-----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, TiE3TLXCQJX9TLHyK6tnpUXUh5vofv/68juLx6cu6eP2qgA/TRh4KovIGKDsewlG w4NdiZcmmDLUu5mfPyd/gw== 0001068800-99-000047.txt : 19990222 0001068800-99-000047.hdr.sgml : 19990222 ACCESSION NUMBER: 0001068800-99-000047 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981217 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIFIED FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0001033926 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT CONSULTING SERVICES [8742] IRS NUMBER: 351797759 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-22629 FILM NUMBER: 99545911 BUSINESS ADDRESS: STREET 1: 431 N PENNSYLVANIA ST. CITY: INDIANAPOLIS STATE: IN ZIP: 46204-1873 BUSINESS PHONE: 3146343301 MAIL ADDRESS: STREET 1: 431 N PENNSYLVANIA ST CITY: INDIANAPOLIS STATE: IN ZIP: 46204-1873 FORMER COMPANY: FORMER CONFORMED NAME: UNIFIED HOLDINGS INC DATE OF NAME CHANGE: 19970218 8-K/A 1 UNIFIED FINANCIAL SERVICES, INC. 8-K/A ====================================================================== UNITED STATES 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 (Date of earliest event reported): December 17, 1998 UNIFIED FINANCIAL SERVICES, INC. (Exact name of registrant as specified in its charter) DELAWARE 0-22629 35-1797759 (State or other (Commission File (I.R.S. Employer jurisdiction of Number) Identification organization) Number) 431 NORTH PENNSYLVANIA STREET INDIANAPOLIS, INDIANA 46204-1873 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (317) 634-3301 ====================================================================== ITEM 2. ACQUISITION OF ASSETS Reference is made to the Current Report on Form 8-K filed by the Registrant on December 23, 1998 announcing the closing of the merger of Equity Acquisition Corporation, a wholly owned subsidiary of the Registrant, into Equity Underwriting Group, Inc. ("Equity") on December 17, 1998. Reference is also made to the Current Report on Form 8-K filed by the Registrant on January 8, 1999 announcing the closing of the merger of AmeriPrime Financial Services, Inc. ("AmeriPrime") into a wholly owned subsidiary of the Registrant on December 31, 1998. ITEM 5. OTHER EVENTS On October 31, 1998, the Company executed a letter of intent with SBX Inc. to acquire all of the capital stock of SBX Inc. in exchange for 363,636 shares of common stock, $0.01 par value, of the Registrant. On January 29, 1999, the Company and SBX Inc. mutually terminated such letter of intent. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Each Business Acquired (Equity Underwriting Group, Inc. and AmeriPrime Financial Services, Inc.) (1) Equity Underwriting Group, Inc. (i) Independent Auditors' Report (ii) Consolidated Statements of Financial Condition (Audited) as of December 31, 1997 and 1996 (iii) Consolidated Statements of Operations (Audited) for the years ended December 31, 1997 and 1996 (iv) Consolidated Statements of Cash Flows (Audited) for the years ended December 31, 1997 and 1996 (v) Consolidated Statements of Changes in Stockholders' Equity (Audited) for the years ended December 31, 1997 and 1996 (vi) Notes to Audited Consolidated Financial Statements (vii) Consolidated Balance Sheet (Unaudited) as of September 30, 1998 (viii) Consolidated Statements of Operations (Unaudited) for the nine months ended September 30, 1998 and 1997 (ix) Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 1998 and 1997 (x) Notes to Unaudited Financial Statements - 2 - (2) AmeriPrime Financial Services, Inc. (i) Independent Auditors' Report (ii) Consolidated Statements of Financial Condition (Audited) as of December 31, 1997 and 1996 (iii) Consolidated Statements of Operations (Audited) for the years ended December 31, 1997 and 1996 (iv) Consolidated Statements of Cash Flows (Audited) for the years ended December 31, 1997 and 1996 (v) Consolidated Statements of Changes in Shareholders' Equity (Audited) for the years ended December 31, 1997 and 1996 (vi) Notes to Audited Consolidated Financial Statements (vii) Statement of Financial Condition (Unaudited) as of September 30, 1998 (viii) Statements of Operations (Unaudited) for the nine months ended September 30, 1998 and 1997 (ix) Statements of Cash Flows (Unaudited) for the nine months ended September 30, 1998 and 1997 (x) Notes to Unaudited Financial Statements (b) Pro Forma Financial Information (i) Pro Forma Consolidating Balance Sheet (Unaudited) as of September 30, 1998 (ii) Pro Forma Consolidating Statements of Income (Unaudited) for the nine months ended September 30, 1998 and 1997 (iii) Pro Forma Consolidating Statements of Income (Unaudited) for the years ended December 31, 1997 and 1996 (iv) Notes to Pro Forma Consolidating Financial Statements (Unaudited) (c) Exhibits See Exhibit Index on page 49. - 3 - To the Board of Directors and Stockholder of Equity Underwriting Group, Inc. INDEPENDENT AUDITORS' REPORT ---------------------------- We have audited the accompanying consolidated statements of financial condition of Equity Underwriting Group, Inc. and subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits 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 consolidated 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 audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Equity Underwriting Group, Inc. and subsidiaries at December 31, 1997 and 1996, and the results of their operations, and their cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ Larry E. Nunn & Associates, LLC Columbus, Indiana February 12, 1999 - 4 - EQUITY UNDERWRITING GROUP, INC. AUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION December 31, 1997 and 1996
1997 1996 ---- ---- ASSETS ------ Current Assets: Cash and cash equivalents $ 1,901,940 $2,043,446 Money held for employees 100 100 Accounts receivable - trade 2,872,603 1,953,681 Accounts receivable - other 10,589 -- Deferred income tax benefit 35,700 -- Notes receivable - officers 50,000 50,000 Prepaid expense 62,070 35,649 Investments in marketable securities 4,863 281,857 Advances to affiliate 31,952 10,585 Other assets -- -- ----------- ---------- Total current assets 4,969,817 4,375,318 ----------- ---------- Property and Equipment: Computer equipment and software 783,640 444,531 Furniture and fixtures 852,417 608,242 Automobiles 144,846 116,252 ----------- ---------- 1,780,903 1,169,025 Less accumulated depreciation (1,220,842) (806,153) ----------- ---------- Net property and equipment 560,061 362,872 ----------- ---------- Other Assets: Non-compete covenant 20,000 25,000 Goodwill, net of amortization of $523,285 and $0, respectively 372,662 895,947 Cash value of officers' life insurance 39,520 33,247 Insurance agency purchased lease and employment rights 257,947 -- Less accumulated amortization (107,966) -- Minority interest in subsidiary 466,424 10,601 Deferred income tax 437,990 21,000 ----------- ---------- Total other assets 1,486,577 985,795 ----------- ---------- TOTAL ASSETS $ 7,016,455 $5,723,985 =========== ========== See notes to audited consolidated financial statements and independent auditors' report.
- 5 - EQUITY UNDERWRITING GROUP, INC. AUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION December 31, 1997 and 1996
1997 1996 ---- ---- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current Liabilities: Line of credit $ 80,000 $ -- Current portion of long-term debt 87,570 476,428 Accounts payable - insurance companies 4,787,147 3,829,077 Accounts payable - brokers 207,713 232,172 Accounts payable - trade 94,577 113,981 Accrued expenses 142,454 59,904 Cash held for employees 632 100 Income tax payable 8,387 5,700 Other liabilities 348,907 -- ---------- ---------- Total current liabilities 5,757,387 4,717,362 ---------- ---------- Long-Term Liabilities: Notes payable 1,179,613 719,519 Other liabilities 514,611 -- ---------- ---------- Total long-term liabilities 1,694,224 719,519 ---------- ---------- Stockholders' Equity: Common stock, no par value, 1,000 shares authorized and issued, 100 shares outstanding 1,000 1,000 Paid in capital 2,500 -- Retained earnings (438,557) 291,076 Unrealized loss on investments (99) (4,972) ---------- ---------- Total stockholders' equity (435,156) 287,104 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,016,455 $5,723,985 ========== ========== See notes to audited consolidated financial statements and independent auditors' report.
- 6 - EQUITY UNDERWRITING GROUP, INC. AUDITED CONSOLIDATED STATEMENTS OF OPERATIONS For the years ended December 31, 1997 and 1996
1997 1996 ---- ---- Revenue: Gross operating revenues $10,365,295 $ 7,890,257 Less commissions expense (4,741,726) (3,443,417) ----------- ----------- Net commission income 5,623,569 4,446,840 ----------- ----------- Administration Expenses: Compensation 4,268,165 2,724,682 Business development 611,358 579,314 Depreciation 414,689 144,309 Amortization 107,966 -- Postage and delivery expenses 281,611 246,480 Telephone and communications 62,991 52,030 Equipment rental 198,388 162,232 Professional fees 58,791 42,056 Insurance 60,350 59,476 Facilities rent 214,350 198,949 Other operating expenses 1,030,761 384,547 ----------- ----------- Total administrative expenses 7,309,420 4,594,075 ----------- ----------- Net Operating Income (Loss) (1,685,851) (147,235) ----------- ----------- Other Income (Expense): Interest income 124,319 152,586 Interest expense (71,082) (5,300) Other 22,962 -- Gain on disposal of assets 126 10,908 Realized loss on investments (6,967) -- Leased equipment income -- -- Loss on investment-subsidiary -- -- ----------- ----------- Total other income 69,358 158,194 ----------- ----------- Income (Loss) Before Income Taxes (1,616,493) 10,959 ----------- ----------- Provision for Income Taxes: Income taxes 21,653 22,987 Deferred benefit (452,690) (8,700) ----------- ----------- Total income taxes (431,037) 14,287 ----------- ----------- Net Income Before Minority Interest In Subsidiary (1,185,456) (3,328) Minority interest in loss of consolidated subsidiary 455,823 10,601 ----------- ----------- Net Income (Loss) $ (729,633) $ 7,273 =========== =========== See notes to audited consolidated financial statements and independent auditors' report.
- 7 - EQUITY UNDERWRITING GROUP, INC. AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 1997 and 1996
1997 1996 ---- ---- Cash Flow from Operating Activities: Net income $ (729,633) $ 7,273 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 522,655 144,309 Unrealized loss on investments 4,873 -- Gain on sale of equipment -- (10,908) Minority interest in subsidiary (455,823) (10,601) Deferred income tax benefit (452,690) (8,700) Cash value of officers' life insurance (6,273) (3,996) Change in assets and liabilities: Accounts receivable - trade (918,922) (346,387) Accounts receivable - other (10,589) -- Prepaid expenses (26,421) (5,945) Accounts payable - insurance companies 958,069 (408,656) Accounts payable - brokers (24,459) -- Accounts payable - trade (19,404) -- Accrued expenses 82,550 12,093 Other liabilities 864,050 151,300 Income tax payable 2,687 (15,030) ---------- ---------- Net cash provided (used) by operating activities (209,330) (495,248) Cash Flow from Investing Activities: Property and equipment purchase (611,877) (197,470) Investments purchased/redeemed 276,994 1,721 Proceeds from sale of assets -- 8,000 Advance to affiliates (21,367) (10,585) Intangible assets 270,338 (920,947) Payments on note receivable -- 170,000 ---------- ---------- Net cash provided (used) by investing activities (85,912) (949,281) Cash Flow from Financing Activities: Line of credit 80,000 (300,000) Current portion of long-term debt (388,857) -- Proceeds for paid in capital 2,500 -- Proceeds from long-term debt 460,093 1,195,947 ---------- ---------- Net cash provided (used) by financing activities 153,736 895,947 ---------- ---------- Change in cash and equivalents (141,506) (548,582) Cash and equivalents, beginning of year 2,043,546 2,592,028 ---------- ---------- Cash and equivalents, end of year $1,902,040 $2,043,446 ========== ========== See notes to audited consolidated financial statements and independent auditors' report.
