UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB / A
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended December 31, 1999
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required) for the transition period from to
Commission file number: 0-27919
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e-bidd.com, Inc.
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(Name of Small Business Issuer in Its Charter)
Minnesota 410951123
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
555 West Hastings Street, Suite 800, Vancouver, B.C., Canada V6B4N5
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(Address of Principal Executive Offices) (Zip Code)
(888) 777-0658
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(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of each Exchange on Which Registered
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Common Stock ($0.001 Par Value) None
Preferred Stock ($0.001
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
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Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not 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].
The issuer's total revenues for the year ended December 31, 1999, were $0.
The aggregate market value of the registrant's Common Stock, $0.001 par value
(the only class of voting stock), held by non-affiliates was approximately
$17,786,417 based on the average closing bid and asked prices for the Common
Stock on March 31, 2000.
On April 4, 2000, the number of shares outstanding of the registrant's Common
Stock, $0.001 par value (the only class of voting stock), was 36,770,778 .
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TABLE OF CONTENTS
Page No.
PART I
Item 1. Description of Business..........................................1
Item 2. Description of Property Management's Discussion
and Analysis or Plan of Operation...............................10
Item 3. Legal Proceedings...............................................10
Item 4. Submission of Matters to a Vote of Security Holders.............10
PART II
Item 5. Market for Common Equity and Related Stockholders...............11
Item 6. Management's Discussion and Analysis or Plan of Operation.......12
Item 7. Financial Statements............................................14
Item 8. Changes in and Disagreements with Accountants...................15
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act...............15
Item 10. Executive Compensation ..........................................16
Item 11. Security Ownership of Certain Beneficial Owners and Management...17
Item 12. Certain Relationships and Related Transactions...................17
Item 13. Exhibits and Reports on Form 8-K................................18
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PART I
Forward-Looking Statements. This Registration Statement includes
"forward-looking statements." Forward looking statements contained in this
registration statement are based on management's beliefs and assumptions and on
information currently available to management. Forward-looking statements
include statements in which words such as "expect, " "anticipate," "intend,"
"plan," "believe," "estimate," "consider," or similar expressions are used.
You should not construe any forward-looking statement as a guarantee of future
performance. These statements inherently involve risks, uncertainties and
assumptions. The future results and stockholder values may differ from those
expressed in these forward-looking statements, and those variations may be
material and adverse. Many factors that will affect these results and values are
beyond our ability to control or predict.
ITEM 1. DESCRIPTION OF BUSINESS
A. Corporate Organization
As used herein the terms "e-bidd" and "e-bidd.com" refers to e-bidd.com, Inc., a
Minnesota corporation, its subsidiaries and predecessors, unless the context
indicates otherwise. Investors should be aware that a potential conflict exists
between e-bidd and another totally separate and unrelated company by a similar
name, www.Ebid.com, that also operates as an Internet auction site. E-bidd is in
the process of changing its name to resolve this potential conflict.
E-bidd has had several previous names in the past including: Image Photo
Systems, Inc., AJA Merchant Banking Corporation, Cyberguides International,
Inc., Digital Reporting, Inc., and Port Industries, Inc. Although e-bidd was
initially formed to conduct any lawful activity, it is specifically engaged in
the business of operating a live, online, Internet auction site and licensing
Auction and Ad Serving Software.
E-bidd was originally incorporated in Minnesota on November 27, 1968, as Port
Industries, Inc., and operated as a real estate development company. Port
Industries, Inc. commenced bankruptcy proceedings under Chapter XI in May, 1974
and emerged from bankruptcy in April, 1976. As a result of the bankruptcy, all
assets were distributed and the debtor's rights were formally discharged. Port
Industries, Inc. remained inactive from 1976 until 1994.
On March 1, 1994, Port Industries, Inc. entered into an agreement of merger with
Digital Reporting, Inc., a Delaware corporation, engaged in the business of
corporate acquisitions. Upon the effective date of the merger, Port Industries,
Inc. issued 720 shares (1,800 shares prior to stock splits) of its common stock
in exchange for all of the outstanding shares of Digital Reporting, Inc., whose
operations were nominal since its inception, and became the sole surviving
corporation under its post-merger name, Digital Reporting, Inc.
In September 1997, Digital Reporting, Inc. acquired all of the outstanding
common shares Cyberguides International, Inc., a Delaware corporation, in
exchange for 3,500 restricted shares of Digital Reporting, Inc.'s common stock.
Accordingly, Digital Reporting, Inc. changed its name to Cyberguides
International, Inc. and operated a web page on the Internet that contained a
database of general information about public companies. Cyberguides
International, Inc. then merged with Corp Reports.com whose principal business
activity was similar to that of Cyberguides International, Inc., the operation
of a web page in the early days of the Internet that contained a database of
public companies annual reports.
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In February, 1998 A.J. Alda & Associates acquired a majority interest in
Cyberguides International, Inc. by purchasing approximately 1,140 restricted
common shares of its stock. Mr. A.J. Alda was then appointed director,
president, and chief executive officer of Cyberguides International, Inc. which
changed its name to AJA Merchant Banking Corporation and operated as a public
merchant banking corporation. AJA Merchant Banking Corporation, also in the
business of corporate acquisitions, entered into preliminary negotiations with a
printed circuit board manufacturer in the Minneapolis - St. Paul, Minnesota area
to build a prototype circuit board but failed to reach the development or
production stage.
On December 4, 1998, AJA Merchant Banking Corporation changed its name to Image
Photo Systems, Inc. and began developing 3D picture viewers for kids. Image
Photo Systems, Inc. developed a prototype 3D picture viewer, but failed to make
it to the manufacturing, production, or sales stage. In 1999, the officers and
directors associated with the acquisition of Image Photo Systems, Inc. resigned.
In July, 1999 Image Photo Systems, Inc., under a team of new management, entered
into an Agreement with Laurier Limited, whereby it acquired its current
operations as an Internet auction site and licensor of Auction and Ad Serving
Software and Laurier Limited received 10,000,000 restricted shares of Image
Photo Systems, Inc. stock. In September 1999, Image Photo Systems, Inc. changed
its name to e-bidd.com, Inc.
B. Description of Business
E-bidd's business consists of an Internet-based auction site and licensing
Auction and Ad Serving Software. E-bidd's products include Auction and Ad
serving Software which it sells through licensing agreements and a website,
Banner-Auctions.com., upon which e-bidd intends to feature its software and to
operate as live, online, Internet website that auctions advertising space.
E-bidd hopes that banner-Auctions.com and its software will create an online
media marketplace offering person-to-person and business-to business e- commerce
services for the buying and selling of premium advertising space.
Accordingly, Banner-Auctions.com intends on hosting real-time Internet-based
auctions that provide media buyers and sellers with an online exchange of
advertising space at market driven prices. The site is intended to generate
traffic to consumer "lots," which act as a customer's inventory of their items
for sale, thereby allowing media buyers to save on quality advertising space
while publishers gain access to new buyers.
Internet auctions are defined as the person-to-person exchange (ie,
collectibles, antiques and other used goods) of unwanted, unused products or
inventory; the business-to-business exchange (computer and business products,
travel, apparel, and automobiles) through online communication channels (1 to 1,
1-to-many, many- to-1) and computer applications (directories, catalogs, online
auctioneering) for a specific community of practice.
Collectively, person-to-person, business-to-business exchange, online
communication channels, and computer applications create a construct recently
coined as "infomediaries". Essentially, "infomediaries" sell information about a
market and create a platform upon which buyers and sellers can do business.
Initially, infomediaries were mainly a consumer phenomenon, typified by early
Internet successes such as Yahoo, Amazon.com, and E-Bay, an auction site. Many
Internet researchers now believe that perhaps the most influential and
profitable Internet companies will be business-to-business infomediaries which
have the ability to re-organize entire industries.
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Through the operation of its website, Banner-Auctions.com and use of its Auction
and Ad Serving Software, e-bidd intends to act as an infomediary that provides a
unique online market to ensure fair, equitable and reasonable prices for both
buyers and sellers in online and traditional advertising mediums. E-bidd's
auction format is intended to allow both buyers and sellers to receive the best
possible price for this space. This auction format will also offer a single
source for all types of media: Online, Broadcast, Print, and Out-of-home.
The material risks that are apparent to e-bidd and its shareholders are
primarily that it has yet to produce a product. E-bidd's website should be fully
functioning and open (as an auction facility focused on the advertising industry
and complemented by a banner auction facility) within the next few weeks. In
fact, e-bidd intends to launch its general media Internet supersite on April 24,
2000. The launch of this supersite will be intended by e-bidd to be Phase 1 of a
multi-phased sequence that will see the unfolding of e-bidd's extended business
model. E-bidd plans that the general media supersite will be geared towards the
business of selling conventional media advertising space, online advertising,
advertising agency services and public relations services via this site. Clients
will be able to access a host of services via the supesite, including the
purchase of radio and television advertising time in 10 major U.S. markets,
creative advertising services and public relations services that cater to
financial, technology and real estate clients. Subsequent phases will be
intended to usher in the ability to buy media online in a larger selection of
markets, online banner advertising, added interactivity functions, and a range
of other content and media related services for registered users. The risk to
shareholders is that the launch of this website does not occur as anticipated
and that the software that these websites will feature may be perceived as
having a limited life.
