UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 16, 2000
Ableauctions.com, Inc.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 000-28179 Not Available
------------------------ ----------------------- -------------------------
(State of incorporation) (Commission file number) (I.R.S. Employer
Identification No.)
7303 East Earll Drive
Scottsdale, Arizona 85251
-------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (602) 224-3731
1963 Lougheed Highway
Coquitlam, British Columbia
Canada V3K 3T8
-------------------------------------------------------------------
(Former name or address, if changed since last report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of the Business Acquired.
Audited Financial Statements of Ehli's Commercial/Industrial Auctions
Incorporated Together With Auditors' Report as at December 31, 1999.
Unaudited Financial Statements of Ehli's Commercial/Industrial Auctions
Incorporated dated March 31, 2000.
(b) Pro Forma Financial Information.
Unaudited Pro Forma Consolidated Financial Statements of Ableauctions.com,
Inc. and Ehli's Commercial/Industrial Auctions Incorporated dated March 31,
2000.
(c) Exhibits
Exhibit
Number Description
------ -----------
2.1 Share Purchase Agreement among Randy Ehli, Ableauctions.com,
Inc., and Ehli's Commercial/Industrial Auctions, Inc. dated as of
May 16, 2000 (without schedules or exhibits).(1)(2)
------------
(1) Ableauctions.com, Inc. agrees to supplementally furnish a copy of any
omitted schedule or exhibit to the Securities and Exchange Commission upon
request.
(2) Previously filed on Form 8-K on June 9, 2000.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the duly
authorized undersigned.
Ableauctions.com, Inc.
August 8, 2000 /s/ Abdul Ladha
------------------ -----------------------------------
(Date) Abdul Ladha, President and Director
3
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
2.1 Share Purchase Agreement among Randy Ehli, Ableauctions.com,
Inc., and Ehli's Commercial/Industrial Auctions, Inc. dated as of
May 16, 2000 (without schedules or exhibits).(1)(2)
------------
(1) Ableauctions.com, Inc. agrees to supplementally furnish a copy of any
omitted schedule or exhibit to the Securities and Exchange Commission upon
request.
(2) Previously filed on Form 8-K on June 9, 2000.
<PAGE>
ABLEAUCTIONS.COM, INC.
INDEX TO FINANCIAL STATEMENTS
(a) Financial Statements of the Business Acquired.
Audited Financial Statements of Ehli's Commercial/Industrial Auctions
Incorporated Together With Auditors' Report as at December 31, 1999.
Auditors' Report
Balance Sheet
Statements of Operations
Statement of Changes in Stockholders' Equity
Statement of Cash Flows
Notes to Financial Statements
Unaudited Financial Statements of Ehli's Commercial/Industrial Auctions
Incorporated dated March 31, 2000.
Balance Sheet
Statements of Operations
Statement of Changes in Stockholders' Equity
Statement of Cash Flows
Notes to Financial Statements
(b) Pro Forma Financial Information.
Unaudited Pro Forma Consolidated Financial Statements of Ableauctions.com,
Inc. and Ehli's Commercial/Industrial Auctions Incorporated dated March 31,
2000.
Pro Forma Consolidated Balance Sheet
Pro Forma Consolidated Statements of Operations
Pro Forma Consolidated Statement of Stockholders' Equity
Pro Forma Consolidated Statement of Cash Flows
Notes to Pro Forma Consolidated Financial Statements
<PAGE>
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
FINANCIAL STATEMENTS
DECEMBER 31, 1999
<PAGE>
A Partnership of
Incorporated Professionals
DAVIDSON & COMPANY=========Chartered Accountants================================
INDEPENDENT AUDITORS' REPORT
To the Stockholder and the Board of Directors of
Ehli's Commercial/Industrial Auctions Incorporated
We have audited the accompanying balance sheet of Ehli's Commercial/Industrial
Auctions Incorporated as at December 31, 1999 and the related statements of
operations, changes in stockholder's equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
of the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ehli's Commercial/Industrial
Auctions Incorporated as at December 31, 1999 and the results of its operations,
changes in stockholder's equity and its cash flows for the year then ended in
conformity with generally accepted accounting principles of the United States of
America.
