SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A-3
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS UNDER THE 1934 ACT
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 Hastings Street, Suite 800
Vancouver, B.C. Canada V6B 4N5
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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 to be registered under Section 12(b) of the Exchange Act: None
Securities to be registered under Section 12(g) of the Exchange Act:
Title of Each Class to be so registered: Common Stock ($0.001 Par Value)
Name of Each Exchange on Which Each Class is to be Registered: N/A
This form is being filed with the Securities & Exchange Commission in order to
become a reporting company under the Exchange Act of 1934 and to regain the
Company's quotation on the OTC Bulletin Board in compliance with the National
Association of Securities Dealers, Inc. Rules 6530 and 6540 to limit quotations
on the OTC Bulletin Board to the securities of companies that report their
current financial information to the SEC, banking, or insurance regulators.
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TABLE OF CONTENTS
Page No.
PART I
Item 1. Description of Business..........................................3
Item 2. Management's Discussion and Analysis or Plan of Operation.......13
Item 3. Description of Property.........................................17
Item 4. Security Ownership of Certain Beneficial
Owners and Management...........................................17
Item 5. Directors, Executive Officers, Promoters and
Control Persons.................................................18
Item 6. Executive Compensation..........................................19
Item 7. Certain Relationships and Related Transactions..................19
Item 8. Description of Securities.......................................20
PART II
Item 1. Market for Common Equity and Related Stockholder Matters........20
Item 2. Legal Proceedings...............................................21
Item 3. Changes in and Disagreements with Accountants...................22
Item 4. Recent Sales of Unregistered Securities.........................22
Item 5. Indemnification of Directors and Officers.......................29
PART F/S
Consolidated Financial Statements for December 31, 1998 and 1997
Unaudited Financial Statements for nine months ended September 30,
1999 and 1998.........................................................F-1 - F-21
PART III
Item 1. Index to Exhibits...............................................31
Item 2. Description of Exhibits.........................................32
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PART I
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. This
potential conflict may result in e-bidd having to change its name or litigating
its right to use this name.
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.
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.
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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 cooperate 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.
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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.
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 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 couple of weeks.
The risk to shareholders is that the launch of these websites does not occur
within the next few weeks 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 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:
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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 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);
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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.
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.
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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. 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.
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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.
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.
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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.
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.
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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.
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.
[THIS SPACE LEFT BLANK INTENTIONALLY]
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
A. Results of Operations
Nine months ended September 30, 1999 & 1998. Years ended December 31, 1998 &
1997.
Sales
E-bidd has not generated any revenues from operations for the periods covered by
this Form 10SB.
Losses
Net losses for the nine months ended September 30, 1999, decreased to $350,069
from a net loss of $1,315,249 for the comparable period in 1998, a 73% decrease.
The substantially greater losses in the 1998 period was attributable to e-bidd's
dissolution of its wholly-owned subsidiary Corp Reports.com, Inc. in 1998 and
the write-off all of its assets.
Net losses for the year ended December 31, 1998, increased to $1,315,249 from $
174,022 for the year ended December 31, 1997, an increase of 656%. The increase
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 1997.
E-bidd expects to continue to incur losses at least through fiscal 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 nine months ended September
30, 1999, decreased to $350,069 from $370,746 in the comparable period in 1998,
a decrease of 5%. The primary reason for the decrease in selling, general and
administrative expenses was a decrease in personnel costs for the nine months
ended in 1999.
Selling, general and administrative expenses for the year ended December 31,
1998, increased to $ 370,742 from $180,145 for the year ended December 31, 1997,
an increase of 51%. The substantial increase in selling general and
administrative expenses was the result of an increase in personnel costs.
Depreciation and amortization expenses for the nine months ended September 30,
1999 and September 30, 1998 were $0 and $14,056, respectively. The decrease was
due to the disposition of all depreciable assets of e-bidd as result of the
dissolution of Corp Report.com, Inc.
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Depreciation and amortization expenses for the years ended December 31, 1998 and
December 31, 1997 were $14,056 and $5,155, respectively.
B. Liquidity and Capital Resources
Nine Months ended September 30, 1999 & September 30, 1998. Years ended December
31, 1998 & December 31, 1997.
Cash flow generated by operations were a negative $350,069 for the nine months
ended September 30, 1999 as compared to negative cash flows generated by
operations of $1,315,249 for the comparable period in 1998. Negative cash flows
for the nine months ended September 30, 1998 were attributable to a lack of
sales, substantial expenses and the write off of all of the assets of Corp
Reports.com, Inc. Negative cash flows for the comparable period in 1999,
decreased because no similar write-offs occurred in 1999.
Cash flow generated by operations were a negative $1,315,249 for the year ended
December 31, 1998, and a negative $174,022 for the year ended December 31, 1997.
The increase in negative cash flows for the year ended December 31, 1998 are
primarily attributable to the write-off of all Corp Report.coms, Inc. assets.
Cash flow generated from financing activities was $223,600 for the nine months
ended September 30, 1999 and $838,970 for the comparable period in 1998.
E-bidd's financing activities primarily consisted of the sale of e-bidd's common
stock pursuant to private placements.
Cash flow generated from financing activities was $838,970 for the year ended
December 31, 1998 and $643,041 for the year ended December 31, 1997. 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-SB
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.
Furthermore, as indicated in Note "A" of the audited portion of the financial
statements attached hereto, it is the Company's intention to meet its long-term
liquidity requirements by growing through business combinations rather than by
seeking 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.
The amount of revenues, e-bidd needs to generate from cash flows from operations
to break even over the next twelve months is a minimum of $475,000. E-bidd does
not expect to generate any substantial revenues from operations over the next
twelve months. Nonetheless, e-bidd raised a total of $860,000 in a private
placement, to cover operational expenses over the next twelve months. E- bidd is
uncertain as to its ability to generate sufficient revenues to continue
operations as a going concern thereafter. However, e-bidd is currently in the
-14-
<PAGE>
process of marketing its products in an effort to generate revenues from
operations by December 31, 2000. However, there can be no guarantees that such
efforts will result in e-bidd's breaking even.
E-bidd's prior cash flow statements which indicate that it used $842 and $358,
respectively for the years ended December 31, 1998 and 1999 have no relation to
e-bidd's assertion that it will need $475,000 over the next twelve months to
continue operations. E-bidd's estimated need for the $475,000 is expected to be
used for the following: $100,000 for website development, $125,000 for computer
and other equipment, and $275,000 for working capital, wages, rent, and other
miscellaneous expenses. E-bidd raised $860,000 to cover the above estimated
expenses. These estimates on the use of funds do include website development
costs for the next twelve months.
As of May 3, 2000 e-bidd has completed approximately 60 % of its website
development. E-bidd anticipates a fully operational and reliable product by no
later than December 31, 2000. The website, as of April 24, 2000, is operational
but further modifications and improvements are expected during the remainder of
2000."
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 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 no income tax benefit(s) resulting from net operating losses to
offset operating profit.
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.
-15-
<PAGE>
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 will 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.
G. Year 2000 Compliance
Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field and cannot reliably
distinguish dates beginning on January 1, 2000 from dates prior to the year
2000. Many companies' software and computer systems may need to be upgraded or
replaced in order to correctly process dates beginning in 2000 and to comply
with the "Year 2000" requirements. E-bidd has reviewed its internal programs and
has determined that there are no significant Year 2000 issues within e-bidd's
systems or services. E-bidd has completed modifications to its internal systems
to ensure Year 2000 compliance. The costs of these modifications have not been
material and have involved a reallocation of internal resources rather than
incremental expenditures.
Although e-bidd believes that its software is Year 2000 compliant, it could face
unexpected expenses to fix Y2k problems or unanticipated web site outages,
either of which could harm its business. E- bidd uses third-party equipment and
software that may not be Year 2000 compliant. For example, e-bidd relies on
credit card companies to collect the majority of its revenues from users. Due to
the nature of the credit card system, some industry analysts have questioned the
effect of the year 2000 on credit card processing and billing. Failure of
e-bidd's credit card vendors or other third-party equipment or software vendors
to properly process dates for the year 2000 and thereafter could require e-bidd
to incur unanticipated expenses in seeking alternative means of payment or
hardware or software replacements. It also could result in loss of revenues or
unanticipated e-bidd.com website outages. E-bidd's marketing efforts are also
dependent on the continued operation of Internet portals and other Internet
sites on which it advertises.
Although e-bidd has developed contingency plans with respect to collecting
payment under these circumstances, e-bidd is unable to make contingency plans if
any significant number of the computers constituting the Internet fail to
process dates properly for the year 2000 and there is a system wide slowdown or
breakdown. E-bidd's business is dependent on the continued successful operation
of the Internet. Any interruption or significant degradation of Internet
operations due to Year 2000 problems could harm e-bidd's business.
-16-
<PAGE>
ITEM 3. 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
through December 31, 2001. E-bidd has canceled this lease and moved its
headquarters to 555 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 4. 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 September 30, 1999, 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.
<TABLE>
<CAPTION>
Name and Address of Amount and nature of
Title of Class Beneficial Ownership Beneficial Ownership Percent of Class
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
N/A Ray Matthews None 0%
600 University Street,
Suite 2474
Seattle, Washington 98101
N/A Raymond Dabney None 0%
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 Lancelot Rudelsheim None 0%
555 West Hastings Street,
Suite 800
Vancouver, B.C., Canada
V6B 4N5
Common All Executive Officers and None 0 %
Stock Directors as a Group
(3 persons)
Common Laurier Limited 10,000,000 60.166%
Stock Suite E Regal House (post reverse split figure)
Gibraltar, Gibraltar
-----------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS
The Officers and Directors of e-bidd as of October 30, 1999 are as follows:
Name Age Position
- ---- --- --------
Raymond Dabney(1) 35 President, Chief Executive Officer and
Director
Gord Woodward 40 Vice President, Chief Information Officer
and Director
Lancelot Rudelsheim 39 Director
Raymond Dabney, 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, Vice President, Chief Information Officer and Director, 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.
Lancelot Rudelsheim, Director, is a graduate of Vancouver Community College
(1985). From 1990 to present Mr. Rudelsheim has been President of Microtech
Service Corp., located in Richmond, British Columbia. In this capacity he
directs the company based on computer networking and servicing.
- ---------------------
(1) On October 25, 1999, Raymond Dabney replaced Ray Matthews as President,
CEO and Director of e-bidd.
-18-
<PAGE>
He also provides computer consulting, specializing in accounting, medical, and
legal sectors as well as implements business systems, wide area networking, and
Internet solutions for small to medium sized businesses. From 1985 to 1990 Mr.
Rudelsheim worked as a service manager for Sterling Microsystems of Richmond,
British Columbia.
ITEM 6. EXECUTIVE COMPENSATION
The following table provides summary information for the years 1996, 1997 and
1998 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 - - - - - -
Matthews 1997 0 - - - - - -
President, 1996 0 - - - - - -
former CEO, and
Director
Raymond Dabney 1999 5,000
current President per month
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 7. 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.
-19-
<PAGE>
ITEM 8. DESCRIPTION OF SECURITIES
Dividend, Voting and Preemption Rights
E-bidd only has one class of authorized shares: $.001 par value common stock.
Holders of common stock are entitled to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally available therefor. For
more information on e-bidd's dividend policy, see "Item 1. Market Price of and
Dividends on the Registrant's Common Equity and Other Shareholder Matters."
Holders of e-bidd's common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the security holders. At all
elections of directors of e-bidd, each holder of stock possessing voting power
is entitled to as many votes as equal to the number of his or her shares of
stock multiplied by the number of directors to be elected. Such votes may be
cast for a single director, for any two or more directors, or distributed among
the directors as he or she sees fit (cumulative voting).
In the event of a liquidation, dissolution or winding up of e-bidd, holders of
common stock are entitled to share ratably in all assets remaining after payment
of liabilities and the liquidation preference of any other securities. The
common stock has no preemptive or other subscription rights. There are no
redemption of sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are duly authorized, fully paid, and
non-assessable.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
E-bidd's common stock is traded on Over the Counter Bulletin Board under the
symbol "BIDD.OB."
The table below sets forth the high and low sales prices for e-bidd's Common
Stock for each quarter of 1997, 1998 and the first three quarters of 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
------- ---- ---
1997 First - -
---- Second - -
Third - -
Fourth - -
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<PAGE>
Quarter High Low
------- ---- ---
1998 First 2.5625 .6875
---- Second(2) 1.1875 .31
Third .8675 .13
Fourth .3 .125
Quarter High Low
------- ---- ---
1999 First(3) .33 .027
---- Second(4) .046875 .022
Third(5) 8.625 .035
Fourth N/A N/A
Record Holders
As of September 30, 1999, there were approximately 299 shareholders of record
holding a total of 16,620,778 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. 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 2. LEGAL PROCEEDINGS
E-bidd is currently not a party to any pending legal proceeding.
- -----------------------
(2) On May 31, 1997, e-bidd's common stock reverse split on a one to four
basis.
(3) On March 24, 1999, e-bidd's common stock reverse split on a one to ten
basis.
(4) On April 5, 1999, e-bidd's common stock reverse split on a one to ten
basis.
(5) On July 8, 1999, e-bidd's common stock reverse split on a one to one
hundred basis.
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<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
E-bidd has had no changes in or disagreements with its accountants in its two
most recent fiscal or any later interim period.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The following is a list of all securities sold by e-bidd within the last three
years including, where applicable, the identity of the person who purchased the
securities, title of the securities, and the date sold are outlined below. All
figures listed below reflect post reverse split figures(6).
In April 1997, e-bidd issued 140 shares of its common stock to Max Zentner in
exchange for $14,000 cash and 100 shares of its common stock to Mid Continental
Securities Corp., in exchange for $10,000 cash pursuant to section 4(2) of the
Securities Act of 1933. E-bidd made this offering based on the following
factors: (1) the issuance was an isolated private transaction by e-bidd which
did not involve a public offering; (2) there were only two offerees who were an
officer of or a consultant to e-bidd; (3) the offerees did not resell the stock
but continued to hold it for at least two years; (4) there were no subsequent or
contemporaneous public offerings of the stock; (5) the stock was not broken down
into smaller denominations; and (6) the negotiations for the sale of the stock
took place directly between the offerees and e-bidd.
On May 28, 1997, e-bidd issued 40 shares of its common stock to Mid Continental
Securities, Corp., in exchange for $4,000 cash pursuant to section 4(2) of the
Securities Act of 1933. E-bidd made this offering based on the following
factors: (1) the issuance was an isolated private transaction by e-bidd which
did not involve a public offering; (2) there was only one offeree who was a
consultant to e- bidd; (3) the offeree did not resell the stock but continued to
hold it for at least two years; (4) there were no subsequent or contemporaneous
public offerings of the stock; (5) the stock was not broken down into smaller
denominations; and (6) the negotiations for the sale of the stock took place
directly between the offeree and e-bidd.
On August 6, 1997, e-bidd issued a total of 55 shares of its common stock to the
3 individuals listed below pursuant to section 4(2) of the Securities Act of
1933. E-bidd made this offering based on the following factors: (1) the issuance
was an isolated private transaction by e-bidd which did not involve a public
offering; (2) there were only three offerees who were officers and/or directors
of e-bidd; (3) the offerees did not resell the stock but continued to hold it
for at least two years; (4) there were no subsequent or contemporaneous public
offerings of the stock; (5) the stock was not broken down into smaller
denominations; and (6) the negotiations for the sale of the stock took place
directly between the offerees and e-bidd.
- -----------------------
(6) In 1999 e-bidd executed a 1000 for 1 reverse stock split. This stock
split has been reflected retroactively in the Sales of Unregistered Securities
Section and in the financial statements and notes thereto. During the period
December 31, 1999 e-bidd issued approximately 16,590,000 shares for gross
proceeds of $223,600. These funds were used in the settlement of operating
costs.
-22-
<PAGE>
10 shares to Kaual Singh in exchange for $1,000 cash;
20 shares to Dominick P. Pope in exchange for $2,000 cash; and
25 shares to Milton R. Polland in exchange for $5,000 cash.
On September 15, 1997, e-bidd issued 125 shares of its common stock to 323
Taurus, Ltd., in exchange for $125 cash pursuant to section 4(2) of the
Securities Act of 1933. E-bidd made this offering based on the following
factors: (1) the issuance was an isolated private transaction by e-bidd which
did not involve a public offering; (2) there was only one offeree who was a
consultant to e- bidd; (3) the offeree did not resell the stock but continued to
hold it for at least two years; (4) there were no subsequent or contemporaneous
public offerings of the stock; (5) the stock was not broken down into smaller
denominations; and (6) the negotiations for the sale of the stock took place
directly between the offeree and e-bidd.
On September 15, 1997, pursuant to Rule 504 under Regulation D of the Securities
Act of 1933, e- bidd issued: (1) a total of 6,455 shares of its common stock to
the 11 different entities listed below in exchange for $6,455 cash and in
consideration of their services rendered to e-bidd; (2) 200 shares of its common
stock to Moreland Guarantee, Ltd., in exchange for their services rendered to
e-bidd; and (3) 50 shares of its common stock to Olympic Capital Group, Inc., in
exchange for their services rendered to e-bidd.
Name # of Shares
---- -----------
Hillview Co., Ltd. 745
Beechland Co., Ltd. 745
Leven Investment Ltd. 740
Pollok Investments Ltd. 743
Newton Co., Ltd. 748
Wear Investments Ltd. 746
Gair Co., Ltd. 745
Loch Securities Ltd. 648
Paisley Securities Ltd. 595
E-bidd relied on the following facts in determining that Rule 504 Regulation D
was available: (a) e- bidd was not subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act; (b) e-bidd was engaged in business of
operating a web page on the Internet that contained a database of general
information about public companies and therefore was neither a development stage
company with no specific business plan or purpose, nor was it a company whose
plan was to merge with an unidentified company; (c) the aggregate offering price
did not exceed $1,000,000; and (d) e-bidd filed a Form D within 15 days of the
first sale of the shares subject to the offering.
