UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended October 31, 2001
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act
of 1934 For the transition period _____________ to
Commission File Number 0-26729
-------
WORLDBID CORPORATION
__________________________________________________
(Exact name of small Business Issuer as specified in its charter)
NEVADA 88-0427619
- -------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
810 PEACE PORTAL DRIVE, SUITE 201
BLAINE, WA 98230
- --------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number,
including area code: (360) 332-1752
--------------
--------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) 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 issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days [X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 24,155,953 shares of $0.00001 par
value common stock outstanding as of November 30, 2001.
1
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and Item 310 (b) of Regulation S-B, and,
therefore, do not include all information and footnotes necessary for a complete
presentation of financial position, results of operations, cash flows, and
stockholders' equity in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments considered necessary
for a fair presentation of the results of operations and financial position have
been included and all such adjustments are of a normal recurring nature.
Operating results for the six months ended October 31, 2001 are not necessarily
indicative of the results that can be expected for the year ending April 30,
2002.
2
WORLDBID CORPORATION
AND SUBSIDIARIES
Consolidated Financial Statements
Unaudited
Six months ended October 31, 2001 and 2000
3
WORLDBID CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
Oct. 31 April 30
Assets 2001 2001
Current assets:
Cash and cash equivalents $ 5,348 $ 45,217
Trade accounts receivable 972 14,668
Receivables, other 47,604 41,378
Prepaid expenses - 21,916
---------- ----------
Total current assets 53,924 123,179
Surety Deposit 10,000 -
Debt Issuance Costs 29,427 -
Property, plant and equipment, less
accumulated depreciation 198,729 293,660
Intangible assets, less accumulated
amortization 158,771 207,200
---------- ----------
$ 450,851 $ 624,039
========== ==========
Liabilities and Stockholders' Deficit
Current liabilities:
Notes payable 25,000 100,000
Accounts payable and accrued expenses $ 518,330 $ 566,253
Shareholder loans 231,450 223,450
---------- ----------
Total current liabilities,
being total liabilities 774,780 889,703
15% Guaranteed Convertible Notes 136,000 -
Stockholders' equity:
Common shares 24,156 21,601
Additional paid-in capital 4,562,718 4,082,473
Contributed surplus 38,200 -
Deficit (5,095,265) (4,334,934)
---------- -----------
Accumulated other comprehensive loss (10,262) (34,804)
---------- -----------
Total stockholders' deficit (459,929) (265,664)
---------- -----------
$ 450,851 $ 624,039
========== ===========
Liquidity and future operations (note 2)
Commitments and contingencies (note 8)
See accompanying notes to the unaudited financial statements.
4
WORLDBID CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations and Deficit
Unaudited
Three Months Ended Six months ended
Oct. 31, 2001 Oct. 31, 2000 Oct. 31, 2001 Oct. 31, 2000
------------- ------------- ------------- -------------
Revenues:
Advertising $ 7,544 $ 13,689 $ 7,773 $ 44,455
Membership and partnership fees 89,503 - 156,420 -
------------- ------------- ------------- -------------
97,047 13,689 164,193 44,445
Expenses:
Selling, general and administrative
expenses (note 8) 276,440 813,897 745,872 1,624,445
Interest expense 10,495 38,942 31,501 39,666
Depreciation and amortization 61,684 22,006 125,151 42,006
Loss on disposal of fixed assets - - 22,000 -
------------- ------------- ------------- -------------
Total expenses 348,619 874,845 924,524 1,706,117
------------- ------------- ------------- -------------
Net loss 251,572 861,156 760,331 1,661,662
Other comprehensive loss: foreign currency
translation adjustment 45,066 - 46,586 -
------------- ------------- ------------- -------------
Comprehensive loss 206,506 861,156 $ 713,745 $ 1,661,662
============= ============= ============= =============
Deficit, beginning of period 4,843,693 1,976,718 $ 4,334,934 $ 1,176,212
Net loss for period 251,572 861,156 760,331 1,661,662
------------- ------------- ------------- -------------
Deficit, end of period 5,095,265 2,837,874 $ 5,095,265 $ 2,837,874
Net loss per common share - basic
and diluted $ (0.01) $ 0.06 $ (0.03) $ 0.12
Weighted average number of common shares
Outstanding 23,887,693 14,526,000 23,660,845 14,048,413
<FN>
See accompanying notes to the unaudited financial statements.
