-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Iez0kjJp5pIHkmUBeUq7MRiZdu9Zf8Cc8FIbju2jEpoYUMlcTl4YLP9Q6wBYW+Az 0YM245NnHPmBiUMSJsr+1A== 0000950124-01-503198.txt : 20010914 0000950124-01-503198.hdr.sgml : 20010914 ACCESSION NUMBER: 0000950124-01-503198 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20010912 FILED AS OF DATE: 20010913 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BID COM INTERNATIONAL INC CENTRAL INDEX KEY: 0001079171 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14835 FILM NUMBER: 1736320 BUSINESS ADDRESS: STREET 1: 6725 AIRPORT RD STE 201 STREET 2: MISSISSAUGA ONTARIO CITY: CANADA L4V 1V2 BUSINESS PHONE: 9056727469 MAIL ADDRESS: STREET 1: 6725 AIRPORT RD STE 201 STREET 2: MISSISSAUGA ONTARIO CITY: CANADA L4V 1V2 6-K 1 t28249e6-k.txt BID.COM - NOTICE OF SPECIAL MEETING 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934 FILING NO. 2 FOR THE MONTH OF SEPTEMBER, 2001 Bid.Com International Inc. -------------------------- (Exact name of Registrant) 6725 Airport Road, Suite 201, Mississauga ON, Canada L4V 1V2 ------------------------------------------------------------ (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F Form 20-F X Form 40-F --- --- Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes No X --- --- ================================================================================ 2 BID.COM INTERNATIONAL INC. On September 12, 2001, Bid.Com International Inc. mailed to its shareholders a Notice of Special Meeting of Shareholders, a Management Information Circular, each dated September 7, 2001, and a Form of Proxy. Exhibit 1. Notice of Special Meeting of Shareholders, dated September 7, 2001 Exhibit 2. Management Information Circular, dated September 7, 2001 Exhibit 3. Form of Proxy Exhibit 4. Letter from company to shareholders dated September 7, 2001. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BID.COM INTERNATIONAL INC. Date: September 13, 2001 By: /s/ JOHN MACKIE ------------------------------- Name: John Mackie Title: Vice-President, General Counsel and Corporate Secretary EX-1 3 t28249ex1.txt NOTICE OF SPECIAL MEETING OF SHAREHOLDERS 1 EXHIBIT 1 [BID.COM LETTER HEAD] NOTICE OF SPECIAL MEETING OF SHAREHOLDERS NOTICE IS HEREBY GIVEN that a special meeting (the "Meeting") of the shareholders of BID.COM INTERNATIONAL INC. (the "Corporation") will be held at The Fairmont Royal York hotel, 100 Front Street West, Toronto, Ontario, in The Ballroom (convention floor), on Wednesday, October 10th, 2001, at the hour of 4:30 o'clock in the afternoon for the following purposes: 1. to consider and, if deemed advisable, approve and authorize the acquisition of up to 100% of the issued shares of ADB Systemer ASA of Sola, Norway upon the terms set out in the accompanying Information Circular, including without limitation the issuance of up to 22,102,752 common shares of the Corporation, the amendment or replacement of existing warrants and options of ADB Systemer ASA to provide they shall be exercisable into shares of the Corporation, and certain changes in the board of directors of the Corporation as detailed herein; 2. to consider and, if deemed advisable, pass a special resolution (in the form attached as Appendix I to this Notice), authorizing an amendment to the Articles of Amalgamation of the Corporation effective upon completion of the acquisition contemplated above, to consolidate the 54,638,468 issued and outstanding common shares of the Corporation, together with those common shares issued in connection with the acquisition of ADB Systemer ASA, on the basis of 1 consolidated common share for each 2 existing common shares; 3. to consider and, if deemed advisable, pass a special resolution (in the form attached as Appendix II to this Notice), authorizing changing the name of the Corporation to ADB Systems International Inc., or such other name as may be approved by the Board of Directors of the Corporation, effective upon completion of the acquisition contemplated above; 4. to consider and, if deemed advisable, to pass an ordinary resolution (in the form attached as Appendix III to this Notice) authorizing an increase in the maximum number of options to be granted under the Corporation's Stock Option Plan from 8,700,000 to 10,700,000, effective upon completion of the acquisition contemplated above, in order to accommodate the existing option plan for ADB Systemer ASA and the ongoing participation of ADB employees in the Plan; and 5. to transact such further and other business as may properly come before the Meeting or any adjournment thereof. Shareholders are entitled to vote at the Meeting in person or by proxy. If it is not your intention to be present at the Meeting, please exercise your right to vote by promptly signing, dating and returning the enclosed form of proxy in the envelope provided for that purpose. DATED at Mississauga, Ontario this 7th day of September, 2001. By order of the Board of Directors John A. Mackie John A. Mackie Vice President, General Counsel and Corporate Secretary 2 APPENDIX I SPECIAL RESOLUTION APPROVING SHARE CONSOLIDATION BE IT RESOLVED AS A SPECIAL RESOLUTION THAT: 1. all of the authorized common shares of the Corporation, being the 54,638,468 presently issued and outstanding and all common shares issued in connection with the acquisition of ADB Systemer ASA, be consolidated on the basis of 1 consolidated common share for each 2 common shares presently outstanding, with any fractional shares arising as a result of such consolidation being adjusted to the nearest whole share; 2. the directors and officers of the Corporation are authorized to take such steps as may be necessary or advisable to give effect to the share consolidation, including the filing of Articles of Amendment; 3. the directors and officers of the Corporation are hereby authorized to take any and all such actions as in their discretion they deem necessary or advisable to effectuate the intent of the foregoing resolutions. APPENDIX II SPECIAL RESOLUTION APPROVING CHANGE OF NAME BE IT RESOLVED AS A SPECIAL RESOLUTION THAT: 1. the Articles of the Corporation be amended to change the name of the Corporation from BID.COM INTERNATIONAL INC. to ADB SYSTEMS INTERNATIONAL INC., or such other name as may be approved by the Board of Directors of the Corporation; 2. the directors and officers of the Corporation are authorized to take such steps as may be necessary or advisable to give effect to the name change, including the filing of Articles of Amendment; 3. the directors and officers of the Corporation are hereby authorized to take any and all such actions as in their discretion they deem necessary or advisable to effectuate the intent of the foregoing resolutions. APPENDIX III ORDINARY RESOLUTION APPROVING AMENDMENT TO STOCK OPTION PLAN BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT: 1. the Stock Option Plan of the Corporation (the "Plan") be amended to increase the maximum number of common shares which may be reserved for issuance pursuant to options granted under the Plan from 8,700,000 to 10,700,000; 2. any officer or director of the Corporation be and is hereby authorized for and on behalf of the Corporation (under its corporate seal or otherwise) to execute and deliver all such instruments, documents, directions and writings and to perform and do all such other acts and things as he in his discretion may consider to be necessary, desirable or useful for the purpose of giving effect to the foregoing resolution, including, but not limited to, making any filings with applicable securities regulatory authorities. EX-2 4 t28249ex2.txt MANAGEMENT INFORMATION CIRCULAR 1 EXHIBIT 2 [BID.COM LOGO] MANAGEMENT INFORMATION CIRCULAR SOLICITATION OF PROXIES THIS MANAGEMENT INFORMATION CIRCULAR AND THE ACCOMPANYING PROXY FORM ARE FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY AND ON BEHALF OF THE MANAGEMENT OF BID.COM INTERNATIONAL INC. (THE "CORPORATION") for use at the special meeting of shareholders of the Corporation (the "Meeting") to be held on Wednesday, October 10th, 2001 for the purposes set out in the accompanying notice of meeting. In addition to the use of the mail, proxies may be solicited by officers, directors and regular employees of the Corporation personally or by telephone. The cost of such solicitation will be borne by the Corporation. All dollar amounts contained in this Circular are expressed in Canadian dollars unless otherwise indicated. The persons named in the enclosed form of proxy, who are directors or officers of the Corporation, will vote the shares in respect of which they are appointed in accordance with the direction of the shareholders appointing them. IN THE ABSENCE OF SUCH DIRECTION, SUCH SHARES SHALL BE VOTED IN FAVOUR OF ALL ITEMS OF BUSINESS SET OUT IN THE ACCOMPANYING NOTICE OF MEETING, AS STATED UNDER THOSE HEADINGS IN THIS MANAGEMENT INFORMATION CIRCULAR. THE FORM OF PROXY CONFERS DISCRETIONARY AUTHORITY UPON THE PERSONS NAMED THEREIN WITH RESPECT TO AMENDMENTS OR VARIATIONS TO MATTERS IDENTIFIED IN THE NOTICE OF MEETING AND WITH RESPECT TO OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING. IF MATTERS WHICH ARE NOT NOW KNOWN SHOULD PROPERLY COME BEFORE THE MEETING, THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED ON SUCH MATTERS IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PERSON VOTING SUCH SHARES. A shareholder desiring to appoint some other person to represent him or her at the Meeting may do so either by inserting the name of such person in the blank space provided in the form of proxy or by completing another proxy in a form similar to the enclosed and, in either case, sending it to the Corporation or its transfer agent, CIBC Mellon Trust Company, in the return envelope provided. INSTRUMENTS APPOINTING PROXIES TO BE USED AT THE MEETING MUST BE DEPOSITED WITH THE CORPORATION OR ITS TRANSFER AGENT PRIOR TO THE CLOSE OF BUSINESS ON THE SECOND BUSINESS DAY PRECEDING THE MEETING OR DELIVERED TO THE SECRETARY OF THE MEETING AT THE TIME OF THE MEETING. REVOCATION OF PROXY A shareholder executing the enclosed form of proxy has the power to revoke it. In addition to revocation in any other manner permitted by law, a proxy may be revoked by instrument in writing deposited at the registered office of the Corporation or its transfer agent at any time up to and including the last business day preceding the day of the Meeting or any adjournment thereof at which the proxy is to be used or with the Secretary of the Meeting on the day of the Meeting or adjournment thereof, and upon either of such deposits the proxy shall be revoked. INTEREST OF CERTAIN PERSONS AND CORPORATIONS IN MATTERS TO BE ACTED UPON No person who has been a director or senior officer of the Corporation since the beginning of the last financial year and no person who is a proposed nominee for election as a director of the Corporation and no associate or affiliate of any such director, senior officer or proposed nominee has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting except as disclosed herein. VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF The authorized capital of the Corporation consists of an unlimited number of common shares and an unlimited number of preference shares, issuable in series, of which 54,638,468 common shares of the Corporation are issued and outstanding as of August 31, 2001. Each common share entitles the holder thereof to one vote per share at the Meeting. No preference shares are issued or outstanding. The record date for the determination of shareholders entitled to receive notice of the Meeting has been fixed as September 5, 2001. Shareholders of ADB Systemer ASA will not receive shares of the Corporation pursuant to the 2 proposed acquisition of that company until after the Meeting, and as a result are not eligible to vote at the Meeting. A quorum for the transaction of business at the Meeting is at least 2 shareholders represented in person or by proxy holding not less than 20% of the outstanding shares of the Corporation entitled to vote at the Meeting. All shareholders of record as at the close of business on the record date will be entitled to vote at the Meeting except to the extent that any such shareholder has since the record date transferred any of his or her shares. In such case, a transferee of those shares may produce properly endorsed share certificates, or otherwise establish that he or she owns the shares and provided that he or she has demanded, no later than ten days before the Meeting, that the Corporation recognize the transferee as a person entitled to vote the transferred shares, such transferee will be entitled to vote such shares at the Meeting. To the knowledge of the directors and officers of the Corporation, as of the date hereof no person owns beneficially, directly or indirectly, or exercises control or direction over securities of the Corporation carrying more than 5% of the voting rights attaching to all voting securities of the Corporation. EXECUTIVE COMPENSATION The following table sets forth all compensation for each of the periods indicated paid to the Chief Executive Officer and the four highest paid executive officers of the Corporation, other than the Chief Executive Officer, who earned in excess of $100,000. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ----------------------------------- AWARDS PAYOUTS ---------------------- ---------- ANNUAL COMPENSATION RESTRICTED -------------------------------------- OPTIONS/ SHARES OR OTHER ANNUAL SARS RESTRICTED LTIP ALL OTHER SALARY BONUS COMPENSATION GRANTED SHARE UNITS PAYOUT COMPENSATION NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) (#) ($) ($) ($) - --------------------------- ---- ------- ------ ------------ -------- ----------- ---------- ---------------- Paul Godin...................... 2000 272,000 Nil Nil 57,500 Nil Nil Nil Chairman(2) 1999 260,000 Nil 12,000 160,000 Nil Nil Nil 1998 178,300 Nil 12,000 50,000 Nil Nil Nil Jeffrey Lymburner............... 2000 267,815 Nil 4,498 100,000 Nil Nil Nil President & CEO 1999 225,684 Nil Nil 170,000 Nil Nil Nil 1998 170,500 Nil Nil 100,000 Nil Nil Nil Mark Wallace.................... 2000 250,000 Nil 12,000 75,000 Nil Nil Nil Chief Operating Officer(3) 1999 112,750 Nil Nil 425,000 Nil Nil Nil Jim Moskos...................... 2000 231,250 Nil 12,000 75,000 Nil Nil Nil President, Technology Group 1999 188,500 Nil 12,000 225,000 Nil Nil Nil 1998 102,000 Nil 4,500 100,000 Nil Nil Nil Pete Sprukulis.................. 2000 175,000 10,000 12,000 75,000 Nil Nil Nil Sr. VP, Sales & Marketing(4) 1999 9,138 Nil Nil 150,000 Nil Nil Nil John Mackie..................... 2000 164,167 25,000 9,000 50,000 Nil Nil Nil VP, General Counsel and 1999 46,125 25,000 Nil 100,000 Nil Nil Nil Corporate Secretary(5)
- --------------- (1) Received on account of car reimbursement expenses. (2) Resigned as Chairman of the Board effective June 14, 2000. Mr. Godin was paid a lump sum equal to his salary until December 31, 2000 in consideration for his ongoing assistance in transition of the business. (3) Joined the Corporation on May 17, 1999. Mr. Wallace was Executive Vice President, General Counsel and Corporate Secretary from May 1999 to November 1999. (4) Joined the Corporation on December 13, 1999. Ceased to be an officer of the Corporation on April 24, 2001. (5) Joined the Corporation on November 15, 1999. 2 3 OPTION/SAR GRANTS DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR
MARKET VALUE OF % OF TOTAL SECURITIES SECURITIES UNDER OPTIONS/SARS UNDERLYING OPTIONS/SARS GRANTED TO EXERCISE OR BASE OPTIONS/SARS ON GRANTED EMPLOYEES IN PRICE THE DATE OF GRANT NAME (#) FINANCIAL YEAR ($/SECURITY) ($/SECURITY) EXPIRATION DATE - ---- ---------------- -------------- ---------------- ----------------- --------------- Paul Godin................... 47,500 2.1% 6.35 6.35 2/8/03 10,000 0.4% 2.79 2.79 8/1/03 Jeffrey Lymburner............ 25,000 1.1% 6.35 6.35 2/8/03 75,000 3.3% 2.79 2.79 8/1/03 Mark Wallace................. 75,000 3.3% 2.79 2.79 8/1/03 Jim Moskos................... 75,000 3.3% 2.79 2.79 8/1/03 Pete Sprukulis............... 75,000 3.3% 2.79 2.79 8/1/03 John Mackie.................. 50,000 2.2% 2.79 2.79 8/1/03
AGGREGATED OPTION/SAR EXERCISES DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR AND FINANCIAL YEAR-END OPTION/SAR VALUES
VALUE OF UNEXERCISED IN-THE-MONEY UNEXERCISED OPTIONS/SARS AT OPTIONS/SARS AT FY-END SECURITIES ACQUIRED AGGREGATE VALUE FY-END ($) ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/ NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE - ---- ------------------- --------------- --------------- -------------------- Paul Godin................. 50,000 133,000 217,500/0 0/0 Jeffrey Lymburner.......... 100,000 320,500 232,500/37,500 0/0 Mark Wallace............... Nil Nil 437,500/62,500 0/0 Jim Moskos................. 25,000 55,000 262,500/37,500 0/0 Pete Sprukulis............. Nil Nil 87,500/137,500 0/0 John Mackie................ Nil Nil 75,000/75,000 0/0
- --------------- (1) Aggregate value realized is calculated as the difference between market value at exercise and the exercise price. COMPENSATION OF DIRECTORS During the financial year ended December 31, 2000, the directors received no fees for meetings of the Board or a committee of the Board which they attended and no fee for the signing of any resolution of directors or documents on behalf of the Corporation. For the 2001 financial year, directors other than Messrs. Bourke, Lymburner and Moskos will receive annual compensation of $20,000. DIRECTORS AND OFFICERS LIABILITY INSURANCE The Corporation currently maintains Directors and Officers liability insurance in the amount of $50,000,000 in the aggregate for the term May 1, 2001 to May 1, 2002. All directors are entitled to full reimbursement for director liability without deduction. There is a deductible of $50,000 ($100,000 for a Securities Claim) for each claim against the Corporation out of which the claim for reimbursement by individual directors arises. The aggregate annual premium for the policy is $162,000. No director or officer will pay any portion of this premium. 3 4 PERFORMANCE GRAPH The following graph compares the Corporation's accumulated total shareholder return on the common shares of the Corporation during the period from formation of the Corporation on January 9, 1997 until December 31, 2000 with the accumulated return of the TSE 300 stock index for the same period, assuming a $100 investment and the reinvestment of all dividends. The common share price for performance as set out in the graph below does not necessarily indicate future price performance. [PERFORMANCE GRAPH]
BII TSE 300 (1) --- ----------- Jan. 9, 1997 $100.00 $100.00 Dec. 31, 1997 $338.89 $114.32 Dec. 31, 1998 $402.22 $112.51 Dec. 31, 1999 $688.89 $148.19 Dec.31, 2000 $110.00 $159.17
- --------------- (1) The TSE 300 Total Return Index is compiled by The Toronto Stock Exchange and consists of a market weighted index of 300 issues on The Toronto Stock Exchange. COMPOSITION OF MANAGEMENT RESOURCES AND COMPENSATION COMMITTEE During the financial year ended December 31, 2000, the Management Resources and Compensation Committee (the "Committee") of the Corporation consisted of Christopher Bulger, Dr. Duncan Copeland and Chuck Walker until October 5, 2000 and Pat Bourke, Christopher Bulger and Paul Godin since, all of whom are directors of the Corporation. REPORT ON EXECUTIVE COMPENSATION The Committee is responsible for: (a) recommendations to the Board regarding the appointment or removal of executive officers, reviewing the performance of executive officers and fixing their compensation; and (b) establishing incentive policies for the Corporation and overseeing its stock option plan. The Committee also reviews other compensation, performance, and succession matters within the Corporation from time to time, including the compensation of directors. The Committee approves the design of, assesses the effectiveness of, and administers executive compensation programs in support of compensation policies. The Committee is committed to implementing a compensation program that furthers the Corporation's objectives. The program includes the review and implementation of programs with respect to: (a) total compensation which strengthens the relationship between pay and performance; and (b) compensation opportunities that enhance the Corporation's ability to attract, retain and encourage the development of knowledgeable, experienced and capable management and employees. Salaries Base salaries for executive positions are determined in relation to the person's duties and responsibilities, the skill and knowledge required for such position and competitive market rates. Base salaries are targeted at competitive levels and are adjusted by the Committee to recognize varying levels of responsibility, prior experience, knowledge, performance and the market rates for such individuals. 4 5 Short-Term Incentives Except for sales employees who are entitled to a bonus based on the achievement of revenue targets and the Management Incentive Plan described below, stock options are the only incentive compensation for executives and employees of the Corporation (see "Long-Term Incentives" below). The Board of Directors have established a Management Incentive Plan for executives of the Corporation. For the 2001 financial year, participating executives will be eligible for bonuses ranging from 30% to 50% of their average 2001 salary based on achievement of revenue and expense targets established by the Board. This Plan was established to incent and reward executives for achieving the Corporation's targets, and is necessary in the view of the Committee to address retention issues in light of market volatility in 2000 and 2001 and the impact of same on stock option grants. Long-Term Incentives Long-term incentives in the form of stock options are provided to directors, officers and employees, to address the Corporation's goals of attracting and retaining capable management and employees and providing total compensation competitive with the Corporation's competitors. The use of stock options is designed to create shareholder value over the long-term by encouraging equity ownership in the Corporation by such persons. When awarding long-term incentives, the Committee considers levels of responsibility, skills and knowledge, prior experience and individual performance criteria. 