-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MSA7tqk/OR1h3TFDX9yiwLtt1Sh+1wmKqftL4QzZgr0p+GYuFukKdYV6zQYPcBPv IELxI2CagHajimUQjR5dOg== 0001042910-99-001491.txt : 19991115 0001042910-99-001491.hdr.sgml : 19991115 ACCESSION NUMBER: 0001042910-99-001491 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990830 ITEM INFORMATION: FILED AS OF DATE: 19991112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRINTONTHENET COM INC CENTRAL INDEX KEY: 0000793375 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 591270754 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-14614 FILM NUMBER: 99749848 BUSINESS ADDRESS: STREET 1: 7700 N W 37TH AVENUE CITY: MIAMI STATE: FL ZIP: 30076 BUSINESS PHONE: 3056912800 MAIL ADDRESS: STREET 1: 7700 NW 37TH AVENUED CITY: MIAMI STATE: FL ZIP: 30076 FORMER COMPANY: FORMER CONFORMED NAME: NET LNNX INC DATE OF NAME CHANGE: 19960222 FORMER COMPANY: FORMER CONFORMED NAME: CHESTER COUNTY SECURITY FUND INC DATE OF NAME CHANGE: 19920703 8-K/A 1 AMENDMENT TO CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A2 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): August 30, 1999 PRINTONTHENET.COM, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 000-14614 59-1270754 - -------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 7700 N.W. 37TH AVENUE, MIAMI, FLORIDA 33147 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone no. including area code: (305) 691-2800 -------------- NET LNNX, INC. ------------------------------------------------------------- (Former name or former address, if changed since last report) This Current Report on Form 8-K/A2 is filed by PrintOnTheNet.Com (the "Company") as a second amendment to that certain Current Report on Form 8-K filed by the Company on September 13, 1999. Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS ------------------------------------------------------------------ FINANCIAL STATEMENTS (a) Financial Statements of Businesses Acquired The following audited financial statements of Bailey's Printing Plus, Inc. ("Bailey's") as of and for the years ended December 31, 1998 and 1997 are provided herein: (1) Independent Auditor's Report (2) Balance Sheets as of December 31, 1998 and 1997 (3) Statements of Operations and Retained Earnings for the years ended December 31, 1998 and 1997 (4) Statements of Cash Flows for the years ended December 31, 1998 and 1997 (5) Notes to Financial Statements for the years ended December 31, 1998 and 1997 The following unaudited financial statements of Bailey's as of and for the six month interim periods ended June 30, 1999 and 1998 are provided herein: (1) Balance Sheets as of June 30, 1999 and 1998 (2) Statements of Operations and Retained Earnings for the six month periods ended June 30, 1999 and 1998 (3) Statements of Cash Flows for the six month periods ended June 30, 1999 and 1998 The following audited financial statements of Ivan's Quik Print, Inc. ("Ivan's") as of and for the years ended December 31, 1998 and 1997 are provided herein: (1) Independent Auditor's Report (2) Balance Sheets as of December 31, 1998 and 1997 (3) Statements of Operations and Retained Earnings for the years ended December 31, 1998 and 1997 (4) Statements of Cash Flows for the years ended December 31, 1998 and 1997 (5) Notes to Financial Statements for the years ended December 31, 1998 and 1997 2 The following unaudited financial statements of Ivan's as of and for the six month interim periods ended June 30, 1999 and 1998 are provided herein: (1) Balance Sheets as of June 30, 1999 and 1998 (2) Statements of Operations and Retained Earnings for the six month periods ended June 30, 1999 and 1998 (3) Statements of Cash Flows for the six month periods ended June 30, 1999 and 1998 3 To the Board of Directors of PrintOnTheNet.Com INDEPENDENT AUDITOR'S REPORT I have audited the accompanying balance sheet of Bailey's Printing Plus, Inc., a Florida Sub-chapter S corporation, as of December 31, 1998 and the related statements of operations and retained earnings, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted this audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and 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. I believe that my audit provides a reasonable basis for our opinion. In my opinion, the financial statements referred to above present fairly in all material respects the financial position of Bailey's Printing Plus, Inc., as of December 31, 1998, and the results of operations and cash flow for the year then ended in conformity with generally accepted accounting principles. Esteban Brown CPA, PA Miami, Florida November 8, 1999 4
BAILEY' S PRINTING PLUS, INC. BALANCE SHEET - --------------------------------------------------------------------------------------------------------------- As at December 31, 1998 - --------------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash $ 0 Accounts receivable 22,105 Inventory 3,086 - --------------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 25,191 - --------------------------------------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT Manufacturing equipment 38,429 Less accumulated depreciation (18,413) - --------------------------------------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT, NET 20,016 - --------------------------------------------------------------------------------------------------------------- OTHER ASSETS Deposits 1,260 - --------------------------------------------------------------------------------------------------------------- TOTAL OTHER ASSETS 1,260 - --------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 46,467 =============================================================================================================== LIABILITIES AND STOCKHOLDERS ' EQUITY (DEFICIT) CURRENT LIABILITIES Bank overdraft 9,688 Capitalized lease obligation, short term portion (Note 2) 1,490 Accounts payable and accrued expenses 19,549 Sales taxes payable 1,529 Shareholder loan 3,159 - --------------------------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 35,415 - --------------------------------------------------------------------------------------------------------------- LONG - TERM LIABILITIES Capitalized lease obligation (Note 2) 12,361 - --------------------------------------------------------------------------------------------------------------- TOTAL LONG - TERM LIABILITIES 12,361 - --------------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY (DEFICIT) Common stock, 5,000 shares authorized, issued and outstanding 1,000 Deficit in Retained earnings (2,309) - --------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (1,309) - --------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 46,467 ===============================================================================================================
