SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A2
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 30, 1999
PRINTONTHENET.COM, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
000-14614 59-1270754
- --------------------------------------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
7700 N.W. 37TH AVENUE, MIAMI, FLORIDA 33147
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone no. including area code: (305) 691-2800
--------------
NET LNNX, INC.
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
This Current Report on Form 8-K/A2 is filed by PrintOnTheNet.Com (the
"Company") as a second amendment to that certain Current Report on Form 8-K
filed by the Company on September 13, 1999.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
------------------------------------------------------------------
FINANCIAL STATEMENTS
(a) Financial Statements of Businesses Acquired
The following audited financial statements of Bailey's Printing Plus,
Inc. ("Bailey's") as of and for the years ended December 31, 1998 and 1997 are
provided herein:
(1) Independent Auditor's Report
(2) Balance Sheets as of December 31, 1998 and 1997
(3) Statements of Operations and Retained Earnings for the years ended
December 31, 1998 and 1997
(4) Statements of Cash Flows for the years ended December 31, 1998 and
1997
(5) Notes to Financial Statements for the years ended December 31, 1998
and 1997
The following unaudited financial statements of Bailey's as of and for
the six month interim periods ended June 30, 1999 and 1998 are provided herein:
(1) Balance Sheets as of June 30, 1999 and 1998
(2) Statements of Operations and Retained Earnings for the six month
periods ended June 30, 1999 and 1998
(3) Statements of Cash Flows for the six month periods ended June 30,
1999 and 1998
The following audited financial statements of Ivan's Quik Print, Inc.
("Ivan's") as of and for the years ended December 31, 1998 and 1997 are provided
herein:
(1) Independent Auditor's Report
(2) Balance Sheets as of December 31, 1998 and 1997
(3) Statements of Operations and Retained Earnings for the years ended
December 31, 1998 and 1997
(4) Statements of Cash Flows for the years ended December 31, 1998 and
1997
(5) Notes to Financial Statements for the years ended December 31, 1998
and 1997
2
<PAGE>
The following unaudited financial statements of Ivan's as of and for
the six month interim periods ended June 30, 1999 and 1998 are provided herein:
(1) Balance Sheets as of June 30, 1999 and 1998
(2) Statements of Operations and Retained Earnings for the six month
periods ended June 30, 1999 and 1998
(3) Statements of Cash Flows for the six month periods ended June 30,
1999 and 1998
3
<PAGE>
To the Board of Directors of
PrintOnTheNet.Com
INDEPENDENT AUDITOR'S REPORT
I have audited the accompanying balance sheet of Bailey's Printing Plus, Inc., a
Florida Sub-chapter S corporation, as of December 31, 1998 and the related
statements of operations and retained earnings, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted this audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for our opinion.
In my opinion, the financial statements referred to above present fairly in all
material respects the financial position of Bailey's Printing Plus, Inc., as of
December 31, 1998, and the results of operations and cash flow for the year then
ended in conformity with generally accepted accounting principles.
Esteban Brown CPA, PA
Miami, Florida
November 8, 1999
4
<PAGE>
<TABLE>
<CAPTION>
BAILEY' S PRINTING PLUS, INC.
BALANCE SHEET
- ---------------------------------------------------------------------------------------------------------------
As at December 31, 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 0
Accounts receivable 22,105
Inventory 3,086
- ---------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 25,191
- ---------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Manufacturing equipment 38,429
Less accumulated depreciation (18,413)
- ---------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, NET 20,016
- ---------------------------------------------------------------------------------------------------------------
OTHER ASSETS
Deposits 1,260
- ---------------------------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS 1,260
- ---------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 46,467
===============================================================================================================
LIABILITIES AND STOCKHOLDERS ' EQUITY (DEFICIT)
CURRENT LIABILITIES
Bank overdraft 9,688
Capitalized lease obligation, short term portion (Note 2) 1,490
Accounts payable and accrued expenses 19,549
Sales taxes payable 1,529
Shareholder loan 3,159
- ---------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 35,415
- ---------------------------------------------------------------------------------------------------------------
LONG - TERM LIABILITIES
Capitalized lease obligation (Note 2) 12,361
- ---------------------------------------------------------------------------------------------------------------
TOTAL LONG - TERM LIABILITIES 12,361
- ---------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, 5,000 shares authorized, issued and outstanding 1,000
Deficit in Retained earnings (2,309)
- ---------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (1,309)
- ---------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 46,467
===============================================================================================================
</TABLE>
See accountants' audit report and accompanying notes
5
<PAGE>
<TABLE>
<CAPTION>
BAILEY' S PRINTING PLUS, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
- --------------------------------------------------------------------------------------------------------
For the year ended December 31, 1998
- --------------------------------------------------------------------------------------------------------
<S> <C>
REVENUES $ 390,312
COST OF SALES 177,823
- --------------------------------------------------------------------------------------------------------
GROSS PROFIT 212,489
- --------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Salaries and related costs 134,340
Rent 23,672
Insurance 22,001
Maintenance 8,180
Advertising 6,930
Office costs 6,261
Automobile expense 6,175
Telephone 5,597
Depreciation 3,795
Interest 2,411
Utilities 2,345
Professional fees 1,400
Other 991
Laundry 460
- --------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 224,558
- --------------------------------------------------------------------------------------------------------
NET LOSS (12,069)
RETAINED EARNINGS - BEGINNING 9,760
- --------------------------------------------------------------------------------------------------------
DEFICIT IN RETAINED EARNINGS - ENDING $ (2,309)
========================================================================================================
</TABLE>
See accountants' audit report and accompanying notes
6
<PAGE>
<TABLE>
<CAPTION>
BAILEY' S PRINTING PLUS, INC.
