Pre-Cell Solutions, Inc. and Subsidiary
Pro Forma Consolidated Financial Information
Explanatory Headnote (Unaudited)
Introduction
On April 4, 2000 (the "Closing Date"), Pre-Cell Solutions, Inc. ("Pre-Cell"),
USI Merger Corp., a Georgia corporation and wholly-owned subsidiary of Pre-Cell
("USI Merger Subsidiary"), US Intellicom, Inc., a Georgia corporation ("USI")
and Ronald I. Kindland and each of the other stockholders of USI ("USI
Stockholders") executed a Merger And Reorganization Agreement ("USI Merger
Agreement"), pursuant to which USI was merged ("USI Merger") with and into USI
Merger Corp.
In connection with the USI Merger, Pre-Cell issued an aggregate of 11,440,000
shares of Pre-Cell common stock to the stockholders of USI determined on the
basis of a negotiated value of the business and proprietary technology developed
by USI and the market value of Pre-Cell's common stock. Pre-Cell will also
establish an option pool in the aggregate of 2,133,333 shares of common stock
whereby certain stockholders of USI that had guaranteed USI's line of credit
shall, until December 31, 2000, have the right to acquire Pre-Cell common stock
by repaying approximately $1,600,000 borrowed on USI's line of credit as of the
Closing Date. Additionally, all outstanding options to purchase USI shares will
be fully vested and will automatically be converted into options to purchase
Pre-Cell shares on a basis of 8.8 Pre-cell shares for each USI share entitled to
be purchased under the USI options, at the per share price equal to the quotient
of (i) the price contained in the USI options, divided by (ii) 8.8.
On the Closing Date, Pre-Cell Solutions, Inc. ("Pre-Cell"), Pre-Paid Acquisition
Corp., a Florida corporation and wholly-owned subsidiary of Pre-Cell ("Pre-Paid
Merger Subsidiary"), Pre-Paid Solutions, Inc., a Florida corporation
("Pre-Paid") and Thomas E. Biddix and each of the other stockholders of Pre-Paid
("Pre-Paid Stockholders") executed a Merger And Reorganization Agreement
("Pre-Paid Merger Agreement"), pursuant to which Pre-Paid was merged ("Pre-Paid
Merger") with and into Pre-Paid Acquisition Corp.
In connection with the Pre-Paid Merger, Pre-Cell issued an aggregate of
20,219,136 shares of Pre-cell common stock to the stockholders of Pre-Paid
determined on the basis of a negotiated value of the business and certain
contracts of Pre-Paid and the market value of Pre-Cell's common stock.
Additionally, all outstanding options and warrants to purchase Pre-Paid shares
will be fully vested and will automatically be converted into options and
warrants to purchase Pre-Cell shares on a basis of 2.81915 Pre-Cell shares for
each Pre-Paid share entitled to be purchased under the Pre-Paid options, at the
per share price equal to the quotient of (i) the price contained in the Pre-Paid
options and warrants, divided by (ii) 2.81915.
On the Closing Date, certain of Pre-Cell's shareholders retired under a Stock
Redemption Agreement an aggregate of 27,590,623 shares of Common Stock. Thomas
E. Biddix, Chairman and Chief Executive Officer of the Company who redeemed an
aggregate of 21,550,719 shares of Common Stock redeemed the majority of these
shares.
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The pro forma condensed consolidated balance sheets as of January 31, 2000
assume the transaction was consummated as of January 31, 2000, and the pro forma
condensed consolidated statements of operations for the year ended April 30,
1999 and the nine months ended January 31, 2000 and 1999 assume the transaction
was consummated as of May 1, 1998.
The pro forma condensed consolidated financial statements have been prepared on
the basis of purchase accounting pursuant to APB 16 and may not be indicative of
the actual results of the transactions. In particular, the pro forma condensed
consolidated financial statements are based on management's current estimate of
the allocation of the purchase price, the actual allocation of which may differ.
In the opinion of management, all adjustments have been made that are necessary
to present fairly the pro form data.
