U.S. Securities and Exchange Commission
Washington, D.C. 20549
<P>
AMENDMENT NO. 1 TO
FORM 10-SB
<P>
General form for registration of securities of small
business issuers Under Section 12(b) or (g) of the
Securities Exchange Act of 1934
<P>
Hipstyle.com, Inc.
(Name of Small Business Issuer in its charter)
<P>
Florida
(State or other jurisdiction of incorporation or
organization)
<P>
65-0928369
(I.R.S. Employer Identification No.)
<P>
1221 Brickell Avenue, Suite 900
Miami, Florida 33131
(Address of principal executive offices) (Zip Code)
<P>
(305) 539-0900
(Issuer's telephone number)
<P>
Securities to be Registered Under Section 12(b) of the Act:
None
<P>
Securities to be Registered Under Section 12(g) of the Act:
Common Stock
$.0001 Par Value
(Title of Class)
<P>
To simplify the language in this Registration Statement,
Hipstyle.com, Inc. is referred to herein as "the Company" or
"We."
<P>
Item 1. Business.
<P>
Business Development. We were incorporated under the name
Hipstyle.com, Inc. in the State of Florida on June 22, 1999.
The Company was a wholly owned subsidiary of Intelilabs.com,
Inc. (formerly known as Quentin Road Productions, Inc.), a
publicly trade company listed on the OTC Electronic Bulletin
Board (OTCBB:QRPI) from inception until March 1, 2000.
Effective March 1, 2000, all of the shares of Hipstyle owned
by Intelilabs.com, Inc. were distributed to the
Intelilabs.com, Inc. shareholders in a spin off at a rate of
1.31 Hipstyle shares for each share of Intelilabs.com, Inc.
owned. The Company has spent a total of $54,292 for
research and development. All of such expenses were used to
develop the Company's website since inception of the
Company. The Company did not spend any additional funds on
research and development expenses.
<P>
We have not been involved in any bankruptcy, receivership or
similar proceeding. We have not been involved in any
material reclassification, merger, consolidation, or
purchase or sale of a significant amount of assets not in
the ordinary course of business.
<P>
Business of Issuer.
<P>
Hipstyle.com is a development stage company which is
completing a website, at www.hipstyle.com, dedicated to
bringing together designers and merchants of high fashion
and beauty products with online clothing shoppers and
fashion enthusiasts. The company has launched a beta test
version of the site and has retained the services of a web
design and development firm to facilitate the completion of
a11 planned content and functionality. The Company has
spent a total of $54,292 for research and development. All
of such expenses were used to develop the Company's website
since inception of the Company. The Company did not spend
any additional funds on research and development expenses.
The Company's goal is to become a comprehensive fashion
portal as well as a fashion information intermediary, or
"infomediary". To execute on the portal model, the Company
plans to provide links to established e-commerce, catalog
retail and designer sites featuring apparel and accessories,
as well as a comprehensive offering of fashion related
services and content. Some of these may include: a search
engine, fashion news, research tools, video runways and
interviews, sale and special event postings, major fashion
magazine archives, vintage resources, chat and e-mail
response, as well as bulletin boards on a variety of topics
ranging from fashion and entertainment to current social
issues.
<P>
We anticipate that the fashion infomediary aspect of our
model will focus on aggregating our members' personal
profiles and preferences and then matching them with our
merchant and advertising partners, thus providing focused
services and information to both parties. This strategy
will be heavily dependant on our ability to convert future
visitors to our site into Hipstyle.com members. While most
intended services will be available to all site visitors,
certain higher tier services and functionality will be
reserved for members only.
<P>
We anticipate that membership in Hipstyle will be free and
it will offer special access to certain restricted content
and functionality as well as negotiated member discounts
with merchant partners. To become a member, site visitors
will be asked to fill out some personal information,
including their specific fashion related preferences, and
this information will be aggregated into a confidential data
repository. With the members, explicit permission, the
Company anticipates using these detailed customer profiles
to provide businesses with a powerful online advertising,
direct marketing and electronic commerce channel to more
effectively reach their desired audience. In return, we
anticipate that members will benefit from the targeted
advertising and offers focusing on their specific interests,
and will also receive group discounts and special deals
negotiated by the Company on their behalf.
<P>
Anticipated revenues will be generated primarily through
charging a click through rate for each link to other sites,
revenue sharing on purchases made at partner e-commerce
sites, advertising sales and possible auction fees.
<P>
The Company's corporate offices are located at 1221 Brickell
Avenue, Suite 900, Miami, Florida 33131. The Company' s
corporate staff consists of two full time persons with
collective experience in fashion and online marketing. The
Company's telephone number is (305) 539-0900.
<P>
Operational Details
<P>
Acquiring Viewer Base
<P>
The first and perhaps most important aspect of our model is
to generate an audience/membership as quickly as possible.
Advertising rates, merchant pricing, negotiated member
discounts and access to cost-effective strategic
partnerships are all positively affected by increased
traffic on our website. Therefore, with a growing number of
viewers on our site, we have the potential to deliver more
benefits to our anticipated users, clients and partners.
Our users will benefit from a larger base, as it will
increase our ability to leverage group discounts and special
offers for our members. In addition the quality of
interactive functionality like auctions and bulletin boards
will be greatly improved. Our business partners and
advertisers will have access to more viewers and potential
customers, and will thus benefit more from a relationship
with Hipstyle.com. Finally, our anticipated revenues will be
completely dependant on the amount of traffic and membership
on our site.
<P>
This initiative will hinge on a successful advertising
campaign and public relations strategy. The effort must be
as targeted and cost effective as possible, since this
represents Hipstyle's largest cost allocation. Preliminary
advertising and traffic-building channels have been
identified, with the anticipated approach consisting of
highly targeted advertising online banner buys, business
development relationships with third party sites and
strategic placement on search engines. Depending on the
success of its online advertising initiatives, the Company
may also pursue offline channels including billboard and
magazine advertising.
<P>
We anticipate that a membership can be attained utilizing
the outlined channels and techniques. Hipstyle.com will try
to attract individuals who are interested in this industry
by providing unique content and services, while promoting a
sense of community.
<P>
Content Functionality
<P>
In order to attract this viewer base to HipStyle.com, we
will try to provide services to our members in addition to
shopping links that will be useful and fun to those
individuals who are interested in fashion. We hope to
provide a search engine for our entire site to create an
easy way to quickly find specific items or functions. We
will also anticipate providing up to date news and articles,
as well as research tools, which will include biographies of
important figures in fashion like designers and models.
Planned links will also be established for event postings
such as sample sales, new store or site openings and
possible job and internship listings.
<P>
It is anticipated that members will have upgraded offerings
including the opportunity to chat with each other and
exchange ideas, creating a sense of community within our
viewer base. They should also have the ability e-mail us
directly with questions, comments and suggestions, and have
access to bulletin boards on a variety of topics ranging
from fashion and entertainment to current social issues.
<P>
We will rely on forming partnerships with major magazines to
provide archives of selected features of their current
issues, and unless we can forge these relationships we will
not be able to offer this feature to our members. We
anticipate that seasonal runway shows and various interviews
will be available to download on RealPlayer video to be
viewed by our members. Finally, we will also attempt to
provide our members with resources to aid in the search for
designer vintage pieces, potentially in the form of an on-
line auction.
<P>
Membership Requirements
<P>
In order for us to execute on the infomediary aspect of the
business model, certain features and functionality on the
site including chat, e-mail, videos, magazine archives and
vintage auctions will only be offered in exchange for
filling out a simple questionnaire. The questions that
potential members may be asked to answer will include their
name, the city in which they live, career choice, age range,
hobbies and lifestyle, shopping habits and dress and shoe
size. Upon completing this questionnaire, potential new
members will be assigned a membership number and will be
asked to choose a password that they will use to access
exclusive HipStyle.com offerings.
<P>
Infomediary Model
<P>
We believe that a significant market opportunity exists for
an Internet-based infomediary to serve as an effective
communication channel between businesses and online
consumers. This infomediary would collect consumers'
demographic and behavioral data, with their permission, and
build detailed profiles from that information. The
infomediary would use these profiles to enable businesses to
deliver highly-targeted, one-to-one marketing messages and
other products and services to specified consumers. The
infomediary, as the trusted custodian of their information,
would empower consumers to realize value from their data
while protecting their privacy.
<P>
With accurate and complete member information, the Company
anticipates that it will be able to deliver benefits to our
members, advertisers, clients and strategic partners. For
our business and advertising partners, we hope to provide a
powerful online advertising, direct marketing and electronic
commerce channel to more effectively reach their desired
audience. For our members, we anticipate benefits from the
targeted advertising and offers focusing on their specific
interests, as well as group discounts and special deals
negotiated by the Company on their behalf.
<P>
Hipstyle.com Auction
<P>
Hipstyle.com is planning to offer our members an auction
area for bringing together buyers and sellers of designer
vintage pieces. That planned part of the site will serve as
a place for buyers and sellers to meet, negotiate sales, and
finally consummate transactions directly, thereby bypassing
the time and expense of intermediaries. Anticipated sales
will be conducted by a traditional rising price auction, and
will be hosted by the Company. Users will register for free
by completing a registration form on our sign up page. The
registration form records contact information, mailing
address and validates e-mail address. The bidder will then
be given an identification number for use when bidding.
Once registered, a customer will be able to bid immediately
on any of the listed auctions. Because there will be a fee
charged for each listing, the individual posting an item to
auction on our site will have to provide Hipstyle with a
valid credit card as well as a verified mailing address and
e-mail.
<P>
Our site may contain a listing of clothing categories that
will allow for easy exploration of current auctions. We are
planning that bidders will be able to search for specific
vintage items by browsing through a list of auctions within
a category or subcategory of clothing and then click through
to a product page for a detailed description of a particular
item. Each auction will be assigned a unique identifier so
that users can easily search for and track specific items
being auctioned off. Within the auction part of the site,
we plan to feature an auction search engine to provide our
users with the tools to find a desired item on our site.
Users will be able to search by specific category, style,
size, initial bid price, location of the owner and any
specific keyword searches.
<P>
Once the Company brings together the seller with the winning
bidder, the transaction will be performed between the two
respective parties and will not involve the Company. As
previously mentioned, the company will charge a listing fee
from members for each individual auction that they initiate.
<P>
Revenue
<P>
The partnerships that we anticipate forming with on-line
retailers will include a link directly from our web-site to
the designer's or retailer's home page. The intended
increase in traffic to these sites provided by Hipstyle.com
will enable us to charge each retailer or designers who may
be seeking traffic, a click-through rate, or a fee for each
click called a CPC. In addition, for e-commerce sites, we
will ask for a percentage of revenues obtained through
purchases made by customers that come from Hipstyle.com.
The anticipated growing traffic on Hipstyle.com, should in
turn provide opportunities for these businesses to increase
their on-line revenue percentages. Based on these benefits
to our potential partners, it is anticipated that most
businesses will have no objections to a link from
Hipstyle.com to their own site. It will then be the
objective of our team to negotiate mutually acceptable CPC
and revenue sharing arrangements with each different
potential business partner.
<P>
The anticipated traffic on the Hipstyle.com web site will
also allow for us to receive ad sales revenues from
potential advertisers. Because advertisers traditionally
pay higher rates for targeted ads, we anticipate that the
aggregated information from member questionnaires will
create a highly targeted advertising profile, which should
enable us to charge higher rates for communication with
those members.
<P>
Finally, we anticipate that the Hipstyle members only
auction will bring together buyers and sellers, and will
allow us to take a fee on each individual auction posted.
The sellers of an item will be charged a fee to post,
otherwise the service we be free to all other participating
members who have filled out their member profiles.
<P>
Revenue Sources
<P>
While future possibilities for generating income include
strategic partnerships and/or acquisitions of other shopping
sites, developing and selling our own products and licensing
agreements of various types, we have not pursued any of
these arrangements to date. As mentioned before, our
revenue strategy will focus around CPC rates from links,
revenue sharing from sales, advertising sales and auction
fees.
<P>
CPC
<P>
The CPC rate is a fee that is charged every time a
Hipstyle.com member clicks on any link to a company site.
This method of generating revenue is directly contingent
upon how many members we have, as the probability rate of an
actual click occurring is relatively higher. The number of
clicks that occur on a link is figured by multiplying the
click-through rate, or average percentage of viewers who
click, by the number of viewers that are actually on the
site at a given time.
