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As Of Filer Filing For·On·As Docs:Size Issuer Agent 4/02/07 Enable Holdings, Inc. 424B3 1:2.1M Vintage/FA |
Document/Exhibit Description Pages Size 1: 424B3 Prospectus HTML 1.17M
Unassociated Document |
Delaware
|
52-2372260
|
(State
or Other Jurisdiction of
|
(IRS
Employer
|
Incorporation
or Organization)
|
Identification
No.)
|
Page
|
|
Item
1.
Business
|
1-13
|
Item
1A.
Risk Factors
|
14-28
|
Item
1B. Unresolved Staff comments - Not Applicable
|
|
Item
2.
Properties
|
29
|
Item
3.
Legal Proceedings
|
29
|
Item
4.
Submission of Matters to a Vote of Security Holders
|
29
|
Item
5.
Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
|
30
|
Item
6.
Selected Financial Data
|
31-33
|
Item
7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
|
33-44
|
Item
8.
Financial Statements and Supplementary Data
|
45-67
|
Item
9.
Changes in and Disagreements with Accountants on Accounting and
Financial
Disclosure
|
68
|
Item
9A.
Controls and Procedures
|
68
|
Item
9B.
Other Information
|
68
|
Item
10.
Directors and Executive Officers of the Registrant
|
68-71
|
Item
11.
Executive Compensation
|
72-79
|
Item
12.
Security Ownership of Certain Beneficial Owners and Management
and Related
Stockholder Matters
|
80-82
|
Item
13.
Certain Relationships and Related Transactions and Director
Independence
|
82
|
Item
14.
Principal Accountant Fees and Services
|
84
|
Item
15.
Exhibits and Financial Statement Schedules
|
85
|
§
|
Acceptance
by mainstream shoppers making purchases online.
It is expected that mainstream consumers will drive the majority
of future
growth in the segment, as the increased use of simpler formats, such
as
fixed price format sales, will encourage mainstream shoppers to purchase
new and used goods from smaller sellers through auction
formats.
|
§
|
Growth
in new categories.
To date, consumer electronics, books and CDs have comprised the majority
of online sales. However, several new categories including footwear,
designer apparel and accessories and collectors’ items have begun to
demonstrate strong growth.
|
§
|
Growth
in retailer participation.
Retailers have begun considering moving marketing dollars and merchandise
offerings to performance-based
marketplaces.
|
§
|
traditional
liquidation channels are fragmented and multi-layered greatly increasing
distribution and logistics costs;
|
§ |
Establishing
Brand Recognition, Attracting New Customers and Building Customer
Loyalty.
It is important for Internet retailers to establish a recognized
and
trusted brand-name online because consumers are generally wary of
purchasing products from unfamiliar retailers. Generating positive
brand
recognition is critical to acquiring new customers. Online retailers
may
also experience difficulty retaining their customers because of the
relative ease of switching to different websites and purchasing products
from other online retailers.
|
§ |
Providing
a Broad and Available Product Selection.
In order to appeal to consumers, online retailers must provide a
large
selection of products readily available for delivery. However, it
is
difficult to keep such a broad selection of products ready for delivery
without incurring considerable inventory and warehouse
costs.
|
§ |
Competing
with Low Prices.
Significant price competition exists between online retailers because
consumers are able to quickly compare prices on the Internet. Online
retailers must be able to provide a high value proposition in order
to
attract and retain customers.
|
§ |
Achieving
Sufficient Scale.
Online retailers must achieve sufficient scale to compete successfully
with other major online and offline retailers. Significant investments
are
required to build the infrastructure and implement the marketing
and sales
campaigns necessary to drive consumer website traffic and convert
website
visitors into customers. Therefore, online retailers must have access
to
adequate capital and generate sufficient revenues to achieve the
necessary
scale required to reach
profitability.
|
§ |
Developing
Technology Infrastructure.
Online retailers must develop and implement flexible and scalable
technology systems to appropriately accommodate large product catalogs
with significant data storage needs, high volume transaction processing,
order fulfillment workflow and high quality customer support and
management.
|
§ |
Extensive
Security and Fraud Protection.
uBid’s online marketplace provides a trustworthy and secure buying
environment in which we minimize fraudulent activity and questionable
product quality frequently associated with purchase transactions
from
unestablished businesses, individual consumers and other non-commercial
parties. All merchants offering goods in our online marketplace are
required to successfully complete our merchant certification process,
which includes verification of the merchant’s trade and bank references
and other information which establishes that the merchant is in good
business standing. As a result of this certification, fraudulent
transactions in our marketplace are minimized. In addition, we require
all
buyers to provide a valid credit card before placing their initial
bid,
resulting in reductions to the occurrence of fraudulent
bidding.
|
§ |
Strong
Brand and Loyal Customer Base.
We have strengthened our “trust” positioning over the past year through
advertising, marketing and promotional campaigns and consistent delivery
of quality products at low prices. We have amassed over five million
member registrations since our inception in 1997.
|
§ |
Broad
and Deep Product Selection.
We offer over 200,000 high quality, brand-name new, close-out, overstock
and refurbished merchandise in over 200 categories including computer
products, consumer electronics, apparel, housewares, watches, jewelry,
travel, sporting goods, home improvement products and collectible
products
each day.
|
§ |
Compelling
Value to Consumers and Merchants.
We attract new consumers and retain existing consumers by offering
low
prices on high quality, brand-name products in a marketplace supported
by
both auction style and fixed price formats. We provide additional
value to
our consumers by providing timely and accurate order processing,
direct
fulfillment where applicable and in-house customer support. Sellers
are
attracted to uBid because of the large and growing number of potential
buyers. The frequency of product offerings and the ability to continuously
add new items allow merchants to liquidate inventory quickly to minimize
the risk of price erosion. In addition, our auction style and fixed
price
formats allow suppliers and sellers the opportunity to optimize sales
value while simultaneously liquidating excess merchandise directly
to a
nationwide audience, without conflicting with their primary distribution
channels.
|
§ |
Increased
Consumer and Merchant Base.
We intend to continue expanding our consumer user base through focused
online marketing tactics. These efforts include paid search listings,
comparison shopping, directory listings, affiliate banner ad programs
and
e-mail marketing. We continue to further optimize our website to
increase
our free listings within popular search engines (e.g., Google and
Yahoo).
In addition, we have begun identifying key opportunity segments of
our
database for targeted activation programs. These efforts have resulted
in
an increase in traffic to our website, which reached 2.4 million
visitors
in December 2006, an increase of 47.9% as compared to January 2005.
|
§ |
Product
Category Expansion
.
We plan to continue to add product categories to offer consumers
a more
comprehensive collection of merchandise. We have been successful
in
increasing product categories including collectibles and antiques,
music,
movies, games and apparel while expanding the depth of merchandise
offered
in all categories, particularly jewelry and gifts, home and garden,
sports
and hobbies.
|
§ |
uBid
Certified Merchant Program Expansion.
We believe this program will significantly drive future growth. We
anticipate capturing a large number of additional merchants by identifying
and targeting the growing population of competitors’ disenfranchised
merchants. We believe the UCM Program provides an attractive alternative
by offering a simpler merchant fee structure, volume discounts and
enhanced merchant services (such as dispute and collection assistance
and
relevant consumer statistics).
|
§ |
Acquisitions.
We are actively reviewing synergistic acquisition opportunities which
are
expected to provide inorganic expansion into additional channels.
|
|
|
§ |
Computer
Products:
Including items such as desktops, portable computers, computer
accessories, disk drives, modems, monitors/video equipment, components,
printers, scanners, digital cameras, software and home office
products.
|
§ |
Consumer
Electronics:
Including items such as home theater equipment, home audio equipment,
speakers, televisions, camcorders, VCRs, DVD players, portable
audio
players and automobile audio
equipment.
|
§ |
Apparel
and Accessories:
Including items such as men’s, women’s and children’s casual, fitness, and
dress clothing, shoes and
accessories.
|
§ |
Home:
Including items such as appliances, vacuum cleaners, furniture,
tools,
luggage, appliances, furnishings, art and lawn and
garden.
|
§ |
Sporting
Goods and Memorabilia:
Including items such as sports memorabilia and equipment for golf,
tennis,
health and fitness, outdoor sports, bicycles, water sports and
team
sports.
|
§ |
Increasing
consumer awareness of uBid’s “trust” position.
uBid has created a unique position in the marketplace focused on
earning
consumer trust. This position of “trust” is supported by our focus on
business-to-consumer selling (versus consumer-to-consumer selling),
our
efforts to minimize fraudulent sellers by requiring all merchants
participating in the UCM Program to complete a merchant certification
process, significant investments in our customer support services,
internal product warehousing and payment transaction processing
and
endorsements from various recognized third party security and privacy
programs. We believe this “trust” positioning will continue to set us
apart from our competitors and provide a meaningful difference
in
attracting and maintaining
customers.
|
§ |
Expanding
and optimizing customer acquisition efforts.
Our marketing expenditures are primarily spent on attracting traffic
to
our website. Potential new customers are sourced through a range
of online
efforts including affiliate programs, paid search listings, shopping
comparison programs, online partnerships and e-mail marketing.
In
addition, we are also evaluating new marketing channels such as
offline
direct response television and radio, in-store media, event marketing
and
single partnerships with key online media companies to broaden
our
customer demographics and drive larger incremental gains in customer
acquisition.
|
§ |
Implementing
a scalable, cost-effective customer retention program.
It is critical to have a program that effectively manages new
customer
relationships from acquisition to activation (1 time bidding/buying)
to
repeat purchase. We have recently begun investing in the implementation
of
our customer retention management. Our efforts to date have been
focused
on developing programs aimed at improving bidding/buying behavior
among
key customer segments: 1) recent bidders, 2) lapsed and long
lapsed
bidders, 3) inactive members (i.e., never bid), 4) registered
members
without a credit card on file, and 5) members without an opt-in
e-mail
address. In addition, we are working on a long term customer
retention
management strategy, which is expected to include development
of a
marketing data warehouse.
|
§ |
Increasing
the availability of qualified merchants for the UCM
Program.
The recruiting of merchants to the UCM Program has become a primary
growth
focus. We are marketing to prospective merchants principally through
online media, including e-mail marketing and online trade media
(e.g.,
auction industry newsletters), as well as offline through public
relations
and trade show events. We are also building our own merchant prospect
list
from several sources for use in direct solicitations via e-mail
and direct
mail. These efforts have resulted in a significant increase in
the volume
of qualified prospect applications for
processing.
|
§ |
our
ability to attract visitors to our website and convert those
visitors into
bidders and customers;
|
§ |
the
amount and timing of costs relating to the expansion of our operations,
including sales and marketing
expenditures;
|
§ |
our
ability to introduce new types of merchandise, service offerings
or
customer services in a competitive
environment;
|
§ |
delays
in shipments as a result of computer systems failures, strikes
or other
problems with our delivery service or credit card processing
providers;
|
§ |
Various
online auction houses such as eBay.com, Amazon.com Auctions,
Yahoo!
Auctions, and Bidz.com.
|
§ |
A
number of e-commerce companies focused primarily on excess and
overstock
products with fixed price format, including Amazon.com, Overstock.com,
Shopping.com, eCost.com, BlueFly.com and
SmartBargains.com.
|
§ |
A
variety of offline auction companies that offer similar merchandise
to
that available in our marketplace
supply.
|
§ |
Merchants
that have their own direct distribution channels for excess inventory
or
refurbished products.
|
§ |
Companies
with substantial customer bases in the computer and peripherals
catalog
business, including CDW Computer Centers, PC Connection and PC
Mall, some
of which already sell online or may devote more resources to
e-commerce in
the future.
|
§ |
our
online partners might be unable to deliver a sufficient number
of customer
visits or impressions;
|
§ |
significant
spending on these relationships may not increase our revenues
in the time
periods we expect or at all;
|
§ |
space
on websites may increase in price or cease to be available to
us on
reasonable terms or at all.
|
§ |
evolving
industry standards and practices that could render our website
and
proprietary technology obsolete;
|
§ |
require
us to enter into royalty and licensing agreements that may not
be
available on terms acceptable to us or at
all.
|
§ |
announcements
by uBid or our competitors of significant acquisitions, strategic
partnerships, joint ventures or capital
commitments;
|
2006
|
2005 (1)
|
||||||||||||
High
|
Low
|
High
|
Low
|
||||||||||
First
Quarter
|
$
|
7.20
|
$
|
6.15
|
N/A
|
N/A
|
|||||||
Second
Quarter
|
$
|
6.70
|
$
|
6.25
|
N/A
|
N/A
|
|||||||
Third
Quarter
|
$
|
6.80
|
$
|
4.99
|
N/A
|
N/A
|
|||||||
Fourth
Quarter
|
$
|
3.65
|
$
|
2.15
|
N/A
|
N/A
|
Plan
category
|
Number
of securities to
be
issued upon exercise of
outstanding
options,
warrants
and rights
|
Weighted-average
exercise
price
of outstanding options,
warrants
and rights
|
Number
of securities remaining
available
for future issuance
under
equity compensation plans
(excluding
securities reflected in column (a))
|
(a)
|
(b)
|
(
c)
|
|
Equity
compensation plans
approved
by security holders
|
1,530,600
|
$
4.55
|
969,400
|
Equity
compensation plans not
approved
by security holders
|
320,000
|
$
4.50
|
—
|
Total
|
1,850,600
|
$
4.54
|
969,400
|
uBid.com Holdings, Inc. and Subsidiaries | |||||||||||||||||||||||||
Selected Financial Data | |||||||||||||||||||||||||
(Dollars in Thousands, except for per share data) |
uBid
(1)
|
Predecessor
Company (2)
|
|||||||||||||||||||
Year
Ended December
31,
|
9
Months Ended December 31,
|
8
Months Ended March 31,
|
Year
Ended
|
|||||||||||||||||
2005
|
2004
|
2003
|
2003
|
2002
|
||||||||||||||||
Net
Revenues
|
$
|
66,559
|
$
|
84,592
|
$
|
87,002
|
$
|
65,656
|
$
|
103,484
|
$
|
385,995
|
||||||||
Cost
of Revenues
|
56,421
|
73,062
|
75,837
|
54,491
|
100,252
|
368,405
|
||||||||||||||
Gross
Profit
|
10,138
|
11,530
|
11,165
|
11,165
|
3,232
|
17,590
|
||||||||||||||
Operating
Expenses
|
||||||||||||||||||||
General
and administrative (3)(4)
|
12,973
|
13,045
|
12,112
|
9,021
|
126,527
|
181,710
|
||||||||||||||
Sales
and marketing
|
4,987
|
4,996
|
4,260
|
2,484
|
5,743
|
20,012
|
||||||||||||||
Total
operating expenses
|
17,960
|
18,041
|
16,372
|
11,505
|
132,270
|
201,722
|
||||||||||||||
Loss
From Operations
|
(7,822
|
)
|
(6,511
|
)
|
(5,207
|
)
|
(340
|
)
|
(129,038
|
)
|
(184,132
|
)
|
||||||||
Miscellaneous
Income
|
-
|
-
|
-
|
21
|
-
|
-
|
||||||||||||||
Interest
Income (Expense), net
|
267
|
(2,538
|
)
|
(1,102
|
)
|
(651
|
)
|
(6,006
|
)
|
(8,279
|
)
|
|||||||||
Net
Loss
|
(7,555
|
)
|
(9,049
|
)
|
(6,309
|
)
|
(970
|
)
|
(135,044
|
)
|
(192,411
|
)
|
||||||||
Preferred
Stock Dividends
|
-
|
(1,216
|
)
|
(60
|
)
|
(60
|
)
|
-
|
-
|
|||||||||||
Net
Loss Available to Common Shareholders
|
$
|
(7,555
|
)
|
$
|
(10,265
|
)
|
$
|
(6,369
|
)
|
$
|
(1,030
|
)
|
$
|
(135,044
|
)
|
$
|
(192,411
|
)
|
||
Net
Loss per share - Basic and
|
||||||||||||||||||||
Diluted
|
$
|
(0.37
|
)
|
$
|
(3.88
|
)
|
$
|
(2.56
|
)
|
$
|
(0.41
|
)
|
$
|
N/M
|
$
|
N/M
|
||||
Weighted
Average Shares - Basic and Diluted (5)(6)
|
20,260,689
|
2,643,936
|
2,487,107
|
2,487,107
|
N/M
|
N/M
|
||||||||||||||
Balance
Sheet Data (as of period end):
|
||||||||||||||||||||
Total
current assets
|
$
|
22,052
|
$
|
36,120
|
$
|
11,817
|
$
|
11,257
|
$
|
17,349
|
$
|
34,759
|
||||||||
Total
assets
|
23,578
|
36,644
|
12,146
|
11,653
|
22,047
|
134,318
|
||||||||||||||
Total
current liabilities, excluding debt
|
3,843
|
9,652
|
7,030
|
7,562
|
168,882
|
145,707
|
||||||||||||||
Long-term
debt including current maturities
|
-
|
410
|
11,320
|
3,986
|
1,405
|
1,807
|
||||||||||||||
Redeemable
Common Stock (7)
|
-
|
12,000
|
-
|
-
|
-
|
-
|
||||||||||||||
Total
shareholders equity (deficit)
|
19,735
|
14,582
|
(6,204
|
)
|
105
|
(148,240
|
)
|
(13,196
|
)
|
(1)
|
The
current uBid business was substantially acquired by Petters
Group in April
2003 at which time purchase accounting was applied to adjust
all carrying values to estimate current market value (after
deduction for
negative goodwill) and the business started accounting for
all of its costs of operations without allocations of such
costs from its
prior parent.