<TABLE>
<CAPTION>
Pre-Cell Solutions, and Subsidiaries
Unaudited Pro forma Condensed Consolidated Balance Sheets
January 31, 2000
Pre-Cell Pre-Paid US Pro Forma Consolidated
Solutions, Inc. Solutions, Inc. Intellicom, Inc. Adjustments Pro Forma
--------------- --------------- ---------------- ----------- ---------
Assets:
<S> <C> <C> <C> <C>
Cash $ 3,000 $ 3,517,630 $ 63,761 $ - $ 3,584,391
Accounts receivable 15,560 104,331 269,348 - 389,239
Inventory - 215,295 2,778 - 218,073
Prepaid expenses 7,000 2,269 18,167 - 27,436
Long-lives assets 7,173 603,834 57,547 - 668,554
Other assets - 127,854 1,250 - 129,104
Intangible assets 1,420,802 - - 14,632,967 16,053,769
----------- ----------- ------------- ------------ -------------
$ 1,453,535 $ 4,571,213 $ 412,851 $ 14,632,967 $ 21,070,566
=========== =========== ============= ============ =============
Liabilities and
Stockholders' Deficiency:
Current portion of
long-term debt $ - $ 30,665 $ - $ - $ 30,665
Notes payable - 823,724 1,550,380 - 2,374,104
Accounts payable 38,965 472,455 508,090 - 1,019,510
Accrued expenses 541,847 294,879 103,135 - 939,861
Long-term liabilities - 4,135 - - 4,135
----------- ----------- ------------- ------------ -------------
Total liabilities 580,812 1,625,858 2,161,605 - 4,368,275
----------- ----------- ------------- ------------ -------------
Stockholders' deficiency:
Common stock 338,527 71,721 154,609 (171,488) 393,369
Additional paid-in capital 2,318,303 5,871,693 - 9,903,033 18,093,029
Stock subscription
Receivable (3,000) - (4,500) 4,500 (3,000)
Accumulated other
comprehensive income - 61,088 - (61,088) -
Accumulated deficit (1,781,107) (3,059,147) (1,898,863) 4,958,010 (1,781,107)
----------- ----------- ------------- ------------ -------------
Total stockholders'
deficiency 872,723 2,945,355 (1,748,754) 14,632,967 16,702,291
----------- ----------- ------------- ------------ -------------
$ 1,453,535 $ 4,571,213 $ 412,851 $ 14,632,967 $ 21,070,566
=========== =========== ============= ============ ============
See accompanying headnote and notes to pro forma consolidated financial statements (unaudited)
</TABLE>
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<TABLE>
<CAPTION>
Pre-Cell Solutions, and Subsidiaries
Unaudited Pro forma Condensed Consolidated Statement of Operations
Year Ended April 30, 1999
Pre-Cell Pre-Paid US Pro Forma Consolidated
Solutions, Inc. Solutions, Inc. Intellicom, Inc. Adjustments Pro Forma
--------------- --------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues $ 22,936 $ 1,431,426 $ 955,793 $ - $ 2,410,155
Cost of revenues 17,340 1,254,452 158,165 - 1,429,957
Operating expenses 151,962 1,363,951 1,217,452 2,733,365
Amortization of goodwill - - - 731,648 731,648
------------ ------------ ---------- ---------- ------------
(146,366) (1,186,977) (419,824) (731,648) (2,4843,815)
Other income (expenses) - (95,946) (39,283) - (123,513)
------------ ------------ ---------- ---------- ------------
Net loss $ (146,366) $ (1,282,923) $ (459,107) $ (731,648) $ (2,361,302)
============ ============ ========== ========== ============
Loss per share $ (.05)
============
Weighted average number of common shares outstanding:
Basic 46,754,199
============
Diluted 48,641,467
============
See accompanying headnote and notes to pro forma consolidated financial statements (unaudited)
</TABLE>
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<TABLE>
<CAPTION>
Pre-Cell Solutions, and Subsidiaries
Unaudited Pro forma Condensed Consolidated Statement of Operations
Nine Months Ended January 31, 2000
Pre-Cell Pre-Paid US Pro Forma Consolidated
Solutions, Inc. Solutions, Inc. Intellicom, Inc. Adjustments Pro Forma
--------------- --------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues $ 133,251 $2,490,549 $ 1,234,127 $ - $ 3,857,927
Cost of revenues 103,284 2,226,272 214,797 - 2,544,353
Operating expenses 294,118 1,207,359 1,654,913 3,156,390
Amortization of goodwill - - - 548,736 548,736
------------ ---------- ----------- ---------- ------------
(264,151) (943,082) (635,583) (548,736) (2,391,552)
Other income (expenses) - (46,218) (175,516) - (221,734)
------------ ---------- ----------- ---------- ------------
