U.S. WIRELESS DATA, INC.
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Financial Statements give effect to
the purchase of certain net assets of Cellgate Technologies LLC ("Cellgate") by
U.S. Wireless Data, Inc. ("USWD"). These pro forma condensed financial
statements are presented for illustrative purposes only. The pro forma
adjustments are based upon available information and certain assumptions that
management believes are reasonable.
The Unaudited Pro Forma Condensed Financial Information is prepared using the
purchase method of accounting. For the purpose of the Unaudited Pro Forma
Condensed Financial Information presented below, the purchase price has been
calculated based upon the price of $3.50 per share of USWD Common Stock.
Under the purchase method of accounting, tangible and identifiable intangible
assets acquired and liabilities assumed are recorded at their estimated fair
values. The excess of the purchase price, including estimated direct fees and
expenses related to the merger, over the net assets acquired represents
goodwill, and is classified as other assets, on the accompanying unaudited pro
forma balance sheet. The estimated fair values and useful lives of assets
acquired and liabilities assumed are based on an independent valuation.
The Pro Forma Condensed Balance Sheet of USWD as at September 30, 2000 reflects
the financial position of USWD after giving effect to the purchase of assets and
assumption of certain liabilities of Cellgate and assumes the acquisition took
place on September 30, 2000. The Pro Forma Condensed Statement of Operations for
the fiscal year ended June 30, 2000 and the three months ended September 30,
2000 assumes the purchase occurred on July 1, 1999.
The Unaudited Pro Forma Condensed Financial Information is provided for
illustrative purposes only and does not purport to represent what the actual
results of operations or financial position of USWD would have been had the
merger occurred on the date assumed, nor is it necessarily indicative of future
results of operation or financial position.
The pro forma assumptions and adjustments are described in the accompany notes
presented on the following pages. The Unaudited Pro Forma Condensed Financial
Information should be read in conjunction with the audited financial statements
of USWD in the USWD Annual Report on Form 10-KSB for the year ended June 30,
2000, and with the unaudited financial statements of USWD in the Quarterly
Report on Form 10-QSB for the period ended September 30, 2000 and the audited
financial statements of Cellgate for the year ended December 31, 1999 and the
unaudited financial statements of Cellgate for September 30, 2000 included
herein.
U.S. Wireless Data, Inc.
Pro Forma Condensed Balance Sheet
(Unaudited)
September 30, 20000
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U.S. Wireless Cellgate Pro Forma September 30, 2000
Data, Inc. Technologies, Inc. Adjustments Combined
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ASSETS
Current assets:
Cash $ 36,680,000 $ 151,516 (1,000,000)(b) $ 35,831,516
Accounts receivable, net 218,000 9,200 227,200
Notes receivable 82,000 - 82,000
Other receivable 176,000 - 176,000
Inventory, net 39,000 - 39,000
Other current assets 222,000 14,234 236,234
------------------ ---------------- ----------------- -------------------
$37,417,000 $174,950 ($1,000,000) $36,591,950
------------------ ---------------- ----------------- -------------------
Restricted cash 576,000 - 576,000
Property and equipment, net 2,116,000 15,886 2,131,886
Other assets 103,000 - 8,416,319 (f) 8,519,319
------------------ ---------------- ----------------- -------------------
Total assets $40,212,000 $190,836 7,416,319 47,819,155
================== ================ ================= ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 1,684,000 567,121 475,000 (e) 2,726,121
Accrued liabilities 1,073,000 298,841 1,371,841
Notes payable - 350,000 (250,000)(d) 100,000
------------------ ---------------- ----------------- -------------------
$2,757,000 $1,215,962 $225,000 $4,197,962
------------------ ---------------- ----------------- -------------------
Deferred rent 157,000 - 157,000
Deposit due to Sub Lessor 107,000 - 107,000
------------------ ---------------- ----------------- -------------------
Total liabilities $3,021,000 $1,215,962 $225,000 $4,461,962
--------------------------------------------------------- -------------------
Members' deficit - (1,025,126) 1,025,126 (d) -
------------------ ---------------- ----------------- --------------------
Total stockholders' Equity 37,191,000 - 6,166,193 (d) 43,357,193
------------------ ---------------- ----------------- -------------------
Total liabilities and stockholders' Equity $ 40,212,000 $ 190,836 7,416,319 47,819,155
================== ================ ================= ===================
U.S. Wireless Data, Inc.
