-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OJXlzBnS9B4uvnvDTHisVUXrxxdy5P+IX97EadQV0RvKKAsl5yzeGYt0LsiRAYQo +VvkScb6iaqyIrNq09Fhmw== 0000950172-99-001819.txt : 19991224 0000950172-99-001819.hdr.sgml : 19991224 ACCESSION NUMBER: 0000950172-99-001819 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991112 ITEM INFORMATION: FILED AS OF DATE: 19991223 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RARE MEDIUM GROUP INC CENTRAL INDEX KEY: 0000756502 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 232368845 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-13865 FILM NUMBER: 99780080 BUSINESS ADDRESS: STREET 1: 565 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 6462275480 MAIL ADDRESS: STREET 1: 565 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: ICC TECHNOLOGIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL COGENERATION CORP DATE OF NAME CHANGE: 19891005 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): December 23, 1999 (November 12, 1999) Rare Medium Group, Inc. (Exact Name of Registrant as Specified in Charter) Delaware 000-13865 23-2368845 (State or Other (Commission File No.) (IRS Employer Jurisdiction of Identification No.) Incorporation) 565 Fifth Avenue, 29th Floor, New York, New York 10017 (Address of Principal Executive Offices, including Zip Code) (212) 883-6940 (Registrant's telephone number, including area code) N/A (Former Name or Former Address, if Changed Since Last Report) The undersigned registrant hereby amends and restates Item 7 of its current report on Form 8-K, originally filed with the Securities and Exchange Commission on November 24, 1999 to include the requisite historical financial information of College Media, Inc. and CMJ Oniline, Inc. and the pro foma financial statements of the registrant. The complete text of Item 7 as amended and restated is as follows. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements of Businesses Acquired. Financial Statements of College Media, Inc. and CMJ Online, Inc. Independent Auditors' Report Combined Balance Sheets as of September 30, 1999 (unaudited), December 31, 1998 and 1997 Combined Statements of Operations and deficiency for the nine- month period ended September 30, 1999 (unaudited) and for the years ended December 31, 1998 and 1997 Combined Statements of Cash Flows for the nine-month period ended September 30, 1999 (unaudited) and for the years ended December 31, 1998 and 1997 Notes to Combined Financial Statements (b) Pro Forma Financial Information. Overview Unaudited Pro Forma Condensed Consolidated Statements of Operations for the year ended December 31, 1998 and for the nine-month period ended September 30, 1999 Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1999 Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements (c) Exhibits. Exhibit No. Description 2.1* Agreement and Plan of Merger, dated as of the 12th day of November, 1999, by and among Changemusic.com, Inc., a Delaware corporation, College Media, Inc., a New York corporation, and CMJ.com, Inc., a Delaware corporation. 2.2* Stock Purchase Agreement dated as of the 12th day of November, 1999, by and among College Media, Inc., a New York corporation, Robert Haber, Joanne Haber, Lee Haber, Diane Turofsky and Rare Medium Group, Inc., a Delaware corporation. 2.3* Securities Purchase Agreement, dated as of the 12th day of November, 1999, between Rare Medium Group, Inc., a Delaware corporation, and CMJ.com, Inc., a Delaware corporation. 23.1 Consent of Independent Public Accountant * Previously filed with Rare Medium Group, Inc.'s Current Report on Form 8-K, dated November 24, 1999, and incorporated herein by reference. INDEPENDENT AUDITOR'S REPORT To the Members of College Media, Inc. and CMJ Online, Inc. We have audited the combined balance sheets of College Media, Inc. and CMJ Online, Inc. (the Company") as of December 31, 1998 and 1997 and the related combined statements of operations and deficiency and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these combined financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of the Company at December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. /s/ Rubin & Katz LLP New York, New York December 16, 1999 COLLEGE MEDIA, INC. AND CMJ ONLINE, INC. COMBINED BALANCE SHEETS
SEPTEMBER 30, 1999 DECEMBER 31, (UNAUDITED) 1998 1997 -------------------------------------------------- ASSETS Accounts receivable, net of allowance $ 860,461 $ 545,496 $ 491,553 Property and equipment net of accumulated depreciation 46,379 53,504 58,323 Other assets 26,704 24,752 21,729 ------------ ----------- ----------- Total Assets $ 933,544 $ 623,752 $ 571,605 ============ =========== =========== LIABILITIES AND STOCKHOLDERS' DEFICIT Bank loan payable $ 100,000 $ 100,000 $ 100,000 Accounts payable 1,818,369 1,323,853 822,720 Accrued expenses 185,424 146,635 52,676 Unearned revenue 1,175,440 1,377,643 1,498,230 Due to affiliates 803,664 665,071 363,523 ------------- ----------- ----------- Total Liabilities 4,082,897 3,613,202 2,837,149 Common stock ($1 par value, 300 shares authorized, 222 shares issued and outstanding) 222 222 222 Due from officer (225,066) (202,513) (54,461) Deficit (2,924,509) (2,787,159) (2,211,305) ------------- ------------ ------------ Total Stockholders' Deficit (3,149,353) (2,989,450) (2,265,544) ------------- ------------ ------------ Total Liabilities and Stockholders' Deficit $ 933,544 $ 623,752 $ 571,605 ============= ============ =========== See notes to combined financial statements.
