-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KRPKDFC6QUTEQq5BlJzs7CK8Tkdcm31Jen6x6ItpJXKd3qWMfbgNu5L5XMBy11HK 4D1IqTBv7e2B0rAh9KGwsA== 0000930413-05-003186.txt : 20050429 0000930413-05-003186.hdr.sgml : 20050429 20050429142559 ACCESSION NUMBER: 0000930413-05-003186 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050218 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050429 DATE AS OF CHANGE: 20050429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INCENTRA SOLUTIONS, INC. CENTRAL INDEX KEY: 0001025707 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 860793960 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-32913 FILM NUMBER: 05784559 BUSINESS ADDRESS: STREET 1: 1140 PEARL STREET CITY: BOULDER STATE: CO ZIP: 80302 BUSINESS PHONE: 303-449-8279 MAIL ADDRESS: STREET 1: 1140 PEARL STREET CITY: BOULDER STATE: CO ZIP: 80302 FORMER COMPANY: FORMER CONFORMED NAME: FRONT PORCH DIGITAL INC DATE OF NAME CHANGE: 20000705 FORMER COMPANY: FORMER CONFORMED NAME: EMPIRE COMMUNICATIONS CORP DATE OF NAME CHANGE: 19980327 FORMER COMPANY: FORMER CONFORMED NAME: LITIGATION ECONOMICS INC DATE OF NAME CHANGE: 19961022 8-K/A 1 c37224_8ka.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 --------------------- DATE OF REPORT: FEBRUARY 18, 2005 (Date of earliest event reported) INCENTRA SOLUTIONS, INC. (Exact name of Registrant as specified in its charter) NEVADA (State or other jurisdiction of incorporation) 333-16031 86-0793960 (Commission File No.) (I.R.S. Employer Identification No.) 1140 PEARL STREET BOULDER, COLORADO 80302 (Address of principal executive offices; zip code) (303) 440-7930 (Registrant's telephone number, including area code) N/A (Former Name or Former Address, if changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (SEE General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13-4(e) under the Exchange Act (17 CFR 240.13e-4(c)) EXPLANATORY NOTE: Incentra Solutions, Inc. filed a Current Report on Form 8-K on February 23, 2005 announcing that it had completed its acquisition of all of the outstanding capital stock of STAR Solutions of Delaware, Inc., a Delaware corporation, ("STAR"). The purpose of this amendment is to file financial statements and pro forma financial information relating to the STAR business. SECTION 9 - FINANCIAL STATEMENT AND EXHIBITS ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. Paragraphs (a), (b) and (c) of Item 9, "Financial Statements and Exhibits" are hereby amended to include the following: (a) Financial Statements of Business Acquired (STAR): Audited Financial Statements: PAGE Report of Independent Auditor............................... F-1 Balance Sheet as of December 31, 2004....................... F-2 Income Statement and Member's Capital for the year ended December 31, 2004..................................... F-3 Statement of Cash Flows for the year ended December 31, 2004........................................... F-4 Notes to Consolidated Financial Statements.................. F-5 (b) Pro Forma Financial Information (Unaudited) Unaudited Pro Forma Consolidated Financial Information ................................................ F-8 Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2004 (Unaudited).............................. F-10 Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2004 (Unaudited)........... F-11 (c) Exhibits Number Document ------ -------- 23.1 Consent of Considine & Considine, independent auditors 1 To The Members Star Solutions, LLC A California Limited Liability Company 10120 Pacific Heights Blvd., Suite 200 San Diego, Ca 92121 INDEPENDENT AUDITOR'S REPORT We have audited the accompanying balance sheet of Star Solutions, LLC, A California limited liability company, as of December 31, 2004, and the related income statement and member's capital, and cash flows for the year then ended. 