U.S. 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): December 31, 1999
iEXALT, INC.
(Exact Name of Registrant as Specified in Charter)
NEVADA
(State or Other Jurisdiction of
Incorporation or Organization)
00-09322 75-1667097
(Commission File Number) (I.R.S. Employer
Identification No.)
4301 WINDFERN, HOUSTON, TEXAS 77041
(Address of principal executive offices including zip code)
(281) 600-4000
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
1
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Inapplicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 14, 2000, iExalt, Inc., a Nevada corporation ("Company"),
completed in an arms-length transaction the acquisition of all of the issued and
outstanding stock of First Choice Marketing, Inc.("First Choice"), a Texas
corporation, in exchange for 2,727,000 shares of Company common stock. The
shareholders of First Choice are entitled to additional consideration of up to
999,999 shares of Company common stock over a three-year period provided certain
earnings goals are met by First Choice and Messrs. Dahl and Haenes remain in the
employ of the Company. Messrs. Dahl and Haenes entered into three-year
employment agreements with the Company and were awarded 300,000 stock options
vesting over three years subject to their continued employment. The transaction
was accounted for as a purchase. In February 2000, Mr. Haenes resigned from
employment with the Company and agreed to return 425,000 shares of Company
common stock and to have the 150,000 stock options that had been issued to him
canceled.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Inapplicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Inapplicable.
ITEM 5. OTHER EVENTS
Inapplicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTOR
Inapplicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The Stock Purchase Agreement with First Choice Marketing, Inc. is
attached hereto as Exhibit 1.1.
(a) Financial Statements of Business Acquired.
The appropriate financial statements are filed herewith as Annex
A.
2
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(b) Pro Forma Financial Information.
The appropriate pro forma financial information relating to the
acquisition is filed herewith as Annex A.
ITEM 8. CHANGE IN FISCAL YEAR
Inapplicable.
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.
IEXALT, INC.
By: /s/ JONATHAN GILCHRIST
Jonathan Gilchrist,
Secretary
DATE: March 15, 2000
3
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EXHIBITS
EXHIBIT
NO. PAGE
- ------- ----
1.1 Stock Purchase Agreement with First Choice Marketing, Inc. A-1
(1) Previously filed as an exhibit to the Company's Current Report on
Form 8-K filed with the Securities and Exchange Commission on
January 27, 2000 and incorporated herein by reference.
4
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ANNEX A
ACCOUNTANTS' REVIEW REPORT
To the Board of Directors and Shareholders of
First Choice Marketing, Inc.
Houston, Texas
We have reviewed the accompanying balance sheet of First Choice Marketing, Inc.
as of December 31, 1999, and the related statements of operations, changes in
shareholders' equity (deficit) and cash flows for the three months then ended,
in accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. All
information included in these financial statements is the representation of the
management of First Choice Marketing, Inc.
A review consists principally of inquiries of Company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
/s/ HARPER & PEARSON COMPANY
Houston, Texas
March 13, 2000
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INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
First Choice Marketing, Inc.
7676 Hillmont, Suite 128
Houston, Texas 77040
We have audited the accompanying balance sheet of First Choice Marketing, Inc.
as of September 30, 1999, and the related statements of income, retained
earnings, and cash flows for the nine-month period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Choice Marketing, Inc. as
of September 30, 1999, and the results of operations and its cash flows for the
nine-month period from then ended in conformity with generally accepted
accounting principles.
/s/ ZEPEDA & ASSOCIATES, LC
Houston, Texas
December 15, 1999
6
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INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders of
First Choice Marketing, Inc.
Houston, Texas
We have audited the accompanying balance sheet of First Choice Marketing, Inc.
as of December 31, 1998 and the related statements of operations, changes in
shareholders' equity (deficit) and cash flows for the period May 6, 1998 (date
of inception) through December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Choice Marketing, Inc. at
December 31, 1998 and the results of its operations and its cash flows for the
period May 6, 1998 (date of inception) through December 31, 1998, in conformity
with generally accepted accounting principles.
/s/ HARPER & PEARSON COMPANY
Houston, Texas
March 13, 2000
7
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FIRST CHOICE MARKETING, INC.
BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
1998 1999 1999
------------ ------------ ------------
(Audited) (Audited) (Unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ............ $ 5,040 $ 46,688 $ 8,264
Prepaid expenses ..................... 9,248 -- --
--------- --------- ---------
TOTAL CURRENT ASSETS ....................... 14,288 46,688 8,264
PROPERTY AND EQUIPMENT
Furniture and fixtures ............... 950 7,764 7,764
Computer systems and equipment ....... 40,920 74,692 77,851
Office equipment ..................... 501 3,356 3,356
--------- --------- ---------
42,371 85,812 88,971
Less - accumulated depreciation ...... (6,684) (14,416) (18,692)
--------- --------- ---------
35,687 71,396 70,279
OTHER ASSETS
Deferred income tax benefit .......... -- 37,211 --
Deposits ............................. -- 2,675 2,675
--------- --------- ---------
-- 39,886 2,675
--------- --------- ---------
$ 49,975 $ 157,970 $ 81,218
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable ........................ $ -- $ 100,000 $ 156,000
Accounts payable ..................... 1,900 6,687 16,437
Other accrued liabilities ............ -- 1,469 6,007
--------- --------- ---------
TOTAL CURRENT LIABILITIES ............ 1,900 108,156 178,444
LOANS FROM SHAREHOLDERS .................... 55,697 2,087 2,087
SHAREHOLDERS' EQUITY (DEFICIT)
Preferred stock, par value $.001,
5,000,000 shares authorized, no
shares issued and outstanding ...... -- -- --
Common stock, par value $.001,
1,000 shares authorized, 1,000
issued and outstanding at
December 31, 1998; 20,000,000
shares authorized, 2,707,000
outstanding at September 30, 1999
and 2,727,000 issued and
outstanding at December 31, 1999 ... 1 2,707 2,727
Additional paid-in capital ........... 999 154,793 159,783
Retained deficit ..................... (8,622) (109,773) (261,823)
--------- --------- ---------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (7,622) 47,727 (99,313)
--------- --------- ---------
$ 49,975 $ 157,970 $ 81,218
========= ========= =========
</TABLE>
See accompanying notes and accountants' reports.
8
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FIRST CHOICE MARKETING, INC.
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS YEAR
INCEPTION TO ENDED ENDED ENDED
DECEMBER 31, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1998 1999 1999 1999
(Audited) (Audited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES ................................... $ 14,078 $ 45,377 $ 10,547 $ 55,924
--------- --------- --------- ---------
COST AND EXPENSES
Cost of sales ......................... 1,548 8,285 11,514 19,799
Selling, general & administrative ..... 14,468 167,001 103,625 270,626
Depreciation expense .................. 6,684 7,732 4,276 12,008
--------- --------- --------- ---------
22,700 183,018 119,415 302,433
--------- --------- --------- ---------
OPERATING LOSS ............................. (8,622) (137,641) (108,868) (246,509)
OTHER INCOME (EXPENSE)
Interest expense ...................... - (721) (5,971) (6,692)
--------- --------- --------- ---------
NET LOSS BEFORE INCOME TAXES ............... (8,622) (138,362) (114,839) (253,201)
INCOME TAX (EXPENSE) BENEFIT ............... - 37,211 (37,211) -
--------- --------- --------- ---------
NET LOSS ................................... $ (8,622) $(101,151) $(152,050) $(253,201)
========= ========= ========= =========
</TABLE>
See accompanying notes and accountants' reports.
9
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FIRST CHOICE MARKETING, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON ADDITIONAL
STOCK COMMON PAID IN RETAINED
SHARES STOCK CAPITAL DEFICIT TOTAL
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Issuance of common stock ..................... 1,000 $ 1 999 $ 1,000
Net loss ..................................... -- -- -- (8,622) (8,622)
--------- --------- --------- --------- ---------
Balance at December 31, 1998 (Audited) .......... 1,000 1 999 (8,622) (7,622)
Issuance of common stock ..................... 388,000 388 153,794 -- 154,182
Issuance of common stock to employees ........ 2,318,000 2,318 -- -- 2,318
Net loss ..................................... -- -- (101,151) (101,151)
--------- --------- --------- --------- ---------
Balance at September 30, 1999 (Audited) ......... 2,707,000 2,707 154,793 (109,773) 47,727
Issuance of common stock ..................... 10,000 10 4,990 -- 5,000
Issuance of common stock to employees ........ 10,000 10 -- -- 10
Net loss ..................................... -- -- -- (152,050) (152,050)
--------- --------- --------- --------- ---------
Balance at December 31, 1999 (Unaudited) ........ 2,727,000 $ 2,727 $ 159,783 $(261,823) $ (99,313)
========= ========= ========= ========= =========
</TABLE>
See accompanying notes and accountants' reports.
