<PAGE>
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): August 11, 2000
UPROAR INC.
(Exact name of registrant as specified in its charter)
Delaware 000-29971 522192125
-------- --------- ---------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
240 West 35th Street, New York, NY
10001 (Address of principal executive
offices, including zip code)
Registrant's telephone number, including area code: (212) 714-9500
<PAGE>
Item 2. Acquisition or Disposition of Assets
On August 11, 2000, Uproar Inc. (the "Company" or "Uproar") completed the
acquisition of Take Aim Holdings Ltd. a British Virgin Islands company in the
development stage ("Take Aim"), and its subsidiaries, pursuant to an Agreement
and Plan of Merger by and among the Company, Uproar Acqusition Corp., a Delaware
corporation and a wholly owned subsidiary of the Company ("Acquisition"), Take
Aim, and the shareholders and warrant holders of Take Aim. As a result of the
transaction, Take Aim merged with and into Acquisition, which was the surviving
corporation.
In the transaction, the Company issued the shareholders of Take Aim an aggregate
of 1,333,334 shares of common stock of the Company and assumed outstanding stock
options to purchase an aggregate of (after assumption and conversion) 28,941
shares of common stock of the Company.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
The Company hereby files this Form 8K/A to file the financial statements and
related pro forma consolidated financial statements required pursuant to Item 7
of Form 8-K with respect to the acquisition of Take Aim.
(a) Consolidated Financial Statements of Business Acquired
Audited Financial Statements:
(i) Report of Somekh Chaikin, a member firm of KPMG
International, dated April 28, 2000.
(ii) Take Aim Balance Sheet as of December 31, 1999.
(iii) Take Aim Statement of Operations for the period from
January 4, 1999 (date of inception) to December 31,
1999.
(iv) Take Aim Statement of Stockholders' Equity for the
period from January 4, 1999 (date of inception) to
December 31, 1999.
(v) Take Aim Statement of Cash flows for the period from
January 4, 1999 (date of inception) to December 31,
1999.
(vi) Take Aim Notes to the Consolidated Financial
Statements as of December 31, 1999 and for the period
from January 4, 1999 (date of inception) to December
31, 1999.
Condensed Financial Statements (unaudited):
(i) Take Aim Unaudited Balance Sheet as of June 30, 2000.
(ii) Take Aim Unaudited Statements of Operations for the
six months ended June 30, 2000 and the period from
January 4, 1999 (date of inception) to June 30, 2000.
(iii) Take Aim Unaudited Statements of Cash Flows for the
six months ended June 30, 2000 and the period from
January 4, 1999 (date of inception) to June 30, 2000.
(iv) Take Aim Notes to Financial Statements as of and for
the six month period ended June 30, 2000 and the
period from January 4, 1999 (date of inception) to
June 30, 2000 (unaudited).
<PAGE>
(b) Pro Forma Financial Information
Unaudited Pro Forma Condensed Consolidated Financial
Statements:
(i) Unaudited Pro Forma Condensed Consolidated Balance
Sheet as of June 30, 2000.
(ii) Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the year ended December 31, 1999.
(iii) Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the six months ended June 30, 2000.
(iv) Notes to the Unaudited Pro Forma Condensed
Consolidated Financial Statements.
The Pro Forma Condensed Consolidated Financial Statements
should be read in conjunction with the audited consolidated
financial statements of the Company and the related notes
thereto which are included in the Company's Registration
Statement on Form S-4, as amended, dated September 18, 2000
(as filed with the Securities and Exchange Commission) and the
audited financial Statements of Take Aim that are filed
herewith.
The Pro Forma Condensed Consolidated Financial Information
does not purport to present what the Company's results of
operations would actually have been if the Take Aim
acquisition had occurred on the assumed date, as specified
above, or to project the Company's financial condition or
results of operations for any future period.
(c) Exhibits
2.1 Agreement and Plan of Merger, dated August 7, 2000
among Uproar Inc., Uproar Acquisition Corporation,
Take Aim Holdings Ltd. and the Shareholders and
Warrant Holders of Take Aim Holdings Ltd.
23.1 Independent Auditors' Consent.
<PAGE>
Independent Auditors' Report to the Shareholders of
Take Aim Holding Ltd. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Take Aim Holding
Ltd. (the Company) and its subsidiaries (a development stage enterprise) as of
December 31, 1999, and the related consolidated statements of operations,
changes in shareholders' equity and cash flows, for the period from January 4,
1999 (date of inception) to December 31, 1999. These financial statements are
the responsibility of the Company's Board of Directors and of its 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,
including those prescribed by the Israeli Auditors' Regulations (Manner of
Auditor's Performance) 1973, such auditing standards are substantially identical
to generally accepted auditing standards in the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance that
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 the Board of Directors and 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, based on our audit, the consolidated financial statements
referred to above present fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries (a development stage
enterprise) as of December 31, 1999 and the results of its operations, the
changes in the shareholders' equity and its cash flows for the period from
January 4, 1999 (date of inception) to December 31, 1999 in conformity with
generally accepted accounting principles (GAAP) in the United States.
/S/ Somekh Chaikin
-------------------
Certified Public Accountants (Isr.)