2001 Outlook It is the expectation of the Committee that executive and employee retention will be a significant concern in 2001, due to economic and market conditions. The Committee believes that human resources are one of the most valuable assets of the Corporation, and will continue to closely monitor compensation in that regard. Submitted on behalf of the Committee. Patrick Bourke (Chairman) Christopher Bulger Paul Godin INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS No person who is, or at anytime during the most recently completed financial year was, a director, executive officer or senior officer of the Corporation or any proposed management nominee for election as a director of the Corporation, or any associate of any such director, officer or proposed management nominee is or has been indebted to the Corporation at any time during the last completed financial year. INTERESTS OF INSIDERS IN MATERIAL TRANSACTIONS Other than the transactions referred to herein, there have been no transactions since the beginning of the Corporation's last completed financial year or any proposed transaction, which have materially affected or would materially affect the Corporation in which any director or senior officer of the Corporation, any proposed management nominee for election as a director of the Corporation, any person or company who owns of record, or is known by the Corporation to own beneficially, directly or indirectly, more than 10% of any class of securities of the Corporation, or any associate or affiliate of any of the foregoing persons or companies has a direct or indirect interest. On April 4, 2000, a transaction with The Art Vault International Limited, a company listed on the Canadian Venture Exchange, was completed under which the Corporation provided its online auction technology and related services to enable the implementation of The Art Vault's online auction of art and antiquities. In consideration for its licence and services, the Corporation received 2,500,000 shares of The Art Vault and a share of future profits. Paul Godin, a director of the Corporation, was the founding shareholder, sole officer and director of The Art Vault. Azim Fancy, a former director of the Corporation and of The Art Vault, Charles Walker, a director of the Corporation, and Jim Moskos, a director of the Corporation, also held shares of The Art Vault at the time of this transaction. In March 2001, The Art Vault International Limited made an assignment in bankruptcy due to economic conditions and a lack of 5 6 available funding. As the license and service agreements were fully paid up, the assignment had no material economic effect on the Corporation. MANAGEMENT CONTRACTS Jeffrey Lymburner entered into a non-competition and salary protection agreement with the Corporation dated February 21, 1997, which provides, among other things, that he: (i) will not compete with the Corporation for a period of 12 months, which may be extended by the Corporation to 24 months, following the termination of his employment with the Corporation, in consideration of which the Corporation will pay his full annual salary during such period; and (ii) if his employment with the Corporation is terminated other than by reason of death, disability or cause (as such terms are defined in such agreements), the Corporation will continue to pay his full annual salary for 12 months (or 24 months if the Corporation exercises its option to extend the non-competition restrictions for 24 months) following the date of termination. Mark Wallace, the Chief Operating Officer of the Corporation, has entered into a written agreement with the Corporation which provides, among other things, that in the event of termination of employment other than by death, disability or cause, his previous 12 months salary level is guaranteed for 12 months following termination. MATTERS TO BE ADDRESSED AT THE MEETING The items of special business referred to below are interdependent. In the event the acquisition of ADB Systemer ASA is not completed for any reason, Bid.Com does not intend to proceed with such matters. ACQUISITION OF ADB SYSTEMER ASA Shareholders are being asked to consider and, if deemed advisable to approve by ordinary resolution passed by a simple majority of the votes cast at the meeting, the acquisition of up to 100% of the issued shares of ADB Systemer ASA ("ADB" or "the Company") of Sola, Norway (the "Acquisition"). MANAGEMENT ARE RECOMMENDING THIS ACQUISITION BE APPROVED BY THE SHAREHOLDERS, AS DETAILED BELOW. Pursuant to an agreement entered into by the Corporation with ADB and its Board of Directors dated September 7, 2001 (the "Support Agreement") the Corporation has agreed to make a public tender offer (the "Offer") for all of the outstanding shares of ADB for a price of 6.00 Norwegian kroner ("NOK") per share (approximately Cdn $1.0416 per share), totaling NOK 76.4 million or approximately Cdn $13.3 million. The purchase price will be satisfied by the payment of 1.00 NOK (approximately Cdn. $0.1736) in cash and the issuance of 5.00 NOK (approximately Cdn $0.868) worth of common shares of the Corporation at an issue price equal to Cdn. $0.50 (approximately NOK 2.88) per share of the Corporation, being 1.736 shares of the Corporation for each share of ADB. The numbers contained herein with respect to the Acquisition (other than financial statement data, in respect of which the specific exchange rate is noted), have been presented assuming an exchange rate of Cdn. $1.00 = NOK 5.76, being the rate agreed upon by the parties. The Corporation will bear exchange rate risk from the date hereof until closing. The exchange rate as at September 4, 2001 was Cdn. $1.00 = NOK 5.7537, based on the Bank of Canada nominal noon exchange rate for such day. Assuming all shares of ADB are tendered to the Offer, the Corporation will issue approximately 22,102,752 common shares to the shareholders of ADB. In addition, 700,001 existing warrants presently exerciseable into one share of ADB at an exercise price of NOK 3 (approximately Cdn. $0.5208) will be amended or replaced to allow such warrants to be exercised at NOK 2 (approximately Cdn. $0.3472), when vested, into 1,215,202 common shares of the Corporation, and 880,000 options held by employees, presently exerciseable into one share of ADB at an exercise price of NOK 3 (approximately Cdn. $0.5208) will be amended or replaced to allow such options to be exercised at NOK 2 (approximately Cdn. $0.3472), when vested, into 1,527,680 common shares of the Corporation. Shareholder approval is being sought pursuant to the rules of the Nasdaq National Market, which require shareholder approval of any acquisition involving the issuance of more than 20% of an issuer's pre-acquisition share capital. 6 7 Under the terms of the Offer, the Corporation's obligations to take up and pay for shares of ADB tendered to the Corporation's offer is conditional upon a number of conditions precedent (which the Corporation may waive in its sole discretion) including the following: 1. the acceptance of the Offer by a number of shareholders representing more than 90% of the issued and outstanding shares of ADB; 2. satisfactory employment arrangements shall have been made with persons specified by the Corporation; 3. certain significant shareholders of ADB shall have entered into agreements with the Corporation not to sell any shares of the Corporation received by them pursuant to the Acquisition except as follows: 25% on or after each of the 90th, 180th, and 270th days following the Acquisition and the remaining 25% on or after the first anniversary of the Acquisition (the "Resale Restrictions"); 4. compliance with all applicable corporate, legal and regulatory approvals, including the shareholder approval contemplated hereby; 5. the approval of the Toronto Stock Exchange and all other regulatory authorities having jurisdiction; 6. there being no material changes (including but not limited to adverse tax consequences to either the Corporation or ADB) in the business or affairs of ADB; and 7. the recommendation by the board of directors of ADB to its shareholders that they accept the Offer. The Corporation has stated that should it acquire more than 90% but not all of the issued shares it may exercise its rights of compulsory acquisition under Norwegian law to acquire all of the shares of ADB not already tendered. In the event less than 90% is acquired, the compulsory acquisition rules will not apply. The Corporation has entered into lock up agreements with ADB shareholders holding approximately 65% of the issued shares of ADB, pursuant to which such shareholders have agreed to tender their shares to the Offer, and shareholders holding approximately 50% of the issued shares of ADB have consented to the Resale Restrictions. Notwithstanding the above-mentioned condition regarding acquisition of more than 90% of the issued shares, Management of the Corporation is seeking the approval of the shareholders of the Corporation for any acquisition involving 51% or more of the issued shares of ADB, in order that Management have some flexibility should the 90% threshold not be achieved. Pursuant to Ontario securities law, shares of the Corporation received by shareholders of ADB upon completion of the Acquisition may be resold in Ontario at any time after receipt through registered investment dealers, subject to certain conditions. INFORMATION CONCERNING ADB OVERVIEW ADB is a software vendor of Enterprise Asset Management (EAM) and e-procurement solutions. The Company is publicly traded on the Norwegian over-the-counter market. ADB was founded in 1988 by its current CEO, Jan Edvin Pedersen. The Company started as a consulting company developing custom applications for clients in the oil and gas industry. In 1996, ADB developed and brought to market its own software named WorkMate(R), offering an integrated solution for asset management, including procurement, maintenance and materials management. Following the success of WorkMate, ADB introduced ProcureMate(TM), an internet solution for e-procurement marketed to the oil and gas and government sectors. The Company's clients include some of the world's leading oil and gas operators and service companies such as BP Amoco, Halliburton, Maritime Well Services and ProSafe, and recently certain public sector clients. ADB is headquartered in Sola, near Stavanger in Norway, and has a total of 34 employees. The Company previously had small sales and marketing offices in Texas and England, which have been largely shut down as part of a recent restructuring exercise. ADB has distribution partners in Canada and the United States: Explorer Software Solutions located in Calgary, Alberta, and Production Access located in Houston, Texas. The company has also entered into a collaboration agreement with AMEC, a global leader in the provision of services and engineering solutions to the world's infrastructure, manufacturing and process industries. 7 8 PRODUCT PORTFOLIO ADB's two main software products are WorkMate(R) and ProcureMate(TM), which are complementary and work together: - WORKMATE(R): an EAM software solution for asset intensive industries that require strong solutions related to the maintenance of assets, materials management and procurement. - PROCUREMATE(TM): a web-based e-procurement solution primarily targeting public and private service industries. It offers a suite of applications designed to provide customers with all the functions of an enterprise procurement system. SALES AND MARKETING ADB has identified Norway, the UK and North America as its primary markets. The market presence of ADB is strong in Norway and largely dependent on distributors in North America and the UK. NORWAY Being headquartered in Sola, Norway, ADB maintains its own sales force in the Norwegian market. The sales department consists of 3 dedicated sales people and 2 account managers. In addition, the sales department gets significant support from the technical department in connection with demos, pilots and other pre-sales activities. There is also a training and support department servicing the installed client base. Major clients and users of WorkMate(R) in the Norwegian market are BP Amoco, Halliburton, TotalFinaElf, Maritime Well Services and ProSafe. Key client references for ProcureMate(TM) include Hordaland Fylkeskommune (one of the largest county councils in Norway, with approximately 13,000 employees spread over more than 200 locations) and the city of Halden. UNITED KINGDOM In the UK market, ADB has a collaboration agreement in place with AMEC, one of the world's leading engineering service firms, to market ADB's solutions worldwide. As a result of this agreement, ADB has supplied its solutions to a joint venture of AMEC and Dow Chemicals/Union Carbide. Because ADB currently has only a small direct sales and marketing presence in London, resources are focussed largely on the AMEC partnership opportunity. UNITED STATES ADB's direct presence in the United States currently consists of a small office dedicated solely to maintaining and supporting the Compass CMMS product and customers that ADB inherited as a result of its acquisition of Bonner and Moore in January, 2000. A distribution agreement with Production Access is currently being finalized. ADB is focussed on finding additional channel and distribution partners for this market. CANADA ADB's main distribution partner in Canada is Explorer Software in Calgary. ADB's management considers Explorer to be leaders in land management software solutions for Oil & Gas producers with their CS-Explorer solution. The company has exerted great efforts in introducing WorkMate(R) in the Canadian market, successfully completing sales to Paramount Resources and Encal Energy. 8 9 SELECTED FINANCIAL DATA PROFIT AND LOSS DATA. Key figures from the profit and loss statements for ADB for the last three years and the six month periods ended June 30, 2001 and 2000, are shown below. These numbers should be read in conjunction with the directors' reports, consolidated financial statements and notes attached as Schedules A, B and C to this Circular. An unaudited management reconciliation to Canadian generally accepted accounting principles has been provided below, under Reconciliation to Canadian GAAP. Norwegian Figures The following figures are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. This financial information does not include adjustments to reflect the application of Canadian accounting principles. PROFIT AND LOSS ACCOUNT (000'S OF NOK)
SIX MONTHS ENDED YEAR ENDED DECEMBER 31 JUNE 30, (AUDITED) (UNAUDITED) ---------------------------- ---------------- 1998 1999 2000 2000 2001 ------ ------- ------- ------ ------ Sales/Revenues.................................... 26,089 18,080 23,571 12,320 13,020 Operating profit (loss)........................... 2,608 (11,164) (30,698) (9,476) (6,349) Interest income or expense........................ 327 327 (355) 11 (46) Profit (loss) before taxes........................ 2,935 (10,837) (31,053) (9,465) (6,395) Tax on ordinary results........................... 866 (3,090) (7,583) (2,821) (2,843) Profit (loss) for the period...................... 2,069 (7,747) (23,470) (6,644) (3,552) ====== ======= ======= ====== ======
Canadian Figures For convenience purposes, the above figures have been translated into Canadian dollars using average foreign exchange rates in effect during the reporting period. The following unaudited figures have been translated for convenience purposes only, and should not be viewed as the application of foreign currency translation methods under Canadian accounting principles. PROFIT AND LOSS ACCOUNT (000'S OF CDN$)
YEAR ENDED DECEMBER 31 SIX MONTHS ENDED JUNE 30, (UNAUDITED) (UNAUDITED) ------------------------------------ ------------------------- 1998 1999 2000 2000 2001 ---------- ---------- ---------- ----------- ----------- Sales/Revenues.................... 5,126 3,444 3,981 2,128 2,212 Operating profit (loss)........... 513 (2,127) (5,185) (1,637) (1,078) Interest income or expense........ 64 62 (60) 2 (8) Profit (loss) before taxes........ 577 (2,065) (5,245) (1,635) (1,086) Tax on ordinary results........... 170 (589) (1,281) (487) (483) Profit (loss) for the period...... 407 (1,476) (3,964) (1,148) (603) ========== ========== ========== ========== ========== Translated into Cdn$ at the following exchange rate: $1Cdn=(1)............... NOK 5.0890 NOK 5.2493 NOK 5.9206 NOK 5.7900 NOK 5.8858 ---------- ---------- ---------- ---------- ----------
- --------------- (1) Based on average nominal foreign exchange rates as reported by The Bank of Canada during the reporting period. 9 10 BALANCE SHEET DATA. Key figures from the balance sheet for ADB for the last three years, and the six month periods ended June 30, 2001 and 2000, are shown below. These numbers should be read in conjunction with the directors' reports, consolidated financial statements and notes attached as Schedules A, B and C to this Circular. An unaudited management reconciliation to Canadian generally accepted accounting principles has been provided below, under Reconciliation to Canadian GAAP. Norwegian Figures The following figures are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. This financial information does not include adjustments to reflect the application of Canadian accounting principles. BALANCE SHEET (000'S OF NOK)
SIX MONTHS ENDED YEAR ENDED DECEMBER 31 JUNE 30 (AUDITED) (UNAUDITED) ------------------------ ----------------- 1998 1999 2000 2000 2001 ------ ------ ------ ------- ------- Non-Current Assets..................................... 4,349 8,646 14,303 12,052 15,527 Current Assets......................................... 14,672 7,023 16,788 20,869 13,172 TOTAL ASSETS........................................... 19,021 15,669 31,091 32,921 28,699 Equity................................................. 13,016 9,586 9,501 25,861 20,635 Current Liabilities.................................... 6,005 6,083 21,590 7,060 8,064 TOTAL EQUITY AND LIABILITIES........................... 19,021 15,669 31,091 32,921 28,699 ====== ====== ====== ====== ======
Canadian Figures For convenience purposes, the above figures have been translated into Canadian dollars using closing foreign exchange rates in effect at the end of the reporting period. The following unaudited figures have been translated for convenience purposes only, and should not be viewed as the application of foreign currency translation methods under Canadian accounting principles. BALANCE SHEET (000'S OF CDN$)
YEAR ENDED DECEMBER 31 SIX MONTHS ENDED JUNE 30 (UNAUDITED) (UNAUDITED) ------------------------------------ ------------------------- 1998 1999 2000 2000 2001 ---------- ---------- ---------- ----------- ----------- Non-Current Assets................ 875 1,559 2,439 2,080 2,526 Current Assets.................... 2,954 1,266 2,862 3,602 2,143 TOTAL ASSETS...................... 3,829 2,825 5,301 5,682 4,669 Equity............................ 2,620 1,728 1,620 4,464 3,357 Current Liabilities............... 1,209 1,097 3,681 1,218 1,312 TOTAL EQUITY AND LIABILITIES...... 3,829 2,825 5,301 5,682 4,669 ========== ========== ========== ========== ========== Translated into Cdn$ at the following exchange rate: $1Cdn=(2)............... NOK 4.9677 NOK 5.5463 NOK 5.8651 NOK 5.7940 NOK 6.1462 ---------- ---------- ---------- ---------- ----------
- --------------- (2) Based on closing nominal foreign exchange rates as reported by The Bank of Canada at the end of reporting period. 10 11 The directors' reports and audited consolidated financial statements of ADB for the financial years ended December 31, 2000, 1999 and 1998, and the unaudited consolidated financial statements of ADB, for the 6 month periods ended June 30, 2001 and 2000, prepared in accordance with generally accepted accounting principles in Norway, are attached as Schedules A, B and C to this circular and are incorporated herein by reference. An unaudited reconciliation to Canadian generally accepted accounting principles has been provided below, under Reconciliation to Canadian GAAP. The annual report of ADB for the year 2000 is available to any shareholder upon request address to the Secretary of the Corporation at the address set out at the beginning of this Circular, or from ABD's website at www.adbsys.com. RECONCILIATION TO CANADIAN GAAP The financial statements of ADB Systemer ASA, as reported on by its auditors, have been prepared in accordance with accounting principles applicable in Norway and do not contain certain adjustments which would apply had the financial statements been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"). In order to understand the impacts of such differences in accounting principles, management of Bid.Com has prepared the following unaudited summary of relevant material differences in accounting principles and their corresponding impacts on the financial statements of ADB Systemer ASA. Although management believes this summary is accurate, it has not been reported on by the auditors of ADB or the Corporation. Under Norwegian generally accepted accounting principles, revenues from software licensing, consulting, implementation, maintenance, support and development agreements are accounted for when the software is delivered for licensing agreements, and on a pro-rata basis over the contract term for licensing and maintenance agreements. Under Canadian GAAP, revenue recognition for software licenses and associated services is governed by Canadian Institute of Chartered Accountants Handbook Section 3400 with additional guidance provided by American Institute of Certified Public Accountants Statements of Position 97-2 and 98-9. In order to recognize revenue for software and related services, Canadian GAAP requires that sufficient vendor specific objective evidence be obtained of the fair value individual elements of software licensing and related services agreements regardless of legal form of the agreement. Application of Canadian GAAP would result in different timing of recognized revenues as set out below. Under Norwegian and Canadian generally accepted accounting principles, the recording of deferred tax assets or future tax assets is permitted. Canadian generally accepted accounting principles require that a valuation allowance be recorded if it is more likely than not that the future tax asset would not be realized. Application of Canadian GAAP would have resulted in a lower income tax recovery on ordinary results and lower future tax asset. Shareholder equity under Canadian GAAP presents separate components of share capital and retained earnings, while shareholder equity under Norwegian GAAP combines all equity components. Application of Canadian generally accepted accounting principles would have resulted in the following changes to the profit and loss statement and balance sheet for ADB.
