SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
SECOND AMENDMENT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported): December 3, 2003
Commission File No.: 000-32761
LIVE GLOBAL BID, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 86-1024813
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2075 Norwood Avenue
Moose Jaw, Saskatchewan S6H 4P2
-----------------------------------------------------
(Address of principal executive offices)
(877) 694-6100
------------------------
(Issuer telephone number)
DAKOTA DISTRIBUTION, INC.
-------------------------------------------
(Former name, if changed since last report)
#B3A323-8776 E. Shea Boulevard, Scottsdale, Arizona 85260
------------------------------------------------------------
(Former address, if changed since last report)
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On December 3, 2003, Registrant entered into a Stock Exchange Agreement
with the shareholders of World Farm Equipment Auctions.Com, Inc., a Saskatchewan
corporation ("WFEA") whereby Registrant acquired 100% of WFEA's issued and
outstanding common stock from the shareholders of WFEA for 13,584,787 shares of
Registrant's common stock.
1
SECTION 5 - CORPORATE GOVERNANCE AND MANAGEMENT
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS
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, 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.
ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN
FISCAL YEAR
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, the Registrant changed its fiscal year end from
December 31 to September 30.
Section 9 FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Financial Statements Table Of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM .................... 3
CONSOLIDATED BALANCE SHEETS ................................................ 4
CONSOLIDATED STATEMENT OF OPERATIONS ....................................... 5
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY ............................ 6
CONSOLIDATED STATEMENTS OF CASH FLOWS ...................................... 7
NOTES TO FINANCIAL STATEMENTS ........................................... 8-16
2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Worldwide Farm Equipment Auctions.Com Ltd.
Moose Jaw, Saskatchewan
We have audited the accompanying consolidated balance sheet of Worldwide Farm
Equipment Auctions.Com Ltd. and subsidiary (a Saskatchewan corporation) as of
September 30, 2003, and the related consolidated statements of operations,
changes in stockholders' equity, and cash flows for each of the years in the two
year period then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. As discussed in Note 10, the Company
has restated its 2003 financial statements during the current year due to an
accounting error which resulted in the elimination of deferred tax assets and
related income tax benefit in conformity with accounting principles generally
accepted in the United States of America.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Worldwide Farm
Equipment Auctions.Com Ltd. and subsidiary as of September 30, 2003 and the
results of their operations and cash flows for each of the years in the two year
period then ended in conformity with accounting principles generally accepted in
the United States of America.
Braverman & Company, P.C.
Prescott, Arizona
February 5, 2004
3
WORLDWIDE FARM EQUIPMENT AUCTIONS.COM LTD. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET (RESTATED)
September 30, 2003
ASSETS
CURRENT ASSETS
Cash $ 25,022
Accounts receivable-trade 69,726
Accounts receivable-related parties 44,223
Foreign tax credits receivable 141,955
------------
Total current assets 280,926
OTHER
Patent costs 10,926
------------
$ 291,852
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities 236,780
Accrued compensation 70,334
Advances from related party 76,614
------------
Total current liabilities 383,728
------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, no par value; unlimited shares authorized;
Class A Shares-voting:
2,029,343 shares issued, 1,737,501 outstanding 1,202,291
Class B Shares-non-voting, unlimited shares authorized;
None issued or outstanding
Class A share subscriptions receivable (299,595)
Distributions in excess of legally stated capital (84,221)
Retained earnings (deficit) (939,642)
Currency translation adjustments 29,290
------------
(91,876)
------------
$ 291,852
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4
WORLDWIDE FARM EQUIPMENT AUCTIONS.COM LTD.