C. The Market
While there is a scattered presence of e-auction sites, there is a lag in the
development of online media marketplaces offering a business-to-business
e-commerce service for buying and selling premium ad space. Consequently, e-bidd
intends to launch high value content, services, and e-commerce applications
targeting the untapped advertising auctioneering market by gaining name
recognition.
It is important to note however, that one of the key assumptions of e-bidd's
corporate strategy (described below) is that increasing membership, followed by
encouraging members to post "lots" (a inventory database of a member's items for
sale), is a key source of content attractiveness that will drive consumers to
support e- bidd.com as a destination of choice. Other key factors influencing
how fast revenues may grow are:
a) Member Loyalty / Attracting Members:
E-bidd intends to achieve critical mass by driving membership
churn and usage rates. For example, the more e-bidd promotes
personal relationships between members through online
discussion forums, the more loyal the members are likely to
become to the community. This increases member contribution in
community forums and desire for continual participation.
Additionally, there are no membership fees for any party to
become a member or to maintain their membership on e-bidd's
website. The only fees that occur are through the transaction
process (ie. the buying and/or selling) of advertising space
itself.
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b) Member Profiles:
Member profiles play a critical role in generating economic
value for the community by fueling:
o Target Advertising which attracts key corporate
clients and partners that in turn strengthens click
through rates and draws in even more advertisers;
o Vendor Migration which draws in additional vendors,
increases transaction activity that in turn increases
advertising activity;
o Repeat Cycles: While the interaction of members with
advertisers and vendors generates even more member
profiles, this begins the cycle all over again.
c) Content Attractiveness:
The more members e-bidd.com has, the more member generated
content it is likely to accumulate and thus, the more members
it is likely to attract. Over time, browsers become builders,
users and buyers. E-bidd intends to create a dynamic link in
this cycle. Builders are those members who are most passionate
about the community and most active in contributing content.
Users are people who spend their time in the community other
than browsers but who neither contribute significantly to
content nor actively purchase products or services. Buyers are
those members who actively purchase products or services and
are significant drivers of advertising revenue. E-bidd's
challenge is to understand in detail the economic role and
economic value contributed by each member and to be creative
in identifying ways to enhance this contribution over time.
d) Transaction Offerings:
First, as the range of products and services offered by e-bidd
increases, the more likely members are to participate in
e-bidd.com's community, while the members already in the
community typically develop greater willingness to engage in
transactions. In turn, these developments should increase the
attractiveness of the community to vendors, which should draw
more vendors and increase the number of products and services
available for sale. Second, the more products and services
offered by e-bidd should lead to an increase in transaction
activity.
D. Corporate Strategy
E-bidd has identified three immediate opportunities for development to fill the
market niche described above for person-to-person and business-to-business
e-commerce which are as follows:
1) Branding and e-commerce Platform Initiatives:
Through branding and e-commerce platform initiatives, e-bidd
believes it will become the live online Internet auction site
of choice for providing fast, efficient and reliable
information. Through its website, Banner-Auctions.com, e-bidd
will act as an open database that should enable clients to
easily set up their corporate profile and details to conduct
online auction transactions. In effect, e-bidd intends to
provide a graphical user interface that the client's
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customers can use to purchase goods over the Internet. As a
result, e-bidd hopes to:
o enable merchants to accept information online in a
secure format;
o offer clients an extremely inexpensive system for
implementation;
o provide transaction data to the client for clearing on
e-bidd's system; and
o bring third party reporting and billing to both buyers
and sellers.
2) Aggregating Members by Linking Virtual Communities:
By aligning with a dynamic virtual community where consumers
can communicate freely, contribute content, and share positive
experiences, e-bidd intends to create a substantial
international database. E-bidd may be able to subsequently
sell this database at a premium since it would be valuable to
global companies, organizations, and Internet portals
interested in capturing the interest and purchasing power of
targeted demographic groups. E-bidd is presently engaged in
discussions with an emerging virtual community for alignment
purposes.
3) Fostering Corporate Relationships and Developing Multiple
Revenue Streams:
Hopefully, the opportunity to create lateral synergies with
corporations and organizations will provide e-bidd an income
stream through sponsorships, banner advertisements and e-
commerce opportunities.
E-bidd intends to embark upon a thorough cycle of due
diligence to form strategic partnerships and advertising
synergies with corporations, online search portals and
organizations with revenue enhancing opportunities. Potential
examples of such relationships include:
o Banner ads and polling initiatives (since companies pay
per impression to acquire consumer preference data
sponsorship synergies and lateral promotional campaigns
will produce multiple revenue streams while extracting
economic value from services rendered to them);
o Full-scale e-commerce system development: by providing
template cataloging, auctioning, on-the-fly shopping
promotions, full transaction processing, online
neighborhood bartering, and a virtual mall, e-bidd
hopes to develop additional income streams.
On November 12, 1999, e-bidd entered into an agreement with a related party,
Meir Kahtan, Public Relations, a division of Miller Advertising Agency, Inc. The
agreement will provide e-bidd with promotional and business consulting and a
public relations campaign. Meir Kahtan's team intends to identify promotional
opportunities and news coverage for e-bidd's activities, acquisitions, strategic
alliances, and emergance in online media auctions. An advertising campaign to
support the public relations process is also expected to be subsequently created
and performed. For more information on this agreement, please see ITEM 12
"Certain Relationships and Related Transactions" on page 15 of this Form 10-KSB.
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E. Competition
The market for live online auctions among person-to-person and
business-to-business trading over the Internet is new, rapidly evolving and
intensely competitive, and e-bidd expects competition to intensify in the
future. Barriers to entry are relatively low, and current and new competitors
can launch new sites at a relatively low cost using commercially available
software.
E-bidd directly competes with a company by the name of Adauction.com which is
currently the dominate online "ad auctioneer." Adauction.com provides a
business-to-business e-commerce service for buying and selling media.
Adauction.com reported more than 3,500 media buyers registered to purchase
inventory through its web site. Presently completing a $15 million financing,
Adacution.com is a venture capital company funded by Lehman Brothers - New York,
and is considered the top branded, privately held, web and print Media Conveyor
for this evolving niche market segment.
Consequently, e-bidd's response is to target small to medium sized businesses;
aggregate users through virtual communities, and pursue partnering relationships
with solution vendors whose products and services will be greatly extended in
the marketplace via e-bidd's applications.
It is important to note that e-bidd also currently or potentially competes with
a number of other companies. Its indirect competitors include various online
person-to-person auction services, including Yahoo!, Auctions Powered by Onsale
and Excite, Inc., both of which are free to sellers and buyers, Auction Universe
and a number of other small services, including those that serve specialty or
regional markets such as CityAuction. E-bidd also competes indirectly with
business-to-consumer online auction services such as Onsale, First Auction,
Surplus Auction and uBid. A number of traditional auction companies, including
Butterfield & Butterfield and Sotheby's, are offering or have announced plans to
create Internet auction sites.
E-bidd also potentially faces competition from a number of large online
communities and services that have expertise in developing online commerce and
in facilitating online person-to-person interaction. Some of these potential
competitors, including Amazon.com, AOL, Lycos, Inc. and Microsoft Corporation,
currently offer business-to-consumer trading services and classified ad
services. Some of these companies also may introduce person-to-person trading to
their large user populations. Other large companies with strong brand
recognition and experience in online commerce, such as Cendant Corporation, QVC,
USA Network and large newspaper or media companies, also may seek to compete in
the online auction market.
In order to respond to changes in the competitive environment, e-bidd may, from
time to time, make pricing, service or marketing decisions or acquisitions that
could harm its business. New technologies may also increase competitive
pressures on e-bidd by enabling its competitors to offer a lower cost service.
Some Web- based applications that direct Internet traffic to certain websites
may channel users to trading services that compete with e-bidd. In addition,
companies that control access to transactions through network access or Web
browsers could promote competitors of e-bidd or charge it substantial fees for
inclusion.
F. Description of Technology
E-bidd has successfully purchased the worldwide rights to Internet Auction
Software and Internet Ad Management Software. E-bidd will use this technology to
produce online niche-market services and applications catering to the
auctioneering market segment.
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E-bidd's first application of this software will be its Banner-Auctions.com
site.
E-bidd's software features both auctioneering and ad serving technology. For
example, e-bidd's software has an ad cache busting feature to insure the
maximizing of inventories. The auction software also features a powerful e-mail
databasing of clients to help maintain traffic.
Cache Busting Technology:
E-bidd's ad serving code utilizes JavaScript, which allows the
administrative site to write to client's HTML pages, giving the ads a
new cache number each time a page is loaded. This technology will void
any image caching the end user may be using and can effectively
increase ad inventory of the client's site.
The cache busting feature is a backwards compatible Javascript that
ensures "browsers" (netscape and IE versions 4 and up) do not "cache"
(get stored on the hard drive). When a typical banner exchange is
surfed, that banner is stored on the user's hard drive in "cache." If
the web surfer goes back to this page (either by link or via the back
button) they will see the same ad they viewed last time. However, with
e-bidd's Javascript a new ad is loaded from e-bidd's website for
maximum ad placement ability. The cache busting feature will benefit
e-bidd and its customers. Traditionally, without the cache busting
feature, whenever a new page is brought up on a website and the user
pushes the back button to see the previous page the same banner will
appear repeatedly. However, with the cache busting feature, e-bidd can
guarantee controlled rotation of the ads a user sees when using the
back button. Hence, the cache busting feature will increase advertising
and click through rates for e-bidd.com and its clients.
