-----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, E4j8g+IdJbV4i0ijDWGIOOm56F0gl5q/HieVX6S7yA8P3Ob5FeWxWjiyDVbMqd3M P2H30CxzRMDMV0ulPsWPjw== 0001019056-99-000418.txt : 19990712 0001019056-99-000418.hdr.sgml : 19990712 ACCESSION NUMBER: 0001019056-99-000418 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990423 ITEM INFORMATION: FILED AS OF DATE: 19990709 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER MARKETPLACE INC CENTRAL INDEX KEY: 0000900475 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045] IRS NUMBER: 330008870 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-22014 FILM NUMBER: 99661710 BUSINESS ADDRESS: STREET 1: 1171 RAILROAD ST CITY: CORONA STATE: CA ZIP: 91720 BUSINESS PHONE: 9097352102 MAIL ADDRESS: STREET 1: 1171 RAILROAD ST CITY: CORONA STATE: CA ZIP: 91720 8-K/A 1 FORM 8-K/A - AMENDMENT NO. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 23, 1999 COMPUTER MARKETPLACE, INC. ------------------------------------------------------ (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 0-14731 33-0558415 ----------------------------------------------------------------- (STATE OR OTHER (COMMISSION (IRS EMPLOYER JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.) FORMATION) 1171 RAILROAD STREET, CORONA, CA 91720 ------------------------------------------------------ (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (909) 735-2102 -------------- ------------------------------------------------------------------- (FORMER NAME OR FORMER ADDRESS, IF CHANGES SINCE LAST REPORT) ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS. (a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. See pages F-1 through F-16 below. (b) PRO FORMA FINANCIAL INFORMATION. See pages P-1 through P-9 below. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly authorized and caused the undersigned to sign this Report on the Registrant's behalf. COMPUTER MARKETPLACE, INC. By: /s/ ROBERT M. WALLACE -------------------------------------- Name: Robert M. Wallace Title: Chairman of the Board Dated: July 9, 1999 3
INDEX TO FINANCIAL STATEMENTS Page ---- COMPUTER MARKETPLACE(R), INC. PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS [UNAUDITED]: Introductory Note................................................................... P-1 Pro Forma Combined Condensed Balance Sheet as of March 31, 1999 [Unaudited]........ P-2 Pro Forma Combined Condensed Statement of Operations for the nine months ended March 31, 1999 [Unaudited]........................................... P-5 Pro Forma Combined Condensed Statement of Operations for the year ended June 30, 1998 [Unaudited]......................................................... P-7 Notes to Pro Forma Combined Condensed Financial Statements [Unaudited].............. P-9 E-TAXI, INC.: Report of Independent Auditors...................................................... F-1 Balance Sheets as of March 31, 1999 [Unaudited] and December 31, 1998 [Audited]....................................................... F-2 Statements of Operations for the three months ended March 31, 1999 [Unaudited] and for the period from April 14, 1998 [inception] to December 31, 1998 [Audited]....................................................... F-3 Statements of Stockholders' Deficit for the three months ended March 31, 1999 [Unaudited] and for the period from April 14, 1998 [inception] to December 31, 1998 [Audited]....................................................... F-4 Statements of Cash Flows for the three months ended March 31, 1999 [Unaudited] and for the period from April 14, 1998 [inception] to December 31, 1998 [Audited]....................................................... F-5 Notes to Financial Statements....................................................... F-6 TECHSTORE, L.L.C.: Company's Explanation for Lack of Audit Report for TechStore, L.L.C................. F-9 Balance Sheets as of March 31, 1999 and December 31, 1998 [Unaudited]............... F-10 Statements of Operations for the three months ended March 31, 1999 and 1998 and the years ended December 31, 1998 and 1997 [Unaudited]........................ F-11 Statements of Members' Deficit for the period ended March 31, 1998 through March 31, 1999 [Unaudited]................................................ F-12 Statements of Cash Flows for the three months ended March 31, 1999 and 1998 and the years ended December 31, 1998 and 1997 [Unaudited]........................ F-13 Notes to Financial Statements....................................................... F-14 SIGNATURES............................................................................. F-17
. . . . . . . . PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS [UNAUDITED] ================================================================================ The following pro forma condensed combined balance sheet as of March 31, 1999, and condensed combined statement of operations for the year ended June 30, 1998 and the nine months ended March 31, 1999 give effect to Computer Marketplace, Inc. [the "Company"] acquiring all of the issued and outstanding capital stock of E-Taxi, Inc. ["E-Taxi"] on April 23, 1999. As consideration for 9,074,000 shares of the E-Taxi's common stock and 400,000 shares of E-Taxi's Series A Preferred Stock, the Company issued an aggregate of 9,074,000 shares of the Company's common stock and 400,000 shares of the Company's Series A Preferred Stock. After the closing, the stockholders of E-Taxi owned 81.8% of the shares of the combined entity. For accounting purposes, E-Taxi is deemed to be the acquiror under the purchase method. The total purchase price is approximately $9,500,000 which results in goodwill of approximately $7,500,000. Goodwill will be amortized over 5 years under the straight-line method. The effective date of the E-Taxi acquisition is April 23, 1999. The pro forma financial statements also gives effect to combining TechStore, L.L.C. ["Tech Store"] which was acquired concurrently by E-Taxi on March 31, 1999 by the issuance of 2,000,000 shares of common stock and 400,000 shares of preferred stock of E-Taxi. The Company has assigned a value of $568,000 based upon an unaffiliated appraisal of the intangible assets acquired. The intangibles will be depreciated over 5 years. Immediately prior to the Company's acquiring E-Taxi, E-Taxi completed a private placement of approximately $1,400,000 to fund its working capital needs. In connection with these acquisitions, the Company has revised its business strategy, and has decided to adopt a plan to sell its subsidiary, Medical Marketplace. Therefore, these financials give the pro forma effect of this subsidiary as a discontinued operation [See Combining Schedule A]. The pro forma information is based on the historical financial statements of the Company, E-Taxi and TechStore, giving effect to the transactions under the purchase method of accounting and the assumptions and adjustments in the accompanying notes to the pro forma financial statements. The pro forma balance sheet gives effect to the transactions as if they occurred on the balance sheet date. The pro forma statements of operations for the year ended June 30, 1998 and the nine months ended March 31, 1999 give effect to these transactions as if they had occurred at the beginning of the fiscal year presented. The historical statements of operations of the Company will reflect the effects of these transactions from date of acquisition onward. The pro forma combined statements have been prepared by the Company's managements based upon the historical financial statements of the Company, E-Taxi and TechStore. The pro forma statements may not be indicative of the results that actually would have occurred if the combination had been in effect on the date indicated or which may be obtained in the future. The most recent fiscal year end of TechStore and E-Taxi differs from the Company's most recent fiscal year end by more than 93 days. The acquired entities income statements have been updated to adjust for this difference. The adjustments are listed in notes 4, 5, 7 and 8 to the pro forma financial information. P-1