April 28, 2000
<PAGE>
(a) Consolidated Financial Statements of Business Acquired
Take Aim Holding Ltd. and Subsidiaries
(A Development Stage Enterprise)
<TABLE>
<CAPTION>
Consolidated Balance Sheet
-----------------------------------------------------------------------------------------------------
December 31
1999
-------------
Note U.S. dollars
---------- -------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents 221,698
Short-term deposit 8,000
Receivables and prepaid expenses 3 45,001
-------------
274,699
-------------
Property and equipment, net 2F; 4 116,720
-------------
Other Assets
Capitalized software development costs 2G; 5 192,135
Other assets 2H 8,005
-------------
200,140
=============
591,559
=============
Liabilities and shareholders' equity
Current Liabilities
Short-term credit 13,854
Accounts payable 133,633
Other payables and accrued expenses 6 33,192
Convertible loan 7 250,000
-------------
430,679
-------------
Convertible loan 7 50,000
Accrued severance pay 8 1,533
-------------
51,533
-------------
Commitments and Contingencies 9
Shareholders' equity 10
Share capital, 5,000,000 shares authorized, $.01 par value,
1,471,400 shares issued and outstanding 14,714
Additional paid-in capital 313,235
Deferred compensation (27,441)
Deficit accumulated during the development stage (191,161)
=============
109,347
=============
591,559
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Take Aim Holding Ltd. and Subsidiaries
(A Development Stage Enterprise)
<TABLE>
<CAPTION>
Consolidated Statement of Operations
----------------------------------------------------------------------------------------------------------
For the
period from
January 4, 1999
(date of
inception) to
December 31,
Note 1999
-------------- ---------------
U.S. dollars
---------------
<S> <C> <C>
Research and development costs 70,060
Selling and marketing expenses 66,736
General and administrative expenses 47,757
---------------
Operating loss (184,553)
---------------
Financial expenses, net 1,825
---------------
Loss before income tax (186,378)
Taxes on income 11 4,783
---------------
Loss for the period (191,161)
===============
Loss per share
Basic and diluted 2J (0.246)
===============
Shares used to calculate loss per share
Basic and diluted 2J 778,081
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Take Aim Holding Ltd. and Subsidiaries
(A Development Stage Enterprise)
<TABLE>
<CAPTION>
Statement of Changes in Shareholders' Equity for the Period from January 4, 1999
(date of inception) to December 31, 1999
---------------------------------------------------------------------------------------------------------------------------------
Additional Deferred
Share capital paid in ompensation Deficit accumu-
---------------------------- Outstanding lated during the
Amount capital development stage Total
------------ ------------ ------------ ----------------- ---------------
No. of shares U.S. dollars U.S. dollars U.S. dollars U.S. dollars U.S. dollars
------------- ------------ ------------ ------------ ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of share
capital to founders 1,000,000 10,000 -- -- -- 10,000
Issuance of share capital 400,400 4,004 276,276 -- -- 280,280
Expenses related to issuance
of share capital -- -- (8,400) -- -- (8,400)
Employee stock compensation -- -- 34,958 (34,958) -- --
Amortization of deferred
compensation -- -- -- 7,517 -- 7,517
Shares issued for services 71,000 710 -- -- -- 710
Stock options issued
for services -- -- 10,401 -- -- 10,401
Net loss for the period from
January 4, 1999 (date of
inception) to December
31, 1999 -- -- -- -- (191,161) (191,161)
------------- ------------ ------------ ------------ ---------------- ---------------
Balance as at December 31, 1999 1,471,400 14,714 313,235 (27,441) (191,161) 109,347
============= ============ ============ ============ ================ ===============
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
Take Aim Holding Ltd. and Subsidiaries
(A Development Stage Enterprise)
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows
-------------------------------------------------------------------------------------------------------------
For the period
from January 4,
1999 (date of
inception) to
December 31,
1999
---------------
U.S. dollars
---------------
<S> <C>
Cash flows used in operating activities
Loss for the period (191,161)
Adjustments to reconcile loss to net cash used in operating activities:
Depreciation 2,163
Increase in accrued severance pay, net 1,533
Increase in receivables and prepaid expenses (45,001)
Increase in accounts payable 133,633
Increase in other payable and accrued expenses 33,192
Amortization of deferred compensation 7,517
Stock options issued for services 10,401
Shares issued to founders for services 10,000
Shares issued for services 710
---------------
Net cash used in operating activities (37,013)
---------------
Cash flows used in investing activities
Capitalization of software development costs (192,135)
Purchase of equipment (118,883)
Purchase of other assets (8,005)
Investment in short-term deposit (8,000)
---------------
Net cash used in investing activities (327,023)
---------------
Cash flows provided by financing activities
Proceeds of short-term credit 13,854
Proceeds of convertible loans 300,000
Proceeds from share capital issuance, net 271,880
---------------
Net cash provided by financing activities 585,734
---------------
Increase in cash and cash equivalents 221,698
Balance of cash and cash equivalents
as at January 4, 1999 (date of inception) --
---------------
Balance of cash and cash equivalents at
December 31, 1999 221,698
===============
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
Take Aim Holding Ltd. and Subsidiaries
(A Development Stage Enterprise)
Notes to the Consolidated Financial Statements as at December 31, 1999
--------------------------------------------------------------------------------
Note 1 - General
A. Take Aim Holding Ltd. (hereinafter - the Company) was
incorporated on January 4, 1999 in the British Virgin Islands
(hereinafter - BVI) and began operating on November 24, 1999.
The purpose of the Company is to plan, construct and manage
multi-participant betting game applications on the Internet.
The Company and its subsidiaries is a development stage
enterprise as of December 31, 1999, as it has not generated
significant revenue from its planned principal operations.
The Company has full control over a subsidiary in Antigua,
Omninet Inc. (hereinafter - the subsidiary in Antigua), that
was incorporated on May 26, 1999 for the purpose of developing
the software intended for use on the Internet.
On August 3, 1999 the subsidiary in Antigua incorporated a
wholly owned company in Israel, Omninetworks Ltd. (hereinafter
- the subsidiary in Israel). The subsidiary in Israel was
incorporated for the sole purpose of providing the research,
development, consultancy, planning and support services which
the subsidiary in Antigua will require from time to time. The
services are billed out at 108% of the cost incurred in
performing the services.
On November 24, 1999 the shareholders of the subsidiary in
Antigua transferred their shares to the Company in return for
all the Company's equity at the same rate of holding they had
in the subsidiary in Antigua. Accordingly, the transaction was
accounted for as a "Pooling of Interests."
Furthermore, options for the purchase of shares and a loan
convertible into shares of the subsidiary in Antigua were
assigned to a purchase and conversion of shares of the Company
(also see Note 7).
On December 17, 1999 the Company incorporated a wholly owned
subsidiary in Delaware, USA, Ibetcha Inc., (hereinafter - the
subsidiary in U.S.) for the purpose of operating and marketing
the Internet site.
Subsequent to the balance sheet date, the Company was split
into two separate companies - Bettingcorp Ltd., a company
incorporated in BVI (hereinafter - "BC"), whose purpose is to
concentrate the activity in real money betting, and the
Company itself, which will continue to concentrate and operate
the remaining activities. BC and the Company will cooperate in
the area of R&D, content, recruiting of employees and other
areas (see also Note 9D).
B. Definitions
1. Related party - As defined in Statement of Financial
Accounting Standards (SFAS) No. 57 "Related Party
Disclosures".
<PAGE>
Note 2 - Significant Accounting Policies
A. Financial statements in U.S. dollars ("dollar")
The accompanying financial statements are presented in U.S. dollars.
The currency of the primary economic environment in which the
operations of the Company are conducted is the U.S. dollar, and as
such, the Company uses the dollar as its functional currency. Certain
of the dollar amounts in the financial statements represent the dollar
equivalents in other currencies. The Company's transactions and
balances denominated in U.S. dollars are presented at their original
amounts. Non-dollar transactions and balances have been remeasured to
U.S. dollars, in accordance with the principles set forth in the
Statement of Financial Accounting Standards No. 52 as promulgated by
the Financial Accounting Standards Board of the United States. All
exchange gains and losses from remeasurement of monetary balance sheet
items denominated in non-dollar currencies are reflected in the income
statement when they arise, and are included in financial income or
expenses as appropriate.
B. Estimations and assumptions in the financial statements
The preparation of the 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, disclosure of contingent assets and liabilities, at
the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting periods.
These are management's best estimates based on experience and
historical data, however, actual results may vary from these estimates.
C. Basis of presentation
The financial statements presented herein have been prepared in
accordance with generally accepted accounting principles (GAAP) in the
United States.
D. Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All intercompany transactions and
balances were eliminated in consolidation.
