<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES ACT OF 1934
For The quarterly period ended March 31, 2000
Commission File Number 0-19693
WHATSFORFREE TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Nevada 87-0485320
------ ----------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
7418 East Helm Drive, Scottsdale, Arizona 85260
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (480) 443-1111
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, Par Value $0.001 Per Share
(Title of Class)
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:
22,792,090
NUMBER OF COMMON STOCK SHARES OUTSTANDING
On May 18, 2000
Traditional Small Business Disclosure Format (Check One):
[X] Yes [ ] No
<PAGE>
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS. F-1
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. 2
PART II
ITEM 1. LEGAL PROCEEDINGS. 6
ITEM 2. CHANGES IN SECURITIES. 6
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 10
ITEM 5 OTHER INFORMATION. 10
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K 10
SIGNATURES 11
1
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WHATSFORFREE TECHNOLOGIES, INC.
(Formerly Ranes International Holding, Inc.)
(A Development Stage Enterprise)
BALANCE SHEET
March 31,
2000
(unaudited)
-------------
ASSETS
Cash $ 1,703,112
Account receivable 65,000
-------------
TOTAL CURRENT ASSETS 1,768,112
Property and equipment - net 515,157
OTHER ASSETS:
Intangible assets - net 4,396,895
Deposits 33,400
-------------
4,430,295
-------------
$ 6,713,564
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 232,151
Due to related parties 193,801
-------------
TOTAL CURRENT LIABILITIES 425,952
COMMITMENT AND CONTINGENCIES -
STOCKHOLDERS' EQUITY:
Common Stock, $.001 par value; 50,000,000
shares authorized; 21,959,910 shares
issued and outstanding 21,960
Additional paid-in capital 20,676,119
Deficit accumulated during the development stage (14,410,467)
-------------
TOTAL STOCKHOLDERS' EQUITY 6,287,612
-------------
$ 6,713,564
=============
The accompanying notes are an integral part of these financial statements.
F-1
<PAGE>
<TABLE>
WHATSFORFREE TECHNOLOGIES, INC.
(Formerly Ranes International Holding, Inc.)
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
<CAPTION>
Cumulative
During Development
Three Months Ended Stage
----------------------------- February 15, 1990
March 31, March 31, (inception) to
2000 1999 March 31, 2000
------------- ------------- ------------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
REVENUES $ - $ - $ 1,624
OPERATING EXPENSES:
Advertising expense 417,977 - 417,977
Bonus and incentives 5,855,576 - 5,855,576
Professional fees 1,230,348 87,342 1,867,589
Other general and administrative expenses 345,679 55,351 5,797,088
------------- ------------- ------------------
TOTAL OPERATING EXPENSES 7,849,580 142,693 13,938,230
------------- ------------- ------------------
NET LOSS $ (7,849,580) $ (142,693) $ (13,936,606)
============= ============= ==================
LOSS PER COMMON SHARE, basic and diluted $ (0.44) $ (0.02) $ (9.28)
============= ============= ==================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING, basic and diluted 17,746,440 8,426,647 1,501,433
============= ============= ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
<TABLE>
WHATSFORFREE TECHNOLOGIES, INC.
(Formerly Ranes International Holding, Inc.)
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
<CAPTION>
Cumulative
During Development
Three Months Ended Stage
----------------------------- February 15, 1990
March 31, March 31, (inception) to
2000 1999 March 31, 2000
------------- ------------- ------------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (7,849,580) $ (142,693) $ (13,936,606)
Adjustments to reconcile net loss to net cash
used in operating activities:
Provision for losses - - 955,000
Amortization and depreciation 4,125 - 140,125
Common stock issued in exchange for services 6,400,540 100,500 9,665,547
Warrants issued in exchange for services 91,345 - 91,345
Changes in assets and liabilities:
Account receivables (65,000) - (65,000)
Prepaid expenses 48,500 (63,000) 48,500
Deposits (33,400) - (33,400)
Accounts payable 186,354 75,967 580,128
------------- ------------- ------------------
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES (1,217,116) (29,226) (2,554,361)
------------- ------------- ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (519,283) - (519,283)
------------- ------------- ------------------
NET CASH FLOWS USED IN INVESTING ACTIVITIES (519,283) - (519,283)
------------- ------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Due to related party (674) - (674)
Proceeds from note payable - 30,000 5,000
Proceeds from issuance of common stock 3,433,750 - 4,776,430
------------- ------------- ------------------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 3,433,076 30,000 4,776,756
------------- ------------- ------------------
NET INCREASE IN CASH 1,696,677 774 1,703,112
CASH AT BEGINNING OF YEAR 6,435 289 -
------------- ------------- ------------------
CASH AT END OF YEAR $ 1,703,112 $ 1,063 $ 1,703,112
============= ============= ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
WHATSFORFREE TECHNOLOGIES, INC.
(formerly Ranes International Holding, Inc.)
(A Development Stage Enterprise)
Notes to Financial Statements
March 31, 2000
1. BASIS OF PRESENTATION
---------------------
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principals
for interim financial information, without being audited, pursuant to
the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three
months ended March 31, 2000, are not necessarily indicative of the
results that may be expected for the year ended December 31, 2000. The
unaudited condensed financial statements should be read in conjunction
with the financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31,
1999.
2. NEW SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------
a. PROPERTY AND EQUIPMENT - Property and equipment are stated at
cost. Depreciation is calculated on the straight-line method
based upon the estimated useful lives of the respective
assets. Property and equipment are being depreciated over a
period of three to seven years. Maintenance, repairs and minor
renewals are charged to operations as incurred, whereas the
cost of significant betterments is capitalized. Leasehold
improvements are amortized over the lesser of the lease terms
or the assets' useful lives. Upon the sale or retirement of
property and equipment, the related costs and accumulated
depreciation are eliminated from the accounts and gains or
losses are reflected in operations.
In March 1998, the American Institute of Certified Public
Accountants ("AICPA") issued Statement of Position 98-1 ("SOP
98-1"), "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." SOP 98-1 is effective
for all fiscal periods beginning after December 15, 1998. SOP
98-1 requires the capitalization of certain costs, including
payroll costs, incurred in connection with the development or
purchase of software for internal use. The adoption of this
accounting standard did not have a material effect on the
condensed financial statements.
F-4
<PAGE>
WHATSFORFREE TECHNOLOGIES, INC.
(formerly Ranes International Holding, Inc.)
(A Development Stage Enterprise)
Notes to Financial Statements
March 31, 2000
b. IMPAIRMENT OF LONG-LIVED ASSETS - In the event that facts and
circumstances indicate that the cost of an asset may be
impaired, an evaluation of recoverability would be performed.
If an evaluation is required, the estimated future
undiscounted cash flows associated with the assets would be
compared to the asset's carrying amount to determine if a
write-down to market value is required. At March 31, 2000, the
Company does not believe that impairment has occurred.
3. PROPERTY AND EQUIPMENT
----------------------
Property and equipment at March 31, 2000 is as follows:
Computer equipment and internal use software $ 446,954
Leasehold improvements 9,917
Office furniture and equipment 62,411
-------------
519,282
Less: accumulated depreciation and amortization (4,125)
-------------
$ 515,157
=============
4. INTANGIBLE ASSETS
-----------------
During the three months ended March 31, 2000, the Company purchased
three domain names for the purpose of developing websites. The Company
has accounted for these costs in accordance with Emerging Issues Task
Force Number 2000-2, "Accounting for Website Development Costs," and
pursuant to Accounting Principles Board Opinion Number 17. The Company
has estimated the useful life of the intangible assets to be three
years and will commence amortization once the websites are placed in
service.
5. STOCKHOLDERS' EQUITY
--------------------
a. In January 2000, the Company purchased the right to use
technology to begin focusing on Internet-based marketing and
branding of free products and services. In February 2000, the
Company acquired the remaining worldwide rights to the
Internet-based marketing and branding of free products and
services for WhatsForFree in exchange for the issuance of
2,000,000 shares of restricted common stock valued at $1.75
per share or $3,500,000 recorded as an intangible asset (see
Note 4).
F-5
<PAGE>
WHATSFORFREE TECHNOLOGIES, INC.
(formerly Ranes International Holding, Inc.)