COMPUTER MARKETPLACE, INC. ========================================================================================================================= PRO FORMA COMBINED CONDENSED BALANCE SHEETS [UNAUDITED] ========================================================================================================================= COMPUTER MARKETPLACE, INC. PRO FORMA MARCH 31, 1999 E-TAXI TECHSTORE COMBINED FROM COMBINING MARCH 31, MARCH 31, PRO FORMA MARCH 31, SCHEDULE A 1 9 9 9 1 9 9 9 ADJUSTMENTS 1 9 9 9 -------------- ------------- ------------- ---------------- --------------- ASSETS: CURRENT ASSETS: Cash and Cash Equivalents $ 6,205 $ -- $ 82,535 (3) $ 1,400,000 $ 1,488,740 Accounts Receivable 9,865 -- 27,705 -- 37,570 Other Current Assets 500 -- 11,021 -- 11,521 -------------- ------------- ------------- ---------------- --------------- TOTAL CURRENT ASSETS 16,570 -- 121,261 1,400,000 1,537,831 -------------- ------------- ------------- ---------------- --------------- PROPERTY AND EQUIPMENT - NET 12,105 -- 44,290 -- 56,395 -------------- ------------- ------------- ---------------- --------------- OTHER ASSETS: Goodwill -- -- -- (6) 10,300,000 10,300,000 Deposits -- -- 105,703 -- 105,703 Acquired Intangibles -- -- -- (9) 568,000 568,000 -------------- ------------- ------------- ---------------- --------------- TOTAL OTHER ASSETS -- -- 105,703 10,868,000 10,973,703 -------------- ------------- ------------- ---------------- --------------- TOTAL ASSETS $ 28,675 $ -- $ 271,254 $ 12,268,000 $ 12,567,929 ============== ============= ============= ================ ===============
See Notes to Pro Forma Financial Statements. P-2
COMPUTER MARKETPLACE, INC. ====================================================================================================================== PRO FORMA COMBINED CONDENSED BALANCE SHEETS [UNAUDITED] ====================================================================================================================== COMPUTER MARKETPLACE, INC. PRO FORMA MARCH 31, 1999 E-TAXI TECHSTORE COMBINED FROM COMBINING MARCH 31, MARCH 31, PRO FORMA MARCH 31, SCHEDULE A 1 9 9 9 1 9 9 9 ADJUSTMENTS 1 9 9 9 -------------- ------------- ------------- ------------- --------------- LIABILITIES AND STOCKHOLDERS' (DEFICIT): CURRENT LIABILITIES: Notes/Loans Payable $ 141,169 $ -- $ 45,000 $ -- $ 186,169 Accounts Payable 321,864 -- 331,571 -- 653,435 Accrued Expenses -- 7,321 45,034 -- 52,355 Accrued Payroll and Payroll Related Liabilities 261,457 -- -- -- 261,457 Customer Deposits 102,388 -- -- -- 102,388 Other Current Liabilities 2,154 -- 3,090 -- 5,244 Due to Stockholder -- 16,049 -- -- 16,049 -------------- ------------- ------------- ------------- --------------- TOTAL CURRENT LIABILITIES 829,032 23,370 424,695 -- 1,277,097 -------------- ------------- ------------- ------------- --------------- LONG-TERM DEBT -- -- 7,210 -- 7,210 -------------- ------------- ------------- ------------- --------------- COMMITMENTS AND CONTINGENCIES -- -- -- -- -- -------------- ------------- ------------- ------------- --------------- STOCKHOLDERS' (DEFICIT): Preferred Stock -- -- -- (6) 40 40 Additional Paid-in Capital; Preferred -- -- -- (6) (40) (40) Common Stock 135 6,460 -- (6) 907 1,042 (6) (6,460) Capital in Excess of Par Value 8,785,100 58,200 -- (6) 10,300,000 13,007,805 (6) (907) (3) 1,400,000 (9) 407,349 (11) 1,500,000 (6) (9,448,397) (6) 6,460 Common Stock Subscription Receivable -- (68,860) -- -- (68,860) Accumulated Deficit (9,448,397) (19,170) (167,851) (9) 167,851 (19,170) (6) 9,448,397 Deferred Compensation (137,195) -- -- (11) (1,500,000) (1,637,195) Owner's Capital -- -- 7,200 (9) (7,200) -- -------------- ------------- ------------- ------------- --------------- TOTAL STOCKHOLDERS' (DEFICIT) (800,357) (23,370) (160,651) 12,268,000 11,283,622 -------------- ------------- ------------- ------------- --------------- TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 28,675 $ -- $ 271,254 $ 12,268,000 $ 12,567,929 ============== ============= ============= ============= ===============
See Notes to Pro Forma Financial Statements. P-3
COMPUTER MARKETPLACE, INC. =============================================================================================================== PRO FORMA COMBINED CONDENSED BALANCE SHEETS COMBINING SCHEDULE A [UNAUDITED] =============================================================================================================== PRO FORMA CMP, INC. ADJUSTMENT (1) CMP, INC. CONSOLIDATED MMP, INC. MARCH 31, 1999 MARCH 31, 1999 DISPOSAL AFTER DISPOSAL ---------------- --------------- --------------- ASSETS: CURRENT ASSETS: Cash and Cash Equivalents $ 76,850 $ 70,645 $ 6,205 Accounts Receivable - Net 284,779 274,914 9,865 Other Current Assets 500 -- 500 ---------------- --------------- --------------- TOTAL CURRENT ASSETS 362,129 345,559 16,570 ---------------- --------------- --------------- PROPERTY AND EQUIPMENT - NET 737,524 725,419 12,105 ---------------- --------------- --------------- OTHER ASSETS: Residual Value of Equipment 765,000 765,000 -- Others 77,442 77,442 -- ---------------- --------------- --------------- TOTAL OTHER ASSETS 842,442 842,442 -- ---------------- --------------- --------------- TOTAL ASSETS $ 1,942,095 $ 1,913,420 $ 28,675 ================ =============== =============== LIABILITIES AND STOCKHOLDERS' (DEFICIT): CURRENT LIABILITIES: Notes Payable $ 793,514 $ 652,345 $ 141,169 Accounts Payable 519,871 198,007 321,864 Accrued Payroll and Payroll Related Liabilities 324,924 63,467 261,457 Customer Deposits 205,259 102,871 102,388 Other Current Liabilities 110,616 108,462 2,154 ---------------- --------------- --------------- TOTAL CURRENT LIABILITIES 1,954,184 1,125,152 829,032 LONG-TERM DEBT 349,558 349,558 -- ---------------- --------------- --------------- TOTAL LIABILITIES 2,303,742 1,474,710 829,032 ---------------- --------------- --------------- COMMITMENTS AND CONTINGENCIES -- -- -- ---------------- --------------- --------------- STOCKHOLDERS' (DEFICIT): Preferred Stock - $.0001 Par Value, 1,000,000 Shares Authorized, No Shares Issued and Outstanding -- -- -- Common Stock - $.0001 Par Value, 50,000,000 Shares Authorized, 1,392,424 Shares Issued and Outstanding 135 -- 135 Deferred Compensation (137,195) -- (137,195) Capital in Excess of Par Value 8,785,100 -- 8,785,100 Accumulated Deficit (9,009,687) 438,710 (9,448,397) ---------------- --------------- --------------- TOTAL STOCKHOLDERS' (DEFICIT) (361,647) 438,710 (800,357) ---------------- --------------- --------------- TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 1,942,095 $ 1,913,420 $ 28,675 ================ =============== ===============