Pro Forma Condensed Statement of Operations
For the Twelve Months Ended June 30, 2000 (a)
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(Unaudited) Combined
U.S. Wireless Cellgate Pro Forma Pro Forma
Data, Inc. Technologies LLC Adjustments Results
----------------- ----------------- ---------------- ---------------
Net revenues: $597,000 50,060 647,060
Cost of revenues: 896,000 292,910 1,188,910
----------------- ----------------- ---------------- ---------------
Gross Loss (299,000) (242,850) - (541,850)
----------------- ----------------- ---------------- ---------------
Operating expenses:
Selling, general and administrative 6,826,000 2,522,223 1,140,560 (c) 10,488,783
Research and development 1,330,000 36,727 1,366,727
----------------- ----------------- ---------------- ---------------
Total operating expense 8,156,000 2,558,950 1,140,560 11,855,510
----------------- ----------------- ---------------- ---------------
Loss from operations (8,455,000) (2,801,800) (1,140,560) (12,397,360)
Interest income 644,000 28,600 672,600
Interest expense (797,000) (2,167) (799,167)
Other income 84,000 84,000
----------------- ----------------- ---------------- ---------------
Net Loss (8,524,000) (2,775,367) 12,523,927 (12,523,927)
----------------- ----------------- ---------------- ---------------
Preferred stock dividends (45,746,000) (45,746,000)
----------------- ----------------- ---------------- ---------------
Net loss available to common stockholders' $ (54,270,000) (2,775,367) 58,269,927 (58,269,927)
================= ================= ================ ===============
Basic and diluted net loss per share
(after deduction of preferred stock dividends)
Net loss available to common stockholders' $ (2.26) - - 25,007,000
================= ================= ================ ===============
Weighted average common shares
outstanding basic and diluted 23,976,000 0 1,031,000 25,007,000 (g)
================= ================= ================ ===============
U.S. Wireless Data, Inc.
Pro Forma Condensed Statement of Operations
(Unaudited)
For the three months ended September 30, 2000 (a)
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Combined
U.S. Wireless Cellgate Pro Forma Pro Forma
Data, Inc. Technologies LLC Adjustments Results
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Net revenues: $151,000 $24,345 - $175,345
Cost of revenues: 106,000 235,175 - 341,175
----------------- ----------------- -------------- ---------------
Gross profit (loss) 45,000 (210,830) - (165,830)
----------------- ----------------- -------------- ---------------
Operating expenses:
Selling, general and administrative 3,260,000 701,715 285,140 (c) 4,246,855
Research and development 350,000 350,000
----------------- ----------------- -------------- ---------------
Total operating expense 3,610,000 701,715 285,140 4,596,855
----------------- ----------------- -------------- ---------------
----------------- ----------------- -------------- ---------------
Loss from operations (3,565,000) (912,545) (285,140) (4,762,685)
----------------- ----------------- -------------- ---------------
Interest income 627,000 2,265 - 629,265
Interest expense (10,059) 10,000 (10,059)
Other income 10,000
----------------- ----------------- -------------- ---------------
Net Loss ($2,928,000) ($920,339) 4,133,479 (4,143,479)
================= ================= ============== ===============
Basic and diluted net loss per share
(after deduction of preferred stock dividends)
Net loss available to common stockholders' $ (0.35) $ - $ - 9,366,000
================= ================= ============== ===============
Weighted average common shares
outstanding basic and diluted 8,335,000 - 1,031,000 9,366,000 (g)
================= ================= ============== ===============
Notes to the Pro Forma Condensed Financial Statements
(a.) U.S. Wireless Data, Inc. ("U.S. Wireless") has acquired the assets and
assumed certain liabilities of Cellgate Technologies LLC ("Cellgate").
For the purposes of these Pro Forma Condensed Financial Statements the
information relating to Cellgate, which has a year-end of December 31,
has been recast to conform to U.S. Wireless' year-end of June 30,
2000. Accordingly, the twelve months ended June 30, 2000 of Cellgate,
includes Net revenues and Net loss of approximately $18,000 and
$1,631,000 for the six month period June 30, 2000 and omits
approximately $0 and $1,267,000 for the six months ended June 30, 1999,
respectively.
(b.) Represents the cash payment of $1,000,000 as part of the Purchase
Agreement.
(c.) Represents the applicable amortization expense for intangible assets.
The intangible assets consist of work force acquired, intellectual
property and goodwill, which are amortized over four (4) years, seven
(7) years and ten (10) years, respectively.
(d.) To reflect the issuance of 562,500 shares of U.S. Wireless common stock
valued at $1,900,000 to members of Cellgate and contingently issuable
consideration of approximately $4,200,000 to members of Cellgate,
elimination of members equity of Cellgate, liabilities of Cellgate not
assumed and cash payments to members of Cellgate. The contingently
issuable consideration includes approximately $2,600,000 in cash and
468,000 shares of U.S. Wireless common stock valued at $1,600,000.
(e.) Adjusted to reflect incurrence of an estimated $475,000 of
non-recurring merger-related costs, which have been reflected in the
purchase price. These costs include fees for financial advisors, legal
advisors, accountants and other nominal costs. This amount does not
include any costs incurred to integrate and restructure the operations
of U.S. Wireless and Cellgate. These integration and restructure costs
which consist of payments to Cellgate employees for wages, severance
and benefits, and the cost of facility leases subsequent to the date of
the acquisition are estimated to be $152,000
(f.) The purchase price of Cellgate, is approximately $8,416,000, which
includes $965,000 of assumed liabilities. The purchase price is
allocated to the following intangible assets; acquired workforce
($250,000), technology, patents and licenses ($6,100,000) and Goodwill
($2,066,000)
(g.) Represents U.S. Wireless' weighted average number of shares of Common
Stock outstanding for the period and approximately 1,031,000 shares to
be issued as a result of the merger. This includes 562,500 shares to be
issued at date of closing and 468,500 shares contingently issuable one
year from date of closing depending on the average share price of U.S.
Wireless common stock.