EX-7.1 3 ex7form8ka061301.txt FINANCIAL STATEMENTS AND PRO FORMA STATEMENTS EXHIBIT 7.1 PARK CITY GROUP, INC. Index to Financial Statements -------------------------------------------------------------------------------- Page Balance sheet 2 Statement of operations 3 Statement of equity 4 Statement of cash flows 5 Pro forma unaudited combined financial statements 6 Notes to the unaudited pro forma combined financial statements 11 1
PARK CITY GROUP, INC. Balance Sheet ------------------------------------------------------------------------------------- March 31, 2001 (unaudited) ------------------ Assets Current assets: Cash and cash equivalents $ 34,233 Marketable securities 1,507 Receivables, net: Trade 819,205 Related party 29,810 Inter-company Receivables 692,770 Prepaid expenses and other current assets 18,927 Deferred income taxes 120,000 ------------------ Total current assets 1,716,452 Property and equipment, net 156,327 Deferred taxes 1,280,000 Other assets 33,802 ------------------ $ 3,186,581 ================== ---------------------------------------------------------------------------------- Liabilities and Equity Current liabilities: Accounts payable 307,661 Accrued Liabilities 107,828 Deferred revenue 1,140,560 Accrued payroll and related liabilities 297,716 Income taxes payable 70,429 Current portion of capital lease obligations 6,338 ------------------ Total current liabilities 1,930,532 ------------------ Long term liabilities: Notes payable 2,400,000 Capital lease obligation, less current portion 6,642 ------------------ Total liabilities 4,337,174 ------------------ Equity: Common stock, $0.00002 par value, 40,000,000 shares authorized, 25,130,136 shares issued and outstanding 503 Additional paid-in capital 6,294,031 Accumulated deficit (7,445,127) ------------------ Total equity (1,150,593) ------------------ $ 3,186,581 ================== 2
PARK CITY GROUP, INC. Statement of Operations ------------------------------------------------------------------------------------------------------------ Three Months Ended March 31, 2001 2000 (unaudited) (unaudited) ----------------------------------- Revenues: Software licenses $ 21,036 $ 2,120,073 Maintenance and support 503,373 509,246 Services 122,160 209,300 Cost of revenues 83,150 208,579 ----------------------------------- Gross profit 563,419 2,630,040 Operating expenses: Research and development 51,537 341,781 Sales and marketing 275,801 247,535 General and administrative 184,275 90,580 ----------------------------------- Income from operations 51,806 1,950,144 ----------------------------------- Other income (expense): Interest expense (48,711) (48,785) Interest income 10,072 2,828 Other 882 731 ----------------------------------- (Loss) income before income taxes 14,049 1,904,918 Provision for income taxes - - ----------------------------------- Net (loss) income $ 14,049 $ 1,904,918 =================================== Weighted average shares 25,130,136 25,130,136 =================================== Pro forma basic and diluted earnings (loss) per share $ 0.01 $ 0.08 =================================== ------------------------------------------------------------------------------------------------------------ 3
PARK CITY GROUP, INC. Statement of Equity Years Ended December 31, 2000 and 1999 and Three Months Ended March 31, 2001 ------------------------------------------------------------------------------------------------------------ Common Stock Additional -------------------------- Paid-in Accumulated Shares Amount Capital Deficit Total -------------------------------------------------------------------- Balance, December 31, 1999 25,130,136 $ 503 $ 6,294,031 $ (8,853,582) $(2,559,048) Net income - - 1,394,406 1,394,406 -------------------------------------------------------------------- Balance, December 31, 2000 25,130,136 503 6,294,031 (7,459,176) (1,164,642) Net loss (unaudited) - - - 14,049 14,049 -------------------------------------------------------------------- Balance, March 31, 2001 (unaudited) 25,130,136 $ 503 $ 6,294,031 $ (7,445,127) $(1,150,593) ==================================================================== ------------------------------------------------------------------------------------------------------------ 4
