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 (Date of Earliest Event Reported): December 17, 1998
FRONTLINE COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-24223 13-3950283
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
One Blue Hill Plaza, Pearl River, NY 10965
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 623-8553
Not Applicable
Former name or former address, if changed since last report
<PAGE>
Item 7. Financial Statements and Exhibits
The following financial statements and pro forma financial information
omitted from the Company's report on Form 8-K for the event dated December 17,
1998 filed with the Commission on December 23, 1998, in reliance upon
instructions 7(a)(4) and 7(b)(2) of Form 8-K, are filed herewith.
(a). Financial Statements of Business Acquired.
Audited Financial Statements of Webspan, Inc. as of December 31, 1997 and
December 31, 1996.
1. Balance Sheets
2. Statements of Operations
3. Statements of Stockholders' Deficit
4. Statements of Cash Flows
5. Notes to Financial Statements
Unaudited Financial Statements of Webspan Communications, Inc. for the nine
months ended September 30, 1998.
1. Balance Sheet as of September 30, 1998.
2. Statement of Operations for the nine-month period ended September
30, 1998.
3. Statement of Stockholders' Deficit for the nine-month period
ended September 30, 1998.
4. Statement of Cash Flows for the nine-month period ended September
30, 1998.
5. Notes to Financial Statements.
Unaudited Financial Statements of Webspan, Inc. for the nine months ended
September 30, 1997.
1. Statement of Operations for the nine-month period ended September
30, 1997.
2. Statement of Stockholders' Deficit for the nine-month period
Ended September 30, 1997.
3. Statement of Cash Flows for the nine-month period ended September
30, 1997.
4. Notes to Financial Statements.
<PAGE>
(b). Pro Forma Financial Information.
Unaudited Pro Forma Combined Financial Statements for Frontline
Communications Corporation.
1. Introduction
2. Balance Sheet as of September 30, 1998
3. Statement of Operations for the nine-month period ended September
30, 1998.
4. Statement of Operations for the year ended December 31, 1997.
5. Notes to Pro Forma Combined Financial Statements.
(c). Exhibits.
Reference is made to the Exhibits previously filed with the Securities and
Exchange Commission as Exhibits to the Company's Report on Form 8-K, for the
event dated December 17, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: March 2, 1999
FRONTLINE COMMUNICATIONS, INC.
By /s/ Stephen J. Cole-Hatchard
-------------------------------
Name: Stephen J. Cole-Hatchard
Title: President/CEO
<PAGE>
Webspan, Inc.
Financial Statements
Year ended December 31, 1997 and 1996
<PAGE>
WEBSPAN, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
CONTENTS Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT 1
FINANCIAL STATEMENTS
BALANCE SHEETS 2
STATEMENTS OF OPERATIONS 3
STATEMENT OF STOCKHOLDERS' DEFICIT 4
STATEMENTS OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6
<PAGE>
Steven H. Mermelstein
Certified Public Accountant
2523 Avenue P
Brooklyn, N. Y. 11229
1-718-258-6865
Independent Auditor's Report
To the Stockholders
Webspan, Inc.
Lakewood, N. J. 08701
I have audited the accompanying balance sheets of Webspan, Inc. (the "Company")
as of December 31, 1996 and 1997, and the related statements of operations,
stockholders' deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of December 31, 1996
and 1997, and the results of its operations and its cash flows for the years
then ended in conformity with generally accepted accounting principles.
/s/ Steven H. Mermelstein
Steven H. Mermelstein, CPA
February 8, 1999
Brooklyn, NY
<PAGE>
Webspan, Inc.
