UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities of Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Rim.Com Inc.
(Name of Small Business Issuer in Its Charter)
Nevada 52-0983735
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
7579 E Main, Suite 600, Scottsdale, AZ 85251
(Address of Principal Executive Offices) (Zip Code)
(as of Date of Filing)
Issuer's Telephone Number (480) 970-3336
Securities to be Registered Under Section 12(b) of the Act:
None
Securities Registered Under Section 12(g) of the Exchange Act:
Title of Each Class Name of Each Exchange On Which Registered
------------------- -----------------------------------------
Common Stock Nasdaq - Bulletin Board
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RIM.COM INC.
FORM 10-SB
PAGE
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PART I
Item 1. Description of Business......................................... 1
Item 2. Management's Discussion and Analysis or Plan of Operation ...... 3
Item 3. Description of Property ........................................ 5
Item 4. Security Ownership of Certain Beneficial Owners and
Management ..................................................... 5
Item 5. Directors, Executive Officers, Promoters and Control
Persons......................................................... 6
Item 6. Executive Compensation.......................................... 7
Item 7. Certain Relationships and Related Transactions.................. 8
Item 8. Description of Securities....................................... 9
PART II
Item 1. Market Price of and Dividends on Registrant's Common
Equity and Other Shareholder Matters............................ 10
Item 2. Legal Proceedings .............................................. 10
Item 3. Changes In and Disagreements with Accountants................... 10
Item 4. Recent Sales of Unregistered Securities......................... 10
Item 5. Indemnification of Directors and Officers....................... 10
PART F/S
Financial Statements.................................................... 12
PART IV
Item 1. Index to Exhibits............................................... 25
SIGNATURES................................................................... 26
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
BACKGROUND
Rim.Com Inc (the "Company" or the "Registrant") was organized in Nevada on
February 14, 2000. On April 6, 2000, the Company closed its acquisition of its
subsidiary, Rimmer Computer Inc., an Arizona corporation which had been in
business in Phoenix, Arizona for over thirteen years ("Rimmer"). The acquisition
of Rimmer was accomplished by exchanging 3,400,000 shares of Company restricted
common stock for 100% of the outstanding shares of Rimmer. The acquisition of
Rimmer by the Company was conditioned upon the Company raising a minimum of
$250,000 from private placement offerings. On June 30, 2000 the Company
simultaneously closed an offering of $260,000 to 13 accredited investors and an
offering of $26,750 to 26 non-accredited investors.
RIMMER COMPUTER
Rimmer Computer, Inc. ("Rimmer") was started on March 1, 1987. The business
started out as a brokerage computer hardware company - buying, selling, and
leasing computer equipment specializing in IBM 3270 terminals or compatibles. By
1990 Rimmer began to do network consulting helping small business set up and use
networked PC's. This line of business continued to grow, initial growth being in
large part supported by a large project management contract with the Arizona
Department of Transportation. As networking systems became more common, Rimmer
next became authorized as a Novell Partner, and the target customer group became
generally larger businesses. Today Rimmer is authorized by: Novell, Microsoft,
IBM, Compaq, Hewlett Packard, Cisco -- and others. Rimmer employs ten people and
the technical staff have multiple certifications such as Microsoft Certified
Systems Engineers and Certified NetWare Engineers. All of Rimmer's customers are
currently located in the Phoenix, Arizona area, although Rimmer expects to
obtain some national accounts within the next year.
SERVICES OFFERED
Rimmer specializes in partnering arrangements where its clients utilize
Rimmer employees on a weekly or daily basis. This enables Rimmer to create a
stable and well-functioning information system, which in turn provides a robust
and reliable platform to implement advanced applications such as e-commerce and
intranet services. This exceptionally high level of information systems
sophistication is enjoyed by Rimmer clients only after a rigorous commitment and
expenditure of time and money to: (1) make existing hardware, software, systems,
and operational procedures extremely well stabilized and running smoothly; and
(2) then (or simultaneously), implement advanced applications with dramatic
profit improvements.
During fiscal year 1999 Rimmer served approximately 70 different customers,
most of which it anticipates serving in fiscal year 2000. As of April 1, 2000
Rimmer had 15 customers which it serves each month and 6 customers it serves
each week. Rimmer receives a retainer in advance from each customer and bills
its customers on a monthly basis. Rimmer bills its customers at a hourly rate
between $75 and $135 for the work performed by each of its six technicians.
SERVICE BENEFITS
Rimmer provides customers with a stable, easy-to-manage information
technology infrastructure, which directly affects the customers' bottom line,
regardless of what industry they are in. Rimmer believes a stable information
platform greatly increases employee productivity: the information system tools
are always available for use, and the data is accessible. Rimmer works with its
clients to make sure they are appropriately trained so they can take full
advantage of their information tools. Numerous studies have shown that the total
cost of ownership of a computer system is 20-25% hardware and software, and
75-80% people costs. Rimmer believes savings in employee productivity that is
provided by a stable system can be enormous.
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COMPETITIVE ADVANTAGE
Smart people - well selected. Everyone in this business claims this
advantage. Rimmer simply DOES IT. This is done through extensive interviewing
techniques that have been developed and proven over the years along with
technical testing, practice calls, and use of outside interviewers (not head
hunters - but accomplished information systems associates who are experts in the
services Rimmer provides).
Efficient operating systems - these systems include an advanced data base
of customer contacts and management of that database. These systems include
efficient managing of the two most crucial factors affecting the profitability
of Rimmer: percentage billable time of the engineers and sales measurements,
quota, and incentive plans.
Total commitment to services - since the inception of its information
systems consulting, Rimmer has focused on providing services. Hardware was a
necessary ancillary that was not a major contributor to profitability. Rimmer
already has years of experience at selling services, thus not needing to force
the transition from hardware sales to services.
Sales awareness - most competitors in this industry are
technology-oriented. Rimmer's two principals both come from successful sales
careers and training in the information systems industry. Rimmer believes this
factor has proven to be an advantage over many competitors.
The "system" - report card, sales of plans (instead of spending unbillable
time answering requests for bids), and customer culling. Many of our competitors
are frequently a "service" company - they "fix" things; more worthy competitors
frequently limit their services to "projects" such as installing a new network,
or a new application. Rimmer believes its approach of getting systems up to
excellence in reliability and functionality and doing projects - is non-ending.
Rimmer believes its value to the sophisticated customers who realize these
benefits is such that its relationship with them endures for several years.
