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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 2000
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission file number 0-27757
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Asia Web Holdings, Inc.
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(Name of small business issuer in its charter)
Delaware 33-0529299
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1947 Camino Vida Roble, Suite 102, Carlsbad, California 92008
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(Address of principal executive offices)
(760) 804-0023
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(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None
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Securities registered under Section 12(g) of the Exchange Act:
Title of each class
Common Stock
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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 90days. Yes [X]
No [ ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [X]
State issuer's revenues for its most recent fiscal year. $36,122.00
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State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date withing the past 60 days. (See definition of
affiliate in Rule 12b-2 of the Exchange Act.)[Amended in Release No. 33-7419 (P.
85,938), effective June 13, 1997, 62 F.R. 26387.]
Note: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.
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(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date 8,790,408. (1)
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II,
etc.) Into which the document is incorporated: (1) any annual report to security
holders; (2) any proxy or information statement; and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").
Listed documents should be clearly described for identification purposes (e.g.,
annual report to security holders for fiscal year ended December 24, 1990).
Transition Small Business Disclosure Format (check one);
Yes_______ No_______
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(1) The Registrant has taken the position that the acquisition of PT Jaring Data
Interaktif was void AB INITIO and that the 44,000,000 shares issued to Alanberg
Pte should be canceled for failure of consideration. Taking into account the
Alanberg shares and assuming no additional stock was issued, there would be
52,790,408 shares outstanding.
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Part I
Item 1. Description of Business.
HISTORICAL BUSINESS
Asia Web Holdings, Inc. (the "Company" or the "Registrant")
was incorporated under the Company Act of British Columbia on August 26, 1983,
as Sheen Minerals, Inc., a mineral exploration and extraction company. On August
27, 1991, the Company changed its name to International AcuVision Systems, Inc.
and in September, 1993, the Company was domesticated under Section 388 of the
Delaware General Corporation Law. During the period August 1991 through August
31, 1998, the Company marketed its vision training products in the Optometric,
Sports Vision, Occupational Therapy and Visual Rehabilitation fields. By fiscal
year end, August 31, 1998, the Company concluded that future sales and business
in the vision training market was too limited and that the costs of marketing
and production too great. Unsolicited orders for vision training products were
filled through August 31, 1999 at which time management determined that the
Company would discontinue the vision training operation in its entirety. As a
result, management determined that the Company should restructure.
At the 1999 Annual Meeting of Stockholders, the Company's name
was changed to AcuBid.com, Inc; the authorized shares were increased to
50,000,000; a class of 10,000,000 Preferred Shares was created; the Company's
stock was reverse split one for two; and the web-based auction house was
initiated.
At the Annual Meeting of Stockholders held May 22, 2000, the
authorized shares were increased to 100,000,000 and the name of the Company was
changed to Asia Web Holdings, Inc. On June 2, 2000, Registrant filed the
Restated Certificate of Incorporation of Acubid.com, Inc. changing the
authorized shares and changing the name of the Company from Acubid.com, Inc. to
Asia Web Holdings, Inc. As described below, while the Company's business model
was changed, the Company continues to operate the Acubid.com auction web site.
MATERIAL MERGERS, RECLASSIFICATIONS, MERGERS, CONSOLIDATIONS OR PURCHASE/SALE OF
ASSETS
On March 13, 2000, the Registrant entered into a Stock
Purchase Agreement with Adisatrya Surya Sulisto ("Seller" or "Sulisto"), owner
of at least 90% of the issued and outstanding shares of Jaring Data Interaktif,
("JDI") wherein and whereby, the Registrant, through its wholly owned
subsidiary, Acubid Acquisition Corp., was to purchase 90% of the issued and
outstanding shares of JDI in exchange for 44,000,000 shares of the Registrant's
Common Stock. The Stock Purchase Agreement also contemplated that an additional
5,000,000 shares of the Registrant's common stock would be issued to the Seller
in the event that the Seller raised an additional $10,000,000 in capital for the
Registrant.
On March 24, 2000, Registrant entered into an Amended and
Restated Stock Purchase Agreement (the "Agreement") which replaced the Stock
Purchase Agreement executed March 13, 2000. This Agreement did not differ
significantly from the March 13, 2000 Stock Purchase Agreement and essentially
clarified certain terms of the original agreement and expanded the
representations and warranties made by the Registrant and Seller. Again, in this
Agreement, the Registrant, through its wholly owned subsidiary, Acubid
Acquisition Corp., was to purchase 90% of the issued and outstanding shares of
JDI from Seller in exchange for 44,000,000 shares of the Registrant's common
stock.
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The Agreement also provided that Seller contemplated entering
into an arrangement with the Selim K. Zilkha Trust ("Zilkha" or the "Trust")
wherein the Trust would purchase 5,000,000 shares of Registrant's Common Stock
in exchange for a $10,000,000 capital infusion in the Registrant. It was
contemplated that this Private Placement would close simultaneously with the
closing under the Agreement and after Registrant received appropriate investment
representations from Zilkha. The Agreement further provided that Zilkha, would
be entitled to all the rights, remedies, and other benefits under the Agreement
as Seller, on a pro rata basis. One of these other benefits included certain
registration rights.
Shareholder approval was required by the Agreement to complete
the transaction. Additionally, shareholder approval was also required since the
transaction contemplated a change in the name of the Registrant to Asia Web
Holdings, Inc. and since the completion of the transaction required increasing
the authorized shares of Common Stock from 50,000,000 to 100,000,000.
The Agreement provided that prior to closing, the Bylaws of
the Registrant and its wholly owned subsidiary would be amended to increase the
Board of Directors to eight (8) directors. Upon closing, the Agreement
contemplated that when the Registrant solicited proxies for approval of the
Agreement by the Shareholders, it would also solicit proxies for the election of
a Board of Directors consisting of eight persons, six (6) of which were to be
designated by the Seller and two of which were to be designated by the current
management.
The Agreement further contemplated that, upon closing, Michael
Schaffer, the Registrant's current Chief Executive Officer would enter into an
employment agreement in which Mr. Schaffer i) would serve as Chief Executive
Officer for a period of five (5) years; ii) receive an annual salary of $150,000
per year plus a qualified option package; iii) may be terminated by the
Registrant, at any time, by providing him with a severance of 1 1/2 years of
compensation at any time during the first year, 1 year compensation during the
next three years, and 1/2 year compensation during the fifth or last year. The
Agreement further contemplated providing Lawrence Schaffer, President, and Waddy
Stephenson, Chief Technical Officer similar employment contracts at their
present compensation levels.
The Agreement contemplated that closing would occur no later
than August 31, 2000 and that the Agreement could be terminated by either party
if the closing did not occur by that date.
Closing was also subject to the approval of the Indonesian
Badan Penanaman Modal or Investment Board and was obtained on March 24, 2000.
Closing was also subject to the approval of the Ministry of Laws and Legislation
of the amended Articles of Association of JDI reflecting the position of the
Registrant as a shareholder. Final approval of the Ministry of Laws and
Legislation was obtained on June 6, 2000. Amended and final approval of Badan
Penanaman Modal or Investment Board was obtained on June 16, 2000.
The Agreement also contemplated that the Seller would transfer
the JDI stock to an offshore entity which would be substituted in the place of
the Seller.
The Annual Meeting of Stockholders was held on May 22, 2000
and at that meeting, the shareholders of the Registrant approved and adopted,
among others, the following:
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i. Amended and Restated Stock Purchase Agreement, dated
as of March 24, 1999 (the "Agreement"), by and among
AcuBid, AcuBid Acquisition Corporation ("Acquisition
Corp."), PT Jaring Data Interaktif ("JDI") and
Adisatrya Surya Sulisto ("Sulisto") or his assignee
pursuant to which AcuBid, through Acquisition Corp.,
would purchase 90% of the issued and outstanding
shares of JDI from Sulisto in exchange for 44,000,000
shares of AcuBid common stock, par value $.001 per
share (the "Common Stock") This agreement also
contemplated that at the time of the Acquisition,
Selim K. Zilkha Trust ("Zilkha") who had indicated an
interest in acquiring shares of the Registrant, would
purchase 5,000,000 shares of Common Stock at $2.00
per share for an aggregate purchase price of
$10,000,000.
ii. Amendments to the Company's Certificate of
Incorporation to increase the number of authorized
shares of Common Stock from 50,000,000 to 100,000,000
shares and change the name of the Company to Asia Web
Holdings, Inc.;
iii. The election of the Michael Schaffer; Waddy
Stephenson; Tjahjono Soerjodibroto; William Millard;
Terry Giles; Raj Singam; Gordon Holterman; and, Bosko
Djordjevic to the Board of Directors for a term of
one year and effective upon Closing;
Implementation of No.2 above was conditioned on approval of
No.1 and the completion of the Acquisition. The election of the six directors
recommended by Sulisto (all of the above, excluding Michael Schaffer and Waddy
Stephenson) was only to be effective upon closing of the Acquisition.
Pursuant to a Sale and Purchase Agreement dated June 15, 2000,
between Adisatrya Surya Sulisto and Alanberg Pte. Ltd., a Singapore corporation
("Alanberg"), Alanberg assumed all of the duties, rights and obligations of
Sulisto under the Amended and Restated Stock Purchase Agreement.
By June 19, 2000, all required Indonesian regulatory approval
and all conditions precedent had been fulfilled and the Transaction closed on
that date. At the closing, Registrant delivered to Alanberg certificates
representing 44,000,000 shares of the Registrant's Common Stock in exchange for
180,000,000 shares or 90% of the issued and outstanding shares of JDI's stock.
No other consideration was paid for 90% of the issued and outstanding shares of
JDI stock.
On June 20, 2000, Registrant and Alanberg entered into
Amendment No. 1 to the Amended and Restated Stock Purchase Agreement ("Amendment
No. 1") amended the provisions of Article III of the Agreement. Amendment No. 1
provided that Seller was to arrange for Zilhka to purchase 1,000,000 shares of
Registrants Series B Preferred Stock (convertible into 5,000,000 common shares)
at $10.00 per share (the "Preferred Shares"). Amendment No. 1 also provided that
Zilkha was to receive a Warrant to purchase an additional 5,000,000 shares of
common Stock exercisable at $2.00 per share for the first three years after the
closing of the Transaction and $4.00 per share for an additional two years
thereafter. Additionally, Zilkha was to receive a second warrant to purchase an
additional 2,000,000 shares of Common Stock exercisable at $5.00 per share for
five years after the closing of the Transaction. Amendment III also provided
that Zilkha was entitled to all the same rights, remedies and other benefits
under the Agreement as the Seller, including registration rights. On June 20,
2000, Registrant entered into a Registration Rights Agreement with Zilkha .
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On June 20, 2000, Registrant filed the Certificate of
Designations of the Series B Preferred with the Delaware Secretary of State. The
Preferred Shares have a Stated Value of $10.00 per share, rank senior to all
other securities of the Registrant, including later authorized classes, have a
liquidation preference, and are convertible, at any time into five common shares
for each preferred share. The Preferred Shares also contain an Economic
Anti-Dilution provision in the event that the Registrant sells Common Stock at a
more advantageous price than Two Dollars per share within ten years of the
issuance of the Preferred Shares.
On June 23, 2000, the Company closed the Private Placement
transaction with Zilkha, issuing 1,000,000 shares of Series B Preferred Stock
and the two warrants described above, in exchange for $10,000,000.
As a result of Indonesian Presidential Decree No. 96/2000
("Decree") on July 20, 2000, thirty days after closing the transaction with P.T
Jaring Data Interaktif ("JDI'), which banned foreign investments in Internet and
multli-media related industries and after seeking advice and researching the
implications of this Decree, management concluded that the transaction with
Alanberg Pte. Ltd. ("Alanberg") JDI was void on July 20, 2000 due to
impossibility and frustration of purpose. Management was not advised of the
Decree by JDI or Alanberg until August 6, 2000 when it was finally released by
the Indonesian government.
Additionally, Alanberg and JDI took other actions which
frustrated the purpose of the transaction. On April 25, 2000 prior to the
Closing of the transaction with JDI, Registrant wired JDI $200,000 on the
assurance of JDI's representatives, including Bosko Djordjevic and Peter Gontha
that it was to be used as working capital of JDI. On July 13, 2000, subsequent
to Closing, Registrant wired JDI $500,000 on the assurance of JDI's
representatives, including Dicky di Nata and Peter Gontha that it was to be used
as working capital of JDI. Registrant believes that at least $500,000 of this
$700,000 was given personally to Peter Gontha, whose children own Alanberg and
were sellers of JDI.
On August 4, 2000, Registrant wired an additional $200,000 to
JDI, which was to be used as a short term loan to a company called Pacomnet, a
start-up in business to business Internet banking and owned by the son of JDI's
president, Dicky di Nata and believed to be controlled by Peter Gontha. On
September 10, 2000, Registrant called the loan pursuant to the terms of a signed
agreement between Registrant and Pacomnet and was advised by Dicky di Nata, an
officer of JDI who was not a representative of Pacomnet, that the Registrant was
not entitled to the funds.
Based on all of the foregoing, management has concluded that
the transaction with Alanberg Pte. Ltd. ("Alanberg") and JDI was void AB INITIO
due to impossibility and frustration of purpose as of July 20, 2000. (See, Item
3. Legal Proceedings.)
Thus, of the $900,000 that the Registrant advanced to JDI and
its related entities, Registrant believes that, not less than $700,000 and
possibly all of the funds were converted to the personal use of others and not
applied to the needs of JDI.
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BUSINESS OF ASIA WEB HOLDINGS, INC.
The Company has operated AcuBid.com ("AcuBid") as a web-based
auction house since August, 1999 featuring business-to-consumer and
consumer-to-consumer auctions. AcuBid goal was to target serious collectors who
were knowledgeable about products and already use online auctions to buy and
sell products.
The business plan, conceived in February 1999, had the Company
competing for a share of the online auction business dominated by eBAY,
Amazon.com and Yahoo. In the latter part of 1999, certain assumptions relating
to the Company's ability to gain a significant portion of the online auction
business proved to be incorrect. The first incorrect assumption was the makeup
of the industry itself. As of October 1999, 80% of the sales on eBay were
conducted by 4% of the sellers. This indicates that most of the online auction
business is conducted by dealers rather than the general population. Most of the
models used to predict the Company's growth were based on the general population
selling items over the Internet rather than just a smaller number of dealers.
The second incorrect assumption was the Internet community's
willingness to purchase collectibles over the Internet. In the fall of 1999, an
FBI sting operation uncovered dealers that had been auctioning counterfeit
sports memorabilia on the Internet. This led to a decline in consumer confidence
concerning the authenticity of collectibles bought over the Internet. Management
believed that this added another barrier between buyers and sellers and lead to
a decline in the auction market.
The third incorrect assumption was the level of success the
Company would experience by using celebrities to promote the site. Management
believed that through the use of celebrities, such as Hall of Fame members
Johnny Bench and Joe Morgan, it could attract a significant number of Internet
users to its sight with little or no additional marketing. This proved not to be
the case and, although certain guerilla marketing tactics have shown promising
results, none of the Company's marketing efforts have had a significant impact
on attracting buyers and sellers to its auction site. In general it was decided
that the cost of advertising required to develop name recognition and to attract
buyers and sellers to the Company's auction site was greater than expected. More
importantly, the cost was estimated to be larger than the revenue that could be
derived from those buyers and sellers.
Because of these issues, the Company began to explore business
relationships that would provide the Company a venue to use its Internet
expertise in a profitable manner while at the same time building customer
support for its online auction business. This led to a plan in February, 2000,
that would have the Company:
a) Enter into emerging Internet markets through acquisitions and
strategic alliances with Internet corporations from those
markets that focus on Internet subscriptions and/or content
development. It was expected that the acquisitions themselves
would be profitable or through some combination of Internet
subscriber fees, premium services, web hosting fees, and web
development fees, as well as through advertising revenue.
These acquisitions and strategic alliances are collectively
referred to as "partners".
b) Expand and evolve the Company's auction technologies into
reusable e-commerce technologies that can be offered to these
Internet corporations. In addition, the Company would provide
technical and managerial support to these Internet
corporations. The Company's ability to attract Internet
corporations in the emerging Internet markets relies heavily
on its ability to assist those corporations.
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c) Leverage off these new markets to increase the traffic to the
Company's online auction site as well as other developed
e-commerce and information sites. Each relationship that the
Company forges with another Internet corporation increases the
number of viewers that the Company can reach worldwide. This
provides the Company with access to new viewers that can be
driven to its auction and e-commerce sites without a
significant investment in advertising.
It was this new business model that lead to the acquisition of
PT Jaring Data Interaktif, described above. As of the date of this report, the
Company is assessing whether to continue to pursue this new business model. See,
Item 6, Management Discussion and Analysis or Plan of Operation.
THE ACUBID AUCTION BUSINESS
The AcuBid auction is fully automated and available 7 days a
week, 24 hours a day. Consumers are able to access AcuBid at any time to browse
current auctions, list new items for sale, bid on items, check account status,
or view other information available on the site.
The main product attribute of AcuBid is an easy to use auction
interface. AcuBid has intuitive site architecture. A comprehensive search
function will allow product, member, and other searches. AcuBid designed the web
site to be compatible for the majority of Internet browsers in use. Finally,
AcuBid was designed to provide safe and secure transactions for users.
While the site is operational, there is virtually no activity
on the site and the Company is not actively promoting the auction site and has
ceased selling Company owned inventory on its site.
HOW THE SITE FUNCTIONS
It is not necessary to register as an AcuBid user to browse
through different auctions. However, to become a buyer or seller on AcuBid,
users are required to register and accept AcuBid's member agreement. The member
agreement takes a few minutes to fill out, and upon completion users are able to
bid on products or list items for sale.
AcuBid requires users to provide personal information
including name, address, phone number, E-mail address, and credit card
information. This information is necessary for several reasons:
o To verify that buyers and sellers are not minors;
o To provide AcuBid with billing information when the
user incurs fees from AcuBid; and
o To verify how AcuBid can contact the registered user.
