<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/12g/A
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
e-AUCTION GLOBAL TRADING INC.
(Name of Small Business Issuer in its Charter)
Nevada Pending
- ------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
181 Bay Street, BCE Place, Suite 3730
Toronto, Ontario, Canada M5J 2T3
- ---------------------------------------- ---------------
(Address of principal executive offices) Postal Code
(416) 214-1587
- -----------------
(Issuer's telephone number)
Securities to be registered pursuant to Section 12(b) of the Act:
None.
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001.
<PAGE>
<TABLE>
<CAPTION>
e-AUCTION GLOBAL TRADING INC.
INCOME STATEMENT 1999 1998
- ----------------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDING MARCH 31 January 1 to January 8 to
UNAUDITED - PREPARED BY MANAGEMENT (IN US DOLLARS) March 31 March 31
<S> <C> <C>
REVENUE - -
EXPENSES
Salaries and benefits 64,909 -
Legal 5,716 -
Sales, general and administrative 61,852 7,571
--------------------------------------
TOTAL EXPENSES 132,477 7,571
--------------------------------------
--------------------------------------
Net Loss (132,477) (7,571)
--------------------------------------
Opening retained earnings (deficit) (291,569) -
Closing retained earnings (deficit) (424,046) (7,571)
e-AUCTION GLOBAL TRADING INC.
BALANCE SHEET AS AT MARCH 31 1999 1998
- ----------------------------------------------------------------------------------------------------------
UNAUDITED - PREPARED BY MANAGEMENT (IN US DOLLARS)
ASSETS
CURRENT ASSETS
Cash - 249
Accounts Receivable - -
--------------------------------------
- 249
Deposit in Schelfhout - -
Software Assets 68,747 -
Incorporation Costs 2,000 422
--------------------------------------
70,747 422
--------------------------------------
70,747 671
--------------------------------------
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable & Accruals 136,566 2,992
Due to Related Parties - 4,000
Due to Ventures North Investment Partners 82,477 -
Loan Payable - -
--------------------------------------
219,043 6,992
EQUITY
Share Capital 39,820 1,250
Contributed Surplus 235,930 -
Retained Earnings (Deficit) (424,046) (7,571)
--------------------------------------
(148,296) (6,321)
--------------------------------------
70,747 671
--------------------------------------
</TABLE>
e-AUCTION GLOBAL TRADING INC.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS 1999 1998
- ----------------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDING MARCH 31 January 1 to January 8 to
UNAUDITED - PREPARED BY MANAGEMENT (IN US DOLLARS) March 31 March 31
<S> <C> <C>
CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES
Net loss (132,477) (7,571)
Add items not affecting cash
Allowance for loan receivable - -
Net changes in non-cash operating accounts
Accounts payable 134,066 2,992
--------------------------------------
1,588 (4,579)
--------------------------------------
FINANCING ACTIVITIES
Due to related parties (67,523) 4,000
Issuance of share capital 34,500 1,250
Share issue costs - -
--------------------------------------
(33,023) 5,250
--------------------------------------
INVESTING ACTIVITIES
Incorporation costs - (422)
Software assets (68,747) -
Deposit in Schelfhout - -
--------------------------------------
(68,747) (422)
--------------------------------------
INCREASE (DECREASE) IN CASH (100,181) 249
CASH, beginning of period 100,181 -
--------------------------------------
CASH, end of period - 249
--------------------------------------
</TABLE>
e-AUCTION GLOBAL TRADING INC.
(FORMERLY KAZARI INTERNATIONAL, INC.)
(A NEVADA CORPORATION)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(IN U.S. FUNDS)
- -------------------------------------------------------------------------------
1. INCORPORATION AND NATURE OF BUSINESS
- -------------------------------------------------------------------------------
The Company was incorporated on January 8, 1998 in Nevada, U.S.A. On
March 23, 1999 the directors acting in lieu of a special meeting approved
the name change to e-Auction Global Trading Inc.
The Company was organized with the intent to be a holding company which
will acquire and/or form joint ventures with corporate entities
conducting various types of businesses throughout the world. (NOTE 5)
- -------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
<PAGE>
- -------------------------------------------------------------------------------
a) Foreign currency translation
The Company follows the "temporal" method of accounting for
foreign currency translations. Balance sheet items are translated
into Canadian dollars at exchange rates prevailing at the balance
sheet date for monetary items and at exchange rates in effect at
the transaction date for non-monetary items. Income statement
items are translated at average rates prevailing during the year.
