Audited Financial Statements of
REQUESTAMERICA.COM, INC.
Years ended December 31, 2000 and 1999
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
RequestAmerica.com, Inc.
We have audited the accompanying balance sheets of
RequestAmerica.com, Inc. as of December 31, 2000 and 1999 and
the related statements of operations and deficit,
stockholders' equity and cash flows for the years ended
December 31, 2000 and 1999. These 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 audits 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 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of RequestAmerica.com, Inc. as of December 31, 2000
and December 31, 1999, and the results of operations and cash
flows for the years ended December 31, 2000 and 1999 in
conformity with accounting principles generally accepted in
the United States of America.
The accompanying financial statements have been prepared
assuming RequestAmerica.com, Inc. will continue as a going
concern. As discussed in note 2 to the financial statements,
the Company's need to generate cash from operations and obtain
additional financing raises substantial doubt about its
ability to continue as a going concern. Management plans as
to this matter are discussed in note 2. The financial
statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ KPMG LLP
Chartered Accountants
Victoria, Canada
April 23, 2001
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REQUESTAMERICA.COM, INC.
Balance Sheets
December 31, 2000 and 1999
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2000 1999
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Assets
Current assets:
Cash and cash equivalents $ 90,025 $ 148,229
Accounts receivable 4,107 -
Other current assets 1,484 1,098
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95,616 149,327
Deferred acquisition costs 22,488 -
Furniture and equipment, net (note 4) 39,220 5,994
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$ 157,324 $ 155,321
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 11,309 $ 945
Payroll taxes payable 15,901 187
Deferred revenue 19,671 1,796
Line of credit (note 6) - 4,814
Income taxes payable - 800
Capitalized lease obligation -
short term (note 5) 1,860 1,632
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48,741 10,174
Capitalized lease obligation - long-term - 1,860
Stockholders' equity:
Common stock, no par value, authorized:
100,000,000 shares: issued and outstanding
15,412,500 and 13,850,000 in 2000 and 1999,
respectively 1,172,500 349,000
Deficit (1,063,917) (205,713)
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Subsequent event (note 10) 108,583 143,287
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$ 157,324 $ 155,321
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See accompanying notes to financial statements.
2
REQUESTAMERICA.COM, INC.
Statements of Operations and Deficit
Years ended December 31, 2000 and 1999
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2000 1999
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Revenue $ 37,207 $ 2,976
Operating expenses:
Personnel 694,304 127,093
Facilities 48,240 16,307
Other operating costs 46,216 15,346
Selling expenses 46,474 32,437
General and administrative 66,427 16,560
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901,661 207,743
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Loss from operations (864,454) (204,767)
Interest income (expense) 7,050 (146)
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Loss before taxes (857,404) (204,913)
Income tax provision (note 7) 800 800
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Net loss $ (858,204) $ (205,713)
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Net loss per common share, basic and diluted $ (0.06) $ (0.02)
Weighted average shares outstanding,
Basic and diluted (Note 3(i)) 15,204,555 10,678,767
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See accompanying notes to financial statements.
3
REQUESTAMERICA.COM, INC.
Statement of Stockholders' Equity
Years ended December 31, 2000 and 1999
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Stock-
Common stock holders'
Shares Amount Deficit equity
- ----------------------------------------------------------------------------
Balance, January 1, 1999 - $ - $ - $ -
Issuance of common stock 13,850,000 349,000 - 349,000
Net loss - - (205,713) (205,713)
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Balance, December 31, 1999 13,850,000 349,000 (205,713) 143,287
Issuance of common stock
for cash 1,537,500 821,000 - 821,000
Stock options exercised
for cash 25,000 2,500 - 2,500
Net loss - - (858,204) (858,204)
- ----------------------------------------------------------------------------
Balance, December 31, 2000 15,412,500 $ 1,172,500 $(1,063,917) $ 108,583
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See accompanying notes to financial statements.
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REQUESTAMERICA.COM, INC.