/s/ Davidson & Company
Vancouver, Canada Chartered Accountants
July 11, 2000
A Member of Accounting Group International
==========================================
Suite 1270, Stock Exchange Tower, 609 Granville Street, P.O. Box 10372,
Pacific Centre, Vancouver, B.C., Canada V7Y 1G6
Telephone (604) 687-0947 Fax (604) 687-6172
<PAGE>
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
BALANCE SHEET
AS AT DECEMBER 31, 1999
================================================================================
<TABLE>
<S> <C>
ASSETS
Current
Cash and cash equivalents $ 250,762
Accounts receivable - trade 14,264
Inventory 33,550
Prepaid expenses 9,935
---------------
Total current assets 308,511
Capital assets (Note 3) 30,273
---------------
Total assets $ 338,784
=================================================================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
Current
Accounts payable and accrued liabilities $ 49,805
Due to related party 55,656
---------------
Total current liabilities 105,461
---------------
Stockholder's equity (Note 4)
Capital stock
Authorized
50,000 common shares with a par value of $1.00
Issued and outstanding
December 31, 1999 - 500 common shares with a par value of $1.00 500
Retained earnings 232,823
---------------
Total stockholder's equity 233,323
---------------
Total liabilities and stockholder's equity $ 338,784
=================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<S> <C>
REVENUE
Sales $ 1,067,412
COST OF GOODS SOLD 98,799
---------------
GROSS PROFIT 968,613
---------------
OPERATING EXPENSES
Accounting and legal fees 2,330
Advertising and promotion 93,211
Auction supplies and expenses 20,815
Automobile 16,345
Bad debt 3,461
Consulting fees 7,937
Credit card service charges 46,775
Depreciation 9,700
Insurance 18,072
Office and miscellaneous 41,327
Payroll and business taxes 54,903
Rent and utilities 85,319
Salaries and benefits 388,914
Security 6,952
Telephone 14,069
---------------
810,130
Income before other item 158,483
OTHER ITEM
Interest income 10,823
---------------
Net income $ 169,306
================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
================================================================================
<TABLE>
Common Stock Total
-------------- --------------- Retained Stockholder's
Shares Amount Earnings Equity
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1998 500 $ 500 $ 140,640 $ 141,140
Net income - - 169,306 169,306
Distributions - - (77,123) (77,123)
------------ ------------ ------------- -------------
Balance, December 31, 1999 500 $ 500 $ 232,823 $ 233,323
==============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 169,306
Items not affecting cash:
Depreciation 9,700
Changes in non-cash working capital items:
Decrease in accounts receivable 2,247
Decrease in inventory 14,950
Increase in prepaid expenses (9,935)
Increase in accounts payable and accrued liabilities 27,574
---------------
Net cash provided by operating activities 213,842
---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of amounts due to related party (1,387)
Distribution (77,123)
---------------
Net cash used in financing activities (78,510)
---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash payment for capital assets (22,102)
---------------
Net cash used in investing activities (22,102)
---------------
Change in cash and cash equivalents for the year 113,230
Cash and cash equivalents, beginning of year 137,532
---------------
Cash and cash equivalents, end of year $ 250,762
======================================================================================================
</TABLE>
Supplemental disclosures with respect to cash flows (Note 5)
The accompanying notes are an integral part of these financial statements.
<PAGE>
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
================================================================================
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized in August 1988, under the laws of the State of
Washington. The Company is involved in public auctions of primarily
consignment goods consisting of vehicles, equipment and general merchandise
from their location in Tacoma, Washington.
2. SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses
during the period. Actual results could differ from these estimates.
