SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended December 31, 2003
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from ______________ to ______________
Commission file number: 000-32761
LIVE GLOBAL BID, INC.
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(Exact name of small business issuer as specified in its charter)
NEVADA 86-1024813
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2075 Norwood Avenue Moose Jaw, Saskatchewan S6H 4P2
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(Address of principal executive office) (Zip Code)
602-821-6492
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(Issuer's telephone number)
DAKOTA DISTRIBUTION, INC.
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(Former name, if changed since last report)
#B3A323-8776 E. Shea Boulevard, Scottsdale, Arizona 85260
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(Former address, 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 Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes XX No
---- ----
The number of outstanding shares of the issuer's common stock, $0.001 par value,
as of December 31, 2003 was 20,000,000.
1
TABLE OF CONTENTS
Part I Financial Information Page
Item 1. Financial Statements:
Condensed Balance Sheet, December 31, 2003 (unaudited) ........... 3
Unaudited Statements of Operations for the three months
ended December 31, 2003 and 2002 .................................... 4
Unaudited Condensed Statements of Cash Flows for the three
months ended December 31, 2003 and 2002 ............................. 5
Statements of Shareholders' Equity for the period from
September 1, 2001 through December 31, 2003 (unaudited) ............. 6
Notes to Financial Statements (unaudited) ........................... 7
Item 2. Management's Discussion and Analysis and Plan of Operations .... 9
Part II Other Information
Item 1. Legal Proceedings ................................................... 10
Item 2. Changes in Securities ............................................... 10
Item 6. Exhibits and Reports on Form 8-K .................................... 10
Signatures .................................................................. 11
2
LIVE GLOBAL BID, INC.
CONSOLIDATED BALANCE SHEET
(unaudited)
ASSETS
---------
CURRENT ASSETS
Cash $ 302,162
Accounts receivable 86,894
Accounts receivable-related parties 44,926
Foreign tax credits receivable 83,386
--------------
Total Current Assets 517,369
OTHER
Deferred tax assets 737,921
Patent costs 19,371
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1,274,661
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
Accounts payable and accrued liabilities 233,805
Deferred revenue 68,750
Income tax payable 145,301
Advances from related parties 82,664
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Total Current Liabilities 530,520
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.0001, 100,000,000 shares authorized;
shares issued 20,000,000, shares outstanding 16,516,463 2,000
Paid in capital 1,203,091
Share subscriptions receivable (169,344)
Distributions in excess of legally stated capital (171,761)
Retained earnings (deficit) (175,285)
Currency translation adjustments, net 58,240
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746,941
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$ 1,277,461
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SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
3
LIVE GLOBAL BID, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
2003 2002
--------------- ---------------
REVENUE
Software licensing fees $ 524,728 $ 151,610
Software commissions 168,418 10,971
Other 61,019 15,549
--------------- ---------------
754,165 178,130
--------------- ---------------
COSTS AND EXPENSES
Software licensing costs 141,728 56,549
Selling, general and administrative 344,231 119,191
Research and development 79,220
Interest 19,343 429
--------------- ---------------
Total costs and expenses 584,521 176,169
--------------- ---------------
Net income (loss) before provision (benefit) for
income taxes 169,644 1,961
Income tax (benefit) (231,938)
--------------- ---------------
Net income (loss) $ 401,582 $ 1,961
=============== ===============
NET INCOME (LOSS) PER SHARE-Basic and diluted $ 0.03 *
=============== ===============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 13,231,044 6,962,272
=============== ===============
* less than $.01 per share
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4
LIVE GLOBAL BID, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<table>
<caption>
Distributions
COMMON STOCK in Excess of Currency
---------------------- Paid-in Stock Legally Stated Accumulated Translation
SHARES Amount Capital Subscriptions Capital (Deficit) Adjustments Total
---------------------- ----------- ------------ ------------- ----------- ----------- ---------
Balances, September 30, 2001 7,497,712 $ 323,642 $ - $ - $ - $ (566,335) $ 19,905 $(222,788)
Proceeds from sale of common stock 1,489,515 212,917 212,917
Foreign currency translation adjustment 842 842
Net( loss) for the year (202,599) (202,599)
----------- ---------- ----------- ------------ ------------- ----------- ----------- ---------
