Ealixir, Inc. 10-Q

ITEM 1: FINANCIAL STATEMENTS SEMOTUS SOLUTIONS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited) DECEMBER 31 MARCH 31 ASSETS 2002 2002 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents (including restricted cash of $693,286 at March 31, 2002) $ 2,505,467 $ 4,797,589 Trade receivables (net of allowance for doubtful accounts of $82,590 at December 31, 2002 and $67,000 at March 31, 2002) 400,813 266,220 Income and GST tax receivable 250 3,823 Other receivables 46,203 60,395 Prepaid expenses 107,721 167,998 Net current assets from discontinued operations -- 113,343 ------------ ------------ Total current assets 3,060,454 5,409,368 Property and equipment, net 408,827 652,452 Capitalized contract, net 144,238 576,958 GMP intellectual property, net 250,000 1,000,000 Goodwill 2,474,597 2,474,597 Net noncurrent assets from discontinued operations 16,630 21,804 ------------ ------------ Total assets $ 6,354,746 $ 10,135,179 ============ ============ LIABILITIES: CURRENT LIABILITIES: Accounts payable $ 527,836 $ 629,635 Accrued expenses and other current liabilities 150,746 339,787 Notes payable 22,938 693,286 Current portion of capital lease obligations 25,905 89,297 Current portion of advances on technology sales 283,074 269,109 Deferred revenue 655,093 1,323,858 Net current liabilities from discontinued operations 142,490 -- ------------ ------------ Total current liabilities 1,808,082 3,344,972 Capital lease obligation, net of current portion 20,355 44,200 Advances on technology sales, net of current portion 345,853 566,542 ------------ ------------ Total liabilities 2,174,290 3,955,714 ------------ ------------ Minority Interest 391,928 202,528 Commitments and contingencies (Note 7) PREFERRED SHAREHOLDERS' EQUITY: Convertible preferred stock, Series B: $0.001 par value; $13.00 liquidation value; authorized: 5,000,000 shares; issued and outstanding: none at December 31, 2002 and 469,231 at March 31, 2002 (Note 6) -- 469 Additional paid-in capital -- 5,681,987 ------------ ------------ Total preferred shareholders' equity -- 5,682,456 ------------ ------------ COMMON SHAREHOLDERS' EQUITY Common stock: $0.01 par value; authorized: 50,000,000 shares; issued and outstanding: 18,121,365 at December 31, 2002 and 17,200,784 at March 31, 2002 181,214 172,008 Additional paid-in capital 66,135,178 60,396,089 Accumulated other comprehensive loss (142,153) (142,360) Notes receivable - related parties (109,893) (701,817) Accumulated deficit (62,275,818) (59,429,439) ------------ ------------ Total common shareholders' equity 3,788,528 294,481 ------------ ------------ Total liabilities, minority interest, preferred and common shareholders' equity $ 6,354,746 $ 10,135,179 ============ ============ See accompanying notes to consolidated financial statements. 3 SEMOTUS SOLUTIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited) THREE MONTHS ENDED NINE MONTHS ENDED DECEMBER 31, DECEMBER 31, ------------------------------ ------------------------------ 2002 2001 2002 2001 ------------ ------------ ------------ ------------ Revenues: Wireless Services $ 338,970 $ 346,421 $ 962,773 $ 1,017,190 Enterprise and commerce sales 250,212 255,380 766,775 921,334 Professional and related services 11,475 17,512 51,744 334,274 Logistics 274,512 316,662 866,898 1,186,303 ------------ ------------ ------------ ------------ Total Revenue 875,169 935,975 2,648,190 3,459,101 ------------ ------------ ------------ ------------ Cost of sales: Wireless Services 68,160 108,785 246,130 420,031 Enterprise and commerce sales 144,240 155,137 433,895 543,249 Professional and related services 2,587 1,872 5,858 161,538 Logistics 93,529 141,567 359,844 597,249 ------------ ------------ ------------ ------------ Total cost of sales 308,516 407,361 1,045,727 1,722,067 ------------ ------------ ------------ ------------ Gross Profit 566,653 528,614 1,602,463 1,737,034 Operating Expenses from continuing operations: (Exclusive of depreciation and amortization and stock, option and warrant expense) Research and development 179,969 309,712 695,474 1,176,829 Sales and marketing 268,825 388,281 798,270 1,642,391 General and administrative 472,327 776,111 2,296,919 3,254,966 Impairment of goodwill -- -- -- 650,000 Depreciation and amortization: Research and development 982 22,605 118,810 72,013 General and administrative 328,942 807,959 896,935 2,588,997 ------------ ------------ ------------ ------------ Stock, option and warrant expense: Sales and marketing -- 21,000 -- 63,000 General and administrative 1,362 74,847 24,283 323,275 ------------ ------------ ------------ ------------ Total operating expenses 1,252,407 2,400,515 4,830,691 9,771,471 ------------ ------------ ------------ ------------ Operating Loss from continuing operations (685,754) (1,871,901) (3,228,228) (8,034,437) Net interest income 9,756 68,402 45,001 220,305 Other income 100,658 68,779 435,455 208,394 ------------ ------------ ------------ ------------ Total interest and other income 110,414 137,181 480,456 428,699 ------------ ------------ ------------ ------------ Net loss before minority interest (575,340) (1,734,720) (2,747,772) (7,605,738) Minority Interest 3,711 -- 37,981 -- ------------ ------------ ------------ ------------ Net loss from continuing operations (571,629) (1,734,720) (2,709,791) (7,605,738) Loss from discontinued operations (315) (235,679) (125,860) (971,392) ------------ ------------ ------------ ------------ Net Loss (571,944) (1,970,399) (2,835,651) (8,577,130) Other comprehensive income loss - Translation adjustment (2,080) (6,744) 207 (37,264) ------------ ------------ ------------ ------------ Comprehensive loss $ (574,024) $ (1,977,143) $ (2,835,444) $ (8,614,394) ============ ============ ============ ============ Net loss per common share: Basic $ (0.03) $ (0.11) $ (0.16) $ (0.51) Diluted $ (0.03) $ (0.11) $ (0.16) $ (0.51) Weighted average shares used in per share calculation, basic and diluted 18,108,715 17,185,991 17,764,736 16,882,685 ============ ============ ============ ============ See accompanying notes to consolidated financial statements. 4 SEMOTUS SOLUTIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) NINE MONTHS ENDED DECEMBER 31, --------------------------------- 2002 2001 -------------- -------------- Cash flows from operating activities: Net loss $ (2,835,651) $ (8,577,130) Foreign currency translation adjustment 207 (37,264) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,015,745 2,661,010 Compensation expense related to stock issued for services 24,283 386,275 Net amortization of contract income (317,565) (500,731) Amortization of advances on technology sales (206,724) (233,345) Amortization of Notes Receivable 574,647 255,982 Impairment of goodwill -- 650,000 Loss from Sale of Assets 1,220 -- Non-cash settlement of liabilities 165,215 -- Loss from discontinued operations 125,860 971,392 Changes in assets and liabilities net of acquired assets and liabilities due to acquisitions: Accounts and other receivables (116,828) 69,737 Inventory -- (7,065) Prepaid expenses and other assets 60,277 (943) Accounts payable (97,186) 83,444 Accrued liabilities (189,041) (11,235) Deferred revenue 127,788 205,285 Advances on Technology Sales 11,704 -- -------------- -------------- Net cash used in operating activities (1,656,049) (4,084,588) -------------- -------------- Cash flows from investing activities: Acquisition of property and equipment (22,083) (20,707) Cash received from FY2002 acquisitions, net -- 1,096,472 Sale of Fixed Assets 560 -- Sale of Kinetidex technology -- 350,000 Minority investment in subsidiary 210,379 -- -------------- -------------- Net cash provided by investing activities 188,856 1,425,765 -------------- -------------- Cash flows from financing activities: Repayments of notes payable (22,881) (154,283) Repayments of capital lease obligations (38,928) (46,010) Proceeds from exercise of options and warrants -- 11,668 Repurchase of Preferred Stock (Note 6) (100,000) -- -------------- -------------- Net cash used in financing activities (161,809) (188,625) -------------- -------------- Net cash provided by discontinued operations 30,166 88,573 Net decrease in cash and cash equivalents (1,598,836) (2,758,875) Cash and cash equivalents, beginning of period 4,104,303 7,330,749 -------------- -------------- Cash and cash equivalents, end of period $ 2,505,467 $ 4,571,874 ============== ============== See accompanying notes to consolidated financial statements. 