STATEMENT OF CASH FLOWS
- ------------------------------------------------------------------------------------------------------
For the year ended December 31, 1998
- ------------------------------------------------------------------------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (12,069)
- ------------------------------------------------------------------------------------------------------
Adjustmentsto reconcile net loss to net cash provided by operating
activities:
Depreciation 3,795
(Increase) decrease in:
Accounts receivable (4,061)
Inventory 200
Increase (decrease) in:
Bank overdraft 9,251
Accounts payable and accrued expenses 5,963
Payroll and sales taxes payable (3,273)
Shareholder loan 3,159
- ------------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS 15,034
- ------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,965
- ------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayment on equipment financing (2,965)
- ------------------------------------------------------------------------------------------------------
NET CASH FLOWS USED BY FINANCING ACTIVITIES (2,965)
- ------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH 0
CASH - BEGINNING OF YEAR 0
- ------------------------------------------------------------------------------------------------------
CASH - END OF YEAR $ 0
======================================================================================================
</TABLE>
See accountants' audit report and accompanying notes
7
<PAGE>
NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Bailey's Printing Plus, Inc., (Company), was incorporated in the State
of Florida on January 6, 1992, and has operated as quick print shop
since it's inception.
REVENUE RECOGNITION
The company recognizes revenue on the accrual basis of accounting and
recognizes income upon completion of the jobs.
INCOME TAXES
The company, with the consent of its shareholders has elected for
income tax purposes to be taxed as a Subchapter-S corporation.
Under the provisions of the Internal Revenue Code, Sub-S corporations
are not taxable entities instead the shareholders are taxed on their
proportionate share of the company's taxable income. Accordingly, no
provision for federal or state income tax has been provided in the
accompanying income statements.
INVENTORIES
Inventory, consisting of printing supplies, is valued at the lower of
cost or market value using the first-in first-out method.
PROPERTY AND EQUIPMENT
Property and equipment, consisting of computers and manufacturing
equipment is stated at cost, less accumulated depreciation.
Depreciation commences when the assets are placed in service and
computed using the straight-line method over the estimated useful lives
of the assets, which are five to ten years.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions may affect the
reported amounts of assets, liabilities, and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expense during the reporting period.
Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, receivables, accounts payable, debt, accrued expenses and other
liabilities are carried at amounts which reasonably approximate their
fair value due to the short-term nature of these amounts or due to
variable rates of interest which are consistent with current market
rates.
NOTE 2 - CAPITAL LEASE OBLIGATION
The Company is a party to a five-year capital lease obligation for the
purchase of equipment dated July 1997. The monthly payment is $435 and
bears 14.9 % finance cost. At the conclusion of the lease the Company
has a $1.00 purchase option. The lease is secured by manufacturing
equipment. As of December 31, 1998 the current portion on this
obligation was $1,490.
8
<PAGE>
NOTE 3 - COMMITMENTS
The Company is a party to several operating leases as follows.
Facility: A five year lease on the manufacturing facility dated
February 1992, and extended for an additional five year period through
January 2002. The lease is subject to pass through cost escalations,
and the current monthly rental is $ 1,974.
A twenty-four month lease on a van dated June 1998, with monthly
payments of $361.
Approximate minimum annual rentals on these operating leases are as
follows.
1999 $ 28,020
2000 $ 25,495
2001 $ 23,690
2002 $ 23,690
----------
Total $ 100,985
==========
Total rental payments on these leases and other operating leases
expired during the year ended December 31, 1998 totaled approximately
$27,924.
NOTE 4 - SUBSEQUENT EVENTS
On August 25, 1999, the Company entered into a transaction with
PrintOnTheNet.Com a publicly traded company. Under the terms of this
transaction the Company sold certain assets and debt, its customer
list, and other intangible assets for a total price of $251,000 in
cash, stock of the acquiring company, and debt assumed by the acquiring
company.
9
<PAGE>
To the Board of Directors of
PrintOnTheNet.Com
INDEPENDENT AUDITOR'S REPORT
I have audited the accompanying balance sheet of Bailey's Printing Plus, Inc., a
Florida Sub-chapter S corporation, as of December 31, 1997 and the related
statements of income and retained earnings, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted this audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Bailey's Printing Plus, Inc., as of
December 31, 1997, and the results of operations and cash flow for the year then
ended in conformity with generally accepted accounting principles.
Esteban Brown CPA, PA
Miami, Florida
November 8, 1999
10
<PAGE>
<TABLE>
<CAPTION>
BAILEY' S PRINTING PLUS, INC.
