<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: August 23, 2000
MYCOM GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Nevada 0-29836 33-0677545
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
602 Main Street
Cincinnati, Ohio 45202
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (513) 352-5560
<PAGE> 2
FORM 8-K MYCOM GROUP, INC.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
(b) Pro Forma Financial Information
(c) Exhibits
Item Title
---- -----
2* Plan and Agreement of Merger by and between Bad Toys,
Inc. and Mycom Group, Inc. (formerly Myca Group,
Inc.) dated March 31, 2000, (Annex IV to Proxy
Statement dated May 9, 2000, File No. 0-29836,
incorporated herein by reference) as amended by the
Closing Agreement between Bad Toys, Inc. and Mycom
Group dated August 23, 2000.
3* Articles of Incorporation, as amended, of Mycom
Group, Inc.
10* Purchase Agreement by and among Mycom Group, Inc.,
Bad Toys, Inc. and Tricorp Financial, Inc., dated
August 14, 2000.
*Previously filed as an exhibit to Mycom's Form 8-K dated
August 23, 2000 and filed with the Securities Exchange
Commission on September 8, 2000.
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.
MYCOM GROUP, INC.
By: /s/ Joan Carroll
------------------------
Joan Carroll, President
Date: November 3, 2000
<PAGE> 3
INDEX TO FINANCIAL STATEMENTS
MYCOM GROUP, INC. AND CONSOLIDATED SUBSIDIARY
FINANCIAL STATEMENTS
With
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Report of Independent Certified Public Accountants F-2
Consolidated Financial Statements:
Consolidated Balance Sheets F-3
Consolidated Statements of Operations F-4
Consolidated Statement of Changes in Stockholders' Equity F-5
Consolidated Statements of Cash Flows F-6
Notes to Consolidated Financial Statements F-7
Pro Forma Consolidated Financial Statements F-13
<PAGE> 4
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
The Board of Directors
Mycom Group, Inc.
Cincinnati, OH
We have audited the accompanying consolidated balance sheet of Mycom Group, Inc.
and Consolidated Subsidiary as of December 31, 1999, and the related statements
of operations, stockholders' equity and cash flows for the two years ended
December 31, 1998 and December 31, 1999. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements, referred to above,
presents fairly, in all material respects, the financial position of Mycom Group
and Consolidated Subsidiary as of December 31, 1999, and the results of its
operations, changes in stockholders' equity and cash flows for the two years
ended December 31, 1998 and December 31, 1999 in conformity with generally
accepted accounting principles.
Schumacher & Associates, Inc.
Certified Public Accountants
2525 Fifteenth Street, Suite 3H
Denver, Colorado 80211
October 6, 2000
F-2
<PAGE> 5
MYCOM GROUP, INC. AND CONSOLIDATED SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, 1999 July 31, 2000
----------------- ----------------
(unaudited)
<S> <C> <C>
Cash $ 9,528 $ 21,943
Accounts receivable, net of allowance for doubtful accounts 812,445 2,840,589
of $68,691 at December 31, 1999
and $68,885 at July 31, 2000
Prepaid expenses 7,880 18,173
---------- ----------
Total current assets 829,853 2,880,705
Property and equipment, net of
accumulated depreciation of $144,068
at December 31, 1999, and $182,942
at July 31, 2000 190,947 195,585
Other assets 9,037 7,803
---------- ----------
TOTAL ASSETS $1,029,837 $3,084,093
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Accounts payable and accrued expenses $ 279,230 $2,399,128
Deferred income taxes 180,794 38,487
Current maturities of note payable 69,457 404,457
Current maturities of obligations under capital leases 28,265 35,964
---------- ----------
Total current liabilities 557,746 2,878,036
Note payable, net of current maturities 171,393 125,358
Obligations under capital leases, net of current maturities 19,414 27,475
Deferred income taxes 11,450 9,075
---------- ----------
TOTAL LIABILITIES 760,003 3,039,944
========== ==========
Commitments and contingencies (notes 1, 2, 3, 4, 5, 6, 7, 10)
Stockholders' Equity:
Preferred stock, $.01 par value, 10,000,000 shares
authorized, none issued and outstanding -- --
Common stock, $.01 par value, 90,000,000 shares