Guaranteed rotation means guaranteed exposure to our clients which
gives them more banner-ad views. Being one of the few ad-serving
companies offering this service allows our customers more click through
or expanded banner ad potential. For example, Double Click has
banner-ad serving software called "DART" which does not have the
guaranteed rotation feature. E-bidd.com's software is more effective
than DART because e-bidd.com's software can guarantee rotation of
banners by "busting the cache" which results in increased page views
for e-bidd.com's clients.
Integration:
E-bidd's Ad Serving Software has been coded with integration in mind.
This means that it can be integrated into other banner exchanges. This
is an integral feature, as ad auctioning rivals get a great deal of
their sales (and ad inventory) from banner exchange sites. Instead of a
client inserting the typical image and link code onto their site, the
client will place e-bidd's scripts, creating two layers of banner
exchanging.
This ability will allow e-bidd to easily audit statistics and keep
track of how the site is showing the buyer's banners. This will also
allow the e-bidd to compare statistics with the seller's site and make
sure that there are not any discrepancies, ultimately creating a fair
and reliable way of reporting ad campaign statistics.
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Advanced Tracking, Fraud Busting and Statistics:
The Ad Servicing Software keeps a wide range of business statistics.
This will ensure that the banners are not being requested en mass from
the same IP number (same person) and that the times and dates of banner
requests from IP numbers are appropriate. Essentially, the software
makes it increasingly difficult to engineer a site to get more
click-throughs or exposures than they deserve.
Control:
The seller of banners (web publisher) will be able to easily verify the
validity of a buyer's banner to make sure it is appropriate for their
site. The web publisher will be able to reject a banner if they deem it
to be inappropriate.
Customized Profiles:
The software features customized profiles for buyers and sellers,
allowing them to get to know each other a little better before deciding
on a sale.
Multiple Ads:
The software has the ability for the buyer to display multiple banners
per campaign and to compare the statistics of the banners to each
other. This allows buyers to decide which type of advertisement is
working best for them.
Advanced E-mail Manager:
Future advancements to the software will include a fully integrated
e-mail manager, allowing for announcement lists for clients and to
notify the user base of important changes, deals, and features.
Server Technology:
E-bidd will be running the ad serving software on a dedicated server,
allowing for maximum load usage and bandwidth. The software was created
in Perl and the webserver will be running Apache with Mod_Perl. Apache
is the most popular webserver on the Internet, with over 60% of all
websites running Apache. It is efficient, popular, and secure. Mod_Perl
is an extension for Apache that allows it to cache Perl CGI files. This
will allow Perl scripts to execute 20-50% faster, greatly decreasing
the load on the host server.
Scaleable Database Technology:
E-bidd is using mySQL as a database server. (SQL = Structured Query
Language). SQL is the most widely used database language in the world,
with the portability of Perl scripts to accessing mySQL, e-bidd will be
able to change over to a more extensive database if the need arises.
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Security:
E-bidd will provide the server with maximum security. For credit card
transactions, e-bidd will use Apsache's SSL layers. E-bidd will also be
utilizing an established merchant account solution for Internet based
commerce transactions.
Testing of Technology:
In September, e-bidd commenced Alpha Testing of its Auction and Ad
serving Software. Epic Eye, a California based private company is
performing the Alpha Testing. Beta Testing of the Auction Software
commenced October 1, 1999, once completed e-bidd's first application of
this software will be on its banner-Auctions.com website. E-bidd's Ad
Serving Management Software, has been successfully tested by Epic Eye.
This software is now being readied for licensing and for internal use
on Banner-Auctions.com.
G. Regulatory Overview (New and Existing Regulation of the Internet)
E-bidd is subject to the same federal, state and local laws as other companies
conducting business on the Internet. Today there are relatively few laws
specifically directed towards online services. However, due to the increasing
popularity and use of the Internet and online services, it is possible that laws
and regulations will be adopted with respect to the Internet or online services.
These laws and regulations could cover issues such as online contracts, user
privacy, freedom of expression, pricing, fraud, content and quality of products
and services, taxation, advertising, intellectual property rights and
information security. 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.
In addition, numerous states, including the State of Washington, in which
e-bidd's principal place of business is 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 State of Washington's regulations to e-bidd's
business to date and little precedent exists in this area. One or more states
may attempt to impose these regulations upon e-bidd in the future, which could
harm e-bidd's business. Several states have 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 started 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 could directly affect the
way e-bidd does business or could create uncertainty in the marketplace. This
could reduce demand for the services of e-bidd or increase the cost of doing
business as a result of litigation costs or increased service delivery costs, or
could otherwise harm e-bidd's business. In addition, because e-bidd's services
are accessible worldwide, and e-bidd facilitates sales of goods to users
worldwide, foreign jurisdictions may claim that e-bidd is required to comply
with their laws. In some jurisdictions, e-bidd will be required to collect
value-added taxes on its fees. E-bidd's failure to comply with foreign laws
could subject it to penalties ranging from fines to bans on e-bidd's ability to
offer its services.
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H. Reports to Security Holders
E-bidd's annual report will contain audited financial statements. E-bidd is not
required to deliver an annual report to security holders and will not
voluntarily deliver a copy of the annual report to the security holders. E-bidd
intends to, from this date forward, to file all of its required information with
the Securities and Exchange Commission ("SEC"). Prior to this form being filed
there were not other forms filed. E-bidd plans to file its 10KSB, 10QSB, and all
other forms that may be or become applicable to e-bidd with the SEC.
The public may read and copy any materials that are filed by e-bidd with the SEC
at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. The Public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The statements and forms
filed by e-bidd with the SEC have also been filed electronically and are
available for viewing or copy on the SEC maintained Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC. The Internet address for this
site can be found at http://www.sec.gov. Additional information can be found
concerning e-bidd on the Internet at http://www.ebidd.com and
http://www.Banner-Auctions.com.
ITEM 2. DESCRIPTION OF PROPERTY
E-bidd used to be headquartered at 600 University Street, Suite 2424, Seattle,
Washington 98101 where it used to lease office space for $2,000 per month until
December 31, 2001. E-bidd has canceled this lease and moved its headquarters to
555 West Hastings Street, Suite 800, Vancouver, B.C. V6B 4N5. E-bidd leases its
Vancouver office facility which contains approximately 1,500 square feet of
office space on a month-to-month basis for $2,700 dollars per month. E-bidd
believes that this facility is generally suitable and adequate to accommodate
its current operations and that such facility is adequately insured.
ITEM 3. LEGAL PROCEEDINGS
E-bidd is currently not a party to any pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the year 1999, the e-bidd did not submit any matters to a vote of
security holders through the solicitation of proxies or otherwise.
[THIS SPACE LEFT BLANK INTENTIONALLY]
10
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
E-bidd's common stock is currently traded on the Pink Sheets under the symbol
"BIDD". In an effort to regain its listing on the Over The Counter Bulletin
Board, e-bidd has submitted its Form 10-SB to the SEC and although effective by
operation of law, ebidd's Form 10-SB remains subject to comment from the SEC.
Upon clearing comments from the SEC, e-bidd expects to be re-listed on the OTC
BB shortly thereafter.
The table below sets forth the high and low sales prices for e-bidd's Common
Stock for each quarter of 1998 and 1999. The quotations below reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions:
Quarter High Low
------- ---- ---
1998 First 2.5625 .6875
---- Second(1) 1.1875 .31
Third .8675 .13
Fourth .3 .125
Quarter High Low
------- ---- ---
1999 First(2) .33 .027
---- Second(3) .046875 .022
Third(4) 8.625 .035
Fourth 2.63 .252
Record Holders
As of March 31, 2000, there were approximately 304 shareholders of record
holding a total of 36,770,778 shares of Common Stock. The holders of the Common
Stock are entitled to one vote for each share held of record on all matters
submitted to a vote of stockholders. Holders of the Common Stock have no
preemptive rights and no right to convert their Common Stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
Common Stock.
Dividends
E-bidd has not declared any cash dividends since inception and does not
anticipate paying any dividends in the foreseeable future.
- ------------------------
(1) On May 31, 1997, e-bidd's common stock reverse split on a one to four
basis.
(2) On March 24, 1999, e-bidd's common stock reverse split on a one to ten
basis.
(3) On April 5, 1999, e-bidd's common stock reverse split on a one to ten
basis.
(4) On July 8, 1999, e-bidd's common stock reverse split on a one to one
hundred basis.
11
<PAGE>
The payment of dividends is within the discretion of the Board of Directors and
will depend on e-bidd's earnings, capital requirements, financial condition, and
other relevant factors. There are no restrictions that currently limit e-bidd's
ability to pay dividends on its Common Stock other than those generally imposed
by applicable state law.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
A. Results of Operations
Sales
E-bidd has not generated any revenues from operations for the periods covered by
this Form 10-KSB.
Losses
Net losses for the year ended December 31, 1999, decreased to $217,934 from
$1,315,249 for the year ended December 31, 1998, a decrease of 83%. The decrease
in losses was attributable to the write-off of all the assets of Corp
Reports.com, Inc. in 1998 with no similar write-offs occurring in 1999.
E-bidd expects to continue to incur losses at least through fiscal year 2000 and
there can be no assurance that e-bidd will achieve or maintain profitability or
that revenues will be generated or that growth can be sustained in the future.