Cash and cash equivalents
The Company considers all investments with a maturity of three months or
less to be cash equivalents.
Inventory
Inventory is stated at the lower of cost and net realizable value.
Capital assets and depreciation
Capital assets, which consist of equipment, tools and machinery and
furniture and fixtures, are recorded at cost less accumulated depreciation.
The cost of capital assets is depreciated using the straight-line method
over estimated lives of 5 years.
Leasehold improvements are depreciated using the straight-line method over
a period of 10 years.
Revenue recognition
The Company generally earns revenues from its auction activities either
through consignment sales, or through sales of inventory purchased by the
Company. For consignment sales, the Company earns auction fees charged to
consignors, and buyer's premiums charged to purchasers, determined as a
percentage of the sale price. For inventory sales, the Company earns a
profit or incurs a loss on the sale, to the extent the purchase price
exceeds or is less than the purchase price paid for such inventory.
For each type of auction revenue, an invoice is rendered to the purchaser,
and revenue is recognized by the Company, at the date of the auction. The
auction purchase creates a legal obligation upon the purchaser to take
possession of, and pay for the merchandise. This obligation generally
provides the Company with reasonable assurance of collection of the sale
proceeds, from which the Company's earnings are derived, including the fees
from consignors and purchasers, as well as resale profits.
Federal income tax
The Company has elected to be treated as an S Corporation under the
Internal Revenue Code. Under this election, income is generally taxed
directly to the stockholders rather than at a corporate level.
<PAGE>
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
================================================================================
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Financial instruments
The Company's financial instruments consist of cash, accounts receivable,
accounts payable and accrued liabilities and amounts due to related party.
The fair value of these financial instruments approximate their carrying
values, unless otherwise noted.
3. CAPITAL ASSETS
<TABLE>
========================================================================================================
Accumulated Net Book
Cost Depreciation Value
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equipment, tools and machinery $ 41,803 $ 13,870 $ 27,933
Furniture and fixtures 2,811 471 2,340
Leasehold improvements 16,959 16,959 -
-------------- -------------- ----------
$ 61,573 $ 31,300 $ 30,273
========================================================================================================
</TABLE>
4. CAPITAL STOCK
The Company's authorized capital stock consists of 50,000 shares of common
stock, with a par value of $1.00 per share. All shares of common stock have
equal voting rights and, when validly issued and outstanding, are entitled
to one vote per share in all matters to be voted upon by shareholders. The
shares of common stock have no pre-emptive, subscription, conversion or
redemption rights and may be issued only as fully paid and non-assessable
shares. Holders of the common stock are entitled to share pro-rata in
dividends and distributions with respect to the common stock, as may be
declared by the Board of Directors out of funds legally available.
5. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS
========================================================================
Cash paid for interest $ -
========================================================================
6. COMMITMENT
The Company leased its facilities consisting of land and a building under a
lease which expired in 1998. Since the expiration, the Company has
continued to lease the property under a month-to-month arrangement at a
total monthly rental of approximately $6,200. The Company has notified the
landlord that it will exercise its option to renew the lease. The option
will extend the lease for an additional one-year period once the lease
agreement is signed. Rent expenses under this lease for the year ended
December 31, 1999 approximated $75,100.
