EX-99.2 3 g67929ex99-2.txt PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS 1 EXHIBIT 99.2 U.S. TECHNOLOGIES INC. INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The unaudited pro forma consolidated financial statements have been prepared to give effect to U.S. Technologies Inc. ("USXX") acquisition of all of the outstanding equity interests of E2Enet, Inc. ("E2E"), a development stage enterprise. The unaudited pro forma consolidated financial statements assume that 138,825,188 shares of E2E common stock are outstanding on a fully diluted basis as of December 31, 1999, and reflect application of the purchase method of accounting for the acquisition. Such financial statements have been derived from, and should be read in conjunction with, the historical consolidated financial statements and notes thereto of the USXX for the year ended December 31, 1999, and the E2E historical financial statements and notes thereto for the year ended December 31, 1999 included elsewhere in this form 8-K. The unaudited pro forma consolidated balance sheet gives effect to the acquisition as if it had occurred on December 31, 1999 combining the balance sheets of USXX and E2E as of that date. The unaudited pro forma consolidated statements of operations give effect to the acquisition as if it had occurred on January 1, 1999 and include appropriate adjustments for amortization and other items directly related to the transaction, but exclude any potential cost savings. The pro forma adjustments are based on preliminary estimates, available information and certain assumptions that management deems appropriate. The unaudited pro forma consolidated financial statements do not purport to represent the consolidated results that would have been obtained had the transaction occurred at the dates indicated, as assumed, nor do they purport to present the results which may be obtained in the future. 20 2 U.S. TECHNOLOGIES INC. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DECEMBER 31, 1999 (UNAUDITED)
U. S. TECHNOLOGIES E2ENET, PRO FORMA PRO FORMA INC. INC. ADJUSTMENTS CONSOLIDATED ------------ ------------ ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 9,451 $ 243,477 $ 6,144,297 (1) $ 5,277,327 (1,119,898) (2) Accounts receivable, less 195,289 -- 195,289 allowance Inventories 260,575 -- 260,575 ------------ ------------ ------------ ------------ Prepaid expenses 39,340 5,330 44,670 ------------ ------------ --------- ------------ Total current assets 504,655 248,807 5,024,399 5,777,861 ------------ ------------ --------- ------------ Property and equipment, net 571,383 32,234 603,617 ------------ ------------ --------- ------------ Other assets: Investment in affiliates -- 9,840,920 2,921,299 (2) 12,762,219 Note and advances receivable -- 1,208,624 -- 1,208,624 Goodwill 2,000,000 (2) 2,000,000 Other 16,058 -- 16,058 ------------ ------------ --------- ------------ Total other assets 16,058 11,049,544 4,921,299 15,986,901 ------------ ------------ --------- ------------ Total assets $ 1,092,096 $ 11,330,585 $ 9,945,698 $ 22,368,379 ============ ============ ========= ============ LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities Current maturities of long-term debt $ 27,270 -- $ -- $ 27,270 Accounts payable 1,004,237 1,494,951 2,499,188 Accrued expenses 267,587 437,035 2,000,000 (2) 2,704,622 Note payable to stockholders -- 5,856,987 (5,856,987) (2) -- ------------ ------------ --------- ------------ Totals current liabilities 1,299,094 7,788,973 (3,856,987) 5,231,080 Long-term debt less current maturities 13,794 -- -- 13,794 ------------ ------------ --------- ------------ Total liabilities 1,312,888 7,788,973 (3,856,987) 5,244,874 ------------ ------------ --------- ------------ Stockholders' equity Common stock 583,906 43,587 (43,587) (2) 583,906 Convertible preferred stock 5,000,000 -- 11,200,000 16,200,000 Convertible preferred stock, subscribed but unissued 289,703 -- 6,144,297 (1) 6,434,000 Additional paid in capital 12,275,655 43,861,286 (43,861,286) (2) 12,275,655 Accumulated deficit (17,992,167) (40,358,936) 40,358,936 (2) (17,992,167) Stock receivable (150,205) (4,325) 4,325 (2) (150,205) Treasury stock, at cost (227,684) -- -- (227,684) ------------ ------------ --------- ------------ Total Stockholders' Equity (220,792) 3,541,612 13,802,685 17,123,505 ------------ ------------ --------- ------------ TOTAL LIABILITIES & EQUITY $ 1,092,096 $ 11,330,585 $ 9,945,698 $ 22,368,379 ============ ============ ============ ============