TARGET MARKET DEFINED
Any businesses that use IBM-compatible microcomputers (PCs) and are
interested in utilizing technology to create a competitive advantage for
themselves are potential clients. Historically, Rimmer has targeted small to
medium businesses with 10 to 4,000 workstations.
COMPETITION
There are three types of competitors: large, multi-location companies, such
as Novell, EDS and MicroAge; regional and local firms of similar size, such as
JJ Croney & Associates, Sentinel Technologies, and Hughes Callahan; and one-man
companies.
FUTURE ACQUISITIONS
The Company believes that there are dozens of computer consulting companies
in the United States which are similar to Rimmer and which would welcome the
opportunity to join the Company. Most likely, these companies would generate
annual revenues in the $500,000 to $2,000,000 range, but would have little or no
net income. The Company is hopeful that it would be able to acquire such
companies in exchange for its restricted common stock in order to preserve its
cash. The Company would hope that these companies could then be made profitable
by economies of scale or improving gross profit margins.
Since the Company has not completed any acquisitions other than Rimmer and
has not even begun acquisition negotiations with any target company, there is no
assurance that the Company will be able to complete any acquisitions in the
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future, or that any such companies acquired will ever be profitable. Further,
certain expenses of any future acquisition, such as legal and accounting costs
which may be substantial, would be required to be paid in cash.
The Company will most likely accomplish any future acquisition by merging
the target company into a subsidiary of the Company. Under Nevada law such a
merger would not require shareholder approval if the total number of shares to
be issued in the transaction did not exceed 20% of the Company's total
outstanding shares. Therefore, investors in this Offering should plan on the
Company conducting all future acquisitions without receiving shareholder
approval.
EMPLOYEES
Rimmer currently employs 6 systems engineers, two salespeople, one
administrative/accountant, in addition to management. Rimmer is actively
recruiting more engineers for hiring in the next 4 months.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The statements contained in this document which are not historical are
forward-looking statements that are subject to risks and uncertainties that
could cause actual results to differ materially from those expressed in the
forward-looking statements, including, but not limited to, the Company's ability
to market its products and services and future customer acceptance for its
products and services, and other risks detailed in this document and other
documents made available to investors.
OVERVIEW
Rim.Com was formed in February 2000 and had no tangible assets and no
liabilities before its acquisition of Rimmer on April 6, 2000. Therefore, the
discussion below focuses on the operations of Rimmer, Rim.Com's wholly-owned
subsidiary. Rimmer has been in existence since 1987 and has been an SubChapter S
corporation since 1991. During February 2000 Rimmer changed its fiscal year end
to September 30 and terminated its SubChapter S status.
RESULTS OF OPERATION
SIX MONTHS ENDING MARCH 31, 2000
During the six months ended March 31, 2000 Rimmer produced a net loss of
$12,193 on revenues of $323,231, as compared to a net loss of $41,160 on
revenues of $390,943 for the same period of the prior year. Rimmer's revenues in
the six month period ended March 31, 2000 were $67,712 less than the same period
for the preceding year. This revenue reduction resulted from a $86,723 decrease
in hardware/software sales; consulting revenues increased in the 2000 period by
$17,523 over the prior year. Also, Rimmer's gross profit in the six month period
ended March 31, 2000 increased by $29,055 over the prior year. Rimmer plans on
continuing the de-emphasis of hardware/software sales because such sales provide
less profit margin than consulting services.
Rimmer's cost of goods sold in the six months ended March 31, 2000 was
$96,767 less than the same period of the prior year. This cost decrease resulted
primarily from a reduction of technician non- billable time and less
hardware/software sales during the period.
Rimmer's general and administrative expense decreased by $4,067 during the
six month period ended March 31, 2000 in comparison to the same period of the
prior year. This cost decrease resulted primarily from a reduction in
administrative personnel. Administrative expenses may increase in future
quarters, because of the addition of Mr. King and Mr. Gunderson to the Company's
staff. Also, the Company will incur substantial accounting and legal expenses in
the coming months as it attempts to list its stock for trading and becomes a
"fully reporting company."
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Interest expense increased by $4,155 during the six month period ended
March 31, 2000 over the same period of the prior year, as a result of the notes
payable increasing by approximately $45,000. The Company is hopeful this debt
can be reduced substantially in the next year from internally generated
cashflow.
YEAR ENDED SEPTEMBER 30, 1999
During the year ended September 30, 1999 Rimmer produced a net loss of
$72,140 on revenues of $851,207, as compared to a net loss of $7,760 on revenues
of $659,160 for the prior year. Rimmer's revenues in the 1999 fiscal year were
$192,047 higher than in the prior year, because hardware/software sales
increased by approximately $74,500 and consulting sales increased by
approximately $116,000. However, Rimmer's cost of goods sold increased by
$185,057 in the 1999 fiscal year as well, as a result of increased
hardware/software costs, sales commissions paid, and labor cost increases.
Rimmer's general and administrative expense increased by $66,908 during the
1999 fiscal year in comparison to the prior year, as a result increased
professional and consulting expenses, depreciation and office rent. The Company
hopes to increase revenues and its profit margin in fiscal year 2000, but it
will also attempt to manage its cost of goods sold and its general and
administrative expenses in the next year as well.
Interest expense increased in fiscal year 1999 over 1998 by $4,496, as a
result of the debt increasing by approximately $41,000. The Company is hopeful
this debt can be reduced substantially in the next year with internally
generated cashflow.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000 Rimmer's liquidity was sufficient to continue its
business with respect to its existing customers, because most of its accounts
receivable turn over every month. However, to obtain capital required for
marketing to new customers and national accounts and to hire the additional
personnel to service new customers, the Company needed to obtain the additional
$286,750 of capital from its two stock offerings of June 30, 2000. These funds
should provide working capital for Company growth for approximately six months.
After that period, the Company may attempt to secure additional equity or debt
financing to sustain additional growth. There is no assurance the Company will
be able to secure additional financing if needed in the future, because the
Company does not have any commitment for such financing at this time.
Rimmer's debt resources have been utilized to the maximum with Rimmer
securing additional short- term debt in the amount of $45,000 during the year
ended March 31, 2000. This debt is comprised of one bank loan and several credit
card loans. Rimmer is paying an annual rate of approximately 18.8% on this debt
at this time. During the coming year the Company is hopeful of reducing the
amount of this debt through internally generated cashflow or, possibly,
re-financing the debt at a lower interest rate.