(A Development Stage Enterprise)
Notes to Financial Statements
March 31, 2000
In addition, on January 27, 2000, the Company granted warrants
as part of the purchase price associated with the intangible
asset. The total value of the warrants granted was $210,960
and was recorded as an intangible asset. The valuation of the
warrants were based on the Black-Scholes Option Pricing Model
with the following weighted average assumptions used: annual
dividend of $0; expected volatility of 50%; stock price of
$1.66; risk free interest rate of 6%; and expected lives of 3
months to 1 year:
o Three month warrant to purchase 100,000 shares at $0.50
per share or $50,000. This warrant was not exercised and
expired on April 27, 2000. These warrants were valued at
$1.163 or $116,340.
o Six month warrant to purchase 100,000 shares at $1.00
per share or $100,000. This option expires July 27, 2000
and has not yet been exercised. These warrants were
valued at $.6982 or $69,820.
o A one year warrant to purchase 100,000 shares at $2.00
per share or $200,000. This option expires January 27,
2001, and has not yet been exercised. These warrants
were valued at $.248 or $24,800.
b. During the first quarter 2000, the Company has conducted four
Offerings under Regulation D, Rule 506 of the Securities Act
of 1933. These offerings are exempt from registration with the
SEC under Regulation D of the 1993 Act, as amended. The four
Offerings raised $3,433,750 during the first quarter 2000, and
Are made up of the following:
i. On February 15, 2000, the Company issued 500,000 shares
of restricted common stock at $0.25 per share or
$125,000. In addition, the Board of Directors declared a
10% stock dividend for 50,000 shares of restricted
common stock to the holders valued at $0.25 per share or
$12,500.
ii. On February 15, 2000, the Company issued 239,500 shares
of restricted common stock at $0.50 per share for
$119,750.
iii. The Company issued 1,335,000 units at $1.00 per share
from an offering dated March 3, 2000. The $1.00 offering
offers 1,335,000 shares of restricted common stock in
total plus one warrant for each share of common stock,
for the purchase of an additional share of common stock.
$1,335,000 was received in cash during March 2000. The
warrants may be exercised any time prior to February 5,
2001 at $2.00 per share. None of these warrants were
exercised during the first quarter 2000.
F-6
<PAGE>
WHATSFORFREE TECHNOLOGIES, INC.
(formerly Ranes International Holding, Inc.)
(A Development Stage Enterprise)
Notes to Financial Statements
March 31, 2000
iv. The Company issued 615,333 units $3.00 per share from an
offering dated March 27, 2000. The $3.00 Offering offers
5,550,000 shares of restricted common stock in total
plus one warrant for each share of common stock, for the
purchase of an additional share of restricted common
stock. At March 31, 2000, $1,846,000 was received. The
warrants may be exercised any time prior to April 1,
2001 at an exercise price of $4.00. 2,000 warrants were
exercised during the first quarter 2000 for $8,000.
c. The Company authorized a 10% stock dividend to stockholders of
record as of January 31, 2000. These shares were valued at
$0.30 per share or $370,016 on the date the stock dividend was
declared. On March 30, 2000, 1,233,385 shares of restricted
common stock were authorized for distribution.
d. The Company agreed to issue 300,000 shares of restricted
common stock to various advisors of the Company. These shares
were valued at the low bid price on the date the individual
agreed to join the Company, for a total of $223,275 and
recorded as professional fees during the first quarter 2000.
e. On January 10, 2000, the Company agreed to a finders fee of
75,000 shares of restricted common stock plus warrants to
purchase 100,000 shares of restricted common stock at $0.50
per share expiring January 10, 2002. The payment was for
finding the sellers of the domain name of Whats4Free.com and
WhatsForFree.com.
The 75,000 shares of common stock were valued at the low bid
price on the date of the agreement, of $0.809 or $60,675 and
recorded as professional fees.
The valuation of the warrants calculated to $0.4357 and was
based on the Black-Scholes Option Pricing Model with the
following weighted average assumptions used: annual dividend
of $0; expected volatility of 40%; stock price of $0.86; risk
free interest rate of 6%; and expected lives of 3 months to 1
year. Valuation of the warrants was based on the Black-Scholes
Option Pricing Model. At March 31, 2000, the company had not
exercised the warrants.
f. On January 13, 2000, the Company contracted with a Nationwide
Media for advertising at a cost of $298,000. On March 31,
2000, the Company had paid $69,445 and issued 125,000 shares
of restricted common stock, which included a warrant. The
warrant allows for the purchase of 50,000 shares of common
stock at $2.00 per share expiring January 31, 2001. The shares
issued were valued at $0.755 or $94,375 and recorded as
advertising costs. The valuation of the warrants calculated to
$0.3309 and was based on the Black-Scholes Option Pricing
Model with the following weighted average assumptions used:
annual dividend of $0; expected volatility of 40%; stock price
of $0.86; risk free interest rate of 6%; and expected lives of
3 months to 1 year. Valuation of the warrants was based on the
Black-Scholes Option Pricing Model. At March 31, 2000, the
company had not exercised the warrants.
F-7
<PAGE>
WHATSFORFREE TECHNOLOGIES, INC.
(formerly Ranes International Holding, Inc.)
(A Development Stage Enterprise)
Notes to Financial Statements
March 31, 2000
g. The Company issued 3,000 shares restricted of common stock in
exchange for network consulting services. These shares were
valued on the date of the agreement at the low bid price of
$0.364 or $5,625 and recorded as consulting services.
h. During March 2000, the Company issued 50,000 shares of
restricted common stock to a consultant for strategic
planning, valued at the low bid price on the date of the
agreement, or $0.364 per share or $18,200, recorded to
consulting services.
i. During the first quarter 2000, the Company issued 155,000
shares of restricted common stock to employees of the company
as stock incentives to join the company. These shares were
valued at the low bid price of the stock on the day they
agreed to join the company, or $690,830. In addition,
1,350,000 shares of restricted common stock was issued to
executive officers of the Company as a signing bonus to join
the Company. These shares were valued at the low bid price the
day they agreed to join the Company, or $4,946,233.
j. During 1999, the Company issued shares of restricted common
stock and warrants to a consultant for services performed.
During the first quarter 2000, the Company valued 300,000
warrants using the Black-Scholes Option Pricing Model with the
following weighted average assumptions used: annual dividend
of $0; expected volatility of 40%; stock price of $1.93; risk
free interest rate of 6%; and expected lives of 3 months to 1
year. The valuation of the warrants calculated to $0.1041 per
share or $31,230 and was recorded to consulting fees. The
warrants are exercisable at $4.00 per share prior to February
1, 2000.
The Company has disputed the value of the services and the
consultant has disagreed with such dispute. In an effort to
end the disparity, the Company paid the consultant $200,000
cash and issued 100,000 shares of common stock valued at
$10,410, and reduced 100,000 of the warrants that were
available to the consultant. The consultant has forfeited his
rights to the remaining 200,000 warrants.
k. During the first quarter of 2000, the Company issued 75,000
shares of common stock for legal services valued at the low
bid price on the date of issuance of $368,750 and recorded as
professional fees.
6. COMMITMENTS AND CONTINGENCIES
-----------------------------
a. OPERATING LEASES
In February and March 2000, the Company entered into a three
year operating lease agreement for its office facilities.
F-8
<PAGE>
WHATSFORFREE TECHNOLOGIES, INC.
(formerly Ranes International Holding, Inc.)
(A Development Stage Enterprise)
Notes to Financial Statements
March 31, 2000
Aggregate future lease payments under these non-cancelable
leases are as follows for the years ending subsequent to
December 31, 1999:
Years ending December 31:
-------------------------
2000 $ 76,713
2001 92,457
2002 98,245
2003 12,245
------------
Total minimum future lease payments $ 279,660
============
On April 20, 2000, the Company entered into a Lease Agreement
for a total of 23,421 square feet in a building nearby the
existing offices. The Company began occupancy on April 28,
2000. (See Note 11 "MATERIAL SUBSEQUENT EVENTS").
b. On February 29, 2000, the Company agreed to engage Net
Services Marketing Inc., a public relation consultant, to
provide public relations services for one year. The Company
paid a total of $150,000 during the first quarter 2000.
c. On March 8, 2000, the Company contracted with a company out of
Utah, for the Web Development Services beginning February 2000
for a total of $215,040. As of March 31, 2000, the Company
paid $31,200 towards their services performed.
On March 29, 2000, the Company agreed to order a majority of
the Sun hardware equipment and certain software through this
Utah based company. Total costs are estimated at approximately
$1,200,000 and such costs are expected to be acquired through
a lease-to-purchase financing arrangement. No costs were
incurred as of March 31, 2000.
d. On March 20, 2000, the Company contracted with EMC Corporation
to purchase $1,091,760 worth of computer hardware and software
for infrastructure development related to its web site.
Payment terms are net 30 days with shipment contingent upon a
$200,000 down payment (paid in April 2000) to EMC Corporation.
Terms of the agreement require that 10% of the balance due be
paid in warrants (the right to purchase common stock) in the
Company. After 30 days, monthly lease payments of $26,995
(plus taxes) are due for 36 months.
F-9
<PAGE>
WHATSFORFREE TECHNOLOGIES, INC.
(formerly Ranes International Holding, Inc.)