5
WORLDBID CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Unaudited
Six months ended
Oct. 31 Oct. 31
2001 2000
---------- -----------
Cash flows from operating activities: $ (760,331) $ (1,661,662)
Items not involving cash
Amortization 125,151 42,006
Foreign exchange on subsidiary operations 45,586 9,392
Loss on disposal of fixed assets 22,000 -
Services received in exchange for equity 4,000 -
Change in non-cash working capital items
Accounts receivable 13,696 (19,707)
Receivables, other (6,226) -
Prepaid expenses 11,916 (118,062)
Accounts payable and accrued expenses (47,993) 295,950
---------- -----------
Net Cash used in operating
Activities (592,201) (1,452,083)
---------- -----------
Cash flows from investing activities:
Capital expenditures (12,668) (137,396)
---------- -----------
Net cash used in investing
Activities (12,668) (137,396)
---------- -----------
Cash flows from financing activities:
Proceeds from issuance of notes payable 25,000) -
Repayment of notes payable (100,000) -
Proceeds from shareholder loans, net 8,000 426,250
Proceeds from issuance of common stock 496,000 681,250
Proceeds from issuance of convertible notes 136,000 -
Share subscriptions - 500,000
---------- -----------
Net cash provided by financing
Activities 565,000 1,607,500
---------- -----------
Net increase (decrease) in cash and cash
equivalents (39,869) 18,021
Cash and cash equivalents at beginning
of period 45,217 86,911
---------- -----------
Cash and cash equivalents at end of period $ 5,348 $ 104,932
========== ===========
See accompanying notes to the unaudited financial statements.
6
WORLDBID CORPORATION
AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements (in US $)
Six months ended October 31, 2001 and 2000
(1) Business and basis of presentation:
Worldbid Corporation (the "Company") was incorporated on August 10, 1998 in the
State of Nevada as Tethercam Systems, Inc. On January 15, 1999 the Company
changed its name to Worldbid Corporation. The Company is engaged in the
business of facilitating electronic commerce via the internet through the
operation of an online business-to-business world trade web site. The Company
operates in one business segment. The Company has consolidated its two
wholly-owned subsidiary companies: RequestAmerica.com, Inc. and Worldbid Canada
Corporation. All significant inter-company balances and transactions have been
eliminated in the consolidation.
The unaudited consolidated financial statements of the Company at October 31,
2001 and for the six month period then ended include the accounts of the Company
and its wholly-owned subsidiaries and reflect all adjustments (consisting only
of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the financial position and operating
results for the interim periods. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted in these interim
statements under the rules and regulations of the Securities and Exchange
Commission ("SEC"). Accounting policies used in fiscal 2002 are consistent with
those used in fiscal 2001. The results of operations for the six months ended
October 31, 2001 are not necessarily indicative of the results for the entire
fiscal year ending April 30, 2002. These interim financial statements should be
read in conjunction with the financial statements for the fiscal year ended
April 30, 2001 and the notes thereto included in the Company's Form 10-KSB filed
with the SEC on August 14, 2001. The consolidated financial statements have
been prepared in accordance with generally accepted accounting principles in the
United States.
(2) Liquidity and future operations:
The Company has sustained net losses and negative cash flows from operations
since its inception. At October 31, 2001 the Company has negative working
capital of $720,856. The Company's ability to meet its obligations in the
ordinary course of business is dependent upon its ability to establish
profitable operations and to obtain additional funding through public or private
equity financing, collaborative or other arrangements with corporate sources, or
other sources. Management is seeking to increase revenues through continued
marketing of its services; however additional funding will be required.