CONSOLIDATED STATEMENT OF OPERATIONS
Years Ended September 30,
-----------------------------
2003 2002
-------------- --------------
(RESTATED)
REVENUE
Software licensing fees $ 776,370 $ 331,544
Software commissions 158,721 8,758
Other 92,893 24,389
-------------- --------------
1,027,984 364,691
-------------- --------------
COSTS AND EXPENSES
Software licensing costs 398,169 132,753
Selling, general and administrative 797,101 411,657
Interest 3,422 22,881
-------------- --------------
Total costs and expenses 1,198,692 567,290
-------------- --------------
Operating income (loss) $ (170,708) $ (202,599)
=============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
5
WORLDWIDE FARM EQUIPMENT AUCTIONS.COM LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<table>
<caption>
Distributions in
Common Stock Excess of Currency
---------------------- Stock Legally Stated Accumulated Translation
Shares Amount Subscriptions Capital (Deficit) Adjustments Total
----------- ---------- ------------ -------------- ----------- ------------ ------------
Balances, September 30, 2001 1,124,172 $ 323,642 $ - $ - $ (566,335) $ 19,905 $ (222,788)
Proceeds from sale of common stock @ $.95 223,331 212,917 212,917
Foreign currency translation adjustment 842 842
Net( loss) for the year (202,599) (202,599)
---------------------- ------------ -------------- ----------- ------------ ------------
Balances, September 30, 2002 1,347,503 536,559 - - (768,934) 20,747 (211,628)
Proceeds from sale of common stock @ $1.03 166,665 171,092 171,092
Proceeds from sale of common stock @ $.68 100,000 68,437 68,437
Exercise of stock options @ $1.03 415,175 426,202 (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 (loss) for the year-restated (170,708) (170,708)
----------- ---------- ------------ -------------- ----------- ------------ -------------
Balances, September 30, 2003 2,029,343 $1,202,291 $ (299,595) $ (84,221) $ (939,642) $ 29,290 $ (91,876)
=========== ========== ============ ============== =========== ============ ============
</table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
6
WORLDWIDE FARM EQUIPMENT AUCTIONS.COM LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended September 30,
---------------------------
2003 2002
------------- -------------
(RESTATED)
OPERATING ACTIVITIES:
Net income (loss) $ (170,708) $ (202,599)
Adjustments to reconcile net (loss) to net
cash used by operating activities:
Changes in:
Accounts receivable (109,455) (4,494)
Foreign tax credits receivable (7,396) (52,457)
Accrued compensation 70,334
Accounts payable and accrued liabilities 144,821 53,858
------------- -------------
Net Cash (Used) by Operating Activities (72,403) (205,692)
------------- -------------
INVESTING ACTIVITIES:
Patent costs (1,623) 39
------------- -------------
Net Cash Provided (Used) by Operating
Investing Activities (1,623) 39
------------- -------------
FINANCING ACTIVITIES:
Distributions in excess of legally stated capital (84,221)
Reduction in advances from related parties (192,161) (3,712)
Proceeds from sale of common stock 374,418 213,782
------------- -------------
Net Cash provided by Financing Activities 98,035 210,070
------------- -------------
Effect of exchange rates on cash 264 (24)
------------- -------------
NET INCREASE IN CASH 24,274 4,393
CASH, beginning of period 748 (3,645)
------------- -------------
CASH, end of period $ 25,022 $ 748
============= =============
Supplemental schedule of noncash investing and
financing activities:
Stock subscriptions receivable for 291,842
common shares $ 299,595
=============
Other supplemental information
Interest paid $ 3,422 $ 22,881
============= =============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
7
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
History
Worldwide Farm Equipment Auctions.Com Ltd (the Company or WFEA) was incorporated
in Saskatchewan, Canada on July 17, 2000. Until October 2001, the Company was
engaged in the research and development (R&D) of software to enable the
interface of internet bidding with live auctions, thereby increasing the number
of participants bidding on products offered for sale by customers. Until that
date, the Company was in the development stage as set forth in SFAS #7, spending
the majority of its time raising equity financing and conducting R&D activities.
By October 2001, the Company completed its software development and began
offering the software under licensing arrangements to its customers in Canada
and the United States, resulting in substantial operating revenues. The
Company's fiscal year end is September 30.
Principles of Consolidation
The Company's consolidated financial statements as of September 30, 2003 include
the consolidated financial statements of the Company, and its 100 % owned
subsidiary, Live Global Communications USA Incorporated (LGB), a Nevada
corporation formed June 23, 2003, to facilitate the sale of the Company's
products in the United States. All significant intercompany accounts and
transactions have been eliminated in consolidation.
Cash Equivalents
The Company considers all highly liquid investments with the original maturities
of three months or less to be cash equivalents. The Company occasionally
maintains its bank account balance in excess of federally insured limits.
