8-K/A 1 marketsmart8ka.txt FINANCIAL STATEMENTS FOR MARKET SMART COMPANIES UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A Second Amendment CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: January 14, 2005 --------------------------------- (Date of earliest event reported) CGI HOLDING CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Nevada 33-19980-D ------------------------------- ---------------------- (State or other jurisdiction of (Commission File No.) incorporation) 87-0450450 --------------------------------- (IRS Employer Identification No.) 5 Revere Drive, Suite 510 Northbrook, Illinois 60062 ----------------------------------------- (Address of Principal Executive Offices) (847) 562-0177 --------------------------------------------------- (Registrant's telephone number, including area code) NOT APPLICABLE ------------------------------------------------------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) CGI Holding Corporation, a Nevada corporation (the "Company") is filing this Current Report on Form 8-K/A in order to amend Form 8-K filed on January 20, 2005 (SEC File No. 33-19980-D), and incorporated herein by reference, to provide certain financial disclosures required by Item 9.01 with respect to the acquisition of MarketSmart, Inc. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of Businesses Acquired Attached hereto are the combined audited balance sheets of MarketSmart Advertising, Inc., Rightstuff, Inc. and Checkup Marketing, Inc., Inc. as of December 31, 2004 and 2003 and the related combined statements of income and comprehensive income, changes in stockholders' equity and cash flows for the years then ended. (b) Pro Forma Financial Information. Attached hereto is the consoldiated pro forma balance sheet and statement of operations for the year ended December 31, 2004. This Current Report on Form 8-K/A and attachments hereto contain forward-looking statements. These statements reflect our current understanding with respect to planned future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward looking statements represent our estimates and assumptions only as of the date of this report, and we do not assume any obligation to update any of these statements. 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. Dated: April 1, 2005 CGI HOLDING CORPORATION. By: /s/ Gerard M. Jacobs ------------------------------------------------- Name: Gerard M. Jacobs Title: President and Chief Executive Officer (a) Financial Statements of Businesses Acquired Independent Auditor's Report Board of Directors MarketSmart Advertising, Inc., RightStuff, Inc., and CheckUp Marketing, Inc. Raleigh, North Carolina We have audited the accompanying combined balance sheets of MarketSmart Advertising, Inc., RightStuff Inc., and CheckUp Marketing, Inc. as of December 31, 2004 and 2003, and the related combined statements of income and comprehensive income, changes in stockholders' equity and cash flows for the years then ended. These combined financial statements are the responsibility of the companies' management. Our responsibility is to express an opinion on these combined financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined 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, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of MarketSmart Advertising, Inc., RightStuff Inc., and CheckUp Marketing, Inc. as of December 31, 2004 and 2003, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. March 13, 2005 MarketSmart Advertising, Inc., RightStuff, Inc., and CheckUp Marketing, Inc. COMBINED BALANCE SHEETS December 31, 2004 and 2003 2004 2003 ------------ ------------ ASSETS Current Assets: Cash $ 472,723 $ 52,512 Trade receivables 1,090,885 1,037,231 Unbilled revenue 234,735 476,435 Prepaid expenses and other assets 27,370 21,907 Prepaid client costs - 102,680 ------------ ------------ Total Current Assets 1,825,713 1,690,765 ------------ ------------ Property and Equipment Equipment 311,165 258,648 Furniture and fixtures 29,292 22,821 Leasehold improvements 15,000 15,000 ------------ ------------ Total Property and Equipment 355,457 296,469 Less: Accumulated depreciation 170,650 151,296 ------------ ------------ Total Property and Equipment, Net 184,807 145,173 ------------ ------------ Other Assets Equipment security deposit - 1,350 Cash value