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 January 31, 2003
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period to
Commission File Number 0-26729
-------
WORLDBID CORPORATION
__________________________________________________
(Exact name of small Business Issuer as specified in its charter)
NEVADA 88-0427619
- ----------------------------------- -----------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
810 PEACE PORTAL DRIVE, SUITE 201
BLAINE, WA 98230
- -------------------------------------- -------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number,
including area code: (360) 332-1752
--------------
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: 93,999,901 shares of $0.001 par
value common stock outstanding as of March 13, 2003.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
2
WORLDBID CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2003
(Unaudited)
(Stated in U.S. Dollars)
WORLDBID CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Stated in U.S. Dollars)
JANUARY 31 APRIL 30
2003 2002
-------------------------
ASSETS
Current
Cash and cash equivalents $ 23,742 $ 20,049
Trade accounts receivable 3,381 2,300
Receivables, other 12,375 16,170
Prepaid expenses - 2,839
--------------------------
39,498 41,358
Surety Deposit - 10,000
Property, Plant And Equipment,
less accumulated depreciation 44,457 68,043
Intangible Assets, less
accumulated amortization 47,787 103,818
--------------------------
$ 131,742 $ 223,219
===========================================================
LIABILITIES
Current
Notes payable $ - $ 25,000
Accounts payable and
accrued liabilities 362,707 567,159
Shareholder loans 5,000 381,900
--------------------------
367,707 974,059
--------------------------
15% Guaranteed Convertible
Notes (Note 3) 1,002,500 265,000
--------------------------
STOCKHOLDERS' EQUITY
(DEFICIENCY)
Common Shares 44,981 24,156
Additional Paid-In Capital 4,702,848 4,562,718
Contributed Surplus 38,200 38,200
Deficit (6,011,674) (5,632,177)
Accumulated Other
Comprehensive Loss (12,820) (8,737)
--------------------------
(1,238,465) (1,015,840)
--------------------------
$ 131,742 $ 223,219
===========================================================
Liquidity And Future Operations (Note 2)
See accompanying notes to the unaudited financial statements
WORLDBID CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
(Unaudited)
(Stated in U.S. Dollars)
- ----------------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31 JANUARY 31
2003 2002 2003 2002
- ----------------------------------------------------------------------------------------
Revenues
Advertising $ - $ 8,685 $ 2,960 $ 16,458
Membership and partnership
fees 88,712 53,680 227,716 210,100
------------------------------------------------------
88,712 62,365 230,676 226,558
------------------------------------------------------
Expenses
Selling, general and
administrative expenses (Note 5) 97,278 385,764 371,545 1,131,636
Interest expense 42,521 12,260 107,487 43,761
Depreciation and amortization 16,851 61,509 36,925 186,660
Loss on disposal of
fixed assets - - - 22,000
Goodwill impairment - - 94,216 -
------------------------------------------------------
156,650 459,533 610,173 1,384,057
------------------------------------------------------
Net Loss For
The Period (67,938) (397,168) (379,497) (1,157,499)
Foreign Currency
Translation Adjustment (2,900) 212 (4,083) 45,278
------------------------------------------------------
Comprehensive Loss $ (70,838) $ (396,956) $ (383,580) $(1,112,221)
========================================================================================
Deficit,
Beginning Of Period $(5,943,736) $(5,095,265) $(5,632,177) $(4,334,934)
Net Loss For
The Period (67,938) (397,168) (379,497) (1,157,499)
Deficit,
End Of Period $(6,011,674) $(5,492,433) $(6,011,674) $(5,492,433)
========================================================================================
Net Loss Per Share -
Basic And Diluted $ (0.01) $ (0.02) $ (0.01) $ (0.05)
========================================================================================
Weighted Average Number
Of Common Shares
Outstanding 34,220,371 23,405,337 28,728,917 24,040,212
========================================================================================
See accompanying notes to the unaudited financial statements
WORLDBID CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
- ----------------------------------------------------------------
NINE MONTHS ENDED
JANUARY 31
2003 2002
- ----------------------------------------------------------------
Cash Flows From (Used In)
Operating Activities
Net loss for the period $(379,497) $(1,157,499)
Items not involving cash:
Amortization 36,925 186,660
Loss on disposal of fixed assets - 22,000
Services received in
exchange for equity - 4,000
Goodwill impairment 94,216 -
------------------------
(248,356) (944,839)
Change in non-cash working
capital items:
Accounts receivable (1,081) 13,696
Receivables, other 3,795 13,934
Prepaid expenses 2,839 11,916
Accounts payable and
accrued expenses 236,589 128,892
------------------------
Net Cash Used In
Operating Activities (6,214) (776,401)
------------------------
Cash Flows From Investing Activity