<P>
The CPC rate must be specific for each client or strategic
partner, based on their specific traffic needs and relative
stature in the industry. In most instances, the more
existing traffic that a business has on its site, the less
marginal value it places on incremental clicks. In
addition, larger sites with more members and well-developed
brands, tend to have greater leverage in negotiating CPC
rates that they are willing to pay. Because of brand
recognition it is anticipated that a well known site or
retailer will be willing to pay a lower CPC rate, but will
attract more visitors than a less known site. Conversely, a
newer site may be willing to pay a higher CPC rate to
Hipstyle, but may not attract as many visitors. Because the
net impact on revenues will only be realized after testing
the performance of each partnership, the Company will need
to maintain flexibility in the its CPC rates, within the
accepted industry parameters. It is anticipated that
Hipstyle will initially charge lower CPC rates for more
established partners and retailers.
<P>
Revenue Sharing
<P>
Revenue sharing for purchases made at on-line retailers,
sources from HipStyle.com is an excellent way for the
Company to generate income. This option is only available
to us, however, through sites that are established as e-
cornmerce sites. Only a select few of the designers who are
on-line are actually selling their products via the
internet. Most of the sites that are currently and actively
retailing are e-commerce boutiques that are designed
specifically for this purpose. While we have targeted these
on-line retailers as potential clients of Hipstyle.com and
hope to generate revenue share in the immediate future, we
do not have any existing revenue sharing contracts in place,
and may not be able to secure these types of relationships.
<P>
We are also planning to target major designer web sites for
potential revenue sharing, but anticipate a CPC arrangement
in the near future, as they develop their e-commerce
capabilities. Currently, the majority are catalog sites
that are designed for viewing the current collections and
then ordering by contacting a customer service center
through an 800 number or e-mail. However, we anticipate and
are starting to see some indications that designer sites
will eventually undergo a transformation to enable e-
commerce. This belief is based on the fact that a growing
number of related businesses have been using the Internet as
a low-cost sales and distribution channel. We believe that
this interest in online commerce is fueled in part by:
<P>
Online Interactivity. Businesses can use the Internet
to interact with customers in a real-time personalized
transaction experience that provides the business with
significant marketing flexibility. On the Internet, a
business can frequently adjust its featured selections,
pricing and visual presentation. Also, these businesses can
display a larger number of products than a traditional store
based or catalog retailer.
<P>
Global Scope of the Internet. Businesses that use the
Internet as a sales and marketing channel are able to reach
and serve a large and geographically diverse customer base
electronically from a central location. Also, businesses
can easily obtain demographic and related customer data that
provides additional opportunities for direct marketing and
personalized services.
<P>
Decreased Sales Costs. Businesses that use the
Internet can access a global market without the high costs
associated with additional retail channels. Online retailers
and distributors do not have the burden of managing and
maintaining multiple retail stores or the significant
printing and mailing costs of catalogues.
<P>
Reduced Inventory Costs. Many businesses that use the
Internet are able to have products shipped to consumers
directly by the manufacturers. This reduces inventory costs
and decreases exposure to inventory obsolescence.
<P>
When these businesses conclude their e-commerce
transformation and begin to sell products directly form
their web site, the Company plans to form strategic
partnerships with these companies with the value proposition
that Hipstyle.com will generate traffic to their sites and
increase the demand for their products on-line.
<P>
Advertising Sales
<P>
Advertising sales on Hipstyle.com is a way that we can
possibly generate revenue from a diverse selection of
marketplaces. We intend to create a variety of different
options and packages from companies that would purchase
advertising space on our site. These companies are not
limited to the fashion industry, but can come from a variety
of related industries including: major banks and credit
cards, beauty products and cosmetics, fragrances, fitness
products and gyms, hotels, restaurants and nightclubs.
These advertisements will be in the format of click-on
banners and buttons of varying sizes that will link the
viewer directly to the advertisers' home page. The pricing
for these ads will be based on a CPM rate, or cost per
thousand impressions, which the number of unique times the
ad is viewed on Hipstyle.com site. The CPM rate is derived
from the number of exclusive viewers on a site at a given
time, or how many viewers will actually see the ad.
Therefore, the higher Hipstyle's membership number, the more
its advertising space is in demand. This further outlines
our initial priority to draft a large viewer base in order
to generate maximum profit from sale of our advertising
space.
<P>
The CPMs Hipstyle will charge are also dependent on our
site's click through rates, and on the individual
advertiser. If an advertiser is paying us a CPM rate for
showing an ad, but is not receiving any clicks or generating
visits to their site, the advertiser will either demand a
lower CPM rate or discontinue the relationship. Therefore
the click through performance of our user base may heavily
impact the CPM advertising rates we will be able to charge
in the future.
<P>
Competition
<P>
There are several direct competitors in this industry, but
we believe that there is enough current demand to support
another entrant in this industry based on the amazing
observed and projected growth of the internet, e-commerce
and the fashion industry. An estimated 33% of U.S.
households now use the Internet, which is projected to rise
to 66% by 2003, according to a Yankee Group survey. The U.S.
retail apparel market is valued at $172 billion by the
Garment Industry Development Corporation, and revenues from
online consumer retail shopping are projected to grow to
$125.6 billion by 2004, representing an increase of 240%
from the $37 billion projected by year-end 2000, according
to eMarketer.
<P>
In the future, the Company may encounter competition from
other fashion designers and retailers who are still in the
process of constructing their web-sites, but are showing a
future commitment to e-commerce for their business. Many of
the Company's competitors, as well as a number of potential
new competitors, have significantly greater financial,
technical and marketing resources than the Company. There
can be no assurance that the Company's competitors will not
develop Internet products and services that are superior to
those of the Company or that achieve greater market
acceptance than the Company's offerings.
<P>
The Company may also compete with online services and other
Web site operators as well as traditional off-line media
such as print and television for a share of advertisers'
total advertising budgets. There can be no assurance that
the Company will be able to compete successfully against its
current or future competitors or that competition will not
have a material adverse effect on the Company's business,
results of operations and financial condition. However,
retailing over the internet breaks down any previously
existing boundaries, creating an international marketplace
for products that have already achieved world-wide status
through magazine editorial and advertising campaigns. These
facts create the ideal opportunity to introduce a web site
like Hipstyle.com that combines all aspects of the fashion
industry, combining shopping with an on-line community of
individuals who share the same interests.
<P>
EMPLOYEES
<P>
At September 30,2000, the Company employed a total of two
full time persons. In addition, depending on client demand,
the Company will utilize manpower agencies to contract
additional persons on a temporary, part-time basis.
None of the Company's employees are represented by a labor
union. The Company believes that its relations with its
employees are good.
<P>
Item 2. Financial Information
-----------------------------
<P>
Item 2. Management Discussion and Analysis and Plan of
Operation
-------------------------------------------------------
<P>
<TABLE>
<S> <C> <C>
For the From June 22, 1999
Three Months Ended (inception)
September 30, 2000 to June 30, 2000
---------------------------------------------
Development Stage Revenues $0 $0
<P>
Development Stage Expenses (37,246) (37,246)
<P>
Deficit Accumulated During
Development Stage (37,246) (37,246)
</TABLE>
<P>
Development Stage Revenues
<P>
The Company's operations have been devoted primarily to
developing a business plan, planning strategic acquisitions,
creating an Internet identity and raising capital for future
operations and administrative functions. The Company has
not undertaken any acquisitions to date, although it plans
to grow its business through possible future acquisitions.
The Company intends to grow through internal development,
strategic alliances and acquisitions of existing businesses.
The ability of the Company to achieve its business
objectives is contingent upon its success in raising
additional capital until adequate revenues are realized from
operations.
<P>
Development Stage Expenses
<P>
The Company's development stage expenses were $37,246 for
the year end of June 30, 2000. The Company was
inactive for the short year ended June 30, 1999 and
accordingly did not incur any development stage expenses.
The expenses incurred were primarily due to various
consulting, managerial and professional services in pursuit
of the Company's objectives.
<P>
Plan of Operations
<P>
The Company anticipates that its cash position will sustain
operations for the next 6 months, at which time it will need
to raise additional funding. The Company does not have any
specific capital raising plans at this time, but anticipate
that it will be able to raise additional capital in 6 months
as market conditions improve.
<P>
The Company will continue to upgrade and develop its website
over the next 12 months to meet its operating objectives.
The Company does not expect to purchase or sell any property
or equipment over the course of the next 12 months. During
its normal course of business, it plans to contract and
outsource capital intensive activities. It plans to
outsource as much as possible, but the Company will add
employees to our staff on an as needed basis.
<P>
The Company intends to expand its Board of Directors, and to
seek to recruit and retain a Chief Financial Officer, upon
completion of this offering. Current efforts are underway
to recruit additional members of management, as well.
<P>
Item 3. Description of Properties.
----------------------------------
<P>
We currently sublease office space in a building located at
1221 Brickell Avenue, Suite 900, Miami, Florida. The
facility is leased pursuant to a month to month lease. The
primary tenant is The Farkas Group, Inc. The Farkas Group,
Inc. subleases the facility to Atlas Equity Group, Inc., an
affiliated entity. Atlas Equity Group, Inc. subleases the
facility to us. The landlord is not affiliated with us. We
do not pay rent for the use of the premises but as of July
31, 2000 we have been paying an office expense reimbursement
of $2,000 per month. We believe that this space is
sufficient for us at this time.
<P>
Item 4. Security Ownership of Certain Beneficial Owners and
Management.
-----------------------------------------------------------
<P>
As of September 30, 2000, there were 4,600,000 shares of our
common stock, $0.0001 par value issued and outstanding. The
following tabulates holdings of our shares of common stock
by each person who, as of September 30, 2000, holds of
record or is known by management to own beneficially more
than 5% of our common shares and, in addition, by all of our
directors and officers individually and as a group. Each
named beneficial owner has sole voting and investment power
with respect to the shares set forth opposite their name.
<P>
<TABLE>
<CAPTION>
Security Ownership of Beneficial Owners (1)(2):
<S> <C> <C> <C>
Title of Class Name & Address Amount Percent
-------------------------------------------------------------------------
Common Stock Atlas Equity Group, Inc.(2) 2,620,000 56.96%
701 Brickell Avenue
Suite 3120
Miami, FL 33131
<P>
Common Stock Rebecca J. Brock 655,000 14.24%
294 South Coconut Lane
Miami Beach, FL 33139
<P>
Security Ownership of Management (3):
<P>
Title of Class Name & Address Amount Percent
--------------------------------------------------------------------------
Common Stock Rebecca J. Brock 655,000 14.24%
294 South Coconut Lane
Miami Beach, FL 33139
<P>
Common Stock Michelle Brock 50,000 1.09%
105 Lexington Avenue, #6D
New York, NY 10016
<P>
All directors and executive 705,000 15.32%
officers as a group (2 persons)
<P>
</TABLE>
<P>
(1) Pursuant to Rule 13-d-3 under the Securities Exchange
Act of 1934, as amended, beneficial ownership of a security
consists of sole or shared voting power (including the power
to vote or direct the voting) and/or sole or shared
investment power (including the power to dispose or direct
the disposition) with respect to a security whether through
a contract, arrangement, understanding, relationship or
otherwise. Unless otherwise indicated, each person indicated
above has sole power to vote, or dispose or direct the
disposition of all shares beneficially owned, subject to
applicable community property laws.
<P>
(2) Michael D. Farkas is the sole officer, director and
shareholder of Atlas Equity Group, Inc. and Michael D.
Farkas is married to Rebecca J. Brock, the President of the
Company.
<P>
(3) This table is based upon information obtained from our
stock records. Unless otherwise indicated in the footnotes
to the above table and subject to community property laws
where applicable, we believe that each shareholder named in
the above table has sole or shared voting and investment
power with respect to the shares indicated as beneficially
owned.
<P>
Item 5. Directors and Executive Officers
-----------------------------------------
<P>
Rebecca J. Brock, 24, has been President, Secretary,
Treasurer and Director of the Company since inception. She
has also been a fashion model with Fords Models Inc. in
Miami, Florida and Spirit Model Management in New York, New
York. She was been in the modeling industry for the past
five years represented by various modeling agencies in New
York, Miami, Paris, Los Angeles and Chicago. Ms. Brock has
been heavily in contact with many artists through her
experience in the fashion industry. In addition, since
1996, Ms. Brock has been represented by a commercial
television agency in New York and has appeared in lead roles
in several national television commercials. She is
currently a member of the Screen Actors Guild. In addition,
Ms. Brock was President and founder of WealthHound.com, Inc.
a publicly traded company listed on the OTC Electronic
Bulletin Board. She was also founder and President of
Quentin Road Productions, Inc., a publicly traded company
listed on the OTC Electronic Bulletin Board. She attended
Penn State University from 1995-1996.
