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, 2002
[ ] 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
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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
incorporation or organization) Identification No.)
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
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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: 34,181,441 shares of $0.001 par value
common stock outstanding as of December 13, 2002.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
2
WORLDBID CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002
(Unaudited)
(Stated in U.S. Dollars)
WORLDBID CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Stated in U.S. Dollars)
- ----------------------------------------------------------------------
OCTOBER 31 APRIL 30
2002 2002
- ----------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents $ 24,904 $ 20,049
Trade accounts receivable 228 2,300
Receivables, other 11,180 16,170
Prepaid expenses - 2,839
------------ ------------
36,312 41,358
Surety Deposit - 10,000
Property, Plant And Equipment,
less accumulated depreciation 52,652 68,043
Intangible Assets, less accumulated
amortization (Note 3) 56,152 103,818
------------ ------------
$ 145,116 $ 223,219
======================================================================
LIABILITIES
Current
Notes payable $ - $ 25,000
Accounts payable and accrued
liabilities 305,243 567,159
Shareholder loans 5,000 381,900
------------ ------------
310,243 974,059
------------ ------------
15% Guaranteed Convertible Notes (Note 4) 1,056,500 265,000
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common Shares 34,181 24,156
Additional Paid-In Capital 4,659,648 4,562,718
Contributed Surplus 38,200 38,200
Deficit (5,943,736) (5,632,177)
Accumulated Other Comprehensive Loss (9,920) (8,737)
------------ ------------
(1,221,627) (1,015,840)
------------ ------------
$ 145,116 $ 223,219
======================================================================
Liquidity And Future Operations (Note 2)
See accompanying notes to the unaudited financial statements
WORLDBID CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Unaudited)
(Stated in U.S. Dollars)
- -------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
OCTOBER 31 OCTOBER 31
2002 2001 2002 2001
- -------------------------------------------------------------------------------------
Revenues
Advertising $ - $ 7,544 $ 2,960 $ 7,773
Membership and partnership
fees 72,553 89,503 139,004 156,420
------------------------------------------------------
72,553 97,047 141,964 164,193
------------------------------------------------------
Expenses
Selling, general and
administrative expenses
(Note 4) 137,650 276,440 274,267 745,872
Interest expense 41,867 10,495 64,966 31,501
Depreciation and amortization 10,537 61,684 20,074 125,151
Loss on disposal of fixed
assets - - - 22,000
Goodwill impairment (Note 5) - - 94,216 -
------------------------------------------------------
190,054 348,619 453,523 924,524
------------------------------------------------------
Net Loss For The Period (117,501) (251,572) (311,559) (760,331)
Foreign Currency Translation
Adjustment (2,495) 45,066 (1,183) 46,586
------------------------------------------------------
Comprehensive Loss $ (119,996) $ (206,506) $ (312,742) $ (713,745)
=====================================================================================
Deficit, Beginning Of Period $(5,826,235) $(4,843,693) $(5,632,177) $(4,334,934)
Net Loss For The Period (117,501) (251,572) (311,559) (760,331)
------------------------------------------------------
Deficit, End Of Period $(5,943,736) $(5,095,265) $(5,943,736) $(5,095,265)
=====================================================================================
Net Loss Per Share - Basic
And Diluted $ (0.01) $ (0.01) $ (0.01) $ (0.03)
=====================================================================================
Weighted Average Number Of
Common Shares Outstanding 27,497,584 23,887,693 25,826,670 23,660,845
=====================================================================================
See accompanying notes to the unaudited financial statements
WORLDBID CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
- -------------------------------------------------------------------------
SIX MONTHS ENDED
OCTOBER 31
2002 2001
- -------------------------------------------------------------------------
Cash Flows From (Used In) Operating Activities
Net loss for the period $(311,559) $(760,331)
Items not involving cash:
Amortization 20,074 125,151
Foreign exchange on subsidiary operations - 45,586
Goodwill impairment 94,216 -
Loss on disposal of fixed assets - 22,000
Services received in exchange for equity - 4,000
----------------------
(197,269) (563,594)
Change in non-cash working capital items:
Accounts receivable 2,072 13,696
Receivables, other 4,990 (6,226)
Prepaid expenses 2,839 11,916
Accounts payable and accrued expenses 179,129 (47,993)
----------------------
Net Cash Used In Operating Activities (8,239) (592,201)
----------------------
Cash Flows From Investing Activity
Capital expenditures (719) (12,668)
----------------------
Cash Flows From Financing Activities
Proceeds on issuance of notes payable - 25,000
Notes payable (repayment) 5,000 (100,000)
Proceeds from shareholder loans, net - 8,000
Proceeds from issuance of common stock - 496,000
Proceeds from surety deposit 10,000 -
Proceeds from issuance of convertible notes - 136,000
----------------------
15,000 565,000
----------------------
Effect Of Exchange Rate Changes On Cash (1,187) -
----------------------
Net Increase (Decrease) In Cash And Cash
Equivalents 4,855 (39,869)
Cash And Cash Equivalents, Beginning
Of Period 20,049 45,217
----------------------
Cash And Cash Equivalents, End Of Period $ 24,904 $ 5,348
=========================================================================
See accompanying notes to the unaudited financial statements
WORLDBID CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 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 October 31,
2002, 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 2003 are
consistent with those used in fiscal 2002 except as described in Note 5. The
results of operations for the six months ended October 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 October 31, 2002, the Company has negative working
capital of $273,931. 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.