On September 29, 1997, e-bidd acquired all of the issued and outstanding shares
of Cyberguides International, Inc. common stock for 3,500 shares of e-bidd's
common stock pursuant to section 4(2) of the Securities Act of 1933. E-bidd made
this offering based on the following factors: (1) the issuance was an isolated
private transaction by e-bidd which did not involve a public offering; (2) all
of the offerees were officers and/or directors of e-bidd; (3) the offeree(s) did
not resell the stock but continued to hold it for at least two years;
-23-
<PAGE>
(4) there were no subsequent or contemporaneous public offerings of the stock;
(5) the stock was not broken down into smaller denominations; and (6)the
negotiations for the sale of the stock took place directly between the offerees
and e-bidd.
In October 1997, pursuant to Rule 504 under Regulation D of the Securities Act
of 1933, e-bidd issued: (1) a total of 4,295 shares of its common stock to the 6
entities listed below in exchange for $4,295 cash.
Name # of Shares
---- -----------
Panwell Management Inc. 745
Konica Corporation 700
Coshocten limited 740
Omaha Corporate Services 695
Softwind Limited 715
Tica Trading Limited 700
E-bidd relied on the following facts in determining that Rule 504 Regulation D
was available: (a) e- bidd was not subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act; (b) e-bidd was engaged in the business
of maintaining a web page on the Internet that contained a database of public
companies annual reports and therefore was neither a development stage company
with no specific business plan or purpose, nor was it a company whose plan was
to merge with an unidentified company; (c) the aggregate offering price did not
exceed $1,000,000; and (d) e-bidd filed a Form D within 15 days of the first
sale of the shares subject to the offering.
On October 3, 1997, e-bidd issued a total of 3,500 shares of its common stock to
the 5 investors listed below pursuant to section 4(2) of the Securities Act of
1933. E-bidd made this offering based on the following factors: (1) the issuance
was an isolated private transaction by e-bidd which did not involve a public
offering; (2) there were only five offerees who were officers and/or directors
of e- bidd; (3) the offerees did not resell the stock but continued to hold it
for at least two years; (4) there were no subsequent or contemporaneous public
offerings of the stock; (5) the stock was not broken down into smaller
denominations; and (6) the negotiations for the sale of the stock took place
directly between the offerees and e-bidd.
Name # of Shares
---- -----------
Manuel Lopez 2,780
Steven Hutchins 400
Raynold Arcuri 110
Anthony Lopez 120
Manuel Bayo, Jr. 90
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<PAGE>
In December 1997, e-bidd, pursuant to Rule 504 under Regulation D of the
Securities Act of 1933, issued: (1) 110 shares of its common stock to Edward
Lopez in exchange for $110 cash; (2) 725 shares of its common stock to
Christopher Lopez; (3) 10 shares of its common stock to Irene Lopez; and (4) 10
shares of its common stock to Raymond A. Arcuri, Jr. all in exchange for $13,500
cash and their cancellation e-bidd's indebtedness to them in the amount of
$210,000. In making this offering, e-bidd relied on the following facts in
determining that Rule 504 Regulation D was available: (a) e-bidd was not subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (b)
e-bidd was engaged in the business of maintaining a web page on the Internet
that contained a database of public companies annual reports and therefore was
neither a development stage company with no specific business plan or purpose,
nor was it a company whose plan was to merge with an unidentified company; (c)
the aggregate offering price did not exceed $1,000,000; and (d) e-bidd filed a
Form D within 15 days of the first sale of the shares subject to the offering.
In January 1998, e-bidd issued, pursuant to Rule 504 under Regulation D of the
Securities Act of 1933, shares of its common stock as follows:
250 shares of its common stock to Hadfield, Ltd. in exchange for its
cancellation of e-bidd's indebtedness of $86,250 to them;
750 shares of its common stock to Formosa Securities, Corp. in exchange for
their cancellation of e-bidd's indebtedness of $258,750 to them; and
a total of 313 shares of its common stock to the 35 individuals/entities
listed below in exchange for their consulting services rendered to e-bidd
as follows:
Name # of Shares Name # of Shares
---- ----------- ---- -----------
John Lopez 30 Steve Randall 4
Anthony Lopez 25 Blair Bagneschi 3
Steve Hutchings 25 Colleen Fitzpatrick 5
Judy Bruno 13 Edwina Fitzpatrick 3
Terence Lydon 10 Matthew Henry 5
Andrew Hartt 13 Mary Foote-Lujan 5
Megan Vasely 1 Eric Horn 2
Melissa Jostedt 1 Pat Kavanagh 5
Liliana Ventura 1 Robert Coronel 2
Paul Adler 1 Christina Kisielewski 5
John Coughlan 1 Hake Anderson 20
Laura Pooler 5 David Eaton 10
Dante Sinoncini 8 James Leinwebor 10
Kathleen Emlir 4 Henderson Cole 5
Seth Holmberg 8 Christopher Lopez 20
Brenton Lee 7 Genevieve Lopez 5
Steven Siskind 31 Jacks Union, Ltd. 18
Elaine Goodman 2
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<PAGE>
E-bidd relied on the following facts in determining that Rule 504 Regulation D
was available: (a) e- bidd was not subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act; (b) e-bidd was engaged in the business
of maintaining a web page on the Internet that contained a database of public
companies annual reports and therefore was neither a development stage company
with no specific business plan or purpose, nor was it a company whose plan was
to merge with an unidentified company; (c) the aggregate offering price did not
exceed $1,000,000; and (d) e-bidd filed a Form D within 15 days of the first
sale of the shares subject to the offering.
On February 1, 1998, pursuant to Rule 504 under Regulation D of the Securities
Act of 1933, e-bidd issued 100 shares of its common stock to Christopher Lopez
in exchange for his cancellation of e- bidd's indebtedness of $35,000 to him.
E-bidd relied on the following facts in determining that Rule 504 Regulation D
was available: (a) e-bidd was not subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act; (b) e-bidd was engaged in the business
of maintaining a web page on the Internet that contained a database of public
companies annual reports and therefore was neither a development stage company
with no specific business plan or purpose, nor was it a company whose plan was
to merge with an unidentified company; (c) the aggregate offering price did not
exceed $1,000,000; and (d) e-bidd filed a Form D within 15 days of the first
sale of the shares subject to the offering.
In May 1998, pursuant to Rule 504 under Regulation D of the Securities Act of
1933, e-bidd issued shares of its common stock as follows:
40 shares of its common stock to Christopher Lopez in exchange for $12,000
cash; 320 shares of its common stock to Christopher Lopez in exchange for
his cancellation of ebidd's indebtedness of $96,000 to him; and
402 shares of its common stock to Moreland Guarantee, Ltd. in exchange for
their consulting services rendered to e-bidd.
E-bidd relied on the following facts in determining that Rule 504 Regulation D
was available: (a) e- bidd was not subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act; (b) e-bidd was engaged in preliminary
negotiations to merge with a manufacturer of printed circuit boards and
therefore was neither a development stage company with no specific business plan
or purpose, nor was it a company whose plan was to merger with an unidentified
company; (c) the aggregate offering price did not exceed $1,000,000; and (d)
e-bidd filed a Form D within 15 days of the first sale of the shares subject to
the offering.
[THIS SPACE LEFT BLANK INTENTIONALLY]
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<PAGE>
On November 19, 1998, e-bidd issued a total of 1985 shares of its common stock
to the 27 individuals listed below pursuant to Rule 505 of Regulation D as
follows:
Name # of shares Name # of shares
---- ----------- ---- -----------
Manuel Lopez 1,500 Brenton Lee 8
David Eaton 300 Seth Holmberg 8
Luis Rodriguez 25 Dante Simoncini 7
Jean Lopez 20 Anthony Lopez 5
Christopher Lopez 17 Laura Pooler 5
Raynold Arcuri, Jr. 15 John Lopez 5
Judy Bruno 13 Genevieve Lopez 5
kristen Lopez 10 Christopher M. Lopez 5
Nicholas Lopez 10 Henderson Cole 5
Matthew Henry 10 Mary Foote-Lujan 5
Joseph Rainero 10 Steve Randall 4
Melissa Jostedt 4 Megan Vasely 4
Eric Horn 3 Christina Kisielewski 3
Robert Coronel 1
E-bidd's basis for claiming an exemption from registration pursuant to Rule 505
of Regulation D, includes:
(a) E-bidd believes that it complied with the general Rules of Rule 501
through 503. However, ebidd does not have a record as to whether it filed a
Form D. Nevertheless, the failure to file the Form D (according to Release
No. 6825) is not a condition to claiming a valid exemption under Rule 504,
505, or 506.
(b) The aggregate offering price did not exceed 5,000,000 as defined in
Rule 501(c).
(c) E-bidd has reason to believe that all the shares were issued to
accredited investors and in no event did the number of unaccredited
investors exceed 35 persons. E-bidd distributed a private Placement
memorandum to the purchasers.
(d) E-bidd is not disqualified from relying on Rule 505 because it nor its
affiliates or predecessors are described in Rule 262.
[THIS SPACE LEFT BLANK INTENTIONALLY]
-27-
<PAGE>
On March 30, 1999, e-bidd, pursuant to a Rule 504 under Regulation D of the
Securities Act of 1933, issued a total of 5,700 shares of its common stock to
the 6 entities listed below in exchange for $5,700 cash.
Name # of shares
---- -----------
Hatfield Limited 1,250
Leven Investments, Ltd. 1,250
Tica trading, Ltd. 1,250
Braden, Inc. 1,000
Softwind Limited 475
Omaha Corporate Services 475
The Company relied on the following facts in determining that Rule 504
Regulation D was available: (a) the Company was not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act; (b) the Company was
engaged in the business of developing 3D picture viewers and therefore was
neither a development stage company with no specific business plan or purpose,
nor was it a company whose plan was to merge with an unidentified company; (c)
the aggregate offering price did not exceed $1,000,000; and (d) the Company
filed a Form D within 15 days of the first sale of the shares subject to the
offering.
On July 1, 1999, e-bidd issued 3,000 shares of its common stock and on August 2,
1999, e-bidd issued 30,000 shares of its common stock (for a total of 33,000
shares) to Connor Holdings, Inc. in exchange for $25,000 cash pursuant to Rule
504 under Regulation D of the Securities Act of 1933. E-bidd relied on the
following facts in determining that Rule 504 Regulation D was available: (a) e-
bidd was not subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act; (b) e-bidd was engaged in the business of developing 3D picture
viewers and therefore was neither a development stage company with no specific
business plan or purpose, nor was it a company whose plan was to merge with an
unidentified company; (c) the aggregate offering price did not exceed
$1,000,000; and (d) e-bidd filed a Form D within 15 days of the first sale of
the shares subject to the offering.
On August 4, 1999, e-bidd issued a total of 16,560,000 shares of its common
stock, pursuant to Rule 504 under Regulation D of the Securities Act of 1933 to
the 14 investors listed below. Laurier Limited received its stock in exchange
for $10,000 and licensing rights to software which may allow e-bidd to conduct
operations as an Internet auction site and licensor of Auction and Ad Serving
Software.
Name # of Shares par value/share
---- ----------- ---------------
Laurier Limited 10,000,000 .03
Craig Schneider 545,000 .03
Scott Marshall 545,000 .03
Mike Frankenberger 35,000 .03
Chronos Holdings 545,000 .03
JG Investments 545,000 .03
-28-
<PAGE>
Name # of Shares par value/share
---- ----------- ---------------
Clarkson Holdings 545,000 .03
Ongar Assets Limited 675,000 .03
Owzat Holdings 675,000 .03
Kildowan Limited 675,000 .03
Bowood Limited 675,000 .03
Moores Capital 545,000 .03
Duke Holdings 545,000 .03
Jim Vandeberg 10,000 .11
E-bidd relied on the following facts in determining that Rule 504 Regulation D
was available: (a) e- bidd was not subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act; (b) e-bidd was engaged in the business
developing 3d picture viewers and had a specific business plan to become an
operator of an online, live Internet ad auction site and therefore was neither a
development stage company with no specific business plan or purpose, nor was it
a company whose plan was to merge with an unidentified company; (c) the
aggregate offering price did not exceed $1,000,000; and (d) e-bidd filed a Form
D within 15 days of the first sale of the shares subject to the offering.
On October 15, 1999, e-bidd issued 150,000 shares of common stock for services
to Richard D. Surber, pursuant to Rule 701 of the Securities Act of 1933. The
Company relied on the following facts in determining that Rule 701 was
available: (a) the shares were issued pursuant to a written compensatory benefit
plan issued by the Company, (b) the individual listed rendered bonafide services
not in connection with the offer or sale of securities in capital raising
transaction, (c) the shares were issued pursuant to a written contract relating
to the issuance of shares paid as compensation for services rendered, and (d)
the amount of shares offered and sold in reliance on Rule 701 did not exceed
$500,000 and all securities sold in the last 12 months have not exceeded
$5,000,000.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 10.01 of e-bidd's Bylaws and sections 302A.251, 559 or 80A.23 of the
Minnesota Statutes provide for indemnification of e-bidd's officers and
directors in certain situations where they might otherwise personally incur
liability, judgments, penalties, fines and expenses in connection with a
proceeding or lawsuit to which they might become parties because of their
position with e-bidd.
In accordance with the provisions referenced above, e-bidd shall indemnify to
the fullest extent permitted by it bylaws, and in the manner permissible under
the laws of the State of Minnesota, any person made, or threatened to be made, a
party to an action or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he is or was a director or officer of
e-bidd, or served any other enterprise as director, officer or employee at the
request of e-bidd. The Board of Directors, in its discretion, shall have the
power on behalf of e-bidd to indemnify any person, other than a director or
officer, made a party to any action, suit or proceeding by reason of the fact
that he/she is or was an employee of e-bidd.
-29-
<PAGE>
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of e-bidd, e-bidd has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities ( other than the payment by e-bidd of expenses incurred or paid
by a director, officer or controlling person of e-bidd in the successful defense
of any action, suit or proceedings) is asserted by such director, officer, or
controlling person in connection with any securities being registered, e-bidd
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issues.
PART F/S
E-bidd's financial statements for the fiscal years ended December 31, 1998 and
1997 and the interim reports for September 30, 1999 and 1998 are attached hereto
as F-1 through F-21.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
-30-
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
REPORT ON AUDIT FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<PAGE>
YEARS ENDED DECEMBER 31, 1998 AND 1997
CONTENTS
PAGE
Independent Auditors' Report.................................................F-2
FINANCIAL STATEMENTS
Balance Sheets...............................................................F-3
Statements of Income and Accumulated Deficit ................................F-4
Statements of Stockholders' Equity...........................................F-5
Statements of Cash Flows.................................................F-6 & 7
Notes to Financial Statements................................................F-8
F-1
<PAGE>
Bedinger & Company 1850 Mount Diablo Blvd., Suite 610
- ------------------
Certified Public Accountants Walnut Creek, California 94596
(925) 932-7808
INDEPENDENT AUDITORS' REPORT
September 10, 1999
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 for E-BIDD.Com, Inc. (formerly
Image Photo Systems, Inc.) (a company in the development stage) ("Company"), as
of December 31, 1998 and 1997 and the related statements of income, (loss) and
accumulated deficit, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of E-BIDD.Com, Inc. (formerly Image Photo
Systems, Inc.) (a company in the development stage), as of and for the year
ended December 331, 1996 were audited by other auditors whose reports dated May
29, 1997, expresses an unqualified opinion on these statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and preform the audit to obtain
reasonable assurances about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting 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 at December 31, 1998 and 1997 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) as of
December 31, 1998 and 1997 and the results of its operations and its cash flows
for the year and eight month periods then ended, respectively, 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 raises substantial doubt
about its ability to continue as a going concern. Management plans in regards to
these matters are also described in Note E. The financial statements do not
include and adjustments that might result from the outcome of this uncertainty.
