<PAGE>
BOOKTECH.COM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Five Months
Year Ended Ended Year Ended
December 31, December 31, July 31,
2000 1999 1999
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES .............................................................. $ 1,725,019 $ 1,024,866 $ 1,328,813
COST OF SALES .......................................................... 2,317,030 1,027,223 1,578,308
------------ ------------ ------------
Gross margin ................................................... (592,011) (2,357) (249,495)
------------ ------------ ------------
OPERATING EXPENSES:
Selling, marketing and general and administrative (excluding
stock-based compensation costs of $964,945 in 2000) ............ 6,314,304 932,540 1,718,300
Stock-based compensation .......................................... 964,945 -- --
------------ ------------ ------------
Total operating expenses ....................................... 7,279,249 932,540 1,718,300
------------ ------------ ------------
LOSS FROM OPERATIONS ................................................... (7,871,260) (934,897) (1,967,795)
------------ ------------ ------------
INTEREST EXPENSE TO RELATED PARTIES .................................... 83,950 83,422 209,795
OTHER INTEREST EXPENSE ................................................. 73,630 42,327 4,841
------------ ------------ ------------
Total interest expense ......................................... 157,580 125,749 214,636
------------ ------------ ------------
INTEREST INCOME ........................................................ 30,297 -- --
------------ ------------ ------------
NET LOSS ............................................................... (7,998,543) (1,060,646) (2,182,431)
ACCRUED DIVIDENDS ON PREFERRED STOCK ................................... 195,736 -- --
------------ ------------ ------------
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS ........................... $ (8,194,279) $ (1,060,646) $ (2,182,431)
============ ============ ============
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER
SHARE -- BASIC AND DILUTED ..................................... $ (0.51) $ (0.15) $ (0.36)
============ ============ ============
SHARES USED IN COMPUTING BASIC AND DILUTED NET
LOSS PER SHARE ................................................. 16,123,291 6,921,001 6,016,552
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
43
<PAGE>
BOOKTECH.COM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash ............................................................................... $ 4,611 $ 82,753
Accounts receivable, less allowances for uncollectible accounts and returns
of $78,100 in 2000 and $91,700 in 1999 ......................................... 205,503 228,466
Other current assets ............................................................... 51,136 --
------------ ------------
Total current assets .................................................. 261,250 311,219
------------ ------------
PROPERTY AND EQUIPMENT, at cost ....................................................... 4,327,116 808,298
Accumulated depreciation .............................................................. (613,621) (73,928)
------------ ------------
Property and equipment, net ........................................... 3,713,495 734,370
------------ ------------
OTHER ASSETS:
Acquired technology and patent application ........................................... 993,103
Acquired customer list, net ........................................................... 944,138 --
Deposits and other .................................................................... 75,854 25,200
------------ ------------
Total other assets .................................................. 2,013,095 25,200
------------ ------------
TOTAL ................................................................. $ 5,987,840 $ 1,070,789
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Bank overdraft ..................................................................... $ 25,681 $ --
Current portion of long-term debt .................................................. 888,587 437,838
Current portion of long-term debt due to related parties ........................... 1,013,100 2,953,759
Accounts payable, including past due amounts ....................................... 4,009,090 1,282,385
Accrued payroll .................................................................... 344,041 143,423
Accrued interest expense to related parties ........................................ 17,660 354,130
Accrued other expenses ............................................................. 181,192 267,394
------------ ------------
Total current liabilities ............................................. 6,479,351 5,438,929
------------ ------------
LONG-TERM DEBT ........................................................................ 11,585 591,824
------------ ------------
DEFERRED LEASE OBLIGATION ............................................................. 101,250 146,250
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' DEFICIENCY:
Preferred stock, 5,000,000 shares authorized:
Convertible Series A, par value, $.00042,
2,135,301 shares issued and outstanding (liquidation value, $3,398,688) at
December 31, 2000; no shares issued or outstanding at December 31, 1999 ...... 897 --
Convertible Series B, par value, $.00042,
1,100,000 shares issued and outstanding at December 31, 2000; no shares
issued or outstanding at December 31, 1999 ................................... 462 --
Common stock, authorized, 54,523,810 shares, $.00042 par value, 19,146,546
shares issued and outstanding at December 31, 2000; no par value,
68,965,600 shares authorized; 9,655,184 shares issued and
8,620,700 shares outstanding at December 31, 1999 ............................... 8,041 760,000
Dividends payable in shares of common stock ........................................ 195,736 --
Additional paid-in capital ......................................................... 12,883,890
Deferred compensation .............................................................. (16,115) --
Treasury stock, at cost (1,034,484 shares at December 31, 1999) .................... -- (187,500)
Accumulated deficit ................................................................ (13,677,257) (5,678,714)
------------ ------------
Total stockholders' deficiency ........................................ (604,346) (5,106,214)
------------ ------------
TOTAL ................................................................. $ 5,987,840 $ 1,070,789
============ ============
</TABLE>
See notes to consolidated financial statements.