<P>
Michelle Brock, 26, has served as our Vice President and
Director since May 30, 2000. Ms. Brock has been employed in
public relations and sales for Norma Kamali, Inc. since May
1999. Her responsibilities include the generating of
editorial press of United States and foreign fashion
magazines as well as sales to industry insiders and Internet
clients. From May 1998 to May 1999, Ms. Brock was employed
as an analyst assistant with Odyssey Investments Partners,
LLC where she conducted financial and market research in the
Internet technology, aerospace, telecommunications and
transportation industries. She was also Vice President of
Quentin Road Productions, Inc., a publicly traded company
listed on the OTC Electronic Bulletin Board. Ms. Brock
graduated in May 1998, from Penn State University with a
degree in Music Theory and Violin Performance.
<P>
Rebecca Brock and Michelle Brock are sisters. Rebecca Brock
is married to Michael D. Farkas the sole shareholder of
Atlas Equity Group, Inc., the principal shareholder of the
Company.
<P>
The Company intends to expand its Board of Directors, and to
seek to recruit and retain a Chief Financial Officer, upon
completion of this offering. Current efforts are underway
to recruit additional members of management, as well.
<P>
All officers and directors listed above will remain in
office until the next annual meeting of our stockholders,
and until their successors have been duly elected and
qualified. There are no agreements with respect to the
election of Directors. We have not compensated our
Directors for service on our Board of Directors, any
committee thereof, or reimbursed for expenses incurred for
attendance at meetings of our Board of Directors and/or any
committee of our Board of Directors. Officers are appointed
annually by our Board of Directors and each Executive
Officer serves at the discretion of our Board of Directors.
We do not have any standing committees.
<P>
None of our Officers and/or Directors have filed any
bankruptcy petition, been convicted of or been the subject
of any criminal proceedings or the subject of any order,
judgment or decree involving the violation of any state or
federal securities laws within the past five (5) years.
<P>
Item 6. Executive Compensation.
-------------------------------
<P>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Name Position Year Salary Bonus Other Stock Options
-----------------------------------------------------------------------------------------
Rebecca J. Brock Pres/Secy/Tres 2000 $65.50 0 0 0 0
<P>
Michelle Brock VP/Director 2000 $5,000 0 0 0 0
</TABLE>
<P>
Our shareholders may in the future determine to pay
Directors' fees and reimburse Directors for expenses related
to their activities.
<P>
Item 7. Certain Relationships and Related Transactions.
-------------------------------------------------------
<P>
We currently sublease office space in a building located at
701 Brickell Avenue, Suite 3120, Miami, Florida. The
facility is leased pursuant to a month to month lease. The
primary tenant is The Farkas Group, Inc. The Farkas Group,
Inc. subleases the facility to Atlas Equity Group, Inc., an
entity which is wholly owned by Michael Farkas. Mr. Farkas
is an affiliated individual to the Company since he is the
sole shareholder, officer and director of Atlas Equity
Group, Inc. which owns 57% of the outstanding shares of
Intelilabs. Atlas Equity Group, Inc. subleases the facility
to us. The landlord is not affiliated with us. We do not
pay rent for the use of the premises but as of July 31, 2000
we have been paying an office expense reimbursement of
$2,000 per month.
<P>
We have not and do not intend to enter into any additional
transactions with our management or any nominees for such
positions. We have not and do not intend to enter into any
transactions with our beneficial owners. We are a subsidiary
of Atlas Equity Group, Inc. which is the owner of 56.96% of
our outstanding shares. Since inception, we have not entered
into any transactions with promoters other than our officers
and directors Rebecca J. Brock and Michelle Brock, who each
received 655,000 and 50,000 respectively, of our shares of
common stock. Rebecca Brock received her 655,000 shares as
part of the distribution of the Hipstyle shares by
Intelilabs.com, Inc. and Michelle Brock received her 50,000
shares for consulting services rendered to the Company
including the writing and development of the Company's
business plan, the development of corporate and operating
strategies and creative input into our website. Such
shares were also issued as an incentive for Michelle Brock
to become an officer of the Company.
<P>
Rebecca Brock, President of the Company loaned the Company
for the cost of licensing the Company in New York and
reserving the Company's internet address as well as other
operating expenses. No interest is being charged on this
loan and is due on demand. In addition, upon formation of
the Company, Quentin Road Productions, Inc., the original
sole shareholder of the Company, loaned the Company $2,000
for the costs of formation of the Company.
<P>
On March 1, 2000, a majority of the shareholders
and the Directors authorized a distribution of the Hipstyle
shares owned by Quentin Road Productions, Inc. to the
Quentin Road Productions, Inc. shareholders in an
unregistered spin off at a rate of 1.31 Hipstyle shares for
each share of Quentin Road Productions, Inc. owned. After
such spin off, the Company had 4,000,000 shares outstanding
to 25 shareholders.
<P>
Our management is involved in other business activities and
may, in the future become involved in other business
opportunities. If a specific business opportunity becomes
available, such persons may face a conflict in selecting
between our business and their other business interests. We
have not and do not intend in the future to formulate a
policy for the resolution of such conflicts.
<P>
Such related party transactions were on terms that were not
more favorable than if agreed upon by a third party in an
arms length transaction.
<P>
Item 8. Description of Securities
---------------------------------
<P>
Qualification.
<P>
The following statements constitute brief summaries of our
Articles of Incorporation and Bylaws, as amended. Such
summaries are qualified in their entirety by reference to
the full text of our Articles of Incorporation and Bylaws.
<P>
Common Stock.
<P>
Our Articles of Incorporation authorize us to issue up to
100,000,000 Common Shares, $0.0001 par value per common
share. As of September 30, 2000, there were 4,600,000
shares of our common stock outstanding.
<P>
Liquidation Rights.
<P>
Upon our liquidation or dissolution, each outstanding Common
Share will be entitled to share equally in our assets
legally available for distribution to shareholders after the
payment of all debts and other liabilities.
<P>
Dividend Rights.
<P>
We do not have limitations or restrictions upon the rights
of our Board of Directors to declare dividends, and we may
pay dividends on our shares of stock in cash, property, or
our own shares, except when we are insolvent or when the
payment thereof would render us insolvent subject to the
provisions of the Florida Statutes. We have not paid
dividends to date, and we do not anticipate that we will pay
any dividends in the foreseeable future.
<P>
Voting Rights.
<P>
Holders of our Common Shares are entitled to cast one vote
for each share held of record at all shareholders meetings
for all purposes.
<P>
Other Rights.
<P>
Common Shares are not redeemable, have no conversion rights
and carry no preemptive or other rights to subscribe to or
purchase additional Common Shares in the event of a
subsequent offering.
<P>
There are no other material rights of the common
shareholders not included herein. There is no provision in
our charter or by-laws that would delay, defer or prevent a
change in control of us. We have not issued debt securities.
<P>
PART II
<P>
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
----------------------------------------------------
<P>
(A) MARKET PRICE. There is no established public
trading market for our securities. After this document is
declared effective by the Securities and Exchange
Commission, we currently intend to seek a listing on the OTC
Electronic Bulletin Board in the United States. Our shares
can not trade on the OTC Bulletin Board until all SEC
comments relating to this Form 10-SB have been resolved. Our
shares are not and have not been listed or quoted on any
exchange or quotation system.
<P>
At September 30, 2000, there were 4,600,000 shares of our
common stock issued and outstanding. We have never paid
dividends on our shares. We currently intend to retain
earnings for use in our business and do not anticipate
paying any dividends in the foreseeable future.
<P>
As of the date of this registration, we had forty-three (43)
holders of record of our common stock. We currently have one
class of common stock outstanding. As of this date there are
no plans to file a registration statement to register the
Company's restricted shares. As of this date, none of the
shareholders that have shares that are restricted in
accordance with Rule 144 of the Securities Act of 1933 can
free up their shares. None of the Hipstyle shareholders
received their shares before March 1, 2000 and therefore can
not sell any of their shares until March 1, 2001. After
March 1, 2001, the shareholder that have restricted stock
can sell their shares in accordance with and subject to the
resale restrictions of Rule 144.
<P>
Certain securities herein are restricted securities as
defined under Rule 144 of the Securities Act of 1933 and may
only be sold under Rule 144 or otherwise under an effective
registration statement or an exemption from registration, if
available. Rule 144 generally provides that a person who has
satisfied a one year holding period for the restricted
securities and is not an affiliate of us may sell such
securities subject to the Rule 144 provisions. Under Rule
144, directors, executive officers, and persons or entities
they control or who control them may sell shares that have
satisfied the one year holding period for the restricted
securities in an amount limited to, in any three-month
period, the greater of 1% of our outstanding shares of
common stock or the average of the weekly trading volume in
our common stock during the four calendar weeks preceding a
sale. All sales under Rule 144 must also be made without
violating the manner-of-sale provisions, notice
requirements, and the availability of public information
about us. A sale of shares by such security holders, whether
under Rule 144 or otherwise, may have a depressing effect
upon the price of our common stock in any market that might
develop.
<P>
Penny Stock Considerations.
<P>
Broker-dealer practices in connection with transactions in
"penny stocks" are regulated by certain penny stock rules
adopted by the Securities and Exchange Commission. Penny
stocks generally are equity securities with a price of less
than $5.00. Penny stock rules require a broker-dealer, prior
to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure
document that provides information about penny stocks and
the risks in the penny stock market. The broker-dealer also
must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each
penny stock held in the customer's account. In addition, the
penny stock rules generally require that prior to a
transaction in a penny stock, the broker-dealer make a
special written determination that the penny stock is a
suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction.
<P>
These disclosure requirements may have the effect of
reducing the level of trading activity in the secondary
market for a stock that becomes subject to the penny stock
rules. Our shares will likely be subject to such penny stock
rules, and our shareholders will, in all likelihood, find it
difficult to sell their securities.
<P>
No market exists for our securities and there is no
assurance that a regular trading market will develop, or if
developed will be sustained. A shareholder, in all
likelihood, therefore, will not be able to resell the
securities referred to herein should he or she desire to do
so. Furthermore, it is unlikely that a lending institution
will accept our securities as pledged collateral for loans
unless a regular trading market develops. There are no
plans, proposals, arrangements or understandings with any
person in regard to the development of a trading market in
any of our securities.
<P>
(B) HOLDERS. There is one holder of the Company's
Common Stock. The issued and outstanding shares of the
Company's Common Stock were issued in accordance with the
exemptions from registration afforded by Section 4(2) of the
Securities Act of 1933 and Rule 506 promulgated thereunder.
<P>
(C) DIVIDENDS. The Company has not paid any dividends
to date, and has no plans to do so in the immediate future.
<P>
ITEM 2. LEGAL PROCEEDINGS.
---------------------------
<P>
We are not a party to any pending legal proceeding, and we
are not aware of any contemplated legal proceeding by a
governmental authority involving us.
<P>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
---------------------------------------------------------
<P>
During the two most recent fiscal years and the subsequent
interim period, we have had no disagreement, resignation or
dismissal of the principal independent accountant for the
Company. Our accountant at this time is John Abitante, CPA
of Berenfeld, Spritzer, Shechter & Sheer.
<P>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
--------------------------------------------------
<P>
The following sets forth information relating to all of our
previous sales of securities which were not registered under
the Securities Act of 1933.
<P>
Hipstyle.com, Inc. was incorporated in the State of Florida
on June 22, 1999 as a wholly owned subsidiary of Quentin
Road Productions, Inc. and 2,000 shares were issued to
Quentin Road Productions, Inc. in reliance on the exemption
under Section 4(2) of the Securities Act of 1933, as amended
(the "Act"). Such shares were issued to Quentin Road
Productions, Inc. as founders shares for the formation of
the Company. On January 15, 2000, the Shareholder and
Directors of Hipstyle authorized a 2,000 for 1 stock split
increasing the amount of outstanding shares owned by Quentin
Road Productions, Inc., the sole shareholder, to 4,000,000
shares. On March 1, 2000, a majority of the shareholders of
Quentin Road Productions, Inc. and the Directors authorized
a distribution of the Hipstyle shares owned by Quentin Road
Productions, Inc. to the Quentin Road Productions, Inc.
shareholders in an unregistered spin off at a rate of 1.31
Hipstyle shares for each share of Quentin Road Productions,
Inc. owned. After such spin off, the Company had 4,000,000
shares outstanding to 25 shareholders. This distribution
did not constitute a sale of securities since this was
simply a distribution of the Hipstyle shares to the
Intelilabs.com, Inc. shareholders and such shares received
were restricted in accordance with Rule 144 of the
Securities Act of 1933.
