PART F/S
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
Independent Auditors' Report................................................F-1
Consolidated Balance Sheet for the Years Ended
June 30, 1999 and 1998.....................................................F-3
Consolidated Statement of Operations for the Years
Ended June 30, 1999 and 1998...............................................F-4
Consolidated Statement of Shareholders' Equity for
the Years Ended June 30, 1999 and 1998.....................................F-5
Consolidated Statement of Cash Flows for the Years
Ended June 30, 1999 and 1998...............................................F-6
Supplemental Disclosure of Noncash Activities...............................F-7
Notes to Consolidated Financial Statements
June 30, 1999 and 1998.....................................................F-8
Consolidated Balance Sheet for December 31, 1999
and June 30, 1999..........................................................F-14
Consolidated Statement of Operations for the Six Months
Ended December 31, 1999 and the Twelve Months Ended June 30, 1999..........F-15
Consolidated Statement of Shareholders' Equity for the
Six Months Ended December 31, 1999 and the
Twelve Months Ended June 30, 1999..........................................F-16
Consolidated Statement of Cash Flows for the Six Months
Ended December 31, 1999 and the Twelve Months Ended June 30, 1999..........F-17
Charles E. Smith
Certified Public Accountant
709 B West Rusk, Suite 580
Rockwall, Texas 75087
Telephone (214) 212-2307
To the Board of Directors and Stockholders
of Ameri-First Financial Group, Inc.
I have audited the accompanying consolidated balance sheet of Ameri-First
Financial Group, Inc. (a Nevada corporation) and subsidiaries as of June 30,
1999, and the related consolidated statements of income, retained earnings, and
cash flows for the year then ended. These consolidated financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these consolidated financial statements based on my audit. The
consolidated financial statements of Ameri-First Financial Group, Inc. (formerly
Pacific Sports Holdings, Inc.) as of June 30, 1998 were audited by other
auditors whose report dated September 11, 1998, expressed an unqualified opinion
on those statements.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated 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. I believe my audit provides a reasonable basis for my
opinion.
In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Ameri-First
Financial Group, Inc. and subsidiaries as of June 30, 1999, and the results of
their operations and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Charles E. Smith
Rockwall, Texas
February 9, 2000
F-1
Charles E. Smith
Certified Public Accountant
709 B West Rusk, Suite 580
Rockwall, Texas 75087
Telephone (214) 212-2307
February 9, 2000
Mr. Jeffrey C. Bruteyn
Ameri-First Financial Group, Inc.
4514 Cole Ave., Suite 806
Dallas, Texas 75205
Dear Mr. Bruteyn:
This letter shall serve to evidence my consent to inclusion of the
consolidated financial statements of Ameri-First Financial Group, Inc. and
subsidiaries as of June 30, 1999 in the Form 10-SB filing of your company.
Please advise me if I may be of any further service in this respect
Yours Truly,
/s/ Charles E. Smith
--------------------
Charles E. Smith
F-2
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Consolidated Balance Sheet
June 30, 1999 and 1998
Assets
June 30, 1999 June 30, 1998
------------- -------------
Current assets:
Cash $ 629 $ 37,049
Trade accounts receivable, less allowances for bad debt and returns 104,648
Inventories 165,199
Prepaid expenses and other current assets 105,638 275,750
Other current receivables 600
------------- -------------
Total current assets 106,867 582,646
Property and equipment 155,207
Investments 1,500
Excess of cost over net assets acquired, less accumulated amortization 76,531
------------- -------------
$ 108,367 $ 814,384
============= =============
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of debt payable to shareholder $ 1,255,000 $ 17,653
Current installments of capital lease commitment 2,041 4,606
Accounts payable 244,945 91,399
Accrued expenses 162,528 28,688
------------- -------------
Total current liabilities 1,664,514 142,346
Capital lease commitment, excluding current maturities 2,018
Long-term notes payable to shareholders, excluding current maturities 518,440
------------- -------------
Total liabilities 1,664,514 662,804
------------- -------------
Shareholders' equity:
Common Stock, $0.001 par value. Authorized 25,000,000; issued and
outstanding 4,166,414 and 2,520,900 at June 30, 1999 and 1998 4,166 2,521
Paid-in capital 6,818,751 467,856
Accumulated deficit (8,379,064) (318,797)
------------- -------------
Net shareholders' equity (1,556,147) 151,580
Commitments and contingencies (see notes) $ 108,367 $ 814,384
============= =============
See accompanying notes to consolidated financial statements.
