8-K 1 form8k_1027.txt FORM 8-K - 10/27/2003 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported) -October 27, 2003 RxBAZAAR, INC. -------------- (Exact name of registrant as specified in its charter) Delaware 5-78407 38-3506266 -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.) 1385 Kemper Meadow Drive, Cincinnati, Ohio 45240 -------------------------------------------------------------------------------- (Address of principal executive offices) (zip code) Registrant's telephone number, including area code - (781) 449-4962 -------------- Not Applicable -------------- (Former Name or Former Address, if changed since last report) ITEM 5. OTHER EVENTS ---------------------- On October 27, 2003, RxBazaar, Inc. (the "Company") entered into a Management Services Agreement (the "Services Agreement") with Steel City Pharmaceuticals LLC, a Delaware limited liability company ("SCP"), whereby the Company will advise SCP of opportunities to purchase pharmaceutical and medical products on a cash basis for resale by the Company. SCP has agreed to maintain at least $4 million in capital to be used for these spot inventory purchases. On inventory purchased from SCP for resale, the Company would pay SCP a profit share equal to the greater of (i) 30% of the gross margin on sales by the Company of such inventory or (ii) a 20% annual percentage return on SCP's purchase price for the inventory for the period from payment by SCP for the inventory until it receives repayment from the Company. The Company generally will make payment to SCP on the earlier of (i) 30 days after its resale of the inventory or (ii) 45 days after payment by SCP of the purchase price for such inventory. Should the Company not resell the inventory within 45 days after the date of payment by SCP, the Company shall purchase such non-resold inventory for its account. SCP is being granted a second priority security interest in the Company's receivables to secure the Company's payment obligations. The Services Agreement is for a term ending on August 31, 2006, subject to earlier termination either by SCP at any time or by the Company at any time after one year provided that the Company may terminate earlier should SCP reject more than 20% of the purchase opportunities during the first six months of the Agreement. For additional information regarding the provisions of the Services Agreement, see Exhibit 10.1 to this Report. The Company decided to enter into the Services Agreement to have access to spot inventory purchases through the availability of SCP's equity capital. Over the past several months the Company has sought to raise additional capital for several purposes, including having funds available to participate in cash purchases of spot inventory. Unfortunately, the Company has not been able to raise the necessary capital. The arrangement with SCP is the only current means for the Company to participate in a meaningful amount of spot purchases. The members of SCP include C. Robert Cusick, the Chairman of the Board and a director of the Company, and separate trusts established by Robert E. Cawthorn and by Handel Evans, both directors of the Company. Their aggregate capital contribution to SPC was $1 million of the $3 million of initial capital contributions, plus Mr. Cusick is a co-guarantor of a $1 million line of credit obtained by SCP. The sole managing-member of SCP has been an equity and debt investor in the Company. As additional consideration for SCP to enter into the Services Agreement, the Company granted to SCP (i) warrants (the "Warrants") to purchase shares of the Company's Common Stock at an exercise price of $2.00 per share exercisable for five years at the rate of one Warrant for each $20.00 of equity capital invested in SCP (or Warrants for 150,000 shares of Common Stock based upon SCP's current invested capital), and (ii) options (the "Options") to purchase up to 1,600,000 shares of the Company's Common Stock exercisable at $2.50 per share during the term of the Services Agreement and for a period of 60 days thereafter, subject to earlier termination should SCP reject more than 20% of offered purchase opportunities during the first six months of the term of the Services Agreement. For additional information regarding the Warrants and the 2 Options, reference is made to Exhibits 10.2 and 10.3, respectively, to this Report. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. -------------------------------------------- (c) Exhibits. 10.1 Management Services Agreement, dated as of October 27, 2003, between the Company and Steel City Pharmaceuticals LLC ("SCP"). 10.2 Common Stock Purchase Warrant, dated October 27, 2003, issued to SCP. 10.3 Stock Option Agreement, dated October 27, 2003, granted to SCP. 10.4 Intercreditor Agreement, dated October 27, 2003, among Able Laboratories, Inc., SCP and The CIT Group/Business Credit, Inc., acknowledged by the Company and FPP Distribution, Inc. 3 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. RxBAZAAR, INC -------------------------------------- (Registrant) By: /s/ Bruce C. Warwick -------------------------------------- Bruce C. Warwick, Treasurer October 28, 2003 4