See accountants' audit report and accompanying notes 5
BAILEY' S PRINTING PLUS, INC. STATEMENTS OF OPERATIONS AND RETAINED EARNINGS - -------------------------------------------------------------------------------------------------------- For the year ended December 31, 1998 - -------------------------------------------------------------------------------------------------------- REVENUES $ 390,312 COST OF SALES 177,823 - -------------------------------------------------------------------------------------------------------- GROSS PROFIT 212,489 - -------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Salaries and related costs 134,340 Rent 23,672 Insurance 22,001 Maintenance 8,180 Advertising 6,930 Office costs 6,261 Automobile expense 6,175 Telephone 5,597 Depreciation 3,795 Interest 2,411 Utilities 2,345 Professional fees 1,400 Other 991 Laundry 460 - -------------------------------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 224,558 - -------------------------------------------------------------------------------------------------------- NET LOSS (12,069) RETAINED EARNINGS - BEGINNING 9,760 - -------------------------------------------------------------------------------------------------------- DEFICIT IN RETAINED EARNINGS - ENDING $ (2,309) ========================================================================================================
See accountants' audit report and accompanying notes 6
BAILEY' S PRINTING PLUS, INC. STATEMENT OF CASH FLOWS - ------------------------------------------------------------------------------------------------------ For the year ended December 31, 1998 - ------------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ (12,069) - ------------------------------------------------------------------------------------------------------ Adjustmentsto reconcile net loss to net cash provided by operating activities: Depreciation 3,795 (Increase) decrease in: Accounts receivable (4,061) Inventory 200 Increase (decrease) in: Bank overdraft 9,251 Accounts payable and accrued expenses 5,963 Payroll and sales taxes payable (3,273) Shareholder loan 3,159 - ------------------------------------------------------------------------------------------------------ TOTAL ADJUSTMENTS 15,034 - ------------------------------------------------------------------------------------------------------ NET CASH PROVIDED BY OPERATING ACTIVITIES 2,965 - ------------------------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES Principal repayment on equipment financing (2,965) - ------------------------------------------------------------------------------------------------------ NET CASH FLOWS USED BY FINANCING ACTIVITIES (2,965) - ------------------------------------------------------------------------------------------------------ NET INCREASE IN CASH 0 CASH - BEGINNING OF YEAR 0 - ------------------------------------------------------------------------------------------------------ CASH - END OF YEAR $ 0 ======================================================================================================
See accountants' audit report and accompanying notes 7 NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS Bailey's Printing Plus, Inc., (Company), was incorporated in the State of Florida on January 6, 1992, and has operated as quick print shop since it's inception. REVENUE RECOGNITION The company recognizes revenue on the accrual basis of accounting and recognizes income upon completion of the jobs. INCOME TAXES The company, with the consent of its shareholders has elected for income tax purposes to be taxed as a Subchapter-S corporation. Under the provisions of the Internal Revenue Code, Sub-S corporations are not taxable entities instead the shareholders are taxed on their proportionate share of the company's taxable income. Accordingly, no provision for federal or state income tax has been provided in the accompanying income statements. INVENTORIES Inventory, consisting of printing supplies, is valued at the lower of cost or market value using the first-in first-out method. PROPERTY AND EQUIPMENT Property and equipment, consisting of computers and manufacturing equipment is stated at cost, less accumulated depreciation. Depreciation commences when the assets are placed in service and computed using the straight-line method over the estimated useful lives of the assets, which are five to ten years. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions may affect the reported amounts of assets, liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. FAIR VALUE OF FINANCIAL INSTRUMENTS Cash, receivables, accounts payable, debt, accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair value due to the short-term nature of these amounts or due to variable rates of interest which are consistent with current market rates. NOTE 2 - CAPITAL LEASE OBLIGATION The Company is a party to a five-year capital lease obligation for the purchase of equipment dated July 1997. The monthly payment is $435 and bears 14.9 % finance cost. At the conclusion of the lease the Company has a $1.00 purchase option. The lease is secured by manufacturing equipment. As of December 31, 1998 the current portion on this obligation was $1,490. 8 NOTE 3 - COMMITMENTS The Company is a party to several operating leases as follows. Facility: A five year lease on the manufacturing facility dated February 1992, and extended for an additional five year period through January 2002. The lease is subject to pass through cost escalations, and the current monthly rental is $ 1,974. A twenty-four month lease on a van dated June 1998, with monthly payments of $361. Approximate minimum annual rentals on these operating leases are as follows. 1999 $ 28,020 2000 $ 25,495 2001 $ 23,690 2002 $ 23,690 ---------- Total $ 100,985 ========== Total rental payments on these leases and other operating leases expired during the year ended December 31, 1998 totaled approximately $27,924. NOTE 4 - SUBSEQUENT EVENTS On August 25, 1999, the Company entered into a transaction with PrintOnTheNet.Com a publicly traded company. Under the terms of this transaction the Company sold certain assets and debt, its customer list, and other intangible assets for a total price of $251,000 in cash, stock of the acquiring company, and debt assumed by the acquiring company. 9 To the Board of Directors of PrintOnTheNet.Com INDEPENDENT AUDITOR'S REPORT I have audited the accompanying balance sheet of Bailey's Printing Plus, Inc., a Florida Sub-chapter S corporation, as of December 31, 1997 and the related statements of income and retained earnings, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted this audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and 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. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly in all material respects, the financial position of Bailey's Printing Plus, Inc., as of December 31, 1997, and the results of operations and cash flow for the year then ended in conformity with generally accepted accounting principles. Esteban Brown CPA, PA Miami, Florida November 8, 1999 10
