-----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, N9a7zLBTCJ/K042TZ+8l/r/c4rnD9DzQhsbalZY4UfVNitOmc8OY/PQQ2hx3WoHP j1UqrJqahZ9oNp0vyP4jDA== 0001072993-99-000272.txt : 19991111 0001072993-99-000272.hdr.sgml : 19991111 ACCESSION NUMBER: 0001072993-99-000272 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990827 ITEM INFORMATION: FILED AS OF DATE: 19991110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPS COM INC CENTRAL INDEX KEY: 0001080232 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 330645337 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-25913 FILM NUMBER: 99746232 BUSINESS ADDRESS: STREET 1: 9888 CARROLL CENTRE ROAD STREET 2: SUITE 100 CITY: SAN DIEGO STATE: CA ZIP: 92126 BUSINESS PHONE: 8585783000 MAIL ADDRESS: STREET 1: 9888 CARROLL CENTRE ROAD STREET 2: SUITE 100 CITY: SAN DIEGO STATE: CA ZIP: 92126 8-K/A 1 FORM 8-K/A ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Form 8-K/A AMENDMENT 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): August 27, 1999 COMPS.COM, Inc. (Exact name of registrant as specified in its charter) Delaware 000-25913 33-0645337 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 9888 Carroll Centre Road, Suite 100, San Diego, 92126-4580 California - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) - -------------------------------------------------------------------------------- Registrant's telephone number, including area code: (858) 578-3000 ================================================================================ ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. COMPS.COM, Inc. (the "Company") filed a Current Report on Form 8-K with the Commission on September 13, 1999. At Item 7 of the report, the Company indicated that it would file audited financial statements of the acquired businesses and the Company's pro forma financial information at a later date. That information follows. (a) Financial Statements of Sendero Investments, Inc., Parramore, Inc., and The Commercial Broker's Network (A Joint Venture between ARA-D/FW, Inc. and Sendero Investments, Inc. Audited Financial Statements of Sendero Investments, Inc., as of and for the year ended December 31, 1998, which include the following: (i) Independent Auditors' Report (ii) Balance Sheets (iii) Statements of Operations (iv) Statements of Changes in Stockholder's Equity (Deficit) (v) Statements of Cash Flows (vi) Notes to Financial Statements Audited Financial Statements of Parramore, Inc. as of and for the year ended December 31, 1998, which include the following: (vii) Independent Auditors' Report (viii) Balance Sheets (ix) Statement of Operations and Changes in Retained Earnings (x) Statements of Cash Flows (xi) Notes to Financial Statements Audited Financial Statements of The Commercial Broker's Network as of December 31, 1998 and for the period from June 1, 1998 (inception) to December 31, 1998, which include the following: (xii) Independent Auditors' Report (xiii) Balance Sheets (xiv) Statements of Operations and Changes in Joint Venture Capital (Deficit) (xv) Statements of Cash Flows (xvi) Notes to Financial Statements (b) Pro Forma Financial Statements. Unaudited Pro Forma Condensed Financial Statements of COMPS.COM, Inc. as of June 30, 1999 and December 31, 1998, which include the following: (i) Introduction to Unaudited Pro Forma Condensed Financial Statements (ii) Unaudited Pro Forma Condensed Balance Sheet (iii) Unaudited Pro Forma Condensed Statements of Operations (iv) Notes to Unaudited Pro Forma Condensed Financial Statements (c) Exhibits. 23.1 Consent of Independent Auditors, Sprouse & Winn, L.L.P. The Board of Directors Sendero Investments, Inc. INDEPENDENT AUDITORS' REPORT ---------------------------- We have audited the accompanying balance sheet of Sendero Investments, Inc. (the Company) as of December 31, 1998, and the related statements of operations, changes in stockholder's equity (deficit), and cash flows for the year then ended. 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 the Company as of December 31, 1998, and the results of its operations and cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ SPROUSE & WINN, L.L.P. October 8, 1999 F-1 SENDERO INVESTMENTS, INC. Balance Sheets
Unaudited -------- December 31, June 30, 1998 1999 -------- -------- Assets Total assets $ -0- $ -0- ======== ======== Liabilities: Total liabilities $ -0- $ -0- -------- -------- Stockholder's equity Common stock - No par value; 10,000 shares authorized, 1,000 shares issued and outstanding 4,000 4,000 Additional paid in capital 28,148 28,148 Retained earnings (deficit) (32,148) (32,148) -------- -------- Total stockholder's equity (deficit) -0- -0- -------- -------- Total liabilities and stockholder's equity $ -0- $ -0- ======== ========
See notes to financial statements F-2 SENDERO INVESTMENTS, INC. Statements of Operations
Unaudited -------------------------------------------- December 31, Six Months Ended Six Months Ended 1998 June 30, 1998 June 30, 1999 ------------- ------------- ------------- Revenue $ -0- $ -0- $ -0- Expenses -0- -0- -0- ------------- ------------- ------------- Net income $ -0- $ -0- $ -0- ------------- ------------- ------------- Earnings per share $ -0- $ -0- $ -0- ============= ============= =============
