Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K-A-2
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
January 31, 2002
IMX PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
Commission File Number 000-30294
Utah 87-0394290
- --------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 2902, 140 Broadway, New York, NY 10005
--------------------------------------------
(Address of Principal Executive Offices)
212.509.9500
------------
(Registrant's Telephone number, including area code)
Page 1 of 4
ITEM 7. Financial Statements, Pro Forma Financial Information, and Exhibits.
These are the audited and pro forma financial statements required as a result of
the acquisition of all of the remaining equity of ThinkDirectMarketing, Inc.
("TDMI") as described in more detail in Item 2 of the Report on Form 8-K filed
February 15th, 2002. A discussion of TDMI's operating results may be found in
the Report on Form 10-QSB for the three months ended March 31, 2002.
Financial
Statement
Page Financial Statement Name
F-1 Auditor's Report of Berenfeld, Spritzer, Shechter & Sheer
F-2 ThinkDirectMarketing, Inc. Balance Sheets as of December 31, 2001 (audited) and December 31,
2000(audited)
F-4 ThinkDirectMarketing, Inc Statements of Operations for the Years Ended December 21, 2001
(audited) and December 31, 2000 (audited)
F-5 ThinkDirectMarketing, Inc Statements of Stockholders Deficit for the Years
Ended December 21, 2001 (audited) and December 31, 2000 (audited)
F-6 ThinkDirectMarketing, Inc Statements of Cash Flow for the Years Ended December 21, 2001
(audited) and December 31, 2000 (audited)
F-7-25 Notes to Audited Financial Statements
F-26 IMX Pharmaceuticals, Inc. and Subsidiaries Pro Forma Balance Sheets as of December 31, 2001.
F-28 IMX Pharmaceuticals, Inc. and Subsidiaries Pro Forma Statements of Operations for the Three
Months Ended December 31, 2001.
F-29 IMX Pharmaceuticals, Inc. and Subsidiaries Pro Forma Statements of Operations for the Year
Ended June 30, 2001.
Page 2 of 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IMX PHARMACEUTICALS, INC.
Date: May 15, 2002 By: /s/ Adrian Stecyk
-------------------------------
Adrian Stecyk
Page 3 of 4
INDEX TO FINANCIAL STATEMENTS
Financial Financial Statement Name
Statement
Page
F-1 Auditor's Report of Berenfeld, Spritzer, Shechter & Sheer F-1
F-2 ThinkDirectMarketing, Inc. Balance Sheets as of December 31, 2001 (audited) and F-2
December 31, 2000(audited)
F-4 ThinkDirectMarketing, Inc Statements of Operations for the Years Ended December 21, 2001 F-4
(audited) and December 31, 2000 (audited)
F-5 ThinkDirectMarketing, Inc Statements of Stockholders Deficit for the Years Ended F-5
December 21, 2001 (audited) and December 31, 2000 (audited)
F-6 ThinkDirectMarketing, Inc Statements of Cash Flow for the Years Ended December 21, 2001 F-6
(audited) and December 31, 2000 (audited)
F-7-25 Notes to Audited Financial Statements F-8-25
F-26 IMX Pharmaceuticals, Inc. and Subsidiaries Pro Forma Balance Sheets as of
December 31, 2001. F-26
F-28 IMX Pharmaceuticals, Inc. and Subsidiaries Pro Forma Statements of Operations for the F-28
Three Months Ended December 31, 2001.
F-29 IMX Pharmaceuticals, Inc. and Subsidiaries Pro Forma Statements of Operations for the F-29
Year Ended June 30, 2001.
Page 4 of 4
INDEPENDENT AUDITORS' REPORT
To the Stockholders and
Board of Directors
ThinkDirectMarketing, Inc.
Stamford, Ct.
We have audited the consolidated balance sheet of ThinkDirectMarketing, Inc.
("the Company"), a Delaware company, and subsidiary as of December 31, 2001, the
balance sheet of ThinkDirectMarketing, Inc. as of December 31, 2000 and the
related statements of operations and accumulated deficit in retained earnings,
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the 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. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of
ThinkDirectMarketing, Inc. and subsidiary as of December 31, 2001 and the
financial position of ThinkDirectMarketing, Inc. as of December 31, 2000, and
the respective results of their operations and cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
The accompanying financial statements have been prepared assuming that the
Company and subsidiary will continue as a going concern. As described in Note 2
conditions exist which raise substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
BERENFELD, SPRITZER, SHECHTER & SHEER
May 10, 2002
THINKDIRECTMARKETING, INC. AND SUBSIDIARY
(f/k/a Digital Asset Management, Inc.)
BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
ASSETS
2001 2000
--------------- ---------------
(Consolidated)
CURRENT ASSETS:
Cash $ 8,162 $ 537,576
Accounts receivable, net of allowance
for bad debts 220,945 31,743
Prepaid expenses 43,697 28,195
Employee loans (202) 1,000
--------------- ---------------
Total Current Assets 272,602 598,514
--------------- ---------------
PROPERTY AND EQUIPMENT, net of
accumulated depreciation of
$261,592 and $126,500 253,864 439,269
--------------- ---------------
OTHER ASSETS:
Security deposits 15,457 17,757
Customer list, net of
accumulated amortization
of $100,534 and $72,608 0 27,926
Website development 111,837 345,347
--------------- ---------------
Total Other Assets 127,294 391,030
--------------- ---------------
TOTAL ASSETS $ 653,760 $ 1,428,813
=============== ===============
The accompanying notes are an integral part of these financial statements.
2
THINKDIRECTMARKETING, INC. AND SUBSIDIARY
(f/k/a Digital Asset Management, Inc.)
BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
LIABILITES AND STOCKHOLDERS' EQUITY (DEFICIT)
2001 2000
--------------- ---------------
(Consolidated)
CURRENT LIABILITIES:
Notes payable $ 5,089,000 $ 4,881,934
Accounts payable and accrued expenses 764,112 226,737
Deferred revenue 347,912 162,599
Employee loans 0 5,000
--------------- ---------------
Total Current Liabilities 6,201,024 5,276,270
--------------- ---------------
LONG-TERM LIABILITIES 0 0
--------------- ---------------
Total Liabilities 6,201,024 5,276,270
--------------- ---------------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $0.01 par value 2,000,000 shares
authorized, 1,145,073 and 2,500 shares issued
and outstanding 11,451 25
Common Stock, $0.01 par value, 3,000,000 shares
authorized, 280,956 and134,000 shares issued
and outstanding 2,810 1,340
Additional paid-in capital 6,800,693 3,540,385
Members' Deficit in Subsidiary (612,762)
Retained earnings (deficit) (11,749,456) (7,389,207)
--------------- ---------------
Total Stockholders' Equity (Deficit) (5,547,264) (3,847,457)
--------------- ---------------
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY (DEFICIT) $ 653,760 $ 1,428,813
=============== ===============
The accompanying notes are an integral part of these financial statements.