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 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 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 financial position of Star Solutions, LLC, A California limited liability company, as of December 31, 2004, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. /s/ CONSIDINE & CONSIDINE An Accountancy Corporation San Diego, California January 29, 2005 F-1 STAR SOLUTIONS, LLC A CALIFORNIA LIMITED LIABILITY COMPANY BALANCE SHEET DECEMBER 31, 2004 ASSETS CURRENT ASSETS Cash (Note 3) $1,348,900 Accounts Receivable (Note 4) 2,140,417 Inventory 32,110 ---------- 3,521,427 PROPERTY AND EQUIPMENT (NOTE 5) 54,913 OTHER ASSETS Deposits 7,005 ---------- TOTAL ASSETS 3,583,345 ========== LIABILITIES AND MEMBERS' CAPITAL CURRENT LIABILITIES Accounts Payable 1,886,741 Accrued Product Costs (Note 6) 1,098,830 Accrued Liabilities (Note 7) 507,249 ---------- TOTAL LIABILITIES 3,492,820 COMMITTMENTS (NOTE 8) MEMBER'S CAPITAL 90,525 ---------- TOTAL LIABILITIES AND MEMBERS' CAPITAL $3,583,345 ========== F-2 STAR SOLUTIONS, LLC A CALIFORNIA LIMITED LIABILITY COMPANY INCOME STATEMENT AND MEMBER'S CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2004 REVENUE $ 17,338,983 COST OF SALES 11,175,564 ------------ GROSS PROFIT 6,163,419 EXPENSES Auto 113,528 Bad Debt 20,780 Consulting 581,254 Depreciation 39,507 Employee Compensation and Benefits 4,271,638 Insurance 127,098 Interest 77 Marketing 20,194 Meals & Entertainment 48,274 Office 64,775 Professional Fees 79,833 Rent 194,265 Repairs & Maintenance 2,333 Telephone & Utilities 77,240 Travel & Lodging 103,175 Worker's Compensation 69,933 ------------ 5,813,904 ------------ INCOME FROM OPERATIONS 349,515 OTHER INCOME/(EXPENSE) Gain on Asset Sale (Note 9) 1,771,398 Interest 6,601 Loss on Disposal of Assets (12,864) ------------ 1,765,135 ------------ INCOME BEFORE TAX 2,114,650 INCOME TAX EXPENSE 25,180 ------------ NET INCOME 2,089,470 MEMBER'S CAPITAL - BEGINNING OF YEAR 192,453 DISTRIBUTIONS (2,191,398) ------------ MEMBER'S CAPITAL - END OF YEAR $ 90,525 ============ F-3 STAR SOLUTIONS, LLC A CALIFORNIA LIMITED LIABILITY COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2004 CASH FLOWS PROVIDED BY OPERATING ACTIVITIES Net Income $ 2,089,470 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH USED BY OPERATING ACTIVITIES Depreciation 39,507 Loss on Disposal of Assets 12,864 Decrease in Accounts Receivable 924,458 Decrease in Inventory 296,300 Decrease in Accounts Payable (1,574,822) Increase in Accrued Product Costs) 1,098,830 Increase in Accrued Liabilities 59,912 ----------- 857,049 ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 2,946,519 CASH FLOWS USED BY INVESTING ACTIVITIES Purchase of Property and Equipment (3,602) CASH FLOWS USED BY FINANCING ACTIVITIES Distributions (2,191,398) ----------- NET INCREASE IN CASH 751,519 CASH - BEGINNING 597,381 ----------- CASH - ENDING $ 1,348,900 =========== SUPPLEMENTAL DISCLOSURE: Interest Paid $ 77 Income Taxes Paid $ 12,590 F-4 STAR SOLUTIONS, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 NOTE 1 THE COMPANY Star Solutions, LLC, is a California limited liability company participating in computer sales, installation and support. The Company was formed on October 23, 1997 in the State of California. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting - The accompanying financial statements have been prepared using the accrual method in conformity with generally accepted accounting principles. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. These estimates may differ from actual results. Cash - The Organization considers all highly liquid investments with a fixed maturity date of three months or less to be cash equivalents. Inventory - Inventory is stated at the lower of cost or market, cost being determined principally under the first-in first-out (FIFO) method. Property and Equipment - Property and equipment are carried at cost. Depreciation is computed using the straight - line method of depreciation over the assets' estimated useful lives of 3-5 years. Maintenance and repairs are charged to the expense as incurred; major renewals and betterment's are capitalized. When items of property and equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss is included in income. Revenue Recognition - Revenue from product sales is recognized upon shipment to customers. Income Taxes - The Company is classified as a partnership for income tax purposes and, accordingly, pays no federal tax. Income tax expense represents the minimum state income tax and any fees implied on total income for a California limited liability company. F-5 STAR SOLUTIONS, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 NOTE 3 CASH The Company has cash in excess of the federally insured limits at their financial institution totaling, $1,327,619. Cash consists of the following: Wells Fargo - Sweep Account $ 837,736 Wells Fargo - Money Market 490,064 Wells Fargo - Checking 