<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB/A
AMENDMENT #2
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
AUCTIONANYTHING.COM, INC.
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(Name of Small Business Issuer in its charter, as amended)
Delaware 13-2640971
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
35 West Pine Street, Suite 211, Orlando, Florida 32801
- ------------------------------------------------ -----
(Address of principal executive offices) (Zip code)
(407) 481-2140
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(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
To be so registered each class is to be registered
N/A N/A
--- ---
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $0.001 per share
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(Title of class)
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AUCTIONANYTHING.COM, INC.
FORM 10-SB
TABLE OF CONTENTS
<TABLE>
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Page
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PART I.................................................................................................... 3
ITEM 1- DESCRIPTION OF BUSINESS........................................................................... 3
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS............... 9
ITEM 3 - DESCRIPTION OF PROPERTY.......................................................................... 13
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................................... 13
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS..................................... 14
ITEM 6 - EXECUTIVE COMPENSATION........................................................................... 16
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS............................................. 16
ITEM 8 - DESCRIPTION OF SECURITIES........................................................................ 16
PART II................................................................................................... 17
ITEM 1 - MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.. 17
ITEM 2 - LEGAL PROCEEDINGS................................................................................ 17
ITEM 3 - CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS..................................................... 18
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES.......................................................... 18
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS........................................................ 18
PART F/S.................................................................................................. 19
FINANCIAL STATEMENTS...................................................................................... 19
PART III.................................................................................................. 32
ITEM 1- INDEX TO EXHIBITS................................................................................. 32
ITEM 2- DESCRIPTION OF EXHIBITS........................................................................... 33
</TABLE>
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PART I
ITEM 1- DESCRIPTION OF BUSINESS
Corporate History
AuctionAnything.com, Inc. ("UBUY" or the "Company") is a publicly
traded company (OTC BB: UBUY). The Company was originally incorporated in
Delaware under the name "Mediplex Corporation" on February 25, 1969. According
to documents filed in the State of Delaware, Mediplex Corporation forfeited its
Certificate of Incorporation on December 3, 1973, as a result of not having
named a registered agent as required by Delaware law; however, the Company was
renewed and revived pursuant to a Certificate of Renewal and Revival filed on
June 4, 1974. On June 5, 1974, the Company changed its name to "The Lawton-York
Corporation." On January 31, 1975, the Company merged into it a New York
corporation of identical name, which had been incorporated on February 10, 1966.
The Company was the surviving corporation of that merger.
The Company was, for many years, a wholesaler of custom one-, two-,
three- and four-color processed commercial printing, as well as disposable and
durable office equipment including stock paper, fax paper, fax and copy
machines, computers, file cabinets and safes. The Company conducted its
business throughout the United States of America and Puerto Rico from its
headquarters in New York.
On March 10, 1999, the Company changed the focus of its business and
closed a transaction by which it acquired 100% of the outstanding capital stock
of North Orlando Sports Promotions, Inc., a privately held Florida corporation
("NOSP"), from the shareholders of NOSP. As consideration for that acquisition,
the Company issued 24,003,133 shares of its common stock, $0.001 par value (the
"Common Stock"), which amounted to approximately 85% of the Company's
outstanding Common Stock, to the three former shareholders of NOSP. In
connection with the transaction, the Company adopted the name,
"AuctionAnything.com, Inc.," in order to more accurately reflect its new core
business. Also, on the date that the parties executed the agreement pursuant to
which the acquisition transaction was effected, the Company sold most, but not
all ($25,000 remained) of its assets to its major shareholder, director and
president, Joel E. Cavalier, in exchange for his assignment to the Company of
747,116 shares of Common Stock and his assumption of all of the Company's
liabilities. At the Closing of the acquisition transaction, the Company's
directors and officers resigned, and the Company elected a new management team
consisting of the three former shareholders of NOSP, who are experienced in
providing Internet auctions. Upon the closing of the acquisition, the Company
had the assets and liabilities of NOSP, as well as the $25,000 in assets that
Mr. Cavalier did not acquire and outstanding warrants for the purchase of up to
3,000,000 shares of Common Stock at a purchase price of $0.30 per share.
Immediately prior to the acquisition transaction, the Company
undertook an offering of its Common Stock and warrants to purchase Common Stock.
According to the offering document provided by the Company to the shareholders
of NOSP, the Company's offering was undertaken in reliance upon Rule 504 of
Regulation D, promulgated under the Securities Act of 1933, as amended. In the
acquisition agreement among the Company, NOSP and the shareholders of NOSP, it
was a condition precedent to the obligations of NOSP and the shareholders of
NOSP that the Company shall have "concluded its pending offering of securities
under Rule 504. "The Company's current management and directors, who are the
former shareholders of NOSP, are unable to state with certainty whether the
acquisition transaction was a condition to the Company's closing of its
securities offering under Rule 504. However, the offering document provided by
the Company contains, in addition to a discussion of the Company, discussion of
NOSP and the contemplated acquisition transaction. Thus, it appears that the
Company's securities offering was predicated upon a successful acquisition
transaction.
Business and Properties
Industry Overview
Growth of the Internet and Online Commerce
------------------------------------------
The Internet has emerged as a global medium enabling millions of
people worldwide to share information, communicate and conduct business
electronically. An estimated 25% of U.S. households now use the Internet, which
is projected to rise to 33% in 1999 and to 66% by 2003/1/. Some 55% of the U.S.
adult population (108 million) accessed the Internet during the final three
months of 1998, up from 40% in the first three months of the year/2/.
International Data Corporation ("IDC") estimates that the number of Internet
users will grow from approximately 69 million worldwide in 1997 to approximately
320 million worldwide by the end of 2002. This growth is expected to be driven
by the large and growing number of personal computers ("PCs") installed in homes
and offices, the decreasing cost of PCs, easier, faster and cheaper access to
the Internet, improvements in network infrastructure, the proliferation of
Internet content and the increasing familiarity and acceptance of the Internet
by businesses and consumers. The Internet possesses a number of unique
characteristics that differentiate it from traditional media: users communicate
or access information without geographic or temporal limitations; users access
dynamic and interactive content on a real-time basis; and users communicate and
interact instantaneously with a single individual or with entire groups of
individuals. As a result of these characteristics, Internet usage is expected
____________________________
/1/ Yankee Group survey, March, 1999.
/2/ INTECO Corp. survey, January, 1999.
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to continue to grow rapidly. The growing acceptance of the Internet represents
an enormous opportunity for businesses to conduct commerce over the Internet.
IDC estimates that commerce over the Internet will increase from approximately
$32 billion worldwide in 1998 to approximately $130 billion worldwide in 2000.
While companies initially focused on facilitating and conducting
transactions between businesses over the Internet, a number of companies more
recently have focused on facilitating a wide variety of business-to-consumer
transactions. These companies typically use the Internet to offer standard
products and services that can be easily described with graphics and text and do
not necessarily require physical presence for purchase, such as books, CDs,
videocassettes, automobiles, home loans, airline tickets and on-line banking and
stock trading. The Internet gives these companies the opportunity to develop
one-to-one relationships with customers worldwide from a central location
without having to make the significant investments required to build a number of
local retail presences, manage a worldwide distribution infrastructure or
develop the printing and mailing infrastructure associated with traditional
direct marketing activities. While companies have generally focused on applying
these benefits in business-to-business and business-to-consumer transactions, a
significant market opportunity exists to apply these same advantages to
facilitate person-to-person trading over the Internet.
In addition, the Internet offers advertisers the ability to target
their messages and to make changes quickly and frequently in response to market
factors, current events and consumer feedback. Ad effectiveness is measured by
the number of "impressions" delivered to customers and the "click-through" rate
to advertisers' web sites. This level of targetability, flexibility, and
measurability is not available through traditional print or broadcast media.
Online advertising revenue was estimated at $266.9 million in 1996, $907 million
in 1997/3/, and $2.1 billion in 1998. Internet ad revenue of $5.5 billion is
predicted for 1999, which represents a 161.9% increase over last year/4/. Online
ad spending is expected to reach $7.1 billion by 2002/5/, and will climb to an
estimated $15 billion by 2003/6/. Online advertising is showing significantly
stronger yearly growth than television advertising/7/, has proven to be
efficacious/8/, and continues to gain ground on print advertising, as people
move from the newspaper to the Internet for news and information. Its 240%
projected growth rate has dwarfed cable television's 15.5% growth rate/9/.
The Person-to-Person Trading Market
-----------------------------------
The exchange of goods between individuals--person-to-person trading--
has traditionally been conducted through trading forums such as classified
advertisements, collectibles shows, garage sales and flea markets or through
intermediaries, such as auction houses and local dealer shops. These markets are
highly inefficient, making person-to-person trading difficult for buyers and
sellers. Their fragmented, regional nature makes it difficult and expensive for
buyers and sellers to meet, exchange information and complete transactions. The
localized nature of these markets also results in a limited variety and breadth
of goods available in any one location. Buyers are limited to searching through
local classified ads or to traveling to numerous geographically-dispersed flea
markets, trade shows or dealer shops in order to find items of interest. These
markets often have high transaction costs because intermediaries either mark up
goods for resale or charge a commission. Because these markets are information
inefficient, buyers and sellers lack a reliable and convenient means of setting
prices for sales or purchases. Despite
_____________________________
/3/ Fox Market Wire: "1997 - a Breakthrough Year of Online Advertising", April
8, 1998, citing figures compiled by Coopers and Lybrand.
/4/ Simba Information report: "Web Advertising 1998-1999 Market Analysis and
Forecast", February, 1999 (including $2.1 billion figure for 1998); earlier
reports predicted $3.8 billion in ad revenues by the year 2000 (6/th/ E Overview
Report of eMarketer, August, 1998). Another study by eMarketer estimates ad
revenues as follows: 1998: $1.5 billion, 1999: $2.61 billion, 2000: $4.2
billion, 2001: $6.7 billion, 2002: $8.9 billion. (CyberAtlas: Advertising:
"Increase in Ad Spending Predicted" March 25, 1999).
/5/ Supra
/6/ PC World: "Online Advertising to Increase Tenfold", August 21, 1998, citing
Forrester Research, Inc. report.
/7/ Internet Advertising Bureau, press release, April 8, 1998, citing figures
compiled by Coopers & Lybrand.
/8/ The Ipsos-ASI/AOL study of February 1999 shows that consumers are as likely
to remember an online banner ad as a television commercial; the Netratings
survey of October, 1998, concludes that "Web banner ads significantly increase
the audience reach of a product", and the February, 1999 study of online brand
loyalty by Cyber Dialogue, found that one third of consumers have changed their
perception of a brand because of online advertising.
/9/ Coopers and Lybrand report, April 1998.
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these inefficiencies, the Company believes that the market for traditional
person-to-person trading in the U.S. through auctions and classified ads
exceeded $50 billion in goods sold in 1997.
The Internet offers, for the first time, the opportunity to create a
compelling global marketplace that overcomes the inefficiencies associated with
traditional person-to-person trading while offering the benefits of Internet-
based commerce to the person-to-person trading market. An Internet-based,
centralized trading place facilitates buyers' and sellers' meeting, listing
items for sale, exchanging information, interacting with each other and,
ultimately, consummating transactions. It allows buyers and sellers to trade
directly, bypassing traditional intermediaries and lowering costs for both
parties. This trading place is global in reach, offering buyers a significantly
broader selection of goods to purchase and providing sellers the opportunity to
sell their goods efficiently to a broader base of buyers. It offers significant
convenience, allowing trading at all hours and providing continually-updated
information. By leveraging the interactive nature of the Internet, this trading
place also facilitates a sense of community through direct buyer and seller
communication, thereby enabling the interaction between individuals with mutual
interests. As a result, there exists a significant market opportunity for an
Internet-based, centralized trading place that applies the unique attributes of
the Internet to facilitate person-to-person trading.
General Business
AuctionAnything.Com, Inc., operates a variety of Internet-related
services. Currently, the Company has three operations: (i) an online person-to-
person trading service, known as the AuctionAnything.com person-to-person
network; (ii) a service that establishes and hosts auctions for other
businesses, known as Auction Business Solutions (ABS); and (iii) an Internet
service provider (ISP) service, known as Tish.net. The Company remains committed
to pursuing all commercial opportunities in the online person-to-person,
business-to-consumer and business-to-business trading service areas.
AuctionAnything.com
-------------------
The Company owns and operates the AuctionAnything.com person-to-person
network, an online person-to-person trading website. The website is located at
http://www.auctionanything.com. This site serves as a centralized trading place
for buyers and sellers to meet, negotiate sales, and finally consummate
transactions directly, thereby bypassing the time and expense of intermediaries.
Sales are conducted by auction hosted by the Company. Although users are
required to register, the Company does not currently charge for these services
in order to attract potential customers for its other products, such as its ABS
program (see below).
Currently, the Company has consolidated all person-to-person trading
services into one centralized site with an expanding list of categories. The
site is available at http://Auctions.AuctionAnything.com.
The Company sells Gold Memberships to AuctionAnything.com person-to-
person sites. The membership includes free listings for one year, no commissions
on items sold for one year, free Internet service via a third-party vendor known
as WebCombo and a discounted long distance telephone service via another third-
party vendor known as StarTouch.
Auction Business Solutions
--------------------------
Auction Business Solutions (ABS) is a business-to-consumer service
whereby the Company establishes and then hosts auctions for other businesses.
This service was designed for businesses whose product inventory has a
relatively high-turnover rate, particularly businesses that sell bulk-items that
are easily shipped. The Company provides the milieu and the technical support,
while the customer is responsible for all listed items, content, delivery,
collections, and other incidentals. The Company charges an initial installation
fee, then a flat monthly fee plus a percentage of the successful sales
thereafter.
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The ABS auctions appear on and are accessed through the
AuctionAnything.com website. Also, AuctionAnything.com registered users are
automatically registered to participate in all ABS sites. Currently, there are
six ABS auction sites found at the AuctionAnything.com website:
(i) Sportsauction.com (www.SportsAuction.com) is an ABS site wholly
-----------------------------------------
owned by the Company. In addition to being the main site for the
Company, it has served as a test site for all technical
components. At this site, the Company auctions off sports and
celebrity material, all of which are owned by the Company. The
auctions are conducted weekly, beginning every Monday and
concluding every Sunday. The Company typically runs between 500
and 3000 lots per week. These weekly lots are combined with
occasional daily lots, which begin and end on the same day. The
daily lots are designed to attract buyers to the site on off
days. The Company offers a weekly auction giveaway to that
week's bidders. Each time a person bids, they are entered into a
drawing; thus, people are encouraged to bid more in order to
increase their chances of winning.