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To protect the integrity of this information, AcuBid has made
it clear in its privacy policy that this information will not be released to any
outside party. AcuBid's privacy policy has been submitted to and approved by
BBBOnline. This organization provides third party assurance that the privacy
policy meets the highest standards of consumer protection.
The pricing policy of auctions on the AcuBid auction site is
straightforward with no hidden costs. Neither Buyer nor Seller pay fees.
While the auction web site continues to be operational, as of
the date of this report, there are very few items listed for sale on the site
and it is not generating any revenue.
OPERATIONS AND TECHNOLOGY
The AcuBid Internet auction site consists of multiple INTEL
Pentium based workstations utilizing Microsoft Windows NT Enterprise Edition,
Microsoft SQL Server, Microsoft Internet Information Server, and Microsoft Site
Server technologies. Long-term growth of the site is accommodated through the
use of the following scalability, fault tolerant, and security strategies.
Scalability is the ability of a site to expand as its client
base expands. Scalability of the site is accomplished using a "division of
labor" strategy as well as "clustering" technology. Servers are divided into
four types: web servers, personalization/mail servers, database servers, and
image servers, dividing the workload into four groups. The database servers can
be further specialized by partitioning the data that each database server would
manage. The image servers are further divided by assigning members to specific
image servers. " Clustering" refers to the use of multiple servers that divide
client requests among the servers assigned to a cluster. Multiple data-less web
and personalization/mail servers are clustered to provide scalability for these
servers.
Fault tolerance is the ability for the site to easily recover
from hardware failures. Fault tolerance within the site is accomplished though
hardware mirroring of all data stores (image and database servers) and the use
of fail-over database servers. Fault tolerance of the web and
personalization/mail servers is accomplished by the same "clustering" technology
used for scalability. Disaster recovery is provided through the use of
incremental backups of the database and image data stores.
Security is the ability for the site to protect its servers
and data from unwarranted access. Security within the site is accomplished
through a variety of technologies, including fire walls, IP restrictions,
encryption, and password authentication.
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COMPETITIVE BUSINESS CONDITIONS
INDUSTRY BACKGROUND: GROWTH OF THE INTERNET AND ONLINE COMMERCE
The Internet has emerged as a global medium enabling millions
of people worldwide to share information, rapidly and easily communicate and
electronically conduct business. International Data Corporation ("IDC")
estimates that the number of Internet users will grow from approximately 60
million worldwide in 1997 to approximately 320 million worldwide by the end of
2002. This large and rapid growth is expected to be propelled by the large and
growing number of Personal Computers ("PCs") installed in homes and offices, the
decreasing cost of PCs, easier, faster and cheaper access to the Internet,
improvements in network infrastructure, the proliferation of Internet content
and the increasing familiarity and acceptance of the Internet by businesses and
consumers. The Internet has a number of distinct characteristics that
differentiate it from traditional media: users communicate and access
information without geographic or tangible limitations; users access dynamic and
interactive content on a real-time basis; and users communicate and interact
instantaneously with a single individual or with groups of individuals. As a
result of these distinct characteristics, Internet usage is expected to continue
to expand rapidly.
The growing adoption of the World Wide Web represents an
enormous opportunity for businesses to conduct commerce over the Internet.
RESEARCH AND DEVELOPMENT ACTIVITIES
During the fiscal year, the Company had a technical staff of 3
for research and development. Presently, the Company does not maintain such a
technical staff. The Company has incurred no significant research and
development costs this fiscal year. The Company expects to incur no additional
costs over the next twelve months. It is expected that any software or web site
development undertaken over that period will be accomplished using minimal
staff. The Company will require no additional equipment to meet user demand at
foreseeable levels of operation. Depending on the direction taken by the Company
after the unwinding of the JDI transaction, at some point, additional servers
and equipment may be required. At present levels of operation, management does
not believe that the number of key employees will change significantly within
the next twelve months.
INTELLECTUAL PROPERTY
The Company regards the protection of its copyrights, service
marks, trademarks, trade dress and trade secrets to be important to its future
success and relies on a combination of copyright, trademark, service mark and
trade secret laws and contractual restrictions to establish and protect its
proprietary rights in products and services. The Company has entered into
confidentiality and invention assignment agreements with its employees and
contractors, and nondisclosure agreements with its suppliers and strategic
partners in order to limit access to and disclosure of its proprietary
information. There can be no assurance that these contractual arrangements or
the other steps taken by the Company to protect its intellectual property will
prove sufficient to prevent misappropriation of the Company's technology or to
deter independent third party development of similar technologies. The Company
has pursued the registration of its trademarks and service marks in the United
States and will do so internationally. Effective trademark, service mark,
copyright and trade secret protection may not be available in every country in
which the Company's services are made available online.
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The Company also relies on certain technologies that it
licenses from third parties, such as Microsoft, Compaq, and Symantec, the
suppliers of key database technology, the operating system and specific hardware
components for the auction business. There can be no assurance that these third
party technology licenses will continue to be available to the Company on
commercially reasonable terms. The loss of such technology could require the
Company to obtain substitute technology of lower quality or performance
standards or a greater cost, which could materially adversely affect the
Company's future prospects.
To date, the Company has not been notified that its
technologies infringe the proprietary rights of third parties, but there can be
no assurance that third parties will not claim infringement by the Company with
respect to past, current or future technologies. The Company expects that
participants in its markets will be increasingly subject to infringement claims
as the number of services and competitors in the Internet industry segment
grows. Any such claim, whether meritorious or not, could be time consuming,
result in costly litigation, cause service upgrade delays or require the Company
to enter into royalty or licensing agreements. Such royalty or licensing
agreements might not be available on terms acceptable to the Company or at all.
As a result, any such claim could have a material adverse effect upon the
Company's future prospects.
GOVERNMENT REGULATION
The Company is not currently subject to direct federal, state
or local regulation, and laws or regulations applicable to access to or commerce
on the Internet, other than regulations applicable to businesses generally.
However, due to the increasing popularity and use of the Internet and other
online services, it is possible that a number of laws and regulations may be
adopted with respect to the Internet or other online services covering issues
such as user privacy, freedom of expression, pricing, content and quality of
products and services, taxation, advertising, intellectual property rights and
information security.
Although sections of the Communications Decency Act of 1996
(the "CDA") that, among other things, proposed to impose criminal penalties on
anyone distributing "indecent" material to minors over the Internet, were held
to be unconstitutional by the U.S. Supreme Court, there can be no assurance that
similar laws will not be proposed and adopted. Certain members of Congress have
recently discussed proposing legislation that would regulate the distribution of
"indecent" material over the Internet in a manner that they believe would
withstand challenge on constitutional grounds. The nature of such similar
legislation and the manner in which it may be interpreted and enforced cannot be
fully determined and, therefore, legislation similar to the CDA could subject
the Company and/or its customers to potential liability, which in turn could
have an adverse effect on the Company's business, results of operations and
financial condition. The adoption of any such laws or regulations might also
decrease the rate of growth of Internet use, which in turn could decrease the
demand for the Company's services or increase the cost of doing business or in
some other manner have a material adverse effect on the Company's future
prospects.
In addition, applicability to the Internet of existing laws
governing issues such as property ownership, copyrights and other intellectual
property issues, taxation, libel, obscenity and personal privacy is uncertain.
The vast majority of such laws were adopted prior to the advent of the Internet
and related technologies and, as a result, do not contemplate or address the
unique issues of the Internet and related technologies.
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In addition, numerous states, including the State of
California in which the Company's headquarters are located, have regulations
regarding the manner in which "auctions" may be conducted and the liability of
"auctioneers" in conducting such auctions. No legal determination has been made
with respect to the applicability of the California regulations to the Company's
business to date and little precedent exists in this area. The Company has
complied with the auctioneer bonding requirements of the State of California.
There can be no assurance, however, that a state will not attempt to impose
other regulations upon the Company in the future or that such imposition will
not have a material adverse effect on the Company's future prospects.
Several states have also proposed legislation that would limit
the uses of personal user information gathered online or require online services
to establish privacy policies. The Federal Trade Commission has also recently
settled a proceeding with one online service regarding the manner in which
personal information is collected from users and provided to third parties.
Changes to existing laws or the passage of new laws intended to address these
issues, including some recently proposed changes, could create uncertainty in
the marketplace that could reduce demand for the services of the Company or
increase the cost of doing business as a result of litigation costs or increased
service delivery costs, or could in some other manner have a material adverse
effect on the Company's future prospects.
In addition, because the Company's services are accessible
worldwide, and the auction site, when fully operational, facilitates sales of
goods to users worldwide, other jurisdictions may claim that the Company is
required to qualify to do business as a foreign corporation in a particular
state or foreign country. The Company is qualified to do business in two states
in the United States, and failure by the Company to qualify as a foreign
corporation in a jurisdiction where it may be required to do so could subject
the Company to taxes and penalties for the failure to qualify and could result
in the inability of the Company to enforce contracts in such jurisdictions. Any
such new legislation or regulation, or the application of laws or regulations
from jurisdictions whose laws do not currently apply to the Company's business,
could have a material adverse effect on the Company's future prospects.
The law relating to the liability of providers of online
services for activities of their users on the service is currently unsettled.
While the Company does not pre-screen the types of goods offered on AcuBid, it
is aware that certain goods, such as alcohol, tobacco, firearms, adult material
and other goods that may be subject to regulation by local, state or federal
authorities. There can be no assurance that the Company would be able to prevent
the unlawful exchange of goods on its service or that it will successfully avoid
civil or criminal liability for unlawful activities carried out by users through
AcuBid's service. The imposition upon the Company of potential liability for
unlawful activities of users of the AcuBid service, could require the Company to
implement measures to reduce its exposure to such liability, which may require,
among other things, the Company to spend substantial resources and/or to
discontinue certain service offerings. Any costs incurred as a result of such
liability or asserted liability could have a material adverse effect the
Company's future prospects.
In addition, the Company's success largely depends upon
sellers reliably delivering and accurately representing the listed goods and
buyers paying the agreed purchase price. The AcuBid auction site takes no
responsibility for delivery of payment or goods to any user of the AcuBid
service in person to person transactions. The Company anticipates, that it will
receive communications from users who did not receive the purchase price or the
goods that were to have been exchanged. While AcuBid can suspend the accounts of
users who fail to fulfill their delivery obligations to other users, AcuBid,
beyond crediting sellers with the amount of their fees in certain circumstances,
does not have the ability to otherwise require users to make payments or deliver
goods and AcuBid does not and will not compensate users who believe they have
been defrauded by other users.
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The Company does, from time to time receive complaints from
buyers as to the quality of the goods purchased. With respect to Company to
Person transactions, AcuBid had an unconditional 30 day return policy and
believed that such a policy will be adequate to protect AcuBid from most
problems associated with Company to Person transactions. With respect to Person
to Person transactions, although AcuBid does attempt to reduce its liability to
buyers for unfulfilled transactions or other claims related to the quality of
the purchased goods, the Company could in the future receive requests from users
requesting reimbursement or threatening legal action against the Company if no
reimbursement is made. Any resulting litigation could be costly for the Company,
divert management attention and could result in increased costs of doing
business, or otherwise have a material adverse effect on the Company's future
prospects. Any negative publicity generated as a result of fraudulent or
deceptive conduct by users of AcuBid could damage the Company's reputation and
diminish the value of its name, which could have a material adverse effect on
the Company's future prospects.
Other than Company owned inventory, AcuBid does not pre-screen
the goods that are listed by users on the AcuBid auction site or the contents of
their listings, which may include text and images. The Company anticipates that
it could receive, in the future, communications alleging that certain items sold
through the AcuBid service infringe third-party copyrights, trademarks or other
intellectual property rights. AcuBid's user policy prohibits the sale of goods
which may infringe third-party intellectual property rights and AcuBid is
empowered to suspend the account of any user who infringes third-party
intellectual property rights, there can be no assurance that an allegation of
infringement will not result in litigation against AcuBid. Any such litigation
could be costly for the Company and could result in increased costs of doing
business, or could in some other manner have a material adverse effect on the
Company's future prospects.
EMPLOYEES
As of the date of this filing, the Company has four employees:
two senior executives responsible for contracting, procurement and purchasing,
inventory oversight, and investor relations; a chief technology officer
responsible for design of and oversight of all software and information
technology development; and one in customer/technical support and general
administration. The Company has never had a work stoppage, and no employees are
represented under collective bargaining agreements. The Company considers its
relations with its employees to be good. The Company believes that its future
success will depend in part on its ability to attract, integrate, retain and
motivate highly qualified technical and managerial personnel. Competition for
qualified personnel in the internet industry and the Company's geographic region
is intense, and there can be no assurance that the Company will be successful in
attracting, integrating, retaining and motivating a sufficient number of
qualified personnel to conduct its business.
THE BUSINESS OF PT JARING DATA INTERAKTIF
Since the breakdown in the relationship with JDI occurred
approximately five weeks after the closing, the Company has no current
information to report on JDI beyond what was in the Company's Proxy Statement
dated May 3, 2000 and the report filed with the Securities and Exchange
Commission on September 5, 2000 on Form 8-K/A.
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Item 2. Properties
Effective June 1, 1999, the Company began leasing 3,081 square
foot of prime office space in the very desirable Pacific Ridge Complex in
Carlsbad, California. The Company obtained the space at $1.60 per square foot,
which is $0.15-0.30 per square foot below market. The lease is for three years,
with renewal and expansion options. The Company believes that this space will
provide adequate working space and environment for the technical and
administrative needs of the Company and will provide the necessary high tech
profile to meet with experts in the field and other interested parties. The
Company believes that this office space will be adequate to meet its needs for
the immediate future. Long-range future growth can be accommodated by leasing
additional space nearby.
On May 25, 1999, the Company entered into an agreement with
Level 3 Communications to secure space and bandwidth for the housing of its main
Web site server operations in San Diego, California. Pursuant to this agreement,
the Company is required to pay Level 3 Communications $1,800.00 per month which
will increase as the bandwidth increases with growth. This agreement was
terminated by mutual consent on October 7, 2000.
Item 3. Litigation
The following is a summary of three litigation matters in
which the Company is party. The summaries below are qualified by a review of the
complete court file in each matter.
o The Zilkha Litigation
---------------------
On Oct. 11, 2000, Selim K. Zilkha, on behalf of the Selim K.
Zilkha Trust filed a lawsuit against the Company seeking the return of the Ten
Million Dollar ($10,000,000) private placement he invested with the Company in
June, 2000. Additionally, Zilkha was seeking a temporary restraining order
("TRO") and an application for a preliminary injunction which was heard on Oct.
18, 2000 before the Honorable Napoleon Jones in the United States District Court
for the Southern District of California. The TRO and the preliminary injunction
sought to freeze Ten Million Dollars ($10,000,000) of the Company's assets. The
Company and its attorneys vigorously opposed the TRO and preliminary injunction
and will vigorously defend this lawsuit.
The allegations made in Zilkha's complaint assert violations
of the state and federal securities laws, as well as related causes of action.
The Company unequivocally denies the allegations contained in the Complaint.
On October 20, 2000 the Honorable Napoleon Jones denied
Zilhka's Application for a Temporary Restraining Order and Preliminary
Injunction to freeze Ten Million Dollars ($10,000,000) of the Company's assets.
The Court released its opinion, finding that Zilkha's motion was without merit.
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The Court declined to freeze $10,000,000 of the Company's
assets finding that Zilkha, whose investment put him on the same footing as any
other shareholder, had no lien or other legal rights over the Company's assets
that would entitle him such an extraordinary injunction.
On October 20, 2000, within hours of the District Court
releasing its opinion, Zilhka filed an emergency motion in the United States
Court of Appeals for the Ninth Circuit seeking an immediate, that is, same day
or next day order freezing $10,000,000 of the Company's assets.
On November 3, 2000, the United States Court of Appeals for
the Ninth Circuit granted Zilkha the emergency injunction and remanded the
matter back to the District Court for reconsideration of the preliminary
injunction on that level. On November 21, 2000, the District Court granted the
preliminary injunction.
On November 6, 2000, the Company filed a motion to dismiss
Zilkha's complaint on the ground that it failed to state a claim upon which
relief can be granted.
On December 1, 2000, the District Court entered an order
dismissing Zilkha's complaint for failure to state a claim upon which relief can
be granted. At that time, the District Court did give Zilkha leave to amend the
complaint up to and including December 18, 2000.
On December 18, 2000, Zilkha filed his First Amended Complaint
and on December 28, 2000, the Company filed its answer and counterclaim against
Zilkha for breach of contract.
Management has been vigorously defending this case although,
it has been engaged in settlement discussions with Zilkha.
o The Delaware Litigation
-----------------------
As a result of Indonesian Presidential Decree No. 96/2000
("Decree") on July 20, 2000, thirty days after closing the transaction with P.T
Jaring Data Interaktif ("JDI'), which banned foreign investments in Internet and
media related industries and after seeking advice and researching the
implications of this Decree, management concluded that the transaction with
Alanberg Pte. Ltd. ("Alanberg") JDI was void on July 20, 2000 due to
impossibility and frustration of purpose. Management was not advised of the
Decree by JDI or Alanberg until August 6, 2000.
Additionally, Alanberg and JDI took other actions which
frustrated the purpose of the transaction. On April 25, 2000 prior to the
Closing of the transaction with JDI, Registrant wired JDI $200,000 on the
assurance of JDI's representatives, including Bosko Djordjevic and Peter Gontha
that it was to be used as working capital of JDI. On July 13, 2000, subsequent
to Closing, Registrant wired JDI $500,000 on the assurance of JDI's
representatives, including Dicky di Nata and Peter Gontha that it was to be used
as working capital of JDI. Registrant believes that at least $500,000 of this
$700,000 was given personally to Peter Gontha, whose children own Alanberg and
were sellers of JDI.
On August 4, 2000, Registrant wired an additional $200,000 to
JDI, which was to be used as a short term loan to a company named Pacomnet, a
start-up in business to business Internet banking and owned by the son of JDI's
president, Dicky Di Nata and controlled by Peter Gontha. The Registrant, which
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had the option to purchase Pacomnet for an additional $1,800,000, called the
loan on September 10, 2000, pursuant to the terms of a signed agreement between
Registrant and Pacomnet and was advised by Dicky di Nata, an officer of JDI, who
was not a representative of Pacomnet, that the Registrant was not entitled to
the funds.