18,467 Wells Fargo - Flex 2,633 ---------- $1,348,900 ========== NOTE 4 ACCOUNTS RECEIVABLE Accounts receivable are trade receivables arising from operations. Management has determined the allowance for doubtful accounts to be zero as of December 31, 2004. NOTE 5 PROPERTY AND EQUIPMENT Major categories of property and equipment are summarized as follows: Furniture and Fixtures $ 208,388 Vehicles 78,605 Office Equipment 11,975 Computers 9,503 --------- 308,471 Accumulated Depreciation (253,558) --------- $ 54,913 ========= NOTE 6 ACCRUED PRODUCT COSTS Product costs represent estimated amounts owed to Sun Microsystems for potential pricing adjustments based on prior sales transactions. NOTE 7 ACCRUED LIABILITIES Accrued liabilities consists of the following: Compensation $269,844 Sales Tax 70,529 Vacation 53,412 Professional Services 50,000 Other Liabilities 31,139 Income Taxes 12,590 Consulting 10,057 Payroll Taxes 9,678 -------- $507,249 ======== F-6 STAR SOLUTIONS, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 NOTE 8 COMMITMENTS The Company leases office space under a non-cancelable operating lease that expires in January of 2006. The Company also leases office equipment under non-cancelable operating lease which expires in August of 2006. The lease agreements currently require aggregate monthly rental payments of approximately $12,000. The minimum future lease payments for the years ended December 31, are as follows: 2005 $149,082 2006 12,782 -------- $161,864 ======== Rent expense for the period ended December 31, 2004 was $194,265. NOTE 9 GAIN ON ASSET SALE Gain on asset sale presents the proceeds collected on a contract sale. F-7 Pro Forma Financial Information (Unaudited) Acquisition of MSI On August 18, 2004 (the "Acquisition Date"), we acquired all of the outstanding capital stock of MSI, a Delaware corporation. The transaction was structured as a reorganization of MSI with and into Front Porch Merger Corp., a Delaware corporation and newly-formed, wholly-owned subsidiary of our company. The Acquisition of MSI by our company has been accounted for as a reverse merger because on a post-merger basis, the former MSI shareholders hold a majority of our outstanding common stock of our company on a voting and diluted basis. As a result, MSI is deemed to be the acquirer for accounting purposes. The MSI stockholders were issued 47,454,985 restricted shares of common stock and 2,466,971 restricted shares of the newly-designated, voting and non-dividend bearing Series A Redeemable Preferred Stock (the "Series A Preferred") of our company in exchange for their ownership of MSI securities. The Series A Preferred shares are convertible into shares of common stock on a twenty-for-one basis. In connection with the Acquisition, we canceled 13,452,381 shares of outstanding Incentra common stock and warrants to purchase 3.5 million shares of Incentra common stock that were held by MSI prior to the Acquisition Date. MSI canceled $0.2 million in receivables owed to it from us. We also had outstanding warrants to purchase 202,740 shares of restricted common stock at a price per share of $.0003 and outstanding warrants to purchase 33,029 shares of Series A Preferred at a price per share of $10.35. The accompanying unaudited pro forma statement of operations includes the pro forma results of Front Porch Digital, Inc. from January 1, 2004 through August 17, 2004 (the date of the acquisition). Acquisition of STAR Solutions of Delaware, Inc. On February 18, 2005 (the "STAR Closing Date"), we acquired all of the outstanding capital stock of STAR Solutions of Delaware, Inc., a privately-held Delaware corporation ("STAR"). The acquisition was effected pursuant to an Agreement and Plan of Merger (the "Merger Agreement"). Pursuant to the Merger Agreement, the purchase price consisted of (i) a cash payment of $1,422,000, (ii) the issuance of 12,617,555 unregistered shares of our common stock and (iii) the issuance of an unsecured convertible promissory note for $2.5 million (the "Note"). In addition, we paid $78,000 to the sole remaining stockholder of STAR in exchange for all shares of capital stock of STAR held by such stockholder. Interest on the Note accrues an annual rate of 0.5%, and therefore a discount was applied to reflect a fair value rate of interest. Principal is payable through August 1, 2007. All or a portion of the outstanding principal and