F-3
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Consolidated Statement of Operations
Years Ended June 30, 1999 and 1998
Year Ended Year Ended
June 30, 1999 June 30, 1998
------------- -------------
Net sales $ 87,683 $ 230,853
Cost of sales 598,378 124,528
------------- -------------
Gross profit (510,695) 106,325
Operating expenses:
Selling 22,338
General and administrative expenses 2,991,795 239,078
------------- -------------
2,991,795 261,416
------------- -------------
Loss from operations (3,502,490) (155,091)
Other expenses:
Other 18,768 (103,689)
Loss on repossessed assets and sale of business (762,479)
Loss on writeoff of investments (3,685,955)
Interest, net (128,126) (11,486)
------------- -------------
(4,557,792) (115,175)
------------- -------------
Loss before minority interest (8,060,282) (270,266)
Minority interest (15) (30)
------------- -------------
Net loss $ (8,060,267) $ (270,236)
============= =============
Net loss per share - basic and diluted $ (2.76) $ (0.13)
============= =============
Weighted average shares - basic and diluted 2,923,855 2,091,375
============= =============
See accompanying notes to consolidated financial statements.
F-4
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Consolidated Statement of Shareholders' Equity
Years Ended June 30, 1999 and 1998
Common stock Additional Net
------------------------- paid-in Accumulated shareholders'
Shares Amount capital deficit equity
---------- ---------- ---------- ----------- ------------
Balance at June 30, 1997 802,800 $ 803 $ 51,565 $ 20,417 $ (31,951)
Shares issued for cash 58,100 58 145,192 145,250
Shares issued for acquisition of:
Mardock 60,000 60 240 300
South Bay Golf 1,600,000 1,600 6,400 8,000
Capital contributions 264,459 264,459
Distribution to shareholders (16,610) (16,610)
Net loss (270,236) (270,236)
---------- ---------- ---------- ----------- ------------
Balance at June 30, 1998 2,520,900 $ 2,521 $ 467,856 $ (266,429) $ 99,212
Shares issued for barter credit
for advertising 80,000 80 999,920 1,000,000
Shares issued to buy minority
15% of Outback Sports 60,000 60 240 300
Shares issued to buy majority
50.01% of Tahoe Air Corp. 1,100,000 1,100 3,653,900 3,655,000
Shares issued for services 274,698 275 820,001 820,276
Shares issued for cash 130,816 130 850,171 850,301
Less offering costs (128,539) (128,539)
Capital contributions 155,202 155,202
Net loss (8,060,267) (8,060,267)
---------- ---------- ---------- ----------- ------------
Balance at June 30, 1999 4,166,414 $ 4,166 $6,818,751 $(8,326,696) $ (1,608,515)
========== ========== ========== =========== ============
See accompanying notes to consolidated financial statements.
F-5
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Consolidated Statement of Cash Flows
Years Ended June 30, 1999 and 1998
Year Ended Year Ended
June 30, 1999 June 30, 1998
------------- -------------
Cash flows from operating activities:
Net loss $ (8,060,267) $ (270,236)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 13,435
Non-cash expenses 343,592
Stock issued for expenses 1,700,575
Writeoff of investments paid for with stock 3,654,500
(Increase) decrease in assets:
Accounts receivable 104,648 19,312
Other receivables (600)
Inventory 165,199 (92,603)
Prepaid expenses and other current assets 170,111 (258,681)
Increase (decrease) in liabilities:
Accounts payable 153,546 19,082
Accrued expenses 133,840 (15,885)
------------- -------------
Net cash used in operating activities (1,634,856) (585,576)
Cash flows used in investing activities:
Proceeds from disposal of property and equipment (3,716)
Cash paid for acquisition of assets (189,623)
------------- -------------
Net cash used in investing activities 0 (193,339)
Cash flows from financing activities:
Proceeds from borrowings on notes payable 718,907 440,000
Payment on notes payable (2,228)
Proceeds from issuance of stock 721,762 145,250
Distribution to shareholders (16,610)
Principal payments under capital lease obligations 2,565 (14,503)
Capital contributions 155,202 243,320
------------- -------------
Net cash provided by financing activities 1,598,436 795,229
------------- -------------
Net increase in cash $ (36,420) $ 16,314
Cash at beginning of period 37,049 20,735
------------- -------------
Cash at end of period $ 629 $ 37,049
============= =============
See accompanying notes to consolidated financial statements.
