<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
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 29, 1999
SKYLYNX COMMUNICATIONS, INC.
------------------------------
(Exact name of registrant as specified in its charter)
COLORADO 0-24687 84-1360029
- --------------- ------------------------- --------------------
(State or other (Commission file number) (Employer Identi-
incorporation) fication No.)
600 South Cherry Street, Suite 305, Denver, Colorado 80246
---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 316-0400
---------------------------------------------------------------------
103 Sarasota Quay, Sarasota, Florida 34236
---------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
<PAGE>
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------
(a) Financial Statements
--------------------
Pursuant to Item 7(a)(4), the Registrant files herewith the
following financial statements of the acquired business:
Net Asset, LLC Audited Financial Statements
Independent Auditor's Report
Balance sheet as of December 31, 1998
Statements of Operation for the years ended December 31, 1998 and
1997
Statements of Members' Deficit for the years ended December 31,
1998 and 1997
Statements of Cash Flows for the years ended December 31, 1998
and 1997
Notes to Financial Statements
(b) Unaudited Financial Statements
------------------------------
Balance Sheet as of March 31, 1999 (unaudited)
Statements of Operations for the Three Month Periods Ended March
31, 1999 and 1998
Statements of Cash Flows for the Three Month Period Ended March
31, 1999 and 1998
Notes to Financial Statements
(c) Pro Forma Financial Information
-------------------------------
Pursuant to Item 7(b) and Item 7(a)(4), the Registrant files
herewith the following unaudited pro forma consolidated financial
information:
Pro Forma Consolidated Balance Sheets as of March 31, 1999 and
December 31, 1998
Pro Forma Consolidated Statements of Operations for the three
month period ended March 31, 1999 and the year ended December 31,
1998
The unaudited Pro Forma Consolidated Balance Sheets as of March 31,
1999 and December 31, 1998 and unaudited Pro Forma Consolidated Statements
of Operations for the year ended December 31, 1998 and the three month
period ended March 31, 1999 (collectively the Pro Forma Consolidated
Financial Statements) give effect to the acquisition by SkyLynx
Communications of certain assets of Net Asset, LLC. These transactions
were accounted for as a purchase in accordance with the provisions of
Accounting Principles Board Opinion Number 16.
The Pro Forma Consolidated Statements of Operations were prepared
assuming that the acquisition described above was consummated as of the
beginning of each period presented. The Pro Forma Consolidated Balance
Sheet includes the pro forma purchase accounting entries for the
acquisition and was prepared assuming that the transaction was consummated
as of January 1, 1998.
The unaudited Pro Forma Consolidated Financial Statements are based
upon historical consolidated and combined financial statements of the
Registrant and Net Asset, LLC.
The pro forma adjustments and the resulting Pro Forma Consolidated
Financial Statements have been prepared based upon available information
and certain assumptions and estimates deemed appropriate by the Registrant.
A final determination of required purchase accounting adjustments and the
allocation of the purchase price to the assets acquired based upon their
respective fair values has not yet been made for the acquisition.
The Pro Forma Consolidated Balance Sheet and the Pro Forma
Consolidated Statements of Operations are not necessarily indicative of the
results of operations that actually would have been achieved had the
acquisition been consummated as of the dates indicated, or that may be
achieved in the future. Furthermore, the Pro Forma Consolidated Financial
Statements do not reflect changes that may occur as the result of post-
combination activities and other matters.
The Pro Forma Consolidated Financial Statements and notes thereto
should be read in conjunction with the accompanying historical financial
statements and notes thereto of Net Asset, LLC and the audited consolidated
financial statements of the Registrant and subsidiaries included in its
Annual Report on Form 10-KSB for the year ended December 31, 1998.
<PAGE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Members of
Net Asset, LLC:
We have audited the accompanying balance sheet of Net Asset, LLC (a
California limited liability company) as of December 31, 1998, and the
related statements of operations, members' deficit and cash flows for the
years ended December 31, 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 Net Asset, LLC as of
December 31, 1998, and the results of its operations and its cash flows for
the years ended December 31, 1998 and 1997, in conformity with generally
accepted accounting principles.
