10-K 1 secu901k.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-KSB

 

(X)      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended:   September 30, 2001


Commission file number: 000-26969


SECURE SIGN, INC.

(Name of small business issuer in its charter)


YourBankOnline.com, Inc.

(Former name of small business issuer)

 

Colorado, United States

(State or other jurisdiction of incorporation or organization)

 

84-1343219

(I.R.S. Employer ID Number)

 

18904 Hwy 99, Suite D, Lynnwood, Washington 98036

(Address of principal executive offices)

 

 

(425) 670-8142

(Issuer's Telephone Number)

 

 

Securities to be registered pursuant to Section 12(b) of the Act: None

 

Securities to be registered pursuant to Section 12(g) of the Act:   15,888,257 Common Shares, no par value

                                                                                                                                          (Title of Class)

 

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 report(s), and (2) has been subject to such filing requirements for the past 90 days. Yes ___ No  X  

 

Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. ___

 

State the issuer's revenues for its most recent fiscal year:   $ 6,263

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates based upon the average bid and asked price at September 30, 2001 was $385,848.

 

As of September 30, 2001, issuer had 15,888,257 shares of common equity issued and outstanding.

 

Transitional Small Business Disclosure Format: Yes ___ No  X

 

 

SECURE SIGN, INC.

 

Form 10-KSB

TABLE OF CONTENTS

 

PART I

                                                               

Item 1.     Description of Business

                                 

Item 2.     Description of Property

 

Item 3.     Legal Proceedings

 

Item 4.     Submission of Matters to a Vote of Securities Holders

 

PART II

 

Item 5.     Market for Common Equity and Related Stockholder Matters

 

Item 6.     Management's Discussion and Analysis or Plan of Operation

 

Item 7.     Financial Statements

 

Item 8.     Changes In and Disagreements With Accountants on Accounting And Financial Disclosure

 

PART III

 

Item 9.     Directors, Executive Officers, Promoters and Control Persons, Compliance With Section 16(a) of the Exchange Act

 

Item 10.    Executive Compensation

 

Item 11.    Security Ownership of Certain Beneficial Owners and Management

 

Item 12.    Certain Relationships and Related Transactions

 

Item 13.    Exhibits and Reports on Form 8-K

 

 

PART I


ITEM 1.     DESCRIPTION OF BUSINESS

 

Historical Corporate Development

 

YourBankOnline.com, Inc. (hereinafter also referred to as the "Company" and/or the "Registrant") is a company in the development stage. The Company was incorporated July 14, 1995 under the laws of the State of Colorado and was originally known as Attache Holdings, Ltd. In November of 1998, Attache Holdings, Ltd became Consolidated Data, Inc.  In February of 2000, Consolidated Data, Inc. became YourBankOnline.com, Inc. Subsequently, on October 31, 2000, YourBankOnline.com, Inc. became Secure Sign, Inc.

 

The Company was inactive until it acquired Contractor's Directory, Inc. ("Contractor's Directory") on April 17, 1997 via a stock for stock acquisition in exchange for 1,000,000 shares of the Company's restricted common stock. From 1997 to the first quarter of 1999, the Company was exclusively involved in the development of an e-Commerce business designed to fill the needs of the construction industry. This included development of "contractors-directory.com". Use of Contractor's Directory allows public information to be downloaded, via the Internet, and reformatted for ease of use by contractors and suppliers. This includes credit and building permit information. (See "Contractor's Directory") Contractor's Directory is a wholly owned subsidiary of the Company.

 

In March 1999, the Company acquired a software system, "YourBankOnline", which was the primary focus of the Company during this fiscal year. The Company actively marketed, sold and supported the software to members of the banking industry while still maintaining "contractors-directory.com".  In October 2000 the Company entered into a new business called Secure Sign.  The Company completed the development stages of the business, but abandoned it in February, 2001.  Subsequent to February 2001, the Company's primary business was the search for new business opportunities.

 

Historical Development of YourBankOnline Software

 

River City Bank ("River City") of Sacramento, California originally developed YourBankOnline in 1996 and 1997, and began offering a range of online services, resulting from YourBankOnline in September of 1997. The system was developed internally in order to offer state-of-the-art services to River City Customers.

 

Following the successful implementation at River City, management licensed and installed the system to three community banks located in northern California: Citizens Bank, Tri-Counties Bank and Auburn National Bank. River City also acted as a service bureau for these banks (i.e., provided them other computing capabilities). In 1998, the management of River City decided to focus on the traditional banking services and did not expand the online banking system to additional banks.

 

DTEK Corporation ("DTEK"), a privately held company located in Boise, Idaho, purchased YourBankOnline from River City in September 1998 for total consideration of $410,000. Consideration was a $60,000 down payment and a note payable of $350,000 due to River City in September 1999.

 

Prior to the Registrant's purchase of the YourBankOnline software from DTEK in February 1999, DTEK fronted a license to the software. Global Payment Systems, Inc. ("Global"), a subsidiary of National Data, Inc., was granted a perpetual worldwide non-exclusive irrevocable transferable right and license to the YourBankOnline software. Global's license allows them to modify, customize, sublicense, resell and distribute the system. Global can also transfer its rights to a third party. Global retains this right and currently markets and sells a version of the software to financial institutions. Global is and will continue to be a competitor of the Company. Global does not have rights to modifications, revisions, additions or any other changes the Company makes to the software.

 

Global agreed to pay DTEK 50% of the first $1,300,000 of license fees received, plus commissions, plus a final lump sum of $50,000. There is not certain date for the payment. Global also agreed to operate and maintain the existing YourBankOnline server sites. Global currently receives an aggregate monthly licensing fee of $1,100 paid by Citizens Bank, Tri-Counties Bank and Auburn Bank.

Page 1

 

In February 1999 the Company purchased YourBankOnline and all rights related to it from DTEK. Consideration for the purchase was $640,000 payable as follows:

 

                        $400,000 through the issuance of 2,000,000 common shares of the Company's

                        restricted common stock valued at $0.20 per share.

 

                        $240,000 paid at the rate of a $10,000 payment for each license sold or through

                        the issuance of 1,200,000 shares of restricted common stock valued at $0.20 per

                        share. The agreement required the Company pay the cash or the stock twelve

                         months from the date of the contract or by March 10, 2000.

 

On April 12, 1999, the Company authorized and issued 1,200,000 shares of its restricted common stock in full satisfaction of its agreements with DTEK.

 

As part of the agreement DTEK assigned to the Company all rights and title to the existing software license between DTEK and Global. This includes payments from River City, subject to DTEK receiving the balance of the initial licensing revenues as compensation for its consulting and support. Any residual income will be paid to the Company which management believes will be immaterial to the on-going operations of the Company.

 

In July 2002, the Company sold back to DTEK the YourBankOnline software for the return of 2,377,000 shares of the Company's common stock and a $20,000 promissory note.

 

 

CONTRACTOR'S DIRECTORY, INC.

 

Historical Development of Contractor's Directory

 

In 1997, the Company developed, and currently operates, contractors-directory.com, a website. This site provides construction contractors with information useful to their business. Services include listing of notices for liens filed, notices of building permits, directories of contractors, notices of upcoming bids, and other similar services of interest to contractors. Contractor's Directory also provides website development for individual contractors.

 

The Company, through loans and contributed services from related companies, has invested approximately $546,000 in the development of Contractor's Directory. This has resulted in the production of negligible revenue. The company has significantly reduced the operations and expenditures associated with the business. Management does not intend to continue to expand the services and provide updates to Contractor's Directory. Current plans are to sell, "spin-off", abandon or otherwise dispose of the subsidiary and/or the operations of Contractor's Directory, Inc.

 

Description of Contractor's Directory

 

Contractor's Directory provides an Internet site that is available to general contractors, subcontractors, architects, property managers, insurance companies and other individuals and entities involved in the construction industry. Subscribers in various categories are able to provide information about their companies that interested parties can review in the privacy of their office using DOS or Windows. Each subcontractor or supplier can provide a color photo and up to eight pages of text describing their company. Additionally, bid lists, building permits, and credit and lien information will be updated daily on the website. General contractors and other interested parties can receive this service for a fee.

