UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended September 30, 2000
Commission File Number: 0-30211
MINDFULEYE, INC.
--------------------------------------------------------------
(formerly, RABATCO, INC.)
(Exact name of registrant as specified in its charter)
Nevada 87-0616344
------------------------ -----------------------------
(Place of Incorporation) (IRS Employer ID Number)
Suite 300- 355 Burrard St. Vancouver, British Columbia V6C 2G6
--------------------------------------------------------------
(Address of registrant's principal executive office)
604-638-6800
--------------------------------------------------------------
(Registrant's telephone number)
-------------------------------------------------------------------
(Former name or address, if changed since last report)
Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Number of Shares of Common Stock, $0.001 Par Value, Outstanding at
September 30, 2000: 13,815,000
<PAGE>
MINDFULEYE, INC.
For the Quarter Ended
September 30, 2000
INDEX TO FORM 10-QSB
<TABLE>
Page
----
<S> <C> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets:
- December 31, 1999 and September 30, 2000...................................................1
Consolidated Statements of Operations:
- For the Nine Months and Three Months Ended September 30, 2000..............................2
Consolidated Statements of Comprehensive Loss
- For the Nine Months and Three Months Ended September 30, 2000..............................3
Consolidated Statements of Cash Flow
- For the Nine Months Period Ended September 30, 2000........................................4
Consolidated Statements of Stockholders Equity
- For the Nine Months Ended September 30, 2000..............................................5
Notes to Financial Statements ........................................................................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.........................................................16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.........................................................................21
ITEM 2. CHANGES IN SECURITIES ....................................................................21
ITEM 3. DEFAULTS UPON SENIOR SECURITIES...........................................................21
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.........................................21
ITEM 5. OTHER INFORMATION.........................................................................21
ITEM 6. EXHIBITS AND REPORTS ON FROM 8-K..........................................................21
SIGNATURES...........................................................................................22
</TABLE>
i
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Expressed in United States Dollars)
(Unaudited)
<TABLE>
=============================================================================================================
September 30, December 31,
2000 1999
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 502,870 $ 6,520
Accounts receivable 32,847 1,661
Prepaid expenses 7,772 -
--------------- --------------
Total current assets 543,489 8,181
Capital assets (Note 4) 248,673 23,662
--------------- --------------
$ 792,162 $ 31,843
=============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 36,798 $ 18,740
--------------- --------------
Total current liabilities 36,798 18,740
Long-term debt (Note 5) - 214,093
--------------- --------------
36,798 232,833
--------------- --------------
STOCKHOLDERS' EQUITY
Capital stock (Note 8)
Authorized
100,000,000 common shares with a par value of $0.001
Issued and outstanding
September 30, 2000 - 13,815,000 common shares (1999 - 6,750,000) 13,815 1
Additional paid-in capital 2,170,920 -
Cumulative translation adjustment (2,535) -
Deficit accumulated during the development stage (1,426,836) (200,991)
--------------- --------------
Total stockholders' equity 755,364 (200,990)
--------------- --------------
$ 792,162 $ 31,843
=============================================================================================================
</TABLE>
History and organization of the Company (Note 1)
Commitments (Note 12)
Subsequent events (Note 15)
The accompanying notes are an integral part of
these consolidated financial statements
1
<PAGE>
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in United States Dollars)
(Unaudited)
<TABLE>
====================================================================================================================
Cumulative
Amounts from
July 21,
1999 Period From
(Date of Three Month Nine Month July 21,
Inception) to Period Ended Period Ended 1999 to
September 30, September 30, September 30, September 30,
2000 2000 2000 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING EXPENSES
Amortization $ 30,062 $ 9,730 $ 27,776 $ 649
Consulting fees 313,640 128,760 207,271 45,271
Contract work 1,279 - - 1,279
Foreign exchange loss 6,412 - - -
Insurance 1,300 336 963 -
Interest and bank charges 11,571 584 7,235 38
Investor relations 5,977 3,760 4,088 15
Legal and audit fees 156,493 29,596 147,241 2,277
Marketing and brand development 98,003 48,628 98,003 -
Newsalert and other infeed services 27,684 10,798 27,684 -
Office and miscellaneous 98,949 32,430 84,669 8,649
Rent and utilities 59,075 16,210 52,296 2,498
Stock based compensation expense 103,850 - 103,850 -
Telephone and communications 34,249 13,726 31,835 1,656
Wages and benefits 512,225 180,768 466,867 9,281
--------------- ------------- ------------ ------------
Loss before other item (1,460,769) (475,326) (1,259,778) (71,613)
--------------- ------------- ------------ ------------
OTHER ITEM
Interest income 33,933 11,618 33,933 -
--------------- ------------- ------------ ------------
Loss for the period $ (1,426,836) $ (463,708) $(1,225,845) $ (71,613)
====================================================================================================================
Basic and diluted loss per share $ (0.03) $ (0.10) $ (0.01)
====================================================================================================================
Weighted average number of shares outstanding 13,815,000 12,128,315 6,750,000
====================================================================================================================
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements
2
<PAGE>
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Expressed in United States Dollars)
(Unaudited)
<TABLE>
=============================================================================================================================
Cumulative
Amounts from
July 21,
1999 Period From
(Date of Three Month Nine Month July 21,
Inception) to Period Ended Period Ended 1999 to
September 30, September 30, September 30, September 30,
