<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
May 5, 2000
-------------------------------------------------------------------------------
Date of Report (Date of Earliest Event Reported)
Envision Development Corporation
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(Exact name of registrant as specified in its charter)
Florida 001-15311 65-0981457
-------------- --------------- ------------------
State of Commission File IRS Employer
Incorporation Number Identification No.
100 Nickerson Road, Marlboro, Massachusetts 01752
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Address of principal executive offices
(508) 480-3000
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Registrant's telephone number, including area code
4 Mount Royal Avenue, Marlboro, Massachusetts 01752
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(Former name or former address, if changed since last report)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On May 22, 2000, Envision Development Corporation ("Envision") filed a Current
Report on Form 8-K (the "Envision Initial Report") describing the acquisition of
certain assets and the assumption of certain liabilities of LiQ, Inc. ("LiQ").
This Current Report on Form 8-K/A amends the Envision Initial Report by
including with this Form 8-K/A the financial statements and pro forma financial
information prescribed by Item 7 of Form 8-K. In accordance with Item 7(a)(4)
and Item 7(b)(2) of Form 8-K, such financial statements and pro forma financial
information are filed by amendment to the Envision Initial Report no later than
75 days from May 5, 2000.
Item 7. Financial Statements and Pro Forma Financial Information.
(a) Financial Statements of LiQ, Inc.
Independent Auditors' Report
Balance Sheet as of January 31, 2000
Statement of Operations for the period from February 4, 1999 (inception) to
January 31, 2000
Statement of Changes in Stockholders' Deficiency for the period from February 4,
1999 (inception) to January 31, 2000
Statement of Cash Flows for the period from February 4, 1999 (inception) to
January 31, 2000
Notes to Financial Statements
(b) Pro Forma Financial Information
Pro Forma Combined Balance Sheet as of January 29, 2000 (Unaudited)
Pro Forma Combined Statement of Operations for the Fiscal Year Ended
January 29, 2000 (Unaudited)
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized this 19th day of July, 2000.
ENVISION DEVELOPMENT CORPORATION
By: /s/ WILLIAM J. PATCH
---------------------------------------
William J. Patch
Chairman and Chief Executive Officer
<PAGE> 3
LiQ, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
For the Period February 4, 1999 (Inception) Through January 31, 2000
<PAGE> 4
LiQ, INC.
(A Development Stage Company)
CONTENTS
--------------------------------------------------------------------------------
PAGE
----
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Operations 3
Statement of Changes in Stockholders' Deficiency 4
Statement of Cash Flows 5
NOTES TO FINANCIAL STATEMENTS 6-9
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
LiQ, Inc.
We have audited the accompanying balance sheet of LiQ, Inc. (a Development Stage
Company) as of January 31, 2000, and the related statements of operations,
changes in stockholders' deficiency and cash flows for the period from February
4, 1999 (inception) through January 31, 2000. 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 financial statements referred to above present fairly, in
all material respects, the financial position of LiQ, Inc. as of January 31,
2000, and the results of its operations and its cash flows for the period
February 4, 1999 (inception) through January 31, 2000 in conformity with
generally accepted accounting principles.
/s/ Marcum & Kliegman LLP
-------------------------
March 22, 2000
<PAGE> 6
LiQ, INC.