 

Competition for Contractor's Directory

 

Management is not aware of other companies offering services similar to the Contractor's Directory. Currently, general contractors, property managers, engineers, architects and others in the industry normally find sub-contractors and suppliers through the standard Yellow Pages or by referral.

 

 

SECURE SIGN, INC.

 

The Company amended its Articles of Incorporation on October 31, 2000 from YourBankOnline.com, Inc. to Secure Sign, Inc. and its trading symbol was changed from "YBOL" to "SECU".

 

The Company then announced on December 5, 2000 that it had completed the first development phase of its demonstration project for providing digital signature capability for physicians writing drug prescriptions for their patients.  The demonstration project ("IDRX") was aimed at providing a simple and seamless method for medical doctors to authenticate and encrypt e-mail prescriptions through the use of digital signatures, using a protocol known as public key infrastructure ("PKI").

 

Participants in the demonstration project included Group Telecom of Canada; its technology services subsidiary, GT Group Telecom Services Corporation; Pat Reynolds, who once designed the medical billing payments system for the physician community of British Columbia, Canada; and Joe Vincent, prominent Mount Vernon, Washington lawyer active with the Washington Board of Pharmacy.

 

On October 4, 2000, Pakie V. Plastino resigned as an officer and director and Joseph Vincent was elected as President, Patrick Reynolds as Vice President, and Randy Brasmer as Secretary/Treasurer.  Pakie V. Plastino continued on as a consultant to the Company.  On February 4, 2001, Joseph Vincent, Patrick Reynolds and Randy Brasmer resigned.  William Doehne then was elected as President and Coya Cady was elected as Secretary/Treasurer for the remainder of the fiscal year 2001 and for fiscal year 2002.

Page 2

 

GENERAL

 

Employees

 

At September 30, 2001, the Company operated with approximately 5 employees and consultants.

 

There is no collective bargaining agreement in place.

 

Development Costs

 

The Company is currently a development stage company and no significant revenues have been earned from the operation of the Company. The majority of the expenditures and resources of the Company during the previous two fiscal years have been spent on development of Contractor's Directory and YourBankOnline, and most recently in the current fiscal year on the formation and development of Secure Sign.  By March 31, 2001, the Company had abandoned its attempt to develop and operate its Contractor's Directory business, its online banking business, and its Secure Sign business.  Thereafter, the Company has been actively searching for new business opportunities.

 

Subsequent Events

 

In July 2002, the Company sold back the YourBankOnline software to DTEK in exchange for a $20,000 promissory note due in 36 months bearing interest at the rate of 5% per annum, and for the return of the remaining shares held by DTEK or its business associates.

 DTEK 1,825,000 shares
 ZZ Cash 52,000 shares
 Cashell Communications 500,000 shares
           Total 2,377,000 shares

 

ITEM 2.     DESCRIPTION OF PROPERTY

 

During the first half of the fiscal year ending September 30, 2001, the Company rented approximately 1,400 square feet of space at 6912 220th St SW, Mountlake Terrace, Washington, on a month-to-month basis, for administrative and sales efforts.  The Company paid $1,850 per month for this facility.  During the last half of the fiscal year, the Company moved and pays a nominal amount of $300 per month to the Law Offices of Dean Kalivas, the Company's legal consultant.  The Company considers the facility adequate for current purposes.

Page 3

 

ITEM 3.     LEGAL PROCEEDINGS

 

On September 27, 2000, the Securities and Exchange Commission ("SEC") instituted cease-and-desist proceedings against YourBankOnline.com, Inc. (formerly known as Consolidated Data, Inc.) and Pakie V. Plastino pursuant to Section 21C of the Securities and Exchange Act of 1934. The SEC further instituted public administrative proceedings against William L. Butcher, C.P.A., the Company's independent auditor, pursuant to Rule 102(e)(1) of the SEC's Rules of Practice.

 

On February 5, 2001, the Company submitted an offer of settlement which the SEC accepted. The settlement provided that, without admitting nor denying the findings of the SEC, except that the Company admits the jurisdiction of the SEC over it and over the subject matter of the proceeding, the Company consents to the issuance of the Order Making Findings and the issuance of a Cease-and Desist Order against the Company from committing or causing any violation or any future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

 

On July 3, 2001, Pakie V. Plastino submitted an offer of settlement which the SEC accepted. The settlement provided that Pakie V. Plastino, without admitting or denying the findings of the SEC, except that he admits the jurisdiction of the SEC over him and over the subject matter of the proceeding, he consents to the issuance of the Order Making Findings, the issuance of a Cease-and-Desist Order and the ordering of Remedial Sanctions.

 

On July 3, 2001, Williams L. Butcher, C.P.A. submitted an offer of settlement which the SEC accepted. The settlement provided that William L. Butcher, without admitting or denying the findings of the SEC, except that he admits the jurisdiction of the SEC over him and over the subject matter of the proceeding, he consents to the issuance of the Order Making Findings and the Imposition of Sanctions pursuant to Rule 102(e) of the Commission's Rules of Practice.

 

The Company does not know of any other material, active or pending legal proceedings against them; nor is the Company involved as a plaintiff in any material proceeding or pending litigation.

 

The Company knows of no other active or pending proceedings against anyone that might materially adversely affect an interest of the Company.

 

 

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE FOR SECURITY HOLDERS

 

    None.

Page 4

 

PART II


ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

Through October 21, 1999, the Company's common stock traded on the over-the-counter electronic bulletin board in the United States, having the trading symbol "CSDD". Subsequent to October 21, 1999, the Company's common stock was quoted and traded on the "Pink Sheets". On February 2, 2000 the Company changed its name to YourBankOnline.com, Inc. and the trading symbol was changed to "YBOL". On October 31, 2000 the Company again changed its name, to Secure Sign, Inc., and the trading symbol was changed to "SECU".  Trading volume and high/low/closing prices for the past four years are disclosed in the following table:

 

Stock Trading Activity

 

Quarter Ended High Low Close Volume
12-31-01 0.03 0.01 0.01 215,000
09-30-01 0.25 0.02 0.03 340,700
03-30-01 0.06 0.02 0.03 142,700
03-31-01 0.53 0.04 0.04 774,200
12-31-00 1.50 0.19 0.47 2,501,600
09-30-00 2.63 0.50 0.56 1,820,600
06-30-00 5.13 1.19 1.63 1,149,600
03-31-00 6.00 1.00 2.63 1,338,500
12-31-99 3.50 0.75 2.25    471,200
09-30-99 7.50 2.25 2.69    457,530
06-30-99 31.50    1.87 4.50 2,171,000
03-31-99 2.00 0.12 1.81    565,000
12-31-98 0.69 0.19 0.25      78,101
09-30-98 No Trading No Trading No Trading No Trading
06-30-98 No Trading No Trading No Trading No Trading
03-31-98 No Trading No Trading No Trading No Trading

  

On September 30, 2001, the shareholders' list for the Company's common shares showed 93 registered shareholders and 17,329,162 shares issued and outstanding. The transfer agent had to add 559,095 shares authorized but not issued, and subtract 2,000,000 shares issued but rescinded, which then totaled 15,888,257 shares.

 

The Company has not declared any dividends on its common or preferred shares since its incorporation and does not anticipate that it will do so in the foreseeable future. The present policy of the company is to retain future earnings for use in its operations and expansion of its business.

 

The preferred shares of the Company are not registered and do not trade on any exchange.

 

The following is a discussion of securities sold by the Company during the period covered by this report which were not registered under the Securities Act:

 

On October 27, 2000 the Company issued 850,000 shares of its common stock to 15 employees and consultants for a variety of business and consulting services.  No cash was received but management assumed a non-cash equity value for the stock issuance of $265,625 or $0.3125 per share.  The shares of stock were issued pursuant to an exemption from registration provided under Section 4(2) of the Securities Act of 1933.

