S-1/A 1 abi2002s1a9.txt FORM S-1 REGISTRATION STATEMENT AMENDMENT #9 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 1, 2002. REGISTRATION NO. 333-75626 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-1/A AMENDMENT NUMBER 9 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- ABIDON INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 6510 36-4340367 ---------------- ---------------------------- ------------------- (STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) --------------- 5301 E. STATE STREET, SUITE 215 ROCKFORD, ILLINOIS 61108 (815) 226-8700 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) --------------- HOWARD P. MILLER PRESIDENT AND CHIEF EXECUTIVE OFFICER 5301 E. STATE STREET, SUITE 215 ROCKFORD, ILLINOIS 61108 (815) 226-8700 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) 1 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [ X ] If this Form is filed to register additional securities for an offering pursuant to Rule 462 (b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE ============================================================================ PROPOSED AMOUNT OF TITLE OF EACH CLASS OF MAXIMUM AGGREGATE REGISTRATION SECURITIES TO BE REGISTERED OFFERING PRICE (1) FEE Common Stock, par value $0.0001 per share $90,000,000 $8,280.00 ============================================================================ (1) Estimated pursuant to Rule 457(o) solely for the purpose of calculating the amount of the registration fee. --------------- 2 Information contained herein is subject to completion of Amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This Prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state. Abidon Inc. has not made any preliminary distributions of our prospectus and will not make any distribution prior to the effective date of this registration. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said section 8(a), may determine. ABIDON INC. COMMON STOCK 5,000,000 SHARES "RISK FACTORS" See "Risk Factors" on Page 10 for certain considerations relevant to an investment in the common stock. The shares of Common Stock have not been approved for quotation on the NASDAQ National Market. No quotation has been applied for on the NASDAQ National Market. Abidon has not submitted an application to the NASDAQ national market or any automated quotation system of a national or foreign securities association. These securities have not been approved or disapproved by the securities and exchange commission or any state securities commission nor has the securities and exchange commission or any state securities passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. INITIAL PUBLIC PROCEEDS TO OFFERING PRICE ABIDON INC. Per Share $18.00 $18.00 Total $90,000,000 $90,000,000 This is a best efforts self-underwritten offer. 3 There is no minimum number of shares that must be sold for this offering to be complete. Investors will not receive their money back even if only a nominal amount of the offering proceeds are raised. We estimate the 5,000,000 shares will all be sold within two years from the effective registration date. There has been no arrangement to place the funds in an escrow, trust, or similar account. The investors will understand the funds will be used according to the use of proceeds as outlined in the use of proceeds paragraph, even if only a nominal amount of the offering proceeds are raised and will not get their money back. 4 TABLE OF CONTENTS Page Prospectus Summary..................................... 6 Risk Factors........................................... 10 Use of Proceeds........................................ 13 Dividend Policy........................................ 15 Capitalization......................................... 17 Dilution............................................... 18 Selected Combined Financial Data....................... 19 Selected Pro Forma Combined Financial Data............. 22 Management's Discussion and Analysis of Financial Condition and Results of Operations.................. 26 Business............................................... 29 Management............................................. 44 Certain Transactions................................... 51 Principal Stockholders................................. 51 Description of Capital Stock........................... 53 Shares Eligible for Future Sale........................ 54 Legal Matters.......................................... 55 Experts................................................ 55 Additional Information................................. 56 Index to Financial Statements.......................... F-1 ============================================================================= ============================================================================= SHARES ABIDON, INC. COMMON STOCK (PAR VALUE $.0001 PER SHARE) [LOGO] 5 The date of this Prospectus is August 1, 2002. PROSPECTUS SUMMARY 5,000,000 shares of Common Stock offered. The aggregate offering price to the public is $90,000,000. This is a best efforts offering at $18.00 per share to the public. The proceeds of the offering are for capital expenditures, including latest servers, computers, graphic equipment, software, printers, cameras, copiers, vehicles, high speed transmission equipment, employee wages, advertising, technology, and remote regional offices. The growth of services will increase our page capacity from 2,000 to 17,000. This entails adding additional servers, software and high speed Internet connections. The development will add detail and usability of our services for both buyers and sellers. The stock is being offered by Abidon Inc. All stock is Common Stock and has dividend rights and voting rights. Abidon Inc. is in the following business - leasing commercial real estate, which represents 49% of sales, sales of antiques, which represents 49% of sales, and Internet services, which represents 2% of sales. Abidon intends to invest into the Internet service sector. On our Internet service site which contains our home page, store and auction site, we generate income by selling our advertisement banners. BUSINESS COMBINATIONS The following statements show the results of operations from 1994 through 1999 for Rockford Investors Partnership, in the business of leasing its commercial real estate properties, and State Street Investors of Rockford, Inc., in the business of leasing its real estate properties. Rockford Investors Partnership was originally Rockford Investors, Inc. Incorporated on December 19, 1985, it consisted of 81 shares of stock. State Street Investors of Rockford, Inc.was incorporated on June 8, 1989 and consisted of 110 shares of stock. East State Street Antiques Mall, in the business of selling antiques, was started in 1986 by Howard Miller dba The East State Street Antiques Mall. It was incorporated November 9, 1999 and issued twenty shares of stock. These three corporations merged into UBuy2 Inc. on January 24, 2000. On January 24, 2000 the combination of East State Street Antiques Mall, Rockford Investors, Inc., State Street Investors of Rockford, Inc. formed UBuy2. All three companies were dissolved upon the completed combination into UBuy2 Inc. The name was changed from UBuy2 Inc. to Abidon, Inc. on April 6, 2000. 6 THE OFFERING Common Stock offered by Abidon..... 5,000,000 shares Common Stock to be outstanding after this offering...................... 22,050,00 shares Use of proceeds.................... For capital expenditures, new technology, working capital, products and services. See "Use of Proceeds." SUMMARY FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA) --------------------------------------- Year ended 3 mos ended December 31 March 31 --------------------------------------- 1999 2000 2001 2002 --------------------------------------- STATEMENT OF INCOME DATA: Net Revenues $3878 $3826 $3522 $943 Gross Profit 1972 1943 1816 521 Income from operations (107) (119) (127) (29) Net income 494 154 59 88 Net income per share $5.79 $.009 $.003 $.0054 Shares Basic 85 17,050 17,050 17,050 ---------------------- MARCH 31, 2002 ---------------------- BALANCE SHEET DATA: Cash and cash equivalents $26 Working capital Total assets 4,184 Debt and long-term liability 1,616 Total stockholders' equity 2,567 NOTE: The financial information is combined for year 1999 for East State Street Mall, Investors of Rockford, Inc., and Rockford Investors Partnership. Years 2000, 2001, and March 31, 2002 are for Abidon Inc. 7 SUMMARY OF FINANCIAL INFORMATION State St. Investors of Rockford, Inc Income Statement 12 mos. ended 12 mos. ended 12 mos. ended 12 mos. ended 12 mos. ended 12 mos. ended Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994 ------------ ------------ ------------ ------------ ------------ ------------ Income 1,319,730.38 1,336,506.63 1,294,652.43 1,262,046.91 1,235,282.46 1,125,946.28 Cost of Sales 115,479.84 121,023.30 105,494.89 99,979.25 95,156.00 69,089.75 ------------ ------------ ------------ ------------ ------------ ------------ Gross Profit 1,204,250.54 1,215,483.33 1,189,157.54 1,162,067.66 1,140,126.46 1,056,856.53 Total Expenses 803,819.14 726,089.82 736,363.43 770,743.26 659,363.53 631,808.28 ------------ ------------ ------------ ------------ ------------ ------------ Profit Before Taxes 400,431.40 489,393.51 452,794.11 391,324.40 490,762.93 425,048.25 ------------ ------------ ------------ ------------ ------------ ------------ Income Per Shares $ 3,640.29 $ 4,449.04 $ 4,116.31 $ 3,557.50 $ 4,312.71 $ 3,414.58 ------------ ------------ ------------ ------------ ------------ ------------ Basic Shares Outstanding 110 110 110 110 110 110 ------------ ------------ ------------ ------------ ------------ ------------ Dividend Paid $ 4,000.00 $ 4,000.00 $ 4,000.00 $ 4,000.00 $ 3,950.00 $ 4,000.00 Per Share ------------ ------------ ------------ ------------ ------------ ------------ Unaudited SUMMARY FINANCIAL INFORMATION East State Antique Malls Income Statement 12 mos. ended 12 mos. ended 12 mos. ended Dec. 31, 1999 Dec. 31, 2000 Dec. 31, 2001 ------------- ------------- ------------- Income 2,095,795 1,968,555 1,716,724 Identifiable Assets 4,255 26,774 45,383 Operating Income 47,403 52,135 (218,704) See Auditor's Segment Information F-1, Pg. 11

8 SUMMARY OF FINANCIAL INFORMATION Rockford Investors Partnership Income Statement 12 mos. ended 12 mos. ended 12 mos. ended 12 mos. ended 12 mos. ended 12 mos. ended Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994 ------------ ------------ ------------ ------------ ------------ ------------ Income 479,425.50 463,359.46 431,196.36 440,830.43 423,650.84 412,972.23 Cost of Sales 31,552.95 38,434.00 10,781.00 32,787.42 30,500.00 35,000.00 ------------ ------------ ------------ ------------ ------------ ------------ Gross Profit 447,872.55 424,925.46 420,415.36 408,043.01 393,150.84 377,972.23 Total Expenses 277,801.53 274,925.20 236,729.83 257,595.75 248,328.91 221,607.13 ------------ ------------ ------------ ------------ ------------ ------------ Profit Before Taxes 170,071.02 150,000.26 183,685.53 150,447.26 144,821.93 156,365.10 ------------ ------------ ------------ ------------ ------------ ------------ Income Per $ 2,099.65 $ 1,851.86 $ 2,267.73 $ 1,857.38 $ 1,787.93 $ 1,930.44 Shares ------------ ------------ ------------ ------------ ------------ ------------ Basic Shares 81 81 81 81 81 81 Outstanding ------------ ------------ ------------ ------------ ------------ ------------ Dividend Paid $ 2,000.00 $ 1,900.00 $ 2,000.00 $ 2,000.00 $ 1,900.00 $ 2,000.00 Per Share ------------ ------------ ------------ ------------ ------------ ------------ Unaudited

9 RISK FACTORS This offering involves a high degree of risk. In addition to the other information set forth in this Prospectus, the following risk factors should be considered carefully in evaluating Abidon, Inc. and its business before purchasing any of the shares of Common Stock of Abidon. This Prospectus contains certain forward-looking statements that involve risks and uncertainties, such as statements of Abidon's plans, objectives, expectations and intentions. When used in this Prospectus, the words "expects," "anticipates," "intends," and "plans" and similar expressions are intended to identify certain of these forward-looking statements. The cautionary statements in this Prospectus should be read as being applicable to all related forward-looking statements wherever they appear in this Prospectus. Abidon's actual results could differ materially from those discussed in this Prospectus. Factors that could cause or contribute to such differences include those discussed below, as well as those discussed elsewhere in this Prospectus. RISKS RELATED TO REAL ESTATE PROPERTIES PROFITABILITY There always exists the possibility of an economic slowdown or over building of rental property in our local geographic area where there is a possibility of our tenants not renewing or defaulting on their leases. There is a possibility of releasing any cancelled or defaulted lease agreements. Abidon's income would be greatly reduced if such an occurrence was to happen and therefore would be unable to make their mortgage payment. MATERIAL RISK ON REAL PROPERTY There is a possibility that acts of God - fire from lightning, wind, earthquakes, flood - could materially damage our real properties. Any such event could cause the tenants not to be able to make their rent payments and could result in a reduction of Abidon's income. EXPIRING LEASES Forty nine percent of Abidon's real estate leases expire during 2002 and 2003. There is a risk that Abidon will not be able to release the spaces coming due in the above time periods. This would reduce Abidon's revenue and profits. RISK OF REAL ESTATE LIQUIDITY In the event of a forced liquidation, there is a risk that Abidon would have trouble finding a buyer for the real estate properties. Due to the unique nature of these buildings it could take over a year to find a buyer. 10 RISK OF ENVIRONMENTAL HAZARDS There is a possibility of an environmental violation or exposure. Abidon could be liable if an existing violation is discovered. There would be a cost to Abidon Inc. to remedy the violation. This cost would reduce the company's net worth. INSURANCE ON REAL ESTATE There is always a possibility of Abidon real estate properties having a fire or the possibility of an earthquake, flood damage, or vandalism damage. Although Abidon has insurance to cover such a loss, the business would be disrupted and could cost Abidon a substantial amount of funds above the amount the insurance company would pay. Also, the insurance company could go out of business at the time the incident occurred and Abidon would be unable to collect for their loss. RISKS RELATED TO EAST STATE ANTIQUE MALL - PROFITABILITY There is a risk that our rentals cannot be renewed or replaced. If Abidon Inc. is unable to renew or replace the existing tenants our income would decline and this would affect our profitability. MANAGEMENT OF POTENTIAL GROWTH There is a possibility that Abidon's current personnel will not be adequate to support Abidon's future operations, that management will be able to hire, train, retain, motivate and manage required personnel or that Abidon management will be able to identify, manage and exploit existing and potential strategic relationships and market opportunities. The failure of Abidon to manage growth effectively could have a material adverse effect on Abidon's business results of operations and financial condition. DEPENDENCE ON KEY PERSONNEL ON THE INTERNET Abidon's performance is substantially dependent on the continued services and on the performance of its senior management and other key personnel. Abidon's performance also depends on Abidon's ability to retain and motivate its other officers and key employees and could have a material effect on Abidon's business, results of operations and financial condition. Abidon is dependent on key personnel, Howard Miller, president and Stanley Miller, secretary. RISK OF CAPACITY CONSTRAINTS ON THE INTERNET Abidon seeks to generate a high volume of traffic and transactions on Abidon service. Accordingly, the satisfactory performance, reliability and availability of Abidon's web site, processing systems and network infrastructure are critical to Abidon's reputation and its ability to attract and retain large numbers of users who bid for or sell items on its service while maintaining adequate customer service levels. Any failure to expand or upgrade its systems could reduce Abidon's income. 11 RISK OF SYSTEM FAILURE ON THE INTERNET In the case of frequent or persistent system failures, Abidon's reputation and name brand could be materially adversely affected. Although Abidon has implemented certain network security measures, its servers are also vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which could lead to interruptions, delays, loss of data or the inability to complete customer auctions. In addition, although Abidon works to prevent unauthorized access to Abidon data, it is impossible to eliminate this risk completely. The occurrence of any and all of these events could have a material adverse effect on Abidon's business, results of operations and financial condition. INTERNET ADVERTISING REVENUE All Internet revenue is generated by selling advertising on our site. Internet advertising decreased significantly in the last twelve months. The national trend on Internet banner advertising has declined over the past twelve months. Abidon has a monthly sale volume on average of $8,000 and an expense of $35,000 per month. Abidon Inc. has 135 customers providing gift certificates to be auctioned. These gift certificates represent the customers' business and is classified as advertising. There is a risk that Abidon will not be able to increase its advertising. If this trend continues Abidon Inc. could be materially adversely affected. DIRECT PARTICIPATION OFFERING There is a possibility that we can only sell a small percent of this offering. This would curtail the funding of our growth and development. Abidon will not be using underwriters, brokers or dealers in connection with this offering and the selling of the shares. This could have a material adverse effect on Abidon's business results and financial condition. DEPENDENT ON OFFERING There is a risk that Abidon Inc. will not be able to implement the business plan due to a limited sale of this issue. To implement the business plan, Abidon Inc. needs to raise $45,000,000 over the first twelve month period. If Abidon is unable to raise the $45,000,000 then our plan will be reduced. Abidon would not be able to establish the four remote, regional office locations to be used as sales offices and back-up sites to the Internet equipment operations headquarters. 12 RISK OF DECLINING REVENUE Revenues have decreased for the year 2001 by 9%. Revenues from the real estate and antique mall comprise 98 percent of Abidon's total revenues. The Internet sales represent 2 percent of sales. The revenue from the real estate declined by $83,000 from year end 2000 to year end 2001. This is a 4.6% decrease in the real estate income. The antique mall revenue decreased $251,000 from year end 2000 to year end 2001. This is a decrease of 12% in revenue from the antique mall. There is a risk that if these sales continue to decline it would cause a loss for Abidon Inc. INTENSE COMPETITION ON THE INTERNET The market for person-to-person trading over the Internet is rapidly evolving and intensely competitive, and Abidon, Inc. expects competition to intensify further in the future. Abidon potentially faces competition from a number of large online communities and services that have expertise in developing online commerce and in facilitating online person-to-person interactions. Other large companies with strong brand recognition and experience in online commerce may also seek to compete in the online auction market. Competitive pressures created by any one of these companies, or by Abidon's competitors collectively, could restrict Abidon Inc.'s growth and cause a limited profit potential. RAPID TECHNOLOGICAL CHANGE ON THE INTERNET The market in which Abidon competes is in rapidly changing technology, evolving industry standards, frequent new service and product announcements, introductions and enhancements and changing customer demands. The failure of Abidon to adapt to such changes would have a material adverse effect on Abidon's business, results of operations and financial condition. In addition, the widespread adoption of new Internet, networking or telecommunications technologies or other technological changes could require substantial expenditures by Abidon to modify or adapt its services or infrastructure, which could have a material adverse effect on Abidon's business, results of operations and financial condition. RISKS ASSOCIATED WITH CERTAIN ACTIVITIES ON ABIDON'S SERVICE The law related to the liability of provider of online services for activities of their users on the service is currently unsettled. While Abidon does not pre-screen the types of goods offered on Abidon, Abidon is aware that certain goods, such as alcohol, tobacco, firearms, adult material, illegal drugs, and other goods that may be subject to regulation by local, state or federal authorities might have been traded on the Abidon service. There is a possibility that Abidon will not be able to prevent the unlawful exchange of goods on its service or that it will successfully avoid civil or criminal liability for unlawful activities carried out by users through Abidon's service. The imposition upon Abidon of potential liability for unlawful activities of users of the Abidon service could require Abidon to implement measures to reduce its exposure to such liability, which may require, among other things, Abidon to spend substantial resources and/or to discontinue certain service offerings. Any costs incurred as a result of such liability or asserted liability could force Abidon Inc. to use its current assets to pay for such cost. 13 SALES AND OTHER TAXES Abidon Internet Services does not collect sales or other similar taxes in respect to goods sold by users through Abidon service. A successful assertion by one or more states or any foreign country that Abidon should collect sales or other taxes on the exchange of merchandise on its system could cause Abidon Inc. to pay for those costs and reduce the current assets. ANTIQUE MALL SALES TAX Illinois sales tax is collected on all retail sales at the E. State Antique Mall. People with Resale Certificates make purchases at the E. State Antique Mall. These Resale Certificates exempt the person listed on the Resale Certificate from paying sales tax on items that are for resale purposes. There is a risk if a person presents a false Resale Certificate Number. The State of Illinois could audit the E. State St. Antique Mall and could collect sales tax on items that had not been properly recorded. This could have an adverse effect on Abidon's business, results of operations and financial condition. LEGISLATION-TAXES ON THE INTERNET Legislation limiting the ability of the states to impose taxes on Internet based transactions has been passed in the U.S. Congress. Failure to renew this legislation could allow various states to impose taxes on Internet based commerce and the imposition of such taxes could reduce the competitive advantage of Internet sales. This reduced advantage or increased cost could reduce Abidon's business and could cause a loss in revenue. PROTECTION AND ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS Abidon regards the protection of its copyrights, service marks, trademarks, trade dress and trade secrets as critical to its future success. There can be no assurance that any steps taken by Abidon to protect its intellectual property will prove sufficient to prevent misappropriation of Abidon's technology or to deter independent third-party development of similar technologies. CONTROL BY PRINCIPAL STOCKHOLDERS, EXECUTIVE OFFICERS AND DIRECTORS Upon the sale of all 5,000,000 shares of this offering, Abidon's executive officers and directors (and their affiliates) will, in the aggregate, own approximately (53.4%) of Abidon's outstanding Common Stock. As a result, such persons, acting together, will have the ability to control all matters submitted to stockholders. Accordingly, such concentration of ownership may have the effect of delaying, deferring or preventing a change in control of Abidon, impede a merger, consolidation, takeover or other business combination involving Abidon or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of Abidon, which in turn could have an adverse effect on the market price of Abidon's Common Stock. 14 FUTURE CAPITAL NEEDS Abidon may need to raise additional funds in order to fund more rapid expansion, to develop new or enhanced services or products, to respond to competitive pressures or to acquire complementary products, businesses or technologies. There is a possibility that additional financing will not be available. Such inability could have a material adverse effect on Abidon's business, results of operations and financial condition. NO PRIOR MARKET FOR COMMON STOCK Prior to this offering, there has been no public market for Abidon's Common Stock, and there is a possibility that an active public market will not develop or be sustained after this offering or that investors will be able to sell the Common Stock should they desire to do so. After the completion of this offering Abidon intends to apply for a listing on the NASDAQ national market. Abidon has not applied to the national market. We have not yet applied to any state for registration or qualification. We will apply for registration and qualification in the States of Illinois, Michigan, Indiana, Ohio, New York, California and others, upon the effective date of registration. IMMEDIATE AND SUBSTANTIAL DILUTION The initial public offering price is substantially higher than the net tangible book value per outstanding share of Common Stock. Purchasers of the Common Stock in this offering will suffer immediate and substantial dilution of $13.80 per share in the net tangible book value of the Common Stock from the initial public offering price. This could have an adverse effect on the market price of the Common Stock. USE OF PROCEEDS Abidon intends to use the net proceeds, over time as follows: First, $9,000,000 for capital expenditures, including latest servers, computers, graphics equipment, software, printers, cameras, copiers, vehicle, high speed transmission equipment, employee wages, and advertising; second, $13,500,000 to invest in technology, products and services; third, $22,500,000, of which $6,500,000 to be invested in technology, products and services and $16,000,000 for general corporate business including working capital, including employee wages; fourth, $22,500,000 for general corporate business including working capital, including employee wages; fifth, $22,500,000, of which $9,000,000 is for capital expenses, $4,000,000 for employee wages, $1,000,000 for advertising, $4,000,000 for products, $2,000,000 for services, and $2,500,000 for working capital should our offering be fully subscribed Abidon has no present plans or commitments and is not currently engaged in any negotiations with respect to such transactions that are material. Pending such uses, Abidon intends to invest the net proceeds from this offering in short-term, interest-bearing, investment-grade securities. Abidon will have significant discretion as to the use of the net proceeds from this offering. BROAD MANAGEMENT DISCRETION OVER ALLOCATIONS OF PROCEEDS This is a best efforts offering. The following table summarizes the use of the net proceeds in the event that the maximum number of offered shares are not sold. 15 The following table reflects how net proceeds will be used if only 10%, 25%, 50%, 75% and 100% of the offering proceeds are raised. ---------------------------------------------------------------------------------------- Proceeds $ 9,000,000 $22,500,000 $45,000,000 $67,500,000 $90,000,000 Priority #1 Priority #2 Priority #3 Priority #4 Priority #5 10% 25% 50% 75% 100% ---------------------------------------------------------------------------------------- Capital Expenses $ 6,000,000 $ 9,500,000 $ 4,000,000 $ 1,500,000 $ 9,000,000 ---------------------------------------------------------------------------------------- Employee Wages $ 2,000,000 $ 2,000,000 $ 2,500,000 $ 3,000,000 $ 4,000,000 ---------------------------------------------------------------------------------------- Advertising $ 1,000,000 $ 1,000,000 ---------------------------------------------------------------------------------------- Products $ 1,000,000 $ 2,000,000 $ 4,000,000 $ 4,000,000 ---------------------------------------------------------------------------------------- Services $ 1,000,000 $ 2,000,000 $ 2,000,000 $ 2,000,000 ---------------------------------------------------------------------------------------- Working Capital $12,000,000 $12,000,000 $ 2,500,000 ---------------------------------------------------------------------------------------- Totals $ 9,000,000 $13,500,000 $22,500,000 $22,500,000 $22,500,000 ========================================================================================

