UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 30549
FORM 10-QSB
(MarkOne)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
of 1934
For the quarterly period ended June 30, 2002
[ ] TRANSACTION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number: 0-28363
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SBS Interactive Co.
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(Exact name of small business issuer as specified in its charter)
Florida 59-28363
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(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
37 Prince Arthur Avenue, Suite 300, Toronto, Ontario, M5R 1E2, Canada
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(Address of principal executive offices)
(416) 961-1409
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(Issuer's telephone number)
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(Former name, former address and former fiscal year
(if changed since last report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a Court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of each of the issuer's classes of common
equity, as of October 28, 2002 was 7,017,200 shares of common stock.
Transitional Small Business Disclosure Format (Check one): Yes [X] No [ ]
INDEX
Page
Number
------
Part I. Financial Information
Item 1. Financial Statements
Condensed Balance Sheet as of September 30, 2002 3
Condensed Statements of Loss for Three Months
Ended September 30, 2002 and September 30, 2001,
Nine Months Ended September 30, 2002 and
September 30, 2001 and Since Inception 4
Condensed Statements of Cash Flows for Nine
Months Ended September 30, 2002 and
September 30, 2001 and Since Inception 5
Summary of Significant Accounting Policies 6
Notes to Condensed Financial Statements 8
Item 2. Plan of Operation 13
Part II. Other Information
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults in Senior Securities 16
Item 4. Submission of Matters to a Vote of Securities Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
Certifications 18
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------
The requisite financial statements for SBS Interactive, Co. through
September 30, 2002 are submitted below. Appropriate financial statements for its
significant subsidiary, SBS Interactive, Inc. which was acquired on October 29,
2002 (See Item 2. Plan of Operation) are in the process of preparation and will
be filed on or before December 30, 2002.
SBS INTERACTIVE, CO.
CONDENSED BALANCE SHEET
September 30, 2002
- ------------- -----------
Assets
Cash $ 55,775
Deposits 6,974
-----------
$ 62,749
===========
Liabilities and Stockholders' Equity
Total liabilities 0
Commitments and Contingencies
Stockholders' Equity
Common stock, $0.001 par value; 50,000,000 shares
authorized; 7,017,000 shares issued and outstanding 7,017
Additional paid-in capital 4,183,143
Deficit accumulated during the development stage (4,127,411)
-----------
Total stockholders' equity 62,749
-----------
$ 62,749
===========
3
SBS INTERACTIVE, CO.
CONDENSED STATEMENTS OF OPERATIONS
For the three For the three For the nine For the nine From
months ended months ended months ended months ended inception
Sep. 30, Sep. 30, Sep. 30, Sep. 30, to Sep. 30,
2002 2001 2002 2001 2002
------------- ------------- ------------- ------------- -----------
Development stage expenses:
Selling, general and administrative,
excluding non-cash compensation
(benefit) expense $ 19,153 $ 12,570 $ 43,223 $ 38,620 $ 254,649
Non-cash compensation expense - - - - 3,875,000
---------- ---------- ---------- ---------- -----------
Total development stage expenses 19,153 12,570 43,223 38,620 4,129,649
---------- ---------- ---------- ---------- -----------
Loss from operations (19,153) (12,570) (43,223) (38,620) (4,129,649)
Other income:
Interest income - - - - 2,238
---------- ---------- ---------- ---------- -----------
Net loss (19,153) (12,570) (43,223) (38,620) 4,127,411)
---------- ---------- ---------- ---------- -----------
Net loss applicable to common stock $ (19,153) $ (12,570) $ (43,223) $ (38,620) $(4,127,411)
========== ========== ========== ========== ===========
Net loss per common share (basic and diluted) $ (0.01) $ (0.01) $ (0.01) $ (0.01)
========== ========== ========== ==========
Weighted average number of common shares outstanding 7,017,200 6,517,200 7,017,200 6,517,200
========== ========== ========== ==========
4
SBS INTERACTIVE, CO.
