SECOND AMENDMENT TO THE
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Rhino Enterprises Group, Inc.
(Name of Small Business Issuer in its charter)
Nevada 88-0333844
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification
number)
2925 LBJ Freeway, Suite 188, Dallas, Texas 75234
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: (972) 241-2669
Securities to be registered under Section 12(b) of the Act:
Title of each class to be so registered: n/a
Name of exchange on which each class is to be registered: n/a
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001 per share
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TABLE OF CONTENTS
Page No.
Part I
Item 1. Description of Business 1
Item 2. Management's Discussion and Analysis 17
Item 3. Description of Property 22
Item 4. Security Ownership of Certain
Beneficial Owners and Management 22
Item 5. Directors, Executive Officers,
Promoters and Control Persons 24
Item 6. Executive Compensation 27
Item 7. Certain Relationships and Related
Transactions 31
Item 8. Description of Securities 33
Part II
Item 1. Market for Common Equity and Related
Stockholder Matters 34
Item 2. Legal Proceedings 35
Item 3. Changes In and Disagreements with
Accountants 35
Item 4. Recent Sales of Unregistered
Securities 36
Item 5. Indemnification of Directors and
Officers 39
Part F/S 39
Part III
Item 1. Index to Exhibits 85
Item 2. Description of Exhibits 85
Signatures 85
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
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Rhino Enterprises Group, Inc. (the "Company" or "Rhino")
was originally incorporated in Nevada on March 3, 1995 as Unique
Fashions, Inc. ("Unique"), with the stated business plan of
producing, marketing and selling children's specialty garments.
Unique's common stock was approved for trading on the Over-the-
Counter Bulletin Board as "UNQF."
On March 25, 1999, the Company effected a tax-free spin-off
transaction of its former wholly-owned subsidiary, Unique Ideas,
Inc. (formerly Unique Products, Inc.), a Texas corporation. The
stock of Unique Ideas, Inc. was distributed on a pro-rata basis
to the stockholders of the Company on March 25, 1999.
On April 30, 1999, the Company effected a one-for-twenty (1
for 20) reverse stock split of its common stock, changed its name
to Rhino Enterprises Group, Inc. and changed its stock symbol to
"RHNO." The Company's web-site is located at www.rhino-inc.com.
On May 13, 1999, the Board of Directors of Rhino approved a
stock-for-stock purchase agreement between Rhino and the
shareholders of Framing Systems, Inc., a Nevada corporation
("Framing"). From May 17, 1999 to December 2, 1999, the majority
of the Framing shareholders exchanged their shares of Framing
common stock into shares of the Company's common stock on a one
share of Rhino common stock for twenty-five shares of Framing
common stock basis, eventually making Framing a 65%-owned
subsidiary of the Company. At December 31, 1999, an aggregate of
6,584,000 shares of Framing had been exchanged for an aggregate
of 263,360 shares of the Company. Three shareholders executed the
stock for stock exchange agreement but have not been able to
produce an original certificate or provide proper documentation
regarding a lost stock certificate to facilitate the exchange of
their Framing Systems shares into the Company's common stock.
These three shareholders hold an aggregate of 310,000 shares of
Framing which will be exchanged into 12,400 shares of the
Company's common stock upon presentment of their original Framing
stock certificate or proper documentation for a lost stock
certificate. When these shares are actually issued by the
Company, the Company will own 68% of Framing. At the time the
Company entered into this transaction, it had a pre-existing
relationship with Framing by virtue of the fact that Framing's
previous president, David H. Carl, was the president of Rhino and
both companies share office space.
On November 12, 1999, Rhino acquired 50% of the outstanding
stock of R&R Foods, Inc., a Texas corporation ("R&R"). Rhino
acquired this 50% ownership for the cash payment price of
$46,000, which was previously paid by a third party. Rhino
entered into a promissory note for the repayment of the $46,000
to the third party. R&R currently operates one Great Outdoors
restaurant location in Arlington, Texas. R&R also has the
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exclusive franchise right to open two additional Great Outdoors
stores in the Dallas-Fort Worth, Texas metroplex area. At the
time of this transaction, there was no pre-existing relationship
with the owners of R&R Foods.
On October 27, 1999, Rhino entered into a letter of intent
to acquire Executive Assistance, Inc., a Nevada corporation
("Executive Assistance"), which transaction closed on November
18, 1999. Executive Assistance is a firm engaged in the business
of providing administrative functions to small businesses. The
terms of the acquisition were based on a stock-for-stock
exchange, whereby the Executive Assistance shareholders exchanged
100% of the outstanding stock (4,000,000 shares) of Executive
Assistance for 80,000 shares of the Company's common stock. This
transaction made Executive Assistance a wholly-owned subsidiary
of the Company. At the time of this transaction, there was a pre-
existing business relationship between Mary Magouirk, the
president of Executive Assistance, and the officers and directors
of the Company. Furthermore, Robert W. Moehler, President of the
Company, was an indirect affiliate of Executive Assistance.
On November 24, 1999, for the cash purchase price of $2,000,
the Company subscribed to 100% of the founder's stock in
Eyesite.com, Inc., a Delaware corporation ("Eyesite" or
"Eyesite.com") the Company incorporated in May of 1999, thus
making Eyesite.com a wholly-owned subsidiary of the Company.
Eyesite.com's corporate headquarters are located at 2925 LBJ
Freeway, Suite 188, Dallas, Texas. Since the Company created the
Delaware corporation, Eyesite.com, Inc., there was a pre-existing
affiliation with at the time the Company subscribed to 100% of
the stock of Eyesite.com. Subsequently, on December 29, 1999,
Eyesite.com purchased all of the assets related to and including
the registered web site www.eyesite.com from Dr. Gary Edwards.
These assets included all rights, title and interest in and to
the website eyesite.com, customer/marketing files and
information, contract rights, income from the business,
intellectual property and more. These assets are described in
more detail in the Asset Purchase Agreement, which is filed as
exhibit 10.0 to this Second Amendment to the Form 10-SB. The
purchase price consists of a note payable totaling $50,000 and
the greater of 500,000 shares of Eyesite.com common stock or 10%
of the outstanding common stock of Eyesite.com on the date of
closing. Eyesite.com is positioning itself to be a marketing and
buying cooperative to champion the independent eye care
professional and provide business-to-business and consumer
e-commerce, as well as to provide information regarding LASIK
vision correction.
On December 17, 1999 Rhino acquired 50% of the outstanding
stock of e-Data Alliance Corp., a Texas corporation ("e-Data").
The purchase price consisted of a cash payment to e-Data of
$200,000 and an obligation to provide $800,000 worth of
advertising/marketing services to e-Data. To facilitate this
obligation to provide $800,000 in marketing/advertising services,
the Company entered into a separate transaction with Money
Business, Inc., dba The Underground Shopper, a corporation owned
by Digital Information & Virtual Access, Inc., a Nevada
corporation ("DIVA"), to obtain $800,000 worth of
advertising/marketing, which will be invoiced to Rhino as actual
usage of services is incurred. e-Data
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currently operates web hosting and off-site data storage. It also
provides Web site design and database services. The servers
operated by e-Data are located in premium telecommunications
facilities located in Dallas. At the time of this stock purchase
of 50% of E-Data, the Company had a previous business (vendor-
type) affiliation with the principals of E-Data. None of the
principals of the non-Rhino owned E-Data shares are affiliates of
the Company.
On December 17, 1999 Rhino sold its 50% ownership of R&R
to Sarwin Family, LLC, a Texas Limited Liability Company, at the
same price for which it was purchased (net cost of zero to the
Company), which was $46,000, payable in the form of a promissory
note. Management of the Company has had, at various times over
the last several years, previous business consulting
relationships with Steve Sarwin, who manages the Sarwin Family,
LLC.
Information regarding the Company's advances to operating
and emerging entities is included in Note E to the Company's
Consolidated Financial Statements. Additionally, the information
regarding the Company's indebtedness is included in Note G to the
Company's consolidated financial statements.
It is the Company's intention to grow by developing business
partnerships and making strategic acquisitions. As part of its
ongoing corporate strategy, the Company will continue to seek
acquisition opportunities which will complement its existing
operations. The largest subsidiary of Rhino is its wholly-owned
Eyesite.com, Inc., a Delaware corporation.
Operating decisions for the various subsidiaries are made by
the managers of the business entities. The Company's Board of
Directors makes investment decisions and all other capital
allocation decisions for the Company. Likewise, the respective
subsidiaries' Board of Directors who make those decisions for
their companies.
The Company retained cash and investments at the holding
company level of $152,730.99 at December 31, 1999. Total
liabilities of Rhino at the same date were $3,935,485.73.
The Company will report, as of the end of its 1998 tax year,
aggregate consolidated net operating tax loss carry forwards
("NOLs") for Federal income tax purposes of approximately
$250,000. Management estimates that the 1999 tax operating loss
will be approximately $500,000, thus increasing the carryforward
to approximately $750,000. These losses will expire over the
course of the next 15 years unless utilized prior thereto. See
Note B of the Notes to Consolidated Financial Statements.
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Business of Issuer
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The Company is a holding company engaged in the acquisition,
incubation and development of start-ups and emerging-growth
companies. The Company provides management, consulting services
and financing to these entities. As the entities to which the
Company provides incubation services need funds, the Company
advances funds in the form of unsecured notes, on a short-term
basis, which notes are expected to be repaid or may be converted
into an equity position in the entity in satisfaction of the note
payable to the Company. The terms of such conversion, if any,
would be negotiable each time such notes mature. The Company will
develop a growth-oriented portfolio of companies utilizing
various business strategies. The Company's primary focus for
incubating growth is to develop a subsidiary company through a
consolidation process utilizing a combination of mergers and/or
acquisitions of comparable companies within a specified industry
that is highly fragmented and supports an overall trend towards
consolidation. In simple terms, a consolidation is the process
where multiple companies within a given market segment are merged
or combined through acquisitions and/or buyouts. The resulting
entity is more streamlined and competitive in the marketplace.
The Company identifies a targeted industry by utilizing a
criteria-based screening process that considers the following:
o a non-exploitative industry;
o an industry that has social value;
o revenue of the industry is greater than $200 million;
o industry has more than 40 established, profitable
independent companies with revenue between $500,000 and
$5,000,000;
o industry is not reliant on small number of large
customers; and
o industry creates quality employment.
In each of these selected industries, the Company targets a
company to be acquired that will become the growth platform or
nucleus for that industry. The Company then manages the
consolidation strategy by seeking out and acquiring comparable
companies with revenues of $5 million or less and, through its
management practices, endeavors to facilitate growth to $20 to
$25 million in profitable gross revenue. The Company intends to
use its current businesses as a base to acquire profitable
companies in each of the targeted industries. The Company plans
to then put into place higher level management controls and
accounting services, provide access to professional and
experienced legal counsel, and employ aggressive marketing
resources to enable the combination of these companies to realize
substantially greater growth and profitability than they are able
to achieve under current management. While the option exists to
retain each portfolio company in the family of Rhino companies,
the Company intends at some stage in each portfolio company's
development to seek to sell it off to a larger consolidator or
spin it off in an Initial Public Offering.
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The Company anticipates that its revenue will include fees
and expense reimbursements provided in connection with its
incubation services, interest income on funds advanced in the
form of notes, and the earnings of its subsidiaries and its
equity-method investees. The Company has defined its current
business segments as incubation of start-ups and emerging-growth
companies and e-commerce enterprises. Eyesite.com is currently
the only material e-commerce entity, while Rhino Enterprises
Group, Inc. (the parent), Executive Assistance (a subsidiary) and
e-Data (the equity-method investee) are the only significant
components of the incubation segment.
Eyesite.com
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Eyesite.com is in the process of positioning itself to be
the premier Internet "portal of choice" for all information,
products and services related to vision correction and eye care.
Eyesite.com plans to pursue this objective by responding to the
exploding business opportunities immediately available through
the Internet and through the latest technological advances in the
$25 billion optical market (according to a 1998 Dain Rauscher
Wessels research report) for eye care. By utilizing
state-of-the-art technology, Eyesite.com intends to deliver the
highest quality information, services and products in a cost
effective and efficient manner and is determined to draw on the
vast resources of the Internet to most effectively reach
customers and eye care professionals. Eyesite.com intends to
enhance its existing web site, www.eyesite.com, to enable easy
storage and retrieval of eye care information and provide
innovative and reasonably priced products and services to draw
customers to private practice eye care professionals through its
site. Eyesite.com aims to make its web site the place where
people go for information, products and services in the vision
correction and eye care field.
The Eyesite.com web site will be the driving force of the
enterprise, and its continuously expanding web presence will
serve as the conduit for spreading of its information, products
and services. Eyesite.com anticipates being the vital link that
instantly connects eye care information, opportunities, and
private practice eye care professionals with consumers on a
twenty-four hour basis, seven days a week.
As specified below, the Eyesite.com web site currently
offers a limited number of services to both the consumer and the
private practice eye care professional. The scope of these
products and services will be expanded, as also outlined below,
to target both the consumer, the private practice eye care
professional, as well as vendors to the industry.
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Market for Products or Services
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A vast portion of the nation's population requires
eyeglasses or contact lenses to correct common refractive vision
disorders, and over 97 million Americans purchased eyewear in
1998, according to Jobson Optica Group's U.S. Optical Industry
Handbook 1999. These consumers, with a median age of
approximately 35 years old, spent a total of approximately $16
billion during 1998 on eyeglasses, contact lenses and other
corrective lenses. When professional services are included,
estimates for the total eye care market in North America were
approximately $36 billion. Consumers purchased retail optical
goods through three main retail channels: (1) private practice
ophthalmologists, optometrists and opticians, which accounted for
63% of sales, (2) retail chains, which accounted for 35% of sales
and (3) health maintenance organizations, which accounted for 2%
of sales. These expenditures are made to treat the symptoms of
what has become a fixable disorder. Companies in the optical
industry are meeting rising demand with innovative new products.
The innovations include advanced spectacle lens materials, high
performance sun wear and eyeglass frames, contact lenses,
pharmaceuticals that improve the treatment of eye diseases and
refractive vision correction (RVC).
The Internet has become an important alternative to
traditional media, enabling millions of consumers to seek
information, communicate with one another and execute commercial
transactions electronically. The number of worldwide web users is
expected to grow considerably over the next several years. The
Internet is distinct from traditional media in that it offers 24
hours a day, 7 days a week, real-time access to dynamic and
interactive content and instantaneous communication among users.
These characteristics, combined with the fast growth of Internet
users and usage, have created a powerful, rapidly expanding
direct marketing and sales channel. Advertisers can target very
specific demographic groups, measure the effectiveness of
advertising campaigns and revise them in response to real-time
feedback. Similarly, the Internet offers on-line merchants the
ability to reach a vast audience and operate with lower costs and
greater economies of scale, while offering consumers greater
selections, lower prices and heightened convenience, compared to
conventional retailing. The management team of Eyesite.com
believes that all participants in the eye care industry will
benefit from the Internet because of its unique attributes as an
open, low-cost and flexible technology for the exchange of
information and execution of electronic transactions.
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Portals such as AOL, Excite, The Go Network, Lycos, MSN, and
Yahoo! have established themselves as leading pathways for a
broad variety of information. Users are augmenting these portals
with subject-specific vertical portals (example: drkoop.com for
the healthcare industry), which are becoming a growing segment of
the Internet. These vertical portals are using brand awareness
driven by high quality topical content and significant market
resources to establish them as destinations for highly
concentrated groups of users.
Health and medical information is one of the fastest growing
areas of interest on the Internet. According to Cyber Dialogue,
an industry research firm, during the 12-month period ended July
1998, approximately 17 million adults in the United States
searched on-line for health and medical information, including
eye care information. Cyber Dialogue estimates that approximately
70% of the persons searching for health and medical information
on-line believe the Internet empowers them by providing them with
information before and after they go to a doctor's office.
Eyesite.com believes that establishing clear brand identity
as a trusted source of on-line consumer eye care information and
services, should provide a significant opportunity to capitalize
on multiple revenue sources. These include direct-to-consumer
advertising of the value of the laser vision correction procedure
at an affordable price and e-commerce of all types of eyewear.
Products, Sales and Marketing
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Eyesite.com has three principal thrusts for providing
products and services, one or more of which may be pursued
concurrently. In the first phase, Eyesite.com intends to rapidly
expand and enhance its existing web site, www.eyesite.com, in the
first half of the year 2000. The aim is to make this web site the
premier Internet gateway for vision care information and for
value shopping by consumers seeking eye care products and
services through e-commerce on the World Wide Web.
Currently, Eyesite.com offers on its web site: 1) the
ability for online appointment setting with participating
doctors; 2) the ability to get discounted eye exams from
participating doctors; 3) online retrieval of prescriptions for
eyeglasses and contact lenses by patients if their doctor elects
to make them available; 4) general information about eye care to
the consumer; 5) the ability for a consumer to ask an eye care
related question and to have it answered by a doctor via e-mail.
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Eyesite.com plans to offer, and is working on, the following
services: 1) consumer e-commerce for eye care products which will
actually be purchased from participating doctors; 2) business-to-
business e-commerce so that participating doctors can purchase
product and equipment online from vendors; 3) consumer access to
a database of most available eye glass frames to view, and if the
consumer has the ability, to put a digitized picture of
him/herself in to see how he/she would look with a given pair of
frames; 4) referrals for refractive surgery; 5) greatly expanded
eye care information database; 6) continuing education
opportunities for the eye care professional; 7) appointment
reminder service; 8) database mining and marketing for the
participating doctors; 9) and practice management software tools
online.
In the second phase, Eyesite.com intends to recruit a select
number of private practice eye care professionals in each
metropolitan area that it elects to enter to become Eyesite.com,
Inc. licensees. While enabling each eye care professional to
retain his/her independence, Eyesite.com intends to provide
certain benefits, as outlined in the Marketing section below.
These select eye care professionals will further facilitate the
branding of the "Eyesite.com" name. Further, they will become an
eye care professional of choice on the Eyesite.com web site.
In the third phase, Eyesite.com intends to establish laser
centers that lead the market in providing affordable laser eye
surgical procedures, without compromising quality of care. These
vision correction laser procedures will be marketed with the
intent to expand the availability to a greater segment of the
population with an emphasis on "quality and value at an
affordable price." Initially, these centers will be providing the
highly successful, rapidly growing and increasingly accepted
LASIK procedure. Since these centers will offer only these laser
refractive surgical procedures, the surgeons will be some of the
most experienced in the field, thus continuing to enhance the
objective of quality of care. This exclusivity of service offered
with below market pricing may potentially allow each center to
generate excellent cash flow and profits for Eyesite.com.
Additional patient options for corrective eye procedures will be
examined for potential inclusion in the menu of future services
to be provided.
The private practice eye care professional can be viewed as
a key gatekeeper for refractive procedures. These Eyesite.com
private practice eye care professionals will be encouraged to
refer a growing number of candidates for these procedures to each
laser center. Eyesite.com's aggressive cross-media marketing of
its Web Site will cause the Internet to become a strong marketing
tool for these laser centers.
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Eyesite.com will launch the campaign to market and provide
laser vision correction in Dallas/Ft. Worth, Texas area. After
successfully establishing the laser vision market in the
Dallas/Ft. Worth area, the Company will expand its presence to
numerous other metropolitan areas throughout the United States.
Eyesite.com intends to employ a dynamic marketing and
advertising plan to increase awareness of the web site address as
well as the products and services it offers. It aims to utilize
traditional advertising to include print, television and radio;
banner swaps; listings with major Internet search engines;
strategic alliances with leaders in the vision care industry; the
use of the new electronic magazine format, e-zines; and referral
partnerships to create a synergistic blend of influential tools
to drive consumers to our web site.
Eyesite.com intends to pursue three target audiences: (1)
the consuming public; (2) the private practice eye care
professional; and (3) vendors of vision related products. To the
consumer, Eyesite.com intends to provide the capability to:
o access information on any topic related to the eye and
its care;
o go on-line, ask an eye care question, and receive a
response from a qualified eye care professional;
o referrals for quality eye care refractive surgical
procedures at more affordable prices;
o search for an eye care professional in the consumer's
geographical area;
o set an appointment with an Eyesite.com affiliated eye
care professional, in real-time, on-line from anywhere
in the world;
o order discounted quality vision and eye care related
products and services 24 hours a day over the
Internet, such as: prescription glasses and frames,
contact lenses, sunglasses, eye exams, and eyeware
accessories, all of which would be picked up at the
nearest Eyesite.com private practice eye care
professional's location of the consumer's choosing;
o participate in chat rooms regarding vision related
concerns; and
o access a bulletin board for job opportunities in the
eye care industry.
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To the private practice eye care professional, Eyesite.com
intends to provide:
o brand identity as an Eyesite.com professional;
o web page on Eyesite.com's web site;
o intense geographic cross-media marketing;
o doctor listings;
o inexpensive web site hosting;
o e-mail;
o chat rooms;
o MIS assistance for improved profitability;
o patient referrals;
o appointment scheduling;
o product sales;
o better discounts on cost of goods sold;
o continuing education opportunities;
o access to the bulletin board to advertise employment
opportunities;
o opportunities for co-management revenues from Lasik
surgery; and
o retained independence.
To vendors, Eyesite.com intends to provide links to vendor
web sites and the opportunity to advertise vendor products and
services.
A relentless branding and marketing of the web site,
www.eyesite.com, will continually focus on increasing the number,
quality and value of visitors to the site. Eyesite.com intends to
take full advantage of the powerful trend that more than 60% of
the population of the United States requires eye glasses or
contact lenses and that during 1998 more than 100 million
consumers spent a total of some $16 billion on corrective vision
products. Eyesite.com plans to move quickly to reap the benefits
of the predicted expansion of the laser vision correction market
at an average annual pace of 40%-50% over the next several years.
Competition
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Optical retail is a competitive and fragmented industry.
Eyesite.com has a variety of competitors, including
ophthalmologists and optometrists in private practice,
traditional optical retail stores, including national optical
chains such as Sunglass Hut, Pearle Vision Center, Sterling
Optical, LensCrafters and National Vision Association and mass
merchandisers such as Wal-Mart, Sam's and Costco. In addition,
Eyesite.com intends to compete with non-traditional optical
retailers, such as retailers, mail order catalogs, direct
marketers such as 1-800 Contacts, and with other online web-based
optical retailers such as Shades.com and EyeCity.com. Eyesite.com
management recognizes that there will be many more online
competitors in the future, as barriers to entry are minimal, and
new competitors can launch competing websites at a relatively low
cost. These sites offer different services, many of which are
currently offered by, or will be offered by Eyesite.com.
Management has not located any eye care related web site that is
as all-encompassing for both the consumer and the private
practice eye care professional as is planned for Eyesite.com's
web site. Regardless of the services offered, marketing the web
site for brand recognition is critical to long-term success, and
none have done that to date, and management is not aware of any
competitors that exploit this to the fullest as is planned for
Eyesite.com.
In addition to competition, other challenges to the success
of Eyesite.com exist. Maintaining a multi-functional and dynamic
web site that operates as user-friendly and as smoothly as
possible in all of its functional areas demands that the best
technical talent be deployed to ensure minimal technical
problems. Privacy issues relative to patient records are
potential fears both from the consumer and the private practice
eye care professional are currently being addressed. While
internet use continues to grow, the branding of the Eyesite.com
name, causing the public's regular usage of the site is no small
task. Nevertheless, management believes that it is addressing
this task to bring the proper resources to bear to succeed.
The Eyesite.com management team believes that the principal
competitive factors it will have in its online market are brand
recognition, product selection, convenience, price,
accessibility, customer service, quality of search tools, quality
of site content and reliability and speed of fulfillment.
In the laser vision correction niche of Eyesite's industry,
there is intense competition. Individual companies compete with
other entities, including hospitals, individual ophthalmologists,
other laser centers and certain manufacturers of excimer laser
equipment, in offering laser vision correction. Laser centers
compete on the basis of quality of service, reputation and price.
The Company competes in two principal markets: the market for
laser vision correction and the consumer market for vision
correction.
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Within the consumer market for laser vision correction,
Eysesite faces competition from other service providers. As
market acceptance for laser vision correction continues to
increase, competition within this market will grow. The market
for laser vision correction is divided into three major segments:
corporate-owned centers, surgeon-owned centers, and institution-
owned centers. In the United States for the fourth quarter of
calendar 1998, the corporate-owned segment accounted for the
largest percentage of total procedure value with a 42% market
share according to The Market Scope, an industry source. The
surgeon-owned centers, which refer to ophthalmologists who have a
laser and perform laser vision correction procedures, accounted
for 39% of total procedures performed. The remaining 19% of laser
vision correction procedures were performed at institution-owned
centers, such as hospitals or universities.
Although competitors in certain regions may charge less for
laser vision correction than Eyesite.com, the management team
believes that the primary factors affecting competition in the
laser vision correction market are quality of service,
reputation, brand recognition and price, and that competitiveness
is enhanced by a strong network of highly qualified doctors.
In the laser vision correction arena, Eyesite.com competes
in fragmented geographic markets. Eyesite.com's principal
corporate competitors include: TLC, The Laser Centers, Laser
Vision Centers, LCA-Vision, Clear Vision Laser Centers, Omega
Health Systems and Icon Laser Centers. In each specific
geographic market, Eyesite.com will also compete with local
ophthalmologists and institutions.
Current Status of Eyesite.com
-----------------------------
In March 2000, Eyesite.com launched its campaign in the
Dallas/Ft. Worth, Texas market to license private practice eye
care professionals and to commence performing the Lasik
procedure. Currently, Eyesite.com is in discussions with a number
of private practice eye care professionals, with one having
signed on, who have expressed an interest in being part of the
Eyesite.com network. At least eight have received the necessary
applications. Without advertising, Eyesite.com is also receiving
e-mail inquiries from professionals from as far away as Canada
and Mexico who desire further information on how to participate.
Eyesite.com has also entered into an agreement with an
opthalmologist to perform the Lasik procedure, as well as having
made contractual arrangements with a laser center at which the
procedures will be performed.
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e-Data
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e-Data is an internet database and e-commerce hosting
company that offers its product services through its website,
www.edataalliance.com. e-Data began operations in May, 1999.
e-Data provides a wide range of hosting and enhanced Internet
services that enable its customers to publish and manage their
web sites and network-based applications more effectively than
internally developed solutions. e-Data provides hosting for
customers' web sites, software applications, and data on servers
typically housed in their data center so that others on the
Internet can access and interact with its customers' web sites
and network-based applications. e-Data web hosting services
provide a variety of hosting solutions to meet the needs of
businesses of all sizes, as their web sites develop from low-end
marketing brochures to more complex, interactive web sites and
finally to applications integral to their businesses. e-Data's
application hosting services provide its customers remote access
to mission-critical software applications and data 24 hours a
day, 7 days a week, 365 days a year.