(A Development Stage Company)
BALANCE SHEET
JANUARY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
CURRENT ASSETS
Cash $ 15,713
PROPERTY AND EQUIPMENT, Net 34,562
OTHER ASSETS
Security deposit 123,498
---------
TOTAL ASSETS $ 173,773
=========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 62,926
OTHER LIABILITIES
Advances from stockholders $ 235,300
Note payable, related party 101,111
---------
TOTAL OTHER LIABILITIES 336,411
---------
TOTAL LIABILITIES 399,337
COMMITMENTS
STOCKHOLDERS' DEFICIENCY
Common stock, $.0001 par value, 10,000,000 shares
authorized 3,300,550 issued and outstanding 330
Additional paid-in capital 899,420
Accumulated deficit during development (1,125,314)
----------
TOTAL STOCKHOLDERS' DEFICIENCY (225,564)
----------
TOTAL LIABILITIES AND STOCKHOLDERS' $ 173,773
============
DEFICIENCY
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2
<PAGE> 7
LiQ, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Period February 4, 1999 (Inception) through January 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
OPERATING REVENUE $ --
-----------------
OPERATING EXPENSES
Website development costs $ 103,014
General and administrative expenses 1,021,920
------------
TOTAL OPERATING EXPENSE 1,124,934
------------
NET LOSS BEFORE INCOME TAXES (1,124,934)
INCOME TAXES 380
------------
NET LOSS $(1,125,314)
===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3
<PAGE> 8
LiQ, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
For the Period February 4, 1999 (Inception) through January 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock Deficit
-------------------------- Accumulated
Amount Additional During the
Par Value Paid-In Development
Shares $0.0001 Capital Stage Total
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE-February 4, 1999
(Inception) -- $ -- $ -- $ -- $ --
Issuance of shares 3,300,550 330 899,420 -- 899,750
Net loss (1,125,314) (1,125,314)
----------- ----------- ----------- ----------- -----------
BALANCE - January 31, 2000 3,300,550 $ 330 $ 899,420 $(1,125,314) $ (225,564)
=========== =========== =========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
4
<PAGE> 9
LiQ, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FEBRUARY 4, 1999 (INCEPTION) THROUGH JANUARY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,125,314)
Adjustments to reconcile net loss to net cash used in
operating activities:
Stock compensation $ 189,750
Depreciation 7,918
Increase in security deposit (123,498)
Increase in accounts payable and accrued expenses 62,926
------------
TOTAL ADJUSTMENTS 137,096
------------
NET CASH USED IN OPERATING ACTIVITIES (988,218)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (42,480)
------------
NET CASH USED IN INVESTING ACTIVITIES (42,480)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 710,000
Increase in advances to stockholders 235,300
Increase in note payable, related party 101,111
------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,046,411
-----------
NET INCREASE IN CASH 15,713
CASH - Beginning --
------------
CASH - Ending $ 15,713
============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
5
<PAGE> 10
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
LiQ, Inc. (the "Company"), was incorporated on February 4, 1999 in the
State of Delaware. The Company was established to be an internet portal
for social shopping in where two or more people can be engaged in
discussions of the purchasing of products. The Company has not commenced
operations and is considered a development stage company in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 7.
PROPERTY AND EQUIPMENT AND DEPRECIATION
Property and equipment is stated at cost. Maintenance and repairs are
charged to expense as incurred; costs of major additions and betterments
are capitalized. When property and equipment is sold or otherwise
disposed of, the cost and related accumulated depreciation are eliminated
from the accounts and any resulting gain or loss is reflected in income.
Depreciation is provided for using the straight line and accelerated
methods over the estimated useful lives of the related assets.
INCOME TAXES
The provision for income taxes is based on income recognized for
financial statement purposes and includes the effects of temporary
differences between such income and that recognized for tax return
purposes.
ADVERTISING COSTS AND WEBSITE DEVELOPMENT COSTS
Advertising costs and website development costs of $25,238 and $103,014,
respectively, are expensed as incurred during the period February 4, 1999
(inception) through January 31, 2000.
USE OF ESTIMATES IN THE FINANCIAL STATEMENTS
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.
6
<PAGE> 11
NOTE 2 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
Property and equipment at January 31, 2000 consists of the following:
<S> <C>
Furniture and fixtures $10,111
Computer equipment 26,022
Telecommunications equipment 6,347
-------
42,480
Less: accumulated depreciation (7,918)
-------
Property and Equipment, net $34,562
=======
</TABLE>
Depreciation expense for the period February 4, 1999 (inception) through
January 31, 2000 was $7,918.
NOTE 4 - INCOME TAXES
The provision for income taxes for the period February 4, 1999
(inception) through January 31, 2000 consists of the following:
Federal $ --
State and City 380
-----
Total $ 380
=====
The Company recognizes deferred tax assets for the future tax effect of
net operating loss carry forwards. A valuation allowance is required if,
based on the weight of available evidence, it is more likely than not
that some portion or all of the deferred tax assets will not be realized.