PARK CITY GROUP, INC. Statement of Cash Flows ------------------------------------------------------------------------------------------------------------ Three Months Ended March 31, ----------------------------------- 2001 2000 (unaudited) (unaudited) ----------------------------------- Cash flows from operating activities: Net income (loss) $ 14,049 $ 1,904,918 Adjustments to reconciled net income to net cash provided by operating activities: Depreciation and amortization 21,170 26,702 (Increase) decrease in: Accounts receivable (547,068) 140,253 Accounts receivable - related parties 528,833 82,234 Inter-company receivable (692,770) Prepaid expenses and other assets 1,408 1,160 (Decrease) increase in: Accounts payable 115,054 (38,895) Accrued payroll and related liabilities 98,960 (56,708) Deferred revenue (154,213) (990,435) Income tax payable (67,912) (7,730) Accrued liabilities (57,098) (172,485) ----------------------------------- Net cash used in operating activities (739,587) 889,014 ----------------------------------- Cash flows from investing activities: Purchases of property and equipment - (53,580) Purchases of marketable securities (1,507) (1,434) ----------------------------------- Net cash used in investing activities (1,507) (55,014) ----------------------------------- Cash flows from financing activities: Proceeds from (payments on) line of credit 7,199 (137,000) Payments on notes payable (304,159) (423,365) Payments on capital lease obligation (26,955) (5,851) ----------------------------------- Net cash provided by financing activities (323,915) (566,216) ----------------------------------- Net (decrease) increase in cash and cash equivalents (1,065,009) 267,784 Cash and cash equivalents, beginning of year 1,099,242 247,442 ----------------------------------- Cash and cash equivalents, end of period $ 34,233 $ 515,226 =================================== ------------------------------------------------------------------------------------------------------------ 5
FIELDS TECHNOLOGIES, INC. Pro Forma Combined Financial Statements (Unaudited) -------------------------------------------------------------------------------- Fields Technologies, Inc. (FTI) entered into an agreement with Park City Group, Inc. (PCG) wherein FTI issued 109,623,600 shares of common stock to the shareholders of PCG in exchange for 98.76% of the outstanding shares of PCG common stock. In as much as PCG is the operating entity and its shareholders have control of the voting shares of the Company, the transaction has been accounted for as a reverse merger, or a recapitalization of PCG. The following unaudited pro forma combined balance sheet at March 31, 2001 and statements of operations for the three months ended March 31, 2001 and the year ended December 31, 2000 are presented as though the entities had been together since January 1, 2000 and aggregate the unaudited balance sheet and unaudited statement of operations at March 31, 2001 of Fields Technologies, Inc. (formerly Amerinet Group.com, Inc.) as of March 31, 2001 and the unaudited balance sheet and unaudited statement of operation of Park City Group, Inc. as of March 31, 2001, giving effect to a transaction which was completed on June 13, 2001, wherein FTI acquired PCG (the Acquisition). The business combination is treated as a reverse merger or a recapitalization of PCG with FTI issuing common stock in exchange for 98.76% of the issued and outstanding shares of PCG. The following unaudited pro forma combined balance sheet at March 31, 2001 and the year ended December 31, 2000 are also presented as though the entities had been together January 1, 2000 and aggregate the unaudited balance sheet and unaudited statement of operations at March 31, 2001 of PCG and Fresh Market Manager, LLC (formerly Cooper Fields, LLC) (FMM), giving effect to a transaction which was completed in April, 2001, wherein PCG acquired FMM. See Note 2 in the Notes to the Unaudited Pro Forma Combined Financial Statements for further information. The following pro forma balance sheet and statements of operations used management assumptions at March 31, 2001. The pro forma combined financial statements are not necessarily indicative of the combined balance sheet and statements of operations which might have existed for the period indicated or the results of operations as they may be now or in the future. -------------------------------------------------------------------------------- 6
FIELDS TECHNOLOGIES, INC. Pro Forma Combined Balance Sheet March 31, 2001 ----------------------------------------------------------------------------------------------------------- Pro Forma FTI PCG FMM Adj. Combined ---------------------------------------------------------------- Assets Current assets: Cash $ 7,815 $ 34,233 $ 4,243 $ - $ 46,291 Marketable securities - 1,507 - - 1,507 Accounts receivable, net 142 819,205 307,302 - 1,126,649 Accounts receivable - related party - 29,810 - - 29,810 Intercompany receivables - 4,553,484 - C (4,553,484) - Prepaid expenses and other current assets - 18,927 954 - 19,881 Deferred tax asset, current - 120,000 - - 120,000 ---------------------------------------------------------------- Total current assets 7,957 5,577,166 312,499 (4,553,484) 1,344,138 Property and equipment, net 4,865 156,327 100,213 - 261,405 Property and equipment, net - idle 292,719 - - - 292,719 Investment in WRIwebs.com, inc. 642,108 - - - 642,108 Deposits (other assets for PCG) 400 33,802 - - 34,202 Deferred tax asset, long-term - 1,280,000 - - 1,280,000 ---------------------------------------------------------------- Total assets $ 948,049 $7,047,295 $ 412,712 $ (4,553,484)$ 3,854,572 ---------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- 7