See accompanying introduction and notes to pro forma condensed consolidated financial statements. 21 3 U.S. TECHNOLOGIES INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1999 (UNAUDITED)
U. S. TECHNOLOGIES E2ENET, PRO FORMA PROFORMA INC. INC. ADJUSTMENTS CONSOLIDATED ------------ ---------- ----------- ------------ Net sales $ 3,764,785 $ -- $ -- $ 3,764,785 ----------- ---------- --------- ----------- Operating costs and expenses Cost of sales 4,458,881 -- 4,458,881 Selling expense 43,658 -- 43,658 General and administrative 1,988,113 3,063,763 666,667 (C) 5,718,543 expense Stock compensation expense -- 31,072,080 31,072,080 ----------- ---------- --------- ----------- Total operating costs and expenses 6,490,652 34,135,843 666,667 41,293,162 ----------- ---------- --------- ----------- Loss from operations (2,725,867) (34,135,843) (666,667) (37,528,377) ----------- ---------- --------- ----------- Other expense (income) Gain on sale of subsidiary (642,764) -- (642,764) Equity in loss of investees -- 3,824,279 373,299 (A) 4,197,578 Interest (28,893) 2,319,116 (2,290,350) (B) (127) Other 202,271 -- 202,271 ----------- ---------- --------- ----------- Total other expense (income) (469,386) 6,143,395 (1,917,051) 3,756,958 ----------- ---------- --------- ----------- Net loss (2,256,481) (40,279,238) 1,250,384 (41,285,335) Preferred stock dividends 525,114 525,114 ----------- ---------- --------- ----------- Net loss applicable to common shareholders $(2,781,595) $(40,279,238) $ 1,250,384 $ (41,810,449) =========== ============ ============ ============== Net loss per common share basic and diluted $ (0.10) $ (1.45) =========== ============== Average common shares outstanding basic and diluted 28,795,278 28,795,278 =========== ===========
See accompanying introduction and notes to pro forma condensed consolidated financial statements. 22 4 U.S. TECHNOLOGIES INC. NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Notes to pro forma consolidated balance sheet Note (1) - To reflect the sale by USXX of Series A and Series C Convertible Preferred Stock, a condition precedent to the merger. Conversion of these shares are subject to similar factors as noted below in Note (2) as they relate to the Series B Mandatorily Convertible Preferred Stock. Upon conversion USXX may recognize the existence of a beneficial conversion feature, which may be substantial in amount and would result in a reduction in net income or increase in net loss applicable to common stockholders. Note (2) - To record the acquisition by USXX of E2E and the estimated valuation adjustments of E2E's assets and liabilities resulting from the preliminary allocation of the purchase price. The aggregate purchase price is estimated to be $12,319,898 and consists of $11,200,000 of USXX's Series B Mandatorily Convertible Preferred Stock issued to the former shareholders of E2E plus $1,119,898 of acquisition costs. This transaction also resulted in the conversion of E2E's shareholder debt to equity. In completing the merger transaction, USXX also assumed a $2,000,000 liability between E2E's former significant shareholder and the two significant shareholders of one of E2E's former investee companies. The excess of purchase price over the estimated value of assets acquired, $2,000,000 was allocated to goodwill. USXX's Series B Mandatorily Convertible Preferred Stock is mandatorily convertible upon the acceptance by the Secretary of State of the State of Delaware of a charter amendment increasing the number of shares of common stock authorized to an amount sufficient to permit the conversion of all of the then outstanding USXX Preferred Stock into common stock. This charter amendment must first be approved by stockholders of USXX. Upon satisfaction of these criteria and conversion of the Series B Mandatorily Convertible Preferred Stock, USXX may recognize the existence of a beneficial conversion feature, which may be substantial in amount, and would result in a reduction in net income or increase in net loss applicable to common stockholders. Notes to pro forma consolidated statements of operations for the year ended December 31, 1999 Note (A) - To record additional amortization of the carrying value of investments in excess of the Company's share of the underlying equity using the straight-line method over a three year period. Note (B) - To eliminate interest expense on E2E shareholder notes payable and warrants converted to equity on the date of the merger. Note (C) - To record amortization of goodwill over a three year life. 23