Management is working to obtain sufficient working capital from external sources
in order to continue operations. There is however no assurance that the
aforementioned events, including the receipt of additional funding, will occur
or be successful.
7
WORLDBID CORPORATION
AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements (in US $)
Six months ended October 31, 2001 and 2000
(3) Foreign currency:
The functional currency of the operations of the Company's wholly-owned Canadian
operating subsidiary is the Canadian dollar. Assets and liabilities measured in
Canadian dollars are translated into United States dollars using exchange rates
in effect at the balance sheets date with revenue and expense transactions
translated using average exchange rates prevailing during the period. Exchange
gains and losses arising on this translation are excluded from the determination
of income and reported as foreign currency translation adjustment (which is
included in the comprehensive income (loss) in stockholders' deficit.
(4) Net loss per share:
The Company computes net loss per share in accordance with SFAS No. 128,
"Earnings per Share". Under the provisions of SFAS No. 128, basic loss per
share is computed using the weighted average number of common stock outstanding
during the periods. Diluted loss per share is computed using the weighted
average number of common and potentially dilative common stock outstanding
during the period. As the Company generated net losses in each of the periods
presented, the basic and diluted net loss per share is the same as any exercise
of options or warrants would be anti-dilutive.
(5) Acquisitions:
(a) RequestAmerica.com, Inc. ("RA"):
On February 23, 2001, the Company purchased all the common stock of RA for
750,000 shares of its common stock (comprised of 702,955 Worldbid Corporation
common shares and options which can be converted to 47,045 Worldbid Corporation
common shares) with a combined fair value (determined by using an average of
recent trading prices for the Company's stock) of approximately $225,000. A
further 750,000 common shares are contingently issuable should the Company
achieve certain profitability targets by February 2003.
Substantially all of the cost of the acquisition was attributable to the
intangible assets acquired.
(b) Worldbid.com:
On February 15, 1999 acquired a website and all other rights from Global
Internet Holdings Ltd. ("GIH"). The Company issued a total of 6,000,000
restricted shares of common stock with a $30,000 value pursuant to the
acquisition agreement.
The Company and GIH have agreed that the GIH shares would be held in escrow for
a period of four years on the terms and conditions of an escrow agreement
between the Company. Shares not yet released will be released to GIH in
accordance with the Escrow Agreement and are summarized below:
Anniversary of closing date Number of shares
------------------------------ ------------------
February 15, 2002 2,000,000 shares
February 15, 2003 2,000,000 shares
8
WORLDBID CORPORATION
AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements (in US $)
Six months ended October 31, 2001 and 2000
(6) Share purchase options
During the six months ended October 31, 2001, the directors approved an
extension of exercise dates and reduction of exercise prices for all of
Worldbid's presently outstanding share purchase warrants and a reduction of the
share exercise price of $0.10 per share
(7) 15% Guaranteed Convertible Notes
Under an Offering Memorandum dated September 20, 2001, the Company is offering
on a best efforts basis up to 1,500 Units, each consisting of a $1,000, 15%
interest payable annually, guaranteed convertible note and 20,000 Series X
purchase warrants. The notes are guaranteed by the Company's wholly-owned
subsidiary Worldbid Canada Corporation and are secured by a general security
agreement charging present and future acquired assets of the subsidiary that
will be subordinated to certain indebtedness of the subsidiary. At the option
of the holder, the note may be converted into common shares of the Company on
the basis of the lesser of 50% of the average market price of the Company's
shares for the 10 days preceding conversion or $0.05 per share.
Worldbid at its option may elect to issue common shares in satisfaction of its
interest obligation on the basis of 75% of the average market price of the
Company's shares for the 10-day period immediately preceding the interest
payment date.
The notes when issued will be due on September 30, 2004.