Unrealized gains and losses are deferred and amortized over their
expected life. Realized gains and losses are charged to
operations.
b) Loss per common share
Loss per common share on a fully diluted basis is not presented as
it would be anti-dilutive.
c) Measurement uncertainty
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Significant areas requiring the use of management
estimates relate to the determination of impairment of assets and
useful lives for depreciation and amortization. Financial results
as determined by actual events could differ from those estimates.
d) Financial instruments
The Company's financial instruments consist of cash, loan
receivable and accounts payable, the fair market value of which
approximates their carrying value.
e) Related party transactions
Related party transactions are recorded at their exchange amounts
which approximate fair market value.
f) Uncertainty due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use
two digits rather than four to identify a year. Date-sensitive
systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using year 2000 dates is
processed. In addition, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than
a date. The effects of the Year 2000 Issue may be experienced
before, on, or after January 1, 2000, and, if not addressed, the
impact on operations and financial reporting may range from minor
errors to significant systems failure which could affect an
entity's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue
affecting the entity, including those related to the efforts of
customers, suppliers, or other third parties, will be fully
resolved.
- -------------------------------------------------------------------------------
3. SHARE CAPITAL AND CONTRIBUTED SURPLUS
- -------------------------------------------------------------------------------
a) Authorized - 250,000,000 common shares with a par value of $0.001
<TABLE>
<CAPTION>
MARCH 31,
NUMBER OF 1999 CONTRIBUTED
SHARES $ SURPLUS
---------- --------- ------------
<S> <C> <C> <C>
b) Issued -
Balance,
January 1,
1999 5,320,000 5,320 235,930
Share Exchange
<PAGE>
Agreement 34,500,000 34,500 -
---------- -------- -------
Balance, end
of period 39,820,000 39,820 235,930
========== ====== =======
</TABLE>
The Company entered into an agreement to acquire 100% of the issued and
outstanding shares of e-Auction Global Trading Inc., a Barbados company (the
legal subsidiary). The purchase price was 34,500,000 common shares of the
Company. The acquisition will be accounted for as a reverse takeover where the
financial statements will be issued under the name of the legal parent but
will be a continuation of the financial statements of the legal subsidiary. As
preparation for the acquisition the Company increased its authorized capital
stock to 250,000,000 shares of common stock.
In connection with the acquisition of the Barbados subsidiary the company
granted 1,000,000 stock options with an exercise price of $0.01 per share to the
former employees, officers and directors of this company.
(SEE NOTE 5)
- -------------------------------------------------------------------------------
4. LOSS PER SHARE
- -------------------------------------------------------------------------------
Loss per share for the period from January 1, 1999 to March 31, 1999 is
$0.01.
- -------------------------------------------------------------------------------
5. SUBSEQUENT EVENTS
- -------------------------------------------------------------------------------
Subsequent to quarter end:
a) The Company entered into an agreement to acquire 100% of the issued
and outstanding shares of Schelfhout Computer Systemen
N.V.("Schelfhout"), a Belgian company. The purchase price is to be
$10,000,000 and is to be paid as follows:
<TABLE>
<S> <C> <C>
Deposit $1,000,000 (paid in August 1999)
At closing $3,000,000 cash
At closing $6,000,000 in common shares of the Company
</TABLE>
The $6,000,000 in shares are not free trading and are subject to a
timed release formula. If the Company's shares are not freely
trading on any given release date the equivalent cash is to be paid
by the Company and the shares are to be returned to the Treasury.
The agreement is still subject to final approval by all parties.
b) In connection with the Schelfhout acquisition the Company received a
loan of $1,000,000 from Millennium Advisors Inc., ("Millennium") a
company related through a common director, acting as agent for
undisclosed lenders. In addition Millennium received 197,219 common
shares of the Company worth $1,000,000 as a financing fee.
The Company also entered into a contract for services whereby
Millenium would be paid 25% of any funds raised by the sale of
equity or issuance of debt by the Company in excess of the amount
reasonably required by the Company to complete the Schelfhout
acquisition.
c) The Company, through its Canadian subsidiary, made two purchases of
intellectual property. The first purchase was for $300 Cdn. paid in
the form of 30,000 options for common shares with an exercise price
of $0.01 Cdn. per share. In connection with this acquisition the
Company entered into a consulting agreement where a company
associated with the vendor would be paid $5,000 Cdn. per month and
would also receive 65,000 options for common shares with an exercise
price of $0.01 Cdn. per share.
