EX-99.3 4 a05-11990_1ex99d3.htm EX-99.3

Exhibit 99.3

 

Unaudited Combined Pro Forma Financial Data

 

The following unaudited pro forma combined financial information has been prepared to give effect to the acquisition of PrimaryAds Inc. by CGI Holding Corporation.  The transaction is being accounted for as a purchase business combination.

 

On April 22, 2005, CGI Holding Corporation completed the acquisition of PrimaryAds Inc. for an initial purchase price of $9.95 million. In addition, acquisition-related closing expenses of approximately $75,000 were incurred.

 

The acquisition has been accounted for using purchase price accounting in accordance with Financial Accounting Standard No. 141 — Business Combinations. The unaudited pro forma combined statement of financial position as of March 31, 2005 gives effect to the acquisition as if the acquisition had occurred on that date. The unaudited pro forma combined balance sheet includes the balance sheets of CGI Holding Corporation and PrimaryAds Inc. as of March 31, 2005.

 

The unaudited pro forma combined statements of income for the year ended December 31, 2004 and for the three months ended March 31, 2005 give effect to the acquisition as if the acquisition had occurred on January 1, 2004. The unaudited pro forma combined statements of income presented for the year ended December 31, 2004 and for the three months ended March 31, 2005 include historical financial results of CGI Holding Corporation and PrimaryAds Inc. for the year ended December 31, 2004 and for the three months ended March 31, 2005. Any savings or additional costs, which may be realized through the integration of the operations have not been estimated or included in the unaudited pro forma combined statements of income.

 

The unaudited pro forma financial information includes the adjustments that have a continuing impact to the combined company to reflect the transaction using purchase accounting. The pro forma adjustments are described in the notes to the unaudited pro forma financial information.  The adjustments are based upon preliminary information and certain management judgments and estimates. The purchase accounting adjustments are subject to revisions, which will be reflected in future periods. Revisions, if any, are not expected to have a material effect on the statement of income or financial position of CGI Holding Corporation.

 

The unaudited pro forma financial information and accompanying notes are presented for illustrative purposes only and do not purport to be indicative of, and should not be relied upon as indicative of, the financial position or operating results that may occur in the future or that would have occurred if the acquisition had been consummated on January 1, 2004 or March 31, 2005, as applicable. The unaudited pro forma financial information should be read in conjunction with:

 


 

(1) CGI Holding Corporation’s consolidated financial statements and notes thereto and management’s discussion and analysis for the year ended December 31, 2004 filed as part of CGI Holding Corporation’s Annual Report on Form 10-KSB

 

(2) CGI Holding Corporation’s consolidated financial statements and notes thereto and management’s discussion and analysis for the three months ended March 31, 2005 filed as part of CGI Holding Corporation’s Quarterly Report on Form l0-QSB.

 

(3) PrimaryAds Inc.’s audited financial statements and notes thereto as of and for the years ended December 31, 2004 and 2003, included as Exhibit 99.1 of this Form 8-K/A.

 

(4) PrimaryAds Inc.’s unaudited financial statements and notes thereto as of March 31, 2005 and for the three months ended March 31, 2005 and 2004, included as Exhibit 99.2 of this Form 8-K/A.

 

(5) CGI Holding Corporation’s Current Report on Form 8-K previously filed on April 27, 2005.

 


 

CGI Holding Corporation

Combined Pro Forma Balance Sheet (Unaudited)

March 31, 2005

 

 

 

CGI

 

PrimaryAds

 

Pro Forma
Adjustments

 

Total

 

Current Assets

 

 

 

 

 

 

 

 

 

Cash

 

$

10,664,207

 

$

1,288,491

 

(9,950,000

)(1)

$

2,002,698

 

Restricted Cash

 

605,002

 

 

 

 

 

605,002

 

Accounts Receivable

 

3,647,973

 

865,084

 

 

 

4,513,057

 

Unbilled Revenue

 

3,646,931

 

 

 

 

 

3,646,931

 

Allowance for Doubtful accounts

 

(282,751

)

 

 

 

 

(282,751

)

Notes Receivable from Related Party

 

280,175

 

 

 

 

 

280,175

 

Other Current Assets

 

1,132,114

 

 

 

 

 

1,132,114

 

Deferred Tax Asset

 

147,840

 

 

 

 

 

147,840

 

Total Current Assets

 

19,841,491

 

2,153,575

 

(9,950,000

)

12,045,066

 

 

 

 

 

 

 

 

 

 

 

Net Property and Equipment

 

1,769,604

 

1,256

 

 

 

1,770,860

 

 

 

 

 

 

 

 

 

 

 

Other Assets

 

 

 

 

 

 

 

 

 

Deferred Tax Asset

 

724,586

 

 

 

 

 

724,586

 

Intangible Assets (Prior CGI Goodwill - $17,076,173)

 

22,765,933

 

21,397

 

8,957,021

(2)

31,744,351

 

Other Assets

 

369,759

 

 

 

 

 

369,759

 

Total Other Assets

 

23,860,278

 

21,397

 

 

 

32,838,696

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

45,471,373

 