|
|||||||||||||||||||
(2) |
Predecessor
financials for the year ended July 31, 2002 and the eight
months ended
March 31, 2003 were derived solely from the accounting
records of CMGI, the sole shareholder of our predecessor
(which acquired
our business in April 2000), and using historical results
of operations, and historical basis of assets and liabilities
of such
predecessor's business. The statements of operations include
fees charged
for certain corporate funtions historically provided to us
by CMGI,
including administrative services (accounting, human resources,
tax
services, legal and treasury), inventory management and order
fulfillment,
information systems operations and administration, and
advertising services. These fees were allocated on a specifically
identifiable basis or using the relative percentages, as
compared to
CMGI's other business, net of revenues, payroll, net cost
of goods sold,
square footage, headcount, or
other.
|
|||||||||||||||||||
(3)
|
||||||||||||||||||||
(4)
|
In
April 2000, CMGI acquired uBid and recorded $367.0 million
in goodwill
which was amortized over a three year period prior to the
impairment
of all remaining goodwill of $89.4 million (as well as the
impairment of
the $3.9 million of property and equipment) during the period
ended March 31, 2003. Pro forma net loss for the fiscal years
ended July
31, 2002 was $70.4 million had uBid not amortized goodwill
during these periods.
|
|||||||||||||||||||
(5)
|
Computation
for periods ended prior to April 2003 is not meaningful (N/M)
because
there was no common stock outstanding during those periods.
|
|||||||||||||||||||
(6)
|
Reflects
the retroactive effects of the impact of the Company's December
2005
merger with Cape Coastal and the resulting
exchange of the Company's 1,072 shares of common stock outstanding
for the
stock of Cape Coastal.
|
|||||||||||||||||||
(7)
|
At
December 31, 2005, represents 2,666,668 shares of common
stock subject to
redemption after the merger with Cape
Coastal Trading Corporation and the first private offering.
Such shares
were redeemed in February
2006.
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
|
Q3
|
Q2
|
|
Q1
|
||||||||||||||||
2006
|
2006
|
2006
|
2006
|
2005
|
2005
|
2005
|
2005
|
||||||||||||||||||
Net
|
$
|
13,008
|
$
|
14,366
|
$
|
19,097
|
$
|
20,088
|
$
|
19,295
|
$
|
18,594
|
$
|
19,885
|
$
|
26,818
|
|||||||||
Cost
of
|
9,838
|
12,425
|
16,980
|
17,178
|
16,306
|
15,497
|
17,095
|
24,164
|
|||||||||||||||||
Gross
|
3,170
|
1,941
|
2,117
|
2,910
|
2,989
|
3,097
|
2,790
|
2,654
|
|||||||||||||||||
Operating
|
|||||||||||||||||||||||||
General
|
2,534
|
3,454
|
3,451
|
3,534
|
3,185
|
3,111
|
3,602
|
3,147
|
|||||||||||||||||
Sales
|
866
|
1,160
|
1,436
|
1,525
|
1,339
|
1,247
|
1,127
|
1,283
|
|||||||||||||||||
Total
|
3,400
|
4,614
|
4,887
|
5,059
|
4,524
|
4,358
|
4,729
|
4,430
|
|||||||||||||||||
Loss
from
|
(230
|
)
|
(2,673
|
)
|
(2,770
|
)
|
(2,149
|
)
|
(1,535
|
)
|
(1,261
|
)
|
(1,939
|
)
|
(1,776
|
)
|
|||||||||
Interest
|
60
|
12
|
49
|
146
|
(1,042
|
)
|
(572
|
)
|
(507
|
)
|
(417
|
)
|
|||||||||||||
Net
Loss
|
(170
|
)
|
(2,661
|
)
|
(2,721
|
)
|
(2,003
|
)
|
(2,577
|
)
|
(1,833
|
)
|
(2,446
|
)
|
(2,193
|
)
|
|||||||||
Preferred
|
-
|
-
|
-
|
-
|
(1,171
|
)
|
(15
|
)
|
(15
|
)
|
(15
|
)
|
|||||||||||||
Net
Loss
|
$
|
(170
|
)
|
$
|
(2,661
|
)
|
$
|
(2,721
|
)
|
$
|
(2,003
|
)
|
$
|
(3,748
|
)
|
$
|
(1,848
|
)
|
$
|
(2,461
|
)
|
$
|
(2,208
|
)
|
|
Basic
and D
|
$
|
(0.01
|
)
|
$
|
(0.13
|
)
|
$
|
(0.13
|
)
|
$
|
(0.10
|
)
|
$
|
(1.26
|
)
|
$
|
(0.74
|
)
|
$
|
(0.99
|
)
|
$
|
(0.89
|
)
|
|
Weighted
Share
|
20,333,333
|
20,333,333
|
20,333,333
|
19,955,536
|
2,974,603
|
2,487,107
|
2,487,107
|
2,487,107
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
||||||||||||||||||
2006
|
2006
|
2006
|
2006
|
2005
|
2005
|
2005
|
2005
|
||||||||||||||||||
Measure
|
|||||||||||||||||||||||||
GMS
(in thousands)
|
$
|
26,276
|
$
|
26,528
|
$
|
30,286
|
$
|
31,167
|
$
|
31,035
|
$
|
27,215
|
$
|
28,020
|
$
|
34,623
|
|||||||||
Number
of orders (in thousands)
|
|||||||||||||||||||||||||
Direct
|
24
|
23
|
37
|
36
|
43
|
36
|
39
|
46
|
|||||||||||||||||
uBid
Certified Merchant
|
99
|
89
|
88
|
87
|
93
|
72
|
64
|
51
|
|||||||||||||||||
Total
orders
|
123
|
112
|
125
|
123
|
136
|
108
|
103
|
97
|
|||||||||||||||||
Average
Order Value
|
|||||||||||||||||||||||||
Direct
|
$
|
424
|
$
|
424
|
$
|
416
|
$
|
465
|
$
|
398
|
$
|
495
|
$
|
493
|
$
|
443
|
|||||||||
uBid
Certified Merchant
|
$
|
126
|
$
|
128
|
$
|
110
|
$
|
107
|
$
|
108
|
$
|
112
|
$
|
106
|
$
|
119
|
|||||||||
Visitors
(in thousands)
|
6,529
|
6,488
|
7,215
|
6,369
|
7,051
|
8,287
|
7,545
|
6,829
|
|||||||||||||||||
Bidders
(in thousands)
|
239
|
211
|
255
|
241
|
267
|
222
|
251
|
243
|
|||||||||||||||||
Bidders
to Visitors Percentage
|
3.7%
|
%
|
3.3
|
%
|
3.5
|
%
|
3.8
|
%
|
3.8
|
%
|
2.7
|
%
|
3.3
|
%
|
3.6
|
%
|
|||||||||
Approved
UCM Vendors
|
2,049
|
1,716
|
1,307
|
949
|
628
|
401
|
202
|
169
|
§
|
EITF
05-5, “Accounting for Early Retirement or Postemployment Programs with
Specific Features issued in June 2005 and effective for the Company
in the
first quarter of 2007, this EITF applies to early retirement
programs
which create incentives for employees, within a specific age
group, to
transition from full or part-time employment to retirement before
legal
retirement age.
|
§
|
EITF
06-2, “Accounting for Sabbatical Leave and Other Similar Benefits.” Issued
in June 2006 and effective for the Company in the first quarter
of fiscal
2008, this EITF applies to compensated absences that require
a minimum
service period but have no increase in the benefit even with
additional
years of service.
|
§
|
EITF
06-9, “Reporting a Change in (or the Elimination of) a Previously Existing
Difference between the Fiscal Year End of a Parent Company and
That of a
Consolidated Entity or between the Reporting Period of an Investor
and
That of an Equity Method Investee.” Issued in November 2006 and effective
for the Company in the second quarter of 2007, this EITF requires
certain
disclosures whenever a change is made to modify or eliminate
the time lag
(usually three months or less) used for recording results of
consolidated
entities or equity method investees that have a different fiscal
year end
than the Company.
|
§
|
EITF
00-19-2, “Accounting for Registration Payment Arrangements”. Issued in
December 2006, this pronouncement requires an entity to recognize
and
measure a registration payment arrangement as a separate unit
of account
from the financial instrument subject to that arrangement. If
the transfer
of consideration is probable and reasonably estimated at inception,
the
liability should be included in the allocation of proceeds from
the
financing transaction. The effective date is for financial statements
issued for fiscal years beginning after December 31, 2006 and
retrospective application is not
permitted.
|
uBid.com
Holdings, Inc. and Subsidiaries
|
|||||||||
Consolidated
Statements of Operations
|
|||||||||
(Dollars
in Thousands, except for per share
data)
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
|||||||||
Net
Revenues
|
$
|
66,559
|
$
|
84,592
|
$
|
87,002
|
||||
Cost
of Revenues
|
56,421
|
73,062
|
75,837
|
|||||||
Gross
Profit
|
10,138
|
11,530
|
11,165
|
|||||||
Operating
Expenses:
|
||||||||||
General
and Administrative (1)
|
12,973
|
13,045
|
12,112
|
|||||||
Sales
and Marketing
|
4,987
|
4,996
|
4,260
|
|||||||
Total
Operating Expenses
|
17,960
|
18,041
|
16,372
|
|||||||
Loss
From Operations
|
(7,822
|
)
|
(6,511
|
)
|
(5,207
|
)
|
||||
Other
Income (Expense):
|
||||||||||
Interest
Expense
|
(375
|
)
|
(2,925
|
)
|
(1,188
|
)
|
||||
Interest
Income
|
642
|
124
|
86
|
|||||||
Miscellaneous
Income
|
-
|
263
|
-
|
|||||||
Total
Other Expense, Net
|
267
|
(2,538
|
)
|
(1,102
|
)
|
|||||
Net
Loss
|
(7,555
|
)
|
(9,049
|
)
|
(6,309
|
)
|
||||
Preferred
Stock and Other Deemed Dividends
|
-
|
(1,216
|
)
|
(60
|
)
|
|||||
Net
Loss Available to Common Shareholders
|
$
|
(7,555
|
)
|
$
|
(10,265
|
)
|
$
|
(6,369
|
)
|
|
Net
Loss per share - Basic and Diluted (2)
|
$
|
(0.37
|
)
|
$
|
(3.88
|
)
|
$
|
(2.56
|
)
|
|
Weighted
Average Shares - Basic and Diluted
|
20,260,689
|
2,643,936
|
2,487,107
|
(1)
|
Includes
$30, $360 and $264 of management fees charged to uBid by Petters
Group for
the years ended December 31, 2006, 2005 and
2004.
|
(2)
|
Reflects
the retroactive effects of the impact of the Company's December
2005
merger with Cape Coastal and the resulting exchange of the
Company's 1,072
shares of common stock outstanding for the stock of Cape Coastal
at an
exchange ratio of 2,320 to 1 for the years ended December 31,
2005 and
2004.
