U.S. Securities and Exchange Commission
Washington, D.C. 20549
<P>
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>
i-RealtyAuction.com, Inc.
(Name of Small Business Issuer in its charter)
<P>
<TABLE>
<S> <C> <C>
Delaware 65-0963722
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
<P>
1221 Brickell Avenue, Suite 900
Miami, Florida 33131
(Address of principal executive offices) (Zip Code)
<P>
(305)358-3678
(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 i-
RealtyAuction.com, Inc. is referred to herein as "the
Company" or "We".
PART I
<P>
Item 1. Description of Business.
---------------------------------
<P>
Business Development.
<P>
We were incorporated under the name i-RealtyAuction.com,
Inc. in the State of Delaware on November 24, 1999 and are a
subsidiary of i-Incubator.com, Inc. (OTCBB: INQU).
<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 Overview.
<P>
i-RealtyAuction.com, Inc. (the "Company or "i-Realty") is a
development stage company which is completing a specialized
online person-to-person trading website dedicated to
bringing together residential real estate sellers and
buyers. The website will reside at "http://www.i-
realtyauction.com" and will attempt to serve as a
centralized auction for buyers and sellers to meet,
negotiate sales, and consummate transactions directly,
thereby bypassing the time and expense of intermediaries. In
addition, i-Realty owns the domain names "i-
RealtyAuction.com", "i-RealtyAuction.net",
"iRealtyAuction.com" and "iRealtyAuction.net".
<P>
Anticipated sales will be conducted by a traditional rising
price auction (the highest bid wins), and will be hosted by
the Company. The Company's goal is to create an integrated
real estate site for individuals on both sides of the
transaction, and thus will offer additional value added
services through links to its anticipated strategic
partners. i-Realty may also achieve this goal by growing
through acquisitions of companies and businesses in
complimentary industries.
<P>
In addition to the auction, anticipated products offered
through strategic partners will include: mortgage finders
and calculators, homeowners insurance, property value
analysis, credit reports, hazard reports, moving companies,
relocation assistance, property appraisal and inspection,
home improvement specialists and image hosting services for
showing your property on line.
<P>
Although it is anticipated that users will be required to
register prior to posting a home listing or bidding, the
Company does not plan to charge for these services in order
to attract a critical mass of users to the site. Revenues
will be generated from non-refundable listing fees charged
to the sellers of the property who want to conduct an
auction, partnerships with third-party value added
providers, and advertisers on our site. No commission fees
shall be paid to the Company upon the sale of any property
listed on the site.
<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 persons, both experienced in
the real estate and the online market. The Company's
telephone number is (305) 358-3678.
<P>
Industry Background
<P>
Growth of the Internet and Electronic commerce:
<P>
The Internet is a significant interactive global medium for
communication, information and commerce. It is enabling
millions of people worldwide to share information,
communicate and conduct business electronically. Growth is
being driven by the large and growing number of personal
computers ("PCs") installed in homes and offices, the
decreasing cost of PCs, easier, faster and cheaper access to
the Internet, improvements in network infrastructure, the
proliferation of Internet content and the increasing
familiarity and acceptance of the Internet by businesses and
consumers.
<P>
We believe the primary uses of the Internet as a medium of
electronic commerce are as follows:
<P>
Business-to-Person Applications.
<P>
A growing number of businesses have been using the Internet
as a low-cost sales and distribution channel. Business
commerce use of the Internet revolves around both business-
to-business and business-to-person transactions. 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>
Person-to-Person Applications
<P>
Person-to-person trading has traditionally been conducted
directly through classified advertisements, collectibles
shows, garage sales and flea markets or through
intermediaries, such as auction houses and local dealer
shops. These markets are highly inefficient and their
fragmented, regional nature makes it difficult and expensive
for buyers and sellers to meet, exchange information and
complete transactions. Also, the localized nature of these
markets results in a limited variety and breadth of goods
available in any one auction. An Internet-based trading
solution offers several advantages over traditional person-
to-person trading mediums, such as:
<P>
- Facilitating the meeting of buyers and sellers,
listing items for sale, exchanging information, interacting
with each other and consummating transactions.
<P>
- Allowing buyers and sellers to trade directly with
one another, thereby bypassing traditional intermediaries
and lowering costs for both parties.
<P>
- Providing a global marketplace, which gives buyers a
broader selection of goods to purchase and sellers the
opportunity to sell their goods efficiently to a wider base
of buyers.
<P>
- Offering significant convenience, by allowing trading
at all hours and providing continually-updated information.
<P>
We plan on offering person-to-person applications with
additional real estate portal services.
<P>
i-RealtyAuction.com Details
<P>
Acquiring Viewer Base
<P>
The first element of our business model is to try to
generate an audience/membership. The higher the number of
viewers on our web site, the greater our value becomes to
potential members, clients and strategic partners. This
initiative will hinge on a successful advertising campaign
and public relations strategy. The effort should be as
targeted and cost effective as possible, since this
represents the Company's largest cost allocation.
Preliminary advertising channels have been identified, and
we anticipate that a membership can be attained. The
Company will try to attract individuals who are interested
in buying or selling a home by providing a unique auction
environment as well as a comprehensive offering of home
purchasing and selling services.
<P>
The Auction Process
<P>
Registering
<P>
-Buyers
<P>
While any visitor to our website will be able to browse
through our service and view the real estate properties
listed for auction, a user will first have to register with
us in order to bid on a real estate property. 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 or buy immediately on any of the listed properties.
<P>
- Sellers
<P>
Registration will be required for all individuals or agents
that want to post a home or real estate property on our
site. Because there will be a listing fee charged for each
listing, the user will have to provide i-Realty with a valid
credit card as well as a verified mailing address and e-
mail.
<P>
Navigating
<P>
Our site will contain a listing of product categories that
will allow for easy exploration of current auctions. Bidders
will be able to search for specific real estate properties
by browsing through a list of auctions within a category or
subcategory of properties and then click through to a
product page for a detailed description of a particular
home. Each auction will be assigned a unique identifier so
that users can easily search for and track specific home
auctions.
<P>
The site will also feature a search engine to provide our
users with the tools to find a desired home or residence
being auctioned on our site. Users will be able to search
by specific location, house characteristics (square feet,
bedrooms, bathrooms, property size, etc), price range, and
specific keyword searches. For example, if a user wanted to
find if we were auctioning off a 2 bedroom apartment in New
York City, the user could simply enter "Manhattan" and "2
Bedroom" and the search engine would create a list of
apartments, including the house identification number and
the specific status of the auction. The addition of the
search engine will save our users valuable time when they
have a specific home in mind.
<P>
Obtaining Information about a Property
<P>
On our website, customers will be able to obtain detailed
information on each home which is up for bid. Each property
features a specific page containing:
<P>
- a detailed house/condo/apartment description
- a full-color image of the space
- pricing
- specific owner conditions for the sale outside of
price
- length/expiration of auction time
- bidding increments
- the item identification number
- the minimum bid
<P>
Bidding on a Property
<P>
-The buyer
<P>
Once registered, it is anticipated that a customer will be
able to bid or buy at will. As bids are received, our
website will be instantly updated to display the current
high bidder's user name. If a user places a bid, and then
another member places a higher bid, the original bidder will
receive an e-mail message from i-Realty notifying them that
they have been outbid, and will ask them if they would like
to make a higher bid.
<P>
i-Realty also plans to offer the "InstaBid" auction feature,
which will give users an automated bidding option. The
bidder will be asked to specify the maximum amount that she
would be willing to spend on a particular property. Once
that amount is entered, the InstaBid feature would monitor
the bidding activity on a particular property, and would
automatically enter higher bids for the user if her previous
bid is matched or exceeded by another bidder, up to the
maximum dollar amount originally specified by the bidder.
