TABLE OF CONTENTS
MANAGEMENT'S ASSERTIONS IN THE PREPARATION
OF THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATING FINANCIAL STATEMENTS....................................... 1
PRO FORMA FINANCIAL STATEMENTS
MINIMUM PURCHASE PRICE
Pro Forma Condensed Consolidating Balance Sheet as of June 30, 2000. 2
Pro Forma Condensed Consolidating Income Statement
for the six months ended June 30, 2000........................... 3
Pro Forma Condensed Consolidating Balance Sheet as of
December 31, 1999................................................ 4
Pro Forma Condensed Consolidating Income Statement
for the year ended December 31, 1999............................. 5
Pro Forma Condensed Consolidating Income Statement
for the year ended December 31, 1998............................. 6
Pro Forma Condensed Consolidating Income Statement
for the year ended December 31, 1997............................. 7
MAXIMUM PURCHASE PRICE
Pro Forma Condensed Consolidating Balance Sheet as of June 30, 2000. 8
Pro Forma Condensed Consolidating Income Statement
for the six months ended June 30, 2000........................... 9
Pro Forma Condensed Consolidating Balance Sheet as of
December 31, 1999................................................ 10
Pro Forma Condensed Consolidating Income Statement
for the year ended December 31, 1999............................. 11
Pro Forma Condensed Consolidating Income Statement
for the year ended December 31, 1998............................. 12
Pro Forma Condensed Consolidating Income Statement
for the year ended December 31, 1997............................. 13
NOTES TO PRO FORMA CONDENSED CONSOLIDATING
FINACIAL STATEMENTS...................................................... 14
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidating financial statements
are presented to give effect to the share exchange and cash payments approved by
the shareholders of NextPath Technologies, Inc. ("NextPath") and Laser Wireless,
Inc. ("Laser") on October 18, 1999; Willow Systems Limited ("Willow") and its
subsidiaries, NextWave Photonics, LLC and Reflex, LLC on November 2, 1999;
Sagebrush Technology, Inc. ("Sagebrush") on December 14, 1999; Essentia Water,
Inc. ("Essentia") on January 21, 2000; USCertified Letters, L.L.C. ("USCL") on
July 27, 2000; and Lewis Mechanical and Metalworks, Inc. ("Lewis") on August 4,
2000, respectively, under the purchase method of accounting.
The unaudited pro forma condensed consolidating financial statements assume that
Laser, Willow, Epilogue, Sagebrush, Essentia, USCL, and Lewis had been acquired
or invested in by NextPath as of the date of inception of the acquired company
or January 1, 1997, whichever occurred later.
The pro forma condensed consolidating financial statements are not necessarily
indicative of results of operations or the financial position which would have
occurred had the mergers and acquisitions described above incurred at the
inception of these entities, nor are they necessarily indicative of future
results of operations or financial position. The unaudited pro forma condensed
consolidating financial statements should be read in connection with the
historical financial statements of Laser, Willow, Epilogue Corporation,
Sagebrush, Essentia, USCL, and Lewis including the notes thereto and the
historical financial statements of NextPath including the notes thereto.
1
<PAGE>
NEXTPATH TECHNOLOGIES, INC.
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET - MINIMUM PURCHASE PRICE
JUNE 30, 2000
ASSETS
<TABLE>
<CAPTION>
Essentia Lewis
NextPath Water Mechanical Combining entries Pro Forma
-------------------------------
Prior to
Consolidated 1-20-00 thru 6-30-00 Sub-Total No. Debit Credit Combined
------------ -------- ------------- ------------ --- ------------ ------------ -------------
CURRENT ASSETS:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash $ 182,668 $ - $ - $ 182,668 $ - $ - $ 182,668
Accounts receivable, net 954,013 - 12,192 966,205 - 966,205
Inventory 520,429 - 61,468 581,897 - 581,897
Prepaid expenses 65,901 - - 65,901 - 65,901
Advances to shareholders 31,783 - - 31,783 - 31,783
Advances and notes
receivable, net 5,921,018 - - 5,921,018 4 2,750,000 3,171,018
---------- ------- ---------- ---------- --------- ---------- ----------
Total current assets 7,675,812 - 73,660 7,749,472 - 2,750,000 4,999,472
---------- ------- ---------- ---------- --------- ---------- ----------
PROPERTY AND EQUIPMENT, net 1,328,404 - 3,807,560 5,135,964 5,135,964
---------- ------- ---------- ---------- --------- ---------- ----------
OTHER ASSETS:
Investments 2,600,000 - - 2,600,000 4 10,530,000 - 13,130,000
Goodwill 22,968,237 - 527,884 23,496,121 23,496,121
Deposits 9,524 - - 9,524 9,524
---------- ------- ----------- ---------- ---------- --------- ----------
25,577,761 - 527,884 26,105,645 10,530,000 - 36,635,645
---------- ------- ----------- ---------- ---------- --------- ----------
$34,581,977 $ - $ 4,409,104 $38,991,081 $10,530,000 $2,750,000 $46,771,081
========== ======= =========== ========== ========== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,972,375 $ - $ 105,260 $ 2,077,635 3 $2,000,000 $10,077,635
4 6,000,000
Accrued expenses 354,851 - - 354,851 354,851
Deferred taxes 14,882 - - 14,882 14,882
Advances 95,878 - - 95,878 95,878
Notes payable - - 2,303,844 2,303,844 2,303,844
Notes payable -
related party 7,032,179 - - 7,032,179 7,032,179
---------- ------- ----------- ---------- ---------- ---------- ----------
Total current liabilities 9,470,165 - 2,409,104 11,879,269 - 8,000,000 19,879,269
---------- ------- ----------- ---------- ---------- ---------- ----------
STOCKHOLDERS' EQUITY:
Common stock 40,051 - 2,000,000 2,040,051 4 1,000 41,051
3 2,000,000
Additional paid in capital 74,134,862 - - 74,134,862 4 1,779,000 75,913,862
Deficit accumulated during
the development stage (49,063,101) - - (49,063,101) (49,063,101)
---------- ------- ---------- ---------- ---------- ---------- ----------
25,111,812 - 2,000,000 27,111,812 2,000,000 1,780,000 26,891,812
---------- ------- ---------- ---------- ---------- ---------- ----------
$34,581,977 $ - $ 4,409,104 $38,991,081 $ 2,000,000 $9,780,000 $46,771,081
========== ======= ========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to pro forma financial statements.
