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.
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U.S. TECHNOLOGIES INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2000
(UNAUDITED)
<Table>
<Caption>
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
============ =========== ============ ===========
</Table>
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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:
<Table>
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
===========
</Table>
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.
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U.S. TECHNOLOGIES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2000
(UNAUDITED)
<Table>
<Caption>
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
============ =========== ============ =========== ============
</Table>
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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.
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