|
Total
|
Less
than
1
Year
|
|
1-3
Years
|
3-5
Years
|
After
5
Years
|
|
||||||||||
Operating
Leases
|
$
|
1,530,487
|
$
|
452,238
|
$
|
451,749
|
$
|
468,200
|
$
|
158,300
|
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
45
|
46
|
|
47
|
|
Consolidated
Statements of Shareholders’ Equity for the years ended December 31, 2006,
2005 and 2004
|
48
|
49
|
|
Notes
to Consolidated Financial Statements
|
50-66
|
uBid.com
Holdings, Inc and Subsidiaries
|
|||||
Consolidated
Balance Sheets
|
|||||
(Dollars
in Thousands, except par value
data)
|
2005
|
|||||||
Assets
|
|||||||
Current
Assets
|
|||||||
Cash
and cash equivalents
|
$
|
14,785
|
$
|
21,176
|
|||
Restricted
investments
|
214
|
7,003
|
|||||
Accounts
receivable, less allowance for doubtful accounts of $215 and
$60,
respectively
|
1,810
|
1,306
|
|||||
Merchandise
inventories
|
4,054
|
5,989
|
|||||
Prepaid
expenses and other current assets
|
1,189
|
646
|
|||||
Total
Current Assets
|
22,052
|
36,120
|
|||||
Property
and Equipment, net
|
924
|
524
|
|||||
Purchased
Intangible Assets
|
602
|
-
|
|||||
Total
Assets
|
$
|
23,578
|
$
|
36,644
|
|||
Liabilities
and Shareholders' Equity
|
|||||||
Current
Liabilities
|
|||||||
Flooring
facility
|
$
|
152
|
$
|
1,612
|
|||
Accounts
payable
|
2,239
|
4,456
|
|||||
Accrued
expenses:
|
|||||||
Advertising
|
428
|
397
|
|||||
Merger
and offering costs
|
-
|
2,000
|
|||||
Other
|
1,024
|
1,187
|
|||||
Current
maturities of long-term debt
|
-
|
410
|
|||||
Total
Current Liabilities
|
3,843
|
10,062
|
|||||
|
|||||||
Redeemable
Common Stock, $.001 par value (2,666,668 shares in 2005)
|
-
|
12,000
|
|||||
Shareholders'
Equity
|
|||||||
Common
stock, $.001 par value (200,000,000 shares authorized; 20,333,333
and 19,399,334 issued and outstanding,
respectively)
|
20
|
17
|
|||||
Stock
warrants
|
8,086
|
6,322
|
|||||
Additional
paid-in-capital
|
36,848
|
25,907
|
|||||
Accumulated
deficit
|
(25,219
|
)
|
(17,664
|
)
|
|||
Total
Shareholders' Equity
|
19,735
|
14,582
|
|||||
Total
Liabilities and Shareholders' Equity
|
$
|
23,578
|
$
|
36,644
|
uBid.com Holdings, Inc. and Subsidiaries | |||||||||||||
Consolidated Statements of Operations | |||||||||||||
(Dollars in Thousands, except for per share data) |
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
|||||||||
Net
Revenues
|
$
|
66,559
|
$
|
84,592
|
$
|
87,002
|
||||
Cost
of Revenues
|
56,421
|
73,062
|
75,837
|
|||||||
Gross
Profit
|
10,138
|
11,530
|
11,165
|
|||||||
Operating
Expenses:
|
||||||||||
General
and Administrative (1)
|
12,973
|
13,045
|
12,112
|
|||||||
Sales
and Marketing
|
4,987
|
4,996
|
4,260
|
|||||||
Total
Operating Expenses
|
17,960
|
18,041
|
16,372
|
|||||||
Loss
From Operations
|
(7,822
|
)
|
(6,511
|
)
|
(5,207
|
)
|
||||
Other
Income (Expense):
|
||||||||||
Interest
Expense
|
(375
|
)
|
(2,925
|
)
|
(1,188
|
)
|
||||
Interest
Income
|
642
|
124
|
86
|
|||||||
Miscellaneous
Income
|
-
|
263
|
-
|
|||||||
Total
Other Income (Expense), Net
|
267
|
(2,538
|
)
|
(1,102
|
)
|
|||||
|
||||||||||
Net
Loss
|
(7,555
|
)
|
(9,049
|
)
|
(6,309
|
)
|
||||
Preferred
Stock and Other Deemed Dividends
|
-
|
(1,216
|
)
|
(60
|
)
|
|||||
Net
Loss Available to Common Shareholders
|
$
|
(7,555
|
)
|
$
|
(10,265
|
)
|
$
|
(6,369
|
)
|
|
Net
Loss per share - Basic and Diluted
(2)
|
$
|
(0.37
|
)
|
$
|
(3.88
|
)
|
$
|
(2.56
|
)
|
|
Weighted
Average Shares - Basic and Diluted
|
20,260,689
|
2,643,936
|
2,487,107
|
(1)
|
Includes $30, $360 and $264 of management fees charged to uBid by Petters Group for the years ended December 31, 2006, 2005 and 2004. | ||||||||||||
(2)
|
Reflects the retroactive effects of the impact of the Company's December 2005 merger with Cape Coastal and the resulting exchange of the Company's 1,072 shares of common stock outstanding for the stock of Cape Coastal at an exchange ratio of 2,320 to 1 for the years ended December 31, 2005 and 2004. |
uBid.com
Holdings,
Inc.
|
|||||||||||||||
Consolidated
Statements of Shareholders' Equity
|
|||||||||||||||
(Dollars
in Thousands)
|
Preferred
Stock
|
Common
Stock
|
Stock
|
Paid-in
|
Accumulated
|
|||||||||||||||||||||
Shares
|
Dollars
|
Shares
|
Dollars
|
Warrants
|
Capital
|
Deficit
|
Total
|
||||||||||||||||||
Balance,
December 31, 2003
|
2,500
|
$
|
1,060
|
2,487,107
|
$
|
—
|
$
|
75
|
$
|
—
|
$
|
(1,030
|
)
|
$
|
105
|
||||||||||
Preferred
stock dividends
|
—
|
60
|
—
|
—
|
—
|
—
|
(60
|
)
|
—
|
||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(6,309
|
)
|
(6,309
|
)
|
|||||||||||||||
Balance,
December 31, 2004
|
2,500
|
1,120
|
2,487,107
|
—
|
75
|
—
|
(7,399
|
)
|
(6,204
|
)
|
|||||||||||||||
Preferred
stock dividends
|
—
|
60
|
—
|
—
|
—
|
—
|
(60
|
)
|
—
|
||||||||||||||||
Conversion
of preferred stock (1)
|
(2,500
|
(1,180
|
)
|
5,800,159
|
8
|
—
|
1,172
|
—
|
—
|
||||||||||||||||
Exercise
of warrants (2)
|
—
|
—
|
436,172
|
1
|
(75
|
)
|
74
|
—
|
—
|
||||||||||||||||
Issuance
of common stock (3)
|
—
|
—
|
76,562
|
—
|
—
|
444
|
—
|
444
|
|||||||||||||||||
Merger
with Cape Coastal (4)
|
—
|
—
|
599,331
|
—
|
—
|
(2,061
|
)
|
—
|
(2,061
|
)
|
|||||||||||||||
Private
offering (5)
|
—
|
—
|
10,000,003
|
8
|
5,200
|
29,792
|
—
|
35,000
|
|||||||||||||||||
Deemed dividend (6)
|
—
|
—
|
—
|
—
|
—
|
1,156
|
(1,156
|
)
|
—
|
||||||||||||||||
Private
offering costs (7)
|
—
|
—
|
—
|
—
|
522
|
(4,670
|
)
|
—
|
(4,148
|
)
|
|||||||||||||||
Warrants
issuance (8)
|
—
|
—
|
—
|
—
|
600
|
—
|
—
|
600
|
|||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(9,049
|
)
|
(9,049
|
)
|
|||||||||||||||
Balance,
December31, 2005
|
—
|
—
|
19,399,334
|
17
|
6,322
|
25,907
|
(17,664
|
)
|
14,582
|
||||||||||||||||
Second
private offering (9)
|
—
|
—
|
333,332
|
3
|
1,560
|
11,937
|
—
|
13,500
|
|||||||||||||||||
Stock
Compensation Expense
|
—
|
—
|
—
|
—
|
—
|
708
|
—
|
708
|
|||||||||||||||||
Second
private offering costs (9)
|
—
|
—
|
600,667
|
—
|
204
|
(1,704
|
)
|
—
|
(1,500
|
)
|
|||||||||||||||
Net
Loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(7,555
|
)
|
(7,555
|
)
|
|||||||||||||||
Balance,
December 31, 2006
|
—
|
$
|
—
|
20,333,333
|
$
|
20
|
$
|
8,086
|
$
|
36,848
|
$
|
(25,219
|
)
|
$
|
19,735
|
(1) |
Conversion
of 2,500 shares of convertible voting preferred stock just
prior to the
merger with Cape Coastal and exchange of resulting 2,500
shares of common
stock for the common stock of Cape Coastal at an exchange
ratio of 2,320
to 1. See Footnote 3. Dividends were not paid and therefore
reflected as a
contribution to paid-in-capital.
|
(2) |
Exercise
of warrants just prior to the merger with Cape Coastal and
exchange of
resulting 188 shares of common stock for the common stock
of Cape Coastal
at an exchange ratio of 2,320 to 1. See Footnote
3.
|
(3) |
The
Company issued 33 shares of its non-voting common stock in
October 2005
for $444. These shares are also reflected as exchanged common
stock at an
exchange ratio of 2,320 to 1. See Footnote
3.
|
(4) |
Upon
the December 2005 merger with Cape Coastal, which has been
accounted for
as a reverse acquisition, the previous owners of Cape Coastal
retained
599,331 shares of $0.001 par value common stock (out of 200,000,000
authorized shares) and the Company assumed net liabilities
of Cape Coastal
of $61. In addition, 444,444 shares of common stock owned
by the previous
uBid stockholders became subject to redemption and were reclassified
out
of permanent equity. These shares were redeemed during 2006.
See Footnote
3.
|
(5) |
Concurrent
with the December 2005 merger with Cape Coastal, the Company
completed the
first part of a private placement under which it issued 10,000,003
shares
of common stock and stock warrants valued at $5,200 for an
aggregate of
$45,000. Of the issued shares, 2,222,224 were subject to
redemption and
are therefore not classified as permanent equity. These shares
were
redeemed in 2006.
|
(7) |
Private
offering costs included warrants issued to transaction advisors
valued at
$522 and cash expenses of $4,148. See Footnote
3.
|
(8) |
Concurrent
with the private offering, the Company issued warrants to
certain lenders
valued at $600 as provided in the credit agreement governing
such debt.
See Footnote 3.
|
(9) |
On
February 3, 2006, the Company completed the second part of
the private
offering of Units to accredited investors. In this offering,
the Company
sold 3,000,000 shares of its common stock and warrants to
purchase 750,002
shares of it’s common stock on the same terms as described above for an
aggregate $13,500. The Company also redeemed the 2,666,668
shares of
common stock issued in connection to the merger and the first
private
offering that were subject to redemption at a price of $4.50
per share
(and then reissued these shares without the redemption feature
as part of
the 3,000,000 shares sold). The Company also issued 600,667
shares of
common stock (valued at $4.50 per share) to shareholders
of Cape Coastal
prior to merger and uBid’s financial advisor, Calico Capital Group. In
addition, the Company issued additional warrants to purchase
90,000 shares
of it’s common stock to its placement agents on the same terms
as
described above. The second part of the private offering
resulted in no
net cash proceeds being retained by the Company. Issuance
costs, including
the value of the warrants and the shares issued to Calico
Capital Group,
were $4,407.
|
uBid.com
Holdings, Inc and Subsidiaries
|
|||||||||
Consolidated
Statements of Cash Flows
|
|||||||||
(Dollars
in Thousands)
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
|||||||||
Cash
Flows From Operating Activities
|
||||||||||
Net
loss
|
$
|
(7,555
|
)
|
$
|
(9,049
|
)
|
$
|
(6,309
|
)
|
|
Adjustments
to reconcile net loss to net cash used in Operating
activities
|
||||||||||
Depreciation
and amortization
|
438
|
181
|
176
|
|||||||
Interest
expense paid with warrants
|
-
|
600
|
-
|
|||||||
Non-cash
compensation expense
|
708
|
-
|
200
|
|||||||
Changes
in assets and liabilities:
|
||||||||||
Accounts
receivable
|
(504
|
)
|
(660
|
)
|
(454
|
)
|
||||
Merchandise inventories
|
1,935
|
1,217
|
(1,476
|
)
|
||||||
Prepaid expenses and other current assets
|
(542
|
)
|
(74
|
)
|
265
|
|||||
Accounts payable
|
(2,217
|
)
|
(13
|
)
|
2,065
|
|||||
Accrued expenses
|
(2,133
|
)
|
1,051
|
370
|
||||||
Net
cash used in operating activities
|
(9,870
|
)
|
(6,747
|
)
|
(5,163
|
)
|
||||
Cash
Flows From Investing Activities
|
||||||||||
Capital
expenditures
|
(717
|
)
|
(376
|
)
|
(109
|
)
|
||||
Purchased
intangible assets
|
(723
|
)
|
-
|
-
|
||||||
Change
in restricted investments
|
6,789
|
(5,344
|
)
|
2,011
|
||||||
Net
cash provided by (used in) investing activities
|
5,349
|
(5,720
|
)
|
1,902
|
||||||
Cash
Flows From financing Activities
|
||||||||||
Change
in flooring facility
|
(1,460
|
)
|
1,523
|
(3,167
|
)
|
|||||
Proceeds
from issuance of related-party debt
|
-
|
1,500
|
9,000
|
|||||||
Proceeds
from issuance of Bridge notes
|
-
|
5,000
|
-
|
|||||||
Proceeds
from sale of common stock and warrants
|
13,500
|
29,500
|
-
|
|||||||
Redemption
of common stock
|
(12,000
|
)
|
-
|
-
|
||||||
Fees
paid in conjunction with Merger and offerings
|
(1,500
|
)
|
(4,148
|
)
|
-
|
|||||
Payments
on notes payable
|
-
|
(1,000
|
)
|
(1,000
|
)
|
|||||
Proceeds
from sale of non-voting common stock
|
-
|
444
|
-
|
|||||||
Repayment
of related-party debt
|
-
|
(500
|
)
|
-
|
||||||
Payments
on long-term debt
|
(410
|
)
|
(410
|
)
|
(666
|
)
|
||||
Net
cash (used in) provided by financing activities
|
(1,870
|
)
|
31,909
|
4,167
|
||||||
Net
(Decrease) Increase in Cash and Cash Equivalents
|
(6,391
|
)
|
19,442
|
906
|
||||||
Cash
and Cash Equivalents, beginning of year
|
21,176
|
1,734
|
828
|
|||||||
Cash
and Cash Equivalents, end of year
|
$
|
14,785
|
$
|
21,176
|
$
|
1,734
|
||||
Supplemented
Cash Flow Disclosure
|
||||||||||
Cash
paid for interest
|
$
|
275
|
$
|
2,494
|
$
|
1,056
|
||||
Common
stock and warrants issued in exchange for cancellation of related
party
debt
|
$
|
-
|
$
|
10,500
|
$
|
-
|
||||
Common
stock and warrants issued in exchange for cancellation of
debt
|
$
|
-
|
$
|
5,000
|
$
|
-
|
||||
Warrants
and stock issued as stock issuance costs
|
$
|
2,907
|
$
|
522
|
$
|
-
|
1.
|
Organization
and
Operations
|
uBid.com
Holdings, Inc. (the “Company”), formerly uBid, Inc., operates a
leading on-line marketplace that enables itself, certified merchants,
manufacturers, retailers, distributors and small businesses to
offer high
quality excess, new, overstock, close-out, refurbished and limited
supply
brand name merchandise to consumer and business customers. Through
the
Company’s website, located at www.ubid.com,
the Company offers merchandise across a wide range of product
categories
including but not limited to computer products, consumer electronics,
apparel, housewares, watches, jewelry, travel, sporting goods,
home
improvement products and collectibles. The Company’s marketplace employs a
combination of auction style and fixed price formats.
|
uBid, Inc. commenced operations in 1997 primarily selling computer and consumer electronics on our online auction style marketplace as a wholly-owned subsidiary of PC Mall. In December 1998, uBid completed an initial public offering. | ||
|
|
In
April 2000, CMGI, Inc. (“CMGI”) acquired ownership of uBid, Inc. in a
stock-for-stock merger transaction valued at approximately $407,000.
Upon
closing, uBid, Inc. became a wholly- owned subsidiary of
CMGI.
|
On April 2, 2003, CMGI sold substantially all of the assets and non-related party liabilities of uBid, Inc. to Takumi Interactive, Inc., an investment vehicle of Petters Group Worldwide, LLC (“Petters Group”) formed on March 7, 2003, which changed its name to uBid, Inc. immediately after the acquisition. As a result of the transaction, uBid became a separate stand-alone business owned substantially by the Petters Group. In consideration of the asset sale, Takumi paid CMGI (1) $1,612,500 in cash at closing, (2) a promissory note in the aggregate principal amount of $2,000,000, bearing interest at the prime rate plus 1.5%, payable in two equal installments on the first and second anniversaries of the closing, and (3) a warrant to purchase non-voting common stock of uBid constituting 5% of the outstanding common stock of uBid on the consummation of the business sale. | ||
On December 29, 2005 (the “Closing Date”) , uBid entered into a Merger Agreement and Plan of Reorganization with Cape Coastal Trading Corporation (the previous public reporting entity), and uBid Acquisition Co., Inc., a wholly-owned subsidiary of Cape Coastal. Under the Merger Agreement, uBid Acquisition Co. merged with and into uBid, with uBid remaining as the surviving corporation and our wholly-owned subsidiary. | ||
Before
the merger, Cape Coastal Trading Corporation was a shell company.