- 8 - EQUITY UNDERWRITING GROUP, INC. AUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY For the years ended December 31, 1997 and 1996
Unrealized Common Paid In Retained Loss on Stock Capital Earnings Investment Total ----- ------- -------- ---------- ----- Balance - December 31, 1995 $1,000 $ -- $ 283,803 $ -- $ 284,803 Net income -- -- 7,273 -- 7,273 Unrealized loss on investment -- -- -- (4,972) (4,972) ------ ------ --------- ------- --------- Balance - December 31, 1996 1,000 -- 291,076 (4,972) 287,104 Contribution to capital -- 2,500 -- -- 2,500 Unrealized loss on investments -- -- -- 4,873 4,873 Net income (loss) -- -- (729,633) -- (729,633) ------ ------ --------- ------- --------- Balance - December 31, 1997 $1,000 $2,500 $(438,557) $ (99) $(435,156) ====== ====== ========= ======= ========= See notes to audited consolidated financial statements and independent auditors' report.
- 9 - EQUITY UNDERWRITING GROUP, INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 1997 and 1996 ---------------------------------------------- NOTE 1 - NATURE OF BUSINESS Equity Underwriting Group, Inc. (the "Company"), formerly known as Equity Insurance Managers, Inc., and its related subsidiaries provide services of all types for property and casualty insurance. The subsidiaries contained within the group are Equity Insurance Managers, Inc., Equity Insurance Managers, Inc. of Illinois, LLC, 21st Century Claims Service, Inc. and Equity Insurance Administrators, Inc. Equity Insurance Managers, Inc. ("EIM") and Equity Insurance Managers, Inc. of Illinois, LLC ("EIM of Ill.") are licensed Managing General Agencies operating as a wholesale/broker of property and casualty insurance products in Kentucky, Illinois, Tennessee, Virginia, West Virginia, Ohio and Indiana. EIM and EIM of Ill. operate as managing general agents between a number of admitted as well as Excess and Surplus Line insurance companies with over 2,000 independent producers. During 1996, EIM of Ill. was incorporated as a limited liability corporation and the Company acquired a 55% owned interest. EIM of Ill. purchased an existing agency to continue its operations as a wholesaler/broker of property and casualty insurance products in the states of Illinois and Indiana. During 1997, the Company acquired a 50% ownership in 21st Century Claims Service, Inc. ("21st Century"). EIM owns the other 50% in 21st Century. 21st Century was incorporated as a Kentucky corporation to conduct business as a claim adjusting service company. 21st Century is currently operating as a third party administrator for various insurance companies in the private passenger and commercial trucking lines. During 1997, the Company formed Equity Insurance Administrators, Inc. ("EIA") as a 100% owned subsidiary. EIA was established for the purpose of performing administrative services on a contractual basis for property and casualty insurance carriers. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation - --------------------------- The consolidated financial statements include the accounts of Equity Underwriting Group, Inc., Equity Insurance Managers, Inc., a wholly owned subsidiary, Equity Insurance Managers, Inc. of Illinois, LLC, a 55% owned subsidiary, 21st Century Claims Service, Inc., a 50% owned subsidiary, and Equity Insurance Administrators, Inc., a wholly owned subsidiary. All significant inter-company transactions have been eliminated. The acquisition of the shares in all the subsidiaries were with the initial incorporation or organization by the Company, which results in the book value of the assets and liabilities of the subsidiaries being reported in the Consolidated Financial Statements. EIM of Ill. acquired certain assets of the insurance agency in which these assets, including goodwill, were reported in the EIM of Ill. and the Consolidated Financial Statements at fair market value on the purchase date. - 10 - EQUITY UNDERWRITING GROUP, INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 1997 and 1996 ---------------------------------------------- NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Cash and Equivalents - -------------------- For purposes of the statements of cash flows, the Company considers highly liquid investments with a maturity of three months or less to be cash equivalents. The Company has invested excess cash in short-term U.S. Government backed bonds and securities, through a financial institution. Accounts Receivable - ------------------- The Company considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. If amounts become uncollectible, they will be charged to operations when that determination is made. Marketable Securities - --------------------- Under the provisions of FAS 115, Accounting for Certain Investments in Debt and Equity Securities, marketable securities considered available-for-sale are recorded at fair market value if they have a readily determinable fair value. The corresponding unrealized gain or loss in the fair market value in relation to cost is accounted for as a separate item in the stockholders' equity section of the balance sheet. Management believes that its investments in marketable securities should be classified as investments that are available-for-sale and are stated at fair value. Property and Equipment - ---------------------- Property and equipment is stated at cost, less accumulated depreciation. Depreciation is computed by using the straight-line and accelerated cost methods over the estimated useful lives of the assets. Under the provisions of SOP 98-1, computer software is expensed when developed for internal use and there is no existing plan to market the software externally. Accordingly, management believes all software should be expensed. Intangible assets - ----------------- The following intangible assets were acquired in the purchase of an insurance agency by EIM of Ill. and are amortized on a straight-line or remaining value basis using the following economic lives:
Term Basis Cost ---- ----- ---- Non-compete covenant 3 years Straight-line $ 20,000 Irland & Rogers Name 15 years Straight-line $ 25,000 Goodwill 15 years Straight-line $372,662 Value of Building Lease 8 years Remaining Value $200,200
- 11 - EQUITY UNDERWRITING GROUP, INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 1997 and 1996 ---------------------------------------------- NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Commission Income and Expense - ----------------------------- Each of EIM and EIM of Ill. recognizes commission income from each insurance company it represents on insurance policies written. This commission income is recorded on the effective date of each policy. The return commissions are recorded when a policy cancellation occurs. The commission expense owed to the independent producer of a written policy is recorded on the effective date of the policy. Income Recognition - ------------------ 21st Century and EIA recognize revenue at the time service is performed under the accrual method. Income Taxes - ------------ Deferred taxes result primarily from timing differences in the recognition of the conversion from accrual basis of accounting for financial statement purposes to the modified accrual basis of accounting for income tax purposes. The remaining difference is primarily in the allocation and amortization of the intangible assets in the insurance agency purchase by EIM of Ill. 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 at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 - RESTRICTED CASH EIM maintains a cafeteria plan for the benefit of its employees. Cash representing employee contributions to this plan is maintained in a restricted cash account and is not included in these financial statements. EIA maintains a trust account for Insurance Ventures, Inc., a company with which it has entered a business agreement. This account is used to collect insurance payments to be forwarded to Explorer Insurance, a division of The Insurance Company of the West, the company underwriting the insurance. This account is not included in these financial statements. 21st Century maintains a set of accounts for Rattner Mackenzie, a Lloyd's of London brokered company. These accounts are used to pay insurance claims from insurance business written through Rattner Mackenzie. This account is not included in these financial statements. - 12 - EQUITY UNDERWRITING GROUP, INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 1997 and 1996 ---------------------------------------------- NOTE 4 - STOCKHOLDERS' AGREEMENT The Company is obligated to make non-compete payments in the amounts of $25,000 and $20,000 annually to former stockholders under various agreements. These payments are expensed when paid. A schedule of payments due is as follows:
Year ending December 31 Amount ----------- ------ 1998 $45,000 1999 45,000 2000 45,000
NOTE 5 - LONG-TERM DEBT EIM has a $400,000 revolving line of credit with a bank, which was fully drawn as of December 31, 1997 and $250,000 was outstanding as of December 31, 1996. The credit line bears interest at the bank's prime rate. The loan is secured by all company assets and becomes payable on January 20, 1999. 21st Century has a $200,000 revolving line of credit with a bank, which was fully drawn as of December 31, 1997. The maturity date of the loan is January 30, 1999. Interest on the loan is payable monthly at a rate equal to the bank's prime rate plus 1%. The loan is secured by all assets of 21st Century and is guaranteed by Equity Insurance Managers, Inc. EIM of Ill. has a note payable due to the former owner of the agency purchased on December 31, 1996. The note is payable in six annual installments of $150,952 beginning January 1, 1998. As of December 31, 1996, EIM of Ill. also owed the down payment on the purchase of $226,428, which was paid in January, 1997. The original loan amount was $667,181, bearing an interest rate of prime plus 1% (9 1/2%) as of the purchase date. The long-term debt maturities are as follows:
Year ended December 31 Amount ----------- ------ 1998 $ 87,570 1999 95,889 2000 104,998 2001 114,973 2002 125,896 2003 137,855 -------- Total $667,181 ========
- 13 - EQUITY UNDERWRITING GROUP, INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 1997 and 1996 ---------------------------------------------- NOTE 6 - INVESTMENT IN SUBSIDIARIES On December 31, 1996, EIM of Ill. entered into a purchase agreement with an Illinois based wholesale insurance agency to purchase an existing agency, Irland & Rogers. The purchase included the assets, properties and business of the seller. The assets were purchased for $893,609 and Equity Insurance Managers, Inc. is a guarantor of the agreement. The remaining payment terms of the purchase are disclosed in Note 5. During 1997, the Company became a 50% stockholder in 21st Century. The Company's investment in 21st Century is $2,500 as of December 31, 1997. During 1997, the Company formed EIA as a wholly owned subsidiary. The investment in EIA is $5,000 as of December 31, 1997. The Company's investments in subsidiaries are all eliminated through consolidation. NOTE 7 - OPERATING LEASES The Company's leasing activity consists principally of the leasing of automobiles, office equipment (excluding computer equipment - See Note 8) and office space under operating leases that expire over the next five years. The following is a schedule of future minimum rental payments by years required under various operating leases in effect that have limited or remaining noncancellable lease terms in excess of one year as of December 31, 1997:
Year ending December 31 Amount ----------- ------ 1998 $ 275,855 1999 288,637 2000 281,315 2001 276,991 2002 91,850 ---------- Total $1,214,648 ==========
NOTE 8 - SALES/LEASEBACK TRANSACTION The Company entered into a sales/leaseback transaction with Commonwealth Premium Finance Corporation ("CPFC"), under which CPFC purchased certain computer equipment to be leased back to the Company under normal operating lease terms. At December 31, 1997, the cost of all items leased was $629,622 with accumulated depreciation of $447,516. - 14 - EQUITY UNDERWRITING GROUP, INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 1997 and 1996 ---------------------------------------------- NOTE 8 - SALES/LEASEBACK TRANSACTION (continued) The following is a schedule by years of future minimum rentals under the lease based on items leased at December 31, 1997:
Year ending December 31 Amount ----------- ------ 1998 $ 64,607 1999 35,869 2000 27,588 2001 12,064 2002 4,724 -------- Total $144,852 ========