E. Cash equivalents
All highly liquid investments with original maturities of generally
three months or less are considered to be cash equivalents.
<PAGE>
Note 2 - Significant Accounting Policies (cont'd)
F. Property and equipment, net
Property and equipment are stated at cost less accumulated
depreciation.
Depreciation is calculated by the "straight-line" method at annual
rates considered adequate to write-off the assets over their estimated
useful lives as estimated by the management of the Company.
Annual depreciation rates are as follows:
%
--------------
Computers and peripheral equipment 15-33
Office furniture and equipment 6-15
Leasehold improvements are amortized by the straight-line method over
the remaining life of the lease, which is shorter than the useful life
of the improvements.
G. Capitalized software development costs
The Company capitalizes part of the software development costs in
accordance with Statement of Position 98-1 (SOP) and EITF 00-2.
Accordingly, a company that purchases or independently develops
software for its own use which is not intended for sale, will
capitalize the costs incurred during the planning, configuration,
development of the application, coding and installment of the software
as well as during its testing. The conditions for beginning to
capitalize are a financing approval of the Management as well as it
being anticipated that the project will be completed and will
accomplish its purpose.
The Company's software will be amortized by the straight line method
according to its anticipated useful life. The software was not used at
all in 1999 and its related costs will be amortized when the software
is put into use on the Internet.
H. Other Assets
According to the Company's assessments that the U.S. patent office will
approve its patent application, the legal fees incurred in connection
with these applications were capitalized. Once the patent will be
approved, the capitalized costs will be amortized using the
straight-line method over the remaining estimated economic life of the
Company's patent.
I. Deferred income taxes
The Company applies the provisions of Statement No. 109 of the FASB
("Accounting for Income Taxes").
<PAGE>
Note 2 - Significant Accounting Policies (cont'd)
J. Loss per share
The Company adopted SFAS NO. 128, "Earnings per Share". Under SFAS 128,
the Company presents two earnings per share (EPS) amounts. Basic EPS is
calculated based on net earnings available to common shareholders and
the weighted-average number of shares outstanding during the reported
period. Diluted EPS includes additional dilution from potential common
stock, such as stock issuable pursuant to the exercise of stock options
outstanding.
K. Stock options compensation
The Company has adopted Accounting Principles Board Opinion No. 25 -
"Accounting for Stock Issued to Employees", ("APB 25") and related
interpretations. As such, compensation expenses related to employee
stock options is recorded over the vesting period only if, on the date
of grant the fair value of the underlying stock exceeds the exercise
price. The Company adopted the disclosure-only requirements of
Statement of Financial Accounting Standards ("SFAS") No. 123
"Accounting for Stock-Based Compensation", which allows entities to
continue to apply the provisions of APB Opinion No. 25 for transactions
with employees and provide pro forma net income disclosure for employee
stock grants made as if the fair value based method of accounting in
SFAS No. 123 had been applied to these transactions.
Stock option compensation to non-employees are recorded in accordance
with SFAS No. 123 and EITF 96-18, at the fair value of the stock
options issued.
L. Comprehensive income (loss)
The Company adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130
establishes standards for the reporting of all changes in equity from
non-shareholder sources. As applicable to these financial statements
Comprehensive loss is the same as net loss for the period presented.
<PAGE>
Note 3 - Receivable and Prepaid Expenses
December 31
1999
---------------
U.S. dollars
---------------
Deferred income tax 2,119
Prepaid expenses 6,697
Government institutions 16,215
Employees 1,145
Related parties 625
Others 18,200
---------------
45,001
===============
Note 4 - Property and Equipment, Net
<TABLE>
<CAPTION>
Computers Office Total
and peripheral furniture and
equipment equipment
U.S. dollars U.S. dollars U.S. dollars
-------------- -------------- --------------
<S> <C> <C> <C>
Cost
Additions during 1999 105,871 13,012 118,883
-------------- -------------- --------------
As at December 31, 1999 105,871 13,012 118,883
-------------- -------------- --------------
Accumulated depreciation
Additions during 1999 2,090 73 2,163
-------------- -------------- --------------
As at December 31, 1999 2,090 73 2,163
-------------- -------------- --------------
Undepreciated cost balance
as at December 31, 1999 103,781 12,939 116,720
============== ============== ==============
</TABLE>
Note 5 - Capitalized Software Development Costs
During 1999, the Company capitalized software development costs in the
total sum of US$ 192,135. The software was not used at all in 1999 and
its related cost will be amortized when the software is put into use on
the Internet.
<PAGE>
Note 6 - Other Payables and Accrued Expenses
December 31
1999
---------------
U.S. dollars
---------------
Payroll and related expenses 20,198
Expenses accrued 6,092
Government institutions 6,902
---------------
33,192
===============
Note 7 - Convertible Loans
On November 4, the subsidiary in Antigua signed a loan agreement with
an investor for the receipt of a loan in the amount of US$ 50,000,
which can be converted into Class A preference shares of the subsidiary
in Antigua until the Company raises additional capital in the future.
When the Company purchased the subsidiary in Antigua the loan was
assigned to the Company, including all the conversion rights, so that
it can be converted into class A preference shares of the Company with
the same rights attached to them as to the class A preference shares of
the subsidiary in Antigua. Subsequent to the balance sheet date,
additional capital was raised and the loan was converted into preferred
shares (also see Note 10B3).
On December 27, 1999, the Company signed a loan agreement with a group
of investors for the receipt of a loan in the amount of US$ 250,000,
which can be converted at any time into Class B preference shares of
the Company until the Company raises additional capital in the future.
Subsequent to the balance sheet date the loan was repaid in full with
the addition of accrued interest without being converted into
preference shares.
Note 8 - Severance Pay
Under the Israeli law, the Company is required to make severance
payment to dismissed employees (including officers) and to employees
leaving employment in certain other circumstances. The liability for
severance pay is calculated on the basis of the latest salary paid to
each employee multiplied by the number of years of employment. The
liability of the Company for the payment of pensions, retirement
compensation and severance pay to its employees is covered partly by
current deposits in the names of the employees with an insurance
company.
The liability in respect of employee severance benefits reflected in
the balance sheets represents the unfunded amounts.
<PAGE>
Note 8 - Severance Pay (cont'd)
December 31
1999
---------------
US$
---------------
Provision for severance pay 4,610
Amounts funded 3,077
---------------
1,533
===============
Note 9 - Commitments and Contingencies
A. Development agreement
In July 1999, the subsidiary in Antigua signed an agreement with
Shelron Internet Ltd., an Israeli Company, for the development of the
Company's Internet site for the price of US$135,000 (with a possible
deviation of 15%), 50,000 ordinary shares US$ 0.01 par value of the
Company and 20,000 options for the purchase of ordinary shares US$ 0.01
par value at an exercise price of US$ 0.92. Development of the program
was completed at the beginning of 2000 and in March 2000 a final
agreement was signed in which the deviation was settled as well as
other additions to the program in the total additional amount of US$
87,000.
