UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
of the
SECURITIES EXCHANGE ACT OF 1934
Date of Event Requiring Report: August 8, 2003
NOVAMED, INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
000-26927 77-0443643
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(Commission File Number) (IRS Employer Identification Number)
Cornelis van Lieshout, President
2465 West 12th Street, Suite 2, Tempe, Arizona 85281
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(Address of principal executive offices)
(480) 505-0070
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(Registrant's telephone number, including area code)
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ITEM 1. Changes in Control of Registrant
On August 5, 2003, NovaMed, Inc., ("Company") entered into a Stock Exchange
Agreement ("Agreement") with World Wide Auctioneers, Inc. ("WWA") wherein the
Company agreed to issue to the shareholders of WWA 13,887,447 shares of its
common stock in exchange for the 50,000 shares that constitute all the issued
and outstanding shares of WWA's wholly owned subsidiary World Wide Auctioneers,
Ltd. ("WWA Dubai"). The parties closed the Agreement on August 8, 2003 with the
Company's acquisition of WWA Dubai. The share issuances to the shareholders of
WWA included the agreement to issue 7,525,000 shares of the Company's common
stock to Asia4Sale.com, Inc., the majority shareholder of WWA. The authorized
share issuance to Asia4Sale.com, Inc. and the other shareholders of WWA
effectively constitutes a change in control of the Company with Asia4Sale.com,
Inc. alone exercising voting control over 47.8% of the Company's issued and
outstanding common stock on August 8, 2003.
ITEM 2. Acquisition or Disposition of Assets.
On August 8, 2003 the Company acquired WWA Dubai as a wholly owned subsidiary.
WWA Dubai is an international equipment auction company based in the United Arab
Emirates that holds unreserved auctions for the sale of construction, industrial
and transportation equipment on a consignment basis. Virtually all other
equipment auction companies trade for their own accounts in their own auctions,
a practice that diminishes the auctioneer's returns and antagonizes equipment
dealers. WWA Dubai's business focus on selling on behalf of consignors rather
than buying or selling on its own account eliminates any conflict between its
own interests and those of buyers or sellers.
WWA Dubai has conducted heavy equipment consignment auctions in Dubai and
Jakarta, Indonesia using a sophisticated auction and mailing information system
developed in-house over two years of holding auctions. Management is in the
process of formalizing agreements to auction large packages of equipment in the
U.S., South America and Australia. Equipment, once secured, will be auctioned
either in Dubai or through a partner in Australia. Joint ventures to conduct
auctions in China, South America and India are also under consideration.
The Company intends to change its name to "WWA Group, Inc." to reflect its
business focus as soon as is practicable pursuant to Securities and Exchange
Commission rules and regulations.
ITEM 5. Other Events
On August 8, 2003 subsequent to the closing of the Agreement with WWA, Ruairidh
Campbell, the Company's sole officer and director appointed Eric Montandon,
Cornelis van Leishout and Digamber Naswa to the Company's board of directors.
The newly constituted board of directors then accepted the resignation of
Ruairidh Campbell, as a director and officer of the Company and proceeded to
appoint new officers. The board of directors appointed Cornelis van Lieshout as
the Company's president and chief executive officer, Digamber Naswa as the
Company's chief financial officer and Herman Huening as the Company's corporate
secretary.
ITEM 7. Financial Statements and Exhibits
Audited financial statements for WWA Dubai and pro forma financial statements
for the Company are hereby filed with this Form 8K within the time permitted by
the rule.
The following exhibits are included:
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EXHIBIT PAGE DESCRIPTION
NO. NO.
10(i) 4 Stock Exchange Agreement dated August 5, 2003 between the
Company and the shareholders of World Wide Auctioneers, Inc.
and disclosure schedules thereto.
99 (i) 41 World Wide Auctioneers, Ltd. audited financial statements for the
years ended December 31, 2002 and December 31, 2001.
99(ii) 55 World Wide Auctioneers, Ltd. unaudited financial statements for
the six month period ended June 30, 2003.
99(iii) 69 Pro forma financial statements consolidating the Company with
World Wide Auctioneers, Ltd. for the six month period ended
June 30, 2003.
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
NOVAMED, INC.
Signature Date
By: /s/ Cornelis van Lieshout August 25, 2003
-------------------------
Name: Cornelis van Lieshout
Title: President and Chief Executive Officer
By: /s/ Digamber Naswa August 25, 2003
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Name: Digamber Naswa
Title: Chief Financial Officer
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EXHIBIT 10(i)
STOCK EXCHANGE
AGREEMENT
BETWEEN
NovaMed, Inc.
AND
WWA World Wide Auctioneers, Inc. (USA)
August 5, 2003
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STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (the "Agreement"), entered into as of August 5,
2003, by and between NovaMed, Inc., a Nevada corporation (the "Company") and WWA
World Wide Auctioneers, Inc. (USA), a Nevada corporation ("World Wide USA"), and
each of the shareholders of World Wide USA as identified in a Disclosure
Schedule appended to this Agreement (collectively the "Sellers").
WITNESSETH:
WHEREAS, each of the Sellers own that number of shares of common stock of World
Wide USA, set forth opposite their respective names on a Disclosure Schedule 1.1
hereto, which shares constitute all of the issued and outstanding shares of
World Wide USA ("World Wide USA Shares"); and
WHEREAS, World Wide USA owns World Wide Auctioneers, Ltd. ("World Wide Dubai")
as a wholly owned subsidiary; and
WHEREAS, the Company desires to acquire from the World Wide USA, and World Wide
USA desires to transfer to the Company, all of the issuing and outstanding
shares of World Wide Dubai amounting to 50,000 World Wide Dubai common shares
par value of US$1 ("World Wide Dubai Shares"), in exchange for the issuance by
the Company to the Sellers of an aggregate of 13,887,447 shares of the Company's
common stock, par value $.001 per share ("Company Shares") to be allocated among
the Sellers on a pro rata basis as set forth in Disclosure Schedule 1.1 hereto;
WHEREAS, the chairman of the board of World Wide USA, Eric Montandon and the
president of World Wide USA, Cornelis van Lieshout represent and warrant, that
said director and officer are fully authorized and empowered through appropriate
corporate action to act on behalf of and bind the Sellers.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and agreements set forth herein, the parties hereto
agree as follows:
ARTICLE I
EXCHANGE OF SHARES
1.1 Exchange of Shares. Subject to the terms and conditions of this Agreement,
-------------------
on Closing:
(a) The Company shall issue and deliver to the Sellers that number of Company
Shares as set forth opposite such Seller's name in Disclosure Schedule 1.1
hereto for the World Wide Dubai Shares in an aggregate amount of thirteen
million eight hundred and eighty seven thousand four hundred and forty seven
(13,887,447) shares of the Company's common stock, and World Wide USA agrees to
deliver to the Company, all of the issuing and outstanding shares of World Wide
Dubai amounting to 50,000 World Wide Dubai Shares.
(b) Company Shares issued to Sellers shall be subject to resale restrictions
imposed pursuant to the Securities Act of 1933 as amended (the "Securities
Act").
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1.2 Time and Place of Closing.
-------------------------
The closing of the transactions contemplated hereby (the "Closing") shall take
place on August 8, 2003 at the offices of the Company at 10 a.m. Mountain
Daylight Time, or at such other place as the parties may agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to World Wide USA and to the Sellers that:
2.1 Due Organization and Qualification; Due Authorization.
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(a) The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of formation, with full corporate
power and authority to own, lease and operate its respective business and
properties and to carry on its respective business in the places and in the
manner as presently conducted or proposed to be conducted. The Company is in
good standing as a foreign corporation in each jurisdiction in which the
properties owned, leased or operated, or the business conducted, by it requires
such qualification except for any such failure, which when taken together with
all other failures, is not likely to have a material adverse effect on the
business of the Company taken as a whole.
(b) The Company does not own, directly or indirectly, any capital stock, equity
or interest in any corporation, firm, partnership, joint venture or other entity
except that wholly owned subsidiary described in Article 2.19 hereto.
(c) The Company has all requisite corporate power and authority to execute and
deliver this Agreement, and to consummate the transactions contemplated hereby
and thereby. The Company has taken all corporate action necessary for the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and this Agreement constitutes the valid and
binding obligation of the Company, enforceable against the Company in accordance
with its respective terms, except as may be affected by bankruptcy, insolvency,
moratoria or other similar laws affecting the enforcement of creditors' rights
generally and subject to the qualification that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefore may be brought.
2.2 No Conflicts or Defaults.
The execution and delivery of this Agreement by the Company and the consummation
of the transactions contemplated hereby do not and shall not (i) contravene the
Articles of Incorporation or By-laws of the Company, (ii) violate, conflict
with, or result in a breach of, or a default or loss of rights under, any
material covenant, agreement, mortgage, indenture, lease, instrument, permit or
license to which the Company is a party or by which the Company or any of their
respective assets are bound, or any judgment, order or decree, or any law, rule
or regulation to which the Company or any of their respective assets are
subject, (iii) result in the creation of, or give any party the right to create,
any lien, charge, encumbrance or any other right or adverse interest upon any of
the assets of the Company, (iv) terminate or give any party the right to
terminate, amend, abandon or refuse to perform, any material agreement,
arrangement or commitment to which the Company is a party or by which the
Company or any of its assets are bound, or (v) accelerate or modify, or give any
party the right to accelerate or modify, the time within which, or the terms
under which, the Company is to perform any duties or obligations or receive any
rights or benefits under any material agreement, arrangement or commitment to
which it is a party.
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2.3 Capitalization.
The authorized capital stock of the Company immediately prior to giving effect
to the transactions contemplated hereby consists of 50,000,000 shares of common
stock of which 1,299,858 shares of common stock are issued and outstanding as of
the date hereof. All of the outstanding shares of common stock are, and the
Company Shares when issued in accordance with the terms hereof, will be, duly
authorized, validly issued, fully paid and non-assessable. All outstanding
shares of the Company's capital stock were issued in compliance with all
applicable federal and state laws. The Company Shares are not subject to any
preemptive or subscription right, any voting trust agreement or other contract,
agreement, arrangement, option, warrant, call, commitment or other right of any
character obligating or entitling the Company to issue, sell, redeem or
repurchase any of its securities, and there is no outstanding security of any
kind convertible into or exchangeable for common stock. The offers and sales of
all the Company's outstanding securities were at all relevant times either
registered under the Securities Act and the applicable state securities or Blue
Sky laws, or exempt from such registration pursuant to the exemption claimed
therefore.
2.4 Financial Statements.
--------------------
Disclosure Schedule 2.4 contains copies of the balance sheets of the Company at
December 31, 2002 (audited) and June 30, 2003 (unaudited) (such statements being
the "Company Financial Statements"). The Company Financial Statements, together
with the notes thereto, have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent throughout all periods
presented, subject to audit adjustments, which are not expected to be material.
Such statements present fairly the financial position of the Company as of the
dates indicated. The books of account and other financial records of the Company
have been maintained in accordance with good business practices.
2.5 Further Financial Matters.
(a) The Company has no material liabilities or obligations, whether secured or
unsecured, accrued, determined, absolute or contingent, asserted or unasserted
or otherwise, which are required to be reflected or reserved in a balance sheet
or the notes thereto under generally accepted accounting principles that are not
reflected in the Company Financial Statements.
(b) Except as set forth in the Company Financial Statements, the Company does
not have any, direct or indirect, indebtedness, liability, claim, loss, damage,
deficiency, obligation or responsibility, fixed or unfixed, choate or inchoate,
liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent
or otherwise of which the Company is aware.
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2.6 Taxes.
The Company has filed all federal, state, county, local and foreign national,
provincial and local tax returns or reports which were required to be filed on
or prior to the date hereof in respect of all income, withholding, franchise,
payroll, excise, property, sales, use, value added or other taxes or levies,
imposts, duties, license and registration fees, charges, assessments or
withholdings of any nature whatsoever (together, "Taxes"), and has paid all
Taxes (and any related penalties, fines and interest) which have become due
pursuant to such returns or reports or pursuant to any assessment which has
become payable, or, to the extent its liability for any Taxes (and any related
penalties, fines and interest) has not been fully discharged, the same have been
properly reflected as a liability on the books and records of the Company and
adequate reserves therefore have been established. All such returns and reports
filed on or prior to the date hereof have been properly prepared and are true,
correct (and to the extent such returns reflect judgments made by the Company,
such judgments were reasonable under the circumstances) and complete in all
material respects. No extension for the filing of any such return or report is
currently in effect. No tax return or tax return liability of the Company has
been audited or, presently under audit. All taxes and any penalties, fines and
interest which have been asserted to be payable as a result of any audits have
been paid. The Company has not given or been requested to give waivers of any
statute of limitations relating to the payment of any Taxes (or any related
penalties, fines and interest). There are no claims pending or, to the knowledge
of the Company, threatened, against the Company for past due Taxes. All payments
for withholding taxes, unemployment insurance and other amounts required to be
paid for periods prior to the date hereof to any governmental authority in
respect of employment obligations of the Company including, without limitation,
amounts payable pursuant to the Federal Insurance Contributions Act, have been
paid or shall be paid prior to the Closing and have been duly provided for on
the books and records of the Company and in the Company Financial Statements.