<PAGE>
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
<PAGE>
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
BALANCE SHEET
(Unaudited)
AS AT MARCH 31, 2000
================================================================================
<TABLE>
<S> <C>
ASSETS
Current
Cash and cash equivalents $ 445,788
Accounts receivable - trade 2,496
Inventory 49,268
Prepaid expenses 4,968
---------------
Total current assets 502,520
Capital assets (Note 3) 29,517
---------------
Total assets $ 532,037
============================================================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
Current
Accounts payable and accrued liabilities $ 150,155
Due to related party 55,656
---------------
Total current liabilities 205,811
---------------
Stockholder's equity (Note 4)
Capital stock
Authorized
50,000 common shares with a par value of $1.00
Issued and outstanding
March 31, 2000 - 500 common shares with a par value of $1.00 500
Retained earnings 325,726
---------------
Total Stockholder's equity 326,226
---------------
Total liabilities and Stockholder's equity $ 532,037
============================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
STATEMENT OF OPERATIONS
(Unaudited)
THREE MONTH PERIOD ENDED MARCH 31, 2000
================================================================================
<TABLE>
<S> <C>
REVENUE
Sales $ 298,571
COST OF GOODS SOLD 15,631
---------------
GROSS PROFIT 282,940
---------------
OPERATING EXPENSES
Accounting and legal fees 1,260
Advertising and promotion 14,055
Auction supplies and expenses 5,667
Automobile 5,247
Bad debt (recovery) (1,303)
Consulting fees 345
Credit card service charges 7,507
Depreciation 2,176
Insurance 4,968
Office and miscellaneous 18,347
Payroll and business taxes 14,655
Rent and utilities 22,194
Salaries and benefits 89,180
Security 2,310
Telephone 2,597
---------------
189,205
Income before other item 93,735
OTHER ITEM
Interest income 3,049
---------------
Net income $ 96,784
============================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
(Unaudited)
================================================================================
<TABLE>
Common Stock Total
-------------- --------------- Retained Stockholder's
Shares Amount Earnings Equity
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1999 500 $ 500 $ 232,823 $ 233,323
Net income - - 96,784 96,784
Distributions - - (3,881) (3,881)
------------ ------------ ------------- -------------
Balance, March 31, 2000 500 $ 500 $ 325,726 $ 326,226
==============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
STATEMENT OF CASH FLOWS
(Unaudited)
THREE MONTH PERIOD ENDED MARCH 31, 2000
================================================================================
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 96,784
Items not affecting cash:
Depreciation 2,176
Changes in non-cash working capital items:
Decrease in accounts receivable 11,768
Increase in inventory (15,718)
Decrease in prepaid expenses 4,967
Increase in accounts payable and accrued liabilities 100,350
---------------
Net cash provided by operating activities 200,327
---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions (3,881)
---------------
Net cash used in financing activities (3,881)
---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash payment for purchase of capital assets (1,420)
---------------
Net cash used in investing activities (1,420)
---------------
Change in cash and cash equivalents for the period 195,026
Cash and cash equivalents, beginning of period 250,762
---------------
Cash and cash equivalents, end of period $ 445,788
==================================================================================================
</TABLE>
Supplemental disclosures with respect to cash flows (Note 5)
The accompanying notes are an integral part of these financial statements.
<PAGE>
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
================================================================================
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized in August 1988, under the laws of the State of
Washington. The Company is involved in public auctions of primarily
consignment goods consisting of vehicles, equipment and general merchandise
from their location in Tacoma, Washington.
2. SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses
during the period. Actual results could differ from these estimates.
Cash and cash equivalents
The Company considers all investments with a maturity of three months or
less to be cash equivalents.
Inventory
Inventory is stated at the lower of cost and net realizable value.
Capital assets and depreciation
Capital assets, which consist of equipment, tools and machinery and
furniture and fixtures, are recorded at cost less accumulated depreciation.
The cost of capital assets is depreciated using the straight-line method
over estimated lives of 5 years.
Leasehold improvements are depreciated using the straight-line method over
a period of 10 years.
Revenue recognition
The Company generally earns revenues from its auction activities either
through consignment sales, or through sales of inventory purchased by the
Company. For consignment sales, the Company earns auction fees charged to
consignors, and buyer's premiums charged to purchasers, determined as a
percentage of the sale price. For inventory sales, the Company earns a
profit or incurs a loss on the sale, to the extent the purchase price
exceeds or is less than the purchase price paid for such inventory.