The second purchase was for $50,000 Cdn. in cash. In connection with
this acquisition the Company entered into a management services
agreement where $1,000 Cdn. per month would be paid to the vendor
who also received 80,000 options for common shares with an exercise
price of $0.01 Cdn. per share.
<PAGE>
d) Approved a stock option plan where 6,000,000 common shares are
reserved for issuance on the exercise of options. Options are
exercisable for a period of 10 years from the date of the grant.
f) Granted a director of the Company 250,000 stock options with an
exercise price of $5 per share. Granted employees 3,050,000 stock
options with an exercise price of $0.85 per share.
g) The Company advanced a further $100,000 to Intrepidus, Inc. in
connection with the Bridge loan agreement.
h) The Company received an additional $2,200,000 in the form of a
convertible debenture, the terms of which still have to be
finalized.
- -------------------------------------------------------------------------------
6. CONTINGENCY
- -------------------------------------------------------------------------------
A shareholder derivative action was brought against the Company on
November 17, 1999 in the United States District Court against the
Company, its subsidiaries, two of its directors and several other
companies and individuals.
The action alleges Sanga International, Inc.'s ("Sanga") reputation was
damaged by the Defendants (i) engaging in conversion (ii) engaging in
fraud (iii) interfering with Sanga's prospective business advantage (iv)
breach of contract (v) violating California usury laws and (vi) breach of
fiduciary duty.
The plaintiff claims the defendants' actions have not only damaged Sanga
but also the plaintiff and the remaining shareholders of Sanga by as much
as $100 million dollars.
The Action was stayed on November 29, 1999 as a result of Sanga filing
for Chapter 11 bankruptcy protection in the United States Bankruptcy
Court.
Exposure to the Company is not determinable at this time.
- -------------------------------------------------------------------------------
7. RECONCILIATION OF UNITED STATES TO CANADIAN GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
- -------------------------------------------------------------------------------
a) Basic and diluted loss per share under U.S. GAAP are equal to the
loss per share under Canadian GAAP. The weighted average number of
shares for calculating loss per share is 17,970,000.
b) Under U.S. GAAP, the Company would record a deferred tax asset
subject to an evaluation allowance where that asset is impaired or
not expected to be realized. The Company has deferred tax assets
of approximately $78,800. The Company's valuation allowance would
be equal to the amount of the deferred tax assets. Therefore,
there have been no amounts booked in the accounts of the Company.
<PAGE>
<TABLE>
<CAPTION>
e-AUCTION GLOBAL TRADING INC.
INCOME STATEMENT 1999 1999 1998 1998
- --------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDING JUNE 30 January 1 to April 1 to January 8 to April 1 to
UNAUDITED - PREPARED BY MANAGEMENT (IN US DOLLARS) June 30 June 30 June 30 June 30
<S> <C> <C> <C> <C>
REVENUE - - - -
EXPENSES
Salaries and benefits 315,351 250,442 - -
Legal 33,254 27,538 3,500 3,500
Sales, general and administrative 289,646 227,794 73,232 65,661
--------------------------------------------------------------
TOTAL EXPENSES 638,251 505,774 76,732 69,161
--------------------------------------------------------------
--------------------------------------------------------------
Net Loss (638,251) (505,774) (76,732) (69,161)
--------------------------------------------------------------
Opening retained earnings (deficit) (291,569) (424,046) - (7,571)
Closing retained earnings (deficit) (929,820) (929,820) (76,732) (76,732)
</TABLE>
<TABLE>
<CAPTION>
e-AUCTION GLOBAL TRADING INC.
BALANCE SHEET AS AT JUNE 30 1999 1998
- ----------------------------------------------------------------------------------------------------
UNAUDITED - PREPARED BY MANAGEMENT (IN US DOLLARS)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash 1,023 173,293
Accounts Receivable - -
----------------------------------
1,023 173,293
Deposit in Schelfhout - -
Software Assets 68,747 -
Incorporation Costs 2,000 2,000
----------------------------------
70,747 2,000
----------------------------------
71,770 175,293
----------------------------------
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable & Accruals 335,912 -
Due to Related Parties - 10,775
Due to Ventures North Investment Partners 389,928 -
Loan Payable - -
----------------------------------
725,840 10,775
EQUITY
Share Capital 39,820 5,320
Contributed Surplus 235,930 235,930
Retained Earnings (Deficit) (929,820) (76,732)
----------------------------------
(654,070) 164,518
----------------------------------
71,770 175,293
----------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
e-AUCTION GLOBAL TRADING INC.