interest due under the Note may be converted by the holder into shares of common stock at any time from the end of each calendar quarter immediately preceding a payment due date, as defined. The Note is initially convertible at a conversion price equal to the greater of (i) $0.40 or (ii) seventy percent (70%) of the average closing price of our common stock, as reported on the Over-The-Counter Bulletin Board, for the ten (10) consecutive trading days ending on and including the last day of the calendar quarter immediately preceding the applicable Payment Due Date. As of the Star Closing Date, the Note was convertible into a maximum of 6,250,000 shares of common stock. Our obligations under the Note are not secured by any of our assets. STAR also entered into a consulting agreement with FGBB, Inc., a Nevada corporation that is controlled by the formaer STAR stockholder ("FGBB"), pursuant to which FGBB will provide sales and F-8 marketing services to us relating to the business of STAR. The consulting agreement provides that we will pay FGBB a consulting fee of $500,000 for services to be provided thereunder, which amount shall be paid in twenty-four equal monthly payments of approximately $20,800, commencing in March 2005. In addition, on February 18, 2005, STAR obtained a revolving line of credit, which provides for borrowings until March 1, 2007, of up to $5,000,000. All acquisitions have been accounted for as purchases. There were no significant accounting policy differences or other items, which required adjustment in the accompanying unaudited pro forma consolidated statement of operations. The accompanying unaudited condensed pro forma consolidated balance sheet gives effect to the acquisition as if it had been consummated on December 31, 2004. The accompanying unaudited condensed pro forma consolidated statement of operations for the year ended December 31, 2004, gives effect to the acquisition as if it had been consummated on January 1, 2004. The unaudited condensed pro forma consolidated financial statements should be read in conjunction with the historical financial statements of Star Solutions of Delaware, Inc. (included herein) as well as those of our company. The unaudited pro forma consolidated financial statements do not purport to be indicative of the financial position or results of operations that would have actually been obtained had such transactions been completed as of the assumed dates and for the periods presented, or which may be obtained in the future. The pro forma adjustments are described in the accompanying notes and are based upon available information and certain assumptions that we believe are reasonable. The pro forma excess of the STAR purchase price over STAR's net tangible assets acquired was approximately $7.6 million. A preliminary allocation of the STAR purchase price has been made to major categories of assets and liabilities in the accompanying unaudited pro forma consolidated financial statements, including a preliminary allocation of the STAR purchase price excess over the net tangible assets acquired to goodwill, approximately $7,000,000, and certain identifiable intangible assets, primarily customer relationships, totaling approximately $600,000. The purchase price allocation and adjustments are not final; the allocation is only preliminary at this time, as we and our independent valuation advisors are still reviewing all of the underlying assumptions and calculations used in the allocation. The pro forma adjustments represent our best estimates based upon available information and certain assumptions that we believe to be reasonable at this time, which includes our best estimate that approximately $7,000,000 of the excess purchase price of STAR over the net tangible assets acquired represents goodwill, which is not amortized pursuant to U.S. generally accepted accounting principles. However, because the purchase price allocation is not final, the amounts reflected in the unaudited pro forma consolidated financial statements are subject to change, and the actual allocation of the purchase price (which could include a change in the allocation between goodwill and other identifiable, amortizable assets) and the resulting effect on income (loss) from operations may differ from the pro forma amounts included herein. F-9 INCENTRA SOLUTIONS, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET December 31, 2004
