Rhino Outdoor International, Inc. - Form 10QSB/A
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-QSB/A
(Mark
One)
[X] Quarterly
report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 2006
[
] Transition report
under Section 13 or 15(d) of the Exchange Act for
the
transition period from __________ to __________.
Commission
File Number: 333-62690
RHINO
OUTDOOR INTERNATIONAL, INC.
(Exact
name of small business issuer as specified in its charter)
Nevada
|
65-1000634
|
(State
or other jurisdiction of incorporation
or organization)
|
(I.R.S.
Employer Identification
No.)
|
370
Amapola Ave. # 202,
Torrance, California
|
90501
|
(Address
of principal executive office)
|
(Zip
Code)
|
1-800-288-3099
(Issuer's
telephone number)
CYBERADS,
INC.
(Former
name, former address, and former fiscal year, if changed since last
report)
Check
whether the issuer: (1) 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.
Yes x No o
Indicate
by check mark whether the registrant is a shell company (as defined
by Rule
12b-2 of the Exchange Act 1934).
Yes o No x
As
of
August 18, 2006, the number of outstanding shares of the issuer's
common stock
was 225,346,899 shares.
TRANSITIONAL
SMALL BUSINESS DISCLOSURE FORMAT:
Yes
o No
x
PART
I - FINANCIAL STATEMENTS
Rhino
Outdoor International, Inc.
Torrance,
California
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
have
reviewed the accompanying consolidated balance sheet of Rhino Outdoor
International, Inc., as of June 30, 2006, and the related statements of
operations, stockholders' equity, and cash flows for the six months then
ended.
All information included in these financial statements is the representation
of
the management of Rhino Outdoor International, Inc.
We
conducted our review in accordance with standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
the
standards of the Public Company Accounting Oversight Board, the objective
of
which is the expression of an opinion regarding the financial statements
taken
as a whole. Accordingly, we do not express such an opinion.
Based
on
our review, we are not aware of any material modifications that should be
made
to the accompanying financial statements in order for them to be in conformity
with accounting principles generally accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has suffered recurring losses and has an accumulated
deficit at June 30, 2006. These factors raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
/s/
Williams
&
Webster,
P.S.
Williams
& Webster, P.S.
Certified
Public Accountants
Spokane,
Washington
December
13, 2006
RHINO
OUTDOOR INTERNATIONAL, INC.
|
|
(A
Development Stage Company)
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
2006
|
|
2005
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
Cash
|
|
$
|
18,578
|
|
$
|
-
|
|
Accounts
receivable
|
|
|
5,000
|
|
|
7,500
|
|
Loans
receivable
|
|
|
-
|
|
|
15,000
|
|
Investments
|
|
|
1,102,500
|
|
|
-
|
|
Inventory,
net
|
|
|
183,210
|
|
|
-
|
|
Other
current assets
|
|
|
2,052
|
|
|
-
|
|
TOTAL
CURRENT ASSETS
|
|
|
1,311,340
|
|
|
22,500
|
|
|
|
|
|
|
|
|
|
FIXED
ASSETS
|
|
|
|
|
|
|
|
Plant,
property, and eqiupment
|
|
|
192,736
|
|
|
-
|
|
Less
accumulated depreciation
|
|
|
(66,498
|
)
|
|
-
|
|
TOTAL
FIXED ASSETS
|
|
|
126,238
|
|
|
-
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
|
Goodwill
|
|
|
3,013,463
|
|
|
-
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
4,451,041
|
|
$
|
22,500
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
1,292,990
|
|
$
|
1,063,251
|
|
Accrued
liabilities
|
|
|
944,408
|
|
|
971,762
|
|
Bank
overdraft
|
|
|
15,487
|
|
|
15,108
|
|
Lines
of credit
|
|
|
299,950
|
|
|
-
|
|
Notes
payable
|
|
|
294,192
|
|
|
294,192
|
|
Current
portion of long-term debt
|
|
|
45,105
|
|
|
-
|
|
Deferred
revenues and customer deposits
|
|
|
699,817
|
|
|
172,453
|
|
Related
party payable
|
|
|
1,687,925
|
|
|
1,226,161
|
|
TOTAL
CURRENT LIABILITIES
|
|
|
5,279,874
|
|
|
3,742,927
|
|
|
|
|
|
|
|
|
|
LONG-TERM
LIABILITIES
|
|
|
|
|
|
|
|
Bank
indebtedness, net of current portion
|
|
|
46,187
|
|
|
-
|
|
Vehicle
loans, net current portion
|
|
|
28,321
|
|
|
-
|
|
TOTAL
LONG-TERM LIABILITIES
|
|
|
74,508
|
|
|
-
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
5,354,382
|
|
|
3,742,927
|
|
|
|
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT
|
|
|
|
|
|
|
|
Convertible
preferred stock, $0.001 par value; 5,000,000 shares
authorized
|
|
|
|
|
|
|
|
Series
A - 835,660 shares issued and outstanding
|
|
|
836
|
|
|
836
|
|
Series
B - 1,000,000 shares issued and outstanding
|
|
|
1,000
|
|
|
1,000
|
|
Series
C - 2,250,000 and 0 shares issued and outstanding,
respectively
|
|
|
2,250
|
|
|
-
|
|
Common
stock, $0.001 par value; 500,000,000 shares
authorized,
|
|
|
|
|
|
|
|
197,246,909
and 123,351,777 shares issued and oustanding,
|
|
|
|
|
|
|
|
respectively
|
|
|
197,247
|
|
|
123,352
|
|
Additional
paid-in capital
|
|
|
27,004,386
|
|
|
23,172,901
|
|
Accumulated
deficit prior to current development stage
|
|
|
(19,234,546
|
)
|
|
(19,234,546
|
)
|
Accumulated
deficit in development stage
|
|
|
(9,414,514
|
)
|
|
(7,783,970
|
)
|
Accumulated
comprehensive income
|
|
|
540,000
|
|
|
-
|
|
Total
Stockholders' Deficit
|
|
|
(903,341
|
)
|
|
(3,720,427
|
)
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
$
|
4,451,041
|
|
$
|
22,500
|
|
The
accompanying notes are an integral part of these interim financial
statements.