COLLEGE MEDIA, INC. AND CMJ ONLINE, INC. COMBINED STATEMENTS OF OPERATIONS AND DEFICIENCY
NINE MONTHS ENDED YEARS ENDED SEPTEMBER 30, DECEMBER 31, 1999 1998 1997 (UNAUDITED) ----------------------------------------------------- Revenue, net: Publishing $ 3,372,273 $ 4,223,345 $ 3,965,268 Events 1,151,659 1,029,968 1,001,043 Other 151,580 157,331 284,720 ------------- ------------ ------------ 4,675,512 5,410,644 5,251,031 Cost of production 4,025,238 5,030,437 4,474,639 Selling, general and administrative expenses 689,834 828,843 782,024 Depreciation and amortization 18,153 30,186 34,816 ------------- ------------ ------------ 4,733,225 5,889,466 5,291,479 ------------- ------------ ------------ Loss from operations (57,713) (478,822) (40,448) Interest expense, net (79,637) (97,032) (80,564) -------------- ------------- ------------- Net loss (137,350) (575,854) (121,012) Deficit - beginning of period (2,787,159) (2,211,305) (2,090,293) -------------- ------------- ------------- Deficit - end of period $ (2,924,509) $ (2,787,159) $ (2,211,305) ============== ============= ============= See notes to combined financial statements.
COLLEGE MEDIA, INC. AND CMJ ONLINE, INC. COMBINED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1999 YEARS ENDED (UNAUDITED) DECEMBER 31 1998 1997 ------------------------------------------------------ Cash flows from operating activities Net loss $ (137,350) $ (575,854) $ (121,012) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 18,153 30,186 34,816 Changes in operating assets and liabilities: Accounts receivable (314,965) (53,943) (1,526) Due from officer (22,553) (148,052) (43,751) Other assets (1,952) (3,023) (10,754) Accounts payable and accrued expenses 533,305 595,092 74,209 Unearned revenue (202,203) (120,587) 57,628 ----------- ------------ ----------- Net cash used in operating activities (127,565) (276,181) (10,390) Cash flows from investing activities Additions to property and equipment (11,028) (25,367) (26,237) Cash flows from financing activities Due to affiliates 138,593 301,548 36,627 ----------- ---------- ----------- Net increase in and cash at the beginning and end of the period $ - $ - $ - =========== ========== =========== SUPPLEMENTAL CASH FLOW DISCLOSURES Interest paid $ 99,542 $ 102,936 $ 78,597 ========== ========== =========== See notes to combined financial statements.