<P>
In September, 2000, we completed a Regulation D, Rule 504
Offering in which we issued a total of 550,000 shares of our
common stock to 22 shareholders for an aggregate offering
price of $110,000. The Common Stock issued in the Company's
Regulation D, Rule 504 offering was issued in a transaction
not involving a public offering in reliance upon an
exemption from registration provided by Section 4(2) of the
Securities Act of 1933, as amended, and Rule 504 of
Regulation D promulgated thereunder. In accordance with
Section 230.504 (b)(1) of the Securities Act of 1933, these
shares were designated as unrestricted since they qualified
for exemption under Section 230.504 since such transactions
satisfy the terms and conditions of Sections 230.501 and
230.502 (a) of the Securities Act of 1933 since such
offering was registered in the State of New York, without
violation of any Federal or state securities law or
regulation. The Company qualified for the Rule 504 exemption
for this offerings since it met the following requirements
set forth in Reg. Section 230.504:
<P>
(A) No general solicitation or advertising was
conducted by the Company in connection with the offering of
any of the Shares.
<P>
(B) At the time of the offering the Company was
not:
(1) subject to the reporting requirements of
Section 13 or 15 (d) of the Exchange Act; or
(2) an "investment company" within the meaning of
the federal securities laws.
<P>
(C) Neither the Company, nor any predecessor of the
Company, nor any director of the Company, nor any beneficial
owner of 10% or more of any class of the Company's equity
securities, nor any promoter currently connected with the
Company in any capacity has been convicted within the past
ten years of any felony in connection with the purchase or
sale of any security.
<P>
(D) The offers and sales of securities by the
Company pursuant to the offerings were not attempts to evade
any registration or resale requirements of the securities
laws of the United States or any of its states.
<P>
(E) None of the investors are affiliated with any
director, officer or promoter of the Company or any
beneficial owner of 10% or more of the Company's securities.
<P>
(F) The aggregate offering price did not exceed
$1,000,000, less the aggregate offering price for all
securities sold within the twelve months.
<P>
(G) The Company has complied with the requirements
of Rule 504 of Regulation D promulgated pursuant to the Act
and of applicable state exemptions from registration in the
offers and sales by the Company of its securities in these
offerings.
<P>
Please note that pursuant to Rule 504, all shares purchased
under this offering after April 7, 1999 were restricted in
accordance with Rule 144 of the Securities Act of 1933.
<P>
On May 20, 2000, we issued a total of 50,000 shares of our
common stock to Michelle Brock as compensation for services
rendered to the company valued at $5,000 and such services
rendered to the Company including the writing and
development of the Company's business plan, the development
of corporate and operating strategies and creative input
into our website. Such shares were also issued as an
incentive for Michelle Brock to become an officer of the
Company. Ms. Brock is a sophisticated purchaser and had a
pre-existing relationship with members of the Company's
management. Accordingly, the issuance of shares was exempt
from the registration requirements of the Act pursuant to
Section 4(2) of the Act.
<P>
The Company qualified for exemption under Section 4(2) of
the Securities Act of 1933 since the issuance shares the
Company not involving a public offering. The offering was
not a "public offering" as defined in Section 4(2) due to
the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. The Company did not undertake an offering
in which it sold a high number of shares to a high number
of investors. Rather these shares were just issued to the
founder of the Company. In addition, the shareholder had
the necessary investment intent as required by Section 4(2)
since it agreed to and received a share certificate bearing
a legend stating that such shares are restricted pursuant to
Rule 144 of the 1933 Securities Act. These restrictions
ensure that these shares would not be immediately
redistributed into the market and therefore not be part of a
"public offering." Based on an analysis of the above
factors, the Company has met the requirements to qualify for
exemption under Section 4(2) of the Securities Act of 1933
for this transaction.
<P>
In SEC Release No. 33-285, the SEC specifically stated that
there is a subjective test to determine if there was a
"public offering." First is the number of offerees and
their relationship to the Company. This offering was only
given to one investor. Another part of this factor is the
relationship that these individuals have with the Company.
As the founder of the Company, Quentin Road Productions,
Inc. had all material information regarding the Company and
therefore had special knowledge of the Company which makes
it more likely to be a private offering. In addition.
Quentin Road Productions, Inc is a sophisticated investor.
All of these factors meet the requirements for a private
offering.
<P>
We have never utilized an underwriter for an offering of our
securities. Other than the securities mentioned above, we
have not issued or sold any securities.
<P>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
---------------------------------------------------
<P>
Our Articles of Incorporation provide that, to the fullest
extent permitted by law, none of our directors or officers
shall be personally liable to us or our shareholders for
damages for breach of any duty owed to us or our
shareholders. In addition, we shall have the power, by our
by-laws or in any resolution of our stockholders or
directors, to undertake to indemnify the officers and
directors of ours against any contingency or peril as may be
determined to be in our best interest and in conjunction
therewith, to procure, at our expense, policies of
insurance.
<P>
PART F/S
<P>
For the information required by this Item, refer to the
Index to Financial Statements appearing on page F-1 of the
registration statement.
<P>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
FINANCIAL STATEMENTS
<P>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000
<P>
HIPSTYLE.COM, INC.
<P>
TABLE OF CONTENTS
<P>
BALANCE SHEETS
<P>
STATEMENTS OF OPERATIONS
<P>
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<P>
STATEMENTS OF CASH FLOWS
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
<TABLE>
<CAPTION>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
BALANCE SHEETS
<P>
ASSETS
<P>
</CAPTION>
<S> <C> <C>
ASSETS
(Unaudited)
September 30, 2000 June 30, 2000
--------------------------------------
CURRENT ASSETS:
<P>
Cash $ 35,491 $ 55
Prepaid expenses 2,000
---------------------------------------
Total Current assets 37,491 55
<P>
TOTAL ASSETS $ 37,491 $ 55
=======================================
<P>
LIABILITIES AND STOCKHOLDERS' EQUITY
<P>
CURRENT LIABILITIES:
<P>
Accounts payable & accrued expenses $ 11,907 $ 73,137
---------------------------------------
Total Current liabilities 11,907 73,137
<P>
STOCKHOLDERS' EQUITY:
Common Stock, par value $.0001 per share;
100,000,000 shares authorized 4,600,000 and
4,190,000 shares issued and
outstanding, respectively 460 419
Additional paid-in capital 114,940 4,981
Deficit accumulated during the development
stage (89,816) (78,482)
--------------------------------------
Total Stockholders' equity 25,584 (73,082)
--------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 37,491 $ 55
======================================
<P>
The accompanying notes are an integral part of these financial statements.
<P>
</TABLE>
<TABLE>
<CAPTION>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF OPERATIONS
</CAPTION>
<S> <C> <C> <C>
FOR THE PERIOD
THREE MONTHS ENDED JUNE 22, 1999
SEPTEMBER 30, (INCEPTION) TO
2000 1999 SEPTEMBER 30, 2000
---------------------------------------------------
DEVELOPMENT STAGE REVENUES $ 0 $ 0 $ 0
---------------------------------------------------
<P>
DEVELOPMENT STAGE EXPENSES:
Accounting fees 4,000 0 17,000
Bank charges 90 0 235
Consulting fees 0 0 5,000
Dues & subscriptions 55 238 293
Licenses and taxes 0 250 925
Office expenses 6,000 0 6,000
Postage 81 0 81
Legal fees 738 0 5,219
Research & development 0 0 54,292
On-line services 90 0 90
Travel 280 0 281
---------------------------------------------------
TOTAL DEVELOPMENT STAGE EXPENSES 11,334 488 89,416
---------------------------------------------------
LOSS FOR THE PERIOD $ (11,334) $ (488) $ (89,416)
===================================================
<P>
LOSS PER COMMON SHARE
<P>
Basic $ (0.00) $ (0.00) $ (0.02)
===================================================
Diluted N/A N/A N/A
===================================================
Weighted-average number of common
shares outstanding 4,420,543 4,000,000 4,420,543
=====================================================
<P>
The accompanying notes are an integral part of these financial statements.
<P>
</TABLE>
<TABLE>
<CAPTION>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<P>
FOR THE PERIOD JUNE 22, 1999 (INCEPTION) THROUGH SEPTEMBER 30, 2000
</CAPTION>
<S> <C> <C> <C> <C> <C>
DEFICIT
ACCUMULATED
DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
---------------------------------------------------------
Balance, June 22, 1999
(inception) 0 $ 0 $ 0 $ 0 $ 0
<P>
Restricted common stock issued
to related parties for
consulting fees 4,000,000 400 0 (200) 200
<P>
Deficit accumulated during
the development stage for the
period June 22, 1999
(inception) through
June 30, 1999 0 0 0 (200) (200)
----------------------------------------------------------
Balance, June 30, 1999 4,000,000 400 0 (400) 0
<P>
The accompanying notes are an integral part of these financial statements.
<P>
</TABLE>
<TABLE>
<CAPTION>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<P>
FOR THE PERIOD JUNE 22, 1999 (INCEPTION) THROUGH SEPTEMBER 30, 2000 CONT'D)
</CAPTION>
<S> <C> <C> <C> <C> <C>
DEFICIT
ACCUMULATED
DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
---------------------------------------------------------
Balance, June 30, 1999 4,000,000 400 0 (400) 0
<P>
Restricted common stock issued
to related party for
consulting services 50,000 5 4,995 0 5,000
<P>
Common stock issued to third
parties in private offering 140,000 14 27,986 0 28,000
<P>
Less stock subscription
receivable (28,000) (28,000)
<P>
Deficit accumulated during
development stage for the year
ended June 30, 2000 0 0 0 (78,082) (78,082)
---------------------------------------------------------
Balance, June 30, 2000 4,190,000 419 4,981 $(78,482) $(73,082)
<P>
Common stock issued to third
parties in private offering 410,000 41 81,959 82,000
<P>
Stock subscription received 28,000 28,000
<P>
Deficit accumulated during the
development stage for the three
months ended September 30, 2000 0 0 0 (11,334) (11,334)
---------------------------------------------------------
Balance, September 30, 2000 4,600,000 $ 460 $ 114,940 $(89,816) $ 25,584
<P>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CASH FLOWS
<P>
INCREASE (DECREASE IN CASH)
</CAPTION>
<S> <C> <C> <C>
FOR THE PERIOD
THREE MONTHS ENDED JUNE 22, 1999
SEPTEMBER 30, (INCEPTION) TO
2000 1999 SEPTEMBER 30, 2000
-----------------------------------------------
OPERATING ACTIVITIES:
---------------------
Deficit accumulated during
the development stage $ (11,334) $ (488) $ (89,816)
<P>
Adjustments to reconcile net
loss to net cash used by
operations:
(Increase) Decrease in
prepaid expenses (2,000) (2,000)
Increase (Decrease) in accounts
payable & Accrued expenses (61,230) 988 11,907
----------------------------------------------
Net Cash Used by
Operating Activities (74,564) 500 (79,909)
<P>
FINANCING ACTIVITIES:
---------------------
Proceeds from the issuance
of common stock 41 0 460
Proceeds from Additional
Paid in Capital 109,959 0 114,940
----------------------------------------------
Net Cash Provided By
Financing Activities 110,000 0 115,400
----------------------------------------------
<P>
Increase (decrease) in cash 35,436 500 35,491
----------------------------------------------
Cash, Beginning of quarter 55 0 0
----------------------------------------------
Cash, End of quarter $ 35,491 $ 500 $ 35,491
==============================================
<P>
The accompanying notes are an integral part of these financial statements.
<P>
</TABLE>
<P>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENT OF CASH FLOWS
<P>
FOR THE PERIOD FROM JUNE 22, 1999 (INCEPTION)
TO SEPTEMBER 30, 2000
<P>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<P>
During the three-month periods ended September 30, 2000 and
1999, and for the cumulative period June 22, 1999
(inception) through September 30, 2000, the Company did not
pay or accrue any interest or taxes.
<P>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
<P>
The Company entered into the following non-cash
transactions:
<P>
On June 22, 1999 (inception) the Company issued 4,000,000
post-split (see note 6) restricted shares of common stock in
consideration for consulting services provided by
Intelilabs.com, Inc. formerly known as Quentin Road
Productions, Inc., the founder of the Company (see note 1).
This transaction was valued at $200.
<P>
On May 30, 2000 the Company issued 50,000 restricted shares
of the Company's common stock in exchange for consulting
services to the Vice President of the Company. This
transaction was valued at $5,000 (see note 6).
<P>
HIPSTYLE.COM, INC
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------
<P>
ORGANIZATION
------------
<P>
Hipstyle.com, Inc. ("the Company") was incorporated on
June 22, 1999 under the laws of the State of Florida and is
licensed to do business in the state of New York. The
Company is in the process of designing a website dedicated
to bringing together designers of high fashion and beauty
products with a targeted client base. The Company's goal is
to provide links to established e-commerce and catalog
retail sites featuring designer apparel and accessories, as
well as fashion related services and content to its viewers.
