SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ____________
Commission File No. 000-27233
RRUN VENTURES NETWORK, INC.
(Exact name of Registrant as specified in its charter)
NEVADA 98-0204736
----------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
62 W. 8th Avenue, 4th Floor
Vancouver, British Columbia, Canada V5Y 1M7
-------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer?s telephone number, including area code: (604) 682-6541
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 ( ).
State the number of shares outstanding of each of the issuer?s
classes of common equity, as of the last practicable date.
Class Outstanding as of March 31, 2003
----------------------------- ---------------------------------
$0.0001 par value Common Stock 58,154,790
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
1
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-QSB and
Item 310 (b) of Regulation S-B, and, therefore, do not include
all information and footnotes necessary for a complete
presentation of financial position, results of operations, cash
flows, and stockholders' equity in conformity with generally
accepted accounting principles. In the opinion of management,
all adjustments considered necessary for a fair presentation of
the results of operations and financial position have been
included and all such adjustments are of a normal recurring
nature. Operating results for the three months ended March 31,
2003 are not necessarily indicative of the results that can be
expected for the year ending December 31, 2003.
2
RRUN VENTURES NETWORK INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(Unaudited)
(Stated in U.S. Dollars)
RRUN VENTURES NETWORK INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Stated in U.S. Dollars)
-----------------------------------------------------------------------------
MARCH 31 DECEMBER 31
2003 2002
-----------------------------------------------------------------------------
ASSETS
Current
Cash $ 124 $ 32
Goods and Services Tax recoverable 4,424 5,786
Prepaid expense 47,528 345
Notes receivable 13,125 13,125
-----------------------------
65,201 19,288
Capital Assets 7,715 8,230
-----------------------------
$ 72,916 $ 27,518
=============================================================================
LIABILITIES
Current
Accounts payable $ 1,463,084 $ 1,374,920
Loans and advances payable 541,460 528,581
-----------------------------
2,004,544 1,903,501
-----------------------------
STOCKHOLDERS' DEFICIENCY
Share Capital
Authorized:
100,000,000 common shares, par value
$0.0001 per share
Issued and outstanding:
56,154,790 common shares at March 31, 2003
and 45,654,790 at December 31, 2002 5,616 4,566
Add: Share subscriptions received:
1,685,000 common shares at March 31, 2003
and 36,250 at December 31, 2002 8,045 1,450
Additional paid-in capital 1,138,534 1,087,084
Deficit (3,083,823) (2,969,083)
-----------------------------
(1,931,628) (1,875,983)
-----------------------------
$ 72,916 $ 27,518
=============================================================================
RRUN VENTURES NETWORK INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
(Unaudited)
(Stated in U.S. Dollars)
-----------------------------------------------------------------------------
INCEPTION
OCTOBER 12
THREE MONTHS ENDED 2000 TO
MARCH 31 MARCH 31
2003 2002 2003
-----------------------------------------------------------------------------
Revenue $ - $ - $ 9,000
------------------------------------------
Expenses
Administrative services 2,267 6,101 156,837
Amortization 516 2,687 15,761
Business development 21,000 191,166 739,106
Consulting 50,000 260,001 520,963
Equipment leases - 7,474 35,796
Investor relations 295 171,774 391,694
Marketing - 541 36,389
Media design 180 15,983 84,055
Office, rent and sundry 32,545 50,956 297,739
Professional fees 7,441 25,605 273,034
Software development - 38,888 855,135
Travel 496 9,650 112,203
Wages and benefits - 13,344 28,281
------------------------------------------
114,740 794,170 3,546,993
------------------------------------------
Loss Before The Following 114,740 769,170 3,537,993
Write Down Of Investment - - 6,750
Minority Interest In Loss Of
Subsidiary - - (219)
------------------------------------------
Loss From Continuing
Operations 114,740 769,170 3,544,524
Gain On Disposition Of
Subsidiary - - (419,427)
Discontinued
Operations - 24,984 (53,629)
------------------------------------------
Net Loss For The Period $ 114,740 $ 769,186 $ 3,071,468
=============================================================================
Net Loss Per Share $ 0.01 $ 0.05
==============================================================
Weighted Average Number Of
Common Shares Outstanding 49,543,679 14,781,391
===============================================================
RRUN VENTURES NETWORK INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
-----------------------------------------------------------------------------
INCEPTION
OCTOBER 12
THREE MONTHS ENDED 2000 TO
MARCH 31 MARCH 31
2003 2002 2003
-----------------------------------------------------------------------------
Cash Flows From Operating
Activities