COLLEGE MEDIA, INC. AND CMJ ONLINE, INC. NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 1998 NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION THE COMPANY College Media, Inc. and CMJ Online, Inc. (collectively "CMJ" or the "Company") is a multi platform media company providing both music consumers and music industry professionals with music news, commentary, market data and industry analysis focusing on the college and emerging music markets. The Company operates in three different business: (1) publishing, (2) events and (3) Internet. The publishing business is engaged in publishing magazines and electronic information. The events business is engaged in the organization production and management of trade shows for the music industry. The internet business is engaged in providing the music consumer and the music industry professional updated market data and industry analysis. Subsequent to September 30, 1999 the assets of CMJ Online, Inc. were transferred to College Media, Inc. at book value. The Company merged with Changemusic.com, Inc. on November 12, 1999. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF COMBINATION The financial statements were prepared on a combined basis. All significant transactions between the entities have been eliminated in combination. REVENUE RECOGNITION Advertising revenue for the Company's publications is recognized as income in the month that the related publications are sent to subscribers or become available at newsstands. Publishing revenue consists of both subscription revenue and single copy newsstand sales. Subscription revenue is deferred and recognized as income in the month that the related publications are sent to the subscribers. Newsstand sales, less estimated returns, are recognized in the month that the related publications become available for sale at newsstands. Event and internet revenue is recognized as income when earned. Payments received in advance are deferred and included in unearned revenue. USE OF ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. PROPERTY AND EQUIPMENT Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed over the estimated useful lives of the assets which range from 5 to 7 years. Leasehold improvements are amortized over the remaining life of the lease. INCOME TAXES The Company is an S Corporation under the Internal Revenue Code; accordingly the accompanying financial statements do not include a provision for state and federal income taxes since, pursuant to provisions of the Internal Revenue Code, each item of income, gain, loss, deduction and credit is allocated to and reportable by the members of the corporation. NOTE 3 - INTERIM FINANCIAL INFORMATION The accompanying unaudited financial statements as of and for the period ended September 30, 1999 have been prepared in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the period ended September 30, 1999 are not necessarily indicative of the results that may be expected for the year ended December 31, 1999. NOTE 4 - BANK LOAN PAYABLE The Company entered into a line of credit agreement with Fleet Bank for an amount up to $100,000. The line of credit bears interest at Prime plus 1.5%. The outstanding balance was $100,000 at September 30, 1999, (unaudited) December 31, 1998 and 1997. The interest rate at September 30, 1999, December 31, 1998 and 1997 was 9.75% (unaudited), 9.25% and 10%, respectively. Interest only payments are required on a monthly basis. Interest expense at September 30, 1999, December 31, 1998 and 1997 amounted to $6,292 (unaudited), $9,990 and $9,836, respectively. NOTE 5 - ACCOUNTS RECEIVABLE, NET Accounts receivable, net consist of the following:
SEPTEMBER 30, 1999 DECEMBER 31, (UNAUDITED) 1998 1997 ------------------------------------------------------- Accounts receivable $ 830,610 $ 484,907 $ 360,621 Subscriptions receivable 120,145 129,883 196,226 Allowance for doubtful accounts, returns and cancellations (90,294) (69,294) (65,294) ----------- ----------- ----------- $ 860,461 $ 545,496 $ 491,553 =========== =========== ===========
COLLEGE MEDIA, INC. AND CMJ ONLINE, INC. NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 6 - PROPERTY AND EQUIPMENT, NET
SEPTEMBER 30, 1999 DECEMBER 31, (UNAUDITED) 1998 1997 ----------------------------------------------- Computers and equipment $ 141,857 $ 132,445 $ 213,451 Leasehold improvements 39,549 39,549 39,549 Furniture and fixtures 6,227 4,610 19,107 ---------- ---------- ---------- $ 187,633 $ 176,604 $ 272,107 Accumulated depreciation and amortization (141,254) (123,100) (213,784) ----------- ----------- ---------- $ 46,379 $ 53,504 $ 58,323 ========== ========== ==========
NOTE 7- UNEARNED INCOME Unearned income consists of the following:
SEPTEMBER 30, 1999 DECEMBER 31, (UNAUDITED) 1998 1997 ------------------------------------------------ Unexpired subscriptions $ 879,480 $ 1,104,558 $ 1,130,071 Advertising contracts 295,960 273,085 368,159 ----------- ----------- ----------- $1,175,440 $ 1,377,643 $ 1,498,230 ========== =========== ===========
