<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 1999
- ----------------------------------------------------------------------------
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): SEPTEMBER 1, 1999
iTURF INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-25347 13-3963754
(STATE OR OTHER (COMMISSION FILE NO.) (IRS EMPLOYER
JURISDICTION OF IDENTIFICATION
INCORPORATION) NUMBER)
435 HUDSON STREET
NEW YORK, NEW YORK 10014
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICERS) (ZIP CODE)
(212) 741-7785
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
<PAGE>
This Form 8-K/A amends and completes the Registrant's Form 8-K filed on
September 7, 1999.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Financial Statements of [email protected], INC.
(i) Independent Auditors' Report
(ii) Balance Sheets as of December 31, 1997, December 31,
1998 and June 30, 1999 (unaudited)
(iii) Statements of Operations and Deficit for the years
ended December 31, 1997 and 1998 and for the six
months ended June 30, 1998 and 1999 (unaudited)
(iv) Statements of Cash Flows for the years ended December
31, 1997 and 1998 and for the six months ended June
30, 1998 and 1999 (unaudited)
(v) Notes to Financial Statements
(b) PRO FORMA FINANCIAL INFORMATION
(i) Unaudited Pro Forma Condensed Consolidated Financial
Information
(ii) Unaudited Pro Forma Condensed Consolidated Balance
Sheet as of July 31, 1999
(iii) Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the six months ended July 31, 1999
(iv) Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the year ended January 31, 1999
(v) Notes to Unaudited Pro Forma Condensed Consolidated
Financial Information
(c) EXHIBITS
Exhibit 2.1* Agreement and Plan of Merger dated August 9,
1999, as amended September 1, 1999, by and among
iTurf Inc., iTurf Acquisition Corporation,
[email protected], Inc. ("Taponline"), the
stockholders of Taponline and MarketSource
Corporation (the "Merger Agreement") (incorporated
by reference to exhibit 10.17 of iTurf's Quarterly
Report on Form 10-Q for the period ended July 31,
1999).
Exhibit 2.2* Amendment No. 1, dated September 1, 1999, to
Merger Agreement
Exhibit 23.1 Consent of Independent Auditors
Exhibit 99.1* Online Advertising Authorized Reseller
Agreement between iTurf, Taponline and
MarketSource Corporation, dated September 1,
1999.
Exhibit 99.2* Offline Advertising Purchase Agreement
between iTurf and MarketSource Corporation, dated
September 1, 1999.
- ------------
* Previously filed.
<PAGE>
[LETTERHEAD OF BDO SEIDMAN, LLP]
INDEPENDENT AUDITORS' REPORT
[email protected], INC.
Cranbury, New Jersey
We have audited the accompanying balance sheets of [email protected], INC. (the
"Company") as of December 31, 1998 and 1997, and the related statements of
operations and deficit and cash flows for the years then ended. These financial
statements are the responsibility of MarketSource Corporation's ("MarketSource")
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 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 audits provide a reasonable basis for our opinion.
The operations covered by the financial statements of [email protected], INC.
referred to above had no separate legal status or existence prior to August 1,
1998. The accompanying financial statements were prepared as described in Note 2
and include allocations of various costs incurred by MarketSource based on
estimates as described in the notes to the financial statements. Accordingly,
the accompanying financial statements are not necessarily indicative of the
results of operations that would have been attained if the Company had been
operated as a separate entity. The Company is dependent on MarketSource to
provide financing and support for its operations.
In our opinion, the financial statements referred to above, present fairly in
all material respects, the financial position of [email protected], INC. as of
December 31, 1998 and 1997, and the results of its operations and cash flows for
the years then ended, in conformity with generally accepted accounting
principles.
BDO Seidman, LLP
Woodbridge, New Jersey
October 13, 1999
<PAGE>
[email protected], INC.