STATEMENT OF CASH FLOWS 1999 1999 1998 1998
- --------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDING JUNE 30 January 1 to April 1 to January 8 to April 1 to
UNAUDITED - PREPARED BY MANAGEMENT (IN US DOLLARS) June 30 June 30 June 30 June 30
<S> <C> <C> <C> <C>
CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES
Net loss (638,251) (505,774) (76,732) (69,161)
Add items not affecting cash
Allowance for loan receivable - - - -
Net changes in non-cash operating accounts
Accounts payable 333,412 199,346 - (2,992)
--------------------------------------------------------------
(304,839) (306,427) (76,732) (72,153)
--------------------------------------------------------------
FINANCING ACTIVITIES
Due to related parties 239,928 307,451 10,775 6,775
Issuance of share capital 34,500 - 251,250 250,000
Share issue costs - - (10,000) (10,000)
--------------------------------------------------------------
274,428 307,451 252,025 246,775
--------------------------------------------------------------
INVESTING ACTIVITIES
Incorporation costs - - (2,000) (1,578)
Software assets (68,747) - - -
Deposit in Schelfhout - - - -
--------------------------------------------------------------
(68,747) - (2,000) (1,578)
--------------------------------------------------------------
INCREASE (DECREASE) IN CASH (99,158) 1,023 173,293 173,044
CASH, beginning of period 100,181 - - 249
--------------------------------------------------------------
CASH, end of period 1,023 1,023 173,293 173,293
==============================================================
</TABLE>
e-AUCTION GLOBAL TRADING INC.
(FORMERLY KAZARI INTERNATIONAL, INC.)
(A NEVADA CORPORATION)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN U.S. FUNDS)
- -------------------------------------------------------------------------------
1. INCORPORATION AND NATURE OF BUSINESS
- -------------------------------------------------------------------------------
The Company was incorporated on January 8, 1998 in Nevada, U.S.A. On
March 23, 1999 the directors acting in lieu of a special meeting approved
the name change to e-Auction Global Trading Inc.
The Company was organized with the intent to be a holding company which
will acquire and/or form joint ventures with corporate entities
conducting various types of businesses throughout the world. (NOTE 5)
- -------------------------------------------------------------------------------
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
a) Foreign currency translation
The Company follows the "temporal" method of accounting for
foreign currency translations. Balance sheet items are translated
into Canadian dollars at exchange rates prevailing at the balance
sheet date for monetary items and at exchange rates in effect at
the transaction date for non-monetary items. Income statement
items are translated at average rates prevailing during the year.
Unrealized gains and losses are deferred and amortized over their
expected life. Realized gains and losses are charged to
operations.
b) Loss per common share
Loss per common share on a fully diluted basis is not presented as
it would be anti-dilutive.
c) Measurement uncertainty
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Significant areas requiring the use of management
estimates relate to the determination of impairment of assets and
useful lives for depreciation and amortization. Financial results
as determined by actual events could differ from those estimates.
d) Financial instruments
The Company's financial instruments consist of cash, loan
receivable and accounts payable, the fair market value of which
approximates their carrying value.
e) Related party transactions
Related party transactions are recorded at their exchange amounts
which approximate fair market value.
f) Uncertainty due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use
two digits rather than four to identify a year. Date-sensitive
systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using year 2000 dates is
processed. In addition, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than
a date. The effects of the Year 2000 Issue may be experienced
before, on, or after January 1, 2000, and, if not addressed, the
impact on operations and financial reporting may range from minor
errors to significant systems failure which could affect an
entity's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue
affecting the entity, including those related to the efforts of
customers, suppliers, or other third parties, will be fully
resolved.