CONDENSED STATEMENTS OF CASH FLOWS
For the nine For the nine
months ended months ended From
Sep. 30, Sep. 30, inception to
2002 2001 Sep. 30, 2002
------------ ------------- -------------
Operating activities:
Net loss $ (43,223) $ (38,620) $(4,127,411)
Adjustments to reconcile net loss to net cash
used in operating activities:
Common stock issued for services - - 3,875,000
Change in assets and liabilities:
Deposits - - (6,974)
Accounts payable (8,723) (900) -
--------- ---------- -----------
Net cash used in operating activities (51,946) (39,520) (259,385)
--------- ---------- -----------
Financing activities:
Proceeds from issuance of common stock - - 315,160
--------- ---------- -----------
Net cash provided by financing activities - - 315,160
--------- ---------- -----------
Net increase (decrease) in cash and cash equivalents (51,946) (39,520) 55,775
Cash and equivalents, beginning of year 107,721 166,689 -
--------- ---------- -----------
Cash and equivalents, September 30, 2002 $ 55,775 $ 127,169 $ 55,775
========= ========== ===========
5
SBS INTERACTIVE, CO.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
- ---------------------
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with Article 310 of Regulation S-B. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. All adjustments which,
in the opinion of management, are considered necessary for a fair presentation
of the results of operations for the periods shown are of a normal recurring
nature and have been reflected in the unaudited condensed financial statements.
The results of operations for the periods presented are not necessarily
indicative of the results expected for the full fiscal year or for any future
period. The information included in these unaudited condensed financial
statements should be read in conjunction with Plan of Operation and Results of
Operations contained in this report and the financial statements and
accompanying notes included in the Inet Commerce Conduit Corp. (the "Company")
Annual Report on Form 10-K for the fiscal year ended December 31, 2001.
NATURE OF OPERATIONS
- --------------------
SBS Interactive, Co. (the "Company") was incorporated on September 20, 1996
under the laws of the State of Florida as Cosmetics Consultants Corp. for the
purpose of marketing sales and support services to retailers of cosmetic
companies. In November of 1999 the Company changed its activities to acting as a
consultant to internet related enterprises that are seeking capital. In July,
2002 the Company changed its activities to operate as a consumer electronics
company focused on developing, marketing and licensing products that enable the
consumers to use their televisions as an interactive medium.
On November 25, 1996, Cosmetics Consultants Corp. changed its name to Lomillo
Consultants Corp.
On July 17, 1997, the Company amended and restated its articles of incorporation
and changed its name to Inet Commerce Conduit Corp.
On July 30, 2002, the Company amended and restated its articles of incorporation
and changed its name to SBS Interactive, Co
The Company has been operating as a development stage enterprise since its
inception and is devoting substantially all its efforts to the ongoing
development of the Company.
6
SBS INTERACTIVE, CO.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
- -------------------------
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
- -----------------------------------
The carrying amounts of the Company's financial assets, including cash and cash
equivalents approximate fair value because of their short maturities.
USE OF ESTIMATES
- ----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
ADVERTISING
- -----------
The Company conducts nondirect response advertising for the promotion of its
products. These costs are expensed as incurred. Advertising costs for the
periods ended September 30, 2002 and 2001 were $1,825 and $1,790 respectively.
INCOME TAXES
- ------------
The Company accounts for income taxes pursuant to the provisions of Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes,"
which requires, among other things, a liability approach to calculating deferred
income taxes. The asset and liability approach requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of assets
and liabilities.
LOSS PER SHARE
- --------------
Basic loss per share is computed on the basis of the weighted average number of
common shares outstanding during each year. Diluted loss per share is computed
on the basis of the weighted average number of common shares and dilutive
securities outstanding. Dilutive securities having an antidilutive effect on
diluted loss per share are excluded from the calculation.
7
SBS INTERACTIVE, CO.
