<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
------------------
October 25, 1999
Crosswalk.com, Inc..
------------------------------------------------------
(Exact name of registrant as specified in its Charter)
Delaware
----------------------------------------------
(State or other jurisdiction of incorporation)
00-22847
------------------------
(Commission File Number)
54-1831588
---------------------------------
(IRS Employer Identification No.)
4100 Lafayette Center Drive, Suite 110
Chantilly, Virginia 20151
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
4206F Technology Court
Chantilly, Virginia 20151
------------------------------------------------------------
(Former Name or Former Address if Changed Since Last Report)
(703) 968-4808
----------------------------------------------------
(Registrant's telephone number, including area code)
Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of
1934
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
The purpose of this Amendment is to amend Item 7 to provide certain
financial information with respect to the Merger (as defined below), which
information was impracticable to provide at the time the Registrant filed the
Current Report on Form 8-K dated August 13, 1999.
On August 13, 1999, Crosswalk.com, Inc., a Delaware corporation (the
"Company"), closed on a Plan and Reorganization and Agreement (the "Agreement")
entered into on July 30, 1999, by and among the Company, Media Management, Inc.,
(Media), a Virginia corporation and a wholly-owned subsidiary of the Company,
Wike Associates, Inc., (Wike), a Virginia Corporation, and its sole stockholder,
Stephen M. Wike (Stockholder), providing for Wike to become a wholly-owned
subsidiary of the Company by merger of Wike with and into Media, and for
Stockholder, by such merger to become a stockholder of the Company.
Pursuant to this transaction, the Company purchased all outstanding
shares of common stock of Wike in exchange for 494,845 restricted and
nonregistered shares of Common Stock, par value $.01 per share, of the Company
and $1,982,397 in cash. The source of the cash consideration was the Company's
working capital. Mr. Wike has also been appointed to serve on the Company's
Board of Directors.
Wike operates a Web site, Goshen.Net, which provides an extensive
searchable directory that can be used to discover such Internet services as Web
sites providing information about youth group resources, denominational
publications, Christian support groups, listings of various Christian radio
shows, and even the personal pages of Christian individuals and families. Under
the name Media Management, Wike also operates a "card pack" business. In that
area, the company is acquiring a proprietary distribution list of 250,000
churches, pastors and leading laymen to which six mailings are sent annually.
The average card pack contains between 90-120 advertisements, for which each
advertiser pays approximately $2,400. The description of the Agreement contained
herein does not purport to be complete and is qualified in its entirety by the
provisions of the Agreement, the contents of which was filed as Exhibit 2.1 of
Form 8-K dated August 13, 1999.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Wike as of November 30, 1998 and May 31,
1999 (unaudited) and for the years ended November 30, 1998 and
1997 and for the six months ended May 31, 1999 and 1998
(unaudited) with reports thereon are included herein.
<PAGE> 3
WIKE ASSOCIATES, INC.
FINANCIAL STATEMENTS
AS OF NOVEMBER 30, 1998 AND MAY 31, 1999 (UNAUDITED)
AND FOR THE YEARS ENDED NOVEMBER 30, 1998 AND 1997
AND FOR THE SIX MONTHS ENDED MAY 31, 1999 AND 1998 (UNAUDITED)
AND REPORT THEREON
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS AND STOCKHOLDER
WIKE ASSOCIATES, INC.
Roanoke, Virginia
We have audited the accompanying balance sheet of WIKE ASSOCIATES, INC., (the
"Company") as of November 30, 1998, and the related statements of operations and
retained earnings and cash flows for the years ended November 30, 1998 and 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of WIKE ASSOCIATES, INC. as of
November 30, 1998, and the results of its operations and its cash flows for the
years ended November 30, 1998 and 1997 in conformity with generally accepted
accounting principles.
/s/ HOFFMAN, MORRISON & FITZGERALD, P.C.
McLean, Virginia
September 20, 1999
<PAGE> 5
WIKE ASSOCIATES, INC.
BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOVEMBER 30, MAY 31,
1998 1999
------------------- ------------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 51,313 $ 79,210
Accounts receivable, net 140,454 183,863
Loans to stockholder - 15,636
Prepaid expenses 105,216 -
------------------- ------------------
Total current assets 296,983 278,709
PROPERTY AND EQUIPMENT:
Leasehold improvements 37,572 38,710
Office furniture and equipment 202,742 230,193
Software 16,025 34,465
------------------- ------------------
256,339 303,368
Less: accumulated depreciation and
amortization (155,289) (180,732)
------------------- ------------------
Net property and equipment 101,050 122,636
OTHER ASSETS
Trademarks, less accumulated amortization of
$169 and $84, for 1999 and 1998, respectively 2,436 2,351
Cash surrender value of officer's life insurance 14,850 14,850
------------------- ------------------
17,286 17,201
------------------- ------------------
$ 415,319 $ 418,546
=================== ==================
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Line of credit - bank $ 60,000 $ 23,000
Accounts payable 14,220 13,804
Payroll taxes payable 27,050 965
Accrued retirement plan contribution 5,486 -
Accrued income taxes payable 3,799 43,402
Deferred income taxes 28,000 -
------------------- ------------------
Total current liabilities 138,555 81,171
DEFERRED INCOME TAXES 4,000 1,000
------------------- ------------------
Total liabilities 142,555 82,171
COMMITMENTS - -
STOCKHOLDER'S EQUITY:
Common stock, no par value, 5,000 shares
authorized; 1,100 issued and outstanding 80 80
Additional paid-in-capital 7,758 7,758
Retained earnings 264,926 328,537
------------------- ------------------
Total stockholder's equity 272,764 336,375
------------------- ------------------
$ 415,319 $ 418,546
=================== ==================
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
WIKE ASSOCIATES, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED NOVEMBER 30,
1998 1997
-------------------- -------------------
<S> <C> <C>
SALES, net $ 2,030,855 $ 1,747,003
COST OF SALES 937,233 891,107
-------------------- -------------------
Gross profit 1,093,622 855,896
Selling, general and administrative expenses 1,004,306 763,935
-------------------- -------------------
INCOME (LOSS) FROM OPERATIONS 89,316 91,961
OTHER INCOME (EXPENSE):
Interest income 839 476
Interest expense (1,018) (1,201)
Other income - -
Loss on disposal of assets (5,072) -
-------------------- -------------------
Total other expense (5,251) (725)
-------------------- -------------------
INCOME (LOSS) BEFORE PROVISION (BENEFIT)
FOR INCOME TAXES 84,065 91,236
Provision (benefit) for income taxes 20,059 21,656
-------------------- -------------------
NET INCOME (LOSS) 64,006 69,580
RETAINED EARNINGS, BEGINNING OF PERIOD 200,920 131,340
-------------------- -------------------
RETAINED EARNINGS, END OF PERIOD $ 264,926 $ 200,920
==================== ===================
<CAPTION>
FOR THE SIX MONTHS ENDED MAY 31,
1999 1998
------------------- ----------------
(unaudited) (unaudited)
<S> <C> <C>
SALES, net $ 1,211,610 $ 965,071
COST OF SALES 552,778 469,402
------------------- ----------------
Gross profit 658,832 495,669
Selling, general and administrative expenses 570,487 504,011
------------------- ----------------
INCOME (LOSS) FROM OPERATIONS 88,345 (8,342)
OTHER INCOME (EXPENSE):
Interest income - -
Interest expense (377) (445)
Other income 85 -
Loss on disposal of assets - -
------------------- ----------------
Total other expense (292) (445)
------------------- ----------------
INCOME (LOSS) BEFORE PROVISION (BENEFIT)
FOR INCOME TAXES 88,053 (8,787)
Provision (benefit) for income taxes 24,442 (2,863)
------------------- ----------------
NET INCOME (LOSS) 63,611 (5,924)
RETAINED EARNINGS, BEGINNING OF PERIOD 264,926 200,920
------------------- ----------------
RETAINED EARNINGS, END OF PERIOD $ 328,537 $ 194,996
=================== ================
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
WIKE ASSOCIATES, INC.