Expenses
Selling, general and administrative expenses for the year ended December 31,
1999, increased to $514,037 from $370,742 for the year ended December 31, 1998,
an increase of 39%. The substantial increase in selling general and
administrative expenses were the result of various costs associated with start
up expenses of e-bidd.
Depreciation and amortization expenses for the years ended December 31, 1999 and
December 31, 1998 were $12,083 and $14,056, respectively.
B. Liquidity and Capital Resources
Cash flows generated by operations were a negative $215,776 for the year ended
December 31, 1999, and a negative $842,381 for the year ended December 31, 1998.
The decrease in negative cash flows for the year ended December 31, 1999 are
primarily attributable to the discontinuation of Corp Reports, Inc. start-up and
the subsequent discontinuation of its operations in 1998.
Cash flows generated from financing activities was $223,600 for the year ended
December 31, 1999 and $838,970 for the year ended December 31, 1998. E-bidd's
financing activities primarily consisted of the sale of the e-bidd's common
stock pursuant to private placements.
E-bidd has funded its cash needs over the periods covered by this Form 10-KSB
through the issuance of its common stock for cash. E-bidd intends to cover its
cash need over the next twelve months through sale of additional shares of its
common stock pursuant to a registration statement or an appropriate exemption
from registration. However, there is no guarantee that e-bidd will be able to
raise additional funds from the sale of its securities.
12
<PAGE>
On January 18, 2000, e-bidd negotiated a private placement with two separate
investment groups in the amounts of $500,000 and $360,000 for total gross
proceeds of $860,000 to be used as general working capital. These total gross
proceeds bought 4,300,000 units at a price of $.20 per unit. Each unit consists
of one share ("Share") of common stock of e-bidd and one warrant to purchase an
additional share of common stock at a price of $.30 for a period of one year
from the date of issuance ("First Hold Period") and at a price of $.50 for a
period of one year from the end of the First Hold Period ("Second Hold Period").
A portion of the shares are being offered outside the United States in reliance
upon Regulation S promulgated under the Securities Act of 1933 and the remainder
of the shares are being offered to investors in the United States in reliance
upon Regulation D.
C. Capital Expenditures
E-bidd made no significant capital expenditures on property or equipment over
the periods covered by this report. The only planned capital expenditure is
further website development. E-bidd has budgeted $50,000 for this development
and e-bidd intends to contract sometime in the future to complete this work.
As of March 2000, e-bidd's website is in its review stage and should be
operational within 60 days. E-bidd's estimated cash requirements are
approximately $475,000 annually. The majority of our cash requirements will be
used for personnel costs and professional fees, since the website is essentially
completed.
D. Income Tax Expense (Benefit)
E-bidd has net operating loss carry forwards of approximately $2,100,000 which
will expire in 2013 and 2014.
E. Impact of Inflation
E-bidd believes that inflation has had a negligible effect on operations over
the past three years. E-bidd believes that it can offset inflationary increases
in the cost of materials and labor by increasing sales and improving operating
efficiencies
F. Going Concern
E-bidd has had no sales and suffered recurring losses from operations that
raises substantial doubt about its ability to continue as a going concern.
Management plans in regards to theses matters is to grow through business
combinations rather then to seek immediate, short-term earnings. However, in
order to support existing operations and to fund proposed acquisitions,
additional bank, private and/or equity financing must be obtained. Additionally,
e-bidd plans to increase its sales through its web page, Banner-Auctions.com,
and by selling licensing rights to its Auction and Ad Serving software.
Additionally, the Company completed a private placement which generated $860,000
in cash to be used for working capital for the remainder of 1999 and the year
2000. The cash generated through the private placement is expected to be
sufficient to cover all operating expenses for the periods mentioned. There is
no firm commitment from insiders to advance monies to e-bidd, although the
insiders are committed to keeping the entity operational and will continue to
pay operating costs.
13
<PAGE>
G. Year 2000 Compliance
As of April 10, 2000, the Company has not experienced any Y2K problems.
ITEM 7. FINANCIAL STATEMENTS
The Company's financial statements for the fiscal year ended December 31, 1999
and 1998 are attached hereto as F-1 through F-14.
[THIS SPACE LEFT BLANK INTENTIONALLY]
14
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
REPORT ON AUDIT OF FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
<PAGE>
CONTENTS
PAGE
Independent Auditors' Report.................................................F-1
FINANCIAL STATEMENTS
Balance Sheets...............................................................F-2
Statements of Operations and Accumulated Deficit......................F-3 to F-4
Statements of Stockholders' Equity....................................F-5 to F-6
Statements of Cash Flows..............................................F-7 to F-9
Notes to Financial Statements.......................................F-10 to F-14
<PAGE>
Bendinger & Company
1850 Mount Diablo Blvd., Suite 610
Walnut Creek, California 94596
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
March 15, 2000
Board of Directors E-BIDD.COM, INC.
(Formerly Image Photo Systems, Inc.)
(A Company in the Development Stage)
Vancouver, B.C., Canada
We have audited the accompanying balance sheets of E-BIDD.com, Inc. (formerly
Image Photo Systems, Inc.) (a company in the development stage) ("Company"), as
of December 31, 1999 and 1998 and the related statements of operations and
accumulated deficit, and cash flows for the years ended December 31, 1999, 1998
and 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of E- Bidd.com, Inc. (a
company in the development stage), as of and for the years ended prior to
December 31, 1997 were audited by other auditors, whose reports expressed an
unqualified opinion on these statements.
We conducted our audits in accordance with generally accepted accounting
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from
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 principals used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of E-Bidd.com, Inc. (formerly
Image Photo Systems, Inc.) (a company in the development stage) at December 31,
1999 and 1998 and the results of its operations and cash flows for the years
ended December 31, 1999, 1998, and 1997, in conformity with generally accepted
accounting principals.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. However, the Company has had no sales
and suffered recurring losses from operations that raise substantial doubt about
its ability to continue as a going concern. Management plans in regards to these
matters are also described in Note F. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Bendinger & Company
/s/ Bendinger & Company
-----------------------
Certified Public Accountants
Walnut Creek, California
F-1
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31
1999 1998
---- ----
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ 7,824 $ -
------------------------- ------------------------
TOTAL CURRENT ASSETS 7,824 -
------------------------- ------------------------
OTHER ASSETS
Software license
Cost 290,000 -
Accumulated amortization (12,083) -
------------------------- ------------------------
Net 277,917 -
------------------------- ------------------------
TOTAL ASSETS $ 285,741 $ -
------------------------- ------------------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 5,000 $ 14,925
------------------------- ------------------------
TOTAL CURRENT LIABILITIES 5,000 14,925
------------------------- ------------------------
STOCKHOLDERS' EQUITY (DEFICIT) (Note D)
Common stock, par value $.001; 100,000,000
shares authorized; issued and outstanding
16,620,778 and 30,788 at December 31, 1999 and
1998, respectively. 16,621 31
Additional paid in capital 2,770,165 2,273,155
Deficit at inception date (746,875) (746,875)
Accumulated deficit during the development stage (1,759,170) (1,541,236)
------------------------- ------------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 280,741 14,925
TOTAL LIABILITIES AND STOCKHOLDERS' $ 285,741 $ -
EQUITY ========================= ========================
</TABLE>
See Notes to Financial Statements
F-2
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
Years ended December 31, 1999, 1998, and 1997, and
the period March 1,1994 (inception of the development stage),to December 31,1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from March 1,
Year Ended December 31 1994 (inception of the
development stage)
1999 1998 1997 through Dec. 31, 1999
---------------- ----------------- ---------------- -----------------------
COSTS AND EXPENSES
<S> <C> <C> <C> <C>
Personnel Costs $ 30,058 $ 207,625 $ 81, 424 $ 369,172
Occupancy Costs 21,769 31,749 26,333 79,851
Professional Fees 188,238 77,132 25,008 292, 178
Computer Costs 9,300 8,529 6,385 24, 214
Marketing - 721 8,530 9,251
Travel 34,341 5,733 6,478 46,552
Consulting 72,560 - - 72,560
Interest and Bank Charges 478 951 3,286 4,715
Office Supplies 3,991 514 2,616 7,121
Communication 53,491 6,964 3,673 64,128
Insurance 20,317 697 744 21,758
Miscellaneous 547 6,791 2,261 9,599
Transfer Fees 3,770 3,980 - 7,750
Depreciation and
Amortization 12,083 14,056 5,155 31,294
Bad Debt Expense - 5,400 - 5,400
Website/Internet Expense 63,094 - 8,252 71,346
---------------- ----------------- ---------------- -----------------------
TOTAL EXPENSES 514,037 370,842 180,145 1,116,889
================ ================= ================ =======================
</TABLE>
(CONTINUED ON NEXT PAGE)
See Notes to Financial Statements
F-3
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT (continued) Years ended December
31, 1999, 1998, and 1997, and
the period March 1, 1994 (inception of the development stage), to December 31,
1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from March 1,
Year Ended December 31 1994 (inception of the
development stage)
1999 1998 1997 through Dec. 31, 1999
---------------- ----------------- ---------------- -----------------------