2000 2000 2000 1999
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net loss $ (1,426,836) $ (463,708) $ (1,225,845) $ (71,613)
Other comprehensive income, net of tax:
Foreign currency translation adjustments (2,535) (2,987) (2,535) -
-------------- ------------ ------------- ------------
Consolidated comprehensive loss $ (1,429,371) $ (466,695) $ (1,228,380) $ (71,613)
================================================================================================================
Basic and diluted comprehensive loss per share $ (0.03) $ (0.10) $ (0.01)
================================================================================================================
Weighted average number of shares outstanding 13,815,000 12,128,315 6,750,000
================================================================================================================
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements
3
<PAGE>
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States Dollars)
(Unaudited)
<TABLE>
====================================================================================================================
Cumulative
Amounts from
July 21,
1999 Period From
(Date of Nine Month July 21,
Inception) to Period Ended 1999 to
September 30, September 30, September 30,
2000 2000 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $ (1,426,836) $ (1,225,845) $ (71,613)
Items not affecting cash:
Amortization 30,062 27,776 649
Stock based compensation expense 103,850 103,850 -
Changes in non-cash working capital items:
Increase in accounts receivable (32,847) (31,186) (1,872)
Increase in prepaid expenses (7,772) (7,772) -
Decrease in due to related parties (23,116) (23,116) -
Increase in accounts payable and accrued liabilities 33,298 14,558 -
--------------- ------------- ------------
Net cash used in operating activities (1,323,361) (1,141,735) (72,836)
--------------- ------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of capital assets (278,735) (252,787) (6,224)
Acquisition of investment in subsidiary (net of cash acquired) 2,257,500 2,257,500 -
--------------- ------------- ------------
Net cash provided by investing activities 1,978,765 2,004,713 (6,224)
--------------- ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 1 - 1
Due to related parties (150,000) (150,000) 91,775
Repayment of long-term debt - (214,093) -
--------------- ------------- ------------
Net cash used in financing activities (149,999) (364,093) 91,776
--------------- ------------- ------------
Change in cash and cash equivalents for the period 505,405 498,885 12,716
Effect of exchange rates on cash and cash equivalents (2,535) (2,535) -
Cash and cash equivalents, beginning of period - 6,520 -
--------------- ------------- ------------
Cash and cash equivalents, end of period $ 502,870 $ 502,870 $ 12,716
====================================================================================================================
</TABLE>
Supplemental disclosure with respect to cash flows (Note 9)
The accompanying notes are an integral part of
these consolidated financial statements
4
<PAGE>
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Expressed in United States Dollars)
(Unaudited)
<TABLE>
======================================================================================================================
Deficit
Accumulated
Additional During the Cumulative Total
Paid-in Development Translation Stockholders'
Shares Amount Capital Stage Adjustment Equity
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, July 21, 1999 - $ - $ - $ - $ - $ -
Common stock issued 160 1 - - - 1
Loss for the period - - - (200,991) - (200,991)
----------- ---------- ----------- ------------- ----------- -------------
Balance, December 31, 1999 160 1 - (200,991) - (200,990)
Common stock issued 53 - - - - -
----------- ---------- ----------- ------------- ----------- -------------
Balance, March 13, 2000 213 1 - (200,991) - (200,990)
Capital stock of
MindfulEye.com at
March 13, 2000 (213) (1) 1 - - -
Capital stock of
MindfulEye Inc. at
March 13, 2000 6,905,000 - - - - -
Shares issued to acquire
MindfulEye.com 6,910,000 6,910 2,073,974 - - 2,080,884
Adjustment to par value - 6,905 (6,905) - - -
Stock based
Compensation expense - - 103,850 - - 103,850
Loss for the period - - - (1,225,845) (2,535) (1,228,380)
----------- ---------- ----------- ------------- ----------- -------------
Balance at
September 30, 2000 13,815,000 $ 13,815 $2,170,920 $ (1,426,836) $ (2,535) $ 755,364
======================================================================================================================
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
5
<PAGE>
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited)
SEPTEMBER 30, 2000
================================================================================
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was incorporated under the laws of the state of Nevada on June
16, 1977 with authorized common stock of 100,000 shares with par value of
$0.25. On June 20, 1998, the authorized common stock was increased to
100,000,000 shares with a par value of $0.001.
On June 20, 1998, the Company completed a forward common stock split of one
share of its outstanding stock for five shares. This report has been
prepared showing after stock split shares with a par value of $0.001 from
its inception.
The Company has been in the development stage since its inception and has
been primarily engaged in the business of developing mining properties.
During 1982, the Company abandoned its remaining assets and settled its
liabilities and since that date remained inactive until March 2000.
Effective March 13, 2000, the Company acquired all of the issued and
outstanding common stock of MindfulEye.com Systems, Inc.
("MindfulEye.com"). MindfulEye.com was incorporated on July 21, 1999, under
the laws of British Columbia. MindfulEye.com is in the development stage
and is currently developing a subscription-based service for the retail and
institutional investment community that delivers proprietary content
directly to subscribers by wireless devices, fax, e-mail and the web.
The company changed its name from Rabatco, Inc. to MindfulEye, Inc.
("MindfulEye") on May 12, 2000.
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the
financial position, results of operations, changes in stockholders' equity
and cash flows at September 30, 2000 and for the periods then ended have
been made. These financial statements should be read in conjunction with
the audited financial statements of the Company for the year ended December
31, 1999. The results of operations for the period ended September 30, 2000
are not necessarily indicative of the results to be expected for the year
ending December 31, 2000.
