- -------------------------------
The Company accounts for the carrying value of long-lived assets in accordance
with the requirements of FAS 121 "Accounting for the Impairment of Long-Lived
Assets". As of September 30, 1998, no asset impairment needs to be recognized.
Note 1. Summary of Significant Accounting Policies (Continued)
Comprehensive Income
- --------------------
Effective January 1, 1999, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" (Statement 130). This
statement is effective for financial statements issued for periods beginning
after December 15, 1997. Statement 130 established standards for reporting and
display of comprehensive income and its components in a full set of general
purpose financial statements. Statement 130 requires that all items recognized
under accounting standards as components of comprehensive income be reported in
a financial statement with equal prominence as other statements. There were no
items of other comprehensive income in the nine months ended September 30, 1999
and 1998, and the period October 4, 1988 (Inception) to September 30, 1999;
thus, net income is equal to comprehensive income for the period.
In 1999, the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 131, "Disclosures about Segments of an Enterprise and Related Information."
SFAS No. 131 defines how operating segments are determined and requires
disclosure of certain financial and descriptive information about the Company's
operating segments. Under current conditions, the Company has one reporting
segment.
Cash and Cash Equivalents
- -------------------------
The Company considers all short-term, highly liquid investments with an original
maturity date of three months or less at date of purchase to be cash
equivalents. Cash and cash equivalents are stated at cost, which approximates
fair value.
51
<PAGE>
Revenue Recognition
- -------------------
Revenue is recognized by the Company upon the delivery of the product or
completion of services rendered.
Advertising Costs and Marketing Costs
- -------------------------------------
The Company expenses all advertising costs as incurred. Advertising expense for
the nine months ended September 30, 1999 amounted to $39,905. Marketing costs
totaled $112,139 for the nine months ended September 30, 1999. In addition the
Company issued restricted common stock shares for marketing development valued
at $ 600,000 during the nine months ended September 30, 1999 or a grand total of
$ $ 752,044
Research and Development
- ------------------------
Research and development costs are expensed as incurred. Research and
development costs for the nine months ended September 30, 1999 totaled $
177,705. Marketing and development costs totaled $600,000 as explained above in
Advertising Costs and Marketing Costs.
Concentration of Business and Credit Risk
- -----------------------------------------
The Company has exposure to credit risk to the extent that its cash and cash
equivalents exceed amounts covered by federal deposit insurance. The Company
believes that its credit risk is not significant.
Note 1. Summary of Significant Accounting Policies (Continued)
Concentration of Business and Credit Risk (Continued)
- -----------------------------------------------------
The Company plans to do business in the international market. The Company's
ability to collect the amounts due from its customers is affected by economic
conditions in its industry and the geographical area in which it conducts
business.
Note 2. Property, Equipment and Software
Property, equipment, and software consisted of the following at September 30,
1999:
Equipment $18,602
Less accumulated depreciation (1,220)
-------
17,382
Software 15,660
-------
$33,042
-------
Note 3. Stockholders' Equity
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.
52
<PAGE>
Also, in 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.
In August, 1998, the Company issued 5,800,000 shares of common stock for
software valued at $15,660. Prior stockholders of common stock of the 1,000,000
outstanding shares were redeemed in 1998.
The Company for the quarter ended September 30, 1998, issued 700,000 restricted
common stock shares to consultants for services rendered valued at $1,890 and
428,500 restricted common stock shares to consultants in the fourth quarter 1998
valued at $1,156. Common stock shares outstanding were 6,500,000 shares as of
September 30, 1998 and 6,928,500 shares at December 31, 1998.
In the quarter ended March 31, 1999 the Company issued 390,000 shares of
restricted common stock for $1.00 per share or $390,000 for consulting services
pursuant to a Regulation D Rule 504 SEC offering which totaled 1,000,000 common
stock shares. Common stock shares outstanding at March 31, 1999 totaled
7,318,500.
Note 3. Stockholders' Equity (Continued)
Under the Regulation D Rule 504 offering the Company in the quarter ended June
30, 1999 received funds of $252,000 after expenses of $118,000 on issuing
370,000 shares of restricted common stock at $1.00 per share. Also issued were
240,000 common shares for consulting services at $1.00 per share or $240,000 for
the balance of the 1,000,000 shares of the offering. In addition, in the quarter
ended June 30, 1999, the Company for consulting services issued 450,000 shares
of restricted common stock at $1.00 per share (total of $450,000). No shares
were issued to an affiliated party. Outstanding common stock shares were
8,378,500 as of June 30, 1999 and September 30, 1999.
Note 4. Loan Payable - Stockholder
During the three months ended September 30, 1999 the primary shareholder loaned
the Company a net amount of $131,055 with a ninety day maturity term on a non
interest basis.
Note 5. Income Taxes
The Company has a 1998 Federal net operating loss carryforward of approximately
$5,600, which will expire in the year 2018. The tax benefit of this net
operating loss of approximately has been offset by a full allowance for
realization.
53
<PAGE>
Note 6. Year 2000
The Company has assessed its exposure to date sensitive computer software
programs that may not be operative subsequent to 1999 and has implemented a
requisite course of action to minimize Year 2000 risk and ensure that neither
significant costs nor disruption of normal business operations are encountered.
However, because there is no guarantee that all systems of outside vendors or
other entities on which the Company's operations rely will be Year 2000
compliant, the Company remains susceptible to consequences of the Year 2000
issue.
Note 7. Subsequent Events
AHC - I, BT
- -----------
On October 21, 1999, the major stockholder of the Company entered into a stock
purchase agreement with AHC, Ltd., (which the latter assigned to AHC - I, BT, a
Nevada Business Trust pursuant to which the stockholder agreed to sell and AHC,
Ltd., agreed to purchase 2,300,000 shares of common stock of the major
stockholder in the Registrant. AHC - I, BT is a Nevada Business Trust. The
Trustee of the Trust is Growth Capital Investments, Inc., a California
corporation. The trust is the assignee of the rights of AHC, Ltd. under the
stock purchase agreement dated October 21, 1999.