BAILEY' S PRINTING PLUS, INC. BALANCE SHEET - --------------------------------------------------------------------------------------------------------- As at December 31, 1997 - --------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash $ 0 Accounts receivable 18,044 Inventory 3,286 - --------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 21,330 - --------------------------------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT Manufacturing equipment 38,429 Less accumulated depreciation (14,619) - --------------------------------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT, NET 23,810 - --------------------------------------------------------------------------------------------------------- OTHER ASSETS Deposits 1,260 - --------------------------------------------------------------------------------------------------------- TOTAL OTHER ASSETS 1,260 - --------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 46,400 ========================================================================================================= LIABILITIES AND STOCKHOLDERS ' EQUITY CURRENT LIABILITIES Bank overdraft 437 Capitalized lease obligation, short term portion (Note 2) 2,313 Accounts payable and accrued expenses 13,586 Payroll and sales taxes payable 4,802 - --------------------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 21,138 - --------------------------------------------------------------------------------------------------------- LONG - TERM LIABILITIES Capitalized lease obligation (Note 2) 14,502 - --------------------------------------------------------------------------------------------------------- TOTAL LONG - TERM LIABILITIES 14,502 - --------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Common stock, 5,000 shares authorized, issued and outstanding 1,000 Retained earnings 9,760 - --------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 10,760 - --------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 46,400 =========================================================================================================
See accountants' audit report and accompanying notes 11
BAILEY' S PRINTING PLUS, INC. STATEMENT S OF INCOME AND RETAINED EARNINGS - -------------------------------------------------------------------------------------------------- For the year ended December 31, 1997 - -------------------------------------------------------------------------------------------------- REVENUES $ 407,341 COST OF SALES 166,047 - -------------------------------------------------------------------------------------------------- GROSS PROFIT 241,294 - -------------------------------------------------------------------------------------------------- OPERATING EXPENSES Salaries and related costs 144,178 Rent 23,690 Insurance 20,842 Office costs 9,446 Automobile expense 7,947 Telephone 7,487 Advertising 4,935 Depreciation 3,753 Maintenance 3,713 Utilities 2,444 Professional fees 1,825 Interest 1,311 Laundry 1,215 Other 1,082 - -------------------------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 233,868 - -------------------------------------------------------------------------------------------------- NET INCOME 7,426 RETAINED EARNINGS - BEGINNING 16,962 Distributions to shareholders (14,628) - -------------------------------------------------------------------------------------------------- RETAINED EARNINGS - ENDING $ 9,760 ==================================================================================================
See accountants' audit report and accompanying notes 12
BAILEY' S PRINTING PLUS, INC. STATEMENT OF CASH FLOWS - ----------------------------------------------------------------------------------------------------- For the year ended December 31, 1997 - ----------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 7,426 - ----------------------------------------------------------------------------------------------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,753 (Increase) decrease in: Accounts receivable 5,292 Inventory 22 Shareholders loans 4,242 Increase (decrease) in: Bank overdraft (4,826) Accounts payable and accrued expenses 0 Payroll and sales taxes payable 1,618 - ----------------------------------------------------------------------------------------------------- TOTAL ADJUSTMENTS 10,101 - ----------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 17,527 - ----------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Distributions to shareholders (14,628) Purchase of equipment (19,715) - ----------------------------------------------------------------------------------------------------- NET CASH FLOWS USED BY INVESTING ACTIVITIES (34,343) - ----------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from equipment financing 18,550 Principal repayment on equipment financing (1,734) - ----------------------------------------------------------------------------------------------------- NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 16,816 - ----------------------------------------------------------------------------------------------------- NET INCREASE IN CASH 0 CASH AND EQUIVALENTS - BEGINNING OF YEAR 0 - ----------------------------------------------------------------------------------------------------- CASH AND EQUIVALENTS - END OF YEAR $ 0 =====================================================================================================