Capital expenditures (1,010) (12,280)
------------------------
Cash Flows From Financing Activities
Proceeds on issuance of notes payable - 25,000
Notes payable (repayment) - (100,000)
Proceeds from shareholder
loans, net 5,000 13,759
Proceeds from issuance
of common stock - 512,427
Proceeds from surety
deposit 10,000 -
Proceeds from issuance
of convertible notes - 247,000
------------------------
15,000 698,186
------------------------
Effect Of Exchange Rate
Changes On Cash (4,083) 45,278
------------------------
Net Increase (Decrease) In
Cash And Cash Equivalents 3,693 (45,217)
Cash And Cash Equivalents,
Beginning Of Period 20,049 45,217
------------------------
Cash And Cash Equivalents,
End Of Period $ 23,742 $ -
================================================================
See accompanying notes to the unaudited financial statements
WORLDBID CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2003
(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 January 31,
2003, and for the nine 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 nine months ended January 31, 2003 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 January 31, 2003, the Company has negative working
capital of $328,209. 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
JANUARY 31, 2003
(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.
During the quarter ended January 31, 2003, note holders converted 54 units into
10,800,000 common shares at a price of $0.005 per share.
As at January 31, 2003, 1,002.5 units of 15% convertible notes are outstanding.
4. SHARE CAPITAL
During the period ended January 31, 2003, the Company issued 10,800,000 common
shares on the conversion of convertible notes with a fair value of $54,000.
5. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
2003 2002
----------------
Selling expenses
Salaries and benefits $28,586 $ 47,448
Commissions 1,107 26,214
Marketing expense 10,919 54,754
Travel 1,044 109,654
-----------------
41,656 238,070
-----------------
WORLDBID CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2003
(Unaudited)
(Stated in U.S. Dollars)
5. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Continued)
2003 2002
--------------------
General and administrative expenses
Salaries and benefits $244,672 $ 553,385
Technical support and operations 39,663 111,578
Insurance - 2,007
Bad debt expense - 15,018
Telephone and facsimile 3,785 14,463
Professional services 35,303 134,817
Other 6,466 62,298
-------------------
329,889 893,566
-------------------
Total selling, general and
administrative expenses $371,545 $1,131,636
====================
6. 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.
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:
2003 2002
----------------------------
Reported net loss
for the period $ (379,497) $ (1,157,499)
Add back: Goodwill
amortization - (74,907)
----------------------------
Adjusted net loss
for the period $ (379,497) $ (1,082,592)
============================
Basic and diluted earnings
per share
Reported net loss for
the period $ (0.01) $ (0.05)
Goodwill amortization - -
----------------------------
Adjusted net loss for
the period $ (0.01) $ (0.05)
============================
WORLDBID CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2003
(Unaudited)
(Stated in U.S. Dollars)
7. SUBSEQUENT EVENT
Subsequent to January 31, 2003, the Company issued 49,100,000 common shares on
the conversion of convertible notes with a fair value of $491,000.
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 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:
3
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
NINE MONTHS ENDED JANUARY 31, 2003 COMPARED TO NINE MONTHS ENDED JANUARY 31,
2002
Revenues
We had revenues of $230,676 for the nine months ended January 31, 2003, compared
to $226,558 for the nine months ended January 31, 2002, representing an increase
of $4,118 or 1.8%. We had revenues of $88,712 for the three months ended January
31, 2003, compared to $62,365 for the three months ended January 31, 2002,
representing an increase of $26,347 or 42.2%. Our revenues from sales of
membership subscriptions to our Worldbid web sites and partnership fees for the
nine months ended January 31, 2003 were $227,716, representing 98.7% of our
total revenues, compared to $210,100 for the nine months ended January 31, 2002,
representing 92.7% of revenues. All our revenues for the three months ended
January 31, 2003 were from sales of membership subscriptions to our Worldbid web
sites and partnership fees, compared to 86.0% of revenues for the three months
ended January 31, 2002. Revenues in connection with partnership arrangements
are equal to approximately 4-5% of total revenues and are 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 nine
months ended January 31, 2003 from $16,458 for the nine months ended January 31,
2002. We did not have any revenues from advertising on e-mail trade
notifications during the three months ended January 31, 2003, compared to
revenues of $8,685 for the three months ended January 31, 2002. The increase in
revenues was in part attributable to our acquisition of the ECeurope.com web
site and related business in our second quarter.