(A Development Stage Enterprise)
Notes to Financial Statements
March 31, 2000
e. On March 15, 2000, the Company contracted services with a
major communications Corporation to deliver Internet access
service consisting of a dedicated, high-speed network
connection between the Company's premises and the Internet
Protocol Network, and routing services. Set-up costs are
anticipated to be less than $10,000 and the monthly costs as
high as $60,000. Costs are based on inbound and outbound
utilizations. These services are in the process of being
established and as of March 31, 2000, no costs have been paid.
7. MATERIAL SUBSEQUENT EVENTS
--------------------------
a. On April 3, 2000, the Company contracted with Performance
Capital Corporation for corporate consulting services related
to general business issues, covering a period of one year. The
Company agreed to issue Performance Capital 200,000 shares of
its common stock in return for consulting services amounting
to $1,824,000.
b. On April 20, 2000, the Company entered into a lease agreement
for office space of approximately 23,400 square feet plus the
improvements to the space. The lease commenced on April 21,
2000 for a term of six months. Rent during the term is $15,104
(including taxes) per month plus 100% of common area
maintenance expenses. The Company also provided a $50,000
security deposit (paid in April 2000). The Company occupied
the space beginning April 21, 2000 and has moved all employees
over to this space except the Web site designers and
developers (approximately 40 employees) who temporarily remain
in the existing leased space.
On May 12, 2000, the Company entered into an Option Agreement
granting the Company the right to purchase the office
building. If the Company purchased the office building,
additional consideration of $485,000 in cash, $700,000 in
shares of the Company's restricted common stock, and to pay
off or refinance the existing mortgage of $1,390,000. The
option expires on October 26, 2000.
c. As of May 10, 2000, the Company raised an additional
$3,720,000 from the private placements and all of the
Offerings have been completed (see Note 5 "STOCKHOLDERS
EQUITY").
d. On April 20, 2000 the Company entered into a Letter of Intent
with Cisco Systems Capital Corporation to provide specific
financing for Cisco System products purchased by the Company.
Financing may be provided up to $2,000,000. The details of the
financing arrangements are currently being negotiated.
F-10
<PAGE>
WHATSFORFREE TECHNOLOGIES, INC.
(formerly Ranes International Holding, Inc.)
(A Development Stage Enterprise)
Notes to Financial Statements
March 31, 2000
e. The Company has committed to the following hardware and
software agreements since March 31, 2000, which are estimated
at the aggregate purchase price of $1,979,360. The Company is
considering financing all or a portion of these costs through
a leasing company:
1. On April 6, 2000, the Company contracted with EMC
Corporation to purchase $304,300 worth of computer
hardware and software for its infrastructure development
related to its web site. Terms of the agreement call for
a $50,000 down payment (paid in April 2000) due on order
and monthly lease payments of $7,698 per month for 36
months (excluding taxes).
2. On April 24, 2000, the Company further contracted with
EMC Corporation to purchase $1,112,760 worth of computer
hardware and software for infrastructure development
related to its web site. Payment terms are net 30 days
with shipment contingent upon a $200,000 down payment
(paid in April 2000) to EMC Corporation.
3. On April 24, 2000, the Company also contracted with EMC
Corporation to purchase $312,300 worth of computer
hardware and software for infrastructure development
related to its web site. Payment terms are net 30 days
with shipment contingent upon a $50,000 down payment
(paid in April 2000) to EMC Corporation.
F-11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD-LOOKING STATEMENTS AND FACTORS THAT MAY AFFECT RESULTS
Except for the historical information contained herein, this Report
contains forward-looking statements within the meaning of The Private Securities
Litigation Reform Act of 1995. Words such as "believe," "expect," "intend,"
"anticipate," "estimate," "project," and similar expressions identify
forward-looking statements, which speak only as of the date the statement was
made. Those statements may include projections of revenues, income or loss,
capital expenditures, plans for future operations, financing needs or plans, and
plans relating to our Web-site, products or services, as well as assumptions
relating to the foregoing.
Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Future events
and actual results could differ materially from those set forth in, contemplated
by, or underlying the forward-looking statements. Additional risk factors that
could cause actual results to differ materially from those expressed in such
forward-looking statements are set forth in Exhibit 99, which is attached hereto
and incorporated by reference into this Quarterly Report on Form 10-QSB.
WhatsForFree undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise. This Report should be read in conjunction with our Report
on Form 10-KSB for the fiscal year ended December 31, 1999.
OVERVIEW
WhatsForFree is a development stage, Internet company whose primary
business objective is to provide innovative, online marketing channels for
businesses, charitable organizations and advertising firms focusing on
promotional offers of free products and services. We also intend to utilize
information we gather concerning consumer preferences and demographics to offer
advertising services, develop in-house proprietary heuristics, web-hosting and
site development capabilities, and package, market and sell our
commercialization services to other Web entrepreneurs.
Our Internet business plan was developed in 1999, and we have yet to
generate any revenues or to launch our Web-site, Whats4free.com, which is
currently scheduled for launch at the end of the second quarter of 2000. Once we
have successfully launched our Web-site, we intend to generate revenues in a
number of areas, including:
o fees from customer acquisition for Partners,
o sales of banner advertising on the Web-site,
o e-commerce revenues through sales of products and services
that are not offered for free,
o support of charitable and related not-for-profit activities,
o fees paid by regional partners for exclusivity rights and new
client introductions,
o sale of database and related information concerning consumers
and providers,
o fees from a membership program,
o development of partner Web-sites, and
o partner ISP support fees.
We have incurred significant losses since the adoption of our Internet
business plan. These losses resulted primarily from costs related to developing
our Web-site, retention of key personnel, developing or acquiring technologies
to be used in our business and general corporate overhead. We expect to continue
incurring net losses for the foreseeable future, based in part on the following:
o We will incur substantial marketing expense in order to
advertise and promote our Web-site, to establish a consumer
and provider base and to increase the usage of our Web-site.
o Increased usage of our Web-site will lead to increased
operating expenses and require additional capital expenditures
on new computer equipment, software and technology.
<PAGE>
o Our operating expenses will continue to increase as we expand
the technical capabilities of our Web-site, solicit potential
advertisers and undertake to monitor usage of our Web-site and
develop consumer and provider profiles for our database.
If our revenue growth is slower than anticipated or our operating
expenses exceed our expectations, our losses will be significantly greater than
anticipated. We may never achieve or sustain profitability.
Recent Developments
During the first quarter 2000, the Company has entered into a letter of intent
with NOW Check Cashing, Inc. ("NCCI") out of Atlanta, Georgia. This acquisition
is contingent upon approval by the Board of Directors upon the completion of an
independent audit of NCCI's financial statements covering a period of three
years. This letter of intent has been cancelled.
PLAN OF OPERATIONS
KEY BUSINESS OBJECTIVES. Our plan of operations for the next twelve
months is to focus our efforts on:
o initiating our Web-site operations;
o identifying opportunities that will materialize as a result of
the positioning of our Internet offering;
o strengthening alliances with our service providers and
increasing the number and scope of our strategic partnerships;
o enhancing our Web-site offerings; and
o initiating advertising and promotional campaigns for our
Web-site.
FINANCING AND PERSONNEL. We are currently engaged in a
milestone-driven, staged funding and development process. The initial phases of
that process were completed with closure of seed funding of approximately $7.1
million. Mission critical resources have been contracted, tasked and developed,
and we are now moving forward to the final testing phases prior to launch. Key
personnel and support staff, including Web page designers, developers, coders
and writers, have been hired. Our staff was comprised of approximately 100
employees at May 10, 2000, and we expect to increase the number of employees to
more than 250 by the end of 2000.
EQUIPMENT ACQUISITIONS. We are committed to the utilization of industry
standard platforms. Strategic alliances and core infrastructure components have
been negotiated with Cisco, Sun, Oracle, EMC and Q-west. We will utilize an
Oracle database and financial systems running on Sun servers, with
communications supported by Cisco and Q-west, and storage by EMC. Citrix will be
used for customer solutions. We expect to continue to negotiate alliances with
these and other software and service providers, in part, through the exchange of
common stock for goods or services.
FUTURE CAPITAL REQUIREMENTS. We do not believe that our current cash
reserves will be adequate to meet our cash needs during the next twelve months.
We anticipate seeking additional funding during the next twelve months,
including funding from strategic partners and investment banking and venture
capital sources. We rely upon our ability to raise capital by the sale of our
common stock, the barter of our common stock for required operating and
promotional products and services, and the incurrence of indebtedness to fund
operations.
RESULTS OF OPERATIONS:
Revenues
We did not record revenues during the quarters ended March 31, 2000 or
March 31, 1999.
