UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2000
Commission file number: 000-31017
24 HOUR AUCTION, INC.
(Exact name of registrant as specified in its charter)
Delaware 91-1780705
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
2009 Iron Street
Bellingham WA 98225
(Address of principal executive offices) (Zip Code)
(360) 647-3170
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for at least the past 90 days.
Yes (X) No ( )
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 3,660,000
Transitional Small Business Disclosure Format (check one);
Yes ( ) No (X)
1
TABLE OF CONTENTS
PART I
PAGE
----
ITEM 1 Financial Information 3
ITEM 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 13
PART II
ITEM 1 Legal Proceedings 13
ITEM 2 Changes in Securities 13
ITEM 3 Defaults Upon Senior Securities 13
ITEM 4 Submission of Matters to a Vote of Security Holders 13
ITEM 5 Other Information 13
ITEM 6 Exhibits and Reports on Form 8-K 13
Signatures 13
2
24 HOUR AUCTION, INC.
FORM 10 QSB
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2000
PART I. - FINANCIAL INFORMATION
24 HR AUCTION INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 2000
WILLIAMS & WEBSTER PS
CERTIFIED PUBLIC ACCOUNTANTS
BANK OF AMERICA FINANCIAL CENTER
W 601 RIVERSIDE, SUITE 1940
SPOKANE, WA 99201
(509) 838-5111
24 HR AUCTION INC.
(A DEVELOPMENT STAGE COMPANY)
TABLE OF CONTENTS
ACCOUNTANT'S REVIEW REPORT 1
FINANCIAL STATEMENTS
Consolidated Balance Sheets 2
Consolidated Statements of Operations 3
Consolidated Statement of Stockholders' Equity 4
Consolidated Statements of Cash Flows 5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 6
3
To the Board of Directors
24 Hr Auction Inc.
Bellingham, Washington
ACCOUNTANT'S REVIEW REPORT
--------------------------
We have reviewed the accompanying consolidated balance sheet of 24 Hour Auction,
Inc. (a development stage company) as of November 30, 2000 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the three months ended November 30, 2000, for the period from September 21, 1999
(inception) to November 30, 1999, and for the period from September 21, 1999
(inception) to November 30, 2000. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
The financial statements for the period ended August 31, 2000 were audited by us
and we expressed an unqualified opinion on them in our report dated November 21,
2000, but we have not performed any auditing procedures since that date.
As discussed in Note 2, the Company has been in the development stage since its
inception on September 21, 1999. Realization of a major portion of the assets
is dependent upon the Company's ability to meet its future financing
requirements, and the success of future operations. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans regarding those matters are described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Williams & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
December 8, 2000
4
24 HR AUCTION INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
November 30, August 31,
2000 2000
(Unaudited)
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ 1,442 $ 3,608
Prepaid expenses 1,500 --
------------ ------------
Total Current Assets 2,942 3,608
------------ ------------
PROPERTY PLANT AND EQUIPMENT
Web site costs 3,007 3,007
Computer equipment 1,500 1,500
Less: accumulated depreciation and amortization (1,201) (876)
------------ ------------
Total Property, Plant and Equipment 3,306 3,631
------------ ------------
TOTAL ASSETS $ 6,248 $ 7,239
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 898 $ 472
Related party payables 3,000 2,750
------------ ------------
Total Current Liabilities 3,898 3,222
------------ ------------
COMMITMENTS AND CONTINGENCIES -- --
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, 20,000,000 shares authorized,
$.0001 par value; 0 shares issued and
outstanding -- --
Common stock, 80,000,000 shares authorized,
$.0001 par value; 3,660,000 shares
issued and outstanding 366 366
Additional paid-in capital 19,134 19,134
Deficit accumulated during development stage (17,150) (15,483)
------------ ------------
Total Stockholders' Equity 2,350 4,017
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,248 $ 7,239
============ ============
See accompanying notes and accountant's review report.
5
24 HR AUCTION INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Period For the Period
September 21, September 21,
For the 1999 1999
Three Months (Inception) (Inception)
Ended through through
November 30, November 30, November 30,
2000 1999 2000
(Unaudited) (Unaudited)
------------ ------------ ------------
REVENUES $ -- $ -- $ --
------------ ------------ ------------
OPERATING EXPENSES
Lease expense 250 500 3,000
Filing and transfer agent fees 172 -- 1,700
Professional expense -- -- 8,250
Organizational expense -- -- 2,000
Web site maintenance 132 -- 132
Depreciation 325 -- 1,201
General and administrative 788 -- 788
Office supplies -- 74 79
------------ ------------ ------------
Total Operating Expenses 1,667 574 17,150
------------ ------------ ------------
LOSS FROM OPERATIONS (1,667) (574) (17,150)
INCOME TAXES -- -- --
------------ ------------ ------------
NET LOSS $ (1,667) $ (574) $ (17,150)
============ ============ ============
NET LOSS PER COMMON SHARE,
BASIC AND DILUTED $ nil $ nil $ nil
============ ============ ============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING,
BASIC AND DILUTED 3,660,000 3,660,000 3,660,000
============ ============ ============
See accompanying notes and accountant's review report.