See notes to financial statements F-3 SENDERO INVESTMENTS, INC. Statements of Changes in Stockholder's Equity (Deficit)
Additional Retained Common Paid in Earnings Stock Capital (Deficit) Total ------ ------- -------- -------- Beginning balance, January 1, 1998 $4,000 $ -0- $(32,148) $(28,148) Additional paid in capital contributed by stockholder -0- 28,148 -0- 28,148 Net income -0- -0- -0- -0- ------ ------- -------- -------- Ending balance, December 31, 1998 $4,000 $28,148 $(32,148) $ -0- ====== ======= ======== ======== Beginning balance, January 1, 1998 (unaudited) $4,000 $ -0- $(32,148) $(28,148) Net income (unaudited) -0- -0- -0- -0- ------ ------- -------- -------- Ending balance, June 30, 1998 (unaudited) $4,000 $ -0- $(32,148) $(28,148) ====== ======= ======== ======== Beginning balance, January 1, 1999 (unaudited) $4,000 $28,148 $(32,148) $ -0- Net income (unaudited) -0- -0- -0- -0- ------ ------- -------- -------- Ending balance, June 30, 1999 (unaudited) $4,000 $28,148 $(32,148) $ -0- ====== ======= ======== ========
See notes to financial statements F-4 SENDERO INVESTMENTS, INC. Statements of Cash Flows
Unaudited ------------------------------------ Six Months Six Months December 31, Ended Ended 1998 June 30, 1998 June 30, 1999 ------------- ------------- ------------- Cash flows from operating activities Net income (loss) $ -0- $ -0- $ -0- ------------- ------------ ------------ Net cash provided by operating activities -0- -0- -0- ------------- ------------ ------------ Net increase (decrease) in cash -0- -0- -0- Cash, beginning of period -0- -0- -0- ------------- ------------ ------------ Cash, end of period $ -0- $ -0- $ -0- ============= ============ ============
NON CASH TRANSACTIONS - --------------------- A note payable to a stockholder of $28,148 was converted to additional paid in capital as of December 30, 1998. F-5 SENDRO INVESTMENTS, INC. Notes to Financial Statements (All information related to the six months ended June 30, 1998 and June 30, 1999 is unaudited) NOTE 1: ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS Sendero Investments, Inc. (the Company) was organized to own and operate an information data service business. REVENUE RECOGNITION The Company prepares its financial statements on the accrual basis of accounting whereby revenues and expenses are recognized in the period earned or incurred. 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 from those estimates. FEDERAL INCOME TAX Effective August 28, 1991, the stockholder of the Company filed an election that the Company is treated as an S corporation for Federal income tax purposes. As such, the Company is not, in general, subject to Federal income tax, but rather income and expenses are passed through to the stockholder, who must report the income and expenses on his own income tax return. NOTE 2: RELATED PARTY TRANSACTIONS The Company entered into an agreement with Parramore, Inc., d.b.a. The Flick Report, an affiliated company. Parramore will provide management and marketing services to a joint venture on behalf of the Company in return for revenues generated by the joint venture. Revenues and expenses associated with the joint venture are not included in these financial statements. NOTE 3: SUBSEQUENT EVENT In August 1999, the sole stockholder entered into an agreement to sell 100 percent of the outstanding stock in Sendero Investments, Inc. to another company. F-6 The Board of Directors Parramore, Inc. dba The Flick Report INDEPENDENT AUDITORS' REPORT ---------------------------- We have audited the accompanying balance sheet of Parramore, Inc. dba The Flick Report (the Company) as of December 31, 1998, and the related statements of operations and changes in retained earnings, and cash flows for the year then ended. 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 the Company as of December 31, 1998 and the results of its operations and cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ SPROUSE & WINN, L.L.P. September 10, 1999 F-7 PARRAMORE, INC. dba THE FLICK REPORT Balance Sheets
Unaudited -------- December 31, June 30, 1998 1999 -------- -------- Assets Current assets: Cash $ 41,943 $ 41,827 Accounts receivable, less allowance for doubtful 28,924 27,325 accounts (Note 2) Prepaid expenses 3,678 3,678 Other assets 5,020 3,106 Note receivable (Note 3) 27,744 -0- -------- -------- Total current assets 107,309 75,936 Property and equipment, net (Note 4) 27,594 30,756 Total assets $134,903 $106,692 ======== ======== Liabilities: Current liabilities: Accounts payable $ 12,500 $ 11,392 Accrued expenses 42,511 32,710 Deferred revenue 11,868 13,872 Total current liabilities 66,879 57,974 -------- -------- Total liabilities 66,879 57,974 -------- -------- Stockholder's equity Common stock - No par value; shares authorized 10,000, issued and outstanding 50 1,000 1,000 Retained earnings 67,024 47,718 -------- -------- Total stockholder's equity 68,024 48,718 -------- -------- Total liabilities and stockholder's equity $134,903 $106,692 ======== ========