Rental expense under this lease was approximately $160,407 in 1997 and $148,614 in 1996. NOTE 9 - RETIREMENT PLAN During 1994, the Company implemented a Profit Sharing Plan including a 401(k) feature for its employees. Contributions to the plan are at the discretion of management. The Company contributed $10,367 and $9,612 to the Plan during the years ended December 31, 1997 and 1996, respectively. NOTE 10 - RELATED PARTIES The officers of the Company are also the owners of CPFC, an affiliated company. CPFC provides leasing and premium financing services for various products represented by the Company. As of December 31, 1997 and 1996 the Company had $201,132 and $173,000, respectively, included as accounts receivable - insurance agencies that were due from CPFC. In addition CPFC owed the Company $32,823 for various expenses paid by EIM in 1997. This amount is included in advances to affiliates. These advances were eliminated in the consolidation. The Company paid various expenditures on behalf of 21st Century throughout 1997. As of December 31, 1997, the Company had $147,333 included as advances to affiliates due from 21st Century. These advances were eliminated in the consolidation. The Company also paid various expenditures on behalf of EIA throughout 1997. As of December 31, 1997, the Company had $108,897 included as advances to affiliates due from EIA. These advances were eliminated through consolidation. As of December 31, 1997, the stockholders of the Company have received advances of $50,000 from the Company. These advances, secured by their CPFC stock, are due annually and bear interest at a rate equivalent to the short-term applicable federal rate (AFR), adjustable quarterly. The AFR rate used at December 31, 1997 and 1996, was 5.56% and 5.63%, respectively. - 15 - EQUITY UNDERWRITING GROUP, INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 1997 and 1996 ---------------------------------------------- NOTE 11 - SUBSEQUENT EVENTS Equity Underwriting Group, Inc., the holding company, was established on January 20, 1998. The stockholders of Equity Insurance Managers, Inc. exchanged their shares of EIM for the shares in Equity Underwriting Group, Inc. Subsequently, the shares of the majority owner were retired by Equity Underwriting Group, Inc. A payment in the amount of $1,250,000, financed by a bank, was made to the majority stockholder. The remainder is due in installments of $900,000 and $900,000 on January 1, 1999 and January 1, 2000, respectively. NOTE 12 - CONTINGENCY The Company is a party to various lawsuits, claims and other legal actions arising in the ordinary course of business. In the opinion of management and counsel, all such matters are without merit or are of such kind, or involve such amounts, that unfavorable disposition would not have a material adverse effect on the financial position or results of operations of the Company. NOTE 13 - CONCENTRATION OF CREDIT RISK The Company has a concentration of credit risk in that it periodically maintains cash deposits in a single financial institution in excess amounts insured by the FDIC. The Company has not experienced any losses on such accounts to significant credit risk related to the losses. - 16 - EQUITY UNDERWRITING GROUP, INC. CONSOLIDATED BALANCE SHEET (Unaudited) September 30, 1998
ASSETS ------ Current Assets: Cash and cash equivalents $ 909,286 Money held for employees -- Accounts receivable - trade 5,421,657 Accounts receivable - other 2,000 Notes receivable - officers 14,058 Prepaid expense 13,862 Advance to affiliate 21,689 Other assets 4,731 ----------- Total current assets 6,387,283 ----------- Property and Equipment: Computer equipment and software 145,967 Furniture and fixtures 1,714,751 Automobiles 144,846 ----------- 2,005,564 Less accumulated depreciation (1,398,958) ----------- Net property and equipment 606,606 ----------- Other Assets: Non-compete covenant 20,000 Goodwill, net of amortization of $523,285 372,662 Cash value of officers' life insurance 39,520 Amortized expenses 270,448 Deferred income tax 363,270 ----------- 1,065,900 Less accumulated amortization (157,703) ----------- Total other assets 908,197 ----------- Minority interest in subsidiary 549,389 ----------- TOTAL ASSETS $ 8,451,475 ===========
See notes to the unaudited financial statements. - 17 - EQUITY UNDERWRITING GROUP, INC. CONSOLIDATED BALANCE SHEET (Unaudited) September 30, 1998
LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current Liabilities: Line of credit $ 75,000 Current portion of long-term debt 95,889 Accounts payable - insurance companies 6,650,587 Accounts payable - brokers 257,470 Accounts payable - trade 64,936 Accrued expenses 76,128 Income tax payable 2,886 Other liabilities 435,520 ----------- Total current liabilities 7,658,416 ----------- Long-Term Debt: Notes payable 3,682,101 Deferred income tax -- Other liabilities 571,574 ----------- Total long-term liabilities 4,253,675 ----------- Total liabilities 11,912,091 ----------- Stockholders' Equity: Common stock - no par value, 1,000 shares authorized and issued, 45 outstanding 5,000 Paid in capital 2,500 Retained earnings (534,662) Unrealized loss on investments (7,430) Treasury stock (2,926,024) ----------- Total stockholders' equity (3,460,616) ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,451,475 ===========
See notes to the unaudited financial statements. - 18 - EQUITY UNDERWRITING GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the nine months ended September 30, 1998 and 1997
1998 1997 ---- ---- Revenue: Gross Operating Revenues $ 7,972,468 $ 7,303,700 Less commissions expense (3,664,684) (3,453,429) ----------- ----------- Net commission income 4,307,784 3,850,271 ----------- ----------- Administrative Expenses: Compensation 2,490,427 3,475,690 Amortization 46,613 -- Depreciation 178,116 292,752 Business development 509,816 735,130 Postage 242,596 56,446 Telephone 54,184 44,556 Equipment rental 45,803 148,784 Professional fees 64,033 42,961 Insurance 55,772 57,222 Rent 250,851 215,559 Other operating 442,420 594,411 ----------- ----------- Total expenses 4,380,631 5,663,511 ----------- ----------- Net operating income (loss) (72,847) (1,813,240) ----------- ----------- Other Income (Expense): Interest income 58,819 89,967 Interest expense (207,694) (50,628) Other 160,395 118,910 Gain on disposal of assets -- 126 Leased equipment income 4,961 -- Income taxes (12,784) (7,765) Deferred benefit (109,919) 447,489 ----------- ----------- Total other income (expense) (106,222) 598,099 ----------- ----------- Net loss before minority interest (179,069) (1,215,141) Minority interest in loss of consolidated subsidiary 82,966 403,921 ----------- ----------- NET LOSS $ (96,103) $ (811,220) =========== ===========
See notes to the unaudited financial statements. - 19 - EQUITY UNDERWRITING GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the nine months ended September 30, 1998 and 1997
1998 1997 ---- ---- Cash Flow from Operating Activities: Net income $ (96,103) $ (811,220) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 227,853 378,048 Unrealized loss on investments (7,331) (2,458) Minority interest in subsidiary (82,966) (403,921) Deferred income tax benefit 110,420 (447,489) Cash value of officers' life insurance -- (3,996) Change in assets and liabilities: Accounts receivable - trade (2,549,055) (3,987,077) Accounts receivable - other 3,858 (1,291) Notes receivable - officers 35,942 -- Prepaid expenses 48,209 (29,637) Amortized expenses (12,501) -- Accounts payable - insurance companies 1,863,440 3,625,937 Accounts payable - brokers 49,757 (232,172) Accounts payable - trade (29,641) 1,328,113 Accounts payable - other 137,443 924,192 Accrued expenses (66,326) 6,882 ----------- ----------- Net Cash Provided (used) by Operating Activities (367,001) 343,911 ----------- ----------- Cash Flow from Investing Activities: Property and equipment purchase (224,662) (441,610) Investments purchased/redeemed 4,863 281,857 Intangible assets -- 256,390 Advance to affiliates 10,263 (15,105) ----------- ----------- (209,536) 81,532 ----------- ----------- Cash Flow from Financing Activities: Line of credit (5,000) -- Current portion of long-term debt 8,319 (396,426) Proceeds from common stock 4,000 -- Proceeds from long-term debt 2,502,488 (52,338) Paid in capital -- 2,500 Purchase of treasury stock (2,926,024) -- ----------- ----------- (416,217) (446,264) ----------- ----------- Change in cash and equivalents (992,754) (20,821) Cash and equivalents, beginning of period 1,902,040 2,043,546 ----------- ----------- Cash and equivalents, end of period $ 909,286 $ 2,022,725 =========== ===========
See notes to the unaudited financial statements. - 20 - EQUITY UNDERWRITING GROUP, INC. NOTES TO UNAUDITED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 1998 and 1997 ----------------------------------------------------- NOTE 1--BASIS OF PRESENTATION The unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. - 21 - To the Board of Directors and Stockholder of AmeriPrime Financial Services, Inc. INDEPENDENT AUDITORS' REPORT ---------------------------- We have audited the accompanying consolidated statements of financial condition of AmeriPrime Financial Services, Inc. and subsidiary which gives the retroactive effect of the acquisition of AmeriPrime Financial Securities, Inc., as of December 31, 1997 and 1996, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits 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 consolidated 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 audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of AmeriPrime Financial Services, Inc. and subsidiary at December 31, 1997 and 1996, and the results of their operations, and their cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ Larry E. Nunn & Associates, LLC Columbus, Indiana February 12, 1999 - 22 - AMERIPRIME FINANCIAL SERVICES, INC. AUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION December 31, 1997 and 1996
1997 1996 ---- ---- ASSETS ------ Current Assets Cash and cash equivalents $ 53,504 $ 85,136 Investment in non-affiliated mutual funds 145,355 118,523 Accounts receivable 139,819 85,842 Allowance for doubtful accounts -- -- Prepaid assets and deposit -- -- -------- -------- Total current assets 338,678 289,501 -------- -------- Non-Current Assets Organizational cost 337 337 Accumulated amortization of organizational costs (337) (240) -------- -------- Total non-current assets -- 97 -------- -------- Fixed Assets, at Cost Equipment and furniture 8,174 2,437 Leasehold improvements 10,661 10,661 Vehicles -- -- -------- -------- Total cost 18,835 13,098 -------- -------- Less: accumulated depreciation 3,997 3,085 -------- -------- Net fixed assets 14,838 10,013 -------- -------- TOTAL ASSETS $353,516 $299,611 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current Liabilities Accounts payable and accrued expenses $ 73,488 $ 73,342 Income taxes payable - deferred -- -- Other liabilities -- -- -------- -------- Total current liabilities 73,488 73,342 -------- -------- Long-Term Liabilities -- -- Total long-term liabilities -- -- -------- -------- Total Liabilities $ 73,488 $ 73,342 -------- -------- Stockholders' Equity Common stock, par value $1 per share, 1,000 authorized and outstanding 1,000 1,000 Additional paid-in capital 120,000 173,453 Retained earnings 159,028 51,816 Net unrealized gain (loss) on securities available for sale -- -- -------- -------- Total stockholders' equity 280,028 226,269 -------- -------- STOCKHOLDERS' EQUITY $353,516 $299,611 ======== ========
See notes to audited consolidated financial statements and independent auditors' report. - 23 - AMERIPRIME FINANCIAL SERVICES, INC. AUDITED CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended December 31, 1997 and 1996
1997 1996 ---- ---- Revenue Brokerage $ 32,970 $ 12,000 Trust and administrative services 402,888 162,726 Other income -- -- -------- -------- Total revenue 435,858 174,726 -------- -------- Cost of Sales Brokerage revenue changes -- -- Investment fees -- -- Administrative fees 50,101 73,342 Compliance and filing fees 30,591 28,439 Funds professional fees -- -- -------- -------- Total cost of sales 80,692 101,781 -------- -------- Gross Profit 355,166 72,945 -------- -------- Operating Expenses Employee compensation and benefits 204,892 -- Reserves and allowances -- -- Fund services operating charges -- -- Mail and courier service 1,786 1,122 Telephone 4,677 -- Equipment rental and maintenance -- -- Occupancy 6,307 -- Depreciation 1,444 405 Professional fees 5,790 6,395 Other expenses 28,902 22,952 -------- -------- Total operating expenses 253,798 30,874 -------- -------- Income from operations 101,368 42,071 -------- -------- Other Income Unrealized gain on securities 16,675 11,023 Investment income 11,782 5,280 Other -- -- -------- -------- Total other income (loss) 28,457 16,303 -------- -------- Income before income taxes 129,825 58,374 -------- -------- Income taxes Current -- -- Deferred -- -- -------- -------- Total income taxes -- -- -------- -------- NET INCOME $129,825 $ 58,374 ======== ========
See notes to audited consolidated financial statements and independent auditors' report. - 24 - AMERIPRIME FINANCIAL SERVICES, INC. AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1997 and 1996
1997 1996 ---- ---- Cash flow from operating activities: Net income $129,825 $ 58,374 Adjustments to reconcile net income to net cash provided by (used) in operating activities: Deferred income taxes -- -- Provision for depreciation and amortization 1,444 405 Amortization of bond premium -- -- Unrealized gain on investments (16,675) (11,023) Loss (gain) on fixed assets disposed or sold -- -- (Increase) decrease in operating assets: Receivables (53,977) (26,718) Prepaid and sundry assets -- 25,000 Increase (decrease) in current liabilities: Accounts payable and accrued expenses 146 18,501 Other liabilities -- -- -------- -------- Net cash provided by operating activities 60,763 64,540 Cash flow from investing activities: Purchase of fixed assets (5,737) -- Proceed from sale of fixed assets -- -- Investment in mutual funds (10,593) (24,838) Investment in debt securities -- -- -------- -------- Net cash provided by investing activities (16,330) (24,838) Cash flow from financing activities: Return of capital (53,453) 40,274 Dividends (22,612) -- Proceeds from issuance of common stock -- -- Proceeds from bank line-of-credit and financing -- -- -------- -------- Net cash provided by financing activities (76,065) 40,274 Net increase (decrease) in cash and cash equivalents (31,632) 79,976 CASH AND CASH EQUIVALENTS, beginning of the year 85,136 5,071 -------- -------- CASH AND CASH EQUIVALENTS, end of the year $ 53,504 $ 85,136 ======== ======== SUPPLEMENTARY INFORMATION Interest paid $ -- $ -- Income taxes paid $ -- $ -- See notes to audited consolidated financial statements and independent auditors' report.