- -------------------------------------------------------------------------------
3. SHARE CAPITAL AND CONTRIBUTED SURPLUS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
a) Authorized - 250,000,000 common shares with a par value of $0.001
JUNE 30,
NUMBER OF 1999 CONTRIBUTED
SHARES $ SURPLUS
---------- --------- ------------
<S> <C> <C> <C>
b) Issued -
Balance,
January 1,
1999 5,320,000 5,320 235,930
<PAGE>
Share Exchange
Agreement 34,500,000 34,500 -
---------- ------ ------
Balance, end
of period 39,820,000 39,820 235,930
========== ====== =======
</TABLE>
The Company entered into an agreement to acquire 100% of the issued and
outstanding shares of e-Auction Global Trading Inc., a Barbados company (the
legal subsidiary). The purchase price was 34,500,000 common shares of the
Company. The acquisition will be accounted for as a reverse takeover where the
financial statements will be issued under the name of the legal parent but
will be a continuation of the financial statements of the legal subsidiary. As
preparation for the acquisition the Company increased its authorized capital
stock to 250,000,000 shares of common stock.
In connection with the acquisition of the Barbados subsidiary the company
granted 1,000,000 stock options with an exercise price of $0.01 per share to the
former employees, officers and directors of this company.
(SEE NOTE 5)
- -------------------------------------------------------------------------------
4. LOSS PER SHARE
- -------------------------------------------------------------------------------
Loss per share for the period from January 1, 1999 to June 30, 1999 is
$0.02.
- -------------------------------------------------------------------------------
5. SUBSEQUENT EVENTS
- -------------------------------------------------------------------------------
Subsequent to quarter end:
a) The Company entered into an agreement to acquire 100% of the issued
and outstanding shares of Schelfhout Computer Systemen
N.V.("Schelfhout"), a Belgian company. The purchase price is to be
$10,000,000 and is to be paid as follows:
<TABLE>
<S> <C> <C>
Deposit $1,000,000 (paid in August 1999)
At closing $3,000,000 cash
At closing $6,000,000 in common shares of the Company
</TABLE>
The $6,000,000 in shares are not free trading and are subject to a
timed release formula. If the Company's shares are not freely
trading on any given release date the equivalent cash is to be paid
by the Company and the shares are to be returned to the Treasury.
The agreement is still subject to final approval by all parties.
b) In connection with the Schelfhout acquisition the Company received a
loan of $1,000,000 from Millennium Advisors Inc., ("Millennium") a
company related through a common director, acting as agent for
undisclosed lenders. In addition Millennium received 197,219 common
shares of the Company worth $1,000,000 as a financing fee.
The Company also entered into a contract for services whereby
Millenium would be paid 25% of any funds raised by the sale of
equity or issuance of debt by the Company in excess of the amount
reasonably required by the Company to complete the Schelfhout
acquisition.
c) The Company, through its Canadian subsidiary, made two purchases of
intellectual property. The first purchase was for $300 Cdn. paid in
the form of 30,000 options for common shares with an exercise price
of $0.01 Cdn. per share. In connection with this acquisition the
Company entered into a consulting agreement where a company
associated with the vendor would be paid $5,000 Cdn. per month and
would also receive 65,000 options for common shares with an exercise
price of $0.01 Cdn. per share.
<PAGE>
The second purchase was for $50,000 Cdn. in cash. In connection with
this acquisition the Company entered into a management services
agreement where $1,000 Cdn. per month would be paid to the vendor
who also received 80,000 options for common shares with an exercise
price of $0.01 Cdn. per share.
d) Approved a stock option plan where 6,000,000 common shares are
reserved for issuance on the exercise of options. Options are
exercisable for a period of 10 years from the date of the grant.
f) Granted a director of the Company 250,000 stock options with an
exercise price of $5 per share. Granted employees 3,050,000 stock
options with an exercise price of $0.85 per share.
g) The Company advanced a further $100,000 to Intrepidus, Inc. in
connection with the Bridge loan agreement.
h) The Company received an additional $2,200,000 in the form of a
convertible debenture, the terms of which still have to be
finalized.
- -------------------------------------------------------------------------------
6. CONTINGENCY
- -------------------------------------------------------------------------------
A shareholder derivative action was brought against the Company on
November 17, 1999 in the United States District Court against the
Company, its subsidiaries, two of its directors and several other
companies and individuals.
The action alleges Sanga International, Inc.'s ("Sanga") reputation was
damaged by the Defendants (i) engaging in conversion (ii) engaging in
fraud (iii) interfering with Sanga's prospective business advantage (iv)
breach of contract (v) violating California usury laws and (vi) breach of
fiduciary duty.
