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 July 31, 2002
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period to
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Commission File Number 0-26729
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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
--------------
NOT APPLICABLE
_____________________________________________________________________
(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: 24,155,955 shares of $0.001 par value
common stock outstanding as of September 16, 2002.
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 three months ended July 31, 2002 are not necessarily
indicative of the results that can be expected for the year ending April 30,
2003.
2
WORLDBID CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2002
(Unaudited)
(Stated in U.S. Dollars)
3
WORLDBID CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Stated in U.S. Dollars)
- --------------------------------------------------------------------------------
JULY 31 APRIL 30
2002 2002
- --------------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents $ 12,546 $ 20,049
Trade accounts receivable 4,951 2,300
Receivables, other 10,958 16,170
Prepaid expenses 670 2,839
------------ ------------
29,125 41,358
Surety Deposit - 10,000
Property, Plant And Equipment,
less accumulated depreciation 60,848 68,043
Intangible Assets, less accumulated amortization 7,623 103,818
------------ ------------
$ 97,596 $ 223,219
=======================================================================
LIABILITIES
Current
Notes payable $ 25,000 $ 25,000
Accounts payable and accrued liabilities 249,682 567,159
Shareholder loans - 381,900
------------ ------------
274,682 974,059
------------ ------------
15% Guaranteed Convertible Notes (Note 3) 1,031,500 265,000
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common Shares 24,156 24,156
Additional Paid-In Capital 4,562,718 4,562,718
Contributed Surplus 38,200 38,200
Deficit (5,826,235) (5,632,177)
Accumulated Other Comprehensive Loss (7,425) (8,737)
------------ ------------
(1,208,586) 1,015,840
------------ ------------
$ 97,596 $ 223,219
=======================================================================
Liquidity And Future Operations (Note 2)
See accompanying notes to the unaudited financial statements
4
WORLDBID CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Unaudited)
(Stated in U.S. Dollars)
THREE MONTHS ENDED
JULY 31
2002 2001
-------------------- ------------
Revenues
Advertising $ 2,960 $ 229
Membership and partnership fees 66,451 66,917
-------------------- ------------
69,411 67,146
-------------------- ------------
Expenses
Selling, general and administrative
expenses (Note 4) 136,617 469,432
Interest expense 23,099 21,006
Depreciation and amortization 9,537 63,467
Loss on disposal of fixed assets - 22,000
Goodwill impairment (Note 5) 94,216 -
-------------------- ------------
263,469 575,905
-------------------- ------------
Net Loss For The Period (194,058) (508,759)
Foreign Currency Translation Adjustment 1,312 1,500
-------------------- ------------
Comprehensive Loss $ (192,746) $ (507,259)
===========================================================================
Deficit, Beginning Of Period $ (5,632,177) $(4,334,934)
Net Loss For The Period (194,058) (508,759)
-------------------- ------------
Deficit, End Of Period $ (5,826,235) $(4,843,693)
===========================================================================
Net Loss Per Share -
Basic And Diluted $ (0.01) $ (0.02)
===========================================================================
Weighted Average Number Of
Common Shares Outstanding 24,155,955 23,660,845
===========================================================================
See accompanying notes to the unaudited financial statements
5
WORLDBID CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
THREE MONTHS ENDED
====================
JULY 31
2002 2001
---------- ----------
Cash Flows From Operating Activities
Net loss for the period $(194,058) $(508,759)
Items not involving cash:
Amortization 9,537 63,467
Goodwill impairment 94,216 -
Loss on disposal of fixed assets - 22,000
Services received in exchange for equity - 4,000
---------- ----------
(90,305) (419,292)
Change in non-cash working capital items:
Accounts receivable (2,651) 7,482
Receivables, other 5,212 (14,768)
Prepaid expenses 2,169 11,916
Accounts payable and accrued expenses 67,123 22,198
---------- ----------
(18,452) (392,464)
---------- ----------
Cash Flows From Investing Activity
Capital expenditures (363) (5,593)
---------- ----------
Cash Flows From Financing Activities
Repayment of notes payable - (100,000)
Proceeds from shareholder loans, net - (5,000)
Proceeds from issuance of common stock - 496,000
Proceeds from surety deposit 10,000 -
---------- ----------
10,000 391,000
---------- ----------
Effect Of Exchange Rate Changes On Cash 1,312 -
---------- ----------
Net Increase (Decrease) In Cash And Cash Equivalents (7,503) (7,057)
Cash And Cash Equivalents, Beginning Of Period 20,049 45,217
---------- ----------
Cash And Cash Equivalents, End Of Period $ 12,546 $ 38,160
============================================================================
See accompanying notes to the unaudited financial statements
6
WORLDBID CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2002
(Unaudited)
(Stated in U.S. Dollars)
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 wholly-owned
subsidiary company, 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 July 31, 2002,
and for the three 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 2003 are consistent with
those used in fiscal 2002 except as described in Note 5. The results of
operations for the three months ended July 31, 2002 are not necessarily
indicative of the results for the entire fiscal year ending April 30, 2003.