BALANCE SHEET
- ---------------------------------------------------------------------------------------------------------
As at December 31, 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 0
Accounts receivable 18,044
Inventory 3,286
- ---------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 21,330
- ---------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Manufacturing equipment 38,429
Less accumulated depreciation (14,619)
- ---------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, NET 23,810
- ---------------------------------------------------------------------------------------------------------
OTHER ASSETS
Deposits 1,260
- ---------------------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS 1,260
- ---------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 46,400
=========================================================================================================
LIABILITIES AND STOCKHOLDERS ' EQUITY
CURRENT LIABILITIES
Bank overdraft 437
Capitalized lease obligation, short term portion (Note 2) 2,313
Accounts payable and accrued expenses 13,586
Payroll and sales taxes payable 4,802
- ---------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 21,138
- ---------------------------------------------------------------------------------------------------------
LONG - TERM LIABILITIES
Capitalized lease obligation (Note 2) 14,502
- ---------------------------------------------------------------------------------------------------------
TOTAL LONG - TERM LIABILITIES 14,502
- ---------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock, 5,000 shares authorized, issued and outstanding 1,000
Retained earnings 9,760
- ---------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 10,760
- ---------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 46,400
=========================================================================================================
</TABLE>
See accountants' audit report and accompanying notes
11
<PAGE>
<TABLE>
<CAPTION>
BAILEY' S PRINTING PLUS, INC.
STATEMENT S OF INCOME AND RETAINED EARNINGS
- --------------------------------------------------------------------------------------------------
For the year ended December 31, 1997
- --------------------------------------------------------------------------------------------------
<S> <C>
REVENUES $ 407,341
COST OF SALES 166,047
- --------------------------------------------------------------------------------------------------
GROSS PROFIT 241,294
- --------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Salaries and related costs 144,178
Rent 23,690
Insurance 20,842
Office costs 9,446
Automobile expense 7,947
Telephone 7,487
Advertising 4,935
Depreciation 3,753
Maintenance 3,713
Utilities 2,444
Professional fees 1,825
Interest 1,311
Laundry 1,215
Other 1,082
- --------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 233,868
- --------------------------------------------------------------------------------------------------
NET INCOME 7,426
RETAINED EARNINGS - BEGINNING 16,962
Distributions to shareholders (14,628)
- --------------------------------------------------------------------------------------------------
RETAINED EARNINGS - ENDING $ 9,760
==================================================================================================
</TABLE>
See accountants' audit report and accompanying notes
12
<PAGE>
<TABLE>
<CAPTION>
BAILEY' S PRINTING PLUS, INC.
STATEMENT OF CASH FLOWS
- -----------------------------------------------------------------------------------------------------
For the year ended December 31, 1997
- -----------------------------------------------------------------------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 7,426
- -----------------------------------------------------------------------------------------------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 3,753
(Increase) decrease in:
Accounts receivable 5,292
Inventory 22
Shareholders loans 4,242
Increase (decrease) in:
Bank overdraft (4,826)
Accounts payable and accrued expenses 0
Payroll and sales taxes payable 1,618
- -----------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS 10,101
- -----------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 17,527
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Distributions to shareholders (14,628)
Purchase of equipment (19,715)
- -----------------------------------------------------------------------------------------------------
NET CASH FLOWS USED BY INVESTING ACTIVITIES (34,343)
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from equipment financing 18,550
Principal repayment on equipment financing (1,734)
- -----------------------------------------------------------------------------------------------------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 16,816
- -----------------------------------------------------------------------------------------------------
NET INCREASE IN CASH 0
CASH AND EQUIVALENTS - BEGINNING OF YEAR 0
- -----------------------------------------------------------------------------------------------------
CASH AND EQUIVALENTS - END OF YEAR $ 0
=====================================================================================================
</TABLE>
See accountants' audit report and accompanying notes
13
<PAGE>
NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Bailey's Printing Plus, Inc., (Company), was incorporated in the State
of Florida on January 6, 1992, and has operated as quick print shop
since it's inception.
REVENUE RECOGNITION
The company recognizes revenue on the accrual basis of accounting and
recognizes income upon completion of the jobs.
INCOME TAXES
The company, with the consent of its shareholders has elected for
income tax purposes to be taxed as a Subchapter-S corporation.
Under the provisions of the Internal Revenue Code, Sub-S corporations
are not taxable entities instead the shareholders are taxed on their
proportionate share of the company's taxable income. Accordingly, no
provision for federal or state income tax has been provided in the
accompanying income statements.
INVENTORIES
Inventory, consisting of printing supplies, is valued at the lower of
cost or market value using the first-in first-out method.
PROPERTY AND EQUIPMENT
Property and equipment, consisting of computers and manufacturing
equipment is stated at cost, less accumulated depreciation.
Depreciation commences when the assets are placed in service and
computed using the straight-line method over the estimated useful lives
of the assets, which are five to ten years.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions may affect the
reported amounts of assets, liabilities, and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expense during the reporting period.
Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, receivables, accounts payable, debt, accrued expenses and other
liabilities are carried at amounts which reasonably approximate their
fair value due to the short-term nature of these amounts or due to
variable rates of interest which are consistent with current market
rates.
NOTE 2 - CAPITAL LEASE OBLIGATION
The Company is a party to a five-year capital lease obligation for the
purchase of equipment dated July 1997. The monthly payment is $435 and
bears 14.9 % finance cost. At the conclusion of the lease the Company
has a $1.00 purchase option. The lease is secured by manufacturing
equipment. As of December 31, 1997 the current portion on this
obligation was $ 2,058.