The plaintiff claims the defendants' actions have not only damaged Sanga
but also the plaintiff and the remaining shareholders of Sanga by as much
as $100 million dollars.
The Action was stayed on November 29, 1999 as a result of Sanga filing
for Chapter 11 bankruptcy protection in the United States Bankruptcy
Court.
Exposure to the Company is not determinable at this time.
- -------------------------------------------------------------------------------
7. RECONCILIATION OF UNITED STATES TO CANADIAN GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
- -------------------------------------------------------------------------------
a) Basic and diluted loss per share under U.S. GAAP are equal to the
loss per share under Canadian GAAP. The weighted average number of
shares for calculating loss per share is 28,955,359.
b) Under U.S. GAAP, the Company would record a deferred tax asset
subject to an evaluation allowance where that asset is impaired or
not expected to be realized. The Company has deferred tax assets
of approximately $78,800. The Company's valuation allowance would
be equal to the amount of the deferred tax assets. Therefore,
there have been no amounts booked in the accounts of the Company.
<PAGE>
<TABLE>
<CAPTION>
e-AUCTION GLOBAL TRADING INC.
INCOME STATEMENT 1999 1999 1998 1998
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE NINE MONTHS ENDING SEPTEMBER 30 January 1 to July 1 to January 8 to July 1 to
UNAUDITED - PREPARED BY MANAGEMENT (IN US DOLLARS) September 30 September 30 September 30 September 30
<S> <C> <C> <C> <C>
REVENUE - - - -
EXPENSES
Salaries and benefits 559,931 244,580 - -
Legal 86,697 53,443 21,500 18,000
Sales, general and administrative 549,958 260,312 196,955 123,724
------------------------------------------------------------------
TOTAL EXPENSES 1,196,586 558,335 218,455 141,724
------------------------------------------------------------------
------------------------------------------------------------------
Net Loss (1,196,586) (558,335) (218,455) (141,724)
------------------------------------------------------------------
Opening retained earnings (deficit) (291,569) (929,820) - (76,732)
Closing retained earnings (deficit) (1,488,155) (1,488,155) (218,455) (218,455)
</TABLE>
<TABLE>
<CAPTION>
e-AUCTION GLOBAL TRADING INC.
BALANCE SHEET AS AT SEPTEMBER 30 1999 1998
- ------------------------------------------------------------
UNAUDITED - PREPARED BY MANAGEMENT (IN US DOLLARS)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash 1,015 31,570
Accounts Receivable - -
----------------------------------
1,015 31,570
Deposit in Schelfhout 1,000,000 -
Software Assets 68,747 -
Incorporation Costs 2,000 2,000
----------------------------------
1,070,747 2,000
----------------------------------
1,071,762 33,570
----------------------------------
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable & Accruals 514,864 -
Due to Related Parties - 10,775
Due to Ventures North Investment Partners 769,303 -
Loan Payable 1,000,000 -
----------------------------------
2,284,167 10,775
EQUITY
Share Capital 39,820 5,320
Contributed Surplus 235,930 235,930
Retained Earnings (Deficit) (1,488,155) (218,455)
----------------------------------
(1,212,405) 22,795
----------------------------------
1,071,762 33,570
----------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
e-AUCTION GLOBAL TRADING INC.
STATEMENT OF CASH FLOWS 1999 1999 1998 1998
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE NINE MONTHS ENDING SEPTEMBER 30 January 1 to July 1 to January 8 to July 1 to
UNAUDITED - PREPARED BY MANAGEMENT (IN US DOLLARS) September 30 September 30 September 30 September 30
<S> <C> <C> <C> <C>
CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES
Net loss (1,196,586) (558,335) (218,455) (141,724)
Add items not affecting cash
Allowance for loan receivable - - - -
Net changes in non-cash operating accounts
Accounts payable 512,364 178,952 - -
------------------------------------------------------------------
(684,223) (379,384) (218,455) (141,724)
------------------------------------------------------------------
FINANCING ACTIVITIES
Due to related parties 619,303 379,376 10,775 -
Loan payable 1,000,000 1,000,000 - -
Issuance of share capital 34,500 - 251,250 -
Share issue costs - - (10,000) -
------------------------------------------------------------------
1,653,803 1,379,376 252,025 -
------------------------------------------------------------------
INVESTING ACTIVITIES
Incorporation costs - - (2,000) -
Software assets (68,747) - - -
Deposit in Schelfhout (1,000,000) (1,000,000) - -
------------------------------------------------------------------
(1,068,747) (1,000,000) (2,000) -
------------------------------------------------------------------
INCREASE (DECREASE) IN CASH (99,166) (8) 31,570 (141,724)
CASH, beginning of period 100,181 1,023 - 173,293
------------------------------------------------------------------
CASH, end of period 1,015 1,015 31,570 31,570
------------------------------------------------------------------
</TABLE>
e-AUCTION GLOBAL TRADING INC.