2. BASIS OF PRESENTATION
These financial statements contain the financial statements of MindfulEye
and MindfulEye.com presented on a consolidated basis. On March 13, 2000,
MindfulEye acquired all of the issued and outstanding share capital of
MindfulEye.com by issuing 6,910,000 common shares (Note 6). As a result of
the share exchange, control of the combined companies passed to the former
shareholders of MindfulEye.com. This type of share exchange has been
accounted for as a capital transaction accompanied by a recapitalization of
MindfulEye.com. Recapitalization accounting results in consolidated
financial statements being issued under the name MindfulEye but are
considered a continuation of MindfulEye.com. As a result, the financial
statements presented represent the consolidated financial position of the
above companies as at September 30, 2000 and the results of operations and
cash flows of MindfulEye.com for the period from July 21, 1999 to September
30, 2000 and the results of operations and cash flows of MindfulEye from
its deemed date of acquisition during the period. The number of shares
outstanding at September 30, 2000 as presented are those of MindfulEye.
6
<PAGE>
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited)
SEPTEMBER 30, 2000
================================================================================
3. SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The consolidated financial statements include MindfulEye, Inc. and
MindfulEye.com Systems, Inc. All significant intercompany balances and
transactions have been eliminated upon consolidation.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses
during the period. Actual results could differ from these estimates.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with original
maturities of three months or less.
Loss per share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). Under SFAS 128, basic and diluted earnings per share are to be
presented. Basic earnings per share is computed by dividing income
available to common shareholders by the weighted average number of common
shares outstanding in the period. Diluted earnings per share takes into
consideration common shares outstanding (computed under basic earnings per
share) and potentially dilutive common shares.
Income taxes
Income taxes are provided in accordance with Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes". A
deferred tax asset or liability is recorded for all temporary differences
between financial and tax reporting and net operating loss carryforwards.
Deferred tax expenses (benefit) result from the net change during the year
of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all
of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.
Accounting for derivative instruments and hedging activities
In September 1998, the Financial Accounting standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities" which
establishes accounting and reporting standards for derivative instruments
and for hedging activities. SFAS 133 is effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. In June 1999, the FASB
issued SFAS 137 to defer the effective date of SFAS 133 to fiscal quarters
of fiscal years beginning after June 15, 2000. The Company does not
anticipate that the adoption of the statement will have a significant
impact on its financial statements.
7
<PAGE>
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited)
SEPTEMBER 30, 2000
================================================================================
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Stock-based compensation
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," encourages, but does not require, companies to
record compensation cost for stock-based employee compensation plans at
fair value. The Company has chosen to account for stock-based compensation
using Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Accordingly compensation cost for stock options is
measured as the excess, if any, of the quoted market price of the Company's
stock at the date of the grant over the amount an employee is required to
pay for the stock.
The Company accounts for stock-based compensation issued to non-employees
in accordance with the provisions of SFAS 123 and the Emerging Issues Task
Force consensus in Issue No. 96-18 (EITF 96-18"), "Accounting for Equity
Instruments that are Issued to Other Than Employees for Acquiring or in
Conjunction with Selling, Goods or Services".
Comprehensive income
In 1998, the Company adopted Statement of Financial Accounting Standards
No. 130 ("SFAS 130"), "Reporting Comprehensive Income". This statement
establishes rules for the reporting of comprehensive income and its
components.
Financial instruments
The Company's financial instruments consist of cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities, and long
term debt. Unless otherwise noted, it is management's opinion that the
Company is not exposed to significant interest, currency or credit risks
arising from these financial instruments. The fair value of these financial
instruments approximate their carrying values, unless otherwise noted.
Foreign currency translation
Translation amounts denominated in foreign currencies are translated into
United States currency at exchanges rates prevailing at transactions dates.
Carrying values of monetary assets and liabilities are adjusted at each
balance sheet date to reflect the exchange rate at that date. Gains and
losses from restatement of foreign currency monetary assets and liabilities
are included in income.
Capital assets and amortization
Capital assets are recorded at cost less accumulated amortization.
Amortization is being provided for annually, using the declining balance
method at the following rates:
Computer software 100%
Computer hardware 30%
Furniture and equipment 20%
Leasehold improvements are amortized over the period of the lease.
8
<PAGE>
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited)
SEPTEMBER 30, 2000
================================================================================
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Disclosure about segments of an Enterprise and related information
Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "
Disclosure About Segments of an Enterprise and Related information"
requires use of management approach model for segment reporting. The
management approach model is based on the way a company's management
organizes segments within the company for making operating decisions and
assessing performance. Reporting segments are based on products and
services, geography, legal structure, management structure, or any other
manner in which the management disaggregates a company. Currently, SFAS 131
has no effect on the company's financial statements as substantially all of
the company's operations are conducted in one industry segment in Canada.
4. CAPITAL ASSETS
<TABLE>
=================================================================================================
Net Book Value
---------------------------------
Accumulated September 30, December 31,
Cost Amortization 2000 1999
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Computer hardware $ 178,995 $ 19,169 $ 159,826 $ 20,565
Computer software 10,516 5,175 5,341 3,097
Leasehold improvements 9,190 919 8,271 -
Furniture and equipment 80,034 4,799 75,235 -
------------ ----------- ------------ -----------
$ 278,735 $ 30,062 $ 248,673 $ 23,662
=================================================================================================
</TABLE>
5. LONG TERM DEBT
<TABLE>
=============================================================================================-================
September 30, December 31,
2000 1999
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Note payable to a related party, bearing interest at the Bank of
Montreal prime rate plus 2%, or 10% if undeterminable; secured;
repayable on either receipt of proceeds from second round Phase II
Equity financing or Initial Public Offering, whichever is earlier. $ - $ 214,093
==============================================================================================================
</TABLE>
9
<PAGE>
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited)
SEPTEMBER 30, 2000
================================================================================
6. RECAPITALIZATION
On March 13, 2000, the Company acquired all of the issued and outstanding
share capital of MindfulEye.com. As consideration, the Company issued
6,910,000 shares at a deemed value of $1,930,883 and paid $150,000.