See accountants' audit report and accompanying notes 13 NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS Bailey's Printing Plus, Inc., (Company), was incorporated in the State of Florida on January 6, 1992, and has operated as quick print shop since it's inception. REVENUE RECOGNITION The company recognizes revenue on the accrual basis of accounting and recognizes income upon completion of the jobs. INCOME TAXES The company, with the consent of its shareholders has elected for income tax purposes to be taxed as a Subchapter-S corporation. Under the provisions of the Internal Revenue Code, Sub-S corporations are not taxable entities instead the shareholders are taxed on their proportionate share of the company's taxable income. Accordingly, no provision for federal or state income tax has been provided in the accompanying income statements. INVENTORIES Inventory, consisting of printing supplies, is valued at the lower of cost or market value using the first-in first-out method. PROPERTY AND EQUIPMENT Property and equipment, consisting of computers and manufacturing equipment is stated at cost, less accumulated depreciation. Depreciation commences when the assets are placed in service and computed using the straight-line method over the estimated useful lives of the assets, which are five to ten years. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions may affect the reported amounts of assets, liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. FAIR VALUE OF FINANCIAL INSTRUMENTS Cash, receivables, accounts payable, debt, accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair value due to the short-term nature of these amounts or due to variable rates of interest which are consistent with current market rates. NOTE 2 - CAPITAL LEASE OBLIGATION The Company is a party to a five-year capital lease obligation for the purchase of equipment dated July 1997. The monthly payment is $435 and bears 14.9 % finance cost. At the conclusion of the lease the Company has a $1.00 purchase option. The lease is secured by manufacturing equipment. As of December 31, 1997 the current portion on this obligation was $ 2,058. 14 NOTE 3 - COMMITMENTS The Company is a party to several operating leases as follows. Facility: A five year lease on the manufacturing facility dated February 1992, and extended for an additional five year period through January 2002. The lease is subject to pass through cost escalations, and the current monthly rental is $ 1,974. A twenty-four month lease on a van dated June 1996, with monthly payments of $349. Approximate minimum annual rentals on these operating leases are as follows. 1998 $ 27,960 1999 $ 28,020 2000 $ 25,495 2001 $ 23,690 2002 $ 23,690 ---------- Total $ 128,855 ========== Total rental payments on these leases totaled $ 28, 057 for the year ended December 31, 1997. NOTE 4 - SUBSEQUENT EVENTS On August 25, 1999, the Company entered into a transaction with PrintOnTheNet.Com a publicly traded company. Under the terms of this transaction the Company sold certain assets and debt, its customer list, and other intangible assets for a total price of $251,000 in cash, stock of the acquiring company, and debt assumed by the acquiring company. 15
BAILEY'S PRINTING PLUS, INC. CONDENSED BALANCE SHEETS (UNAUDITED) JUNE 30, -------- 1999 1998 ---- ---- ASSETS CURRENT ASSETS Cash $ 2,688 $ 13,007 Accounts receivable, net 29,462 25,697 Inventory 3,086 3,286 ----------------- ----------------- Total Current Assets 35,236 41,990 ----------------- ----------------- Property and equipment, net 19,142 21,913 Deposits 1,260 1,260 ----------------- ----------------- $ 55,638 $ 65,163 ================= ================= LIABILITIES AND SHAREH0LDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 18,232 $ 20,067 Current portion of capital lease obligations 1,273 2,313 ----------------- ----------------- Total Current Liabilities 19,505 22,380 ----------------- ----------------- Capital lease obligations 11,776 13,020 SHAREHOLDERS' EQUITY Common stock 1,000 1,000 Retained earnings 23,357 28,763 ----------------- ----------------- Total Shareholders' Equity 24,357 29,763 ----------------- ----------------- $ 55,638 $ 65,163 ================= =================
16
BAILEY'S PRINTING PLUS, INC. CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (UNAUDITED) For the Six Month Period Ended June 30, 1999 1998 ---- ---- Net sales $ 260,956 $ 203,457 Cost of sales 144,499 114,251 ----------------- ----------------- Gross profit 116,457 89,206 Selling, General and Administrative Expenses 89,540 69,216 ----------------- ----------------- Income from operations 26,917 19,990 Interest expense 1,251 987 ----------------- ----------------- Net income 25,666 19,003 Retained earnings (deficit) - beginning of period (2309) 9,760 ----------------- ----------------- Retained earnings - end of period $ 23,357 $ 28,763 ================= =================
(1) Bailey's is a Subchapter S Corporation and as such any taxes required are the responsibility of the individual shareholders. Therefore, no provision for income taxes is reflected herein. 17
BAILEY'S PRINTING PLUS, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Month Period Ended June 30, 1999 1998 ---- ---- Net income $ 25,666 $ 19,003 Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 1,724 1,898 Accounts receivable (7,359) (7,654) Shareholder loan (3,159) - Accounts payable and accrued expenses (12,532) 1,242 -------------------- --------------------- Total adjustments (21,326) (4,514) Net cash flows from operating activities 4,340 14,489 Cash flows from investing activities: Expenditures for property and equipment (850) - Cash flows from financing activities: Payments under capital lease obligations (802) (1,482) -------------------- --------------------- NET INCREASE IN CASH 2,688 13,007 CASH AT BEGINNING OF PERIOD - - -------------------- --------------------- CASH AT END OF PERIOD $ 2,688 $ 13,007 ==================== =====================
18 To the Board of Directors of PrintOnTheNet.Com INDEPENDENT AUDITOR'S REPORT I have audited the accompanying balance sheet of Ivan's Quick Print, Inc., a Florida corporation as of December 31, 1998 and the related statements of operations and retained earnings, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted this audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and 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. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects the financial position of Ivan's Quick Print, Inc., as of December 31, 1998 and the results of it's operations and it's cash flow, for the year then ended in conformity with generally accepted accounting principles. Esteban Brown CPA, PA Miami, Florida November 8, 1999 19