Loss from continuing operations $ (114,740) $ (769,170) $ (3,544,524)
Adjustments To Reconcile Net
Loss To Net Cash Used By
Operating Activities
Amortization 516 2,687 15,761
Issue of common stock for
expenses 52,500 60,000 345,690
Write down of investment - - 6,750
Minority interest in loss of
subsidiary - - (219)
Goods and Services Tax
recoverable 1,362 3,343 (4,424)
Prepaid expense (47,183) (13,747) (47,528)
Notes receivable - - (13,125)
Accounts payable 88,163 614,561 2,034,763
Loans and advances payable 12,879 33,914 668,900
------------------------------------------
(6,503) (93,412) (537,956)
------------------------------------------
Cash Flows From Investing
Activities
Net asset deficiency of legal
parent at date of reverse
take-over transaction - - (12,355)
Purchase of capital assets - - (43,493)
------------------------------------------
- - (55,848)
------------------------------------------
Cash Flows From Financing
Activities
Shares issued for cash - - 414,712
Share subscriptions received 6,595 99,000 8,045
------------------------------------------
6,595 99,000 422,757
------------------------------------------
Increase (Decrease) In Cash 92 5,588 (171,047)
Net Cash From Discontinued
Operations - 24,984 53,630
Cash Acquired On Acquisition Of
Subsidiary - - 117,541
Cash, Beginning Of Period 32 1,421 -
------------------------------------------
Cash, End Of Period $ 124 $ 31,993 $ 124
=============================================================================
RRUN VENTURES NETWORK INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
MARCH 31, 2003
(Unaudited)
(Stated in U.S. Dollars)
ADDITIONAL
PAID-IN
SHARES AMOUNT CAPITAL DEFICIT TOTAL
-----------------------------------------------------
Shares issued for cash
and services 4,200,000 $4,200 $ - $ - $ 4,200
Adjustment to number of
shares issued and
outstanding as a result
of the acquisition of
RAHX, Inc.
RAHX, Inc. (4,200,000)(4,200) - - (4,200)
RRUN Ventures Inc. 5,708,780 5,709 (1,509) - 4,200
Adjustment to stated
value of stockholders'
equity to reflect
minority interest in
the net assets of
RAHX, Inc. at the
acquisition date - - (219) - (219)
Net asset deficiency of
legal parent at date of
reverse take-over
transaction - - - (12,355) (12,355)
Shares issued to acquire
investment in Kaph Data
Engineering Inc. 400,000 400 6,350 - 6,750
Loss for the period - - - (79,249) (79,249)
-----------------------------------------------------
Balance, December 31,
2000 6,108,780 6,109 4,622 (91,604) (80,873)
Adjustment to number of
shares issued and
outstanding as a result
of the acquisition of
RRUN Ventures, Inc.
RRUN Ventures, Inc. (6,108,780)(6,109) (4,622) - (10,731)
RRUN Ventures Network
Inc. 288,420 288 10,443 - 10,731
Fair value of shares
issued in connection
with the acquisition of
RRUN Ventures, Inc. 305,439 306 28,325 - 28,631
-----------------------------------------------------
593,859 594 38,768 (91,604) (52,242)
Increase in issued
shares due to 20 for 1
stock split 11,283,321 594 (594) - -
Shares issued for debt 1,867,544 187 54,257 - 54,444
Shares issued for cash 670,000 67 13,333 - 13,400
Shares issued for
Services 200,000 20 3,980 - 4,000
Loss for the year - - - (1,611,999) (1,611,999)
-----------------------------------------------------
Balance, December 31,
2001 14,614,724 1,462 109,744 (1,703,603) (1,592,397)
RRUN VENTURES NETWORK INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS DEFICIENCY
MARCH 31, 2003
(Unaudited)
(Stated in U.S. Dollars)
ADDITIONAL
PAID-IN
SHARES AMOUNT CAPITAL DEFICIT TOTAL
-----------------------------------------------------
Balance, December 31,
2001 14,614,724 $1,462 $ 109,744 $(1,703,603)$(1,592,397)
Shares issued for debt 11,163,816 1,116 268,026 - 278,142
Shares issued for
services 13,845,000 1,384 283,606 - 275,990
Shares issued for cash
and notes receivable 7,861,250 787 461,912 - 462,698
Shares cancelled (1,830,000) (183) (61,204) - (61,387)
Forgiveness of
shareholder debt - - 25,000 - 25,000
Loss for the year - - - (1,265,480) (1,265,480)
-----------------------------------------------------
Balance, December 31,
2002 45,654,790 4,566 1,087,084 (2,969,083) (1,877,434)
Shares issued for
services 10,500,000 1,050 51,450 - 52,500
Loss for the period - - - (114,740) (114,740)
-----------------------------------------------------
Balance, March 31, 2003 56,154,790 $5,616 $ 1,138,534 $(3,083,823)$(1,939,674)
=====================================================
RRUN VENTURES NETWORK INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(Unaudited)
(Stated in U.S. Dollars)
1. BASIS OF PRESENTATION
The unaudited consolidated financial statements as of March 31,
2003 included herein have been prepared without audit pursuant
to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with United States of America generally accepted
accounting principles have been condensed or omitted pursuant
to such rules and regulations. In the opinion of management,
all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included. It is suggested that these consolidated financial
statements be read in conjunction with the December 31, 2002
audited consolidated financial statements and notes thereto.