Legally, the Company is the parent of MindfulEye.com. However, as a result
of the share exchange described above, control of the combined companies
passed to the former shareholders of MindfulEye.com. This type of share
exchange has been accounted for as a capital transaction accompanied by a
recapitalization of MindfulEye.com, rather than a business combination.
Accordingly, the net assets of MindfulEye.com will be included in the
balance sheet at book values and the deemed acquisition of the Company will
be accounted for by the purchase method with the net assets of the Company
recorded at fair market value at the date of acquisition. The revenues and
expenses and assets and liabilities reflected in the financial statements
prior to the date of acquisition are those of MindfulEye.com. Revenue and
expenses and assets and liabilities subsequent to the date of acquisition
include the accounts of the Company.
The cost of an acquisition should be based on the fair value of the
consideration given, except where the fair value of the consideration given
is not clearly evident. In such a case, the fair value of the net assets
acquired is used.
The 6,910,000 common shares issued pursuant to the acquisition agreement
were deemed to have a value of $1,930,883 based on the fair value of the
Company's net assets.
The total purchase price of $2,080,883 was allocated as follows:
Cash $ 2,257,500
Due to related parties (173,117)
Accounts payable and accrued liabilities (3,500)
--------------
$ 2,080,883
7. STOCK OPTIONS AND WARRANTS
The following stock options were outstanding at September 30, 2000.
=========================================================================
Number Exercise
of shares Price Expiry date
-------------------------------------------------------------------------
1,815,000 $3.50 June 7, 2002
75,000 $3.50 August 14, 2002
10,000 $3.50 August 22, 2002
20,000 $3.50 September 1, 2002
10,000 $3.50 October 24, 2002
9,000 $3.50 December 25, 2002
=========================================================================
The following warrants were outstanding at September 30, 2000.
======================================================================
Number Exercise
of shares Price Expiry date
----------------------------------------------------------------------
537,500 $ 2.10 March 20, 2001
then at $2.50 March 20, 2002
======================================================================
10
<PAGE>
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited)
SEPTEMBER 30, 2000
================================================================================
8. CAPITAL STOCK
As a result of the recapitalization described in Note 6, whereby
MindfulEye.com is deemed to be the acquiror for accounting purposes, the
number and value of common shares issued and outstanding at September 30,
2000 are MindfulEye's.
9. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
<TABLE>
====================================================================================
Period From
Nine Month July 21,
Period Ended 1999 to
September 30, September 30,
2000 1999
------------------------------------------------------------------------------------
<S> <C> <C>
Cash paid during the period for interest $ - $ -
Cash paid during the period for income taxes - -
====================================================================================
</TABLE>
The following non-cash transaction occurred during the nine month period
ended September 30, 2000:
a) The company issued 6,910,000 shares at a deemed value of $1,929,365 to
acquire 100% of the outstanding shares of MindfulEye.com.
No non-cash transactions occurred during the period from July 21, 1999 to
September 30, 1999.
10. STOCK BASED COMPENSATION EXPENSE
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" encourages but does not require companies to
record compensation cost for stock-based employee compensation plans at
fair value. The Company has chosen to account for stock-based compensation
using Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees". Accordingly, compensation cost for stock options is
measured as the excess, if any, of quoted market price of the Company's
stock at the date of grant over the option price.
The Company accounts for stock issued to non-employees in accordance with
the provisions of SFAS 123 and the Emerging Issues Task Force consensus in
Issue No. 96-18, "Accounting for Equity Instruments that are Issued to
Other Than Employees for Acquiring or in Conjunction with Selling Goods or
Services".
Following is a summary of the stock option activity:
<TABLE>
================================================================================================
Weighted
Average
Number Exercise
of Shares Price
------------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at December 31, 1999 - $ -
Granted 1,939,000 3.50
Forfeited - -
Exercised - -
-----------
Outstanding at September 30, 2000 1,939,000 $ 3.50
================================================================================================
Weighted average fair value of options granted during the period $ 1.20
================================================================================================
</TABLE>
11
<PAGE>
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited)
SEPTEMBER 30, 2000
================================================================================
10. STOCK BASED COMPENSATION EXPENSE (cont'd.....)
Following is a summary of the status of the options outstanding at
September 30, 2000:
<TABLE>
===============================================================================================
Outstanding Options Exercisable Options
--------------------------------------------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Contractual Exercise Exercise
Exercise Price Number Life Price Number Price
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$3.50 1,939,000 1.69 $ 3.50 52,500 $ 3.50
===============================================================================================
</TABLE>
Compensation
The Company granted 556,500 options to consultants during the current
period which are accounted for under the Emerging Issues Task Force
Consensus in Issue No. 96-18. Accordingly, using the Black-Scholes option
pricing model, the options are marked to fair value through charges to
operations as stock-based compensation. Stock-based compensation recognized
pursuant to EITF 96-18 during the nine month period ended September 30,
2000 was $103,850. This amount can be allocated to the other expense
categories in the accompanying statements of operations as consulting fees
of $103,850.