of life insurance 68,082 39,760 ------------ ------------ Total Other Assets 68,082 41,110 ------------ ------------ TOTAL ASSETS $ 2,078,602 $ 1,877,048 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Trade payables $ 527,442 $ 667,006 Due to stockholders - 23,649 Accrued expenses and other current liabilities 52,283 29,232 Line of credit 288,720 478,720 Current portion of lease obligation 3,654 - ------------ ------------ Total Current Liabilities 872,099 1,198,607 Noncurrent Liabilities - Long-term lease obligation, net of current portion 14,759 - ------------ ------------ Total Liabilities 886,858 1,198,607 ------------ ------------ Stockholders' Equity Common stock 3,000 3,000 Stock subscriptions (2,000) (2,000) Retained earnings 1,184,630 674,638 Accumulated other comprehensive income 6,114 2,803 ------------ ------------ Total Stockholders' Equity 1,191,744 678,441 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,078,602 $ 1,877,048 ============ ============ The accompanying notes are an integral part of the combined financial statements MarketSmart Advertising, Inc., RightStuff, Inc., and CheckUp Marketing, Inc. COMBINED STATEMENTS OF INCOME and COMPREHENSIVE INCOME Years Ended December 31, 2004 and 2003 2004 2003 ---------------------- -------------------- AMOUNT PERCENT AMOUNT PERCENT ------------ --------- ---------- --------- SALES $8,821,067 100.00% $7,777,234 100.00% COST OF SALES 5,885,202 66.72 5,375,744 69.12 ------------ --------- ---------- --------- GROSS PROFIT 2,935,865 33.28 2,401,490 30.88 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,768,122 20.04 2,124,459 27.32 ------------ --------- ---------- --------- INCOME FROM OPERATIONS 1,167,743 13.24 277,031 3.56 ------------ --------- ---------- --------- OTHER INCOME (EXPENSE) Miscellaneous expense - - (858) (.01) Interest expense (15,750) (.18) (14,807) (.19) ------------ --------- ---------- --------- TOTAL OTHER EXPENSE (15,750) (.18) (15,665) (.20) ------------ --------- ---------- --------- INCOME BEFORE TAXES ON INCOME 1,151,993 13.06 261,366 3.36 TAXES ON INCOME - - 24,754 .32 ------------ --------- ---------- --------- NET INCOME 1,151,993 13.06 236,612 3.04 OTHER COMPREHENSIVE INCOME - Unrealized gain on securities 3,311 .04 2,517 .03 ------------ --------- ---------- --------- COMPREHENSIVE INCOME $1,155,304 13.10% $ 239,129 3.07% ============ ========- ========== ========= The accompanying notes are an integral part of the combined financial statements MarketSmart Advertising, Inc., RightStuff, Inc., and CheckUp Marketing, Inc. COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Years Ended December 31, 2004 and 2003
STOCK ACCUMLATED OTHER COMMON SUBSCRIPT- RETAINED COMPREHENSIVE STOCK TIONS EARNINGS INCOME TOTAL ------------ ------------ ------------ ---------------- ------------ Balance, January 1, 2003 $ 4,000 $ (2,000) $ 454,480 $ 286 $ 456,766 Net Income - - 236,612 - 236,612 Unrealized Gain on Securities - - - 2,517 2,517 Stock Redemption (1,000) - (16,454) - (17,454) ------------ ------------ ------------ -------------- ------------ Balance, December 31, 2003 3,000 (2,000) 674,638 2,803 678,441 Net Income - - 1,151,993 - 1,151,993 Distributions - - (642,000) - (642,000) Unrealized Gain on Securities - - - 3,311 3,311 ------------ ------------ ------------ -------------- ------------ Balance, December 31, 2004 $ 3,000 $ (2,000) $1,184,630 $ 6,114 $1,191,744 ============ ============ ============ ============== ============
The accompanying notes are an integral part of the combined financial statements MarketSmart Advertising, Inc., RightStuff, Inc., and CheckUp Marketing, Inc. COMBINED STATEMENTS OF CASH FLOWS Years Ended December 31, 2004 and 2003 2004 2003 ------------ ---------- CASH FLOWS FROM OPERATING ACTIVITIES - Net Income $1,151,993 $236,612 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 62,243 45,459 Provision for losses on receivables - Customers 12,128 3,808 Increase in cash value of life insurance (28,322) (16,638) (Increase) decrease in assets: Trade receivables (65,782) (314,407) Unbilled revenue 241,700 (116,991) Refundable income taxes - 56,239 Prepaid taxes - 60,913 Prepaid expenses 100,528 (105,827) Security deposit 1,350 - Deferred tax benefit - 3,838 Increase (decrease) in liabilities: Trade payables (139,564) 211,970 Accrued expenses and other current