<PAGE>
Advertising Expense
Advertising expenses consist primarily of marketing and promotional
costs related to developing our brand and generating interest in our Web-site
launch, as well as personnel and other costs. Advertising expense was $417,977
for the three months ended March 31, 2000. We did not purchase any advertising
during the corresponding period of 1999, as we had no activities or business
plan at that time. From time to time, we have retained the services of various
companies in exchange for shares of our common stock and expect to continue to
do so in the future.
Bonus and Incentives
Bonuses and incentives expenses are non-cash charges arising from the
issuance of restricted common stock to our employees at the fair value of these
shares as of the date of issuance. Bonus and incentives was $5,855,576 for the
three months ended March 31, 2000 and zero for the three-month period ended
March 31, 1999. This increase was primarily due to the grants of signing
bonuses, paid in the form of common stock, to key individuals retained by us
during the first quarter of 2000.
Professional Fees
Professional fees consist primarily of fees paid to lawyers,
accountants and other professionals and consultants relating to our preparations
for the launch of our Web site. Professional fees for the three-months ended
March 31, 2000 increased to $1,230,348 from $87,342 for the three-month period
ended March 31, 1999. This increase is primarily due to the retention of legal
representation for the purpose of the start-up and establishing our policies and
procedures. A portion of this expense was incurred in the form of exchanges of
our common stock for services.
General and Administrative Expenses
General and administrative expenses principally consist of payroll and
related overhead costs related to the general management, investor relations,
finance and human resource functions. General and administrative expenses for
the three-month period ended March 31, 2000 increased to $345,679, from $55,351
for the three-month period ended March 31, 1999. This increase is due to an
increase in the number of employees to approximately 65 employees at March 31,
2000 and other costs associated with the anticipated launch of our Web site.
Interest and Taxes
No interest expense was incurred during the three month periods ending
March 31, 2000 or March 31, 1999. We have and had no debentures or other
financing liabilities during these periods. We have a net operating loss
carryover as of December 31, 1999 of approximately $5,991,000 available to
offset future taxable income, if any. In the event of ownership changes
aggregating 50% or more in any three-year period, the amount of loss carryovers
that become available for utilization in any year may be limited. If not
utilized against future taxable income, the net operating loss carryovers will
expire between the years 2005 and 2014.
Net Loss
Our net loss for the three-month period ended March 31, 2000 was
$7,849,580, compared to a net loss of $142,693 for the three-month period ended
March 31, 1999. This increase is primarily due to the issuance of signing bonus
grants to newly retained officers and employees in addition to an increase in
legal and professional fees associated with our establishment of company
policies and procedures. These losses reflect the fact that we did not achieve
material revenues in either period. We anticipate that losses will continue as
we increase our operating expenses to carry out our plan of operations. In
particular, we have recently increased our advertising expenses associated with
carrying out a marketing plan promoting our business and Web site. These
advertising expenses may not result in increased revenues.
LIQUIDITY AND CAPITAL RESOURCES
We have relied almost exclusively on equity financing to fund our
operations and capital expenditures. In the three-month period ending March 31,
2000, our operating working capital (defined as current assets less current
liabilities) increased by $1,527,497. This increase was primarily a result of a
private placement of common stock, which raised $3,433,998.
We expect to purchase additional computer related equipment and
software for approximately $4,300,000 during 2000. We are currently negotiating
financing arrangements through several leasing companies.
<PAGE>
We have the option to purchase the building, which we leased in April
2000 of approximately 23,400 square feet, to support our expansion. Should we
decide to negotiate the purchase of the office building, the purchase price will
be approximately $2,600,000 and may be funded through a combination of our
common stock and cash.
Year 2000 Readiness Disclosure
As of the date of this filing, we have not incurred any significant
business interruptions as a result of Y2K issues. In January 2000, we purchased
new computers along with a new software programs and a new network system. We
have updated the software that we utilize. We anticipate that these software
updates will reflect the revisions required to accommodate transactions in the
year 2000 and thereafter. We do not anticipate significant problems relating to
our computer entries in the year 2000 or thereafter. We have not incurred
significant costs in preparation of Y2K issues. No key suppliers or customers
have reported any issues related to year 2000 that might cause an material
adverse affect on our business operations.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company has not been involved in any litigation during the period covered by
this report.
ITEM 2. CHANGES IN SECURITIES.
MARKET INFORMATION
Prior to May 1, 1995, there was no public market for the Company's common stock.
Since May 1, 1995, the National Quotation Bureau, Inc has quoted the Company's
common stock in the National Daily Quotation Service ("Pink Sheets") published
daily. The Company's trading symbol was changed from "BFTI" to "BFTK" in
connection with the Company's December 2, 1996, reverse stock split; then again
to "RIHI" with the name change referred to in Item 1 and the 1 for 100 reverse
stock split in January 1998. Effective December 28, 1999, the Company began
trading under the symbol "WFFT" and quotations are available through the
Electronic Bulletin Board.
A 1 for 3 reverse stock split was effective December 2, 1996. A 1 for 100
reverse stock split was authorized on January 17, 1998 and effective on March 6,
1998. The authorized stock remained at 50,000,000 shares of common stock. All
figures in this Quarterly Report give effect to such reverse stock splits, and
previously stated numbers of shares are appropriately restated, unless otherwise
indicated. All statements in this annual report should be read in conjunction
with and are qualified by the other information and financial statements
(including the notes thereto) appearing elsewhere in this Quarterly Report and
the previously filed Annual Report.
On April 13, 2000, the Company officially filed an application to be listed on
the American Stock Exchange. Notification of approval may take up to several
weeks. If approved, the Company will begin trading under the ticker symbol of
FWF.
The Company's authorized common stock consists of 50,000,000 shares, $.001 par
value per share. On May 10, 2000, there were 22,792,090 shares of common stock
outstanding.
On May 10, 2000, the high, low and closing bid price of the Company's common
stock, as reported on the OTC Bulletin Board by NASDAQ Trading and Marketing
Services, were $ 6.44, $ 5.91 and $6.25 respectively.
HOLDERS
The approximate number of stockholders of record of the Registrant's common
stock as of the close of business on May 10, 2000 was 691, including brokerage
houses holding stock for an unknown number of stockholders. The Company's
transfer agent and registrar for the common stock is National Stock Transfer
Co., Salt Lake City, Utah.
DIVIDENDS
The Company paid a 10% stock dividends on its common stock on March 30, 2000 for
shareholders of record as of January 31, 2000. All stock issued for this
dividend is subject to the 12-month holding period and other applicable
requirements under Rule 144 of the Securities Act of 1933. The Company had no
earnings, consequently, has never paid cash dividends on its common stock and
does not intend to do so in the near future. The Company currently intends to
retain its earnings, if any, for the operation, equipment purchases and
expansion of its business. The Company's present policy is to apply available
working capital to expansion and acquisition.
<PAGE>
RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED
SECURITIES
1. During the first quarter 2000, the Company has conducted four Offerings
under Regulation D, Rule 506 of the Securities Act of 1933, as amended.
The following four offerings raised $3,425,750 during the first quarter
2000:
(a) On February 15, 2000, the Company issued 500,000 shares of
common stock at $0.25 per share or $125,000. In addition, the
Board of Directors declared a 10% stock dividend for 50,000
shares of restricted common stock to the holders valued at $0.25
per share of $12,500.
(b) On February 15, 2000, the Company issued 239,500 shares of
common stock at $0.50 per share for $119,750.
(c) The Company issued 1,335,000 units at $1.00 per share from an
offering dated March 3, 2000. The $1.00 offering offers
1,335,000 shares of common stock in total plus one warrant for
each share of common stock, for the purchase of an additional
share of common stock. $1,335,000 was received in cash during
March 2000. The warrant may be exchanged any time prior to
February 5, 2001 at an exercise price of $2.00. None of these
warrants were exercised during the first quarter of 2000.
(d) The Company agreed to issue 615,333 shares of common stock at
$3.00 per share from an Offering dated March 27, 2000. The $3
Offering offers 5,550,000 shares of common stock in total. Each
share of common stock is given one warrant for the purchase of
an additional share of common stock. $1,846,000 was received as
of March 31, 2000. The warrants may be exchanged any time prior
to April 1, 2001 at an exercise price of $4.00. 2,000 warrants
were exercised during the first quarter 2000 for $8,000.
Subsequent to March 31, 2000, all of the Offerings have been completed
of which all monies are expected to be used towards the purchase of
computer equipment and software, web design, materials, consultants and
operating capital needs to initiate the Company's entry into the
Internet marketplace.
2. On February 15, 2000 the Company issued shares of common stock, as
follows:
No. Of
Purchaser Ref. Shares
--------- ---- ------
Scott Dahne (a) 250,000
Russell Williams (b) 25,000
Walter Williams (b) 25,000
James Hinton, Jr. (c) 1,000,000
John & Vanessa Kirk (c) 1,000,000
News USA (d) 125,000
Kaufman & Associates (e) 75,000
WAVZ Research (f) 3,000
(a) For services performed as Chairman of the Advisory Board and as
a Strategic and Operational Advisor to the Company. These shares
were recorded at the low bid price of $0.408 or $102,000 on
January 4, 2000, the date agreed to join the company.