Revenue Recognition
We recognize revenue in accordance with Staff Accounting Bulletin No. 101,
"Revenue Recognition in Consolidated financial statements" ("SAB No.101") and
related authoritative pronouncements. License fee income is recognized as
revenue when (i) persuasive evidence of an arrangement exists, (ii) all
significant obligations have been performed pursuant to the terms of the license
agreement, (iii) amounts are fixed or determinable, and (iv) collectibility of
amounts is reasonably assured.
The Company licenses software under cancelable license agreements over varying
periods. Software licensing fee revenue is recognized upon software installation
and acceptance. Such revenue also includes charges for program modifications
required to meet customer requirements, and all other initial or total fees
required to be paid prior to installation. Software commission revenue is
recognized upon billings rendered for software activation on the internet during
live auctions. which involve either a "post" or "sale per item charge, or both,
for items featured prior to or at the time bidding occurs.. This category also
includes amortization of annual software update fees charged in lieu of
commissions. Other revenue includes non-recurring charges for consulting,
training and software demonstrations. Revenues from government grants relating
to research and development of the Company's products are recognized as a direct
reduction of research and development expenses in the year such amounts are
determined.
8
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES - continued
Software Licensing Costs
WFEA's cost of licensing software includes those costs relating to employee
compensation, their travel, benefits and communication, facility costs in which
those employees operate, and customer software installation, modification and
maintenance. This category also includes all software development costs for
software enhancements not included as part of R&D expenses.
Capitalized Software Research and Development Costs
Software R&D costs incurred prior to the establishment of technological
feasibility are charged to research and development expense as incurred, a
separate component of operating expense. Technological feasibility is
established upon completion of a working model, which is typically demonstrated
after initial beta testing is completed. Software development costs incurred
subsequent to the time a product's technological feasibility has been
established, through the time the product is available for general release to
customers, are capitalized if material. To date, software research and
development costs incurred subsequent to the establishment of technological
feasibility have been immaterial and accordingly have not been capitalized.
Software research and development costs are charged to research and development
expense as incurred. No such expense was incurred during fiscal 2003 or 2002.
Refundable foreign ITC tax credits or foreign government grants, amounted to
$80,000 and $62,000, respectively, for 2003 and 2002, which are recorded as a
direct reduction of licensing costs in the accompanying consolidated statements
of operations.
Patent costs
Patent costs relating to the Company's several patent applications are
capitalized and will be amortized over the period of expected benefit commencing
in the year Letters Patent are issued.
Foreign Currency
The functional currencies of the Company's foreign operations are the local
currencies. The consolidated financial statements of the Company's foreign bank
accounts have been translated into U.S. dollars in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation."
All balance sheet accounts have been translated using the exchange rates in
effect at the balance sheet date. Amounts contained in the statements of
operations have been translated using the average exchange rate for the year.
Accumulated net translation adjustments have been reported separately as a
separate component of stockholders' equity in the consolidated financial
statements in accordance with SFAS No. 130. Foreign currency translation
adjustments resulted in gains or (losses) net of taxes in 2003 of $8,543 and
$842 in fiscal 2003 and 2002, respectively. Foreign currency transaction losses
resulting from exchange rate fluctuations on transactions denominated in a
currency other than the functional currency totaled $60,780 and nil in fiscal
2003 and in 2002, respectively, and are included in other expense in the
accompanying consolidated statements of operations.
Start up Costs
Costs of start-up activities, including organization costs, are expensed as
incurred for financial reporting purposes.
9
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES - continued
Earnings (loss) Per Common Share
Basic earnings (loss) per common share has been calculated based upon the
weighted average number of common shares outstanding during the period in
accordance with the Statement of Financial Accounting Standards Statement No.
128, "Earnings per Share".
Use of Estimates in the Preparation of Consolidated financial statements
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates and assumptions.
NOTE 2 - DISTRIBUTIONS IN EXCESS OF LEGALLY STATED CAPITAL
During fiscal 2003, the Company paid approximately $84,221 towards the purchase
of substantially all of the outstanding stock of a publicly held shell company
on behalf of the Company's shareholders. These payments were made at a time when
the Company had no retained earnings and were therefore classified as a separate
component of equity in the accompanying consolidated balance sheet as
"Distributions in excess of legally stated capital".
