10-Q/A 1 a10qa630.txt 10Q/A ENDING 6/30/2001 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB/A AMENDED QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001 Commission file number 0-29403 RHINO ENTERPRISES GROUP, INC., a Nevada corporation 2925 LBJ Freeway, Suite 188, Dallas, Texas 75234 (972) 241-2669 IRS Tax ID #: 88-0333844 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [ ] As of August 1, 2001, there were 1,921,221 shares of common stock,$0.001 par value, of the registrant issued and outstanding. Transitional Small Business Disclosure Format (check one) YES [ ] NO [X] -1- PART I: FINANCIAL INFORMATION Item 1. Financial Statements: The consolidated financial statements for the quarter and six months ended June 30, 2001 for Rhino Enterprises Group, Inc. ("Rhino" or the "Company") follow. RHINO ENTERPRISES GROUP, INC. CONSOLIDATED BALANCE SHEETS JUNE 30, 2001 AND DECEMBER 31, 2000 ASSETS 6-30-2001 12-31-2000 ---------------------- ------------ ----------- Current Assets Cash $ 1,467 $ 7,920 Accounts receivable 56,187 64,436 Inventory 4,000 4,000 ------------ ----------- Total Current Assets 61,654 76,356 ------------ ----------- Property and equipment net 202,803 222,797 Investment in e-Data Alliance Corp. 126,865 132,443 Intangible assets -- net 154,466 194,050 Goodwill -- net 0 94,072 Deposits 14,621 14,621 Deferred marketing expense 800,000 800,000 Advances to operating and start-up entities 691,474 1,485,999 ------------ ----------- Total Non-current Assets 1,990,229 2,943,982 ------------ ----------- Total Assets $ 2,051,883 $ 3,020,338 ============ =========== CURRENT LIABILITIES ----------------------------- Accounts payable $ 580,112 $ 577,079 Accrued expenses 751,257 568,917 Notes payable 4,753,345 3,939,590 ------------ ----------- Total Current Liabilities 6,084,714 5,085,586 Deferred marketing obligation 800,000 800,000 ------------ ----------- Total Liabilities 6,884,714 5,885,586 ------------ ----------- STOCKHOLDERS' DEFICIT ------------------------------ Common stock 1,818 1,706 Preferred stock 334 334 -2- Paid in capital 2,075,495 2,050,405 Accumulated deficit (6,839,652) (4,846,867) Non-controlling interest 1,864 1,864 Treasury stock, at cost (72,690) (72,690) ------------ ----------- Total Stockholders' Deficit (4,832,831) (2,865,248) ------------ ----------- Total Liabilities and Stockholders' Deficit $ 2,051,883 $ 3,020,338 ============ ===========

See Notes to Consolidated Financial Statements. RHINO ENTERPRISES GROUP, INC. CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000 2nd Quarter 2nd Quarter 6 Months 6 Months 2001 2000 2001 2000 ---------- ---------- --------- --------- REVENUES $ 223,483 $ 22,780 $515,815 $ 28,803 COST OF REVENUES 209,983 15,321 392,007 17,821 -------- -------- ------- ------- GROSS PROFIT 13,500 7,459 123,808 10,982 -------- -------- ------- ------- GENERAL AND ADMINISTRATIVE EXPENSES Operating costs 182,355 156,638 252,947 322,020 Personnel costs 176,111 299,547 387,889 587,333 Legal and professional fees 126,332 46,302 219,450 77,373 Impairment losses 103,611 0 1,089,911 0 Depreciation and amortization 21,541 27,735 42,666 51,930 -------- -------- --------- --------- Total General and Administrative Expenses 609,950 530,222 1,992,863 1,038,656 -------- -------- --------- --------- LOSS FROM OPERATIONS (596,450) (522,763) (1,869,055) (1,027,674) -------- -------- --------- --------- OTHER INCOME (EXPENSE) Interest income 6,940 39,567 13,885 78,363 Interest expense (32,622) (78,075) (106,911) (148,512) Other 0 0 4,155 2,715 Equity in loss of e-Data Alliance Corp. (2,522) (15,403) (5,578) (44,748) -------- -------- --------- --------- Total Other Income (Expense) (28,204) (53,911) ( 94,449) (112,182) -------- -------- --------- --------- LOSS BEFORE INCOME TAX (624,654) (576,674) (1,963,504) (1,139,856) PROVISION FOR INCOME TAX 0 0 0 0 --------- ------- --------- --------- NET LOSS $(624,654) $(576,674)$(1,963,504)$(1,139,856) ========= ======= ========= ========= LOSS PER SHARE $ (0.36) $ (0.35) $ (1.15) $ (0.71) ========= ======== ========= =========

-3- See Notes to Consolidated Financial Statements. RHINO ENTERPRISES GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000 6-30-2001 6-30-2000 ----------- ----------- CASH FROM OPERATING ACTIVITIES Net Loss $(1,963,504) $(1,139,856) Add (deduct) non cash items affecting net loss - Depreciation and amortization 58,669 51,930 Interest accrued but not paid 93,459 170,259 Interest on advances accrued not collected (1,154) (74,122) Impairment losses 1,089,912 0 Equity in losses of investee 5,578 44,747 Increase in accounts receivable 8,249 0 Increase in prepaid expenses 0 (34,621) Increase in accounts payable 3,033 38,718 Increase in accrued expenses 119,961 ( 4,722) --------- --------- Net Cash Used By Operations (646,158) (946,667) --------- --------- CASH USED BY INVESTING ACTIVITIES Purchase equipment 0 (134,260) Proceeds from sale of equipment 908 53,384 Advances to operating and start-up entities (214,786) (671,508) Collect advances from operating and start-up entities 27,328 481,456 --------- --------- Net Cash Used by Investing Activities (186,550) (270,928) --------- --------- CASH PROVIDED BY FINANCING ACTIVITIES Borrowings 992,055 1,031,048 Repayments (178,300) (385,369) Purchase treasury stock 0 (72,690) Proceeds from sale of common stock 12,500 256,094 --------- --------- Net Cash Provided by Financing Activities 826,255 829,083 --------- --------- NET CHANGE IN CASH (6,453) (388,512) CASH, beginning of year 7,920 390,071 --------- --------- CASH, end of six months $ 1,467 $ 1,559 ========= ========= INTEREST PAID $ 73,776 $ 0 ========= ========