Capital Expenses: Abidon will spend on a priority basis up to $30,000,000 on capital equipment over the next two years. This equipment will include main-frame computer systems, work station systems, site servers, high speed phone systems, backup computer systems, sales vehicles, and four regional support sites. These four regional sites would serve as localized sales offices, headquarter support sites for marketing, and failsafe back-up locations in the event of emergencies. Employee Wages: Abidon estimates an increase in the number of employees from 25 to over 500 within the first twelve months. These employees will be sales, accounting, programmers, managers and supervisors. This estimate is based on all 5,000,000 shares being sold. Abidon's management will retain broad discretion as to the allocation of the proceeds of this offering. The failure of management to apply such funds effectively could have a material adverse effect on Abidon's business, results of operations and financial condition. Abidon has paid all expenses to date out of its profits from their existing income. Abidon has not borrowed any funds to prepare this offering. Abidon intends on spending only funds that are generated by their existing businesses to prepare this offering. 16 DETERMINATION OF OFFERING PRICE The following factors were taken into consideration to determine the offering price: dilution to the new shareholders, the percentage of the corporation that the new stockholders would own, and the price of other IPO offerings. Also, consideration was given to the projected growth of the corporation. PLAN OF DISTRIBUTION The Registrant intends to offer the stock to the public. The announcements will be offered on the web site, along with our final prospectus. Any announcement will only relate the name of the company, the total number of shares, the price of each share, the assurance that the announcements will not be an offer to sell or solicitation of an offer to buy any security. Any offer or solicitation can only be made by the prospectus. A copy of the Prospectus can be obtained by contacting the office at 5301 E. State Street, Rockford, Illinois 61108 (815-226-8700). Complete copies of the Prospectus will be available to anyone attending investment meetings. The plan is to be implemented by the Board of Directors immediately after the effective date of this Registration Statement. The President, Howard Miller, Secretary, Stanley Miller, and Director, Cloyd Dowell will be selling the stock for Abidon Inc. performing their duties as officers and director of the Corporation. After funds are received the President, Secretary and Director will issue stock. There has been no notices, interviews, mailings, public meetings, and materials or publications prepared or released. The following persons, Stanley Miller, Howard Miller, and Cloyd Dowell are relying on Rule 3a4-1, Associated Persons of an Issuer Deemed not to be Brokers. These individuals all meet the following Safe Harbor regulations. Mr. Howard Miller, Mr. Stanley Miller, and Mr. Cloyd Dowell will abide by the following Safe Harbor regulations. 17 a. An associated person of an issuer of securities shall not be deemed to be a broker solely by reason of his participation in the sale of the securities of such issuer if the associated person: 1. Is not subject to a statutory disqualification, as that term is defined in section 3(a)39 of the Act, at the time of his participation; and 2. Is not compensated in connection with his participation but the payment of commissions or other remuneration based either directly or indirectly on transactions in securities; and 3. Is not at the time of his participation an associated person of a broker or dealer; and 4. Meets the conditions of paragraph (a)4(iii) of this section: iii. The associated person restricts his participation to any one or more of the following activities. A. Preparing any written communication or delivering such communication through the mails or other means that does not involve oral solicitation by the associated person of a potential purchaser; Provided, however, that the content of such communication is approved by a partner, officer or director of the issuer: B. Responding to inquiries of a potential purchaser in a communication initiated by the potential purchaser, Provided, however, that the content of such responses are limited to information contained in a registration statement filed under the Securities Act of 1933 or other offering document; or C. Performing ministerial and clerical work involved in affecting any transaction DIVIDEND POLICY Over the past two years, Abidon paid a cash dividend on January 15, 2001 of $.005 per share of common stock and Abidon does not know when the next dividend will be paid. Any future dividend will only be determined at the direction of the Board of Directors. BOARD POLICY The policy of Abidon Inc. Board of Directors requires a vote of the securities holders to change any policy concerning the following items: (a) To issue senior securities requires a vote of security holders(no activity).* (b) To borrow money requires a vote of security holders(no activity).* (c) To make loans to other persons requires a vote of security holders (no activity).* (d) To invest in the securities of other issuers for the purpose of exercising control requires a vote of security holders (no activity).* (e) To underwrite securities of other issuers requires a vote of security holders(no activity).* (f) To engage in the purchase and sale (or turnover) of investments. Authorized by security holders (no activity).* (g) To offer securities in exchange for property requires a vote of security holders (no activity).* (h) To repurchase or otherwise reacquire its shares or other securities requires a vote of security holders (no activity).* (i) To make annual or other reports to security holders, indicating the nature and scope of such reports and whether they will contain financial statements certified by independent public accountants. Authorized by the security holders. Reports provided on annual financial statements. * No Activity: The Board of Directors of Abidon, Inc. has taken no action on each line item over the past three years. The policy of the Board of Directors is to require the vote of the securities holders to acquire any security or investment and requires a vote of security holders. The policy of the Board of Directors is not to acquire any real estate. Any change in this policy requires a vote of the security holders. A description of our real estate now held is on page 31 and 32 of this prospectus. 18 1. 5301 East State Street property is 160,000 sq. ft. three story above ground. One story below ground exposed to the south, constructed with block exterior, with interior steel main structure, dry walled interior walls on steel studding, carpeted flooring over concrete decking. Building has blacktop parking around building. Tenant occupants consist of 75% general office and 25% retail. Property has maintained occupancy in the 90's% for the last five years. 2. 5411 East State Street property is 60,000 sq. ft., two story above ground, one story below ground exposed to the south, constructed with block exterior, with interior steel main structure, dry walled interior walls on steel studding, carpeted flooring over concrete decking. Building has blacktop parking around building. Tenant occupants consist of 59% general office and 41% retail space. Property has maintained occupancy in the 90's% for the last five years. 5301 EAST STATE --------------- Mortgage Balance 2001 $1,222,137.97 Interest Rate 7.5% Amortization 120 months Maturity Date Sept. 1, 2008 Prepayment None Provisions Upon maturity date balance due is zero. (see EX-10.78 Mortgage Associated Commercial Mortgage Inc. and Abidon Inc.) 5411 EAST STATE --------------- Mortgage Balance Dec 31, 2001 $164,350.27 Interest Rate 6.5% Amortization 22 months Maturity Date Nov. 10, 2003 Prepayment None Provisions Upon maturity date balance due is zero. (see EX-10.79 Bank One, Illinois NA and Abidon Inc.) 19 Real Estate Leases of 10% of Income or Rentable Square Footage Abidon does not have any tenant that leases 10% of the total leasable space in either of Abidon's real estate properties. Lease Summary of Abidon Inc. Real Estate Holdings The following table shows the total number of tenants whose leases expire during the next ten years, by the year they expire, the total area covered by such leases, the annual rental represented by the leases, and the percentage of gross annual rental represented by the leases. % Of Gross # ofLeases Leased Annual Lease Lease Year Expiring Sq. Feet Revenue Revenue 2002 22 20,247 $ 244,037 18% 2003 24 40,253 $ 412,928 31% 2004 19 31,933 $ 376,836 27% 2005 9 15,602 $ 164,258 12% 2006 2 1,825 $ 25,450 1.8% 2007 4 6,720 $ 80,545 6.9% 2008 0 0 0 0 2009 0 0 0 0 2010 1 3,630 $ 45,375 3.3% TOTAL 81 120,210 $1,349,429 100% 20 Abidon Inc. has no plans to renovate 5301 East State Street properties. Abidon Inc. has no plans to renovate 5411 East State Street properties. 5301 East State Street properties are located on the far east side of Rockford. The east side of Rockford is the newest business district and the fastest growing district anywhere in the city of Rockford. The high rate of occupancy stated elsewhere in this filing for the past five years indicates the competitive performance of the properties. The properties are in direct competition with old and mostly new retail and office buildings alike. OCCUPANCY RATE -------------- Occupancy Occupancy Occupancy Occupancy Occupancy percentage percentage percentage percentage percentage 2001 2000 1999 1998 1997 ----------------------------------------------------------------------------------------- 5301 East State Street 93.36% 94.30% 92.93% 93.19% 97.04% 5411 East State Street 100.00% 100.00% 91.36% 94.69% 88.45% ----------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------- Average Annual Rental Per Square Foot ----------------------------------------------------------------------------------------- 2001 2000 1999 1998 1997 ----------------------------------------------------------------------------------------- 5301 East State Street $10.35 $10.42 $10.25 $10.06 $9.88 5411 East State Street $ 9.23 $ 9.15 $ 9.10 $ 8.99 $9.18 ----------------------------------------------------------------------------------------- REAL EXTATE TAXES AND TAX RATE ------------------------------ Realty Tax Rate 2001 Real Per $100.00 Estate Taxes --------------- ------------ 5301 East State Street $10.767 $191,797.52 5411 East State Street $10.767 $ 65,591.38

21 ABIDON INC. TAX ASSET DETAIL 1/01/01-12/31/01 Asset Property Date In Cost Sec 179 Salvage Prior Current End Net Description Service Exp Cur- Value Deprec- Deprec- Deprec- Book Value Method Period rent = c iation iation iation ----- ----------- ------- ------------ -------- ------- ---------- --------- ---------- ----------- ------ ------ Group: Buildings ---------------- Loc: 5301 E State St -------------------- 1 Building 10/01/90 2,808,240.73 0.00 0.00 910,078.02 89,150.50 999,228.52 1,809,012.21 S/L 31.5 2 Building 6/30/91 526,461.37 0.00 0.00 159,470.45 16,713.06 176,183.51 350,277.86 S/L 31.5 additions 1991 3 Building 6/30/92 468,041.19 0.00 0.00 126,915.93 14,858.45 141,774.38 326,266.81 S/L 31.5 additions 1992 4 Improvements 3/31/93 71,563.06 0.00 0.00 17,701.42 2,271.84 19,973.26 51,589.80 S/L 31.5 5 Improvements 6/30/93 71,101.53 0.00 0.00 13,749.36 1,823.12 15,572.48 55,529.05 S/L 39.0 6 Improvements 9/30/93 45,130.02 0.00 0.00 8,437.77 1,157.18 9,594.95 35,535.07 S/L 39.0 7 Improvements 12/31/93 89,766.83 0.00 0.00 16,207.87 2,301.71 18,509.58 71,257.25 S/L 39.0 8 Improvements 1/31/94 58,268.51 0.00 0.00 10,396.17 1,494.06 11,890.23 46,378.28 S/L 39.0 9 Improvements 2/28/94 14,303.81 0.00 0.00 2,521.48 366.76 2,888.24 11,415.57 S/L 39.0 10 Improvements 7/31/94 4,907.49 0.00 0.00 812.65 125.83 938.48 3,969.01 S/L 39.0 11 Improvements 8/30/94 4,500.00 0.00 0.00 735.55 115.38 850.93 3,649.07 S/L 39.0 12 Improvements 9/30/94 10,872.78 0.00 0.00 1,754.05 278.79 2,032.84 8,839.94 S/L 39.0 13 Improvements 3/31/95 9,637.15 0.00 0.00 1,431.18 247.11 1,678.29 7,958.86 S/L 39.0 14 Improvements 6/30/95 8,380.82 0.00 0.00 1,190.85 214.89 1,405.74 6,975.08 S/L 39.0 15 Improvements 9/30/95 3,331.31 0.00 0.00 452.01 85.42 537.43 2,793.88 S/L 39.0 16 Improvements 11/30/95 11,561.34 0.00 0.00 1,519.26 296.44 1,815.70 9,745.64 S/L 39.0 17 Improvements 6/30/96 29,912.16 0.00 0.00 3,483.37 766.98 4,250.35 25,661.81 S/L 39.0 18 Improvements 6/30/97 35,383.45 0.00 0.00 3,213.25 907.27 4,120.52 31,262.93 S/L 39.0 19 Improvements 9/30/98 19,592.39 0.00 0.00 1,151.26 502.37 1,653.63 17,938.76 S/L 39.0 20 Improvements 11/30/98 2,189.54 0.00 0.00 119.30 56.14 175.44 2,014.10 S/L 39.0 21 Improvements 11/30/99 9,362.50 0.00 0.00 270.07 240.06 510.13 8,852.37 S/L 39.0 ----- ----------- ------- ------------ -------- ------- ------------ ---------- ------------ ------------ 5301 East State Street 4,302,507.98 0.00 0.00 1,281,611.27 133,973.36 1,415,584.63 2,886,923.35 ---------------------- ------------ -------- ------- ------------ ---------- ------------ ------------

22 ABIDON INC. TAX ASSET DETAIL 1/01/01-12/31/01 Asset Property Date In Cost Sec 179 Salvage Prior Current End Net Description Service Exp Cur- Value Deprec- Deprec- Deprec- Book Value Method Period rent = c iation iation iation ----- ----------- ------- ------------ -------- ------- ---------- --------- ---------- ----------- ------ ------ Loc: 5411 East State St ----------------------- 31 Building 8/15/88 506,896.00 0.00 0.00 359,353.81 21,289.63 380,643.44 126,252.56 PRE 19.0 32 Building 6/15/88 686,607.58 0.00 0.00 269,452.67 21,797.07 291,249.74 395,357.84 S/L 31.5 33 Carpeting 11/15/91 5,058.71 0.00 0.00 5,058.71 0.00 5,058.71 0.00 200DB 7.0 34 Building 11/15/91 1,463.89 0.00 0.00 424.04 46.47 470.51 993.38 S/L 31.5 35 Improvements 6/15/92 43,412.00 0.00 0.00 11,796.79 1,378.16 13,174.95 30,237.05 S/L 31.5 36 Improvements 6/15/93 86,875.30 0.00 0.00 16,405.62 2,227.57 18,633.19 68,242.11 S/L 39.0 37 Improvements 6/15/94 13,851.47 0.00 0.00 2,331.52 355.17 2,686.69 11,164.78 S/L 39.0 38 Improvements 6/15/95 40,534.18 0.00 0.00 5,490.39 1,039.34 6,529.73 34,004.45 S/L 39.0 39 Improvements 4/30/96 2,850.57 0.00 0.00 344.13 73.09 417.22 2,433.35 S/L 39.0 40 Improvements 4/30/97 2,921.00 0.00 0.00 277.75 74.90 352.65 2,568.35 S/L 39.0 41 Improvements 6/15/98 12,209.12 0.00 0.00 748.50 313.05 1,061.55 11,147.57 S/L 39.0 42 Improvements 11/30/99 4,112.50 0.00 0.00 118.63 105.45 224.08 3,888.42 S/L 39.0 44 Improvements 2/01/00 13,037.50 0.00 0.00 292.51 334.29 626.80 12,410.70 S/L 39.0 47 Lease 9/30/01 10,300.00 0.00 0.00 0.00 77.03 77.03 10,222.97 S/L 39.0 Improvements ------------ -------- ------- ---------- --------- ---------- ----------- 5411 East State St 1,430,129.82 0.00 0.00 672,095.07 49,111.22 721,206.29 708,923.53 ------------ -------- ------- ---------- --------- ---------- ----------- Buildings 5,732,637.80 0.00 0.00 1,953,706.34 183,084.58 2,136,790.92 3,595,846.88 ------------ -------- ------- ---------- --------- ---------- ----------- Group: Computer Equipment Loc: State St ------------- 43 Computer 1/31/00 2,085.94 0.00 0.00 417.19 667.50 1,084.69 1,001.25 200DB 5.0 Equip 45 Computer 6/15/00 77,205.93 20,000.00 0.00 31,441.19 18,305.90 49,747.09 27,458.84 200DB 5.0 Equip 00 48 Computer 6/30/01 15,930.42 15,930.42 0.00 0.00 15,930.42 15,930.42 0.00 200DB 5.0 Equip ----------- --------- ----- ---------- --------- ---------- ---------- State St 95,222.29 15,930.42 0.00 31,858.38 34,903.82 66,762.20 28,460.09 -------- Computer ----------- --------- ----- ---------- --------- ---------- ---------- Equipment 95,222.29 15,930.42 0.00 31,858.38 34,903.82 66,762.20 28,460.09 ----------- --------- ----- ---------- --------- ---------- ---------- 23 ABIDON INC. TAX ASSET DETAIL 1/01/01-12/31/01 Group: Furn Fixt & Equip ------------------------ Loc: State St -------------- 22 Steam Table 1/31/92 237.82 0.00 0.00 237.82 0.00 237.82 0.00 200DB 7.0 23 Sandwich Shop 4/30/92 2,744.00 0.00 0.00 2,744.00 0.00 2,744.00 0.00 200DB 7.0 Sign 24 Equipment 11/30/97 2,863.44 0.00 0.00 1,857.18 287.50 2,144.68 718.76 200DB 7.0 28 Equipment 6/15/89 10,079.41 0.00 0.00 10,079.41 0.00 10,079.41 0.00 200DB 7.0 ----------- --------- ----- ---------- --------- ---------- ---------- State St 15,924.67 0.00 0.00 14,918.41 287.50 15,205.91 718.76 -------- Furn ----------- --------- ----- ---------- --------- ---------- ---------- Fixt 15,924.67 0.00 0.00 14,918.41 287.50 15,205.91 718.76 & Equip ----------- --------- ----- ---------- --------- ---------- ---------- Group: Land ----------- Loc: 5301 E State St -------------------- 25 Land 11/15/89 450,000.00 0.00 0.00 0.00 0.00 0.00 450,000.00 Memo 0.0 ----------- --------- ----- ---------- --------- ---------- ---------- 5301 E State St 450,000.00 0.00 0.00 0.00 0.00 0.00 450,000.00 ----------- --------- ----- ---------- --------- ---------- ---------- Loc: 5411 E State St -------------------- 30 Land 8/15/88 85,070.00 0.00 0.00 0.00 0.00 0.00 85,070.00 Land 0.0 ----------- --------- ----- ---------- --------- ---------- ---------- 5411 E State St 85,070.00 0.00 0.00 0.00 0.00 0.00 85,070.00 ----------- --------- ----- ---------- --------- ---------- ---------- Land 535,070.00 0.00 0.00 0.00 0.00 0.00 535,070.00 ----------- --------- ----- ---------- --------- ---------- ---------- Group: Start up Expenses ------------------------ Location --------- 29 Loan 4/15/94 4,243.10 0.00 0.00 1,255.26 848.62 2,103.88 2,139.22 Amort 5.0 Amortization 46 Organizational 6/30/00 1,114.37 0.00 0.00 130.01 222.87 352.88 761.49 Amort 5.0 Exp ----------- --------- ----- ---------- --------- ---------- ---------- No Location 5,357.47 0.00 0.00 1,385.27 1,071.49 2,456.76 2,900.71 Start up ----------- --------- ----- ---------- --------- ---------- ---------- expenses 5,357.47 0.00 0.00 1,385.27 1,071.49 2,456.76 2,900.71 ----------- --------- ----- ---------- --------- ---------- ---------- Grand 6,384,212.23 15,930.42 0.00 2,001,868.40 219,347.39 2,221,215.79 4,162,996.44 Total ------------ --------- ----- ------------ ---------- ------------ ------------