FIELDS TECHNOLOGIES, INC. Pro Forma Combined Balance Sheet (continued) March 31, 2001 ------------------------------------------------------------------------------------------------------------------- Pro Forma FTI PCG FMM Adj. Combined ------------------------------------------------------------------ Liabilities Current liabilities: Deferred revenue $ - $1,140,560 $ 334,000 $ - $ 1,474,560 Bank overdraft 4,373 - - - 4,373 Line of credit - - 212,000 - 212,000 Accounts payable 259,454 307,661 52,269 - 619,384 Accrued Liabilities - 107,828 - - 107,828 Inter-company payables - - 4,553,484 C (4,553,484) - Accrued expenses 316,448 70,429 - - 386,877 Accrued payroll and related liabilities - 297,716 30,407 - 328,123 Loans payable - related parties 5,077 - 600,421 - 605,498 Loans payable - current portions 389,808 - - - 389,808 Capital lease obligation - current portion 36,623 6,338 - - 42,961 ------------------------------------------------------------------ Total current liabilities 1,011,783 1,930,532 5,782,581 (4,553,484) 4,171,412 Long term liabilities: Capital lease obligations, net of current portion - 6,642 - - 6,642 Notes payable - 6,260,714 - - 6,260,714 ------------------------------------------------------------------ Total liabilities 1,011,783 8,197,888 5,782,581 (4,553,484) 10,438,768 Equity subject to potential redemptions 640,987 - - - 640,987 Equity: Preferred stock 4,121 - - - 4,121 Common stock 124,795 503 - B 1,095,733 1,221,031 Additional paid in capital 14,911,398 6,294,031 2,000 B (21,207,429) - Accumulated deficit (15,745,035) (7,445,127) (5,371,869)B 20,111,696 (8,450,335) ------------------------------------------------------------------ Total equity (704,721) (1,150,593) (5,369,869) - (7,225,183) Total liabilities and equity $ 948,049$ 7,047,295 $ 412,712 $ (4,553,484)$ 3,854,572 ------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------- 8
FIELDS TECHNOLOGIES, INC. Pro Forma Combined Statement of Operations Three Months Ended March 31, 2001 ------------------------------------------------------------------------------------------------------------------- Pro Forma FTI PCG FMM Adj. Combined -------------------------------------------------------------------- Revenues $ 22,524 $ 646,569 $ - $ - $ 669,093 Cost of revenues 2,355 83,150 43,459 - 128,964 -------------------------------------------------------------------- Gross profit 20,169 563,419 (43,459) - 540,129 Research and development expenses - 51,537 458,708 - 510,245 Selling, general and administrative expenses 1,514,577 460,076 193,048 - 2,167,701 Write-off of acquired in process technology - - - B 4,413,099 4,413,099 -------------------------------------------------------------------- (Loss) income from operations (1,494,408) 51,806 (695,215) (4,413,099) (6,550,916) Other income (expense): Interest income - 10,072 - - 10,072 Interest expense (10,684) (48,711) (75,979) - (135,374) Other - 882 (10) - 872 Equity in losses of subsidiary (34,452) - - - (34,452) -------------------------------------------------------------------- Total other expense (45,136) (37,757) (75,989) - (158,882) Net (loss) income before taxes (1,539,544) 14,049 (771,204) (4,413,099) (6,709,798) Income tax expense - - - - - -------------------------------------------------------------------- Net (loss) income before extraordinary item (1,539,544) 14,049 (771,204) (4,413,099) (6,709,798) Extraordinary items: Net effect of acquisition of FMM and discharge of related indebtedness and accrued interest - - 635,269 - 635,269 -------------------------------------------------------------------- $ (1,539,544) $ 14,049 $ (135,935) $ (4,413,099) $(6,074,529) -------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- 9