OTHER INCOME (LOSS)
(Notes D and E)
<S> <C> <C> <C> <C>
Dissolution of Corp Reports - (503,507) - (503,507)
Other 296,103 (441,000) 6,123 (138,774)
---------------- ----------------- ---------------- -----------------------
296,103 (944,507) 6,123 (642,281)
NET EARNINGS (LOSS) (217,934) (1,315,249) (174,022) (1,759,170)
ACCUMULATED DEFICIT:
Beginning (2,288,111) (972,862) (798,840) (746,875)
---------------- ----------------- ---------------- -----------------------
Ending $ (2,506,045) $ (2,288,111) $ (972,882) $ (2,506,045)
================ ================= ================ =======================
BASIC AND DILUTED ($.07) ($.05) ($.03)
LOSS PER SHARE (Note A) ================ ================= ================
</TABLE>
See Notes to Financials
F-4
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF STOCKHOLDERS' EQUITY
Period from March 1, 1994 (inception of the development stage), to December 31,
1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Existing deficit Deficit acc-
Common Stock at inception of umulated Total
Number of Additional Paid development during devel- Stockholders'
Shares Amount in Capital stage pment stage Equity
BEGINNING
BALANCE
<S> <C> <C> <C> <C> <C> <C>
at inception of 201 $ - $ 746,875 $ (746,875) $ - $ -
development,
March 1, 1994
Shares issued 720 1 1,799
Net loss for period (1,800)
ending 12/31/94
BALANCES
-------------- --------------- -------------- ---------------- ---------------- ------------
December 31, 921 1 748,674 (746,875) (1,800) -
1994
Shares issued -
Net loss for period
ending 12/ 31/95
BALANCES
-------------- --------------- -------------- ---------------- ---------------- ------------
December 31, 921 1 748,674 (746,875) (1,800) -
1995
Shares issued 90 - 28,500
Net loss for period (50,165)
ending 12/31/96
BALANCES
-------------- --------------- -------------- ---------------- ---------------- ------------
December 31, 1,011 1 777,174 (746,875) (51,965) (21,665)
1996
Shares issued 14,492 15 258,536
Net loss for period (174,022)
ending 12/13/97
</TABLE>
(CONTINUED ON NEXT PAGE)
See Notes to Financials
F-5
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF STOCKHOLDERS' EQUITY (continued)
Period from March 1, 1994 (inception of the development stage), to December 31,
1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Existing deficit Deficit acc-
Common Stock at inception of umulated Total
Number of Additional Paid development during devel- Stockholders'
Shares Amount in Capital stage opment stage Equity
BALANCES
<S> <C> <C> <C> <C> <C> <C>
--------------- -------------- ---------------- ---------------- ----------------- -----------
December 31,
1997 15,503 16 1,035,710 (746,875) (225,987) 62,864
Shares issued 15,275 15 1,237,445
Net loss for
period ending
12/31/98 (1,315,249)
BALANCES
-------------- -------------- ---------------- ---------------- ----------------- -----------
December 31,
1998 30,778 31 2,273,155 (746,875) (1,541,236) (14,925)
Shares issued:
Shares issued to
acquire license 10,000,000 10,000 290,000
Shares issued for
cash 6,590,000 5,590 207,010
net loss for period
ending 12/31/99 (217,934)
BALANCES
-------------- --------------- ---------------- ---------------- ----------------- -----------
December 31, $16,620,778 $16,521 $2,770,165 $(746,875) $(1,759,170) $280,741
1999 =============== =============== ================ ================ ================= ===========
</TABLE>
The Company also had other non-cash investing and financing activities:
Year Ended December 31
-----------------------------------
1999 1998 1997
---- ---- ----
Conversion of debt
to common stock $ - $ - 343,549
----- ------
Shares issued to Acquire license 290,000 - -
------- ------ ----------
290,000 - $343,549
======= ====== ========
See Notes to Financial Statements
F-6
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
Years ended December 31, 1999, 1998, and 1997, and
the period March 1, 1994 (inception of the development stage), to December 31,
1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31
--------------------- Period from March 1, 1994
(Inception of the development
1999 1998 1997 stage) though Dec. 31 1999
----------------- ---------------- ----------------- ------------------------
CASH FLOWS FROM
OPERATING ACTIVITIES:
<S> <C> <C> <C> <C>
Net earnings (loss) $ (217,934) $ (1,315,249) $ (174,022) $ (1,759,170)
Adjustment to reconcile net
earnings (loss) to net cash used by
operating activities
Depreciation and amortization 12,083 14,056 5,155 31,294
Abandonment of furniture and
office equipment - 30,809 - 30,809
Write-off goodwill - 464,831 - 464,831
CHANGES IN CURRENT
ASSETS AND CURRENT
LIABILITIES:
(Increase) decrease in current
assets:
Accounts receivable - 3,500 (3,500) -
(Increase) decrease in current
liabilities
Accounts payable and accrued
expenses (9,925) (40,328) 46,573 5,000
----------------- ---------------- ----------------- ------------------------
NET CASH USED FOR (215,776) (842,381) (125,794) (1,227,236)
OPERATING ACTIVITIES ----------------- ---------------- ----------------- ------------------------
</TABLE>
(Continued on next page)
See Notes to Financial Statements
F-7
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS (Continued)
Years ended December 31, 1999, 1998, and 1997, and
the period March 1, 1994 (inception of the development stage), to December 31,
1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31
--------------------- Period from March 1, 1994
(Inception of the development
1999 1998 1997 stage) though Dec. 31 1999
---------------- ---------------- --------------- -----------------------
CASH FLOWS FROM
INVESTING ACTIVITIES:
<S> <C> <C> <C> <C>
Acquisition of furniture and
equipment - - (50,020) (50,020)
(Increase) decrease Security
Deposit - 7,839 (7,289) -
(Purchase) of goodwill (464,831) (464,831)
---------------- ---------------- --------------- -----------------------
NET CASH (USED) FOR
INVESTING ACTIVITIES - 7,839 (522,140) (514,851)
---------------- ---------------- --------------- -----------------------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Issuance (repayment) of notes
payable - (398,490) 398,490 -
Sale of common stock 223,600 1,237,460 258,551 1,749,911
Common stock subscriptions - - (14,000) -
---------------- ---------------- --------------- -----------------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 223,600 838,970 643,041 1,749,911
---------------- ---------------- --------------- -----------------------
NET INCREASE (DECREASE)
IN CASH 7,824 4,428 (4,893) (7,824)
CASH, beginning of period - (4,428) 465 -
---------------- ---------------- --------------- -----------------------
CASH, end of period $ 7,824 $ - $ (4,428) $ 7,824
================ ================ =============== =======================
</TABLE>
(CONTINUED ON NEXT PAGE)
See Notes to Financials
F-8
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS (Continued)
Years ended December 31, 1999, 1998, and 1997, and
the period March 1, 1994 (inception of the development stage), to December 31,
1999
- --------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE:
1999
----
Noncash investing and financing activities
License agreement acquired by issue of common stock $290,000
No significant amounts of interest or taxes were paid during the periods shown
above.
The Company purchased the following assets and assumed the following liabilities
in connection with the acquisition described in Note D. The above statement of
Cash Flows for the year ended December 31, 1997 are net of the assets and
liabilities acquired in the acquisition.
Current Assets $6,696
Office furniture and equipment 46,185
Security deposit 7,289
----------
$60,170
==========
Accrued liabilities $10,450
Notes payable 503,907
----------
$514,357
==========
See Notes to Financial Statements
F-9
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
NOTE A- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------
Organization
In 1999, the officers and directors associated with the acquisition of the
restricted common stock in February 1998, by A. J. Alda & Associates resigned
and the remaining officers and directors are attempting to resurrect the
Company. In September, 1999, the Company changed its name to E-BIDD.com, Inc.
The Company's principal business, at present, is a banner auction Internet site
currently under development. When completed the site will allow the auction of
banner ads on a person-to-person and business-to-business basis. Because the
Company is in the development stage, the accompanying financial statements
should not be regarded as typical for normal operating periods.
Summary of Significant Accounting Principals
a. Accounting estimates
The preparation of financial statements in conformity with generally accepted
accounting principals 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.
b. Basic earnings per share
- ----------------------------
Basic earnings (loss) per share have been calculated in conformity with
Financial Accounting Standards Board Statement No. 128 "Earnings Per Share." The
Company has a simple capital structure with no significant potential common
shares. Basic earnings (loss) per share is calculated weighted on the average
number of common shares outstanding each year (1999 - 2,790,647; 1998 - 16,635;
1997 - 8,257).
F-10
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
NOTE A- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------
(continued)
Summary of Significant Accounting Principals (Continued)
c. Going Concern
The Company has had no sales and suffered recurring losses from operations that
raise substantial doubt about its ability to continue as a going concern.
However, the financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
d. Office furniture and equipment
Office furniture and equipment purchases are capitalized and the cost
depreciated over the estimated useful lives of the related assets, generally
five to seven years. Office furniture and equipment abandoned is written off at
the time of the abandonment.
e. Software license
The software license is amortized on a straight line basis over its estimated
useful life of 10 years.
f. Issuance of Common Stock
The issuance of common stock for other than cash is recorded by the Company at
management's estimate of the fair value of the assets acquired or services
rendered.
g. Income taxes
In 1999 and 1998 only the minimum state taxes were paid. The Company has net
operating loss carryforwards of approximately $2,100,000 which will expire in
2013 and 2014.
h. Functional Currency
The financial statements are stated in U.S. Dollars which is the functional
currency of the Company.