2
<PAGE>
NEXTPATH TECHNOLOGIES, INC.
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT - MINIMUM PURCHASE PRICE
FOR THE SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
Essentia Lewis
NextPath Water Mechanical Combining entries Pro Forma
-------------------------------
Prior to
Consolidated 1-20-00 thru 6-30-00 Sub-Total No. Debit Credit Combined
------------ -------- ------------- ------------ --- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES $ 2,438,375 $ 38,469 $ 9,359,702 $11,836,546 $ - $ - $ 11,836,546
COST OF GOODS SOLD 1,722,883 26,696 8,682,140 10,431,719 10,431,719
---------- ------- ----------- ---------- --------- --------- ----------
GROSS PROFIT 715,492 11,773 677,562 1,404,827 - - 1,404,827
---------- ------- ----------- ---------- --------- --------- ----------
EXPENSES:
General and administrative 6,957,008 30,574 159,049 7,146,631 7,146,631
Consulting 5,034,960 - - 5,034,960 5,034,960
Sales 565,131 44,845 - 609,976 609,976
Amortization of goodwill - - - - 1 116,757 116,757
---------- ------- ----------- ---------- --------- --------- ----------
12,557,099 75,419 159,049 12,791,567 116,757 - 12,908,324
---------- ------- ----------- ---------- --------- --------- ----------
NET INCOME (LOSS) FROM
OPERATIONS (11,841,607) (63,646) 518,513 (11,386,740) 116,757 - (11,503,497)
---------- ------- ----------- ---------- --------- --------- ----------
OTHER INCOME (EXPENSE):
Interest income 11,990 - - 11,990 11,990
Dividend income 60,000 - - 60,000 60,000
Other income 24,649 - - 24,649 24,649
Interest expense (21,838) (3,567) (106,621) (132,026) (132,026)
---------- ------- ----------- ---------- ---------- --------- ----------
74,801 (3,567) (106,621) (35,387) - - (35,387)
---------- ------- ----------- ---------- ---------- --------- ----------
NET INCOME (LOSS) BEFORE
INCOME TAXES (11,766,806) (67,213) 411,892 (11,422,127) 1,169,757 - (11,538,884)
PROVISION FOR (BENEFIT FROM)
INCOME TAXES - - 164,757 164,757 5 - 164,757 -
---------- ------- ----------- ---------- ---------- --------- ----------
NET INCOME (LOSS) $(11,766,806) $(67,213) $ 247,135 $(11,586,884) $ 1,169,757 $ 164,757 $(11,538,884)
========== ======= =========== ========== ========== ========= ==========
NET LOSS PER SHARE $ (.29)
==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 39,661,409
==========
</TABLE>
See accompanying notes to pro forma financial statements.
3
<PAGE>
NextPath Technologies, Inc.
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET - MINIMUM PURCHASE PRICE
DECEMBER 31, 1999
ASSETS
<TABLE>
<CAPTION>
Laser Willow Essentia Lewis Combining entries
--------------------------
Wireless Systems Sagebrush Water Mechanical
NextPath prior to prior to prior to prior to thru Pro Forma
Consolidated 10-18-99 11-02-99 12-14-99 1-20-00 6-30-00 Sub-Total No. Debit Credit Combined
------------ --------- --------- --------- --------- ----------- ----------- --- ---------- ---------- -----------
CURRENT ASSETS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash $ 658,837 $ - $ - $ - $ 55,142 $ - $ 713,979 $ 713,979
Accounts
receivable,
net 282,051 - - - 95,665 12,192 389,908 389,908
Inventory 138,057 - - - 78,747 61,468 278,272 278,272
Prepaid
expenses 42,674 - - - 34,410 - 77,084 77,084
Advances to
shareholders 6,487 - - - - - 6,487 6,487
Advances and
notes 4 2,750,000
receivable,
net 3,260,161 - - - - - 3,260,161 6 150,000 360,161
----------- ------- -------- -------- -------- ---------- ---------- ---------- --------- ---------
Total current
assets 4,388,267 - - - 263,964 73,660 4,725,891 - 2,900,000 1,825,891
----------- ------- -------- -------- -------- ---------- ---------- ---------- --------- ---------
PROPERTY AND
EQUIPMENT, net 535,179 - - - 280,010 3,807,560 4,622,749 2 110,690 4,733,439
----------- ------- -------- -------- -------- ---------- ---------- ---------- --------- ---------
OTHER ASSETS:
Investments 2,600,000 - - - - - 2,600,000 4 10,530,000 13,130,000
Goodwill 17,883,754 - - - - 527,884 18,411,638 2 7,676,487 26,088,125
Deposits 4,250 - - - - - 4,250 4,250
----------- ------- -------- -------- -------- ---------- ---------- ---------- --------- ----------
20,488,004 - - - - 527,884 21,015,888 18,206,487 - 39,222,375
----------- ------- -------- -------- -------- ---------- ---------- ---------- --------- ----------
$ 25,411,450 $ - $ - $ - $ 543,974 $ 4,409,104 $30,364,528 $18,317,177 $2,900,000 $45,781,705
=========== ======= ======== ======== ======== ========== ========== ========== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
LIABILITIES:
Accounts
payable $ 384,148 $ - $ - $ - $ 105,880 $ - $ 490,028 3 $2,000,000 $ 8,490,028
6,000,000
Accrued
expenses 192,654 - - - 20,977 105,260 318,891 318,891
Deferred
taxes 14,882 - - - - - 14,882 14,882
Notes
payable 19,950 - - - - 2,303,844 2,323,794 2,323,794
Advances
from
NextPath - - - - 150,000 - 150,000 6 150,000 -
Notes payable -
related
party 3,435,919 - - - 400,000 - 3,835,919 3,835,919
---------- -------- -------- -------- -------- --------- ---------- --------- ---------- ----------
Total current
liabilities 4,047,553 - - - 676,857 2,409,104 7,133,514 150,000 8,000,000 14,983,514
---------- -------- -------- -------- -------- --------- ---------- --------- ---------- ----------
STOCKHOLDERS'
EQUITY:
Common stock 37,136 - - - 1,058,847 2,000,000 3,095,983 2 1,058,847 586
3 2,000,000
4 1,000 38,722
Additional
paid in
capital 58,623,056 - - - - - 58,623,056 2 7,653,708
1,779,000 68,055,764
Deficit
accumulated
during the
development
stage (37,296,295) - - -(1,191,730) - (38,488,025) 2 1,191,730 (37,296,295)
---------- -------- -------- -------- --------- ---------- ---------- --------- ---------- ----------
21,363,897 - - - (132,883) 2,000,000 23,231,014 3,058,847 10,626,024 30,798,191
---------- -------- -------- -------- --------- ---------- ---------- --------- ---------- ----------
$ 25,411,450 $ - $ - $ - $ 543,974 $4,409,104 $30,364,528 $3,208,847 $18,626,024 $45,781,705
========== ======== ======== ======== ======== ========== ========== ========= ========== ==========
</TABLE>
See accompanying notes to pro forma financial statements.