SIX MONTHS ENDED YEAR ENDED DECEMBER 31 JUNE 30 ------------------------------ ------------------- 1998 1999 2000 2000 2001 -------- -------- -------- -------- -------- (000's Norwegian Kroner, except per share amounts) PROFIT AND LOSS ACCOUNT Loss for the period under Norwegian GAAP............ 2,069 (7,747) (23,470) (6,644) (3,552) Impact on net loss of Canadian GAAP Valuation allowance for future tax asset.......... -- (3,046) (7,583) (2,393) (2,843) Software revenue not recognizable................. -- -- 213 -- (90) ------- ------- ------- ------- ------- Loss for the year under Canadian GAAP............... 2,069 (10,793) (30,840) (9,037) (6,485) ======= ======= ======= ======= ======= Loss per share under Canadian GAAP.................. 0.46 (2.34) (6.25) -- -- BALANCE SHEET Accounts Receivable (Adjusted)...................... 6,259 3,089 6,099 5,420 3,369 Deferred taxes (Adjusted)........................... -- -- -- -- --
For convenience purposes, the above figures have been translated into Canadian dollars using average foreign exchange rates in effect during the reporting period in the case of profit and loss accounts, and at the end of the reporting period in the case of the balance sheet. The following figures have been translated for convenience purposes 11 12 only, and should not be viewed as the application of foreign currency translation methods under Canadian accounting principles.
YEAR ENDED DECEMBER 31 SIX MONTHS ENDED JUNE 30 ------------------------------------ ------------------------- 1998 1999 2000 2000 2001 ---------- ---------- ---------- ----------- ----------- (000's of Canadian Dollars) PROFIT AND LOSS ACCOUNT Loss for the period under Norwegian GAAP............................... 407 (1,476) (3,964) (1,148) (603) Impact on net loss of Canadian GAAP Valuation allowance for future tax asset........................... -- (580) (1,281) (413) (483) Software revenue not recognizable.................... -- -- 36 -- (15) ---------- ---------- ---------- ---------- ---------- Loss for the year under Canadian GAAP............................... 407 (2,056) (5,209) (1,561) (1,101) ========== ========== ========== ========== ========== Loss per share under Canadian GAAP... 0.09 (0.47) (1.06) Translated in Cdn$ at the following exchange rate $1Cdn =.............. NOK 5.0890 NOK 5.2493 NOK 5.9206 NOK 5.7900 NOK 5.8858 BALANCE SHEET Accounts Receivable (Adjusted)....... 1,260 557 1,040 936 548 Deferred taxes (Adjusted)............ -- -- -- -- -- Translated in Cdn$ at the following exchange rate $1Cdn =.............. NOK 4.9677 NOK 5.5463 NOK 5.8651 NOK 5.7940 NOK 6.1462
PRO FORMA FINANCIAL STATEMENTS Attached as Schedule D to this Circular are unaudited pro forma financial statements reflecting the combined financial results of the Corporation and ADB as at June 30, 2001 and for the periods ended December 31, 2000 and June 30, 2001, giving effect to the proposed acquisition. The Acquisition will be accounted for using the purchase method of accounting. MARKET INFORMATION ADB's shares trade in the Norwegian OTC (over the counter) market. The following table shows the last trades in ADB shares:
SHARE PRICE DATE VOLUME (NOK) ---- ------ ----------- Sep. 1, 2000............................................ 2,000 35 Sep. 6, 2000............................................ 10,000 32 Sep. 8, 2000............................................ 2,000 35 Sep. 11, 2000........................................... 10,500 36 Oct. 4, 2000............................................ 2,000 34 Feb. 14, 2001........................................... 3,300 15 July 6, 2001............................................ 76,250 2,50 July 31, 2001........................................... 3,000 5
As the table shows, the last trade was in July, 2001 at NOK 5 per share (approximately Cdn. $0.87 per share), when 3,000 shares changed hands. Liquidity is extremely limited. RISK FACTORS RELATING TO BID.COM'S INVESTMENT IN ADB The proposed investment by the Corporation in ADB is not free from risk and shareholders should consider the following risk factors prior to exercising their right to vote on the acquisition of ADB. RISK ASSOCIATED WITH INVESTMENTS IN SECURITIES Market prices of securities of technology companies have historically been highly volatile, and the market has from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. Factors such as fluctuations in ADB's operating results, the aftermath of ADB's public 12 13 announcements, concerns related to ADB's products and markets in general and overall conditions in the national and international equities markets can have an adverse and unpredictable effect on the market price of ADB's shares. FLUCTUATIONS IN FINANCIAL RESULTS The financial results of the Company have fluctuated from quarter to quarter in recent years and may continue to fluctuate on a quarterly and annual basis in the future. Accordingly, comparison between two individual periods may not necessarily give a clear indication of future results. CURRENCY EXCHANGE RISKS As ADB generates revenues in several countries, ADB's financial results are affected by revenues and costs occurring in different currencies which may fluctuate significantly. As of today ADB has no mechanisms for hedging this risk. However, such measures will be considered as and when determined appropriate by ADB's management. INTEGRATION AND MANAGEMENT OF GROWTH The integration of ADB's business or technologies with those of the Corporation may be more difficult than anticipated. ADB is pursuing substantial growth over the next few years. If successful, this will significantly strain the management resources, the internal systems, the finances, the employees and the office and equipment situation of ADB. Training of personnel and partners will be particularly resource intensive. Furthermore, future results depend on their ability to integrate and consolidate future potential acquisitions of other companies, technologies, products and market channels. To counter balance these effects ADB will continue the development of organizational infrastructure to handle such growth. MANAGEMENT AND KEY PERSONNEL The Company's success depends to a significant extent on the continued active participation of a number of key employees. ADB believes that its success also depends on its continuing ability to attract and retain highly qualified technical, managerial and sales personnel. Competition for such qualified personnel is strong and there can be no assurance that ADB will be successful in attracting and retaining the required number of such personnel. LENGTHY SALES CYCLES The sales cycles of ADB's products is currently quite long. This increases the risk associated with sales activities, and makes the revenue stream of the Company more unpredictable. Sales cycles of 9 -- 12 months are not uncommon. ERRONEOUS SOFTWARE, DEVELOPMENT PROJECTS AND IMPLEMENTATION RISKS As a software vendor, ADB has significant risks associated with developing, improving and maintaining its software products. Development of new features, new technology platforms and bug-fixing can be very time consuming and costly. Also, when a sale is made and an implementation project is underway, ADB normally carries the majority of the risk associated with completing the installation on time and on budget. STRONG COMPETITION ADB is a small market participant offering solutions in competition with some of the largest software companies in the world, with great marketing and product development power. It is thus a great challenge for ADB to achieve visibility in the market and convince prospective clients of ADB's commitment over time. It is also more difficult for ADB to find qualified and dedicated partners for distribution and implementation. SHIFTS IN TECHNOLOGY The information technology industry is characterized by fast development and rapidly changing technologies imposing challenges to all software vendors. Choice of technological solutions and platforms that fail to gain market acceptance are costly and can be detrimental to companies like ADB. 13 14 THE FOREGOING INFORMATION CONCERNING ADB IS DERIVED ENTIRELY FROM PUBLIC FILINGS OF ADB AND DISCLOSURES BY ADB IN CONNECTION WITH THE OFFER, AND ALTHOUGH MANAGEMENT OF THE CORPORATION HAS NO REASON TO BELIEVE TO THE CONTRARY, THE CORPORATION CANNOT WARRANT AND ASSUMES NO RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION OR THAT IT IS FREE FROM MATERIAL REPRESENTATION. BACKGROUND TO THE OFFER As indicated at the Corporation's Annual Meeting of Shareholders held on June 21, 2001, Management and the Board of Directors of Bid.Com have been exploring acquisition opportunities as a means of improving shareholder value. Through internal investigation and research, ADB was identified as one of several possible acquisition candidates in March of 2001, and contact was made with Jan Pedersen, President and CEO of ADB. On July 18, 2001, following extensive discussions between the parties, a non-binding letter of intent (the "LOI") was signed by the parties outlining the desire of both parties to explore a potential acquisition of ADB by Bid.Com. The LOI provided that ADB would not solicit third party offers prior to August 31, 2001 (later extended to September 7, 2001), and would allow Bid.Com to proceed with due diligence with a view to submitting an Offer for the shares of ADB. On September 7, 2001, the Support Agreement was executed, committing the Corporation to launch a bid to acquire the shares of ADB. The bid is subject to several conditions as set out above, including specifically the approval of the Corporation's shareholders. In coming to its conclusion as to the fairness of the proposed price for the Acquisition, Management and the Board of Directors of the Corporation considered numerous factors, including: a. the relative size and financial strength of the two organizations; b. industry-specific trading and acquisition multiples; c. the liquidity and trading history of the shares of both organizations; and d. information relating to the financial condition, results of operations and business of ADB, including synergies between the businesses and technologies of ADB and the Corporation. MANAGEMENT AND THE BOARD OF DIRECTORS OF THE CORPORATION BELIEVE THE PRICE PROPOSED FOR THE ACQUISITION IS FAIR, AND ARE RECOMMENDING THAT SHAREHOLDERS OF THE CORPORATION VOTE IN FAVOUR OF THE ACQUISITION. THE ACQUISITION AND THE POST-ACQUISITION STRUCTURE As stated above, it is anticipated that approximately 22,102,752 common shares of the Corporation will be issued to the shareholders of ADB in connection with the Acquisition, along with warrants to acquire up to 1,215,202 shares and options to acquire up to 1,527,680 shares. ADB has approximately 215 shareholders, of which 5 hold more than 5% of the shares of ADB. To the knowledge of ADB, there are no agreements between any of ADB's shareholders regarding the voting of their shares in ADB or Bid.Com. The 6 largest shareholders of ADB, together holding approximately 50% of the issued shares of ADB, have signed lock-up agreements with Bid.Com agreeing to tender their shares to the Offer, and to the Resale Restrictions, as defined above. Following the completion of the Acquisition, the largest shareholders of the Corporation will be Jan Pedersen, President and CEO of ADB, and Lime Rock Partners, a Connecticut-based venture capital firm (through Riverside Investments). Each will hold approximately 4.5% of the Corporation's post-acquisition shares. As a result of the significant shareholdings by ADB shareholders as a group and in particular Lime Rock, Mr. Pedersen and four other shareholders (Sandnes Investering, Rogaland Investering, AIG Private Bank Ltd., and Karstein Gjersvik -- collectively, the "Four Shareholders"), they have requested board representation. Pursuant to a Board Representation Agreement entered into on September 7, 2001, Bid.Com has agreed that: (a) Lime Rock Partners and Jan Pedersen shall each have the right to nominate a director to the Board of Bid.Com, following completion of the Acquisition; (b) the Four Shareholders shall together have the right to nominate a director at the next Annual General Meeting of shareholders of the Corporation; and (c) Mr. Pedersen shall have observer rights at all meetings of the Board of Directors of Bid.Com. These rights of nomination shall continue for so long as Lime Rock, Jan Pedersen or the Four Shareholders, as the case may be, continue to hold more than 50% of the common shares of the Corporation received by them pursuant to the Acquisition. In the event the Acquisition is completed successfully, the Board of Directors of the Corporation intends to appoint John Reynolds and Martin Bekkeheien (as Mr. Pedersen's nominee) to the Board of Directors of the Corporation. In order to continue to comply with the Canadian residency requirements contained in the Ontario 14 15 Business Corporations Act, and to avoid further increasing the size of the Board, these two directors will take the place of Patrick Bourke, Duncan Copeland and Howard Koenig, who will be resigning following completion of the Acquisition, and the size of the Board will be reduced to nine. Set forth below are the biographies of the new directors and Mr. Pedersen: MARTIN BEKKEHEIEN. Mr. Bekkeheien was elected Chairman of the Board of ADB Systemer ASA in September 2000 and has been a member of the Board of ADB since April 2000. Mr. Bekkeheien is a Senior Vice-President of Statoil, the Norwegian state-owned oil company, presently in charge of leadership development. He has held several director positions within Statoil over the last 20 years. Mr. Bekkeheien is also a director of Allianse Informasjonssystemer AS. He currently holds 61,927 shares, 3,889 warrants and 100,000 options in ADB. JOHN REYNOLDS. Mr. Reynolds was elected to the Board of ADB in March of 2000. Mr. Reynolds is a principal of Lime Rock Partners, a private equity firm focused on small cap opportunities in the energy sector, and one of the two largest shareholders in ADB. Mr. Reynolds was previously a Vice-President in the Research Department at Goldman Sachs & Co., where he was the senior analyst responsible for the oil field services and drilling sector from 1992 to 1998. JAN EDVIN PEDERSEN. Mr. Pedersen has been CEO of ADB since 1988 when he founded the Company. Mr. Pedersen has broad software experience with clients such as Saga Petroleum, Statoil, BP Norway, Elf Petroleum and the Norwegian Petroleum Directorate. He holds a Master of Science degree in Civil Engineering, the technical university in Trondheim, Norway. In addition, Mr. Pedersen will hold an executive position with Bid.Com, assuming the title of President, European Operations. Mr. Pedersen has executed an employment contract with Bid.Com pursuant to which he agrees to assume this role and remain with the Corporation for a minimum period of 2 years. This agreement will continue to pay Mr. Pedersen his current annual salary of NOK 850,000 (approximately Cdn. $148,000) and entitle him to participate in the Corporation's existing Management Incentive Plan. Mr. Pedersen will also be entitled to an annual retention bonus in the amount of Cdn. $100,000 for each year worked under his employment agreement. In the event of termination of employment other than by reason of death, disability or cause prior to the end of the two year term, Mr. Pedersen's base salary level is guaranteed for 12 months following termination. Except as noted above, Management personnel and the Board of Directors of the Corporation will remain unchanged as a result of this transaction. The employees of ADB will be retained under their existing employment arrangements. REASONS FOR RECOMMENDING THE ACQUISITION Management and the Board of Directors believe that the acquisition of ADB will be advantageous to the Corporation in a number of respects, including: 1. ADB's product offerings are highly complementary to those of the Corporation. The lifecycle of an asset can notionally be separated into sourcing, procurement, management and disposition. By combining the product suites of the two companies, the combined entity will have a complete asset lifecycle management solution available for clients, and in particular, a fulsome "procurement" offering which combines sourcing, procurement and asset management. 2. ADB has a strong base of international clients in the oil and gas sector, and a growing list of clients in the public sector, all of whom Management believes are ideally suited to Bid.Com's sourcing and disposition applications. A key element of the strategy as a combined entity will be to focus on these sectors in particular. 3. ADB's revenues for Q1 and Q2 2001 were similar to the Corporation's. This acquisition should as a result add meaningfully to the Corporation's revenue base. In addition, operational synergies are expected as a result of over-lapping capacity in the sales, technology and administrative groups of the two companies. 4. ADB has been recognized by the Gartner Group as a Tier 1 EAM software vendor. According to the Gartner Group, the market for asset management technology is expected to be $1.3 billion by 2002. MANAGEMENT AND THE BOARD OF DIRECTORS OF THE CORPORATION BELIEVE THE PRICE PROPOSED FOR THE ACQUISITION IS FAIR, AND ARE RECOMMENDING THAT SHAREHOLDERS OF THE CORPORATION VOTE IN FAVOUR OF THE ACQUISITION. 15 16 VOTING INTENTIONS IT IS INTENDED THAT THE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY WILL EXERCISE THE VOTING RIGHTS ATTACHING TO THE SHARES IN RESPECT OF WHICH THEY ARE APPOINTED IN FAVOUR OF APPROVING THE ACQUISITION OF ADB IN THE ABSENCE OF CONTRARY INSTRUCTIONS. AMENDMENT OF ARTICLES -- SHARE CONSOLIDATION Shareholders are being asked to consider and if deemed advisable, to pass a special resolution in the form set out below, authorizing an amendment to the Articles of Amalgamation of the Corporation to consolidate the 54,638,468 common shares of the Corporation presently issued and outstanding and all common shares issued in connection with the acquisition of ADB Systemer ASA on the basis of 1 consolidated common share for each 2 common shares presently outstanding. A special resolution is a resolution passed by a majority of two-thirds of the votes cast on such resolution at a duly constituted meeting of shareholders. After careful consideration, Management of the Corporation has concluded that this consolidation is in the best interests of the Corporation for several reasons: 1. The total number of issued shares of the Corporation after giving effect to the acquisition of ADB (if approved) will be approximately 76,741,220 (86,087,761 on a fully diluted basis). After giving effect to the proposed share consolidation the total number of issued shares of the Corporation will be reduced to approximately 38,370,610 common shares (43,043,880 on a fully diluted basis) which Management considers to be a more manageable number for the purposes of future acquisitions and financings. 2. Management understands that upon implementation of the consolidation, the market price for the Corporation's shares should adjust to reflect the increased equity participation represented by each consolidated share. It is anticipated that such adjusted price, if sustained, may improve shareholder liquidity by allowing the Corporation's shares to receive more favourable margin treatment by brokers and investment dealers. The price of the consolidated shares of the Corporation, however, will be subject to market forces which may largely be outside the control of the Corporation or its Management. Accordingly there can be no assurance that such adjusted market price, if realized, will be sustained. It should be noted that, pursuant to the rules of the Nasdaq National Stock Market, shares of the Corporation are subject to a minimum US $1.00 bid price maintenance requirement in order to maintain its listing. On June 19, 2001, the Corporation was notified by Nasdaq Staff that the Corporation's common shares would be de-listed. In accordance with Nasdaq procedures, the Corporation appealed this action, and is awaiting the determination of a Nasdaq Listing Qualifications Panel. Management recognizes that the proposed consolidation by itself may not be sufficient to bring the Corporation's shares into compliance with the minimum bid price requirements of the Nasdaq National Stock Market. There is a significant risk that, notwithstanding the share consolidation contemplated, the Corporation's shares will be de-listed from the Nasdaq Market. It is Management's belief that the proposed consolidation is nonetheless appropriate for the reasons enumerated above. Based upon the foregoing, Management of the Corporation and the Board of Directors recommend that shareholders vote in favour of such share consolidation. IT IS INTENDED THAT THE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY WILL EXERCISE THE VOTING RIGHTS ATTACHING TO THE SHARES IN RESPECT OF WHICH THEY ARE APPOINTED IN FAVOUR OF PASSING A SPECIAL RESOLUTION AUTHORIZING SUCH SHARE CONSOLIDATION IN THE ABSENCE OF CONTRARY INSTRUCTIONS. The text of the resolution is set out in Appendix I to the accompanying Notice of Meeting. AMENDMENT OF ARTICLES -- CHANGE OF NAME Shareholders are being asked to consider and, if deemed advisable, to pass a special resolution in the form set out below authorizing a change of name of the Corporation from Bid.Com International Inc. to ADB Systems International Inc. or such other name as may be approved by the Board of Directors of the Corporation. A special resolution is a resolution passed by a majority of two-thirds of the votes cast on such resolution and at a duly constituted meeting of shareholders of the Corporation. During the year 2000, the Corporation completed the transition of its business from a business-to-consumer retailer to a business to business application service provider offering dynamic pricing solutions. During the latter part of 2000 and the first two quarters of 2001 the market environment for business-to-consumer Internet businesses 16 17 commonly identified with a consumer-oriented "dot.com" brand or corporate identity deteriorated dramatically. As a result of our evolving business model and market concerns regarding "dot.com" branding, Management of the Corporation considers it appropriate to change the corporate name of the Corporation to clearly indicate to the investing public and prospective customers the departure of the Corporation from the so called "dot.com" consumer-oriented business community. The acquisition of ADB Systemer ASA presents a good opportunity to proceed with a change of name. ADB has developed significant goodwill, particularly in the EAM and oil and gas sectors, which we believe has significant value. In addition, by adopting the ADB name and branding, we will avoid the significant expense associated with typical re-brandings, a fact that is particularly important in light of our focus on cost containment. Accordingly, Management of the Corporation and the Board of Directors recommend that shareholders vote in favour of passing a special resolution implementing such change of name. IT IS INTENDED THAT THE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY WILL EXERCISE THE VOTING RIGHTS ATTACHING TO THE SHARES IN RESPECT OF WHICH THEY ARE APPOINTED IN FAVOUR OF PASSING A SPECIAL RESOLUTION AUTHORIZING THE CHANGE OF NAME IN THE ABSENCE OF CONTRARY INSTRUCTIONS. The text of the resolution is set out in Appendix II to the accompanying Notice of Meeting. AMENDMENT TO THE 1999 STOCK OPTION PLAN The Corporation adopted a stock option plan (the "Plan") as an incentive for directors, officers and key employees whereby non-assignable options may be granted by the Board, enabling them to purchase common shares of the Corporation for a term not exceeding 10 years at an exercise price not less than the market price for common shares of the Corporation at the time of the grant, such options to be exercisable within the term as set out by the Board for said options. The Plan which was approved by shareholders on May 15, 1996, as amended, currently provides that options may not be granted to purchase more than 8,700,000 common shares. The granting is subject to the further conditions that: (i) not more than 10% of the number of shares issued and outstanding from time to time (the "Outstanding Issue") may be reserved for the granting of options to insiders; (ii) not more than 10% of the Outstanding Issue may be reserved for the granting of options to insiders within a one year period or issued to insiders within a one-year period; and (iii) not more than 5% of the Outstanding Issue may be issued to any one insider in a one-year period. The Corporation has granted options to purchase a total of 7,965,597 common shares under the Plan, of which 4,086,234 are outstanding and 2,313,150 have been exercised. The exercise price of the outstanding options range from $0.70 to $11.50 and such options expire between January 2, 2002 and December 11, 2004. An aggregate of 2,657,000 options are held by officers and directors of the Corporation as a group. The Acquisition of ADB will require the incorporation of ADB's existing stock option plan within the Plan. Pursuant to the Acquisition, this would result in an additional 1,527,680 options being issued. In addition, ADB's employees will participate in the Plan on an ongoing basis. The TSE and NASDAQ rules require that shareholder approval be obtained in order to increase the maximum number of common shares reserved for issuance under the Plan. Accordingly, the shareholders are being asked to consider and, if deemed advisable, to pass, with or without variation, an ordinary resolution, the text of which is attached as Appendix III to the Notice calling the Meeting, authorizing the maximum number of common shares to be granted under the Plan to be increased to 10,700,000 common shares of the Corporation (pre-consolidation), being 14% of the issued capital of the Corporation (post-acquisition). THE PERSON DESIGNATED IN THE ENCLOSED FORM OF PROXY INTENDS TO VOTE FOR THE AMENDMENT TO THE PLAN, UNLESS THE SHAREHOLDER SPECIFIES TO VOTE AGAINST SUCH AMENDMENT. 