Note 7. Subsequent Events (Continued)
AHC - I, BT (Continued)
- -----------------------
Under the terms of the Stock Purchase Agreement, AHC - I, BT is entitled to
acquire 2,300,000 shares of common stock of the Company from the stockholder for
a total consideration of $750,000. These funds would be distributed to the
stockholder upon the close of escrow. In addition, the Company, in order to
obtain an immediate infusion of cash for its operations, granted to AHC - I , BT
the right to acquire 3,800,000 shares of common stock at a price of
approximately $.20 share. All funds from the sale of these shares are to be
placed directly into the operating capital of the Company.
Under the agreement, an escrow was opened for the transaction. The escrow
instructions contain a number of conditions that are required to be met prior to
a close. Under the agreement, AHC - I, BT was required to make available to the
Company the sum of $250,000 for operations and a proportionate number of shares
of common stock would be distributed to AHC - I, BT in consideration for the
capital infusion. Pursuant to the agreement, AHC -I, BT provided the Company
with the required funds. The stock purchase transaction is still in escrow and a
closing is expected within the next sixty days. After the escrow closing, AHC -
I, BT would control 50.1% of the total issued and outstanding stock of the
Company and would be in control of the Company. The unrelated company assumed
control of the Company and the directors and officers of the Company resigned
and new directors and officers were elected.
54
<PAGE>
Lead Machine, Inc.
- ------------------
On December 7, 1999, the Company executed an agreement with Lead Machine, Inc.,
a Washington corporation, and the sole shareholder of Lead Machine, Inc.
pursuant to which the Company agreed to purchase the asset "Millionaires Island"
which consists of certain customer accounts, customer lists and contracts
(customer assets). The Company assumed no liabilities of Lead Machine, Inc. The
Company has agreed to pay the seller a fee for new or renewal customer assets of
the greater of $50.00 or ten percent of the fees generated by the Company per
customer subscribing to Millionaires Island after November 1, 1999. The seller,
at her option, could terminate the Company's right to use the Millionaires
Island assets (customer assets) if the Company does not reach a minimum sales
standard by March 31, 2000.
Note 8. Commitments and Contingencies
Marketing Agreement
- -------------------
The Company entered into a marketing agreement dated April, 1999, with an
unrelated market entity to market websites. The Company advanced monies to the
marketing entity in the approximate amount of $145,600. In order to assist in
customer satisfaction, the Company did not process any customer credit cards
until the websites were operating in July, 1999. The Company because of
customer's' requests' began refunding credit card receipts in August, 1999 and
advanced amounts for unpaid sub-distributor commissions to the marketing entity.
The Company entered into a settlement agreement with the market entity and sales
persons on
Note 8. Commitments and Contingencies (Continued)
November 15, 1999 wherein the major shareholder agreed to transfer his personal
shares totaling 738,938 to the settling parties. The Company also agreed to pay
$86,067 in cash to settle any possible litigation.
The Company in the test market of supersite orders from customers after receipt
of revenue decided to refund all cash and credit card receipts as a matter of
goodwill upon discovery of significant sales allowances and sale returns. The
net result was to record revenues at zero after returns and allowances and
expense any test market advances to the market entity. The net amount recorded
as test market expense totaled $79,639 for the nine months ended September 30,
1999 and $42,149 for the three months ended September 30, 1999.
The Company entered into an operating lease for office space in July 1999. The
lease has a six month term with monthly payments of $2,794
55
<PAGE>
RBID.COM, INC.
(A Development Stage Company)
BALANCE SHEET
September 30, 1998
(Unaudited)
ASSETS
------
Software $ 15,660
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $ 1,772
--------
Total Current Liabilities 1,772
--------
Stockholders' Equity
Common stock, $0.001 par value, 50,000 shares authorized;
6,500,000 shares issued and outstanding 6,500
Additional paid in capital 11,050
Deficit accumulated during the development stage (3,662)
--------
Total Stockholders' Equity (13,888)
--------
Total Liabilities and Stockholders' Equity $ 15,660
========
56
<PAGE>
RBID.COM, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Period
Nine months Nine months October 4,1988
ended ended (Inception) to
September 30, September 30, September 30,
1999 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Revenue $ -- $ -- $ --
----------- ----------- -----------
Expenses:
General and administrative 1,520,819 3,662 1,525,638
Depreciation 1,220 -- 1,220
----------- ----------- -----------
Total Operating Expenses 1,522,039 3,662 1,526,858
----------- ----------- -----------
Operating Loss (1,522,039) (3,662) (1,526,858)
----------- ----------- -----------
Net Loss ($1,522,039) $ (3,662) ($1,526,858)
=========== =========== ===========
Per Share Information:
Weighted Average Shares Outstanding -
Basic and Diluted 7,783,500 2,144,444 1,670,411
=========== =========== ===========
Net Loss Per Common Share - Basic and Diluted $ (0.20) $ -- $ (0.91)
=========== =========== ===========
</TABLE>
57
<PAGE>
RBID.COM, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the period October 4, 1988 (Inception) to September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at October 4, 1988 -- $ -- $ -- $ -- $ --
Issuance of stock for services
September 1, 1989 1,000 1 999 (1,000) --
Forward stock split 1,000 to 1
May 19, 1998 999,000 999 (999) -- --
Issuance of common stock to purchase
software August 24, 1998 5,800,000 5,800 9,860 -- 15,660
Redemption of Common Stock
August 24, 1998 (1,000,000) (1,000) -- 1,000 --
Issuance of stock for services
rendered August 25, 1998 through
September 30, 1998 700,000 700 1,190 -- 1,890
Net loss for the year ended
September 30,1998 -- -- -- (3,662) (3,662)
---------- ---------- ---------- ---------- ----------
Balance, September 30, 1998 6,500,000 $ 6,500 $ 11,050 $ (3,662) $ 13,888
========== ========== ========== ========== ==========
</TABLE>
58
<PAGE>
RBID.COM, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Period
Nine months Nine months October 4, 1988
ended ended (Inception) to
September 30, September 30, September 30,
1998 1997 1998
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ($ 3,662) -- ($ 3,662)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Consulting services contributed 1,890 -- 1,890
Increase in operating assets:
Accounts payable 1,772 -- 1,772
-------- -------- --------
Net cash provided by operating activities: -- -- --
-------- -------- --------
NET INCREASE IN CASH -- -- --
CASH, beginning of year -- -- --
-------- -------- --------
CASH, end of period $ -- $ -- $ --
======== ======== ========
NON CASH TRANSACTION
Issuance of common stock for software $ 15,660 $ 15,660
SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the year for:
Interest $ --
Income taxes $ --
</TABLE>
59
<PAGE>
RBID.COM INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
Note 1. Summary of Significant Accounting Policies
Organization
The Company was incorporated 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. 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 businesses.