See Notes to Pro Forma Financial Statements. P-4
COMPUTER MARKETPLACE, INC. ========================================================================================================================= PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS [UNAUDITED] ========================================================================================================================= COMPUTER E-TAXI TECHSTORE MARKETPLACE, INC. FOR THE FOR THE PRO FORMA FOR THE NINE PERIOD FROM THREE COMBINED MONTHS ENDED APRIL 14, 1998 MONTHS FOR THE NINE MARCH 31, 1999 [INCEPTION] TO ENDED MONTHS ENDED FROM COMBINING DECEMBER 31, MARCH 31, PRO FORMA MARCH 31, SCHEDULE B 1 9 9 8 1 9 9 9 ADJUSTMENTS 1 9 9 9 -------------- ------------- ------------- ---------------- --------------- REVENUES: Revenue from Operations $ 205,909 $ -- $ 2,197,496 (7) $ 5,040,528 $ 7,443,933 -------------- ------------- ------------- ---------------- --------------- COSTS AND EXPENSES: Cost of Revenues 153,698 -- 2,076,371 (7) 4,755,726 6,985,795 Selling, General and Administrative 818,003 13,683 228,475 (4) 1,971 1,359,061 (7) 296,929 Amortization of Goodwill -- -- -- (6) 1,545,000 1,545,000 Amortization of Intangibles -- -- -- (10) 75,000 75,000 Advisory Fee Amortization -- -- -- (11) 562,500 562,500 -------------- ------------- ------------- ---------------- --------------- Totals 971,701 13,683 2,304,846 7,237,126 10,527,356 -------------- ------------- ------------- ---------------- --------------- OPERATING LOSS (765,792) (13,683) (107,350) (2,196,598) (3,083,423) -------------- ------------- ------------- ---------------- --------------- OTHER INCOME (EXPENSE): Interest Expense (12,672) -- (2,172) (7) (7,773) (22,617) Interest Income - Stockholders -- 3,200 -- -- 3,200 Miscellaneous 27,194 -- -- (7) 1,606 28,800 -------------- ------------- ------------- ---------------- --------------- TOTAL OTHER INCOME (EXPENSE) 14,522 3,200 (2,172) (6,167) 9,383 -------------- ------------- ------------- ---------------- --------------- NET INCOME (LOSS) $ (751,270) $ (10,483) $ (109,522) $ (2,202,765) $ (3,074,040) ============== ============= ============= ================ =============== INCOME (LOSS) PER SHARE $ (0.56) $ (0.38) ============== =============== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 1,352,424 8,157,924 ============== =============== See Notes to Pro Forma Financial Statements.
P-5
COMPUTER MARKETPLACE, INC. ================================================================================================================ PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS COMBINING SCHEDULE B [UNAUDITED] ================================================================================================================ PRO FORMA CMP, INC. ADJUSTMENT (1) CONSOLIDATED MMP, INC. CMP, INC. FOR THE NINE FOR THE NINE FOR THE NINE MONTHS ENDED MONTHS ENDED MONTHS ENDED MARCH 31, 1999 MARCH 31, 1999 MARCH 31, 1999 --------------- --------------- --------------- REVENUES: Product Sales $ 1,877,917 $ 1,687,589 $ 190,328 Rental, Service and Other 315,510 299,929 15,581 --------------- --------------- --------------- TOTAL REVENUES 2,193,427 1,987,518 205,909 --------------- --------------- --------------- COSTS AND EXPENSES: Cost of Revenues - Product Sales 1,381,378 1,229,237 152,141 Cost of Revenues- Rental, Service and Other 112,467 110,910 1,557 Selling, General and Administrative 1,556,749 738,746 818,003 --------------- --------------- --------------- TOTAL COSTS AND EXPENSES 3,050,594 2,078,893 971,701 --------------- --------------- --------------- OPERATING LOSS (857,167) (91,375) (765,792) --------------- --------------- --------------- OTHER INCOME (EXPENSE): Interest Expense (94,436) (81,764) (12,672) Interest Income 24 24 -- Miscellaneous 61,474 34,280 27,194 --------------- --------------- --------------- TOTAL OTHER (EXPENSE) INCOME (32,938) (47,460) 14,522 --------------- --------------- --------------- NET LOSS $ (890,105) $ (138,835) $ (751,270) =============== =============== =============== See Notes to Pro Forma Financial Statements.
P-6
COMPUTER MARKETPLACE, INC. ========================================================================================================================= PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS [UNAUDITED] ========================================================================================================================= COMPUTER E-TAXI MARKETPLACE, INC. FOR THE TECHSTORE PRO FORMA FOR THE PERIOD FROM FOR THE COMBINED YEAR ENDED APRIL 14, 1998 YEAR FOR THE JUNE 30, 1998 [INCEPTION] TO ENDED YEAR ENDED FROM COMBINING DECEMBER 31, DECEMBER 31, PRO FORMA JUNE 30, SCHEDULE C 1 9 9 8 1 9 9 8 ADJUSTMENTS 1 9 9 8 -------------- ------------- ------------- ---------------- --------------- REVENUES: Revenues from Operations $ 3,555,832 $ -- $ 6,348,883 (8) $ (5,040,528) $ 4,864,187 -------------- ------------- ------------- ---------------- --------------- COSTS AND EXPENSES: Cost of Revenues 3,000,797 -- 5,985,748 (8) (4,755,726) 4,230,819 Selling, General and Administrative 1,964,427 13,683 401,722 (5) (5,866) 2,077,037 (8) (296,929) Inventory writedown 104,688 -- -- -- 104,688 Amortization of Goodwill -- -- -- (6) 2,060,000 2,060,000 Amortization of Intangibles -- -- -- (10) 100,000 100,000 Advisory Fee Amortization -- -- -- (11) 750,000 750,000 -------------- ------------- ------------- ---------------- --------------- TOTAL COSTS AND EXPENSES 5,069,912 13,683 6,387,470 (2,148,521) 9,322,544 -------------- ------------- ------------- ---------------- --------------- OPERATING LOSS (1,514,080) (13,683) (38,587) (2,892,007) (4,458,357) -------------- ------------- ------------- ---------------- --------------- OTHER INCOME (EXPENSE): Interest Expense (34,438) -- (7,715) (8) 7,773 (34,380) Interest Income 5,964 3,200 -- -- 9,164 Other (58,442) -- 1,606 (8) (1,606) (58,442) -------------- ------------- ------------- ---------------- --------------- TOTAL OTHER INCOME (EXPENSE) (86,916) 3,200 (6,109) 6,167 (83,658) -------------- ------------- ------------- ---------------- --------------- NET LOSS $ (1,600,996) $ (10,483) $ (44,696) $ (2,885,840) $ (4,542,015) ============== ============= ============= ================ =============== LOSS PER SHARE $ (1.18) $ (.44) ============== =============== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 1,352,424 10,426,424 ============== =============== See Notes to Pro Forma Financial Statements.
