<PAGE> 1
EXHIBIT 99.2
FINANCIAL PASSPORT, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED CONDENSED BALANCE SHEET
JUNE 30,
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
------------------ ------------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 86,281 $ 4,487,623
Accounts receivable, net of allowance 44,610 18,220
Prepaid expenses and other current assets 253,708 145,665
------------------ ------------------
Total current assets 384,599 4,651,508
------------------ ------------------
Fixed assets 9,559,547 7,091,485
Less: accumulated depreciation and amortization (963,600) (66,128)
------------------ ------------------
Net fixed assets 8,595,947 7,025,357
------------------ ------------------
Other assets 142,514 84,904
------------------ ------------------
Total assets $ 9,123,060 $ 11,761,769
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses $ 1,405,826 $ 1,343,053
Other liabilities:
Deferred liabilities 97,820 111,213
Convertible notes payable 2,280,150 -
Due to related party 1,699,090 -
Accrued interest 85,050 -
------------------ ------------------
Total other liabilities 4,162,110 111,213
------------------ ------------------
Total liabilities 5,567,936 1,454,266
------------------ ------------------
Shareholders' Equity:
Members capital, 415,108 and 30,164 Class A and Class B - 19,362,829
Units outstanding, respectively
Common stock, $.001 par value: 20,000,000 shares authorized,
4,887,350 shares issued and outstanding 4,887 -
Additional paid in capital 27,121,702 1,475,010
Accumulated deficit (23,571,465) (10,530,336)
------------------ ------------------
Total shareholders' equity 3,555,124 10,307,503
------------------ ------------------
Total liabilities & shareholders' equity $ 9,123,060 $ 11,761,769
================== ==================
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 2
FINANCIAL PASSPORT, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM JUNE 6, 1996
(INCEPTION) TO
2000 1999 JUNE 30, 2000
------------------ ------------------ ------------------
<S> <C> <C> <C>
Revenues:
Platform revenue $ 229,167 $ - $ 229,167
Other revenue 67,902 32,004 354,241
------------------ ------------------ ------------------
Total revenue 297,069 32,004 583,408
------------------ ------------------ ------------------
Selling and operating expenses:
Selling expenses 186,682 8,245 1,028,887
Salaries and benefits 1,093,363 1,036,584 6,858,461
Travel and entertainment 80,659 68,442 369,505
Facilities, utilities & communications 606,222 344,599 1,400,004
Taxes, other than income 14,612 7,556 14,612
Supplies & freight 59,783 57,020 59,783
Outside services 960,745 198,539 4,160,242
Software maintenance licensing 214,843 111,823 571,969
Depreciation & amortization 864,373 28,612 172,116
Stock based compensation 1,754,870 1,475,010 5,831,332
Write-off of proprietary software - - 3,438,281
Other operating expenses 400 - 321,171
------------------ ------------------ ------------------
Total operating expenses 5,836,552 3,336,430 24,226,363
------------------ ------------------ ------------------
------------------ ------------------ ------------------
Loss from operations (5,539,483) (3,304,426) (23,642,955)
------------------ ------------------ ------------------
Non-operating (income)/expenses:
Interest income (18,870) (34,229) (163,542)
Interest expense 86,015 610 86,015
Other (income)/expense 6,039 (40,782) 6,039
------------------ ------------------ ------------------
Total non-operating (income)/expenses 73,184 (74,401) (71,488)
------------------ ------------------ ------------------
Net loss ($5,612,667) ($3,230,025) ($23,571,467)
================== ================== ==================
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 3
FINANCIAL PASSPORT, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM JUNE 6, 1996
(INCEPTION) TO
2000 1999 JUNE 30, 2000
---------------- ---------------- ----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (5,612,667) $ (3,230,025) $ (23,571,467)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 864,373 28,612 975,863
Loss on disposal of fixed assets 3,107 - 3,107
Stock based compensation 1,754,870 1,475,010 5,831,330
Loss on write-off of proprietary software - - 3,438,281
Consulting fees paid through stock issuance 22,497 - 22,497
Write-off of intellectual property - - 183,673
Changes in assets and liabilities:
Accounts receivable (17,631) 13,079 (44,860)
Prepaid expenses and other current assets (123,974) (55,928) (253,709)
Accrued Interest 85,050 - 85,050
Other assets (64,406) (630) (148,419)
Accounts payable and accrued expenses 97,102 289,424 1,231,228
Deferred liabilities 14,115 24,535 97,820
---------------- ---------------- ----------------
Net cash used in operating activities (2,977,564) (1,455,923) (12,149,606)
---------------- ---------------- ----------------
- -
Cash flows from investing activities:
Software development (2,374,717) (2,514,716) (12,345,516)
Purchase of property and equipment (211,671) (52,877) (659,932)
Acquisition of subsidiary, net - - (52,423)
---------------- ---------------- ----------------
Net cash used in investing activities (2,586,388) (2,567,593) (13,057,871)
---------------- ---------------- ----------------
Cash flows from financing activities:
Proceeds from issuance of convertible notes 2,280,150 - 2,280,150
Financing received from related party 1,699,090 - 1,699,090
Proceeds from issuance of class A units 26,250 7,925,663 21,388,935
Redemption of units - - (74,417)
---------------- ---------------- ----------------
Net cash provided by financing activities 4,005,490 7,925,663 25,293,758
---------------- ---------------- ----------------
Net increase/(decrease) in cash and cash equivalents (1,558,462) 3,902,147 86,281
Cash and cash equivalents at beginning of period 1,644,743 585,476 -
---------------- ---------------- ----------------
Cash and cash equivalents at end of period $ 86,281 $ 4,487,623 $ 86,281
================ ================ ================
Supplemental information:
Interest paid $ 965 $ 610 $ 2,266
Income taxes paid $ 6,789 $ 3,200 $ 11,214
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 4
Financial Passport, Inc.