B. Rental commitments
Premises occupied by the subsidiary in Israel are rented under a rental
agreement which expires in August 2000.
The agreement is renewable at the Company's option.
Minimum future rental payments due under the above agreements assuming
no renewal options are exercised, are US$ 25,872.
C. Concentration of credit risk
Financial instruments that may subject the Company to significant
concentrations of credit risk consist of cash investments. Cash and
cash equivalents and short-term deposit are maintained by major
financial institutions in Israel and in the United States.
D. Engagement with BC
As part of the goal of the spin-off process, the Company gave exclusive
rights to BC, to use the required technology and IP for real money
betting activity. Moreover, the Company undertook to give a
non-guaranteed loan to BC in 2000, in the amount of US$ 250,000.
E. Advertisement agreement
Subsequent to the balance sheet date, the Company signed an advertising
agreement with an advertising company in the USA. The Company's
liability to the advertising company, as a result of the agreement,
amounts to a total of US$ 155,000.
<PAGE>
Note 10 - Shareholders' Equity
A. Share capital
<TABLE>
<CAPTION>
December 31, 1999
-----------------------------
Number of shares
-----------------------------
Authorized Issued and
outstanding
------------- -----------
<S> <C> <C>
Ordinary shares of US$ 0.01 par value 5,000,000 1,471,400
</TABLE>
B. Change in the shareholders' equity
1. On January 10, 2000 the Company amended its Articles of
Association so that 50,000 of the registered ordinary shares
of a par value of US$1 each were split at the ratio of 1 to
100 for a total amount of 5,000,000 shares of a par value of
US$0.01 each, divided into 4,000,000 ordinary shares and
1,000,000 Series A convertible accumulating preferred shares.
The figures in notes 10A to 10D are described as if the stock
split of the ordinary shares took place upon the Company's
inception.
2. Upon its incorporation, the subsidiary in Antigua initially
issued to a number of executives 1,000,000 ordinary shares of
par value US$0.01 each. In addition 71,000 ordinary shares of
par value US$ 0.01 each were granted at no cost as part of an
agreement for services rendered.
On July 12, 1999 the subsidiary in Antigua issued, to a number
of investors 400,400 ordinary shares of a par value of US$
0.01 each for the price of US$ 0.70 per share and for the
total amount of US$280,280. Expenses in the amount of $8,400
incurred in connection with the share issuance have been
deducted from share premium. Certain investors were granted an
option to purchase, in a future raising of capital, shares in
an amount that is equivalent to the amount of their present
investment at a price per share that reflects a 12.5% discount
from the price of the share set for the following raising of
capital, and some investors had the option to make an
additional investment of four times their original investment
at a price per share that reflects a 20% discount (see also
Note 10B3).
On November 24, 1999, the Company issued 1,471,400 ordinary
shares of a par value of US$ 0.01 each to the shareholders of
the subsidiary in Antigua in return for their shares in the
subsidiary in Antigua, so that their rate of holding in the
Company on the day of issue is identical to that they had in
the subsidiary in Antigua.
<PAGE>
Note 10 - Shareholders' Equity (cont'd)
B. Change in the shareholders' equity (cont'd)
3. Subsequent to the balance sheet date the Company issued to a
number of investors, as part of a share purchase agreement,
814,181 series A Preferred Shares at US$ 2.481 per share for
the total amount of US$ 2,020,000. Furthermore, certain
investors exercised their option to purchase 20,733 ordinary
shares for the total amount of US$ 44,976, an amount that is
equivalent to their previous investment in the Company (see
also Note 10B2), and a loan in the amount of US$ 50,000 was
converted into 20,153 Series A preferred shares of a par value
US$ 0.01 each, reflecting a purchase price of US$ 2.481 per
share. With the approval of the majority of these investors,
an additional 100,765 series A preferred shares at a par value
of US$ 0.01 each, at a same purchase price and at an aggregate
purchase price of US$ 250,000, were issued to new investors
who joined the share purchase agreement.
The holders of the Series A preferred shares shall be entitled
to the following rights:
(a) Preference in respect of dividend payments over all
other holders of equity securities of the Company up
to the full amount paid for the Series A preferred
shares plus interest at a rate of 8% per annum.
Thereafter, the holders of the Series A Preferred
shall participate in any remaining dividend
distribution pro-rata with all other equity
securities on an as-converted basis.
(b) Preference over all other holders of equity
securities of the Company in the event of
liquidation, bankruptcy or reorganization of the
Company up to the full amount paid for the Series A
preferred shares, plus accrued but unpaid dividends,
and interest at the rate of 8% per annum. Thereafter,
the holders of the preferred shares shall participate
on an as converted basis in the distribution of any
remaining proceeds but no more than three times the
original issue price of the preferred shares then
held by such holders.
(c) Conversion into ordinary shares any time after the
date of issuance until the earlier of an Initial
Public Offering (in which the preferred shares shall
be automatically converted into ordinary shares), or
the affirmative vote of the holders of at least 51%
of the preferred shares to convert the preferred
shares into ordinary shares. The conversion ration is
one ordinary share for each preferred share subject
to adjustment specified in the Company's Articles of
Association.
C. Employee stock option plan
1. On June 24, 1999 the Board of Directors of the subsidiary in
Antigua decided to allocate 250,000 of its US$ 0.01 par value
shares for the purpose of forming an employee share option
plan.
2. Upon incorporation of the Company, 250,000 ordinary shares of
par value US$ 0.01 each, were allocated for the purpose of
forming an employee share option plan. These shares were
allocated to the existing employees enrolled in the stock
option plan of the subsidiary in Antigua in exchange for their
entitlement to the stock options in the subsidiary in Antigua.
<PAGE>
Note 10 - Shareholders' Equity (cont'd)
C. Employee stock option plan (cont'd)
3. Subsequent to balance sheet date, additional 225,300 ordinary
shares of par value US$0.01 were allocated by the Board of
Directors of the Company to the purpose of the share option
plan.
4. As of December 31, 1999, options to purchase 21,700 US$ 0.01
par value ordinary shares are outstanding under the plan at
the exercise price of par value.
The options will be exercisable per one of the following
terms:
(a) Options to be exercisable in three equal parts upon
each of the first three anniversary dates of the
issuance of the options provided that those employees
continue to be employed by the Company on such dates,
or
(b) Options to be exercisable in three equal parts upon a
vesting period of 18 months, 24 months and 30 months,
respectively provided that those employees continue
to be employed by the Company on such dates.
According to Accounting Principles Board Opinion No. 25 -
"Accounting for Stock Issued to Employees" ("APB 25"), the
difference between the fair value of the shares on the date of
grant of such option and the exercise price of such options
should be charged as an expenses over the vesting period and,
correspondingly, should be presented as capital surplus on the
Company's financial statements.