 

On February 8, 2001 the Company cancelled 250,000 shares of the October 27, 2000 issuance, bringing the net issuance to 600,000 shares for a non-cash equity value of $187,500.

 

In February and September 2000 the company issued 210,000 shares of Series B preferred stock for $210,000.  The shares of common stock were issued pursuant to an exemption from registration provided under Section 4(2) of the Securities Act of 1933.

 

Page 5

 

 

Name

Number of Series B Preferred Shares

                  Exchanged                    

Purchase Price

Dennis Takagusi 20,000 $  20,000
Andrew Steven Austin 50,000     50,000
Interfinancial Group, Inc. 25,000     25,000
Sagerian Family Trust 10,000     10,000
Komut Family Trust 50,000     50,000
Richard A. Mattingly II       25,000              25,000     
Michael N. Brette        20,000                 20,000      
          Total 210,000    $ 210,000

       

Subsequently on February 8 and February 27, 2001 the Company issued 846,862 shares of its common stock in exchange for the 210,000 shares of the Series B preferred stock as follows:

                                                            

 

Name

Number of Series B Preferred Shares

                   Exchanged                 

Number of Shares of Stock

Received From Exchange

Dennis Takagusi 20,000       98,078
Andrew Steven Austin 50,000     230,735
Interfinancial Group, Inc. 25,000     115,370
Sagerian Family Trust 10,000       46,196
Kohut Family Trust 50,000     138,587
Richard A. Mattingly II       25,000              115,309     
Michael N. Brette         20,000                     92,391       
          Total 210,000        846,862

 

The shares of common stock were issued pursuant to an exemption from registration provided under Section 4(2) of the Securities Act of 1933.

 

On February 9, 2001 the company issued 265,000 shares of its common stock to William H. Chang for $15,000.  The shares of stock were issued pursuant to an exemption from registration provided under Section 4(2) of the Securities Act of 1933.

 

At September 30, 2001, a correction was made in the 210,000 Series B preferred stock exchanged for common stock based on a $20,000 refund to Kohut Family Trust.  Common stock was reduced by $20,000 and a loan payable to Dean Kalivas was increased by $20,000.

 

Page 6

 

ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS

 

The following discussion should be read in conjunction with the financial statements and related notes included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of factors including, but not limited to, those under "Factors That May Affect Future Results of Operations" below and elsewhere in this Report.

 

OVERVIEW

 

YourBankOnline enables small to medium sized banks to offer their retail and commercial customers banking and financial services over the Internet. This product enables banks to offer their customers an array of products, services and transactions over the Internet in a secure environment. The Company acquired the YourBankOnline software in March 1999, and from April 1999 to December 1999 our principal activities consisted of recruiting employees, developing our business strategy, and raising capital for the growth of YourBankOnline.  Substantially all of our revenue during the fiscal year ending September 30, 2001, approximately $6,263, was generated through licensing fees and other revenues associated with YourBankOnline operations. 

 

To date, the majority of our resources have been directed to developing our business plan, forming exclusive strategic marketing alliances, and building our sales and marketing, management, and technology personnel for YourBankOnline.  

 

During the periods covered by this Form 10-KSB, the Company generated only nominal revenues through host fees of Contractor's Directory. Payments made to obtain server space from an unrelated third party, maintenance associated with the web site and general and administrative expenditures continued. It is unclear whether those companies under the yearly contracts for hosting services will renew those contracts for the fiscal year ending 2002. Management does not intend to aggressively seek renewal of those contracts or to pursue new contracts. Conversely, management does not intend to incur significant expenses in the maintenance or updating of the web site. Consequently, management expects the cash flow related to Contractor's Directory to be nominal, if any,  during the fiscal year ended September 30, 2002.

 

From October 4, 2000 through February 4, 2001, the Company started and attempted to develop a new business venture called Secure Sign which was a business which provided digital signature capability for physicians writing drug prescriptions for their patients.  The Company abandoned this effort in February 2001.

 

From February 2001 through the end of its fiscal year 2001, the Company devoted all of its resources to look for new business opportunities.  No such new business opportunities were located during fiscal year 2001.

 

Page 7

 

 

FISCAL YEAR ENDED SEPTEMBER 30, 2001 COMPARED TO FISCAL YEAR ENDED SEPTEMBER 30, 2000

 

Revenues

 

The YourBankOnline banking software business generated revenues of $36,357 and Contractor's Directory, Inc. generated fees of $2,325 during fiscal 2000.  During fiscal year 2001 the YourBankOnline software business generated revenues of $6,263.

 

Revenues decreased $32,419, or 84%, from $38,682 during fiscal 2000 to $6,263 in fiscal 2001.  This income was attributable only to service revenues from YourBankOnline.  Neither Contractor's Directory nor Secure Sign contributed any revenues.

 

Expenses

 

Total expenses increased $1,836,511, or 484%, from $478,845 during fiscal 2000 to $2,315,356 in fiscal 2001. This increase was primarily attributable to costs incurred to acquire and begin the initial development of the online banking business.

 

Amortization expense decreased $1,799,451, from $2,354,039 during fiscal 2000 to $554,588 in fiscal 2001.  This decrease is primarily attributable to the abandonment of the online banking business.

 

Amortization expense decreased $516,504, or 100%, from $516,504 during fiscal 2000 to $-0- in fiscal 2001 as a result of amortization of the Internet banking software that was acquired in March 1999.  The banking software was acquired at a cost of $640,000 but is no longer being amortized over its expected useful life of five years, having been amortized down to a net value of $20,000.

 

Advertising, consulting, marketing, and travel expense increased $58,569 in fiscal 2001, which is primarily attributed to costs incurred to develop the Secure Sign business and to recruit future management and employees.

 

Legal, accounting, and professional fees decreased $108,363, which is primarily attributed to a reduction in costs associated with the online banking business.

 

Facilities, telephone, wages and related office expense decreased $605,265, from $692,048 during fiscal 2000 to $86,873 in fiscal 2001.  This decrease is primarily attributed to a reduction in costs associated with the online banking business.

 

Investor relation expense decreased $122,823 and is attributable to a reduction in costs incurred to assist the company in public relations, drafting press released, public appearances, and the general marketing of the Company.

 

Interest Expense

 

Interest expense decreased $7,772, from $29,686 during fiscal 2000 to $21,914 in fiscal 2001.  The decrease is attributable to a decrease in the average balance of loans payable during fiscal 2001 as compared to fiscal 2000.

 

Page 8

 

 

Liquidity and Capital Resources

 

Through September 30, 2001 we have raised a total of approximately $192,501 of capital to fund the operations of the Company. As of September 30, 2001, we had loan indebtedness of $536,297.

 

During fiscal 2001 cash provided by financing activities was $62,461. During fiscal 2000 cash provided by financing activities was $1,451,582. The decrease was attributed to fewer shares issued for cash and services in fiscal 2001.

 

Our existing capital resources will not be adequate to fund our operations for more than two to six months. We have not sustained positive earnings or cash flow and we are required to incur significant expenses to be competitive. Consequently, we will require additional funds during the next two to six months to execute our strategy of acquiring new business opportunities. Additional financing may not be available on favorable terms or at all. If we cannot raise adequate funds to satisfy our capital requirements, we may have to limit our search for new business opportunities.

 

We cannot predict the extent to which investor interest in the Company will lead to future sales of equity securities to fund our current business plan. It is unlikely that we will raise significant amounts of capital through borrowing or through the issuance of other debt instruments. Therefore, in early 2001 we plan on seeking new capital through the issuance of additional shares of the Company, either through a public offering or private placement, at prices that have yet to be determined. Sales of a substantial number of shares of our common stock in the public market could adversely affect the market price of our common stock. We may also seek the advice and assistance of investment bankers and other financial professionals to assist us in raising additional capital and we expect to pay fee for these services.

 

Factors That May Affect Future Results Of Operations

 

In addition to the other information included in this Report, the following factors should be considered in evaluating our business and future prospects:

 

Because we are a Development Stage Company and have a limited operating history, an investor in our common stock must consider the risks and difficulties frequently encountered by early stage companies.