Market for Products or Services
-------------------------------
The growth in computer and the World Wide Web usage combined
with enhanced functionality and accessibility have made the
Internet an increasingly attractive medium for businesses to:
O disseminate information;
O engage in e-commerce;
O build customer relationships;
O streamline and automate data-intensive processes; and
O communicate more efficiently with dispersed employees.
In the last several years, businesses have emerged with
operating models that are exclusively dependent on the Internet,
while traditional businesses of all sizes are working quickly to
establish a web presence. Many of these businesses establish
their initial online presence with a simple, static brochure for
marketing purposes. As they become more familiar with the
Internet as a communications platform, an increasing number of
businesses are implementing more complex, mission-critical
applications on the Web including sales, customer service,
customer acquisition and retention, employee communications and
e-commerce between suppliers and business partners.
-12-
<PAGE>
According to Forrester Research, Inc., U.S. firms are now
spending approximately 25% of their overall IT budgets on
outsourcing services. These services include packaged application
software implementation and support, customer support and network
development and maintenance. Reasons for the growth in
outsourcing include:
o the desire of companies to focus on their core
businesses;
o the increased costs that businesses experience in
developing and maintaining their networks and software
applications;
o the fast pace of technological change that shortens
time to obsolescence and increases capital
expenditures as companies attempt to capitalize on
leading-edge technologies;
o the challenges faced by companies in hiring,
motivating and retaining qualified application
engineers and IT employees;
o the desire of companies to reduce deployment time and
risk.
Many businesses, both small and large, lack the resources
and expertise to cost-effectively develop and continually enhance
their web sites with evolving technologies while maintaining a
network infrastructure that remains operational in the event of a
hardware or software failure as well as supports increased
bandwidth capability as their business grows. Small- to medium-
sized businesses typically lack the IT resources, capital and
scale to design their own web sites and install, maintain and
monitor their own web servers and Internet connectivity. Large
businesses typically require state-of-the-art facilities and
networks that are monitored and managed on a 24x7 basis by
experts in Internet technology and that can be upgraded and
scaled to meet the needs of mission-critical Internet
applications that may be integral to their businesses. As a
result, e-Data believes enterprises of all sizes are seeking
outsourcing arrangements to help:
o build effective web sites;
o improve their site's reliability and performance;
o provide continuous monitoring of their Internet
operations; and
o reduce costs.
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<PAGE>
Businesses increasingly face competitive demands to automate
business processes. This problem has been exacerbated by a
shortage of IT professionals. Until recently, implementation of
Internet applications required development of in-house software
applications or the customization of existing packages. This made
each implementation unique and costly. It also made
implementation time frames and costs unpredictable. The
management team of e-Data believes that businesses of all sizes
have a significant need to outsource the hosting of Internet and
other software applications to improve core business processes,
reduce costs and enhance their global competitive position.
Products, Sales and Marketing
-----------------------------
The management team of e-Data believes that a significant
market opportunity exists for a nationally-recognized hosting
solutions provider with the scale and expertise to offer a wide
range of value-priced services to businesses of all sizes. e-Data
currently offers a full range of hosting services that enable
businesses to deploy, use, expand and update their web sites and
applications infrastructures more rapidly and cost-effectively
than internally developed solutions. e-Data's current service
offerings comprise four main areas: web hosting, software
application hosting, consulting and web site design.
e-Data services include the following product offerings:
WEB HOSTING
o Virtual Hosting. Its virtual hosting solution provides
web site hosting on a server that is owned, managed
and housed by e-Data for multiple customers. This is
an economical solution for customers with simple or
moderately accessed sites.
o Dedicated Hosting. Dedicated hosting provides to a
single customer hosting for their web site on a
network server that is managed, housed and owned by
e-Data. This type of service enables a customer to
host complex web sites and applications without the
need to incur significant infrastructure and overhead
costs. This solution provides greater server and
network resources for e-Data customers than virtual
hosting and allows them to configure their
hardware to optimize site performance. Companies with
increasing levels of complexity, traffic or reliance
on their web sites may prefer dedicated hosting.
-14-
<PAGE>
o Co-located Hosting. Its co-located hosting solution
provides web hosting services on servers that are
owned by e-Data customers but which are managed and
housed by e-Data. In general, the co-located servers
are housed separately from e-Data shared and dedicated
servers in its data centers which they monitor on a
24x7 basis and to which they allow customers limited
access.
SOFTWARE APPLICATION HOSTING
Its application hosting solution, through which e-Data
manages software applications for its customers, is designed
to support its customers' Internet, intranet and extranet
projects through a variety of service and support options.
e-Data offers a range of application outsourcing services
which provide its customers with the ability to capitalize
on the latest Internet-enabled technologies while
outsourcing information technology operations such as
deployment strategies and maintenance and upgrades of
software to a third party.
CONSULTING
e-Data provides consulting services to its customers by
helping them bridge the gap between their data and
information and the Internet. e-Data Alliance provides a
complete solution for companies with complex mission-
critical web applications. In addition to providing hosting
services, e-Data helps companies design and develop
solutions to meet their business goals. e-Data also offers a
complete spectrum of business support services:
o Network architecture and design to assist a business
customer's staff in the development of detailed
network specifications and implementation tactics;
o Application development and implementation that
complements the customer's underlying network and
helps it achieve its business goals, minimizing the
high risk traditionally associated with custom
development;
o Strategic technology planning to ensure high
performance, long-term network operations that support
a customer's business objectives while accommodating
the unique needs of its user base; and
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<PAGE>
o Local area network (LAN), wide area network (WAN) and
virtual private network design (VPN) plus
implementation and support of highly complex, highly
resilient LAN, WAN and VPN infrastructures.
WEB DESIGN
e-Data provides web site design services. To accomplish
this, e-Data developed a new model for the web design
industry. e-Data does not employ a staff of web site
developers and graphic artists who are normally set in their
ways and by definition are generalists. Instead, e-Data
relies on the expertise of a national IT resources group to
contract on a case-by-case basis with an expert in the type
of design its client is requesting.
If a client requests a site with numerous Java applets, e-
Data contracts with a Java applet expert. If the client
wants Flash technology, e-Data contracts with a Flash
technology expert. Using this approach there is no wasted
learning curve and e-Data's clients receive the most
expertise for their money.
e-Data's IT resources group's staff of industry
professionals is focused on recruiting, screening, and
qualifying the best web design experts. Using their virtual
hiring staff, we select the experts necessary to create the
customers's web site. The end result: e-Data's customers'
web site is created by the right expert and in the most
cost-effective manner.
Competition
-----------
The market for web-hosting, data storage and web-design are
all highly competitive. e-Data is relatively new in operating in
these three areas and intends to expand its current customer base
significantly in the coming months. As e-Data is a new venture,
most of e-Data's competitors in these three areas have greater
financial, technical and marketing resources, larger customer
bases, longer operating histories, greater name recognition and
more established relationships in the industry than e-Data does.
Its current and prospective competitors generally may be
divided into the following groups:
o other Web hosting and Internet services companies such
as AboveNet Communications, Inc., Exodus
Communications, Inc., Frontier GlobalCenter, Globix
Corporation and local and regional hosting providers;
-16-
<PAGE>
o national and regional Internet service providers such
as Concentric Network Corporation, MindSpring
Enterprises, Inc., UUNET Technologies, Inc., PSINet
Inc. and Verio Inc.;
o global telecommunications companies including AT&T
Corp., British Telecommunications plc, Telecom Italia
SpA and Nippon Telegraph and Telephone Corp.;
o regional and local telecommunications companies,
including the regional Bell operating companies such
as Bell Atlantic Corporation and US West, Inc.;
o companies that focus on application hosting such as
USinternetworking, Inc. and IBM Global Services;
o multimedia hosting companies such as broadcast.com.
General Information of the Company
- ----------------------------------
The Company has no trademarks, patents or other licenses
that are material to the conduct of its business. Eyesite.com is
in the process of registering its logo and name.
Neither the Company nor its subsidiaries have material
research and development expenses.
The costs to the Company and its subsidiaries of complying
with environmental regulations are not material.
The Company currently employs approximately seven (7) full-
time employees at the corporate level. The aggregate total of
employees amongst the Company and its subsidiaries is
approximately 19. None of the Company's employees are members of
collective bargaining units. The Company believes its
relationships with its employees is good.
Item 2. Management's Discussion and Analysis
This registration statement includes, without limitation,
certain statements containing the words "believes,"
"anticipates," "estimates," "could," "plans to," and "predicts"
and words of a similar nature, which constitute "forward-looking
statements" meaning actual results could differ from projected or
expected results. In particular, the statements herein regarding
the Company's anticipated increased sales in the year 2000; the
continuity of growth of the Company and its subsidiaries; the
expected increase in wages and professional fees in the year 2000
and the percentage of increase thereof; the anticipated expansion
of the Company's operations in the year 2000; the anticipated
execution of a formal long term lease agreement for office space;
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<PAGE>
the increase or reduction of goodwill; the anticipated increase
in advertising expenses in the year 2000; the Company continuing
to make loans to other businesses as a way to pursue business
opportunities; the increase of interest expense in the year 2000;
the growth of interest income in the year 2000; the possibility
of extraordinary income in the year 2000; the anticipation that a
significant portion of the loans made to other companies will be
repaid in the year 2000; the anticipation that the Company will
be able to secure additional long term debt financing or equity
financing in 2000; the belief that the Company has the financial
resources and commitments needed to meet business requirements in
the foreseeable future; the anticipated significant growth
of its operations in 2000; the assertion that such growth will in
turn cause certain financial and operational areas of the Company
to change; the expected increase in the number of employees of
the Company; the assertion that such expansion of employees will
also significantly increase the funds utilized to provide
sufficient advertising & marketing, office space and equipment
for the increased staff and growth of the Company; and the
anticipation of the increase in expenditures for legal and
accounting services to meet the Company's various compliance
standards are all forward-looking statements. Forward-looking
statements reflect management's current expectations and are
inherently uncertain. The Company's actual results may differ
significantly from management's expectations.
Results of Operations
- ---------------------
The Company posted revenues of $9,922 for the year ended
1999 up from $0 in 1998. This increase was due to the acquisition
and development of its subsidiaries (Framing Systems and
Executive Assistance). The Company anticipates increased revenues
in 2000 as the operations of its subsidiaries continue to grow.
The income from our equity investment in e-Data for 1999 was
immaterial.
The Company's total general & administrative expenses
increased by approximately 2391%, from $31,652 in 1998 to
$756,952 in 1999. This dramatic increase in operating expenses
was attributable to the Company's pursuit of business activity
and acquisition candidates. Personnel costs and professional fees
grew from $0 in 1998 to $421,284 in 1999, as the Company
increased staff to handle the marketing, administrative,
management, legal, accounting and technological demands of its
increased business activity. The Company anticipates personnel
costs and professional fees to continue to grow into 2000, but
-18-
<PAGE>
they should not increase by as large of a percentage based
on 1999's total. Additionally, the Company's operating costs
increased from $20,804 in 1998 to $323,815 in 1999, an increase
of 1,556%. This increase was caused by the Company obtaining
lease space on a month to month basis and incurring marketing,
administrative and other costs related with doing business. With
the anticipated expansion of the Company's operations into 2000,
management anticipates operating costs to increase into 2000 as
we expect to enter into a formal long-term lease arrangement and
significantly increase the Company's advertising budget in 2000.
This is due to the Company's need to promote the products and
services of its subsidiaries and other equity investments.
Other Income/(Expense) went from ($12,500) in 1998 to $7,664
in 1999. The change was caused by a $21,697 increase in interest
earned by the Company on loans it has made to other Companies,
and a $12,746 profit that was attributable to a non-recurring
item. The change was also attributable to the Company's interest
expense increasing from $12,500 in 1998 to $26,779 in 1999, an
increase of 114%. The Company will continue to make loans to
other companies as a way to pursue business opportunities. The
increase in interest expense was caused by the Company incurring
additional debt to finance operations and acquisitions. The
Company anticipates that interest expense will continue to
increase into 2000 as the Company continues to expand and grow
its operations. Therefore, it is anticipated that interest income
for the Company will continue to grow into 2000. It is possible
that the Company will have other extraordinary income in 2000,
but at this time management cannot predict the source of any
potential extraordinary income.
Financial Condition
- -------------------
In 1999, the Company financed its operations through debt
and sales of common stock. In March and April of 1999, the
Company raised $67,355 through the sale of common stock. At year
end, cash and cash equivalents were $390,071 as compared to $0 at
December 31, 1998. The ratio of current assets to current
liabilities was .70 to 1 at December 31, 1999, compared to .002
to 1 at December 31, 1998.
Operating activities used $617,382 of cash in 1999, whereas
operating activities provided $10,311 of cash in 1998. This
change in cash provided as compared to cash used amounted to
$627,693. This was caused by the expansion of the Company's
business activity. The majority of the cash utilized by
operations in 1999 was attributable to general & administrative
costs.
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<PAGE>
Investing activities consumed $1,875,626 during 1999,
compared to $11,088 in 1998. Capital expenditures rose in 1999
from $11,088 in 1998 to $76,582 in 1999. These capital
expenditures were investments in property and equipment for the
expansion of the Company and to accommodate possible future
growth. Additionally in 1999, the Company made short-term loans
bearing 8% to 10% interest to various companies totaling
$1,584,044 which is an increase over 1998's total of $0. The
Company anticipates that a significant portion of these loans
will be repaid in 2000, thus providing a source of working
capital for the Company. Additionally, the Company made a
$200,000 equity investment in e-Data and expended $15,000 on
payments for intangibles. Both of these represent increases from
$0 in 1998.
Financing activity provided the Company with $2,881,971 as
of December 31, 1999 as compared to $0 in 1998. During 1999, the
Company received $3,392,949 of financing. There were three
sources of this financing. Digital Information & Virtual Access,
Inc. loaned to the Company a total of $1,342,949 in the form of
an unsecured note at 6% interest that is due upon demand.
Net.Return, Inc. provided $2,000,000 in the form of an unsecured
note at 10% payable by December 31, 2000. Dr. Gary Edwards
provided $50,000 of financing to facilitate the purchase of a
web-site at 0% interest payable in six equal monthly installments
of $8,333.33, beginning in January 2000. This financing
provided, in part, the funding for operations and investment
activities. Management of the Company does not anticipate needing
additional loans during the year 2000. Rather, management
believes that collections on advances, fees earned through
incubation services, interest income and reimbursement of
expenses will be sufficient for the Company's working capital
needs for the whole of the year 2000. Management anticipates
collecting on approximately $200,000 to $500,000 of outstanding
notes receivable in the third or fourth quarters of this year.
Management foresees that its options for repaying $3,082,736 in
notes payable are open. The Company could approach each lender to
negotiate the renewal and extension of the debt or discuss the
exploration of converting such debt into equity in the Company;
could locate other private financing to replace the current
financing; or could make an equity placement of securities to
raise funds to repay these outstanding notes. Any one or more of
these options may be used, as the Company is not committed to any
single course of action at this time.
The Company believes that it has the financial resources and
commitments needed to meet business requirements in the
foreseeable future, including capital expenditures and working
capital requirements. The Company anticipates significant growth
of its operations in 2000. This growth will in turn cause certain
financial and operational areas of the Company to change. The
most significant change in operations will be the number of
employees working for the Company. The Company currently has 7
full-time employees and out-sources most projects. In an effort
to bring these projects "in-house" and based on the expansion,
the Company anticipates having 35-50 full or part time employees
by the end of 2000. This expansion will also significantly
increase the funds utilized to provide sufficient advertising &
marketing, office space and equipment for the increased staff and
growth of the Company. Additionally, the Company will be required
to increase its expenditures for legal and accounting services to
meet its various compliance standards.
-20-
<PAGE>
Year 2000 Compliance
- --------------------
Prior to January 1, 2000, it was widely believed that many
computer systems used today would not be able to interpret data
correctly after December 31, 1999, because such systems allow
only two digits to indicate the year in a date. The Company and
its subsidiaries have been engaged, both before December 31, 1999
and after January 1, 2000, in assessing this Year 2000 ("Y2K")
issue as it relates to their businesses, including their
electronic interactions with banks, vendors, customers and
others. Even though the acute problems many anticipated relating
to the Y2K challenge did not materialize in any significant way
during the first month of 2000, this project, along with
developing and implementing solutions to the Y2K issue, if any
were to occur, is continuing. Management currently anticipates
that the project will be substantially completed by March 1,
2000, and will not have a material impact on the Company's
consolidated financial results or position.
The Company's consolidated financial results could also be
adversely affected if one or more of the companies in which it
has material investments or will have material investments are
materially adversely affected by the Y2K issue.
Eyesite.com and Executive Assistance rely primarily on
personal computers and popular contemporary business and
operating system software that management believes are year 2000
compliant.
E-Data is highly dependent on electronic data processing,
Internet and server technology and information systems in its
operations. E-Data management believes that its hardware and
operating system software are year 2000 compliant. E-Data has
identified the third parties material to its operations.
Management of E-Data is continuing to monitor and, in the case of
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<PAGE>
certain material third parties, has been able to test its
interface to the external systems of its third-party business
associates and believes that they are year 2000 compliant.
Management of E-Data believes that its electronic data processing
and information systems will be year 2000 compliant. However,
should any material system fail to correctly process information
due to the recent century change, operations could be interrupted
and this could have a material adverse effect on E-Data's results
of operations.
ITEM 3. DESCRIPTION OF PROPERTY
The Company rents from The Strateia Group, Inc., a related-
party shareholder, on a month-to-month basis approximately 4,705
square feet of office space located at 2925 LBJ Freeway, Suite
188, Dallas, Texas 75234, for a monthly rental of $6,496 per
month. This office space is utilized for the Company's corporate
offices and is in good condition and adequate for the Company's
current needs. There is currently unused space available in the
suite for the addition of a few more employees. However, as the
Company's corporate staff grows, the Company may relocate it
offices to a space that better utilizes is square footage. At
this time, the Company is not a party to any lease or other
written agreement for the utilization of its office space.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of
the date of filing this registration statement (unless otherwise
noted), with respect to the beneficial ownership of the common
stock by each officer and director of the Company, each person
(or group of persons whose shares are required to be aggregated)
known to the Company to be the beneficial owner of more than five
percent (5%) of the common stock, and all such directors and
executive officers of the Company as a group. Unless otherwise
noted, the persons named below have sole voting and investment
power with respect to the shares shown as beneficially owned by
them.
Title of Name and Address Amount & Nature Percent of
Class of Beneficial Owner of Beneficial Owner Class
- ---------------------------------------------------------------
Common Robert W. Moehler 140,605<F1> 8.9%
2925 LBJ Freeway
Suite 188
Dallas, Texas 75234
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<PAGE>
Common David H. Young 41,285<F2> 2.6%
2925 LBJ Freeway
Suite 188
Dallas, Texas 75234
Common Daniel H. Weaver 221,987<F3> 14.1%
2925 LBJ Freeway
Suite 283
Dallas, Texas 75234
Common David H. Carl 122,470<F4> 7.8%
2925 LBJ Freeway
Suite 188
Dallas, Texas 75234
Common Emmerson Finance, Ltd. 225,000<F5> 14.3%
c/o Belestra AG
Beethovenstr, Switzerland
Common The Strateia Group, Inc. 108,000<F6> 6.8%
2925 LBJ Freeway
Suite 188
Dallas, Texas 75234
- ----------------------------------------------------------------
Officers and directors
as a group (4 persons) 526,347 33.5%
================================================================
- ---------------------
<F1> As of March 30, 2000, Mr. Moehler has current ownership of
123,945 shares, which total includes 60,000 shares held in the
name of MFC Group, Inc., a corporation which is controlled by Mr.
Moehler. Mr. Moehler has options to purchase 250,000 shares of
the Company's common stock at $.25 per share, which vest monthly
(beginning November 1, 1999) in fifty-nine equal increments of
4,165 shares and one final increment of 4,265 shares, expiring
five years from the dates of vesting, five months of which have
been exercised. The above figure includes 16,660 shares, which
represents Mr. Moehler's right to exercise the options which have
vested (or will vest within the next 60 days).
<F2> As of March 30, 2000, Mr. Young has current ownership of
24,625 shares. Mr. Young has options to purchase 250,000 shares
of the Company's common stock at $.25 per share, which vest
monthly (beginning November 1, 1999) in fifty-nine equal
increments of 4,165 shares and one final increment of 4,265
shares, expiring five years from the dates of vesting, five
months of which have been exercised. The above figure includes
16,660 shares, which represents Mr. Young's right to exercise the
options which have vested (or will vest within the next 60 days).
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<PAGE>
<F3> As of March 30, 2000, Mr. Weaver has current ownership of
213,667 shares, which total includes 24,400 shares held in an
IRA. Mr. Weaver has options to purchase 125,000 shares of the
Company's common stock at $.25 per share, which vest monthly
(beginning November 1, 1999) in fifty-nine equal increments of
2,080 shares and one final increment of 2,280 shares, expiring
five years from the dates of vesting, five months of which have
been exercised. The above figure includes 8,320 shares, which
represents Mr. Weaver's right to exercise the options which have
vested (or will vest within the next 60 days).
<F4>As of March 30, 2000, Mr. Carl has current ownership of
103,750 shares. Mr. Carl has options to purchase 125,000 shares
of the Company's common stock at $.25 per share, which vest
monthly (beginning November 1, 1999) in fifty-nine equal
increments of 2,080 shares and one final increment of 2,280
shares, expiring five years from the date of vesting, none of
which have been exercised. The above figure includes 18,720
shares, which represents Mr. Carl's right to exercise the options
which have vested (or will vest within the next 60 days).
<F5>The natural person or persons who beneficially own Emmerson
Finance Ltd. is unknown to management of the Company.
Management's "contact person" for Emmerson Finance is Marvin
Sirota, an individual residing in the state of New York. However,
none of the Company's officers, directors, subsidiaries or
affiliates have an interest or ownership in Emmerson Finance Ltd.
<F6>The Strateia Group, Inc., a Nevada corporation, is controlled
by Joe H. Glover. Although Rhino shares office space with The
Strateia Group, Inc., none of its officers and directors exercise
any amount of control over The Strateia Group, Inc.
CHANGES IN CONTROL
The Company has no arrangements which might result in a
change in control of the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
The following table sets forth the directors and executive
officers of the Company, their ages, and all positions with the
Company.
Name Age Positions
- ---------------------------------------------------------------
Robert W. Moehler 35 Director and President
David H. Young 51 Director, Chief Operating
Officer and Secretary
Daniel H. Weaver 49 Director, Executive Vice
President of Finance and
Treasurer
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<PAGE>
David H. Carl 51 Director
Robert W. Moehler, age 35, is President and Director of the
Company. Mr. Moehler has been a director of the Company since
October, 1999. In December of 1999, he was re-elected as a
director for a one year term. He is also a director of the
Company's wholly-owned subsidiary, Eyesite.com, Inc., a Delaware
corporation. Mr. Moehler has significant experience with start-up
companies and industry consolidations. Mr. Moehler received an
M.B.A. degree in Management in 1996 from Amber University in
Dallas, Texas. He also received a B.B.A. degree in Finance in
1992 and a B.S. degree in Business Control Systems in 1987 from
the University of North Texas in Denton, Texas. From 1987-1989 he
served as a Staff Auditor for Western Union Telegraph Company,
Inc. From 1989-1992 he served in various capacities with The
Thompson Group, Inc. and Dedicated Care Holdings, Inc.,a group of
companies located in Dallas, Texas that were involved in
providing long-term health care services, as well as numerous
other medical-related services including therapy, lab and
pharmacy. During his employment with these companies, he served
as senior accountant from 1989-1990, controller from 1990-1991
and Treasurer from 1991-1992. Since 1992, Mr. Moehler has been
self-employed, providing business consulting services as well as
buying, selling and marketing sports memorabilia. Since November
1995, Mr. Moehler has served in varying capacities with MFC
Group, Inc., a Nevada organized company that provides business
consulting services. From January 1994 to January 1997, Mr.
Moehler served as Secretary and Treasurer of The Strateia Group,
Inc., a business consulting firm located in Dallas that
specializes in providing services to entrepreneurial businesses
and start-ups. Since January 1997, Mr. Moehler has served as
President of Memorabilia & Antiquities, Inc., a development stage
company that sells and markets sports memorabilia, historical
documents and ancient antiquities. From December 1997 to December
1998, Mr. Moehler was President of Enviro-Clean of America, Inc.
(OTCBB: EVCL) and oversaw the financing efforts, acquisition plan
and its obtaining public status. From December 1998 until his
resignation in May, 1999, Mr. Moehler continued to serve as
Secretary/Treasurer and a member of the Board of Directors of
EVCL. Since January 1999, Mr. Moehler has served as President,
Secretary, Treasurer and a director of Framing Systems, Inc., a
majority owned subsidiary of the Company. He was named president
of Rhino Enterprises Group, Inc. in October of 1999.
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<PAGE>
David H. Young, age 51, is the Chief Operating Officer,
Secretary and a Director of the Company. He has been a director
of the Company since October of 1999. In December of 1999, Mr.
Young was re-elected to the board for a one year term. Mr.
Young joined The Strateia Group, Inc. in August of 1998 as an
industry specialist after retiring from the United States Marine
Corps as a full colonel. During his tenure at The Strateia Group,
Col. Young obtained training and experience in the public market,
specifically in small public companies. His most recent effort
with Enviro-Clean of America, Inc. (OTCBB: EVCL), assisted that
corporation from the development stage to a company producing $5
million in gross revenues. While on active duty, Col. Young had
numerous command positions, including the 31st Marine
Expeditionary Unit and the 3rd Battalion, 6th Marines. Col. Young
played a significant role as Officer in Charge of the Mobile
Training Team Gold in Colombia, South America in creating counter
drug units. Col. Young is a 1973 graduate of the United States
Naval Academy and has an MA from the Naval War College and is a
candidate for an MBA from Regis University.