- 25 - AMERIPRIME FINANCIAL SERVICES, INC. AUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the Years Ended December 31, 1997 and 1996
Additional Paid-In Retained Capital Earnings ------- -------- 1996 Balance at beginning of year $133,179 $ (6,558) Proceeds on stock transactions or capital 40,274 -- Payments on stock transactions or capital -- -- Dividend payments -- -- Net income (loss) of the year -- 58,374 -------- -------- Balance as of December 31, 1996 $173,453 $ 51,816 ======== ======== 1997 Proceeds on stock transactions or capital $ -- $ -- Payments on stock transactions or capital (53,453) -- Dividend payments -- (22,612) Net income (loss) of the year -- 129,825 -------- -------- Balance as of December 31, 1997 $120,000 $159,029 ======== ======== See notes to audited consolidated financial statements and independent auditors' report.
- 26 - AMERIPRIME FINANCIAL SERVICES, INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 1997 and 1996 ---------------------------------------------- NOTE 1 - NATURE OF OPERATIONS The consolidated financial statements include the accounts of AmeriPrime Financial Services, Inc. (the "Company"), a Texas corporation, and its wholly owned subsidiary, AmeriPrime Financial Securities, Inc. ("Securities"). Securities, a Texas corporation, is a registered broker-dealer under the Securities Exchange Act of 1934, as amended, and is a member of the National Association of Securities Dealers, Inc. Securities performs distribution and sale of mutual fund shares for the respective mutual funds. The Company is a registered investment adviser under the Investment Advisers Act of 1940, as amended and provides organization, administration and advisory services for mutual funds. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - --------------------- The consolidated financial statements include the accounts of AmeriPrime Financial Services, Inc. and AmeriPrime Financial Securities, Inc. All intercompany transactions and balances between the Company and its subsidiaries have been eliminated. Effective December 30, 1998, the Company acquired Securities in a transaction accounted for under the pooling-of-interest method of accounting. The Consolidated Financial Statements give retroactive effect to the pooling-of-interest transaction and, as a result, the Consolidated Statements of Financial Condition, Statements of Operations and Statements of Cash Flows are presented as if the combining companies have been consolidated for all periods presented. As required by generally accepted accounting principles, the Consolidated Financial Statements become the historical consolidated financial statements upon issuance of the financial statements for the period that includes the date of the transaction. The Consolidated Financial Statements, including the notes thereto, should be read in conjunction with the historical financial statements of the Company. Fees and Commissions - -------------------- The Company records revenue on the accrual basis of accounting. For the administration operations revenue are recorded on the month the services are performed. The organization revenue is recorded as earned and as costs are incurred. The Securities brokerage business revenue is recorded as earned on a monthly basis. The fees earned based upon contracts with the mutual funds specifying a minimum fee or on a rate basis of mutual fund asset value. - 27 - AMERIPRIME FINANCIAL SERVICES, INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 1997 and 1996 ---------------------------------------------- NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Property and Equipment - ---------------------- Property and equipment is stated at cost. Depreciation, including the depreciation of capital leased equipment, is provided on the straight-line or accelerated methods over the estimated useful lives of the assets for financial statement purposes. Investments in Mutual Funds - --------------------------- Investments, which consist primarily of an investment in a mutual fund (affiliated or non-affiliated), are recorded and adjusted to the fair market value as of the date of the financial statements and reported on the statement of operations as unrealized gain or loss on securities. Income Taxes - ------------ The Company and Securities each file a separate federal and state income tax return and during 1997 and 1996 filed as an S-corporation. Therefore, federal and state taxable income and losses were passed through to their stockholders. Subsequent to the acquisition by the Company, Securities will be included in the consolidated tax returns of the Company, which uses the accrual method of tax and accounting reporting. The Company has adopted Statement of Financial Accounting Standards No. 109 ("SFAS 109") accounting for income taxes. The Statement requires use of the liability method of accounting for deferred income taxes. Organizational Costs - -------------------- Costs relating to the organization of the Company have been capitalized and are being amortized over a sixty-month period on a straight-line basis. Use of Estimates - ---------------- The presentation 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 at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. - 28 - AMERIPRIME FINANCIAL SERVICES, INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 1997 and 1996 ---------------------------------------------- NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Statement of Cash Flows - ----------------------- For purposes of the statement of cash flows, the Company considers all liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains money market investments that are not insured by the FDIC and bank accounts that periodically exceed the FDIC limit during the year. Financial Statement Presentation - -------------------------------- Certain amounts in the 1996 financial statements have been reclassified to conform to the 1997 presentation. NOTE 3 - COMMITMENTS AND CONTINGENCIES The Company leases its corporate headquarters and administrative office facilities located in Southlake, Texas pursuant to an operating lease on a month to month basis. The aggregate minimum rental commitments required is $720 per month as of December 31, 1997. Total rental expense was $6,307 and $-0- for the years ended December 31, 1997 and 1996, respectively. NOTE 4 - COMMITMENTS AND CONTINGENCIES The Company makes disbursements for the benefit of the mutual funds, which are reimbursed by the mutual funds. The Company records the receivable from the funds and the payable to the provider when the service is provided. The following represents the account as of December 31, 1997 and 1996. 1997 1996 ---- ---- Expense receivable from the funds $122,319 $73,342 Accounts payable for funds 73,488 73,342 -------- ------- Net $ 48,831 $ -- ======== ======= NOTE 5 - EMPLOYEE BENEFIT PLANS The Company initiated a 401(k) plan in 1998 to include matching for funds contributed by the participants. The Company will match each employee's contribution up to fifty percent of the first six percent of the employee's pre-tax contribution. During 1997 and 1996, a consolidated expense for matching the 401(k) was $-0- and $-0- respectively. - 29 - AMERIPRIME FINANCIAL SERVICES, INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 1997 and 1996 ---------------------------------------------- NOTE 6 - CASH SEGREGATED UNDER FEDERAL REGULATION Pursuant to rule 15c3-3 as promulgated by the Securities and Exchange Commission, Securities calculates its reserve requirement and segregates cash and/or securities for the exclusive benefit of the customers on a periodic basis. The reserve requirement calculated by the Company was $5,000, at December 31, 1997 and 1996. Balances segregated in excess of reserve requirements are not restricted. NOTE 7 - NET CAPITAL REQUIREMENTS Securities is subject to the Securities and Exchange Commission's "Uniform Net Capital Rule" (Rule 15c3-1), which requires the maintenance of minimum net capital, as defined, of 6 2/3% of aggregate indebtedness or $5,000 and $5,000 at December 31, 1997 and 1996, whichever is greater, and a ratio of aggregate indebtedness to net capital of not more than 15 to 1. At December 31, 1997, Securities had net capital of $124,706, which was $119,706 in excess of its required net capital of $5,000, and a net capital ratio of .547 to 1. At December 31, 1996, Securities had net capital of $101,817, which was $96,817 in excess of its required net capital of $5,000, and a net capital ratio of 2.28 to 1. NOTE 8 - MAJOR CLIENTS The subsidiary and segments of the Company have major customers, which are not material to the consolidated operations and balance sheet. NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS The following table presents the carrying amounts and estimated fair values of the Company's financial instruments at December 31, 1997 and 1996. FASB Statement No. 107, Disclosures About Fair Value of Financial Instruments, defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties.
1997 1996 ------------------- ------------------- Carrying Fair Carrying Fair ($ in thousands) Amount Value Amount Value ------ ----- ------ ----- Financial assets Cash and cash equivalents $ 53.5 $ 53.5 $ 85.1 $ 85.1 Investment in mutual funds 145.4 145.4 118.5 118.5 Receivables (trade) 139.8 139.8 85.8 85.8 Financial liabilities Current liabilities 73.5 73.5 73.3 73.3 Long-term capitalized lease obligations 21.4 21.4 21.4 21.4
- 30 - AMERIPRIME FINANCIAL SERVICES, INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 1997 and 1996 ---------------------------------------------- NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS (continued) The carrying amounts shown in the above table are included in the statement of financial position under the indicated captions. The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash, and cash equivalents, receivables, and current liabilities: The - ---------------------------------------------------------------- carrying amounts approximate fair value because of the short maturity of those instruments. Investment in money market mutual funds are treated as cash equivalents with maturity under 90 days. Investment in affiliated mutual funds: The carrying amount is - ------------------------------------- determined by the NAV daily pricing sheets (fair market value) as of the close of the markets on December 31. NOTE 10 - INVESTMENTS IN MUTUAL FUNDS The marketable investments in mutual funds cost and fair market value of the investments as of December 31, 1997 and 1996 are as follows:
Number Market Unrealized Gain (Loss) Investment of Shares Cost Value Accumulated Current Year Income --------- ---- ----- ----------- ------------ ------ 1996 Globalt Growth Fund 2,500.000 $ 25,425 $ 31,916 $ 6,491 $ 4,891 $ 425 AIT Vision U.S. Equity 2,853.045 29,000 32,011 3,011 2,836 4,000 Carl Domino Equity Income Fund 2,543.685 25,550 32,025 6,475 5,725 550 NewCap (Maxim) Contarian Fund 2,505.100 25,000 22,570 (2,430) (2,430) -- -------- -------- ------- ------- ------- Totals $104,975 $118,522 $13,547 $11,022 $4,975 ======== ======== ======= ======= ====== Number Market Unrealized Gain (Loss) Investment of Shares Cost Value Accumulated Current Year Income --------- ---- ----- ----------- ------------ ------ 1997 Globalt Growth Fund 2,784.201 $ 28,971 $ 41,067 $12,095 $ 5,604 $ 3,546 AIT Vision U.S. Equity 3,116.091 32,338 41,319 8,981 5,970 3,338 Carl Domino Equity Income Fund 2,720.922 28,297 43,344 15,047 8,572 2,747 NewCap (Maxim) Contarian Fund 2,575.428 25,526 19,625 (5,901) (3,471) 526 -------- -------- ------- ------- ------- Totals $115,132 $145,355 $30,222 $16,675 $10,157 ======== ======== ======= ======= =======
- 31 -
AMERIPRIME FINANCIAL SERVICES, INC. STATEMENT OF FINANCIAL CONDITION (Unaudited) September 30, 1998 ASSETS ------ Current Assets: Cash and cash equivalents $ 48,849 Investments in non-affiliated mutual funds 145,355 Accounts receivable 190,019 Allowance for doubtful accounts -- -------- Total current assets 384,223 -------- Fixed Assets, at Cost: Equipment 8,174 Leasehold improvements 10,661 -------- Gross 18,835 Accumulated depreciation and amortization 4,597 -------- Net fixed assets 14,238 -------- Non-Current Assets: Organization cost 337 Accumulated amortization (337) -------- Total non-current assets -- -------- TOTAL ASSETS $398,461 ======== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current Liabilities: Accounts payable $ 78,257 -------- Total current liabilities 78,257 -------- Commitments: Shareholders' Equity: Common stock 1,000 Paid-in capital 120,000 Retained earnings 199,204 -------- Total shareholders' equity 320,204 -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $398,461 ======== See notes to the unaudited financial statements.
- 32 - AMERIPRIME FINANCIAL SERVICES, INC. STATEMENTS OF OPERATIONS (Unaudited) For the nine months ended September 30, 1998 and 1997
1998 1997 ---- ---- Revenue: Brokerage $ 13,486 $ 18,480 Fund services 384,058 279,145 Dividends and interest 2,078 776 -------- -------- Total revenue 399,622 298,401 -------- -------- Cost of Sales: Fund services charges 92,948 73,476 -------- -------- Total cost of sales 92,948 73,476 -------- -------- Gross profit 306,674 224,925 -------- -------- Expenses: Compensation and benefits 210,511 93,282 Professional fees 9,700 5,522 Occupancy 6,477 4,403 Telephone 6,449 3,445 Mail and courier service 2,278 1,482 All other 30,483 26,620 -------- -------- Total expenses 265,898 134,754 -------- -------- Income before income taxes 40,776 90,171 -------- -------- Income Taxes: State -- -- Federal -- -- -------- -------- Total income taxes -- -- -------- -------- NET RESULTS $ 40,776 $ 90,171 ======== ======== See notes to the unaudited financial statements.