 

We cannot guarantee that we will succeed in achieving these goals, and there can be no assurance we will ever achieve or sustain profitability. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for detailed information on our limited operating history.

 

We incurred net losses of approximately $498,416 for fiscal the year ending September 30, 2001. At September 30, 2001, we had an accumulated deficit of approximately $3,925,082. We expect to incur significant operating losses on a quarterly basis in the future.

 

FORWARD-LOOKING STATEMENTS

 

From time-to-time, the Company or its representatives may have made or may make forward-looking statements, orally or in writing. Such forward-looking statements may be included in, but not limited to, press releases, oral statements made with the approval of an authorized executive officer or in various filings made by the Company with the Securities and Exchange Commission or other regulatory agencies. Words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project or projected", or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). The Reform Act does not apply to initial registration statements, including this filing by the Company. The Company wishes to ensure that meaningful cautionary statements accompany such statements, so as to maximize to the fullest extent possible the protections of the safe harbor established in the Reform Act. Accordingly, such statements are qualified in their entirety by reference to and are accompanied by the following discussion of certain important factors that could cause actual results to differ materially from such forward-looking statements.

 

Page 9

 

ITEM 7.     FINANCIAL STATEMENTS

 

Reference is made to the financial statements and related notes and supplemental data under Item 13 filed with this report.


SECURE SIGN, INC. AND SUBSIDIARY

(FORMERLY YOUR BANK ONLINE.COM, INC AND

FORMERLY CONSOLIDATED DATA, INC.)

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2001 AND 2000



TABLE OF CONTENTS


 

Independent Auditor's Report 11
   
Consolidated Balance Sheet 12
   
Consolidated Statement of Income 13
   
Consolidated Statement of Cash Flows 14
   
Consolidated Statement of Changes in Stockholders' Equity 15
   
Noted to Consolidated Financial Statements 16


Page 10

 

INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Stockholders of

Secure Sign, Inc. and Subsidiary

 (Formerly Your Bank Online.com, Inc., formerly Consolidated Data, Inc.)

Lynwood, Washington

 

We have audited the consolidated balance sheet of Secure Sign, Inc. (a Colorado corporation) and its subsidiary as of September 30, 2001 and 2000, and the related consolidated statements of income, accumulated deficit, stockholders' equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of the other auditors provide a reasonable basis for our opinion.

 

In our opinion the 2001 and 2000 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Secure Sign, Inc. and its Subsidiary as of September 30, 2001 and 2000, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 14 to the financial statements, the Company's ability to exist as a going concern relies on its ability to raise adequate financing. Those conditions raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note 14. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 /s/ Lichter, Weil & Associates

San Diego, California

December 22, 2002

 

Page 11

 

Secure Sign, Inc.

(Formerly Known as YOURBANKONLINE.COM, INC.)

(Formerly Known as CONSOLIDATED DATA, INC.)

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

September 30, 2001and 2000

 

         2001                 2000      
ASSETS      
     Current Assets      
          Cash and cash equivalents $0   $97,198
          Accounts Receivable 228   11,080
          Other receivables 0                 37,728
                    Total Current Assets 228               146,006
     Fixed Assets      

          Furniture and equipment net of accumulated

           depreciation of $81,884 and $80,004,

             respectively

 2,920                   4,799
                    Total Fixed Assets                2,920                   4,799
     Other Assets      

          Computer software, net of accumulated   

             amortization of  $620,000 and $620,000,

             respectively

 20,000                20,000
         Deposits 0   6,823
                    Total Other Assets 20,000   26,823
          Total Assets $23,148   $177,628
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
     Current Liabilities      
          Accounts payable and accrued expenses $361,297   $267,324
          Dividends payable 0   4,750
          Loans payable 175,000   107,538
                    Total Liabilities 536,297   379,612
       
     Stockholders' Equity      

          Common stock, no par value, 50,000,000 shares

               authorized, 15,888,257 and 14,146,395 issued

               and outstanding, respectively

 3,411,933   3,009,432

          Preferred Stock Class A, no par value, 5,000,000 shares

               authorized, 0 and 0 issued and

               outstanding, respectively

 0   0

         Preferred Stock Class B, $1 par value, 2,000,000 shares

               authorized, 0 and 210,000 issued and outstanding,

               respectively

 0   210,000
          Deficit accumulated during development stage (3,925,082)   (3,421,416)
                    Total Stockholders' Equity (513,149)   (201,984)
                    Total Liabilities and Stockholder's Equity $23,148   $177,628
                       

 

Page 12

 

Secure Sign, Inc.

(Formerly Known as YOURBANKONLINE.COM, INC.)

(Formerly Known as CONSOLIDATED DATA, INC.)

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF INCOME

For the Years Ended September 30, 2001 and 2000

And for the Period From July 14, 1995 (Inception) to September 30, 2001

 

 

For the Years Ended

September 30,

 July 14, 1995 (Inception) to September 30,
                  2001                                  2000             

              2001              

Sales, net $6,263 $38,682        $119,536
Cost of sales          0 0        0
     Gross profit 6,263 38,682        119,536
       
Selling Expenses 288,407     215,201       1,015,727
       
General and administrative expenses 244,358     1,728,779       2,529,463
       
     Income (loss) from operations (526,502)     (1,905,298)      (3,425,654)
       
Other (Income) Expense      
     Other Income         0 0       (10)
     Impairment loss         0 125,912       125,912
     Settlement expense (50,000)   247,638       197,638
     Interest expense 21,914   29,685       165,888
     Total Other (Income) Expense (28,086)   403,235       489,428
       
          Income (loss) before income taxes (498,416)     (2,308,533)      (3,915,082)
       
Provision for income taxes         0 0       0
     Net income (loss) ($498,416)       ($2,308,533)      ($3,915,082)
       
     Net loss per share (basic and diluted)      
          Basic ($0.03) ($0.20)      ($0.29)
          Diluted ($0.03) ($0.20)      ($0.29)
       
     Weighted average number of shares      
          Basic 15,599,328        11,449,224      13,531,189
          Diluted 15,599,328        11,449,224      13,531,189

   

Page 13

 

Secure Sign, Inc.

(Formerly Known as YOURBANKONLINE.COM, INC.)

(Formerly Known as CONSOLIDATED DATA, INC.)

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended September 30, 2001 and 2000

And for the Period From July 14, 1995 (Inception) to September 30, 2001

 

 

For the Years Ended

September 30,

July 14, 1995 (Inception) to

September 30,

  2001   2000   2001
CASH FLOWS FROM OPERATING ACTIVITIES          
     Net Income (loss) ($419,416)   ($2,308,533)   ($3,915,082)
           
Adjustments to reconcile net loss to net cash used

in operating activities:

          
     Amortization 0   516,505   645,000
     Depreciation 1,880   1,879   5,973
     Impairment loss 0   50,912   50,912
     Common stock issued for services 187,501   302,249   489,750
     Decrease (Increase) in receivables 10,852   (11,080)   (228)
     Decrease (Increase) in other receivables 37,728   (37,728)   0
     Decrease (Increase) in marketing rights 0   75,000   75,000
     Decrease (Increase) in deposits 6,823   (6,823)   0

     (Decrease) Increase in accounts payable and     

          accrued expenses

 93,973   117,312   361,297
     Total Adjustments 338,757   1,008,226   1,627,704
     Net cash used in operations (159,659)   (1,300,307)   (2,287,378)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
     Purchase of computer software 0   0   (640,000)
     Purchase of marketing rights 0   0   (75,000)
     Purchase of furniture and equipment 0   (52,912)   (84,804)
     Net cash used in investing activities 0   (52,912)   (799,804)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
     Issuance of loan payable 67,461   234,707   765,071
     Payments on loan payable 0   0   (30,977)
     Stock Redemption (20,000)   0   (20,000)
     Sale of stock 15,000   1,216,875   2,373,088
     Net cash provided in financing activities 62,461   1,451,582   3,087,182
           
     Net change in cash and cash equivalents (97,198)   98,363   0
     Cash and cash equivalents at beginning of year 97,198   (1,165)   0
     Cash and cash equivalents at end of year $0   $97,198   $0
           
Supplemental cash flows disclosures:          
           
     Income tax payments $0   $0   $0
     Interest payments $0   $0   $0
     Common stock issued for services $187,501   $302,249   $489,750
     Common stock issued for preferred dividends $10,000   $0   $10,000
             

 

Page 14

 

Secure Sign, Inc.