24 BUSINESS This Prospectus contains forward-looking statements that involve risks and uncertainties. Abidon's actual results may differ significantly from the results discussed in these forward-looking statements. Factors that may cause such a difference include, but are not limited to, those discussed in "Risk Factors." 25 CAPITALIZATION ABIDON, INC. BALANCE SHEET As of March 31, 2002 ASSETS CURRENT ASSETS Cash 10,574 A/R SEC 13,230 Rents receivable 2,587 ---------- Total Current Assets 26,391 PROPERTY AND EQUIPMENT 4,129,685 ---------- Net Property and Equipment 4,129,685 OTHER ASSETS Loan fees 4,243 Other 53,565 Accumulated amortization (30,032) ---------- Total Other Assets 27,776 ---------- TOTAL ASSETS $4,183,852 ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Payroll taxes 10,907 Sales tax payable 7,775 Wages payable 24,013 Deferred revenues 31,544 Federal Income tax payable 25,600 Real estate taxes payable 239,153 Current portion of long-term debt 190,679 ---------- Total Current Liabilities 529,671 LONG-TERM LIABILITIES Long-term debt, less current portion 1,086,884 ---------- Total Long-Term Liabilities 1,086,884 STOCKHOLDERS EQUITY Common stock, $.0001 par value per share 40,000,000 shares authorized 17,050,000 shares issued and outstanding 1,705 Additional paid-in capital 1,916,295 Retained earnings 649,297 ---------- Total Stockholders' Equity 2,567,297 ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,183,852 ========== Unaudited 26 DILUTION The pro forma net tangible book value of Abidon as of March 31, 2002 is $2,567,297 or $0.15 per share of Common Stock. "Pro forma net tangible book value per share" is determined by dividing the pro forma number of outstanding shares of Common Stock (assuming the conversion of all outstanding shares of Preferred Stock into shares of Common Stock) into the net tangible book value of Abidon (total tangible assets less total liabilities). After giving effect to the receipt of the estimated net proceeds from the sale by Abidon of the 5,000,000 shares of Common Stock offered by Abidon hereby, the pro forma net tangible book value of Abidon as of December 31, 2001 is approximately $92,479,255 or $4.20 per share. This represents an immediate increase in pro forma net tangible book value of $4.05 per share to existing stockholders and an immediate dilution of $13.80 per share to new investors purchasing shares at the initial public offering price. The following table illustrates the per share dilution: Initial public offering price per share $18.00 Pro forma net tangible book value per $0.15* share as of Dec. 31, 2001 Increase per share attributable to new investors $4.05 Pro forma net tangible book value per share after the offering $4.20 Dilution per share to new investors $13.80 ===== The following table summarizes as of December 31, 2001, on the pro forma basis described above, the number of shares of Common Stock purchased from Abidon, and the total consideration paid to Abidon. Shares Purchased Total Consideration Number Percent Amount Percent Price/Share Existing 17,050,000 77.32% 2,479,000 2.84% $ 0.15* Stockholders New Investors 5,000,000 22.68% 90,000,000 97.16% $ 18.00 ---------- ------ ---------- ------ TOTAL 22,050,000 100% 92,479,000 100% ========== ====== ========== ====== The estimated expenses to prepare the stock offering are $500,000. After the closing of the offering, Abidon is authorized to issue more shares, not to exceed a total of 30,000,000 shares outstanding. Shares to be used for buyouts, mergers, and advertising. * Rounded to nearest cent. 27 SELECTED COMBINED FINANCIAL DATA The following selected combined financial data should be read in conjunction with, and are qualified by reference to, the Combined Financial Statements and Notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this Prospectus. The combined statement of income data is for the years ended December 31, 1996, 1997, 1998, 1999, 2000, and 2001 and the combined balance sheet data for December 31, 2000 and 2001. Statements for 1996 and 1997 are unaudited. This includes all entities of Abidon Inc.; State Street Investors of Rockford, Inc., East State Street Antiques Mall, and Rockford Investors Partnership. This statement clarifies the information for years 1996 and 1997 are unaudited. 28 Year Ended December 31 ---------------------- COMBINED STATEMENT OF INCOME DATA: 2001 2000 1999 1998 1997 1996 ---- ---- ---- ---- ---- ---- (IN THOUSANDS, EXCEPT PER SHARE DATA) Lease revenues $1700 $1783 $1782 $1807 $1618 $1661 Antique Mall Sales 1717 1969 2095 2420 2547 2542 Internet Auction Service Revenues 105 74 -- -- -- -- ---- ---- ---- ---- ---- ---- Total Revenues 3522 3826 3877 4227 4165 4203 ---- ---- ---- ---- ---- ---- COST OF GOODS SOLD Paid to Antique Mall Dealers 1629 1814 1905 2254 2203 2181 Internet Auction Service Consignments 77 69 -- -- -- -- ---- ---- ---- ---- ---- ---- Total Cost of Goods Sold 1706 1883 1905 2254 2203 2181 ---- ---- ---- ---- ---- ---- Gross Profit 1816 1943 1972 1972 1962 2022 OPERATING EXPENSES 1592 1642 1340 1115 1179 1259 ---- ---- ---- ---- ---- ---- Operating Income 224 300 632 857 783 763 ---- ---- ---- ---- ---- ---- OTHER INCOME (EXPENSE) Interest Income Interest Expense (112) (120) (129) (143) 155 177 Other Income 4970 -- -- -- -- -- ---- ---- ---- ---- ---- ---- Net Other Expense (107) (119) (127) (140) (155) (177) ---- ---- ---- ---- ---- ---- Income Before Income Taxes 117 181 504 717 628 586 PROVISION FOR INCOME TAXES 58 26 10 9 9 7 ---- ---- ---- ---- ---- ---- NET INCOME 59 $154 $494 $707 $619 $579 ---- ---- ---- ---- ---- ---- Net Income per Share: Basic $.003 $1.80 $5.79 $8.29 $7.26 $6.79 ---- ---- ---- ---- ---- ---- Weighted Average shares-basic 17,050 85 85 85 85 85 ---- ---- ---- ---- ---- ---- Diluted $.003 $.009 $5.79 $8.29 $7.26 $6.79 ---- ---- ---- ---- ---- ---- Weighted average shares diluted 17,050 17,050 85 85 85 85 ---- ---- ---- ---- ---- ---- Long Term Liabilities 1,131 $1,520 $1,692 $1,853 $1,978 $2,148 ---- ---- ---- ---- ---- ----

29 COMBINED FINANCIAL DATA ABIDON, INC. BALANCE SHEETS December 31, 2001 and 2000 ASSETS 2001 2000 ---------- ---------- CURRENT ASSETS Cash $ 79,390 $ 85,539 Rent receivable 10,694 2,526 ---------- ---------- Total Current Assets 90,084 88,065 ---------- ---------- PROPERTY AND EQUIPMENT 4,160,096 4,352,141 ---------- ---------- OTHER ASSETS Loan fees 4,243 4,243 Other 28,237 1,114 Less: Accumulated amortization (2,909) (1,367) ---------- ---------- Net Other Assets 29,571 3,990 ---------- ---------- TOTAL ASSETS $4,279,751 $4,444,196 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 113,105 $ 86,658 Wages payable 13,221 9,357 Payroll taxes and withholdings payable 9,279 17,096 Sales tax payable 9,395 6,481 Deferred revenues 31,544 39,950 Income taxes payable 42,600 26,313 Real estate taxes payable 259,000 247,613 Current portion of long-term debt 190,679 171,505 ---------- ---------- Total Current Liabilities 668,823 604,973 LONG-TERM LIABILITIES Long-Term debt, less current portion 1,131,673 1,333,833 ---------- ---------- Total Liabilities 1,800,496 1,938,806 ---------- ---------- STOCKHOLDERS' EQUITY Common Stock, $.0001 par value per share 1,705 1,705 40,000,000 shares authorized 17,050,000 shares issued and outstanding Additional paid-in capital 1,916,295 1,916,295 Retained earnings 561,255 587,390 ---------- ---------- Total Stockholders' Equity 2,479,255 2,505,390 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,279,751 $4,444,196 ========== ========== See accompanying notes to financial statements (Page F-1)

30 SELECTED COMBINED FINANCIAL DATA Abidon consists of the assets of the following three Illinois corporations: State Street Investors of Rockford Inc., Rockford Investors Inc., and East State Antiques Mall Inc. The calculations before the corporation was formed are made as follows: 85,250 shares of stock outstanding. Selected combined financial data is for the years ended December 31, 1999, 2000, and 2001. The weighted average shares diluted for the year 2000 is actual shares outstanding. The 5,000,000 shares of this offering are included in the weighted average shares diluted for 2001, which equals 22,050,000 outstanding shares. 31 ABIDON, INC. COMBINED STATEMENT OF INCOME DATA Years Ended December 31, 2001, 2000, and 1999 2001 2000 1999 (IN THOUSANDS, EXCEPT PER SHARE DATA) Total Revenues 3,522,205 3,826,465 3,878,541 --------- --------- --------- Total Cost of Goods Sold 1,706,158 1,883,147 1,905,789 --------- --------- --------- Gross Profit 1,816,047 1,943,318 1,972,752 OPERATING EXPENSES 1,591,869 1,642,801 1,340,514 --------- --------- --------- Operating Income 224,178 300,517 632,238 --------- --------- --------- OTHER INCOME (EXPENSE) Interest income 262 1,312 1,883 Interest expense (112,367) (120,781) (129,821) Other income 4,970 -- -- --------- --------- --------- Net Other Expense (107,135) (119,469) (127,938) --------- --------- --------- Income Before Income Taxes 117,043 181,048 504,300 PROVISION FOR INCOME TAXES 57,928 26,313 10,185 --------- --------- --------- NET INCOME $ 59,115 $ 154,735 $ 494,115 ========= ========= ========= Pro forma net income (loss) per 0share (1): $.003 $1.80 $5.79 Basic 17,050 17,050 85 Weighted average shares-basic $.0026 $.009 $5.79 Diluted 22,050 17,050 85 Weighted average shares-diluted $1,131 $1,520 $1,692

32 The following table sets forth the details of the operating expenses for years ending 2001 and 2000. Operating Expenses Yr. End 2001 Yr. End 2000 ------------------ ------------ ------------ Payroll Reimbursement 00 (122,385.24) Rent Rebate 00 110,000.00 Commissions and Management 73,207.50 00 Computer Consulting 30,075.05 23,405.32 Server Expenses 00 4,746.20 Commissions - AM 4,091.24 80,875.00 Computer Consulting - AM 515.00 39,244.58 Accounting and Legal 41,513.32 17,779.00 Director's Fees 2,000.00 2,000.00 Auto and Truck 2,893.07 4,231.73 Advertising AM 105,756.34 730.64 Amortization RNTL 1,523.54 954.17 Advertising AM (9,202.32) 76,128.18 Bank Charges AM 23,030.21 21,905.16 Bank Charges RNTL 794.20 341.07 Cable 619.52 00 Depreciation 218,275.90 199,932.62 Donations 2,477.01 00 Dues and Subscriptions 1,317.67 847.25 Employment Benefits 945.70 00 Entertainment 707.83 731.48 Federal Payroll Taxes AM 35,457.22 36,633.07 Federal Payroll Taxes RNTL 213.47 283.09 Equipment Rental 192.00 859.00 Insurance Expenses 35,022.40 15,931.00 Internet Services 3,318.94 12,108.19 Insurance AM (1,064.13) 00 Web Hosting Service 2,312.09 00 Wages 426,704.50 402,805.22 Licenses & Taxes 396.50 00 Lease Expense 280.00 00 Linen & Laundry AM 00 325.00 Linen & Laundry RNTL 00 90.13 Miscellaneous Expenses AM 00 469.67 Miscellaneous Expenses RNTL 00 260.00 Office Expense AM 447.12 100.00 Office Salaries RNTL 00 923.50 Office Expense RNTL 10,438.31 13,029.19 Postage 2,939.32 1,378.70 Real Estate Taxes 259,000.00 247,613.30 Repairs and Maintenance AM (73.00) 00 Repairs and Maintenance RNTL 163,381.00 179,362.32 Sales Promotions 1,850.00 1,005.34 Security 1,217.22 924.50 Unemployment Tax 1,370.05 3,611.21 Supplies RNTL 7,908.63 10,793.55 33 Supplies AM 50.00 770.83 Supplies Internet RNTL 1,988.98 00 Supplies Computer RNTL 12,580.67 49,753.74 Telephone 14,206.00 24,175.56 Travel 698.02 500.00 Supplies Internet 00 1,692.33 Utilities 98,707.52 89,830.85 Telephone-T line 11,785.85 11,250.00 Essior Utilities 00 (86.59) Commissions ESTM 00 5,000.00 Accounting and Legal ESTM 00 1,445.00 Amortization ESTM 00 5.89 Director's Fees ESTM 00 2,200.00 Depreciation ESTM 00 4,061.25 Office Expense ESTM 00 (25.13) Real Estate Taxes ESTM 00 (8,340.41) Telephone 00 175.13 Payroll Reimbursement HMDS 00 (8,541.00) Computer Consulting HMDS 00 5,832.95 Advertising HMDS 00 2,611.36 Band Charges HMDS 00 3,725.01 Donations HMDS 00 25.00 Federal Payroll Taxes HMDS 00 3,868.74 Insurance Expense 00 (4,696.00) Wages HMDS 00 42,066.96 Misc. HMDS 00 1,000.00 Repair HMDS 00 260.68 Unemployment Tax HMDS 00 908.41 Supplies ESS 00 1,653.23 Subcontracting ESS 00 2,000.00 Commissions ESS 00 5,000.00 Accounting and Legal ESS 00 1,660.00 Bank Charges ESS 00 3.51 Depreciation ESS 00 11,232.78 Licenses ESS 00 100.00 Office Expense ESS 00 (507.78) Repairs ESS 00 1,268.94 Supplies ESS 00 337.60 Telephone ESS 00 607.78 ------------------ ------------ ------------ TOTALS 1,591.869.46 1,642.799.76 34 QUARTERLY RESULTS OF OPERATIONS The following table sets forth, for the periods presented, certain data from Abidon's statement of income. The statement of income data has been derived from Abidon's unaudited combined financial statements, which, in management's opinion, have been prepared on substantially the same basis as the audited financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods presented. This information should be read in conjunction with the Financial Statements and Notes thereto included elsewhere in this Prospectus. The operating results in any quarter are not necessarily indicative of the results that may be expected for any future period. 35 QUARTERLY RESULTS OF OPERATIONS (IN THOUSANDS, EXCEPT PERCENTAGES) Three Months Ended Dec. 31 Mar. 31 June 30 Sept.30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1999 2000 2000 2000 2000 2001 2001 2001 2001 ---- ---- ---- ---- ---- ---- ---- ---- ---- Net revenues $1013 $693 $942 $890 $1016 $889 $975 $1003 $966 Cost of net revenues 417 436 469 465 502 519 484 562 489 ---- ---- ---- ---- ---- ---- ---- ---- ---- Gross Profit 560 257 473 425 514 370 491 441 477 ---- ---- ---- ---- ---- ---- ---- ---- ---- Total operating expenses 267 203 494 490 417 338 444 444 420 ---- ---- ---- ---- ---- ---- ---- ---- ---- Income from operations 293 203 494 490 417 338 444 444 420 Interest and other income, net -- -- -- -- -- -- -- -- -- ---- ---- ---- ---- ---- ---- ---- ---- ---- Income before income taxes 293 53 (21) (65) 97 32 29 14 58 Provision for income taxes (64) (6) (6) -- -- (7) (6) (3) (2) ---- ---- ---- ---- ---- ---- ---- ---- ---- Net Income $229 $47 ($27) ($65) $97 $25 $23 $11 $55 ==== ==== ==== ==== ==== ==== ==== ==== ==== As a Percentage of Net Revenues: Net revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost of net revenues 41.16 62.91 47.78 52.24 49.40 58.38 48.64 56.03 50.62 ---- ---- ---- ---- ---- ---- ---- ---- ---- Gross profit 58.84 37.09 50.22 47.76 50.60 41.62 50.36 43.97 49.38 ---- ---- ---- ---- ---- ---- ---- ---- ---- Total operating expenses 26.35 29.29 52.44 55.05 81.12 38.02 45.53 44.26 42.16 ---- ---- ---- ---- ---- ---- ---- ---- ---- Income from operations 32.49 7.80 (2.22) (7.29) 30.52 3.60 4.83 (.29) 7.22 Interest and other income, net -- -- -- -- -- -- -- -- -- ---- ---- ---- ---- ---- ---- ---- ---- ---- Income before income taxes 32.49 7.80 (2.22) (7.29) 30.52 3.60 4.83 (.29) 7.22 Provision for income taxes (6.31) (.86) (.63) -- -- (.79) (1.06) (.06) (.20) ---- ---- ---- ---- ---- ---- ---- ---- ---- Net income 26.18% 6.94% (2.85%) (7.29%) 30.52% 2.81% 3.77% .35% 7.02% ==== ==== ==== ==== ==== ==== ==== ==== ==== ---------------------------------------------------------------------------------------------------------------