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 calendar 2002
compared to 2001. Revenues from sales of membership subscriptions to our
Worldbid web sites have increased in calendar 2002 compared to 2001. The
increase in revenues from sales of membership subscriptions to our Worldbid web
sites has exceeded the decline in revenues derived from partnership
arrangements, with the result that our revenues increased both for the nine
months and the three months ended January 31, 2003.
4
Operating Expenses
Our operating expenses were $610,173 for the nine months ended January 31, 2003,
compared to operating expenses of $1,384,057 for the nine months ended January
31, 2002, representing a decrease of $773,884 or 55.9%. Our operating expenses
were $156,650 for the three months ended January 31, 2003, compared to operating
expenses of $459,533 for the three months ended January 31, 2002, representing a
decrease of $302,883 or 65.9%. 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 $371,545 for the
nine months ended January 31, 2003, compared to $1,131,636 for the nine months
ended January 31, 2002, representing a decrease of $760,091 or 67.2%. Our
selling, general and administrative expenses decreased to $97,278 for the three
months ended January 31, 2003, compared to $385,764 for the three months ended
January 31, 2002, representing a decrease of $288,486 or 74.8%. 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 $329,889 for the nine
months ended January 31, 2003, compared to $893,566 for the nine months ended
January 31, 2002, representing a decrease of $563,677 or 63.1%. 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 nine months ended January 31, 2003, we incurred minimal selling
expenses in the amount of $41,656, compared to $238,070 for the nine months
ended January 31, 2002, representing a decrease of $196,414 or 74.1%. 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 $107,487 for the nine months ended January 31,
2003, compared to $43,761 for the nine months ended January 31, 2002,
representing an increase of $63,726 or 146%. Our interest expense was $42,521
for the three months ended January 31, 2003, compared to $12,260 for the three
months ended January 31, 2002, representing an increase of %30,261 or 247%. 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 and is reflective of the conversion of substantial
indebtedness into convertible notes during the latter half of fiscal 2002 and
the current fiscal year. We anticipate that our interest expense will decline
substantially due to recent conversions of our convertible notes.
Net Loss
We recorded a loss of $379,497 for the nine months ended January 31, 2003,
compared to a loss of $1,157,499 for the nine months ended January 31, 2002.
Our loss was $67,938 for the three months ended January 31, 2003 compared to a
loss of $397,168 for the three months ended January 31, 2002. Our reduced
losses reflect the increases 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 $23,742 as at January 31, 2003, compared to cash on hand
of $20,049 as at April 30, 2002. We had a working capital deficit of $328,209
as at January 31, 2003, 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 nine months ended January 31, 2003 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 January 31, 2003 compared to $567,159 as
of April 30, 2002 and to reduce our shareholders loans to $5,000 as of January
31, 2003 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 did not complete any sales of our 15% guaranteed convertible notes and
Series X Share Purchase Warrants during the three months ended January 31, 2003.
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 nine months ended January 31, 2003. 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 by one of
our former principal shareholders. The total amount of shareholders loans
payable by us to Mr. Anderson and the shareholder 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 October, 2002 through the issuance our 15%
guaranteed convertible notes and Series X Share Purchase Warrants. There is no
assurance that either Mr. Anderson or any other shareholder will advance further
funds to us in
6
order to finance our business operations. We did not realize any proceeds from
shareholder loans during the nine months ended January 31, 2003
Our monthly selling, general and administrative expenses are approximately
$40,000 to $50,000 per month. Our current revenues are approximately $25,000 to
$30,000 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. Our interest
expense has increased to approximately $15,000 per month and is primarily
attributable to interest accruing on our 15% guaranteed convertible notes. We
anticipate that we will pay this interest expense by issuing additional shares
of our common stock at a discount to market in accordance with the terms of the
convertible notes. We anticipate that our interest expense will decline
substantially due to recent conversions of our convertible notes.
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.
15% Guaranteed Convertible Notes
During our third quarter ended January 31, 2002, 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 nine months ended January 31, 2003.