The Company granted 1,382,500 options to employees which are all accounted
for using Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees". Had compensation expense relating to the 1,382,500
options granted to employees been recognized on the basis of fair value
pursuant to Statement of Financial Accounting Standard No. 123, net loss
and loss per share would have been adjusted as follows:
<TABLE>
=================================================================================================
Period From
Nine Month July 21,
Period Ended 1999 to
September 30, September 30,
2000 2000
-------------------------------------------------------------------------------------------------
<S> <C> <C>
Loss for the period
As reported $ (1,225,845) $ (71,613)
================= ================
Pro forma $ (1,586,717) $ (71,613)
================= ================
Basic and diluted loss per share
As reported $ (0.10) $ (0.01)
================= ================
Pro forma $ (0.13) $ (0.01)
=================================================================================================
</TABLE>
12
<PAGE>
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited)
SEPTEMBER 30, 2000
================================================================================
10. STOCK BASED COMPENSATION EXPENSE (cont'd....)
The fair value of each option granted is estimated using the Black Scholes
Option Pricing Model. The assumptions used in calculating fair values are
as follows:
==========================================================================
Period from
Nine Month July 21,
Period Ended 1999 to
September 30, September 30,
2000 2000
--------------------------------------------------------------------------
Risk free interest rate 6.425% -
Expected life of the options 2.05 years -
Expected volatility 138.28% -
Expected dividend yield - -
==========================================================================
11. RELATED PARTY TRANSACTIONS
The Company entered into the following transactions with related parties
during the nine month period ended September 30, 2000, and the period from
July 21, 1999 to September 30, 1999:
a) Paid or accrued $58,875 to director and an officer for consulting fees
(September 30, 1999 - $44,965).
b) Included in long-term debt is an amount of $Nil (December 31, 1999 -
$214,093) which is payable to a director of the Company.
c) Included in accounts payable and accrued liabilities is an amount of
$Nil (December 31, 1999 - $5,571) which is payable to directors of the
Company.
d) The Company repaid $100,000 for amounts due to related parties.
12. COMMITMENTS
a) The Company leases office premises pursuant to an operating lease,
which expires in 2005. Future annual lease payments are as follows:
2001 $ 92,099
2002 95,364
2003 98,629
2004 98,629
2005 49,314
-----------------
$ 434,035
=================
13
<PAGE>
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited)
SEPTEMBER 30, 2000
================================================================================
13. INCOME TAXES
The Company's total deferred tax asset is as follows:
<TABLE>
================================================================================================
September 30, December 31,
2000 1999
----------------------------------------------------------------------------- ------------------
<S> <C> <C>
Tax benefit of net operating loss carryforward $ 485,124 $ 68,337
Valuation allowance (485,124) (68,337)
--------------- --------------
$ - $ -
================================================================================================
</TABLE>
The Company has a net operating loss carryforward of approximately
$1,426,836, which expires in 2019 and 2020. The Company provided a full
valuation allowance on the deferred tax asset because of the uncertainty
regarding realizability.
14. ACCUMULATED OTHER COMPREHENSIVE LOSS
Total comprehensive loss for the nine month period ended September 30,
2000, the period from July 21, 1999 to September 30, 1999 and the period
from July 21, 1999 to September 30, 2000 was $1,228,380, $71,613 and
$1,429,371 respectively. The only item included in other comprehensive loss
is foreign currency translation adjustments in the amounts of $2,535 for
the nine month period ended September 30, 2000 and $2,535 for the period
from July 21, 1999 to September 30, 2000.
============================================================================
Foreign Accumulated
Currency Other
Translation Comprehensive
Adjustment Income
----------------------------------------------------------------------------
Beginning balance, December 31, 1999 $ - $ -
Current period change 2,535 2,535
----------- -----------
Ending balance, September 30, 2000 $ 2,535 $ 2,535
============================================================================
15. SUBSEQUENT EVENTS
The following are events which occurred subsequent to September 30, 2000:
a) The Company's subsidiary, MindfulEye.com Systems Inc.
("MindfulEye.com") and the Canadian Venture Exchange ("CDNX") have
entered into an agreement whereby CDNX officials will test
MindfulEye.com's internet market surveillance service. The
surveillance service is expected to assist officials in watching a
greater array of stock price on-line chat, discussions, news, and
editorial sources for rumours and other information that could affect
the stock price of companies that trade on the exchange.
14
<PAGE>
MINDFULEYE, INC.
(formerly Rabatco, Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited)
SEPTEMBER 30, 2000
================================================================================
15. SUBSEQUENT EVENTS (cont'd.....)
b) The Company announced a distribution agreement between the Company's
subsidiary, MindfulEye.com, and Canada Newswire ("CNW") to offer
advanced internet market surveillance technologies and services for
public companies, securities exchanges, and regulatory bodies. Under
the terms of the agreement, CNW will act as the exclusive Canadian
distributor of MindfulEye.com's Surveillance and SurveillancePro
Services.
15
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for disclosures that report the Company's historical results, the
statements set forth in this section contain forward-looking statements. Words
or phrases "will likely result", "are expected to", "will continue", "is
anticipated", "estimate", "project or projected", or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995.
Actual results could differ materially from those projected in forward-looking
statements. Additional information and factors that could cause actual results
to differ materially from those in the forward-looking statements are set forth
in this Form 10-QSB and the Company's Form 10SB, as amended, filed with the
Securities and Exchange Commission. The Company desires to take advantage of
certain provisions in the Private Securities Litigation Reform Act of 1995,
which provide a safe harbor for forward-looking statements made by or on behalf
of the Company. The Company hereby cautions stockholders, prospective investors
in the Company, and other readers to not place undue reliance on these
forward-looking statements, which can only address known events as of the date
of this report.
