Exhibit 99.2
Acquisition of Next Generation Media Corp.
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On May 1, 2000, the BigHub.com, Inc. ("BigHub") completed its acquisition of 52%
of the outstanding common stock of Next Generation Media Corporation ("NexGen").
BigHub purchased the shares of NexGen common stock using 1,079,545 shares of
BigHub common stock and options to acquire an additional 700,000 shares of
BigHub common stock as consideration. The NexGen common stock was valued at
$1.70 per share, while BigHub's common stock was valued at $5.00 per share, both
based on market prices of the stock. The securities purchased from NexGen
consisted of (i) 661,404 shares of NexGen common stock which were converted from
247,365 shares of NexGen's Series A Preferred Stock held by 25 shareholders (the
"Series A Preferred Stockholders"); (ii) 94,581 shares of NexGen common stock
paid to the Series A Preferred Stockholders as dividends; (iii) options to
purchase 164,915 shares of NexGen common stock, with an exercise price of $.16
per share, assigned to BigHub by the Series A Preferred Stockholders; (iv)
options to purchase 300,000 shares of NexGen common stock, with an exercise
price of $.50, from Gerard R. Bernier and Joel Sens; and (v) 2,419,115 shares of
common stock held by Gerard Bernier, Joel Sens and John Banas. On a fully
diluted basis, BigHub owns 69% of NexGen.
The total number of BigHub shares paid as consideration for the NexGen
securities was 1,079,545, which had a value of $1,821,732 on the date of the
transaction based on the closing bid price of BigHub's common stock on that
date. Gerard Bernier, Joel Sens, and John Banas, received an aggregate of
822,499 shares of BigHub common stock, while the remaining shareholders of
NexGen received an aggregate of 257,046 shares of BigHub common stock. In
addition, Mr. Bernier and Mr. Sens received options to purchase 300,000 shares
of BigHub's common stock at an exercise price of $1.25 per share and options to
purchase an aggregate of 400,000 shares of BigHub's common stock at an exercise
price of $5.50 per share.
The difference between the fair market value of NexGen's tangible assets and the
purchase price will be accounted for as goodwill and will be amortized over ten
years, the expected benefit period.
Unaudited Pro Forma Condensed Consolidated Financial Statements
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The unaudited Pro Forma Condensed Consolidated Statements of Operations for the
fiscal year ended October 31, 1999 and the fiscal six months ended April 30,
2000 gives effect to the acquisition of NexGen as if had occurred on November 1,
1998 and 1999, respectively. The Pro Forma Condensed Statements of Operations is
based on historical results of operations of The BigHub.com and NexGen for the
fiscal year ended October 31, 1999 and the calendar year ended December 31,
1999, respectively. The unaudited Pro Forma Condensed Consolidated Balance Sheet
gives effect to the acquisition as if it had occurred on October 31, 1999. These
financial statements are not necessarily indicative of what actual results would
have been had the transactions occurred on either November 1, 1998 or October
31, 1999, nor do they purport to indicate future results of the Company. The
unaudited pro forma financial statements should be read in conjunction with
NexGen's audited financial statements and related notes thereto for the year
ended December 31, 1999 appearing herein and the audited financial statements of
The BigHub.com and related notes thereto filed with the Company's Annual Report
on Form 10-KSB for the fiscal year ended October 31, 1999.