This feature will allow potential users greater freedom and
time savings when participating in an auction.
<P>
-The seller
<P>
At the start of the auction it is anticipated that each
seller/poster will have the option to specify the duration
of their auction (up to 30 days), the "reserve price" below
which he/she will not sell the property, and the specific
bidding increments. If a bidder comes in with an
appropriate auction price above the minimum price, then the
seller/poster will receive the contact information of the
bidder, and will be free to pursue a direct transaction.
<P>
Once the Company brings together the seller with the winning
bidder, the transaction is performed between the two
respective parties and does not involve the Company.
<P>
Community
<P>
One of our main objectives will be to create a sense of
community amongst our users to draw large audiences,
encourage repeat visits and keep users engaged, while
protecting their privacy and consumer interests. i-Realty
is anticipating the creation of a system where each user of
the service will have an ability to post comments about
other users of the service directly into the target member's
profile sections. These profile sections may be viewed by
other members. Users will be prevented from leaving
comments in their own profile. For example if a bidder
recognizes the user name/or number of an individual or agent
who has previously posted a home for sale, and they have had
a negative experience with the individual, they can post
their comments into the sellers profile, and other bidders
can access these comments. Conversely, if a seller has had
a positive experience with a bidder, they will be able to
post comments into the bidder's profile as well. This
system will not only promote a sense of community on the
site, but may also serve as a deterrent for fraud and
abuses.
<P>
Real Estate Portal Products
<P>
The Company's goal is to create an integrated real estate
portal for individuals on both sides of the transaction, and
offer a one-stop solution for most services related to
buying or selling a home. i-Realty anticipates that it will
enter into strategic relationships with the top providers of
home services and offer links from its site directly to the
home pages of our designated partners. Through these
anticipated affiliations i-Realty hopes to offer our users
with access to the following products:
<P>
1.Mortgage finders and calculators will provide
potential buyers with financing for the purchase;
<P>
2.Credit reports will allow users to check on the
status of their credit as they are considering a home or
property purchase;
<P>
3.Homeowners insurance will provide existing homeowners
or potential buyers with protection for their asset;
<P>
4.Hazard reports will help customers determine the
desirability, financability, insurability and potential
problems with any property anywhere in the U.S. in moments,
via the Web;
<P>
5.Moving companies will list their services on the i-
Realty website, and will allow members to shop around for
the most cost effective alternative when it is time to move
in or out of their home;
<P>
6.Relocation assistance services and programs will
familiarize users with new areas and facilitate the
adjustment process after moving;
<P>
7.Property appraisal services will allow users to gauge
the value of a home if they are buying or selling;
<P>
8.Property inspection services will be offered to
facilitate the closing process;
<P>
9.Home improvement merchant links will be set up across
a full line of products and services for the home;
<P>
10.Image hosting services will allow sellers to
showcase their property on-line with virtual 360-degree
views of the space; and
<P>
11.Utilities will be offered online for all living
needs.
<P>
Revenue
<P>
Listing Fees
<P>
It is anticipated that each seller will be charged a
placement fee for each individual auction. In the event
that an auction is unsuccessful, the seller will be offered
a reduced rate on each ensuing auction that is initiated for
the same property. We anticipate selling listing fees in
bulk, and working with both individuals who wish to sell
their homes, as well as real estate agents and regional real
estate brokers with an extensive inventory of properties
that may be auctioned on our site.
<P>
Strategic partners
<P>
The partnerships that we anticipate forming with our on-line
service providers and merchants who will include a link
directly from our website directly to their home page. This
type of arrangement is mutually beneficial for both parties.
It will provide, a one-stop access to a wide range of real
estate services for i-Realty's members, and at the same time
bring new customers and revenue to our partners. To date we
have not forged any strategic alliances. Because more value
is usually placed on customers and revenue, it is
anticipated that the Company will be able to derive revenue
from these relationships via several different arrangements
including CPC, CPA and/or revenue sharing. Depending on the
specifics of each partner relationship, one or a combination
of these compensation methods may be used. The following is
a description of each:
<P>
- Cost Per Click (CPC)
<P>
The intended increase in traffic to each third-party service
provided by the Company will enable us to charge each
retailer a click-through rate, or a fee for each click
called a CPC. This rate will be determined on an
individualized basis with each partner. The CPC rate is a
fee that is charged every time an i-Realty member clicks on
any link to another company's site. This method of
generating revenue is directly contingent upon how many
members we have, as the probability of an actual click
occurring becomes higher with more traffic on our site.
<P>
The CPC rate must be specific for each client or strategic
partner, based on their traffic needs. The more existing
traffic there is on a site, the less valuable each click is
for them. However, for a brand new site the need to
generate traffic is more immediate. Consequently, the more
established sites will be charged a lower CPC rate.
<P>
- Cost Per Acquisition (CPA)
<P>
In some instances we anticipate that it will make sense to
charge a flat fee for each new customer that we deliver to a
strategic partner. For example in the case of a mortgage
partner, we anticipate receiving a flat fee for each closed
mortgage.
<P>
- Revenue Sharing
<P>
For e-commerce partners, we anticipate asking for a fixed
percentage of revenues obtained through purchases made by
customers that are i-Realty members. The growing memberships
may provide opportunities for these businesses to increase
their on-line revenues.
<P>
The revenue arrangement will be determined by the strategic
partner's industry dynamics relative standing in their
respective industry, and marginal value that the partner
derives from additional customers and revenues.
<P>
Advertising on i-RealtyAuction.com
<P>
The anticipated traffic on the i-Realty website will also
allow for us to receive advertising sales revenues from
potential advertisers. Advertising sales on i-Realty 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 for companies that would
purchase advertising space on our site. These companies are
not limited to the real estate industry, but can come from a
variety of related industries including: major banks and
credit cards, automobile manufacturers, the travel industry,
fitness products and gyms, restaurants and any industry that
can benefit from a group of consumers with significant
potential spending power.
<P>
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 times the ad
appears on this 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 i-Realty'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.
The CPMs i-Realty will charge are also dependent on our
members click through rates, and on the individual
advertiser. Newer advertisers are willing to pay more for
each new customer and would pay a higher rate per click.
<P>
Future Revenue Opportunities
<P>
Future possibilities for generating income include strategic
partnerships and/or acquisitions of other auction sites,
vertical integration into the real estate brokerage
business, horizontal integration into the businesses of our
anticipated partners (ie mortgage providers, home insurance,
imaging services, etc) or agreements to be the host for
other third party auctions.
<P>
Legislation
<P>
Government Regulation
<P>
Our industry is subject to national and local real estate
laws. Because we are not a licensed real estate broker, we
are prohibited from charging an agents commission on
completed real estate transactions. Our revenue model with
our members is thus built around auction placement fees as
opposed to a percentage of a completed home sale.
<P>
The auction industry is not currently subject to direct
federal laws or regulations applicable to access to or
commerce on the Internet. However, due to the increasing
popularity and use of the Internet, it is possible that a
number of laws and regulations may be adopted with respect
to the Internet covering issues such as:
<P>
- user privacy
- freedom of expression
- pricing
- content and quality of products and services
- taxation
- advertising
- intellectual property rights
- information security
<P>
The adoption of any such laws or regulations might decrease
the rate of growth of Internet use, which in turn could
decrease the demand for our services, increase the cost of
doing business or in some other manner have a material
adverse effect on our business, financial condition and
operating results. In addition, applicability to the
Internet of existing laws governing issues such as property
ownership, copyrights and other intellectual property
issues, taxation, libel, obscenity and personal privacy is
uncertain. The vast majority of such laws were adopted prior
to the advent of the Internet and related technologies and,
as a result, do not contemplate or address the unique issues
of the Internet and related technologies.