F-6
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Consolidated Statement of Cash Flows
Years Ended June 30, 1999 and 1998
Supplemental Disclosure of Noncash Activities
Supplemental disclosure of noncash financing activities:
In the year ended June 30, 1998:
Common stock valued at $8,000 was issued for receivables of $100 Common
stock valued at $300 was issued as part of a purchase acquisition
A related party note payable of $21,139 was converted to equity and
recorded as additional paid-in capital
In the year ended June 30, 1999:
Common stock valued at $3,655,000 was issued for 50.01% of Tahoe Air Corp.
Common stock valued at $300 was issued as part of a purchase acquisition
Supplemental disclosure of cash flow information:
1999 1998
--------- ---------
Cash paid during the year for:
Interest 0 1,656
Income taxes 0 2,700
See accompanying notes to consolidated financial statements.
F-7
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Notes to Consolidated Financial Statements
June 30, 1999 and 1998
(1) Summary of Significant Accounting Policies and Practices
(a) General
-------
Ameri-First Financial Group, Inc. and subsidiaries (the "Company") is
engaged in investment banking. Prior to that business, the Company was engaged
through its subsidiary, Southbay Golf, in the design, marketing and sales of
golf equipment under the exclusive worldwide license for the Head Golf brand
name, and on a non-exclusive basis for golf accessories. It also formerly
through its subsidiary, Outback, marketed and distributed sportswear, swimwear
and accessories under the Spank brand name. Through a subsidiary, Mardock, which
was disposed of in early 1999, the Company marketed items including caps, mugs,
hats, pens, bags and other items corporations use for their promotional needs.
(b) Basis of Presentation
---------------------
On March 20, 1998, by amendment to U-Bake's Articles of Incorporation,
U-Bake changed its name to Oregon Outerwear, Inc.
On May 18, 1998, by amendment to Oregon Outerwear, Inc.'s Articles of
Incorporation, Oregon Outerwear, Inc. changed its name to Pacific Sports
Holdings, Inc.
On August 25, 1999, by amendment to Pacific Sports Holdings, Inc.'s
Articles of Incorporation, Pacific Sports Holdings, Inc. changed its name to
Tahoe Pacific Corporation.
On January 5, 2000, by amendment to Tahoe Pacific Corporation's Articles of
Incorporation, Tahoe Pacific Corporation changed its name to Ameri-First
Financial Group, Inc.
On August 25, 1999, by amendment to Pacific Sports Holdings, Inc.'s
Articles of Incorporation, the Company approved a one for five reverse stock
split. These consolidated financial statements have been presented to reflect
the reverse stock split as if it had been effected on June 30, 1997.
(C) Principles of Consolidation
---------------------------
The consolidated financial statements include the financial statements of
Ameri-First Financial Group, Inc. and its related subsidiaries. All significant
intercompany balances have been eliminated in consolidation.
(d) Cash Equivalents
----------------
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments with original maturities of three
months or less to be cash equivalents.
(e) Revenue Recognition
-------------------
Revenue is recognized upon shipment of product. Allowances for estimated
returns and discounts are provided when the related revenue is recorded.
F-8
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Notes to Consolidated Financial Statements
June 30, 1999 and 1998
(f) Inventories
-----------
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out method.
(g) Property and Equipment
----------------------
Property and equipment are stated at cost. Depreciation of plant and
equipment is calculated on the straight-line method over the estimated useful
lives of the assets.
(h) Income Taxes
------------
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
(i) Income (loss) per Share
-----------------------
Basic net income (loss) per share is based on the weighted average number
of actual shares outstanding during the period. Options to purchase common stock
are included in the calculation of income (loss) per share provided their impact
is not dilutive. As of June 30, 1999 and 1998, no stock option plan was in
place, and therefore, no stock options or other common stock equivalent
instruments have been issued.
(j) Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of
-----------------------------------------------------------------------
The Company accounts for long-lived assets under the Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of." This statement requires
that long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount an asset to
future net cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the fair value of the
assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value, less costs to sell.
(k) Product Design and Development Costs
------------------------------------
The Company charges all product design and development costs to expense
when incurred. Product design and development costs aggregated approximately
$18,668 for the year ended June 30, 1998. In the year ended June 30, 1999, the
lines requiring design and development were dropped.