3
THINKDIRECTMARKETING, INC.
(f/k/a Digital Asset Management, Inc.)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
DECEMBER 31, 2001 and 2000
2001 2000
--------------- ---------------
(Consolidated)
REVENUES $ 1,577,410 $ 389,483
OPERATING EXPENSES 6,222,319 3,987,182
--------------- ---------------
LOSS FROM OPERATIONS (4,644,910) (3,597,699)
--------------- ---------------
OTHER INCOME (EXPENSES)
Interest income 217 10
Forgiveness of loan interest 0 142,849
Interest expense (4,537) (81,848)
Loss on website impairment (116,103) 0
Loss on computer equipment impairment (139,568) 0
Other expenses (2,012) (100)
--------------- ---------------
Total Other Income (Expenses) (262,003) 60,911
--------------- ---------------
NET LOSS (4,906,913) (3,536,788)
RETAINED EARNINGS (DEFICIT) - BEGINNING (7,455,312) (3,852,420)
--------------- ---------------
RETAINED EARNINGS (DEFICIT) - ENDING $ (12,222,656) $ (7,389,208)
=============== ===============
The accompanying notes are an integral part of these financial statements.
4
THINKDIRECTMARKETING, INC. AND SUBSIDIARY
(f/k/a Digital Asset Management, Inc.)
STATEMENTS OF STOCKHOLDERS' (DEFICIT)
DECEMBER 31, 2000 and 2001
Additional
Preferred Stock Common Stock Paid-in Members'
Shares Value Shares Value Capital Deficit
------------ ------------ ------------ ------------ ------------ ------------
Stockholders deficit at
January 1, 2000 2,500 $ 25 440 $ 4 $ 2,500,412 $
Stock issued in exchange for services 40 40,000
Stock purchases 900 9
Employee stock options issued 1,373
Non-employee stock options issued 999,927
Common stock split 100 to 1 132,660 1,327 (1,327)
Net Loss for the year ended
December 31, 2000
------------ ------------ ------------ ------------ ------------ ------------
Stockholders deficit at
December 31, 2000 2,540 25 134,000 1,340 3,540,385 0
Members' deficit acquired (66,104)
Adjustment for the number of
shares of stock outstanding 501,766 5,018 54,056 541 (5,559)
Employee stock purchases 92,900 929
Conversion of loans to stock 640,767 6,408 3,265,867
Net Loss for the year ended
December 31, 2001 (546,657)
------------ ------------ ------------ ------------ ------------ ------------
Stockholders and members' deficit at
December 31, 2001 1,145,073 $ 11,451 280,956 $ 2,810 $ 6,800,693 $ (612,761)
============ ============ ============ ============ ============ ============
Total
Accumulated Stockholders'
Deficit Deficit
------------ ------------
Stockholders deficit at
January 1, 2000 $ (3,852,419) $ (1,351,978)
Stock issued in exchange for services 40,000
Stock purchases 9
Employee stock options issued 1,373
Non-employee stock options issued 999,927
Common stock split 100 to 1 0
Net Loss for the year ended
December 31, 2000 (3,536,788) (3,536,788)
------------ ------------
Stockholders deficit at
December 31, 2000 (7,389,207) (3,847,457)
Members' deficit acquired (66,104)
Adjustment for the number of
shares of stock outstanding 0
Employee stock purchases 929
Conversion of loans to stock 3,272,275
Net Loss for the year ended
December 31, 2001 (4,360,249) (4,906,906)
------------ ------------
Stockholders and members' deficit at
December 31, 2001 $(11,749,456) $ (5,547,263)
============ ============
The accompanying notes are an integral part of these financial statements.
5
THINKDIRECTMARKETING, INC.
(f/k/a Digital Asset Management, Inc.)
STATEMENTS OF CASH FLOWS
DECEMBER 31, 2001 and 2000
2001 2000
--------------- ---------------
(Consolidated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,906,913) $ (3,536,788)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 310,426 267,113
Issuance of stock for services 0 40,000
(Increase) decrease in accounts receivable (141,535) (26,259)
(Increase) decrease in prepaid expenses (15,502) (24,331)
(Increase) decrease in employee loans (3,798) 0
(Increase) decrease in security deposits 2,300 4,078
(Increase) decrease in restricted cash 0 85,508
(Increase) decrease in accounts payable
and accrued expenses 422,642 (86,411)
Increase (decrease) in deferred revenues 185,313 125,149
--------------- ---------------
Net cash used by operating activities (4,147,067) (3,151,941)
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of fixed assets (89,255) (331,891)
Capitalized development costs 0 (136,225)
Website impairment 116,103 0
Computer equipment impairment 139,568 0
Website development (30,000) 0
Loan to affiliate 0 0
--------------- ---------------
Net cash used by investing activities 136,416 (468,116)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 207,066 3,079,937
Conversion of loans to stock 3,272,275
Repayments of notes payable 0 (60,000)
Issuance of common stock 929 0
Issuance of stock options 0 1,001,300
Proceed from sale of stock 0 9
--------------- ---------------
Net cash provided by investing activities 3,480,270 4,021,246
--------------- ---------------
NET DECREASE IN CASH (530,381) 401,189
CASH BALANCE- Beginning 538,545 136,387
--------------- ---------------
CASH BALANCE- Ending $ 8,164 $ 537,576
=============== ===============
The accompanying notes are an integral part of these financial statements.
6
THINKDIRECTMARKETING, INC.
(f/k/a Digital Asset Management, Inc.)