2.7 Indebtedness: Contracts: No Defaults.
------------------------------------
(a) Disclosure Schedule 2.7 sets forth a true, complete and correct list of all
material instruments, agreements, indentures, mortgages, guarantees, notes,
commitments, accommodations, letters of credit or other arrangements or
understandings, whether written or oral, to which the Company is a party
(collectively, the "Company Operating Agreements"). An agreement shall not be
considered material for the purposes of this Article 2.7(a) if it provides for
expenditures or receipts of less than $60,000 and has been entered into by the
Company in the ordinary course of business. The Company Operating Agreements
constitute all of the contracts, agreements, understandings and arrangements
required for the operation of the business of the Company or which have a
material effect thereon. Copies of all such material written Company Operating
Agreements have previously been delivered or otherwise made available to the
Sellers and such copies are true, complete and correct as of the date hereof.
(b) The Company nor, to the Company's knowledge, any other person or entity is
in breach in any material respect of, or in default in any material respect
under, any material contract, agreement, arrangement, commitment or plan to
which the Company is a party, and no event or action has occurred, is pending or
is threatened, which, after the giving of notice, passage of time or otherwise,
would constitute or result in such a material breach or material default by the
Company or, to the knowledge of the Company, any other person or entity. The
Company has not received any notice of default under any contract, agreement,
arrangement, commitment or plan to which it is a party, which default has not
been cured to the satisfaction of, or duly waived by, the party claiming such
default on or before the date hereof.
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2.8 Personal Property.
-----------------
The Company has good and marketable title to all of its tangible personal
property and assets free and clear of any other liens or mortgages, except for
any lien for current taxes not yet due and payable, as set forth in Disclosure
Schedule 2.8.
2.9 Real Property.
Disclosure Schedule 2.9 sets forth a true and complete list of all real property
owned by, or leased or subleased by or to, the Company. Each lease to which the
Company is a party is valid, binding and in full force and effect with respect
to the Company and, to the knowledge of the Company, no notice of default or
termination under any such lease is outstanding.
2.10 Compliance with Law.
(a) The Company is not conducting its respective business or affairs in material
violation of any applicable federal, state or local law, ordinance, rule,
regulation, court or administrative order, decree or process, or any requirement
of insurance carriers. The Company has not received any notice of violation or
claimed violation of any such law, ordinance, rule, regulation, order, decree,
process or requirement.
(b) The Company is in compliance in all material respects with all applicable
federal, state, local and foreign laws and regulations relating to the
protection of the environment and human health. There are no claims, notices,
actions, suits, hearings, investigations, inquiries or proceedings pending or,
to the knowledge of the Company, threatened against the Company that are based
on or related to any environmental matters or the failure to have any required
environmental permits, and there are no past or present conditions that the
Company has reason to believe are likely to give rise to any material liability
or other obligations of the Company under any environmental laws.
2.11 Permits and Licenses.
The Company has all certificates of occupancy, rights, permits, certificates,
licenses, franchises, approvals and other authorizations as are reasonably
necessary to conduct its respective business and to own, lease, use, operate and
occupy its assets, at the places and in the manner now conducted and operated,
except those the absence of which would not materially adversely affect its
respective business. As of the date hereof, the Company has not received any
written or oral notice or claim pertaining to the failure to obtain any material
permit, certificate, license, approval or other authorization required by any
national, federal, state or local agency or other regulatory body, the failure
of which to obtain would materially and adversely affect its business.
2.12 Ordinary Course.
Since June 30, 2003, the Company has conducted its business, maintained its real
property and equipment and kept its books of account, records and files,
substantially in the same manner as previously conducted, maintained or kept and
solely in the ordinary course.
2.13 No Adverse Changes. Since June 30, 2003, there has not been:
------------------
(a) Any material adverse change in the business, prospects, the financial or
other condition, or the respective assets or liabilities of the Company as
reflected in the Company Financial Statements.
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(b) Any material loss sustained by the Company, including, but not limited to
any loss on account of theft, fire, flood, explosion, accident or other
calamity, whether or not insured, which has materially and adversely interfered,
or may materially and adversely interfere, with the operation of the Company's
business.
(c) To the best knowledge of the Company, any event, condition or state of
facts, including, without limitation, the enactment, adoption or promulgation of
any law, rule or regulation, the occurrence of which materially and adversely
does or would affect the results of operations or the business or financial
condition of the Company.
2.14 Litigation.
(a) There is no claim, dispute, action, suit, proceeding or investigation
pending or, to the knowledge of the Company, threatened, against or affecting
the business of the Company that has not been disclosed to World Wide USA and
the Sellers, or challenging the validity or propriety of the transactions
contemplated by this Agreement, at law or in equity or admiralty or before any
federal, state, local, foreign or other governmental authority, board, agency,
commission or instrumentality, nor to the knowledge of the Company, has any such
claim, dispute, action, suit, proceeding or investigation been pending or
threatened, during the 12-month period preceding the date hereof.
(b) There is no outstanding judgment, order, writ, ruling, injunction,
stipulation or decree of any court, arbitrator or federal, state, local, foreign
or other governmental authority, board, agency, commission or instrumentality,
against or materially affecting the business of the Company.
(c) The Company has not received any written or verbal inquiry from any federal,
state, local, foreign or other governmental authority, board, agency, commission
or instrumentality concerning the possible violation of any law, rule or
regulation or any matter disclosed in respect of its business.
2.15 Insurance.
The Company maintains no insurance.
2.16 Certificate of Incorporation and Bylaws: Minute Books.
-----------------------------------------------------
The copies of the Articles of Incorporation and Bylaws (or similar governing
documents) of the Company, and all amendments to each are true, correct and
complete. The minute books of the Company contain true and complete records of
all meetings and consents in lieu of meetings of its board of directors (and any
committees thereof), or similar governing bodies, since the time of their
respective organization. The stock books of the Company are true, correct and
complete.
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2.17 Employee Benefit Plans.
----------------------
The Company does not maintain, nor has the Company maintained in the past, any
employee benefit plans ("as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), or any plans, programs,
policies, practices, arrangements or contracts (whether group or individual)
providing for payments, benefits or reimbursements to employees of the Company,
former employees, their beneficiaries and dependents under which such employees,
former employees, their beneficiaries and dependents are covered through an
employment relationship with the Company, or any entity required to be
aggregated in a controlled group or affiliated service group with the Company
for purposes of ERISA or the Internal Revenue Code of 1986 (the "Code")
(including, without limitation, under Section 414(b), (c), (m) or (o) of the
Code or Section 4001 of ERISA, at any relevant time.
2.18 Patents: Trademarks and Intellectual Property Rights.
The Company owns no patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, internet web site(s), proprietary rights
or processes. 2.19 Subsidiaries.
The Company has one wholly owned subsidiary, NovaMed Medical Products
Manufacturing, Inc., a Minnesota corporation, which currently has no operations.
2.20 Affiliate Transactions.
(a) Neither the Company nor any officer, director or employee of the Company (or
any of the relatives or affiliates of any of the aforementioned persons) is a
party to any agreement, contract, commitment or transaction with the Company or
affecting the business of the Company, or has any interest in any property,
whether real, personal or mixed, or tangible or intangible, used in or necessary
to the Company which will subject the Sellers to any liability or obligation
from and after the Closing Date.
(b) The Company has no indebtedness due from its respective officers, directors
or stockholders or any of their respective relatives or affiliates, and none of
the officers, directors or stockholders of the Company or their respective
relatives or affiliates has any claim against the Company.
2.21 No Anti-Dilution Adjustment.
The issuance of the Company Shares will not give any holder of any of the
Company's outstanding shares, options, warrants or other convertible securities
or rights the right to purchase any additional shares of capital stock, the
right to be issued any capital stock and/or the right to purchase capital stock
at a reduced price.
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2.22 No Regulatory Problems.
The Company (i) has not filed a registration statement which is the subject of
any proceeding or examination under Section 8 of the Securities Act, or is not
the subject of any refusal order or stop order thereunder; (ii) is not subject
to any pending proceeding under Rule 258 of the Securities Act or any similar
rule adopted under Section 3(b) of the Securities Act, or to an order entered
thereunder; (iii) has not been convicted of any felony or misdemeanor in
connection with the purchase or sale of any security or involving the making of
any false filing with the Securities and Exchange Commission ("Commission");
(iv) is not subject to any order, judgment, or decree of any court of competent
jurisdiction temporarily, preliminary or permanently restraining or enjoining,
the Company from engaging in or continuing any conduct or practice in connection
with the purchase or sale of any security or involving the making of any false
filing with the Commission; and (v) is not subject to a United States Postal
Service false representation order entered under Section 3005 of Title 39,
United States Code; or a temporary restraining order or preliminary injunction
entered under Section 3007 of Title 39, United States Code, with respect to
conduct alleged to have violated Section 3005 of Title 39, United States Code.
To its knowledge, none of the Company's directors, officers, or beneficial
owners of five percent or more of any class of its equity securities (i) has
been convicted of any felony or misdemeanor in connection with the purchase or
sale of any security, involving the making of a false filing with the
Commission, or arising out of the conduct of the business of an underwriter,
broker, dealer, municipal securities dealer, or investment advisor; (ii) is
subject to any order, judgment, or decree of any court of competent jurisdiction
temporarily or preliminary enjoining or restraining, or is subject to any order,
judgment, or decree of any court of competent jurisdiction, permanently
enjoining or restraining such person from engaging in, or continuing, any
conduct or practice in connection with the purchase or sale of any security
involving the making of a false filing with the Commission, (iii) is subject to
an order of the Commission entered pursuant to Section 15(b), 15B(a), or 15B(c)
of the Securities Exchange Act of 1934, as amended ("Exchange Act"), or is
subject to an order of the Commission entered pursuant to Section 203(e) or (f)
of the Investment Advisers Act of 1940; (iv) has been suspended or expelled from
membership in, or suspended or barred from association with a member of, an
exchange registered as a national securities exchange pursuant to Section 6 of
the Exchange Act, an association registered as a national securities association
under Section 15A of the Exchange Act, for any act or omission to act
constituting conduct inconsistent with just and equitable principles of trade;
or (v) is subject to a United States Postal Service false representation order
entered under Section 3005 of Title 39, United States Code; or is subject to a
restraining order or preliminary injunction entered under Section 3007 of Title
39, United States Code, with respect to conduct alleged to have violated Section
3005 of Title 39, United States Code.
2.23 Miscellaneous.
-------------
The representations and warranties made by the Company in this Agreement and the
statements made by or on behalf of the Company in any certificate, document or
exhibit furnished in connection with the transactions contemplated hereby or
thereby or in any public filing with any regulatory agency, (i) were prepared in
accordance with the requirements of the Securities Act or the Exchange Act, as
and if required, and (ii) do not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make such
representations or warranties or other such statements, in light of the
circumstances under, and at the time at, which they were made, not false or
misleading.
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2.24 Tax Free Transaction
The Company has structured this exchange with the intent that it be considered a
tax-free exchange under the Internal Revenue Code of 1986, as amended, for all
parties.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WORLD WIDE USA AND SELLERS
World Wide USA represents and warrants and Sellers, (but only when specifically
referenced in this Article III and then only with respect to each Seller's
representations and warranties) severally and not jointly, represent and warrant
to the Company that:
3.1 Due Organization and Qualification; Due Authorization.
(a) World Wide Dubai is a corporation duly incorporated, validly existing and in
good standing under the laws of their jurisdiction of formation, with full
corporate power and authority to own, lease and operate its business and
properties and to carry on its business in the places and in the manner as
presently conducted or proposed to be conducted. World Wide Dubai is in good
standing as foreign corporation in each jurisdiction in which the properties
owned, leased or operated, or the businesses conducted, by them requires such
qualification except for any such failure, which when taken together with all
other failures, is not likely to have a material adverse effect on the business
of World Wide Dubai when taken as a whole.
(b) World Wide Dubai does not own, directly or indirectly, any capital stock,
equity or interest in any corporation, firm, partnership, joint venture or other
entity.
(c) World Wide USA has all requisite power and authority to execute and deliver
this Agreement, and to consummate the transactions contemplated hereby and
thereby. World Wide USA has taken all corporate action necessary for the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and this Agreement constitutes the valid and
binding obligation of World Wide USA and the Sellers, enforceable against World
Wide USA and the Sellers in accordance with its respective terms, except as may
be affected by bankruptcy, insolvency, moratoria or other similar laws affecting
the enforcement of creditors' rights generally and subject to the qualification
that the availability of equitable remedies is subject to the discretion of the
court before which any proceeding therefore may be brought.
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3.2 No Conflicts or Defaults.
------------------------
Except as specifically provided otherwise in this Agreement, the execution and
delivery of this Agreement by World Wide USA and the Sellers for the
consummation of the transactions contemplated hereby do not and shall not (i)
contravene the Articles of Incorporation or By-laws of World Wide USA or World
Wide Dubai (ii) violate, conflict with, or result in a breach of, or a default
or loss of rights under, any material covenant, agreement, mortgage, indenture,
lease, instrument, permit or license to which World Wide USA or World Wide Dubai
is a party or by which World Wide USA or World Wide Dubai or their assets are
bound, or any judgment, order or decree, or any law, rule or regulation to which
World Wide USA or World Wide Dubai or their assets are subject, (iii) result in
the creation of, or give any party the right to create, any lien upon any of the
assets of World Wide USA or World Wide Dubai, (iv) terminate or give any party
the right to terminate, amend, abandon or refuse to perform, any material
agreement, arrangement or commitment to which World Wide USA or World Wide Dubai
is party or by which World Wide USA or World Wide Dubai or any of their assets
are bound, or (v) accelerate or modify, or give any party the right to
accelerate or modify, the time within which, or the terms under which, World
Wide USA or World Wide Dubai are to perform any duties or obligations or receive
any rights or benefits under any material agreement, arrangement or commitment
to which they are a party.