Thus, of the $900,000 that the Registrant advanced to JDI and
its related entities, the Company believes that, not less than $700,000 and
possibly all of the funds were converted to the personal use of others and not
applied to the needs of JDI.
On November 6, 2000, a meeting of the Board of Directors was
called and was attended by: Lawrence Schaffer, president and a director prior to
Closing; Waddy Stephenson and Michael Schaffer, both directors prior to closing
and elected again without contingency at the May 22, 2000 shareholder's meeting;
Raj Singham, a director of Alanberg, personal legal counsel to Peter F. Gontha,
and chosen by the selling JDI shareholders and contingently elected only upon
closing of the transaction; and, Bosko Djordjevic, chosen by the selling JDI
shareholders and contingently elected only upon closing of the transaction. Two
resolutions were considered:
o That because of impossibility caused by the Decree
and the alleged conversion of over $500,000 of
Registrant's money that the issuance of 44,000,000 of
Registrant's Common Stock to Alanberg was to be
canceled.
o That the Company commence an action against Peter
Gontha for his acts as a shareholder and an officer
of JDI, specifically the alleged conversion of over
$500,000.
As to both of the resolutions, the old board members, Schaffer
and Stephenson voted in favor and Djordjevic and Singham voted against. Both Mr.
Djordjevic and Mr. Singham were advised that the Company believed that since
they were interested directors, under Delaware law, their vote would not be
counted, and since the transaction was void, AB INITIO, only the vote of the old
board members should be counted.
On November 8, 2000, the pre-acquisition board of directors
consisting of Lawrence Schaffer, Michael Schaffer, and Waddy Stephenson signed a
unanimous written consent that acknowledged that the transaction between
Registrant and JDI was void and that the issuance of common stock to Alanberg
was void and the stock should be canceled.
On November 8, 2000, Alanberg, acting through its directors
Noorjahan Meurling and Dewi Allice Lydia Gontha a.k.a. Dewi Gontha Sulisto, and
without the signatures of Alanberg directors identified in the Company's Form
8-K filed on September 5, 2000, Raj Singham and Francois Gontha, signed an
Action by Written Consent of Stockholder of Asia Web Holdings, Inc. pursuant to
Section 228 of the Delaware General Corporations Law and Article 1, Section 9 of
the Bylaws ("Shareholder Action"), purporting to remove Michael Schaffer and
Waddy Stephenson from the Board of Directors and appointed Marlon Buno, Peter
Gontha's accountant in the United States. This Shareholder Action was ratified
by a Board of Director's Resolution of Alanberg Private Limited signed by all of
the directors of Alanberg: Raj Singham, Noorjahan Meurling, and Dewi Allice
Lydia Gontha a.k.a. Dewi Gontha Sulisto. The composition of the Board of
Directors of Alanberg on November 8, 2000 is not the same as reported in the
Company's Form 8-K filed on September 5, 2000.
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This purported board of directors of the Company, consisting
of Marlon Buno, Raj Singham, and Bosko Djordjevic, a Beverly Hills, California
resident, on November 8, 2000, after waiver of notice pursuant to Section 229 of
the Delaware General Corporations Law held a meeting and took the following
actions:
o Rescission of the actions taken at the November 6,
2000 meeting of the Company's Board of Directors.
o Removal of Michael Schaffer as Chief Executive
Officer, Lawrence Schaffer as President, and Waddy
Stephenson as Secretary and as Vice President of
Technical Development.
o The election of Marlon Buno as President and Chief
Executive Officer, Lincoln Stone as Secretary, and
Marlon Buno as Chief Financial Officer.
o That legal counsel acting in the matter of Zilkha vs.
Asia Web Holdings, Inc. in the United States District
Court for the Southern District of California, Case
No. 00 CV 2025 (the"Zilkha Case"), Patton Boggs LLP
and Joseph Nardulli were to continue to be retained
by the Company but that such counsel were to
disregard the instruction of the "previous
management" and were to only act if instructed by the
newly appointed officers.
o That the accountancy firm of Israeloff, Trattner and
Co. were to continue in the employ of the Registrant
but that the accountants were to disregard the
instruction of the "previous management" and were to
only act if instructed by the newly appointed
officers.
o That the banking authority of the former officers is
rescinded.
o That Marlon Buno and Lincoln Stone become the
designated signatories on the Company's bank accounts
with the exception of the account holding the
$10,000,000 proceeds from the Selim Zilkha private
placement.
o That Marlon Buno and Bosko Djordjevic become the
designated signatories on the bank account holding
the $10,000,000 proceeds from the Selim Zilkha
private placement.
o That these purported officers and directors be
indemnified by the Company for the above actions.
On November 13, 2000, after action by the old Board of
Directors consisting of Michael Schaffer, Lawrence Schaffer, and Waddy
Stephenson, the Company's attorneys, Patton Boggs LLP and Delaware law firm of
Richards, Layton & Finger, filed a Complaint in the United States District Court
for the District of Delaware naming as defendants PT Jaring Data Interaktif,
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Peter F. Gontha, Francois Gontha, Dewi Allice Lydia Gontha, Adisatrya Suryo
Sulisto, Ahmad Sidik Mauladi ("Dicky") Iskandar Di Nata, Alanberg PTE.Ltd.,
Marlon Buno, Lincoln Stone, and Bosko Djordjevic. The Complaint alleges the
following causes of action: 1)Securities Fraud in Violation Rule 10b-5 and
Section 10(b) of the Securities and Exchange Act of 1934; 2) Fraudulent
Misrepresentations or alternatively Negligent Misrepresentations; 3) Fraudulent
Inducement and Concealment; 4) Conversion; 5) Civil Conspiracy to Commit Fraud;
6) Breach of Fiduciary Duty; 7) Breach of Contract; 8) Impossibility and
Impracticability of Performance and Frustration of Purpose; 9) Declaratory
Judgment; 10) Relief Under Subchapter VII, Section 225 of the Delaware General
Corporate Law; and 11) Conversion.
On November 21, 2000, the Company sought a Temporary
Restraining Order restraining the Defendants in the Delaware action from
attempting to exercise management and control over the Company. The court
granted a Temporary Restraining Order maintaining the status quo finding that
the Board of Directors in the interim consisted of Michael Schaffer, Waddy
Stephenson, Bosko Djordjevic, and Raj Singham.
(c) The Kurt Bevacqua Litigation
----------------------------
A Complaint was filed in the Superior Court of California,
County of San Diego (Central Division) by Plaintiff Kurt Bevacqua against the
Company initially on March 6, 2000 for Breach of Contract; Breach of Oral
Contract; Services Performed for a Certain Sum; Unjust Enrichment; Specific
Performance of Contract; and Breach of Fiduciary Duty. The Complaint was amended
on October 18, 2000 to add as Defendants, Michael Schaffer, Lawrence Schaffer,
and Waddy Stephenson as to the Cause of Action for Breach of Fiduciary Duty. The
Amended Complaint was answered on November 17, 2000. Subsequent to answering the
Amended Complaint, a motion was made by the three new defendants and joined by
the Company to continue the trial. The trial had been reset from March 2, 2001
to June 1, 2001.
The gravamen of Plaintiff's claim is that the Company and the
three named director defendants breached an agreement reached on or about May
29, 1999, wherein Plaintiff, a former major league baseball player, entered into
an agreement to serve on the Company's advisory board, and would further
persuade other well-known professional athletes to join the advisory board.
Plaintiff alleges that in return that he was promised 50,000 shares of the
Company's common stock and the option to purchase 200,000 shares of the
Company's common stock at $0.45 per share. Plaintiff alleges that he performed
under the terms of the Agreement, and without justification his contract was
canceled, losing his rights to the 50,000 shares of stock and the option to
purchase 200,000 of the Company stock. Further, Plaintiff alleges that he was
damaged by the cancellation of an engagement to do some fifty-two radio
appearances on a local San Diego radio program at $250.00 per program, of which
he only completed two such programs before the Company terminated their
contractual relationship with Plaintiff. The Company has been and continues to
defend this action based upon its numerous affirmative defenses including breach
of contract on the part of Plaintiff Bevacqua. Further, the Company has
cross-complained against Bevacqua for (1) rescission; (2) Breach of Contract;
(3) Breach of the Covenant of Good Faith and Fair Dealing; (4) Breach of
Fiduciary Duty; (5) Money had and received; and (6) Constructive Trust. The
Company is seeking damages in a sum of at least One Million One Hundred
Twenty-Five Thousand Dollars ($1,125,000) on these causes of action.
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Plaintiff's Complaint prays for damages in an unspecified
amount against the Company, and further prays for the specific performance of
the alleged contract, wherein Plaintiff was to receive 50,000 shares of the
common stock and an option to purchase 200,000 additional shares of stock.
Plaintiff prays for an unspecified sum in damages against the three directors in
the new cause of action for Breach of Fiduciary Duty and for punitive damages
again in an unspecified amount on the Breach of Fiduciary Duty Cause of Action,
which is directed at the three individually named defendants only.
However, based upon the discovery conducted to date and the
evaluation of the merits of Plaintiff's action upon this limited discovery, it
is believed that there is a reasonable likelihood that upon the trial of this
matter that the Company would receive a defense verdict. Moreover, in the event
that the Company would receive an adverse verdict at trial, based upon the facts
as they have been currently developed, it appears that the Company's exposure is
in the range of approximately One Hundred Thousand Dollars ($100,000).
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders, through the
solicitation of proxies or otherwise.
Part II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company's Common Stock has been publicly traded in the
over-the-counter market and quoted on the Nasdaq electronic OTC Bulletin Board
since March, 1999 under the trading symbol, "EBID" until June 1, 2000 and under
the symbol "AWHI" since that date. Prior to that, the Company's stock traded on
the Vancouver Stock Exchange since February, 1985 and since August 26, 1997, the
Company's stock has traded in the over-the-counter market and quoted on the OTC
Bulletin Board under the symbol IACV The OTC Bulletin Board is an electronic
quotation service that displays real-time quotes, last sale prices and volume
information in certain and domestic foreign issuers whose securities are traded
in the over-the-counter market.
No dividends on the Company's Common stock have been declared
or paid since the Company's inception. The Company currently intends to retain
earnings to finance the growth and development of its business and does not
anticipate paying cash dividends on its Common Stock in the foreseeable future.
As of August 31, 2000 there were approximately 391 holders of record and over
3000 holders in "street name" of the Company's Common Stock and 1 holder of the
Company's Series B Convertible Preferred Stock (See, Item 3 Litigation, above.).
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The following states the range of high and low bid prices for
the each quarter of the last two fiscal years:
Quarter Ending (1) High Low
--------------- ---- ---
November 30, 1998 $0.10 $0.04
February 28, 1999 $0.20 $0.04
May 31, 1999 (2) $4.25 $0.20
August 31, 1999 $8.00 $2.50
November 30, 1999 $2.8125 $0.5938
February 28, 2000 $3.50 $0.75
May 31, 2000 $5.0938 $1.375
August 31, 2000 $2.50 $0.3125
------------
(1) The High/Low bid prices for each quarter of the last fiscal year was
obtained from Nasdaq Trading and Market Services. The quotations
reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.
There have been no sales of equity securities of Registrant
sold by Registrant (that were not registered under the Securities Act of 1933)
during the period covered by this report, except those previously reported on
Form 10-QSB.
Item 6. Management's Discussion and Analysis or Plan of Operation
Management's Discussion and Analysis
The following "Management's Discussion and Analysis or Plan of
Operation" includes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. This Act provides a "safe
harbor" for forward-looking statements to encourage companies to provide
prospective information about themselves so long as they identify these
statements as forward-looking and provide meaningful cautionary statements
identifying important factors that could cause actual results to differ from the
projected results. All statements other than statements of historical fact we
make in this Proxy Statement are forward-looking. In particular, any statements
that we make in this Proxy Statement regarding industry prospects or our future
results of operations or financial position are forward looking statements.
Forward-looking statements reflect our current expectations and are inherently
uncertain. Our actual results may differ significantly from our expectations.
At the beginning of its fiscal year 2000, AcuBid.com Inc. was
an online auction house. The business plan, conceived in February 1999, had the
Company competing for a share of the online auction business dominated presently
by eBAY, Amazon.com and Yahoo. Online auctions enable buyers and sellers of
specified items to come together on an informal and entertaining manner and to
conduct their business. To date, the Company's revenues have been derived from
listing fees, commissions received from the sale of items on its site and sales
of items for its own account. Inventory transactions may also result in losses
rather than gains due to acquisition costs, inventory management costs, and
fulfillment cost.
During the early part of the fiscal year, the Company
redesigned its online auction site to make it more aesthetically pleasing and
easier to use. As part of the redesign, new functions were added to the site.
The Company modified and changed some of the categories of its listed items. The
auction categories now include Antiques, Art, Books, Coins, Collectibles, Comic
Books and Sci-Fi, Entertainment, Jewelry, Sports Memorabilia, Stamps, Toys and
Miscellaneous. As of the date of this filing, since inception of the site, the
Company has completed approximately 15,500 auctions. Also as of the date of this
filing, the Company had minimal items listed for sale.
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One of the new functions is automatic cross-referencing of a
single item in multiple categories. Sellers, in both Company-to-Person and
Person-to-Person transactions, can list an item in 3 sub-categories as well as
in the main category. Additionally, the Company has eliminated the Premier
Option feature, which charged a seller premium listing fees for its item to
appear on the site's home page. The Company has instituted a Random Home Page
Feature in which 25 items per day, in groups of five, will appear on the Home
Page. The Company also improved and expanded its search engine capability,
enabling users to search by product, category, or seller. Additional auction
administration features, including Bid Retraction, Auction Editing, and Auction
Canceling were also added.
Also, during the early part of the fiscal year different forms
of marketing were used in order to increase the traffic to the AcuBid auction
site. Advertisements were placed in Antique Trader, Comic Book Marketplace,
Linns Stamp News, New England Antiques, New York Antique Almanac, Sports
Collectors Digest, and Warmans Today's Collector; targeted email campaigns were
used to attract eBay customers to the AcuBid auction site; and mass email based
mailings were undertaken. In addition, starting in January 2000, the "Collect
This" radio show began to air on KOGO AM 600. The aim of this show was to
generate an interest both in the collectibles market and in the AcuBid auction
site. The radio show was canceled.
The Company also explored the possibility of expanding its
online auction site to include different types of auctions and also the
possibility of creating an e-commerce site for collectibles that would allow
direct sales of collectible items as an alternative to an auction. At this time,
the Company has not decided whether or not to develop these sites as originally
explored, but believes that the development of such sites or related e-commerce
sites will benefit both the Company and its strategic partners.
As discussed above in Item 1, in the latter part of 1999, the
Company reassessed the auction business and concluded that is needed to
reconfigure its business model from direct competition with Yahoo and eBay to
other internet and e-commerce applications which also included expansion or
other uses of the auction site. This lead to the JDI acquisition.
On January 24, 2000, the Company entered into a Memorandum of
Understanding with JDI to acquire 90% of JDI through a stock purchase agreement.
Subsequently, the formal agreement was signed on March 13, 2000 and amended on
March 27, 2000. Copies of these agreements are attached, as exhibits, to the
Company's Form 8-K filed with the Securities and Exchange Commission on March
29, 2000.
Established in February 1999, JDI, represented to the Company
that it was an Indonesian-based Internet Service and Content Provider Company
and with its associated companies participates in multi-media business. It was
further represented to the Company by the principals of JDI, that, JDI and its
associates have extensive licenses in satellite, wireless broadband and other
areas that relate to Internet service and content. It was further represented to
the Company by the principals of JDI, that, JDI provided dial-up Internet
services and in the near future expects to provide broadband Internet services
via satellite for Indonesian customers. It was further represented to the
Company by the principals of JDI, that, JDI plans to extend those services
throughout Asia and has long range plans to target the larger global community.
It was further represented to the Company by the principals of JDI, that, JDI
also has licenses and contracts to market a wide range of content from media
sources, including TV stations, radio stations, Pay Televisions (cable and
Direct Broadcast Satellite) and newspapers.
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In addition, it was further represented to the Company by the
principals of JDI, that, JDI owns 69% of PT Medialintas Antar Buana ("MLAB"), a
start-up Internet Service Provider ("ISP") and is affiliated to PT Mesana
Investama Utama, a securities company. It was further represented to the Company
by the principals of JDI, that, a web site devoted to the Jakarta stock market,
as well as other web sites, is currently under development, which would further
increase focus on the content market for Indonesia.
In February 2000, the Company started providing direct
technical support to JDI. Technical personnel from the Company have been working
with JDI personnel in support of the development of their network infrastructure
and web portal development. It was anticipated that this technical support would
continue and was expected to expand following the Acquisition. This support was
key to the success of JDI and the Company's role in the emerging Indonesia
Internet market. As of the date of this filing, the Company no longer provides
technical support to JDI and does not anticipate that it will in the future.
On May 22, shareholder approval was obtained to complete the
JDI acquisition between the Company and JDI and by June 19, 2000, all required
Indonesian regulatory approval and all conditions precedent had been fulfilled
and the Transaction closed on that date. At the closing, the Company delivered
to Alanberg certificates representing 44,000,000 shares of the Registrant's
Common Stock in exchange for 180,000,000 shares or 90% of the issued and
outstanding shares of JDI's stock. No other consideration was paid for 90% of
the issued and outstanding shares of JDI stock.
As a result of the June 20, 2000 closing of the JDI
transaction, Larry Schaffer resigned from the Board of Directors and the
Directors elected at the shareholder meeting took office. The Board of Directors
then consisted of Michael Schaffer; Waddy Stephenson; Tjahjono Soerjodibroto;
William Millard; Terry Giles; Raj Singam; Gordon Holterman; and, Bosko
Djordjevic. Note that on July 21, 2000, Gordon Holterman resigned from the Board
of Directors; on September 19, 2000 William Millard and Terry Giles resigned
from the Board of Directors; and on October 12, Tjahjono Soerjodibroto resigned
from the Board of Directors. At the time of this filing, pursuant to the
November 21, 2000 order of the Delaware District Court, the Board of Directors
consists of Michael Schaffer, Raj Singam, Waddy Stephenson, and Bosko
Djordjevic.