Arthur Andersen LLP
Tampa, Florida,
June 11, 1999
<PAGE>
<PAGE>
NET ASSET, LLC
BALANCE SHEET -- DECEMBER 31, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash $ 15,980
Accounts receivable, net of allowance for
doubtful accounts of $2,945 63,247
Prepaid expenses and other current assets 2,208
-------------
Total current assets 81,435
PROPERTY AND EQUIPMENT, net 338,657
-------------
Total assets $ 420,092
=============
LIABILITIES AND MEMBERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 216,072
Accrued liabilities 32,433
Deferred revenue 115,864
Current maturities of notes payable to members 165,492
Current maturities of capital lease obligations 28,559
-------------
Total current liabilities 558,420
NOTES PAYABLE TO MEMBERS, net of current
maturities 15,400
CAPITAL LEASE OBLIGATIONS, net of current
maturities 58,752
-------------
COMMITMENTS AND CONTINGENCIES
MEMBERS' DEFICIT:
Contributed capital 482,992
Accumulated deficit (695,472)
Total members' deficit (212,480)
-------------
Total liabilities and members' deficit $ 420,092
=============
</TABLE>
The accompanying notes are an integral part of this balance sheet.
<PAGE>
NET ASSET, LLC
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------- ------------
<S> <C> <C>
REVENUES $ 819,307 $ 705,871
----------- ------------
COSTS AND EXPENSES:
Cost of revenues 467,934 434,237
Selling, general and administrative 637,015 411,917
----------- ------------
Total costs and expenses 1,104,949 846,154
----------- ------------
LOSS FROM OPERATIONS (285,642) (140,283)
OTHER INCOME 14,133 -
INTEREST EXPENSE (19,435) (12,602)
----------- ------------
NET LOSS $ (290,944) $ (152,885)
=========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE>
NET ASSET, LLC
STATEMENTS OF MEMBERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
Members' Accumulated
Capital Deficit Total
----------- ----------- -------------
<S> <C> <C> <C>
BALANCE, Dec 31, 1996 $ 402,992 $ (251,643) $ 151,349
Net loss - (152,885) (152,885)
----------- ----------- -------------
BALANCE, Dec 31, 1997 402,992 (404,528) (1,536)
Capital contributions 80,000 - 80,000
Net loss - (290,944) (290,944)
----------- ----------- -------------
BALANCE, Dec 31, 1998 $ 482,992 $ (695,472) $ (212,480)
=========== =========== =============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE>
NET ASSET, LLC
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (290,944) $ (152,885)
Adjustments to reconcile net loss
to net cash used in operating
activities
Depreciation 80,695 54,893
Changes in operating assets and
liabilities
Accounts receivable 30,911 (92,192)
Prepaid expenses and other
current assets 1,728 (2,341)
Accounts payable 125,189 13,089
Accrued liabilities 16,742 13,263
Deferred revenue 29,238 86,626
------------ -------------
Net cash used in operating
activities (6,441) (79,547)
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisition of
property and equipment (45,734) (110,067)
------------ -------------
Net cash used in investing
activities (45,734) (110,067)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Payments) borrowings on notes
payable, net (13,108) 186,998
Payments on capital lease
obligations (8,746) -
Capital contributions 80,000 -
------------ -------------
Net cash provided by
financing activities 58,146 186,998
------------ -------------
NET INCREASE (DECREASE) IN CASH 5,971 (2,616)
CASH, beginning of year 10,009 12,625
------------ -------------
CASH, end of year $ 15,980 $ 10,009
=========== =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 19,436 $ 12,634
SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING ACTIVITY:
Equipment acquired under capital
leases $ 96,057 $ -
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE>
NET ASSET, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ORGANIZATION AND BUSINESS:
-------------------------
Net Asset, LLC (the Company), is a California limited liability
company formed in December 1996 pursuant to the terms of the Operating
Agreement for Net Asset, LLC. The Company was formed through the
investments of several individuals and a corporation, RhinoTrax, Inc.
