SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from
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to
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Commission file number
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RBID.COM INC.
(Exact Name of Registrant as Specified in its Charter)
Florida 33-0857311
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State of Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
24461 Ridge Route Dr., Laguna Hills, CA 92663
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Address of Principal Executive Offices) (Zip Code)
(949) 470-4550
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(Issuer's Telephone Number, Including Area Code)
NONE
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
At June 30, 1999, and November 10, 1999 there were 8,378,500 shares of common
stock outstanding.
RBID.COM INC.
(A DEVELOPMENT STAGE COMPANY)
(UNAUDITED)
TABLE OF CONTENTS
Part I. Financial Information Page Numbers
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Item 1. Financial Statements
Balance Sheets at June 30, 1999 and December 31, 1998 (Unaudited) 1
Statement of Operations for the three months ended June 30, 2
1999 and 1998 and October 4, 1998 (Inception) to June 30, 1999 (Unaudited)
Statements of Operations for the six months ended June 30, 3
1999 and 1998 and October 4, 1998 (Inception) to June 30, 1999 (Unaudited)
Statements of Cash Flows for the six months ended June 30, 4
1999 and 1998 and October 4, 1998 (Inception) to June 30, 1999 (Unaudited)
Notes to Financial Statements (unaudited) 5 - 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results 14
of Operations Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K 14
Signature Page 15
RBID.COM, INC.
(A Development Stage Company)
BALANCE SHEET
(Unaudited)
June 30, December 31,
1999 1998
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ASSETS
Current Assets
Cash $11,191 $ --
Deposits 2,608 --
Loan receivable, shareholder 26,944
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Total Current Assets 40,743 --
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Property and equipment, net of accumulated
depreciation 31,655 15,660
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Total Assets $ 72,398 $ 15,660
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 11,492 $ 1,772
Payroll taxes payable 2,500 --
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Total Current Liabilities 13,992 1,772
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Stockholders' Equity
Common stock, $0.001 par value, 50,000 shares authorized;
8,378,500 shares issued and outstanding 8,378 6,928
Additional paid in capital 1,341,590 11,779
Deficit accumulated during the development stage (1,291,562) (4,819)
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Total Stockholders' Equity 58,406 13,888
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Total Liabilities and Stockholders' Equity $ 72,398 $ 15,660
========= ===========
See accompanying notes to financial statements.
1
RBID.COM, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(Unaudited)
Period
Three months Three months October 4, 1988
ended ended (Inception) to
June 30, June 30, June 30,
1999 1998 1999
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Revenue $ -- $ -- $ --
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Expenses:
Selling, general and administrative 896,453 1,772 1,291,272
Depreciation 290 -- 290
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Total Operating Expenses 896,743 1,772 1,291,562
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Operating Loss (896,473) (1,772) (1,291,562)
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Net Loss ($ 896,473) ($ 1,772) ($1,291,562)
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Per Share Information:
Weighted Average Shares Outstanding -
Basic and Diluted 7,848,500 7,486,000 1,514,409
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Net Loss Per Common Share - Basic and Diluted ($ 0.11) -- ($ 0.85)
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See accompanying notes to financial statements.
2
RBID.COM, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(Unaudited)
Period
Six months Six months October 4, 1988
ended ended (Inception) to
June 30, June 30, June 30,
1999 1998 1999
----------- ----------- -----------
Revenue $ -- $ -- $ --
----------- ----------- -----------
Expenses:
Selling, general and administrative 1,286,453 1,772 1,291,272
Depreciation 290 -- 290
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Total Operating Expenses 1,286,743 1,772 1,291,562
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Operating Loss (1,286,743) (1,772) (1,291,562)
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Net Loss ($1,286,743) ($ 1,772) ($1,291,562)
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Per Share Information:
Weighted Average Shares Outstanding -
Basic and Diluted 7,848,500 1,000,000 1,514,409
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Net Loss Per Common Share - Basic and Diluted ($ 0.17) -- ($ 0.85)
=========== =========== ===========
See accompanying notes to financial statements.