STATEMENTS OF CASH FLOWS
DECEMBER 31, 2001 and 2000
2001 2000
--------------- ---------------
(Consolidated)
NON-CASH FINANCING ACTIVITIES:
Long-term debt converted to preferred stock:
Preferred stock 6,408 0
Additional paid-in capital 3,265,867 0
--------------- ---------------
$ 3,272,275 $ 0
=============== ===============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest expense $ 0 $ 0
=============== ===============
The accompanying notes are an integral part of these financial statements.
7
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The 2001 consolidated financial statements include the accounts of
ThinkDirectMarketing, Inc. ("the Company") and its wholly owned
subsidiary, DirectMailQuotes, LLC. ("the Subsidiary") which was
acquired in 2001. All significant intercompany balances and
transactions have been eliminated.
The 2000 financial statements include only the accounts of the Company.
NATURE OF BUSINESS
The Company
The Company was originally incorporated under the name of Digital Asset
Management, Inc. in the State of Delaware on October 14, 1998. The
Company restated its certificate of incorporation on July 14, 2000.
The Company designs, develops and distributes products and services
that automate and streamline direct marketing and customer relationship
management. The Company has developed several scaleable and
complimentary lines of data management products and professional direct
mail services that were previously available only to Fortune 1000
companies. The Company has established marketing agreements to provide
direct mail and telemarketing services with major corporations and
business service partners servicing small and medium businesses
marketplace.
The Company licenses data from two leading data providers. This data is
utilized in the Company's ThinkDirectMail line of products.
ThinkDirectMail provides online direct marketing list services sold on
a subscription basis. ThinkDirectMail TM is an online
subscription-based direct marketing list product that lets users search
through a database of over 100 million business and consumer listings
by zip code, SIC code, geographic radius, as well as names and
addresses. ThinkDirectMail enables its users to accurately target
potential customers using criteria such as age, income, housing type,
family status, etc.
The Subsidiary
Direct Mail Quotes, LLC. d/b/a "Mail Mogul" was originally incorporated
in the State of California on February 3, 2000.
The Subsidiary operates a website where buyers of direct mail can
receive competitive bids from local mail shops able to handle their
mailing needs. Mail Mogul is an online market place for sellers of
direct mail, providing leads, website applications, mailing lists,
mailing supplies as well as other products and services.
8
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
The Subsidiary owns the web properties www.DirectMAilQuotes.com ("DMQ")
and www.MailMogul.com. DMQ allows buyers of direct mail to receive
competitive bids from local mail shops able to handle their mailing
needs. Users of DMQ can also read from hundreds of articles dedicated
to direct mail, look up important postal rates and regulations and
search for mail shops nationwide by the services they provide.
MailMogul is an online marketplace for professional mailing services.
From the www.MailMogul.com website, members can purchase Requests for
Quotes, mailing lists, mailing supplies, data entry services, as well
as other services designed to help mail shops compete better in the
21st century. Mail shops also have the opportunity to rent website
applications designed specifically for the direct mail industry. These
applications can be used to build a brand new site, or added to an
existing site to give mail shops the power to offer job tracking, quote
requests, postal information and job initiation right from their
website.
REVENUE AND COST RECOGNITION
The accompanying financial statements have been prepared using the
accrual method of accounting. Under the accrual method, revenues are
recognized when earned and expenses are recognized when incurred.
ADVERTISING COSTS
The Company expenses advertising as incurred. Advertising expense costs
for the years ended December 31, 2001 and 2000 totaled $932,136 and
$464,988 respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America, requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets
and liabilities as of the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period.
Accordingly, actual results could differ from those estimates.
9
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
CASH AND CASH EQUIVALENTS
For financial statement presentation purposes, the company considers
short-term, highly liquid investments with original maturities of three
months or less to be cash and cash equivalents. The Company did not
hold any cash equivalents as of December 31, 2001 and 2000.
FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107 "Disclosures about Fair Value of Financial Instruments"
requires the Company to disclose the fair value of its financial
instruments. The Company's financial instruments, including accounts
receivable, accounts payable and notes payable are carried at cost,
which, in the opinion of management, approximates their fair value due
to the short-term maturities and approximate market interest rates of
these instruments.
ACCOUNTS RECEIVABLE
The Company conducts business and extends credit based on the
evaluation of the customers' financial condition, generally without
requiring collateral. Exposure to losses on receivables is expected to
vary by customer due to the financial condition of each customer. The
Company monitors credit losses and maintains allowances for anticipated
losses considered necessary under the circumstances.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Maintenance and repair costs
are charged to expense as incurred. Gains and losses on disposition of
property and equipment are reflected in income currently. Depreciation
is computed on a straight-line method for financial reporting and an
accelerated method for income tax purposes, based on the estimated
useful lives of the assets.
LONG-LIVED ASSETS
The Company evaluates whether events and circumstances have occurred
that may warrant revision of the estimated life of intangible and other
long-lived assets, or whether the remaining balance of intangible and
other long-lived assets should be evaluated for possible impairment. If
and when such factors, events or circumstances indicate that intangible
or other long-lived assets should be evaluated for possible impairment,
management would make an estimate of undiscounted cash flows over the
remaining lives of the respective assets in measuring recoverability.
10
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
WEBSITE DEVELOPMENT
The Company accounts for website development costs in accordance with
the guidance of EITF 00-2 "Accounting for Website Development Costs".
Costs incurred in the planning stage are expensed as incurred. Costs
relating to software used to operate the website are accounted for
under Statement of Position 98-1, "Software Developed or Obtained for
Internal Use". Accordingly, external direct costs, payroll and payroll
related costs for those directly involved with the project, are
capitalized during the application development stage. Costs incurred
during the post-implementation operation stage, and fees incurred for
web-hosting, are expensed as incurred.
Costs incurred in connection with development of the Company website
are capitalized and amortized over a 5 year period. The website is
reviewed for potential impairment whenever events or circumstances
indicate that the carrying amount may not be recoverable.
INCOME TAXES
The Company accounts for income taxes in accordance with SFAS No. 109
"Accounting for Income Taxes", which requires an asset liability
approach to financial accounting and reporting for income taxes.
Deferred Income tax assets and liabilities are computed for differences
between the financial statement and tax basis of assets and liabilities
that will result in taxable or deductible amounts in the future based
on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances
are established when necessary to reduce deferred tax assets to the
amount expected to be realized. Income tax expense is the tax payable
or refundable for the period plus or minus the change during the period
in deferred tax assets and liabilities.