(RhinoTrax), collectively the Members. In connection with the Company's
formation, RhinoTrax contributed cash and equipment of approximately
$300,000 for a 73 percent interest in the Company. The Company was formed
to provide high-speed Internet connectivity and enhanced Internet services
to businesses through the use of wireline technologies. The Company sells
primarily to business customers in the Fresno, California area.
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 from those
estimates.
Property and Equipment
----------------------
Property and equipment are stated at cost. Depreciation and
amortization are provided using the straight-line method over the estimated
useful lives of depreciable assets.
Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures for major renewals and betterments, which extend
the useful lives of existing equipment, are capitalized and depreciated.
Upon retirement or disposition of property and equipment, the cost and
related accumulated depreciation are removed from the accounts and any
resulting gain or loss is recognized in the statements of operations.
Revenue Recognition and Deferred Revenue
----------------------------------------
Revenue, comprised primarily of billings on Internet and enhanced
services, is recognized as the services are provided. Amounts collected
prior to the services being provided are reflected as deferred revenue.
Installation and customer set-up fees are recognized upon completion of the
services. Revenue from consulting services is recognized as the services
are provided. Revenue from hardware sales is recognized upon shipment of
the respective products.
Income Taxes
------------
The Company has elected to report its earnings as a limited liability
company under the Internal Revenue Code. All income or loss is reported
through the Members' personal tax returns. The tax returns and the amount
of taxable income or loss are subject to examination by federal and state
taxing authorities. If such examinations result in changes to taxable
income or loss, the tax liabilities of the Members could be changed
accordingly.
Fair Value of Financial Instruments
-----------------------------------
The Company believes that the carrying value of financial instruments
on the balance sheet approximates their fair value.
3. LIQUIDITY:
---------
The Company incurred operating losses from operations for the years
ended December 31, 1998 and 1997. As further discussed in Note 9 to the
financial statements, the Company's management sold substantially all of
its assets to SkyLynx Communications, Inc. (SkyLynx), in exchange for cash
in April 1999. Management believes that the sale to SkyLynx will allow the
Company to increase sales and marketing efforts, which in turn should
generate increased revenues and improve operating results.
4. PROPERTY AND EQUIPMENT:
----------------------
Property and equipment consisted of the following as of December 31,
1998:
<TABLE>
<CAPTION>
Useful Lives in Years Amount
--------------------- ------
<S> <C> <C>
Communications equipment 5 $ 221,876
Computer equipment 5 224,851
Furniture and fixtures 5 31,271
Less- Accumulated depreciation and amortization (139,341)
----------
Property and equipment, net $ 338,657
==========
</TABLE>
5. NOTES PAYABLE TO MEMBERS:
------------------------
The Company has notes payable to various members. These members have
loaned monies to the Company to fund operations. The notes payable bear
interest at rates ranging from zero percent to 21.5 percent and mature at
various dates through the year ending December 31, 2000.
Maturities of notes payable to members at December 31, 1998, are as
follows:
<TABLE>
<CAPTION>
Year Ending December 31, Amount
------------------------ ------
<S> <C>
1999 $165,492
2000 15,400
--------
180,892
Less- Current maturities (165,492)
--------
Notes payable to members, net of
current maturities $ 15,400
========
</TABLE>
6. CAPITAL LEASE OBLIGATIONS:
-------------------------
The Company has capital leases for certain of its computers and
equipment. Assets under capital leases are capitalized using interest
rates appropriated at the inception of each lease. The leases generally
provide for the lessee to pay taxes, maintenance, insurance and certain
other operating costs of the leased property over the three-year term of
each lease. The total cost of assets under capital leases and accumulated
amortization as of December 31, 1998, was $96,057 and $8,167, respectively.