See Notes to Consolidated Financial Statements. -4- RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - NATURE OF OPERATIONS Rhino Enterprises Group, Inc. has two operating segments business incubation and eye care. Our business incubation activities include providing management, consulting services, and financing to assist both start-up and emerging or developing entities as well as established operating enterprises to avail themselves of various growth opportunities. Our eye care segment is positioning itself to be a leading provider of affordable laser eye surgical procedures. In addition, we intend to develop our web site - www.Eyesite.com - to provide information, products and services related to vision correction and eye care. See further discussion in Note P Operating Segments. We are highly leveraged and have accumulated a considerable deficit from operations. Repayment of our indebtedness and related interest charges is dependent on our ability to obtain additional working capital. During the quarter we engaged Donner Corp International and several financial consultants to provide strategic assistance in raising capital. Their initial efforts focused on facilitating our filing a Form S-8 registration statement for 600,000 shares to be offered at $1.25 per share. See Note K for further discussion of our liquidity and capital resources. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States for interim information, and with the instructions to Form 10-QSB and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three-month period ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. -5- NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation The consolidated financial statements include the accounts of Rhino Enterprises Group, Inc. and our wholly-owned subsidiary Executive Assistance, Inc., our 90%-owned subsidiary - Eyesite.com, Inc, and our 68% - owned subsidiary, Framing Systems, Inc. Significant inter-company transactions and balances have been eliminated in consolidation. Reclassifications Certain reclassifications have been made to the 2000 amounts to conform to the 2001 presentation. RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued Accounting Estimates The preparation of consolidated financial statements requires us to make estimates and assumptions which affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. Actual results could differ from those estimates. Allowance for Uncollectible Accounts Receivable We believe that an allowance for uncollectible accounts receivable was not necessary at June 30, 2001. -6- Inventory Inventory consists of medical supplies and is recorded at cost. Property, Plant and Equipment Fixed assets are recorded at cost and depreciated over their estimated useful lives, which range from three to ten years, using the straight-line method. Investment in e-Data Alliance Corp. We account for our 50%-owned investee, e-Data Alliance Corp. ("e- Data") using the equity method of accounting. We record our share of e-Data's income or loss and either increase or decrease our investment in e-Data accordingly. Intangible Assets Intangible assets consist of certain proprietary knowledge and an internet web-site domain totaling $287,439 which are being amortized over 3 years. Goodwill Goodwill represented the excess purchase price over the fair market value of net assets acquired of Executive Assistance, Inc. and Framing Systems, Inc. totaling $103,770. During the quarter, we determined that goodwill was impaired and wrote the unamortized balance ($94,072) off since neither entity has any operations. Accumulated amortization of intangibles and goodwill was $133,208 and $103,322 as of June 30, 2001 and December 31, 2000, respectively. -7- RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued Amortization expense of intangibles and goodwill is shown below 2nd Quarter 2nd Quarter 6 Months 6 Months 2001 2000 2001 2000 ---------- ---------- --------- --------- Intangibles $20,000 $20,000 $39,583 $40,000 Goodwill 0 1,730 1,730 3,408

Impairment of Long-Lived Assets We account for the impairment of long-lived assets in accordance with SFAS No. 121 which requires that such assets be reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. During the first quarter of 2001, we recorded an impairment charge of $986,300 related to certain unrecoverable advances to start up and operating entities. During the second quarter, we took an additional charge of $9,539 related to certain other advances which we consider to be unrecoverable. (See Note D below). Income Tax Accounting Income taxes are provided for the tax effects of transactions reported in the consolidated financial statements and consist of taxes currently due plus deferred taxes. Deferred tax assets or liabilities are recognized for temporary differences between the tax basis of assets and liabilities for financial statement and income tax purposes. Deferred tax assets and liabilities represent future tax consequences of those temporary differences. Revenue Recognition We utilize informal agreements to provide management, consulting services and other financial assistance to operating companies and start-up entities. Typical agreements call for either a flat monthly fee or hourly rates plus reimbursement of out-of-pocket expenses. Revenues from such agreements are recognized as services are provided. Our web-hosting services are billed on a monthly basis and revenues recognized accordingly; while web site design revenues are recognized as the services are performed. Lasik surgeries fees are recorded when procedures are performed. Comprehensive Income (SFAS No. 130) We have no components of "other comprehensive income". -8- Advertising We expense advertising ($6,499 and $24,640 in the quarters ended June 30, 2001 and 2000, respectively; and $26,149 and $89,498 for the six months ended June 30, 2001 and 2000, respectively)as it is incurred. RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued Loss Per Share Loss per share was computed using the weighted monthly average number of common shares outstanding during the periods, and the anti-dilutive effect of stock options discussed in Note M below was excluded. Stock-based Compensation We have elected to follow APB Opinion No. 25, Accounting for Stock Issued to Employees in accounting for our employee stock options. Under APB No. 25, if the exercise price of an employee's stock options equals or exceeds the market price of the underlying stock on the date of grant and certain other plan conditions are met, no compensation expense is recognized. See Note M regarding pro forma net loss per common share information as required by the alternative fair value accounting provided for under SFAS No. 123, Accounting for Stock-Based Compensation. We account for stock-based awards issued to non-employees in accordance with the fair value guidance contained in SFAS No.123 which provides that transactions be measured based on the fair value of the goods or services received or the fair value of the equity instrument issued, whichever can be more reliably determined. -9- NOTE C - INVESTMENT IN e-DATA ALLIANCE CORP. On December 17, 1999, we acquired (for $200,000 cash) 50% of the outstanding shares of e-Data Alliance Corp. ("e-Data"), a Texas corporation, which provides web hosting, off-site data storage, web site design, and data base services. The data servers operated by e-Data are located in premium telecommunications facilities in Dallas. Un-audited condensed financial information of e-Data at June 30, 2001 and 2000 follows: Balance Sheets 6-30-2001 12-31-2000 --------------------------------- --------- ---------- Cash $ 8,500 $ 15,836 Receivables 11,651 6,087 Other current assets 9,000 9,000 -------- ------- Total Current Assets 29,151 30,923 Property, plant and equipment, net 34,578 43,963 -------- ------- Total Assets $ 63,729 $ 74,886 ======== =======

RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE C INVESTMENT IN E-DATA ALLIANCE CORP., (continued) Current Liabilities $ 0 $ 0 Stockholders' Equity 63,729 74,886 -------- ------- Total Liabilities and Stockholder's Equity $ 63,729 $ 74,886 ======== =======

2nd QTR 2nd QTR 6 Months 6 Months Statement of Operations 2001 2000 2001 2000 -------------------------- -------- ------- ------- -------- Revenues $ 9,843 $ 7,599 $ 18,235 $ 32,090 Operating Expenses 14,888 39,813 29,392 116,400 ------- ------- ------- ------- Net Loss $ (5,045) $(32,214) $(11,157) $(84,310) ======= ======= ======= =======

-10- NOTE D- ADVANCES TO OPERATING AND START-UP ENTITIES As a vital part of our operations as a business incubator, we advance funds to established operating entities and start-up or emerging enterprises under the terms of a financing arrangement which typically provides for recoupment in one of three forms - (1) Our primary preference is to convert all or a significant portion of the outstanding advances into an equity position in lieu of receiving cash. (2) Cash representing the return of all advances plus an amount for the time value of money. The repayment of any advances usually is scheduled for a period of three to five years in the future. (3) Repayment of any advances is accelerated if the entity obtains cash infusions from public sources. Prior to filing our first quarter Form 10-QSB, certain information came to our attention involving three of the entities to which we had advanced funds that called into question the ultimate recoupment of our investment. Our assessment of these new circumstances caused us to conclude that it was more likely than not that we would not recoup our advances and consequently we wrote off $986,300 at March 31, 2001. During the second quarter, we further assessed our outstanding advances and determined that additional impairment losses had occurred and we wrote off an additional $9,539. RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE D ADVANCES TO OPERATING AND START-UP ENTITIES, continued -11- The following table summarizes outstanding advances: 6-30-2001 12-31-2000 --------- ---------- Advances to operating enterprises - Energy Systems Solutions, Inc. $ 0 $ 329,691 Teman Electrical Contractors, Inc. 0 318,766 Memorabilia and Antiquities, Inc. 27,603 19,793 Sarwin Family, LLC 142,309 138,164 R and R Foods, Inc. 0 6,000 Eyemakers, Inc. 187,053 182,211 -------- --------- 356,965 994,625 -------- --------- Advances to start-up entities - Emerging Pharmacy Solutions, Inc. 10,000 335,000 Legend Security, Inc. 16,614 16,130 Target Marketing International, Inc. 51,160 48,218 Historic Inns of America, Inc. 0 3,398 Canton Auction House, Inc. 39,757 38,628 Media Star Productions, Inc. 9,346 0 Swan River Corporation 207,632 50,000 -------- --------- 334,509 491,374 -------- --------- Total Advances $ 691,474 $1,485,999 ======== =========

Advances are generally due in periods ranging from 3 to 5 years, bear interest at 6% and are unsecured. The totals shown above includes approximately $50,000 of accrued interest. Our general policy is to require entities to which we advance funds to sign a financing agreement. As part of our ongoing business strategy, we continue to seek investment opportunities which complement our existing portfolio. Operating decisions for the various entities are made by the managers of those business entities. Our Board of Directors makes investment decisions and all other capital resource allocations. The boards of each enterprise to which we advance funds make similar decisions for their entities. -12- RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE E- NOTES PAYABLE 6-30-2001 12-31-2000 --------- ---------- Note payable to Digital Information & Virtual Access, Inc., 6% interest, unsecured. Note is due on demand $ 990,754 $1,029,888 Notes payable to Southern Leasing, Inc., 8% interest, unsecured, due on demand 136,480 136,480 Notes payable to Net.Return, Inc. 10% interest, unsecured. Notes are due during 2001 2,507,000 2,507,000 Note payable to Hart-Prince Group, Inc., 8% interest, unsecured, due on demand 25,000 25,000 Notes payable to Southern Leasing, Inc., interest ranging from 8% to 10%, due during 2001 163,200 163,200 Note payable to The Strateia Group, Inc., interest at 10%, unsecured and due on demand 86,841 78,022 Notes payable to World Asset Management, interest at 8%, unsecured and due between October 1, 2001 and January 16, 2002 727,600 0 Note payable to Alcon Laboratories, Inc., interest at 8%, secured by laser machine, due monthly over the next twelve months 105,470 0 Other 11,000 0 --------- --------- Total Indebtedness $4,753,345 $3,939,590 ========= =========