Net Income (Loss) Per Share
The net income (loss) per share is computed by dividing the net income (loss)
for the period by the weighted average of common shares outstanding for the
period. For the nine months ended September 30, 1998 and 1997 and for the period
October 4, 1998 (Inception) to September 30, 1998 potential common shares and
the computation of diluted earnings per share are not considered as their effect
would be anti-dilutive.
60
<PAGE>
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
significantly from those estimates.
Software
Software is being depreciated using the accelerated cost recovery method over a
life of five years. This depreciation method is designed to expense the cost of
the asset over its estimated useful life.
Impairment of Long-Lived Assets
The Company accounts for the carrying value of long-lived assets in accordance
with the requirements of FAS 121 "Accounting for the Impairment of Long-Lived
Assets". As of September 30, 1998, no asset impairment needs to be recognized.
Comprehensive Income
There were no items of other comprehensive income in the nine months ended
September 30, 1998 and 1997 and the period October 4, 1988 (Inception) to
September 30, 1998; thus, net income is equal to comprehensive income for the
period.
Note 1. Summary of Significant Accounting Policies (Continued)
Cash and Cash Equivalents
The Company considers all short-term, highly liquid investments with an original
maturity date of three months or less at date of purchase to be cash
equivalents. Cash and cash equivalents are stated at cost, which approximates
fair value.
Revenue Recognition
Revenue is recognized by the Company upon the delivery of the product or
completion of services rendered.
Advertising Costs
The Company expenses all advertising costs as incurred Concentration of Business
and Credit Risk. The Company has exposure to credit risk to the extent that its
cash and cash equivalents exceed amounts covered by federal deposit insurance.
The Company believes that its credit risk is not significant.
The Company plans to do business in the international market. The Company's
ability to collect the amounts due from its customers is affected by economic
conditions in its industry and the geographical area in which it conducts
business.
61
<PAGE>
Note 2. Stockholders' Equity
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.
Also, in 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.
In 1998 the Company issued 5,800,000 shares of common stock for software valued
at $15,660. Prior stockholders of common stock of the 1,000,000 outstanding
shares were redeemed in 1998.
In addition, the Company for the nine months ended September 30, 1998 issued
700,000 shares to consultants for services rendered valued at $1,890.
Note 3. Income Taxes
The Company anticipates it will have a Federal net operating loss carryforward
of estimated at $5,600, which will expire in the year 2018. The tax benefit of
this net operating loss of approximately has been offset by a full allowance for
realization.
Note 4. Year 2000
The Company has assessed its exposure to date sensitive computer software
programs that may not be operative subsequent to 1999 and has implemented a
requisite course of action to minimize Year 2000 risk and ensure that neither
significant costs nor disruption of normal business operations are encountered.
However, because there is no guarantee that all systems of outside vendors or
other entities on which the Company's operations rely will be Year 2000
compliant, the Company remains susceptible to consequences of the Year 2000
issue.
Note 5. Subsequent Events
In 1999 the Company received funds of approximately $252,000 from an exempt
securities offering pursuant to Regulation D Rule 504. Common stock was issued
based on a subscription price of $1.00 per share for the 1,000,000 share
offering. The costs of the offering of approximately $118,000 was recorded as a
reduction to additional paid in capital. Consulting service shares issued
totaled 630,000. The Company also issued 450,000 restricted shares for services
in 1999 at $1.00 per share.
62
<PAGE>
In 1999, the President of the Company entered into a stock purchase agreement
with an unrelated company pursuant to which the President agreed to sell and the
unrelated company agreed to purchase 2,300,000 shares of common stock of the
President's in the Company for a total consideration of $750,000. The unrelated
company assumed control of the Company and the directors and officers of the
Company resigned and new directors and officers were elected.
The Company entered into an operating lease for office space in July 1999. The
lease has a six month term with monthly payments of $2,794.
Note 6. Commitments and Contingencies
The Company entered into a marketing agreement dated April, 1999, with a firm to
market website sales. The agreement has been terminated based on terms of the
agreement due to a change in management. Certain claims are outstanding which
are being settled by the Company as they occur and based on the development
stage of the Company are considered material by management.
63
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
3(i) Original Articles of Incorporation and Amended and
Restated Articles of Incorporation. (Incorporated by
reference to Exhibits filed with Form 10SB filed with
the SEC on November 5, 1999.)