- 33 - AMERIPRIME FINANCIAL SERVICES, INC. STATEMENTS OF CASH FLOWS (Unaudited) For the nine months ended September 30, 1998 and 1997
1998 1997 ---- ---- OPERATING ACTIVITIES: Net results $ 40,176 $ 90,171 Adjustments to reconcile net income to net cash provided (used) in operating activities: Provision for depreciation and amortization 600 669 (Increase) decrease in operating assets: Receivables (50,200) 800 Prepaid and sundry assets (Decrease) increase in liabilities: Accounts payable 4,769 3,589 -------- -------- Net cash from (used) in operating activities (4,655) 95,229 -------- -------- INVESTING ACTIVITIES: Purchase of fixed assets (5,737) -------- -------- Net cash provided (used) in investing activities -- (5,737) -------- -------- FINANCING ACTIVITIES: Return of capital (53,453) -------- -------- Net cash provided (used) in financing activities -- (53,453) -------- -------- NET CHANGE IN CASH AND CASH EQUIVALENTS (4,655) 36,039 CASH AND CASH EQUIVALENTS Beginning of period 53,504 85,136 -------- -------- End of period $ 48,849 $121,175 ======== ======== SUPPLEMENTARY INFORMATION Interest paid $ -- $ -- ======== ======== Income taxes paid $ -- $ -- ======== ======== See notes to the unaudited financial statements.
- 34 - AMERIPRIME FINANCIAL SERVICES, INC. NOTES TO UNAUDITED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 1998 and 1997 ----------------------------------------------------- NOTE 1--BASIS OF PRESENTATION The unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. - 35 - PRO FORMA CONSOLIDATING FINANCIAL STATEMENTS (UNAUDITED) -------------------------------------------------------- The following unaudited pro forma consolidating balance sheet gives effect to the acquisitions by the Company of Equity, Commonwealth Premium Finance Corporation ("CPFC"), AmeriPrime and Strategic Fund Services, Inc. ("Strategic") as if each of the transactions were consummated on September 30, 1998. The pro forma consolidating income statements for the nine months ended September 30, 1998 and 1997 and for the years ended December 31, 1997 and 1996 set forth the results of operations of the Company combined with the results of operations of Equity, CPFC, AmeriPrime and Strategic as if the transactions had occurred as of the first day of each of the periods presented; provided, however, Strategic was not organized until June 25, 1998 and, as such, had no results of operations prior to such date. In addition, the results of operations of each of Resource Benefit Planners, Inc. ("Resource Benefit") and EMCO Estate Management Company, Inc. ("EMCO") are set forth in the consolidating income statements for the nine months ended September 30, 1997 and the years ended December 31, 1997 and 1996 as if the transactions had occurred as of the first day of each of the periods presented. The results of operations of Resource Benefits and EMCO are included in the results of operations of the Company for the nine months ended September 30, 1998. The Company acquired Fiduciary Counsel, Inc. ("Fiduciary Counsel") on August 21, 1998, which acquisition was accounted for under the purchase method of accounting. Accordingly, the historical results of operations of the Company include the results of operations of Fiduciary Counsel from August 21, 1998 forward. Consistent with the Securities and Exchange Commission's rules regarding the treatment of acquisitions accounted for as purchases in pro forma presentations, the pro forma consolidating income statements for the nine months ended September 30, 1998 and 1997 and the year ended December 31, 1997 include the results of operations of Fiduciary Counsel but the pro forma consolidating income statement for the year ended December 31, 1996 does not. On March 31, 1998, the Company acquired 100% of the outstanding capital stock of Unified Investment Advisers, Inc. ("Unified Advisers") (upon the surrender to Unified Advisers by all stockholders of such company other than the Company of all shares of capital stock held by them). Accordingly, the historical results of operations of the Company include the results of operations of Unified Advisers from March 31, 1998 forward. Except for the period since the date of acquisition, the pro forma combined consolidating income statements for the nine months ended September 30, 1998 and 1997 and the years ended December 31, 1997 and 1996 do not include the results of operations of Unified Advisers. The unaudited pro forma consolidating financial statements should be read in conjunction with the accompanying Notes to Pro Forma Consolidating Financial Statements and with the historical financial statements of each of the Company, Fiduciary Counsel, Equity and AmeriPrime. The historical interim financial information for the nine months ended September 30, 1998, used as a basis for the pro forma consolidating financial statements, include all necessary adjustments, which, in management's opinion, are necessary to present the financial position and operations fairly. These pro forma consolidating financial statements may not be indicative of the results of operations that actually would have occurred if the transactions had been consummated on the dates assumed above or of the results of operations that may be achieved in the future. - 36 - UNIFIED FINANCIAL SERVICES, INC. Pro Forma Consolidating Balance Sheet (unaudited) September 30, 1998
UNIFIED EQUITY AMERIPRIME CONSOLIDATED UNDERWRITING CPFC FINANCIAL ------------ ------------ ---- --------- ASSETS: CURRENT ASSETS: Cash and cash equivalents $ 9,367,300 $ 909,286 $ 33,414 $ 48,849 Investments in securities 14,556 Investments in affiliated mutual funds 375,134 130,511 Investments in non-affiliated mutual funds 184,619 Receivable, affiliated company -- 21,689 Notes receivable -- 49,058 Accounts receivable insurance clients 5,423,657 Accounts receivable 1,867,890 1,515,846 78,110 Allowance for doubtful accounts (2,041) Prepaid and sundry assets 91,598 111,858 ----------- ----------- ---------- -------- Total current assets 11,899,056 6,515,548 1,549,260 257,470 ----------- ----------- ---------- -------- FIXED ASSETS, AT COST: Equipment and furniture, gross 1,481,425 1,907,246 13,097 Accumulated depreciation (889,404) (1,388,248) (3,423) Capitalized leased equipment 188,102 Accumulated depreciation (74,937) ----------- ----------- ---------- -------- Total fixed assets 705,186 518,998 -- 9,674 ----------- ----------- ---------- -------- NON-CURRENT ASSETS: Investments in debt securities 994,170 Deferred cost 589,445 667,872 337 Accumulated amortization (233,594) (500,345) (307) Notes receivable, net of current maturity -- Goodwill, gross 1,564,802 895,947 Accumulated amortization (8,693) (48,573) Equity in and investment in affiliate -- Other non-current assets 23,531 397,270 ----------- ----------- ---------- -------- Total non-current assets 2,929,661 1,244,644 167,527 30 ----------- ----------- ---------- -------- TOTAL ASSETS $15,533,903 $ 8,279,190 $1,716,787 $267,174 =========== =========== ========== ======== ADJUSTMENTS AND ELIMINATIONS ---------------------------- STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED --------- -------- ----- ------ ------------ ASSETS: CURRENT ASSETS: Cash and cash equivalents $ 978 $10,359,827 $ $ $10,359,827 Investments in securities 14,556 14,556 Investments in affiliated mutual funds 505,645 505,645 Investments in non-affiliated mutual funds 184,619 184,619 Receivable, affiliated company 21,689 21,689 -- Notes receivable 49,058 49,058 Accounts receivable insurance clients 5,423,657 5,423,657 Accounts receivable 3,461,846 3,461,846 Allowance for doubtful accounts (2,041) (2,041) Prepaid and sundry assets 203,456 203,456 ------- ----------- -------- -------- ----------- Total current assets 978 20,222,312 -- 21,689 20,200,623 ------- ----------- -------- -------- ----------- FIXED ASSETS, AT COST: Equipment and furniture, gross 9,911 3,411,679 3,411,679 Accumulated depreciation (382) (2,281,457) (2,281,457) Capitalized leased equipment 188,102 188,102 Accumulated depreciation (74,937) (74,937) ------- ----------- -------- -------- ----------- Total fixed assets 9,529 1,243,387 -- -- 1,243,387 ------- ----------- -------- -------- ----------- NON-CURRENT ASSETS: Investments in debt securities 994,170 994,170 Deferred cost 1,257,654 314,500 943,154 Accumulated amortization (734,246) 48,048 (686,198) Notes receivable, net of current maturity -- -- Goodwill, gross 2,460,749 2,460,749 Accumulated amortization (57,266) (57,266) Equity in and investment in affiliate -- -- Other non-current assets 420,801 244,140 664,941 ------- ----------- -------- -------- ----------- Total non-current assets -- 4,341,862 292,188 314,500 4,319,550 ------- ----------- -------- -------- ----------- TOTAL ASSETS $10,507 $25,807,561 $292,188 $336,189 $25,763,560 ======= =========== ======== ======== =========== See notes to pro forma consolidating financial statements (unaudited).
- 37 - UNIFIED FINANCIAL SERVICES, INC. Pro Forma Consolidating Balance Sheet (unaudited) September 30, 1998
UNIFIED EQUITY AMERIPRIME CONSOLIDATED UNDERWRITING CPFC FINANCIAL ------------ ------------ ---- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of capitalized leases $ 50,928 $ $ $ Current portion of bank borrowing 30,719 75,000 Accounts payable 1,024,578 99,767 410,646 63,435 Accrued compensation and benefits 570,855 Payable to insurers 6,646,480 Payable to broker/dealers 247,017 257,470 Income taxes payable 4,646 (122,945) (10) Deferred income taxes 59,918 Other liabilities 818,656 435,224 (73,011) Payable to affiliates ----------- ----------- ---------- -------- Total current liabilities 2,807,317 7,390,996 337,625 63,435 ----------- ----------- ---------- -------- LONG-TERM LIABILITIES: Long-term capitalized lease obligations, net of current portion 51,386 Bank borrowing, net of current portion 298,537 3,817,311 1,240,000 Deferred income taxes 800 Other liabilities -- 492,000 ----------- ----------- ---------- -------- Total long-term liabilities 350,723 4,309,311 1,240,000 -- ----------- ----------- ---------- -------- TOTAL LIABILITIES 3,158,040 11,700,307 1,577,625 63,435 ----------- ----------- ---------- -------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock 20,350 7,500 50,000 2,000 Preferred stock Series C 1,672 Additional paid-in capital 11,385,171 (2,926,024) 180,856 Retained earnings 968,670 (502,593) 89,162 20,883 ----------- ----------- ---------- -------- TOTAL STOCKHOLDERS' EQUITY 12,375,863 (3,421,117) 139,162 203,739 ----------- ----------- ---------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $15,533,903 $ 8,279,190 $1,716,787 $267,174 =========== =========== ========== ======== ADJUSTMENTS AND ELIMINATIONS ---------------------------- STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED --------- -------- ----- ------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of capitalized leases $ $ 50,928 $ $ $ 50,928 Current portion of bank borrowing 105,719 105,719 Accounts payable 1,598,426 21,689 1,576,737 Accrued compensation and benefits 570,855 570,855 Payable to insurers 6,646,480 6,646,480 Payable to broker/dealers 504,487 504,487 Income taxes payable (118,309) 125,831 244,140 -- Deferred income taxes 59,918 59,918 Other liabilities 1,180,869 1,180,869 Payable to affiliates 26,527 26,527 26,527 -------- ----------- -------- -------- ----------- Total current liabilities 26,527 10,625,900 147,520 244,140 10,722,520 -------- ----------- -------- -------- ----------- LONG-TERM LIABILITIES: Long-term capitalized lease obligations, net of current portion 51,386 51,386 Bank borrowing, net of current portion 5,355,848 5,355,848 Deferred income taxes 800 800 Other liabilities 492,000 492,000 -------- ----------- -------- -------- ----------- Total long-term liabilities -- 5,900,034 -- -- 5,900,034 -------- ----------- -------- -------- ----------- TOTAL LIABILITIES 26,527 16,525,934 147,520 244,140 16,622,554 -------- ----------- -------- -------- ----------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock 1,000 80,850 53,505 27,345 Preferred stock Series C 1,672 1,672 Additional paid-in capital 8,640,003 53,505 8,693,508 Retained earnings (17,020) 559,102 288,292 147,671 418,481 -------- ----------- -------- -------- ----------- TOTAL STOCKHOLDERS' EQUITY (16,020) 9,281,627 341,797 201,176 9,141,006 -------- ----------- -------- -------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,507 $25,807,561 $489,317 $445,316 $25,763,560 ======== =========== ======== ======== =========== See notes to pro forma consolidating financial statements (unaudited).