Management concluded a valuation allowance was appropriate at January 31,
2000 due to operating losses incurred. The need for the valuation
allowance is evaluated periodically by management.
The components of deferred tax assets at January 31, 2000 are as follows:
Net operating loss $ 461,000
Accumulated depreciation (3,000)
---------
458,000
Less: valuation allowance (458,000)
Deferred Tax Asset, Net of Valuation Allowance $ --
=========
7
<PAGE> 12
NOTE 4 - INCOME TAXES, continued
An operating loss carry forward, which may provide future tax benefits,
approximates $1,125,000 at January 31, 2000. This operating loss carry
forward expires in 2020.
NOTE 5 - COMMITMENTS
LEASE ARRANGEMENT
During November 1999, the Company entered into a noncancellable operating
lease for office space expiring on November 30, 2004. As part of the
lease agreement, the Company paid a security deposit in the amount of
$123,497 which is equal to the rent expense for the last year of the
lease. The total rent expense for the period February 4 through January
31, 2000 was $80,948.
During September 1999, the Company entered into a noncancellable
operating lease for a web server expiring in September of 2001. Total
equipment lease expense for the period February 4 through January 31,
2000 was $15,860.
The minimum commitments for the remainder of the leases is as follows:
For the Year
Ending January 31, Amount
------------------ --------
2001 $131,300
2002 126,425
2003 117,000
2004 120,000
2005 103,000
--------
Total $597,725
========
NOTE 6 - NOTE PAYABLE, RELATED PARTY
The Company was loaned money from a related party. This loan is
non-interest bearing and has no definitive repayment terms. The related
party has agreed not to demand payment until subsequent to February 1,
2001.
NOTE 7 - ADVANCES FROM SHAREHOLDERS
The Company was advanced monies from stockholders to be used in paying
various expenses incurred in the beginning stages of operation. The
shareholder has agreed not to demand payment until subsequent to February
1, 2001.
8
<PAGE> 13
NOTE 8 - SUBSEQUENT EVENTS
INCENTIVE STOCK OPTION PLAN
During February 2000, the Company adopted a stock option plan, an
aggregate of 3,000,000 shares of common stock are authorized for issuance
under the plan. The plan provides that options may be granted to attract
and retain key employees and certain outside consultants of the Company.
Options granted under the plan are exercisable for a period of ten years.
In addition, the option price will be determined by a committee (as
defined in the agreement) and set forth in an agreement pursuant to which
each option is granted, however the option price for each incentive stock
option will not be less than 100% of market value of the common stock on
the grant date.
9
<PAGE> 14
ENVISION DEVELOPMENT CORPORATION
(SUCCESSOR TO PERFUMANIA.COM, INC.)
FORWARD LOOKING STATEMENTS
This Report on Form 8-K contains forward looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors,
some of which are beyond our control, that may cause the actual results,
performance or achievements of Envision Development Corporation or its industry
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. These forward-looking
statements are based on our current expectations and are subject to a number of
risks, uncertainties and assumptions relating to our operations, financial
condition and results of operations, including, among others, rapid
technological and regulatory changes in the industries we serve, the financial
resources of our customers, our numerous competitors and the few barriers to
entry for potential competitors, our uncertain revenue growth, our ability to
attract and retain qualified personnel, our ability to expand our infrastructure
and manage our growth, and our ability to identify, finance and integrate
acquisitions, among others. If any of these risks or uncertainties materialize,
or if any of the underlying assumptions prove incorrect, actual results may
differ significantly from results expressed or implied in any forward-looking
statements made by us. These and other risks are detailed in the Annual Report
on Form 10-K as of and for the year ending January 29, 2000 and in other
documents filed by us with the Securities and Exchange Commission. Envision
undertakes no obligation to update publicly any forward-looking statements for
any reason, even if new information becomes available or other events occur in
the future.