Statements of Cash Flows
Years ended December 31, 2000 and 1999
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2000 1999
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Cash provided by (used in):
Cash flows from operating activities:
Net loss $ (858,204) $ (205,713)
Depreciation and amortization,
which do not involve cash 7,788 1,219
Changes in non-cash working capital and
other assets and liabilities:
Accounts receivable (4,107) -
Other current assets (386) (1,098)
Accounts payable 10,364 945
Payroll taxes payable 15,714 187
Deferred revenue 17,875 1,796
Income taxes payable (800) 800
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Net cash used in operating activities (811,756) (201,864)
Cash flows from investing activities:
Additions to equipment and furniture (41,014) (7,213)
Deferred acquisition costs (22,488) -
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Net cash used in investing activities (63,502) (7,213)
Cash flows from financing activities:
Issuance of common stock 821,000 349,000
Stock options exercised 2,500 -
Line of credit advances (payments) (4,814) 4,814
Issuance of capitalized lease obligation - 4,468
Payments on capitalized lease obligation (1,632) (976)
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Net cash provided by financing activities 817,054 357,306
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Increase (decrease) in cash and cash equivalents (58,204) 148,229
Cash and cash equivalents, beginning of year 148,229 -
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Cash, end of year $ 90,025 $ 148,229
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Supplemental cash flow information:
Income taxes paid $ 1,600 $ -
Interest paid 771 459
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See accompanying notes to financial statements.
5
REQUESTAMERICA.COM, INC.
Notes to Financial Statements
Years ended December 31, 2000 and 1999
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1. The Company and description of business:
RequestAmerica.com, Inc. (the "Company") was formed in
1998 and incorporated January 27, 1999 under the laws of
the State of California. The Company changed its name,
DoingBusinessInAmerica.com, to RequestAmerica.com, Inc. in
January 2000 and reissued common stock at a conversion
rate of 100-for-1 in the form of a stock split. The
accompanying financial statements reflect the stock split
on a retroactive basis in all periods presented. The
Company operates as an interactive, internet-based,
national clearing house for small business on-line
exchange in the B2B and G2B marketplace. Its services are
designed to provide buyers a large group of vendors from
which to select and sellers a targeted source of sales
leads.
2. Liquidity and future operations:
The Company has earned minimal revenues, and experienced
decreased working capital and operating losses in 1999 and
2000. These factors, the Company's inability to execute
its business plan model and other market-driven issues,
create an uncertainty about the Company's ability to
continue as a going concern. Management believes that it
has mitigated these issues by the transaction described in
note 10.
3. Significant accounting policies:
(a) Use of estimates:
The preparation of financial statements in accordance
with generally accepted accounting principles in the
United States of America requires management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures 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 the estimates used in
the preparation of these financial statements.
(b) Cash and equivalents:
For purposes of the statements of cash flows, the
Company considers all unrestricted highly liquid
investments with an initial maturity of three months or
less to be cash equivalents. Accordingly, the Company's
money market fund investments are treated as cash
equivalents and included in cash in the accompanying
financial statements.
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REQUESTAMERICA.COM, INC.
Notes to Financial Statements
Years ended December 31, 2000 and 1999
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3. Significant accounting policies (continued):
(c) Furniture and equipment:
Furniture and equipment are recorded at cost and
depreciated utilizing the straight-line method over
their useful lives of five years
(d) Deferred acquisiton costs:
Costs relating to the pending acquisition of the Company
by Worldbid Corporation have been deferred and will be
expensed once the transaction is completed.
(e) Advertising costs:
All costs associated with advertising and promotion are
expensed in the year incurred. Advertising expense
aggregated approximately $46,000, and $32,000 for the
years ended December 31, 2000 and 1999, respectively.
(f) Income taxes:
The Company follows the asset and liability method of
accounting for income taxes. Under this method,
deferred tax assets and liabilities are recognized for
the future consequences attributable to differences
between the financial statement carrying amounts of
existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are
expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that
includes the enactment date. To the extent that it is
not more likely than not that a deferred tax asset will
be realized, a valuation allowance is provided.
(g) Personnel:
During the year ended December 31, 2000, the Company
ceased all employment contracts and agreements and
currently leases all of its staff and corporate
personnel from an outside agency. Accordingly, the
Company has no liabilities for employee-related
expenditures including compensated absences and
insurance.
(h) Revenue recognition:
The Company offers its subscribers monthly and annual
service contracts. Recognition of revenue on unexpired
monthly and annual contracts is recognized on a
straight-line basis over the remaining life of the
contract.
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REQUESTAMERICA.COM, INC.