3.3 Capitalization.
--------------
The authorized capital stock of World Wide Dubai immediately prior to giving
effect to the transactions contemplated hereby consists of 50,000 shares of
common stock, par value US$1, of which 50,000 shares are issued and outstanding
as of the date hereof.
All of the World Wide Dubai Shares when transferred in accordance with the terms
of this Agreement, will be, duly authorized, validly issued, fully paid and
non-assessable, and have not been or, will not be transferred in violation of
any rights of third parties. All outstanding shares of World Wide Dubai's stock
were issued in compliance with all applicable national, federal and state laws.
The World Wide Dubai Shares are not subject to any preemptive or subscription
right, any voting trust agreement or other contract or agreement, arrangement,
option, call, commitment or other right of any character obligating or entitling
World Wide Dubai to issue, sell, redeem or repurchase any of their securities,
and there is no other outstanding security of any kind convertible into or
exchangeable for common stock. The offers and sales of all of World Wide Dubai's
outstanding securities were at all relevant times either registered under the
Securities Act and the applicable state securities or Blue Sky laws, exempt from
such registration pursuant to the exemption claimed therefore and in full
compliance with the regulatory requirements for issuing common stock under the
laws of the British Virgin Islands.
3.4 Financial Statements.
Disclosure Schedule 3.4 contains copies of the audited balance sheets of World
Wide Dubai at December 31, 2002 and December 31, 2001 and the unaudited balance
sheet as of June 30, 2003 (such statements being the "World Wide Dubai Financial
Statements"). The World Wide Dubai Financial Statements, together with the notes
thereto, have been prepared in accordance with generally accepted accounting
principles applied on a basis consistent throughout all periods presented,
subject to audit adjustments, which are not expected to be material. Such
statements present fairly the financial position of World Wide Dubai as of the
dates indicated. The books of account and other financial records of World Wide
Dubai have been maintained in accordance with good business practices.
14
3.5 Further Financial Matters.
(a) World Wide Dubai has no material liabilities or obligations, whether secured
or unsecured, accrued, determined, absolute or contingent, asserted or
unasserted or otherwise, which are required to be reflected or reserved in a
balance sheet or the notes thereto under generally accepted accounting
principles that are not reflected in the World Wide Dubai Financial Statements.
(b) Except as set forth in the Dubai Financial Statements, the Company does not
have any, direct or indirect, indebtedness, liability, claim, loss, damage,
deficiency, obligation or responsibility, fixed or unfixed, choate or inchoate,
liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent
or otherwise of which World Wide USA is aware.
3.6 Taxes.
World Wide Dubai has filed all national, federal, state, local and foreign tax
returns or reports which were required to be filed on or prior to the date
hereof in respect of all income, withholding, franchise, payroll, excise,
property, sales, use, value added or other taxes or levies, imposts, duties,
license and registration fees, charges, assessments or withholdings of any
nature whatsoever (together "Taxes"), and has paid all Taxes (and any related
penalties, fines and interest) which have become due pursuant to such returns or
reports or pursuant to any assessment which has become payable, or, to the
extent it liability for any Taxes (and related penalties, fines and interest)
has not been fully discharged, the same have been properly reflected as a
liability on the books and records of World Wide Dubai and adequate reserves
therefore have been established. All such returns and reports filed on or prior
to the date hereof have been properly prepared and are true, correct (and to the
extent such returns reflect judgments made by World Wide Dubai, such judgments
were reasonable under the circumstances) and complete in all material respects.
No extension for the filing of any such return or report is currently in effect.
No tax return or tax return liability of World Wide Dubai has been audited or,
presently under audit. All taxes and any penalties, fines and interest which
have been asserted to be payable as a result of any audits have been paid. World
Wide Dubai has not given or been requested to give waivers of any statute of
limitations relating to the payment of any Taxes (or any related penalties,
fines and interest). There are no claims pending or, to the knowledge of World
Wide USA or Sellers, threatened, against World Wide Dubai for past due Taxes.
All payments for withholding taxes, unemployment insurance and other amounts
required to be paid for periods prior to the date hereof to any governmental
authority in respect of employment obligations of World Wide Dubai have been
paid or shall be paid prior to the Closing and have been duly provided for on
the books and records of World Wide Dubai and in the World Wide Dubai Financial
Statements. No tax return or tax return liability of World Wide Dubai has been
audited or, presently under audit. There are no claims pending or, to the
knowledge of World Wide USA or Sellers, threatened, against World Wide Dubai for
past due taxes. All payments for withholding taxes, unemployment insurance and
other amounts required to be paid for periods prior to the date hereof to any
governmental authority in respect of employment obligations of World Wide Dubai
have been paid or shall be paid prior to the Closing and have been duly provided
for on the books and records of World Wide Dubai and in the World Wide Dubai
Financial Statements.
15
3.7 Indebtedness: Contracts: No Defaults.
------------------------------------
(a) Schedule 3.7 of the Disclosure Schedule sets forth a true, complete and
correct list of all material instruments, agreements, indentures, mortgages,
guarantees, notes, commitments, accommodations, letters of credit or other
arrangements or understandings, whether written or oral, to which World Wide
Dubai is party (collectively, the "World Wide Dubai Operating Agreements"). An
agreement shall not be considered material for the purposes of this Article
3.7(a) if it provides for expenditures or receipts of less than $60,000 and has
been entered into by World Wide Dubai in the ordinary course of business. The
World Wide Dubai Operating Agreements constitute all of the material contracts,
agreements, understandings and arrangements required for the operation of the
business of World Wide Dubai or which have a material effect thereon. Copies of
all such material written World Wide Dubai Operating Agreements have previously
been delivered or otherwise made available to the Company and such copies are
true, complete and correct as of the date hereof.
(b) Neither, World Wide Dubai, nor, to the knowledge of World Wide USA or the
Sellers, is any other person or entity is in breach in any material respect of,
or in default in any material respect under, any material contract, agreement,
arrangement, commitment or plan to which World Wide Dubai is party, and no event
or action has occurred, is pending or is threatened, which, after the giving of
notice, passage of time or otherwise, would constitute or result in such a
material breach or material default by World Wide Dubai, nor, to the knowledge
of World Wide USA or the Sellers, is any other person or entity. World Wide
Dubai has not received any notice of default under any contract, agreement,
arrangement, commitment or plan to which they are party, which default has not
been cured to the satisfaction of, or duly waived by, the party claiming such
default on or before the date hereof.
3.8 Personal Property.
(a) World Wide Dubai has good and marketable title to all of its tangible
personal property and assets free and clear of any other liens or mortgages,
except for any lien for current taxes not yet due and payable, as set forth in
Disclosure Schedule 3.8.
3.9 Real Property.
Disclosure Schedule 3.9 sets forth a true and complete list of all real property
owned by, or leased or subleased by or to, World Wide Dubai. Except as set forth
in Schedule 3.9 of the Disclosure Schedule, each lease to which World Wide Dubai
is party is valid, binding and in full force and effect with respect to World
Wide Dubai, and, to the knowledge of World Wide USA and Sellers, all other
parties thereto; no notice of default or termination under any such leases are
outstanding.
3.10 Compliance with Law.
(a) World Wide Dubai is not conducting its respective business or affairs in
material violation of any applicable national, federal or local law, ordinance,
rule, regulation, court or administrative order, decree or process, or any
requirement of insurance carriers. World Wide Dubai has not received any notice
of violation or claimed violation of any such law, ordinance, rule, regulation,
order, decree, process or requirement.
16
(b) World Wide Dubai is in compliance in all material respects with all
applicable national, federal, local and foreign laws and regulations relating to
the protection of the environment and human health. There are no claims,
notices, actions, suits, hearings, investigations, inquiries or proceedings
pending or, to the knowledge of World Wide USA or Sellers, threatened against
World Wide Dubai that are based on or related to any environmental matters or
the failure to have any required environmental permits, and there are no past or
present conditions that World Wide Dubai has reason to believe are likely to
give rise to any material liability or other obligations of World Wide Dubai
under any environmental laws.
3.11 Permits and Licenses.
World Wide Dubai has all certificates of occupancy, rights, permits,
certificates, licenses, franchises, approvals and other authorizations as are
reasonably necessary to conduct their respective businesses and to own, lease,
use, operate and occupy their assets, at the places and in the manner now
conducted and operated, except those the absence of which would not materially
adversely affect their respective businesses. As of the date hereof, World Wide
Dubai has not received any written or oral notice or claim pertaining to the
failure to obtain any material permit, certificate, license, approval or other
authorization required by any national, federal, state or local agency or other
regulatory body, the failure of which to obtain would materially and adversely
affect their respective businesses.
3.12 Ordinary Course
Since inception, World Wide Dubai has conducted its business, maintained their
real property and equipment and kept their books of account, records and files,
substantially in the same manner as previously conducted, maintained or kept and
solely in the ordinary course.
3.13 No Adverse Changes.
------------------
Since June 30, 2003, there has not been:
(a) Any material adverse change in the business, prospects, the financial or
other condition, or the respective assets or liabilities of World Wide Dubai.
(b) Any material loss sustained by World Wide Dubai, including, but not limited
to any loss on account of theft, fire, flood, explosion, accident or other
calamity, whether or not insured, which has materially and adversely interfered,
or may materially and adversely interfere, with the operation of World Wide
Dubai's business.
(c) To the best knowledge of World Wide USA and Sellers, any event, condition or
state of facts, including, without limitation, the enactment, adoption or
promulgation of any law, rule or regulation, the occurrence of which materially
and adversely does or would affect the results of operations or the business or
financial condition of World Wide Dubai.
17
3.14 Litigation.
(a) There is no claim, dispute, action, suit, proceeding or investigation
pending or, to the knowledge of World Wide USA or Sellers, threatened, against
or affecting the business of World Wide Dubai except as set forth in Disclosure
Schedule 3.14, or challenging the validity or propriety of the transactions
contemplated by this Agreement, at law or in equity or admiralty or before any
federal, state, local, foreign or other governmental authority, board, agency,
commission or instrumentality, nor to the knowledge of World Wide USA or
Sellers, has any such claim, dispute, action, suit, proceeding or investigation
been pending or threatened, during the 12-month period preceding the date
hereof.
(b) There is no outstanding judgment, order, writ, ruling, injunction,
stipulation or decree of any court, arbitrator or national, federal, local,
foreign or other governmental authority, board, agency, commission or
instrumentality, against or materially affecting the business of World Wide
Dubai.
(c) World Wide Dubai has not received any written or verbal inquiry from any
national, federal, local, foreign or other governmental authority, board,
agency, commission or instrumentality concerning the possible violation of any
law, rule or regulation or any matter disclosed in respect of its business.
3.15 Insurance.
---------
World Wide Dubai maintains the following insurance policies:
Insurance Coverage
Fire & Perils Insurance Property insured against
Fire and Extended perils
Money Policy Money in the safe
& Money in transit (any
where in U.A.E.)
Third Party Liability Insurance Any Injury and / or loss or
damage to Third party property
Workmen's Compensation Insurance All Employees
3.16 Certificate of Incorporation and By-laws: Minute Books.
-------------------------------------------------------
The copies of the Articles of Incorporation and By-laws (or similar governing
documents) of World Wide Dubai, and all amendments to each are true, correct and
complete. The minute books of World Wide Dubai contain true and complete records
of all meetings and consents in lieu of meetings of its board of directors (and
any committees thereof), or similar governing bodies, since the time of their
respective organization. The stock books of World Wide Dubai are true, correct
and complete.
18
3.17 Employee Benefit Plans.
World Wide Dubai does not maintain, nor has World Wide Dubai maintained in the
past, any employee benefit plans ("as defined in Section 3(3) of the "ERISA"),
or any plans, programs, policies, practices, arrangements or contracts (whether
group or individual) providing for payments, benefits or reimbursements to
employees of World Wide Dubai, former employees, their beneficiaries and
dependents under which such employees, former employees, their beneficiaries and
dependents are covered through an employment relationship with World Wide Dubai
or any entity required to be aggregated in a controlled group or affiliated
service group with World Wide Dubai for purposes of ERISA or the Code
(including, without limitation, under Section 414(b), (c), (m) or (o) of the
Code or Section 4001 of ERISA, at any relevant time.
3.18 Patents; Trademarks and Intellectual Property Rights.
World Wide Dubai owns or possesses sufficient legal rights to all patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, internet web site(s) proprietary rights and processes necessary for
its business as now conducted without any conflict with or infringement of the
rights of others. There are no outstanding options, licenses or agreements of
any kind relating to the foregoing, and World Wide Dubai is not bound by, or a
party to, any options, licenses or agreements of any kind with respect to the
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, proprietary rights and processes of any other person or
entity.
3.19 Subsidiaries.
------------
World Wide Dubai has no subsidiaries.