Future acquisitions of the Company will be funded by using the Company's
common stock. The Company does anticipate expending cash to expand the revenues
of any business it may acquire in the future, so the Company may need to obtain
additional funds for such expansion, as well as Rimmer's expansion, in the
future. There is no assurance that the Company will be able to acquire any
business in the future, since the Company has not yet completed any
acquisitions. The Company has entered into acquisition discussions with several
companies, but has yet reached the stage where any acquisition is probable.
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ITEM 3. DESCRIPTION OF PROPERTY
The Company is currently leasing for three (3) years approximately 1,200 square
feet of space at its principal offices at a monthly rent of approximately $1,212
plus tax. This space is suitable for the current operations. No difficulty is
seen in acquiring additional space in the same general area as it is needed in
the future.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of July 13, 2000 there were 4,734,171 shares of Company common stock
outstanding. The following table sets forth the name, address, number of shares
beneficially owned, and the percentage of the Company's total outstanding common
stock shares owned by: (i) each of the Company's Officers and Directors; (ii)
the Company's Officers and Directors as a group; and (iii) other shareholders of
5% or more of the Company's total outstanding common stock shares.
Number of Percent of
Name of Owner Shares(1) Outstanding
------------- --------- -----------
Robert H. Korndorffer (2)(3) 1,141,000 24.1%
Christina M. Strauch (2)(4) 1,008,700 21.3%
Bruce M. King (2)(5) 250,000 5.3%
Merlin W. Gunderson (2)(6) 250,000 5.3%
Officers and Directors, as
a Group (4 people) (7) 2,450,000 68.1%
James R. Korndorffer (8) 400,000 8.4%
416 Kenilworth Ave.
Gulf Breeze, FL 32561
----------
(1) Represents shares in the individual or entity has a beneficial interest.
(2) The address of this person is 7579 E. Main Street, Suite 600, Scottsdale,
AZ 85251.
(3) These percentages have not been adjusted for the potential exercise of Mr.
Korndorffer's 500,000 stock options. In the event Mr. Korndorffer exercises
those options and no other option holder exercises his options, of which
there is no assurance, he would own 1,641,300 shares, which would be 31.4%
of the shares currently outstanding. (See "Management - Compensation.")
(4) These percentages have not been adjusted for the potential exercise of Ms.
Strauch's 500,000 stock options. In the event Ms. Strauch exercises those
options and no other option holder exercises his options, of which there is
no assurance, she would own 1,508,700 shares, which would be 28.8% of the
shares currently outstanding. (See "Management - Compensation.")
(5) Represents 250,000 shares held in the name of Commerce General, Inc. of
which Mr. King is President, a Director and the majority shareholder. These
percentages have not been adjusted for the potential exercise of Mr. King's
500,000 stock options. In the event Mr. King exercises those options and no
other option holder exercises his options, of which there is no assurance,
he would own 450,000 shares, which would be 9.1% of the shares currently
outstanding. (See "Management - Compensation.")
(6) Represents shares held in the name of a trust of which Mr. Gunderson is a
beneficiary. These percentages have not been adjusted for the potential
exercise of Mr. Gunderson's 250,000 stock options. In the event Mr.
Gunderson exercises those options and no other option holder exercises his
options, of which there is no assurance, he would own 500,000 shares, which
would be 10.1% of the shares currently outstanding. (See "Management -
Compensation.")
(7) These percentages have not been adjusted for the potential exercise of
management's 1,450,000 stock options. In the event management exercises all
of those options, of which there is no assurance, management would own
4,100,000 shares, which would be 66.3% of the shares currently outstanding.
(See "Management - Compensation.")
(8) James R. Korndorffer is the brother of the Company's Chairman.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The directors and executive officers of the Company as of July 13, 2000
were as follows:
Name and Address Age Position
---------------- --- --------
Robert H. Korndorffer 65 Director and Chairman
7579 E. Main St., Suite 600
Scottsdale, AZ 85251
Christina M. Strauch 45 Director and President
7579 E. Main St., Suite 600
Scottsdale, AZ 85251
Bruce M. King 47 Director and
7579 E. Main St., Suite 600 Vice President
Scottsdale, AZ 85251
Merlin W. Gunderson 78 Director and
7579 E. Main St., Suite 600 Secretary/Treasurer
Scottsdale, AZ 85251
ROBERT H. KORNDORFFER became a Director and President of the Company on
April 6, 2000. On July 5, 2000 he became Chairman of the Company. Mr.
Korndorffer has been a principal shareholder and officer of Rimmer Computer Inc.
since its formation in 1987. He has a BS in Chemical Engineering from the
University of Mississippi (1956). He redirected his interest in computers in the
chemical industry when he left in 1965 to work for IBM as a data processing
sales representative for 13 years and for the ITT Corporation for five years.
After starting Rimmer Computer, Mr. Korndorffer has continued his technical
education in various curricula such as becoming a Certified NetWare Engineer for
the Novell Corporation.
CHRISTINA M. STRAUCH became a Director and Vice President - Marketing of
the Company on April 6, 2000. On July 5, 2000 she became President. Ms. Strauch
has been a principal shareholder and officer of Rimmer Computer Inc. since April
1990. She was awarded an MBA in finance and marketing from UCLA in 1981, and
worked for IBM in technical sales for five and a half years. After that she
worked in commercial real estate for two years, then returned to the technology
sector in 1989 with Rimmer Computer, Inc. She is a certified Novell sales
professional and a certified Cisco salesperson. She is also currently an adjunct
faculty member in the Business and Technology division of Scottsdale and Gateway
Community Colleges.
BRUCE M. KING became a Director and Chairman of the Company on April 6,
2000. On July 5, 2000 he resigned as Chairman of the Company and became Vice
President. Mr. King has a Master in Business Administration and Administrative
Management from Bowie State University (1995) and a Masters in Spanish from
Middlebury College (1984). From June 1995 until September 1997, Mr. King served
as chief financial officer for Kings Onion House, Inc., a produce distributor in
Phoenix, Arizona. From September 1997 to present Mr. King has been the majority
shareholder and President of Commerce General, Inc., a management consulting
company in Mesa, Arizona. Previously Mr. King had a twenty-year career as a
professional military officer, which included experience in business management
and international relations.