5 SEMOTUS SOLUTIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (unaudited) NINE MONTHS ENDED DECEMBER 31, --------------------------------- 2002 2001 -------------- -------------- SUPPLEMENTAL CASH FLOW DISCLOSURE: Cash paid for interest $ 64,589 $ 66,574 ============== ============== Cash paid for income taxes $ 3,701 $ 5,190 ============== ============== SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Non-cash purchase consideration for the acquisition of Wizshop.com, Inc. and Application Design Associates, Inc. through the issuance of common stock $ -- $ 4,666,000 ============== ============== Additional non-cash purchase consideration paid to shareholder of Cross Communications, Inc. pursuant to the first year performance criteria of the Merger Agreement $ -- $ 18,086 ============== ============== Additional non-cash purchase consideration paid to shareholders of WizShop.com, Inc. pursuant to the Merger Agreement $ 122,681 $ -- ============== ============== Common stock issued for services $ 24,283 $ 386,275 ============== ============== Common stock issued for liabilities $ 165,215 $ -- ============== ============== Property and equipment purchased through the issuance of capital leases $ -- $ 122,971 ============== ============== Warrants issued as part of the consideration for repurchase of preferred stock $ 90,497 $ -- ============== ============== See accompanying notes to consolidated financial statements. 6 SEMOTUS SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. FORMATION AND BUSINESS OF THE COMPANY: Semotus(TM) Solutions, Inc. ("Semotus" or the "Company"), changed its name from Datalink.net, Inc. as of January 11, 2001. The Company, originally Datalink Systems Corporation, was formed under the laws of the State of Nevada on June 18, 1996. On June 27, 1996, the Company went public through an acquisition of a public corporation, Datalink Communications Corporation ("DCC"), which was previously Lord Abbott, Inc., a Colorado corporation formed in 1986. As a part of the transaction, the Company also acquired a Canadian corporation, DSC Datalink Systems Corporation, incorporated in Vancouver, British Columbia, now named Semotus Systems Corp. Semotus is a leading provider of enterprise application software connecting employees to critical business systems, information, and processes. Semotus helps mobile employees make better and faster decisions, increase customer satisfaction, and improve efficiencies in their business processes for shorter sales and service cycles. The Company's products serve such vertical markets as workforce automation and financial services. Semotus' enterprise application software provides mobility, convenience, efficiency and improves profitability. For more information please go to our website at http://www.semotus.com. 2. BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of Semotus Solutions, Inc. and its subsidiaries. The consolidated balance sheet as of December 31, 2002, the consolidated statements of operations and comprehensive loss for the three and nine month periods ended December 31, 2002 and 2001, and the consolidated statements of cash flows for the nine month periods ended December 31, 2002 and 2001 have been prepared by the Company, without audit and in accordance with the instructions to Form 10-Q and Regulation S-K. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine month periods ended December 31, 2002 are not necessarily indicative of the results that may be expected for the year ending March 31, 2003. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The Company believes that the disclosures provided are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended March 31, 2002. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: Semotus Systems Corporation (Canadian subsidiary), Cross Communications, Inc., Simkin, Inc., Wares on the Web, Inc., FiveStar Advantage, Inc., WizShop.com, Inc. and Application Design Associates, Inc. All significant intercompany transactions and balances have been eliminated in consolidation. Operations of the Canadian subsidiary consist mainly of research and development and engineering on behalf of the parent company. FiveStar's and Wares on the Web's operations have been discontinued as of June 28, 2002 and August 19, 2002, respectively. All other subsidiaries generate revenues from the sales of products and services. The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. 