WORLDBID CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002
(Unaudited)
(Stated in U.S. Dollars)
3. INTANGIBLE ASSETS
During the quarter ended October 31, 2002, the Company acquired intangible
assets of $50,514 representing trademarks and customer lists. These intangible
assets are to be amortized over a two year period being the estimated useful
life of the intangibles.
4. 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.
During the quarter ended October 31, 2002, the Company completed the sale of an
additional 25 convertible notes in consideration for conversion of notes payable
indebtedness of $25,000.
As at October 31, 2002, 1,056.5 units of 15% convertible notes are outstanding.
5. SHARE CAPITAL
During the period ended October 31, 2002, the Company issued 2,500,000 common
shares at a value of $25,000 and 2,500,000 share purchase warrants for a value
of $25,514 for the acquisition of intangible assets of ECeurope.com.
WORLDBID CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002
(Unaudited)
(Stated in U.S. Dollars)
5. SHARE CAPITAL (Continued)
Each share purchase warrant entitles the holder to purchase one common share at
a price of $0.01 per share up to September 12, 2003, at $0.02 per share up to
September 12, 2004, and at $0.03 per share up to September 12, 2005.
6. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
2002 2001
------------------
Selling expenses
Salaries and benefits $ 18,622 $ 35,280
Commissions 152 10,205
Marketing expense 12,160 48,763
Travel 1,028 27,012
------------------
31,962 121,260
------------------
General and administrative expenses
Salaries and benefits 186,226 351,929
Technical support and operations 27,580 85,373
Insurance - 747
Bad debt expense - 15,018
Telephone and facsimile 2,435 11,077
Professional services 22,764 117,794
Other 3,300 42,674
------------------
242,305 624,612
------------------
Total selling, general and administrative expenses $274,267 $745,872
==================
7. 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.
WORLDBID CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002
(Unaudited)
(Stated in U.S. Dollars)
7. CHANGE IN ACCOUNTING POLICY (Continued)
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 $(311,559) $(760,331)
Add back: Goodwill amortization - 49,938
----------------------
Adjusted net loss for the period $(311,559) $(710,393)
======================
Basic and diluted earnings per share
Reported net loss for the period $ (0.01) $ (0.03)
Goodwill amortization - -
----------------------
Adjusted net loss for the period $ (0.01) $ (0.03)
======================
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
3
measures during our fiscal year ended April 30, 2002 in order to reduce our
operating costs:
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
SIX MONTHS ENDED OCTOBER 31, 2002 COMPARED TO SIX MONTHS ENDED OCTOBER 31, 2001
Revenues
We had revenues of $141,964 for the six months ended October 31, 2002, compared
to $164,193 for the six months ended October 31, 2001, representing a decrease
of $22,229 or 13.5%. We had revenues of $72,553 for the three months ended
October 31, 2002, compared to $97,047 for the three months ended October 31,
2001, representing a decrease of $24,494 or 25.2%. Our revenues from sales of
membership subscriptions to our Worldbid web sites and partnership fees for the
six months ended October 31, 2002 were $139,004, representing 97.9% of our total
revenues, compared to $156,420 for the six months ended October 31, 2001,
representing 95.3% of revenues. All our revenues for the three months ended
October 31, 2002 were from sales of membership subscriptions to our Worldbid web
sites and partnership fees, compared to 92.2% of revenues for the three months
ended October 31, 2001. 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
decreased to $2,960 for the six months ended October 31, 2002 from $7,773 for
the six months ended October 31, 2001. We did not have any revenues from
advertising on e-mail trade notifications during the three months ended October
31, 2002.