RHINO
OUTDOOR INTERNATIONAL, INC.
|
(A
Development Stage Company)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From
|
|
|
|
|
|
|
|
|
|
|
|
Inception
of
|
|
|
|
|
|
|
|
|
|
|
|
Development
|
|
|
|
|
|
|
|
|
|
|
|
Stage
|
|
|
|
|
|
|
|
|
|
|
|
(January
1, 2005)
|
|
|
|
Three
Months Ended
|
|
Six
Months Ended
|
|
to
|
|
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
|
2006
|
|
2005
|
|
2006
|
|
2005
|
|
2006
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
|
29,750
|
|
$
|
-
|
|
$
|
29,750
|
|
$
|
-
|
|
$
|
29,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST
OF SALES
|
|
|
24,654
|
|
|
-
|
|
|
24,654
|
|
|
-
|
|
|
24,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
5,096
|
|
|
-
|
|
|
5,096
|
|
|
-
|
|
|
5,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
74,257
|
|
|
431,851
|
|
|
141,350
|
|
|
490,248
|
|
|
823,081
|
|
Depreciation
expense
|
|
|
851
|
|
|
-
|
|
|
851
|
|
|
-
|
|
|
851
|
|
Management
fees
|
|
|
601,729
|
|
|
-
|
|
|
706,729
|
|
|
-
|
|
|
706,729
|
|
Marketing
expenses
|
|
|
382,634
|
|
|
1,307,612
|
|
|
596,059
|
|
|
3,038,783
|
|
|
6,201,672
|
|
Selling
expenses
|
|
|
18,000
|
|
|
698,438
|
|
|
164,856
|
|
|
1,016,585
|
|
|
1,577,109
|
|
TOTAL
OPERATING EXPENSES
|
|
|
1,077,471
|
|
|
2,437,901
|
|
|
1,609,845
|
|
|
4,545,616
|
|
|
9,309,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
FROM OPERATIONS
|
|
|
(1,072,375
|
)
|
|
(2,437,901
|
)
|
|
(1,604,749
|
)
|
|
(4,545,616
|
)
|
|
(9,304,346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
14,063
|
|
|
-
|
|
|
14,063
|
|
|
-
|
|
|
19,493
|
|
Gain
on forgiveness of debt
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,500
|
|
Interest
expense
|
|
|
(21,220
|
)
|
|
-
|
|
|
(39,858
|
)
|
|
-
|
|
|
(117,990
|
)
|
Loss
on abandonment of assets
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(14,171
|
)
|
TOTAL
OTHER INCOME (EXPENSES)
|
|
|
(7,157
|
)
|
|
-
|
|
|
(25,795
|
)
|
|
-
|
|
|
(110,168
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
BEFORE TAXES
|
|
|
(1,079,532
|
)
|
|
(2,437,901
|
)
|
|
(1,630,544
|
)
|
|
(4,545,616
|
)
|
|
(9,414,514
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
TAXES
|
|
|
-
|
|
|
800
|
|
|
-
|
|
|
800
|
|
|
800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
|
(1,079,532
|
)
|
|
(2,438,701
|
)
|
|
(1,630,544
|
)
|
|
(4,546,416
|
)
|
|
(9,415,314
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gain on investments
|
|
|
540,000
|
|
|
-
|
|
|
540,000
|
|
|
-
|
|
|
540,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
LOSS
|
|
$
|
(539,532
|
)
|
$
|
(2,438,701
|
)
|
$
|
(1,090,544
|
)
|
$
|
(4,546,416
|
)
|
$
|
(8,875,314
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS PER COMMON SHARE,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC
AND DILUTED
|
|
$
|
(0.01
|
)
|
$
|
(0.06
|
)
|
$
|
(0.01
|
)
|
$
|
(0.14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON
STOCK SHARES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OUTSTANDING,
BASIC AND DILUTED
|
|
|
151,172,738
|
|
|
37,518,477
|
|
|
140,106,932
|
|
|
31,793,119
|
|
|
|
|
The
accompanying notes are an integral part of these interim financial
statements.
RHINO
OUTDOOR INTERNATIONAL, INC.
|
|
(A
Development Stage Company)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
Other
|
|
|
|
|
|
Preferred
Stock
|
|
Common
Stock
|
|
Paid-in
|
|
Deficit
|
|
Comprehensive
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Accumulated
|
|
Income
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
January 1, 2005
|
|
|
835,660
|
|
$
|
836
|
|
|
23,225,777
|
|
$
|
23,226
|
|
$
|
16,170,135
|
|
$
|
(19,234,546
|
)
|
$
|
-
|
|
$
|
(3,040,349
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for consulting expense
|
|
|
-
|
|
|
-
|
|
|
99,626,000
|
|
|
99,626
|
|
|
6,846,766
|
|
|
-
|
|
|
-
|
|
|
6,946,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for debt
|
|
|
-
|
|
|
-
|
|
|
500,000
|
|
|
500
|
|
|
57,000
|
|
|
-
|
|
|
-
|
|
|
57,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in exchange for compensation
|
|
|
1,000,000
|
|
|
1,000
|
|
|
-
|
|
|
-
|
|
|
99,000
|
|
|
-
|
|
|
-
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for year ending December 31, 2005
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(7,783,970
|
)
|
|
-
|
|
|
(7,783,970
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2005
|
|
|
1,835,660
|
|
|
1,836
|
|
|
123,351,777
|
|
|
123,352
|
|
|
23,172,901
|
|
|
(27,018,516
|
)
|
|
-
|
|
|
(3,720,427
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for management and consulting fees
|
|
|
-
|
|
|
-
|
|
|
51,395,132
|
|
|
51,395
|
|
|
1,156,235
|
|
|
-
|
|
|
-
|
|
|
1,207,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for accrued liabilities
|
|
|
-
|
|
|
-
|
|
|
22,500,000
|
|
|
22,500
|
|
|
427,500
|
|
|
-
|
|
|
-
|
|
|
450,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for acquisition of subsidiary
|
|
|
1,650,000
|
|
|
1,650
|
|
|
-
|
|
|
-
|
|
|
1,648,350
|
|
|
-
|
|
|
-
|
|
|
1,650,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for accrued management fees
|
|
|
600,000
|
|
|
600
|
|
|
-
|
|
|
-
|
|
|
599,400
|
|
|
-
|
|
|
-
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for period ending June 30, 2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,630,544
|
)
|
|
-
|
|
|
(1,630,544
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gain on investments
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
540,000
|
|
|
540,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2006 (unaudited)
|
|
|
4,085,660
|
|
$
|
4,086
|
|
|
197,246,909
|
|
$
|
197,247
|
|
$
|
27,004,386
|
|
$
|
(28,649,060
|
)
|
$
|
540,000
|
|
$
|
(903,341
|
)
|
The
accompanying notes are an integral part of these interim financial
statements.