Balance Sheets
================================================================================
December 31, December 31,
1997 1996
----------- -----------
ASSETS
Current:
Cash and cash equivalents $ 45,161 $ 75,245
Accounts receivable -- 57,428
Prepaid expenses and other current assets 48,683 29,210
----------- ----------
Total current assets 93,844 161,883
----------- ----------
Fixed:
Equipment and Equipment Leases 417,794 406,632
Less: Accumulated Depreciation (213,680) (81,326)
----------- ----------
Net fixed assets 204,114 325,306
----------- ----------
Other assets 11,875 41,084
----------- ----------
TOTAL ASSETS $ 309,833 $ 528,273
=========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current:
Notes payable - current portion $ 132,372 $ 85,416
Equipment lease payable - current portion 19,344 19,343
Accounts payable and accrued expenses 126,810 147,985
Deferred income 751,561 408,898
----------- ----------
Total current liabilities 1,030,087 661,642
----------- ----------
Long Term:
Notes payable - long term portion -- 75,428
Equipment leases payable - long term portion 10,193 29,537
Deferred income 32,890 955
----------- ----------
Total long-term liabilities 43,083 105,920
----------- ----------
Officer Loans Payable 105,322 257,932
----------- ----------
Total liabilities 1,178,492 1,025,494
----------- ----------
Stockholders' Deficit:
Capital stock, no par value, 1,000,000 shares 300,000 300,000
authorized and issued
Accumulated deficit (1,168,659) (797,221)
----------- ----------
Total stockholders' deficit (868,659) (497,221)
----------- ----------
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 309,833 $ 528,273
=========== ==========
See independent auditor's report and notes to financial statements
Page 2
<PAGE>
Webspan, Inc.
Statements of Operations
================================================================================
For the twelve months
ended December 31,
--------------------------
1997 1996
----------- ----------
Revenues $ 1,265,470 $ 643,017
Cost of revenues 1,356,493 698,388
----------- ----------
Gross Profit (91,023) (55,371)
Operating expenses:
Selling, General and Administrative 270,679 741,850
----------- ----------
Loss from operations (361,702) (797,221)
Other Income(expense):
Interest expense 9,736 0
----------- ----------
Net Loss $ (371,438) $ (797,221)
=========== ==========
Loss per share of common stock $ (0.37) $ (0.80)
=========== ==========
Weighted average number of shares outstanding: 1,000,000 1,000,000
=========== ==========
See independent auditor's report and notes to financial statements
Page 3
<PAGE>
Webspan, Inc.
Statement of Stockholders' Deficit
================================================================================
<TABLE>
<CAPTION>
Twelve months ended December 31, 1997 and 1996
===================================================================================================
Accumulated
Common Stock Deficit Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1, 1996 $ -- $ -- $ --
Issue 1,000,000 shares - Capital Stock, no par 300,000 0 300,000
Net Loss -- (797,221) (797,221)
- ---------------------------------------------------------------------------------------------------
Balance, December 31, 1996 300,000 (797,221) (497,221)
Net Loss -- (371,438) (371,438)
- ---------------------------------------------------------------------------------------------------
Balance, December 31, 1997 300,000 (1,168,659) (868,659)
===================================================================================================
</TABLE>
See independent auditor's report and notes to financial statements
Page 4
<PAGE>
Webspan, Inc.
Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
================================================================================
<TABLE>
<CAPTION>
Twelve months
ended December 31,
---------------------------------
1997 1996
--------- -----------
<S> <C> <C>
Cash flow from operating activities:
Net Loss $(371,438) $ (797,221)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 132,354 81,326
Changes in assets and liabilities:
Accounts receivable 57,428 (57,428)
Prepaid expenses and other (19,473) (29,210)
Other assets 29,209 (41,084)
Accounts payable and accrued expenses (21,175) 147,985
Deferred income 374,598 409,853
--------- -----------
Net cash used by operating activities 181,503 (285,779)
Cash flows from investing activities:
Acquisition of equipment (11,162) (406,632)
--------- -----------
Net cash used by operating activities (11,162) (406,632)
Cash flows from financing activities:
Proceeds from notes payable -- 160,844
Proceeds from officer loans payable -- 257,932
Proceeds from equipment leases payable -- 48,880
Repayments of notes and officer notes payable (181,082) --
Repayments of equipment leases payable (19,343) --
Proceeds from sale of capital stock -- 300,000
--------- -----------
Net cash used by financing activities (200,425) 767,656
--------- -----------
Net increase in cash and cash equivalents: $ (30,084) $ 75,245
Cash, beginning of period 75,245 --
--------- -----------
Cash, end of period $ 45,161 $ 75,245
========= ===========
</TABLE>
See independent auditor's report and notes to financial statements
Page 5
<PAGE>
Webspan, Inc.