See notes to financial statements F-8 PARRAMORE, INC. dba THE FLICK REPORT Statements of Operations and Changes in Retained Earnings
Unaudited ------------------------------------------------ Year Ended Six Months Ended Six Months Ended December 31, 1998 June 30, 1998 June 30, 1999 -------------------- --------------------- --------------------- Publication / subscription revenue $555,870 $264,733 $300,115 Cost of services 211,447 99,405 127,214 -------------------- --------------------- --------------------- Gross profit 344,423 165,328 172,901 -------------------- --------------------- --------------------- General & administrative expenses Postage 10,833 5,272 2,917 Advertising 4,620 1,433 3,430 Marketing, general 15,274 9,749 1,620 Auto expense 11,911 1,768 2,595 Depreciation and amortization expense 4,849 2,144 3,770 Business meals and entertainment 4,205 2,005 3,011 Bad debts 10,415 460 635 Conventions / seminars 2,905 -0- -0- Computer expenses 14,197 8,972 950 Dues and subscriptions 4,214 1,833 2,144 Insurance 13,670 6,407 8,775 Office expense & supplies 15,200 5,429 8,581 Accounting services 6,930 3,030 3,900 Legal & professional services 150 (4,570) (140) Rent (Note 7) 14,916 5,500 6,750 Taxes 1,281 1,028 -0- Telephone 9,725 4,091 3,050 Travel 5,206 3,520 -0- Payroll processing fees 740 382 495 Utilities 2,263 854 953 Payroll & payroll taxes 170,864 80,405 134,083 Employee expenses 564 564 -0- SEP expense (Note 6) 22,466 9,083 12,316 Miscellaneous expense 2,919 1,679 1,538 -------------------- --------------------- --------------------- Total General and Administrative Expenses 350,317 151,038 201,373 -------------------- --------------------- --------------------- Other income (expense) (Note 5) 14,018 3,581 9,166 -------------------- --------------------- --------------------- Net income (loss) before income tax 8,124 17,871 (19,306) Income tax expense - current 105 -0- -0- Net income (loss) 8,019 17,871 (19,306) Retained earnings, beginning 59,005 59,005 67,024 -------------------- --------------------- --------------------- Retained earnings, ending $ 67,024 $ 76,876 $ 47,718 ==================== ===================== ===================== Earnings (loss) per share $ 160 $ 357 $ (386) ==================== ===================== =====================
See notes to financial statements F-9 PARRAMORE, INC. dba THE FLICK REPORT Statements of Cash Flows
Unaudited --------------------------------------- December 31, Six Months Ended Six Months Ended 1998 June 30, 1998 June 30, 1999 --------------- ---------------- ---------------- Cash flows from operating activities Net income (loss) $ 8,019 $17,871 $(19,306) Adjustments to reconcile change in net income to net cash provided by operating activities: Depreciation and amortization 4,849 2,144 3,770 Bad debt expense 10,415 460 635 Loss on sale / disposal of property 614 614 -0- (Increase) decrease in assets: Accounts receivable (1,945) (348) 966 Prepaid expenses (3,678) (1,983) -0- Other assets (603) (269) 1,914 Increase (decrease) in liabilities: Accounts payable (7,168) 3,345 (1,108) Accrued expenses 32,819 20,159 (9,801) Federal income tax payable (2,317) (2,317) -0- Deferred revenue 432 1,558 2,003 --------------- ---------------- ---------------- Net cash provided (used) by operating activities 41,437 41,234 (20,927) --------------- ---------------- ---------------- Cash flows from investing activities Acquisition of property and equipment (19,110) (5,940) (6,933) Proceeds from sales of property 225 225 -0- Net change in notes receivable 14,030 -0- 27,744 --------------- ---------------- ---------------- Net cash provided (used) by investing activities (4,855) (5,715) 20,811 --------------- ---------------- ---------------- 36,582 35,519 (116) Net increase (decrease) in cash Cash, beginning of period 5,361 5,361 41,943 --------------- ---------------- ---------------- Cash, end of period $ 41,943 $40,880 $ 41,827 =============== ================ ================ Supplemental Disclosure of Cash Flow Information: Interest paid $ 219 $ 42 $ -0- =============== ================ ================ Taxes paid $ 3,600 $ 1,028 $ -0- =============== ================ ================
See notes to financial statements F-10 PARRAMORE, INC. dba THE FLICK REPORT Notes to Financial Statements (All information related to the six months ended June 30, 1998 and June 30, 1999 is unaudited) NOTE 1: ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS Parramore, Inc. dba The Flick Report (the Company) publishes The Flick Report, which is a bi-monthly commercial real estate trade journal for central Texas. It contains industry-related articles, news, and information as well as listing and display advertisements for real estate properties, companies, and vendors. REVENUE RECOGNITION The Company prepares its financial statements on the accrual basis of accounting whereby revenues and expenses are recognized in the period earned or incurred. ACCOUNTS RECEIVABLE The Company provides for uncollectible accounts receivable using the allowance method of accounting for bad debts. Under this method of accounting, a provision for uncollectible accounts is charged to earnings. The allowance is increased or decreased based on past collection history and management's evaluation of accounts receivable. All amounts considered uncollectible are charged against the allowance account and recoveries of previously charged off accounts are added to the allowance. PROPERTY AND EQUIPMENT The Company capitalizes assets with a cost greater than $1,000. Assets acquired before January 1, 1997 were capitalized if costs were greater than $500. Depreciation is determined using the straight- line method over the estimated useful lives of the property and equipment. Estimated useful lives of property and equipment range from five to seven years. Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. There is no impairment loss recorded in these financial statements. CONCENTRATION OF CREDIT RISK Accounts receivable potentially expose the Company to concentrations of credit risk as defined by Statement of Financial Accounting Standard No. 105, Disclosure of Information about Financial Instruments with Off-Balance Sheet Risk and Financial Instruments with Concentrations of Credit Risk. The Company provides credit in the normal course of business to customers located in the Central Texas area. The Company maintains allowances for potential credit losses. F-11 PARRAMORE, INC. dba THE FLICK REPORT Notes to Financial Statements (Continued) (All information related to the six months ended June 30, 1998 and June 30, 1999 is unaudited) NOTE 1: ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) DEFERRED REVENUE The Company collects annual subscriptions for publications. The portion of the subscriptions received prior to the end of the year which are applicable to the subsequent year has been deferred and will be recognized as revenue during such period as the subscriptions are earned. ADVERTISING Advertising costs are expensed when incurred. 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 from those estimates. FEDERAL INCOME TAX The Company accounts for its income taxes in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. Deferred income taxes if any, reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. NOTE 2: ACCOUNTS RECEIVABLE Accounts receivable consist of the following: 1998 ------- Trade accounts receivable $38,152 Less allowance for doubtful accounts (9,228) ------- Net Accounts Receivable $28,924 ======= F-12 PARRAMORE, INC. dba THE FLICK REPORT Notes to Financial Statements (Continued) (All information related to the six months ended June 30, 1998 and June 30, 1999 is unaudited) NOTE 3: NOTE RECEIVABLE Note receivable consists of a note due from the stockholder. Interest is calculated at the applicable federal tax rate. The note receivable was repaid during 1999. NOTE 4: PROPERTY AND EQUIPMENT Property and equipment at December 31, 1998 consists of the following: 1998 -------- Furniture and equipment $ 19,047 Computers and software 27,097 -------- Total property and equipment 46,144 Less accumulated depreciation and amortization (18,550) -------- Net property and equipment $ 27,594 ======== NOTE 5: OTHER INCOME (EXPENSE) 1998 ------- Other income $14,851 Gain (loss) on sale / disposal of property (614) Interest expense (219) ------- $14,018 ======= NOTE 6: RETIREMENT PLAN On January 15, 1995 the Company established a defined contribution plan. All employees who have attained the age of 21 and have completed three years of credited service are eligible to participate in the defined contribution plan. The Company contributes annually an amount determined by the Board of Directors. Employer contributions to the plan were $22,466 for 1998. F-13 PARRAMORE, INC. dba THE FLICK REPORT Notes to Financial Statements (Continued) (All information related to the six months ended June 30, 1998 and June 30, 1999 is unaudited) NOTE 7: LEASE AGREEMENTS The Company leases office space under an agreement that expires in 2000. The future minimum rental payments required under this non- cancelable operating lease as of December 31, 1998 are as follows: 1999 $16,200 2000 12,150 ------- Total minimum payments $28,350 ======= Total rent expense for the year ended December 31, 1998 was $14,916. NOTE 8: SUBSEQUENT EVENT In August 1999, the sole stockholder entered into an agreement to sell 100 percent of the outstanding stock in Parramore, Inc. to another company. NOTE 9: RELATED PARTY TRANSACTIONS The Company entered into an agreement with Sendero Investments, Inc., an affiliated company, to provide management and marketing services to a joint venture on behalf of the affiliate in return for revenues generated by the joint venture. Revenues and expenses associated with the joint venture are included in the financial statements. Revenues related to the joint venture were $75,551 for the year ended December 31, 1998. The Company had a note receivable from the stockholder for $27,744 at December 31, 1998. F-14 To the Partners of The Commercial Broker's Network INDEPENDENT AUDITORS' REPORT ---------------------------- We have audited the accompanying balance sheet of The Commercial Broker's Network (a joint venture project) (Project) as of December 31, 1998, and the related statements operations and changes in joint venture capital (deficit), and cash flows for the period June 1, 1998 (inception) through December 31, 1998. These financial statements are the responsibility of the Project'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 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 of the financial statements 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 the Project as of December 31, 1998, and the results of its operations and cash flows for the period June 1, 1998 (inception) through December 31, 1998 in conformity with generally accepted accounting principles. /s/ SPROUSE & WINN, L.L.P. September 8, 1999 Austin, Texas F-15 THE COMMERCIAL BROKER'S NETWORK Balance Sheets