11
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
COMPENSATED ABSENSES
The Company does not accrue for compensated absences and recognizes the
costs of compensated absences when actually paid to employees.
Accordingly, no liability for such absences has been recorded in the
accompanying financial statements. Management believes the effect of
this policy is not material to the accompanying financial statements.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been presented in accordance
with accounting principles generally accepted in the United States of
America, which assume the continuity of the Company as a going concern.
The Company has incurred operating losses for each of the last four
years ended December 31, 1998, 1999, 2000 and 2001 of ($485,000),
($3,367,000), ($3,567,000), ($4,907,000), respectively and the
accumulated deficit amounted to ($12,362,000) at December 31, 2001. The
Company's current liabilities exceed its current assets by ($5,950,000)
and the Company' total liabilities exceed its total assets by
($5,550,000). These matters raise substantial doubt about the ability
of the Company to continue as a going concern. The Company's
continuance will be dependent on the ability to restructure its
operations to achieve profitability in the near term and its ability to
raise sufficient debt or equity capital to fund continuing operations
until such restructuring is completed.
Presently, the Company cannot ascertain the eventual success of
management's plans with any degree of certainty. The accompanying
financial statements do not include any adjustments that might result
from the eventual outcome of the uncertainties described above.
NOTE 3 - INVESTMENT IN SUBSIDIARY
On March 30, 2001 the Company entered into a One Hundred percent (100%)
membership interest purchase agreement ("the purchase agreement") with
DirectMailQuotes, LLC, a California limited liability company ("DMQ"),
the Direct MailQuotes, LLC investors ("the DMQ investors") and Cater
Barnard plc, (f/k/a VoyagerIT.com) a company formed under the laws of
England ("Cater Barnard ").
12
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 3 - INVESTMENT IN SUBSIDIARY
Pursuant to the purchase agreement, the Company purchased from the DMQ
investors One Hundred percent (100%) of the issued and outstanding
membership and economic interest (the "Membership Interests") of DMQ.
In exchange for the sale of the member interests, the Company would
within forty five days of the end of the Measurement Period (as defined
below) issue convertible promissory notes to the DMQ Investors ("the
DMQ notes") on a pro rata basis, in the aggregate amount of the
purchase price (as defined below).
The measurement period was defined as the twelve month period
commencing as of January 1, 2001 and ending December 31, 2001.
The initial purchase price (the "initial purchase price") of the
Membership Interests was established at Five hundred thousand dollars
($500,000), subject to certain adjustments ("the adjusted purchase
price").
In accordance with the agreement at the conclusion of the measurement
period "the adjusted purchase price" was agreed to be $425,000.
Management was unable to conclude that there was lasting value in the
assets purchased, therefore there was a discount recorded equal to the
convertible notes issued.
NOTE 4- PROPERTY AND EQUIPMENT
Property and equipment consisted of the following for the years ended
December 31, 2001 and 2000 respectively: Depreciation expense for the
years ended December 31, 2001 and 2000 total $126,935 and $82,785,
respectively.
Estimated
Property and Equipment Useful Lives 2001 2000
----------------- ------------ -----------
Computer equipment and software 5 years $ 407,854 $ 474,891
Telephone equipment 5 years 18,049 18,049
Office equipment 5 years 3,212 3,212
Furniture and fixtures 7 years 86,340 69,616
----------- -----------
Total Property and Equipment 515,455 565,768
Accumulated Depreciation (261,591) (126,500)
----------- -----------
Net Property and Equipment $ 253,864 $ 439,268
=========== ===========
Depreciation expense for the years ended December 31, 2001 and 2000
total $126,935 and $82,785, respectively.
13
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 4 - PROPERTY AND EQUIPMENT (Continued)
During 2001 computer equipment of $139,568 was deemed impaired and
written down to management's estimated fair value. An impairment loss
of that amount has been charged to operations in 2001.
NOTE 5 - WEBSITE IMPAIRMENT
During 2001 the Company determined that based on estimated future cash
flows, the carrying amount of the website exceeded its fair value by
$116,103, accordingly an impairment loss of that amount was recognized
and included in the statement of operations.
NOTE 6 - NOTES PAYABLE
As of December 31, 2001 and 2000 notes payable consisted of the
following:
2001 2000
The Company:
-------------- --------------
Convertible bridge note payable to Axciom Corporation due December 31,
2001- effective rate approximately 4.5% (convertible into 80,000 shares
of Series B-2 Preferred stock, par value $.01 per share). $ 400,000 $ 400,000
Convertible bridge notes payable to various individuals due December 31,
2001- effective rate approximately 8.0% (convertible into 640,767 shares
of Series B-1, B-2 and C-1 Preferred stock, par value $.01 per share). 3,271,989
Bridge note payable to CDSI due June 8, 2001- no stated
interest rate. 100,000
Convertible promissory notes payable to Cater Barnard plc due December
31, 2001 (convertible into 359,381 shares of the Series D preferred
stock, par value $.01 per share).
4,575,000 1,109,945
Total Company Notes Payable 4,975,000 4,881,934
The Subsidiary:
Note payable, individual, no stated interest rate 114,000 0
-------------- --------------
Total Notes Payable $ 5,089,000 $ 4,881,934
============== ==============
14
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 6 - NOTES PAYABLE (Continued)
The Subsidiary's note payable was issued to a former member of the
Subsidiary ("the Note holder") in repayment of loans made by the Note
holder. The note in the amount of $114,000 is non-interest bearing. The
Subsidiary provided a Side Letter to the Note holder in which the
Subsidiary made a commitment that in the event the Internal Revenue
Service should impute interest on the note, the Subsidiary will
reimburse the Note holder for the income tax generated by the imputed
interest.
The note provides for $60,000 to be paid in $10,000 monthly increments
beginning in July 2001 and continuing through December 2001. The
remaining $54,000 shall be payable as follows: (a) as earned, 50% of
the net profits of the Subsidiary shall be paid to the Note holder and
(b) any part of the $54,000 that remains unpaid on June 30, 2002 shall
be then due and payable in full.
As of December 31, 2001 no payments had been made. The failure to make
a payment when due constitutes an event of default. The effect of
default is:
(i) The termination of the license agreement entered into by the
Subsidiary and the Note holder as part of the Purchase
agreement of March 30, 2001.