BALANCE SHEETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, JUNE 30,
------------------------------- 1999
1997 1998 (UNAUDITED)
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Prepaid and other current assets $ -- $ -- $ 6,384
-------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS -- -- 6,384
PROPERTY, PLANT AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION AND AMORTIZATION 127,747 51,461 169,229
INTANGIBLE ASSETS, LESS ACCUMULATED AMORTIZATION -- 440,275 612,957
-------------------------------------------------------------------------------------------------------
$ 127,747 $ 491,736 $ 788,570
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT:
Accounts payable and accrued expenses $ -- $ -- $ 275,385
Deferred revenues -- -- 55,500
Affiliate payable 742,406 1,520,278 3,263,737
-------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 742,406 1,520,278 3,594,622
-------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S DEFICIT:
Common stock; no par value; 1,000 shares
authorized; 100 shares issued and outstanding
-- -- --
Additional paid-in capital 100 100 100
Deficit (614,759) (1,028,642) (2,806,152)
-------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDER'S DEFICIT (614,659) (1,028,542) (2,806,052)
-------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDER'S
DEFICIT $ 127,747 $ 491,736 $ 788,570
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
[email protected], INC.
STATEMENTS OF OPERATIONS AND DEFICIT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the year ended For the six months ended
December 31, June 30,
---------------------------------------------------------------------------------------------------------------------
1997 1998 1998 1999
---------------------------------------------------------------------------------------------------------------------
(unaudited)
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET REVENUES $ 570,843 $ 593,847 $ 166,887 $ 85,405
COST OF SERVICES (COMMISSIONS) 9,691 22,261 5,679 4,756
---------------------------------------------------------------------------------------------------------------------
GROSS MARGIN 561,152 571,586 161,208 80,649
---------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Sales and marketing 893,285 779,438 161,992 1,108,681
General and administrative 282,626 206,031 120,644 749,478
---------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES (1,175,911) (985,469) (282,636) (1,858,159)
---------------------------------------------------------------------------------------------------------------------
NET LOSS (614,759) (413,883) (121,428) (1,777,510)
DEFICIT, BEGINNING OF PERIOD - (614,759) (614,759) (1,028,642)
---------------------------------------------------------------------------------------------------------------------
DEFICIT, END OF PERIOD $ (614,759) $(1,028,642) $(736,187) $(2,806,152)
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
[email protected], INC.
STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the year ended For the six months ended
December 31, June 30,
---------------------------------------------------------------------------------------------------------------------
1997 1998 1998 1999
---------------------------------------------------------------------------------------------------------------------
(Unaudited)
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(614,759) $(413,883) $(121,428) $(1,777,510)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 90,682 76,286 38,148 20,462
Amortization - - - 23,437
Changes in assets and liabilities:
Prepaid expenses and other current
assets - - - (6,384)
Accounts payable and accrued
expenses - - - 275,385
Deferred revenues - - - 55,500
---------------------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING
ACTIVITIES (524,077) (337,597) (83,280) (1,409,110)
---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture, fixtures and
equipment (9,524) - - (138,230)
Intangible assets - (440,275) (187,864) (196,119)
---------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING
ACTIVITIES (9,524) (440,275) (187,864) (334,349)
---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Affiliated financing/payments 533,601 777,872 271,144 1,743,459
---------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH - - - -
CASH, BEGINNING OF YEAR - - - -
---------------------------------------------------------------------------------------------------------------------
CASH, END OF YEAR $ - $ - $ - $ -
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
On January 1, 1997, MarketSource contributed approximately $209,000 of
furniture, fixtures and equipment to the Company.
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
[email protected], INC.
NOTES TO FINANCIAL STATEMENTS
INFORMATION AS OF JUNE 30, 1999 AND FOR THE 6 MONTHS
ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED
- --------------------------------------------------------------------------------
1. BUSINESS [email protected], Inc. (the "Company") is an internet
marketing company focused primarily at the college
student market. Effective August 6, 1998, the
Company was incorporated as a wholly-owned
subsidiary of MarketSource Corporation
("MarketSource"). The Company utilizes
MarketSource's business relationships and
infrastructure and is dependent on MarketSource to
provide financing and support for its operations.
Prior to August 6, 1998, the Company operated as a
separate line of service within MarketSource.
2. BASIS OF
PRESENTATION MarketSource Corporation is currently in the
process of negotiating the merger of the Company
with a third party.
The amounts included in the accompanying financial
statements are presented on a historical cost
basis and do not reflect any adjustments for
purchase accounting.