(Formerly Known as YOURBANKONLINE.COM, INC.)

(Formerly Known as CONSOLIDATED DATA, INC.)

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

And for the Period From July 14, 1995 (Inception) to September 30, 2001

 

  Number of Shares   Amount   Deficit Accumulated During Development Stage
  Common   Preferred   Common   Preferred  
Balance at inception, July 14, 1995 0   0   $0   $0   $0
                   
May 1996 issuance of 100,000 shares preferred stock Class A 0 100,000 0 10,050 0
                   
June 1996, issuance 1,701,000 shares common stock pursuant to 504 Reg. D at $0.0005 per share 1,701,000   0   851   0   0
Net loss July 14, 1995 to September 30, 1996 0   0   0   0   (38,561)
                   
Balance at September 30, 1996 1,701,000   100,000   851   10,050   (38,561)
                   
March 1997, issuance of common stock pursuant to 504 Reg. D at $0.0005 per share 225,000   0   112   0   0
                   
March 1997, issuance of 1,500,000 shares of common stock for directory marketing rights at $0.05 per share 1,500,000   0   75,000   0   0
                   
April 1997, issuance of 1,000,000 share of common stock for acquisition of Contractors Directory, Inc. 1,000,000   0   100   0   0
                   
May 1997, issuance of shares for directors fees pursuant to directors' resolution at $0.05 per share 500,000   0   25,000   0   0
                   
Issuance of shares for attorney and secretarial services at $0.05 per share 100,000   0   5,000   0   0
                   
Net loss for year ended September 30, 1997 0   0   0   0   (372,513)
                   
Balance at September 30, 1997 5,026,000   100,000   106,063   10,050   (411,074)
                   
October to December 1997, issuance of shares pursuant to 504 Reg. D private placement at $0.15 per share 80,000   0   12,000   0   0
                   
August 1998, issuance of shares for consulting service at $0.05 per share 150,000   0   7,500   0   0
                   
September 1998, issuance of shares for directors fees pursuant to directors' resolution dated May 1, 1997 at $0.05 per share 1,200,000   0   60,000   0   0
                   
Net loss for year ended September 30, 1998 0   0   0   0   (245,773)
                   
Balance at September 30, 1998 6,456,000   100,000   185,563   10,050   (656,847)
                   
March 1999, issuance of shares for consulting services at $0.20 per share 25,000   0   5,000   0   0
                   
March 1999, issuance of shares for legal, accounting, and consulting services at $0.20 per share 300,000   0   60,000   0   0
                   
March 1999, issuance of shares for online banking software rights at $0.20 per share 2,000,000   0   400,000   0   0
                   
April 1999, issuance of shares pursuant to exercise of private placement stock option; 25,000 shares at $1.00; 25,000 shares at $2.00; and 25,000 shares at $5.00 75,000   0   200,000   0   0
                   
April 1999, additional issuance of shares for online banking software at $0.20 per share 1,200,000   0   240,000   0   0
                   
May 1999, issuance of shares for consulting services at $0.20 per share 28,000   0   5,600   0   0
                   
June 1999, issuance of balance of shares for directors fee at $0.05 per share pursuant to directors' resolution date May 1, 1997 700,000   0   35,000   0   0
                   
Net loss for year ended September 30, 1999 0   0   0   0   (451,286)
                   
Balance at September 30, 1999 10,784,000   100,000   1,131,163   10,050   (1,108,133)
                   
January 2000, private placement of 80,000 shares for $120,000 80,000   0   120,000   0   0
                   
January 2000, private placement of 50,000 shares for non-cash services 50,000   0   96,875   0   0
                   
February 2000, private placement of 559,095 shares in exchange for debt 559,095   0   96,875   0   0
                   
February 2000, S-8 issuance of 41,000 shares for non-cash business planning and legal services valued at $33,332 41,000   0   33,332   0   0
                   
May 2000, private placement of 125,000 shares for non-cash investor relations services valued at $50,000 125,000   0   50,000   0   0
                   
May 2000, private placement of 500,000 shares for $200,000 500,000   0   200,000   0   0
                   
June 2000, private placement of 50,000 shares for non-cash business planning and legal services valued at $50,000 50,000   0   50,000   0   0
                   
June 2000, private placement of 190,000 shares preferred stock Class B for $190,000 0   190,000   0   190,000   0
                   
July 2000, private placement of 2,000,000 shares for acquisition of Genesis Capital Co., Ltd, valued at $1,750,000 2,000,000   0   1,750,000   0   0
                   
August 2000, S-8 issuance of 192,300 shares to employees and consultants for non-cash services valued at $173,917 192,300   0   173,917   0   0
                   
August 2000, issuance of 450,000 shares to HEP Trust in exchange for 100,000 shares of Class A preferred stock 450,000   (100,000)   10,050   (10,050)   0
                   
September 2000, private placement of 20,000 shares for $40,000 20,000   0   40,000   0   0
                   
September 2000, private placement of 20,000 preferred stock Class B shares for $20,000 0   20,000   0   20,000   0
                   
September 2000, private placement of 45,000 shares for non-cash investor relations services valued at $45,000 45,000   0   45,000   0   0
                   
September 2000, private placement of 1,250,000 shares for $500,000 1,250,000   0   500,000   0   0
                   
September 2000, rescission of 2,000,000 shares issued to Genesis Capital Co., Ltd (2,000,000)   0   (1,750,000)   0   0
                   
Dividends accrued on Preferred Class B 0   0   0   0   (4,750)
                   
Net loss for year ended September 30, 2000 0   0   0   0   (2,308,533)
                   
Balance at September 30, 2000 14,146,395   210,000   $3,009,432   $210,000   ($3,421,416)
                   
October 2000 private placement of 850,000 shares for non cash payment of services to unrelated parties 850,000   0   265,625   0   0
                   
February 2001 cancellation of 200,000 shares issued for services (200,000)   0   (78,125)   0   0
                   
February 2001 conversion of 210,000 shares Class B Preferred Stock into 846,862 shares common stock 846,862   (210,000)   220,000   (210,000)   0
                   
February 2001 private placement of 265,000 shares common stock 265,000   0   15,000   0   0
                   
Repurchase of 20,000 shares of common stock and subsequent cancellation (20,000)   0   (20,000)   0   0
                   
Dividends accrued on Preferred Class B 0   0   0   0   (5,250)
                   
Net loss for the year ended September 30, 2001 0   0   0   0   (498,416)
                   
  15,888,257   0   $3,411,932   $0   ($3,925,082)
                   

 

Page 15

 

SECURE SIGN, INC. AND SUBSIDIARY

(FORMERLY YOUR BANK ONLINE.COM, INC AND

FORMERLY CONSOLIDATED DATA, INC.)

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2000 AND 1999



 

NOTE 1 - NATURE OF OPERATIONS


Secure Sign, Inc. (the "Company"), formerly Your Bank Online.com, Inc. and Consolidated Data, Inc., was incorporated on July 14, 1995 under the laws of the state of Colorado. Contractor's Directory, Inc. (Subsidiary) was purchased on April 17, 1999 in a stock for stock transaction exchange. Contractor's Directory, Inc. is 100% owned by Secure Sign, Inc. and both companies are collectively referred to as the "Company".

 

The Company was inactive until it acquired Contractor's Directory, Inc., a company that was based on the exclusive development of an e-Commerce business designed to fill the needs of the construction industry.

 

In March 1999 the Company purchased a software program "Your Bank Online" from a financial institution. The Company's focus was then to actively market, sell and support the software to members of the banking industry.