Each warrant will entitle the holder to purchase one common share of the Company
on the following basis
(a) $0.05 per share if exercised prior to September 30, 2002
(b) $0.10 per share if exercised after September 30, 2002 and prior to
September 30, 2003 and
(c) $0.15 per share if exercised after September 30, 2003 and prior to
September 30, 2004.
(8) Commitments and contingencies:
(a) Lease obligations:
The Company leases office space under a non-cancelable operating lease agreement
that expires on July 31, 2003. Future minimal rental commitments are as
follows:
Year Amount
---- ------
2002 $ 38,213
2003 $ 76,427
2004 $ 19,107
The Company is also obligated under a lease for a period of 60 days from date of
notice of cancellation with its server provider in the amount of $7,516.
9
WORLDBID CORPORATION
AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements (in US $)
Six months ended October 31, 2001 and 2000
(b) Legal proceedings:
The Company is defendant in a suit that seeks the return of certain funds
invested in the Company, plus damages and costs. Specifically, the Bank of
Montreal (the "Bank") has claimed for the return of certain monies invested in
the Company from funds they claim were misappropriated from the Bank. The
Company has filed a statement of defense denying any liability on the basis that
no misappropriated funds were received by it.
Management and legal counsel for the Company are of the opinion that the Bank's
claim is without merit and the Company will prevail in defending the suit.
(c) Contingent share issue:
The company is currently resolving a dispute with a third party that may result
in the issue of additional shares for no additional cash consideration.
10
<Page>
(9) Selling, general and administrative expense:
Three Months Ended Six months ended
Oct. 31 Oct. 31 Oct. 31 Oct. 31
2001 2000 2001 2000
---------- ---------- ---------- ----------
Selling expenses:
Salaries and benefits $28,012 $157,003 $35,280 $301,153
Commissions 2,506 1,317 10,205 2,553
Marketing Expense 10,261 372,278 48,763 677,784
Travel 18,016 18,665 27,012 92,690
Trade meetings - 3 - 1,745
---------- ---------- ---------- ----------
58,795 549,266 121,260 1,075,925
General and administrative expenses:
Salaries and benefits 153,224 78,202 351,979 148,192
Technical support and operations 37,270 84,335 85,373 136,652
Insurance 6 15,665 747 24,111
Bad debt expense 6,063 1,360 15,018 1,360
Telephone and facsimile 4,513 16,153 11,077 24,154
Professional services 18,313 38,050 111,794 162,468
Other (1,744) 30,866 42,624 51,583
---------- ---------- ---------- ----------
217,644 264,631 624,612 548,520
---------- ---------- ---------- ----------
Total selling, general and
administrative expenses $276,440 $813,897 $745,872 $1,624,445
========== ========== ========== ==========
11
Item 2. Management's Discussion and Analysis or Plan of Operations
FORWARD LOOKING STATEMENTS
The information in this discussion 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. These
forward-looking statements involve risks and uncertainties, including statements
regarding the Company's capital needs, business strategy and expectations. Any
statements contained herein that are not statements of historical facts may be
deemed to be forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as "may", "will", "should",
"expect", "plan", "Intend", "anticipate", "believe", estimate", "predict",
"potential" or "continue", the negative of such terms or other comparable
terminology. Actual events or results may differ materially. In evaluating
these statements, you should consider various factors, including the risks
outlined in the Risk Factors section below, and, from time to time, in other
reports the Company files with the SEC. These factors may cause the Company's
actual results to differ materially from any forward-looking statement. The
Company disclaims any obligation to publicly update these statements, or
disclose any difference between its actual results and those reflected in these
statements. The information constitutes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
OVERVIEW
Worldbid Corporation owns and operates an international business-to-business and
government-to-business facilitation service, which combines proprietary software
with the power of the Internet to bring buyers and sellers together from around
the world for interactive trade. We were founded on the basis of a simple
premise: small, mid-sized and even large companies face numerous linguistic,
cultural and logistical barriers when trying to find new buyers nationally and
internationally or when trying to develop new sources of products or materials
nationally and internationally. We have designed our Worldbid.com Internet web
site to enable companies throughout the world to procure, source (buy) and
tender (sell) products and services nationally and internationally.