4
<PAGE>
NextPath Technologies, Inc.
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT - MINIMUM PURCHASE PRICE
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Laser Willow Essentia Lewis Combining entries
--------------------------
Wireless Systems Sagebrush Water Mechanical
NextPath prior to prior to prior to prior to thru Pro Forma
Consolidated 10-18-99 11-02-99 12-14-99 1-20-00 6-30-00 Sub-Total No. Debit Credit Combined
------------ --------- ---------- --------- --------- ----------- ----------- --- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES $ 356,157 $ - $1,026,451 $1,735,195 $ 677,221 $13,732,898 $ 17,527,922 $ - $ $ 17,527,922
COST OF
GOODS SOLD 235,788 - - 1,053,273 499,755 11,518,563 13,307,379 13,307,379
----------- ------- --------- --------- -------- ---------- ----------- --------- --------- -----------
GROSS PROFIT 120,369 - 1,026,451 681,922 177,466 2,214,335 4,220,543 - - 4,220,543
----------- ------- --------- --------- -------- ---------- ----------- --------- --------- -----------
EXPENSES:
General and
admin-
istrative 3,830,344 249,281 1,239,187 1,259,289 821,903 382,544 7,782,548 7,782,548
Consulting 25,309,111 - - - - - 25,309,111 25,309,111
Research and
development 2,334,392 122,666 446,943 - - 119,515 3,023,516 3,023,516
Bad Debts 1,605,110 - - - - - 1,605,110 1,605,110
Amortization
of
goodwill - - - - - - - 1 4,942,658 4,942,658
----------- ------- --------- --------- -------- ---------- ----------- ---------- --------- -----------
33,078,957 371,947 1,686,130 1,259,289 821,903 502,059 37,720,285 4,942,658 - 42,662,944
----------- ------- --------- --------- -------- ---------- ----------- ---------- --------- -----------
NET INCOME
(LOSS) FROM
OPERATIONS (32,958,588) (371,947) 1,686,130 (577,367) (644,437) 1,712,276 (33,499,742) 4,942,658 - (38,442,401)
----------- ------- --------- --------- -------- ---------- ---------- ---------- --------- -----------
OTHER INCOME
(EXPENSE):
Interest
income 5,982 - - - - - 5,982 5,982
Dividend
income 16,813 - - - - - 16,813 16,813
Interest
expense - - (543) (768) (43,713) (158,304) (203,328) (203,328)
Loss of
invest-
ments (3,832,360) - - - - - (3,832,360) (3,832,360)
----------- ------- --------- --------- -------- ---------- ---------- ---------- ---------- -----------
(3,809,565) - (543) (768) (43,713) (158,304) (4,012,893) - - (4,012,893)
----------- ------- --------- --------- -------- ---------- ---------- ---------- ---------- -----------
NET INCOME
(LOSS)
BEFORE
INCOME TAXES (36,768,153) (371,947) (660,222) (578,135) (688,150) 1,553,972 (37,512,635) 5,418,158 (42,455,294)
PROVISION FOR
(BENEFIT FROM)
INCOME TAXES - - - - 621,589 621,589 5 - 621,589 -
----------- ------- --------- --------- -------- ---------- ---------- ---------- ---------- -----------
NET INCOME
(LOSS) $(36,768,153)$(371,947) $(660,222) $(578,135)$(688,150) $ 932,383$(38,134,224) $5,418,158 $ 621,589 $(42,455,294)
=========== ======= ========= ========= ======== ========== ========== ========== ========== ===========
NET LOSS
PER SHARE $ (2.34)
===========
WEIGHTED AVERAGE
NUMBER OF
SHARES
OUTSTANDING 18,148,799
===========
</TABLE>
See accompanying notes to pro forma financial statements.
5
<PAGE>
NextPath Technologies, Inc.
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT - MINIMUM PURCHASE PRICE
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Laser Willow Essentia Lewis Combining entries
Wireless Systems Sagebrush Water Mechanical
NextPath prior to prior to prior to prior to thru Pro Forma
Consolidated 10-18-99 11-02-99 12-14-99 1-20-00 6-30-00 Sub-Total No. Debit Credit Combined
------------ --------- ---------- --------- --------- ----------- ----------- --- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C><C> <C> <C>
REVENUES $ - $ - $1,039,117 $1,907,010 $ 174,401 $19,794,996 $22,915,524 $ - $ - $22,915,524
COST OF
GOODS SOLD - - - 906,655 199,468 13,624,559 14,730,682 - 14,730,682
---------- -------- --------- --------- -------- ---------- ---------- --------- --------- ----------
GROSS PROFIT - - 1,039,117 1,000,355 (25,067) 6,170,437 8,184,842 - - 8,184,842
---------- -------- --------- --------- -------- ---------- ---------- --------- --------- ----------
EXPENSES:
General and
admin-
istrative 528,412 - 862,798 754,185 475,565 442,128 3,063,088 - - 3,063,088
Amortization
of goodwill - - - - - - - 1 5,111,116 5,111,116
---------- -------- --------- --------- -------- ---------- ---------- --------- --------- ----------
528,412 - 862,798 754,185 475,565 442,128 3,063,088 5,111,116 - 8,174,204
---------- -------- --------- --------- -------- ---------- ---------- --------- --------- ----------
NET INCOME
(LOSS) FROM
OPERATIONS (528,412) - 176,319 246,170 (500,632) 5,728,309 5,121,754 5,111,116 - 10,638
---------- -------- --------- --------- -------- ---------- ---------- --------- --------- ----------
OTHER INCOME
(EXPENSE):
Interest
income - - 40 - - - 40 40
Interest
expense - - - (17,363) (2,948) (77,586) (97,897) (97,897)
---------- -------- --------- --------- -------- ---------- ----------- --------- --------- ----------
- - 40 (17,363) (2,948) (77,586) (97,857) - - (97,857)
---------- -------- --------- --------- -------- ---------- ---------- --------- --------- ----------
NET INCOME
(LOSS)
BEFORE INCOME
TAXES (528,412) - 176,359 228,807 (503,580) 5,650,723 5,023,897 5,111,116 - (87,219)
PROVISION FOR
(BENEFIT FROM)
INCOME TAXES - - - - - - - - - -
---------- -------- --------- --------- -------- ---------- ---------- --------- --------- ----------
NET LOSS $ (528,412) $ - $ 176,359 $ 228,807 $(503,580) $5,650,723 $5,023,897 $5,111,116 $ - $ (87,219)
========== ======== ========= ========= ======== ========== ========== ========= ========= ==========
NET LOSS PER
SHARE $ (0.01)
==========
WEIGHTED AVERAGE
NUMBER OF
SHARES
OUTSTANDING 9,969,685
==========
</TABLE>
See accompanying notes to pro forma financial statements.