liabilities 23,050 (13,161) ------------ ---------- Net Cash Provided by Operating Activities 1,359,324 51,815 NET CASH USED IN INVESTING ACTIVITIES - Purchases of Property (80,723) (82,277) ------------ ---------- CASH FLOWS FROM FINANCING ACTIVITIES Net (repayments) borrowings under line of credit (190,000) 25,382 Principal payments under capital lease (2,741) - Net (repayments to) borrowings from stockholders (23,649) 23,649 Distributions to stockholders (642,000) - Redemption of common stock - (17,454) ------------ ---------- Net Cash (Used in) Provided by Financing Activities (858,390) 31,577 ------------ ---------- NET INCREASE IN CASH 420,210 1,115 CASH - Beginning of Year 52,512 51,397 ------------ ---------- CASH - End of Year $ 472,723 $ 52,512 ============ ========== Interest Paid $ 15,632 $ 22,496 ============ ========== Income Taxes Paid (Received) $ 6,716 $ (102,481) ============ ========== The accompanying notes are an integral part of the combined financial statements MarketSmart Advertising, Inc., RightStuff, Inc., and CheckUp Marketing, Inc. NOTES TO COMBINED FINANCIAL STATEMENTS Years Ended December 31, 2004 and 2003 NOTE A - PRINCIPLES OF COMBINATION AND BUSINESS ACTIVITIES The combined financial statements are not those of a separate legal entity, but include the accounts of three North Carolina corporations: MarketSmart Advertising, Inc. (MarketSmart), RightStuff, Inc. (RightStuff), and CheckUp Marketing, Inc. (CheckUp), which are commonly controlled and managed. All intercompany accounts and transactions among these entities (collectively, the Company) have been eliminated in combination. MarketSmart, along with RightStuff, are full-service advertising agencies offering in-house creative and production capabilities for all media. CheckUp provides mystery shoppers and follow-up services. Advertising services and other services account for approximately 90% and 10% of revenues, respectively, in 2004 and 89% and 11% of revenues, respectively, in 2003. The Company operates in all industries but tends to specialize in the restaurant, automotive and real estate sectors. The principal office is located in Raleigh, North Carolina but the Company's customer base extends along the entire East Coast. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Revenue Recognition Revenue is recognized in the financial statements in the period in which services are performed. Trade Receivables Receivables are carried at original invoice amount. No provision for doubtful accounts has been made as of December 31, 2004 and 2003, as management considers all amounts fully collectible. A receivable is considered to be past due if any portion of the receivable balance is outstanding for more than 90 days. Receivables are written off when deemed uncollectible. Depreciation Property and equipment are stated at cost. Depreciation is provided on the straight-line method for financial statement purposes and accelerated methods for tax purposes. Repairs and maintenance are expensed as incurred. The cost of leasehold improvements are amortized over the terms of the leases or their useful lives, if shorter. The estimated useful lives of the assets are as follows: Equipment 5 to 7 years Furniture and Fixtures 7 years Leasehold Improvements 4 years Income Taxes As of January 1, 2004, each entity within the Company has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Accordingly, the stockholders will be taxed on their proportionate share of each entity's taxable income. As a result of this change, no provision or liability for federal or state income taxes has been provided for in the combined financial statements for the year ended December 31, 2004. Prior to 2004, the Company accounted for income taxes in accordance with Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which required the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences related primarily to depreciation. Deferred tax assets and liabilities represented future tax consequences of those differences, which would either be taxable or deductible when assets and liabilities were recovered or settled. Deferred taxes were also recognized for operating losses that were available to offset future taxable income. As a result of changing to Subchapter S status, any potential deferred assets or liabilities due to timing differences