Notes to Financial Statements
December 31, 1997 and 1996
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS
The Company is a corporation organized on January 5, 1996 under the laws of
the state of New Jersey for the purpose of serving as an internet web host.
NOTE 2 - EQUIPMENT AND DEPRECIATION
Equipment is stated at cost and equipment leases are all capitalized.
Depreciation is computed over a period of five (5) years using the
double-declining balance method. All equipment is subject to an U. C. C.
security interest.
NOTE 3 - EQUIPMENT LEASE PAYABLE
Equipment lease payable represents the balance of lease payments due on the
capitalized leases included in note 2.
NOTE 4 - NOTES PAYABLE/DEFERRED INTEREST
Net server equipment in the amount of $112,425 was purchased from U. S.
Robotics. Note payments of $7,118 are to be made monthly for 24 months of which
$58,419 represents deferred interest. The equipment is subject to an U. C. C.
filing.
NOTE 5 - DEFERRED INCOME-REVENUE RECOGNITION
Deferred income applies to prepaid customer subscriptions, which if
cancelled at the customer's discretion under each of the respective plans, would
be non-forfeitable. Consequently, income will be recognizable at the point that
payments are forfeitable.
NOTE 6 - SUBSEQUENT EVENTS
On January 5, 1998 CPHP, a secured creditor of Webspan, Inc., enforced a
security interest against Webspan, Inc. due to its default of an agreement dated
December 10, 1995. The U. C. C. security interest was applicable to much of the
equipment, equipment leases and to the entire customer list. This effectively
terminated Webspan Inc.'s status as a going concern. CPHP subsequently
transferred all the acquired assets to Webspan Communications, Inc. subject to a
new U. C. C. interest on the equipment and customer list in exchange for its
stock.
Page 6
<PAGE>
Webspan Communications, Inc.
Financial Statements
Nine Months ended September 30, 1998
<PAGE>
WEBSPAN COMMUNICATIONS, INC.
FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998
TABLE OF CONTENTS
FINANCIAL INFORMATION Page
BALANCE SHEET (UNAUDITED) 1
STATEMENT OF OPERATIONS (UNAUDITED) 2
STATEMENT OF STOCKHOLDERS' DEFICIT (UNAUDITED) 3
STATEMENT OF CASH FLOWS (UNAUDITED) 4
NOTES TO FINANCIAL STATEMENTS 5
<PAGE>
Webspan Communications, Inc.
Balance Sheet
================================================================================
September 30,
1998
---------------
(Unaudited)
ASSETS
Current:
Cash and cash equivalents $ 63,607
Accounts receivable, less allowance for doubtful accounts 4,343
---------
Total current assets 67,950
---------
Fixed:
Equipment 249,252
Less: accumulated depreciation (62,313)
---------
Total fixed assets 186,939
---------
Other assets --
---------
TOTAL ASSETS $ 254,889
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current:
Notes payable - current portion $ --
Equipment Lease payable - current portion 1,312
Accounts payable and accrued expenses 57,197
Deferred income 279,472
---------
Total current liabilities 337,981
---------
Long Term:
Notes payable - long term portion --
Equipment Lease payable - long term portion 13,045
Deferred income 38,197
---------
Total long-term liabilities 51,242
---------
Officer's Loan Payable --
---------
Total liabilities 389,223
---------
Stockholders' Deficit:
Capital stock, no par value, 1,000,000 shares
authorized and issued 158,678
Accumulated deficit (293,012)
---------
Total stockholders' deficit (134,334)
---------
---------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 254,889
=========
See accompanying notes to financial statements.