General Overview
MindfulEye, Inc. (formerly Rabatco, Inc.)(the "Company" or "MindfulEye"), was
incorporated under the laws of the State of Nevada on June 16, 1977. From the
Company's inception in 1977 through 1982, the Company was primarily engaged in
the business of mineral resource exploration. The Company remained inactive from
1982 to 1998. On March 13, 2000, the Company completed the acquisition of
MindfulEye.com Systems, Inc., a company engaged in the business of Internet
software and technology research and development. On May 12, 2000, the Company
changed its name to MindfulEye, Inc.
The financial statements presented in this report contain the financial
statements of MindfulEye, Inc. and MindfulEye.com Systems, Inc. on a
consolidated basis. The Company's acquisition of MindfulEye.com Systems, Inc.
has been accounted for as a capital transaction accompanied by a
recapitalization of MindfulEye.com Systems, Inc. As a result, the financial
statements presented represent the consolidated financial position of
MindfulEye, Inc. and MindfulEye.com, Systems, Inc. as at September 30, 2000, the
results of operations and cash flows of MindfulEye.com Systems, Inc. for the
period from July 21, 1999 to September 30, 2000 and the results of operations
and cash flows of MindfulEye, Inc. from its deemed date of acquisition during
the period.
MindfulEye is developing a technology designed to provide subscribers to its
service sources of topic-related content available on the Internet. The first
subscriber service that MindfulEye intends to provide is designed to monitor the
content on investor related Internet web sites for information of interest to
subscribers in the investment-related communities. MindfulEye's technology is
designed to:
- browse and monitor Internet websites for specific types of
information, including chat room discussions, newswire postings and
published reports;
- rank the information for sentiment and significance using Artificial
Intelligence (AI) technology; and
- deliver the information to subscribers in a summarized format.
MindfulEye intends to use AI to rank investor information based on the nature of
the comments, reports, news and other information and present this information
in a "MoodIndex" or "MoodScore."
Once the technology is fully developed, the Company anticipates that subscribers
will be able to select a number of delivery options for receiving the
information it collects, including cell phone, pager, email, web, fax, and
instant messaging. The Company anticipates that it will be able to deliver
sourced content shortly after being discovered, batched in time periods, or
summarized in daily reports.
MindfulEye's system is being developed in a modular fashion so that each content
source will have a dedicated collection system that will permit MindfulEye to
add new information sources or "feeds" quickly as they become available. The
Company believes that this modular architecture will assist in the scaling of
the system.
16
<PAGE>
MindfulEye is also in the process of using its AI technology to develop market
surveillance services, which is designed to assist regulatory officers in
monitoring online chat, discussions, news, and editorial services for rumors and
other information that could affect the markets they regulate.
MindfulEye has not fully completed the development of the technology related to
the services that it intends to provide, and MindfulEye cannot assure you that
it will successfully complete such development or that its subscription service
will be commercially successful.
In September 2000, a partnership was entered between MindfulEye's subsidiary
MindfulEye.com Systems, Inc. and Microsoft Canada Co. under the Canadian Rapid
Deployment Program, a local initiative that, together with the Microsoft
Corporate Program, launches the new SQL Server 2000. SQL Server 2000 is the data
management and analysis backbone for Microsoft's planned series of .NET
applications and services. The server is tailored to rapidly deliver Web-enabled
applications for e-commerce, data warehousing and line of business that are
designed to be highly scalable and reliable. The SQL Server 2000 is designed to
support the significant content storage and real time analysis needs required to
support MindfulEye's proposed subscription based Internet monitoring and alert
service.
MindfulEye announced on September 19, 2000 an agreement between its subsidiary,
MindfulEye.com Systems, Inc. and Swift Trade Securities Inc. ("Swift Trade"),
whereby Swift Trade will offer MindfulEye's new online monitoring and research
service to Swift Trade's customer base of 300 professional day traders. Swift
Trade is the largest electronic day trading operator and training provider in
Canada, with 10 locations nationwide and five more scheduled to open in the
first quarter of 2001. MindfulEye is in the process of negotiating similar
agreements with other partners. There can be no assurance that such alliances
will be entered into.
On October 10, 2000, MindfulEye announced that its subsidiary, MindfulEye.com
Systems Inc. and the Canadian Venture Exchange (CDNX) entered into an agreement
whereby Canadian Venture Exchange officials will test MindfulEye's Internet
market surveillance service. The surveillance service is designed to assist
officials in monitoring an array of online chat, discussions, news, editorial
sources for rumors and other information that could affect market of companies
that trade on the exchange.
On October 20 2000, MindfulEye announced a distribution agreement between its
subsidiary, MindfulEye.com Systems Inc. and Canada Newswire (CNW), Canada's most
widely used public corporate disclosure newswire, to offer advanced internet
market surveillance technologies and services for public companies, securities
exchanges, and regulatory bodies. Under the terms of the agreement, CNW will act
as the exclusive Canadian distributor of MindfulEye's Surveillance and
SurveillancePro services.
In the past nine months, management has focused its efforts on negotiating and
entering into the above-mentioned partnerships and agreements and in completing
the development and testing of the web site and the technologies.
The following discussion and analysis explains MindfulEye's results of
operations for the three-month fiscal quarter from July 1, 2000 to September 30,
2000. You should review the discussion and analysis of financial condition in
conjunction with MindfulEye's financial statements and the related notes, as
well as statements detailed in MindfulEye's Securities and Exchange Commission
filings.
Results of Operations
Fiscal Quarter Ended September 30, 2000
Revenues. MindfulEye launched version 1.0 "release candidate" of our product in
the second week of October 2000. Its phase II Beta Version was released on June
29, 2000. Both these versions were available to the subscribers at no charge.