(ii) Autographauctions.com (www.AutographAuctions.com) is also an ABS
-------------------------------------------------
site wholly owned by the Company. The site eventually feeds the
visitor to the sportsauction.com site. This site was established
to eliminate confusion concerning the large amount of non-sports
celebrity autographs offered in the sportsauction.com site, and
also to facilitate advertising in celebrity autograph magazines.
(iii) Stogiesauction.com (www.StogiesAuction.com) is an ABS site
-------------------------------------------
established for a customer based in Boca Raton, Florida. They
auction off cigar and related merchandise.
(iv) TCI Industries (www.TCIIndustries.com) is an ABS site
--------------------------------------
established for a customer based in Columbia, South Carolina.
They auction off computer equipment.
(v) Showcases USA (www.UniqueMemorabilia.com) is an ABS site
-----------------------------------------
established for a customer in Tampa, Florida. They auction off
sports and celebrity memorabilia.
(vi) Christian Help (www.AuctionsForCharity.com) is an ABS site
-------------------------------------------
established for a charitable service based in Orlando, Florida.
The auction, to be held in November of 1999, will serve as a
fundraiser. This client will only be charged a percentage of the
successful sales.
The Company's current plan is to aggressively market its ABS program
to businesses that could potentially thrive in the online business-to person
field. The Company is committed to expanding its marketing and advertising of
the ABS program via media, personal contacts, and trade shows.
ISP Services
------------
Tish.net is an ISP that provides Internet service for the Company and
for other customers. Currently, Tish.net provides ISP services for approximately
50 clients. There are no immediate plans to solicit new clients for these
services.
Revenue Sources
Tish.net
Tish.net offers ISP services to approximately 50 clients. There are no
immediate plans to solicit new clients for these services. Services provided
include dial-up through high-speed Internet access and design and hosting of
Internet web and e-mail services. Customer costs range from $16 per month to
$1,500 per month for access and hosting services, and other services are
provided based on hourly rates.
Auction Business Solutions
Auction Business Solutions (ABS) is a service whereby the Company
establishes and hosts auctions for other businesses. Currently, the Company has
established six ABS sites, four of which were established for customers.
Typically, the Company charges each customer an initial set up charge of
$5,000.00, and then $250.00
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per month, plus two percent of their successful sales. The Company expects to
increase the successful sales percentage fee from two percent to three percent.
The Company is actively seeking more customers for this service.
SportsAuction.com
SportsAuction.com and AutographAuction.com are ABS sites owned by the
Company. The Company auctions off sports and celebrity material weekly via the
web site, SportsAuction.com, a/k/a AutographAuction.com. All of the items
offered for sale by auction on this web site are owned by the Company. The
Company runs between 500 and 3000 lots per week. These weekly lots are combined
with occasional daily lots. All auctions are non-reserve auctions and subject to
a $1.00 minimum bid. Currently, the Company generates approximately $10,000 per
week in gross sales from SportsAuction.com.
Gold Memberships
The Company sells Gold Membership to AuctionAnything.com to customers
at a rate of $99. The membership includes free listings for one year, no
commission charges on items sold for one year, free Internet service and a
discounted long distance telephone service.
Commissions
The Company receives a five percent commission on all usage of the
long distance carrier, StarTouch, by any customer who signs up for long distance
telephone service through the Company.
Banner Advertising
The Company plans on selling banner advertising on its website in the
near future. The competition for advertising dollars is intense, but the dollars
available are growing. Jupiter Communications, a leading Internet research firm,
estimates that Web advertising in the U.S. will grow from $940 million in 1997
to over $7.6 billion by the year 2002. Ad rates for many web sites have remained
stable at $10 to $50 per 1,000 pages viewed, but significant discounting is
prevalent in the market. Initially, the Company may discount its rates in order
to establish itself in the market.
Sales Through Other Auction Sites
The Company also generates modest revenue through sales of its own
inventory through other Internet auction sites, such as eBay. Gross sales from
these activities are approximately $1,000 per week.
Competition
The market for person-to-person and business-to-customer trading over
the Internet is relatively new, rapidly evolving and intensely competitive, and
the Company expects competition to intensify further 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. The Company
currently or potentially competes with a number of other companies. The
Company's direct competitors include various online person-to-person auction
services, including Onsale Exchange, Auction Universe, Excite, eBay, Ubid, and a
number of other services, including those that serve specialty markets. Also,
the Company will compete directly with emerging networks of online person-to-
person and business-to-customer auction services, such as the FairMarket
network, which combine the services of competing auction sites, thereby exposing
items to a larger number of buyers. The Company also competes indirectly with
business-to-consumer online auction services such as Onsale, First Auction,
ZAuction and Surplus Auction. The Company 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. Certain of these potential competitors, including Amazon.com, AOL,
Microsoft and Yahoo! currently offer a variety of business-to-consumer trading
services and classified ad services, and certain of these companies 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 and large newspaper or media companies may also seek
to compete in the online auction market. Competitive pressures created by any
one of these companies, or by the Company's
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competitors collectively, could have a material adverse effect on the Company's
business, results of operations and financial condition.
The Company believes that the principal competitive factors in its
market are volume and selection of goods, population of buyers and sellers,
customer service, reliability of delivery and payment by users, brand
recognition, Web site convenience and accessibility, price, quality of search
tools and system reliability. Many of the Company's current and potential
competitors have longer operating histories, larger customer bases, greater
brand recognition and significantly greater financial, marketing, technical and
other resources than the Company. In addition, other online trading services may
be acquired by, receive investments from or enter into other commercial
relationships with larger, well-established and well-financed companies as use
of Internet and other online services increases. Therefore, certain of the
Company's competitors may be able to devote greater resources to marketing and
promotional campaigns, adopt more aggressive pricing policies or may try to
attract traffic by offering services for free and devote substantially more
resources to Web site and systems development than the Company. Increased
competition may result in reduced operating margins, loss of market share and
diminished value in the Company's brand. There can be no assurance that the
Company will be able to compete successfully against current and future
competitors. Further, as a strategic response to changes in the competitive
environment, the Company may, from time to time, make certain pricing, service
or marketing decisions or acquisitions that could have a material adverse effect
on its business, results of operations and financial condition. New technologies
and the expansion of existing technologies may increase the competitive
pressures on the Company by enabling the Company's competitors to offer a lower-
cost service. Certain Web-based applications that direct Internet traffic to
certain Web sites may channel users to trading services that compete with the
Company. Although the Company has established Internet traffic arrangements with
several large online services and search engine companies, there can be no
assurance that these arrangements will be renewed on commercially reasonable
terms or that they will otherwise continue to result in increased users of the
Company's service. In addition, companies that control access to transactions
through network access or Web browsers could promote the Company's competitors
or charge the Company substantial fees for inclusion. Any and all of these
events could have a material adverse effect on the Company's business, results
of operations and financial condition.
Government Approval and Regulation
The Company is not currently subject to direct federal, state or local
regulation, and laws or regulations applicable to access to or commerce on the
Internet, other than regulations applicable to businesses generally. However,
due to the increasing popularity and use of the Internet and other online
services, it is possible that a number of laws and regulations may be adopted
with respect to the Internet or other online services covering issues such as
user privacy, freedom of expression, pricing, content and quality of products
and services, taxation, advertising, intellectual property rights and
information security. Although the laws that, among other things, proposed to
impose criminal penalties on anyone distributing "indecent" material to minors
over the Internet, were held to be unconstitutional by the U.S. Supreme Court,
there can be no assurance that similar laws will not be proposed and adopted.
Certain members of Congress have recently discussed proposing legislation that
would regulate the distribution of "indecent" material over the Internet in a
manner that they believe would withstand challenge on constitutional grounds.
The nature of such similar legislation and the manner in which it may be
interpreted and enforced cannot be fully determined and, therefore, such
legislation could subject the Company and/or its customers to potential
liability, which in turn could have an adverse effect on the Company's business,
results of operations and financial condition. The adoption of any such laws or
regulations might also decrease the rate of growth of Internet use, which in
turn could decrease the demand for the Company's service or increase the cost of
doing business or in some other manner have a material adverse effect on the
Company's business, results of operations and financial condition. In addition,
applicability to the Internet of existing laws governing issues such as property
ownership, copyrights and other intellectual property issues, taxation, libel,
obscenity and personal privacy is uncertain. The vast majority of such laws
were adopted prior to the advent of the Internet and related technologies and,
as a result, do not contemplate or address the unique issues of the Internet and
related technologies.
In addition, numerous states have regulations regarding the manner in
which "auctions" may be conducted and the liability of "auctioneers" in
conducting such auctions. The Company does not believe that such regulations,
which were adopted prior to the advent of the Internet, govern the operations of
the Company's business nor have any claims been filed by any state implying that
the Company is subject to such legislation. There can be no assurance, however,
that a state will not attempt to impose these regulations upon the Company in
the future or that
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such imposition will not have a material adverse effect on the Company's
business, results of operations and financial condition. Several states have
also proposed legislation that would limit the uses of personal user information
gathered online or require online services to establish privacy policies. The
Federal Trade Commission has also initiated action against at least one online
service regarding the manner in which personal information is collected from
users and provided to third parties. Changes to existing laws or the passage of
new laws intended to address these issues, including some recently proposed
changes, could create uncertainty in the marketplace that could reduce demand
for the services of the Company or increase the cost of doing business as a
result of litigation costs or increased service delivery costs, or could in some
other manner have a material adverse effect on the Company's business, results
of operations and financial condition. In addition, because the Company's
services are accessible worldwide and the Company facilitates sales of goods to
users worldwide, other jurisdictions may claim that the Company is required to
qualify to do business as a foreign corporation in a particular state or foreign
country. Failure by the Company to qualify as a foreign corporation in a
jurisdiction where it is required to do so could subject the Company to taxes
and penalties for the failure to qualify and could result in the inability of
the Company to enforce contracts in such jurisdictions. Any such new legislation
or regulation, or the application of laws or regulations from jurisdictions
whose laws do not currently apply to the Company's business, could have a
material adverse effect on the Company's business, results of operations and
financial condition.
Research and Development Expenses
The Company does not presently budget or isolate all its research and
development costs. These costs are generally included in overhead as they are
attributed principally to salary and other expenses associated with maintaining
programming personnel who spend varying amounts of time dedicated to both
research and development of new online features and applications and to the
administration and maintenance of those sites and applications.
Costs and Effects of Compliance with Environmental Law
The Company is not aware of any significant present or future impact on its
business due to compliance with environmental laws.
Employees
As of October 20, 1999, the Company had fourteen employees, including six
in customer support, three in product development, one in sales and marketing,
and four in administration and business development. The Company has never had a
work stoppage, and no employees are represented under collective bargaining
agreements. The Company considers its relations with its employees to be good.
The Company believes that its future success will depend in part on its
continued ability to attract, integrate, retain and motivate highly qualified
technical and managerial personnel, and upon the continued service of its senior
management and key technical personnel. Competition for qualified personnel in
the Company's industry and geographical location is intense, and there can be no
assurance that the Company will be successful in attracting, integrating,
retaining and motivating a sufficient numbers of qualified personnel to conduct
its business in the future.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATIONS
Important Considerations Related to Forward-Looking Statements
The statements contained in this report that are not historical facts are
forward-looking statements that involve certain risks and uncertainties. These
forward-looking statements include the plans and objectives of management for
future operations relating to the products and future economic performance of
the Company.
The forward-looking statements are based on assumptions that the Company
will continue to market its products and services competitively. The forward-
looking statements are also based upon assumptions that (i) competitive
conditions within the Internet auction business will not change materially or
adversely; (ii) demand for sports and celebrity memorabilia will remain strong;
and (iii) the market will accept the Company's new products
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and services. Assumptions relating to the foregoing are difficult or impossible
to predict accurately and many are beyond the control of the Company. In light
of the significant uncertainties inherent in the forward-looking information
included herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved.
General
The Company's primary source of revenues is through a variety of Internet
related services. Currently, the Company has three main operations: (i) an on-
line, person-to-person trading service, known as AuctionAnything.com; (ii) a
service that establishes and hosts auctions for other businesses, known as
Auction Business Solutions; and (iii) an Internet service provider known as
Tish.net.
The Company's financial position and results of operations are subject to
fluctuations due to a variety of factors. Fluctuations in the quality and value
of items sold on the Company's Internet auction site can result in significant
increases or decreases in revenues. The Company's historical results of
operations are not necessarily indicative of future results.
Selected Balance Sheet Items
As noted above, the Company raised approximately $925,000 in capital
through a private offering of securities. That transaction had a significant
impact on certain balance sheet accounts and the effects are described below.
The following is a description of the private offering, the subsequent
acquisition transaction with the shareholders of NOSP, and the unrelated prior
transaction between NOSP and The Information SuperHighway Corporation:
On or about February 18, 1999, the Company concluded a private offering of
securities in reliance upon the exemption from registration requirements
provided by Rule 504 of Regulation D, promulgated under the Securities Act of
1933, as amended (the "Securities Act"). The Company sold one million units to
18 investors at the offering price of $0.10 per unit, and each unit consisted of
one share of Common Stock and one stock purchase warrant. Each warrant entitled
the holder thereof to purchase three additional shares of Common Stock at a
purchase price of $0.30 per share. Consequently, the total offering price was
$100,000, and an additional $900,000 would be received upon the exercise of all
of the warrants. No underwriting discounts or commissions were paid. The
warrants were exercisable by the holder at any time upon the payment of the
exercise price and a transfer agent fee of $25.00, until the expiration of the
warrant on May 31, 1999. In addition, the Company could call a warrant under
certain circumstances. The form of the stock purchase warrant issued to the
purchasers thereof is attached hereto as an exhibit.