3.20 Affiliate Transactions.
(a) Neither World Wide Dubai nor any officer, director or employee of World Wide
Dubai (or any of the relatives or affiliates of any of the aforementioned
persons) is a party to any agreement, contract, commitment or transaction with
World Wide Dubai or affecting the business of World Wide Dubai, or has any
interest in any property, whether real, personal or mixed, or tangible or
intangible, used in or necessary to World Wide Dubai which will subject World
Wide Dubai to any liability or obligation from and after the Closing except as
set forth in Disclosure Schedule 3.20.
(b) World Wide Dubai has no indebtedness due from its respective officers,
directors or stockholders or any of their respective relatives or affiliates,
and none of the officers, directors or stockholders of World Wide Dubai or their
respective relatives or affiliates has any claim against World Wide Dubai.
3.21 Stock Exchange for Investment.
(a) Sellers represent that they are acquiring the Company Shares for investment
for each such Seller's own account and not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and each such Seller has
no present intention of selling, granting any participation in, or otherwise
distributing the same. Each such Seller further represents that they do not have
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third person, with
respect to any of the Company Shares.
19
(b) Sellers represent that they understand that the Company Shares are not
registered under the Securities Act on the ground that the sale and the issuance
of securities hereunder is exempt from registration under the Securities Act
pursuant to Section 4(2) and that the Company's reliance on such exemption is
predicated on Sellers representations set forth herein.
(c) Sellers acknowledge that they can bear the economic risk of their
investment, and have such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and risks of the
investment in the Company Shares.
(d) Sellers represent that they have carefully reviewed such information as each
Seller deemed necessary to evaluate an investment in the Company Shares. To the
full satisfaction of Sellers, Sellers have been furnished all materials that
Sellers have requested relating to the Company and the issuance of the Company
Shares hereunder, and Sellers have been afforded the opportunity to ask
questions of representatives of the Company to obtain any information necessary
to verify the accuracy of any representations or information made or given to
each Seller. Notwithstanding the foregoing, nothing herein shall derogate from
or otherwise modify the representations and warranties of the Company set forth
in this Agreement, on which each Seller has relied in making an exchange of the
World Wide Dubai Shares for the Company Shares.
(e) Sellers understand that the Company Shares may not be sold, transferred, or
otherwise disposed of without registration under the Securities Act or an
exemption therefrom, and that in the absence of an effective registration
statement covering the Company Shares or any available exemption from
registration under the Securities Act, the Company Shares must be held
indefinitely. Sellers represent that Sellers are aware that the Company Shares
may not be sold pursuant to Rule 144 promulgated under the Securities Act unless
all of the conditions of that Rule are met.
3.22 No Regulatory Problems
World Wide Dubai (i) has not filed a registration statement which is the subject
of any proceeding or examination under Section 8 of the Securities Act, or is
not the subject of any refusal order or stop order thereunder; (ii) is not
subject to any pending proceeding under Rule 258 of the Securities Act or any
similar rule adopted under Section 3(b) of the Securities Act, or to an order
entered thereunder; (iii) has not been convicted of any felony or misdemeanor in
connection with the purchase or sale of any security or involving the making of
any false filing with the Commission; (iv) is not subject to any order,
judgment, or decree of any court of competent jurisdiction temporarily,
preliminary or permanently restraining or enjoining, World Wide Dubai from
engaging in or continuing any conduct or practice in connection with the
purchase or sale of any security or involving the making of any false filing
with the Commission; and (v) is not subject to a United States Postal Service
false representation order entered under Section 3005 of Title 39, United States
Code; or a temporary restraining order or preliminary injunction entered under
Section 3007 of Title 39, United States Code, with respect to conduct alleged to
have violated Section 3005 of Title 39, United States Code.
20
To its knowledge, none of World Wide Dubai's directors, officers, or beneficial
owners of five percent or more of any class of its equity securities (i) has
been convicted of any felony or misdemeanor in connection with the purchase or
sale of any security, involving the making of a false filing with the
Commission, or arising out of the conduct of the business of an underwriter,
broker, dealer, municipal securities dealer, or investment advisor; (ii) are
subject to any order, judgment, or decree of any court of competent jurisdiction
temporarily or preliminary enjoining or restraining, or is subject to any order,
judgment, or decree of any court of competent jurisdiction, permanently
enjoining or restraining such person from engaging in, or continuing, any
conduct or practice in connection with the purchase or sale of any security
involving the making of a false filing with the Commission, (iii) are subject to
an order of the Commission entered pursuant to Section 15(b), 15B(a), or 15B(c)
of the Exchange Act, or is subject to an order of the Commission entered
pursuant to Section 203(e) or (f) of the Investment Advisers Act of 1940; (iv)
have been suspended or expelled from membership in, or suspended or barred from
association with a member of, an exchange registered as a national securities
exchange pursuant to Section 6 of the Exchange Act, an association registered as
a national securities association under Section 15A of the Exchange Act, for any
act or omission to act constituting conduct inconsistent with just and equitable
principles of trade; or (v) are subject to a United States Postal Service false
representation order entered under Section 3005 of Title 39, United States Code;
or is subject to a restraining order or preliminary injunction entered under
Section 3007 of Title 39, United States Code, with respect to conduct alleged to
have violated Section 3005 of Title 39, United States Code.
ARTICLE IV
SPECIAL RIGHTS AND AGREEMENTS
4.1 Board of Directors.
The Company shall confirm the appointment of three (3) persons to the board of
directors at Closing. The initial board of directors shall be comprised of Eric
Montandon chairman of the board, Cornelis van Lieshout and Digamber Naswa.
4.2 Officers
The board of directors at Closing will appoint officers of the Company. Cornelis
van Lieshout will be appointed as president and chief executive officer,
Digamber Naswa will be appointed chief financial officer and Hans Herman Huening
will be appointed as corporate secretary.
4.3 Company Benefit Plan.
--------------------
Subsequent to the Closing, the Company may adopt a benefit plan designed to
reserve for the directors, officers, key employees and non-employee individuals
up to 600,000 shares of the Company's common stock to be used for stock
issuances or option grants to such individuals on terms and conditions
determined by the Company's board of directors.
21
4.4 Finders Fee
(a) The Company was introduced to World Wide USA and the Sellers by Pacific
Seaboard Advisors AG and on the Closing of this Agreement the Company will issue
555,498 shares of the Company's common stock to Pacific Seaboard Advisors AG as
a finder's fee in full satisfaction of the terms of a finder's fee agreement
dated June 1, 2003.
(b) Except as to the introduction and finders fee payable to Pacific Seaboard
Advisors AG, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Company directly with World
Wide USA and the Sellers without the intervention of any person on behalf of
World Wide Dubai in such a manner as to give rise to any valid claim by any
person against the Company or World Wide USA or any of the Sellers for a
finder's fee, brokerage commission or similar payment.
ARTICLE V
CONDITIONS PRECEDENT AND POST-CLOSING COVENANTS
5.1 Conditions Precedent to Obligations of the Company.
---------------------------------------------------
The obligations of the Company under this Agreement to consummate the Closing
contemplated hereby shall be subject to the satisfaction, or to the waiver by
it, on or before the Closing, of the following conditions:
(a) Representations and Warranties True. The representations and warranties of
World Wide USA and the Sellers shall be in all material respects true and
accurate as of the date when made, and, except as to representations and
warranties which are expressly limited to a state of facts existing at a time
prior to the Closing, shall be in all material respects true and accurate at and
as of the Closing, with the same effect as if the same had been made at the
Closing.
(b) Performance of Covenants. World Wide USA and the Sellers shall have
performed and complied in all material respects with each and every covenant,
agreement and condition required by this Agreement to be performed or complied
with by it prior to or at the Closing.
(c) No Governmental or Other Proceeding or Litigation. No order of any court or
administrative agency shall be in effect which restrains or prohibits any
transaction contemplated hereby; and no suit, action, other than the exercise of
dissenters' rights, investigation, inquiry or proceeding by any governmental
body or other person or entity shall be pending or threatened against World Wide
USA or World Wide Dubai which challenges the validity or legality, or seeks to
restrain the consummation, of the transactions contemplated hereby.
(d) Closing Documentation. The Company shall have received such additional
documentation at the Closing as the Company and its counsel may reasonably
require to evidence compliance by World Wide USA and the Sellers with all of
their obligations under this Agreement, including but not limited to, evidence
of World Wide USA Shareholders Action in Lieu of a Special Meeting of the
Shareholders as set forth in Disclosure Schedule 5.1.
22
5.2 Conditions Precedent to Obligations of World Wide USA and the Sellers.
----------------------------------------------------------------------
The obligations of World Wide USA and the Sellers under this Agreement to
consummate the Closing contemplated hereby shall be subject to the satisfaction,
or to the waiver by World Wide USA and the Sellers, on or before the Closing
Date, of the following conditions:
(a) Representations and Warranties True. The representations and warranties of
the Company shall be in all material respects true and accurate as of the date
when made, and, except as to representations and warranties which are expressly
limited to a state of facts existing at a time prior to the Closing, shall be in
all material respects true and accurate at and as of the Closing, with the same
effect as if the same had been made at the Closing.
(b) Performance of Covenants. The Company shall have performed and complied in
all material respects with each and every covenant, agreement and condition
required by this Agreement to be performed or complied with by it prior to or at
the Closing.
(c) No Governmental or Other Proceeding or Litigation. No order of any court or
administrative agency shall be in effect which restrains or prohibits any
transaction contemplated hereby; and no suit, action, other than the exercise of
dissenters' rights, investigation, inquiry or proceeding by any governmental
body or other person or entity shall be pending or threatened against the
Company which challenges the validity or legality, or seeks to restrain the
consummation, of the transactions contemplated hereby.
(d) Closing Documentation. World Wide USA and the Sellers shall have received
such additional documentation at the Closing as World Wide USA and the Sellers
and their respective counsel may reasonably require to evidence compliance by
the Company with all of its obligations under this Agreement.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnity of Sellers.
The Company agrees to defend, indemnify and hold harmless World Wide USA and
each Seller from and against, and to reimburse World Wide USA and each Seller
with respect to, all liabilities, losses, costs and expenses, including, without
limitation, reasonable attorneys' fees and disbursements ("Seller's Losses"),
asserted against or incurred by World Wide USA or such Seller by reason of,
arising out of, or in connection with any material breach of any representation
or warranty contained in this Agreement made by the Company or in any document
or certificate delivered by the Company pursuant to the provisions of this
Agreement or in connection with the transactions contemplated thereby.
Notwithstanding the foregoing provisions of this Article 6.1, no claim for
indemnification shall be made by World Wide USA or each Seller against the
Company unless and until the aggregate of World Wide USA or each Seller's Losses
shall exceed $25,000.
23
6.2 Indemnity of the Company.
World Wide USA and the Sellers, severally and not jointly, agree to defend,
indemnify and hold harmless the Company from and against, and to reimburse the
Company with respect to, all liabilities, losses, costs and expenses, including,
without limitation, reasonable attorneys' fees and disbursements ("Company
Losses"), asserted against or incurred the Company by reason of, arising out of,
or in connection with any material breach of any representation or warranty
contained in this Agreement and made by World Wide USA or the Sellers or in any
document or certificate delivered by World Wide USA or the Sellers pursuant to
the provisions of this Agreement or in connection with the transactions
contemplated thereby; provided, however, that each Seller shall only be required
to defend, indemnify and hold harmless the Company for the representations and
warranties made by World Wide USA or such Seller. Notwithstanding the foregoing
provisions of this Article 6.2, no claim for indemnification shall be made by
Company against World Wide USA or Seller unless and until the aggregate Company
Losses shall exceed $25,000.
6.3 Indemnification Procedure.
A party (an "Indemnified Party") seeking indemnification shall give prompt
notice to the other party (the "Indemnifying Party") of any claim for
indemnification arising under this Article VI. The Indemnifying Party shall have
the right to assume and to control the defense of any such claim with counsel
reasonably acceptable to such Indemnified Party, at the Indemnifying Party's own
cost and expense, including the cost and expense of reasonable attorneys' fees
and disbursements in connection with such defense, in which event the
Indemnifying Party shall not be obligated to pay the fees and disbursements of
separate counsel for such in such action. In the event, however, that such
Indemnified Party's legal counsel shall determine that defenses may be available
to such Indemnified Party that are different from or in addition to those
available to the Indemnifying Party, in that there could reasonably be expected
to be a conflict of interest if such Indemnifying Party and the Indemnified
Party have common counsel in any such proceeding, or if the Indemnified Party
has not assumed the defense of the action or proceedings, then such Indemnifying
Party may employ separate counsel to represent or defend such Indemnified Party,
and the Indemnifying Party shall pay the reasonable fees and disbursements of
counsel for such Indemnified Party. No settlement of any such claim or payment
in connection with any such settlement shall be made without the prior written
consent of the Indemnifying Party which consent shall not be unreasonably
withheld.
ARTICLE VII
MISCELLANEOUS
7.1 Survival of Representations and Warranties.
Except as otherwise provided, all representations and warranties made by a party
in this Agreement or in any document or certificate delivered pursuant hereto
shall survive the Closing Date until one year from the Closing.
