EXHIBIT 99.4
VACATIONSPOT.COM, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
SIX-MONTH PERIODS ENDED
DECEMBER 31, 1999 AND 1998 (unaudited)
VACATIONSPOT.COM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND JUNE 30, 1999 (unaudited)
================================================================================
December 31, June 30,
ASSETS 1999 1999
- ------ ---- ----
CURRENT ASSETS:
Cash and cash equivalents $11,442,269 $ 6,593,492
Accounts receivable 128,112 29,796
Prepaid expenses 56,890 29,126
----------- -----------
Total current assets 11,627,271 6,652,414
PROPERTY AND EQUIPMENT, net 335,427 179,729
GOODWILL, net 4,665,708
INTANGIBLE ASSETS, net 677,732 805,042
----------- -----------
TOTAL $17,306,138 $ 7,637,185
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 472,439 $ 187,446
Accrued expenses 271,669 74,792
Unearned revenue 108,851 93,084
----------- -----------
Total current liabilities 852,959 355,322
COMMITMENTS
STOCKHOLDERS' EQUITY:
Series A convertible preferred stock, $0.0001 par value - Authorized,
1,346,666 shares; issued and outstanding, 1,010,000 shares
with liquidation preference of $0.50 per share 101 101
Series A-1 convertible preferred stock, $0.0001 par value -
Authorized, 1,346,666 shares; none issued and outstanding
liquidation preference of $0.50 per share
Series B convertible preferred stock, $0.0001 par value - Authorized,
4,600,000 shares; issued and outstanding, 4,362,498 and 3,562,500 shares,
respectively, with liquidation preference of $2.00 per share 436 356
Series B-1 convertible preferred stock, $0.0001 par value -
Authorized, 4,600,000 shares; none issued and outstanding
with liquidation preference of $2.00 per share
Series C convertible preferred stock, $0.0001 par value - Authorized, 200
3,000,000 shares; issued and outstanding, 1,999,900 shares with
liquidation preference of $4.00 per share
Series C-1 convertible preferred stock, $0.0001 par value - Authorized,
3,000,000 shares; none issued and outstanding with liquidation
preference of $4.00 per share
Common stock, $0.0001 par value - Authorized, 30,000,000 shares;
issued and outstanding, 8,067,996 and 6,314,350 shares, respectively 806 631
Additional paid-in capital 23,943,759 11,042,882
Unearned stock-based compensation (102,931) (102,931)
Notes receivable from affiliated parties (114,510) (114,510)
Accumulated deficit (7,190,408) (3,544,666)
Accumulated other comprehensive loss:
Cumulative currency translation adjustment (84,274)
----------- -----------
Total stockholders' equity 16,453,179 7,281,863
----------- -----------
TOTAL $17,306,138 $ 7,637,185
=========== ===========
See notes to consolidated financial statements.
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VACATIONSPOT.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX-MONTH PERIODS ENDED DECEMBER 31, 1999 AND 1998 (unaudited)
==============================================================================
December 31,
------------
1999 1998
---- ----
NET REVENUES $ 479,595 $ 143,560
COST OF REVENUES (1,258,836) (53,829)
----------- -----------
Gross margin (779,241) 89,731
OPERATING EXPENSES:
Product development 1,057,166 454,872
Sales and marketing 1,332,452 531,305
General and administrative 654,602 377,973
----------- -----------
3,044,220 1,364,150
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LOSS FROM OPERATIONS (3,823,461) (1,274,419)
OTHER INCOME 177,719 19,513
----------- -----------
NET LOSS (3,645,742) $(1,254,906)
===========
OTHER COMPREHENSIVE LOSS:
Currency translation adjustment (84,274)
-----------
COMPREHENSIVE LOSS $(3,730,016)
===========
See notes to consolidated financial statements.