ASSETS December 31, March 31, --------------------------------- 2002 2001 2000 ------------ ------------ ------------ (unaudited) Current assets: Cash and cash equivalents $ 206,225 $ 176,840 $ 339,027 Accounts receivable - less allowance for doubtful accounts of $334,344, $277,587 and $40,000 1,226,158 1,651,396 951,495 Rebates receivable 32,011 93,653 -- Inventory 2,880,838 3,894,494 216,922 Prepaid expenses and other current assets 90,449 62,323 18,054 ------------ ------------ ------------ Total current assets 4,435,681 5,878,706 1,525,498 ------------ ------------ ------------ Property and equipment, at cost: Computer hardware and software 666,833 666,633 478,680 Furniture, fixtures and equipment 261,363 261,363 124,651 Leasehold improvements 28,713 28,713 13,342 ------------ ------------ ------------ 956,909 956,709 616,673 Less accumulated depreciation and amortization (300,426) (248,320) (29,006) ------------ ------------ ------------ Net property and equipment 656,483 708,389 587,667 ------------ ------------ ------------ Other assets: Deferred financing costs, net 294,207 329,832 85,000 Customer lists, net of accumulated amortization of $459,550 and $353,500 1,661,433 1,767,483 -- Deferred acquisition costs -- -- 16,542 Deposits 27,063 30,383 44,733 ------------ ------------ ------------ Total other assets 1,982,703 2,127,698 146,275 ------------ ------------ ------------ $ 7,074,867 $ 8,714,793 $ 2,259,440 ============ ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Notes payable $ 2,371,607 $ 3,081,373 $ 250,000 Accounts payable 2,533,536 2,838,257 1,850,262 Accrued expenses and other current liabilities 1,132,661 847,667 144,883 Preferred dividends payable 331,682 257,682 -- ------------ ------------ ------------ Total current liabilities 6,369,486 7,024,979 2,245,145 Subordinated notes payable 2,250,000 2,250,000 -- ------------ ------------ ------------ Total liabilities 8,619,486 9,274,979 2,245,145 ------------ ------------ ------------ Stockholders' equity (deficit): Preferred stock, at liquidation value, $.001 par value, 10,000,000 shares authorized: Series A, 2,466,667 shares issued 3,700,000 3,700,000 -- Series B, 212,500 shares issued 425,000 -- -- Common stock, $.001 par value, 60,000,000 shares authorized, 4,762,792, 4,762,792 and 3,811,166 shares issued 4,763 4,763 3,811 Additional paid-in capital 6,023,334 5,885,100 3,537,121 Accumulated deficit (11,618,659) (10,053,655) (3,258,680) Unearned stock-based compensation (79,057) (96,394) (267,957) ------------ ------------ ------------ Total stockholders' equity (deficit) (1,544,619) (560,186) 14,295 ------------ ------------ ------------ $ 7,074,867 $ 8,714,793 $ 2,259,440 ============ ============ ============ See independent auditors' report and accompanying notes to consolidated financial statements.

Three Months Ended March 31, Years Ended December 31, ------------------------------ ------------------------------ 2002 2001 2001 2000 ------------ ------------ ------------ ------------ (unaudited) Sales, net $ 3,614,346 $ 2,179,014 $ 17,244,283 $ 734,493 Cost of sales 2,958,960 1,985,430 14,479,743 726,273 ------------ ------------ ------------ ------------ Gross profit 655,386 193,584 2,764,540 8,220 ------------ ------------ ------------ ------------ Operating expenses: Sales and marketing 340,083 238,910 1,388,245 411,702 Information technology 203,730 358,113 1,202,886 1,053,845 General and administrative 1,459,749 790,973 5,993,270 1,693,256 ------------ ------------ ------------ ------------ Total operating expenses 2,003,562 1,387,996 8,584,401 3,158,803 ------------ ------------ ------------ ------------ Operating loss (1,348,176) (1,194,412) (5,819,861) (3,150,583) ------------ ------------ ------------ ------------ Other income (expense): Interest income -- 192 205 7,555 Interest and financing expense (242,073) (106,499) (745,903) (19,563) Miscellaneous income (expense), net 99,245 21,844 28,266 (45,637) ------------ ------------ ------------ ------------ Other income (expense), net (142,828) (84,463) (717,432) (57,645) ------------ ------------ ------------ ------------ Net loss (1,491,004) (1,278,875) (6,537,293) (3,208,228) Dividends on preferred stock 74,000 35,682 257,682 -- ------------ ------------ ------------ ------------ Net loss applicable to common stock $ (1,565,004) $ (1,314,557) $ (6,794,975) $ (3,208,228) ============ ============ ============ ============ Net loss per share - basic $ (0.33) $ (0.34) $ (1.59) $ (0.82) ============ ============ ============ ============ Weighted average shares outstanding 4,762,792 3,897,769 4,264,128 3,928,369 ============ ============ ============ ============ See independent auditors' report and accompanying notes to consolidated financial statements.