/s/ Bendinger & Company
Bedinger & Company
Certified Public Accountants
F-2
<PAGE>
<TABLE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
BALANCE SHEETS
- --------------------------------------------------------------------------------
<CAPTION>
December 31
1998 1997
(Audited) (Audited)
---------------- -----------------
ASSETS
<S> <C> <C>
Current Assets
Cash (overdraft) ($4,428)
Accounts Receivable 3,500
------------ -----------
Total Current Assets (928)
Furniture & equipment (Net) (Note A) 44,865
Security deposits 7,839
Goodwill (Note A) 464,831
------------ -----------
TOTAL ASSETS $ 0 $ 516,607
============ ===========
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 14,925 $ 55,253
Notes payable (Note B) - 398,490
------------ -----------
TOTAL CURRENT LIABILITIES 14,925 453,743
------------ -----------
STOCKHOLDERS' EQUITY (DEFICIT) (Note D)
Common Stock, par value $.001;
100,000,000 shares authorized;
issued and outstanding 30,788 and 15,503
at December 31, 1998 and 1997, respectively. 31 16
Additional paid in capital 2,273,155 1,035,710
Deficit at inception date (746,875) (746,875)
Accumulated deficit during the development stage (1,541,236) (225,987)
------------ -----------
TOTAL STOCKHOLDERS' EQUITY DEFICIT (14,925) 62,864
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' $ 0 $ 516,607
EQUITY ============ =============
</TABLE>
See Notes to Financial Statements
F-3
<PAGE>
<TABLE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF INCOME (LOSS) AND ACCUMULATED DEFICIT
Years ended December 31, 1998, 1997, and 1996 and
The period March 1, 1994 (inception of development stage), to December 31, 1998
- ----------------------------------------------------------------------------------
<CAPTION>
Period from March
1, 1994 (inception
Year Ended December 31 of development
----------------------------------------------- stage) through
1998 1997 1996 Dec.31, 1998
---- ---- ----
<S> <C> <C> <C> <C>
COSTS AND EXPENSES
Personal Costs $207,525 $81,424 $50,165 $339,114
Occupancy Costs 31,749 26,333 58,082
Professional fees 77,132 25,008 103,940
Computer costs 8,529 6,385 14,914
Marketing 721 8,530 9,251
Travel 5,733 6,478 12,211
Internet Expenses 0 8,252 8,252
Interest and Bank Charges 951 3,286 4,237
Office Supplies 514 2,616 3,130
Communication 6,964 3,673 10,637
Insurance 697 744 1,441
Miscellaneous 6,791 2,261 9,052
Transfer Fees 3,980 3,980
Depreciation and amortization 14,056 5,155 19,211
Bad debt expenses 5,400 0 5,400
------------ ----------- ----------- ------------
TOTAL EXPENSES 370,742 180,145 50,165 602,862
------------ ----------- ----------- ------------
OTHER INCOME (LOSS)
(Notes A and D):
Dissolution of Corp Reports 503,507 503,507
Other 441,000 (6,123) 434,877
------------ ----------- ------------ ------------
(944,507) 6,123 (938,384)
NET EARNINGS (LOSS) (1,315,249) (174,022) (50,165) (1,541,236)
ACCUMULATED DEFICIT:
Beginning (972,862) (798,840) (748,675) (746,875)
Ending ($2,288,111) ($972,862) ($798,840) ($2,288,111)
============ =========== =========== ============
BASIC AND DILUTED LOSS / SHARE ($.05) ($.03) ($.06)
============ =========== ===========
</TABLE>
See Notes to Financial Statements
F-4
<PAGE>
<TABLE>
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 development stage) to December 31, 1998
- --------------------------------------------------------------------------------
<CAPTION>
Existing Deficit
deficit at accumulated
Common Stock Additional inception of during Total
Number Paid-in development development Stockholders'
of Shares Amount Capital stage stage Equity
------------------- ------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BEGINNING BALANCE
at inception of development,
March 1, 1994 201 $ - $ 746,875 ($746,875) $ - $ -
Shares issued 720 1 1,799 -
Net loss for period ending
12/31/94 (1,800)
BALANCES
-------- --------- ----------- ------------ ----------- -----------
December 31, 1994 921 1 748,674 (746,875) (1,800) -
Shares issued
Net loss for period ending
12/32/95 0
BALANCES
-------- --------- ----------- ------------ ----------- -----------
December 31, 1995 921 1 748,674 (746,875) (1,800) -
Shares issued 90 0 28,500
Net loss for period ending
12/31/96 (50,165)
BALANCES
-------- --------- ----------- ------------ ----------- -----------
December 31, 1996 1,011 1 777,174 (746,875) (51,965) (21,665)
Shares issued 14,492 15 258,536
Net loss for period ending
12/31/97 (174,022)
BALANCES
-------- --------- ----------- ------------ ------------ -----------
December 31, 1997 15,503 16 1,035,710 (746,875) (225,987) 62,864
Shares issued 15,285 15 1,237,455
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)
======== ========= =========== ============ ============ ===========
</TABLE>
The Company also had other non-cash investing and financing activities:
Year Ended December 31
----------------------------------------
1998 1997 1996
------------------------------------------
Conversion of debt to
common stock - $343,549 -
============= ======== ==========
See Notes to Financial Statements
F-5
<PAGE>
<TABLE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
Period from March 1, 1994 (inception of development stage) to December 31, 1998
- -------------------------------------------------------------------------------
<CAPTION>
Period from
March 1, 1994
(Inception of
Year Ended December 31 development
---------------------- stage) through
Cash Flows from Operating Activities 1998 1997 1996 Dec. 31, 1999
---- ---- ---- --------------
<S> <C> <C> <C> <C>
Net earnings (loss) ($1,315,249) ($174,022) ($50,165) (1,541,236)
Adjustment to reconcile net earnings (loss) to
net cash used by operating activities:
Depreciation and amortization 14,056 5,155 19,211
Abandonment of furniture & equipment 30,809 30,809
Write-off goodwill 464,831 464,831
CHANGES IN CURRENT ASSETS AND
CURRENT ASSETS AND CURRENT
LIABILITIES:
(Increase) decrease in current assets:
Accounts receivable 3,500 (3,500) 0 0
(Increase) decrease in current liabilities:
Accounts payable and accrued expenses (40,328) 46,573 8,680 14,925
NET CASH USED FOR OPERATING
ACTIVITIES: (842,381) (125,794) (41,485) (1,011,460)
============ ============ =========== =============
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of furniture & equipment (50,020) (50,020)
(Increase) decrease Security Deposit 7,839 (7,289) (550) 0
(Purchase) of goodwill (464,831) (464,831)
------------- ------------- ----------- ------------
NET CASH (USED) FOR INVESTING
ACTIVITIES 7,839 (522,140) (550) (514,851)
------------- ------------- ----------- ------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance (repayment) of notes payable (398,490) 398,490 0 0
Sale of common stock 1,237,460 258,551 28,500 -
Common stock subscriptions - (14,000) 14,000 0
NET CASH PROVIDED BY FINANCING
ACTIVITIES 838,970 643,041 42,500 1,526,311
NET INCREASE (DECREASE) IN CASH 4,428 (4,893) 465 0
CASH, beginning of period (4,428) 465
CASH end of period $ 0 $ (4,428) $ 465 $ 0
============ =========== =========== ===========
</TABLE>
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, 1998 AND 1997
Period from March 1, 1994 (inception of development stage) to December 31, 1998
SUPPLEMENTAL DISCLOSURE:
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-7
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
- -------------------------------------------
NOTE A- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated in November 1968 as "Port Industries, Inc." under
the laws of the state of Minnesota. The Company commenced bankruptcy proceedings
under Chapter XI in May 1974 and emerged from bankruptcy in April 1976. As a
result of the bankruptcy proceedings, all assets were distributed and the
debtor's rights were formally dismissed. The Company remained inactive from 1976
until 1994.
On March 1, 1994, the Company entered into an agreement of merger with Digital
Reporting, Inc., a Delaware corporation. Upon the effective date of this merger,
the Company issued a net amount of 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 of Digital
Reporting, Inc.
In September, 1997 the Company acquired all of the outstanding common shares of
Cyberguides, Inc., a Company incorporated under the laws of the State of
Delaware in exchange for 3,500 restricted shares of common stock of the Company
with a par value of $1.00 per share. As of the closing, the Company changed its
name to Cyberguides International, Inc. and the authorized number of voting
common shares from 10,000,000 to 30,000,000 shares of which 15,503 shares were
issued and outstanding and held by approximately 225 shareholders at December
31, 1997.
In February 1998, A.J. Alda & Associates acquired approximately 1,140 restricted
common shares of the Company and Mr. A.. J. Alda was appointed Director,
President, and Chief Executive Officer of the Company which changed its name to
AJA Merchant Banking Corporation. Mr. Kenneth G. C. Telford was appointed a
Director and Chief Operating Officer. Mr. Leslie J. Ames was appointed
Vice-President and a Director. Mr. Manuel Lopez, who is also President of Corp
Reports.Com, Inc. (formerly Cyberguides, International Inc.) was also appointed
a director of the Company.
Prior to August, 1998, Corp Reports.Com was dissolved and the assets
(principally goodwill) and liabilities associated with that acquisition were
written-off.
F-8
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
- ------------------------------------------
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Organization (Continued)
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 Principles
a. Accounting estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
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 (1998-16,635; 1997-8,257;
1996-966).
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, 1998 AND 1997
- -------------------------------------------
Summary of Significant Accounting Principles (continued)
c. 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.
d. Issuance of Common Stock
The issuance of common stock for other than cash is recorded by the Company at
managements estimate of the fair value of the assets acquired or service
rendered.
e. Income taxes
In 1998 and 1997 only the minimum state taxes were paid. The Company has net
operating loss carry-forwards of approximately $1,500,000 for which the
valuation allowance is the maximum.
f. Functional Currency
The financial statements are stated in U.S. dollars which is the functional
currency of the Company.
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, 1998 AND 1997
NOTE B - NOTES PAYABLE
December 31, 1997
-----------------
Unsecured note payable to individual, bearing interest at
12% (deferred), due September 30, 1998. $10,000
Unsecured note payable to individual, bearing interest at
12% (deferred), due October 31, 1998. 12,000
Unsecured note payable to individual, bearing interest at
12% (deferred), due December 31, 1998. 13,890
Unsecured note payable to individual, bearing interest at
12% (deferred), due December 31, 1998. 4,500
Unsecured note payable to individual, bearing interest at
12% (deferred), due December 31, 1998. 6,800
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, 1998 AND 1997
- -------------------------------------------
December 31, 1997
NOTE B - NOTES PAYABLE (continued)
Unsecured note payable to individual, bearing interest at
12% (deferred), due December 31, 1998. 0
Unsecured note payable to an unrelated Corporation,
with interest at 12% and principal converted to
common stock in February 1998. 345,000
Other 6,300
----------------------
$398,490
======================
The obligations were terminated as of August 31, 1998 upon the dissolution of
Corp Reports.Com.
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 notes thereto.
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, 1998 AND 1997
NOTE D - ACQUISITION OF CORPREPORTS.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 CorpReports. Com, Inc. The
acquisition has been accounted for as a purchase and results of the operations
have been included in the accompanying consolidated financial statements since
the effective date of acquisition was September 30, 1997. The summarized 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 (net) 46,185
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 part "c" of Note "A".
See Notes To Financial Statements
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, 1998 AND 1997
- ----------------------------------------------
NOTE E - SUBSEQUENT EVENTS
Subsequent to year end, the Company completed a private placement offering in
the amount of $860,000. Management intends to use the offering proceeds for
working capital purposes. Management believes the offering will provide
sufficient working capital for the coming year.
F-14
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1999 & 1998 (Unaudited)
CONTENTS
PAGE
FINANCIAL STATEMENTS
Balance Sheets..............................................................F-16
Statements of Income (Loss) and Accumulated Deficit.........................F-17
Statements of Stockholders' Equity..........................................F-18
Statements of Cash Flows....................................................F-19
Notes to Financial Statements...............................................F-20
F-15
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
BALANCE SHEETS (Unaudited)
NINE MONTHS ENDED SEPTEMBER 30, 1999 & 1998 (Unaudited)
- ------------------------------------------------------------
<TABLE>
SEPTEMBER 30
(Unaudited)
ASSETS 1999 1998
---- ----
<CAPTION>
<S> <C> <C>
CURRENT ASSETS
Cash (overdraft) $7,139 -
Accounts receivable - -
------------- ------------
TOTAL CURRENT ASSETS 7,139
Software license (Note E) (Net of $4,800 amortization) 285,200
-------------
TOTAL ASSETS $ 292,339 $ 0
============= ============
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 6,877 $ 14,925
Notes payable (Note C) 160,422 -
------------- ------------
TOTAL CURRENT LIABILITIES 167,299 14,925
------------- ------------
STOCKHOLDERS' EQUITY (DEFICIT) (NOTE D)
Common stock, par value $.001;
100,000,000 Shares authorized; issued
and outstanding 16,620,788 and 30,788 at
September 30, 1999 and 1998, respectively.
16,621 31
Additional paid in capital 2,770,165 2,273,155
Accumulated deficit (2,661,746) (2,288,111)
------------- ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (125,040) (14,925)
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 292,339 $ -
============= ============
See Notes To Financial Statements
</TABLE>
F-16
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF INCOME (LOSS) AND ACCUMULATED DEFICIT
NINE MONTHS ENDED SEPTEMBER 30, 1999 & 1998 (Unaudited) and
Period of inception of development stage March 1, 1994 through September 30,
1998
- ------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
(Unaudited) Period from inception of
development stage March 1, 1994
COSTS AND EXPENSES 1999 1998 through September 30, 1999
---- ---- -------------------------------
<S> <C> <C> <C>
Personnel Costs $82,729 $207,525 $421,843
Occupancy costs 3,000 31,749 61,082
Professional costs 142,271 77,132 242,211
Computer costs 0 8,529 14,914
Marketing 39,707 721 48,958
Travel 8,502 5,733 20,713
Internet expenses 54,500 0 62,752
Interest and bank charges 233 951 4,470
Office Supplies 3,237 514 6,367
Communication 3,647 6,964 14,284
Insurance 5,138 697 6,579
Miscellaneous 2,105 6,791 11,157
Transfer Fees 0 3,980 3,980
Depreciation and 4,800 14,056 24,011
amortization
Bad debt expenses 18,766 5,400 24,166
-------------- --------------- -------------
TOTAL EXPENSES 373,635 370,742 976,487
-------------- --------------- -------------
OTHER INCOME (LOSS)
Dissolution of Corp 0 503,507 503,507
Reports
Other 0 441,000 434,877
-------------- --------------- -------------
0 (944,507) (938,384)
NET EARNINGS (LOSS) (373,635) (1,315,249) (1,914,871)
ACCUMULATED DEFICIT:
Beginning (2,288,111) (972,862) (746,875)
-------------- --------------- -------------
Ending $ (2,661,746) $ (2,288,111) $ (2,661,746)
============== =============== =============
BASIC AND DILUTED ($.01) ($.05)
============== ===============
LOSS PER SHARE
See Notes To Financial Statements
</TABLE>
F-17
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1999 & 1998 (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Existing deficit at
Common Stock Additional inception of
Number of Paid-in development
Shares Amount Capital stage
---------- ----------- ------------ ------------------
BALANCES
<S> <C> <C> <C> <C>
December 31, 1996 1,011 $1 $777,174 ($746,875)
Shares issued 14,492 15 $258,536
Net loss for the period
ending 12/31/97
BALANCES
---------- ----------- ------------ -----------------
December 31, 1997 15,503 16 1,035,710 (746,875)
Shares issued 15,275 15 1,237,445
Net loss for the period
ending 9/30/98
BALANCES
---------- ----------- ------------ -----------------
August 31, 1998 30,778 31 2,273,155 (745,875)
Shares issued
Net loss for the period
ending 12/31/98
BALANCES
---------- ----------- ------------ -----------------
December 31, 1998 30,778 31 2,273,155 (745,875)
Shares Issued
Shares issued to acquire
license 10,000,000 10,000 290,000
For cash 6,590,000 6,590 207,101
Net loss for the period
ending 9/30/99
BALANCES
---------- ----------- ------------ -----------------
September 30, 1999 16,620,778 $16,621 $2,770,165 ($745,875)
========== =========== ============ =================
</TABLE>
The Company also had other non-cash investing and financing activities:
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31 September 30
---------------------------------------------- ------------------
1998 1997 1996 1999 1998
---------------------------------- ---- ----
<S> <C> <C> <C> <C> <C>
Conversion of debt to - $ 343,549 $ - - $ 498,000
common stock - - -
License Agreement acquired by
issue of common stock $ 290,000 -
- ----------------------------------------------------------------------------------------------------
</TABLE>
See Notes To Financial Statements
F-18
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1999 & 1998 (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months ended September 30
(Unaudited)
1999 1998
---- ----
<S> <C> <C>
Cash Flows from Operating Activities
Net earnings (loss) ($373,635) ($1,315,249)
Adjustment to reconcile net earnings (loss) to net cash
used by operating activities:
Depreciation and amortization 4,800 14,056
Abandonment of furniture & equipment - 30,809
Write-off goodwill - 464,831
CHANGES IN CURRENT ASSETS AND CURRENT
ASSETS AND CURRENT LIABILITIES:
(Increase) decrease in current assets:
Accounts receivable 0 3,500
(Increase) decrease in current liabilities:
Accounts payable and accrued expenses (8,048) (40,328)
------------- ---------------
NET CASH USED FOR OPERATING ACTIVITIES (376,883) (842,381)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase (decrease) Security Deposit - 7,839
(Purchase) of Goodwill - -
NET CASH (USED) FOR INVESTING ACTIVITIES - 7,839
------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance (repayment) of notes payable 160,422 (398,490)
Sale of common stock 223,600 1,237,460
Common stock subscriptions - -
------------- ---------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 384,022 838,970
------------- ---------------
NET INCREASE (DECREASE) IN CASH 7,139 4,428
CASH, beginning of period 0 (4,428)
CASH end of period $ 7,139 $ 0
============= ===============
Noncash investing and financing activities
License agreement acquired by issue of common stock $ 290,000 $ 0
============= ===============
</TABLE>
See Notes To Financial Statements
F-19
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999 & 1998 (Unaudited)
NOTE A. Basis of Presentation
The accompanying consolidated unaudited condensed financial statements have been
prepared by management and, therefore, do not include all information and
footnotes required by generally accepted accounting principals and should,
therefore, be read in conjunction with the audited financials in this Form 10SB
for the fiscal year ended December 31, 1998. These statements do include normal
recurring adjustments which the Company believes necessary for a fair
presentation of the statements. The interim operations results are not
necessarily indicative of the results for the full year ended December 31, 1999.
NOTE 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 (1998-16,635; 1997-8,257;
1996-966).
F-20
<PAGE>
E-BIDD.COM, INC.
(FORMERLY IMAGE PHOTO SYSTEMS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999 & 1998 (Unaudited)
- ----------------------------------------------------------
NOTE C - Notes Payable September 30, 1999 September 30, 1998
------------------ ------------------
Unsecured note payable to an
unrelated Corporation with
interest at12% (deferred), -
due December 31, 160,422 -
---------------- --------------
NOTE D. 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 notes thereto.
During the period ended August 31, 1999 the company issued 16,590,000 shares for
gross proceeds of $223,600 and software valued at $290,000. These funds were
used in the settlement of operating costs.
NOTE E. Purchase of software
In July, 1999 e-bidd received $10,000 and issued 10,000,000 restricted shares of
its stock to Laurier Limited in exchange for e-bidd's acquisition of its rights
to the software used to build the Company's website (an Internet auction site
and licensor of Auction and Ad Serving Software). E-bidd accounted for this
transaction as a sale of securities of $300,000 and valued the rights to the
software accordingly at $290,000. The software license is amortized on a
straight line basis over its extended useful life of 10 years.
F-21
<PAGE>
PART III
ITEM 1. EXHIBITS
(a) Exhibits. Exhibits required to be attached are listed in the Index to
Exhibits beginning on page 32 of the form 10-SB under "Item 2. Description
of Exhibits."