3. RECENT PRONOUNCEMENTS In June 2002, the FASB issued SFAS No. 146, "Accounting for Exit or Disposal Activities" ("SFAS 146"). SFAS 146 addresses significant issues regarding the recognition, measurement, and reporting of costs that are associated with exit and disposal activities, including restructuring activities that are currently accconted for under EITF No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit and Activity (including Certain Costs Incurred in a Restructuring)." The scope of SFAS 146 also includes costs related to terminating a contract that is not a capital lease and termination benefits that employees who are involuntarily terminated receive under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002 and early application is encouraged. The Company's adoption of SFAS 146 on January 1, 2003 had no impact on the Company's financial position or results of operations. In November 2002, the FASB issued FASB Interpretation NO. 45 ("FIN 45"), "GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS, AN INTERPRETATION OF FASB STATEMENTS NO. 5, 57, AND 107 AND RESCISSION OF FASB INTERPRETATION NO. 34." FIN 45 clarifies the requirements of FASB Statement No. 5, "ACCOUNTING FOR CONTINGENCIES" relating to the guarantor's accounting for, and disclosure of the issuance of certain types of guarantees. The disclosure provisions of the Interpretation are effective for financial statements of interim or annual reports that end after December 15, 2002, irrespective of the guarantor's year-end. The Company's adoption of FIN 45 did not have a material impact in the Company's financial position or results of operations. 7 In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation, Transition and Disclosure." SFAS No. 148 amends SFAS No. 123 and requires prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS No. 148 is effective for fiscal years ending after December 15, 2002 and is effective for interim periods beginning after December 15, 2002. The Company's adoption of SFAS NO. 148 on January 1, 2003 did not have a material effect on the Company's financial position or results of operations. 4. EARNINGS PER SHARE (EPS) DISCLOSURES: The Company has adopted SFAS No. 128 "Earnings Per Share " (EPS). Basic EPS is computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants and other convertible securities. Common equivalent shares are excluded from the computation of net loss per share if their effect is anti-dilutive. For the nine months ended December 31, 2002 and 2001, 6,569,039 potential shares and 7,319,276 potential shares, respectively, were excluded from the shares used to calculate diluted EPS as their effect is anti-dilutive. 5. DISCONTINUED OPERATIONS. As part of Semotus' Centralization and Consolidation Plan, which is further described in the Company's March 31, 2002 10-K, Semotus reduced its e-commerce and m-commerce presence with the elimination of unprofitable products and services in that segment. FiveStar was not expected to make a significant contribution to the Company's future profitability as its operations were unprofitable. Therefore, Semotus decided to close the facilities and cease the operations as of the end of June 2002. Furthermore, FiveStar filed for liquidation under Chapter 7 of the U.S. Bankruptcy Code on June 28, 2002. In continuing with the reduced e-commerce and m-commerce presence and the elimination of unprofitable products and services, Semotus decided to discontinue the operations of Wares on the Web in August, 2002. The Wares on the Web operations were unprofitable. Furthermore, Wares on the Web filed for liquidation under Chapter 7 of the U.S. Bankruptcy Code on August 19, 2002. In accordance with FAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the operations of FiveStar Advantage, Inc. have been recorded as discontinued operations in the nine month period ended December 31, 2002. FiveStar was part of the Enterprise and Commerce Sales segment. The disposal of the assets and liabilities is now under the control of the U.S. Bankruptcy Court and a gain or loss on disposal will be recognized at the time of the final disposition by the Court, which is not expected to be material. In the same manner, Wares on the Web's operations have been recorded as discontinued in the nine months ended December 31, 2002. It also was part of the Enterprise and Commerce Sales segment. The disposal of the assets and liabilities is now under the control of the U.S. Bankruptcy Court and a gain or loss on disposal will be recognized at the time of the final disposition by the Court, which is not expected to be material. The