Preferred Stock Common Stock ------------------------------ ------------------------------ Shares Amount Shares Amount ------------ ------------ ------------ ------------ Balance, December 31, 1999 -- $ -- 4,000,000 $ 4,000 Sale of common stock, net -- -- 80,000 80 Private placements of common stock -- -- 371,166 371 Stock option compensation -- -- -- -- Stock warrants issued for services -- -- -- -- Cancellation and retirement of common stock -- -- (640,000) (640) Stock subscriptions received -- -- -- -- Amortization of unearned compensation -- -- -- -- Net loss -- -- -- -- ------------ ------------ ------------ ------------ Balance, December 31, 2000 -- -- 3,811,166 3,811 Private placement of preferred stock 3,133,334 4,700,000 -- -- Private placements of common stock -- -- 1,154,601 1,155 Purchase and retirement of preferred stock (666,667) (1,000,000) -- -- Purchase and retirement of common stock -- -- (215,000) (215) Amortization of unearned compensation -- -- -- -- Forfeiture of unearned compensation -- -- -- -- Stock, options and warrants issued -- -- 4,000 4 Stock options exercised -- -- 8,025 8 Preferred dividends accrued -- -- -- -- Net loss -- -- -- -- ------------ ------------ ------------ ------------ Balance, December 31, 2001 2,466,667 3,700,000 4,762,792 4,763 Sale of preferred stock 212,500 425,000 -- -- Stock options and warrants issued -- -- -- -- Amortization of unearned compensation -- -- -- -- Forfeiture of unearned compensation -- -- -- -- Preferred dividends accrued -- -- -- -- Net loss -- -- -- -- ------------ ------------ ------------ ------------ Balance, March 31, 2002 2,679,167 $ 4,125,000 4,762,792 $ 4,763 ============ ============ ============ ============

Additional Unearned Stock Paid-in Accumulated Stock-based Subscriptions Capital Deficit Compensation Receivable Total ------------ ------------ ------------ ------------ ------------ Balance, December 31, 1999 $ 96,000 $ (50,452) $ -- $ (18,000) $ 31,548 Sale of common stock, net 1,920 -- -- -- 2,000 Private placements of common stock 2,817,461 -- -- -- 2,817,832 Stock option compensation 321,100 -- (321,100) -- -- Stock warrants issued for services 316,000 -- -- -- 316,000 Cancellation and retirement of common stock (15,360) -- -- 16,000 -- Stock subscriptions received -- -- -- 2,000 2,000 Amortization of unearned compensation -- -- 53,143 -- 53,143 Net loss -- (3,208,228) -- -- (3,208,228) ------------ ------------ ------------ ------------ ------------ Balance, December 31, 2000 3,537,121 (3,258,680) (267,957) -- 14,295 Private placement of preferred stock (331,932) -- -- -- 4,368,068 Private placements of common stock 2,677,039 -- -- -- 2,678,194 Purchase and retirement of preferred stock 50,000 -- -- -- (950,000) Purchase and retirement of common stock (5,160) -- -- -- (5,375) Amortization of unearned compensation -- -- 55,351 -- 55,351 Forfeiture of unearned compensation (116,212) -- 116,212 -- -- Stock, options and warrants issued 72,246 -- -- -- 72,250 Stock options exercised 1,998 -- -- -- 2,006 Preferred dividends accrued -- (257,682) -- -- (257,682) Net loss -- (6,537,293) -- -- (6,537,293) ------------ ------------ ------------ ------------ ------------ Balance, December 31, 2001 5,885,100 (10,053,655) (96,394) -- (560,186) Sale of preferred stock -- -- -- -- 425,000 Stock options and warrants issued 146,250 -- -- -- 146,250 Amortization of unearned compensation -- -- 9,321 -- 9,321 Forfeiture of unearned compensation (8,016) -- 8,016 -- -- Preferred dividends accrued -- (74,000) -- -- (74,000) Net loss -- (1,491,004) -- -- (1,491,004) ------------ ------------ ------------ ------------ ------------ Balance, March 31, 2002 $ 6,023,334 $ 11,618,659 $ (79,057) $ -- $ (1,544,619) ============ ============ ============ ============ ============ See independent auditors' report and accompanying notes to consolidated financial statements.