For each type of auction revenue, an invoice is rendered to the purchaser,
and revenue is recognized by the Company, at the date of the auction. The
auction purchase creates a legal obligation upon the purchaser to take
possession of, and pay for the merchandise. This obligation generally
provides the Company with reasonable assurance of collection of the sale
proceeds, from which the Company's earnings are derived, including the fees
from consignors and purchasers, as well as resale profits.
Federal income tax
The Company has elected to be treated as an S Corporation under the
Internal Revenue Code. Under this election, income is generally taxed
directly to the stockholders rather than at a corporate level.
<PAGE>
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
================================================================================
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Financial instruments
The Company's financial instruments consist of cash, accounts receivable,
accounts payable and accrued liabilities and amounts due to related party.
The fair value of these financial instruments approximate their carrying
values, unless otherwise noted.
3. CAPITAL ASSETS
<TABLE>
=======================================================================================================
Accumulated Net Book
Cost Depreciation Value
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equipment, tools and machinery $ 43,223 $ 15,906 $ 27,317
Furniture and fixtures 2,811 611 2,200
Leasehold improvements 16,959 16,959 -
------------ ------------ ----------
$ 62,993 $ 33,476 $ 29,517
=======================================================================================================
</TABLE>
4. CAPITAL STOCK
The Company's authorized capital stock consists of 50,000 shares of common
stock, with a par value of $1.00 per share. All shares of common stock have
equal voting rights and, when validly issued and outstanding, are entitled
to one vote per share in all matters to be voted upon by shareholders. The
shares of common stock have no pre-emptive, subscription, conversion or
redemption rights and may be issued only as fully paid and non-assessable
shares. Holders of the common stock are entitled to share pro-rata in
dividends and distributions with respect to the common stock, as may be
declared by the Board of Directors out of funds legally available.
5. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS
=========================================================================
Cash paid for interest $ -
=========================================================================
6. COMMITMENT
The Company leased its facilities consisting of land and a building under a
lease which expired in 1998. Since the expiration, the Company has
continued to lease the property under a month-to-month arrangement at a
total monthly rental of approximately $6,200. The Company has notified the
landlord that it will exercise its option to renew the lease. The option
will extend the lease for an additional one-year period once the lease
agreement is signed. Rent expense under this lease for the three month
period ended March 31, 2000 was approximated at $19,050.
<PAGE>
ABLEAUCTIONS.COM, INC.
AND
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
<PAGE>
ABLEAUCTIONS.COM, INC.
AND
EHLI'S COMMERCIAL/INDUSTRIAL AUCTIONS INCORPORATED
PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro-forma consolidated balance sheet as at March 31,
2000 and pro-forma consolidated statements of operations for the year ended
December 31, 1999 and the three month period ended March 31, 2000 (the
"Pro-forma Financial Statements") of Ableauctions.com, Inc. (the "Company") give
effect to the acquisition by the Company of 100% of the outstanding capital
stock of Ehli's Commercial/Industrial Auctions Incorporated, as of the beginning
of the periods indicated for purposes of the statements of operations.
The Pro-forma Financial Statements have been prepared by the Company based upon
the financial statements of the Company and Ehli's Commercial/Industrial
Auctions Incorporated The Pro-forma Financial Statements give effect to the
acquisition under the purchase method of accounting and to certain assumptions
and adjustments described more fully in the accompanying notes. These Pro-forma
Financial Statements may not be indicative of the results that actually would
have occurred if the transactions had been completed on the dates indicated or
of the results which may be obtained in the future. The Pro-forma Financial
Statements should be read in conjunction with the financial statements and notes
thereto of the Company and Ehli's Commercial/Industrial Auctions Incorporated
included elsewhere in this Form 8-K.
<PAGE>
ABLEAUCTIONS.COM, INC.