3
RBID.COM, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
Period
Six months Six months October 4, 1988
ended ended (Inception) to
June 30, June 30, June 30,
1999 1998 1999
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ($1,286,743) ($ 1,772) ($1,291,562)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Consulting services contributed 1,080,000 -- 1,083,047
Depreciation 290 -- 290
Increase in operating assets:
Deposits (2,608) -- (2,608)
Loan receivable, stockholder (26,944) -- (26,944)
Accounts payable & taxes payable 12,220 1,772 13,992
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Net cash used in operating activities: (223,785) -- (223,785)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (16,285) -- (16,285)
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CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock,
net of issuance costs 251,261 -- 251,261
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NET INCREASE IN CASH 11,191 -- 11,191
CASH, beginning of year -- -- --
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CASH, end of period $ 11,191 $ -- $ 11,191
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the year for:
Interest $ --
Income taxes $ --
See accompanying notes to financial statements.
4
RBID.COM INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Organization
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The Company was incorporated on October 4, 1988, in the State of Florida under
the name of Gulf Coast Securities Transfer, Inc. On May 19, 1998, the Company's
name was changed to GCST Corp. and Amended Articles of Incorporation. The name
was again changed to Rbid.com, Inc. on April 6, 1999 and a second set of Amended
Articles of Incorporation were filed with the State of Florida. The Company is a
development stage Company. The Company's primary concentrations are in providing
internet access services, e-commerce solutions, online shopping, online auctions
and classified advertising to consumers and small to medium businesses.
Net Income (Loss) Per Share
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The net income (loss) per share is computed by dividing the net income (loss)
for the period by the weighted average of common shares outstanding for the
period. For the period October 4, 1998 (Inception) to June 30, 1999 potential
common shares and the computation of diluted earnings per share are not
considered as their effect would be anti-dilutive.
Estimates
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The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's management to
make estimates and assumptions that affect the amounts reported in these
financial statements and accompanying notes. Actual results could differ
significantly from those estimates.
Property, Equipment and Software
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Property and equipment are recorded at cost. Depreciation has been calculated on
the accelerated cost recovery method at rates based on five to seven years
estimated lives. Software is being depreciated using the accelerated cost
recovery method over a life of seven years. This depreciation method is designed
to expense the cost of the asset over its estimated useful life.
Impairment of Long-Lived Assets
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The Company accounts for the carrying value of long-lived assets in accordance
with the requirements of FAS 121 "Accounting for the Impairment of Long-Lived
Assets". As of September 30, 1998, no asset impairment needs to be recognized.
Comprehensive Income
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Effective January 1, 1999, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" (Statement 130). This
statement is effective for financial statements issued for periods beginning
5
after December 15, 1997. Statement 130 established standards for reporting and
display of comprehensive.
Comprehensive Income (Continued)
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income and its components in a full set of general purpose financial statements.
Statement 130 requires that all items recognized under accounting standards as
components of comprehensive income be reported in a financial statement with
equal prominence as other statements. There were no items of other comprehensive
income for the period October 4, 1988 (Inception) to June 30, 1999, thus, net
income is equal to comprehensive income for the period.
In 1999, the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 131, "Disclosures about Segments of an Enterprise and Related Information."
SFAS No. 131 defines how operating segments are determined and requires
disclosure of certain financial and descriptive information about the Company's
operating segments. Under current conditions, the Company has one reporting
segment.
Cash and Cash Equivalents
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The Company considers all short-term, highly liquid investments with an original
maturity date of three months or less at date of purchase to be cash
equivalents. Cash and cash equivalents are stated at cost, which approximates
fair value.
Revenue Recognition
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Revenue is recognized by the Company upon the delivery of the product or
completion of services rendered.
Advertising Costs and Marketing Costs
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The Company expenses all advertising costs as incurred. Advertising expense for
the six months ended June 30, 1999 amounted to $21,605. Marketing costs totaled
$37,490 for the six months ended June 30, 1999.
Research and Development
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Research and development costs are expensed as incurred. Research and
development costs for the six months ended June 30, 1999, are estimated by
management to be approximately $600,000.
Concentration of Business and Credit Risk
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The Company has exposure to credit risk to the extent that its cash and cash
equivalents exceed amounts covered by federal deposit insurance. The Company
believes that its credit risk is not significant.