Our
business operations following the merger are those of our wholly-owned
subsidiaries, uBid and Dibu Trading Corporation.
|
||
|
|
The
merger was treated as a recapitalization of uBid for financial
accounting
purposes. Accordingly, the historical financial statements of
Cape Coastal
before the merger have been replaced with the historical financial
statements of uBid before the merger. The name Cape Coastal was
subsequently changed to uBid.com Holdings, Inc. in February
2006.
|
2.
|
Summary of Significant
Accounting Policies
|
|
Use
of Estimates
|
The
preparation of financial statements in conformity with generally
accepted
accounting principles in the United States of America requires
management
to make estimates and assumptions that affect the reported amounts
of
assets and liabilities and disclosure of contingent assets and
liabilities
at the date of the financial statements, and the reported amounts
of
revenues and expenses during the respective reporting periods.
Actual
results could differ from those estimates.
|
|
Year-End
|
The
Company’s fiscal years end on December 31.
|
|
Cash
and Cash Equivalents
|
The
Company considers all highly liquid investments purchased with
a maturity
of three months or less to be cash equivalents. Cash and cash
equivalents
include financial instruments that potentially subject the Company
to a
concentration of credit risk. The Company maintains its cash
balances in
two institutions and has concentration of credit risk to the
extent
deposits exceeded the federally insured limits.
|
|
Restricted
Investments
|
The Company maintains restricted collateral invested in money market accounts and are used as security for the Company’s office lease and purchases from certain suppliers. Interest on the money market account is earned at 2.0% per annum. | |
During
2005 the Company was required to maintain Letters of Credit collateralized
by restricted investments to support credit lines with certain
suppliers.
For 2006, a maximum of $7,000 was available under the credit
line
described in Note 10 eliminating the need for restricted
investments.
|
||
Accounts
Receivable
|
Accounts
receivable consist of amounts due from customers, businesses,
and credit
cards billed for which payment has not yet been received at year
end. An
allowance for doubtful accounts is maintained at a level management
believes is sufficient to cover potential losses based on historical
trends and known current factors.
|
|
Activity
relating to the allowance for doubtful accounts is summarized
as
follows:
|
Merchandise
Inventories
|
Merchandise
inventories consist of merchandise purchased for resale and are
valued at
the lower of specifically identified cost or market. The Company
establishes allowances for damages, excess and obsolete inventory
equal to
the difference between the cost of inventory and the estimated
market
value based upon assumptions about future demand and market
conditions.
|
Property
and Equipment
|
Property
and equipment are stated at cost and depreciated/amortized on
a
straight-line basis over the estimated useful lives of the related
assets
as follows:
|
|
Furniture
and fixtures
|
7
years
|
|
|
Computer
equipment
|
3
years
|
|
|
Leasehold
improvements
|
Life
of Lease
|
|
Maintenance
and repairs are charged to expense as incurred. Major betterments
are
capitalized and depreciated over the remaining useful lives of
the
respective assets. Gains and losses on disposal of assets are
credited or
charged to income.
|
||
Purchased
Intangible
Assets
|
Purchased
intangible assets consist primarily of a trademark and customer
relationships. These assets are amortized over their estimated
useful
lives of twelve to twenty-four months.
|
||
Long-Lived
Assets
|
Long-lived
assets are reviewed for impairment whenever events or circumstances
indicate the remaining useful life of any long-lived assets may
warrant
revision or that the remaining carrying value of such assets
may not be
recoverable. When factors indicate that such assets should be
evaluated
for possible impairment, the Company uses an estimate of the
undiscounted
cash flows over the remaining life of the asset in measuring
whether the
asset is recoverable. No impairment has been recognized for the
years
ended December 31, 2006 and 2005.
|
||
Financial Instruments
|
The
carrying amounts reported in the balance sheet for cash, cash
equivalents,
restricted investments, accounts receivable, flooring facility,
accounts
payable, accrued expenses and current maturities of long term
debt
approximate fair value because of the short-term nature of these
amounts.
|
||
Revenue
Recognition
|
The
Company sells merchandise under two types of arrangements, direct
purchase
sales and revenue sharing arrangements.
|
||
|
For
direct purchase sales, the Company is responsible for conducting
the
auction for merchandise owned by the Company, billing the customer,
shipping the merchandise to the customer, processing merchandise
returns
and collecting accounts receivable. In accordance with the
provisions of
Staff Accounting Bulletin 104, the Company recognizes revenue
when the
following revenue recognition criteria are met: (1) persuasive
evidence of an arrangement exists; (2) the product has been shipped
(FOB Shipping Point) and the customer takes ownership and assumes
the risk
of loss; (3) the selling price is fixed or determinable; and
(4) collection of the resulting receivable is reasonably
assured.
|
||
|
For
sales of merchandise under revenue-sharing agreements, the Company
is
responsible for conducting the auction for merchandise owned
by third
parties, billing the customer, arranging for a third party to
complete
delivery to the customer, processing merchandise returns and
collecting
accounts receivable. The Company bears no physical inventory
loss or
returns risk related to these sales. The Company records commission
revenue at the time of shipment. Commission revenues recognized
under
revenue sharing arrangements were $4,686, $3,384 and $1,827 for
the
periods ended December 31, 2006, 2005 and 2004,
respectively.
|
Shipping
and Handling
Costs
|
Shipping
costs that are billable to the customer are included in revenue
and all
shipping costs that are payable to vendors are included in cost
of
revenues in the accompanying consolidated statements of operations.
Handling costs consisting primarily of the third party logistics
warehouse
costs are included in general and administrative expenses and
for the
years ended December 31, 2006, 2005 and 2004 were $767, $874, and
$1,025 respectively.
|
||
Merchandise
Return Policy
|
The
Company’s return policy, for all selling arrangements, is that merchandise
sold by the Company can be returned within 15 days. Returns are
subject to
a 15% restocking fee which are included in revenues. Restocking
fees for
the periods ended December 31, 2006, 2005 and 2004 were $81, $71 and
$80, respectively. However, the Company, although not obligated to do
so, may accept merchandise returns outside the 15-day period
if a product
is defective or does not conform to the specifications of the
item sold at
auction, and attempts to work with its customers to resolve complaints
about merchandise. The Company provides an accrual for estimated
future
returns at the time of shipment based on historical
experience.
|
||
Activity relating to the merchandise return accrual is summarized as follows: |
Advertising
Costs
|
The
Company has marketing relationship agreements with various online
companies such as portal networks, contextual sites, search engines
and
affiliate partners. Agreements have varying terms including 1-14
day
cancellation clauses. Advertising costs are generally charged
to the
Company monthly per vendor agreements, which typically are based
on
visitors and/or registrations delivered to the site or at a set
fee.
Agreements do not provide for guaranteed renewal and may be terminated
by
the Company without cause. Such advertising costs are charged
to expense
as incurred.
|
|
Stock-Based
Compensation
|
Effective
January 1, 2006, the Company adopted Statement of Financial Accounting
Standards No. 123(R) (“SFAS 123R”). This pronouncement requires companies
to measure the cost of employee service received in exchange
for a
share-based award (typically stock options) based on the fair
value of the
award. The Company has elected to use the “modified prospective”
transition method for stock options granted prior to January
1, 2006, but
for which the vesting period is not complete. There were no options
granted prior to December 29, 2005. Under this transition method,
the
Company accounts for such awards on a prospective basis, with
expense
being recognized in its statement of operations beginning in
the first
quarter of 2006 and continuing over the remaining requisite service
period
based on the grant date fair value estimated in accordance with
Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (“SFAS 123”). Prior to 2006, the Company accounted for
employee stock options using the method of accounting prescribed
by
Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to
Employees, and associated interpretations using the intrinsic
method.
Generally, no expense was recognized related to its stock options
under
this method because the stock option’s exercise price was set at the
stock’s fair market value on the date the option was granted. The Company
recognizes these compensation costs on a straight-line basis
over the
requisite service period of the award which is generally the
option
vesting term of four years. The total compensation expense related
to the
stock option plan for the year ended December 31, 2006 was $0.7
million.
|
Income
Taxes
|
The
Company accounts for income taxes under the liability method.
Under this
method, deferred income taxes are recognized by applying enacted
statutory
tax rates applicable to future years to differences between the
income tax
bases and financial reporting amounts of existing assets and
liabilities.
A valuation allowance is provided when it is more likely than
not that all
or some portion of deferred income tax assets will not be
realized.
|
|
Net
Loss Per Share
|
The
Company computes loss per share under Statement of Financial
Accounting
Standards (“SFAS”) No. 128, “Earnings Per Share.” The statement requires
presentation of two amounts: basic and diluted loss per share.
Basic loss
per share is computed by dividing the loss available to common
stockholders by the weighted average common shares outstanding.
Dilutive
earnings per share would include all common stock equivalents
unless
anti-dilutive.
|
|
|
Due
to losses in each period presented, the Company has not included
the
following common stock equivalents in its computation of diluted
loss per
share as their input would have been anti-dilutive. Considering
the
retroactive reflection of the merger with Cape Coastal and the
resulting
share exchange, no common stock equivalents were outstanding
until
2005.
|
New
Accounting
Pronouncements
|
In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes by prescribing the recognition threshold a tax position is required to meet before being recognized in the financial statements. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006 and is required to be adopted by the Company in the first quarter of fiscal 2007. The cumulative effects, if any, of applying FIN 48 will be recorded as an adjustment to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the effect that the adoption of FIN 48 will have on its consolidated results of operations and financial condition but does not expect it to have a material impact. | |
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 provides guidance for using fair value to measure assets and liabilities. It also responds to investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and is required to be adopted by the Company in the first quarter of 2008. The Company is currently evaluating the effect that the adoption of SFAS 157 will have on its consolidated results of operations and financial condition but does not expect it to have a material impact. |
On February 15, 2007, the FASB issued Statement of Financial Accounting Standards No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115" ("SFAS 159"). This standard permits an entity to measure financial instruments and certain other items at estimated fair value. Most of the provisions of SFAS No. 159 are elective; however, the amendment to FASB No. 115, "Accounting for Certain Investments in Debt and Equity Securities," applies to all entities that own trading and available-for-sale securities. The fair value option created by SFAS 159 permits an entity to measure eligible items at fair value as of specified election dates. The fair value option (a) may generally be applied instrument by instrument, (b) is irrevocable unless a new election date occurs, and (c) must be applied to the entire instrument and not to only a portion of the instrument. SFAS 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity (i) makes that choice in the first 120 days of that year, (ii) has not yet issued financial statements for any interim period of such year, and (iii) elects to apply the provisions of FASB 157. We are currently evaluating the impact of SFAS 159, if any, on our consolidated financial statements. | ||
In addition, the Company is reviewing the following Emerging Issues Task Force (“EITF”) consensuses and does not currently expect that the adoption of these will have a material impact on its consolidated results of operations and financial condition: |
§
|
EITF
05-5, “Accounting for Early Retirement or Post-employment Programs with
Specific Features issued in June 2005 and effective for the Company
in the
first quarter of 2007, this EITF applies to early retirement
programs
which create incentives for employees, within a specific age
group, to
transition from full or part-time employment to retirement before
legal
retirement age.
|
||
§
|
EITF
06-2, “Accounting for Sabbatical Leave and Other Similar Benefits.” Issued
in June 2006 and effective for the Company in the first quarter
of fiscal
2008, this EITF applies to compensated absences that require
a minimum
service period but have no increase in the benefit even with
additional
years of service.
|
||
§
|
EITF
06-9, “Reporting a Change in (or the Elimination of) a Previously Existing
Difference between the Fiscal Year End of a Parent Company and
That of a
Consolidated Entity or between the Reporting Period of an Investor
and
That of an Equity Method Investee.” Issued in November 2006 and effective
for the Company in the second quarter of 2007, this EITF requires
certain
disclosures whenever a change is made to modify or eliminate
the time lag
(usually three months or less) used for recording results of
consolidated
entities or equity method investees that have a different fiscal
year end
than the Company.
|
||
|
§
|
EITF
00-19-2 , “ Accounting for Registration Payment Arrangements”. Issued in
December 2006, this pronouncement requires an entity to recognize
and
measure a registration payment arrangement as a separate unit
of account
from the financial instrument subject to that arrangement. If
the transfer
of consideration is probable and reasonably estimated at inception,
the
liability should be included in the allocation of proceeds from
the
financing transaction. The effective date is for financial statements
issued for fiscal years beginning after December 31, 2006 and
retrospective application is not
permitted.
|
3.
|
Merger
and Private
Offerings
|
On
December 29, 2005, Cape Coastal Trading Corporation, uBid Acquisition
Co.,
Inc. (“Acquisition Sub”) and uBid, Inc. entered into a Merger Agreement
and Plan of Reorganization. Under the Merger Agreement, Acquisition
Sub
merged with and into uBid, Inc., with uBid, Inc. remaining as
the
surviving corporation and a wholly-owned subsidiary of Cape Coastal
Trading Corporation (or “Cape Coastal”). Just prior to the closing date,
all outstanding convertible preferred shares and warrants to
acquire
common shares of uBid were converted and exercised such that,
just prior
to the merger 3,793 common shares were outstanding which were
exchanged on
a 2,320 to 1 basis on the closing date into 8,800,000 shares
of common
stock with up to 444,444 shares of common stock subject to redemption
at a
redemption price of $4.50. The Financial Statements reflect the
impact of
the merger and the resulting exchange of the Company’s common stock
outstanding before the conversion and exercise of the convertible
preferred stock and warrants. The stockholders of Cape Coastal
before the
merger retained 599,331 shares of common stock. Before the merger,
Cape
Coastal was a public shell company. Concurrent with the merger,
the
Company amended its Certificate of Incorporation to change its
name from
Cape Coastal Trading Corporation to “uBid.com Holdings,
Inc.”
|
|
The
merger was treated as a recapitalization of uBid for financial
accounting
purposes. Accordingly, the historical financial statements of
Cape Coastal
before the merger were replaced with the historical financial
statements
of uBid before the merger. All share and per share data has been
retroactively restated to reflect the implicit conversion ratio
related to
the exchange of shares in the merger.