7.2 Notice.
All communications, notices, requests, consents or demands given or required
under this Agreement shall be in writing and shall be deemed to have been duly
given when delivered to, or received by prepaid registered or certified mail or
recognized overnight courier addressed to, or upon receipt of a facsimile sent
to, the party for whom intended, as follows, or to such other address or
facsimile number as may be furnished by such party by notice in the manner
provided herein:
24
If to the Company:
NovaMed, Inc.
1403 East 900 South
Salt Lake City, Utah 84105
Attention: Ruairidh Campbell, President
Phone Number: (801) 582-9609
Fax Number: (801) 582-9629
If to World Wide USA:
World Wide Auctioneers (USA), Inc.
2465 W. 12th Street, Suite 2
Tempe, Arizona 85281
Attention: Cornelis van Lieshout, President
Phone Number: (480) 505-0070
Fax Number: (480) 505-0071
If to the Sellers:
At the respective addresses of each Seller.
7.3 Entire Agreement.
This Agreement, the Disclosure Schedules and any instruments and agreements to
be executed pursuant to this Agreement, sets forth the entire understanding of
the parties hereto with respect to its subject matter, merges and supersedes all
prior and contemporaneous understandings with respect to its subject matter and
may not be waived or modified, in whole or in part, except by a writing signed
by each of the parties hereto. No waiver of any provision of this Agreement in
any instance shall be deemed to be a waiver of the same or any other provision
in any other instance. Failure of any party to enforce any provision of this
Agreement shall not be construed as a waiver of its rights under such provision.
7.4 Successors and Assigns.
This Agreement shall be binding upon, enforceable against and inure to the
benefit of, the parties hereto and their respective heirs, administrators,
executors, personal representatives, successors and assigns, and nothing herein
is intended to confer any right, remedy or benefit upon any other person. This
Agreement may not be assigned by any party hereto except with the prior written
consent of the other parties, which consent shall not be unreasonably withheld.
25
7.5 Governing Law.
This Agreement will be construed and enforced in accordance with and governed by
the laws of the State of Utah, without reference to principles of conflicts of
law. Each of the parties consents to the jurisdiction of the federal courts
whose districts encompass any part of the State of Utah in connection with any
dispute arising under this Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
conveniens, to the bringing of such proceeding in such jurisdictions. Each party
hereby agrees that if another party to this Agreement obtains a judgment against
it in such a proceeding, the party which obtained such judgment may enforce same
by summary judgment in the courts of any country having jurisdiction over the
party against whom such judgment was obtained, and each party hereby waives any
defenses available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Agreement irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the right of any party to serve process in any other
manner permitted by law.
7.6 Counterparts.
This Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
7.7 Construction.
------------
Headings contained in this Agreement are for convenience only and shall not be
used in the interpretation of this Agreement. References herein to articles,
sections and the Disclosure Schedules are to the articles, sections and
disclosures, respectively, of this Agreement. The Disclosure Schedule is hereby
incorporated herein by reference and made a part of this Agreement. As used
herein, the singular includes the plural, and the masculine, feminine and neuter
gender each includes the others where the context so indicates. Any item that is
disclosed in a representation or warranty or in the Disclosure Schedule shall be
deemed disclosed for all purposes and for every representation and warranty.
7.8 Severability.
If any provision of this Agreement is held to be invalid or unenforceable by a
court of competent jurisdiction, this Agreement shall be interpreted and
enforceable as if such provision were severed or limited, but only to the extent
necessary to render such provision and this Agreement enforceable.
IN WITNESS WHEREOF each of the parties hereto has executed this Agreement as of
the date first set forth above.
NOVAMED, INC.
/s/ Ruairidh Campbell
By: Ruairidh Campbell
President
26
WORLD WIDE AUCTIONEERS, iNC. (USA)
/s/ Conrnelis van Lieshout
By: Cornelis van Lieshout
President
ON BEHALF OF THE SELLERS
/s/ Eric Montandon
eric Montandon
/s/ Cornelis van Lieshout
Cornelis van Lieshout
27
DISCLOSURE SCHEDULE 1.1
World Wide Auctioneers (USA), Inc. Shares
(Attached)
28
DISCLOSURE SCHEDULE 2.4
COMPANY FINANCIAL STATEMENTS
(Attached)
29
DISCLOSURE SCHEDULE 2.7
COMPANY OPERATING AGREEMENTS
None
30
DISCLOSURE SCHEDULE 2.8
COMPANY PERSONAL PROPERTY
None
31
DISCLOSURE SCHEDULE 2.9
COMPANY REAL PROPERTY
None
32
DISCLOSURE SCHEDULE 3.4
WORLD WIDE DUBAI FINANCIAL STATEMENTS
(Attached)
33
DISCLOSURE SCHEDULE 3.7
WORLD WIDE DUBAI OPERATING AGREEMENTS
1. SERVICES CONTRACT between World Wide Auctioneers Ltd. Dubai and WWA World
Wide Auctioneers (S) Pte. Ltd., Singapore to provide business development, sales
representation and business management assistance to the Company. The value of
contract is USD 144,000 per annum.
2. Lease agreement between World Wide Auctioneers Ltd. (Dubai) and Jebel Ali
Free Zone Authority (Dubai) for use of land. The value of the contract is
approximately USD 200,000 per annum.
3. Bidders agreements with different bidders operative only if they buy
equipment in WWA auctions. These agreements are closed with the close of each
auction.
4. Consigners agreement with different consignors operative only if they
consign equipment to WWA auctions. These agreements are closed after the
settlement of each auction.
34
DISCLOSURE SCHEDULE 3.8
WORLD WIDE DUBAI PERSONAL PROPERTY
(Attached)
35
DISCLOSURE SCHEDULE 3.9
WORLD WIDE DUBAI REAL PROPERTY
Lease agreement between World Wide Auctioneers Ltd. (Dubai) and Jebel Ali Free
Zone Authority, (Dubai) for use of land. The value of contract is approximately
USD 200,000 per annum.
36
DISCLOSURE SCHEDULE 3.14
LITIGATION
World Wide Dubai is a defendant in a lawsuit filed by Abdullah Ahmed Ali (AAA)
Const. Equipment Co. (Sharjah, UAE) in May 2003.
While attending the World Wide Dubai Auction, held April 8-10, 2003, the
plaintiff was the highest bidder on Lot 1336, a Link Belt LS218H Crawler Crane.
The day after the auction World Wide Dubai was made aware that the crane was
subject to a previously unsettled lien and therefore the crane was not legally
transferable. World Wide Dubai invoked Clause 4 of the signed Bidder's Agreement
whereby the auctioneer has the right to cancel any sale at its discretion. World
Wide subsequently penalized the seller for non-delivery of clear title, and
offered this penalty amount to AAA. AAA refused this offer, and also refused to
accept the refund of the purchase price paid for the crane by wire transfer from
AAA to World Wide Dubai on April 11, 2003.
AAA filed a case against World Wide Dubai in a Dubai court for delivery of the
equipment. The first hearing of the case was fixed for June 10 and subsequently
extended to Sept.02, 2003. The equipment remains in World Wide Dubai's
possession.
37
DISCLOSURE SCHEDULE 3.20
AFFILATE TRANSACTIONS
Services Contract between World Wide Auctioneers Ltd. (Dubai) and WWA World
Wide Auctioneers (S) Pte. Ltd. Singapore to provide business development, sales
representation and business management assistance to World Wide Dubai. The value
of the contract USD 144,000 per annum.
38
DISCLOSURE SCHEDULE 5.1
WORLD WIDE AUCTIONEERS, INC. (USA) SHAREHOLDERS ACTION IN LIEU OF A SPECIAL MEETING OF THE SHAREHOLDERS
STOCKHOLDERS ACTION IN LIEU OF AN EXTRAORDINARY SPECIAL MEETING OF THE STOCKHOLDERS
-----------------------------------------------------------------------------------
June 5, 2003
WWA Worldwide Auctioneers, Inc.
(A Nevada Corporation)
Stockholders Action in Lieu of An Extraordinary Special Meeting of the
Stockholders of WWA Worldwide Auctioneers, Inc. ("Corporation"), as permitted in
accordance with the provisions set forth in the State of Nevada Revised Statutes
and Article II, Section 10 of the Corporation's Bylaws, which provide that any
action required or permitted to be taken at a meeting of the stockholders,
except matters as to which dissenting stockholders may hold a statutory right of
appraisal, may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by a majority of the stockholders entitled
to vote with respect to the subject matter thereof.
NOTICE
The stockholders of the Corporation, by signing this resolution, waive notice of
the time, place and purpose of this stockholders action and agree to the
transaction of the business recited in this stockholders action by the written
consent of the majority of the stockholders of the Corporation, such written
consent to be effective as of June 5, 2003.
RECORD DATE
The record date for the stockholders entitled to consent on the action presented
is June 5, 2003, as determined by the Corporation's board of directors, there
being 13,455,000 shares of common stock entitled to vote on said date.
VOTE REQUIRED
Article II, Section 7 of the Corporation's Bylaws mandates that acts of the
stockholders require the approval of the majority of the outstanding votes of
the stockholders.
CONSENT RESOLUTIONS
The majority of the stockholders of the Corporation do hereby approve the sale
of its 100% owned subsidiary World Wide Auctioneers, Ltd to NovaMed, Inc. (a
Nevada Corporation), in a stock for stock transaction. This sale is expected to
take place by August 31, 2003.
The majority of the stockholders of the Corporation do hereby approve the
appointment of Eric Montandon to the Board of Directors, the appointment of
Cornelius van Lieshout, to the Board of Directors and the appointment of
Digamber Naswa to the Board of Directors.
39
SIGNATURES
The consent resolutions set forth above were approved by the Corporation's
stockholders in as many counterparts as may be necessary, each of which is so
signed will be deemed an original, and such counterparts together will
constitute one and the same instrument and, notwithstanding the date of
execution, will be deemed to be dated as of the effective date, August 8, 2003,
set forth above.
Stockholders Signature Number of Shares Acting in Favor Percentage
Asia4Sale.Com, Inc. 7,525,000 55.9%
/s/ Eric Montandon
By: Eric Montandon, Chairman
Steverit Trustee Company 2,500,000 18.6%
/s/ S. J. Chatfield
-------------------
By: S. J. Chatfield, Director
Cornelis van Lieshout 300,000 2.2%
/s/ Cornelis van Lieshout
TOTAL 10,325,000 76.7%
CERTIFICATE OF SECRETARY FOR THE MINUTES OF WRITTEN CONSENT IN LIEU OF
AN EXTRAORDINARY SPECIAL MEETING OF THE STOCKHOLDERS
I, Hans Hermann Huening, acting as secretary of WWA Worldwide Auctioneers, Inc.,
a Nevada corporation ("Corporation"), hereby certify that I am acting as the
duly elected secretary of the Corporation, and that the foregoing consent
resolutions contained in the foregoing minutes of the Stockholders Action in
Lieu of an Extraordinary Special Meeting of the Stockholders, dated June 5, 2003
that considered the approval of the sale of subsidiary WorldWide Auctioneers,
Ltd. and the appointment of certain individuals to the board of directors of the
Corporation were approved by a majority of the stockholders entitled to vote in
said action, there being 13,455,000 shares issued and outstanding of which
10,325,000 shares acted in favor of the stockholders action.
/s/ Hans Herman Huening
Hans Herman Huening, Secretary
40
EXHIBIT 99(i)
World Wide Auctioneers Limited
(Dubai Branch)
Financial statements
31 December 2002
41
World Wide Auctioneers Limited
(Dubai Branch)
Financial statements
31 December 2002
Contents Page
Report of the Auditors 1
Income statement 2
Balance sheet 3
Statement of cash flows 4
Statement of changes in head office account 5
Notes 6 -12
42
KPMG
Audit & Accounting
P.O. Box 3800 KPMG level, City Tower 1 Telephone: +971 (4) 3310222
Dubai Sheikh Zayed Road Telefax: +971 (4) 3310202
The Shareholders
World Wide Auctioneers Limited
Report of the Auditors
We have audited the accompanying balance sheet of World Wide Auctioneers Limited
("the Branch") as of 31 December 2002 and the related statements of income and
cash flows for the year then ended.
Respective responsibilities of the Directors and the Auditors
These financial statements are the responsibility of the Branch's Directors. Our
responsibility is to express an opinion on these financial statements based on
our audit.
Basis of opinion
We conducted our audit in accordance with International Standards on Auditing
promulgated by the International Federation of Accountants. Those Standards
require that we plan and perform the audit to obtain reasonable assurance that
the financial statements are free of material mis-statement. 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.
Opinion
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Branch as of 31 December 2002 and the
results of its operations and its cash flows for the year then ended in
accordance with International Financial Reporting Standards promulgated by the
International Accounting Standards Board and comply, where appropriate, with the
Impending Regulations issued by the Jebel Ali Free Zone Authority (JAFZA).
Other matters
Without qualifying our opinion we draw attention to note 2, which explains that
these financial statements have been prepared on a going concern basis. The
Branch has accumulated losses of USD 989,941 (2001: USD 1,226,182) and had net
current liabilities of USD 963,037 (2001: USD 879,008) as at that date. The
continuation of the Branch's operations is dependent upon future profitable
operations and the ability of the Branch to generate sufficient cash flows to
meet its future obligations. The financial statements do not include
adjustments, as referred to in note 2, that would be required if the Branch is
unable to continue to operate.