3(ii) Bylaws. (Incorporated by reference to Exhibits filed
with Form 10SB filed with the SEC on November 5,
1999.)
10 Material Contracts
(a) Contract with Concentric
(b) Employment Contract with Horst Danning*
(c) Employment Contract with Dr. Klaus Bartak*
11 Statement Re: Computation of Per Share Earnings
21 Subsidiaries of Registrant
(a) R-Way, Inc., a Delaware Corporation
*Incorporated by reference to Registrant's Form 10 filed on November 5, 1999.
64
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
RBID.COM, INC.
/s/Fred Wallace
-----------------------
Fred Wallace
Date: , 2000 Chief Financial Officer
----------
Pursuant to the requirements of 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.
<TABLE>
<CAPTION>
Signature Title Date
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
/s/Horst Danning Chairman of the Board, February 29,2000
- --------------- Director, and
Horst Danning Chief Executive Officer
/s/Dr. Klaus Bartak President and a February 29,2000
- ------------------- Director
Dr. Klaus Bartak
/s/Fred Wallace Chief Financial Officer February 29,2000
- ---------------
Fred Wallace
/s/Emilio Francisco Director February 29,2000
- -------------------
Emilio Francisco
Debra Martinez Secretary February 29,2000
- ---------------
Debra Martinez
</TABLE>
65
CONCENTRIC NETWORK CORPORATION
1300 BRISTOL STREET NORTH, SUITE 220, NEWPORT BEACH, CA 92660
CONCENTRIC HOST SERVER SOLUTIONS SERVICE AGREEMENT
This Concentric Host Server Solutions Service Agreement ("Agreement") is made
and entered into on this 12 day of 6, 1999 ("Effective Date") by and between
Concentric Network Corporation, Inc., a Delaware corporation ("Concentric") and
RBID.COM, INC. ("Customer"), a Florida corporation with its principal place of
business at 24461 Ridge Route Drive (2nd Floor), Laguna Hills, CA 92653.
The Parties hereto agree as follows:
1.0 SERVICES
Subject to the terms and conditions of this Agreement during the term of this
Agreement, Concentric will provide to Customer the goods and services
(collectively, the "Services") as described and selected in the applicable
Co-location Order Form(s) and/or the Managed Server Order Form(s) (each an
"Order Form") attached hereto as Exhibit A.
2.0 PAYMENT AND INVOICES
2.1 Fees. Customer shall pay concentric all fees indicated on the applicable
Order Form. These fees and charges may include a one-time set-up charge, as well
as certain monthly fees.
<PAGE>
2.2 Payment Terms. Billing will begin on the date that CNC notifies Customer
that the Service is available to Customer ("Anniversary Date"). Anniversary
Date, or availability, is the date regardless of whether Customer is prepared to
institute usage of the Service, when all services indicated on the Order Form
have been installed, activated, and have been successfully tested. Billing shall
reflect all corrected Services on the Order Form, and Customer is obligated to
pay CNC for such services. CNC shall invoice Customer monthly for the fees
payable under this Agreement, and Customer shall pay CNC such fees no later than
30 days after the invoice date. IF CNC does not receive payment in full for each
invoice within 30 days after the invoice date, CNC may add to Customer's account
late cxharge of 1.5% per month, or the highest amount allowed by law, whichever
is less.
2.3 Taxes. All fees are in United States dollars and exclude any applicable
taxes. Customer shall pay, indemnify and hold Concentric harmless from all
sales, use, value added or other taxes of any nature, other than taxes on
Concentric's net income, including panalties and interest, and all government
permit or license fees assesses upon or iwth respect to any fees due under this
Agreement (except to the extent Customer provides Concentric with a valid tax
exemption certificate). If any applicable foreign law requires Customer to
withhold amounts from any payments to Concentric hereunder: (a) Customer shall
affect such withholding, remit such amounts to the appropriate taxing
authorities and promptly furnish Concentric with tax receipt evidencing the
payments of such amounts; and (b) the sum payable by Customer upon which the
deduction or withholding is based shall be increased to the extent necessary to
ensure that, after such deduction or withholding , a net amount equal to the
amount Concentric would have received and retained in the absence of such
required deduction or withholding.
<PAGE>
3.0 REPRESENTATIONS AND WARRANTIES
3.1 General. Each party represents and warrants that it has the right and
authority to enter into this Agreement, and that by entering into this
Agreement, it will not violate, conflict with or cause a material default under
any other contract, agreement, indenture, decree, judgment, undertaking,
conveyance, lien or encumbrance to which it is a party or by which it or any of
its property is or may become subject or bound. Each party shall, at its own
expense, make obtain, and maintain in force at all times during the term of this
Agrement, all applicable filings, registrations, reports licenses, permits and
authorizations necessary to perform its obligations under this Agreement.
3.2 Compliance with Laws. Customer represents and warrants that no consent,
approval or authorization of or designation, declaration or filing with any
governmental authority is required in connection with the valid execution,
delivery and performance of this Agreement. Each party shall, at its own
expenses, comply with all laws, regulations and other legal requirements that
apply to it and this Agreement, including copyright, privacy and communications
decency laws.
3.3 Acceptable Use. Customer is solely responsible for the content of any
postings, date or transmissions using the Services, or any any other use of the
Services by Customer or by any person or entity Customer permits to access the
Services. Customer represents and warrants that it will: (a) not use any
Concentric equipment or services in a manner that (I) is prohibited by any law
or regulation or concentric policy, or to facilitate the violation of any law or
regulation or such policy; or (ii) will disrupt third parties' use or enjoyment
of any communications service or outlet; (b) not violate or tamper with the
security of any Concentric computer equipment or
<PAGE>
program; and (C) enter into an agreement with each of its end-users sufficient
to comply with the terms herein. If Concentric has reasonable grounds to believe
that Customer is utilizing the Services for any such illegal or disruptive
purpose Concentric may suspend or terminate Services immediately upon notice to
Customer.