PRO-FORMA CONSOLIDATED BALANCE SHEET
(Unaudited)
MARCH 31, 2000
================================================================================
<TABLE>
Ehli's
Commercial/
Industrial
Ableauctions Auctions Pro-forma Pro-forma
.com, Inc. Incorporated Adjustments Consolidated
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current
Cash and cash equivalents $ 1,452,826 $ 445,788 $ (900,000) $ 998,614
Accounts receivable - trade 427,226 2,496 - 429,722
Accounts receivable - other 113,295 - - 113,295
Inventory 1,326,617 49,268 - 1,375,885
Prepaid expenses 81,335 4,968 - 86,303
------------- ------------- ------------- -------------
Total current assets 3,401,299 502,520 (900,000) 3,003,819
Trademark 11,425 - - 11,425
Capital assets 4,920,920 29,517 - 4,950,437
Web site development costs 94,479 - - 94,479
Goodwill 1,246,268 - 923,774 2,170,042
------------- ------------- ------------- -------------
Total assets $ 9,674,391 $ 532,037 $ 23,774 $ 10,230,202
==============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 823,958 $ 150,155 $ - $ 974,113
Promissory note 102,831 - - 102,831
Due to related party - 55,656 - 55,656
------------- ------------- ------------- -------------
Total current liabilities 926,789 205,811 - 1,132,600
Promissory note 943,527 - - 943,527
------------- ------------- ------------- -------------
1,870,316 205,811 - 2,076,127
------------- ------------- ------------- -------------
Stockholders' equity
Capital stock
Authorized
62,500,000 common shares with a par value
of $0.001
Issued and outstanding
March 31, 2000 - 19,549,517 common shares
with a par value of $0.001 19,549 500 (450) 19,599
Additional paid-in capital 10,288,562 - 349,950 10,638,512
Retained earnings (deficit) (2,566,664) 325,726 (325,726) (2,566,664)
Accumulated other comprehensive income 62,628 - - 62,628
------------- ------------- ------------- -------------
Total stockholders' equity 7,804,075 326,226 23,774 8,154,075
------------- ------------- ------------- -------------
Total liabilities and stockholders' equity $ 9,674,391 $ 532,037 $ 23,774 $ 10,230,202
==============================================================================================================================
</TABLE>
See notes to the pro-forma consolidated financial statements.
<PAGE>
ABLEAUCTIONS.COM, INC.
PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
THREE MONTH PERIOD ENDED MARCH 31, 2000
================================================================================
<TABLE>
Ehli's
Commercial/
Ableauctions Industrial Pro-forma Pro-forma
.com, Inc. Auctions Adjustments Consolidated
Incorporated
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE
Sales $ 867,691 $ 298,571 $ - $ 1,166,262
Commissions 232,436 - - 232,436
------------- ------------ ------------ -------------
1,100,127 298,571 - 1,398,698
COST OF GOODS SOLD 814,751 15,631 - 830,382
------------- ------------ ------------ -------------
GROSS PROFIT 285,376 282,940 - 568,316
------------- ------------ ------------ -------------
OPERATING EXPENSES
Accounting and legal fees 116,013 1,260 - 117,273
Advertising and promotion 154,288 14,055 - 168,343
Amortization and depreciation 105,608 2,176 - 107,784
Amortization of goodwill 14,692 - 46,189 60,881
Auction supplies and expenses - 5,667 - 5,667
Automobile 15,348 5,247 - 20,595
Bad debt (recovery) (3,696) (1,303) - (4,999)
Commission 16,053 - - 16,053
Consulting fees 81,254 345 - 81,599
Credit card service charges - 7,507 - 7,507
Insurance - 4,968 - 4,968
Investor relations and shareholder information 266,571 - - 266,571
Licences and permits 14,354 - - 14,354
Management fees 1,607 - - 1,607
Office and miscellaneous 62,913 18,347 - 81,260
Payroll and business taxes - 14,655 - 14,655
Rent and utilities 185,335 22,194 - 207,529
Repairs and maintenance 24,062 - - 24,062
Salaries and benefits 296,069 89,180 - 385,249
Security - 2,310 - 2,310
Telephone 24,686 2,597 - 27,283
Travel and entertainment 115,605 - - 115,605
------------- ------------ ------------ -------------
1,490,762 189,205 46,189 1,726,156
------------- ------------ ------------ -------------
Income (loss) before other items (1,205,386) 93,735 (46,189) (1,157,840)
------------- -------------- -------------- --------------
</TABLE>
Continued.....