The Company plans to do business in the international market. The Company's
ability to collect the amounts due from its customers is affected by economic
conditions in its industry and the geographical area in which it conducts
business.
6
Note 2. Property, Equipment and Software
Property, equipment and software consisted of the following at September 30,
1999:
Equipment $16,285
Less accumulated depreciation (290)
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15,995
Software 15,660
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$31,655
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Note 3. Stockholders' Equity
In 1998, the State of Florida approved the Company's restated Articles of
Incorporation, which increased its capitalization from 1,000 common shares to
50,000,000 common shares. The par value was unchanged at $.001.
Also, in 1998, the Company forward split its common stock 1,000:1, thus
increasing the number of outstanding common stock shares from 1,000 to 1,000,000
shares.
In August 1998, the Company issued 5,800,000 shares of common stock for software
valued at $15,660. The shares of the prior stockholders of Company's common
stock totaling 1,000,000 outstanding shares, were redeemed in 1998.
In addition, the Company for the nine months ended September 30, 1998, issued
700,000 shares of common stock to consultants for services rendered valued at
$1,890. During the three months ended December 31, 1998, the Company issued
428,500 shares of common stock to consultants for services rendered valued at
$1,157.
In the quarter ended June 30, 1999, the Company received funds of approximately
$252,000 from an exempt securities offering pursuant to Regulation D, Rule 504.
Common stock was issued based on a subscription price of $1.00 per share for the
1,000,000 share offering. The costs of the offering of approximately $118,000
were recorded as a reduction to additional paid in capital. Consulting service
shares issued totaled 630,000. The Company also issued 450,000 restricted shares
of common stock for services in 1999 at $1.00 per share (390,000 shares in the
three months ended March 31, 1999 and 60,000 shares in the three months ended
June 30, 1999).
Note 4. Income Taxes
The Company has a 1998 Federal net operating loss carryforward of approximately
$5,600, which will expire in the year 2018. The tax benefit of this net
7
operating loss of approximately has been offset by a full allowance for
realization.
Note 5. Year 2000
The Company has assessed its exposure to date sensitive computer software
programs that may not be operative subsequent to 1999 and has implemented a
requisite course of action to minimize Year 2000 risk and ensure that neither
significant costs nor disruption of normal business operations are encountered.
However, because there is no guarantee that all systems of outside vendors or
other entities on which the Company's operations rely will be Year 2000
compliant, the Company remains susceptible to consequences of the Year 2000
issue.
Note 6. Subsequent Events
In October, 1999, the President of the Company entered into a stock purchase
agreement with an unrelated company pursuant to which the President agreed to
sell and the unrelated company agreed to purchase 2,300,000 shares of common
stock of the President's in the Company for a total consideration of $750,000.
The unrelated company assumed control of the Company and the directors and
officers of the Company resigned and new directors and officers were elected.
Note 7. Commitment and Contingencies
The Company entered into a marketing agreement dated April, 1999, with an
unrelated market entity to market websites. The Company advanced monies to the
marketing entity in the approximate amount of $145,600. In order to assist in
customer satisfaction, the Company did not process any customer credit cards
until the websites were operating in July, 1999. The Company because of
customers' requests', began refunding credit card receipts in August, 1999, and
advanced amounts for unpaid sub-distributor commissions to the marketing entity.
The Company in the test market of supersite orders from customers after receipt
of revenue decided to refund all cash and credit card receipts as a matter of
goodwill upon discovery of significant sales allowances and sale returns. The
net result was to record revenues at zero after returns and allowances and
expense any test market advances to the market entity. The net amount recorded
as test market expense totaled $37,490 for the six months ended June 30, 1999,
and for the three months ended June 30, 1999.
