SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) APRIL 23, 1999
COMPUTER MARKETPLACE, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-14731 33-0558415
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(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.)
FORMATION)
1171 RAILROAD STREET, CORONA, CA 91720
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (909) 735-2102
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(FORMER NAME OR FORMER ADDRESS, IF CHANGES SINCE LAST REPORT)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. See pages F-1 through
F-16 below.
(b) PRO FORMA FINANCIAL INFORMATION. See pages P-1 through P-9 below.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly authorized and caused the undersigned to sign this
Report on the Registrant's behalf.
COMPUTER MARKETPLACE, INC.
By: /s/ ROBERT M. WALLACE
--------------------------------------
Name: Robert M. Wallace
Title: Chairman of the Board
Dated: July 9, 1999
3
<PAGE>
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
Page
----
<S> <C> <C>
COMPUTER MARKETPLACE(R), INC.
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS [UNAUDITED]:
Introductory Note................................................................... P-1
Pro Forma Combined Condensed Balance Sheet as of March 31, 1999 [Unaudited]........ P-2
Pro Forma Combined Condensed Statement of Operations for the nine
months ended March 31, 1999 [Unaudited]........................................... P-5
Pro Forma Combined Condensed Statement of Operations for the year ended
June 30, 1998 [Unaudited]......................................................... P-7
Notes to Pro Forma Combined Condensed Financial Statements [Unaudited].............. P-9
E-TAXI, INC.:
Report of Independent Auditors...................................................... F-1
Balance Sheets as of March 31, 1999 [Unaudited] and
December 31, 1998 [Audited]....................................................... F-2
Statements of Operations for the three months ended March 31, 1999
[Unaudited] and for the period from April 14, 1998 [inception] to
December 31, 1998 [Audited]....................................................... F-3
Statements of Stockholders' Deficit for the three months ended March 31,
1999 [Unaudited] and for the period from April 14, 1998 [inception] to
December 31, 1998 [Audited]....................................................... F-4
Statements of Cash Flows for the three months ended March 31,
1999 [Unaudited] and for the period from April 14, 1998 [inception] to
December 31, 1998 [Audited]....................................................... F-5
Notes to Financial Statements....................................................... F-6
TECHSTORE, L.L.C.:
Company's Explanation for Lack of Audit Report for TechStore, L.L.C................. F-9
Balance Sheets as of March 31, 1999 and December 31, 1998 [Unaudited]............... F-10
Statements of Operations for the three months ended March 31, 1999 and 1998
and the years ended December 31, 1998 and 1997 [Unaudited]........................ F-11
Statements of Members' Deficit for the period ended March 31, 1998
through March 31, 1999 [Unaudited]................................................ F-12
Statements of Cash Flows for the three months ended March 31, 1999 and 1998
and the years ended December 31, 1998 and 1997 [Unaudited]........................ F-13
Notes to Financial Statements....................................................... F-14
SIGNATURES............................................................................. F-17
</TABLE>
. . . . . . . .
<PAGE>
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
[UNAUDITED]
================================================================================
The following pro forma condensed combined balance sheet as of March
31, 1999, and condensed combined statement of operations for the year ended June
30, 1998 and the nine months ended March 31, 1999 give effect to Computer
Marketplace, Inc. [the "Company"] acquiring all of the issued and outstanding
capital stock of E-Taxi, Inc. ["E-Taxi"] on April 23, 1999. As consideration for
9,074,000 shares of the E-Taxi's common stock and 400,000 shares of E-Taxi's
Series A Preferred Stock, the Company issued an aggregate of 9,074,000 shares of
the Company's common stock and 400,000 shares of the Company's Series A
Preferred Stock. After the closing, the stockholders of E-Taxi owned 81.8% of
the shares of the combined entity. For accounting purposes, E-Taxi is deemed to
be the acquiror under the purchase method. The total purchase price is
approximately $9,500,000 which results in goodwill of approximately $7,500,000.
Goodwill will be amortized over 5 years under the straight-line method. The
effective date of the E-Taxi acquisition is April 23, 1999. The pro forma
financial statements also gives effect to combining TechStore, L.L.C. ["Tech
Store"] which was acquired concurrently by E-Taxi on March 31, 1999 by the
issuance of 2,000,000 shares of common stock and 400,000 shares of preferred
stock of E-Taxi. The Company has assigned a value of $568,000 based upon an
unaffiliated appraisal of the intangible assets acquired. The intangibles will
be depreciated over 5 years. Immediately prior to the Company's acquiring
E-Taxi, E-Taxi completed a private placement of approximately $1,400,000 to fund
its working capital needs.
In connection with these acquisitions, the Company has revised its
business strategy, and has decided to adopt a plan to sell its subsidiary,
Medical Marketplace. Therefore, these financials give the pro forma effect of
this subsidiary as a discontinued operation [See Combining Schedule A].
The pro forma information is based on the historical financial
statements of the Company, E-Taxi and TechStore, giving effect to the
transactions under the purchase method of accounting and the assumptions and
adjustments in the accompanying notes to the pro forma financial statements.
The pro forma balance sheet gives effect to the transactions as if they
occurred on the balance sheet date. The pro forma statements of operations for
the year ended June 30, 1998 and the nine months ended March 31, 1999 give
effect to these transactions as if they had occurred at the beginning of the
fiscal year presented. The historical statements of operations of the Company
will reflect the effects of these transactions from date of acquisition onward.
The pro forma combined statements have been prepared by the Company's
managements based upon the historical financial statements of the Company,
E-Taxi and TechStore. The pro forma statements may not be indicative of the
results that actually would have occurred if the combination had been in effect
on the date indicated or which may be obtained in the future.
The most recent fiscal year end of TechStore and E-Taxi differs from
the Company's most recent fiscal year end by more than 93 days. The acquired
entities income statements have been updated to adjust for this difference. The
adjustments are listed in notes 4, 5, 7 and 8 to the pro forma financial
information.
P-1
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<TABLE>
<CAPTION>
COMPUTER MARKETPLACE, INC.
=========================================================================================================================
PRO FORMA COMBINED CONDENSED BALANCE SHEETS [UNAUDITED]
=========================================================================================================================
COMPUTER
MARKETPLACE, INC. PRO FORMA
MARCH 31, 1999 E-TAXI TECHSTORE COMBINED
FROM COMBINING MARCH 31, MARCH 31, PRO FORMA MARCH 31,
SCHEDULE A 1 9 9 9 1 9 9 9 ADJUSTMENTS 1 9 9 9
-------------- ------------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash and Cash Equivalents $ 6,205 $ -- $ 82,535 (3) $ 1,400,000 $ 1,488,740
Accounts Receivable 9,865 -- 27,705 -- 37,570
Other Current Assets 500 -- 11,021 -- 11,521
-------------- ------------- ------------- ---------------- ---------------
TOTAL CURRENT ASSETS 16,570 -- 121,261 1,400,000 1,537,831
-------------- ------------- ------------- ---------------- ---------------
PROPERTY AND
EQUIPMENT - NET 12,105 -- 44,290 -- 56,395
-------------- ------------- ------------- ---------------- ---------------
OTHER ASSETS:
Goodwill -- -- -- (6) 10,300,000 10,300,000
Deposits -- -- 105,703 -- 105,703
Acquired Intangibles -- -- -- (9) 568,000 568,000
-------------- ------------- ------------- ---------------- ---------------
TOTAL OTHER ASSETS -- -- 105,703 10,868,000 10,973,703
-------------- ------------- ------------- ---------------- ---------------
TOTAL ASSETS $ 28,675 $ -- $ 271,254 $ 12,268,000 $ 12,567,929
============== ============= ============= ================ ===============
</TABLE>
See Notes to Pro Forma Financial Statements.