<P>
State Laws
<P>
Several states have proposed legislation that would limit
the uses of personal user information gathered online or
require online services to establish privacy policies.
Changes to existing laws or the passage of new laws intended
to address these issues could create uncertainty in the
marketplace that could reduce demand for our services or
increase the cost of doing business as a result of
litigation costs or increased service delivery costs,
adversely affecting our business, financial condition and
operating results.
<P>
Competition
<P>
There are several direct competitors in this industry, but
we believe that there is enough current demand to support
another entrant. The competitors include but are not limited
to:
<P>
1.Ziprealty.com offering real time online real estate
auctions
<P>
2.AuctionAdvantage.net offering online real estate
auctions.
<P>
3.Regional and local offline real estate auctioneers,
who advertise their auctions on line
<P>
In the future, the Company may encounter competition from
other real estate auctions that are still in the process of
constructing their websites, 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 or real estate 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
website operators as well as traditional off-line auctions
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, auctions over the Internet break down
any previously existing boundaries, creating an
international marketplace for products. These facts create
the ideal opportunity to introduce a web site like i-Realty
that combines all aspects of the real estate and auction
industry.
<P>
Global Realty Management Group, Inc.
<P>
On December 6, 1999, i-Realty agreed to sell to Global
Realty Management an amount equal to thirty percent of the
issued and outstanding shares of i-Realty for a purchase
price of $30,000 and 500,000 restricted common shares of
Global Realty Management Group, Inc. Pursuant to the
Agreement, i-Realty owns 500,000 shares of Global Realty
Management Group, Inc. (OTCBB:GRMG) which is publicly traded
company on the OTC Electronic Bulletin Board.
<P>
Employees
<P>
As of November 1, 2000, the Company employed a total of two
persons on a part time basis. In addition, depending on
demand, the Company will utilize manpower agencies to
contract between 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>
Risk Factors
<P>
Limited Operating History/Anticipated Losses.
<P>
The Company was incorporated on November 22, 1999 and has
not generated any revenues to date. The Company has no
significant assets or financial resources. The Company has
been engaged solely in start-up activities and has not
commenced material operations in its core business of
providing specialized online person-to-person trading
website dedicated to bringing together residential real
estate sellers and buyers. The likelihood of the success of
the Company must be considered in light of the problems,
expenses, difficulties, complications and delays frequently
encountered by a small developing company starting a new
business enterprise and the highly competitive environment
in which the Company will operate. To address these risks,
the Company must, among other things, respond to competitive
developments; continue to attract, retain and motivate
qualified persons, research and develop new technology; and
commercialize services incorporating such technologies.
There can be no assurance the Company will be successful in
addressing these risks or any other risks. The Company has
not been in business long enough to make a reasonable
judgment as to its future performance. There can be no
assurance the Company will be able to successfully implement
its business plan, generate sufficient revenue to meet its
expenses, operate profitably or be commercially successful.
<P>
The Company anticipates incurring losses during its initial
stages of development and expansion. There can be no
assurance that the Company will be successful in obtaining
revenues in amounts necessary to fund its operations,
implement its business strategy or fund possible
acquisitions.
<P>
Need for Additional Funds
<P>
The Company's capital requirements to implement its business
strategy will be significant. The Company will need
additional funds from loans and/or the sale of equity
securities. Furthermore, the Company intends to effect
future acquisitions with cash and the issuance of debt and
equity securities. The cost of anticipated acquisitions may
require the Company to seek additional financing. The
Company anticipates requiring additional funds in order to
fully implement its business plan to significantly expand
its operations. No assurance can be given that such funds
will be available or, if available, will be on commercially
reasonable terms satisfactory to the Company. There can be
no assurance that the Company will be able to obtain
financing if and when it is needed on terms the Company
deems acceptable. The inability of the Company to obtain
financing would have a material adverse effect on the
Company's ability to implement its acquisition strategy, and
as a result, could require the Company to diminish or
suspend its acquisition strategy.
Acquisition Related Risks
<P>
The Company intends, as part of its business strategy to
acquire other businesses which are in the industry.
Management is unable to predict whether or when any
prospective acquisitions will occur or the likelihood of a
material transaction being completed on favorable terms and
conditions. The Company's ability to finance acquisitions
may be constrained by, among other things, its ability to
raise additional capital or obtain debt financing. Although
the Company has no current plans to incur debt financing,
the terms of any future debt financings may significantly
limit the Company's ability to incur indebtedness in
connection with other acquisitions. In addition,
acquisitions of other companies commonly involve certain
risks, including, among others: the difficulty of
assimilating the acquired operations and personnel; the
potential disruption of the Company's ongoing business and
diversion of resources and management time; the possible
inability of management to maintain uniform standards,
controls, procedures and policies; the risks of entering
markets in which the Company has little or no direct prior
experience; and the potential impairment of relationships
with employees or customers as a result of changes in
management.
<P>
There can be no assurance that the Company will be able to
identify, acquire or profitably manage additional companies
or successfully integrate the operations of additional
companies into those of the Company without encountering
significant delays, costs or other problems. The Company
may compete for expansion and acquisition opportunities with
other companies who may have greater financial and other
resources than the Company. There can be no assurance that
any acquisition will be made, that the Company will be able
to obtain additional financing needed to finance such
acquisitions and, if any acquisitions are so made, that the
acquired business will be successfully integrated into the
Company's operations or that the acquired business will
perform as expected. The Company has no definitive agreement
with respect to any acquisition, although from time to time
it has discussions with other companies and assesses
opportunities on an ongoing basis.
<P>
The Company may also enter into joint venture transactions.
These transactions present many of the same risks involved
in acquisitions and may also involve the risk that other
joint venture partners may have economic, business or legal
interests or objectives that are inconsistent with those of
the Company. Joint venture partners may also be unable to
meet their economic or other obligations, thereby forcing
the Company to fulfill these obligations.
<P>
Government Regulation
<P>
The Company's services are subject to significant regulation
at the federal and state levels. Delays in receiving
required regulatory approvals or the enactment of new
adverse regulation or regulatory requirements may have a
material adverse effect upon the Company.
<P>
Government regulation and legal uncertainties could add
additional costs to doing business on the Internet. There
are currently few laws or regulations that specifically
regulate communications or commerce on the Internet.
However, laws and regulations may be adopted in the future
that address issues such as user privacy, pricing and the
characteristics and quality of products and services. For
example, the Telecommunications Act of 1996 sought to
prohibit transmitting various types of information and
content over the Internet. Several telecommunications
companies have petitioned the Federal Communications
Commission to regulate Internet service providers and on-
line service providers in a manner similar to long distance
telephone carriers and to impose access fees on those
companies. This could increase the cost of transmitting data
over the Internet. Moreover, it may take years to determine
the extent to which existing laws relating to issues such as
intellectual property ownership, libel and personal privacy
are applicable to the Internet. Any new laws or regulations
relating to the Internet or any new interpretations of
existing laws could adversely affect our business.
<P>
Probable Change in Control of Management
<P>
A business combination involving the issuance of the
Company's common stock will, in all likelihood, result in
shareholders of another company obtaining a controlling
interest in the Company. Any such business combination may
require shareholders of the Company to sell or transfer all
or a portion of the Company's common stock held by them. The
resulting change in control of the Company will likely
result in removal of the present officer and director of the
Company and a corresponding reduction in or elimination of
his/her participation in the future affairs of the Company.