3.4 DISCLAIMER. THE WARRANTIES SET FORTH IN THIS SECTION 3 ARE THE ONLY
WARRANTIES MADE BY CONCENTRIC. CONCENTRIC MAKES NO OTHER WARRANTIES OF ANY KIND,
EXPRESS OR IMPLIED, WITH RESPECT TO ITS SERVICES, ANY RELATED SERVICE OR
SOFTWARE, OR THE FITNESS OF THE SPACE FOR CUSTOMER'S USE. CONCENTRIC HEREBY
EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, OR NON-INFRINGEMENT, OR IMPLIED WARRANTIES ARISING FROM A
COURSE OF DEALING OR COURSE OF PERFORMANCE. NO ORAL OR WRITTEN INFORMATION GIVEN
BY CONCENTRIC, ITS EMPLOYEES, LICENSORS OR THE LIKE WILL CREATE A WARRANTY.
4.0 LIMITATION OF LIABILITY
UNDER NO CIRCUMSTANCES, INCLUDING NEGLIGENCE, WILL (A) CONCENTRIC OR ANYONE ELSE
INVOLVED IN ADMINISTERING, DISTRIBUTING OR PROVIDING THE SERVICES, OR (B) WITH
REGARD TO THIRD-PARTY SOFTWARE, THE APPLICABLE LICENSOR, BE LIABLE FOR ANY
INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES THAT RESULT FROM THE USE
OR INABILITY TO USE
<PAGE>
THE SERVICES, OR, IF APPLICABLE, THE THIRD-PARTY SOFTWARE, INCLUDING BUT NOT
LIMITED TO LOSS OF REVENUE OR LOST PROFITS, OR DAMAGES THAT RESULT FROM
MISTAKES, OMISSIONS, INTERRUPTIONS, DELETION OF FILES OR EMAIL, ERRORS, DEFECTS,
VIRUSES, DELAYS IN OPERATION OR TRANSMISSION, FAILURE OF PERFORMANCE, THEFT,
DESTRUCTION OR UNAUTHORIZED ACCESS TO CONCENTRIC'S RECORDS, PROGRAMS OR
SERVICES, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. IN THE EVENT OF ANY BREACH BY CONCENTRIC OF THIS AGREEMENT,
CONCENTRIC'S LIABILITY TO CUSTOMER WILL NOT EXCEED THE AMOUNT PAID TO CONCENTRIC
BY CUSTOMER DURING THE PREVIOUS TWELVE MONTHS. IN THE EVENT OF ANY BREACH BY THE
THIRD-PARTY LICENSOR OF THIS AGREEMENT, SUCH LICENSOR'S LIABILITY TO CUSTOEMR
WILL NOT EXCEED THE AMOUNT PAID FOR SUCH THIRD-PARTY SOFTWARE.
5.0 CONFIDENTIAL INFORMATION
5.1 Definition. For purposes of this Agreement "Confidential Information" shall
mean information indcluding, without limitation, computer programs, code,
algorithms, names and expertise of employees and consultants, know-how,
formulas, processes, ideas, inventions (whether patentable or not), schematics
and other technical, business, financial and product development plans,
forecasts, strategies and information marked "Confidential", or if disclosed
verbally, is identified as confidential at the time of disclosure. In addition
to the foregoing, with respect to Third-Party Software (as defined below),
Confidential Information shall also include any source or object
<PAGE>
codes, technical data, data output of such software, Documentation (as defined
below), or correspendence owned by the applicable Licensor. Confidential
Information excludes information that of the receiving party; (ii) was
rightfully known or becomes rightfully known to the receiving party without
confidential or proprietary restriction from a source other than the disclosing
party; (iii) is idependently developed by the receiving party without the
participation of individuals who have had access to the Confidential
Information; (iv) is approved by the disclosing party for disclosure without
restriction in a wirtten docuemnt which is signed by a fuly authorized officer
of such disclosing party; and (v) the receiving party is legally compelled to
disclose; provided, however, that prior to any such compelled disclosure, the
receiving party will (a) assert the privileged and confidential nature of the
Confidential Informqtion against the third party seeking disclosure and (b)
cooperate fully with the disclosing party in protecting against any such
discosure and/or obtaining a protective order narrowing the scope of such
disclosure and/or use of the Confidential Information. In the event that such
sprotection against disclosure is not obtained, the receiving party will be
entitled to disclose the Confidential Information, but only asl, and to the
extent, necessary to legally comply with compelled disclosure.
5.2 Nondisclosure. Until the later of three (3) years from the Effective Date,
or the expiration of the then current term as set forth on the Order From [sic],
each party agrees to maintain all Confidential Information in confidence to the
same extent that it protects its own similar Confidential Information, but in no
event less than reasonable care, and to use such Confidential Informaiton only
as permitted under this Agreement; in addition, with respect to the Confidential
Information of the Third-Party Software Licensor, Customer agrees that it shall
not use or disclose such information at an time either during the term or after
the termination of this
<PAGE>
Agreement, except as required by law. Each party agrees to take all ressonable
precautions to prevent any unauthorized disclosure or use of Confidential
Informaiton including, without limitation disclosing Confidential Information
only to its employees: (a) with a need to know to further permitted uses of such
information; (b) who are parties to apppropriate agreements sufficient to comply
with this Section 5; and (c) who are informed of the nondisclosure/nonuse
obligations imposed by this Section 5; and both parties shall take appropriate
steps to implement and enforce such non-disclosure/non-use obligations.