- 38 - UNIFIED FINANCIAL SERVICES, INC. Pro Forma Consolidating Statement of Income (unaudited) For the nine months ended September 30, 1998
UNIFIED FIDUCIARY EQUITY AMERIPRIME CONSOLIDATED COUNSEL UNDERWRITING CPFC FINANCIAL ------------ ------- ------------ ---- --------- REVENUE: Brokerage $2,541,340 $ -- $ -- $ -- $ 13,486 Fund services 1,074,505 384,058 Investment advisory 2,486,627 858,618 Trust and administration services 900,046 Insurance -- 8,003,938 290,436 Software and programming services 24,153 Other income 206,923 130 133,886 249 Interest and dividends 169,000 3,410 58,819 2,078 ---------- -------- ---------- -------- -------- Total revenue 7,402,594 862,158 8,196,643 290,685 399,622 ---------- -------- ---------- -------- -------- COST OF SALES: Brokerage revenue charges 1,180,369 Fund service revenue charges 374,410 92,948 Insurance commissions -- 3,664,683 Investment fees 103,121 Administration fees 56,692 ---------- -------- ---------- -------- -------- Total cost of sales 1,717,592 -- 3,664,683 -- 92,948 ---------- -------- ---------- -------- -------- Gross profit 5,685,002 862,158 4,531,960 290,685 306,674 ---------- -------- ---------- -------- -------- EXPENSES: Employee compensation and benefits 2,263,440 523,246 2,362,162 34,295 210,511 Brokerage operating charges 345,704 Fund services operating charges 428,080 Mail and courier 72,842 4,163 242,596 9,714 2,278 Telephone 102,339 12,122 54,184 2,888 6,449 Equipment rental and maintenance 99,369 34,801 45,803 1,350 Occupancy 218,421 57,701 250,851 3,611 6,477 Depreciation and amortization 268,198 30,407 189,983 52,829 Professional fees 199,388 148,311 64,033 24,768 29,700 Insurance 88,963 3,840 55,772 223 Advertising, marketing, etc. 329,652 -- 509,816 Interest expense 32,767 6,539 166,397 72,026 All other 178,151 90,308 454,151 8,448 35,377 ---------- -------- ---------- -------- -------- Total expenses 4,627,314 911,438 4,395,748 209,929 291,015 ---------- -------- ---------- -------- -------- INCOME FROM OPERATIONS 1,057,688 (49,280) 136,212 80,756 15,659 ---------- -------- ---------- -------- -------- ADJUSTMENTS AND ELIMINATIONS ---------------------------- STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED --------- -------- ----- ------ ------------ REVENUE: Brokerage $ -- $ 2,554,826 $ -- $ -- $ 2,554,826 Fund services 9,850 1,468,413 9,850 1,458,563 Investment advisory 3,345,245 3,345,245 Trust and administration services 900,046 900,046 Insurance 8,294,374 100,000 8,394,374 Software and programming services 24,153 24,153 Other income 341,188 341,188 Interest and dividends 233,307 233,307 -------- ----------- ------ -------- ----------- Total revenue 9,850 17,161,552 9,850 100,000 17,251,702 -------- ----------- ------ -------- ----------- COST OF SALES: Brokerage revenue charges 1,180,369 1,180,369 Fund service revenue charges 467,358 467,358 Insurance commissions 3,664,683 3,664,683 Investment fees 103,121 103,121 Administration fees 56,692 59,692 -------- ----------- ------ -------- ----------- Total cost of sales -- 5,475,223 -- -- 5,475,223 -------- ----------- ------ -------- ----------- Gross profit 9,850 11,686,329 9,850 100,000 11,776,479 -------- ----------- ------ -------- ----------- EXPENSES: Employee compensation and benefits 14,926 5,408,580 14,926 5,393,654 Brokerage operating charges 345,704 345,704 Fund services operating charges 428,080 428,080 Mail and courier 15 331,608 15 331,593 Telephone 177,982 177,982 Equipment rental and maintenance 181,323 181,323 Occupancy 537,061 537,061 Depreciation and amortization 541,417 21,840 519,577 Professional fees 446,200 446,200 Insurance 17 148,815 17 148,798 Advertising, marketing, etc. 839,468 839,468 Interest expense 277,729 277,729 All other 11,912 778,347 11,890 766,457 -------- ----------- ------ -------- ----------- Total expenses 26,870 10,462,314 -- 48,688 10,413,626 -------- ----------- ------ -------- ----------- INCOME FROM OPERATIONS (17,020) 1,224,015 9,850 148,688 1,362,853 -------- ----------- ------ -------- ----------- See notes to pro forma consolidating financial statements (unaudited). - 39 - UNIFIED FINANCIAL SERVICES, INC. Pro Forma Consolidating Statement of Income (unaudited) For the nine months ended September 30, 1998 UNIFIED FIDUCIARY EQUITY AMERIPRIME CONSOLIDATED COUNSEL UNDERWRITING CPFC FINANCIAL ------------ ------- ------------ ---- --------- OTHER INCOME (LOSS): Unrealized gain or (loss) on securities $ (27,028) $ $ $ $ 24,517 Realized gain or (loss) on securities 6,451 Results of affiliate loss (39,945) Gain (loss) on sale/disposal of fixed assets 5,141 249 ---------- -------- ---------- -------- -------- Total other income (loss) (55,381) -- -- 249 24,517 ---------- -------- ---------- -------- -------- INCOME BEFORE INCOME TAXES 1,002,307 (49,280) 136,212 81,005 40,176 ---------- -------- ---------- -------- -------- INCOME TAXES: Current 1,935 10,821 Deferred (6,080) (2,847) ---------- -------- ---------- -------- -------- NET INCOME $1,006,452 $(46,433) $ 136,212 $ 70,184 $ 40,176 ========== ======== ========== ======== ======== Preferred dividends $ 65,844 $ -- $ -- $ -- $ -- ========== ======== ========== ======== ======== Income available to common stockholders $ 940,608 $(46,433) $ 136,212 $ 70,184 $ 40,176 ========== ======== ========== ======== ======== ADJUSTMENTS AND ELIMINATIONS ---------------------------- STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED --------- -------- ----- ------ ------------ OTHER INCOME (LOSS): Unrealized gain or (loss) on securities $ $ (2,511) $ $ $ (2,511) Realized gain or (loss) on securities 6,451 6,451 Results of affiliate loss (39,945) (39,945) Gain (loss) on sale/disposal of fixed assets 5,390 5,390 -------- ----------- ------ -------- ----------- Total other income (loss) -- (30,615) -- -- (30,615) -------- ----------- ------ -------- ----------- INCOME BEFORE INCOME TAXES (17,020) 1,193,400 9,850 148,688 1,332,238 -------- ----------- ------ -------- ----------- INCOME TAXES: Current 12,756 12,784 (28) Deferred (8,927) 113,047 (121,974) -------- ----------- ------ -------- ----------- NET INCOME $(17,020) $ 1,189,571 $9,850 $274,519 $ 1,454,240 ======== =========== ====== ======== =========== Preferred dividends $ -- $ 65,844 $ -- $ -- $ 65,844 ======== =========== ====== ======== =========== Income available to common stockholders $(17,020) $ 1,123,727 $9,850 $274,519 $ 1,388,396 ======== =========== ====== ======== =========== See notes to pro forma consolidating financial statements (unaudited).
- 40 - UNIFIED FINANCIAL SERVICES, INC. Pro Forma Consolidating Statement of Income (unaudited) For the nine months ended September 30, 1997
RESOURCE UNIFIED ESTATE BENEFIT FIDUCIARY EQUITY CONSOLIDATED MANAGEMENT PLANNERS COUNSEL UNDERWRITING CPFC ------------ ---------- -------- ------- ------------ ---- REVENUE: Brokerage $2,022,262 $ $ $ $ $ Fund services 1,614,066 Investment advisory 1,509,636 969,946 Trust and administration services 123,561 206,007 278,201 Insurance 7,309,509 319,780 Software and programming services 143,178 Other income 23,095 346 117,271 Interest and dividends 44,799 2,774 85,798 ---------- -------- -------- -------- ----------- -------- Total revenue 5,480,597 206,007 278,547 972,720 7,512,578 319,780 ---------- -------- -------- -------- ----------- -------- COST OF SALES: Brokerage revenue charges 1,208,753 Fund services revenue charges 200,000 Investment fees 52,694 Insurance commissions 3,453,429 Administration fees 13,491 ---------- -------- -------- -------- ----------- -------- Total cost of sales 1,474,938 -- -- -- 3,453,429 -- ---------- -------- -------- -------- ----------- -------- Gross profit 4,005,659 206,007 278,547 972,720 4,059,149 319,780 ---------- -------- -------- -------- ----------- -------- EXPENSES: Employee compensation and benefits 2,122,910 156,909 118,376 348,682 2,652,175 36,344 Brokerage operating charges 264,885 Fund services operating charges 185,803 Mail and courier 43,034 1,452 2,368 15,441 56,446 Telephone 49,031 3,746 3,453 9,483 44,556 Equipment rental and maintenance 62,734 9,808 16,526 44,830 148,784 3,476 Occupancy 151,656 10,760 5,954 83,675 215,559 Depreciation and amortization 147,084 10,325 31,462 115,314 66,818 Professional fees 50,839 1,350 145 118,745 42,961 20,324 Insurance 10,538 6,269 57,222 1,707 Advertising, marketing -- 150 100 -- 721,278 Interest expense 3,364 5,508 3,450 320,159 65,477 All other 314,746 17,450 101,873 118,015 800,695 5,986 ---------- -------- -------- -------- ----------- -------- Total expenses 3,396,086 201,625 275,166 780,052 5,175,149 200,132 ---------- -------- -------- -------- ----------- -------- INCOME FROM OPERATIONS 609,573 4,382 3,381 192,668 (1,116,000) 119,648 ---------- -------- -------- -------- ----------- -------- ADJUSTMENTS AND ELIMINATIONS ---------------- AMERIPRIME STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED ---------- --------- -------- ----- ------ ------------ REVENUE: Brokerage $ 18,480 $ $ 2,040,742 $ $ $ 2,040,742 Fund services 279,145 1,893,211 1,893,211 Investment advisory 2,479,582 2,479,582 Trust and administration services 607,769 607,769 Insurance 7,629,289 125,598 7,503,691 Software and programming services 143,178 143,178 Other income 140,712 140,712 Interest and dividends 776 134,147 134,147 -------- ------ ----------- -------- -------- ----------- Total revenue 298,401 15,068,630 125,598 -- 14,943,032 -------- ------ ----------- -------- -------- ----------- COST OF SALES: Brokerage revenue charges 1,208,753 1,208,753 Fund services revenue charges 43,476 243,476 243,476 Investment fees 52,694 52,694 Insurance commissions 3,453,429 3,453,429 Administration fees 13,491 13,491 -------- ------ ----------- -------- -------- ----------- Total cost of sales 43,476 4,971,843 -- -- 4,971,843 -------- ------ ----------- -------- -------- ----------- Gross profit 254,925 10,096,787 125,598 -- 9,971,189 -------- ------ ----------- -------- -------- ----------- EXPENSES: Employee compensation and benefits 63,282 5,498,678 5,498,678 Brokerage operating charges 264,885 125,598 139,287 Fund services operating charges 185,803 185,803 Mail and courier 1,482 120,223 120,223 Telephone 3,445 113,714 113,714 Equipment rental and maintenance 286,158 286,158 Occupancy 4,403 472,007 472,007 Depreciation and amortization 371,003 371,003 Professional fees 5,522 239,886 239,886 Insurance 3,963 79,699 79,699 Advertising, marketing 721,528 721,528 Interest expense 397,958 397,958 All other 44,657 1,403,422 1,403,422 -------- ------ ----------- -------- -------- ----------- Total expenses 126,754 10,154,964 -- 125,598 10,029,366 -------- ------ ----------- -------- -------- ----------- INCOME FROM OPERATIONS 128,171 (58,177) 125,598 125,598 (58,177) -------- ------ ----------- -------- -------- ----------- See notes to pro forma consolidating financial statements (unaudited). - 41 - UNIFIED FINANCIAL SERVICES, INC. Pro Forma Consolidating Statement of Income (unaudited) For the nine months ended September 30, 1997 RESOURCE UNIFIED ESTATE BENEFIT FIDUCIARY EQUITY CONSOLIDATED MANAGEMENT PLANNERS COUNSEL UNDERWRITING CPFC ------------ ---------- -------- ------- ------------ ---- OTHER INCOME (LOSS): Unrealized gain or (loss) on securities $ (25,127) $ $ $ $ $ Realized gain or (loss) on securities Results of loss (gain) of affiliate (54,722) Gain or loss on sale/disposal of fixed assets (1,700) (126) ---------- -------- -------- -------- ----------- -------- Total other income (loss) (79,849) -- -- (1,700) (126) -- ---------- -------- -------- -------- ----------- -------- INCOME BEFORE INCOME TAXES 689,422 4,382 3,381 194,368 (1,115,874) 119,648 ---------- -------- -------- -------- ----------- -------- INCOME TAXES: Current 16,000 1,748 13,906 19,500 7,766 4,552 Deferred ---------- -------- -------- -------- ----------- -------- NET INCOME $ 673,422 $ 2,634 $(10,525) $174,868 $(1,123,640) $115,096 ========== ======== ======== ======== =========== ======== Preferred dividends $ 101,854 $ -- $ -- $ -- $ -- $ -- ========== ======== ======== ======== =========== ======== Income available to common stockholders $ 571,568 $ 2,634 $(10,525) $174,868 $(1,123,640) $115,096 ========== ======== ======== ======== =========== ======== ADJUSTMENTS AND ELIMINATIONS ---------------- AMERIPRIME STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED ---------- --------- -------- ----- ------ ------------ OTHER INCOME (LOSS): Unrealized gain or (loss) on securities $ $ $ (25,127) $ $ $ (25,127) Realized gain or (loss) on securities -- -- Results of loss (gain) of affiliate (54,722) (54,722) Gain or loss on sale/disposal of fixed assets (1,826) (1,826) -------- ------- --------- -------- -------- --------- Total other income (loss) -- -- (81,675) -- -- (81,675) -------- ------- --------- -------- -------- --------- INCOME BEFORE INCOME TAXES 128,171 -- 23,498 125,598 125,598 23,498 -------- ------- --------- -------- -------- --------- INCOME TAXES: Current 63,472 63,472 Deferred -- -- -------- ------- --------- -------- -------- --------- NET INCOME $128,171 $ -- $ (39,974) $125,598 $125,598 $ (39,974) ======== ======= ========= ======== ======== ========= Preferred dividends $ -- $ -- $ 101,854 $ $ $ 101,854 ======== ======= ========= ======== ======== ========= Income available to common stockholders $128,171 $ -- $(141,828) $125,598 $125,598 $(141,828) ======== ======= ========= ======== ======== ========= See notes to pro forma consolidating financial statements (unaudited).