6
<PAGE>
NEXTPATH TECHNOLOGIES, INC.
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT - MINIMUM PURCHASE PRICE
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Laser Willow Essentia Lewis Combining entries
Wireless Systems Sagebrush Water Mechanical
NextPath prior to prior to prior to prior to thru Pro Forma
Consolidated 10-18-99 11-02-99 12-14-99 1-20-00 6-30-00 Sub-Total No. Debit Credit Combined
------------ --------- ---------- --------- --------- ----------- ----------- --- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C><C> <C> <C>
REVENUES $ - $ - $ 551,331 $ 757,108 $ - $ 1,007,572 $ 2,316,011 $ - $ - $ 2,316,011
COST OF
GOODS SOLD - - - 417,071 - 875,784 1,292,855 1,292,855
----------- -------- --------- -------- -------- ---------- ---------- -------- ---------- ----------
GROSS PROFIT - - 551,331 340,037 - 131,788 1,023,156 - - 1,023,156
----------- -------- --------- -------- -------- ---------- ---------- -------- ---------- ----------
EXPENSES:
General and
adminis-
trative - - 455,509 364,268 - 68,506 888,283 888,283
Amortization
of goodwill - - - - - - - 1 3,575,819 3,575,819
----------- -------- --------- -------- -------- ---------- ---------- --------- ---------- ----------
- - 455,509 364,268 - 68,506 888,283 3,575,819 - 4,464,102
----------- -------- --------- -------- -------- ---------- ---------- --------- ---------- ----------
NET INCOME
(LOSS) FROM
OPERATIONS - - 95,822 (24,231) - 63,282 134,873 3,575,819 - (3,440,946)
----------- -------- --------- -------- -------- ---------- ---------- --------- ---------- ----------
OTHER INCOME
(EXPENSE):
Interest
expense - - - (6,623) - (2,169) (8,792) (8,792)
----------- -------- --------- -------- -------- ---------- ---------- --------- ---------- ----------
- - - (6,623) - (2,169) (8,792) - - (8,792)
----------- -------- --------- -------- -------- ---------- ---------- --------- ---------- ----------
NET INCOME
(LOSS) BEFORE
INCOME TAXES - - 95,822 (30,854) - 61,113 126,081 3,575,819 - (3,449,738)
PROVISION FOR
(BENEFIT FROM)
INCOME TAXES - - 38,329 - - 24,445 62,774 5 62,774 -
----------- -------- --------- -------- -------- ---------- ---------- --------- ---------- ----------
NET INCOME
(LOSS) $ - $ - $ 57,493 $ (30,854) $ - $ 36,668 $ 63,307 $3,575,819 $ 62,774 $(3,449,738)
=========== ======== ========= ======== ======== ========== ========== ========= ========== ==========
NET LOSS
PER SHARE $ (1.48)
==========
WEIGHTED
AVERAGE
NUMBER OF
SHARES
OUTSTANDING 2,337,260
===========
</TABLE>
7
<PAGE>
NEXTPATH TECHNOLOGIES, INC.
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEETS - MASIMUM PURCHASE PRICE
JUNE 30, 2000
ASSETS
<TABLE>
<CAPTION>
Essentia Lewis
NextPath Water Mechanical Combining entries Pro Forma
-------------------------------
Prior to
Consolidated 1-20-00 thru 6-30-00 Sub-Total No. Debit Credit Combined
------------ -------- ------------- ------------ --- ------------ ------------ -------------
CURRENT ASSETS:
<S> <C> <C> <C> <C> <C> <C> <C>
Cash $ 182,668 $ - $ - $ 182,668 $ - $ - $ 182,668
Accounts receivable, net 954,013 - 12,192 966,205 - 966,205
Inventory 520,429 - 61,468 581,897 - 581,897
Prepaid expenses 65,901 - - 65,901 - 65,901
Advances to shareholders 31,783 - - 31,783 - 31,783
Advances and notes
receivable, net 5,921,018 - - 5,921,018 4 2,750,000 3,171,018
----------- --- ----------- ---------- ----------- ----------- -----------
Total current assets 7,675,812 - 73,660 7,749,472 - 2,750,000 4,999,472
----------- --- ----------- ---------- ----------- ----------- -----------
PROPERTY AND EQUIPMENT, net 1,328,404 - 3,807,560 5,135,964 5,135,964
----------- --- ----------- ---------- ----------- ----------- -----------
OTHER ASSETS:
Investments 2,600,000 - - 2,600,000 4 28,530,000 - 31,130,000
Goodwill 22,968,237 - 527,884 23,496,121 3 5,000,000 - 28,496,121
Deposits 9,524 - - 9,524 9,524
----------- --- ----------- ----------- ----------- ----------- -----------
25,577,761 - 527,884 26,105,645 33,530,000 - 59,635,645
----------- --- ----------- ----------- ----------- ----------- -----------
$ 34,581,977 $ - $ 4,409,104 $ 38,991,081 $ 33,530,000 $ 2,750,000 $ 69,771,081
=========== === ========== =========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,972,375 $ - $ 105,260 $ 2,077,635 3 $ 2,000,000 $ 28,077,635
4 24,000,000
Accrued expenses 354,851 - - 354,851 354,851
Deferred taxes 14,882 - - 14,882 14,882
Advances 95,878 - - 95,878 95,878
Notes payable - - 2,303,844 2,303,844 2,303,844
Notes payable -
related party 7,032,179 - - 7,032,179 7,032,179
----------- --- ---------- ----------- ----------- ---------- -----------
Total current liabilities 9,470,165 - 2,409,104 11,879,269 - 26,000,000 37,879,269
----------- --- ---------- ----------- ----------- ---------- -----------
STOCKHOLDERS' EQUITY:
Common stock 40,051 - 2,000,000 2,040,051 4 1,000 43,490
3 2,000,000 2,439
Additional paid in capital 74,134,862 - - 74,134,862 3 4,997,561
4 1,779,000 80,911,423
Deficit accumulated during
the development stage (49,063,101) - - (49,063,101) (49,063,101)
----------- --- ---------- ----------- ----------- ---------- -----------
25,111,812 - 2,000,000 27,111,812 2,000,000 6,780,000 31,891,812
----------- --- ---------- ----------- ----------- ---------- -----------
$ 34,581,977 $ - $ 4,409,104 $ 38,991,081 $ 2,000,000 $32,780,000 $ 69,771,081
=========== === ========== =========== =========== ========== ===========
</TABLE>
See accompanying notes to pro forma financial statements.