Balances, September 30, 2002 8,987,227 536,559 - - - (768,934) 20,747 (211,628)
Proceeds from sale of common stock 1,111,579 171,092 171,092
Proceeds from sale of common stock 666,954 68,437 68,437
Exercise of stock options 2,769,027 426,202 (299,595) 126,608
Distributions in excess of legally
stated capital (84,221) (84,221)
Foreign currency translation adjustment,net 8,543 8,543
Net income for the year 192,067 192,067
----------- ---------- ----------- ------------ ------------- ----------- ----------- ---------
Balances, September 30, 2003 13,534,787 1,202,291 - (299,595) (84,221) (576,867) 29,290 270,899
(unaudited)
Recapitalization December 3, 2003 6,465,213 (1,200,291) 1,203,091 (2,800) -
Collection of stock subscriptions 130,251 130,251
Distributions in excess of legally
stated capital (87,540) (87,540)
Foreign currency translation adjustment,net 28,949 28,949
Net income for the quarter 401,582 401,582
----------- ---------- ----------- ------------ ------------- ----------- ----------- ---------
Balances, December 31, 2003
(unaudited) 20,000,000 $ 2,000 $ 1,203,091 $ (169,344) $ (171,761) $ (178,085) $ 58,239 $ 744,141
=========== ========== =========== ============ ============= =========== =========== =========
</table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
5
LIVE GLOBAL BID, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended December 31,
------------------------------
2003 2002
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OPERATING ACTIVITIES:
Net income (loss) $ 401,582 $ 1,961
Deferred tax assets (392,172)
Adjustments to reconcile net (loss) to net
cash used by operating activities:
Changes in:
Accounts receivable (17,871) 1,330
Foreign tax credits receivable 58,569 (17,587)
Accounts payable 14,050 25,405
Deferred revenue 68,750
Income tax payable 145,301
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Net Cash (Used) by Operating Activities 278,209 11,108
---------------- -------------
INVESTING ACTIVITIES:
Patent costs (8,445) (37)
---------------- -------------
Net Cash Provided (Used) by Investing Activities (8,445) (37)
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FINANCING ACTIVITIES:
Distributions in excess of legally stated capital (87,540)
Reduction in advances from related parties (64,284) (66,628)
Proceeds from stock subscriptions 157,739 81,416
---------------- -------------
Net Cash provided by Financing Activities 5,915 14,788
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Effect of exchange rates on cash 1,461 5
---------------- -------------
NET INCREASE IN CASH 277,140 25,864
CASH, beginning of period 25,022 748
---------------- -------------
CASH, end of period $ 302,162 $ 26,612
=============== =============
Other supplemental information
Interest paid $ 19,343 $ 429
================ =============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
6
NOTE 1 - NATURE OF OPERATIONS AND SELECTED NOTES TO INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America and in accordance with the SEC's instructions applicable to Form 10-QSB
interim financial information. In the opinion of management, such consolidated
financial statements include all adjustments, consisting of normal recurring
adjustments, necessary to December 31, 2003 and for all periods presented. The
results of operations presented in the accompanying consolidated financial
statements are not necessarily indicative of the results expected for the full
fiscal year or for any future period.
The accompanying consolidated financial statements do not include all of the
information and disclosures required by accounting principles generally accepted
in the United States of America for annual financial statements. Such interim
consolidated financial statements should be read in conjunction with the
Company's Form 8-K/A for 2003 and 2002 audited financial statements and notes
thereto.
The Company had previously reported a year end of December 31. As a result of
the stock exchange transaction as further described below, the Company adopted
the year end of the accounting acquirer of September 30. All financial
presentations subsequent to the transaction are those of the accounting acquirer
and its September 30 year end.
NOTE 2 - COMMON STOCK TRANSACTIONS
Live Global Bid, Inc. (the Company) formerly Dakota Distribution, Inc. is a
public company which as a result of a stock exchange transaction on December 3,
2003 acquired all of the outstanding common stock of an operating company,
Worldwide Farm Equipment Auctions.Com, Ltd. (WFEA). The consolidated financial
statements of the Company include the latter's operations and that of its wholly
owned and totally held subsidiary, Live Global Communications USA Incorporated.
All intercompany transactions and accounts have been eliminated in
consolidation.
On December 3, 2003, all of the Company's 1,000,000 outstanding shares of common
stock were acquired by a management group of WFEA for which approximately
$172,000 had been paid by WFEA as of December 31, 2003, which is classified as
"Distributions in excess of legally stated capital", in the accompanying
consolidated balance sheet and consolidated statement of shareholders' equity.