RHINO
OUTDOOR INTERNATIONAL, INC.
|
|
(A
Development Stage Company)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From
|
|
|
|
|
|
|
|
Inception
of
|
|
|
|
|
|
|
|
Development
|
|
|
|
|
|
|
|
Stage
|
|
|
|
|
|
|
|
(January
1, 2005)
|
|
|
|
Six
Months Ended
|
|
to
|
|
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
|
2006
|
|
2005
|
|
2006
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(1,630,544
|
)
|
$
|
(4,546,416
|
)
|
$
|
(9,414,514
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
|
|
used
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
851 |
|
|
- |
|
|
- |
|
Stock
issued for accrued wages
|
|
|
450,000
|
|
|
-
|
|
|
550,000
|
|
Common
stock issued for compensation and services
|
|
|
1,207,630
|
|
|
4,473,279
|
|
|
8,154,022
|
|
Preferred
shares issued for accrued management fees
|
|
|
600,000
|
|
|
-
|
|
|
600,000
|
|
Forgiveness
of debt
|
|
|
-
|
|
|
-
|
|
|
(2,500
|
)
|
Loss
on abandonment of assets
|
|
|
-
|
|
|
-
|
|
|
14,171
|
|
Provision
for doubtful accounts
|
|
|
-
|
|
|
800
|
|
|
-
|
|
(Increase)
decrease in:
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
7,500
|
|
|
-
|
|
|
7,500
|
|
Increase
(decrease) in:
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
116,143
|
|
|
(25,002
|
)
|
|
310,172
|
|
Accrued
liabilities
|
|
|
(784,459
|
)
|
|
-
|
|
|
(465,833
|
)
|
Deferred
revenues and customer deposits
|
|
|
2,000
|
|
|
136,142
|
|
|
174,453
|
|
Net
cash provided (used) by operating activities
|
|
|
(30,879
|
)
|
|
38,803
|
|
|
(71,678
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Increase
in loans receivable
|
|
|
15,000
|
|
|
-
|
|
|
7,500
|
|
Cash
acquired in acquisition
|
|
|
18,578
|
|
|
-
|
|
|
18,578
|
|
Increase
in bank overdrafts
|
|
|
-
|
|
|
-
|
|
|
(6,415
|
)
|
Purchase
of marketing rights
|
|
|
-
|
|
|
(210,000
|
)
|
|
-
|
|
Net
cash provided (used) by investing activities
|
|
|
33,578
|
|
|
(210,000
|
)
|
|
19,663
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Advances
from related parties
|
|
|
15,500
|
|
|
185,664
|
|
|
55,106
|
|
Increase
in bank overdrafts
|
|
|
379
|
|
|
-
|
|
|
379
|
|
Increase
in bank indebtness
|
|
|
-
|
|
|
-
|
|
|
15,108
|
|
Net
cash provided by financing activities
|
|
|
15,879
|
|
|
185,664
|
|
|
70,593
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in cash
|
|
|
18,578
|
|
|
14,467
|
|
|
18,578
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
beginning of period
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
end of period
|
|
$
|
18,578
|
|
$
|
14,467
|
|
$
|
18,578
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
2,212
|
|
$
|
-
|
|
$
|
5,502
|
|
Income
taxes paid
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH
INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for debt
|
|
$
|
-
|
|
$
|
-
|
|
$
|
57,500
|
|
Common
stock issued for accrued wages
|
|
$
|
450,000
|
|
$
|
-
|
|
$
|
550,000
|
|
Preferred
shares issued for subsidiary
|
|
$
|
1,650,000
|
|
$
|
-
|
|
$
|
1,650,000
|
|
The
accompanying notes are an integral part of these interim financial
statements.
(A
Development Stage Company)
CONSOLIDATED
INTERIM NOTES TO THE FINANCIAL STATEMENTS
JUNE
30, 2006
NOTE
1 - BASIS OF PRESENTATION AND DESCRIPTION OF THE BUSINESS
Rhino
Outdoor International, Inc. (fka Cyberads, Inc), was incorporated on April
12,
2000 in the State of Florida. On August 10, 2005 the Company changed domicile
from Florida to Nevada.
The
Company provides management and sales support to businesses focused in the
Extreme Sports/Lifestyle market segment. The Company earns commissions/fees
on
securing distribution for the businesses and products it represents.
Additionally, the Company will earn commissions when product deliveries are
made
through the distribution channel. The Company and its management has devoted
their attention toward restructuring debt and seeking profitable products
in
2005. The Company’s year-end is December 31.
As
of
January 1, 2005, the Company abandoned its previous business plan of marketing
cellular phone services and began a new development stage where it intends
to
provide management and sales support to businesses focused in the Extreme
Sports/Lifestyle market segment.
On
June
21, 2006, the Company entered into a share exchange agreement and plan of
reorganization with Rhino Off Road Industries, Inc. Under this agreement
and
plan of reorganization, the Company acquired 100 percent of the outstanding
common stock of Rhino in exchange for 1,650,000 shares of the Company’s Series C
convertible preferred stock. Furthermore, the Company issued another 600,000
shares of Series C convertible preferred stock for the retention of the
subsidiary’s officers and 400,000 for loan guarantees. As of June 30, 2006, the
400,000 shares had not been issued for loan guarantees. Rhino
Off
Road Industries, Inc. was incorporated on September 25, 2003 in the State
of
Nevada. The principal business of the Company is the design, manufacturing
and
sale of off road vehicles and its related parts. The Company’s operations are
located in Henderson, Nevada. See Note 3.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This
summary of significant accounting policies of Rhino Outdoor International,
Inc.,
is presented to assist in understanding the Company’s financial statements. The
financial statements and notes are representations of the Company’s management,
which is responsible for their integrity and objectivity. These accounting
policies conform to accounting principles generally accepted in the United
States of America, and have been consistently applied in the preparation
of the
financial statements.
Accounting
Method
The
Company’s financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in
the
United States of America.
Accounts
Receivable
The
Company carries its accounts receivable at cost less an allowance for doubtful
accounts. On a periodic basis, the Company evaluates its accounts receivable
and
establishes an allowance for doubtful accounts, based on a history of past
write-offs and collections and current credit conditions.
RHINO
OUTDOOR INTERNATIONAL, INC
(A
Development Stage Company)
CONSOLIDATED
INTERIM NOTES TO THE FINANCIAL STATEMENTS
JUNE
30, 2006
The
Company’s policy is to accrue interest on trade receivables 90
days after invoice date. A receivable is considered past due if payments have
not been received by the Company for 90 days. At that time, the Company will
discontinue accruing interest and turn the account over for collection. If
a
payment is made after it has been turned over for collection, the Company will
apply the payment to the outstanding principal first and resume accruing
interest. Accounts are written off as uncollectible if no payments are received
180 days after they have been turned over for collection.
