The most interesting parts, as I see 'em on my first quick take:
LFT's $10.0 million subscription receivable and its obligation to pay $10.0 million for LCEs is collateralized by the assignment of a collection of postage stamps. A third party holds the collection of postage stamps in safekeeping. Pursuant to the April 15, 1999 agreement between the Company and LFT, LFT has an unconditional and irrevocable obligation to pay the $10.0 million subscription receivable and the LCE receivables recognized by the Company on or before April 15, 2000. As of June 30, 1999, the Company has outstanding LCE receivables from LFT totaling $1,250,000. The $10.0 million subscription receivable from LFT is shown as a reduction in stockholders' equity in the accompanying June 30, 1999 balance sheet.
And what the hell is THIS gibberish?
On May 15, 1999, the Company entered into a non-binding letter of intent to issue LFT an additional five million shares of its common stock for an aggregate purchase price of $100.0 million. LFT has delivered to the Company a Subscription Agreement and Investment Representations for the shares that is contingent only upon an increase in the Company's authorized shares and due diligence to the Company's satisfaction on a $900.0 million Promissory Oil Production Note to be delivered as collateral for LFT's obligation to pay the
purchase price. The Company's security interest in the note is to be limited to $100.0 million and is to be an undivided interest with LFT, who has agreed to permit the Company to receive the first $100.0 million paid under the note.
WHATTTT???? A $900 million promissory oil note? Well, guys, let's SEE it. And this agreement is contingent ONLY "upon an increase in the company's authorized shares"??? Not to mention the "due diligence to the Company's satisfaction on a $900.0 million Promissory Oil Production Note"...well my GOD don't they know whether it exists or not?
Now THIS is REALLY interesting:
Pending such shareholder approval, the Company's Chairman of the Board, and a principal stockholder [ndr Dorian Reed, lol], has transferred shares from his own account to LFT to hold the transaction.
But Dorian's in a win/win situation:
In August 1999, the Company's Chairman of the Board, and a principal stockholder, agreed to transfer sufficient shares from his own account back to the Company to be retired, to enable the additional shares to be issued to the persons entitled to receive them. Upon stockholder approval of an increase in the Company's authorized shares, the Company is obligated to issue replacement shares to the Company's Chairman of the Board.
Were the people at RB wondering where all those "new" shares came from? Were idiots like Obwon speculating about a huge naked short position? Snicker:
During the period from the effective date of the merger to June 30, 1999, the Company received net proceeds of approximately $1,849,762 from the issuance of approximately 2,547,585 shares of its common stock in private placement transactions and upon exercise of outstanding warrants and options. As described above, the Company issued 2,000,000 shares of its common stock to LFT in exchange for a $10,000,000 subscription receivable. It also issued approximately 37,071 shares in settlement of merger liabilities assumed and
converted $5,000 of outstanding promissory notes into 5,000 shares....
As of June 30, 1999, the Company has recorded, as a component of stockholders' equity, an aggregate of 2,267,858 shares of common stock to be issued. Of the aggregate number of shares of common stock to be issued, 2,000,000 are replacement shares that are to be issued to the Company's Chairman of the Board, as described above, 100,000 shares are to be issued in connection with the assets purchase agreement between the Company and Solvere and 167,858 shares are to be issued to persons who have tendered the purchase price for shares that are unissued as of June 30, 1999.
AAAAUUUGGGHHH!!! And as they've explained above, they're recognizing revenues that won't be paid until next April:
The Company had gross revenues of $1,899,284 and $1,463,200 for the six months and three months ended June 30, 1999, respectively. Gross revenues in the first quarter totaled $463,084. The increase in second quarter revenues as compared to the first quarter is the result of revenues recognized from the LCE agreement with LFT. LCE revenues from LFT recognized in the second quarter totaled $1,250,000. Revenues from quarter to quarter also reflect an increase of approximately 54% in revenues from sponsorship rights and the Company's bid and rank program.
Oh, this is really encouraging, too:
Selling, general and administrative expenses for the six months ended June 30, 1999 totaled $1,202,475, or 63.3% of gross revenues...
Woooooo!! Only "up to" $20 million?? I thought it was supposed to be $110 million? What haven't I understood?
The Company has entered into various transactions with The Life Foundation Trust ("LFT") for the sale of its common stock and the purchase by LFT of Local City Editions ("LCEs"). The transactions with LFT that have been completed, call for the payment of up to $20.0 million to the Company, subject to certain limitations, on or before April 15, 2000.
HEYYYYY!! I've made it into a 10Q!!!
In addition thereto, the Company has filed a Complaint, against one identified and five anonymous internet posters for Libel, Tortious Interference with Business Relations and Civil Conspiracy, in the United States District Court for the Middle District of Florida. The Complaint, entitled Hitsgalore.com, Inc. v. Janice Shell, et al., Case NO. 99-1387-CIV-T-26C, seeks damages in excess of twenty million dollars.
This is a bit odd, though:
At the present time, the Company is seeking to ascertain the identity of the anonymous Defendants through discovery.
The discovery process is a mutual thing. It doesn't begin until the complaint has been filed and the defendants have responded.
But I'm afraid they've got worse problems than us "bashers":
The Securities and Exchange Commission has informed the Company that its amended Annual Reports on Form 10-K for the 1998 and 1997 fiscal years do not comply with the requirements of Form 10-K, because of the inclusion of unaudited financial statements for fiscal 1996 in each of the amended annual reports. The Securities and Exchange Commission has requested that the Company correct the deficiencies by filing amendments to include audited financial statements and related audit reports for 1996.
Worse yet, and cosmically so:
As of the date hereof, the Registrant has not engaged an accounting firm to audit and report on its financial statements for the current fiscal year or any preceding fiscal year.
And apart from that, the numbers are really lousy, IMO, even considering that they recognized LFT income that they apparently haven't received.
Unbelievable. Anyone wanna make book on whether they'll ever find an auditor willing to take 'em on?
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