During the quarter ended September 30, 2000, MindfulEye did not generate any
revenue from its operations. MindfulEye had interest income in the amount of
$11,618.
Expenses. During the fiscal quarter ended September 30, 2000, MindfulEye
incurred total expenses of $475,326 related primarily to: (i) research and
developing its web technologies; (ii) marketing and brand development; (iii)
professional and legal fees relating to its Securities and Exchange Commission
reports and (iv) general overhead and administrative expenses. During the
quarter, MindfulEye paid consulting fees in the amount of $128,760 which
included fees paid to (i) Everest Advisory Group Inc., for the services of
Julian Remedios as MindfulEye's chief financial officer and (ii) fees paid to
Ecotex Service Corporation for management services of Randy Bartsch. MindfulEye
paid legal and accounting fees of $29,596 during the fiscal quarter ended
September 30, 2000 related to preparation of its filings with the Securities and
Exchange Commission, patent searches and other
17
<PAGE>
corporate and accounting matters. MindfulEye incurred other expenses, including
amortization expenses of $9,730, insurance expense of $336, interest and bank
charges expenses of $584, investor relations expenses of $3,760, marketing and
brand development expenses of $48,628, infeed services expenses of $10,798,
office and miscellaneous expenses of $32,430, rent and utilities expenses of
$16,210, telephone and communication expenses of $13,726 and wages and salary
expenses of $180,768.
MindfulEye anticipates that expenses relating to the development of its web site
will increase during the fourth quarter of 2000 as it launches the official
version of its web site; it offers its subscription based services to
subscribers and it completes development of version 1.1 Surveillance services.
MindfulEye also anticipates that expenses relating to marketing and sales will
increase during the fourth quarter of 2000 as it continues an extensive campaign
to market and promote the MindfulEye.com website and subscription services to
the general public, investor relation professionals and other investment
community through partnerships with investment professionals.
Net Loss. MindfulEye had a net loss of $463,708 or basic and diluted loss of
$0.03 per share for the fiscal quarter ended September 30, 2000.
Nine Month Period Ended September 30, 2000
Revenues. MindfulEye launched version 1.0 "release candidate" of our product in
the second week of October 2000. Its phase II Beta Version was released on June
29, 2000. Both these versions were available to the subscribers at no charge.
During nine month period ended September 30, 2000, MindfulEye did not generate
any revenue from its operations. MindfulEye had interest income in the amount of
$33,933.
Expenses. During the nine month period ended September 30, 2000, MindfulEye
incurred total expenses of $1,259,778 related primarily to: (i) research and
developing its web technologies (ii) marketing and brand development (iii)
professional and legal fees relating to its Securities and Exchange Commission
reports and (iv) general overhead and administrative expenses. During the nine
month period ended September 30, 2000, MindfulEye paid consulting fees in the
amount of $207,271 which included fees paid to (i) Everest Advisory Group Inc.,
for the services of Julian Remedios as MindfulEye's chief financial officer (ii)
fees paid to Tod Maffin Inc. relating to general consulting services and (iii)
fees paid to Ecotex Service Corporation for management services of Randy
Bartsch. MindfulEye paid legal and accounting fees of $147,241 during nine month
period ended September 30, 2000 related to preparation of its filings with the
Securities and Exchange Commission, patent searches and other corporate and
accounting matters. MindfulEye incurred other expenses, including amortization
expenses of $27,776, insurance expenses of $963, interest and bank charges
expenses of $7,235, investor relations expenses of $4,088, marketing and brand
development expenses of $98,003, infeed services expenses of $27,684, office and
miscellaneous expenses of $84,669, rent and utilities expenses of $52,296,
telephone and communication expenses of $31,835; wages and salary expenses of
$466,867 and non-cash stock based compensation expenses of $103,850.
Net Loss. MindfulEye had a net loss of $1,225,845 or basic and diluted loss of
$0.10 per share for the nine month period ended September 30, 2000.
Plan of Operation
During MindfulEye's fiscal quarter ended June 30, 2000, MindfulEye launched the
beta-version of its web site. MindfulEye launched version 1.0 `release
candidate' of our product in the second week of October 2000. MindfulEye intends
to launch its Version 1.1 web site in November 2000, which will include some
enhancements to the Version 1.0 and also intends to launch its Surveillance
products in November 2000. Mindfuleye anticipates that it will begin accepting
paid subscriptions for its services in the fourth quarter 2000 or the first
quarter 2001. The level of revenues from subscriptions is expected to vary based
on a number of factors, including, among other things: (i) the number of
subscribers to Mindfuleye's subscription-based services; (ii) the willingness of
visitors to pay subscription fees for Mindfuleye's services; (iii) the
effectiveness of Mindfuleye's marketing and sales efforts; (iv) general economic
factors affecting the market for securities; and other factors, several of which
are outside the control of Mindfuleye.
After the official launch of its website, MindfulEye intends to focus on (i)
intensifying its marketing and promotional efforts for the MindfulEye and brand
development; (ii) developing strategic relationships with the existing and other
Internet providers, investment houses and regulatory bodies; (iii) obtaining
subscribers for its services (iv) developing and enhancing its artificial
intelligence technologies - LexantTM and (iv) developing and expanding its
website offerings.