17 18 PARTICULARS OF OTHER MATTERS TO BE ACTED ON Management of the Corporation knows of no matters to come before the Meeting other than the matters referred to in the Notice of Meeting. The Board of Directors of the Corporation has approved the contents of this Information Circular on or about August 30, 2001 and the mailing of same to shareholders of record on September 11, 2001. DATED at Mississauga, Ontario this 7th day of September, 2001. BY ORDER OF THE BOARD John A. Mackie John A. Mackie Vice President, General Counsel and Corporate Secretary 18 19 SCHEDULE A CONSOLIDATED ("GROUP") AND NON CONSOLIDATED ("PARENT") FINANCIAL STATEMENTS OF ADB SYSTEMER ASA FOR THE FINANCIAL YEARS ENDED DECEMBER 31, 2000 AND 1999 (ALL FIGURES IN NORWEGIAN KRONER) ADB SYSTEMER ASA ANNUAL REPORT 2000 NATURE OF OPERATION ADB Systemer ASA ("ADB") is a leading international software vendor focused on integrated eProcurement and Enterprise Asset Management software solutions developed specifically for the energy industry and other asset intensive industries, as well as public sector. ADB's flagship is WorkMate, one of the most innovative, integrated asset management systems on the market. Comprising unique functionality for procurement, materials management, technical information, maintenance and management information, WorkMate has a proven track record amongst operators and service companies in the North Sea area, as well as in the US and Canada. The latest addition to the portfolio is ProcureMate, which is a web-based procurement system that bridges the traditional gap between an in-house EAM/ERP system (such as WorkMate), and external e-catalogues or marketplaces. Besides the headquarters in Stavanger, Norway, ADB maintains offices in Houston and London. SHORT SUMMARY OF THE YEAR 2000 The millennium and a slow market marked the beginning of year 2000. ADB acquired on January 1st 2000 the consultant department of Bonner & Moore Associates Inc. with 6 people in Houston, Texas, as part of the expansion strategy in the USA. In April the Company raised 24 MNOK in equity where the main investor was Cognition Ventures in London, which invested 8 MNOK at NOK 40 per share. There was also issued an option for 1.2 million shares to Cognition, with expiry in November 2000, aligned with the company's financial plan. After the new shares issue in April the subsidiary in UK was established, and the office opened in Guildford, London in August. At the same time ADB achieved its first contract in UK. Concurrently with investments in marketing and branding in the USA, UK and Norway, ADB continued the investments in further development of the products. The Board of ADB changed during 2000 with the election of Martin Bekkeheien as new board member in May 2000 and as Chairman of the board when Karstein Gjersvik departed in September 2000. He was replaced on the Board by Ole Ertvaag. During the autumn 2000 it became clear that Cognition would not exercise its option, and ADB engaged a very reputable broker company to raise the necessary capital. Late fall 2000 became the worst market in years for IT-Stocks, and it was impossible for ADB to get attention in The Market. In light of the development in the financial markets and The Company's financial situation, the Board determined In December to start a restructuring-process to reduce The Company's expenses. This process is now showing results. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-1 20 COMMENTS TO THE ANNUAL ACCOUNTS In 2000 ADB group achieved revenues of NOK 23.6 million. This is an increase of 5.5 MNOK or 30.3% increase from the year before. The gross revenues were of 17.6 MNOK in Norway, 6.3 MNOK in the USA and 1.1 MNOK in the UK. ADB Group's operating result was -30.7 MNOK, 19.5 MNOK lower than in 1999. The ordinary result for 2000 was -23.5 MNOK. The result contains 4.4 MNOK in restructuring charges. ADB has in 2000 made strong efforts in positioning and marketing the main products WorkMate and ProcureMate internationally. Some important milestones were achieved like the first contracts in UK and Canada, but the result of this effort is considerably weaker than the assumed plans and expectations. The Board is not satisfied with the year's result. The Company's equity per 31.12.2000 is weak due to the year's result. The book value of equity for ADB group was 9.5 MNOK compared to 9.6 MNOK at the beginning of the year. The Company raised 24 MNOK in new equity in 2000. The funds have been used to build up the marketing apparatus in USA and UK and to invests in product development, which has all been directly expensed. The Company's book value of equity is zero, if one ignores the deferred tax asset. ADB has to raise new capital to continue operations. The Company's largest shareholders have made written guarantees to inject a minimum of 7 MNOK in new capital early 2001. The Board's opinion is that there will be enough capital to continue operations in 2001 due to the already committed new equity and the ongoing restructuring of the Company. The Board has thus assumed continued operation as a foundation for the annual accounts. ADB SYSTEMER ASA Year 2000 has been a tough year for ADB as for the rest of the software business. Many software vendors have struggled with the millennium effect. For ADB's products the first half-year of 2000 saw a very weak market. The second half-year offered new and important client-contracts for the Company, without a corresponding growth in revenues. ADB gained one of its most important and largest contracts ever in an open tender competing with more than 20 other suppliers. The contract covered a procurement and materials management system to Hordaland Fylkeskommune. ADB Norway reached revenues of 17.6 MNOK, the same as for 1999. During 2000 ADB used 35,500 hours on new and sustaining development of its own software, compared to 31,000 hours in 1999. This amounts to an investment in product development of approximately 15 MNOK, which have all been directly expensed in 2000. The level is high compared to the Company's revenues. The investments are made to compete in a market where a small company like ADB has to deliver leading solutions in order to achieve success. The Company had a considerably higher cost level in 2000 than the year before, mostly because of an aggressive growth strategy with comprehensive investments in product development and operations in USA and UK. As part of the growth strategy the organisation was expanded within most activity areas. The operating loss was -29.6 NOK and the ordinary result was -20.7 MNOK, compared with -10.1 and -6.9 MNOK respectively in 1999. During the fall the strategy and plans where worked trough and revised, and a comprehensive restructuring of the Company was started and carried out during December. Restructuring charges of 10.5 MNOK were taken. The accrual shall primarily cover the cost of closing the office in the USA, where a loan of 8.4 MNOK will be written off in addition to the cost of winding up of 0.5 MNOK. In addition the Tonsberg office with 6 people was decided shut down, and this will cost about 1.2 MNOK. The Company has also taken charges of 0.4 MNOK to reduce the personnel at the head office with 4-5 people. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-2 21 ADB SYSTEMS LTD In August the ADB office in London was opened, and the subsidiary ADB Systems Ltd was established. The Company won its first and very important contract with a process installation plant managed by the worldwide engineering and services-company Amec and chemicals-giant Union Carbide. Amec and ADB are also entering into a global collaboration-agreement regarding sales and distribution of ADB's software. ADB achieved revenues of 1.1 MNOK in UK in 2000 and an operation loss of 3 MNOK, mainly due to high start-up costs. ADB SYSTEMS INC The subsidiary ADB Systems Inc. achieved revenues of 6.2 MNOK, an operating loss of -4.8 MNOK and an ordinary result of -5.2 MNOK. This significant loss is primarily due to the lack of new sales. ADB has as many other foreign companies experienced that it is very demanding to establish a profitable operation in the American market. As part of the restructuring of the Company ADB has decided to close the office and terminate it's financial exposure in the USA. The present marketing operation will be continued through a distribution agreement with ADB's partner Production Access, which also takes over the majority of ADB's employees in the USA. ORGANISATION AND PERSONNEL The ADB group increased the number of personnel in 2000 from 42 at the beginning of the year to 55 at the end. The restructuring process is expected to reduce the personnel by 19 to 36 employees. WORKING ENVIRONMENT 147 days were lost on account of sickness in 2000. This corresponds to around 1.4% of total working time in the Company. No serious work-related accidents or injuries occurred or were reported during the year. The Board believes that the work environment is satisfactory. However, the need to improve working conditions is continuously assessed. EXTERNAL ENVIRONMENT ADB's activities do not affect the external environment. OUTLOOK Important conditions and expectations set forth for ADB's growth strategy and internationalisation effort in 2000 did not work out as planned or were underestimated: - - the market for the Company's products and services developed weaker than expected - - at the same time the cost in building up the sales operations in UK and US became higher than expected - - the capital market for software shares developed completely different than expected On this basis it became clear for the Board that the Company's financial basis was insufficient to carry out the growth strategy which was the foundation for the capital-injection in April 2000. The re-evaluation of conditions, strategy and plans lead to a relative comprehensive restructuring -- which we now can see the effects of, with a much lower cost-basis for one. The Board's evaluation is that ADB's main products are technologically advanced and competitive with a considerable value for the users, enhancing their business effectiveness. The Board is also of the opinion that the market potential for the Company's products is large, particularly with success internationally. The critical factor for ADB is foremost related to sales and marketing. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-3 22 After the Boards opinion ADB has a competent and good organisation with high technological and business process know-how related to the main products WorkMate and ProcureMate. At the same time, the employees have shown great sympathy for and responded positively to the ongoing restructuring process. ADB's main shareholders have shown through guarantees for new equity that despite very weak results the latest two years, they still have faith and are willing to support the Company. The Boards summarised opinion is that ADB can be further developed to become a profitable and prosperous company for the owners, partners and employees. In the first phase of the turn-around operation, the Board has focused on reducing and controlling the cost in the Company without loss of key personnel and expertise. The main focus going forward will be on revenues, i.e. sales and marketing. In Norway ADB has strengthened the sales operations. In the UK an organisation and a distribution is maintained, in the USA the same personnel are still selling ADB's products under a new company name; Production Access, and in Canada ADB has the distribution agreement with Explorer Software Solutions. MARKET OPPORTUNITIES The market for ADB's solutions is growing. It is expected a considerably higher growth within procurement, materials management and e-commerce than for example traditional ERP software. Norway's sales-team has set focus on oil & gas, public sector and process industry. Within the oil & gas the activity is high, and ADB is expecting several new customers within the service-sector. The public sector has high focus on procurement solutions and ADB is positioned with good references. In the UK, there is great expectation to the collaboration agreement with Amec. During the spring Amec will have a big marketing campaign within the company and towards its customers. Several names are already on the table, and ADB will focus very hard on these opportunities. ADB's distributor in Canada, Explorer Software Solutions, achieved its first two customers on ADB's WorkMate(R) solution in 2000. Explorer is a recognised supplier in Canada, and the references will enable more sales in 2001. If the distributions-agreement with Production Access materialises as expected, ADB's products will be integrated with Production Access' own products, and appear more American and be more competitive. The Board expects a positive development of sales, and that Production Access and ADB will be able to capitalise on the market investments made the last two years. ADB is sharpening the Company's profile as a technology provider. So far ADB has conducted the marketing, sale and implementation of the Company's products. This requires large resources and involves relatively high risk. To reach a broader market than ADB itself is able to reach, ADB will work to find strong partners who have a broad distribution network. ADB will in this process be flexible with respect to what kind of partnerships and strategic solutions that will best serve the interests of the Company and its shareholders. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-4 23 RESULT FOR THE YEAR AND ACCOUNTING OPERATIONS It is proposed that ADB Systemer ASA's deficit for the year, amounting to NOK -20,727,645, be treated as follows: Transfer from share premium reserve NOK 20,727,645,- Total equity capital as at 31.12.2000 NOK 12,984,162,- Stavanger, March 1 2001 The Board of Directors, ADB Systemer ASA - ----------------- --------------- ------------ ------------ --------------- Martin Bekkeheien Finn Kristensen Ole Ertvaag John Jan E. Pedersen Board Member Board Member Board Member Reynolds Board Member Board Member and CEO
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-5 24 [KPMG LOGO] KPMG AS P.O. Box 57 Petroleumsveien 6 Telephone +47 51 57 82 00 N-4064 Stavanger N-4033 Stavanger Fax +47 51 57 12 29 Enterprise NO 935 174 627
To the Annual Shareholder's Meeting of ADB SYSTEMER ASA AUDITORS REPORT FOR 2000 RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS We have audited the annual financial statements of ABD SYSTEMER ASA as of 31 December 2000, showing a loss of NOK 20 727 645 for the parent company and a loss of NOK 23 469 590 for the group. We have also audited the information in the Director's report concerning the financial statements, the going concern assumption and the proposal for the coverage of the loss. The financial statements compromise the balance sheet, the statements of income and cash flows, the accompanying notes and the group accounts. These financial statements and the Director's report are the responsibility of the Company's Board of Directors and Managing Director. Our responsibility is to express an opinion on these financial statements and other information according to the requirements of the Norwegian Act on Auditing and Auditors. BASIS OF OPINION We conducted our audit in accordance with the Norwegian Act on Auditing and Auditors and auditing standards and practices generally accepted in Norway. Those standards and practices require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure in the financial statements. An audit also includes assessing the accounting principles used and significant accounting estimates made by management, as well as evaluating the overall financial statement presentation. To the extend required by law and auditing standards and practices an audit also comprises a review of the management of the Company's financial affairs and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion. OPINION In our opinion: - - the financial statements have been prepared in accordance with law and regulations and present the financial position of the Company and of the Group as of December 31, 2000, and the results of its operations and its cash flows for the year then ended, in accordance with accounting standards, principles and practices generally accepted in Norway - - the Company's management has fulfilled its obligations in respect of registration and documentation of accounting information as required by law and accounting standards, principles and practices generally accepted in Norway - - the information in the Directors' report concerning the financial statements, the going concern assumption, and the proposal for coverage of the loss is consistent with the financial statements and comply with the law and regulations. Stavenger, 20 February 2001 KPMG AS State Authorised Public Accountant Note: This translation of the Norwegian statutory Audit Report has been prepared for the information purposes only These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-6 25 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 2000 PROFIT AND LOSS ACCOUNT (IN NORWEGIAN KRONER)
GROUP PARENT ------------------------- ------------------------- NOTE 2000 1999 2000 1999 ---- ----------- ----------- ----------- ----------- Sales/revenues........................... 1, 2 23,571,436 18,079,910 17,643,429 17,557,275 TOTAL OPERATING INCOME................... 23,571,436 18,079,910 17,643,429 17,557,275 Materials................................ 1,373,276 293,620 285,887 96,437 Payroll and related cost................. 3 29,936,322 16,911,434 22,437,609 16,410,589 Depreciation............................. 5 1,897,884 1,589,009 1,613,085 1,574,079 Loss on receivables...................... 79,360 79,360 Other operating expenses................. 5 16,620,816 10,449,721 12,297,262 9,529,566 Restructuring/ wind up cost.............. 4,361,526 10,487,870 ----------- ----------- ----------- ----------- OPERATING PROFIT (LOSS).................. (30,697,749) (11,163,874) (29,557,644) (10,053,396) Interest received from group companies... 563,420 81,544 Other financial income................... 818,121 368,083 960,902 449,063 Other financial expenses................. (1,173,034) (41,153) (705,807) (43,145) ----------- ----------- ----------- ----------- PROFIT (LOSS) BEFORE TAXES AND EXTRAORDINARY ITEMS.................... (31,052,662) (10,836,944) (28,739,129) (9,565,934) Tax on ordinary results.................. 6 (7,583,072) (3,089,458) (8,011,483) (2,661,047) ----------- ----------- ----------- ----------- PROFIT (LOSS) FOR THE YEAR............... (23,469,590) (7,747,486) (20,727,645) (6,904,887) ----------- ----------- ----------- ----------- Profit (loss) for the year is distributed as follows: Other equity............................. (3,684,715) From share premium reserve............... (20,727,645) (3,220,172) ----------- ----------- TOTAL DISTRIBUTED........................ (20,727,645) (6,904,887) =========== ===========
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-7 26 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 2000 CONSOLIDATED BALANCE SHEET (IN NORWEGIAN KRONER)
GROUP PARENT ----------------------- ----------------------- NOTE 2000 1999 2000 1999 ---- ---------- ---------- ---------- ---------- ASSETS FIXED ASSETS Intangible fixed assets Deferred taxes............................. 6 10,628,524 3,045,452 10,628,524 2,617,041 Goodwill................................... 5 1,711,138 190,828 ---------- ---------- ---------- ---------- TOTAL INTANGIBLE FIXED ASSETS.............. 10,628,524 4,756,590 10,628,524 2,807,869 Tangible fixed assets Machinery and equipment.................... 5 2,689,151 2,651,095 1,582,799 2,443,001 Buildings.................................. 5 943,738 943,738 943,738 943,738 ---------- ---------- ---------- ---------- TOTAL TANGIBLE FIXED ASSETS................ 3,632,889 3,594,833 2,526,537 3,386,739 FINANCIAL FIXED ASSETS Investments in subsidiaries................ 4 86,916 Investment in shares....................... 294,118 294,118 Loans to group companies................... 5,177,830 1,338,440 Other receivables.......................... 42,075 ---------- ---------- ---------- ---------- TOTAL FINANCIAL FIXED ASSETS............... 42,075 294,118 5,177,830 1,719,474 ---------- ---------- ---------- ---------- TOTAL FIXED ASSETS......................... 14,303,488 8,645,541 18,332,891 7,914,082 CURRENT ASSETS RECEIVABLES Accounts receivable........................ 5,885,866 3,089,485 4,271,983 2,249,864 Receivables from group companies........... 1,023,597 Other receivables.......................... 189,207 284,819 157,087 148,357 ---------- ---------- ---------- ---------- TOTAL RECEIVABLES.......................... 6,075,073 3,374,304 4,429,070 3,421,818 Bank deposits, cash in hand, etc........... 10 10,712,863 3,649,243 9,895,238 3,085,216 ---------- ---------- ---------- ---------- TOTAL CURRENT ASSETS....................... 16,787,936 7,023,547 14,324,308 6,507,034 ---------- ---------- ---------- ---------- TOTAL ASSETS............................... 31,091,424 15,669,088 32,657,199 14,421,116 ========== ========== ========== ==========
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-8 27 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 2000 CONSOLIDATED BALANCE SHEET (IN NORWEGIAN KRONER)
GROUP PARENT ----------------------- ----------------------- NOTE 2000 1999 2000 1999 ---- ---------- ---------- ---------- ---------- EQUITY AND LIABILITIES EQUITY PAID-IN CAPITAL Share capital.................................. 7 5,232,000 4,627,200 5,232,000 4,627,200 Share premium reserve.......................... 7 4,268,969 4,958,789 7,752,162 5,756,008 ---------- ---------- ---------- ---------- TOTAL EQUITY................................... 9,500,969 9,585,989 12,984,162 10,383,208 LIABILITIES CURRENT LIABILITIES Liabilities to financial institutions.......... 10,000,000 10,000,000 Accounts payable............................... 1,913,039 455,402 1,877,210 455,402 Social security, VAT and other................. 2,377,684 1,575,454 2,377,684 1,524,146 Advances from customers........................ 937,864 699,144 937,864 699,144 Holiday pay etc................................ 1,689,234 1,254,136 1,689,234 1,254,136 Other short-term liabilities................... 4,672,634 2,098,962 2,791,046 105,079 ---------- ---------- ---------- ---------- TOTAL CURRENT LIABILITIES...................... 21,590,455 6,083,098 19,673,037 4,037,908 ---------- ---------- ---------- ---------- TOTAL LIABILITIES.............................. 21,590,455 6,083,098 19,673,037 4,037,908 ---------- ---------- ---------- ---------- TOTAL EQUITY AND LIABILITIES................... 31,091,424 15,669,088 32,657,199 14,421,116 ---------- ---------- ---------- ----------
