EXHIBIT 99.2
------------
BRIGHTCUBE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On December 20, 2000, BrightCube, Inc., formerly PhotoLoft, Inc., a Nevada
corporation ("BrightCube") closed its acquisition of Extreme Velocity Group,
Inc. ("EVG"), a California corporation (the "Acquisition"). EVG is a Los
Angeles based corporation, which provides Internet and imaging solutions to the
art market.
The Acquisition was consummated pursuant to an Agreement and Plan of
Reorganization by and among BrightCube, PhotoL Acquisition Corp., a California
corporation and wholly-owned subsidiary of BrightCube ("Sub"), EVG, and certain
shareholders of EVG dated as of November 22, 2000, as amended by that certain
First Amendment to Agreement and Plan of Reorganization dated as of December 7,
2000 and that certain Second Amendment to Agreement and Plan of Reorganization
dated as of December 20, 2000 (as amended, the "Merger Agreement"). Under the
Merger Agreement, Sub was merged with and into EVG, and EVG was the surviving
corporation in the merger and became a wholly owned subsidiary of BrightCube.
Based on negotiations between the parties to and as set forth in the Merger
Agreement, BrightCube issued an aggregate of 18,192,600 shares of common stock
(the "Merger Shares") to the former shareholders of EVG in exchange for all of
the outstanding stock of EVG. EVG had no options or other rights to purchase
its stock outstanding at the time of the Acquisition. In addition, BrightCube
agreed to assume and pay an $800,000 liability of EVG to Marco Fine Arts (a
corporation owned by Al Marco, the principal shareholder of EVG) and assume
certain lines of credit with a balance of approximately $690,000 in the
aggregate. BrightCube paid the $800,000 from its working capital subsequent to
the acquisition.
3,208,600 shares of the Merger Shares (the "Escrow Shares") were placed in a
twelve-month escrow account as security for the indemnification obligations of
the former EVG shareholders to BrightCube and others as set forth in the Merger
Agreement. In general, pursuant to the Merger Agreement and the related escrow
agreement, BrightCube may recover from the escrow for any losses, expenses,
liabilities or other damages due to a breach of any representation, warranty,
covenant or agreement of EVG in the Merger Agreement and for certain other
enumerated items.
The acquisition will be accounted for as a purchase, with the assets acquired
and liabilities assumed recorded at fair values, and the results of EVG's
operations included in BrightCube's consolidated financial statements from the
date of acquisition.
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EXHIBIT 99.2
------------
The accompanying unaudited pro forma condensed consolidated financial statements
illustrate the effect of the acquisition on the Company's financial position and
results of operations. The unaudited pro forma condensed consolidated balance
sheet is based on the historical balance sheets of BrightCube and EVG as of
September 30, 2000 and December 20, 2000 respectively, and assumes that the
acquisition took place on the balance sheet date. The unaudited pro forma
condensed consolidated statements of operations are based on the historical
statements of operations of BrightCube and EVG for the nine months ended
September 30, 2000 and December 20, 2000, respectively, and the year ended
December 31, 1999 for both companies. Management believes that the inclusion of
the EVG financial statements as of December 20, 2000 and for the nine months
then ended in these unaudited pro forma condensed consolidated financial
statements more accurately reflects EVG's current financial position and results
of operations due to its increased activities during the later part of 2000.
The pro forma condensed consolidated statements of operations assume the
acquisition took place on July 1, 1999 (commencement of EVG's operations).
The unaudited pro forma condensed consolidated financial statements may not be
indicative of the actual results of the acquisition. In particular, the pro
forma condensed consolidated financial statements are based on management's
current estimate of the allocation of the purchase price, the actual allocation
of which may differ. The unaudited pro forma condensed consolidated results of
operations may not be indicative of the actual results which would have been
obtained if the acquisition had occurred on July 1, 1999.
The accompanying unaudited condensed consolidated pro forma financial statements
should be read in conjunction with BrightCube's historical financial statements
and notes thereto contained in the Company's 1999 Annual Report of Form 10-KSB
and the Quarterly Report of Form 10-QSB for the quarter ended September 30, 2000
and the financial statements of EVG presented herein.