The Company entered into an operating lease for office space in July 1999. The
lease has a six month term with monthly payments of $2,794
8
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain "forward-looking statements" as defined under
Section 21E of the Securities Exchange Act of 1934. The Company desires to take
advantage of the "safe harbor" provisions of Section 21E and is including this
statement for the express purpose of availing itself of the protection of the
safe harbor with respect to all such forward-looking statements. These
forward-looking statements, which are included in Management's Discussion and
Analysis, describe future plans or strategies and may include the Company's
expectations of future financial results. The words "believe", "expect",
"anticipate", "estimate", "project", and similar expressions identify
forward-looking statements. The Company's ability to predict results or the
effect of future plans or strategies or qualitative or quantitative changes
based on market risk exposure is inherently uncertain. Factors which could
effect actual results include but are not limited to i) change in general
market, ii) general economic conditions, both in the United States generally and
in the Company's market area, iii) legislative/regulatory changes, iv) demand
for products, v) competition, and other internet commerce issues. These factors
should be considered in evaluating the forward-looking statements, and undue
reliance should not be placed on such statements.
9
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
PLAN OF OPERATIONS
For the next twelve months, RBID will continue its present business
operation as a leading provider of Internet access services, e-commerce
solutions, online shopping mall, auction mall and classified advertising for
consumers and small- to medium-sized businesses. The Company shall continue to
provide consumers and merchants the information, technology, and services they
need to become successful in e-commerce, while offering the online shopping
consumer a unique and enjoyable shopping, auction and free classified
advertising experience.
The Company anticipates that it will continue to be headquartered in
Laguna Hills, California. The Company is expanding its quality products and
services to include the world's first fully interactive online merchant stores
that include full access to auction and classifieds advertising channels.
At the present time, the Company distributes both a product and
service. The product which the Company distributes is a web site for individuals
which desire to own and operate a retail mall establishment for the sale of
goods and services. Specifically, an interested person will contract with the
Company to design a retail shopping mall. The selling price of the retail mall
site will range from $250.00 to $995.00. The Company will undertake to create
the retail mall for the subscriber and the subscriber will then be able to offer
a wide variety of goods and services to the public for sale from his/her
individual mall site.
The market for the products and services provided by the Company is
both the domestic and international markets. Specifically, all persons globally
who utilize the internet and available high speed technologies will be potential
customers of the Company. This would include persons who desire to set up their
own business mall site as well as persons that will purchase goods and services
from the mall sites.
The Company's main focus will continue to be to develop unique and
powerful Internet related e-commerce products and services to meet the high
demand of small to medium sized businesses. The Company's main focus will be on
marketing the Internet shopping mall and merchant online stores (Rmall.com)
classified advertising (Rads.com) and online auctions (Rbid.com). These new
exciting products and services will be the driving force for Company expansion
into new markets and product diversification. These new and revolutionary
products and services are called R-Mall (Internet shopping mall and merchant
online stores), R-Ads (Internet classified advertising), Rbid.com (Internet
auction), Rway.net (Internet access and marketing services) and R-escrow
(financial transactions).
10
While the Company has spent the past year investing in intensive
preparation and development of the products and services and key affiliate
relationships with major retailers, which have been outlined on the rbid.com Web
site, the next 12 months will be spent implementing its marketing and sales
programs. Existing and newly enrolled users may now begin the practical
application of the Company's SuperSite features including: online auctions with
a user-friendly interface facilitating Web site navigation; an online shopping
mall with major industry names like Dell, Disney, JC Penny and Sharper Image;
classified advertising sites such as R-freeAds, Rhomeguide and R-auto mall; and
R-surf Internet services including a chat forum, free e-mail and a portal search
page --- all under the R-world umbrella of products and services.
The Company utilizes Organizational Marketing with Merchant Resellers
as the key marketing strategy behind Rway, Rmall and RBID auction house. In the
coming months and years the Company will focus on bringing on-board large
national organizations with millions of potential customers and vendors that
will buy and sell the Company's products and services. This unique market
approach will undoubtedly revolutionize the Internet world. Where other
companies spend tens of millions of dollars on banner media advertising as its
primary avenue of promoting and selling their products while trying to build a
name recognition, the Company will immediately focus on bringing millions of
customers on-line while strategically placing media advertising to exclusively
build the Company name recognition. The Company is developing relationships with
other national marketing firms that specialize in assisting corporations to
reach their maximum sales potentials.