These interim financial statements should be read in conjunction with the
financial statements for the fiscal year ended April 30, 2002 and the notes
thereto included in the Company's Form 10-KSB. 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 July 31, 2002, the Company has negative working capital
of $245,557. 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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2002 AND 2001
(Unaudited)
(Stated in U.S. Dollars)
3. 15% GUARANTEED CONVERTIBLE NOTES
On September 14, 2001, the Company approved an offering of up to 1,500 units at
a price of $1,000 per unit. Each unit consists of one 15% guaranteed
convertible note in the principal amount of $1,000 and twenty thousand (20,000)
share purchase warrants. Each warrant entitles the holder to purchase one
additional share at a price of $0.05 per share up to September 30, 2002, $0.10
per share up to September 30, 2003, and at $0.15 per share up to September 30,
2004.
The notes fall due on September 30, 2004, bear interest at 15% per annum,
payable annually, and are secured by a general security agreement over the
assets of Worldbid Canada Corporation and by the subordination of intercompany
debt.
The notes are convertible into shares of common stock of the Company at the
option of the holder, on the basis of the lesser of 50% of the average market
price of the Company's shares for the ten day period preceding the conversion or
$0.05 per share.
The Company may, at its option, elect to issue shares of common stock for its
interest obligations on the basis of 75% of the average market price of the
Company's shares for the ten days immediately preceding the interest payment
date.
On July 31, 2002, the Company completed the sale of an additional 766.5 15%
convertible notes for proceeds of $766,500. Proceeds from the issue of the
convertible notes included $731,000 in amounts due to related parties and
shareholders converted to notes. As at July 31, 2002, 1,031.5 units of 15%
convertible notes are outstanding.
4. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
2002 2001
----------------
Selling expenses
Salaries and benefits $ 8,881 $ 7,269
Commissions - 7,699
Marketing expense 5,143 38,502
Travel - 8,996
Trade meetings - -
----------------
14,024 62,466
----------------
8
WORLDBID CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2002 AND 2001
(Unaudited)
(Stated in U.S. Dollars)
4. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Continued)
2002 2001
-------- --------
General and administrative expenses
Salaries and benefits $ 92,529 $198,755
Technical support and operations 13,323 48,103
Insurance - 741
Bad debt expense - 8,955
Telephone and facsimile 1,121 6,564
Professional services 11,683 99,481
Other 3,937 44,367
-------- --------
122,593 406,966
-------- --------
Total selling, general and administrative expenses $136,617 $469,432
==================
5. CHANGE IN ACCOUNTING POLICY
Effective May 1, 2002, the Company adopted the requirements of SFAS No. 142 -
"Goodwill and Other Intangible Assets". Under SFAS No. 142, goodwill and
indefinite-lived intangible assets are no longer amortized, but are reviewed
annually or more frequently if impairment indicators arise, for impairment.
During the quarter ended July 31, 2002, the Company recognized a goodwill
impairment loss of $94,216.
The following pro-forma information is provided to show the effect of the
adoption of SFAS No. 142 on the financial information of all periods presented
in this statement:
2002 2001
----------------------
Reported net loss for the period $(194,058) $(575,905)
Add back: Goodwill amortization - 24,969
----------------------
Adjusted net loss for the period $(194,058) $(550,936)
======================
Basic and diluted earnings per share
Reported net loss for the period $ (0.01) $ (0.02)
Goodwill amortization - -
----------------------
Adjusted net loss for the period $ (0.01) $ (0.02)
======================
9
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
discussed below, and, from time to time, in other reports the Company files with
the SEC, including the Company's Annual Report on Form 10-KSB for the year ended
April 30, 2002. 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 ("We" or "Worldbid") 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. up-front fees for partnership arrangements where we are paid for our web
site development services;
3. sales of data gathered from our Worldbid web sites;
4. 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 began to charge
membership subscription fees for our Worldbid web sites in April 2001. We have
repositioned our revenue model to a revenue model based primarily on charging
fees to businesses for membership subscriptions to our Worldbid web sites from
one that earns revenues from advertising on e-mail notifications. As we have
undertaken this repositioning strategy, our revenues from advertising have
become 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.