21
EXHIBIT 99.2
------------
BRIGHTCUBE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
Historical
-------------------------------
Brightcube EVG
September 30, December 20,
2000 2000 Adjustments PRO FORMA
--------------- -------------- ---------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,495,800 $ - $ (800,000)(2) $ 6,503,300
(12,000)(3)
(180,500)(4)
Accounts receivable 215,300 35,700 251,000
Inventory - 179,700 179,700
Prepaid expenses and other current assets 125,000 102,500 227,500
--------------- -------------- ---------------- -------------
TOTAL CURRENT ASSETS 7,836,100 317,900 (992,500) 7,161,500
PROPERTY AND EQUIPMENT, NET 807,800 165,200 973,000
Excess of cost over net assets acquired - - 9,536,100 (1) 9,536,100
OTHER ASSETS 25,800 53,600 79,400
--------------- -------------- ---------------- -------------
TOTAL ASSETS $ 8,669,700 $ 536,700 $ 8,543,600 $17,750,000
=============== ============== ================ =============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Bank overdraft $ - $ 180,500 $ (180,500)(4) $ -
Accounts payable 658,100 362,000 1,020,100
Accrued expenses and other 710,300 76,600 160,000 (1) 946,900
Lines of credit due bank and related party - 690,000 (345,000)(5) 345,000
Due to related party - 800,000 (800,000)(2) 0
Notes payable to shareholders 95,000 12,000 (12,000)(3) 95,000
--------------- -------------- ---------------- ------------
TOTAL CURRENT LIABILITIES 1,463,400 2,121,100 (1,177,500) 2,407,000
Long-term debt - - 345,000 (5) 345,000
--------------- -------------- ---------------- ------------
TOTAL LIABILITIES 1,463,400 2,121,100 (832,500) 2,752,000
--------------- -------------- ---------------- ------------
SHAREHOLDERS' EQUITY (DEFICIENCY)
Common stock and paid in capital 19,902,700 1,874,100 (1,874,100)(1) 27,694,400
7,791,700 (1)
Deferred compensation (39,200) - (39,200)
Accumulated deficit (12,657,200) (3,458,500) 3,458,500 (1) (12,657,200)
--------------- -------------- ---------------- ------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY) 7,206,300 (1,584,400) 9,376,100 14,998,000
--------------- -------------- ---------------- ------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY (DEFICIENCY) $ 8,669,700 $ 536,700 $ 8,543,600 $17,750,000
=============== ============== ================ ============
See accompanying notes to unaudited pro forma condensed consolidated financial information.
22
EXHIBIT 99.2
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BRIGHTCUBE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Historical
---------------------------
Brightcube EVG
For the nine months ended
September 30, December 20,
2000 2000 Adjustments PRO FORMA
------------ ------------- ------------- -------------
REVENUES $ 403,600 $ 1,187,100 $ - $ 1,590,700
Cost of Revenues 247,900 385,700 - 633,600
------------ ------------- ------------- -------------
GROSS PROFIT 155,700 801,400 - 957,100
------------ ------------- ------------- -------------
OPERATING EXPENSES:
Sales and marketing 458,500 1,535,900 - 1,994,400
General and administrative 7,796,400 1,646,100 67,500(7) 10,531,700
1,021,700(6)
------------ ------------- ------------- -------------
TOTAL OPERATING EXPENSES 8,254,900 3,182,000 1,089,200 12,526,100
------------ ------------- ------------- -------------
LOSS FROM OPERATIONS (8,099,200) (2,380,600) (1,089,200) (11,569,000)
------------ ------------- ------------- -------------
OTHER INCOME (EXPENSE):
Other income 113,300 4,200 - 117,500
Interest & other expense (18,900) (40,200) - (59,100)
Litigation settlement - (101,000) - (101,000)
------------ ------------- ------------- -------------
TOTAL OTHER INCOME (EXPENSE) 94,400 (137,000) - (42,600)
------------ ------------- ------------- -------------
LOSS BEFORE INCOME TAXES (8,004,800) (2,517,600) (1,089,200) (11,611,600)
INCOME TAX EXPENSE 800 - - 800
------------ ------------- ------------- -------------
NET LOSS (8,005,600) $ (2,517,600) $ (1,089,200) (11,612,400)
============= =============
Deemed dividend on redemption of Series A Preferred
Stock including value ascribed to warrants of $145,000 (357,000) (357,000)
------------ -------------
Net loss allocable to common shareholders $(8,362,600) $(11,969,400)
============ =============
Basic and diluted loss per share $ (0.32) $ (0.29)
============ =============
Basic and diluted weighted-average common shares outstanding 25,808,000 40,792,000
============ =============
See accompanying notes to unaudited pro forma condensed consolidated financial information.