(ii) The Note holder has a perpetual world-wide royalty-free
license ("the Recovery Right") from the Subsidiary to use,
modify, revise, transfer, enhance, sublicense or deal with in
any way or manner determined by the Note holder at his
discretion (a) any of the intellectual property of the
Subsidiary developed by the Subsidiary and the Note holder
prior to the Closing of the Purchase agreement and (b) any
software developed after the Closing of the Purchase agreement
primarily by the Subsidiary or any subsidiary thereof,
relating expressly to creative and mailing modules and any
applications relating to the MailMogul product.
The entire indebtedness due under this Note shall at the option of the
Note holder be immediately due and payable without notice.
15
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 7 - INCOME TAXES
The provision for income taxes in the statements of operations is as
follows:
2001 2000
-------------- --------------
Current
Federal $ 0 $ 0
State 0 0
-------------- --------------
$ 0 $ 0
============== ==============
Deferred
Federal $ 0 $ 0
State 0 0
-------------- --------------
$ 0 $ 0
============== ==============
The deferred tax asset, net of valuation allowance, for 2001 and 2000
income tax is $0 and $0, respectively.
The Company has available at December 31, 2001 and 2000 approximately
$11,750,000 and $7,390,000 of unused operating loss carry forwards that
may be applied against taxable income and that expire in various years
from 2017 to 2020.
16
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Employment Contracts
The Company has entered into employment contracts with six individuals.
The contracts provide for minimum annual salaries and incentives based
on the individual meeting goals established by the Company's
Compensation Committee. The employment agreements also contain
provisions for the issuance of options to purchase a certain number of
shares of common stock based on the company's success in the attainment
of certain performance goals. The total commitment for these employment
contracts is as follows:
For the year ending December 31,
2002 $ 570,000
2003 130,000
2004 15,000
------------------
$ 715,000
==================
Web Site Link Agreement
In July 2001 the Company entered into a Web Site Link Agreement ("Web
Site agreement") with Claritas Inc. ("Claritas"). The Web Site
agreement establishes a hypertext link ("the Link") between the
Company's web site and Claritas' web site. Claritas maintains the link
which enables visitors ("end-users") to the Company's web site to Link
directly into the the Claritas web site. The purpose of the Link is to
provide a vehicle by which end-users can place product orders. In
exchange for the link, Claritas pays the Company commissions ("the
Commisisons") for those sales that eminate from the Link. Claritas
maintains on its web site a software application that enables it to (i)
recognize end-user product orders resulting from access to the Claritas
web site through the Link and (ii) track such orders and calculate the
Commissions.
The Commissions are equal to twenty percent (20%) of the first ten
thousand dollars in revenues generated through the Link and twenty five
percent (25%) for those revenues generated in excess of the initial ten
thousand dollars ($10,000).
The Company's responsibility is to maintain and continually upgrade its
Web Site and facilitate uninterrupted, end-user access to its web site
and the Link.
The agreement was never implemented.
17
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)
Data License Agreement
In October 1998 the Company entered into a Data License Agreement ("the
Data License agreement") with Acxiom Corporation ("Acxiom). The Data
License agreement permits the Company use of the Acxiom business and
residential information database (the "Database"). The database
contains names, addresses, telephone numbers and other information of
sixteen million United States Business and two million Canadian
Business listings as well as eighty-five million United States
residential and eleven million Canadian residential listings.
The agreement permits the Company to use the Database to create mailing
list products and telemarketing list products for sale to the Company's
customers.
At December 31, 2001 the Company had a contractual obligation, for the
term of the contract, to pay to Acxiom, on a monthly basis 12% of
revenues generated from the sale or display of the data as described in
the agreement. The contract establishes certain minimum amounts to be
paid to Acxiom. For calendar year 2002 the minimum amount to be paid by
the Company is $475,000, payable in equal monthly installments. For
each successive calendar year the minimum amount is 120% of the prior
year's minimum amount.
The Company may terminate the agreement upon sixty days written notice
to Acxiom.
Acxiom is a related party to the Company (see Note 14 Related Party
Transactions)
Lease Obligations
The Company has various operating leases for real property and
equipment used in operations. The Company leases, from unrelated
parties, office space for use by the Company and its subsidiary. The
real property leases and equipment leases expire on various dates in
2004 and 2006 respectively.
18
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)
Real Property Lease Obligations
The Company entered into three lease obligations for office space in
Connecticut, Colorado and California.
Connecticut Lease
The Connecticut lease was entered into on November 10, 1998. The
original term of the lease was from January 1, 1999 through December
31, 1999. The lease contained an option for the Company to extend the
lease for an additional five-year period ending December 31, 2004. The
Company exercised the option. In November 2001 the Company and its
landlord agreed to extend the lease to December 31, 2005. During the
extension period the fixed rent would be equivalent to the fair market
rent as agreed between the Company and the Landlord. The annual rent
expense for 2001 and 2000 was $66,763 and $66,763.
Colorado Leases
The first Colorado lease was entered into in November, 1998 and expired
in November 2000. The annual rent for 2000 was $31,998.
The second Colorado lease was entered into on November 27, 2000. The
original term of the lease is from February 1, 2001 through January 31,
2004. The annual rent for 2001 was $57,126.
California Lease
The California lease was entered into on July 17, 2001. The term of the
lease is from August 1, 2001 through July 31, 2003. The lease contains
a provision for the Company to continue, with the consent of the
landlord, its tenancy on a month-to-month basis at a monthly rent of
$1,680 upon expiration of the lease. The annual rent for 2001 was
$8,000.
Future minimum lease commitments under all long-term operating leases
as of December 31, 2001 are approximately:
Year Ending
December 31, Amount
------------------ ------------------
2002 $ 143,400
2003 144,700
2004 85,300
2005 3,200
2006 1,000
----------------
$ 377,600
================
19
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)
Pending Litigation
A Find Z Inc.
The Company is a defendant in lawsuit filed by A Find Z Inc. ("A Find
Z"). A Find Z is claiming an outstanding finder's fee in an amount
equal to between $25,000 and $85,000. Outside counsel for the Company
has advised that at this stage in the proceedings they cannot offer an
opinion as to the probable outcome. It is not possible to predict at
this time the extent of the Company's liability, if any. The Company is
vigorously defending its position. On May 14, 2002 the parties reached
a preliminary agreement to settle the lawsuit. If the settlement is
consummated the Company will pay A Find Z $25,000 and receive a
complete release.