In December 2003, the shareholders of the Company approved a 20 for 1 forward
stock split, resulting in 20 million outstanding shares of common stock with a
par value of $.0001. Of this post split amount, 13,534,787 shares were exchanged
for all of the outstanding shares of WFEA, and the remaining shares, 6,465,213,
appear on the consolidated statement of shareholders' equity as shares acquired
in the recapitalization of WFEA. Of those shares, 4,083,320 were issued in
connection with the transaction, including 200,000 to the original shareholders,
and the balance, 2,381,893, are considered issued but not outstanding as they
are being held for future issuance, including 1,000,000 common shares to be
issued in connection with a pending "Private Placement" of shares. Another
1,101,644 shares of the original exchanged shares, 13,534,787, are also
considered issued but not outstanding as those shares are being held pending the
payment of shares issued under a subscription agreement.
7
NOTE 3 - SEGMENT INFORMATION
The table below presents revenues earnings before income tax (EBT), and total
assets for reported segments in thousands. There was only one segment for 2002,
which was foreign only:
Intersegment
2003 LGB WFEA Amounts TOTAL
- ---- ---- ----- -------- ------
Revenues $ 646 $308 $ (200) $ 754
EBT 428 ( 258) 170
Total assets 662 1,420 (807) 1,275
Specific items included in segment EBT for the three months ended December 31,
2003 were as follows (in thousands):
LGB WFEA
---- -----
Revenues from external customers $ 646 $ 102
Intersegment revenues 200
Wage program revenues 4
Interest income 1
Interest expense 19
Segment assets of LGB include goodwill relating to the purchase of customer
contracts from WFEA and cash in bank. Segment assets of WFEA include accounts
receivable trade and intercompany, deferred tax assets, patent costs, foreign
tax credits receivable and cash. Neither company has any significant capitalized
fixed assets or property as those items are classified as operating leases.
Segment revenues of WFEA and EBT for LGB include an intercompany management fee
of $200,000 a quarter for the first year of operations of LGB. Total assets
differ from consolidated amounts due to intercompany amounts which have been
eliminated in consolidation.
8
Item 2. Management's Discussion and Analysis and Plan of Operations
The following discussion and plan of operations for our Company should be read
in conjunction with our most recent financial statements and notes appearing
elsewhere in this Form 10-QSB.
Stock Exchange Transaction and Change in Year End
In this current quarter the Company changed its name from Dakota Distribution
Ltd. to Live Global Bid Inc. to reflect the nature of the subsidiary acquired.
The Company had previously reported a year end of December 31. As a result of
the stock exchange transaction as further described below, the Company adopted
the year end of the accounting acquirer of September 30. At present, the Company
employs 18 people at two offices in Saskatchewan and one person in the United
States office.
On December 3, 2003 the Company acquired all the Class A Common Shares of
Worldwide Farm Equipment Auctions.com Ltd., hereinafter referred to as (WFEA),
for 13,534,787 shares of the Company. The remaining 6,465,213 shares of the 20
million shares outstanding after a 20 for 1 forward stock split in December
2003, are classified and treated as shares attributable to the recapitalization
of WFEA. Of those shares, 4,083,320 were issued through December 31, 2003 to a
management group of WFEA in connection with the transaction, and the balance,
2,381,893 of such shares were considered issued but not outstanding as of
December 31, 2003, as they are being held for future issuance, including
1,000,000 common shares to be issued in connection with a pending "Private
Placement" of common shares. Another 1,101,644 shares of the originally
exchanged shares, 13,534,787, are also considered issued but not outstanding as
those shares are being held pending the payment of shares issued under a
subscription agreement. In acquiring WFEA, the Company agreed to convert
outstanding options in WFEA to options in the Company for $.17 per share. At
December 31, 2003, there are 16,516,463 common shares outstanding and 3,483,537
shares reserved for future issuance which are considered issued but not
outstanding.
Our recent dramatic increase in revenue and profitability is due to the
acceptance of our Live Global Bid 1.1 Software and the completion of significant
contracts with Manheim Interactive, ADESA Canada and ADESA USA who are the
leading auction houses in North America. The Company's business model for most
customers is to be compensated on a "per tick" or continuous revenue stream
based on the number of vehicles being posted in auctions that use our software
and further for vehicles sold to internet buyers. As our existing clients roll
out our product to additional auction lanes in their companies, and these lanes
continue to hold more auctions using the Company's software, the Company's
revenues will continue to increase with little increase in our related costs.
From the existing products we have and the continued market acceptance and
adoption of these products we expect revenues and profits to continue to
increase for the foreseeable future.