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MERLIN W. GUNDERSON has been a Director and Treasurer of the Company since
April 6, 2000. On July 11, 2000 he became Secretary as well. Mr. Gunderson has a
CPA degree from the University of Illinois. As senior partner, Mr. Gunderson
grew a two person accounting firm (Clifton-Gunderson, LLC) to be the 18th
largest CPA firm in the United States. Since 1989 Mr. Gunderson has served as an
independent consultant, assisting numerous clients in restructuring,
capitalization and financial management. In 1997 he assisted a manufacturing
company with a public offering that raised $1,500,000 and assisted in debt
financing $1,200,000. Mr. Gunderson served several years on lecture circuits and
participated actively with the American Institute of CPAs. He was also an
adjunct Professor of Accounting for Bradley University.
ITEM 6. EXECUTIVE COMPENSATION
Rimmer has employment contracts with Mr. Korndorffer, Ms. Strauch, Mr. King
and Mr. Gunderson. These contracts have non-compete provisions. The contracts
with Mr. Korndorffer and Ms. Strauch have a two-year term ending January 25,
2002 and the contracts with Mr. King and Mr. Gunderson have a one-year term
ending March 1, 2001.
The current annual salaries of the Company's current officers are as
follows: Mr. Korndorffer - $60,000, Ms. Strauch - $60,000; Mr. King - $36,000
and Mr. Gunderson - $36,000. The Company may, at some future time, increase
salaries or grant bonuses to its officers, but such increases and/or bonus
payments, and the actual payment of salaries will be made only if the Company is
successful and they do not materially adversely affect the Company's cash flow
from operations.
STOCK OPTIONS
At its last fiscal year end, September 30, 1999, the Company had no stock
option plans in existence.
On April 6, 2000 the Company and its shareholders adopted its 2000
Management and Employee Stock Option Plan (the "Plan"). 3,000,000 Company shares
are reserved for issuance under the Plan.
The Plan provides for the granting of stock options which, at the
discretion of the Board, may be either "incentive stock options" within the
meaning of Section 422A of the U.S. Internal Revenue Code or non-qualified stock
options which do not qualify as incentive stock options. With respect to any
participant who owns stock possessing more than 10% of the voting rights of the
Company's outstanding capital stock, the exercise price of any incentive stock
option under the Plan to such a participant must be not less than 110% of fair
market value on the date of grant. Options under the Plan may be granted to
officers, directors, key employees of, and professional consultants to, the
Company and its subsidiaries. Under the terms of the Plan, the aggregate fair
market value (determined at the time an option is granted, which will normally
be equal to the option exercise price per share) of Common Stock exercisable
under an incentive stock option for the first time in any calendar year may not
exceed $100,000.
The maximum term for each option under the Plan is ten years or less. No
option granted may be transferred by the optionee other than by will, the laws
of descent and distribution, or by a qualified domestic relations order, and
each option will be exercisable during the lifetime of the optionee only by such
optionee. Options under the Plan will be exercisable in whole or in part at such
times after the date of grant as set forth in an option agreement as determined
by the Committee or the Board of Directors. Each option granted will be for a
term, and exercisable only in accordance with option agreements approved by the
Board.
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The Plan contains provisions which authorize the Board in the event of a
sale or merger of all or substantially all of the Company's assets, or a merger
or consolidation in which the Company is not the surviving corporation, to take
certain action in its discretion. In the event of such a transaction the Board
may accelerate the exercisability of any option to permit its exercise in full
during such period as the Board may prescribe following the public announcement
of a sale of assets or merger, and may elect to earlier grant that right at the
time an individual option is granted. The Board may also require an optionee in
the event of such a transaction to surrender an option in return for a
substitute option issued by a surviving corporation which is determined by the
Committee to have a value substantially equal to the value of the surrendered
option.
The Board of Directors will determine who will receive any stock options,
the number of shares subject to each option granted, the option period, any
vesting schedules which defer the optionee's rights to exercise an option and
the exercise price. The issuance of any stock options may have the effect of
diluting the percentage of ownership in the Company of the then existing
shareholders.
As of July 13, 2000 the Company had granted stock options for the following
number of shares to the indicated persons, all exercisable at $.30 per share:
Robert Korndorffer - 500,000; Christina Strauch - 500,000; Bruce King - 200,000
and Merlin Gunderson - 250,000. 300,000 of the share options to Korndorffer and
Strauch and Gunderson's option are intended to qualify as IRS incentive stock
options and, as such, may not be exercised until April 7, 2001. 200,000 of the
share options to Korndorffer, Strauch and King do not qualify as IRS incentive
stock options and, as such, may be exercised immediately.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Upon the incorporation of the Company on February 14, 2000, 200,000 shares
of common stock were issued to Michael K. Hair, the sole officer and Director of
at that time, in exchange $200 cash which paid for the incorporation and for
services totalling $5,000 in value. On April 6, 2000 in an exchange agreement
with Rimmer an additional 3,400,000 shares were issued by the Company to 8
individuals, companies and trusts. The distributions to affiliates were as
follows:
Bruce M. King (to a corporation of which he is President and a limited
liability company of which he is a member) - 1,248,600 shares; Robert H.
Korndorffer - 442,000 shares; Christina M. Strauch - 309,400; Norman King (Bruce
King's brother) Family Trust - 1,000,000 shares; Merlin Gunderson (to a trust of
which he is a beneficiary) - 250,000 shares. In July 2000 Mr. Korndorffer and
Ms. Strauch purchased some of Mr. Bruce King's and Mr. Norman King's shares. See
"Item 4" above.
At December 31, 1999 Rimmer owed Mr. Korndorffer approximately $12,326 from
working capital loans Mr. Korndorffer had made to Rimmer over the years. This
debt bears no interest. In March 2000, Mr. Korndorffer contributed this $12,326
to the Company as a contribution to capital.
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At December 31, 1999 Christina M. Strauch owed Rimmer approximately $73,636
as interest free salary advances Rimmer. On January 25, 2000 Ms. Strauch repaid
$20,000 of this advance. Ms. Strauch intends to repay the balance of this
advance over the next two years from her salary.
On January 25, 2000 Commerce General, Inc., a company of which Mr. Bruce M.
King is President and majority shareholder invested $27,500 into Rimmer as a
contribution of capital.
On May 25, 2000 Michael K. Hair, then an officer and Director of the
Company, loaned Rimmer $20,000. This sum was repaid on July 3, 2000 with no
interest.
ITEM 8. DESCRIPTION OF SECURITIES
GENERAL
The authorized capital stock of the Company is 20,000,000 shares of Common
Stock, and 10,000,000 Shares of Preferred Stock, all with par value of $.001 per
Share. As of July 13, 2000, the capitalization of the Company consists of
4,734,171 outstanding shares of Common Stock and 0 shares of Preferred Stock
outstanding.