NOTE F - STOCKHOLDERS' DEFICIT Capital Structure We are authorized to issue 25,000,000 shares of common stock with a par value of $0.001 per share. At June 30,2001, there were 1,817,721 shares outstanding. Our subsidiary, Eyesite.com, Inc. is authorized to issue 5,000,000 shares of preferred stock, $0.002 par value, of which 1,000,000 shares have been designated as 14% Cumulative Convertible Preferred Stock, Series A by Eyesite.com, Inc.'s Certificate of Designation. The Series A preferred shares are convertible at anytime six months after issuance into one share of Eyesite.com, Inc.'s common stock, including all accrued and unpaid dividends. -13- RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE F STOCKHOLDERS' DEFICIT, (continued) The conversion price is $2.50 per share. Further, at Eyesite.com, Inc.'s option, the Series A preferred shares are convertible at any time after six months from issuance, upon 30 days notice, in whole or part, at $2.50 per share. Finally, if the "ask" price of Eyesite.com, Inc.'s common stock as quoted on the OTC Bulletin Board or other exchange ever meets or exceeds $3.25 per share for ten consecutive trading days, then each outstanding share of Series A preferred stock is mandatorily convertible into one share of Eyesite.com, Inc.'s common stock, including all accrued and unpaid dividends at $2.50 per share. On May 31, we issued 100,000 shares to Donner Corp International (See Note A above) as part of their compensation associated with a consulting agreement. We recognized a non-cash expense of $12,700 as a result of this transaction. On May 29, 10,000 shares were issued upon the exercise of certain options. We received cash proceeds of $12,500 in connection with this transaction. On June 14, two shareholders of our Framing Systems, Inc. subsidiary exchanged their holdings for 2,000 shares of our common stock. Subsequent to the end of the second quarter, we issued another 100,000 shares to Donner Corp International as per the terms of our agreement described in Note A. An additional 18,014 shares of common stock have been issued upon the exercise of certain options through the date of this filing. NOTE G-- LOSS PER SHARE The following table summarizes the amounts used to calculate the loss per share as reported in the accompanying consolidated statements of operations. Quarter Ended June 30 6 Months Ended June 30 ----------------------- ----------------------- 2001 2000 2001 2000 ---------- ---------- ---------- ---------- Net Loss $ 624,654 $ 576,674 $1,963,504 $1,139,856 Add - deemed preferred stock dividend 14,616 0 29,232 0 --------- --------- --------- --------- Loss applicable to common stockholders $ 639,270 $ 574,674 $1,992,736 $1,139,856 ========= ======== ========= ========= -14- Weighted average number of shares outstanding 1,743,054 1,647,640 1,724,388 1,605,431 ========= ========= ========= ========= Loss per Share $ 0.36 $ 0.35 $ 1.15 $ 0.71 ========= ========= ========= =========

RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE H - LEASE COMMITMENTS Our corporate offices are located in sub-leased facilities under the terms of a month-to-month rental agreement. The primary tenant is one of our shareholders. Among other things, our lease requires us to reimburse our landlord for certain overhead expenses such as telephone, utilities, etc. based on the square-footage occupied. Our arrangement calls for monthly billings. Management believes that the allocation method used for overhead reimbursements is reasonable. Rent expense was $22,121 and $24,044 for the quarters ended June 30, 2001 and 2000; while for the six-month periods ended June 30, 2001 and 2000, rent expense was $48,086 and $51,915, respectively. Our Dallas Eyesite Laser Center, which opened July 1, 2000, operates in facilities leased for three(3)years from an unrelated third party. Rent expense was $14,638 and $4,874 for the quarters ended June 30, 2001 and 2000, respectively. Rent expense was $29,699 and $4,874 for the six-month periods ended June 30, 2001 and 2000, respectively. In connection with the opening of our Dallas Eyesite Laser Center, we entered into an operating lease agreement for the surgical laser device which performs the eye surgery. The terms of the lease provide for payments of $225 per procedure with a base minimum of 70 procedures per month for the first year ($15,750 per month). The base minimum number of procedures per month for the second and third years are negotiable. The amounts shown below represent our minimum lease obligations through the terms of our existing leases. -15- FUTURE OBLIGATIONS ----------- December 31, 2001 $350,552 December 31, 2002 683,698 December 31, 2003 456,999 NOTE I - INCOME TAX We have tax net operating loss carry-forwards of approximately $3,700,000 which expire, if not used, starting in 2010. Deferred tax assets of approximately $1,258,000 have been fully allowed for, since we believe that it is not "more likely than not" that these tax benefits will be realized. Consolidated tax returns are not filed. Each entity files separately. The 2000 tax returns are under extension. RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE J - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment at June 30, 2001 and December 31, 2000 consisted of the following - 6-30-2001 12-31-2000 --------- ---------- Equipment $ 132,540 $ 133,549 Furniture and fixtures 63,871 63,871 Automobiles 0 0 Leasehold improvements 54,082 54,082 -------- ------- 250,493 251,502 Less - accumulated depreciation (47,690) (28,705) -------- ------- Net property, plant and equipment $ 202,803 $222,797 ======== =======