Each investor in the offering executed a subscription agreement in which
such investor represented, among other things, that he, she or it was an
accredited investor, as such term is defined in the Securities Act. In
conducting the offering, the Company utilized an offering document that
disclosed the terms of the offering and the securities offered, as well as
information about the Company. It should be noted that the offering was
conducted and concluded by the Company's previous management prior to the
acquisition transaction by which the current controlling shareholders of the
Company obtained control of the Company. The current controlling shareholders,
in connection with the acquisition transaction, received assurances, in the form
of representations and warranties, that the offering was properly conducted in
accordance with the requirements of Rule 504 and applicable state securities
laws.
As stated above, the Company's offering of securities included the sale of
one million warrants, each of which could be exercised to purchase three shares
of the Company's Common Stock at $0.30 per share. The first warrant exercise
occurred on or about March 23, 1999, and the final warrant exercise occurred on
or about April 20, 1999. All three million shares of Common Stock subject to
the warrants were sold, resulting in additional gross proceeds to the Company of
$900,000. Of the three million shares of Common Stock issued by the Company
pursuant to the warrant exercises, 2,960,000 shares were issued free of resale
restrictions in accordance with Rule 504 as then in effect. Because Rule 504
was amended effective April 7, 1999, the one warrant exercise that occurred
subsequent to April 6, 1999, pursuant to which the warrant holder purchased
40,000 shares of Common Stock, resulted in the issuance of restricted Common
Stock to that purchaser.
The Company's offering of securities under Rule 504 was undertaken in order
to raise capital for the Company's operations. The Company has used the
$900,000 in gross proceeds from warrant exercises for working capital and
general corporate purposes, including, but not limited to, the hiring of
additional workers, payment of significant legal, accounting and insurance
professional fees, advertising and marketing, additional equipment and supplies,
rent, telephone and data line expenses and other miscellaneous expenses.
On March 10, 1999, the Company closed a transaction by which it acquired
100% of the outstanding capital stock of North Orlando Sports Promotions, Inc.,
a privately held Florida corporation ("NOSP"), from the shareholders of NOSP.
As consideration for that acquisition, the Company issued 24,003,133 shares of
its Common Stock, which amounted to approximately 85% of the Company's
outstanding Common Stock, to the three former shareholders of NOSP. In
connection with the transaction, the Company adopted the name,
"AuctionAnything.com, Inc.," in order to reflect more accurately its new core
business.
Also, concurrently with the execution of the acquisition agreement pursuant
to which the Company acquired NOSP, the Company sold most of its assets to its
major shareholder, director and president, Joel E. Cavalier, in exchange for his
assignment to the Company of 747,116 shares of Common Stock and his assumption
of all of the Company's liabilities. Consequently, as of the closing of the
acquisition transaction with the shareholders of NOSP, the Company had assets of
$25,000 in cash, no liabilities, and outstanding warrants that, if exercised,
would result in an additional $900,000 of capital to the Company. At the
Closing of the acquisition transaction, the Company's directors and officers
resigned, and the Company elected a new management team consisting of the three
former shareholders of NOSP, who are experienced in providing Internet
auctions.
On February 18, 1999, prior to the acquisition transaction by which the
Company acquired North Orlando Sports Promotions, Inc., NOSP closed a
transaction by which it acquired substantially all of the assets, and assumed
certain liabilities, of The Information SuperHighway Corporation, a Florida
corporation ("TISH"), in exchange for 208 1/3 shares of the common stock of
NOSP. TISH was wholly-owned by Martin M. Meads, who also served as the
President and as a director of TISH, and Mr. Meads became the beneficial owner,
by distribution from TISH, of the shares of stock in NOSP received by TISH in
that transaction. The combination of the operations of NOSP and TISH was
contemplated by the shareholders of NOSP and Mr. Meads for many months prior to
the closing of the transaction, and that transaction was independent of the
subsequent transaction by which the shareholders of NOSP, including Mr. Meads,
acquired control of the Company. In that subsequent acquisition transaction,
Mr. Meads' 208 1/3 shares of stock in NOSP were acquired by the Company for
7,059,745 shares of the Company's Common Stock.
Cash and Cash Equivalents
Cash and cash equivalents increased from $1,597 at December 31, 1997 to
$3,506 at December 31, 1998. This change resulted primarily from cash generated
from sales. Cash and cash equivalents increased from $3,506 at December 31, 1998
to $301,485 at August 31, 1999. This increased resulted primarily from the cash
generated in the Company's private placement of securities, which is described
above.
Accounts Receivable
Accounts receivable decreased from $4,323 at December 31, 1997 to $1,983 at
December 31, 1998. This change resulted primarily from enhanced collection
efforts by the Company. Accounts receivable increased from $1,983 at December
31, 1998 to $18,433 at August 31, 1999. This increase resulted from increased
sales volumes and from a larger product inventory.
Inventory
Inventory increased from $22,987 at December 31, 1997 to $39,886 at
December 31, 1998. This change resulted principally from increased purchases of
sports and celebrity memorabilia for auction during 1998. Inventory increased
from $39,886 at December 31, 1998 to $278,236 at August 31, 1999. This increase
resulted from large inventory purchases made in the second and third quarters of
1999.
Prepaid Expenses
Prepaid expenses and other assets increased from $0 at December 31, 1997
and December 31, 1998, to $51,094 at August 31, 1999. This change resulted
principally from the additional financial burdens placed on the Company as a
consequence of its public status.
Prepaid expenses as of August 31, 1999 are summarized as follows:
Prepaid insurance of $40,506
Prepaid rent of $1,385
Prepaid legal fees of $9,203
Equipment
Equipment decreased from $11,450 at December 31, 1997 to $8,082 at December
31, 1998. This change resulted primarily from depreciation recorded during 1998.
Equipment increased from $8,082 at December 31, 1998 to $45,485 at August 31,
1999. The change resulted from the acquisition of computer equipment by the
Company and from the acquisition of Tish.net previously described.
-10-
<PAGE>
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses increased from $14,081 at December
31, 1997 to $20,733 at December 31, 1998.
This change resulted principally from increased inventory purchases.
Accounts payable and accrued expenses increased from $20,733 at December 31,
1998 to $34,837 at August 31, 1999. This change resulted principally from
increased numbers of employees of the Company and the growth of other overhead
costs.
Due to Related Parties
Due to related parties increased from $16,612 at December 31, 1997 (current
and long-term portions) to $34,304 at December 31, 1998. This increase was due
to loans made by officers of the Company. Due to related parties decreased from
$34,304 at December 31, 1998 to $0 at August 31, 1999. This change resulted from
payment of the aforementioned loans by the Company during 1999.
Common Stock and Additional Paid-In Capital
Common stock and additional paid-in capital increased from $500 and $7,500,
respectively at December 31, 1998 to $28,239 and $915,053, respectively at
August 31, 1999. This change resulted principally from the private placement of
securities in 1999, mentioned above.
Results of Operations
Year ended December 31, 1998 to Year Ended December 31, 1997
Sales
Sales increased from $212,379 during the year ended December 31, 1997 to
$399,392 during the year ended December 31, 1998. This increase resulted
principally from increased volume of transactions caused by increased visitation
to the Company's Internet site by potential customers.
Commission Income
Commission income increased from $9,780 for the year ended December 31,
1997 to $10,031 for the year ended December 31, 1998. This increase resulted
principally because the Company sold more consigned inventory during 1998 than
1997.
Cost of Sales
Cost of sales increased from $166,555 during the year ended December 31,
1997 to $290,511 during the year ended December 31, 1998. This increase resulted
from increased sales volume in 1998 over 1997.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased from $31,505 for the
year ended December 31, 1997 to $112,934 for the year ended December 31, 1998.
This increase resulted principally from the increase in salaries and employee
benefits from $0 in 1997 to $68,069 in 1998. During 1997 the Company had no
employees as all matters were handled by officers of the Company without
compensation. Beginning in April 1998, the officers of the Company began
receiving compensation and as of December 31, 1998 the Company had four
employees.
Depreciation
Depreciation expense increased from $5,795 for the year ended December 31,
1997 to $7,067 for the year ended December 31, 1998. Depreciation expense
increased in the year ended December 31, 1998, due to the fact that assets
purchased in 1997 reflect a full year of depreciation expense in 1998, while
reflecting a partial year's depreciation in 1997.
-11-
<PAGE>
Interest
Interest expense increased from $1,332 for the year ended December 31, 1997
to $3,167 for the year ended December 31, 1998. This increase resulted
principally due to the increase in 1998 in the amounts due to related parties,
which bore interest.
Results of Operations
Eight Months Ended August 31, 1999 to August 31, 1998
Sales
Sales increased from $250,720 during the eight months ended August 31, 1998
to $400,198 during the eight months ended August 31, 1999. This increase
resulted principally from increased volume of transactions caused by increased
visitation to Company's Internet site by potential customers.
The Company believes that it has experienced increased visitation to the
its Internet site by potential customers during the periods compared because of
several factors: (a) the amount of customer bidding through the Company's site
has increased; (b) the amount of e-mail received by the Company from customers
and other visitors has increased; (c) the hardware resources required to handle
the traffic have increased; and (d) the amount of interest in Internet auctions
has increased. The Company monitors the performance of its systems fairly
closely and has developed what it believes to be a reasonable assessment of the
traffic and performance of its systems. The company has not historically
recorded the number of visitations to its sites and, therefore, has no
verifiable numbers to support its belief or assessments.
Internet Service Revenue
Internet service revenue increased from $0 during the eight months ended
August 31, 1998 to $43,615 during the eight months ended August 31, 1999. This
increase resulted from the 1999 acquisition of Tish.net, previously described.
Commission Income
Commission income decreased from $7,393 during the eight months ended
August 31, 1998 to $4,015 for the eight months ended August 31, 1999. This
decrease resulted principally because of a decrease in the volume of consigned
inventory sold.
Cost of Goods Sold
Cost of goods sold increased from $155,946 during the eight months ended
August 31, 1998 to $290,602 during the eight months ended August 31, 1999. The
increase resulted principally from the increase in auction sales offset by a
decline in gross margin. Cost of goods sold as a percentage of auction sales
increased from 62% during the eight months ended August 31, 1998 to 73% during
the eight months ended August 31, 1999. This increase is due to the increase of
items offered for sale, which diluted the bidding process and reduced margins
during the period.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased from $84,339 during
the eight months ended August 31, 1998 to $429,904 during the eight months ended
August 31, 1999. This increase resulted principally because of an increase in
payroll and related costs from $35,501 during the eight months ended August 31,
1998 to $227,072 during the eight months ended August 31, 1999, an increase in
professional fees from $4,032 during the eight months ended August 31, 1998, to
$64,438 during the eight months ended August 31, 1999, and a increase in
advertising expense from $0 during the eight months ended August 31, 1998, to
$30,183 during the eight months ended August 31, 1999. The increase in payroll
and related costs was caused as the number of employees of the Company increased
from four at August 31, 1998 to fourteen at August 31, 1999. The increase in
professional fees is due to the costs incurred related to the public offering.
The increase in advertising expense is due to management's efforts to increase
sales.
Liquidity and Funding of Operations
The Company currently has assets and internal liquidity as illustrated on
its balance sheet. The Company has cash and inventory that it will continue to
sell through its SportsAuction web site. The Company will rely on these
resources to fund its operations in the foreseeable future. The Company has a
small line of credit with its bank (approximately $50,000) that it will consider
leveraging, if necessary.
The Company has no material commitments for expenditures over the next 12
months other than its expected normal operating expenses, which include payroll
expenses, legal, accounting and insurance fees, advertising and marketing,
purchase and maintenance of equipment (and supplies), rent, telephone and data
line expenses and other miscellaneous expenses. The Company intends to seek
additional funding in the near future and is considering various avenues to do
so at the present time.
Risks Associated with the Year 2000
Overview of Year 2000 Problem
The Year 2000 problem concerns the inability of information technology
("IT") and non-IT systems to properly recognize and process date sensitive
information beyond January 1, 2000. The failure to accurately recognize the
Year 2000 could result in a variety of problems from data miscalculations to the
failure of entire systems. The Company has experienced no such problems to
date.
Information and Non-Information Technology Systems
The IT systems of the Company consist of a network of personal computers,
servers and networking equipment built using hardware and software from
mainstream suppliers including Cisco, Lucent Technologies, Adtran, Gateway,
Dell, Microsoft and Red Hat. Furthermore, the Company's IT systems include the
data lines that connect its network to the Internet. The non-IT systems used by
the Company are primarily facility related and include telephones, building
security systems, fire suppression systems, HVAC, electrical systems and other
utilities.
The Y2K Team
In mid-1999, the Company formed a Year 2000 committee (the "Y2K Team") for
the purpose of identifying, understanding and addressing the various issues
associated with the Year 2000 problem. The Y2K Team consists of representatives
from senior management, information systems and accounting.
Assessing Year 2000 Readiness
The Y2K Team's initial step in assessing Year 2000 readiness consisted of
identifying any systems that were date sensitive and, accordingly, could have
potential Year 2000 problems. The Y2K Team conducted inspections, interviews
and tests to identify which of the systems used by the Company could have a
potential Year 2000 problem.
The IT systems of the Company are comprised of hardware and software
applications from mainstream suppliers. Accordingly, the Y2K Team contacted and
evaluated documentation from the respective vendors and manufacturers to verify
the Year 2000 compliance of their products. The Y2K Team also evaluated
documentation from the non-IT systems providers to the Company. Although the
Y2K Team received positive responses from the companies with which the Company
has third party relationships regarding their Year 2000 compliance, the Company
cannot be assured that the third parties adequately considered the impact of the
Year 2000.