18
<PAGE>
Capital Requirements
MindfulEye anticipates its operating budget to implement its plan of operation
and to meet its financial obligations during the remainder of its fiscal year
ending December 31, 2000, will be as follows:
DESCRIPTION December 31,
2000
------------------------------------------------- ------------------
Technology & product development $230,000
Marketing and brand development $120,000
Salaries & benefits - management and office $170,000
In-feed charges from third parties $ 34,000
Legal, regulatory filings and accounting $ 34,000
Office and administration $ 53,000
Investor relations $ 50,000
Insurances $ 10,000
Capital equipment $ 79,000
-------------
Totals $780,000
Liquidity and Capital Resources
As at September 30, 2000, MindfulEye had working capital on hand in the amount
of $506,691. MindfulEye had cash or cash equivalents of $502,870, accounts
receivables of $32,847 and prepaid expenses and deposits in the amount of
$7,772. MindfulEye had accounts payable and accrued liabilities in the amount of
$36,798.
MindfulEye anticipates that its working capital is sufficient to satisfy its
cash requirements through to November 2000. MindfulEye anticipates it will be
required to raise financing during the fourth quarter of 2000 to allow the
company to expand its operations in 2001. MindfulEye anticipates that it will be
required to raise at least $200,000 to meet its anticipated fourth quarter
expenditures and an additional $4,000,000 to $8,000,000 to meet its anticipated
cash requirements for the planned expansion of the Company's operations for
marketing, developing technology, applications and products during the year
2001. As at September 30, 2000, MindfulEye has no arrangements of financing, and
there can be no assurance that it will be successful in acquiring sufficient
financing to fund its plan of operation on terms acceptable to MindfulEye, if at
all. Any inability to obtain additional financing, when needed, will have a
material adverse effect on the company, requiring the company to significantly
curtail or possibly cease its operations. In addition, any additional equity
financing may involve substantial dilution to the interests of the Company's
then existing shareholders.
While MindfulEye believes its capital requirement estimates are reasonable, such
estimates can change for many different reasons, some of which are beyond
MindfulEye's control. MindfulEye is a development stage company, which means
that it is in the process of developing its technologies and that it currently
has no revenues from its operations. MindfulEye anticipates that it will
officially market its services to subscribers on a subscription fee basis late
in the fourth quarter. MindfulEye currently has no subscribers and earns no
income from its operations. MindfulEye does not believe it will receive any
significant revenue from its subscription services until at least 2001. There
can be no assurance that MindfulEye will successfully launch its web site as
planned or that a sufficient number of subscribers will subscribe to the
MindfulEye service to make it commercially viable.
MindfulEye does not anticipate it will acquire or dispose of any significant
equipment in the fourth quarter of 2000.
19
<PAGE>
Subsequent Event
On November 6, 2000, MindfulEye closed a Private Placement of $150,000. The
Private Placement consisted of the sale of 300,000 common shares at $0.50 per
share to Powerstar, an accredited investor, for the net proceeds of $150,000.
The common shares issued are pursuant to an exemption from registration under
Regulation S of the Securities Act 1933. Mindfuleye is attempting to raise
additional capital but as at November 14, 2000, MindfulEye has no arrangements
of financing, and there can be no assurance that it will be successful in
acquiring sufficient financing to fund its plan of operation on the terms
acceptable to MindfulEye, if at all. Any inability to obtain additional
financing, when needed, will have a material adverse effect on Mindfuleye,
requiring Mindfuleye to significantly curtail or possibly cease its operations.
In addition, any additional equity financing may involve substantial dilution to
the interests of the Company's then existing shareholders.
Product Research and Development
MindfulEye currently develops all of its technologies internally. MindfulEye
anticipates it will spend approximately $2,000,000 in payroll, consultants and
equipment to develop the technology and the new products related to its
MindfulEye.com services and support systems during the next 12 months.
MindfulEye may also engage consultants to assist with product research and
development.
The cost for developing technology is expensive and the process will require
testing and refinement. MindfulEye's commercial success will depend on its
ability to attract subscribers to its services. This will require MindfulEye to
develop and use sophisticated technologies to generate, sustain and maintain
user interest and satisfaction.
There can be no assurance that MindfulEye will successfully develop and test the
technologies related to it services on a timely basis, if at all. Any
substantial delay in obtaining the required financing or developing the
MindfulEye services and the support services for subscribers would have a
materially adverse effect on MindfulEye's business and results of operations.
Personnel
As at September 30, 2000, MindfulEye had 18 full-time employees. This included 3
on management, 9 programmers and developers, who assist us in development of its
internal operating and information systems and technologies, and 6 employees who
are engaged in general and administrative and marketing functions.
MindfulEye also engages independent consultants to assist in the development of
its technologies and applications, for public relations services, NLP (natural
language processing) development, marketing services and communication
consulting. MindfulEye may also engage additional consultants in the future to
assist it with the development of software and information systems and
implementation of its business plan.
MindfulEye's success will depend in large part on its ability to attract and
retain skilled and experienced employees and consultants. MindfulEye does not
anticipate any of its employees will be covered by a collective bargaining
agreement. MindfulEye does not currently maintain key man life insurance on any
of its directors or executive officers.
Subsequent to September 30, 2000, MindfulEye hired 4 additional employees to
assist in application and technology development. On October 3, 2000, Julian
Remedios resigned as Mindfuleye's chief financial officer.
Inflation
MindfulEye's results of operations have not been affected by inflation and
management does not expect inflation to have a significant effect on the
Company's operations in the future.
Dividends
The Company has not paid any dividends on its stock.
20
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
------ -----------
27.1 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K for the Quarter ended September
30, 2000.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
Date: November 13, 2000
MINDFULEYE, INC.
/s/ Ray Torresan
----------------------------------------
Ray Torresan
Chairman of the Board of Directors,
President
22
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
27.1 Financial Data Schedule