Future minimum lease payments required under capital leases for
equipment at December 31, 1998, are as follows:
<TABLE>
<CAPTION>
Year Ending December 31, Amount
------------------------ ------
<S> <C>
1999 $ 41,227
2000 43,356
2001 28,357
---------
Net minimum lease payments under
capital leases 112,940
Less- Portion representing interest (25,629)
---------
Present value of net minimum lease payments 87,311
Less- Current maturities (28,559)
---------
Capital lease obligations, less current
maturities $ 58,752
=========
</TABLE>
The lease agreements required payments of principal and interest under
capital leases of $14,999 for 1998.
7. COMMITMENTS AND CONTINGENCIES:
-----------------------------
Operating Leases
----------------
The Company leases real estate under operating leases. Certain real
estate leases require the Company to pay maintenance, insurance, taxes and
certain other expenses in addition to the stated rentals.
Future minimum lease payments for noncancellable operating leases in
effect at December 31, 1998, are as follows:
<TABLE>
<CAPTION>
Year Ending December 31, Amount
------------------------ ------
<S> <C>
1999 $ 17,256
2000 17,256
2001 17,256
2002 17,256
2003 18,300
Thereafter 87,048
---------
$ 174,372
=========
</TABLE>
Rent expense under operating leases for the years ended December 31,
1998 and 1997, totaled $18,682 and $12,850, respectively.
8. RELATED-PARTY TRANSACTIONS:
--------------------------
The Company obtained financing from various members to fund operations
during 1998 and 1997. These obligations are payable according to the terms
discussed in Note 5.
9. SUBSEQUENT EVENT:
----------------
Effective April 29, 1999, the Company sold substantially all of its
assets to SkyLynx for $1,175,000 in cash.
<PAGE>
<PAGE>
NET ASSET, LLC
BALANCE SHEET -- MARCH 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash $ 21,113
Accounts receivable, net of allowance for
doubtful accounts of $2,215 at March 31, 1999 44,031
Prepaid expenses and other current assets 1,486
------------
Total current assets 66,630
PROPERTY AND EQUIPMENT, net 319,253
------------
Total assets $ 385,883
============
LIABILITIES AND MEMBERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 308,090
Accrued liabilities 34,254
Deferred revenue 89,671
Current maturities of notes payable to members 144,281
Current maturities of capital lease obligations 29,958
------------
Total current liabilities 606,254
NOTES PAYABLE TO MEMBERS, net of current maturities 10,950
CAPITAL LEASE OBLIGATIONS, net of current
maturities 48,654
------------
COMMITMENTS AND CONTINGENCIES
MEMBERS' DEFICIT:
Contributed capital 482,992
Accumulated deficit (762,967)
------------
Total members' deficit (279,975)
------------
Total liabilities and members' deficit $ 385,883
============
</TABLE>
The accompanying notes are an integral part of this balance sheet.