NOTE 9 - DEFERRED REVENUE
Revenues derived from the sale of twelve-month subscriptions to the
Company's mailing lists and the subsidiary's "Request for Quote"
service are deferred and included in income on a monthly basis as one
twelfth of the subscriptions expire.
NOTE 10 - UNINSURED CASH BALANCES
The Federal Deposit Insurance Corporation insures balances up to but
not exceeding cash deposits in a financial institution of $100,000. The
Company from time to time maintains balances in excess of the amount
insured. As of December 31, 2001 and 2000 the company had $0 and
$437,576 deposited in excess of the amount insured by the Federal
Deposit Insurance Corporation.
NOTE 11 - CAPITAL STOCK
Preferred Stock
During 2000 and 2001 the Company had issued and outstanding various
series of preferred stock. The series classifications were Series A,
B-1, B-2, C-1 and C-2. The characteristics of the various series with
respect to rights, preferences, limitations, voting
20
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 11 - CAPITAL STOCK (continued)
Preferred Stock (continued)
- --------------------------------------------------------------------------------------------------------------
Preferred Series: A B-1 B-2 C-1 C-2
- --------------------------------------------------------------------------------------------------------------
Per share
liquidation rights $10.00 $2.50 $5.00 $7.79 $4.06
- --------------------------------------------------------------------------------------------------------------
Conversion ratio
Preferred:Common 1:1 1:1 1:1 1:1 1:1
- --------------------------------------------------------------------------------------------------------------
Treatement of Retired Retired Retired Retired Retired
reacquired and and and and and
shares cancelled cancelled cancelled cancelled cancelled
- --------------------------------------------------------------------------------------------------------------
Effect of: Conversion Conversion ratio Conversion Conversion ratio Conversion
ratio in effect immed- ratio in effect immed- ratio
(a) common in effect iately prior to in effect iately prior to in effect
stock subdivision by immed- subdivision immed- subdivision immed-
stock split, stock iately prior proportion-ately iately prior proportion-ately iately prior
dividend, etc. to subdivision reduced to subdivision reduced to subdivision
or proportion-ately Conversion ratio proportion-ately Conversion ratio proportion-ately
(b) common reduced in effect immed- reduced in effect immed- reduced
stock combination by Conversion iately prior to Conversion iately prior to Conversion
reverse stock split, ratio subdivision ratio subdivision ratio
stock in effect proportionately in effect proportionately in effect
dividend, etc. immed- (a) reduced immed- (a) reduced immed-
iately prior or iately prior or iately prior
to subdivision (b) increased to subdivision (b) increased to subdivision
proportionately proportionately proportionately
(a) reduced (a) reduced (a) reduced
or or or
(b) increased (b) increased (b) increased
- --------------------------------------------------------------------------------------------------------------
Consolidation / Convertible Convertible Convertible Convertible Convertible
Merger into the kind into the kind into the kind into the kind into the kind
and amount and amount and amount and amount and amount
of shares of of shares of of shares of of shares of of shares of
stock stock stock stock stock
receivable receivable upon receivable receivable upon receivable
upon the the upon the the upon the
consolidation consolidation consolidation consolidation consolidation
or merger or merger or merger or merger or merger
- --------------------------------------------------------------------------------------------------------------
and dividend rights were similar to that of common shareholders with
the following exceptions:
21
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 11 - CAPITAL STOCK (Continued)
Preferred Stock (Continued)
On October 31, 1998 the Company issued 1,250 shares of Series A
preferred stock to Acxiom Corporation in exchange for cash in the
aggregate amount of $1,250,000.
On October 31, 1998 the Company issued 1,250 shares of Series A
preferred stock to CDSI Holdings, Inc. ("CDSI") in exchange for
furniture and fixtures valued at $35,000, a customer database valued
at $1,005,338 and capitalized software costs valued at $234,403. The
issuance price was reduced by $24,740, which represented the amount of
CDSI's deferred revenue liability assumed by the Company. The
valuation was determined by management based on the readily
ascertainable value of Acxiom's purchase of 1,250 shares for cash.
In February 2000, the Company issued 25 shares of Series B-2 preferred
stock to its legal council in exchange for services provided to the
Company.
In March 2000, the Company issued 15 shares of Series B-2 preferred
stock to vendors in exchange for marketing services provided to the
Company.
In March 2001, the Company issued 100,000 shares of Series B-1
preferred stock to Acxiom in exchange for Acxiom's election to
exercise the conversion feature of the Company's $250,000 convertible
bridge note payable to Acxiom.
In March 2001, the Company issued 100,000 shares of Series B-1
preferred stock to an individual in exchange for the individual's
election to exercise the conversion feature of the Company's $250,000
convertible bridge note payable to the individual.
In March 2001, the Company issued 171,000 shares of Series B-2
preferred stock to various Bridge Noteholders in exchange for the
Bridge Noteholders election to exercise the conversion feature of the
Company's $862,000 bridge note payable to the Bridge Noteholders.
In March 2001, the Company issued 217,520 shares of Series C-1
preferred stock to various Bridge Noteholders in exchange for the
Bridge Noteholders election to exercise the conversion feature of the
Company's $1,409,989 bridge note payable to the Bridge Noteholders.
22
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 11 - CAPITAL STOCK (Continued)
Preferred Stock (Continued)
In March 2001, the Company issued 52,247 shares of Series C-1
preferred stock to Cater Barnard plc in exchange for Cater Barnard
plc`s election to exercise the conversion feature of the Company's
$500,000 bridge note payable to Cater Barnard plc.
NOTE 11 - CAPITAL STOCK (Continued)
Common Stock
On January 1, 2000 the Company had 440 shares issued of its common
stock.
In June 2000 the Company issued 900 shares of its common stock to
individuals for cash at par value.
NOTE 12 - STOCK OPTION PLAN
The Company has a fixed employee stock-based compensation plan. Under
the Company's Employee Stock Option Plan ("the ESOP"), the Company may
grant options for up to 150,000 shares of common stock. The exercise
price of each option is $6.24. The maximum term of the options is 10
years vesting upon issuance.
On January 27, 2000 the Board of Directors authorized a 100 to 1 stock
split on the Company's $.01 par value common stock. As a result of the
split, 132,660 additional shares were issued and additional paid in
capital was reduced by $1,327.
