UNITED STATES
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): January 8, 2001
(October 24, 2000)
IEXALT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
75-1667097
NEVADA 00-09322 (IRS EMPLOYER
(STATE OF INCORPORATION) (COMMISSION FILE NUMBER) IDENTIFICATION NO.)
4301 WINDFERN
HOUSTON, TEXAS 77041
(ADDRESS OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES INCLUDING ZIP CODE)
(281) 600-4000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 24, 2000, iExalt, Inc., a Nevada corporation ("iExalt"), agreed
to acquire all issued and outstanding stock of CleanWeb, Inc., a Texas
corporation ("CleanWeb") effective November 1, 2000. CleanWeb provides premium
filtered Internet access nationwide. CleanWeb's operations will be consolidated
with the operations of iExalt's ISP division, iExalt.net, but iExalt will market
services under both product names.
As consideration for the acquisition, iExalt issued a total of 2,313,000
common shares in exchange for all issued and outstanding stock of CleanWeb. In
addition, if the actual number of CleanWeb's subscribers is above 6,200 or below
6,000 as of October 31, 2000, the agreement provides for an increase or decrease
in the number of common shares to be issued by iExalt. The amount of the
consideration was based on arms-length negotiation among the parties.
iExalt also granted "piggyback" registration rights with respect to an
aggregate of 200,000 iExalt common shares issued in the acquisition.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The appropriate financial statements are filed herewith as Annex A.
(b) PRO FORMA FINANCIAL INFORMATION.
The appropriate pro forma financial information relating to the
acquisition is filed herewith as Annex B.
(c) EXHIBITS.
EXHIBIT NO. DESCRIPTION
2.1 (1) Stock Exchange Agreement, dated October
24, 2000, between iExalt, Inc. and Ted
L. Parker, the sole shareholder of
CleanWeb, Inc. (schedule and notary
statements omitted).
4.1 (1) Investor's Rights Agreement, dated
October 24, 2000, by and among iExalt,
Inc., certain shareholders of iExalt,
and Ted L. Parker (exhibits omitted).
99.1 (1) Press release issued by the Company
relating to the acquisition of CleanWeb,
Inc.
(1) Previously filed as an exhibit to the Company's
current report on Form 8-K filed with the
Securities and Exchange Commission on November 8,
2000 and incorporated herein by reference.
2
<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.
DATE: January 8, 2001. iExalt, Inc.
By: /s/ CHRIS L. SISK
---------------------------------
Chris L. Sisk
EXECUTIVE VICE PRESIDENT AND
PRINCIPAL FINANCIAL OFFICER
3
<PAGE>
ANNEX A
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Cleanweb, Inc.
Lubbock, Texas
We have audited the accompanying balance sheets of Cleanweb, Inc. as of October
31, 2000 and December 31, 1999, and the related statements of operations,
changes in stockholder's deficit, and cash flows for the ten months ended
October 31, 2000 and the year ended December 31, 1999. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cleanweb, Inc. at October 31,
2000 and December 31, 1999 and the results of its operations and its cash flows
for the ten months ended October 31, 2000 and the year ended December 31, 1999,
in conformity with generally accepted accounting principles.
/s/ HARPER & PEARSON COMPANY
Houston, Texas
December 9, 2000
4
<PAGE>
<TABLE>
<CAPTION>
CLEANWEB, INC.
BALANCE SHEETS
OCTOBER 31, 2000 AND DECEMBER 31, 1999
ASSETS OCTOBER 31, DECEMBER 31,
2000 1999
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash .............................................. $ 131,090 $ 89,444
Accounts receivable ............................... 39,377 44,190
Accounts receivable, affiliates ................... -- 9,831
Prepaid expenses .................................. 8,782 48,965
----------- -----------
TOTAL CURRENT ASSETS .............................. 179,249 192,430
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Furniture, fixtures and equipment ................. 97,335 37,020
Computer systems and software ..................... 291,438 288,225
----------- -----------
388,773 325,245
Less accumulated depreciation ..................... (201,727) (110,096)
----------- -----------
187,046 215,149
----------- -----------
OTHER NONCURRENT ASSETS ................................... 1,000 1,000
----------- -----------
TOTAL ASSETS ...................................... $ 367,295 $ 408,579
=========== ===========
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES
Accounts payable .................................. $ 185,840 $ 200,340
Accrued expenses .................................. 72,687 76,690
Accrued expenses, affiliates ...................... 21,435 --
Deferred revenue .................................. 224,488 214,559
Current obligations under capital leases .......... 54,231 48,373
----------- -----------
TOTAL CURRENT LIABILITIES ......................... 558,681 539,962
----------- -----------
OBLIGATIONS UNDER CAPITAL LEASES .......................... 70,649 60,324
----------- -----------
TOTAL LIABILITIES ................................. 629,330 600,286
----------- -----------
STOCKHOLDER'S DEFICIT
Common stock, par value $1, 1000 shares authorized,
issued and outstanding .......................... 1,000 1,000
Additional paid-in capital ........................ 3,477,901 2,742,578
Retained deficit .................................. (3,740,936) (2,935,285)
----------- -----------
TOTAL STOCKHOLDER'S DEFICIT ....................... (262,035) (191,707)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT ....... $ 367,295 $ 408,579
=========== ===========
</TABLE>
See accompanying notes.