P-2
<PAGE>
<TABLE>
<CAPTION>
COMPUTER MARKETPLACE, INC.
======================================================================================================================
PRO FORMA COMBINED CONDENSED BALANCE SHEETS [UNAUDITED]
======================================================================================================================
COMPUTER
MARKETPLACE, INC. PRO FORMA
MARCH 31, 1999 E-TAXI TECHSTORE COMBINED
FROM COMBINING MARCH 31, MARCH 31, PRO FORMA MARCH 31,
SCHEDULE A 1 9 9 9 1 9 9 9 ADJUSTMENTS 1 9 9 9
-------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' (DEFICIT):
CURRENT LIABILITIES:
Notes/Loans Payable $ 141,169 $ -- $ 45,000 $ -- $ 186,169
Accounts Payable 321,864 -- 331,571 -- 653,435
Accrued Expenses -- 7,321 45,034 -- 52,355
Accrued Payroll and
Payroll Related Liabilities 261,457 -- -- -- 261,457
Customer Deposits 102,388 -- -- -- 102,388
Other Current Liabilities 2,154 -- 3,090 -- 5,244
Due to Stockholder -- 16,049 -- -- 16,049
-------------- ------------- ------------- ------------- ---------------
TOTAL CURRENT LIABILITIES 829,032 23,370 424,695 -- 1,277,097
-------------- ------------- ------------- ------------- ---------------
LONG-TERM DEBT -- -- 7,210 -- 7,210
-------------- ------------- ------------- ------------- ---------------
COMMITMENTS AND
CONTINGENCIES -- -- -- -- --
-------------- ------------- ------------- ------------- ---------------
STOCKHOLDERS' (DEFICIT):
Preferred Stock -- -- -- (6) 40 40
Additional Paid-in
Capital; Preferred -- -- -- (6) (40) (40)
Common Stock 135 6,460 -- (6) 907 1,042
(6) (6,460)
Capital in Excess of
Par Value 8,785,100 58,200 -- (6) 10,300,000 13,007,805
(6) (907)
(3) 1,400,000
(9) 407,349
(11) 1,500,000
(6) (9,448,397)
(6) 6,460
Common Stock
Subscription Receivable -- (68,860) -- -- (68,860)
Accumulated Deficit (9,448,397) (19,170) (167,851) (9) 167,851 (19,170)
(6) 9,448,397
Deferred Compensation (137,195) -- -- (11) (1,500,000) (1,637,195)
Owner's Capital -- -- 7,200 (9) (7,200) --
-------------- ------------- ------------- ------------- ---------------
TOTAL STOCKHOLDERS'
(DEFICIT) (800,357) (23,370) (160,651) 12,268,000 11,283,622
-------------- ------------- ------------- ------------- ---------------
TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIT) $ 28,675 $ -- $ 271,254 $ 12,268,000 $ 12,567,929
============== ============= ============= ============= ===============
</TABLE>
See Notes to Pro Forma Financial Statements.
P-3
<PAGE>
<TABLE>
<CAPTION>
COMPUTER MARKETPLACE, INC.
===============================================================================================================
PRO FORMA COMBINED CONDENSED BALANCE SHEETS COMBINING SCHEDULE A [UNAUDITED]
===============================================================================================================
PRO FORMA
CMP, INC. ADJUSTMENT (1) CMP, INC.
CONSOLIDATED MMP, INC. MARCH 31, 1999
MARCH 31, 1999 DISPOSAL AFTER DISPOSAL
---------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash and Cash Equivalents $ 76,850 $ 70,645 $ 6,205
Accounts Receivable - Net 284,779 274,914 9,865
Other Current Assets 500 -- 500
---------------- --------------- ---------------
TOTAL CURRENT ASSETS 362,129 345,559 16,570
---------------- --------------- ---------------
PROPERTY AND EQUIPMENT - NET 737,524 725,419 12,105
---------------- --------------- ---------------
OTHER ASSETS:
Residual Value of Equipment 765,000 765,000 --
Others 77,442 77,442 --
---------------- --------------- ---------------
TOTAL OTHER ASSETS 842,442 842,442 --
---------------- --------------- ---------------
TOTAL ASSETS $ 1,942,095 $ 1,913,420 $ 28,675
================ =============== ===============
LIABILITIES AND STOCKHOLDERS' (DEFICIT):
CURRENT LIABILITIES:
Notes Payable $ 793,514 $ 652,345 $ 141,169
Accounts Payable 519,871 198,007 321,864
Accrued Payroll and Payroll Related Liabilities 324,924 63,467 261,457
Customer Deposits 205,259 102,871 102,388
Other Current Liabilities 110,616 108,462 2,154
---------------- --------------- ---------------
TOTAL CURRENT LIABILITIES 1,954,184 1,125,152 829,032
LONG-TERM DEBT 349,558 349,558 --
---------------- --------------- ---------------
TOTAL LIABILITIES 2,303,742 1,474,710 829,032
---------------- --------------- ---------------
COMMITMENTS AND CONTINGENCIES -- -- --
---------------- --------------- ---------------
STOCKHOLDERS' (DEFICIT):
Preferred Stock - $.0001 Par Value, 1,000,000
Shares Authorized, No Shares Issued and
Outstanding -- -- --
Common Stock - $.0001 Par Value, 50,000,000
Shares Authorized, 1,392,424 Shares Issued
and Outstanding 135 -- 135
Deferred Compensation (137,195) -- (137,195)
Capital in Excess of Par Value 8,785,100 -- 8,785,100
Accumulated Deficit (9,009,687) 438,710 (9,448,397)
---------------- --------------- ---------------
TOTAL STOCKHOLDERS' (DEFICIT) (361,647) 438,710 (800,357)
---------------- --------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 1,942,095 $ 1,913,420 $ 28,675
================ =============== ===============
</TABLE>
See Notes to Pro Forma Financial Statements.
P-4
<PAGE>
<TABLE>
<CAPTION>
COMPUTER MARKETPLACE, INC.