On June 23, 2000, the Company closed the Private Placement
transaction with Zilkha, issuing 1,000,000 shares of Series B Preferred Stock
and the two warrants described above, in exchange for $10,000,000.
On July 13, 2000, subsequent to Closing, the Company wired JDI
$500,000 on the assurance of JDI's representatives, including Dicky di Nata and
Peter Gontha, was to be used as working capital of JDI. This was in addtion to
the $200,000 wired to JDI on April 25, 2000 for the same purpose. By August 6,
the Company came to believe, that, most, if not all,of this $700,000 was given
personally to Peter Gontha, whose children own Alanberg and were sellers of JDI.
-20-
<PAGE>
On August 4, 2000, Registrant wired an additional $200,000 to
JDI, which was to be used as a short term loan to a company called Pacomnet, a
start-up in business to business Internet banking and owned by the son of JDI's
president, Dicky Di Nata and controlled by Peter Gontha. On September 10, 2000,
Registrant called the loan pursuant to the terms of a signed agreement between
Registrant and Pacomnet and was advised by Dicky di Nata, an officer of JDI who
was not a representative of Pacomnet, that the Registrant was not entitled to
the funds.
Although not announced until August 5, 2000, Indonesia's
President Wahid issued a decree on July 20, 2000, banning new investments by
foreigners in multimedia industries (including Internet related operations) and
limiting foreign ownership in telecommunications companies to forty-nine percent
(49%).
By mid-August, 2000, because of the unauthorized reimbursement
of a substantial portion of JDI's working capital to certain individuals and
because of the Presidential Decree, the Company's Directors began discussing the
inability to move forward with JDI. Although the Internet portion of the decree
was repealed within two weeks of its announcement, by that time the relationship
between the two companies had deteriorated to the point that continuation of
that relationship was severely jeopardized. This culminated in a September 18,
2000 Board of Directors resolution authorizing the CEO, Michael Schaffer, to
explore in concept the unwinding of the transaction between JDI and the Company.
SUMMARY
By August 31, 2000 the Online Auction Site was operational but
was no longer actively promoted by the Company. By October 31, 2000 the Company
had moved the equipment that hosted the site from the Level III Data Center in
San Diego, California to its corporate offices and was no longer actively
selling its own merchandise on the site. The Advisory Board that had advised the
Company on acquiring and promoting merchandise is also no longer active. By
taking these actions, the Company eliminated almost all costs associated with
maintaining the site. Although the site remains operational allowing consumers
to post items on the site for auction, the activity on the site is minimal and
the Company has no expectations that the site will generate significant revenue
unless a decision is made to begin actively promoting the site again.
By August 5, 2000, because of the Indonesian Presidential
decree and the deteriorating conditions in the relationship between JDI and the
Company, the Company no longer had any active role in the business of JDI. It is
not expected that condition change until the litigation is resolved and it is
not known at that time what the relationship between the two companies will be.
The Company is in a position where it needs to evaluate a new
business model that best utilizes its current assets and personnel. Several
Internet related as well as non-Internet related possibilities have been
reviewed but, with the current status quo order issued by the United States
District Court for the District of Delaware, the Company can take no action
until the litigation is resolved. It is not expected that the Company will make
any decisions on its future business model until the litigation is resolved.
Additionally, when a new direction is determined the Company does not know if
its auction site will fit in that new business.
-21-
<PAGE>
Item 7. Financial Statements
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
FINANCIAL STATEMENTS
AND
AUDITORS' REPORT
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
<PAGE>
CONTENTS
Page
----
AUDITORS' REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Operations 3
Statements of Shareholders' Equity 4
Statements of Cash Flows 5-6
Notes to Financial Statements 7-22
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Asia Web Holdings, Inc.
(formerly AcuBid.com, Inc.)
We have audited the accompanying balance sheets of Asia Web Holdings, Inc.
(formerly AcuBid.com, Inc.) as of August 31, 2000 and 1999, and the related
statements of operations, shareholders' equity, cash flows for the years 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Asia Web Holdings, Inc. as of
August 31, 2000 and 1999, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
As further discussed in Notes 1 and 8 to the financial statements, the Company
is involved in significant litigation and is subject to a temporary restraining
order that limits the Company's ability to operate.
Israeloff, Trattner & Co. CPAs, P.C.
Valley Stream, New York
December 20, 2000, except for
Note 8, as to which the date
is December 28, 2000
1
<PAGE>
<TABLE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
BALANCE SHEETS
AUGUST 31, 2000 AND 1999
<CAPTION>
ASSETS
2000 1999
--------------- ---------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents (Note 1) $ 10,287,631 $ 4,093,919
Marketable securities (Note 1) 1,182,585 -
Inventory (Note 1) - 188,953
Prepaid expenses - 60,000
Due from officers and directors 42,452 -
--------------- ---------------
Total current assets 11,512,668 4,342,872
--------------- ---------------
PROPERTY AND EQUIPMENT, at cost, less accumulated
depreciation (Notes 1 and 2) 156,117 196,487
--------------- ---------------
OTHER ASSETS
Investment in closely held company, at cost (Note 1) 100,000 -
Inventory (Note 1) 142,389 -
Other 6,978 14,742
--------------- ---------------
Total other assets 249,367 14,742
--------------- ---------------
TOTAL ASSETS $ 11,918,152 $ 4,554,101
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 146,169 $ 121,602
Accrued liabilities 140,038 88,962
Due to related parties (Note 3) 13,290 13,290
--------------- ---------------
Total current liabilities 299,497 223,854
--------------- ---------------
OTHER PAYABLE (Note 6) - 53,437
--------------- ---------------
COMMITMENTS AND CONTINGENCIES (Note 8)
REDEEMABLE CUMULATIVE CONVERTIBLE
PREFERRED STOCK; par value $.001; 10,000,000
shares authorized; Series A; 6% cumulative; no shares
issued and outstanding in 2000 and 3,800,000 shares
issued and outstanding in 1999 (Note 9) - 3,800,000
--------------- ---------------
SHAREHOLDERS' EQUITY (Notes 1, 4, 5, 10 and 11)
Preferred stock, Series B; stated value $10 per
share; 1,000,000 and no shares authorized, issued and
outstanding in 2000 and 1999, respectively (Note 10) 10,000,000 -
Common stock; par value of $0.001 per share; 100,000,000
and 50,00,000 shares authorized, in 2000 and 1999,
respectively, 52,790,408 and 5,738,151 shares issued
and outstanding in 2000 and 1999, respectively 52,792 5,739
Additional paid-in capital 101,639,006 9,300,786
Investment in Indonesian Subsidiary, at cost,
subject to recision (88,000,000) -
Accumulated deficit (12,073,143) (8,829,715)
--------------- ---------------
Total shareholders' equity 11,618,655 476,810
--------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 11,918,152 $ 4,554,101
=============== ===============
See accompanying notes to financial statements.
</TABLE>
2
<PAGE>
<TABLE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
Revenues $ 36,122 $ 840
Cost of revenues 242,647 -
------------ ------------
Gross profit (loss) (206,525) 840
------------ ------------
Operating Costs and Expenses
Selling, general and administrative, excluding depreciation
(including $394,086 and $1,283,745 in 2000 and 1999
in the form of common stock issued and stock options
granted to employees and others for services provided)
(Note 10) 1,763,852 1,799,364
Depreciation (Note 2) 83,503 39,458
------------ ------------
Total operating costs and expenses 1,847,355 1,838,822
------------ ------------
Loss from Operations (2,053,880) (1,837,982)
------------ ------------
Other (Income) Expenses
Interest expense 878 13,211
Dividend and interest income (208,648) (20,612)
Litigation charge (Note 8) 100,000 -
Realized and unrealized investment gains (71,323) (4,575)
Other 800 800
------------ ------------
Total other expenses (income) (178,293) (11,176)
------------ ------------
Loss from continuing operations before discontinued
operations and extraordinary items (1,875,587) (1,826,806)
Loss from discontinued operations (Note 1) (1,367,841) -
------------ ------------
Loss before extraordinary items (3,243,428) (1,826,806)
Extraordinary items
Gain on debt forgiveness (Note 4) - 72,745
Loss on extinguishment of debt (Note 10) - (120,421)
------------ ------------
Net loss (3,243,428) (1,874,482)
Preferred dividends - 19,000
Distribution to converting preferred shareholders in
the form of common stock (Note 9) 788,960 -
------------ ------------
Net loss applicable to common shareholders $(4,032,388) $(1,893,482)
============ ============
Net loss per common share - basic and diluted (Notes 1 and 12)
Loss from continuing operations before extraordinary item $ (0.17) $ (0.46)
Loss from discontinued operations (0.08) -
Extraordinary items - (0.01)
------------ ------------
Net loss $ (0.25) $ (0.47)
============ ============
See accompanying notes to financial statements.
</TABLE>
3
<PAGE>
<TABLE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
<CAPTION>
Series B
Preferred Stock Common Stock Additional
------------------------------ ----------------------------- Paid-In
Shares Amount Shares Amount Capital
------------- ---------------- -------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Balance, August 31, 1998 - $ - 2,639,301 $ 2,640 $ 6,734,353
Shares issued in satisfaction of debt - - 322,100 322 213,456
Shares issued in exchange for services - - 456,000 456 571,664
Release of escrowed shares - - - - 193,375
Sale of stock in private placement offering,
net of costs of $4,135 - - 1,110,000 1,110 494,265
Exercise of stock purchase warrants - - 1,162,500 1,163 530,880
Exercise of stock options - - 100,000 100 44,900
Options granted on common stock to
employees and directors for services - - - - 518,250
Cancellation of common shares issuance
of shares of Series A preferred stock - - (51,750) (52) 52
Forgiveness of debt - - - - 18,591
Net loss - - - - -
Preferred dividends - - - - (19,000)
------------- ---------------- -------------- ------------- -----------------
Balance, August 31, 1999 - - 5,738,151 5,739 9,300,786
Net loss for the period - - - - -
Settlement of liabilities by the issuance of
common stock - - 57,739 58 60,879
Issuance of shares of common stock for services - - 75,748 76 224,960
Preferred stock dividends - - - - (59,250)
Exchange of Series A preferred shares for
common stock - - 2,893,770 2,894 4,020,356
Issuance of shares of Series B preferred stock 1,000,000 10,000,000 - - -
Issuance of common stock for stock of
another company - - 44,000,000 44,000 87,956,000
Exercise of stock options - - 25,000 25 11,225
Options granted on common stock to
employees and directors for services - - - - 124,050
------------- ---------------- -------------- ------------- -----------------
1,000,000 $ 10,000,000 52,790,408 $ 52,792 $ 101,639,006
============= ================ ============== ============= =================
</TABLE>
continued below
<PAGE>
<TABLE>
<CAPTION>
Investment In
Indonesian
Subsidiary
Subject to Accumulated
Recision Deficit Total
---------------- ---------------- ----------------
<S> <C> <C> <C>
Balance, August 31, 1998 $ - $ (6,955,233) $ (218,240)
Shares issued in satisfaction of debt - - 213,778
Shares issued in exchange for services - - 572,120
Release of escrowed shares - - 193,375
Sale of stock in private placement offering,
net of costs of $4,135 - - 495,375
Exercise of stock purchase warrants - - 532,043
Exercise of stock options - - 45,000
Options granted on common stock to
employees and directors for services - - 518,250
Cancellation of common shares issuance
of shares of Series A preferred stock - - -
Forgiveness of debt - - 18,591
Net loss - (1,874,482) (1,874,482)
Preferred dividends - - (19,000)
---------------- ---------------- ----------------
Balance, August 31, 1999 - (8,829,715) 476,810
Net loss for the period - (3,243,428) (3,243,428)
Settlement of liabilities by the issuance of
common stock - - 60,937
Issuance of shares of common stock for services - - 225,036
Preferred stock dividends - - (59,250)
Exchange of Series A preferred shares for
common stock - - 4,023,250
Issuance of shares of Series B preferred stock - - 10,000,000
Issuance of common stock for stock of
another company (88,000,000) - -
Exercise of stock options - - 11,250
Options granted on common stock to
employees and directors for services - - 124,050
---------------- ---------------- ----------------
$ (88,000,000) $ (12,073,143) $ 11,618,655
================ ================ ================
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
<TABLE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(4,032,388) $(1,874,482)
------------ ------------
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Loss from discontinued operations 1,367,841 -
Depreciation 83,503 39,458
Amortization of debt discount - 12,000
Common shares issued as an incentive to
preferred shareholders 788,960 -
Shares issued and released from escrow
for compensation 225,036 765,495
Options granted for compensation 124,050 518,250
Extraordinary gain on debt forgiveness - (72,745)
Extraordinary loss on extinguishment of debt - 120,421
Changes in assets and liabilities:
Inventory 46,564 (188,953)
Prepaid expenses and other 67,764 (60,000)
Accounts payable 24,568 102,194
Accrued liabilities 126,013 25,087
Due to related parties - (500)
Other payable (53,437) 53,437
Due from officers and directors (42,452) -
------------ ------------
Total adjustments 2,758,410 1,314,144
------------ ------------
Cash used by continuing operations (1,273,978) (560,338)
Cash provided (used) by discontinued operations (1,367,841) 8,045
------------ ------------
Net cash used by operating activities (2,641,819) (552,293)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property and equipment (43,134) (236,076)
Payments for marketable securities (1,182,585) -
Payments for investment in closely held company (100,000) -
------------ ------------
Net cash used by investing activities (1,325,719) (236,076)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of warrants - 532,043
Proceeds from exercise of options 11,250 45,000
Net proceeds from issuance of common stock in
a private placement - 495,375
Proceeds from issuance of Series A redeemable
preferred stock in a private placement 150,000 3,800,000
Proceeds from issuance of Series B preferred stock
in a private placement 10,000,000 -
------------ ------------
Net cash provided by financing activities 10,161,250 4,872,418
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 6,193,712 4,084,049
CASH AND CASH EQUIVALENTS - beginning 4,093,919 9,870
------------ ------------
CASH AND CASH EQUIVALENTS - end $10,287,631 $ 4,093,919
============ ============
See accompanying notes to financial statements.
</TABLE>
5
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
2000 1999
------------- -------------
Cash paid during the year for:
Interest $ 878 $ 1,211
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
2000 1999
------------- -------------
Common stock issued for settlement of debt $ 60,937 $ 213,778
============= =============
Common stock issued in exchange for Series A
preferred stock and accrued dividends $ 4,023,250 $ -
============= =============
Common stock issued in exchange for stock
of Indonesian subsidiary $ 88,000,000 $ -
============= =============
See accompanying notes to financial statements.
6
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS AND ORGANIZATION
Asia Web Holdings, Inc. (the "Company") was formed in Canada in 1983, as
Sheen Minerals, Inc. It was subsequently incorporated under the laws of
the state of Delaware in September 1993, as AcuVision Systems, Inc.
Through August 1998, the Company marketed vision training products, the
"AcuVision" product line. By fiscal 1998 year end, the Company concluded
that future sales and business in the vision training market was too
limited and that the costs of marketing and production too great. As a
result, during fiscal 1999, management determined that the Company should
discontinue the AcuVision line and restructure.
In addition, during fiscal 1999, the Company changed its name to
AcuBid.Com Inc. and expanded its business objective to include the
development of a premier web site to facilitate the buying and selling of
high-end collectibles. The Company started to accumulate an inventory of
rare and hard to find items, which it began to auction to the public over
its web site. In addition, the Company has developed and implemented the
technological requirements needed to act as a broker to provide a venue
for sellers and dealers to display their collectibles to potential
purchasers throughout the world via the AcuBid.Com web site.
In an effort to create a stronger and more diversified company with
access to the Asian Internet market, on March 13, 2000 and as amended on
March 24, 2000, the Company entered into a stock purchase agreement with
Adisatrya Surya Sulisto, ("Seller" or "Sulisto"), owner of at least 90%
of the issued and outstanding shares of Jaring Data Interaktif, ("JDI"),
whereby the Company, through a wholly-owned subsidiary, Acubid
Acquisition Corp., agreed to purchase 90% of JDI's stock in exchange for
44,000,000 shares of the Company's stock (approximately 80% of the
Company). The agreement also provided that the Company contemplated
entering into an arrangement with the Selim K. Zilkha Trust ("Zilkha" or
the "Trust") wherein the Trust would purchase 5,000,000 shares of the
Company's common stock in exchange for a $10,000,000 capital infusion
through a private placement that would close simultaneously with the
closing under the JDI agreement. The JDI transaction closed on June 20,
2000 when the market value of the Company's stock was approximately $2
and the Zilkha Private Placement closed June 23, 2000 (Notes 8 and 10).
During May 2000, the Company's name was changed to Asia Web Holdings,
Inc.
Pursuant to a Sale and Purchase Agreement dated June 15, 2000, between
Sulisto and Alanberg Pte. Ltd., a Singapore corporation ("Alanberg"),
Alanberg assumed all of the duties, rights and obligations of Sulisto
under the Amended and Restated Stock Purchase Agreement. Hereinafter,
Sulisto, JDI and Alanberg individually and collectively referred to as
JDI.
Pursuant to the purchase agreement, JDI made several representations and
warranties to the Company regarding their financial statements and
regarding the laws of Indonesia. Between April and August 2000, the
Company advanced $900,000 to JDI for working capital and other purposes.
The Company believes that at least $700,000 of the advances was utilized
personally and not applied to the needs of the JDI. Furthermore, on or
about July 20, 2000, the government of Indonesia issued a presidential
decree that had the effect of restricting foreign investment in
Indonesian multi-media and Internet companies. Although the Internet
portion of the decree was repealed within two weeks of its announcement,
by that time the relationship between JDI and the Company had
deteriorated to the point that continuation of that relationship was
severely jeopardized.
