roi_10qsb-70930.htm
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-QSB
(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,
2007
|
[
]
|
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.)
|
1191
Center Point Dr., Henderson, Nevada
|
|
89704
|
(Address
of principal executive
office)
|
|
(Zip
Code)
|
1-800-288-3099
(Issuer's
telephone number)
(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
September 30, 2007, the number of outstanding shares of the issuer's common
stock was 87 706 500 shares.
TRANSITIONAL
SMALL BUSINESS DISCLOSURE
FORMAT: Yes o No x
PART
I - FINANCIAL
INFORMATION
|
|
|
|
ITEM
1.
|
FINANCIAL
STATEMENTS
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets as of September 30, 2007 and December 31,
2006
|
3
|
|
|
|
|
Condensed
Consolidated Statement of Operations for the Three and Nine months
ended
September 30, 2007 and 2006 and for the current development stage
(January 1, 2005) to September 30, 2007
|
4
|
|
|
|
|
Condensed
Consolidated Statement of Cash Flows for the Nine Months ended
September 30, 2007 and 2006 and for the current development stage
(January
1, 2005) to September 30, 2007
|
5
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements
|
6
|
|
|
|
ITEM
2.
|
MANAGEMENT'S
DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
12
|
|
|
|
ITEM
3.
|
CONTROLS
AND PROCEDURES
|
15
|
|
|
|
PART
II - OTHER
INFORMATION
|
|
|
|
ITEM
6.
|
EXHIBITS
|
15
|
|
|
|
SIGNATURES
|
15
|
ITEM
1.
|
FINANCIAL
STATEMENTS
|
RHINO
OUTDOOR INTERNATIONAL, INC
|
(A
Development Stage Enterprise)
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
|
|
$
|
70,028
|
|
|
$
|
1,862
|
|
Inventories
|
|
|
113,490
|
|
|
|
123,490
|
|
Other
current assets
|
|
|
101,954
|
|
|
|
2,052
|
|
Total
Current Assets
|
|
|
285,472
|
|
|
|
127,404
|
|
|
|
|
|
|
|
|
|
|
PROPERTY
AND EQUIPMENT, NET
|
|
|
104,087
|
|
|
|
107,954
|
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
|
|
Investments
|
|
|
810
|
|
|
|
14,400
|
|
Goodwill
|
|
|
3,165,963
|
|
|
|
3,013,463
|
|
Total
Other Assets
|
|
|
3,166,773
|
|
|
|
3,027,863
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
3,556,332
|
|
|
$
|
3,263,221
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND NET CAPITAL DEFICENCY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
1,292,514
|
|
|
$
|
1,300,032
|
|
Checks
outstanding in excess of cash in bank
|
|
|
-
|
|
|
|
21,534
|
|
Accrued
liabilities
|
|
|
1,814,409
|
|
|
|
1,332,860
|
|
Lines
of credit
|
|
|
287,689
|
|
|
|
299,896
|
|
Deferred
revenue and customer deposits
|
|
|
272,991
|
|
|
|
448,027
|
|
Notes
payable
|
|
|
399,692
|
|
|
|
294,192
|
|
Notes
payable - related party
|
|
|
477,614
|
|
|
|
573,814
|
|
Convertible
debt
|
|
|
279,980
|
|
|
|
-
|
|
Other
current liabilities
|
|
|
429,524
|
|
|
|
440,484
|
|
Total
Current Liabilities
|
|
|
5,254,413
|
|
|
|
4,710,840
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
41,723
|
|
|
|
59,729
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
CAPITAL DEFICIENCY
|
|
|
|
|
|
|
|
|
Preferred
stock, $.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 shares issued and outstanding
|
|
|
1,038
|
|
|
|
2,250
|
|
Common
stock, $.001 par value; 500,000,000 shares authorized; shares issued
and
outstanding 87,706,500 (50,748,709 in 2006)
|
|
|
87,706
|
|
|
|
50,749
|
|
Additional
paid-in capital
|
|
|
38,220,112
|
|
|
|
35,502,478
|
|
Accumulated
deficit prior to current development stage
|
|
|
(19,234,,546
|
)
|
|
|
(19,234,546
|
)
|
Accumulated
deficit in development stage
|
|
|
(20,704,262
|
)
|
|
|
(17,394,515
|
)
|
Accumulated
comprehensive loss
|
|
|
(111,600)
|
|
|
|
(435,600
|
)
|
Net
Capital Deficiency
|
|
|
(1,739,806
|
)
|
|
|
(1,507,348
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND NET CAPITAL DEFICIENCY
|
|
$
|
3,,556,330
|
|
|
$
|
3,263,221
|
|
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
RHINO
OUTDOOR INTERNATIONAL, INC.