IVAN 'S QUICK PRINT, INC. BALANCE SHEET - ----------------------------------------------------------------------------------------------------------- As at December 31, 1998 - ----------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash $ 3,866 Accounts receivable 25,292 Inventory 2,917 Shareholder loan 3,408 - ----------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 35,483 - ----------------------------------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT Manufacturing equipment 25,827 Less accumulated depreciation (8,244) - ----------------------------------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT, NET 17,583 - ----------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 53,066 =========================================================================================================== LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES Note payable, current portion 2,058 Accounts payable and accrued expenses 28,453 - ----------------------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 30,511 - ----------------------------------------------------------------------------------------------------------- LONG - TERM LIABILITIES Note payable long term - portion 2,485 - ----------------------------------------------------------------------------------------------------------- TOTAL LONG - TERM LIABILITIES 2,485 - ----------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Paid-in capital 500 Retained earnings 19,570 - ----------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 20,070 - ----------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 53,066 ===========================================================================================================
See accountants' audit report and accompanying notes 20
IVAN 'S QUICK PRINT, INC. STATEMENT OF OPERATIONS AND RETAINED EARNINGS - --------------------------------------------------------------------------------------------------------- For the year ended December 31, 1998 - --------------------------------------------------------------------------------------------------------- REVENUES $ 300,383 COST OF SALES 166,178 - --------------------------------------------------------------------------------------------------------- GROSS PROFIT 134,205 - --------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Salaries and related costs 43,173 Occupancy costs 30,373 Insurance 14,921 Automobile expense 12,054 Office costs 8,699 Telephone 5,821 Utilities 4,790 Maintenance 4,696 Licenses and taxes 3,398 Equipment rental 2,907 Depreciation 2,583 Laundry 949 Professional fees 939 Interest 584 Advertising 50 - --------------------------------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 135,937 - --------------------------------------------------------------------------------------------------------- NET LOSS (1,732) RETAINED EARNINGS - BEGINNING 21,302 - --------------------------------------------------------------------------------------------------------- RETAINED EARNINGS - ENDING $ 19,570 =========================================================================================================
See accountants' audit report and accompanying notes 21
IVAN 'S QUICK PRINT, INC. STATEMENT OF CASH FLOWS - -------------------------------------------------------------------------------------------------------- For the year ended December 31, 1998 - -------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (1,732) - -------------------------------------------------------------------------------------------------------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 2,583 (Increase) decrease in: Accounts receivable other (7,499) Inventory (104) Due from shareholder (1,751) Increase (decrease) in: Accounts payable and accrued expenses 7,834 Payroll and sales taxes payable (2,048) - -------------------------------------------------------------------------------------------------------- TOTAL ADJUSTMENTS (985) - -------------------------------------------------------------------------------------------------------- NET CASH FLOWS USED BY OPERATING ACTIVITIES (2,717) - -------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Principal repayment on equipment financing (1,853) - -------------------------------------------------------------------------------------------------------- NET CASH FLOWS USED BY FINANCING ACTIVITIES (1,853) - -------------------------------------------------------------------------------------------------------- NET DECREASE IN CASH (4,570) CASH - BEGINNING OF YEAR 8,438 - -------------------------------------------------------------------------------------------------------- CASH - END OF YEAR $ 3,866 ========================================================================================================
See accountants' audit report and accompanying notes 22 NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS Ivans Quick Print Inc., (Company), was incorporated in the State of Florida in June 1985 and operated as quick print shop since it's inception. REVENUE RECOGNITION The company recognizes revenue on the accrual basis of accounting and recognizes income upon completion of the jobs. INCOME TAXES The Company is a regular C corporation for income tax purposes. For the year ended December 31, 1998, the Company had an available net operating loss carry-back that reduced the income tax liability for this year to zero. No effect of this income tax benefit is recorded for the year ended December 31, 1998. INVENTORIES Inventory, consisting of printing supplies, is valued at the lower of cost or market value using the first-in first-out method. PROPERTY AND EQUIPMENT Property and equipment, consisting of computers and manufacturing equipment is stated at cost, less accumulated depreciation. Depreciation commences when the assets are placed in service and is computed using the straight-line method over the estimated useful life of the assets, ten years. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions may affect the reported amounts of assets, liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. FAIR VALUE OF FINANCIAL INSTRUMENTS Cash, receivables, accounts payable, debt, accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair value due to the short-term nature of these amounts or due to variable rates of interest which are consistent with current market rates. NOTE 2 - NOTES PAYABLE BANK The Company is a party to a five-year note payable to a bank for the purchase of manufacturing equipment dated March 1996. The monthly payment is $203 and bears interest at 10.5 %. The loan is secured by a lien on the equipment. As of December 31, 1998 the current portion due on this loan is $2,058. 