-----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, F+EIiVNRE60sG+Teyge7G6qh2eaarYu7gzdmLC/hmGbzNySL2m9ulavBnLglzTNs xiRKFhD+v2UjYBuCIvAIxA== /in/edgar/work/0000891618-00-005027/0000891618-00-005027.txt : 20001114 0000891618-00-005027.hdr.sgml : 20001114 ACCESSION NUMBER: 0000891618-00-005027 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000830 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MANAGEMENT NETWORK GROUP INC CENTRAL INDEX KEY: 0001094814 STANDARD INDUSTRIAL CLASSIFICATION: [8742 ] IRS NUMBER: 481129619 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-27617 FILM NUMBER: 762058 BUSINESS ADDRESS: STREET 1: 7300 COLLEGE BLVD., STE 302 CITY: OVERLAND PARK STATE: KS ZIP: 66210 BUSINESS PHONE: 9133459315 MAIL ADDRESS: STREET 1: 7300 COLLEGE BLVD., STE 302 CITY: OVERLAND PARK STATE: KS ZIP: 66210 8-K/A 1 f669448ke8-ka.txt FORM 8-K/A 1 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): August 30, 2000 Commission File Number: THE MANAGEMENT NETWORK GROUP, INC. (Exact name of Registrant as specified in its charter)
DELAWARE 48-1129619 ------- ---------- State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
7300 COLLEGE BLVD., SUITE 302, OVERLAND PARK, KS 66210 --------------------------------------------------- (Address of principal executive offices) (Zip Code) 913-345-9315 -------------------------------------------------- Registrant's telephone number, including area code NOT APPLICABLE -------------- (Former name, former address and former fiscal year, if changed since last report.) This Form 8-K/A amends Registrant's previously filed Current Report on Form 8-K dated September 14, 2000. ------------------------- 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. The Management Network Group, Inc., (the "Company" or "TMNG") a Delaware corporation, hereby amends its Current Report on Form 8-K previously filed with the Securities and Exchange Commission on September 14, 2000, relating to the Company's acquisition of The Weathersby Group, Inc. ("TWG"), a Maryland corporation, on September 5, 2000, by means of TMNG acquiring all of the issued and outstanding stock of TWG in exchange for cash and Company stock. This Form 8-K/A includes the financial statements and pro forma financial information which had been omitted from the previously filed document as permitted by Item 7(a)(4) of Form 8-K. The financial statements and pro forma financial information are filed herewith. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. See Exhibit 99.1 and 99.2 for audited annual financial statements and unaudited interim financial statements of TWG. (b) PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) The following unaudited pro forma condensed combined financial statements, including the notes thereto, is qualified in its entirety by reference to, and should be read in conjunction with, the historical financial statements and notes thereto for the fiscal year ended January 1, 2000 of TMNG, and the historical financial statements and notes thereto of TWG for the year ended December 31, 1999, included as exhibits herein. The following unaudited pro forma condensed combined financial statements give effect to the Company's acquisition of TWG for $11.2 million in cash and $8.0 million in TMNG common stock in exchange for all the stock of TWG. This acquisition was recorded under the purchase method of accounting. The unaudited pro forma condensed combined statement of operations gives effect to the merger, assuming that the acquisition had occurred as of January 3, 1999. The unaudited pro forma condensed combined balance sheet as of July 1, 2000 gives effect to the acquisition transaction as if it had occurred on that date. The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the mergers had been consummated at the beginning of the periods presented, nor is it necessarily indicative of future operating results or financial position. (c) EXHIBITS The following Exhibits are filed as part of this report: 99.1 Financial Statements for The Weathersby Group, Inc. 2 3 THE MANAGEMENT NETWORK GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF JULY 1, 2000 (in thousands)
Pro forma Pro forma TMNG TWG Adjustments Combined Current Assets: Cash and cash equivalents ....................... $ 53,809 $ 792 $ (11,844)(1) $ 42,757 Receivables: Accounts receivable ............................ 12,523 1,845 14,368 Accounts receivable - unbilled ................. 7,539 1,289 8,828 --------- --------- --------- --------- 20,062 3,134 23,196 Less: Allowance for doubtful accounts ......... (625) (61) (686) --------- --------- --------- --------- 19,437 3,073 22,510 Other assets .................................... 1,265 (39)(2) 1,226 --------- --------- --------- --------- Total current assets ........................ 74,511 3,865 (11,883) 66,493 Property and Equipment, net ...................... 784 88 872 Deferred Tax Asset ............................... 3,331 3,331 Goodwill ......................................... 