The Company completed its Year 2000 assessment of its IT resources. As a
small Internet company with minimal hardware and software, the following table
identifies the major subsystems that are employed in the Company's operations,
along with the Company's assessment of any Year 2000 impacts:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Subsystem Y2K Testing Y2K Assessment Post-Y2K Impact
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Routers, Hubs Complete Compliant None expected
- ---------------------------------------------------------------------------------------------------------
Servers Complete Compliant None expected
- ---------------------------------------------------------------------------------------------------------
Workstations Complete Compliant None expected
- ---------------------------------------------------------------------------------------------------------
Telephones, FAX Complete Compliant None expected
- ---------------------------------------------------------------------------------------------------------
Outside Service Vendors Complete Stated Compliance None expected
- ---------------------------------------------------------------------------------------------------------
</TABLE>
In addition, the Y2K Team evaluated information from other companies with
which the Company has material third party relationships. Such third parties,
in addition to the providers of IT and non-IT systems, consist of the Company's
transfer agent and financial institutions. The Company depends on its transfer
agent to maintain and track investor information and its financial institutions
for availability of cash. No such third parties have reported to the Company
any problems related to the Year 2000.
Achieving Year 2000 Compliance
The Y2K Team identified and completed upgrades for the hardware equipment
that was not year 2000 compliant. In addition, the Y2K Team identified and
completed upgrades of the software applications that were not Year 2000
compliant, although the Company cannot be assured that the upgrade solutions
provided by the vendors have addressed all possible Year 2000 issues. No such
issues have arisen to date.
The costs of these modifications have not been material and have involved a
reallocation of internal resources rather than incremental expenditures. The
Company engaged in a testing program to further ensure Year 2000 compliance.
This program did not identify additional modifications to the Company's internal
systems that were required prior to December 31, 1999. If problems exist that
were not identified, the Company could face unexpected expenses to fix such
problems or unanticipated website outages, either of which would harm its
business. No such problems have surfaced to date.
The Company uses third-party equipment and software that may not be Year
2000 compliant. Of the third parties investigated, all indicated that they were
Year 2000 compliant or would be Year 2000 compliant prior to the start of Year
2000. Although the Y2K Team received positive information from the companies
with which the Company has third party relationships regarding their Year 2000
compliance, the Company cannot be assured that the third parties adequately
considered the impact of the Year 2000. However, no third such third party has
reported experiencing any Year 2000 problems, and, to date, the Company has
experienced no problems related to the Year 2000 compliance of such third
parties.
Assessing the Risks of Non-Compliance and Developing Contingency Plans
There can be no assurance that the Company has been completely successful
in its efforts to address the Year 2000 issue or that problems arising from the
Year 2000 issue will not at some point cause a material adverse effect on the
operating results or financial condition of the Company. However, prior to
January 1, 2000, the Company believed that its most reasonably likely worst-case
scenario would relate to problems with the systems of third parties rather than
with the Company's internal systems, including computer systems necessary to
maintain the viability of the Internet, temporary power outages at distribution
centers, delayed transportation of products by third parties, temporary building
management issues (e.g., false fire alarms, malfunction of elevators, etc.), and
delayed customer purchases due to non-compliant personal computers. To date, no
such scenario has arisen.
Risk of Failure of Information and Non-Information Technology Systems
The Company might still be harmed if necessary upgrades or changes were not
identified or, if identified, were not timely and successfully implemented. The
Company also could still be harmed by Year 2000 problems at its vendors and
business partners. For example, the Company 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 the Company's
credit card vendors or other third-party equipment or software vendors to
properly process dates for the Year 2000 and thereafter could require the
Company 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 website outages. The Company's marketing efforts are also
dependent on the continued operation of Internet portals and other Internet
sites on which it advertises.
Although the Company has developed contingency plans with respect to
collecting payment under these circumstances, the Company 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. The Company'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 the
Company's business. Based on the inability of the Y2K Team to identify a
suitable alternative in case of Internet failure, the Y2K Team has determined
not to develop a contingency plan to address this risk. To date, no such
failures have occurred with respect to credit card processing or Internet
operations.
Risk of Loss of Short-Term Liquidity from Failure of Financial Institutions
to Achieve Year 2000 Compliance
The Company believed that the reasonably likely worst-case scenario with
regard to the Company's financial institutions was that some or all of its funds
on deposit with such financial institutions might be temporarily unavailable.
The Y2K Team determined that the Company's financial institutions had indicated
that their systems were Year 2000 compliant or were expected to be Year 2000
compliant prior to the Year 2000. Despite these statements from the financial
institutions, the Company could not be assured that the financial institutions
had addressed all possible Year 2000 issues. The loss of short-term liquidity
could have affected the Company's ability to pay its expenses on a current
basis. The Company did not, and does not,
Based upon the information gathered from the Company's financial
institutions and the inability of the Y2K Team to identify a suitable
alternative for the deposit of funds that was not subject to potential Year 2000
problems, the Y2K Team determined not to develop a contingency plan to address
this risk. To date, the Company's financial institutions have reported no
failures as a result of Year 2000 problems, and the Company has experienced no
loss of short-term liquidity.
Risk of Non-Compliance from Other Third Parties
The Company was limited in its efforts to address the Year 2000 issue as it
related to third parties and relied solely on the assurances of these third
parties as to their Year 2000 preparedness. Contingency plans were made in case
of third party non-compliance to seek alternative sources for goods and
services; however, no problems have developed to date.
-12-
<PAGE>
ITEM 3 - DESCRIPTION OF PROPERTY
Office Space
The Company leases approximately 871 square feet of office space at 35 West
Pine Street, Suites 211 and 226, Orlando, Florida 32801, at the current rental
rate of $692.44 per month (increasing to $769.37 per month on November 10, 1999.
The lease is for two years ending May 9, 2001, but the lease is renewable at the
Company's option for an additional one years. Currently, the facility is
adequate for the Company's operations, but Management expects that additional
facilities will be needed prior to the expiration of the lease.
Other
The Company owns or leases various computer equipment, telecommunications
equipment, furniture and office machinery at its location in Orlando, Florida.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) The following individuals hold five percent (5%) or more of the
outstanding voting stock of the Company. No other individual or any group is
known to the Company to be the beneficial owner of more than five percent (5%)
of any class of the Company's voting securities.
<TABLE>
<CAPTION>
Name and Address of Amount and nature of Percent of
Title of Class Beneficial Owner Beneficial Owner Class
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Raymond J. Hotaling III 8,471,694 owned directly 29.9%
35 West Pine St., Ste. 211
Orlando, Florida 32801
Common Stock Dennis A Kurir 8,471,694 owned directly 29.9%
35 West Pine St., Ste. 211
Orlando, Florida 32801
Common Stock Martin M. Meads 7,059,745 owned directly 24.9%
35 West Pine St., Ste. 211
Orlando, Florida 32801
</TABLE>
(b) The following includes beneficial ownership information for all
current executive officers and directors, and all who served as directors or
executive officers in the fiscal years ended January 31, 1998 and 1999.
-13-
<PAGE>
Tabular information is provided for outstanding securities plus any securities
that a person has a right to acquire within 60 days pursuant to options,
warrants, conversion privileges or other rights.
<TABLE>
<CAPTION>
Name and Address of Amount and nature of Percent of
Title of Class Beneficial Owner Beneficial Owner Class
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Raymond J. Hotaling III 8,471,694 owned directly 29.9%
President/ Secretary/
Chairman/ Director
35 West Pine St., Ste. 211
Orlando, Florida 32801
Common Stock Dennis A Kurir 8,471,694 owned directly 29.9%
CEO/Director
35 West Pine St., Ste. 211
Orlando, Florida 32801
Common Stock Martin M. Meads 7,059,745 owned directly 24.9%
Co-CEO/ Treasurer/
Director
35 West Pine St., Ste. 211
Orlando, Florida 32801
Common Stock Joel E. Cavalier - 0 - 0.0%
FORMER
President/Chairman/Director
65-55 Woodhaven Blvd.
Rego Park, NY 11374
Common Stock Nancy Scalia-Dunn - 0 - 0.0%
FORMER
Secretary/Treasurer/Director
65-55 Woodhaven Blvd.
Rego Park, NY 11374
Common Stock Matthew J. Cavalier 10,000 owned directly 0.04%
FORMER Director
65-55 Woodhaven Blvd.
Rego Park, NY 11374
Common Stock Jesse Clayton - 0 - 0.0%
FORMER Director
65-55 Woodhaven Blvd.
Rego Park, NY 11374
Common Stock All directors and officers 24,013,133 owned directly 84.8%
(current and former) as
a group (7 persons)
</TABLE>
(c) Management knows of no arrangements that may result in a change
of control of the Company.
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following presents directors, executive officers, promoters and control
persons of the Company as of October 20, 1999:
-14-
<PAGE>
<TABLE>
<CAPTION>
Name Age Title Term of Office
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Raymond J. Hotaling III 33 President Indefinite
Secretary Indefinite
Chairman of the Board (Director) 1 Year
Dennis A. Kurir 53 Chief Executive Officer Indefinite
Director 1 Year
Martin M. Meads 38 Co-Chief Executive Officer Indefinite
Treasurer Indefinite
Director 1 Year
</TABLE>
Raymond J. Hotaling III. Mr. Hotaling has been President, Secretary, a
-----------------------
Director and Chairman of the Board of the Company since March 10, 1999. He also
serves as the President and Secretary of the Company's wholly-owned subsidiary,
North Orlando Sports Promotions, Inc. Mr. Hotaling has been the President of
NOSP since its incorporation in 1995, and he has been responsible for its day-
to-day operations, including the design, development and marketing of the
corporate web site and Internet auction system, as well as daily accounting
functions. From 1993 to 1995, Mr. Hotaling was a materials engineer with Matrix
Composites, Inc. He also served as Flight Crew Systems Engineer with Lockheed
Space Operations Company from 1990 to 1993. Mr. Hotaling attended the State
University of New York at Binghamton from 1984 to 1986 and graduated from the
Florida Institute of Technology in 1989 with a B.S. in mechanical engineering.
Dennis A. Kurir. Mr. Kurir has been the Chief Executive Officer and a
---------------
Director of the Company since March 10, 1999. He also serves as the Chief
Executive Officer of NOSP, a position that he has held since 1995. From 1994 to
1995, Mr. Kurir served as the Orlando Print Show Manager, the North Florida Vice
President of Operations and then the Membership Director of the Printing
Association of Florida. Mr. Kurir graduated from Michigan Technological
University in 1967 with a B.S. in biological sciences. In 1971, after service
in the United States Army during the Vietnam War, he earned his M.B.A. from
Michigan Technological University.
Martin M. Meads. Mr. Meads has been the Treasurer and a Director of
---------------
the Company since March 10, 1999. He was also the Company's Senior Vice
President of Business Operations from March 10, 1999, until June 11, 1999, at
which time he became co-Chief Executive Officer. Mr. Meads also serves as the
Vice President and Treasurer of NOSP, a position he has held since February 18,
1999. Prior to March, 1999, Mr. Meads served as the President of The
Information SuperHighway Corporation ("TISH"), an Orlando, Florida based
Internet Service Provider (ISP) since June 1995. Mr. Meads was a senior systems
engineer at Coleman Research Corporation between September ,1992, and April,
1996. Mr. Meads holds B.S. and M.S. degrees in electrical engineering from
Michigan Technological University and also holds a M.S. degree in electro-optics
from the University of Central Florida.
As of October 20, l999, there were no family relationships among the
directors and executive officers. Further, to the knowledge of Management, no
director, executive officer, promoter or control person has been involved in any
legal proceedings during the past five years that are material to an evaluation
of the ability or integrity of such director, person nominated to become a
director, executive officer, promoter or control person of the Company. None of
the individuals listed in this Item 5 has had a bankruptcy petition filed by or
against any business of which such person was a general partner or executive
officer either at the time of such bankruptcy, if any, or within two years prior
to that time. No director, executive officer, promoter or control person was or
has been convicted in a criminal proceeding or is subject to a pending criminal
proceeding or subject to any order, judgment, or decree, not subsequently
reversed, suspended, or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, borrowing, or otherwise limiting his or
her involvement in any type of business, securities or banking activities. No
director, executive officer, promoter or control person has been found by a
court of competent jurisdiction in a civil action to have violated federal or
state securities or commodities laws.
-15-
<PAGE>
ITEM 6 - EXECUTIVE COMPENSATION
The following table sets forth the compensation paid during the last two
fiscal years to the chief executive officer of the Company. No information has
been shown for other executive officers, each of whom received less than
$100,000 in compensation in the last fiscal year. Due to the change of control
of the Company that occurred on March 10, 1999, the information provided below
reflects compensation paid during the past two fiscal years to the chief
executive officer of North Orlando Sports Promotions, Inc., who has served as
the chief executive officer of the Company since said change in control. All of
the current executive officers of the Company have served since March 10, 1999.
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
Annual compensation Long term compensation
Awards Payouts
Securities
Restricted underlying Other
Name and principal position Year Salary Bonus Total stock options/SARs Compensation
($) ($) ($) award(s) (#)
(a) (b) (c) (d) (e) ($) (g)
(f)
<S> <C> <C> <C> <C> <C> <C> <C>
Dennis A. Kurir, CEO 1998 19,434 -0- 19,434 -0- -0- -0-
1997 -0- -0- -0- -0- -0-
</TABLE>
Employment Contracts
As of October 20, 1999, there are no existing employment contracts.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 18, 1999, prior to the acquisition transaction by which the
Company acquired North Orlando Sports Promotions, Inc., NOSP acquired
substantially all of the assets, and assumed certain liabilities, of The
Information SuperHighway Corporation, a Florida corporation ("TISH"), in
exchange for 208 1/3 shares of the common stock of NOSP. TISH was wholly-owned
by Martin M. Meads, who also serves as the President and as a Director of TISH,
and Mr. Meads became the beneficial owner, by distribution from TISH, of the
shares of stock in NOSP received by TISH in that transaction. The shareholders
of NOSP prior to that transaction were Dennis A Kurir and Raymond J. Hotaling
III. Subsequent to that transaction, Mr. Meads became the Vice President and
Treasurer of NOSP, and he now also serves as the co-CEO, Treasurer and a
Director of the Company, positions he has held subsequent to the Company's
acquisition of NOSP on March 10, 1999. In that acquisition transaction, Mr.
Meads' 208 1/3 shares of stock in NOSP were acquired by the Company for
7,059,745 shares of the Company's Common Stock.