Depreciation expense included in general and administrative expenses was $1,541 and $2,307 for the quarters ended June 30, 2001 and 2000, respectively. For the six-months periods ended June 30, 2001 and 2000, depreciation expense, included in general and administrative expenses was $3,083 and $3,880, respectively. -16- In 2001, $8,026 and $16,051 of depreciation expense was included in "cost of revenues" for the three and six month periods ended June 30, 2001. NOTE K - LIQUIDITY AND CAPITAL RESOURCES Since restarting operations in 1999, we have incurred losses and accumulated a deficit of approximately $6,840,000. In addition, we have approximately $6,085,000 of current liabilities against approximately $61,600 of current assets. We have been able to obtain long term capital resources through private placement offerings of our common and preferred stock, and to arrange for short term liquidity by issuing notes payable. However, there can be no assurance that we may not continue to experience liquidity problems or be successful in obtaining sufficient working capital on a timely basis in the future. We anticipate that we will have to continue to sell common and/or preferred stock and borrow additional funds to provide sufficient working capital to fund operations during 2001. RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE L -- RELATED PARTY TRANSACTIONS The following summarizes the transactions with related parties during the six months ended June 30, 2001 - Memorabilia and Antiquities, Inc. ("M&A") is a corporation owned by our chief executive officer, who owns 11.6% of our outstanding common stock. M&A owed us $19,793 at January 1, 2001 for advances made to them during prior years. During the six months ended June 30, M&A received additional advances of $12,167 and repaid $4,357 leaving an outstanding balance due us of $27,603. -17- Media Star Productions, Inc. ("MEDIA") is an entity whose CEO is also the CEO of The Strateia Group, Inc., which owns 6.3% of our outstanding common stock. During the fourth quarter of 2000, MEDIA paid us $110,000 (income in advance) for certain information technology services which will be recognized into our income at the rate of $8,000 per month beginning November, 2000. At January 1, 2001, we had a liability of $139,586 to MEDIA, consisting of unearned income of $94,000 and the obligation to reimburse MEDIA for funding certain expenditures. During the six months ended June 30, 2001, we repaid MEDIA $132,165 plus $2,010 of interest, and we recognized $48,000 of the unearned income, leaving a liability of $46,000. In addition, we advanced MEDIA $31,893 and collected back $22,547 leaving a balance due us of $9,346. The Strateia Group, Inc. ("Strateia") is one of our shareholders with a 6.3% ownership position. As mentioned in Note H Lease Commitments, we sub-lease office facilities from them. At January 1, 2001, we had an outstanding balance of $102,750 due to Strateia which consists of $78,022 in a note payable with the remainder in trade payables. During the six months ended June 30, 2001, Strateia advanced us an additional $8,820 and we repaid them $24,728 leaving a balance owed to Strateia of $86,842. Digital Information and Virtual Access, Inc. ("DIVA") is an entity whose CEO is also the CEO of The Strateia Group, Inc. mentioned above. At January 1, 2001, we had an obligation to DIVA of $1,085,486, which included accrued interest of $55,598. During the six months ended June 30, 2001 we reduced the principal by $39,135 along with $71,046 of interest owed. During this same period of time, additional interest of $30,609 was accrued on our outstanding note, resulting in a balance owed of $1,005,915 at June 30, 2001. -18- RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE M -- STOCK OPTIONS The following table summarizes activity related to our outstanding stock options: Employees Non-employees -------------- ------------- No. of options No. of options -------------- -------------- Balance at December 31, 1999 952,500 0 Granted 175,000 0 Exercised ( 89,495) 0 Expired (373,332) 0 -------------- -------------- Balance at December 31, 2000 664,673 915,000 Granted 0 0 Exercised 0 10,000 Expired 0 0 -------------- -------------- Balance at June 30, 2001 664,673 905,000 ============== ============== At June 30, 2001, exercisable options outstanding are as follows: Range of Exercise Prices Number Exercisable No. exercisable ------------------------ ------------------ --------------- Granted at $0.25 per share 154,639 Granted at $0.50 per share 175,000 N/A ------- 329,639 (See below) -------

The terms of options to purchase shares of our common stock are summarized below Option Price --------------------- Weighted Average Number Contractual Weighted Range of Exercise Price FMV Granted Life Average Total ------------------------ ---- --------- ----------- ---------- --------- To Employees ============ Granted at market value $0.500 489,673 5.0 years $0.250 $ 122,418 Granted at market value 0.375 450,000 5.0 years $0.375 168,750 Granted at market value 0.250 175,000 5.0 years $0.500 87,500 --------- ------ --------- 1,114,673 $0.340 $ 378,668 --------- ----- ---------

-19- RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE M STOCK OPTIONS, continued To Non-employees ================ Granted < market value $0.250 350,000 1.0 year $0.250 $ 87,500 Granted < market value 0.050 165,000 1.0 year $0.050 82,500 Granted < market value 0.800 25,000 1.0 year $0.800 20,000 Granted < market value 0.091 10,000 1.0 year $0.091 9,100 Granted < market value 1.000 60,000 1.0 year $1.000 60,000 Granted < market value 1.250 295,000 1.0 year $1.250 368,750 --------- ------ --------- 905,000 $0.694 627,850 --------- ----- --------- Grand Total All Options 2,019,673 $0.493 $1,006,518 ========= ===== =========

Options granted to employees during 1999 had an exercise price equal to the market value of the underlying common stock. Options granted to employees during 2000 had an exercise price less than the fair market of the underlying common stock. Had compensation cost for our stock options been determined in accordance with SFAS No. 123, our net loss and loss per share would have been adjusted to the pro forma amounts indicated below. The effects of applying SFAS No. 123 in this pro forma disclosure are not indicative of future amounts. Quarter Ended June 30 6 Months Ended June 30 ---------------------- ---------------------- 2001 2000 2001 2000 -------- -------- ---------- ---------- Net loss reported, adjusted for deemed dividend $639,270 $576,674 $1,992,736 $1,139,856 Pro forma amount assuming SFAS No. 123 $644,058 $576,674 $2,002,312 $1,139,856 Loss per common share as reported $ 0.36 $ 0.35 $ 1.15 0.71 Pro forma loss per share assuming SFAS No. 123 $ 0.37 $ 0.35 $ 1.16 0.71