P-7
COMPUTER MARKETPLACE, INC. ================================================================================================================= PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS COMBINING SCHEDULE C [UNAUDITED] ================================================================================================================= PRO FORMA CMP, INC. ADJUSTMENT (1) CONSOLIDATED MMP, INC. CMP, INC. FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED JUNE 30, 1998 JUNE 30, 1998 JUNE 30, 1998 --------------- --------------- --------------- REVENUES: Product Sales $ 5,725,882 $ 2,220,050 $ 3,505,832 Rental, Service and Other 2,244,077 2,194,077 50,000 --------------- --------------- --------------- TOTAL REVENUES 7,969,959 4,414,127 3,555,832 --------------- --------------- --------------- COSTS AND EXPENSES: Cost of Revenues - Product Sales 5,394,503 2,393,706 3,000,797 Cost of Revenues- Rental, Service and Other 1,488,753 1,488,753 -- SG&A 3,238,976 1,274,549 1,964,427 Writedown 104,688 -- 104,688 --------------- --------------- --------------- TOTAL COSTS AND EXPENSES 10,226,920 5,157,008 5,069,912 --------------- --------------- --------------- OPERATING LOSS (2,256,961) (742,881) (1,514,080) --------------- --------------- --------------- OTHER INCOME (EXPENSE): Interest Expense (132,638) (98,200) (34,438) Interest Income 24,246 18,282 5,964 Loss (Gain) sale of assets (81,028) -- (81,028) Miscellaneous 22,586 -- 22,586 --------------- --------------- --------------- TOTAL OTHER (EXPENSE) (166,834) (79,918) (86,916) --------------- --------------- --------------- NET LOSS $ (2,423,795) $ (822,799) $ (1,600,996) =============== =============== =============== See Notes to Pro Forma Financial Statements.
P-8 COMPUTER MARKETPLACE, INC. NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) ================================================================================ (1) The Pro forma Combined Condensed Balance Sheet as of March 31, 1999 gives effect to the Company's plan for the disposal of Medical Marketplace, Inc., which is reflected in Combining Schedule A, and the elimination of the intercompany balance of approximately $777,000, which the Company does not expect to be repaid. The $777,000 has already been adjusted on the MMP, Inc. financials through the accumulated deficit of MMP, Inc. (2) The Company's estimated loss on plan of disposal of Medical Marketplace, Inc. at March 31, 1999 is calculated as follows: March 31, 1999 --------------- Estimated selling price $ 60,000 Net book value (combining schedule A) $ 438,710 Estimated net loss $ 378,710 (3) To reflect a private offering on April 22, 1999 of E-Taxi which raised approximately $1,400,000. (4) To adjust E-Taxi statement of operations for the period from April 14, 1998 [inception] to December 31, 1998 to the nine month period ended March 31,1999 by adding the three months ended March 31, 1999 and subtracting the period from April 14, 1998 to June 30, 1998. (5) To adjust E-Taxi statement of operations for the period from April 14, 1998 [inception] to December 31, 1998 to the year ended June 30,1998 by subtracting the period from July 1, 1998 to December 31, 1998. (6) To reflect E-taxi exchange of stock, with a fair value of stock issued of approximately $9,500,000 and to record resulting goodwill on the balance sheet calculated as follows: Purchase Price: $ 9,500,000 Net Equity (Deficiency) of CMP, the Company, as acquired company in reverse acquisition by E-Taxi (800,357) ------------- GOODWILL $ 10,300,357 -------- ============= The annual amortization of $ 2,060,000 (nine months is $1,545,000) is reflected on the income statements over a straight line method over 5 years. The Company used a fair value of $1.00 per share for the 9,474,000 shares of common and preferred stock. (7) To adjust TechStore statement of operations for the three months ended March 31, 1999 by adding the six months ended December 31, 1998 to reflect a nine month period ended March 31, 1999. (8) To adjust TechStore statement of operations for the year ended December 31, 1998 to the year ended June 30,1998 by removing the six months of operations of July 1, 1998 to December 31, 1998. There was basically only one month's activity in 1997 which is deemed immaterial. (9) On March 31, 1999, the owners of TechStore contributed their ownership interest in TechStore to E-Taxi in exchange for 2,000,000 common shares and 400,000 preferred shares of E-Taxi. The Company has received an estimated valuation from an unaffiliated entity for the intangible assets of TechStore approximating $568,000. P-9 COMPUTER MARKETPLACE, INC. NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) ================================================================================ (10) To record the annual amortization of intangibles of $568,000 on the straight line method over 5 years of $100,000 (nine months of $75,000). (11) On April 9, 1999, Gateway Advisors, Inc. received warrants for 1,500,000 shares of common stock in exchange for advisory services to be performed over 2 years. The warrants are exercisable at $2.50 per share until April 8, 2000. The Company will record an annual advisory fee of $750,000 based upon the fair value of the stock issued of $1,500,000, which will be recorded as a deferred cost. The nine month fee will be $562,500. P-10 REPORT OF INDEPENDENT AUDITORS To the Board of Directors and Stockholders of E-Taxi, Inc. Corona, California We have audited the accompanying balance sheet of E-Taxi, Inc. [a development stage company] as of December 31, 1998, and the related statements of operations, stockholders' deficit, and cash flows for the period from April 14, 1998 [inception] to December 31, 1998. 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 audit. We conducted our audit in accordance with generally accepted auditing standards. 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 supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of E-Taxi, Inc. [a development stage company] as of December 31, 1998, and the results of its operations and its cash flows for the period then ended, in conformity with generally accepted accounting principles. MOORE STEPHENS, P. C. Certified Public Accountants. Cranford, New Jersey July 7, 1999 F-1
Exhibit A E-TAXI, INC. [A DEVELOPMENT STAGE COMPANY] ==================================================================================================== BALANCE SHEETS ==================================================================================================== MARCH 31, DECEMBER 31, 1 9 9 9 1 9 9 8 [UNAUDITED] --------------- --------------- ASSETS $ -- $ -- =============== =============== LIABILITIES AND STOCKHOLDERS' DEFICIT: CURRENT LIABILITIES: Due to Stockholder $ 16,049 $ 6,261 Accrued Liabilities 7,322 7,322 --------------- --------------- TOTAL CURRENT LIABILITIES 23,371 13,583 --------------- --------------- STOCKHOLDERS' DEFICIT: Preferred Stock - $.001 Par Value, 10,000,000 Shares Authorized, No Shares Issued and Outstanding -- -- Common Stock - $.001 Par Value, 20,000,000 Shares Authorized, 6,460,000 Shares Issued and Outstanding 6,460 6,460 Additional Paid-in Capital 58,200 58,200 Common Stock Subscription Receivable (68,860) (67,760) Deficit Accumulated During Development Stage (19,171) (10,483) --------------- --------------- TOTAL STOCKHOLDERS' DEFICIT (23,371) (13,583) --------------- --------------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ -- $ -- =============== ===============