2. NATURE OF OPERATIONS
a) Organization
The Company was incorporated in the State of Nevada, U.S.A.,
on October 12, 2000.
b) Development Stage Activities
The Company was organized as a holding company to develop or
acquire innovative ventures with an emphasis on serving the
lifestyle needs of the 18 - 34 year Digital Generation
through the production and marketing of lifestyle products
and services. The Company's initial venture is RAHX, a
business concept previously focused on delivering, for its
customers, a consolidated Entertainment Experience Network
comprised of many services ranging from digital media peer
to peer file exchange to live entertainment and online video
games. At this time, the Company's focus is the developing
of a live entertainment business, specifically nightclubs
and live events.
RRUN VENTURES NETWORK INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(Unaudited)
(Stated in U.S. Dollars)
2. NATURE OF OPERATIONS (Continued)
c) Going Concern
Since inception, the Company has suffered recurring losses,
net cash outflows from operations and, at March 31, 2003,
has a working capital deficiency of $1,939,343. The Company
expects to continue to incur substantial losses to complete
the development and testing of its technology. Since its
inception, the Company has funded operations through common
stock issuances and related party loans in order to meet its
strategic objectives. Management believes that sufficient
funding will be available to meet its business objectives,
including anticipated cash needs for working capital, and is
currently evaluating several financing options. However,
there can be no assurance that the Company will be able to
obtain sufficient funds to continue the development of and,
if successful, to commence the sale of its products under
development. As a result of the foregoing, there exists
substantial doubt about the Company's ability to continue as
a going concern. These consolidated financial statements do
not include any adjustments that might result from the
outcome of this uncertainty.
3. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of the Company have been
prepared in accordance with generally accepted accounting
principles in the United States of America. Because a precise
determination of many assets and liabilities is dependent upon
future events, the preparation of consolidated financial
statements for a period necessarily involves the use of
estimates which have been made using careful judgement.
The consolidated financial statements have, in management's
opinion, been properly prepared within reasonable limits of
materiality and within the framework of the significant
accounting policies summarized below:
a) Consolidation
These consolidated financial statements include the accounts
of the Company, its 100% owned subsidiaries, RRUN Labs Inc.
and RVNI Management Ltd., and its 67% owned subsidiary,
RAHX, Inc.
RRUN VENTURES NETWORK INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(Unaudited)
(Stated in U.S. Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
b) Development Stage Company
The Company is a development stage company as defined in the
Statements of Financial Accounting Standards No. 7. The
Company is devoting substantially all of its present efforts
to establish a new business and none of its planned
principal operations have commenced. All losses accumulated
since inception have been considered as part of the
Company's development stage activities.
c) Investments
Investments in companies owned less than 20% are recorded at
the lower of cost or fair market value.
d) Software Development Costs
The costs to develop new software products and enhancements
to existing software products will be expensed as incurred
until technological feasibility has been established. Once
technological feasibility has been established, any
additional costs will be capitalized.
e) Income Taxes
The Company has adopted Statement of Financial Accounting
Standards No. 109 - "Accounting for Income Taxes" (SFAS
109). This standard requires the use of an asset and
liability approach for financial accounting and reporting on
income taxes. If it is more likely than not that some
portion or all if a deferred tax asset will not be realized,
a valuation allowance is recognized.