-20- RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE N STOCK OPTIONS, continued The fair value of options granted to employees was estimated on the date of grant using the Black-Scholes option-pricing model. The following assumptions were used for grants in 1999 and 2000 - dividend yield of 0%, volatility of 0%, risk-free interest rate estimated as 6%; estimated life of 5 years. The estimated fair value of options granted to employees in 1999 was $0.06 per share. The estimated fair value of the options granted during 2000 to employees was $0.875 per share, while the estimated fair value of options granted to non-employees was $0.50 per share. The model is based on historical stock prices and volatility, which, due to low volume of transactions, may not be representative of future price variances. The options granted to non-employees are related to the consulting contract discussed in Note A above and are "out-of-the-money". They vest over the three year period ended April 30, 2002. Although we will receive consulting services over the course of the next year, we have no assurance that the consultants will ultimately exercise all of their options. The 10,000 options that were exercised during the second quarter of 2001 were exercised at the strike price. The compensation expense arising from the differential between the strike price and the market value of the stock on the exercise date was not material. NOTE N - CONTINGENCIES Several of the notes comprising our obligation to Net.Return, Inc. are past due. (See Note E - Notes Payable). Efforts of management to renew, extend or renegotiate the terms and conditions of those notes have proved unsuccessful to date. It is uncertain as to the ultimate disposition of the notes payable to Net. Return, Inc. Management is continuing with efforts to resolve this matter. We were notified of a recommendation by the staff of the Securities and Exchange Commission (the "Commission") that the Commission -21- bring a civil injunction action against the Company and two (2) of its directors, alleging certain violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. We engaged securities counsel and intend to defend itself and our directors against the allegations and proposed action. As of the date of this filing, we have not received any further communications from the Commission regarding this matter. NOTE O - SUBSEQUENT EVENTS Subsequent to June 30, 2001, the following events and/or transactions occurred: In July, we prepared a Regulation S Offering Memorandum for 5,000,000 shares of common stock at $0.50 per share. Effective July 1, we executed an employment contract with our Vice President of Finance which provides, among other things, for an annual salary of $75,000 and 250,000 options to purchase our common stock at $1.30 (the market value of our stock on July 1) that vest over the next three years. RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE P - OPERATING SEGMENT INFORMATION We organize and manage our business in two operating segments - business incubation and eye care services. The business incubation segment includes the parent company, Rhino, its subsidiaries Executive Assistance, Inc. and Framing Systems, Inc., and its equity method investee, e-Data Alliance Corp. This segment provides various forms of assistance (in the form of management, consulting services, and financing) to assist start-up enterprises as well as established operating companies to position themselves for growth opportunities. Segment revenues consist of fees, overhead reimbursements, interest income on funds advanced in the form of short term notes, earnings of subsidiaries and equity method investees. -22- Our eye care services segment represents the activities of our 90%- owned subsidiary Eyesite.Com, Inc. All operations, at present, are located within the United States. Revenues arise from sales primarily to unrelated third parties. The accounting policies followed in presenting the segment information are the same as those described in the summary of significant accounting policies included in our consolidated financial statements. A summary, by segment, of our significant assets, liabilities, revenues and expenses is presented below for the three-month and six-month periods ended June 30, 2001, and 2000. Asset Data June 30, 2001 Incubator Eye Care Eliminations Consolidated ========================== ------------ ------------ -------------- -------------- Current Assets $ 792,153 $ 57,533 $ (788,033) $ 61,653 Advances 504,421 187,053 0 691,474 Investment in equity method investees 126,865 0 0 126,865 Other long-lived assets 896,893 284,998 (10,000) 1,171,891 ------------ ------------ -------------- -------------- Total Assets $ 2,320,332 $ 529,584 $ (798,033) $ 2,051,883 ============ ============ ============== ============== Asset Data December 31, 2000 Incubator Eye Care Eliminations Consolidated ============================== ------------ ------------ -------------- -------------- Current Assets $ 777,003 $ 50,859 $ (736,885) $ 90,977 Advances 1,303,788 182,211 0 1,485,999 Investment in equity method investees 132,443 0 0 132,443 Other long-lived assets 1,021,686 299,233 (10,000) 1,310,919 ------------ ------------ -------------- -------------- Total Assets $ 3,234,920 $ 532,303 $ (746,885) $ 3,020,338 ============ ============ ============== ==============

RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE P OPERATING SEGMENT INFORMATION, continued Profit and Loss Information Three Months Ended June 30, 2001 ============================================================== Revenues - external sources $ 48,000 $ 175,483 $ 0 $ 223,483 Inter-segment revenues 0 0 0 0 Interest income 4,520 2,420 0 6,940 Other income 0 0 0 0 Cost of revenues 0 (209,983) 0 (209,983) Operating expenses (376,334) (108,795) 0 (485,129) Interest expense (25,124) (7,497) 0 (32,621) Depreciation and amortization (14,631) (6,610) 0 (21,241) Equity in losses of e-Data (2,522) 0 0 (2,522) Write off goodwill (113,308) 0 0 (113,308) ------------ ------------ -------------- -------------- Net Loss $ ( 479,399) $ (154,982) $ 0 $ ( 634,381) ============ ============ ============== ==============

-23- Profit and Loss Information -- Three Months Ended June 30, 2000 =============================================================== Revenues from external sources $ 1,500 $ 21,280 $ 0 $ 22,780 Inter-segment revenues 0 0 0 0 Interest income 35,543 4,024 0 39,567 Other income 0 0 0 0 Equity in losses of e-Data (15,403) 0 0 (15,403) Operating expenses (271,233) (246,575) 0 (517,808) Interest expense (75,442) (2,633) 0 (78,075) Depreciation and amortization (14,630) (11,427) (1,678) (27,735) ------------ ------------ -------------- -------------- Net Loss $ (339,665) $ (235,331) $ (1,678) $ (576,674) ============ ============ ============= ==============

Profit and Loss Information Six Months Ended June 30, 2001 ============================================================ Revenues - external sources $ 48,000 $ 467,815 $ 0 $ 515,815 Inter-segment revenues 0 0 0 0 Interest income 9,044 4,841 0 13,885 Other income 0 0 0 0 Cost of revenues 0 (392,006) 0 (392,006) Operating expenses (620,055) (240,533) 0 (860,588) Interest expense (92,685) (14,226) 0 (106,911) Depreciation and amortization (29,261) (12,804) 0 (42,065) Equity in losses of e-Data (5,578) 0 0 (5,578) Impairment-advances & goodwill (1,099,608) 0 0 (1,099,608) ------------ ------------ -------------- -------------- Net Loss $ (1,785,988) $ (186,913) $ 0 $ (1,972,901) ============ ============ ============== ==============

RHINO ENTERPRISES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE P OPERATING SEGMENT INFORMATION, continued Profit and Loss Information -- Six Months Ended June 30, 2000 ============================================================= Revenues from external sources $ 1,500 $ 27,303 $ 0 $ 28,803 Inter-segment revenues 0 0 0 0 Interest income 70,798 7,565 0 78,363 Other income 2,715 0 0 2,715 Equity in losses of e-Data (44,748) 0 0 (44,748) Operating expenses (565,187) (439,360) 0 (1,004,547) Interest expense (145,054) (3,458) 0 (148,512) Depreciation and amortization (30,618) (17,956) (3,356) (51,930) ------------ ------------ -------------- -------------- Net Loss $ (710,594) $ (425,906) $ (3,356) $ (1,139,856) ============ ============ ============= ==============