<P>
Need for Additional Management
<P>
We require additional management, middle management and
technical personnel. Our business is dependent on continued
services of our key personnel, particularly, Michael D.
Farkas, our President and Jamee M. Kalimi, our Vice
President and Secretary. However, in order to implement an
expanded website program, we must hire additional management
and middle management and technical personnel. We may be
unable to retain our key employees or attract, assimilate or
retain other highly qualified employees. We have
experienced, and we expect to continue to experience,
difficulty in hiring and retaining highly skilled employees
with appropriate qualifications. There is significant
competition for qualified employees in the computer
programming and Internet industries. If we do not succeed in
attracting new personnel or retaining and motivating our
current personnel, our business will be adversely affected.
<P>
Liability
<P>
We could face liability for information contained on and
communications made through our website. We may be subject
to claims for defamation, negligence, copyright or trademark
infringement, personal injury or other legal theories
relating to the information we publish on our website. These
types of claims have been brought, sometimes successfully,
against on-line services as well as other print publications
in the past. Based on links we provide to other websites, we
could also be subject to claims based upon on-line content
we do not control that is accessible from our website.
Claims may also be based on statements made and actions
taken as a result of participation in our chat rooms or as a
result of materials posted by citizens on news groups at our
website. These claims could result in substantial costs and
a diversion of our management's attention and resources,
regardless of whether we are successful. Our insurance,
which covers commercial general liability, may not
adequately protect us against these types of claims.
<P>
We may incur product liability for products sold over the
Internet. Consumers may sue us if products that we sell
online or which are purchased through our website are
defective or injure the user. This type of claim could
require us to spend significant time and money in litigation
or to pay significant damages. As a result, any legal
claims, whether or not successful, could seriously damage
our reputation and our business.
<P>
Competition
<P>
Because of our small size, we may have difficulty in
competing with major computer, software and Internet
companies. All aspects of the Internet market are new,
rapidly evolving and intensely competitive, and we expect
competition to intensify in the future. Barriers to entry
are low, and current and new competitors can easily launch
new websites at a relatively low cost using commercially-
available software. Our present competitors include
nationally-known companies, that have expertise in computer
and Internet technology, and a number of other small
companies, including those that serve specialty markets.
Other major companies have the financial and technical
ability to compete aggressively in the market for three-
dimensional software products on the Internet. Many, if not
all, of these companies have longer operating histories,
larger customer bases, greater brand recognition in other
business and Internet markets and significantly greater
financial, marketing, technical and other resources than we
have. Competitive pressures created by any one of these
companies, or by our competitors collectively, could have a
material adverse effect on our business, results of
operations and financial condition, and we can give no
assurance that we will be able to compete successfully
against current and future competitors.
<P>
We may be unable to respond to the rapid technological
change in our industry. The computer and Internet industries
are characterized by rapidly changing technologies, frequent
new product and service introductions and evolving industry
standards. The recent growth of the Internet and intense
competition in our industry make these market
characteristics more pronounced. Our future success will
depend on our ability to adapt to rapidly changing
technologies by continually improving the performance
features and reliability of our services. We may experience
difficulties that could delay or prevent the successful
development, introduction or marketing of new products and
services. In addition, any enhancements must meet the
requirements of our current and prospective users and must
achieve significant market acceptance. We could also incur
substantial costs if we need to modify our service or
infrastructures to adapt to these changes. The failure to
offer the most current technologies could have a material
adverse effect upon our business. Furthermore, if three-
dimensional Internet standards evolve in a manner which is
incompatible with out technology, we may not be able to
market our technology.
<P>
We cannot insure that we can provide our users with a secure
environment. Our website is vulnerable to physical or
electronic break-ins, viruses or other problems that affect
websites and Internet communication and commerce generally.
As e-commerce becomes more prevalent, our customers may
become more concerned about security. Although we believe
that we can implement reasonable security precautions,
security systems can and are sometimes circumvented. The
circumvention of our security measures may result in the
misappropriation of proprietary information, such as credit
card information, or interruptions of our operations. Any
security breaches could damage our reputation and expose us
to a risk of loss or liability. We may be required to make
significant investments in our efforts to protect against
and to remedy security breaches. Our failure to address
security concerns adequately could materially and adversely
affect our business, financial condition and operating
results.
<P>
Item 2. Management Discussion and Analysis and Plan of
Operation
-------------------------------------------------------
<P>
<TABLE>
<S> <C> <C>
For the Nine Months From November 24, 1999
ended (inception)
September 30, 2000 to December 31, 1999
----------------------------------------------------
Development Stage Revenues $ 0 $ 0
<P>
Development Stage Expenses (104,572) (4,883)
<P>
Deficit Accumulated During
Development Stage (104,572) (4,883)
<P>
</TABLE>
<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." 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>
During the past nine months, the Company has spent
considerable time and capital resources defining and
developing its strategic plan for delivering and operating
on line sales and auction technology.
<P>
Development Stage Revenues
<P>
The Company's operations have been devoted primarily to
raising capital for creation of the i-Realty website. i-
Realty was incorporated in Delaware on November 24, 1999.
Michael D. Farkas is the President and Director and Jamee M
Kalimi is the Vice President, Secretary and Director of i-Realty.
<P>
I-Incubator.com, Inc. shall remain the parent company of i-
RealtyAuction.com, Inc. as it owns a total of 3,500,000
(70%) shares of its common stock valued at $.0001 per share.
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>
Development stage expenses increased by $99,689 or 2,041%
from the initial short year ended December 31, 1999. This
increase was primarily due to the purchase of a domain name
and developing a corporate website. In addition, we have
utilized funds engaging various consulting and managerial
services in search of licensing, corporate acquisitions and
advertising.
<P>
Liquidity and Capital Resources
<P>
Despite capital contributions and related party loans, the
Company from time to time experienced cash flow shortages
that have slowed the Company growth. During 2000, the
consequences of those cash flow shortages has been an
increase of accrued expenses and stockholder loans, bringing
those figures to $104,572 and $5,000 respectively at
September 30, 2000.
<P>
The Company has primarily financed its activities from loans
from a related party. A significant portion of the loans
has been used to cover working capital needs such as office
expense and various consulting and professional 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>
Item 3. Description of Property.
--------------------------------
<P>
The Company presently shares office space with i-
Incubator.com, Inc., the majority shareholder of the
Company, 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 Atlas
Equity Group, Inc. Atlas Equity Group, Inc. subleases the
facility to i-Incubator.com, Inc. Michael D. Farkas,
President of i-Realty is the President and sole shareholder
of Atlas Equity Group, Inc. The landlord is not affiliated
with us. No rent is being charged to the Company. 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 October 31, 2000, there were 5,000,000 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 October 31, 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 i-Incubator.com, Inc. 3,500,000 70.00%
1221 Brickell Avenue
Suite 900
Miami, FL 33131
<P>
Global Realty 1,500,000 30.00%
Management Group, Inc.
1221 Brickell Avenue
Suite 900
Miami, FL 33131
<P>
Security Ownership of Management (2):
<P>
Title of Class Name & Address Amount Percent
---------------------------------------------------------------------------
Common Stock Michael D. Farkas(3) 0 0
294 South Coconut Lane
Miami Beach, FL 33139
<P>
Jamee M. Kalimi 0 0
3314 Oak Drive
Hollywood, Florida
<P>
All directors and executive 0 0%
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) 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>
(3) Michael D. Farkas is a principal shareholder and officer
of Global Realty Management Group, Inc. and through his
affiliated entities, is the principal shareholder of i-
Incubator.com, Inc.
<P>
Item 5. Directors, Executive Officers, Promoters and Control
Persons.