f) Amortization
Capital assets are being amortized on the declining balance
basis at the following rates:
Computer equipment 30%
Computer software 100%
Office furniture and equipment 20%
RRUN VENTURES NETWORK INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(Unaudited)
(Stated in U.S. Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
g) Stock Based Compensation
The Company accounts for stock based employee compensation
arrangements in accordance with the provisions of Accounting
Principles Board Opinion No. 25 - "Accounting for Stock
Issued to Employees" (APB No. 25) and complies with the
disclosure provisions of Statement of Financial Accounting
Standards No. 123 - "Accounting for Stock Based
Compensation" (SFAS No. 123). Under APB No. 25,
compensation expense is recognized based on the difference,
if any, on the date of grant between the estimated fair
value of the Company's stock and the amount an employee must
pay to acquire the stock. Compensation expense is
recognized immediately for past services and rateably for
future services over the option vesting period.
h) Financial Instruments
The Company's financial instruments consist of cash, GST
recoverable, prepaid expenses and accounts payable.
Unless otherwise noted, it is management's opinion that this
Company is not exposed to significant interest or credit
risks arising from these financial instruments. The fair
value of these financial instruments approximate their
carrying values, unless otherwise noted.
i) Net Loss Per Share
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" ("SFAS 128"). Under SFAS 128, basic
and diluted earnings per share are to be presented. Basic
earnings per share is computed by dividing income available
to common shareholders by the weighted average number of
common shares outstanding in the period. Diluted earnings
per share takes into consideration common shares outstanding
(computed under basic earnings per share) and potentially
dilutive common shares.
4. SUBSEQUENT EVENTS
Subsequent to March 31, 2003, the Company issued 5,648,287
common shares to settle a debt with a fair value of $12,991,
and issued a total of 12,920,000 common shares with a fair
value of $41,200, pursuant to the provisions of various
consulting services agreements entered into by the Company.
Item 2. Management's Discussion and Analysis or Plan of
Operations
Forward Looking Statements
This report on Form 10-QSB contains certain forward-looking
statements within the meaning of section 21(e) of the Securities
Exchange Act of 1934, as amended, and other applicable securities
laws. All statements other than statements of historical fact are
"forward-looking statements" for purposes of these provisions,
including any projections of earnings, revenues, or other
financial items; any statements of the plans, strategies, and
objectives of management for future operation; any statements
concerning proposed new products, services, or developments, any
statements regarding future economic conditions or performance,
statements of belief, and any statement of assumptions underlying
any of the foregoing. Such forward-looking statements are subject
to inherent risks and uncertainties, and actual results could
differ materially from those anticipated by the forward-looking
statements.
RESULTS OF OPERATIONS
For The Three Month Period Ended March 31, 2003 Compared To the
Three Month Period Ended March 31, 2002
3
For The Three Month Period Ended March 31, 2003 Compared To the
Three Month
Period Ended March 31, 2002
For the three month period ended March 31, 2003, the Company
earned revenues
of $0.00, as compared to revenues of $0 for the same period ended
March 31,
2002.
For the three month period ended March 31, 2003, the Company
incurred
operational expenses of $114,740, as compared to $794,170 during
the same
period in 2002. These operating expenses included: consulting
fees of
$50,000 and $260,001, business development expenses $21,000, and
$191,166;
and professional fees of $7,441, and $25,605, for the three month
period
ending March 31, 2003, and 2002, respectively.
For the three month period ended March 31, 2003, the company also
issued
10,500,000 shares as payment to one of our legal advisors to
cover our legal
expenses and to establish a pre-paid expense for future legal
services. At
March 31, 2003, the Pre-paid Expense totaled $47,528.
The Company incurred a net loss from operations of $114,740 for
the fiscal
quarter ended March 31, 2003, as compared to $794,170 for the
same period in
2002.
For the three month period ended March 31, 2003, the Company
earned revenues of $0.00, as compared to revenues of $0 for the
same period ended March 31, 2002.
For the three month period ended March 31, 2003, the Company
incurred operational expenses of $114,740, as compared to
$794,186 during the same period in 2002. These operating
expenses included: consulting fees of $50,000 and $260,001,
business development expenses $21,000, and $191,166; and
professional fees of $7,441, and $25,605, for the three month
period ending March 31, 2003, and 2002, respectively.