-24- Item 2. Management's Discussion and Analysis The following discussion of the financial condition and results of operations of Rhino Enterprises Group, Inc. and its business segments should be read in conjunction with the Management's Discussion and Analysis and the consolidated financial statements and the notes thereto included in our prior quarterly filings on Form 10-QSB and the Company's annual filing on Form 10-KSB. This quarterly report on Form 10-QSB contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements using terminology such as "anticipates", "expect", "will", "believes", "foresees", "could", "may" or the negative thereof or other comparable terminology regarding beliefs, plans, expectations or intentions regarding the future. These forward-looking statements involve risks and uncertainties and actual results could differ materially from those discussed in the forward-looking statements. All forward-looking statements and risk factors included in this document are made as of the date hereof, based on information available as of the date thereof, and we assume no obligation to update any forward-looking statement or risk factors. Factors That May Impact Future Operating Results ------------------------------------------------ We operate in a rapidly changing environment that involves numerous risks and uncertainties. This section lists some, but not all, of the factors, risks, and uncertainties that may have a material adverse effect on our business, financial condition or results of operations. -25- Important factors that could cause actual results, performance or achievement of to differ materially from our expectations include, but are not limited to the following: (1) one or more of the assumptions or other factors discussed in connection with particular forward-looking statements prove not to be accurate (2) mistakes in estimates of revenues and expenses (3) our inability to obtain additional capital through borrowing's or the sale of securities (4) non-acceptance of our services in the marketplace for whatever reason (5) the Company's inability to support any product or service to meet market demand (6) generally unfavorable economic conditions which would adversely affect us, our subsidiaries or any of the entities to which we have advanced funds (7) loss of key personnel and the inability to hire and/or retain competent personnel; and (8) if our experiences unanticipated problems and/or "force majeure" events (including but not limited to accidents, fires, acts of God, etc.) or is adversely affected by problems of its suppliers, shippers, customers or others. All written or oral forward-looking statements attributable are expressly qualified in their entirety by such factors. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. We are dependent upon our current management team. Should any one or more of our management team leave, we could face a financial setback or suffer in other ways related to our planned business. It could take a significant period of time to locate and train replacements, if and when necessary. We have employment agreements with our President and our Vice President of Finance, which may be terminated upon certain circumstances. Copies of these agreements have been filed with the Securities and Exchange Commission. Since revenues are not presently sufficient to provide enough working capital to fund current operations, we are dependent upon outside financing. It may be difficult to borrow additional funds or have access to additional funds via some other method. If such a situation occurs, we may not be able to make debt service payments, provide the services we have planned, increase our staff as planned or otherwise grow our business. -26- During the second quarter, we negotiated agreements with an investment banking entity and several financial consultants to assist us in evaluating financing opportunities and alternatives within our current financial condition and capital structure. We filed a Form S-8 Registration Statement for payments of fees to several consultants and financial advisors. We also prepared a Regulation S Offering Memorandum for 5,000,000 shares at $0.50 per share. A potential offshore investor has indicated an interest in funding the entire offering. Also, during the second quarter, we were able to negotiate several short term loans from an investor totaling approximately $725,000. There are significant debt obligations which must be repaid in cash at some point or we must explore other alternatives for repayment, which could be in the form of conversion of debt to equity, replacement financing and/or repayment by an offering of securities. It may be difficult to repay the existing debt when due, extend the due date of the existing debt, reach some agreement with regard to converting the debt to equity or otherwise satisfy our obligation. Likewise, if a new source of financing is found to replace our current sources, we could face similar risks in the future with regard to our ability to repay or otherwise take care of any future debt. Also, any additional issuances of securities, whether in the form of converting debt to equity or the form of a securities offering, would dilute the share value of current shareholders. One of our business segments advances funds to small operating and start-up entities. These advances are evidenced with an interest bearing note and financing agreement. There is a risk that these entities will not be able to repay their advances. We are carrying these advances as assets on our balance sheet. Our expectation is that these start-up and small operating companies may take 3 to 5 years before being in a position to repay our advances. If, because of current economic conditions or the lack of availability of capital to continue funding start-up and small operating companies, or their inability to successfully implement their business plans, or because of actual results and lack of acceptance by the market place, then we would assess the carrying value of these advances for impairment. We would consider adjusting the carrying value to reflect anticipated recoverability; or, alternatively, we may seek to convert the advances into an equity -27- interest in the entity. However, we may face difficulty in negotiating with such borrowers with regard to the ability to convert the debt into equity or the conversion ratio. If the advances are converted into equity of the borrowing entity, there exists a possibility that the equity interest will not be a liquid investment or that the value of such equity interest will not be at or near the value of the advances made. Further, if one or more of the entities to which funds have been advanced is unable to repay the advance when due or if the advance is converted into a non- liquid equity investment, we could potentially have working capital shortages. Our eye-care business segment is operating in accordance with current laws and regulations. If new health-care related legislation is passed at a local, state or federal level, it could adversely affect our operations. There are potential risks that we may not be able to (1) continue our business as planned, (2) adjust our business plan in accordance with any new requirements, or (3) operate in a profitable manner. If our growth plans come to fruition, we expect to hire additional personnel. The current low unemployment rate might present a challenge to locate and attract qualified individuals to fill new positions. There are potential risks that we may not be able to (1) fill every new position in a timely manner, (2) retain current employees, or (3) offer compensation packages that would attract top quality candidates. ------------------------------------------------------------- Results of Operations - Quarters Ended June 30, 2001 and 2000 ------------------------------------------------------------- The Company posted revenues of $223,482 for the quarter ended June 30, 2001, up from $22,780 for the same quarter