(b) For services performed as Technical Advisors and Strategic and
Operational Advisors to the Company on Internet security,
e-commerce development, and emerging Internet technologies.
These shares were recorded at the low bid price of $1.813 or
$90,600 on February 4, 2000, the date they became advisors to
the Company.
(c) In January 2000, the Company purchased the licensing agreement
plus all remaining license rights for Whats4Free.com for an
additional 2,000,000 shares of common stock valued at the low
bid price on February 11, 2000, the date of the agreement, of
$1.75 or $3,500,000. Use of the license gives the right to use
the property for commercial purposes including the
distinguishing marks for and in connection with providing
advertising services on the websites and providing search
services and links to other websites directly to the public.
<PAGE>
(d) Shares issued for advertising services for the Company in
exchange for common stock valued on January 13, 2000, the date
of the agreement, at the low bid price of $0.755 or $94,375.
This Nationwide publicity agreement guarantees over 31,200
favorable media story placements in newspapers and on radio
stations across the nation.
(e) Shares issued as a finders fee for current services in fining
the sellers of Whats4Free.com and future services in assisting
the Company in locating possible business acquisitions, joint
ventures or other strategic relationships. These shares were
valued on the low bid price on the date of the agreement,
January 10, 2000, of $0.809 or $60,675.
(f) Shares were issued in exchange for network consulting services,
and were valued on the date of the agreement, February 7, 2000
at the low bid price of $0.364 or $5,625.
All shares were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933.
3. On February 15, 2000, the Company issued 50,000 shares of its common
stock to Pat Passenheim, the Companies legal counsel, in exchange for
legal services. These shares were issued pursuant to services performed
as required under the 1997 Retainer Stock Plan for Non-Employee
Directors and Consultants ("the 1997 Stock Plan"). These shares were
registered with the Securities and Exchange Commission on August 8,
1998, on Form S-8. These shares are valued at the at the low bid price
on the date of issuance of $1.75 or $87,500.
4. On March 17, 2000, the Company issued a combined total of 75,000 shares
of its common stock to two new members of the Advisory Board, Terry
Gardner and Alan D. Liker, for services to be performed as Advisors to
the Company. These shares were valued on January 4, 2000, the date of
their agreements, and at the low bid price of $0.409 or $30,675. All
shares were issued pursuant to the exemption from registration under
Section 4(2) of the Securities Act of 1933.
5. On March 17, 2000, the Company issued 50,000 shares of its common stock
to a consultant for strategic planning, valued at the low bid price on
the date of the agreement, or $0.364 per share or $18,200. Such shares
were issued pursuant to the exemption from registration under Section
4(2) of the Securities Act of 1933.
6. On March 20, 2000, the Company issued 92,500 shares of common stock to
five employees of the Company as a signing bonus to join the Company.
These shares were valued using the low bid price on the date they
agreed to join the Company or $492,220 in aggregate. Such shares were
issued pursuant to the exemption from registration under Section 4(2)
of the Securities Act of 1933.
7. On March 22, 2000, the Company issued 25,000 shares of common stock to
a legal firm, for legal services performed in conjunction with the
Offering Memorandums. These shares were issued pursuant to services
performed as required under the 1997 Retainer Stock Plan for
Non-Employee Directors and Consultants ("the 1997 Stock Plan"). These
shares were registered with the Securities and Exchange Commission on
August 8, 1998, on Form S-8. These shares are valued on March 22, 2000
at the low bid price of $11.25 or an aggregate of $281,250.
8. On March 30, 2000, the Company issued, in aggregate, 873,385 shares of
common stock to approximately 563 shareholders as a 10% Stock Dividend
to shareholders of record on January 31, 2000. Such shares were valued
at $0.30 per share or $262,016.
<PAGE>
The Board of Directors of the Company agrees to issue 360,000 shares of
common stock to the following, as payment of the 10% stock dividend:
<TABLE>
<CAPTION>
No. Of
Name Position/Affiliation Shares
---- -------------------- ------
<S> <C> <C>
Wynn J. Bott Officer 35,000
C. Austin Burrell Officer & Director 100,000
Richard Schmidt Officer & Director 25,000
Cactus Consulting International, Inc. Related Party * 200,000
</TABLE>
* Cactus Consulting International, Inc. ("CCI"), provided substantially
all of the Company's corporate management and administrative services
during the years ended December 31, 1999 and 1998. CCI is wholly owned
by Jan J. Olivier, the Company's CEO and Chairman of the Board.
Such shares were valued at $0.30 per share or $108,000 and will be
issued pursuant to the exemption from registration under Section 4(2)
of the Securities Act of 1933.
9. During the first quarter of 2000, ten employees of the Company agreed
to signing bonus to join the Company, in exchange for an aggregate of
1,412,500 shares of common stock valued on the date they agreed to
join the company, for an aggregate value of $5,144,843:
<TABLE>
<CAPTION>
No. Of
Name Position/Affiliation Shares Total Value
---- -------------------- ------ -----------
<S> <C> <C> <C>
Michael Dillon Officer since 2/00 350,000 $ 634,233
Avery Martinez Officer since 3/7/00 1,000,000 $ 4,312,000
Other Employees Employee 62,500 $ 198,610
</TABLE>
Such shares were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
There has been no material default in the payment of principal, interest or any
other material default not cured within 30 days.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no matters submitted to a vote of security holders.
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits:
10.1 Jan J. Olivier Employment Agreement dated April 30, 1999.
10.2 Cactus Consulting International, Inc. Public Relation Agreement dated
August 31, 1998.
27 Financial Data Schedule
99 Private Securities Litigation Reform Act of 1995- Safe Harbor
Compliance Statement for Forward-Looking Statements.
B. Reports on Form 8K
a. The Company filed an 8K on February 17, 2000 regarding the
change of address of the corporate offices of the registrant and
the change in company name from Ranes International Holding,
Inc. to WFFT.
b. The Company filed an 8K on April 7, 2000 regarding a change in
Certified Public Accountants (Item 4 of section 304 (a)).
================================================================================
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: May 18, 2000 WhatsForFree Technologies Inc.
By: /s/ Jan J. Oliver
------------------------------------
Jan J. Olivier
Chief Executive Officer, Director
By: /s/ Wynn J. Bott
-----------------------------------
Wynn J. Bott
Chief Financial Officer
EMPLOYMENT AGREEMENT WITH JAN J. OLIVER
April 30, 1999
Mr. Jan J. Olivier,
President and CEO
Ranes International Holdings, Inc. 8360 East Via de Ventura, Bldg. L200
Scottsdale, AZ 85258 RE: Extension of Employment Agreement
Dear Jan:
Upon execution by you, this letter will constitute an extension of the
employment agreement (" Agreement") dated May 1, 1996, between you and Ranes
International Holdings, Inc. (formerly known as Bio Fluorescent Technologies,
Inc.) (The "Company").
1. TERM: The Agreement effective May 1,1996 is extended from May 1,1999 to May
1,2002, unless mutually extended by the parties in writing.
2. POSITIONS WITH THE COMPANY: During the term and extension of the term of this
Agreement, you will serve as Chief Executive Officer and President of the
Company. You will faithfully and diligently perform all duties directed by the
Board of Directors of the Company (the "Board"), as well as those set forth in
the Bylaws of the Company that relate to such positions. You will report
directly to the Board.
3. COMPENSATION: You will continue receive the compensation for your services as
per the Agreement during your term of employment which is:
(a) You will receive a minimum base salary of $15,000.00 per month.
Your salary will be paid through Cactus Consultants International, Inc. ("CCI"),
per your request.
(b) You will receive one percent (1%) of the Company's gross sales.
Such amounts shall be payable to you on a quarterly basis on the day that is
thirty (30) days following the end of each quarter.
(c) You will participate in any incentive compensation plan, pension or
profit sharing plan, stock purchase plan, group benefit plan, medical plan,
bonus plan, and/or benefit plans, either currently in effect or as may be
established from time to time by the Board, for which you as an officer of the
Company are or may be eligible to participate.
(d) You will receive stock options to purchase 500,000 shares of
Company stock, with 250,000 reload option at $0.445 per share. Such options
shall vest as follows: Jan J. Olivier, as community property. Such options, once
vested, shall be exercisable by you for a period of five (5) years or until the
date which is thirty (30) days after the date your employment with the Company
terminates (whether by termination without cause, voluntary resignation, death
or disability), whichever is earlier.
(e) You will receive such other compensation as may from time to tome
be grant you by the Board of the Compensation Committee thereof.