14
<PAGE>
NOTE 3 - COMMITMENTS
The Company is a party to several operating leases as follows.
Facility: A five year lease on the manufacturing facility dated
February 1992, and extended for an additional five year period through
January 2002. The lease is subject to pass through cost escalations,
and the current monthly rental is $ 1,974.
A twenty-four month lease on a van dated June 1996, with monthly
payments of $349.
Approximate minimum annual rentals on these operating leases are as
follows.
1998 $ 27,960
1999 $ 28,020
2000 $ 25,495
2001 $ 23,690
2002 $ 23,690
----------
Total $ 128,855
==========
Total rental payments on these leases totaled $ 28, 057 for the year
ended December 31, 1997.
NOTE 4 - SUBSEQUENT EVENTS
On August 25, 1999, the Company entered into a transaction with
PrintOnTheNet.Com a publicly traded company. Under the terms of this
transaction the Company sold certain assets and debt, its customer
list, and other intangible assets for a total price of $251,000 in
cash, stock of the acquiring company, and debt assumed by the acquiring
company.
15
<PAGE>
<TABLE>
<CAPTION>
BAILEY'S PRINTING PLUS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
JUNE 30,
--------
1999 1998
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 2,688 $ 13,007
Accounts receivable, net 29,462 25,697
Inventory 3,086 3,286
----------------- -----------------
Total Current Assets
35,236 41,990
----------------- -----------------
Property and equipment, net 19,142 21,913
Deposits 1,260 1,260
----------------- -----------------
$ 55,638 $ 65,163
================= =================
LIABILITIES AND SHAREH0LDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 18,232 $ 20,067
Current portion of capital lease obligations 1,273 2,313
----------------- -----------------
Total Current Liabilities 19,505 22,380
----------------- -----------------
Capital lease obligations 11,776 13,020
SHAREHOLDERS' EQUITY
Common stock 1,000 1,000
Retained earnings 23,357 28,763
----------------- -----------------
Total Shareholders' Equity 24,357 29,763
----------------- -----------------
$ 55,638 $ 65,163
================= =================
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
BAILEY'S PRINTING PLUS, INC.
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
For the Six Month Period Ended June 30,
1999 1998
---- ----
<S> <C> <C>
Net sales $ 260,956 $ 203,457
Cost of sales 144,499 114,251
----------------- -----------------
Gross profit 116,457
89,206
Selling, General and Administrative Expenses 89,540 69,216
----------------- -----------------
Income from operations 26,917 19,990
Interest expense 1,251 987
----------------- -----------------
Net income 25,666 19,003
Retained earnings (deficit) - beginning of
period (2309) 9,760
----------------- -----------------
Retained earnings - end of period $ 23,357 $ 28,763
================= =================
</TABLE>
(1) Bailey's is a Subchapter S Corporation and as such any taxes required are
the responsibility of the individual shareholders. Therefore, no provision
for income taxes is reflected herein.
17
<PAGE>
<TABLE>
<CAPTION>
BAILEY'S PRINTING PLUS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six Month Period Ended June 30,
1999 1998
---- ----
<S> <C> <C>
Net income $ 25,666 $ 19,003
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation 1,724 1,898
Accounts receivable (7,359) (7,654)
Shareholder loan (3,159) -
Accounts payable and accrued expenses (12,532) 1,242
-------------------- ---------------------
Total adjustments (21,326) (4,514)
Net cash flows from operating activities 4,340 14,489
Cash flows from investing activities:
Expenditures for property and equipment (850)
-
Cash flows from financing activities:
Payments under capital lease obligations (802) (1,482)
-------------------- ---------------------
NET INCREASE IN CASH 2,688 13,007
CASH AT BEGINNING OF PERIOD - -
-------------------- ---------------------
CASH AT END OF PERIOD $ 2,688 $ 13,007
==================== =====================
</TABLE>
18
<PAGE>
To the Board of Directors of
PrintOnTheNet.Com
INDEPENDENT AUDITOR'S REPORT
I have audited the accompanying balance sheet of Ivan's Quick Print, Inc., a
Florida corporation as of December 31, 1998 and the related statements of
operations and retained earnings, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted this audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects the financial position of Ivan's Quick Print, Inc., as of
December 31, 1998 and the results of it's operations and it's cash flow, for the
year then ended in conformity with generally accepted accounting principles.
Esteban Brown CPA, PA
Miami, Florida
November 8, 1999
19
<PAGE>
<TABLE>
<CAPTION>
IVAN 'S QUICK PRINT, INC.