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED NOVEMBER 30,
1998 1997
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 1,975,405 $ 1,722,571
Cash paid to employees and vendors (1,905,694) (1,703,748)
Interest received 839 476
Income taxes paid (14,850) -
Interest paid (1,018) (1,201)
------------------ ------------------
Net cash provided by operating activities 54,682 18,098
------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (63,253) (50,085)
Costs incurred for trademark (2,520) -
Loans to stockholder - -
------------------ ------------------
Net cash used in investing activities (65,773) (50,085)
------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Draws (repayments) on bank line of credit 40,000 20,000
------------------ ------------------
NET CHANGE IN CASH 28,909 (11,987)
CASH, BEGINNING OF YEAR 22,404 34,391
------------------ ------------------
CASH, END OF YEAR $ 51,313 $ 22,404
================== ==================
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income (loss) $ 64,006 $ 69,580
Adjustment to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 45,787 43,530
Loss on disposal of assets 5,072 -
Changes in assets and liabilities affecting operations:
Accounts receivable, net (55,450) (24,432)
Prepaid expenses 11,751 (13,702)
Cash surrender value of officer's life insurance (14,850) -
Accounts payable (7,877) (63,073)
Payroll taxes payable 15,389 9,914
Accrued retirement plan contribution 800 4,686
Accrued income taxes payable (5,946) (13,405)
Deferred income taxes (4,000) 5,000
------------------ ------------------
Net cash provided by operating activities $ 54,682 $ 18,098
================== ==================
<CAPTION>
FOR THE SIX MONTHS ENDED MAY 31,
1999 1998
------------------ ------------------
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 1,168,201 $ 940,229
Cash paid to employees and vendors (1,028,222) (858,655)
Interest received - -
Income taxes paid (12,040) (10,130)
Interest paid (377) (445)
------------------ ------------------
Net cash provided by operating activities 127,562 70,999
------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (47,029) (31,970)
Costs incurred for trademark - -
Loans to stockholder (15,636) (13,274)
------------------ ------------------
Net cash used in investing activities (62,665) (45,244)
------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Draws (repayments) on bank line of credit (37,000) (20,000)
------------------ ------------------
NET CHANGE IN CASH 27,897 5,755
CASH, BEGINNING OF YEAR 51,313 22,404
------------------ ------------------
CASH, END OF YEAR $ 79,210 $ 28,159
================== ==================
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income (loss) $ 63,611 $ (5,924)
Adjustment to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 25,528 21,844
Loss on disposal of assets - -
Changes in assets and liabilities affecting operations:
Accounts receivable, net (43,409) (24,842)
Prepaid expenses 105,216 116,967
Cash surrender value of officer's life insurance - -
Accounts payable (416) (1,396)
Payroll taxes payable (26,085) (11,022)
Accrued retirement plan contribution (5,486) (1,890)
Accrued income taxes payable 39,603 12,262
Deferred income taxes (31,000) (35,000)
------------------ ------------------
Net cash provided by operating activities $ 127,562 $ 70,999
================== ==================
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE> 8
WIKE ASSOCIATES, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
A. ORGANIZATION
Wike Associates, Inc., (the "Company"), was incorporated in the State of
Virginia on March 5, 1991. The Company is a direct-mail distributor of
advertising and coupons that distributes to 250,000 active churches in
the United States. The Company also maintains a web site, www.goshen.net,
which extends their advertising services to the Internet.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The accounts of the Company are maintained on the
accrual basis of accounting whereby revenue is recognized when earned,
and costs and expenses are recognized when incurred.
USE OF ESTIMATES - Management uses estimates and assumptions in preparing
financial statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results could
vary from those estimates.
ACCOUNTS RECEIVABLE - The Company uses the direct write-off method, which
approximates GAAP, to account for amounts, if any, of its accounts
receivable which are considered uncollectible.
DEPRECIATION AND AMORTIZATION - Property and equipment are stated at
cost. Depreciation and amortization is determined using the straight-line
method over estimated useful lives ranging from three to ten years.