-----------------------------------------------------------
<P>
Michael D. Farkas, 28, has been the President and Director
of the Company since inception. Mr. Farkas has been the
Chairman of the Board of Directors and Chief Executive
Officer of Wealthhound.com, Inc. a publicly traded company
listed on the National Quotations Bureau Pink Sheets
(NQB:WLTH) since March 7, 2000. He is Executive Vice
President, Chief Financial Officer, Treasurer, Secretary and
Director of Global Realty Management Group, Inc. a publicly
traded company listed on the OTC Electronic Bulletin Board
(OTCBB:GRMG) and is on the Board of Directors of i-
Incubator.com, Inc., a publicly traded company listed on the
OTC Electronic Bulletin Board. (OTCBB:INQU). Prior to
joining WealthHound.com, Mr. Farkas founded Atlas
Recreational Holdings which owns a controlling interest in
Holiday RV Superstores, Inc., a publicly traded company on
Nasdaq (NASDAQ:RVEE). Since 1995, Mr. Farkas has
concentrated his business activities on mergers and
acquisitions, financial consulting and fund raising
primarily in the telecommunications, information technology
and other hi-tech ventures through Atlas Equity Group, Inc.
and Warrior Equity Partners, Inc.(each of which Mr. Farkas
founded and is President). He has also specialized in
mergers and acquisitions for various entrepreneurial
companies and prior to that served as a financial consultant
to several NYSE member firms including Paine Webber and
Prudential Securities.
<P>
Jamee M. Kalimi, 32, has been Vice President, Secretary and
Director of the Company since inception. She is a marketing
and telecommunications expert with a strong ability to
create new strategies and business plans. Since 1998, Ms.
Kalimi has been President and Director of i-Incubator.com,
Inc. a publicly traded company listed on the OTC Electronic
Bulletin Board. (OTCBB:INQU). Ms. Kalimi is also President
of i-CarAuction.com, Inc., i-AntiqueAuction.com, Inc. and i-
Aerobids.com, Inc. and is Vice President and Secretary of i-
Teleco.com, Inc. all of which are subsidiaries of i-
Incubator.com, Inc. Ms. Kalimi has been heavily involved in
the telecommunications industry since 1990, specializing in
pay per call services and the marketing of such services.
She has an active real estate license in the State of
Florida which was obtained in 1995. Prior to working for
us, she was an assistant to the President of Atlas Equity
Group, Inc. from February 1998 to October 1998. She worked
as a Real Estate Sales and Leasing Manager for Sclar Realty
from April 1996 to February 1998 and President of AvJam
Communications, Inc. from January 1994 to April 1996.
<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.
--------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Name Position Year Salary Bonus Other Stock Options
----------------------------------------------------------------------------------------
Michael D. Farkas Pres/Director 2000 $ 0 0 0 0
<P>
Jamee M. Kalimi VP/Sec/Dir 2000 $ 0 0 0 0
</TABLE>
<P>
Our shareholders may in the future determine to pay
Director's fees and reimburse Directors for expenses related
to their activities.
<P>
Item 7. Certain Relationships and Related Transactions.
-------------------------------------------------------
<P>
The Company presently shares office space with i-
Incubator.com, Inc. 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
Atlas Equity Group, Inc., an affiliated entity. Atlas
Equity Group, Inc. subleases the facility to i-
Incubator.com, Inc. Michael D. Farkas, President of i-Realty
is the President and sole shareholder of Atlas Equity Group,
Inc. The landlord is not affiliated with us. No rent is
being charged to the Company. We believe that this space is
sufficient for us at this time.
<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 a parent company, i-Incubator.com, Inc. Since inception,
we have not entered into any transactions with promoters
other than our officers and directors Michael D. Farkas and
Jamee M. Kalimi.
<P>
i-Realty has executed two (2) promissory notes with Atlas
Equity Group, Inc. ("Atlas Equity") for a total of $5,000
which Atlas Equity loaned to the Company. On October 25,
2000, Atlas Equity loaned $3,000 which is payable on January
24, 2001 and is accruing interest a the rate of ten (10%)
percent per annum. On November 10, 2000, Atlas Equity
loaned $2,000 which is payable on February 9, 2001 and is
accruing interest at the rate of ten (10%) percent per
annum. Atlas Equity is owned solely by Michael D. Farkas
who is the President of i-Realty.
<P>
On September 11, 2000, i-Realty entered into an agreement to
purchase the domain names "i-RealtyAuction.com", "i-
RealtyAuction.net", "iRealtyAuction.com" and
"iRealtyAuction.net" from Michael D. Farkas, the President
of i-Realty for $50,000.
<P>
To date the $50,000 has not been paid by i-Realty to Michael
D. Farkas.
<P>
i-Realty owes $50,000 to Envitro.com, Inc. for the creation
of the corporate website which to date has not been paid.
Envitro.com, Inc., is a wholly owned subsidiary of
Wealthhound, Inc. which is a wholly owned subsidiary of
Wealthhound.com, Inc. Michael D. Farkas, the President of
i-Realty is the Chief Executive Officer and principal
shareholder of Wealthhound.com, Inc. In addition, i-
Incubator.com, Inc., the parent of i-Realty, is a
shareholder of Wealthhound.com, Inc.
<P>
Global Realty Management Group, Inc. owns thirty (30%)
percent of the issued and outstanding shares in i-Realty.
Michael D. Farkas, President of i-Realty is Executive Vice
President, Chief Financial Officer, Treasurer, Secretary and
a principal shareholder of Global Realty Management Group,
Inc.
<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>
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 do not purport to be complete and 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
50,000,000 Common Shares, $0.0001 par value per common share
and no Preferred Shares. As of October 31, 2000, there are
5,000,000 shares of our common stock outstanding. All
outstanding Common Shares are legally issued, fully paid and
non-assessable.
<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 Delaware 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 of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters.
----------------------------------------------------------
<P>
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 have been resolved. Our shares are not and have not been
listed or quoted on any exchange or quotation system.
<P>
At October 31, 2000, there were 5,000,000 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 two (2) holders
of record of our common stock. We currently have one class
of common stock outstanding.
<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>
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.
-------------------------------------------------------
<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, 7700 N. Kendall
Drive, Suite 805, Miami, Florida 33156.
<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>
i-RealtyAuction.com, Inc. was incorporated in the State of
Delaware on November 24, 1999 as a wholly owned subsidiary
of i-Incubator.com, Inc. and 700,000 shares were issued to
i-Incubator.com, Inc. On December 6, 1999, i-Realty agreed
to sell to Global Realty Management an amount equal to
thirty percent of the issued and outstanding shares of i-
Realty for a purchase price of $30,000 and 500,000
restricted common shares of Global Realty Management Group,
Inc. Pursuant to same, 300,000 shares of i-Realty were
issued to Global Realty Management Group, Inc. All of the
shares described above were issued in reliance on the
exemption under Section 4(2) of the Securities Act of 1933,
as amended (the "Act"). Such shares met the requirements
for this exemption since i-Incubator.com, Inc. and Global
Realty Management Group, Inc. were qualified in terms of
financial sophistication and had access to material
information about the Company. On October 10, 2000, the
Shareholder and Directors of i-Realty authorized a 5 for 1
forward stock split increasing the amount of outstanding
shares owned by i-Incubator.com, Inc. to 3,500,000 and
increasing the amount of outstanding shares owned by Global
Realty Management Group, Inc. to 1,500,000.