10
<PAGE>
FIRST CHOICE MARKETING, INC.
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCEPTION NINE MONTHS THREE MONTHS YEAR
TO ENDED ENDED ENDED
DECEMBER 31, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1998 1999 1999 1999
--------- --------- --------- ---------
(Audited) (Audited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................ $ (8,622) $(101,151) $(152,050) $(253,201)
--------- --------- --------- ---------
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation ............................... 6,684 7,732 4,276 12,008
Non cash expenses .......................... -- 17,500 10 17,510
Deferred tax benefit ....................... -- (37,211) 37,211 --
Change in operating assets and liabilities:
Prepaid expense ....................... (9,248) 9,248 -- 9,248
Deposits .............................. -- (2,675) -- (2,675)
Accounts payable ...................... 1,900 4,787 9,750 14,537
Other accrued liabilities ............. -- 1,469 10,538 12,007
--------- --------- --------- ---------
Total Adjustments ................................... (664) 850 61,785 62,635
--------- --------- --------- ---------
Net Cash Used by Operating Activities ............... (9,286) (100,301) (90,265) (190,566)
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment .................. (42,371) (43,441) (3,159) (46,600)
--------- --------- --------- ---------
Net Cash Used by Investing Activities ............... (42,371) (43,441) (3,159) (46,600)
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Changes in loans from shareholders .................. 55,697 (14,610) -- (14,610)
Issuance of debt .................................... -- 100,000 50,000 150,000
Proceeds from issuance of common stock .............. 1,000 100,000 5,000 105,000
--------- --------- --------- ---------
Net Cash Provided by Financing Activities ........... 56,697 185,390 55,000 240,390
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH ............................ 5,040 41,648 (38,424) 3,224
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD -- 5,040 46,688 5,040
--------- --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................. $ 5,040 $ 46,688 $ 8,264 $ 8,264
========= ========= ========= =========
</TABLE>
See accompanying notes and accountants' reports
11
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FIRST CHOICE MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
First Choice Marketing, Inc. (the Company) was formed on May 6, 1998
in the State of Texas. The Company utilizes independent sales
representatives to market and sell a variety of products and
services at discounted prices for the individual, home and business
throughout the United States.
MANAGEMENT'S ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. While it is believed that such estimates are
reasonable, actual results could differ from those estimates.
CONCENTRATIONS OF CREDIT RISK - Financial instruments, which
potentially subject the Company to concentrations of credit risk,
consist principally of cash. The Company places its cash with high
credit quality financial institutions.
FINANCIAL INSTRUMENTS - The estimated fair values of the Company's
financial instruments approximate their carrying value because of
the short-term maturity of these instruments or the stated interest
rates are indicative of market interest rates.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid
debt instruments having maturities of three months or less at the
date of purchase to be cash equivalents.
PROPERTY AND EQUIPMENT - Property and equipment is carried at
original cost. Maintenance or repair costs are charged to expense as
incurred. When assets are sold or retired, the remaining costs and
related accumulated depreciation are removed from the accounts and
any resulting gain or loss is included in income. For financial
reporting purposes, depreciation of property and equipment is
provided using the straight-line method based upon the expected
useful lives of the assets. Estimated useful lives of assets are as
follows:
Furniture and fixtures 7 years
Computer systems and equipment 5 years
Office equipment 5 years
RECLASSIFICATIONS - Certain reclassifications have been made to the
accompanying statements of changes in shareholders' equity (deficit)
and the statements of cash flows for the nine months ended September
30, 1999 for non-cash investing and financing activities.
12
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FIRST CHOICE MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
REVENUE RECOGNITION - The Company requires payment when sales orders
are placed and recognizes revenue concurrently.
NOTE B NOTES PAYABLE
At September 30, 1999, notes payable consists of two promissory
notes dated August 11, 1999 and September 28, 1999. Each note has a
principal balance of $50,000 and bears interest at 10%. The notes
are payable 180 days from the date of execution and are secured by
1,450,000 shares of common stock of the Company.
During November 1999, the principals of the firm which holds the
notes became shareholders of the Company.