(A
Development Stage Enterprise)
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
Activity During
Current Development Stage
(January
1, 2005) toSeptember
30,
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
September
30
|
|
|
Nine
Months Ended
September
30
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
|
112,484
|
|
|
$
|
23,398
|
|
|
$
|
529,869
|
|
|
$
|
53,148
|
|
|
$
|
606,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST
OF GOODS SOLD
|
|
|
35,990
|
|
|
|
44,183
|
|
|
|
151,751
|
|
|
|
68,837
|
|
|
|
251,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT (LOSS)
|
|
|
76,494
|
|
|
|
(20,785
|
)
|
|
|
378,118
|
|
|
|
(15,689
|
)
|
|
|
354,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
318,107
|
|
|
|
333,853
|
|
|
|
972,691
|
|
|
|
1,182,784
|
|
|
|
3,515,394
|
|
Marketing
|
|
|
50,250
|
|
|
|
3,516,474
|
|
|
|
464,425
|
|
|
|
4,112,533
|
|
|
|
10,216,612
|
|
Selling
|
|
|
-
|
|
|
|
3,547,474
|
|
|
|
374,730
|
|
|
|
359,300
|
|
|
|
5,511,840
|
|
Total
Operating Expenses
|
|
|
368,357
|
|
|
|
7,397,801
|
|
|
|
1,796,416
|
|
|
|
9,007,647
|
|
|
|
19,243,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
FROM OPERATIONS
|
|
|
(291,863
|
)
|
|
|
(7,418,586
|
)
|
|
|
(1,418,298
|
)
|
|
|
(9,023,386
|
)
|
|
|
(18,888,875
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
-
|
|
|
|
180,155
|
|
|
|
-
|
|
|
|
194,218
|
|
|
|
340,272
|
|
Interest,
net
|
|
|
(18,301
|
)
|
|
|
(28,358
|
)
|
|
|
(43,007
|
)
|
|
|
(68,216
|
)
|
|
|
(206,379
|
)
|
Acquisition
expense
|
|
|
-
|
|
|
|
|
|
|
|
(25,098
|
)
|
|
|
|
|
|
|
(25,098
|
)
|
Loss
on sale of investment
|
|
|
-
|
|
|
|
(11,763
|
)
|
|
|
(328,377
|
)
|
|
|
(11,763
|
)
|
|
|
(340,140
|
|
Other
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,641
|
)
|
Total
Other Income (Expenses)
|
|
|
(18,301
|
)
|
|
|
140,034
|
|
|
|
(396,482
|
)
|
|
|
114,239
|
|
|
|
(218,050
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
BEFORE TAXES
|
|
|
(310,164
|
)
|
|
|
(7,278,552
|
)
|
|
|
(1,814,780
|
)
|
|
|
(8,909,097
|
)
|
|
|
(19,106,925
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
TAXES
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
|
(310,254
|
)
|
|
|
(7,278,552
|
)
|
|
|
(1,814,780
|
)
|
|
|
(8,909,097
|
)
|
|
|
(19,106,925
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
LOSS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
loss on investments
|
|
|
(90
|
)
|
|
|
(920,731
|
)
|
|
|
(111,600
|
)
|
|
|
(411,571
|
)
|
|
|
(547,290
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
LOSS
|
|
$
|
(310,254
|
)
|
|
$
|
(8,199,283
|
)
|
|
$
|
(1,926,470
|
)
|
|
$
|
(9,320,668
|
)
|
|
$
|
(19,654,215
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS PER COMMON
SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
And Diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.96
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(1.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON
STOCK SHARES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OUTSTANDING,
BASIC AND DILUTED
|
|
|
72,677,356
|
|
|
|
7,564,217
|
|
|
|
72,194,261
|
|
|
|
7,185,378
|
|
|
|
|
|
The
accompanying notes are an integral part of these
condensed consolidated financial statements.