ITEM 8 - DESCRIPTION OF SECURITIES
The Company is authorized to issue 50,000,000 shares of Common Stock, par
value $0.001 per share. As of October 20, 1999, 28,321,946 shares of Common
Stock are outstanding, held of record by approximately 189 persons. The holders
of Common Stock are entitled to one vote for each share held of record on all
matters to be voted on by stockholders. There is no cumulative voting with the
result that the holders of more than 50% of the shares voting for the election
of directors can elect all of the directors. The holders of Common Stock are
entitled to receive dividends when, as and if declared by the Board of Directors
out of the funds legally available therefor. In the event of the liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining available for distribution
after payment of liabilities and after provision has been made for each class of
stock, if any, having preference over the Common Stock. Holders of shares of
Common Stock, as such, have no conversion, preemptive or other subscription
rights, and there are no redemption provisions applicable to the Common Stock.
The Company is not currently authorized to issue any shares of preferred
stock.
The U.S. Securities and Exchange Commission (the "Commission") has adopted
Rule 15g-9 under the Securities Exchange Act of 1934, as amended, which
established the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions.
For any transaction involving a penny stock, unless the transaction is
exempt, the rules require (i) that a broker or dealer approve a person's account
for transactions in penny stocks, and (ii) that the broker or dealer receive
from the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be purchased. In order to approve a
person's account for transactions in penny stocks, the broker or dealer must (i)
obtain financial information and information concerning the investment
experience and objectives of the person, and (ii) make a reasonable
determination that the transactions in penny stocks are suitable for that person
and that person has sufficient knowledge and experience in financial matters to
be capable of evaluating the risks of transactions in penny stocks. The broker
or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prepared by the Commission relating to the penny stock
market, which, in highlight form, (i) sets forth the basis upon which the broker
or dealer made the suitability determination, and (ii) sets forth that the
broker or dealer received a signed, written agreement from the investor prior to
the transaction.
Disclosure also must be made concerning the risks of investing in penny
stocks in both public offerings and in secondary trading, and concerning
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly
statements must be provided disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.
As a result of the penny stock trading restrictions, brokers or potential
investors may be reluctant to trade in the Company's securities, which may
result in less liquidity for the Company's stock.
-16-
<PAGE>
The Company has never paid any dividends. Future dividends, if any, will be
contingent upon the Company's revenues and earnings, if any, capital
requirements and general financial condition subsequent to the consummation of a
business combination. The payment of dividends is within the discretion of the
Company's Board of Directors. The Company presently intends to retain all
earnings, if any, for use in the Company's business operations and accordingly,
the Board does not anticipate declaring any dividends in the foreseeable future.
However, there are no current restrictions on the payment of dividends either by
contract or regulation.
PART II
ITEM 1 - MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
At the time of filing, only a limited market existed for common shares of
the Company. As of October 20, 1999, the Company had outstanding 28,321,946
shares of Common Stock with a par value of $0.001 per share. According to the
records of the Company's transfer agent, Olde Monmouth Stock Transfer Co., Inc.,
a total of 4,308,813 of those shares were freely tradeable over the counter.
(a) The Common Stock of the Company has been traded on the over-the-
counter market since September of 1998, initially under the symbol, LWTN. The
stock began trading under the symbol, UBUY, on March 22, 1999. The high and low
bid prices each fiscal quarter, in fraction and decimal form, since the second
quarter of 1998 are as follows:
<TABLE>
<CAPTION>
1998
----
High Low
<S> <C> <C>
3rd Quarter (9/1 to 9/30) 4/43 (0.093) 4/43 (0.093)
4th Quarter 4/43 (0.093) 4/43 (0.093)
1999
----
High Low
1st Quarter 2-1/2 (2.500) 4/43 (0.093)
2nd Quarter 3 (3.000) 81/85 (0.953)
3rd Quarter 11/16 (0.6875) 5/8 (0.625)
</TABLE>
The quotations above reflect interdealer prices without retail markup, mark down
or commission, and may not represent actual transactions.
(b) As of October 20, 1999, the Company had 189 Shareholders of record of
its common stock.
(c) The Company has not previously paid cash dividends on its Common
Stock. The payment of cash dividends from current earnings is not prohibited by
any agreements to which the Company is a party, but is subject to the discretion
of the Board of Directors and will be dependent upon many factors, including the
Company's earnings, its capital needs and its general financial condition. The
Company currently does not intend to pursue a policy of payment of dividends,
but rather to utilize any excess proceeds to finance the development and
expansion of its business.
ITEM 2 - LEGAL PROCEEDINGS
No legal proceedings are pending against the Company.
-17-
<PAGE>
ITEM 3 - CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
* Not applicable.
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES
On or about February 18, 1999, the Company concluded a private offering of
securities in reliance upon the exemption from registration requirements
provided by Rule 504, promulgated under the Securities Act of 1933, as amended
(the "Securities Act"). The Company sold one million units to 18 investors at
the offering price of $0.10 per unit, and each unit consisted of one share of
Common Stock, par value $0.001 per share, and one stock purchase warrant. Each
warrant entitled the holder thereof to purchase three additional shares of
Common Stock at a purchase price of $0.30 per share. Consequently, the total
offering price was $100,000, and an additional $900,000 would be received upon
the exercise of all of the warrants. No underwriting discounts or commissions
were paid. The warrants were exercisable by the holder at any time upon the
payment of the exercise price and a transfer agent fee of $25.00, until the
expiration of the warrant May 31, 1999. In addition, the Company could call a
warrant if the Common Stock traded at or above a $5.00 reported closing bid or
trade price for 10 consecutive trading days, upon 15 days' written notice to the
warrant holder of the Company's intention to do so, if the warrant holder shall
not have exercised the warrant prior to the end of such 15-day notice period.
Each investor in the offering executed a subscription agreement in which
such investor represented, among other things, that he, she or it was an
accredited investor, as such term is defined in the Securities Act. In
conducting the offering, the Company utilized an offering document that
disclosed the terms of the offering and the securities offered, as well as
information about the Company. It should be noted that the offering was
conducted and concluded by the Company's previous management prior to the
acquisition transaction by which the current controlling shareholders of the
Company obtained control of the Company. The current controlling shareholders,
in connection with the acquisition transaction, received assurances, in the form
of representations and warranties, that the offering was properly conducted in
accordance with the requirements of Rule 504 and applicable state securities
laws.
The exemption under Rule 504 is available to any issuer that is not a
reporting company pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended, or not a development stage company that either
has no specific business plan or purpose or has indicated that its business plan
is to engage in a merger or acquisition with an unidentified company or
companies, or other entity or person. Rule 504 allows companies to sell up to
$1,000,000 of its securities within a 12-month period in an exempt transaction
to an unlimited number of investors without regard to the investment
sophistication of the investor. In the registration provisions which require the
delivery of a prospectus before sale, there was no restriction on resale of the
securities by investors. Thus, the Common Stock issued under the Rule 504
exemption was "free-trading" and not restricted under federal law. Rule 504 was
amended effective April 7, 1999, subsequent to the completion of the offering,
and stock sold pursuant to that exemption would now be restricted and not "free-
trading."
Since the closing of the offering and the aforementioned acquisition
transaction, all of the holders of the stock purchase warrants sold during the
offering have exercised such warrants, resulting in the issuance of an
additional three million shares of Common Stock at the warrant exercise price of
$0.30 per share. Most of the shares of Common Stock issued pursuant to the
warrant exercises were issued as "free-trading"; however, 40,000 of such shares
of Common Stock were issued as restricted stock because the warrant holder
exercised his warrant subsequent to April 6, 1999, the effective date of the
amendment to Rule 504.
To the knowledge of management, the Company has undertaken no other sales
of its securities during the past three years. Neither NOSP nor TISH has sold
any of its securities during the past three years.
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
-18-
<PAGE>
The Company is incorporated in Delaware. Under Section 145 of the
Corporation Law of Delaware, a Delaware Company may, under specified
circumstances, indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director, officer, employee or agent of the Company, or is
or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement, actually and reasonably incurred by a director,
officer, employee or agent of the Company in connection with the action, suit or
proceeding, provided that such provision shall not eliminate or limit the
liability of an individual applying for indemnification if, unless otherwise
ordered by a court, a final adjudication establishes that (i) his acts or
omissions involved intentional misconduct, fraud, or a knowing violation of the
law and (ii) the act or omission was material to the cause of action.
The Company's Articles of Incorporation and Bylaws provide that the Company
may indemnify its officers, directors, employees and agents to the fullest
extent permissible under Delaware law. Directors and officers shall be, and
employees and agents may be, upon adoption of a resolution of the Board of
Directors, indemnified if made a party or threatened to be made a party, or
involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative, or any
appeal of such an action or any inquiry or investigation that could lead to such
an action, against judgments, penalties (including excise and similar taxes and
punitive damages), fines, settlements and reasonable expenses (including,
without limitation, attorneys' fees) actually incurred in connection with such
action. The Board of Directors has the option of making any indemnification
payments in advance and to purchase and maintain insurance to protect itself and
its officers, directors, employees and agents. These indemnification rights are
non-exclusive, but they will not eliminate or limit the liability of any
directors, officer, employee or agent to the extent that such person is found
liable for: (i) a breach of a duty of loyalty to the Company or its members;
(ii) an act or omission not in good faith that constitutes a breach of duty to
the Company or involves intentional misconduct or a knowing or reckless
violation of the law; (iii) a transaction from which the director, officer,
employee or agent received an improper benefit, whether or not the benefit
resulted from an action taken within the scope of the individual's duties; or
(iv) an act or omission for which liability is expressly provided by an
applicable statute.
The Company currently maintains a Directors and Officers liability
insurance policy with an annual aggregate limit of $1,000,000.
PART F/S
FINANCIAL STATEMENTS
NORTH ORLANDO SPORTS PROMOTIONS, INC.
Financial Statements
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
Independent Auditors' Report
To The Shareholders
North Orlando Sports Promotions, Inc.:
We have audited the accompanying balance sheets of North Orlando Sports
Promotions, Inc. as of December 31, 1998 and 1997 and the related statements of
operations, stockholders' equity 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 audits.
-19-
<PAGE>
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of North Orlando Sports
Promotions, Inc. as of December 31, 1998 and 1997 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
- ------------------
Orlando, Florida
September 24, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NORTH ORLANDO SPORTS PROMOTIONS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Balance Sheets
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------
Current assets:
- --------------------------------------------------------------------------------
Cash and cash equivalents $ 3,506 1,597
- --------------------------------------------------------------------------------
Accounts receivable 1,983 4,323
- --------------------------------------------------------------------------------
Inventory 39,886 22,987
- --------------------------------------------------------------------------------
Due from related parties 6,988 --
- --------------------------------------------------------------------------------
Total current assets 52,363 28,907
- --------------------------------------------------------------------------------
Equipment, less accumulated depreciation of $16,124 in
1998 and $9,057 in 1997 8,082 11,450
- --------------------------------------------------------------------------------
$60,445 40,357
- --------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- --------------------------------------------------------------------------------
Current liabilities:
- --------------------------------------------------------------------------------
Accounts payable and accrued expenses $20,733 14,081
- --------------------------------------------------------------------------------
Due to related parties 34,304 5,353
- --------------------------------------------------------------------------------
Total current liabilities 55,037 19,434
- --------------------------------------------------------------------------------
Long-term liabilities:
- --------------------------------------------------------------------------------
Due to related parties -- 11,259
- --------------------------------------------------------------------------------
Total long-term liabilities -- 11,259
- --------------------------------------------------------------------------------
Stockholders' equity:
- --------------------------------------------------------------------------------
Common stock, par value $1; 500 shares authorized,
issued and outstanding 500 500
- --------------------------------------------------------------------------------
Additional paid-in capital 72,500 59,500
- --------------------------------------------------------------------------------
Retained earnings (accumulated deficit) (67,592) (50,336)
- --------------------------------------------------------------------------------
Total stockholders' equity 5,408 9,664
- --------------------------------------------------------------------------------
$60,445 40,357
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
-20-
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
NORTH ORLANDO SPORTS PROMOTIONS, INC.
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Statements of Operations
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Years ended December 31, 1998 and 1997
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
1998 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
Revenues:
- -------------------------------------------------------------------------------------------------------
Sales $ 399,392 212,379
- -------------------------------------------------------------------------------------------------------
Commission income 10,031 9,780
- -------------------------------------------------------------------------------------------------------
409,423 222,159
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Cost of sales 290,511 166,555
- -------------------------------------------------------------------------------------------------------
Gross profit 118,912 55,604
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Expenses:
- -------------------------------------------------------------------------------------------------------
Selling, general and administrative 125,934 83,505
- -------------------------------------------------------------------------------------------------------
Depreciation 7,067 5,795
- -------------------------------------------------------------------------------------------------------
Interest 3,167 1,332
- -------------------------------------------------------------------------------------------------------
Total expenses 136,168 90,632
- -------------------------------------------------------------------------------------------------------
Net (loss) $ (17,256) (35,028)
=========== ==========
- -------------------------------------------------------------------------------------------------------
Weighted average shares outstanding 16,943,388 16,943,388
- -------------------------------------------------------------------------------------------------------
Loss per share (.001) (.002)
- -------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
-21-
<PAGE>
- --------------------------------------------------------------------------------
NORTH ORLANDO SPORTS PROMOTIONS, INC.
- --------------------------------------------------------------------------------
Statements of Stockholders' Equity
- --------------------------------------------------------------------------------
Years ended December 31, 1998 and 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Retained
Additional earnings Total
Common paid-in (accumulated stockholders'
stock capital deficit) equity
- --------------------------------------------------------------------------------
Balances at December 31, 1996 $ 500 7,500 (15,308) (7,308)
- --------------------------------------------------------------------------------
Net (loss) -- -- (35,028) (35,028)
- --------------------------------------------------------------------------------
Capital Contribution (see note 2) -- 52,000 -- 52,000
- --------------------------------------------------------------------------------
Balances at December 31, 1997 500 59,500 (50,336) 9,664
- --------------------------------------------------------------------------------
Net (loss) -- -- (17,256) (17,256)
- --------------------------------------------------------------------------------
Capital Contribution (see note 2) -- 13,000 -- 13,000
- --------------------------------------------------------------------------------
Balances at December 31, 1998 $ 500 72,500 (67,592) 5,408
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
-22-
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------
NORTH ORLANDO SPORTS PROMOTIONS, INC.