4. EXPENSES AND MISCELLANEOUS BENEFITS: The Company will pay or reimburse you
for all ordinary and necessary business expenses incurred or paid by you in
furtherance of the Company's business, all in accordance with the Company's
policies and procedures of general application. You will be permitted to take
vacations and sick leave in accordance with the Company's policies and
procedures as in effect for other officers of the Company.
5. TERMINATION FOR CAUSE: The Company may terminate you for cause in the event
that you: (a) materially breach this Agreement; (b) fail to follow any
reasonable and lawful direction of the Board or materially violate any
reasonable rule or regulation established by the Company from time to time
regarding conduct of its business; (c) engage in any act of dishonesty with
respect to the Company; or (d) engage in criminal conduct (whether or not
related to your employment). Upon any termination under this Paragraph 5, you
will be entitled to receive only your then current base salary, and any other
benefits to which you are entitled to receive hereunder through the date of
termination. If you are terminated for cause, notwithstanding any provision in
any stock option agreement, all stock options held by you shall terminate on
your date of termination.
<PAGE>
6. TERMINATION B VOLUNTARY RESIGNATION: In the event that you voluntarily
resign from the Company, you will be entitled to receive only your then current
base salary, net of withholding or other deductions required by law, and any
other benefits to which you are entitled hereunder, through the date of your
resignation.
7. DEATH OR DISABILITY: If during the term of this extension of the Agreement
you die, then this Agreement will terminate and your estate shall be paid your
then current base salary, net of withholding or other deduction required by law,
and any other benefits to which you are then entitled hereunder through the date
of your death. If during the term of this Agreement extension you become so
disabled or incapacitated by reason of any physical or mental illness or any
drug or alcohol addiction so as to be unable to perform the services required of
you pursuant to this Agreement extension for a continuous period of three
months, then at the option of the Company upon thirty (30) days written notice
to you, this Agreement extension shall terminate at the end of such three-month
period, provided that during such period of disability or incapacity, you shall
be paid the full salary, benefits and expenses otherwise payable to you, less
the amount you receive from any Company-provided disability insurance for the
period of such illness or incapacity. In addition, in the case of termination by
death or disability under this Paragraph 7, for a period of one year from the
date of your termination, the Company will maintain in full force and effect,
for the benefit of you or your estate, your coverage under any life, health,
disability, accident or similar insurance plans in which you then participate,
or will provide you or your estate with alternative coverage substantially
equivalent to that provided under such plans.
8. TERMINATION OTHER THAN CAUSE: In the event that you are terminated for any
reason other than as set forth in Paragraph 5 above:
(a) You will receive your then current base salary, net of withholding
and other deductions required by law, for the unexpired term of this Agreement
extension, payable at your election either in lump sum or at the times such
salary would have been payable were you to remain employed by the Company; and,
(b) Your dependents as well as yourself will have the right to continue
to participate in any good benefit plan, medical plan and/or other benefit
plans, or be provided with benefits similar to those provided by such plans for
the unexpired term of this Agreement extension.
9. CONFIDENTIALITY: During the term of this Agreement extension, and for a
period of two years after the termination of this Agreement extension
(regardless of the manner in which this Agreement is terminated), you will not
communicate or disclose to any person, or use for your own account, or for the
account of any other person, without the prior written consent of the Company,
any confidential knowledge or information concerning any patents, inventions,
know-how, processes or equipment used in, or any trade secret or confidential
information concerning the business and affairs of the Company or any of its
affiliates that you acquire or have acquired during the term of your employment
with the Company. Additionally, during the term of this Agreement and extension
of the Agreement, and for a period of two years after the termination of this
Agreement and extension (regardless of the manner in which this Agreement or
extension is terminated), you shall retain all such confidential knowledge and
information concerning the foregoing in trust for the sole benefit of the
Company and its affiliates and their respective successors and assigns. This
Paragraph 9 shall survive the termination of this Agreement.
10. PERSONAL RIGHTS AND OBLIGATIONS: This Agreement extension and all rights and
obligations hereunder are personal and shall not be assignable by either you or
the Company except as provided in this subparagraph, and any purported
assignment in violation thereof shall be null and void. Any person, firm or
corporation succeeding to the business of the Company by merger, consolidation,
purchase of assets or otherwise, shall assume by contract or operation of law
the obligations of the Company hereunder and in such a case you shall continue
to honor this Agreement and extension of Agreement with such person, firm or
corporation substituted for the Company as the employer.
<PAGE>
11. NOTICES: Any notice, election or communication to be given under this
Agreement extension shall be in writing and delivered in person or deposited,
certified or registered, in the United States mail, postage prepaid, addressed
as follows:
If to the Company: Ranes International Holding, Inc.
8360 East Via de Ventura, Bldg. L200
Scottsdale, AZ 85258
If to you: Mr. Jan J. Olivier
6400 East Jackrabbit Road
Paradise Valley , AZ 85253
or to such other addresses as the Company or you may from time to time designate
by notice hereunder. Notice will be effective upon delivery in person, or at
midnight on the fourth business day after the date of mailing, if mailed.
12. ENTIRE AGREEMENT: This Agreement extension constitutes and embodies the full
and complete understanding and agreement of the Company and you with respect to
your employment by the Company and supersedes all prior understanding or
agreements whether oral or in writing. This agreement may be amended only in
writing signed by you and the Company.
13. BINDING NATURE OF AGREEMENT: This Agreement extension shall be binding upon
and inure to the benefit of the Company and its successors and assigns and
shall be binding upon you, your heirs and legal representatives.
14. GOVERNING LAW: This Agreement extension shall be governed by and interpreted
in accordance with the laws of the state of Arizona.
15. CAUTIONS: The captions included in this Agreement extension are for
convenience and do not constitute a part of this Agreement.
16. COUNTEPARTS: This Agreement extension may be executed in any number of
counterparts, each of which will be considered a duplicate original.
17. WITHHOLDING AND RELEASE: You acknowledge and agree that payments made to you
hereunder may be subject to withholding. You further acknowledge and agree that
payment of any of the benefits to be provided to you under this Agreement
extension following any termination of your employment is subject to your
compliance with any reasonable and lawful policies or procedures of the Company
relating to employee severance, including the execution and delivery by you of a
release reasonably satisfactory to the Company or related persons, except for
the continuing obligations provided herein.
/S/ Ray TripHahn
Ray TripHahn, Company Secretary & Director
Very truly yours,
Accepted:
/s/ Jan J. Oliver
Jan J. Oliver
Date: 4/30/99
PUBLIC RELATION AGREEMENT WITH CACTUS CONSULTANTS INTERNATIONAL, INC.
Standard Form Corporate Public Relations Agreement
This Agreement, made this 31st day of August, 1998, by and between CACTUS
CONSULTANTS INTERNATIONAL, INC., a corporation duly organized in the State of
Arizona (hereinafter referred to as "CCI'), and RANES INTERNATIONAL HOLDING,
INC., (hereinafter referred to as '"Client"), Witnesseth:
1.00 RECITALS: That CCI tenders, among other services, Public Relations and
Investor Relations services for client companies that are in various stages of
growth who wish to develop and maintain public awareness about their companies
by providing corporate information on such companies and their concurrent
technology, products and/or services; and Client is a company in its start up or
growth stage and wishes to retain an independent, outside, Corporate Public and
Investor Relations Service firm that can assist Client to maintain public
awareness and interest in their company, technology, products and/or services;
NOW THEREFORE, in consideration of the mutual promises, covenants, and terms
between the parties hereto, it is agreed as follows:
1.01 TERM OF CONTRACT: Client hereby retains, employs, and otherwise engages the
services of CCI according to the terms described herewith commencing the 1 st
day of September, 1998, and continuing for a period of three (3) years, and said
retention by Client of CCI for the applicable period, shall be renewable at the
option of the parties by mutual agreement upon the same terms and conditions, or
as amended.