authorized, 39,500,000 issued and outstanding at
December 31, 1999 and 48,392,006 at July 31, 2000 100 100
Treasury stock, 500,000 shares at no cost -- --
Retained earnings 269,734 44,049
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 269,834 44,149
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,029,837 $3,084,093
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE> 6
MYCOM GROUP, INC. AND CONSOLIDATED SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31 Seven Months Ended July 31
-------------------------------- --------------------------------
1998 1999 1999 2000
------------ ------------ ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Professional service revenue $ 5,516,853 $ 5,355,641 $ 3,308,836 $ 5,035,974
------------ ------------ ------------ ------------
Professional service costs and general and
administrative expenses:
Labor and benefits 3,118,019 3,588,819 2,079,501 2,205,398
Rebilled expenses 1,127,690 923,815 516,823 2,661,048
Depreciation 53,446 76,148 22,677 38,874
Rent 214,139 228,723 124,914 152,525
Bad Debts 54,220 50,246 45,246 12,387
Other 863,095 502,275 332,495 297,222
------------ ------------ ------------ ------------
Total 5,430,609 5,370,026 3,121,656 5,367,454
------------ ------------ ------------ ------------
Income (loss) from operations 86,244 (14,385) 187,180 (331,480)
------------ ------------ ------------ ------------
Other income (expense):
Interest expense (5,192) (53,538) (27,394) (29,163)
Loss on disposal of property and
equipment (6,818)
------------ ------------ ------------ ------------
(5,192) (60,356) (27,394) (29,163)
------------ ------------ ------------ ------------
Income (loss) from continuing operations,
before provision for income taxes 81,052 (74,741) 159,786 (360,643)
------------ ------------ ------------ ------------
Provision for income taxes on income (loss)
from continuing operations:
------------ ------------ ------------ ------------
Deferred (expense) credit (45,146) 25,289 (63,915) 134,957
------------ ------------ ------------ ------------
Net income (loss) from continuing
operations 35,906 (49,452) 95,871 (225,686)
Income (loss) from discontinued
operations, net of income taxes 30,886 (39,029) (7,109)
------------ ------------ ------------ ------------
Net income (loss) $ 66,792 $ (88,481) $ 88,762 $ (225,686)
============ ============ ============ ============
Per share information:
Net income (loss) per share from
continuing operations $nil $nil $nil $nil
Net income (loss) per share from
discontinued operations nil nil nil nil
------------ ------------ ------------ ------------
Net income (loss) per share $nil $nil $nil $nil
============ ============ ============ ============
Weighted average common share,
outstanding 39,500,000 39,500,000 39,500,000 39,500,000
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 7
<TABLE>
<CAPTION>
MYCOM GROUP, INC. AND CONSOLIDATED SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the period from January 1, 1998 through July 31, 2000 (unaudited)
Preferred Stock Common Stock Treasury Stock
Shares Amount Shares Amount Shares Amount
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at
January 1, 1998 -- $ -- 39,500,000 $ 00 -- $ --
Net income for the
year ended
December 31, 1998
-- -- -- -- -- --
------------ ----------- ----------- ----------- ----------- -----------
Balance at
December 31, 1998
-- -- 39,500,000 100 -- --
Net (loss) for the
year ended
December 31, 1999
-- -- -- --
------------ ----------- ----------- ----------- ----------- -----------
Balance at
December 31, 1999
------------ ----------- ----------- ----------- ----------- -----------
-- -- 39,500,000 100 -- --
Reorganization/
recapitalization
-- -- 8,892,006 -- 500,000 --
Net (loss) for the
seven month period
ended July 31,
2000 (unaudited) -- -- -- -- -- --
Balance of July
31, 2000
(unaudited) -- $ -- 48,392,006 $ 100 500,000 $ --
============ =========== =========== =========== =========== ===========
<CAPTION>
Additional Retained Total
Paid-In Earnings
Capital
<S> <C> <C> <C>
Balance at
January 1, 1998 $ -- $ 291,424 $ 291,524
Net income for the
year ended
December 31, 1998
-- 66,792 66,792
----------- ----------- -----------
Balance at
December 31, 1998
-- 358,216 358,316
Net (loss) for the