Stavenger, 20 February 2001 Martin Bekkeheien Finn Kristensen Ole Ertvaag Chairman of the board John Raynolds Jan E. Pedersen Managing director and member of the board
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-9 28 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 2000 CASH FLOW STATEMENT (IN NORWEGIAN KRONER)
GROUP PARENT ------------------------- ------------------------- NOTE 2000 1999 2000 1999 ---- ----------- ----------- ----------- ----------- CASH FLOW FROM OPERATING ACTIVITIES Received payments from sales................. 21,013,774 21,124,469 15,780,671 20,417,866 Payments for purchased goods and services.... (16,294,171) (9,365,567) (10,892,126) (10,105,651) Payments for salaries, soc. security tax and tax deducted............................... (28,698,995) (17,411,492) (21,148,974) (16,961,955) Received interest............................ 818,121 368,083 1,524,322 530,607 Interest payments............................ (878,916) (41,153) (324,773) (43,145) Paid tax and government taxes................ (870,442) (870,442) Payments for investments in other companies.................................. (148,894) (235,810) ----------- ----------- ----------- ----------- 1) NET CASH FLOW FROM OPERATING ACTIVITIES... (24,040,187) (6,344,996) (15,060,880) (7,268,530) CASH FLOW FROM INVESTING ACTIVITIES Increased loans to subsidiaries.............. (10,895,642) (1,006,196) Changes in other receivables................. 332,244 Investments in tangible fixed assets......... (2,120,710) (3,023,273) (562,055) (1,279,939) ----------- ----------- ----------- ----------- NET CASH FLOW FROM INVESTING ACTIVITIES...... (2,120,710) (2,691,029) (11,457,697) (2,286,135) Cash flow from financing activities Increase in equity........................... 23,328,599 4,271,450 23,328,599 4,271,450 Increase in debt............................. 10,000,000 10,000,000 Currency exchange differences................ (104,074) 45,379 ----------- ----------- ----------- ----------- NET CASH FLOW FROM FINANCING ACTIVITIES...... 33,224,525 4,316,829 33,328,599 4,271,450 Net change in cash and cash equivalents...... 7,063,628 (4,719,196) 6,810,022 (5,283,215) Cash and cash equivalents at the beginning of period..................................... 3,649,235 8,368,431 3,085,216 8,368,431 ----------- ----------- ----------- ----------- CASH AND CASH EQUIVALENTS AT THE END OF PERIOD..................................... 10,712,863 3,649,235 9,895,238 3,085,216 1) RECONCILIATION: Profit/(loss) before taxes................... (31,052,662) (10,836,944) (28,739,128) (9,565,934) Taxes paid................................... 0 (870,442) 0 (870,442) Depreciation................................. 1,897,884 1,589,009 1,613,085 1,574,079 Write downs of receivables, shares and tangible assets............................ 2,247,622 8,460,034 Changes in accounts receivables.............. (2,717,021) 3,169,913 (2,022,119) 2,985,937 Changes in accounts payables................. 1,457,637 (378,463) 1,421,808 (378,463) Amounts classified as investing-/financing activities................................. (148,894) 0 (235,810) Changes in other balance sheet items......... 4,126,353 1,130,825 4,205,440 (777,897) ----------- ----------- ----------- ----------- NET CASH FLOW FROM OPERATING ACTIVITIES...... (24,040,187) (6,344,996) (15,060,880) (7,268,530)
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-10 29 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 2000 (IN NORWEGIAN KRONER) NOTE 1 ACCOUNTING PRINCIPLES The financial statements, which have been prepared by the company's boards of directors and management, should be read in conjunction with the report of the board of directors and the audit report. The financial statements, which have been presented in compliance with the Norwegian Companies Act, the Norwegian Accounting Act and Norwegian generally accepted accounting principles in effect as of 31 December 2000, consist of the profit and loss account, balance sheet, cash flow statement and notes to the accounts. ACCOUNTING PRINCIPLES. The financial statements have been prepared based on the fundamental principles governing historical cost accounting, comparability, continued operations, congruence and caution. Transactions are recorded at their value at the time of the transaction. Income is recognized at the time of delivery of goods or services sold. Costs are expensed in the same period as the income to which they relate is recognized. When applying the basic accounting principles and presentation of transactions and other issues, a "substance over form" view is taken. Contingent losses which are probable and quantifiable are taken to cost. The different accounting principles are further commented on below. REVENUE RECOGNITION/COST RECOGNITION (MATCHING) Revenue is recognised when it is earned. Usually this is at the time of the transaction and the revenue recognition follows the transaction principle. Costs are recognised in accordance with the matching principle. Costs accrued to create income are matched with the income. Costs that can not be directly related to income are expensed as incurred. ASSETS/LIABILITIES Assets/liabilities linked to the operating cycle as well as receivables/liabilities which are due within one year are classified as current assets/liabilities. Current assets/current liabilities are valued at the lower/higher value of cost and net realizable value. Net realizable value is defined as expected sales price less expected cost of sale. Other assets are classified as fixed assets. Fixed assets are entered in the accounts at original cost, with deductions for accumulated depreciation. If the fair value of a fixed asset is lower than book value, and the decline in value is not temporary, the fixed asset will be written down to fair value. Similar rules normally apply for liabilities. FIXED ASSETS Fixed assets are entered in the accounts at original cost, with deductions for accumulated depreciation. Based on the acquisition cost, straight line depreciation is applied over the economic life of the fixed assets. RECEIVABLES Receivables are accounted for at face value with deductions for expected loss. FOREIGN CURRENCIES Receivables and liabilities in foreign currencies are valued at the exchange rate as at the balance sheet date. DEFERRED TAX ASSET In compliance with the principles in the new accounting act, the company has entered deferred tax asset into the accounts. (ref. note 6) Deferred tax is calculated based on temporary differences between book values and tax basis for These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-11 30 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 2000 -- (CONTINUED) (IN NORWEGIAN KRONER) assets and liabilities at year end. For the purposes of calculating deferred tax, nominal tax rates are used. Taxable and deductible temporary differences are offset to the extent they reverse within the same time-frame. Temporary differences that will constitute a future tax deduction give rise to a deferred tax asset. Change in deferred tax liability and deferred tax asset, together with taxes payable for the fiscal year adjusted for errors in previous years tax calculations constitutes taxes for the year. Deferred tax assets is not included in the consolidated balance sheet for loss carried forward from the subsidiaries. RESEARCH AND DEVELOPMENT COST The company is expensing all cost related to research and development. The report of the board of directors have more information. NOTE 2 SEGMENT INFORMATION The company income is related to markets in Norway, US, UK and Canada. In these markets, the company operates within the following market segments; Oil & Gas, public sector and the process industry. Their income is generated from products as WorkMate and Procuremate and services related to these products. The company has also provided development services for their clients. The report of the board of directors have more information. NOTE 3 SALARIES / NUMBER OF EMPLOYEES / BENEFITS PAYROLL AND RELATED COST
PARENT GROUP ----------------------- ----------------------- 2000 1999 2000 1999 ---------- ---------- ---------- ---------- Payroll.......................................... 18,310,436 13,542,670 25,636,347 14,043,515 Social security costs............................ 2,626,340 1,978,259 2,626,340 1,978,259 Other employee related costs..................... 1,500,833 889,660 1,673,634 889,660 ---------- ---------- ---------- ---------- Payroll and related costs........................ 22,437,609 16,410,589 29,936,322 16,911,434 ========== ========== ========== ==========
Average number of employees in the group in 2000.........................49 The company does not have any pension schemes. BENEFITS (NORWEGIAN KRONER)
MANAGING DIRECTOR BOARD OF DIRECTORS ----------------- ------------------ Salary...................................................... 805,124 0 Other benefits.............................................. 83,627
The Managing Director has an option to buy 38 000 shares in the company. Chairman of the board and some members of the board of Directors have an option to buy shares in the company. Ref. note 7. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-12 31 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 2000 -- (CONTINUED) (IN NORWEGIAN KRONER) AUDIT The audit fee for 2000 for the parent company was 75 000 NOK. The fees for other services provided by the auditor was 151 333 NOK. NOTE 4 SUBSIDIARY
COMPANY ------------------------------------ ADB SYSTEMS INC. ADB SYSTEMS LTD. ---------------- ---------------- FORMAL INFORMATION Time of acquisition......................................... October 1998 July 2000 Business office............................................. Houston, USA Guildford, UK Ownership share............................................. 100% 100% Voting share................................................ 100% 100%
The parent company's shares in ADB Systems Inc. are written down to NOK 0 due to the board of directors decision to close down the subsidiary. NOTE 5 TANGIBLE FIXED ASSETS AND INTANGIBLE ASSETS -- PARENT COMPANY
31.12.2000 ---------------------------------------------- MACHINERY, PLANT AND BUILDINGS EQUIPMENT GOODWILL AND ART TOTAL ---------- --------- --------- --------- Cost as at 1.1......................................... 5,016,355 1,230,000 943,738 7,190,093 + additions during the year............................ 562,055 562,055 --------- --------- ------- --------- ACQUISITION COST AS OF 31.12........................... 5,578,410 1,230,000 943,738 7,752,148 Accumulated depreciation as of 01.01................... 2,573,354 1,039,167 3,612,521 + depreciation for the year............................ 1,422,257 190,833 1,613,090 Accumulated depreciation as at 31.12................... 3,995,611 1,230,000 5,225,611 --------- --------- ------- --------- NET BOOK VALUE AS OF 31.12............................. 1,582,799 0 943,738 2,526,537 Depreciation plan...................................... 20-30% 33%
The company has leases in the amount of NOK 2 145 619. The building rent in Sola amounts to NOK 1 122 999,-and in Tonsberg amounts to NOK 249 934. The rest of the lease amount is related to computer equipment. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-13 32 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 2000 -- (CONTINUED) (IN NORWEGIAN KRONER) TANGIBLE FIXED ASSETS AND INTANGIBLE ASSETS -- GROUP
MACHINERY, PLANT AND BUILDINGS EQUIPMENT GOODWILL AND ART TOTAL ---------- --------- --------- ---------- Cost as at 1.1........................................ 5,227,819 2,819,456 943,738 8,991,013 + additions during the year........................... 2,120,710 2,120,710 --------- --------- ------- ---------- ACQUISITION COST AS OF 31.12.......................... 7,348,529 2,819,456 943,738 11,111,723 Accumulated depreciation as of 01.01.................. 2,588,279 1,039,167 3,627,446 + depreciation for the year........................... 2,071,104 1,780,284 3,851,388* Accumulated depreciation as at 31.12.................. 4,659,383 2,819,456 7,478,834 --------- --------- ------- ---------- NET BOOK VALUE AS OF 31.12............................ 2,689,146 0 943,738 3,632,889 --------- --------- ------- ---------- Depreciation plan..................................... 20-30% 33%
- --------------- * Goodwill in ADB Systems Inc. is written down as a result of the decision to close down the subsidiary. In addition, it is carried out an extraordinary depreciation on tangible assets due to an evaluation of actual value. These numbers amounts to NOK 1 953 504,- and are presented in the profit and loss account as restructuring costs. The rest of the amount, NOK 1 897 884,-, is presented as depreciation in the profit and loss account. NOTE 6 TAXES
PARENT ------------------------- 2000 1999 ----------- ---------- CURRENT TAX: Profit (loss) before taxes and extraordinary items.......... (28,739,128) (9,565,934) Permanent differences....................................... 126,689 62,193 Changes in temporary differences............................ 11,436,304 492,950 ----------- ---------- Basis for current tax....................................... (17,176,135) (9,010,791) ----------- ---------- Tax 28% ----------- ---------- CURRENT TAX................................................. 0 0 TAX EXPENSE FOR THE YEAR Deferred tax -- gross changes............................... (8,011,483) (2,661,047) ----------- ---------- TOTAL TAX EXPENSE FOR THE YEAR.............................. (8,011,483) (2,661,047) =========== ==========
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-14 33 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 2000 -- (CONTINUED) (IN NORWEGIAN KRONER) SPECIFICATION OF THE BASIS FOR DEFERRED TAXES -- PARENT COMPANY
2000 1999 ----------- ---------- OFFSETTING DIFFERENCES: Fixed assets................................................ (784,219) (335,785) Accounting differences...................................... (10,987,870) Loss carry forward.......................................... (26,186,926) (9,010,791) ----------- ---------- TOTAL....................................................... (37,959,015) (9,346,576) =========== ========== DEFERRED TAX LIABILITY/DEFERRED TAX ASSET................... (10,628,524) (2,617,041)
Tax loss carry forwards expire in 2009. SPECIFICATION OF THE BASIS FOR DEFERRED TAXES -- GROUP
2000 1999 ------------ ----------- OFFSETTING DIFFERENCES: Fixed assets................................................ (784,219) (355,785) Accounting differences...................................... (10,987,870) Loss carry forward*......................................... (26,186,926) (10,200,821) ------------ ----------- TOTAL....................................................... (37,959,015) (10,536,606) ============ =========== DEFERRED TAX LIABILITY/DEFERRED TAX ASSET................... (10,628,524) (3,045,452) TAX EXPENSE -- GROUP Deferred tax -- gross changes............................... (7,583,072) (3,089,458)
- --------------- * Loss carried forward is only calculated for in the parent company. The board of directors has decided to close down ADB Systems Inc. and loss carried forward in ADB Systems Ltd. is not calculated for when deferred tax assets were estimated. Loss carried forward in ADB Systems Ltd. amounts NOK 3,433,700,-. NOTE 7 EQUITY AND SHAREHOLDER INFORMATION -- PARENT COMPANY
SHARE PREMIUM SHARE CAPITAL RESERVE TOTAL ------------- ------------- ----------- EQUITY AS AT 01.01.2000.................................. 4,627,200 5,756,008 10,383,208 Increase in capital...................................... 604,800 23,544,000 24,148,800 Cost related to share issue.............................. (820,201) (820,201) Profit (loss) (after dividend)........................... (20,727,645) (20,727,645) --------- ----------- ----------- EQUITY AS AT 31.12.2000.................................. 5,232,000 7,752,162 12,984,162
SHARE CAPITAL AND INFORMATION ABOUT SHAREHOLDERS The share capital consist of one class of shares. Each share gives the same rights in the company. Nominal value per share is NOK 1,-. As at 31.12.00, the company had issued options to buy 1 081 600 shares. 381 600 of them are issued to employees and members of the board. The strike price on the option is NOK 31 for 199 000 of them and NOK 40 for the rest These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-15 34 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 2000 -- (CONTINUED) (IN NORWEGIAN KRONER) (182 600). In addition, the company has issued an option to buy 700 000 sharees with the strike price NOK 31 to funds managed by Lime Rock Partners. EQUITY GROUP Equity as at 01.01.......................................... 9,585,989 Increase in capital Parent company.......................... 24,148,800 Costs related to share issue................................ (820,201) Profit (loss) (after dividend).............................. (23,469,590) Intercompany unrealized currency gain 160,045............... 160,045 Currency differences related to the consolidation........... (104,074) ----------- EQUITY AS AT 31.12.2000..................................... 9,500,969 ===========
SHARES AND OPTIONS OWNED BY THE BOARD OF DIRECTORS
NAME POSITION SHARES OPTIONS - ---- --------------------- --------- ------- Martin Bekkeheien..................................... Chairman of the board 17,000 12,000 Jan Edvin Pedersen.................................... Managing director 967,638 38,000 John Reynolds......................................... Member of the board 7,500 Finn Kristensen....................................... Member of the board 43,000 7,500 --------- ------ Total............................................... 1,027,638 65,000 ========= ======
SHARES AND OPTIONS OWNED BY THE MANAGEMENT IN ADB SYSTEMER ASA AS OF 31 DECEMBER 2000
NAME POSITION SHARES OPTIONS - ---- --------------------- ------- ------- Jan Edvin Pedersen..................................... Managing director 967,638 38,000 Jone Skaara............................................ CFO 60,000 Erik Wang.............................................. Sales director 10,000 Jan Harestad........................................... Technical director 12,250 8,000 ------- ------- Total................................................ 979,888 116,000 ======= =======
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-16 35 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 2000 -- (CONTINUED) (IN NORWEGIAN KRONER) LIST OF SHAREHOLDERS WITH AN OWNERSHIP MORE THAN 1% OF THE PARENT COMPANY AS OF 31 DECEMBER 2000
NUMBER NAME OF SHARES PERCENTAGE - ---- --------- ---------- Jan Edvin Pedersen.......................................... 967,638 18.49% Riverside Investments LLC................................... 753,210 14.40% Svenska Handelsbanken S.A................................... 361,888 6.92% AIG Private Bank Ltd........................................ 342,728 6.55% Sandnes Investering ASA..................................... 314,754 6.02% Svenska Handelsbanken Depot (Cognition Ventures)............ 200,000 3.82% Sirius AS................................................... 187,451 3.58% Per Ove Sondena............................................. 180,159 3.44% Arne Hellesto............................................... 138,190 2.64% Amund Myklebost............................................. 117,961 2.25% Globus SMB.................................................. 116,555 2.23% Arne Hellesto AS............................................ 103,332 1.98% Sten Dueland................................................ 77,670 1.48% Karsten Gjersvik............................................ 67,954 1.30% Oystein Birkeland........................................... 62,500 1.19% Helland Eiendom............................................. 58,000 1.11% --------- --------- Total..................................................... 4,049,990 5,232,000 ========= =========
NOTE 8 EARNING PER SHARE
2000 1999 ----------- ---------- Profit (loss) for the year.................................. (23,469,590) (7,747,486) Weighted average number of outstanding ordinary shares...... 4,929,600 4,602,700 Purchase options............................................ 1,081,600 840,200 Weighted average number of outstanding ordinary shares included options.......................................... 4,929,600 4,602,700 Earnings per share.......................................... (4.76) (1.68) Diluted earnings per share:................................. (4.76) (1.68)