23 NOTE 3 - RELATED PARTIES The Company operates out of a facility owned by the shareholders. In lieu of a lease agreement the Company pays the costs associated with ownership of the property and charges them to rent. For the year ended December 31, 1998 the rent totaled approximately $ 30,373. NOTE 4 - SUBSEQUENT EVENTS On August 27, 1999, the Company entered into a transaction with PrintOnTheNet.Com a publicly traded company. Under the terms of this transaction the Company sold certain assets, its customer list, and other intangible assets for a total price of $100,000 in cash and stock of the acquiring company. 24 To the Board of Directors of PrintOnTheNet.Com INDEPENDENT AUDITOR'S REPORT I have audited the accompanying balance sheet of Ivan's Quick Print, Inc., a Florida corporation as of December 31, 1997 and the related statements of income and retained earnings, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted this audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and 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. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects the financial position of Ivan's Quick Print, Inc., as of December 31, 1997 and the results of operations and cash flows for the year then ended in conformity with generally accepted accounting principles. Esteban Brown CPA, PA Miami, Florida November 8, 1999 25
IVAN'S QUICK PRINT, INC. BALANCE SHEET - ---------------------------------------------------------------------------------------------------------------------------- As at December31, 1997 - ---------------------------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash $ 8,438 Accounts receivable 17,793 Inventory 2,813 Shareholder loan 1,657 - ---------------------------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 30,701 - ---------------------------------------------------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT Manufacturing equipment 25,827 Less accumulated depreciation (5,662) - ---------------------------------------------------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT, NET 20,165 - ---------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 50,866 ============================================================================================================================ LIABILITIES AND STOCKHOLDERS ' EQUITY CURRENT LIABILITIES Note payable, current portion 2,058 Accounts payable and accrued expenses 20,619 Payroll and sales taxes payable 2,048 - ---------------------------------------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 24,725 2 - ---------------------------------------------------------------------------------------------------------------------------- LONG - TERM LIABILITIES Note payable long - term portion 4,339 - ---------------------------------------------------------------------------------------------------------------------------- TOTAL LONG - TERM LIABILITIES 4,339 - ---------------------------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Paid-in capital 500 Retained earnings 21,302 - ---------------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 21,802 - ---------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 50,866 ============================================================================================================================
See accountants' audit report and accompanying notes 26
IVAN'S QUICK PRINT, INC. STATEMENTS OF INCOME AND RETAINED EARNINGS - --------------------------------------------------------------------------------------------------------- For the year ended December 31, 1997 - --------------------------------------------------------------------------------------------------------- REVENUES $ 288,878 COST OF SALES 157,694 - --------------------------------------------------------------------------------------------------------- GROSS PROFIT 131,184 - --------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Salaries and related costs 38,102 Automobile expense 17,239 Rent 16,012 Insurance 13,326 Maintenance 12,297 Office costs 10,009 Telephone 6,331 Equipment rental 5,594 Utilities 4,719 Depreciation 2,058 Professional fees 975 Interest 768 Advertising 689 Laundry 415 - --------------------------------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 128,534 - --------------------------------------------------------------------------------------------------------- NET INCOME 2,650 RETAINED EARNINGS - BEGINNING 18,652 - --------------------------------------------------------------------------------------------------------- RETAINED EARNINGS - ENDING $ 21,302 =========================================================================================================
See accountants' audit report and accompanying notes 27
IVAN'S QUICK PRINT, INC. STATEMENT OF CASH FLOWS - --------------------------------------------------------------------------------------------------------- For the year ended December 31, 1997 - --------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 2,650 - --------------------------------------------------------------------------------------------------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 2,058 (Increase) decrease in: Accounts receivable 73 Inventory 368 Increase (decrease) in: Accounts payable and accrued expenses (1,801) Payroll and sales taxes payable (248) - --------------------------------------------------------------------------------------------------------- TOTAL ADJUSTMENTS 450 - --------------------------------------------------------------------------------------------------------- NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 3,100 - --------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Principal repayment on equipment financing (1,669) - --------------------------------------------------------------------------------------------------------- NET CASH FLOWS USED BY FINANCING ACTIVITIES (1,669) - --------------------------------------------------------------------------------------------------------- NET INCREASE IN CASH 1,431 CASH - BEGINNING OF YEAR 7,007 - --------------------------------------------------------------------------------------------------------- CASH - END OF YEAR $ 8,438 =========================================================================================================
