UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K/A
AMENDMENT NO. 2 TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) FEBRUARY 11, 2000
COMMISSION FILE NUMBER: 0-25565
QUEPASA.COM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 84-0879433
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
ONE ARIZONA CENTER, 400 E. VAN BUREN 85004
4TH FLOOR, PHOENIX, AZ (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 602-716-0100
ITEM 5. OTHER EVENTS
On February 11, 2000, the Registrant filed a Current Report on Form 8-K
(the "Initial Report) describing the acquisition of eTrato.com, inc. ("eTrato").
This Current Report on Form 8-K/A amends the Initial Report by including with
this Form 8-K/A the financial statements and pro forma financial information
prescribed by Item 7 of Form 8-K.
On January 28, 2000 the Company acquired all of the outstanding common
stock of eTrato for 681,818 shares of quepasa common stock valued at $9.6
million and issued a note payable of $1.25 million in exchange for all of the
Redeemable Series A Preferred Stock outstanding as of the acquisition date. An
additional 681,818 shares will be held in escrow pending the outcome of certain
revenue and web-site contingencies over the six-month period following the
acquisition. eTrato is an online, auction community that:
o facilitates transactions from consumer-to-consumer,
business-to-consumer and business-to-business;
o links Hispanic buyers and sellers of goods and services;
o aids transactions with online tools for payment and
fulfillment; and
o provides a secure and easy to understand environment for
conducting e-business.
Members of the eTrato community can list products or services in the
site's online auction or classifieds section in Spanish, English or both. If
users request, eTrato will translate to either language, for a small fee. Some
of the features of the site include escrow payment services, customs and
shipping estimates and options, currency conversion tools, chat and discussion
forums, a trading resource center and directory, advanced auction functions such
as image hosting, user ratings and bulk item uploading and specialized
business-to-business areas with sealed bid and reverse auction formats. eTrato
provides live online customer service in order to help users have a positive
first experience. The Company expects online auction revenue from the following
sources:
o revenue splits on the sale of value-added trading services
(e.g. escrow and freight forwarding);
o premium service fees and premium listing upgrades providing
the seller with more prominent ad space;
o the auctioning of our own products through the site;
o fees paid by third parties for advertising their products and
services on the site; and
o translation services.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The audited consolidated balance sheet of eTrato as of December 31,
1999 and the related consolidated statements of operations, stockholders' equity
and cash flows for the period from inception (June 16, 1999) through December
31, 1999.
(b) Pro Forma Financial Information
The attached unaudited pro forma condensed combined balance sheet as of
December 31, 1999 and statement of operations for the year ended December 31,
1999 give effect to the purchase by the Company of all of the outstanding shares
of common stock of eTrato as of the beginning of the period presented for the
statement of operations, for an aggregate purchase price of $10.85 million
consisting of $9.6 million from the issuance of shares of common stock of
quepasa.com at the closing and assumption of a $1.25 million promissory note.
Accordingly, the acquired assets and liabilities were recorded at their
estimated fair value at the date of acquisition. The pro forma condensed
combined statement of operations assumes that the acquisition took place at the
beginning of the period presented and combines the Company's and eTrato's
results of operations for the year ended December 31, 1999. The unaudited pro
forma condensed combined balance sheet combines the Company's balance sheet as
of December 31, 1999 with eTrato's balance sheet as of December 31, 1999, giving
effect to the acquisition as if it had occurred on December 31, 1999.
The pro forma condensed combined financial information is presented for
illustrative purposes only and is not necessarily indicative of the operating
results or financial position that would have occurred had the acquisition been
consummated at the beginning of the period presented, nor is it necessarily
indicative of future operating results or financial position.
The pro forma condensed combined financial statements should be read in
conjunction with the audited historical consolidated financial statements and
the related notes thereto of the Company and the audited financial statements
and notes thereto of eTrato.
ETRATO.COM, INC.
INDEX TO FINANCIAL STATEMENTS
o Independent Auditors' Report
o Balance Sheet as of December 31, 1999
o Statement of Operations for period from inception (June 16,
1999) through December 31, 1999
o Statement of Stockholders' Equity for period from inception
(June 16, 1999) through December 31, 1999
o Statement of Cash Flows for period from inception (June 16,
1999) through December 31, 1999
o Notes to Financial Statements
QUEPASA.COM, INC.
PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
(UNAUDITED)
The attached unaudited pro forma condensed combined balance sheet as of
December 31, 1999 and statement of operations for the year ended December 31,
1999 give effect to the purchase by the Company of all of the outstanding shares
of common stock of eTrato as of the beginning of the period presented, for an
aggregate purchase price of $10.85 million, all of which was paid by the
issuance of shares of common stock of quepasa.com and the purchase of all of the
outstanding shares of preferred stock of eTrato in exchange for a $1.25 million
note payable. Accordingly, the acquired assets and liabilities were recorded at
their estimated fair value at the date of acquisition. The pro forma condensed
combined statement of operations assumes that the acquisition took place at the
beginning of the period presented and combines the Company's and eTrato's
results of operations for the year ended December 31, 1999. The unaudited pro
forma condensed combined balance sheet combines the Company's balance sheet as
of December 31, 1999, with eTrato's balance sheet as of December 31, 1999,
giving effect to the acquisition as if it had occurred on December 31, 1999.
CONTENTS
Pro Forma Condensed Combined Balance Sheet as of December 31, 1999
Pro Forma Condensed Combined Statement of Operations for the Year Ended
December 31, 1999
Notes to Pro Forma Condensed Combined Financial Statements
(c) Exhibits
23.0 Consent of Independent Auditors
DRAFT 04/13/00
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders quepasa.com, inc.:
We have audited the accompanying balance sheet of eTrato.com, inc. (the
Company) (a development stage Company) as of December 31, 1999, and the related
statements of operations, stockholders' equity, and cash flows for the period
from inception (June 16, 1999) through December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. 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 present fairly, in all
material respects, the financial position of eTrato.com, inc. as of December 31,
1999, and the results of its operations and its cash flows for the period from
inception (June 16, 1999) through December 31, 1999, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
Phoenix, Arizona
April 11, 2000
ETRATO.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1999
ASSETS
Current assets:
Cash and cash equivalents $ 776,454
Prepaid expenses and other current assets 112,587
---------------
Total current assets 889,041
Software, net of depreciation of $3,875 186,180
---------------
Total assets $ 1,075,221
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities - accounts payable $ 148,208
---------------
Stockholders' equity:
Preferred stock; $.001 par value - authorized, 1,375,000 shares;
none issued and outstanding --
Redeemable Series A preferred stock; ($.001 par value -
125,000 shares authorized issued and outstanding) 125
Common stock; $.001 par value - authorized, 3,500,000 shares;
issued and outstanding, 309,000 shares 309
Additional paid-in capital 1,119,892
Deficit accumulated during the development stage (193,313)
---------------
Total stockholders' equity 927,013
Commitments, contingencies and subsequent events (notes 3, 8, 9 and 10)
---------------
$ 1,075,221
===============
See accompanying notes to financial statements.
ETRATO.COM, INC.
( A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
PERIOD FROM INCEPTION (JUNE 16, 1999)
THROUGH DECEMBER 31, 1999
CUMULATIVE FROM
INCEPTION
(JUNE 16, 1999)
DECEMBER 31,
1999
-----------------------------
Operating expenses:
Sales and marketing $ 6,650
Product development 22,125
General and administrative expense 164,538
---------------
Total operating expenses 193,313
---------------
Net loss $ (193,313)
===============
Net loss per share, basic and diluted $ (0.88)
===============
See accompanying notes to financial statements.
ETRATO.COM, INC.
(A Development Stage Company)
Statement of Stockholders' Equity
Period from inception (June 16, 1999)
through December 31, 1999
ACCUMULATED
NUMBER OF SHARES AMOUNT ($'S) DEFICIT DURING
------------------- ----------------- ADDITIONAL THE DEVELOPMENT
PREFERRED COMMON PREFERRED COMMON PAID-IN CAPITAL STAGE
--------- -------- --------- ------ --------------- --------------
Issuance of common stock for development services -- 200,000 $ -- $ 200 $ 1,800 $ --
Issuance of common stock for cash -- 100,000 -- 100 900 --
Issuance of common stock for investment services -- 9,000 -- 9 (9) --
Issuance of preferred stock for cash 125,000 -- 125 -- 1,117,201 --
Net loss -- -- -- -- -- (193,313)
------- -------- --------- ------ ----------- ---------
125,000 309,000 $ 125 $ 309 $ 1,119,892 $(193,313)
======= ======== ========= ====== =========== =========
TOTAL
STOCKHOLDERS'
EQUITY
----------------
Issuance of common stock for development services $ 2,000
Issuance of common stock for cash 1,000
Issuance of common stock for investment services --
Issuance of preferred stock for cash 1,117,326
Net loss (193,313)
-----------
$ 927,013
===========
See accompanying notes to financial statements.