In October 1995, the Financial Accounting Standards Board
(FASB) issued statement No. 123 "Accounting for Stock-based
Compensation" ("SFAS 123") which established financial
accounting and reporting standards for stock-based
compensation plans. The statement defined a fair value based
method of accounting for an employee stock option plan.
The Company adopted the disclosures provision of SFAS 123, but
opted to remain under the expenses recognition provision of
APB 25.
There was no material difference between the effect of the
application of SFAS 123 and that of APB 25 for the period
ended December 31, 1999.
The Company and the subsidiary in Antigua recognized
compensation expenses in 1999, related to the grant of options
to employees in the sum of US$ 1,667 and US$ 4,167,
respectively. The unamortized balance of the compensation
expenses in respect of these stock options grants amounted to
US$ 24,074 as of December 31, 1999 which will be amortized in
accordance with the vesting period of the options.
<PAGE>
Note 10 - Shareholders' Equity (cont'd)
C. Employee stock option plan (cont'd)
5. The following tables summarizes information about employees
stock options as of December 31, 1999:
<TABLE>
<CAPTION>
(a)
Number Number Weighted
outstanding at exercisable at remaining
December 31 December 31 contractual
Exercise price 1999 1999 life
-------------- -------------- -------------- ---------------
US dollars In years
-------------- ---------------
<S> <C> <C> <C>
0.01 21,700 None *
</TABLE>
* No expiration dates indicated in the option agreement.
<TABLE>
<CAPTION>
(b) December 31
1999
-------------
Number of
options
-------------
<S> <C>
Total number allocated 250,000
Granted 21,700
--------
Allocated for future grant at end of year 228,300
========
Exercised during the current year -
--------
Unexercised at end of year 21,700
========
</TABLE>
6. Subsequent to balance sheet date, the Company granted an
additional 21,500 options to employees at the same terms
mentioned in Note 10C4(a).
D. Non-employee stock compensation
According to specific agreements signed with consultants, the Company
granted options to purchase shares under the terms and conditions
specified in the said agreements.
<PAGE>
Note 10 - Shareholders' Equity (cont'd)
D. Non-employee stock compensation (cont'd)
FAS 123 determines that consultant fees paid in options should be
recorded based on the fair value of the consideration. Compensation
expenses derived from stock options granted to consultants are
calculated according to the requirement of financial accounting
standards No. 123 ("SFAS 123").
The following table summarizes information about options outstanding at
December 31, 1999:
For the period
from January 4,
1999 (date of
inception) to
December 31
1999
---------------
Number of
options
---------------
Granted 55,500
Exercised -
---------------
Outstanding at December 31, 1999 55,500
===============
Number exercisable at December 31, 1999 38,100
===============
Exercise prices range from US$ 0.01 to US$ 0.92.
The Company and the subsidiary in Antigua recognized compensation
expenses in 1999, related to the grant of options to consultants, in
the sum of US$ 481 and US$ 12,068, respectively. The unamortized
balance of the compensation expenses in respect of these stock option
grants amounted to US$ 3,367 as of December 31, 1999 which will be
amortized in accordance with the vesting period of the options.
<PAGE>
Note 11 - Taxes on Income
A. Tax exemption under the BVI and the Antigua tax rules
Since all of the operations of the Company and the subsidiary in
Antigua are taking place out of the BVI and the Antigua territories,
the Company and the subsidiary in Antigua are exempt of any tax
assessment.
B. The Israeli subsidiary
1. The subsidiary in Israel is taxed under the Israeli tax rules.
All tax expenses derive from the Israeli subsidiary
operations.
2. The Israeli subsidiary is assessed according to the Income Tax
Law (Inflationary Adjustments), 1985 (hereinafter - the
Adjustment Law).
According to the law, taxable income is measured in real terms
according to changes in the CPI. Income will be taxable at the
regular corporate rate, which currently is 36%.
The Israeli subsidiary has not received final assessments
since inception.
3. Deferred income taxes
December 31
1999
---------------
U.S. dollars
---------------
Provision for vacation 1,567
Provision for severance pay 552
---------------
2,119
===============
<PAGE>
Note 11 - Taxes on Income (cont'd)
C. Reconciliation of the Statutory Tax Expense to the Actual Tax
Expense
A reconciliation of statutory tax expense, assuming all income is taxed
at the statutory rate of 36% applicable to the income of companies in
Israel, and the actual tax expense, is as follows:
<TABLE>
<CAPTION>
For the period
from January 4,
1999 (date of
inception) to
December 31
1999
---------------
U.S. dollars
---------------
<S> <C>
Loss before taxes on income, as reported in the
consolidated statement of operations (186,378)
===============
Statutory tax on the above amount (67,096)
Non-deductible losses 69,674
Non-deductible operating expenses 1,047
Increase in taxes arising from differences between
Israeli currency income and dollar income - net* 1,158
---------------
Taxes on income for the reported period 4,783
===============
</TABLE>
* Resulting from the difference between the changes in the
Israeli CPI (the basis for computation of taxable income) and
the exchange rate of Israeli currency relative to the U.S.
dollar.
<PAGE>
Note 12 - Related party balances and transactions
A. Inventions transfer agreement
On January 19, 2000, a Company's director assigned to the Company all
his inventions and domain names prior to his employment with the
Company and related to the activities of the Company.
Furthermore, the director assigned to the Company future inventions
made by him during the period and as a result of his employment with
the Company.
B. Balance owed to, or due from, related parties
December 31
1999
---------------
U.S. dollars
---------------
Account receivable 625
===============
C. Expense to related parties
For the period
from
January 4, 1999
(date of
inception) to
December 31
1999
---------------
U.S. dollars
---------------
Payroll and related expenses 34,456
General and administrative expenses 1,712
---------------
36,168
===============
Note 13 - Subsequent Events
Subsequent to balance sheet date, the control of the subsidiary in
Israel was transferred from the subsidiary in Antigua to the full
control of the Company, at no cost.