<PAGE>
ABLEAUCTIONS.COM, INC.
PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
THREE MONTH PERIOD ENDED MARCH 31, 2000
================================================================================
<TABLE>
Ehli's
Commercial/
Ableauctions Industrial Pro-forma Pro-forma
.com, Inc. Auctions Adjustments Consolidated
Incorporated
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
cont'd.....
Income (loss) before other items (1,205,386) 93,735 (46,189) (1,157,840)
------------- ------------ ------------ -------------
OTHER ITEMS
Interest income 14,443 3,049 - 17,492
Foreign exchange loss (29,035) - - (29,035)
------------- ------------ ------------ -------------
(14,592) 3,049 - (11,543)
------------- ------------ ------------ -------------
Income (loss) before income taxes (1,219,978) 96,784 (46,189) (1,169,383)
Income taxes - - 21,157 21,157
------------- ------------ ------------ -------------
Income (loss) for the period $(1,219,978) $ 96,784 $ (67,346) $ (1,190,540)
==============================================================================================================================
Basic and diluted loss per share $ (0.07) $ - $ - $ (0.06)
==============================================================================================================================
Weighted average number of shares outstanding 18,668,483 - 50,000 18,718,483
==============================================================================================================================
</TABLE>
See notes to the pro-forma consolidated financial statements.
<PAGE>
ABLEAUCTIONS.COM, INC.
PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
YEAR ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
Ehli's
Commercial/
Ableauctions Industrial Pro-forma Pro-forma
.com, Inc. Auctions Adjustments Consolidated
Incorporated
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE
Sales $ 829,755 $ 1,067,412 $ - $ 1,897,167
Commissions 68,695 - - 68,695
------------ ------------ ------------ ------------
898,450 1,067,412 - 1,965,862
COST OF GOODS SOLD 582,346 98,799 - 681,145
------------ ------------ ------------ ------------
GROSS PROFIT 316,104 968,613 - 1,284,717
------------ ------------ ------------ ------------
OPERATING EXPENSES
Accounting and legal fees 76,057 2,330 - 78,387
Advertising and promotion 119,014 93,211 - 212,225
Amortization and depreciation 195,288 9,700 - 204,988
Amortization of goodwill 11,972 - 184,755 196,727
Auction supplies and expenses - 20,815 - 20,815
Automobile 46,196 16,345 - 62,541
Bad debt (recovery) 36,011 3,461 - 39,472
Commission 39,625 - - 39,625
Consulting fees 45,966 7,937 - 53,903
Credit card services charges - 46,775 - 46,775
Insurance - 18,072 - 18,072
Investor relations and shareholder information 400,731 - - 400,731
Management fees 238,278 - - 238,278
Office and miscellaneous 61,179 41,327 - 102,506
Payroll and business taxes - 54,903 - 54,903
Rent and utilities 73,695 85,319 - 159,014
Salaries and benefits 310,770 388,914 - 699,684
Security - 6,952 - 6,952
Telephone 19,118 14,069 - 33,187
------------ ------------ ------------ ------------
1,673,900 810,130 184,755 2,668,785
------------ ------------ ------------ ------------
Income (loss) before other items (1,357,796) 158,483 (184,755) (1,384,068)
------------ ------------ ------------ ------------
</TABLE>
Continued.....
<PAGE>
ABLEAUCTIONS.COM, INC.
PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
YEAR ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
Ehli's
Commercial/
Ableauctions Industrial Pro-forma Pro-forma
.com, Inc. Auctions Adjustments Consolidated
Incorporated
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
cont'd.....