<PAGE>
<PAGE>
NET ASSET, LLC
STATEMENTS OF OPERATIONS
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Three Month Period
Ended March 31,
1999 1998
----------- --------------
<S> <C> <C>
REVENUES $ 221,482 $ 180,311
----------- --------------
COSTS AND EXPENSES:
Cost of revenues 125,906 115,278
Selling, general and administrative 155,407 152,617
Total costs and expenses 281,313 267,895
----------- --------------
LOSS FROM OPERATIONS (59,831) (87,584)
INTEREST EXPENSE (7,664) (4,093)
----------- --------------
NET LOSS $ (67,495) $ (91,677)
============ =============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE>
NET ASSET, LLC
STATEMENTS OF CASH FLOWS
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Three Month Period
Ended March 31,
1999 1998
------------ -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (67,495) $ (91,677)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities-
Depreciation 23,987 17,228
Changes in operating assets and
liabilities-
Accounts receivable 19,216 19,367
Prepaid expenses and other
current assets 722 (4,395)
Accounts payable 92,018 22,331
Accrued liabilities 1,821 (9)
Deferred revenue (26,193) 10,767
------------ -------------
Net cash provided
by (used in)
operating activities 44,076 (26,388)
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisition of
property and equipment (4,583) (14,835)
------------ -------------
Net cash used in investing
activities (4,583) (14,835)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Payments) borrowings on notes
payable, net (25,661) (14,271)
Payments on capital lease obligations (8,699) -
Capital contributions - 55,000
------------ -------------
Net cash (used in)
provided by
financing activities (34,360) 40,729
------------ -------------
NET INCREASE (DECREASE) IN CASH 5,133 (494)
CASH, beginning of period 15,980 10,009
------------ -------------
CASH, end of period $ 21,113 $ 9,515
============ =============
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid for interest $ 6,074 $ 4,131
SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING ACTIVITY:
Equipment acquired under capital
leases $ - $ 18,762
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> NET ASSET, LLC
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(Unaudited)
1. INTERIM FINANCIAL INFORMATION:
-----------------------------
The interim financial statements as of March 31, 1999, and for the
three-month periods ended March 31, 1999 and 1998, are unaudited and have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. 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 Net Asset,
LLC's management, the unaudited interim financial statements contain all
adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation. The results of operations for the
interim periods are not necessarily indicative of the results for the
entire fiscal year.
<PAGE>
<PAGE>
NET ASSET, LLC
Unaudited Pro Forma Condensed, Combined Financial Information
December 31, 1998
The following unaudited pro forma condensed, combined balance sheet
and a pro forma condensed, combined statement of operations gives the
effect to the Company.
These unaudited pro forma condensed, combined statements are not
necessarily indicative of results of operations had the acquisitions
occurred at January 1, 1998, nor the results the results to be expected in
the future.
The following footnotes should be read in understanding pro forma
adjustments to the unaudited pro forma condensed, consolidated statements.
(a) Adjustment reflects the $1,175,000 asset purchase of Net Asset;
$886,752 customer list and covenant not to compete, $65,455 other assets,
$338,657 property and equipment and unearned revenue of $115,864. The
consideration paid in this transaction was $975,000 cash, and a purchase
price holdback of $200,000.
(b) Adjustment to recognize twelve months amortization expense
($295,584) on the customer list and the covenant not to compete agreements.
The property was depreciated over three years and customer list and
covenant not to compete agreements over two to three years.
(c) Adjustments to reflect balances at December 31, 1998 that were
not acquired by the Company.
(d) Adjustment to reflect the $500,000 cash required for acquisitions
and the adjustment to equity to fund acquisitions and continuing
operations.
<PAGE>
<PAGE>
PRO FORMA CONDENSED, COMBINED BALANCE SHEET
AS OF DECEMBER 31,1998
<TABLE>
<CAPTION>
(d)
SkyLynx Net Pro Forma Pro Forma
Communications, Asset, Adjustments Adjustments Pro Forma
Inc. LLC Total Net Asset Simply Combined