Cash
and Cash Equivalents
For
purposes of the statement of cash flows, the Company considers all highly liquid
investments and short-term debt instruments with original maturities of three
months or less to be cash equivalents.
Compensated
Absences
Employees
of the Company are entitled to paid vacation, and sick days, depending on job
classification, length of service, and other factors. Management has deemed
that
any liability arising from this policy would be immaterial and has accrued
no
compensated absences liabilities for the period ended June 30, 2006
Cost
of Sales
Cost
of
sales consists of the purchase price of materials and supplies, shipping, labor
and benefits, and other overhead costs associated with production.
Development
Stage Activities
The
Company has been in the development stage since the inception of the current
development stage (which began January 1, 2005) and has realized minimal revenue
from operations. It expects to be engaged to provide management and sales
support to businesses focused in the Extreme Sports/Lifestyle market
segment.
Going
Concern
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As shown in the financial statements, the Company
has limited revenues, has incurred a net loss for the six months ended June
30, 2006, and has an accumulated deficit since the inception of the Company.
These factors indicate that the Company may be unable to continue in existence.
The Company is currently putting business plans in place which will, if
successful, mitigate these factors which raise substantial doubt about the
Company’s ability to continue as a going concern. The financial statements do
not include any adjustments related to the recoverability and classification
of
recorded assets, or the amounts and classification of liabilities that might
be
necessary in the event the Company cannot continue existence.
Management
has established plans designed to increase the sales of the Company’s products
and services and decrease debt. These plans will include providing management
and sales support to businesses focused in the Extreme/Lifestyle market segment
where the Company anticipates earning commissions/fees on securing distribution
from business and products it represents.
RHINO
OUTDOOR INTERNATIONAL, INC
(A
Development Stage Company)
CONSOLIDATED
INTERIM NOTES TO THE FINANCIAL STATEMENTS
JUNE
30, 2006
An
estimated $2 million is believed necessary to continue operations and increase
development through the next fiscal year. The timing and amount of capital
requirements will depend on a number of factors, including demand for products
and services and the availability of opportunities for international expansion
through affiliations and other business relationships. Management intends to
seek new capital from new equity securities issuances to provide funds needed
to
increase liquidity, fund internal growth, and fully implement its business
plan.
Inventories
The
Company records inventories at the lower of cost or market on a first-in,
first-out basis. At June 30, 2006, the Company has estimated a reserve of
$50,000.
|
|
June
30,
|
|
June
30,
|
|
|
|
2006
|
|
2005
|
|
Raw
and work-in-progress
|
|
$
|
152,107
|
|
$
|
-
|
|
Finished
goods
|
|
|
81,103
|
|
|
-
|
|
Reserve
for obsolescence
|
|
|
(50,000
|
)
|
|
-
|
|
Total
Inventory
|
|
$
|
183,210
|
|
$
|
-
|
|
Investments
The
Company’s investments in securities are classified as either trading, held to
maturity, or available-for-sale in accordance with Statement of Financial
Accounting Standards No. 115. Available-for-sale securities consist of equity
securities not classified as trading securities or as securities to be held
to
maturity. Unrealized holding gains and losses, net of tax, on available-for-sale
securities are reported as a net amount in a separate component of other
comprehensive income. Gains and losses on the sale of available-for-sale
securities are determined using the average cost method and are included in
earnings. The Company determines the gain or loss on investment securities
held
as available-for-sale, based upon the accumulated cost basis of specific
investment accounts. On the Company’s balance sheet, short-term available for
sale securities are classified as “investments.”
Long-lived
Assets
The
Company accounts for its long-lived assets in accordance with Statement of
Financial Accounting Standards No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets”. This standard establishes a single accounting
model for long-lived assets to be disposed of by sale, including discontinued
operations, and requires that these long-lived assets be measured at the lower
of carrying amount or fair value less cost to sell, whether reported in
continuing operations or discontinued operations. Accordingly, the Company
reviews the carrying amount of long-lived assets for impairment where events
or
changes in circumstances indicate that the carrying amount may not be
recoverable. The determination of any impairment would include a comparison
of
estimated future cash flows anticipated to be generated during the remaining
life of the assets to the net carrying value of the assets.
Property
and Equipment
Property
and equipment are stated at cost. Depreciation of property and equipment is
calculated using the straight-line method over the estimated useful lives of
the
assets, which range from three to seven years. See Note 4.
RHINO
OUTDOOR INTERNATIONAL, INC
(A
Development Stage Company)
CONSOLIDATED
INTERIM NOTES TO THE FINANCIAL STATEMENTS
JUNE
30, 2006
Principles
of Consolidation
The
accompanying consolidated financial statements at June 30, 2006 include the
accounts of Rhino Outdoor International, Inc. and its wholly owned subsidiaries
IDS Cellular, Inc. (“IDS”), and Rhino Off Road Industries, Inc. All significant
transactions and balances among the companies included in the consolidated
financial statements have been eliminated. The operations of IDS are currently
idle.
Provision
for Taxes
Income
taxes are provided based upon the liability method of accounting pursuant to
Statement of Financial Accounting Standards No. 109, “Accounting for Income
Taxes” (hereinafter “SFAS No. 109). Under this approach, deferred income taxes
are recorded to reflect the tax consequences in future years of differences
between the tax basis of assets and liabilities and their financial reporting
amounts at each year-end. A valuation allowance is recorded against deferred
tax
assets if management does not believe the Company has met the “more likely than
not” standard imposed by SFAS No. 109 to allow recognition of such an
asset.
Recent
Accounting Pronouncements
In
September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 157, “Fair Value Measurements” (hereinafter
“SFAS No. 157”), which defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles (GAAP), and expands
disclosures about fair value measurements. Where applicable, SFAS No. 157
simplifies and codifies related guidance within GAAP and does not require any
new fair value measurements. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and interim periods
within those fiscal years. Earlier adoption is encouraged. The Company does
not
expect the adoption of SFAS No. 157 to have a significant effect on its
financial position or results of operations.
In
June
2006, the Financial Accounting Standards Board issued FASB Interpretation No.
48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB
Statement No. 109” (hereinafter “FIN 48”), which prescribes a recognition
threshold and measurement attribute for the financial statement recognition
and
measurement of a tax position taken or expected to be taken in a tax return.