=========================================================================================================================
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS [UNAUDITED]
=========================================================================================================================
COMPUTER E-TAXI TECHSTORE
MARKETPLACE, INC. FOR THE FOR THE PRO FORMA
FOR THE NINE PERIOD FROM THREE COMBINED
MONTHS ENDED APRIL 14, 1998 MONTHS FOR THE NINE
MARCH 31, 1999 [INCEPTION] TO ENDED MONTHS ENDED
FROM COMBINING DECEMBER 31, MARCH 31, PRO FORMA MARCH 31,
SCHEDULE B 1 9 9 8 1 9 9 9 ADJUSTMENTS 1 9 9 9
-------------- ------------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Revenue from Operations $ 205,909 $ -- $ 2,197,496 (7) $ 5,040,528 $ 7,443,933
-------------- ------------- ------------- ---------------- ---------------
COSTS AND EXPENSES:
Cost of Revenues 153,698 -- 2,076,371 (7) 4,755,726 6,985,795
Selling, General and
Administrative 818,003 13,683 228,475 (4) 1,971 1,359,061
(7) 296,929
Amortization of Goodwill -- -- -- (6) 1,545,000 1,545,000
Amortization of Intangibles -- -- -- (10) 75,000 75,000
Advisory Fee Amortization -- -- -- (11) 562,500 562,500
-------------- ------------- ------------- ---------------- ---------------
Totals 971,701 13,683 2,304,846 7,237,126 10,527,356
-------------- ------------- ------------- ---------------- ---------------
OPERATING LOSS (765,792) (13,683) (107,350) (2,196,598) (3,083,423)
-------------- ------------- ------------- ---------------- ---------------
OTHER INCOME (EXPENSE):
Interest Expense (12,672) -- (2,172) (7) (7,773) (22,617)
Interest Income -
Stockholders -- 3,200 -- -- 3,200
Miscellaneous 27,194 -- -- (7) 1,606 28,800
-------------- ------------- ------------- ---------------- ---------------
TOTAL OTHER
INCOME (EXPENSE) 14,522 3,200 (2,172) (6,167) 9,383
-------------- ------------- ------------- ---------------- ---------------
NET INCOME (LOSS) $ (751,270) $ (10,483) $ (109,522) $ (2,202,765) $ (3,074,040)
============== ============= ============= ================ ===============
INCOME (LOSS) PER SHARE $ (0.56) $ (0.38)
============== ===============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 1,352,424 8,157,924
============== ===============
See Notes to Pro Forma Financial Statements.
</TABLE>
P-5
<PAGE>
<TABLE>
<CAPTION>
COMPUTER MARKETPLACE, INC.
================================================================================================================
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS COMBINING SCHEDULE B [UNAUDITED]
================================================================================================================
PRO FORMA
CMP, INC. ADJUSTMENT (1)
CONSOLIDATED MMP, INC. CMP, INC.
FOR THE NINE FOR THE NINE FOR THE NINE
MONTHS ENDED MONTHS ENDED MONTHS ENDED
MARCH 31, 1999 MARCH 31, 1999 MARCH 31, 1999
--------------- --------------- ---------------
<S> <C> <C> <C>
REVENUES:
Product Sales $ 1,877,917 $ 1,687,589 $ 190,328
Rental, Service and Other 315,510 299,929 15,581
--------------- --------------- ---------------
TOTAL REVENUES 2,193,427 1,987,518 205,909
--------------- --------------- ---------------
COSTS AND EXPENSES:
Cost of Revenues - Product Sales 1,381,378 1,229,237 152,141
Cost of Revenues- Rental, Service and Other 112,467 110,910 1,557
Selling, General and Administrative 1,556,749 738,746 818,003
--------------- --------------- ---------------
TOTAL COSTS AND EXPENSES 3,050,594 2,078,893 971,701
--------------- --------------- ---------------
OPERATING LOSS (857,167) (91,375) (765,792)
--------------- --------------- ---------------
OTHER INCOME (EXPENSE):
Interest Expense (94,436) (81,764) (12,672)
Interest Income 24 24 --
Miscellaneous 61,474 34,280 27,194
--------------- --------------- ---------------
TOTAL OTHER (EXPENSE) INCOME (32,938) (47,460) 14,522
--------------- --------------- ---------------
NET LOSS $ (890,105) $ (138,835) $ (751,270)
=============== =============== ===============
See Notes to Pro Forma Financial Statements.
</TABLE>
P-6
<PAGE>
<TABLE>
<CAPTION>
COMPUTER MARKETPLACE, INC.
=========================================================================================================================
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS [UNAUDITED]
=========================================================================================================================
COMPUTER E-TAXI
MARKETPLACE, INC. FOR THE TECHSTORE PRO FORMA
FOR THE PERIOD FROM FOR THE COMBINED
YEAR ENDED APRIL 14, 1998 YEAR FOR THE
JUNE 30, 1998 [INCEPTION] TO ENDED YEAR ENDED
FROM COMBINING DECEMBER 31, DECEMBER 31, PRO FORMA JUNE 30,
SCHEDULE C 1 9 9 8 1 9 9 8 ADJUSTMENTS 1 9 9 8
-------------- ------------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Revenues from Operations $ 3,555,832 $ -- $ 6,348,883 (8) $ (5,040,528) $ 4,864,187
-------------- ------------- ------------- ---------------- ---------------
COSTS AND EXPENSES:
Cost of Revenues 3,000,797 -- 5,985,748 (8) (4,755,726) 4,230,819
Selling, General and
Administrative 1,964,427 13,683 401,722 (5) (5,866) 2,077,037
(8) (296,929)
Inventory writedown 104,688 -- -- -- 104,688
Amortization of Goodwill -- -- -- (6) 2,060,000 2,060,000
Amortization of Intangibles -- -- -- (10) 100,000 100,000
Advisory Fee Amortization -- -- -- (11) 750,000 750,000
-------------- ------------- ------------- ---------------- ---------------
TOTAL COSTS AND EXPENSES 5,069,912 13,683 6,387,470 (2,148,521) 9,322,544
-------------- ------------- ------------- ---------------- ---------------
OPERATING LOSS (1,514,080) (13,683) (38,587) (2,892,007) (4,458,357)
-------------- ------------- ------------- ---------------- ---------------
OTHER INCOME (EXPENSE):
Interest Expense (34,438) -- (7,715) (8) 7,773 (34,380)
Interest Income 5,964 3,200 -- -- 9,164
Other (58,442) -- 1,606 (8) (1,606) (58,442)
-------------- ------------- ------------- ---------------- ---------------
TOTAL OTHER INCOME
(EXPENSE) (86,916) 3,200 (6,109) 6,167 (83,658)
-------------- ------------- ------------- ---------------- ---------------
NET LOSS $ (1,600,996) $ (10,483) $ (44,696) $ (2,885,840) $ (4,542,015)
============== ============= ============= ================ ===============
LOSS PER SHARE $ (1.18) $ (.44)
============== ===============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 1,352,424 10,426,424
============== ===============
See Notes to Pro Forma Financial Statements.
</TABLE>
P-7
<PAGE>
<TABLE>
<CAPTION>
COMPUTER MARKETPLACE, INC.
=================================================================================================================
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS COMBINING SCHEDULE C [UNAUDITED]
=================================================================================================================
PRO FORMA
CMP, INC. ADJUSTMENT (1)
CONSOLIDATED MMP, INC. CMP, INC.