NOTES TO FINANCIAL STATEMENTS
1. GOING CONCERN
-------------
The accompanying financial statements were prepared assuming that the
Company will continue as a going concern. This basis of accounting
contemplates the realization of assets and the satisfaction of its
liabilities in the normal course of operations. Since inception the Company
has incurred losses of approximately $4 million and has not reached a
profitable level of operations, all of which raise substantial doubt about
the Company's ability to continue as a going concern.
The Company's continued existence is dependent upon its ability to resolve
its liquidity problems, principally by obtaining additional debt financing
and equity capital. While pursuing additional debt and equity funding, the
Company must continue to operate on limited cash flow generated internally.
The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
Accordingly, there are no assurances that the Company will be successful in
achieving the above plans, or that such plans, if consummated, will enable
the Company to obtain profitable operations or continue as a going concern.
2. DEPOSITS
--------
This represents an amount deposited on November 15, 1999 (and subsequent
interest earned) with a bank for a secured corporate credit card with a
credit limit of $5,000. The deposit can be returned at any time provided
the request is made in writing and there is no balance outstanding on the
account. Should any balance be outstanding, the deposit would be applied
against the balance due and the remainder would be refunded to the Company.
As of September 30, 2002 the balance due on the card was $0.
3. COMMON STOCK
------------
On November 30, 2001, the Company issued 500,000 shares of restricted,
unregistered common stock to two consultants in exchange for services
rendered in the offering of the common stock.. The issuances were valued at
estimated fair value of $7.75 per share. In connection therewith, the
Company recorded a charge to operations in the amount of $3,875,000 during
2001.
8
SBS INTERACTIVE, CO.
NOTES TO FINANCIAL STATEMENTS
The following reconciles the components of the loss per share computation:
For the nine months ended
September 30, 2002 2001
------------------------------------- -------------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
Loss per common share
Net (loss)
available to
common $(43,223) 7,017,200 $(0.01) $(38,620) 6,517,200 $(0.01)
-------- --------- ------ -------- --------- ------
Net (loss)
available
to common
shareholders
plus assumed
conversions $(43,223) 7,017,200 $(0.01) $(38,620) 6,517,200 $(0.01)
======== ========= ======= ======== ========== =======
4. INCOME TAXES
------------
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. At
December 31, 2001, the Company had federal net operating losses (NOL) of
approximately $4,288,633. The NOL expires in the years 2016 through 2021.
In the event that a change in ownership of the Company of greater than 50
percent occurs/occurred as a result of the Company's issuance of common and
preferred stock, the utilization of the NOL carryforward will be subject to
limitation under certain provisions of the Internal Revenue Code.
Realization of any portion of the approximate $ 1,473,566 deferred federal
tax asset at September 30, 2002 is not considered more likely than not by
management; accordingly, a valuation of allowance has been established for
the full amount of such asset.
The reconciliation of income tax benefit computed at the United States
federal tax rate of 34% to income tax benefit is as follows:
Nine months ended Sep. 30, 2002 2001
--------------------------- ----------- ------------
Tax benefit at the United States
statutory rate $ 14,696 $ 13,131
State income tax benefit, net 735 657
---------- ----------
Valuation allowance adjustment (15,431) (13,787)
Income tax benefit $ - $ -
========== ==========
9
SBS INTERACTIVE, CO.
NOTES TO FINANCIAL STATEMENTS
Significant components of the Company's deferred tax assets and liabilities
are as follows:
September 30, 2002 2001
------------- ----------- ------------
Deferred tax assets:
Net operating loss
carryforwards $ 1,473,566 $ 51,572
Valuation allowance for deferred
tax assets (1,473,056) (51,572)
----------- ---------
Net deferred tax asset $ - $ -
=========== ========
5. RELATED PARTY TRANSACTIONS
--------------------------
Consulting Services
-------------------
The Company neither owns or leases any real property. Fees totaling $7,000
and $8,450 have been paid to officers and companies owned by shareholders
during the periods ended September 30, 2002 and 2001 for administrative
fees, consulting services rendered and, expenses paid on behalf of the
Company. The officers and directors of the Company are involved in other
business activities and may, in the future, become involved in other
business opportunities.