The strike price on the options are almost similar to the average market price of the shares in 2000 because of this the diluted earning per share is similar to the earning per share. ADB Systemer ASA has as at 31.12.2000, 1 081 600 options outstanding. NOTE 9 FINANCIAL MARKET RISK ADB systemer ASA has their main income and costs in NOK. The development in currency exchange rates has due to this, not had any material impact on the company. The company has a short term liability to a financial institution and therefore exposed for fluctuations in the interest. The company needs new capital to continue the growth. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-17 36 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 2000 -- (CONTINUED) (IN NORWEGIAN KRONER) NOTE 10 BANK DEPOSITS, CASH IN HAND, ETC. NOK 1 076 829,- of the total cash at bank is restricted to meet the liability arising from payroll taxes withheld. In addition, NOK 5 000 000,- of the total cash at bank is restricted and serves as a security in the bank for the interest bearing debt. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule A is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. A-18 37 SCHEDULE B CONSOLIDATED ("GROUP") AND NONCONSOLIDATED ("PARENT") FINANCIAL STATEMENTS FOR ADB SYSTEMER ASA FOR THE FINANCIAL YEARS ENDED DECEMBER 31, 1999 AND 1998 (ALL FIGURES IN NORWEGIAN KRONER) ADB SYSTEMER ASA ANNUAL REPORT FOR 1999 NATURE OF THE ACTIVITY ADB systemer ASA ("ADB") operates exclusively as a software house specializing in product development and the implementation of solutions for clients, mainly in the offshore and energy sectors. The Company's main product is WorkMate(R), a state-of-the-art IT tool for Procurement, Materials Management and Maintenance. The product has already established itself as a market leader for the companies operating on the Norwegian continental shelf and has also gained recognition internationally. ADB has its headquarters in the municipality of Sola near Stavanger. It also has branches in Tonsberg and in the UK, and a subsidiary company, ADB Systems Inc., in Houston, Texas. BACKGROUND INFORMATION ON THE ACCOUNTS The ADB Group is made up of the parent company, ADB systemer ASA, and the wholly-owned subsidiary ADB Systems Inc. In 1999 the Group registered a turnover of NOK 18.1 million. This was NOK 8.0 million less than in the preceding year, representing a reduction of 31%. The operating result was a loss of NOK 11.2 million, i.e. a fall of NOK 13.8 million compared with 1998. The ordinary result for 1999 was a loss of NOK 7.7 million. The Directors are not happy with the year's results. The Directors have based the Annual Accounts on the assumption of continued operations, since they believe that the Company has met its main objectives and no other circumstances relating to the development and operations of the Company suggest doing otherwise. The Directors believe that the Company is in a sound financial position. The Group's equity-to-assets ratio was 61% at year-end. ADB SYSTEMER ASA For the parent company 1999 was a difficult year, in which sales suffered a decline. The unusually low oil price at the end of 1998 resulted in very modest IT investment budgets in 1999 for operators and service companies in the offshore sector, which constitute ADB's main target clients. There was also a slump in investments in the IT market generally in the second half of the year in anticipation of the year 2000. At the same time, large numbers of the Company's consultancy staff were assigned as a matter of priority to non-income-generating training or support functions for the newly established distribution partners in the UK, Canada and the US. Consequently sales, at NOK 17.6 million, were down by NOK 8.5 million (-33%) compared with the previous year. Costs were at a higher level in 1999 than in the preceding year. The Directors made a conscious decision to continue building up the Company despite the weaker trend in income. Certain cost-saving measures were taken, where this did not hamper corporate growth. Substantial sums were spent on internationalisation, a continued very high level of product development, further organizational expansion and the setting-up of a new quality system. The total time spent on further refinements of WorkMate and the Company's new e-commerce solution came to 31,000 hours in 1999. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule B is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. B-1 38 The operating result saw a deterioration of NOK 12.7 million in 1999, resulting in a deficit of NOK 10.1 million. The Company's liquidity position at year-end was satisfactory. ADB SYSTEMS INC. The subsidiary company ADB Systems Inc. recorded a turnover of NOK 1.1 million. Its ordinary result was a loss of NOK 0.8 million. 1999 was the subsidiary's first year of operations and, in view of that fact, the Directors are very pleased with its performance. ORGANIZATION AND STAFFING The ADB Group increased the number of its employees in 1999 from 36 to 42. Of these, 32 work in Sola, 7 in Tonsberg, 1 in the UK and 2 in Houston. Twenty-nine of the staff work on systems development, four are attached to the Support Center and nine are involved in sales and administration. Throughout the year the Company spent substantial amounts on skills enhancement for its staff. This particularly applies to Internet-based business-to-business solutions, in which the Company sees major opportunities for the future. With effect from January 1 2000 ADB Systems Inc. took over the business as well as the five employees of the Consulting Services Division of the company Bonner & Moore Associates Inc. WORK ENVIRONMENT 287 days were lost on account of sickness in 1999. This corresponds to around 3.1% of total working time in the period under review. No serious work-related accidents or injuries occurred or were reported during the year. The Directors believe that the work environment is satisfactory. However, they are assessing on-going needs to improve working conditions. The Company's Work Environment Committee met regularly throughout 1999 and introduced a series of improvements. EXTERNAL ENVIRONMENT ADB's activities do not affect the external environment. FUTURE PROSPECTS 1999 was an eventful and important year for ADB, despite the picture that might be suggested by the results. Intense efforts were devoted to product development in the area of Internet-based business-to-business solutions and internationalisation. This goal-directed activity has laid a firm foundation for further growth and expansion. E-COMMERCE The rapid expansion and acceptance of the Internet as a channel of communication for electronic commerce has opened up major new opportunities for ADB. As a leading supplier of advanced procurement systems, ADB has valuable expertise in the formulation of Internet-based business-to-business solutions. During 1999 the Company devoted considerable resources to developing WorkMate E-commerce. WorkMate E-commerce is a pioneering plug-in solution, which in a simple and elegant manner quickly enables large ERP-intensive clients to make use of business-to-business solutions with their suppliers via the Internet. The product will be an excellent tool for opening up exciting new markets for WorkMate. ADB intends to devote substantial resources in 2000 to the international marketing and sale of WorkMate E-commerce. Thanks to the groundwork laid down in 1999, ADB was able to announce on February 15 2000 that BP Amoco was the first client to have adopted the product. ADB has high expectations for this solution, which it hopes to sell on the global market. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule B is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. B-2 39 INTERNATIONALISATION Prior to 1999 ADB's activities focused exclusively on the Norwegian market. The subsidiary company ADB Systems Inc. became operational on January 1 1999 and acquired its first client in Houston in August. The same month also saw its first sale in Canada, through the distributor Explorer Software Solutions. WorkMate was officially launched on the UK market at the Offshore Europe 99 Fair in Aberdeen in September, with the signing of a distribution agreement with Absoft Ltd. On January 4 2000 ADB Systems Inc. announced that with effect from January 1 2000 the Company had taken over the business, including the product known as "Compass", and the five employees of the Consulting Services Division of Bonner & Moore Associates Inc. The client base that came with the acquisition is substantial and covers a very wide geographical area, with operations in the US, Canada, Australia, New Zealand, Central and South America, Europe, the Middle East and Africa. Many of the clients are large users, where there is considerable potential for converting from Compass to WorkMate. They will provide an important base for ADB's further international expansion. Most of the growth in turnover in 2000 is expected to come from sales outside Norway, in particular the UK, Canada and the US. The work undertaken in 1999 on establishing sales and implementation partners promises to yield good results in the period ahead. RESULT FOR THE YEAR AND ACCOUNTING OPERATIONS It is proposed that ADB systemer ASA's deficit for the year, amounting to NOK 6,904.887, be treated as follows: Transfer from other equity capital NOK 3,684,715 Transfer from share premium reserve NOK 3,220,172 Total equity capital as at 31.12.99 NOK 10,383,208 Group's equity capital entered in the accounts NOK 9,585,989 Stavanger, March 2 2000 The Board of Directors, ADB systemer ASA - --------------- --------------- ----------------- ------------------ Tore Tonne Finn Kristensen Karstein Gjersvik Jan Edvin Pedersen Chairman, Board Board Member Board Member Board Member and of Directors Managing Director
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule B is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. B-3 40 [KPMG LOGO] KPMG AS P.O. Box 57 Petroleumsveien 6 Telephone +47 51 57 82 00 N-4064 Stavanger N-4033 Stavanger Fax +47 51 57 12 29 Enterprise NO 935 174 627
To the Annual Shareholder's Meeting of ADB Systemer ASA AUDITORS REPORT FOR 1999 RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS We have audited the annual financial statements of ABD Systemer ASA as of 31 December 1999, showing a loss of NOK 6 904 877 for the parent company and a loss of NOK 7 747 485 for the group. We have also audited the information in the Board of Directors' report concerning the financial statements, the going concern assumption, and the proposal for the coverage of the loss. The financial statements compromise the balance sheet, the statements of income and cash flows, the accompanying notes and the group accounts. These financial statements are the responsibility of the Company's Board of Directors. Our responsibility is to express an opinion on these financial statements and other information according to the requirements of the Norwegian Act on Auditing and Auditors. BASIS OF OPINION We conducted our audit in accordance with the Norwegian Act on Auditing and Auditors and good auditing practice in Norway. Good auditing practice require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure 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. To the extent required by law and good auditing practice an audit also comprises a review of the management of the Company's financial affairs and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion. OPINION In our opinion: - - the financial statements are prepared in accordance with law and regulations and present the financial position of the Company and of the Group as of December 31, 1999, and the results of its operations and its cash flows for the year then ended, in accordance with good accounting practice in Norway - - the company's management has fulfilled its duty to produce a proper and clearly set out registration and documentation of accounting information in accordance with law and good accounting practice - - the information in the Board of Directors' report concerning the financial statements, the going concern assumption, and the proposal for coverage of the loss are consistent with the financial statements and comply with the law and regulations. Stavenger, 2 March 2000 KPMG AS Jay W. Grytten State Authorised Public Accountant Note: This translation from Norwegian has been prepared for the information purposes only These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule B is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. B-4 41 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 1999 PROFIT AND LOSS ACCOUNT (IN NORWEGIAN KRONER)
PARENT GROUP ------------------------ ------------------------ 1999 1998 NOTE 1999 1998 ----------- ---------- ---- ----------- ---------- 17,557,275 26,088,987 Sales/revenues.......................... 1,2 18,079,910 26,088,987 ----------- ---------- ----------- ---------- 17,557,275 26,088,987 TOTAL OPERATING INCOME.................. 18,079,910 26,088,987 96,437 91,803 Materials............................... 293,620 91,803 16,410,589 14,290,829 Payroll and related cost................ 3 16,911,434 14,290,829 1,574,079 1,026,118 Depreciation............................ 6 1,589,009 1,026,118 9,529,566 8,072,684 Other operating expenses................ 6 10,449,721 8,072,684 ----------- ---------- ----------- ---------- (10,053,396) 2,607,553 OPERATING PROFIT (LOSS)................. (11,163,874) 2,607,553 Interest received from group 81,544 0 companies............................... 0 0 449,063 382,890 Other financial income.................. 368,083 382,890 (43,145) (55,916) Other financial expenses................ (41,153) (55,916) ----------- ---------- ----------- ---------- PROFIT (LOSS) BEFORE TAXES AND (9,565,934) 2,934,527 EXTRAORDINARY ITEMS..................... (10,836,944) 2,934,527 (2,661,047) 865,837 Tax on ordinary result.................. 7 (3,089,458) 865,837 ----------- ---------- ----------- ---------- (6,904,887) 2,068,690 PROFIT (LOSS) FOR THE YEAR.............. (7,747,485) 2,068,690 =========== ========== =========== ========== PROFIT (LOSS) FOR THE YEAR IS DISTRIBUTED AS FOLLOWS: (3,684,715) 2,068,690 Other equity (3,220,172) 0 From share premium reserve ----------- ---------- (6,904,887) 2,068,690 TOTAL DISTRIBUTED =========== ==========
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule B is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. B-5 42 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 1999 CONSOLIDATED BALANCE SHEET (IN NORWEGIAN KRONER)
PARENT GROUP ----------------------- ----------------------- 31.12 01.01 31.12 01.01 1999 1999 NOTE 1999 1999 ---------- ---------- ---- ---------- ---------- ASSETS FIXED ASSETS INTANGIBLE FIXED ASSETS 2,617,041 Deferred tax asset....................... 7 3,045,452 190,828 600,832 Goodwill................................. 6 1,711,138 600,832 ---------- ---------- ---------- ---------- 2,807,869 600,832 TOTAL INTANGIBLE FIXED ASSETS............ 4,756,590 600,832 TANGIBLE FIXED ASSETS 2,443,001 2,327,144 Machinery and equipment.................. 6 2,651,095 2,327,144 943,738 943,738 Buildings................................ 6 943,738 943,738 ---------- ---------- ---------- ---------- 3,386,739 3,270,882 TOTAL TANGIBLE FIXED ASSETS.............. 3,594,833 3,270,882 FINANCIAL FIXED ASSETS 86,916 36,916 Investments in subsidiaries.............. 4 36,916 294,118 108,308 Investments in shares.................... 5 294,118 108,308 1,338,440 Loans to group companies................. 332,244 Other receivables........................ 332,244 ---------- ---------- ---------- ---------- 1,719,474 477,468 TOTAL FINANCIAL FIXED ASSETS............. 294,118 477,468 ---------- ---------- ---------- ---------- 7,914,082 4,349,182 TOTAL FIXED ASSETS....................... 8,645,541 4,349,182 CURRENT ASSETS RECEIVABLES 2,249,864 6,259,398 Accounts receivables..................... 3,089,485 6,259,398 1,023,597 Receivables from group companies......... 148,357 44,136 Other receivables........................ 284,819 44,136 ---------- ---------- ---------- ---------- 3,421,818 6,303,534 TOTAL RECEIVABLES........................ 3,374,304 6,303,534 3,085,216 8,368,431 Bank deposits, cash in hand, etc......... 12 3,649,243 8,368,431 ---------- ---------- ---------- ---------- 6,507,034 14,671,965 TOTAL CURRENT ASSETS..................... 7,023,547 14,671,965 ---------- ---------- ---------- ---------- 14,421,116 19,021,147 TOTAL ASSETS............................. 15,669,088 19,021,147 ========== ========== ========== ==========
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule B is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. B-6 43 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 1999 CONSOLIDATED BALANCE SHEET (IN NORWEGIAN KRONER)
PARENT GROUP ----------------------- ----------------------- 31.12 01.01 31.12 01.01 1999 1999 NOTE 1999 1999 ---------- ---------- ---- ---------- ---------- EQUITY AND LIABILITIES EQUITY PAID-IN CAPITAL 4,627,200 4,578,200 Share capital............................ 8 4,627,200 4,578,200 5,756,008 4,753,730 Share premium reserve.................... 8 4,958,789 4,753,730 ---------- ---------- ---------- ---------- 10,383,208 9,331,930 TOTAL PAID-IN CAPITAL.................... 9,585,989 9,331,930 RETAINED EARNINGS 3,684,715 Other equity............................. 8 3,684,715 ---------- ---------- ---------- ---------- 3,684,715 TOTAL RETAINED EARNINGS.................. 3,684,715 ---------- ---------- ---------- ---------- 10,383,208 13,016,645 TOTAL EQUITY............................. 9,585,989 13,016,645 LIABILITIES PROVISIONS 44,006 Deferred tax............................. 7 44,006 ---------- ---------- ---------- ---------- 44,006 TOTAL PROVISIONS......................... 44,006 CURRENT LIABILITIES 455,402 833,865 Accounts payable......................... 455,402 833,865 0 870,442 Tax payable.............................. 7 870,442 1,524,146 2,243,282 Social security, VAT and other........... 1,575,454 2,243,282 699,144 824,490 Advances from customers.................. 699,144 824,490 1,254,136 1,086,367 Holiday pay etc.......................... 1,254,136 1,086,367 105,079 102,051 Other short-term liabilities............. 2,098,962 102,051 ---------- ---------- ---------- ---------- 4,037,908 5,960,496 TOTAL CURRENT LIABILITIES................ 6,083,099 5,960,496 ---------- ---------- ---------- ---------- 4,037,908 6,004,502 TOTAL LIABILITIES........................ 6,083,099 6,004,502 ---------- ---------- ---------- ---------- 14,421,116 19,021,147 TOTAL EQUITY AND LIABILITIES............. 15,669,088 19,021,147 ========== ========== ========== ==========
Sola, March 2, 2000 Tore Tonne Karstein Gjersvik Jan Edvin Pedersen Chairman of the board Finn Kristensen
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule B is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. B-7 44 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 1999 CASH FLOW STATEMENT (IN NORWEGIAN KRONER)
PARENT ------------------------- GROUP 1999 1998 1999 ----------- ----------- ----------- CASH FLOW FROM OPERATING ACTIVITIES 20,417,866 25,625,687 Received payments from sales............................. 21,124,469 (10,105,651) (7,754,015) Payments for purchased goods and services................ (9,365,567) Payments for salaries, social security tax and tax (16,961,955) (13,427,484) deducted................................................. (17,411,492) 530,607 382,890 Received interest........................................ 368,083 (43,145) (53,390) Interest payments........................................ (41,153) (870,442) (821,779) Paid tax and government taxes............................ (870,442) (235,810) (36,916) Payments for investments in other companies.............. (148,894) ----------- ----------- ----------- (7,268,530) 3,914,993 1) NET CASH FLOW FROM OPERATING ACTIVITIES............... (6,344,996) CASH FLOW FROM INVESTING ACTIVITIES (1,006,196) (332,244) Payments for loans to subsidiaries 0 Changes in other receivables............................. 332,244 (1,279,939) (2,870,836) Investments in tangible fixed assets..................... (3,023,273) ----------- ----------- ----------- (2,286,135) (3,203,080) NET CASH FLOW FROM INVESTING ACTIVITIES.................. (2,691,029) CASH FLOW FROM FINANCING ACTIVITIES 4,271,450 1,664,490 Increase in equity....................................... 4,271,450 0 Currency exchange differences 45,379 ----------- ----------- ----------- 4,271,450 1,664,490 NET CASH FLOW FROM FINANCING ACTIVITIES.................. 4,316,829 (5,283,215) 2,376,403 Net change in cash and cash equivalents.................. (4,719,196) 8,368,431 5,992,028 Cash and cash equivalents at the beginning of period..... 8,368,431 ----------- ----------- ----------- 3,085,216 8,368,431 CASH AND CASH EQUIVALENTS AT THE END OF PERIOD........... 3,649,235 1) RECONCILIATION: (9,565,934) 2,934,527 Profit/(loss) before taxes............................... (10,836,944) (870,442) (821,779) Taxes paid............................................... (870,442) 1,574,079 1,026,118 Depreciation............................................. 1,589,009 2,985,937 (873,021) Changes in accounts receivables.......................... 3,169,913 (378,463) 131,225 Changes in accounts payables............................. (378,463) (235,810) (36,916) Amounts classified as investing-/financing activities.... (148,894) (777,897) 1,554,839 Changes in other balance sheet items..................... 1,130,825 ----------- ----------- ----------- (7,268,530) 3,914,993 NET CASH FLOW FROM OPERATING ACTIVITIES.................. (6,344,996)
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule B is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. B-8 45 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 1999 (IN NORWEGIAN KRONER) NOTE 1 ACCOUNTING PRINCIPLES The financial statements, which have been prepared by the company's boards of directors and management, should be read in conjunction with the report of the board of directors and the audit report. The company formed a subsidiary towards the end of the year 1998. There were no activity in this company in 1998, and it is therefore first included in the consolidated accounts in 1999. NEW ACCOUNTING ACT The financial statements, which have been presented in compliance with the Norwegian Companies Act, the Norwegian Accounting Act and Norwegian generally accepted accounting principles in effect as of 31 December 1999, consist of the profit and loss account, balance sheet, cash flow statement and notes to the accounts ACCOUNTING PRINCIPLES The financial statements have been prepared based on the fundamental principles governing historical cost accounting, comparability, continued operations, congruence and caution. Transactions are recorded at their value at the time of the transaction. Income is recognised at the time of delivery of goods or services sold. Costs are expensed in the same period as the income to which they relate is recognized. When applying the basic accounting principles and presentation of transactions and other issues, a "substance over form" view is taken. Contingent losses which are probable and quantifiable are taken to cost. The different accounting principles are further commented on below. REVENUE RECOGNITION/ COST RECOGNITION (MATCHING) Revenue is recognised when it is earned. Usually this is at the time of the transaction and the revenue recognition follows the transaction principle. Costs are recognised in accordance with the matching principle. Costs accrued to create income are matched with the income. Costs that can not be directly related to income are expensed as incurred. ASSETS/ LIABILITIES Assets/ liabilities linked to the operating cycle as well as receivables/liabilities which are due within one year are classified as current assets/ liabilities. Current assets/ current liabilities are valued at the lower/ higher value of cost and net realisable value. Net realisable value is defined as expected salesprice less expected cost of sale. Other assets are classified as fixed assets. Fixed assets are entered in the accounts at original cost, with deductions for accumulated depreciation. If the fair value of a fixed asset is lower than book value, and the decline in value is not temporary, the fixed asset will be written down to fair value. Similar rules normally apply for liabilities. FIXED ASSETS Fixed assets are entered in the accounts at original cost, with deductions for accumulated depreciation. Based on the acquisition cost, straight line depreciation is applied over the economic life of the fixed assets. RECEIVABLES Receivables are accounted for at face value with deductions for expected loss. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule B is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. B-9 46 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 1999 -- (CONTINUED) (IN NORWEGIAN KRONER) FOREIGN CURRENCIES Receivables and liabilities in foreign currencies are valued at the exchange rate as at the balance sheet date. DEFERRED TAX ASSET In compliance with the principles in the new accounting act, the company has entered deferred tax asset into the accounts. (ref. note 7) Deferred tax is calculated based on temporary differences between book values and tax basis for assets and liabilities at year end. For the purposes of calculating deferred tax, nominal tax rates are used. Taxable and deductible temporary differences are offset to the extent they reverse within the same time-frame. Temporary differences that will constitute a future tax deduction give rise to a deferred tax asset. Change in deferred tax liability and deferred tax asset, together with taxes payable for the fiscal year adjusted for errors in previous years tax calculations constitutes taxes for the year. RESEARCH AND DEVELOPMENT COST The company is expensing all cost related to research and development. The report of the board of directors have more information. NOTE 2 SEGMENT INFORMATION The company operate within one segment. The product is WorkMate. The company income is mainly related to the home market in 1999. The report of the board of directors have more information. NOTE 3 SALARIES / NUMBER OF EMPLOYEES / BENEFITS PAYROLL AND RELATED COST
PARENT GROUP ------------------------ ---------- 1999 1998 1999 ---------- ---------- ---------- Payroll.................................................... 13,542,670 11,786,687 14,043,515 Social security costs...................................... 1,978,259 1,799,937 1,978,259 Other employee related costs............................... 889,660 704,205 889,660 ---------- ---------- ---------- Payroll and related cost................................... 16,410,589 14,290,829 16,911,434 ========== ========== ========== Average number of employees in 1999..............................................................38
The company does not have any pension schemes.