PRO FORMA FINANCIAL INFORMATION
(Unaudited)
On May 5, 2000, the Board of Directors of Envision Development Corporation
("Envision" or the "Company") approved an Agreement and Plan of Merger
("Agreement") with LiQ Inc. ("LiQ"), a Delaware corporation. Envision issued
640,000 shares of its common stock in exchange for all of the issued and
outstanding shares of LiQ. The transaction will be accounted for as a purchase.
LiQ integrates voice-enabled communications via VoIP, document sharing, and
co-browsing over the Internet or corporate intranets. The LiQ IsoSpace platform
enables live, Web-based communications, transactions, and real-time knowledge
exchange.
The total purchase price is valued at approximately $36,800,000, consisting of
640,000 shares of Envision common stock. The shares issued by the Company in
connection with the LiQ acquisition are not registered under the Securities Act
of 1933 and are subject to restrictions on transferability for a period of 12
months from the date of issuance. The value of Envision's shares included in the
purchase price was calculated net of an estimated 15% market value discount to
reflect the restrictions on the transferability. The market value was calculated
using the average of the closing price of the previous ten trading days of
Envision common stock prior to consummation of the transaction. The number of
shares of Envision common stock given in exchange for such shares of LiQ capital
stock was determined by negotiations among the parties to the Agreement.
The following presents the pro forma financial information (unaudited) of
Envision as of and for the fiscal year ended January 29, 2000 as if the
acquisition of LiQ was consummated at the beginning of the fiscal period
10
<PAGE> 15
for income statement purposes and at the end of the fiscal period for balance
sheet purposes. The historical financial information for LiQ is derived from the
historical financial statements of LiQ as of and for the period from February 4,
1999 (inception) to January 31, 2000 and is intended only for presentation of
the Company's pro forma financial information. The pro forma financial
information is provided for informational purposes only and should not be
construed to be indicative of the Company's results of operations had the
acquisition been consummated on the dates assumed and does not project the
Company's results of operations for any future period. The pro forma adjustments
are described below.
11
<PAGE> 16
<TABLE>
<CAPTION>
PRO FORMA COMBINED BALANCE SHEET AS OF JANUARY 29, 2000
(UNAUDITED)
Envision
Historical As Pro Forma Pro Forma
Adjusted (7) LiQ (1) Adjustments Results
--------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $9,208,501 $15,713 $9,224,214
--------------- --------------- ---------------- ----------------
Total current assets 9,208,501 15,713 9,224,214
Net assets from discontinued
operations 832,208 -- 832,208
Property and equipment, net -- 34,562 34,562
Other assets -- 123,498 123,498
Intangible assets, net -- -- 37,044,191 (2) 37,044,191
--------------- --------------- ---------------- ----------------
Total assets $10,040,709 $173,773 $37,044,191 $47,258,673
=============== =============== ================ ================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued $322,900 $62,926 $ -- $385,826
expenses --------------- --------------- ---------------- ----------------
Total current liabilities 322,900 62,926 385,826
Advances for stockholders -- 235,300 235,300
Note payable, related party -- 101,111 101,111
--------------- --------------- ---------------- ----------------
322,900 399,337 722,237
--------------- --------------- ---------------- ----------------
Shareholders' equity
(deficit):
Common stock 75,000 330 (330) (3) 81,400
6,400 (3)
Additional paid in capital 15,194,771 899,420 (899,420) (3) 52,006,998
36,812,227 (3)
Accumulated deficit (5,551,962) (1,125,314) 1,125,314 (3) (5,551,962)
--------------- --------------- ---------------- ----------------
Total shareholders' equity 9,717,809 (225,564) 37,044,191 46,536,436
--------------- --------------- ---------------- ----------------
Total liabilities and $10,040,709 $173,773 $37,044,191 $47,258,673
shareholders' equity =============== =============== ================ ================
</TABLE>
12
<PAGE> 17
PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE FISCAL YEAR ENDED
JANUARY 29, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Envision
Historical As Pro Forma Pro Forma
Adjusted (7) LiQ (1) Adjustments Results
--------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C>
Operating expenses:
General and administrative expense $ (1,143,177) $ (1,021,920) $ -- $ (2,165,097)
Website development costs -- (103,014) (103,014)
Amortization of intangibles -- -- (12,348,064)(5) (12,348,064)
------------ ------------ ------------ ------------
Loss from continuing operations
before interest (1,143,177) (1,124,934) (12,348,064) (14,616,175)
Interest income 180,886 -- 180,886