major classes of assets and liabilities included in the discontinued operations are as follows: at December 31, 2002 and March 31, 2002 respectively, inventory of $134,563 and $178,171 and payables of $208,249 and $166,394. At March 31, 2002 there was also $71,989 in cash and $54,346 in accounts receivable. At December 31, 2002, both cash and receivables were immaterial. Revenue from FiveStar recorded in the nine months ended December 31, 2002 was $152,992 and for the three and nine-month periods ended December 31, 2001 was $329,902 and $1,104,529. There was no revenue from the Fivestar operations in the three months ended December 31, 2002. Revenue from Wares recorded in the nine months ended December 31, 2002 was $26,570, and for the three month and nine month periods ended December 31, 2001 was $157,716 and $599,652, respectively. There was no revenue from the Wares operations in the three months ended December 31, 2002. 6. REPURCHASE OF PREFERRED STOCK: On December 31, 2002, Semotus Solutions, Inc. and Brown Simpson Partners I, Ltd. (successors-in-interest to Brown Simpson Strategic Growth Fund, Ltd. And Brown Simpson Strategic Growth Fund, L.P.) entered into a Preferred Stock Buy Back and Mutual Release Agreement. As part of the Agreement, Semotus repurchased from Brown Simpson all of the outstanding shares of the Company's Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock was reflected on Semotus' balance sheet as $5.7 million in Preferred Shareholder Equity. In consideration of the aforesaid purchase of the Shares, Semotus paid one hundred thousand dollars ($100,000.00) and issued to Brown Simpson 846,154 warrants to purchase shares of Common Stock of Semotus, exercisable at $0.01 per share. In addition, in consideration for Brown Simpson agreeing to enter into a settlement and mutual release related to its anti-dilution claim, the Company is revising Brown Simpson's existing 1,153,846 (post-split) warrants to provide for an exercise price of $0.01 per share. On January 24, 2003, Brown Simpson exercised 1,153,846 warrants by remitting $11,538.46 to Semotus, and Brown Simpson was issued 1,153,846 shares of common stock. 7. COMMITMENTS AND CONTINGENCIES: Effective October 23, 2002 the Board of Directors of the Company approved the repricing of most of the options under the Company's 1996 Stock Option Plan, as amended, with exercise prices ranging from $0.22 to $0.84 per share held by most of the employees (including executive officers) and Board members of the Company. The Board of Directors determined such a reprice to be appropriate in order to sustain the incentivization of its employees. The option grants were repriced to an exercise price of $0.15 per share (the current fair market value of the Company's common stock as of the reprice date) and an exercise price of $0.17 per share (110% of the fair market value at the date of reprice) for those persons owning more than 10% of the voting power of all classes of stock. All grants maintained their existing vesting schedule. This is deemed to be a 8 repricing under FIN 44 and will result in variable plan accounting. While no compensation expense was required to be recognized in the three months and nine months ended December 31, 2002, expense will be recognized in the future if the stock price increases above the revised exercise price of the options. On April 1, 2003, Global Beverage Group ("GBG"), the 49% owner of ADA, has the option to purchase Semotus' 51% ownership of ADA for either (i) $2.5 million in cash, or (ii) the return of 500,000 shares of Semotus common stock originally issued to John Hibben, the President of ADA, as part of the Merger Agreement between Semotus and ADA, and subsequently transferred from John Hibben to GBG as part of GBG's 49% stock purchase of ADA. The Company continues to be a party to certain commitments and contingencies, as previously reported in Note 20 and Part II, Item 3 of Registrant's Form 10K for the year ended March 31, 2002. Please also refer to Part II, Item 1 of this report for additional litigation contingencies. 