KPMG
Dubai, United Arab Emirates
May 17, 2003
43
World Wide Auctioneers Limited
(Dubai Branch)
Income statement
for the year ended 31 December 2002
Year ended Period ended
Note 31 December 2002 31 December 2001
USD USD
Revenue 3 3,799,237 2,387,556
Cost of trading goods (389,112) (557,192)
Administrative and general expenses 4 (3,308,941) (2,772,491)
Start up costs - (285,425)
Other income 5 159,113 33,452
Finance charges (24,056) (32,082)
---------- --------------
Net profit/(loss) for the year/period 236,241 (1,226,182)
====== ========
The notes on pages 6 to 12 form part of these financial statements.
The report of the Auditors is set out on page 1.
44
World Wide Auctioneers Limited
(Dubai Branch)
Balance sheet
at 31 December 2002
Note 2002 2001
USD USD
Property, plant and equipment 6 453,096 132,826
Current assets
Inventories 7 36,387 29,957
Trade and other receivables 8 3,395,282 215,154
Due from related parties 9 101,192 333,574
Cash in hand and at bank 10 4,579,214 229,428
------------ -----------
8,112,075 808,113
------------ -----------
Current liabilities
Trade and other payables 11 8,690,970 1,030,340
Bank overdraft - 7,520
Due to related parties 9 384,142 649,261
------------ ------------
9,075,112 1,687,121
------------ ------------
Net current liabilities (963,037) (879,008)
---------- -----------
Net liabilities (509,941) (746,182)
====== ======
Represented by
Head Office account 12 480,000 480,000
Accumulated losses (989,941) (1,226,182)
---------- ------------
(509,941) (746,182)
====== =======
The notes on pages 6 to 12 form part of these financial statements.
We approve these financial statements and confirm that we are responsible for
them, including selecting the accounting policies and making the judgments
underlying them. We confirm also that we have made available all relevant
accounting records and information for its compilation.
These financial statements were approved by the Board of Directors on May 17, 2003
/s/ Eric Montandon /s/ Carl van Lieshout
Director Director
The report of the Auditors is set out on page 1.
45
World Wide Auctioneers Limited
(Dubai Branch)
Statement of cash flows
for the year ended 31 December 2002
Year ended Period ended
31 December 2002 31 December 2001
USD USD
Cash flows from operating activities
Net Profit/(loss) for the year/period 236,241 (1,226,182)
Adjustments for:
Depreciation 97,029 47,121
Provision for doubtful debts - 24,118
Provision for slow moving inventories 6,014 9,986
Provision for staff terminal benefits 5,273 3,024
---------- -------------
Operating profit/(loss) before working capital changes 344,557 (1,141,933)
Increase in inventories (12,444) (39,943)
Increase in trade and other receivables (3,180,128) (239,272)
Decrease/(increase) in due from related parties 232,382 (333,574)
Increase in trade and other payables 7,655,357 1,027,316
------------ -----------
Net cash inflow/(outflow) from operating activities 5,039,724 (727,406)
------------ -----------
Cash flows from investing activities
Acquisition of property, plant and equipment (417,299) (179,947)
----------- -----------
Cash outflow from investing activities (417,299) (179,947)
----------- -----------
Cash flows from financing activities
Net financing from Head Office - 480,000
(Decrease)/increase in long term loan from the Holding Company (265,119) 649,261
----------- -------------
Cash (outflow)/inflow from financing activities (265,119) 1,129,261
----------- -------------
Net increase in cash and cash equivalents 4,357,306 221,908
Cash and cash equivalents at beginning of the year/period 221,908 -
------------ -----------
Cash and cash equivalents at the end of the year/period 4,579,214 221,908
======= ======
The notes on pages 6 to 12 form part of these financial statements
The report of the Auditors is set out on page 1.
46
World Wide Auctioneers Limited
(Dubai Branch)
Statement of changes in Head Office account
for the year ended 31 December 2002
Head Office Accumulated
account losses Total
USD USD USD
Net financing from Head Office 480,000 - 480,000
Loss for the period ended 2001 - (1,226,182) (1,226,182)
---------- ------------- ------------
At 31 December 2001 480,000 (1,226,182) (746,182)
---------- ------------- ------------
At 1 January 2002 480,000 (1,226,182) (746,182)
Profit for the year - 236,241 236,241
---------- ----------- -----------
At 31 December 2002 480,000 (989,941) (509,941)
====== ====== ======
The notes on pages 6 to 12 form part of these financial statements
47
World Wide Auctioneers Limited
(Dubai Branch)
Notes
(forming part of the financial statements)
1 Status and principal activities
World Wide Auctioneers Limited ("the Branch") is a branch of World Wide
Auctioneers Limited AG Munich, Germany, ("the Holding Company"). The
Branch was incorporated as a limited liability company in the territory
of the British Virgin Islands under the International Business
Companies Act, Cap 291 on 20 March 2000 and operates in Dubai under a
license from the Jebel Ali Free Zone Authority.
The principal activities of the Branch are trading and auction of used and
unused construction equipments, transportation and marine equipments.
The Branch's commercial operations commenced on 15 June 2000. The
registered office is at P.O. Box 17774, Jebel Ali, Dubai, United Arab
Emirates.
2 Principal accounting policies
Going concern
These financial statements have been prepared on a going concern basis.
The Branch has accumulated losses of USD 989,941 (2001: USD 1,226,182)
and had net current liabilities of USD 963,037 (2001: USD 879,008) as
at that date. The continuation of the Branch's operations is dependent
upon future profitable operations and the ability of the Branch to
generate sufficient cash flows to meet its future obligations.
Furthermore, the Holding Company has confirmed its willingness to
support the Branch, financially or otherwise, if the Branch is unable
to generate sufficient cash flows. Should the Branch be unable to
continue to operate, adjustments would have to be made to reduce the
assets to their recoverable amount.
Statement of compliance
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") promulgated by the
International Accounting Standards Board (IASB) and interpretations
issued by the Standing Interpretations Committee of the IASB.
The following accounting policies have been applied consistently in dealing
with items which are considered material in relation to the Branch's
financial statements.
Basis of accounting
These financial statements have been prepared under the historical cost
convention. The financial statements are presented in United States
Dollar ("USD").
Revenue recognition
Revenue comprises the commission receivable on acting as agents in
auction sales and revenue from trading of goods. Revenue is recognised
when the goods are delivered.
Staff terminal benefits
The provision for staff terminal benefits is calculated in accordance
with the minimum amount prescribed by the Jebel Ali Free Zone
Authority. It is based on the liability that would arise if the
employment of all staff were terminated at the balance sheet date.
48
World Wide Auctioneers Limited
(Dubai Branch)
Notes (continued)
2 Principal accounting policies (continued)
Trade receivables
Trade receivables are stated at their cost less impairment losses
(refer accounting policy on impairment).
Trade payables
Liabilities are recognised for amounts to be paid in future for goods
or services received, whether or not billed to the Branch. Trade
payables are stated at cost.
Borrowing costs
Borrowing costs are recognised as an expense in the period in which
they are incurred.
Inventories
Inventories are valued at the lower of cost and net realisable value.
The cost is determined by specific identification method. Cost includes
purchase price, freight, insurance, duties and other incidental
expenses incurred in bringing inventories to their present location and
condition.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses. Depreciation is calculated so as to
write-off the cost of property, plant and equipment over their
estimated useful lives as follows:
Life (Years)
Office equipment 4
Furniture and fittings 4
Leasehold improvements 4-5
Vehicles 5
Cash and cash equivalents
Cash and cash equivalents represent cash in hand, cash at bank and bank
overdraft.
Foreign exchange
Transactions denominated in foreign currencies are translated into USD
and recorded at the foreign exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies, which are stated at historical cost, are translated into
USD at the foreign exchange rates ruling at the balance sheet date.
Realised and unrealised foreign exchange differences arising on
translation are recognised in the income statement.
Operating lease - as lessee
Leases of assets under which the lessor effectively retains all the
risks and benefits of ownership are classified as operating leases.
Payments made under operating leases are recognised in the income
statement on a straight-line basis over the period of the lease.
49
World Wide Auctioneers Limited
(Dubai Branch)
Notes (continued)
2 Principal accounting policies (continued)
Provisions
A provision is recognised in the balance sheet when the Branch has a
present legal or constructive obligation as a result of a past event,
it is probable that an outflow of economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount
of the obligation.
Impairment
The carrying amounts of the Branch's assets are reviewed at each
balance sheet date or whenever there is any indication of impairment.
If any such indication exists, the asset's recoverable amount is
estimated. An impairment loss is recognised whenever the carrying
amount of the asset exceeds it recoverable amount. Impairment losses,
if any, are recognised in the income statement.
3 Revenue
Year ended Period ended
31 December 2002 31 December 2001
USD USD
Commission revenue 3,421,250 2,060,766
Revenue from trading of goods 377,987 326,790
------------- -------------
3,799,237 2,387,556
======= =======
4 Administrative and general expenses
Year ended Period ended
31 December 2002 31 December 2001
USD USD
Staff salaries and wages 404,961 314,094
Director's salaries 192,000 257,715
Rent and lease 304,821 331,303
Freight and clearing 416,371 270,443
Traveling costs 196,861 164,298
Advertising expenses 173,209 141,188
Telephone and faxes 116,319 103,187
Printing and stationary 78,932 82,606
Meals and entertainment expenses 89,508 76,254
Legal and professional fees 103,339 69,062
Depreciation 97,029 47,121
Provision for doubtful debts - 24,118
Provision for slow moving inventories 6,014 9,986
Bad debts written off 10,500 -
===== =====
Above expenses include expenses amounting to USD 93,665 of the
representative office of the Branch in Singapore.
The Branch had 21 employees at 31 December 2002 (2001:10).
50
World Wide Auctioneers limited
(Dubai Branch)
Notes (continued)
5 Other income Year ended Period ended
31 December 2002 31 December 2001
USD USD
Management fee 100,000 -
Interest income 8,808 9,092
Miscellaneous income 50,305 24,360
-------- ----------
159,113 33,452
-------- ----------
Management fee represents the fee received for managing auctions in
Jakarta.
6 Property, plant and equipment
Furniture Leasehold
Office and improve-
equipments fittings -ments Vehicles Total
USD USD USD USD USD
Cost
At 1 January 2002 98,769 63,725 17,453 - 179,947
Additions 84,292 5,257 181,727 146,023 417,299
---------- --------- ---------- ----------- -----------
At 31 December 2002 183,061 68,982 199,180 146,023 597,246
---------- --------- ---------- ---------- -----------
Depreciation
At 1 January 2002 25,105 18,477 3,539 - 47,121
Charge for the year 38,002 16,696 27,572 14759 97,029
--------- --------- -------- --------- -----------
At 31 December 2002 63,107 35,173 31,111 14,759 144,150
-------- --------- -------- --------- ----------
Net book value
At 31 December 2002 119,954 33,809 168,069 131,264 453,096
====== ===== ===== ====== ======
At 31 December 2001 73,664 45,248 13,914 - 132,826
===== ===== ===== ====== ======
Vehicles are hypothecated to the banks against the loan taken for them.
7 Inventories
2002 2001
USD USD
Trading goods 52,387 39,943
Less: provision for slow moving inventories (16,000) (9,986)
---------- ---------
36,387 29,957
========== ===========
51
World Wide Auctioneers limited
(Dubai Branch)
Notes (continued)
8 Trade and other receivables 2002 2001
USD USD
Trade receivables 3,215,271 210,996
Provision for doubtful debts - (24,118)
------------ ----------
3,215,271 186,878
Other receivables and prepayments 180,011 28,276
------------ ----------
3,395,282 215,154
======= ======
9 Transactions with related parties
The Branch, in the normal course of business, carries out transactions with
other business enterprises that fall within the definition of related
parties as contained in International Accounting Standard 24. These
transactions represent amounts transferred to other enterprises for
short-term operational requirements. No interest is charged on these
transfers.
2002 2001
Due from related parties USD USD
World Wide Auctioneers Limited, BV - 131,941
World Wide Auctioneers Singapore Pte Limited - 92,628
World Wide Auctioneers Subic Bay Philipines - 92,230
Asia 4 Sale.com, USA 28,775 16,775
Adderley Davis & Associates, Ltd 35,482 -
Heavy Equipment FZE 16,935 -
Finative 20,000 -
---------- ----------
101,192 333,574
====== ======
2002 2001
Due to related parties USD USD
World Wide Auctioneers Limited, Germany 276,726 449,261
World Wide Auctioneers, USA - 200,000
World Wide Auctioneers, Asset bank 67,367 -
Generators and Cranes FZE 40,049 -
---------- ----------
384,142 649,261
====== ======
52
World Wide Auctioneers limited
(Dubai Branch)
Notes (continued)
10 Cash in hand and at bank
2002 2001
USD USD
Cash in hand 774,987 957
Cash at bank 3,804,227 228,471
------------ ----------
4,579,214 229,428
======= ======
Cash at bank include USD 10,179 (2001:USD 2,055) as margin deposit towards bank
guarantees given.
11 Trade and other payables
2002 2001
USD USD
Trade payables 7,473,050 638,804
Other payables and accruals 1,209,443 388,332
Provision for staff terminal benefits 8,477 3,204
------------ -------------
8,690,970 1,030,340
======= =======
12 Head Office account
This represents the amount invested by the Holding Company in the
Branch.