6. COMMITMENT AND CONTINGENCIES
----------------------------
The Company conducts its operations from leased facilities, under operating
leases on a month-to-month basis, which can be terminated by either party
upon giving notice 30 days in advance.
Lease rent expense for the periods ended September 30, 2002 and 2001
amounted to $2,600 and $1,600. At September 30, 2002, future minimum lease
payments and rent usage tax were $0.
7. SUPPLEMENTAL CASH FLOW INFORMATION
----------------------------------
Supplemental disclosure is as follows:
September 30, 2002 2001
------------- ----------- ------------
Cash paid for interest $ - $ -
Cash paid for taxes - -
10
SBS INTERACTIVE, CO.
NOTES TO FINANCIAL STATEMENTS
8. SUBSEQUENT EVENTS
-----------------
From September of 1999 to the present, the Company initiated and conducted
operations as a consultant to Internet-related entertainments seeking
capital. Due to a lack of any meaningful response to these efforts, the
Company concluded to put these consulting efforts on hold and is in the
process of closing its consulting Internet offices. The Company has entered
into arrangements for a business Combination in which it will acquire 100%
ownership of SBS Interactive, Inc., a Nevada corporation ("Interactive") in
exchange for approximately 3,181,000 shares of common stock to be issued to
the stockholders of Interactive. The Company has concluded to concentrate
its operations on attempting to raise capital to fund and operate the
business of Interactive as a consumer electronics company focused on
developing, marketing and licensing products that enable the consumers to
use their televisions as an interactive medium.
On July 16, 2002, Interactive, the Company and SBS Acquisition, Inc., a
Nevada corporation and a wholly owned subsidiary of the Company executed
and entered into a "Merger Agreement". The Merger Agreement was closed on
October 29, 2002 for the Business Combination in which Interactive will
became a wholly owned subsidiary of the Company and the present
stockholders of Interactive will become shareholders of the Company. The
Merger Agreement provided that upon its "Effective Time":
Acquisition was merged into Interactive which is the surviving corporation
in the merger;
The 20,676,000 shares of the common stock of Interactive outstanding
immediately prior to the Effective Time was cancelled and the holders of
that stock became shareholders of the Company with each 6.5 oldshares of
Interactive stock becoming 1 share of the Company's common stock (no
fractional shares of the Company's shares will be issued and each
Interactive shareholder entitled to a fractional share will be issued a
whole share therefor); Approximately 3,181,000 shares will be issued by the
company.
Interactive issued 1,000 shares of new common stock to the Company and thus
became a wholly owned subsidiary of the Company.
The Board of Directors and officers of the Company have been reorganized
and the following constitutes its directors and officers:
11
SBS INTERACTIVE, CO.
NOTES TO FINANCIAL STATEMENTS
Name Position(s)
---- -----------
Todd Gotlieb President and Director
Barry Alter Vice President
Patti Cooke Secretary and Director
On August 31, 2002, Interactive and Steven S. Cady reached a conditional
agreement that, if the Company completed the acquisition of Interactive and
acquired sufficient additional capital to fund Interactive's program to
manufacture and market its Side by SideTM products by the end of December
2002, Mr. Cady would become a director and the Chief Executive Officer of
the Company. This agreement has been ratified by the Company since its
acquisition of Interactive of October 29, 2002. It is presently understood
by the parties that if the Company acquires $2,000,000 in additional
capital by December 31, 2002, Mr. Cady will head a new management team to
be assembled by him and Barry D. Alter and Patti Cooke will resign from
positions as officers and/or directors. Mr. Cady has been acting as a
consultant to Interactive since August 31, 2002, concentrating on product
development with Ultimate Corporation and formation of the new management
team for the Company.