FIELDS TECHNOLOGIES, INC. Pro Forma Combined Statement of Operations Year Ended December 31, 2000 ------------------------------------------------------------------------------------------------------------ Pro Forma FTI PCG FMM Adj. Combined ----------------------------------------------------------------- Revenues $ 395,444 $6,513,142 $ 812,424 $ $ 7,721,010 Cost of revenues 298,429 1,013,930 204,972 - 1,517,331 ----------------------------------------------------------------- Gross profit 97,015 5,499,212 607,452 - 6,203,679 Research and development expenses - 1,035,926 1,033,912 - 2,069,838 Selling, general and administrative expenses 3,233,579 1,882,901 352,671 - 5,469,151 Goodwill charges 630,791 - - - 630,791 Impairment of investment 1,869,205 - - - 1,869,205 Impairment of goodwill 522,201 - - - 522,201 ----------------------------------------------------------------- Income (loss) from operations (6,158,761) 2,580,385 (779,131) - (4,357,507) Other income (expense): Interest income - 31,535 1,726 - 33,261 Interest expense to related party (487,071) - (487,071) Interest expense (162,503) (255,579) (19,131) - (437,213) Debt forgiveness (222,983) - - - (222,983) Equity in losses of subsidiary (64,793) - - - (64,793) ----------------------------------------------------------------- Total other income (expense) (450,279) (224,044) (504,476) - (1,178,799) Net income (loss) before tax expense (6,609,040) 2,356,341 (1,283,607) - (5,536,306) Income tax expense - 991,935 - - 991,935 ----------------------------------------------------------------- Net income (loss) before extraordinary items (6,609,040) 1,364,406 (1,283,607) - (6,528,241) Discontinued operations: Loss from discontinued operations 1,666,240 - - - 1,666,240 Loss on disposal of subsidiaries 231,313 - - 231,313 ----------------------------------------------------------------- Total discontinued operations 1,897,553 - - - 1,897,553 Discount attributable to beneficial conversion privilege of preferred stock 814,246 - - - 814,246 ----------------------------------------------------------------- Net income (loss) $ (9,320,839) $1,364,406 $(1,283,607) $ - $ (9,240,040) ----------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------ 10
FIELDS TECHNOLOGIES, INC. Notes to the Unaudited Pro Forma Combined Financial Statements -------------------------------------------------------------------------------- 1. Reverse Fields Technologies, Inc. (FTI) entered into an Acquisition agreement with Park City Group, Inc. (PCG) wherein FTI issued 109,623,600 shares of common stock to the shareholders of PCG in exchange for 98.76% of the outstanding shares of PCG common stock. In as much as PCG is the operating entity and its shareholders have control of the voting shares of the Company, the transaction is accounted for as a reverse merger, or a recapitalization of PCG. The adjustments to the unaudited pro forma financial statements assume the acquisition occurred on the first day of each period presented and are as follows: A Adjustments to reflect the recapitalization due to the reverse merger transaction. B Adjustment to reflect write off of in process technology acquired from FMM. C Elimination of intercompany amounts. 2. Park City In April 2001, Park City Group, Inc. (PCG) entered Group, Inc. into an agreement wherein 100% of the ownership Acquisition interest of Fresh Market Manager, LLC (Formerly of Fresh Cooper Fields, LLC) (FMM) was acquired from its Market members for $3,860,714. $1,110,714 was paid at Manager, closing with the remaining $2,750,000 evidenced by a LLC promissory note with specified payment terms of $1,000,000 payable on December 20, 2001, $500,000 payable on June 20,2002 with the remaining $1,250,000 payable on December 20, 2002. This note bears interest at a rate of 10% on the remaining unpaid balance is payable monthly beginning April 10, 2001. This note is guaranteed by Fresh Market Manager, LLC, Riverview Financial Corp. which PCG is obligated to repay. In addition, certain shares of PCG stock owned by Riverview Financial Corporation were pledged as security or are being held in escrow as additional collateral along with a 50% interest in a condominium property owned by Randall K. Fields. In connection with this transaction, certain obligations were forgiven resulting in a net benefit to PCG which have been included in the equity of the accompanying unaudited pro forma combined financial statements and not in the statement of operations because of the related party nature of these obligations and transactions. -------------------------------------------------------------------------------- 11 FIELDS TECHNOLOGIES, INC. Notes to the Unaudited Pro Forma Combined Financial Statements Continued -------------------------------------------------------------------------------- 2. Park City FMM did recognize an extraordinary gain of $635,269 Group, Inc. consisting of the forgiveness of accrued interest Acquisition related to debt obligations to an unrelated party. of Fresh This extraordinary item has been reflected with no Market income tax consequences due to the benefit of net Manager, operating loss carryforwards from prior periods. LLC Continued -------------------------------------------------------------------------------- 12