Daniel H. Weaver, CPA, age 49, is the Executive Vice
President of Finance, Treasurer and a Director of the Company. He
has been a director of the Company since February of 1999. In
December of 1999, Mr. Weaver was re-elected to the board for a
one year term. He received a Bachelor of Science from the United
States Naval Academy in 1972 and a Master of Business
Administration from George Washington University in 1978. After
service in the U.S. Navy, Mr. Weaver worked for the U.S. House of
Representatives in a staff position. He subsequently worked for
the international accounting firm of Coopers & Lybrand and then
served as the Treasurer and Chief Accounting Officer of a savings
and loan association. From 1984 to 1997, he was an officer and
shareholder in the accounting firm of Solana Kaufman & Weaver. He
formed his own accounting firm, D.H. Weaver & Associates, in
1998. Mr. Weaver is also an officer of Digital Information &
Virtual Access, Inc. (DIVA), a Nevada corporation whose common
stock trades on the OTC Bulletin Board under the symbol DIVA. He
currently serves as a Director for Energy System Solutions, Inc.
(ESUL), a public company traded on the OTC Bulletin Board.
David H. Carl, age 51, is a Director of Rhino Enterprises
Group, Inc. He was a director of the Company from March of 1995
to April of 1997 and has currently been a director of the Company
since February of 1999. In December of 1999, Mr. Carl was
re-elected to the board for a one year term. From February of
1999 to October of 1999, he served as President of the Company.
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<PAGE>
He is the President of the Company's wholly-owned subsidiary,
Eyesite.com, Inc., a Delaware corporation. Mr. Carl received a
Bachelor of Science degree from the United States Naval Academy
in 1972 and a Bachelor of Business degree from the University of
Maryland in 1982. From 1972 to 1983, Mr. Carl was a Captain in
the United States Marine Corps. After serving as general manager
for several retail bookstores in Dallas, Texas from 1983 to 1985,
Mr. Carl formed a financial partnership that began a
consolidation of small retail bookstores, for which he served as
the managing partner from 1986 to 1988. Subsequently, from 1989
to 1992, Mr. Carl was the operational partner for a real estate
investment firm, Fidelity Group. From 1992 to present, Mr. Carl
has owned The Bayside Group, Inc., a firm that consults with
start-up and small businesses on operational matters. During this
time, from 1993 to 1997, Mr. Carl started and provided
operational oversight to a residential mortgage brokerage
company, Community Home Mortgage, Inc. with locations in the
Dallas/Ft. Worth area. Mr. Carl has been involved with several
entrepreneurial, start-up companies for the last several years.
He currently serves as a Director of Energy System Solutions,
Inc, a public company traded on the OTC Bulletin Board (ESUL).
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth the compensation received by
the Company's Presidents for the last three fiscal years. None of
the other officers' compensation packages exceeded $100,000 per
year.
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<PAGE>
SUMMARY COMPENSATION TABLE <F1>
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
--------------------------------- ----------------------------
Securities
Name and Other Restricted Underlying
Principal Annual Stock Options/
Position Year Salary Bonus Comp. Awards SARs
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert Moehler 1999<F2> $15,152 $15,000 $2,200<F3> -0- 250,000<F4>
President
David Carl 1999<F5> -0- $10,000 $4,000 $2,000 125,000<F6>
President
Gary Boone 1999<F7> -0- -0- -0- $1,000 -0-
President 1998 -0- -0- -0-
1997 $20,000 -0- -0-
<F1> All columns which are inapplicable have been removed. All
figures have been rounded to the nearest whole amount.
<F2> Mr. Moehler became president of the Company on October 26,
1999.
<F3> Mr. Moehler was paid $2,200 in total consulting fees during
the month of April, 1999.
<F4> Mr. Moehler has options to purchase 250,000 shares of the
Company's common stock at $.25 per share, which vest monthly
(beginning November 1, 1999) in fifty-nine equal increments of
4,165 shares and one final increment of 4,265 shares, expiring
five years from the dates of vesting, five months of which have
been exercised. Mr. Moehler will have the right to exercise
145,775 of the options within three years from the date of
issuance.
<F5> Mr. Carl was president of the Company from February 15, 1999
until October 26, 1999, when Mr. Moehler was appointed as
president.
<F6>Mr. Carl has options to purchase 125,000 shares
of the Company's common stock at $.25 per share, which vest
monthly (beginning November 1, 1999) in fifty-nine equal
increments of 2,080 shares and one final increment of 2,280
shares, expiring five years from the date of vesting, none of
which have been exercised. Mr. Carl will have the right to
exercise 72,800 of the options within three years from the date
of issuance.
<F7> Gary Boone was president of the Company from October 15,
1996 until February 15, 1999, when Mr. Carl was appointed as
president.
</TABLE>
-28-
<PAGE>
OPTIONS/SAR GRANTS
Option/SAR Grants in Last Fiscal Year
Individual Grants
- -----------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Base Expiration
Name Granted Fiscal Year Price Date
- -----------------------------------------------------------------------------
Moehler 250,000 33% $.25 Five Years<F1>
Carl 125,000 17% $.25 Five Years<F2>
Boone -0- n/a n/a n/a
<F1>Mr. Moehler has options to purchase 250,000 shares of the
Company's common stock at $.25 per share, which vest monthly
(beginning November 1, 1999) in fifty-nine equal increments of
4,165 shares and one final increment of 4,265 shares, expiring
five years from the dates of vesting.
<F2>Mr. Carl has options to purchase 125,000 shares
of the Company's common stock at $.25 per share, which vest
monthly (beginning November 1, 1999) in fifty-nine equal
increments of 2,080 shares and one final increment of 2,280
shares, expiring five years from the date of vesting.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR END
OPTION/SAR VALUE TABLE
Aggregated Option/SAR Exercises
in Last Fiscal Year and FY-End Option/SAR Value
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Moehler -0- -0- 8,330/241,670 $34,361.25/$996,888.75
Carl -0- -0- 4,160/120,840 $17,160/$498,465
Boone -0- -0- -0- -0-
</TABLE>
LONG TERM INCENTIVE PLANS
There are no long term incentive plans in effect and,
therefore, no awards have been given to any executive officer in
the past year.
-29-
<PAGE>
COMPENSATION OF DIRECTORS
The Company has issued to Mr. Carl, a director of the
Company, options to purchase 125,000 shares of the Company's
common stock at $.25 per share, which vest monthly (beginning
November 1, 1999) in fifty-nine equal increments of 2,080 shares
and one final increment of 2,280 shares, expiring five years from
the date of vesting. Although Mr. Carl held the position of
President/CEO of the Company for a short period of time during
the fiscal year end 1999, these options were granted to Mr. Carl
for his role as a director of the Company.
Other than the options granted to Mr. Carl, as stated above,
no other director of the Company has received any compensation
for the sole purpose of serving as a director. The Company does
not, at this time, plan to pay compensation to other or future
members of the Company's Board of Directors for the performance
of their duties as directors, other than reimbursement of
expenses incurred to attend board meetings. The Company has not
established committees of the Board of Directors.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN
CONTROL ARRANGEMENTS
On October 27, 1999, the Company executed an employment
agreement with its President, Robert W. Moehler, for a three year
term. The terms of the employment contract provide, among other
things, that Mr. Moehler shall serve in the position of
President, shall be entitled to minimum annual compensation of
$84,000, shall receive benefits and life insurance as set forth
in the agreement and shall receive options to purchase 250,000
shares of common stock at $.25 per share (vesting monthly).
Further, in the event of a "change of control" of the Company, as
defined in the employment agreement, the Company shall pay to Mr.
Moehler an amount equal to the monthly portion of his minimum
annual compensation multiplied by 36, which shall be paid to Mr.
Moehler in one lump sum no later than 60 days after Mr. Moehler's
termination of employment. The employment agreement with Mr.
Moehler was filed as Exhibit 10.0 to registration statement on
Form 10-SB.
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<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October of 1999, the Company entered into an employment
agreement with Robert W. Moehler, President of the Company.
Pursuant to the employment agreement, which is for a term of
three years, Mr. Moehler will receive minimum annual compensation
of $84,000 along with other benefits as set forth in the
agreement. In addition, Mr. Moehler was granted options to
purchase 250,000 shares of the Company's common stock at an
exercise price of $.25 per share, which vest monthly over five
years and expire five years from the dates of vesting.
In October of 1999, the Company entered into an employment
agreement with David H. Young, Chief Operating Officer of the
Company. Pursuant to the employment agreement, which is for a
term of three years, Mr. Young will receive minimum annual
compensation of $75,000 along with other benefits as set forth in
the agreement. In addition, Mr. Young was granted options to
purchase 250,000 shares of the Company's common stock at an
exercise price of $.25 per share, which vest monthly over five
years and expire five years from the dates of vesting.
In October of 1999, the Company issued to Daniel H. Weaver,
an officer and a director, and to David H. Carl, a director,
options to purchase 125,000 shares each of the Company's common
stock, at an exercise price of $.25 per share, which vest monthly
over five years and expire five years from the dates of vesting.
In March of 1999, the Company issued to Daniel H. Weaver, a
director only at the time, and David H. Carl, a director,
2,000,000 shares of common stock each, which were valued at the
par value of $.001 per share. These shares were subsequently
reverse split into 100,000 shares each. At the same time, the
Company issued to Gary Boone, an officer and director at the
time, 1,000,000 shares of common stock, which were valued at the
par value of $.001 per share. These shares were subsequently
reverse split into 50,000 shares. This stock compensation was
awarded to these three individuals for their services rendered to
the Company prior to its name change to Rhino Enterprises Group,
Inc. and was not for compensation solely for serving as a
director.
The Company loaned approximately $350,000 to Memorabilia &
Antiquities, Inc., a Nevada corporation which is partially owned
and controlled by Robert Moehler, President of the Company. This
loan was made upon the same terms as the loans made to other
corporations and has since been repaid in full, together with
stated interest.
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<PAGE>
Robert Moehler, President of the Company, indirectly held
75% of the outstanding shares of Executive Assistance, Inc., a
Nevada corporation, prior to Executive Assistance being acquired
by the Company. Mr. Moehler abstained from the vote by the board
of directors of the Company to approve this stock for stock
transaction, in which he indirectly received 60,000 shares of the
Company.
On November 3, 1999, the Company issued to Daniel H. Weaver,
an officer and director of the Company, 69,817 shares for
accounting services rendered to the Company by his accounting
practice, which services were valued at $28,625 or $.41 per
share. Although Mr. Weaver was an officer and director at the
time the shares were issued, he was only a director at the time
the services were incurred by his accounting practice. Such
services were not compensated in other form by the Company at the
time they were rendered. Rather, D.H. Weaver & Associates, the
name under which he practiced, invoiced the Company for the
accounting services rendered.
The Company leases, on a month-to-month basis, its office
space and some equipment from The Strateia Group, Inc., a 6.2%
shareholder of the Company. The Strateia Group, Inc. owes
approximately $118,000 to the Company. The Strateia Group, Inc.
is controlled by Joe H. Glover.
On December 3, 1999, the Company paid to Daniel H. Weaver,
an officer and director of the Company, $4,200 for the purchase
of a 1990 Buick Electra Park Avenue. The Company utilized the
web-site of Edmunds.com to get a fair market value, resale price
based upon the year, mileage and general condition of the
vehicle.
On November 25, 1999, the Company paid to Memorabilia &
Antiquities, Inc., a Nevada corporation partially owned and
controlled by Robert W. Moehler, $8,050 for the purchase of a
1994 Chevrolet Blazer. The Company utilized the web-site of
Edmunds.com to get a fair market value, resale price based upon
the year, mileage and general condition of the vehicle.
On November 22, 1999, the Company paid to Memorabilia &
Antiquities, Inc., a Nevada corporation partially owned and
controlled by Robert W. Moehler, $20,650 for the purchase of a
1996 Chevrolet Tahoe. The Company utilized the web-site of
Edmunds.com to get a fair market value, resale price based upon
the year, mileage and general condition of the vehicle.
-32-
<PAGE>
On November 29, 1999, the Company loaned $5,000 to Daniel
H. Weaver at 6% interest per annum, which shall be repaid to the
Company upon demand by the Company.
On May 13, 1999, the Board of Directors of Rhino approved a
stock-for-stock purchase agreement between Rhino and the
shareholders of Framing, which took place between the dates of
May 17, 1999 to December 2, 1999. At the time the Company entered
into this transaction, it had a pre-existing relationship with
Framing by virtue of the fact that Framing's previous president,
David H. Carl, was the president of Rhino and both companies
share office space.
In February of 2000, the Company entered into share lockup
agreements with its four officers and directors. Pursuant to the
agreements, the officers and directors are prevented from selling
or otherwise divesting themselves of any shares beneficially
owned by them for a period of 12 months.
Other than as described above, there have been no material
transactions in the past two years or proposed transactions to
which the Company has been or proposed to be a party in which any
officer, director, nominee for officer or director, or security
holder of more than 5% of the Company's outstanding securities is
involved.
The Company has no promoters other than its executive
officers and directors. There have been no transactions which
have benefitted or will benefit its executive officers and
directors either directly or indirectly.
ITEM 8. DESCRIPTION OF SECURITIES
The Company is presently authorized to issue up to
20,000,000 shares of common stock, $.001 par value per share, and
up to 5,000,000 shares of preferred stock, $.001 par value per
share. No shareholder of the Company has a preemptive right to
acquire the Company's unissued shares. There are no provisions,
other than the articles of incorporation and by-laws of the
Company and the Nevada Revised Statutes, that govern the voting
of the Company's shares. The Company has not to date paid any
dividends on its common stock or preferred stock. There are no
provisions, other than as may be set forth in the Nevada Revised
Statutes, that prohibit or limit the payment of dividends. There
are no provisions in the Company's articles of incorporation or
by-laws that would delay, defer or prevent a change in control of
the Company.
-33-
<PAGE>
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company is voluntarily filing this Registration
Statement on Form 10-SB to maintain the eligibility requirements
for its listing on the OTC Bulletin Board, which requires all
listed companies to be registered with the Securities and
Exchange Commission (the "SEC") under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, and to be current in
its required filings once so registered. Further, these
eligibility requirements mandate that the Company obtains a "no
further comment" position from the SEC with regard to this
Registration Statement on Form 10-SB, prior to the Company's May
3, 2000 phase-in date. If the Company should fail, for any
reason, to reach this position with the SEC, the Company's common
stock will be removed from eligibility to trade on the OTC
Bulletin Board, or delisted. Should this occur, the Company's
common stock could only be able to trade via the Pink Sheets, if
the Company is able to locate a market maker willing to make a
market in its stock, until such time as it has been re-approved
for trading on the OTC Bulletin Board or other exchange.
The Company's common stock was originally approved for
trading on the OTC Bulletin Board under the symbol "UNQF." When
the Company's name changed to Rhino Enterprises Group, Inc. on
April 30, 1999, its symbol changed to "RHNO," under which it
currently trades. The range of high and low bid information for
the Company's common stock for each quarter that it has traded
within the last two fiscal years is set forth below.
Quarter High/Ask Low/Bid
--------------------------------------------------
4th Quarter 1999 $5.50 $0.25
3rd Quarter 1999 no trades no trades
2nd Quarter 1999 $0.50 $0.125
1st Quarter 1999 no trades no trades
4th Quarter 1998 no trades no trades
3rd Quarter 1998 no trades no trades
2nd Quarter 1998 no trades no trades
1st Quarter 1998 no trades no trades
The above historical trading information was received from
Prophet Financial Systems via American Online's historical quote
function. These quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent
actual transactions.
-34-
<PAGE>
There are currently unexercised options outstanding that
allow the optionholders to purchase up to an aggregate of 787,950
shares of the Company's common stock at varying exercise prices,
vesting dates and expiration dates. Please see Part II, Item 4,
Recent Sales of Unregistered Securities, for a more detailed
description of these options.
The Company has not agreed to register any shares of
its common stock for any shareholder. There are presently
646,594 shares of common stock which are restricted and which
may, subject to eligibility, be sold in reliance upon Rule 144 of
the Securities Act of 1933, as amended.
STOCKHOLDERS
There are approximately 295 shareholders of record for the
Company's common stock.
DIVIDENDS
To date, the Company has not paid any dividends on its
common stock. The payment of dividends, if any, in the future is
within the discretion of the Board of Directors and will depend
upon the Company's earnings, its capital requirements and
financial condition, and other relevant factors. There are no
provisions in the Company's articles of incorporation or by-laws
that prevent or restrict the payment of dividends. Dividend
payments, if any, would be subject to the provisions of the
Nevada Revised Statutes as well.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Company has been threatened. None of the
Company's officers, directors or beneficial owners of five
percent (5%) or more of the Company's outstanding securities is a
party adverse to the Company, nor do any of the foregoing
individuals have a material interest adverse to the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Company used the same accountant for auditing of the
Company's financial statements for the last two fiscal years and
has not had any disagreements with said accountant.
-35-
<PAGE>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On December 31, 1997, the Company issued an aggregate of
60,000 shares of common stock to one individual and his company
based upon a conversion of an aggregate of $15,000 in convertible
debentures of the Company's subsidiary at that time and $15,000
in loans to the Company. These securities were issued in reliance
upon both Section 4(2) of the Securities Act of 1933, as amended
and Article 581-5(B) of the Texas Securities Act, as such stock
was issued in the ordinary course of business to liquidate a
bonafide debt.
On March 26, 1999, the Company issued to three of its
officers and directors an aggregate of 5,000,000 shares of common
stock, valued at the par value of $.001 per share, for services
rendered to the corporation. These securities were issued in
reliance on both Section 4(2) of the Securities Act of 1933, as
amended, and Article 581-5(I) of the Texas Securities Act, as
such stock was issued to Texas residents under a stock purchase
program for the benefit of employees and directors of the
Company.
From March 26, 1999 to April 7, 1999, the Company sold an
aggregate of 13,719,817 shares of its common stock to a total of
33 investors at a sales price of $.005 per share pursuant to an
exemption from registration provided by Regulation D, Rule 504.
In accordance with the terms of Rule 504 at the time of this
offering, the Company was neither a reporting company, investment
company nor a blank check company; the Company did not advertise
for or generally solicit investors; and the Company did not raise
more than $1,000,000. These securities were sold for cash. There
were no underwriting discounts or commissions involved in the
sale of these securities.
In April of 1999, the Company issued an aggregate of 123,900
shares of common stock to an aggregate of seven individuals for
conversion of an aggregate of $92,500 of convertible debentures
in the Company's subsidiary at that time. The conversion rate was
set forth in the convertible debenture. These securities were
issued in reliance upon both Section 4(2) of the Securities Act
of 1933, as amended and Article 581-5(B) of the Texas Securities
Act, as such stock was issued in the ordinary course of business
to liquidate a bonafide debt.
The Company acquired 65% of the outstanding common stock
of Framing Systems, Inc., a Nevada corporation, by issuing to the
shareholders of Framing Systems one share of the Company's
restricted common stock for each twenty-five shares of common
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<PAGE>
stock of Framing Systems. Between the dates of May 17, 1999 and
December 2, 1999, 41 shareholders of Framing Systems exchanged an
aggregate of 6,584,000 shares of Framing Systems' common stock
for 263,360 shares of the Company's common stock. Three
additional shareholders executed the stock for stock exchange
agreement but have not been able to produce an original
certificate or proper documentation evidencing a lost stock
certificate to facilitate the exchange of their Framing Systems
shares into the Company's common stock. These three shareholders
hold an aggregate of 310,000 shares of Framing which will be
exchanged into 12,400 shares of the Company's common stock. These
securities were issued in reliance on both Section 4(2) of the
Securities Act of 1933, as amended, and Article 581-5(G) of the
Texas Securities Act, as such stock was only issued pursuant to
and in connection with a merger, consolidation or sale of
corporate stock or assets from the Company to another corporation
or the securities holders of such target corporation.
On August 20, 1999, the Company approved the issuance of
1,000 shares of common stock of the Company, valued at $0.1875
per share to an employee of the Company as a bonus for
administrative services rendered to the Company. These securities
were issued in reliance on both Section 4(2) of the Securities
Act of 1933, as amended, and Article 581-5(I) of the Texas
Securities Act, as such stock was issued to Texas residents under
a stock purchase program for the benefit of employees and
directors of the Company.
On August 20, 1999, three individuals who had made loans to
the Company, converted their loans to an aggregate of 10,250
shares of common stock of the Company. The conversion price of
$.50 per share (pre 1 for 20 reverse stock split) was set forth
in the original loan documents executed by each individual. These
securities were issued in reliance upon both Section 4(2) of the
Securities Act of 1933, as amended and Article 581-5(B) of the
Texas Securities Act, as such stock was issued in the ordinary
course of business to liquidate a bonafide debt.
On October 27, 1999, the Company issued options to purchase
an aggregate of 950,000 shares of common stock to officers,
directors and other employees of the Company. On an aggregate
basis, these options vest in 59 equal monthly increments of
15,820 shares on the first day of each month beginning in
November of 1999 and ending with September of 2004 and one final
monthly increment of 16,620 shares on the first day of October of
2004. These options expire five years from the dates of vesting
and the exercise price is $.25 per share. These securities were
issued in reliance on both Section 4(2) of the Securities Act of
1933, as amended, and Article 581-5(I) of the Texas Securities
Act, as such options were issued to Texas residents under a stock
purchase program for the benefit of employees and directors of
the Company.
-37-
<PAGE>
Between November 1, 1999 and November 19, 1999, four
individuals who had made loans or held debentures with the
Company, converted these instruments into an aggregate of 8,000
shares of common stock of the Company. The conversion price of
$.50 per share (pre 1 for 20 reverse stock split) was set forth
in the original loan documents executed by each individual. These
securities were issued in reliance upon both Section 4(2) of the
Securities Act of 1933, as amended and Article 581-5(B) of the
Texas Securities Act, as such stock was issued in the ordinary
course of business to liquidate a bonafide debt.
On November 3, 1999, the Company approved the issuance to
one of its officers/directors, 69,817 shares for accounting
services rendered to the Company by this individual's accounting
practice, which services were valued at $28,625 or $.41 per
share. These securities were issued in reliance on both Section
4(2) of the Securities Act of 1933, as amended, and Article 581-
5(I) of the Texas Securities Act, as such stock was issued to
Texas residents under a stock purchase program for the benefit of
employees and directors of the Company.
The Company acquired 100% of the outstanding common stock
of Executive Assistance, Inc., a Nevada corporation, by issuing
to the shareholders of Executive Assistance, one share of the
Company's restricted common stock for each fifty shares of common
stock of Executive Assistance. On November 17, 1999, 3
shareholders of Executive Assistance exchanged an aggregate of
4,000,000 shares of Executive Assistance's common stock
for 80,000 shares of the Company's common stock. These securities
were issued in reliance on both Section 4(2) of the Securities
Act of 1933, as amended, and Article 581-5(G) of the Texas
Securities Act, as such stock was only issued pursuant to and in
connection with a merger, consolidation or sale of corporate
stock or assets from the Company to another corporation or the
securities holders of such target corporation.
On November 17, 1999, the Company issued to an employee of
its subsidiary, Executive Assistance, options to purchase a total
of 2,500 shares of common stock. These options vest in 59 equal
monthly increments of 41 shares on the first day of each month
beginning in December of 1999 and ending with October of 2004 and
one final monthly increment of 81 shares on the first day of
November of 2004. These options expire five years from the dates
of vesting and the exercise price is $.50 per share. These
securities were issued in reliance on both Section 4(2) of the
Securities Act of 1933, as amended, and Article 581-5(I) of the
Texas Securities Act, as such options were issued to Texas
residents under a stock purchase program for the benefit of
employees and directors of the Company.
-38-
<PAGE>
On December 1, 1999, the Company issued to one individual,
options to purchase up to 25,000 shares of common stock of the
Company at $5.00 per share, for an aggregate of $125,000,
expiring on December 1, 2001. These securities were issued in
reliance on Section 4(2) of the Securities Act of 1933, as
amended, as such options were issued to an accredited investor in
an isolated transaction.
On March 31, 2000, the Company cancelled the non-vested
options to purchase 137,500 shares of common stock of the Company
at $.25 per share that were issued to the Company's former Vice
President of Human Resources, G.W. Flinn. Upon Mr. Flinn's
departure from the Company, his vested options totaled 12,500.
These cancelled non-vested options and the vested options
represent 150,000 of the 950,000 options referenced above that
were issued on October 27, 1999.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Officers and directors of the Company may be indemnified by
the Company for any liability incurred by them while acting
within the scope of their respective duties as officers and
directors of the Company, except for acts of intentional
misconduct. As of the date hereof, the Company has no contracts
in effect providing any indemnity with any specific rights of
indemnification, although the Company's by-laws authorize its
Board of Directors to enter into and deliver such contracts to
provide an indemnity with specific rights of indemnification in
addition to the rights provided in the Company's articles of
incorporation and by-laws to the fullest extent provided under
Nevada law. The Company has been advised that, in the opinion of
the Securities and Exchange Commission, such indemnification is
against public policy, and is unenforceable. The Company has no
special insurance against liability of its directors and
officers, although the Company's by-laws provide that the Company
may, unless prohibited by Nevada law, maintain such insurance.
PART F/S
The Company's audited financial statements for the year
ended December 31, 1999, the Framing Systems audited financial
statements for the year ended December 31, 1998, the Framing
Systems interim statements for the period ended March 31, 1999,
and the e-Data interim statements for the period ended November
30, 1999, which are required by this Part F/S are included
herein.
-39-
<PAGE>
RHINO ENTERPRISES GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
-40-
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
We have audited the accompanying consolidated balance sheets of
RHINO ENTERPRISES GROUP, INC. and SUBSIDIARIES as of December
31, 1999 and 1998, and the related consolidated statements of
income, stockholders' equity, and cash flows for the years then
ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
consolidated 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. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of RHINO ENTERPRISES GROUP, INC. and
SUBSIDIARIES as of December 31, 1999 and 1998, and the results of
their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ M. C. Hunter & Associates
February 26, 2000
Fort Worth, Texas
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<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999 AND 1998
1998
ASSETS 1999 (Restated)
- ---------------------------------- ----------- ------------
Current Assets
Cash on hand and in banks $ 390,071 $ 1,108
Notes receivable 1,584,044 0
Prepaid expenses and deposits 805,000 0
----------- ------------
Total Current Assets 2,779,115 1,108
----------- ------------
Property, plant and equipment,
at cost 87,670 11,088
Less -- accumulated depreciation (7,453) 2,267
Invesment in E-DATA ALLIANCE CORP. 200,000 0
Intangible assets, at cost 240,000 0
Less -- accumulated amortization (6,667) 0
----------- ------------
Total Long-lived Assets 513,550 8,821
----------- ------------
Total Assets $ 3,292,665 $ 9,929
=========== ============
CURRENT LIABILITIES
- ----------------------------------
Accounts payable $ 41,985 $ 89,684
Accrued expenses 839,334 42,166
Notes and debentures payable 3,082,736 556,319
----------- ------------
Total Current Liabilities 3,964,055 688,169
----------- ------------
STOCKHOLDERS' EQUITY
- ----------------------------------
Common stock 1,577 4,613
Paid in capital 1,448,105 1,196,402
Accumulated deficit (2,122,558) (1,882,381)
Non-controlling interest 1,486 3,126
----------- ------------
Total Stockholders' Equity (671,390) (678,240)
----------- ------------
Total Liabilities and
Stockholders' Equity $ 3,292,665 $ 9,929
=========== ============
See Notes to Consolidated Financial Statements.