1.02 SERVICES TO BE PERFORMED BV CCI: The parties hereby agree that CCI will
expend its efforts as ALL independent contractor to, including, but not limited
to
a) receive information, including but not limited to, press releases,
financial information, news items, management information, business plan,
disclosure and filing information, product and/or services information,
technical information, and any and all information deemed by Client necessary
for CCI or any Public and Investor Relations firm to perform its obligations;
b) consult with Client on cost, terms, location, and other factors
regarding announcements and public venue for placement of such, and otherwise
arrange for publication of such information in public venue publications, and
all as may be more specifically described and designated in Exhibit " A";
c) consult with, make commentary on, suggest, advise, or otherwise
review and/or amend, at Client's direction, information provided to CCI by the
Client for performance of its duties;
d) disseminate, mail, courier, distribute, and make available, on an
individual transactional basis, or larger group basis, all at agreed
specifications, and according to the terms and conditions specified in Exhibits
" A " and "B", information deemed by the Client necessary for CCI to perform the
services as more specifically described in this Agreement and the Exhibits
herein;
e) provide telephone reception and response services on an individual
or program basis, relay verbal information, and, render general, non-specified,
telephone response, and follow up response, and those same services as may be
more specifically described in Exhibit " A" or otherwise requested by the
Client;
f) provide telephone contract and presentation services to designated
parties, prearranged parties, and otherwise as may be more specifically directed
by Client or described in Exhibit " A";
g) in turn to retain, employ, utilize or rent, any employees,
subcontractors, agents, consultants, advisors, or plant, property, or equipment,
on CCI's behalf, or Client's behalf, as the case may be, all necessary and
ordinary for CCI to perform the services as more specifically described in this
Agreement and the Exhibits herein;
<PAGE>
1.03 ESTOPPEL AND WAIVER: Client hereby agrees, covenants, and warrants, that
CCI is a retained independent contractor to Client, and that no agent, employee,
or servant of CCI shall be deemed to be, including but not limited to, a
Director, Officer, employee, agent or servant of Client; further Client hereby
agrees that Client, its employees, officers, directors, and agents, are estopped
from making, and waive their right to make, any claim, demand, petition, civil
or court action, file any proceeding, or otherwise allege any right, duty, or
liability against CCI, its directors, officers, employees, agents or servants,
that CCI, its employees, agents, or servants, is anything other than an
independent contractor. Client further warrants that CCI performs its services
and makes available its plant, property, equipment and employees, and its manner
and means of rendering such services are under the sole control of CCI, as an
independent contractor. CCJ, as an independent contractor, is solely and
entirely responsible for the acts of its employees, agents, servants, and any
subcontractors. Additionally, Client warrants and attests that no Client or
Client company employee benefits that may currently be provided to its
employees, or provided in the future, are provided, nor are intended to be
provided to, CCI, its employees, agents, or servants, such employee benefits
that are standard, common, or normal for employers to provide for employees.
1.04 REPRESENTATIONS AND WARRANTIES BV CLIENT OF FURNISHED CORPORATE
INFORMATION: The Client hereby represents, covenants, and warrants to CCI that
all information, whether submitted to CCI pursuant to CCI performing its duties
to this Agreement, or submitted to CCI otherwise, by whatever means, shall
disclose all material facts and shall not omit any facts necessary to make such
information, statements, or significance made on behalf on the Client or its
affairs not misleading;
1.05 CLIENT INDEMNIFICATION OF CCI FOR CORPORATE INFORMATION AND ITS
DISSEMINATION: Client hereby covenants, warrants, and agrees that CCI is not
responsible for, and CCI is indemnified by Client for any claims, demands,
costs, fees, Attorneys' fees or retainers, fines, penalties, whether court
ordered, or not, and held otherwise harmless for, any and all information
relayed, transmitted, disseminated, distributed, or otherwise communicated by
whatever means, by CCI on the Client's behalf, or otherwise, whether in the
performance of CCI's duties, or not, including but not limited to, public or
private publication, dissemination by verbal or written means, by mail, courier,
telefax, or telephone; Client further covenants and warrants that any
information it supplies to CCI, in any original or amended form, and the
concurrent accuracy of such information, and its compliance with any Copyright
laws, status, or protection, is solely the responsibility of the Client, and
Client is free to seek advise of its own Counsel regarding the accuracy of any
information it provides CCI, the manner of dissemination of such information in
the public venue, whether directly by Client, by arranged publication, or
whether by CCI, according to the terms of this Agreement, or not.
1.06 AGREED POLICIES AND PROCEDURES: IT is hereby agreed between the parties
hereto, without limiting the foregoing, and as may be more specifically in the
Exhibits attached and made a part of this Agreement, that
a) from time to time, CCI, in the performance of its duties, may assist
with the preparation, amendment, drafting, editing, consulting, or critique of
the information provided by Client, and submit such prepared, amended, or edited
information to the Client for the purposes of review and approval; and
b) from time to time, CCI, in the performance of its duties, may submit
to Client, for purposes of final review and approval, suggested strategy,
consultation, advise, and/or additional policy or procedure regarding CCI's
potential Public and Investor Relations services; and
c) Client may request CCI, and CCI shall make, all corrections, changes
and amendments, in dealing with information and/or strategy, policy and
procedure that the Client may request; and
d) in all cases, Client shall have, and is deemed to have, all final
review and approval, of all disseminated information and policy and procedures,
and
e) with out limiting any of the foregoing, all approvals, corrections,
amendments, and strategies, policies and procedures, unless otherwise approved
by this Agreement, shall be signed by a duly authorized representative of the
Client, whether by original signature or by facsimile (telefax); Client may
also, if not specified by the terms of this Agreement, leave standing
instructions as to a final approval issue or series of issues regarding
information, proofs for publication, or other matters of policy or procedures;
the Client hereby designates the individual(s) listed in Exhibit "C" hereof as
authorized representative( s) for purposes of this Agreement, and CCI may rely
upon such designation;
<PAGE>
f) staged payment Compensation terms, if applicable, shall be as
outlined in Exhibit(s) " A" and "B", and call for certification by CCI of
completion of services/project stage or phase, and CCI shall deliver its Invoice
to Client upon completion of such phase, and Client shall render payment for
such completed phase to CCI; CCI's Invoice, if applicable, may call for
reimbursement, advance, or settlement, of Costs and Expenses in connection with
its performance and completion of the agreed stage, phase, or project, if
applicable;
1.07 COMPENSATION AND TIME OF PERFORMANCE: IN return for CCI's services, Client
agrees to pay compensation as more specifically described in Exhibit "B" of this
agreement. Compensation is to be denominated in US dollars, in cash, or
property, as the case may be, and is either I) payable upon execution of this
agreement, all as stipulated in Schedule "B", or 2) payable, in whole or part,
in staged payments, as the case may be and as described in Exhibit(s) " A"
and/or "B" upon CCI beginning performance, completion of a phase of its
performance, or as otherwise specified by the parties.
a) Should compensation be paid, partially or wholly, and in lieu of
cash, in the form of securities as payment for services in kind, then Client and
CCI shall agree on the value of such securities tendered, and such valuation
will be stipulated and comprise, pro-rata a stipulated portion of the
Compensation, itemized in Schedule B. Should securities tendered by part of the
compensation, it is agreed between the patties hereto that, once tendered, CCI
shall have been deemed to have received final payment, for either all or part of
their compensation under this agreement; and
b) further, all investment risk of any securities tendered, shall be
agreed between the parties, to belong to CCI, to pass at the time of tender;
however, it is further agreed between the parties that the above term
"Securities" does not include "options to purchase" securities, of any issuer,
and that options will not have an ascertainable value for purposes of
compensation, thus will not be accounted for as described above. The parties
also agree, however, that should any such options be granted to CCI in
connection with this Agreement will be part of its compensation, or deemed to be
legal consideration for CCI's services; and
c) it is mutually agreed between the parties hereto, that CCI retains
the option to begin its performance under this agreement, prior to the payment
of its agreed Compensation, and that if performance has begun prior to the
execution of the Agreement, such performance by CCI is hereby agreed by Client
to be ratified and approved as if it were undertaken after execution of this
Agreement.
1.08 COSTS AND EXPENSES: OUT OF POCKET COSTS: RETAINERS AND ADVANCES: The
parties hereby agree that CCI, as an independent contractor, provides premises,
labor, consultation, and contractor services, among other services. All matters
regarding sharing of Costs and Expenses, whether allocated to Client, or
advanced on behalf of Client by CCI, or Costs and Expenses absorbed, as the case
may be, by CCI, and general matters regarding such Costs, Expenses, Retainers
and Advances ("Costs and Expenses") shall be stipulated to be expressed in U.S.