<PAGE>
Take Aim Holding Ltd. and Subsidiaries
(A Development Stage Enterprise)
<TABLE>
<CAPTION>
Unaudited Consolidated Balance Sheet
--------------------------------------------------------------------------------
June 30
2000
(Unaudited)
--------------
Note U.S. dollars
----------------- ---------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents 805,059
Receivables and prepaid expenses 46,764
---------------
851,823
---------------
Long-term receivable 2B 250,000
---------------
Property and equipment, net 188,568
---------------
Other assets
Capitalized software development costs 414,171
Other assets 9,082
---------------
423,253
---------------
1,713,644
===============
Liabilities and shareholders' equity
Current liabilities
Accounts payable 103,459
Other payables and accrued expenses 439,342
---------------
542,801
---------------
Accrued severance pay 14,036
---------------
Commitments and contingencies 2
Shareholders' equity 3
Share capital 24,273
Additional paid-in capital 2,878,640
Deferred compensation (173,933)
Deficit accumulated during the development stage (1,572,173)
---------------
1,156,807
---------------
1,713,644
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Take Aim Holding Ltd. and Subsidiaries
(A Development Stage Enterprise)
<TABLE>
<CAPTION>
Unaudited Consolidated Statements of Operations
--------------------------------------------------------------------------------
For the
period from
For the January 4, 1999
six months (date of
ended on inception)
June 30 to June 30,
2000 2000
-------------- --------------
U.S. dollars U.S. dollars
-------------- --------------
<S> <C> <C>
Cost of revenues 347,144 347,144
-------------- --------------
Gross loss (347,144) (347,144)
Research and development costs 61,493 131,553
Selling and marketing expenses 493,613 560,349
General and administrative expenses 472,912 520,669
-------------- --------------
Operating loss (1,375,162) (1,559,715)
Financial income, net 18,505 16,680
-------------- --------------
Loss before income tax (1,356,657) (1,543,035)
Income tax 24,355 29,138
-------------- --------------
Net loss for the period (1,381,012) (1,572,173)
============== ==============
Net loss per share
Basic and diluted (0.608) (1.247)
============== ==============
Shares used to calculate net loss per share
Basic and diluted 2,269,769 1,261,022
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Take Aim Holding Ltd. and Subsidiaries
(A Development Stage Enterprise)
<TABLE>
<CAPTION>
Unaudited Consolidated Statements of Changes in Shareholders' Equity
--------------------------------------------------------------------------------
Share capital Additional
---------------------------------------- paid in Deferred Accumulated Total
Outstanding no. of shares Amount capital compensation deficit
------------------------- ------------- ------------ ------------ ------------ ------------
Ordinary Preferred U.S. dollars U.S. dollars U.S. dollars U.S. dollars U.S. dollars
------------ ----------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of share
capital to founders 1,000,000 10,000 - - - 10,000
Issuance of share capital 400,000 4,004 276,276 - - 280,280
Expenses related to issuance
of share capital - - (8,400) - - (8,400)
Employee stock compensation - - 34,958 (34,958) - -
Amortization of deferred
compensation - - - 7,517 - 7,517
Shares issued for services 71,000 710 - - - 710
Stock options issued for
services - - 10,401 - - 10,401
Net loss for the period
from January 4, 1999
(date of inception)
to December 31, 1999 - - - - (191,161) (191,161)
----------- ---------- ------------ ------------ ---------- ----------- ------------
Balance as at December 31,
1999 1,471,400 - 14,714 313,235 (27,441) (191,161) 109,347
Issuance of share
capital (unaudited) - 914,946 9,149 2,260,851 - - 2,270,000
Exercise of options into
shares (unaudited) 20,733 - 208 44,768 - - 44,976
Conversion of loan into
shares, net (unaudited) - 20,153 202 49,798 - - 50,000
Employee stock option
(unaudited) - - - 195,900 (195,900) - -
Amortization of deferred - - - - 36,258 - 36,258
compensation (unaudited) - - - -
Forfeiture of employees
stock options (unaudited) - - (13,400) 13,150 - (250)
Stock options issued for
services (unaudited) - - - 27,488 - - 27,488
Net loss for the period
(unaudited) - - - - - 1,381,012) (1,381,012)
----------- ---------- ------------ ------------ ---------- ----------- ------------
Balance as at June 30,
2000 (unaudited) 1,492,133 935,099 24,273 2,878,640 (173,933) 1,572,173) 1,156,807
=========== ========== ============ ============ ========== =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Take Aim Holding Ltd. and Subsidiaries
(A Development Stage Enterprise)
<TABLE>
<CAPTION>
Unaudited Consolidated Statements of Cash Flows
--------------------------------------------------------------------------------
For the
period from
January 4,
Six months 1999
ended on (date of
June 30, inception) to ,
2000 June 30, 2000
---------------- ----------------
U.S. dollars U.S. dollars
---------------- ----------------
<S> <C> <C>
Cash flows used in operating activities
Net loss for the period (1,381,012) (1,572,173)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 44,227 46,390
Increase in accrued severance pay, net 12,503 14,036
Increase in other receivables and prepaid expenses (1,763) (46,764)
Decrease in trade payables (30,174) 103,459
Increase in accrued expenses and other liabilities 406,150 439,342
Amortization of deferred compensation 36,258 43,775
Forfeiture of employees stock options compensation (250) (250)
Stock options issued for services 27,488 37,889
Shares used for services - 710
Issuance of shares to founders - 10,000
---------------- ----------------
Net cash used in operating activities (886,573) (923,586)
---------------- ----------------
Cash flows used in investing activities
Capitalization of other assets (1,077) (9,082)
Capitalization of software development costs (251,800) (443,935)
Purchase of equipment (86,311) (205,194)
Grant of long-term loan (250,000) (250,000)
Investment in short-term deposit - (8,000)
Redemption of short time deposit 8,000 8,000
---------------- ----------------
Net cash used in investing activities (581,188) (908,211)
---------------- ----------------
Cash flows provided by financing activities
Proceeds from convertible loans - 300,000
Proceeds from short-term credit - 13,854
Repayment of convertible loan (250,000) (250,000)
Repayment of short-term credit (13,854) (13,854)
Proceeds from exercise of options 44,976 44,976
Proceeds from share capital issuance, net 2,270,000 2,541,880
---------------- ----------------
Net cash provided by financing activities 2,051,122 2,636,856
---------------- ----------------
Increase in cash and cash equivalents 583,361 805,059
Balance of cash and cash equivalents at beginning of period 221,698 -
---------------- ----------------
Balance of cash and cash equivalents at end of period 805,059 805,059
================ ================
Supplemental disclosure of non cash financing activities:
Conversion of convertible loan into preferred shares 50,000 50,000
================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Take Aim Holding Ltd. and Subsidiaries
(A Development Stage Enterprise)
Notes to the Consolidated Financial Statements as at June 30, 2000 (unaudited)
--------------------------------------------------------------------------------
Note 1 - General
The Company is a development stage enterprise as it has not generated
any revenues from its planned principal operations.
These financial statements are as at June 30, 2000 and for the period
of the six months then ended. They should be read in conjunction with
the annual audited financial statements of the Company as at December
31, 1999, and for the period from January 4, 1999 (date of inception)
to December 31, 1999 and their accompanying notes (hereinafter - "the
annual financial statements").
The accounting principles used in the preparation of the interim
consolidated financial statements are consistent with those used in the
preparation of the consolidated financial statements as of December 31,
1999. However, the accompanying unaudited consolidated financial
statements have been prepared in accordance with US Generally Accepted
Accounting Principles (GAAP) for interim financial information. All
adjustments which, in the opinion of management are necessary for a
fair presentation of the interim financial statements, have been
included. Results of operations for the six months ended June 30, 2000,
are not necessarily indicative of the results that may be expected for
the year ended December 31, 2000.
Note 2 - Commitments and Contingencies
A. During the first quarter of 2000, the Company's subsidiary in Israel
signed an additional lease agreement for an office building. The
liabilities of the Company deriving from the previous and the
additional agreement, assuming that the Company will not exercise
options for additional periods, amount to US$ 77,000 and US$ 36,000 for
2000 and 2001, respectively.