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1998 JUNE 30, 1998 JUNE 30, 1998
--------------- --------------- ---------------
<S> <C> <C> <C>
REVENUES:
Product Sales $ 5,725,882 $ 2,220,050 $ 3,505,832
Rental, Service and Other 2,244,077 2,194,077 50,000
--------------- --------------- ---------------
TOTAL REVENUES 7,969,959 4,414,127 3,555,832
--------------- --------------- ---------------
COSTS AND EXPENSES:
Cost of Revenues - Product Sales 5,394,503 2,393,706 3,000,797
Cost of Revenues- Rental, Service and Other 1,488,753 1,488,753 --
SG&A 3,238,976 1,274,549 1,964,427
Writedown 104,688 -- 104,688
--------------- --------------- ---------------
TOTAL COSTS AND EXPENSES 10,226,920 5,157,008 5,069,912
--------------- --------------- ---------------
OPERATING LOSS (2,256,961) (742,881) (1,514,080)
--------------- --------------- ---------------
OTHER INCOME (EXPENSE):
Interest Expense (132,638) (98,200) (34,438)
Interest Income 24,246 18,282 5,964
Loss (Gain) sale of assets (81,028) -- (81,028)
Miscellaneous 22,586 -- 22,586
--------------- --------------- ---------------
TOTAL OTHER (EXPENSE) (166,834) (79,918) (86,916)
--------------- --------------- ---------------
NET LOSS $ (2,423,795) $ (822,799) $ (1,600,996)
=============== =============== ===============
See Notes to Pro Forma Financial Statements.
</TABLE>
P-8
<PAGE>
COMPUTER MARKETPLACE, INC.
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
================================================================================
(1) The Pro forma Combined Condensed Balance Sheet as of March 31, 1999 gives
effect to the Company's plan for the disposal of Medical Marketplace, Inc.,
which is reflected in Combining Schedule A, and the elimination of the
intercompany balance of approximately $777,000, which the Company does not
expect to be repaid. The $777,000 has already been adjusted on the MMP, Inc.
financials through the accumulated deficit of MMP, Inc.
(2) The Company's estimated loss on plan of disposal of Medical Marketplace,
Inc. at March 31, 1999 is calculated as follows:
March 31, 1999
---------------
Estimated selling price $ 60,000
Net book value (combining schedule A) $ 438,710
Estimated net loss $ 378,710
(3) To reflect a private offering on April 22, 1999 of E-Taxi which raised
approximately $1,400,000.
(4) To adjust E-Taxi statement of operations for the period from April 14, 1998
[inception] to December 31, 1998 to the nine month period ended March 31,1999 by
adding the three months ended March 31, 1999 and subtracting the period from
April 14, 1998 to June 30, 1998.
(5) To adjust E-Taxi statement of operations for the period from April 14, 1998
[inception] to December 31, 1998 to the year ended June 30,1998 by subtracting
the period from July 1, 1998 to December 31, 1998.
(6) To reflect E-taxi exchange of stock, with a fair value of stock issued of
approximately $9,500,000 and to record resulting goodwill on the balance sheet
calculated as follows:
Purchase Price: $ 9,500,000
Net Equity (Deficiency) of CMP, the Company,
as acquired company in reverse acquisition by E-Taxi (800,357)
-------------
GOODWILL $ 10,300,357
-------- =============
The annual amortization of $ 2,060,000 (nine months is $1,545,000) is reflected
on the income statements over a straight line method over 5 years. The Company
used a fair value of $1.00 per share for the 9,474,000 shares of common and
preferred stock.
(7) To adjust TechStore statement of operations for the three months ended March
31, 1999 by adding the six months ended December 31, 1998 to reflect a nine
month period ended March 31, 1999.
(8) To adjust TechStore statement of operations for the year ended December 31,
1998 to the year ended June 30,1998 by removing the six months of operations of
July 1, 1998 to December 31, 1998. There was basically only one month's activity
in 1997 which is deemed immaterial.
(9) On March 31, 1999, the owners of TechStore contributed their ownership
interest in TechStore to E-Taxi in exchange for 2,000,000 common shares and
400,000 preferred shares of E-Taxi. The Company has received an estimated
valuation from an unaffiliated entity for the intangible assets of TechStore
approximating $568,000.
P-9
<PAGE>
COMPUTER MARKETPLACE, INC.
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
================================================================================
(10) To record the annual amortization of intangibles of $568,000 on the
straight line method over 5 years of $100,000 (nine months of $75,000).
(11) On April 9, 1999, Gateway Advisors, Inc. received warrants for 1,500,000
shares of common stock in exchange for advisory services to be performed over 2
years. The warrants are exercisable at $2.50 per share until April 8, 2000. The
Company will record an annual advisory fee of $750,000 based upon the fair value
of the stock issued of $1,500,000, which will be recorded as a deferred cost.
The nine month fee will be $562,500.
P-10
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
E-Taxi, Inc.
Corona, California
We have audited the accompanying balance sheet of E-Taxi, Inc.
[a development stage company] as of December 31, 1998, and the related
statements of operations, stockholders' deficit, and cash flows for the period
from April 14, 1998 [inception] to December 31, 1998. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of E-Taxi, Inc.
[a development stage company] as of December 31, 1998, and the results of its
operations and its cash flows for the period then ended, in conformity with
generally accepted accounting principles.
MOORE STEPHENS, P. C.
Certified Public Accountants.