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<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1998
1999 (Restated)
------------ ----------------
REVENUES $ 9,922 $ 0
COST OF SALES 0 0
GROSS PROFIT 9,922 0
------------ ----------------
GENERAL AND ADMINISTRATIVE EXPENSES
Operating costs 323,815 20,804
Personnel costs 237,718 0
Legal and professional fees 183,566 0
Depreciation and amortization 11,853 10,848
------------ ----------------
Total General and
Administrative Expenses 756,952 31,652
------------ ----------------
LOSS FROM OPERATIONS (747,030) (31,652)
------------ ----------------
OTHER INCOME (EXPENSE)
Interest income 21,697 0
Interest expense (26,779) (12,500)
Other 12,746 0
------------ ----------------
Total Other Income (Expense) 7,664 (12,500)
------------ ----------------
LOSS BEFORE INCOME TAX (739,366) (44,152)
PROVISION FOR INCOME TAX 0 0
------------ ----------------
NET LOSS $ (739,366) $ (44,152)
============ ================
LOSS PER SHARE $ (0.56) $ (0.08)
============ ================
See Notes to Consolidated Financial Statements.
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<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
NON-
COMMON PAID IN ACCUMULATED CONTROL TOTAL
SHARES STOCK CAPITAL DEFICIT INTEREST EQUITY
--------- -------- --------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1998,
as previously reported 4,269,528 $ 4,270 $1,196,745 $ (1,817,808) $ 0 $ (616,793)
Adjustments in connection
with the pooling of
interests (23,994) 6,699 (17,295)
--------- -------- --------- ------------ -------- ---------
BALANCE, January 1, 1998,
as restated 4,269,528 4,270 1,196,745 (1,841,802) 6,699 (634,088)
Stock issued to acquire
subsidiaries 343,360 343 (343) 0
Net loss --
1998 operations (40,579) (3,573) (44,152)
--------- -------- --------- ------------ -------- ---------
BALANCE, December 31, 1998 4,612,888 4,613 1,196,402 (1,882,381) 3,126 (678,240)
Private placement
offering 13,719,817 13,720 53,635 67,355
Debentures converted
to stock 123,900 124 (124) 0
Notes payable converted
to stock 17,750 18 177,482 177,500
Stock issued
or services 5,070,817 5,071 28,741 33,812
Stock issuance costs (30,000) (30,000)
Reverse split (1 share
for 20 shares) 21,968,596 (21,969) 21,969 0
Spin - off
Unique Ideas, Inc. 497,549 497,549
Net loss -- 1999 Operations (737,726) (1,640) (739,366)
--------- -------- --------- ------------ -------- ---------
BALANCE, December 31, 1999 1,576,576 $ 1,577 $1,448,105 $ (2,122,558) $ 1,486 $ (671,390)
========= ======== ========= ============ ======== =========
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
(Restated)
---------- -------------
CASH FROM OPERATING ACTIVITIES
Net Loss $ (739,366) $ (44,152)
Adjustments to reconcile
net loss to net cash
from operating activities
Depreciation and amortization 11,853 10,848
Stock issued for services 33,812 0
Changes in working capital 76,319 43,615
---------- -------------
Net Cash From Operating
Activities (617,382) 10,311
---------- -------------
CASH USED BY INVESTING ACTIVITIES
Purchase property and equipment (76,582) (11,088)
Notes receivable (1,584,044) 0
Invest in E-DATA ALLIANCE CORP. (200,000) 0
Payments for intangibles (15,000) 0
---------- -------------
Net Cash Used by
Investing Activities (1,875,626) (11,088)
---------- -------------
CASH PROVIDED BY FINANCING ACTIVITIES
Borrowings 3,392,949 0
Repayments (548,333) 0
Stock sold in private
placement offering 67,355 0
Payment of stock issuance costs (30,000) 0
---------- -------------
Net Cash Provided by
Financing Activities 2,881,971 0
---------- -------------
NET CHANGE IN CASH 388,963 (777)
CASH, beginning of year 1,108 1,885
---------- -------------
CASH, end of year $ 390,071 $ 1,108
========== =============
See Notes to Consolidated Financial Statements.
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<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE A - NATURE OF OPERATIONS
Rhino Enterprises Group, Inc. (The "Company") was formerly
known as Unique Fashions, Inc. (a Nevada C corporation). The
Company acts as a business incubator for start-up and emerging
enterprises. The Company performs this function by providing
management, consulting services, and financing to assist
established operating entities to position themselves to enter
the capital markets. The Company and its subsidiaries operate
in two business segments - business incubation and e-commerce.
See further discussion in Note Q below.
Unique Fashions, Inc. was incorporated on March 3, 1995, to
acquire Unique Ideas, Inc. The acquisition transaction was
consummated on May 1, 1995, with an exchange of one share of the
Company's common stock for each share of Unique Ideas, Inc.'s
outstanding common stock. The transaction was accounted for as a
purchase, effective May 1, 1995. During 1998, the only
activities involved negotiating pay-off settlements with trade
payable vendors, collecting outstanding receivables, and
disposing of assets.
Unique Ideas, Inc. was originally incorporated August 17, 1993,
as Unique Products, Inc. for the purpose of acquiring the assets
and assuming the liabilities of Doodle Art Wear, a Texas general
partnership. The purchase price for the partnership was
allocated to the acquired assets and liabilities. Intangible
assets amounting to $50,223 related to the design, manufacturing
process, and product marketing strategies for children's
outerwear and related accessories were identified and amortized
on a straight-line basis over a period of five years. Unique
Ideas, Inc. accounted for the acquisition transaction as a
purchase effective August 17, 1993. Goodwill amounted to
$46,298. By the end of 1996, operations had ceased. On March
25, 1999, the Company effected a tax-free spin-off transaction of
Unique Ideas, Inc. All of Unique Ideas, Inc.'s outstanding
shares (675,666) were distributed on a pro-rata basis to the
Company's stockholders who had been the shareholders of Unique
Ideas, Inc. The intangibles owned by Unique Ideas, Inc. had been
fully amortized by December 31, 1998. Goodwill arising in this
acquisition transaction was written off at the time of the spin-
off.
On April 30, 1999, the Unique Fashions, Inc. effected a one-for-
twenty (1 for 20) reverse stock split of its common stock and
changed its name to Rhino Enterprises Group, Inc.
NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation These consolidated financial statements contain
the accounts of Rhino Enterprises Group, Inc. and its wholly-
owned subsidiaries Eyesite.Com, Inc. and Executive Assistance,
Inc., and its 65% owned subsidiary, Framing Systems, Inc.
The Company's investment in E-Data Alliance Corp. represents a
50% ownership position; consequently, this investee is accounted
for using the equity method. All significant inter-company
transactions and balances have been eliminated in consolidation.
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<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Property, Plant and Equipment All fixed and depreciable assets
are carried at cost. Depreciation of property, plant, and
equipment was provided using the straight-line method over the
expected useful life of the assets which range from 3 to 7 years.
Allowance for Uncollectible Notes Receivable - Management
believes that a reserve for uncollectible notes receivable was
not necessary at December 31, 1999.
Accounting Estimates - The preparation of consolidated financial
statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions
which affect the reported amounts of assets, liabilities,
revenues and expenses, and disclosures of contingent assets and
liabilities at the date of the consolidated financial statements.
Actual results could differ from those estimates.
Income Tax Accounting - Income taxes are provided for the tax
effects of transactions reported in the consolidated financial
statements and consist of taxes currently due, plus deferred
taxes. Deferred tax assets or liabilities are recognized for
temporary differences between the tax basis of assets and
liabilities for financial statement and income tax purposes.
Deferred tax assets and liabilities represent future tax return
consequences of those temporary differences. At December 31,
1999 and 1998, there were no significant deferred tax assets or
liabilities.
The Company anticipates having a tax net operating loss
carryforward of approximately $750,000 which will expire starting
in 2010. A deferred tax asset has not been recognized for this
net operating loss, since management believes that it is not
"more likely than not" that this tax benefit will ever be
realized.
Amortization of Intangible Assets - Intangible assets, which
consist of certain proprietary knowledge and a web-site, are
being amortized over 3 years.
Earnings Per Share - Basic loss per share was computed by
dividing the net loss allocable to common shareholders by the
weighted monthly average outstanding common shares during the
year. A reconciliation of the numerator and denominator
associated with this calculation is presented in Note I below.
Diluted earnings per share reflect per share amounts that would
result if potentially dilutive securities were converted into
common stock.
Advertising - The Company expenses advertising as it is
incurred.
Comprehensive Income - The Company has no items of "other
comprehensive income". Therefore, net income equals
comprehensive income.
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<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition - Since reviving the previously dormant
Unique Fashions, Inc. in April, 1999, the Company has not
generated any significant amounts of revenue. The subsidiaries
also did not generate any significant amount of revenue as they
were either dormant when the Company acquired them or were
incorporated late in the year.
The parent company anticipates receiving revenues from fees and
overhead reimbursements in exchange for providing incubation
services, interest income on funds advanced in the form of short-
term notes, and the earnings of its subsidiaries and its equity-
method investee. The subsidiaries recognize revenues based on
monthly billings for services, and as billings are presented for
work in progress.
Restatement of 1998 Previously Reported Amounts - The 1998
consolidated financial statements have been restated to reflect
the pooling treatment of the acquisition of Framing Systems, Inc.
and Executive Assistance, Inc. as though they had been acquired
on January 1, 1998.
Stock - based Compensation - The Company recognizes the
compensation incurred by granting stock options to employees and
non-employees in accordance with the provisions of APB No. 25.
The disclosure of the amount of expense that would have been
recorded had the Company followed the accounting prescribed by
SFAS No. 123 was based on the fair value of the underlying common
stock using the Black - Scholes options pricing model. The
significant assumptions used to estimate the fair value of the
options included setting volatility at zero, the discount bond
rate at 6%, and the annual dividend rate at zero.
NOTE C - ACQUISITIONS AND FORMATION OF SUBSIDIARIES
On May 13, 1999, the Company initiated a stock-for-stock purchase
of Framing Systems, Inc. calling for the exchange of all the
outstanding stock (10,129,000 shares) of Framing Systems, Inc.
for 405,160 restricted shares of the Company. As of December
31, 1999, only 6,584,000 shares of Framing Systems, Inc. had been
exchanged for 263,360 shares of the Company resulting in an
ownership position of 65%. The transaction was accounted for as
a pooling of interests, and the consolidated financial statements
for 1998 have been restated to include the assets, liabilities,
net worth and net loss of Framing Systems, Inc. as if the
transaction had occurred on January 1, 1998. No goodwill was
recognized as a result of the exchange of stock. On a separate
company basis, Framing Systems, Inc. reported revenues of $-0-
which resulted in a net loss of $10,208 for the year ended
December 31, 1998; while revenues were $-0- resulting in a net
loss of $882 for the quarter ended March 31, 1999. Framing
Systems, Inc. is a start-up enterprise that intends to develop,
produce and market a fully-operational commercial software
package for use in the custom picture framing industry.
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<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, AND 1998
NOTE C - ACQUISITIONS AND FORMATION OF SUBSIDIARIES, continued
On November 11, 1999, the Company consummated an agreement to
acquire Executive Assistance, Inc., which is engaged in the
business of providing various administrative functions to small
businesses. The terms of the acquisition called for a stock-for-
stock exchange whereby shareholders of Executive Assistance, Inc.
exchanged 100% of the outstanding common shares (4,000,000
shares) for 80,000 restricted shares of the Company's common
stock. This transaction was accounted for as a pooling of
interests.
The consolidated financial statements for 1998 have been restated
to include the assets, liabilities, net worth and net loss of
Executive Assistance, Inc. for 1998 as if the transaction had
occurred on January 1, 1998. No good will was recognized in
connection with the exchange of the common stock. On a separate
company basis, Executive Assistance, Inc. reported revenues of $
- -0- resulting in a net loss of $3,555 for the year ended December
31, 1998; and revenues of $8,861 resulting in a net loss of
$2,700 for the nine months ended September 30, 1999.
On November 24, 1999, the Company subscribed to 100% of the
founder's stock of EYESITE.COM, Inc., a Delaware corporation,
which the Company incorporated on October 31, 1999. The
Company's investment in this wholly-owned subsidiary was $2,000.
On December 22, 1999, EYESITE.COM, Inc. purchased a registered
web site (www.eyesite.com) from Dr. Gary Edwards. EYESITE.COM,
Inc. is positioning itself to be a marketing and buying
cooperative to champion independent eye care professionals,
provide business-to-business and consumer e-commerce service
related to the eye-care industry, and to provide information
about and perform LASIK vision correction through laser surgery.
As part of its ongoing corporate strategy, the Company will
continue to seek investment opportunities which complement its
existing operations. Operating decisions for the various
subsidiaries are made by the managers of those business entities.
The Company's Board of Directors make investment decisions and
all other capital resource allocations. Likewise, the Boards of
each subsidiary make similar decisions for their entities.
NOTE D INVESTMENT IN E-DATA ALLIANCE CORP.
On December 17, 1999, the Company acquired 50% of the outstanding
shares of E-DATA Alliance Corp., a Texas corporation, which
provides web hosting and off-site data storage. Additionally E-
DATA offers web site design and data base services. The servers
operated by E-DATA are located in premium telecommunications
facilities in Dallas. E-Data was incorporated in 1999 and had
revenues of $15,000 (an inter-segment sale from Eyesite.Com, Inc.
in connection with the development of their web site) resulting
in a net income of $2,553 for the eleven months ended November
30, 1999.
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<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE D - INVESTMENT IN E-DATA ALLIANCE CORP, continued
Un-audited condensed financial statement information of E-Data
Alliance Corp. for the year ended December 31, 1999 is shown as
follows -
Balance Sheet
Cash $ 153,319
Prepaid expenses 5,496
Other current assets 21,160
---------
Total Current Assets 179,975
Property, plant and equipment, net 44,892
---------
Total Assets $ 224,867
---------
Current Liabilities $ 14,742
Stockholders' Equity 210,125
---------
Total Liabilities and Stockholder's Equity $ 224,867
---------
Statement of Income
Revenues $ 29,252
Operating Expenses 29,127
---------
Net Income $ 125
---------
It is E-DATA Alliance Corp.'s strategic intention to grow by
developing business partnerships and making strategic
acquisitions. In addition, to the consideration already received
from the Company, E-DATA Alliance Corp. will receive $800,000 of
marketing and advertising services from national and local media
entities that will be negotiated for by Rhino and procured either
through cash payments and/or bartering transactions.
Among other things, the acquisition agreement with e-Data
provides that the Company enter into a contract with a national
media marketing company to purchase $800,000 of advertising (in
various forms such as internet and print media). The Company
will be billed monthly for any advertising time placed by the
marketing company. Such obligations will be treated under
standard commercial terms of net 30 days. The Company and the
marketing company will jointly determine the mix of advertising
in the various forms of media.
NOTE E - NOTES RECEIVABLE FROM OPERATING AND EMERGING ENTERPRISES
As a vital part of its strategic activities as a business
incubator, the Company makes initial investments in established
operating entities and start-up or emerging enterprises
primarily by advancing funds in the form of short-term unsecured
notes.
The following summarizes significant advances outstanding as of
December 31, 1999 -
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<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE E - NOTES RECEIVABLE FROM OPERATING AND EMERGING ENTITIES,
cont.
Unsecured advances to established operating entities -
Emerging Pharmacy Solutions, Inc. $ 252,849
Energy Systems Solutions, Inc. 179,016
Memorabilia and Antiquities, Inc. (related party) 365,051
Sarwin Family LLC 154,584
Teman Electric (related party) 342,884
---------
Secured advances to start-up or emerging
entities - 1,294,384
---------
Real Talk Network, Inc. 100,466
---------
Other unsecured notes receivable -
Individual 110,955
Stockholders 78,239
---------
189,194
---------
Total Notes Receivable $1,584,044
---------
Each of these notes is due in less than one year and bear
interest ranging from 6% to 10%. The total shown above includes
$16,284 of accrued interest receivable. As of the date of the
auditor's report to the consolidated financial statements, none
of the notes are delinquent. The established operating
enterprises have track records of profitability and cash
generation and the Company believes that there is not a
significant risk of not collecting the funds advanced.
The note from Real Talk Network, Inc. is secured by the personal
guarantee of the stockholders of Real Talk Network, Inc. and all
the tangible assets of the company, which consist primarily of
cash and equipment.
With respect to the start-up and emerging entities, the Company
anticipates either receiving repayment of the funds advanced, or
taking an equity position when the entity is ready to either go
public or become a subsidiary of the Company. Each of the
entities listed above is an operating enterprise with the
capability to repay the loans. (See Note M below which indicates
that Memorabilia & Antiquities, Inc. repaid its advance in
January, 2000). Any exchange of stock in satisfaction of the
notes will be negotiated at the time of conversion.
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<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE F - CONTINGENCY FOR CONVERTIBLE DEBENTURES
At various times during 1995 and 1996, Unique Ideas, Inc. raised
$1,379,916 of working capital by issuing short-term convertible
promissory notes bearing interest at 10%. They were originally
expected to be repaid within six months of issue. However, due
to continuing cash constraints, no repayments were ever made.
The principal amount (not including interest) of these notes is
convertible into shares of common stock at exchange rates ranging
from $0.10 to $1.00 per share. As of December 31, 1999,
$1,091,312 of debentures had been converted to common stock.
During 1999 and prior to the spin-off transaction discussed
above, an additional $92,500 of debentures were surrendered for
conversion, which resulted in issuance of 123,900 restricted
shares (7,875 post reverse split shares) of the Company's common
stock. Subsequent to the spin-off transaction described above,
the Board of Directors approved an extension of time until
December 31, 2000 for the remainder of the debenture holders to
convert their instruments into restricted common shares of the
Company. At December 31, 1999, there were still 30 debenture
holders representing $196,352 who could ultimately elect to
convert their debentures resulting in the issuance of 19,635
shares of the Company's common stock. Any conversion of a
debenture into common stock would be accounted for as an increase
in common stock for the par value with a corresponding decrease
in paid in capital.
NOTE G - INDEBTEDNESS
At December 31, 1999, the Company had short term indebtedness as
follows -
Note payable to Digital Information &
Virtual Access, Inc., 6% interest,
unsecured, including accrued and
unpaid interest of $14,341. Note
is due on demand $1,041,069
Note payable to Net.Return, Inc. 10%
interest, unsecured. Note is due on
or before 12-31-00 $2,000,000
---------
$3,041,069
---------
At December 31, 1999, the Subsidiaries had short term
indebtedness as follows -
Note payable to Dr. Gary Edwards,
10% interest, secured by certain
intellectual property and license
rights. Due in six monthly
installments of $8,333 $ 41,667
---------
Consolidated Debt at 12-31-99 $3,082,736
---------
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<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE G - INDEBTEDNESS, continued
The Company had outstanding debt at December 31, 1998 as
follows -
Note payable to an individual, 50%
interest, past due, unsecured $ 25,000
Notes payable to five individuals,
non-interest bearing, past due, unsecured 152,500
---------
Total for Unique Fashions, Inc. $ 177,500
---------
On June 15, 1999, the Board of Directors approved the conversion
of these outstanding loans of $177,500 into restricted common
stock at $.50 per share. Taking into account the 1 for 20
reverse split discussed below, the conversion rate was $10.00
per share of restricted common stock, which resulted in the
issuance of 17,750 shares of the Company's restricted common
stock.
Debt of Unique Ideas, Inc. at December 31, 1998 consisted of the
following -
Note payable to Capital Funding &
Consulting Group, 11% interest,
past due, unsecured. Unpaid accrued
interest at December 31, 1998 is $12,131. $ 30,000
Note payable to an individual, 9% interest,
past due, unsecured. Unpaid and accrued
interest at December 31, 1998 is $9,024 36,799
Notes payable to six individuals, various
rates of Interest, past due, unsecured 22,965
---------
Total for Unique Ideas, Inc. $ 89,764
Consolidated Debt at 12-31-98 $ 267,264
=========
The indebtedness of Unique Ideas, Inc. was not affected by the
spin-off described above and is still outstanding. The Company
has no contingent or any other form of continuing obligation for
the repayment of Unique Ideas, Inc. debt.
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<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE H - COMMON STOCK
The Company has 25,000,000 of authorized shares of common stock
at a par value of $0.001 per share.
On March 30, 1999, the Company authorized a securities offering
of 15,000,000 shares of common stock at an offering price of
$.005 per share, on a best efforts basis pursuant to an exemption
from registration with the Securities and Exchange Commission
provided by Rule 504 of Regulation D and Section 3(b) of the
Securities Act of 1933, and pursuant to exemptions from
registration in the various states in which the securities were
offered as deemed appropriate by the Board of Directors and
offered under the terms and conditions set forth in the offering
memorandum or offering circular. $67,355 was raised from this
offering and 13,719,817 (685,991 post-reverse split) shares were
issued. The Company incurred offering costs of $30,000 which
were netted against the proceeds and recorded as reduction of
paid in capital in the accompanying Consolidated Statement of
Stockholders' Equity.
On April 30, 1999, the Company issued 250,000 shares of common
stock to certain non-employee shareholders as compensation for
various professional services rendered to the Company. An
expense of $4,950 was booked. In November, 69,817 shares were
issued to a non-employee stockholder and officer of the Company
as payment for certain accounting and tax services that were
rendered when this stockholder was only a director. An expense
of $28,625 was recorded, which reflects the fair value of the
services rendered.
NOTE I - EARNINGS PER SHARE RECONCILIATIONS
The following table summarizes the amounts used to calculate the
basic loss per share as reported in the accompanying consolidated
statement of income.
For the Year Ended December 31
1999 1998
---------- ----------
Net Loss $ 739,366 $ 44,152
Weighted average outstanding shares 1,328,897 556,836
Basic Loss per Share $ 0.56 $ 0.08
The stock options discussed in Note K were not included in a
calculation of diluted loss per share as their effect was anti-
dilutive. The weighted average number of outstanding shares has
been calculated by giving consideration to the acquisitions
described above which were accounted for as poolings of
interests.
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<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE J - COMMITMENTS AND CONTINGENT LIABILITIES
The Company operates out of sub - leased facilities under the
terms of a month-to-month rental agreement. The primary tenant
is one of the Company's shareholders. Rent expense was $43.984
and $0 for 1999 and 1998, respectively. The Company also has an
overhead (expenses related to occupancy, such as telephone,
utilities, etc.) reimbursement agreement which is based on the
square-footage occupied, with this same stockholder. This
arrangement calls for monthly billings. See the related party
footnote disclosures in Note L for a summary of amounts incurred
and paid under this reimbursement agreement.
On November 29, 1999, the Board of Directors approved the buy-
back of up to 200,000 shares of the Company's common shares for a
price not to exceed $5 per share for a period of 180 days from
the date the Company issues a press release to its stockholders
announcing such a buy-back. See Note M for discussion of
subsequent events.
On December 22, 1999, the Company entered into a consulting
contract with Dr. Gary Edwards (the person from whom the web site
described in the EYESITE.COM, Inc. acquisition Note C was
purchased) to maintain and enhance the web site. Among other
things, the agreement provides for 36 monthly payments of $7,000
which is for 200 hours per month at $35 per hour for Dr. Edwards
services.
NOTE K - STOCK OPTIONS
The Company has employment agreements with its president and its
chief operating officer which provide, among other things, for
the payment of a base salary, car allowance, life insurance
premiums, and non-qualified stock options (granted October 27,
1999) to purchase 250,000 shares each of common stock at $.25 per
share. The fair value of the common stock on the grant date was
$0.25. The options vest monthly over a period of 5 years.
Certain key employees and two directors were also granted similar
non-qualified stock options on October 27, 1999 to purchase
452,500 shares of the Company's common stock at $0.25 per share.
The options vest ratably over 60 months. The fair value of the
common stock on the date of grant was $0.25.
No compensation expense has been recorded for these stock options
as the Company will account for them under APB No. 25. At
December 31, 1999, none of the options had been exercised nor
had any of them lapsed. The pro forma effect of this stock-
based compensation on earnings had SFAS No. 123 been utilized is
not material (approximately $2,000 additional expense).
-54-
<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE L - RELATED PARTY TRANSACTIONS
Related Party & Balance at Amounts Amounts Balance at
Relationship Dec 31, 1998 Advanced Collected Dec 31, 1999
- --------------- ------------ --------- ---------- ------------
Teman Electric $ - 0 - $ 342,884 $ - 0 - $ 342,884
(1) (See
Note E)
Memorabilia & - 0 - 405,051 40,000 365,051
Antiquities (2) (See
Note E)
Marathon - 0 - 40,158 - 0 - 40,158
Group(1) (See
Note E)
Joe Glover (1) - 0 - 10,000 - 0 - 10,000
Dan Weaver (1) - 0 - 5,000 - 0 - 5,000
Funds Amounts
Received from Repaid
DIVA (3) - 0 - $1,581,069 $540,000 $(1,041,069)
Strateia Group (1) - 0 - 98,524 92,562 ( 5,962)
Other Transactions With Related Parties
Dan Weaver (1) Common Stock
for Services $ 28,625
Dan Weaver (1) Sell Auto
to Co. $ 4,200
Strateia Sell Intangibles
Group (1) to the Company $ 175,000
Stratiea Overhead
Group (1) Reimbursement $ 24,540
(1) Stockholder
(2)Owned by President of Rhino
(3) Common officers & shareholders
-55-
<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE M - NON-CASH INVESTING AND FINANCING TRANSACTIONS
1999 1998
-------- --------
Spin-off of Unique Ideas, Inc. $ 497,549 $ -0-
Debt converted to common stock 177,500 7,500
Debentures converted to common stock 92,500 30,000
Intangibles purchased with a note 225,000 -0-
Prepaid marketing costs 800,000 -0-
NOTE N - SUBSEQUENT EVENTS
On February 9, 2000, the Company filed a registration statement
on Form 10-SB with the Securities and Exchange Commission. The
effective date of the registration statement, pending the
submission of a pre-effective amendment that addresses comments
of the Commission, is anticipated to be April 9, 2000. A public
offering may commence shortly after this time, if approved by the
Board of Directors.