The Business Combination is designed to constitute a "non-taxable"
transaction under U.S. and Canadian tax laws; however, the parties have not
obtained any tax ruling or opinion on its tax status and the shareholders
of Interactive were advised and cautioned to seek their own tax advice and
counsel on this issue;
The stock of the Company being issued to the Interactive shareholders is:
(i) being issued pursuant to exemptions for the registration requirements
of the Securities Act of 1933 ("Securities Act") provided in Rule 506 of
Regulation D and/or Regulation S adopted under the Securities Act; (ii)
"restricted securities" as defined under the Securities Act; and (iii)
subject to restrictions on their future transferability and/or sale.
A copy of the Merger Agreement was filed with the Form 10-QSB Report for
the period ended June 30, 2002 as an Exhibit 10(A). A copy of the Articles
and Plan of Merger was filed with Nevada on October 29, 2002 to complete
the acquisition of Interactive by the Company.
12
ITEM 2. PLAN OF OPERATION
- --------------------------
SBS Interactive, Co. ("Company" or "Issuer") was formed as a Florida
corporation named "Cosmetics Consultation Corporation" on September 20, 1996.
Its name was changed to "Lomillo Consulting Corp." on November 25, 1996 and then
to "Inet Commerce Conduit Corp." on July 17, 1997. On July 30, 2002, the Company
changed its name to "SBS Interactive, Co." in anticipation of the completion of
the Business Combination hereinafter described. From September of 1999 to the
present, the Company initiated and conducted operations as a consultant to
Internet-related enterprises seeking capital. Due to a lack of any meaningful
response to these efforts, the Company concluded to put these consulting efforts
on hold and is in the process of closing its consulting Internet offices. On
October 29th the Company completed a Business Combination in which it acquired
100% ownership of SBS Interactive, Inc., a Nevada corporation ("Interactive") in
exchange for approximately 3,181,000 shares of common stock to be issued to the
stockholders of Interactive. The Company has concluded to concentrate its
operations on attempting to raise capital to fund and operate the business of
Interactive as a consumer electronics company focused on developing, marketing
and licensing products that enable the consumers to use their televisions as an
interactive medium.
On July 16, 2002, Interactive, the Company and SBS Acquisition, Inc., a
Nevada corporation and a wholly owned subsidiary of the Company executed and
entered into a "Merger Agreement". The Merger Agreement was closed on October
29, 2002 for the Business Combination in which Interactive became a wholly owned
subsidiary of the Company and the present stockholders of Interactive will
become shareholders of the Company. The Merger Agreement provided that upon its
"Effective Time":
o Acquisition was merged into Interactive which was the surviving
corporation in the merger;
o The 20,676,000 shares of the common stock of Interactive outstanding
immediately prior to the Effective Time were canceled and the holders
of that stock shall become shareholders of the Company with each 6.5
old shares of Interactive stock becoming 1 share of the Company's
common stock (no fractional shares of the Company's shares will be
issued and each Interactive shareholder entitled to a fractional share
will be issued a whole share therefor). Approximately 3,181,000 shares
will be issued by the Company in the transaction;
o Interactive will issue 1,000 shares of the new common stock to the
Company and thus Interactive will be a wholly-owned subsidiary of
the Company;
o The Business Combination was designed to constitute a
"non-taxable" transaction under U.S. and Canadian tax laws;
however, the parties have not obtained any tax ruling or opinion
on its tax status and the shareholders of Interactive are advised
and cautioned to seek their own tax advice and counsel on this
issue;
o The stock of the Company being issued to the Interactive
shareholders: (i) is being issued pursuant to exemptions from the
registration requirements of the Securities Act of 1933
("Securities Act") provided in Rule 506 of Regulation D and/or
Regulation S adopted under the Securities Act; (ii) will be
"restricted securities" as defined under the Securities Act; and
(iii) will be subject to restrictions on their future
transferability and/or sale.
A copy of the Merger Agreement was filed with the Form 10-QSB Report for
the period ended June 30, 2002 as an Exhibit 10(a). A copy of the Articles and
Plan of Merger filed with Nevada on October 29, 2002 to complete the acquisition
of Interactive by the Company is filed herewith as Exhibit 10(b).