The company is continuing to serve new customers and an agreement was reached in
the third quarter of the last fiscal year with an industry consortium which
promises to bring 80 to 130 more customers in "Tier 2" auctions to the Company
over the next 24 months. The Company has sold a system to a significant industry
player in Australia who, subsequent to the 1st quarter, held an auction in
Australia with positive results. The Company is expecting significant revenues
from this source in the future. We now dominate the North American auto auction
market and are now looking to the salvage market for future sales. We are in
serious negotiations with a major player in that market. The Company expects to
sell its products in Europe in the second and third quarter of the current
fiscal year. As our existing clients expand their products to Europe we expect
their competitors will be motivated to use our software to stay competitive.
9
Item 2. Management's Discussion and Analysis and Plan of Operations - continued
The Company has spent approximately $ 80,000 on research and development in the
first quarter on new software products including the "Run Maker" which will
assist existing and new users of our Live Global Bid software in recording and
describing the "run" of vehicles in lots that make up existing auctions. The
Company anticipates a significant new stream of revenue when this product is
introduced in the 3rd quarter. The Company has applied for patents on its
products and anticipates having a resolution of that application
The Company's existing profits and our projection for the future indicate we
will be self funded, however, we plan a private placement of $1,000,000 in late
second quarter of the current fiscal year, and also a filing with the Securities
and Exchange Commission a registration statement on Form SB - 2, to become a
trading entity later in the year to provide enhanced value and liquidity to our
shareholders.
Current Quarter Compared to Same Quarter a Year Ago
Our total revenues were $754,000 for the current quarter, compared to $178,130 a
year ago. Our pre-tax income and net income for the current quarter were
$169,644 and $401,582, respectively, compared to $1,961 for both categories a
year ago. Benefiting the current quarter's net income was a recovery of income
tax $ 231,000, which is net amount comprised of a tax benefit for the increase
of $374,000 in the value of the net operating loss carryovers from prior years
as a result of a 22 % rate increase to 43% for public companies in Canada, plus
an increase in the value of the net operating loss for Canadian tax purposes for
the current quarter, less Federal income taxes on U.S. operations which were
taxable for the quarter of approximately $143,000. As of December 31, 2003, we
had a working capital deficiency of $ 13,151, compared to a working capital
deficiency of $137,588 a year ago.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
31.1 Certificate of CEO as Required by Rule 13a-14(a)/15d-14
31.2 Certificate of CFO as Required by Rule 13a-14(a)/15d-14
32.1 Certificate of CEO as Required by Rule 13a-14(b) and Rule 15d-14(b)
(17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of
the United States Code
32.2 Certificate of CFO as Required by Rule 13a-14(b) and Rule 15d-14(b)
(17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of
the United States Code
10
Item 6. Exhibits and Reports on Form 8-K - continued
(b) Reports on Form 8-K
Form 8K filed January 6, 2004
On December 18, 2003, Kevin Ericksteen resigned as the President of
Registrant and Deanna Olson resigned as Secretary and Treasurer of
Registrant. The Board of Directors appointed Barry White to replace Mr.
Ericksteen as President, and Barbara White to replace Ms. Olson as
Secretary and Treasurer of Registrant.
On December 18, 2003, the shareholders of Registrant, by unanimous
written consent, voted to amend Registrant's Articles of Incorporation to
(i) change the name of Registrant from "Dakota Distribution, Inc." to "Live
Global Bid, Inc.", and (ii) increase the authorized capital stock of
Registrant from 25,000,000 shares of common stock to 100,000,000 shares of
common stock, and (iii) authorize the Board of Directors, in its sole
discretion, to issue preferred stock and debt securities with such terms
and conditions as it may decide, without shareholder approval. The
Certificate of Amendment was filed with the Nevada Secretary of State on
December 19, 2003.
On December 18, 2003, Kevin Ericksteen and Deanna Olson, without
disagreements or conflicts, resigned their positions as Directors of
Registrant. Prior to their resignation, Mr. Ericksteen and Ms. Olson
unanimously appointed Grant Devine, Barry White and Zelijko Stefanovic to
replace them as Directors of the Registrant via written consent in
accordance with the laws of the State of Nevada.
Form 8K January 6, 2004 amended February 18, 2004 to amend error in
Fincancials exhibit.
Form 8K January 6, 2004 amended February 19, 2004 to amend error in
Fincancials exhibit.
SIGNATURE
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereto duly authorized.
LIVE GLOBAL BID, INC.
(Registrant)
Date: February 23, 2004
By: /s/ Barry White
- --------------------------
Barry White
President and Director
11