36 The following table sets forth, for the periods presented, certain data from Abidon's combined statement of income as a percentage of net revenues. The information has been derived from Abidon's audited combined financial statements. This information should be read in conjunction with the Combined Financial Statements and Notes thereto included elsewhere in this Prospectus. 1999 2000 2001 ----- ----- ----- Net revenues 100.0% 100.0% 100.0% Cost of net revenues 49.1 49.5 48.4 ----- ----- ----- Gross profit 50.9 50.5 51.6 ----- ----- ----- Total operating expenses 34.6 42.9 42.3 ----- ----- ----- Income from operations 16.3 7.8 3.3 Interest and other income, net (3.3) (3.1) (3.0) ----- ----- ----- Income before income taxes 13.0 4.7 3.3 Provision for income taxes 0.3 0.7 1.6 ----- ----- ----- Net income 12.7% 4.0% 1.6% ----- ----- ----- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Abidon Internet Services is very new and has only been in operation since April 4, 2000 and as of December 31, 2001 has a staff of 25 employees engaged in developing, advertising, promoting the site, improving customer relations, obtaining users, and encourage companies to list their entire catalog of products on the site. Abidon Inc. has been able to develop the online service with 25 employees without showing a corporation loss. The lease revenues for 1999 were $1,782,746, for 2000 they were $1,783,510, and for 2001 they were $1,700,330. This shows a decline in lease revenue of 4.6% for the years 2000 and 2001. This decline in revenue is due to the loss of tenants which were replaced with tenants at a lower rental rate per square foot. Antique Mall sales for 1999 were $2,095,795, for 2000 they were $1,968,555, and for 2001 they were $1,716,728. This shows a drop in sales of approximately 18% over the three years. The internet auction service generated revenues for 2000 of $74,400 and for 2001 they were $105,147. The total revenues for 1999 were $3,878,541, for 2000 they were $3,826,465 and for 2001 they were $3,522,205, showing a decrease in revenue over the three years of 11%. The operating expense increases from $1,340,514 in 1999 to $1,642,801 in 2000 and to $1,591,869 in 2001. The net income has declined for the years 1999, 2000, and 2001. (1999-$494,115, 2000-$154,735, and 2001-$59,115.) This was a decrease in net income of 88%. The operational results or net worth resulted in a decline to $2,505,390 in 2000 and to $2,479,255 in 2001. The main reason for the decline in net income was due to the cost of developing the Internet site. 37 These costs entailed the capital expenditures for a server, computers, desk, chairs, fax machines, copy machines, phone systems, cameras, printers, and high speed information lines. Other costs were wages for site manager, programmers, sales and clerical, plus miscellaneous costs. Abidon Inc. expects revenue growth in the Internet operation. The requirement for capital expenditures has been met for the startup of our Internet site. Future capital expenditures will be for upgrade on computers and additional line upgrades. The sales management team will monitor the success of each salesperson and recommends the necessary changes to be made to insure the success of the marketing plan. They will also make recommendations to charges necessary to add or replace according to each area's sales results. Monthly reports will be made to the management team to monitor the revenue versus the cost of sales. This increased revenue will allow Abidon to upgrade capital expenditures and to increase all of our additional required staffing needs on an ongoing basis. All incremental upgrades generated by volume will be borne by the increased revenue stream. Abidon Inc. will purchase vehicles for its salespeople. The vehicles will be used by the salespeople to call on advertisers for our web site. All expansion cost for capital requirements will be provided by incremental growth generated by the startup investment income and the proceeds from this issue. The Internet site will generate revenue by selling advertising that consists of banner ads, e-shops, gift certificates, and classifieds. The value of these ads increase as the number of hits increases on a monthly total. We auction gift certificates on the web site. Abidon receives all the money from the sale of these gift certificates. Substantially all of Abidon's revenues come from income from real estate rentals in the two buildings and sales from the antique mall. Abidon.com charged no fees to buyers and, to date, has sold advertising on the Web site - $74,000 in year 2000, and $105,000 in year 2001. Abidon's current working capital deficit at year end totaled $588,739. This shortage will be paid over the next twelve months by lease revenues. Abidon could meet any shortage of current asset requirements by securing a working capital line of credit from a bank, reduce its cost of operations, secure a long-term mortgage loan on its real estate or obtain an equity funding from its current stockholders. 38 Abidon's revenues for the first quarter ending March 31, 2002 were $942,831 compared with $849,858 for the same period in 2001. This represents an increase of $92,973. The sales in the antique mall for the first quarter of 2002 totaled $513,721, compared to $453,147 for 2001. This is an increase of $60,574 for the malls. The lease income for the first quarter of 2002 totaled $405,592 compared to 2001 of $326,739. This is an increase of $78,853. This increase is due to a higher percentage of the rental spaces being leased. The Internet sales for the first quarter totaled $23,520 as compared with $69,973 for the first quarter 2001. This represents a decrease in revenue of $46,453. This decrease in revenue is due to the loss of two key salesmen. The cost of goods sold were $422,185 compared with $368,741. This was also an increase over the comparable period in 2001 of $53,444. The gross profit was $520,648 compared to $481,118. This was an increase of $39,530. Abidon's first quarter operating expenses of $388,078 compared with first quarter 2001 of $35,008. This represents a decrease of $46,930. Abidon's first quarter operating income for 2002 was $132,570 which compared with 2001 of $46,110 for an increase of $86,460. Abidon's 2002 first quarter net income was $88,042 compared with first quarter 2001 of $13,718. This was an increase of $74,314. Abidon reported earnings per share for the first quarter of 2002 of $.0052 compared with first quarter 2001 of $.0008. FACTORS AFFECTING RESULTS OF OPERATIONS AND FINANCIAL CONDITION ON THE INTERNET Abidon is very new and thus has only a limited operating history on which to base an evaluation of its business and prospects. Abidon's prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development, particularly companies in new and rapidly evolving markets such as online commerce. To address these risks and uncertainties, Abidon must, among other things, maintain and increase the number of its registered users, items listed on its service and completed auctions, maintain and enhance its brand, implement and execute its business and marketing strategy successfully, continue to develop and upgrade its technology and information processing systems, continue to enhance the Abidon.com service to meet the needs of a changing market, provide superior customer service, respond to competitive developments, and attract, integrate, retain and motivate qualified personnel. There can be no assurance that Abidon will be successful in accomplishing all of these things, and the failure to do so could have a material adverse effect on Abidon's business, results of operations and financial condition. 39 Abidon Internet Services believes that its continued growth will depend in large part on its ability to: (i) increase its brand name awareness, (ii) provide its customers with superior community and trading experiences and (iii) maintain sufficient transaction volume to attract buyers and sellers. Accordingly, Abidon intends to invest in marketing and promotion, site development, technology and operating infrastructure development. In view of the rapidly evolving nature of Abidon's business and its limited operating history, Abidon believes that period-to-period comparisons of its operating results are not necessarily meaningful and should not be relied upon as indications of future performance. Abidon's operating results have varied on a quarterly basis during its short operating history and may fluctuate significantly as a result of a variety of factors, many of which are outside Abidon's control. Sales from the Antique Malls and the ability to keep the real estate office/retail buildings leased could affect the profitability. Other factors that may affect Abidon's quarterly operating results include: (a) Abidon's ability to manage the number of items listed on its service; (b) price competition; (c) increasing consumer confidence and acceptance of the Internet and other online services for commerce and, in particular, the trading of products such as those listed on Abidon; (d) Abidon's ability to retain an active user base, attract new users who list items for sale and who complete transactions through its service and maintain customer satisfaction; (e) the level of use of the Internet and online services; (f) the announcement or introduction of new sites, services and products by Abidon or its competitors; (g) consumer confidence in the security of transactions over the Internet; (h) the success of Abidon's brand building and marketing campaigns; (i) the volume of items listed on Abidon's web site; (j) Abidon's ability to upgrade and develop its systems and infrastructure to accommodate growth; (k) the timing, cost and availability of advertising in traditional media and on other web sites and online services; (l) volume, size, timing and completion rate of trades on Abidon; (m) Abidon's ability to attract new personnel in a timely and effective manner; (n) technical difficulties or service interruptions; (o) the amount and timing of operating costs and capital expenditures relating to expansion of Abidon's business, operations and infrastructure; (p) governmental regulation by Federal or local governments; (q) general economic conditions as well as economic conditions specific to the Internet and online commerce industries, and consumer trends and popularity of certain categories of collectible items. 40 Abidon believes that its results of operations from Internet sales are somewhat seasonal in nature, with fewer auctions around the Thanksgiving and Christmas holidays in the fourth quarter. Abidon's limited operating history, however, makes it difficult to fully assess the impact of these seasonal factors or whether or not its business is susceptible to cyclical fluctuations in the U.S. economy. In addition, Abidon believes that its growth may have overshadowed whatever seasonal or cyclical factors might have influenced its business to date. There can be no assurance that seasonal or cyclical variations in Abidon's operations will not become more pronounced over time or that they will not materially adversely affect its results of operations in the future. Moreover, consumer "fads" and other changes in consumer trends may cause significant fluctuations in Abidon's operating results from one quarter to the next. Due to the foregoing factors, Abidon's quarterly revenues and operating results are difficult to forecast. Abidon believes that period-to-period comparisons of its operating results may not be meaningful and should not be relied upon as an indication of future performance. In addition, it is likely that in one or more future quarters Abidon's operating results will fall below the expectations of investors. INFORMATION WITH RESPECT TO REGISTRANT THE COMPANY - ABIDON INC. The corporation, Abidon Inc., is in the business of leasing office and retail space, and operates Abidon Inc., dba East State Antiques Mall and Abidon Internet Services. Abidon.com is an online auction site offering a place for the public to sell or buy many different products. We also have online stores specializing in antiques and collectibles for people who prefer not to have to bid. On our online stores, people can immediately purchase items that are available and they can make an offer to the seller as well. Between both of these sites, this adds up to thousands of items for sale and continues to build our customer base. The sellers on our auction site and on our online stores establish their selling price. There are 3,053 categories and thousands of items available for purchase. People are talking about Abidon and are able to find products that they are interested in. Abidon's principal executive offices are located at 5301 E. State Street, Suite 215, Rockford, Illinois. The phone number is 815-226-8700. The web site is located at www.abidon.com. Information contained on Abidon's web site shall not constitute a part of this Prospectus. Abidon leases space to 77 different companies at their two commercial buildings located at 5301 and 5411 E. State Street, Rockford, Illinois. The real estate is owned by Abidon Inc. 41 Abidon operates the East State Antique Mall in both of their commercial buildings at 5301 and 5411 E. State Street, Rockford, Illinois. The businesses are located in the lower levels of these two buildings. The space and showcases are rented to antique dealers. The antiques are purchased by the public. The customer will pay for the purchase at the checkout counter. Dealers are paid for the sales made from their booth or showcases every two weeks. On top of their rent they pay 6% of their sales to the East State Antique Mall. The store hours are 10:00 AM to 9:00 PM seven days a week except they are closed on three holidays each year (Easter, Thanksgiving, and Christmas). DESCRIPTION OF BUSINESS On December 19, 1985 Howard P. Miller incorporated Rockford Investors Inc., an Illinois Corporation. The corporation was formed to build a commercial building of 60,000 square feet located at 5411 E. State Street, Rockford, Illinois. Authorized shares of the corporation were 10,000,000 without Par Value. On January 3, 1986 at a special meeting of the Board of Directors, a resolution was passed to issue 41 shares of stock to Howard Miller and it was approved by Howard Miller, sole director. The 41 shares of stock were issued in exchange for 4-1/4 acres of land located at 5411 E. State Street, Rockford, Illinois. On February 5, 1986 a resolution was passed to sell 40 shares of common stock at $10,000 per share. Howard Miller then purchased an additional 9 shares of the 40 shares of stock that were available for sale. The remaining 31 shares were sold to 9 local investors, including 11 shares that were sold to Howard Miller's brother, Stanley Miller, and 6 shares sold to a cousin, Irvin Miller. The building was completed in December of 1986. The corporation was changed to an Illinois Partnership on June 29, 1988. On January 3, 2000 it was changed from a Partnership to an Illinois corporation and was merged into UBuy2 Inc. on January 24, 2000 (later changed to Abidon Inc., a Delaware corporation). Rockford Investors Inc. stockholders received 20,250 shares of stock. The name was amended to Abidon Inc. on April 6, 2000. The mortgage balance on the commercial building as of September 1, 2001 was $129,785. A quarterly dividend of $500 per share was paid on all of the 81 outstanding shares from 1995 through January 6, 2000, except for one quarter in 1995 and one quarter in 1998 when $400 per share was paid. 42 On June 8, 1989 Howard Miller incorporated State Street Investors of Rockford Inc., an Illinois corporation. Authorized shares of the corporation was 1,000 without Par Value. On September 20, 1989 a resolution was passed by the sole director, Howard Miller, to have two classes of stock, Class A voting stock and Class B, non voting stock with no Par Value on either class of stock, being 40 shares of Class A voting stock and 120 shares of Class B non voting stock. The 40 shares of Class A voting stock were issued to Howard Miller and a reverse split of the 40 shares of stock (2 for 1), which left 20 shares of Class A voting stock. Then 90 shares of Class B non voting stock were sold at $20,000 per share and were sold to 30 investors. On October 4, 1989 the corporation purchased 6.55 acres of land located at 5301 E. State Street, Rockford, Illinois from Howard Miller for $450,000. The corporation constructed a 160,000 square foot office and retail building. Howard Miller and Stanley Miller were General Contractors for the corporation and it was completed October 1990. Of the 90 shares of stock that were sold 20 shares were purchased by Stanley Miller (the brother of President Howard Miller) and a cousin, Irvin Miller, purchased 6 shares. State Investors Inc. merged into UBuy2 on January 24, 2000, for 55,000 shares of stock. Mortgage balance on the commercial building as of September 1, 2001 was $1,279,131. A quarterly dividend of $1,000 per share was paid on all the 110 outstanding shares from 1994 through January 11, 2000, except for one quarter in October 1995 of $950 per share. In December, 1986, Howard Miller, dba East State Antique Mall, Rockford, Illinois opened its doors at 5411 E. State Street with 20,000 square feet of retail space. In December, 1990, it expanded to a second location at 5301 E. State Street, Rockford, Illinois in 40,000 square feet of retail space. The business obtained as high as 320 antique dealers leasing space in the two locations. The business was incorporated in the State of Illinois under the name of East State Antique Mall, Inc. an Illinois corporation on November 9, 1999. (Authorized shares of 1,000 with no Par Value.) On November 15, 1999 Howard Miller, President, and Stanley Miller, Secretary, passed a resolution to issue 10 shares of stock to Howard Miller and 10 shares of stock to Stanley Miller (Howard Miller's brother). The East State Street Antique Mall merged into UBuy2, Inc. on January 24, 2000, in exchange for 10,000 shares of UBuy2, Inc. stock. The UBuy2, Inc. name was changed to Abidon, Inc. on April 6, 2000. On January 18, 2000, Howard Miller and Stanley Miller incorporated UBuy2 Inc. a Delaware corporation. UBuy2 Inc. consisted of the merger of the following three corporations: State Street Investors of Rockford Inc. (55,000 shares), East State Antique Mall Inc. (10,000 shares), and Rockford Investors Inc. (20,250 shares) for a total outstanding shares of stock of the corporation of 85,250 shares of common stock. A resolution was passed by UBuy2 Inc. on January 20, 2000 for a stock split of 200 to 1. There are 17,050,000 shares of common stock outstanding. As of now the corporation, Abidon Inc., is in the business of leasing office and retail space, operates Abidon dba East State Antique Mall, Abidon Internet auction service, community page, stores, advertising on the site, and offers many other services on the Internet. 43 Advertisers on our web site generate income for Abidon on four major sections of our web site. * E-Shops. We sell advertising space to customers that want to display their inventory on our site. The customers have the option of displaying photos of each item or could describe any item. Abidon is not involved in the sales transactions. Advertising space is leased on a monthly basis of $50.00 per month paid in advance. * Classified. We sell classified ad space to customers that can list their items on our site and pay a fee for the ad. Ads with photos are at a premium to ads with verbal descriptions. Classified ads are run on a monthly basis and are billed at $5.00 per ad with a photo and $3.00 per ad without a photo. * Banner Ad. We anticipate selling banner ads to service oriented clients. The banner ad will be contracted on an annual basis. Banner ads will be priced at $100.00-$500.00 per ad depending on location and web page. Abidon Inc. has not yet sold any banner ads. * Gift Certificates. We advertise for customers and take gift certificates from their business. We auction these certificates on the site generating advertisement revenue. Gift certificates are the fastest growing portion of our advertising revenue. We have other services on our web site. We allow dealers to register with us and display their inventory on the stores. The community page is a local service that informs the local residents of community activities. These services are leads that attract users to log onto our site and do not generate revenue for the company. When a customer logs onto our site, the log on is recorded. This log on is known as a "hit." Services such as the stores, community services, various games, and the auction site are designed to generate these hits. As an example, Abidon recorded 1,560,000 hits for the month of April 2002. We do not generate income from "hits." Hits are similar to customers that walk through a retail shop as "traffic" or "shoppers." The number of hits recorded is the basis of setting the advertising rate for the e-shops, banner ads, classifieds and gift certificates. As the number of "hits" increases from the current rate of 1,500,000 per month to an estimated 5,000,000 hits per month, our success of selling more ads and increasing our rate structure will generate additional income for Abidon Inc. Our focus of sales and marketing has been the central region of the United States. When we enter the east coast, southern and western states market we can expect our hits will increase 1,500,000 hits per region or from 1,500,000 to close to 5,000,000. These hits from these additional markets will allow Abidon to generate additional advertising customers. Abidon's web site has an existing 2000 web page capacity. We use this web page capacity for the display of all our services _ the e-shops, the home page, the community page, the auction site, stores, classifieds. To increase the web page to our desired capacity of 17,000, we will add additional servers, software, technology, computers, and high speed Internet lines. 44 DESCRIPTION OF PROPERTY 5411 E. State Street, Rockford, Illinois, is a three story office and retail commercial building with 60,000 square feet, located on a 4-1/2 acre parcel of land. It is a steel structure with steel bar joists and masonry exterior walls. The interior has oak doors, suspended ceilings, interior walls are dry walled with steel studs, and carpeted or tiled floors on upper 2 floors. The building has an elevator and is sprinkled. Lower level has only lattice dividers and exposed bar joist ceilings with concrete floors. The East State Antique Mall is located in the lower level with approximately 100 dealers and consisting of 20,000 square feet of space. The building also has approximately 20 office and retail businesses. The mortgage balance on the building as of December 31, 2001 is $116,375 with an interest rate of 7.87%. The monthly payments are $5,300 and will pay off in 2003. The mortgage is with Bank One, Illinois, NA, 1 East Old State Capitol Plaza, Springfield, Illinois 62794 (Customer Number: 7606830004). Abidon believes that it has adequate insurance coverage on the building. There are no major renovations or improvements on the building, other than normal. The Book Value as of December 31, 2001 is $793,993. Abidon believes that the competitive condition of the property is good since Abidon has maintained a 95+ percent occupancy over the past ten years. 5301 E. State Street, Rockford, Illinois is a four story office and retail commercial building with 160,000 square feet, located on a 6-1/2 acre parcel of land. It is a steel structure with steel bar joists and masonry exterior walls. The interior has oak doors, suspended ceilings, interior walls are drywalled with steel studs, and carpeted or tiled floors on upper 3 floors. The main entrance has an open staircase with marble floors. There is a 4 acre parking lot. The lower level has only lattice walls and exposed bar joist ceilings and concrete floors. The East State Antique Mall is located in the lower level with approximately 200 antique dealers in 37,500 square feet of space and also the Abidon Internet site with 2,500 square feet of space. There are 60 leasers of retail and office space in the remainder of the building on the upper three floors. The building has an elevator and is sprinkled. The mortgage balance on the building as of December 31, 2001 is $1,233,679 with an interest rate of 7.5% and will pay off in September 2008. Monthly payments are $19,251.74. The mortgage is with Associated Commercial Mortgage Inc., 401 East Kilbourn Avenue, Suite 350, Milwaukee, Wisconsin 53202 (800-622-3836). Account No. 687-0687-6163157-5555. Abidon believes that it has adequate insurance coverage on the building. There are no major renovations or improvements on the building, other than normal. The Book Value as of December 31, 2001 is $3,336,924. Abidon believes that the competitive condition of the property is good since Abidon has maintained a 95+ percent occupancy over the past eight years. 45 The following information pertains to the two real estate properties owned by Abidon Inc.: Rockford, Illinois is the second largest city in Illinois. It is located about 80 miles northwest of Chicago, near the Wisconsin border. There are more than 600 industries making over 300 different products distributed throughout the world. Adequate schools, churches and recreational facilities are well located throughout the city. Bus transportation serves all areas of the city. Interstate Highway 90, Northwest Tollway, permits fast transportation to Chicago and O'Hare Airport, as well as north to Minneapolis and St. Paul. Interstate 39 affords travel north and south. Rockford has many truck and freight lines, an outstanding airport facility, and is served by several railroads. East State Street is a major east-west highway, intercity Route 20, connecting the central downtown business district with Interstate 90, continuing east to Belvidere. Mulford Road, just east, is one of the major north-south community highways connecting the general northeast residential areas with those in the southeast, continuing south into the county. Automobile traffic is very heavy. This location is in the center of one of the fastest growing commercial and residential areas of the city. The properties surrounding are mixed and include numerous fast food outlets, several automobile agencies, gasoline service stations, and several large retail centers. A large hospital complex is northeast across East State Street and a private liberal arts college, Rockford College, is 1,000 feet north. 46 SCHEDULE OF REAL ESTATE LEASES 5411 EAST STATE STREET, ROCKFORD, ILLINOIS Current % Gross Current Maint. Lease Annual Tenant Sq. Ft. Rent Fee Expires Option Rental ------ ------- ------- --- ------- ------ ------ Hayes Marketing Services 740 740.00 2/28/04 3 yrs./$1.00 inc. 3.10 Beth & Rudnicki Insurance 1,345 731.90 220.81 8/31/02 3 yrs./$2.00 inc. 3.99 Big Apple Bagels (restaurant) 2,356 1,621.71 734.28 3/31/04 Two 5-yr/$1.00 inc. 9.86 Whale Inc. (diet center) 1,700 1,170.17 529.84 3/31/03 Exercised option 7.11 Solomon Foley (State Farm Ins.) 836 624.22 130.27 4/30/03 5 yrs./$1.00 inc. 3.16 Larry Lang (American Family Ins.) 553 332.58 90.78 1/31/05 Two 3-yr/$1.00 inc. 1.77 Mailboxes & Parcel Depot 1,440 991.20 448.80 10/31/03 5 yrs./$1.00 inc. 6.03 March of Dimes (non-profit) 568 902.91 488.69 12/14/03 5 yrs./$2.00 inc. 5.82 Mr. Clean Cleaners (dry cleaners) 900 548.33 288.83 2/01/97 Month to Month 3.50 Interim Healthcare 1,500 1,032.50 467.50 5/31/03 3 yrs./$1.00 inc. 6.28 S & H Spherion Corp. (retail sales) 1,500 1,032.50 467.50 5/31/03 3 yrs./$1.00 inc. 6.28 Signatures Hair Studio 500 465.00 1/31/03 5 yrs./$1.00 inc. 1.95 Superior Travel (travel agency) 2,748 1,433.54 856.46 10/31/03 5 yrs./$1.00 inc. 9.58 Warranty processing (new car) 5,788 2,049.80 950.20 12/31/03 5 yrs./$2.00 inc. 12.55 Velasco & Associates (financial) 1,740 1,232.50 4/30/05 2 yrs./$2.00 inc. 5.16 River Valley Community Church 1,136 861.47 2/14/01 Month to Month 3.16 Muscular Dystrophy Assn. (non profit) 2,555 1,070.97 419.45 5/31/03 5 yrs./$2.00 inc. 6.24 Mortgage Bankers Services Corp (mortgages) 1,571 703.51 257.91 9/30/03 3 yrs./$1.00 inc. 4.02 Robbinswood Outdoor Advertising-sign rental-$2.000 annually-lease expires August 31, 2005. ----------------------------------------------------------------------------------------------