RHINO
OUTDOOR INTERNATIONAL, INC
(A
Development State Enterprise)
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Nine
Months Ended September 30
|
|
Cumulative
Activity During Current Development Stage (January 1, 2005) to September
30,
2007
|
|
|
2007
|
|
|
2006
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(1,814,780
|
)
|
|
$
|
(8,909,097
|
)
|
|
|
(19,106,925
|
)
|
Depreciation
and amortization
|
|
|
47,067
|
|
|
|
9,403
|
|
|
|
56,470
|
|
Stock
issued for accrued wages
|
|
|
-
|
|
|
|
450,000
|
|
|
|
510,000
|
|
Stock
issued for compensation & services
|
|
|
-
|
|
|
|
1,207,630
|
|
|
|
7,436,392
|
|
Reserve
for issuance of preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
400,000
|
|
Stock
issued for accrued management fees
|
|
|
-
|
|
|
|
600,000
|
|
|
|
600,000
|
|
Other
|
|
|
-
|
|
|
|
-
|
|
|
|
11,671
|
|
Common
stock issued for debt
|
|
|
-
|
|
|
|
1,000,000
|
|
|
|
20,000
|
|
Amortization
of deferred revenues
|
|
|
(234,375
|
)
|
|
|
-
|
|
|
|
(562,500
|
)
|
Common
stock issued for marketing and selling expenses
|
|
|
773,726
|
|
|
|
7,062,449
|
|
|
|
8,699,468
|
|
Loss
on sale of investment
|
|
|
328,377
|
|
|
|
11,763
|
|
|
|
417,544
|
|
Preferred
stock issued fro accrued management fees
|
|
|
-
|
|
|
|
600,000
|
|
|
|
36,657
|
|
Adjustments
to reconcile net loss to net cash provided by (used for) operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
in assets & liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
10,000
|
|
|
|
40,000
|
|
|
|
79,720
|
|
Deposits
|
|
|
(88,302
|
)
|
|
|
|
|
|
|
(88,302
|
)
|
Other
assets
|
|
|
(4,500
|
)
|
|
|
(7,740
|
)
|
|
|
(12,240
|
)
|
Accounts
payable
|
|
|
(6,852
|
)
|
|
|
76,443
|
|
|
|
291,493
|
|
Deferred
revenue & customer deposits
|
|
|
443,735
|
|
|
|
(109,165
|
)
|
|
|
334.,570
|
|
Accrued
liabilities
|
|
|
(10,689
|
)
|
|
|
(526,958
|
)
|
|
|
(154,576
|
)
|
|
|
|
(556,593
|
)
|
|
|
912,228
|
|
|
|
(1,138,950
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of plant, property, and equipment
|
|
|
(22,500
|
)
|
|
|
-
|
|
|
|
(22,500
|
)
|
Other
|
|
|
-
|
|
|
|
53,940
|
|
|
|
43,534
|
|
|
|
|
(22,500
|
)
|
|
|
53,940
|
|
|
|
21,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances
from related parties
|
|
|
(53,700
|
)
|
|
|
(969,380)
|
)
|
|
|
22,883
|
|
Proceeds
from issuance of convertible debt
|
|
|
479,980
|
|
|
|
-
|
|
|
|
479,980
|
|
Proceeds
from sale of common stock
|
|
|
264,687
|
|
|
|
-
|
|
|
|
264,687
|
|
Other
|
|
|
(35,674
|
)
|
|
|
8,046
|
|
|
|
361,969
|
|
|
|
|
655,293
|
|
|
|
(961,334
|
)
|
|
|
1,129,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in cash
|
|
|
76,200
|
|
|
|
4,834
|
|
|
|
11,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
at beginning of period
|
|
|
1,862
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
at end of period
|
|
$
|
78,062
|
|
|
$
|
4,834
|
|
|
$
|
78,062
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
-
|
|
|
$
|
4,618
|
|
|
$
|
21,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH
INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for debt
|
|
$
|
20,000
|
|
|
$
|
-
|
|
|
$
|
97,500
|
|
Common
stock issued for accrued wages
|
|
|
-
|
|
|
|
450,000
|
|
|
|
45,000
|
|
Common
stock issued for convertible debt
|
|
|
200,000
|
|
|
|
-
|
|
|
|
200,000
|
|
Preferred
shares issued for subsidiary
|
|
|
-
|
|
|
|
1,650,000
|
|
|
|
16,500
|
|
Shares
issued for related party payable
|
|
|
-
|
|
|
|
1,233,231
|
|
|
|
1,233,231
|
|
The
accompanying notes are an integral part of these
condensed consolidated financial statements.