year ended
December 31, 1999
-- (88,481) (88,481)
----------- ----------- -----------
Balance at
December 31, 1999
----------- ----------- -----------
-- 269,735 269,835
Reorganization/
recapitalization
-- -- --
Net (loss) for the
seven month period
ended July 31,
2000 (unaudited) -- (225,686) (225,686)
Balance of July
31, 2000
(unaudited) $ -- $ 44,049 $ 44,149
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 8
MYCOM GROUP, INC. AND CONSOLIDATED SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31 Seven Months Ended July 31
1998 1999 1999 2000
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net income (loss) $ 66,792 $ (88,481) $ 88,762 $ (225,686)
----------- ----------- ----------- -----------
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation 53,446 76,148 22,677 38,874
Loss on disposal of property and equipment 6,818
Deferred income tax 65,738 (43,008) 68,655 (134,957)
Decrease (increase) in:
Accounts receivable (394,513) 108,884 (276,571) (2,028,144)
Advances and prepaid expenses (12,334) (6,730) (7,925) (10,293)
Deposits (3,711) -- -- 1,234
Increase (decrease) in:
Accounts payable and accrued expenses 53,234 (61,608) (123,831) 2,119,898
----------- ----------- ----------- -----------
Net cash (used in) operating activities (171,348) (7,977) (228,233) (239,074)
----------- ----------- ----------- -----------
Cash flows from investing activities:
Purchases of property and equipment and other (182,694) (33,784) (3,696) (4,638)
----------- ----------- ----------- -----------
Net cash (used in) investing activities (182,694) (33,784) (3,696) (4,638)
----------- ----------- ----------- -----------
Cash flows from financing activities:
Leases 65,605 11,548 5,999 22,629
Capital advances on long-term financing 200,000 288,105 288,105 288,965
Payments on long-term financing (30,679) (76,729) (43,680) (55,467)
Payments on line of credit -- (200,000) -- --
----------- ----------- ----------- -----------
Net cash provided by financing activities 234,926 22,924 250,424 256,127
----------- ----------- ----------- -----------
Net increase (decrease) in cash (119,116) (18,837) 18,495 12,415
Cash and cash equivalents:
Beginning of year 147,481 28,365 28,365 9,528
----------- ----------- ----------- -----------
End of Period $ 28,365 $ 9,528 $ 46,860 $ 21,943
=========== =========== =========== ===========
Supplemental cash flow information:
Cash paid for interest $ 5,192 $ 53,538 $ 27,394 $ 29,169
=========== =========== =========== ===========
Cash paid for income taxes $ 7,914 $ -- $ -- $ --
=========== =========== =========== ===========
</TABLE>
F-6
<PAGE> 9
MYCOM GROUP, INC. AND CONSOLIDATED SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) Summary of Significant Accounting Policies
------------------------------------------
Description of Business
-----------------------
Mycom Group, Inc. (Mycom) is principally an enterprise communications
and information management company providing such services as multimedia
design and marketing, web design and web applications for businesses
headquartered in the United States. The Company changed its name from Myca
Group, Inc. to Mycom.com, Inc. on March 28, 2000, and then changed its name
to Mycom Group, Inc. on August 1, 2000. The Company's principal office is
located in Cincinnati, Ohio. (See Note 8 for a description of a segment of
business that was disposed of effective January 1, 2000.)
Business Combination
--------------------
Effective August 23, 2000, a business combination of Mycom Group, Inc.
(MGI), an Ohio corporation, and Bad Toys, Inc., a Nevada corporation, was
completed. Prior to the business combination, Bad Toys, Inc. spun off all
of its assets, liabilities and business thereby making Bad Toys, Inc. an
inactive publicly traded company. Bad Toys, Inc. issued 39,500,000 shares
of its common stock to the shareholders of MGI in exchange for 100%
ownership of MGI. MGI was then merged into Bad Toys, Inc. with Bad Toys,
Inc. being the survivor corporation. Bad Toys, Inc. then changed its name
to Mycom Group, Inc. (Mycom) and retained its Nevada charter. Immediately
prior to the business combination, Bad Toys, Inc. had approximately
8,892,006 shares of common stock outstanding. Certain Bad Toys, Inc.