Our operating expenses continue to exceed our revenues. Accordingly, our
ability to continue our business operations is subject to our achieving
additional financing. See the discussion below under Liquidity and Financial
Condition. In order to address our shortage of cash and working capital, we
took the following measures during our fiscal year ended April 30, 2002 in order
to reduce our operating costs:
10
1. We have reduced our staffing level to the minimum number required to
continue to support our business operations. We now have a total of six
full-time equivalent consultants and five part-time consultants.
2. We have reduced travel, marketing and selling expenses in order to focus
our cash reserves on basic business operations.
3. We have given up our operations office in Victoria, British Columbia in
order to reduce our lease expense.
These measures have served to reduce our operating costs and our cash
requirements. However, these measures may also impact on our ability to continue
to achieve additional revenues from the expansion of our web site operations.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JULY 31, 2002 COMPARED TO THREE MONTHS ENDED JULY 31, 2001
Revenues
We had revenues of $69,411 for the three months ended July 31, 2002, compared to
$67,146 for the three months ended July 31, 2001. Our revenues from sales of
membership subscriptions to our Worldbid web sites and partnership fees for the
three months ended July 31, 2002 were $66,451, representing 95.7% of our total
revenues, compared to $66,917 for the three months ended July 31, 2001,
representing 99.7% of revenues. Revenues in connection with partnership
arrangements were comprised primarily of up-front fees paid by our partners for
web site development services, with the balance being comprised of our
proportionate share of web site membership subscription sales through the
partnership arrangement. Our revenues from advertising on e-mail trade
notifications increased to $2,960 for the three months ended July 31, 2002 from
$229 for the three months ended July 31, 2001.
Our revenues from membership subscriptions and partnership fees reflect our
decision to pursue revenues from subscriptions to our Worldbid web sites as our
primary source of revenue. See Overview above. Our minimal 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 $263,469 for the three months ended July 31, 2002,
compared to operating expenses of $575,905 for the three months ended July 31,
2001. The decrease in our operating expenses of $312,436, representing a 54%
decrease, reflects our decision to reduce our overall business infrastructure
and to scale back our selling and marketing expenses in the year ended April 30,
2002 due to limited working capital. See Overview above. We have continued to
maintain our reduced operating expenses since April 30, 2002 due to a lack of
financing to expand our operations.
Our selling, general and administrative expenses decreased to $136,617 for the
three months ended July 31, 2002, compared to $469,432 for the three months
ended July 31, 2001. The decrease in our selling, general and administrative
expenses in the amount of $332,815, representing a 71% decrease, was primarily
the result of our decision to scale back our selling and marketing expenses due
to limited working capital in the year ended April 30, 2002. We expect that our
selling, general and administration expenses may increase substantially if we
are able to achieve the necessary 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
11
not able to raise sufficient financing to enable us to maintain our operations
and we are forced to further reduce our business operations to reflect our lack
of adequate working capital.
Our general and administrative expenses decreased to $122,593 for the three
months ended July 31, 2002, compared to $406,966 for the three months ended July
31, 2001. The decrease in our general and administrative expenses in the amount
of $284,373, representing a 70% decrease, was primarily the result of measures
taken to reduce our overhead expenses during the year ended April 30, 2002.
These measures included a substantial reduction in both staff and facilities.
During the three months ended July 31, 2002, we incurred minimal selling
expenses in the amount of $14,024, compared to $62,466 for the three months
ended July 31, 2001. Our minimal 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 $23,099 for the three months ended July 31, 2002,
compared to $21,006 for the three months ended July 31, 2001. 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 comprehensive loss of $192,746 for the three months ended July 31,
2002, compared to a comprehensive loss of $507,259 for the three months ended
July 31, 2001. The reduced loss reflects the our constant level of revenues and
the substantial reduction to our selling, general and administrative expenses
during the three months ended July 31, 2002, compared to the three months ended
July 31, 2001.
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. 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 $12,546 as at July 31, 2002, compared to cash on hand of
$20,049 as at April 30, 2002. We had a working capital deficit of $245,557 as
at July 31, 2002, compared to a working capital deficit of $932,701 at April 30,
2002.