-------------- ----------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Assets
- ------
Cash 512,925 15,980 528,905 (15,980) (975,000) (a) 37,925
500,000 (e)
Accounts receivable - 63,247 63,247 - 63,247
Inventory - - 2 - -
Other current assets 20,135 2,208 24,343 - 22,343
-------------- ----------- ---------------------- ----------- -------------
Current assets 533,060 81,435 614,495 (15,980) (475,000) 123,515
Property & equipment 1,632,370 338,657 1,971,027 - 1,971,027
Other assets 242,173 - 242,173 886,752 (a)1,128,925
-------------- ----------- ---------------------- ----------- -------------
Total assets 2,407,603 420,092 2,827,695 (15,980) 411,752 3,223,467
============== =========== ====================== =========== =============
Liability and Equity
- --------------------
Accounts payable 360,176 216,072 576,248 (216,072) - 360,176
Accrued expense 363,138 32,433 395,571 (32,433) - 363,138
Unearned revenue - 115,864 115,864 - - 115,964
Other Current
Liabilities 411,160 194,051 605,211 (194,051) - 411,160
-------------- ----------- ---------------------- ----------- -------------
Current liabilities 1,134,474 558,420 1,692,894 (442,556) - 1,250,338
-------------- ----------- ---------------------- ----------- -------------
LT debt - 15,400 15,400 (15,400) - -
Other LT Liabilities - 58,752 58,752 (58,752) 200,000 (a) 200,000
-------------- ----------- ---------------------- ----------- -------------
Total LT Liabilities - 74,152 74,152 (74,152) 200,000 200,000
-------------- ----------- ---------------------- ----------- -------------
Total Liabilities 1,134,474 632,572 1,767,046 (516,708) 200,000 1,450,338
Preferred stock 2,645,828 - 2,645,828 500,000 (e)3,145,828
Common stock 9,531 482,992 492,523 (482,992) - (a) 9,531
Paid in capital 4,171,356 - 4,171,356 - - (a)4,171,356
Retained earnings
(deficit) (5,553,586) (695,472) (6,249,058) 695,472 - (a)(5,553,586)
Total shareholders'
equity 1,273,129 (212,480) 1,060,649 212,480 500,000 1,773,129
-------------- ----------- ---------------------- ----------- -------------
Total liability
and equity 2,407,603 420,092 2,827,695 (304,228) 700,000 3,223,467
============== =========== ====================== =========== =============
</TABLE>
<PAGE>
<PAGE>
PRO FORMA CONDENSED, COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,1998
<TABLE>
<CAPTION>
SkyLynx Net Pro Forma
Communications, Assets, Adjustments Pro Forma
Inc. LLC Total Net Assets Combined
-------------- ----------- ---------------------- -------------
<S> <C> <C> <C> <C>
Revenues 7,898 819,307 827,205 827,205
Operating cost
and expenses 5,300,834 1,104,949 6,405,783 295,584 6,701,367
Loss from operations (5,292,936) (285,642) (5,578,578) (295,584) (5,874,162)
Interest and other
income (expenses) 18,104 (5,302) 12,802 - 12,802
-------------- ----------- ---------------------- -------------
Net Loss (5,274,832) (290,944) (5,565,776) (295,584) (5,861,360)
============== =========== ====================== =============
Weighted average
common shares
outstanding 8,946,874 8,946,874
Basic loss per share (0.59) (0.66)
</TABLE>
<PAGE>
<PAGE>
NET ASSETS, LLC
UNAUDITED PRO FORMA CONDENSED, COMBINED FINANCIAL INFORMATION
MARCH 31, 1999
The following unaudited pro forma condensed, combined balance sheet
and a pro forma condensed, combined statement of operations gives the
effect to the Company
These unaudited pro forma condensed, combined statements are not
necessarily indicative of results of operations had the acquisitions
occurred at January 1, 1999, nor the results the results to be expected in
the future.
The following footnotes should be read in understanding pro forma
adjustments to the unaudited pro forma condensed, consolidated statements.
(a) Adjustment reflects the $1,175,000 asset purchase of Net
Assets; $899,901 customer list and covenant not to compete, $45,517 other
assets, $319,253 property and equipment and unearned revenue of $89,671.
The consideration paid in this transaction was $975,000 cash, and a
purchase price holdback of $200,000.
(b) Adjustment to recognize three months amortization expense
($74,992) on the customer list and the covenant not to compete agreements.
The property was depreciated over three years and customer list and
covenant not to compete agreements over two to three years.
(c) Adjustments to reflect balances at December 31, 1998 that were
not acquired by the Company.
(d) Adjustment to reflect the $500,000 cash required for
acquisitions and the adjustment to equity to fund acquisitions and
continuing operations.