3
6
24 HR AUCTION INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
Common Stock Accumulated
--------------------------- During Total
Number Additional Development Stockholders'
of Shares Amount Paid-in Capital Stage Equity
------------ ------------ --------------- ------------ ------------
Issuance of common stock
in September 1999
for cash at an average
of $.005 per share 3,660,000 $ 366 $ 19,134 $ -- $ 19,500
Loss for period ending
August 31, 2000 -- -- -- (15,483) (15,483)
------------ ------------ ------------ ------------ ------------
Balance, August 31, 2000 3,660,000 366 19,134 (15,483) 4,017
Loss for the three months
Ended November 30, 2000 -- -- -- (1,667) (1,667)
------------ ------------ ------------ ------------ ------------
Balance, November 30, 2000
(unaudited) 3,660,000 $ 366 $ 19,134 $ (17,150) $ 2,350
============ ============ ============ ============ ============
See accompanying notes and accountant's review report.
4
7
24 HR AUCTION INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Period For the Period
September 21, September 21,
For the 1999 1999
Three Months (Inception) (Inception)
Ended through through
November 30, November 30, November 30,
2000 1999 2000
(Unaudited) (Unaudited)
------------ ------------ ------------
Cash flows from operating activities:
Net loss $ (1,667) $ (574) $ (17,150)
Depreciation 325 -- 1,201
Adjustments to reconcile net loss
to cash used in operating
activities:
Increase in prepaid expense (1,500) -- (1,500)
Increase in accounts payable 426 -- 898
Increase in related parties payable 250 500 3,000
------------ ------------ ------------
Net cash used in operating activities (2,166) (74) (13,551)
------------ ------------ ------------
Cash flows from investing activities:
Purchase of computer equipment -- -- (1,500)
Purchase of web site -- -- (3,007)
------------ ------------ ------------
Net cash used in investing activities -- -- (4,507)
------------ ------------ ------------
Cash flows from financing activities:
Sale of common stock -- 19,500 19,500
------------ ------------ ------------
Net cash provided by financing activities -- 19,500 19,500
------------ ------------ ------------
Net increase in cash (2,166) 19,426 1,442
Cash, beginning of period 3,608 -- --
------------ ------------ ------------
Cash, end of period $ 1,442 $ 19,426 $ 1,442
============ ============ ============
SUPPLEMENTAL DISCLOSURES:
Interest expense paid $ -- $ -- $ --
============ ============ ============
Income taxes paid $ -- $ -- $ --
============ ============ ============
See accompanying notes and accountant's review report.
8
24 HR AUCTION INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
24 Hr Auction Inc. (herein after "the Company"), was incorporated in September,
1999 under the laws of the State of Delaware primarily for the purpose of
auctioning goods and services via the internet. As of May 31, 2000, the
Company's principal office is located in Bellingham, Washington.
In November 1999, the Company formed its subsidiary, Bidmonkey.com.
Bidmonkey.com is expected to auction goods and services that are geographically
targeted. 24 Hr Auction Inc. and Bidmonkey.com were in the development stage
and at May 31, 2000 had not realized any significant revenues from planned
operations.
The Company serves as a holding company for its subsidiary's operations. The
subsidiary is not considered a franchise although the Company plans to franchise
its subsidiary's operations. References herein to the Company include the
Company and it subsidiary, unless the context otherwise requires.
The Company's fiscal year end is August 31.
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in
understanding the Company's financial statements. The financial statements and
notes are representations of the Company's management, which is responsible for
their integrity and objectivity. These accounting policies conform to
accounting principles generally accepted in the United States of America and
have been consistently applied in the preparation of the financial statements.
Accounting Method
- ------------------
The Company's financial statements are prepared using the accrual method of
accounting.
Interim Financial Statements
- ------------------------------
The interim financial statements as of May 31, 2000 and for the period ended May
31, 2000, included herein, have been prepared for the Company without audit.
They reflect all adjustments, which are, in the opinion of management, necessary
to present fairly the results of operations for these periods. All such
adjustments are normal recurring adjustments. The results of operations for the
periods presented are not necessarily indicative of the results to be expected
for the full fiscal year.
Use of Estimates
- ------------------
The process of preparing financial statements in conformity with accounting
principles generally accepted in the United States of America requires the use
of estimates and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements. Accordingly,
upon settlement, actual results may differ from estimated amounts.
9
24 HR AUCTION INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Development Stage Activities
- ------------------------------
The Company has been in the development stage since its formation on September
21, 1999. It is primarily engaged in auctioning goods and services via the
internet.
Principles of Consolidation
- -----------------------------
The consolidated financial statements include the accounts of the Company and
its subsidiary. All significant intercompany transactions and balances have
been eliminated in consolidation.
Cash and Cash Equivalents
- ----------------------------
For purposes of the Statement of Cash Flows, the Company considers all
short-term debt securities purchased with an original maturity of three months
or less to be cash equivalents.
Fair Value of Financial Instruments
- ---------------------------------------
The carrying amounts for cash and payables approximate their fair value.