have been effectively eliminated as of December 31, 2003. For the year ended December 31, 2003, the taxes on income consist of the following: Current: Federal $17,206 State 3,710 --------- 20,916 --------- Deferred: Federal 2,302 State 1,536 --------- 3,838 --------- Total Taxes on Income $24,754 --------- Major Customers For the years ended December 31, 2004 and 2003, approximately 46% and 30%, respectively, of the Company's revenues were generated from services rendered to thirty-two individual markets (each market representing a separate customer) of one overall franchiser. Approximately 42% and 60% of the trade receivables as of December 31, 2004 and 2003, respectively, were from these same customers. Variable Interest Entities In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46). FIN 46 requires companies with a variable interest in a variable interest entity to apply this guidance immediately to variable interest entities created after December 31, 2003, and in the first year or interim period beginning after December 15, 2004 to variable interest entities in which an enterprise holds a variable interest that it acquired before January 1, 2004. The application of the guidance could result in the consolidation of a variable interest entity. The only potential variable interest entity with which the Company is associated is the lessor of the office space as disclosed in Note J. The Company is evaluating whether the lessor is a variable interest entity, whether the Company is the primary beneficiary and, if so, the impact of this interpretation on financial position and results of operations. The Company believes the fair market value of the office building is no less than the related debt of approximately $489,852 as of December 31, 2004. Unbilled Revenue Unbilled revenue represents revenue which has been earned and recognized, but has not yet been billed by the Company. NOTE C - CASH Substantially all of the Company's cash is held at one financial institution. Cash deposits held by the bank exceeded FDIC-insured limits by $215,311 as of December 31, 2004. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash. NOTE D - PREPAID EXPENSES Prepaid expense consists of $13,575 and $11,423 of prepaid insurance for the years ended December 31, 2004 and 2003, respectively. NOTE E - MARKETABLE SECURITIES The Company is the owner of 251 shares of Prudential Financial, Inc. common stock. The stock is classified as available-for-sale and is reported at its fair value in the accompanying combined financial statements. The Company received the stock as a result of the demutualization of the insurance Company and took a basis in the asset of $7,681. The gross unrealized gain as of December 31, 2004 and 2003 amounted to $6,114 and $2,803, respectively. NOTE F - CASH VALUE OF LIFE INSURANCE The Company is the beneficiary of $1,500,000 in life insurance policies on the three stockholders, $250,000 in a term policy, and $1,250,000 in whole life policies as shown below. The increase in the cash value of the whole life policies has been offset against the premiums paid during the year. Face Amount Cash Value 2004 2003 A. President $250,000 $16,557 $10,661 B. Vice President 500,000 22,729 12,640 C. CEO 500,000 28,796 16,459 $68,082 $39,760 Proceeds from the insurance polices would be used to fund buy/sell agreements between the stockholders and the Company (Note N). NOTE G - Equipment Leases The Company entered into a lease for a copy machine during the year ended December 31, 2004. This lease included a bargain purchase option of $1.00. The value of this capital lease and the corresponding accumulated depreciation is included in the total of property, plant and equipment on the balance sheet. The capitalized value and accumulated depreciation as of December 31, 2004 is $21,154 and $3,526, respectively. The following is a schedule by year of future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of December 31, 200 Year Ending December 31: 2005 $5,589 2006 5,589 2007 5,589 2008 5,589 2009 932 Total minimum lease payments 23,288 Less imputed interest 4,875 Present Value of Net Minimum Lease Payments $18,413 The Company leased a copy machine under an operating lease during 2003 and for a portion of the year during 2004. Rental expense for this equipment was $21,533 and $20,882 for the years ended