Since year end and through the date of the independent auditor's
report (February 29, 2000), the Company collected $387,551 of the
outstanding notes receivable and borrowed an additional $300,000
from Net.Return, Inc. and $50,000 from DIVA.
In accordance with the announced plans of management discussed in
Note J above to begin repurchasing some of the outstanding shares
of the Company, $53,532 was expended to repurchase 14,450 shares.
NOTE O - CONCENTRATIONS OF CREDIT RISK
The Company maintains cash in several accounts with financial
institutions, including a money market account with a national
brokerage house. At December 31, 1999, the Company had $188,348
funds on deposit with one bank in excess of the Federally insured
limits of $100,000.
NOTE P - ADDITIONAL DISCLOSURES RELATED TO THE POOLING
ACQUISITIONS
Loss previously reported
by Unique Fashions, Inc. for 1998 $ 30,389
Loss incurred by Executive
Assistance, Inc. for 1998 3,555
Loss incurred by Framing
Systems, Inc. for 1998 10,208
-------
Restated loss for 1998 $ 44,152
-------
-56-
<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE Q - SEGMENT INFORMATION
The Company organizes its business into two reportable segments -
business incubation and e-commerce entities. As previously
discussed in these notes, the business incubation segment
includes the parent company, Rhino, its subsidiary Executive
Assistance, Inc., and its equity method investee, E-Data Alliance
Corp. This segment provides various forms of assistance (in the
form of management, consulting services, and financing) to assist
start-up and emerging enterprises as well as established
operating companies to position themselves to enter capital
markets. Segment revenues consist of fees, overhead
reimbursements, interest income on funds advanced in the form of
short term notes, and the earnings of subsidiaries and equity
method investees.
The e-commerce segment represents the subsidiaries (Framing
Systems, Inc. and Eyesite.Com) that are entering the tremendous
markets available through the Internet. All operations, at
present, are located within the United States. Revenues arise
from sales primarily to unrelated third parties.
The segments' accounting policies are the same as those of the
Company described in the summary of significant accounting
policies. A summary, by segment, of the Company's significant
assets, liabilities, revenues and expenses is presented on the
ensuing schedules for the years ended December 31, 1999 and 1998.
-57-
<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
FOOTNOTE FOR SEGMENT DISCLOSURES
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
SEGMENT DATA -- 1999 Incubator E-Commerce Eliminations Consolidated
<S> <C> <C> <C> <C>
========================= ----------- ------------ -------------- --------------
Asset Information
- -------------------------
Current Assets, other than
notes receivable $ 1,194,954 $ 117 $ 0 $ 1,195,071
Notes receivable 1,772,443 110,955 (299,354) 1,584,044
Investment in equity
method investees 200,000 0 0 200,000
Other long-lived assets 315,120 106,270 (107,841) 313,550
----------- ------------ -------------- -------------
Total Assets $ 3,482,517 $ 217,342 $ (407,195) $ 3,292,665
=========== ============ ============== =============
Profit and Loss Information
- ----------------------------
Revenues from external
customers $ 8,861 $ 1,061 $ 0 $ 9,922
Revenues from other
operating segments 0 0 0 0
Interest revenue 16,467 5,230 0 21,697
Other income 12,746 0 0 12,746
Operating expenses (556,731) (188,368) 0 (745,099)
Interest expense (26,779) (26,779)
Depreciation and amortization (5,589) (6,264) 0 (11,853)
----------- ----------- ------------- ------------
Net Loss $ (551,025) $ (188,341) $ 0 $ (739,366)
=========== =========== ============= ============
Income tax 0 0 0 0
Equity in net income of
equity method investees 0 0 0 0
</TABLE>
-58-
<PAGE>
RHINO ENTERPRISES GROUP, INC. AND SUBSIDIARIES
FOOTNOTE FOR SEGMENT DISCLOSURES
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
SEGMENT DATA -- 1998 Incubator E-Commerce Eliminations Consolidated
<S> <C> <C> <C> <C>
========================= ----------- ------------ -------------- -------------
Asset Information
- -------------------------
Current Assets, other
than notes receivable $ 795 $ 313 $ 0 $ 1,108
Receivables 0 0 0 0
Investment in equity
method investees 0 0 0 0
Other long-lived assets 675 8,821 (675) 8,821
----------- ------------ -------------- ------------
Total Assets $ 1,470 $ 9,134 $ (675) $ 9,929
=========== ============ ============== ============
Profit and Loss Information
- ----------------------------
Revenues from external
customers $ 0 $ 0 $ 0 $ 0
Revenues from other
operating segments 0 0 0 0
Interest revenue 0 0 0 0
Other income 0 0 0 0
Operating expenses (15,142) (5,662) 0 (20,804)
Interest expense (12,500) 0 0 (12,500)
Depreciation and amortization (6,302) (4,546) 0 (10,848)
----------- ------------ -------------- -------------
Net Loss $ (33,944)$ (10,208)$ 0 $ (44,152)
=========== ============ ============== =============
Income tax 0 0 0 0
Equity in net income of
equity method investees 0 0 0 0
</TABLE>
-59-
<PAGE>
FRAMING SYSTEMS, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1998
-60-
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors
FRAMING SYSTEMS, INC.
We have audited the accompanying balance sheets of FRAMING
SYSTEMS, INC. (a Nevada C corporation and development stage
company) as of December 31, 1998 and the related statements of
income, stockholders' equity, and cash flows for the year then
ended, and for the period from January 30, 1996 (inception of
operations) 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. The financial statements for the
year ended December 31, 1997 were audited by other auditors and
their report dated March 25, 1998 was unqualified.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made 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 FRAMING SYSTEMS, INC. as of December 31, 1998 and the results
of their operations and their cash flows for the year then ended
and for the period from January 30, 1996 (inception of
operations) to December 31, 1998, in conformity with generally
accepted accounting principles.
/s/ M. C. Hunter & Associates
February 26, 2000
Fort Worth, Texas
-61-
<PAGE>
DAVID E. COFFEY
CERTIFIED PUBLIC ACCOUNTANT
3651 LINDELL RD., SUITE H
LAS VEGAS, NV 90103
(702) 871-3979
To the Board of Directors and Stockholders
of Framing Systems, Inc.
Las Vegas, Nevada
I have audited the accompanying balance sheet of Framing
Systems, Inc. (a development stage company) as of December 31,
1997 and the related statements of operations, cash flows and
changes in stockholders' deficit for the period from Jamuary 30,
1996 (date of inception) to December 31, 1997. These financial
statements are the responsibility of Framing Systems, Inc.'s
management. my responsibility is to express an opinion of these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement. An
audit includes examining, on 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 of the financial statements provide a reasonable basis for
my opinion.
In my opinion, the accompanying financial statements present
fairly, in all material respects, the financial position of
Framing Systems, Inc. as of December 31, 1997 and the results of
operations, cash flows and changes in stockholders' deficit for
the period then ended in conformity with generally accepted
accounting principles.
/s/ DAVID COFFEY C.P.A.
David Coffey C.P.A.
March 25, 1998
-62-
<PAGE>
FRAMING SYSTEMS, INC.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1998 AND 1997
ASSETS 1998 1997
--------- ---------
Cash in banks $ 313 $ 2,415
Property, plant and equipment 11,088 0
Less -- accumulated depreciation (2,267) 0
Organizational costs 0 3,695
Less -- accumulated amortization 0 (1,416)
--------- ---------
Total Assets $ 9,134 $ 4,694
========= =========
CURRENT LIABILITIES
Accounts payable $ 0 $ 330
Accrued expenses 0 15,000
Due to shareholder 203 1,195
--------- ---------
Total Current Liabilities 203 16,525
--------- ---------
STOCKHOLDERS' EQUITY
Common Stock 10,129 6,272
Paid in capital 29,431 2,318
Deficit accumulated during development
stage (30,629) (20,421)
--------- ---------
Total Stockholders' Equity 8,931 (11,831)
--------- ---------
Total Liabilities and Stockholders' Equity $ 9,134 $ 4,694
========= =========
See Notes to Financial Statements.
-63-
<PAGE>
FRAMING SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
(With Cumulative Amounts from Inception of
Operations -- January 30, 1996)
From
1998 1997 Inception
-------- ------- ----------
REVENUES $ 0 $ 0 $ 0
COST OF SALES 0 0 0
-------- ------- ----------
GROSS PROFIT 0 0 0
-------- ------- ----------
GENERAL AND ADMINISTRATIVE EXPENSES
Operating expenses 5,662 16,005 24,667
Depreciation and amortization 4,546 739 5,962
-------- ------- ----------
LOSS FROM OPERATIONS 10,208 16,744 30,629
-------- ------- ----------
OTHER INCOME (EXPENSE)
Interest income 0 0 0
Interest expense 0 0 0
-------- ------- ----------
TOTAL OTHER INCOME (EXPENSE) 0 0 0
-------- ------- ----------
LOSS BEFORE INCOME TAX 10,208 16,744 30,629
PROVISION FOR INCOME TAX 0 0 0
-------- ------- ----------
NET LOSS $ 10,208 $16,744 $ 30,629
======== ======= ==========
See Notes to Financial Statements.
-64-
<PAGE>
FRAMING SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
<TABLE>
<CAPTION>
SHARES COMMON PAID IN ACCUMULATED TOTAL
Outstanding STOCK CAPITAL DEFICIT EQUITY
------------- -------- --------- ------------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, January 30, 1996 0 $ 0 $ 0 $ 0 $ 0
Issued as compensation for services 6,000,000 6,000 6,000
Net loss -- 1996 operations (3,677) (3,677)
------------- -------- --------- ------------- --------
BALANCE, December 31, 1996 6,000,000 6,000 0 (3,677) 2,323
Private placement sale 272,000 272 2,448 2,720
Stock issuance costs (130) (130)
Net loss -- 1997 operations (16,744) (16,744)
------------- -------- --------- ------------- --------
BALANCE, December 31, 1997 6,272,000 6,272 2,318 (20,421) (11,831)
Private placement sale 3,857,000 3,857 35,613 39,470
Stock issuance costs (8,500) (8,500)
Net loss -- 1998 operations (10,208) (10,208)
------------- -------- --------- ------------- --------
BALANCE, December 31, 1998 10,129,000 $ 10,129 $ 29,431 $ (30,629) $ 8,931
============= ======== ========= ============= ========
</TABLE>
See Notes to Financial Statements.
-65-
<PAGE>
FRAMING SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
(With Cumlative Amounts from Inception of
Operations -- January 30, 1996)
From
1998 1997 Inception
--------- --------- -------------
CASH USED BY OPERATING ACTIVITIES
Net Loss $ (10,208) $ (16,744) $ (30,629)
Adjustments to reconcile
net loss to cash used
Depreciation and amortization 4,546 739 5,962
Changes in working capital (15,127) 15,330 203
--------- --------- -------------
Cash Used By Operating Activities (20,789) (675) (24,464)
--------- --------- -------------
CASH USED IN INVESTING ACTIVITIES
Purchase property and equipment (11,088) 0 (11,088)
Payments for organization costs 0 0 (695)
--------- --------- -------------
Cash Used By Investing Activities (11,088) 0 (11,783)
--------- --------- -------------
CASH PROVIDED BY FINANCING ACTIVITIES
Borrowings from shareholders 0 1,000 4,695
Repay shareholder loans (1,195) (500) (1,695)
Stock issuance costs (8,500) (130) (8,630)
Sale of common stock in private
placement offerings 39,470 2,720 42,190
--------- --------- -------------
Cash Provided by Financing
Activities 29,775 3,090 36,560
--------- --------- -------------
NET INCREASE (DECREASE) IN CASH (2,102) 2,415 313
CASH, beginning of year 2,415 0 0
--------- --------- -------------
CASH, end of year 313 2,415 313
========= ========= =============
SUPPLEMENTARY DATA -- NON CASH ITEMS
- ---------------------------------------
Stock issued as compensation
for services $ 0 $ 0 $ 6,000
See Notes to Financial Statements.
-66-
<PAGE>
FRAMING SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 - NATURE OF OPERATIONS
Framing Systems, Inc. (the "Company") was incorporated on
January 30, 1996 under the corporate statutes of the state of
Nevada. The business purpose of the Company is to develop,
produce and market a fully-operational commercial software and
hardware package for use in the custom framing industry. As of
the date of these financial statements, the Company is still in
the development stage.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organizational Costs and Amortization
The costs associated with establishing the corporation were
capitalized and amortized over a 5 year estimated useful life.
However, effective December 31, 1998, in accordance with the
provisions of the recently adopted Statement of Position 98-5 -
"Start-Up Costs", the Company wrote off the remaining unamortized
balance of previously capitalized organization costs in the
amount of $2,279.
Property, Plant, Equipment and Depreciation
Fixed assets additions are recorded at cost. Maintenance and
repairs are expensed as incurred; while renewals and betterments
are capitalized. Depreciation is computed using accelerated
methods over the estimated useful lives of each asset, which
range from 5 to 7 years.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions about certain reported amounts and
related disclosures. Actual results could differ from these
estimates.
Stock Offering Costs
Offering costs incurred by the Company in connection with a
private placement offering were deducted from the net proceeds
and reported in paid in capital.
-67-
<PAGE>
FRAMING SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company retained two of its stockholders to assist with the
formation of the corporation and initial start-up activities.
These stockholders were issued 6,000,000 shares of common stock
as compensation for those services. The Company valued those
services at $6,000 or $0.001 per share.
As the Company has had no operations to generate revenues, there
has been a need for working capital. One of the Company's
officers loaned $15,000 during 1997, which the Company repaid in
1998. In addition, two of the stockholders loaned the Company
$1,695 during 1996 and 1997, which were repaid in 1997 and 1998.
NOTE 4 - COMMON STOCK
The Company has an authorized capitalization of 25,000,000 shares
of common stock at $0.001 par value. At December 31, 1998, there
were 10,129,000 shares issued and outstanding. There are no
treasury shares.
NOTE 5 - RECLASSIFICATION OF PRIOR YEAR AMOUNTS
Certain prior year amounts have been reclassified to conform to
the current year presentation.
NOTE 6 - SUBSEQUENT EVENT
On May 13, 1999, the Company's Board of Directors accepted an
offer from Rhino Enterprises Group, Inc. (a business incubator
which provides various forms of management and marketing
expertise to start-up and emerging enterprises) to exchange its
10,129,000 shares of common stock for 405,160 shares of Rhino's
common stock. As of the date of these financial statement,
6,854,000 shares had been exchanged, resulting in Rhino owning
65% of the Company.
NOTE 7 - ADVERTISING COSTS
Any advertising costs would be expensed as incurred.
-68-
<PAGE>
FRAMING SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 8 - COMPREHENSIVE INCOME
The Company has no items of "other comprehensive income;"
therefore, comprehensive income equals net income.
NOTE 9 - INCOME TAX
Income tax is provided for the tax effects of transactions
reported in the financial statements and consist of taxes
currently due plus deferred taxes. Deferred tax assets and
liabilities are recognized for temporary differences between the
tax basis of assets and liabilities for financial reporting and
income tax purposes. Deferred tax assets and liabilities
represent future tax return consequences of those temporary
differences. At December 31, 1998, there were no significant
deferred tax assets or liabilities that had been recognized in
the financial statements. The Company files a separate tax
return from its new Parent Company (see Note 6 above) and as of
December 31, 1998 has a tax loss carryforward of approximately
$25,000. No deferred tax asset has been recorded for this
temporary difference since management believes that it is not
more likely than not that this future tax benefit will ever be
realized.
-69-
<PAGE>
FRAMING SYSTEMS, INC.
INTERIM FINANCIAL STATEMENTS
MARCH 31, 1999
-69-
<PAGE>
FRAMING SYSTEMS, INC.
(A Development Stage Company)
BALANCE SHEET
MARCH 31, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
March 31, Dec. 31,
ASSETS 1999 1998
-------------- --------------
<S> <C> <C>
Cash in banks $ 289 $ 313
Property, plant and equipment 11,088 11,088
Less -- accumulated depreciation (3,125) (2,267)
Organizational costs 0 0
Less -- accumulated amortization 0 0
-------------- --------------
Total Assets $ 8,252 $ 9,134
============== ==============
CURRENT LIABILITIES
Accounts payable $ 0 $ 0
Accrued expenses 0 0
Due to shareholder 203 203
-------------- --------------
Total Current Liabilities 203 203
-------------- --------------
STOCKHOLDERS' EQUITY
Common Stock 10,129 10,129
Paid in capital 29,431 29,431
Deficit accumulated during development stage (31,511) (30,629)
-------------- --------------
Total Stockholders' Equity 8,049 8,931
-------------- --------------
Total Liabilities and Stockholders' Equity $ 8,252 $ 9,134
============== ==============
</TABLE>
See Notes to Interim Financial Statements.
-70-
<PAGE>
FRAMING SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF INCOME
FOR THE QUARTER ENDED MARCH 31, 1999 AND 1998
(With Cumulative Amounts from Inception of
Operations January 30, 1996)
<TABLE>
<CAPTION>
March 31, March 31, From
1999 1998 Inception
---------- ----------- -----------
<S> <C> <C> <C>
REVENUES $ 0 $ 0 $ 0
COST OF SALES 0 0 0
---------- ----------- -----------
GROSS PROFIT 0 0 0
---------- ----------- -----------
GENERAL AND ADMINISTRATIVE EXPENSES
Operating expenses 24 3,407 24,691
Depreciation and amortization 858 412 6,820
---------- ----------- -----------
LOSS FROM OPERATIONS 882 3,819 31,511
---------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest income 0 0 0
Interest expense 0 0 0
---------- ----------- -----------
TOTAL OTHER INCOME (EXPENSE) 0 0 0
---------- ----------- -----------
LOSS BEFORE INCOME TAX 882 3,819 31,511
PROVISION FOR INCOME TAX 0 0 0
---------- ----------- -----------
NET LOSS $ 882 $ 3,819 $ 31,511
========== =========== ===========
</TABLE>
See Notes to Interim Financial Statements.
-71-
<PAGE>
FRAMING SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
<TABLE>
<CAPTION>
SHARES COMMON PAID IN ACCUMULATED TOTAL
Outstanding STOCK CAPITAL DEFICIT EQUITY
----------- --------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
BALANCE, January 30, 1996 0 $ 0 $ 0 $ 0 $ 0
Issued as compensation for services 6,000,000 6,000 6,000
Net loss -- 1996 operations (3,677) (3,677)
----------- --------- ---------- ------------ --------
BALANCE, December 31, 1996 6,000,000 6,000 0 (3,677) 2,323
Private placement sale 272,000 272 2,448 2,720
Stock issuance costs (130) (130)
Net loss -- 1997 operations (16,744) (16,744)
----------- --------- ---------- ------------ --------
BALANCE, December 31, 1997 6,272,000 6,272 2,318 (20,421) (11,831)
Private placement sale 3,857,000 3,857 35,613 39,470
Stock issuance costs (8,500) (8,500)
Net loss -- 1998 operations (10,208) (10,208)
----------- --------- ---------- ------------ --------
BALANCE, December 31, 1998 10,129,000 $ 10,129 $ 29,431 $ (30,629) $ 8,931
Net loss -- First quarter 99
operations (882) (882)
----------- --------- ---------- ------------ --------
BALANCE, March 31, 1999 10,129,000 10,129 29,431 (31,511) 8,049
=========== ========= ========== ============ ========
</TABLE>
See Notes to Interim Financial Statements.
-72-
<PAGE>
FRAMING SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDED MARCH 31, 1999 AND 1998
(With Cumlative Amounts from Inception of
Operations -- January 30, 1996)
<TABLE>
<CAPTION>
March 31, March 31, From
1999 1998 Inception
------------ ------------ -----------
<S> <C> <C> <C>
CASH USED BY OPERATING ACTIVITIES
Net Loss $ (882) $ (3,819) $ (30,629)
Adjustments to reconcile net loss to cash used
Depreciation and amortization 858 412 5,962
Changes in working capital 0 (15,200) 203
------------ ------------ -----------
Cash Used By Operating Activities (24) (18,607) (24,464)
------------ ------------ -----------
CASH USED IN INVESTING ACTIVITIES
Purchase property and equipment 0 (3,588) (11,088)
Payments for organization costs 0 0 (695)
------------ ------------ -----------
Cash Used By Investing Activities 0 (3,588) (11,783)
------------ ------------ -----------
CASH PROVIDED BY FINANCING ACTIVITIES
Borrowings from shareholders 0 0 4,695
Repay shareholder loans 0 (1,195) (1,695)
Stock issuance costs 0 (8,630) (8,630)
Sale of common stock in private placement offerings 0 39,470 42,190
------------ ------------ -----------
Cash Provided by Financing Activities 0 29,645 36,560
------------ ------------ -----------
NET INCREASE (DECREASE) IN CASH (24) 7,450 313
CASH, beginning of year 313 2,415 0
------------ ------------ -----------
CASH, end of year $ 289 $ 9,865 $ 313
============ ============ ===========
SUPPLEMENTARY DATA -- NON CASH ITEMS
- ----------------------------------------------
Stock issued as compensation for services $ 0 $ 0 $ 6,000
</TABLE>
See Notes to Interim Financial Statements.
-73-
<PAGE>
FRAMING SYSTEMS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
MARCH 31, 1999
NOTE 1 - NATURE OF OPERATIONS
Framing Systems, Inc. (the "Company") was incorporated on
January 30, 1996 under the corporate statutes of the state of
Nevada. The business purpose of the Company is to develop,
produce and market a fully-operational commercial software and
hardware package for use in the custom framing industry. As of
the date of these financial statements, the Company is still in
the development stage.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organizational Costs and Amortization
The costs associated with establishing the corporation were
capitalized and amortized over a 5 year estimated useful life.
However, effective December 31, 1998, in accordance with the
provisions of the recently adopted Statement of Position 98-5
"Start-Up Costs", the Company wrote off the remaining unamortized
balance of previously capitalized organization costs in the
amount of $2,279.
Property, Plant, Equipment and Depreciation
Fixed assets additions are recorded at cost. Maintenance and
repairs are expensed as incurred; while renewals and betterments
are capitalized. Depreciation is computed using accelerated
methods over the estimated useful lives of each asset, which
range from 5 to 7 years.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions about certain reported amounts and
related disclosures. Actual results could differ from these
estimates.
Stock Offering Costs
Offering costs incurred by the Company in connection with a
private placement offering were deducted from the net proceeds
and reported in paid in capital.
Interim Accounting Periods
These interim financial statements reflect all adjustments which
are, in the opinion of management, necessary to a fair
presentation of the financial position and results of operations
for the quarter ended March 31, 1999.
-74-
<PAGE>
FRAMING SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company retained two of its stockholders to assist with the
formation of the corporation and initial start-up activities.
These stockholders were issued 6,000,000 shares of common stock
as compensation for those services. The Company valued those
services at $6,000 or $0.001 per share.
As the Company has had no operations to generate revenues, there
has been a need for working capital. One of the Company's
officers loaned $15,000 during 1997, which the Company repaid in
1998. In addition, two of the stockholders loaned the Company
$1,695 during 1996 and 1997, which were repaid in 1997 and 1998.
NOTE 4 - COMMON STOCK
The Company has an authorized capitalization of 25,000,000 shares
of common stock at $0.001 par value. At March 31, 1999, there
were 10,129,000 shares issued and outstanding. There are no
treasury shares.
NOTE 5 - RECLASSIFICATION OF PRIOR YEAR AMOUNTS
Certain prior year amounts have been reclassified to conform to
the current year presentation.
NOTE 6 - SUBSEQUENT EVENT
On May 13, 1999, the Company's Board of Directors accepted an
offer from Rhino Enterprises Group, Inc. (a business incubator
which provides various forms of management and marketing
expertise to start-up and emerging enterprises) to exchange its
10,129,000 shares of common stock for 405,160 shares of Rhino's
common stock. As of the date of these financial statement,
6,854,000 shares had been exchanged, resulting in Rhino owning
65% of the Company.
NOTE 7 - ADVERTISING COSTS
Any advertising costs would be expensed as incurred.
-75-
<PAGE>
FRAMING SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
NOTE 8 - COMPREHENSIVE INCOME
The Company has no items of "other comprehensive income;"
therefore, comprehensive income equals net income.
NOTE 9 - INCOME TAX
Income tax is provided for the tax effects of transactions
reported in the financial statements and consist of taxes
currently due plus deferred taxes. Deferred tax assets and
liabilities are recognized for temporary differences between the
tax basis of assets and liabilities for financial reporting and
income tax purposes. Deferred tax assets and liabilities
represent future tax return consequences of those temporary
differences. At March 31, 1999, there were no significant
deferred tax assets or liabilities that had been recognized in
the financial statements. The Company files a separate tax
return from its new Parent Company (see Note 6 above) and as of
December 31, 1998 has a tax loss carryforward of approximately
$25,000. No deferred tax asset has been recorded for this
temporary difference since management believes that it is not
more likely than not that this future tax benefit will ever be
realized.
-76-
<PAGE>
E-DATA ALLIANCE CORP.
INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 1999
-77-
<PAGE>
E-DATA ALLIANCE CORP.
BALANCE SHEET
NOVEMBER 30, 1999
November 30,
1999
-----------------
ASSETS
- --------------------------------------
Cash in banks $ 62,578
Receivables -- trade 10,000
-- stock subscription 9,000
-----------------
Total Current Assets 81,578
Property, plant and equipment 46,205
Less -- accumulated depreciation (1,781)
-----------------
Total Assets $ 126,002
=================
CURRENT LIABILITIES
- --------------------------------------
Accounts payable $ 11,199
Accrued expenses 2,250
Short - term note payable 100,000
-----------------
Total Current Liabilities 113,449
-----------------
STOCKHOLDERS' EQUITY
- --------------------------------------
Common stock 10,000
Retained earnings 2,553
-----------------
Total Stockholders' Equity 12,553
-----------------
Total Liabilities and Stockholders' Equity $ 126,002
=================
See Notes to Interim Financial Statements.