in 2000. Most of this increase came from our Eyesite Laser Center operations. Cost of goods sold increased from $15,321 to $209,983, all of which was associated with eye-care operations. Should working capital become available to promote and advertise our Eyesite Laser Center we -28- expect that revenues will grow in the ensuing quarters. However, if resources are not available we anticipate that revenue growth will be negligible. General and administrative expenses increased from $530,222 in the second quarter of 2000 to $609,950, reflecting a $26,000 increase in overhead; a $123,000 reduction in personnel costs; a $80,000 increase in legal and professional fees associated with the preparation of two registration statements discussed above; and a $100,000 write-down of impaired goodwill. Other Income/(Expense) decreased from $53,911 to $28,204 reflecting a reduction in interest income of approximately $32,000 because certain advances were written off in the first quarter. Additionally, interest expense decreased by $45,453 over the same period a year ago because interest is not being accrued on certain loans. Finally, our share of the loss in our equity investee, e- Data, declined by approximately $13,000 because e-Data reduced their operating costs. Should sufficient resources become available, we would continue our incubation segment strategies by advancing funds to start-up and small operating companies in industries we have identified as meeting our growth and investment criteria. If the resources are in the form of debt, we would expect increases in interest expense. It would also mean that interest income would possibly increase if additional advances are made and financing agreements are obtained from entities to which we advance funds. --------------------------------------------------------------- Results of Operations - Six Months Ended June 30, 2001 and 2000 --------------------------------------------------------------- Revenues increased over the same period from the prior year by approximately $487,000 which is due to revenues generated by our Eyesite Laser Center. The increase of approximately $374,000 in cost of sales is entirely attributable to our eye-care business segment. General and administrative expenses increased by approximately $955,000 reflecting a $69,000 reduction in overhead; a $200,000 decrease in personnel costs; a $142,000 increase in legal and professional fees reflecting the costs associated with various SEC filings; and impairment losses associated with advances ($986,000) and goodwill ($103,000). -29- Other Income/(Expense) decreased by approximately a net $18,000. Interest income decreased $64,000 reflecting the impairment losses on advances referred to above. Interest expense decreased by $41,000 over the same period a year ago because interest is not being accrued on certain loans. Finally, our share of the loss in our equity investee, e-Data, declined by approximately $39,000 because e-Data reduced their operating costs. ------------------- Financial Condition ------------------- At June 30, cash had declined by approximately $6,400 since the beginning of the year. Operating activities used approximately $646,000 attributable to the payment of general and administrative costs. Investing activities consumed approximately $186,000 of cash during the first quarter primarily from net advances to start- up and operating entities. Financing activities provided approximately $826,000, all from borrowings except $12,500 raised from the sale of stock. Cash flow from anticipated repayments on advances, and revenues from our eye care segment are not sufficient at this time to fund current operations, provide capital for our business incubation activities and provide growth capital for our eye care segment. In order to fund these activities, we will need to obtain additional capital through additional borrowings or the sale of securities. There is no guarantee that we will be able to obtain such capital. If we cannot obtain additional capital, our ability to continue operations will be in doubt. We have significant debt obligations which must be repaid or otherwise satisfied. It may be difficult to repay the existing debt when due or to modify terms such as extending due dates or converting the debt to equity. We will attempt to negotiate satisfactory arrangements with our lenders. PART II - OTHER INFORMATION (Items 3, 4 and 5 have been omitted as there is no information to report.) -30- Item 1. Legal Proceedings -------------------------- The Company has been notified of a recommendation by the staff of the Securities and Exchange Commission (the "Commission") that the Commission bring a civil injunction action against the Company and two (2) of its directors, alleging certain violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. The Company has hired securities counsel and intends to defend itself and its directors against such allegations and proposed action. Item 2. Changes in Securities. ------------------------------- The following changes in securities occurred during the quarter ended June 30, 2001. On May 7, 2001, the Company filed an S-8 Registration Statement under The Securities Act of 1933 to register 600,000 shares of the Company's $0.001 par value common stock. On May 31, 2001, we issued 100,000 shares of our restricted common stock to Donner Corp International in connection with the execution of the consulting agreement attached to our Form 8-K filed on May 7, 2001. On May 29, 2001, we sold 10,000 shares of common stock to one of the consultants engaged to assist us in raising capital as described in the Form 8-K filed May 7, 2001. On June 14, 2001, two of the shareholders of Framing Systems, Inc. (our 68% owned subsidiary) exchanged 50,000 shares for 2,000 shares of our common stock. Item 6. Exhibits and Reports on Form 8-K. ------------------------------------------ Exhibits - None Reports on Form 8-K -31- On May 7, 2001, the Company filed a Current Report on Form 8-K with the Securities and Exchange Commission reporting a series of investment banking agreements with Donner Corp International and certain consultants that will assist us in raising capital. Also, on May 7, 2001, the Company filed a Form S-8 Registration Statement under the Securities Act of 1933 reporting the registration of 600,000 shares of the Company's $0.001 par value common stock that will be offered for sale at $1.25 per share. On May 16, 2001, the Company filed a Current Report on Form 8-K with the Securities and Exchange Commission reporting certain amendments to the consulting agreements that were exhibits in the Form 8-K filed on May 7, 2001. On May 31, 2001, the Company filed a Current Report on Form 8-K with the Securities and Exchange Commission reporting an investment banking agreement with a consultant who will be compensated with stock options. On June 5, 2001,the Company filed a Current Report on Form 8-K with the Securities and Exchange Commission reporting an investment banking agreement with a consultant who will be compensated with stock options. On June 26, 2001, the Company filed a Current Report on Form 8-K with the Securities and Exchange Commission reporting certain amendments to the consulting agreements that were exhibits in the Form 8-K filed on May 7, 2001. On July 5, 2001, the Company filed a Current Report on Form 8-K with the Securities and Exchange Commission reporting an employment contract with Mr. Dan Weaver, Vice President of Finance. On July 18, 2001, the Company filed a Current Report on Form 8-K with the Securities and Exchange Commission reporting certain amendments to the consulting agreements that were exhibits in the Form 8-K filed on May 7, 2001. -32- SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Rhino Enterprises Group, Inc. (Registrant) Date: August 14, 2001 By:/S/ DANIEL H. WEAVER -------------------------------- Daniel H. Weaver Chief Financial Officer and duly authorized officer -33-

RHINO ENTERPRISES GROUP INC 10-Q/A