5.3 Terms of Agreement Confidential. Subject to Section 7.1, each of the parties
agrees not to disclose to any third party the terms of this Agreement hereto,
except to advisors, investors and others on a need-to-know basis under
circumstances that reasonable ensure the confidentiality thereof, or to the
extent required by law.
5.4 Injunctive Relief. In the event of an actual or threatened breach of the
above confidentiality provisions, the nonbreaching party will have no adqequate
remedy at law and will be entitled to immediate injunctive and other equitable
relief, withoutbond and without the necessity of showing actual money damages.
6.0 TERM AND TERMINATION\
6.1 Term. This Agreement will commence on the Effective Date and continue for
the term elected by Customer as set forth on the Order Form which will begin on
the Anniversary Date. The initial term of any Order Form placed pursuant to this
Agreement for either Co-location or Managed
<PAGE>
Server Services shall be a minimum of one (1) year. Absent written notice by
either party thirty (30) days prior to the end of the initial term or any
successive renewal terms, this Agreement will automatically renew for successive
one (1) year terms under the prices then in effect for the Services.
6.2 Termination. A party may terminate this Agreement upon written notice to the
other party:
(a) For any material breach of this Agreement, which the defaulting party fails
to cure within thirty (30) days following written notice by the non-defaulting
party of such breach; or
(b) Upon the other party's insolvency or liquidation as a result of which such
party ceases to do business for a continuous period of at least three (3)
months.
6.3 Effect of Termination. Customer shall comply with all applicable procedures
related to equipment removal upon termination. The obligations of Sections 3, 4,
5, 6.3 and 9 will survive any expiration or earlier termination of this
Agreement. In the event of any expiration or earlier termination of this
Agreement, Customer will (a) if applicable, immediately stop using the Third-
Party Software, and in the applicabvle Licensor's sole discretion, return or
destroy all copies of the Third-Party Software, Documentation (each as defined
below) and data output of such software; and (b) be obligated to pay to
Concentric fees and other charges incurred prior to termination. In addition, if
Customer fails to pay any invoice(s) for forty-five (45) days or more from the
date of this oivoice, Customer shall be denied access to the Space (as defined
below) until such time as the invoice(s) has been paid in full. Upon
cancellation Concentric reserves the
<PAGE>
right to retain customer-woned equipment until all amounts due and payable to
Concentric have been settled. Finally, within ten (10) dayus after the
termination of this Agreement, if requested, Customer shall return to the
disclosing party all originals and copies of all Confidential Information which
has been fixed in any tangible medium of expression. If return of digital copies
is impractical, Customer may destroy the digital copies and send the disclosing
party written certification of such destruction.
7.0 MARKETING AND PROMOTION
7.1 Press Release. The parties may agree to cooperate to prepare and release a
joint press release rgarding this Agreement, subject to the approval of each
party, which must not be unreasonably withheld or delayed.
8.0 FACILITIES
8.1 The folowing terms and conditions will apply only if Customer has filed a
Co-Location Order Form:
(a) License to Occupy. For purposes of this Agreement, "Sapce" means the
Concentric facilities where Customer's hardware and software are stored and
operated. Concentric grants to Customer a non-exclusive license to occupy the
Space. Customer acknowledges that it has been granted only a license to occupy
the Space and that it has not been granted any real property interests in the
Space.
<PAGE>
(b) Servides. Cocentric will provide Customer with the services ("Services") as
specified in the Order Form (i.e., "Remote Hands").
(c) Exclusions. Services shall not include services for problems arising out of
(i) modification, alteration or addition or attempted modification, alteration
or addition of hardware undertaken by persons other than Concentric or
Concentric's authorized representatives, or (ii) hardware supplied by Customer.
(d) Material and Changes. Customer shall comply with all applicable rules and
regulations, including equipment installation or de-installation, and alteration
of the Space. Customer shall not make any changes or material alterations to the
interior or exterior portions of the Space, including any cabling or power
supplies for its hardware. Customer agrees not to erect any signs or devices to
the exterior portion of the Space.
(e) Damage. Customer agrees to reimburse Concentric for all reasonable repair or
restoration costs associated with damage or destruction caused by Customer's
personnel, Customer's agents, Customer's suppliers/contractors, or Customer's
visitors during the term or as a consequence of Customer's removal of its
hardware or property installed in the Space.
(f) Insurance. Custoemr shall maintain, at Customer's expense, Insurance
covering equipment and personal property owned or leased byCustomer and used or
stored on Concentric's premises. Customer shall also maintain insurance covering
the equipment or property owned or leased by Customer against loss or physical
<PAGE>
damage. If so requested, Customer will provide CNC written evidence of insurance
coverage consistent with the requirements of this subsection.
(g) Customer Duties. Customer shall document and promptly report all errors or
malfunctions fo the hardware to Concentric. Concentric shall take all steps
necessary to carry out procedures for the rectification of errors or
malfunctions within a reasonable time. Customer shall maintain a current backup
copy of all programs and dates. Customer shall properly train its personnel in
the use of the hardware.
(h) Third-Party Software. For purposes of this Agreement, "Third-Party Software"
means those products indicated as such on the Order Form. If Customer purchases
any Third-Party Software, Customer hereby agrees to be bound by the following
terms and conditions, and further agrees to enter into all applicable
agreements, if any, which such third-party requires of Concentric.
(i) Customer is granted a non-exclusive, nontransferable right to install and
use the Third-Party Software in object code form only, accompanying
documentation ("Documentation"), and data output of such software solely for
Customer's internal use. Such license is not transferable or assignable by
Customer, in whole or in part, whether voluntarily or bymerger, consolidation or
sale, or otherwise by operation of law. Customer may make one backup copy of the
Third-Party Software for archival purposes only.
ii. Title to the Third-Party Software shall be retained by the applicable
Licensor of such software. No right, title, or interest in the Third-Party
Software or Documentation is granted or conveyed to Customer by implication or
otherwise.