7
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DESCRIPTION OF BUSINESS AND ORGANIZATION (CONTINUED)
Therefore, during November 2000, the Board of Directors of the Company
concluded that the transaction was void. Accordingly, the value of the
acquired JDI shares is included in the shareholders' equity section as an
investment subject to recision On November 13, 2000, the Company filed a
complaint in the United States District Court in Delaware which alleged
that JDI engaged in a conspiracy to defraud the Company of approximately
80% of its stock ownership and of the loan for the additional $900,000.
Among other relief, the Company is seeking a declaration that the
transactions governed by the purchase agreement are void. On November 21,
2000, the Court granted a Temporary Restraining Order maintaining the
status quo, finding that the Board of Directors in the interim, consisted
of two Company members and two JDI members.
Management feels that it is doubtful that they will recover the $900,000
advances. As such, the advances, together with all other expenses paid in
connection with this transaction, are included in the statement of
operations as loss from discontinued operations amounting to $1,367,841.
Additionally, as of August 31, 2000, while the site remains operational,
there is virtually no activity on the site and the Company is not
actively promoting the auction site and has ceased selling Company owned
inventory on its site.
The Company is in a position where it needs to evaluate a new business
model that best utilizes its assets and personnel, but with the current
status quo order issued by the Court, the Company can take no action
until the litigation is resolved. It is not expected that the Company
will make any decisions on its future business model until the litigation
is resolved. See Note 8 for further discussion of the JDI litigation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
REVENUE RECOGNITION
Revenues from items listed on the Company's on-line auction site are
recognized at the time an item is sold.
WEB SITE DEVELOPMENT COSTS
Product development costs include expenses incurred by the Company to
develop, enhance, manage, monitor and operate the Company's web site.
Product development costs are expensed as incurred.
8
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include short-term, highly liquid investments
with original maturities of three months or less. The Company has no
requirements for compensating balances. At August 31, 2000, cash balances
in excess of federally insured limits amounted to approximately
$10,012,000.
MARKETABLE SECURITIES
Approximately $1,182,000 is maintained in a liquid asset management
account which invests primarily in investment grade short-term commercial
paper, corporate bonds and taxable auction rate notes.
The Company accounts for its marketable securities in accordance with the
provisions of Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities" (SFAS
115). The Company has classified all investment securities as trading
securities which are measured at fair value in the financial statements
with unrealized gains and losses included in results of operations.
INVENTORY
Inventory, consisting of sports memorabilia and other collectibles, is
stated at the lower of cost (first-in; first-out) or market. The
Company's management monitors inventory for slow moving items and makes
necessary valuation adjustments when required. The Company has adjusted
its inventory to its estimated net realizable value and has charged
operations approximately $70,000 in fiscal 2000. Additionally, management
has classified the inventory as a long-term asset at August 31, 2000.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and are depreciated using the
straight-line method over the expected lives, which range from three to
five years. Expenditures for normal maintenance and repairs are charged
to operations. Renewals and betterments that materially extend the life
of the assets are capitalized.
INVESTMENT IN CLOSELY HELD COMPANY
During fiscal 2000, the Company purchased 100,000 shares of $.001 par
value preferred stock of a closely held brokerage company for $100,000.
Each share of the preferred stock is convertible into 2 shares of common
stock at $.50 a share.
This investment is carried at cost. There is no market for this
investment, and it is impracticable to estimate fair value of the
Company's investment however, audited year end financial statements as of
June 30, 2000, reflect total shareholders' equity of approximately
$168,000.
9
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Company accounts for current and deferred income taxes using the
liability method. Under this method deferred income tax liabilities and
assets are computed based on the tax liability or benefit in future years
of the reversal of temporary differences in the recognition of income or
deduction of expenses between financial and tax reporting. Deferred tax
assets and/or liabilities are classified as current and noncurrent based
on the classification of the related asset or liability for financial
reporting purposes, or based on the expected reversal date for deferred
taxes that are not related to an asset or liability. Valuation allowances
are established when necessary to reduce deferred tax assets to the
amount expected to be realized.
FINANCIAL INSTRUMENTS
The Company's financial instruments include cash, related party
receivables and payables, and trade payables for which carrying amounts
approximate fair value due to the relatively short maturity of these
instruments. The carrying value of the Company's marketable securities
approximates fair value based on quoted market prices.
STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (SFAS 123) requires that companies with
stock-based compensation plans recognize compensation expense based on
the "fair value" accounting method, or to apply the "intrinsic value"
method provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25), and disclose pro
forma net income assuming the fair value method had been applied.
The Company has elected to adopt the disclosure-only provisions of SFAS
123 and, accordingly, computes compensation expense for employees as
prescribed by APB 25. Under APB 25, compensation cost, if any, is
measured as the excess of the quoted market price of the Company's stock
at the date of grant over the amount an employee must pay to acquire the
stock. For stock options granted to non-employees, expense is measured
based on the fair value method prescribed by SFAS 123.
COMMON SHARES AND PER SHARE AMOUNTS
In March 1999, the Company effected a one-for-two reverse stock split.
All common shares and per share amounts have been adjusted to give effect
to that stock split.
Basic loss per share is computed by dividing loss available to common
shareholders by the weighted average number of common shares outstanding
for the year. Diluted earnings per share reflects the potential dilution
that could occur if dilutive securities and other contracts to issue
common stock were exercised or converted into common stock or resulted in
the issuance of common stock that then shared in the Company's earnings.
Diluted loss per share does not consider the potentially dilutive
securities on an "as if converted" basis, as the effect of their
inclusion would be anti-dilutive.
ADVERTISING COSTS
Advertising costs are charged to operations as they are incurred.
Advertising expense was $53,111 and $82,153 for the years ended August
31, 2000 and 1999, respectively.
10
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
2000 1999
---------- ----------
Computer equipment and software $ 254,972 $ 211,839
Furniture 22,990 22,990
Office equipment and other 20,438 20,438
---------- ----------
298,400 255,267
Less: Accumulated depreciation 142,283 58,780
---------- ----------
Net property and equipment $ 156,117 $ 196,487
========== ==========
Depreciation expense for the years ended August 31, 2000 and 1999 was
$83,503 and $39,458, respectively.
3. DUE TO RELATED PARTIES
The balances due to related parties of $13,290 at August 31, 2000 and
1999, are non-interest bearing with no specified due date.
4. DEBENTURES PAYABLE
In November 1997, the Company issued debentures totalling $125,000 to
three individuals for $100,000 in cash and the retirement of a $25,000
note payable to an officer. The debentures bore interest at 10% per
annum, payable quarterly commencing on March 1, 1998. Principal payments
began on February 15, 1998 at the greater of 10% of the original
principal amount per month or 50% of the gross proceeds received from the
sale of AcuVision products during each month until paid.
The debentures were issued with detachable, non-transferable warrants to
purchase additional shares of the Company's common stock at one share for
each $1.00 Canadian of the principal amount. The warrants were
exercisable anytime at $0.40 Canadian per share through November 30,
1998, and $0.46 Canadian per share through November 30, 1999, at which
time they expired. At the date of the transaction, this represented
warrants to purchase 87,500 post-split common shares at $0.56 U.S. and
$0.66 U.S. per share through these respective dates. The proceeds from
the issuance of the debentures were allocated between the fair value of
the debentures and the fair value of the warrants, and a related discount
of $26,250 was recognized. The discount was amortized on an effective
interest method over the life of the debentures.
In March 1999, the Company retired two of the debentures and related
accrued interest of approximately $78,980 in exchange for the issuance of
200,000 shares of its common stock. (See Note 10 for extraordinary loss
recorded in connection with the exchange.) The remaining debenture with a
principal balance of $67,500 was forgiven by the debenture holder and an
extraordinary gain of $72,745, consisting of principal plus accrued
interest, was recognized.
5. NOTE PAYABLE - OFFICER
The note payable to an officer for $25,000, with an interest rate of 10%
per annum, was collateralized by all assets of the Company, with interest
payable semi-annually, due July 25, 1998. In March 1999, the note and
related accrued interest aggregating $26,417, was exchanged for 100,000
shares of the Company's common stock which approximated the carrying
value of the debt.
11
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
6. OTHER PAYABLE
In October 1999, the Company agreed to issue a total of 41,739 shares of
its common stock to a consultant as settlement of an amount due.
Accordingly, the amount due to this consultant at August 31, 1999
(calculated based upon the fair value of the related common shares issued
in October 1999) had been presented as a long-term liability. As of
August 31, 2000, the liability has been settled and the shares issued.
7. INCOME TAXES
Significant components of the Company's deferred income tax assets and
liabilities are as follows:
August 31,
--------------------------
2000 1999
------------ ------------
Deferred income tax assets:
Net operating loss carryforward $ 2,400,000 $ 900,000
Allowance for doubtful accounts 1,992 1,992
Other 272 272
------------ ------------
Total deferred income tax asset 2,402,264 902,264
Valuation allowance (2,402,264) (902,264)
------------ ------------
Net deferred income tax asset $ - $ -
============ ============
Reconciliation of effective tax rate to the U.S. statutory rate is as
follows:
For the Years Ended August 31,
-----------------------------
2000 1999
------------ ------------
Tax expense at U.S. statutory (34.0)% (34.0)%
Change in valuation allowance 34.0 34.0
------------ ------------
Effective income tax rate 0.0 % 0.0 %
============ ============
The Company has available at August 31, 2000 federal net operating loss
carryforwards of approximately $6,600,000. The net operating loss
carryforward will begin to expire in 2009. A significant portion of prior
period net operating losses were not related to United States tax
jurisdiction as the Company was a foreign corporation through September
1993.
Utilization of the deferred tax asset is dependent upon the Company
having taxable profits in the future. A valuation allowance equal to the
deferred tax asset has been provided since it is more likely than not
that the net operating loss carryforward will expire before the Company
is able to realize the benefit.
12
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
8. COMMITMENTS AND CONTINGENCIES
Leases
During 1999, the Company entered into an operating lease for its office
space expiring May 31, 2002. The lease requires minimum annual rentals
plus increases based on real estate taxes and operating costs. The
Company, at its option, may renew the lease for one two-year period.
Rental expense for the years ended August 31, 2000 and 1999 was $55,755
and $13,390, respectively.
Future minimum annual rentals under the Company's non-cancellable
operating leases with initial terms greater than one year are as follows:
Year Ending August 31,
----------------------
2001 $ 61,465
2002 47,139
------------
$ 108,604
============
Employment Agreements
In connection with the JDI transaction, on June 1, 2000, the Company
entered into three employment agreements with officers of the Company.
The agreements are for five years and include salary provisions that
aggregate $334,000 per annum. As of August 31, 2000, the total salary
commitment was $1,586,500. In addition, the officers received options to
purchase an aggregate of 600,000 shares of common stock for $2.50 per
share with vesting periods ranging from immediately upon issuance to five
years.
JDI Litigation
On July 20, 2000, thirty days after closing the JDI transaction (Note 1),
Indonesian Presidential Decree No. 96/2000 ("Decree") was issued banning
foreign investments in Internet and media related industries. The Company
after seeking advice and researching the implications of this Decree,
concluded that the JDI transaction was void due to impossibility and
frustration of purpose. The Company was not advised of the Decree by JDI
until August 6, 2000. From April 25, 2000 through August 4, 2000, the
Company advanced $900,000 to JDI and its affiliates for working capital
and short-term borrowings. The Company believes that at least $700,000 of
the advances were utilized personally and not applied to the needs of
JDI.
On November 6, 2000, a meeting of the Board of Directors was called and
attended by three pre-acquisition members ("old" board members) and two
members ("new" board members) chosen by JDI and contingently elected upon
closing of the transaction. Two resolutions were considered:
1. That because of the impossibility caused by the Decree and the
theft and conversion of over $400,000 of the Company's money,
the issuance of 44,000,000 of the Company's common stock was
to be canceled.
2. That the Company commence an action against Peter F. Gontha
for his acts as a shareholder and an officer of JDI,
specifically the theft and conversion of over $450,000.
(Management now believes that the theft and conversion is at least
$700,000.)
13
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
8. COMMITMENTS AND CONTINGENCIES (CONTINUED)
JDI Litigation (Continued)
Both resolutions were approved by the old board members, with only two of
the three voting; the new members being advised that since the
transaction was void and since they were considered interested directors
under Delaware law, their votes would not be counted.
On November 8, 2000, the old board of directors signed a unanimous
written consent that acknowledged that the transaction between the
Company and JDI was void and that the issuance of common stock was void
and the stock was canceled.
On November 8, 2000, the new board members attempted to take control of
the Company by, among other actions, rescinding the actions taken at the
November 6, 2000 board meeting, removal of the CEO, President and Vice
President of Technical Development (the old board members), recision of
these officers' banking authority, and the installation of new officers
with signatory authority over the account holding the $10 million Zilkha
proceeds.
On November 13, 2000, after action by the old Board of Directors, the
Company's attorneys filed a complaint in the United States District Court
for the District of Delaware naming as defendants PT Jaring Data
Interaktif, Peter F. Gontha, and others alleging securities fraud and
other torts and seeking the return or $900,000 plus punitive damages.
On November 21, 2000, the Company sought a Temporary Restraining Order
restraining the Defendants in this Delaware action from attempting to
exercise management and control over the Company. The Court granted a
Temporary Restraining Order maintaining the status quo, finding that the
Board of Directors in the interim consisted of two old members and two
new members.
As with any litigation, it is difficult to predict with any certainty how
a case may turn out giving the variables of juror and juries and the
potential for adverse rulings; however, the Company, based on the advice
of legal counsel, believes it has a reasonable likelihood of obtaining a
favorable outcome in this matter.
Zilkha Litigation
On October 11, 2000, Selim Zilkha, on behalf of the Selim Zilkha Trust,
filed a lawsuit against the Company seeking the return of the $10 million
invested in June 2000. The complaint asserts violations of the state and
federal securities laws, as well as related causes of action. The Company
has unequivocally denied the allegations.
Zilkha sought relief through a temporary restraining order and a
preliminary injunction to freeze $10 million of the Company's assets. On
October 20, 2000, the U.S. District Court found that Zilkha's motion was
without merit. The Court, in declining to freeze the $10 million, found
that Zilkha's investment put him on the same footing as any other
shareholder and thus had no lien or other legal rights over the Company's
assets that would entitle him to an injunction.
On November 3, 2000, the U.S. Court of Appeals granted Zilkha an
emergency injunction and remanded the matter back to the District Court.
On November 21, 2000, the District Court granted the preliminary
injunction.
14
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
8. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Zilkha Litigation (Continued)
On December 1, 2000, the District Court entered an order dismissing
Zilkha's complaint for failure to state a claim upon which relief can be
granted. At that time, the District Court did grant Zilkha until December
18, 2000 to amend the complaint.
On December 18, 2000, Zilkha filed an amended complaint and on December
28, 2000, the Company filed its answer and counterclaim against Zilkha
for breach of contract.
As with any litigation, it is difficult to predict with any certainty how
a case may turn out giving the variables of juror and juries and the
potential for adverse rulings; however, the Company, based on the advice
of legal counsel, believes it has a reasonable likelihood of obtaining a
favorable outcome in this matter. Although the Company has vigorously
been defending this case, it has been involved in numerous settlement
discussions.
Kurt Bevacqua Litigation
The Company and three of its directors are defendants in a lawsuit
alleging breach of contract, brought by a former member of its advisory
board, Kurt Bevacqua. The plaintiff alleges that in return for serving on
the Company's advisory board and persuading other well-known professional
athletes to join the advisory board he was promised 50,000 shares of the
Company's common stock and the option to purchase an additional 200,000
shares at $0.45 per share.
The plaintiff is seeking damages in an unspecified amount. A limited
amount of discovery has been conducted in this matter, and outside
counsel for the Company has estimated the Company's exposure to
approximate $100,000. The Company, accordingly, has charged operations
$100,000 during the year ended August 31, 2000.
9. PRIVATE PLACEMENT OF 6% CUMULATIVE CONVERTIBLE REDEEMABLE SERIES A
PREFERRED STOCK
In July 1999, the Company initiated a private placement to sell 400 units
at $10,000 per unit. Each unit consisted of 10,000 shares of 6%
cumulative convertible redeemable Series A preferred stock and warrants
to purchase 5,000 shares of the Company's common stock. Dividends are
payable semi-annually. Each preferred share was convertible into .666
common shares in the first year, .4 shares in the second year, and .285
share thereafter. No preferred shares could utilize the conversion
feature until six months after the offering had been concluded. The
warrants to purchase common shares are exercisable at $2.00 per share in
the first year and $3.00 per share thereafter. The warrants expire five
years from the date of issue. The Company raised approximately $3,950,000
from this offering, of which $3,800,000 had been subscribed and received
as of August 31, 1999 and $150,000 was received during the year ended
August 31, 2000. Pursuant to the terms of the preferred stock, the
Company was not permitted to declare or pay any dividends on its common
stock unless all preferred dividends due have been paid.
In January 2000, the Company commenced an exchange offer with its
preferred share-holders. Pursuant thereto, the Company agreed to exchange
each outstanding preferred share for common stock in the ratio set forth
in the preferred stock purchase agreement, .666 common shares for each
outstanding preferred share. Additionally, as an incentive to the
preferred shareholders, the Company agreed to issue one additional common
shares for every 10 common shares issued in the exchange.
15
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
9. PRIVATE PLACEMENT OF 6% CUMULATIVE CONVERTIBLE REDEEMABLE SERIES A
PREFERRED STOCK (CONTINUED)
As of August 31, 2000, all 3,950,000 of these preferred shares were
exchanged, which resulted in the issuance of 2,893,770 common shares. The
number of shares issued as "incentive" shares amounted to 263,070. For
accounting purposes, these shares have been recorded as a distribution to
the preferred shareholders, net of accrued dividends due the preferred
shareholders, which were cancelled in connection with the exchange offer.