47 5301 E. State Street, Rockford, Illinois Current % Gross Current Maint. Lease Annual Tenant (Type of Business) Sq. Ft. Rent Fee Expires Option Rental ------------------------- ------- ------- --- ------- ------ ------ Phazes Hair Salon 1000 833.33 333.33 12/1/00-11/30/05 5 yrs./$1.00 inc. 1.31 Focus Financial Advisors 2955 2,145.51 458.43 04/1/96-3/31/07 5 yrs./$1.00 inc. 2.92 Spectrum Insurance Agency 3740 2,337.50 701.25 12/1/90-7/31/03 5 yrs./$1.00 inc. 3.41 Jenny Craig Diet Center 2386 1,789.50 795.33 12/15/90-12/31/02 2 yrs./$1.00 inc. 2.90 Management Resource Group (financial) 1200 825.00 225.00 1/1/01-8/31/02 1 yr./$1.00 inc. 1.18 Necchi New Home Sewing Center 3630 2,571.25 1,210.00 3/1/91-2/28/10 10 yrs./$2.00 inc. 4.24 Blades Hair Salon 750 618.75 275.00 4/15/91-4/14/06 5 yrs./$1.00 inc. 1.00 Cummings Advertising 8635 5,655.93 1,770.18 8/15/91-8/14/04 5 yrs./$1.00 inc. 8.34 Millard Brown (market research) 5650 4,708.33 1,059.38 2/1/00-1/21/03 3 yrs./no inc. 6.47 Midwest Sleep & Neuro Institute 2900 1,872.92 543.75 11/01/01-11/30/05 5 yrs./$1.00 inc. 2.71 Richard Kretz (shareholder service) 340 323.00 11/20/91-11/19/03 5 yrs./$1.00 inc. .36 Ash Equipment (equipment sales) 124 120.00 1/1/93-12/31/02 3 yrs./no inc. .13 American Republic Insurance 1342 838.75 447.33 7/1/99-6/30/02 3 yrs./$1.00 inc. 1.44 Mark Rouleau (attorney) 525 509.69 1/15/95-1/14/03 2 yrs./no inc. .57 StarMed Health Personnel 700 904.17 3/1/02-2/28/05 3 yrs./$1.00 inc. 1.01 Appraisal Services (real estate) 1800 1,215.00 337.50 5/1/92-4/30/04 3 yrs./$1.00 inc. 1.74 John O'Brien, DDS 2100 1,925.00 393.75 8/1/92-7/31/02 10 yrs./$2.00 inc. 2.60 Candy's Creative Hair Design 1075 716.67 358.33 4/15/01-4/14/06 5 yrs./$1.00 inc. 1.21 Mary Kay Cosmetics Training Center 1920 1,270.00 237.49 6/15/92-6/14/02 5 yrs./$2.00 inc. 1.69 Connect Two (answering service) 1240 837.00 232.50 3/1/94-2/28/07 5 yrs./$1.00 inc. 1.20 S.J. Grant (Dale Carnegie Course) 1250 885.42 156.25 8/15/92-8/14/03 5 yrs./$1.00 inc. 1.17 Rock Valley Women's Health Center 1550 1,046.25 290.63 3/1/01-2/28/04 2 yrs./$1.00 inc. 1.50 Mid Northern Mgmt. (property mgmt) 1590 1,060.00 198.75 11/15/92-11/14/02 5 yrs./$1.00 inc. 1.41 Dean Badorek (insurance) 845 522.92 158.44 12/1/92-11/30/02 5 yrs./$.50 inc. .76 Onit Consulting Services (computer training) 2700 1,597.50 506.25 9/24/01-9/23/03 5 yrs./$1.00 inc. 2.36 Periodic Payment (investment sec.) 770 574.64 144.38 1/1/02-12/31/04 3 yrs./$1.00 inc. .81 Simply Computers Software Inc. 617 790.00 12/15/98-8/31/04 5 yrs./$1.00 inc. .89 Harkness Insurance LLC 1000 666.67 333.33 9/1/99-8/31/04 4 yrs./$2.00 inc. 1.12 Sue Seehawer (costhetics) 1225 918.75 306.25 9/1/97-8/31/02 5 yrs./$2.00 inc. 1.78 Portamedic (physicals) 1125 759.38 210.93 1/02/02-12/31/04 3 yrs./$1.00 inc. 1.09 James Archer (insurance) 504 341.04 167.94 1/1/97-12/31/02 3 yrs./$1.00 inc. .57 48 Page 2 ------ Peter F. Geraci (attorney) 700 700.00 4/1/01-3/31/04 3 yrs./$1.00 inc. .83 Rosetta Chamberlin (realtors) 410 369.00 3/1/94-2/28/03 3 yrs./$2.00 inc. .41 Temp Connect (employment agency) 2160 1,800.00 540.00 10/1/97-9/30/02 5 yrs./$1.00 inc. 2.63 Lee, Hecht, Harrison (Insurance) 3790 2,605.43 710.62 9/1/01-8/31/04 5 yrs./$1.00 inc. 3.72 Automatic Data Processing 220 238.33 5/1/99-4/30/03 1 yr./$1.00 inc. .27 Harold Best (doctor) 678 621.50 5/1/00-4/30/03 3 yrs./$2.00 inc. .70 Elite Reporting Services Ltd. (court reporter) 270 270.00 8/21/95-8/20/02 3 yrs./$2.00 inc. .30 John Johnson (insurance) 1505 1,505.00 4/1/01-3/31/04 3 yrs./$1.00 inc. 1.69 Consumers Illinois Water Co. 574 478.33 8/1/99-7/31/02 3 yrs./$1.00 inc. .54 Back in Action Chiropractic 1425 771.88 475.00 12/1/00-11/30/03 3 yrs./$2.00 inc. 1.40 Lehnen Mollan & Assoc. 1025 619.27 341.67 2/1/00-1/31/05 5 yrs./$1.00 inc. 1.08 Pro Care Dental Group 1340 1,340.50 167.50 7/1/97-6/30/07 5 yrs./$2.00 inc. 1.69 Gabrielle Sartwell Diamond Realty 1098 1,098.00 4/1/00-3/31/05 5 yrs./$1.00 inc. 1.23 Rockford Sexual Assault Consulting 362 362.00 3/15/02-3/14/04 2 yrs./$1.00 inc. .41 Val Pak (advertising) 910 850.83 9/1/97-8/30/02 0 yrs./$.0.00 inc. .96 Learning & Discovery Services 110 110.00 10/15/97-10/14/02 1 yrs./$0.00 inc. .12 Kirkwood Education Services 1500 1,000.00 500.00 5/1/98-4/30/03 5 yrs./$1.00 inc. 1.68 Mary's Candy Bouquet (retail sales) 1200 1,000.00 400.00 6/1/99-5/31/04 5 yrs./$1.00 inc. 1.57 Barbara Askelson (insurance) 878 830.44 1/15/00-12/14/04 3 yrs./$1.00 inc. .93 Dr. Robert Heit (chiropractor) 2150 1,612.50 716.67 11/15/99-11/14/04 2-5 yrs./$1.00 inc. 2.61 Illinois Introductions (match making) 755 775.00 8/1/00-7/31/03 3 yrs./$1.00 inc. .87 Illinois Introductions (match making) 670 660.00 1/1/01-12/31/02 2 yrs./$1.50 inc. .74 Illinois Introductions (match making) 354 382.50 6/1/01-7/31/03 3 yrs./$1.00 inc. .43 Camelot Care Centers Inc. 3786 2,524.00 709.80 1/1/00-12/31/05 5 yrs./$1.00 inc. 3.63 Norbert J. Wick (general office) 280 280.00 3/12/01-3/11/02 1 yr./no inc. .38 Wells Fargo Home Mortgages 340 340.00 Month to month .38 Accurate Mortgage Services 652 652.00 5/11/01-4/30/02 1 yr./no inc. .73 Midwest Home Funding (mortgages) 1225 816.67 408.33 9/1/01-8/31/04 3 yrs./$1.00 inc. 1.38 Dealer Marketing Systems (warranty processing) 2180 1,271.67 726.65 9/1/01-8/31/04 3 yrs./$1.00 inc. 2.24 Deep Sea Electronics (sales) 900 637.50 168.75 9/1/01-8/31/04 5 yrs./$1.00 inc. .90 Tim Spinker & Lisa Capriotti (insurance) 1185 1,530.63 1/1/02-12/21/07 5 yrs./$1.00 inc. 1.72 First Benefits Group (insurance) 2800 1,575.00 525.00 2/1/02-1/31/05 3 yrs./$1.50 inc. 2.36