FIN
48 also provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. FIN 48
is
effective for fiscal years beginning after December 15, 2006. The Company does
not expect the adoption of FIN 48 to have an immediate material impact on its
financial reporting, and the Company is currently evaluating the impact, if
any,
the adoption of FIN 48 will have on its disclosure requirements.
In
March
2006, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 156, “Accounting for Servicing of Financial Assets—an
amendment of FASB Statement No. 140.” This statement requires an entity to
recognize a servicing asset or servicing liability each time it undertakes
an
obligation to service a financial asset by entering into a servicing contract
in
any of the following situations: a transfer of the servicer’s financial assets
that meets the requirements for sale accounting; a transfer of the servicer’s
financial assets to a qualifying special-purpose entity in a guaranteed mortgage
securitization in which the transferor retains all of the resulting securities
and
RHINO
OUTDOOR INTERNATIONAL, INC
(A
Development Stage Company)
CONSOLIDATED
INTERIM NOTES TO THE FINANCIAL STATEMENTS
JUNE
30, 2006
classifies
them as either available-for-sale securities or trading securities; or an
acquisition or assumption of an obligation to service a financial asset that
does not relate to financial assets of the servicer or its consolidated
affiliates. The statement also requires all separately recognized servicing
assets and servicing liabilities to be initially measured at fair value, if
practicable and permits an entity to choose either the amortization or fair
value method for subsequent measurement of each class of servicing assets and
liabilities. The statement further permits, at its initial adoption, a one-time
reclassification of available for sale securities to trading securities by
entities with recognized servicing rights, without calling into question the
treatment of other available for sale securities under Statement 115, provided
that the available for sale securities are identified in some manner as
offsetting the entity’s exposure to changes in fair value of servicing assets or
servicing liabilities that a servicer elects to subsequently measure at fair
value and requires separate presentation of servicing assets and servicing
liabilities subsequently measured at fair value in the statement of financial
position and additional disclosures for all separately recognized servicing
assets and servicing liabilities. This statement is effective for fiscal years
beginning after September 15, 2006, with early adoption permitted as of the
beginning of an entity’s fiscal year. Management believes the adoption of this
statement will have no impact on the Company’s financial condition or results of
operations.
In
February 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 155, “Accounting for Certain Hybrid Financial
Instruments, an Amendment of FASB Standards No. 133 and 140” (hereinafter “SFAS
No. 155”). This statement established the accounting for certain derivatives
embedded in other instruments. It simplifies accounting for certain hybrid
financial instruments by permitting fair value remeasurement for any hybrid
instrument that contains an embedded derivative that otherwise would require
bifurcation under SFAS No. 133 as well as eliminating a restriction on the
passive derivative instruments that a qualifying special-purpose entity (“SPE”)
may hold under SFAS No. 140. This statement allows a public entity to
irrevocably elect to initially and subsequently measure a hybrid instrument
that
would be required to be separated into a host contract and derivative in its
entirety at fair value (with changes in fair value recognized in earnings)
so
long as that instrument is not designated as a hedging instrument pursuant
to
the statement. SFAS No. 140 previously prohibited
a qualifying special-purpose entity from holding a derivative financial
instrument that pertains to a beneficial interest other than another derivative
financial instrument. This
statement is effective for fiscal years beginning after September 15, 2006,
with
early adoption permitted as of the beginning of an entity’s fiscal year.
Management believes the adoption of this statement will have no impact on the
Company’s financial condition or results of operations.
Research
and Development
Research
and development expenses are charged to operations as incurred. The cost of
intellectual property purchased from others that is immediately marketable
or
that has an alternative future use is capitalized and amortized as intangible
assets. Capitalized costs are amortized using the straight-line method over
the
estimated economic life, typically 10 years, of the related asset. The Company
periodically reviews its capitalized patent costs to assess recoverability
based
on the projected undiscounted cash flows from operations. Impairments are
recognized in operating results when a permanent diminution in value
occurs
RHINO
OUTDOOR INTERNATIONAL, INC
(A
Development Stage Company)
CONSOLIDATED
INTERIM NOTES TO THE FINANCIAL STATEMENTS
JUNE
30, 2006
Reclassifications
Certain
amounts from prior periods have been reclassified to conform to the current
period presentation. This reclassification has resulted in no changes to the
Company’s accumulated deficit or net losses presented.
Revenue
Recognition
The
Company recognizes revenue from product sales upon shipment to independent
distributors, the Company’s customers. Revenue from administration fees is
recognized upon collection from independent distributors.
Use
of
Estimates
The
process of preparing financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
use
of estimates and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements. Accordingly,
upon settlement, actual results may differ from estimated amounts.
NOTE
3 - ACQUISITION OF RHINO OFF ROADS INDUSTRIES, INC.
On
June
21, 2006, the Company acquired one hundred percent of the issued and outstanding
shares of Rhino Off Roads Industries, Inc. for 1,650,000 convertible preferred
shares Series C of Rhino Outdoor International, Inc. Per the merger agreement,
the
Company issued another 600,000 shares of Series C convertible preferred stock
for the retention of the subsidiary’s officers. Furthermore,
400,000
shares were to be issued for loan guarantees that the subsidiary’s officers had
for lines of credit and bank indebtedness. As of June 30, 2006, these shares
have not been issued, and the officers still are the guarantee on these lines
of
credit.
The
purchase price was allocated as follows:
Cash
|
|
$
|
18,578
|
|
Accounts
receivable
|
|
|
5,000
|
|
Investments
|
|
|
1,102,500
|
|
Inventories
|
|
|
183,210
|
|
Plant,
property & equipment, net
|
|
|
126,238
|
|
Other
assets
|
|
|
2,052
|
|
Total
Assets Acquired
|
|
|
1,437,578
|
|
Current
liabilities
|
|
|
(2,177,590
|
)
|
Other
liabilities
|
|
|
(74,508
|
)
|
Total
Liabilities Assumed
|
|
|
(2,252,098
|
)
|
Liabilities
in excess of assets
|
|
|
823,463
|
|
Other
comprehensive income
|
|
|
540,000
|
|
Cost
of acquisition
|
|
|
1,650,000
|
|
Goodwill
|
|
$
|
3,013,463
|
|
RHINO
OUTDOOR INTERNATIONAL, INC
(A
Development Stage Company)
CONSOLIDATED
INTERIM NOTES TO THE FINANCIAL STATEMENTS
JUNE
30, 2006
NOTE
4 - BANK OVERDRAFTS
Bank
overdrafts consist of checks written in excess of funds on deposit. The
underlying bank is used as an imprest account with automatic transfers from
the
Company’s general account as checks are presented.