All of the Company Internet products and services were developed and
designed for future expansion into the International markets. In the upcoming
year, the Company will selectively open new countries and territories in a
prudent and financially beneficial way with existing capable and experienced
marketing companies.
Through the development of proprietary software that allows the Company
to virtually contract with unlimited number of small local ISP's (Internet
service providers), the Company can offer unlimited Internet access at
competitive rates. The Company is able to sell Internet access in all major
metropolitan cities with unlimited Internet access at a competitive rate while
paying substantial commissions and bonuses. The Company's main servers are
located in a major hub to the world wide Internet and assures online members
fast access (56K or ISDN) and network reliability.
The Company has made a huge commitment and investment over the past
year into providing its internal computerized systems and distributor tracking
the best software available in the industry. Its partnership agreement with OP
Technologies, Oracle, 3Com, Motorola as well as utilizing the latest Microsoft
development programs for complete support of all the Company's exclusive
11
software needs is a vital link to the Company's overall success and future
growth.
The Company believes that during the next 12 months it will begin to
generate revenues that will provide the Company with sufficient funds to meet
its day to day financial obligations. The Company does not anticipate the sale
of any securities other than under existing agreements or the borrowing of any
funds during the next 12 months since it believes that the funds it will receive
from operations will be more than adequate to meet the Company's needs. However,
in the event that additional funds would be required to operate the business of
the Company, the Company would seek to either borrow money or seek additional
equity investors.
The Company does not expect to purchase or sell any significant assets
during the next 12 months for use in its operations. However, if greater storage
and data capacity is required to meet the needs of its customers, the Company
will seek to increase its computer capacity through the purchase or rental of
additional equipment or storage capacity. However, the Company is unable to
state with any degree of certainty if the latter will be required during the
next 12 months.
The Company does not expect any significant change in the number of
employees during the next 12 months for use in its operations. However, if
greater manpower is required to meet the needs of its customers, the Company
will seek to increase its employee number. However, the Company is unable to
state with any degree of certainty if the latter will be required during the
next 12 months.
12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
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For the quarter ended June 30, 1999, the Company generated a net loss
of $896,743, an increase from a net loss of $1,772 for the second quarter of
1998.
At June 30, 1999, the Company's total assets reached $72,398, an
increase of $56,738 over total assets at December 31, 1998.
DISCUSSION OF OPERATIONS
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The Development Stage Company had expenditures of $727,176 for consulting for
the three months ended June 30, 1999. In addition the Company incurred
advertising/marketing expense of $59,095 and software development expense of
$27,062 prior to launching of its internet website at the end of the second
quarter of 1999.
The loss in the prior year quarter ended June 30, 1998 of $1,772 resulted from
state registration fees payable by the Company.
LIQUITY AND CAPITAL SOURCES
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The Company received funds of approximately $252,000 from an exempt offering
Regulation D, Rule 504. In addition, consultants were issued restricted common
stock shares valued at $690,000 for their services rendered at $1.00 per share.
The cost of the offering totaled approximately $118,000.
13
Management's Discussion and Analysis of Financial Condition and Results of
- --------------------------------------------------------------------------------
Operations Part II.
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PART II OTHER INFORMATION
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Item 1 LEGAL PROCEEDINGS
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The Company is not involved in any legal proceedings incident to their
businesses. In the opinion of management, no material pr proceeding is foreseen
and no loss is expected from any such lawsuit.
Item 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
- ---------------------------------------------------
Not applicable
Item 3 DEFAULTS UPON SENIOR SECURITIES
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Not applicable
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -------------------------------------------------------------
No matters were submitted for a vote of shareholders during the period covered
by this report.
Item 5 OTHER INFORMATION
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Not applicable
Item 6 EXHIBITS AND REPORT ON FORM 8-K
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(a) Exhibits
NUMBER DESCRIPTION
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Financial Data Schedule
(b) Reports on Form 8-K
None.
14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RBID.COM INC.
Date: November 10, 1999 By: /s/ Fred Wallace
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FRED WALLACE, CFO
15
EXHIBIT INDEX
EXHIBIT DESCRIPTION
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27 Financial Data Schedule