COLLEGE MEDIA, INC. AND CMJ ONLINE, INC. NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 8 - OPERATING LEASE COMMITMENTS The Company is obligated under various equipment operating leases, which expire at various dates through May, 2002. Future minimum commitments under non-cancelable operating leases are approximately as follows: Year ended December 31, 1999 $60,000 2000 22,000 2001 8,000 2002 3,000 ------- Total $93,000 ======= NOTE 9 - RELATED PARTY TRANSACTIONS At September 30, 1999, December 31, 1998 and 1997, loans to officers amounted to $225,066 (unaudited) $202,513, and $54,461 respectively, including accrued interest. The loan is payable on demand and bears interest at 8%. Included in due to affiliates, are various liabilities to the Haber family (the Company's principals). The amounts are payable on demand. At September 30, 1999, December 31, 1998 and 1997 the outstanding balances are $81,644 (unaudited) $38,944 and $30,782, respectively. The Company utilizes the personal credit cards of the Haber Family. Included in due to affiliates, at September 30, 1999, December 31, 1998 and 1997, are credit card payables amounting to $722,020 (unaudited) $626,127, and $332,741, respectively. The interest rates on the credit cards range from 16% to 22%. Interest expense relating to the credit card payable at September 30, 1999, December 31, 1998 and 1997 amounted to $93,250 (unaudited), $92,946 and $68,761, respectively. NOTE 10 - IMPACT OF THE YEAR 2000 (UNAUDITED) The Company has assessed the year 2000 issue, and has developed an action plan which addresses the issue. Management believes that the year 2000 issue will not materially affect the Company's future operating results or financial position. Unaudited Pro Forma Condensed Consolidated Financial Information The following Unaudited Pro Forma Condensed Consolidated Statements of Operations assume that the Rare Medium Group, Inc. and subsidiaries (RMG) purchase of common stock of College Media, Inc., which include the operations of CMJ Online, Inc. (collectively, CMJ), representing a 25% interest and the merger of RMG's 96% owned subsidiary, ChangeMusic.com, Inc. (ChangeMusic.com) with CMJ to form CMJ.com, Inc. (CMJ.com) (individually and collectively, the "Acquisition") had occurred on January 1, 1998, combining RMG and the combined results of CMJ for the year ended December 31, 1998 and nine months ended September 30, 1999. The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1999 reflects the Acquisition as if it had occurred on September 30, 1999. The pro forma information does not include the effects of RMG's purchase of the Series A Preferred Stock issued by CMJ.com as such transactions are between RMG and a consolidated subsidiary. The pro forma information is derived from the historical financial statements of RMG and CMJ, after giving effect to the Acquisition using the purchase method of accounting and assumptions and adjustments considered appropriate by RMG, certain of which are described in the accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. The allocation of purchase price to the assets acquired and liabilities assumed has been made using estimated fair values. These estimates may be subject to adjustment to reflect actual amounts, primarily in the case of accrued liabilities. Any subsequent adjustments are not expected to be material. The pro forma information is provided for illustrative purposes only and is not necessarily indicative of the results of operations or financial condition that actually would have been obtained if the acquisition had occurred on the dates indicated or of the operating results that may be obtained in the future. The Unaudited Pro Forma Condensed Consolidated Financial Information should be read in conjunction with the historical financial statements, and the related notes thereto, of RMG and CMJ. The historical financial statements of CMJ as of and for the year ended December 31, 1998 and the related notes thereto, and the historical financial statements of CMJ as of and for the nine-month period ended September 30, 1999 and the related notes thereto are included herein. The historical financial statements of RMG and the related notes thereto as of and for the year ended December 31, 1998 and as of and for the nine-month period ended September 30, 1999 and the related notes thereto, have been previously filed with the Securities and Exchange Commission.
RARE MEDIUM GROUP, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998 (000's OMITTED EXCEPT PER SHARE DATA) Historical Historical College Media, Rare Medium Inc. and CMJ Pro Forma Pro Forma Group, Inc. Online, Inc.(1) adjustments as adjusted Revenue $ 4,688 $ 5,411 $ 10,099 Total expenses 22,764 5,890 2,674 (2) 31,328 -------- ----------- --------- ---------- Loss from operations (18,076) (479) (2,674) (21,229) Interest expense, net (1,279) (97) (1,376) --------- ----------- ----------- Loss before income taxes and discontinued operation (19,355) (576) (2,674) (22,605) Income tax expense 355 - 355 ---------- ----------- ------- ----------- Loss before discontinued operations (19,710) (576) (2,674) (22,960) Discontinued operation: Loss from discontinued operation (4,538) (4,538) Gain on restructuring of Engelhard/ICC 24,257 24,257 Loss on sale of FAS (628) - (628) ---------- ----------- -------- ----------- Income from discontinued operation 19,091 - 19,091 ---------- ----------- -------- ----------- Net loss $ (619) $ (576) $ (2,674) $ (3,869) ========== =========== ======== =========== Basic and diluted earnings (loss) per share: Continuing operations $ (0.78) $ (0.90) Discontinued operations 0.76 0.75 ---------- ------------ Net loss per share $ (0.02) $ (0.15) Weighted average common shares outstanding 25,282,002 180,860(3) 25,462,862
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