3
VACATIONSPOT.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SIX-MONTH PERIOD ENDED DECEMBER 31, 1999 (unaudited)
==============================================================================
Series A Series B
convertible convertible
Common stock preferred stock preferred stock
------------ --------------- ---------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
BALANCE, June 30, 1999 6,314,350 $631 1,010,000 $101 3,562,500 $356
Issuance of Series C preferred stock
Issuance of stock related to acquisition of VHR
International, s.a. 1,609,946 161 799,998 80
Issuance of common stock 143,700 14
Other comprehensive loss:
Currency translation adjustment
Net loss
--------- ---- --------- ---- --------- ----
Balance, December 31, 1999 8,067,996 $806 1,010,000 $101 4,362,498 $436
========= ==== ========= ==== ========= ====
Series C
convertible Additional Unearned
preferred stock paid-in stock-based
---------------
Shares Amount capital compensation
------ ------ ------- ------------
BALANCE, June 30, 1999 $11,042,882 $(102,931)
Issuance of Series C preferred stock 1,999,900 $200 7,999,400
Issuance of stock related to acquisition of VHR
International, s.a. 4,819,647
Issuance of common stock 81,830
Other comprehensive loss:
Currency translation adjustment
Net loss
--------- ---- ----------- ---------
Balance, December 31, 1999 1,999,900 $200 $23,943,759 $(102,931)
========= ==== =========== =========
Notes
receivable Cumulative
from affiliated Accumulated translation Stockholders'
parties deficit adjustment equity
------- ------- ---------- ------
BALANCE, June 30, 1999 $(114,510) $(3,544,666) $ 7,281,863
Issuance of Series C preferred stock 7,999,600
Issuance of stock related to acquisition of VHR
International, s.a. 4,819,888
Issuance of common stock 81,844
Other comprehensive loss:
Currency translation adjustment $(84,274) (84,274)
Net loss (3,645,742) (3,645,742)
--------- ----------- -------- -----------
Balance, December 31, 1999 $(114,510) $(7,190,408) $(84,274) $16,453,179
========= =========== ======== ===========
See notes to consolidated financial statements.
-4.
VACATIONSPOT.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX-MONTH PERIODS ENDED DECEMBER 31, 1999 AND 1998 (unaudited),
==============================================================================
December 31,
------------
1999 1998
---- ----
OPERATING ACTIVITIES:
Net loss $(3,645,742) $(1,254,906)
Adjustment to reconcile net loss to net cash used by operating activities:
Depreciation and amortization 316,149 404,522
Recognition of sales and marketing expense for
warrants for common stock 86,411
Cash provided (used) by changes in operating assets
and liabilities, net of effects of purchase of VHR
International, s.a.
Accounts receivable and prepaid expenses (212,491) (23,837)
Accounts payable and accrued expenses 481,870 12,751
Unearned revenue 15,767 52,715
----------- -----------
Net cash used by operating activities (2,958,036) (808,755)
INVESTING ACTIVITIES:
Additions to property and equipment (190,357) (158,814)
Purchase of intangible assets (1,199,854)
----------- -----------
Net cash used by investing activities (190,357) (1,358,668)
FINANCING ACTIVITIES:
Member contributions 2,894,277
Proceeds from issuance of common and preferred stock 8,081,444
----------- -----------
Net cash provided by financing activities 8,081,444 2,894,277
EFFECT OF FOREIGN EXCHANGE RATES CHANGES ON CASH
AND CASH EQUIVALENTS (84,274)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,848,777 726,854
CASH AND CASH EQUIVALENTS:
Beginning of period 6,593,492 178
----------- -----------
End of period $11,442,269 $ 727,032
=========== ===========
See notes to consolidated financial statements.
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VACATIONSPOT.COM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
notes required by accounting principles generally accepted in the United States
of America for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered necessary
for a fair presentation have been included. Consolidated operating results for
the six month period ended December 31, 1999 are not necessarily indicative of
the results that may be expected for the year ending June 30, 2000. For further
information, refer to the financial statements for the year ended June 30, 1999
and for the cumulative period from December 2, 1997 (inception) to June 30, 1998
and notes thereto included herein.
PREFERRED STOCK
In December 1999, the Company issued 1,999,900 shares of Series C preferred
stock. Proceeds received from the offering totaled approximately $8,000,000.
ACQUISITION
In July 1999, VacationSpot.com, Inc. issued 1,609,946 shares of common stock and
799,998 shares of Series B preferred stock, with a combined value of
approximately $4,800,000 in exchange for approximately 96.4% of the outstanding
stock and warrants of VHR International, s.a. in a transaction that was
accounted for under the purchase method of accounting. The 3.6% of the
outstanding stock of VHR International, s.a. not originally purchased by
VacationSpot.com, Inc. is owned by a founder of VHR International, s.a. and is
subject to a call option via a July 1999 shareholders' agreement between the
Company and the shareholder. Under the terms of the agreement, the Company may
acquire the remaining 3.6% (or 1,000 shares) of VHR International, s.a. for
90,055 shares of VacationSpot.com, Inc. common stock and $15,000 on or before
August 31, 2000.
SUBSEQUENT EVENT
On March 17, 2000, the Company was acquired by Expedia, Inc. All of the
outstanding shares, options, and warrants of the Company were exchanged for
approximately $82,877,000 of 2.6 million unregistered Expedia, Inc. shares and
options.
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