Interest expense to affiliate (176,238) -- (176,238)
Income tax expense -- (380) (380)
------------ ------------ ------------ ------------
Loss from continuing operations $ (1,138,529) $ (1,125,314) $(12,348,064) $(14,611,907)
============ ============ ============ ============
Basic and diluted loss per
common share:
Loss from continuing operations $ (0.19) $ (2.25)
============ ============
Weighted average number of common
shares outstanding used in basic
and diluted calculation 5,844,780 -- 640,000 (6) 6,484,780
============ ============ ============ ============
</TABLE>
13
<PAGE> 18
Notes to Pro Forma Combined Financial Statements:
The acquisition of LiQ has been accounted for using the purchase method of
accounting, and, accordingly, the purchase price of the LiQ acquisition was
allocated to the assets acquired and liabilities assumed based on their
estimated fair values at the acquisition date.
The purchase price for the above acquisitions was allocated as follows:
Fair value of net assets acquired (net liabilities assumed):
Property and equipment, net $ 34,562
Other assets 123,498
---------
Total assets acquired 158,060
Accounts payable and accrued expenses (62,926)
Other liabilities (336,411)
---------
Total liabilities assumed (399,337)
---------
Net non-cash liabilities assumed (241,277)
Cash acquired 15,713
---------
Net liabilities assumed $(225,564)
=========
The following is a reconciliation of the purchase price to the excess of the
estimated fair value of net assets acquired allocated to intangible assets:
Purchase price $36,818,627
Net liabilities assumed 225,564
-----------
Amount allocated to intangible assets $37,044,191
===========
In connection with the acquisition of LiQ, approximately $37,000,000 was
assigned to intangible assets. The amount assigned to intangible assets is
preliminary and is subject to adjustment upon finalization of the purchase
accounting. The finalization of the purchase accounting for LiQ may result in a
significant portion of the aggregate purchase price being identified as
in-process research and development, which will be charged to operations during
fiscal year 2001 when the amounts are determined. Various factors are being
considered in determining the amount of the purchase price to be allocated to
in-process research and development, such as estimating the stage of development
of each in-process research and development project at the date of acquisition,
estimating cash flows resulting from the expected revenues generated from such
projects and discounting the net cash flows, in addition to other assumptions.
The estimate of the cash flows resulting from the expected revenues generated
from the projects is dependent upon a number of risk factors and uncertainties,
including the rate of market acceptance of the projects, rapid technological
changes, the financial resources of our customers and the low barriers to entry
for potential competitors, some of which have access to greater resources than
the Company. The remaining identified intangibles, including the value of
purchased technology and other intangibles, will be amortized on a straight-line
basis over a period of three years. These intangible assets are subject to
review of recoverability based on various factors including Envision's ability
to generate future revenues sufficient to warrant the intangible amounts
capitalized.
14
<PAGE> 19
(1) To add the assets and liabilities of LiQ as of January 31, 2000
(2) To add goodwill, net of amortization expense, for the fiscal year ended
January 29, 2000
(3) To eliminate LiQ common stock, additional paid-in-capital and retained
earnings and record the 640,000 shares of Envision common stock issued in the
acquisition
(4) To add the expenses of LiQ for the period from February 4, 1999 (inception)
to January 31, 2000
(5) To add pro forma amortization expense for the fiscal year ended January 29,
2000
(6) To adjust the weighted average number of shares outstanding for the
consideration of 640,000 shares of Envision common stock
(7) On May 10, 2000, Envision sold its wholly-owned subsidiary, perfumania.com,
inc. ("perfumania.com") to E Com Ventures, formerly known as Perfumania, Inc.,
pursuant to the terms of a Stock Purchase Agreement, dated April 29, 2000, among
Envision, ZERO.NET, Inc. ("ZERO.NET") and E Com Ventures. ZERO.NET is a
significant shareholder of Envision. Envision exchanged all of the common stock
of perfumania.com for 400,000 shares of common stock of Envision held by E Com
Ventures. The sales price was determined by negotiation between the parties. The
transaction requires approval by Envision's shareholders. Management expects to
recognize a gain on the disposal of the discontinued operation. The disposition
of perfumania.com is accounted for as a discontinued operation, and accordingly,
amounts in the accompanying pro forma financial statements have been restated to
reflect discontinued operations accounting.