shareholders agreed to return to the treasury 500,000 shares of Bad Toys,
Inc. stock. The Company has indicated that it anticipates reserving these
500,000 shares for possible issuance to employees for services and
issuances related to a stock option plan being considered. Since the former
shareholders of MGI own approximately 82% of Mycom after the business
combination, the transaction has been accounted for as a reverse
acquisition. Certain shareholders of Bad Toys, Inc. have escrowed 100,000
shares of stock as collateral for their guarantee to pay liabilities in
excess of assets estimated at approximately $250,000 assumed from Bad Toys,
Inc. in the spin-off distribution. A contingent liability exists with
respect to this matter, the ultimate resolution of which cannot presently
be determined. As a part of the due diligence reviews prior to the business
combination, it was determined that certain regulatory filings had not been
made by Bad Toys, Inc., resulting in recession rights to certain prior
investors in Bad Toys, Inc. On July 31, 2000, a contingent liability of
$922,600 relates to this matter, the ultimate resolution of which cannot
presently be determined. The July 31, 2000, unaudited Financial Statements
have been retroactively adjusted to give effect to the 8/23/2000, business
combination, as if it had occurred on 7/23/2000.
Principles of Consolidation
---------------------------
Mycom formed Mycom Enterprises on July 28, 2000, for the purpose of
distributing a 51% interest in its advertising business to certain
stockholders of Mycom. Mycom retained a 49% interest in Mycom Enterprises.
Since the 51% shareholders of Mycom Enterprises are significant
shareholders, officers and directors of Mycom, Mycom has significant
influence over the operations of Mycom Enterprises and in substance
controls Mycom Enterprises. Therefore, the accounts of Mycom Enterprises
are included in the consolidated financial statements and a provision for
the 51% ownership has been eliminated from the consolidated net income.
Stockholders' equity is after the distribution of the 51% interest.
Property and Equipment
----------------------
Property and equipment are stated at historical cost. Depreciation is
computed using straight-line and accelerated methods over the estimated
useful lives of the assets, ranging from 3 to 7 years.
F-7
<PAGE> 10
MYCOM GROUP, INC. AND CONSOLIDATED SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. The Company
maintains its cash in bank deposit accounts which, at times, exceed
federally insured limits. The Company has not experienced any losses in
such accounts, and believes it is not exposed to any significant credit
risk on cash and cash equivalents.
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 liabilities and assets 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.
Product Development
-------------------
The Company currently has various software and computer-related
products under development. During 1999, the Company incurred approximately
$99,000 in labor and other costs related to development. During the seven
month period ended July 31, 2000, the Company incurred approximately
$95,000, in development costs. These costs have been expensed as incurred.
Once all research and development is completed and technological
feasibility of the software product has been established, research and
development costs will be capitalized and amortized on a product-by-product
basis.
Advertising
-----------
Advertising costs are charged to operations when incurred. Advertising
and promotional costs were $4,067, $1,900, $678, and $3,752 for the years
ended December 31, 1998 and 1999, and the seven month periods ended July
31, 1999, and July 31, 2000, respectively.
Unaudited Financial Statements
------------------------------
The balance sheet as of July 31, 2000, the statements of operations and
the statements of cash flows for the seven month periods ended July 31,
1999 and July 31, 2000, and the statement of changes in stockholders'
equity for the seven month period ended July 31, 2000, have been prepared
by management without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations, cash flows and
changes in stockholders' equity at July 31, 2000, and for all periods
presented have been made.
F-8
<PAGE> 11
MYCOM GROUP, INC. AND CONSOLIDATED SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2) Line of Credit and Note Payable
-------------------------------
The Company has available $400,000 under a revolving credit agreement
that expires June 30, 2001. At December 31, 1999, the Company had no amount
outstanding on the line of credit. At July 31, 2000, the Company had
$335,000 outstanding under the line of credit. The line of credit bears
interest at the bank's prime rate plus 1%. The line of credit is
collateralized by substantially all assets of the Company, as well as the
personal guarantees of the four stockholders.