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, this ___ 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 ___, 2000
/s/ Gord Woodward
- ------------------------
Gord Woodward Vice President and Director May ___, 2000
/s/ Brian Walker
- ------------------------
Brian Walker Director May ___, 2000
/s/ Meir Kahtan
- ------------------------
Meir Kahtan Director May ___, 2000
-31-
<PAGE>
ITEM 2. DESCRIPTION OF EXHIBITS.
INDEX TO EXHIBITS
Exhibit
No. Page No. Description
2(a) 34 Articles of Merger and Plan and of Merger, Port Industries,
Inc. March 1, 1994.
2(b) 38 Stock Purchase Agreement dated September 20, 1996. (Digital
Reporting, Inc. acquires all of the issued and outstanding
shares of R & D Industries, Inc.).
2(c) 44 Digital Reporting, Inc. Board Resolution dated September 3,
1997, authorizing the acquisition of all the outstanding stock
of Cyberguides, Inc.
3(i)(a) 45 Articles of Incorporation of Port Industries, Inc.
3(i)(b) 48 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.
3(i)(c) 49 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.
3(i)(d) 50 Minnesota Secretary Of State Amendment Of Articles Of
Incorporation (Digital Reporting Inc. changes its name to
Cyberguides International, Inc., September 30, 1997).
3(i)(e) 51 Minnesota Secretary Of State Amendment Of Articles Of
Incorporation (Cyberguides International, Inc., changes its
name to AJA Merchant Banking Corporation February 10, 1998).
3(i)(f) 52 Minnesota Secretary Of State Amendment Of Articles Of
Incorporation (AJA Merchant Banking Corporation changes its
name to Image Photo Systems, Inc. December 3, 1998).
3(i)(g) 53 Minnesota Secretary Of State Amendment Of Articles Of
Incorporation (Image Photo systems, Inc. changes its name to
e-bidd.com, Inc., September 16, 1999).
-32-
<PAGE>
3(i)(h) 54 Articles Of Incorporation Of Image Photo Systems, Inc
3(ii)(a) 58 By-Laws of Port Industries, Inc
3(ii)(b) 73 By-laws of Image Photo Systems, Inc.
Material Contracts
Exhibit
No. Page No. Description
6(a) 82 Agreement, dated July 29, 1999, between e-bidd.com, Inc. and
Laurier Limited.
10(i) 88 Benefit Plan dated October 15, 1999
27 92 Financial Data Schedule "CE"
-33-
Exhibit 2(a)
ARTICLES OF MERGER AND
PLAN AND AGREEMENT OF MERGER
PORT INDUSTRIES, INC.
(a Minnesota corporation)
(the "Surviving Corporation")
AND
DIGITAL REPORTING, INC.
(a Delaware Corporation)
THIS PLAN AND AGREEMENT OF MERGER, entered into on March 1. 1994 by Port
Industries. Inc., ("Port") , a Minnesota business corporation, and approved by
resolution adopted by its Board of Directors on said date; and entered into on
March 1, 1994 by Digital Reporting, Inc. ("DRI"), a Delaware business
corporation, and approved by resolution adopted by its Board of Directors on
said date.
WHEREAS Port is a business corporation of the State of Minnesota with
its principal office therein located at 464 Second St. Suite 108 Excelsior MN
65331 and its registered office located at 15906 Wayzata Blvd, Wayzata MN 55391
; and the total number of shares of capital stock which Port has authority to
issue is 10,000,000 common shares all of one class and of a par value of $. 10
each, and currently there are 502,000 of such shares issued and outstanding; and
WHEREAS DRI is a business corporation of the State of Delaware with its
registered office therein located at 15 East North 5treet, City of Dover, County
of Kent; and the total number of shares of capital stock which DRI has authority
to issue is 10,000,000 common. shares all of one class and of d oar value of
$.001 each; and currently there are 2,800,000 of such shares issued and
outstanding; and
WHEREAS the Business Corporation Act of the State of Minnesota permits
the merger of a business corporation of another jurisdiction with and into a
business corporation of the State of Minnesota; and the General Corporation Law
of the State of Delaware permits a merger of a business corporation of the State
of Delaware with and into a business corporation of another jurisdiction; and
WHEREAS Port and DRI and the respective Boards of Directors thereof deem
it advisable and to the advantage, welfare and best interests of said
corporations and their respective stockholders to merge DRI with and into Port
pursuant to the provisions of the Business Corporation Act of the State of
Minnesota and the General Corporation Law of the State of Delaware upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE. in consideration of the premises and of the mutual
agreement. of the parties hereto, being thereunto duly entered into by Port and
DRI and approved by resolutions duly adopted by their respective Boards of
Directors, this Plan and Agreement of Merger and the terms and conditions hereof
and the mode of carrying this merger into effect, together with any Provisions
required or permitted to be set forth therein, are hereby determined and agreed
upon as hereinafter in this Plan and Agreement set forth,
1. Port and DRI shall, pursuant to the provisions of the Minnesota
Business Corporation Act and of the General Corporation Law of the State of
Delaware, be merged with and into a single corporation, to wit, Port, which
shall be the Surviving Corporation upon the effective date of the merger, and
which is sometimes hereinafter referred to as the "surviving corporation" which
shall continue to exist as the surviving corporation under this merger under Its
post-merger new name of Digital Reporting, Inc. The separate existence of DRI,
the Delaware corporation and hereinafter sometimes referred to as the
"terminating corporation", shall cease at the said effective time in accordance
with the provisions of said General Corporation Law of the state of Delaware.
-34-
<PAGE>
2. The manner and basis of converting the shares of each of the
constituent corporations of this merger into shares of the Surviving Corporation
shall be as follows:
a) Upon the effective date of this merger, each share of Port shall
remain one share of the Surviving Corporation, and accordingly the issued shares
of the Surviving Corporation shall not be converted or exchanged in any manner
but shall continue to represent similar issued shares of the Surviving
Corporation.
b) Each issued share of the terminating corporation shall upon the
effective date of this merger be converted into one (1) share of the Surviving
Corporation. Holders of certificates representing common shares of the
terminating corporation shall as of the effective date of this merger be
entitled to such rights which they would enjoy if they held certificates of the
Surviving Corporation, and shall be issued new certificates of the Surviving
Corporation upon surrender of their certificates in the terminating corporation.
3. Board of Directors Upon the effectiveness of this merger, the Board
of Directors of the Surviving Corporation shall consist of Mr. Frank Carr and up
to two other directors who will be appointed by Mr. Carr, and they shall hold
office until their successors are elected and shall qualify.
4. Officers - Upon the effectiveness of this merger, the new Board of
Directors of the Surviving Corporation will elect officers of the Surviving
Corporation to immediately commence such positions with the Surviving
Corporation, and the current officers of the Surviving Corporation will resign
their officer positions.
5. Bylaws - The present bylaws of Port shall be the bylaws of the
Surviving Corporation and be in full force and effect upon the effectiveness of
this merger and thereafter until changed, altered or Attended as therein
provided and in the manner prescribed by the Minnesota Business Corporation Act.
6. Restated Articles Of Incorporation - The Articles of Incorporation of
the Surviving Corporation shall be as follows as of the effective date of this
merger:
ARTICLE I.
The name of this corporation shall be Digital Reporting, Inc.
ARTICLE II.
The period of duration of this corporation' shall be perpetual, and this
corporation. shall have general business purposes and shall have unlimited power
to engage in any lawful business authorized by the laws of the State of Minn
esota,
ARTICLE III.
The registered office of this corporation in the County of Hennepin.
State of Minnesota is 9372 Creekwood Drive, Eden Prairie, Minnesota 55347.
ARTICLE IV.
This corporation is 'authorized to issue up to 10,100,000 common share
of capital stock, all of which shall be of a par value of $.001 per share.
-35-
<PAGE>
ARTICLE V.
The shareholders of this corporation shall have no right to cumulate
votes for the election of directors; and such shareholders also shall have
preemptive rights to subscribe for any issue of shares of any Class of this no
or corporation now or hereafter made.
ARTICLE VI.
The Board of Directors of this corporation shot have the authority:
i) to allot and authorize the issuance of the authorized but unissued
shares of this corporation. ii) to accept or reject subscriptions for
shares of any class ,made after incorporation; iii) to fix the terms.
conditions and provisions of and authorize the issuance of rights to
convert any securities, as of this corporation into shares of and class
or classes. including, the conversion basis or bases, and to fix the
terms. conditions and provisions of and authorize the issuance of
options, warrants or other rights to purchase or subscribe for shares of
any class or classes, including the option price or prices; and iv) to
make and alter the bylaws of this corporation subject to the power of
the shareholders to repeal or change such bylaws.
ARTICLE VII
No director of this corporation shall be personally liable to the
corporation or its shareholders for monetary damages for a breach of fiduciary
duty as a director; provided, however, that this Article VII shall not limit or
eliminate the liability OF it director. to the extent provided, by applicable
law for breach of a director's duty of loyalty to the corporation or its
shareholders; (ii) acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law of Section 302A.599 or
80.23 of the Minnesota Statutes; (iv) any transaction from which a director
derived any improper personal benefit; or (v) any act or omission occurring
prior to the date when this provision becomes effective.
The provisions of this Article VII shall not be deemed to limit or
preclude Indemnification of a director by this corporation, for any liability of
a director which has not been eliminated by the provisions of this Article VII.
If the Minnesota Statutes hereinafter are amended to authorize the
further lamination or limitation of the liability of directors, then the
liability. of director of the corporation in addition to what is provided
herein, shall be further eliminated or limited to the fullest extent permitted
by the Minnesota statutes as so amended.
Any amendment or repeal of this Article VII shall be prospective only
and shall not adversely affect any limitation on the personal liability of a
director of the corporation existing at the time of such repeal or limitation.
Statement Required by Minnesota Statutes Section 302A.615. This Plan and
Agreement of Merger has been approved by each corporation hereto pursuant to the
Minnesota Business Corporation Act, Chapter 302A of Minnesota Statutes.
-36-
<PAGE>
09/22/99 WED 14:38 FAX 206 464 0484
SEP-22-1999 16:24
METRO LEGAL SERVICES
7. Effectiveness of Merger This merger shall become effective in the
state of Minnesota on the date on which the Secretary of State of Minnesota
files this Plan of Merger and accompanying statement that the Plan of Merger has
been approved by each corporation as required by Minnesota law, which documents
shall comprise the Articles of Merger as required by Section 302A.61S of the
Minnesota Business Corporation Act.
8. The aforesaid Surviving Corporation does hereby agree that it may be
served with process in Delaware in any proceeding for enforcement of any
obligation of DRI, as well as for enforcement of any obligation of said
Surviving Corporation arising from this merger, including any suit or other
proceeding to enforce the right, if any, of any stockholder of DRI as determined
in appraisal proceedings pursuant to Delaware law; and the aforesaid Surviving
Corporation does hereby Irrevocably appoint the Secretary of State of Delaware
as its agent to accept service of process in any such suit or other proceedings;
and does hereby specify the following as the address to which a copy of such
process shall be mailed by the Secretary of State of Delaware:
Cohen & Cohen
445 Park Avenue, 15th Floor
New York, NY 10022
9. In the event that the merger- herein shall have been fully
authorized in accordance with the provisions of thd Minnesota Business
Corporation Act. the terminating corporation and the Surviving Corporation
hereby stipulate that they will cause to be executed and filed and/ recorded any
document or document5 prescribed by the laws of the State of Delaware and the
State of Minnesota, and that they will cause to be performed all necessary acts
therein and elsewhere to effectuate the merger.
10. The Board of Directors and the proper officers of the terminating
corporation and of the Surviving Corporation, respectively, are hereby
authorized. empowered dnd directed to do any and all acts and things, and to
make, execute, deliver, file, and/or record any and all instruments, papers, and
documents which shall be or become necessary, proper or convenient to carry out
or put into effect any of the provisions of this Plan and Agreement of Merger or
of the merger herein provided for.
Dated: March 1, 1994
PORT INDUSTRIES, INC., the Surviving
Attest: Corporation
/s/ By /s/
Robert O. Knutson, Secretary Robert Holmgren, President
Dated: March 1, 1994 DIGITAL REPORTING, INC. The Terminating
Attest: Corporation
/s/ By /s/
Frank R. Cohen, Secretary Frank Carr, President
-37-
Exhibit 2(b)
Digital Reporting, Inc.
225 Park Avenue
Suite 211
New York, NY 10169
- ----------------------------------------------------------------------------
September 20, 1996
R & D Industries, Inc. 1824 130th Avenue NE, Suite 2 Bellevue, WA 98005
Dear Messrs. Dauenhauer and Routh:
The purpose of this letter is to confirm the intentions of the parties hereto
with respect to the acquisition by Digital Reporting, Inc. (the "Buyer"), or its
assignees, of all the shares of capital stock (the "Shares") of R & D
Industries, Inc. ("RDI"). RDI presently owns and operates several locations
engaged in the sale, installation and service of computer hardware, software,
and network products. The specific locations are identified on Schedule "A"
annexed hereto. All of the Shares are presently owned by Messrs. Dauenhauer and
Routh (collectively the "Shareholders"). The principal terms of the Buyer's
acquisition of the Shares from the Shareholders would be as follows:
1 . Description of Transaction
Buyer would acquire free and clear of any liens, pledges, claims, encumbrances
and/or security interests of any nature, the Shares from the Shareholders in
consideration of the issuance of shares of the Buyer's securities as described
below.
2. Reorganization Agreement
2.1 The transaction is subject to the terms and conditions of a detailed
reorganization agreement ("Agreement") which will provide in part that:
(a) Upon closing of the Transaction ("Closing"), the buyer will acquire
100% of the Shares in exchange for the issuance to the Shareholders, or
their designees equivalent to $2,500,000 in cash and stocks as
described below. Due to an inventory adjustment as disclosed in a
memorandum dated September 4, 1996, attached as "Exhibit B", the
acquisition price would be adjusted up or down for being over or under
the Tangible Net Worth, as described in paragraph (e).
-38-
<PAGE>
Cash Distribution:
* Bill Dauenhauer and Rod Routh will each receive $500,000, to be paid in two
installments of $250,000 to each of (i) $250.000 at closing and (ii) $250,000 90
days after the closing.
Stock Distribution:
* Bill Dauenhauer and Rod Roth will each receive stock valued at $750,000.
The stock price will be based upon the average price ten trading days prior to
the closing and price protection (downside protection) will be provided for
three years or up to the time the stock become available for trading by Bill and
Rod.
(b) Bill will enter into an employment agreement of $150,000 for a three year
period with incentives to be negotiated (to include health benefits, vacation,
stock options, etc.).
Rod will receive dental and health coverage for three years. The Chevy Suburban
will be transferred to him at closing.
(c) RDI will be required to deliver, prior to the Closing; consolidated audited
financial statements on behalf on RDI prepared in accordance with generally
accepted accounting principles and applicable Securities and Exchange Commission
regulation covering RDI's prior two fiscal years as well as any unaudited
quarterly stub period. In the case that RDI is required to have three years of
audited statement per SEC regulations, RDI will be advised so.
(d) The Buyer will acquire all of RDI's right, title and interest to all
trademarks, web pages and all other computer related assets.
(e) As a pre condition of the closing, RDI represents the following
will be delivered at the closing:
* Tangible net worth of RDI will be $1.0 to $1.2 million,
* 1995 sales revenues of $47 million (via audited statement)
* Projected sales of revenues for 1996 of $50 million.
(f) The Closing of the Transaction would also be subject to approval by the
Board of Directors and Shareholders of RDI as well as the Buyer and Seller being
satisfied with the results of its "Due Diligence" investigation of each other's
business, liabilities, properties and assets.
-39-
<PAGE>
(g) Closing will be subject to the approval of the following:
* RDI is presently in negotiation with Deutsche Financial
Services to replace First Interstate Bank of Washington as our
"Working Capital" lender. With either lender, this transaction
with Digital is contingent on the approval of (a) the lender,
and (b) the lender waiving Rod Routh's and Bill Dauenhauer's
personal guarantee.
* Hewlett Packard (authorization)
2.2 The Agreement will be prepared by Tenzer, Greenblatt LLP and will contain
the terms set forth herein and other mutually acceptable and customary
provisions including, but not limited, representations and warranties of each
party to the other, undertaking of each party as to the conduct of their
respective businesses and operations prior to the Transaction, conditions
precedent to the Transaction and other customary terms.
3. Confidential Agreement
Digital Reporting, Inc. will be required to sign a confidentiality agreement
before any financials and company's records are made available for review.
4. Due Diligence
RDI and the Shareholders each agree to make available for inspection to the
Buyer and its representatives all corporate books, records, documents, and
assets of RDI and will otherwise afford Buyer and its respective representatives
reasonable access to all documentation, contracts, agreements, patents, patent
applications and all other information concerning the business, financial and
legal conditions of RDI for the purpose of satisfying the consummating the
proposed transaction acquisition. The Buyer agrees not to use for its own
benefit, except for matters related to his Letter of Intent and the Agreement,
any information or documentation obtained in connection with any such
investigation.
Digital Reporting, Inc. will make available all corporate books, records and
documents for inspection to RDI prior to the closing.
5. Good Faith of Buyer
As long as Buyer is proceeding in good faith diligently and in a timely manner
with respect to the Transaction contemplated hereby, neither RDI nor the
Shareholders may sell, agree to sell or enter into any arrangements or
negotiations of any type relating to (i) the sale of RDI's assets (other than in
the ordinary course of business); (ii) the sale, pledge and/or hypothecation of
the Shares and/or any interest in the Shares; (Hi) a material change in RDI's
business; (iv) the increase of any material liabilities or obligations of RDI
other than in the ordinary course; or (v) the issuance of any shares of capital
stock, other securities, and/or securities convertible into capital stock of RDI
(including any merger or consolidation except for transactions with the Buyer).
-40-
<PAGE>
6. Nature of this Letter
It is understood that this document is a Letter of Intent and merely constitutes
a statement of mutual intentions of the parties with respect to the proposed
transactions herein above. This Letter of Intent does not contain all matters
upon which agreement must be reached and hence, creates no binding rights in
favor of either party. A binding Agreement with respect to proposed transactions
will result only after the execution by the parties of such Agreement, subject
to the terms and conditions set forth in such Agreement.