8
<PAGE>
NextPath Technologies, Inc.
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT - MAXIMUM PURCHASE PRICE
FOR THE SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
Essentia Lewis
NextPath Water Mechanical Combining entries Pro Forma
-------------------------------
Prior to
Consolidated 1-20-00 thru 6-30-00 Sub-Total No. Debit Credit Combined
------------ -------- ------------- ------------ --- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES $ 2,438,375 $ 38,469 $ 9,359,702 $ 11,836,546 $ - $ - $ 11,836,546
COST OF GOODS SOLD 1,722,883 26,696 8,682,140 10,431,719 10,431,719
----------- ------- ----------- ----------- ----------- ----------- -----------
GROSS PROFIT 715,492 11,773 677,562 1,404,827 - - 1,404,827
----------- ------- ----------- ----------- ----------- ----------- -----------
EXPENSES:
General and administrative 6,957,008 30,574 159,049 7,146,631 7,146,631
Consulting 5,034,960 - - 5,034,960 5,034,960
Sales 565,131 44,845 - 609,976 609,976
Amortization of goodwill - - - - 1 616,757 616,757
Amortization of Investment
in USCL - - - - 5 2,853,000 2,853,000
----------- ------- ----------- ----------- ---------- ----------- -----------
12,557,099 75,419 159,049 12,791,567 3,469,757 - 16,261,324
----------- ------- ----------- ----------- ---------- ----------- -----------
NET INCOME (LOSS) FROM
OPERATIONS (11,841,607) (63,646) 518,513 (11,386,740) 3,469,757 - (14,856,497)
----------- ------- ----------- ----------- ---------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest income 11,990 - - 11,990 11,990
Dividend income 60,000 - - 60,000 60,000
Other income 24,649 - - 24,649 24,649
Interest expense (21,838) (3,567) (106,621) (132,026) (132,026)
----------- ------- ----------- ----------- ---------- ----------- ------------
74,801 (3,567) (106,621) (35,387) - - (35,387)
----------- ------- ----------- ----------- ---------- ----------- -----------
NET INCOME (LOSS) BEFORE
INCOME TAXES (11,766,806) (67,213) 411,892 (11,422,127) 3,469,757 - (14,891,884)
PROVISION FOR (BENEFIT FROM)
INCOME TAXES - - 164,757 164,757 6 - 164,757 -
----------- ------- ----------- ----------- ---------- ----------- -----------
NET INCOME (LOSS) $(11,766,806) $(67,213) $ 247,135 $(11,586,884) $ 3,469,757 $ 164,757 $(14,891,884)
=========== ======= =========== =========== ========== =========== ===========
NET LOSS PER SHARE $ (0.35)
===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 42,100,434
===========
</TABLE>
See accompanying notes to pro forma financial statements.
9
<PAGE>
NextPath Technologies, Inc.
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET - MAXIMUM PURCHASE PRICE
DECEMBER 31, 1999
ASSETS
<TABLE>
<CAPTION>
Laser Willow Essentia Lewis Combining entries
Wireless Systems Sagebrush Water Mechanical
NextPath prior to prior to prior to prior to thru Pro Forma
Consolidated 10-18-99 11-02-99 12-14-99 1-20-00 6-30-00 Sub-Total No. Debit Credit Combined
------------ --------- --------- --------- --------- ----------- ----------- --- ---------- ---------- ----------
CURRENT ASSETS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash $ 658,837 $ - $ - $ - $ 55,142 $ - $ 713,979 $ 713,979
Accounts
receivable,
net 282,051 - - - 95,665 12,192 389,908 389,908
Inventory 138,057 - - - 78,747 61,468 278,272 278,272
Prepaid
expenses 42,674 - - - 34,410 - 77,084 77,084
Advances to
shareholders 6,487 - - - - - 6,487 6,487
Advances and
notes
receivable, 4 2,750,000
net 3,260,161 - - - - - 3,260,161 7 150,000 360,161
---------- -------- -------- -------- -------- ---------- ---------- ---------- ---------- ----------
Total current
assets 4,388,267 - - - 263,964 73,660 4,725,891 - 2,900,000 1,825,891
---------- -------- -------- -------- -------- ---------- ---------- ---------- ---------- ----------
PROPERTY AND
EQUIPMENT, net 535,179 - - - 280,010 3,807,560 4,622,749 4 110,690 4,733,439
---------- -------- -------- -------- -------- ---------- ---------- ---------- ---------- ----------
OTHER ASSETS:
Investments 2,600,000 - - - - - 2,600,000 4 28,530,000 31,130,000
Goodwill 17,883,754 - - - - 527,884 18,411,638 2 7,676,487
3 5,000,000 31,088,125
Deposits 4,250 - - - - - 4,250 4,250
---------- -------- -------- -------- -------- ---------- ---------- ---------- ---------- ----------
20,488,004 - - - - 527,884 21,015,888 41,206,487 - 62,222,375
---------- -------- -------- -------- -------- ---------- ---------- ---------- ---------- ----------
$25,411,450 $ - $ - $ - $ 543,974 $ 4,409,104 $30,364,528 $41,317,177 $ 2,900,000 $68,781,705
========== ======== ======== ======== ======== ========== ========== ========== ========== ==========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
CURRENT
LIABILITIES:
Accounts
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