ETRATO.COM, INC.
( A Development Stage Company)
Statement of Cash Flows
Period from inception (June 16, 1999)
through December 31, 1999
CUMULATIVE FROM
INCEPTION
(JUNE 16, 1999)
DECEMBER 31,
1999
---------------
Cash flows from operating activities:
Net loss $ (193,313)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 3,875
Common stock issued in exchange for development services 2,000
Increase (decrease) in cash resulting from changes in:
Prepaid expenses and other current assets (112,587)
Accounts payable 148,208
-----------
Net cash used in operating activities (151,817)
-----------
Cash flows from investing activities - capital expenditures (190,055)
-----------
Cash flows from financing activities:
Net proceeds from issuance of redeemable preferred stock 1,117,326
Net proceeds from issuance of common stock 1,000
-----------
Net cash provided by financing activities 1,118,326
-----------
Net increase in cash and cash equivalents and cash and cash equivalents, end of period $ 776,454
===========
See accompanying notes to financial statements.
eTrato.com, inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
(1) ORGANIZATION
eTrato.com, inc. (eTrato or the Company) was incorporated in Delaware
on June 16, 1999. eTrato developed a web-based community which provides
person-to-person on-line trading services to the Hispanic market. eTrato online
service permits Spanish-speaking sellers to list items for sale, buyers to bid
on items and all users to browse through the detail of listed items seven days a
week. The Company was a development stage enterprise during 1999. Substantially
all activity of the Company has been with related parties, see note 8.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) USE OF ESTIMATES
The preparation of 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 as of the financial statement
date and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
(b) CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk are cash and cash equivalents. Periodically, the
Company maintains cash in financial institutions in excess of the amounts
insured by the federal government.
(c) CASH EQUIVALENTS
The Company considers cash on hand and highly liquid investments with
an original maturity of three months or less to be cash equivalents.
(d) REVENUE RECOGNITION
Revenues are derived primarily from placement fees charged for the
listing of items for auction and success fees calculated as a percentage of the
final sales transaction value. Revenues related to placement fees are recognized
at the time the item is listed, while those related to success fees are
recognized at the time that the auction is successfully concluded. During the
year ended December 31, 1999, no revenues were earned as the Company allowed
users to list their auction items free of charge during the development stage.
(e) PRODUCT DEVELOPMENT COSTS
Product development costs include expenses incurred by the Company to
maintain, monitor and manage the Company's website. The Company recognizes
website development costs in accordance with Statement of Position ("SOP") 98-1,
"Accounting for the Costs of Computer Software Development or Obtained for
Internal Use." As such, the Company expenses all costs incurred that relate to
the planning and post-implementation phases of development. Costs incurred in
the site development phase are capitalized as software in the accompanying
balance sheet and recognized over the product's estimated useful life of two
years. The Company capitalized $190,055 in site-related software during the
period from inception (June 16, 1999) through December 31, 1999. All product
development costs were purchased from Alphabit Media, Inc., and Designet S.A. de
C.V., affiliates by common ownership at December 31, 1999.
(f) STOCK-BASED COMPENSATION
The Company accounts for stock-based employee compensation arrangements
in accordance with provisions of Accounting Principles Board ("APB") Opinion No.
25, "Accounting for Stock Issued to Employees," and complies with the disclosure
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." Under APB
No. 25, compensation expense is based on the difference, if any, on the date of
the grant, between the fair value of the Company's stock and the exercise price.
The Company accounts for stock issued to non-employees in accordance with the
provisions of SFAS No. 123 and the Emerging Issues Task Force ("EITF") Consensus
on Issue No. 96-18.
(g) IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews long-lived assets for impairment whenever events or
changes in circumstances indicate the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future undiscounted net cash
flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amounts of the assets exceed the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.
(h) INCOME TAXES
The Company accounts for income taxes under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future
consequences attributed to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Differences between income for
financial and tax reporting purposes arise primarily from start-up costs.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
(i) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of the Company's financial instruments, including
cash, cash equivalents and accounts payable approximate their fair value due to
the short-term nature of these instruments.