5
<PAGE>
CLEANWEB, INC.
STATEMENTS OF OPERATIONS
TEN MONTHS ENDED OCTOBER 31, 2000 AND YEAR ENDED DECEMBER 31, 1999
OCTOBER 31, DECEMBER 31,
2000 1999
----------- ------------
REVENUES .......................................... $ 1,054,854 $ 712,126
----------- -----------
COSTS AND EXPENSES
Direct expenses .............................. 23,160 23,929
Salaries and compensation .................... 691,370 874,890
Advertising, marketing and promotional expense 3,838 447,366
Telecommunications ........................... 750,135 595,831
General and administrative ................... 370,928 574,357
----------- -----------
TOTAL EXPENSES ............................... 1,839,431 2,516,373
----------- -----------
LOSS FROM OPERATIONS ......................... (784,577) (1,804,247)
INTEREST EXPENSE .................................. 21,074 11,613
----------- -----------
NET LOSS .......................................... $ (805,651) $(1,815,860)
=========== ===========
See accompanying notes.
6
<PAGE>
<TABLE>
<CAPTION>
CLEANWEB, INC.
STATEMENTS OF STOCKHOLDER'S DEFICIT
TEN MONTHS ENDED OCTOBER 31, 2000 AND YEAR ENDED DECEMBER 31, 1999
ADDITIONAL
COMMON PAID-IN RETAINED STOCKHOLDER'S
STOCK CAPITAL DEFICIT DEFICIT
=========== =========== =========== =============
<S> <C> <C> <C> <C>
Balance, December 31, 1998 $ 1,000 $ 1,362,296 $(1,119,425) $ 243,871
Stockholder contribution . -- 1,380,282 -- 1,380,282
Net loss ................. -- -- (1,815,860) (1,815,860)
----------- ----------- ----------- -----------
Balance, December 31, 1999 1,000 2,742,578 (2,935,285) (191,707)
Stockholder contribution . -- 735,323 -- 735,323
Net loss ................. -- -- (805,651) (805,651)
----------- ----------- ----------- -----------
Balance, October 31, 2000 $ 1,000 $ 3,477,901 $(3,740,936) $ (262,035)
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
7
<PAGE>
<TABLE>
<CAPTION>
CLEANWEB, INC.
STATEMENTS OF CASH FLOWS
TEN MONTHS ENDED OCTOBER 31, 2000 AND YEAR ENDED DECEMBER 31, 1999
OCTOBER 31, DECEMBER 31,
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ....................................... $ (805,651) $(1,815,860)
----------- -----------
Adjustments to reconcile net loss to
Net cash used by operating activities:
Depreciation, depletion and amortization ..... 91,631 79,152
Change in Operating Assets and Liabilities
Accounts receivable ........................ 14,644 (26,265)
Prepaid expenses ........................... 40,183 66,686
Accounts payable ........................... (14,500) 198,789
Accrued expenses ........................... 17,432 47,520
Deferred revenue ........................... 9,929 200,303
----------- -----------
Net Cash Used By Operating Activities .......... (646,332) (1,249,675)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital additions ................................. (1,858) (51,280)
----------- -----------
Net Cash Used By Investing Activities .......... (1,858) (51,280)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions of capital .......................... 735,323 1,380,282
Repayments under capital leases ................... (45,487) (19,184)
----------- -----------
Net Cash Provided By Financing Activities ...... 689,836 1,361,098
----------- -----------
NET INCREASE IN CASH ..................................... 41,646 60,143
CASH AT BEGINNING OF PERIOD .............................. 89,444 29,301
----------- -----------
CASH AT END OF PERIOD .................................... $ 131,090 $ 89,444
=========== ===========
Cash Paid During The Year For:
Income taxes .................................... $ -- $ --
=========== ===========
Interest ........................................ $ 12,639 $ 8,669
=========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Capital additions financed through capital leases .... $ 61,670 $ 69,271
=========== ===========
</TABLE>
See accompanying notes
8
<PAGE>
CLEANWEB, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000 AND DECEMBER 31, 1999
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BASIS OF PRESENTATION - Cleanweb, Inc. ("the
Company") was incorporated in Texas on March 20, 1998 as an "S"
Corporation for the purpose of developing and marketing internet
products and services to families and businesses. The Company
operates as an Internet service provider (ISP) that combines
extensive databases, a dynamic filter and a word scrubber to check
each level of a web site for offensive material.