We were able to achieve a substantial reduction to our working capital deficit
during the three months ended July 31, 2002 by the issuance of our 15%
guaranteed convertible notes and Series X Share Purchase
12
Warrants to our creditors in conversion of an aggregate of $766,500 in
indebtedness. This issuance of convertible notes enabled us to reduce our
accounts receivable to $249,682 as of July 31, 2002 compared to $567,159 as of
April 30, 2002 and to reduce our shareholders loans to NIL as of July 31, 2002
compared to $381,900 as of April 30, 2002. We issued 15% guaranteed convertible
notes in the principal amount of $216,000 and 4,320,000 Series X Share Purchase
Warrants to Mr. Logan Anderson, our chief financial officer, as payment to Mr.
Anderson of accrued but unpaid consultant fees and related expenses in the
amount of 216,000. We issued additional 15% guaranteed convertible notes in the
principal amount of $81,000 and 1,620,000 Series X Share Purchase Warrants to
Mr. Anderson as re-payment to Mr. Anderson of shareholders loans advanced by Mr.
Anderson to us in the amount of $81,000. We issued 15% guaranteed convertible
notes in the principal amount of $119,000 and 2,380,000 Series X Share Purchase
Warrants to Mr. Howard Thomson, our chief financial officer, as payment to Mr.
Thomson of accrued but unpaid consultant fees.
We have historically been dependent on sales of our equity securities, secured
convertible notes and loans from certain of our shareholders to finance our
business operations. We did not achieve any sales of our common stock or other
equity securities during the three months ended July 31, 2002. There is no
assurance that we will be able to complete further sales of our equity
securities, secured convertible notes or obtain further loans.
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 $381,900 as of
April 30, 2002, compared to $223,450 as of April 30, 2001. These loans were
retired during the three months ended July 31, 2002 through the issuance our 15%
guaranteed convertible notes and Series X Share Purchase Warrants. There is no
assurance that either Mr. Anderson or Mr. Moll will advance further funds to us
in order to finance our business operations. We did not realize any proceeds
from shareholder loans during the three months ended July 31, 2002
Our monthly marketing and operating expenses are approximately $45,000 to
$50,000 per month. Our current revenues are approximately $20,000 to $25,000
per month. Accordingly, we are still dependent on additional financing to
maintain our business operations. We will continue to attempt to maintain our
reduced level of operating costs while maintaining revenues in order to reduce
our financing requirements. We will require additional financing in order to
repay our outstanding liabilities, as reflected in our working capital deficit.
Failure to repay our creditors or make satisfactory arrangements to repay our
creditors may impact our ability to continue operations.
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. As we have been unable to raise financing to maintain our prior
level of operations, we have scaled back our business operations. See Overview
above.
During our second quarter 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 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
shares of Worldbid's common stock, 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
13
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 $766,500 of our 15% guaranteed convertible notes and
Series X Share Purchase Warrants during the three months ended July 31, 2002.
These convertible notes were issued to our creditors in consideration of the
conversion of indebtedness owed by us in the principal amount of $766,500. We
are continuing this offering but there is no assurance that we will complete any
additional sales of the convertible notes. We have now issued an aggregate of
1,031.5 of our 15% guaranteed convertible notes representing aggregate
indebtedness under the convertible notes of $1,031,500. In addition, we have
issued an aggregate of 20,630,000 Series X Share Purchase Warrants. The
outstanding 15% guaranteed convertible notes are currently convertible into
206,300,000 shares of our common stock, based on our current trading price of
$0.01 per share as of September 11, 2002. This number of shares is in excess of
our current authorised capital. We have covenanted in the terms of the
convertible notes to take any required corporate action as may be necessary to
increase the number of our authorised but unissued shares to such number of
shares that will be sufficient to enable conversion of all the outstanding
convertible notes. This corporate action would require an amendment to our
articles of incorporation. We will be required to seek shareholder approval of
the amendment to our articles of incorporation to complete the increase to our
authorised capital.
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 have identified in this Quarterly
Report on Form 10-QSB. 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 maintain operations,
implement our business strategy and plan of operation and repay our
creditors;
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 and current
revenues with reduced operating capital.
NEW ACCOUNTING PRONOUNCEMENTS
Effective May 1, 2002, we adopted the requirements of SFAS No. 142 - "Goodwill
and Other Intangible Assets". Under SFAS No. 142, goodwill and indefinite-lived
intangible assets are no longer amortized, but are reviewed annually or more
frequently if impairment indicators arise, for impairment. During the quarter
ended July 31, 2002, we recognized a goodwill impairment loss of $94,216 as a
consequence of compliance with the requirements of SFAS No. 142. Our interim
financial statements for the three months ended July 31, 2002 included with this
Quarterly Report on Form 10-QSB include pro-forma information to show the effect
of the adoption of SFAS No. 142 on the financial information of all periods
presented in the financial statements.