Note payable consisted of the following:
<TABLE>
<CAPTION>
December 31, 1999 July 31, 2000
(unaudited)
<S> <C> <C>
Line of credit $ -- $ 335,000
Note payable to bank
collateralized by substantially
all assets of the company,
payable in monthly installments
of $7,447 including interest at
the bank's prime rate plus 1%,
final payment due January
21, 2003 240,850 194,816
--------- ---------
240,850 529,815
Less amounts due within one year 69,457 404,457
--------- ---------
$ 171,393 $ 125,358
--------- ---------
</TABLE>
Maturities of the note payable as of December 31, are as follows:
2000 $ 69,457
2001 76,350
2002 83,928
2003 11,115
---------------
$240,850
===============
Maturities of the notes payable as of July 31, 2000, are as follows:
2000 $ 23,422
2001 411,350
2002 83,928
2003 11,115
---------------
$529,815
===============
3) Retirement Plans
----------------
The Company sponsors a plan for all employees, whereby employees can
elect to have a portion of their salary deferred. The Company contributes a
match based on a percentage determined before the end of each plan year.
Matching contributions totaled $13,402 and $25,018 for the years ended
December 31, 1998 and 1999, respectively. All such elective deferrals are
not subject to current income tax and are held by a third-party trustee.
The Company also sponsors a profit sharing plan, which covers eligible
employees. Discretionary contributions are determined by the principal
shareholders. Management did not make contributions for the years ended
December 31, 1998 and 1999.
F-9
<PAGE> 12
MYCOM GROUP, INC. AND CONSOLIDATED SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4) Income Taxes
------------
The Company has adopted Statement of Financial Accounting Standards No.
109 "Accounting for Income Taxes" ("FAS 109"). Under the provisions of FAS
109, an entity recognizes deferred tax assets and liabilities for future
tax consequences of events previously recognized in the Company's financial
statements or tax returns. The measurement of deferred tax assets and
liabilities is based on the provision of enacted tax law; the effects of
future changes in tax laws or rates are not anticipated. Under FAS 109,
measurement is computed using applicable current tax rates. Management has
used a 40% combined federal and state rate for purposes of calculating
deferred taxes.
MGI previously filed its income tax returns on the cash basis.
Temporary differences consist primarily of the timing of revenue and
expense recognition between the accrual basis and cash basis as well as
differences in depreciation methods and vacation accruals. Bad Toys, Inc.,
now Mycom Group, Inc., filed its tax returns on an accrual basis. Since MGI
was merged into Mycom Group, Inc., with Mycom Group, Inc. being the
survivor corporation, the Company's tax accounting method will be changed
to the accrual basis.
Components of the net deferred tax liability are:
<TABLE>
<CAPTION>
December 31, 1999 July 31, 2000
(Unaudited)
-------------------- ---------------------
<S> <C> <C>
Deferred tax assets $111,692 $919,808
Deferred tax liabilities 303,936 967,370
-------------------- ---------------------
Net deferred tax liability $192,244 $ 47,562
==================== =====================
</TABLE>
At December 31, 1999, and July 31, 2000, the Company has net operating
loss carryforwards totaling approximately $43,943 and $312,831,
respectively, that may be offset against future taxable income in various
years through 2020.
F-10
<PAGE> 13
MYCOM GROUP, INC. AND CONSOLIDATED SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5) Leases
------
The Company rents its office facilities and various equipment under
leases classified as operating leases. Future minimum lease payments are as
follows:
2000 $261,471
2001 242,032
2002 217,957
2003 73,894
The Company is a lessee under capital leases of various computer
equipment and furniture expiring at various times between December 10, 2000
and January 1, 2003. Future minimum lease payments required under these
capital leases are as follows:
<TABLE>
<CAPTION>
December 31, 1999 July 31, 2000
------------------------ ----------------------
(unaudited)
<S> <C> <C> <C>
2000 $28,267 $16,424
2001 16,419 29,113
2002 11,113 23,807
2003 643 6,882
------------------------ ----------------------
56,442 76,226
Less amount representing interest 8,763 12,787
------------------------ ----------------------
Net present value of minimum lease
obligations 47,679 63,439
Less current portion 28,265 35,964
------------------------ ----------------------
Long-term portion $19,414 $27,475
======================== ======================
</TABLE>
Property and equipment includes $77,153 cost and $11,763 accumulated
depreciation related to these leased assets at December 31, 1999 and
$104,930 and $20,281 at July 31, 2000. Depreciation expense includes
$11,763 in 1999 attributable to these same assets and includes $8,519
during the seven month period ended July 31, 2000.