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. Of these convertible
notes, a total representing aggregate indebtedness of $545,000 have been
converted into 59,900,000 shares of our common stock to date. In addition, we
have issued an aggregate of 21,130,000 Series X Share Purchase Warrants, none of
which have been exercised to date. The remaining 15% guaranteed convertible
notes are currently convertible into approximately 25,575,000 shares of our
common stock, based on our current trading price as of March 11, 2002. This
number of shares is in excess of our current authorised capital. We have
7
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.
Risk Factors
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 the
Risk Factors attached to this Quarterly Report, the risk factors described
throughout this Quarterly Report and the following risk factors:
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 nine months ended January 31, 2003 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.
8
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.
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 (the "1933 Act") during the three months ended January 31, 2003
except as set forth below:
1. We issued 10,800,000 shares of our common stock to twelve of the holders of
our 15% guaranteed convertible notes upon conversion of convertible notes
in the aggregate principal amount of $54,000 on January 31, 2003. The notes
were converted at a price of $0.005 per share, being 50% of the average
market price of our common stock prior to conversion in accordance with the
terms of the convertible notes. The shares were issued to the investors,
each of whom is not a "U.S. Person" pursuant to Regulation S of the 1933
Act. All share certificates were endorsed with a restrictive legend
confirming that the securities had been issued pursuant to Regulation S of
the Act, were "restricted securities" under the Act and could not be resold
without registration under the Act or an applicable exemption from the
registration requirements of the Act.
Subsequent to January 31, 2003, we issued the following our securities without
registration under the 1933 Act:
1. We issued 11,900,000 shares of our common stock to Mr. Howard Thomson, our
chief financial officer upon conversion of convertible notes in the
principal amount of $119,000 held by Mr. Thomson. The notes were converted
at a price of $0.01 per share, being 50% of the average market price of our
common stock prior to conversion in accordance with the terms of the
convertible notes. The shares were issued to Mr. Thomson in accordance with
Section 4(2) of the Act. All share certificates were endorsed with a
restrictive legend confirming that the securities had been issued pursuant
to an exemption from registration under the Act, were "restricted
securities" under the Act and could not be resold without registration
under the Act or an applicable exemption from the registration requirements
of the Act.
2. We issued 37,200,000 shares of our common stock to Mr. Logan Anderson, our
chief executive officer upon conversion of convertible notes in the
principal amount of $372,000 held by Mr. Anderson. The notes were converted
at a price of $0.01 per share, being 50% of the average market price of our
common stock prior to conversion in accordance with the terms of the
convertible notes. The shares were issued to Mr. Anderson in accordance
with Section 4(2) of the Act. All share certificates were endorsed with a
restrictive legend confirming that the securities had been issued pursuant
to an exemption from registration under the Act, were "restricted
securities" under the Act and could not be resold without registration
under the Act or an applicable exemption from the registration requirements
of the Act.
9
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 January 31, 2003.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K.
EXHIBITS REQUIRED BY ITEM 601 OF FORM 8-K
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 Executive Consultant Agreement dated September 1, 2001 between
Worldbid and Logan Anderson(4)
Exhibit 10.2 Executive Consultant Agreement dated September 1, 2001 between
Worldbid and Howard Thomson(4)
Exhibit 10.3 Memorandum of Agreement dated September 18, 2002 between
Worldbid and City of London Group PLC (5)
Exhibit 10.4 Amendment to Executive Consultant Agreement dated November 1,
2002 between Worldbid and Logan Anderson(6)
Exhibit 10.5 Amendment to Executive Consultant Agreement dated November 1,
2002 between Worldbid and Howard Thomson(6)
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 (6)
Exhibit 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 (6)
10
Exhibit 99.3 Risk Factors (6)
(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-QSB Quarterly Report filed with
the Securities and Exchange Commission on December 15, 2000.
(3) Incorporated by reference from our Form 10-QSB Quarterly Report filed with
the Securities and Exchange Commission on December 24, 2001.
(4) Incorporated by reference from our Form 10-KSB Annual Report filed with the
Securities and Exchange Commission on August 13, 2002.
(5) Incorporated by reference from our Form 10-QSB Quarterly Report filed with
the Securities and Exchange Commission on September 23, 2002.
(6) 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
January 31, 2003. We have not filed any Current Reports on Form 8-K since
January 31, 2003.
11
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: March 12, 2003
By: /s/ Howard Thomson
___________________________________
Howard Thomson, Chief Financial Officer
Director
Date: March 12, 2003
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: March 12, 2003 /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: March 12, 2003 /s/ HOWARD THOMSON
___________________________________
(Signature)
Chief Financial Officer
___________________________________
(Title)