Three Months Years Ended Ended March 31, December 31, --------------------------- --------------------------- 2002 2001 2001 2000 ----------- ----------- ----------- ----------- (unaudited) Cash flows from operating activities: Net loss $(1,491,004) $(1,278,875) $(6,537,293) $(3,208,228) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Depreciation and amortization 259,495 87,717 693,727 29,006 Amortization of unearned compensation 9,321 20,068 55,351 53,143 Stock, options and warrants issued for services 82,500 -- 17,000 395,167 (Increase) decrease in operating assets: Accounts receivable 425,238 1,517,127 2,872,829 (951,495) Rebates receivable 61,642 (246,607) 143,769 -- Inventory 1,013,656 (1,265,100) 1,112,744 (216,922) Prepaid expenses and other current assets (28,126) (544,881) (13,536) (18,054) Increase (decrease) in operating liabilities: Accounts payable (304,721) (1,985,406) (3,638,462) 1,850,262 Accrued expenses and other current liabilities 284,994 14,956 531,532 117,026 ----------- ----------- ----------- ----------- Net cash provided by (used for) operating activities 312,995 (3,681,001) (4,762,339) (1,950,095) ----------- ----------- ----------- ----------- Cash flows from investing activities: Purchase of property and equipment (200) (48,023) (148,321) (616,673) Decrease (increase) in deposits 3,320 2,008 137,582 (44,733) Purchase of subsidiary -- (4,002,880) (4,002,880) (16,542) ----------- ----------- ----------- ----------- Net cash provided by (used for) investing activities 3,120 (4,048,895) (4,013,619) (677,948) ----------- ----------- ----------- ----------- Cash flows from financing activities: Increase in deferred financing costs -- (365,402) (365,402) (82,559) Net change in line of credit (1,061,730) 2,449,145 2,386,280 -- Proceeds from notes payable and warrants 375,000 450,000 575,000 250,000 Payments on notes payable (25,000) -- (75,000) -- Proceeds from sale of stock 425,000 5,895,599 7,046,262 2,740,665 Proceeds from stock options exercised -- -- 2,006 -- Stock subscriptions received -- -- -- 2,000 Purchase and retirement of stock -- (950,375) (955,375) -- ----------- ----------- ----------- ----------- Net cash provided by (used for) financing activities (286,730) 7,478,967 8,613,771 2,910,106 ----------- ----------- ----------- ----------- Net change in cash and cash equivalents 29,385 (250,929) (162,187) 282,063 Cash and cash equivalents at beginning of period 176,840 339,027 339,027 56,964 ----------- ----------- ----------- ----------- Cash and cash equivalents at end of period $ 206,225 $ 88,098 $ 176,840 $ 339,027 =========== =========== =========== =========== Supplemental cash flow information: Interest paid $ 105,767 $ 82,406 $ 528,724 $ 193 Preferred dividends accrued 74,000 35,682 257,682 -- Additional cash flow information is included in Note 3 See independent auditors' report and accompanying notes to consolidated financial statements.