Historically, financial statements were not
prepared for the Company. These financial
statements have been carved out from the
historical financial records of MarketSource and
are intended to present the operations and cash
flows of the Company on a stand alone basis. All
of the allocations and estimates in the financial
statements are based on the assumptions that
MarketSource's management believes are reasonable
under the circumstances. However, these
allocations and estimates are not necessarily
indicative of the costs and expenses that would
have resulted if the Company had been operated as
a separate entity, the determination of which is
not practicable. Accordingly, the financial
statements of the Company do not necessarily
reflect the results of operations or financial
position that would have existed had the Company
been a separate entity. The financial statements
include expenses, which have been allocated to the
Company by MarketSource on a specific
identification basis, plus its allocated share of
the costs associated with resources it shares with
MarketSource. Allocations from MarketSource for
shared resources have been made primarily based on
the relationship of the costs to revenue.
Certain indirect costs were historically included
in the financial statements of MarketSource. These
costs, which principally include interest and
other expenses, are not specifically identifiable
nor allocable to the service lines and,
accordingly, have been omitted from the financial
statements.
<PAGE>
[email protected], INC.
NOTES TO FINANCIAL STATEMENTS
INFORMATION AS OF JUNE 30, 1999 AND FOR THE 6 MONTHS
ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED
- --------------------------------------------------------------------------------
All billing and collection activities of the
Company are performed by MarketSource. These
activities have been reflected in "Affiliate
payable."
3. SUMMARY OF FIXED ASSETS
SIGNIFICANT
ACCOUNTING POLICIES
Fixed assets, comprised primarily of equipment,
are stated at cost and depreciated using the
straight-line method over the estimated useful
lives of the assets, primarily 5 years.
INTANGIBLE ASSETS
Intangible assets relate to the initial costs of
developing the Company's web site. These costs are
being amortized on the straight-line method over 3
years.
REVENUE RECOGNITION
Revenues are recognized as marketing services are
provided to customers. Billings recorded in
advance of the Company providing marketing
services are deferred until the services are
provided.
ADVERTISING COSTS
The Company expenses the cost of advertising as
incurred. Advertising costs were approximately
$294,000 and $23,000 for the six months ended June
30, 1999 and 1998 and $380,000 and $364,000 for
the years ended December 31, 1998 and 1997,
respectively.
<PAGE>
[email protected], INC.
NOTES TO FINANCIAL STATEMENTS
INFORMATION AS OF JUNE 30, 1999 AND FOR THE 6 MONTHS
ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED
- --------------------------------------------------------------------------------
INCOME TAXES
The Company's results have been included in the
federal tax return of MarketSource. Income taxes
have been accounted for as if the Company had
operated as a separate entity. Deferred tax assets
and liabilities are recognized with respect to the
tax consequences attributable to the difference
between the financial statement carrying values
and tax bases of assets and liabilities. Deferred
tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable
income in the years in which these temporary
differences are expected to reverse.
The Company has not provided a benefit for income
taxes since, if it were a separate company, any
deferred benefits as a result of its net operating
loss carryforward, would be subject to a full
valuation allowance.
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 amount 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.
LONG-LIVED ASSETS
Long-lived assets, such as property and equipment,
are evaluated for impairment when events or
changes in circumstances indicate that the
carrying amount of the assets may not be
recoverable through the estimated undiscounted
future cash flows from the use of these assets. If
and when any such impairment exists, the related
assets will be written down to fair value. This
policy is in accordance with Statement of
Financial Accounting Standards No. 121,
"Accounting for Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of." No
write downs have been necessary for the years
ended December 31, 1998 and 1997.
4. MAJOR CUSTOMERS For the year ended December 31, 1998, one customer
represented 40% of revenues.
<PAGE>
[email protected], INC.
NOTES TO FINANCIAL STATEMENTS
INFORMATION AS OF JUNE 30, 1999 AND FOR THE 6 MONTHS
ENDED JUNE 30, 1999 AND 1998 IS UNAUDITED
- --------------------------------------------------------------------------------
5. YEAR 2000 ISSUES Like other companies, the Company could be
(UNAUDITED) adversely affected if the computer systems it, its
suppliers or customers use do not properly process
and calculate date-related information and data
from the period surrounding and including January
1, 2000. This is commonly known as the "Year 2000"
issue. At this time, because of the complexities
involved in the issue, management cannot provide
assurances that the Year 2000 issue will not have
an impact on the Company's operations.
6. UNAUDITED INTERIM The financial statements as of June 30, 1999 and
STATEMENTS 1998 and for the six months then ended are
unaudited; however, in the opinion of management,
all adjustments (consisting solely of normal
recurring adjustments) necessary for a fair
presentation of the financial statements for the
interim periods have been made. The results of
interim periods are not necessarily indicative of
the results to be obtained in a full fiscal year.