We currently earn revenue from the following sources:
1. sales of membership subscriptions to businesses using our Worldbid web
site;
2. sales of data gathered from our Worldbid web sites;
3. sales of advertising placed on our Worldbid web sites and on e-mail trade
notifications that are transmitted via the Worldbid web site to businesses.
We began generating advertising revenues in August 1999. We have only recently
begun to charge membership subscription fees for our Worldbid web sites. We are
presently repositioning our revenue model to a revenue model based on charging
fees to businesses
11
for membership subscriptions to our Worldbid web sites from one that earns
revenues from advertising on e-mail notifications. As we undertake this
repositioning strategy, our revenues from advertising are becoming a smaller
proportion of overall revenues. We have undertaken this repositioning strategy
based on our belief that our Worldbid web sites now offer sufficient value to
businesses to justify charging a fee to businesses that choose to become members
of our Worldbid web sites. However, there is no assurance that our fee-based
subscription revenue model will be commercially successful.
RESULTS OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 2001 COMPARED TO SIX MONTHS ENDED OCTOBER 31, 2000
Revenues
We had revenues of $164,193 for the six months ended October 31, 2001, compared
to $44,455 for the six months ended October 31, 2000. Our revenues from sales of
membership subscriptions to our Worldbid web sites for the six months ended
October 31, 2001 were $156,420, representing 95.3% of our total revenues. We
did not earn any revenue from subscription sales during the six months ended
October 31, 2000. Our revenues from advertising on e-mail trade notifications
declined to $7,773 for the six months ended October 31, 2001, compared to
$44,455 for the six months ended October 31, 2000. The increase in overall
revenues was attributable to revenues from subscriptions sales and reflects our
decision to pursue revenues from subscriptions to our Worldbid web sites as our
primary source of revenue. The decrease in revenues from advertising reflects
both the general market decline in advertising revenues on the Internet and our
decision to pursue revenues from sales of membership subscriptions to our
Worldbid web sites. We anticipate that revenue from membership subscriptions
will continue to increase if we are successful in attracting new users to the
Worldbid web sites who are prepared to pay a subscription fee and in convincing
current users of the Worldbid web sites to become paying subscribers. We
anticipate that revenue from advertisements on e-mail trade notifications will
not increase materially within the current fiscal year.
Operating Expenses
Our operating expenses were $924,524 for the six months ended October 31, 2001,
compared to operating expenses of $1,706,117 for the six months ended October
31, 2000. The decrease in our operating expenses of $781,593 reflects our
decision to reduce our overall business infrastructure and to scale back our
selling and marketing expenses in the six months ended October 31, 2001 due to
limited working capital.
Our selling, general and administrative expenses decreased to $745,872 for the
six months ended October 31, 2001, compared to $1,624,445 for the six months
ended October 31, 2000. The decrease in our selling, general and administrative
expenses in the amount of $878,573 was primarily the result of our decision to
scale back our selling and marketing expenses due to limited working capital.
We expect that our selling, general and administration expenses may increase
substantially if we are able to achieve the necessary
12
financing to enable us to implement our expansion strategy in accordance with
our business plan. We anticipate our operating expenses will decrease if we are
not able to raise sufficient financing to enable us to maintain our operations
and we are forced to reduce our business operations to reflect our lack of
adequate working capital.
During the six months ended October 31, 2001, we experienced substantial
decreases in selling costs. Our selling expenses were reduced to $121,260 for
the six months ended October 31, 2001, compared to $1,075,925 for the six months
ended October 31, 2000. The reduction in selling expenses reflects our decision
to reduce our selling expenses based on the fact that we did not have sufficient
working capital to finance our plans for the selling and marketing of our
Worldbid web sites and our services while maintaining our web site operations.