<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>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
TABLE OF CONTENTS
<P>
BALANCE SHEETS 2
<P>
STATEMENT OF OPERATIONS 3
<P>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY 4
<P>
STATEMENT OF CASH FLOWS 5-6
<P>
NOTES TO FINANCIAL STATEMENTS 7-13
<P>
<TABLE>
<CAPTION>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
BALANCE SHEETS
<P>
ASSETS
<S> <C> <C>
(UNAUDITED) (AUDITED)
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------------------------------------
CURRENT ASSETS:
<P>
Cash $ 32 $ 317
Note receivable - related party 29,000 29,000
------------------------------------------
TOTAL CURRENT ASSETS $ 29,032 $ 29,317
<P>
OTHER ASSETS:
<P>
INVESTMENT IN RELATED PARTY 500 500
------------------------------------------
TOTAL ASSETS $ 29,532 $ 29,817
<P>
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
<P>
CURRENT LIABILITIES:
<P>
Accrued expenses payable 7,000 3,500
Loan and advances payable
- related parties 100,787 0
-----------------------------------------
Total Current Liabilities 107,787 3,500
<P>
STOCKHOLDER'S EQUITY:
<P>
Common Stock, $.001 par value,
100,000,000 shares authorized,
5,000,000 shares issued and
outstanding 5,000 5,000
Additional paid-in capital 26,200 26,200
Deficit accumulated during
the development stage (109,455) (4,883)
------------------------------------------
Total Stockholder's Equity
(Deficit) (78,255) 26,317
------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY (DEFICIT)$ 29,532 $ 29,817
==========================================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<P>
<TABLE>
<CAPTION>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF OPERATIONS
<S> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED)
FOR THE NINE FOR THE NINE FOR THE PERIOD
MONTHS ENDED MONTHS ENDED NOVEMBER 22, 1999
SEPTEMBER 30, SEPTEMBER 30, (INCEPTION) TO
2000 1999 SEPTEMBER 30, 2000
-------------------------------------------------------------
DEVELOPMENT STAGE REVENUES $ 0 $ 0 $ 0
<P>
DEVELOPMENT STAGE EXPENSES:
Accounting 2,500 0 5,000
Advertising 737 0 737
Bank charges 135 0 164
Consulting fees 0 0 1,354
Domain names 50,000 0 50,000
Legal fees 1,000 0 2,000
Licenses and taxes 200 0 200
Web Design 50,000 0 50,000
------------------------------------------------------------
Total development stage expenses 104,572 0 109,455
------------------------------------------------------------
DEFICIT ACCUMULATED DURING
THE DEVELOPMENT STAGE $ (104,572) $ 0 $ (109,455)
=============================================================
LOSS PER SHARE:
Basic $ (0.0209) N/A $ (0.0219)
=============================================================
Diluted N/A N/A N/A
=============================================================
<P>
Weighted-average of common
shares outstanding 5,000,000 N/A 5,000,000
=============================================================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<P>
<TABLE>
<CAPTION>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT)
<P>
FOR THE PERIOD NOVEMBER 22, 1999 (INCEPTION) TO SEPTEMBER 30, 2000
<S> <C> <C> <C> <C> <C>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
-----------------------------------------------------------------
Balance, November 22, 1999
(inception) 0 $ 0 $ 0 $ 0 $ 0
<P>
Restricted Common stock
issued to related
party for management
services 5,000,000 5,000 26,200 0 31,200
<P>
Deficit accumulated during the
development stage for the
period November 22, 1999
(inception)
to December 31, 1999 0 0 0 0 0
-----------------------------------------------------------------
Balance,
December 31, 1999 5,000,000 5,000 26,200 0 31,200
<P>
Deficit accumulated during the
development stage for the nine
months ended September 30 2000 0 0 0 (104,572) (104,572)
-----------------------------------------------------------------
Balance,
September 30, 2000 5,000,000 $ 5,000 $ 26,200 $(104,572) $ (73,372)
=================================================================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<P>
<TABLE>
<CAPTION>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CASH FLOWS
<P>
INCREASE (DECREASE) IN CASH
<S> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED)
FOR THE NINE FOR THE NINE FOR THE PERIOD
MONTHS ENDED MONTHS ENDED NOVEMBER 22 1999
SEPTEMBER 30, SEPTEMBER 30, (INCEPTION) TO
2000 1999 SEPTEMBER 30, 2000
-----------------------------------------------------------------
OPERATING ACTIVITIES:
<P>
Deficit accumulated during the
development stage $(104,572) $ 0 $ (109,455)
<P>
Adjustments to reconcile net loss to
net cash used by operations:
Common stock issued for
Management services 0 0 700
Consulting 0 0 1,354
Increase in accrued
expenses 3,500 0 7,000
--------------------------------------------------------------
Net Cash Used for
Operating Activities (101,072) 0 (100,401)
--------------------------------------------------------------
INVESTING ACTIVITIES:
Consulting 0 0 (1,354)
Note receivable -
I-Incubator.com, Inc. 0 0 (29,000)
--------------------------------------------------------------
Net Cash Used for
Investing Activities 0 0 (30,354)
--------------------------------------------------------------
FINANCING ACTIVITIES:
Proceeds from the issuance
of common stock 0 0 30,000
Loans and advances payable
related parties 100,787 0 100,787
--------------------------------------------------------------
Net Cash Provided by
Financing Activities 100,787 0 130,787
--------------------------------------------------------------
INCREASE (DECREASE) IN CASH (185) 0 32
--------------------------------------------------------------
CASH, BEGINNING OF PERIOD 317 0 0
--------------------------------------------------------------
CASH, END OF PERIOD $ 32 $ 0 $ 32
==============================================================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<P>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CASH FLOWS
<P>
FOR THE PERIOD NOVEMBER 22, 1999 (INCEPTION)
TO SEPTEMBER 30, 2000
<P>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<P>
During the period from November 22, 1999 (inception)
to September 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
transaction:
<P>
The Company issued 3,500,000 shares of common stock in
consideration of management services to I-Incubator.com,
Inc. formerly known as Master Communications, Corp. The
transaction was valued at$700. (see note 8 and 9).
<P>
The Company issued 1,500,000 shares in exchange for $30,000
and 500,000 common shares of Global Realty Management Group,
Inc. valued at $500 (see note 5 and 9).
<P>
<TABLE>
i-REALTYAUCTION.COM, INC.
COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
<S> <C> <C> <C> <C>
INCREASE DAYS SHARE
DATE DECREASE OUTSTANDING OUTSTANDING DAYS
-----------------------------------------------------------------------------------------
January 1, 2000 0 5,000,000 273 1,365,000,000
<P>
September 30, 2000 0 5,000,000 0 0
<P>
September 30, 2000 273 1,365,000,000
==================================================================
WEIGHTED SHARES 5,000,000
<P>
</TABLE>
<TABLE>
i-REALTYAUCTION.COM, INC.
COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<S> <C> <C> <C> <C>
INCREASE DAYS SHARE
DATE DECREASE OUTSTANDING OUTSTANDING DAYS
-----------------------------------------------------------------------------------------
December 2, 1999 0 5,000,000 29 145,000,000
<P>
December 31, 1999 0 5,000,000 274 2,740,000,000
<P>
September 30, 2000 5,000,000 0 0
=====================================================================
WEIGHTED SHARES 5,000,000
<P>
</TABLE>
<P>
i-REALTYAUCTION.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>
i-RealtyAuction.com, Inc. ("the Company"), was incorporated
on November 22, 1999 under the laws of the state of
Delaware. The Company's operations have been devoted
primarily to structuring and positioning itself to take
advantage of opportunities available in the internet
industry. The Company intends to grow through internal
development, strategic alliances and acquisitions of
existing businesses. The Company has the authority to
issue 100,000,000 shares of common stock. The Company is a
development stage company and has had limited activity.