49 Complete List Of All Equipment And Computers Owned Free And Clear By Abidon, Inc. Quantity Description Category -------- ----------- -------- 27 Monitors Computer 25 Work Stations Computer 2 Accelera Credit Card/Check Verification 000-8900 Credit Card 2 MS Cash Drawers Credit Card 2 Star TSP 55011 Receipt Printer Credit Card 2 Veriphone Credit Card Receipt Printer 250 Credit Card 1 Veriphone Credit Card Receipt Printer Credit Card 5 Sony MVC-FD73 Digital Camera Imaging 1 3Com Officeconnect Hub 16 Port Network 4 Belkin Category 5e 12 Port Patch Panel Network 2 Belkin Category 5e 24 Port Patch Panel Network 1 Cisco 1605R Router Network 3 APC Back-Ups 300 Power 1 APC Smart-Ups 1250 Power 1 APC Smart-Ups 1400 Power 1 D-Link Printer Server 3-port Printer 2 Epson LQ-570+ Dot Matrix Printer Printer 1 HP Color Copier 190 Printer 1 HP DeskJet 612c Inkjet Printer Printer 3 Lexmark z11 Inkjet Printer Printer 1 Lexmark z32 Inkjet Printer Printer 1 Panasonic KX-P1123 Dot Matrix Printer Printer 1 Acer AcerScan 620U Scanner 1 Genius ColorPage - Vivid III V2 Scanner 1 Umax Astra 1200S Scanner 1 Avocent Switchview KVM 4-port Server 1 Custom File/Security Server Server 1 Custom Web/SQL Server Server 1 Cybernet Firewall Pro Suite v3.2 Software 1 Ipswitch Imail Server v7.0 Software 1 Microsoft SQL Server 7 with 5 Clients Software 1 Microsoft Windows 2000 Server with 25 Clients Software 1 Microsoft Windows 2000 Server with 5 Clients Software 28 Microsoft Windows 98SE Software 1 Veritas Backup Exec v8.6 Software 1 AT&T Cordless 900MHz Phone Telephony 3 AT&T Digital Answering Machine Telephony 1 Brother IntelliFax 1270 Telephony 1 Castio TA-145 Answering Machine Telephony 3 GE 12 Memory Speaker Phone Telephony 2 Uniden 900 MHz Cordless Phones Telephony 1 Uniden Cordless speaker Phone w/Answering Machine Telephony 1 Uniden EXP7901 900MHz Cordless Telephone Telephony 50 INDUSTRY BACKGROUND GROWTH OF INTERNET AND ONLINE COMMERCE The Internet has emerged as a global medium enabling millions of people worldwide to share information, communicate and conduct business electronically. International Data Corporation (IDC) estimates that the number of web users is growing at a fast pace. This growth is expected to be driven by the large and growing number of PCs installed in homes and offices, the decreasing cost of PCs, easier, faster and cheaper access to the Internet, improvements in network infrastructure, the proliferation of Internet content and the increasing familiarity and acceptance of the Internet by businesses and consumers. The Internet possesses a number of unique characteristics that differentiate it from traditional media: users communicate or access information without geographic or temporal limitations; users access dynamic and interactive content on a real-time basis; and users communicate and interact instantaneously with a single individual or with entire groups of individuals. As a result of these characteristics, web usage is expected to continue to grow rapidly. The growing adoption of the web represents an enormous opportunity for businesses to conduct commerce over the Internet. While companies initially focused on facilitating and conducting transactions between businesses over the Internet, a number of companies more recently have focused on facilitating a wide variety of business-to-consumer transactions. These companies typically use the Internet to offer standard products and services that can be easily described with graphics and text and do not necessarily require physical presence for purchase, such as books, CDs, videocassettes, automobiles, home loans, airline tickets and online banking and stock trading. The Internet gives these companies the opportunity to develop one-to-one relationships with customers worldwide from a central location without having to make the significant investments required to build a number of local retail presences, manage a worldwide distribution infrastructure or develop the printing and mailing infrastructure associated with traditional direct marketing activities. While companies have generally focused on applying these benefits in business-to-business and business-to-consumer transactions, a significant market opportunity exists to apply these same advantages to facilitate person-to-person trading over the Internet. 51 THE PERSON-TO-PERSON TRADING MARKET OPPORTUNITY The exchange of goods between individuals, person-to-person trading, has traditionally been conducted through trading forums such as classified advertisements, collectibles shows, garage sales and flea markets or through intermediaries, such as auction houses and local dealer shops. These markets are highly inefficient, making person-to-person trading difficult for buyers and sellers. Their fragmented, regional nature makes it difficult and expensive for buyers and sellers to meet, exchange information and complete transactions. The localized nature of these markets also results in a limited variety and breadth of goods available in any one location. Buyers are limited to searching through local classified ads or to traveling to numerous geographically dispersed flea markets, trade shows or dealer shops in order to find items of interest. These markets often have high transaction costs because intermediaries either mark up goods for resale or charge a commission. Because these markets are information inefficient, buyers and sellers lack a reliable and convenient means of setting prices for sales or purchases with traditional person-to-person trading while offering the benefits of Internet-based commerce to the person-to-person trading market. An Internet-based centralized trading place facilitates buyers and sellers meeting, listing items for sale, exchanging information, interacting with each other and, ultimately, consummating transactions. It allows buyers and sellers to trade directly, bypassing traditional intermediaries and lowering costs for both parties. 52 This trading place is global in reach, offering buyers a significantly broader selection of goods to purchase and providing sellers the opportunity to sell their goods efficiently to a broader base of buyers. It offers significant convenience, allowing trading at all hours and providing continually updated information. By leveraging the interactive nature of the Internet, this trading place also facilitates a sense of community through direct buyer and seller communication, thereby enabling the interaction between individuals with mutual interests. In addition, this community orientation, facilitation of direct buyer and seller communication and efficient access to information on a particular buyer or seller's trading history can help alleviate the risks of anonymous trading. As a result, there exists a significant market opportunity for an Internet-based centralized trading place that applies the unique attributes of the Internet to facilitate person-to-person trading. THE ABIDON SOLUTION Abidon.com utilizes person-to-person trading of a wide range of goods over the Internet using an efficient auction format. The core Abidon service permits sellers to list items for sale, buyers to bid for and purchase items of interest and all Abidon users to browse through listed items from any place in the world at any time. Abidon offers buyers a large selection of new and used items that can be difficult and costly to find through traditional means such as classified advertisements, collectibles shows, garage sales and flea markets or through intermediaries, such as auction houses and local dealer shops. Abidon also enables sellers to reach a larger number of buyers more cost effectively than traditional person-to- person trading forums. Abidon also has real estate holdings and operates the East State Antique Malls. 53 Abidon, Inc., a Delaware corporation, was originally introduced on January 18, 2000 to create an efficient marketplace for individuals to trade with one another. Abidon began as an online trading community. Abidon primarily attracts buyers and sellers through TV ads, trade magazines, newspapers, web pages, and links, and by providing buyers and sellers with a place to trade goods with one another. The number of categories under which Abidon lists goods for auction has grown to over 3000. The average number of items listed for sale has increased to 5000 and the number of registered unique dealers has increased. December 31, 1999 1,212 December 31, 2000 2,151 December 31, 2001 2,930 December 31, 2002 3,263 COMPELLING TRADING ENVIRONMENT. Abidon has created a distinctive trading environment by utilizing an auction format, establishing procedural rules and promoting community values that are designed to facilitate trade and communications between buyers and sellers, without the need for Abidon to intervene and play a significant role in the trading process. The auction format creates a sense of urgency among buyers to bid for goods because of the uncertain future availability of a unique item on the site. Similarly, by accepting multiple bids at increasing prices, its auction format provides sellers a more efficient means of obtaining a maximum price for their products. Abidon encourages every Abidon user to provide comments and feedback on other Abidon users with whom they interact and offers user profiles that provide feedback ratings and incorporate these comments. Abidon believes that this Feedback Forum helps make users more comfortable with dealing with an unknown trading partner over the web. In addition, Abidon provides guidelines for trade, helps provide information to resolve user disputes, responds to reports of misuse of the Abidon service and, if necessary, suspends users who violate the terms of Abidon's user agreement. COST EFFECTIVE, CONVENIENT TRADING. Abidon allows its buyers and sellers to bypass traditionally expensive, regionally fragmented intermediaries and carries no inventory. Sellers bypass costly traditional intermediaries thus allowing for lower selling costs and increasing the sellers' likelihood of finding buyers willing to pay his or her target price. To list an item on Abidon, sellers pay no placement fee. As a result, sellers can sell relatively inexpensive items. By allowing sellers to conveniently reach a broad range of buyers, Abidon also ameliorates the time-consuming, logistical inconvenience of individual selling. Buyers have access to a broad selection of items and avoid the need to pay expensive markups or commission to intermediaries. Buyers are not charged for trading through Abidon. The items listed on 54 Abidon provides a mutual benefit for buyers and sellers to more effectively determine the appropriate price for an item. STRONG COMMUNITY AFFINITY. Abidon believes that fostering direct interaction between buyers and sellers with similar interests has enabled it to create a loyal, active community of users. Abidon has introduced a variety of features and services designed to strengthen this sense of community among Abidon users. Abidon facilitates communications between buyers and sellers by offering customer support assistance from Abidon personnel and other Abidon users and by providing community features that are designed to encourage consumer loyalty and repeat usage. INTUITIVE USER EXPERIENCE. Abidon's service is a fully automated, topically arranged, intuitive and easy-to-use online service that is available on a 24 hour a day, seven days a week basis. Within minutes of completing a simple online form, a seller can immediately list items for sale on the service, and buyers can submit bids for items quickly and easily. Buyers can easily search the thousands of items listed by category or specific item. During the course of the auction, bidders are notified by email of the status of their bids and are notified immediately if they are outbid. Sellers and successful bidders are automatically notified when an auction is completed. To assist users further, Abidon offers customer support via email. ABIDON STRATEGY Abidon's objective is to build on its position as an online person-to-person trading community. The key elements of Abidon's strategy are: GROW THE ABIDON COMMUNITY AND THE ABIDON BRAND. Abidon believes that building greater awareness of the Abidon brand within and beyond the Abidon community is critical to expanding its user base and to maintaining the vitality of the Abidon community. Abidon's historical growth has been largely attributable by word-of-mouth, through TV ads, trade magazines, newspapers, web pages, links and banners. Abidon intends to build its user base and its brand name aggressively. Abidon has prepared a substantial national advertising campaign, both in traditional media and online, that is designed to attract new Abidon users. The campaign will include advertising in targeted publications, strategic advertising and sponsorship placements on high traffic web sites, radio and television advertising campaigns and active participation in other forums such as selected trade shows. The marketing campaign will be launched, in part, by the proceeds from this offering. The marketing plan is dependent upon this offering. 55 BROADEN THE ABIDON TRADING PLATFORM. Abidon intends to pursue a multi- pronged strategy for growing the Abidon platform within existing product categories, across new product categories and internationally. Abidon will target key vertical markets in its user programs and marketing activities. Abidon also intends to grow existing product categories by introducing category-specific bulletin boards and chat rooms, integrating category- specific content, advertising its service in targeted publications and participating in targeted trade shows. In addition, Abidon intends to broaden the range of products offered on its trading platform by seeking to attract new users from the general audience of Internet users and adding product categories, content and other services or features to meet this new user demand. Abidon believes that there are significant opportunities for person-to-person trading worldwide and therefore intends to leverage the service and brand name internationally by developing Abidon for selected international markets and marketing and promoting these services actively. ENHANCE FEATURES AND FUNCTIONALITY. Abidon.com intends to update and enhance the features and functionality of Abidon frequently in order to continue to improve the user trading experience through Abidon. Abidon recently introduced personalization features such as a customizable user interface that tracks a user's recent auction activity and account balance information and highlights auctions of specified items. Abidon intends to introduce other features such as new auction formats, online stores and online want ads, category-specific content and other features designed to enhance the Abidon experience. Abidon will continue to provide rapid system response and transaction processing time by investing in its infrastructure in order to accommodate additional users, content and auctions. EXPAND VALUE-ADDED SERVICE. In order to offer an "end-to-end" person-to- person trading service, Abidon.com intends to offer a variety of pre- and post-trade services to enhance the user experience. Abidon intends to introduce services to facilitate the exchange of goods so that buyers and sellers will feel more comfortable sending money or goods to an unknown trading partner. It is anticipated that these services may include pre- trade services, such as services to facilitate scanning and uploading of photographs of listed items, and post-trade services, such as third party escrow services and arrangements with shippers to help sellers ship their products more easily. Abidon may pursue strategic relationships with third parties to provide many of these value-added services. REGISTRATION. While any visitor to Abidon can browse through the Abidon.com service and view the items listed for auction, in order to bid for an item or to list an item for sale, buyers and sellers must first register with Abidon. Users register by completing a short online form and thereafter can immediately bid for an item or list an item for sale. There is no charge for registering. BUYING ON ABIDON.COM Buyers typically enter Abidon.com through its home page, which contains a listing of product categories that allows for easy exploration of current auctions. Bidders can search for specific items by browsing through a list of auctions within a category or subcategory and then "click through" to a detailed description for a particular item. Bidders can also search specific categories or the entire database of auction listings using keywords to describe the types of products in which they are interested, and Abidon's search engine will generate a list of relevant auctions with links to the detailed descriptions. Each auction is assigned a unique identifier so that users can easily search for and track specific auctions. 56 Once a bidder has found an item of interest and registered with Abidon.com, the bidder enters the maximum amount he or she is willing to pay at that time. In the event of competitive bids, the Abidon service automatically increases bidding in increments based upon the then current highest bid for the item, up to the bidder's maximum price. As Abidon encourages direct interaction between buyers and sellers, bidders wishing additional information about a listed item can access the seller's email address and contact the seller for additional information. Abidon believes that this interaction between bidders and sellers leverages the personal, one-to-one nature of person-to-person trading on the web and is an important element of the Abidon experience. Once each bid is made, a confirmation is sent to the bidder via email, an outbid notice is sent to the next highest bidder and the item's auction status is automatically updated. Bidders are notified of the status of their bids via email and are notified immediately after they are outbid. Bidders are not charged for making bids or purchases through Abidon. Abidon Internet plans to charge fees some time in the future, after the service is well established. HOW TRANSACTIONS ARE COMPLETED. At the end of an auction period, if a bid exceeds the minimum price and, if one is set, the reserve price, Abidon automatically notifies the buyer and seller via email and the buyer and seller can then consummate the transaction independently of Abidon. The buyer and seller must independently arrange for the shipment of and payment for the item, with the buyer typically paying for shipping. Possession is taken of items only if they are being sold on consignment through the East State Antique Mall and fees are then collected in the mall for these items when they are sold. Under the terms of Abidon's user agreement, if a seller receives one or more bids above the state minimum or reserve price, whichever is higher, the seller is obligated to complete a transaction although Abidon has no power to force the seller or bidder to complete the transaction other than to suspend them from using the Abidon service. WHAT CAN BE PURCHASED OR SOLD ON ABIDON.COM. The Abidon service has grown to offering over 3000 categories as of December 2001. As the number of product categories has grown, Abidon periodically organizes the categories under different headings to reflect the major types of items currently listed. These product categories are currently organized under the following headings: Antiques Architectural Antiques Art Books, Movies, Music Coins, Stamps Collectibles Computers Dolls, Figurines Health & Beauty Jewelry, Gemstones Motor Vehicles Photo & Electronics Pottery, Glass Real Estate Sports Memorabilia Tools Toys and Games Miscellaneous 57 Each category has numerous subcategories. Abidon also is currently selling advertising banners and other types of advertising on the site. The most popular items sold on Abidon are relatively standardized or are well represented with a photo (and therefore can be evaluated to some degree without a physical inspection), are small and easily shippable, and are relatively inexpensive. As the Abidon community grows and additional items are listed, Abidon will continue to organize auctions under additional categories to respond to the needs of the Abidon community. COMMUNITY SERVICE. Beyond providing a convenient means of trading, Abidon has devoted substantial resources to building an online person-to-person trading community, which Abidon believes is one of the strongest on the web. Key components of Abidon's community philosophy are maintaining an honest and open marketplace and treating individual users with respect. Abidon offers a variety of community and support features that are designed to solidify the growth of the Abidon community and to build Abidon user affinity and loyalty. Abidon facilitates email communications between buyers and sellers. MARKETING ABIDON.COM Abidon marketing strategy is to promote its brand and attract buyers and sellers to the Abidon service. To attract users to its site, Abidon historically has relied on banners, TV ads, trade magazines, newspapers, web pages, and links and, to a lesser extent, on distribution or sponsorship relationships with high traffic web sites. Today, Abidon employs a variety of methods to promote its brand and attract potential buyers and sellers. Currently, Abidon utilizes strategic purchases of online advertising to place advertisements in areas in which it believes it can reach its target audience. Abidon also engages in a number of marketing activities in traditional media such as advertising in print media and at shows and other events. OPERATIONS AND TECHNOLOGY Abidon Internet Services has built a robust, scalable user interface and transaction processing system. Abidon's system maintains data records and all other aspects of the auctions process, including notifying users via email when they initially register, place a successful bid, are outbid, place an item for sale and when an auction ends. The system maintains user registration information, current auctions and historical listing information. All information is archived to a back-up system. The system updates a test-based search engine continually with the title and descriptions of new items, as well as pricing and bidding updates for active items. 58 Abidon Internet Services system has been designed around industry standard architectures and has been designed to reduce downtime in the event of outages or catastrophic occurrences. The Abidon Internet Services provides 24-hour day, seven-day week reliability. System hardware is located at Abidon's facility in Rockford, Illinois. Abidon Internet Services system also provides emergency power back up. Abidon's system consists of database servers running SQL relational database management systems and a suite of Pentium III Xeon based servers accessed via terminal servers running on a Microsoft Windows 2000 server operating system. Abidon's Internet servers also utilize Thawte Secure certificates to help it to conduct secure communications and transactions. Abidon Internet Services anticipates that it will continue to devote significant resources to product development in the future as it adds new features and functionality to the Abidon service. The market in which Abidon competes is characterized by rapidly changing technology, evolving industry standards, frequent new service and product announcements, introductions and enhancements and changing customer demands. Accordingly, Abidon's future success will depend on its ability to adapt to rapidly changing technologies, to adapt its services to evolving industry standards and to continually improve the performance, features and reliability of its service in response to competitive service and product offerings and evolving demands of the marketplace. The failure of Abidon to adapt to such changes would have a material adverse effect on Abidon's business, results of operations and financial condition. In addition, the widespread adoption of new Internet, networking or telecommunications technologies or other technological changes could require substantial expenditures by Abidon to modify or adapt its services or infrastructure which could have a material adverse effect on Abidon's business, results of operations and financial condition. See "Risk Factors--Rapid Technological Change; Risks Associated with New Services, Features and Functions". COMPETITION The market for person-to-person trading over the Internet is rapidly evolving and intensely competitive, and Abidon expects competition to intensify further in the 59 future. Barriers to entry are relatively low, and current and new competitors can launch new sites at a relatively low cost using commercially available software. Abidon currently or potentially competes with a number of other companies. Abidon's direct competitors include various online person-to-person auction services, including Yahoo!, eBay, Amazon, Onsale, and a number of other small services, including those that serve specialty markets. Abidon potentially faces competition from a number of large online communities and services that have expertise in developing online commerce and in facilitating online person-to-person interaction. Some of these potential competitors, including AOL and Microsoft, currently offer a variety of business-to-consumer trading services and classified ad services, and some of these companies may introduce person-to-person trading to their larger user populations. Other large companies with strong brand recognition and experience in online commerce, such as large newspaper or media companies may also seek to compete in the online auction market. Competitive pressures created by any one of these companies, or by Abidon's competitors collectively, could have a material adverse effect on Abidon's business, results of operations and financial condition. Abidon Internet Services believes that the principal competitive factors in its market are volume and selection of goods, population of buyers and sellers, community cohesion and interaction, customer service, reliability of delivery and payment by users, brand recognition, web site convenience and accessibility, price, quality of search tools and system reliability. Many of Abidon's potential competitors have longer operating histories, larger customer bases and greater brand recognition in other business and Internet markets and significantly greater financial, marketing, technical and other resources than Abidon. In addition, other online trading services may be acquired by, receiving investments from or entering into other commercial relationships with larger, well established and well financed companies as use of the Internet and other online services increases. Therefore, some of Abidon's competitors may be able to devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing policies or may try to attract traffic by offering services for free and devote substantially more resources to web site and systems development than Abidon. Increased competition may result in reduced operating margins, loss of market share and diminished value in Abidon's brand. There can be no assurance that Abidon will be able to compete successfully against current and future competitors. Further, as a strategic response to changes in the competitive environment, Abidon may, from time to time, make certain pricing, service or marketing decisions or acquisitions that could have a material adverse effect on its business, results of operations and financial condition. New technologies and the expansion of existing technologies may increase the competitive pressures on Abidon by enabling Abidon's competitors to offer a lower cost service. Certain web based applications that direct Internet traffic to certain web sites may channel users to trading services that compete with Abidon. Although Abidon has established Internet traffic arrangements with several large online services and search engine companies, there can be no assurance that these arrangements will be renewed on commercially reasonable terms or that they will otherwise continue to result in increased users of the Abidon service. In addition, companies that control access to transactions through network access or web browsers could promote Abidon's competitors or charge Abidon substantial fees for inclusion. Any and all of these events could have a material adverse effect on Abidon's business, results of operations and financial condition. See "Risk Factors--Intense Competition". 60 INTELLECTUAL PROPERTY, INTERNET Abidon regards the protection of its copyrights, service marks, trademarks, trade dress and trade secrets as critical to its future success and relies on a combination of copyright, trademark, service mark and trade secret laws and contractual restrictions to establish and protect its proprietary rights in products and services. There can be no assurance that these contractual arrangements or the other steps taken by Abidon to protect its intellectual property will prove sufficient to prevent misappropriation of Abidon's technology or to deter independent third-party development of similar technologies. Abidon pursues the registration of its trademarks and service marks in the U.S. There can be no assurance that these third-party technology licenses will continue to be available to Abidon on commercially reasonable terms. The loss of such technology could require Abidon to obtain substitute technology of lower quality or performance standards or at greater cost, which could materially adversely affect Abidon's business, results of operations and financial condition. To date, Abidon has not been notified that its technologies infringe the proprietary rights of third parties, but there can be no assurance that third parties will not claim infringement by Abidon with respect to past, current or future technologies. Abidon expects that participants in its markets will be increasingly subject to infringement claims as the number of services and competitors in Abidon's industry segment grows. Any such claim, whether meritorious or not, could be time-consuming, result in costly litigation, cause service upgrade delays or require Abidon to enter into royalty or licensing agreements. Such royalty or licensing agreements might not be available on terms acceptable to Abidon or at all. As a result, any such claim could have a material adverse effect upon Abidon's business, results of operations and financial condition. See "Risk Factors - Protection and Enforcement of Intellectual Property Rights". PRIVACY POLICY, INTERNET Abidon believes that issues relating to privacy and use of personal information relating to Internet users are becoming increasingly important as the Internet and its commercial use grow. Abidon has adopted a detailed privacy policy that outlines how Abidon uses information concerning is users and the extent to which other registered Abidon users may have access to this information. Users must acknowledge and agree to this policy when registering for the Abidon service. Abidon does not sell or rent any personally identifiable information about its users to any third party, however, Abidon does disclose certain information to sellers and winning bidders upon the end of the auction. This information gives both the seller and the winning bidder each other's user names and a link to a page that allows them to send an email to one another. Abidon uses information about its users for internal purposes only in order to improve marketing and promotional efforts, to analyze site usage statistically and to improve content, product offerings and site layout. Abidon is a member of the TRUSTe program, a non-profit independent organization which audits web sites' privacy statements and audits their adherence thereto. 61 EMPLOYEES As of December 31, 2001 Abidon had 25 employees. Abidon had never had a work stoppage, and no employees are represented under collective bargaining agreements. Abidon considers its relations with its employees to be good. Abidon believes that its future success will depend in part on its continued ability to attract, integrate, retain and motivate highly qualified technical and managerial personnel, and upon the continued service of its senior management and key technical personnel, none of whom is bound by an employment agreement. Competition for qualified personnel in Abidon's industry and geographical location is intense, and there can be no assurance that Abidon will be successful in attracting, integrating, retaining and motivating a sufficient number of qualified personnel to conduct its business in the future. See "Risk Factors-Dependence on Key Personnel." FACILITIES Abidon's principal administrative, marketing and product development facilities are located in approximately 3,000 square feet of office space at 5301 E. State Street, Rockford, Illinois. Currently, this facility is owned by Abidon. MANAGEMENT EXECUTIVE OFFICERS AND DIRECTORS The following table sets forth certain information regarding the executive officers and directors of Abidon. Name Age Position ---- --- -------- Howard Miller 65 President, Chief Executive Officer Stanley Miller 67 Secretary and Director Cloyd Dowell 55 Director John Frisella 51 Director Harvey Bokath 76 Director Evelyn Carlyle 75 Director Each director will hold office until the next Annual Meeting of Stockholders and until his or her successor is elected and qualified or until his or her earlier resignation or removal. Each officer serves at the discretion of the Board of Directors (the "Board"). 62 EXECUTIVE OFFICERS AND DIRECTORS MANAGEMENT Howard Miller has been President and CEO of Abidon Inc. (formerly UBuy2 Inc., a Delaware corporation) since its inception on January 18, 2000. He is 65 years old. Prior to forming Abidon Inc., he was President and founder of State Street Investors of Rockford Inc., an Illinois corporation, a real estate development of commercial and office space and leasing from 1991 through 1999. He was President of Rockford Investors Inc., an Illinois corporation, from its inception on December 19, 1985. The company developed commercial real estate and leased commercial and office space. Howard Miller was the originator and owner of the East State Antique Mall in Rockford, Illinois. The business was started in 1985 as Howard Miller, dba East State Antique Mall, and was incorporated on November 9, 1999. For the past 14 years it has leased space to from 300 to 320 antique dealers. On January 24, 2000 State Street Investors of Rockford Inc., Rockford Investors Inc., and East State Antique Mall Inc. merged into Abidon Inc., formerly UBuy2 Inc., a Delaware corporation. He was President of Miller Bros. Inc., an Illinois corporation, from 1967 to July 1984. This company was general contractors building and selling family residences (built over 1,000 single family homes), subdividing land, and construction of commercial real estate. He was President of Miller Bros. Real Estate Inc., an Illinois corporation, in the business of selling real estate, from 1970 through 1977, in the sales and closing of real estate, and held a Real Estate Brokers license. He was President and sole owner of a chain of 4 laundry and drycleaners, Mr. Clean Cleaners Inc., an Illinois corporation, in Rockford, Illinois and Loves Park, Illinois, from 1960 to August 1994. He is a graduate of Queen City High School, Queen City, Missouri. He attended Rockford School of Business and obtained an Illinois Real Estate Brokers License in March 1967. Howard Miller is the brother of a Director, Stanley Miller, who is Secretary of the corporation. Stanley Miller has been Secretary of Abidon Inc. (formerly UBuy2 Inc., a Delaware corporation) since January 18, 2000. He is the Manager of Operations, including leasing and construction. Prior to the formation of Abidon Inc. he was Secretary of State Street Investors of Rockford Inc., an Illinois corporation, a real estate development of commercial and office space and leasing from 1991 through 1999 and was Manager of Operations, including leasing and construction. The company was developers of commercial real estate and leasing of commercial and office space. On January 24, 2000 State Street Investors of Rockford Inc., Rockford Investors Inc. and East State Antique Mall merged into Abidon Inc. (formerly UBuy2 Inc., a Delaware corporation). Stanley Miller was Secretary of Miller Bros. Inc., an Illinois corporation, from 1967 to July 1984. This company was general contractors building and selling single family residences (built over 1,000 single family homes), subdividing land, and construction of commercial real estate. He was Secretary of Miller Bros. Real Estate Inc., an Illinois corporation, in the business of selling real estate, from 1970 through 1977, in the sales and closing of real estate and holds an Illinois Real Estate Brokers license. From May 1963 to 1967 Stanley Miller was the owner, President and Secretary of Stanley Miller Building Contractor Inc., an Illinois corporation, a general contractor and developer of single family homes. He graduated from high school in Unionville, Missouri and attended N.E. Missouri State Teachers College. He attended Rockford School of Business and obtained his Real Estate Brokers License in March 1967. He is 67 years old. Stanley Miller is the brother of the President of Abidon, Howard Miller. 63 Cloyd Dowell has been a Director of Abidon Inc., (formerly UBuy2 Inc., a Delaware corporation) since January 20, 2000. He was also a Director of State Street Investors of Rockford Inc., an Illinois corporation, from 1993 through 1999. He is President of Simplex Financial Services Inc., an Illinois corporation, which he formed in 1991 and incorporated in 1993. From 1980 through 1990 he was Finance Manager in Internal Leasing and Finance for Rockwell International. From 1975 to 1980 he was Credit Manager for Thomas J. Lipton Company. Prior to that, from 1970 to 1975, he was Accounts Manager for the Bank of Colorado. Cloyd Dowell graduated from the University of Colorado with a BA in Finance. He is 55 years old. John Frisella is 51 years old. He has been a Director of Abidon Inc., (formerly UBuy2 Inc., a Delaware corporation) since January 20, 2000. He was a Director of State Street Investors of Rockford Inc., an Illinois corporation, from 1991 through 1999. Since 1974 he has owned and operated John's Restaurant and Pizzeria in Rockford, Illinois. Prior to 1974 he worked as a mason finisher for AA Construction for three years and for Rockford Auto Glass for one year. He is a native of Italy, where he graduated from high school, and came to the United States in 1969. Harvey Bokath has been a Director of Abidon Inc., (formerly UBuy2 Inc., a Delaware corporation) since January 20, 2000. He is 76 years old. He was a Director of State Street Investors of Rockford Inc., an Illinois corporation, from 1991 through 1999. He was Maintenance Supervisor for Sundstrand Corp., Rockford, Illinois, from 1949 through 1980. From 1981 to the present time he has been self-employed in general maintenance. In 1947 and 1948 he worked for Chippewa Falls Plumbing Company, Chippewa Falls, Wisconsin. From 1940 through 1946 he was employed in an auto, gas, and service station in Rib Lake, Wisconsin. He graduated from high school in Rib Lake, Wisconsin. Evelyn Carlyle is 75 years old and has been a Director of Abidon Inc., (formerly UBuy2 Inc., a Delaware corporation) since January 20, 2000. She was a Director of State Street Investors of Rockford Inc., an Illinois corporation, from 1991 through 1999. She was a Legal Secretary and Paralegal for Attorney Hickey in Rockford, Illinois, from 1960 through 1986 and for Attorney Steven Nordberg from 1986 through 1990, when she retired. She graduated from East High School in Rockford, Illinois. 64 EXECUTIVE COMPENSATION Stanley Miller receives compensation and also receives $200 for any Board of Directors meeting. Howard Miller receives $200 for any Board of Directors meeting. All other Directors (Harvey Bokath, Evelyn Carlyle, John Frisella, and Cloyd Dowell) receive $200 for the annual Board of Directors meeting which is held in September of each year. They also receive $200 for any additional Special Board of Directors meetings. No other compensation is given to them. SUMMARY COMPENSATION TABLE ------------------------------------------------------------------------------------------------------------------------------ Annual Compensation Long-term Compensation ------------------------------------------------------------------------------------------------------------------------------ Awards Payouts ------------------------------------------------------------------------------------------------------------------------------ Other annual Restricted Securities All other Name and principal position Year Salary Bonus compensation stock underlying LTIP payouts compensation ($) ($) ($) award(s) options/SARs ($) ($) Board Meeting (#) (a) (b) (c) (d) (e) (f) (g) (h) (i) ------------------------------------------------------------------------------------------------------------------------------ CEO Howard Miller 2001 $200 Secretary Stanley Miller (A) 2001 $71,800 $200 Director Cloyd Dowell (B) 2001 $200 Director John Frisella (C) 2001 $200 Director Harvey Bokath (D) 2001 $200 Director Evelyn Carlyle 2001 $200 ------------------------------------------------------------------------------------------------------------------------------