Some of these include: a search engine, fashion news, chat
and e-mail response, research tools, video runways and
interviews, sale and special event postings, major fashion
magazine archives, and vintage resources. Revenue will be
generated primarily though charging a click through rate for
each link, revenue sharing on purchases made at partner e-
commerce sites, advertising sales and auction commissions.
<P>
To accomplish its goal as a fashion infomediary over
time, viewers will be offered an exclusive membership in the
Company that will give them special access and privileges.
In return viewers will be asked to fill out some personal
information that will be aggregated into a database and used
to attract future partners and advertisers.
<P>
The Company was a wholly owned subsidiary of
Intellilabs.com, Inc. ("Intellilabs"), formerly known as
Quentin Road productions, Inc., a publicly trade company
listed on the OTC Electronic Bulletin Board (OTCBB:QRPI)
from inception until March 1, 2000. It was spun-off by
Intellilabs on March 1, 2000. Upon such spin-off,
shareholders of Intellilabs received 1.31 shares of the
Company for each share of Intellilabs owned as of March 1,
2000. As a result of the spin-off, Atlas Equity Group,
Inc., a related party, beneficial owner of which is Michael
D. Farkas, became a majority shareholder in the company
owning approximately 57% of the outstanding shares. Its
principal office is located at 1221 Brickell Avenue, Suite
900, Miami, FL 33131.
<P>
HIPSTYLE.COM, INC
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 1 - NATURE OF ORGANIZATIONS AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
------------------------------------------------------
<P>
MANAGEMENT DECISION NOT TO CONSOLIDATE
---------------------------------------
<P>
Statement of Financial Accounting Standards ("SFAS")
No. 94, "Consolidation of All Majority Owned Subsidiaries,"
encourages the use of consolidated financial statements
between a parent company and its subsidiaries unless:
<P>
a) Control is likely to be temporary,
b) Control does not rest with the majority owner(s),
or
c) Minority stockholders have certain approval or
veto rights that allow them to exercise
significant control over major management
decisions in the ordinary course of business.
<P>
The management of Atlas Equity Group, Inc., a related party,
in which Michael D. Farkas is a beneficial owner, believes
that its control is temporary. Therefore, management
believes that separate financial statements are appropriate
and properly reflect the Company's current operating
results.
<P>
USE OF ESTIMATES
----------------
<P>
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities as of the date of the
financial statements. Accordingly, actual results could
differ from those estimates.
<P>
CASH AND CASH EQUIVALENTS
------------------------
<P>
For purposes of reporting cash flows, the company
considers all highly liquid investments purchased with an
original maturity of three months or less to be cash
equivalents.
<P>
CARRYING VALUES
---------------
<P>
The Company reviews the carrying values of its long-
lived and identifiable intangible assets for possible
impairment. Whenever events or changes in circumstances
indicate that the carrying amount of assets may not be
recoverable, the Company will reduce the carrying value of
the assets and charge operations in the period the
impairment occurs.
<P>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
------------------------------------------------------
<P>
INCOME TAXES
------------
<P>
The Company utilizes Statement of Financial Standards
("SFAS") No. 109, "Accounting for Income Taxes", which
requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of
events that have been included in financial statements or
tax returns. Under this method, deferred income taxes are
recognized for the tax consequences in future years of
differences between the tax basis of assets and liabilities
and their financial reporting amounts at each period end
based on enacted tax laws and statutory tax rates applicable
to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established
when necessary to reduce deferred tax assets to the amount
expected to be realized. The accompanying financial
statements have no provisions for deferred tax assets or
liabilities because the deferred tax allowance offsets
deferred tax assets in their entirety.
<P>
STOCK COMPENSATION
------------------
<P>
The Company has adopted SFAS No. 123 "Accounting for
Stock-Based Compensation." SFAS No. 123 encourages the use
of the fair market method to account for transactions
involving stock base compensation that are entered into
fiscal years beginning after December 15, 1995. Under the
fair value method, the issuance of equity instruments to
non-employees in exchange for goods or services, should be
accounted for based on the fair value of the goods or
services received or the fair value of the income
instruments issued, whichever is more reliably measured.
<P>
NET LOSS PER SHARE
-----------------
<P>
The Company has adopted SFAS No. 128 "Earnings Per
Share". Basic loss per share is computed by dividing the
loss available to common shareholders by the weighted-
average number of common shares outstanding. Diluted loss
per share is computed in a manner similar to the basic loss
per share, except that the weighted-average number of shares
outstanding is increased to include all common shares,
including those with the potential to be issued by virtue of
warrants, options, convertible debt and other such
convertible instruments. Diluted earnings per share
contemplates a complete conversion to common shares of all
convertible instruments only if they are dilutive in nature
with regards to earnings per share. Since the Company has
incurred losses for all periods, and since there are no
convertible instruments, basic loss per share and diluted
loss per share are the same.
<P>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
--------------------------------------------------------
<P>
FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
<P>
SFAS No. 107 "Disclosures about Fair Value of Financial
Instruments" requires the disclosure of the fair value of
financial instruments. The Company's management, using
available market information and other valuation methods,
has determined the estimated fair value amounts. However,
considerable judgment is required to interpret market data
in developing estimates of fair value. Accordingly, the
estimates presented herein are not necessarily indicative of
the amounts the Company could realize in a current market
exchange.
<P>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
-------------------------------------------------------
<P>
In June 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 130, "Reporting Comprehensive
Income". This statement requires companies to classify
items of other comprehensive income by their nature in
financial statements and to display the accumulated balance
of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity
section of a statement of financial position. SFAS No. 130
is effective for financial statements issued for fiscal
years beginning after December 15, 1997. Management
believes that SFAS No. 130 has no material effect on the
Company's financial statements because it has no elements of
comprehensive income other than net operating losses.
<P>
In June 1997, the FASB issued SFAS No. 131, "Disclosure
about Segments of an Enterprise and Related Information".
This statement establishes additional standards for segment
reporting in financial statements and is effective for
financial statements issued for fiscal years beginning after
December 15, 1997. Since the company did not have revenues
and or segments during the periods ended September 30, 2000
and September 30, 1999; the provisions of SFAS No. 131 does
not have a material effect on these financial statements.
<P>
In April, 1998, the American Institute of Certified
Public Accountants issued Statement of Position No. 98-5,
"Reporting for Costs of Start-Up Activities", ("SOP 98-5").
The Company is required to expense all start-up costs
related to new operations as incurred. In addition, all
start-up costs that were capitalized in the past must be
written off when SOP 98-5 is adopted. The Company's
adoption did not have a material impact on the Company's
financial position or results of operations.
<P>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 2 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
(CONT'D)
-------------------------------------------------------
<P>
SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities", is effective for financial
statements issued for fiscal years beginning after June 15,
1999. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for
hedging activities. Management does not believe that SFAS
No. 133 will have a material effect on its financial
position or results of operations.
<P>
SFAS No. 134, "Accounting for Mortgage-Backed Securities
Retained after The Securitization of Mortgage Loans Held for
Sale by Mortgage Banking Enterprises", is effective for
financial statements issued in the first fiscal quarter
beginning after December 15, 1998. This statement is not
applicable to the Company.
<P>
SFAS No. 135, "Rescission of FASB Statement No. 75 and
Technical Corrections", is effective for financial
statements issued for fiscal years beginning February 1999.
This statement is not applicable to the Company.
<P>
On December 3, 1999 the Securities and Exchange
Commission ("SEC") staff issued Staff Accounting Bulletin
No. 101 (SAB 101) "Revenue Recognition in Financial
Statements" which reflects the basic principles of revenue
recognition in existing generally accepted accounting
principles. SAB 101 discusses such revenue recognition
issues as (1) Transfer of Title, (2) Substantial Performance
and Acceptance, (3) Nonrefundable Payments, (4) Accounting
for Certain Costs of Revenues, (5) Refundable Fees for
Services, (6) Estimates and Change in Estimates, (7) Fixed
or Determinable Fees and, (8) Implementing the Guidance on
SAB 101 because the Company has not realized any revenues
and is in the development stage, management does not believe
that SAB 101 has a material effect on the financial
statements.
<P>
In January 2000, the Emerging Issues Task Force issued
EITF 99-17 "Accounting for Advertising Barter Transactions"
establishes accounting and reporting requirements for such
transactions. Generally, the Task Force reached a consensus
that revenue and expenses from an advertising barter
transaction should be recognized at fair value of the
advertising surrendered. Although the Company is currently
seeking these kinds of barter arrangements, it is still in
the development stage and has not yet commenced operations.
As a result, management does not believe that EITF 99-17 has
a material effect on the financial statements.
<P>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
(CONT'D)
-------------------------------------------------------
<P>
On March 16, 2000 the Emerging Issues Task Force issued
EITF 99-19 "Recording Revenue as a Principal versus Net as
an Agent" which addresses the issue of how and when revenues
should be recognized on a Gross or Net method as the title
implies. How revenues are recognized have become
increasingly important because some investors may value
companies that primarily sell products on the Internet based
on a multiple of revenues rather than a multiple of gross
profits or earnings. The emerging Issues Task Force has not
reached a consensus but sites SEC Staff Accounting Bulletin
101.
<P>
The SEC considers the following factors:
<P>
1. Does the Company act as a principal in the
transaction?
2. Does the Company take title to the product?
3. Does the Company assume the risk of ownership?
4. Does the Company act as an agent or a broker?
<P>
On March 16, 2000 the Emerging Issues Task Force issued EITF
00-2 "Accounting for Web Site Development Costs" which
establishes accounting and reporting requirements for
website development costs including those costs associated
with planning, developing and operating a website.
Generally, costs associated with planning and operating a
website should be expensed while those costs associated in
developing should be capitalized. Management believes that
it should expense its website development costs due to the
development stage status of the Company and the uncertainty
surrounding future benefits it may or may not derive from
these costs.
<P>
On July 20, 2000 the Emerging Issues Task Force issued EITF
00-14 "Accounting For Certain Sales Incentives" which
establishes accounting and reporting requirements for sales
incentives such as discounts, coupons, rebates and free
products or services. Generally, reductions in or refunds
of a selling price should be classified as a reduction in
revenue. For SEC registrants the implementation date is the
beginning of the fourth quarter after the registrant's
fiscal year end December 15, 1999. Management does not
believe that EITF 00-14 will have a material effect on the
financial statements.
<P>
Management anticipates generating revenues by entering into
strategic partnerships and/or acquisitions of other
electronic shopping sites, developing and selling there own
products and licensing agreements of various types, click
through fees, revenue sharing from sales, advertising sales
and auction fees. Since the Company has not generated any
revenues to date, management will evaluate its revenue
sources when realized and apply SAB 101 and EITF 99-19
accordingly.
<P>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
(CONT'D)
-------------------------------------------------------
<P>
In March, 2000 the FASB issued Interpretation No. 44,
"Accounting for Certain Transactions Involving Stock
Compensation, Interpretation of APB Opinion No. 25."
Interpretation No. 44 clarifies the application of
Accounting Principle Board Opinion No. 25 to certain issues
including: (1) the definition of employee for purposes of
applying APB No. 25, (2) the criteria for determining
whether a plan qualifies as a non-compensatory plan, (3) the
accounting consequences of various modifications to the
terms of a previously fixed stock option or award, and (4)
the accounting for an exchange of stock compensation awards
in business combinations. Management adopted the
application of the fair value method under FASB Statement
123 and, therefore, this Interpretation does not have a
material effect on the financial statements.
<P>
NOTE 3 - DEVELOPMENT STAGE OPERATIONS AND GOING
CONCERN MATTERS
-----------------------------------------------------
<P>
The Company's initial activities have been devoted to
developing a business plan, negotiating contracts and
raising capital for future operations and administrative
functions.
<P>
The accompanying financial statements have been
prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in
the normal course of business. As shown in the financial
statements, development stage losses from June 22, 1999
(inception) to September 30, 2000, were $89,416. The
Company's cash flow requirements have been met by
contributions of capital and accounts payable.
<P>
The possibility exists that these sources of financing will
not continue to be available. If the company is unable to
generate profits, or unable to obtain additional funds for
its working capital needs, it may have to cease operations.
<P>
The Company intends to meet its long-term liquidity needs
through available cash as well as through additional
financing from outside sources. Management believes that
the existing working capital in combination with additional
paid-in capital will be sufficient to fund operations at
least through July 1, 2001 (see note 6 and 8).