dollars, for accounting and other purposes. All such terms regarding Costs and
Expenses, Out of Pocket Costs, Retainers and Advances, now known or unknown, may
be stipulated and expressed as terms in Exhibit "B". Should the terms regarding
Costs and Expenses be not specified as described, then, from time to time
a) CCI may, in its discretion, advance, or allocate, on a reasonable
basis, sums in payment of, including, but not limited to, postage, supplies,
phone expenses, and other out of pocket expenses, that are costs and expenses of
Client, and reimbursable to CCI; and
<PAGE>
b) CCI may, in its discretion, keep and maintain limited books and
records, in the form of an account deemed or carried as "Costs and Expenses
Advanced or Allocated on behalf of Client"; and
c) CCI shall advise Client on a regular basis, all as is practicable,
the total amount of Costs, Out of Pocket Costs, and Expenses, deemed to be and
attributable to Client, together with those described Costs and Expenses that
have been paid ( or paid, then allocated) by CCI on behalf of Client, together
with those Costs and Expenses that remain Due and Payable but remaining unpaid,
belonging to 3rd party vendors on behalf of Client; and
d) that any Costs and Expenses, Out of Pocket Expenses or Advances
made, advanced, or allocated by CCI to any party become an Accounts Receivable (
or, as the case may be, "Expenses Receivable") for CCI, and an Accounts Payable
for Client; Costs and Expenses, Bills, Invoices and other Costs directly billed
or invoiced in either CCI's name, on behalf of Client, or directly billed by 3rd
party vendors, all remaining unpaid, as the case may be, remain an Accounts
Payable to the Client to such 3rd party vendors; and
e) CCI may submit an Invoice, all in connection with, and consistent
with, this Agreement, from time to time, or on a regular basis; and without
limiting the foregoing, parties hereby expressly agree that nothing in the
aforesaid, or any other part of this Agreement, creates any obligation,
whatsoever, on the part of CCI, as an independent contractor, to advance, pay,
settle, negotiate, or otherwise absorb, any expense, cost, advance, claim,
invoice, fine, penalty, or bear any other item of expense, on behalf of Client
or its activities, and the parties agree, in good faith, that it is not CCI's
obligation to do so;
1.09 ASSIGNMENT AND DELEGATION: Neither party may assign any rights or delegate
any duties hereunder, without limiting the foregoing, including the retention by
CCI of subcontractors, agents, and sub- consultants, without the other party's
express prior written consent.
1.10 ENTIRE AGREEMENT: THIS writing, the Exhibits attached and made a part of
this Agreement herein, shall contain the entire agreement of the parties,
without limiting the foregoing, including CCI's option to begin performance,
such performance, if begun, being ratified by execution of this Agreement, and
pursuant to its execution, as aforesaid. No material representations were made
or relied upon by either party other than those expressly set forth in the
Agreement. Client understands that CCI may expend substantial financial sums and
work effort in the good faith performance of its services, and CCI makes no
guarantees, assurances or representations in regard to its performance under the
Agreement, to the results of Client's Corporate Public and Investor Relations
program or any other results of services required by Client pursuant to this
Agreement. No agent, employee or other representative of either party is
empowered to alter or amend any of the above terms, conditions, compensation,
matter of policy or procedure unless done in writing and signed by an executive
officer of both respective parties.
1.11 CONTROLLING: LAW AND VENUE: This Agreement's validity, interpretation and
performance shall be controlled by and construed under the laws of the State of
Arizona. The proper venue and jurisdiction shall be the Circuit Court in
Maricopa County, Arizona.
1.12 OTHER PREVAILING LAWS AND APPLICABILITY: THIS Agreement, the terms and
conditions therein, including, but not limited to, the manner of Compensation
that may be tendered by Client to CCI, or any payments In kind, may be, and are
deemed herein to be, contingent and subject to, including but not limited to,
Client's compliance with applicable State Securities Laws, Federal Securities
Laws, and Rules of the various applicable Securities Exchanges, Securities
Commissions, and NASD Broker-Dealer Rules and Regulations. Client understands,
agrees, covenants and warrants to the Client, or other parties in interest that
Client will make all applicable filings, registrations, amendments, and secure
opinions and exemptions, for any undertaking by Client in connection with the
tender or payment, in kind, or other obligation, to Client, of Securities,
Warrants, Options, Rights, or other tendered securities of Client. Further,
Client agrees that it will disclose any intended manner, type, or method of
registration of Securities in connection with this Agreement, and any timing of
such registration, with CCI, and that CCI, by and through its designated
Counsel, must approve and concur with the Client (or its designated Counsel), on
such manner and timing of any such registration. CCI also may reserve the right
to secure from Client, at Client' s cost, an Opinion of Counsel, that any
transaction regarding Securities is compliant with the applicable State or
Federal Laws regarding such. All costs and expenses in connection with the
aforesaid shall be borne by the Client.
<PAGE>
1.13 CERTAIN AUTHORITIES TO CCI: Without limiting any provision in this
Agreement, Client may extend certain limited authorities or powers to CCI, or
certain officers or employees, ordinary and necessary to facilitate Client's
business and CCl's performance.
1.14 PREVAILING: PARTY: In the event of the institution of any legal proceedings
or litigation, at the trial level or appellate lever, with regard to this
Agreement, the prevailing party shall be entitled to receive from the
non-prevailing party all costs, reasonable attorney's fees and expenses.
1.15 FAILURE TO OBJECT NOT A WAIVER: The failure of either party to this
Agreement to object to, or to take affirmative action with respect to any
conduct of the other which is in violation of the terms of this Agreement shall
not be construed as a waiver of the violation or breach or of any future
violation, breach or wrongful conduct.
1.16 NOTICES: All notices or other documents under this Agreement shall be in
writing and delivered personally or mailed by certified mail, postage prepaid,
addressed to the representative or Company as follows:
COMPANY: CACTUS CONSULTANTS INTERNATIONAL, INC,
8360 East Via de Ventura, Bldg. 1.J200
Scottsdale, Arizona 85258
Attention: Mr. Jan J. Olivier
CLIENT: RANES INTERNATIONAL HOLDING, INC,
8360 East Via de Ventura, Bldg. L200
Scottsdale, Arizona 85258
Attention: Mr. Ian I. Olivier, President/CEO
1.17 HEADINGS: Headings in this Agreement are for convenience only and shall not
be used to interpret or construe its provisions. For all intents and purposes,
time is of the essence with this Agreement.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
CACTUS CONSULTANTS INTERNATIONAL, INC.
RANES INTERNATIONAL HOLDING, INC.
BY: /S/ Jan J. Olivier
-------------------------
JAN J. OLIVIER
BY: /S/ Ray Triphahn
-------------------------
RAY TRIPHAHN, DIRECTOR
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,703,112
<SECURITIES> 0
<RECEIVABLES> 65,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,768,112
<PP&E> 515,157
<DEPRECIATION> 4,125
<TOTAL-ASSETS> 6,713,564
<CURRENT-LIABILITIES> 425,952
<BONDS> 0
0
0
<COMMON> 21,960
<OTHER-SE> (14,410,467)
<TOTAL-LIABILITY-AND-EQUITY> 6,713,564
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 7,849,580
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (7,849,580)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,849,580)
<EPS-BASIC> (.44)
<EPS-DILUTED> (.44)
</TABLE>
EXHIBIT 99
----------
WHATSFORFREE TECHNOLOGIES, INC.
Private Securities Litigation Reform Act of 1995
Safe Harbor Compliance Statement for Forward-Looking Statements
In passing the Private Securities Litigation Reform Act of 1995 (the
"PSLRA"), Congress encouraged public companies to make "forward-looking
statements"(1) by creating a safe-harbor to protect companies from securities
law liability in connection with forward-looking statements. WhatsforFree
Technologies, Inc. (the "Company" or "WFFT") intends to qualify both its written
and oral forward-looking statements for protection under the PSLRA.
To qualify oral forward-looking statements for protection under the
PSLRA, a readily available written document must identify important factors that
could cause actual results to differ materially from those in the
forward-looking statements. WFFT provides the following information in
connection with its continuing effort to qualify forward-looking statements for
the safe harbor protection of the PSLRA.
Important factors currently known to management that could cause actual
results to differ materially from those in forward-looking statements include,
but are not limited to, the following: (i) Internet start-up stock price
fluctuations; (ii) our limited operating history; (iii) our ability to
effectively manage growth; (iv) our ability to establish effective financial and
managerial controls; (v) recruiting, hiring and retaining the services of key
personnel; (vi) our ability to compete with more established firms that possess
greater resources than our own; (vii) consumer acceptance of our Web-site and
new product and service introductions; (viii) our failure to protect our
proprietary information and technology; (ix) security breaches of the content of
our Web-site which may lead to third party claims as to misappropriated
information; (x) the demand for the on-line marketing services that we provide;
(xi) declines in online advertising rates; and (xii) new regulatory developments
that may make the delivery of our services unfeasible or more expensive. For a
more complete description of these and other risk factors that may affect our
results, see our Annual Report on Form 10-K for the fiscal year ended December
31, 1999 as well as our other filings with the Securities and Exchange
Commission.
Forward-looking statements express expectations of future events. All
forward-looking statements are inherently uncertain as they are based on various
expectations and assumptions concerning future events and they are subject to
numerous known and unknown risks and uncertainties which could cause actual
events or results to differ materially from those projected. Due to these
inherent uncertainties, the investment community is urged not to place undue
reliance on forward-looking statements. In addition, WFFT undertakes no
obligation to update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes to projections
over time.
- ------------------------
(1) "Forward-looking statements" can be identified by use of words such as
"expect," "believe," "estimate," "project," "forecast," "anticipate," "plan,"
and similar expressions.