Concentration of Risk
- -----------------------
The Company maintains its cash accounts in one commercial bank in Vancouver,
British Columbia, Canada. The Company's cash account is a business checking
account maintained in U.S. dollars, which totaled $6,014 as of May 31, 2000.
This account is not insured.
Derivative Instruments
- -----------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This standard establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the consolidated balance sheet and measure those instruments at
fair value.
At May 31, 2000, the Company has not engaged in any transactions that would be
considered derivative instruments or hedging activities.
Impaired Asset Policy
- -----------------------
In March 1995, the Financial Accounting Standards Board issued statement SFAS
No. 121 titled "Accounting for Impairment of Long-lived Assets." In complying
with this standard, the Company reviews its long-lived assets quarterly to
determine if any events or changes in circumstances have transpired which
indicate that the carrying value of its assets may not be recoverable. The
Company does not believe any adjustments are needed to the carrying value of its
assets at May 31, 2000.
10
24 HR AUCTION INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
- --------------------
Revenues and cost of revenues are recognized when services and products are
furnished or delivered. At May 31, 2000, no revenues were realized or
recognized by the Company or its subsidiary.
Franchise Revenue
- ------------------
Revenue from sales of individual franchises will be recognized, net of an
allowance for uncollectible amounts, when substantially all significant services
to be provided by the Company have been performed. For the period ended May 31,
2000, the Company did not realize or recognize any revenues from franchise
activities.
Compensated Absences
- ---------------------
As the Company is still in the development stage, it currently does not have a
policy regarding accruals of compensated absences. The Company intends to
expense these costs as incurred.
Organization Expenses
- ----------------------
The Company has recognized and expensed $2,000 in organizational expenses for
the period ended May 31, 2000.
Income Taxes
- -------------
At May 31, 2000, the Company had a net operating loss of approximately $17,000
since its inception in September 1999. No provision for taxes or tax benefit
has been reported in the financial statements, as there is not a measurable
means of assessing future profits or losses.
Basic and Diluted Loss Per Share
- -------------------------------------
Net loss per share was computed by dividing the net loss by the weighted average
number of shares outstanding during the period. The weighted average number of
shares was calculated by taking the number of shares outstanding and weighting
them by the amount of time that they were outstanding. Basic and diluted loss
per share were the same, as there were no common stock equivalents outstanding.
Going Concern
- --------------
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.
As shown in the accompanying financial statements, the Company has generated no
revenues since inception. The Company recorded a loss and an accumulated
deficit of $17,150 for the period from September 21, 1999 (inception) to May 31,
2000. The Company, being a developmental stage enterprise, is currently putting
technology in place which will, if successful,
11
24 HR AUCTION INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Going Concern (continued)
- ---------------------------
mitigate these factors which raise substantial doubt about the Company's ability
to continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be necessary
in the event the Company cannot continue in existence.
Management has established plans designed to increase the sales of the Company's
products and services. Management intends to seek new capital from new equity
securities issuances that will provide funds needed to increase liquidity, fund
internal growth and fully implement its business plan.
NOTE 3 - PROPERTY AND EQUIPMENT
The Company has capitalized the costs to build its web site and is depreciating
those costs over three years using the straight-line method. In addition, the
Company purchased computer equipment which will be depreciated over five years
using the straight-line method. In the future the Company will review those
assets for impairment on a quarterly basis by comparing the estimated
undiscounted future cash flows to their respective carrying amounts.
Depreciation expense for the period ended May 31, 2000 was $325.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company is the lessor of office space and computers under an operating lease
for $250 per month expiring in September 2000. The space and computers are
leased from a related party. At May 31, 2000, $2,000 in rent expense was
unpaid and accrued as related party payable.
NOTE 5-COMMON AND PREFERRED STOCK
Upon incorporation, the Company authorized the issuance of 20,000,000 shares of
preferred stock at a par value of $0.0001 per share, of which there are no
shares outstanding. The preferred shares have not been designated any
preferences.
Upon incorporation, the Company authorized the issuance of 80,000,000 shares of
common stock at a par value of $0.0001 per share, of which 3,660,000 shares are
outstanding under Regulation D, Rule 504. Holders of shares of common stock are
entitled to one vote for each share on all matters to be voted on by the
stockholders, but have no cumulative voting rights. Holders of shares of common
stock are entitled to share ratably in dividends, if any, as may be declared by
the Board of Directors in its discretion, from funds legally available. The
Company has not authorized any convertible stock, warrants, options or dividends
as of May 31, 2000.
12
24 HOUR AUCTION, INC.
FORM 10 QSB
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2000
ITEM 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations
Management has been exploring a variety of revenue models in the light of recent
events in the internet environment."
The company is a developmental stage company. There are no appreciable changes
to its financial condition or its operations except as outlined in the review
for the period ended 11/30/2000.
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other information.
None.
Item 6. Exhibits and Reports on Form 8-K.
None.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
24 HOUR AUCTION, INC.
/s/ Nazir Maherali
___________________________
Date: March 14, 2001 Nazir Maherali
President