<P>
The financial statements do not include any adjustments
relating to the recoverability and classification of
liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's
continuation as a going concern is dependent upon its
ability to generate sufficient cash flow to meet its
obligations on a timely basis, to retain additional paid-in
capital and to ultimately attain profitability.
<P>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 4 - INCOME TAXES
-------------------------
<P>
No provisions for income taxes have been made because
the Company has sustained cumulative losses since the
commencement of operations. For the three month period
ended September 30, 2000 and year ended June 30, 2000, the
Company had net operating loss carryforwards ("NOL's") of
$11,334 and $78,482, respectively, which will be available
to reduce future taxable income and expense in the year
ending September 30 and June 30, 2015 respectively.
<P>
In accordance with SFAS No. 109 the Company has
computed the components or deferred income taxes as follows.
<P>
<TABLE>
<S> <C> <C>
September 30, June 30,
2000 2000
------------------------------
Deferred tax assets $ 2,210 $ 14,250
Valuation allowance (2,210) (14,250)
------------------------------
Deferred tax asset, net $ - $ -
==============================
</TABLE>
<P>
At September 30, 2000 and June 30, 2000, a valuation
allowance has been provided and realization of the deferred
tax benefit is not likely.
<P>
The effective tax rate varies from the U.S. Federal
statutory tax rate for both the three-month periods ended
September 30, 2000 and year ended June 30, 2000, principally
due to the following:
<P>
U.S. statutory tax rate 15%
State and local taxes 4.5
Valuation (19.5)
----------
Effective rate - %
==========
<P>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 5 - ACCOUNTS PAYABLE & ACCRUED EXPENSES
------------------------------------------------
<P>
Accounts payable and accrued expenses at September
30, 2000 & June 30, 2000 respectively consisted of the
following:
<P>
<TABLE>
<S> <C> <C>
September 30, June 30,
2000 2000
-----------------------------
Accounts Payable $ 4,826 $ 54,697
Shareholder loans 500 2,488
Accrued Expenses 6,581 15,952
-----------------------------
$ 11,907 $ 73,137
=============================
</TABLE>
<P>
NOTE 6 - STOCKHOLDERS' EQUITY
---------------------------------
<P>
The Company issued 4,000,000 post-split common shares
upon incorporation to Intellilabs in exchange for consulting
services pertaining to the formation of the Company valued
at $200. This investor is deemed to be a founder and
affiliate of the Company. These shares have been adjusted
to give retroactive effect to a 2,000 to 1 stock split that
occurred on January 15, 2000.
<P>
On January 4, 2000, the Board of Directors amended the
Articles of Incorporation. The number of authorized shares
of common stock was increased to 100,000,000. The par value
was changed to $0.0001 per share of common stock. The
financial statements have been retroactively adjusted to
reflect the effect of this change.
<P>
On January 15, 2000, the Board of Directors authorized
a 2,000 to 1 forward split of the Company's common stock,
par value $0.0001. Subsequent to the split there were
4,000,000 issued and outstanding. This transaction has been
given retroactive effect as if it occurred at inception
(June 22, 1999).
<P>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 6 - STOCKHOLDERS' EQUITY (CONT'D)
------------------------------------------
<P>
On March 1, 2000, the Company entered into an agreement
and plan of distribution ("spin-off") with Intellilabs.
Upon spin-off, the shareholders of Intellilabs received 1.31
shares of the Company's common stock for each share of
Intellilabs owned as of March 1, 2000, totaling 4,000,000
common shares. As a result of this spin-off and share
distribution Atlas Equity Group, Inc., a related party, in
which Michael D. Farkas is a beneficial owner, received
2,620,000 shares, representing approximately 57% of the
Company's outstanding common stock and Rebecca J. Farkas
(f/k/a Brock) received 655,000 shares representing
approximately 16% of the Company's common stock.
<P>
On May 30, 2000, the Board of Directors authorized the
issuance of 50,000 restricted shares of the Company's common
stock in exchange for consulting services rendered by the
Vice President. These shares were valued at $0.10 per share
due to their restrictive nature and are subject to Rule 144
of the SEC Act of 1933 as amended. This transaction was
valued at $5,000.
<P>
In June 2000, the Company entered into a private
offering of securities pursuant to Regulation D, Rule 504,
promulgated under the Securities Act of 1933 as amended.
Common shares were offered to non-accredited and
unaffiliated investors for cash consideration of $0.20 per
share. Prior to June 30, 2000 140,000 unrestricted common
shares were subscribed to by 6 non-accredited and
unaffiliated investors for capital contributions totaling
$28,000. The proceeds from the sale of these securities
were received in July 2000 and have been recorded as stock
subscription receivable in the statement of changes in
stockholders' equity. Although the Company has not gone
through the administrative procedures of issuing these
shares, for purposes of these financial statements, they are
deemed to have been issued and outstanding.
<P>
In July and August 2000, 410,000 unrestricted common
shares were subscribed to by 16 non-accredited and
unaffiliated investors for cash consideration totaling
$82,000. The proceeds from the sale of these securities
were received during the months of July and August 2000.
<P>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 6 - STOCKHOLDERS' EQUITY (CONT'D)
------------------------------------------
<P>
A total of 550,000 unrestricted common shares have been
offered to 22 non-accredited and unaffiliated investors as a
result of this offering. The offering is now closed.
<P>
NOTE 7 - RELATED PARTY TRANSACTIONS
----------------------------------------
<P>
The Company issued 4,000,000 post-split common shares
upon incorporation to Intellilabs, the parent company, in
exchange for consulting services valued at $200. These
shares were subsequently distributed to the shareholders of
Intellilabs. Pursuant to an agreement and plan of
distribution (see note 1 and 6).
<P>
On May 30, 2000 the Company issued 50,000 restricted
shares of the Company's common stock in exchange for
consulting services to Michelle Brock, a related party, and
Vice President of the Company. This transaction was valued
at $5,000.
<P>
Michael D. Farkas and Rebecca J. Farkas, his wife, an
officer and director, and a related party loaned the Company
$2,488 which covered the cost of the license fees to the
State of New York and the reservation costs associated with
reserving the desired internet address and other operating
expenses. No interest has been charged on these loans and
were paid on August 31, 2000.
<P>
In July 2000, the Company agreed to reimburse Atlas
Equity Group, Inc., a related party, beneficial owner of
which is Michael D. Farkas, $2,000 per month (on a month-to-
month basis) for rent and other operating expenses. Prior
to July 2000, the Company had been relatively inactive, did
not require and was not occupying any office space. Because
of recent developments, including the hiring of employees
and the completion of their business plan, management now
has agreed to occupy space from Atlas Equity Group, Inc., a
related party, beneficial owner of which is Michael D.
Farkas.
<P>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
Item 2. Management's Discussion and Analysis
-----------------------------------------------
<P>
The following discussion and analysis should be read in
conjunction with the financial statements of the Company and
the accompanying notes appearing subsequently under the
caption "Financial Statements."
<P>
The following discussion and analysis contains forward-
looking statements, which involve risks and uncertainties.
The Company's actual results may differ significantly from
the results, expectations and plans discussed in these
forward-looking statements.
<P>
The Company's operations have been devoted primarily to
developing a business plan and raising capital for future
operations and administrative functions. The Company
intends to grow through internal development, strategic
alliances, and acquisitions of existing businesses. Because
of uncertainties surrounding its development, the Company
anticipates incurring development stage losses in the
foreseeable future. The ability of the Company to achieve
its business objectives is contingent upon its success in
raising additional capital until adequate revenues are
realized from operations.
<P>
Development stage expenses during the three months ended
September 30, 2000 were $11,334 as compared to $488 for the
period ended September 30, 1999. For the period of June 22,
1999 (Inception) through September 30, 2000 development
stage expenses totaled $89,416. The expenses incurred were
primarily due to various consulting, managerial professional
services in connection with its Form 10 filing and in
connection with its pursuit of the Company's objectives, as
well as professional fees incurred in connection with the
Company's annual and quarterly regulatory filings. On-going
increases to development stage expenses are anticipated.
<P>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
Liquidity and Capital Resources
-------------------------------
<P>
Despite capital contributions and both related party and
third party loan commitments, the company from time to time
experienced, and continues to experience, cash flow
shortages that have slowed the Company's growth.
<P>
The Company has primarily financed its activities from sales
of capital stock of the Company and from loans from related
and third parties. A significant portion of the funds
raised from the sale of capital stock has been used to cover
working capital needs such as office expenses and various
consulting fees.
<P>
The Company continues to experience cash flow shortages, and
anticipates this continuing through the foreseeable future.
Management believes that additional funding will be
necessary in order for it to continue as a going concern.
The Company is investigating several forms of private debt
and/or equity financing, although there can be no assurances
that the Company will be successful in procuring such
financing or that it will be available on terms acceptable
to the Company.
<P>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
FINANCIAL STATEMENTS
<P>
JUNE 30, 2000
<P>
</PAGE>
<PAGE>
HIPSTYLE.COM, INC.
<P>
TABLE OF CONTENTS
------------------
<P>
<TABLE>
<S> <C>
INDEPENDENT AUDITOR'S REPORT 1
<P>
BALANCE SHEET 2
<P>
STATEMENTS OF OPERATIONS 3
<P>
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY 4-5
<P>
STATEMENTS OF CASH FLOWS 6-7
<P>
NOTES TO FINANCIAL STATEMENTS 8-12
<P>
</TABLE>
</PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
<P>
To the Stockholders and Board of Directors
Hipstyle.com, Inc.
(A Development Stage Company)
Miami, Florida
<P>
We have audited the accompanying balance sheet of
Hipstyle.com, Inc. (a development stage company) as of June
30, 2000 and 1999 and the related statements of operations,
and cash flows for the year ended June 30, 2000 and for the
period from June 22, 1999 (inception) to June 30, 1999 and
the cumulative period June 22, 1999 (inception) to June 30,
2000 and changes in stockholder's equity for the cumulative
period June 22, 1999 (inception) to June 30, 2000. 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.
<P>
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
<P>
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Hipstyle.com, Inc. as of June 30, 2000 and 1999,
and the results of its operations and its cash flows for the
years ended June 30, 2000 and for the period from June 22,
1999 (inception) to June 30, 1999 and the cumulative period
June 22, 1999 (inception) to June 30, 2000, in conformity
with generally accepted accounting principles.
<P>
The accompanying financial statements have been prepared
assuming the Company will continue as a going concern. As
discussed in Note 3 to the financial statements, the Company
is a development stage company. The realization of a major
portion of its assets is dependent upon its ability to meet
its future financing requirements, and the success of future
operations. These factors raise substantial doubt about the
Company's ability to continue as a going concern. The
financial statements do not include any adjustments that
might result from this uncertainty.
<P>
Berenfeld, Spritzer, Shechter and Sheer
Miami, Florida
September 5, 2000
<P>
</PAGE>
<PAGE>
<TABLE>
<CAPTION>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
BALANCE SHEET
<P>
ASSETS
</CAPTION>
<S> <C> <C>
June 30, 2000 June 30, 1999
--------------------------------
CURRENT ASSETS:
<P>
Cash $ 55 $0
--------------------------------
Total Assets 55 0
================================
<P>
LIABILITIES AND STOCKHOLDERS' EQUITY
<P>
CURRENT LIABILITIES:
<P>
Accounts Payable $54,697 $0
Shareholder loans 2,488 0
Accrued professional fees 15,952 0
--------------------------------
Total Current Liabilities 73,137 0
<P>
STOCKHOLDERS' EQUITY (DEFICIENCY):
<P>
Common stock, $.0001 par value,
100,000,000 shares authorized,
4,190,000 and 4,000,000 shares
issued and outstanding respectively 419 400
<P>
Additional paid-in capital 4,761 (200)
Deficit accumulated during the
the development stage (78,282) (200)
--------------------------------
Total Stockholders' Equity (Deficiency) (78,082) 0
--------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY) $ 55 $0
================================
<P>
The accompanying notes are an integral part of these financial statements.
<P>
</TABLE>
</PAGE>
<PAGE>
<TABLE>
<CAPTION>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF OPERATIONS
</CAPTION>
<S> <C> <C> <C>
FOR THE PERIOD FOR THE PERIOD
FOR THE JUNE 22, 1999 JUNE 22, 1999
YEAR ENDED (INCEPTION) TO (INCEPTION) TO
JUNE 30, 2000 JUNE 30, 1999 JUNE 30, 2000
-------------------------------------------------------
DEVELOPMENT STAGE REVENUES $ 0 $ 0 $ 0
<P>
DEVELOPMENT STAGE EXPENSES:
<P>
Accounting 13,000 0 13,000
Bank charges 145 0 145
Consulting fees 5,000 200 5,200
Dues and subscriptions 238 0 238
Licenses and taxes 925 0 925
Professional fees 4,482 0 4,482
Research and development 54,292 0 54,292
--------------------------------------------------------
Total Development Stage Expenses 78,082 200 78,282
<P>
DEFICIT ACCUMULATED DURING
THE DEVELOPMENT STAGE $(78,082) $(200) $(78,282)
========================================================
<P>
LOSS PER SHARE:
<P>
Basic $ 0.02 $ 0.00 $ 0.02
<P>
Diluted N/A N/A N/A
=======================================================
Weighted-average of common
shares outstanding 4,026,093 4,000,000 4,025,535
=======================================================
<P>
The accompanying notes are an integral part of these financial statements.