See accountants' audit report and accompanying notes 28 NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS Ivans Quick Print Inc., (Company), was incorporated in the State of Florida in June 1985 and operated as quick print shop since it's inception. REVENUE RECOGNITION The company recognizes revenue on the accrual basis of accounting and recognizes income upon completion of the jobs. INCOME TAXES The Company is a regular C corporation for income tax purposes. For the year ended December 31, 1997, the Company had an available net operating loss carry-back that reduced the income tax liability for this year to zero. No effect of this income tax benefit is recorded for the year ended December 31, 1997. INVENTORIES Inventory, consisting of printing supplies, is valued at the lower of cost or market value using the first-in first-out method. PROPERTY AND EQUIPMENT Property and equipment, consisting of computers and manufacturing equipment is stated at cost, less accumulated depreciation. Depreciation commences when the assets are placed in service and is computed using the straight-line method over the estimated useful life of the assets, ten years. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions may affect the reported amounts of assets, liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. FAIR VALUE OF FINANCIAL INSTRUMENTS Cash, receivables, accounts payable, debt, accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair value due to the short-term nature of these amounts or due to variable rates of interest which are consistent with current market rates. NOTE 2 - NOTES PAYABLE BANK The Company is a party to a five-year note payable to a bank for the purchase of manufacturing equipment dated March 1996. The monthly payment is $203 and bears interest at 10.5 %. The loan is secured by a lien on the equipment. As of December 31, 1997 the current portion due on this loan is $1,853. 29 NOTE 3 - RELATED PARTIES The Company operates out of a facility owned by the shareholders. In lieu of a lease agreement the Company pays the costs associated with ownership of the property and charges them to rent. For the year ended December 31, 1997 the rent totaled approximately $ 16,012. NOTE 4 - SUBSEQUENT EVENTS On August 27, 1999, the Company entered into a transaction with PrintOnTheNet.Com a publicly traded company. Under the terms of this transaction the Company sold certain assets, its customer list, and other intangible assets for a total price of $100,000 in cash and stock of the acquiring company. 30
IVAN'S QUIK PRINT, INC. CONDENSED BALANCE SHEETS (UNAUDITED) JUNE 30, -------- 1999 1998 ---- ---- ASSETS CURRENT ASSETS Cash $ 6,846 $ 4,115 Accounts receivable, net 34,876 28,257 Due from shareholders 36,955 12,292 Inventory 2,917 2,813 ---------------- ------------- Total Current Assets 81,594 47,477 ---------------- ------------- Property and equipment, net 11,782 18,874 ---------------- ------------- $ 93,376 $ 66,351 ================ ============= LIABILITIES AND SHAREH0LDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 18,766 $ 25,379 Current portion of notes payable 29,206 2,985 Income taxes payable 3,800 - ---------------- ------------- Total Current Liabilities 51,772 28,364 ---------------- ------------- NOTES PAYABLE 2,485 - SHAREHOLDERS' EQUITY Common stock 500 500 Retained earnings 41,104 35,002 ---------------- ------------- Total Shareholders' Equity 41,604 35,502 ---------------- ------------- $ 93,376 $ 66,351 ================ ============= 31 IVAN'S QUIK PRINT, INC. CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (UNAUDITED) For the Six Month Period Ended June 30, 1999 1998 ---- ---- Net sales $ 187,654 $ 183,230 Cost of sales 100,926 110,485 ----------------- --------------- Gross profit 86,728 72,745 Selling, General and Administrative Expenses 59,072 55,635 ----------------- --------------- Income from operations 27,656 17,110 Interest expense 2,322 3,410 ----------------- --------------- Income before taxes 25,334 13,700 Provision for income taxes 3,800 - (1) ----------------- --------------- Net income 21,534 13,700 Retained earnings - beginning of period 19,570 21,302 ----------------- --------------- Retained earnings - end of period $ 41,104 $ 35,002 ================= ===============
(1) Ivan's is a regular C corporation for income tax purposes. For the year ended December 31, 1997, Ivan's had an available net operating loss carry-back that reduced the income tax liability for the period to zero. 32
IVAN'S QUIK PRINT, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Month Period Ended June 30, 1999 1998 ---- ---- Net income $ 21,534 $ 13,700 Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 5,801 1,291 Accounts receivable (9,584) (10,464) Due from shareholders (33,547) (10,635) Accounts payable and accrued expenses (5,887) 2,712 ----------------- ------------------ Total adjustments (43,217) (17,096) Net cash flows from operating activities (21,683) (3,396) Cash flows from financing activities: Borrowings (repayments) under notes payable 24,663 (927) ----------------- ------------------ NET INCREASE (DECREASE) IN CASH 2,980 (4,323) CASH AT BEGINNING OF PERIOD 3,866 8,438 ----------------- ------------------ CASH AT END OF PERIOD $ 6,846 $ 4,115 ================= ==================
33 (b) Unaudited Pro Forma Financial Information (1) Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1999 (2) Unaudited Pro Forma Condensed Consolidated Statement of Operations for the period from January 27, 1999 (inception) through June 30, 1999 PRINTONTHENET.COM, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION OVERVIEW - -------- On August 30, 1999, the Company completed the acquisition of two South Florida printing companies: Bailey's and Ivan's. Bailey's was acquired for approximately $251,000. Of that, $50,000 was paid in cash, debt was assumed totaling $28,000, and the remaining portion of the purchase price was paid by delivery of shares of the Company's common stock having a value equal to $172,900. Ivan's was acquired for $100,000. Of that, $25,000 was paid in cash, and the remaining portion of the purchase price was paid by delivery of shares of the Company's common stock having a value equal to $75,000. The unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1999 and the unaudited Pro Forma Condensed Consolidated Statement of Operations for the period from January 27, 1999 (inception) to June 30, 1999 give effect to the acquisitions by the Company of Bailey's and Ivan's. These acquisitions have been accounted for using the purchase method of accounting. The unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1999 is presented as if the acquisitions of Bailey's and Ivan's had taken place on June 30, 1999. The unaudited Pro Forma Condensed Consolidated Statement of Operations is for the period from January 27, 1999 (inception) through June 30, 1999.. The unaudited Pro Forma Condensed Consolidated Financial Statements have been prepared based upon the historical financial statements of the Company and the acquired subsidiaries for the periods stated above. Such pro forma statements may not be indicative of the results that would have occurred if the acquisitions had been consummated on the indicated dates, or of the operating results that may be achieved by the combined companies in the future. 34