13 Contingent liabilities and commitment
The Branch does not have any significant contingent liabilities or capital
commitments at the balance sheet date (2001: USD Nil).
14 Operating lease commitments
The Branch has entered into one long-term motor vehicle lease. The future lease
payments under this lease is as follows:
2002 2001
USD USD
Within one year 9,698 26,054
Between one and five years - 27,418
==== ====
15 Bank guarantees 2002 2001
USD USD
Labour guarantee 36,822 -
-------- -----
36,822 -
===== ===
53
World Wide Auctioneers limited
(Dubai Branch)
Notes (continued)
16 Financial instruments
Financial assets of the Branch include trade and other receivables,
amounts due from related parties and cash at bank and in hand.
Financial liabilities of the Branch include trade and other payables
and long term loan from the Holding Company. Accounting policies for
financial assets and financial liabilities are set out in note 2.
Credit risk
Management considers the Branch's credit risk to be low given the
credit worthiness of the related parties and a diversification of
customers. Accordingly, amounts due from the related parties and trade
receivables are considered to be recoverable.
Currency risk
The Branch conducts its transactions mostly in Arab Emirates Dirhams
(`AED'), which is pegged against the United States Dollar. The
currency risk is therefore low.
Fair value
The fair value of the Branch's financial instruments approximates their
carrying value.
17 Comparative figures
The figures of the current year are not strictly comparable to the
previous period as the previous period figures were for 562 days.
Previous period's figures have been regrouped to match the presentation
adopted during the current year.
54
EXHIBIT 99(ii)
World Wide Auctioneers Limited
(Dubai Branch)
Financial statements
30 June 2003
55
World Wide Auctioneers Limited
(Dubai Branch)
Financial statements
30 June 2003
Contents Page
Report of the Reviewer 1
Income statement 2
Balance sheet 3
Statement of cash flows 4
Statement of changes in the Head Office account 5
Notes 6 -12
56
KPMG
Audit & Accounting
P.O. Box 3800 KPMG level, City Tower 1 Telephone: +971 (4) 3310222
Dubai Sheikh Zayed Road Telefax: +971 (4) 3310202
The Head Office
World Wide Auctioneers Limited (Dubai Branch)
Report of the Reviewer
We have reviewed the accompanying balance sheet of World Wide Auctioneers
Limited (Dubai Branch) - ("the Branch") as of 30 June 2003, and the related
statements of income and cash flows for the six months period then ended. These
financial statements represent the Branch's operations in the United Arab
Emirates and have been prepared from the records maintained in United Arab
Emirates, which contain evidence of transactions recorded locally.
These financial statements are the responsibility of the Branch's management.
Our responsibility is to issue a report on these financial statements based on
our review.
We conducted our review in accordance with International Standards on Auditing
applicable to review engagements. Those standards require that we plan and
perform the review to obtain moderate assurance about whether the financial
statements are free of material mis-statement. A review is limited primarily to
inquiries of Branch personnel and analytical procedures applied to financial
data, and thus provides less assurance than an audit. We have not performed an
audit, and, accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe
that the accompanying financial statements are not presented fairly, in all
material respects, in accordance with International Financial Reporting
Standards promulgated by the International Accounting Standards Board.
KPMG
Dubai, United Arab Emirates
July 23, 2003
57
World Wide Auctioneers Limited
(Dubai Branch)
Income statement
for the six month period ended 30 June 2003
Six month
period ended Year ended
Note 30 June 2003 31 December 2002
USD USD
Revenue 3 2,332,597 3,799,237
Cost of trading goods (41,219) (389,112)
Administrative and general expenses 4 (1,963,717) (3,308,941)
Other income 5 11,052 159,113
Finance charges (22,577) (24,056)
---------- ----------
Net profit for the period/year 316,136 236,241
====== ======
The notes on pages 6 to 12 form part of these financial statements.
The report of the Reviewer is set out on page 1.
58
World Wide Auctioneers Limited
(Dubai Branch)
Balance sheet
at 30 June 2003
30 June 31 December
Note 2003 2002
USD USD
Property, plant and equipment 6 449,209 453,096
Current assets
Inventories 7 52,520 36,387
Trade and other receivables 8 652,819 3,395,282
Due from related parties 9 339,505 101,192
Cash in hand and at bank 10 2,153,121 4,579,214
----------- ------------
3,197,965 8,112,075
----------- ------------
Current liabilities
Trade and other payables 11 3,502,305 8,690,970
Due to related parties 9 138,674 384,142
----------- ------------
3,640,979 9,075,112
----------- ------------
Net current liabilities (443,014) (963,037)
------- -----------
Net liabilities 6,195 (509,941)
==== ======
Represented by
Head Office account 12 680,000 480,000
Accumulated losses (673,805) (989,941)
------- ------------
6,195 (509,941)
==== =======
The notes on pages 6 to 12 form part of these financial statements.
We approve these financial statements and confirm that we are responsible for
them, including selecting the accounting policies and making the judgments
underlying them. We confirm also that we have made available all relevant
accounting records and information for its compilation.
These financial statements were approved by the Board of Directors of the Head Office, on
/s/ Carl Van Lieshout /s/ Eric Montandon
Carl Van Lieshout Eric Montandon
Director Director
The report of the Reviewer is set out on page 1.
59
World Wide Auctioneers Limited
(Dubai Branch)
Statement of cash flows
for the six month period ended 30 June 2003
Six month
period ended Year ended
30 June 2003 31 December 2002
USD USD
Cash flows from operating activities
Net profit for the period/year 316,136 236,241
Adjustments for:
Depreciation 72,238 97,029
Loss on disposal of equipment 463 -
Provision for slow moving inventories - 6,014
Provision for staff terminal benefits 4,069 5,273
---------- ----------
Operating profit before working capital changes 392,906 344,557
Increase in inventories (16,133) (12,444)
Decrease/(increase) in trade and other receivables 2,742,463 (3,180,128)
(Increase)/decrease in due from related parties (238,313) 232,382
(Decrease)/increase in trade and other payables (5,191,843) 7,655,357
Decrease in due to related parties (245,468) (265,119)
------------- ------------
Net cash (utilized)/generated from operations (2,556,388) 4,774,605
Staff terminal benefits paid (891) -
------------- ------------
Net cash flow from operating activities (2,557,279) 4,774,605
------------- ------------
Cash flows from investing activities
Acquisition of property, plant and equipment (69,169) (417,299)
Proceeds from disposal of equipment 355 -
--------- -----------
Net cash flow from investing activities (68,814) (417,299)
--------- -----------
Cash flows from financing activities
Financing from the Head Office 200,000 -
---------- ----------
Net cash flow from financing activities 200,000 (265,119)
---------- ----------
Net (decrease)/increase in cash and cash equivalents (2,426,093) 4,357,306
Cash and cash equivalents at beginning of the period/year 4,579,214 221,908
------------ ------------
Cash and cash equivalents at the end of the period/year 2,153,121 4,579,214
======= =======
The notes on pages 6 to 12 form part of these financial statements The report of
the Reviewer is set out on page 1.
60
World Wide Auctioneers Limited
(Dubai Branch)
Statement of changes in Head Office account
for the year ended 30 June 2003
Head Office Accumulated
account losses Total
USD USD USD
At 1 January 2002 480,000 (1,226,182) (746,182)
Net profit for the year - 236,241 236,241
---------- ----------- -----------
At 31 December 2002 480,000 (989,941) (509,941)
====== ====== ======
At 1 January 2003 480,000 (989,941) (509,941)
Financing during the year 200,000 - 200,000
Net profit for the period - 316,136 316,136
---------- ----------- --------
At 30 June 2003 680,000 (673,805) 6,195
====== ====== =====
The notes on pages 6 to 12 form part of these financial statements
61
World Wide Auctioneers Limited
(Dubai Branch)
Notes
(forming part of the financial statements)
1 Status and principal activities
World Wide Auctioneers Limited ("the Branch") is a branch of World
Wide Auctioneers Limited BVJ ("the Head Office"), a company
incorporated in the territory of the British Virgin Islands under the
International Business Companies Act, Cap 291 on 20 March 2000.
The Branch operates in Jebel Ali, Dubai under a trade license from
the Jebel Ali Free Zone Authority. The Branch's commercial operations
commenced on 15 June 2000.
The Head Office is a fully owned subsidiary of World Wide
Auctioneers Inc., ("the Holding Company"), a limited liability company
incorporated in Arizona, USA. The Holding Company acquired the full
interest in the Head Office with effect from 1st May 2003 pursuant to
an agreement dated 26th April 2003 between the Holding Company and
World Wide Auctioneers Limited AG, Munich, Germany.
The principal activities of the Branch are trading and auction of
used and unused construction equipments, transportation and marine
equipments. The registered office is at P.O. Box 17774, Jebel Ali,
Dubai, United Arab Emirates.
2 Principal accounting policies
Statement of compliance
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") promulgated by the
International Accounting Standards Board (IASB) and interpretations
issued by the Standing Interpretations Committee of the IASB.
The following accounting policies have been applied
consistently in dealing with items which are considered material in
relation to the Branch's financial statements.
Basis of accounting
These financial statements have been prepared under the historical cost
convention.
The currency of the country in which the Branch is registered is United
Arab Emirates Durham ("AED"). However, these financial statements are
presented in United States Dollars ("USD"), rounded to the nearest USD,
to facilitate consolidation at a group level.
Revenue recognition
Revenue comprises the commission receivable on acting as agents in
auction sales and revenue from trading of goods. Revenue is recognised
when the goods are delivered.
Staff terminal benefits
The provision for staff terminal benefits is calculated in accordance
with the minimum amount prescribed by the Jebel Ali Free Zone
Authority. It is based on the liability that would arise if the
employment of all staff were terminated at the balance sheet date.
Trade and other receivables
Trade and other receivables are stated at their cost less impairment
losses.
62
World Wide Auctioneers Limited
(Dubai Branch)
Notes (continued)
2 Principal accounting policies (continued)
Trade and other payables
Trade and other payables are stated at their cost.
Borrowing costs
Borrowing costs are recognised as an expense in the period in which
they are incurred.
Inventories
Inventories are stated at the lower of cost and net realisable value.
The cost is determined by specific identification method. Cost includes
purchase price, freight, insurance, duties and other incidental
expenses incurred in bringing inventories to their present location and
condition.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses. Depreciation is calculated so as to
write-off the cost of property, plant and equipment over their
estimated useful lives as follows:
Life
(Years)
Office equipment 4
Furniture and fittings 4
Leasehold improvements 4-5
Vehicles 5
Cash and cash equivalents
Cash and cash equivalents represent cash in hand and cash at bank.
Foreign exchange
Transactions denominated in foreign currencies are translated into USD
and recorded at the foreign exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies, which are stated at historical cost, are translated into
USD at the foreign exchange rates ruling at the balance sheet date.
Realised and unrealised foreign exchange differences arising on
translation are recognised in the income statement.
Operating lease - as lessee
Leases of assets under which the lessor effectively retains all
the risks and benefits of ownership are classified as operating leases.
Payments made under operating leases are recognised in the income
statement on a straight-line basis over the period of the lease.
Provisions
A provision is recognised in the balance sheet when the Branch has a
present legal or constructive obligation as a result of a past event,
it is probable that an outflow of economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount
of the obligation.
63
World Wide Auctioneers Limited
(Dubai Branch)
Notes (continued)
2 Principal accounting policies (continued)
Impairment
The carrying amounts of the Branch's assets are reviewed at each
balance sheet date or whenever there is any indication of impairment.
If any such indication exists, the asset's recoverable amount is
estimated. An impairment loss is recognised whenever the carrying
amount of the asset exceeds it recoverable amount. Impairment losses,
if any, are recognised in the income statement.
3 Revenue
Six month
period ended Year ended
30 June 2003 31 December 2002
USD USD
Commission revenue 2,276,073 3,421,250
Revenue from trading of goods 56,524 377,987
------------- ------------
2,332,597 3,799,237
======= ========
4 Administrative and general expenses
Six month
Year ended Period ended
30 June 2003 31 December 2002
These expenses include: USD USD
Staff salaries and wages 212,996 404,961
Director's salaries 96,000 192,000
Rent and lease 174,620 304,821
Freight and clearing 228,657 416,371
Traveling costs 102,766 196,861
Advertising expenses 93,535 173,209
Telephone and faxes 59,559 116,319
Printing and stationary 40,600 78,932
Meals and entertainment expenses 46,754 89,508
Legal and professional fees 46,340 103,339
Depreciation 72,238 97,029
Provision for slow moving inventories - 6,014
Bad debts written off 1,711 10,500
==== =====
Administration and general expenses include USD 66,607 in respect of
the representative office of the Branch in Singapore and individual
representatives in Thailand and Hong Kong (2002: USD 93,665, excluding
Singapore).
The Branch had 26 employees at 30 June 2003 (2002:21).
64
World Wide Auctioneers limited
(Dubai Branch)
Notes (continued)
Six month
5 Other income Year ended Period ended
30 June 2003 31 December 2002
USD USD
Management fee - 100,000
Interest income - 8,808
Miscellaneous income 11,052 50,305
---------- ----------
11,052 159,113
===== ======
Management fee represents the fee received for managing auctions in
Jakarta.