F-11
<PAGE> 14
MYCOM GROUP, INC. AND CONSOLIDATED SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6) Property and Equipment
----------------------
Property and equipment consisted of the following:
December 31, 1999 July 31, 2000
(unaudited)
Furniture and fixtures $ 59,611 $ 59,611
Equipment 269,950 313,462
Leasehold improvements 5,454 5,454
------------------ ---------------
$ 335,015 $ 378,527
================== ===============
7) Customer Concentrations
-----------------------
For the years ended December 31, 1998 and 1999, and the seven months
ended July 31, 2000, the Company had two customers that accounted for
approximately 81%, 75%, and 88%, respectively, of its revenues.
8) Disposal of a Segment of Business
---------------------------------
Effective January 1, 2000, the Company disposed of its Lottery Machine
Service business and two other businesses in development stage. The Lottery
Machine Service contract and conceptual rights were distributed to the
existing stockholders of Mycom. No value was assigned to the contractual or
conceptual rights distributed, as the contract was for a Minority Business
Enterprise only and cannot be maintained by a public entity.
9) Preferred Stock and Common Stock
--------------------------------
The Company has 10,000,000 shares of $.01 par value preferred stock
authorized and none issued. Terms and preferences of future issuances of
preferred stock shall be at the discretion of the Company's Board of
Directors. The 10,000,000 shares of preferred stock and an increase to
90,000,000 authorized shares of common stock were provided for in amended
articles of incorporation dated August 18, 2000. The effect of the August
18, 2000 amendment was retroactively shown in the July 31, 2000 financial
statements. The Company intends to amend its articles to assign no par
value to its shares.
10) Stock Subscription
------------------
Pursuant to an agreement dated August 14, 2000, the Company issued
6,000,000 restricted shares of common stock to an entity with a provision
that within five days, the Company would receive $.50 per share. In
addition, the Company was to receive an additional $.50 per share upon
registration of the shares with the Securities and Exchange Commission. The
entity defaulted on its obligations; therefore, no funds were received. The
Company has issued a demand notice requiring return of the shares. The
shares were returned and cancelled.
F-12
<PAGE> 15
INDEX TO PRO FORMA FINANCIAL STATEMENTS
MYCOM GROUP, INC.
AND CONSOLIDATED SUBSIDIARY
BAD TOYS, INC.
PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED)
Pro Forma Financial Statements:
Balance Sheet F-14
Statements of Operations F-15 and F-16
Notes to Pro Forma Financial Statements F-17
F-13
<PAGE> 16
<TABLE>
<CAPTION>
MYCOM GROUP, INC. (MGI) AND CONSOLIDATED SUBSIDIARY
BAD TOYS, INC. (BDTY)
PRO FORMA BALANCE SHEET
(unaudited)
JULY 31, 2000
BDTY MGI Adjustments Combined
----------- ----------- ----------- -----------
ASSETS
<S> <C> <C> <C> <C>
Current Assets:
Cash $ -- $ 21,943 $ -- $ 21,943
Accounts receivable net of allowance
for doubtful accounts 2,840,589 2,840,589
Other
Prepaid expenses 18,173 18,173
----------- ----------- ----------- -----------
Total Current Assets 2,880,705 2,880,705
Property and equipment, net of
accumulated depreciation 195,585 195,585
Other assets
Deposits 7,803 7,803
----------- ----------- ----------- -----------
Total Assets $ -- $ 3,084,093 $ -- $ 3,084,093
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ -- $ 2,399,128 $ -- $ 2,399,128
Deferred income tax 38,487 38,487
Customer deposits
Related party payables
Current maturities notes payable, other 404,457 404,457
Current maturities of capital leases 35,964 35,964
----------- ----------- ----------- -----------
Total Current Liabilities 2,878,036 2,878,036
Notes payable, net of current maturities,
obligations under capital leases, net of
current maturities 125,358 125,358
Note payable, net of current maturities 27,475 27,475
Deferred income tax 9,075 9,075
----------- ----------- ----------- -----------
Total Liabilities -- 3,039,944 -- 3,039,944
----------- ----------- ----------- -----------
Stockholders' Equity :
Common stock 143,270 100 (1) (143,270) 100
Additional paid-in capital 935,750 -- (1) (935,750) --
Treasury stocks, 500,000 shares at no
cost -- -- -- --
Accumulated (deficit) (1,079,020) 44,049 (1) 1,079,020 44,049
----------- ----------- ----------- -----------
Total Stockholders' Equity -- 44,149 -- 44,149
----------- ----------- ----------- -----------
Total Liabilities and Stockholders' Equity $ -- $ 3,084,093 $ -- $ 3,084,093
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the proforma financial
statements.