7. Amendment and CountgMart Execution
This Letter of Intent may be executed by the parties in counterparts, all of
which shall constitute one and the same original. The terms of this Letter of
Intent may be amended, modified or waived only in writing executed by the
parties hereto.
If the foregoing correctly sets forth the material terms of your understanding
of the proposed transactions, and if such terms are acceptable to you, please
execute two originals of this letter and return one executed to the undersigned.
We look forward to a fruitful reorganization of our firms.
Accepted and Agreed to Digital Reporting, Inc.
this 20th day of September, 1996
By: /s/
Preston Kassem, Director
By: /s/
Kevin Ruggiero, Director
By: /s/
Dominick P. Pope, Director, President
Accepted and Agreed to R & D Industries, Inc.
this 25th day of Sept 1996
By: /s/
Rod Routh, Co-owner
By: /s/
Bill Dauenhauer, Vice-President, Co-owner
-41-
<PAGE>
Schedule A
Name of Entity
Which Owns Location Computer Locations
1824 130th Avenue NE
Bellevue, WA
East 10807 Montgomery
Spokane, WA
8066 SW Nimbas Avenue
Beaverton, OR
7285 S. Revere Parkway
Englewood, CO
3578 South 500 West
Salt Lake City, UT
-42-
<PAGE>
SEP-04-1996 13:30 R & D INDUSTRIES, INC.
RDI R & D INDUSTRIES INC
- --------------------------------------------------------------------------------
EXHIBIT B
DATE: SEPTEMBER 4, 1996
TO: DIGITAL RFPORTING, INC.
ATTN: KEVIN RUGGIERO
CC: BILL DAUENHAUER, RDI
FROM: ROD ROUTH, RDI,
SUBJECT: OBSOLETE/DEMO USED INVENTORY, AT 12/31/95 & 6/30/96
IN REVIEWING THE POSSIBILITIES OF "HOW TO DISPOSE OF" THE
ABOVE SUBJECT INVENTORY, I HAVE FOUND THE FOLLOWING:
1. SELL TO LOCAL & NATIONAL "RE-MARKETERS",
2. DONATE TO EDUCATIONAL CHARITABLE ORGANIZATIONS, OR
3. SELL TO A THIRD WORLD COUNTRY MARKET, PROBABLY THRU A
BROKER,
4. SELL VIA COMPUTERPRICES.COM OVER THE INTERNET
A CONSERVATIVE ESTIMATE, FOR PURPOSES OF THIS EXERCISE, IS
THAT THE NET PROCEEDS TO RDI WOULD BE $200,000 BEFORE TAXES.
THIS WOULD RESULT IN AN ESTIMATED FEDERAL INCOME TAX
SAVINGS/CREDIT OF $300,000. THIS AMOUNT WOULD BE ADJUSTED
UP/DOWN BY SALES OF THIS INVENTORY PRIOR TO CLOSING. HOWEVER,
SINCE THIS IS A "SUB S" CORPORATION, THE REFUND CANNOT BE
BOOKED IN THE COMPANY FINANCIAL RECORDS. THE OWNERS OF RDI
(DAUENHAUER & ROUTH) WOULD ADJUST THE SALES DOLLARS BY THE
REFUND THAT WOULD BE CARRIED BACK/FORWARD.
PLEASE SIGN AND DATE TO ACKNOWLEDGE RECEIPT OF THE MEMO.
DIGITAL REPORTING, INC.
BY: /s/ Kevin Ruggiero DATE: SEPTEMBER 1996
--------------------------
1824 130TH AVE NE-SUITE 2-BELLEVIEW WA 98005-(206) 881 8490 - FAX (206) 869 6565
-43-
Exhibit 2(c)
OCT. 6. 1997 1: 12PM NO. 177 P. 2/5
UNANIMOUS WRITTEN CONSENT OF DIRECTORS OF
DIGITAL REPORTING, INC.
IN LIEU OF MEETING
THE UNDERSIGNED, being the sole director of Digital Reporting, Inc. , a
Minnesota corporation (the "Corportion"), hereby waives notice of and the
holding of a meeting of the Board of Directors of said Corporation, and does
hereby unanimously consent to and adopt the following Resolutions this 3rd day
of September, 1997.
RESOLVED that the Corporation acquire all of the outstanding Common
Stock of Cyberguides, Inc., a Delaware corporation, in accordance with a certain
Acquisition Agreement dated as of September 15, 1997 (the "Agreement") .
RESOLVED, that the Agreement and all other matters referred to in the
Agreement be and they hereby are authorized and approved; and,
RESOLVED, that this Corporation hereby authorizes the issuance of
3,500,000 shares of restricted common stock pursuant to SEC Rule 144, in
accordance with the revisions of the Agreement, to the persons set forth on
Exhibit attached hereto; and,
RESOLVED that the officers of the Corporation are hereby authorized to
take such actions and execute such documents as they deem necessary and proper
to effectuate the foregoing resolutions.
/s/
Peter Lee
-44-
EXHIBIT 3(i)(a)
ARTICLES OF INCORPORATION
OF
PORT INDUSTRIES, INC.
For the purpose of forming a corporation pursuant to the provisions of
the Minnesota Business Corporation Act, the following Articles of Incorporation
are adopted:
1. The name of this corporation shall be Port Industries, Inc.
2. This corporation shall have general business purposes and shall have
unlimited power to engage in, and do any lawful act concerning, any and all
lawful businesses for which corporations may be organized under the Minnesota
Business Corporation Act. Without limiting the generality of the foregoing, this
corporation shall have the following specific powers:
(a) to acquire, hold, develop, improve, lease, buy, sell and dispose of
real and personal property of all kinds and descriptions;
(b) to enter into one or more partnership agreements or one or more joint
venture agreements with any other person, firm or corporation;
(c) to become surety for or guarantee the carrying out and performance of
any contract, lease, or obligation of any kind of any person, firm or
corporation in connection with the-.carrying on of any business which in the
judgment of the Board of Directors of this corporation will be of benefit to
this corporation; and
(d) to acquire, hold, pledge, mortgage, hypothecate, sell, or otherwise
dispose of the shares, bonds, securities and other evidences of indebtedness of
any person or of any domestic or foreign corporation.
3. The period of duration of this corporation shall be perpetual.
-45-
<PAGE>
4. The location and post office address of the registered office of this
corporation in Minnesota is 15906 Wayzata Boulevard, Wayzata, Hennepin County,
Minnesota 55391.
5. The total authorized number of shares of this corporation is 10,000 all
of which shall be Common Shares of the par value of $10.00 each.
6. The shareholders of this corporation:
(a)shall have no right to cumulate votes for the election of directors;
(b)shall have no right to subscribe to any issue of shares of any class of
this corporation now or hereafter made; and
(c) shall have the power, by the affirmative vote of the holders of a
majority of the outstanding shares entitled to vote thereon, to (i) authorize
the sale, lease,, exchange, or other disposal of all or substantially all of the
property and assets of this corporation, including its good will; (ii) to amend
the Articles of Incorporation of this corporation and (iii) to adopt an
agreement of consolidation or merger.
7. The amount of stated capital with which this corporation shall begin
business shall be $1,000.00
8. The names and post office address of the first directors, who shall
serve until the first annual meeting of shareholders, are as follows: Name Post
Office Address W. L. Holmgren 15906 Wayzata Boulevard Wayzata, Minnesota 55391
Robert F. Holmgren 15906 Wayzata Boulevard
Wayzata, Minnesota 55391
W. Reed Holmgren 15906 Wayzata Boulevard
Wayzata, Minnesota 55391
-46-
<PAGE>
9. The name and post off ice address of the incorporator, who ia natural
person of full age, are:
Name Post Office Address
Thomas M. Brown 2400 First Rational Bank Building
Minneapolis, Minnesota 55402
10. The Board of Directors of this corporation shal1 have authority: (a)to
allot and authorize the issuance of the authorized but unissued shares of this
corporation, including the declaration of dividends payable in shares of any
class to shareholders of any other class; (b)to accept or reject subscriptions
for shares of any class made after incorporation; (c)to fix the terms,
provisions and conditions of and authorize the issuance of (1) rights to convert
any securities of this corporation into shares of any class or classes,
including the conversion basis or bases, and (ii) options to purchase or
subscribe for shares of any class or classes, including the option price or
prices at which shares may be purchased or subscribed for; and (d)to make and
alter the Bylaws of this corporation subject to the power of the shareholders to
change or repeal such Bylaws. IN WITNESS WHEREOF, the undersigned incorporator
has executed these Articles of Incorporation on November 25, 1968. In presence
of: /s/ Reese C Johnson
/s/ Thomas M. Brown
Thomas M. Brown
-47-
Exhibit 3(i)(b)
ARTICLES OF AMENDMENT
OF
INCORPORATION
ARTICLES OF
OF
PORT INDUSTRIES, INC.
We, W. L. HOLMGREN and W. REED HOLMGREN, do hereby certify that we are,
respectively, the President and Secretary of Port Indus- tries, Inc., a
Minnesota corporation, and that paragraph 5 of the Articles of Incorporation of
the corporation was duly amended in its entirety by the writing of the sole
shareholder of the corporation in lieu of a special meeting of the sole
shareholder on June 19, 1969, in accordance with the statutes of the State of
Minnesota and the Articles of Incorporation of the corporation, such paragraph 5
to read as follows:
"5. The total authorized number of shares of this corporation is 30,000,
all of which shall be Common Shares of the par value of $10.00 each." IN
WITNESS WHEREOF, We have hereunto set our hands as President and Secretary,
respectively, of Port Industries, Inc., and affixed the seal-of said
corporation this 28th day of October, 1969.
/s/
W. L. Holmgren President
/s/
W. Reed Holmgren Secretary
STATE OF MINNESOTA )
) SS
COUNTY OF HENNEPIN )
On this 28th day of October, 1969, before me, a Notary Public within and
for said County, personally appeared W.L. HOLMGREN and W. REED HOLMGREN, to me
personally know, who, being each by me duly sworn, did say that they, are,
respectively, the President and Secretary of PORT INDUSTRIES, INC., the
corporation named in the foregoing instrument, and that the seal affixed to said
instrument is the corporate seal of said corporation, and that said instrument
was signed and sealed in behalf of said corporation by authority of its sole
shareholder, and that said W. L. HOLMGREN and W. REED HOLMGREN acknowledged said
instrument to be the free act and deed of said corporation.
-48-
Exhibit 3(i)(c)
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
PORT INDUSTRIES, INC.
We, Robert F. Holmgren and R. 0. Knutson, do hereby certify that we are,
respectively, the President and Secretary of Port Industries, Inc., a Minnesota
corporation, and that paragraph 5 of the Articles of Incorporation of the
corporation was duly amended in its entirety by a resolution duly adopted by the
shareholders at the annual meeting of shareholders held on February 29, 1972, in
accordance with the statutes of the State of Minnesota and the Articles of
Incorporation of the corporation, such paragraph 5 to read as follows:
5. The total authorized number of shares of this corporation is 1,000,000,
all of which shall be Common Shares of the par value of 10/ each."
IN WITNESS WHEREOF', we have hereunto set our hands as
President and-Secretary, respectively, of Port Industries, Inc., and affixed
the seal of said corporation this 6th day 1972.
----------------------------
Robert F. Holmgren, President
-----------------------------
R.U. Knutson, Secretary
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
On this 6th day of March, 1972, before me, a Notary ,Public within and for
said County, personally appeared Robert F. Holmgren and R. 0. Knutson, to me
personally known, who, being each by me duly sworn, did say that they are,
respectively, the President and Secretary of PORT INDUSTRIES, INC., the
corporation named in the foregoing instrument, and that the seal affixed to said
instrument is the corporate seal of said corporation, and that said instrument
was signed and sealed in behalf of said corporation by authority of its
shareholders,and that said Robert F. Holmgren and R. 0. Knutson acknowledged
said instrument to be the free act and deed of said corporation.
--------------------------
Notary Public
-49-
Exhbit 3(i)(d)
MINNESOTA SECRETARY OF STATE
AMENDMENT OF ARTICLES OF INCORPORATION
BEFORE COMPLETING THIS FORM, PLEASE READ INSTRUCTIONS LISTED BELOW
CORPORATE NAME: (List the name of the company prior to any desired name change)
DIGITAL REPORTING, INC.
This amendment is effective on the day it is filed with the Secretary of State,
unless you indicate another date, no later than 30 days after filing with the
Secretary of State.
The following amendment(s) of articles regulating the above corporation were
adopted: (Insert full text of newly amended article(s) indicating which
article(s) is (are) being amended or added.) If the ful text of the amendment
will not fit in the space provided, attach additional numbered pages. (Total
number of pages including this form ___ .)
ARTICLE 1
The name of this corporation shall be CYBERGUIDES INTERNATIONAL, INC.
ARTICLE. 5
The total authorized number of shares of this corporation is 30,000,000, all of
which shall be common Shares of the par value of $.001 each.
This amendment has been approved pursuant to Minnesota Statutes chapter 302A or
317A. I certify that I am authorized to execute this amendment and I further
certify that I understand that by signing this amendment I am subject to the
penalties of perjury as set forth in section 609.48 as if I had signed this
amendment under oath.
___________/s/_____________________________________
(Signature of Authorized Person) Peter Lee, President
INSTRUCTIONS FOR OFFICE USE
ONLY
1. Type or print with black ink.
2. A filing fee of: $35.00 made payable to the
Secretary of State.
3. Return completed form to:
Secretary of State STATE OF MINNESOTA
180 State Office Building DEPARTMENT OF STATE
100 Constitution Ave.
St. Paul, MN 55135-1299 SEP 30 1997
Secretary of State
-50-
Exhibit 3(i)(e)
MINNESOTA SECRETARY OF STATE
AMENDMENT OF ARTICLES OF INCORPORATION
BEFORE COMPLETING THIS FORM, PLEASE READ INSTRUCTIONS LISTED BELOW.
CORPORATE NAME: (List the name of the company prior to any desired name
change)
CYBERGUIDES INTERNATIONAL, INC. This amendment is effective on the day it
is filed with the Secretary of State, unless you indicate another day, no
later than 30 days after filing with the Secretary of State.
The following amendment(s) of articles regulating the above corporation
were adopted: (Insert full text of newly amended article(s) Indicating
which article(s) Is (are) being amended or added.) If the full text of the
amendment will not fit In the space provided, attach additional numbered
pages. (Total number of pages including this form _______ .)
ARTICLE - 1
The name of this corporation shall be AJA Merchant Banking Corporation
This amendment has been approved pursuant to Minnesota Statutes chapter
302A or 327A. I certify that I am authorized to execute this amendment and
I further certify that I understand that by signing this amendment that I
am subject to the penalties of perjury as set forth in section 609 4B as if
I had signed this amendment under oath.
/s/ Manuel Lopez
Manuel Lopez, President
(Signature of authorized person)
- -------------------------------------------------------------------------------
INSTRUCTIONS: FOR OFFICIAL USE ONLY
1. Type or print with black ink.
2. A filing fee of: $35.00, made payable to the STATE OF MINNESOTA
Secretary of State. DEPARTMENT OF STATE
3. Return completed forms to FILED
Secretary of State FEB 10 1998
180 state Office Building
100 Constitution Ave. _____/s/__________
St. Paul, MN 55155-1299 Secretary of State
(612) 286-2603
-51-
Exhibit 3(i)(f)
MINNESOTA SECRETARY 0F STATE
AMENDMENT OF ARTICLES OF INCORPORATION
BEFORE COMPLETING THIS FORM, PLEASE READ INSTRUCTIONS LISTED BELOW.
CORPORATION NAME:(List the name of the company prior to any desired name change)
AJA MERCHANT BANKING CORPORATION
This amendment is effective on the day it is filed with the Secretary of State,
unless you indicate another date, no later than 30 days after filing with the
Secretary of State.
December 4, 1998
The following amendment(s) of articles regulating the above corporation were
adopted (Insert full text of newly amended article(s) indicating which
article(s) is (are) being amended or added.) If the full text of the amendment
will not fit in the space provided attach additional numbered pages. (Total
number of pages including this form ____.)
ARTICLE 1
The name of this corporation shall be IMAGE PHOTO SYSTEMS, INC
ARTICLE 5
The total authorized number of Shares Of this Corporation is 100,000,000, all of
which shall be Common Shares of the par value $.001 each.
This amendment has been approved pursuant to Minnesota Statutes chapter 302A or
317A. I certify that I am authorized to execute this amendment and I further
certify that I understand that by signing this amendment, I am subject to the
penalties of perjury as set forth in section 609.48 as if I had signed this
amendment under oath.
--------------------------------------
William Scott Marshall, President
INSTRUCTIONS OFFICE USE ONLY
1 - Type or print with black Ink.
2 - A Filing Fee of $35.00, made payable to the
Secretary of State.
3 - Return completed forms to: STATE OF MINNESOTA
DEPARTMENT
Secretary of State
160 State Office Building
100 Constitution Ave.
St. Paul, MN 55155-1299
(612)296-2603
-52-
Exhibit 3(i)(g)
MINNESOTA SECRETARY OF STATE
AMENDMENT OF ARTICLES OF INCORPORATION
READ INSTRUCTIONS LISTED BELOW BEFORE COMPLETING THIS FORM
1. Type or print in black ink.
2. There is a $35.00 fee payable to the Secretary of State for filing the
"Amendment of Articles of Incorporation". 3. Return completed Amendment Form and
Fee to the address listed on the bottom of the form.
CORPORATE NAME: (List the name of the company prior to any desired name change)
Image Photo Systems, Inc.
This amendment is effective on the day it is filed with the Secretary of State,
unless you indicate another date, no later than 30 days after filing with the
Secretary of State.