Unaudited -------- December 31, June 30, 1998 1999 -------- -------- Assets Current assets: $ 18,239 Cash $ 67,203 Accounts receivable -0- 2,088 -------- -------- Total current assets 18,239 69,291 -------- -------- Total assets $ 18,239 $ 69,291 ======== ======== Liabilities Current liabilities: Sales tax payable $ 1,205 $ 8,932 Other liabilities -0- -0- Deferred subscription revenue 36,607 78,067 -------- -------- Total current liabilities 37,812 86,999 -------- -------- Joint venture capital (Deficit) (19,573) (17,708) -------- -------- Total liabilities and joint venture capital $ 18,239 $ 69,291 ======== ========
See accompanying notes to the financial statements F-16 THE COMMERCIAL BROKER'S NETWORK Statements of Operations and Changes in Joint Venture Capital (Deficit)
Unaudited -------------------------------------- Period From Period From June June 1, 1998 1, 1998 (Inception) Six Months (Inception) to To June 30, Ended December 31, 1998 1998 June 30, 1999 -------------------- ---------------- ----------------- Revenues Subscription revenue $ 112,500 $6,572 $ 123,781 Interest income 610 -0- 703 Other income 35 -0- -0- -------------------- ---------------- ----------------- Total revenue 113,145 6,572 124,484 -------------------- ---------------- ----------------- Expenses Operational and administrative fees 3,540 80 6,158 Net income 109,605 6,492 118,326 Beginning joint venture capital (deficit) -0- -0- (19,573) Distributions to joint venture partners (129,178) -0- (116,461) -------------------- ---------------- ----------------- Ending joint venture capital (deficit) $ (19,573) $6,492 $ (17,708) ==================== ================ =================
See accompanying notes to the financial statements F-17 THE COMMERICAL BROKER'S NETWORK Statements of Cash Flows
Unaudited --------------------------------------- Period From June Period From 1, 1998 June 1, 1998 Six Months (Inception) to (Inception) to Ended December 31, 1998 June 30, 1998 June 30, 1999 ------------------- ----------------- ------------- Cash flows from operating activities Net income $ 109,605 $ 6,492 $ 118,326 Adjustments to reconcile net income to net cash Provided by (used in) operating activities: Increase in accounts receivable -0- (1,747) (2,088) Increase in sales tax payable 1,205 1,147 7,727 Increase in other liabilities -0- 119 -0- Increase in deferred subscription revenue 36,607 7,589 41,460 Net cash provided by operating activities 147,417 13,600 165,425 ------------------- ----------------- ---------------- Cash flows from financing activities Distributions to joint venture partners (129,178) -0- (116,461) ------------------- ----------------- ---------------- Net increase in cash 18,239 13,600 48,964 Cash, beginning of period -0- -0- 18,239 Cash, end of period $ 18,239 $13,600 $ 67,203 =================== ================= ================
See accompanying notes to the financial statements F-18 COMMERCIAL BROKER'S NETWORK Notes to Financial Statements (All information related to the period from June 1, 1998 (Inception) to June 30, 1998 and the period from January 1,1999 to June 30, 1999 is unaudited) NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ENTITY Commercial Broker's Network (Project) is a joint venture project between ARA - HL, Inc. (a Texas Corporation) and Sendero Investments, Inc. (a Texas Corporation). DESCRIPTION OF BUSINESS The joint venture project was formed specifically for the purpose of developing, marketing and operating a real estate information service and trade association referred to as The Commercial Broker's Network. The term of this agreement is for three years unless earlier termination is agreed upon by both parties in writing. ARA- HL, Inc., at its own expense, shall perform all programming and software development required for the Project's Internet online information system. Sendero Investments, Inc., at its own expense, performs all marketing, client development and administration needed to build sales and support the business operations of the Project. Sendero Investments, Inc. assigned its interest in the project to a related entity, Parramore, Inc., on June 23, 1997. Both entities shall contribute the use of their own hardware, software and office overhead needed to develop the online system and business development. The cost of services provided by ARA-HL, Inc. and Sendero Investments, Inc. is borne by ARA-HL, Inc. and Sendero Investments, Inc. and therefore is not reflected in