payable $ 384,148 $ - $ - $ - $ 105,880 $ - $ 490,028 3 $ 2,000,000 $26,490,028
4 24,000,000
Accrued
expenses 192,654 - - - 20,977 105,260 318,891 318,891
Deferred
taxes 14,882 - - - - - 14,882 14,882
Notes
payable 19,950 - - - - 2,303,844 2,323,794 2,323,794
Advances
from
NextPath - - - - 150,000 - 150,000 7 150,000 -
Notes payable -
related party 3,435,919 - - - 400,000 - 3,835,919 3,835,919
---------- ------- -------- -------- --------- ---------- ---------- ---------- ---------- ----------
Total current
liabilities 4,047,553 - - - 676,857 2,409,104 7,133,514 150,000 26,000,000 32,983,514
---------- ------- -------- -------- --------- ---------- ---------- ---------- ---------- ----------
STOCKHOLDERS'
EQUITY:
Common stock 37,136 - - - 1,058,847 2,000,000 3,095,983 2 1,058,847 586
3 2,000,000 2,439
4 1,000 41,161
Additional paid
in capital 58,623,056 - - - - - 58,623,056 2 7,653,708
4 1,779,000
3 4,997,561 73,053,325
Deficit
accumulated
during the
development
stage (37,296,295) - - - (1,191,730) - (38,488,025) 2 1,191,730 (37,296,295)
---------- ------- -------- -------- --------- ---------- ---------- ---------- ---------- ----------
21,363,897 - - - (132,883) 2,000,000 23,231,014 3,058,847 15,626,024 35,798,191
---------- ------- -------- -------- --------- ---------- ---------- ---------- ---------- ----------
$25,411,450 $ - $ - $ - $ 543,974 $4,409,104 $30,364,528 $ 3,208,847 $41,626,024 $68,781,705
========== ======= ======== ======== ========= ========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to pro forma financial statements.
10
<PAGE>
NextPath Technologies, Inc.
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT - MAXIMUM PURCHASE PRICE
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Laser Willow Essentia Lewis Combining entries
Wireless Systems Sagebrush Water Mechanical
NextPath prior to prior to prior to prior to thru Pro Forma
Consolidated 10-18-99 11-02-99 12-14-99 1-20-00 6-30-00 Sub-Total No. Debit Credit Combined
------------ --------- ---------- --------- --------- ----------- ----------- --- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES $ 356,157 $ - $1,026,451 $1,735,195 $ 677,221 $13,732,898 $17,527,923 - $17,527,922
COST OF GOODS
SOLD 235,788 - - 1,053,273 499,755 11,518,563 13,307,379 13,307,379
---------- -------- --------- --------- -------- ---------- ---------- --------- -------- -----------
GROSS PROFIT 120,369 - 1,026,451 681,922 177,466 2,214,335 4,220,544 - - 4,220,543
---------- -------- --------- --------- -------- ---------- ---------- --------- -------- -----------
EXPENSES:
General and
adminis-
trative 3,830,344 249,281 1,239,187 1,259,289 821,903 382,544 7,782,548 7,782,548
Consulting 25,309,111 - - - - - 25,309,111 25,309,111
Research
and
development 2,334,392 122,666 446,943 - - 119,515 3,023,516 3,023,516
Bad debts 1,605,110 - - - - - 1,605,110 1,605,110
Amortization
of goodwill - - - - - - - 1 5,942,658 5,942,658
Amortization
of
Investment
in USCL - - - - - - - 5 475,500 475,500
---------- -------- --------- --------- -------- ---------- ---------- --------- ------- ----------
33,078,957 371,947 1,686,130 1,259,289 821,903 502,059 37,720,285 6,418,158 - 44,138,444
---------- -------- --------- --------- -------- ---------- ---------- --------- ------- ----------
NET INCOME
(LOSS) FROM
OPERATIONS (32,958,588) (371,947) (659,679) (577,366) (644,437) 1,712,276 (33,499,741) 6,418,158 - (39,917,899)
---------- -------- --------- --------- -------- ---------- ---------- --------- ------- ----------
OTHER INCOME
(EXPENSE):
Interest
income 5,982 - - - - - 5,982 5,982
Dividend
income 16,813 - - - - - 16,813 16,813
Interest
expense - - (543) (768) (43,713) (158,304) (203,328) (203,328)
Loss on
invest-
ments (3,832,360) - - - - - (3,832,360) (3,832,360)
---------- -------- --------- --------- -------- ---------- ---------- --------- -------- ----------
(3,809,565) - (543) (768) (43,713) (158,304) (4,012,893) - - (4,012,893)
---------- -------- --------- --------- -------- ---------- ---------- --------- -------- ----------
NET INCOME
(LOSS)BEFORE
INCOME TAXES (36,768,153) (371,947) (660,222) (578,134) (688,150) 1,553,972 (37,512,634) 6,418,158 - (43,930,792)
PROVISION FOR
(BENEFIT
FROM) INCOME
TAXES - - - - - 621,589 621,589 6 - 621,589 -
----------- -------- --------- --------- -------- ---------- ---------- --------- --------- ----------
NET INCOME
(LOSS) $(36,768,153) $(371,947) $(660,222) $(578,135)$(688,150) $ 932,383 $(38,134,223) $6,418,158 $ 621,589 $(43,930,794)
=========== ======== ========= ========= ======== ========== =========== ========= ========= ===========
NET INCOME PER
SHARE $ (2.13)
===========
WEIGHTED AVERAGE
NUMBER OF
SHARES
OUTSTANDING 20,587,824
==========
</TABLE>
See accompanying notes to pro forma financial statements.
11
<PAGE>
NEXTPATH TECHNOLOGOES, INC.