- 42 - UNIFIED FINANCIAL SERVICES, INC. Pro Forma Consolidating Statement of Income (unaudited) For the year ended December 31, 1997
RESOURCE UNIFIED BENEFIT FIDUCIARY ESTATE EQUITY CONSOLIDATED PLANNERS COUNSEL MANAGEMENT UNDERWRITING CPFC ------------ -------- ------- ---------- ------------ ---- REVENUE: Brokerage $2,542,130 $ -- $ -- $ -- $ -- $ -- Fund services 1,624,395 Investment advisory 1,859,566 1,277,954 Trust and administration services 367,555 284,381 263,921 Insurance 10,365,295 446,553 Software and programming services 131,787 Other income 241,775 223 22,962 Interest and dividends 3,497 124,319 ---------- -------- ---------- -------- ----------- -------- Total revenue 6,767,208 284,604 1,281,451 263,921 10,512,576 446,553 ---------- -------- ---------- -------- ----------- -------- COST OF SALES: Brokerage revenue charges 1,712,545 Fund service revenue charges Insurance commissions 4,741,726 Investment fees 90,768 Administration fees 59,015 ---------- -------- ---------- -------- ----------- -------- Total cost of sales 1,862,328 -- -- -- 4,741,726 -- ---------- -------- ---------- -------- ----------- -------- Gross profit 4,904,880 284,604 1,281,451 263,921 5,770,850 446,553 ---------- -------- ---------- -------- ----------- -------- EXPENSES: Employee compensation and benefits 2,623,443 257,520 483,251 212,945 4,268,165 64,016 Brokerage operating charges 317,381 Fund services operating charges 235,561 Mail and courier 50,518 3,523 281,611 Telephone 104,068 4,797 1,719 4,843 62,991 Equipment rental and maintenance 90,404 3,607 62,833 2,377 198,388 Occupancy 216,618 13,992 100,096 14,424 214,350 3,744 Depreciation and amortization 189,752 13,768 55,276 654 522,655 73,901 Professional fees 193 251,097 4,684 58,791 23,184 Insurance 3,692 6,283 -- 60,350 Advertising, marketing, etc. 100 -- 412 611,358 Interest expense 6,213 6,378 -- 71,082 87,842 All other 596,394 50,219 181,775 47,564 1,030,761 33,030 ---------- -------- ---------- -------- ----------- -------- Total expenses 4,424,139 357,624 1,148,708 287,903 7,380,502 285,717 ---------- -------- ---------- -------- ----------- -------- INCOME FROM OPERATIONS 480,741 (73,020) 132,743 (23,982) (1,609,652) 160,836 ---------- -------- ---------- -------- ----------- -------- ADJUSTMENTS AND ELIMINATIONS AMERIPRIME ---------------- FINANCIAL STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED --------- --------- -------- ----- ------ ------------ REVENUE: Brokerage $ 32,970 $ -- $ 2,575,100 $ -- $ -- $ 2,575,100 Fund services 402,888 2,027,283 2,027,283 Investment advisory 3,137,520 3,137,520 Trust and administration services 915,857 915,857 Insurance 10,811,848 171,174 10,640,674 Software and programming services 131,787 131,787 Other income 11,782 276,742 276,742 Interest and dividends 127,816 127,816 -------- ----- ----------- -------- -------- ----------- Total revenue 447,640 -- 20,003,953 171,174 -- 19,832,779 -------- ----- ----------- -------- -------- ----------- COST OF SALES: Brokerage revenue charges 1,712,545 1,712,545 Fund service revenue charges 80,692 80,692 80,692 Insurance commissions 4,741,726 4,741,726 Investment fees 90,768 90,768 Administration fees 59,015 59,015 -------- ----- ----------- -------- -------- ----------- Total cost of sales 80,692 -- 6,684,746 -- -- 6,684,746 -------- ----- ----------- -------- -------- ----------- Gross profit 366,948 -- 13,319,207 171,174 -- 13,148,033 -------- ----- ----------- -------- -------- ----------- EXPENSES: Employee compensation and benefits 204,892 8,114,232 8,114,232 Brokerage operating charges 317,381 317,381 Fund services operating charges 235,561 235,561 Mail and courier 1,786 337,438 337,438 Telephone 4,677 183,095 183,095 Equipment rental and maintenance 357,609 357,609 Occupancy 6,307 569,531 569,531 Depreciation and amortization 1,444 857,450 30,154 887,604 Professional fees 5,790 343,739 343,739 Insurance 70,325 70,325 Advertising, marketing, etc. 611,870 611,870 Interest expense 171,515 171,515 All other 28,903 1,968,646 171,174 1,797,472 -------- ----- ----------- -------- -------- ----------- Total expenses 253,799 -- 14,138,392 30,154 171,174 13,997,372 -------- ----- ----------- -------- -------- ----------- INCOME FROM OPERATIONS 113,149 -- (819,185) 201,328 171,174 (849,339) -------- ----- ----------- -------- -------- ----------- See notes to pro forma consolidating financial statements (unaudited). - 43 - UNIFIED FINANCIAL SERVICES, INC. Pro Forma Consolidating Statement of Income (unaudited) For the year ended December 31, 1997 RESOURCE UNIFIED BENEFIT FIDUCIARY ESTATE EQUITY CONSOLIDATED PLANNERS COUNSEL MANAGEMENT UNDERWRITING CPFC ------------ -------- ------- ---------- ------------ ---- OTHER INCOME (LOSS): Unrealized gain or (loss) on securities $ 28,855 $ $ $ $ $ Realized gain or (loss) on securities 15,647 6,540 (6,967) Results of affiliate loss (160,298) 1,700 Gain (loss) on sale/disposal of fixed assets (52,720) 126 Minority interest 455,823 --------- -------- -------- -------- ----------- -------- Total other income (loss) (168,516) -- 8,240 -- 448,982 -- --------- -------- -------- -------- ----------- -------- INCOME BEFORE INCOME TAXES 312,225 (73,020) 140,983 (23,982) (1,160,670) 160,836 --------- -------- -------- -------- ----------- -------- INCOME TAXES: Current 45,500 6,691 1,185 21,653 Deferred 7,500 (452,690) --------- -------- -------- -------- ----------- -------- NET INCOME $ 259,225 $(73,020) $134,292 $(25,167) $ (729,633) $160,836 ========= ======== ======== ======== =========== ======== Preferred dividends $ 136,552 $ -- $ -- $ -- $ -- $ -- ========= ======== ======== ======== =========== ======== Income available to common stockholders $ 122,673 $(73,020) $134,292 $(25,167) $ (729,633) $160,836 ========= ======== ======== ======== =========== ======== ADJUSTMENTS AND ELIMINATIONS AMERIPRIME ---------------- FINANCIAL STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED --------- --------- -------- ----- ------ ------------ OTHER INCOME (LOSS): Unrealized gain or (loss) on securities $ 16,675 $ $ 45,530 $ $ $ 45,530 Realized gain or (loss) on securities 15,220 15,220 Results of affiliate loss (158,598) (158,598) Gain (loss) on sale/disposal of fixed assets (52,594) (52,594) Minority interest 455,823 455,823 -------- ----- --------- -------- -------- --------- Total other income (loss) 16,675 -- 305,381 -- -- 305,381 -------- ----- --------- -------- -------- --------- INCOME BEFORE INCOME TAXES 129,824 -- (513,804) 201,328 171,174 (543,958) -------- ----- --------- -------- -------- --------- INCOME TAXES: Current 75,029 75,029 Deferred (445,190) (445,190) -------- ----- --------- -------- -------- --------- NET INCOME $129,824 $ -- $(143,643) $201,328 $171,174 $(173,797) ======== ===== ========= ======== ======== ========= Preferred dividends $ -- $ -- $ 136,552 $ -- $ -- $ 136,552 ======== ===== ========= ======== ======== ========= Income available to common stockholders $129,824 $ -- $(280,195) $201,328 $171,174 $(310,349) ======== ===== ========= ======== ======== ========= See notes to pro forma consolidating financial statements (unaudited).