Cranford, New Jersey
July 7, 1999
F-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit A
E-TAXI, INC. [A DEVELOPMENT STAGE COMPANY]
====================================================================================================
BALANCE SHEETS
====================================================================================================
MARCH 31, DECEMBER 31,
1 9 9 9 1 9 9 8
[UNAUDITED]
--------------- ---------------
<S> <C> <C>
ASSETS $ -- $ --
=============== ===============
LIABILITIES AND STOCKHOLDERS' DEFICIT:
CURRENT LIABILITIES:
Due to Stockholder $ 16,049 $ 6,261
Accrued Liabilities 7,322 7,322
--------------- ---------------
TOTAL CURRENT LIABILITIES 23,371 13,583
--------------- ---------------
STOCKHOLDERS' DEFICIT:
Preferred Stock - $.001 Par Value, 10,000,000 Shares
Authorized, No Shares Issued and Outstanding -- --
Common Stock - $.001 Par Value, 20,000,000 Shares
Authorized, 6,460,000 Shares Issued and Outstanding 6,460 6,460
Additional Paid-in Capital 58,200 58,200
Common Stock Subscription Receivable (68,860) (67,760)
Deficit Accumulated During Development Stage (19,171) (10,483)
--------------- ---------------
TOTAL STOCKHOLDERS' DEFICIT (23,371) (13,583)
--------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ -- $ --
=============== ===============
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit B
E-TAXI, INC. [A DEVELOPMENT STAGE COMPANY]
============================================================================================
STATEMENTS OF OPERATIONS
============================================================================================
FOR THE
CUMULATIVE PERIOD FROM
FROM APRIL 14, THREE MONTHS APRIL 14, 1998
1998 TO ENDED [INCEPTION] TO
MARCH 31, MARCH 31, DECEMBER 31,
1 9 9 9 1 9 9 9 1 9 9 8
[UNAUDITED] [UNAUDITED]
---------------- --------------- ---------------
<S> <C> <C> <C>
OPERATING EXPENSES:
General and Administrative $ (23,471) $ (9,788) $ (13,683)
INTEREST INCOME - STOCKHOLDERS 4,300 1,100 3,200
---------------- --------------- ---------------
NET LOSS $ (19,171) $ (8,688) $ (10,483)
================ =============== ===============
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit C
E-TAXI, INC. [A DEVELOPMENT STAGE COMPANY]
=========================================================================================================================
STATEMENTS OF STOCKHOLDERS' DEFICIT
=========================================================================================================================
DEFICIT
COMMON ACCUMULATED
COMMON STOCK ADDITIONAL STOCK DURING TOTAL
------------------------ PAID-IN SUBSCRIPTION DEVELOPMENT STOCKHOLDERS'
SHARES AMOUNT CAPITAL RECEIVABLE STAGE DEFICIT
------------ --------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of Subscribed
Common Stock in
April 1998 6,360,000 $ 6,360 $ 58,200 $ (64,560) $ -- $ --
Issuance of Common
Stock in April 1998 for
Consulting Services 100,000 100 -- -- -- 100
Interest Income Accrued -- -- -- (3,200) -- (3,200)
Net Loss for the Period
Ended December 31,
1998 -- -- -- -- (10,483) (10,483)
------------ --------- ------------ ------------ ------------- ------------
BALANCE - DECEMBER 31,
1998 6,460,000 6,460 58,200 (67,760) (10,483) (13,583)
Interest Income Accrued -- -- -- (1,100) -- (1,100)
Net Loss for the Three
Months Ended
March 31, 1999 -- -- -- -- (8,688) (8,688)
------------ --------- ------------ ------------ ------------- ------------
BALANCE - MARCH 31,
1999 [UNAUDITED] 6,460,000 $ 6,460 $ 58,200 $ (68,860) $ (19,171) $ (23,371)
============ ========= ============ ============ ============= ============
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit D
E-TAXI, INC. [A DEVELOPMENT STAGE COMPANY]
=========================================================================================================================
STATEMENTS OF CASH FLOWS
=========================================================================================================================
FOR THE
CUMULATIVE PERIOD FROM
FROM APRIL 14, THREE MONTHS APRIL 14, 1998
1998 TO ENDED [INCEPTION] TO
MARCH 31, MARCH 31, DECEMBER 31,
1 9 9 9 1 9 9 9 1 9 9 8
[UNAUDITED] [UNAUDITED]
---------------- --------------- ---------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Loss $ (19,171) $ (8,688) $ (10,483)
Adjustments to Reconcile Net Loss to Net
Cash Provided by Operating Activities:
Consulting Services Paid for by Issuance
of Common Stock 100 -- 100
Due to Stockholder 16,049 9,788 6,261
Accrued Liabilities 7,322 -- 7,322
Interest Income Accrued - Stockholders (4,300) (1,100) (3,200)
---------------- --------------- ---------------
NET CASH - OPERATING ACTIVITIES -- -- --
---------------- --------------- ---------------
INCREASE IN CASH AND CASH EQUIVALENTS -- -- --
CASH AND CASH EQUIVALENTS - BEGINNING
OF PERIODS -- -- --
---------------- --------------- ---------------
CASH AND CASH EQUIVALENTS - END OF PERIODS $ -- $ -- $ --
================ =============== ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash Paid for Interest $ -- $ -- $ --
Cash Paid for Income Taxes $ -- $ -- $ --
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES:
Issuance of Common Stock for Services $ 100 $ -- $ 100
Issuance of Subscribed Common Stock $ 64,560 $ -- $ 64,560
See Notes to Financial Statements.
</TABLE>
F-5
<PAGE>
E-TAXI, INC. [A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS
================================================================================
[1] DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[A] DESCRIPTION OF BUSINESS - E-Taxi, Inc. [the "Company"] was incorporated in
the state of Delaware on April 14, 1998. The Company plans to market services
directed at the small office/home office businesses. Primary activities to date
have included identifying potential services for this market. Thus, the Company
is a development stage company.
[B] USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported results of operations during the reporting
period. Actual results could differ from those estimates.
[C] CASH AND CASH EQUIVALENTS - The Company considers all highly liquid
investments with an original maturity at time of purchase of 90 days or less to
be cash equivalents. The Company has no cash equivalents at year end.
[D] CONCENTRATION OF CREDIT RISK - The Company has no financial instruments
which are subject to credit risk.
[E] COMPREHENSIVE INCOME OR LOSS - The Company has no material components of
comprehensive income.
[2] INCOME TAXES
There is no provision for income taxes for the period from April 14, 1998
[inception] to December 31, 1998 as the Company incurred a net loss, the benefit
of which was not recognized due to the uncertainty of its realization. The
Company's deferred tax asset at December 31, 1998 principally relates to its net
operating loss and approximates $2,050. Due to uncertainty surrounding
recoverability, a full valuation allowance has been established against this
amount. Accordingly, no deferred tax asset is reflected in these financial
statements.
The Tax Reform Act of 1986 imposes substantial restrictions on the utilization
of net operating loss and tax credits in the event of a change in ownership as
defined in the Internal Revenue Code. Accordingly, the Company's ability to
utilize net operating loss and credit carryforwards may be limited as a result
of such an "ownership change." Management has not determined whether such an
ownership change has occurred.
[3] RELATED PARTY TRANSACTIONS
At December 31, 1998, the Company owes a stockholder $6,261 for general
operating expenses paid for on behalf of the Company [See Note 6].
[4] STOCKHOLDER'S EQUITY
[A] CONVERTIBLE PREFERRED STOCK - The Company is authorized to issue 10,000,000
shares of Preferred Stock, of which none were issued and outstanding as of
December 31, 1998.
Each share of Series A Preferred Stock has a liquidation preference of $10.00
per outstanding share of Series A Preferred Stock.
F-6
<PAGE>
E-TAXI, INC. [A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, SHEET #2
================================================================================
[4] STOCKHOLDER'S EQUITY
[A] CONVERTIBLE PREFERRED STOCK [CONTINUED] - The Series A Preferred Stock is
redeemable, for cash in exchange for the shares of Series A Preferred Stock to
be redeemed equal to the original Series A issue price, three years from the
date of issuance of the Series A Preferred Stock.
Except as otherwise required by law, holders of Series A Preferred Stock have no
voting rights.
Each share of preferred stock shall be convertible into a number of shares of
common stock as determined by dividing the original Series A issue prices by the
then applicable conversion price for such Series A Preferred Stock. The initial
Conversion Price per shares of Series A Preferred Stock is $2.50 subject to
adjustment for splits and combinations. Conversion will occur automatically upon
a firm commitment underwritten public offering pursuant to a registration
statement on Form S-1 or Form SB-2 under the Securities Act of 1933, as amended,
in which the offering price of a share of common stock is not less than $5.00
[See Note 6C].