See Notes to Financial Statements. F-2
Exhibit B E-TAXI, INC. [A DEVELOPMENT STAGE COMPANY] ============================================================================================ STATEMENTS OF OPERATIONS ============================================================================================ FOR THE CUMULATIVE PERIOD FROM FROM APRIL 14, THREE MONTHS APRIL 14, 1998 1998 TO ENDED [INCEPTION] TO MARCH 31, MARCH 31, DECEMBER 31, 1 9 9 9 1 9 9 9 1 9 9 8 [UNAUDITED] [UNAUDITED] ---------------- --------------- --------------- OPERATING EXPENSES: General and Administrative $ (23,471) $ (9,788) $ (13,683) INTEREST INCOME - STOCKHOLDERS 4,300 1,100 3,200 ---------------- --------------- --------------- NET LOSS $ (19,171) $ (8,688) $ (10,483) ================ =============== ===============
See Notes to Financial Statements. F-3
Exhibit C E-TAXI, INC. [A DEVELOPMENT STAGE COMPANY] ========================================================================================================================= STATEMENTS OF STOCKHOLDERS' DEFICIT ========================================================================================================================= DEFICIT COMMON ACCUMULATED COMMON STOCK ADDITIONAL STOCK DURING TOTAL ------------------------ PAID-IN SUBSCRIPTION DEVELOPMENT STOCKHOLDERS' SHARES AMOUNT CAPITAL RECEIVABLE STAGE DEFICIT ------------ --------- ------------ ------------ ------------- ------------ Issuance of Subscribed Common Stock in April 1998 6,360,000 $ 6,360 $ 58,200 $ (64,560) $ -- $ -- Issuance of Common Stock in April 1998 for Consulting Services 100,000 100 -- -- -- 100 Interest Income Accrued -- -- -- (3,200) -- (3,200) Net Loss for the Period Ended December 31, 1998 -- -- -- -- (10,483) (10,483) ------------ --------- ------------ ------------ ------------- ------------ BALANCE - DECEMBER 31, 1998 6,460,000 6,460 58,200 (67,760) (10,483) (13,583) Interest Income Accrued -- -- -- (1,100) -- (1,100) Net Loss for the Three Months Ended March 31, 1999 -- -- -- -- (8,688) (8,688) ------------ --------- ------------ ------------ ------------- ------------ BALANCE - MARCH 31, 1999 [UNAUDITED] 6,460,000 $ 6,460 $ 58,200 $ (68,860) $ (19,171) $ (23,371) ============ ========= ============ ============ ============= ============
See Notes to Financial Statements. F-4
Exhibit D E-TAXI, INC. [A DEVELOPMENT STAGE COMPANY] ========================================================================================================================= STATEMENTS OF CASH FLOWS ========================================================================================================================= FOR THE CUMULATIVE PERIOD FROM FROM APRIL 14, THREE MONTHS APRIL 14, 1998 1998 TO ENDED [INCEPTION] TO MARCH 31, MARCH 31, DECEMBER 31, 1 9 9 9 1 9 9 9 1 9 9 8 [UNAUDITED] [UNAUDITED] ---------------- --------------- --------------- OPERATING ACTIVITIES: Net Loss $ (19,171) $ (8,688) $ (10,483) Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities: Consulting Services Paid for by Issuance of Common Stock 100 -- 100 Due to Stockholder 16,049 9,788 6,261 Accrued Liabilities 7,322 -- 7,322 Interest Income Accrued - Stockholders (4,300) (1,100) (3,200) ---------------- --------------- --------------- NET CASH - OPERATING ACTIVITIES -- -- -- ---------------- --------------- --------------- INCREASE IN CASH AND CASH EQUIVALENTS -- -- -- CASH AND CASH EQUIVALENTS - BEGINNING OF PERIODS -- -- -- ---------------- --------------- --------------- CASH AND CASH EQUIVALENTS - END OF PERIODS $ -- $ -- $ -- ================ =============== =============== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash Paid for Interest $ -- $ -- $ -- Cash Paid for Income Taxes $ -- $ -- $ -- SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES: Issuance of Common Stock for Services $ 100 $ -- $ 100 Issuance of Subscribed Common Stock $ 64,560 $ -- $ 64,560 See Notes to Financial Statements.
F-5 E-TAXI, INC. [A DEVELOPMENT STAGE COMPANY] NOTES TO FINANCIAL STATEMENTS ================================================================================ [1] DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [A] DESCRIPTION OF BUSINESS - E-Taxi, Inc. [the "Company"] was incorporated in the state of Delaware on April 14, 1998. The Company plans to market services directed at the small office/home office businesses. Primary activities to date have included identifying potential services for this market. Thus, the Company is a development stage company. [B] USE OF ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles 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 reported results of operations during the reporting period. Actual results could differ from those estimates. [C] CASH AND CASH EQUIVALENTS - The Company considers all highly liquid investments with an original maturity at time of purchase of 90 days or less to be cash equivalents. The Company has no cash equivalents at year end. [D] CONCENTRATION OF CREDIT RISK - The Company has no financial instruments which are subject to credit risk. [E] COMPREHENSIVE INCOME OR LOSS - The Company has no material components of comprehensive income. [2] INCOME TAXES There is no provision for income taxes for the period from April 14, 1998 [inception] to December 31, 1998 as the Company incurred a net loss, the benefit of which was not recognized due to the uncertainty of its realization. The Company's deferred tax asset at December 31, 1998 principally relates to its net operating loss and approximates $2,050. Due to uncertainty surrounding recoverability, a full valuation allowance has been established against this amount. Accordingly, no deferred tax asset is reflected in these financial statements. The Tax Reform Act of 1986 imposes substantial restrictions on the utilization of net operating loss and tax credits in the event of a change in ownership as defined in the Internal Revenue Code. Accordingly, the Company's ability to utilize net operating loss and credit carryforwards may be limited as a result of such an "ownership change." Management has not determined whether such an ownership change has occurred. [3] RELATED PARTY TRANSACTIONS At December 31, 1998, the Company owes a stockholder $6,261 for general operating expenses paid for on behalf of the Company [See Note 6]. [4] STOCKHOLDER'S EQUITY [A] CONVERTIBLE PREFERRED STOCK - The Company is authorized to issue 10,000,000 shares of Preferred Stock, of which none were issued and outstanding as of December 31, 1998. Each share of Series A Preferred Stock has a liquidation preference of $10.00 per outstanding share of Series A Preferred Stock. F-6 E-TAXI, INC. [A DEVELOPMENT STAGE COMPANY] NOTES TO FINANCIAL STATEMENTS, SHEET #2 ================================================================================ [4] STOCKHOLDER'S EQUITY [A] CONVERTIBLE PREFERRED STOCK [CONTINUED] - The Series A Preferred Stock is redeemable, for cash in exchange for the shares of Series A Preferred Stock to be redeemed equal to the original Series A issue price, three years from the date of issuance of the Series A Preferred Stock. Except as otherwise required by law, holders of Series A Preferred Stock have no voting rights. Each share of preferred stock shall be convertible into a number of shares of common stock as determined by dividing the original Series A issue prices by the then applicable conversion