65 CERTAIN TRANSACTIONS Stanley Miller, Secretary of Abidon Inc., received the following wages: 1999 - $70,000, 2000 - $70,000, and 2001 - $72,000. (See Financial Statements.) DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES Under the Delaware statute on Abidon's Certificate of Incorporation, the following statement is provided: "No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for any breach of the director's duty of loyalty to the Corporation or its stockholders, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or for any transaction form which the director derived an improper personal benefit." Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable. PRINCIPAL STOCKHOLDERS The following table sets forth certain information known to the Company with respect to beneficial ownership of the Company's Common Stock as of December 31, 2001 by each stockholder known by the Company to be the beneficial owner of more than 5% of the Company's Common Stock, each director of the Company, the named Executive Officer, and all executive officers and directors as a group. 66 ---------------------------------------------------------------------------- Title of Name and Address of Beneficial Owner Amount of Percent Class Beneficial of Class Ownership ---------------------------------------------------------------------------- Common Howard Miller 5,600,000 32.8% 1912 Wichita Drive Rockford, IL 61108 Common Stanley/Delcie Miller 3,550,000 20.8% 5053 Painted Pony Lane Loves Park, IL 61111 Common John/Maria Frisella 1,750,000 10.2% 1238 Barberry Lane Belvidere, IL 61008 Common Harvey/Juletta Bokath 400,000 2.3% 6538 Carman Drive Rockford, IL 61108 Common Cloyd/Janet Dowell 350,000 2.0% 440 E. Walnut Street Roselle, IL 60172 Common Evelyn Carlye 100,000 * 622 Sunrise Lane Rockford, IL 61107 Common All directors and executive officers 11,750,000 68.3% as a group (6 persons) ---------------------------------------------------------------------------- * Represents beneficial ownership of less than 1%. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Unless otherwise indicated, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Shares of Common Stock subject to options that are currently exercisable or exercisable within 60 days of December 31, 2001, are deemed to be outstanding and to be beneficially owned by the person holding such options for the purpose of computing the percentage ownership of any other person. 67 SHARES BENEFICIALLY OWNED PRIOR TO OFFERING NAME OF BENEFICIAL OWNER NUMBER OF SHARES HELD Norman/Gloria Akelaitis 300,000 Harvey/Juletta Bokath 400,000 Mary Lou Brandon/Shirley Sutherland 100,000 William/Dorothy Burgett 150,000 James/Marcia Byrne 200,000 Evelyn Carlyle 100,000 Ethel Chick 100,000 Cloyd/Janet Dowell 350,000 C. Mark Elder 200,000 James A. Falconer 300,000 James M. Falconer 100,000 John/Linda Falconer 100,000 John/Maria Frisella 1,750,000 Michael Fulling 200,000 Harris Trust 50,000 Eugene Hayenga 100,000 Ruth Hayenga 100,000 Jenny Kliebe 400,000 Robert/Jeannette Kliebe 200,000 Silva Ludwig 200,000 George Maurici 100,000 Carl/Cheryl Miller 100,000 Ernest/Inez Miller 100,000 Howard Miller 5,600,000 Irvin/Palma Miller 700,000 Stanley/Delcie Miller 3,550,000 Steve Noble 650,000 Nolan Rogers 100,000 Henry/Vernita Watts 50,000 Jerry/Harriet Wescott 200,000 Wayne/Dessie Whitlow 200,000 Douglas/Patricia Wilburn 100,000 Bobby Joe/Freida Whitlow 200,000 Total Shares 17,050,000 68 DESCRIPTION OF CAPITAL STOCK Immediately following the closing of this offering, the authorized capital stock of Abidon will consist of 40,000,000 shares of Common Stock, $0.0001 par value per share. As of December 31, 2001, there were outstanding 17,050,000 shares of Common Stock held of record by 33 stockholders. All stock is Common Stock. COMMON STOCK The holders of Common Stock are entitled to receive dividends out of assets legally available, at such times, and in such amounts, as the Board of Directors may determine. Each stockholder is entitled to one vote for each share of Common Stock held on all matters submitted to a vote of stockholders. Cumulative voting for the election of directors is not provided for in Abidon's Certificate of Incorporation, which means that the holders of a majority of the shares voted can elect all of the directors then standing for election. The Common Stock is not entitled to preemptive rights and is not subject to conversion or redemption. Upon a liquidation, dissolution or winding-up of Abidon, the assets legally available for distribution to stockholders are distributable ratably among the holders of the Common Stock. Each outstanding share of Common Stock is, and all shares of Common Stock to be outstanding upon completion of this offering will be, fully paid and nonassessable. DELAWARE STOCK Upon the closing of this offering, Abidon will be subject to the provisions of Section 203 of the Delaware General Corporation Law (the "Anti-Takeover Law") regulating corporate takeovers. This provision prevents certain Delaware corporations from engaging under certain circumstances, in "business combinations" (which include a merger or sale of more than 10% of the corporation's assets) with any "interested stockholder" (a stockholder who owns 15% or more of the corporation's outstanding voting stock, as well as affiliates and associates of any such persons) for three years following the date that such stockholder became an "interested stockholder" unless (i) the transaction is approved by the Board of Directors prior to the date the "interested stockholder" attained such status, (ii) upon consummation of the transaction that resulted in the stockholder's becoming an "interested stockholder," the "interested stockholder" owned at lease 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding those shares owned by (a) persons who are directors and also officers and (b) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer), or (iii) on or subsequent to such date the "business combination" is approved by the Board of Directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the "interested stockholder." A Delaware corporation may "opt out" of the Anti-Takeover Law with an express provision in its original certificate of incorporation or an express provision in its certificate or incorporation or bylaws resulting from a stockholders' amendment approved by at least a majority of the outstanding voting shares. The Company has not "opted out" of the provisions of the Anti-Takeover Law. The statute could prohibit or delay mergers or other takeover or change-in- control attempts with respect to the Company, and, accordingly, may discourage attempts to acquire the Company. 69 TRANSFER AGENT AND REGISTRAR The Transfer Agent and Registrar for Abidon's Common Stock is Abidon, Inc. LISTING The shares of Common Stock to be submitted for approval on the NASDAQ National Market under the trading symbol "Abidon" or "abdn." To be implemented upon closing of this offering. Abidon Inc. has not submitted an application to the NASDAQ national market or any other national or foreign securities associations. SHARES ELIGIBLE FOR FUTURE SALE Prior to this offering, there has been no market for the Common Stock of Abidon, and there can be no assurance that a significant public market for the Common Stock will develop or be sustained after this offering. After this offering, future sales of substantial amounts of Common Stock (including shares issued upon exercise of outstanding options) could adversely affect prevailing market prices and could impair Abidon's ability to raise capital from the sale of its equity securities. As described below, no shares currently outstanding will be available for sale immediately after this offering due to certain contractual restriction on resale. Upon completion of this offering, Abidon will have outstanding 22,050,000 shares of Common Stock. Of these shares, the 5,000,000 shares sold in this offering will be freely tradable without restriction under the Securities Act unless purchased by "affiliates" of Abidon as that term is defined in Rule 144 under the Securities Act. The remaining shares held by existing stockholders are subject to lock-up agreements generally providing that, with certain limited exceptions, the stockholder will not (i) offer to sell, sell, contract to sell, pledge or otherwise dispose of any shares of Common Stock owned of record or beneficially prior to the offering or any securities convertible into or exchangeable for such shares of Common Stock, (ii) establish a "put equivalent position" with respect to such Common Stock within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended, or (iii) publicly announce an intention to take any of the actions set forth in (i) or (ii) for a period of 120 days following the date of the final Prospectus for this offering without prior written consent of Abidon, Inc. acting alone or each of the above listed representatives acting together. As a result of these lock-up agreements; notwithstanding possible earlier eligibility for sale under the provisions of Rules 144, 144(k) and 701, none of these shares will be saleable until 121 days after the date of the final Prospectus. Beginning 121 days after the date of the final Prospectus, 17,050,000 of these shares will be eligible for sale in the public market, although a portion of such shares will be subject to certain volume limitations pursuant to Rule 144. The remaining Restricted Shares will become eligible for sale upon expiration of applicable holding periods under Rule 144 of the Securities Act and gives Abidon the right to repurchase unvested shares. Common Stock of Abidon is also subject to 120- day lock-up agreements. 70 LEGAL MATTERS The validity of the issuance of the shares of Common Stock offered hereby will be passed upon for Abidon by Rieck & Crotty, whose address is 55 West Monroe Street, Suite 3390, Chicago, IL 60603-5062 (telephone number 312-726- 4646). EXPERTS The financial statements included in this Prospectus have been audited by Virchow, Krause & Co., LLP, independent accountants. The companies and periods covered by these audits are indicated in the individual reports of Virchow, Krause, & Co., LLP. Such financial statements have been so included in reliance on the reports of Virchow, Krause, & Co., LLP given on the authority of said firm as experts in auditing and accounting. Their address is 500 Midland Ct., Janesville, WI 53547 (telephone number 608-752- 5835). LEGAL PROCEEDINGS Abidon is not involved in any legal proceedings at this time. COMMON EQUITY SECURITIES There has been no public market for Abidon's common stock. There are 33 stockholders and they are the holders of all of the 17,050,000 shares of common stock outstanding. Abidon paid a cash dividend on January 15, 2001 of $.005 per share of common stock. This is the only dividend paid since the corporation was started in January 2000. ACCOUNTING DISCREPANCIES There have been no discrepancies with the Accountants. 71 ADDITIONAL INFORMATION Abidon has filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form S-1 under the Securities Act with respect to the shares of Common Stock offered hereby. This Prospectus does not contain all of the information set forth in the Registration Statement and the exhibits thereto. For further information with respect to Abidon and the Common Stock offered hereby, reference is made to the Registration Statement and the exhibits thereto. Statements contained in this Prospectus regarding the contents of any contract or any other document to which reference is made are not necessarily complete, and, in each instance, reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. A copy of the Registration Statement and the exhibits thereto may be inspected without charge at the offices of the Commission at Judiciary Plaza, 450 Fifth Street, Washington, D.C. 20549, and copies of all or any part of the Registration Statement may be obtained from the Public Reference Section of the Commission, Washington, D.C. 20549 upon the payment of the fees prescribed by the Commission. The Commission maintains a Web site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants, such as Abidon, that file electronically with the Commission. 72 ABIDON, INC. Rockford, Illinois FINANCIAL STATEMENTS Including Independent Auditors' Report December 31, 2001, 2000, and 1999 73 ABIDON, INC. TABLE OF CONTENTS ---------------------------------------------------------------------------- Independent Auditors' Report 1 Financial Statements -------------------- Balance Sheets 2 Statements of Operations 3 Statements of Stockholders' Equity 4 Statements of Cash Flows 5 Notes to Financial Statements 6-12 Supplemental Information ------------------------ Schedules of Cost of Goods Sold 13 Schedule of Operating Expenses 14 74 Page 1 Virchow, Krause & Company, LLP ---------------------------------------------------------------------------- INDEPENDENT AUDITORS' REPORT Stockholders and Board of Directors Abidon, Inc. Rockford, Illinois We have audited the accompanying balance sheets of Abidon, Inc. as of December 31, 2001, 2000, and 1999 and the related statements of operations, stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence and supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Abidon, Inc. as of December 31, 2001, 2000 and 1999, and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information provided, as identified in the table of contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. VIRCHOW, KRAUSE & COMPANY, LLP Janesville, Wisconsin February 21, 2002 75 Page 2 ABIDON, INC. BALANCE SHEETS December 31, 2001 and 2000 ASSETS 2001 2000 ----------- ----------- CURRENT ASSETS Cash $ 79,390 $ 85,539 Rent receivable 10,694 2,526 ----------- ----------- Total Current Assets 90,084 88,065 ----------- ----------- PROPERTY AND EQUIPMENT 4,160,096 4,352,141 ----------- ----------- OTHER ASSETS Loan fees 4,243 4,243 Other 28,237 1,114 Less: Accumulated amortization (2,909) (1,367) ----------- ----------- Net Other Assets 29,571 3,990 ----------- ----------- TOTAL ASSETS $ 4,279,751 $ 4,444,196 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 113,105 $ 86,658 Wages payable 13,221 9,357 Payroll taxes and withholdings payable 9,279 17,096 Sales tax payable 9,395 6,481 Deferred revenues 31,544 39,950 Income taxes payable 42,600 26,313 Real estate taxes payable 259,000 247,613 Current portion of long-term debt 190,679 171,505 ----------- ----------- Total Current Liabilities 668,823 604,973 LONG-TERM LIABILITIES Long-term debt, less current portion 1,131,673 1,333,833 ----------- ----------- TOTAL LIABILITIES 1,800,496 1,938,806 ----------- ----------- STOCKHOLDERS EQUITY Common stock, $.0001 par value per 1,705 1,705 share 40,000,000 shares authorized 17,050,000 shares issued and outstanding Additional paid-in capital 1,916,295 1,916,295 Retained earnings 561,255 587,390 ----------- ----------- Total Stockholders' Equity 2,479,255 2,505,390 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,279,751 $4,444,196 =========== =========== See accompanying notes financial statements

76 Page 3 ABIDON, INC. STATEMENTS OF OPERATIONS Years Ended December 31, 2001, 2000, and 1999 ---------------------------------------------------------------------------- 2001 2000 1999 --------- --------- --------- REVENUES Lease revenues $1,700,330 $1,783,510 $1,782,746 Antique mall sales 1,716,728 1,968,555 2,095,795 Net Internet auction service revenues 27,883 5,334 - --------- --------- --------- Total Revenues 3,444,941 3,757,399 3,878,541 --------- --------- --------- COST OF GOODS SOLD Paid to antique mall dealers and other mall costs 1,628,894 1,814,081 1,905,789 Internet auction service consignments 77,264 69,066 --- --------- --------- --------- Total Cost of Goods Sold 1,706,158 1,883,147 1,905,789 --------- --------- --------- Gross Profit 1,816,047 1,943,318 1,972,752 OPERATING EXPENSES 1,591,869 1,642,801 1,340,514 --------- --------- --------- Operating Income 224,178 300,517 632,238 --------- --------- --------- OTHER INCOME (EXPENSE) Interest income 262 1,312 1,883 Interest expense (112,367) (120,781) (129,821) Other income 4,970 --- --- --------- --------- --------- Net Other Expense (107,135) (119,469) (127,938) --------- --------- --------- Income Before Income Taxes 117,043 181,048 504,300 PROVISION FOR INCOME TAXES 57,928 26,313 10,185 --------- --------- --------- NET INCOME $ 59,115 $ 154,735 $ 494,115 ========= ========= ========= NET INCOME PER SHARE OF COMMON STOCK $ 0.003 $ 0.009 $ 0.029 ========= ========= ========= See accompanying notes to financial statements

77 Page 4 ABIDON, INC. STATEMENTS OF STOCKHOLDERS' EQUITY Years Ended December 31, 2001, 2000, and 1999 ---------------------------------------------------------------------------- Additional Total Common Paid-in Retained Stockholders' Stock Capital Earnings Equity -------- --------- ---------- --------- BALANCES, Dec. 31, 1998 $ 1,705 $1,868,295 $ 690,040 $2,560,040 1999 net income --- --- 494,115 494,115 Contributions of related party payable to equity --- 48,000 --- 48,000 Distributions --- --- (601,000) (601,000) -------- --------- ---------- --------- BALANCES, Dec. 31, 1999 1,705 1,916,295 583,155 2,501,155 2000 net income --- --- 154,735 154,735 Distributions --- --- (150,500) (150,500) -------- --------- ---------- --------- BALANCES, Dec. 31, 2000 1,705 1,916,295 587,390 2,505,390 2001 net income --- --- 59,115 59,115 Distributions --- --- (85,250) (85,250) -------- --------- ---------- --------- BALANCES, Dec. 31, 2001 $ 1,705 $1,916,295 $ 561,255 $2,479,255 ======== ========= ========== ========= See accompanying notes to financial statements

78 Page 5 ABIDON, INC. STATEMENTS OF CASH FLOWS Years Ended December 31, 2001, 2000, and 1999 ---------------------------------------------------------------------------- 2001 2000 1999 --------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 59,115 $ 154,735 $ 494,115 Adjustments to reconcile net income to net cash flows from operating activities Depreciation 218,276 215,227 186,060 Amortization 1,542 960 71 Change in assets and liabilities Rent receivable (8,168) 1,698 10,455 Accounts payable 26,448 (6,398) 3,131 Wages payable 3,864 5,683 (103) Payroll taxes and withholdings payable (7,817) 8,574 2,513 Sales tax payable 2,914 (1,694) (2,745) Deferred revenues (8,406) 6,589 (1,837) Income taxes payable 16,287 18,003 (941) Real estate taxes payable 11,387 (15,595) (2,035) --------- --------- --------- Net Cash Flows from Operating Activities 315,442 387,782 688,684 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (26,232) (89,662) (13,475) Purchases of other assets (27,123) (1,114) -- --------- --------- --------- Net Cash Flows from Investing Activities (53,355) (90,776) (13,475) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Repayment of long-term debt (182,986) (173,839) (161,080) Stockholder distributions (85,250) (150,500) (601,000) --------- --------- --------- Net Cash Flows from Financing Activities (268,236) (324,339) (762,080) --------- --------- --------- Net Change in Cash and Cash (6,149) (27,333) (86,871) Equivalents CASH AND CASH EQUIVALENTS - Beginning of Year 85,539 112,872 199,743 --------- --------- --------- CASH AND CASH EQUIVALENTS - End of Year $ 79,390 $ 85,539 $ 112,872 ========= ========= ========= Supplemental cash flow disclosures Cash paid for interest $ 112,367 $ 120,781 $ 129,821 Cash paid for income taxes 41,641 8,310 9,251 Noncash investing and financing activities Contribution of related party payable to equity --- --- 48,000 See accompanying notes to financial statements