As of December 31,1998, no preferred stock has been issued.
The holders of Series A Preferred Stock are entitled to receive, upon conversion
of any Series A Preferred Stock, a six percent [6%] cumulative dividend upon the
original Series A issue price measured from the date of issuance of the Series A
Preferred Stock through the conversion date. Such dividend shall be payable in
common stock, valued at fair market value as of the conversion date.
No dividends have been declared or paid on preferred stock or common stock since
inception of the Company.
[B] COMMON STOCK - The Company is authorized to issue 20,000,000 shares of
common stock, of which 6,460,000 shares were issued and outstanding as of
December 31, 1998. In April 1998, the Company issued 100,000 shares of common
stock in exchange for consulting services valued at $100. Of the total shares
outstanding, 6,360,000 shares were issued for other than cash proceeds [See Note
5]. The value of such shares was determined based upon the value of the shares
issued, as determined by cash proceeds to the company of sales of similar
instruments, or the value of the goods or services received, whichever was more
readily determinable. Holders of common stock have the right to one vote for
each share of common stock held.
[5] COMMON STOCK SUBSCRIPTION RECEIVABLE
In April 1998, the Company issued 6,360,000 shares of common stock to the
founder of the Company on a subscription basis. At December 31, 1998, a
subscription receivable of $64,560 plus interest of $3,200 has been recorded as
a deduction from stockholders' equity. The subscription receivable accrues
interest at 7% per annum and is due in full in September 1999 and is secured by
shares of common stock of Gateway Advisors, Inc.
[6] SUBSEQUENT EVENTS
[A] As of April 22, 1999, the Company closed (i) a private offering of its
90,000 shares of Series A convertible preferred stock at $.001 par value and
810,000 common stock at $.001 par value raising an aggregate of approximately
$1,400,000 therefrom and (ii) on the acquisition of all of the outstanding
limited liability company interests of TechStore, L.L.C., a California limited
liability company. As of March 31, 1999, Gateway Advisors, Inc., Bejan
Aminifard, Mosen Aminifard and Derek Wall entered into a Contribution Agreement,
pursuant to which each of the owners of TechStore contributed their ownership
interest in TechStore to E-Taxi in exchange for shares of common stock and
preferred stock of Computer Marketplace, Inc., a corporation publicly traded on
the Over the Counter ["OTC"] bulletin board.
F-7
<PAGE>
E-TAXI, INC. [A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, SHEET #3
================================================================================
[6] SUBSEQUENT EVENTS [CONTINUED]
[B] As of April 15, 1999, E-Taxi entered into letters of intent with all of the
outstanding shareholders of SPSS, Inc., a California corporation ["SSPS"],
pursuant to which E-Taxi has agreed to purchase, and the shareholders of SSPS
have agreed to sell, 14,706 shares of the capital stock of SPSS, Inc. or
approximately 89.9% of the shares of SSPS capital stock outstanding. The letters
of intent are non-binding and subject to the satisfaction of certain conditions,
including the execution and delivery of a definitive purchase agreement.
[C] On April 23, 1999, all of the issued and outstanding capital stock of the
Company was acquired by Computer Marketplace, Inc. in a business combination
intended to be accounted for as a "reverse acquisition." As consideration for
9,074,000 shares of the Company's common stock and 400,000 shares of the
Company's Series A preferred stock, Computer Marketplace issued an aggregate of
9,074,000 shares of common stock, par value $.0001 per share [the "Common
Shares"], and 400,000 shares of Series A Preferred Stock, par value $.0001 per
share [the "Preferred Shares"]. For accounting purposes, the Company is deemed
to be the acquirer, and Computer Marketplace is deemed to be acquired, under the
purchase method of accounting.
As a result, on April 23, 1999, (i) E-Taxi is a wholly owned subsidiary of
Computer Marketplace, Inc., (ii) the stockholders of E-Taxi are the beneficial
owners of (a) the Common Shares, or 81.8% of the shares of Computer
Marketplace's common stock outstanding, and (b) the Preferred Shares, or 100% of
the shares of Computer Marketplace's preferred stock outstanding, and (c) Robert
M. Wallace of E-Taxi was appointed as Chairman of the Board of Directors of
Computer Marketplace. As of April 23, 1999, Mr. Wallace beneficially owns
6,426,500 shares of Computer Marketplace's common stock, or 51% of the shares
outstanding, which includes (i) 24,000 shares of Computer Marketplace Series A
preferred stock held by Gateway Advisors, Inc., a company owned and controlled
by Mr. Wallace, (ii) 102,800 shares of Computer Marketplace common stock owned
by the Gateway Advisors Profit Sharing Plan, and (iii) 1,500,000 shares of
common stock issuable upon the exercise of a Common Stock Purchase Warrant owned
by Gateway Advisors. Computer Marketplace also granted to each of the former
holders of E-Taxi capital stock the right to have the Common Shares included in
the next registration statement filed by the Company with the Securities and
Exchange Commission [other than on a Form S-4 or Form S-8], subject to certain
limitations and restrictions.
The number of Computer Marketplace shares constituting the Series A Preferred
Stock is 400,000, $.0001 par value per share, all of which were issued to the
former holders of Series A Preferred Stock of the Company. Each share of
Computer Marketplace Series A Preferred Stock is convertible, at the option of
the holder, at any time into four (4) shares of common stock of Computer
Marketplace, subject to adjustment. The shares of Computer Marketplace Series A
Preferred Stock are also automatically converted into shares of common stock of
Computer Marketplace in the event that the closing price for the shares of
common stock equals or exceeds $3.75 per share for three (3) consecutive trading
days. As of the close of business on April 28, 1999, the shares of common stock
had a closing price of greater than $3.75 for more than three (3) consecutive
days, and therefore, as of May 3, 1999, the Preferred Shares were automatically
converted into 1,600,000 shares of common stock.
[7] UNAUDITED INTERIM STATEMENTS
The financial statements as of March 31, 1999 and for the three months ended
March 31, 1999 are unaudited; however, in the opinion of management all
adjustments [consisting solely of normal recurring adjustments] necessary in
order to make the interim financial statements not misleading have been made.
The results of the interim period are not necessarily indicative of the results
to be obtained for a full fiscal year.
. . . . . . . . . . . .
F-8
<PAGE>
COMPANY'S EXPLANATION FOR LACK OF AUDIT
REPORT FOR TECHSTORE, L.L.C.
PricewaterhouseCoopers, LLP was retained to perform the audit of
TechStore L.L.C. on February 12, 1999 for the December 31, 1998 financial
statements. PricewaterhouseCoopers, LLP report date was March 5, 1999, except
for Note 7 as to which the date is March 31, 1999 for the TechStore L.L.C.
financials of March 31, 1999. On June 28, 1999, PricewaterhouseCoopers, LLP
informed the Company that they would not consent to the Company's inclusion of
their audit opinion in the Form 8KA to be filed by July 9, 1999.
PricewaterhouseCoopers, LLP gave no reason other that it was their firm's policy
not to consent to including their opinion in reverse merger situations. Because
of the late notification, the Company has filed the December 31, 1998 financial
statements without PricewaterhouseCoopers' audit report.