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.
Our revenues derived from partnership arrangements decreased in 2002 compared to
2001. Revenues from sales of membership subscriptions to our Worldbid web sites
have increased in 2002 compared to 2001. However, the decline in revenues
derived from partnership arrangements has exceed the increase in revenues from
sales of membership subscriptions to our Worldbid web sites, with the result
that our revenues declined both for the six months and the three months ended
October 31, 2002.
4
Operating Expenses
Our operating expenses were $453,523 for the six months ended October 31, 2002,
compared to operating expenses of $924,524 for the six months ended October 31,
2001, representing a decrease of $471,001 or 50.9%. Our operating expenses were
$190,054 for the three months ended October 31, 2002, compared to operating
expenses of $348,619 for the three months ended October 31, 2001, representing a
decrease of $158,565 or 45.5%. The decreases in our operating expenses reflect
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 $274,267 for the
six months ended October 31, 2002, compared to $745,872 for the six months ended
October 31, 2001, representing a decrease of $471,605 or 63.2%. Our selling,
general and administrative expenses decreased to $137,650 for the three months
ended October 31, 2002, compared to $276,440 for the three months ended October
31, 2001, representing a decrease of $138,790 or 50.2%. The decreases were
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 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 $242,305 for the six months
ended October 31, 2002, compared to $624,612 for the six months ended October
31, 2001, representing a decrease of $382,307 or 61.2%. The decrease in our
general and administrative expenses 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 six months ended October 31, 2002, we incurred minimal selling
expenses in the amount of $31,962, compared to $121,260 for the six months ended
October 31, 2001, representing a decrease of $89,298 or 73.6%. 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 increased to $64,966 for the six months ended October 31,
2002, compared to $31,501 for the six months ended October 31, 2001. Our
interest expense was $41,867 for the three months ended October 31, 2002,
compared to $10,495 for the three months ended October 31, 2001. The interest
expense was incurred pursuant to loans that have been advanced to enable us to
maintain our business operations and pursuant to convertible notes that we have
issued as payment of accrued liabilities. The increase to our interest expense
was primarily attributable to interest payable on our outstanding convertible
notes
Net Loss
We recorded a loss of $311,559 for the six months ended October 31, 2002,
compared to a loss of $760,331 for the six months ended October 31, 2001. Our
loss was $117,501 for the three months ended October 31, 2002 compared to a loss
of $251,572 for the three months ended October 31, 2001. Our reduced losses
reflect the minor reduction to our revenues and the substantial reduction to our
selling, general and administrative expenses.
5
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 once we achieve increased
financing 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 $24,904 as at October 31, 2002, compared to cash on hand
of $20,049 as at April 30, 2002. We had a working capital deficit of $273,931
as at October 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 six months ended October 31, 2002 by the issuance of our 15%
guaranteed convertible notes and Series X Share Purchase Warrants to our
creditors in conversion of an aggregate of $791,500 in indebtedness. This
issuance of convertible notes enabled us to reduce our accounts payable and
accrued liabilities to $305,243 as of October 31, 2002 compared to $567,159 as
of April 30, 2002 and to reduce our shareholders loans to $5,000 as of October
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 six months ended October 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 six months ended October 31, 2002
6
Our monthly marketing and operating expenses, including interest expenses, are
approximately $60,000 to $70,000 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 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 $791,500 of our 15% guaranteed convertible notes and
Series X Share Purchase Warrants during the six months ended October 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 $791,500. 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
1,056.5 of our 15% guaranteed convertible notes representing aggregate
indebtedness under the convertible notes of $1,056,500. In addition, we have
issued an aggregate of 21,130,000 Series X Share Purchase Warrants. The
outstanding 15% guaranteed convertible notes are currently convertible into
211,300,000 shares of our common stock, based on our current trading price of
$0.01 per share as of December 12, 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:
7
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 and the generation of partnership fees;
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 six months ended October 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.
ITEM 3. CONTROLS AND PROCEDURES.
As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the
"Exchange Act"), we carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures within the 90 days prior
to the filing date of this report. This evaluation was carried out under the
supervision and with the participation of our Chief Executive Officer, Mr. Logan
Anderson and our Chief Financial Officer, Mr. Howard Thomson. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective in timely alerting
management to material information relating to us required to be included in our
periodic SEC filings. There have been no significant changes in our internal
controls or in other factors that could significantly affect internal controls
subsequent to the date we carried out our evaluation.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed our reports filed
or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act is
accumulated and communicated to management, including our Chief Executive
Officer and our Chief Financial Officer, to allow timely decisions regarding
required disclosure.