COMMON STOCK
The holders of the Common Stock are entitled to receive dividends when and
as declared by the Board of Directors, out of funds legally available therefore,
subject to the rights of the holders of any shares of Preferred Stock that may
be issued by the Company. The Company has not paid cash dividends in the past
and does not expect to pay any within the foreseeable future since any earnings
are expected to be invested. In the event of liquidation, dissolution or winding
up of the Company, either voluntarily or involuntarily, each outstanding share
of the Common Stock is entitled to share equally in the Company's assets,
subject to any preferential liquidation rights of the holders of shares of
Preferred Stock which may then be outstanding. Each outstanding share of the
Common Stock is entitled to equal voting rights, consisting of one vote per
share.
PREFERRED STOCK
The Company is currently authorized to issue 10,000,000 Shares of Preferred
Stock. As of July 13, 2000, no shares of Preferred Stock have been issued. The
Board of Directors is authorized, subject to any limitation prescribed in the
laws of the State of Nevada, by without further action by the Company's
shareholders, to provide for the issuance of Preferred Stock in one or more
series, to establish from time to time the number of shares of each such series
and any qualifications, limitations or restrictions thereof, and to increase or
decrease the number of shares of any such series without any further vote or
action by shareholders. The Board of Directors may authorize and issue Preferred
stock with voting or conversion rights that could adversely affect the voting
power or other rights of the holders of common stock. In addition, the issuance
of Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of the Company. The Company has no present plans to issue any
additional shares of Preferred Stock.
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PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND OTHER
STOCKHOLDER MATTERS
MARKET INFORMATION. The Company's common stock has not previously been
actively traded. The principal market in which the Company's common shares will
be trading is the over-the-counter market automated quotation system commonly
known as the Bulletin Board. The Company does not know what its trading symbol
will be at this time. Such over-the-counter market quotations reflect
inter-dealer prices without retail markup, markdown or commission and may not
necessarily represent actual transactions.
HOLDERS. As of July 13, 2000 the Company had 49 stockholders of record.
DIVIDENDS. The Company has not paid or declared any dividends upon its
common shares since its inception and, by reason of its present financial status
and its contemplated financial requirements, does not intend to pay or declare
any dividends upon its common shares in the near future.
ITEM 2. LEGAL PROCEEDINGS
There were no legal proceedings involving the Company pending or threatened
at July 13, 2000.
ITEM 3. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
The Company has not changed its accountants or had any disagreements with
its accountants since Semple & Cooper, LP, was engaged in February 2000.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On February 15, 2000 the Company issued 200,000 restricted shares of its
common stock to the sole officer and Director of the Company in exchange for
services valued at $5,000. This transaction was exempt from registration
pursuant to Section 4(2) of the Act and Regulation D as promulgated under the
Act.
On April 6, 2000 the Company issued 3,400,000 restricted shares of its
common stock to a total of 7 non - accredited individuals and trusts in the
acquisition of Rimmer Computer, Inc. This transaction was exempt from
registration pursuant to Section 4(2) of the Act and Regulation D as promulgated
under the Act.
On June 30, 2000 the Company issued 866,671 shares of its common stock to
13 accredited investors in exchange for $260,000 of gross offering proceeds.
This transaction was exempt from registration pursuant to Section 4(2) of the
Act and Rule 504 of Regulation D as promulgated under the Act.
On June 30, 2000 the Company issued 267,500 restricted shares of its common
stock to 26 non-accredited investors in exchange for $26,750 of gross offering
proceeds. This transaction was exempt from registration pursuant to Section 4(2)
of the Act and Rule 506 of Regulation D as promulgated under the Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
No officer or Director of the Company shall be liable to the Company or its
shareholders for the damages for the breach of a fiduciary duty as a Director or
officer other than: (a) acts or omissions which involve intentional misconduct,
fraud or a known violation of the law: or (b) the payment of dividends in
violation of NRS 78.300.
10
<PAGE>
The Company may purchase or maintain insurance or make other financial
arrangements on behalf of any person who is or was a Director, officer,
employee, or agent of the Company, or is or was serving at the request of the
Company as a Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise asserted against him in
his capacity as Director, officer, employee or agent, or arising of his status
as such, whether or not the Company has the authority to indemnify him against
such liability or expense.
The Company shall indemnify all of its officers and Directors, past,
present, and future against any and all expenses incurred by them, and each of
them, including but not limited to, legal fees, judgments and penalties which
may be incurred, rendered or levied in any legal action or administrative
proceeding brought against them for any act or omission alleged to have been
committed while acting within the scope of their duties as officers or Directors
of the Company. The expenses of officers and Directors incurred and in advance
of final disposition of the action or proceeding upon receipt of an undertaking
by or on behalf of the officer or Director to repay the amount if it is
ultimately determined by a court of competent jurisdiction that he/she is not
entitled to be indemnified by the Company. Such right of indemnification shall
not be exclusive of any other rights of indemnification which the officers and
Directors may have or hereafter acquire. Without limitation of the foregoing,
the Board of Directors may adopt by-laws from time to time to provide the
fullest indemnification permitted by the laws of the State of Nevada.
11
<PAGE>
PART F/S
FINANCIAL STATEMENTS
RIMMER COMPUTER, INC.
FOR THE YEARS ENDED
SEPTEMBER 30, 1999 AND 1998 AND
FOR THE SIX MONTH PERIODS ENDED
MARCH 31, 2000 AND 1999 (UNAUDITED)
PAGE
----
Independent Auditors' Report 13
Balance Sheets September 30, 1999 and March 31, 2000 (Unaudited) 14
Statements of Operations for the Years Ended September 30, 1999
and 1998 and for the Six Month Periods Ended March 31, 2000
and 1999 (Unaudited) 16
Statements of Stockholders' Equity (Deficit) for the Years Ended
September 30, 1999 and 1998 and for the Six Month Periods Ended
March 31, 2000 and 1999 (Unaudited) 17
Statements of Cash Flows for the Years Ended September 30, 1999
and 1998 and for the Six Month Periods Ended March 31, 2000
and 1999 (Unaudited) 18
Notes to Financial Statements 20
12
<PAGE>
INDEPENDENT AUDITORS' REPORT
To The Stockholders and Board of Directors of
Rimmer Computer, Inc.