We expect selling expenses to increase if we are able to achieve additional
financing as we plan to increase selling and marketing expenditures to develop
and promote our regional and vertical partner sites, and we plan to implement
marketing programs to promote Worldbid and our subscription fee based services.
Our interest expense was $31,501 for the six months ended October 31, 2001,
compared to $39,666 for the six months ended October 31, 2000. The interest
expense was incurred pursuant to loans that have been advanced to enable us to
maintain our business operations.
Net Loss
We recorded a net loss of $713,765 for the six months ended October 31, 2001,
compared to a net loss of $1,661,662 for the six months ended October 31, 2000.
The reduced loss reflects the marginal increase in our revenues and the
substantial reduction to our selling, general and administrative expenses during
the six months ended October 31, 2001, compared to the six months ended October
31, 2000.
If we are able to achieve the required financing, we anticipate that our
operating expenses will increase as we carry out our business strategy and plan
of operations due to the following factors:
1. we plan a substantial marketing and sales program over the next twelve
months in order to increase our paid registered user base and to develop and
promote our regional and vertical partner sites;
2. we anticipate incurring increased expenses associated with anticipated
increased usage of the Worldbid web sites and expansion of our business;
3. we anticipate incurring increased expenses associated with developing
programs and software systems required to handle a larger membership base; and
4. we anticipate incurring additional expenses associated with completing
and managing our plan of operation and expansion efforts.
We will not be able to proceed with these plans if we do not achieve the
required financing.
13
If we are able to proceed with these plans but the increased operating expenses
incurred do not result in us achieving increased revenues, then our losses will
increase.
LIQUIDITY AND CAPITAL RESOURCES
We had cash on hand of $5,348 as at October 31, 2001, compared to cash on hand
of $45,217 as at April 30, 2001. We had a working capital deficit of $720,856
as at October 31, 2001, compared to a working capital deficit of $766,524 at
April 30, 2001.
We were dependent on sales of our equity securities and loans from certain of
our shareholders during the six months ended October 31, 2001 to finance our
business operations. We realized the following proceeds from sales of equity
securities during the three months ended October 31, 2001:
A. $31,000 from the sale of 155,000 shares and 77,500 share purchase
warrants on May 10, 2001; and
B. $136,000 from the sale of our 15% guaranteed convertible notes.
We have also financed our business operations using loans advanced by Logan
Anderson, our chief executive officer and one of our directors, and Mr. Harold
Moll, the owner of more than 5% of our common stock. The total amount of
shareholders loans payable by us to Mr. Anderson and Mr. Moll was $231,450 as of
October 31, 2001, compared to $223,450 as of April 30, 2001. There is no
assurance that either Mr. Anderson or Mr. Moll will advance further funds to us
in order to finance our business operations.
Our monthly marketing and operating expenses are approximately $120,000 per
month. Our current cash reserves are not sufficient to enable us to sustain our
business operations for a period of more than one month. Accordingly, we
immediately require additional financing to finance our business operations if
we are to continue as a going concern. We are presently pursuing additional
financing and we anticipate that any additional financing would be through sales
of secured convertible notes and share purchase warrants, as discussed below,
sales of our common stock or through loans from our shareholders. However, we do
not have any commitments in place for the sale of any of our securities and
there is no assurance that we will be able to raise the additional capital that
we require to continue operations. In the event that we are unable to raise
additional financing on acceptable terms, we plan to scale back our business
operations in order to reduce expenditures. Actions that we may take to reduce
our expenditures may include: (i) reducing our marketing and sales efforts; (ii)
reducing staff; (iii) reducing our Web site operations and the level of services
that we provide; (iv) selling assets; (v) disposing of business units; or (vi)
suspending our operations.
During the three months ended October 31, 2001, our board of directors approved
an offering of secured convertible notes and share purchase warrants in order
enable us to raise the funds required for us to sustain our business operations.