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 disclosures 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.
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.
ACCOUNTS RECEIVABLE, NET - Accounts receivable results from sales of
Internet products and services to commercial customers. Accounts
receivable is shown net of allowances for bad debts of $11,700 at
October 31, 2000, and December 31, 1999, respectively.
PROPERTY AND EQUIPMENT - Property and equipment is carried at
original cost or adjusted net realizable value, as applicable.
Maintenance and 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 each class of assets. Estimated useful
lives of assets are as follows: Furniture and fixtures - five years;
computer systems and software - three years.
INTERNALLY DEVELOPED SOFTWARE - The Company continues to develop and
improve its filtering technology and its components, building
databases and re-writing interfaces to continue to make the
Company's filtering service more reliable. Such expenditures are
expensed as incurred.
9
<PAGE>
CLEANWEB, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000 AND DECEMBER 31, 1999
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FINANCIAL INSTRUMENTS FAIR VALUE - The carrying values of the
Company's financial instruments, which include cash and cash
equivalents, accounts receivable, accounts payable and accrued
expenses, deferred revenues, and obligations under capital lease,
approximate their respective fair values due to their relative short
maturities and market interest rates.
REVENUE RECOGNITION - Subscription service revenues are recognized
over the period that services are provided. Subscription payments
received but not yet earned in accordance with the Company's revenue
recognition policy are recorded as deferred revenue on the balance
sheet. Revenue is recognized and relieved from deferred revenue as
the services are provided over the subscription term. In December
1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements"("SAB 101"), which clarifies certain existing accounting
principles for the timing of revenue recognition and its
classification in the financial statements. The SEC delayed the
required implementation date of SAB 101 by issuing Staff Accounting
Bulletins No. 101A, "Amendment: Revenue Recognition in Financial
Statements" and 101B, "Second Amendment: Revenue Recognition in
Financial Statements" in March and June 2000, respectively. SAB 101
became effective October 1, 2000. The Company believes its current
revenue recognition policies are in accordance with SAB 101.
ADVERTISING EXPENSE - The Company's operations involve significant
advertising, marketing and promotional expenditures. The Company
expenses such amounts as incurred.
INCOME TAXES - The Company has elected to be taxed as an "S"
corporation. No provision for income taxes is reflected in the
financial statements, as they are the responsibility of the
stockholder.
NOTE B CONDITIONS AFFECTING ONGOING OPERATIONS
In its brief history, the Company has incurred recurrent net losses
and its current liabilities exceed its current assets by $379,432 at
October 31, 2000. The Company's continuation as a going concern is
dependent upon its ability to generate sufficient cash flow to meet
its obligations on a timely basis, and ultimately to attain
profitability. Management's plans regarding operation of the company
are to sell its operations and consolidate with another filtered
Internet service provider. The Company was subsequently sold to
iExalt, Inc. effective November 1, 2000. See Note G.
10
<PAGE>
CLEANWEB, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000 AND DECEMBER 31, 1999
NOTE C STOCKHOLDER'S EQUITY AND CONTRIBUTIONS OF CAPITAL
The Company receives additional funding from other companies that
are affiliated through common ownership as well as directly from its
stockholder to meet its cash operating needs. In addition, some
operating and corporate expenses are directly paid by affiliated
companies. Management believes that such expenses directly paid or
allocated are based upon the level of activity in the normal course
of business. The Company treats such payments of expenses as
contributions of capital as none of the amounts contributed will be
repaid. Contributions made by the stockholder and affiliated
companies were $735,323 and $1,380,282 for the ten month period
ended October 31, 2000 and the year ended December 31, 1999.
NOTE D EMPLOYEE BENEFIT PLANS
The Company has a defined contribution 401(K) plan for substantially
all of the employees after three months of service and attainment of
age 21. The Plan allows for discretionary employer contributions.
Employer contributions totaled $0 for the ten month period ended
October 31, 2000 and $1,743 for the year ended December 31, 1999.