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On September 1, 1999, iTurf Inc. ("iTurf") acquired [email protected], Inc., a
New Jersey corporation ("Taponline"). Taponline was acquired pursuant to an
Agreement and Plan of Merger, dated as of August 9, 1999, as amended
September 1, 1999, by and among iTurf, iTurf Acquisition Corporation a Delaware
corporation, ("Merger Sub"), Taponline, the stockholders of Taponline and
MarketSource Corporation (a Delaware corporation) (the "Merger Agreement").
Pursuant to the Merger Agreement, Merger Sub was merged with and into Taponline,
with Taponline as the surviving corporation (the "Merger"). As a result of the
Merger, Taponline became a wholly-owned subsidiary of iTurf.
The aggregate consideration paid in connection with the Merger consisted of
1,586,996 shares of iTurf Class A common stock valued at approximately
$19.1 million, or $12.0625 per share based on iTurf's share price at the time
the transaction was announced. The Merger is intended to qualify as a tax-free
reorganization and will be accounted for under the purchase method of
accounting.
Taponline operates a community and content Web site focusing on college and
university students between the ages of 18 and 24. The description of the Merger
Agreement, which is filed as an exhibit to this Form 8-K, does not purport to be
complete and is qualified in its entirety by the provisions of the Merger
Agreement.
The following unaudited condensed consolidated financial information sets
forth the consolidated financial position and consolidated results of operations
of iTurf and Taponline assuming the combination was accounted for using the
purchase method of accounting and that the combination was consummated (i) on
July 31, 1999 for the unaudited pro forma condensed consolidated balance sheet
and (ii) as of the beginning of the earliest period presented in the unaudited
pro forma condensed consolidated statements of operations. Accordingly, the
assets acquired and liabilities assumed have been recorded at their estimated
fair values, which are subject to further adjustment based on future events and
future analysis.
The unaudited pro forma information consolidates iTurf's historical balance
sheet as of July 31, 1999 with the balance sheet of Taponline as of June 30,
1999, and iTurf's historical statements of operations for the six months ended
July 31, 1999 and the fiscal year ended January 31, 1999 with the historical
statements of operations of Taponline for the six months ended June 30, 1999 and
the fiscal year ended December 31, 1998, respectively.
The pro forma condensed consolidated balance sheet and statements of
operations have been prepared by the management of iTurf. The following
unaudited pro forma condensed consolidated information is presented for
illustration purposes only. It is not necessarily indicative of the financial
position or results of operations which would actually have been reported had
the combination been in effect during those periods or which may be reported in
the future. The statements should be read in conjunction with iTurf's historical
financial statements and notes thereto included in filings with the SEC and
Taponline's financial statements which have been included elsewhere in this
report.
F-27
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JULY 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
ITURF T@PONLINE PRO FORMA
HISTORICAL HISTORICAL(i) ADJUSTMENTS PRO FORMA
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.................. $ 22,422 $ 22,422
Marketable securities...................... 55,517 55,517
Prepaid expenses and other current
assets................................... 1,840 6 1,846
-------- ------- ------- --------
Total current assets..................... 79,779 6 79,785
PROPERTY & EQUIPMENT, NET.................... 1,868 170 2,038
INTANGIBLE ASSETS............................ 313 613 19,145 (a) 20,071
-------- ------- ------- --------
TOTAL ASSETS................................. $ 81,960 $ 789 $19,145 $101,894
======== ======= ======= ========
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable and other current
liabilities.............................. $ 1,207 $ 331 $ 460 (a) $ 1,998
Liabilities due affiliates................. 2,632 3,264 (3,264)(b) 2,632
-------- ------- ------- --------
Total current liabilities................ 3,839 3,595 (2,804) 4,630
STOCKHOLDERS' EQUITY
iTurf Preferred Stock......................
iTurf Common Stock--Class A................ 48 16 (a) 64
iTurm Common Stock--Class B................ 125 125
Additional paid-in capital................. 97,261 19,127 (a) 116,388
Investment in common stock of dELiA*s
Inc...................................... (17,734) (17,734)
Retained earnings (deficit)................ (1,579) (2,806) 3,264 (b) (1,579)
(458)(a)
-------- ------- ------- --------
Total stockholders' equity............... 78,121 (2,806) 21,949 97,264
-------- ------- ------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY... $ 81,960 $ 789 $19,145 $101,894
======== ======= ======= ========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
information.