PRINTONTHENET.COM, INC. (A DEVELOPMENT STAGE COMPANY) PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) JUNE 30, 1999 HISTORICAL BAILEY'S IVAN'S COMBINED ADJUSTMENTS PRO FORMA ---------- -------- ------ -------- ----------- --------- ASSETS Current Assets Cash $ 3,863 $ 2,688 $ 6,846 $ 13,397 $ (9,534) (1) $ 3,863 Accounts receivable - 29,462 34,876 64,338 (64,338) (2) - Inventory - 3,086 2,917 6,003 (4,003) (3) 2,000 Due from shareholders - - 36,955 36,955 (36,955) (2) - ------------- --------- --------- --------- ---------- ---------- Total Current Assets 3,863 35,236 81,594 120,693 (114,830) 5,863 Property and equipment, net 6,377 19,142 11,782 37,301 (10,924) (3) 26,377 Deposits 93,342 1,260 - 94,602 (1,260) (2) 93,342 Non compete agreement - - - - 50,000 (4) 50,000 Excess of cost over assets acquired - - - - 278,949 (4) 278,949 ------------- --------- --------- --------- ---------- ---------- Total Assets $ 103,582 $ 55,638 $ 93,376 $252,596 $ 201,935 $ 454,531 ============= ========= ========= ========= ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses $ 13,208 $ 18,232 $ 22,566 $ 54,006 $ (40,798) (2) $ 13,208 Current portion of notes payable and capital lease obligations - 1,273 29,206 30,479 (29,206) (5) 6,273 5,000 (1) ------------- --------- --------- --------- ---------- ---------- Total current liabilities 13,208 19,505 51,772 84,485 (65,004) 19,481 Shareholder loans 164,800 - - 164,800 75,000 (1) 239,800 Notes payable and capital lease obligations - 11,776 - 11,776 10,000 (1) 21,776 ------------- --------- --------- --------- ---------- ---------- Total Liabilities 178,008 31,281 51,772 261,061 19,996 281,057 Stockholders' Equity Preferred stock 1,000 - - 1,000 - 1,000 Common stock 15,771 1,000 500 17,271 (1,500) (6) 263,671 247,900 (7) Deficit accumulated during the development stage (91,197) 23,357 41,104 (26,736) (64,461) (6) (91,197) ------------- --------- --------- --------- ---------- ---------- Total Stockholders' Equity (74,426) 24,357 41,604 (8,465) 181,939 173,474 Total Liabilities & Stockholders' Equity $ 103,582 $ 55,638 $ 93,376 $252,596 $ 201,935 $ 454,531 ============= ========= ========= ========= ========== ==========
35
PRINTONTHENET.COM, INC. (A DEVELOPMENT STAGE COMPANY) PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE PERIOD FROM JANUARY 27, 1999 (INCEPTION) THROUGH JUNE 30, 1999 HISTORICAL BAILEY'S IVAN'S COMBINED ADJUSTMENTS PRO FORMA ---------- -------- ------ -------- ----------- --------- Net sales $ - $217,463 $ 156,379 $ 373,842 $ - $ 373,842 Cost of sales - 120,416 84,105 204,521 - 204,521 ----------- --------- ---------- ---------- ----------- ----------- Gross profit - 97,047 72,274 169,321 - 169,321 Selling, General and Administrative Expenses 78,972 74,617 49,226 202,815 12,709 (8) 215,524 ----------- --------- ---------- ---------- ----------- ----------- Income (loss) from operations (78,972) 22,430 23,048 (33,494) (12,709) (46,203) Interest expense 564 1,042 1,935 3,541 243 (9) 3,784 ----------- --------- ---------- ---------- ----------- ----------- Income (loss) before taxes (79,536) 21,388 21,113 (37,035) (12,952) (49,987) Provision for income taxes - - 3,167 3,167 (3,167)(10) - ----------- --------- ---------- ---------- ----------- ----------- Net income (loss) $ (79,536) $ 21,388 $ 17,946 $ (40,202) $ (9,785) $ (49,987) =========== ========= ========== ========== =========== =========== Basic and Dili\uted Earnings per Common Share (0.00) (0.00) =========== ========= ========== ========== =========== =========== Average common shares outstanding 19,134,102 23,956 19,158,058 =========== ========= ========== ========== =========== ===========
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) The Company did not purchase the cash balances of Bailey's and Ivans. The cash portion of the acquisitions was funded with borrowings of $75,000 from certain majority shareholders. The Company will pay the sellers of Bailey's an additional $15,000 over 3 years. (2) Represents the elimination of assets and liabilities not purchased by the Company. (3) Represents entries made to adjust the carrying value of inventory and property and equipment to fair value on the acquisition date. (4) Represents an entry to record the specified value of the purchase price assigned to non-compete agreements which will be amortized over a 3 year period, and an entry to record the preliminary estimate of excess of purchase price over assets acquired, which will be amortized over a 10 year period. (5) Represents an entry to eliminate $29,206 of Ivan's long term debt not being assumed by the Company, offset by an entry to record $13,049 of Bailey's long term debt that is being assumed by the Company. (6) Represents entries made to eliminate the equity existing in Bailey's and Ivan's prior to the acquisitions. (7) Represents entries made to record the fair value (as of the date of issuance) of 138,320 and 66,054 shares of the Company's Common Stock issued to the sellers (or their representatives) of Bailey's and Ivan's, respectively. (8) Represents an entry to record $18,568 of amortization expense related to the non-compete agreements and the excess of purchase price over the assets acquired (see Note 4), offset by an entry to decrease depreciation expense by $5,859 relating to the adjustment in the carrying value of property and equipment (see Note 3). (9) Represents entries made to adjust interest expense pertaining to the changes in long-term debt as identified in Notes 1 and 5. (10) For tax purposes the Company has sufficient accumulated losses to offset the income generated by Bailey's and Ivan's, and therefore no deferred taxes are being presented relating to the net operating loss carryforward. 36 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PRINTONTHENET.COM, INC. Dated: November 12, 1999 By: /S/ BENJAMIN ROGATINSKY --------------------------- Benjamin Rogatinsky Chief Executive Officer and Director 37 -----END PRIVACY-ENHANCED MESSAGE-----