BALANCE SHEET
- -----------------------------------------------------------------------------------------------------------
As at December 31, 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 3,866
Accounts receivable 25,292
Inventory 2,917
Shareholder loan 3,408
- -----------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 35,483
- -----------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Manufacturing equipment 25,827
Less accumulated depreciation (8,244)
- -----------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, NET 17,583
- -----------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 53,066
===========================================================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Note payable, current portion 2,058
Accounts payable and accrued expenses 28,453
- -----------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 30,511
- -----------------------------------------------------------------------------------------------------------
LONG - TERM LIABILITIES
Note payable long term - portion 2,485
- -----------------------------------------------------------------------------------------------------------
TOTAL LONG - TERM LIABILITIES 2,485
- -----------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Paid-in capital 500
Retained earnings 19,570
- -----------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 20,070
- -----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 53,066
===========================================================================================================
</TABLE>
See accountants' audit report and accompanying notes
20
<PAGE>
<TABLE>
<CAPTION>
IVAN 'S QUICK PRINT, INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
- ---------------------------------------------------------------------------------------------------------
For the year ended December 31, 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C>
REVENUES $ 300,383
COST OF SALES 166,178
- ---------------------------------------------------------------------------------------------------------
GROSS PROFIT 134,205
- ---------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Salaries and related costs 43,173
Occupancy costs 30,373
Insurance 14,921
Automobile expense 12,054
Office costs 8,699
Telephone 5,821
Utilities 4,790
Maintenance 4,696
Licenses and taxes 3,398
Equipment rental 2,907
Depreciation 2,583
Laundry 949
Professional fees 939
Interest 584
Advertising 50
- ---------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 135,937
- ---------------------------------------------------------------------------------------------------------
NET LOSS (1,732)
RETAINED EARNINGS - BEGINNING 21,302
- ---------------------------------------------------------------------------------------------------------
RETAINED EARNINGS - ENDING $ 19,570
=========================================================================================================
</TABLE>
See accountants' audit report and accompanying notes
21
<PAGE>
<TABLE>
<CAPTION>
IVAN 'S QUICK PRINT, INC.
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------------------------------
For the year ended December 31, 1998
- --------------------------------------------------------------------------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,732)
- --------------------------------------------------------------------------------------------------------
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation 2,583
(Increase) decrease in:
Accounts receivable other (7,499)
Inventory (104)
Due from shareholder (1,751)
Increase (decrease) in:
Accounts payable and accrued expenses 7,834
Payroll and sales taxes payable (2,048)
- --------------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS (985)
- --------------------------------------------------------------------------------------------------------
NET CASH FLOWS USED BY OPERATING ACTIVITIES (2,717)
- --------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayment on equipment financing (1,853)
- --------------------------------------------------------------------------------------------------------
NET CASH FLOWS USED BY FINANCING ACTIVITIES (1,853)
- --------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH (4,570)
CASH - BEGINNING OF YEAR 8,438
- --------------------------------------------------------------------------------------------------------
CASH - END OF YEAR $ 3,866
========================================================================================================
</TABLE>
See accountants' audit report and accompanying notes
22
<PAGE>
NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Ivans Quick Print Inc., (Company), was incorporated in the State of
Florida in June 1985 and operated as quick print shop since it's
inception.
REVENUE RECOGNITION
The company recognizes revenue on the accrual basis of accounting and
recognizes income upon completion of the jobs.
INCOME TAXES
The Company is a regular C corporation for income tax purposes. For the
year ended December 31, 1998, the Company had an available net
operating loss carry-back that reduced the income tax liability for
this year to zero. No effect of this income tax benefit is recorded for
the year ended December 31, 1998.
INVENTORIES
Inventory, consisting of printing supplies, is valued at the lower of
cost or market value using the first-in first-out method.
PROPERTY AND EQUIPMENT
Property and equipment, consisting of computers and manufacturing
equipment is stated at cost, less accumulated depreciation.
Depreciation commences when the assets are placed in service and is
computed using the straight-line method over the estimated useful life
of the assets, ten years.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions may affect the
reported amounts of assets, liabilities, and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expense during the reporting period.
Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, receivables, accounts payable, debt, accrued expenses and other
liabilities are carried at amounts which reasonably approximate their
fair value due to the short-term nature of these amounts or due to
variable rates of interest which are consistent with current market
rates.
NOTE 2 - NOTES PAYABLE BANK
The Company is a party to a five-year note payable to a bank for the
purchase of manufacturing equipment dated March 1996. The monthly
payment is $203 and bears interest at 10.5 %. The loan is secured by a
lien on the equipment. As of December 31, 1998 the current portion due
on this loan is $2,058.
23
<PAGE>
NOTE 3 - RELATED PARTIES
The Company operates out of a facility owned by the shareholders. In
lieu of a lease agreement the Company pays the costs associated with
ownership of the property and charges them to rent. For the year ended
December 31, 1998 the rent totaled approximately $ 30,373.
NOTE 4 - SUBSEQUENT EVENTS
On August 27, 1999, the Company entered into a transaction with
PrintOnTheNet.Com a publicly traded company. Under the terms of this
transaction the Company sold certain assets, its customer list, and
other intangible assets for a total price of $100,000 in cash and stock
of the acquiring company.
24
<PAGE>
To the Board of Directors of
PrintOnTheNet.Com
INDEPENDENT AUDITOR'S REPORT
I have audited the accompanying balance sheet of Ivan's Quick Print, Inc., a
Florida corporation as of December 31, 1997 and the related statements of income
and retained earnings, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted this audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects the financial position of Ivan's Quick Print, Inc., as of
December 31, 1997 and the results of operations and cash flows for the year then
ended in conformity with generally accepted accounting principles.
Esteban Brown CPA, PA
Miami, Florida
November 8, 1999
25
<PAGE>
<TABLE>
<CAPTION>
IVAN'S QUICK PRINT, INC.