NOTE
5 - PROPERTY AND EQUIPMENT
Property
and equipment are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets. The useful
lives of property, plant and equipment for purposes of computing depreciation
are five to forty years. The following is a summary of property, equipment,
and
accumulated depreciation:
|
|
June
30,
|
|
June
30,
|
|
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
Plant
assets
|
|
$
|
183,687
|
|
$
|
-
|
|
Office
furniture
|
|
|
7,445
|
|
|
-
|
|
Leasehold
improvements
|
|
|
1,604
|
|
|
-
|
|
|
|
|
192,736
|
|
|
-
|
|
Less
accumulated depreciation
|
|
|
(66,498
|
)
|
|
-
|
|
Net,
property and equipment
|
|
$
|
123,238
|
|
$
|
-
|
|
Depreciation
and amortization expense for the period ended June 30, 2006 was $851. The
Company evaluates the recoverability of property and equipment when events
and
circumstances indicate that such assets might be impaired. The Company
determines impairment by comparing the undiscounted future cash flows estimated
to be generated by these assets to their respective carrying amounts.
Maintenance and repairs are expensed as incurred. Replacements and betterments
are capitalized. The cost and related reserves of assets sold or retired are
removed from the accounts, and any resulting gain or loss is reflected in
results of operations.
NOTE
6 - INCOME TAXES
At
June
30, 2006, the Company had deferred tax assets calculated at an expected rate
of
34% of approximately $9,700,000 principally arising from net operating loss
carryforwards for income tax purposes. As management of the Company cannot
determine that it is more likely than not that the Company will realize the
benefit of the net deferred tax asset, a valuation allowance equal to the net
deferred tax asset was recorded at June 30, 2006. The significant components
of
the deferred tax asset at June 30, 2006 were as follows:
RHINO
OUTDOOR INTERNATIONAL, INC
(A
Development Stage Company)
CONSOLIDATED
INTERIM NOTES TO THE FINANCIAL STATEMENTS
JUNE
30, 2006
|
|
|
|
Net
operating loss carryforward:
|
|
$
|
28,600,000
|
|
|
|
|
|
|
Deferred
tax asset
|
|
$
|
9,700,000
|
|
Deferred
tax asset valuation allowance
|
|
|
(9,700,000
|
)
|
Net
deferred tax asset
|
|
$
|
-
|
|
At
June
30, 2006, the Company has net operating loss carryforwards of $28,600,000 which
begin to expire in the year 2020. The change in the allowance account from
December 31, 2005 to June 30, 2006 was $552,000.
NOTE
7 - CAPITAL STOCK
Preferred
Stock
The
Company is authorized to issue 5,000,000 shares of preferred stock with a par
value of $0.001. These shares are convertible to common stock. As of June
30, 2006, the Company has issued 835,660 shares of preferred Series A, 1,000,000
shares of preferred Series B, and 2,250,000 shares of preferred Series C.
On
June
26, 2005, the Company issued 1,000,000 shares of its convertible preferred
Series B stock in exchange for partial payment of accrued salary to an officer
of the Company. The shares were recorded at $0.10 value, which was a fair price
average during the period of accrual. The Company recorded a reduction in
accrued salary liability as a result of this issuance. Each share of Series
B
preferred was originally entitled to 100 votes per share, which was increased
to
255 votes per share on June 21, 2006.
On
June
21, 2006, the Company issued 1,650,000 shares of its convertible preferred
Series C stock in a share exchange agreement and plan of reorganization when
the
Company acquired 100 percent of the outstanding common stock of Rhino Off Road
Industries, Inc. The Company also issued another 600,000 shares of Series C
convertible preferred stock for the retention of the subsidiary’s officers. Per
the merger agreement, 400,000 shares were to be issued for loan guarantees
that
the subsidiary’s officers had for lines of credit and bank indebtedness. As of
June 30, 2006, these shares have not been issued, and the officers still are
the
guarantee on these lines of credit.
Common
Stock
The
Company is authorized to issue 500,000,000 shares of common stock. All shares
have equal voting rights, are non-assessable and have one vote per share. Voting
rights are not cumulative and, therefore, the holders of more than 50% of the
common stock could, if they choose to do so, elect all of the directors of
the
Company.
During
the six month ended June 30, 2006, the Company issued 51,395,132 and 22,500,000
shares of its common stock for $1,207,630 and $450,000 in exchange for
management and consulting services and accrued wages, respectively. The services
were measured at the fair market value of the shares received on the day the
shares were issued.
During
the year ended December 31, 2005, the Company issued 99,626,000 shares of its
common stock in exchange for consulting services for $6,946,392. The services
were measured at the fair market value of the shares received on the day the
shares were issued.
RHINO
OUTDOOR INTERNATIONAL, INC
(A
Development Stage Company)
CONSOLIDATED
INTERIM NOTES TO THE FINANCIAL STATEMENTS
JUNE
30, 2006
During
the year ended December 31, 2005, the Company issued 500,000 shares of its
common stock in exchange for debt of $60,000 and recorded a gain of forgiveness
of debt of $2,500 for this exchange. The services were measured at the fair
market value of the shares received on the day the shares were
issued.
NOTE
8 - LEASE COMMITMENTS
Lease
Payments
The
Company has operating lease commitments for its premises. The monthly lease
commitment is approximately $6,000. For years ended December 31, 2005, and
2004,
the Company had paid approximately $72,000 for rent of facilities costs. The
lease expired in April 2006. No replacement lease agreement has been signed
and
the Company continues to rent the facilities on a month-to-month
basis.