F-9
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Notes to Consolidated Financial Statements
June 30, 1999 and 1998
(l) New Accounting Standards
------------------------
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income" (SFAS 130), and Statement No. 131,
"Disclosure about Segments of an Enterprise and Related Information" (SFAS 131).
SFAS 130 establishes new standards for reporting comprehensive income and its
components. SFAS 130 requires adoption currently. However, since comprehensive
income does not differ from historical amounts, no disclosure is required. SFAS
131 requires disclosures of certain information regarding operating segments,
products and services, geographic areas and major customers. SFAS 131 requires
adoption for the Company effective July 1, 1998. Management has determined that
the adoption of the above statements will not have a material impact upon the
Company's financial position or results of operations.
In April 1998, SEC issued SOP 98-5, "Reporting on Cost of Start-up
Activities." SOP 98-5 requires that all costs of start-up activities, including
organizational costs, be expensed as incurred. The Company adopted this
statement effective July 1, 1998. The Company has not yet evaluated the impact
of this statement.
(2) Property and Equipment
At June 30, 1999 and 1998, a summary of property and equipment, at cost, is
as follows:
Machinery and equipment $ 0 $ 319,448
Furniture and office equipment 0 51,043
Leasehold improvements 0 37,904
--------- ---------
0 408,395
Less accumulated depreciation and amortization 0 253,188
--------- ---------
Property and equipment, net $ 0 $ 155,207
(3) Acquisitions
On March 30, 1998, the Company acquired 100% of the assets of South Bay
Golf, Inc. in exchange for 8,000,000 shares of the Company's common stock. The
assets of South Bay consisted entirely of the Head Golf license. The acquisition
was accounted for as a purchase. Results of operations of South Bay were minimal
from the date of acquisition to June 30, 1999. No amounts have been allocated to
the Head Golf license.
The fair values assigned to the assets acquired were as follows:
Trade receivables $ 100
Cost in excess of fair value 7,900
-------------
Total purchase price $ 8,000
On March 31, 1998, the Company acquired certain assets from Mardock, Inc.
for a total of $200,000 cash and 300,000 shares of the Company's common stock.
The acquisition has been accounted for as a purchase and the results of
operations are included in the Company's consolidated financial statements from
the date of acquisition through the date of its sale on March 31, 1999.
The fair value assigned to the net assets acquired was $129,909. The
Company recorded goodwill of $70,391 and amortized this amount over a ten year
estimated life, until it was written off at the time of sale on March 31, 1999.
F-10
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Notes to Consolidated Financial Statements
June 30, 1999 and 1998
(3) Acquisitions (cont'd)
In May 1998, the Company purchased 70% of the outstanding stock of Outback
Apparel Group, Inc. ("Outback") for cash consideration of $70. The assets of
Outback consisted primarily of the Spank license. The acquisition was accounted
for as a purchase. Results of operations of Outback were minimal from the date
of acquisition to June 30, 1999. No amounts have been allocated to the Spank
license.
In May 1999, the Company entered into an agreement to purchase 50.01% of
Tahoe Air Corp. in exchange for 1,100,000 shares of the Company's common stock
valued at $3,655,000. The investment subsequently became virtually worthless and
has been written down to $500.
(4) Inventory
Inventory recorded at the lower of first-in, first-out cost or market as of
June 30, 1998 and June 30, 1999 consists of the following:
1998 1999
---------- ----------
Raw materials $ 73,844 $ 0
Work in process 23,888 0
Finished goods 67,467 0
---------- ----------
$ 165,199 $ 0
(5) Leases
The Company has a noncancelable operating lease, primarily for office
space, with an unrelated party. The Company also has a 36 month capital lease
for equipment. Rental expense for the operating lease during the year ended June
30, 1999 and 1998 amounted to $53,568 and $7,920, respectively.
The Company leased a manufacturing facility from a shareholder for its
subsidiary Mardock, Inc. through March 31, 1999 when the subsidiary was sold.
The rent expense associated with this lease for the years ended June 30, 1999
and 1998 amounted to $23,760 and $7,920, respectively.
Future minimum lease payments under noncancelable operating lease and
future minimum capital lease payments as of June 30, 1999 are:
Operating Operating
lease lease
--------- ---------
Year ending June 30:
2000 $ 2,041 $ 35,712
All amounts are current installment obligations.