|
|
|
|
Concurrent
with the merger, the Company completed the first part of a private
offering of common stock shares and warrants (the “Units”) to accredited
investors. The Company sold 10,000,003 shares of its common stock
of which
2,222,224 shares were subject to redemption and warrants to purchase
2,500,003 shares of its common stock at $5.85 for a period of
5 years, for
aggregate consideration of approximately $45,000. These warrants
were
valued at $2.08 per warrant for an aggregate of $5,200 using
a
Black-Scholes model (see Note 16 for pricing assumptions). Some
of the
investors participating in the first part of the private offering
held
notes that were issued by uBid before the merger, including $10,500
of
debt held by the Petters Group and $5,000 of debt held by the
bridge loan
holders. Rather than accepting cash consideration for the Units
acquired
by these investors, the Company agreed to issue Units at a rate
of one
Unit for each $4.50 of debt for consideration of the note holders’
cancellation of the existing notes. Of the 3,444,444 Units issued
in
exchange for debt, 2,222,224 Units were issued to Petters Group
with
common shares that were subject to redemption at a redemption
price of
$4.50. For debt exchanged with Units that did not have redeemable
common
shares, the value of the securities issued in exchange for the
debt
equaled the face value of the debt exchanged, and accordingly,
no gain or
loss was recognized or recorded by the Company. Due to the higher
value of
the redeemable common shares issued to Petters Group, the Company
realized
a loss of approximately $1,156 upon the exchange of debt for
Units with
those redeemable common shares. However, as the Petters Group
is
considered a significant related party to the Company, the exchange
was
treated for accounting purposes as a capital transaction and
the resulting
loss was reflected as a dividend to shareholders rather than
as a direct
reduction of net earnings. Therefore, the consideration the Company
received on the Closing Date consisted of approximately $29,500
in cash
and $15,500 in cancelled debt. In addition, on the Closing Date,
the
Company issued warrants to purchase 333,333 shares of its common
stock to
the bridge note holders as a financing fee, which warrants are
exercisable
for three years at an exercise price of $4.50 and the value of
which,
$600, was recorded as interest expense. The Company also issued
warrants
to purchase 230,000 shares of its common stock to its placement
agents in
the offering, which warrants are exercisable for five years at
an exercise
price of $4.50 and the value of which, $522, was recorded as
cost of the
equity issuance. These warrants were valued at $1.80 and $2.27,
respectively, per warrant for an aggregate of $1,122 using a
Black-Scholes
model (see Note 16 for pricing assumptions). Issuance costs,
including the
value of the placement agent warrants, were
$4,670.
|
|
|
On
February 3, 2006, the Company completed the second part of
the private
offering to accredited investors. In this offering, the Company
sold on
the same terms as described above for an aggregate of $13,500,
3,000,000
shares of its common stock and warrants to purchase 750,002
shares of its
common stock. The Company also redeemed the 2,666,668 shares
of common
stock issued in connection with the merger and the first private
offering
that were subject to redemption at a price of $4.50 per share
and issued
600,667 shares of common stock (valued at $4.50 per share)
to Cape Coastal
and uBid’s financial advisor, Calico Capital Group. In addition, the
Company issued additional warrants to purchase 90,000 shares
of its common
stock to its placement agents on the same terms as described
above. The
second part of the private offering resulted in no net cash
proceeds being
retained by the Company. Issuance costs, including the value
of the
placement agent warrants and the shares issued to Calico Capital
Group,
were $4,407.
|
4.
|
Merchandise
Inventories
|
Merchandise
inventories consist of the
following:
|
Activity
relating to the inventory reserve is summarized as
follows:
|
5.
|
Major
Suppliers
|
During
the year ended December 31, 2006, Sony Electronics, Inc. (“Sony”) and
Hewlett Packard Company (“HP”), accounted for 12.86% and 7.58%,
respectively, of the Company’s inventory purchases. Amounts due at
December 31, 2006 included in accounts payable and flooring facility
were
approximately $883 and $254, respectively, to these
vendors.
|
|
|
During
the year ended December 31, 2005, Sony and HP, accounted for
33.2% and 8.9%, respectively, of the Company’s inventory purchases.
Amounts due at December 31, 2005 included in accounts payable
and flooring
facility were approximately $752 and $433, respectively, to these
vendors.
|
During
the year ended December 31, 2004, Sony and HP accounted for 54.7% and
10.9%, respectively, of the Company’s inventory purchases. Amounts due at
December 31, 2004 included in accounts payable and flooring facility
were approximately $2,166 and $30, respectively, to these
vendors.
|
||
6.
|
Property
and Equipment
|
Property
and equipment consist of the
following:
|
|
|
Depreciation
and amortization expense was $316, $181 and $176 for the years ended
December 31, 2006, 2005 and 2004, respectively.
|
7.
|
Purchased
Intangible
Assets
|
During
2006, the Company purchased certain intangible assets consisting
of a
trademark and customer list totaling approximately $723. Total
amortization for the year ended December 31, 2006 was approximately
$122.
Amortization expense expected to be incurred for the years ending
December
31, 2007 and December 31, 2008 is $361 and $240,
respectively.
|
8.
|
Related
Party Transactions
|
The
following represents significant transactions between the Company
and
Petters Group, a holder of greater than 5% of our voting common
stock
during 2006, 2005 and 2004.
|
|
Service
Assistance
|
The
Company had entered into an advisory agreement with Petters Group,
whereby
Petters Group provided financial and management consulting services
to the
Company for a fee. General and administrative expenses include
approximately $30, $360 and $264 for management fees payable
to the
Petters Group for services rendered during 2006, 2005 and 2004,
respectively. The agreement was terminated in January
2006.
|
|
Product
Purchases
|
The
Company purchases products from Petters Group for direct purchase
sales.
Purchases from Petters Group were $365, $1,597 and $1,473 for
the years
ended December 31, 2006, 2005 and 2004, respectively. At December
31, 2006
and 2005, amounts due to Petters Group included in accounts payable
were
$36 and $442, respectively.
|
|
Product
Sales
|
Petters
Group owns approximately 25% of the outstanding shares of WSS
Media, Inc.,
(“WSS”). During the year ended December 31, 2005, we sold approximately
$223,000 in product to WSS Media, Inc. At December 31, 2005,
the balance
was unpaid. We made no sales to WSS in 2006 and had no outstanding
balance
at December 31, 2006.
|
|
Promissory
Notes
|
During
2005, the Company had a convertible promissory note of $500 due
to the
Petters Group. This note bore an annual interest rate of 8%.
This note and
the related unpaid, earned interest was due and paid in full
April 8,
2005.
|
|
|
On
April 2, 2003, the Company entered into a secured revolving credit
agreement with the Petters Group for up to $5,000. On November
22, 2004,
the Company entered into a second secured revolving credit agreement
for
up to $4,000. Both agreements were secured by a subordinated
security
interest in all of the assets of the Company. Both agreements
were renewed
on March 21, 2005 and were scheduled to expire on March 31, 2006.
Borrowings bore an annual interest rate of 14%. In April 2005,
the second
secured revolving credit agreement of up to $4,000 was increased
by $1,500
to $5,500.
|
|
|
On
December 29, 2005, Petters Group debt consisting of $10,500 under
the
secured credit agreements was cancelled and exchanged for 2,333,334
shares
of common stock and 583,333 warrants with a five year life and
an exercise
price of $5.85. Of the shares of common stock issued, 2,222,224
shares
were redeemable at $4.50 per share if the minimum 10,000,000
units were
sold in the first private offering and the second private offering
occurred within 40 days of the first private offering. All accrued
interest was paid on December 29, 2005. A loss of $1,156 on the
extinguishment of debt was incurred and was recorded as a deemed
dividend
in 2005.
|
|
|
During
2005, the Company had a $5,000 note payable that bore interest
at 14% due
monthly to Lancelot Investments. The note was paid on December
29, 2005
with proceeds from the first private placement. The Lancelot
Investment
note was guaranteed by the Petters Group.
|
|
Interest
Expense
|
A
summary of the interest expense on related-party debt is as
follows:
|
2005
|
2004
|
|||||||||
$500
note payable
|
$
|
-
|
$
|
67
|
$
|
67
|
||||
$5,000
revolver
|
-
|
670
|
624
|
|||||||
$5,500
revolver
|
-
|
670
|
42
|
|||||||
Lancelot
Investment $5,000 note payable
|
-
|
480
|
-
|
|||||||
|
||||||||||
Total
|
$
|
-
|
$
|
1,887
|
$
|
733
|
9.
|
Flooring
Facility
|
During
2006, 2005 and 2004, the Company maintained a short-term $1,000,
$4,000 and $1,500 secured flooring facility with IBM (the “Flooring
Facility”), respectively, whereby IBM made payments on behalf of the
Company to its vendors. Under the terms of the agreement, the
Flooring
Facility does not bear interest if outstanding balances are paid
within
the terms specific to each vendor; otherwise, interest is accrued
on
outstanding balances at the prime rate plus 6.5% (effectively
14.5% at
December 31, 2006). The Company accounts for all Flooring Facility
purchases as a financing cash inflow, with a corresponding cash
outflow
for the increase in its inventory. Upon repayment, the cash outflow
is
reported as a financing activity. The net effect on operating
cash flow is
the amount of gross profit generated. Interest expense for the
years ended
and December 31, 2006, 2005 and 2004 relating to the Flooring
Facility was
$150, $140 and $432, respectively.
|
|
|
As
of December 31, 2006 and 2005, amounts outstanding under the Flooring
Facility consist of the following:
|
|
|
During
2006 and 2005, the Flooring Facility was secured by security
deposits of
$1,000 and $4,000, respectively. (See Note 2, restricted investments,
for
further explanation.) There are no restrictive covenants on the
Flooring
Facility.
|
10
|
Long-Term
Debt
|
On
November 10, 2003, the Company entered into an amended Microsoft
Enterprise Agreement with Microsoft, Inc. (the “Microsoft Agreement”).
This Microsoft Agreement enables the Company to license one or
more of
Microsoft’s license products across the Company’s platform to ensure that
the entire Company’s enterprise will be licensed. Under the terms of the
agreement, amounts were payable in quarterly installments of
approximately
$102 through December 31, 2006. The December 31, 2005 balance
of $410 was
paid in 2006. The Company accounted for the amended agreement
by adjusting
the then present balance of the obligation under the existing
agreement to
the new obligation under the amended agreement. The incremental
additional
obligation of $80 associated with the amended agreement was capitalized
in
computer software and is being amortized over its estimated useful
life.
Accumulated amortization was $80 at December 31, 2006 and $53
at December
31, 2005.
|
|
|
On
July 21, 2004, the Company entered into an agreement with Banco
Popular
North America (“Banco Popular”) under which the Company obtained a $5,000
irrevocable letter of credit (“iLOC”) for the benefit of Sony. This iLOC
is used as a security deposit for inventory purchases from Sony.
Sony may
draw upon the iLOC in the event the Company is in payment default.
The
iLOC bears an annual rate of interest of 2.0%. Sony then reimburses
the
Company 0.5%. The iLOC is secured by all of the assets of the
Company.
Petters Group and Lancelot Investment had provided a guarantee
to Banco
Popular for the full $5,000 in the event Sony drew upon the iLOC.
In
addition, Banco Popular has entered into inventory buyback agreements
with
Sony and the Petters Group. Sony and Petters Group have agreed
to buy back
the Sony product from the Company in the event of a default.
On December
30, 2005, we provided a $5,000 deposit as a restricted cash security
to
Banco Popular to release Lancelot Investment and Petters Group
from their
obligations under the letter of credit.
|
On
October 3, 2005, the Company issued unsecured promissory notes
in the aggregate amount of $5,000 (the “Bridge Notes”) to two
institutional investors (collectively, the “Note Holders”). In connection
with the issuance of the Bridge Notes, the Company, upon the
first closing of our private offering on December 29, 2005, issued
the Note Holders warrants to purchase 333,333 shares of common
stock for a
period of three years at a purchase price of $4.50. These warrants
were
recorded at fair value as interest expense in the accompanying
statement
of operations. In conjunction with the first closing, the Bridge
Notes were exchanged for 1,111,111 Units consisting of 1,111,111
shares of
common stock and 277,778 warrants with a five year life with
an exercise
price of $5.85. These shares did not have a redeemable feature
and no gain
or loss was recorded in the
exchange.
|
|
|
On
May 9, 2006, the Company and its subsidiaries entered into a
Credit and
Security Agreement with Wells Fargo Bank, National Association
acting
through Wells Fargo Business Credit and related security agreements
and
other agreements described in the Credit and Security Agreement
(the
“Credit Agreement”). The Credit Agreement provides for advances to the
Company of up to a maximum of $25,000. The amount actually available
to
the Company will vary from time to time, depending on, among
other
factors, the amount of eligible inventory and the amount of eligible
accounts receivable. The obligations under the Credit Agreement
and all
related agreements are secured by all of the Company’s assets. The initial
term of the Agreement is three years, expiring on April 28, 2009.
Up to
$7,000 of the maximum amount is available for irrevocable, standby
and
documentary letters of credit. At December 31, 2006, the Company
had
$3,000 in letters of credit issued as security for purchases
from certain
suppliers. Advances under the Credit Agreement bear interest
at a base
rate (Wells Fargo Bank’s prime rate) or LIBOR plus 2.5%. The Credit
Agreement requires a prepayment fee of $500 if the Company terminates
the
Credit Agreement during its first year, $400 if it terminates
the Credit
Agreement during its second year and $100 if the Company terminates
the
Credit Agreement during the third year. The Credit Agreement
requires the
Company, among other things, to limit capital expenditures and
maintain
minimum availability on the line. Also, the Company is obligated
contractually by a restrictive lock box arrangement. The Credit
Agreement
also requires the Company to pay a variety of other fees and
expenses,
including minimum monthly interest of $10. The Company, as of
December 31,
2006, had $100 in deferred financing fees being amortized over
the life of
the Credit Agreement. As of December 31, 2006, the effective
loan rate was
8.25% and the Company had no outstanding balance and was in compliance
with all the loan covenants.
|
11.
|
Employee
Benefit Plans
|
Company
employees participate in a 401(k) savings plan. The plan is open
to all
full-time eligible employees who have attained age 21 and have
completed
30 days of service. Participants may make tax-deferred contributions
subject to limitations specified by the Internal Revenue Code.
Employee
contributions of up to 3% are currently matched by the Company
at a rate
of 50%. Employees are 100% vested in their pretax contributions
at all
times and become fully vested in the employer-matching contribution
after
two years of service. During the years ended December 31, 2006,
2005 and
2004, the Company incurred $69, $70 and $59 of expenses, respectively,
related to the 401(k) matching component of this plan.
|
12.
|
Contingent
Liabilities
|
From
time to time, the Company is subject to claims and administrative
proceedings, including product liability matters, resulting from
the
conduct of its business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse
effect on
the financial position or results of operations of the Company.