<PAGE>
iii. Customer acknowledges that the applicable Licensor can only control such
Licensor's servers and therefore such Licensor cannot guarantee delivery of all
data output registered by Customer in any given time period.
iv. Except for any backup archival copies permitted herein, Customer may not,
and shall not allow other to, copy, modify, translate, disassemble, decompile,
reverse engineer or create derivative wroks of the Third-Party Software,
Documentation or data output of such software,
v. Customer shall not disclose the results of any benchmark costs of the
Third-Party Software or data output of such software to any third party; provide
third parties access to the Third-Party Software, Documentation or data output,
sublicense, rent, lease, barter, sell, or otherwise distribute the Third-Party
Software, Documentation or other data output; or use any technical information
in any way related to or acquired by use of the Third-Party Software for the
prospective economic advantage of any third-party. Notwithstanding the
foregoing, Customer may publish and disseminate summaries of the data output
performed and transmitted by the Third-Party Software provided that Customer
attributes the applicable Licensor as the source of the data output or
information on which such summaries are based.
vi. CUSTOMER HEREBY ACCEPTS THE SOFTWARE AND DATA "AS IS" WITH NO EXPRESS OR
IMPLIED WARRANTIES OR CONDITIONS OF ANY KIND, INCLUDING, WITHOUT LIMITATION,
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THE APLICABLE
LICENSOR NEITHER ASSUMES, NOR AUTHORIZES ANY OTHER PERSON TO ASSUME FOR IT, ANY
<PAGE>
OTHER LIABILITY IN CONNECTION WITH THE SOFTWARE, DATA, OR ANY OTHER INFORMATION,
INCLUDING, WITHOUT LIMITATION, LIABILITY ARISING OUT OF THE DELIVERY,
INSTALLATION, SUPPORT OR USE OF THE SOFTWARE, INFORMATION OR DATA. SUCH LICENSOR
DIES NOT WARRANT THE RESULTS OF ANY PROGRAM OR SERVICE OR THAT ANY ERRORS IN THE
SOFTWARE WILL BE CORRECTED, OR THAT THE SOFTWARE WILL MEET CUSTOMER'S
REQUIREMENTS OR EXPECTATIONS. SUCH LICENSOR CANNOT GUARANTEE AND DOES NOT
WARRANT THE ACCURACY OF THE DATA DELIVERED TO CUSTOMER OR THAT DATA IS
TRANSMITTED TO CUSTOMER WITHOUT INTERRUPTION OR DELAY.
Customer asserts and acknowledges that prior to execution of this Agreement,
Customer had sufficient opportunityt o evaluate the Third-Party Software,
Documentation, and data output delivery of such software to become familiar with
their performance and operation.
8.2 The following terms and conditions will apply only if Customer has filled
out Managed Server Order Form.
(a) Services. Concentric will provide Customer with the services as specified in
the Order Form.
(b) Service Level Agreement. Concentric agrees that its Managed Server downtime
will not exceed 4.33 minutes per day, or 30.3 minutes per week,or 130 minutes
per month. If in any calendar month, Customer's server is down for more than 130
minutes (exclusive of (i) scheduled maintenance windows and (ii) customer
<PAGE>
enabled faults), Concentric will credit to Customer's account twenty-five perent
(25%) of each month's Managed Server fee, as set forth in the Order Form.
8.3 Regulations. Customer shall comply with all applicable operational rules and
regulations, while on Concentric's premises and while under Concentric escort.
Concentric may, in its sole discretion, limit Customer's access to a reasonable
number of authorized Customer employees or designee. Customer shall not
interfere with any other customers of Concentric, or such other customers' use
of Concentric's facilities.
8.4 Assumption of Risk. Customer hereby assumes any and all risks associated
with Customer, its agents (including contractors and sub-contractors) or
employees' use of the space and shall indemnify, defend and hold harmless
Concentric from any and all claims, liabilities, judgments, causes of action,
damages, costs, and expenses (including reasonable attorneys' and experts'
fees), caused by or arising in connection with such use.
9.0 GENERAL PROVISIONS
9.1 Assignment. This Agreement will be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and assigns.
Notwithstanding the above, Customer may not assign its rights or obligations
under this Agreement without the prior written consent of Concentric. Any
assignment in violation of this Section shall be null and void.
9.2 Independent Contractors. The parties will have the status of independent
<PAGE>
9.2 Independent Contractors. The parties will have the status of independent
contractors and nothing in this Agreement should be deemed to place the parties
in the relationship of employer- emploee, principal-agent, or partners in a
joint venture.
9.3 Waiver. The failure of either party to enforce at any time any of the
provisions of this Agreement, or the failure to require at any time performance
by the other party of any of the provisions of this Agreement, should in no way
be construed to be a present or future waiver of such provisions, nor in any way
affect ther right of either party to enforce each and every such provision
thereafter. The express waiver by either party of any provision, condition or
requirement of this Agreement will not constitute a waiver of any future
obligation to comply with such provision, condition or or requirement.
9.4 Severability. If any provision of this Agreement is helf by a court of
competent jurisdiction ot be invalid, illegal, or unenforceable under present or
future laws, such provision will be struck from the Agreement and the remaining
provisions of this Agreement shall remain in full force and effect.
9.5 Monitoring of Content. Concentric, at its sole discretion, may elect to
electronically monitor the Concentric network and may disclose any content or
records concerning Customer's account as necessary to satisfy any law,
regulation, or other governmental requirestor to properly operate the Concentric
network and protect any of its customers. Customer acknowledges and expressly
agrees that Concentric will not be liable to Customer or its customers for any
action Concentric takes to remove or restrict access to obscene, indecent or
offensive content made available by Customer, nor for any action taken to
<PAGE>
restrict access to material made available in violation of any law, regulation
or rights of a third party, including but not limited to, rights under the
copyright law and prohibitions on libel, slander and invasion of privacy.