-78-
<PAGE>
E-DATA ALLIANCE CORP.
STATEMENT OF INCOME
FOR THE PERIOD FROM JULY 2, 1999 (Inception of Operations)
TO NOVEMBER 30, 1999
November 30, From
1999 Inception
-------------- --------------
REVENUES $ 15,000 $ 15,000
COST OF SALES 0 0
-------------- --------------
GROSS PROFIT 15,000 15,000
GENERAL AND ADMINISTRATIVE EXPENSES
Operating expenses (3,997) (3,997)
Personnel costs (6,669) (6,669)
Depreciation (1,781) (1,781)
-------------- --------------
INCOME FROM OPERATIONS 2,553 2,553
-------------- --------------
OTHER INCOME (EXPENSE)
Interest income 0 0
Interest expense 0 0
-------------- --------------
TOTAL OTHER INCOME (EXPENSE) 0 0
-------------- --------------
INCOME BEFORE TAX 2,553 2,553
PROVISION FOR INCOME TAX 0 0
-------------- --------------
NET INCOME $ 2,553 $ 2,553
============== ==============
See Notes to Interim Financial Statements.
-79-
<PAGE>
E-DATA ALLIANCE CORP.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JULY 2, 1999 (Inception of Operations)
TO NOVEMBER 30, 1999
<TABLE>
<CAPTION>
Shares COMMON PAID IN RETAINED TOTAL
Outstanding STOCK CAPITAL EARNINGS EQUITY
------------ --------- --------- ---------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, July 2, 1999 0 $ 0 $ 0 $ 0 $ 0
Issued in organization 10,000 10,000 10,000
Net profit for five months 2,553 2,553
------------ --------- --------- ---------- --------
BALANCE, November 30, 1999 10,000 $ 10,000 $ 0 $ 2,553 $ 12,553
============ ========= ========= ========== ========
</TABLE>
See Notes to Interim Financial Statements.
-80-
<PAGE>
E-DATA ALLIANCE CORP.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JULY 2, 1999 (Inception of Operations)
TO NOVEMBER 30, 1999
November 30, From
1999 Inception
-------------- -------------
CASH USED BY OPERATING ACTIVITIES
Net Profit $ 2,553 $ 2,553
Adjustments to reconcile net
loss to cash used
Depreciation and amortization 1,781 1,781
Increase in accounts payable
and accrued expenses 13,449 13,449
Increase in accounts receivable (10,000) (10,000)
-------------- -------------
Cash Used By Operating
Activities 7,783 7,783
-------------- -------------
CASH USED IN INVESTING ACTIVITIES
Purchase property and equipment (46,205) (46,205)
-------------- -------------
Cash Used By Investing
Activities (46,205) (46,205)
-------------- -------------
CASH PROVIDED BY FINANCING ACTIVITIES
Borrowings 100,000 100,000
Sale of common stock in
private placement offerings 1,000 1,000
-------------- -------------
Cash Provided by
Financing Activities 101,000 101,000
-------------- -------------
NET INCREASE IN CASH 62,578 62,578
CASH, beginning of year 0 0
-------------- -------------
CASH, end of year $ 62,578 $ 62,578
============== =============
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING TRANSACTIONS
- ---------------------------------------
Interest paid $ 0 $ 0
Common stock issued but
not paid for 9,000 9,000
Income tax paid 0 0
See Notes to Interim Financial Statements.
-81-
<PAGE>
E-DATA ALLIANCE CORP.
NOTES TO INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 1999
NOTE 1 - NATURE OF OPERATIONS
E-DATA ALLIANCE CORP. (the "Company") was incorporated on June
2, 1999, under the for-profit corporation statutes of the state
of Texas. The business purpose of the Company is to design and
develop web sites for small business and other organizations.
The Company also provides web hosting services.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property, Plant, Equipment and Depreciation
Fixed assets additions are recorded at cost. Maintenance and
repairs are expensed as incurred; while renewals and betterments
are capitalized. Depreciation is computed using accelerated
methods over the estimated useful lives of each asset, which
range from 5 to 7 years.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions about certain reported amounts and
related disclosures. Actual results could differ from these
estimates.
Revenue Recognition
Revenues from Web site hosting are recognized as they are billed
monthly. Hosting services to third parties and an affiliated
entity began in December 1999. Revenues from Web site design are
recognized as they are billed as work progresses.
Allowance for Uncollectible Accounts Receivable
Management believes that no allowance for uncollectible accounts
receivable is necessary at November 30, 1999.
Advertising
The Company expenses advertising costs as they are incurred.
-82-
<PAGE>
E-DATA ALLIANCE CORP.
NOTES TO INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 1999
NOTE 3 - RELATED PARTY TRANSACTIONS
The revenues shown in the accompanying statement of income arose
from designing a web site for an affiliate of Rhino Enterprises
Group, Inc., who, as discussed in Note 8 below, became a 50%
shareholder in December, 1999.
NOTE 4 - COMMON STOCK
The Company has an authorized capitalization of 1,000,000 shares
of common stock at $0.001 par value. At November 30, 1999,
there were 10,000 shares issued and outstanding. There are no
treasury shares.
NOTE 5 - INDEBTEDNESS
The Company has the following short-term notes payable
outstanding at November 30, 1999 -
Digital Information & Virtual Access, Inc.,
note payable, with interest at 10%, due 180
days from September 28, 1999. Note is
unsecured. $ 50,000
Digital Information & Virtual Access, Inc.,
note payable, with interest at 10%, due 180
days from October 22, 1999. Note is unsecured. $ 50,000
---------
$ 100,000
---------
These obligations were forgiven in the transaction described
in Note 6 below; consequently, no interest has been accrued in
the accompanying statement of income.
NOTE 6 - COMPREHENSIVE INCOME
The Company has no items of "other comprehensive income;"
therefore, comprehensive income equals net income.
-83-
<PAGE>
E-DATA ALLIANCE CORP.
NOTES TO INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 1999
NOTE 7 - INCOME TAX
Income tax is provided for the tax effects of transactions
reported in the financial statements and consist of taxes
currently due plus deferred taxes. Deferred tax assets and
liabilities are recognized for temporary differences between the
tax basis of assets and liabilities for financial reporting and
income tax purposes. Deferred tax assets and liabilities
represent future tax return consequences of those temporary
differences. At November 30, 1999, there were no significant
deferred tax assets or liabilities that had been recognized in
the financial statements. The Company will file a separate tax
return and for the tax year ended December 31, 1999 and expects
to report nominal taxable income.
NOTE 8 SUBSEQUENT EVENT
On December 17, 1999, the Company issued 10,000 shares of its
common stock to Rhino Enterprises Group, Inc. (a business
incubator which provides various forms of management and
marketing expertise to assist start-up and emerging enterprises).
The consideration received for these shares was an infusion of
$100,000 of cash from Rhino and the forgiveness of the loans made
by Digital Information & Virtual Access, Inc. ("DIVA"). In
addition, the Company will receive $800,000 of advertising and
marketing services from national and local media companies,
including but not limited to DIVA and its subsidiary, Money
Business, Inc. d.b.a. "The Underground Shopper". Rhino
Enterprises Group, Inc. will negotiate for and procure these
advertising and marketing services.
NOTE 9 - ACCOUNTING FOR INTERIM PERIODS
The accompanying interim period financial statements reflect all
adjustments which are, in the opinion of management, necessary to
a fair presentation of the financial position and results of
operations for the five months ended November 30, 1999.
-84-
<PAGE>
PART III
ITEMS 1 AND 2. INDEX TO EXHIBITS AND DESCRIPTION
Exhibit
Number Description
- ------- -----------------------------------------------------
10.0 Asset Purchase Agreement
23.0 Accountant's Consent
27.0 Financial Data Schedule
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant has caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly
authorized.
Rhino Enterprises Group, Inc.
(Registrant)
Date: May 4, 2000 By: /s/ ROBERT W. MOEHLER
--------------------------------
Robert W. Moehler
President and duly
authorized officer
-85-
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into to be effective as of the _______ day of December,
1999, by and among EYESITE.COM, INC., a Delaware corporation
(hereinafter referred to as "Buyer"), and GARY EDWARDS, M.D., an
individual (hereinafter referred to as "Seller").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of creating,
publishing, updating and maintaining that certain commercial web
site with the registered domain of "http://www.eyesite.com," and
other businesses, activities and endeavors related thereto (the
businesses, activities and endeavors (but expressly excluding
Seller's ophthalmology practice and Seller's Success
International corporation) related thereto are hereinafter
collectively referred to as the "Business"); and
WHEREAS, pursuant to the terms and provisions contained
herein, Seller desires to sell to Buyer and Buyer desires to
purchase from Seller, the Business as a going concern and certain
properties, assets and rights of Seller's Business as provided
herein.
NOW, THEREFORE, for and in consideration of the premises and
the mutual representations, warranties, covenants and agreements
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
ARTICLE I
TERMS OF PURCHASE AND SALE
Section 1.1 Purchase and Sale of Assets.
(a) Pursuant to the terms and provisions contained
herein, Seller hereby agrees to sell, assign, transfer and convey
to Buyer at Closing (as defined hereafter), and Buyer hereby
agrees to purchase from Seller at Closing, certain properties,
assets and rights of Seller as described as follows, and as
identified on Exhibit A attached hereto and incorporated herein
by reference:
(i) All of Seller's right, title and interest in
and to the registered domain "http://www.eyesite.com" (the "Web
site") as such Web site exists as to the date of Closing;
(ii) All right, title and interest, if any and of
whatever kind or character, of Seller in and to all customer
lists, customer files, customer information, marketing and
promotional materials, manuals, marketing studies or analysis or
any other records or memoranda relating in any manner whatsoever
to Seller's Web site customers or
1
<PAGE>
advertisers (collectively, the "Customers") or sales directly or
indirectly related to the Web site (hereinafter collectively
referred to as the "Customer Lists");
(iii) All original files, books and records of
Seller with respect to the Customers and Customer Lists
including, without limitation, all Customer files, Customer
account histories, Customer purchasing and payment history,
Customer credit files, etc., as well as a list of all current and
previous suppliers or manufacturers to the Business within the
past two (2) years with sales in excess of Five Thousand and
00/100 Dollars ($5,000.00) per year;
(iv) To the extent such are assumable, all right,
title and interest of Seller as of the date of Closing in, to and
under the contracts, leases, franchises, agreements,
arrangements, understandings, commitments and business
relationships and all of Seller's rights (including rights of
refund and offset), including without limitation, the Internic
and Cybercom relationships and agreements, deposits, privileges,
claims, causes of action and options relating to or pertaining to
the Web site (collectively, the "Contract Rights");
(v) All of Seller's right, title and interest in
and to any and all income and payments due Seller relating to and
arising out of the Business as of the date of Closing;
(vi) To the extent transferable, all right, title
and interest of Seller as of the date of Closing in, to and under
all permits and licenses relating to the Web site, the Business
or all or any of the Assets (as defined below);
(vii) All right, title and interest of Seller in and
to all prepaid rentals and other prepaid expenses, bonds,
deposits and financial assurance requirements relating to any of
the Assets or the Business, including without limitation, any
prepaid amounts to Internic;
(viii) All right, title and interest of Seller in and
to any benefit of and the right to enforce the covenants and
warranties, if any, the Seller is entitled to enforce with
respect to the Assets against Seller's predecessors and title to
the Assets;
(ix) All of Seller's right, title and interest in
the name "eyesite.com," "Eyesite.Com," "Eyesite" and all related
and similar names, logos and trade names including, without
limitation, any of Seller's corporate, copyright, trademark,
trade name and service mark rights and interest in such names,
logos and trade names; provided, however, that Buyer and Seller
agree and acknowledge that parties other than Seller may have
certain rights in the trade name "Eyesite";
(x) All right, title and interest of Seller in, to
and under all rights, privileges, claims, causes of actions and
options relating or pertaining to the Business or the Assets;
(xi) All right, title and interest of Seller in and
to the goodwill of the Business;
2
<PAGE>
All of the assets, properties and rights listed in this
subparagraph (a) shall hereinafter be referred to collectively as
the "Assets."
(b) Notwithstanding anything to the contrary contained
herein, the Assets shall not include (i) all claims of Seller for
refunds for any income taxes (whether federal, state, local,
foreign or other) applicable to periods prior to the or after the
date of Closing; (ii) any rights accruing as a result of, or any
proceeds paid or payable in accordance with the Agreement; (iii)
any and all insurance proceeds and insurance claims of Seller,
except for proceeds and claims relating to any damage, loss or
casualty to the Assets accruing after the execution of this
Agreement but prior to the date of Closing; or (iv) any assets
and contracts relating to Seller's ophthalmology practice or
Seller's Success International corporation or as specifically
listed on Schedule 1.1(b) hereto (hereinafter collectively
referred to as the "Excluded Assets").
(c) It is expressly understood and agreed among the
parties hereto that Buyer is not assuming, and shall not be
deemed to assume, any liabilities of Seller relating to the
Assets or arising out of the Business, except those specifically
listed on Schedule 1.1(c) hereto (the "Assumed Liabilities").
Section 1.2 Purchase Price and Other Consideration.
(a) The total consideration to be paid by Buyer to
Seller (the "Purchase Price") for all of the Assets purchased
hereunder shall be equal to: (i) cash in the aggregate amount of
Fifty Thousand and No/100 Dollars ($50,000.00), payable in six
(6) equal monthly installments, the first of which shall be paid
at Closing; and (ii) the greater of Five Hundred Thousand
(500,000) shares of Buyer's founders' common stock, or ten
percent (10%) of Buyer's then-outstanding founders' common stock
as of the date of Closing. The Purchase Price shall be payable
at or before Closing by (a) the issuance to Seller or Seller's
designee(s) of certain common stock of Buyer, (b) delivery by
Buyer of one or more certified checks or wire transfers drawn on
Buyer's bank account of an amount not to exceed Eight Thousand
Three Hundred Thirty-Three and 33/100 Dollars ($8,333.33),
payable to Seller, and (c) assumption of certain obligations of
Seller as set forth specifically on Schedule 1.1(c) hereto.
(b) In addition, Buyer and Seller agree and acknowledge
that, at the sole option of Buyer, Buyer may elect to terminate
all of its obligations under this Agreement with no further
obligation of Buyer, in the event of a material change in the
Business prior to the Closing; for purposes of illustration but
not for purposes of exclusion, a "material change" in the
Business would include but shall not be limited to a loss of a
one or more customer relationship(s) which constitute
individually or in the aggregate more than ten percent (10%) by
gross revenue of the Business.
(c) After the Closing, Buyer shall offer a Consulting
Arrangement to Seller, and Seller shall agree to be engaged by
Buyer, subject to the terms and conditions set forth in the
Consulting
3
<PAGE>
Agreement on Exhibit B, which is incorporated herein for all
purposes. Additionally, Seller shall be offered a seat on
Buyer's board of directors including, without limitation,
reasonable protection under Buyer's director and officer errors
and omissions insurance policy.
(d) The parties hereto acknowledge and agree that Buyer
shall not be required to, nor shall Buyer assume, adopt or accept
any employee benefit plan, contract, practice, program, policy or
arrangement or any kind of Seller.
Section 1.3 Compliance with Uniform Commercial Code - Bulk
Transfers. Seller and Buyer acknowledge and agree that the
purchase and sale of the Assets may be subject to Chapter 6 of
the Uniform Commercial Code enacted in the State of Hawaii
regarding bulk transfers. In that regard, Seller hereby agrees
to indemnify, defend and hold harmless Buyer, and Buyer's
directors, officers and agents from and against any and all
demands, claims, actions or causes of actions, assessments,
losses, damages, liabilities, costs and expenses, including
reasonable attorney's fees, asserted against or imposed upon or
incurred by Buyer, its directors, officers and agents, as the
case may be, directly or indirectly, in whole or in part,
resulting from any alleged noncompliance of such former
provisions by Seller.
Section 1.4 Allocation of Purchase Price. The Purchase
Price shall be allocated among the Assets in the manner set forth
in a schedule to be delivered by Buyer to Seller within thirty
(30) days of the Closing Date, and the parties agree (a) to
comply with all filing, notice and reporting requirements
described in Section 1060 of the Internal Revenue Code of 1986,
as amended (the "Code") and (b) that, without the consent of both
parties, neither party will make any representation to any party
as to such allocation that is at variance with the allocation set
forth on such schedule.
Section 1.5 Deferred Vesting of the Assets; Possible
Reversion to Seller.
(a) Notwithstanding any other provision of this
Agreement, Seller and Buyer acknowledge and agree that the
ownership of the assets and the full vesting of such ownership in
Buyer is contingent upon Buyer remitting to Seller the amount set
forth in Subsection 1.5(b) below or achieving any two (2) of the
following three (3) performance criteria within thirty-six (36)
months of the Closing Date:
(i) Achievement of status of Buyer as a registered
public company with NASDAQ or any other recognized United States
stock exchange, with its common stock price trading at a minimum
of Three and No/100 Dollars ($3.00) per share (based upon a ten
(10) day average closing bid and ask price);
(ii) Achievement of Buyer of a book value of not
less than Five and No/100 Dollars ($5.00) per share, based upon
generally accepted accounting principles and audited financial
statements; or
4
<PAGE>
(iii) Completion of funding from any source
whatsoever that makes available to Buyer at least Three Million
Five Hundred Thousand and No/100 Dollars ($3,500,000.00) in cash.
(b) Buyer and Seller hereby further agree that should
Buyer fail to achieve at least two (2) of three (3) criteria set
forth in Subsection 1.5(a) above, Buyer shall alternatively have
the right, in its sole discretion, to remit to Seller the sum of
Five Hundred Thousand and No/100 Dollars ($500,000.00) in cash
within a one (1) month period from the expiration of the thirty-
six (36) month period described in Subsection 1.5(a) above, in
addition to any other consideration set forth in Section 1.2
above.
(c) If Buyer satisfies any two (2) of the three (3)
criteria set forth in Section 1.5(a) above or pays the amount set
forth in Subsection 1.5(b) above, full ownership of the Assets
will immediately and absolutely vest in Buyer without further
actions of either Buyer or Seller. In the event Buyer fails to
achieve two (2) of the three (3) criteria set forth in Subsection
1.5(a) above or, in the alternative, to pay the additional
purchase price of Five Hundred Thousand and No/100 Dollars
($500,000.00) described in Subsection 1.5(b) on or before the
date which is one (1) month following the expiration of the
thirty-six (36) month period described in Subsection 1.5(a)
above, all of Buyer's right, title and interest in and to the
Assets shall be reconveyed back to Seller without any additional
cost to Seller, and Seller shall assume the Assumed Liabilities,
provided, however, that in such event Seller shall assume only
liabilities in an amount equal to or lesser than the aggregate
amount of the Assumed Liabilities as of the Closing Date.
(d) Until such time as the title to the Assets and the
Business fully vest in Buyer, the Parties hereto shall enter into
a License Agreement ("License Agreement") in the form of the
License Agreement attached hereto as Exhibit C and incorporated
herein.
ARTICLE II
REPRESENTATIONS AND
WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows,
and acknowledges that Buyer is relying on such representations
and warranties, in connection with the purchase by Buyer of the
Assets and consummation of the other transactions described
herein.
Section 2.1 Title to and Ownership and Condition of Assets.
(a) Seller has, at the Closing, and shall convey to
Buyer, good and indefeasible title to the Assets, free and clear
of all liens, security interests, claims, demands, charges or
other encumbrances of any kind and character whatsoever, save and
except for any lien burdening the Assets as a result of the
Assumed Liabilities.
5
<PAGE>
(b) There are no outstanding contractual or other rights
of third parties to acquire any portion of the Assets, and there
are no outstanding agreements, options or other arrangements or
commitments which would require Seller to obtain the consent of
any party to effect the consummation of the transactions
contemplated hereby;
(c) Seller shall pay his remaining liabilities (other
than the Assumed Liabilities) directly or indirectly relating to
the assets that exist as of the date of Closing in the ordinary
course of business, and shall fulfill and satisfy, during the
period after the Closing, all of his debts, obligations and
liabilities which relate to the Business (other than the Assumed
Liabilities) existing as of the Closing Date, in order to ensure
that the purchase of the Assets by Buyer is effective against any
and all persons holding claims against Seller based on
transactions or events occurring prior to the Closing.
Section 2.2 Organization. Seller is an individual who
resides in the State of Hawaii. Seller conducts his Business and
maintains his properties in such jurisdiction and is presently
qualified as a foreign or domestic entity under the laws of all
jurisdictions in which he conducts his Business. Seller has the
requisite power and authority to own or lease his properties and
to carry on his Business as, and in the places where, such
properties are owned or leased and such Business is conducted.
Section 2.3 Power and Authority. Seller has the power,
authority and legal right to enter into and perform this
Agreement and all other documents or instruments contemplated
herein, and the execution, delivery and performance of such
agreements and the consummation of the transactions contemplated
thereby will not (i) result in any material breach or default
under any mortgage, loan agreement, deed of trust, indenture or
other loan-related instrument to which Seller is a party or by
which he is bound, (ii) violate any order, writ, injunction or
decree applicable to any Seller, or (iii) violate any provisions
of laws, rules or regulations to which any Seller is subject.
This Agreement constitutes, and all other agreements and
documents executed in connection herewith by Seller, upon due
execution and delivery by Seller, shall constitute valid and
binding obligations of Seller, enforceable against Seller in
accordance with their terms, except insofar as enforcement hereof
may be limited by bankruptcy, insolvency or similar laws for
general equitable principles, or as otherwise set forth herein.
Section 2.4 Liabilities and Litigation. At Closing, there
shall be no liabilities of any kind whatsoever whether accrued,
absolute, contingent, determined or determinable, which would
encumber the Assets or title thereto or result in any liability
to Buyer with respect thereto. At Closing there shall exist no
claim, circumstances or matter whatsoever, of or relating to the
Assets or the Business (other than in connection with the Assumed
Liabilities) which would encumber the title thereto or result in
any liability to Buyer with respect thereto; provided, however,
Seller shall be permitted to discharge such obligations within a
commercially reasonable period of time after the Closing but
shall not permit any encumbrances or liens to attach to the
Assets. There are no actions, proceedings or investigations
pending or, to the best of Seller's knowledge, threatened against
Seller or any shareholder of Seller or any of their respective
properties or rights, at law or in equity or before or by any
court or federal, state, municipal or other
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governmental department, commission, board, bureau, agency or
other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign (collectively, "Agent"
and "Agency"). Seller is not directly or indirectly, subject to
any continuing court or Agency order, writ, in junction or decree
applicable specifically to it, the Assets or the Business.
Seller shall continue to be solely liable for, and Buyer is not
assuming responsibility or liability for, all matters described
in this Section 2.4, unless specifically set forth as the Assumed
Liabilities.
Section 2.5 Breach of Other Agreements. Seller warrants
that the execution of this Agreement or any documents
contemplated herein, and the consummation of the transactions
contemplated herein, will not violate, conflict with, modify or
breach (i) any material term or provision of, or cause a default
under, or be an event which, with notice and/or lapse of time,
would constitute a default under, or result in the acceleration
of, or result in the creation of any encumbrance upon any of the
Assets pursuant to any material contract or agreement to which
Seller is a party, (ii) any judgment, decree, writ, order or
injunction of any court or arbitration body relating to the
Assets or Seller, or (iii) any order or other action of any
governmental authority, commission, bureau or administrative
agency.
Section 2.6 Taxes. Seller has duly filed all federal,
state, local and other tax returns, including, without
limitation, all federal and state payroll tax returns, all
federal and state income and/or franchise tax returns and state
or local sales tax returns, which are or were required to be
filed by the Business as of Closing, whether separately or as a
component of Seller's individual tax return(s). Seller has paid
all taxes that have become due, have accrued or have been or will
be assessed against him related to the Business or Assets for all
periods through the Effective Date. There are no tax
deficiencies or claims presently being asserted against Seller
relating to the Assets or the operation of his Business. There
is no pending or threatened claim by any federal, state or local
taxing authority against or with respect to Seller relating to
the Business for payment of additional taxes for any period prior
to the date hereof. Notwithstanding anything to the contrary
contained herein, all risk and liability with respect to any tax
obligation or liability of Seller relating to or arising with
respect to his ownership, use, control or operation of the Assets
or the Business during any period up to and including the Closing
Date, or arising as of a result of the transactions contemplated
herein, shall be borne exclusively by Seller.
Section 2.7 Compliance with Laws. To the best of his
knowledge, Seller has not violated and is not now in violation
of, any federal, state or municipal law, ordinance, order,
regulation or requirement affecting the Assets, and no written
notice of any such violation has been issued by any governmental
authority.
Section 2.8 Prior Bulk Sales. Seller has not never
transferred in bulk or otherwise not in the ordinary course of
his business all or any major part of the materials, supplies,
merchandise or other inventory of the Business, or any
substantial portion of the equipment of the Business.
Section 2.9 No Finder's Fees. Seller has not made any
agreement with any broker or other person or entity or taken any
action which would cause any broker or other person or entity
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to become entitled to any fee or commission in connection with
the transactions contemplated hereby.
Section 2.10 Attachments and Other Proceedings. There are
no attachments, executions, assignments for the benefit of
creditors, receiverships or voluntary or involuntary proceedings
in bankruptcy or pursuant to any debtor relief laws contemplated
or filed by or against Seller relating to the Business or the
Assets.
Section 2.11 Governmental and Other Consents. No consent,
approval or other authorization of any governmental authority or
other third party is required in connection with the execution or
delivery of this Agreement by Seller or the consummation by
Seller of the transactions contemplated hereby.
Section 2.12 Employees and Benefits.
(a) Seller does not currently and has never engaged or
hired employees in connection with the Business or the Assets.
Accordingly, Seller is not a party to, or bound by, any
collective bargaining agreements or other labor agreements.