F-14
<PAGE> 17
<TABLE>
<CAPTION>
MYCOM GROUP, INC. (MGI) AND CONSOLIDATED SUBSIDIARY
BAD TOYS, INC. (BDTY)
PRO FORMA STATEMENT OF OPERATIONS
(unaudited)
SEVEN MONTHS ENDED JULY 31, 2000
BDTY MGI Adjustments Combined
------------ ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Revenue $ -- $5,035,974 $ -- $5,035,974
Operating expenses -- 5,367,454 - 5,367,454
------------ ----------------- ----------------- ---------------
Net (loss) from operations -- (331,480) - (331,480)
============ ================= ================= ===============
Interest expenses -- (29,169) - (29,169)
Provision for income taxes deferred (credit)
-- (134,957) - 134,957
------------ ----------------- ----------------- ---------------
Net (Loss) $ -- $(225,686) $ -- $(225,686)
============ ================= ================= ===============
Net (Loss) per common share $nil $nil
================= ===============
Weighted average number of common shares
outstanding 47,892,006 47,892,006
================= ===============
</TABLE>
The accompanying notes are an integral part of the proforma financial
statements.
F-15
<PAGE> 18
<TABLE>
<CAPTION>
MYCOM GROUP, INC. (MGI) AND CONSOLIDATED SUBSIDIARY
BAD TOYS, INC. (BDTY)
PRO FORMA STATEMENT OF OPERATIONS
(unaudited)
YEAR ENDED DECEMBER 31, 1999
BDTY MGI Adjustments Combined
------------ ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Revenue $ -- $5,355,641 $ -- $5,355,641
Operating expenses -- 5,370,026 -- 5,370,026
------------ ---------------- ----------------- --------------
(Loss) from operations -- (14,385) -- (14,385)
Interest (expense) -- (53,538) (53,538)
Loss on disposal of property and
equipment (6,818) (6,818)
Deferred income tax credit -- 25,289 -- 25,289
(Loss) from discontinued operations (39,029) (2) (39,029) --
------------ ---------------- ----------------- ---------------
Net (Loss) $ -- $(88,481) $39,029 $(49,452)
============ ================ ================= ===============
Net (Loss) per common share $nil $nil
================ ===============
Weighted average common shares outstanding
39,500,000 39,500,000
================= ===============
</TABLE>
The accompanying notes are an integral part of the proforma financial
statements.
F-16
<PAGE> 19
MYCOM GROUP, INC. (MGI) AND CONSOLIDATED SUBSIDIARY
BAD TOYS, INC. (BDTY)
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(unaudited)
(1) General
--------
On August 23, 2000, BDTY issued 39,500,000 shares of its common stock
pursuant to the acquisition of Mycom Group, Inc. (an Ohio
corporation), which was then merged into BDTY. BDTY then changed its
name to Mycom Group, Inc. This business combination was accounted for
as a reverse acquisition.
(2) Pro Forma Information
---------------------
The pro forma financial statements give effect to the business
combination of BDTY and MGI as if the combination had taken place at
the beginning of the respective periods.
(3) Pro Forma Adjustments
---------------------
(1) This entry gives effect to eliminating BDTY stockholders' equity
accounts.
(2) This entry gives effect to the business segment disposal.
F-17