79 Page 6 ABIDON, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2001, 2000, and 1999 ---------------------------------------------------------------------------- NOTE 1 - Summary of Significant Accounting Policies ---------------------------------------------------------------------------- Nature of Business Abidon, Inc. (the company), located in Rockford, Illinois, operates in three lines of business. See note 6 for information on segment reporting. Business Combinations On February 1, 2000, the company entered into a plan of merger with State Street Investors of Rockford, Inc., Rockford Investors, Inc., and East State Street Antiques Mall, Inc. Pursuant to the plan of merger, the stockholders of the three companies received 85,250 shares of common stock of the company. The three companies were dissolved after the merger. The stockholders of State Street Investors of Rockford, Inc., Rockford Investors, Inc., and East State Street Antiques Mall, Inc. and the percentage of stock they owned were identical to the ownership they owned in the company. Based on the common control of State Street Investors of Rockford, Inc., Rockford Investors, Inc., and East State Street Antiques Mall, Inc., and the company, the combinations were accounted for similar to a pooling of interest. Cash and Cash Equivalents For purposes of the statements of cash flows, the company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Financial Instruments The carrying amounts for all financial instruments approximates fair value. The carrying amounts for cash and cash equivalents, rent receivable, accounts payable, and accrued liabilities approximate fair value because of the short maturity of these instruments. The fair value of long-term debt approximates the carrying amounts based upon the company's expected borrowing rate for debt with similar remaining maturities and comparable risk. 80 Page 7 Depreciation Property and equipment are recorded at cost. Improvements are capitalized while repair and maintenance costs are charged to operations when incurred. Furniture, fixtures, equipment, and antiques are depreciated or amortized using the 200% declining balance method, while buildings and improvements are depreciated using the straight-line method. Depreciation expense amounted to $218,276, $215,227, and $186,060 for the years ended December 31, 2001, 2000, and 1999 respectively. Expenses computed using the 200% declining balance method did not differ materially from that which would have been computed using the straight-line method. Recoverability of Property, Equipment Improvements The company evaluates long-lived assets to be held and used in the business for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment is determined by comparing estimated undiscounted future operating cash flows to the carrying amounts of assets. if an impairment exists, the amount of impairment is measured as the excess of the assets carrying amount less the sum of the estimated discounted future operating cash flows of such asset and the expected proceeds upon sale of the asset. Assets held for sale are reported at the lower of carrying amount or fair value less estimated costs to sell. There was no impairment of long-lived assets as of December 31, 2001 and 2000. Revenue Recognition The company records lease revenues at the time rent becomes earned and receivable from the tenant according to individual lease contracts. The company records sales revenue at the time merchandise is shipped. The company ensures that the transaction complies with the seven conditions and the six considerations contained in Accounting and Auditing Enforcement Release No. 108 of the Securities and Exchange Commission (SEC). In accordance with Emerging Issues Task Force (EITF) issue 99-19 "Reporting Revenue Gross as a Principal versus Net as an Agent", the company reports its Internet auction service revenues net of related cost of goods sold rather than as gross. In November 1999, the SEC issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition." SAB No. 101, as amended, sets forth the SEC staff's position regarding the point at which it is appropriate for a registrant to recognize revenue. The staff believes that revenue is realizable and earned when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or service has been rendered, the seller's price to the buyer is fixed or determinable and collectibility is reasonably assured. The company uses the above criteria to determine whether revenue can be recognized, and therefore, believes that the issuance of this bulletin does not have a material impact on these financial statements. The company adopted 81 Page 8 SAB No. 101 during the quarter ended March 31, 2001 and the effect of adoption was not material to the consolidated financial statements. Effective January 1, 2001, the company began recording amounts being charged to customers for shipping and handling as revenue in accordance with recently released Emerging Issues Task Force (EITF) Issue 00-10, "Accounting for Shipping and Handling Fees and Costs." Income Taxes For financial statement purposes, the company records income and expenses on the accrual basis, whereas for income tax purposes, income and expenses are recorded on the cash basis. The company utilizes the liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement and income tax reporting bases of assets and liabilities. Advertising Advertising costs are charged to operations when incurred. Advertising expense amounted to $98,404, $79,470, and $51,115 for the years ended December 31, 2001, 2000, and 1999, respectively. Estimates The preparation of financial statements in conformity with accounting principles generally accepted 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 reporting period. Actual results could differ from those estimates. Recently Issued Accounting Pronouncements Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended, is effective for years beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument, including certain derivative instruments embedded in other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge criteria 82 Page 9 are met. Special accounting for qualifying hedges allows a derivative's gains or losses to offset related results on the hedged item in the statement of operations and requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. The adoption of SFAS No. 133 will not materially impact the company's financial position or results of operations. Effective January 1, 2002, the company will adopt SFAS No. 141 and 142, "Business Combinations" and "Goodwill and Other Intangible Assets." Management believes the adoption of these standards will not have an impact on the company's financial position or results of operations. NOTE 2 - Property and Equipment ---------------------------------------------------------------------------- Major categories of property and equipment at December 31 are summarized as follows: Depreciable Lives 2001 2000 1999 ----- ---------- ---------- ---------- Land N/A $ 535,070 $ 535,070 $ 535,070 Buildings and improvements 31.5-39 yrs. 5,732,638 5,722,338 5,710,950 Equipment 5-7 yrs. 111,147 95,216 145,346 ---------- ---------- ---------- Total Property and Equipment 6,378,855 6,352,624 6,391,366 Less: Accumulated depreciation (2,218,759) (2,000,483) (1,913,660) ---------- ---------- ---------- Net Property and Equipment $ 4,160,096 $ 4,352,141 $ 4,477,706 ========== ========== ========== NOTE 3 - Long-Term Debt ---------------------------------------------------------------------------- Long-term debt at December 31, 2001, 2000 and 1999 consisted of the following: 2001 2000 1999 ---------- ---------- ---------- Note payable to bank with monthly payments of principal and interest of $5,300 bearing interest at 6.50%. This note is secured by a first mortgage on real estate and the personal guarantee of one of the company's stockholders. The note is due November 2003. $ 111,827 $ 160,116 $ 208,962 Note payable to bank with monthly payments of principal and interest of $19,252 bearing interest at 7.50%. This note is secured by a first mortgage on real estate and the personal guarantee of two of the company's stockholders. The note is due September 2008. 1,210,525 1,345,222 1,470,215 ---------- ---------- ---------- Total 1,322,353 1,505,338 1,679,177 Less: Current portion of long-term debt (190,679) (171,505) (159,016) ---------- ---------- ---------- Long-Term Debt $ 1,131,673 $ 1,333,833 $ 1,520,161 ========== ========== ========== 83 Page 10 Annual maturities of long-term debt for the years ending after December 31, 2001 are as follows: 2002 $ 190,679 2003 209,239 2004 167,519 2005 180,524 2006 194,539 Thereafter 379,853 --------- TOTAL $1,322,353 ========= NOTE 4 - Related Party Transactions ---------------------------------------------------------------------------- During 2001, 2000, and 1999, the company paid management wages to one of its stockholders of $72,000, $70,000, and $70,000, respectively. During 2001, 2000, and 1999, the company paid dividends to its stockholders of $85,250, $150,500, and $601,000, respectively. NOTE 5 - Income Taxes ---------------------------------------------------------------------------- For 2000, Abidon, Inc. was taxed as a corporation for its short period of February through December, as were State Street Investors of Rockford, Inc., Rockford Investors, Inc., and East State Street Antiques Mall, Inc. for their short periods commencing January 1, 2000 through January 18, 2000. No deferred income taxes have been recorded as of December 31, 2000 because no significant temporary differences exist between the reporting of amounts for financial statement purposes and income tax purposes. During 1999 and 1998, State Street Investors of Rockford, Inc. was taxed under the provisions of Subchapter S of the Internal Revenue Code, Rockford Investors, Inc. was taxed as a partnership, and East State Street Antiques Mall, Inc. was taxed as a sole proprietorship. For these types of tax entities, in lieu of federal and state corporation income taxes, the owners are taxed on their proportionate share of the taxable income which is combined with their other personal income and deductions to determine taxable income on their individual tax returns. Therefore, for 1999 and 1998 there is no provision for corporate income taxes. Income tax expense for these years consists of state of Illinois Replacement Tax. The provision for income taxes differs from the amount of income tax determined by applying the U.S. statutory federal income tax rate of 34% to income before income taxes as a result of the following: 84 Page 11 Year ended December 31, 2001 2000 1999 % % % ---- ---- ---- Federal income taxes at statutory rate 34.0 34.0 34.0 Benefit of federal graduated rates (8.2) (18.4) --- State income taxes, net of federal benefit 4.8 4.8 2.5 Income taxed at a partner/shareholder level --- --- (34.0) Nondeductible items and other 18.9 (5.9) (0.5) ---- ---- ---- 49.5 14.5 2.0 ==== ==== ==== NOTE 6 - Segment Information ---------------------------------------------------------------------------- The company operates in three business segments. The company operates an on-line auction service (internet auction), owns and leases two commercial office buildings on East State Street in Rockford (commercial real estate), and also operates an antique mall in the lower level of each office building (antique mall). Information on the company's business segments was as follows: 2001 2000 1999 --------- --------- --------- For the years ended December 31 Revenues Internet auction $ 105,147 $ 74,400 $ --- Commercial real estate 1,700,330 1,783,510 1,782,746 Antique mall 1,716,728 1,968,555 2,095,795 --------- --------- --------- Total Revenues $3,522,205 $3,826,465 $3,878,541 ========= ========= ========= Operating income (loss) Internet auction $ (360,142) $ (490,078) $ (86,026) Commercial real estate 803,024 738,460 670,861 Antique mall (218,704) 52,135 47,403 --------- --------- --------- Total Operating Income $ 224,178 $ 300,517 $ 632,238 ========= ========= ========= Capital expenditures Internet auction $ 15,932 $ 76,624 $ --- Commercial real estate 10,300 13,038 13,475 Antique mall --- --- --- --------- --------- --------- 85 Page 12 Total Capital Expenditures $ 26,232 $ 89,662 $ 13,475 ========= ========= ========= Depreciation and amortization Internet auction $ 35,579 $ 31,969 $ --- Commercial real estate 184,239 184,218 183,173 Antique mall --- --- 2,958 --------- --------- --------- Total Depreciation and Amortization $ 219,818 $ 216,187 $ 186,131 ========= ========= ========= At December 31 Identifiable assets Internet auction $ 61,192 $ 48,436 $ --- Commercial real estate 4,173,176 4,368,986 4,594,383 Antique mall 45,383 26,774 4,255 --------- --------- --------- Total Identifiable Assets $4,279,751 $4,444,196 $4,598,638 ========= ========= ========= 86 SUPPLEMENTAL INFORMATION 87 ABIDON, INC. SCHEDULES OF COST OF GOODS SOLD Years Ended December 31, 2001, 2000, and 1999 2001 2000 1999 --------- --------- --------- Paid to antique mall dealers $1,598,772 $1,800,038 $1,897,936 Other costs 30,122 14,043 7,853 --------- --------- --------- TOTAL COST OF GOODS SOLD $1,628,894 $1,814,081 $1,905,789 ========= ========= ========= 88 ABIDON, INC. SCHEDULES OF OPERATING EXPENSES Years Ended December 31, 2001, 2000, and 1999 2001 2000 1999 --------- --------- --------- Advertising and promotion $ 100,881 $ 80,501 $ 51,140 Depreciation and amortization 219,799 216,187 186,131 Insurance 33,958 11,235 18,281 Bank charges 23,824 25,975 23,750 Office expense 10,885 12,596 6,852 Consulting 30,590 68,482 11,646 Legal and accounting 41,513 20,884 31,980 Repairs and maintenance 163,308 80,892 313,276 Salaries and wages 426,705 426869 199,424 Directors fees 2,000 4,200 3,600 Payroll taxes 37,041 45,305 21,600 Supplies 22,528 65,001 10,387 Property taxes 259,000 239,273 263,208 Vehicle expense 2,893 4,232 2,953 Telecommunications 32,242 53,063 10,370 Utilities 93,708 89,744 96,983 Postage and delivery 2,939 1,379 864 Rental management fees and commissions 82,299 90,875 87,033 Miscellaneous expenses 5,756 6,108 1,036 --------- --------- --------- TOTAL OPERATING EXPENSES $1,591,869 $1,642,801 $1,340,514 ========= ========= ========= 89 ABIDON, INC. BALANCE SHEET As of March 31, 2002 ASSETS CURRENT ASSETS Cash 10,574 A/R SEC 13,230 Rents receivable 2,587 --------- Total Current Assets 26,391 PROPERTY AND EQUIPMENT 4,129,685 --------- Net Property and Equipment 4,129,685 OTHER ASSETS Loan fees 4,243 Other 53,565 Accumulated amortization (30,032) --------- Total Other Assets 27,776 --------- TOTAL ASSETS $4,183,852 ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Payroll taxes 10,907 Sales tax payable 7,775 Wages payable 24,013 Deferred revenues 31,544 Federal Income tax payable 25,600 Real estate taxes payable 239,153 Current portion of long-term debt 190,679 --------- Total Current Liabilities 529,671 LONG-TERM LIABILITIES Long-term debt, less current portion 1,086,884 --------- Total Long-Term Liabilities 1,086,884 STOCKHOLDERS EQUITY Common stock, $.0001 par value per share 40,000,000 shares authorized 17,050,000 shares issued and outstanding 1,705 Additional paid-in capital 1,916,295 Retained earnings 649,297 --------- Total Stockholders' Equity 2,567,297 --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,183,852 ========= Unaudited 90 ABIDON, INC. INCOME STATEMENT 3 Months Ended March 31, 2002 2001 -------- -------- REVENUES Sales - Antiques $ 513,721 $ 453,147 Lease income 405,592 326,739 Sales - Internet auction service revenues 23,520 69,973 -------- -------- Total Revenues 942,833 849,859 COST OF GOODS SOLD Purchases 413,149 358,476 Internet auction service expense 9,036 10,265 -------- -------- Total Cost of Goods Sold 422,185 368,741 -------- -------- Gross Profit 520,648 481,118 OPERATING EXPENSES 388,078 435,008 -------- -------- Operating Income (Loss) 132,570 46,110 OTHER INCOME (EXPENSE) Interest Income 0 262 Interest Expense (28,866) (22,337) -------- -------- Total Other Expense (28,866) (22,075) -------- -------- Income Before Taxes 103,704 24,035 PROVISION FOR INCOME TAXES 15,662 10,307 -------- -------- NET INCOME $ 88,042 $ 13,728 ======== ======== EARNINGS PER SHARE $ 0.0052 $ 0.0008 ======== ======== Statement of Retained Earnings ------------------------------ Amount at beginning of year 561,255 587,390 -------- -------- Add net income 88,042 13,728 -------- -------- Distributions 0 (85,250) -------- -------- Amount at end of year 88,042 (71,522) ======== ======== Unaudited 91 ABIDON, INC. STATEMENT OF CASH FLOWS March 31 2002 2001 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income (Loss) $ 88,044 $ 13,728 Adjustments to reconcile Net Income (Loss) to net Cash provided by (used in) operating activities: Depreciation and Amortization 48,726 47,192 Losses (Gains) on sales of Fixed Assets 0 (385) Decrease (Increase) in Operating Assets: Accounts Receivable 8,107 0 Increase (Decrease) in Operating Liabilities: Accounts Payable (113,105) (39,801) Accrued Liabilities (26,047) 42,688 -------- -------- Total Adjustments (82,319) 49,694 -------- -------- Net Cash Provided By (Used In) Operating Activities 5,725 63,422 CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditures (18,316) (12,393) Proceeds From Sale of Fixed Assets 0 0 -------- -------- Net Cash Provided By (Used In) Investing Activities (18,316) (12,393) CASH FLOWS FROM FINANCING ACTIVITIES Notes Payable Borrowings 28,867 22,337 Notes Payable Repayments (73,657) (73,655) Dividends Paid 0 (85,250) -------- -------- Net Cash Provided By (Used In) Financing Activities (44,790) (136,568) -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (57,381) (85,539) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 79,390 (0) -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 10,574 $ (0) ======== ======== Unaudited 92 ABIDON, INC. Notes to Financial Statements Note 1 - Summary of Significant Accounting Policies Nature of Business Abidon, Inc. (the company), located in Rockford, Illinois, operates in three lines of business. The company operates an on-line auction service (internet auction), owns and leases two commercial office buildings on East State Street in Rockford (commercial real estate), and also operates an antique mall in the lower level of each office building (antique mall). Business Combinations On February 1, 2000, the company entered into a plan merger with East State Street Investors of Rockford, Inc., Rockford Investors, Inc., and East State Street Antiques Mall, Inc. Pursuant to the plan of merger, the stockholders of the three companies received 85,250 shares of common stock of the company. The stockholders of East State Street Investors of Rockford, Inc., Rockford Investors, Inc., and East State Street Antiques Mall, Inc., and the percentage of stock they owned were identical to the ownership they owned in the company. Based on the common control of East State Street Investors of Rockford, Inc., Rockford Investors, Inc., and East State Street Antiques Mall, Inc., and the company, the combinations were accounted for similar to a pooling interest. Cash and Cash Equivalents For purposes of the statement of cash flows, the company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Financial Instruments The carrying amounts for all financial instruments approximate fair value. The carrying amounts for cash and cash equivalents, rent receivable, accounts payable, and accrued liabilities approximate fair value because of the short maturity of these instruments. The fair value of long-term debt approximates the carrying amounts based upon the company's expected borrowing rate for debt with similar remaining maturities and comparable risk. Depreciation Property and equipment are recorded at cost. Improvements are capitalized while repair and maintenance costs are charged to operations when incurred. Furniture, fixtures, equipment, and antiques are depreciated or amortized using the 200% declining balance method, while buildings and improvements are depreciated using the straight-line method. Depreciation expense amounted to $48,726.42 for the three months ended March 31, 2002. Expenses computed using the 200% declining balance method did not differ materially from that which would have been computed using the straight-line method. 93 ABIDON, INC. Notes to Financial Statements Revenue Recognition The company records lease revenues at the time rent becomes receivable from the tenant according to individual lease contracts. The company records sales revenue at the time merchandise is shipped. Income Taxes For financial statement purposes, the company records income and expenses on the accrual basis, whereas for income tax purposes, income and expenses are recorded on the cash basis. The company utilized the liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement and income tax reporting bases of assets and liabilities. Advertising Advertising costs are charged to operations when incurred. Advertising expense amounted to $34,515.44 for the 3 months ended March 31, 2002. Note 2 - Long-Term Debt Long-Term debt at March 31, 2002 consisted of the following: Note payable to bank with monthly payments of principal and interest of $5,300 bearing interest at 7.80%, this note is secured by a first mortgage on real estate and the personal guarantee of one of the company's stockholders. The note is due November 2003. 98,222 Note payable to bank with monthly payments of principal and interest of $19,252 bearing interest at 7.50%, this note is secured by a first mortgage on real estate and the personal guarantee of one of the company's stockholders. The note is due September 2008 1,179,341 --------- Total 1,277,563 Less: Current portion of Long-Term Debt (190,679) --------- Long-Term Debt 1,086,884 ========= 94 ABIDON, INC. Notes to Financial Statements Note 3 - Segment Information The company operates three business segments. The company operates an on- line auction service (internet auction), owns and leases two commercial office buildings on East State Street in Rockford (commercial real estate), and also operates an antique mall in the lower level of each office building (antique mall). Information on the company's business segments was as follows: Three Months Ending March 31, 2002 2001 ------- ------- Revenues Internet auction 23,520 69,973 Commercial real estate 405,592 326,739 Antique Mall 513,719 453,147 ------- ------- Total Revenues 942,831 849,858 Operating Income (Loss) Internet auction (120,665) (32,525) Commercial real estate 232,794 46,313 Antique Mall 20,441 32,322 ------- ------- Total Operating Income 132,570 46,110 Capital Expenditures Internet auction 0 12,393 Commercial real estate 18,316 0 Antique Mall 0 0 ------- ------- Total Capital Expenditures 18,316 12,393 Depreciation and amortization Internet auction 2,846 8,726 Commercial real estate 45,818 38,394 Antique Mall 62 62 ------- ------- Total Depreciation and amortization 48,726 47,192 Identifiable assets Internet auction 25,614 51,100 Commercial real estate 4,103,415 4,265,575 Antique Mall 656 934 ------- ------- Total Identifiable assets 4,129,685 4,317,609 95 ABIDON, INC. Notes to Financial Statements Note 4 - Property and Equipment Major categories of property and equipment at March 31, are summarized as follows: 2002 2001 Land 535,070 535,070 Buildings 5,747,884 5,722,338 Furn Fixt & Equip 114,217 107,609 --------- --------- Total 6,397,171 6,365,017 Accumulated Depreciation (2,267,485) (2,047,407) --------- --------- Net Property and Equipment 4,129,686 4,317,610 ========= ========= Depreciable Lives: ----------------- Buildings are depreciated at 93 years. Equipment is depreciated at 5-7 years. 96 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. 97 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the costs and expenses to be paid by the Company in connection with the sale of the shares of Common Stock being registered hereby. All amounts are estimates except for the Securities and Exchange Commission registration fee. Securities and Exchange Commission registration fee $ 8,280 NASD filing fee.................................... 55,000* NASDAQ National Market filing fee.................. 5,000* Accounting fees and expenses....................... 30,000* Legal fees and expenses............................ 10,000* Investment meeting expenses........................ 90,000* Printing and engraving expenses.................... 25,000* Blue sky fees and expenses......................... 30,000* Transfer agent and registrar fees and expenses..... 20,000* Total.............................................. $265,000 * Estimates ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation's board of directors to grant, indemnity to directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act of 1933, as amended (the "Securities Act"). ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. The following table sets forth information regarding all securities sold by the Registrant since its inception on January 18, 2000. Title Of Number Aggregate Class Of Purchasers Date Of Sale Securities Securities And Form ------------------- ------------ ---------- ---------- -------- State Street Jan. 24, 2000 Common 55,000 Complete Investors of consideration Rockford, Inc. $1,650,000 East State Antique Jan. 24, 2000 Common 10,000 Complete Mall Inc. consideration $26,000 Rockford Investors Jan. 24, 2000 Common 20,250 Complete Inc. consideration $82,500 98 On August 15, 2000 the company stock was split 200 to 1. After completion of the stock split there are 17,050,000 shares of common stock outstanding. No other stock has been issued through December 31, 2001. CONSIDERATION PAID BY EACH PURCHASER IN EXCHANGE FOR COMMON STOCK OF ABIDON SHARES BENEFICIALLY Common Stock was exchanged as follows: OWNED PRIOR TO OFFERING State Street Rockford East # OF ABIDON Investors Investors Antique NAME OF BENEFICIAL OWNER SHARES Stock Stock Stock Norman/Gloria Akelaitis 300,000 3 Harvey/Juletta Bokath 400,000 4 M.L. Brandon/Shirley Sutherland 100,000 1 William/Dorothy Burgett 150,000 1.5 James/Marcia Byrne 200,000 2 Evelyn Carlyle 100,000 1 Cloyd/Janet Dowell 350,000 3.5 C. Mark Elder 200,000 2 James A. Falconer 300,000 3 James M. Falconer 100,000 1 John/Linda Falconer 100,000 1 John/Maria Frisella 1,750,000 15 5 Michael Fulling 200,000 2 Harris Trust 50,000 .5 Eugene Hayenga 100,000 1 Ruth Hayenga 100,000 1 Jenny Kliebe 400,000 3 2 Robert/Jeannette Kliebe 200,000 2 Silva Ludwig 200,000 2 George Maurica 100,000 2 Carl/Cheryl Miller 200,000 2 Ernest/Inez Miller 100,000 1 Howard Miller 5,600,000 21 50 10 Irvin/Palma Miller 700,000 4 6 Stanley/Delcie Miller 3,550,000 20 11 10 Steve Noble 650,000 6 1 Nolan Rogers 100,000 2 Henry/Vernita Watts 50,000 1 Jerry/Harriet Wescott 200,000 2 Wayne/Dessie Whitlow 200,000 1.5 1 Douglas/Patricia Wilburn 100,000 1 Bobby Joe/Freida Whitlow 200,000 2 Total Shares 17,050,000 110 81 20 99 EXEMPTION FROM REGISTRATION Regulation D of the Security Act of 1933. Exemption for Limited Offers and Sales Without Regard to Dollar Amount of Offering - Reg. 230.506: (i) Limitation on number of purchasers. There are no more than or the issuer believes that there are no more than 35 purchasers of securities from the issuer in any offering under this section 230.506. (ii) Nature of purchasers. Each purchaser who is not an accredited investor either alone or with his purchaser representative(s) has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment, or the issuer reasonably believes that immediately prior to making any sale that such purchaser comes within this description. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 100 EXHIBIT INDEX EXHIBIT NUMBER EXHIBIT TITLE EX-1.00 Underwriting Agreement EX-2.00 Plan of Acquisition, reorganization, arrangement, liquidation, or succession EX-2.01 Merger Agreement between UBuy2 Inc. and State Street Investors Inc., Rockford Investors Inc., and East State Antiques Mall, Inc. EX-2.02 Merger between UBuy2 Inc. and Rockford Investors Inc. EX-2.03 Minutes approving Merger between UBuy2 Inc. and Three Corporations EX-3.00 Certificate of Incorporation, UBuy2 Inc. EX-3.01 Certificate of Amendment, Abidon Inc. EX-3.02 Certificate of Amendment, change in Authorized Shares of Stock EX-3.03 Bylaws of Corporation EX-4.01 Copy of Stock Certificate EX-4.02 Copy of Rights of Investors EX-5.00 Opinion Regarding Legality * EX-10.00 Material Contracts Index - Leases EX-10.78 Mortgage Associated Commercial Mortgage Inc. and Abidon Inc. EX-10.79 Bank One, Illinois NA and Abidon Inc. EX-11.00 Consolidated Statement of Income Data EX-13.00 Annual Report to Stockholders EX-15.00 Letter Regarding Unaudited Interim Financial Information EX-21.00 Subsidiary of Registrant EX-23.00 Consent of Experts and Counsel ** * Filed by Amendment Number 2 to Registration Statement on January 15, 2002. ** Filed by Amendment Number 8 to Registration Statement on July 23, 2002. All other Exhibits incorporated by reference to the Company's Registration Statement on Form S-1 (File No. 333-75626) filed on December 20, 2001. 101 ITEM 17. UNDERTAKINGS. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described under Item 14 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 102 The undersigned registrant hereby undertakes: To file, during any period in which offers or sales are being made, a post- effective amendment to this registration statement: i. To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; ii. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. 103 To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. 104 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Rockford, State of Illinois, on August 1, 2002. ABIDON INC. ------------------------ (Registrant) /s/ Howard Miller ------------------------ Howard Miller, President By (Signature and Title) Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. /s/ Stanley Miller ------------------------ Stanley Miller (Signature) Secretary ------------------------ (Title) August 1, 2002 ------------------------ (Date) /s/ Howard Miller -------------------------------------- Howard Miller, President, Chief Executive Officer and Director /s/ Stanley Miller -------------------------------------- Stanley Miller, Secretary and Director /s/ Harvey D. Bokath -------------------------------------- Harvey D. Bokath, Director /s/ John Frisella -------------------------------------- John Frisella, Director 105

ABIDON INC S-1/A