<P>
</TABLE>
</PAGE>
<PAGE>
<TABLE>
<CAPTION>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
<P>
FOR THE PERIOD JUNE 22, 1999 (INCEPTION) TO JUNE 30, 1999
</CAPTION>
<S> <C> <C> <C> <C> <C>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
-------------------------------------------------------------------
Balance, June 22, 1999
(inception) 0 $ 0 $ 0 $ 0 $ 0
<P>
Restricted common stock
issued to founder
for consulting services 4,000,000 400 (200) 0 (200)
<P>
Deficit accumulated during the
development stage for the
period June 22, 1999 (inception)
to June 30, 1999 0 0 0 (200) (200)
-------------------------------------------------------------------
Balance June 30, 1999 4,000,000 $ 0 $ (200) $ (200) $ 0
-------------------------------------------------------------------
<P>
The accompanying notes are an integral part of these financial statements.
<P>
4
</TABLE>
</PAGE>
<TABLE>
<CAPTION>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
<P>
FOR THE CUMULATIVE PERIOD JUNE 22, 1999 (INCEPTION) TO JUNE 30, 2000
<P>
CONTINUED
</CAPTION>
<S> <C> <C> <C> <C> <C>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
-------------------------------------------------------------------
Balance June 30,
1999 (inception) 0 $ 0 $ 0 $ 0 $ 0
<P>
Restricted common stock
issued to founder for
consulting services 4,000,000 400 (200) 0 200
<P>
Deficit accumulated during the
development stage for the
Period June 22, 1999
(inception) to June
30, 1999 0 0 0 (200) (200)
------------------------------------------------------------------
Balance June 30, 1999 4,000,000 400 (200) (200) 0
<P>
Restricted common stock
issued to related party for
consulting services 50,000 5 4,995 0 5,000
<P>
Common stock issued
to third parties 140,000 14 27,986 0 28,000
<P>
Less stock subscription
receivable 0 0 (28,000) 0 (28,000)
<P>
Deficit accumulated during the
development stage for the year
ended June 30, 2000 0 0 0 (78,082) (78,082)
------------------------------------------------------------------
Balance,
June 30, 2000 4,190,000 $ 419 $ 4,781 $ (78,282) $ 73,082
==================================================================
<P>
The accompanying notes are an integral part of these financial statements.
<P>
5
</TABLE>
</PAGE>
<P>
<PAGE>
<TABLE>
<CAPTION>
HIPSTYLE.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CASH FLOWS
</CAPTION>
<S> <C> <C> <C>
FOR THE PERIOD FOR THE PERIOD
FOR THE JUNE 22, 1999 JUNE 22, 1999
YEAR ENDED (INCEPTION) TO (INCEPTION) TO
JUNE 30, 2000 JUNE 30, 1999 JUNE 30, 2000
----------------------------------------------------------
OPERATING ACTIVITIES:
<P>
Deficit accumulated during the
development stage $(78,082) $(200) $(78,282)
<P>
Adjustments to reconcile net loss
to net cash used by operations:
<P>
Restricted common stock issued
for consulting fees 5,000 200 5,200
Increase in accrued expenses 15,952 0 15,952
Increase in accounts payable 54,697 0 54,697
----------------------------------------------------------
Net Cash Used by
Operating Activities (2,433) 0 (2,433)
----------------------------------------------------------
FINANCING ACTIVITIES:
<P>
Loans from shareholders 2,488 0 2,488
----------------------------------------------------------
Net Cash Provided by
Financing Activities 2,488 0 2,488
----------------------------------------------------------
<P>
NET INCREASE IN CASH 55 0 55
<P>
CASH, BEGINNING OF PERIOD 0 0 0
---------------------------------------------------------
CASH, END OF PERIOD $55 $0 $55
=========================================================
<P>
The accompanying notes are an integral part of these financial statements.
<P>
6
</TABLE>
</PAGE>
HIPSTYLE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD JUNE 22, 1999 (INCEPTION) TO JUNE 30, 2000
<P>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<P>
During the years ended June 30, 2000 and 1999, and for
the cumulative period June 22, 1999 (inception) to June 30,
2000, the Company did not pay any interest.
<P>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
<P>
The Company entered into the following non-cash
transactions:
<P>
On June 22, 1999 (inception) the Company issued
4,000,000 post-split (see note 5) restricted shares of
common stock in consideration for services provided by
Intelilabs.com, Inc., formerly known as Quentin Road
Productions, Inc. the founder of the Company. This
transaction was valued at $200.
<P>
On May 30, 2000 the Company issued 50,000 restricted
shares of the Company's common stock in exchange for
consulting services to the Vice President of the Company.
This transaction was valued at $5,000.
<P>
The accompanying notes are an integral part of these
financial statements.
<P>
7
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------
<P>
ORGANIZATION
<P>
Hipstyle.com, Inc. ("the Company") was incorporated on June
22, 1999 under the laws of the State of Florida and is
licensed to do business in the state of New York. The
Company is in the process of designing a website dedicated
to bringing together designers of high fashion and beauty
products with a targeted client base. The Company's goal is
to provide links to established e-commerce and catalog
retail sites featuring designer apparel and accessories, as
well as fashion related services and content to its viewers.
Some of these include: a search engine, fashion news, chat
and e-mail response, research tools, video runways and
interviews, sale and special event postings, major fashion
magazine archives, and vintage resources. Revenue will be
generated primarily though charging a click through rate for
each link, revenue sharing on purchases made at partner e-
commerce sites, advertising sales and auction commissions.
<P>
To accomplish its goal as a fashion infomediary over time,
viewers will be offered an exclusive membership in the
Company that will give them special access and privileges.
In return viewers will be asked to fill out some personal
information that will be aggregated into a database and used
to attract future partners and advertisers.
<P>
The Company was a wholly owned subsidiary of
Intellilabs.com, Inc. ("Intellilabs"), formerly known as
Quentin Road productions, Inc., a publicly traded company
listed on the OTC Electronic Bulletin Board (OTCBB:QRPI)
from inception until March 1, 2000. It was spun-off by
Intellilabs on March 1, 2000. Upon such spin-off,
shareholders of Intellilabs received 1.31 shares of the
Company for each share of Intellilabs owned as of March 1,
2000. As a result of the spin-off, Atlas Equity Group,
Inc., a related party, beneficial owner of which is Michael
D. Farkas, became a majority shareholder in the Company
owning approximately 56% of the outstanding shares. The
principal office is located at 1221 Brickell Avenue, Suite
900, Miami, FL 33131.
<P>
MANAGEMENT DECISION NOT TO CONSOLIDATE
--------------------------------------
<P>
Statement of Financial Accounting Standards ("SFAS") No. 94,
"Consolidation of All Majority Owned Subsidiaries,"
encourages the use of consolidated financial statements
between a parent company and its subsidiaries unless:
<P>
a. Control is likely to be temporary,
b. Control does not rest with the majority
owner(s), or
c. Minority stockholders have certain approval or
veto rights that allow them to exercise
significant control over major management
decisions in the ordinary course of business.
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
------------------------------------------------------
<P>
MANAGEMENT DECISION NOT TO CONSOLIDATE (CONT'D)
-----------------------------------------------
<P>
The management of Atlas Equity Group, Inc., a related party,
beneficial owner of which is Michael D. Farkas, believes
that its control is temporary. Therefore, management
believes that separate financial statements are appropriate
and properly reflect the Company's current operating
results.
<P>
CASH AND CASH EQUIVALENTS
<P>
For purposes of reporting cash flows, the Company considers
all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
<P>
FAIR VALUE OF FINANCIAL INSTRUMENTS
<P>
SFAS No. 107 "Disclosures about Fair Value of Financial
Instruments" requires the disclosure of the fair value of
financial instruments. The Company's management, including
cash equivalents, accounts payable, accrued professional
fees and shareholder loans are carried at cost, which
approximates their fair value because of the short-term
maturity of these instruments.
<P>
INCOME TAXES
<P>
The Company utilizes Statement on Financial Accounting
Standard ("SFAS") No. 109, "Accounting for Income Taxes,"
which requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of
events that have been included in financial statements or
tax returns. Under this method, deferred income taxes are
recognized for the tax consequences in future years of
differences between the tax bases of assets and liabilities
and their financial reporting amounts at each period end
based on enacted tax laws and statutory tax rates applicable
to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established
where necessary to reduce deferred tax assets to amounts
expected to be realized. The accompanying financial
statements have no provisions for deferred tax assets or
liabilities because the deferred tax allowance offsets
deferred tax assets in their entirety.
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
-------------------------------------------------------
<P>
STOCK COMPENSATION
<P>
The Company has adopted SFAS No. 123 "Accounting for Stock-
Based Compensation." SFAS No. 123 encourages the use of the
fair market method to account for transactions involving
stock base compensation that are entered into fiscal years
beginning after December 15, 1995. Under the fair value
method, the issuance of equity instruments to non-employees
in exchange for goods or services, should be accounted for
based on the fair value of the goods or services received or
the fair value of the income instruments issued, whichever
is more reliably measured.
<P>
NET LOSS PER SHARE
<P>
The Company has adopted SFAS No. 128 "Earnings Per Share."
Basic loss per share is computed by dividing the loss
available to common shareholders by the weighted-average
number of common shares outstanding. Diluted loss per share
is computed in a manner similar to the basic loss per share,
except that the weighted-average number of shares
outstanding is increased to include all common shares,
including those with the potential to be issued by virtue of
warrants, options, convertible debt and other such
convertible instruments. Diluted earnings per share
contemplates a complete conversion to common shares of all
convertible instruments, only if they are dilutive in nature
with regards to earnings per share. Since the Company has
incurred net losses for all periods and since there are no
convertible instruments or options, basic loss per share and
diluted loss per share are the same.
<P>
USE OF ESTIMATES
<P>
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of
contingent assets and liabilities as of the date of the
financial statements, and the reported amounts of revenues
and expenses during the reporting period. Accordingly,
actual results could differ from those estimates.
<P>
SEGMENTS
<P>
The Company has adopted the provisions of SFAS No. 131,
Disclosures about Segments of an Enterprise and Related
Information. SFAS No. 131 establishes standards for
companies to report information about operating segments in
annual financial statements. It also establishes standards
for related disclosures about products and services,
geographic areas and major customers. Since the Company did
not have any revenues and or segments during the periods
ended June 30, 2000 and June 30, 1999; the provisions of
SFAS No. 131 does not have a material effect on these
financial statements.
<P>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
------------------------------------------------------
<P>
In June 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 130, "Reporting Comprehensive
Income." This statement requires companies to classify
items of other comprehensive income by their nature in
financial statements and to display the accumulated balance
of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity
section of a statement of financial position. SFAS No. 130
is effective for financial statements issued for fiscal
years beginning after December 15, 1997. Management
believes that SFAS No. 130 has no material effect on the
Company's financial statements because it has no elements of
comprehensive income other than net operating losses.
<P>
In April 1998, the American Institute of Certified Public
Accountants issued Statement of Position No. 98-5,
"Reporting for Costs of Start-Up Activities," ("SOP 98-5").
The Company is required to expense all start-up costs
related to new operations as incurred. In addition, all
start-up costs that were capitalized in the past must be
written off when SOP 98-5 is adopted. The Company's
adoption did not have a material impact on the Company's
financial position or results of operations.
<P>
SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," is effective for financial statements
issued for fiscal years beginning after June 15, 1999. SFAS
No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging
activities. Management does not believe that SFAS No. 133
will have a material effect on its financial position or
results of operations.
<P>
SFAS No. 134, "Accounting for Mortgage-Backed Securities
Retained after the Securitization of Mortgage Loans Held for
Sale by Mortgage Banking Enterprises," is effective for
financial statements issued in the first fiscal quarter
beginning after December 15, 1998. This statement is not
applicable to the Company.