REVENUE RECOGNITION - Revenue is principally derived from customer
contracts for advertising mailing packets. Packets are distributed every
other month at which time the customers are billed and the revenue
recognized. The Company also has monthly subscription contracts to their
Internet web site, which offers an extension of the Company's advertising
media. Subscriptions to advertise on the Internet web site are billed and
recognized on a pro-rata monthly-basis.
PENSIONS - In February 1998, the FASB issued SFAS No. 132, "Employers
Disclosure about Pensions and Other Postretirement Benefits." SFAS No.
132 is required to be adopted by the Company for fiscal year 1999. It
revises employers' disclosures about pension and other postretirement
benefit plans. It does not change the measurement or recognition of those
plans.
COMPREHENSIVE INCOME - Effective for financial statements for periods
ending after December 15, 1997, the Financial Accounting Standards Board
issued SFAS No. 130, "Reporting Comprehensive Income," which establishes
standards for reporting comprehensive income and its components.
Comprehensive income is defined as the change in equity during a period
from transactions and other events from nonowner sources. Entities that
do not have items of other comprehensive income in any period presented
are not required to report comprehensive income, accordingly the Company
has not made any such disclosure in the statements presented herein.
<PAGE> 9
WIKE ASSOCIATES, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES - The Company, a C-corporation, accounts for income taxes
under Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Under this method, deferred tax assets and liabilities
are determined based on differences between the financial reporting and
tax basis of assets and liabilities and are measured using the enacted
tax rates and laws that will be in effect when the differences are
expected to reverse. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized. The
principal items relate primarily to differences between the accumulated
depreciation and amortization for tax and book purposes.
C. LINE OF CREDIT
The Company maintains a revolving line of credit in the amount of $75,000
with a financial institution. Interest accrues monthly at the bank's
prime rate plus .5%. Principal outstanding and accrued interest is due on
demand of the bank. The agreement, dated April 15, 1997, terminates 60
months from the original date of the note. The Company had outstanding
draws on the line of credit of $60,000 and $23,000 as of November 30,
1998 and May 31, 1999, respectively.
D. INCOME TAXES
The provision (benefit) for income taxes for the year ended November 30,
1998 and 1997 and for the six months ended May 31, 1999 and 1998 is as
follows:
<TABLE>
<CAPTION>
November 30, May 31,
-------------------- ---------------------
1998 1997 1999 1998
----------- ----------- ------------ ------------
(unaudited)
<S> <C> <C> <C> <C>
Current $ 24,059 $ 16,656 $ 55,442 $ 32,137
Deferred (4,000) 5,000 (31,000) (35,000)
-------- -------- --------- ---------
Total provision (benefit)
for income taxes $ 20,059 $ 21,656 $ 24,442 $ (2,863)
======== ======== ========= =========
</TABLE>
Deferred tax assets and liabilities at November 30, 1998 and May 31, 1999
were as follows:
<TABLE>
<CAPTION>
May 31,
1998 1999
------------------ ------------------
(unaudited)
<S> <C> <C>
Gross deferred tax assets $ - $ -
Gross deferred tax liability
Current deferred tax liability 28,000 -
Long-term deferred tax liability 4,000 1,000
----------------- -----------------
Net deferred tax liabilities $ 32,000 $ 1,000
================= =================
</TABLE>
The components of the deferred tax liability above relates to book and
tax differences in the manner in which depreciation and amortization
expense is calculated, differences in the recognition of operating costs
and a contribution carryover to future periods.
E. RELATED PARTY TRANSACTIONS
The Company leases its corporate office space from the sole stockholder
of the Company. See Note F.
<PAGE> 10
WIKE ASSOCIATES, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
F. COMMITMENTS AND CONTINGENCIES
The Company leases office space in Roanoke, Virginia from the sole
stockholder of the Company. Rent expense under this lease is
approximately $3,300 per month, on a month-to-month basis.