The following pro forma financial information illustrates the historical
presentation of Envision as presented in the Annual Report on Form 10-K as of
and for the year ending January 29, 2000 filed by us with the Securities and
Exchange Commission with discontinued operations accounting for the disposition
of perfumania.com. The Envision Historical As Adjusted column is used in the
presentation of the pro forma financial information for the LiQ acquisition as
management believes this is indicative of the continuing impact of the
transaction. The pro forma financial information is provided for informational
purposes only and should not be construed to be indicative of the Company's
results of operations had the acquisition or disposition been consummated on the
dates assumed and does not project the Company's results of operations for any
future period. The pro forma adjustments are described below.
15
<PAGE> 20
PRO FORMA BALANCE SHEET AS OF JANUARY 29, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Envision
Envision Historical As
Historical perfumania.com Adjusted
------------------- ---------------------- ----------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 9,208,501 $ -- $ 9,208,501
Accounts receivable 38,937 (38,937) --
Inventory 1,651,327 (1,651,327) --
Prepaid expenses 102,357 (102,357) --
------------------- ---------------------- ----------------
Total current assets 11,001,122 (1,792,621) 9,208,501
Net assets of discontinued operations -- 832,208 832,208
Property and equipment, net 236,375 (236,375) --
------------------- ---------------------- ----------------
Total assets $ 11,237,497 $ (1,196,788) $ 10,040,709
=================== ====================== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Amounts due to affiliate $ 255,201 $ (255,201) $ --
Accounts payable and accrued expenses 1,264,487 (941,587) 322,900
------------------- ---------------------- ----------------
Total current liabilities 1,519,688 (1,196,788) 322,900
------------------- ---------------------- ----------------
Shareholders' equity (deficit):
Common stock 75,000 -- 75,000
Additional paid in capital 15,194,771 -- 15,194,771
Accumulated deficit (5,551,962) -- (5,551,962)
------------------- ---------------------- ----------------
Total shareholders' equity 9,717,809 -- 9,717,809
------------------- ---------------------- ----------------
Total liabilities and shareholders'
equity $ 11,237,497 $ (1,196,788) $ 10,040,709
=================== ====================== ================
</TABLE>
16
<PAGE> 21
PRO FORMA STATEMENT OF OPERATIONS FOR THE FISCAL YEAR ENDED
JANUARY 29, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Envision
Envision perfumania. Historical As
Historical com Adjusted
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net sales $ 2,290,149 $(2,290,149) $ --
Cost of goods sold 1,832,094 (1,832,094) --
----------- ----------- -----------
Gross profit 458,055 (458,055) --
----------- ----------- -----------
Operating expenses:
General and administrative expense 3,234,910 (2,091,733) 1,143,177
Sales and marketing expense 1,548,742 (1,548,742) --
Web site development expense 196,673 (196,673) --
Consulting fees 277,190 (277,190) --
Management fees to affiliate 433,655 (433,655) --
----------- ----------- -----------
Total operating expenses 5,691,170 (4,547,993) 1,126,286
----------- ----------- -----------
Loss from continuing operations before
interest (5,233,115) 4,089,938 (1,143,177)
Interest income 180,886 -- 180,886
Interest expense to affiliate (176,238) -- (176,238)
----------- ----------- -----------
Loss from continuing operations $(5,228,467) $ 4,089,938 $(1,138,529)
=========== =========== ===========
</TABLE>
17