NOTE 3 - INCOME TAXES
Income taxes in are provided for using the liability method of accounting. A
deferred tax asset or liability is recorded for all temporary difference between
financial and tax reporting. Deferred tax expense (benefit) results from the net
change during the year of deferred tax assets and liabilities. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to more likely than not be realized in future tax returns. Tax
law and rate changes are reflected in income in the period such changes are
enacted.
There was no current federal or foreign income tax provision or benefit for
fiscal year 2002 and 2003, nor were there any recorded deferred income tax
assets as such amounts applied to only foreign operations and were completely
offset by a valuation allowance.
The following is an analysis of deferred tax assets for the year 2003. The
income tax on US operations was immaterial. The Company's total foreign net
operating loss carryovers of $1,219,000, expires if unused in 2009 as to
$397,000, and the balance in 2010. Tax credits as of September 30, 2003 of
$108,000 expire in 2009 as to $67,840 and the balance in 2010.
10
NOTE 3 - INCOME TAXES - continued
Deferred Valuation
Tax Assets Allowance Balance
---------- --------- ---------
Deferred tax assets September 30, 2002 $ 368,000 $(368,000) $ -0-
Additions for foreign tax credits 40,226 40,226
Dncrease in valuation allowance 108,246 108,246
NOL applied against intercompany profits (105,434) (105,434)
Net operating losses applied to taxable income ( 43,038) ( 43,038)
Deferred tax assets at September 30, 2003 $259,754 $(259,754) $ -0-
========== ========= =========
The components of loss before income taxes for the years ended September 30,
2003 and 2002 were as follows:
2003 2002
---------- ----------
United States $ 219,530 $ -0-
Foreign (390,238) (202,599)
Net (loss) $(170,708) $(202,599)
========== ==========
The following is reconciliation from the expected statutory federal income tax
provision to the Company's actual income tax (benefit) for the years ended
September 30:
2003 2002
Expected income tax (benefit) at federal ---------- ----------
statutory tax rate $ ( 50,041) $( 68,884)
Foreign tax credits (40,226) (67,844)
Valuation allowance and surtax adjustment 98,267 136,728
Actual income tax $ -0- $ -0-
========== ==========
NOTE 4 - OPTIONS TO PURCHASE COMMON STOCK
The Company issued a total of 702,674 stock purchase options to purchase 702,674
shares of common stock at $1.03 per share, over an extended period ending in
May, 2005. As of September 30, 2003, 415,175 options have been exercised for
$426,202, of which 291,842 shares have not been issued pending receipt of
$299,595. There were 287,499 unexercised options outstanding at September 30,
2003. All options granted were issued as part of the total amount received for
certain shares issued and no separate value or compensation was associated or
involved with the original of grant of the options.
NOTE 5 - THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
Below is a listing of the most recent accounting standards and their effect on
the Company.
11
NOTE 5 - THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS - continued
SFAS 148 Accounting for Stock-Based Compensation-Transition and Disclosure
Amends FASB 123 to provide alternative methods of transition for an entity that
voluntarily changes to the fair value based method of accounting for stock-based
employee compensation.
SFAS 149 Amendment of Statement 133 on Derivative Instruments and Hedging
Activities
This Statement amends and clarifies financial accounting and reporting for
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives) and for hedging
activities under FASB Statement NO. 133, Accounting for Derivative Instruments
and Hedging Activities.
SFAS 150 Financial Instruments with Characteristics of both Liabilities and
Equity
This Statement requires that such instruments be classified as liabilities in
the balance sheet. SFAS 150 is effective for financial instruments entered into
or modified after May 31, 2003.
Interpretation No. 46 (FIN 46)
Effective January 31, 2003, The Financial Accounting Standards Board requires
certain variable interest entities to be consolidated by the primary beneficiary
of the entity if the equity investors in the entity do not have the
characteristics of a continuing financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. The Company has not invested
in any such entities, and does not expect to do so in the foreseeable future.
The adoption of these new Statements is not expected to have a material effect
on the Company's financial position, results or operations, or cash flows.
NOTE 6 - SIGNIFICANT CUSTOMERS
Revenues generated from customers comprising more than 10% of sales during the
years ended September 30, 2003 and 2002 were as follows: All sales were
generated from the use of the Company's only product, its live bidding software
completed in October 2001.