price for such Series A Preferred Stock. The initial Conversion Price per shares of Series A Preferred Stock is $2.50 subject to adjustment for splits and combinations. Conversion will occur automatically upon a firm commitment underwritten public offering pursuant to a registration statement on Form S-1 or Form SB-2 under the Securities Act of 1933, as amended, in which the offering price of a share of common stock is not less than $5.00 [See Note 6C]. As of December 31,1998, no preferred stock has been issued. The holders of Series A Preferred Stock are entitled to receive, upon conversion of any Series A Preferred Stock, a six percent [6%] cumulative dividend upon the original Series A issue price measured from the date of issuance of the Series A Preferred Stock through the conversion date. Such dividend shall be payable in common stock, valued at fair market value as of the conversion date. No dividends have been declared or paid on preferred stock or common stock since inception of the Company. [B] COMMON STOCK - The Company is authorized to issue 20,000,000 shares of common stock, of which 6,460,000 shares were issued and outstanding as of December 31, 1998. In April 1998, the Company issued 100,000 shares of common stock in exchange for consulting services valued at $100. Of the total shares outstanding, 6,360,000 shares were issued for other than cash proceeds [See Note 5]. The value of such shares was determined based upon the value of the shares issued, as determined by cash proceeds to the company of sales of similar instruments, or the value of the goods or services received, whichever was more readily determinable. Holders of common stock have the right to one vote for each share of common stock held. [5] COMMON STOCK SUBSCRIPTION RECEIVABLE In April 1998, the Company issued 6,360,000 shares of common stock to the founder of the Company on a subscription basis. At December 31, 1998, a subscription receivable of $64,560 plus interest of $3,200 has been recorded as a deduction from stockholders' equity. The subscription receivable accrues interest at 7% per annum and is due in full in September 1999 and is secured by shares of common stock of Gateway Advisors, Inc. [6] SUBSEQUENT EVENTS [A] As of April 22, 1999, the Company closed (i) a private offering of its 90,000 shares of Series A convertible preferred stock at $.001 par value and 810,000 common stock at $.001 par value raising an aggregate of approximately $1,400,000 therefrom and (ii) on the acquisition of all of the outstanding limited liability company interests of TechStore, L.L.C., a California limited liability company. As of March 31, 1999, Gateway Advisors, Inc., Bejan Aminifard, Mosen Aminifard and Derek Wall entered into a Contribution Agreement, pursuant to which each of the owners of TechStore contributed their ownership interest in TechStore to E-Taxi in exchange for shares of common stock and preferred stock of Computer Marketplace, Inc., a corporation publicly traded on the Over the Counter ["OTC"] bulletin board. F-7 E-TAXI, INC. [A DEVELOPMENT STAGE COMPANY] NOTES TO FINANCIAL STATEMENTS, SHEET #3 ================================================================================ [6] SUBSEQUENT EVENTS [CONTINUED] [B] As of April 15, 1999, E-Taxi entered into letters of intent with all of the outstanding shareholders of SPSS, Inc., a California corporation ["SSPS"], pursuant to which E-Taxi has agreed to purchase, and the shareholders of SSPS have agreed to sell, 14,706 shares of the capital stock of SPSS, Inc. or approximately 89.9% of the shares of SSPS capital stock outstanding. The letters of intent are non-binding and subject to the satisfaction of certain conditions, including the execution and delivery of a definitive purchase agreement. [C] On April 23, 1999, all of the issued and outstanding capital stock of the Company was acquired by Computer Marketplace, Inc. in a business combination intended to be accounted for as a "reverse acquisition." As consideration for 9,074,000 shares of the Company's common stock and 400,000 shares of the Company's Series A preferred stock, Computer Marketplace issued an aggregate of 9,074,000 shares of common stock, par value $.0001 per share [the "Common Shares"], and 400,000 shares of Series A Preferred Stock, par value $.0001 per share [the "Preferred Shares"]. For accounting purposes, the Company is deemed to be the acquirer, and Computer Marketplace is deemed to be acquired, under the purchase method of accounting. As a result, on April 23, 1999, (i) E-Taxi is a wholly owned subsidiary of Computer Marketplace, Inc., (ii) the stockholders of E-Taxi are the beneficial owners of (a) the Common Shares, or 81.8% of the shares of Computer Marketplace's common stock outstanding, and (b) the Preferred Shares, or 100% of the shares of Computer Marketplace's preferred stock outstanding, and (c) Robert M. Wallace of E-Taxi was appointed as Chairman of the Board of Directors of Computer Marketplace. As of April 23, 1999, Mr. Wallace beneficially owns 6,426,500 shares of Computer Marketplace's common stock, or 51% of the shares outstanding, which includes (i) 24,000 shares of Computer Marketplace Series A preferred stock held by Gateway Advisors, Inc., a company owned and controlled by Mr. Wallace, (ii) 102,800 shares of Computer Marketplace common stock owned by the Gateway Advisors Profit Sharing Plan, and (iii) 1,500,000 shares of common stock issuable upon the exercise of a Common Stock Purchase Warrant owned by Gateway Advisors. Computer Marketplace also granted to each of the former holders of E-Taxi capital stock the right to have the Common Shares included in the next registration statement filed by the Company with the Securities and Exchange Commission [other than on a Form S-4 or Form S-8], subject to certain limitations and restrictions. The number of Computer Marketplace shares constituting the Series A Preferred Stock is 400,000, $.0001 par value per share, all of which were issued to the former holders of Series A Preferred Stock of the Company. Each share of Computer Marketplace Series A Preferred Stock is convertible, at the option of the holder, at any time into four (4) shares of common stock of Computer Marketplace, subject to adjustment. The shares of Computer Marketplace Series A Preferred Stock are also automatically converted into shares of common stock of Computer Marketplace in the event that the closing price for the shares of common stock equals or exceeds $3.75 per share for three (3) consecutive trading days. As of the close of business on April 28, 1999, the shares of common stock had a closing price of greater than $3.75 for more than three (3) consecutive days, and therefore, as of May 3, 1999, the Preferred Shares were automatically converted into 1,600,000 shares of common stock. [7] UNAUDITED INTERIM STATEMENTS The financial statements as of March 31, 1999 and for the three months ended March 31, 1999 are unaudited; however, in the opinion of management all adjustments [consisting solely of normal recurring adjustments] necessary in order to make the interim financial statements not misleading have been made. The results of the interim period are not necessarily indicative of the results to be obtained for a full fiscal year. . . . . . . . . . . . . F-8 COMPANY'S EXPLANATION FOR LACK OF AUDIT REPORT FOR TECHSTORE, L.L.C. PricewaterhouseCoopers, LLP was retained to perform the audit of