44
<PAGE>
booktech.com, inc. and Subsidiary
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
$.00042 Par Value $.00042 Par Value
Convertible Preferred Convertible Preferred $.00042 Par Value
Stock, Series A Stock, Series B Common Stock
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance, August 1, 1998 ....................... -- $ -- -- $ -- -- $ --
Net loss for the period .................... -- -- -- -- -- --
--------- ------ --------- ------ ---------- -------
Balance, July 31, 1999 ........................ -- -- -- -- -- --
Related party loans converted into
common stock .............................. -- -- -- -- -- --
Net loss for the period ..................... -- -- -- -- -- --
--------- ------ --------- ------ ---------- -------
Balance, December 31, 1999 .................... -- -- -- -- -- --
Adjustment to reflect exchange of common
stock in reverse merger ................... -- -- -- -- 7,520,690 3,159
Issuance of preferred stock in exchange for
common stock .............................. -- -- 1,100,000 462 -- --
Conversion of related party notes and
accrued interest into preferred stock ..... 2,135,301 897 -- -- -- --
Issuance of common stock, including
conversion of other debt and accrued
interest into common stock ................ -- -- -- -- 4,666,667 1,960
Common stock held by former Ebony & Gold
Ventures' shareholders .................... -- -- -- -- 5,000,000 2,100
Issuance of common stock to acquire
technology and patent application ......... -- -- -- -- 1,379,310 579
Reverse merger expenses ..................... -- -- -- -- -- --
Issuance of common stock to acquire assets
of Copytron, Inc. ......................... -- -- -- -- 238,298 100
Stock-based compensation .................... -- -- -- -- 341,581 143
Accrued dividends on convertible preferred
stock, Series A ........................... -- -- -- -- -- --
Fair value of warrants granted in connection
with issuance of notes payable to related
parties ................................... -- -- -- -- -- --
Beneficial conversion feature of notes
payable to related parties ................ -- -- -- -- -- --
Net loss for the period ..................... -- -- -- -- -- --
--------- ------ --------- ------ ---------- -------
Balance, December 31, 2000 .................... 2,135,301 $ 897 1,100,000 $462 19,146,546 $ 8,041
========= ====== ========= ====== ========== =======
<CAPTION>
Dividends
No Par Additional Payable In
Common Stock Paid-In Shares of
Shares Amount Capital Common Stock
------ -------- ---------- ------------
<S> <C> <C> <C> <C>
Balance, August 1, 1998 ....................... 20,000 $260,000 $ -- $ --
Net loss for the period .................... -- -- -- --
------ --------- ----------- ----------
Balance, July 31, 1999 ........................ 20,000 260,000 -- --
Related party loans converted into
common stock .............................. 5,000 500,000 -- --
Net loss for the period ..................... -- -- -- --
------ --------- ----------- ----------
Balance, December 31, 1999 .................... 25,000 760,000 -- --
Adjustment to reflect exchange of common
stock in reverse merger ................... (21,810) (663,024) 472,365 --
Issuance of preferred stock in exchange for
common stock .............................. (3,190) (96,976) 96,514 --
Conversion of related party notes and
accrued interest into preferred stock ..... -- -- 3,215,274 --
Issuance of common stock, including
conversion of other debt and accrued
interest into common stock ................ -- -- 7,022,577 --
Common stock held by former Ebony & Gold
Ventures' shareholders .................... -- -- (2,100) --
Issuance of common stock to acquire
technology and patent application ......... -- -- 992,524 --
Reverse merger expenses ..................... -- -- (582,938) --
Issuance of common stock to acquire assets
of Copytron, Inc. ......................... -- -- 699,900 --
Stock-based compensation .................... -- -- 980,917 --
Accrued dividends on convertible preferred
stock, Series A ........................... -- -- (195,736) 195,736
Fair value of warrants granted in connection
with issuance of notes payable to related
parties ................................... -- -- 83,317 --
Beneficial conversion feature of notes
payable to related parties ................ -- -- 101,276 --
Net loss for the period ..................... -- -- -- --
------ --------- ----------- ----------
Balance, December 31, 2000 .................... -- $ -- $12,883,890 $ 195,736
====== ========= =========== ==========
<CAPTION>
Deferred Treasury Accumulated