Section 2.13 Investment Representations. Seller hereby
makes the following representations and warranties to Buyer with
regard to Buyer's common stock which will make up a part of the
Purchase Price:
(a) The stock of Buyer to be issued to Seller will be
acquired for investment for Seller's own account for investment
only, not as a nominee or agent, and not with a view to or for
resale in connection with, any distribution or public offering of
securities within the meaning of the Securities Act of 1933, as
amended, or any other applicable securities law, and Seller has
no present intention of selling, granting a participation in or
otherwise distributing the same. Seller represents that the
entire legal and beneficial interest of the common stock of Buyer
will be held for Seller's account only, neither in whole or in
part for any other person. By executing this Agreement and
related certificates required by Buyer, Seller further represents
that he has no present contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant
participation to such person or to any third person with respect
to any of the common stock of Buyer. Seller understands that the
common stock of Buyer to be issued hereunder may not be
transferred without an effective registration statement covering
such shares under such securities laws, or an opinion of counsel
or other evidence satisfactory to Buyer, in his sole discretion,
that registration is not required under the applicable securities
laws. These restrictions under the applicable securities laws
are in addition to those restrictions contained in this
Agreement. Seller represents and warrants that it, along with
his advisors, is knowledgeable in making investments similar to
the purchase of the common stock of Buyer, and is able to bear
the risk of such illiquidity in his investment and the economic
risk of such investment. Seller hereby additionally represents,
warrants and acknowledges that he has been given the opportunity
to review such information about Buyer so as to make a fully-
informed decision to purchase the common stock
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of Buyer, and further that no guarantees have been given by Buyer
about the value of the common stock of Buyer.
(b) Seller understands and acknowledges that the common
stock of Buyer to be issued pursuant to the Agreement has not
been registered under the Securities Act of 1933, as amended,
(the "Securities Act") or any other applicable state securities
laws.
(c) The share certificate(s) issued to Seller
representing common stock of Buyer or any share certificate(s)
issued or issuable in respect of any such common stock of Buyer
upon any stock split, stock dividend, recapitalization or similar
event, shall contain the following restrictive legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ("SHARES") HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED AND ENACTED IN THE UNITED STATES OF AMERICA (THE
"U.S. ACT"), THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES ("STATE ACT") OR THE LAWS OF ANY OTHER COUNTRY OR
LAWFUL JURISDICTION (THE "OTHER APPLICABLE LAWS").
ACCORDINGLY, THE HOLDER OF THIS CERTIFICATE MAY NOT OFFER,
SELL, RENOUNCE OR TRANSFER THE SHARES DIRECTLY OR INDIRECTLY
IN THE UNITED STATES OR TO A UNITED STATES CITIZEN,
RESIDENT, OR RESIDENT ALIEN ("AMERICAN NATIONAL") UNLESS
DONE IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF THE
U.S. ACT, RULE 144 UNDER THE U.S. ACT, ANY APPLICABLE STATE
ACT, AND ALL OTHER APPLICABLE LAWS OR AS PART OF A
TRANSACTION IN CONNECTION WITH WHICH THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL WHICH SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH TRANSACTION IS EXEMPT
FROM SUCH REGISTRATION REQUIREMENTS OR THAT COMPLIANCE WITH
SUCH REGISTRATION REQUIREMENTS IS NOT REQUIRED."
"THE SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, TO ANY PURCHASER OUTSIDE THE UNITED STATES OR
WHO IS NOT AN AMERICAN NATIONAL UNLESS THE TRANSACTION IS IN
COMPLIANCE WITH THE U.S. ACT, THE SECURITIES LAWS OF THE
JURISDICTIONS IN WHICH THE OFFER AND/OR SALE TAKES PLACE AND
ALL OTHER APPLICABLE LAWS AND REGULATIONS."
(d) Seller acknowledges that the common stock of Buyer
held by the undersigned must be held subject to Rule 144 and
other applicable provisions of the Securities Act. Seller
represents, warrants and acknowledges that the common stock of
Buyer shall not be transferrable except on the conditions
specified in this Agreement and Rule 144 of the Securities Act,
and accordingly, any intended transfer, assignment or sale by
Seller prior to such applicable waiting period under Rule 144 or
in violation of other applicable provisions of the Securities Act
shall be null and void.
(e) The certificates evidencing the common stock of
Buyer shall also bear any legend required pursuant to any state,
local or foreign law governing such securities.
(f) Seller has had the opportunity to review with his
own tax advisors the tax consequences to the undersigned of the
Agreement and transactions contemplated thereby. Seller
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understands that he must solely rely on his advisors and not on
any statements or representations by Buyer or any of his agents.
Seller understands that he (and not Buyer) shall be responsible
for any such tax liability that may arise as a result of the
Agreement or any transactions contemplated thereby.
Section 2.14 Enforceability. This Agreement and any other
agreement to be entered into pursuant to the terms hereof or as
contemplated hereby by Seller constitute valid and binding
obligations of Seller, enforceable in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting
the enforcement of creditors rights generally and the application
of general principles of equity.
Section 2.15 Full Disclosure. No representation or
warranty of Seller made in this Agreement, nor any written
statement or certificate furnished or to be furnished by Seller
to Buyer pursuant hereto, or in connection with the transactions
contemplated hereby, contains, or will contain, any untrue
statement of a material fact, or omits, or will omit to state, a
material fact necessary to make the statement or facts contained
herein or therein not misleading. No Seller has withheld, and no
Seller will withhold, from Buyer knowledge of any events,
conditions or facts of which Seller has knowledge which could
materially and adversely affect the Assets or Buyer.
ARTICLE III
COVENANTS OF SELLER
Seller hereby covenants and agrees with Buyer as follows:
Section 3.1 Conduct of Business. From September 16, 1999
to the Closing, Seller will, in all material respects, and will
cause such entities to, conduct his Business in the ordinary
course and use good faith and commercially reasonable efforts to
preserve such Business, and shall not, without Buyer's prior
written consent, impair or fail to use his best efforts to
preserve his relationships with employees, suppliers, Customers,
creditors and others having business relationships with Seller.
Section 3.2 Notices and Approvals. Prior to the Closing,
Seller shall, at his sole expense, promptly give all notices to
and use his best efforts to obtain all consents from third
parties which may be necessary or deemed desirable by Buyer in
connection with this Agreement and the consummation of the
transactions contemplated hereby, including without limitation,
those shown on Schedule 3.2 hereto. If all such consents are not
forthcoming by the date of Closing, Seller shall continue to use
their best efforts to obtain all such consents, at the sole
expense of Buyer.
Section 3.3 Fulfillment of All Covenants and Obligations.
Seller shall satisfy and fulfill all of his other obligations and
covenants set forth in this Agreement or as may otherwise be
contemplated herein or necessary or appropriate to consummate the
transactions set forth herein.
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Section 3.4 Termination of Seller's Business. Seller shall
use his best efforts to sell and/or close all remaining portions
of his Business which are not acquired by the Buyer pursuant
hereto and which would otherwise violate the Covenants Not to
Compete, Trade Secrets or Confidentiality set forth in Sections
3.8, 3.9 or 3.10 hereto as soon as possible after the Closing
Date.
Section 3.5 Material Change. From September 16, 1999 to
the date of Closing, Seller shall promptly inform Buyer in
writing of any aterial adverse change to the Business or the
Assets. Notwithstanding the disclosure to Buyer of any such
material adverse change, Seller shall not be relieved of any
liability to Buyer pursuant to this Agreement or, nor shall
provide such information by Seller to Buyer be deemed a waiver by
Buyer of, the breach of any representation or warranty of Seller
contained in this Agreement.
Section 3.6 Material Contracts. From October 15, 1999,
Seller shall not, without the prior written consent of Buyer,
incur any obligation in excess of Five Thousand and No/100
Dollars ($5,000.00); make any purchases in excess of Five
Thousand and No/100 Dollars ($5,000.00) in the aggregate;
increase the compensation paid or payable to any officer,
director, employee or agent of any Seller; or otherwise take any
action outside the ordinary course of business.
Section 3.7 Contracts. Except with Buyer's prior written
consent, Seller shall not waive any material right or cancel any
material contract, debt or claim that constitutes an Asset.
Section 3.8 Non-Competition; Confidentiality.
(A) Seller recognizes and acknowledges that he will
derive substantial benefit from the consummation of the
transactions contemplated by this Agreement. Seller further
recognizes and acknowledges that Buyer is making a substantial
investment pursuant to this Agreement in reliance upon the fact
that the knowledge and expertise developed by Seller and his
management of the affairs of the Business will be preserved and
will not be used in competition with the Business purchased by
Buyer. Seller hereby agrees that the covenants contained herein
are reasonable and necessary for the protection of Buyer and the
Business to be purchased by Buyer, and that Seller agrees to take
all necessary actions to assure that Seller will not, directly or
indirectly, except for the benefit of Buyer or with the prior
written consent of Buyer, which consent may be granted or
withheld at Buyer's sole discretion:
(i) Own, manage, engage in, control, be employed
by, participate in or be connected with, in any manner
whatsoever, the ownership, management, operation or control of
any business which sells, promotes or distributes products or
services, or which otherwise performs services, which are
reasonably like and which may reasonably compete with those
products or services previously offered by Seller's Business
and/or the Web site (but specifically excluding any existing non-
eye product or service web site of Seller) at any time during the
term of this Agreement;
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(ii) Canvas, solicit or accept business from
"Customers of the Buyer" after the Closing (except on behalf of
the Buyer) which, for purposes of this Agreement, shall mean any
person or entity which has been contacted by Seller or his
affiliates or subsidiaries, or has engaged in business with
Seller or any of his affiliates or subsidiaries, during the two
(2) year period prior to the effective date of this Agreement;
(iii) Directly or indirectly request or advise any
Customer of the Buyer to withdraw, curtail or cancel such
Customer's business with the Buyer, or otherwise interfere with
the business relationship between such Customers and the Buyer,
or any of his affiliates or subsidiaries;
(iv) Otherwise aid, consult or assist anyone
engaged in any business which is competitive with the "Business
of the Buyer," which "Business of the Buyer" shall include all
business activities in which the Buyer or any of his affiliates
or subsidiaries is engaged at any time after the date of Closing
(including, but not limited to, the publication of one or more
eye-related web sites, sales therefore, sales and acquisitions of
such types of business) or in which the Buyer or any of his
affiliates or subsidiaries plans to engage after the date of
Closing; or
(v) communicate to any person or entity any trade
secrets, customer lists, information (financial or otherwise),
strategies, systems, methods or any other business data or
secrets of the Buyer, any of the Buyer's affiliates or
subsidiaries.
(b) Seller's covenants against competition as set forth
in subparagraph (a) above shall commence on the date of this
Agreement and shall continue for a period of two (2) years after
the date of Closing of this Agreement. The restraints against
competition imposed on and agreed to by each Seller hereunder
shall apply to, and be enforceable in, the State of Hawaii,
and/or an area within fifty (50) miles of any location where the
Buyer, or any of its affiliates or subsidiaries is doing
business.
Section 3.9 Trade Secrets.
(a) Seller covenants and agrees that he will not,
directly or indirectly, for his own account or benefit, or for
the account or benefit of any other person or party, communicate
to any person or entity any trade secrets, customer lists,
information (financial or otherwise), strategies or any other
business data or secrets of Buyer.
(b) Seller's covenant against disclosure as set forth in
subparagraph (a) above shall commence on the date of this
Agreement and shall continue for a period of two (2) years after
the date of Closing of this Agreement.
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Section 3.10 Nondisclosure of Confidential Information.
(a) Seller acknowledges that Buyer may disclose or has
previously disclosed certain confidential information to such
party. Seller hereby covenants and agrees that he will not,
without prior written consent of Buyer, at the closing or at any
time thereafter, disclose or permit to be disclosed to any third
party by any method whatsoever any of the confidential
information of Buyer whether acquired prior to or after the
Closing Date. For purposes of this Agreement, "confidential
information" shall include, but not be limited to, any and all
records, notes, memoranda, data, ideas, processes, methods,
techniques, systems, formulas, patents, models, devices,
programs, computer software, writings, research, personnel
information, plans, or any other information of whatever nature
in the possession or control of Buyer which has not been
published or disclosed to the general public, or which gives to
Buyer an opportunity to obtain an advantage over competitors who
do not know of or use it.
(b) The foregoing paragraph shall not be applicable if
and to the extent Seller is required to testify in a judicial or
regulatory proceeding pursuant to an order of a judge or
administrative law judge issued after such party and his legal
counsel urge that the aforementioned confidentiality be
preserved.
(c) Any breach of this nondisclosure covenant will
result in the waiver by Seller of any and all rights to
compensation and any additional Purchase Price, if any, unpaid at
the time of the breach. In such event Buyer shall have no
further obligation to pay any amounts related thereto.
Section 3.11 Remedy for Breach.
(a) The parties hereto, recognizing that irreparable
injury will result to Buyer, his business and property in the
event of a breach or threatened breach of any of the above
covenants in Section 3.8, 3.9 or 3.10, respectively, by Seller
and that Buyer's purchase of the Assets pursuant hereto, agree
that in the event of a violation of any of the covenants herein
against competition or disclosure of confidential information by
Seller:
(i) Seller's Consulting Agreement described
hereunder may be terminated in the sole discretion of Buyer;
(ii) all payments otherwise due hereunder to
Seller, including without limitation any deferred Purchase Price,
may be immediately terminated without further obligation to the
Buyer in the sole discretion of the Buyer; and
(iii) in addition to any other legal or equitable
remedies and damages available, the Buyer shall be entitled to
the issuance of restraining orders or injunctions, both temporary
and permanent, in order to restrict the violation thereof by
Seller, his partners, agents, servants, employees and employers,
and all persons acting directly or indirectly for or with it.
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(b) The restrictive covenants contained in this
Agreement shall survive the date of Closing provided under the
terms of this Agreement and any termination of this Agreement,
and shall be enforceable according to his terms.
(c) If any court of competent jurisdiction should
hereinafter determine in the course of litigation that the
provisions of this paragraph are unreasonable with respect to
length of time, geographical area, or activities so restrained,
then this clause shall be construed to operate for such period of
time and such geographical area or areas and in respect of such
activities as said court shall determine to be the maximum
reasonable restraint in the circumstances, and the parties agree
to submit such question or questions to such court in the event
of any such determination of unreasonableness.
(d) The waiver of any party of a breach of any provision
of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by either such party. The failure to
enforce any provision(s) of the Agreement shall not be construed
as a waiver of such provision(s).
(e) The covenants of Sections 3.8, 3.9, 3.10 or 3.11
hereof shall survive the Closing of this Agreement, and be
enforceable according to their terms.
ARTICLE IV
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to purchase the Assets and
consummate the transactions at the Closing shall be subject to
the satisfaction on or prior to the Closing Date (as defined
below) of all of the following conditions, except such conditions
as Buyer may waive in writing:
Section 4.1 Representations, Warranties and Covenants of
Seller. All of the representations and warranties of Seller
contained herein shall be accurate in all material respects when
made and as of the Closing Date with the same effect as though
such representations and warranties (in the exact language
contained herein with appropriate modification of tense in the
case of representations and warranties relating to statements of
fact as of specified dates) had been made as of the Closing Date,
and Seller shall have complied in all material respects with all
of his respective agreements and covenants contained herein to be
performed on or prior to the Closing Date.
Section 4.2 Further Action. All action that shall be
required to be taken by Seller in order to effect the sale and
transfer of the Assets to Buyer and to consummate the other
transactions contemplated herein shall have been taken.
Section 4.3 Authorizing Resolutions. Seller shall have
delivered to Buyer copies of evidence of authority for Seller
relating to consummation of the transactions contemplated herein.
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ARTICLE V
REPRESENTATIONS OF BUYER
Buyer hereby represents and warrants to Seller as follows,
and acknowledges that Seller is relying upon such representations
and warranties, in connection with the purchase by Buyer of the
Assets and the consummation of the other transactions described
herein.
Section 5.1 Organization. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws
of the State of Delaware. Buyer conducts his business and
maintains his properties in each jurisdiction and is presently
qualified as a foreign or domestic entity under the laws of all
jurisdictions in which he conducts his business. Buyer has the
requisite power and authority to own or lease properties and to
carry on his businesses as, and in the places where, such
properties are owned or leased and such business is conducted.
Section 5.2 Power and Authority. Buyer has the power,
authority and legal right to enter into and perform this
Agreement and all other documents or instruments contemplated
herein, and the execution, delivery and performance of such
agreements and the consummation of the transactions contemplated
thereby will not (i) result in any breach of, default under,
violation of, or conflict with or require consent under any term
or provision of Buyer's Certificate of Incorporation or Bylaws,
(ii) result in any material breach or default under any mortgage,
loan agreement, deed of trust, indenture or other loan-related
instrument to which any Buyer is a party or by which he is bound,
(iii) violate any order, writ, injunction or decree applicable to
any Buyer, or (iv) violate any provisions of laws, rules or
regulations to which any Buyer is subject. This Agreement
constitutes, and all other agreements and documents executed in
connection herewith by Buyer upon due execution and delivery by
Buyer shall constitute valid and binding obligations of Buyer,
enforceable against him in accordance with their terms, except
insofar as enforcement hereof may be limited by bankruptcy,
insolvency or other similar laws for general equitable
principles, or as otherwise set forth herein.
Section 5.3 Breach of Other Agreements. The execution of
this Agreement or any documents contemplated herein, and the
consummation of the transactions contemplated herein, will not
violate, conflict with, modify or breach (i) any material term or
provision of, or cause a default under, or be an event which,
with notice and/or lapse of time, would constitute a default
under, or result in the acceleration of, or result in the
creation of any encumbrance upon any of the Assets pursuant to
any material contract or agreement to which Buyer is a party,
(ii) any judgment, decree, writ, order or injunction of any court
or arbitration body relating to the Assets, or (iii) any order or
other action of any governmental authority, commission, bureau or
administrative agency.
Section 5.4 Taxes. Buyer has duly filed all federal,
state, local and other tax returns, including, without
limitation, all federal and state payroll tax returns, all
federal and state income and/or franchise tax returns and state
or local sales tax returns, which are or were required to be
filed by him as of Closing. Buyer has paid all taxes that have
become due, have accrued or have
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been or will be assessed against him for all periods through the
date of Closing. There are no tax deficiencies or claims
presently being asserted against Buyer relating to the operations
of his business.
Section 5.5 Finder's Fees. Buyer has not made any
agreement with any person or entity or taken any action which
would cause any person or entity to become entitled to any fee or
commission in connection with the transactions contemplated
hereby.
Section 5.6 Full Disclosure. No representation or warranty
of Buyer made in this Agreement, nor any written statement or
certificate furnished or to be furnished by Buyer to Seller
pursuant hereto, or in connection with the transactions
contemplated hereby, contains, or will contain, any untrue
statement of a material fact, or omits, or will omit to state, a
material fact necessary to make the statement or facts contained
herein or therein not misleading. Buyer has withheld, nor will
he withhold, from Seller knowledge of any events, conditions or
facts of which Buyer has knowledge which could materially and
adversely affect the Assets or Seller.
ARTICLE VI
COVENANTS OF BUYER
Section 6.1 Assumption of Liabilities. Buyer hereby
covenants to, effective with the date of Closing, assume the
Assumed Liabilities as set forth in Schedule 1.1(c). Buyer shall
undertake to remit payment for the Assumed Liabilities, including
without limitation the accounts payable assumed by Buyer, to be
paid in the normal course of business on a basis consistent with
his normal business practices.
Section 6.2 Fulfillment of all Covenants and Obligations.
Buyer shall satisfy and fulfill all of his other obligations and
covenants set forth in this Agreement including, without
limitation, those contained in Section 1.5 above or as may
otherwise be contemplated herein or necessary or appropriate to
consummate the transactions set forth herein.
Section 6.3 Certified Corporate Documents. At or prior to
the Closing, Buyer shall deliver to Seller or his representative
certified copies of the resolutions of his Board of Directors
authorizing this Agreement and the consummation of the
transactions contemplated hereby.
ARTICLE VII
CLOSING
Section 7.1 Closing. (a) The closing (the "Closing")
of the purchase and sale of the Assets and the other transactions
contemplated hereby shall take place at the offices of Buyer
beginning at 10:00 a.m. on December 22nd, 1999 (the "Closing
Date"), or at such other place, date and time as the parties may
agree upon in writing. The Closing of the transactions
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contemplated herein shall be effective as of the close of
business on December 22nd, 1999 ("Effective Date"). In
particular, the parties hereto shall deliver the following at the
Closing:
(i) Seller shall deliver to Buyer fully and validly
executed bills of sale, filings, assignments, licenses, consents
and all other documents contemplated or specifically identified
in this Agreement or which are otherwise necessary or appropriate
to fully effectuate the transfer of the Assets to Buyer as
contemplated herein, including, without limitation, the transfer
of the Internic domain registration and the Cybercom web site
hosting agreement.
(ii) Buyer shall deliver to Seller the Purchase Price as
specified in Section 1.2 hereof, including any certificates of
Seller deemed necessary by Buyer to issue the applicable
certificates of stock and cash, as applicable.
(iii) Seller shall deliver to Buyer possession of all
books, accounts, records, documents, agreements and reports held
by Seller with respect to the Customers.
(iv) Buyer shall deliver to Seller the Consulting
Agreement.
Following the Closing Date, Buyer and Seller hereby agree to
provide for the following:
(i) The Purchase Price shall be allocated among the
Assets as set forth in Section 1.4 within thirty (30) days of the
Closing Date; and
(ii) Payment by Buyer of the remaining five (5)
installments of the cash Purchase Price.
ARTICLE VII
INDEMNIFICATION AND ARBITRATION
Section 8.1 Agreement to Indemnify.
(a) Subject to the conditions and provisions set forth
in this Article VIII, Seller agrees, upon the lapse of the thirty
(30) day period after Seller is notified in writing of such a
demand, claim, action or cause of action, to indemnify, defend
and hold harmless the Buyer from and against all demands, claims,
actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including reasonable attorney's
fees, asserted against or imposed upon or incurred by the Buyer,
as the case may be, directly or indirectly, in whole or in part,
resulting from (i) all debts, liabilities and obligations, actual
or alleged, arising at any time from or related to the ownership,
control or operation of the Assets or Business by Seller prior to
Closing, (ii) sales taxes imposed upon Seller and arising out of
the operation of the Businesses or with respect to Seller's
ownership, use, control, operation or sale of the Assets, (iii)
any obligation of Seller pertaining to interest on the
shareholder loans whether directly to the shareholder advancing
funds
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to Seller or to any federal, state or local tax authority, (iv) a
breach of any covenant, or the inaccuracy in any respect of any
representation or warranty, of Seller contained in or made
pursuant to this Agreement and (v) all other liabilities for
which the Buyer may become liable and which are covered by this
indemnity, including, without limitation, all federal, state and
local taxes applicable to the ownership, control or operation of
the Assets on and prior to the Closing Date and liabilities
arising as a result of the calculation of same.
(b) Subject to the conditions and provisions of this
Article VIII, Buyer agrees, upon the lapse of the thirty (30) day
period after Buyer is notified in writing of such a demand,
claim, action or cause of action, to indemnify, defend and hold
harmless the Seller from and against all demands, claims, actions
or causes of action, assessments, losses, damages, liabilities,
cost and expenses, including reasonable attorney fees, asserted
against or imposed upon or incurred by the Seller, as the case
may be, directly or indirectly, in whole or in part, resulting
from (i) the failure of Buyer to pay any of the Assumed
Liabilities (except as may be set forth in Section 1.2 above),
(ii) a breach of any covenant, or other inaccuracy in any respect
of any representation or warranty, of Buyer contained in or made
pursuant to this Agreement, (iii) any and all claims and
contingent liabilities relating to the Assumed Liabilities,
including without limitation any contingent liabilities, whether
now existing or hereafter arising, pertaining to Seller's and/or
Buyer's utilization of the names "Eyesite" and "eyesite.com", and
(iv) all other liabilities for which Seller may become liable and
which are covered by this indemnity, including, without
limitation, all federal, state and local taxes applicable to the
ownership, control or operation of the Assets after the Closing
Date and liabilities arising as a result of the calculation of
same.
(c) All of the adjustments, demands, claims, actions or
causes of action, assessments, losses, damages, liabilities,
costs and expenses to which a party may be entitled to recover or
for which such party may be entitled to indemnification pursuant
to this Agreement shall hereinafter be referred to as the
"Indemnification Claims".
Section 8.2 Arbitration. Any and all disputes arising
between the parties with respect to the validity and/or payment
of any Indemnification Claim as provided by this Article VIII
shall be finally settled by binding arbitration pursuant to the
commercial rules of the American Arbitration Association
following the Federal Rules of Civil Procedure. If the parties
cannot agree on a single arbitrator for purposes of settling such
a dispute, the indemnifying party and the indemnified party shall
each appoint an arbitrator and so advise the other party, and
these two arbitrators will appoint a third arbitrator. If either
party fails to appoint an arbitrator within thirty (30) days
after receipt of written request to do so, the decision of the
appointed arbitrator shall be final. If an arbitrator fails or
is unable to act, his successor will be appointed in the same
manner as the arbitrator whom he succeeds. The arbitrators
appointed as aforesaid shall immediately proceed to arbitrate the
dispute between the indemnified party and the indemnifying party,
and they shall, within fifteen (15) days of the arbitration
proceeding, or as soon thereafter as may be practicable, render
their decision in writing and transmit such written decision to
the parties hereto. The forum for such proceeding shall be in
the city of San Francisco, California and the arbitrators shall
be entitled to such information, including the business records
of Buyer and Seller, as they deem necessary or desirable for
purposes of determining or resolving the
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dispute. The decision of the majority of the arbitrators then
serving shall be binding and final upon the parties, and judgment
made upon the order may be entered in any court having
appropriate jurisdiction. The arbitrator shall determine which
party shall bear the costs, including attorney's fees, of the
proceedings or the portion of such cost which each party should
bear.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Date of Agreement. The term "date of this
Agreement" as used herein shall mean the date this Agreement has
been fully executed by Seller and the Buyer as indicated by their
signatures below.
Section 9.2 Date of Performance. In the event the Closing
Date or any other date or provision provided herein should fall,
expire or be due on a legal holiday, Saturday or Sunday, such
date or provision shall be extended to the next working day which
is not a legal holiday, Saturday or Sunday, and such next working
day shall be considered to be the due date, performance date or
expiration date for all purposes hereunder. Similarly, upon the
occurrence of any act of God or any other event which is out of
either party's control or otherwise considered to be a condition
of force majeure, the performance hereunder including the Closing
hereunder shall be extended until such time as performance is
possible.
Section 9.3 Entire Agreement. This Agreement contains the
complete agreement between the parties hereto and cannot be
varied, modified or altered except by the written agreement of
the parties hereto. The parties agree that there are no oral
agreements, understandings, representations or warranties which
are not expressly set forth herein. This Agreement (including
the Exhibits and Schedules hereto) shall supersede all prior
agreements and understandings, both written and oral, between the
parties hereto with respect to the subject matter hereof and no
party shall be liable or bound to the other in any manner by any
warranties, representations or covenants not set forth herein or
contemplated hereby.
