EX-99.2 4 g70740ex99-2.txt UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL 1 EXHIBIT 99.2 U.S. TECHNOLOGIES INC. INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The unaudited pro forma condensed consolidated financial statements have been prepared to give effect to the purchase on April 12, 2000 and March 27, 2001, respectively, by U.S. Technologies Inc. ("USXX") of all of the outstanding equity interests of E2Enet, Inc. ("E2E") and Yazam.com, Inc. ("Yazam"), both development stage enterprises. The proforma balance sheet is presented as if the acquisition of Yazam occurred on December 31, 2000. The proforma statement of operations is presented as if each of the acquisitions of E2E and Yazam occurred on January 1, 2000. The pro forma condensed consolidated financial statements have been prepared and/or derived from, and should be read in conjunction with, the historical consolidated financial statements and notes thereto of USXX, E2E and Yazam. The unaudited pro forma condensed consolidated balance sheet assumes that all outstanding shares of Yazam common stock and all preferred stock of Yazam were acquired by USXX as of December 31, 2000 and reflect preliminary application of the purchase method of accounting for the acquisition. USXX acquired assets with an estimated fair market value of approximately $32,949,000 and assumed liabilities of approximately $2,015,000 in exchange for payment of $22,000,000 in cash, $7,714,000 of USXX's Series F redeemable convertible preferred stock and $880,000 of USXX's common stock warrants. The Series F preferred shares are redeemable at the option of the holder in the event that a charter amendment authorizing additional common shares is not effected by September 1, 2001, except for those shareholders who waived such redemption right on July 19 and 20, 2001. The unaudited pro forma condensed consolidated balance sheet gives effect to the cash used in the operations of Yazam from January 1, 2001 to March 27, 2001. The application of the purchase method of accounting for the E2E acquisition is already incorporated into the historical consolidated balance sheet of USXX as of December 31, 2000. The unaudited pro forma consolidated statement of operations gives effect to the E2E and Yazam acquisitions as if they had occurred on January 1, 2000 and include appropriate adjustments for amortization and other items related to the transaction, but exclude any potential cost savings. Further, Yazam had effectively curtailed its operations during December 2000 and had begun a process of liquidating its assets prior to the purchase by USXX. 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. F-16 2 U.S. TECHNOLOGIES INC. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DECEMBER 31, 2000 (UNAUDITED)
HISTORICAL U.S. --------------------------- TECHNOLOGIES, U.S. INC. TECHNOLOGIES, YAZAM.COM PRO FORMA PRO FORMA INC. INC. ADJUSTMENTS NOTES CONSOLIDATED ------------- ----------- ------------ ----- ------------- ASSETS Current Assets Cash and cash equivalents............. $ 6,110 $35,427,363 $ 22,000,000 (A) $ 5,418,871 (22,000,000) (B) (22,000,000) (D) (8,014,602) (B) Accounts receivable, less allowance... 401,253 1,263,799 1,665,052 Inventories........................... 169,834 -- 169,834 Prepaid expenses...................... 81,848 441,835 523,683 ------------ ----------- ------------ ----------- Total current assets........... 659,045 37,132,997 (30,014,602) 7,777,440 ------------ ----------- ------------ ----------- Property and equipment, net........... 656,820 1,918,728 2,575,548 Other assets: Investment in associated companies.... 3,434,217 1,631,258 5,065,475 Note receivable....................... 90,000 -- 90,000 Security deposits..................... 770,905 770,905 Goodwill.............................. 1,634,394 1,634,394 Other................................. 450 -- 450 ------------ ----------- ------------ ----------- Total other assets............. 3,524,667 4,036,557 0 7,561,224 ------------ ----------- ------------ ----------- Total assets................... $ 4,840,532 $43,088,282 $(30,014,602) $17,914,212 ============ =========== ============ =========== LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities Accounts payable and accrued expenses............................ $ 2,006,571 $ 3,613,477 400,000 (B) $ 6,020,048 Obligation under put option assumed in conjunction with E2E acquisition.... 2,000,010 2,000,010 Due to Yazam shareholders............. 466,413 466,413 Line of credit........................ 197,392 197,392 Notes payable......................... 685,861 685,861 Notes payable Yazam acquisition....... 22,000,000 (A) 0 (22,000,000) (D) ------------ ----------- ------------ ----------- Totals current liabilities..... 4,889,834 4,079,890 400,000 9,369,724 Series F convertible preferred stock.... -- 7,713,790 (B) 7,713,790 Stockholders' equity Common stock.......................... 592,216 1,989 (1,989) (B) 592,216 Convertible preferred stock........... 21,958,689 85,150,000 (85,150,000) (B) 21,958,689 Convertible preferred stock, subscribed but unissued............. 1,199,200 -- 1,199,200 Additional paid in capital............ 27,601,507 9,587,864 (9,587,864) (B) 34,503,787 6,022,280 (C) 880,000 (B) Deferred compensation................. (346,391) 346,391 (B) 0 Accumulated deficit................... (51,400,914) (44,712,759) 44,712,759 (B) (57,423,194) (6,022,280) (C) Foreign currency translation adjustments......................... 77,741 (77,741) (B) 0 Treasury stock, at cost............... (10,750,052) 10,750,052 (B) 0 ------------ ----------- ------------ ----------- Total Stockholders' Equity..... (49,302) 39,008,392 (38,128,392) 830,698 ------------ ----------- ------------ ----------- Total Liabilities and Equity... $ 4,840,532 $43,088,282 $(30,014,602) $17,914,212 ============ =========== ============ ===========