Page 1
<PAGE>
Webspan Communications, Inc.
Statement of Operations
================================================================================
Nine months
ended September 30,
(Unaudited)
- --------------------------------------------------------------------------------
1998
----------
Revenues $ 803,741
Cost of Revenues 837,983
----------
Gross profit/(loss) (34,242)
Operating expenses:
Selling, general and administrative 258,770
----------
Net (loss) $ (293,012)
==========
See accompanying notes to financial statements.
Page 2
<PAGE>
Webspan Communications, Inc.
Statement of Stockholders' Deficit
<TABLE>
<CAPTION>
==============================================================================================
Nine months ended September 30, 1998
==============================================================================================
Capital Accumulated
Stock Deficit Total
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 5, 1998 $ -- $ -- $ --
Issue 1,000,000 shares - Capital Stock, no par 183,668 -- 183,668
Net loss -- (293,012) (293,012)
Capital contributions (withdrawals) (25,000) -- (25,000)
- -----------------------------------------------------------------------------------------------
Balance, September 30, 1998 $ 158,668 $ (293,012) $ (134,344)
===============================================================================================
</TABLE>
See accompanying notes to financial statements.
Page 3
<PAGE>
Webspan Communications, Inc.
Statement of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
================================================================================
Nine months
ended September 30,
-------------------
(Unaudited)
1998
------------
Cash flow from operating activities:
Net Loss $ (293,012)
in operating activities:
Depreciation and amortization 62,313
Changes in assets and liabilities:
Accounts receivable (4,343)
Accounts payable and accrued expenses 57,197
Deferred revenue 317,669
-----------
Net cash used by operating activities 139,824
Cash flows from investing activities:
Acquisition of equipment (65,574)
-----------
Net cash used by operating activities (65,574)
Cash flows from financing activities:
Proceeds from/(Repayments of) capitalized leases 14,357
Capital withdrawals (25,000)
-----------
Net cash used by financing activities (10,643)
-----------
Net increase (decrease) in cash and cash equivalents: 63,607
Cash, beginning of period --
-----------
Cash, end of period $ 63,607
===========
See accompanying notes to financial statements
Page 4 Page
<PAGE>
Webspan Communications, Inc.
Notes to Financial Statements
September 30, 1998
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
In the opinion of management, the accompanying unaudited financial
statements include all adjustments, consisting of normal recurring accruals,
considered necessary for a fair presentation of the results for interim periods.
Operating results for the nine months ended September 30, 1998 are not
necessarily indicative of the results to be expected for the full year ending
December 31, 1998.
NOTE 2 - ORGANIZATION AND NATURE OF BUSINESS
Webspan Communications, Inc. is a corporation organized under the laws of
the State of New Jersey for the purpose of serving as an internet web host.
Webspan, Inc., a predecessor company, engaged in an identical business, ceased
operations on January 5, 1998. CPHP, a secured creditor of Webspan, Inc.,
enforced a security interest against Webspan, Inc. due to its default of an
agreement dated December 10, 1995. The U. C. C. security interest was applicable
to much of the equipment and equipment leases and to the entire customer list.
CPHP subsequently transferred all the acquired assets to Webspan Communications,
Inc., subject to a new U. C. C. security interest on the equipment and customer
list, in exchange for its stock.
NOTE 3 - SUBSEQUENT EVENT
On December 17, 1998, Webspan Communications, Inc. sold substantially all
of its assets and business to Frontline Communications Corp ("Frontline") in
consideration of: a $500,000 cash payment; the issuance of 113,364 shares of
Frontline's common stock; and assumption of $543,755 of liabilities.
Page 5
<PAGE>
Webspan, Inc.
Financial Statements
Nine Months ended September 30, 1997
<PAGE>
WEBSPAN, INC.
FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1997
TABLE OF CONTENTS
FINANCIAL INFORMATION Page
STATEMENT OF OPERATIONS (UNAUDITED) 1
STATEMENT OF STOCKHOLDERS' DEFICIT (UNAUDITED) 2
STATEMENT OF CASH FLOWS (UNAUDITED) 3
NOTES TO FINANCIAL STATEMENTS 4
<PAGE>
Webspan, Inc.
Statement of Operations
- --------------------------------------------------------------------------------
Nine months
ended September 30,
(Unaudited)
- --------------------------------------------------------------------------------
1997
-----------
Revenues $ 1,088,953
Cost of Revenues 1,026,724
-----------
Gross profit/(loss) 62,229
Operating expenses:
Selling, general and administrative 317,054
-----------
Net (loss) (254,825)
===========
See accompanying notes to financial statements.
Page 1
<PAGE>
Webspan, Inc.
Statement of Stockholders' Deficit
================================================================================
Nine months ended September 30, 1997
- --------------------------------------------------------------------------------
Capital Accumulated
Stock Deficit Total
- --------------------------------------------------------------------------------
Balance, January 1, 1997 $ 300,000 $ (797,221) $ (497,221)
Net loss -- (254,825) (254,825)
- -------------------------------------------------------------------------------
Balance, September 30, 1997 $ 300,000 $ (1,052,046) $ (752,046)
================================================================================
See accompanying notes to financial statements.
Page 2
<PAGE>
Webspan, Inc.
Statement of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
================================================================================
Nine months
ended September 30,
-------------------
(Unaudited)
1997
--------
Cash flow from operating activities:
Net Loss $(254,825)
in operating activities:
Depreciation and amortization 99,265
Changes in assets and liabilities:
Accounts receivable 54,486
Prepaid expenses and other 29,210
Other assets 29,209
Accounts payable and accrued expenses (33,385)
Deferred revenue 102,450
--------
Net cash used by operating activities 26,410
Cash flows from investing activities:
Acquisition of equipment --
--------
Net cash used by operating activities --
Cash flows from financing activities:
Proceeds from/(Repayments of) notes payable (844)
Proceeds from/(Repayments of) capitalized leases (10,531)
Proceeds from/(Repayments of) officer notes payable (77,451)
Capital withdrawals --
Proceeds from sale of common stock --
--------
Net cash used by financing activities (88,826)
--------
Net increase (decrease) in cash and cash equivalents: (62,416)
Cash, beginning of period 75,245
--------
Cash, end of period $ 12,829
========
See accompanying notes to financial statements
Page 3
<PAGE>
Webspan, Inc.
Notes to Financial Statements
September 30, 1997
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
In the opinion of management, the accompanying unaudited financial
statements include all adjustments, consisting of normal recurring accruals,
considered necessary for a fair presentation of the results for interim periods.
Operating results for the nine months ended September 30, 1997 are not
necessarily indicative of the results to be expected for the full year ending
December 31, 1997.
Page 4
<PAGE>
Frontline Communications Corp.,
Webspan Communications, Inc. (1998),
and Webspan, Inc. (1997)
Unaudited Pro Forma Combined Financial Information
On December 17, 1998, Frontline Communications Corp. (the Company) acquired
substantially all of the assets used in the business of Webspan Communications
Inc. (Webspan), the successor to Webspan, Inc., in consideration of $500,000 in
cash, assumption of $543,755 of liabilities and issuance of an aggregate of
113,364 shares of the Company's Common Stock. The purchase price of $1,582,759,
including acquisition costs of $30,000, is subject to downward adjustment under
certain circumstances ninety (90) days following the closing of the acquisition.
The acquisition has been accounted for as a purchase with the results of the
acquisition included in the consolidated financial statements of the Company
from date of acquisition.