- ------------------------------------------------------------------------------------
Statement of Cash Flows
- ------------------------------------------------------------------------------------
Years ended December 31, 1998 and 1997
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------
1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------------
Cash flows used in operating activities:
- ------------------------------------------------------------------------------------
Net (loss) $(17,256) (35,028)
- ------------------------------------------------------------------------------------
Adjustments to reconcile net (loss) income to net cash used
in operating activities:
- ------------------------------------------------------------------------------------
Depreciation 7,067 5,795
- ------------------------------------------------------------------------------------
Fair Value of services contributed by stockholders 13,000 52,000
- ------------------------------------------------------------------------------------
Cash provided by (used in) changes in assets
and liabilities:
- ------------------------------------------------------------------------------------
Accounts receivable 2,340 (3,645)
- ------------------------------------------------------------------------------------
Inventory (16,899) (12,900)
- ------------------------------------------------------------------------------------
Accounts payable and accrued expenses (6,652) 5,467
- ------------------------------------------------------------------------------------
Net cash (used in) provided by operating activities (5,096) 11,689
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Cash flows used in investing activities:
- ------------------------------------------------------------------------------------
Capital expenditures (3,699) (5,288)
- ------------------------------------------------------------------------------------
Net cash used in investing activities (3,699) (5,288)
- ------------------------------------------------------------------------------------
Cash flows from financing activities:
- ------------------------------------------------------------------------------------
Advances to related parties (6,562) --
- ------------------------------------------------------------------------------------
Proceeds from issuance of notes payable to related parties 45,500 4,538
- ------------------------------------------------------------------------------------
Proceeds from issuance of notes payable 20,000 --
- ------------------------------------------------------------------------------------
Principal payments on notes payable to related parties (28,234) --
- ------------------------------------------------------------------------------------
Principal payments on notes payable (20,000) (15,523)
- ------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 10,704 (10,985)
- ------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 1,909 (4,584)
- ------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 1,597 6,181
- ------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 3,506 1,597
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 2,097 $ 1,236
- ------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------------
</TABLE>
-23-
<PAGE>
NORTH ORLANDO SPORTS PROMOTIONS, INC.
Notes to Financial Statements
December 31, 1998 and 1997
(1) Summary of Significant Accounting Policies
(a) Description of Business
North Orlando Sports Promotion, Inc. (the "Company") operates on-line
auctions specializing in sports memorabilia. The Company's primary
site for operations is www.SportsAuction.com., which focuses on the
----------------------
collectibles market. The Company generates revenue by procuring
specialty merchandise at the wholesale level and selling it at retail
in an on-line format. Examples of typical inventory would include
autographed memorabilia (photos, football jerseys, balls, hats, etc.),
sports cards, and other related collectibles. The Company also
generates commissions revenue through consignment sales of
memorabilia.
(b) Cash and cash equivalents
The Company considers cash and short-term highly liquid investments
with original maturities of three months or less to be cash
equivalents.
(c) Inventories
Inventories are stated at the lower of cost or market. Cost is
determined principally on the specific identification method.
Provisions for potentially obsolete or slow-moving inventory is made
based on management's analysis of inventory levels.
Consignment inventory is not recorded as inventory by the Company and
is not placed in an auction until the merchandise is received. If a
consignment item does not sell in an auction, the Company requests
that the consignor lower the minimum bid or withdraw the item from the
auction.
(d) Equipment
Equipment is stated at cost less accumulated depreciation.
Depreciation of equipment is computed using the straight-line method
over its estimated useful life of 3 years.
(e) Income Taxes
The Company is considered an S-corporation for federal income tax
purposes. As such, the Company is not subject to federal income taxes
directly. Income or loss of the Company passes through to the
individual stockholders.
(f) Revenue Recognition
The Company sells merchandise to customers under one of two types of
sales transactions. The Company either purchases merchandise and sells
it to customers or sells merchandise to customers under consignment
arrangements and earns a commission.
Revenue from sales of purchased merchandise is recognized and title
passes when the Company receives verification of the credit card
transaction or verification of the check clearing and the related
merchandise has been shipped.
Commission income from consignment sales is calculated as a percentage
of the final sales value at the close of the auction and recognized
when the Company receives verification of the credit card transaction
or verification of the check. Commission is paid to the consignor
after the merchandise has been shipped.
(g) Merchandise Return Policy
The Company guarantees all items to be authentic, including
consignment items. Any item may be returned within seven days for a
full refund provided that the item has not been altered.
-24-
<PAGE>
(h) Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(i) Earning Per Share
The Company has reflected earnings per share in the accompanying
statements of operation utilizing the weighted average number of
shares after giving consideration to the transaction with Lawton -
York described in note 4 to the financial statements.
(j) Comprehensive Income
In June 1997, the Financial Accounting Standards Board established
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income." This Statement establishes standards for
reporting and display of comprehensive income and its components in a
full set of financial statements. This Statement requires that an
enterprise classify items or other comprehensive income by nature in a
financial statement and display the accumulated balance of other
comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of a balance sheet.
The Company adopted this Statement effective January 1, 1998. The
Company does not have any components of other comprehensive income
for the years ended December 31, 1998 and 1997.
(2) Related Party Transactions
From January 1, 1997 to March 31, 1998, the Company's officers and
stockholders (the "Officers") provided administrative, purchasing and
engineering services to the Company without compensation. Also during 1998
and 1997, the Company did not incur rental expense as its operations were
conducted from the personal residences of one of the Company's Officers.
For the year ended December 31, 1998 and 1997 the Company has included a
charge to operations amounting to $ 13,000 and $ 52,000 for those services
with a corresponding capital contribution by the officers.
During 1998 and 1997, the Officers auctioned collectible merchandise
through the Company as consignors and did not pay the Company a commission
for this service.
At December 31, 1998 and 1997, notes payable bearing interest of 14% and
due August 31, 1999 in the amount of $34,304 and $5,353, respectively, was
due to related parties. Subsequent to December 31, 1998, the notes were
paid off.
(3) Year 2000 (Unaudited)
The Company is dependent on computer systems and system applications for
conducting its ongoing business functions. In 1998, the Company began its
process of identifying, evaluating and implementing changes to computer
programs necessary to address the year 2000 issue. This issue involves the
ability of computer systems that have time sensitive programs to recognize
properly the year 2000. The inability to do so could result in failures or
miscalculations, which could disrupt the Company's ability to meet its
customer and other obligations on a timely basis.
In addition, the Company is developing contingency plans to address
perceived risks associated with the Year 2000 effort. These include
business resumption plans to address the possibility of internal systems
failures and the possibility of failure of systems or processes outside the
Company's control. Preparations for the management of the date change will
continue through 1999.
(4) Subsequent Events
Subsequent to December 31, 1998, the Company acquired the net assets of The
Information SuperHighway Corporation (TISH) in exchange for approximately
208 shares of the Company's common stock which represented approximately
29% of the Company's outstanding shares. The acquisition was accounted for
as a purchase. On the date of acquisition, February 18, 1999, assets were
approximately $10,000.
Subsequent to December 31, 1998 and the acquisition of TISH described in
the preceding paragraph, AuctionAnything.com (previously Lawton - York),
acquired 100% of the Company in exchange for 85%, or 24,003,133 shares of
the outstanding shares of AuctionAnything.com. As a result, the two
shareholders of the Company at December 31, 1998 each received 8,471,694
shares of AuctionAnything.com and the former shareholder of TISH received
7,059,745 shares of AuctionAnything.com. In anticipation of the
acquisition, AuctionAnything.com completed a private offering of 1,000,000
units at an offering price of $.10 per unit. Each unit consisted of one
share of common stock and one stock purchase warrant. Each stock purchase
warrant entitled the holder to purchase three shares of common stock of
AuctionAnything.com for $.30 per share. A total of 4,000,000 shares of
common stock were issued and sold by AuctionAnything.com for net proceeds
of approximately $925,000. The proceeds of the offering will be used for
working capital and to fund the Company's expansion plans.
Subsequent to the acquisition of the Company by AuctionAnything.com, on
March 10, 1999, the assets and liabilities of AuctionAnything.com were
liquidated and the Company became a wholly-owned subsidiary of
AuctionAnything.com.
-25-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AUCTIONANYTHING.COM, INC.
- --------------------------------------------------------------------------------
Balance Sheets
- --------------------------------------------------------------------------------
August 31, 1999 and 1998
- --------------------------------------------------------------------------------
(Unaudited)
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------
Current assets:
- --------------------------------------------------------------------------------
Cash and cash equivalents $ 301,485 46,714
- --------------------------------------------------------------------------------
Accounts receivable 18,433 4,892
- --------------------------------------------------------------------------------
Inventory 278,236 21,663
- --------------------------------------------------------------------------------
Prepaid and other assets 51,094 --
- --------------------------------------------------------------------------------
Due from related parties -- 6,052
- --------------------------------------------------------------------------------
Total current assets 649,248 79,321
- --------------------------------------------------------------------------------
Equipment, less accumulated depreciation of $22,733 45,485 6,309
- --------------------------------------------------------------------------------
$ 694,733 85,360
- --------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- --------------------------------------------------------------------------------
Current liabilities:
- --------------------------------------------------------------------------------
Accounts payable and accrued expenses $ 34,837 16,110
- --------------------------------------------------------------------------------
Due to related parties -- 48,404
- --------------------------------------------------------------------------------
Total current liabilities 34,837 64,514
- --------------------------------------------------------------------------------
Stockholders' equity:
- --------------------------------------------------------------------------------
Common stock, par value $.001; 50,000,000 shares
authorized; 28,238,980 shares issued and
outstanding 28,239 500
- --------------------------------------------------------------------------------
Additional paid-in capital 980,053 72,500
- --------------------------------------------------------------------------------
Retained earnings (accumulated deficit) (348,396) (51,884)
- --------------------------------------------------------------------------------
Total stockholders' equity 659,896 21,116
- --------------------------------------------------------------------------------
$ 694,733 85,630
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Subsequent to December 31, 1998, the Company entered into an operating lease for
office space as well as assuming an operating lease in conjunction with the
purchase of the assets of TISH. The future minimum lease payments under these
non-cancelable operating leases are as follows:
Year ending December 31,
------------------------------
1999 $ 7,634
2000 10,904
2001 3,300
--------
Total minimum lease payments $ 21,838
========
-26-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AUCTIONANYTHING.COM
- --------------------------------------------------------------------------------
Statements of Operations
- --------------------------------------------------------------------------------
Eight months ended August 31, 1999 and 1998
- --------------------------------------------------------------------------------
(Unaudited)
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
Revenues:
- --------------------------------------------------------------------------------
Sales $ 400,198 250,720
- --------------------------------------------------------------------------------
Internet service revenue 43,615 --
- --------------------------------------------------------------------------------
Commissions income 4,015 7,393
- --------------------------------------------------------------------------------
447,828 258,113
- --------------------------------------------------------------------------------
Cost of sales 290,602 155,946
- --------------------------------------------------------------------------------
Gross profit 157,226 102,167
- --------------------------------------------------------------------------------
Expenses:
- --------------------------------------------------------------------------------
Selling, general and administrative expenses 429,904 97,339
- --------------------------------------------------------------------------------
Depreciation 6,665 5,209
- --------------------------------------------------------------------------------
Interest 1,461 1,167
- --------------------------------------------------------------------------------
Total expenses 438,030 103,715
- --------------------------------------------------------------------------------
Net (loss) $(280,804) (1,548)
========= ========
- --------------------------------------------------------------------------------
Weighted average shares outstanding 25,692,623 16,943,388
- --------------------------------------------------------------------------------
Loss per share (.011) (.000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
</TABLE>
-27-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AUCTIONANYTHING.COM, INC.
- --------------------------------------------------------------------------------
Statement of Stockholders' Equity
- --------------------------------------------------------------------------------
Eight months ended August 31, 1999
- --------------------------------------------------------------------------------
(Unaudited)
- --------------------------------------------------------------------------------
Retained
Additional earnings Total
Common paid-in (accumulated stockholders'
stock capital deficit) equity
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Balances at December 31, 1998 $ 500 72,500 (67,592) 5,408
- --------------------------------------------------------------------------------
Common stock issued (note 4) 27,739 907,553 -- 935,292
- --------------------------------------------------------------------------------
Net loss -- -- (280,804) (280,804)
- --------------------------------------------------------------------------------
Balances at August 31, 1999 $28,239 980,053 (348,396) 659,896
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
-28-
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
AUCTIONANYTHING.COM, INC.
- ----------------------------------------------------------------------------------------------
Statements of Cash Flows
- ----------------------------------------------------------------------------------------------
Eight months ended August 31, 1999 and 1998
- ----------------------------------------------------------------------------------------------
(Unaudited)
- ----------------------------------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
Cash flows used in operating activities:
- ----------------------------------------------------------------------------------------------
Net (loss) income $(280,804) (1,548)
- ----------------------------------------------------------------------------------------------
Adjustments to reconcile net (loss) income to net cash used
in operating activities:
- ----------------------------------------------------------------------------------------------
Depreciation 6,665 5,209
- ----------------------------------------------------------------------------------------------
Fair value of services contributed by stockholders -- 13,000
- ----------------------------------------------------------------------------------------------
Cash provided by (used in) changes in assets
and liabilities:
- ----------------------------------------------------------------------------------------------
Accounts receivable (16,450) (569)
- ----------------------------------------------------------------------------------------------
Prepaid and other assets (51,094) --
- ----------------------------------------------------------------------------------------------
Inventory (238,350) 1,324
- ----------------------------------------------------------------------------------------------
Accounts payable and accrued expenses 14,104 2,029
- ----------------------------------------------------------------------------------------------
Due to/from related parties 6,988 (8,612)
- ----------------------------------------------------------------------------------------------
Net cash (used in) provided by operating activities (558,941) 10,833
- ----------------------------------------------------------------------------------------------
Cash flows used in investing activities:
- ----------------------------------------------------------------------------------------------
Capital expenditures (44,068) (68)
- ----------------------------------------------------------------------------------------------
Net cash used in investing activities (44,068) (68)
- ----------------------------------------------------------------------------------------------
Cash flows from financing activities:
- ----------------------------------------------------------------------------------------------
Proceeds from issuance of common stock 935,292 --
- ----------------------------------------------------------------------------------------------
Principal payments on notes payable to related parties (34,304) --
- ----------------------------------------------------------------------------------------------
Proceeds from notes payable to related parties -- 34,352
----------------------------------------------------------------------------------------------
Net cash provided by financing activities 900,988 34,352
- ----------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 297,979 45,117
- ----------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 3,506 1,597
- ----------------------------------------------------------------------------------------------
Cash and cash equivalents at end of eight months $ 301,485 46,714
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Cash paid during the eight months for interest $ 1,720 $ 768
- ----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
-29-
<PAGE>
AUCTIONANYTHING.COM
Notes to Financial Statements
August 31, 1999 and 1998
(Unaudited)
(1) Summary of Significant Accounting Policies
(a) Description of Business
AuctionAnything.com, Inc. (the "Company") operates on-line auctions
specializing in sports memorabilia. The Company's primary site for
operations is www.SportsAuction.com., which focuses on the
----------------------
collectibles market. The Company generates revenue by procuring
specialty merchandise at the wholesale level and selling it at retail
in an on-line format. Examples of typical inventory would include
autographed memorabilia (photos, football jerseys, balls, hats, etc.),
sports cards, and other collectibles such as Beanie Babies. The
Company also generates commissions revenue through consignment sales
of memorabilia.