RHINO
OUTDOOR INTERNATIONAL, INC.
(A
Development Stage Enterprise)
NOTES
TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2007
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 and 2006. 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 agreed to issue 400,000 shares of Series C convertible
preferred stock for loan guarantees. As of September 30, 2007, the
400,000 shares had not yet been issued. 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 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.
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.
Development
Stage Activities
Since
the
inception of the current development stage (which began January 1, 2005), the
Company 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.
RHINO
OUTDOOR INTERNATIONAL, INC.
(A
Development Stage Enterprise)
NOTES
TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2007
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 cash and revenues, has incurred a net loss for the six months
ended September 30, 2007, 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.
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.
Goodwill
Goodwill
represents the excess of the purchase price and related direct costs over the
fair value of net assets acquired as of the date of the acquisition of Rhino
Off
Road Industries, Inc. The Company reviews periodically its goodwill to assess
recoverability based on projected undiscounted cash flows from operations.
Impairments are recognized in operating results when a permanent diminution
in
value occurs. At September 30, 2007, no impairment was deemed necessary for
the
Company’s goodwill.
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.”
RHINO
OUTDOOR INTERNATIONAL, INC.
(A
Development Stage Enterprise)
NOTES
TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2007
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 incircumstances 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.
Principles
of Consolidation
The
accompanying consolidated financial statements at September 30, 2007 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.
Revenue
Recognition
The
Company recognizes revenue for product sales when there is a mutually executed
sales contract, when the products are shipped and title passes to customers,
when the contract price and terms are fixed, and when collectibility is
reasonably assured.
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.
RHINO
OUTDOOR INTERNATIONAL, INC.
(A
Development Stage Enterprise)
NOTES
TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2007
NOTE
3 - 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
September 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. While each share of
Series B preferred was originally entitled to 100 votes per share, this 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
September 30, 2006, these shares have not been issued.
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.
On
August
30, 2006, the board of directors approved and the Company effected a one
hundred-for-one reverse stock split of the Company’s common stock. All
references in the financial statements to shares, share prices, per share
amounts and stock plans have been adjusted retroactively for the one
hundred-for-one reverse stock split.
During
the twelve months ended December 31, 2006, the Company issued 245,000 and
205,000 shares of its common stock for $490,000 and $410,000 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. Also, during the year ended December 31, 2006, the Company
issued 43,865,191 shares of common stock in exchange for marketing and selling
expenses for $7,875,993. Also, during the year ended December 31, 2006, the
Company issued 5,200,000 shares of common stock for related party debt of
$1,300,000.
During
the six months ended June 30, 2007, the Company issued 15,649,500 shares of
its
common stock in exchange for marketing and selling expenses of $823,475, and
5,268,000 shares in exchange for cash of $264,687 and 400,000 shares in payment
of $20,000 in notes payable. Additionally, the Company cancelled
6,000,000 shares that were previously issued for services.
RHINO
OUTDOOR INTERNATIONAL, INC.
(A
Development Stage Enterprise)
NOTES
TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2007
NOTE
4 - 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
September 30, 2007 is approximately $601,482 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 agreement, the Company
was obligated to pay an aggregate of $72,261 with the balance due October 1,
2004. These amounts were never paid. 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.
NOTE
5 - RELATED PARTY TRANSACTIONS
Accrued
payroll and accrued taxes represents amounts owed to management for services
provided. At September 30, 2007 and 2006 the Company had accrued payroll of
$598,277 and $211,333, respectively.
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
September 30, 2007 and 2006, short-term related party payables were $358,614
and
$1,687,925, respectively. These loans are unsecured, non-interest bearing,
and
payable on demand.
RHINO
OUTDOOR INTERNATIONAL, INC.
(A
Development Stage Enterprise)
NOTES
TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2007
NOTE
6 – BUSINESS COMBINATION
Effective
September 28, 2007 the company acquired certain assets and assumed certain
assets of W.E.Rock an event planning and off-road championship series
company. The business combination was accounted for as a purchase
ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF
OPERATIONS
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.