On December 15, 1999, the above notes and the related accrued
interest were consolidated into a promissory note with an
outstanding balance at December 31, 1999 of $156,000. The note bears
interest at 10% and is payable 90 days from the date of execution
with an additional renewal period of 90 days. The note is secured by
1,450,000 shares of common stock of the Company.
Management is negotiating the renewal of this note.
NOTE C INCOME TAXES
At inception, the Company was classified as a subchapter S
corporation for income tax purposes, which resulted in income,
deductions, and credits to be reported on the individual
shareholders' personal income tax returns. As such, no provision for
the tax effects of any operating losses during 1998 has been
considered in the calculations of any taxes currently due or
deferred.
Effective January 1, 1999, the Company rescinded its subchapter S
status and elected to be taxed under subchapter C of the Internal
Revenue Code. Income taxes are provided for the tax effects of
transactions reported in the financial statements, and consist of
taxes currently due plus deferred taxes. Deferred taxes are
recognized on all significant differences between the basis of
assets and liabilities for financial statement and income tax
purposes. The differences relate primarily to depreciable assets and
net operating losses carried forward. Deferred tax assets and
liabilities represent the future tax return consequence of those
differences, which will either be taxable or deductible when the
assets and liabilities are recovered or settled in the future, based
upon enacted tax laws and rates applicable at that time. Non-current
income tax expense reflects the net change during the period in
deferred tax assets and liabilities.
13
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FIRST CHOICE MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE C INCOME TAXES (CONTINUED)
During the nine months ending September 30, 1999, the Company
recorded a tax benefit of $37,211 for deductions available to offset
future taxable income. As a result of change in ownership effective
December 31, 1999, the benefit of these deductions was lost.
Therefore, income tax expense of an equal amount was recognized to
write-off the previously recorded deferred tax asset and no
additional income tax benefit has been recognized for the operating
losses generated during the three months ending December 31, 1999.
NOTE D LEASES
The Company has entered into an operating lease for office space.
Future minimum lease payments at December 31, 1999 are as follows:
2000 $ 53,638
2001 57,945
2002 39,220
2003 10,769
$161,572
Rent expense for the period ended December 31, 1998, the nine months
ended September 30, 1999 and the three months ended December 31,
1999 amounted to $350, $12,500 and $8,025, respectively.
NOTE E STOCK WARRANTS
During the nine months ended September 30, 1999, the Company issued
two common stock warrant certificates. Each certificate is
exercisable for 270,000 shares of common stock of the Company at an
exercise price of one dollar per share. The warrants commence on
August 17, 1999 and September 2, 1999 and expire 5 years after the
commencement.
During November 1999, the principals of the firm issued the two
warrant certificates became shareholders of the Company.
A common stock warrant certificate was issued to a related party on
December 15, 1999 exercisable for 270,000 shares of common stock of
the Company at an exercise price of one dollar per share. The
warrant has a five-year term commencing December 15, 1999.
The terms of the warrants were amended when the Company was acquired
by iExalt, Inc. (See Note H). The amendments provided that warrants
14
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FIRST CHOICE MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
for 270,000 shares become exercisable
NOTE E STOCK WARRANTS (CONTINUED)
in each of the next three years, but only if certain earnings goals
for the Company are met.
No warrants have been exercised at December 31, 1999.
NOTE F RELATED PARTY TRANSACTIONS
The Company obtained $12,641 of printing services from an entity
owned by a shareholder during the three months ending December 31,
1999 and $18,224 during the nine months ended September 30, 1999.
NOTE G SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
Non-cash investing and financing transactions included the
following:
During the three months ending December 31, 1999, the Company
converted $6,000 of accrued interest into a note payable and issued
10,000 shares of its common stock to an employee in lieu of
compensation.
During the nine months ending September 30, 1999, the Company issued
110,000 shares of its common stock in exchange for $17,500 of
printing and computer services and issued 78,000 shares of its
common stock in exchange for a $39,000 reduction in loans from
shareholders.
NOTE H SUBSEQUENT EVENTS
As of December 31, 1999, all of the outstanding stock of the Company
was acquired by iExalt, Inc. (iExalt). In consideration for this
purchase, the Company's shareholders received 2,727,000 shares of
common stock in iExalt. In addition, over the next three years, the
shareholders are entitled to receive 333,333 additional shares per
year if certain earnings goals are met, and the two principal
shareholders stay in the employ of the Company.
The two principal shareholders entered into three-year employment
contracts with the Company. Each received $20,000 and 150,000 common
stock options exercisable at $1.80 per share. The options vest in
the amount of 50,000 per year on the anniversary of the acquisition
and are exercisable only if the earning goals are met.