Notes to Financial Statements
Years ended December 31, 2000 and 1999
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3. Significant accounting policies (continued):
(i) Net loss per share:
As the Company generated net losses in each of the
periods presented, basic and diluted net loss per share
is the same as the issue of any exercise of options and
would be anti-dilutive.
4. Furniture and equipment:
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2000 1999
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Computer equipment $ 39,249 $ 5,937
Furniture and office equipment 8,978 1,276
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48,227 7,213
Less accumulated depreciation 9,007 1,219
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Net equipment and furniture $ 39,220 $ 5,994
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5. Leases:
At December 31, 2000 and 1999, future minimum annual rental commitments
under non-cancelable lease obligations are as follows:
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Capital
leases
- ----------------------------------------------------------------------------
2001 1,995
- ----------------------------------------------------------------------------
Total minimum lease payments 1,995
Less amount representing interest 135
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Present value of net minimum lease payments $ 1,860
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The Company has commitments of $9,748 in 2001 under
operating leases.
6. Line of credit:
The Company has a line of credit providing maximum funding
of $15,000 at prime plus 4.75% and is guaranteed by the
Company's majority shareholder. At December 31, 1999,
borrowings aggregated $4,814. At December 31, 2000, there
were no borrowings outstanding. The line was canceled
during 2001.
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REQUESTAMERICA.COM, INC.
Notes to Financial Statements
Years ended December 31, 2000 and 1999
============================================================================
7. Income taxes:
Current income taxes are computed at statutory rates on pre-
tax income. Deferred taxes would be recorded based on
differences in the carrying values of assets and liabilities
for financial statement and income tax purposes. At
December 31, 2000, the Company has elected to carry forward
net operating losses for federal and state income tax
purposes of approximately $1.2 million that may be available
to reduce future taxable income to 2015. As utilization of
such operating losses for tax purposes is not assured, the
deferred tax asset has been fully reserved through the
recording of a 100% valuation allowance. These operating
losses may be limited to the extent an "ownership change"
occurs.
The components of the deferred tax asset as of December 31,
2000 are as follows:
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2000 1999
- ----------------------------------------------------------------------------
Deferred tax asset:
Net operating loss carry forward $ 457,000 $ 75,000
Less valuation allowance (457,000) (75,000)
- ----------------------------------------------------------------------------
Net deferred tax $ - $ -
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Net operating losses (expressed in thousands of dollars)
expire as follows:
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2014 197
2015 1,039
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Total $ 1,236
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8. Common stock options:
During 2000, the Company reserved 3,828,500 shares for
issuance under a stock option plan (the Plan). The Plan
provides for the grant of stock options or shares of
restricted stock to employees and key advisors (an
"Optionee") of the Company. Options granted under the Plan
vest immediately and expire ten years from the date of
grant.
During 2000, the Company granted a total of 1,056,500 stock
options at an exercise price of $0.10 (an amount that
approximates or exceeds the market value of the Company
stock on the date of grant) were granted to certain
employees. The Company recorded no compensation expense
relating to these options, as there was no implicit benefit
derived from the exercise price being less than market
value. 25,000 options were exercised on December 31, 2000.
The remaining contractual life of the options is 9.5 years.
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REQUESTAMERICA.COM, INC.
Notes to Financial Statements
Years ended December 31, 2000 and 1999
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9. Concentration of risk and contingencies:
The Company has a concentrated credit risk for cash and
cash equivalents because it maintains deposits in banks
that sometimes exceed amounts insured by the Federal
Deposit Insurance Corporation
10. Subsequent event:
The Company was acquired by Worldbid Corporation (parent)
by means of a merger with the parent's subsidiary,
Worldbid (Acquisition) Company, during March 2001.
Worldbid Corporation exchanged 750,000 shares of its
common stock for all of the RequestAmerica.com, Inc.
common stock outstanding and exchanged stock options for
the Company's 1,031,500 granted but unexercised stock
options. In addition, the Company has agreed to issue up
to an additional 750,000 common shares in the future,
should certain performance targets be met. The Company
incurred $22,488 in professional costs in connection with
the acquisition that were classified as deferred
acquisition costs as of December 31, 2000.
Subsequently, the Company has planned to move its
operations to Worldbid Corporation's corporate
headquarters in Canada and is in the process of selling
substantially all of its U.S. based assets. The Company's
majority stockholder was recently named President of
Worldbid Corporation and is in the process of completing
the acquisition.
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