RARE MEDIUM GROUP, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1999 (000's OMITTED EXCEPT PER SHARE DATA) Historical Historical College Media, Rare Medium Inc. and CMJ Pro Forma Pro Forma Group, Inc. Online, Inc.(1) adjustments as adjusted Revenue $ 19,080 $ 4,676 $ 23,756 Total expenses 46,911 4,733 2,006(2) 53,650 ---------- ----------- -------- ----------- Loss from operations (27,831) (57) (2,006) (29,894) Interest expense, net (1,407) (80) (1,487) ---------- ----------- -------- ----------- Net loss (29,238) (137) (2,006) (31,381) Deemed dividend attributable to issuance of convertible preferred stock (29,879) - (29,879) Cumulative dividends and accretion of convertible preferred stock to liquidation value (4,663) - (4,663) ---------- ----------- Net loss attributable to common stockholders $ (63,780) $ (137) $ (2,006) $ (65,923) ========== ========== ========= =========== Basic and diluted loss per share $ (1.81) (1.86) Weighted average common shares outstanding 35,320,850 180,860(3) 35,501,710
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
RARE MEDIUM GROUP, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1999 (000'S OMITTED) Historical College Media, Rare Medium Inc. and CMJ Pro Forma Pro Forma Group, Inc. Online, Inc.(1) adjustments as adjusted ASSETS Current assets: Cash and cash equivalents $ 59,374 $ - $ (1,000)(3) $ 58,374 Accounts receivable, net 7,297 860 8,157 Work in process 3,125 - 3,125 Prepaid expenses and other current assets 2,621 - 2,621 ---------- -------- --------- ---------- Total current assets 72,417 860 (1,000) 72,277 Property, plant and equipment, net 7,839 46 7,885 Investments in affiliates 14,551 - 14,551 Intangibles, net 57,720 - 8,022(4) 65,742 Other assets 1,198 27 1,225 ---------- -------- --------- ---------- Total assets $ 153,725 $ 933 $ 7,022 $ 161,680 ========== ========= ========= =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 9,202 $ 2,004 $ 11,206 Deferred revenue 606 1,175 1,781 Current portion of notes payable 3,844 904 4,748 ----------- --------- ---------- Total current liabilities 13,652 4,083 17,735 ----------- --------- ---------- Notes payable - related parties 2,990 2,990 Other noncurrent liabilities 184 184 ----------- --------- ---------- Total liabilities 16,826 4,083 20,909 ----------- --------- ---------- Series A Convertible Preferred Stock, $.01 par value, net of unamortized discount 34,553 - 34,553 ---------- --------- ---------- Stockholders' equity: Preferred stock, $.01 par value Common stock, $.01 par value 407 2(3),(5) 409 Additional paid-in capital 216,261 - 3,870(3) 220,131 Note receivable from shareholder (230) (225) 225(5) (230) Accumulated deficit (113,921) (2,925) 2,925(5) (113,921) Treasury stock, at cost (171) - (171) ----------- --------- ---------- ---------- Total stockholders' equity 102,346 (3,150) 7,022 106,218 ----------- --------- ---------- ---------- Total liabilities and stockholders' equity $ 153,725 $ 933 $ 7,022 $ 161,680 =========== ========= ========== ==========
See accompanying notes to unaudited pro forma condensed consolidated financial statements. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (000'S OMITTED EXCEPT SHARE AND PER SHARE DATA) (1) Represents the historical financial information of CMJ. The historical financial information was derived from the audited combined financial statements of CMJ for the year ended December 31, 1998 and the unaudited combined financial statements as of and for the nine-month period ended September 30, 1999. (2) Reflects an adjustment of $2,674 and $2,006 for the year ended December 31, 1998 and the nine-month period ended September 30, 1999, respectively, which represents the amortization of goodwill over a three year period as a result of the acquisition of CMJ. (3) Represents the Acquisition price consideration paid by RMG consisting of (a) $1,000 in cash and 180,860 shares of RMG common stock valued at $21.41 per share, based on the fair value of RMG's common stock at the time of the purchase of 25% of CMJ and (b) the contribution of RMG's interest in ChangeMusic.com into CMJ.com pursuant to the merger agreement. The book value of RMG's investment in ChangeMusic.com and CMJ approximates the value of RMG's effective ownership in CMJ.com. (4) Represents the excess of the Acquisition price over the fair value of the identifiable assets, net of liabilities assumed, in the amount of $8,022 arising from the Acquisition. No amounts have been recorded with respect to minority interest receivable as there is no future funding requirement by the minority interest shareholder. (5) Reflects the removal of the historical equity of CMJ resulting from the Acquisition. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized. RARE MEDIUM GROUP, INC. (Registrant) DATE: December 23, 1999: /s/ Jeffrey J. Kaplan ------------------------- Name: Jeffrey J. Kaplan Title: Executive Vice President and Chief Financial Officer EX-23 2 EXHIBIT 23.1 - CONSENT OF INDEPENDENT AUDITOR EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT The Board of Directors and Stockholders Rare Medium Group, Inc. We consent to the use of our report dated December 16, 1999, included elsewhere herein, on the combined financial statements of College Media, Inc. and CMJ Online, Inc. as of and for the years ended December 31, 1998 and 1997. /s/ Rubin & Katz LLP New York, New York December 21, 1999 -----END PRIVACY-ENHANCED MESSAGE-----