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT - MAXIMUM PURCHASE PRICE
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Laser Willow Essentia Lewis Combining entries
Wireless Systems Sagebrush Water Mechanical
NextPath prior to prior to prior to prior to thru Pro Forma
Consolidated 10-18-99 11-02-99 12-14-99 1-20-00 6-30-00 Sub-Total No. Debit Credit Combined
------------ --------- ---------- --------- --------- ----------- ----------- --- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES $ - $ - $1,039,117 $1,907,010 $ 174,401 $19,794,996 $22,915,524 $ - $ - $22,915,524
COST OF
GOODS SOLD - - - 906,655 199,468 13,624,559 14,730,682 - 14,730,682
---------- -------- --------- --------- -------- ---------- ---------- --------- -------- ----------
GROSS PROFIT - - 1,039,117 1,000,355 (25,067) 6,170,437 8,184,842 - - 8,184,842
---------- -------- --------- --------- -------- ---------- ---------- --------- -------- ----------
EXPENSES:
General and
admini-
strative 528,412 - 862,798 754,185 475,565 442,128 3,063,088 - - 3,063,088
Amortization
of
goodwill - - - - - - 1 6,111,116 6,111,116
---------- -------- --------- --------- -------- ---------- --------- --------- --------- ----------
528,412 - 862,798 754,185 475,565 442,128 3,063,088 6,111,116 - 9,174,204
--------- -------- --------- --------- -------- ---------- --------- --------- --------- ----------
NET INCOME
(LOSS) FROM
OPERATIONS (528,412) - 176,319 246,170 (500,632) 5,728,309 5,121,754 6,111,116 - (989,362)
---------- -------- --------- --------- -------- ---------- --------- --------- --------- ----------
OTHER INCOME
(EXPENSE):
Interest
income - - 40 - - - 40 40
Interest
expense - - - (17,363) (2,948) (77,586) (97,897) (97,897)
--------- -------- --------- --------- -------- ---------- --------- --------- --------- ----------
- - 40 (17,363) (2,948) (77,586) (97,857) - - (97,857)
--------- -------- --------- --------- -------- ---------- --------- --------- --------- ----------
NET LOSS BEFORE
INCOME TAXES (528,412) - 176,359 228,807 (503,580) 5,650,723 5,023,897 6,111,116 - (1,087,219)
PROVISION FOR
(BENEFIT FROM)
INCOME TAXES - - - - - - - - - -
--------- -------- --------- --------- -------- ---------- --------- --------- --------- ----------
NET LOSS $ (528,412) $ - $ 176,359 $ 228,807 $(503,580)$ 5,650,723 $5,023,897 $6,111,116 $ - $(1,087,219)
========= ======== ========= ========= ======== ========== ========= ========= ========= ==========
NET LOSS PER
SHARE $ (0.09)
=========
WEIGHTED AVERAGE
NUMBER OF
SHARES
OUTSTANDING 12,408,710
==========
</TABLE>
See accompanying notes to pro forma financial statements.
12
<PAGE>
NEXTPATH TECHNOLOGIES, INC.
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT - MAXIMUM PURCHASE PRICE
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Laser Willow Essentia Lewis Combining entries
Wireless Systems Sagebrush Water Mechanical
NextPath prior to prior to prior to prior to thru Pro Forma
Consolidated 10-18-99 11-02-99 12-14-99 1-20-00 6-30-00 Sub-Total No. Debit Credit Combined
------------ --------- ---------- --------- --------- ----------- ----------- --- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ 551,331 $ 757,108 $ - $ 1,007,572 $ 2,316,011 $ - $ - $ 2,316,011
COST OF
GOODS SOLD - - - 417,071 - 875,784 1,292,855 1,292,855
--------- --------- --------- -------- -------- ---------- ---------- --------- -------- ----------
GROSS PROFIT - - 551,331 340,037 - 131,788 1,023,156 - - 1,023,156
--------- --------- --------- -------- -------- ---------- ---------- --------- -------- ----------
EXPENSES:
General and
admin-
istrative - - 455,509 364,268 - 68,506 888,283 888,283
Amortization
of goodwill - - - - - - - 1 4,575,819 4,575,819
-------- --------- -------- -------- -------- ---------- ---------- --------- --------- ----------
- - 455,509 364,268 - 68,506 888,283 4,575,819 - 5,464,102
-------- --------- -------- -------- -------- ---------- ---------- --------- --------- ----------
NET INCOME
(LOSS) FROM
OPERATIONS - - 95,822 (24,231) - 63,282 134,873 4,575,819 - (4,440,946)
-------- --------- -------- -------- -------- ---------- ---------- --------- --------- ----------
OTHER INCOME
(EXPENSE):
Interest
expense - - - (6,623) - (2,169) (8,792) (8,792)
-------- --------- -------- -------- -------- ---------- ---------- ---------- --------- ----------
- - - (6,623) - (2,169) (8,792) - - (8,792)
-------- --------- -------- -------- -------- ---------- ---------- ---------- --------- ----------
NET INCOME
(LOSS) BEFORE
INCOME TAXES - - 95,822 (30,854) - 61,113 126,081 4,575,819 - (4,449,738)
PROVISION FOR
(BENEFIT FROM)
INCOME TAXES - - 38,329 - - 24,445 62,774 6 62,774 -
-------- --------- -------- -------- -------- ---------- ---------- --------- --------- ----------
NET INCOME
(LOSS) $ - $ - $ 57,493 $ (30,854) $ - $ 36,668 $ 63,307 $4,575,819 $ 62,774 $(4,449,738)
======== ========= ======== ======== ======== ========== ========== ========= ========= ==========
NET LOSS
PER SHARE $ (0.93)
=========
WEIGHTED AVERAGE
NUMBER OF
SHARES
OUTSTANDING 4,776,285
=========
</TABLE>
See accompanying notes to pro forma financial statements.
13
<PAGE>
NEXTPATH TECHNOLOGIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATING
FINANCIAL STATEMENTS
(1) GENERAL
NextPath Technologies, Inc. ("NextPath") engages primarily in the
development of technology, which has potential application in a wide
range of businesses and other business activities.
The pro forma condensed combining consolidated financial statements have
been prepared assuming the following entities were acquired under the
purchase method of accounting as of the inception of the acquired
company or January 1, 1997, whichever occurred last:
Laser Wireless, Inc. ("Laser")
Willow Systems Limited ("Willow") and its subsidiaries, NextWave
Photonics, LLC and Reflex, LLC
Sagebrush Technology, Inc. ("Sagebrush")
Essentia Water, Inc. ("Essentia")
Industrial Division of Lewis Mechanical and Metalworks, Inc.
("Lewis")
These pro forma combining consolidated financial statements also reflect
the Company's 20% equity investment in USCertified Letters, LLC
("USCL").