We have audited the accompanying balance sheet of Rimmer Computer, Inc. as of
September 30, 1999, and the related statements of operations, changes in
stockholders' equity (deficit), and cash flows for the years ended September 30,
1999 and 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rimmer Computer, Inc. as of
September 30, 1999, and the results of its operations, changes in stockholders'
equity (deficit), and its cash flows for the years ended September 30, 1999 and
1998, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company has negative working capital and a deficit
stockholders' equity. These conditions raise substantial doubt about its ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Certified Public Accountants /s/ Semple & Cooper, LLP
Phoenix, Arizona
April 10, 2000
13
<PAGE>
RIMMER COMPUTER, INC.
BALANCE SHEETS
SEPTEMBER 30, 1999 AND MARCH 31, 2000 (UNAUDITED)
ASSETS
September 30, March 31,
1999 2000
--------- ---------
(Unaudited)
Current Assets:
Cash (Note 1) $ 7,641 $ 1,245
Accounts receivable - trade, net (Note 1) 28,196 56,134
Inventory (Note 1) 796 1,287
--------- ---------
Total Current Assets 36,633 58,666
--------- ---------
Property and Equipment: (Note 1)
Furniture and fixtures 1,996 1,996
Computer equipment 10,098 10,098
Computer system 64,904 77,520
Copying equipment 672 807
Office equipment 5,706 6,954
--------- ---------
83,376 97,375
Less: accumulated depreciation (14,395) (27,425)
--------- ---------
68,981 69,950
--------- ---------
Other Assets:
Cash surrender value of life insurance 7,862 7,862
Accounts receivable - related party 73,346 51,136
--------- ---------
81,208 58,998
--------- ---------
Total Assets $ 186,822 $ 187,614
========= =========
The Accompanying Notes are an Integral Part
of the Financial Statements
14
<PAGE>
RIMMER COMPUTER, INC.
BALANCE SHEETS (CONTINUED)
SEPTEMBER 30, 1999 AND MARCH 31, 2000 (UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
September 30, March 31,
1999 2000
------------ -----------
(Unaudited)
Current Liabilities:
Notes payable (Note 2) $ 80,727 $ 83,587
Note payable - related party (Note 3) 12,326 --
Accounts payable
- trade 73,117 66,438
- other (Note 4) 40,365 40,633
Accrued expenses 15,077 4,113
--------- ---------
Total Current Liabilities 221,612 194,771
--------- ---------
Commitments: (Note 5) -- --
Stockholders' Equity (Deficit):
Common stock, no par value, 1,000,000 shares
authorized; 2,000 shares issued and outstanding 2,000 2,000
Additional paid-in capital -- 39,826
Accumulated deficit (36,790) (48,983)
--------- ---------
Total Stockholders' Equity (Deficit) (34,790) (7,157)
--------- ---------
Total Liabilities and Stockholders'
Equity (Deficit) $ 186,822 $ 187,614
========= =========
The Accompanying Notes are an Integral Part
of the Financial Statements
15
<PAGE>
RIMMER COMPUTER, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998 AND
FOR THE SIX MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
<TABLE>
<CAPTION>
September 30, March 31,
----------------------- -----------------------
1999 1998 2000 1999
--------- --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
Revenues $ 851,207 $ 659,160 $ 323,231 $ 390,943
Cost of Revenues (619,600) (434,543) (178,507) (275,274)
--------- --------- --------- ---------
Gross Profit 231,607 224,617 144,724 115,669
--------- --------- --------- ---------
General and Administrative
Expenses (292,805) (225,897) (149,005) (153,072)
--------- --------- --------- ---------
Loss from Operations (61,198) (1,280) (4,281) (37,403)
--------- --------- --------- ---------
Other Income (Expense):
Interest income 34 -- -- 34
Interest expense (10,976) (6,480) (7,912) (3,791)
--------- --------- --------- ---------
(10,942) (6,480) (7,912) (3,757)
--------- --------- --------- ---------
Net Loss $ (72,140) $ (7,760) $ (12,193) $ (41,160)
========= ========= ========= =========
Basic Loss per Share $ (36.07) $ (3.88) $ (6.10) $ (20.58)
========= ========= ========= =========
Weighted Average Shares
Outstanding 2,000 $ 2,000 $ 2,000 $ 2,000
========= ========= ========= =========
</TABLE>
The Accompanying Notes are an Integral Part
of the Financial Statements
16
<PAGE>
RIMMER COMPUTER, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998 AND
FOR THE SIX MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Additional Retained Stockholders'
--------------------- Paid-in Earnings Equity
Shares Amount Capital (Deficit) (Deficit)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance, September 30, 1997 2,000 $ 2,000 $ -- $ 43,110 $ 45,110
Net income for the year ended
September 30, 1998 -- -- -- (7,760) (7,760)
-------- -------- -------- -------- --------
Balance at September 30, 1998 2,000 2,000 -- 35,350 37,350
Net loss for the year ended
September 30, 1999 -- -- -- (72,140) (72,140)
-------- -------- -------- -------- --------
Balance at September 30, 1999 2,000 2,000 -- (36,790) (34,790)
Conversion of $12,326 note payable
and cash contribution -- -- 39,826 -- 39,826
Net income for the six month period
ended March 31, 2000 (Unaudited) -- -- -- (12,193) (12,193)
-------- -------- -------- -------- --------
Balance at March 31, 2000 (Unaudited) 2,000 $ 2,000 $ 39,826 $(48,983) $ (7,157)
======== ======== ======== ======== ========
</TABLE>
The Accompanying Notes are an Integral Part
of the Financial Statements
17
<PAGE>
RIMMER COMPUTER, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998 AND
FOR THE SIX MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
<TABLE>
<CAPTION>
September 30, March 31,
----------------------- -----------------------
1999 1998 2000 1999
--------- --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
Increase (Decrease) in Cash:
Cash flows from operating activities:
Cash received from customers $ 918,138 $ 613,054 $ 307,619 $ 462,331
Cash paid to suppliers and employees (883,214) (612,877) (344,674) (427,561)
Interest paid (10,720) (6,480) (7,912) (3,791)
Interest received 34 -- -- 34
--------- --------- --------- ---------
Net cash provided (used) by operating
activities 24,238 (6,303) (44,967) 31,013
--------- --------- --------- ---------
Cash flows from investing activities:
Collection of loan receivable 16,238 1,398 22,209 9,667
Purchase of fixed assets (70,797) (3,151) (13,998) (18,573)
--------- --------- --------- ---------
Net cash provided (used) by investing
activities (54,559) (1,753) 8,211 (8,906)
--------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from debt 37,396 28,523 2,860 15,309
Repayment of debt (14,932) (8,592) -- (15,452)
Proceeds from additional paid-in capital -- -- 27,500 --
--------- --------- --------- ---------
Net cash provided (used) by financing
activities 22,464 19,931 30,360 (143)
--------- --------- --------- ---------
Net increase (decrease) in cash (7,857) 11,875 (6,396) 21,964
Cash at beginning of period 15,498 3,623 7,641 15,498
--------- --------- --------- ---------
Cash at end of period $ 7,641 $ 15,498 $ 1,245 $ 37,462
========= ========= ========= =========
</TABLE>
The Accompanying Notes are an Integral Part
of the Financial Statements
18
<PAGE>
RIMMER COMPUTER, INC.
STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998 AND
FOR THE SIX MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
<TABLE>
<CAPTION>
September 30, March 31,
--------------------- ---------------------
1999 1998 2000 1999
-------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C>
Reconciliation of Net Loss to Net Cash
Provided (Used) by Operating Activities:
Net Loss $(72,140) $ (7,760) $(12,193) $(41,160)
-------- -------- -------- --------
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation 8,008 2,144 13,030 1,131
Changes in Assets and Liabilities:
Accounts receivable
- trade 66,931 (46,106) (27,938) 71,388
Inventory 1,121 (770) (491) (67)
Cash surrender value of life insurance (1,085) -- -- (866)
Accounts payable
- trade 1,807 37,057 (6,679) (2,964)
- other 18,687 944 1,268 8,409
Accrued expenses 909 8,188 (11,964) (4,858)
-------- -------- -------- --------
96,378 1,457 (32,774) 72,173
-------- -------- -------- --------
Net cash provided (used) by operating activities $ 24,238 $ (6,303) $(44,967) $ 31,013
======== ======== ======== ========
</TABLE>
The Accompanying Notes are an Integral Part
of the Financial Statements
19
<PAGE>
RIMMER COMPUTER, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF OPERATIONS AND USE OF
ESTIMATES:
Nature of Operations:
Rimmer Computer, Inc. (the "Company") provides installation and consulting
services pertaining to computer hardware, software and systems. It provides
the majority of its services to small businesses throughout the
Southwestern United States.
Pervasiveness of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Accounts Receivable:
The Company provides for potentially uncollectible accounts receivable by
use of the allowance method. The allowance is provided based upon a review
of the individual accounts outstanding, and the Company's prior history of
uncollectible accounts receivable. As of September 30, 1999 and 1998, no
allowance has been provided for potentially uncollectible accounts
receivable and, in the opinion of management, all accounts are considered
fully collectible.
Inventory:
Inventory consists of various computer cables and other computer hardware
to be used on an as needed basis. Inventories are stated at the lower of
cost or market. Cost is determined using the average cost method. Market is
based upon current sales prices. Provisions are made periodically for
obsolete and slow moving inventory.
Property and Equipment:
Property and equipment are recorded at cost. Depreciation is provided for
on the straight-line method over the estimated useful lives of the assets.
The average lives range from three (3) to seven (7) years. Maintenance and
repairs that neither materially add to the value of the property nor
appreciably prolong its life are charged to expense as incurred.
Betterments or renewals are capitalized when incurred. For the years ended
September 30, 1999 and 1998, depreciation expense was $8,008 and $2,144,
respectively. For the six month periods ended March 31, 2000 and 1999,
depreciation expense was $13,030 and $1,131 (unaudited), respectively.
20
<PAGE>
RIMMER COMPUTER, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF OPERATIONS AND USE OF
ESTIMATES: (CONTINUED)
Revenue Recognition:
The Company derives its revenues from the sale of computer systems as well
as sales of application software, parts and components. The Company also
derives revenues by providing maintenance, consulting and educational
services to its customers. The Company recognizes revenues from sales of
its systems, application software, parts and components at the time of
shipment. Revenues from consulting and maintenance services are recognized
as the service is provided.
Impairment of Long-Lived Assets:
The Company reviews long-lived assets for impairment whenever events or
changes in circumstances indicate the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset to future undiscounted net
cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeded the fair
value of the assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell.
Fair Value of Financial Instruments:
The carrying values of cash, cash equivalents, accounts receivable,
accounts payable and current notes payable approximate their fair values
because of the short maturity of these instruments.
Income Taxes:
The Company previously elected to operate as a Sub-chapter S Corporation.
As such, all taxable income and related tax credits were passed through to
the stockholders who were responsible for any resulting income tax. In
January, 2000, the Sub-chapter S tax option was terminated, and the Company
became a C-Corporation.
Concentration of Credit Risk:
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of accounts receivable.
The Company performs ongoing credit evaluations of its customers' financial
condition, but does not require collateral to support customer receivables.
21
<PAGE>
RIMMER COMPUTER, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF OPERATIONS AND USE OF
ESTIMATES: (CONTINUED)
Net Loss Per Share:
The computation of basic net loss per share is based on the weighted
average number of common shares outstanding during the period. Diluted loss
per share amounts have not been presented as they are anti-dilutive.
2. NOTES PAYABLE:
Notes payable at September 30, 1999 and March 31, 2000 consisted of three
(3) notes and four (4) notes with total outstanding balances of $80,727 and
$83,587 (unaudited), respectively. The balances at September 30, 1999 and
March 31, 2000 consists primarily of a line of credit, with interest at
prime plus 2.35% per annum, due June, 2000. The total credit limit of
$72,500 was fully utilized.
3. NOTE PAYABLE TO RELATED PARTY:
As of September 30, 1999, the note payable to related party consisted of
one (1) note, with an outstanding balance of $12,326. The note payable was
contributed to capital during the period ended March 31, 2000.
4. ACCOUNTS PAYABLE - OTHER:
Accounts payable - other consist primarily of credit card balances, with
annual percentage rates ranging from 10% to 16%.
5. COMMITMENTS:
The Company has entered into an operating lease agreement for office space
through October 31, 2002.