PRO PRO FORMA INCENTRA STAR FORMA CONSOLIDATED HISTORICAL HISTORICAL ADJUSTMENTS TOTAL ---------- ---------- ----------- ------------ ASSETS Current assets: Cash and cash equivalents $ 3,068,458 $ 1,348,900 -- $ 4,417,358 Accounts receivable, net 3,740,554 2,140,417 -- 5,880,971 Other current assets 645,637 32,110 -- 677,747 ------------- ------------- ------------- ------------- Total current assets 7,454,649 3,521,427 -- 10,976,076 ------------- ------------- ------------- ------------- Property and equipment, net 2,452,817 54,913 -- 2,507,730 Capitalized software development costs, net 1,188,885 -- 1,188,885 (1), (2), (3), (4) (5), (6), Intangible assets, net 16,537,060 $ 7,604,484 (7) 24,141,544 Other assets 1,043,634 7,005 -- 1,050,639 ------------- ------------- ------------- ------------- TOTAL ASSETS $ 28,677,045 $ 3,583,345 $ 7,604,484 $ 39,864,874 ============= ============= ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Current portion of notes payable, capital leases and other long term obligations $ 1,738,516 $ 764,305 (1) $ 2,502,821 Accounts payable 1,374,953 $ 1,886,741 -- 3,261,694 Accrued expenses 3,058,806 1,606,079 38,645 (5) 4,703,530 Current portion of deferred revenue 1,185,736 -- -- 1,185,736 ------------- ------------- ------------- ------------- Total current liabilities 7,358,011 3,492,820 802,950 11,653,781 ------------- ------------- ------------- ------------- Notes payable, capital leases and other long term obligations, net of current port 2,266,970 1,855,695 (2) 4,122,665 Derivative warrant liability 1,925,534 -- 1,925,534 Line of credit 1,900,000 (3), (4) 1,900,000 Deferred revenue, net of current portion 149,204 -- -- 149,204 ------------- ------------- ------------- ------------- TOTAL LIABILITIES 11,699,719 3,492,820 4,558,645 19,751,184 ------------- ------------- ------------- ------------- Series A convertible redeemable preferred stock 22,000,767 -- -- 22,000,767 ------------- ------------- ------------- ------------- Stockholders' equity: Preferred stock, nonvoting, $.001 par value, 2,500,000 -- shares authorized, none issued or outstanding Common stock, $.001 par value, 200,000,000 shares authorized, 106,493,617 shares issued, 105,059,978 shares outstanding, 1,433,639 shares in treasury 105,060 12,618 (6) 117,678 Common stock, no par value; 1,000,000 shares authorized, 800,000 shares issued -- -- -- and outstanding -- -- -- Additional paid-in capital 113,271,091 3,123,746 (6) 116,394,837 Accumulated other comprehensive loss 19,184 -- 19,184 Accumulated deficit (118,418,776) 90,525 (90,525) (118,418,776) ------------- ------------- ------------- ------------- TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (5,023,441) 90,525 3,045,839 (1,887,077) ------------- ------------- ------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $ 28,677,045 $ 3,583,345 $ 7,604,484 $ 39,864,874 ============= ============= ============= =============
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (1) Record current portion of note payable to former owner of Star of $629,305, net of discount of $75,000, and consulting agreement with former owner of Star of $250,000, net of discount of $40,000. (2) Record long term portion of note payable to former owner of Star of $1,870,695, net of discount of $225,000, and consulting agreement with former owner of Star of $250,000, net of discount of $40,000. (3) Record cash payments to former owners of Star of $1,500,000 paid by drawing on the line of credit. (4) Capitalize investment banking fees of $400,000 paid by drawing on the line of credit. (5) Capitalize attorney fees and other costs associated with the acquisition of Star of $38,645. (6) Record 12,617,555 shares of common stock ($12,618) and additional paid in capital ($3,123,746) based on the market value of common stock issued in the acquisition of Star. (7) Eliminate equity of acquired entity of $90,525. F-10 INCENTRA SOLUTIONS, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Year Ended December 31, 2004