In
addition, the Company maintains product liability insurance that
is
evaluated annually and considered adequate. There were no significant
contingencies as of December 31, 2006.
|
13.
|
Income
Taxes
|
The
income tax provision for the years presented is as
follows:
|
Year
ended December 31,
|
2005
|
2004
|
||||||||
Current
provision:
|
||||||||||
Federal
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
State
|
-
|
-
|
-
|
|||||||
Deferred
benefit
|
(2,868
|
)
|
(3,572
|
)
|
(2,479
|
)
|
||||
Benefit
for income taxes
|
(2,868
|
)
|
(3,572
|
)
|
(2,479
|
)
|
||||
Less
increase in valuation allowance
|
2,868
|
3,572
|
2,479
|
|||||||
Income
tax provision
|
$
|
-
|
$
|
-
|
$
|
-
|
|
|
The
income tax benefit at the federal statutory tax rate is reconciled
to the
actual expense for income taxes for the years presented as
follows:
|
Year
ended December 31,
|
2005
|
2004
|
||||||||
Federal
income tax benefit at federal statutory rate
|
$
|
(2,659
|
)
|
$
|
(3,077
|
)
|
$
|
(2,159
|
)
|
|
Effect
of state income taxes
|
(209
|
)
|
(495
|
)
|
(320
|
)
|
||||
Increase
in valuation allowance
|
2,868
|
3,572
|
2,479
|
|||||||
Total
|
$
|
-
|
$
|
-
|
$
|
-
|
|
|
Components
of deferred income tax assets and liabilities are as
follows:
|
2005
|
|||||||
Deferred
income tax assets:
|
|||||||
Net
operating loss carryforward
|
$
|
8,935
|
6,204
|
||||
Inventories
|
177
|
270
|
|||||
Stock-based
compensation
|
320
|
-
|
|||||
Allowance
for doubtful accounts
|
45
|
24
|
|||||
Property
and equipment
|
41
|
44
|
|||||
Other
|
25
|
-
|
|||||
Gross
deferred income tax assets
|
9,543
|
6,542
|
|||||
Deferred
income tax liabilities
|
-
|
-
|
|||||
Property
and equipment
|
(43
|
)
|
-
|
||||
Prepaid
expenses
|
(208
|
)
|
(118
|
)
|
|||
Gross
deferred income tax liabilities
|
(251
|
)
|
(118
|
)
|
|||
Net
deferred income tax assets
|
9,292
|
6,424
|
|||||
Less
valuation allowance
|
(9,292
|
)
|
(6,424
|
)
|
|||
Net
deferred income tax asset
|
$
|
-
|
$
|
-
|
The
Company has an estimated federal net operating loss carryforward
as of
December 31, 2006 of $22,900 that have expiration dates from
2023 through
2027. Pursuant to section 382 of the Internal Revenue Code, the
usage of
these net operating loss carryforwards may be limited due to
changes in
ownership that have occurred or may occur in the future. The
Company has
not yet determined the impact, if any, that changes in ownership
have had
on net operating loss carryforwards. The Company has provided
a valuation
allowance against all of its deferred income tax assets as it
is more
likely than not that the deferred income tax assets will not
be
realized.
|
14.
|
Leases
|
|
15.
|
Phantom
Stock
Appreciation
Plan
|
The
Company had a Phantom Stock Appreciation Plan in which certain
employees
had been issued phantom shares which were subject to certain
vesting
provisions. The plan was implemented on July 1, 2003 and issued
phantom
shares were scheduled to vest over four years. Effective July
2005, the
Company terminated the Phantom Stock Appreciation Plan. The total
expense
incurred and recorded in conjunction with the plan termination
was $463 in
accordance with the plan agreement based on an independent third-party
valuation. Payouts required under the plan were made with a portion
of the
proceeds from the first private offering described in Note 3.
The Company
recorded compensation expense of $463 and $200 in the years ended
December 31, 2005 and 2004, respectively.
|
16.
|
Stock
Warrants
|
The
Company entered into a warrant agreement with CMGI pursuant to
the terms
of the asset purchase agreement dated April 2, 2003. The warrant
agreement
provided CMGI with the right to purchase shares of nonvoting
common stock
equal to up to 5% of the total fully converted common shares
then
outstanding, representing 436,172 shares (on a post - exchange
basis) as of the acquisition date, at a de minimus exercise price.
The warrant was immediately exercisable and had a term of five years.
The warrant was assigned an estimated fair value of $75 in connection
with
the asset purchase agreement as determined by the board of directors
based
upon the value of the preferred stock issued by the Company in
connection
with its initial capitalization. The warrants were exercised on
December 29, 2005 prior to the merger described in Note
3.
|
|
|
|
|
|
Additional
stock warrants issued in December 2005 and February 2006 are
described in
Note 3. The following table summarizes information about warrants
outstanding as of December 31,
2006:
|
Number
Outstanding
|
Exercise
Price
|
Remaining
Contractual
Life
|
Warrant
Fair
Value
at issue date
|
|||
3,250,003
|
$
5.85
|
5
years
|
$
2.08
|
|||
|
||||||
333,333
|
$
4.50
|
3
years
|
$
1.80
|
|||
|
||||||
320,000
|
|
$
4.50
|
5
years
|
$
2.27
|
|
|
The
warrants were valued using a Black-Scholes model using the respective
expected life, a risk free interest rate of 5.0%, no expected dividends
and a 68.0% volatility. See Note 18 for a description of the
assumptions.
|
17.
|
Common
Stock and Series A Convertible Preferred
Stock
|
|
Common
Stock
|
At
December 31, 2006 and 2005 there were 200,000,000 shares of common
stock
$.001 par value authorized and 20,333,333 and 19,399,334 shares
issued and
outstanding.
|
|
|
|
In
conjunction with the Merger Agreement described in Note 3 and
in
accordance with the Securities Purchase Agreement, the Company
agreed to
use its reasonable best efforts to prepare and file, within 45
days of the
closing of the first private offering (December 29, 2005), a
registration
statement registering for resale the shares of common stock acquired
by
the investors in the private offerings, the shares of common
stock
underlying the warrants acquired by the investors, the shares
of common
stock retained by the Cape Coastal stockholders that have not
already been
registered, the shares issued to former uBid, Inc. stockholders
in the
merger, the shares of common stock underlying the warrants issued
to the
placement agents, and the shares of common stock underlying the
warrants
issued to the Note Holders. If the registration statement had
not been
filed within 45 days after the closing of the December 29, 2005
offering,
the Company would have been required to pay each investor liquidated
damages, in cash, absent waivers to the contrary, in the amount
of 1.0% of
the purchase price multiplied by the amount of securities held
by such
investor as of the date of default. The registration statement
was filed
within the required time. If the registration statement was not
declared
effective by the SEC within 120 days of the closing of the December
2005
offering, the Company would have been required to pay each investor
damages, in cash, absent waivers to the contrary, in the amount
of the
1.0% of the purchase price multiplied by the amount of securities
held by
such investor as of the date of default. In addition, the Company
is
required to use its reasonable best efforts to keep the registration
statement continuously effective under the Securities Act until
the
earlier of the date that all registrable securities covered by
such
registration statement have been sold or can be sold under Rule
144(k). If
an investor is not permitted to sell registrable securities for
any reason
other than the fault of such Investor for five or more trading
days
whether or not consecutive, the Company will be required to pay
liquidated
damages for failing to maintain the effectiveness of the registration
statement. The liquidated damage payments would be due on a monthly
basis
until the applicable event of the default has been cured. Any
such
payments shall apply on a pro-rata basis for any portion of a
month before
an event of default is cured. Any late payments shall bear interest
at a
rate of 1.0% per month until paid in full. The maximum liquidated
damages
the Company would have been required to pay is 20% of the purchase
price
multiplied by the amount of securities held by such investor
as of the
date of default. Absent waivers to the contrary, the maximum
penalty the
Company would be required to pay is $11,700 if the Company was
in default
for the entire 24 month period before Rule 144 would take effect.
The
registration statement was declared effective on July 22, 2006
and the
Company obtained waivers through that date. As of December 31,
2006, the
Company has not paid any penalties and is in compliance with
all terms of
the agreement.
|
|
Series
A Convertible
Preferred
Stock
|
As
of December 31, 2004, the Company had 2,500 shares of voting
Series A
Convertible Preferred Stock outstanding (5,800,159 shares of
common stock
on a post-exchange basis. See also Note 3). These shares were
convertible at the option of the holder into one share of voting
common
stock at a conversion price of $400 per share which approximated
fair
value at the date of issuance. The voting Series A Preferred
Stock
automatically converted to voting common stock in the event of
a public
offering. Dividends on the voting Series A Convertible Preferred
Stock
were to accrue yearly at an annual rate of 6% however such dividends
were
never paid.
|
|
|
There
are 25,000,000 shares authorized of preferred stock with preferences
and
rights to be determined by our board of directors. No
shares were issued at December 31, 2006 and
2005.
|
18.
|
2005
Equity Incentive Plan
|
The
2005 Equity Incentive Plan is an equity-based compensation plan
to provide
incentives to, and to attract, motivate and retain the highest
qualified
employees, directors, consultants and other third party service
providers.
The 2005 Equity Incentive Plan enables the board to provide equity-based
incentives through grants or awards of stock options and restricted
stock
(collectively, “Incentive Awards”) to present and future employees,
consultants, directors, and other third party service providers.
|
A
total of 2,500,000 shares of common stock has been reserved for
issuance
under the 2005 Equity Incentive Plan. If an Incentive Award granted
pursuant to the 2005 Equity Incentive Plan expires, terminates,
is
unexercised or is forfeited, or if any shares are surrendered
to the
Company in connection with an Incentive Award, the shares subject to
such award and the surrendered shares will become available for
future
awards under the 2005 Equity Incentive Plan. Options generally
vest over a
period of four years and have a ten year contractual life. At
December 31,
2006 and 2005, the Company had options to purchase 1,530,600 and
1,721,700 shares, respectively, of common stock outstanding to
certain
officers and other employees. The compensation costs charged
against
income was $708, $0 and $0 for the years ended December 31, 2006,
2005 and
2004, respectively, and are included in General and Administrative
Expenses in the Consolidated Statement of Operations
|
||
None
of the Incentive Awards granted under the 2005 Equity Incentive
Plan were
issued for cash consideration collected from the participants.
The
Incentive Awards were granted to participants in the 2005 Equity
Incentive
Plan on the basis of services to be provided to the Company by
the
participants.
|
||
The
risk-free interest rate is based on the U.S. Treasury Bill rates.
The
dividend reflects the fact that the Company has never paid a
dividend on
its common stock and does not expect to in the future. Expected
volatility
was based on a market-based implied volatility. The expected
term of the
options is based on what the Company believes will be representative
of
future behavior. In addition, we are required to estimate the
expected
forfeiture rate and recognize expense only for those shares expected
to
vest. If our actual forfeiture rate is materially different from
our
estimate, the stock-based compensation expense could be significantly
different from what we have recorded in the current
period.
|
||
19.
|
Subsequent
Event
|
On March 26, 2007, Robert H. Tomlinson, Jr., the Company's CEO, informed the Board of Directors of the Company that he will not be renewing his employment agreement with the Company that terminates on December 29, 2007. Mr. Tomlinson's employment contract automatically renews on an annual basis starting on December 29, 2007 unless Mr. Tomlinson or the Company provides written notice to the other no later than 60 days prior to December 29, 2007 of such parties intent not to renew the contract. |
The
following is a summary of all of the Company’s stock option activity:
|
Shares
under
option
|
Weighted-average
exercise
price
per
share
|
||||||
Outstanding
at December 31, 2004
|
-
|
$
|
-
|
||||
Granted
|
1,721,700
|
4.50
|
|||||
Exercised
|
-
|
-
|
|||||
Surrendered
|
-
|
-
|
|||||
Outstanding
at December 31, 2005
|
1,721,700
|
4.50
|
|||||
Granted
|
495,100
|
4.88
|
|||||
Exercised
|
-
|
-
|
|||||
Surrendered
|
(686,200
|
)
|
(4.66
|
)
|
|||
Outstanding
at December 31, 2006
|
1,530,600
|
$
|
4.55
|
||||
Exercisable
at December 31, 2006
|
78,125
|
$
|
4.50
|
The
following is a summary of the Company’s nonvested
shares:
|
Shares
under
option
|
Weighted-average
exercise
price
per
share
|
||||||
Nonvested
at December 31, 2004
|
-
|
$
|
-
|
||||
Granted
|
1,721,700
|
4.50
|
|||||
Vested
|
-
|
-
|
|||||
Surrendered
|
-
|
-
|
|||||
Nonvested
at December 31, 2005
|
1,721,700
|
4.50
|
|||||
Granted
|
495,100
|
4.88
|
|||||
Vested
|
(78,125
|
)
|
(4.50
|
)
|
|||
Surrendered
|
(686,200
|
)
|
(4.66
|
)
|
|||
Nonvested
at December 31, 2006
|
1,452,475
|
$
|
4.55
|
As
of December 31, 2006 there was $2,965 of total unrecognized compensation
cost related to the nonvested option awards under the 2005 Equity
Incentive Plan. That cost is expected to be recognized over the
3.0 year
remaining vesting period of the nonvested option awards. The
total fair
value of the option awards that vested during the year ended
December 31,
2006 was $163.
|
Outstanding
|
Exercisable
|
|||||||||||||||
Weighted
|
||||||||||||||||
|
Average
|
Weighted
|
Weighted
|
|||||||||||||
Number
|
Remaining
|
Average
|
Number
|
Average
|
||||||||||||
Exercise
|
Outstanding
at
|
Contractual
|
Exercise
|
Exercisable
at
|
Exercise
|
|||||||||||
Price
|
Life
|
Price
|
Price
|
|||||||||||||
$2.90
|
400
|
9.9
|
$
|
2.90
|
-
|
$
|
-
|
|||||||||
$2.90
|
51,000
|
9.9
|
$
|
2.90
|
-
|
$
|
-
|
|||||||||
$3.55
|
30,000
|
9.8
|
$
|
3.55
|
-
|
$
|
-
|
|||||||||
$3.65
|
1,000
|
9.7
|
$
|
3.65
|
-
|
$
|
-
|
|||||||||
$3.95
|
500
|
9.7
|
$
|
3.95
|
-
|
$
|
-
|
|||||||||
$4.50
|
1,312,500
|
9.1
|
$
|
4.50
|
78,125
|
$
|
4.50
|
|||||||||
$5.30
|
50,000
|
9.6
|
$
|
5.30
|
-
|
$
|
-
|
|||||||||
$5.75
|
300
|
9.1
|
$
|
5.75
|
-
|
$
|
-
|
|||||||||
$6.15
|
1,000
|
9.0
|
$
|
6.15
|
-
|
$
|
-
|
|||||||||
$6.15
|
50,000
|
9.0
|
$
|
6.15
|
-
|
$
|
-
|
|||||||||
$6.45
|
1,000
|
9.5
|
$
|
6.45
|
-
|
$
|
-
|
|||||||||
$6.49
|
1,000
|
9.5
|
$
|
6.49
|
-
|
$
|
-
|
|||||||||
$6.50
|
300
|
9.1
|
$
|
6.50
|
-
|
$
|
-
|
|||||||||
$6.50
|
15,000
|
9.2
|
$
|
6.50
|
-
|
$
|
-
|
|||||||||
$6.50
|
10,000
|
9.5
|
$
|
6.50
|
-
|
$
|
-
|
|||||||||
$6.65
|
400
|
9.3
|
$
|
6.65
|
-
|
$
|
-
|
|||||||||
$6.74
|
5,000
|
9.2
|
$
|
6.74
|
-
|
$
|
-
|
|||||||||
$6.80
|
1,200
|
9.5
|
$
|
6.80
|
-
|
$
|
-
|
|||||||||
|
1,530,600
|
$
|
4.55
|
78,125
|
$
|
4.50
|
The
aggregate intrinsic value of the outstanding options (the difference
between the closing stock price on the last trading day of the
year ended
December 31, 2006 of $2.75 per share and the exercise price,
multiplied by
the number of in-the-money options) was zero. This amount will
change
based on changes in the fair market value of the Company’s common
stock.
|
Name
|
Age
|
Position
|
Robert
H. Tomlinson, Jr.
|
50
|
President
and Chief Executive Officer and Director
|
Timothy
E. Takesue
|
38
|
Executive
Vice President, Merchandising
|
Miguel
A. Martinez, Jr.
|
51
|
Vice
President, Finance and Secretary
|
Stuart
R. Romenesko
|
43
|
Chairman
of the Board
|
Paul
Traub
|
55
|
Director
|
Kenneth
Roering
|
64
|
Director
|
|
|
Cash
Severance
|
|
Years
for Continuation of
|
||
Named
Executive Officer
|
|
Multiple
|
|
Medical
and Dental Benefits
|
||
Robert
H. Tomlinson, Jr.
|
|
1
times ($275,000)
|
|
1
year ($12,000)
|
||
Timothy
E. Takesue
|
|
1
times ($250,000)
|
|
1
year ($12,000)
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards ($)
|
Option
Awards ($) (1)(2)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Change
in Pension Value and
Nonqualified
Deffered
Compensation
Earnings ($)
|
All
Other
Compensation
($)
|
Total
($)
|
Robert
H. Tomlinson, Jr.
|
2006
|
275,000
|
-
|
-
|
216,000
|
-
|
-
|
1,500
|
276,500
|
President
and Chief
|
|||||||||
Executive
Officer
|
|||||||||
|
|||||||||
Timothy
E. Takesue
|
2006
|
250,000
|
-
|
-
|
216,000
|
-
|
-
|
1,500
|
251,500
|
President
of uBID, Inc.
|
|||||||||
Miguel
A. Martinez, Jr.
|
2006
|
159,000
|
-
|
-
|
33,000
|
-
|
-
|
1,500
|
160,500
|
Vice
President, Finance
|
|||||||||
(1)
|
The
option awards amounts represent compensation costs charged against
income
for the year ended December 31, 2006 and included in General
and
Administrative Expenses. Compensation costs exclude the impact
of
estimated forfeitures and include the amount of actual forfeitures.