(j) NET LOSS PER SHARE
Basic loss per share is computed by dividing income available to common
stockholders by the weighted- average number of common shares outstanding for
the period. Diluted loss per share reflects the potential dilution that could
occur if securities or contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the Company. There were no stock options or
warrants outstanding at December 31, 1999.
(k) SEGMENT REPORTING
The Company utilizes the management approach in designating business
segments. The management approach designates the internal organization that is
used by management for making operating decisions and assessing performance as
the source of the Company's reportable segments. The Company's one segment
provides person-to-person on-line trading services to the Hispanic market.
(3) LEASES
OPERATING LEASES
The Company entered into and later amended a one-year computer-hardware
lease agreement that provides hardware, rack space and bandwith on the Company's
website from a related party, commencing November 24, 1999. The lease expires
November 24, 2000; however,
the Company may terminate the lease with four months notice. In addition, the
Company has the option to purchase the computer hardware at full market value
with four months notice.
Future minimum rental payments under this non-cancelable equipment
lease are $175,000 for the year ending December 31, 2000.
Equipment lease expense for the period from inception (June 16, 1999)
through December 31, 1999 was $25,000.
(4) INCOME TAXES
Income taxes consists of the following:
CURRENT DEFERRED TOTAL
------------------- ------------------- -------------------
Federal $ -- $ -- $ --
State -- -- --
------------------- ------------------- -------------------
$ -- $ -- $ --
=================== =================== ===================
A reconciliation of actual income taxes to income taxes at the
"expected" United States federal corporate income tax rate of 34% is as follows:
Income tax expense at "expected" federal corporate rate $ (65,726)
Change in valuation allowance 65,726
--------
$ --
========
The tax effects of temporary differences that give rise to significant
portions of the deferred tax asset and deferred tax liability are as follows:
Deferred tax assets - start-up costs $ 65,726
Less valuation allowance (65,726)
----------
Deferred tax liabilities --
----------
Net deferred tax asset $ --
==========
The Company believes sufficient uncertainty exists regarding the
realization of the tax assets such that a full valuation allowance is
appropriate.
(5) STOCKHOLDERS' EQUITY
(a) INITIAL CAPITALIZATION
Upon incorporation on June 16, 1999, the Company issued 200,000 shares
of common stock in exchange for the fair value of product development services
of $2,000.
(b) STOCK SPLIT
In November 1999, the Company's board of directors authorized a 100 for
one stock split. The financial statements have been presented as if the stock
split had occurred at inception.
(c) PRIVATE PLACEMENT
During November 1999, the Company issued 100,000 shares of common stock
and 125,000 shares of redeemable Series A Preferred Stock in a private placement
for cash at $.01 and $10.00 per share, respectively. The Company received gross
proceeds totaling $1,251,000 from these issuances.
The Company issued 9,000 shares of common stock at $.01 per share for
investment services in connection with its private placement.
(6) LOSS PER SHARE
A summary of the reconciliation from basic loss per share to diluted
loss per share for investment services follows for the period from inception
(June 16, 1999) through December 31, 1999:
Loss available to common stockholders $ (193,313)
============
Basic EPS-weighted-average shares outstanding 220,919
============
Basic and diluted loss per share $ (.88)
============
Stock options not included in diluted EPS since
antidilutive --
============
(7) STOCK OPTION PLAN AND EMPLOYEE COMPENSATORY STOCK
In November 1999, the Company adopted a Stock Option Plan (the "Plan"),
which provides for the granting of options to officers, directors, and
consultants. The Plan permits the granting of "incentive stock options" meeting
the requirements of Section 422A of the Internal Revenue Code. 37,500 shares of
common stock have been restricted under the Plan for the granting of options. No
options were granted under the Plan. The Plan was cancelled on January 28, 2000
(see note 10).
(8) RELATED PARTY TRANSACTIONS
eTrato has two agreements with Alphabit Media, Inc., an affiliate by
common ownership at December 31, 1999, detailed as follows: (1) A one-year web
hosting/maintenance and support agreement dated December 7, 1999, that provides
technical support and software maintenance for a monthly fee of $12,500, and (2)
A one-year website development agreement dated November 24, 1999, that provides
software development services at a rate of $95.00 per hour on an "as-needed"
basis. The Company also has two vendor agreements with Designet S.A de C.V., an
affiliate by common ownership at December 31, 1999, detailed as follows: (1) A
one-year customer service agreement dated December 1, 1999, that provides for
live customer support for customers utilizing the eTrato website for $13,000 per
month, and (2) A one-year website development agreement that provides software
development services at a rate of $95.00 per hour on an "as needed" basis.