The offering consists of the offering of up to 1,500 units. Each unit consists
of one $1,000 15% guaranteed convertible note and 20,000 Series X share purchase
warrants (the "Series X Share Purchase Warrants"). The
14
offering is being made pursuant to Regulation S of the Securities Act of 1933.
The convertible notes will be due on September 30, 2004 and will bear interest
at 15% per annum payable annually. The notes are guaranteed by Worldbid's
wholly-owned subsidiary Worldbid Canada Corporation (the "Subsidiary") which
guarantee will be secured by a general security agreement charging present and
future acquired assets of the Subsidiary. The notes will be convertible into
common shares of Worldbid, at the option of the holder, on the basis of the
lesser of 50% of the average market price of Worldbid's shares for the 10 day
period preceding conversion or $0.05 per share. Worldbid may at its option elect
to issue common shares in satisfaction of its interest obligations on the basis
of 75% of the average market price of Worldbid's shares for the 10 day period
preceding the interest payment date. Each Series X Share Purchase Warrant will
entitle the holder to purchase one common share of Worldbid's common stock on
the following basis:
a. $0.05 per share if exercised prior to September 30, 2002;
b. $0.10 per share if exercised after September 30, 2002 and prior to
September 30, 2003; and
c. $0.15 per share if exercised after September 30, 2003 and prior to
September 30, 2004.
We completed sales of $136,000 of our 15% guaranteed convertible notes and
Series X Share Purchase Warrants during the three months ended October 31, 2001.
We have completed sales of an additional $14,000 of our 15% guaranteed
convertible notes and Series X Share Purchase Warrants subsequent to October 31,
2001. There is no assurance that we will complete any additional sales of
the proposed convertible secured notes.
During the three months ended October 31, 2001, our directors also approved:
a. an extension of exercise dates and reduction of exercise prices for all
of Worldbid's presently outstanding share purchase warrants such that the terms
of the outstanding warrants will be the same as the Series X Share Purchase
Warrants; and
b. a reduction of the exercise price of all outstanding stock options to an
exercise price of $0.10 per share.
Our board of directors is of the opinion that these measures taken during the
three months ended October 31, 2001 were necessary to ensure continued
development of Worldbid's business in the current difficult market situation
which has severely hampered Worldbid's ability to obtain equity financing to
meet the ongoing requirements of its expanding business. Our board of directors
is of the opinion that the consideration for the secured convertible notes and
the share purchase warrants is fair and adequate in view of the current trading
price of our common stock, recent sales of our common stock by Global Internet
Holdings Ltd. and the reluctance of outside investors to invest in our
securities, despite the best efforts of management to raise financing from sales
of our securities, due
15
to the current depressed market and due to our inability to achieve strong
revenue growth. Global Internet Holdings Ltd. is a company controlled by Mr.
Scott Wurtele, our former chief executive officer and a former director.
We anticipate that we will continue to incur losses for the foreseeable future,
as we expect to incur substantial marketing and operating expenses in
implementing our plan of operations. Our future financial results are uncertain
due to a number of factors, many of which are outside of our control. These
factors include the risk factors that we identified in our Form 10-KSB Annual
Report filed with the SEC on August 14, 2001. These risk factors include, but
are not limited to:
A. our ability to implement subscription fees for the Worldbid web sites
without significantly reducing the number of users of the Worldbid web sites,
the number of trade leads and the number of e-mail trade notifications;
B. the success of our strategic alliances and referral agreements for the
marketing of our Worldbid web sites;
C. our ability to raise additional capital necessary to implement our
business strategy and plan of operation;
D. our ability to compete with existing and new business-to-business
electronic commerce web sites;
E. the success of any marketing and promotional campaign which we conduct
for the Worldbid web sites.; and
F. our ability to continue to maintain business operations with reduced
operating capital.