B. On January 16, 2000, the Company was split into two separate companies
- Bettingcorp. Ltd. a company incorporated in BVI (hereinafter - "BC"),
whose purpose is to concentrate the activity in real money betting, and
the Company itself, which will continue to concentrate and operate the
remaining activities. This transaction had no effect on shareholders'
equity, assets and liabilities on transaction date. The Company gave an
exclusive worldwide license to BC, a related party, to use the required
technology and IP for real money betting activity. BC and the Company
will cooperate in the area of R&D, content, recruiting of employees and
other areas.
<PAGE>
On May 19, 2000, the Company granted a loan to BC in the amount of $
250,000, bearing interest at the rate of Libor+1% per annum, for
repayment at the earlier of December 31, 2002 or the date of future
raising of capital in the amount of at least $ 500,000. BC has the
right to convert the loan, in whole or in part, plus the accrued
interest, into preference shares of BC, if additional capital is raised
in the future. The quantity of preference shares receivable from this
conversion will be determined by dividing the amount intended for
conversion by 85% of the price paid for the preference shares in the
said raising of capital. The balance of the loan and the interest
accrued, which will not be converted in the raising of capital, will be
repaid within 14 days thereafter. BC has the right to repay the loan at
any time prior to the raising of capital.
Note 3 - Shareholders' Equity
A. Share capital
<TABLE>
<CAPTION>
June 30, 2000
-------------------------------
Number of shares
-------------------------------
Authorized Issued and
outstanding
-------------- --------------
(Unaudited) (Unaudited)
-------------- --------------
<S> <C> <C>
Ordinary shares of
US$ 0.01 par value 4,000,000 1,492,133
Series A Preferred Shares of
US$ 0.01 par value 1,000,000 935,099
</TABLE>
B. Change in the shareholders' equity
1. On January 10, 2000 the Company amended its Articles of Association so
that 50,000 of the registered ordinary shares of a par value of US$1
each were split at the ratio of 1 to 100 for a total amount of
5,000,000 shares of a par value of US$0.01 each, divided into 4,000,000
ordinary shares and 1,000,000 Series A convertible accumulating
preferred shares.
2. During the first quarter of 2000, the Company issued to a number of
investors, as part of a share purchase agreement, 814,181 series A
Preferred Shares of a par value of US$ 0.01 per share for the total
amount of US$ 2,020,000 reflecting a purchase price of US$ 2.481 per
share. Furthermore, certain investors exercised their option to
purchase 20,733 ordinary shares for the total amount of US$ 44,976, an
amount that is equivalent to their previous investment in the Company
(see also Note 10B2 at the annual financial statements), and a loan in
the amount of US$ 50,000 was converted into 20,153 Series A preferred
shares of a par value US$ 0.01 each, reflecting a purchase price of US$
2.481 per share. With the approval of the majority of these investors,
an additional 100,765 series A preferred shares at a par value of US$
0.01 each, at a same purchase price and at an aggregate purchase price
of US$ 250,000, were issued to new investors who joined the share
purchase agreement.
<PAGE>
The rights which the holders of the series A preferred shares are
entitled to detailed at Note 10B4 to the annual financial statements.
Note 4 - Additional Information
A. On January 16, 2000 the control of the subsidiary in Israel was
transferred from the subsidiary in Antigua to the full control of the
Company at no cost.
B. On August 11, 2000, the Company merged into Uproar Acquisition Corp.,
a Delaware Corporation and a wholly owned subsidiary of Uproar Inc.,
as part of a share exchange transaction.
As part of the transaction, the holders of the preferred shares
received their preferred right to the investment principal plus
interest at the rate of 8%, accrued from the date of the investment up
to the date of the transaction by means of the receipt of shares of
Uproar Inc. having an equivalent value as at the date of the
transaction. With this, the preferred rights of these shareholders came
to an end.
<PAGE>
(b) Pro Forma Financial Information
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
statements gives effect to the acquisition using the purchase method
of accounting, after giving effect to pro forma adjustments described
in the accompanying notes. The unaudited pro forma condensed
consolidated financial information is based on, and should be read in
conjunction with the audited historical consolidated financial
statements of Uproar for the year ended December 31, 1999, included in
its Prospectus on Form S-1, and Quarterly Reports for the fiscal
quarters ended March 31, 2000 and June 30, 2000 on Form 10-Q, and the
audited historical financial statements of Take Aim for the period
from January 4, 1999 (date of inception) to December 31, 1999 and the
unaudited historical financial statements of Take Aim as of and for
the six months ended June 30, 2000 which are included in this Form
8-K/A filing.
The unaudited pro forma condensed consolidated balance sheet as of
June 30, 2000 gives effect to the acquisition of Uproar and Take Aim
as if it had occurred on June 30, 2000.
The unaudited pro forma condensed consolidated statement of operations
for the six months ended June 30, 2000 gives effect to the acquisition
of Take Aim as if it occurred on January 1, 2000. The unaudited pro
forma condensed consolidated statement of operations of the year ended
December 31, 1999 gives effect to the acquisition of Take Aim as if it
occurred on January 1, 1999.
Uproar expects to incur merger-related costs estimated to aggregate
approximately $300,000, primarily consisting of fees to legal counsel,
independent accountants, financial advisors, and printing fees.
However, additional unanticipated expenses may be incurred in
connection with this transaction.
The unaudited pro forma condensed consolidated financial statements
are presented for illustrative purposes only and are not necessarily
indicative of the results of operations or financial position that
would have been achieved if the acquisition had been consummated at
the dates indicated, nor are they necessarily indicative of future
results of operations or financial position of the combined company.
The allocation of the purchase price of Take Aim is preliminary and
does not reflect the fair value adjustments to its assets and
liabilities, since those amounts have not been finalized and have been
estimated at this time.