(b) Cash and Cash Equivalents
The company considers cash and short-term highly liquid investments
with original maturities of three months or less to be cash
equivalents.
(c) Inventories
Inventories are stated at the lower of cost or market. Cost is
determined principally on the specific identification method.
Provisions for potentially obsolete or slow-moving inventory is made
based on management's analysis of inventory levels.
Consignment inventory is not recorded as inventory by the Company and
is not placed in an auction until the merchandise is received. If a
consignment item does not sell in an auction, the Company requests
that the consignor lower the minimum bid or withdraw the item from the
auction.
(d) Equipment
Equipment is stated at cost less accumulated depreciation.
Depreciation of equipment is computed using the straight-line method
over its estimated useful life of 3 years. Depreciation expense was
$6,665 for the eight months ended August 31, 1999.
(e) Income Taxes
The Company was considered an S-corporation for federal income tax
purposes through March 9, 1999. As such, the Company was not subject
to federal income taxes directly. Income or loss of the Company passed
through to the individual stockholders. Effective March 10, 1999, the
Company is considered a C-corporation for federal income tax purposes.
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases, and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
(f) Revenue Recognition
-30-
<PAGE>
The Company sells merchandise to customers under one of two types of
sales transactions. The Company either purchases merchandise and sells
it to customers or sells merchandise to customers under consignment
arrangements and earns a commission.
Revenue from sales of purchased merchandise is recognized and title
passes when the Company receives verification of the credit card
transaction or verification of the check clearing and the related
merchandise has been shipped.
Commission income from consignment sales is calculated as a percentage
of the final sales value at the close of the auction and recognized
when the Company receives verification of the credit card transaction
or verification of the check. Commission is paid to the consignor
after the merchandise has been shipped.
(g) Merchandise Return Policy
The Company guarantees all items to be authentic, including
consignment items. Any item may be returned within seven days for a
full refund provided that the item has not been altered.
(h) Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(i) General
The financial statements of the Company as of and for the eight month
period ended August 31, 1999 and 1998 have not been audited. In the
opinion of management, the unaudited financial statements include all
adjustments and accruals necessary to present fairly the Company's
financial position at August 31, 1999 and 1998 and the results of its
operations for the eight months ended August 31, 1999 and 1998.
Results for interim periods are not necessarily indicative of the
results to be expected during the remainder of the current year or for
any future period.
(2) Related Party Transactions
During 1999, the Officers auctioned collectible merchandise through the
Company as consignors and did not pay the Company a commission for this
service.
Notes payable bearing interest of 14% with a balance of $34,304 were paid
in full to related parties on March 31, 1999.
(3) Year 2000
The Company is dependent on computer systems and system applications for
conducting its ongoing business functions. In 1998, the Company began its
process of identifying, evaluating and implementing changes to computer
programs necessary to address the year 2000 issue. This issue involves the
ability of computer systems that have time sensitive programs to recognize
properly the year 2000. The inability to do so could result in failures or
miscalculations, which could disrupt the Company's ability to meet its
customer and other obligations on a timely basis.
In addition, the Company is developing contingency plans to address
perceived risks associated with the Year 2000 effort. These include
business resumption plans to address the possibility of internal systems
failures and the possibility of failure of systems or processes outside the
Company's control. Preparations for the management of the date change will
continue through 1999.
(4) Acquisition
On March 10, 1999, the Company closed a transaction by which it acquired
100% of the outstanding capital stock of North Orlando Sports Promotions,
Inc., a privately held Florida Corporation ("NOSP") from the shareholders
of NOSP. As consideration for this acquisition, the Company issued
24,003,133 shares of its common stock, $.001 par value (the "Common
Stock"), which amounted to approximately 85% of the Company's outstanding
Common Stock, to the three former shareholders of NOSP. Also, prior to the
closing of the transaction, the Company sold substantially all of its pre-
acquisition assets to its majority pre-acquisition shareholder in exchange
for his assignment to the Company of 747,116 shares of common stock and his
assumption of all of the Company's pre-acquisition liabilities.
-31-
<PAGE>
In anticipation of the acquisition, the Company completed a private
offering of 1,000,000 units at an offering price of $.10 per unit. Each
unit consists of one share of common stock and one stock purchase warrant.
Each stock purchase warrant entitled the holder to purchase three shares of
common stock of the Company for $.30 per share. A total of 4,000,000 shares
of common stock were issued and sold by the Company for net proceeds of
approximately $925,000. The proceeds of the offering will be used for
working capital and to fund the Company's expansion plans.
(5) Leases
During 1999, the Company entered into an operating lease for office space.
The future minimum lease payments under these non-cancelable operating
leases are as follows:
<TABLE>
<CAPTION>
Operating
Year ending December 31, leases
--------------------------------- ----------
<S> <C>
1999 $ 3,414
2000 10,904
2001 3,300
----------
Total minimum lease payments $ 17,618
==========
</TABLE>
(6) Income Taxes
The following is a reconciliation between expected income tax benefit and
actual using the applicable statutory federal income tax rate of 34% and
applicable state of Florida income tax rate of 5.5% for the eight month
period ended August 31, 1999:
<TABLE>
<S> <C>
Expected tax benefit $ 110,918
Allowance (110,918)
-----------
$ --
===========
</TABLE>
The tax effect of temporary differences that give rise to deferred tax
assets as of August 31, 1999 are as follows:
<TABLE>
<S> <C>
Deferred tax asset:
Net operating loss $ 110,918
Less allowance (110,918)
-----------
Total $ --
===========
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the projected future taxable income and tax planning strategies,
as well as carryback opportunities, in making this assessment. Based upon
the level of historical taxable income, projections for future taxable
income over the periods in which the deferred tax assets are deductible,
management believes it is more likely than not the Company will not realize
the benefits of these deductible differences.
PART III
ITEM 1- INDEX TO EXHIBITS
-32-
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page
Number Number Description
- ------ ------ -----------
<S> <C> <C>
2.1 - Certificate of Incorporation of the Company and
all Amendments thereto (filed with Form 10-SB on
October 28, 1999, and incorporated herein by
reference)
2.2 - Bylaws of the Company (filed with Form 10-SB on
October 28, 1999, and incorporated herein by
reference)
3.1 - Article Fourth of the Certificate of
Incorporation of the Company, as amended (filed
with Form 10-SB on October 28, 1999, and
incorporated herein by reference)
3.2 - Articles II, V and VI of the Bylaws of the
Company (filed with Form 10-SB on October 28,
1999, and incorporated herein by reference)
6.1 - Office Lease dated May 10, 1999, between the
Company and Tradewinds Office Building (filed
with Form 10-SB on October 28, 1999, and
incorporated herein by reference)
6.2 - Acquisition Agreement dated February 18, 1999,
among the Company, North Orlando Sports
Promotions, Inc., and the Shareholders of North
Orlando Sports Promotions, Inc. (filed with
Form 10-SB on October 28, 1999, and
incorporated herein by reference)
6.3 - Asset Purchase Agreement dated February 18,
1999, between North Orlando Sports Promotions,
Inc., and The Information SuperHighway
Corporation (filed with Form 10-SB on October
28, 1999, and incorporated herein by reference)
6.4 - Form of Stock Purchase Warrant dated March 17,
1999 (filed herewith)
10.1 - Consent of KPMG LLP (filed with Form 10-SB/A on
November 11, 1999, and incorporated herein by
reference
</TABLE>
ITEM 2- DESCRIPTION OF EXHIBITS
The documents listed in Item 1- Index to Exhibits, other than Exhibit
6.4, which is attached hereto, were attached to the initial filing or first
amended filing of this registration statement as exhibits and are incorporated
herein by this reference. Exhibit 2.1 consists of the Certificate of
Incorporation of the Company on file with the Secretary of State of Delaware,
together with all amendments thereto to date. Exhibit 2.2 is the current Bylaws
of the Company. Exhibits 3.1 and 3.2 are those portions of Exhibits 2.1 and 2.2
that describe the rights of the Company's security holders. Exhibits 3.1 and 3.2
are not filed herewith as separate exhibits, but they are referred to in the
Index to Exhibits in order to identify where such information may be found in
Exhibits 2.1 and 2.2. Exhibit 6.1 is the Office Lease that is described in Item
3 of Part I of this registration statement. Exhibit 6.2 is the Acquisition
Agreement that is first described in the Corporate History section of Item 1 of
Part I of this registration statement. Exhibit 6.3 is the Asset Purchase
Agreement that is first described in Item 7 of Part I of this registration
statement. Exhibit 6.4 is the form of Stock Purchase Warrant that is first
described in the Selected Balance Sheet Items section of Item 2 of Part I of
this registration statement. Exhibit 10.1 is the consent of KPMG LLP.
-33-
<PAGE>
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.
AUCTIONANYTHING.COM, INC.
Date: January 18, 2000 By: /s/ Raymond J. Hotaling III
----------------------------------------
Raymond J. Hotaling III, President
-34-
<PAGE>
EXHIBIT 6.4
THIS WARRANT MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED, EXCEPT
IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT), AND ALL APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE ACT, OR UNDER THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES, AND MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH, OR
PURSUANT TO AN EXEMPTION FROM, THE REQUIREMENTS OF SUCH LAWS.
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR OTHERWISE
QUALIFIED FOR RESALE BY THE HOLDER UNDER APPLICABLE SECURITIES LAWS AND MAY
NOT BE SOLD OR TRANSFERRED EXCEPT AS PERMITTED BY APPLICABLE SECURITIES
LAWS INCLUDING (i) IN RELIANCE ON EXEMPTIONS FROM REGISTRATION OR
PROSPECTUS REQUIREMENTS OR (ii) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR VALID PROSPECTUS.
THIS WARRANT IS, AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT WILL BE, ISSUED IN RELIANCE UPON THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 504 OF REGULATION D, PROMULGATED UNDER THE
ACT. RULE 504 HAS BEEN AMENDED BY THE U.S. SECURITIES AND EXCHANGE
COMMISSION EFFECTIVE APRIL 7, 1999, AND SHARES ISSUED UPON EXERCISE OF THIS
WARRANT SUBSEQUENT TO THAT DATE WILL BE SUBJECT TO THE AMENDED PROVISIONS
OF RULE 504 AND WILL BEAR A RESTRICTIVE LEGEND.
No. W-__ ________ SHARES
WARRANT TO PURCHASE
_______ SHARES OF COMMON STOCK
OF THE LAWTON-YORK CORPORATION
(NOW KNOWN AS AUCTIONANYTHING.COM, INC.)
This certifies that __________________ ("Warrant Holder") or assigns
--------------
permitted hereunder, is entitled to purchase from The Lawton-York Corporation, a
Delaware corporation now known as AuctionAnything.com, Inc. (the "Company"), at
-------
any time on or prior to May 31, 1999 (the "Expiration Date"), the number of duly
---------------
authorized, fully paid and non-assessable shares of Common Stock, par value
$.001 per share, of the Company (the "Common Stock") stated above at the
------------
Exercise Price (as hereinafter defined). The Exercise Price and the number of
Warrant Shares (as hereinafter defined) that may be purchased on exercise of
this Warrant are subject to adjustment as provided in Article III.
<PAGE>
This Warrant is hereby issued pursuant to and subject in all respects to
the terms and conditions set forth in the Subscription Agreement, dated on or
about February 18, 1999, executed by the Warrant Holder (the "Subscription
Agreement"). Capitalized terms used but not otherwise defined herein shall have
the meaning ascribed to such term in the Subscription Agreement.
ARTICLE I
DEFINITIONS
-----------
Section 1.01. As used herein, the following terms shall have the
------------
meanings ascribed to such terms:
"Business Day" means a day other than a Saturday, Sunday or other day
------------
on which banks in the State of Florida are authorized by law to remain closed.
"Exercise Price" means initially $0.30 per share of Common Stock, as
--------------
that price may be adjusted from time to time as provided in Article III.
"Form of Assignment" has the meaning specified in Section 5.02.
------------------
"Subscription Form" has the meaning specified in Section 2.02.
-----------------
"Warrant Holder" means the person or entity named on the first page
--------------
hereof or any Person in whose name this Warrant is registered on the books of
the Company.
"Warrants" means this Warrant and all warrants of like tenor issued
--------
pursuant to the Subscription Agreement.
"Warrant Shares" means the shares of Common Stock, or any other
--------------
securities deliverable upon exercise of the Warrants.