16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We and our operating subsidiary, Worldbid Canada Corporation, have been named as
defendants in an action commenced by the Bank of Montreal in the Supreme Court
of British Columbia in June, 2001 against ourselves, Worldbid Canada Corporation
and Mr. Howard Thomson, our treasurer and chief financial officer and one of our
directors. This legal proceeding was reporting in our Form 10-QSB for the three
months ended July 31, 2001. There were no material developments in these legal
proceedings during the three months ended October 31, 2001.
We have been threatened with legal action by one of our investors who purchased
our securities during the three months ended July 31, 2001 as a result of our
decision to proceed with our offering of 15% guaranteed convertible notes and
Series X Share Purchase Warrants. The securities purchased were units, each of
which was comprised of one share of our common stock and one-half of one share
purchase warrant, at a price of $0.20 per share. Our board of directors is
considering resolving this threat of litigation by issuing additional shares of
our common stock to all purchasers of our $0.20 unit offering in consideration
of each purchaser executing a release in our favor of any and all claims arising
from their purchase of units.
Item 2. Changes in Securities
We completed the sale of 136 15% guaranteed convertible note and Series X Share
Purchase Warrants units during the three months ended October 31, 2001 for
proceeds of $136,000. Each unit sold consisted of one $1,000 15% guaranteed
convertible note and 20,000 Series X Share Purchase Warrants. The units were
offered and sold pursuant to Regulation S of the Securities Act of 1933 to
persons who are not "U.S. Persons", as defined in Regulation S. No commissions
or fees were paid in connection with the sales of units. The convertible notes
are due on September 30, 2004 and bear interest at 15% per annum payable
annually. The notes are guaranteed by Worldbid's wholly-owned subsidiary
Worldbid Canada Corporation (the "Subsidiary") which guarantee is secured by a
general security agreement charging present and future acquired assets of the
Subsidiary. The notes are convertible into common shares of Worldbid, at the
option of the holder, on the basis of the lesser of 50% of the average market
price of Worldbid's shares for the 10 day period preceding conversion or $0.05
per share. Worldbid may at its option elect to issue common shares in
satisfaction of its interest obligations on the basis of 75% of the average
market price of Worldbid's shares for the 10 day period preceding the interest
payment date. Each Series X Share Purchase Warrant will entitle the holder to
purchase one common share of Worldbid's common stock on the following basis:
a. $0.05 per share if exercised prior to September 30, 2002;
b. $0.10 per share if exercised after September 30, 2002 and prior to
September 30, 2003; and
17
c. $0.15 per share if exercised after September 30, 2003 and prior to
September 30, 2004.
We completed the sale of 155,000 units at a price of $0.20 per unit during the
three months ended October 31, 2001. We have received proceeds of $31,000 from
the sale of these units. Each unit was comprised of one share of our common
stock and one-half of one share purchase warrant. Each whole share purchase
warrant entitles the holder to purchase one share our common stock at a price
$0.05 per share if exercised prior to September 30, 2002, at a price of $0.10
per share if exercised after September 30, 2002 and prior to September 30, 2003;
and at a price of $0.15 per share if exercised after September 30, 2003 and
prior to September 30, 2004. A total of 155,000 shares and 77,500 share purchase
warrants were issued. Each purchaser was a non-US person. No commissions or fees
were paid in connection with the offering. The sales were completed pursuant to
Regulation S of the Act.
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Mr. David Kennet was appointed as our vice-president of business development on
November 28, 2001.
Item 6. Exhibits and Reports on Form 8-K.
EXHIBITS
Exhibit 4.1 Form of 15% Guaranteed Convertible Notes
Exhibit 4.2 Form of Series X Share Purchase Warrant
REPORTS ON FORM 8-K
None
18
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorised.
WORLDBID CORPORATION
By: /s/ Logan Anderson
________________________________________
Logan Anderson, Chief Executive Officer
Director
Date: December 21, 2001
By: /s/ Howard Thomson
________________________________________
Howard Thomson, Chief Financial Officer
Director
Date: December 21, 2001
19