For the three month period ended March 31, 2003, the company also
issued 10,500,000 shares as payment to one of our legal advisors
to cover our legal expenses and to establish a pre-paid expense
for future legal services. At March 31, 2003, the Pre-paid
Expense totaled $47,528.
The Company incurred a net loss from operations of $114,740
for the fiscal quarter ended March 31, 2003, as compared to
$794,186 for the same period in 2002.
Liquidity and Financial Condition As Of September 30, 2002
We had cash-on hand of totaling $124.00 as of March 31,
2003.
Due to major changes in market conditions, management
decided to change our business strategy to maximize our chances
of success. Since inception the Company?s original business
strategy was to operate as a venture development
4
organization
focused on content distribution utilizing the Internet. As
reported in the Company?s Annual report for the period ended
December 31, 2002 the Company' has shifted its strategy from
being focused solely on technology oriented to one of focused on
live entertainment, particularly entertainment establishments
(i.e. nightclubs) and live events (i.e. concerts and special
events)
Our business strategy has been to build urban lifestyle-
based businesses based around software and on-line communities.
We believe that our vision to build lifestyle businesses is still
viable but that we need to change to an off-line focus with the
on-line focus coming later. Accordingly we are focusing our
immediate efforts on building a network of licensed entertainment
establishments, as the base for our urban lifestyle businesses.
These establishments will still utilize a branding approach so
that we can sell other urban lifestyle products and services.
Our immediate aim is to acquire our first establishment so that
we can use it as a flagship for the network and demonstrate our
unique and proprietary entertainment concepts for use in our
other establishments. We intend that the later establishments
will be developed in new and existing locations in major cities
throughout the United States and Canada.
In order to finance the first acquisition, and our phases of
implementation we plan to raise investment capital through
different types of securities offerings. We plan to fund new
establishment locations, including our first acquisition, through
direct investments into the individual establishments and
providing the investors with cash dividends and some capital
stock in the Company to the investors. This is hoped to reduce
the potential dilution to our existing shareholders. We also plan
to raise investment capital by sale of stock in RAHX, our
lifestyle subsidiary, or other planned subsidiary which again is
hoped to reduce dilution to our existing shareholders. We plan to
invite direct investments into the Company to provide funds for
general corporate purposes. We believe that this plan will enable
us to achieve our development goals with acceptable dilution to
our existing shareholders.
We believe that the first acquisition of a nightclub
entertainment establishment will require approximately a minimum
of $500,000 for the acquisition, plus approximately $100,000 in
legal, accounting and administrative expenses. In addition our
first acquisition will require a minimum of another $400,000 for
working capital and general corporate purposes. This is a minimum
total of approximately $1,000,000 that will be required in the
next quarter during which we are hoping to make the first
acquisition. In the following 3 months, we plan to make one or
two additional acquisitions. We believe that the cost of a second
and third acquisition or development project will be
approximately a minimum of $1,000,000 each and that approximately
another $500,000 minimum each will be required for the same
purposes as listed above for the first acquisition and for
working capital and general corporate purposes. Thus, we
anticipate needing a minimum of $4,000,000 of investment capital
during the next six months.
After the first two acquisitions, we intend to develop other
entertainment establishments from initial buildout rather than
from acquisitions. Our plan is to open two additional
entertainment establishments by the end of 2003 and we anticipate
that additional funding (approximately $1,000,000) will be
required to accomplish this. Management
5
anticipates that funding
requirements for this plan will be less than the overall cost of
opening these nightclubs, since the revenues from the first two
or three nightclubs is expected to generate enough cash flow to
reduce the level of external capital required. We have developed
comprehensive business and financial plans that result in our
development of a network of entertainment establishments that
should operate on a cash positive basis and without incurring
substantial dilution to stockholders such that the Company can
possibly increase its overall valuation substantially. The
Company believes it will require approximately $1,000,000 to
launch its live events business unit, including the cost of
acquisitions and their subsequent integration and for the venture
development of other potential lines of business for 2003. The
total additional working capital financing described in this
section is planned to also include the development of other
synergistic business units such as, including but not limited to,
membership services, brand licensing and merchandising.