Section 9.4 Successors and Assigns. The terms and
conditions of this Agreement shall inure to the benefit of and be
binding upon the respective parties hereto and their successors,
representatives, heirs, administrators, executors and assigns.
This Agreement may not be assigned by any party without the prior
written consent of the other party hereto.
Section 9.5 Third Party Beneficiary. Nothing in this
Agreement shall be deemed to create any right in any creditor or
other person not a party hereto, and this instrument shall not be
construed in any respect to be a contract in whole or in part for
the benefit of any other party except as aforesaid.
Section 9.6 Identical Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall for all
purposes be deemed to be an original and all of which
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shall constitute the same instrument, but only one of which need
be produced to evidence the agreement of the parties hereto.
Section 9.7 Headings. The captions and headings of the
paragraphs and subparagraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of,
or to construe or limit the meaning of, this Agreement or to
affect the construction hereof.
Section 9.8 Use of Certain Terms. As used in this
Agreement, the words "herein", "hereof", and "hereunder" and the
other words of similar import refer to this Agreement as a whole
and not to any particular paragraph, subparagraph or other
subdivision.
Section 9.9 Consent and Waiver. No consent or waiver,
express or implied, by any party hereto of any breach or default
by any other party hereto in the performance of his obligations
hereunder shall be deemed or construed to be a consent or waiver
to or of any other breach or default in the performance by such
party of the same or any other obligations of such party
hereunder. Failure on the part of any party to complain of any
act or failure to act of the other party or to declare the other
party in default, irrespective of how long such failure
continues, shall not constitute a waiver by such party of his
rights hereunder.
Section 9.10 Severability. If any provision of this
Agreement or the application thereof to any person or
circumstance shall be held invalid or unenforceable to any
extent, such illegality or unenforceability shall extend to that
provision solely, and the remainder of this Agreement shall be
enforced to the greatest extent permitted by law as if such
illegal or unenforceable provision were not incorporated herein.
Section 9.11 Exhibits, Schedules, Etc. All statements
contained in any Exhibit, Schedule, certificate or other
instrument delivered by or on behalf of the parties hereto, or in
connection with the transactions contemplated hereby, are an
integral part of this Agreement, and shall be deemed to be
incorporated herein by reference. The Parties agree that certain
schedules may be delivered after Closing.
Section 9.12 Notices. Any notice or communication required
or permitted hereunder shall be deemed to be delivered and
received when actually received by the intended recipient or,
whether actually received or not, on the third (3rd) day after it
is deposited in the United States mail, postage fully prepaid,
registered or certified mail, return receipt requested, addressed
to the intended recipient at the address shown below:
If to the Buyer, to: Eyesite.Com, Inc.
2925 LBJ Freeway, Suite 188
Dallas, Texas 75234
Attn: George W. Flinn
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with a copy to: Bellinger & DeWolf, L.L.P.
750 North St. Paul, Suite 900
Dallas, Texas 75201
Attn: Glen A. Bellinger, Esq.
If to Seller, to: Gary Edwards, M.D.
1329 Lusitana Street
Suite 806
Honolulu, Hawaii 96813
with a copy to: ______________________________
______________________________
______________________________
______________________________
Attn: ________________________
or at such other address for a party as shall be specified by
like notice.
Section 9.13 Survival. The representations and warranties
of the parties contained herein shall survive the Closing for the
period specified herein. All covenants and agreements made in
this Agreement shall survive, and shall not be extinguished by,
the Closing for the period specified herein.
Section 9.14 Expenses. Except as otherwise expressly
provided herein, each party will pay all of his expenses,
including attorneys' fees, in connection with the negotiation of
this Agreement, the performance of his obligations hereunder and
the consummation of the transactions contemplated by this
Agreement.
Section 9.15 Further Assurances. The parties hereto will
execute and deliver such further instruments of conveyance and
transfer and take such additional actions as the other party may
reasonably request to effect, consummate, confirm or evidence the
transfer to the Buyer of the Assets. Seller will execute such
documents as may be necessary to assist the Buyer in preserving
or perfecting his rights in the Assets and will also do such acts
as are necessary to fully perform any Seller's representations,
warranties and agreements contained herein.
Section 9.16 Governing Law. This agreement and the
obligations of the parties hereto shall be governed by and
interpreted, construed and enforced in accordance with the laws
of the State of Texas. Each of the parties hereto agrees that
any suit, action or proceeding for the enforcement of this
Agreement shall be brought only in the State courts or Federal
courts in the State of Texas, County of Dallas, and each party
hereby consents to the jurisdiction of such courts.
Section 9.17 Knowledge. As used herein, the term "to the
best of their knowledge" or "to the best of his knowledge", and
all similar terms or phrases shall mean all facts and information
presently known to such person and any facts and information
which such person
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should have known in the exercise of such care as a reasonable
and prudent person would exercise under the same or similar
circumstances, without the need for any independent
investigation.
Section 9.18 Time. The parties hereto agree that time is
of the essence.
Section 9.19 Facsimile Signatures. The parties hereto
agree that the Closing may occur simultaneously, with facsimile
signatures of each party serving for purposes of the Closing,
with the understanding that the parties shall obtain fully
executed original signatures following the Closing.
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement as of the date set forth above.
SELLER:
/s/ GARY EDWARDS, M.D.
--------------------------
Gary Edwards, M.D.
BUYER:
EYESITE.COM, INC.
a Delaware corporation
By: /s/ GEORGE W. FLINN
-------------------------
George W. Flinn, President
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EXHIBIT A
ASSETS SUBJECT TO PURCHASE
(i) All of Seller's right, title and interest in and to
the registered domain "http://www.eyesite.com" (the "Website");
(ii) All right, title and interest, if any and of
whatever kind or character, of Seller in and to all customer
lists, customer files, customer information, marketing and
promotional materials, manuals, marketing studies or analysis or
any other records or memoranda relating in any manner whatsoever
to Seller's Website customers or advertisers (collectively, the
"Customers") or sales directly or indirectly related to the
Website (hereinafter collectively referred to as the "Customer
Lists");
(iii) All original files, books and records of Seller with
respect to the Customers and Customer Lists including, without
limitation, all Customer files, Customer account histories,
Customer purchasing and payment history, Customer credit files,
etc., as well as a list of all current and previous suppliers or
manufacturers to the Business within the past two (2) years with
sales in excess of Five Thousand and 00/100 Dollars ($5,000.00)
per year;
(iv) To the extent such are assumable, all right, title
and interest of Seller as of the date of Closing in, to and under
the contracts, leases, franchises, agreements, arrangements,
understandings, commitments and business relationships and all of
Seller's rights (including rights of refund and offset),
including without limitation, the Internic and Cybercom
relationships and agreements, deposits, privileges, claims,
causes of action and options relating to or pertaining to the
Website (collectively, the "Contract Rights");
(v) All of Seller's right, title and interest in and to
any and all income and payments due Seller relating arising out
of the Business as of the date of Closing;
(vi) To the extent transferable, all right, title and
interest of Seller as of the date of Closing in, to and under all
permits and licenses relating to the Website, the Business or all
or any of the Assets (as defined below);
(vii) All right, title and interest of Seller in and to
all prepaid rentals and other prepaid expenses, bonds, deposits
and financial assurance requirements relating to any of the
Assets or the Business, including without limitation, any prepaid
amounts to Internic;
(viii) All right, title and interest of Seller in and to
any benefit of and the right to enforce the covenants and
warranties, if any, the Seller is entitled to enforce with
respect to the Assets against Seller's predecessors and title to
the Assets;
Exhibit A - Page 1
<PAGE>
(ix) All of Seller's right, title and interest in the
name "eyesite.com," "Eyesite.Com," "Eyesite" and all related and
similar names, logos and trade names including, without
limitation, any of Seller's corporate, copyright, trademark,
trade name and service mark rights and interest in such names,
logos and trade names; provided, however, that Buyer and Seller
agree and acknowledge that parties other than Seller may have
certain rights in the trade name "Eyesite";
(x) All right, title and interest of Seller in, to and
under all rights, privileges, claims, causes of actions and
options relating or pertaining to the Business or the Assets;
(xi) All right, title and interest of Seller in and to
the goodwill of the Business and Seller;
Exhibit A - Page 2
<PAGE>
EXHIBIT B
CONSULTING AGREEMENT
<PAGE>
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is made and
entered into to be effective as of December _____, 1999, by and
between EYESITE.COM, INC., a Delaware corporation (the
"Company"), and GARY EDWARDS, M.D. ("Consultant").
W I T N E S S E T H:
WHEREAS, the Company desires to contract with Consultant to
assist the Company in (i) assisting the Company in its
maintaining and upgrading that certain commercial web site with
the registered domain of "http://www.eyesite.com" (the "Web
site") and other related activities for the benefit of the
Company (collectively, the "Consulting Services");
WHEREAS, Consultant has particular skills, knowledge and
abilities related to the provision of such Consulting Services;
and
WHEREAS, the Company desires to compensate Consultant in
full satisfaction of all of Consultant's past services and
contributions to the Company; and
WHEREAS, the Company desires to retain Consultant to perform
the Consulting Services pursuant to the terms and provisions
contained herein.
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants and conditions contained herein, and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
CONTRACT
Section 1.1 Contract. (a) The parties hereby agree that
the Company shall retain Consultant to perform the Consulting
Services for the Company for a thirty-six (36) month period,
commencing on the date hereof and ending thirty-six (36) months
later, subject to the provisions of Article III and the other
terms and conditions hereinafter set forth. In this regard,
Consultant agrees to perform the Consulting Services using his
professional and good faith judgment. Consultant shall be an
independent contractor of Company in performing the Consulting
Services, and nothing contained herein shall be construed to
create an employment relationship or a partnership or joint
venture between the Company and Consultant.
(b) Unless otherwise authorized by the Board of
Directors of the Company, Consultant shall not have the right to
make any contracts or commitments for or on behalf of the Company
relating to the Web site or otherwise, to sign or endorse any
commercial paper, contracts or instruments of any nature or to
enter into any obligation binding the Company to the payment of
money or otherwise.
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Section 1.2 Offer to Employ Consultant. Following the term
of this Agreement, Consultant may be offered an employment or a
continuing consulting position, upon the mutual agreement and
mutually agreeable terms negotiated between the Company and
Consultant. In this regard, the parties intend that this
Agreement to compensate Consultant for his actual services
rendered to and for the benefit of the Company during the term of
this Agreement. This Agreement does not preclude a conversion of
Consultant's status into an employment relationship with the
Company as an executive of the Company; rather, the Company
acknowledges a strong interest at this time in entering into such
a relationship with Consultant, should the work demands of the
Company and the availability of Consultant make such an
arrangement possible.
ARTICLE II
COMPENSATION
Section 2.1 Compensation. As full compensation for all
services rendered pursuant to this Agreement during the term of
this Agreement, Consultant shall be paid by the Company a minimum
monthly consulting fee (hereinafter referred to as the
"Consulting Fee") equal to Seven Thousand and No/100 Dollars
($7,000.00). Such Consulting Fee amount is based upon the
mutual understanding of Consultant and the Company that
Consultant is obligated to render Thirty Five (35) documented
consulting hours on a monthly basis for the benefit of the
Company at an agreed rate equal to Two Hundred and No/100 Dollars
($200.00) per hour. Any consulting hours rendered by Consultant
in excess of Thirty Five (35) hours per month shall be approved
in advance by an officer or other official of the Company based
upon specific project requirements of the Company in blocks
(each, a "Block") of Ten (10) hours per Block at the agreed rate
of One Thousand Five Hundred and No/100 Dollars ($1,500.00) per
Block (each, a "Block Fee"). Prior to the payment of any Block
Fee by the Company, Consultant shall document each Block to the
satisfaction of the officer or other official of the Company who
authorized such additional services. The monthly Consulting Fee
and any Block Fee, as applicable, to be paid to Consultant
hereunder shall be paid on the fifteenth (15th) day of each
calendar month following the month actual services were rendered
to the Company (and, in the case of a Block Fee, documented) by
Consultant during the term.
ARTICLE III
TERMINATION
Section 3.1 Termination. This Agreement may be terminated
by the Company at any time only (i) for "cause", as determined by
the Company's Board of Directors, or (ii) for a violation of any
of Consultant's covenants against non-competition,
confidentiality or nondisclosure of trade secrets or confidential
information as set forth in Article IV below prior to the
expiration of this Agreement, upon written notice delivered to
Consultant.
ARTICLE IV
Section 4.1 Non-Competition and Confidentiality. (a)
Consultant recognizes and acknowledges that he will derive
substantial benefit from the consummation of the transactions
contemplated by this Agreement. Consultant further recognizes
and acknowledges that The
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Company is making a substantial investment pursuant to this
Agreement and that certain Asset Purchase Agreement (the
"Purchase Agreement") of even date herewith in reliance upon the
fact that the knowledge and expertise developed by Consultant and
his management of the affairs of the business of the Company (the
"Business") will be preserved and will not be used in competition
with the Business purchased by the Company. Consultant hereby
agrees that the covenants contained herein are reasonable and
necessary for the protection of the Company and the Business to
be purchased by the Company, and that Consultant agrees to take
all necessary actions to assure that Consultant will not,
directly or indirectly, except for the benefit of the Company or
with the prior written consent of the Company, which consent may
be granted or withheld at the Company's sole discretion:
(i) Own, manage, engage in, control, be employed by,
participate in or be connected with, in any manner whatsoever,
the ownership, management, operation or control of any business
which sells, promotes or distributes products or services, which
are reasonably like and which may reasonably compete or which
otherwise performs services, which are reasonably like and which
may reasonably compete with those products or services previously
offered by Consultant's Business and/or the Web site (but
specifically excluding any existing non-eye product or service
Website of Consultant) at any time during the term of this
Agreement;
(ii) Canvas, solicit or accept business from
"Customers of the Company" after effective date hereof (except on
behalf of the Company) which, for purposes of this Agreement,
shall mean any person or entity which has been contacted by
Consultant or his affiliates or subsidiaries, or has engaged in
business with Consultant or any of his affiliates or
subsidiaries, during the two (2) year period prior to the
effective date of this Agreement;
(iii) Directly or indirectly request or advise any
Customer of the Company to withdraw, curtail or cancel such
Customer's business with the Company, or otherwise interfere with
the business relationship between such Customers and the Company,
or any of his affiliates or subsidiaries;
(iv) Otherwise aid, consult or assist anyone engaged
in any business which is competitive with the "Business of the
Company," which "Business of the Company" shall include all
business activities in which the Company or any of his affiliates
or subsidiaries is engaged at any time after the date of Closing
(including, but not limited to, the publication of one or more
eye-related web sites, sales therefore, sales and acquisitions of
such types of business) or in which the Company or any of his
affiliates or subsidiaries plans to engage after the date of
Closing; or
(v) communicate to any person or entity any trade
secrets, customer lists, information (financial or otherwise),
strategies, systems, methods or any
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other business data or secrets of the Company, any of the
Company's affiliates or subsidiaries.
(b) Consultant's covenants against competition as set
forth in subparagraph (a) above shall commence on the date of
this Agreement and shall continue for a period of two (2) years
after the date of Closing of this Agreement. The restraints
against competition imposed on and agreed to by each Consultant
hereunder shall apply to, and be enforceable in, the State of
Hawaii, and/or an area within fifty (50) miles of any location
where the Company, or any of its affiliates or subsidiaries is
doing business.
Section 4.2 Trade Secrets.
(i) Consultant covenants and agrees that he will not,
directly or indirectly, for his own account or benefit, or for
the account or benefit of any other person or party, communicate
to any person or entity any trade secrets, customer lists,
information (financial or otherwise), strategies or any other
business data or secrets of the Company.
(ii) Consultant's covenant against disclosure as set
forth in subparagraph (a) above shall commence on the date of
this Agreement and shall continue for a period of two (2) years
after the date of Closing of this Agreement.
Section 4.3 Nondisclosure of Confidential Information.
(i) Consultant acknowledges that the Company may
disclose or has previously disclosed certain confidential
information to such party. Consultant hereby covenants and
agrees that he will not, without prior written consent of the
Company, at the closing or at any time thereafter, disclose or
permit to be disclosed to any third party by any method
whatsoever any of the confidential information of the Company
whether acquired prior to or after the Closing Date. For
purposes of this Agreement, "confidential information" shall
include, but not be limited to, any and all records, notes,
memoranda, data, ideas, processes, methods, techniques, systems,
formulas, patents, models, devices, programs, computer software,
writings, research, personnel information, plans, or any other
information of whatever nature in the possession or control of
the Company which has not been published or disclosed to the
general public, or which gives to the Company an opportunity to
obtain an advantage over competitors who do not know of or use
it.
(ii) The foregoing paragraph shall not be applicable
if and to the extent Consultant is required to testify in a
judicial or regulatory proceeding pursuant to an order of a judge
or administrative law judge issued after such party and his legal
counsel urge that the aforementioned confidentiality be
preserved.
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(iii) Any breach of this nondisclosure covenant will
result in the waiver by Consultant of any and all rights to
compensation and any additional Purchase Price, if any, unpaid at
the time of the breach. In such event the Company shall have no
further obligation to pay any amounts related thereto.
Section 4.4. Remedy for Breach. Consultant expressly
recognizes and acknowledges that the terms and conditions of this
Agreement and specifically Article IV hereunder are reasonable as
to time and area, necessary to protect the legitimate business
interests of the Company, and are not unduly burdensome to
Consultant.
Further, Consultant expressly acknowledges and agrees that
irreparable injury will result to the Company and to its business
and properties in the event of any breach by Consultant of any of
the provisions of this Article IV, and that Consultant's
continued engagement is predicated on the commitments undertaken
by him pursuant thereto. In the event of any breach of any of
Consultant's commitments pursuant to this Article IV, the Company
shall be entitled to immediately terminate this Agreement with
no further obligation to Consultant hereunder and to any other
remedies and damages available, including without limitation to
injunctive relief to restrain the violation of such commitments
by Consultant or by any person or persons acting for or with
Consultant in any capacity whatsoever.
If any court of competent jurisdiction should hereinafter
determine in the course of litigation that the provisions of this
Article IV are unreasonable with respect to length of time,
geographical area, or activities so restrained, then this clause
shall be construed to operate for such period of time and such
geographical area or areas and in respect of such activities as
said court shall determine to be the maximum reasonable restraint
in the circumstances, and the parties agree to submit such
question or questions to such court in the event of any such
determination of unreasonableness.
Section 4.5. Waiver of Breach. The waiver of either party
of a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach by either
the Company or Consultant. The failure to enforce any
provision(s) of the Agreement shall not be construed as a waiver
of such provision(s).
Section 4.6. Survival of Covenants. The covenants of
Article IV hereof shall survive any termination of Consultant's
engagement and any termination of this Agreement, and be
enforceable according to their terms.
ARTICLE V
MISCELLANEOUS
Section 5.1 Notices. All notices, demands or other
communications required or provided hereunder shall be in writing
and shall be deemed to have been given at the earlier of (a)
actual receipt, or (b) three (3) days after deposit in the United
States Mail as provided below. Notice may be sent by personal
service to the parties or by deposit in the United States mail,
certified or
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registered, postage prepaid, return receipt requested, addressed
to the parties at the addresses set forth below or at such other
addresses as such parties may designate by notice to the other
parties.
If to Company: Eyesite.Com, Inc.
2925 LBJ Freeway
Suite 188
Dallas, Texas 75234
Attention: George W. Flinn, President
with a copy to: Bellinger & DeWolf, L.L.P.
750 North St. Paul, Suite 900
Dallas, Texas 75201
Attention: H. Len Musgrove, Esq.
If to Consultant: Gary Edwards, M.D.
1329 Lusitana Street, Suite 806
Honolulu, Hawaii 96813
Section 5.2 Applicable Law. This Agreement and the
obligations of the parties hereunder shall be interpreted,
construed, governed and enforced in accordance with the laws of
the State of Texas, and shall be performed in Dallas County,
Texas.
Section 5.3 Entire Agreement. This Agreement, together
with the Purchase Agreement, contains the entire agreement among
the parties hereto relative to the transactions contemplated
hereby, and supersedes all other oral and written agreements,
express or implied, concerning the subject matter of this
Agreement. No variations, modifications or changes in this
Agreement shall be binding upon a party unless set forth in a
document duly executed by or on behalf of such party.
Section 5.4 Assignability. Neither this Agreement, nor
the rights and obligations created under it, may be assigned by
either party without the prior written consent of the other party
to this Agreement.
Section 5.5 Severability. If any provision of this
Agreement or the application thereof to any person or
circumstance shall be held invalid or unenforceable to any
extent, such illegality or unenforceability shall extend to that
provision only, and the remainder of this Agreement shall be
enforced to the greatest extent permitted by law as if such
illegal or unenforceable provision were not incorporated herein.
Section 5.6 Third Party Beneficiary. Nothing in this
Agreement shall be deemed to create any right in any creditor or
other person not a party hereto (other than the successors and
assigns of a party hereto), and this instrument shall not be
construed in any respect to be a contract in whole or in part for
the benefit of any other party except as aforesaid.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first set forth above.
COMPANY:
EYESITE.COM,
a Delaware corporation
By: /s/ GEORGE W. FLYNN
------------------------------
George W. Flinn, President
CONSULTANT:
/s/ GARY EDWARDS, M.D.
---------------------------------
Gary Edwards, M.D.
-7-
<PAGE>
EXHIBIT C
LICENSE AGREEMENT
<PAGE>
WEB SITE LICENSE AGREEMENT
THIS WEB SITE LICENSE AGREEMENT (the "Agreement") is made
and entered into to be effective as of the ______ day of
December, 1999, by and between GARY EDWARDS, M.D., an individual
("Edwards") and EYESITE.COM, INC., a Delaware corporation
("Licensee").
R E C I T A L S:
A. Edwards owns certain proprietary intellectual property,
including without limitation, that certain commercial web site
with the registered domain of "http://www.eyesite.com" and
related intellectual property, a more specific description which
is set forth below (collectively, the "Web Site"); and
B. Licensee desires to obtain the exclusive use of the Web
Site during the term of this Agreement, and Edwards is agreeable
to exclusively licensing the Web Site to Licensee, on the terms
and conditions contained herein.
NOW, THEREFORE, for and in consideration of the premises and
other good and valuable consideration contained herein, the
receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. License of Web Site.
1.1 Edwards grants to Licensee an exclusive,
irrevocable worldwide royalty-free license to use, reproduce,
improve, update, enhance, modify, market, distribute, license,
rent, lease and sell advertising and products on the Web Site as
part of its products and services to Licensee's customers, in
Licensee's sole discretion.
1.2 Licensee's exclusive license rights to the Web
Site shall be for a term of forty (40) months from the effective
date of this Agreement.
2. Ownership of the Web Site by Edwards. Edwards and
Licensee stipulate and agree that the ownership of the "Web
Site," which includes without limitation Edwards' Web Site
(including updates, enhancements and modifications made during
the term of this Agreement) shall be retained by Edwards during
the term of this Agreement, except as provided in Section 3
below.
3. Vesting of Ownership. The parties further agree and
acknowledge that (i) this Agreement is entered into
simultaneously with that certain Asset Purchase Agreement (the
"Purchase Agreement") of even date between Edwards and Licensee,
and (ii) Licensee shall have the right to acquire the fully
vested ownership in the Web Site, subject to certain terms and
conditions described in Section 1.5 of the Purchase Agreement.
Notwithstanding any other provision of this Agreement, upon
Licensee's attainment or satisfaction of the conditions set forth
in Section 1.5 of the Purchase Agreement. Licensee shall be the
fully vested owner of the Web Site in all respects and shall have
no further obligation to Edwards hereunder.
1
<PAGE>
4. License. As used in this Agreement, the term
"exclusive license" shall mean that Edwards shall not without the
prior written consent of Licensee, for his own benefit or the
benefit of a third party market, sell or distribute the Web Site
to any party other than Licensee, nor shall Edwards license any
third party to develop, create, publish, improve, market, sell or
distribute the Web Site.
5. Entire Agreement. This Agreement shall constitute
the entire agreement of the parties as to Licensee's use of the
Web Site, and all prior written or oral agreements are null and
void.
6. No Assignment. Neither party shall have the right to
assign its obligations hereunder without the prior written
consent of the other party.
Dated to be effective as of the date above first written.
LICENSEE: EDWARDS:
EYESITE.COM, INC.,
a Delaware corporation
By: /s/ GEORGE W. FLYNN /s/ GARY EDWARDS, M.D.
-------------------------- ----------------------------
George W. Flinn, President Gary Edwards, M.D.
Address for Notice: Address for Notice:
Eyesite.Com, Inc. 1329 Edwards Street
2925 LBJ Freeway, Suite 188 Suite 806
Dallas, Texas 75234 Honolulu, Hawaii 96813
Attn: G. W. Flinn
2
<PAGE>
SCHEDULE 1.1(c)
ASSUMED LIABILITIES
Any and all contingent liabilities, whether now existing or
arising in the future, resulting from any potential litigation
pertaining to the past or present utilization by Seller of the
names "Eyesite" and/or "eyesite.com".
<PAGE>
SCHEDULE 3.2
NOTICES AND APPROVALS
1. Internic Agreement
2. Cybercom Agreement
<PAGE>
DAVID E. COFFEY
CERTIFIED PUBLIC ACCOUNTANT
3651 LINDELL RD., SUITE H
LAS VEGAS, NV 90103
(702) 871-3979
April 25, 2000
To Whom It May Concern:
Re: Framing Systems, Inc.
I hereby give you permission to use the financial statements
dated December 31, 1997 which I audited in your filings with the
Securities and Exchange Commission.
/s/ DAVID COFFEY
David Coffey
Certified Public Accountant
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999 (AUDITED) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 390,071
<SECURITIES> 0
<RECEIVABLES> 1,584,044
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,779,115
<PP&E> 87,670
<DEPRECIATION> 7,453
<TOTAL-ASSETS> 3,292,665
<CURRENT-LIABILITIES> 3,964,055
<BONDS> 0
0
0
<COMMON> 1,577
<OTHER-SE> (672,967)
<TOTAL-LIABILITY-AND-EQUITY> 3,292,665
<SALES> 9,922
<TOTAL-REVENUES> 9,922
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,779
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (739,366)
<EPS-BASIC> (.56)
<EPS-DILUTED> (.56)
</TABLE>