$

2,176,228

 

(1,067,979

)

$

46,654,622

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

Current Portion of long term debt

 

$

666,509

 

$

—

 

 

 

$

666,509

 

Accounts Payable

 

1,303,065

 

1,053,260

 

75,000

(3)

2,431,325

 

Accrued Income Taxes

 

788,837

 

37,410

 

 

 

826,247

 

Deferred Revenue

 

1,885,523

 

17,579

 

 

 

1,903,102

 

Other Current Liabilities

 

1,668,334

 

 

 

 

 

1,668,334

 

Total Current Liabilities

 

6,312,268

 

1,108,249

 

 

 

7,495,517

 

 

 

 

 

 

 

 

 

 

 

Long Term Liabilities

 

2,202,306

 

—

 

 

 

2,202,306

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

 

Preferred Stock

 

—

 

 

 

 

 

 

 

Common Stock

 

35,823

 

10,000

 

(10,000

)

35,823

 

Additional Paid in Capital

 

37,444,462

 

3,679

 

(3,679

)

37,444,462

 

Retained Earnings

 

16,514

 

1,054,300

 

(1,054,300

)

16,514

 

Treasury Stock

 

(540,000

)

 

 

 

 

(540,000

)

Total Stockholders’ Equity

 

36,956,799

 

1,067,979

 

(1,067,979

)

36,956,799

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Equity

 

$

45,471,373

 

$

2,176,228

 

(1,067,979

)

$

46,654,622

 

 

See Notes to Unaudited Pro Forma Combined Financial Statements.

 


 

CGI Holding Corporation

Combined Pro Forma Statement of Income (Unaudited)

For the Three Months Ended March 31, 2005

 

 

 

CGI

 

PrimaryAds

 

Pro Forma
Adjustments

 

Total

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

10,179,156

 

$

5,312,820

 

 

 

$

15,491,976

 

Cost Of Sales

 

3,226,144

 

4,176,718

 

 

 

7,402,862

 

Gross Profit

 

6,953,012

 

1,136,102

 

 

 

8,089,114

 

Selling, General and Administrative

 

5,571,754

 

202,044

 

$

60,000

(4)

5,833,798

 

Income from operations

 

1,381,258

 

934,058

 

(60,000

)

2,255,316

 

Other Income(Expense)

 

43,562

 

—

 

 

 

43,562

 

Income before income tax provision

 

1,424,820

 

934,058

 

(60,000

)

2,298,878

 

Income Tax Provision

 

545,230

 

12,423

 

362,734

(5)

920,387

 

Net Income

 

$

879,590

 

$

921,635

 

$

(422,734

)

$

1,378,491

 

 

 

 

 

 

 

 

 

 

 

Net Income Per Common Share

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

$

0.04

 

Fully Diluted

 

 

 

 

 

 

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

32,672,371

 

Fully Diluted

 

 

 

 

 

 

 

39,390,940

 

 

See Notes to Unaudited Pro Forma Combined Financial Statements.

 


 

CGI Holding Corporation

Combined Pro Forma Statement of Income (Unaudited)

For the Twelve Months Ended December 31, 2004

 

 

 

CGI

 

PrimaryAds

 

Pro Forma
Adjustments

 

Total

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

21,473,565

 

$

12,591,072

 

 

 

$

34,064,637

 

Cost Of Sales

 

4,057,843

 

9,426,961

 

 

 

13,484,804

 

Gross Profit

 

17,415,722

 

3,164,111

 

 

 

20,579,833

 

Selling, General and Administrative

 

12,691,946

 

1,246,189

 

$

240,000

(4)

14,178,135

 

Income from operations

 

4,723,776

 

1,917,922

 

(240,000

)

6,401,698

 

Other Income(Expense)

 

2,423

 

—

 

 

 

2,423

 

Income before income tax provision

 

4,726,199

 

1,917,922

 

(240,000

)

6,404,121

 

Income Tax Provision

 

1,786,233

 

25,237

 

696,338

(5)

2,507,808

 

Net Income

 

$

2,939,966

 

$

1,892,685

 

($936,338

)

$

3,896,313

 

 

 

 

 

 

 

 

 

 

 

Net Income Per Common Share

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

$

0.16

 

Fully Diluted

 

 

 

 

 

 

 

$

0.13

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

24,332,967

 

Fully Diluted

 

 

 

 

 

 

 

30,264,304

 

 

See Notes to Unaudited Pro Forma Combined Financial Statements.

 

Notes to Unaudited Pro Forma Combined Financial Information

 

Note (1) – This adjustment represents the amount of cash paid at closing per the acquisition agreement.

 

Note (2) – This adjustment represents the intangible assets obtained from the acquisition.  The valuation of the intangibles is currently being performed by an independent valuation firm.

 

Note (3) – This represents accruals for costs associated with the acquisition.

 

Note (4) - This adjustment reflects the estimated amount of amortization that would have been recognized from the acquired intangible assets during the period reflected.

 

Note (5) - This adjustment reflects the estimated combined income tax effect that would have been recognized using applicable state and federal tax rates in effect during the periods presented.