BALANCE SHEET
- ----------------------------------------------------------------------------------------------------------------------------
As at December31, 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 8,438
Accounts receivable 17,793
Inventory 2,813
Shareholder loan 1,657
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 30,701
- ----------------------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Manufacturing equipment 25,827
Less accumulated depreciation (5,662)
- ----------------------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, NET 20,165
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 50,866
============================================================================================================================
LIABILITIES AND STOCKHOLDERS ' EQUITY
CURRENT LIABILITIES
Note payable, current portion 2,058
Accounts payable and accrued expenses 20,619
Payroll and sales taxes payable 2,048
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 24,725
2
- ----------------------------------------------------------------------------------------------------------------------------
LONG - TERM LIABILITIES
Note payable long - term portion 4,339
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL LONG - TERM LIABILITIES 4,339
- ----------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Paid-in capital 500
Retained earnings 21,302
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 21,802
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 50,866
============================================================================================================================
</TABLE>
See accountants' audit report and accompanying notes
26
<PAGE>
<TABLE>
<CAPTION>
IVAN'S QUICK PRINT, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
- ---------------------------------------------------------------------------------------------------------
For the year ended December 31, 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C>
REVENUES $ 288,878
COST OF SALES 157,694
- ---------------------------------------------------------------------------------------------------------
GROSS PROFIT 131,184
- ---------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Salaries and related costs 38,102
Automobile expense 17,239
Rent 16,012
Insurance 13,326
Maintenance 12,297
Office costs 10,009
Telephone 6,331
Equipment rental 5,594
Utilities 4,719
Depreciation 2,058
Professional fees 975
Interest 768
Advertising 689
Laundry 415
- ---------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 128,534
- ---------------------------------------------------------------------------------------------------------
NET INCOME 2,650
RETAINED EARNINGS - BEGINNING 18,652
- ---------------------------------------------------------------------------------------------------------
RETAINED EARNINGS - ENDING $ 21,302
=========================================================================================================
</TABLE>
See accountants' audit report and accompanying notes
27
<PAGE>
<TABLE>
<CAPTION>
IVAN'S QUICK PRINT, INC.
STATEMENT OF CASH FLOWS
- ---------------------------------------------------------------------------------------------------------
For the year ended December 31, 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 2,650
- ---------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 2,058
(Increase) decrease in:
Accounts receivable 73
Inventory 368
Increase (decrease) in:
Accounts payable and accrued expenses (1,801)
Payroll and sales taxes payable (248)
- ---------------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS 450
- ---------------------------------------------------------------------------------------------------------
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 3,100
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayment on equipment financing (1,669)
- ---------------------------------------------------------------------------------------------------------
NET CASH FLOWS USED BY FINANCING ACTIVITIES (1,669)
- ---------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH 1,431
CASH - BEGINNING OF YEAR 7,007
- ---------------------------------------------------------------------------------------------------------
CASH - END OF YEAR $ 8,438
=========================================================================================================
</TABLE>
See accountants' audit report and accompanying notes
28
<PAGE>
NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Ivans Quick Print Inc., (Company), was incorporated in the State of
Florida in June 1985 and operated as quick print shop since it's
inception.
REVENUE RECOGNITION
The company recognizes revenue on the accrual basis of accounting and
recognizes income upon completion of the jobs.
INCOME TAXES
The Company is a regular C corporation for income tax purposes. For the
year ended December 31, 1997, the Company had an available net
operating loss carry-back that reduced the income tax liability for
this year to zero. No effect of this income tax benefit is recorded for
the year ended December 31, 1997.
INVENTORIES
Inventory, consisting of printing supplies, is valued at the lower of
cost or market value using the first-in first-out method.
PROPERTY AND EQUIPMENT
Property and equipment, consisting of computers and manufacturing
equipment is stated at cost, less accumulated depreciation.
Depreciation commences when the assets are placed in service and is
computed using the straight-line method over the estimated useful life
of the assets, ten years.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions may affect the
reported amounts of assets, liabilities, and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expense during the reporting period.
Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, receivables, accounts payable, debt, accrued expenses and other
liabilities are carried at amounts which reasonably approximate their
fair value due to the short-term nature of these amounts or due to
variable rates of interest which are consistent with current market
rates.
NOTE 2 - NOTES PAYABLE BANK
The Company is a party to a five-year note payable to a bank for the
purchase of manufacturing equipment dated March 1996. The monthly
payment is $203 and bears interest at 10.5 %. The loan is secured by a
lien on the equipment. As of December 31, 1997 the current portion due
on this loan is $1,853.
29
<PAGE>
NOTE 3 - RELATED PARTIES
The Company operates out of a facility owned by the shareholders. In
lieu of a lease agreement the Company pays the costs associated with
ownership of the property and charges them to rent. For the year ended
December 31, 1997 the rent totaled approximately $ 16,012.
NOTE 4 - SUBSEQUENT EVENTS
On August 27, 1999, the Company entered into a transaction with
PrintOnTheNet.Com a publicly traded company. Under the terms of this
transaction the Company sold certain assets, its customer list, and
other intangible assets for a total price of $100,000 in cash and stock
of the acquiring company.