Compensation Stock Deficit Total
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
Balance, August 1, 1998 ....................... $ -- $ (187,500) $ (2,435,637) $(2,363,137)
Net loss for the period .................... -- -- (2,182,431) (2,182,431)
--------- ----------- ------------ ----------
Balance, July 31, 1999 ........................ -- (187,500) (4,618,068) (4,545,568)
Related party loans converted into
common stock .............................. -- -- -- 500,000
Net loss for the period ..................... -- -- (1,060,646) (1,060,646)
--------- ----------- ------------ ----------
Balance, December 31, 1999 .................... -- (187,500) (5,678,714) (5,106,214)
Adjustment to reflect exchange of common
stock in reverse merger ................... -- 187,500 -- --
Issuance of preferred stock in exchange for
common stock .............................. -- -- -- --
Conversion of related party notes and
accrued interest into preferred stock ..... -- -- -- 3,216,171
Issuance of common stock, including
conversion of other debt and accrued
interest into common stock ................ -- -- -- 7,024,537
Common stock held by former Ebony & Gold
Ventures' shareholders .................... -- -- -- --
Issuance of common stock to acquire
technology and patent application ......... -- -- -- 993,103
Reverse merger expenses ..................... -- -- -- (582,938)
Issuance of common stock to acquire assets
of Copytron, Inc. ......................... -- -- -- 700,000
Stock-based compensation .................... (16,115) -- -- 964,945
Accrued dividends on convertible preferred
stock, Series A ........................... -- -- -- --
Fair value of warrants granted in connection
with issuance of notes payable to related
parties ................................... -- -- -- 83,317
Beneficial conversion feature of notes
payable to related parties ................ -- -- -- 101,276
Net loss for the period ..................... -- -- (7,998,543) (7,998,543)
--------- ----------- ------------ ----------
Balance, December 31, 2000 .................... $ (16,115) $ -- $(13,677,257) $ (604,346)
========= =========== ============ ==========
</TABLE>
See notes to consolidated financial statements.
45
<PAGE>
BOOKTECH.COM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Five Months
Year Ended Ended Year Ended
December 31, December 31, July 31,
2000 1999 1999
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(7,998,543) $(1,060,646) $(2,182,431)
Adjustments to reconcile net loss to net cash used for operating
activities:
Depreciation and amortization 625,524 23,515 49,101
Stock-based compensation 964,945 -- --
Related-party interest expense satisfied by issuing convertible
preferred stock, Series A 56,839 -- --
Amortization of warrants and beneficial conversion feature on
convertible notes payable to related parties 8,432 -- --
Loss on disposal of property and equipment -- 12,869 --
Write-off of acquisition deposit 300,000 -- --
(Decrease) increase in cash from:
Accounts receivable, net 22,963 (114,359) (37,084)
Other current assets (51,136) -- --
Deposits and other assets (50,654) (2,000) (23,200)
Stockholder's advance -- 19,267 (19,267)
Accounts payable 864,387 368,075 663,939
Accrued payroll and other expenses 138,953 234,605 8,308
Accrued interest to related parties 7,862 101,348 164,756
Deferred lease obligation (45,000) 60,000 120,000
----------- ----------- -----------
Net cash used in operating activities (5,155,428) (357,326) (1,255,878)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of customer list (129,969) -- --
Expenditures for property and equipment (822,814) (181,699) (35,948)
Payment of merger costs (582,938) -- --
Acquisition deposit (300,000) -- --
----------- ----------- -----------
Net cash used in investing activities (1,835,721) (181,699) (35,948)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft 25,681 -- --
Proceeds from notes and warrants issued to related parties 2,957,212 150,000 1,510,000
Repayments of notes to related parties (456,710) (22,707) (20,106)
Proceeds from other debt financings -- 595,539 100,000
Repayments of other debt financings (613,176) (159,505) (271,772)
Net proceeds from issuance of common stock 5,000,000 -- --
----------- ----------- -----------
Net cash provided from financing activities 6,913,007 563,327 1,318,122
----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH (78,142) 24,302 26,296
CASH, BEGINNING OF PERIOD 82,753 58,451 32,155
----------- ----------- -----------
CASH, END OF PERIOD $ 4,611 $ 82,753 $ 58,451
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
46 |