The following amendment(s) to articles regulating the above corporation were
adopted: (Insert full text of newly amended article(s) indicating which
article(s) is (are) being amended or added.) If the full text of the amendment
will not fit in the space provided, attach additional numbered pages. (Total
number including this form ___ )
ARTICLE ___1_____
The name of this corporation shall be E-bidd.com, Inc.
This amendment has been approved pursuant to Minnesota Statutes chapter 302A or
317A. I certify that I am authorized to execute this amendment and I further
certify that I understand that by signing this amendment, I am subject to the
penalties of perjury as set forth in section 609.48 and I had signed this
amendment under
______________________________
(Signature of Authorized Person) Attorney
Name and telephone number of contact person: ___________________________
(Please print legibly)
All of the information on this form is public and required in order to process
this filing. Failure to provide the requested information will prevent the
Office from approving or further processing this filing.
If you have any questions please contact the Secretary of State's office at
____________________________________
RETURN TO: Secretary of State STATE OF MINNESOTA
Secretary of State DEPARTMENT OF STATE
160 State Office Building FILED
100 Constitution Ave. SEP 16 1998
St. Paul, MN 55155-1299 /S/
-------------------
(612)296-2603 Secretary of State
-53-
Exhibit 3(i)(h)
ARTICLES OF INCORPORATION
OF
IMAGE-PHOTO SYSTEMS, INC.
The undersigned, being of legal age, in order to form a corporation
under and pursuant to the laws of the State of Nevada, do hereby set forth
as follows:
FIRST: The name of the corporation is IMAGE-PHOTO SYSTEMS, INC.
SECOND: The address of the resident agent of this corporation in this state
is c/o United Corporate Services, Inc., 202 South Minnesota Street, in the City
of Carson City, County of Carson City, State of Nevada 89703 and the name of the
resident agent at said address is United Corporate Services, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the corporation laws of
the State of Nevada.
FOURTH: The corporation shall be authorized to issue the following shares:
Class Number of Shares Par Value
COMMON 75,000,000 $.001
FIFTH: The number of directors constituting the initial Board of Directors
is two (2); and the name and address of the initial Board of Directors, to serve
until the first annual meeting of shareholders, or until the successors are
elected and qualify, are as follows:
NAME ADDRESS
Michael A. Barr 10 Bank Street
White Plains, New York 10606
Robert F. Gilhooley 10 Bank Street
White Plains, New York 10606
-54-
<PAGE>
SIXTH:The names and addresses of the incorporators are as follows:
NAME ADDRESS
Michael A. Barr 10 Bank Street
White Plains, New York 10606
Robert F. Gilhooley 10 Bank Street
White Plains, New York 10606
SEVENTH: The period of duration of the corporation shall be perpetual.
EIGHTH: The corporation may, to the fullest extent permitted by Section
78.751 of the Nevada General Corporation Law, indemnify any and all directors
and officers whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other matter referred to in
or covered by such section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which the persons so indemnified
may be entitled under any By-Law, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity by holding office, and shall continue as to
a person who has ceased to be a director or officer and shall inure to the
benefits of the heirs, executors and administrators of such a person.
-55-
<PAGE>
IN WITNESS WHEREOF, the undersigned hereby execute this document and affirm
that the facts set forth herein are true under the penalties of perjury this
first day of June, 1999.
MICHAEL A. BARR
Michael A. Barr, Incorporator
ROBERT F. GILHOOLEY
Robert F. Gilhooley, Incorporator
STATE OF NEW YORK )
)ss:
COUNTY OF WESTCHESTER)
Be it remembered that on this first day of June, 1999, personally
came before me, a Notary Public in and for the County and State aforesaid,
Michael A. Barr, Robert F. Gilhooley, parties to the foregoing document, known
to me personally to be such, and who, being by me f irst duly sworn,
acknowledged the said document to be their act and deed and that the facts
therein stated are true.
Given under my hand and seal of office the day and year aforesaid.
MARIA R. FISCHETTI
Maria R. Fischetti, Notary Public
-56-
<PAGE>
ACCEPTANCE AS RESIDENT AGENT
OF
IMAGE-PHOTO SYSTEMS, INC.
Having been named to accept service of process for the above stated
corporation, at the place designated in this certificate, I hereby agree to act
in this capacity, and I further agree to comply with the provisions of all
status relative to the proper and complete performance of my duties.
Dated: June 1, 1999
UNITED CORPORATE SERVICES, INC.
MICHAEL A. BARR
Michael A. Barr - President
Resident Agent's Office Address:
202 South Minnesota Street
Carson City, Nevada 89703
-57-
EXHIBIT 3(ii)(a)
PORT INDUSTRIES, INC.
BYLAWS
ARTICLE I
Offices, Corporate Seal
Section 1.01. Registered Office. The registered office of the
corporation in Minnesota shall be that set forth in the Articles of
Incorporation or in the most recent amendment of the Articles of Incorporation
or resolution of the directors filed with the Secretary of State of Minnesota
changing the registered office.
Section 1.02. Other Offices. The corporation may have such other
offices, within or without the State of Minnesota, as the directors shall from
time to time determine.
Section 1.03. Corporate Seal. The corporate seal shall be circular in
form and shall have inscribed thereon the name of the corporation and the word
"Minnesota" and the words "Corporate Seal".
ARTICLE II.
Meetings of Shareholders
Section 2.01. Place and Time of Meetings. Meetings of the shareholders
may be held at any place, within or without the State of Minnesota, designated
by the directors, and in the absence of such designation sha3l be held at the
registered office of the corporation in the State of Minnesota. The directors
shall designate the time of day for each meeting and in the-absence of such
designation every meeting of shareholders shall be held at 10 o'clock A.M.
Section 2.02. Annual Meetings. (a) The first annual meeting of the
shareholders shall- be held on a day designated by the directors which shall be
not more than 16 months after the date of incorporation. Each subsequent annual
meeting, subject to the power of the shareholders to change the date, shall be
held on the same day, or if that day shall fall upon a legal holiday, on the
next succeeding business day.
-58-
<PAGE>
(b) At the annual meeting,, the shareholders, voting as provided in the
Articles of Incorporation, shall designate the number of directors to constitute
the Board of Directors, shau elect directors and transact such other business as
m3,y properly come before them.
Section 2.03. Special Meetings. Special meetings of the shareholders
may be held at. any time and for any purpose and may be called by the Chairman
of the Board, the President, any two directors, or by one or more shareholders
holding ten per cent (10%) or more of the shares entitled to vote on the matters
to be presented to the meeting.
Section 2.04. Quorum; Adjourned Meeting,. The holders of a majority of
the shares outstanding and entitled to vote shall constitute a quorum for the
transaction of business at any annual or special meeting. In case a quorum
shall. not be present at a meeting, those present shall adjourn to such day as
they shall by majority vote agree upon, and a notice of such adjournment shall
be mailed to each shareholder entitled to vote at least five (5) days before
such adjourned meeting. If a quorum is present, a meeting may be adjourned from
time to time without notice other than announcement at the meeting. At adjourned
meetings at which a quorum is present, any business day be transacted which
might have been transacted at the meeting as originally noticed. If a quorum is
present, the shareholders may continue to transact business until adjournment
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 2.05. Voting. At each meeting of the shareholders, every
shareholder having the right to vote shall be entitled to vote either in person
or by proxy. Each shareholder, unless the Articles of Incorporation provide
otherwise, shall have one vote for each share having voting power registered in
his name on the books Of the corporation. Upon the demand of any shareholder,
the vote upon any question before the meeting shall be by ballot. All questions
shall be decided by a majority vote of the number of s
-59-
<PAGE>
shares entitled to vote and represented at the meeting at the time of the vote
except where otherwise required by statute, the Articles of Incorporation or
these Bylaws.
Section 2.06. Closing of Books. The Board of Directors may fix a time
not exceeding sixty (60) days preceding the date of any meeting of shareholders,
as a record date for the determination of the shareholders entitled to notice
of, and to vote at, such meeting, notwithstanding any transfer of shares on the
books of the corporation after any record date so fixed. The Board of Directors
may close the books of the corporation against the transfer of shares during the
whole or any part of such period If the Board of Directors fails to fix a record
date for determination of the shareholders entitled to notice of, and to vote
at, any meeting of shareholders., the record date shall be the twentieth (20th)
day preceding the date of such meeting.
Section 2.07. Notice of Meetings. There shall be mailed to each
shareholder, shown by the books of the corporation to be a holder of record of
voting shares, at his address as shown by the books of the corporation, a notice
setting out the time and place of each annual meeting and each special meeting,
which notice shal3. be mailed at least five (5) days prior thereto; except that
notice of a meeting at which an agreement of merger or consolidation is to be
considered shall be mailed to all shareholders of record, whether entitled to
vote or not, at least two (2) weeks prior thereto; and except that notice of a
meeting at which a proposal to dispose of all, or substantially all, of the
property and assets of the corporation is to be considered shall be mailed to
all shareholders of record, whether entitled to vote or not, at least ten (10)
days prior thereto; and except that notice of a meeting at which a proposal to
dissolve the corporation or to amend the Articles of Incorporation is to be
considered shall be mailed to all shareholders of record, whether entitled to
vote or not, at least ten (10) days prior thereto. Every notice of any special
meeting
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shall state the purpose or purposes for which the meeting has been called
pursuant to Section 2.03, and the business transacted at all special meetings
shall be confined to the purpose stated in the call. Section 2.08. Waiver of
Notice. Notice of any annual or special meeting may be waived either before, at
or after such meeting in writing signed by each shareholder or representative
thereof entitled to vote the shares so represented.
Section 2.09. Written Action. Any action which might be taken at a
meeting of the shareholders may be taken without a meeting if done in writing
and signed by all of the shareholders.
ARTICLE III.
Directors
Section 3.01. General Powers. The property, affairs and business of the
corporation shall be managed by the Board of Directors.
Section 3.02. Number, Qualifications and Term of Office. Until the
first meeting of shareholders, the number of directors shall be the number named
in the Articles of Incorporation. Thereafter, the number of directors shall be
established by resolution of the shareholders but shall not be less than the
lesser of (i) the number of shareholders of record and beneficially or (ii)
three. In the absence of such resolution, the number of directors shall be the
number last fixed by the shareholders or the Articles of Incorporation.
Directors need not be shareholders. Each of the directors shall hold office
until the annual meeting of shareholders next held after his election and until
his successor shall have been elected and shall qualify, or until he shall
resign, or shall have been removed as hereinafter provided.
Section 3.03. Annual Meeting. As soon as practicable after each annual
election of directors, the Board of Directors shall- meet at the registered
office of the corporation, or at such other place within or without the State of
Minnesota as may be designated by the Board of Directors, for the purpose of
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electing the officers of the corporation and for the transaction of such other
business as shall come before the meeting.
Section 3.04. Regular Meetings. Regular meetings of the Board of
Directors shall. be held from time to time at such time and place within or
without the State of Minnesota as may be fixed by resolution adopted by a
majority of the whole Board of Directors.
Section 3.05. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the President, or by any
two of the directors and shall be held from time to time at such time and place
as may be designated in the notice of such meeting.
Section 3.06. Notice of Meetings. No notice need be given of any annual
or regular meeting of the Board of Directors. Notice of each special meeting of
the Board of Directors shall be given by the Secretary who shall give at least
twenty-four (24) hours notice thereof to each director by mail, telephone,
telegram or in person.
Section 3.07. Waiver of Notice. Notice Of any meeting of the Board of
Directors may be waived either before, at or after such meeting in writing,
signed by each director. A director, by his attendance and participation in the
action taken at any meeting of the Board of Directors, shall be deemed to have
waived notice of such meeting.
Section 3.08. Quorum. A majority of the whole Board of Directors Shall
Constitute a quorum for the transaction of business, except that when a vacancy
or vacancies exist, a majority of the remaining directors (provided such
majority consists of not less than the lesser of (i) the number of directors
required by Section 3.02 or (ii) two directors) shall constitute a quorum.
Section 3.09. Vacancies. If there be a vacancy among the directors of
this corporation by reason of death, resignation, increase in the number of
directors required by Section 3.02 or otherwise, such vacancy shall be filled
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for the unexpired term by a majority of the remaining directors of the Board,
and each person so elected shall be a director until his successor is elected by
the shareholders, who may make such election at their next annual meeting or at
any meeting duly called for that purpose.
Section 3.10. Removal. The entire Board of Directors or any individual
director may be removed from office, with or without cause, by a vote of the
shareholders holding a majority of the shares entitled to vote at an election of
directors, except as otherwise provided by law where the shareholders have the
right to cumulate their voter,. In the event that the entire Board or any one or
more directors be so removed, new directors shall be elected at the same
meeting.
Section 3.11 Executive Committee. The Board of Directors by unanimous
affirmative action of the entire Board, may establish an executive committee
consisting of two (2) or more directors. Such committee may meet at stated times
or on notice of all given by anv of their own number. During the intervals
between meetings of the Board of Directors, such committee shall advise and aid
the officers of the corporation in all matters concerning the business and
affairs of the corporation and generally perform such duties and exercise such
powers as may be directed or delegated by the Board of Directors from time to
time. The Board of Directors may., by unanimous affirmative action of the entire
Board, delegate to such committee authority to exercise all the powers of the
Board of Directors, except the power to amend the Bylaws, while the Board of
Directors is not in session. Vacancies in the membership of the committee shall
be filled by the Board of Directors at a regular meeting or at a specia1 meeting
called for that purpose.
Section 3.12. Other Committees. The Board of Directors may establish
other committees from time to time making such regulations as it deems advisable
with respect to the membership, authority and procedures of such committees.
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Section 3.13. Written Action. Any action which might be taken at a
meeting of the Board of Directors, or any duly constituted committee thereof,
may be taken without a meeting if done in writing and signed by all of the
directors or committee members.
Section 3.14. Compensation. Directors who are not salaried officers of
this corporation shall receive such fixed sum per meeting attended or such fixed
annual sum as shall be determined from time to time by resolution of the Board
of Directors. AU directors shall receive their expenses, if any, of attendance
at meetings of the Board of Directors, or any committee thereof. Nothing herein
contained shall be construed to preclude any director from serving this
corporation in any other capacity and receiving proper compensation therefor.
ARTICLE IV.
Officers
Section 4.01. Number. The officers of the corporation shall consist of
a Chairman of the Board (if one is elected by the Board) the President, one or
more Vice Presidents (if desired by the Board), a Secretary, a Treasurer and
such other officers and agents as may from time to time be elected by the Board
of Directors. Any two offices, except those of President and Vice President, may
be held by one person.
Section 4.02. Election, Term of Office and Qualifications. At each
annual meeting of the Board of Directors, the Board shall elect, from within or
without their number, the President, the Secretary, the Treasurer and such other
officers as may be deemed advisable. Such officers shall hold office until the
next annual meeting of the directors or until their successors are elected and
qualify. The President and all other officers who may be directors shall
continue to hold office until the election and qualification of their
successors, notwithstanding an earlier termination of their directorship.
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Section 4.03. Removal and Vacancies. Any officer may be removed from
his office by a majority of the whole Board of Directors, with or without cause.
Such removal, however, shall be without prejudice to the contract rights of the
person so removed. If there be a vacancy among the officers of the corporation
by reason of death, resignation or otherwise, such vacancy shall be filled for
the unexpired term by the Board of Directors.
Section 4.04. Chairman of the Board. The Chairman of the Board, if one
is elected, shall preside at all meetings of the shareholders and directors and
shall have such other duties as may be prescribed from time to time by the Board
of Directors.
Section 4.05. President. The President shall have general active
management of the business of the corporation. In the absence of the Chairman of
the Board, he shall preside at all meetings of the shareholders and directors.
He shall be the chief executive officer of the corporation and shall see that
all orders and resolutions of the Board of Directors are carried into effect. He
shall be ex officio a member of all standing committees. He may execute and
deliver in the name of the corporation any deeds, mortgages, bonds, contracts or
other instruments pertaining to the business of the corporation and, in general,
shall perform all duties usually incident to the office of President. He shall
have such other duties as may from time to time be prescribed by the Board of
Directors.
Section 4.06. Vice President. Each Vice President shall have such
powers and shall perform such duties as may be specified in the bylaws or
prescribed by the Board of Directors or by the President. In the event of
absence or disability of the President, Vice Presidents shall succeed to his
power and duties in the ordex- designated by the Board of Directors.
Section 4.07. Secretary. The Secretary shall be secretary of, and shall
attend all meetings. of the shareholders and Board of Directors and shall record
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all proceedings of such meetings in the minutebook of the corporation. He shall
give proper notice of meetings of shareholders and directors. He shall keep the
seal of the corporation and shall affix the same to any instrument requiring it
and may, when necessary, attest the seal by his signature. He shall perform such
other duties as may from time to time be prescribed by the Board of Directors or
by the President.
Section 4.08. Treasurer. The Treasurer shall keep accurate accounts of
all moneys of the corporation received or disbursed. He shall deposit all
moneys, drafts and checks in the name of, and to the credit of, the corporation
in such banks and depositories as a majority of the whole Board of Directors
shall from time to time designate. He shall have power to endorse for deposit aU
notes, checks and drafts received by the corporation. He shall disburse the
funds of the corporate on as ordered by the Board of Directors, making proper
vouchers therefor. He shall render to the President and the directors, whenever
required, an account of all his transactions as Treasurer and of the financial
condition of the corporation and shall perform such other duties as may from
time to time be prescribed by the Board of Directors or by the President.
Section 4.09. Compensation. The officers of this corporation shall receive such
compensation for their services as may be determined from time to time by
resolution of the Board of Directors
ARTICLE V.
Shares and Their Transfer
Section 5.01. Certificates for Shares. Every owner of shares of the
corporation shall be entitled to a certificate, to be in such form as shall be
prescribed by the Board of Directors, certifying the number of shares of the
corporation owned by him. The certificates for such shares shall be numbered in
the order in which they shall be issued and shall be signed in the nem of the
corporation by the President or a Vice President and by the Secretary or an
Assistant Secretary or by such officers as the Board of
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Directors may designate. Such signatures may be by facsimile if authorized by
the Board of Directors. Every certificate surrender to the corporation for
exchange or transfer i3haU be canceled, and no new certificate or certificates
shal1 be issued in exchange for any existing certificate until such existing
certificate shall have been so canceled, except in cases provided for in section
5.04.