The BigHub.com, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Balance Sheets
October 31, 1999
The BigHub.com Next Generation Media Ajustments Pro Forma
-------------- --------------------- ----------- ----------
Assets
Current assets: 92,991 1,170,053 - 1,263,044
Property and equipment, net 1,502,226 1,431,632 - 2,933,858
Intangibles, net - 934,447 - 934,447
Goodwill - - 1,329,468 (a) 1,329,468
Other assets 1,800 8,105 - 9,905
--------------- ------------------- ------------ -----------
Total assets 1,597,017 3,544,237 1,329,468 6,470,722
=============== =================== ============ ===========
Liabilities and stockholders' equity (deficit)
Current liabilities 3,132,187 2,512,318 - 5,644,505
Long term liabilities - 318,494 (198,459) (a) 120,035
Minority interest - - 419,619 (a) 419,619
Redeemable preferred stock - 1,269,792 (1,269,792) -
Stockholders' equity (deficit) (1,535,170) (556,367) 2,378,100 (a) 286,563
--------------- ------------------- ------------ -----------
Total liabilities and stockholders' equity (deficit) 1,597,017 3,544,237 1,329,468 6,470,722
=============== =================== ============ ===========
The BigHub.com, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statements of Operations
Year Ended October 31, 1999
The BigHub.com Next Generation Media Adjustments Pro Forma
---------------- ----------------------- --------------- --------------
Net sales 35,914 7,865,410 - 7,901,324
Cost of sales 6,757 - - 6,757
---------------- ------------------- -------------- -------------
Gross profit 29,157 7,865,410 - 7,894,567
Operating expenses 3,570,729 9,255,538 137,351 (b) 12,963,618
Other income (expense) (481,879) (226,473) 501,146 (207,206)
---------------- ------------------- -------------- -------------
Loss from continuing operations (4,023,451) (1,616,601) 363,795 (5,276,257)
================ =================== ============== =============
Basic and diluted loss per common share from ---------------- ------------------- -------------- -------------
continuing operations (0.55) - - (0.63)
================ =================== ============== =============
Weighted average common shares outstanding 7,307,582 - 1,079,545 8,387,127
The BigHub.com, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statements of Operations
Six Fiscal Months Ended April 30, 2000
The BigHub.com Next Generation Media Adjustments Pro Forma
-------------- --------------------- ------------ ---------
Net sales 439,597 2,310,306 - 2,749,903
Cost of sales 271,847 - - 271,847
----------- ----------- ------------ ----------
Gross profit 167,750 2,310,306 - 2,478,056
Operating expenses 2,976,952 2,457,443 68,676 (b) 5,503,071
Other income (expense) (41,396) (97,043) 75,696 (62,743)
----------- ----------- ------------ ----------
Loss from operations (2,850,598) (244,180) 7,020 (3,087,758)
----------- ----------- ------------ ----------
Basic and diluted loss per common share from
----------- ----------- ------------ ----------
continuing operations (0.17) - - (0.17)
=========== =========== ============ ==========
Weighted average common shares outstanding 16,932,365 - 1,079,545 18,011,910
Pro Forma Adjustments and Assumptions
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(a) On May 1, 2000, the BigHub.com, Inc. ("BigHub") completed its acquisition
of Next Generation Media Corp. ("NexGen"). BigHub purchased the shares of
NexGen common stock using shares of BigHub common stock as consideration.
The acquisition will be accounted for as a purchase business combination.
The total purchase price for this transaction based on the closing bid
price of BigHub's common stock on May 1, 2000 was $1,821,732. The following
represents the allocation of the purchase price over the historical net
book value of the acquired assets and liabilities of NexGen at December 31,
1999, and is for illustrative pro forma purposes only. Actual fair values
will be based on financial information as of the acquisition date (May 1,
2000), which are not expected to be significantly different from the
historical net book value of the acquired assets and liabilities. Assuming
the transaction occurred on October 31, 1999, the allocation would have
been as follows:
Cash 263,517
AR 546,421
Inventories 107,094
PP&E 1,431,632
Other assets 1,195,572
Total liabilities (2,830,812)
-----------
Net assets 713,424
-----------
69% of Net assets $ 492,263
Goodwill 1,329,469
-----------
$ 1,821,732
===========
This allocation is preliminary and may be subject to change upon evaluation
of the fair value of NexGen's acquired assets and liabilities as of the
acquisition date as well as the potential identification of certain
intangible assets
(b) Goodwill will be amortized over a period of 10 years, the expected period
of benefit. The Pro Forma adjustment to the Pro Forma Statement of
Operations reflects twelve months of amortization expense for the year
ended October 31, 1999, assuming the transaction occurred on November 1,
1998. The Pro Forma adjustment to the Pro Forma Statement of Operations
reflects six months of amortization expense for the six months ended April
30, 2000.
Approximately $944,000 of NexGen's Redeemable preferred stock Series A was
converted to common stock in connection with the acquisition and has been
reflected in the Pro Forma adjustments.