OVERVIEW
Rhino
Outdoor International, Inc. (ROI) did not record revenues during
2005. We discontinued the third party affiliate sales of Cellular
phones and services during 2004, and discontinued all cellular sales in 2005
due
to the financial losses inherent with the commission structure paid to third
party affiliates. The affiliate commissions were earned on "leads"
provided, rather than on sales made, therefore the cancellations and returns
on
cellular phones were not recouped from the third party affiliate and the losses
became ROI expense. During 2006 and 2005, we focused on developing a new
business plan in the extreme sports sector and marketing of its
lifestyle. We engaged with three primary products during 2005,
XBoard, Rhino, and Planet X TV.
In
2006,
we focused 100% of our efforts on Rhino Off Road Industries, and it’s product
the RTV. On June 21, 2006 we acquired by share exchange agreement and
plan of reorganization all the outstanding shares of capital stock of Rhino
in
exchange for shares of capital stock of ROI, formerly known as
CyberAds. On August 30, 2006 the company was renamed Rhino Outdoor
International, Inc, to reflect a more accurate brand name for our business
model. During 2006, we implemented sales and marketing strategies for
the Rhino Off Road RTV, and invested in further development of new models which
are designed to increase sales to consumers, and potentially to government
agencies for the Search and Rescue requirements. During the first
quarter of 2007 we continued to focus on developing the Rhino RTV product line,
and began marketing to consumers through trade advertising and direct sales
through our web site.
During
the 3rd quarter of 2007 we continued development of the Rhino Off Road RTV
and
our implementation of the production facility in China. Management
spent time in China finalizing plant layout and assisting our plant facility
in
obtaining necessary equipment to build the RTV product line.
RELATED
PARTIES AND RELIANCE ON CERTAIN PROVIDERS
We
rely
on the suppliers of inventory to Rhino, for production of products specific
to
our reselling, or direct selling rights.
RECENT
EVENTS
As
noted
above we entered into relationships with Aqua Xtremes, Inc., and its products
XBoard, whereby the company was provided exclusive rights to resell distribution
and dealers within a defined territory. During 2005, we developed a
resell relationship with Rhino Off Road Industries whereby the
company
would recruit and demonstrate the Rhino product line to Distributors, Dealers,
and consumers. During 2005, we developed a relationship with Planet X
TV whereby the company would be compensated for recruiting advertisers and
sponsors for the Planet X TV shows.
During
2006, we did not focus on either Planet X or XBoard as we put all our efforts
towards Rhino and the acquisition and subsequent development of the RTV and
potential government Search and Rescue opportunities. In 2006, we
entered into an LOI with Great West Vans (GWV), at this time we have not
concluded on the transaction and there is no guarantee that the company will
raise the capital required to complete this specific transaction.
During
the first quarter of 2007 we continued to pursue the GWV
acquisition. Further, we have developed a strategic relationship with
Arizona Emergency products for the distribution to government agencies of our
recently developed Emergency Response vehicle. Additionally, we are
completing the design and prototype on a new 4-seater version of the RTV to
expand our product line to meet the consumer demand.
During
the second quarter of 2007 we focused our efforts on finalizing the China
production facility, and completing the design and prototype for AEP and our
Rapid Response 4 seater style vehicle.
PATENTS
AND PROPRIETARY RIGHTS
We
do not
hold any trademark, copyright or patent protection.
Quarter
Ended September 30, 2007 and 2006
We
reported revenues of $112,484 and $23,395 for the quarter ending September
30,
2007 and 2006, respectively, losses of $ 310,254 and $7,278,552
during the quarters ended September 30, 2007 and 2006,
respectively. The increase in revenue from 2007 to 2006 is attributed
to the acquisition of Rhino Off Road effective June 21, 2006 and our effort
to
develop into an Outdoor lifestyle sector company. The Increase in losses was
due
to the developmental stage of the company, and our investment in developing
the
sales and marketing plan for Rhino Off Road. The decrease in loss is
attributable to the increase in revenue during 2007 compared with 2006 3rd
quarter
RESULTS
OF OPERATIONS
Three
months ended September 30, 2007 compared to the three months ended September
30,
2006.
|
|
|
|
|
Increase
|
|
|
|
2007
|
|
|
2006
|
|
|
Amount
|
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
112,484
|
|
|
$
|
23,398
|
|
|
$
|
89,086
|
|
|
|
381%
|
|
Revenue
for the three months ended September 30, 2007 resulted from the sale of Rhino
RTV vehicles, and parts. There were limited sales in 2006 as we were in
developmental stage.