(FORMERLY KAZARI INTERNATIONAL, INC.)
(A NEVADA CORPORATION)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN U.S. FUNDS)
- -------------------------------------------------------------------------------
1. INCORPORATION AND NATURE OF BUSINESS
- -------------------------------------------------------------------------------
The Company was incorporated on January 8, 1998 in Nevada, U.S.A. On
March 23, 1999 the directors acting in lieu of a special meeting approved
the name change to e-Auction Global Trading Inc.
The Company was organized with the intent to be a holding company which
will acquire and/or form joint ventures with corporate entities
conducting various types of businesses throughout the world. (NOTE 5)
- -------------------------------------------------------------------------------
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
a) Foreign currency translation
The Company follows the "temporal" method of accounting for
foreign currency translations. Balance sheet items are translated
into Canadian dollars at exchange rates prevailing at the balance
sheet date for monetary items and at exchange rates in effect at
the transaction date for non-monetary items. Income statement
items are translated at average rates prevailing during the year.
Unrealized gains and losses are deferred and amortized over their
expected life. Realized gains and losses are charged to
operations.
b) Loss per common share
Loss per common share on a fully diluted basis is not presented as
it would be anti-dilutive.
c) Measurement uncertainty
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Significant areas requiring the use of management
estimates relate to the determination of impairment of assets and
useful lives for depreciation and amortization. Financial results
as determined by actual events could differ from those estimates.
d) Financial instruments
The Company's financial instruments consist of cash, loan
receivable and accounts payable, the fair market value of which
approximates their carrying value.
e) Related party transactions
Related party transactions are recorded at their exchange amounts
which approximate fair market value.
f) Uncertainty due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use
two digits rather than four to identify a year. Date-sensitive
systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using year 2000 dates is
processed. In addition, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than
a date. The effects of the Year 2000 Issue may be experienced
before, on, or after January 1, 2000, and, if not addressed, the
impact on operations and financial reporting may range from minor
errors to significant systems failure which could affect an
entity's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue
affecting the entity, including those related to the efforts of
customers, suppliers, or other third parties, will be fully
resolved.
- -------------------------------------------------------------------------------
3. SHARE CAPITAL AND CONTRIBUTED SURPLUS
- -------------------------------------------------------------------------------
a) Authorized - 250,000,000 common shares with a par value of $0.001
<TABLE>
<CAPTION>
SEPTEMBER 30,
NUMBER OF 1999 CONTRIBUTED
SHARES $ SURPLUS
---------- ------------- -----------
<S> <C> <C> <C>
b) Issued -
Balance,
January 1,
1999 5,320,000 5,320 235,930
<PAGE>
Share Exchange
Agreement 34,500,000 34,500 -
---------- ------ ------
Balance, end
of period 39,820,000 39,820 235,930
========== ====== =======
</TABLE>
The Company entered into an agreement to acquire 100% of the issued and
outstanding shares of e-Auction Global Trading Inc., a Barbados company (the
legal subsidiary). The purchase price was 34,500,000 common shares of the
Company. The acquisition will be accounted for as a reverse takeover where the
financial statements will be issued under the name of the legal parent but
will be a continuation of the financial statements of the legal subsidiary. As
preparation for the acquisition the Company increased its authorized capital
stock to 250,000,000 shares of common stock.
In connection with the acquisition of the Barbados subsidiary the company
granted 1,000,000 stock options with an exercise price of $0.01 per share to the
former employees, officers and directors of this company.
(SEE NOTE 5)
- -------------------------------------------------------------------------------
4. LOSS PER SHARE
- -------------------------------------------------------------------------------
Loss per share for the period from January 1, 1999 to September 30, 1999
is $0.04.