See
Footnote 18 for additional details of pricing
assumptions.
|
(2)
|
All
options awards were granted on December 31, 2005 at an exercise
price of
$4.50 per option. Messr(s), Tomlinson’s and Takesue’s options vest 1/3 at
the completion of two years of service. The remaining 2/3 vest
ratably
over the next two years. Mr. Martinez’s options vest ratably over a four
year period.
|
Option
Awards
|
Stock
Awards
|
|||||||||
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(1)
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(2)
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or Units
of
Stock That
Have
Not
Vested
(#)
|
Market
Value
of
Shares
or
Units of
Stock
That
Have
Not
Vested
($) (4)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#) (3)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
($) (5)
|
|
Robert
H. Tomlinson, Jr.
|
||||||||||
President
and Chief
|
||||||||||
Executive
Officer
|
-
|
500,000
|
-
|
$0.00
|
500,000
|
695,000
|
-
|
|||
Timothy
E. Takesue
|
||||||||||
President,
uBid, Inc.
|
-
|
500,000
|
-
|
$0.00
|
500,000
|
695,000
|
-
|
|||
Miguel
A. Martinez, Jr.
|
||||||||||
Vice
President, Finance
|
0
|
75,000
|
-
|
$0.00
|
75,000
|
104,250
|
-
|
|
(1)
|
Shares
under exercisable awards with no performance condition. In the
event of an
acquisition of the Company through the sale of substantially
all of the
Company’s assets and the consequent discontinuance of its business or
through a merger, consolidation, exchange, reorganization,
reclassification, extraordinary dividend, divesture or liquidation
of the
Company, the Board may provide for one or more of the following
with
respect to unvested options: the equitable acceleration of the
exercisability of any outstanding options; the complete termination
of the
Equity Incentive Plan and the cancellation of outstanding options
not
exercised prior to a date specified by the Board; and the continuance
of
the Equity Incentive Plan with respect to the exercise of options
which
were outstanding as of the date of adoption by the Board for
such
transaction and provide to holders of such options the right
to exercise
their respective options as to an economically equivalent number
of shares
of stock of the corporation succeeding the Company by reason
of such
transaction.
|
Grants
of Plan-Based Awards
|
|||||||||||
Estimated
Future Payouts Under
Non-Equity
Incentive Plan Awards (1)
|
Estimated
Future Payouts Under
Equity
Incentive Plan Awards
|
All
Other
Stock
Awards
Number of Shares
of
Stock
or
Units (#)
|
All
Other
Option
Awards
Number
of Securities Underlying
Options
(#)
|
Exercise
or
Base
Price
of
Option
Awards
($/Sh)
|
|||||||
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
($) (2)
|
Target
($)
|
Maximum
($)
|
||||
Robert
H. Tomlinson, Jr.
|
|||||||||||
President
and Chief
|
|||||||||||
Executive
Officer
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Timothy
E. Takesue
|
|
|
|||||||||
President,
uBid, Inc.
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Miguel
A. Martinez, Jr.
|
|||||||||||
Vice
President, Finance
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(2)
|
Includes
shares granted under the 2005 Equity Incentive Plan. No awards
were
granted to the above named executives during the year ended
December 31,
2006.
|
Director
Compensation
|
|||||||
Name
|
Fees
Earned
or
Paid in
Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)(1)(2)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Change
in
Pension
Value
and
Nonqualified
Deferred Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
Stuart
R. Romenesko
|
7,500
|
-
|
22,000
|
-
|
-
|
-
|
29,500
|
Paul
Traub
|
7,500
|
-
|
13,000
|
-
|
-
|
-
|
20,500
|
|
|||||||
Dr.
Kenneth J. Roering
|
-
|
-
|
2,000
|
-
|
-
|
-
|
2,000
|
1.
|
The
option awards amounts represent compensation costs charged against
income
for the year ended December 31, 2006 and included in General
and
Administrative Expenses. Compensation costs exclude the impact
of
estimated forfeitures and include the amount of actual forfeitures.
In the
event of an acquisition of the Company through the sale of substantially
all of the Company’s assets and the consequent discontinuance of its
business or through a merger, consolidation, exchange, reorganization,
reclassification, extraordinary dividend, divesture or liquidation
of the
Company, the Board may provide for one or more of the following
with
respect to unvested options: the equitable acceleration of the
exercisability of any outstanding options; the complete termination
of the
Equity Incentive Plan and the cancellation of outstanding options
not
exercised prior to a date specified by the Board; and the continuance
of
the Equity Incentive Plan with respect to the exercise of options
which
were outstanding as of the date of adoption by the Board for
such
transaction and provide to holders of such options the right
to exercise
their respective options as to an economically equivalent number
of shares
of stock of the corporation succeeding the Company by reason
of such
transaction. See Footnote 18 for additional details of pricing
assumptions.
|
2.
|
The
fair value of options granted to Messr(s), Romenesko, Roering
and Traub
during the year ended December 31, 2006 was $116,000 $88,000
and $160,000
respectively.
|
Shares
Beneficially Owned
|
|||||||
Name
|
Number
|
Percent
(1)
|
|||||
Thomas
J. Petters (2)(14)
|
7,680,714
|
36.72
|
%
|
||||
Petters
Group Worldwide, LLC (3)(14)
|
6,264,047
|
30.39
|
%
|
||||
Tudor
Investment Corporation (4)(15)
|
2,083,334
|
10.04
|
%
|
||||
Smithfield
Fiduciary LLC (5)
|
1,956,522
|
9.38
|
%
|
||||
D.E.
Shaw Valence Portfolios, L.L.C. (6)
|
1,250,000
|
6.07
|
%
|
||||
Alexandra
Global Master Fund Ltd. (7)
|
1,069,446
|
5.17
|
%
|
||||
XI
Asset Management, LLC (8)
|
1,241,939
|
6.11
|
%
|
||||
Robert
H. Tomlinson, Jr.
|
465,776
|
2.29
|
%
|
||||
Timothy
E. Takesue
|
465,776
|
2.29
|
%
|
||||
Miguel
A. Martinez, Jr. (9)
|
62,831
|
0.31
|
%
|
||||
Steven
Sjoblad (10)
|
13,500
|
0.07
|
%
|
||||
Kenneth
J. Roering (11)
|
3,125
|
0.02
|
%
|
||||
Mary
L. Jeffries (12)
|
15,000
|
0.07
|
%
|
||||
David
E. Baer (13)
|
--
|
--
|
%
|
||||
All
directors and executive officers as a group (7 people)
|
1,026,008
|
5.04
|
%
|
(1) |
Based
on a total of 20,333,333 shares outstanding as of March 15,
2007. Shares
underlying warrants exercisable within 60 days of March 15,
2006 are
considered for the purpose of determining the percent of the
class held by
the holder of such warrants, but not for the purpose of computing
the
percentages held by others.
|
(2) |
Includes:
6,264,047 shares beneficially owned by Petters Group Worldwide,
LLC,
including 277,778 warrants exercisable within 60 days by Petters
Group
Worldwide, LLC; and 305,556 warrants exercisable within 60
days by Petters
Company, Inc. Mr. Petters has sole voting and investment power
over all of
the shares indicated in the table as being beneficially owned
by Mr.
Petters, Petters Group Worldwide, LLC and Petters Company,
Inc.
|
(4) |
Includes
416,667 warrants exercisable within 60 days. The shares beneficially
owned
by Tudor Investment Corporation are beneficially owned by a
group of 3
beneficial owners, including: The Tudor BVI Global Portfolio
Ltd. (215,738
shares directly owned and warrants to acquire an additional
53,935 shares
of common stock), Tudor Proprietary Trading, L.L.C. (116,167
shares
directly owned and warrants to acquire an additional 29,042
shares of
common stock) and Witches Rock Portfolio Ltd. (1,334,762 shares
directly
owned and warrants to acquire an additional 333,690 shares
of common
stock). Tudor Investment Corporation provides investment advisory
services
to The Tudor BVI Global Portfolio Ltd. and Witches Rock Portfolio
Ltd. and
may therefore be deemed the beneficial owner of these shares.
Tudor
Investment Corporation is also an affiliate of Tudor Proprietary
Trading,
L.L.C. Paul Tudor Jones, II is the controlling shareholder
of Tudor
Investment Corporation and the indirect controlling equity
holder of Tudor
Proprietary Trading, L.L.C. Each of Tudor Investment Corporation
and Mr.
Jones expressly disclaims beneficial ownership of shares not
directly
owned by them.
|
(5) |
Includes
527,777 warrants exercisable within 60 days. Highbridge Capital
Management, LLC is the trading manager of Smithfield Fiduciary
LLC and has
voting control and investment discretion over securities held
by
Smithfield Fiduciary LLC. Glenn Dubin and Henry Swieca control
Highbridge
Capital Management, LLC. Each of Highbridge Capital Management,
LLC, Glenn
Dubin and Henry Swieca disclaims beneficial ownership of the
securities
held by Smithfield Fiduciary LLC. The address for Smithfield
Fiduciary
LLC, Highbridge International LLC, and Highbridge Capital Corporation
is
The Cayman Corporate Center, 4th Floor, 27 Hospital Road, George
Town,
Grand Cayman, Cayman Islands, BWI. The address for Highbridge
Capital
L.P., Highbridge Capital Management, LLC, Glenn Dubin and Henry
Swieca is
c/o Highbridge Capital Management, LLC, 9 West 57th Street,
27th Floor,
New York, New York 10019. The address for Highbridge Master
L.P.,
Highbridge GP, Ltd. And Highbridge GP, LLC is c/o Harmonic
Fund Services,
Cayman Financial Centre, Tower C, 36 Dr. Roy’s Drive, George Town, Grand
Cayman, Cayman Islands, BWI. This information was provided
in a report on
Schedule 13G/A filed with the SEC on February 14, 2007 and
in information
provided to us from Smithfield Fiduciary LLC.
|
(6) |
Includes
250,000 warrants exercisable within 60 days. David E. Shaw
does not own
any shares of common stock directly. By virtue of Mr. Shaw’s position as
President and sole shareholder of D.E. Shaw & Co., Inc., which is the
general partner of D.E. Shaw & Co., L.P. (the managing member and
investment advisor of D.E. Shaw Valence Portfolios, L.L.C.),
Mr. Shaw may
be deemed to have shared power to vote or direct the vote of,
and shared
power to dispose or direct the disposition of, the shares of
common stock,
and therefore, Mr. Shaw may be deemed to be the beneficial
owner of such
shares. Mr. Shaw disclaims beneficial ownership of the shares
of our
common stock. The address for D.E. Shaw Valence Portfolios,
L.L.C. is 120
West 45th Street, 39th Floor, New York, NY 10036. This information
was
provided in a report on Schedule 13G filed with the SEC on
February 13,
2006.
|
(7) |
Includes
347,223 warrants exercisable within 60 days. Alexandra Investment
Management, LLC, serves as the investment advisor to Alexandra
Global
Master Fund Ltd. By reason of such relationship, Alexandra
Investment
Management, LLC, may be deemed to share dispositive power over
the shares
of common stock stated as beneficially owned by Alexandra Global
Master
Fund Ltd. Alexandra Investment Management, LLC disclaims beneficial
ownership of such shares of common stock. Messrs. Mikhail A.
Filimonov and
Dimitri Sogoloff are, respectively, the Chairman, Chief Executive
Officer,
Managing Member and Chief Investment Officer and the President,
Managing
Member and Chief Risk Officer, of Alexandra Investment Management,
LLC. By
reason of such relationships, Mr. Filimonov and Mr. Sogoloff
may be deemed
to share dispositive power over the shares of common stock
stated as
beneficially owned by Alexandra Global Master Fund, Ltd. Each
of Messrs.
Filimonov and Sogoloff disclaims beneficial ownership of the
shares of
common stock beneficially owned by Alexandra Global Master
Fund Ltd. The
address of Alexandra Global Master Fund Ltd. is Citgo Building,
Wickams
Cay, P.O. Box 662, Road Town, Tortola, British Virgin Islands.
The address
of Alexandra Investment Management, LLC and Messrs. Filimonov
and Sogoloff
is 767 Third Avenue, 39th Floor, New York, New York, 10017.
This
information was provided in a report on Schedule 13G filed
with the SEC on
February 14, 2007.
|
(8) |
Includes
36,112 warrants exercisable within 60 days. A portion of the
shares
beneficially owned by XI Asset Management, LLC are beneficially
owned by
XI Capital Offshore Fund Ltd. (48,246 shares directly owned
and warrants
to acquire an additional 12,062 shares of common stock) and
XI Capital
Partners LP (96,200 shares directly and warrants to acquire
24,050 shares
of common stock). Adam J. Wolfberg does not own any shares
of common stock
directly. By virtue of Mr. Wolfberg’s position as Managing Member of XI
Asset Management, LLC, Mr. Wolfberg may be deemed to have shared
power to
vote or direct the vote of, and shared power to dispose or
direct the
disposition of, the shares of common stock, and therefore,
Mr. Wolfberg
may be deemed to be the beneficial owner of such shares. The
address of XI
Asset Management, LLC and Adam J. Wolfberg is 527 Madison Avenue,
6th
Floor, New York, New York 100222. This information was provided
in a
report on Schedule 13G filed with the SEC on February 14, 2007
and
information contained in the records of the Company.
|
(14) |
Information
regarding the number of shares beneficially owned by Thomas
J. Petters,
Petters Group Worldwide, LLC and Petters Company, Inc. was
provided in a
report on Schedule 13D filed with the SEC on January 9, 2006,
as amended
on February 16, 2006. The address for each of Thomas J. Petters,
Petters
Group Worldwide, LLC and Petters Company, Inc. is: 4400 Baker
Road,
Minnetonka, Minnesota 55343.
|
(15) |
Information
regarding the number of shares beneficially owned by Tudor
Investment
Corporation and its affiliated entities was provided in a report
on
Schedule 13G filed with the SEC on January 3, 2006, as amended
on February
14, 2006, by Paul Tudor Jones, II, The Tudor BVI Global Portfolio,
Ltd.,
Tudor Investment Corporation, Tudor Proprietary Trading, L.L.C
and Witches
Rock Portfolio Ltd. The business address for Tudor Investment
Corporation
is: c/o Tudor Investment Corporation, 1275 King Street, Greenwich,
Connecticut 06831-2936.
|
Plan
category
|
Number
of securities to
be
issued upon exercise
of
outstanding options,
warrants
and rights
|
Weighted-average
exercise
price
of
outstanding
options,
warrants
and
rights
|
Remaining
available for
future
issuance under
equity
compensation
plans
(excluding
securities
reflected in
column
(a))
|
|||||||
(a)
|
(b)
|
(
c)
|
||||||||
Equity
compensation
plans
approved by
security
holders
|
1,530,600
|
$
|
4.55
|
969,400
|
||||||
Equity
compensation
plans
not approved by
security
holders
|
320,000
|
$
|
4.50
|
—
|
||||||
Total
|
1,850,600
|
$
|
4.54
|
969,400
|
|
2006
|
2005
|
Audit
Fees
|
$117,000
|
$117,000
|
Audit-Related
Fees
|
249,000
|
211,000
|
Tax
Fees
|
—
|
—
|
All
Other Fees
|
—
|
—
|
Total
|
$366,000
|
$328,000
|
Exhibit
No.
|
Description
|
Reference
|
2.1
|
Agreement
and Plan of Merger dated as of December 15, 2005, by and between
Cape
Coastal Trading Corporation, a New York corporation and Cape
Coastal
Trading Corporation, a Delaware corporation.
|
Incorporated
by reference to Exhibit 2.1 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on December 21, 2005 (File
No.