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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, our subsidiary, and Mr. Howard Thomson, our treasurer and chief
financial officer and one of our directors. There have been no material
developments in these legal proceedings since our fiscal quarter ended July 31,
2001.
Item 2. Changes in Securities
We completed the sale of 766.5 15% guaranteed convertible note and Series X
Share Purchase Warrants units during the fiscal quarter ended July 31, 2002 in
consideration for conversion of outstanding indebtedness on the amount of
$766,500. 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
c. $0.15 per share if exercised after September 30, 2003 and prior to
September 30, 2004.
In aggregate, a total of 15,330,000 Series X Share Purchase Warrants were issued
during the three months ended July 31, 2002.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to our security holders for a vote during the fiscal
quarter ending July 31, 2002.
Item 5. Other Information
We entered into a Memorandum of Agreement dated September 18, 2002 with City of
London Group PLC for the acquisition of certain ECeurope assets. Pursuant to
this agreement, we have acquired the following assets in consideration for the
issuance of 2,500,000 shares of our common stock and 2,500,000 share purchase
warrants:
(a) The domain name "ECeurope.com" and all rights and trademarks associated
with this domain;
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(b) The customer list of ECeurope.com, consisting of approximately 130,000
registered users;
(c) The ECeurope.com database of over 3 million e-mail addresses; and
(d) The ECeurope.com database of trade leads.
Each share purchase warrant issued entitles City of London Group PLC to purchase
one share of our common stock at any time prior to September 12, 2005 on the
following basis:
(a) $0.01 per share if exercised prior to September 12, 2003;
(b) $0.02 per share if exercised after September 12, 2003 and prior to
September 12, 2004; and
(c) $0.03 per share if exercised after September 12, 2004 and prior to
September 12, 2005.
All shares were issued in reliance of Regulation S of the Securities Act of
1933.
A copy of the Memorandum of Agreement is attached to this Quarterly Report on
Form 10-QSB as Exhibit 10.1.
Item 6. Exhibits and Reports on Form 8-K.
EXHIBITS
The following exhibits are either provided with this Report or are incorporated
herein by reference:
Exhibit 3.1: Articles of Incorporation(1)
Exhibit 3.2: Certificate of Amendment of Articles of Incorporation(1)
Exhibit 3.3: By-Laws of the Company(1)
Exhibit 3.4: Certificate of Amendment of Articles of Incorporation(2)
Exhibit 4.1: Specimen Stock Certificate(1)
Exhibit 4.2 Form of 15% Guaranteed Convertible Notes(3)
Exhibit 4.3 Form of Series X Share Purchase Warrant(3)
Exhibit 4.4: 2000 Stock Option Plan(2)
Exhibit 10.1 Memorandum of Agreement dated September 18, 2002 between
Worldbid and City of London Group PLC (4)
Exhibit 99.1 Certification of Chief Executive Officer pursuant to pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002(4)
Exhibit 99.2 Certification of Chief Executive Officer pursuant to pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002(4)
(1) Incorporated by reference from our registration statement on Form10-SB12G/A
filed with the Securities and Exchange Commission on November 30, 1999
(File No. 0-26729).
(2) Incorporated by reference from our Form 10-Q Quarterly Report filed with
the Securities and
16
Exchange Commission on December 15, 2000.
(3) Incorporated by reference from our Form 10-Q Quarterly Report filed with
the Securities and Exchange Commission on December 24, 2001.
(4) Filed as an Exhibit to this Quarterly Report on Form 10-QSB.
REPORTS ON FORM 8-K
We did not file any Current Reports on Form 8-K during the fiscal quarter ended
July 31, 2002. We have not filed any Current Reports on Form 8-K since July
31, 2002.
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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: September 19, 2002
By: /s/ Howard Thomson
___________________________________
Howard Thomson, Chief Financial Officer
Director
Date: September 19, 2002
CERTIFICATIONS
I, Logan B. Anderson, Chief Executive Officer of Worldbid Corporation, certify
that;
(1) I have reviewed this quarterly report on Form10-QSB of Worldbid
Corporation;
(2) Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report.
Date: September 19, 2002
/s/ Logan B. Anderson
___________________________________
(Signature)
Chief Executive Officer
___________________________________
(Title)
I, Howard Thomson, Chief Financial Officer of Worldbid Corporation, certify
that;
(1) I have reviewed this quarterly report on Form10-QSB of Worldbid
Corporation;
(2) Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report.
Date: September 19, 2002 /s/ Howard Thomson
___________________________________
(Signature)
Chief Financial Officer
___________________________________
(Title)
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