|
|
|
|
|
Decrease
|
|
|
|
2007
|
|
|
2006
|
|
|
Amount
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G&A
Expenses
|
|
$
|
318,107
|
|
|
$
|
333,853
|
|
|
$
|
(15,746
|
)
|
|
|
(.05)%
|
|
G
&
A
Expenses for the three months
ended September 30, 2007 resulted from maintaining our developmental stage,
and
administrative expenses related to Rhino Off Road, G&A expenses
in 2006 were attributable to maintaining the developmental stage of the
company.
|
|
|
|
|
Decrease
|
|
|
|
2007
|
|
|
2006
|
|
|
Amount
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing
Expenses
|
|
$
|
50,250
|
|
|
$
|
3,516,474
|
|
|
$
|
(3,466,224
|
)
|
|
|
(986)%
|
|
Marketing
Expenses for the three months ended September 30, 2007 decreased due to
reduction in trade shows, product demonstrations, consultants, and efforts
toward recruitment of Government sales which were expensed in Quarter ending
September 30 2006..
|
|
|
|
|
Decrease
|
|
|
|
2007
|
|
|
2006
|
|
|
Amount
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
Expenses
|
|
$
|
0
|
|
|
$
|
3,547,474
|
|
|
$
|
(3,547,474
|
)
|
|
|
(100)%
|
|
Selling
Expenses for the three months ended September 30, 2007 decreased as a result
of
the company not paying any commissions for Rhino RTV sales, and
managements focus on production plant development only.
|
|
|
|
|
Decrease
|
|
|
|
2007
|
|
|
2006
|
|
|
Amount
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
$
|
18,301
|
|
|
$
|
28,358
|
|
|
$
|
(10,057
|
)
|
|
|
(35)%
|
|
Interest
expense for the three months ended September 30, 2007 decreased as a result
of a
reduction in interest on notes to related parties, and interest on bank
indebtedness.
As
of
September 30, 2007 compared to September 30, 2006:
Liquidity
and Capital Resources
As
of
September 30, 2007, the Company had current assets totaling $285,472 and a
working capital deficit of $4,968,941. These assets consist of cash
on hand of $70,028, inventories of $113,490, and other current assets of
$101,954. Net stockholders' deficit in the Company was $1,739,806 at
September 30, 2007. The Company is in the development stage and,
since January 1, 2005, has experienced significant changes in liquidity, capital
resources and shareholders’ equity.
Cash
flow
used in operating activities was $556,593 for the period from January 1, 2007
through September 30, 2007. Cash over the periods was used on accounting,
administration, consulting, research and development, and shares issued
for marketing expenses.
Cash
flow
provided from financing activities was $655,293 for the period from January
1,
2007 through September 30, 2007. Financing activities over the period
have consisted of sales of the investments and the company’s common stock and
proceeds from convertible debt.
The
Company’s current assets are insufficient to conduct our plan of operation over
the next twelve (12) months and we will have to seek debt or equity financing
to
fund operations. The Company has no current commitments or
arrangements with respect to, or immediate sources of funding. Further, no
assurances can be given that funding, if needed, would be available or available
to the Company on acceptable terms. The Company’s shareholders would be the most
likely source of new funding in the form of loans or equity placements though
none have made any commitment for future investment and we have no agreement
formal or otherwise. The Company’s inability to obtain funding would have a
material adverse affect on our plan of operation.
Further,
there can be no assurance offered to the public by these disclosures, or
otherwise, that the Company will be successful, or that we will ultimately
succeed as a going concern. To the extent that existing resources and any future
earnings prove insufficient to fund our activities, we will need to raise
additional funds through debt or equity financing. The Company cannot provide
any assurance that such additional financing will be available or that, if
available, it can be obtained on terms favorable to us and our shareholders.
In
addition, any equity financing would result in dilution to the Company
shareholders and any debt financing could involve restrictive covenants with
respect to future capital raising activities or other financial or operational
matters. The Company’s inability to obtain adequate funds will adversely affect
its operations and the ability to implement is plan of operation.
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.
ITEM
6. EXHIBITS
Exhibit
Number
|
Description
of Document
|
|
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certification
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certification
|
32.1
|
Section
1350 Certification
|
32.2
|
Section
1350 Certification
|
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.
|
Rhino
Outdoor International, Inc.
|
|
|
|
|
|
|
By:
|
/s/ Howard
Pearl |
|
|
|
Howard
Pearl |
|
|
|
President
and Chief Executive Officer
|
|
|
|
|
|
15