<PAGE>
Unaudited Pro Forma Condensed Consolidated Balance Sheet
(Amounts in thousands except share and per share data)
<TABLE>
<CAPTION>
June 30, 2000
-------------------------------------
Uproar Take Aim Pro Forma
June 30, June 30, -------------------------------------
2000 2000 Adjustments Combined
-------------------------------------------- ---------------------
Assets (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 9,253 $ 805 $ - $ 10,058
Short term investments 85,377 - - 85,377
Restricted cash 604 - - 604
Accounts receivable - net 6,233 - - 6,233
Prepaid advertising 3,796 - - 3,796
Other current assets 1,274 47 - 1,321
--------------------------------------- -------------------
Total current assets 106,537 852 - 107,389
--------------------------------------- -------------------
Property and equipment, net 9,205 603 - 9,808
Intangible assets, net 7,625 - - 7,625
Goodwill - - 8,339(1) 8,339
Prepaid advertising, long term portion 949 - - 949
Other long term assets 412 259 - 671
--------------------------------------- -------------------
Total assets $ 124,728 $ 1,714 $ 8,339 $ 134,781
======================================= ===================
Liabilities and stockholders' equity
Current liabilities:
Current portion of capital lease
obligations $ 195 $ - $ - $ 195
Trade accounts payable 2,251 104 - 2,355
Accrued expenses and other current
liabilities 4,574 439 300 (1) 5,313
--------------------------------------- -------------------
Total current liabilities 7,020 543 300 7,863
--------------------------------------- -------------------
Long term portion of capital lease obligations 183 - - 183
Other long term liabilities - 14 - 14
Stockholders' equity:
Preferred stock - - - -
Common stock 280 24 (11)(1) 293
Additional paid-in capital 189,009 2,879 6,448 (1) 198,336
Deferred compensation - (174) 30 (1) (144)
Accumulated deficit (71,706) (1,572) 1,572 (1) (71,706)
Accumulated other comprehensive (loss) (58) - (58)
--------------------------------------- -------------------
Total stockholders' equity 117,525 1,157 8,039 126,721
--------------------------------------- -------------------
Total liabilities and
stockholders' equity $ 124,728 $ 1,714 $ 8,339 $ 134,781
======================================= ===================
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
Unaudited Pro Forma Condensed Consolidated Statement of Operations
(Amounts in thousands except share and per share data)
<TABLE>
<CAPTION>
Six months ended
June 30, 2000
Uproar Take Aim -----------------------------------
six months ended six months ended Pro Forma
June 30, June 30, -----------------------------------
2000 2000 Adjustments Combined
----------------- ----------------- ------------- -------------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues $ 12,769 $ - $ - $ 12,769
Cost of revenues (4,264) (347) - (4,611)
----------------- ----------------- ------------- -------------------
Gross profit 8,505 (347) - 8,158
----------------- ----------------- ------------- -------------------
Sales and marketing 18,130 494 24(2) 18,649
Product and technology
development 3,970 61 - 4,031
General and administrative 7,539 473 - 8,012
Amortization of intangible assets 3,037 - 3,037
Amortization of goodwill - - 1,390 (4) 1,390
----------------- ----------------- ------------- -------------------
Total operating expenses 32,676 1,028 1,414 35,119
----------------- ----------------- ------------- -------------------
Loss from operations (24,171) (1,375) (1,414) (26,961)
Other income (expenses):
Litigation settlement (350) - - (350)
Foreign exchange gain (loss) (78) - - (78)
Interest income 2,091 - - 2,091
Interest expense (30) - - (30)
Other income (expense) 3 18 - 22
----------------- ----------------- ------------- -------------------
Loss before income taxes (22,535) (1,357) (1,414) (25,306)
Provision for income taxes 22 24 46
----------------- ----------------- ------------- -------------------
Net loss $ (22,557) $ (1,381) $(1,414) $ (25,352)
================= ================= ============= ===================
<CAPTION>
Historical Historical Pro Forma
----------------- ----------------- -------------------
<S> <C> <C> <C>
Basic and diluted net loss per common
share $ (0.85) $ (0.61) $ (0.91)
Weighted average number of
Common shares outstanding 26,622,856 2,269,769 27,956,190
================= ================= ===================
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
Unaudited Pro Forma Condensed Consolidated Statement of Operations
(Amounts in thousands except share and per share data)
<TABLE>
<CAPTION>
Take Aim
January 4, 1999 Twelve months ended
(date of December 31, 1999
Uproar inception) -------------------------------
twelve months ended through Pro Forma
December 31, December 31, -------------------------------
1999 1999 Adjustments Combined
-------------------- ------------------ ------------- ----------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues $ 10,391 $ - $ - $ 10,391
Cost of revenues (2,533) - - (2,533)
----------------- ------------------ ------------- ----------------
Gross profit 7,858 - - 7,858
----------------- ------------------ ------------- ----------------
Sales and marketing 28,066 67 48(3) 28,181
Product and technology
development 3,701 70 - 3,771
General and administrative 8,919 48 - 8,967
Amortization of intangible assets 6,086 - - 6,086
Amortization of goodwill - - 2,780(5) 2,780
----------------- ------------------ ------------- ----------------
Total operating expenses 46,772 185 2,828 49,785
----------------- ------------------ ------------- ----------------
Loss from operations (38,914) (185) (2,828) (41,927)
Other income (expenses):
Foreign exchange gain (loss) (120) - - (120)
Interest income 535 - - 535
Interest expense (7) - - (7)
Other income (expense) (191) (1) - (192)
----------------- ------------------ ------------- ----------------
Loss before income taxes (38,697) (186) (2,828) (41,711)
Provision for income taxes 28 5 - 33
----------------- ------------------ ------------- ----------------
Net loss $ (38,725) $ (191) $ (2,828) $ (41,744)
================= ================== ============= ================
<CAPTION>
Historical Historical Pro Forma
-------------------- ------------------ ----------------
<S> <C> <C> <C>
Basic and diluted net loss per common
share $ (1.77) $ (0.25) $ (1.80)
Weighted average number of
common shares outstanding
21,909,456 778,081 23,242,790
==================== ================== ================
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
(1) Calculation of estimated purchase price:
<TABLE>
<S> <C>
Shares of common stock of Uproar issued in exchange for Take Aim shares 1,333,334
Average share price of Uproar common stock at the time of the
merger announcement $ 6.8563
------------------
Fair value of common stock issued 9,141,738
Fair value of Take Aim options to be assumed (see note 6) 198,207
Intrinsic value of unvested options (recorded as deferred compensation) (143,733)
Estimated merger costs 300,000
------------------
Estimated purchase price $ 9,496,212
------------------
Preliminary allocation of purchase price:
Net book value of Take Aim's pro forma net assets $ 1,156,807
Goodwill and other intangibles 8,339,405
------------------
$ 9,496,212
==================
</TABLE>
(2) To record amortization of deferred compensation of $23,962 for the six
months ended June 30, 2000.
(3) To record amortization of deferred compensation of $47,924 for the twelve
months ended December 31, 1999.
(4) To record amortization of goodwill and other intangibles related to the
merger of $8,339,405 over three years ($1,389,901 for six months).
(5) To record amortization of goodwill and other intangibles related to the
merger of $8,339,405 over three years ($2,779,802 per year).
(6) Upon the closing of the merger, the outstanding options to purchase Take Aim
common stock was assumed by Uproar. As of August 11, 2000, Take Aim had
74,800 options outstanding which, based on the exchange ratio of .387, were
converted into options to purchase 28,941 shares of Uproar common stock. The
estimated fair value of these options has been included as part of the
purchase price, excluding the intrinsic value of the non-vested portion of
the options allocated to deferred compensation.
<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 hereunto duly authorized.
UPROAR INC.
Date: October 13, 2000 By /S/ Kenneth D. Cron
--------------------
Kenneth D. Cron
Chairman of the Board and
Chief Executive Officer