The unaudited pro forma combined balance sheet as of September 30, 1998 assumes
that the acquisition occurred on September 30, 1998 and includes the September
30, 1998 historical balance sheet of the Company, and the acquired assets and
assumed liabilities of Webspan Communications, Inc., adjusted for the pro forma
effects of this acquisition. The unaudited pro forma combined statements of
operations for the nine months ended September 30, 1998 and the year ended
December 31, 1997 assume that the acquisition occurred on January 1, 1997. It
includes the historical statements of operations of the Company and Webspan
Communications, Inc. or its predecessor company Webspan, Inc. for the periods
presented, adjusted for the pro forma effects of the acquisition.
The unaudited pro forma balance sheet also reflects the acquired assets and
assumed liabilities of three previous acquisitions completed by the Company in
October, 1998 as if these acquisitions occurred on September 30, 1998. The
unaudited pro forma statements of operations for the nine months ended September
30,1998 and the year ended December 31,1997 assume that these acquisitions
occurred on January 1, 1997 and include the historical statements of operations
of the acquired businesses for the periods presented, adjusted for the pro forma
effects of the acquisitions.
The unaudited pro forma condensed combined financial statements have been
included as required and allowed by the rules of the Commission and are provided
for informational purposes only. The pro forma statements of operations do not
purport to be indicative of the results which would have been obtained if the
acquisition had been effected on the date indicated or which may be obtained in
the future.
The accompanying unaudited pro forma condensed combined financial statements
should be read in conjunction with the respective historical financial
statements of the Company, Webspan Communications, Inc. and Webspan, Inc., which
are contained elsewhere herein.
<PAGE>
Frontline Communications Corp. and Webspan Communications, Inc.
Pro Forma Combined Balance Sheet
September 30, 1998 (Unaudited )
<TABLE>
<CAPTION>
(A)
Frontline Roxy WOW U. S. Online Pro Forma
Commun. Systems, Inc. Factor, Inc. Inc. Adjustments
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Current :
Cash and cash equivalents $ 4,268,796 $ -- $ 129 $ -- $ (730,375)
Accounts receivable, net 11,889 30,255
Notes receivable 103,895
Prepaid expenses and other current assets 41,569
Deferred registration costs
--------------------------------------------------------------------------------
Total current assets 4,426,149 30,255 129 -- (730,375)
Equipment, net 287,679 9,127 8,515 44,610
Other assets:
Intangibles, net -- 1,870,739
Other 49,062
================================================================================
Total Assets $ 4,762,890 $ 39,382 $ 8,644 $ 44,610 $ 1,140,364
================================================================================
Liabilities and Stockholders' Equity
Current:
Notes payable $ -- $ -- $ 60,000 $ -- $ --
Accounts payable and accrued expenses 65,838 -- 43,000 130,000
Deferred revenue 35,692 -- --
--------------------------------------------------------------------------------
Total current liabilities 101,530 -- 103,000 -- 130,000
Notes payable-long-term portion 168,600
--------------------------------------------------------------------------------
Total liabilities 270,130 -- 103,000 -- 130,000
--------------------------------------------------------------------------------
Net assets acquired -- 39,382 -- 44,610 (83,992)
--------------------------------------------------------------------------------
Stockholders' Equity
Preferred stock -- 1,000,000
Common stock 32,480 657,263 (657,263)
Additional paid-in-capital 7,438,525 26,774 (26,774)
Accumulated deficit (2,709,632) (778,393) 778,393
Treasury stock (264,113) --
Stock subscriptions receivable (4,500) --
--------------------------------------------------------------------------------
Total Stockholders' Equity (Deficit) $ 4,492,760 $ -- $ (94,356) $ -- $ 1,094,356
--------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 4,762,890 $ 39,382 $ 8,644 $ 44,610 $ 1,140,364
================================================================================
<CAPTION>
Pro Forma Webspan Pro Forma Note Pro Forma
Combined Commun., Inc Adjustments A Combined
-----------------------------------------------------------------------
Assets
Current :
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 3,538,550 $ 2,578 $ (500,000) 1 $ 3,041,128
Accounts receivable, net 42,144 42,144