30
<PAGE>
<TABLE>
<CAPTION>
IVAN'S QUIK PRINT, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
JUNE 30,
--------
1999 1998
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 6,846 $ 4,115
Accounts receivable, net 34,876 28,257
Due from shareholders 36,955 12,292
Inventory 2,917
2,813
---------------- -------------
Total Current Assets 81,594 47,477
---------------- -------------
Property and equipment, net 11,782 18,874
---------------- -------------
$ 93,376 $ 66,351
================ =============
LIABILITIES AND SHAREH0LDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 18,766 $ 25,379
Current portion of notes payable 29,206 2,985
Income taxes payable 3,800 -
---------------- -------------
Total Current Liabilities 51,772 28,364
---------------- -------------
NOTES PAYABLE 2,485
-
SHAREHOLDERS' EQUITY
Common stock 500 500
Retained earnings 41,104 35,002
---------------- -------------
Total Shareholders' Equity 41,604 35,502
---------------- -------------
$ 93,376 $ 66,351
================ =============
31
<PAGE>
IVAN'S QUIK PRINT, INC.
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
For the Six Month Period Ended June 30,
1999 1998
---- ----
<S> <C> <C>
Net sales $ 187,654 $ 183,230
Cost of sales 100,926 110,485
----------------- ---------------
Gross profit 86,728 72,745
Selling, General and Administrative Expenses 59,072 55,635
----------------- ---------------
Income from operations 27,656 17,110
Interest expense 2,322 3,410
----------------- ---------------
Income before taxes 25,334 13,700
Provision for income taxes 3,800 - (1)
----------------- ---------------
Net income 21,534 13,700
Retained earnings - beginning of period 19,570 21,302
----------------- ---------------
Retained earnings - end of period $ 41,104 $ 35,002
================= ===============
</TABLE>
(1) Ivan's is a regular C corporation for income tax purposes. For the year
ended December 31, 1997, Ivan's had an available net operating loss
carry-back that reduced the income tax liability for the period to zero.
32
<PAGE>
<TABLE>
<CAPTION>
IVAN'S QUIK PRINT, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six Month Period Ended June 30,
1999 1998
---- ----
<S> <C> <C>
Net income $ 21,534 $ 13,700
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 5,801 1,291
Accounts receivable (9,584) (10,464)
Due from shareholders (33,547) (10,635)
Accounts payable and accrued expenses (5,887) 2,712
----------------- ------------------
Total adjustments (43,217) (17,096)
Net cash flows from operating activities (21,683) (3,396)
Cash flows from financing activities:
Borrowings (repayments) under
notes payable 24,663 (927)
----------------- ------------------
NET INCREASE (DECREASE) IN CASH 2,980 (4,323)
CASH AT BEGINNING OF PERIOD 3,866 8,438
----------------- ------------------
CASH AT END OF PERIOD $ 6,846 $ 4,115
================= ==================
</TABLE>
33
<PAGE>
(b) Unaudited Pro Forma Financial Information
(1) Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
June 30, 1999
(2) Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the period from January 27, 1999 (inception) through June 30, 1999
PRINTONTHENET.COM, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION
OVERVIEW
- --------
On August 30, 1999, the Company completed the acquisition of two South
Florida printing companies: Bailey's and Ivan's. Bailey's was acquired for
approximately $251,000. Of that, $50,000 was paid in cash, debt was assumed
totaling $28,000, and the remaining portion of the purchase price was paid by
delivery of shares of the Company's common stock having a value equal to
$172,900. Ivan's was acquired for $100,000. Of that, $25,000 was paid in cash,
and the remaining portion of the purchase price was paid by delivery of shares
of the Company's common stock having a value equal to $75,000.
The unaudited Pro Forma Condensed Consolidated Balance Sheet as of June
30, 1999 and the unaudited Pro Forma Condensed Consolidated Statement of
Operations for the period from January 27, 1999 (inception) to June 30, 1999
give effect to the acquisitions by the Company of Bailey's and Ivan's. These
acquisitions have been accounted for using the purchase method of accounting.
The unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1999
is presented as if the acquisitions of Bailey's and Ivan's had taken place on
June 30, 1999. The unaudited Pro Forma Condensed Consolidated Statement of
Operations is for the period from January 27, 1999 (inception) through June 30,
1999..
The unaudited Pro Forma Condensed Consolidated Financial Statements
have been prepared based upon the historical financial statements of the Company
and the acquired subsidiaries for the periods stated above. Such pro forma
statements may not be indicative of the results that would have occurred if the
acquisitions had been consummated on the indicated dates, or of the operating
results that may be achieved by the combined companies in the future.