Years Ended December 31, ------------------------------------------------------------- 2001 2000 --------------------------- -------------------------- Weighted Weighted Average Average Exercise Exercise Shares Price Shares Price --------- --------- --------- --------- Outstanding at beginning of year 198,400 $ 6.50 -- $ -- Granted 74,500 7.50 198,400 6.50 Exercised (8,025) 0.25 -- -- Forfeited (72,375) 5.07 -- -- --------- --------- Outstanding at end of year 192,500 $ 7.69 198,400 $ 6.50 ========= ========= Exercisable at end of year 44,888 $ 6.96 -- $ -- ========= ========= Reserved for future grants at end of year 499,475 501,600 ========= ========= Weighted-average fair value of options granted during the year $ 1.35 $ 1.70

December 31, 2001 ---------------------------------------------------------------------------------- Options Outstanding Options Exercisable -------------------------------------------- -------------------------- Weighted Weighted Weighted Average Average Average Remaining Exercise Number Exercise Exercise Price Number Life Price Exercisable Price -------------- ------------------------- ------- ----------- ------- $0.25 34,700 8.3 years $ 0.25 13,013 $ 0.25 $5.00 5,000 8.5 5.00 1,875 5.00 $7.50 32,800 9.2 7.50 -- -- $10.00 120,000 8.8 10.00 30,000 10.00 -------- -------- Outstanding at end of year 192,500 8 years $ 7.69 44,888 $ 6.96 ======== ========

Years Ended December 31, 2001 2000 -------------- -------------- Net loss As reported $ (6,537,293) $ (3,208,228) (6,950,223) (3,231,728) Net loss per share As reported (1.59) (0.82) (1.63) (0.82)

ASSETS CURRENT Cash and cash equivalents $ 135,558 Accounts receivable - trade (net of allowance for doubtful accounts of $485,068) 3,120,090 Accounts receivable - related party 4,454,687 Accounts receivable - employees 20,048 Accounts receivable - vendor rebates 119,558 Inventory 5,404,815 Prepaid expense 16,477 Deferred tax benefit 165,000 ----------- Total current assets 13,436,233 ----------- FIXED Property and equipment 926,444 Less: Accumulated depreciation 721,373 ----------- Net fixed assets 205,071 ----------- OTHER Deposits 20,146 ----------- Total other assets 20,146 ----------- Total assets $13,661,450 LIABILITIES AND SHAREHOLDER'S EQUITY CURRENT LIABILITIES Accounts payable - trade $ 3,464,057 Accounts payable - related party 5,553,305 Accrued expenses 183,945 ----------- Total current liabilities 9,201,307 ----------- CAPITAL STOCK Common - $.01 par value 100 shares authorized 100 shares issued and outstanding 1 PAID-IN CAPITAL 1,750,000 RETAINED EARNINGS 2,710,142 ----------- Total shareholder's equity 4,460,143 ----------- Total liabilities and shareholder's equity $13,661,450 =========== The accompanying notes are an integral part of these financial statements.

SB Merger RxBazaar ASSETS Corp. Inc. Adjustments Note Pro Forma ------------ ------------ ------------ ---- ------------ Current assets: Cash and cash equivalents $ 3,657 $ 206,225 $ 125,000 B $ 2,749,882 2,415,000 C Accounts receivable -- 1,226,158 -- 1,226,158 Rebates receivable -- 32,011 -- 32,011 Inventory -- 2,880,838 -- 2,880,838 Other current assets -- 90,449 -- 90,449 ------------ ------------ ------------ ------------ Total current assets 3,657 4,435,681 2,540,000 6,979,338 ------------ ------------ ------------ ------------ Net property and equipment -- 656,483 -- 656,483 ------------ ------------ ------------ ------------ Other assets: Deferred financing costs, net -- 294,207 -- 294,207 Customer lists, net -- 1,661,433 -- 1,661,433 Restricted cash 125,000 -- (125,000) B -- Deposits -- 27,063 -- 27,063 ------------ ------------ ------------ ------------ Total other assets 125,000 1,982,703 (125,000) 1,982,703 ------------ ------------ ------------ ------------ $ 128,657 $ 7,074,867 $ 2,415,000 $ 9,618,524 ============ ============ ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Notes payable $ -- $ 2,371,607 $ (1,050,000) C $ 1,374,550 52,943 D Accounts payable -- 2,533,536 -- 2,533,536 Accrued expenses and other 39,298 1,132,661 (50,000) C 1,121,959 Preferred dividends payable -- 331,682 -- 331,682 ------------ ------------ ------------ ------------ Total current liabilities 39,298 6,369,486 (1,047,057) 5,361,727 Subordinated notes payable -- 2,250,000 -- 2,250,000 ------------ ------------ ------------ ------------ Total liabilities 39,298 8,619,486 (1,047,057) 7,611,727 ------------ ------------ ------------ ------------ Stockholders' equity (deficit): Preferred stock, at liquidation value; $.001 par value; 10,000,000 shares authorized: Series A, none, 2,466,667 and 345,333 shares issued -- 3,700,000 -- A 3,700,000 Series B, none, 212,500 and 2,045,000 shares issued -- 425,000 3,665,000 C 4,090,000 Common stock, $.001 par value; 75,000,000 shares authorized, 406,000, 4,762,792 and 3,739,955 shares issued 406 4,763 (1,429) A 3,740 Additional paid-in capital 154,594 6,023,334 (64,212) A 5,910,773 (150,000) C (52,943) D Accumulated deficit (65,641) (11,618,659) 65,641 A (11,618,659) Unearned stock-based compensation -- (79,057) -- (79,057) ------------ ------------ ------------ ------------ Total stockholders' equity (deficit) 89,359 (1,544,619) 3,462,057 2,006,797 ------------ ------------ ------------ ------------ $ 128,657 $ 7,074,867 $ 2,415,000 $ 9,618,524 ============ ============ ============ ============