- 44 - UNIFIED FINANCIAL SERVICES, INC. Pro Forma Consolidating Statement of Income (unaudited) For the year ended December 31, 1996
RESOURCE UNIFIED BENEFIT ESTATE EQUITY CONSOLIDATED PLANNERS MANAGEMENT UNDERWRITING CPFC ------------ -------- ---------- ------------ ---- REVENUE: Brokerage $2,841,519 $ -- $ -- $ -- $ -- Fund services 2,214,523 Investment advisory 1,679,728 Trust and administration services 191,166 292,505 281,561 Insurance -- 7,890,257 276,277 Software and programming services 194,626 Other income 145,090 Interest and dividends 152,586 2,658 ---------- -------- -------- ---------- -------- Total revenue 7,266,652 292,505 281,561 8,042,843 278,935 ---------- -------- -------- ---------- -------- COST OF SALES: Brokerage revenue charges 1,794,886 Fund services revenue charges Insurance commissions 3,443,417 Investment fees 67,624 Administration fees 16,591 ---------- -------- -------- ---------- -------- Total cost of sales 1,879,101 -- -- 3,443,417 -- ---------- -------- -------- ---------- -------- Gross profit 5,387,551 292,505 281,561 4,599,426 278,935 ---------- -------- -------- ---------- -------- EXPENSES: Employee compensation and benefits 2,742,595 162,141 207,271 2,724,682 31,387 Brokerage operating charges 332,508 5,112 Fund services operating charges 233,500 Mail and courier 63,511 2,380 61 Telephone 74,969 4,746 6,951 Equipment rental and maintenance 111,540 -- 10,782 Occupancy 203,651 23,673 -- Depreciation and amortization 195,064 3,063 832 103,176 Professional fees 1,129 3,450 12,430 Insurance 17,662 -- Advertising, marketing, etc. 659 725 579,314 Interest expense 5,067 -- 5,300 31,476 All other 427,391 55,891 49,137 1,290,079 10,784 ---------- -------- -------- ---------- -------- Total expenses 4,384,729 276,411 279,209 4,599,375 194,365 ---------- -------- -------- ---------- -------- INCOME FROM OPERATIONS 1,002,822 16,094 2,352 51 84,570 ---------- -------- -------- ---------- -------- ADJUSTMENTS AND ELIMINATIONS AMERIPRIME ---------------- FINANCIAL STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED --------- --------- -------- ----- ------ ------------ REVENUE: Brokerage $ 12,000 $ -- $ 2,853,519 $ -- $ -- $ 2,853,519 Fund services 162,726 2,377,249 2,377,249 Investment advisory 1,679,728 1,679,728 Trust and administration services 765,232 765,232 Insurance 8,166,534 8,166,534 Software and programming services 194,626 194,626 Other income 145,090 145,090 Interest and dividends 155,244 155,244 -------- ---- ----------- ---- ---- ----------- Total revenue 174,726 -- 16,337,222 -- -- 16,337,222 -------- ---- ----------- ---- ---- ----------- COST OF SALES: Brokerage revenue charges 1,794,886 1,794,886 Fund services revenue charges 101,781 101,781 101,781 Insurance commissions 3,443,417 3,443,417 Investment fees 67,624 67,624 Administration fees 16,591 16,591 -------- ---- ----------- ---- ---- ----------- Total cost of sales 101,781 -- 5,424,299 -- -- 5,424,299 -------- ---- ----------- ---- ---- ----------- Gross profit 72,945 -- 10,912,923 -- -- 10,912,923 -------- ---- ----------- ---- ---- ----------- EXPENSES: Employee compensation and benefits 5,868,076 5,868,076 Brokerage operating charges 337,620 337,620 Fund services operating charges 233,500 233,500 Mail and courier 1,122 67,074 67,074 Telephone 86,666 86,666 Equipment rental and maintenance 122,322 122,322 Occupancy 227,324 227,324 Depreciation and amortization 405 302,540 302,540 Professional fees 6,395 23,404 23,404 Insurance 17,662 17,662 Advertising, marketing, etc. 580,698 580,698 Interest expense 41,843 41,843 All other 22,951 1,856,233 1,856,233 -------- ---- ----------- ---- ---- ----------- Total expenses 30,873 -- 9,764,962 -- -- 9,764,962 -------- ---- ----------- ---- ---- ----------- INCOME FROM OPERATIONS 42,072 -- 1,147,961 -- -- 1,147,961 -------- ---- ----------- ---- ---- ----------- See notes to pro forma consolidating financial statements (unaudited).
- 45 - UNIFIED FINANCIAL SERVICES, INC. Pro Forma Consolidating Statement of Income (unaudited) For the year ended December 31, 1996
RESOURCE UNIFIED BENEFIT ESTATE EQUITY CONSOLIDATED PLANNERS MANAGEMENT UNDERWRITING CPFC ------------ -------- ---------- ------------ ---- OTHER INCOME (LOSS): Unrealized gain or (loss) on securities $ 1,659 $ $ $ $ Realized gain or (loss) on securities 49,684 Results of affiliate loss (151,108) Gain (loss) on sale/disposal of fixed assets (41,859) 10,908 Minority interest in loss of consolidated subsidiary 10,601 --------- ------- ------ ------- ------- Total other income (loss) (141,624) -- -- 21,509 -- --------- ------- ------ ------- ------- INCOME BEFORE INCOME TAXES 861,198 16,094 2,352 21,560 84,570 --------- ------- ------ ------- ------- INCOME TAXES: Current 20,400 2,245 22,987 923 Deferred 9,600 (8,700) --------- ------- ------ ------- ------- NET INCOME $ 831,198 $16,094 $ 107 $ 7,273 $83,647 ========= ======= ====== ======= ======= Preferred dividends $ 136,634 $ -- $ -- $ -- $ -- ========= ======= ====== ======= ======= Income available to common stockholders $ 694,564 $16,094 $ 107 $ 7,273 $83,647 ========= ======= ====== ======= ======= ADJUSTMENTS AND ELIMINATIONS AMERIPRIME ---------------- FINANCIAL STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED --------- --------- -------- ----- ------ ------------ OTHER INCOME (LOSS): Unrealized gain or (loss) on securities $11,023 $ $ 12,682 $ $ $ 12,682 Realized gain or (loss) on securities 5,280 54,964 54,964 Results of affiliate loss (151,108) (151,108) Gain (loss) on sale/disposal of fixed assets (30,951) (30,951) Minority interest in loss of consolidated subsidiary 10,601 10,601 ------- ---- ---------- ---- ---- ---------- Total other income (loss) 16,303 -- (103,812) -- -- (103,812) ------- ---- ---------- ---- ---- ---------- INCOME BEFORE INCOME TAXES 58,375 -- 1,044,149 -- -- 1,044,149 ------- ---- ---------- ---- ---- ---------- INCOME TAXES: Current 46,555 46,555 Deferred 900 900 ------- ---- ---------- ---- ---- ---------- NET INCOME $58,375 $ -- $ 996,694 $ -- $ -- $ 996,694 ======= ==== ========== ==== ==== ========== Preferred dividends $ -- $ -- $ 136,634 $ -- $ -- $ 136,634 ======= ==== ========== ==== ==== ========== Income available to common stockholders $58,375 $ -- $ 860,060 $ -- $ -- $ 860,060 ======= ==== ========== ==== ==== ========== See notes to pro forma consolidating financial statements (unaudited).
- 46 - UNIFIED FINANCIAL SERVICES, INC. Notes to Pro Forma Consolidating Financial Statements (Unaudited) The pro forma consolidating balance sheet and statement of operations give effect to the merger or acquisition of the following companies as if each such merger or acquisition had occurred as of the first day of the period reported. Effective March 10, 1998, the Company acquired Resource Benefit Planners, Inc. in a transaction accounted for under the pooling-of- interest method of accounting. In connection with such acquisition, the Company issued 12,000 shares of Common Stock. Effective August 21, 1998, the Company acquired EMCO Estate Management Company, Inc. in a transaction accounted for under the pooling-of- interest method of accounting. In connection with such acquisition, the Company issued 11,000 shares of Common Stock. Effective December 17, 1998, the Company acquired Equity Underwriting Group, Inc. in a transaction accounted for under the pooling-of-interest method of accounting. In connection with such acquisition, the Company issued 241,745 shares of Common Stock. Effective December 17, 1998, the Company acquired Commonwealth Premium Finance Corporation in a transaction accounted for under the pooling-of- interest method of accounting. In connection with such acquisition, the Company issued 12,800 shares of Common Stock. Effective December 21, 1998, the Company acquired Strategic Fund Services, Inc. in a transaction accounted for under the pooling-of- interest method of accounting. In connection with such acquisition, the Company issued 7,500 shares of Common Stock. Effective December 31, 1998, the Company acquired AmeriPrime Financial Services, Inc. in a transaction accounted for under the pooling-of- interest method of accounting. In connection with such acquisition, the Company issued 410,000 shares of Common Stock. During February 1998, the Company formed Unified Internet Services, Inc., an Indiana corporation. Effective August 21, 1998, the Company acquired Fiduciary Counsel, Inc. in a transaction accounted for under the purchase method of accounting. In connection with such acquisition, the Company issued 36,110 shares of Common Stock and paid $800,835 in cash in exchange for all the capital stock of Fiduciary Counsel, Inc. The excess of cost over fair value of net assets acquired was $1,564,802. Goodwill will be amortized on a straight-line method over 15 years. - 47 - 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. UNIFIED FINANCIAL SERVICES, INC. Dated: February 19, 1999 By: /s/ Timothy L. Ashburn --------------------------------- Timothy L. Ashburn Chairman, President and Chief Executive Officer - 48 - EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 2.1 Agreement and Plan of Merger, dated October 16, 1998, by and among Unified Financial Services, Inc., Equity Acquisition Corporation, Equity Underwriting Group, Inc., John R. Owens and D. Richard Meyer, filed as Exhibit 2.2 to Unified Financial Services, Inc.'s Current Report on Form 8-K dated October 16, 1998, is incorporated herein by reference. 2.2 First Amendment to Agreement and Plan of Merger, dated December 14, 1998, by and among Unified Financial Services, Inc., Equity Acquisition Corporation, Equity Underwriting Group, Inc., John R. Owens and D. Richard Meyer. 2.3 Agreement and Plan of Merger, dated October 16, 1998, by and among Unified Financial Services, Inc., AmeriPrime Acquisition Corporation, AmeriPrime Financial Services, Inc. and Kenneth D. Trumpfheller, filed as Exhibit 2.1 to Unified Financial Services, Inc.'s Current Report on Form 8-K dated October 16, 1998, is incorporated herein by reference. 23.1 Consent of Larry E. Nunn & Associates, LLC with respect to its report dated February 12, 1999 regarding the financial statements of Equity Underwriting Group, Inc. 23.2 Consent of Larry E. Nunn & Associates, LLC with respect to its report dated February 12, 1999 regarding the financial statements of AmeriPrime Financial Services, Inc. - --------------------------- Previously filed - 49 - EX-23.1 2 CONSENT OF EXPERT Exhibit 23.1 ------------ [Letterhead of Larry E. Nunn & Associates, LLC] CONSENT OF LARRY E. NUNN & ASSOCIATES, LLC ------------------------------------------ We consent to the incorporation by reference in the Registration Statement and in the related Prospectus listed below of Unified Financial Services, Inc. of our report dated February 12, 1999, with respect to the financial statements of Equity Underwriting Group, Inc. for the years ended December 31, 1997 and 1996, included in Unified Financial Services, Inc.'s Current Report on Form 8-K/A, dated December 17, 1998. Form Registration Number ---- ------------------- S-8 333-53863 /s/ Larry E. Nunn & Associates, LLC Larry E. Nunn & Associates, LLC Columbus, Indiana February 19, 1999 EX-23.2 3 CONSENT OF EXPERT Exhibit 23.2 ------------ [Letterhead of Larry E. Nunn & Associates, LLC] CONSENT OF LARRY E. NUNN & ASSOCIATES, LLC ------------------------------------------ We consent to the incorporation by reference in the Registration Statement and in the related Prospectus listed below of Unified Financial Services, Inc. of our report dated February 12, 1999, with respect to the financial statements of AmeriPrime Financial Services, Inc. for the years ended December 31, 1997 and 1996, included in Unified Financial Services, Inc.'s Current Report on Form 8-K/A dated December 17, 1998. Form Registration Number ---- ------------------- S-8 333-53863 /s/ Larry E. Nunn & Associates, LLC Larry E. Nunn & Associates, LLC Columbus, Indiana February 19, 1999 -----END PRIVACY-ENHANCED MESSAGE-----