13
Now that the Business Combination is completed, the Company will endeavor
to acquire a significant amount of additional equity capital to fund the
development and business operations of Interactive. This additional equity
capital would be acquired through the sale of restricted equity securities of
the Company in a "Private Placement" proposed to be made pursuant to an
exemption from the registration requirements of the Securities Act of 1933.
Although the Company and Interactive are aware of some potential investor
interest in the proposed Private Placement, there are no commitments or binding
arrangements for the acquisition of any additional capital nor any assurance
that such will become available to the Company or Interactive.
Interactive was organized as a Nevada corporation on August 8, 2002. It was
formed to act as a consumer electronics company focused on acquiring,
developing, licensing and marketing products that turn televisions into an
interactive medium. During the period from August 2000 to October 2000,
Interactive raised $ 1,850,000 through the sale of 1,850,000 shares of its
common stock at $1.00 per share. Of this amount, $1,000,000 and 4,000,000 shares
of Interactive common stock was paid on May 30 2002 for the acquisition of all
the outstanding stock of High Plateau Holdings, Inc. ("High Plateau"). High
Plateau is an Ontario corporation which owns the U.S. Patent to Side by SideTM
the interactive video technology product which enables users to interact with
people, characters or objects on their television screens and which Interactive
plans to market. The balance of Interactive's capital has been expended on
operating expenses and development of the Side by SideTM product.
The technology of Side by SideTM is based upon "blue screen" technology
which is widely used in the film and television industries. Side by SideTM uses
its patented reverse "blue screen" technology to seamlessly combine pre-recorded
program elements into the users environment as captured by the digital camera in
the Side by SideTM set-top box. The Side by SideTM set-top box is connected
between the user's DVD Player (which is transmitting the pre-recorded program
elements) and the TV/Monitor. The TV Monitor then shows the combined
pre-recorded elements and the user's performance captured by the Side by SideTM
set-top box. The user can also add a VCR to record the combined image including
video.
The Side by SideTM product incorporates the use of the Side by SideTM
patented software with a digital camera and a Keyer Unit developed under an
exclusive worldwide Design and Royalty Agreement between High Plateau and
Ultimatte Corporation, a leader in "blue screen" technology. The Side by SideTM
set-top box presently uses camera components from Omnivision, the world's
largest independent supplier of single-chip camera.
If the Company is able to raise sufficient proceeds in its proposed private
placement, it will commence production of the Side by SideTM product and
initiate its marketing efforts.
The potential uses for Side by SideTM in the consumer market includes but
is not limited to children's programs; instructional and training programs
(including fitness, sports, martial arts, exercise and self-help programs);
video karaoke; performance (including musical instrument training, acting
workshops, singing and dancing training); theme parties and adult entertainment.
In the business and institutional markets the potential uses include but are not
limited to: Product and procedural training and testing; military and security
training; language education, training and educating the learning disabled, and
public speaking training.
Dependent upon the availability of additional capital to the Company, its
marketing program will include: completion of marketing research; initiation of
efforts to develop direct sales of the Side by SideTM hardware through existing
retail outlets and software products; and to pursue licensing arrangements under
which others in the electronic entertainment and telecommunications industries
would manufacture and/or sell the Side by SideTM hardware and software products.
The potential software licensees would include businesses involved in the filmed
entertainment and music industries, the fitness, exercise and martial arts
industries and adult entertainment industries. Potential hardware licensees
would include electronic and computer products manufacturers. Interactive has
demonstrated the Side by SideTM product to potential licensees and has received
numerous positive responses and indications of interests in it. However, the
Company does not have any firm licensing arrangements for either the software or
the hardware Side by SideTM products of any firm distribution arrangements with
any existing retailers.