PRO FORMA INCENTRA FPDI PRO FORMA INCENTRA STAR PRO FORMA CONSOLIDATED HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS TOTAL ---------- -------------- --------- ---------- ----------- ------------ TOTAL REVENUE $ 13,284,670 $ 4,455,014 (3) $ 17,739,684 $ 17,338,983 -- $ 35,078,667 ------------- ------------- ------------- ------------- ------------- ------------- Total cost of revenue 7,300,335 1,231,075 (3) 8,531,410 13,417,719 -- 21,949,129 ------------- ------------- ------------- ------------- ------------- ------------- GROSS MARGIN 5,984,335 3,223,939 9,208,274 3,921,264 -- 13,129,538 ------------- ------------- ------------- ------------- ------------- ------------- Selling, general and administrative 10,461,010 3,192,768 (3) 13,653,777 3,532,242 -- 17,186,019 Acquisition costs 1,275,189 150,000 (4) 1,425,189 -- -- 1,425,189 Amortization & depreciation 1,959,530 1,503,459 (3), (5) 3,462,989 39,507 $ 130,000 (2) 3,632,496 ------------- ------------- ------------- ------------- ------------- ------------- 13,695,729 4,846,227 18,541,955 3,571,749 130,000 22,243,704 ------------- ------------- ------------- ------------- ------------- ------------- (LOSS) INCOME FROM OPERATIONS (7,711,393) (1,622,288) (9,333,681) 349,515 (130,000) (9,114,166) ------------- ------------- ------------- ------------- ------------- ------------- Interest expense, net (2,406,548) (1,042,647) (3,449,194) 6,601 (233,746) (3,676,339) Other income (expense) 79,647 72,621 152,268 1,758,534 -- 1,910,802 ------------- ------------- ------------- ------------- ------------- ------------- (2,326,901) (970,026) (3,296,927) 1,765,135 (233,746) (1) (1,765,538) ------------- ------------- ------------- ------------- ------------- ------------- NET LOSS BEFORE INCOME TAX (10,038,295) (2,592,314) (12,630,608) 2,114,650 (363,746) (10,879,704) Income tax expense (400,000) -- (400,000) (25,180) -- (425,180) ------------- ------------- ------------- ------------- ------------- ------------- NET LOSS (10,438,295) (2,592,314) (13,030,608) 2,089,470 (363,746) (11,304,884) ------------- ------------- ------------- ------------- ------------- ------------- Deemed dividends and accretion of redeemable preferred stock to redemption amount (1,339,319) (2,617,572) (3,956,891) -- -- (3,956,891) ------------- ------------- ------------- ------------- ------------- ------------- NET LOSS APPLICABLE TO COMMON SHAREHOLDERS $ (11,777,614) $ (5,209,886) $ (16,987,498) $ 2,089,470 $ (363,746) $ (15,261,774) ============= ============= ============= ============= ============= ============= Weighted average number of common shares 51,027,329 104,865,183 12,617,555 117,482,738 ============= ============= ============= ============= outstanding - basic and diluted Basic and diluted Net loss per share applicable to common shareholders $ (0.23) $ (0.16) $ (0.13) ============= ============= =============
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS STAR (1) Record interest expense on $2.5 million note payable to former owners, consulting agreement with former owner and outstanding borrowings on line of credit used to finance the acquisitions. Included in the amount is $115,000 of non-cash interest expense on the note payable and consulting agreement. (2) Record estimated amortization expense on identifiable intangible assets acquired in the acquisition (based on preliminary allocation of purchase price) of $130,000 using an estimated life of 3-5 years. FPDI (3) Record activity for FPDI from 1-1-04 through 8-17-04. (4) Record acquisition costs paid prior to 8-17-04. (5) Record amortization on intangibles acquired in the acquisition from 1-1-04 through 8-17-04. (6) Record interest expense on note payable of $342,169, deferred financing of $105,338 and 8% convertible notes of FPDI of $595,140 from 1-1-04 through 8-17-04. (7) Record accretion on Series A preferred stock issued in connection with the acquisition from 1-1-04 through 8-17-04. F-11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. INCENTRA SOLUTIONS, INC. Date: April 29, 2005 By:/s/Paul McKnight -------------------------------------- Paul McKnight Chief Financial Officer EXHIBIT INDEX Number Document ------ -------- 23.1 Consent of Considine & Considine, independent auditors EX-23.1 2 c37224_ex23-1.txt EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM To the Board of Directors Incentra Solutions, Inc. We consent to the incorporation by reference in the registration statements on Forms S-8 (Nos. 333-114634 and 333-114605) of Incentra Solutions, Inc.(formerly known as Front Porch Digital, Inc.) of our report dated January 29, 2005, which report appears in this Form 8-K/A Incentra Solutions, Inc. dated February 18, 2005. /s/ Considine & Considine San Diego, California April 28, 2005 -----END PRIVACY-ENHANCED MESSAGE-----