Payments to Alphabit Media, Inc. and Designet S.A. de C.V. pursuant to these
agreements totaled $92,000 during 1999.
(9) CONTINGENCIES
The Company is periodically involved in litigation and claims arising
in the normal course of operations. In the opinion of management based on
consultation with legal counsel, losses, if any, from this litigation are
covered by insurance or are immaterial; therefore, no provision has been made in
the accompanying financial statements for losses, if any, that might result from
the ultimate outcome of these matters.
(10) SUBSEQUENT EVENT
On January 28, 2000, the Company was purchased by quepasa.com, inc. All
common stock of the Company was exchanged for 681,818 shares of quepasa.com's
common stock. An additional 681,818 shares will be held in escrow pending the
outcome of certain revenue and web-site contingencies over the six-month period
following the acquisition. The
redeemable preferred stock was cancelled and
converted into an unsecured promissory note totaling $1,250,000 bearing interest
at 6% per annum. The promissory note matures in December 2001.
QUEPASA.COM, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
YEAR ENDED DECEMBER 31, 1999
PRO FORMA
QUEPASA ETRATO ADJUSTMENTS NOTES COMBINED
ASSETS
Current assets:
Cash and cash equivalents ........................ $ 6,961,592 $ 776,454 $ $ 7,738,046
Trading securities ............................... 22,237,656 -- 22,237,656
Accounts receivable .............................. 297,170 -- 297,170
Forgivable loans ................................. 368,042 -- 368,042
Prepaid expenses ................................. 2,161,494 112,587 2,274,081
------------ ----------- ------------ -----------
Total current assets ..................... 32,025,954 889,041 32,914,995
Prepaid marketing services ......................... 10,120,192 -- 10,120,192
Property and equipment, net ........................ 2,051,103 186,180 2,237,283
Goodwill ........................................... 9,929,803 a 9,929,803
Other assets ....................................... 153,743 153,743
------------ ----------- ------------ -----------
Total assets ....................................... $ 44,350,992 $ 1,075,221 $ 9,929,803 $55,356,016
============ =========== ============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................. $ 2,775,347 $ 148,208 $ $ 2,923,555
Accrued liabilities .............................. 1,023,984 -- 1,023,984
Deferred revenue ................................. 85,417 -- 85,417
------------ ----------- ------------ -----------
Total current liabilities ................ 3,884,748 148,208 -- 4,032,956
Note Payable to Verde Capital Partners, LLC ........ 1,250,000 b 1,250,000
Redeemable common stock ............................ 2,000,000 -- 2,000,000
Deferred advertising expense............................ (1,600,000) -- (1,600,000)
Stockholders' equity:
Preferred stock .................................... -- 125 (125) b --
Common stock ....................................... 14,536 309 (309) a 15,218
682 a
Additional paid-in capital ......................... 75,829,202 1,119,892 (1,119,892) b 85,435,336
9,606,134 a
Accumulated deficit ................................ (35,777,494) (193,313) 193,313 a & b (35,777,494)
------------ ----------- ------------ -----------
Total stockholders' equity ............... 40,066,244 927,013 8,679,803 49,673,060
------------ ----------- ------------ -----------
Total liabilities and stockholders' equity ......... $ 44,350,992 $ 1,075,221 $ 9,929,803 $55,356,016
============ =========== ============ ===========
See accompanying notes to pro forma condensed combined financial statements.
QUEPASA.COM, INC.
PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
PRO FORMA
QUEPASA ETRATO ADJUSTMENTS NOTES COMBINED
Gross revenue ...................................... $ 670,639 $ -- $ $ 670,639
Less commissions ................................... (114,395) -- (114,395)
------------ --------- ----------- -----------
Net revenue ........................................ 556,244 556,244
Operating expenses:
Product and content development expenses ......... 2,319,391 22,125 2,341,516
Advertising and marketing expenses ............... 16,735,517 6,650 16,742,167
Stock based compensation expenses ................ 4,951,177 -- 4,951,177
General and administrative expenses .............. 6,588,196 164,538 6,752,734
Amortization of intangible assets ................ 1,786,457 b 1,786,457
------------ --------- ----------- -----------
Total operating expenses ................. 30,594,281 193,313 1,786,457 32,574,051
------------ --------- ----------- -----------
Loss from operations ............................... (30,038,037) (193,313) (1,786,457) (32,017,807)
Other income (expense)
Interest expense ................................. (238,858) -- (7,603) c (246,461)
Interest income and other ........................ 855,408 -- 855,408
Unrealized gain on trading securities ............ 160,124 -- 160,124
------------ --------- ----------- -----------
Net other income (expenses) ........................ 776,674 -- (7,603) 769,071
------------ --------- ----------- -----------
Net loss ........................................... $(29,261,363) $(193,313) $(1,794,060) $(31,248,736)
============ ========= =========== ============
Net loss per share, basic and diluted .............. $ (2.44) d $ (2.52)
============ ============
Weighted average number of shares outstanding,
basic and diluted ................................ 12,011,088 d 12,380,950
============ ============
See accompanying notes to pro forma condensed combined financial statements.
QUEPASA.COM, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS
(1) BASIS OF ACCOUNTING
On January 28, 1999, quepasa.com, inc. ("quepasa") completed the acquisition of
all of the outstanding shares of common stock and preferred stock of eTrato.com,
inc. ("eTrato") for an aggregate purchase price of $10.85 million consisting of
681,818 shares of quepasa common stock and assumption of a $1.25 million note
payable. An additional 681,818 shares will be held in escrow pending the outcome
of certain revenue and web-site contingencies over the six-month period
following the acquisition. The value of the stock was determined using the
average stock price between the date of the merger agreement and the date the
merger was publicly announced, or $14.09 per share.
The pro forma unaudited condensed combined balance sheet gives effect to the
acquisition as if the transaction had taken place on December 31, 1999 and
combines quepasa's December 31, 1999 audited balance sheet amounts with eTrato's
December 31, 1999 balance sheet amounts.
The pro forma unaudited condensed combined statement of operations for the year
ended December 31, 1999 is presented using quepasa's audited statement of
operations for the year ended December 31, 1999, combined with eTrato's audited
statement of operations for the period from inception (June 16, 1999) through
December 31, 1999, as if the transaction had taken place on January 1, 1999.
The pro forma condensed combined financial statements should be read in
conjunction with the audited financial statements and notes thereto of quepasa
and with the audited financial statements and notes thereto of eTrato.
The pro forma combined statement of operations is not necessarily indicative of
the future results of operations of quepasa or the results of operations which
would have resulted had quepasa and eTrato been combined during the period
presented. In addition, the pro forma results are not intended to be a
projection of future results.
(2) PRO FORMA CONDENSED COMBINED BALANCE SHEET AND PRO FORMA CONDENSED
COMBINED STATEMENT OF OPERATIONS
The accompanying pro forma adjustments reflect adjustments for the following
items:
a) To reflect the issuance of 681,818 shares of quepasa common stock
valued at $9.6 million in exchange for all of the common stock
outstanding as of the acquisition date in connection with the
acquisition of eTrato. The $9.9
million in excess of purchase price over the fair value of the net
assets acquired has been allocated to goodwill.
The allocation of the purchase price to the assets and liabilities
acquired is as follows:
Cash $776,454
Prepaid expenses 112,587
Property and equipment 186,180
Liabilities assumed (1,398,208)
Goodwill 9,929,803
---------
$9,606,816
b) Conversion of the Redeemable Series A Preferred Stock to a $1.25
million note payable on the date of acquisition.
c) Amortization of goodwill related to the eTrato acquisition has been
recorded for the period from inception (June 16, 1999) through December
31, 1999 based on an estimated useful life of 3 years.
d) Interest expense at 6% per annum has been recorded related to the
redeemable preferred stock for the period (November 24, 1999, the date
of issuance) through December 31, 1999. The preferred stock was
converted to a $1.25 million note payable at the date of acquisition.
e) The pro forma combined net loss per share, basic and diluted and
weighted average number of shares outstanding have been adjusted for
the issuance of 681,818 shares of quepasa common stock as if they were
issued on the date of inception (June 16, 1999) of eTrato.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the city of
Phoenix, state of Arizona, on August 15, 2001.
quepasa.com, inc.
By: /s/ Robert J. Taylor
--------------------------------
Name: Robert J. Taylor
Title: Chief Financial Officer
EXHIBIT INDEX
Exhibits
23.0 Consent of Independent Auditors (1)
(1) Previously filed with the Registrant's Current Report on Form 8-K/A
dated April 14, 2000.