000-50995).
|
2.2
|
Merger
Agreement and Plan of Reorganization dated as of December 29,
2005, by and
among Cape Coastal Trading Corporation, uBid Acquisition Co.,
Inc. and
uBid, Inc.
|
Incorporated
by reference to Exhibit 2.2 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
3.1
|
Certificate
of Incorporation.
|
Incorporated
by reference to Exhibit 3.1 to the Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 21, 2005
(File No.
000-50995).
|
3.2
|
Incorporated
by reference to Exhibit 3.2 to the Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 21, 2005
(File No.
000-50995).
|
|
4.1
|
Form
of Warrant to be issued to the Investors.
|
Incorporated
by reference to Exhibit 4.1 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
4.2
|
Form
of Warrant to be issued to the Placement Agents.
|
Incorporated
by reference to Exhibit 4.2 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
4.3
|
Form
of Warrant to be issued to the Note Holders.
|
Incorporated
by reference to Exhibit 4.3 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
4.4
|
Form
of Lockup Agreement.
|
Incorporated
by reference to Exhibit 4.4 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
10.1
|
Asset
Purchase Agreement dated as of January 13, 2005, by and between
Cape
Coastal Trading Corporation, a New York corporation and Kwajo
Sarfoh.
|
Incorporated
by reference to Exhibit 10.3 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 14, 2005 (File
No.
000-50995).
|
Form
of Securities Purchase Agreement by and among Cape Coastal Trading
Corporation, uBid, Inc. and the Investors named therein.
|
Incorporated
by reference to Exhibit 10.2 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
|
10.3
|
Employment
Agreement dated as of December 29, 2005 by and between Cape Coastal
Trading Corporation and Robert H. Tomlinson, Jr.
|
Incorporated
by reference to Exhibit 10.3 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
10.4
|
Employment
Agreement dated as of December 29, 2005 by and between Cape Coastal
Trading Corporation and Timothy E. Takesue.
|
Incorporated
by reference to Exhibit 10.4 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
10.5
|
Employment
Agreement dated as of December 29, 2005 by and between Cape Coastal
Trading Corporation and Anthony Priore.
|
Incorporated
by reference to Exhibit 10.5 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
10.6
|
2005
Equity Incentive Plan, effective as of December 15, 2005.
|
Incorporated
by reference to Exhibit 10.1 to the Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 23, 2005
(File No.
000-50995).
|
10.7
|
Form
of Incentive Stock Option Agreement.
|
Incorporated
by reference to Exhibit 10.2 to the Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 23, 2005
(File No.
000-50995).
|
10.8
|
Form
of Non-Qualified Stock Option Agreement.
|
Incorporated
by reference to Exhibit 10.3 to the Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 23, 2005
(File No.
000-50995).
|
10.9
|
Form
of Indemnity Agreement.
|
Incorporated
by reference to Exhibit 10.9 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
10.10
|
Form
of Amendment Number 1 to Securities Purchase Agreement dated
as of
February 28, 2006.
|
Incorporated
by reference to Exhibit 10.10 to the Annual Report on Form 10-K
filed with
the Securities and Exchange Commission on March 28, 2008 (File
No.
000-50995).
|
10.11
|
Credit
and Security Agreement between uBid.com Holdings, Inc., uBid,
Inc. and
Wells Fargo Bank, National Association acting through Wells Fargo
Business
Credit dated May 9, 2006 and Revolving Note in the amount of
$25,000,000
issued on May 9, 2006 by uBid, Inc and uBid.com Holdings, Inc.
payable to
Wells Fargo Bank, National Association.
|
Incorporated
by reference to Exhibit 10.1 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on May 10, 2006 (File
No.
000-50995).
|
16.1
|
Letter
regarding Change in Certifying Accountant.
|
Incorporated
by reference to Exhibit 16.1 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
16.2
|
Letter
regarding Change in Certifying Accountant.
|
Incorporated
by reference to Exhibit 16.2 to the Registration Statement on
Form S-1
filed with the Securities and Exchange Commission on February
10, 2006
(File No. 333-131733).
|
21.1
|
List
of Subsidiaries.
|
Filed
herewith
|
31.1
|
Certification
of the President and Chief Executive Officer pursuant to Section
302 of
the Sarbanes-Oxley Act of 2002.
|
Filed
herewith
|
31.2
|
Certification
of the Vice President, Finance pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
Filed
herewith
|
32.1
|
Certification
of the President and Chief Executive Officer pursuant to 18 U.S.C.
Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of
2002.
|
Filed
herewith
|
32.2
|
Certification
of the Vice President, Finance pursuant to 18 U.S.C. Section
1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
Filed
herewith
|
UBID.COM
HOLDINGS, INC.
|
||
|
|
|
By: | /s/ Robert H. Tomlinson, Jr. | |
Name:
Robert H. Tomlinson, Jr.
Title:
President and Chief Executive Officer
|
||
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Robert
H. Tomlinson, Jr.
|
|
President
and Chief Executive Officer and Director
|
|
|
Robert
H. Tomlinson, Jr.
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
/s/
Miguel A. Martinez, Jr.
|
|
Vice
President, Finance
|
|
|
Miguel
A. Martinez, Jr.
|
|
(Principal
Financial Officer and
Principal
Accounting Officer)
|
|
/s/
Steven Sjoblad
|
|
|
|
|
Steven
Sjoblad
|
|
Director
|
|
|
/s/
David E. Baer
|
|
|
|
|
David
E. Baer
|
|
Director
|
|
|
/s/
Mary Jeffries
|
|
|
|
|
Mary
Jeffries
|
|
Director
|
|
|
/s/ Kenneth
J. Roering
|
|
|
|
|
Kenneth
J. Roering
|
|
Director
|
|
Exhibit
No.
|
Description
|
Reference
|
2.1
|
Agreement
and Plan of Merger dated as of December 15, 2005, by and between
Cape
Coastal Trading Corporation, a New York corporation and Cape
Coastal
Trading Corporation, a Delaware corporation.
|
Incorporated
by reference to Exhibit 2.1 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on December 21, 2005 (File
No.
000-50995).
|
2.2
|
Merger
Agreement and Plan of Reorganization dated as of December 29,
2005, by and
among Cape Coastal Trading Corporation, uBid Acquisition Co.,
Inc. and
uBid, Inc.
|
Incorporated
by reference to Exhibit 2.2 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
3.1
|
Certificate
of Incorporation.
|
Incorporated
by reference to Exhibit 3.1 to the Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 21, 2005
(File No.
000-50995).
|
3.2
|
Incorporated
by reference to Exhibit 3.2 to the Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 21, 2005
(File No.
000-50995).
|
|
4.1
|
Form
of Warrant to be issued to the Investors.
|
Incorporated
by reference to Exhibit 4.1 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
4.2
|
Form
of Warrant to be issued to the Placement Agents.
|
Incorporated
by reference to Exhibit 4.2 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
4.3
|
Form
of Warrant to be issued to the Note Holders.
|
Incorporated
by reference to Exhibit 4.3 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
4.4
|
Form
of Lockup Agreement.
|
Incorporated
by reference to Exhibit 4.4 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
10.1
|
Asset
Purchase Agreement dated as of January 13, 2005, by and between
Cape
Coastal Trading Corporation, a New York corporation and Kwajo
Sarfoh.
|
Incorporated
by reference to Exhibit 10.3 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 14, 2005 (File
No.
000-50995).
|
Form
of Securities Purchase Agreement by and among Cape Coastal Trading
Corporation, uBid, Inc. and the Investors named therein.
|
Incorporated
by reference to Exhibit 10.2 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
|
10.3
|
Employment
Agreement dated as of December 29, 2005 by and between Cape Coastal
Trading Corporation and Robert H. Tomlinson, Jr.
|
Incorporated
by reference to Exhibit 10.3 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
10.4
|
Employment
Agreement dated as of December 29, 2005 by and between Cape Coastal
Trading Corporation and Timothy E. Takesue.
|
Incorporated
by reference to Exhibit 10.4 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
10.5
|
Employment
Agreement dated as of December 29, 2005 by and between Cape Coastal
Trading Corporation and Anthony Priore.
|
Incorporated
by reference to Exhibit 10.5 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
10.6
|
2005
Equity Incentive Plan, effective as of December 15, 2005.
|
Incorporated
by reference to Exhibit 10.1 to the Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 23, 2005
(File No.
000-50995).
|
10.7
|
Form
of Incentive Stock Option Agreement.
|
Incorporated
by reference to Exhibit 10.2 to the Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 23, 2005
(File No.
000-50995).
|
10.8
|
Form
of Non-Qualified Stock Option Agreement.
|
Incorporated
by reference to Exhibit 10.3 to the Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 23, 2005
(File No.
000-50995).
|
10.9
|
Form
of Indemnity Agreement.
|
Incorporated
by reference to Exhibit 10.9 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
10.10
|
Form
of Amendment Number 1 to Securities Purchase Agreement dated
as of
February 28, 2006.
|
Incorporated
by reference to Exhibit 10.10 to the Annual Report on Form 10-K
filed with
the Securities and Exchange Commission on March 28, 2008 (File
No.
000-50995).
|
10.11
|
Credit
and Security Agreement between uBid.com Holdings, Inc., uBid,
Inc. and
Wells Fargo Bank, National Association acting through Wells Fargo
Business
Credit dated May 9, 2006 and Revolving Note in the amount of
$25,000,000
issued on May 9, 2006 by uBid, Inc and uBid.com Holdings, Inc.
payable to
Wells Fargo Bank, National Association.
|
Incorporated
by reference to Exhibit 10.1 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on May 10, 2006 (File
No.
000-50995).
|
16.1
|
Letter
regarding Change in Certifying Accountant.
|
Incorporated
by reference to Exhibit 16.1 to the Current Report on Form 8-K
filed with
the Securities and Exchange Commission on January 5, 2006 (File
No.
000-50995).
|
16.2
|
Letter
regarding Change in Certifying Accountant.
|
Incorporated
by reference to Exhibit 16.2 to the Registration Statement on
Form S-1
filed with the Securities and Exchange Commission on February
10, 2006
(File No. 333-131733).
|
21.1
|
List
of Subsidiaries.
|
Filed
herewith
|
31.1
|
Certification
of the President and Chief Executive Officer pursuant to Section
302 of
the Sarbanes-Oxley Act of 2002.
|
Filed
herewith
|
31.2
|
Certification
of the Vice President, Finance pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
Filed
herewith
|
32.1
|
Certification
of the President and Chief Executive Officer pursuant to 18 U.S.C.
Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of
2002.
|
Filed
herewith
|
32.2
|
Certification
of the Vice President, Finance pursuant to 18 U.S.C. Section
1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
Filed
herewith
|
This ‘424B3’ Filing | Date | Other Filings | ||
---|---|---|---|---|
12/29/15 | ||||
12/30/10 | ||||
4/28/09 | ||||
12/31/08 | 10-K, 10-K/A, 5, 5/A, NT 10-K | |||
3/28/08 | 10-K | |||
12/31/07 | 10-K | |||
12/29/07 | ||||
11/15/07 | ||||
11/1/07 | ||||
7/21/07 | ||||
Filed on: | 4/2/07 | |||
3/30/07 | 10-K, 8-K | |||
3/27/07 | ||||
3/26/07 | 8-K | |||
3/15/07 | ||||
3/7/07 | 3, 4, 8-K | |||
2/15/07 | 3, 4 | |||
2/14/07 | SC 13G/A | |||
2/13/07 | 3, 4, 8-K | |||
2/12/07 | ||||
1/29/07 | 4 | |||
12/31/06 | 10-K | |||
12/15/06 | ||||
12/1/06 | 3, 4, 8-K | |||
11/17/06 | 424B3 | |||
11/15/06 | ||||
8/1/06 | 3, 8-K | |||
7/31/06 | ||||
7/26/06 | ||||
7/22/06 | ||||
7/21/06 | ||||
7/19/06 | S-1/A | |||
6/30/06 | 10-K/A, 10-Q, S-1/A | |||
5/10/06 | 8-K | |||
5/9/06 | 8-K | |||
3/31/06 | 10-Q | |||
3/15/06 | ||||
2/28/06 | ||||
2/16/06 | SC 13D/A | |||
2/14/06 | SC 13G | |||
2/13/06 | SC 13G | |||
2/10/06 | S-1 | |||
2/6/06 | 4, SC 13G | |||
2/3/06 | 3 | |||
1/31/06 | ||||
1/30/06 | 3, 8-K, DEF 14C | |||
1/12/06 | DEF 14C | |||
1/9/06 | 3, SC 13D, SC 13G | |||
1/5/06 | 8-K | |||
1/4/06 | ||||
1/3/06 | 3, 4, SC 13G | |||
1/1/06 | ||||
12/31/05 | 10-K, 10-K/A | |||
12/30/05 | ||||
12/29/05 | 3, 3/A, 4, 8-K, 8-K/A | |||
12/23/05 | 8-K | |||
12/21/05 | 8-K, 8-K/A | |||
12/15/05 | 8-K, 8-K/A | |||
10/14/05 | ||||
10/3/05 | ||||
9/30/05 | 10QSB | |||
7/26/05 | ||||
4/27/05 | ||||
4/8/05 | ||||
4/1/05 | ||||
3/21/05 | ||||
1/14/05 | 4, 8-K, SC 13D/A, SC 14F1 | |||
1/13/05 | 4, 8-K | |||
12/31/04 | ||||
11/22/04 | 10QSB | |||
10/29/04 | ||||
7/21/04 | ||||
5/20/04 | ||||
12/31/03 | 10KSB, 10KSB/A, NT 10-K | |||
11/10/03 | SB-2/A | |||
7/1/03 | ||||
4/2/03 | ||||
3/31/03 | ||||
3/7/03 | ||||
7/31/02 | ||||
List all Filings |