NOTE E LEASES
The Company leases its corporate offices and some office equipment
under operating leases from third parties. Lease expense under
operating leases during the ten month period ended October 31, 2000
and the year ended December 31, 1999 was $77,709 and $56,355,
respectively. Future minimum payments under long term operating
leases for the twelve month periods ending October 31 are:
2001 $144,110
2002 143,881
2003 146,230
2004 136,202
--------
$570,423
========
11
<PAGE>
CLEANWEB, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000 AND DECEMBER 31, 1999
NOTE E LEASES (CONTINUED)
The Company leases a substantial portion of its computer and
telecommunications systems under capital leases. The Company had
computer and telecommunication equipment totaling $212,331 and
$150,661 under capital leases with accumulated depreciation of
$93,508 and $46,520 at October 31, 2000 and December 31, 1999,
respectively. The Company includes amortization of capital leased
assets in its depreciation expense. The Capital leases are payable
in monthly installments of principal and interest over a period of
three years. Interest rates vary from 13% to 25%. Future minimum
lease payments under capital leases for the twelve month periods
ending October 31 are as follows:
2001 $ 66,746
2002 46,730
2003 19,894
2004 10,662
--------
144,032
Less amounts pertaining to interest (19,152)
--------
Total obligations under capital leases 124,880
Less current maturities (54,231)
--------
$ 70,649
========
NOTE F COMMITMENTS AND CONTINGENCIES
During the ten months ended October 31, 2000, the Company agreed to
an oral settlement of a wrongful termination claim made by a former
employee for $34,500 to be paid in monthly installments plus one
year of free Internet service beginning in 2001. The $34,500 is
included in accrued expenses at October 31, 2000 and December 31,
1999.
A former employee of an affiliated company has filed a
discrimination compliant. The affiliate's operations were halted
prior to December 1998 and the remaining assets and liabilities were
merged with the Company's. No provision for loss has been recoded
for this contingency as Management believes that any claim against
the Company is unlikely. In the event such a claim can be made
against the Company, the stockholder has indemnified the Company
against any such claim.
12
<PAGE>
CLEANWEB, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000 AND DECEMBER 31, 1999
NOTE F COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company is disputing approximately $97,000 in accounts payable,
from one of its telecommunications vendors for amounts, which the
vendor is unable to provide itemized statements of services
rendered. The Company believes such services were never rendered. No
accrual has been recorded in the financial statements for disputed
amounts, as management believes that the possibility of paying any
disputed amounts is remote.
NOTE G SUBSEQUENT EVENTS
On October 24, 2000, all the outstanding stock of the Company was
acquired by iExalt, Inc. ("iExalt"), effective November 1, 2000, for
2,313,000 shares of iExalt's common stock. iExalt currently markets
several different products and services including a filtered ISP to
the Christian community. The transaction was accounted for as a
purchase and a preliminary estimate of goodwill was recorded in the
amount of $2,237,000. The Company is combining its operations with
the operations of iExalt and its filtered ISP, but will continue to
market its services under the Cleanweb name.
13
<PAGE>
ANNEX B
PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma Balance Sheet is presented based upon iExalt's
fiscal year end of August 31, 2000. The pro forma Balance Sheet reflects the
acquisition by iExalt of CleanWeb on October 24, 2000 and effective November 1,
2000 as if it had occurred on August 31, 2000 and includes all material
adjustments considered necessary by management for presentation in accordance
with generally accepted accounting principles. The pro forma adjustments to
reflect the disposition of First Choice Marketing, Inc. on September 22, 2000
are shown separately as noted in Notes A and B to the unaudited Pro Forma
Balance Sheet and Statement of Operations.
The unaudited pro forma income statement for the year ended August 31,
2000 reflects the acquisition by iExalt of CleanWeb on October 24, 2000 and
effective November 1, 2000 as if it had occurred on September 1, 1999. The
unaudited pro forma statement of operations presented below should be read along
with the pro forma income statement filed in Note B of iExalt, Inc.'s 10KSB
which is the starting point for the pro forma income statement below. The pro
forma income statement filed in the 10KSB reflects the following acquisitions as
if they had occurred on September 1, 1999: Keener Communications Group, Inc.
(July, 2000), PremierCare, LLC (July, 2000), First Choice Marketing, Inc.
(December, 1999), Premiere Speakers Bureau, Inc. (December, 1999), and Wordcross
Enterprises, Inc. (October, 1999). The pro forma adjustments to reflect the
disposition of First Choice Marketing, Inc. as if it occurred concurrent with
the First Choice acquisition (December 1999) are shown separately.
The pro forma financial data do not purport to represent what iExalt's
combined financial position or results of operations would actually have been if
such transactions in fact had occurred on these dates and are not necessarily
representative of iExalt's combined financial position or results of operations
for any future period. Since the acquired entities were not under common control
or management prior to their acquisitions by iExalt, the historical combined
results may not be comparable to, or indicative of, future performance.