TECHSTORE, L.L.C.
Date: July 9, 1999 By: /s/ DEREK WALL
---------------------------------------------
Derek Wall
President
F-9
<PAGE>
TECHSTORE, L.L.C.
================================================================================
BALANCE SHEETS [UNAUDITED]
================================================================================
MARCH 31, DECEMBER 31,
1 9 9 9 1 9 9 8
------------ ------------
ASSETS:
CURRENT ASSETS:
Cash $ 82,535 $ 116,139
Accounts Receivable - Net 27,705 63,014
Prepaid Expenses 1,341 4,660
Other Current Assets 9,680 --
------------ ------------
TOTAL CURRENT ASSETS 121,261 183,813
FURNITURE AND EQUIPMENT - NET 44,290 36,182
DEPOSITS 105,703 107,365
------------ ------------
TOTAL ASSETS $ 271,254 $ 327,360
============ ============
LIABILITIES AND MEMBERS' DEFICIT:
CURRENT LIABILITIES:
Accounts Payable $ 331,571 $ 263,302
Accrued Liabilities 45,034 58,857
Notes Payable to Member 45,000 45,000
Capital Lease Obligation - Current 3,090 4,120
------------ ------------
TOTAL CURRENT LIABILITIES 424,695 371,279
CAPITAL LEASE OBLIGATION - NON-CURRENT 7,210 7,210
------------ ------------
TOTAL LIABILITIES 431,905 378,489
------------ ------------
MEMBERS' DEFICIT:
Members' Capital Contributions 7,200 7,200
Accumulated Deficit (167,851) (58,329)
------------ ------------
TOTAL MEMBERS' DEFICIT (160,651) (51,129)
------------ ------------
TOTAL LIABILITIES AND MEMBERS' DEFICIT $ 271,254 $ 327,360
============ ============
The Accompanying Notes are an Integral Part of These Financial Statements.
F-10
<PAGE>
<TABLE>
<CAPTION>
TECHSTORE, L.L.C.
=======================================================================================================================
STATEMENTS OF OPERATIONS [UNAUDITED]
=======================================================================================================================
FOR THE PERIOD FROM
NOVEMBER 1, 1997
THREE MONTHS ENDED YEAR ENDED [INCEPTION] TO
MARCH 31, DECEMBER 31, DECEMBER 31,
1 9 9 9 1 9 9 8 1 9 9 8 1 9 9 7
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
NET REVENUES $ 2,197,496 $ 489,918 $ 6,348,883 $ 25,074
COST OF REVENUES 2,076,371 466,439 5,985,748 23,706
--------------- ---------------- --------------- ---------------
GROSS MARGIN 121,125 23,479 363,135 1,368
--------------- ---------------- --------------- ---------------
OPERATING EXPENSES:
Sales and Marketing 122,210 4,031 256,407 3,206
Research and Development 42,341 32,338 79,928 8,499
General and Administrative 63,924 4,472 65,387 3,296
--------------- ---------------- --------------- ---------------
TOTAL OPERATING EXPENSES 228,475 40,841 401,722 15,001
--------------- ---------------- --------------- ---------------
LOSS FROM OPERATIONS (107,350) (17,362) (38,587) (13,633)
OTHER INCOME -- -- 1,606 --
INTEREST EXPENSE - NET (2,172) (171) (7,715) --
--------------- ---------------- --------------- ---------------
NET LOSS $ (109,522) $ (17,533) $ (44,696) $ (13,633)
=============== ================ =============== ===============
</TABLE>
The Accompanying Notes are an Integral Part of These Financial Statements.
F-11
<PAGE>
<TABLE>
<CAPTION>
TECHSTORE, L.L.C.
======================================================================================================
STATEMENT OF CHANGES IN MEMBERS' DEFICIT [UNAUDITED]
======================================================================================================
TOTAL
BEJAN DEREK MOSEN MEMBERS'
AMINIFARD WALL AMINIFARD DEFICIT
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
BALANCE - NOVEMBER 1, 1997 $ -- $ -- $ -- $ --
Capital Contribution 7,200 -- -- 7,200
Net Loss (13,633) -- -- (13,633)
------------- -------------- ------------- --------------
BALANCE - DECEMBER 31, 1997 (6,433) -- -- (6,433)
Net Loss (31,288) (6,704) (6,704) (44,696)
------------- -------------- ------------- --------------
BALANCE - DECEMBER 31, 1998 (37,721) (6,704) (6,704) (51,129)
Net Loss (76,666) (16,428) (16,428) (109,522)
------------- -------------- ------------- --------------
BALANCE - MARCH 31, 1999 $ (114,387) $ (23,132) $ (23,132) $ (160,651)
============= ============== ============= ==============
The Accompanying Notes are an Integral Part of These Financial Statements.
</TABLE>
F-12
<PAGE>
<TABLE>
<CAPTION>
TECHSTORE, L.L.C.
=======================================================================================================================
STATEMENTS OF CASH FLOWS [UNAUDITED]
=======================================================================================================================
FOR THE PERIOD FROM
NOVEMBER 1, 1997
THREE MONTHS ENDED YEAR ENDED [INCEPTION] TO
MARCH 31, DECEMBER 31, DECEMBER 31,
1 9 9 9 1 9 9 8 1 9 9 8 1 9 9 7
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net Loss $ (109,522) $ (17,533) $ (44,696) $ (13,633)
Adjustments to Reconcile Net Loss
to Net Cash [Used for] Provided
by Operating Activities:
Depreciation and Amortization 4,473 633 7,270 891
Changes in Assets and Liabilities:
Accounts Receivable 35,309 (11,823) (62,074) (940)
Prepaid Expenses and Deposits 4,980 (27,921) (112,025) --
Accounts Payable 68,269 24,609 239,063 33,417
Accrued Liabilities (13,822) 3,519 49,419 260
--------------- ---------------- --------------- ---------------
NET CASH - OPERATING ACTIVITIES (10,313) (28,516) 76,957 19,995
--------------- ---------------- --------------- ---------------
INVESTING ACTIVITIES:
Additions to Furniture and
Equipment (12,581) (3,894) (25,249) (6,733)
Additions to Other Assets (9,680) -- -- --
--------------- ---------------- --------------- ---------------
NET CASH - INVESTING ACTIVITIES (22,261) (3,894) (25,249) (6,733)
--------------- ---------------- --------------- ---------------
FINANCING ACTIVITIES:
Proceeds from Notes Payable
to Member -- -- 255,000 --
Repayments of Notes Payable
to Member -- -- (210,000) --
Repayments of Capital Lease
Obligations (1,030) -- (1,030) --
Capital Lease Obligations -- -- -- --
Paid-in Capital -- -- -- 7,200
--------------- ---------------- --------------- ---------------
NET CASH - FINANCING ACTIVITIES (1,030) -- 43,970 7,200
--------------- ---------------- --------------- ---------------
NET [DECREASE] INCREASE IN CASH (33,604) (32,410) 95,678 20,462
CASH - BEGINNING OF PERIODS 116,139 20,462 20,462 --
--------------- ---------------- --------------- ---------------
CASH - END OF PERIODS $ 82,535 $ (11,948) $ 116,140 $ 20,462
=============== ================ =============== ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash Paid for Interest $ 2,238 $ 206 $ 7,900 $ --
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of Equipment under
Capital Lease $ -- $ -- $ 12,360 $ --
The Accompanying Notes are an Integral Part of These Financial Statements.