- -------------------------------------------------------------------------------
5. SUBSEQUENT EVENTS
- -------------------------------------------------------------------------------
Subsequent to quarter end:
a) The Company entered into an agreement to acquire 100% of the issued
and outstanding shares of Schelfhout Computer Systemen
N.V.("Schelfhout"), a Belgian company. The purchase price is to be
$10,000,000 and is to be paid as follows:
<TABLE>
<S> <C> <C>
Deposit $1,000,000 (paid in August 1999)
At closing $3,000,000 cash
At closing $6,000,000 in common shares of the Company
</TABLE>
The $6,000,000 in shares are not free trading and are subject to a
timed release formula. If the Company's shares are not freely
trading on any given release date the equivalent cash is to be paid
by the Company and the shares are to be returned to the Treasury.
The agreement is still subject to final approval by all parties.
b) In connection with the Schelfhout acquisition the Company received a
loan of $1,000,000 from Millennium Advisors Inc., ("Millennium") a
company related through a common director, acting as agent for
undisclosed lenders. In addition Millennium received 197,219 common
shares of the Company worth $1,000,000 as a financing fee.
The Company also entered into a contract for services whereby
Millenium would be paid 25% of any funds raised by the sale of
equity or issuance of debt by the Company in excess of the amount
reasonably required by the Company to complete the Schelfhout
acquisition.
c) The Company, through its Canadian subsidiary, made two purchases of
intellectual property. The first purchase was for $300 Cdn. paid in
the form of 30,000 options for common shares with an exercise price
of $0.01 Cdn. per share. In connection with this acquisition the
Company entered into a consulting agreement where a company
associated with the vendor would be paid $5,000 Cdn. per month and
would also receive 65,000 options for common shares with an exercise
price of $0.01 Cdn. per share.
<PAGE>
The second purchase was for $50,000 Cdn. in cash. In connection with
this acquisition the Company entered into a management services
agreement where $1,000 Cdn. per month would be paid to the vendor
who also received 80,000 options for common shares with an exercise
price of $0.01 Cdn. per share.
d) Approved a stock option plan where 6,000,000 common shares are
reserved for issuance on the exercise of options. Options are
exercisable for a period of 10 years from the date of the grant.
f) Granted a director of the Company 250,000 stock options with an
exercise price of $5 per share. Granted employees 3,050,000 stock
options with an exercise price of $0.85 per share.
g) The Company advanced a further $100,000 to Intrepidus, Inc. in
connection with the Bridge loan agreement.
h) The Company received an additional $2,200,000 in the form of a
convertible debenture, the terms of which still have to be
finalized.
- -------------------------------------------------------------------------------
6. CONTINGENCY
- -------------------------------------------------------------------------------
A shareholder derivative action was brought against the Company on
November 17, 1999 in the United States District Court against the
Company, its subsidiaries, two of its directors and several other
companies and individuals.
The action alleges Sanga International, Inc.'s ("Sanga") reputation was
damaged by the Defendants (i) engaging in conversion (ii) engaging in
fraud (iii) interfering with Sanga's prospective business advantage (iv)
breach of contract (v) violating California usury laws and (vi) breach of
fiduciary duty.
The plaintiff claims the defendants' actions have not only damaged Sanga
but also the plaintiff and the remaining shareholders of Sanga by as much
as $100 million dollars.
The Action was stayed on November 29, 1999 as a result of Sanga filing
for Chapter 11 bankruptcy protection in the United States Bankruptcy
Court.
Exposure to the Company is not determinable at this time.
- -------------------------------------------------------------------------------
7. RECONCILIATION OF UNITED STATES TO CANADIAN GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
- -------------------------------------------------------------------------------
a) Basic and diluted loss per share under U.S. GAAP are equal to the
loss per share under Canadian GAAP. The weighted average number of
shares for calculating loss per share is 32,616,703.
b) Under U.S. GAAP, the Company would record a deferred tax asset
subject to an evaluation allowance where that asset is impaired or
not expected to be realized. The Company has deferred tax assets
of approximately $78,800. The Company's valuation allowance would
be equal to the amount of the deferred tax assets. Therefore,
there have been no amounts booked in the accounts of the Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the SECURITIES EXCHANGE ACT OF
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
e-AUCTION GLOBAL TRADING INC.
January 17, 2000 By: /s/ Shane Maine
------------------------------
Shane Maine
Chairman and Director
January 17, 2000 By: /s/ Michael Gilley
------------------------------
Michael Gilley
Director