8. SEGMENT INFORMATION Semotus' business has evolved into four segments: wireless services, enterprise and commerce sales, professional and related services and logistic system sales. Semotus' wireless services segment focuses in three areas: Company hosted solutions, client hosted (premise-based) solutions, and financial consumer solutions. The Company creates wireless information products by customizing and delivering actionable and time sensitive information whenever that information is most valuable to the customer. Services and applications are device agnostic and protocol independent, integrating seamlessly into every enterprise infrastructure and working with every wireless carrier and all text messaging devices. Semotus provides two different wireless solutions: (i) Company-hosted where Semotus hosts and manages the information on its servers and (ii) premise based where Semotus installs and engineers the software and information on the customer's servers. Semotus' enterprise and commerce sales line of business provides online transactional information.. The online services include website development and maintenance, sales, marketing, and customer retention programs and services. Semotus' professional services line of business provides customers with online and wireless information and operations consulting, software engineering and training. This line of business provides the software tools and management to install and efficiently run online and wireless operations. The professional and related services business provides Semotus with access to customers who have wireless requirements that can be met with Semotus' wireless solutions. The logistic system sales line of business provides proprietary software with complementary hardware and consulting to satisfy a customer's complete logistical needs. These system installations provide automated logistical solutions for equipment deployment, call centers, dispatching and servicing. All segment financial information presented is unaudited. WIRELESS ENTERPRISE AND PROFESSIONAL AND LOGISTIC CORPORATE SERVICES COMMERCE SALES RELATED SERVICES SYSTEM SALES AND OTHER TOTAL ----------- ----------- ----------- ----------- ----------- ----------- AS OF AND FOR THE THREE MONTHS ENDED DECEMBER 31, 2002 ----------------------------------- Revenue $ 338,970 $ 250,212 $ 11,475 $ 274,512 $ -- $ 875,169 Gross Profit 270,810 105,972 8,888 180,983 -- 566,653 Operating loss* (16,330) 89,950 (496) 6,188 (765,066) (685,754) Depreciation and amortization 28,922 43,471 -- 7,531 250,000 329,924 Capital expenditures 2,567 -- -- -- -- 2,567 Total assets, December 31, 2002* 3,614,285 713,951 263,530 134,168 1,628,812 6,354,746 NINE MONTHS ENDED DECEMBER 31, 2002 ----------------------------------- Revenue $ 962,773 $ 766,775 $ 51,744 $ 866,898 $ -- $ 2,648,190 Gross Profit 716,643 332,880 45,886 507,054 -- 1,602,463 Operating Loss* (830,801) 255,358 22,830 (41,772) (2,633,843) (3,228,228) Depreciation and amortization 193,951 45,964 1,880 23,950 750,000 1,015,745 Capital expenditures 22,083 -- -- -- -- 22,083 Total assets, December 31, 2002* 3,614,285 713,951 263,530 134,168 1,628,812 6,354,746 9 AS OF AND FOR THE THREE MONTHS ENDED DECEMBER 31, 2001 ----------------------------------- Revenue $ 346,421 $ 255,380 $ 17,512 $ 316,662 $ -- $ 935,975 Gross Profit 237,636 100,243 15,640 175,095 -- 528,614 Operating loss* (122,550) 45,551 4,148 (119,979) (1,679,071) (1,871,901) Depreciation and amortization 73,742 21,744 7,486 8,393 719,199 830,564 Capital expenditures 4,172 -- -- -- -- 4,172 Total assets, December 31, 2001* 8,797,980 4,802,917 828,350 1,417,831 4,153,816 20,000,894 NINE MONTHS ENDED DECEMBER 31, 2001 ----------------------------------- Revenue $ 1,017,190 $ 921,334 $ 334,274 $ 1,186,303 $ -- $ 3,459,101 Gross Profit 597,159 378,085 172,736 589,054 -- 1,737,034 Operating Loss* (638,934) (177,929) (443,143) (133,640) (6,640,791) (8,034,437) Depreciation and amortization 233,873 66,842 71,354 21,402 2,267,539 2,661,010 Capital expenditures 14,992 -- -- 5,715 -- 20,707 Total assets, December 31, 2001* 8,797,980 4,802,917 828,350 1,417,831 4,153,816 20,000,894 * Certain corporate marketing, research and development and general and administrative costs have not been allocated to the segments and have been included in "Corporate and other". Further, the selected profit and loss items in the three and nine month periods ended December 31, 2002 and 2001 and total assets at December 31, 2002 and 2001 respectively, have been adjusted for the discontinued operations of FiveStar and Wares on the Web, which are categorized in the Enterprise and Commerce Sales segment. See Note 5, "Discontinued Operations".