Notes receivable 103,895 103,895
Prepaid expenses and other current assets 41,569 41,569
Deferred registration costs
------------------------------------------------ -----------
Total current assets 3,726,158 2,578 (500,000) 3,228,736
Equipment, net 349,931 258,517 608,448
Other assets:
Intangibles, net 1,870,739 1,321,664 1 3,192,403
Other 49,062 49,062
================================================ ===========
Total Assets $ 5,995,890 $ 261,095 $ 821,664 $ 7,078,649
================================================ ===========
Liabilities and Stockholders' Equity
Current:
Notes payable $ 60,000 $ 60,000
Accounts payable and accrued expenses 238,838 30,000 1 268,838
Deferred revenue 35,692 543,755 579,447
------------------------------------------------ -----------
Total current liabilities 334,530 543,755 30,000 908,285
Notes payable-long-term portion 168,600 168,600
------------------------------------------------ -----------
Total liabilities 503,130 543,755 30,000 1,076,885
------------------------------------------------ -----------
Net assets acquired -- (282,660) 282,660 --
------------------------------------------------ -----------
Stockholders' Equity
Preferred stock 1,000,000 1,000,000
Common stock 32,480 1,134 1 33,614
Additional paid-in-capital 7,438,525 507,870 1 7,946,395
Accumulated deficit (2,709,632) (2,709,632)
Treasury stock (264,113) (264,113)
Stock subscriptions receivable (4,500) (4,500)
------------------------------------------------ -----------
Total Stockholders' Equity (Deficit) $ 5,492,760 $ -- $ 509,004 $ 6,001,764
------------------------------------------------ -----------
Total Liabilities and Stockholders' Equity $ 5,995,890 $ 261,095 $ 821,664 $ 7,078,649
================================================ ===========
</TABLE>
(A) Reflects the combined proforma adjustments for the three acquisitions
completed by Frontline in October, 1998.
<PAGE>
Frontline Communications Corp. and Webspan Communications, Inc.
Pro Forma Combined Statement of Operations
Nine Months Ended Sept. 30, 1998
( Unaudited )
<TABLE>
<CAPTION>
(B)
Frontline Roxy WOW U. S. Online Pro Forma
Comm. Systems, Inc. Factor, Inc Inc. Adjustments
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 369,972 $ 192,037 $ 29,029 $ 768,142 $ --
Cost of revenues 339,137 129,521 3,293 915,454 --
-----------------------------------------------------------------------------------
Gross profit 30,835 62,516 25,736 (147,312) --
Operating expenses:
Selling, general & administrative 677,955 73,782 42,067 825,379 544,437
-----------------------------------------------------------------------------------
Total operating expenses 677,955 73,782 42,067 825,379 544,437
-----------------------------------------------------------------------------------
Loss from operations (647,120) (11,266) (16,331) (972,691) (544,437)
Other income ( expense)
Interest expense (27,913) -- -- -- --
Interest income 64,949 -- -- -- --
===================================================================================
Net loss $ (610,084) $ (11,266) $ (16,331) $ (972,691) $ (544,437)
===================================================================================
Loss per share of common stock $ (0.25)
===========
Weighted average number of shares 2,471,077
===========
<CAPTION>
Pro Forma Webspan Pro Forma Note Pro Forma
Combined Commun. Inc Adjustments A Combined
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 1,359,180 $ 803,741 $ -- $ 2,162,921
Cost of revenues 1,387,405 837,983 -- 2,225,388
---------------------------------------------- -----------
Gross profit (28,225) (34,242) -- (62,467)
Operating expenses:
Selling, general & administrative 2,163,620 258,770 330,416 2 2,752,806
---------------------------------------------- -----------
Total operating expenses 2,163,620 258,770 330,416 2,752,806
---------------------------------------------- -----------
Loss from operations (2,191,845) (293,012) (330,416) (2,815,273)
Other income ( expense)
Interest expense (27,913) (27,913
Interest income 64,949 64,949
============================================== ===========
Net loss $ (2,154,809) $ (293,012) $(330,416) $(2,778,237)
============================================== ===========
Loss per share of common stock $ (0.79) $ (0.98)
=========== ===========
Weighted average number of shares 2,721,077 3 2,834,441
=========== ===========
</TABLE>
(B) Reflects the combined pro forma adjustments for the three acquisitions
completed by Frontline in October, 1998, including amortization of all
acquired intangibles using an estimated useful life of 3 years.