these financial statements. The entities must agree in a written agreement before purchasing any additional services or products with the use of the Project's assets. Net income and losses are shared equally. BASIS OF ACCOUNTING Revenue and expenses are recognized under the accrual method of accounting. Revenue is recognized when earned and expenses are recognized when incurred. ESTIMATES The preparation of the financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Actual results could differ from those estimates. DEFERRED SUBSCRIPTION REVENUE Deferred subscription revenue consists of subscriptions purchased for an extended period of time, which has yet to expire. F-19 COMMERICAL BROKER'S NETWORK Notes to Financial Statements (Continued) (All information related to the period from June 1, 1998 (Inception) to June 30, 1998 and the period from January 1,1999 to June 30, 1999 is unaudited) NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) CONCENTRATION OF BUSINESS RISK The Project's service is generally only available for the greater Austin, Texas area. NOTE 2: SUBSEQUENT EVENTS ARA - HL, Inc. assigned its interest in the Project to a related entity, ARA - D/FW, Inc. Distributions will continue to be made to ARA - HL, Inc. The Project changed its partner distribution percentages to 55% to ARA - HL, Inc. and 45% to Sendero Investments, Inc. The joint venture partners have entered into an agreement to sell the joint venture project. F-20 COMPS.COM, INC. AND SENDERO INVESTMENTS, INC., PARRAMORE, INC., AND THE COMMERCIAL BROKER'S NETWORK Unaudited Pro Forma Condensed Financial Statements The unaudited pro forma condensed balance sheet gives effect to the acquisitions of Sendero Investments, Inc. ("Sendero"), Parramore, Inc. ("Parramore"), and The Commercial Broker's Network ("CBN") as if they had occurred on June 30, 1999. The unaudited pro forma condensed statements of operations give effect to the acquisitions of Sendero, Parramore, and CBN using the purchase method of accounting. The pro forma condensed statement of operations for the year ended December 31, 1998 gives effect to the acquisitions as if they had occurred on January 1, 1998 except for CBN which was formed in June 1, 1998. The pro forma condensed statement of operations for the six months ended June 30, 1999 gives effect to the acquisitions as if they had occurred on January 1, 1999. The unaudited pro forma condensed statements of operations are presented for illustrative purposes only and are not necessarily indicative of the results of operations that would have actually been reported had the acquisitions of Sendero, Parramore, and CBN occurred at the beginning of the applicable periods, as assumed, nor is it necessarily indicative of the Company's future results of operations. These unaudited pro forma condensed statements of operations do not incorporate, nor do they assume, any benefits from cost savings or synergies of operations resulting from the acquisition. They should be read in conjunction with the historical financial statements and notes thereto of the respective entities. F-21 PRO FORMA CONDENSED BALANCE SHEET June 30, 1999 (Unaudited) (In thousands)
SENDERO COMPS.COM, INVESTMENTS PARRAMORE PRO FORMA PRO INC. INC. INC. CBN ADJUSTMENTS FORMA -------- ---------- -------- ------- ------ -------- Current assets: Cash and cash equivalents $ 58,439 $ - $ 42 $ 67 (843) $ 57,705 Accounts receivable 2,049 27 2 2,078 Prepaid expenses 462 7 469 -------- ---------- -------- ------- ------ -------- Total current assets 60,950 76 69 (843) 60,252 -------- ---------- -------- ------- ------ -------- Furniture and equipment, net 1,812 31 1,843 Intangible assets, net 6,107 2,549 8,656 Deposits and other assets 300 300 -------- ---------- -------- ------- ------ -------- Total assets $ 69,169 $ - $ 107 $ 69 $1,706 $71,051 ======== ========== ======== ======= ====== ======== Current liabilities: Accounts payable $ 1,856 $ - $ 11 $ - $ - $ 1,867 Accrued liabilities 1,108 33 9 121 1,271 Current portion of long-term debt 1,042 244 1,286 Current portion of capital lease obligations 32 32 Deferred subscription revenue 5,097 14 78 (41) 5,148 -------- ---------- -------- ------- ------ -------- Total current liabilities 9,135 58 87 324 9,604 Long-term debt, less current portion 2,474 1,413 3,887 Capital lease obligations, less current portion 13 13 Deferred rent 67 67 -------- ---------- -------- ------- ------ -------- Total liabilities 11,689 58 87 1,737 13,571 Stockholders' equity (deficit) Common stock 112 4 1 (5) 112 Additional paid-in capital 76,322 28 (28) 76,322 Warrants 514 514 Deferred compensation (3,877) (3,877) Accumulated deficit (15,591) (32) 48 (18) 2 (15,591) -------- ---------- -------- ------- ------ -------- Total stockholders' equity (deficit) 57,480 - 49 (18) (31) 57,480 -------- ---------- -------- ------- ------ -------- Total liabilities and stockholders' equity (deficit) $ 69,169 $ - $ 107 $ 69 $1,706 $ 71,051 ======== ========== ======== ======= ====== ========
See accompanying notes to pro forma condensed financial statements. F-22 PRO FORMA CONDENSED STATEMENT OF OPERATIONS Six Months Ended June 30, 1999 (Unaudited) (In thousands, except share and per share data)