During 2000 the Company issued 111,466 stock options to employees in
accordance with the ESOP.
During 2001 the Company issued 138,200 stock options to employees in
accordance with the ESOP.
23
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 12 - STOCK OPTION PLAN (Continued)
Following is a summary of the status of the plan during 2000 and 2001:
2000 2001
--------------------------- ---------------------------
Weighted Weighted
Average Average
Number of Exercise Number of Exercise
Shares Price Shares Price
--------- -------- --------- --------
Outstanding at January 1, 7,100 $ 6.24 21,766 6.24
Granted 111,466 $ 6.24 138,200 6.24
Exercised 98,600 $ 6.24 (90,800) 6.24
Forfeited 0 $ 6.24 (23,300) 6.24
--------- ---------
Outstanding at December 31, 217,166 $ 6.24 45,866 6.24
========= ======== ========= ========
Options exerciseable at
December 31, 217,166 10,866
========= ======== ========= ========
NOTE 13 - OUTSTANDING WARRANTS
At December 31, 2001 the Company had outstanding warrants to purchase
127,315 shares of the Company's common stock at prices ranging from $2.50
to$5.28 per share. The warrants become exercisable upon issuance and expire
at various dates through 2005 . At December 31, 2001 127,315 shares of
common stock were reserved for that purpose.
24
THINKDIRECTMARKETING, INC.
f/k/a Digital Asset Management, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 14 - RELATED PARTY TRANSACTIONS
Acxiom Corporation:
Acxiom controlled two seats on the Board of Directors from 1998 trough
2001.
Acxiom purchased preferred stock in 1998 and 2001.
In addition the Company is indebted to Acxiom in the amount of
$400,000. Acxiom provided services to the Company under the Data
License Agreement (see Note 8 Commitments and Contingencies)
25
IMX PHARMACEUTICALS, INC.
AND SUBSIDIARY
PRO FORMA BALANCE SHEETS
DECEMBER 31, 2001
ASSETS
- --------------------------------------------------------------------------------
IMX Pharmaceuticals ThinkDirectMarketing
and subsidiaries and subsidiary Findstar, plc
Historical Historical Historical
(Unaudited) (Unaudited) (Unaudited)
------------------- -------------------- ---------------
CURRENT ASSETS
Cash $ 5,175 $ 8,162 $ 36
Accounts receivable 11,977 220,945 162,170
Inventories 0 800
Other receivables
Prepaid expenses 43,697 36,864
------------ ------------ ------------
Total Current Assets 17,152 272,804 199,870
------------ ------------ ------------
PROPERTY AND EQUIPMENT
Property and equipment, net of
accumulated depreciation 0 253,864 92,873
------------ ------------ ------------
OTHER ASSETS
Goodwill 1,125,745
Note receivable, Shalom Y'all 100,000
Deposits and other 0 15,457
Promissory notes receivable 4,100,000
Indeminification agreement 50,000
Website development 111,837
Indemnification agreement
Investment in Findstar plc 10,312,400
Investment in Think Direct Marketing. Inc. 12,912,400
------------ ------------ ------------
Total Other Assets 27,474,800 127,294 1,125,745
------------ ------------ ------------
Total Assets $ 27,491,952 $ 653,962 $ 1,418,488
============ ============ ============
ASSETS
- --------------------------------------------------------------------------------
Pro Forma Pro Forma
Adjustments Results
-------------- -------------
CURRENT ASSETS
Cash $ 0 $ 13,373
Accounts receivable 0 395,092
Inventories 0 800
Other receivables 0 0
Prepaid expenses 0 80,561
------------ ------------
Total Current Assets 0 489,826
------------ ------------
PROPERTY AND EQUIPMENT
Property and equipment, net of
accumulated depreciation 0 346,737
------------ ------------
OTHER ASSETS
Goodwill (1,125,745) 0
Note receivable, Shalom Y'all 0 100,000
Deposits and other 0 15,457
Promissory notes receivable (4,100,000) 0
Indeminification agreement
Website development
Indemnification agreement 0 0
Investment in Findstar plc (10,312,400) 0
Investment in Think Direct Marketing. Inc. (12,912,400) 0
------------ ------------
Total Other Assets (28,450,545) 115,457
------------ ------------
Total Assets $(28,450,545) $ 1,113,857
============ ============
26
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
- --------------------------------------------------------------------------------
IMX Pharmaceuticals ThinkDirectMarketing
and subsidiaries and subsidiary Findstar, plc
Historical Historical Historical
(Unaudited) (Unaudited) (Unaudited)
------------------- -------------------- --------------
CURRENT LIABILITIES
Current portion of long-term
notes payable $ $ 5,089,000 $
Bank overdrafts 0 23,006
Settlement payable, Wachovia 38,000
Settlement payable, Vitaquest 5,000
Administrative fees payable 25,000
Note payable 82,000
Accounts payable 764,314 192,240
Accrued expenses 993,439
and other current liabilities
Deferred revenues 347,912
Commissions payable
Bankruptcy settlement and fees payable
Note payable
Sales tax payable
Stock recission payable
Loans payable
------------ ------------ ------------
Total Current Liabilities 150,000 6,201,226 1,208,685
------------ ------------ ------------
LONG-TERM LIABILITIES
Officer' loan payable
Promissory notes payable 3,000,000
Due to affiliate 803,144
Notes payable, less current portion
------------ ------------ ------------
Total Long-Term Liabilities 3,000,000 0 803,144
------------ ------------ ------------
Total Liabilities 3,150,000 6,201,226 2,011,829
------------ ------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock 18,308,780 11,451 0
Common stock 10,313 2,810 432,734
Additional paid-capital 21,569,228 6,800,693 (1,026,075)
Retained earnings (deficit) (14,968,315) (12,362,218)
Treasury stock (578,054)
Accumulated other
comprehensive income (loss)
------------ ------------ ------------
Total Stockholders' Equity (Deficit) 24,341,952 (5,547,264) (593,341)
------------ ------------ ------------
Total Liabilities
and Stockholders' Equity (Deficit) $ 27,491,952 $ 653,962 $ 1,418,488
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
- --------------------------------------------------------------------------------
Pro Forma Pro Forma
Adjustments Results
------------- ------------
CURRENT LIABILITIES
Current portion of long-term
notes payable $ (4,100,000) $ 989,000
Bank overdrafts 0 23,006
Settlement payable, Wachovia
Settlement payable, Vitaquest
Administrative fees payable
Note payable
Accounts payable 0 956,554
Accrued expenses 993,439
and other current liabilities 0 0
Deferred revenues
Commissions payable 0 0
Bankruptcy settlement and fees payable 0 0
Note payable 0 0
Sales tax payable 0 0
Stock recission payable 0 0
Loans payable 0 0
------------ ------------
Total Current Liabilities (4,100,000) 3,459,911
------------ ------------
LONG-TERM LIABILITIES
Officer' loan payable 0 0
Promissory notes payable 0 3,000,000
Due to affiliate 0 803,144
Notes payable, less current portion 0 0
------------ ------------
Total Long-Term Liabilities 0 3,803,144
------------ ------------
Total Liabilities (4,100,000) 7,263,055
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock (7,234,642) 11,085,589
Common stock (435,544) 10,313
Additional paid-capital (6,800,693) 20,543,153
Retained earnings (deficit) (9,879,666) (37,210,199)
Treasury stock 0 (578,054)
Accumulated other
comprehensive income (loss) 0 0
------------ ------------
Total Stockholders' Equity (Deficit) (24,350,545) (6,149,198)
------------ ------------
Total Liabilities
and Stockholders' Equity (Deficit) $(28,450,545) $ 1,113,857
============ ============
27
IMX PHARMACEUTICALS, INC.