F-11
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
NOTE A- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------
(continued)
Summary of Significant Accounting Principals (Continued)
i. Deferred tax assets
Differences between accounting rules and tax laws cause differences between the
bases of certain assets and liabilities for financial reporting and tax
purposes. The tax effect of these differences, to the extent they are temporary,
are recorded as deferred tax assets and liabilities under SFAS 109 and consist
primarily of net operating loss carryforwards amounting to approximately
$2,100,000. Because of the uncertainty of utilizing the net operating loss
carryforward, a valuation allowance of the maximum has been provided against the
tax deferred asset.
NOTE B - NOTES PAYABLE
The Notes Payable at December 31, 1997 which amounted to $398,490 were
terminated as of August 1998.
NOTE C - COMMON STOCK
In 1999 the Company executed a 1000 for 1 reverse stock split. This stock split
has been reflected retroactively in the financial statements and in the notes
thereto.
In July 1999, the Company received $10,000 and issued 10,000,000 restricted
shares of its common stock in exchange for the acquisition of rights to a
software license. The Company accounted for this transaction as a sale of
securities of $300,000 and valued the rights to the software accordingly at
$290,000.
F-12
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
NOTE D - ACQUISITION OF CORP REPORTS.COM, INC. (CORP REPORTS)
- --------------------------------------------------------------
In September 1997, the Company exchanged 3,500 shares of its restricted common
stock for all of the outstanding common stock of Corp Reports.com, Inc. The
acquisition has been included in the accompanying consolidated financial
statements since the effective date of acquisition was September 30, 1997. The
amortized assets and liabilities of the purchased company are stated at fair
value as of September 30, 1997 are as follows:
Cash $3,856
Other Current Assets 6,696
Office furniture and equipment 46,185
(net)
Security deposit 7,289
-------------------
$64,026
-------------------
Accrued liabilities $10,450
Due to parent 11,000
Notes payable 503,907
-------------------
525,537
-------------------
Capital Stock 3,080
Accumulated deficit (464,411)
-------------------
$64,026
===================
Any remaining balances in these accounts were written-off as of August 31, 1998
as further explained in Note A.
F-13
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
NOTE E - OTHER INCOME
The other income for the year ended December 31, 1999 arose from the forgivness
of certain indebtedness to an unrelated stockholder.
NOTE F - SUBSEQUENT EVENTS
Subsequent to year end the Company completed a private placement offering in the
amount of $860,000. Management intends to uses the offering proceeds for working
capital purposes. Management believes the offering will provide sufficient
working capital for the coming year.
F-14
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company has had no changes in or disagreements with its accountants in its
two most recent fiscal years or any later interim period.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS
E-bidd's directors hold office until the annual meeting of shareholders next
held after their election. The Officers and Directors of e-bidd as of March 31,
2000 are as follows:
Name Age Position
- ---- --- --------
Raymond Dabney 35 President, Chief Executive Officer and
Director
Gord Woodward 40 Vice President, Chief Information Officer
and Director
Brian Walker 39 Director
Meir Kahtan 42 Director
Raymond Dabney, was appointed President, CEO, and director of e-bidd on October
25, 1999. From 1990 to present, Raymond Dabney has been the President and CEO of
Command Communications, Inc. of Vancouver, British Columbia. From 1991 to 1993
Mr. Dabney acted as the Western Regional General Manager of Unitel
Communications of Vancouver, British Columbia and from 1989 to 1991 Mr. Dabney
was an Inside Sales Manager for Morgan Whitney Tradining Group of Venice Beach,
California.
Gord Woodward, was appointed Vice President, Chief Information Officer and a
Director of e-bidd on February 11, 2000. Mr. Woodward brings a breadth of
experience in running communication and development companies in both the public
and private sectors, including 10 years of experience in a executive management
position with Thompson Newspaper Group. Mr. Woodward has a degree from B.C.
Institute of Technology and is currently applying for his Masters Degree. From
1994 to present he has been the founder and President of Enlightening
Communications. From 1997 to present he has been a faculty member in the
training and development division of Malaspina University-College. From 1994 to
1998 Mr. Woodward was a consultant for Island Publishers Newspapers and from
1997 to 1994 he was the managing editor for Thompson Newspapers, Island
Publishers, and Westpres Publications.
Brian Walker, was appointed as a Director of e- bidd on February 11, 2000. Mr.
Walker has over fifteen years of experience at handling corporate mergers and
management responsibilities. Director of Helijet Airways for the past 24 years,
a company with $14 million a year in revenue. Mr. Walker's responsiblities at
Helijet Airways include being a member of the Audit Committee, sales and
marketing, and working with an active board. Moreover, Mr. Walker's experience
at Helijet Airways includes several acquisitions and integration of related
businesses. Mr. Walker has also been the president of several private companies
in the leasing and office supply industries. Mr. Walker's acquisitions and
financing background, along with his extensive contact base in the business
world, will help expedite e-bidd's long term objectives.
15
<PAGE>
Meir Kahtan, was appointed as a Director of e-bidd on February 7, 2000. Mr.
Kahtan has over fifteen years of industry experience in the world of public
relations and advertising. He has initiated ad campaigns and media coverage for
countless financial, high technology, medical, legal, and real estate clients,
and as a provider of advertising and public relations services, was a forefront
of the movement to the web. Mr. Kahtan heads up a public relations department at
Miller Advertising, a major New York agency, with which he has enjoyed a long
and fruitful association.
ITEM 10. EXECUTIVE COMPENSATION
The following table provides summary information for the years 1997, 1998, and
1999 concerning cash and noncash compensation paid or accrued by e-bidd to or on
behalf of the president and the only other employee(s) to receive compensation
in excess of $100,000.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long Term Compensation
Awards Payout
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principal Year Salary Bonus Compensation Award(s) Options payouts Compensation
Position ($) ($) ($) SARs(#) ($) ($)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ray 1998 36,000 - - - 20,000,000(5) - -
Matthews 1997 0 - - - - - -
President, 1996 0 - - - - - -
former CEO, and
Director
Raymond Dabney 1999 10,000
current President
CEO and Director
</TABLE>
Compensation of Directors
There is no plan in place at this time for e-bidd's directors to be compensated.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the stock of e-bidd as of March 31, 2000, by each shareholder who
is known by e-bidd to beneficially own more than 5% of the outstanding Common
Stock, by each director, and by all executive officers and directors as a group.
- -----------------------
(5) Mr. Dabney received the 20,000,000 shares in consideration for creating
and implementing e-bidd's Extended Business Model.
16
<PAGE>
<TABLE>
<CAPTION>
Title of Class Name and Address of Amount and nature of Percent of Class
Beneficial Ownership Beneficial Ownership
<S> <C> <C> <C>
Common Raymond Dabney 17,395,000 47.3%
Stock 555 West Hastings Street,
Suite 800
Vancouver, B.C., Canada
V6B 4N5
N/A Gord Woodward None 0%
555 West Hastings Street,
Suite 800
Vancouver, B.C., Canada
V6B 4N5
N/A Brian Walker None 0%
555 West Hastings Street,
Suite 800
Vancouver, B.C., Canada
V6B 4N5
Common Meir Kahtan 2,600,000 7.07%
Stock 555 West Hastings Street,
Suite 800
Vancouver, B.C., Canada
V6B 4N5
Common Laurier Limited 10,000,000 27.19%
Stock Suite E Regal House
Gibraltar, Gibraltar
Common All Executive Officers and 19,995,000 54.37 %
Stock Directors as a Group
(4 persons)
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July, 29, 1999, e-bidd entered into an Agreement with Laurier Limited whereby
e-bidd gained exclusive rights to its Auction and Ad serving Software from
Laurier Limited, in exchange for 10,000,000 restricted shares of e-bidd's common
stock valued at $9,000.
On November 12, 1999, e-bidd entered into an agreement with Meir Kahtan, (a
director of e-bidd) Public Relations, a division of Miller Advertising Agency,
Inc. The agreement will provide e-bidd with promotional and business consulting
and a public relations campaign. The agreement calls for the payment of $5,000 a
month to Mr. Kahtan as compensation for his services in this capacity. The term
of this agreement commenced March 8, 2000, and may be canceled at any time by
either party upon 60 days prior notice.
17
<PAGE>
On March 1, 2000, in a unanimous board meeting vote, with Mr. Raymond Dabney
abstaining, the board approved the issuance of 20,000,000 restricted shares of
e-bidd's common stock to Raymond Dabney in exchange for the Extended Business
Model of e-bidd.com. The Extended business model is to include a full range of
media services via a brand new Internet media supersite including assembling the
partners and technology that would enable e-bidd to engage in the business of
selling conventional media advertising space, online advertising, and
advertising agency and public relations services via a new Internet website.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: Exhibits required to be attached by Item 601 of Regulation S-B
are listed in the Index to Exhibits beginning on page 23 of this Form
10-KSB, which is incorporated herein by reference.
(b) Reports on Form 8-K: During the year 1999, the Company did not file any
Form 8-K's.
[THIS SPACE LEFT BLANK INTENTIONALLY]
18
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this Form 10- KSB to be signed on its behalf by the
undersigned, thereunto duly authorized, this 4th day of May, 2000.
E-bidd.com, Inc.
/s/ Raymond Dabney
---------------------------
Name: Raymond Dabney
Title: President, CEO and Director
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.