34
<PAGE>
<TABLE>
<CAPTION>
PRINTONTHENET.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
JUNE 30, 1999
HISTORICAL BAILEY'S IVAN'S COMBINED ADJUSTMENTS PRO FORMA
---------- -------- ------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ 3,863 $ 2,688 $ 6,846 $ 13,397 $ (9,534) (1) $ 3,863
Accounts receivable - 29,462 34,876 64,338 (64,338) (2) -
Inventory - 3,086 2,917 6,003 (4,003) (3) 2,000
Due from shareholders - - 36,955 36,955 (36,955) (2) -
------------- --------- --------- --------- ---------- ----------
Total Current Assets 3,863 35,236 81,594 120,693 (114,830) 5,863
Property and equipment, net 6,377 19,142 11,782 37,301 (10,924) (3) 26,377
Deposits 93,342 1,260 - 94,602 (1,260) (2) 93,342
Non compete agreement - - - - 50,000 (4) 50,000
Excess of cost over assets acquired - - - - 278,949 (4) 278,949
------------- --------- --------- --------- ---------- ----------
Total Assets $ 103,582 $ 55,638 $ 93,376 $252,596 $ 201,935 $ 454,531
============= ========= ========= ========= ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued
expenses $ 13,208 $ 18,232 $ 22,566 $ 54,006 $ (40,798) (2) $ 13,208
Current portion of notes
payable and capital lease obligations - 1,273 29,206 30,479 (29,206) (5) 6,273
5,000 (1)
------------- --------- --------- --------- ---------- ----------
Total current liabilities 13,208 19,505 51,772 84,485 (65,004) 19,481
Shareholder loans 164,800 - - 164,800 75,000 (1) 239,800
Notes payable and capital
lease obligations - 11,776 - 11,776 10,000 (1) 21,776
------------- --------- --------- --------- ---------- ----------
Total Liabilities 178,008 31,281 51,772 261,061 19,996 281,057
Stockholders' Equity
Preferred stock 1,000 - - 1,000 - 1,000
Common stock 15,771 1,000 500 17,271 (1,500) (6) 263,671
247,900 (7)
Deficit accumulated during
the development stage (91,197) 23,357 41,104 (26,736) (64,461) (6) (91,197)
------------- --------- --------- --------- ---------- ----------
Total Stockholders' Equity (74,426) 24,357 41,604 (8,465) 181,939 173,474
Total Liabilities &
Stockholders' Equity $ 103,582 $ 55,638 $ 93,376 $252,596 $ 201,935 $ 454,531
============= ========= ========= ========= ========== ==========
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
PRINTONTHENET.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE
PERIOD FROM JANUARY 27, 1999 (INCEPTION) THROUGH JUNE 30, 1999
HISTORICAL BAILEY'S IVAN'S COMBINED ADJUSTMENTS PRO FORMA
---------- -------- ------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ - $217,463 $ 156,379 $ 373,842 $ - $ 373,842
Cost of sales - 120,416 84,105 204,521 - 204,521
----------- --------- ---------- ---------- ----------- -----------
Gross profit - 97,047 72,274 169,321 - 169,321
Selling, General and Administrative
Expenses 78,972 74,617 49,226 202,815 12,709 (8) 215,524
----------- --------- ---------- ---------- ----------- -----------
Income (loss) from operations (78,972) 22,430 23,048 (33,494) (12,709) (46,203)
Interest expense 564 1,042 1,935 3,541 243 (9) 3,784
----------- --------- ---------- ---------- ----------- -----------
Income (loss) before taxes (79,536) 21,388 21,113 (37,035) (12,952) (49,987)
Provision for income taxes - - 3,167 3,167 (3,167)(10) -
----------- --------- ---------- ---------- ----------- -----------
Net income (loss) $ (79,536) $ 21,388 $ 17,946 $ (40,202) $ (9,785) $ (49,987)
=========== ========= ========== ========== =========== ===========
Basic and Dili\uted Earnings per
Common Share (0.00) (0.00)
=========== ========= ========== ========== =========== ===========
Average common shares outstanding 19,134,102 23,956 19,158,058
=========== ========= ========== ========== =========== ===========
</TABLE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(1) The Company did not purchase the cash balances of Bailey's and Ivans. The
cash portion of the acquisitions was funded with borrowings of $75,000
from certain majority shareholders. The Company will pay the sellers of
Bailey's an additional $15,000 over 3 years.
(2) Represents the elimination of assets and liabilities not purchased by the
Company.
(3) Represents entries made to adjust the carrying value of inventory and
property and equipment to fair value on the acquisition date.
(4) Represents an entry to record the specified value of the purchase price
assigned to non-compete agreements which will be amortized over a 3 year
period, and an entry to record the preliminary estimate of excess of
purchase price over assets acquired, which will be amortized over a 10
year period.
(5) Represents an entry to eliminate $29,206 of Ivan's long term debt not
being assumed by the Company, offset by an entry to record $13,049 of
Bailey's long term debt that is being assumed by the Company.
(6) Represents entries made to eliminate the equity existing in Bailey's and
Ivan's prior to the acquisitions.
(7) Represents entries made to record the fair value (as of the date of
issuance) of 138,320 and 66,054 shares of the Company's Common Stock
issued to the sellers (or their representatives) of Bailey's and Ivan's,
respectively.
(8) Represents an entry to record $18,568 of amortization expense related to
the non-compete agreements and the excess of purchase price over the
assets acquired (see Note 4), offset by an entry to decrease depreciation
expense by $5,859 relating to the adjustment in the carrying value of
property and equipment (see Note 3).
(9) Represents entries made to adjust interest expense pertaining to the
changes in long-term debt as identified in Notes 1 and 5.
(10) For tax purposes the Company has sufficient accumulated losses to offset
the income generated by Bailey's and Ivan's, and therefore no deferred
taxes are being presented relating to the net operating loss
carryforward.
36
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
PRINTONTHENET.COM, INC.
Dated: November 12, 1999 By: /S/ BENJAMIN ROGATINSKY
---------------------------
Benjamin Rogatinsky
Chief Executive Officer and Director
37