(A Development Stage Company)
Notes to Consolidated Condensed Financial Statements
JUNE 30, 2000 AND JUNE 30, 1999
(UNAUDITED)
1. ORGANIZATION
Financial Passport, Inc. (formerly Pace Financial Network LLC) (the "Company")
was formed in the State of Delaware on June 6, 1996. On March 8, 2000 the
Company converted from a limited liability company to a "C" corporation. In
connection therewith, each vested Class A and B unit was converted to 10 shares
of common stock of Financial Passport, Inc. The conversion was treated in a
manner similar to a pooling of interests.
The Company, based in Vienna, Virginia, is developing a national distribution
channel using the latest advances in electronic commerce technology to provide a
broad array of name brand, high-quality, low cost financial products and
services to the members, supporters, and affiliates of a variety of affinity
group distribution partners. The primary distribution channel will be the
Company's web site, which is in the final stages of development.
The unaudited consolidated condensed financial statements, including the related
notes, should be read in conjunction with the historical financial statements
and related notes of the Company for the year ended December 31, 1999.
2. NOTES PAYABLE
The Company issued convertible promissory notes between March 2000 and May 2000.
These notes are payable no later than March 31, 2002. Simple interest accrues at
fifteen percent (15%) per annum and is payable no later the maturity date of the
notes. These notes are convertible into common stock of the Company at the
option of the holder. At any time before the maturity date or before any date on
which the Company gives notice that it will repay the note, holders of the notes
can convert the principal and accrued interest into common stock at a price per
share equal to $10.50, subject to adjustment in certain circumstances. The
amount of notes outstanding as of June 30, 2000 was $2,280,150.
<PAGE> 5
Financial Passport, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements (continued)
3. STOCK BASED COMPENSATION
The Company had granted Class A membership units to employees and consultants of
the Company under a discretionary unit compensation plan. Upon conversion to a
"C" corporation, those membership units that were unvested were converted into
stock options that retained the same vesting period as the grants they replaced.
Such options were treated as non-qualified options. Each unvested membership
unit was converted into options to purchase 12.5 shares of common stock. As of
June 30, 2000, employees and consultants held 57,188 options that had vested and
376,563 options that were unvested at a strike price of $5.25 per share. The
options were recognized as compensation expense at the intrinsic value (fair
value for consultants) of the award, which amounted to approximately $5.25 per
share. For the six months ended June 30, 2000 and June 30, 1999, the Company
recognized compensation expense of $1,754,870 and $1,475,010, respectively,
related to these options.
4. INCOME TAXES
Prior to the conversion to a "C" corporation as discussed in Note 1, any taxable
income or loss was passed through to the individual LLC members. Subsequent to
the conversion to a "C" corporation, the Company has deferred tax assets of
approximately $950,000 at June 30, 2000, relating principally to net operating
loss carryforwards. Management of the Company does not expect to achieve
sufficient levels of profitability to utilize such assets and as a result has
also recorded an offsetting valuation allowance against the deferred tax assets.
5. AMOUNT DUE TO RELATED PARTY
On May 24, 2000, the Company entered into a Financing Agreement (the
"Agreement") with OnMoney Financial Services Corporation ("OnMoney"), a wholly
owned subsidiary of Ameritrade Holding Corporation ("Ameritrade"). Pursuant to
this Agreement, OnMoney agreed to fund the Company's operations pending
Ameritrade's acquisition (the "Acquisition") of all of the outstanding shares of
the Company (as further described in Note 7). According to the Agreement, in the
event the Acquisition did not occur, the Company would repay any and all funds
advanced by OnMoney, plus interest at an annual rate of 12% earned thereon. As
of June 30, 2000, the amount due to OnMoney under this Agreement totaled
$1,699,090.
<PAGE> 6
Financial Passport, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements (continued)
6. LITIGATION
The Company filed a lawsuit in January 2000 against a third party seeking
declaratory relief regarding the ownership of certain intellectual property. The
third party subsequently filed for declaratory relief and contract damages. The
Company and the third party had worked together concerning the development of
certain software for use in the Company's website.
On June 9, 2000, the Company settled the lawsuit. As part of the settlement a
new licensing agreement was executed that entirely replaces the previous
agreement that was under dispute. This agreement defines the rights of each
party with regard to the intellectual property involved in the dispute. In
accordance with the settlement agreement, the Company paid $57,500 to the third
party for prior services that were under dispute.
7. SUBSEQUENT EVENT
On July 21, 2000, the Company and Ameritrade consummated a merger (the "Merger")
whereby OM Acquisition Sub I, Inc. (the "Merger Sub"), a wholly-owned subsidiary
of Ameritrade, was merged with and into the Company pursuant to a Merger
Agreement (the "Merger Agreement"), dated as of June 30, 2000, among the
Company, Ameritrade, the Merger Sub and OnMoney. As a result of the Merger, the
Company has become a wholly-owned subsidiary of Ameritrade.
Pursuant to the terms of the Merger Agreement, each issued and outstanding share
of the Company's common stock was converted into the right to receive 0.2894382
shares of Ameritrade's Class A common stock (except that persons holding 2,000
or fewer shares of the Company's common stock had their shares converted into
the right to receive approximately $3.57 for each share of the Company's common
stock).