BENEFITS (NORWEGIAN KRONER) BOARD OF MANAGING DIRECTOR DIRECTORS ----------------- ------------------ Salary...................................................... 711,902 0 Other benefits.............................................. 43,835
The Managing Director has an option to buy 8 000 shares in the company. Members of the board of Directors have options to buy 3 000 shares in the company. Chairman of the board has an option to buy 5 000 shares in the company. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule B is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. B-10 47 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 1999 -- (CONTINUED) (IN NORWEGIAN KRONER) AUDIT The audit fee for 1999 for the parent company was 45 000 NOK. The fees for other services provided by the auditor was 81 647 NOK. NOTE 4 SUBSIDIARY
COMPANY ADB SYSTEMS INC. - ------- ---------------- FORMAL INFORMATION Time of acquisition......................................... October 1998 Business office............................................. Houston, USA Ownership share............................................. 100% Voting share................................................ 100%
The subsidiary is included in the parent company using the cost method and is consolidated in the group accounts. The subsidiary's booked cost value is NOK 86 916. NOTE 5 INVESTMENTS IN OTHER COMPANIES
OWNERSHIP NUMBER OF ACQUISITION SHARE SHARES COST BOOK VALUE --------- --------- ----------- ---------- FIXED ASSETS Digital Consulting International ASA................ 2.50% 57,162 294,118 294,118 ----- ------ ------- -------
NOTE 6 TANGIBLE FIXED ASSETS AND INTANGIBLE ASSETS -- PARENT COMPANY
31.12.1999 ---------------------------------------------- MACHINERY, PLANT AND BUILDINGS EQUIPMENT GOODWILL AND ART TOTAL ---------- --------- --------- --------- Cost as at 1.1......................................... 3,736,416 1,230,000 943,738 5,910,154 + additions during the year............................ 1,279,939 0 0 1,279,939 - - disposals during the year............................ 0 0 0 0 --------- --------- ------- --------- ACQUISITION COST AS OF 31.12. ......................... 5,016,355 1,230,000 943,738 7,190,093 Accumulated depreciation as of 01.01. ................. 1,409,273 629,177 0 2,038,450 + depreciation for the year............................ 1,164,079 410,000 0 1,574,079 Accumulated depreciation as at 31.12................... 2,573,354 1,039,172 0 3,612,526 --------- --------- ------- --------- NET BOOK VALUE AS OF 31.12. ........................... 2,443,001 190,828 943,738 3,577,567 --------- --------- ------- --------- Depreciation plan...................................... 20-30% 33%
Goodwill is depreciated over 3 years, as this, according to the company's opinion is the economic life the appraisal is based upon. The company has leases in the amount of NOK 1 857 251. The building rent in Sola amounts to NOK 1 029 213. The rest of the lease amount is related to computer equipment. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule B is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. B-11 48 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 1999 -- (CONTINUED) (IN NORWEGIAN KRONER) TANGIBLE FIXED ASSETS AND INTANGIBLE ASSETS -- GROUP
MACHINERY, PLANT AND BUILDINGS EQUIPMENT GOODWILL AND ART TOTAL ---------- --------- --------- ---------- Cost as at 1.1........................................ 3,736,411 1,230,000 943,738 5,910,149 + additions during the year........................... 1,502,963 1,520,310 0 3,023,273 - - disposals during the year........................... 0 0 0 0 --------- --------- ------- ---------- ACQUISITION COST AS OF 31.12. ........................ 5,239,374 2,750,310 943,738 8,933,422 Accumulated depreciation as of 01.01. ................ 1,409,270 629,177 0 2,038,447 + depreciation for the year........................... 1,179,009 410,000 0 1,589,009 Accumulated depreciation as at 31.12.................. 2,588,279 1,039,167 0 3,627,446 --------- --------- ------- ---------- NET BOOK VALUE AS OF 31.12. .......................... 2,651,095 1,711,138 943,738 5,305,971 --------- --------- ------- ---------- Depreciation plan..................................... 20-30% 33%
Goodwill in subsidiary is not depreciated as the goodwill was acquired in the end of the year 1999. NOTE 7 TAXES
PARENT ------------------------- 1999 1998 ----------- ---------- CURRENT TAX: Profit (loss) before taxes and extraordinary items.......... (9,565,934) 2,934,527 Permanent differences....................................... 62,193 80,965 Changes in temporary differences............................ 492,950 93,232 ----------- ---------- Basis for current tax....................................... (9,010,791) 3,108,724 ----------- ---------- Tax 28%..................................................... 870,443 ----------- ---------- CURRENT TAX................................................. 0 870,443 TAX EXPENSE FOR THE YEAR Current tax................................................. 0 870,443 Deferred tax -- gross changes............................... (2,661,047) 0 ----------- ---------- TOTAL TAX EXPENSE FOR THE YEAR.............................. (2,661,047) 870,443 =========== ==========
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule B is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. B-12 49 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 1999 -- (CONTINUED) (IN NORWEGIAN KRONER) SPECIFICATION OF THE BASIS FOR DEFERRED TAXES -- PARENT COMPANY
31.12.1999 01.01.1999 ----------- ---------- OFFSETTING DIFFERENCES: Fixed assets................................................ (335,785) 172,165 Accounting differences...................................... 0 (15,000) Loss carry forward.......................................... (9,010,791) 0 ----------- ---------- TOTAL....................................................... (9,346,576) 157,165 =========== ========== DEFERRED TAX LIABILITY/DEFERRED TAX ASSET................... (2,617,041) 44,006
Tax loss carry forwards expire in 2009. SPECIFICATION OF THE BASIS FOR DEFERRED TAXES -- PARENT COMPANY
31.12.1999 01.01.1999 ------------ ----------- OFFSETTING DIFFERENCES: Fixed assets................................................ (335,785) 172,165 Accounting differences...................................... 0 (15,000) Loss carry forward.......................................... (10,362,781) 0 ------------ ----------- TOTAL....................................................... (10,698,566) 157,165 ============ =========== DEFERRED TAX LIABILITY/DEFERRED TAX ASSET................... (3,045,452) 44,006 TAX EXPENSE -- GROUP Deferred tax -- gross changes............................... (3,089,458)
NOTE 8 EQUITY AND SHAREHOLDER INFORMATION -- PARENT COMPANY
SHARE PREMIUM SHARE CAPITAL RESERVE OTHER EQUITY TOTAL ------------- ------------- ------------ ---------- REVISED EQUITY AFTER THE EFFECTS OF IMPLEMENTING THE NEW ACCOUNTING ACT: EQUITY AS AT 31.12.1998......................... 4,578,200 8,438,445 13,016,645 Premium last 10 years (from statutory reserve)...................................... 4,753,730 (4,753,730) --------- ---------- ---------- ---------- EQUITY AS AT 01.01.1999......................... 4,578,200 4,753,730 3,684,715 13,016,645 CHANGES IN EQUITY Increase in capital............................. 49,000 722,450 771,450 Increase in premium reserve..................... 3,500,000 Profit (loss) (after dividend).................. (3,220,172) (3,684,715) (6,904,887) --------- ---------- ---------- ---------- EQUITY AS AT 31.12.1999......................... 4,627,200 5,756,008 0 10,383,208 ========= ========== ========== ==========
The payment of NOK 3.5 mill. to share premium reserve is related to sale of options. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule B is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. B-13 50 ADB SYSTEMER ASA ANNUAL ACCOUNTS GROUP 1999 -- (CONTINUED) (IN NORWEGIAN KRONER) SHARE CAPITAL AND INFORMATION ABOUT SHAREHOLDERS The share capital consist of one class of shares. As at 31.12.99, the company had issued options to buy 840 200 shares. With a split of 140 200 to employees and Board of Directors and 700 000 to Lime Rock Partners. EQUITY GROUP Equity as at 01.01. ........................................ 13,016,645 Increase in capital Parent company.......................... 4,271,450 Profit (loss) (after dividend).............................. (7,747,485) Intercompany unrealized currency gain....................... 80,980 Currency loss related to the consolidation.................. (35,601) ---------- EQUITY AS AT 31.12.1999..................................... 9,585,989 ==========
NOTE 9 EARNING PER SHARE
1999 1998 ---------- --------- Profit (loss) for the year.................................. (7,747,485) 2,068,690 Weighted average number of outstanding ordinary shares...... 4,602,700 4,534,900 Purchase options............................................ 840,200 Weighted average number of outstanding ordinary shares included options.......................................... 4,602,700 Earnings per share.......................................... (1.68) 0.46 Diluted earnings per share:................................. (1.68) 0.46
The strike price on the options are almost similar to the average market price of the shares in 1999 because of this the diluted earning per share is similar to the earning per share. ADB Systemer ASA has as per 31.12.1999 840 200 options outstanding. The strike price on the option are NOK 31. NOTE 10 FINANCIAL MARKET RISK ADB systemer ASA have their main income and cost in NOK. The development in currency exchange rates has due to this, not had any material impact on the company in 1999. This will change when the company's activities abroad increase. The company has no interest bearing debt. The company needs new capital to continue the growth. NOTE 11 DRAWING FACILITIES
1999 --------- Drawing facilities.......................................... 3,000,000
The company has non interest bearing debt as at December 31 1999. NOTE 12 BANK DEPOSITS, CASH IN HAND, ETC. NOK 736 593,- of the total cash at bank is restricted to meet the liability arising from payroll taxes withheld. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule B is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. B-14 51 SCHEDULE C CONSOLIDATED ("GROUP") AND NONCONSOLIDATED ("PARENT") FINANCIAL STATEMENTS FOR ADB SYSTEMER ASA FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 (ALL FIGURES IN NORWEGIAN KRONER) ADB SYSTEMER ASA 2ND QUARTER 2001 FINANCIAL RESULTS ADB GROUP ADB Group achieved revenues of NOK 13.0 million for the first half year of 2001. This is a 5.7% increase from the first half year of 2000. For the second quarter ADB saw revenues of NOK 5.1 million. Although disappointing compared to first quarter revenues of NOK 7.9 million, accumulated revenues for ADB during the first half year was only slightly behind budget. The group made a pre-tax loss for the first six months of NOK 6.4 million, of which NOK 5.4 million relates to the second quarter. The result includes restructuring charges of NOK 1.9 million in connection with the closure of the UK office. The operating loss net of restructuring charges was NOK 4.5 million, of which NOK 3.5 million in the second quarter. NORWAY Revenues of ADB Systemer ASA amounted to NOK 11.2 million for the first 6 months, which is a 29% growth from the NOK 8.7 million achieved same period last year. The second quarter saw revenues of NOK 4.3 million, up 7.5% from second quarter of 2000, but trailing the strong first quarter revenues of NOK 6.9 million. Second quarter activities have been negatively affected by many long weekends in connection with public holidays. License revenues for the first six months amounted to NOK 1.6 million (vs. 1.0 million in 2000), of which NOK 0.55 million were achieved in the second quarter. U.S.A. The US operation had revenues of NOK 2.1 million for the first six months (NOK 3.8 million same period last year), of which NOK 0.9 million in the second quarter. The US makes a positive contribution to the bottom line of the group. The activities are related to the Compass system acquired with Bonner & Moore in 2000. UNITED KINGDOM There were no revenues of significance in the UK during the first half year, and the Board decided at the end of June to close down the office. All activities ceased at July 31. One salesman has been retained to maintain the Amec contract and the Dow Chemicals account. The closure resulted in a full write-off of the NOK 8.2 million loan to the subsidiary, as well as a one time charge of NOK 0.5 million. This affected the Group results negatively by NOK 1.9 million, and the result of ADB Systemer ASA by NOK 8.6 million. BALANCE The equity of the Group was as of June 30 NOK 20.6 million. Net of NOK 13.5 million in deferred tax assets the book value of equity was NOK 7.1 million. After the write-off of the loans to the UK, there should be no uncertainty related to any of the other assets. The Group had net cash-holdings of NOK 9.4 million as of June 30. As of March 31 the net cash-holding was negative by NOK 1.7 million. Through the new shares issue ADB received NOK 15.0 million in cash during the second quarter. These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule C is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. C-1 52 HIGH-LIGHTS FROM 2ND QUARTER The two most important achievements during the second quarter have been: - - Halden Kommune, the leading IT-city in south-east Norway, had ADB's ProcureMate(TM) software installed. This is the first ASP-based installation ADB has ever made, and the effect in the market of this new important reference is already notable. - - ADB was in July short-listed as vendor of the buy-side application for the Public Market Place initiated by the Programme for e-commerce in the Norwegian Public Sector. Final selection will be made in September/October. ADB is one of two short listed suppliers competing solely for the buy-side application, in addition to five companies tendering for both the market place and the buy-side tool. ADB views the chances of winning as good, since ADB, to our knowledge, has the best and most relevant references within the e-procurement field for public sector. OUTLOOK The entire global IT industry is in turmoil due to uncertainty about the future. Despite a good first quarter, ADB experiences a slower market development than earlier anticipated. In the public services sector, where ADB currently has its main focus, most cities and counties are awaiting the Public Market Place. Once a decision has been made, expected in October, this sector should mature more rapidly, and ADB expects to capture a large market share, given a successful outcome of the tender. After the closure of the UK office, the operational risk is reduced significantly. Having shown profitability in Norway in the first quarter, ADB expects to be back into black figures in the fourth quarter. To achieve this, ADB will focus on the Norwegian market as well as supporting the sales person in the UK and the partners in North America. In addition, the ongoing search for a strategic partner for the Company will be continued. THE BOARD OF DIRECTORS These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule C is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. C-2 53 ADB SYSTEMER ASA FINANCIAL STATEMENTS AS OF JUNE 2001 PROFIT AND LOSS ACCOUNT (UNAUDITED) (IN NORWEGIAN KRONER)
PARENT GROUP ------------------------ ----------------------- 30.06 30.06 30.06 30.06 2000 2001 2001 2000 ---------- ----------- ---------- ---------- 8,656,488 11,174,824 Sales/revenues................................. 13,020,239 12,319,799 ---------- ----------- ---------- ---------- 8,656,488 11,174,824 TOTAL OPERATING INCOME......................... 13,020,239 12,319,799 27,972 205,736 Materials...................................... 205,736 128,206 9,613,219 8,158,132 Payroll and related cost....................... 10,196,229 12,379,565 884,976 659,517 Depreciation................................... 895,357 884,976 5,512,404 3,954,955 Other operating expenses....................... 6,184,179 8,402,975 8,622,131 Restructuring/wind up cost..................... 1,888,020 ---------- ----------- ---------- ---------- (7,382,083) (10,425,647) OPERATING PROFIT (LOSS)........................ (6,349,282) (9,475,922) 99,529 319,028 Interest received from group companies......... 59,432 65,768 358,936 Other financial income......................... 360,783 65,768 (114,193) (406,071) Other financial expenses....................... (406,071) (114,193) ---------- ----------- ---------- ---------- (7,330,979) (10,153,754) PROFIT (LOSS) BEFORE TAXES..................... (6,394,570) (9,464,915) (2,052,674) (2,843,051) Tax on ordinary result......................... (2,843,051) (2,820,891) ---------- ----------- ---------- ---------- (5,278,305) (7,310,703) PROFIT (LOSS) FOR THE PERIOD................... (3,551,519) (6,644,024) ---------- ----------- ---------- ---------- PROFIT (LOSS) FOR THE YEAR IS DISTRIBUTED AS FOLLOWS: (5,278,305) (7,310,703) From share premium reserve..................... (3,551,519) ---------- ----------- ---------- (5,278,305) (7,310,703) TOTAL DISTRIBUTED.............................. (3,551,519) ---------- ----------- ----------
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule C is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. C-3 54 ADB SYSTEMER ASA FINANCIAL STATEMENTS AS OF JUNE 2001 CONSOLIDATED BALANCE SHEET (UNAUDITED) (IN NORWEGIAN KRONER)
PARENT GROUP ----------------------- ----------------------- 30.06 30.06 30.06 30.06 2000 2001 2001 2000 ---------- ---------- ---------- ---------- ASSETS FIXED ASSETS INTANGIBLE FIXED ASSETS 4,669,715 13,471,575 Deferred taxes................................. 13,471,575 5,437,932 Goodwill....................................... 1,580,030 ---------- ---------- ---------- ---------- 4,669,715 13,471,575 TOTAL INTANGIBLE FIXED ASSETS.................. 13,471,575 7,017,962 TANGIBLE FIXED ASSETS 2,277,167 920,786 Machinery and equipment........................ 1,351,419 2,759,070 943,738 659,572 Buildings...................................... 659,572 943,738 ---------- ---------- ---------- ---------- 3,220,905 1,580,358 TOTAL TANGIBLE FIXED ASSETS.................... 2,010,991 3,702,808 FINANCIAL FIXED ASSETS 86,916 Investments in subsidiaries 294,118 Investment in shares........................... 294,118 6,120,406 Loans to group companies Other receivables.............................. 44,222 1,037,055 ---------- ---------- ---------- ---------- 6,501,440 0 TOTAL FINANCIAL FIXED ASSETS................... 44,222 1,331,173 ---------- ---------- ---------- ---------- 14,392,060 15,051,933 TOTAL FIXED ASSETS............................. 15,526,788 12,051,943 CURRENT ASSETS RECEIVABLES 3,694,692 2,820,218 Accounts receivable............................ 3,458,400 5,420,238 361,643 683,059 Other receivables.............................. 734,535 410,018 ---------- ---------- ---------- ---------- 4,056,335 3,503,278 TOTAL RECEIVABLES.............................. 4,192,936 5,830,256 14,790,965 8,668,774 Bank deposits, cash in hand, etc............... 8,978,939 15,038,592 ---------- ---------- ---------- ---------- 18,847,300 12,172,051 TOTAL CURRENT ASSETS........................... 13,171,875 20,868,848 ---------- ---------- ---------- ---------- 33,239,360 27,223,984 TOTAL ASSETS................................... 28,698,663 32,920,791 ---------- ---------- ---------- ---------- EQUITY AND LIABILITIES EQUITY PAID-IN CAPITAL 5,232,000 12,732,000 Share capital.................................. 12,732,000 5,232,000 23,273,567 7,807,274 Share premium reserve.......................... 7,902,357 20,629,215 ---------- ---------- ---------- ---------- 28,505,567 20,539,274 TOTAL EQUITY................................... 20,634,356 25,861,215 LIABILITIES CURRENT LIABILITIES 1,117,137 990,357 Accounts payable............................... 997,859 1,130,207 1,259,488 1,384,376 Social security, VAT and other................. 1,384,376 1,259,488 1,665,967 1,174,472 Advances from customers........................ 1,174,472 1,665,967 691,201 524,695 Holiday pay etc................................ 524,695 691,201 2,610,810 Other short-term liabilities................... 3,982,905 2,312,713 ---------- ---------- ---------- ---------- 4,733,793 6,684,710 TOTAL CURRENT LIABILITIES...................... 8,064,307 7,059,576 ---------- ---------- ---------- ---------- 4,733,793 6,684,710 Total liabilities.............................. 8,064,307 7,059,576 ---------- ---------- ---------- ---------- 33,239,360 27,223,984 TOTAL EQUITY AND LIABILITIES................... 28,698,663 32,920,791 ---------- ---------- ---------- ----------