Section 5.02. Issuance of Shares. The Board of Directors is authorized
to cause to be issued shares of the corporation up to the full amount authorized
by the Articles of Incorporation in such amounts as may be determined by the
Board of Directors and as may be permitted by law. No shares shall be allotted
except in consideration of cash or other property, tangible or intangible,
received or to be received by the corporation of services rendered or to be
rendered to the corporation, or of an amount transferred from surplus to stated
capital upon a share dividend. At the time of such allotment of shares, the
Board of Directors making such allotments shall state, by resolution, their
determination of the fair value to the corporation in monetary terms of any
consideration other than cash for which shares are allotted. The amount of
consideration to be received in cash, or otherwise, -shall not be less than the
par value of the shares so allotted.
Section 5.03. Transfer of Shares. Transfer of shares on the books of
the corporation may be authorized only by the shareholder named in the
certificate, or the shareholder's legal representative, or the shareholder's
duly authorized attorney-in-fact, and upon surrender of the certificate or the
certificates for such shares. The corporation may treat as the absolute owner of
shares of the corporation the person or persons in whose name shares are
registered on the books of the corporation.
Section 5.04. Loss of Certificates. Any shareholder claiming a
certificate for shares to be lost or destroyed shall make an affidavit of that
fact in such form as the Board of Directors shall require and shall, if the
Board of Directors so requires, give the corporation a bond of indemnity in
form, in an
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amount and with one or more sureties satisfactory to the Board of Directors to
indemnify the corporation against any claim which may be made against it on
account of the reissue of such certificate, whereupon a new certificate may be
issued in the same tenor and for the same number of shares as the one alleged to
have been destroyed or lost.
ARTICLE VI.
Dividends, Surplus, Etc.
Section 6.01. Dividends. Subject to the provisions of the Articles of
Incorporation, of these Bylaws and of law, the Board of Directors may declare
dividends from paid-in surplus, earned surplus or from net earnings for the
current or preceding fiscal year of the corporation whenever,, and in such
amounts as, in its opinion, the condition of the affairs of the corporation
shall render it advisable.
Section 6.02. Use of Surplus, Reserves. Subject to the provisions of
the Articles of Incorporation and of these Bylaws, the Board of Directors, in
its discretion, may use and apply any of the net assets or net profits of the
corporation applicable for such purpose in purchasing or acquiring any of the
shares of the corporation in accordance with law, or any of its bonds,
debentures, notes, scrip or other securities or evidences of indebtedness, or
from time to time may set aside from its net assets or net profits such sum or
sums as it, in its absolute discretion, may think proper as a reserve fund for
any purpose it may think proper.
Section 6.03. Unrealized Appreciation. The Board of Directors, in
computing the fair value of the assets of the corporation to determine whether
the corporation may pay a dividend or purchase its shares, shall not include
unrealized appreciation of assets, except that readily marketable securities of
other issuers may be valued at not more than market value.
Section 6.04. Record Date. Subject to any provisions of the Articles of
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Incorporation, the Boardof Directors may fix a date not exceeding 40 days
preceding - the date fixed for the payment of any dividend as the record date
for the determination of the shareholders entitled to receive payment of the
dividend, and in such case only shareholders of record on the date so fixed
shall be entitled to receive payment of such dividend notwithstanding any
transfer of shares on the books of the corporation after the record date. The
Board of Directors may close the books of the corporation against the transfer
of shares during the whole or any part of such period.
ARTICLE VII.
Books and Records, Audit, Fiscal Year
Section 7.01. Books and Records. The Board of Directors of the corpor-
ation shall cause to be kept:
(1)a share register, giving the names and addresses of the shareholders,
the number and classes held by each, and the dates on which the
certificates therefor were issued;
(2)records of all proceedings of shareholders and directors; and
(3)such other records and books of account as shall be necessary and
appropriate to the conduct of the corporate business.
Section 7.02. Documents Kept at Registered Office. The Boar
of Directors shall cause to be kept at the registered office of the
corporation originals or copies of: (1)records of all proceedings of
shareholders and directors; (2)Bylaws of the corporation and all
amendments thereto; and (3)reports made to any or all of the shareholders
within the next preceding three (3) years.
Section 7.03. Audit. The Board of Directors shall cause the
records and books of account of the corporation to be audited at least once in
each fiscal year and at such other times as it may deem necessary or
appropriate.
Section 7.04. Fiscal Year. The fiscal year of the corporation shall be
determined by the Board of Directors.
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ARTICLE VIII.
Inspection of Books
Section 8.01. Examination by Shareholders. Every shareholder of the
corporation and every holder of a voting trust certificate shall have a right to
examine, in person or by agent or attorney, at any reasonable time or times, for
any proper purpose, and at the place or places where usually kept, the share
register, books of account and records of the proceedings of the shareholders
and directors and to make extracts therefrom.
Section 8.02. Information to Shareholders. Upon request by a
shareholder of the corporation, the Board of Directors shall furnish to him a
statement of profit and loss ,for the last fiscal year and a balance sheet
containing a summary of the assets and liabilities as of the close of such
fiscal year.
ARTICLE IX.
Loans to Officers, Directors, Shareholders
Section 9.01. The corporation shall not lend any of its assets to any
officer or director of the corporation, nor shall it lend any of its assets to
shareholders upon the security of its shares. If any such loan be made, the
officers and directors who make such loan, or assent thereto, shall be jointly
and severally liable for repayment or return thereof. The corporation shall not
take as security for any debt a lien upon its shares unless such lien be taken
to secure a debt previously contracted.
ARTICLE X.
Indemnification of Directors and Officers
Section 10.01. Each present or future director or officer, whether or
not then in office, and the executors., administrators or other legal
representatives of any such director or officer, shall be indemnified by the
corporation against all reasonable costs and expenses (including the cost of
reasonable
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settlements but exclusive of any amount paid to the corporation in settlement)
and counsel fees paid or incurred in connection with, or arising out of, any
action, suit or proceeding to which any such director or officer or his
executors., administrators or other legal representatives may hereafter be made
a party by reason of his being or having been a director or officer of the
corporation or of a subsidiary of the corporation; provided (1) the action, suit
or proceeding shall be prosecuted to final determination, and it shall not be
finally adjudged that he had been derelict in the performance of his duties as
such director or officer, or (2) the action, suit or proceeding shall be settled
or otherwise terminated as against such director or officer or his executors,
administrators or other legal representatives without a final determination on
the merits, and it shall be determined that such director or officer had not in
any substantial way been derelict in the performance of his duties as charged in
such action, suit or proceeding, such determination to be made by a majority of
the members of the Board of Directors who were not parties to such action, suit
or proceeding, although less than a quorum, or by any one or more disinterested
persons to whom the question may be referred by the Board of Directors. For the
purposes of the preceding sentence, (a) It action, suit or proceeding" shall
include every action, suit or proceeding, civil, criminal or other; (b) the
right of indemnification conferred thereby shall extend to any threatened
action, suit or proceeding, and the failure to institute it shall be deemed its
final determination; (c) the termination of an action, suit or proceeding
following a plea of nolo contenders or other like plea shall not constitute a
final determination on the merits; (d) a judgment of conviction in any criminal
action, suit or proceeding shall not constitute a determination that the person
so convicted has been derelict in the performance of his duties if it is
determined by a majority of the members of the Board of Directors who were not a
party thereto, although less than a quorum, or by one of more disinterested
persons to whom the question may be referred by the Board of Directors that the
persons so convicted acted in good faith,
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for a purpose which he reasonably believed to be in the best interest of the
corporation, and that he had no reasonable cause to believe that his conduct was
unlawful; and (e) advances may be made by the corporation against costs,
expenses and fees as and upon the terms determined by the Board of Directors.
The corporation shall also indemnify an employee who is not an officer to the
same extent that it does an officer. The foregoing right of indemnification
shall not be exclusive of any other rights to which any Director or officer or
employee may be entitled as a matter of law or which may be lawfully granted to
him.
ARTICLE XI.
Amendments
Section 11.01. These Bylaws may be amended or altered by a vote of the
majority of the whole Board of Directors at any meeting provided that notice of
such ]proposed amendment shrall have been given in the notice given to the
directors of such meeting. Such authority in the Board of Directors-is subject
to the power of the shareholders to change or repeal such Bylaws by a majority
vote of the shareholders present or represented at any annual or special meeting
of shareholders called for such purpose, and the Board of directors shall not
make or alter any Bylaws fixing their--number, qualifications or terms of
office.
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BY-LAWS
OF
IMAGE-PHOTO SYSTEMS, INC.
ARTICLE I
OFFICES
SECTION 1.REGISTERED OFFICE.-The registered office shall be established
and maintained at c/o United Corporate Services, Inc., 202 South Minnesota
Street, Carson City, Nevada 89703 and United Corporate Services, Inc. shall be
the registered agent of this corporation in charge thereof.
SECTION 2.OTHER OFFICES.-The corporation may have other offices, either
within or without the State of Nevada, at such place or places as the Board of
Directors may from time to time appoint or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. - Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the notice
of the meeting, shall be held at such place, either within or without the State
of Nevada, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of meeting.
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
they may transact such other corporate business as shall be stated in the notice
of the meeting.
SECTION 2. OTHER MEETINGS. - Meetings of stockholders for any purpose
other than the election of directors may be held at such time and place, within
or without the State of Nevada, as shall be stated in the notice of the meeting.
SECTION 3. VOTING. - Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation and in accordance with the
provisions of these ByLaws shall be entitled to one vote, in person or by proxy,
for each share of stock entitled to vote held by such stockholder, but no proxy
shall be voted after three years from its date unless such proxy provides for a
longer period. Upon the demand of any stockholder, the vote for directors and
the vote upon any question before the meeting, shall be by ballot. All elections
for directors shall be decided by plurality vote; all other questions shall be
decided by majority vote except as otherwise provided by the Certificate of
Incorporation or the laws of the State of Nevada.
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.
A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the address of each, and the
number of shares held by each, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 4. QUORUM . - Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote the meeting.
SECTION 5. SPECIAL MEETINGS.- Special meetings of the stockholders for
any purpose or purposes may be called by the President or Secretary, or by
resolution of the directors.
SECTION 6. NOTICE OF MEETINGS. - Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat at his
address as it appears on the records of the corporation, not less than ten nor
more than sixty days before the date of the meeting. No business other than that
stated in the notice shall be transacted at any meeting without the unanimous
consent of all the stockholders entitled to vote thereat.
SECTION 7. ACTION WITHOUT MEETING. - Unless otherwise provided by the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking
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of the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM.-The number of directors shall be three (3).
The directors shall be elected at the annual meeting of the stockholders and
each director shall be elected to serve until his successor shall be elected and
shall qualify. A director need not be a stockholder.
SECTION 2. RESIGNATIONS. - Any director, member of a committee or other
officer may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES if the office of any director, member of a
committee or other officer becomes vacant, the remaining directors in office,
though less than a quorum by a majority vote, may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen.
SECTION 4. REMOVAL. - Any director or directors may be removed either
for or without cause at any time by the affirmative vote of the holders of a
majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of the stockholders called for the purpose and the vacancies
thus created may be filled, at the meeting held for the purpose of removal, by
the affirmative vote of a majority in interest of the stockholders entitled to
vote.
SECTION 5. INCREASE OF NUMBER. - The number of directors may be
increased by amendment of these By-Laws by the affirmative vote of a majority of
the directors, though less than a quorum, or, by the affirmative vote of a
majority in interest of the stockholders, at the annual meeting or at a special
meeting called for that purpose, and by like vote the additional directors may
be chosen at such meeting to hold office until the next annual election and
until their successors are elected and qualify.
SECTION 6. POWERS. - The Board of Directors shall exercise all of the
powers of the corporation except such as are by law, or by the Certificate of
Incorporation of the corporation or by these By-Laws conferred upon or reserved
to the stockholders.
SECTION 7. COMMITTEES. - The Board of Directors may, by resolution or
resolutions passed by a majority of the whole board, designate one or more
committees, each committee to consist of two or more of the directors of the
corporation. The board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of any member or
such committee or committees, the member or members thereof present at any such
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meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have
the power of authority in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
By-Laws of the corporation; and unless the resolution, these ByLaws, or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.
SECTION 8. MEETINGS. - The newly elected Board of Directors may hold
their first meeting for the purpose of organization and the transaction of
business, if a quorum be present, immediately after the annual meeting of the
stockholders; or the time and place of such meeting may be fixed by consent, in
writing, of all the directors.
Unless restricted by the incorporation document or elsewhere in these
By-laws, members of the Board of Directors or any committee designated by such
Board may participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at such meeting.
Regular meetings of the Board of Directors may be scheduled by a
resolution adopted by the Board. The Chairman of the Board or the President or
Secretary may call, and if requested by any two directors, must call a special
meeting of the Board and give five days' notice by mail, or two days, notice
personally or by telegraph or cable to each director. The Board of Directors may
hold an annual meeting, without notice, immediately after the annual meeting of
shareholders.
SECTION 9. QUORUM. - A majority of the directors shall constitute a
quorum for the transaction of business. If at any meeting of the board there
shall be less than a quorum present, a majority of those present may adjourn the
meeting from time to time until a quorum is obtained, and no further notice
thereof need be given other than by announcement at the meeting which shall he
so adjourned.
SECTION 10.COMPENSATION.- Directors shall not receive any stated salary
for their services as directors or as members of committees, but by resolution
of the board a fixed fee and expenses of attendance may be allowed for
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attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
SECTION 11. ANY ACTION WITHOUT MEETING. - Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting, if prior to such action a
written consent thereto is signed by all members of the board, or of such
committee as the case may be, and such written consent is filed with the minutes
proceedings of the board or committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS. - The officers of the corporation shall be a
President, a Treasurer, and a Secretary, all of whom shall be elected by the
Board of Directors and who shall hold office until their successors are elected
and qualified. In addition, the Board of Directors may elect a Chairman, one or
more Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as
they may deem proper. None of the officers of the corporation need be directors.
The officers shall be elected at the first meeting of the Board of Directors
after each annual meeting. More than two offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. - The Board of Directors may
appoint such other officers and agents as it may deem advisable, who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Directors.
SECTION 3.CHAIRMAN. - The chairman of the Board of Directors, if one be
elected, shall preside at all meetings of the Board of Directors and he shall
hanie and perform such other duties as from time to time may be assigned to him
by the Board of Directors.
SECTION 4. PRESIDENT. - The President shall be the chief executive
officer of the corporation and shall have the general powers and duties of
supervision and management usually vested in the office of President of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the corporation . Except
as the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages and other contracts in behalf of the
corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer or Assistant Secretary or an Assistant Treasurer.
SECTION 5. VICE-PRESIDENT. - Each Vice-President shall have such powers
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and shall perform such duties as shall be assigned to him by the directors.
SECTION 6. TREASURER.- The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, or the President, taking proper vouchers for
such disbursements. He shall render to the President and Board of Directors at
the regular meetings of the Board of Directors, or whenever they may request it,
an account of all his transactions as Treasurer and of the financial condition
of the corporation. If required by the Board of Directors, he shall give the
corporation a bond for the faithful discharge of his duties in such amount and
with such surety as the board shall prescribe.
SECTION 7. SECRETARY. - The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by the law or by these By-Laws, and in case of his absence or refusal
or neglect so to do, any such notice may be given by any person
thereunto.directed by the President, or by the directors, or stockholders, upon
whose requisition the meeting is called as provided in these By-Laws. He shall
record all the proceedings of the meetings of the corporation and of the
directors in a book, to be kept for that purpose, and shall perform such other
duties as may be assigned to him by the directors or the President. He shall
have the custody of the seal of the corporation and shall affix the same to all
instruments requiring it, when authorized by the directors or the President, and
attest the same.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. -
Assistant Treasurers and Assistant Secretaries, if any, shall be elected and
shall have such powers and shall perform such duties as shall be assigned to
them, respectively, by the directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK. - A certificate of stock, signed by
the Chairman or Vice-Chairman of the Board of Directors, if they be elected,
President or Vice- President, and the Treasurer or an Assistant Treasurer, or
Secretary or Assistant Secretary, shall be issued to each stockholder certifying
the number of shares owned by him in the corporation. when such certificates are
countersigned (1) by a transfer agent other than the corporation or its
employee, or, (2) by a registrar other than the corporation or its employee, the
signatures of such officers may be facsimiles.
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SECTION 2. LOST CERTIFICATES.- A new certificate of stock may be issued
in the place of any certificate theretofore issued by the corporation, alleged
to have been lost or destroyed, and the directors may, in their discretion,
require the owner of the lost or destroyed certificate, or his legal
representatives, to give the corporation a bond, in such sum as they may direct,
not exceeding double the value of the stock, to indemnify the corporation
against any claim that may be made against it on account of the alleged loss of
any such certificate, or the issuance of any such new certificate.
SECTION 3. TRANSFER OF SHARES. - The shares of stock of the corporation
shall be transferrable only upon its books by the holders thereof in person or
by their duly authorized attorneys or legal representatives, and upon such
transfer the old certificate shall be surrendered to the corporation by the
delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the directors may designate, by whom they
shall be cancelled, and new certificates shall thereupon be issued. A record
shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. - (a) In order that the
corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the board of directors. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the board
of directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record is adopted by the board of
directors.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for'the purpose of any other
lawful action, the board of directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted.
SECTION 5. DIVIDENDS. - Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
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stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.
SECTION 6. SEAL. - The corporate seal shall be circular in form and
shall contain the name of the corporation, the year of its creation and the
words "Corporate Seal, Nevada, 1999". Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise .
SECTION 7. FISCAL YEAR. - The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS. - All checks, drafts or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of the
corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE. - Whenever any notice is
required by these By-Laws to be given, personal notice is not meant unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage, prepaid,
addressed to the person entitled thereto at his address as it appears on the
records of the corporation, and such notice shall be deemed to have been given
on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by
Statute.
Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Certificate of
Incorporation of the corporation of these By-Laws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent thereto.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered or repealed and By-Laws may be made at any
annual meeting of the stockholders or at any special meeting thereof if notice
of the proposed alteration or repeal of By-Law or By-Laws to be made be
contained in the notice of such special meeting, by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat, or by
the affirmative vote of a majority of the Board of Directors, at any regular
meeting of the Board of Directors, or at any special meeting of the Board of
Directors, if notice of the proposed alteration or repeal of By-Law or By-Laws
to be made, be contained in the notice of such special meeting.
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ARTICLE VII
INDEMNIFICATION
No director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except with respect to (1) a breach of the director's duty of loyalty to the
corporation or its stockholders, (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3)
liability which may be specifically defined by law or (4) a transaction from
which the director derived an improper personal benefit, it being the intention
of the foregoing provision to eliminate the liability of the corporation's
directors to the corporation or its stockholders to the fullest extent permitted
by law. The corporation shall indemnify to the fullest extent permitted by law
each person that such law grants the corporation the power to indemnify.
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Exhibit 6(a)
AGREEMENT
THIS AGREEMENT MADE EFFECTIVE AND EXECUTED AS OF JULY 29,1999 (the "Effective
Date").
BETWEEN:
E-Bidd.com, INC.
Suite 980
1500 West Georgia Street
Vancouver, BC
Canada V6G 2Z6
("E-BIDD")
AND:
Laurier Limited.
Suite E, Regal House
Gibraltar
("LAURIER")
WHEREAS:
A. E-BIDD is in the business of online auctions;
B. LAURIER is a company who holds certain rights to certain software code that
they wish to sell to E- Bidd (the "Transaction");
C. E-BIDD and LAURIER agree that this Agreement will constitute a binding
agreement upon them in respect of the Transaction, such to be on the terms and
conditions contained herein;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants
and agreements herein contained, the parties hereto do covenant and agree (the
"Agreement") each with the other as follows:
I . Rei)resentations And Warranties
1.1 LAURIER represents and warrants to E-BIDD that LAURIER has good and
sufficient right and authority to enter into this Agreement and carry out its
obligations under this Agreement on the terms and conditions set forth herein,
and this Agreement is a binding agreement upon LAURIER enforceable against it in
accordance with its terms and conditions.
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1.2 E-BIDD represents and warrants to LAURIER that E-BIDD has good and
sufficient right and authority to enter into this Agreement and carry out its
obligations under this Agreement on the terms and conditions set forth herein,
and this Agreement is a binding agreement upon E-BIDD enforceable against it in
accordance with its terms and conditions.
2. Software Riehts Purchase
2.1 The parties agree that, subject to the terms and conditions of this
Agreement, LAURIER will sell the worlv,,ide exclusive rights to the software
described substantially in Appendix A and Appendix B ("the Software") to E-BIDD
for 10,000,000 144 restricted shares of E-BIDD ("the Purchase Price").
2.2 The worldwide rights to the software will be for a period of 20 years.
3. General
3.1 Time and each of the terms and conditions of this Agreement shall be of the
essence of this Agreement.
3.2 This Agreement constitutes the entire agreement between the parties hereto
in respect of the matters referred to herein.
3.3 The parties hereto shall execute and deliver all such further documents and
do all such acts as any party may, either before or after the execution of this
Agreement, reasonably require of the other in order that the full intent and
meaning of this Agreement is carried out.
3.4 No amendment or interpretation of this Agreement shall be binding upon the
parties hereto unless such amendment or interpretation is in written form
executed by all of the parties to this Agreement.
3.5 Any notice or other communication of any kind whatsoever to be given under
this Agreement shall be in writing and shall be delivered by hand, email or by
fax to the parties at:
E-Bidd.com, Inc.
Suite 980 -1500
West Georgia Street Vancouver, BC Canada V6G 2Z6
Attention:
Ray Mathews Fax: (604) 806 0223
Laurier Limited Suite E,
Regal House Gibraltar
Attention:
A. Barcio Fax: Oll 350 78800
or to such other addresses as may be given in writing by the parties hereto in
the manner provided for in this paragraph.
3.6 This Agreement may not be assigned by any party hereto without the prior
written consent of all of the parties hereto.
3.7 This Agreement shall be governed by the laws of Washington State applicable
therein, and the parties hereby attorn to thejurisdiction of the Courts of
Washington State.
3.8 This Agreement may be signed by fax and in counterpart.
IN WITNESS WHEREOF the parties have hereunto set their hands and seals effective
as of the Effective Date first above written.
SIGNED, SEALED AND DELIVERED BY E-BIDD.COM, INC. per:
Name of Signatory:
-Title of Signatory:
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DELIVERED BY LAURIER LMTED per:
SIGNED, SEALED AND
Name of Signatory:
- -Title of Signatory:
Appendix A
Technology
Auction Software
For Buyers
Easy registration, password lookup, and a members area that features auction
tracking, purchase history, email options, custom searches, and contact info
update.
For Sellers
Online auction and store managers linked together, featuring one step item
entry, image upload, auction relisting, auction saving, sales and bidding
history, editing, multiple item upload, and many more time saving tools. Each
seller has a home page on the auction site created in the online manager.
For Site Owners
You can run any auction site without ever leaving your browser. Complete
accounting, seller management, an online file manager, newsletters and much
more. Automated processes that run in the
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background take care of updating your site on a regular basis.
Site Manager
o The Site Manager is an online tool for the administrator of an auction
site. The Site Manager is very complete, and allows an entire auction
site to be managed from a browser if you wish.
o The Setup Checklist and Instruction will guide you through the areas
of the site which need to be configured by you.
o The Site Setup section controls all of the options that you will use
to configure your site. Set the colors used in making pages, your fees
and percentages, and add and remove features in this section.
o The Accounting section is the place to view sales reports, issue
credits, log seller payments, send bills, and more
o Send newsletters to your bidders and sellers.
o Resources to get helpful tools and information to maintain your
website. Q & A available in the Site Owners Forum.
o Includes the File Manager is a browser based FTP program. In the File
Manager you can make quick changes or setup your site completely. You
may view, edit, delete, rename and upload new files, and also navigate
through all of the directories of your site.
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Appendix B
Ad Serving Management Software
Cache Busting Technology
Our Ad Serving Code utilizes JavaScript, which allows the administrative site to
dynamically write to clients 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.
Integration
The Ad Serving Software has been coded with integration in mind. Our software
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 our scripts, creating "two layers"
of banner exchanging.
This ability will allow us to easily audit statistics and keep track of how the
site is showing the buyer's banners. This will also allow us to compare
statistics with the seller's site and make sure there aren't any discrepancies,
ultimately creating a very strong and fair way of reporting ad campaign
statistics.
Advanced Tracking, Fraud Busting and Statistics
The Ad Serving Software keeps a wide range of important statistics. This will
ensure that the banners are not being requested en mass from the same IP number
(same person), that the times and dates of banner requests from IP numbers are
appropriate.
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.
Relevant statistics will be available for the ad buyer, seller and the
administrators.
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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 compare the statistics of the banners to each other. This allows
buyers to decide which type of advertisement is working best for them.
Advanced Email Manager
Future advancements to the software will include a fully integrated email
manager, allowing for announcement lists for clients, and to notify the user
base of important changes, deals, and features.
Server Technology
E-bidd.com 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 our Perl
scripts to execute 20-50% faster, greatly decreasing the load on the host
server.
Scaleable Database Technology
We are using mySQL as a database server. (SQL = Structured Query Language) SOL
is the most widely used database language in the world, with the portability
of Perl scripts to accessing mySQL, we will be able to change over to a more
extensive database solution if the need arises.
Security
E-Bidd.com will provides the server with maximum security. For Credit Card
transactions, we will be using Apache's SSL layers. E-Bidd.com will also be
utilizing an established merchant account solution for Internet Based commerce
transactions.
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EXHIBIT 10(I)
THE 1999 BENEFIT PLAN
OF
E-BIDD.COM, INC.
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THE 1999 BENEFIT PLAN OF e-bidd.com, Inc.
e-bidd.com, Inc., a Minnesota corporation (the "Company"), hereby
adopts The 1999 Benefit Plan of e-bidd.com, Inc.'s employees (the "plan") this
day of October 1999. Under the Plan, the Company may issue shares of the
Company's common stock or grant options to acquire the Company's common stock,
par value $0.001 (the "Stock"), from time to time to employees, directors,
officers, consultants or advisors of the Company or its subsidiaries, all on the
terms and conditions set forth herein. In addition, at the discretion of the
Board of Directors, Shares may from time to time be granted under this Plan to
other individuals, including consultants or advisors, who contribute to the
success of the Company or its subsidiaries but are not employees of the Company
or its subsidiaries, provided that bona fide services shall be rendered by
consultants and advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.
1. PURPOSE OF THE PLAN. The Plan is intended to aid the Company in maintaining
and developing a management team, attracting qualified officers and employees
capable of assuring the future success of the Company, and rewarding those
individuals who have contributed to the success of the Company. The Company has
designed this Plan to aid it in retaining the services of executives and
employees and in attracting new personnel when needed for future operations and
growth and to provide such personnel with an incentive to remain employees of
the Company, to use their best efforts to promote the success of the Company's
business, and to provide them with an opportunity to obtain or increase a
proprietary interest in the Company. It is also designed to permit the Company
to reward those individuals who are not employees of the Company but who
management perceives to have contributed to the success of the Company or who
are important to the continued business and operations of the Company. The above
goals will be achieved through the granting of Shares.
2. ADMINISTRATION OF THIS PLAN. Administration of this Plan shall be determined
by the Company's Board of Directors (the "Board"). Subject to compliance with
applicable provisions of the governing law, the Board may delegate
administration of this Plan or specific administrative duties with respect to
this Plan on such terms and to such committees of the Board as it deems proper
(hereinafter the Board or its authorized committee shall be referred to as "Plan
Administrators"). The interpretation and construction of the terms of this Plan
by the Plan Administrators thereof shall be final and binding on all
participants in this Plan absent a showing of demonstrable error. No member of
the Plan Administrators shall be liable for any action taken or determination
made in good faith with respect to this Plan. Any shares approved by a majority
vote of those Plan Administrators attending a duly and properly held meeting
shall be valid. Any shares approved by the Plan Administrators shall be approved
as specified by the Board at the time of delegation.
3. SHARES OF STOCK SUBJECT TO THIS PLAN. The total value of shares issues
pursuant to this Plan shall not exceed a value of greater then Five Hundred
Thousand dollars ($500,000). If any right to acquire Stock granted under this
Plan is exercised by the delivery of shares of Stock or the relinquishment of
rights to shares of Stock, only the net shares of Stock issued (the shares of
stock issued less the shares of Stock surrendered) shall count against the total
number and value of shares reserved for issuance under the terms of this Plan.
4. RESERVATION OF STOCK ON GRANTING OF RIGHTS. At the time any right is granted
under the terms of this Plan, the Company will reserve for issuance the number
of shares of Stock subject to such right until that right is exercised or
expires. The Company may reserve either authorized but unissued shares or
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issued shares reacquired by the Company.
5. ELIGIBILITY. The Plan Administrators may grant shares to employees, officers,
and directors of the Company and its subsidiaries, as may be existing from time
to time, and to other individuals who are not employees of the Company or its
subsidiaries, including consultants and advisors, provided that such consultants
and advisors render bona fide services to the Company or its subsidiaries and
such services are not rendered in connection with the offer or sale of
securities in a capital-raising transaction. In any case, the Plan
Administrators shall determine, based on the foregoing limitations and the
Company's best interests, which employees, officers, directors, consultants and
advisors are eligible to participate in this Plan. Shares shall be in the
amounts, and shall have the rights and be subject to the restrictions, as may be
determined by the Plan Administrators, all as may be within the provisions of
this Plan.
6. TERMS OF GRANTS AND CERTAIN LIMITATIONS ON RIGHT TO EXERCISE.
a. Each right to shares may its terms established by the Plan
Administrators at the time the right is granted.
b. The terms of the right, once it is granted, may be reduced only as
provided for in this Plan and under the express written provisions of
the grant.
c. Unless otherwise specifically provided by the written provisions of
the grant or required by applicable disclosure or other legal
requirements promulgated by the Securities and Exchange Commission
("SEC"), no participant of this Plan or his or her legal
representative, legatee, or distributee will be, or shall be deemed to
be, a holder of any shares subject to any right unless and until such
participant exercises his or her right to acquire all or a portion of
the Stock subject to the right and delivers any required consideration
to the Company in accordance with the terms of this Plan and then only
as to the number of shares of Stock acquired. Except as specifically
provided in this Plan or as otherwise specifically provided by the
written provisions of any grant, no adjustment to the exercise price or
the number of shares of Stock subject to the grant shall be made for
dividends or other rights for which the record date is prior to the
date on which the Stock subject to the grant is acquired by the holder.
d. Rights shall vest and become exercisable at such time or times and
on such terms as the Plan Administrators may determine at the time of
the grant of the right.
e. Grants may contain such other provisions, including further lawful
restrictions on the vesting and exercise of the grant as the Plan
Administrators may deem advisable.
f. In no event may an grant be exercised after the expiration of its
term.
g. Grants shall be non-transferable, except by the laws of descent and
distribution.
7. EXERCISE PRICE. The Plan Administrators shall establish the exercise price
payable to the Company for shares to be obtained pursuant to any purchase
options which exercise price may be amended from time to time as the Plan
Administrators shall determine.
8. PAYMENT OF EXERCISE PRICE. The exercise of any option shall be contingent on
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receipt by the Company of the exercise price paid in either cash, certified or
personal check payable to the Company.
9. WITHHOLDING. If the grant or exercise of any right is subject to withholding
or other trust fund payment requirements of the Internal Revenue Code of 1986,
as amended (the "Code"), or applicable state or local laws, the Company will
initially pay the recipient's liability and will be reimbursed by that person no
later than six months after such liability arises and such person hereby agrees
to such reimbursement terms.
10. DILUTION OR OTHER ADJUSTMENT. The shares of Common Stock subject to this
Plan and the exercise price of outstanding options are subject to proportionate
adjustment in the event of a stock dividend on the Common Stock or a change in
the number of issued and outstanding shares of Common Stock as a result of a
stock split, consolidation, or other recapitalization. The Company, at its
option, may adjust the grants and rights made hereunder, issue replacements, or
declare grants void.
11. OPTIONS TO FOREIGN NATIONALS. The Plan Administrators may, in order to
fulfill the purpose of this Plan and without amending this Plan, grant Options
to foreign nationals or individuals residing in foreign countries that contain
provisions, restrictions, and limitations different from those set forth in this
Plan and the Options made to United States residents in order to recognize
differences among the countries in law, tax policy, and custom. Such grants
shall be made in an attempt to give such individuals essentially the same
benefits as contemplated by a grant to United States residents under the terms
of this Plan.
12. LISTING AND REGISTRATION OF SHARES. Each grant shall be subject to the
requirement that if at any time the Plan Administrators shall determine, in
their sole discretion, that it is necessary or desirable to list, register, or
qualify the shares covered thereby on any securities exchange or under any state
or federal law, or obtain the consent or approval of any governmental agency or
regulatory body as a condition of, or in connection with, the granting of such
rights or the issuance or purchase of shares thereunder, such right may not be
exercised in whole or in part unless and until such listing, registration,
consent, or approval shall have been effected or obtained free of any conditions
not acceptable to the Plan Administrators.
13. EXPIRATION AND TERMINATION OF THIS PLAN. This Plan may be abandoned or
terminated at any time by the Plan Administrators except with respect to any
rights then outstanding under this Plan. This Plan shall otherwise terminate on
the earlier of the date that is five years from the date first appearing in this
Plan or the date on which the 1.5 millionth share is issued hereunder.
14. AMENDMENT OF THIS PLAN. This Plan may not be amended more than once during
any six month period, other than to comport with changes in the Code or the
Employee Retirement Income Security Act or the rules and regulations promulgated
thereunder. The Plan Administrators may modify and amend this Plan in any
respect; provided, however, that to the extent such amendment or modification
would cause this Plan to no longer comply with the applicable provisions of the
Code governing incentive stock options as they may be amended from time to time,
such amendment or modification shall also be approved by the shareholders of the
Company.
ATTEST:
/s/ Ray Matthews
Ray Matthews, President
-91-
<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>
<CIK> 0001097068
<NAME> E-BIDD.COM, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997 DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-1-1998 JAN-1-1997 JAN-1-1999 JAN-1-1998
<PERIOD-END> DEC-31-1998 DEC-31-1997 SEP-30-1999 SEP-30-1998
<EXCHANGE-RATE> 1 1 1 1
<CASH> 0 (4,428) 7,139 0
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<RECEIVABLES> 0 3,500 0 0
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<CURRENT-ASSETS> 0 (928) 7,139 0
<PP&E> 0 44,865 0 0
<DEPRECIATION> 0 0 0 0
<TOTAL-ASSETS> 0 516,607 292,339 0
<CURRENT-LIABILITIES> 14,925 453,743 167,299 14,925
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 31 16 16,621 31
<OTHER-SE> (14,956) 62,848 108,419 (14,956)
<TOTAL-LIABILITY-AND-EQUITY> 0 516,607 292,339 0
<SALES> 0 0 0 0
<TOTAL-REVENUES> 0 0 0 0
<CGS> 0 0 0 0
<TOTAL-COSTS> 370,742 171,893 319,135 370,742
<OTHER-EXPENSES> (944,507) 6,123 0 (944,507)
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 0 8,252 54,500 0
<INCOME-PRETAX> (1,315,249) (174,022) (373,635) (1,315,249)
<INCOME-TAX> 0 0 0 0
<INCOME-CONTINUING> (1,315,249) (174,022) (373,635) (1,315,249)
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (1,315,249) (174,022) (373,635) (1,315,249)
<EPS-BASIC> (.05) (.03) (.01) (.05)
<EPS-DILUTED> (.05) (.03) (.01) (.05)
</TABLE>