F-11
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Notes to Consolidated Financial Statements
June 30, 1999 and 1998
(6) Notes Payable to Shareholders
Notes payable to shareholders at June 30, 1999 consist of the following:
Various notes payable to shareholder, principal due on demand,
interest at 10% due monthly, secured by equipment and
receivables of the Company. $1,255,000
(7) Income Taxes
As of June 30, 1999 and 1998, the Company has Federal tax loss
carryforwards of approximately $8,247,000 and $196,000, respectively.
The future tax benefits of the net operating loss carryforwards have not
been recognized since their realization is dependent upon the Company's ability
to generate future earnings.
At June 30, 1999 and 1998, due to the uncertainty of the Company's ability
to generate future earnings, the Company has established offsetting deferred tax
assets (generated from the aforementioned tax loss carryforwards) and related
valuation allowances.
(8) Commitments and Contingencies
Guaranteed Minimum Royalty Payments
- -----------------------------------
South Bay Golf is a licensee under a Trademark License Agreement with Head
Sports AG ("Head") which granted the Company exclusive worldwide rights to
market and distribute golf clubs, bags and head covers. The Company also had
worldwide nonexclusive marketing and distribution rights for golf accessories
including hats, towels and umbrellas.
The agreement provides for royalties based on the following percentages of
sales: 5% for 1998, 6% for 1999 and 7% for 2000 and all subsequent years.
Guaranteed minimum annual royalties are/were as follows:
Contract Year Amount
------------------------------ -------------
April 1, 1998 - March 31, 1999 $ 600,000
April 1, 1999 - March 31, 2000 800,000
April 1, 2000 - March 31, 2001 1,300,000
April 1, 2001 - March 31, 2002 1,500,000
April 1, 2002 - March 31, 2003 1,750,000
In June 1999, Head sued the Company for $1,000,000 over the royalties due
to Head. The lawsuit was settled in January 2000 for $20,000, and the settlement
of this lawsuit is reflected in the books of the Company in January 2000.
Outback Apparel Group, Inc. is a licensee under a Trademark License
Agreement with Spank Sport ("Spank") which grants the Company the exclusive
right to manufacture, distribute, advertise and sell certain Spank swimwear
products in North America.
F-12
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Notes to Consolidated Financial Statements
June 30, 1999 and 1998
(8) Commitments and Contingencies (cont'd)
Guaranteed Minimum Royalty Payments (cont'd)
- -----------------------------------
The agreement provides for royalties based on 5% of sales. Guaranteed
minimum annual sales are as follows:
Calendar Year Amount
------------- ------------
1998 $ 3 million
1999 5 million
2000 8 million
2001 12 million
The Company has not been able to meet the minimum sales and royalty
requirements and are in default on their agreement. The Company does not expect
any legal action from Spank based on the Company's financial condition and no
liability has been recorded for these royalties.
(9) Other Expense
In the year ended June 30, 1999, the majority of other expense consists of
the writeoff of investments determined to have little value and the loss on the
sale of one of its subsidiaries.
In the year ended June 30, 1998, the majority of other expense consists of
the writeoff of an investment determined to be without value.
(10) Subsequent Events
As explained in Note 8, the Company settled a lawsuit with Head over
minimum royalty payments.
On February 7, 2000, the Company purchased Ameri-First Securities, Inc., an
NASD registered broker dealer.