Management plans on initiating a series of securities offerings
to raise the investment capital needed to meet our acquisition
plans. Although we will make efforts to minimize dilution to
current shareholders, we may not be able to avoid dilution due to
many factors, including but not limited to, the closing of
financing at lower than the desired market price of the Company's
common stock.
RRUN hopes to secure the financing to satisfy the capital needs
for each phase of its implementation plan through the execution
of various funding methods, primarily private placement
investments or debt financing. RRUN hopes to achieve this by
securing relationships with accredited individual investors,
investment bankers, venture capitalists, and/or finance advisors
that have the experience and relationships to aid RRUN with its
capital raising efforts. The source of the private placement or
debt financing may be comprised of a mix of principal
shareholders, private investors and venture capital companies.
If needed capital investment for our acquisitions or developments
is not available, in whole or in part, we intend to delay the
implementation plan regarding our acquisition or development
plans until sufficient investment capital becomes available. We
cannot give any assurances that we will raise sufficient
investment capital to meet the business plan. In addition to
delays to the implementation plan regarding our acquisition or
development plans due to insufficiency of investment capital, we
may suffer other consequences, including but not limited to the
following; We may have to suspend or discontinue operations of
one or more of our business units, such as RAHX, or we may have
to suspend or discontinue operations of the Company if we become
insolvent as a result.
Until we close our first revenue producing acquisition or
begin to produce significant revenues, we will be reliant on
capital received from private placements, loans, and the exercise
of options and warrants. Due to the depressed market for our
securities, we may not be able avoid significant dilution to
current shareholders. In addition, we expect to continue to
retain certain management, staff and consultants, such as legal
counsel, and may need to compensate these individuals through the
issuance of our common stock as compensation. These stock based
compensations may result in significant dilution to current
shareholders due to the depressed market for our securities. We
also continue to reduce or prevent collection of outstanding
vendor debts and accounts with creditors, such as suppliers and
consultants, which could result in litigation against the
Company. There can be no guarantee that all of these
6
negotiations will be successful and the outcome of these
negotiations may include settlements in cash and/or issuance of
common stock. These stock based settlements may result in
significant dilution to current shareholders due to the depressed
market for our securities. We plan on continuing to meet certain
of our expenses through the issuance of our shares of common
stock, which may cause additional and significant dilution to
existing shareholders due to the depressed market for our
securities.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
During the three month period ending March 31, 2003 the
Company has no legal proceedings filed against it.
The Company believes that, as it commences revenue-producing
operations and as it raises capital, we will have the resources
to reduce or prevent collection litigation by creditors or
others.
Item 2. Changes in Securities
Recent Sales of Unregistered Securities
During January 2003, the Company issued 1,648,750 shares of its
previously authorized, but unissued common stock. The shares were
issued to one unrelated company in exchange for cash. The
transaction was valued at $0.004 per share for a total
consideration of $6,595. The transaction was an isolated
transaction with a company having a close affiliation with us
and was exempt from registration under the Securities Act of 1933
pursuant to Section 4(2) of the Act because of not being part of
a public offering. The offering was for a limited purpose and did
not use the machinery of public distribution
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
99.1
7
(b) Reports on Form 8-K
None
SIGNATURES
In accordance with the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorised.
RRUN Ventures Network, Inc.
Date: May 15, 2003
By: /s/ Ray Hawkins
Ray Hawkins, President and Chief
Executive Officer
By: /s/ Edwin Kwong
Edwin Kwong, Principal Accounting Officer
and Chief Financial Officer
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL
OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Ray Hawkins, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that the Quarterly Report on Form 10-QSB of RRUN VENTURES
NETWORK, INC. for the quarterly period ended March 31, 2003 fully
complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and that the information
contained in the Quarterly Report on Form 10-QSB fairly presents
in all material respects the financial condition and results of
operations of RRUN VENTURES NETWORK, INC.
By:
Name:
/s/ Ray Hawkins
Ray Hawkins
Title:
Chief Executive Officer
Date:
May 15, 2003
I, Edwin Kwong, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that the Quarterly Report on Form 10-QSB of RRUN VENTURES
NETWORK, INC. for the quarterly period ended March 31, 2003 fully
complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and that the information
contained in the Quarterly Report on Form 10-QSB fairly presents
in all material respects the financial condition and results of
operations of RRUN VENTURES NETWORK, INC.
By:
Name:
/s/ Edwin Kwong
Edwin Kwong
Title:
Chief Financial Officer
Date:
May 15, 2003