9.6 Indemnity. Customer shall indenmify, defend and hold harmless Concentric,
and/or, if applicable, the Licensor of the Third-Party Software, from any and
all dmaages, liabilities, costs and expenses (including but not limited to
reasonable attorneys' fees) incurred (a) by Concentric as a result of any
threatened or actual suit against Concentric arising out of or in connection
with: (i) information or content provided, accesses or made available by
Customer on Concentric's network; and (ii) Customer's gross negligence or
deliberate wrongdoing in performance under this Agreement and (b) by the
applicable Third-Party Software Licensor as a result of any threatened or actual
suit against such Licensor arising from Customer's use, summarization,
ordissemination of any data output of such software, including, without
limitation, trade libel and slander.
9.7 Force Majeure. Either party will be excused from any delay or failure to
perform any obligation unmder this Agreement if such failure is caused by the
occurrence of any event beyond the reasonable control of such party, including
but not limited to, acts of God, earthquake, labor disputes and strikes, riots
or war. The obligations and rights of the party so excused shall be extended on
a day-to-day basis for the period of time equal to that of the underlying cause
of the delay.
9.8 Governing Law. This Agreement will be deemed to have been made in the State
of claifornia, and the provisions and conditions of this Agreement will be
<PAGE>
governed by and interpreted in accordance with the laws of the State of
California, without regard to conflict of laws principles thereof.
9.9 Arbitration. Anyu dispute or claim arising out of or in connection with this
Agreement or the performance, breach or termination thereof, will be finally
settled by binding arbitration in San Jose, California under the Rules of
Arbitration of the American Arbitration Association by an aribtrator appointed
in accordance with those rules. Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
Notwithstanding the foregoing, either party may apply to any court of competent
jurisdiction for equitable relief without breach of this arbitration provision.
9.10 Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties with respect to the subject matter hereof, and
supersedes all prior agreements and understandings between the parties, whether
written or oral with respect to the subject matter hereof. No modification of
this Agreement shll be binding upon the parties hereto unless evidenced in
writing duly signed by authorized representatives of the respective parties
hereto.
9.11 Notices. Any required notices hereunder shall be given in writing via
electronic mail and by certified mail or overnight express delivery service
(such as DHL) at the address of each party avove or as indicated on the
applicable Order Form, or to such other address as either party may from time to
dime substitute by written notice. Notice shall be deemed served when delivered
or, if delivery is not accomplished by reason of some fault of the addressee,
when tendered.
<PAGE>
Customer and Concentric's authorized representatives have read the foregoing and
all documents incorporated therein and agree and accept such terms.
CUSTOMER REPRESENTATIVE CONCENTRIC NETWORK CORPORATION
By: /s/Peter Ferras By
- ------------------- --
Print Name: Peter Ferras Print Name:
(Authorized Signature) (Authorized Signature)
Title: President/CEO Title:
<PAGE>
<TABLE>
<CAPTION>
June 11, 1999
Concentric Network Prepared for:
Jason Stein Jim Ferras
1300 Bristol Street North RBID
Suite 220 (949) 470-4576
Newport Beach, CA 92660 (310) 779-9268
(800) 711-8030, ext 274
(949) 250-7265
One time/Non-Recurring Costs
<S> <C> <C> <C> <C> <C>
Sales
Qty. Part # Description Price/Unit Subtotal Tax
1 Managed Server Set Up Fee $650.00 $650.00
Deluxe Concentric Host Managed Server
Dual Pentium II/512 cache, 450 MHZ=ASUS BX
256 MB DIMM (to 512 cache) PC-100-SDRAM
Hard Disk: 9.1 GB IBM, Ulta SCSI 3
32-Bit PCI Graphics Card w/1MB DRAM
Ethernet 10/100 MB
50 GB monthly data transfer
8" rack space included
5 business day set up time upon payment receipt
NT or Unix operating system
6 IP addresses
Unlimited email to the limitations of the server
itself
Services: Remote Hands 100 and 200
Bandwidth utilization Reports
Pushing a button
Power Cycling (turning on and off equipment)
Securing Cabling to Connections
Observing, describing, or reporting on indicator
lights or display information on machines
or consoles
Typing commands on a keyboard console
Cable organization, ties or labeling
File Server Back-up
Subtotal (without sales tax) $650.00
Calif. Sales Tax (7.75%)
Non-Recurring Costs Total* $650.00
Monthly Charges
Qty. Part# Description Price/Unit Total Sales Tax
1 Deluxe Managed Server (Rented Server w/50 GB) $950.00
1 Mail Server (10 GB of Transfer/mo.) $260.00
Remote hands 100 and 200 Services included
Subtotal $1,210.00
Calif. Sales Tax (7.75%)
Recurring Costs Total* $1,210.00 x 3mos.
=$4,280.00
Comments:
12 month agreement
*Subject to Terms and Conditions of Service afrement [sic]
Signature /s/ signature illegible
</TABLE>
RBID.COM, INC.
--------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
Statement of Computation of Earnings per Share
----------------------------------------------
AVERAGE
WEIGHTED LOSS
YEAR SHARES LOSS PER SHARE
1989 1,000,000(1) $ 1,000 0
1997 1,000,000 $ 0 0
1998 3,286,896 $ 4,819 0
9/30/99
(Nine Months) 7,783,500 $1,522,039 .20
Inception - 10/4/88 to
9/30/99 1,670,411 $1,526,858 .91
(1) Restated for forward stock split of common stock 1,000:1.