2003 2002
--------- ---------
Customer A 52% 81%
Customer B 15%
Software licensing and commissions are concentrated and dependent on live
auction markets which are diverse, worldwide.
12
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Operating Leases-Office Facilities
The Company conducts its operations from three separate facilities, Regina and
Moose Jaw, Saskatchewan, Canada and Las Vegas Nevada. The first two are leased
under five-year noncancelable operating leases expiring in 2007. The latter is a
12 month service agreement expiring in June 2004. There are no options to renew
these agreements.
The lessor of the Moose Jaw facility is White Sales & Auction, Ltd. (WSA) a
Company owned by the founder/ CEO/president of the Company, which includes a
leaseback to WSA for a monthly rental of $318, plus taxes.
Operating Leases-Equipment
The Company leases vehicles and computer systems under operating leases expiring
at various dates through 2007.
Lease expense for offices and equipment amounted to $33,779 and $2,909 in 2003
and 2002. Sublease rentals amounted to $3,813 and $0 in 2003 and 2002.
The following is a schedule of future minimum lease payments, exclusive of all
executory costs, required under the above operating leases that have remaining
terms in excess of one year as of September 30 2003:
Year Ending September 30, Offices Equipment
------------------------- ---------- ---------
2004 $ 38,892 $ 50,518
2005 37,359 42,884
2006 37,359 29,090
2007 37,359 10,988
2008 4,587 0
---------- ----------
$ 155,556 $133,480
========== ==========
Litigation Pending
A claim has been made against the Company by a former employee alleging the
Company owes the claimant 37,500 shares of Class A common stock for services
performed. The Company believes the employee did not fulfill his obligation
under the agreement and therefore the agreement fails for lack of performance.
Management of the Company believes that its liability for damages seems remote.
NOTE 8 - SEGMENT INFORMATION
The Company has adopted the provisions of SFAS No. 131,"Disclosures about
Segments of an Enterprise and Related Information." Our chief operating decision
maker is considered to be the Company's CEO. The CEO reviews and evaluates
financial information presented on a
group basis as described below. Management evaluates performance of its two
segments based on their continuing operations, financial position and profit or
loss.
The operations of the Company for the United States and Canada were conducted
from offices in Canada until June 2003, at which time it formed a subsidiary,
LGB, in Las Vegas, Nevada to conduct sales efforts for the United States from
13
NOTE 8 - SEGMENT INFORMATION - continued
that location, which has one employee. All United States sales contacts require
approval, licensing, software installation, and maintenance from Canada.
Substantially all costs relating to the United States sales contracts are
initially incurred in Canada, but are billed and collected through the office in
the United States. The Company transferred all of its United States contracts to
the subsidiary effective July 1, 2003 for $558,000, and billed them $185,000 for
the 3 months ended September 30, 2003, as a management fee inclusive of all
services provided by the parent company, including software cost, installation,
modification and maintenance.
The table below presents revenues and EBT for reported segments in thousands.
There was only one segment for 2002, which was foreign only:
Intersegment
2003 LGB WFEA Amounts TOTAL
- ------ --------- --------- --------- ---------
Revenues $ 234 $1,537 $ (743) $1,028
EBT 9 389 (508) (110)
Total assets 616 878 (856) 638
Specific items included in segment EBT for the year ended September 30, 2003
were as follows (in thousands):
LGB WFEA
--------- ---------
Revenues from external customers $ 234 $ 772
Intersegment revenues 743
Wage program revenues 16
Interest income 3
Interest expense 3
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, patent costs, foreign tax credits receivable
and cash. Neither company has any capitalized fixed assets or property as those
items are either classified as operating leases. Segment revenues, EBT and total
assets differ from consolidated amounts due to intercompany amounts which have
been eliminated in consolidation.
NOTE 9 - RELATED PARTY TRANSACTIONS
Predecessor Activities
R&D costs incurred prior to achieving technological feasibility of the Company's
software was initially incurred and paid for by WSA. In consideration for WSA
assigning its interest in the technology it transferred to the Company, the
Company issued 325,000 shares of its restricted common stock to the founder. An
additional 375,000 restricted shares of common stock of the Company were issued
to a number of individuals who paid for them directly to WSA in furtherance of
the research and development activities prior to incorporation of the Company.