In January 2000, the Company filed an Assumed Name certificate to
conduct business as iExaltFamily.com.
In February 2000, one of the principal shareholders resigned from
employment with the Company. This shareholder agreed to return
425,000 shares of the iExalt stock and to pay $10,000 related to the
employment contract to iExalt by June 30, 2000.
15
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FIRST CHOICE MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE H SUBSEQUENT EVENTS (CONTINUED)
The unaudited pro forma results of iExalt, Inc. and the Company for
the twelve months ended December 31, 1999 and 1998 are shown below.
BALANCE SHEET AT DECEMBER 31, 1999 AND INCOME STATEMENT FOR THE YEAR THEN ENDED
p
<TABLE>
<CAPTION>
iEXALT, INC. PRO FORMA FIRST CHOICE iEXALT,
PRO FORMA ADJUSTMENTS MARKETING INC.
------------ ---------- ------------ ------------
(Unaudited) (Note A) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues ................ $ 2,986,972 $ -- $ 55,924 $ 2,931,048
------------ ---------- ------------ ------------
Net Income .............. $ (1,276,907) $ (60,783) $ (253,201) $ (962,923)
============ ========== ============ ============
Earnings(loss) per share $ (0.051)
============
Pro Forma Weighted Average
Shares Outstanding .... 25,034,933
============
Current Assets .......... $ 318,271 $ -- $ 8,264 $ 310,007
Property & Equipment, net 411,617 -- 70,279 341,338
Goodwill, net ........... 3,337,447 2,370,530 -- 966,917
Other Assets, net ....... 184,617 -- 2,675 181,942
------------ ---------- ------------ ------------
Total Assets ............ $ 4,251,952 $2,370,530 $ 81,218 $ 1,800,204
============ ========== ============ ============
Current Liabilities ..... $ 1,198,234 $ -- $ 178,444 $ 1,019,790
Long-term Liabilities ... 352,087 -- 2,087 350,000
Shareholders' Equity .... 2,701,631 2,370,530 (99,313) 430,414
------------ ---------- ------------ ------------
Total Liabilities &
Shareholders Equity ... $ 4,251,952 $2,370,530 $ 81,218 $ 1,800,204
============ ========== ============ ============
</TABLE>
Explanations for Adjustments:
Note (A) To record goodwill from acquisition of First Choice Marketing, Inc.
16
<PAGE>
BALANCE SHEET AT DECEMBER 31, 1998 AND INCOME STATEMENT FOR THE YEAR THEN ENDED
<TABLE>
<CAPTION>
iEXALT, INC. PRO FORMA FIRST CHOICE iEXALT,
PRO FORMA ADJUSTMENTS MARKETING INC.
------------ ---------- ------------ ------------
(Unaudited) (Note A) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues ................ $ 2,976,899 $ -- $ 14,078 $ 2,962,821
------------ ---------- ------------ ------------
Net Income .............. $ (52,124) $ (60,783) $ (8,622) $ 17,281
============ ========== ============ ============
Earnings (loss) per share $ (0.002)
============
Pro Forma Weighted Average
Shares Outstanding .... 23,983,493
============
Current Assets .......... $ 247,613 $ -- $ 14,288 $ 233,325
Property & Equipment, net 81,782 -- 35,687 46,095
Goodwill, net ........... 3,351,277 2,431,313 -- 919,964
------------ ---------- ------------ ------------
Total Assets ............ $ 3,680,672 $2,431,313 $ 49,975 $ 1,199,384
============ ========== ============ ============
Current Liabilities ..... $ 293,589 $ -- $ 1,900 $ 291,689
Long-term Liabilities ... 72,730 -- 55,697 17,033
Shareholders' Equity .... 3,314,353 2,431,313 (7,622) 890,661
------------ ---------- ------------ ------------
Total Liabilities &
Shareholders' Equity .. $ 3,680,672 $2,431,313 $ 49,975 $ 1,199,383
============ ========== ============ ============
</TABLE>
Explanations for Adjustments:
Note (A) To record goodwill from acquisition of First Choice Marketing, Inc.
In Management's opinion, the unaudited pro forma combined results of operations
may not be indicative of the actual results that would have occurred had the
acquisition been consummated at the beginning of 1998 or of the future
operations of the combined companies.
17