23
EXHIBIT 99.2
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BRIGHTCUBE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Historical
----------------------------------------
EVG
July 1, 1999
Brightcube (Commencement of
Year ended Operations) to
December 31, 1999 December 31, 1999 Adjustments PRO FORMA
------------------- ------------------- ------------- ------------
Revenues $ 254,500 $ - $ - $ 254,500
Cost of Revenues 124,200 - - 124,200
------------------- ------------------- ------------- ------------
GROSS PROFIT 130,300 - - 130,300
OPERATING EXPENSES:
Sales and marketing 1,217,200 99,100 - 1,316,300
General and administrative 4,405,900 235,300 120,000(7) 5,442,400
681,200(6)
------------------- ------------------- ------------- ------------
TOTAL OPERATING EXPENSES 5,623,100 334,400 801,200 6,758,700
------------------- ------------------- ------------- ------------
LOSS FROM OPERATIONS (5,492,800) (334,400) (801,200) (6,628,400)
OTHER INCOME (EXPENSE):
Loss on settlement of note (108,100) - - (108,100)
Interest income 110,600 - - 110,600
Interest & other expense (7,200) - - (7,200)
------------------- ------------------- ------------- ------------
TOTAL OTHER INCOME (EXPENSE) (4,700) - - (4,700)
------------------- ------------------- ------------- ------------
LOSS BEFORE INCOME TAXES (5,497,500) (334,400) (801,200) (6,633,100)
INCOME TAX (BENEFIT) EXPENSE (745,400) - - (745,400)
------------------- ------------------- ------------- ------------
NET LOSS (4,752,100) $ (334,400) $ (801,200) (5,887,700)
=================== =============
Deemed dividend on issuance of warrants 80,000 80,000
Deemed dividend on conversion of
preferred stock into common stock 934,000 934,000
------------------- ------------
Net loss allocable to common shareholders $ (5,766,100) $(6,901,700)
=================== ============
Basic and diluted loss per share $ (0.49) $ (0.36)
=================== ============
Basic and diluted weighted-average 11,658,200 19,150,200
common shares outstanding =================== ============
See accompanying notes to unaudited pro forma condensed consolidated financial information.
24
EXHIBIT 99.2
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BRIGHTCUBE, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Note A-Basis of Presentation
Reference is made to the introduction to the unaudited pro forma condensed
financial information.
Note B - Pro Forma Adjustments
The pro forma adjustments to the condensed balance sheet are as follows:
(1) To reflect the acquisition of EVG and the allocation of purchase
price on the basis of fair values of the assets acquired and the
liabilities assumed. The components of purchase price and its
allocation of assets and liabilities of EVG are as follows:
Components of Purchase Price:
BrightCube common stock(a) 14,984,000 shares
Value of common stock(b) $ 0.52 per share
------------
$7,791,700
Estimated acquisition costs 160,000
------------
Total purchase price 7,951,700
EVG shareholders' deficiency(c) 1,584,400
-----------
EXCESS OF COST OVER NET ASSETS ACQUIRED $9,536,100
===========
(a) Excludes 3,208,600 shares of stock that were placed in a
twelve-month escrow account as security for the indemnification
obligations of the former EVG shareholders to BrightCube.
These shares will be valued and included in the purchase price if
and when the shares are released from escrow.
(b) This represents the average stock price of BrightCube surrounding a
few days before and after the terms of the EVG acquisition were
agreed to and announced (December 8, 2000).
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EXHIBIT 99.2
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(c) The fair value of assets acquired and liabilities assumed
approximates their book value.
(2) To reflect the repayment by BrightCube of EVG's payable to MFA under the
terms of the Merger Agreement.
(3) To reflect the repayment of the note payable to a minority shareholder
of EVG on January 10, 2001.
(4) To reclassify the bank overdraft to cash and cash equivalents.
(5) To reflect the long-term portion of the refinanced lines of credit due
bank and related party.
The pro forma adjustments to the condensed statements of operations are as
follows:
(6) To record the amortization of excess of cost over fair value of net
assets acquired over the estimated benefit period of 7 years.
(7) To adjust Al Marco's annual salary to the current employment contract
amount of $240,000 per year.
Note C - Pro Forma Loss Per Share
The reconciliation of the common shares used in the calculation of pro forma
basic and diluted loss per share is as follows:
2000 1999
BrightCube basic and diluted weighted average
shares outstanding 25,808,000 11,658,200
Non-escrow shares issued in the EVG acquisition 14,984,000 7,492,000
---------- ----------
Pro forma basic and diluted weighted average
common shares outstanding 40,792,000 19,150,200
========== ==========
26