8
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 October
31, 2001.
Item 2. Changes in Securities
We did not issue any of our securities without registration under the Securities
Act of 1933 during the three months ended October 31, 2002 except as set forth
below:
1. We completed the sale of 25 15% guaranteed convertible note and Series X
Share Purchase Warrants units during the fiscal quarter ended October 31,
2002 in consideration for conversion of outstanding indebtedness on the
amount of $25,000. Each unit sold consisted of one $1,000 15% guaranteed
convertible note and 20,000 Series X Share Purchase Warrants. In aggregate,
a total of 500,000 Series X Share Purchase Warrants were issued to the
investor. The units were offered and sold pursuant to Regulation S of the
Securities Act of 1933 (the "1933 Act") to one investor who is not a "U.S.
Person", 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
entitles 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.
2. 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 issued 2,500,000 shares of our common stock
and 2,500,000 share purchase warrants in consideration for our acquisition
of the following assets:
(a) The domain name "ECeurope.com" and all rights and trademarks
associated with this domain;
(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 1933 Act. All
certificates representing the securities issued were endorsed with
restrictive legends confirming that the securities cannot be
9
resold without registration under the 1933 Act or pursuant to an exemption
from the registration requirements of the 1933 Act.
3. We issued an aggregate of 7,525,486 shares of our common stock to the
holders of our 15% guaranteed convertible notes, holding an aggregate of
1,056.5 of our 15% guaranteed convertible notes, effective September 30,
2002. All shares were issued as payment of accrued interest on the
convertible notes at the rate of 15% per annum from the date of issuance of
the convertible notes to each holder, respectively, to September 30, 2002.
The shares were issued on the basis of a price of $0.0075 per share, being
75% of the market price of Worldbid's common stock for the ten trading days
prior to September 30, 2002, in accordance with the terms of the
convertible notes. The shares were issued in reliance of Regulation S of
the Securities Act of 1933 on the basis that each holder of our convertible
notes is not a "U.S. Person", as defined in Regulation S. Each share
certificate representing the issued shares will be endorsed with a
restrictive legend confirming that the shares cannot be resold without
registration under the 1933 Act or pursuant to an exemption from the
registration requirements of the 1933 Act. Of the shares issued, 2,058,465
were issued to Mr. Logan Anderson, our chief executive officer, and 397,753
were issued to Mr. Howard Thomson, our chief financial officer.
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 ended October 31, 2002.
Item 5. Other Information
We entered into agreements with Mr. Logan Anderson and Mr. Howard Thomson
subsequent to our second quarter to reduce the amount of consultant fees payable
under our consultant agreements with Mr. Logan Anderson. Mr. Anderson's
consultant fee was reduced from $12,500 per month to $7,500 per month and Mr.
Thomson's fee was reduced from $7,500 per month to $3,000 per month, each
effective November 1, 2002.
Item 6. Exhibits and Reports on Form 8-K.
EXHIBITS REQUIRED BY ITEM 601 OF FORM 8-K
------------------------------------------------------------
Exhibit Number Description of 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 (1)
99.2 Certification of Chief Financial Officer pursuant to
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (1)
- --------------------------------------------------------------------------------
(1) 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
October 31, 2002. We have not filed any Current Reports on Form 8-K since
October 31, 2002.
10
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 16, 2002
By: /s/ Howard Thomson
___________________________________
Howard Thomson, Chief Financial Officer
Director
Date: December 16, 2002
CERTIFICATIONS
I, LOGAN ANDERSON, Chief Executive Officer of Worldbid Corporation (the
"Registrant"), certify that;
1. I have reviewed this quarterly report on Form 10-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.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other facts that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: December 16, 2002 /s/ Logan Anderson
___________________________________
(Signature)
President and Chief Executive Officer
___________________________________
(Title)
CERTIFICATIONS
I, HOWARD THOMSON, Chief Financial Officer of Worldbid Corporation (the
"Registrant"), certify that;
1. I have reviewed this quarterly report on Form 10-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.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other facts that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: December 16, 2002 /s/ Howard Thomson
___________________________________
(Signature)
Chief Financial Officer
___________________________________
(Title)