<PAGE>
<PAGE>
PRO FORMA CONDENSED, COMBINED BALANCE SHEET
As of March 31,1999
<TABLE>
<CAPTION>
(d)
SkyLynx Net Pro Forma Pro Forma
Communications, Assets, Adjustments Adjustments Pro Forma
Inc. LLC Total Net Assets Simply Combined
-------------- ----------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Cash 843,365 21,113 864,478 (21,113) (975,000) (a) 368,365
500,000 (e)
Accounts receivable - 44,031 44,031 - 44,031
Inventory - - - - -
Other current assets 269,536 1,486 271,022 - 271,022
-------------- ----------- ---------------------- ----------- -------------
Current assets 1,112,901 66,630 1,179,531 (21,113) (475,000) 683,418
-------------- ----------- ---------------------- ----------- -------------
Property & equipment 1,728,989 319,253 2,048,242 - 2,048,242
Other assets 1,029,307 - 1,029,307 899,901 (a)1,929,208
-------------- ----------- ---------------------- ----------- -------------
Total assets 3,871,197 385,883 4,257,080 (21,113) 424,901 4,660,868
============== =========== ====================== =========== =============
Liability and Equity
Accounts payable 356,057 308,090 664,147 (308,090) - 356,057
Accrued expense 184,476 34,254 218,730 (34,254) - 184,476
Unearned revenue - 89,671 89,671 - - 89,671
Other Current
Liabilities 373,093 174,239 547,332 (174,239) - 373,093
-------------- ----------- ---------------------- ----------- -------------
Current liabilities 913,626 606,254 1,519,880 (516,583) - 1,003,297
-------------- ----------- ---------------------- ----------- -------------
LT debt 25,000 10,950 35,950 - - 25,000
Other LT Liabilities - 48,654 48,654 (48,654) 200,000 (a) 200,000
-------------- ----------- ---------------------- ----------- -------------
Total LT Liabilities 25,000 59,604 84,604 (59,604) 200,000 225,000
-------------- ----------- ---------------------- ----------- -------------
Total Liabilities 938,626 665,858 1,604,484 (576,187) 200,000 1,228,297
Preferred stock 3,978,119 - 3,978,119 500,000 (d)4,478,119
Common stock 10,889 482,992 493,881 (482,992) - 10,889
Paid in capital 7,786,972 - 7,786,972 - 7,786,972
Retained earnings
(deficit) (8,843,409) (762,967) (9,606,376) 762,967 - (a)(8,843,409)
Total shareholders'
equity 2,932,571 (279,975) 2,652,596 279,975 500,000 3,432,571
-------------- ----------- ---------------------- ----------- -------------
Total liability
and equity 3,871,197 385,883 4,257,080 (296,212) 700,000 4,660,868
============== =========== ====================== =========== =============
</TABLE>
<PAGE>
<PAGE>
PRO FORMA CONDENSED, COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,1999
<TABLE>
<CAPTION>
SkyLynx Net Pro Forma
Communications, Asset, Adjustments Pro Forma
Inc. LLC Total Net Asset Combined
-------------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Revenues 67,888 221,482 289,370 289,370
Operating cost
and expenses 3,360,606 281,313 3,641,919 74,992 3,716,911
Loss from operations (3,292,718) (59,831) (3,352,549) (74,992) (3,427,541)
Interest and other
income (expenses) 2,895 (7,664) (4,769) - (4,769)
-------------- ----------- ---------------------- -------------
Net Loss (3,289,823) (67,495) (3,357,318) (74,992) (3,432,310)
============== =========== ====================== =============
Weighted average
common shares
outstanding 10,572,168 10,572,168
Basic loss per share (0.31) (0.32)
</TABLE>
<PAGE>
<PAGE> SIGNATURE
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.
SKYLYNX COMMUNICATIONS , INC.
Dated: July 13, 1999 By: /s/ Jeffery A. Mathias
------------------ ----------------------------------
Jeffery A. Mathias,, President