AND SUBSIDIARY
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
DECEMBER 31, 2001
IMX Pharmaceuticals, Inc. ThinkDirectMarketing
and subsidiaries and subsidiary Findstar, plc
Historical Historical Historical
(Unaudited) (Unaudited) (Unaudited)
------------------------- -------------------- -------------
NET SALES $ 34,881 $ 515,135 $ 321,709
COST OF SALES 275 391,915 121,470
----------- ----------- -----------
GROSS PROFIT 34,606 123,220 200,239
----------- ----------- -----------
OPERATING EXPENSES
Selling 19,287 147,889 180,382
Advertising 16 45,769 2,798
General and administrative 20,686 816,029 109,547
Depreciation and amortization 5,449 71,589 9,450
----------- ----------- -----------
Total Operating Expenses 45,438 1,081,276 302,177
----------- ----------- -----------
LOSS FROM OPERATIONS (10,832) (958,056) (101,938)
----------- ----------- -----------
OTHER INCOME AND (EXPENSES)
Interest income 0 0 0
Asset impairment loss 0 0 0
Interest expense 0 0 936
Reorganization items 0 0 0
Other (3,067) 0 0
----------- ----------- -----------
Total Other Income and (Expenses) (3,067) 0 936
----------- ----------- -----------
NET LOSS $ (13,899) $ (958,056) $ (101,002)
=========== =========== ===========
Pro Forma Pro Forma
Adjustments Results
----------- -----------
NET SALES $ (34,881) $ 836,844
COST OF SALES (275) 513,385
----------- -----------
GROSS PROFIT (34,606) 323,459
----------- -----------
OPERATING EXPENSES
Selling (19,287) 328,271
Advertising (16) 48,567
General and administrative (20,686) 925,576
Depreciation and amortization (5,449) 81,039
----------- -----------
0
Total Operating Expenses (45,438) 1,383,453
----------- -----------
LOSS FROM OPERATIONS 10,832 (1,059,994)
----------- -----------
OTHER INCOME AND (EXPENSES)
Interest income 0 0
Asset impairment loss 0 0
Interest expense 0 936
Reorganization items 0 0
Other 3,067 0
----------- -----------
Total Other Income and (Expenses) 3,067 936
----------- -----------
0
0
NET LOSS $ 13,899 $(1,059,058)
=========== ===========
- --------------------------------------------------------------------------------
28
IMX PHARMACEUTICALS, INC.
AND SUBSIDIARY
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED
JUNE 30, 2001
IMX Pharmaceuticals, Inc. ThinkDirectMarketing
and subsidiaries and subsidiary Findstar, plc
Historical Historical Historical
(Unaudited) (Unaudited) (Audited)
------------------------- -------------------- -------------
NET SALES $ 1,977,226 $ 643,654 $ 330,731
COST OF SALES 1,513,003 521,249 171,435
----------- ----------- -----------
GROSS PROFIT 464,223 122,405 159,296
OPERATING EXPENSES
Selling 742,788 908,037 513,955
Advertising 20,863 293,135 856
General and administrative 1,663,058 4,206,771 321,640
Depreciation and amortization 104,598 0 48,843
----------- ----------- -----------
Total Operating Expenses 2,531,307 5,407,943 885,294
----------- ----------- -----------
LOSS FROM OPERATIONS (2,067,084) (5,285,538) (725,998)
----------- ----------- -----------
OTHER INCOME AND (EXPENSES)
Interest income 32,413 0 0
Asset impairment loss (1,029,177) 0 0
Interest expense 0 (81,848) (4,897)
Reorganization items (5,634,421) 0 0
Other 262,056 142,577 (2,053)
----------- ----------- -----------
Total Other Income and (Expenses) (6,369,129) 60,729 (6,950)
----------- ----------- -----------
NET LOSS $(8,436,213) $(5,224,809) $ (732,948)
=========== =========== ===========
Pro Forma Pro Forma
Adjustments Results
----------- ---------
NET SALES $(1,977,226) $ 974,385
COST OF SALES (1,513,003) 692,684
----------- -----------
GROSS PROFIT (464,223) 281,701
OPERATING EXPENSES
Selling (742,788) 1,421,992
Advertising (20,863) 293,991
General and administrative (1,663,058) 4,528,411
Depreciation and amortization (104,598) 48,843
----------- -----------
0
Total Operating Expenses (2,531,307) 6,293,237
----------- -----------
LOSS FROM OPERATIONS 2,067,084 (6,011,536)
----------- -----------
OTHER INCOME AND (EXPENSES)
Interest income (32,413) 0
Asset impairment loss 1,029,177 0
Interest expense 0 (86,745)
Reorganization items 5,634,421 0
Other (262,056) 140,524
----------- -----------
Total Other Income and (Expenses) 6,369,129 53,779
----------- -----------
0
0
NET LOSS $ 8,436,213 $(5,957,757)
=========== ===========
29