Rent expense for the years ended November 30, 1998 and 1997 was $42,900
and 38,700 and is included in selling, general and administrative
expenses. Rent expense for the six months ended May 31, 1999 and 1998 was
$16,789 and $19,800 and is also included in selling, general and
administrative expenses.
G. CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash. The Company
maintains its cash account with a commercial bank located in Virginia.
Cash balances are insured by the Federal Deposit Insurance Corporation,
up to $100,000 per financial institution. At November 30, 1998 and May
31, 1999, the Company had no uninsured cash balances.
H. EMPLOYEE BENEFIT PLAN
The Company maintains a SIMPLE-IRA plan, (the "Plan"). All employees
become eligible to participate in the Plan upon hiring. Employees are
fully vested in all contributions to the Plan, including both employee
and employer contributions.
The Company makes elective matching employee contributions up to 3% of an
employees' annual salary, and contributions are remitted to the
investment company, each pay period. Employer contributions to the Plan,
for the year ended November 30, 1998 and 1997, was $11,680 and 8,039,
respectively and for the six months ended May 31, 1999 and 1998 the
contributions were $5,604 and $4,731, respectively.
I. SUBSEQUENT EVENT
On July 30, 1999, the Company entered into a Plan of Reorganization and
Agreement (the "Merger") by and among Crosswalk.com, Inc., a Delaware
corporation ("Crosswalk"), Crosswalk Merger Corp., a Virginia
corporation. On August 13, 1999, the Company completed the closing of the
Merger and it merged into a wholly-owned subsidiary of Crosswalk.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Unaudited Pro Forma Condensed Consolidated Financial
Information are included herein.
<PAGE> 11
CROSSWALK.COM, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999 MAY 31, 1999
CROSSWALK.COM, INC. WIKE ASSOCIATES, INC.
--------------------- -----------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 6,850,547 $ 79,210
Short-term investments 4,812,866 -
Accounts receivable, net 1,689,700 183,863
Other current assets 294,201 15,636
--------------------- ------------------
Total current assets 13,647,314 278,709
LONG TERM INVESTMENTS 5,270,927 -
PROPERTY AND EQUIPMENT, net 1,295,690 122,636
OTHER ASSETS: 219,925 17,201
--------------------- ------------------
Total assets $ 20,433,856 $ 418,546
===================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit $ - $ 23,000
Accounts payable 470,480 13,804
Accrued liabilities 559,279 44,367
Deferred revenue 53,754 -
--------------------- ------------------
Total current liabilities 1,083,513 81,171
NON CURRENT LIABILITIES 59,822 1,000
--------------------- ------------------
Total liabilities 1,143,335 82,171
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY 19,290,521 336,375
--------------------- ------------------
Total liabilities and stockholders' equity $ 20,433,856 $ 418,546
===================== ==================
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS AS ADJUSTED
--------------------- ---------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ (79,210) (1) $ 4,735,050
(2,115,497) (2)
Short-term investments - 4,812,866
Accounts receivable, net (57,069) (1) 1,816,494
Other current assets 147,323 (1) 457,160
--------------------- ---------------------
Total current assets (2,104,453) 11,821,570
LONG TERM INVESTMENTS - 5,270,927
PROPERTY AND EQUIPMENT, net (5,863) (1) 1,412,463
OTHER ASSETS: (41) (1) 5,183,558
6,650,272 (1)
(1,703,799) (3)
--------------------- ---------------------
Total assets $ 2,836,116 $ 23,688,518
===================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit $ (23,000) (1) $ -
Accounts payable 17,403 (1) 501,687
Accrued liabilities 82,890 (1) 686,536
Deferred revenue - 53,754
--------------------- ---------------------
Total current liabilities 77,293 1,241,977
NON CURRENT LIABILITIES (1,000) (1) 59,822
--------------------- ---------------------
Total liabilities 76,293 1,301,799
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY 4,799,997 (2) 22,386,719
(336,375) (4)
(1,703,799) (3)
--------------------- ---------------------
Total liabilities and stockholders' equity $ 2,836,116 $ 23,688,518
===================== =====================
</TABLE>
<PAGE> 12
CROSSWALK.COM, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 MAY 31, 1999
CROSSWALK.COM, INC. WIKE ASSOCIATES, INC.