Pro forma condensed combining consolidated balance sheets of NextPath
have been prepared as of June 30, 2000 and December 31, 1999, and the
related condensed combining consolidated income statements for the six
months ended June 30, 2000 and the years ended December 31, 1999, 1998
and 1997.
A description of NextPath's subsidiaries follows:
Laser Wireless, Inc. (Laser) is a company incorporated March 2,
1998 in Pennsylvania for the purpose of developing, selling and
support of wireless optical communication systems. These systems
are capable of transmitting video, voice, telephone and data
through the atmosphere using eye-safe laser technology. Laser did
not begin operations until 1999 and was acquired by NextPath on
October 18, 1999.
Willow Systems Limited (the "Willow") is a company incorporated
on May 23, 1996 in New Mexico for the purpose of designing and
marketing motion control systems and robotics and the development
of other technology which has potential application in a wide
range of businesses and other business activities. Willow was
acquired by NextPath on November 2, 1999.
Willow has two wholly owned subsidiaries, Reflex LLC and NextWave
Photonics, LLC, both of which had no operations or activity
during the fiscal year ended December 31, 1999.
14
<PAGE>
NEXTPATH TECHNOLOGIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATING
FINANCIAL STATEMENTS
CONTINUED
(1) GENERAL, Continued
Epilogue Corporation (Epilogue) was incorporated on June 7, 1999
in Delaware. On November 11, 1999, Epilogue was merged into
NextPath. Due to the immaterial activity in this development
stage corporation, Epilogue was not included in these pro forma
financial statements.
Sagebrush Technology, Inc. (Sagebrush) was established on April
4, 1991 and incorporated in New Mexico for the purpose of
designing, developing, manufacturing and marketing positioning
devices (gimbals), and other business activities. NextPath
acquired Sagebrush on December 14, 1999.
Essentia Water, Inc. (Essentia) was formed on June 30, 1998 in
the Washington for the purpose of manufacturing and distributing
electrolyte and alkaline enhanced bottled water products.
NextPath acquired Essentia on January 21, 2000.
Lewis Mechanical and Metalworks, Inc. was a privately held
corporation in Idaho. NextPath acquired the Industrial Division
of Lewis Mechanical and Metalworks, Inc. Lewis has proprietary
systems for: 1) oil and water separation, 2) water purification,
3) fuel savings and reduction of harmful emissions from internal
combustion engines, and 4) removal of hydrocarbons from sludge
and soil, and other environmental cleanups. NextPath acquired
Lewis on August 4, 2000.
NextPath also made a 20% equity investment in USCertified Letters, LLC.
This investment is reflected on the equity method in these pro forma
financial statements. A description of this investment is as follows:
USCertified Letters, L.L.C. (USCL) was a limited liability
corporation formed in Alabama and commenced operations in
December of 1999. USCL has developed and licensed proprietary
technologies enabling customers to send US Postal Service
Certified mail, utilizing the Internet from any computer, to
destinations throughout the continental United States, Alaska and
Hawaii. NextPath made its investment in USCL effect July 27,
2000.
(2) MINIMUM VS MAXIMUM PURCHASE PRICE
The accompanying pro form condensed consolidating financial statements
were prepared based on two different sets of assumptions. For purposes
of identification, these pro forma condensed consolidating financial
statements have been identified as the "Minimum Purchase Price" and the
"Maximum Purchase Price".
The following assumptions were made in the preparation of the "Minimum
Purchase Price" pro forma condensed consolidating financial statements:
o Capital contributions for the 20% interest in USCL consisted of (i)
one million shares of NextPath restricted common stock valued at
$1.78 per share or $1,780,000 and (ii) cash of $8,750,000. The
"Minimum Purchase Price" does not anticipate that NextPath will be
required to make certain additional cash contributions totaling
$18,000,000, as these are contingent on the occurrence of certain
future events.
15
<PAGE>
NEXTPATH TECHNOLOGIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATING
FINANCIAL STATEMENTS
CONTINUED
(2) MINIMUM VS MAXIMUM PURCHASE PRICE, Continued
o The purchase price of Lewis was accomplished for (i) $1,675,000 in
cash, (ii) the assumption of $2,409,104 in debt, (iii) the assumption
of $2,200,000 in operating equipment leases, and (iv) up to 2,439,025
shares of NextPath common stock, totaling $5,000,000, based upon
future performance over the next two years. The "Minimum Purchase
Price" does not anticipate that Lewis will receive the additional
2,439,025 shares of NextPath common stock.
o NextPath has recorded the amortization of goodwill over five years
beginning in 1997 or in the year of the acquired company's inception.
The following assumptions were made in the preparation of the "Maximum
Purchase Price" pro form condensed consolidating financial statements:
o The capital contributions to USCL included the additional $18,000,000
in contingency payments.
o The purchase price of Lewis included the issuance of 2,439,025 in
NextPath stock valued at $5,000,000 in contingency payments.
(3) ADJUSTMENTS USED IN PRO FORMA FINANCIAL STATEMENTS
The following adjusting entries were used in the preparation of the pro
forma condensed consolidating financial statements:
Entry (1) - records the amortization of goodwill over five years.
Goodwill is amortized from the later of the formation date of the
company or January 1, 1999. Goodwill capitalized for purpose of these
pro forma financial statements is as follows:
<TABLE>
<CAPTION>
Minimum Purchase Price
<S> <C>
Willow $ 7,198,779
Sagebrush 10,152,428
Laser 892,347
Essentia 7,676,487
Lewis Mechanical 527,884
Maximum Purchase Price
Willow $ 7,198,779
Sagebrush 10,152,428
Laser 892,347
Essentia 7,676,487
Lewis Mechanical 5,527,884
</TABLE>
16
<PAGE>
(3) ADJUSTMENTS USED IN PRO FORMA FINANCIAL STATEMENTS, Continued
Entry (2) - records the pro forma acquisition of Essentia for common
stock.
Entry (3) - records the pro forma acquisition of the Industrial Division
of Lewis Mechanical.
Entry (4) - records the pro forma acquisition of its investment in USCL.
In the Minimum Purchase Price case, the Company's investment in USCL is
$10,530,000 and in the Maximum Purchase Price case, the Company's
investment in USCL is $28,530,000.
Entry (5) - removes pro forma tax liabilities associated with profitable
acquisitions.
Entry (6) - eliminates inter company receivables and payables.
17