10. STOCKHOLDERS' EQUITY
Private Placement of Series B Preferred Stock
The Company's Articles of Incorporation authorize the issuance of
10,000,000 shares of preferred stock, $0.001 par value. On June 20, 2000,
the Company filed the Certificate of Designations of the Series B
Preferred with the Delaware Secretary of State. The preferred shares have
a stated value of $10.00 per share, rank senior to all other securities
of the Company, including common shares and later authorized classes,
have a liquidation preference, and are convertible, at any time into five
common shares for each preferred share. The preferred shares also contain
an economic anti-dilution provision in the event that the Company sells
common stock at a more advantageous price than $2.00 per share within ten
years of the issuance of the preferred shares.
On June 23, 2000, the Company closed a private placement to sell
1,000,000 shares of their Series B Preferred Stock (convertible into
5,000,000 common shares) to one investor, Selim Zilkha (see Note 8), at
the stated value of $10.00 per share for $10,000,000. Attached to this
sale of preferred stock, the investor received a warrant to purchase an
additional 5,000,000 shares of common stock exercisable at $2.00 per
share for the first three years after the closing of the transaction and
$4.00 per share for an additional two years thereafter. Additionally, the
investor received a second warrant to purchase an additional 2,000,000
shares of common stock exercisable at $5.00 per share for five years
after the closing of the transaction.
Common Shares Issued for Settlement of Debt
During March 1999, the Company restructured certain liabilities.
Debentures outstanding at their face amount of $75,000, and related
accrued interest of $8,389, were extinguished in exchange for which the
debenture holders were issued an aggregate of 300,000 shares of the
Company's common stock (See Notes 4 and 5).
Additionally, outstanding professional fees of approximately $9,900 were
settled by the issuance of 22,100 shares of common stock to the creditor.
In connection with the debt settlements referred to above, the excess of
the fair value of the common shares issued, less the recorded value of
the liabilities settled, in the amount of $120,421 has been reflected as
an extraordinary loss in the accompanying statement of operations for
1999.
16
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
10. STOCKHOLDERS' EQUITY (CONTINUED)
Common Stock Issued in Exchange for Services
In March 1999, the Company issued an aggregate of 355,000 shares of its
common stock to certain officers (200,000 shares), members of the
Company's advisory board (70,000 shares) and consultants (85,000 shares)
for services previously rendered to the Company. Compensation expense,
which was based on the estimated fair value of the shares issued at the
time of issuance ($.65 per share or $230,750) was recorded at that time.
In April 1999, 31,000 shares of the Company's common stock were issued to
consultants. The estimated fair value of the shares ($2.02 per share) was
recorded at the time resulting in a charge to operations of $62,620.
In July 1999, an aggregate of 40,000 shares of the Company's common stock
was issued to consultants and compensation expense recorded in the amount
of $170,000 based on the fair market value of such shares at the time of
issuance.
In connection with an agreement between the Company and a consultant in
August 1999, 30,000 shares of common stock were issued to the consultant.
The fair value of such shares issued, based on the price of the common
stock, $108,750, was charged to operations. Additionally, the Company
agreed to compensate the consultant with 70% of the proceeds (as defined)
of all memorabilia sold by the Company pursuant to the agreement. No
amounts are due under this provision.
In October 1999, the Company agreed to issue a total of 57,739 shares of
its common stock to a consultant as settlement of an amount due of
$60,937.
During the year ended August 31, 2000, the Company issued 75,748 shares
of its common stock for services provided to the Company in the amount of
$225,036. The shares were valued at the market value of the Company's
common stock on the date that they were issued.
Common Shares Released from Escrow
In August 1999, the Company's Board of Directors approved the release of
59,500 shares of the Company's common stock originally issued to an
officer and previously held in escrow. The release of the shares resulted
in a charge to operations of $193,375 based on the fair market value of
the shares.
Private Placements of Common Stock
In March 1999, the Company completed the sale of 111 units at $4,500 per
unit in a private placement offering. Each unit consisted of 10,000
shares of its common stock and 1 warrant to purchase 10,000 shares of
common stock at $0.45 per share. The warrants were exercisable at any
time, and all warrants issued were exercised. Accordingly, the Company
issued 2,220,000 shares of its common stock and received proceeds of
$994,865, net of $4,135 of related costs.
17
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
10. STOCKHOLDERS' EQUITY (CONTINUED)
Warrants
In fiscal 1997, the Company, in connection with a private placement,
issued warrants to purchase 100,000 shares of its common stock. The
warrants were immediately exercisable. The warrants expired unexercised
in February 1999.
In November 1997, the Company issued debentures with detachable,
non-transferable warrants to purchase 87,500 shares of its common stock
(Note 4). These warrants were immediately exercisable on issuance. During
fiscal 2000, 35,000 of these warrants expired and 52,500 were exercised
in fiscal 1999.
The Company issued 1,975,000 common stock purchase warrants (75,000 and
1,900,000 in fiscal 2000 and 1999, respectively) in connection with the
issuance of its 6% convertible redeemable Series A preferred stock (Note
9). The warrants, which expire five years from the date of the preferred
stock offering, can be exercised commencing six months after the offering
for a period of twelve months for $2.00 per share. Thereafter, until they
expire, the warrants can be exercised for $3.00 per share.
In addition, the Company issued 7,000,000 common stock purchase warrants
in connection with the issuance of the Series B convertible preferred
stock (Note 10). The first 5,000,000 of these warrants are exercisable
for $2.00 per share for three years and thereafter at $4.00 per share for
two years. The remaining 2,000,000 warrants are exercisable for a period
of five years at $5 per share.
The following summarizes information about warrants granted and
outstanding at August 31, 2000 and 1999, and changes during the years
then ended.
<TABLE>
<CAPTION>
For the Year Ended For the Year Ended
August 31, 2000 August 31, 1999
---------------------------- ----------------------------
Weighted Weighted
Average Average
Exercise Exercise
Warrants Price Warrants Price
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Outstanding,
beginning of year 1,935,000 $ 1.97 187,500 $ 0.89
Granted 7,075,000 2.85 1,900,000 2.00
Exercised - - (52,500) 0.56
Cancelled/expired (35,000) 0.56 (100,000) 1.18
----------- ----------- ----------- -----------
Outstanding, end of year 8,975,000 $ 2.67 1,935,000 $ 1.97
=========== =========== =========== ===========
</TABLE>
18
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
10. STOCKHOLDERS' EQUITY (CONTINUED)
Stock Options
The Company granted options to purchase shares of its common stock as
indicated below. The options were fully vested on the dates of grant.
During 1999, the Company granted options to certain employees, directors
and consultants to purchase 735,000 shares of common stock at exercise
prices ranging from $.45 to $2.50 per share. The options expire between
two and three years from the time of the grant. Compensation expense
amounted to approximately $518,250. For the years ended August 31, 2000
and 1999, 25,000, and 100,000 options had been exercised, respectively.
During 2000, the Company granted options to certain officers and advisory
board members to purchase 635,000 shares of common stock at prices
ranging from $.87 to $2.50. The options expire between 2 and 10 years
from the date of the grant. Compensation expense amounted to
approximately $120,000. As of August 31, 2000, none of these options had
been exercised.
The following summarizes information about stock options granted and
outstanding at August 31, 2000 and 1999, and changes during the years
then ended.
<TABLE>
<CAPTION>
For the Year Ended For the Year Ended
August 31, 2000 August 31, 1999
------------------------------ -----------------------------
Weighted Weighted
Average Average
Exercise Exercise
Options Price Options Price
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Outstanding,
beginning of year 635,000 $ 0.75 - $ 0.00
Granted 635,000 2.43 735,000 0.71
Exercised (25,000) (0.45) (100,000) (0.45)
----------- ----------- ----------- -----------
Outstanding, end of year 1,245,000 $ 1.61 635,000 $ 0.75
=========== =========== =========== ===========
</TABLE>
The weighted average assumptions used to calculate the fair value of the
stock options granted in 2000 and 1999 pursuant to the Black-Scholes
option pricing model were:
2000 1999
------------ ------------
Dividend yield 0% 0%
Risk free interest rate 5.25% 4.74%
Volatility 158% 269%
Expected contractual life 2-10 Years 2.5 Years
19
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
10. STOCKHOLDERS' EQUITY (CONTINUED)
Stock Options (Continued)
Had compensation cost for employee stock options been determined
consistent with SFAS 123, the Company's net loss and loss per share would
have been as follows:
2000 1999
-------------- --------------
Net loss, as reported $ (3,243,428) $ (1,874,482)
Pro forma net loss (4,185,428) (2,010,482)
Basic and diluted net loss
per share, as reported (0.25) (0.47)
Pro forma basic and diluted
net loss per share (0.26) (0.50)
11. INCENTIVE EQUITY PLANS
During August 1999, the Company adopted its 1999 Incentive Equity Plan
("Incentive Plan") and the 1999 Stock Option Plan for Non-Employee
Directors ("Directors Plan").
Officers, including officers who are members of the Board of Directors,
and other key employees of and consultants to the Company may be selected
by a Committee of the Board of Directors, consisting of no less than two
members of the Board to receive benefits under the Incentive Plan.
The Incentive Plan authorizes the granting of options to purchase shares
of common stock ("Option Rights"), stock appreciation rights
("Appreciation Rights"), restricted shares ("Restricted Shares"),
deferred shares ("Deferred Shares"), performance shares ("Performance
Shares") and performance units ("Performance Units").
Subject to adjustment as provided in the Incentive Plan, the number of
shares of common stock that may be issued or transferred, plus the amount
of shares of common stock covered by outstanding awards granted under the
Incentive plan, shall not in the aggregate exceed 1,500,000 shares. The
number of Performance Units granted under the Incentive plan shall not in
the aggregate exceed 100,000. The number of shares of common stock
granted under the Incentive Plan to any individual in any calendar year
shall not in the aggregate exceed 100,000. As of August 31, 1999, no
options have been granted pursuant to the incentive equity plans.
Pursuant to employment contracts, as discussed in Note 8, options for
600,000 shares were issued during the year ended August 31, 2000.
Option Rights
The Company may grant Option Rights that entitle the optionee to purchase
shares of common stock at a price less than, equal to or greater than
market value on the date of grant.
The exercise price for nonqualified stock options granted may not be less
than 85% of the fair market value per share of common stock on the date
of grant. The exercise price for Incentive Stock Options ("ISOs") may not
be less than the fair market value per share of common stock on the date,
and ISOs granted to persons owning more than 10% of the Company's voting
stock must have an exercise price of not less than 110% of the fair
market value per share of common stock on the date of grant. All options
granted must be exercised within ten years of grant, except that ISOs
granted to 10% or more stockholders must be exercised within five years
of grant. The aggregate market value (as determined as of the date of
grant) of the common stock for which any optionee may be awarded ISOs
which are first exercisable by such optionee during any calendar year may
not exceed $100,000.
20
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
11. INCENTIVE EQUITY PLANS (CONTINUED)
Appreciation Rights
Appreciation Rights granted under the Incentive Plan may be either
free-standing or granted in tandem with Option Rights. An Appreciation
Right represents the right to receive from the Company the difference
("Spread"), or a percentage thereof not in excess of 100 percent, between
the base price per share of common stock in the case of a free-standing
Appreciation Right, or the option price of the related Option Right in
the case of a tandem Appreciation Right, and the market value of the
common stock on the date of exercise of the Appreciation Right. Tandem
Appreciation Rights may only be exercised at a time when the related
Option Right is exercisable and the Spread is positive, and the exercise
of a tandem Appreciation Right requires the surrender of the related
Option Right for cancellation.
A free-standing Appreciation Right must have a base price that is at
least equal to the fair market value of a share of common stock on the
date of grant must specify certain other criteria that are necessary
before the Appreciation Right becomes exercisable and may not be
exercised more than 10 years from the date of grant.
Restricted Shares
An award of Restricted Shares involves the immediate transfer by the
Company to a participant of ownership of a specific number of shares of
common stock in consideration of the performance of services, or, as and
to the extent determined by the Company, the achievement of certain
objectives. The participant is entitled immediately to voting, dividend
and other ownership rights in the shares. The transfer may be made
without additional consideration from the participant or in consideration
of a payment by the participant that is less than the market value of the
shares on the date of grant, as the Committee may determine.
Deferred Shares
An award of Deferred Shares constitutes an agreement by the Company to
deliver shares of common stock to the participant in the future in
consideration of the performance of services, subject to the fulfillment
of such conditions during the deferral period (as defined in the
Incentive Plan) as the Company may specify.
The Directors Plan
The Directors Plan will be administered by a committee of the Board of
Directors, consisting of no less than two members of the Board. Only
members of the Board of Directors who are not employees of the Company
(each a "Director") will be eligible to participate in the Directors
Plan.
Subject to adjustment as described below, the number of shares issued or
transferred, plus the number of shares covered by outstanding options
under the Directors Plan shall not exceed 250,000 shares of common stock.
Shares of common stock covered by an option, which is cancelled or
terminated, will again be available to be issued or to be the subject of
a stock option granted under the Directors Plan.
The exercise price of the options granted is equal to the fair market
value per share of common stock on the date of grant. Options granted
under the Directors Plan shall become exercisable to the extent of 20% of
the common shares subject thereto on the Date of Grant and to the extent
of an additional 20% of the common shares subject thereto after each of
the first four anniversaries of such date, for so long as the Optionee
continues to serve as a member of the Board.
21
<PAGE>
ASIA WEB HOLDINGS, INC.
(FORMERLY ACUBID.COM, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
12. LOSS PER SHARE
The computations of net loss per common share for the years ended
August 31, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
2000 1999
------------- -------------
<S> <C> <C>
Loss from continuing operations before
extraordinary items $ (1,875,587) $ (1,826,806)
Less: Distributions to converting preferred
shareholders in the form of common
stock 788,960 -
Less: Preferred dividends - 19,000
------------- -------------
Loss from continuing operations applicable to
common shareholders before extraordinary
items $ (2,664,547) $ (1,845,806)
============= =============
Weighted average number of common shares
outstanding - basic and diluted 15,886,473 4,040,496
============= =============
Basic and diluted loss from continuing operations
per common share before extraordinary items $ (0.17) $ (0.46)
Loss from discontinued operations (0.08) -
Extraordinary items - (0.01)
------------- ------------
Net loss $ (0.25) $ (0.47)
============= =============
The effect of the potentially dilutive securities listed below were not
included in the computation of diluted loss per share, because to do so
would have been antidilutive for the periods presented.
2000 1999
------------- ------------
Shares of common stock issuable under:
Stock options 1,245,000 635,000
Common stock purchase warrants 8,975,000 1,935,000
</TABLE>
22
<PAGE>
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
Within the two most recent fiscal years, there have been no
changes in or disagreements with Accountants on Accounting and Financial
Disclosure.
Part III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act
The following table sets forth the names of the directors and
Named Executive Officers (as defined herein) as well as their ages, the year in
which each director became a director of the Company and the year in which their
terms as director of the Company expire. There are no significant employees who
are not officers or directors.
-23-
<PAGE>
<TABLE>
<CAPTION>
Name and Position Age Director Since Term Expires
----------------- --- -------------- ------------
<S> <C> <C> <C>
Michael A. Schaffer (1) (4) 58 1994 2001
Chief Executive Officer and Director
Waddy Stephenson (1) 40 1999 2001
Vice President of Technical Development and Director
Lawrence C. Schaffer (1) (4) 32 1994 2001
Director and President
Gordon C. Holterman (2) (5) 34 2000 2001
Director
Terry Giles (2) (5) 51 2000 2001
Director
Raj Singham (2) (3) (5) 54 2000 2001
Director
Tjahjono Soerjodibroto (2) (5) 47 2000 2001
Director
Bosko Djordjevic (2) (3) (5) 46 2000 2001
Director
William H. Millard 68 2000 2001
Director
</TABLE>
(1) Michael A. Schaffer, Waddy Stephenson, and Lawrence Schaffer were officers
and directors, as indicated, prior to the Company's annual meeting on May 22,
2000. After the annual meeting, Lawrence Schaffer remained as the Company's
President and Michael Schaffer and Waddy Stephenson remained as directors. Old
Management contends that the acquisition was void not later than July 20, 2000,
one month after closing, and as such, Lawrence Schaffer, Michael Schaffer and
Waddy Stephenson would retain their original positions. Presently, Michael
Schaffer and Waddy Stephenson continue to serve on the Board of Directors
pursuant to the order entered on November 21, 2000 by the United States District
Court for the District of Delaware.
(2) Gordon Holterman resigned from the Board of Directors on July 21, 2000.
Terry Giles, and William H. Millard resigned from the Board of Directors on
September 18, 2000. Tjahohano Soerjodibroto resigned from the Board of Directors
on October 12, 2000. Upon resignation, any and all stock options granted to such
directors were cancelled. Old Management contends that the acquisition was void
not later than July 20, 2000, one month after closing, and as such, the election
of all directors at the direction of Alanberg was void ab initio.
-24-
<PAGE>
(3) Raj Singham and Bosko Djordjevic continue to serve on the Board of Directors
pursuant to the order entered on November 21, 2000 by the United States District
Court for the District of Delaware.
(4) Michael Schaffer and Lawrence Schaffer are father and son, respectively.
(5) After the breakdown in the relationship with JDI on or about August 6, 2000,
no further information has been provided to the Registrant as to these
directors. As such, Registrant has no knowledge as to whether any of these
directors, since the Proxy Statement dated May 3, 2000 have been involved in
Certain Legal Proceedings.
BIOGRAPHIES OF DIRECTORS, AND EXECUTIVE OFFICERS
With respect to the biographies of Gordon C. Holterman, Terry
M. Giles, R.Raj Singham, Tjahjono Soerjodibroto, Bosko Djordjevic, and William
H. Millard, due to the circumstances described in Item 3, Legal Proceedings, the
Company has been unable to obtain updated information beyond what was presented
in the Company's Proxy Statement filed May 3, 2000.
MICHAEL A. SCHAFFER, 58, Chairman of the Board and Chief Executive
Officer.Mr. Schaffer joined the Company in April 1994 (when it was known as
International AcuVision Systems, Inc.) as its Chief Executive Officer and a
Director. Since April 1999, Mr. Schaffer has devoted most of his time to the
Company's business. Mr. Schaffer was one of the founders of WebGalaxy, Inc. a
publicly traded Internet Service Provider based in Silver Spring, Maryland, and
was an Officer and Director of WebGalaxy, Inc. from October,1997 to March, 1999.