--------------------- -----------------------
<S> <C> <C>
OPERATING REVENUES $ 2,714,225 $ 1,211,610
OPERATING EXPENSES 5,575,569 1,123,265
--------------------- ------------------
INCOME(LOSS) FROM OPERATIONS (2,861,344) 88,345
OTHER INCOME (EXPENSES) 349,163 (292)
--------------------- ------------------
NET INCOME (LOSS) BEFORE INCOME
TAX PROVISION (2,512,181) 88,053
INCOME TAX PROVISION - 24,442
--------------------- ------------------
NET INCOME (LOSS) $ (2,512,181) $ 63,611
===================== ==================
Net loss per common share (basic) $ (0.41)
=====================
Weighted average number of common
shares outstanding 6,198,279
=====================
Net loss per common share (diluted) $ (0.41)
=====================
Weighted average number of common
shares outstanding 6,198,279
=====================
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS AS ADJUSTED
--------------------- ---------------------
<S> <C> <C>
OPERATING REVENUES $ - $ 3,925,835
OPERATING EXPENSES 567,933 (3) 7,266,767
--------------------- ---------------------
INCOME(LOSS) FROM OPERATIONS (567,933) (3,340,932)
OTHER INCOME (EXPENSES) - 348,871
--------------------- ---------------------
NET INCOME (LOSS) BEFORE INCOME
TAX PROVISION (567,933) (2,992,061)
INCOME TAX PROVISION (24,442) (5) -
--------------------- ---------------------
NET INCOME (LOSS) $ (543,491) $ (2,992,061)
===================== =====================
Net loss per common share (basic) $ (0.45) (6)
=====================
Weighted average number of common
shares outstanding 6,693,124
=====================
Net loss per common share (diluted) $ (0.45) (6)
=====================
Weighted average number of common
shares outstanding 6,693,124
=====================
</TABLE>
<PAGE> 13
CROSSWALK.COM, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1998 NOVEMBER 30, 1998
CROSSWALK.COM, INC. WIKE ASSOCIATES, INC.
--------------------- -----------------------
<S> <C> <C>
OPERATING REVENUES $ 1,083,294 $ 2,030,855
OPERATING EXPENSES 4,762,537 1,941,539
--------------------- -----------------------
INCOME(LOSS) FROM OPERATIONS (3,679,243) 89,316
OTHER INCOME (EXPENSES) 220,188 (5,251)
--------------------- -----------------------
NET INCOME (LOSS) BEFORE INCOME
TAX PROVISION (3,459,055) 84,065
INCOME TAX PROVISION - 20,059
--------------------- -----------------------
NET INCOME (LOSS) $ (3,459,055) $ 64,006
===================== =======================
Net loss per common share (basic) $ (0.98)
=====================
Weighted average number of common
shares outstanding 3,535,487
=====================
Net loss per common share (diluted) $ (0.98)
=====================
Weighted average number of common
shares outstanding 3,535,487
=====================
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS AS ADJUSTED
--------------------- ---------------------
<S> <C> <C>
OPERATING REVENUES $ - $ 3,114,149
OPERATING EXPENSES 1,135,866 (3) 7,839,942
--------------------- ---------------------
INCOME(LOSS) FROM OPERATIONS (1,135,866) (4,725,793)
OTHER INCOME (EXPENSES) - 214,937
--------------------- ---------------------
NET INCOME (LOSS) BEFORE INCOME
TAX PROVISION (1,135,866) (4,510,856)
INCOME TAX PROVISION (20,059) (5) -
--------------------- ---------------------
NET INCOME (LOSS) $ (1,115,807) $ (4,510,856)
===================== =====================
Net loss per common share (basic) $ (1.12) (6)
=====================
Weighted average number of common
shares outstanding 4,030,332
=====================
Net loss per common share (diluted) $ (1.12) (6)
=====================
Weighted average number of common
shares outstanding 4,030,332
=====================
</TABLE>
<PAGE> 14
CROSSWALK.COM, INC. AND SUBSIDIARIES
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
Crosswalk.com, Inc. (the "Company") acquired Wike Associates, Inc.