</TABLE>
F-13
<PAGE>
TECHSTORE, L.L.C.
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]
================================================================================
[1] THE COMPANY
TechStore, L.L.C. [the "Company"], an online retailer of computer hardware and
software, was formed in March 1998 by three members, including Mr. Bejan
Aminifard, the sole proprietor of TechStore, the Company's predecessor which was
formed in November 1997. Mr. Aminifard contributed his business to the Company
in March 1998, in exchange for a 70% ownership interest. As a result, Mr.
Aminifard is the managing member of the Company. The 1998 statement of
operations reflects the results of operations of both the Company and its
predecessor.
The Company has devoted a substantial effort to developing its website.
Accordingly, the Company has incurred losses from operations and negative
working capital since inception. The Company is striving to achieve profitable
operations by gaining market acceptance of its products. The Company is also
actively seeking to raise additional capital. However, there can be no assurance
that the Company's efforts to achieve profitable operations or raise additional
capital will be successful.
The Company is subject to all of the risks inherent in an early stage business
in the technology and Internet industries. The risks include but are not limited
to limited operating history, limited management resources, reliance on
relationships with merchandise vendors, dependence on the Internet and related
security risks and the changing nature of the Internet industry.
[2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.
Actual results could differ form those estimates.
FURNITURE AND EQUIPMENT - Furniture and equipment, including furniture and
equipment under capital leases, are recorded at cost and depreciated using the
straight-line method over their useful lives, which is generally three to five
years. Maintenance and repairs are charged to expense as incurred, and
improvements and betterments are capitalized. When assets are retired or
otherwise disposed of, the cost and accumulated depreciation are removed from
the accounts and any resulting gain or loss is reflected in operations in the
period realized.
REVENUE RECOGNITION - Upon sale of an item, the Company takes title to the
merchandise, charges the customer's credit card and arranges for a third party
to complete delivery to the customer. The Company obtains merchandise from a
vendor who retains physical possession of the merchandise. The Company is not
obligated to take title to the merchandise unless it successfully sells the
merchandise. Subsequently, the Company pays the vendor any amount due for the
purchase of the related merchandise. The Company records the full sales amount
as revenue upon verification of credit card authorization and shipment of the
merchandise. The Company is at risk of loss for collecting all of the sales
proceeds, delivery of the merchandise and returns from customers. In instances
where credit card authorization has been received but the merchandise has not
been shipped, the Company defers revenue recognition until the merchandise is
shipped.
The Company allows customers to return products, in certain circumstances.
Accordingly, the Company provides for allowances for estimated future returns at
the time of shipment based on historical experience.
RESEARCH AND DEVELOPMENT COSTS - The costs of website development are expensed
as incurred as research and development costs.
F-14
<PAGE>
TECHSTORE, L.L.C.
NOTES TO FINANCIAL STATEMENTS [UNAUDITED], SHEET #2
================================================================================
[2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]
INCOME TAXES - No provision for income taxes is made in these financial
statements as the Company intends to elect partnership tax status under Section
754 of the Internal Revenue Code. The members are responsible for reporting to
taxing authorities their respective share of the Company's income, loss,
deductions and credits.
[3] CONCENTRATIONS OF CREDIT RISK
The Company purchases merchandise from one vendor. Purchases from this vendor
during fiscal 1998 amounted to $5,814,245, or 97% of cost of revenue. This
vendor also accounted for 83% of the accounts payable balance as of December 31,
1998.
The Company performs credit evaluations of its potential customers at the time
of order placement.
[4] FURNITURE AND EQUIPMENT
Furniture and equipment consists of the following as of December 31, 1998:
Office Equipment $ 39,522
Office Furniture 4,820
--------------
Total 44,342
Less: Accumulated Depreciation (8,160)
FURNITURE AND EQUIPMENT - NET $ 36,182
==============
[5] LEASES
The Company leases office equipment and vehicles under capital and operating
leases.
The Company's lease obligations as of December 31, 1998, under capital leases
and operating leases having an initial or remaining term of more than one year,
are as follows:
Capital Operating
Lease Leases
------------- --------------
Year ending
December 31,
1999 $ 5,353 $ 14,376
2000 5,353 14,376
2001 4,015 7,792
------------- --------------
Total Minimum Lease Payments 14,721 $ 36,544
==============
Lease Amount Representing Interest (3,391)
-------------
Present Value of Minimum Lease Payments 11,330
Less Current Portion 4,120
-------------
OBLIGATION UNDER CAPITAL LEASES - LONG-TERM $ 7,210
------------------------------------------- =============
Total rent expense under all operating leases for the year ended December 31,
1998 was $4,597.
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TECHSTORE, L.L.C.
NOTES TO FINANCIAL STATEMENTS [UNAUDITED], SHEET #3
================================================================================
[6] RELATED PARTY TRANSACTIONS
On May 1, 1998, the Company issued a one year promissory note to a member in
exchange for $100,000 in cash. The note bears interest at a rate of 8.28% per
annum. Subsequent to May 1, 1998, the Company made additional borrowings from
the same member totaling $155,000. The Company repaid $2 10,000 of the
outstanding borrowings as of December 31, 1999. The Company paid a total of
$3,921 in interest under the above borrowings.
During fiscal 1999, the Company paid $20,482 and $64,086 to two members,
respectively, in consideration for management services provided to the Company.
On April 1, 1998, the Company entered into a month to month rental agreement
with a member for office space. Rental expense amounted to $7,221 in the fiscal
year ended December 31, 1998.
[7] SUBSEQUENT EVENTS
In March 1999, the Company sold an ownership interest to a new member in
exchange for $330,000 in cash.
On March 31, 1999, the members of the Company entered into a contribution and
exchange agreement with E-Taxi, Inc. ["E-Taxi"] pursuant to which the members
contributed their ownership interests in the Company to E-Taxi in exchange for
shares of common and preferred stock of E-Taxi.
[8] UNAUDITED INTERIM STATEMENTS
The financial statements as of March 31, 1999 and for the three months ended
March 31, 1999 and 1998 are unaudited; however, in the opinion of management all
adjustments [consisting solely of normal recurring adjustments] necessary to
make the interim financial statements not misleading have been made. The results
of the interim period are not necessarily indicative of the results to be
obtained for a full fiscal year.
. . . . . . . . . . . .
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SIGNATURES
================================================================================
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly authorized and caused the undersigned to sign this
report on the registrant's behalf.
COMPUTER MARKETPLACE, INC.
Date: July 9, 1999 By: /s/ ROBERT M. WALLACE
------------------------------------
Robert M. Wallace
Chairman
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