In April, 2000, Mr. Schaffer was again elected to the Board of Directors of Web
Galaxy, Inc., and will hold that position until the Company's next annual
meeting. Since 1988, Mr. Schaffer has served as a Director and Officer of
Consolidated Golden Quail Resources, Ltd. ("Golden Quail"), a publicly traded
mining company that developed gold reserves claims in excess of 200,000 ounces
in the East Mojave Desert. Initially, the Golden Quail claims were under the
jurisdiction of United States Bureau of Land Management. Pursuant to the
California Desert Protection Act of 1994 the claims became part of the East
Mojave Preserve and were transferred to the United States National Park Service.
After the legislation the Company has attempted to establish the economics of
its project under National Park Department rules; to date these attempts have
been unsuccessful. Accordingly, Mr. Schaffer devotes minimal such time to the
business of Golden Quail. Since 1975, Mr. Schaffer has also been a private
investor. In addition, since 1970, Mr. Schaffer has had a high degree of
involvement with collectibles, such as rare stamps, American art and sports
memorabilia. Mr. Schaffer received a Bachelor of Arts degree from Hunter College
and a Juris Doctorate from Brooklyn Law School. Mr. Schaffer was admitted to the
practice of law in the state of New York in 1967 and practiced law through 1972.
LAWRENCE C. SCHAFFER, 32, Director and President. Mr. Schaffer has
served as President and Director of the Company since June 1994 (when it was
known as International AcuVision Systems, Inc.). Mr. Schaffer was a Director
until the time of the Company's May 22, 2000 annual meeting. If the acquisition
of PT. Jaring Data Interaktif is void, Mr. Schaffer would revert to being a
Director until the next annual meeting. Since July 1999, Mr. Schaffer has
devoted the majority of his time and effort to the Company's business. From
March 1997 to July 1999, Mr. Schaffer devoted the majority of his time to his
position as an Officer and Director of WebGalaxy, Inc., a publicly traded
Internet Service Provider of which Mr. Schaffer was a founding member. Mr.
Schaffer resigned from the Board of Directors of WebGalaxy, Inc. in December
1999 and as an Officer in July 1999. In April 2000, Mr. Schaffer was again
elected to the Board of Directors of WebGalaxy, Inc., and will hold that
position until that company's next annual meeting. In addition, Mr. Schaffer has
five years of experience in administration and marketing for several small cap
public companies. Mr. Schaffer received a Bachelor of Arts Degree from the
University of Arizona in 1991.
-25-
<PAGE>
WADDY STEPHENSON, 40, Director and Vice President of Technical
Development. Mr. Stephenson joined AcuBid as a Director in March, 1999. Since
May, 1999, Mr. Stephenson has been AcuBid's Vice President of Technical
Development, overseeing all of the technical acquisitions and development of the
Company. Mr. Stephenson has fifteen years of experience working on client/server
based applications. Since 1986, Mr. Stephenson has worked on Internet based
applications for both commercial and Government agencies, including DirecTV,
InfusionCom, and the United States Marine Corps. Mr. Stephenson is also the sole
shareholder of Software Initiatives, a software consulting firm and continues to
provide consulting to other companies through Software Initiative. Mr.
Stephenson received a Bachelors Degree in Computer Science and Mathematics from
the University of North Florida in 1985.
GORDON C. HOLTERMAN, 34, Mr. Holterman is the President of San
Francisco Sentry Relative Value Advisors, part of the San Francisco Sentry
Investment Group. Mr. Holterman splits his time between San Francisco and
Singapore focussing on Investment opportunities in Southeast Asia. Prior to S.F.
Sentry, Mr. Holterman was the Chief Operating Officer for Farallon Fixed Income
Associates in Cambridge, MA. Mr. Holterman was also previously a Director of
Swiss Bank Corporation, where he managed the West Coast Capital Markets effort.
Mr. Holterman began his career as an attorney in the Mergers and Acquisitions
Group of Skadden, Arps, Slate, Meagher and Flom, San Francisco. Mr. Holterman
received his J.D. from Stanford Law School and holds a B.S. in electrical
engineering and computer science from the Massachusetts Institute of Technology.
TERRY M. GILES, 51, A highly successful attorney since 1975, Mr. Giles
founded and built his law firm in California, handling civil and criminal cases
alike in 22 states and 3 countries. His cases have been high profile with
extensive media coverage, including several books. Mr. Giles is the owner of
Tekniko Licensing Corporation, which licenses intellectual properties throughout
the world. Mr. Giles resides on several boards, including Merchant House Inc.,
Pacific Biometrics Inc., Pepperdine University Board of Regents, and the Horatio
Alger Association of Distinguished Americans, where he is the Vice President of
this most prestigious board. He co-founded The Giles Foundation in 1987, a
non-profit charitable foundation. After getting his BA from California State
University at Fullerton, Mr. Giles moved on to Pepperdine University School of
Law where he received his Juris Doctorate in 1974.
R. RAJ SINGHAM, 54, Mr. Singham is the Senior Partner of Drew and
Napier of Singapore where he has been since 1971. His practice includes Trial
and Appellate Litigation in the areas of Company Banking Industry and
Partnership Law, arbitration, building contracts, property rights injunctions,
and administrative law. Mr. Singam is currently a Director of United Pulp and
Paper Company. He serves as a Director on ABR Ltd's board and on its Audit
Committee. He is Barrister-at-Law at the Middle Temple in London and was
appointed Honorary Legal Advisor to the British High Commission and Panel Member
of the U.S. Embassy. Mr. Singam is a member of several prominent boards and
associations including the International Bar Association, and Singapore
Institute of Directors to name a few.
TJAHJONO SOERJODIBROTO, 47, In 1999, Mr. Soerjodibroto was named the
President Commissioner of PT Tunas Sepadan Investama, a holding company based in
Jakarta specializing in corporate restructuring and asset disposal.
Concurrently, Mr. Soerjodibroto is the President commissioner of the multi-media
production company, PT Yasawirya Tama Cipta, also in Jakarta, he has held this
post since 1996. As President and CEO of PT Indosat from 1991 - 1999, Mr.
-26-
<PAGE>
Soerjodibroto brought this telecommunications company monumental success with
its IPO listing on the New York Stock Exchange in 1994, making it the most
successful Indonesian Company listed in the international capital market. Some
of the prestigious awards bestowed PT Indosat were, BEST CEO IN INDONESIA,
ASIA'S MOST ADMIRED COMPANY, and BEST MANAGED COMPANY to name a few. Mr.
Soerjodibroto began his illustrious career with IBM Indonesia back in 1976. In
15 years with IBM, he specialized in transportation industry applications before
settling in as an education expert, taking over training for all new recruits of
IBM Bangkok, Hong Kong, and Bangladesh. Tjahjono Soerjodibroto graduated from
Bandung Institute of Technology with a major in electronics engineering, and
continued his education at the University of Southern California in Los Angeles,
receiving his MBA in 1990 majoring in International Business.
BOSKO DJORDJEVIC. 46, Mr. Djordjevic, a Californian Investor, is a
Founder and a Director of LIPID Sciences Inc., a medical technology company
based in Los Angeles.
WILLIAM H. MILLARD 68. Mr. Millard is an entreprenuer and early pioneer
of the personal computer industry. Since 1985, Mr. Millard has been a private
investor. He was the founder and former Chairman (1976-1985) of Computer Land
Corporation, which was, during his Chairmanship, the largest retailer of
personal computers in the world.
Item 10. Executive Compensation
The following Summary Compensation Table indicates the cash
compensation, as well as other compensation, paid or accrued, for the period
September 1, 1998 through August 31, 1999 to the Officers and Directors of the
Company. Other than as set forth herein, no executive officer's salary and bonus
exceeded $100,000 in the applicable period. The following information includes
the dollar value of base salaries bonus awards, the number of stock options
granted and certain other compensation, if any, whether paid or deferred.
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------------------
Annual Compensation Awards Payouts
----------------------------------- ------------------------- --------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities
Name Annual Restricted Under- All Other
and Compen- Stock lying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
------------ ---- ------- ----- ------- ---------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael 2000 $120,000 -0- (1) -0- -0- -0- -0-
Schaffer
--------
CEO
Director
Lawrence 2000 $82,000 -0- (1) -0- -0- -0- -0-
Schaffer
--------
President
Director
Norman 2000 $85,000 -0- -0- -0- -0- -0- -0-
Schwartz
--------
CFO &
VP Finance
Director
Waddy 2000 $100,173 -0- (1) -0- -0- -0- -0-
Stephenson
--------
VP Technical
Director
Richard 2000 $23,625 -0- (1) $5000 -0- -0- -0-
Schwartz
--------
VP Marketing
</TABLE>
----------
(1) No amounts are shown in the table with respect to any other perquisites paid
to any named officer because the aggregate amount of such perquisites (e.g. auto
allowance) did not exceed the lesser of (i) $50,000 or (ii) 10% of the total
annual salary and bonus of any named officer.
(2) While the employment agreement of Tjahano Soerjodibroto, Chairman of the
Board, provided that he receive an annual salary of $200,000 and options to
purchase 150,000 shares of Common Stock at $2.00 per share, vesting at the rate
of 30,000 shares at the end of each year of service. Due to his resignation, Mr.
Soerjodibroto did not receive any compensation.
-27-
<PAGE>
<TABLE>
<CAPTION>
STOCK OPTIONS
Option/SAR Grants in the Period 9/1/99 through 8/31/00
------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Expiration
Name Granted (#) Fiscal Year(4) Price ($/Sh) Date
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael
Schaffer(1) 500,000 78.7% 2.50 6/1/10
Lawrence
Schaffer N/A N/A N/A N/A
Waddy
Stephenson(2) 100,000 15.75% $2.50 6/1/10
</TABLE>
----------
(1) Of those 500,000 options, 300,000 are non-qualified options
and subject to the terms of a Stock Option Agreement also
executed on June 1, 2000. The remaining 200,000 options are
incentive equity options and subject to the terms of the
Company's Incentive Equity Plan. The non-qualified options
vest at a rate of 150,000 per year, the first vesting
commencing immediately with the signing of the employment
agreement. The exercise price for the non-qualified options
shall be $2.50 per share. The incentive equity options vest at
a rate of 40,000 per year, the first vesting commencing
immediately with the signing of the employment agreement.
(2) Mr. Stephenson was granted options to purchase 100,000 shares
of common stock. These options are incentive equity options,
subject to the terms of the Company's Incentive Equity Plan,
and vest at a rate of 40,000 per year, the first vesting
commencing immediately with the signing of the employment
agreement.
-28-
<PAGE>
<TABLE>
Aggregated Option/SAR Exercises in the Last Fiscal Year
and Fiscal Year End Option/SAR Values
<CAPTION>
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized($) Unexercisable Unexercisable
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael 190,000/
Schaffer -0- -0- 310,000 $0/0
Lawrence
Schaffer (1) -0- -0- 100,000/0 $0/0
Norman
Schwartz (1) -0- -0- 100,000/0 $0/0
Waddy 140,000/
Stephenson (1) -0- -0- 60,000 $0/0
</TABLE>
The value of unexercised in-the-money options is based upon a
fair market value of the stock on August 31, 2000 of $0.437, the closing price
in the OTC market on that date.
The Company has compensation plans involving long-term
incentive or deferred pension or profit sharing plans for it executive officers.
The Board of Directors approved an Incentive Equity Plan and a Stock Option Plan
for Non-Employee Directors, were approved by the Shareholders at the May 22,
2000 meeting. Stock options and stock compensation award may be granted to
employees, officers and directors from time to time at the discretion of the
Board of Directors. See, "Stock Option and Compensation Plans" below.
Employment Agreements
---------------------
Between May 22, 2000 and June 28, Registrant entered into the
following agreements with the officers and directors, including some of the
directors whose election was to be effective upon closing:
Michael Schaffer
An employment agreement between Michael Schaffer and Asia Web
Holdings, Inc was entered into on June 1, 2000. In return for his serving as
Chief Executive Officer for the next five years, Mr. Schaffer will receive an
annual salary of $150,000 plus a monthly car allowance of $500. Additionally, in
the employment agreement, Mr. Schaffer was granted options to purchase 500,000
shares of common stock. Of those 500,000 options, 300,000 are non-qualified
options and subject to the terms of a Stock Option Agreement also executed on
June 1, 2000. The remaining 200,000 options are incentive equity options and
subject to the terms of the Company's Incentive Equity Plan. The non-qualified
options vest at a rate of 150,000 per year, the first vesting commencing
immediately with the signing of the employment agreement. The exercise price for
the non-qualified options shall be $2.50 per share. The incentive equity options
vest at a rate of 40,000 per year, the first vesting commencing immediately with
the signing of the employment agreement. The exercise price for the incentive
equity options is $2.50 per share. No additional director compensation is
-29-
<PAGE>
presently provided to Mr. Schaffer. In the event Mr. Schaffer is terminated by
the Registrant without cause, Registrant is obligated to pay Mr. Schaffer: (a)
an amount equal to one and one half times one year of the his base salary if his
employment is terminated within the first year; (b) an amount equal to one year
of his base if Mr. Schaffer is terminated during the three years following the
first anniversary of the employment agreement; and, (c) an amount equal to one
half of one year of the base salary if Mr. Schaffer is terminated any time
thereafter during the term of the employment agreement.
Waddy Stephenson
An employment agreement between Waddy Stephenson and Asia Web
Holdings, Inc was entered into on June 1, 2000. In return for his serving as
Chief Technology Officer for the next five years, Mr. Stephenson will receive an
annual salary of $100,000 plus a monthly car allowance of $450. Additionally, in
the employment agreement, Mr. Stephenson was granted options to purchase 100,000
shares of common stock. These options are incentive equity options, subject to
the terms of the Company's Incentive Equity Plan, and vest at a rate of 40,000
per year, the first vesting commencing immediately with the signing of the
employment agreement. The exercise price for the options is $2.50 per share. No
additional director compensation is presently provided to Mr. Stephenson. In the
event Mr. Schaffer is terminated by the Registrant without cause, Registrant is
obligated to pay Mr. Stephenson: (a) an amount equal to one and one half times
one year of the his base salary if his employment is terminated within the first
year; (b) an amount equal to one year of his base if Mr. Stephenson is
terminated during the three years following the first anniversary of the
employment agreement; and, (c) an amount equal to one half of one year of the
base salary if Mr. Stephenson is terminated any time thereafter during the term
of the employment agreement.
Lawrence Schaffer
An employment agreement between Lawrence Schaffer and Asia Web
Holdings, Inc was entered into on June 1, 2000. In return for his serving as
President for the next five years, Mr. Schaffer will receive an annual salary of
$84,000 plus a monthly car allowance of $450. In the event Mr. Schaffer is
terminated by the Registrant without cause, Registrant is obligated to pay Mr.
Schaffer: (a) an amount equal to one and one half times one year of the his base
salary if his employment is terminated within the first year; (b) an amount
equal to one year of his base if Mr. Schaffer is terminated during the three
years following the first anniversary of the employment agreement; and, (c) an
amount equal to one half of one year of the base salary if Mr. Schaffer is
terminated any time thereafter during the term of the employment agreement.
Terry Giles
An agreement between Terry Giles and Asia Web Holdings, Inc
was entered into on June 14, 2000. In return for his serving as a Director of
Asia Web Holdings, Inc for the next five years, Mr. Giles was granted options to
purchase 500,000 shares of common stock. These options are non-qualified options
and vest at a rate of 100,000 per year, the first vesting commencing immediately
with the signing of the agreement. The exercise price for the options is $2.00
per share.
-30-
<PAGE>
William Millard
An agreement between William Millard and Asia Web Holdings,
Inc was entered into on June 14, 2000. In return for his serving as a Director
of Asia Web Holdings, Inc for the next five years, Mr. Millard was granted
options to purchase 500,000 shares of common stock. These options are
non-qualified options and vest at a rate of 100,000 per year, the first vesting
commencing immediately with the signing of the agreement. The exercise price for
the options is $2.00 per share.
Tjahjono Soerjodibroto
A services agreement between Tjahjono Soerjodibroto and Asia
Web Holdings, Inc was entered into on June 28, 2000. In return for his serving
as Director and Chairman of the Board for the next five years, Mr. Soerjodibroto
will receive an annual salary of $200,000. Additionally, in the services
agreement, Mr. Soerjodibroto was granted options to purchase 150,000 shares of
common stock. These options are non-qualified options and vest at a rate of
30,000 per year, the first vesting commencing at the end of the first year of
service. The exercise price for the options is $2.00 per share.
Bosko Djordjevic
Mr. Djordjevic presently has no compensation package from Asia
Web Holdings, Inc.
Gordon Holterman
Mr. Holterman presently has no compensation package from Asia
Web Holdings, Inc.
Raj Singam
Mr. Singam presently has no compensation package from Asia Web
Holdings, Inc.
Options granted to Terry Giles, William Millard, and Tjahjono
Soerjodibroto were canceled when they resigned as Directors.
Compensation of Directors
-------------------------
Other than as noted above with respect to Tjahjono
Soerjodibroto, Officers of the Company receive no additional compensation for
their services as directors. Directors of the Company currently receive no cash
compensation for their attendance at Board meetings except reimbursement for
travel expenses. Although no other compensation is currently contemplated for
directors of the Company, the Board reserves the right to change its policy as
to compensation of directors from time to time based upon the financial
condition of the Company, future performance and other relevant factors.
-31-
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of November 30, 2000
(except as otherwise indicated by footnote), certain information with respect to
the number of shares of Common Stock of the Company beneficially owned by (i)
each officer and director of the Company; (ii) each person known to beneficially
own more than 5% of the Company's Common Stock; and, (iii) all executive
officers and directors as a group. This table only reflects persons who would be
officers and directors and 5% shareholders based on the assumption that the JDI
acquisition is void.