SENDERO COMPS.COM, INVESTMENTS PARRAMORE PRO FORMA PRO INC. INC. INC. CBN ADJUSTMENTS FORMA -------- ---------- -------- ------- ------ -------- Net revenues $ 7,400 $ - $ 300 $ 123 $ 7,823 Cost of revenues 3,728 127 3,855 -------- ---------- -------- ------- ------ -------- Gross profit 3,672 173 123 3,968 Operating expenses: Selling, marketing and administrative 6,561 201 6 290 7,058 Product development 1,014 1,014 -------- ---------- -------- ------- ------ -------- Total operating expenses 7,575 201 6 290 8,072 Income (loss) from operations (3,903) (28) 117 (290) (4,104) Other income (expense) (4) 9 1 (89) (83) -------- ---------- -------- ------- ------ -------- Net income (loss) (3,907) (19) 118 (379) (4,187) Dividend accretion on preferred stock (435) (435) -------- ---------- -------- ------- ------ -------- Loss attributable to common stockholders, basic and diluted $ (4,342) $ - $ (19) $ 118 $ (379) $ (4,622) ======== ========== ======== ======= ====== ======== Net loss per share attributable to common stockholders, basic and diluted $ (0.72) $ (0.76) ======== ======== Shares used in computing net loss attributable to common stockholders, basic and diluted 6,057,459 6,057,459 ========= =========
See accompanying notes to pro forma condensed financial statements. F-23 PRO FORMA CONDENSED STATEMENT OF OPERATIONS Year Ended December 31, 1998 (Unaudited) (In thousands, except share and per share data)
SENDERO COMPS.COM, INVESTMENTS PARRAMORE PRO FORMA PRO INC. INC. INC. CBN ADJUSTMENTS FORMA -------- ---------- -------- ------- ------ -------- Net revenues $ 12,900 $ - $ 555 $ 113 $ 13,568 Cost of revenues 5,768 211 3 5,982 --------- ---------- -------- ------- ------ -------- Gross profit 7,132 344 110 7,586 Operating expenses: Selling, marketing and administrative 7,298 350 1 580 8,229 Product development 1,233 1,233 --------- ---------- -------- ------- ------ -------- Total operating expenses 8,531 350 1 580 9,462 Income (loss) from operations (1,399) (6) 109 (580) (1,876) Other income (expense) (260) 14 (189) (435) --------- ---------- -------- ------- ------ -------- Net income (loss) (1,659) 8 109 (769) (2,311) Dividend accretion on preferred stock (454) (454) --------- ---------- -------- ------- ------ -------- Loss attributable to common stockholders, basic and diluted $ (2,113) $ - $ 8 $ 109 $ (769) $ (2,765) ========= ========== ======== ======= ====== ======== Net loss per share attributable to common stockholders, basic and diluted $ (0.60) $ (0.79) ========= ======== Shares used in computing net loss attributable to common stockholders, basic and diluted 3,517,056 3,517,056 ========= =========
See accompanying notes to pro forma condensed financial statements. F-24 COMPS.COM, INC. AND SENDERO INVESTMENTS, INC., PARRAMORE, INC., AND THE COMMERCIAL BROKER'S NETWORK Notes To Pro Forma Condensed Financial Statements (Unaudited) Note 1. On August 27, 1999, COMPS.COM, Inc., a Delaware corporation ("COMPS"), acquired 1) all of the outstanding stock of Sendero Investments, Inc., a Texas corporation ("Sendero"), 2) all of the outstanding stock of Parramore, Inc., a Texas corporation ("Parramore"), and 3) substantially all of the assets pertaining to the operations of the Commercial Brokers Network business ("CBN") of ARA-D/FW, Inc., a Texas corporation. The acquisitions were consummated on the terms set forth in the respective Stock Purchase Agreements and Asset Purchase Agreement dated August 27, 1999. Sendero is a party to a joint venture with ARA-D/FW operating the CBN, a comprehensive, internet-delivered, interactive, commercial real estate research and listings service subscribed to by members involved in the commercial real estate business in Central Texas. Parramore is in the business of publishing and selling The Flick Report, a bi-monthly central Texas commercial real estate trade journal. Under the terms of the Stock Purchase Agreement for Sendero, COMPS paid a total of $629,748 at the closing, $223,058 of which was in cash and $406,690 of which was in the form of a subordinated convertible note ("Sendero Note"). The Sendero Note bears interest at 7% per annum payable monthly, matures in August 2003, and can only be converted into common stock of COMPS if COMPS defaults under the terms of the Sendero Note. During the period in which a default under the terms of the Sendero Note has not been cured, the number of shares of COMPS common stock issuable upon such a conversion shall equal (i) the outstanding balance of the principal and accrued interest of the Sendero Note at the time of conversion, divided by (ii) the average of the closing prices of a share of COMPS common stock on the Nasdaq National Market for thirty consecutive trading days ending on the trading day immediately preceding the day of the default event. Under the terms of the Stock Purchase Agreement for Parramore, COMPS paid a total of $980,560 at the closing, $347,316 of which was in cash and $633,244 of which was in the form of a subordinated convertible note ("Parramore Note"). The Parramore Note bears interest at 7% per annum payable monthly, matures