SB Merger RxBazaar Corp. Inc. Adjustments Note Pro Forma ------------ ------------ ------------ ---- ------------ Sales, net $ -- $ 3,614,346 $ -- $ 3,614,346 Cost of sales -- 2,958,960 -- 2,958,960 ------------ ------------ ------------ ------------ Gross profit -- 655,386 -- 655,386 Operating expenses 32,367 2,003,562 -- 2,035,929 ------------ ------------ ------------ ------------ Operating loss (32,367) (1,348,176) -- (1,380,543) ------------ ------------ ------------ ------------ Other income (expense): Interest and financing expense -- (242,073) 86,449 1 (155,624) Miscellaneous -- 99,245 -- 99,245 ------------ ------------ ------------ ------------ Other income (expense), net -- (142,828) 86,449 (56,379) ------------ ------------ ------------ ------------ Net loss (32,367) (1,491,004) 86,449 (1,436,922) Dividends on preferred stock -- 74,000 102,250 2 176,250 ------------ ------------ ------------ ------------ Net loss applicable to common stock $ (32,367) $ (1,565,004) $ (15,801) $ (1,613,172) ============ ============ ============ ============ Net loss per share - basic $ (0.08) $ (0.33) $ (0.43) ============ ============ ============ Weighted average shares outstanding 403,933 4,762,792 3 3,737,888 ============ ============ ============

SB Merger RxBazaar Corp. Inc. Adjustments Note Pro Forma ------------ ------------ ------------ ---- ------------ Sales, net $ -- $ 17,244,283 $ -- $ 17,244,283 Cost of sales -- 14,479,743 -- 14,479,743 ------------ ------------ ------------ ------------ Gross profit -- 2,764,540 -- 2,764,540 Operating expenses 11,010 8,584,401 -- 8,595,411 ------------ ------------ ------------ ------------ Operating loss (11,010) (5,819,861) -- (5,830,871) ------------ ------------ ------------ ------------ Other income (expense): Interest income -- 205 -- 205 Interest and financing expense -- (745,903) 40,184 1 (705,719) Miscellaneous -- 28,266 -- 28,266 ------------ ------------ ------------ ------------ Other income (expense), net -- (717,432) 40,184 (677,248) ------------ ------------ ------------ ------------ Net loss (11,010) (6,537,293) 40,184 (6,508,119) Dividends on preferred stock -- 257,682 409,000 2 666,682 ------------ ------------ ------------ ------------ Net loss applicable to common stock $ (11,010) $ (6,794,975) $ (368,816) $ (7,174,801) ============ ============ ============ ============ Net loss per share - basic $ (0.03) $ (1.59) $ (2.17) ============ ============ ============ Weighted average shares outstanding 326,575 4,264,128 3 3,311,465 ============ ============ ============

Three Months Year Ended Ended December 31, March 31, 2002 2001 --------- --------- SB Merger weighted average shares outstanding 403,933 326,575 RxBazaar weighted average shares outstanding as adjusted for the 0.7-for-1 exchange ratio 3,333,955 2,984,890 --------- --------- 3,737,888 3,311,465 ========= =========

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