The approximate future minimum lease payments under the operating lease
agreement, are as follows:
Year Ending
September 30, Amount
------------- ------
2000 $ 5,135
2001 5,135
2002 5,135
2003 428
--------
$ 15,833
========
22
<PAGE>
RIMMER COMPUTER, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. GOING CONCERN:
The Company's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company
has stockholders' deficit at September 30, 1999 and March 31, 2000, in the
amounts of $34,790 and $7,157 (unaudited), respectively. The Company also
has negative working capital at September 30, 1999 and March 31, 2000, in
the amounts of $184,979 and $136,105 (unaudited), respectively. The Company
has also generated losses from operations in prior years. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
7. SUBSEQUENT EVENT:
Subsequent to the balance sheet date, the Company sold 1,134,171 shares of
its common stock pursuant to a Regulation D offering, with approximate
gross proceeds of $280,000.
8. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED):
On April 6, 2000, Rimmer Computer, Inc. was acquired by Rim.Com. Inc. in a
reverse merger.
The following unaudited pro forma condensed consolidated balance sheet
gives effect to the reverse merger of Rimmer Computer, Inc. into Rim.Com
Inc. pursuant to the Stock Purchase Agreement between the parties, and is
based on the estimates and assumptions set forth herein, and in the notes
to such statement. The pro forma financial data does not purpose to be
indicative of the results which would actually have been obtained had the
purchase been effected on the date indicated or of the results which may be
obtained in the future.
On April 6, 2000, Rim.Com Inc. acquired all of the outstanding common stock
of Rimmer Computer, Inc. Rim.Com Inc. was organized in Nevada on February
14, 2000. The acquisition of Rimmer Computer, Inc. was accomplished by
exchanging 3,400,000 shares of Rim.Com Inc. common stock for 100% of the
outstanding shares of Rimmer Computer, Inc. The acquisition of Rimmer
Computer, Inc. by Rim.Com Inc. is conditioned upon Rim.Com Inc. raising a
minimum of $250,000 from private offerings. If Rim.Com Inc. does not raise
$250,000 from the private offerings by June 15, 2000, the Rimmer Computer,
Inc. stockholders have the right to reverse the transaction and Rimmer
Computer, Inc. will no longer be a subsidiary of Rim.Com Inc.
The transaction is accounted for as a reverse acquisition with Rimmer
Computer, Inc. as the acquiring entity, as Rimmer Computer, Inc.'s
stockholders will control 94.4% of the voting common stock immediately
after the merger.
23
<PAGE>
RIMMER COMPUTER, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED): (CONTINUED)
The following represents the pro forma condensed consolidated balance sheet
for the year ended March 31, 2000, assuming the following transactions were
consummated as of March 31, 2000:
- Formation of Rim.Com Inc. as of March 31, 2000
- Reverse merger of Rimmer Computer, Inc. into Rim.Com Inc.
No pro forma statement of operations is presented due to the fact that
Rim.Com Inc. has no operating activity to date.
24
<PAGE>
RIMMER COMPUTER, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
MARCH 31, 2000
Assumes the reverse merger of Rim.Com Inc. with Rimmer Computer, Inc. effective
December 31, 1999, wherein the stockholders of Rimmer Computer, Inc. receive
94.4% (or 3,400,000 shares) of the outstanding common stock.
<TABLE>
<CAPTION>
Rimmer Pro Forma
Computer, Pro Forma Consolidated
Inc. Rim.Com Inc. Adjustments Amounts
--------- --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
Current Assets:
Cash $ 1,245 $ -- $ 1,245
Accounts receivable
- trade, net 56,134 -- 56,134
Inventory 1,287 -- 1,287
--------- --------- ---------
Total Current Assets 58,666 -- 58,666
--------- --------- ---------
Property and Equipment, net 69,950 -- 69,950
--------- --------- ---------
Long-Term Assets:
Cash surrender value of
life insurance 7,862 -- 7,862
Accounts receivable
- related party 51,136 -- 51,136
--------- --------- ---------
58,998 -- 58,998
--------- --------- ---------
Total Assets $ 187,614 $ -- $ 187,614
========= ========= =========
Current Liabilities:
Notes payable $ 83,587 $ -- $ 83,543
Accounts payable 66,438 -- 66,438
Accounts payable - other 40,633 -- 40,633
Accrued expenses 4,113 -- 4,113
--------- --------- ---------
Total Current Liabilities 194,771 -- 194,771
--------- --------- ---------
Commitments: -- -- --
Stockholders' Equity (Deficit):
Common stock 2,000 575 $ (575)(1) 2,000
Additional paid-in capital 39,826 39,826
Accumulated deficit (48,983) (575) 575(1) (48,983)
--------- --------- ---------
Total Stockholders'
Equity (Deficit) (7,157) -- (7,157)
--------- --------- ---------
Total Liabilities and
Stockholders' Equity $ 187,614 $ -- $ 187,614
========= ========= =========
</TABLE>
(1) To adjust the equity of Rim.Com Inc., pursuant to the reverse merger.
25
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
Exhibit Number Description
-------------- -----------
2.1 Agreement of Exchange and Plan of Reorganization
3.1 Articles of Incorporation
3.2 Bylaws
10.1 2000 Stock Option Plan
10.2 Stock Option Agreement with Bruce M. King
10.3 Stock Option Agreement with Robert H. Korndorffer
10.4 Stock Option Agreement with Robert H. Korndorffer
10.5 Stock Option Agreement with Christina M. Strauch
10.6 Stock Option Agreement with Christina M. Strauch
10.7 Stock Option Agreement with Merlin W. Gunderson
10.8 Employment Agreement with Bruce M. King
10.9 Employment Agreement with Robert H. Korndorffer
10.10 Employment Agreement with Christina M. Strauch
10.11 Employment Agreement with Merlin W. Gunderson
10.12 Office Lease
10.13 Office Lease
21.1 Subsidiaries
26
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf on July 13, 1999 by the undersigned, thereunto authorized.
RIM.COM INC.
By: /s/ Robert H. Korndorffer
------------------------------------
Robert H. Korndorffer, Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities on the date(s) indicated.
/s/ Robert H. Korndorffer Chairman (Chief Dated: July 13, 2000
------------------------- Executive Officer)
Robert H. Korndorffer Director
/s/ Christina M. Strauch President (Chief Dated: July 13, 2000
-------------------------- Operating Officer),
Christina M. Strauch Director
/s/ Bruce M. King Vice President Dated: July 13, 2000
-------------------------- Director
Bruce M. King
/s/ Merlin W. Gunderson Secretary/Treasurer Dated: July 13, 2000
-------------------------- (Chief Financial
Merlin W. Gunderson Officer), Director