NOTE
9 - LOAN PAYABLE
Notes
payable consisted of the following at June 30:
|
|
2006
|
|
2005
|
|
The
Company has a $100,000 operating line of credit with Nevada First
Bank
that bears interest at a rate of 8.5% per annum, and was completely
drawn
down at June 30, 2006. This line of credit has no security directly
associated with it. The Company has a second operating line of $199,950
with Nevada First Bank that bears interest at 8.5% per annum, and
was
completely drawn down at June 30, 2006. This line of credit is 100%
secured with a CD owned by related parties.
|
|
$
|
299,950
|
|
$
|
-
|
|
The
Company has a 5-year term loan with Nevada First Bank which had an
initial
value of $125,000. With 3 years left on the term, it bears interest
at an
annual rate of 7.5%, and is secured by all physical assets of the
business. This loan is secured by a personal guarantee by related
parties.
|
|
|
76,323
|
|
|
-
|
|
The
Company has two vehicles loans with lending companies and pays
approximately $1,250 in payments at an average interest rate of
approximately 2.5% on these vehicles.
|
|
|
43,290
|
|
|
-
|
|
Note
payable was due in installments of $5,000 on January 15, 2004 and
February
15, 2004 with final payment due March 15, 2004, plus interest at
10% per
annum; secured by all of the Company's accounts receivable, inventories,
and computer hardware and software and is personally guaranteed by
two
former officers of the Company. In default
|
|
|
109,000
|
|
|
109,000
|
|
RHINO
OUTDOOR INTERNATIONAL, INC
(A
Development Stage Company)
CONSOLIDATED
INTERIM NOTES TO THE FINANCIAL STATEMENTS
JUNE
30, 2006
Note
payable to cellular phone service provider; due in installments of
$92,596
payable on January 2, 2005 and August 2, 2005, plus interest at Libor
index. In default.
|
|
|
185,192
|
|
|
185,192
|
|
|
|
|
|
|
|
|
|
Total
Notes Payable
|
|
$
|
713,755
|
|
$
|
294,192
|
|
NOTE
10 - COMMITMENTS AND CONTINGENCIES
On
June
9, 2006, the Company signed an agreement with Hebei Sida Industry Group Col,
Ltd
(“Sida”), pursuant to which Sida will become an authorized exclusive distributor
of the Company’s products in China. Sida has agreed to purchase 1,000 units over
a three year period. Under the agreement, Sida will manufacture these units
in
China and pay the Company a license fee of 10% over its purchase costs for
distribution rights.
The
Company is non-compliant with respect to certain federal and state payroll
related taxes. Included in accrued payroll and payroll related liabilities
at
June 30, 2006 is approximately $582,800 of unpaid payroll taxes.
In
April
2004, the Company agreed to indemnify a former officer of the Company for any
loss he sustained in a settlement reached with a cellular phone service provider
against IDS and him personally. Under the indemnification, the Company was
obligated to pay an aggregate of $72,261 in installments of $5,000 each on
or
before August 1, 2004 and September 1, 2004, with the balance due October 1,
2004. The indemnification had no effect on the accompanying financial statements
as the amount owed to the cellular phone service provider was previously
recorded as accounts payable in the records of IDS.
The
Company is currently in negotiations with an individual who has threatened
a
lawsuit against the Company, a former officer and a cellular phone service
provider. The Company has offered to issue the individual 250,000 shares of
common stock to settle any claims he may have against the Company. This
individual has verbally accepted the settlement offer. The offer had no effect
on the accompanying consolidated financial statements as consulting services
totaling $27,500 owed this individual were previously recorded as accounts
payable in the records of Rhino Outdoor International, Inc. The Company has
reserved 250,000 shares of common stock to be issued under this settlement
offer.
A
claim
against the Company of approximately $500,000 has been threatened by the
Creditors Committee of World Com. The Company does not believe that it owes
the
amount and intends to vigorously defend the claim. The claim has not been
pursued and the Company is not subject to any legal action pursuing this claim.
Any claims asserted may be challenged by claims of the Company concerning funds
owed to Rhino Outdoor International, Inc. for its prior trade relationship
with
World Com.
RHINO
OUTDOOR INTERNATIONAL, INC
(A
Development Stage Company)
CONSOLIDATED
INTERIM NOTES TO THE FINANCIAL STATEMENTS
JUNE
30, 2006
NOTE
11 - RELATED PARTY TRANSACTIONS
Accrued
payroll and accrued taxes represents amounts owed to management for services
provided. At June 30, 2006, the Company had accrued payroll of
$211,333.
Related
party payables represent amounts due to management and shareholders, who have
loaned money to the Company to pay expenses on behalf of the Company. At June
30, 2006, short-term related party payables were $1,687,925. These loans are
unsecured, non-interest bearing, and payable on demand.
NOTE
12 - INVESTMENTS
The
Company’s securities investments are classified as trading securities and are
recorded at fair value as of the balance sheet date, with the change in fair
value during the period included in accumulated comprehensive income.
In
May
2006, the Company acquired shares of common stock in Luvoo, Inc, a public
company, for sponsorship and visual representation on Rhino vehicles in
competition for a consecutive twelve months beginning on June 1, 2006. The
Company carries this investment at cost. See Note 2.
The
Company’s investments are summarized as follows:
|
|
June
30,
|
|
|
|
2006
|
|
Fair
value:
|
|
|
|
Luvoo,
Inc
|
|
$
|
1,102,500
|
|
Total
fair value
|
|
|
1,102,500
|
|
Gross
unrealized (gain)
|
|
|
540,000
|
|
Cost
|
|
$
|
562,500
|
|
|
|
|
|
|
NOTE
13 - SUBSEQUENT EVENT
Effective
August 30, 2006, the Company completed a one-for one hundred (1-for-100) reverse
stock split for stockholders of record as of August 7, 2006. In addition,
effective August 30, 2006, the Company changed its corporate name to Rhino
Outdoor International, Inc.
Subsequent
to June 30, 2006, the Company executed an agreement with a related party to
issue 4,000,000 shares of common stock for debt of $1,000,000.
The
Company has signed a letter of intent to acquire Great Vans West, a privately
held Canadian company that manufacturers recreational class “B” motor
homes.
Management’s
discussion and analysis contains various forward-looking statements within
the
meaning of the Securities and Exchange Act of 1934. These statements consist
of
any statement other than a recitation of historical fact and can be identified
by the use of forward looking terminology such as “may”, “expect”, “anticipate”,
“estimates”, or “continue” or use of negative or other variations of comparable
terminology. We caution that these statements are further qualified by important
factors that could cause actual results to differ materially from those
contained in our forward looking statements, that these forward looking
statements are necessarily speculative, and there are certain risks and
uncertainties that could cause actual events or results to differ materially
from those referred to in our forward looking statements.
Management’s
discussion and analysis should be read in conjunction with the financial
statements and the notes thereto.
RESULTS
OF OPERATIONS (3 mos.)