December 31, 2004 and 2003, respectively. NOTE H - LINE OF CREDIT MarketSmart has a line of credit with SouthTrust Bank of up to $600,000, not to exceed 75% of MarketSmart's accounts receivable less than sixty days past due. Interest accrues at a rate of .5% below the bank base rate. The interest rate as of December 31, 2004 was 4.75%. The note, which matures on May 16, 2005, is reviewed and renewable annually. The Company expects to renew the note during 2005. The note is secured by valid perfected security interests in all accounts receivable of MarketSmart and is personally guaranteed by the three stockholders. Interest on this note for the years ended December 31, 2004 and 2003 amounted to $14,882 and $11,557, respectively. RightStuff maintains a credit line with Bank of America for an amount of up to $50,000 with an interest rate of prime plus 1.25%. This credit line is personally guaranteed by the three stockholders. This credit line was not used during 2004. NOTE I - ACCRUED EXPENSES Accrued expenses consist of the following as of December 31, 2004 and 2003: 2004 2003 Accrued wages and vacation $20,780 $ 13,086 Accrued interest 1,052 934 Accrued professional fees 23,550 - Other current liabilities 6,901 15,212 Total Accrued Expenses and Other Current Liabilities $52,283 $ 29,232 NOTE J - RELATED PARTY TRANSACTIONS The Company leases its office space from TLC Properties of NC, LLC (TLC) - a North Carolina limited liability company, owned equally by the three stockholders of the Company. A ten-year lease was entered into on January 1, 2000, at a rate of $6,000 per month. In November 2002, the lease was rewritten and restated to reflect the increased office space occupied by the Company and the corresponding change in rent to $9,000, as well as a change in the lease term through November 2006. Rent expense for the years ended December 31, 2004 and 2003 was $109,404 and $108,000, respectively. The future minimum annual rents are due as follows: Year Ending December 31: 2005 $108,000 2006 99,000 --------- $207,000 NOTE K - STOCKHOLDERS' EQUITY MarketSmart Advertising, Inc. has 1,000 shares of common stock authorized, and 1,000 shares issued and outstanding of no par value common stock. RightStuff, Inc. has 100,000 shares of common stock authorized, and 1,000 shares issued and outstanding of $1 par value common stock. CheckUp Marketing, Inc. has 100,000 shares of common stock authorized, and 10 shares issued and outstanding of $100 par value common stock. On September 30, 2003, the stockholders of WordSmith Communications, Inc. (WordSmith) authorized its dissolution, effective on December 31, 2003. WordSmith was a company commonly controlled and managed by the stockholders of the Company. Its stock was repurchased for $17,454. The services previously provided by WordSmith are now being offered through MarketSmart. Results of WordSmith are included in these combined financial statements through its dissolution on December 31, 2003. NOTE L - RETIREMENT PLAN The Company provides a 401(k) retirement plan to all employees who are at least 21 years of age with one completed month of service. Plan entry dates are January 1st, April 1st, July 1st and September 1st. The Company matches dollar-for-dollar the employees' deferral contributions up to 3% of pay, plus 50% of salary deferral contributions from 3% to 5% of pay for the period. The Company's retirement plan contributions for the years ended December 31, 2004 and 2003 were $44,235 and $52,940, respectively. NOTE M - SUBSEQUENT EVENT On or about November 17, 2004, the Company entered into a letter of intent with CGI Holding Corporation (CGI) for the purchase of the Company by CGI. The Company completed this transaction on January 14, 2005 with an effective date of January 1, 2005. NOTE N - COMMITMENTS AND CONTINGENCIES The Company is committed under buy/sell agreements with its stockholders to purchase each stockholder's common stock upon the death of a stockholder, based upon the book value of the Company. The Company expects that the proceeds from the life insurance policies (Note F) will be sufficient to cover any such purchases. NOTE O - RECLASSIFICATION For comparability, the 2003 financial statements reflect reclassifications where appropriate to conform to the combined financial statement presentation used in 2004. (b) PRO FORMA