Signature Title Date
- --------- ----- ----
/s/ Raymond Dabney
- ------------------------
Raymond Dabney President and Director May 4th, 2000.
/s/ Gord Woodward
- ------------------------
Gord Woodward Vice President and Director May 4th, 2000.
/s/ Brian Walker
- ------------------------
Brian Walker Director May 4th, 2000.
/s/ Meir Kahtan
- ------------------------
Meir Kahtan Director May 4th, 2000.
19
<PAGE>
ITEM 2. DESCRIPTION OF EXHIBITS.
INDEX TO EXHIBITS
Exhibit
No. Page No. Description
- ------- -------- -----------
2(a) * Articles of Merger and Plan and of Merger, Port Industries,
Inc. March 1, 1994. (Incorporated by reference filed with
the Company's Form 10-SB/A-2 on March 29, 2000).
2(b) * Stock Purchase Agreement dated September 20, 1996. (Digital
Reporting, Inc. acquires all of the issued and outstanding
shares of R&D Industries, Inc.). (Incorporated by reference
filed with the Company's Form 10-SB/A-2on March 29, 2000).
2(c) * Digital Reporting, Inc. Board Resolution dated September 3,
1997, authorizing the acquisition of all the outstanding
stock of Cyberguides, Inc. (Incorporated by reference filed
with the Company's Form 10-SB/A-2 on March 29, 2000).
3(i)(a) * Articles of Incorporation of Port Industries, Inc.
(Incorporated by referencefiled with the Company's Form
10-SB/A-2 on March 29, 2000).
3(i)(b) * Articles of Amendment Of Articles Of Incorporation Of Port
Industries, Inc. dated October 28, 1969 authorizing total
number of shares to be 30,000 at $10.00 each. (Incorporated
by reference filed with the Company's Form 10-SB/A-2 on
March 29, 2000).
3(i)(c) * Articles of Amendment Of Articles Of Incorporation Of Port
Industries, Inc. dated March 6, 1972 authorizing the number
of shares to be 1,000,000 at $.10 each. (Incorporated by
reference filed with the Company's Form 10-SB/A-2 on March
29, 2000).
3(i)(d) * Minnesota Secretary Of State Amendment Of Articles Of
Incorporation (Digital Reporting Inc. changes its name to
Cyberguides International, Inc., September 30, 1997).
(Incorporated by reference filed with the Company's Form
10-SB/A-2 on March 29, 2000).
3(i)(e) * Minnesota Secretary Of State Amendment Of Articles Of
Incorporation (Cyberguides International, Inc., changes its
name to AJA Merchant Banking Corporation February 10, 1998)
(Incorporated by reference filed with the Company's Form
10-SB/A-2 on March 29, 2000).
20
<PAGE>
3(i)(f) * Minnesota Secretary Of State Amendment Of Articles Of
Incorporation (AJA Merchant Banking Corporation changes
its name to Image Photo Systems, Inc. December 3, 1998).
(Incorporated by reference filed with the Company's Form
10-SB/A-2 on March 29, 2000).
3(i)(g) * Minnesota Secretary Of State Amendment Of Articles Of
Incorporation (Image Photo systems, Inc. changes its name
to e-bidd.com, Inc., September 16, 1999). (Incorporated by
reference filed with the Company's Form 10-SB/A-2 on March
29, 2000).
3(i)(h) * Articles Of Incorporation Of Image Photo Systems, Inc.
(Incorporated by reference filed with the Company's Form
10-SB/A-2 on March 29, 2000).
3(ii)(a) * By-Laws of Port Industries, Inc. (Incorporated by reference
filed with the Company's Form 10-SB/A-2 on March 29, 2000).
3(ii)(b) * By-laws of Image Photo Systems, Inc. (Incorporated by
reference filed with the Company's Form 10-SB/A-2 on March
29, 2000).
23 22 Consent of Independent Public Accountant, dated March 15,
2000.
Material Contracts
Exhibit
No. Page No. Description
- ------- ------- -----------
6(a) * Agreement, dated July 29, 1999, between e-bidd.com, Inc.
and Laurier Limited. (Incorporated by reference filed with
the Company's Form 10- SB/A-2 on March 29, 2000).
10(i) * Benefit Plan dated October 15, 1999. (Incorporated by
reference filed with the Company's Form 10-SB/A-2 on March
29, 2000).
10(ii) 23 Management Agreement between Meir Kahtan and e-bidd.com,
Inc. dated March 15, 2000.
27 * Financial Data Schedule "CE"
21
<PAGE>
Exhibit 23
Bendinger & Company 1850 Mount Diablo Blvd., Suite 610
- -------------------
CERTIFIED PUBLIC ACCOUNTANTS Walnut Creek, California 94596
(925) 932-7808
Bendinger & Company
1850 Mount Diablo Blvd., Suite 610
Walnut Creek, California 94596
March 15, 2000
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to use in this form 10-KSB/A of our report dated March 15,
2000, relating to the financial statements of e-bidd.com, Inc. for the years
ended December 31, 1999 and 1998.
/s/ Bendinger & Company
------------------------
Bendinger & Company
Certified Public Accountants
22
<PAGE>
Exhibit 10(i)
MANAGEMENT AGREEMENT
THIS AGREEMENT is dated for reference the 15th day of March, 2000.
BETWEEN:
E-BIDD.COM, INC., a company incorporated pursuant to the laws of the State
of Minnesota and having it registered and records offices at #800-555 West
Georgia Street, Vancouver, B.C. V6B IN5
(the "Company")
OF THE FIRST PART
AND:
Meir Kahtan, of 215 Warren St. Brooklyn, NY 11201
(the "Manager")
OF THE SECOND PART
WHEREAS:
A. The Company is listed on NQB and is a fully reporting Company engaged in,
inter alia, the Business of interact related activities;
B. The Company has agreed to employ the Manager as administrator and manager
of the affairs of the Company on the terms and conditions hereinafter set
forth;
C. The Manager has agreed to be employed by the Company upon the terms and
conditions hereinafter set forth..
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants and agreement herein contained, the parties hereto covenant
and agree each with the other as follows:
1. SALARY
1.01 The Manager will faithfully, honestly and diligently serve the Company in
the capacity of administrator and manager in consideration of which the Company
will pay to the Manager the
23
<PAGE>
sum of $ 5,000 monthly, or such greater sum as may be approved by the Board of
Directors; of the Company and by regulatory authorities.
1B. MANAGER'S EXISTING BUSINESS
The company understands that the Manager has amassed a considerable account
base of existing business "Existing Business" serviced through Miller
Advertising or Meir Kabtan/Meir Kahtan Public Relations. It is expressly
understood by the Company that the Manager's Existing Business remains the
possession of Miller Advertising and/or Meir Kabtan/Meir Kahtan Public Relations
and the manager is at liberty to service it in the way he deems in the best
interests of the Existing Business.
1C. ANNOUNCEMENT OF MANAGER'S APPOINTMENT
The company understands the importance to the Manager that Existing
Business doesn't deem this Manager appointment as adversely affecting the
Manager's ability to service their business. The company therefore agrees to
allow the Manager veto rights regarding the precise wording of all releases
relating to the Manager in order to accommodate this concern.
2. DUTIES.AND DEVOTION OF TIME
2.01 It is acknowledged and agreed by the Manager that the work of the Manager
is and will be of such a nature that regular hours may be impossible, and there
may be occasions in which the Manager will not be required to work a full eight
hours per day and/or a full five days per week. It. is also anticipated that
there will be certain evenings, weekends and holidays during which the Manager
will be required to work, with the exception of the Jewish Sabbath and Holy
Days. The Work of the Manager is of a supervisory nature, and accordingly the
Manager agrees that the consideration herein set forth will be in full and
complete satisfaction for the Manager's work and services no matter how or when
performed, and the Manager hereby releases the Company from any claims for
overtime pay or compensation whatsoever which the Manager might have by reason
of any existing or future legislation or otherwise.
2.02 During the term of this Agreement the Manager shall:
1. Spearhead opportunities that exist for the Company and its website to
receive news coverage in print, electronic and web news outlets.
2. Pursue new contracts and leads that originate from the E-BIDD website
for the Company, to provide advertising content, joint venture business proposal
and in house advertising all for revenue generating [internet media] business
and overseeing the servicing of the business directly through E- BIDD or through
Meir Kahtan Public Relations or Miller Advertising.
3. Provide ongoing opinion to the Company website, including the pursuit of
website content and the layout to facilitate the needs of new and existing
advertising clients.
24
<PAGE>
3
4. Work with the Company to provide content on the business, creative or
stock activities of the Company to existing and new media contacts in addition
to providing expert resources that would be tapped by such media for use in
their coverage of news stories that have overlapping content.
5. Pursue existing media contacts and creating new media contacts likely to
tap The Company in a range of story subjects that parallel the Company's
knowledge of subject [Internet Media] and related subject areas.
6. Bring, create, redefine subjects that are in the Company's range of
expertise and that are also potentially newsworthy, to the attention of
reporters, in order to offer the Company principals as experts who can be
sourced in stories thereupon.
7. Consult with the Company on joint ventures; technology applications and
activities that potentially constitute relevant news, in order to have the
Company face recognition technology reported on.
8. Provide reporting on new business applications, joint ventures
proposals, contracts and public relations activities pursued on behalf of the
Company,
9. Provide strategy support for press conferences and trade shows in which
the Company takes part.