14
<PAGE>
IEXALT, INC.
UNAUDITED PRO FORMA BALANCE SHEET
AUGUST 31, 2000
<TABLE>
<CAPTION>
IEXALT AND DISPOSITION
SUBSIDIARIES PRO FORMA
PER 10KSB ADJUSTMENTS SUBTOTAL
------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Current assets ...................... $ 1,295,486 (A) $ (74,379) $ 1,221,107
Property & equipment, net ........... 717,025 (A) (45,225) 671,800
Goodwill, net ....................... 2,462,244 -- 2,462,244
Other assets ........................ 272,853 (A) (6,852) 266,001
------------------------------------------------------------
Total Assets ........................ $ 4,747,608 $ (126,456) $ 4,621,152
============================================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities ................. $ 2,894,951 (A) $ (22,447) $ 2,872,504
Long-term liabilities ............... 98,074 -- 98,074
Shareholders' equity ................ 1,754,583 (A) (104,009) 1,650,574
------------------------------------------------------------
Total Liabilities & Equity .......... $ 4,747,608 $ (126,456) $ 4,621,152
============================================================
<CAPTION>
PRO FORMA PRO FORMA
SUBTOTAL CLEANWEB ADJUSTMENTS TOTAL
------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Current assets ...................... $ 1,221,107 $ 179,249 $ -- $ 1,400,356
Property & equipment, net ........... 671,800 187,046 -- 858,846
Goodwill, net ....................... 2,462,244 -- (C) 2,236,680 4,698,924
Other assets ........................ 266,001 1,000 -- 267,001
------------------------------------------------------------
Total Assets ........................ $ 4,621,152 $ 367,295 $ 2,236,680 $ 7,225,127
============================================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities ................. $ 2,872,504 $ 558,681 (C) $ 23,605 $ 3,454,790
Long-term liabilities ............... 98,074 70,649 -- 168,723
Shareholders' equity ................ 1,650,574 (262,035) (C) 2,213,075 3,601,614
------------------------------------------------------------
Total Liabilities & Equity .......... $ 4,621,152 $ 367,295 $ 2,236,680 $ 7,225,127
============================================================
</TABLE>
15
<PAGE>
IEXALT, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2000
<TABLE>
<CAPTION>
PRO FORMA
IEXALT AND DISPOSITION
SUBSIDIARIES PRO FORMA
PER 10KSB ADJUSTMENTS SUBTOTAL
-------------------------------------------------------------
<S> <C> <C> <C>
REVENUES ........................ $ 8,101,283 $ -- $ 8,101,283
EXPENSES ........................ 15,853,424 (B) 136,009 15,989,433
------------ ------------ ------------
LOSS FROM OPERATIONS ............ (7,752,141) (7,888,150)
OTHER INCOME (EXPENSES) ......... (76,628) -- (76,628)
------------ ------------ ------------
NET LOSS ........................ $ (7,828,769) $ (136,009) $ (7,964,778)
============ ============ ============
NET LOSS PER SHARE .............. $ (0.29) $ (0.29)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING ................ 27,032,656 27,057,656
============ ============
<CAPTION>
PRO FORMA PRO FORMA
SUBTOTAL CLEANWEB ADJUSTMENTS TOTAL
-------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES ........................ $ 8,101,283 $ 1,054,854 $ -- $ 9,156,137
EXPENSES ........................ 15,989,433 1,839,431 (D) 111,834 17,940,698
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS ............ (7,888,150) (784,577) (111,834) (8,784,561)
OTHER INCOME (EXPENSES) ......... (76,628) (21,074) -- (97,702)
------------ ------------ ------------ ------------
NET LOSS ........................ $ (7,964,778) $ (805,651) $ (111,834) $ (8,882,263)
============ ============ ============ ============
NET LOSS PER SHARE .............. $ (0.29) $ (0.30)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING ................ 27,057,656 29,370,656
============ ============
</TABLE>
16
<PAGE>
The Pro Forma Adjustments consisted of the following:
(A) To reflect the disposition of the assets of First Choice Marketing as of
August 31, 2000 as filed under the 8K/A dated December 11, 2000.
(B) To reflect the related profit and loss effect through September 22, 2000
(the date of disposition) of First Choice Marketing as if it had occurred
during the year ended August 31, 2000, as filed under the 8K/A dated
December 11, 2000.
(C) To record the goodwill from the acquisition of CleanWeb, Inc.
(D) To record the related amortization of goodwill as if the acquisition of
CleanWeb, Inc. occurred as of September 1, 1999
17