FINANCIAL INFORMATION. CGI HOLDING CORPORATION, INC. CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2004 Pro Forma Total CGI MarketSmart Adjustments ---------- ----------- ------------ ---------- SALES 21,473,565 8,821,067 30,294,632 COST OF SALES 4,057,843 5,885,202 9,943,045 ---------- ----------- ------------ ---------- GROSS PROFIT 17,415,722 2,935,865 20,351,587 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 12,691,946 1,768,122 A 370,000 14,830,068 ---------- ----------- ------------ ---------- INCOME FROM OPERATIONS 4,723,776 1,167,743 (370,000) 5,521,519 ---------- ----------- ------------ ---------- OTHER INCOME (EXPENSES) Other Income(Expense) 24,862 - 24,862 Interest Income 22,163 - 22,163 Interest Expense (44,602) (15,750) (60,352) ---------- ----------- ------------ ---------- TOTAL OTHER INCOME (EXPENSE) 2,423 (15,750) - (13,327) ---------- ----------- ------------ ---------- INCOME BEFORE INCOME TAX PROVISION 4,726,199 1,151,993 (370,000) 5,508,192 PROVISION FOR INCOME TAXES 1,786,233 - B 302,006 2,088,239 ---------- ----------- ------------ ---------- NET INCOME 2,939,966 1,151,993 (672,006) 3,419,953 Other Comprehensive Income - 3,311 3,311 ---------- ----------- ------------ ---------- NET INCOME 2,939,966 1,155,304 (672,006) 3,423,264 ========== =========== ============ ========== Net Income per common share Basic $0.14 ============ Fully Diluted $0.11 ============ WEIGHTED AVERAGE COMMON SHARES Basic 25,332,967 ============ Fully Diluted 31,264,304 ============ PRO FORMA ADJUSTMENTS Note A - Intangible Asset Amortization This adjustment reflects the amount of amortization that would have been recognized from the acquired intangible assets during the period reflected. Note B - Income Tax Adjustment This adjustment reflects the estimated combined income tax affect that would have been recognized using applicable state and federal tax rates in effect during the periods presented. CGI HOLDING CORPORATION, INC. CONSOLIDATED PRO FORMA BALANCE SHEET DECEMBER 31, 2004
Market Pro Forma Total CGI Smart Adjustments ----------- ---------- ---------- ----------- CURRENT ASSETS Cash 17,160,520 472,723 (3,000,000) 14,633,243 Restricted Cash 427,153 - 427,153 Accounts Receivable 1,975,356 1,090,885 3,066,241 Unbilled Revenue 2,659,303 234,735 2,894,038 Allowance for Bad Debts (220,710) - (220,710) Other Current Assets 906,980 27,370 934,350 Deferred Tax Asset 147,840 - 147,840 ----------- ---------- ---------- ----------- Total Current Assets 23,056,442 1,825,713 (3,000,000) 21,882,155 NET PROPERTY AND EQUIPMENT 1,307,398 184,807 (101,967) 1,390,238 ----------- ---------- ---------- ----------- OTHER ASSETS Deferred Tax Asset 700,626 - 700,626 Intangible Assets 1,100,626 - 3,015,000 4,115,626 Goodwill 7,717,068 - 3,645,223 11,362,291 Other Assets 251,132 68,082 319,214 ----------- ---------- ---------- ----------- TOTAL OTHER ASSETS 9,769,452 68,082 6,660,223 16,497,757 ----------- ---------- ---------- ----------- TOTAL ASSETS 34,133,292 2,078,602 3,558,256 39,770,150 =========== ========== ========== =========== CURRENT LIABILITIES Current Portion of Long Term Debt 571,773 3,654 575,427 Notes Payable-Line of Credit - 288,720 288,720 Accounts Payable 706,467 527,442 1,233,909 Accrued Income Taxes 547,104 - 547,104 Deferred Revenue 933,370 - 933,370 Accrued Liabilities 1,111,107 52,283 1,163,390 ----------- ---------- ---------- ----------- TOTAL CURRENT LIABILITIES 3,869,821 872,099 - 4,741,920 TOTAL LONG TERM LIABILITIES 974,297 14,759 - 989,056 ----------- ---------- ---------- ----------- STOCKHOLDERS' EQUITY Preferred Stock, $0.001 par value, 5,000,000 shares authorized; no shares issued or outstanding - - Common Stock, $0.001 par value, 100,000,000 shares authorized, 25,490,936 shares issued and 22,990,936 outstanding 33,984 3,000 (2,000) 34,984 Stock Subscriptions (2,000) 2,000 - Additional Paid In Capital 30,658,266 4,749,000 35,407,266 Retained Earnings (863,076) 1,184,630 (1,184,630) (863,076) Accumulated Other Comprehensive Income 6,114 (6,114) - Treasury Stock (540,000) (540,000) ----------- ---------- ---------- ----------- TOTAL STOCKHOLDERS' EQUITY 29,289,174 1,191,744 3,558,256 34,039,174 ----------- ---------- ---------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 34,133,292 2,078,602 3,558,256 39,770,150 =========== ========== ========== ===========