ARTICLE II
EXERCISE OF WARRANT
-------------------
Section 2.01. (a) This Warrant may be exercised, in whole or in part,
------------
by the Warrant Holder at any time during the period commencing on the date of
issuance of this Warrant until May 31, 1999. THIS WARRANT IS, AND THE SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT WILL BE, ISSUED IN RELIANCE
UPON THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 504 OF REGULATION D,
PROMULGATED UNDER THE ACT. RULE 504 HAS BEEN AMENDED BY THE U.S. SECURITIES AND
EXCHANGE COMMISSION EFFECTIVE APRIL 7, 1999, AND SHARES ISSUED UPON EXERCISE OF
THIS WARRANT SUBSEQUENT TO THAT DATE WILL BE SUBJECT TO THE AMENDED PROVISIONS
OF RULE 504 AND WILL BEAR A RESTRICTIVE LEGEND. IN ADDITION, THE COMPANY MAY
CALL THIS WARRANT SHOULD THE COMPANY'S COMMON STOCK TRADE AT OR ABOVE $5.00
REPORTED CLOSING BID OR TRADE PRICE FOR 10 CONSECUTIVE TRADING DAYS, UPON 15
DAYS' WRITTEN NOTICE TO THE WARRANT HOLDER OF THE COMPANY'S INTENTION TO DO SO,
IF THE WARRANT
-2-
<PAGE>
HOLDER SHALL NOT HAVE EXERCISED THIS WARRANT PRIOR TO THE END OF SUCH 15-DAY
NOTICE PERIOD.
Section 2.02.
------------
(a) To exercise this Warrant in whole or in part, the Warrant Holder
must surrender this Warrant on or prior to the Expiration Date, with the
Subscription Form attached hereto as Exhibit B (the "Subscription Form") duly
--------- -----------------
executed, to the Company at its office specified in Section 6.02.
(b) When the Company receives this Warrant with the Subscription Form
duly executed and accompanied by payment of the full Exercise Price for the
Warrant Shares as to which this Warrant is being exercised and the transfer
agent's charge of $25.00, the Company will (provided that receipt occurs on or
prior to the Expiration Date), as promptly as practicable after receipt, issue
certificates, registered in the name of the Warrant Holder or such other names
as are designated by the Warrant Holder, representing the total number of
validly issued, fully paid and non-assessable shares of Common Stock as to which
this Warrant is being exercised, in such denominations as are requested by the
Warrant Holder, and the Company will deliver those certificates to the Warrant
Holder against payment by a certified or official bank check payable to the
order of the Company or by wire transfer of immediately available funds to the
account of the Company designated by it, in each case of an amount equal to the
Exercise Price for the Warrant Shares as to which this Warrant is being
exercised.
(c) If the Warrant Holder exercises this Warrant prior to the
Expiration Date with respect to fewer than all the Warrant Shares to which this
Warrant relates, the Company will execute a new Warrant for the balance of the
Warrant Shares that may be purchased upon exercise of this Warrant and deliver
that new Warrant to the Warrant Holder, together with the certificates for the
Warrant Shares described in Section 2.02(b).
(d) The Warrant Holder will pay all expenses and any transfer or
similar taxes which may be payable in respect of the issuance of Warrant Shares
and, if this Warrant is exercised as to fewer than all the Warrant Shares to
which it relates, in respect of the issuance of a new Warrant. The Company will
not be required to issue any Warrant Shares or to issue a new Warrant registered
in a name other than that of the Warrant Holder until the Company receives
either evidence that any applicable transfer or similar taxes are not due or
have been paid or funds with which to pay those taxes.
ARTICLE III
ADJUSTMENT OF SHARES AND WARRANT PRICE
--------------------------------------
Section 3.01. The number of shares of Common Stock or other
------------
securities issuable on exercise of this Warrant (the "Exercise Rate") and the
-------------
Exercise Price are subject to adjustment from time to time as follows:
(a) If, after the date hereof, the Company, directly or indirectly,
(i) pays a dividend, or makes any other distribution, on its Common
Stock in shares of its Common Stock, (ii) subdivides the outstanding
Common Stock into a greater number of shares (by reclassification or
otherwise than by a dividend or distribution referred to in clause
(i)) or (iii) combines the outstanding Common Stock into a lesser
number of shares, in each such case, the Exercise Rate in effect at
the record date for the dividend or distribution or the effective date
of the subdivision or combination, will be adjusted so that, upon
exercise of this Warrant after the record date or effective date with
respect to a specified
-3-
<PAGE>
number of Warrant Shares, the Warrant Holder will receive the number
and kind of shares which the Warrant Holder would have received if the
Warrant Holder had exercised this Warrant with respect to that number
of Warrant Shares immediately before the first of those events and
retained all the shares and other securities which the Warrant Holder
received as a result of each of those events.
(b) The Exercise Price in effect at any time shall be subject to
adjustment from time to time upon the happening of an event set forth
in Section 3.01(a) and shall be equal to the Exercise Price
immediately prior to such event multiplied by a fraction, the
numerator of which is the Exercise Rate immediately prior to such
event and the denominator of which is the Exercise Rate immediately
after such event.
(c) No adjustment in the Exercise Price pursuant to this Section 3.01
will be required until cumulative adjustments result in a concomitant
change of 1% or more of the Exercise Price as existed prior to the
last adjustment of the Exercise Price. However, any adjustments which
are not made because of this paragraph will be carried forward and
taken into account at the earlier of (i) any subsequent adjustments or
(ii) the exercise hereof. All calculations under this Section 3.01
will be made to the nearest cent or to the nearest whole share, as the
case may be.
(d) If any adjustment in the Exercise Price or in the Exercise Rate
becomes effective as of a record date for a specified event, and this
Warrant is exercised between that record date and the date the event
occurs, the Company may elect to defer, until the event occurs,
issuing to the Warrant Holder the shares of Common Stock or other
securities to which the Warrant Holder is entitled solely by reason of
that event. However, if the Company does so defer, when this Warrant
is exercised, the Company will deliver to the Warrant Holder a due
bill or other instrument evidencing the Warrant Holder's right to
receive the additional shares or other securities upon occurrence of
the event.
Section 3.02. Whenever the Exercise Price or the Exercise Rate are
------------
adjusted as provided in this Article III, the Company will send to the Warrant
Holder a certificate signed by its President, Secretary, Chief Executive Officer
or Treasurer, setting forth the adjusted Exercise Price, the adjusted Exercise
Rate and the date the adjustment became effective, and containing a brief
description of the events which caused the adjustment and the method by which
such adjustment was calculated.
Section 3.03. The form of Warrant need not be changed because of any
------------
change in the Exercise Price or in the Exercise Rate, and Warrants issued after
the change may state the same Exercise Price and the same number of Warrant
Shares as are stated in Warrants issued before the change. However, the Company
may at any time make any change in the form of Warrant that it deems appropriate
to reflect a change in the Exercise Price or in the Exercise Rate (provided the
change in the form of Warrant does not otherwise affect the terms, conditions,
provisions or substance of the Warrant), and any Warrant issued after the form
of Warrant is so changed may be in the changed form.
Section 3.04. Except as provided in Section 3.01, no adjustment in
------------
respect of dividends shall be made during the term of the Warrant or upon the
exercise of the Warrant. No adjustment shall be made in connection with the
issuance of Common Stock in connection with the private placement of up to
1,000,000 shares of the Company's Common Stock (the "Offering") pursuant to the
--------
Offering Document dated February 17, 1999, or the issuance of Common Stock upon
exercise of this Warrant or other warrants issued in connection with the
Offering.
-4-
<PAGE>
ARTICLE IV
OTHER PROVISIONS RELATING TO
RIGHTS OF WARRANT HOLDER
------------------------
Section 4.01. Except as provided in the Placement Agreement, the
------------
Warrant Holder will not, as such, be entitled to voting rights, receive
dividends or have any other of the rights of a stockholder of the Company;
provided that, after this Warrant is exercised in accordance with Section 2, the
- --------
persons in whose names the Warrant Shares purchased through exercise of this
Warrant are to be issued will be deemed to become the holders of record of those
Warrant Shares for all purposes even if certificates representing those Warrant
Shares are not issued.
Section 4.02.
------------
(a) The Company will at all times reserve and keep available for
issuance upon exercise of this Warrant the number of authorized and unissued
shares of Common Stock equal to the maximum number of shares of Common Stock
which the Company may be required to issue upon exercise of this Warrant from
time to time.
(b) All shares of Common Stock issued on exercise of this Warrant
will, when they are issued, be validly issued, fully paid, non-assessable and
free of preemptive rights.
Section 4.03. The Company will not be required to issue any fraction
------------
of a share upon exercise of this Warrant. In any case in which the Warrant
Holder would, except for the provisions of this Section 4.03, be entitled to
receive a fraction of a share upon exercise of this Warrant, the Company will,
upon exercise of this Warrant, (a) issue the maximum number of whole shares it
is required to issue, and (b) pay to the Warrant Holder, in cash, the product of
(i) such fraction multiplied by (ii) an amount equal to (x) the fair market
value of a Warrant Share, as determined in good faith by the Board minus (y) the
Exercise Price.
Section 4.04. Prior to due presentment for registration of transfer
------------
of this Warrant, the Company may treat the Warrant Holder as the absolute owner
of this Warrant for all purposes, including for the purpose of determining
exercise of this Warrant, despite any notice to the contrary.
ARTICLE V
TRANSFER OF WARRANTS
--------------------
Section 5.01. Neither this Warrant nor any shares of Common Stock or
------------
other securities issued on exercise of this Warrant may be sold, transferred,
assigned, or hypothecated except in accordance with the Subscription Agreement,
the Securities Act of 1933, as amended, and all applicable state securities
laws.
Section 5.02. Upon surrender of this Warrant to the Company at its
------------
office specified in Section 6.02 with the Form of Assignment attached hereto as
Exhibit A (the "Form of Assignment") (or another instrument of assignment) duly
- --------- ------------------
executed and accompanied by (i) evidence that any transfer or similar tax is not
due or has been paid or funds sufficient to pay any transfer or similar tax, and
(ii) evidence reasonably satisfactory to the Company that the proposed
assignment will not violate Section 5.01, the Company will, without charge,
execute and deliver a new Warrant registered in the name of the assignee named
in the Form of Assignment (or other instrument of assignment) and will promptly
cancel
-5-
<PAGE>
this Warrant. This Warrant may be divided or combined with other Warrants by
surrender of this Warrant and any other Warrants with which it is to be combined
at the principal office of the Company together with a written notice, signed by
the Warrant Holder, specifying the names and denominations in which new Warrants
are to be issued.
Section 5.03. Upon receipt by the Company of evidence reasonably
------------
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of indemnification
satisfactory to the Company, or (in the case of mutilation) upon surrender of
this Warrant, the Company will execute and deliver a new Warrant relating to the
same number of Warrant Shares as this Warrant and the lost, stolen, destroyed or
mutilated Warrant will become void. Any new Warrant executed and delivered in
accordance with this Section 5.03 will constitute an additional contractual
obligation of the Company and the Warrant Holder, and will be valid and
enforceable whether or not the Warrant which was believed to have been lost,
stolen or destroyed is subsequently presented for exercise.
ARTICLE VI
OTHER MATTERS
-------------
Section 6.01. The provisions of this Warrant will be binding upon,
------------
and inure to the benefit of, the Company and the Warrant Holder and their
respective successors and permitted assigns.
Section 6.02. Any notice or other communication to the Company or the
------------
Warrant Holder relating to this Warrant will be deemed given on the Business Day
when it is delivered or sent by facsimile transmission, or on the third Business
Day after the day on which it is sent by first-class mail, at the following
address (or such other address as may be specified by one party to the other
after the date of this Warrant):
If to the Company:
AuctionAnything.com, Inc.
P.O. Box 520846
Longwood, Florida 32752
Attention: President
Telecopy No.: (407) 673-9997
If to the Warrant Holder, to the address set forth under the Warrant
Holder's signature on the signature page hereto.
Section 6.03. This Warrant will be governed by, and construed under,
------------
the laws of the State of Florida relating to contracts made and to be performed
in that state.
Section 6.04. The Article headings in this Warrant are for
------------
convenience only, are not part of this Warrant and are not intended to affect
the meaning or interpretation of any of the terms of this Warrant.
-6-
<PAGE>
IN WITNESS WHEREOF, this Warrant has been executed by the Company and
the Warrant Holder as of the 17th day of March, 1999.
AUCTIONANYTHING.COM, INC.
By: _____________________________
Raymond J. Hotaling, III, President
Accepted and agreed to:
"WARRANT HOLDER"
___________________________________
(Signature must conform to the name
of the Warrant Holder specified on
the face of the Warrant.)
Print Name:________________________
Address:___________________________
___________________________
___________________________
Telecopy No.:______________________
-7-
<PAGE>
EXHIBIT A
---------
FORM OF ASSIGNMENT
------------------
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers the
attached Warrant to ____________________________________________ to the extent
of the right to purchase _________________ Warrant Shares, and the undersigned
appoints ___________________________, with full power of substitution, to
transfer that Warrant, with respect to the right to purchase that number of
Warrant Shares, on the books of AuctionAnything.com, Inc.
Dated: ________________, 1999
___________________________________
(Signature must conform to the name
of the Warrant Holder specified on
the face of the Warrant.)
<PAGE>
EXHIBIT B
---------
SUBSCRIPTION FORM
-----------------
To: AuctionAnything.com, Inc.
The undersigned irrevocably elects to purchase ___________ Warrant Shares
by exercising the Warrant to which this form is attached (the "Warrant") and
will tender payment of the full Exercise Price with respect to those Warrant
Shares in accordance with Section 2.02 of the Warrant. The undersigned requests
that the certificates representing the Warrant Shares as to which the Warrant is
being exercised be registered as follows:
Name: _______________________________________
Social Security or Employer
Identification Number: _______________________________________
Address: _______________________________________
_______________________________________
Deliver to: _______________________________________
Address: _______________________________________
_______________________________________
If the Warrant Shares as to which the Warrant is being exercised are fewer
than all the Warrant Shares to which the Warrant relates, please issue a new
Warrant for the balance of the Warrant Shares registered in the name of the
undersigned and deliver it to the undersigned at the following address:
Address: _______________________________________
_______________________________________
This Subscription Form is governed in all respects by the provisions of the
Warrant.
Date: _____________________ Signature:___________________________________
(Signature must conform to the name
of the Warrant Holder specified on
the face of the Warrant.)
Total Exercise Price: $
_______________
Transfer Agent's
Charges: + 25.00
---------------
Total Payment Remitted
Herewith: $
===============