F-28
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JULY 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
T@PONLINE PRO FORMA
iTURF HISTORICAL HISTORICAL(i) ADJUSTMENTS PRO FORMA
---------------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
NET REVENUES................................... $ 5,567 $ 85 $ 5,652
COST OF REVENUES............................... 2,983 5 (5)(c) 2,983
------- ------- ------- -------
GROSS PROFIT................................... 2,584 80 5 2,669
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES... 5,805 1,858 5(c) 7,668
GOODWILL AMORTIZATION.......................... 1,914(d) 1,914
INTEREST INCOME, NET........................... (1,101) (1,101)
------- ------- ------- -------
LOSS BEFORE INCOME TAXES....................... (2,120) (1,778) (1,914) (5,812)
BENEFIT FOR INCOME TAXES....................... (161) (135)(e) (296)
------- ------- ------- -------
NET LOSS....................................... $(1,959) $(1,778) $(1,779) $(5,516)
======= ======= ======= =======
BASIC AND DILUTED NET LOSS PER SHARE........... $ (0.13) $ (0.33)
======= ======= ======= =======
SHARES USED IN THE CALCULATION OF BASIC AND
DILUTED NET LOSS PER SHARE................... 15,372 1,587(a) 16,959
======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
information.
F-29
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
T@PONLINE PRO FORMA
iTURF HISTORICAL HISTORICAL(ii) ADJUSTMENTS PRO FORMA
---------------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
NET REVENUES................................... $ 4,014 $ 594 $ 4,608
COST OR REVENUES............................... 1,687 22 (22)(c) 1,687
------- ------- ------- -------
GROSS PROFIT................................... 2,327 572 22 2,921
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES... 1,506 986 22 (c) 2,514
GOODWILL AMORTIZATION.......................... 3,829 (d) 3,829
INTEREST EXPENSE, NET.......................... 41 41
------- ------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES.............. 780 (414) (3,829) (3,463)
PROVISION (BENEFIT) FOR INCOME TAXES........... 355 (188)(e) 167
------- ------- ------- -------
NET INCOME (LOSS).............................. $ 425 $ (414) $(3,641) $(3,630)
======= ======= ======= =======
BASIC AND DILUTED NET INCOME (LOSS) PER
SHARE........................................ $ 0.03 $ (0.26)
======= ======= ======= =======
SHARES USED IN THE CALCULATION OF BASIC NET
INCOME (LOSS) PER SHARE...................... 12,500 1,587 (a) 14,087
======= ======= ======= =======
SHARES USED IN THE CALCULATION OF DILUTED NET
INCOME (LOSS) PER SHARE...................... 12,518 1,587 (a) 14,087
(18)(f)
======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
information.
F-30
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
I. ADJUSTMENTS
(a) To reflect iTurf's purchase of Taponline for 1,586,996 shares of its
common stock, valued at $19.1 million or $12.0625 per share based on
iTurf's share price at the time the transaction was announced, and
estimated cash acquisition expenses of $460,000 less $458,000 equal to
the net book value of the assets acquired based upon a preliminary
purchase price allocation. Final allocation of the purchase price may
involve a revaluation of certain assets.
(b) To eliminate affiliate liabilities not assumed by iTurf.
(c) To reclassify internal sales commissions to selling, general and
administrative expenses in accordance with iTurf accounting policies.
(d) To reflect the amortization over 5 years of goodwill recorded in the
purchase of Taponline.
(e) To reflect the tax effect of Taponline's pre-tax income based on iTurf's
historical tax rate for the period.
(f) To adjust for anti-dilutive stock options.
II. OTHER ITEMS
(i) The Taponline historical information is as of and for the six months
ended June 30, 1999.
(ii) The Taponline historical information is for the year ended
December 31, 1998.
F-31
<PAGE>
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 thereunto duly authorized.
Dated: November 3, 1999 iTurf Inc.
By: /s/ Stephen I. Kahn
------------------------------------
Stephen I. Kahn
Chairman of the Board, President and
Chief Executive Officer
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in the Form 8-K/A of iTurf Inc. of our report dated
October 13, 1999 with respect to the financial statements of [email protected], INC.
which are contained in this Form 8-K/A of iTurf Inc.
BDO Seidman, LLP
Woodbridge, New Jersey
October 29, 1999