<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 shareholders 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 i-Incubator.com, Inc. ("Incubator")
intends to spin off the Company and believes that its
control is temporary. Therefore, management believes that
separate financial statements are appropriate and properly
reflect 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 and for the reporting period.
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>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
-------------------------------------------------------
<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>
INCOME TAXES
<P>
The Company utilizes 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 the deferred tax asset in its entirety.
<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 a net loss since its inception and there are no
convertible instruments, basic loss per share and diluted
loss per share are the same.
<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 of its
financial instruments. 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 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 based compensation that are entered into for 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>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
--------------------------------------------------------
<P>
In June 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 130, "Reporting Comprehensive
Income". This SFAS requires companies to classify items of
other comprehensive income by their nature in financial
statements and 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 does not affect the Company's financial statements.
<P>
In June 1997, the FASB issued SFAS No. 131, "Disclosure
About Segments of an Enterprise and Related Information".
This SFAS established additional standards for segment
reporting in financial statements and is effective for
financial statements issued for fiscal years beginning after
December 15, 1997. Management believes that SFAS No. 131
does not affect the Company's 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").
Pursuant to this statement, the Company is required to
expense all start-up costs related to new 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 believes that SFAS No. 133 does not
affect the Company's financial statements.
<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 SFAS does not
affect the Company's financial statements.
<P>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
(CONT'D)
---------------------------------------------------------
<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 SFAS does not affect the Company's 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 ability of the Company to achieve its business
objectives is contingent upon its success in raising
additional capital until such time as adequate revenues are
realized from operations.
<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 November 22, 1999 (inception)
to September 30, 2000 aggregated ($109,455). The Company's
cash flow requirements during this period have been met by
contributions of capital and debt financing. No assurance
can be given that these sources of financing will 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 financial statements do not include any adjustments
relating to the recoverability and classification of assets
or liabilities that might be necessary should the Company be
unable to continue as a going concern.
<P>
NOTE 4 - NOTE RECEIVABLE - RELATED PARTY
-----------------------------------------------
<P>
During the period ended December 31, 1999 the Company made a
loan to Incubator, its controlling shareholder, in the
amount of $29,000. The note is unsecured and does not bear
interest.
<P>
NOTE 5 - INVESTMENT - RELATED PARTY
-----------------------------------------
<P>
The Company received 500,000 shares of restricted common in
Global Realty Management Group, Inc. ("Global") in
connection with the issuance of 300,000 shares of the
Company's common stock at inception. This investment is
carried at cost at its original value of $500 (see note 9).
<P>
NOTE 6 - DEFERRED INCOME TAXES
------------------------------------
<P>
The Company has a carry-forward loss for income tax purposes
of $109,455 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 asset and valuation allowance
as of September 30, 2000 and December 31, 1999 were as
follows:
<TABLE>
<S> <C> <C>
2000 1999
----------------------------
Deferred tax assets arising $ 16,450 $ 750
<P>
Less: Valuation allowance (16,450) (750)
<P>
Net Deferred Tax Asset $ 0 $ 0
</TABLE>
<P>
NOTE 7 - ACCRUED EXPENSES
-----------------------------
<P>
Accrued expenses at September 30, 2000 and
December 31, 1999 were as follows:
<TABLE>
<S> <C> <C>
2000 1999
-----------------------------------
Accrued professional fees $ 7,000 $ 3,500
<P>
Total accrued liabilities $ 7,000 $ 3,500
<P>
</TABLE>
<P>
NOTE 8 - RELATED PARTY TRANSACTIONS
------------------------------------------
<P>
The Company has received funds from i-Incubator.com, Inc. to
meet various working capital requirements. These loans and
advances are non-interest bearing and due on demand.
<P>
On September 1, 2000, the Company entered into an agreement
with Michael D. Farkas, a related party to purchase two
domain names, iRealtyAuction.com and iRealtyAuction.net, for
$50,000.
<P>
On September 1, 2000, the Company entered into an agreement
with Envitro.com, Inc., a related party, to design and
construct a web page for $50,000.
<P>
NOTE 9 - STOCKHOLDER'S EQUITY
-----------------------------------
<P>
On December 2, 1999, the Company issued 700,000 restricted
common shares to Incubator, formerly known as Master
Communications Corp., in consideration for management
services valued at $700. Incubator is deemed to be a
founder and affiliate of the Company.
<P>
On December 2, 1999, the Company issued 300,000 restricted
common shares to Global in exchange for $30,000 and 500,000
restricted common shares of Global valued at $500. Global
is deemed to be a founder and affiliate of the Company.
<P>
NOTE 10 - SUBSEQUENT EVENTS
-----------------------------------
<P>
On October 10, 2000, the Company authorized a 5:1 forward
split of the Company's outstanding common stock $.001 par
value. This transaction has been given retroactive effect
to November 22, 1999. After the split there were 5,000,000
restricted shares issued and outstanding with a par value of
$.001.
<P>
On October 25, 2000, the Company executed a note payable to
Atlas Equity Group, Inc., a related party, the principal sum
of $3,000 at a rate of 10% per annum. The entire principal
amount and accrued interest in due and payable on January
24, 2001.
<P>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<P>
TABLE OF CONTENTS
<P>
INDEPENDENT AUDITORS' REPORT 1
<P>
BALANCE SHEETS 2
<P>
STATEMENT OF OPERATIONS 3
<P>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY 4
<P>
STATEMENT OF CASH FLOWS 5-6
<P>
NOTES TO FINANCIAL STATEMENTS 7-13
<P>
INDEPENDENT AUDITORS' REPORT
<P>
To the Stockholder and
Board of Directors
i-RealtyAuction.com, Inc.