14
On October 29, 2002 pursuant to terms of the Merger Agreement, the
management of the Company has changed. The following table sets forth
information regarding the directors and executive officers of the Company:
Beginning
Name Age Positions of Term
---- --- --------- ---------
Todd E. Gotlieb 36 President & Director 10/2002
Barry D. Alter 47 Vice President & Director 10/2002
Patti Cooke 47 Secretary 10/2002
Todd E. Gotlieb graduated from the Osgoode Hall School of Law in 1989. He
was engaged in the private practice of law in Toronto, Ontario from 1997 through
early 1999. From early 1999 through July of 2002, he was employed as a Vice
President for Exclusive Auto Marketing in Toronto, Ontario. He has served as the
founder, President and a director of SBS Interactive, Inc. in Toronto, Ontario
since its formation in August of 2000.
Barry D. Alter has served as a director of SBS Interactive, Inc. since July
of 2002. From 1986 to 1999 he was employed as the President of Sweet Expressions
Foods, Inc. He has been self-employed as a financial consultant since 1999.
On August 31, 2002, Interactive and Steven S. Cady reached a conditional
agreement that, if the Company completed the acquisition of Interactive and
acquired sufficient additional capital to fund Interactive's program to
manufacture and market its Side by SideTM products by the end of December 2002,
Mr. Cady would become a director and the Chief Executive Officer of the Company.
This agreement has been ratified by the Company since its acquisition of
Interactive of October 29, 2002. It is presently understood by the parties that
if the Company acquires or clearly identifies $2,000,000 in additional capital
by December 31, 2002, Mr. Cady will head a new management team to be assembled
by him and Barry D. Alter and Patti Cooke will resign from their positions as
officers and/or directors. Mr. Cady has been acting as a consultant to
Interactive since August 31, 2002, concentrating on product development with
Ultimate Corporation and formation of the new management team for the Company.
Steven S. Cady founded and has been the President and owner of SSC
Marketing, Inc. since 1978. It is a California company providing professional
services to start-up companies. From 1997 to 2002, he served as acting President
of Mainly Flags, Inc., a Delaware corporation in the specialty flag business.
From 1998 to 2002, Mr. Cady served as a director and Chief Executive Officer of
LinkOpp Marketing, Inc. It is a corporate membership-based company facilitating
commerce, including E-Commerce between small business and major corporate
vendors. From 1984, to 1997, Mr. Cady was Chairman of the Board and Chief
Executive Officer of Direct Sales Concepts, Inc., which performed marketing and
sales management services for clients of SSC Marketing, Inc. From 1975 to 1984
he was a partner and Executive Vice President of Prepared Products Company which
pioneered the concepts of prepackaged produce and condiment products for sale in
grocery stores and the development and implementation of salad bars into
restaurants. From 1984 to 1993, Mr. Cady was Chairman of Board and Chief
Executive Officer for Resource Marketing, a partnership. Resource Marketing
became one of the leading national marketing, sales and packaging design
services provider to the food and health aides manufacturing community for the
wholesale Membership Club industry. From 1962 to 1974, Mr. Cady worked for
Double D Foods, Inc., a family owned vegetable oil products manufacturer and
allied food products distributor. It pioneered the concept of "toploading"
lightweight to volume food products on top of commodity food products to offset
freight costs.
15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS IN SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 10(b) Articles and Plan of Merger of SBS Acquisitions,
Inc. With and Into SBS Interactive, Inc.
Exhibit 99.1 Officers' Certification of Financial Statements
Exhibit 99.2 U.S. Letters Patent No. 6,072,933 and Assignment
thereof.
(b) Form 8-Ks
No Reports of Form 8-K were filed during the three-month period
ended September 30, 2002.
16
SIGNATURES
----------
In accordance with the Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
SBS INTERACTIVE, CO.
Dated: November 7, 2002 By: /s/ Todd Gotlieb
-------------------------------------
Todd Gotlieb, President and Principal
Executive, Financial and Accounting
Officer
17
CERTIFICATIONS
I, Todd Gotlieb, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of SBS Interactive,
Co.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly date (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or person performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 11, 2002 /s/ Todd Gotlieb
-------------------------------------
Todd Gotlieb
President and Principal Executive,
Financial and Accounting Officer
18