TechStore L.L.C. on February 12, 1999 for the December 31, 1998 financial statements. PricewaterhouseCoopers, LLP report date was March 5, 1999, except for Note 7 as to which the date is March 31, 1999 for the TechStore L.L.C. financials of March 31, 1999. On June 28, 1999, PricewaterhouseCoopers, LLP informed the Company that they would not consent to the Company's inclusion of their audit opinion in the Form 8KA to be filed by July 9, 1999. PricewaterhouseCoopers, LLP gave no reason other that it was their firm's policy not to consent to including their opinion in reverse merger situations. Because of the late notification, the Company has filed the December 31, 1998 financial statements without PricewaterhouseCoopers' audit report. TECHSTORE, L.L.C. Date: July 9, 1999 By: /s/ DEREK WALL --------------------------------------------- Derek Wall President F-9 TECHSTORE, L.L.C. ================================================================================ BALANCE SHEETS [UNAUDITED] ================================================================================ MARCH 31, DECEMBER 31, 1 9 9 9 1 9 9 8 ------------ ------------ ASSETS: CURRENT ASSETS: Cash $ 82,535 $ 116,139 Accounts Receivable - Net 27,705 63,014 Prepaid Expenses 1,341 4,660 Other Current Assets 9,680 -- ------------ ------------ TOTAL CURRENT ASSETS 121,261 183,813 FURNITURE AND EQUIPMENT - NET 44,290 36,182 DEPOSITS 105,703 107,365 ------------ ------------ TOTAL ASSETS $ 271,254 $ 327,360 ============ ============ LIABILITIES AND MEMBERS' DEFICIT: CURRENT LIABILITIES: Accounts Payable $ 331,571 $ 263,302 Accrued Liabilities 45,034 58,857 Notes Payable to Member 45,000 45,000 Capital Lease Obligation - Current 3,090 4,120 ------------ ------------ TOTAL CURRENT LIABILITIES 424,695 371,279 CAPITAL LEASE OBLIGATION - NON-CURRENT 7,210 7,210 ------------ ------------ TOTAL LIABILITIES 431,905 378,489 ------------ ------------ MEMBERS' DEFICIT: Members' Capital Contributions 7,200 7,200 Accumulated Deficit (167,851) (58,329) ------------ ------------ TOTAL MEMBERS' DEFICIT (160,651) (51,129) ------------ ------------ TOTAL LIABILITIES AND MEMBERS' DEFICIT $ 271,254 $ 327,360 ============ ============ The Accompanying Notes are an Integral Part of These Financial Statements. F-10
TECHSTORE, L.L.C. ======================================================================================================================= STATEMENTS OF OPERATIONS [UNAUDITED] ======================================================================================================================= FOR THE PERIOD FROM NOVEMBER 1, 1997 THREE MONTHS ENDED YEAR ENDED [INCEPTION] TO MARCH 31, DECEMBER 31, DECEMBER 31, 1 9 9 9 1 9 9 8 1 9 9 8 1 9 9 7 --------------- ---------------- --------------- --------------- NET REVENUES $ 2,197,496 $ 489,918 $ 6,348,883 $ 25,074 COST OF REVENUES 2,076,371 466,439 5,985,748 23,706 --------------- ---------------- --------------- --------------- GROSS MARGIN 121,125 23,479 363,135 1,368 --------------- ---------------- --------------- --------------- OPERATING EXPENSES: Sales and Marketing 122,210 4,031 256,407 3,206 Research and Development 42,341 32,338 79,928 8,499 General and Administrative 63,924 4,472 65,387 3,296 --------------- ---------------- --------------- --------------- TOTAL OPERATING EXPENSES 228,475 40,841 401,722 15,001 --------------- ---------------- --------------- --------------- LOSS FROM OPERATIONS (107,350) (17,362) (38,587) (13,633) OTHER INCOME -- -- 1,606 -- INTEREST EXPENSE - NET (2,172) (171) (7,715) -- --------------- ---------------- --------------- --------------- NET LOSS $ (109,522) $ (17,533) $ (44,696) $ (13,633) =============== ================ =============== ===============
The Accompanying Notes are an Integral Part of These Financial Statements. F-11
TECHSTORE, L.L.C. ====================================================================================================== STATEMENT OF CHANGES IN MEMBERS' DEFICIT [UNAUDITED] ====================================================================================================== TOTAL BEJAN DEREK MOSEN MEMBERS' AMINIFARD WALL AMINIFARD DEFICIT ------------- -------------- ------------- -------------- BALANCE - NOVEMBER 1, 1997 $ -- $ -- $ -- $ -- Capital Contribution 7,200 -- -- 7,200 Net Loss (13,633) -- -- (13,633) ------------- -------------- ------------- -------------- BALANCE - DECEMBER 31, 1997 (6,433) -- -- (6,433) Net Loss (31,288) (6,704) (6,704) (44,696) ------------- -------------- ------------- -------------- BALANCE - DECEMBER 31, 1998 (37,721) (6,704) (6,704) (51,129) Net Loss (76,666) (16,428) (16,428) (109,522) ------------- -------------- ------------- -------------- BALANCE - MARCH 31, 1999 $ (114,387) $ (23,132) $ (23,132) $ (160,651) ============= ============== ============= ============== The Accompanying Notes are an Integral Part of These Financial Statements.
F-12
TECHSTORE, L.L.C. ======================================================================================================================= STATEMENTS OF CASH FLOWS [UNAUDITED] ======================================================================================================================= FOR THE PERIOD FROM NOVEMBER 1, 1997 THREE MONTHS ENDED YEAR ENDED [INCEPTION] TO MARCH 31, DECEMBER 31, DECEMBER 31, 1 9 9 9 1 9 9 8 1 9 9 8 1 9 9 7 --------------- ---------------- --------------- --------------- OPERATING ACTIVITIES: Net Loss $ (109,522) $ (17,533) $ (44,696) $ (13,633) Adjustments to Reconcile Net Loss to Net Cash [Used for] Provided by Operating Activities: Depreciation and Amortization 4,473 633 7,270 891 Changes in Assets and Liabilities: Accounts Receivable 35,309 (11,823) (62,074) (940) Prepaid Expenses and Deposits 4,980 (27,921) (112,025) -- Accounts Payable 68,269 24,609 239,063 33,417 Accrued Liabilities (13,822) 3,519 49,419 260 --------------- ---------------- --------------- --------------- NET CASH - OPERATING ACTIVITIES (10,313) (28,516) 76,957 19,995 --------------- ---------------- --------------- --------------- INVESTING ACTIVITIES: Additions to Furniture and Equipment (12,581) (3,894) (25,249) (6,733) Additions to Other Assets (9,680) -- -- -- --------------- ---------------- --------------- --------------- NET CASH - INVESTING ACTIVITIES (22,261) (3,894) (25,249) (6,733) --------------- ---------------- --------------- --------------- FINANCING ACTIVITIES: Proceeds from Notes Payable to Member -- -- 255,000 -- Repayments of Notes Payable to Member -- -- (210,000) -- Repayments of Capital Lease Obligations (1,030) -- (1,030) -- Capital Lease Obligations -- -- -- -- Paid-in Capital -- -- -- 7,200 --------------- ---------------- --------------- --------------- NET CASH - FINANCING ACTIVITIES (1,030) -- 43,970 7,200 --------------- ---------------- --------------- --------------- NET [DECREASE] INCREASE IN CASH (33,604) (32,410) 95,678 20,462 CASH - BEGINNING OF PERIODS 116,139 20,462 20,462 -- --------------- ---------------- --------------- --------------- CASH - END OF PERIODS $ 82,535 $ (11,948) $ 116,140 $ 20,462 =============== ================ =============== =============== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash Paid for Interest $ 2,238 $ 206 $ 7,900 $ -- SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Acquisition of Equipment under Capital Lease $ -- $ -- $ 12,360 $ -- The Accompanying Notes are an Integral Part of These Financial Statements.