6 Property, plant and equipment
Furniture Leasehold
Office and improve-
equipments fittings -ments Vehicles Total
USD USD USD USD USD
Cost
At 1 January 2003 183,061 68,982 199,180 146,023 597,246
Additions 68,165 1,004 - - 69,169
Disposals (2,123) - - - (2,123)
---------- --------- ---------- ----------- -----------
At 30 June 2003 249,103 69,986 199,180 146,023 664,292
---------- --------- ---------- ---------- -----------
Depreciation
At 1 January 2003 63,107 35,173 31,111 14,759 144,150
Charge for the period 28,587 8,694 20,355 14,602 72,238
On disposals (1,305) - - - (1,305)
--------- --------- -------- --------- -----------
At 30 June 2003 90,389 43,867 51,466 29,361 215,083
-------- --------- -------- --------- ----------
Net book value
At 30 June 2003 158,714 26,119 147,714 116,662 449,209
====== ===== ====== ====== ======
At 31 December 2002 119,954 33,809 168,069 131,264 453,096
===== ===== ===== ====== ======
Vehicles are hypothecated to the banks against the loan taken for them.
7 Inventories
30 June 31 December
2003 2002
USD USD
Trading goods 68,520 52,387
Less: provision for slow moving inventories (16,000) (16,000)
-------- ---------
52,520 36,387
======= =======
65
World Wide Auctioneers limited
(Dubai Branch)
Notes (continued)
30 June 31 December
8 Trade and other receivables 2003 2002
USD USD
Trade receivables 423,178 3,215,271
Other receivables and prepayments 229,641 180,011
--------- ------------
652,189 3,395,282
====== =======
9 Transactions with related parties
The Branch, in the normal course of business, carries out
transactions with other business enterprises that fall within the
definition of related parties as contained in International Accounting
Standard 24. These transactions represent amounts transferred to other
enterprises for short-term operational requirements. No interest is
charged on these transfers.
30 June 31 December
2003 2002
Due from related parties USD USD
Asia 4 Sale.com, USA 30,275 28,775
Adderley Davis & Associates 25,536 35,482
World Wide Auctioneers PTY Limited, Australia 81,000 -
World Wide Auctioneers Inc., USA 202,694 -
Heavy Equipment FZE - 16,935
Finative Inc., USA - 20,000
---------- ----------
339,505 101,192
====== ======
Due to related parties
World Wide Auctioneers AG, Germany 12,032 276,726
World Wide Auctioneers Asset Bank Trust, Germany 85,836 67,367
Heavy Equipment FZE 40,806 -
Generators and Cranes FZE - 40,049
---------- ----------
138,674 384,142
====== ======
10 Cash in hand and at bank
30 June 31 December
2003 2002
USD USD
Cash in hand 989,542 774,987
Cash at bank 1,163,579 3,804,227
------------ ------------
2,153,121 4,579,214
======== =======
Cash at bank include USD 52,443 (31 December 2002:USD 10,179) as margin
deposit towards bank guarantees given.
66
World Wide Auctioneers limited
(Dubai Branch)
Notes (continued)
11 Trade and other payables 30 June 31 December
2003 2002
USD USD
Trade payables 2,229,872 7,473,050
Other payables and accruals 1,260,778 1,209,443
Provision for staff terminal benefits 11,655 8,477
------------ ------------
3,502,305 8,690,970
======= =======
12 Head Office account
This represents the amount invested by the Holding Company in the
Branch.
13 Contingent liabilities and commitment
The Branch does not have any significant contingent
liabilities or capital commitments at the balance sheet date (31
December 2002: USD Nil).
14 Operating lease commitments
The Branch has entered into lease agreements for long-term motor
vehicle lease, office space and lease of various residential
accommodations for staff. The future lease payments under these leases
are as follows:
30 June 31 December
2003 2002
USD USD
Within one year 185,999 9,698
Between one and two years 31,848 -
More than two years - -
==== =====
30 June 31 December
15 Bank guarantees 2003 2002
USD USD
Labour guarantee 52,443 36,822
===== ======
16 Financial instruments
Financial assets of the Branch include trade and other receivables,
amounts due from related parties and cash at bank and in hand.
Financial liabilities of the Branch include trade and other payables
and due to related parties. Accounting policies for financial assets
and financial liabilities are set out in note 2.
Credit risk
Management considers the Branch's credit risk to be low given the
credit worthiness of the related parties and a diversification of
customers. Accordingly, amounts due from the related parties and trade
receivables are considered to be recoverable.
67
World Wide Auctioneers limited
(Dubai Branch)
Notes (continued)
16 Financial instruments (continued)
Currency risk
The Branch conducts majority of its core business transactions in USD,
except for certain administrative transactions which are done in the
local currency i.e. AED. However, the AED is pegged against the USD
and hence the currency risk is low.
Fair value
The fair value of the Branch's financial instruments approximates their
carrying value.
17 Comparative figures
Certain comparative figures have been reclassified wherever
necessary to confirm to the presentation adopted in these financial
statements.
68
1
1
EXHIBIT 99(iii)
NovaMed, Inc.
World Wide Auctioneers, Ltd.
PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
[Unaudited]
The following unaudited proforma condensed combined balance sheet aggregates the
balance sheet of NovaMed, Inc. (a Nevada corporation) ("NOVAMED") and the
balance sheet of World Wide Auctioneers, Ltd. (a limited liability company of
the territory of the British Virgin Islands) ("WWA") as of June 30, 2003,
accounting for the transaction as a recapitalization of WWA with the issuance of
shares for the net assets of NOVAMED (a reverse acquisition) and using the
assumptions described in the following notes, giving effect to the transaction,
as if the transaction had occurred as of the end of the period. The transaction
was not completed as of June 30, 2003.
The following unaudited proforma condensed combined statements of operations
combine the results of operations of NOVAMED and the results of operations of
WWA for the six months ended June 30, 2003 and the year ended December 31, 2002
as if the transaction had occurred as of the beginning of each respective
period.
The proforma condensed combined financial statements should be read in
conjunction with the separate financial statements and related notes thereto of
NOVAMED and WWA. These proforma financial statements are not necessarily
indicative of the combined financial position, had the acquisition occurred on
the date indicated above, or the combined results of operations which might have
existed for the periods indicated or the results of operations as they may be in
the future.
69
NOVAMED, INC.
AND WORLD WIDE AUCTIONEERS, LTD.
UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET
June 30, 2003
ASSETS
World Wide Proforma
Auctioneers, Ltd. NovaMed, Inc. Increase Proforma
[Subsidiary] [Parent] (Decrease) Combined
------------ ------------ ----------- -----------
ASSETS:
Cash $2,153,121 $2,798 $ - $2,155,919
Trade and other receivables 652,819 - - 652,819
Receivable due from related party 339,505 - - 339,505
Inventories 52,520 - - 52,520
Property and equipment, net 449,209 - - 449,209
------------ ------------ ----------- -----------
$ 3,647,174 $2,798 $ - $3,649,972
------------ ------------ ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES:
Accounts payable $ 3,502,305 $ 90,044 $ - $ 3,592,349
Related party payables 138,674 - - 138,674
Notes payable - 25,000 - 25,000
------------ ------------ ----------- -----------
Total current liabilities 3,640,979 115,044 - 3,756,023
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock - 1,300 [A] 13,887 15,187
Additional paid-in capital 680,000 6,323,887 [A] (13,887) 552,567
[B] (6,437,433)
Accumulated deficit (673,805) (6,437,433) [B] 6,437,433 (673,805)
------------ ------------ ----------- -----------
Total Stockholders' Equity (Deficit) 6,195 (112,246) - (106,051)
------------ ------------ ----------- -----------
$ 3,647,174 $ 2,798 $ - $ 3,649,972
------------ ------------ ----------- -----------
See Notes To Unaudited Proforma Condensed Financial Statements.
70
NOVAMED, INC.
AND WORLD WIDE AUCTIONEERS, LTD.
UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003
World Wide Proforma
Auctioneers, Ltd. NovaMed, Inc. Increase Proforma
[Subsidiary] [Parent] (Decrease) Combined
------------ ------------ ----------- -----------
REVENUE $ 2,332,597 $ - - $ 2,332,597
------------ ------------ ----------- -----------
OPERATING EXPENSES:
Cost of sales 41,219 - - 41,219
General and administrative 1,963,717 11,541 - 1,975,258
------------ ------------ ----------- -----------
Total operating expenses 2,004,936 11,541 - 2,016,477
------------ ------------ ----------- -----------
INCOME (LOSS) FROM OPERATIONS 327,661 (11,541) - 316,120
Interest expense (22,577) - - (22,577)
Other income 11,052 - - 11,052
------------ ------------ ----------- -----------
INCOME (LOSS) FROM OPERATIONS
BEFORE PROVISION FOR TAXES 316,136 (11,541) - 304,595
PROVISION FOR INCOME TAXES - - - -
------------ ------------ ----------- -----------
NET INCOME (LOSS) $ 316,136 $ (11,541) $ - $ 304,595
---------- --------- --------- ---------
LOSS PER COMMON SHARES
-BASIC AND DILUTED $ N/A $ (.01) N/A $ .02
--------- --------- -------- ---------
WEIGHTED AVERAGE SHARES
-BASIC AND DILUTED N/A 1,300,000 15,187,000
----------- ------------ -----------
71
NOVAMED, INC.
AND WORLD WIDE AUCTIONEERS, LTD.
UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2002
World Wide Proforma
Auctioneers, Ltd. NovaMed, Inc. Increase Proforma
[Subsidiary] [Parent] (Decrease) Combined
------------ ------------ ----------- -----------
REVENUE $ 3,799,237 $ - - $ 3,799,237
------------ ------------ ----------- -----------
OPERATING EXPENSES:
Cost of sales 389,112 - - 389,112
General and administrative 3,308,941 38,890 - 3,347,831
------------ ------------ ----------- -----------
Total operating expenses 3,698,053 38,890 - 3,736,943
------------ ------------ ----------- -----------
INCOME (LOSS) FROM OPERATIONS 101,184 (38,890) - 62,294
Interest expense (24,056) - - (24,056)
Other income (expense) 159,113 53,938 - 213,051
------------ ------------ ----------- -----------
INCOME FROM OPERATIONS
BEFORE PROVISION FOR TAXES 236,241 15,048 - 251,289
PROVISION FOR INCOME TAXES - - - -
------------ ------------ ----------- -----------
NET INCOME $ 236,241 $ 15,048 $ - $ 251,289
---------- --------- --------- ---------
LOSS PER COMMON SHARES
-BASIC AND DILUTED $ N/A $ .02 N/A $ .02
--------- --------- ------- ---------
WEIGHTED AVERAGE SHARES
-BASIC AND DILUTED N/A 979,000 14,866,000
----------- ------------ -----------
See Notes To Unaudited Proforma Condensed Financial Statements.
72
NOVAMED, INC.
AND WORLD WIDE AUCTIONEERS, LTD.
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1 - NOVAMED, INC.
NOVAMED, INC. ["NOVAMED"], a Nevada corporation, was incorporated on
November 26, 1996. During the periods presented, NOVAMED has been primarily
engaged in seeking a potential merger opportunity with an operating
company.
NOTE 2 - WORLD WIDE AUCTIONEERS, LTD.
World Wide Auctioneers, Ltd. ["WWA"], was incorporated as a limited
liability company in the territory of the British Virgin Islands under
the International Business Companies Act, Cap 291 on March 20, 2000.
WWA's principal activities are the trading and auction of used and
unused construction, transportation, and marine equipment.
NOTE 3 - PROFORMA ADJUSTMENTS
On August 5, 2003, NOVAMED entered into a stock exchange agreement
wherein NOVAMED would acquire 100% of WWA through the issuance of
13,887,447 shares of common stock in a transaction wherein WWA will
become a wholly-owned subsidiary of NOVAMED. Upon closing of the
transaction, the shareholders of WWA will own approximately 91% of the
issued and outstanding shares of the Company. Because the shares issued
in the transaction represent control of the total shares of the
outstanding common stock immediately following the transaction, the
transaction has been accounted for as a reverse acquisition. Final
consummation of the proposed acquisition is subject to various
conditions being met and is not guaranteed.
73
NOVAMED, INC.
AND WORLD WIDE AUCTIONEERS, LTD.
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 3 - PROFORMA ADJUSTMENTS [Continued]
Pro forma adjustments on the attached financial statements include the
following:
[A] To record the acquisition of WWA by NOVAMED through the issuance
of 13,887,447 shares of common stock. The ownership interests of
the former owners of WWA in the combined enterprise will be
greater than that of the ongoing shareholders of NOVAMED and,
accordingly, the management of WWA will assume operating control
of the combined enterprise. Consequently, the acquisition is
accounted for as the recapitalization of WWA, wherein WWA
purchased the assets of NOVAMED and accounted for the
transaction as a "Reverse Acquisition" for accounting purposes.
[B] To eliminate the accumulated deficit of NOVAMED at the date of
acquisition to reflect the purchase by WWA for accounting purposes.
NOTE 4 - PROFORMA (LOSS) PER SHARE
The proforma income (loss) per share is computed based on the number of
shares outstanding, after adjustment for shares issued in the acquisition,
as though such shares had been outstanding from the beginning of the
periods presented.
74