F-13
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Consolidated Balance Sheet
December 31, 1999 and June 30, 1999
Assets
December 31, June 30,
1999 1999
------------ ------------
Current assets:
Cash $ 196 $ 629
Trade accounts receivable, less allowances for bad debt and returns
Inventories
Prepaid expenses and other current assets 100,538 105,638
Other current receivables 10,900 600
------------ ------------
Total current assets 111,634 106,867
Property and equipment
Excess of cost over net assets acquired, less accumulated amortization 1,500 1,500
------------ ------------
$ 113,134 $ 108,367
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of debt payable to shareholder $ 1,255,000 $ 1,255,000
Current installments of capital lease commitment 2,041
Accounts payable 308,172 244,945
Accrued expenses 183,445 162,528
------------ ------------
Total current liabilities 1,746,617 1,664,514
Capital lease commitment, excluding current maturities Long-term notes payable
to shareholders, excluding current maturities
Total liabilities 1,746,617 1,664,514
------------ ------------
Shareholders' equity:
Common Stock, $0.001 par value. Authorized 25,000,000; issued and
outstanding 4,706,114 and 4,166,414 at December 31, 1999 and
June 30, 1999, respectively 4,706 4,166
Paid-in capital 7,584,976 6,818,751
Accumulated deficit (9,223,165) (8,379,064)
------------ ------------
Net shareholders' equity (1,633,483) (1,556,147)
$ 113,134 $ 108,367
============ ============
F-14
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Consolidated Statement of Operations
Six Months Ended December 31, 1999 and
Twelve Months Ended June 30, 1999
Six Months Year Ended
Dec. 31, 1999 June 30, 1999
------------- -------------
Net sales $ 0 $ 87,683
Cost of sales 0 598,378
------------- -------------
Gross profit 0 (510,695)
Operating expenses:
Selling
General and administrative expenses 823,199 2,991,795
------------- -------------
823,199 2,991,795
------------- -------------
Loss from operations (823,199) (3,502,490)
Other expenses:
Other 18,768
Loss on repossessed assets and sale of business (762,479)
Loss on writeoff of investments (3,685,955)
Interest, net (20,917) (128,126)
------------- -------------
(20,917) (4,557,792)
------------- -------------
Loss before minority interest (844,116) (8,060,282)
Minority interest (15) (15)
------------- -------------
Net loss $ (844,101) $ (8,060,267)
============= =============
Net loss per share - basic and diluted $ (0.18) $ (2.76)
============= =============
Weighted average shares - basic and diluted 4,644,755 2,923,855
============= =============
F-15
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Consolidated Statement of Shareholders' Equity
Six Months Ended December 31, 1999 and
Year Ended June 30, 1999
Common stock Additional Net
------------------------- paid-in Accumulated shareholders'
Shares Amount capital deficit equity
---------- ---------- ---------- ----------- ------------
Balance at June 30, 1998 2,520,900 $ 2,521 $ 467,856 $ (318,797) $ 151,580
Shares issued for barter credit
for advertising 80,000 80 999,920 1,000,000
Shares issued to buy minority
15% of Outback Sports 60,000 60 240 300
Shares issued to buy majority
50.01% of Tahoe Air Corp. 1,100,000 1,100 3,653,900 3,655,000
Shares issued for services 274,698 275 820,001 820,276
Shares issued for cash 130,816 130 850,171 850,301
Less offering costs (128,539) (128,539)
Capital contributions 155,202 155,202
Net loss (8,060,267) (8,060,267)
---------- ---------- ---------- ----------- ------------
Balance at June 30, 1999 4,166,414 $ 4,166 $6,818,751 $(8,379,064) $ (1,556,147)
Shares issued for stock 30,000 30 29,970 30,000
Shares issued for services 509,700 540 688,210 688,750
Capital contributions 48,000 48,000
Net loss (844,101) (844,101)
---------- ---------- ---------- ----------- ------------
Balance at December 31, 1999 4,706,114 $ 4,736 $7,584,931 $(9,223,165) $ (1,633,498)
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F-16
AMERI-FIRST FINANCIAL GROUP, INC.
AND SUBSIDIARIES
(formerly Tahoe Pacific Corporation, and
formerly Pacific Sports Holdings, Inc.)
Consolidated Statement of Cash Flows
Six Months Ended December 31, 1999 and
Year Ended June 30, 1999
Six Months Year Ended
Dec. 31, 1999 June 30, 1999
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Cash flows from operating activities:
Net loss $ (844,101) $ (8,060,267)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
Non-cash expenses 688,750 343,592
Stock issued for expenses 1,700,575
Writeoff of investments paid for with stock 3,654,500
(Increase) decrease in assets:
Accounts receivable 104,648
Other receivables (10,300) (600)
Inventory 165,199
Prepaid expenses and other current assets 5,100 170,111
Increase (decrease) in liabilities:
Accounts payable 61,201 153,546
Accrued expenses 20,917 133,840
------------- -------------
Net cash used in operating activities (78,433) (1,634,856)
Cash flows used in investing activities:
Proceeds from disposal of property and equipment
Cash paid for acquisition of assets
Net cash used in investing activities 0 0
Cash flows from financing activities:
Proceeds from borrowings on notes payable 718,907
Payment on notes payable
Proceeds from issuance of stock 30,000 721,762
Distribution to shareholders
Principal payments under capital lease obligations 2,565
Capital contributions 48,000 155,202
------------- -------------
Net cash provided by financing activities 78,000 1,598,436
------------- -------------
Net increase in cash $ (433) $ (36,420)
Cash at beginning of period 629 37,049
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Cash at end of period $ 196 $ 629
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