F-13 TECHSTORE, L.L.C. NOTES TO FINANCIAL STATEMENTS [UNAUDITED] ================================================================================ [1] THE COMPANY TechStore, L.L.C. [the "Company"], an online retailer of computer hardware and software, was formed in March 1998 by three members, including Mr. Bejan Aminifard, the sole proprietor of TechStore, the Company's predecessor which was formed in November 1997. Mr. Aminifard contributed his business to the Company in March 1998, in exchange for a 70% ownership interest. As a result, Mr. Aminifard is the managing member of the Company. The 1998 statement of operations reflects the results of operations of both the Company and its predecessor. The Company has devoted a substantial effort to developing its website. Accordingly, the Company has incurred losses from operations and negative working capital since inception. The Company is striving to achieve profitable operations by gaining market acceptance of its products. The Company is also actively seeking to raise additional capital. However, there can be no assurance that the Company's efforts to achieve profitable operations or raise additional capital will be successful. The Company is subject to all of the risks inherent in an early stage business in the technology and Internet industries. The risks include but are not limited to limited operating history, limited management resources, reliance on relationships with merchandise vendors, dependence on the Internet and related security risks and the changing nature of the Internet industry. [2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles 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 form those estimates. FURNITURE AND EQUIPMENT - Furniture and equipment, including furniture and equipment under capital leases, are recorded at cost and depreciated using the straight-line method over their useful lives, which is generally three to five years. Maintenance and repairs are charged to expense as incurred, and improvements and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in operations in the period realized. REVENUE RECOGNITION - Upon sale of an item, the Company takes title to the merchandise, charges the customer's credit card and arranges for a third party to complete delivery to the customer. The Company obtains merchandise from a vendor who retains physical possession of the merchandise. The Company is not obligated to take title to the merchandise unless it successfully sells the merchandise. Subsequently, the Company pays the vendor any amount due for the purchase of the related merchandise. The Company records the full sales amount as revenue upon verification of credit card authorization and shipment of the merchandise. The Company is at risk of loss for collecting all of the sales proceeds, delivery of the merchandise and returns from customers. In instances where credit card authorization has been received but the merchandise has not been shipped, the Company defers revenue recognition until the merchandise is shipped. The Company allows customers to return products, in certain circumstances. Accordingly, the Company provides for allowances for estimated future returns at the time of shipment based on historical experience. RESEARCH AND DEVELOPMENT COSTS - The costs of website development are expensed as incurred as research and development costs. F-14 TECHSTORE, L.L.C. NOTES TO FINANCIAL STATEMENTS [UNAUDITED], SHEET #2 ================================================================================ [2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED] INCOME TAXES - No provision for income taxes is made in these financial statements as the Company intends to elect partnership tax status under Section 754 of the Internal Revenue Code. The members are responsible for reporting to taxing authorities their respective share of the Company's income, loss, deductions and credits. [3] CONCENTRATIONS OF CREDIT RISK The Company purchases merchandise from one vendor. Purchases from this vendor during fiscal 1998 amounted to $5,814,245, or 97% of cost of revenue. This vendor also accounted for 83% of the accounts payable balance as of December 31, 1998. The Company performs credit evaluations of its potential customers at the time of order placement. [4] FURNITURE AND EQUIPMENT Furniture and equipment consists of the following as of December 31, 1998: Office Equipment $ 39,522 Office Furniture 4,820 -------------- Total 44,342 Less: Accumulated Depreciation (8,160) FURNITURE AND EQUIPMENT - NET $ 36,182 ============== [5] LEASES The Company leases office equipment and vehicles under capital and operating leases. The Company's lease obligations as of December 31, 1998, under capital leases and operating leases having an initial or remaining term of more than one year, are as follows: Capital Operating Lease Leases ------------- -------------- Year ending December 31, 1999 $ 5,353 $ 14,376 2000 5,353 14,376 2001 4,015 7,792 ------------- -------------- Total Minimum Lease Payments 14,721 $ 36,544 ============== Lease Amount Representing Interest (3,391) ------------- Present Value of Minimum Lease Payments 11,330 Less Current Portion 4,120 ------------- OBLIGATION UNDER CAPITAL LEASES - LONG-TERM $ 7,210 ------------------------------------------- ============= Total rent expense under all operating leases for the year ended December 31, 1998 was $4,597. F-15 TECHSTORE, L.L.C. NOTES TO FINANCIAL STATEMENTS [UNAUDITED], SHEET #3 ================================================================================ [6] RELATED PARTY TRANSACTIONS On May 1, 1998, the Company issued a one year promissory note to a member in exchange for $100,000 in cash. The note bears interest at a rate of 8.28% per annum. Subsequent to May 1, 1998, the Company made additional borrowings from the same member totaling $155,000. The Company repaid $2 10,000 of the outstanding borrowings as of December 31, 1999. The Company paid a total of $3,921 in interest under the above borrowings. During fiscal 1999, the Company paid $20,482 and $64,086 to two members, respectively, in consideration for management services provided to the Company. On April 1, 1998, the Company entered into a month to month rental agreement with a member for office space. Rental expense amounted to $7,221 in the fiscal year ended December 31, 1998. [7] SUBSEQUENT EVENTS In March 1999, the Company sold an ownership interest to a new member in exchange for $330,000 in cash. On March 31, 1999, the members of the Company entered into a contribution and exchange agreement with E-Taxi, Inc. ["E-Taxi"] pursuant to which the members contributed their ownership interests in the Company to E-Taxi in exchange for shares of common and preferred stock of E-Taxi. [8] UNAUDITED INTERIM STATEMENTS The financial statements as of March 31, 1999 and for the three months ended March 31, 1999 and 1998 are unaudited; however, in the opinion of management all adjustments [consisting solely of normal recurring adjustments] necessary to make the interim financial statements not misleading have been made. The results of the interim period are not necessarily indicative of the results to be obtained for a full fiscal year. . . . . . . . . . . . . F-16 SIGNATURES ================================================================================ Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly authorized and caused the undersigned to sign this report on the registrant's behalf. COMPUTER MARKETPLACE, INC. Date: July 9, 1999 By: /s/ ROBERT M. WALLACE ------------------------------------ Robert M. Wallace Chairman F-17 -----END PRIVACY-ENHANCED MESSAGE-----