Name or Group (2) Common Stock (1)
-------------------------------- ------------------------------------
Number of Shares % of Class
------------------- ----------
Directors: (3)
Michael Schaffer 559,500 (6)(5) 5.68%
Waddy Stephenson 180,000 (5) 1.72%
Lawrence Schaffer 346,000 (4) 3.30%
Officers:
Michael Schaffer 559,500 (6)(5) 5.68%
Waddy Stephenson 180,000 (5) 1.72%
Lawrence Schaffer 346,000 (4) 3.30%
Officers and Directors
as a Group: 1,085,500 10.37%
5% Beneficial Owners: (6)
Michael Schaffer 559,500 5.68%
Canadian Commercial Workers
Industry Pension Plan 1,540,750 14.72%
Andora Holdings Ltd. 924,450 8.83%
William Goren 616,300 5.89%
---------
(1) Based on a total of 10,470,408 shares outstanding as of November 30,
2000 and includes Common Stock beneficially owned plus, where
applicable, Common Stock issuable upon exercise of outstanding stock
options, warrants, and/or convertible notes held only by the person or
group indicated that are fully exercisable or exercisable within 60
days after November 30, 2000.
(2) The persons named in the table have sole voting and investment power
with respect to all shares shown to be beneficially owned by them,
subject to community property laws, where applicable, and the
information contained in the footnotes to this table. Unless otherwise
indicated, the business address for persons listed in the table is 1947
Camino Vida Roble, Suite 102, Carlsbad, California 92008.
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<PAGE>
(3) This table does not include stock ownership of the Company's former
Advisory Board, who did not exercise control and had no role in the
management of the Company.
(4) Includes 100,000 shares of Common Stock issuable upon exercise of stock
options exercisable at $0.45 per share.
(5) As to Waddy Stephenson, includes 100,000 shares of Common Stock
issuable upon exercise of stock options exercisable at $0.45 per share
and 40,000 shares of Common Stock issuable upon exercise of stock
options exercisable at $2.50 per share. As to Michael Schaffer,
includes 190,000 shares of Common Stock issuable upon exercise of stock
options exercisable at 2.50 per share.
(6) In light of the fact that the Company has taken the position that the
acquisition of JDI was void AB INITIO and that the 44,000,000 shares
issued to Alanberg Pte should be cancelled for failure of consideration
and in light of the Zilkha litigation, the above table does not reflect
the shareholding attributable to the beneficial shareholders of
Alanberg nor the holding of Zilkha in the event that the Series B
Preferred Shares are converted into common shares. In that event,
Michael Schaffer, and Canadian Commercial Workers Industry Pension Plan
would no longer be holders of 5% or more of the outstanding Common
Stock. Taking into account the Alanberg shares and assuming no
additional stock was issued, there would be 52,790,408 shares
outstanding and basing the shareholdings as of August 31, 2000 as
reported in the Company's report filed with the Securities and Exchange
Commission on September 5, 2000, the pro forma, table of Security
Ownership of Certain Beneficial Owners and Management would then be as
follows:
Name or Group (2) Common Stock (1)
-------------------------------- -----------------------------------------
Number of Shares % of Class
------------------ ----------
Directors: (3)
Michael Schaffer 559,500 (6)(5) 1.05%
Waddy Stephenson 180,000 (5) 0.34%
Raj Singham 6000 0.01%
Bosko Djordjevic 2,500,000 (12) 4.70%
Officers:
Lawrence Schaffer 346,000 (4) 0.65%
Michael Schaffer 559,500 (6)(5) 1.05%
Waddy Stephenson 180,000 (5) 0.34%
Officers and Directors
as a Group: 3,591,500 6.75%
5% Beneficial Owners: (6)
Alanberg Pte. Ltd. (7)(8) 41,400,000 shares of 77.79%
20 Raffles Place #17-00 Common Stock of
Ocean Tower, Singapore Record and Beneficially
048620
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<PAGE>
Francois Gontha 20,700,000 shares of 38.89%
20 Raffles Place #17-00 Common Stock held
Ocean Tower, Singapore Beneficially as a 50%
048620 shareholder of Alanberg
Pte Ltd.
Asia Interactive Holdings(9) 20,700,000 shares of 38.89%
20 Raffles Place #17-00 Common Stock held
Ocean Tower, Singapore Beneficially as a 50%
048620 shareholder of Alanberg
Pte Ltd.
Ernst and Young 20,700,000 shares of 38.89%
Trust Sdn.Bhd.(10) Common Stock held
20 Raffles Place #17-00 Beneficially as a 100%
Ocean Tower, Singapore shareholder of Asia
048620 Interactive Holdings
Pang Pah Loh a/k/a 3,449,770.009 shares of 6.48%
Pang Pak Lok (11) Common Stock held
20 Raffles Place #17-00 Beneficially as a 16.6655%
Ocean Tower, Singapore shareholder of Ernst & Young
048620 Trust Sdn.Bhd.
Mohamed Sukarno 3,449,770.009 shares of 6.48%
bin Tun Saroon(11) Common Stock held
20 Raffles Place #17-00 Beneficially as a 16.6655%
Ocean Tower, Singapore shareholder of Ernst & Young
048620 Trust Sdn.Bhd.
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<PAGE>
Foo San Kan(11) 3,449,770.009 shares of 6.48%
20 Raffles Place #17-00 Common Stock held
Ocean Tower, Singapore Beneficially as a 16.6655%
048620 shareholder of Ernst & Young
Trust Sdn.Bhd.
Kevin How Kow(11) 3,449,770.009 shares of 6.48%
20 Raffles Place #17-00 Common Stock held
Ocean Tower, Singapore Beneficially as a 16.6655%
048620 shareholder of Ernst & Young
Trust Sdn.Bhd.
Nordin bin Baharuddin(11) 3,450,459.96 shares of 6.48%
20 Raffles Place #17-00 Common Stock held
Ocean Tower, Singapore Beneficially as a 16.6688%
048620 shareholder of Ernst & Young
Trust Sdn.Bhd.
Petrus Gimbaud(11) 3,450,459.96 shares of 6.48%
20 Raffles Place #17-00 Common Stock held
Ocean Tower, Singapore Beneficially as a 16.6688%
048620 shareholder of Ernst & Young
Trust Sdn.Bhd.
----------
(1) Based on a total of 53,220,408 shares outstanding as of November 30,
2000 and includes Common Stock beneficially owned plus, where
applicable, Common Stock issuable upon exercise of outstanding stock
options, warrants, and/or convertible notes held only by the person or
group indicated that are fully exercisable or exercisable within 60
days after September 30, 2000 and after giving effect to the
acquisition of JDI and basing the shareholdings as of August 31, 2000
as reported in the Company's report filed with the Securities and
Exchange Commission on September 5, 2000.
(2) The persons named in the table have sole voting and investment power
with respect to all shares shown to be beneficially owned by them,
subject to community property laws, where applicable, and the
information contained in the footnotes to this table. Unless otherwise
indicated, the business address for persons listed in the table is 1947
Camino Vida Roble, Suite 102, Carlsbad, California 92008.
(3) This table does not include stock ownership of the Company's former
Advisory Board, who did not exercise control and had no role in the
management of the Company.
(4) Includes 100,000 shares of Common Stock issuable upon exercise of stock
options exercisable at $0.45 per share.
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<PAGE>
(5) As to Waddy Stephenson, includes 100,000 shares of Common Stock
issuable upon exercise of stock options exercisable at $0.45 per share
and 40,000 shares of Common Stock issuable upon exercise of stock
options exercisable at $2.50 per share. As to Michael Schaffer,
includes 190,000 shares of Common Stock issuable upon exercise of stock
options exercisable at 2.50 per share.
(6) In light of the fact that the Company has taken the position that the
acquisition of JDI was void AB INITIO and that the 44,000,000 shares
issued to Alanberg Pte should be cancelled for failure of consideration
and in light of the Zilkha litigation, the above table does not reflect
the shareholding attributable to the beneficial shareholders of
Alanberg nor the holding of Zilkha in the event that the Series B
Preferred Shares are converted into common shares. In that event,
Lawrence Schaffer, Michael Schaffer, Norman Schwartz, Andora Holdings,
Ltd. and Canadian Commercial Workers Industry Pension Plan would no
longer be holders of 5% or more of the outstanding Common Stock.
(7) The Directors of Alanberg Pte Ltd. are as follow: Raj Singam; Dewi
Gontha Sulisto; Francois Gontha; and Noorjahan Meurling.
(8) After the Closing of the transaction described in ITEM 2, Alanberg Pte
Ltd sold or otherwise conveyed 2,600,000 share of the Registrant's
Common Stock to Kingslake Holding Pte. Ltd.
(9) Asia Interactive Holdings is a corporation organized an existing under
the laws of Malaysia was incorporated on March 7, 2000.
(10) Ernst & Young Trust Sdn. Bhd. is a corporation organized an existing
under the lawsof Malaysia was incorporated on October 5, 1990.
(11) The total shares issued and outstanding of Ernst & Young Trust Sdn.Bhd.
is 32,002. Pang Pah Loh (also known as Pang Pak Lok), Mohamed Sukamo
bin Tun Saroon, Foo san Kan and Kevin How Kow each hold 5000 shares.
Nordin bin Baharuddin and Petrus Gimbad each hold 5001 shares.
(12) Mr. Djordjevic received an option from Alanberg PT Ltd. to purchase
2,500,000 shares at $2.00 per share.
After giving effect to the transaction with the Selim K.
Zilkha Trust ("Zilkha Trust"), beneficial and record owners of more than 5% of
the outstanding Common Stock of the Registrant, is as follows:
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<PAGE>
Name or Group (2) Common Stock (1)
-------------------------------- -----------------------------------------
Number of Shares % of Class
------------------ ----------
Directors: (3)
Michael Schaffer 559,500 (6)(5) 0.86%
Waddy Stephenson 280,000 (5) 0.28%
Raj Singham 6,000 0.01%
Bosko Djordjevic 2,500,000 (12) 3.83%
Officers:
Lawrence Schaffer 346,000 (4) 0.53%
Michael Schaffer 559,500 (6)(5) 0.86%
Waddy Stephenson 130,000 (5) 0.28%
Officers and Directors
as a Group: 3,345,500 5.51%
5% Beneficial Owners: (6)
Alanberg Pte. Ltd. (7)(8) 41,400,000 shares of 63.48%
20 Raffles Place #17-00 Common Stock of
Ocean Tower, Singapore Record and Beneficially
048620
Francois Gontha 20,700,000 shares of 31.74%
20 Raffles Place #17-00 Common Stock held
Ocean Tower, Singapore Beneficially as a 50%
048620 shareholder of Alanberg
Pte Ltd.
Asia Interactive Holdings(9) 20,700,000 shares of 31.74%
20 Raffles Place #17-00 Common Stock held
Ocean Tower, Singapore Beneficially as a 50%
048620 shareholder of Alanberg
Pte Ltd.
Ernst and Young 20,700,000 shares of 31.74%
Trust Sdn.Bhd.(10) Common Stock held
20 Raffles Place #17-00 Beneficially as a 100%
Ocean Tower, Singapore shareholder of Asia
048620 Interactive Holdings
Selim K. Zilkha Trust 12,000,000 shares of 18.40%
c/o Selim K. Zilkha Common Stock
1001 McKinney, Beneficially
Suite 1900
Houston, Texas 77002
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<PAGE>
Pang Pah Loh a/k/a 3,449,770.009 shares of 5.29%
Pang Pak Lok (11) Common Stock held
20 Raffles Place #17-00 Beneficially as a 16.6655%
Ocean Tower, Singapore shareholder of Ernst & Young
048620 Trust Sdn.Bhd.
Mohamed Sukarno 3,449,770.009 shares of 5.29%
bin Tun Saroon(11) Common Stock held
20 Raffles Place #17-00 Beneficially as a 16.6655%
Ocean Tower, Singapore shareholder of Ernst & Young
048620 Trust Sdn.Bhd.
Foo San Kan(11) 3,449,770.009 shares of 5.29%
20 Raffles Place #17-00 Common Stock held
Ocean Tower, Singapore Beneficially as a 16.6655%
048620 shareholder of Ernst & Young
Trust Sdn.Bhd.
Kevin How Kow(11) 3,449,770.009 shares of 5.29%
20 Raffles Place #17-00 Common Stock held
Ocean Tower, Singapore Beneficially as a 16.6655%
048620 shareholder of Ernst & Young
Trust Sdn.Bhd.
Nordin bin Baharuddin(11) 3,450,459.96 shares of 5.29%
20 Raffles Place #17-00 Common Stock held
Ocean Tower, Singapore Beneficially as a 16.6688%
048620 shareholder of Ernst & Young
Trust Sdn.Bhd.
Petrus Gimbaud(11) 3,450,459.96 shares of 5.29%
20 Raffles Place #17-00 Common Stock held
Ocean Tower, Singapore Beneficially as a 16.6688%
048620 shareholder of Ernst & Young
Trust Sdn.Bhd.
Percentage of ownership based on voting rights associated with
total outstanding common shares of 65,220,408 issued and outstanding after
giving effect to the Zilhka transaction described in the Company's Form 8-K/A
filed September July 5, 2000. This assumes the conversion of the One Million
shares of the Series B Preferred Stock held by the Zilkha Trust into Five
Million shares of Common Stock and the exercise of both Warrants granted to the
Zilkha Trust for an additional Seven Million common shares. The footnotes set
forth above for the previous table apply to this table.
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<PAGE>
Item 12. Certain Relationships And Related Transactions
No relationship or related transactions exist of the type
required to be reported under this Item 12.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Description Page
------- ----------- ----
2.1 Stock Purchase Agreement Executed March 13, 2000
(Filed with Form 8-K on March 29, 2000)
2.2 Amended and Restated Stock Purchase Agreement Executed
March 24, 2000 (Filed with Form 8-K on March 29, 2000 and
Registrant's Definitive Proxy filed on May 3, 2000)
2.3 Amendment No. 1 to the Amended and Restated Stock
Purchase Agreement Executed June 20, 2000
(Filed with Form 8-K on July 5, 2000)
3(i) Restated Certificate of Incorporation of Acubid.com,
Inc. (Filed with Registrant's Definitive Proxy on May
3, 2000.)
3(ii) Bylaws (Delaware)
4.1 Certificate of Designations of the Series B Preferred Stock
Filed June 20, 2000 (Filed with Form 8-K on July 5, 2000)
4.2 Warrant 1 Dated June 20, 2000 granted Selim Zilkha Trust
(Filed with Form 8-K on July 5, 2000)
4.3 Warrant 2 Dated June 20, 2000 granted Selim Zilkha Trust
(Filed with Form 8-K on July 5, 2000)
4.4 Warrant to Purchase Shares of Common Stock of AcuBid.com, Inc.
Exercisable Six Months from the Date of Grant and Expiring
Five Years from the Date of the Grant in connection with 1999
Rule 506 Private Placement
10.1 Employment Agreement with Michael Schaffer dated
June1, 2000 (Filed with Form 8-K on July 5, 2000)
10.2 Stock Option Agreement with Michael Schaffer dated June1, 2000
(Filed with Form 8-K on July 5, 2000)
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<PAGE>
10.3 Employment Agreement with Waddy Stephenson dated
June1, 2000 (Filed with Form 8-K on July 5, 2000)
10.4 Employment Agreement with Lawrence Schaffer dated June 1, 2000
(Filed with Form 8-K on July 5, 2000)
10.5 Director's Compensation Agreement dated June 14, 2000
with Terry Giles (Filed with Form 8-K on July 5, 2000)
10.6 Director's Compensation Agreement dated June 14, 2000 with
William Millard (Filed with Form 8-K on July 5, 2000)
10.7 Director's Compensation Agreement dated June 28, 2000
with Tjahjono Soerjodibroto .(Filed with Form 8-K
on July 5, 2000)
10.8 Purchase and Sale Agreement dated June 12, 2000 between
Adisatrya Surya Sulisto and Alanberg Pte Ltd, a Singapore
Corporation (Filed with Form 8-K on July 5, 2000)
10.9 Registration Rights Agreement dated June 20, 2000 between
Registrant and the Selim Zilkha Trust (Filed with Form 8-K
on July 5, 2000)
10.10 Stock Purchase Agreement and Promissory Note dated
August 4, 2000 by and between Asia Web Holdings, Inc.
and Pacomnet, an Indonesian Company. (Filed with Form 8-K
on November 16, 2000)
10.11 Commercial Office Space Lease, dated May 4, 1999
(Filed with Form 10-SB on December 15, 1999
10.12 Stock option plan for non-employee directors.
(Filed with Registrant's Definitive Proxy on May 3, 2000.)
10.12 Incentive Equity Plan. (Filed with Registrant's Definitive
Proxy on May 3, 2000.)
10.13 Form of Preferred Stock and Warrant Purchase Agreement
between AcuBid.com and 20 accredited investors in
Regulation D, Rule 506 offering in August, 1999 (Filed with
Form 10-SB on December 15, 1999
10.14 Proprietary Information Agreement between AcuBid.com and
certain employees (Filed with Form 10-SB on December 15, 1999
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<PAGE>
10.15 Proprietary Information Agreement between AcuBid.com and
certain employees. (Filed with Form 10-SB on December 15, 1999
(b) Reports on Form 8-K
On July 5, 2000, the Company filed a report on Form 8-K
reporting on a change in control and the acquisition or disposition of assets.
The report did not contain pro forma financial statements for the acquisition
which were later filed with a report on Form 8-K/A on September 5, 2000.
-41-
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Asia Web Holdings, Inc.
/S/ Michael A. Schaffer
-------------------------------
Michael A. Schaffer
Chief Executive Officer
January ____, 2000
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
/S/ Lawrence Schaffer
-------------------------------
Lawrence Schaffer
President and Chief Financial Officer
January ____, 2000
/S/ Waddy Stephenson
-------------------------------
Waddy Stephenson
Chief Technical Officer and
Member of the Board of Directors
January ___, 2000
/S/ Michael A. Schaffer
-------------------------------
Michael A. Schaffer
Chief Executive Officer and Member
of the Board of Directors
January ____,2000
-42-