(a development stage company)
Miami, Florida
<P>
We have audited the accompanying balance sheets of i-
RealtyAuction.com, Inc., (a development stage company), as
of December 31, 1999 and the related statements of
operations, changes in stockholder's equity (deficit) and
cash flows for the periods November 22, 1999 (inception) to
December 31,1999. 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 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 the
audits provide 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 i-RealtyAuction.com, Inc. as of December 31,
1999 and the results of its operations and its cash flows
for the years then ended, and for the cumulative period
November 22, 1999 (inception) 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 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 18, 2000
<P>
<TABLE>
<CAPTION>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
BALANCE SHEETS
<P>
DECEMBER 31, 1999
<P>
ASSETS
<S> <C>
DECEMBER 31,
1999
-----------------
CURRENT ASSETS:
<P>
Cash $ 317
Note receivable - related party 29,000
---------------------------------
TOTAL CURRENT ASSETS $ 29,317
<P> =================================
OTHER ASSETS:
<P>
INVESTMENT IN RELATED PARTY 500
---------------------------------
TOTAL ASSETS 29,817
<P>
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
<P>
CURRENT LIABILITIES:
<P>
Accrued expenses payable 3,500
----------------------------------------------------------
<P>
STOCKHOLDER'S EQUITY (DEFICIT):
<P>
Common Stock, $.001 par value,
100,000,000 shares authorized,
1,000,000 shares issued and
outstanding respectively 1,000
Additional paid-in capital 30,200
Deficit accumulated during
the development stage (4,883)
----------------------------------------------------------
Total Stockholder's Equity
(Deficit) 26,317
----------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY (DEFICIT)$ $ 29,817
==========================================================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<TABLE>
<CAPTION>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF OPERATIONS
FOR THE PERIOD NOVEMBER 22, 1999 (INCEPTION)
TO DECEMBER 31, 1999
<S> <C>
DEVELOPMENT STAGE REVENUES $ 0
-------------------------
DEVELOPMENT STAGE EXPENSES:
Amortization 1,354
Accounting 2,500
Bank charges 29
Legal fees 1,000
-------------------------
Total development stage expenses 4,883
-------------------------
DEFICIT ACCUMULATED DURING
THE DEVELOPMENT STAGE $ (4,883)
===========================
LOSS PER SHARE:
Basic $ (0.0049)
===========================
Diluted N/A
===========================
<P>
Weighted-average of common
shares outstanding 1,000,000
============================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<TABLE>
<CAPTION>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT)
<P>
FOR THE PERIOD NOVEMBER 22, 1999 (INCEPTION) TO DECEMBER 31, 1999
<S> <C> <C> <C> <C> <C>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
-----------------------------------------------------------------
Balance, November 22, 1999
(inception) 0 $ 0 $ 0 $ 0 $ 0
<P>
Common stock issued to related
party for management
services 1,000,000 1,000 30,200 0 31,200
<P>
Deficit accumulated during the
development stage for the
period November 22, 1999
(inception)
to December 31, 1999 0 0 0 (4,883) (4,883)
-----------------------------------------------------------------
Balance,
December 31, 1998 1,000,000 1,000 30,200 (4,883) 26,317
=================================================================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<P>
<TABLE>
<CAPTION>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CASH FLOWS
<P>
FOR THE PERIOD NOVEMBER 22, 1999 (INCEPTION)
<P>
TO DECEMBER 31, 1999
<P>
INCREASE (DECREASE) IN CASH
<S> <C>
OPERATING ACTIVITIES:
<P>
Deficit accumulated during the
development stage $ (4,883)
<P>
Adjustments to reconcile net loss to
net cash used by operations:
Amortization 1,354
Common stock issued for
management services 700
Increase in accrued expenses 3,500
------------------------------------
Net Cash Used for
Operating Activities 671
------------------------------------
INVESTING ACTIVITIES:
Organizational costs (1,354)
Note receivable - i-Incubator.com, Inc. (29,000)
------------------------------------
Net Cash Used for
Investing Activities (30,354)
------------------------------------
FINANCING ACTIVITIES:
Proceeds from the issuance
of common stock 30,000
------------------------------------
Net Cash Provided by
Financing Activities 30,000
-------------------------------------
INCREASE IN CASH 317
-------------------------------------
CASH, NOVEMBER 22, 1999 0
-------------------------------------
CASH, DECEMBER 31, 1999 $ 317
=====================================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<P>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CASH FLOWS
<P>
FOR THE PERIOD NOVEMBER 22, 1999 (INCEPTION)
TO DECEMBER 31, 1999
<P>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<P>
During the period the Company did not pay any interest
or income taxes.
<P>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
<P>
The Company entered into the following non-cash
transaction:
<P>
The Company issued 700,000 shares of common stock in
consideration for management services to I-Incubator.com,
Inc. formerly known as Master Communications, Corp. The
transaction was valued at $700. (see note 7).
<P>
The Company issued 500,000 common shares of Global
Realty Management Group, Inc. The transaction was valued at
$500 (Note 7).
<P>
<P>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
-----------------------------------------------------------
<P>
ORGANIZATION
<P>
i-realtyAuction.com, Inc. ("the Company"), was
incorporated on November 2, 1999, under the laws of the
State of Delaware. The Company's operations have been
devoted primarily to structuring and positioning itself to
take advantage of opportunities available in the internet
industry. The Company intends to grow through internal
development, strategic alliances and acquisitions of
existing business. The Company has the authority to issue
100,000,000 shares of common stock and intends to develop an
auction website devoted entirely to aviation related parts
and accessories. The Company is a development stage company
and has had limited activity.
<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 shareholders 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 i-Incubator.com, Inc. ("Incubator")
intends to spin off the Company and believes that its
control is temporary. Therefore, management believes that
separate financial statements are appropriate and properly
reflect current operating results.
<P>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
-----------------------------------------------------------
<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 for the reporting period.
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>
INCOME TAXES
<P>
The Company utilizes 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 when
<P>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT'D)
-----------------------------------------------------------
<P>
INCOME TAXES (CONT'D)
<P>
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 the
deferred tax asset in its entirety.
<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 since its inception and there are no
convertible instruments, basic loss per share and diluted
loss per share are the same.
<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 of its
financial instruments. 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>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<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 SFAS requires companies to classify items of
other comprehensive income by their nature in financial
statements and 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 does not affect the Company's financial statements.
<P>
In June, 1997, the FASB issued SFAS No. 131, "Disclosure
About Segments of an Enterprise and Related Information".
This SFAS established additional standards for segment
reporting in financial statements and is effective for
financial statements issued for fiscal years beginning after
December 15, 1997. Management believes that SFAS No. 131
does not affect the Company's 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").
Pursuant to this statement, the Company is required to
expense all start-up costs related to new 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 believes that SFAS No. 133 does not
affect the Company's financial statements.
<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 SFAS does not
affect the Company's financial statements.
<P>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<P>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONT'D)
-----------------------------------------------------------
<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 SFAS does not affect the Company's 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 ability of the Company to achieve its business
objectives is contingent upon its success in raising
additional capital until such time as adequate revenues are
realized from operations.
<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 November 22, 1999 (inception)
to December 31, 1999 aggregated ($4,883). The Company's
cash flow requirements during this period have been met by
contributions of capital and debt financing. No assurance
can be given that these sources of financing will 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 financial statements do not include any adjustments
relating to the recoverability and classification of assets
or liabilities that might be necessary should the Company be
unable to continue as a going concern.
<P>
i-REALTYAUCTION.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<P>
NOTE 4 - NOTE RECEIVABLE - RELATED PARTY
--------------------------------------------
<P>
During the period ended December 31, 1999, the Company made
a loan to Incubator, its controlling shareholder, in the
amount of $29,000. The note is unsecured and does not bear
interest.
<P>
NOTE 5 - DEFERRED INCOME TAXES
------------------------------------
<P>
The Company has a carry-forward loss for income tax purposes
of $1,552 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 asset and valuation allowance as of
December 31, 1999 were as follows:
<TABLE>
<S> <C>
1999
----------------------------------------
Deferred tax assets arising $ 750
from net operating loss
<P>
Less: Valuation allowance (750)
----------------------------------------
Net Deferred Tax Asset $ 0
========================================
</TABLE>
<P>
NOTE 6 - ACCRUED EXPENSES
-----------------------------
<P>
Accrued expenses at December 31, 1999 are as follows:
<P>
Accrued accounting fees $ 2,500
Accrued legal fees 1,000
-----------
Total $ 3,500
===========
<P>
NOTE 7 - STOCKHOLDERS' EQUITY
----------------------------------------------
<P>
On December 2, 1999, the Company issued 700,000 restricted
common shares to Incubator, formerly known as Master
Communications Corp., in consideration for management
services valued at $700. Incubator is deemed to be a
founder and affiliate of the Company.
<P>
On December 2, 1999, the Company issued 300,000 restricted
common shares to Global Realty Management Group, Inc.
("Global"), in exchange for $30,000 and 500,000 common
shares of Global valued at $500. Global is deemed to be a
founder and affiliate of the Company.
<P>
PART III
<P>
Item 1. Index to Exhibits
<P>
Exhibit Number Description
<P>
Exhibit 3(i) Articles of Incorporation
<P>
Exhibit 3(ii) By-laws
<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>
I-REALTYAUCTION.COM, INC.
<P>
/s/ Michael D. Farkas
-----------------------------
By: MICHAEL D. FARKAS
Title: President and Director
<P>
Date: November 30, 2000