 

During the fiscal year ended September 30, 2000 the Company pursued both business, online banking and contractor's directory. The Company is in the development stage and expended all of its resources to build both lines of business with minimal revenue generation.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Consolidation

 

The consolidated financial statements for 2000 and 2001 include the accounts of Secure Sign, Inc. and its wholly owned subsidiary, Contractor's Directory, Inc. All significant inter-company accounts and transactions have been eliminated upon consolidation.

 

Revenue Recognition

 

The Company recognizes revenue from sale or use of its products ratably over applicable contract periods or as services are performed.

 

Cash and Cash Equivalents

 

 Cash equivalents are stated at cost. Cash equivalents are highly liquid investments readily convertible into cash with an original maturity of three months or less and consist of time deposits with commercial banks.

 

Allowance for Doubtful Accounts

 

 The Company establishes an allowance for doubtful accounts on a case-by-case basis when it believes the required payment of specific amounts owed is unlikely to occur after a review of historical collection experience, subsequent collections and management's evaluation of existing economic conditions.

 

Advertising

 

Advertising costs are expensed in the year incurred. Advertising expense for year ended September 30, 2001 was $0 and for the year ended September 30, 2000 was $1,790.

 

Page 16

 

Fixed Assets

 

Property and equipment are stated at cost less accumulated depreciation. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance and repairs are charged to expense as incurred. Whenever an asset is retired or disposed of, its cost and accumulated depreciation or amortization is removed from the respective accounts and the resulting gain or loss is credited or charged to income.

 

Depreciation is computed using the straight-line and declining-balance methods over the following estimated useful lives:

 

Computers 3 years
Machinery and Equipment 5 to 12 years          
Furniture and Fixtures 7 years


Intangible Assets

 

Costs associated with software and marketing rights are capitalized and amortized using the straight-line method over fifteen years.

 

Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company's management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.

 

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed. As of September 30, 2000 and the date of our report, management has informed us that there are no matters that warrant disclosure in the financial statements.

 

Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include collectibility of accounts receivable, accounts payable, sales returns and recoverability of long-term assets.

 

Concentration of Credit Risk

 

Financial instruments, which subject the Company to credit risk, consist primarily of cash equivalents and trade accounts receivable arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions, however, cash balances have exceeded the FDIC insured levels at various times during the year. The Company actively evaluates the creditworthiness of the customers with which it conducts business through credit approvals, credit limits and monitoring procedures.

 

Impairment of Long-Lived Assets

 

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset are less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value. The Intangible assets were reviewed during the fiscal year ended September 30, 2000. This review indicated that the intangible assets, consisting of computer software and marketing rights, were impaired, based on cash flow projections over the next three years. Consequently, the carrying value of the computer software and marketing rights totaling $620,000 and $75,000, respectively, were written off as a component of operating expenses during the year ended September 30, 2000.

 

Earnings Per Share

 

Earnings per share are based on the weighted average number of shares of common stock and common stock equivalents outstanding during each period. Earnings per share are computed using the treasury stock method. The options to purchase common shares are considered to be outstanding for all periods presented but are not calculated as part of the earnings per share.

 

Income Taxes

 

Income taxes have been provided based upon the tax laws and rates in the countries in which operations are conducted and income is earned. The income tax rates imposed by the taxing authorities vary. Taxable income may vary from pre-tax income for financial accounting purposes. There is no expected relationship between the provision for income taxes and income before income taxes because the countries have different taxation rules, which vary not only to nominal rates but also in terms of available deductions, credits and other benefits. Deferred tax assets and liabilities are recognized for the anticipated future tax effects of temporary differences between the financial statement basis and the tax basis of the Company's assets and liabilities using the applicable tax rates in effect at year end as prescribed by SFAS 109 "Accounting for Income Taxes".

 

Reclassifications

 

Certain reclassifications have been made to the prior years' financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or accumulated deficit.


NOTE 3 - COMMON STOCK


The Company has three classes of capital stock: Class A Preferred Stock, Class B Preferred Stock and Common Stock. 

At September 30, 2001 and 2000 the Company had 50,000,000 shares of authorized Common Stock with no par value and 15,888,257 and 14,146,395 shares issued and outstanding, respectively.  Holders of Common Stock are entitled to one vote for each share held.

At September 30, 2001 and 2000 the Company had 5,000,000 shares of Class A Preferred Stock authorized with no par value and 0 and 0 shares issued and outstanding, respectively.  Holders of Class A Preferred Stock rank senior to all other equity upon liquidation, dissolution or winding up and have no voting rights. Dividends are only paid upon declaration of dividends on common shares at the rate of 4.5:1.  These preferred shares are convertible into common shares at a conversion rate of 4.5 common shares to 1 preferred share. 

At September 30, 2001 and 2000 the Company had 2,000,000 shares of Class B Preferred Stock authorized with $1 par value and 0 and 210,000 shares issued and outstanding, respectively.  Holders of Class B Preferred Stock rank senior to all other equity except Class A Preferred Stock upon liquidation, dissolution or winding up and are entitled to one vote for each share held.  The Class B shareholders are entitled to an annual dividend rate of 10%, which is cumulative.  As of September 30, 2000 preferred dividends accrued amounted to $5,250.  During February 2001, the Company converted all 210,000 shares of Class B stock into Common Stock, including $10,000 in accrued preferred dividends.  The amount of Common Stock issued was 846,862 shares.

NOTE 4 - FIXED ASSETS

 

Fixed assets consist of the following as of September 30, 2001 and 2000:

 

 

 

2001

 

2000

Office equipment

 

$59,803

 

 $59,803

Computer software

 

 25,000

 

 25,000

 

 

 84,803

 

 84,803

Accumulated depreciation

 

(83,762)

 

(80,004)

Total

 

 $1,041

 

 $4,799

 

      

NOTE 5 - COMMITMENTS

 

Operating Leases

 

The Company leases its office facility and some equipment under a non-cancelable operating lease.

 

In March 2001, the Company terminated its old operating lease agreement for its office facility.  The Company forfeited its lease deposit of $6,823 in full settlement of any future amounts due to the lessor.  The Company then entered into a two year operating lease for a new office facility.  Terms of the lease consist of monthly rent in the amount of $300.  The lessor is a stockholder of the Company.

 

Rent expense for year ended September 30, 2001 and 2000 was $21,992 and $28,144, respectively.

   

The Company has entered into a consulting agreement with its former CEO and Chairman of the Board of Directors, which requires annual payments of $25,000 for his services.  As of September 30, 2001, this amount has been accrued and not paid.


 

NOTE 6 - EARNINGS PER SHARE

 

Basic net earnings per share is computed using the weighted average number of common shares outstanding. The effect of potential common shares outstanding is not included in diluted net earnings per share as it is antidilutive. The computations of basic net earnings per share for 2001 and 2000 are as follows:


  2001   2000
Net Earnings (loss) from operations ($498,416)   ($2,315,356)
       
Basic weighted average shares 15,559,328   11,449,224
Effect of dilutive securities:      
     Convertible preferred stock 0   0
Dilutive potential common shares 15,559,328   11,449,224
       
Net earnings (loss) per share from continuing operations:      
     Basic ($0.03)   ($0.20)
     Diluted ($0.03)   ($0.20)


NOTE 7 - DEBT

 

At September 30, 2001 and 2000, the Company had notes payable outstanding in the aggregate amount of $175,000 and $107,538, respectively. Payable as follows:

 

 

 

 

    2001

    2000

Notes payable to a trust, interest at

10% per annum, due on demand

 


$          20,000


$            0

Notes payable to a corporation, interest at 10% annum, due on demand

 



            30,000

 


               0

Notes payable to a corporation, interest at 12% annum, due on demand

 



      125,000

 


           107,538         

 

 

$    175,000

 $ 107,538 

                                                                 

  

NOTE 8 - INCOME TAXES

 

The Company did not have any Federal or State income tax expense for the years ended September 30, 2001 and 2000. No future benefit for the realization of an operating loss carry-forward, in the form of an asset, has been recognized due to the ongoing nature of the losses and the potential inability for the Company to ever realize their benefit. For the years ended September 30, 2001 and 2000, there is no difference between the federal statutory tax rate and the effective tax rate. At years ended September 30, 2001 and 2000 the Company had available net operating loss carry-forwards of approximately $3,905,997 and $3,424,831, respectively, after adjusting for limitation, to be offset against future taxable income. The operating loss carry forwards will expire at various dates through the year 2015.


NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS

             

The carrying amounts of cash and cash equivalents, accounts receivable, deposits and accounts payable approximate their fair value because of the short maturity of those instruments.

 

The carrying amounts of the Company's long-term debt and capital lease obligations approximate their fair value because of the short maturity and/or interest rates which are comparable to those currently available to the Company on obligations with similar terms.


NOTE 10 - LITIGATION AND CONTINGENCIES

 

The Company is subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities. Management believes that any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the financial condition or results of operations of the Company. Listed below are only those matters considered to be material to the Company by management and its counsel.

 

On September 27, 2000 the Securities and Exchange Commission (SEC) instituted a public cease-and-desist proceeding against the Company, its Chief Executive Officer (CEO) and its independent auditor. The filing alleged fraud by the Company and its CEO based on the Company's inflation of the value of its primary asset, a software program, in a press release and registration statement.

 

On October 4, 2000 the Chief Executive Officer of the Company resigned his position, but remained as Chairman of the Board of Directors.

 

On July 3, 2001 the SEC accepted settlement from the Company, its CEO and its independent auditor, without admitting to or denying the charges. Terms of the settlement required payments to the United States Treasury totaling $72,750 by January 3, 2002, and the temporary rescission of the auditors right to practice before the SEC for a period of one year.

 

Effective September 2000, the Company rescinded a deal with Genesis Capital Company, Ltd. and cancelled 2,000,000 shares of its restricted common stock, which had been issued in relation to the acquisition.  Related to this, the Company lost an initial $100,000 deposit and additional expenses of $147,678. 


NOTE 11 - SUBSEQUENT EVENTS

 

In July 2002 the Company sold its Online Banking Software back to the original owner in exchange for the return of 2,377,000 shares of the Company stock and a note receivable for $20,000, due July 2005, interest accrued at 5% per annum.

 

NOTE 12 - RELATED PARTY TRANSACTIONS

During the fiscal year ended September 30, 2001 and 2000 the Company has accrued wages of $175,000 and $150,000 to Mr. Plastino.  Mr. Plastino was President and Chairman of the Board of Directors.  Mr. Plastino also beneficially owned approximately 30% of the Company's common stock outstanding.
 

NOTE 13 - CLASS B PREFERRED STOCK

In February 2001, the Class B Preferred Stock holders converted in entirety the outstanding 210,000 shares into 846,862 shares of common stock of the Company.  The common stock issuance also included shares to pay accumulated preferred dividends in arrears of approximately $10,000.  these stockholders were also issued Warrants to purchase one share of common stock for each Class B Preferred Stock previously owned at $0.75 per share for a period through February 2004.

NOTE 14 - GOING CONCERN

The Company has suffered recurring losses, cash deficiencies, loan and capital lease defaults, and current liabilities far in excess of current assets. These issues raise substantial concern about its ability to continue as a going concern. Management has prepared the following statement in regards to its plans related to the going concern.

 

The Company is searching for new business opportunities that will generate cash flow.  The Company intends on raising capital through private placements, as it is able and to possibly look for merger candidates.


ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

 

The Company's auditors are Lichter, Weil and Associates, 9191 Towne Centre Drive, Suite 406, San Diego, California 92122.  The Company's previous auditor, William L. Butcher, C.P.A., was sanctioned by the Securities and Exchange Commission and can no longer serve as the Company's auditor.

 

 

PART III

ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

                  

The table below lists, as of September 30, 2001, the names of the Directors and Executive Officers of the Company. The Directors have served in their respective capacities since their election and/or appointment and will serve until the next Annual Shareholders' Meeting or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-Laws of the Company. The Executive Officers serve at the pleasure of the Board of Directors. All Directors and Executive Officers are residents and citizens of the United States.

 

Directors and Executive Officers

 

Name Age Date Elected or Appointed
Coya L. Cady, Secretary/Treasurer 34 February 2001
William D. Doehne, COO 47 July 1997

 

During the period October 4, 2000 to February 4, 2001 as part of the Secure Sign transaction, Joseph Vincent served as President and Director, Patrick Reynolds served as vice-President and Randy Brasmer served as Secretary/Treasurer.  This management team did not work out satisfactorily for the Company and they were terminated or resigned on February 4, 2001.  They were replaced by William D. Doehne as President and Director and by Coya Cady as Secretary/Treasurer and Director for the balance of fiscal year 2001 and for fiscal year 2002.

 

William D. Doehne

 

Mr. Doehne is the President and a Director of the Company. He spends 90% of his time on the affairs of the Company. Mr. Doehne is also the President of Contractor's Directory, Inc. Mr. Doehne has been associated with Contractor's Directory since 1995. From 1991 to 1995 he was employed by ChekProtekt.

 

Coya L. Cady

 

Ms. Cady is the Secretary/Treasurer and a Director of the Company.  She spends 90% of her time on the affairs of the company.  Ms. Cady is also the Secretary/Treasurer of Contractor's Directory, Inc.  From 1996 to 1999, Ms. Cady owned and operated her own company, Cady Services, Inc., which offered accounting services.  From 1999 to 2001 Ms. Cady worked for Boldrey Valuation Advisors as an accountant.

 

The Company has no formal plan for compensating its Directors for their service in their capacity as Directors. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of the Board of Directors. The Board of Directors may award special remuneration to any Director undertaking any special services on behalf of the Company other than services ordinarily required of a Director. During Fiscal 2001, no Director received and/or accrued any compensation for his services as a Director, including committee participation and/or special assignments.

 

Involvement in Certain Legal Proceedings

 

Steven Everett Coryell

 

On December 20, 1995, a civil injunctive complaint was filed in the Fourth Judicial District Court in Boise, Idaho (Cause #CV0C95-06373D) charging that Steven Everett Coryell, the former Chief Executive Officer of Consolidated Data, and his company, National Investigative Consultants, Inc. violated the anti-fraud and registrations provisions of the Idaho Securities Act. The defendants admitted the allegations in the complaint, which included that they sold securities in the form of stock, distressed loans packages and limited partnership interests to 13 residents of the state of Idaho. A judgment was entered against the defendants on March 27, 1996. The court's order found that the defendants violated the securities laws and permanently enjoined them from engaging in such practices in the future. The court ordered full restitution to the investors in the amount of nearly $345,000. Stipulation for judgment and permanent injunction was entered on May 13, 1996. Mr. Coryell is the sole owner of DTEK Corporation, the owner of 2,685,000 common shares of the Company.

 

Pakie Plastino

 

On or around June 11, 1994, Pakie Plastino was barred from acting in any capacity as a contractor in any federally funded construction project by the U.S. Department of Education. The term of the exclusion expired on or about August 28, 1995.  Mr. Plastino is the owner of 2,075,000 common shares of the Company.

 

Family Relationships

 

There are no family relationships between any of the officers and/or directors.

 

 

ITEM 10.     EXECUTIVE COMPENSATION

 

Between October 1, 2000 and September 30, 2001, Pakie Plastino, the former President,  received $25,000 as reimbursement for his office expenses which was accrued as wages and reimbursements payable.

 

The Company has no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to the Company's Directors or Executive Officers. The Company has no stock option or other long-term compensation program.

 

During fiscal 2001, no funds were set aside or accrued by the Company to provide pension, retirement or similar benefits for Directors or Executive Officers.

 

The Company has no plans or arrangements in respect of remuneration received or that may be received by Executive Officers of the Company in Fiscal 2001 to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per Executive Officer.  However, on October 4, 2000, upon Pakie Plastino's resignation as an officer and director, the Company agreed to retain his services as a consultant and to reimburse Mr. Plastino for the reasonable expense of maintaining a separate office in an amount not less than $2,500 per month nor more than $5,000 per month.