("Wike") for approximately $6.90 million in August 1999, including costs
of acquisition, of which approximately $6.65 million was allocated to
intangible assets. Of the $6.65 million, approximately $1.94 and $4.71
million will be amortized over 10 and 5 years, respectively as goodwill.
The pro forma adjustments reflect twelve and six months of amortization
expense, respectively, for the fiscal year ended 1998 and the second
quarter of fiscal year ended 1999, assuming the transaction had occurred
on the first day of the fiscal year ended 1998. The value of the
intangible assets at that date would have been approximately $6.65
million.
Effective August 13, 1999, the Company acquired Wike in exchange for
acquisition consideration consisting of (1) 494,845 shares of common
stock of the Company issued in exchange for all outstanding shares of
Wike common stock, and (2) $1,982,397 in cash. The acquisition will be
accounted for as a purchase in accordance with Accounting Principles
Board Opinion No. 16. Under the purchase method of accounting, the
purchase price is allocated to the assets acquired and liabilities
assumed based on their estimated fair values at August 13, 1999, the date
of the acquisition. Estimates of the fair values of the assets and
liabilities of Wike have been combined with the recorded values of assets
and liabilities of the Company in the unaudited pro forma condensed
financial statements.
2. PRO FORMA ADJUSTMENTS
(1) To adjust assets acquired and liabilities assumed to their
estimated fair values as of August 13, 1999, the closing date of
the acquisition, based on the following allocation:
<TABLE>
<S> <C>
Fair value of assets acquired:
Account receivable, net $ 126,794
Other current assets 162,959
Property and equipment, net 116,773
Other assets 17,160
Goodwill 6,650,272
Fair value of liabilities assumed: (158,464)
------------------------
Total purchase price $ 6,915,494
========================
</TABLE>
<PAGE> 15
CROSSWALK.COM, INC. AND SUBSIDIARIES
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
- --------------------------------------------------------------------------------
2. PRO FORMA ADJUSTMENTS (CONTINUED)
(2) To record the consideration issued by the Company to consummate
the acquisition. Acquisition consideration consisted of the
following:
<TABLE>
<S> <C>
Common Stock issued to purchase Wike $ 4,799,997
Cash given 1,982,397
Acquisition expenses 133,100
------------------------
$ 6,915,494
========================
</TABLE>
(3) To record amortization of Goodwill over useful lives ranging from
ten to five years.
(4) To eliminate the historical stockholder's equity of Wike.
(5) To eliminate the historical tax provisions due to the overall net
losses resulting from the pro forma combination of the Company and
Wike.
(6) Basic and diluted pro forma earnings per share is computed using
the weighted average number of Company common shares outstanding
during the period plus shares of common stock issued as part of
the acquisition.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
2.1 Plan of Reorganization and Agreement dated as of July 30, 1999 by and among
Crosswalk.com, Inc., Media Management, Inc., Wike Associates, Inc., and its sole
stockholder, Stephen M. Wike (Stockholder), (incorporated by reference to
Current Report on Form 8-K filed on August 25, 1999).
23.1 Consent of Hoffman, Morrison & Fitzgerald, P.C.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Crosswalk.com, Inc.
Date: October 25, 1999 By: /s/ William M. Parker
--------------------------------
William M. Parker
Chief Executive Officer and
President
<PAGE> 1
EXHIBIT 23.1
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
CROSSWALK.COM, INC.
Chantilly, Virginia
We consent to the use of our report dated September 20, 1999, with respect to
the financial statements of Wike Associates, Inc. as of November 30, 1998 and
for the two years ended November 30, 1998 and 1997 included in the Current
Report (Form 8-K/A) of Crosswalk.com, Inc.
/s/ Hoffman, Morrison & Fitzgerald, P.C.
McLean, Virginia
October 25, 1999