All shares were recorded at no value, since the related consideration was
pre-incorporation research and development costs for software transferred to the
Company, prior to its technological feasibility stage as required for
commencement of capitalized costs.
14
NOTE 9 - RELATED PARTY TRANSACTIONS - continued
Advances From Related Party
WSA continued to finance the R&D for the Company's software and related office
overhead for a period of many months after WFEA was formed, since the Company
lacked adequate capital, financing and credibility. As equity financing came to
the Company, WSA was reimbursed for costs and expenses attributed to the Company
which amounted to $130,509, and $207,711 during the years ended September 30,
2003, and 2002. The Company owed WSA $76,614 at September 30, 2003 which is
included as a current liability in the accompanying balance sheet. The Company's
founder, the owner of WSA, was advanced $12,216 as of September 30, 2003.
Also included in accounts receivable-related parties, is an advance to the CFO
of the Company for $32,007 as part of the total amount the Company paid to
acquire a publicly held shell company as described below. There is no interest
or collateral applicable to these advances.
NOTE 10 - RESTATEMENT OF FINANCIAL STATEMENTS, FISCAL YEAR ENDED SEPTEMBER 30,
2003
The Company originally reported a loss before income tax benefit for the fiscal
year ended September 30, 2003 of $170,708, an income tax benefit of $362,775,
and net income of $192,067. The recorded income tax benefit and related deferred
tax assets were based on Canadian non-capital losses, research and development
tax credit carry-forwards and expenditure pools. Under US generally accepted
accounting principles, a valuation allowance is required to be provided to
offset any such tax benefits to the extent such tax benefits are more likely to
not be utilized during the carry-forward period based on all of the available
evidence. After further review it was determined that a valuation allowance was
required to offset the full amount of the tax benefits that were previously
recognized. Accordingly, the recorded tax benefit for the year ended September
30, 2003 has been eliminated resulting in a net loss, an increase in the deficit
in retained earnings and an increase in the deficit in stockholders' equity as
of that date. The following is a summary of the effect on operations for 2003
and earnings per share.
CONSOLIDATED RESULTS OF OPERATIONS
Fiscal Year Ended
September 30, 2003
-------------------------------
Originally
Reported Restated
--------------- ---------------
Income (loss) before income taxes $ (170,708) $ (170,708)
Income taxes (benefit) (362,775) -
--------------- ---------------
Net income (loss) $ 192,067 $ (170,708)
=============== ===============
Basic net income (loss) per share $ 0.01 ($0.01)
--------------- ---------------
Weighted average shares outstanding 12,824,060 12,824,060
--------------- ---------------
15
NOTE 11 - SUBSEQUENT EVENTS
Stock Exchange Transaction
As of September 30, 2003 the Company was negotiating with the management of
Dakota Distribution, Inc. (Dakota), a Nevada corporation to exchange all of the
common stock of the Company for newly issued shares of Dakota and the majority
of its outstanding stock to effect a recapitalization of the Company. As
mentioned above, the Company had paid on behalf of its shareholders, $84,221
towards the acquisition of substantially all of the shell's outstanding stock.
WFEA became the legal subsidiary of Dakota on December 3, 2003, the date of the
definitive stock exchange agreement, at which time Dakota changed its name to
Live Global Bid, Inc. For accounting purposes, the consolidated financial
statements as of the date of the stock exchange transaction will be those of the
Company, at historical cost, consolidated with Dakota using fair value for the
Dakota's assets and liabilities then in existence, which were nil.
The Company will be considered the accounting acquirer. The Company will be
required to file a Form 8-K/A with the Securities and Exchange Commission within
75 days of the completion of the stock exchange transaction with Dakota to
include certain historical financial information.
(b) Exhibits
Exhibits: The exhibits listed below are attached and filed as part of this
report:
Exhibits Description
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2.1 Resignation Letter of Kevin Ericksteen
2.2 Resignation Letter of Deanna Olson
2.3 Certificate of Amendment
4.1 Stock Purchase Agreement
23.1 Consent of Independent Auditor
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto authorized.
Live Global Bid, Inc.
By: /s/ Barry White
January 5, 2004 ----------------------------
Barry White
President
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