Income (loss) before other items (1,357,796) 158,483 (184,755) (1,384,068)
------------ ------------ ------------ ------------
OTHER ITEMS
Interest income 22,871 10,823 - 33,694
Foreign exchange loss (4,567) - - (4,567)
------------ ------------ ------------ ------------
18,304 10,823 - 29,127
------------ ------------ ------------ ------------
Income (loss) before income taxes (1,339,492) 169,306 (184,755) (1,354,941)
Income taxes - - 49,279 49,279
------------ ------------ ------------ ------------
Loss for the year $ (1,339,492) $ 169,306 $ (234,034) $ (1,404,220)
==============================================================================================================================
Basic and diluted loss per share $ (0.10) $ - $ - $ (0.11)
==============================================================================================================================
Weighted average number of shares outstanding 13,228,082 - 50,000 13,278,082
==============================================================================================================================
</TABLE>
See notes to the pro-forma consolidated financial statements.
<PAGE>
ABLEAUCTIONS.COM, INC.
NOTES TO THE PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
================================================================================
1. BASIS OF PRESENTATION
Business combination of Ableauctions.com, Inc. ("Able") and Ehli's
Commercial/Industrial Auctions Incorporated ("Ehli").
Effective May 16, 2000, a business combination occurred between Able and
Ehli, whereby Able legally acquired Ehli as a wholly-owned subsidiary. The
terms of the combination provided that Able acquired all of the common
shares of Ehli in exchange for cash payment of US$900,000 and Able issuing
50,000 common shares at a deemed value of US$350,000.
2. PRO-FORMA FINANCIAL INFORMATION
Management has prepared and provided certain pro-forma interim consolidated
financial information to assist readers to understand the nature and effect
of the combination on the unaudited financial statements of Able and Ehli.
The pro-forma financial information is unaudited and has been prepared from
the audited financial statements of Able and Eli's for the year ended
December 31, 1999 and the unaudited interim consolidated financial
statements of Able and Ehli for the three month period ended March 31,
2000.
Pro-forma statements of operations and loss per share:
The pro-forma consolidated statements of operations reflect a combination
of the results of operations of Able and Ehli for the year ended December
31, 1999 and the three month period ended March 31, 2000 and includes the
following:
i) the amortization of goodwill acquired in the amount of $923,774 over
five years. Amortization expense relating to goodwill, for the period
ended March 31, 2000 of $46,189 and $184,755 for the year ended
December 31, 1999 was calculated by taking a pro-rata portion of
expense for the period based on an amortization period of five years
at a rate of $184,755 per year;
ii) The pro-forma presentation of net income (loss) reflects the income
tax adjustments for federal and state income taxes as if Ehli had been
taxed as a C corporation rather than an S corporation for the year
ended December 31, 1999 and the three month period ended March 31,
2000. The effective rate used for pro-forma income taxes was the
applicable effective Federal statutory rate as there was no
significant temporary permanent differences or state income tax
obligations.
iii) the impact on the calculation of pro-forma basic loss per share which
is based on the number of shares that would have been outstanding for
the period had the business combination taken place at the beginning
of the fiscal period.
The calculation of pro-forma weighted average shares outstanding at
December 31, 1999 and March 31, 2000 are as follows:
a) March 31, 2000
Weighted average shares outstanding
as at March 31, 2000 18,668,483
Shares issued for acquisition of
Ehli's 50,000
--------------
18,718,483
==============
<PAGE>
ABLEAUCTIONS.COM, INC.
NOTES TO THE PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
================================================================================
2. PRO-FORMA FINANCIAL INFORMATION (cont'd.....)
b) December 31, 1999
Weighted average shares outstanding
as at December 31, 1999 13,228,082
Shares issued for acquisition of
Ehli's 50,000
--------------
13,278,082
==============