Net loss $ (264,151) $ (989,300) $ (811,099) $ (548,736) $ (2,613,286)
============ ========== =========== ========== ============
Loss per share $ (.04)
============
Weighted average number of common shares outstanding:
Basic 65,511,866
============
Diluted 70,832,482
============
See accompanying headnote and notes to pro forma consolidated financial statements (unaudited)
</TABLE>
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<TABLE>
<CAPTION>
Pre-Cell Solutions, and Subsidiaries
Unaudited Pro forma Condensed Consolidated Statement of Operations
Nine Months Ended January 31, 1999
Pre-Cell Pre-Paid US Pro Forma Consolidated
Solutions, Inc. Solutions, Inc. Intellicom, Inc. Adjustments Pro Forma
--------------- --------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues $ 463 $1,477,830 $ 580,197 $ - $ 2,058,490
------------- ---------- ---------- ---------- ------------
Cost of revenues 1,882 1,198,982 55,509 - 1,256,373
Operating expenses 83,448 1,088,025 851,717 2,023,190
Amortization of goodwill - - - 548,736 548,736
------------- ---------- ---------- ---------- ------------
(84,867) (809,177) (327,029) (548,736) (1,769,809)
Other income (expenses) - (84,230) (27,492) - (111,722)
------------- ---------- ---------- ---------- ------------
Net loss $ (84,867) $ (893,407) $ (354,521) $ (548,736) $ (1,881,531)
============= ========== ========== ========== ============
Loss per share $ (.05)
============
Weighted average number of common shares outstanding:
Basic 40,501,644
============
Diluted 41,990,650
============
See accompanying headnote and notes to pro forma consolidated financial statements (unaudited)
</TABLE>
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Pre-Cell Solutions, and Subsidiary
Notes to Unaudited Pro forma Condensed Consolidated Financial Statements
1. Pro Forma Adjustments
The pro forma condensed consolidated balance sheet as of January 31, 2000
assumes the transaction was consummated as of January 31, 2000, and the pro
forma condensed consolidated statements of operations for the year ended April
30, 1999 and the nine months ended January 31, 2000 and 1999 assume the
transaction was consummated as of May 1, 1998.
2. Acquisitions
On April 4, 2000, Pre-Cell Solutions, Inc. ("Pre-Cell"), acquired by means of a
merger US Intellicom, Inc., a Georgia corporation ("USI") and Pre-Paid
Solutions, Inc., a Florida corporation.
In connection with the USI Merger, Pre-Cell issued an aggregate of 11,440,000
shares of Pre-Cell common stock to the stockholders of USI determined on the
basis of a negotiated value of the business and proprietary technology developed
by USI and the market value of Pre-Cell's common stock.
In connection with the Pre-Paid Merger, Pre-Cell will issue an aggregate of
20,219,136 shares of Pre-Cell common stock to the stockholders of Pre-Paid
determined on the basis of a negotiated value of the business and certain
contracts of Pre-Paid and the market value of Pre-Cell's common stock.
For financial reporting purposes these business combinations have been reflected
in the accompanying pro forma consolidated financial statements as a purchase.
The purchase price for these acquisitions is computed by valuing the outstanding
shares of common stock of Pre-Cell (31,659,136 shares) at $.50 or $15,829,568.
The purchase price for USI and Pre-Paid is anticipated to be allocated as
follows:
<TABLE>
<CAPTION>
US Pre-Paid Total
Intellicom, Inc. Solutions, Inc. Combined
--------------- --------------- --------
<S> <C> <C> <C>
Carrying value of assets acquired $ 412,851 $ 4,571,213 $ 4,984,064
Excess of cost over net assets acquired 7,468,754 7,164,213 14,632,967
----------- ------------ ------------
7,881,605 11,735,426 19,617,031
Fair value of liabilities assumed 2,161,605 1,625,858 3,787,463
----------- ------------ ------------
Total purchase price $ 5,720,000 $ 10,109,568 $ 15,829,568
=========== ============ ============
</TABLE>
3. Amortization of goodwill
To reflect the anticipated amortization of goodwill that would have been
recorded by the consolidated entity using a 20 year amortization period.
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