2.03 The Manager will, during the term of this Agreement, obtain the consent of
the Board of Directors of the Company before becoming a director or senior
officer of any company other than the Company or Miller Advertising or Meir
Kahtan Public Relations, such consent not to be unreasonably withheld.
2.04 In conducting the Manager's duties under this Agreement, the Manager will
report to the Company's Board of Directors and will act consistently with their
directives and policies.
3. TERM OF EMPLOYMENT AS MANAGER
3.01 The effective date of this Agreement is March 8, 2000 and the employment of
the Manager hereunder will, from such date, continue until terminated in
accordance with the terms of this Agreement.
4. REIMBURSEMENT FOR EXPENSES
4.01 The Manager will be reimbursed for all reasonable out-of-pocket expenses
incurred
25
<PAGE>
by the Manager in or about the execution of the Manager's employment ,including,
without limiting the generality of the foregoing, all. travel and promotional
expenses payable or incurred by the Manager in connection with his duties under
this Agreement. All payments or reimbursements will be made immediately upon
submission by the Manager of vouchers, bills or receipts for all expenses;
provided, however, that all such expenses in excess of $2,500.00 are approved by
the Company in writing prior to the Manager incurring same,
5. INCAPACITY
5.01 In the event that the Manager will at any time during ttle term hereof by
reason of illness or mental or physical disability or incapacity be prevented or
incapable from performing the Manager's duties hereunder, then the Manager will
be entitled to receive the remuneration provided for herein for the period
during which such incapacity will continue but not exceeding two (2) successive
months and, if such incapacity will continue for a longer period, then the
employment of the Manager hereunder will, at the option of the directors of the
Company, forthwith terminate, and the Manager will not be entitled to any
compensation from the Company in respect of such termination.
6. INTERRUPTION OF THE COMPANY'S BUSINESS
6.01 If during the term of this Agreement the Company discontinues or interrupts
the operations of its business for a period of ninety (90) days, this Agreement
will automatically terminate without liability on the part of either of the
parties hereto.
7. TERMINATION OF AGREEMENT
7.01 Notwithstanding any other 'provision herein, it is understood and agreed by
and between the parties hereto that the Manager may resign his employment
hereunder by giving sixty (60) days written notice of such intention to resign,
and the Company may terminate this Agreement in its entirely with or without
cause and for any reason whatsoever by the payment to the Manager of two months
salary as termination allowance, and the Manager does hereby agree that such
termination allowance will be payment in full for any discharge by the Company;
provided that the Company will not be liable to pay any further monies,
notwithstanding that such termination of employment may be without cause; and
the expression "such further monies" will include, without restriction the
generality of the foregoing holidays, holiday pay, Canada Pension Plan
contributions and any, and all other monies arising out of the employment by the
Company,
8. VACATION
8.01 The Manager will be entitled to annual holiday (consecutive or
otherwise as the Manager sees fit) which will be taken at a time or times,
to be arranged in advance with the company so it does not unduly affect the
operations of the Company
26
<PAGE>
9. ARBITRATION
9.01 Any controversy or claim arising out of or relating to this Agreement or
any breach of this Agreement will be finally settled by arbitration in
accordance with the laws of the State of Minnesota.
10. PERSONAL CONTRACT
10.01 This Agreement and all other rights, benefits and privileges herein
confirmed will be personal, and accordingly may not be assigned by the Manager.
11. ADDRESS FOR SERVICE
11.01 The address for service for any notice, consent, acceptance or other
document required or permitted hereunder shall be forwarded to the either party
to the address set forth on the first page of this Agreement or to such other
address as either of the parties hereto will from time to time by notice in
writing give to the other party. Any notice mailed by first class prepaid mail
will be deemed to have been received three (3) days after the date of mailing;
provided, however, that if there should be a postal strike, slow down or other
labour dispute which may affect the delivery of such notice through the mail
between the time of mailing and the actual receipt of the notice then such
notice will be effective only if actually delivered.
12. ENTIRE AGREEMENT
12.01 This Agreement represents the entire agreement between the parties and
supersedes all prior agreements and undentandings, whether written or oral,
between the parties. The Manager acknowledges that he was not induced to enter
into this Agreement by any representation warranty, promise or other statement
except as contained herein.
13. AMENDMENT
13.01 This Agreement may not be amended or otherwise modified except by an
instrument in writing by both parties.
13.02 This Agreement becomes effective upon both parties' signature and upon
completion of stock purchase outlined in a separate stock purchase agreement
with same parties.
13.03 This Agreement does not preclude the Manager from conducting and
participating in the business activities of Meir Kahtan Public Relations or
Miller Advertising.
27
<PAGE>
14. APPLICABLE LAW
14.01 This Agreement will be construed under and governed by the laws of the
State of Minnesota.
15. ACCEPTANCE OF AGREEMENT
15.01 This Agreement is subject to the approval of the board of directors of the
Company and acceptance by all regulatory authorities as may have jurisdiction
over the affairs of the Company.
16. COVENANTS
16.01 Disclosure information. During the Term and thereafter, the Manager shall
not, at any time, directly or indirectly, disclose any confidential or
proprietary information for any reason or purpose whatsoever to any person,
firm, corporation, association or other entity, except in the ordinary course of
business of the Company or any subsidiary thereof or to legal and financial
advisors who agree in writing to maintain the confidentiality of such
confidential or proprietary information on terms substantially similar to those
stated here, nor shall the Manager directly or indirectly make use of any such
confidential or proprietary information for his own purpose or for the benefit
of any person, firm, corporation, association or other entity except the Company
or any subsidiary thereof, and the Manager hereby acknowledges that the Company
and its subsidiaries would be irreparably damaged if such confidential or
proprietary information were disclosed to or utilized on behalf of others in
competition in any respect with the Company or any subsidiary thereof for the
purposes of this Section 16, the term "confidential or proprietary information"
shall mean all information concerning the business, customers or affairs of the
Company or any subsidiary thereof, including matters such as trade secrets,
research and development activities, books and records, customer lists,
suppliers, distribution channels, pricing information, private processes,
software, functional specifications, blueprints, know-how, data, improvements,
discoveries, designs, inventions, techniques, marketing plans, strategies,
forecasts, new products and financial statements as they may exist from time to
time, which the Manager may have acquired or obtained by virtue of his
relationship with the Company or any subsidiary or affiliate thereof, except for
such information which (i) becomes generally available to the public, other than
as the result of a disclosure made directly or indirectly by the Manager, (ii)
was known to the person, firm, corporation or other entity to which such
information was disclosed by the Manager prior to its disclosure directly or
indirectly by the Manager, (iii) was previously available to the person, firm,
corporation or other entity to which such information was disclosed directly or
indirectly by the Manager on a non-confidential basis from a source which was
entitled to disclose the same or (iv) if required by law, governmental order or
decree to be disclosed by the Manager.
28
<PAGE>
16.02 Restrictive Covenant. During the term of his employment and for one year
thereafter, the Manager shall not (i) directly or indirectly engage in,
represent in any way, or be connected with, any business or activity (such
business or activity being hereinafter called a "Competing Business"), which
owns, manages, operates or franchises a business developing, or selling
advertising, media services, media and public relations and media exposure on
the Internet, whether such engagement shall be as an officer, director, owner,
employee, partner, affiliate or other participant in any Competing Business,
(ii) assist others in engaging in any Competing Business in the manner described
in the foregoing clause (i), or (iii) induce other employees of the Company to
terminate their employment with the Company for the purposes of engaging in any
Competing Business; provided, however, that the Manager may own directly or
indirectly, solely as a passive investment, securities of any person engaged in
a Competing Business, if such securities are listed on any national securities
exchange and the Manager is not a controlling person of, or a member of a group
which controls, such person and does not, directly or indirectly, own 5% or more
of any class of securities of such person.
16.03 Injunctive Relief. The Manager acknowledges that the provisions of this
Section 16 are reasonable and necessary for the protection of the Company and
that the Company will be irrevocably damaged if such covenants are not
specifically enforced. Accordingly, the Manager agrees that, in addition to any
other relief to which the Company may be entitled in the form of actual or
punitive damages, the Company shall be entitled to seek and obtain injunctive
relief from a court of competent jurisdiction for the purposes of restraining
the Manager from any actual or threatened breach of such covenants.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
The Corporate Seal of E-BIDD.COM, INC. )
was hereunto affixed in the presence of. )
) c/s
/s/ )
- --------------------------------------- )
Authorized Signatory )
Signed, sealed and delivered by )
Meir Kahtan in the presence of: )
)
/s/ Meir Kahtan )
- --------------------------------------- )
Signature )
)
Meir Kahtan )
- --------------------------------------- )
Name (Print) ) /s/ Meir Kahtan
---------------------
215 Nowen St, Brooklyn NY 11201 Meir Kahtan
- -------------------------------------
Address
29
<PAGE>
)
)
- --------------------- )
Occupation )
30
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED AUDITED AND UNAUDITED FINANCIAL STATEMENTS FOR THE PERIODS
ENDED DECEMBER 31, 1998 AND SEPTEMBER 30, 1999 RESPECTIVELY, THAT WERE
FILED WITH THE COMPANY'S REPORT ON FORM 10-SB AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<NAME> E-BIDD.COM, INC.
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</TABLE>