<PAGE>
Frontline Communications Corp. and Webspan, Inc.
Pro Forma Combined Statement of Operations
The Year Ended December 31, 1997
( Unaudited )
<TABLE>
<CAPTION>
(B)
Frontline Roxy WOW U. S. Online Pro Forma
Comm. Systems, Inc. Factor, Inc. Inc. Adjustments
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 321,706 $ 180,569 $ 4,754 $ 610,564 $ --
Cost of revenues 251,928 157,542 47,676 1,119,580 --
----------------------------------------------------------------------------
Gross profit 69,778 23,027 (42,922) (509,016) --
Operating expenses:
Selling, general & admin. 540,883 79,740 96,173 743,922 724,896
Non-cash compensation charge 1,537,000 234,000
----------------------------------------------------------------------------
Total operating expenses 2,077,883 79,740 330,173 743,922 724,896
----------------------------------------------------------------------------
Loss from operations (2,008,105) $ (56,713) $(373,095) $(1,252,938) $ (724,896
Other income ( expense)
Interest expense (28,421) -- -- (70,347) --
Interest income -- -- -- 13,143 --
Other (891) -- -- -- --
============================================================================
Net Loss $(2,037,417) $ (56,713) $(373,095) $(1,310,142) $ (724,896
============================================================================
Loss per share of common stock $ (1.67)
============
Weighted average number of shares 1,218,000
============
<CAPTION>
Pro Forma Webspan Pro Forma Note Pro Forma
Combined Inc. Adjustments Combined
----------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 1,117,593 $ 1,265,470 $ 2,383,063
Cost of revenues 1,576,726 1,356,493 2,933,219
----------------------------------------------- --------------
Gross profit (459,133) (91,023) -- (550,156)
Operating expenses:
Selling, general & admin. 2,185,614 270,679 440,555 2 2,896,848
Non-cash compensation charge 1,771,000 -- 1,771,000
----------------------------------------------- --------------
Total operating expenses 3,956,614 270,679 440,555 4,667,848
----------------------------------------------- --------------
Loss from operations (4,415,747) (361,702) (440,555) (5,218,004)
Other income ( expense)
Interest expense (98,768) (9,736) (108,504)
Interest income 13,143 -- 13,143
Other (891) -- (891)
=============================================== ==============
Net Loss $ (4,502,263) $ (371,438) $(440,555) $ (5,314,256)
=============================================== ==============
Loss per share of common stock $ (3.07) $ (3.36)
============ S==============
Weighted average number of shares 1,468,000 3 1,581,364
============ ==============
</TABLE>
(B) Reflects the combined pro forma adjustments for the three acquisitions
completed by Frontline in October, 1998, including amortization of all
acquired intangibles using an estimated useful life of 3 years.
<PAGE>
Frontline Communications Corp.,
Webspan Communications, Inc. (1998),
and Webspan, Inc. (1997)
Unaudited Pro Forma Combined Financial Information
Note A
The pro forma adjustments to the unaudited pro forma condensed combined
financial statements are as follows:
1. To reflect a total purchase price of approximately $1,582,759 consisting
of: a $500,000 cash payment, the issuance of 113,364 shares of common
stock, assumption of $543,755 of liabilities, and accrued acquisition costs
of approximately $30,000.
2. To reflect amortization of acquired intangibles using an estimated useful
life of 3 years.
3. The weighted average number of shares have been adjusted by 113,364 shares
to reflect the issuance of common stock as if the issuance had occurred on
January 1, 1997.