F-17 3 U.S. TECHNOLOGIES INC. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000 NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET Please refer to the accompanying "Introduction to Unaudited Pro Forma Condensed Consolidated Financial Statements". Note (A) Adjustment to record proceeds from bank note to fund cash portion of purchase price. Note bears interest at 6% and matures on April 27, 2001. Note (B) Records the purchase of the remaining assets of Yazam utilizing purchase accounting. The unaudited pro forma consolidated balance sheet assumes that all outstanding shares of Yazam common stock and all preferred stock are acquired by USXX in exchange for $22,000,000 in cash, $7,713,790 in Series F redeemable convertible preferred stock and $880,000 in warrants. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in connection with the acquisition as if it occurred December 31, 2000: Cash........................................................ $ 5,413,000 Accounts receivable......................................... 1,264,000 Investments in associated companies 3G Vision................................................. 62,000 Baobab.................................................... 151,000 Coremarkets............................................... 350,000 Gammasite................................................. 76,000 Incepto................................................... 44,000 Phlair.................................................... 166,000 EZ Face................................................... 30,000 Quintessence.............................................. 180,000 Selis..................................................... 24,000 Soneta.................................................... 432,000 TravelBond................................................ 41,000 Square.com................................................ 75,000 ------- 1,631,000 Other assets................................................ 4,766,000 Accounts payable and accrued expenses....................... (4,480,000) ----------- $ 8,594,000 ===========
The Pro Forma Condensed Consolidated Balance Sheet gives effect to the cash used in the operations of Yazam from January 1, 2001 to March 27, 2001. Note (C) Adjustment for deemed dividend resulting from beneficial conversion features of the Series F Preferred Stock issued in association with the acquisition of Yazam. Note (D) To retire bridge loan immediately subsequent to closing. F-18 4 U.S. TECHNOLOGIES INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2000 (UNAUDITED)
HISTORICAL --------------------------------------------- U.S. TECHNOLOGIES, E2ENET.COM YAZAM.COM U.S. INC. INC. INC. TECHNOLOGIES, INC. YEAR ENDED (JANUARY 1 - YEAR ENDED PRO FORMA PRO FORMA 12/31/2000 APRIL 12, 2000) 12/31/2000 ADJUSTMENTS NOTES CONSOLIDATED ------------- --------------- ------------ ----------- ----- ------------------ Net sales and revenues.............. 2,671,378 -- 2,157,198 4,828,576 Operating costs and expenses Cost of sales..................... 2,902,444 -- -- 2,902,444 Selling, general and administrative expense.......... 6,423,867 261,015 24,359,456 31,044,338 Impairment of long-lived assets... 12,304,800 -- 16,922,916 29,227,716 ------------ ----------- ------------ ----------- ------------ Total operating costs and expenses.................. 21,631,111 261,015 41,282,372 0 63,174,498 ------------ ----------- ------------ ----------- ------------ Loss from operations................ (18,959,733) (261,015) (39,125,174) 0 (58,345,922) Other expense (income) Interest, net..................... (34,383) 173,284 (2,100,309) 1,304,269 (E) (735,423) (173,284) (E) 95,000 (E) Equity in loss of associated companies....................... 640,350 600,068 2,134,708 3,375,126 Other, net........................ (206,863) -- -- (206,863) ------------ ----------- ------------ ----------- ------------ Total other expense (income).................. 399,104 773,352 34,399 1,225,985 2,432,840 ------------ ----------- ------------ ----------- ------------ Net loss before minority interest in loss of subsidiary................ (19,358,837) (1,034,367) (39,159,573) (1,225,985) (60,778,762) Minority interest in loss of subsidiary........................ (707,740) -- -- (707,740) ------------ ----------- ------------ ----------- ------------ Net loss............................ (18,651,097) (1,034,367) (39,159,573) (1,225,985) (60,071,022) Deemed dividends to preferred shareholders...................... 14,757,650 -- -- 6,022,280 (F) 20,779,930 ------------ ----------- ------------ ----------- ------------ Net loss available to common shareholders...................... $(33,408,747) $(1,034,367) $(39,159,573) $(7,248,265) $(80,850,952) ============ =========== ============ =========== ============ Net loss per common share basic and diluted........................... $ (1.14) $ (2.75) ============ =========== ============ =========== ============ Average common shares outstanding basic and diluted................. 29,408,063 -- -- -- 29,408,063 ============ =========== ============ =========== ============
F-19 5 U.S. TECHNOLOGIES INC. NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2000 Please refer to the accompanying "Introduction to Unaudited Pro Forma Condensed Consolidated Financial Statements." (E) Adjustment to reduce interest income assuming $22,000,000 cash portion of purchase price is paid out as of January 1, 2000 and unavailable for investment by Yazam, to eliminate interest expense on E2E shareholder notes payable and warrants converted to equity on the date of its acquisition by USXX and to record interest expense on the bridge loan. (F) Adjustment for deemed dividend resulting from beneficial conversion features of the Series F Preferred Stock issued in association with the acquisition of Yazam. F-20