 

The Company has no written employment agreements.

 

Other than that disclosed above, no compensation was paid during Fiscal 2001 to any of the officers or directors of the Company to the extent that they were compensated in excess of $60,000.

 

 

SUMMARY COMPENSATION TABLE

Name and Principal Position

(a)

Year

(b)

 Annual Compensation Long-Term Compensation

All Other Compensation

($)

(i)

Salary

($)

(c)

Bonus

($)

(d)

Other Annual Compensation

($)

(e)

 Awards Payouts

Restricted Stock Award(s)

($)

(f)

Securities Underlying Options/SARs

(#)

(g)

LTIP Payouts

($)

(h)
 William Doehne 2001 0 0 0 0 0 0 0
  President 2000 0 0 0 0 0 0 0
  1999 0 0 0 0 0 0 0
 Coya Cady 2001 0 0 0 0 0 0 0
 Secretary/Treas. 2000 0 0 0 0 0 0 0
1999 0 0 0 0 0 0 0


 

ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The Registrant is a publicly owned corporation, the shares of which are owned by United States residents. The Registrant is not controlled directly or indirectly by another corporation or any foreign government.

 

The table below lists, as of September 30, 2001, all persons/companies the Registrant is aware of as being the beneficial owner of more than five percent (5%) of the common stock of the Registrant.

 

5% Shareholders

Title of Class Name of Beneficial Owner

Amount & Nature of

Beneficial Ownership

Percent of Class (#)
Common Pakie Plastino (1) 2,075,000

13.1%

Common Plastino Children Trust (1) 1,600,000

10.1%

Common Pakie V. Plastino Charitable Trust (1) 1,200,000

  7.6%

Common DTEK               2,685,000

16.9%

              Total  

7,560,000

47.7%

                               

    #  Based on 15,888,257 shares outstanding as of September 30, 2001.

 

The table below lists all Directors and Executive Officers who beneficially own the Registrant's voting securities and the amount of the Registrant's voting securities owned by the Directors and Executive Officers as a group, as of September 30, 2001.

 

Shareholdings of Directors and Executive Officers

Title of Class

Name of Beneficial Owner

Amount & Nature of

Beneficial Ownership

Percent of Class (#)
Common

William D. Doehne                              

      250,000       

  1.6%

              Total  

250,000

 


    # Based on 15,888,257 shares outstanding as of September 30, 2001.

 

            [1]    Mr. Plastino acquired 225,000 in March 1997; 1,500,000 shares in March 1997; 750,000 in April 1997; 500,000 on May

                     1, 1997; 1,200,000 on September 30,  1998; and 700,000 in June 1999. Mr. Plastino divested himself of 2,800,000   

                     shares as follows: 1,600,000 shares were transferred to the "Plastino Children Trust", an irrevocable trust in which

                     Mr. Plastino retains no interest or control; and 1,200,000 were transferred to the "Pakie V. Plastino Charitable Trust",

                     an irrevocable trust to benefit higher education and cancer research in which Mr. Plastino retains no interest or 

                     control.

 

 

ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS  

 

There have been no transactions since July 14, 1995 (Date of Inception) through September 30, 2001,  which have materially affected or will materially affect the Company in which any Director, Executive Officer, or beneficial holder of more than 10% of the outstanding common stock, or any of their respective relatives, spouses, associates or affiliates has had or will have any direct or material indirect interest.

 

Subsequent Events

 

During the fiscal year ended September 30, 2002, the following transactions occurred involving the issuance of or cancellation of shares of common stock.

 

DATE PAYEE CONSIDERATION TOTAL SHARES
11/09/01 Morgan First Guaranty $125,000 of debt 16,265,787
11/9/01 J.W. Brown $  30,000 of debt   3,903,830
11/9/01 Dean Kalivas 42,500 in legal fees   5,530,383
12/17/01 James Cerna $ 30,000 past wages   2,000,000
1/10/02 Christopher Dieterich $ 30,000 in legal fees   4,000,000
6/30/02 William D. Doehne $ 15,000 past wages   2,500,000
7/1/02

DTEK

ZZCash

Cashell Communication

 Repurchase of YourBankOnline software

 1,825,000

      52,000

    500,000

9/27/02 Coya Cady $ 12,500 past wages  2,000,000


 

ITEM 13.    EXHIBITS AND REPORTS ON FORM 8-K


(a) The following documents are filed as part of this report:

 

    I.    Financial Information

 

            1.     Index to Financial Statements

            2 .    Independent Auditors' Reports

            3.     Consolidated Balance Sheets at September 30, 2001 and 2000

            4.     Consolidated Statement of Loss and Accumulated Deficit for the years ended September 30, 2001 and 2000

            5.     Consolidated Statement of Cash Flows for the years ended September 30, 2001 and 2000

            6.     Statement of Statement of Changes in Stockholders' Equity for the years ended September 30, 2001 and 2000

            7.     Notes to Financial Statements

 

     II.     Financial statement schedules required to be filed by Item 8 and paragraph (d) of this Item 13:

       

          All schedules are omitted because they are not applicable or the required

          information is shown in the financial statements or notes thereto.

 

     III. The exhibits are listed in the index of exhibits

 

(b)  A report on Form 8-K was filed August 16, 2001, during the last quarter of the period covered by this report.

 

(c) The index of exhibits

 

          3.1 - Articles of Incorporation*

          3.2 - Bylaws*

          4.1 - Amendment to Form D*

        10.1 - Settlement Agreement with Robert Ghim (1)

        21.1 - Subsidiaries of the Registrant*

        23.1 - Consent of Accountants*

        99.1 - Certification Pursuant to Section 13a-14 of the Securities Exchange Act of 1934

        99.2 - Certification Pursuant to Section 13a-14 of the Securities Exchange Act of 1934

           

            * previously filed

                (1) filed as exhibit to Form 8-K (filed August 16, 2001)

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

SECURE SIGN, INC.

a Colorado corporation

 

Date: December 27, 2002

                 

By: /s/ William D. Doehne

William D. Doehne, Chairman of the Board and President

 

Date: December 27, 2002

 

By: /s/ Coya Cady

Coya Cady, Director and Secretary/Treasurer

 

 

Exhibit 99.1

 

Pursuant to the requirements of Rule 13a-14 of the Securities Exchange Act of 1934, as amended, Coya Cady provides the following certification.

     I, Coya Cady, Director and Secretary/Treasurer of Secure Sign, Inc. ("Company"), certify that:
1.
 		 I have reviewed this annual report on Form 10-KSB of the Company;
2.
  		 Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.
  		 Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report;
 
4.
  		 I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have designed such disclosure controls and procedures to ensure that material information relating to the Company is made known to me by others, particularly during the period in which this quarterly report is being prepared;
 
5.
  		 I have disclosed, based on my most recent evaluation, to the Company's auditors and the audit committee of our board of directors (or persons performing the equivalent functions):
 

     a. All significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company's auditors any material weaknesses in internal controls, and
 
     b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and
 
6. I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 
   

Date: December 27, 2002 
/s/ Coya Cady
        Coya Cady,  Director and Secretary/Treasurer
   

Exhibit 99.2

Pursuant to the requirements of Rule 13a-14 of the Securities Exchange Act of 1934, as amended, William Doehne provides the following certification.

     I, William Doehne, Director and Chief Operating Officer of YourBankOnline.com, Inc. ("Company"), certify that:
1.
 		 I have reviewed this annual report on Form 10-KSB of the Company;
2.
  		 Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.
  		 Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report;
 
4.
  		 I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have designed such disclosure controls and procedures to ensure that material information relating to the Company is made known to me by others, particularly during the period in which this quarterly report is being prepared;
 
5.
  		 I have disclosed, based on my most recent evaluation, to the Company's auditors and the audit committee of our board of directors (or persons performing the equivalent functions):
 

     a. All significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company's auditors any material weaknesses in internal controls, and
 
     b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and
 
6. I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 
   

Date: December 27, 2002 
/s/ William Doehne
        William Doehne,  Director & COO