Three
months ended June 30, 2006 compared to the three months ended June 30, 2005
|
|
Three
months ended
June
30
|
|
Increase
|
|
|
|
2006
|
|
2005
|
|
Amount
|
|
%
|
|
Revenue
|
|
$ 29,750
|
|
$
-
|
|
$ 29,750
|
|
100%
|
|
There
were $29,750 in revenues posted during the nine days of operations after
the
acquisition of Rhino Off Road Industries, Inc. at ended June 30,
2006
of which
100% was attributable to sales by Rhino Off-Road Industries, Inc.. There
were no
revenues posted during the three months ended June 30, 2005. The Company
has
been in development stage during both reporting periods.
|
|
Three
months ended
June
30
|
|
Decrease
|
|
|
|
2006
|
|
2005
|
|
Amount
|
|
%
|
|
General
& administrative
|
|
$74,257
|
|
$431,851
|
|
(357,594)
|
|
83%
|
|
General
& administrative expenses for the three months ended June 30, 2006 decreased
by $357,594 to the comparable period in 2005. This decrease in G & A
expenses in the three month period ending June 30, 2006 is related to the
Company not expending funds on marketing and sales of XBoard pending delivery
and production of the product.
The
Company has redirected activities The redirection is related to acquisition
and
business development with companies in the outdoor lifestyle and recreation
category.
|
|
Three
months ended
June
30
|
|
Decrease
|
|
|
|
2006
|
|
2005
|
|
Amount
|
|
%
|
|
Selling
& marketing expense
|
|
$400,634
|
|
$2,000,050
|
|
$1,594,416
|
|
80%
|
|
Selling
and marketing expense of $400,634 for the three months ended June 30, 2006
were
related to the Company’s continued exploration of the development of Rhino Off
Road Industries, Inc.. Selling Expenses decreased by $1,594,416 compared
to the
three months ended June 30, 2005 due to decreased activities as noted above.
|
|
Three
months ended
June
30
|
|
Increase
|
|
|
|
2006
|
|
2005
|
|
Amount
|
|
%
|
|
Interest
Expense
|
|
$21,220
|
|
$
0
|
|
$21,220
|
|
n/a
|
|
Interest
Expense of $21,220 for the three months ended June 30, 2006 were attributable
to
the Company’s accrual of Interest on related parties notes.
RESULTS
OF OPERATIONS (6 mos.)
Six
months ended June 30, 2006 compared to the six months ended June 30, 2005
|
|
Six
months ended
June
30
|
|
Increase
|
|
|
|
2006
|
|
2005
|
|
Amount
|
|
%
|
|
Revenue
|
|
$ 29,750
|
|
$
0
|
|
$
29,750
|
|
100%
|
|
There
were $29,750 in revenues posted during the nine days of operations after
the
acquisition of Rhino Off Road Industries, Inc. at ended June 30, 2006. There
were no other revenues posted during the six months ended June 30, 2005.
The
Company has been in development stage during both reporting
periods.
|
|
Six
months ended June 30
|
|
Decrease
|
|
|
|
2006
|
|
2005
|
|
Amount
|
|
%
|
|
General
& administrative
|
|
$141,350
|
|
$490,248
|
|
(348,898)
|
|
72%
|
|
General
& administrative expenses for the six months ended June 30, 2006 decreased
by $348,898 to the comparable period in 2005. This decrease in G & A
expenses in the six month period ending June 30, 2006 is directly related
to the
Company not taking part in trade show events and administrative activities
on
XBoard.
|
|
Six
months ended
June
30
|
|
Decrease
|
|
|
|
2006
|
|
2005
|
|
Amount
|
|
%
|
|
Selling
& Mrktg. Expense
|
|
$760,915
|
|
$4,055,368
|
|
$3,294,453
|
|
82%
|
|
Selling
Expense of $757,630 for the six months ended June 30, 2006 were related to
the
Company’s continued exploration of the development of Rhino Off Road. Selling
Expenses decreased by $3,294,453 compared to the six months ended June 30,
2005
due to decreased activities as noted above.
|
|
Six
months ended
June
30
|
|
Increase
|
|
|
|
2006
|
|
2005
|
|
Amount
|
|
%
|
|
Interest
Expense
|
|
$39,858
|
|
$
0
|
|
$39,858
|
|
n/a
|
|
Interest
Expense of $39,858 for the six months ended June 30, 2006 were attributable
to
the Company’s accrual of Interest on related parties notes.
FINANCIAL
POSITION & LIQUIDITY AND CAPITAL RESOURCES
As
of
June 30, 2006 compared to June 30, 2005:
|
|
Six
months ended
June
30
|
|
Increase
|
|
|
|
2006
|
|
2005
|
|
Amount
|
|
%
|
|
Cash
|
|
$18,578
|
|
$14,467
|
|
$4,111
|
|
(28%)
|
|
ACQUISITION
OF SUBSIDIARY
On
June
21, 2006, the Company entered into a share exchange agreement and plan of
reorganization with Rhino Off Road Industries, Inc. Under this agreement
and
plan of reorganization, the Company acquired 100 percent of the outstanding
common stock of Rhino in exchange for 1,650,000 shares of the Company’s Series C
convertible preferred stock. Furthermore, the Company issued another 600,000
shares of Series C convertible preferred stock for the retention of the
subsidiaries officers. Per the merger agreement, 400,000 shares were to be
issued for loan guarantees that the subsidiary’s officers had for lines of
credit and bank indebtedness. As of June 30, 2006, these shares have not
been
issued, and the officers still are the guarantee on these lines of
credit.
Management
has agreed to retain Howard Pearl as President of Rhino Off Road, and
anticipates appointing Howard Pearl as CEO of the parent company by end of
year
2006. An employment agreement has been executed and is attached as part of
the
exhibits to the acquisition. The term is three years, with an employee option
for two years, at a minimum paid salary of $180,000 per annum.
As
required by Rule 13a-15 under the Exchange Act, we carried out an evaluation
of
the effectiveness of the design and operation of our disclosure controls
and
procedures. This evaluation was carried out under the supervision and with
the
participation of our management, including our Chief Executive Officer.
Based
upon that evaluation, we concluded that our disclosure controls and procedures
are effective in ensuring that material information related to us, required
to
be disclosed by us in the reports we file or submit under the Exchange
Act is
recorded, processed, summarized and reported within the time periods specified
by the rules and regulations of the SEC. There have been no significant
changes
in our internal controls subsequent to the date we carried out our evaluation.
Disclosure
controls and procedures are controls and other procedures that are designed
to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission’s rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act is
accumulated and communicated to management, including the Company’s Chief
Executive Officer to allow timely decisions regarding required
disclosure.
Exhibit
Number
|
Description
of Document
|
|
|
10.1*
|
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
|
*
Incorporated by reference
In
accordance with the requirements of the Exchange Act, the registrant caused
this
amended report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date:
December 13, 2006
|
CYBERADS,
INC.
|
|
|
|
By:
/s/
JEFF
CRISWELL
Jeff Criswell, President
|
23