in August 2003, and can only be converted into common stock of COMPS if COMPS defaults under the terms of the Parramore Note. During the period in which a default under the terms of the Parramore Note has not been cured, the number of shares of COMPS common stock issuable upon such a conversion shall equal (i) the outstanding balance of the principal and accrued interest of the Parramore Note at the time of conversion, divided by (ii) the average of the closing prices of a share of COMPS common stock on the Nasdaq National Market for thirty consecutive trading days ending on the trading day immediately preceding the day of the default event. Under the terms of the Asset Purchase Agreement for ARA-D/FW, Inc., COMPS paid a total of $889,692 (plus the assumption of certain liabilities not to exceed $100,000) at the closing, $272,626 of which was in cash and $617,066 of which was in the form of two subordinated convertible notes ("Notes") in the amounts of $497,066 and $120,000. The note in the amount of $497,066 bears interest at 8% per annum payable monthly, requires semi-annual installments of principal of $62,133, and matures in August 2003. The note in the amount of $120,000 bears interest at 8% per annum and is due in two equal payments of principal plus accrued interest in February 2000 and August 2000. The Notes can only be converted into common stock of COMPS if COMPS defaults under the terms of the Notes. During the period in which a default under the terms of the Notes has not been cured, the number of shares of COMPS common stock issuable upon such a conversion shall equal (i) the outstanding balance of the principal and accrued interest of the Notes at the time of conversion, divided by (ii) the average of the closing prices of a share of COMPS common stock on the Nasdaq National Market for thirty consecutive trading days ending on the trading day immediately preceding the day of the default event. The total purchase price of $2,748,000, including acquisition costs of $121,000 assumption of deferred subscription revenue of $66,700 plus assumption of other liabilities of $60,400 was allocated, based upon management's best estimate of expected future results of the acquired assets, as follows: Current assets $ 164,400 Furniture and equipment 29,500 Other assets 3,000 Intangible assets 2,551,800 ---------- $2,748,800 ========== F-25 COMPS.COM, INC. AND SENDERO INVESTMENTS, INC., PARRAMORE, INC., AND THE COMMERCIAL BROKER'S NETWORK Notes To Pro Forma Condensed Financial Statements (Continued) (Unaudited) The intangible assets are being amortized over estimated useful lives ranging from three to five years. Note 2. The following are explanations of the adjustments reflected on the pro forma condensed financial statements. Pro Forma Condensed Balance Sheet as of June 30, 1999 ----------------------------------------------------- Adjustments reflect the acquisitions of Sendero, Parramore, and CBN for cash of $843,000, accrued liabilities for acquisition expenses of $121,000, assumption of liability for deferred subscription revenue of $50,000, and notes payable of $1,657,000. These adjustments result in the recording of intangible assets of $2,549,000 as of June 30, 1999. Pro Forma Condensed Statement of Operations for the Six Months Ended -------------------------------------------------------------------- June 30, 1999 ------------- Adjustments reflect amortization of intangible assets acquired as a result of the acquisitions of $290,000 and interest expense of $89,000 on the notes payable issued in the acquisitions and assumed interest expense on the cash outlay of $843,000 at 8% as the Company did not have the available cash at the beginning of the six month period presented. Pro Forma Condensed Statement of Operations for the Year Ended -------------------------------------------------------------- December 31, 1998 ----------------- Adjustments reflect amortization of intangible assets acquired as a result of the acquisitions of $580,000 and interest expense of $189,000 on the notes payable issued in the acquisitions and assumed interest expense on the cash outlay of $843,000 at 8% as the Company did not have the available cash at the beginning of the year presented. F-26 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. COMPS.COM, Inc. Date: November 10, 1999 /s/ Karen Goodrum ------------------ (Karen Goodrum) Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) EX-23.1 2 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS ------------------------------- We consent to the incorporation by reference in the Registration Statement (form S-8) pertaining to the 1999 Stock Incentive Plan and 1999 Employee Stock Purchase Plan of COMPS.COM, Inc. of our reports dated October 8, 1999, September 10, 1999, and September 8, 1999, with the respect to the financial statements of Sendero Investments, Inc., Parramore, Inc. dba The Flick Report, and The Commercial Broker's Network (A Joint Venture Project) included in COMPS.COM, Inc.'s Current Report (form 8-K/A) dated August 27, 1999. /s/ SPROUSE & WINN, L.L.P. November 9, 1999 Austin, Texas -----END PRIVACY-ENHANCED MESSAGE-----