<P>
SFAS No. 135, "Rescission of FASB Statement No. 75 and
Technical Corrections," is effective for financial
statements issued for fiscal years beginning in February
1999. This statement is not applicable to the Company.
<P>
On December 3, 1999 the Securities and Exchange Commission
("SEC") staff issued Staff Accounting Bulletin No. 101 (SAB
101) "Revenue Recognition in Financial Statements" which
reflects the basic principles of revenue recognition in
existing generally accepted accounting principles. SAB 101
discusses such revenue recognition issues as (1) Transfer of
Title, (2) Substantial Performance and Acceptance, (3)
Nonrefundable Payments, (4) Accounting for Certain Costs of
Revenues, (5) Refundable Fees for Services, (6) Estimates
and Change in Estimates, (7) Fixed or Determinable Fees
and, (8) Implementing the Guidance on SAB 101 because the
Company has not realized any revenues and is in the
development stage, management does not believe that SAB 101
has a material effect on the financial statements.
<P>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
(CONT'D)
--------------------------------------------------------
<P>
In January 2000, the Emerging Issues Task Force issued EITF
99-17 "Accounting for Advertising Barter Transactions"
establishes accounting and reporting requirements for such
transactions. Generally, the Task Force reached a consensus
that revenue and expenses from an advertising barter
transaction should be recognized at fair value of the
advertising surrendered. Although the Company is currently
seeking these kinds of barter arrangements, it is still in
the development stage and has not yet commenced operations.
As a result, management does not believe that EITF 99-17 has
a material effect on the financial statements.
<P>
On March 16, 2000 the Emerging Issues Task Force issued EITF
99-19 "Recording Revenue as a Principal versus Net as an
Agent" which addresses the issue of how and when revenues
should be recognized on a Gross or Net method as the title
implies. How revenues are recognized have become
increasingly important because some investors may value
companies that primarily sell products on the Internet based
on a multiple of revenues rather than a multiple of gross
profits or earnings. The emerging Issues Task Force has not
reached a consensus but sites SEC Staff Accounting Bulletin
101.
<P>
The SEC considers the following factors:
<P>
1. Does the Company act as a principal in the
transaction?
2. Does the Company take title to the product?
3. Does the Company assume the risk of ownership?
4. Does the Company act as an agent or a broker?
<P>
On March 16, 2000 the Emerging Issues Task Force issued EITF
00-2 "Accounting for Web Site Development Costs" which
establishes accounting and reporting requirements for
website development costs including those costs associated
with planning, developing and operating a website.
Generally, costs associated with planning and operating a
website should be expensed while those costs associated in
developing should be capitalized. Management believes that
it should expense its website development costs due to the
development stage status of the Company and the uncertainty
surrounding future benefits it may or may not derive from
these costs.
<P>
On July 20, 2000 the Emerging Issues Task Force issued EITF
00-14 "Accounting For Certain Sales Incentives" which
establishes accounting and reporting requirements for sales
incentives such as discounts, coupons, rebates and free
products or services. Generally, reductions in or refunds of
a selling price should be classified as a reduction in
revenue. For SEC registrants the implementation date is the
beginning of the fourth quarter after the registrant's
fiscal year end December 15, 1999. Management does not
believe that EITF 00-14 will have a material effect on the
financial statements.
<P>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
(CONT'D)
-------------------------------------------------------
<P>
Management anticipates generating revenues by entering into
strategic partnerships and/or acquisitions of other
electronic shopping sites, developing and selling there own
products and licensing agreements of various types, click
through fees, revenue sharing from sales, advertising sales
and auction fees. Since the Company has not generated any
revenues to date, management will evaluate its revenue
sources when realized and apply SAB 101 and EITF 99-19
accordingly.
<P>
In March, 2000 the FASB issued Interpretation No. 44,
"Accounting for Certain Transactions Involving Stock
Compensation, Interpretation of APB Opinion No. 25."
Interpretation No. 44 clarifies the application of
Accounting Principle Board Opinion No. 25 to certain issues
including: (1) the definition of employee for purposes of
applying APB No. 25, (2) the criteria for determining
whether a plan qualifies as a non-compensatory plan, (3)
the accounting consequences of various modifications to the
terms of a previously fixed stock option or award, and (4)
the accounting for an exchange of stock compensation awards
in business combinations. Management adopted the
application of the fair value method under FASB Statement
123 and, therefore, this Interpretation does not have a
material effect on the financial statements.
<P>
NOTE 3 - DEVELOPMENT STAGE OPERATIONS AND GOING CONCERN
MATTERS
-----------------------------------------------------------
<P>
The Company's initial activities have been devoted to
developing a business plan, negotiating contracts and
raising capital for future operations and administrative
functions.
<P>
The accompanying financial statements have been prepared on
a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal
course of business. As shown in the financial statements,
development stage losses from June 22, 1999 (inception) to
June 30, 2000 were $78,282. The Company's cash flow
requirements have been met by contributions of capital and
accounts payable.
<P>
The possibility exists that these sources of financing will
not continue to be available. If the Company is unable to
generate profits, or unable to obtain additional funds for
its working capital needs, it may have to cease operations.
<P>
The Company intends to meet its long-term liquidity needs
through available cash as well as through additional
financing from outside sources. Management believes that
the existing working capital in combination with additional
paid-in capital will be sufficient to fund operations at
least through July 1, 2001 (see note 5 and 7).
<P>
The financial statements do not include any adjustments
relating to the recoverability and classification of
liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's
continuation as a going concern is dependent upon its
ability to generate sufficient cash flow to meet its
obligations on a timely basis, to retain additional paid-in
capital and to ultimately attain profitability.
<P>
NOTE 4 - DEFERRED INCOME TAXES
-----------------------------------
<P>
The Company has a carry-forward loss for income tax purposes
of $72,282 that may be offset against future taxable income.
The carry-forward loss expires at various times through the
year 2019. Due to the uncertainty regarding the success of
future operations, management has valued the deferred tax
asset allowance at 100% of the related deferred tax asset.
The deferred tax assets, liabilities and valuation
allowances as of June 30, 2000 and June 30, 1999 consists of
the following:
<TABLE>
<S> <C> <C>
2000 1999
Deferred tax assets arising
from net operating losses $ 14,100 $ 36
Less: Valuation allowance (14,100) (36)
Net deferred liabilities 0 0
<P>
Net Deferred Tax Asset $ 0 $ 0
</TABLE>
<P>
At June 30, 2000 and June 30, 1999 a valuation allowance was
provided as realization of the deferred tax benefit is not
more likely than not.
<P>
The effective tax rate varies from the U.S. Federal
statutory tax rate for both the periods ended June 30, 2000
and June 30, 1999 principally due to the following:
<TABLE>
<S> <C> <C>
2000 1999
<P>
U.S. statutory tax rate 15% 15%
State and local taxes 4 4
Less: Valuation allowance 19 19
<P>
Effective rate 0% 0%
</TABLE>
<P>
NOTE 5 - STOCKHOLDERS' EQUITY
----------------------------------
<P>
The Company issued 4,000,000 post-split common shares upon
incorporation to Intellilabs as founder shares for the
formation of the Company. This transaction was valued at
par $200. This investor is deemed to be a founder and
affiliate of the Company. These shares have been adjusted
to give retroactive effect to a 2,000 to 1 stock split that
occurred on January 15, 2000.
<P>
NOTE 5 - STOCKHOLDERS' EQUITY (CONT'D)
-----------------------------------------
<P>
On January 4, 2000 the Board of Directors amended the
Articles of Incorporation. The number of authorized shares
of common stock was increased to 100,000,000. The par value
was changed to $0.0001 per share of common stock. The
financial statements have been retroactively adjusted to
reflect the effect of this change.
<P>
On January 15, 2000 the Board of Directors authorized a
2,000 to 1 forward split of the Company's common stock, par
value $0.0001. Subsequent to the split there were 4,000,000
issued and outstanding. This transaction has been given
retroactive effect as if it occurred at inception (June 22,
1999).
<P>
On March 1, 2000 the Company entered into an agreement and
plan of distribution ("spin-off") with Intellilabs. Upon
spin-off, the shareholders of Intellilabs received 1.31
shares of the Company's common stock for each share of
Intellilabs owned as of March 1, 2000, totaling 4,000,000
common shares. As a result of this spin-off and share
distribution Atlas Equity Group, Inc., a related party,
beneficial owner of which is Michael D. Farkas, received
2,620,000 shares, representing approximately 56% of the
Company's outstanding common stock and Rebecca J. Farkas
(f/k/a Brock) received 655,000 shares representing
approximately 16% of the Company's common stock.
<P>
On May 30, 2000 the Board of Directors authorized the
issuance of 50,000 restricted shares of the Company's common
stock to Michelle Brock, a related party, as an incentive to
become an officer and for services which included the
writing and development of the Company's business plan, the
development of corporate and operating strategies and
creative input into our website. These shares were valued
at $0.10 per share due to their restrictive nature and are
subject to Rule 144 of the SEC Act 1933 as amended.
<P>
In June 2000, the Company entered into a private offering of
securities pursuant to Regulation D, Rule 504, promulgated
under the Securities Act of 1933 as amended. Common shares
were offered to non-accredited and unaffiliated investors
for cash consideration of $0.20 per share. Prior to June
30, 2000 140,000 unrestricted common shares were subscribed
to by 6 non-accredited and unaffiliated investors for
capital contributions totaling $28,000. The proceeds from
the sale of these securities were received in July 2000 and
have been recorded as stock subscription receivable in the
statement of changes in stockholders' equity. Although the
Company has not gone through the administrative procedures
of issuing these shares, for purposes of these financial
statements, they are deemed to have been issued and
outstanding.
<P>
Subsequent to year-end 410,000 unrestricted common shares
were subscribed to by 16 non-accredited and unaffiliated
investors for cash consideration totaling $82,000. The
proceeds from the sale of these securities were received
during the months of July and August 2000.
<P>
A total of 550,000 unrestricted common shares have been
offered to 22 non-accredited and unaffiliated investors as a
result of this offering. The offering is now closed.
<P>
NOTE 6 - RELATED PARTY TRANSACTIONS
-----------------------------------------
<P>
The Company issued 4,000,000 post split common shares upon
incorporation to Intellilabs, the parent company, in
exchange for consulting services valued at $200. These
shares were subsequently distributed to the shareholders of
Intellilabs, pursuant to an agreement and plan of
distribution (see note 1 and 5).
<P>
On May 30, 2000 the Board of Directors authorized the
issuance of 50,000 restricted shares of the Company's common
stock to Michelle Brock, a related party, as an incentive to
become an officer and for services which included the
writing and development of the Company's business plan, the
development of corporate and operating strategies and
creative input into our website. These shares were valued
at $0.10 per share due to their restrictive nature and are
subject to Rule 144 of the SEC Act 1933 as amended.
<P>
Michael D. Farkas and Rebecca J. Farkas, his wife, officer,
director, and a related party loaned the Company $2,488
which covered the cost of the license fees to the State of
New York and the reservation costs associated with reserving
the desired internet address and other operating expenses.
No interest is being charged on this loan and is due on
demand.
<P>
NOTE 7 - SUBSEQUENT EVENTS
-------------------------------
<P>
As discussed in note 5, in June 2000 the Company entered
into a private offering of securities pursuant to Regulation
D, Rule 504, promulgated under the Securities Act of 1933 as
amended. Subsequent to year-end 410,000 unrestricted common
shares were subscribed to by 16 non-accredited and
unaffiliated investors for cash consideration totaling
$82,000. The proceeds from the sale of these securities
were received during the months of July and August 2000. A
total of 550,000 unrestricted common shares have been
offered to 22 non-accredited and unaffiliated investors for
a total raise of $110,000. The offering is now closed (see
note 5).
<P>
In July 2000, the Company agreed to reimburse Atlas Equity
Group, Inc., a related party, beneficial owner of which is
Michael D. Farkas, $2,000 per month (on a month-to-month
basis) for rent and other operating expenses. Prior to July
2000, the Company had been relatively inactive, did not
require and was not occupying any office space. Because of
recent developments, including the hiring of employees and
the completion of their business plan, management has now
agreed to occupy space from Atlas Equity Group, Inc., a
related party, beneficial owner of which is Michael D.
Farkas.
<P>
SIGNATURES
<P>
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant caused this registration statement
to be signed on its behalf by the undersigned, thereunto
duly authorized.
<P>
HIPSTYLE.COM, INC.
<P>
/s/REBECCA J. BROCK
---------------------
By: REBECCA J. BROCK
Title: President, Secretary and Treasurer
Date: January 17, 2001
<P>
INDEX TO EXHIBITS
<P>
Exhibit 3(i) Articles of Incorporation *
<P>
Exhibit 3(ii) By-laws *
<P>
* Filed with the original Form 10 filed on