These financial statements are presented in Norwegian Kroner and have been prepared using Norwegian accounting principles. See the Selected Financial Data section of the Circular for an unaudited management reconciliation to Canadian generally accepted accounting principles and a convenience translation of selected data into Canadian Dollars. The information contained in this Schedule C is derived entirely from public filings of ADB, and although Management of Bid.Com has no reason to believe to the contrary, the Corporation cannot warrant and assumes no responsibility for the accuracy or completeness of such information or that it is free from material misrepresentation. In addition to historical information, this Schedule contains certain forward looking statements which are subject to risks and uncertainties, some of which are beyond ADB's control. C-4 55 SCHEDULE D COMPILATION REPORT To the Directors of Bid.Com International Inc. We have reviewed, as to compilation only, the accompanying pro forma consolidated balance sheet of Bid.Com International Inc. as at June 30, 2001 and the pro forma consolidated statements of operations for the six months ended June 30, 2001 and the year ended December 31, 2000, which have been prepared for inclusion in the Management Information Circular of Bid.Com International Inc. dated September 7, 2001. In our opinion, the pro forma consolidated balance sheet and pro forma consolidated statements of operations have been properly compiled to give effect to the proposed transactions and assumptions described in the notes thereto. DELOITTE & TOUCHE LLP Chartered Accountants Mississauga, Canada September 7, 2001 D-1 56 BID.COM INTERNATIONAL INC. PRO FORMA CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 2001 (UNAUDITED, IN THOUSANDS OF CANADIAN DOLLARS)
AS AT JUNE 30, 2001 ------------------------------------------------------------------------ BID.COM ADB BID.COM INTERNATIONAL INC. SYSTEMER ASA ADJUSTMENTS INTERNATIONAL INC. ------------------ ------------- ----------- ------------------ (Note 4) ASSETS CURRENT Cash................................... 8,784 1,461 (2,210)(iii) 8,035 Marketable securities.................. 2,947 -- 2,947 Accounts receivable.................... 304 689 (15) (ii) 978 Deposits and prepaid expenses.......... 270 -- 270 ------- ----- ------ ------- 12,305 2,150 (2,225) 12,230 ------- ----- ------ ------- CAPITAL ASSETS......................... 1,452 327 1,779 STRATEGIC INVESTMENTS.................. 658 -- 658 CAPITALIZED SOFTWARE................... 337 -- 337 FUTURE TAX ASSET....................... -- 2,192 (2,192)(i) -- ACQUIRED GOODWILL...................... -- -- 2,210(iii) 12,530 (1,150)(v) 419(vi) 11,051(iv) ------- ----- ------ ------- 14,752 4,669 8,113 27,534 ======= ===== ====== ======= LIABILITIES CURRENT Accounts payable....................... 213 162 375 Accrued liabilities.................. 516 959 1,475 Current portion of capital lease obligation........................ 48 -- 48 Current portion of deferred revenue.... 660 191 851 ------- ----- ------ ------- 1,437 1,312 -- 2,749 ------- ----- ------ ------- Deferred revenue....................... 179 -- 179 Capital lease obligation............... 21 -- 21 ------- ----- ------ ------- 1,637 1,312 -- 2,949 ======= ===== ====== ======= SHAREHOLDERS' EQUITY Share capital.......................... 83,724 2,071 (2,071)(v) 94,775 11,051(iv) Warrants............................... 1,016 -- 1,016 Options................................ -- -- 419(vi) 419 Deficit................................ (71,625) 1,286 (2,192)(i) (71,625) (15) (ii) 921(v) ------- ----- ------ ------- 13,115 3,357 8,113 24,585 ------- ----- ------ ------- 14,752 4,669 8,113 27,534 ======= ===== ====== =======
D-2 57 BID.COM INTERNATIONAL INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2001 (UNAUDITED, IN THOUSANDS OF CANADIAN DOLLARS)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2001 ----------------------------------------------------------------------- BID.COM ADB BID.COM INTERNATIONAL INC. SYSTEMER ASA ADJUSTMENTS INTERNATIONAL INC. ------------------ ------------ ----------- ------------------ (Note 5) Revenue................................ 2,670 2,212 (15)(i) 4,867 Less: Customer acquisition costs..... (19) -- (19) ------ ------ ---- ------ Net revenue............................ 2,651 2,212 (15) 4,848 ------ ------ ---- ------ General and administrative expenses, and software development............. 9,473 2,887 12,360 Depreciation and amortization.......... 638 152 790 Interest income........................ (273) (61) 50(iii) (284) ------ ------ ---- ------ 9,838 2,978 50 12,866 ------ ------ ---- ------ Loss before the undernoted............. (7,187) (766) (65) (8,018) ------ ------ ---- ------ Realized gains on disposal of marketable securities and strategic investments.......................... 6,746 -- 6,746 Unrealized losses on revaluation of marketable securities and provision for impairment of long term assets... (1,134) -- (1,134) Foreign currency revaluation........... (164) (164) Retail activities settlement........... (404) (404) Restructuring Charge................... (613) (320) (933) ------ ------ ---- ------ 4,431 (320) -- 4,111 ------ ------ ---- ------ Loss before Income Tax expense......... (2,756) (1,086) (65) (3,907) Income Tax Expense (Recovery).......... (483) 483(ii) -- ------ ------ ---- ------ NET LOSS FOR THE PERIOD................ (2,756) (603) (548) (3,907) ====== ====== ==== ======
D-3 58 BID.COM INTERNATIONAL INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 (UNAUDITED, IN THOUSANDS OF CANADIAN DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, 2000 ----------------------------------------------------------------------- BID.COM ADB BID.COM INTERNATIONAL INC. SYSTEMER ASA ADJUSTMENTS INTERNATIONAL INC. ------------------ ------------ ----------- ------------------ (Note 5) Revenue................................ 12,497 3,981 36(i) 16,514 Less: Customer acquisition costs..... (157) -- (157) ------- ------ ------ ------- Net revenue............................ 12,340 3,981 36 16,357 ------- ------ ------ ------- Direct expenses........................ 11,460 -- 11,460 Advertising and promotion.............. 5,040 -- 5,040 General and administrative expenses, and software development............. 21,199 8,109 29,308 Depreciation and amortization.......... 1,130 321 1,451 Interest income........................ (467) 60 100(iii) (307) ------- ------ ------ ------- 38,362 8,490 100 46,952 ------- ------ ------ ------- Loss before the undernoted............. (26,022) (4,509) (64) (30,595) ------- ------ ------ ------- Realized gains on disposal of marketable securities and strategic investments.......................... 20,946 -- 20,946 Unrealized losses on revaluation of marketable securities and provision for impairment of long term assets... (15,290) -- (15,290) Restructuring Charge................... -- (736) (736) ------- ------ ------ ------- 5,656 (736) -- 4,920 ------- ------ ------ ------- Loss before income tax expense......... (20,366) (5,245) (64) (25,675) Income Tax Expense (Recovery).......... -- (1,281) 1,281(ii) -- ------- ------ ------ ------- NET LOSS FOR THE YEAR.................. (20,366) (3,964) (1,345) (25,675) ======= ====== ====== =======
D-4 59 BID.COM INTERNATIONAL INC. NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2001 AND DECEMBER 31, 2000 (UNAUDITED, IN THOUSANDS OF CANADIAN DOLLARS) 1. BASIS OF PRESENTATION This unaudited pro forma balance sheet and statement of operations presents the proposed acquisition whereby Bid.Com International Inc. (Bid.Com) acquires ADB Systemer ASA ("ADB") and has been prepared by management from the audited financial statements of Bid.Com and ADB for the year ended December 31, 2000 and unaudited financial statements for the six month period ended June 30, 2001. These financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP") and contain adjustments in order to account for differences between Canadian and Norwegian GAAP. These financial statements also contain adjustments for foreign currency translation from Norwegian Kroner to Canadian dollars. The pro forma consolidated balance sheet has been prepared to give the effect to Bid.Com's proposed acquisition of ABD as if it had occurred June 30, 2001. The pro forma consolidated statements of operations have been prepared to give effect as if the proposed acquisition had occurred on January 1, 2000 for the year ended December 31, 2000, and on January 1, 2001 for the six month period ended June 30, 2001. This acquisition has been accounted for using the purchase method. In the opinion of management, this pro forma balance sheet includes all adjustments necessary for fair presentation. This pro forma balance sheet may not be indicative of the financial position and financial results that actually would have occurred if the events reflected herein had been in effect on the date indicated or of the financial position which may be obtained in the future. The pro forma consolidated financial statements should be read in conjunction with the consolidated financial statements of each of Bid.Com and ADB for the year ended December 31, 2000 and 6 month period ending June 30, 2001. 2. ACCOUNTING TREATMENT FOR ACQUISITION The combination of Bid.Com and ADB, will be accounted for as an acquisition of ADB by Bid.Com. Therefore, the purchase method of accounting will be used to account for the business combination. Application of purchase accounting results in the following: (a) The financial statements will be considered a continuation of the financial statements of Bid.Com. (b) Bid.Com's interest in identifiable assets acquired and liabilities assumed from ADB will be based on their fair values at the date of acquisition. (c) The excess of the acquisition cost over Bid.Com's interest in the identifiable assets acquired and liabilities assumed from ADB has been reflected as acquired goodwill. In accordance with Canadian Institute of Chartered Accountants transitional provisions, goodwill will not be subject to amortization, but will be subject to periodic evaluation of impairment on an ongoing basis. (d) The results of operations of ADB will be included in the financial statements from the date of acquisition only. 3. PRO FORMA ASSUMPTIONS AND ADJUSTMENTS The unaudited pro forma balance sheet gives effect to the proposed acquisition as if the event occurred on June 30, 2001 and reflects the following pro forma assumptions and adjustments: (a) The proposed acquisition will receive the necessary approval of the shareholders of Bid.Com and ADB and will proceed at the disclosed exchange ratios. (b) Fractional interests in common shares for which the holders will receive an additional share, will be nominal. (c) Allocation of purchase price. D-5 60 BID.COM INTERNATIONAL INC. NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JUNE 30, 2001 AND DECEMBER 31, 2000 (UNAUDITED, IN THOUSANDS OF CANADIAN DOLLARS) Bid.Com has assumed the purchase of all of the ADB common shares outstanding, but does not reflect any stock option or share purchase warrant proceeds that may have been exercised by ADB employees or shareholders. The calculation and allocation of the purchase price to the fair value of the assets acquired and liabilities assumed is preliminary and will be finalized following completion of a full valuation of the acquired assets and liabilities of ADB. As a result, Bid.Com has been required to make certain assumptions with respect to the calculation and allocation of the purchase price for accounting purposes in preparing these unaudited pro forma consolidated financial statements. The amounts shown are based on the June 30, 2001 balance sheet of ADB; the amounts of assets and liabilities at the actual date of acquisition will be different. The actual allocation of the purchase price is expected to change which may result in significant differences in certain proforma adjustments. The purchase price has been calculated based upon an agreed upon issue price of $0.50 per Bid.Com common share and agreed upon exchange rate of Cdn $1.00 = NOK 5.76. Initial Purchase Price Calculation as at June 30, 2001 Number of Bid.Com shares issued............................. 22,103 Ascribed value of each Bid.Com share........................ $ 0.50 Value of share consideration................................ 11,051 Cash consideration paid to ABD Shareholders................. 2,210 Consideration paid to ADB shareholders...................... $13,261 Value of stock options issued to ADB option holders in replacement of existing options........................... $ 419 Assigned value of Net Assets Acquired....................... 1,150 ------- Value of goodwill acquired.................................. 12,530 =======
4. PRO FORMA CONSOLIDATED BALANCE SHEET The unaudited pro forma consolidated balance sheet incorporates the following adjustments: (i) Canadian GAAP adjustment for a valuation allowance of future tax asset. (ii) Canadian GAAP adjustment for differences in revenue recognition standards for software. (iii) Estimated cash consideration paid to ADB shareholders. (iv) Estimated share consideration paid to ADB shareholders. (v) Elimination of ADB share capital and deficiency. (vi) Valuation of stock options issued to ADB option holders as replacement of existing ADB options. 5. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS The unaudited pro forma consolidated statements of operations incorporate the following adjustments: (i) Canadian GAAP adjustment for differences in revenue recognition standards for software. (ii) Canadian GAAP adjustment for a valuation allowance of future tax asset. (iii) Estimated interest adjustment on cash portion of purchase price. D-6 EX-3 5 t28249ex3.txt PROXY 1 EXHIBIT 3 BID.COM INTERNATIONAL INC. PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OCTOBER 10, 2001 SOLICITED BY MANAGEMENT The undersigned shareholder of BID.COM INTERNATIONAL INC. (the "Corporation") hereby appoints JEFF LYMBURNER, President, Chief Executive Officer and a director of the Corporation or, failing him, MARK WALLACE, Chief Operating Officer of the Corporation, or instead of either of them .......... .......................... as proxy to attend and vote for the undersigned at THE SPECIAL MEETING (THE "MEETING") OF THE SHAREHOLDERS TO BE HELD ON OCTOBER 10TH, 2001, AND AT ANY ADJOURNMENT(S) THEREOF, in the same manner, to the same extent and with the same power as if the undersigned were present at the Meeting or any such adjournments and, without limiting the generality of the foregoing, hereby grants authority as set forth below. The shares of the Corporation represented by this Proxy shall be voted as follows: 1. VOTE FOR [ ] VOTE AGAINST [ ] Approval of the acquisition of no less than 51% of the shares of ADB Systemer ASA and the related changes to the Board of Directors of the Corporation, the particulars of which are set out in the accompanying Management Information Circular. 2. VOTE FOR [ ] VOTE AGAINST [ ] Passing a special resolution authorizing the consolidation of the issued shares of the Corporation on a one for two basis, the particulars of which are set out in the accompanying Management Information Circular. 3. VOTE FOR [ ] VOTE AGAINST [ ] Passing a special resolution authorizing the change of the name of the Corporation, the particulars of which are set out in the accompanying Management Information Circular 4. VOTE FOR [ ] VOTE AGAINST [ ] Passing an ordinary resolution to approve the amendment to the Corporation's Stock Option Plan, the particulars of which are set out in the accompanying Management Information Circular. 5. At the Proxy's discretion upon any amendments or variations to matters specified in the Notice of Meeting or upon any other matters as may properly come before the Meeting or any adjournments thereof. DATED the ......... day of........................................., 2001. - ------------------------------------------------------------------------ Signature of Shareholder - ------------------------------------------------------------------------ (Please print name here) (PLEASE ADVISE THE CORPORATION OF ANY CHANGE OF ADDRESS) 2 THIS PROXY IS SOLICITED BY OR ON BEHALF OF MANAGEMENT OF THE CORPORATION. WHERE A CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED AS DIRECTED. WHERE NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED IN FAVOUR OF THE MATTERS REFERRED TO HEREIN. THIS PROXY ALSO CONFERS DISCRETIONARY AUTHORITY TO VOTE IN RESPECT OF ANY OTHER MATTER WHICH MAY PROPERLY COME BEFORE THE MEETING AND IN SUCH MANNER AS SUCH NOMINEE IN HIS/HER JUDGMENT MAY DETERMINE. A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON TO ATTEND AND ACT FOR HIM OR HER AND ON HIS OR HER BEHALF AT THE MEETING OTHER THAN THE PERSONS DESIGNATED IN THIS FORM OF PROXY. SUCH RIGHT MAY BE EXERCISED BY FILLING THE NAME OF SUCH PERSON IN THE BLANK SPACE PROVIDED AND STRIKING OUT THE NAME OF MANAGEMENT'S NOMINEES. A proxy will not be valid unless a completed, signed and dated form of proxy is delivered to the Corporation or its transfer agent, CIBC Mellon Trust Company. NOTE: 1. A PERSON APPOINTED AS PROXYHOLDER TO REPRESENT A SHAREHOLDER NEED NOT BE A SHAREHOLDER OF THE CORPORATION. 2. IF THE SHAREHOLDER IS A CORPORATION, THIS PROXY MUST BE EXECUTED BY AN OFFICER OR ATTORNEY THEREOF DULY AUTHORIZED. EX-4 6 t28249ex4.txt LETTER TO SHAREHOLDERS 1 EXHIBIT 4 [BID.COM LOGO] [ADB LOGO] September 7, 2001 Dear Shareholder, This is truly an exciting time for Bid.Com International Inc. Enclosed with this letter you will find a Notice and Management Information Circular relating to a Special Meeting of our Shareholders to be held on Wednesday, October 10, 2001. The purpose of this Meeting is to inform you of an acquisition which we believe will have a dramatic impact on our Company, and to seek your approval of this exciting opportunity. ADB Systemer ASA, based in Norway, is a leading provider of asset management and procurement solutions to the Oil and Gas and Public sectors. Recognized by the Gartner Group as one of the Tier One enterprise asset management companies in the world, ADB has combined a strong suite of software products with industry expertise in a manner which has allowed them to earn business from an impressive list of clients, including BP, AMEC, and Halliburton. In combination with our suite of products, in particular our Dynamic Buyer sourcing solution, we believe the joint product offering will be a compelling one for companies in North America and Europe, in particular for Oil and Gas and Public sector clients. By focusing on these two sectors, we believe the combined entity will be able to leverage ADB's industry expertise most effectively, while adding a value-added dimension for the benefit of existing clients. This Meeting also presents us the opportunity to address two other issues which have become pressing in recent times -- our corporate name and our share price. It is generally acknowledged that with the overall decline of the so- called "dot-coms" our name has gradually become a liability, particularly in light of our reduced reliance on pure auction or "bid" activities. Although dynamic pricing will continue to be a key part of our core technology offering we now believe that the time is right to change our corporate identity in concert with the acquisition of ADB. The attached circular proposes a change of name to ADB Systems International Inc., in order to take advantage of existing goodwill and to expedite the re-branding process. Since the acquisition involves the issuance of shares, we are also proposing a share consolidation, with the intention of improving our share price and reducing our public float to more manageable levels. We truly believe that this acquisition offers a "one plus one equals three" opportunity, with substantial sales, technology and infrastructure benefits. We are looking forward to seeing you on October 10. Yours truly, Jeffrey Lymburner Jeffrey Lymburner President and CEO Bid.Com International Inc. -----END PRIVACY-ENHANCED MESSAGE-----