18,724 (3) 18,724 Other assets ..................................... 57 57 --------- --------- --------- --------- Total Assets ................................ $ 78,626 $ 4,010 $ 6,841 $ 89,477 ========= ========= ========= ========= Current Liabilities: Trade accounts payable .......................... $ 1,157 $ 1,788 $ 2,945 Accrued payroll, bonuses and related expenses ... 3,497 150 3,647 Other accrued liabilities ....................... 1,184 67 $ 846 (4) 2,097 Income taxes payable ............................ 134 134 --------- --------- --------- --------- Total current liabilities ................... 5,972 2,005 846 8,823 Stockholders' Equity (Deficiency in Assets) Common stock Voting - $.001 par value, 100,000,000 shares authorized; 27,417,370 and 27,496,444 issued and outstanding on January 1, 2000 and July 1, 2000, respectively .................. 27 1 (1)(5) 27 Preferred stock Additional paid-in capital ...................... 106,540 8,000 (6) 114,540 (Accumulated deficit) Retained earnings.......... (28,207) 2,004 (2,004)(7) (28,207) Accumulated other comprehensive income - Foreign currency translation adjustment .................................... (47) (47) Unearned compensation ........................... (5,659) (5,659) --------- --------- --------- --------- Total stockholders' equity (deficiency in assets) .................................... 72,654 2,005 5,995 80,654 --------- --------- --------- --------- Total Liabilities and Stockholders' Equity (Deficiency in Assets) .......................... $ 78,626 $ 4,010 $ 6,841 $ 89,477 ========= ========= ========= =========
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements. 3 4 THE MANAGEMENT NETWORK GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS YEAR ENDED JANUARY 1, 2000 (in thousands, except per share amounts)
Pro forma Pro forma TMNG TWG Adjustments Combined Revenues ............................... $ 50,322 $ 11,122 $ 61,444 Cost of Services: Direct cost of services ............... 26,109 7,937 34,046 Equity related charges ................ 2,780 2,780 ------------ ------------ ------------ ------------ Total cost of services ............. 28,889 7,937 36,826 ------------ ------------ ------------ ------------ Gross Profit ........................... 21,433 3,185 24,618 Operating Expenses: Selling, general and administrative ... 9,777 2,394 $ 1,872 (8) 14,043 Equity related charges ................ 1,998 1,998 ------------ ------------ ------------ ------------ Total operating expenses ........... 11,775 2,394 1,872 16,041 ------------ ------------ ------------ ------------ Income (Loss) from Operations .......... 9,658 791 (1,872) 8,577 Other Income (Expense): Interest income ...................... 277 6 283 Interest expense ..................... (1,998) (1,998) Other, net ........................... (68) (68) ------------ ------------ ------------ ------------ Total other expense ................ (1,789) 6 (1,783) ------------ ------------ ------------ ------------ Income Before Provision for Income Taxes and Extraordinary Item ......... 7,869 797 (1,872) 6,794 Provision for Income Taxes ............. (3,208) 430 (9) (2,778) ------------ ------------ ------------ ------------ Income Before Extraordinary Item ....... $ 4,661 $ 797 $ (1,442) $ 4,016 ============ ============ ============ ============ Income Before Extraordinary Item Per Common Share Basic ............................... $ 0.20 $ 0.17 ============ ============ ============ ============ Diluted ............................. $ 0.20 $ 0.17 ============ ============ ============ ============ Shares Used in Calculation of Income Before Extraordinary Item Per Common Share Basic ............................... 23,056,283 23,404,440(10) ============ ============ ============ ============ Diluted ............................. 23,807,010 24,155,167(10) ============ ============ ============ ============
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements. 4 5 THE MANAGEMENT NETWORK GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS SIX MONTHS ENDED JULY 1, 2000 (in thousands, except per share amounts)
Pro forma Pro forma TMNG TWG Adjustments Combined Revenues .................................. $ 35,866 $ 7,245 $ 43,111 Cost of Services: Direct cost of services .................. 18,638 5,089 23,727 Equity related charges ................... 3,917 3,917 ------------ ------------ ------------ ------------ Total cost of services .................... 22,555 5,089 27,644 ------------ ------------ ------------ ------------ Gross Profit .............................. 13,311 2,156 15,467 Operating Expenses: Selling, general and administrative ...... 7,448 1,554 $ 936 (8) 9,938 Equity related charges ................... 810 810 ------------ ------------ ------------ ------------ Total operating expenses ................ 8,258 1,554 936 10,748 ------------ ------------ ------------ ------------ Income from Operations .................... 5,053 602 (936) 4,719 Other Income (Expense): Interest income .......................... 1,626 5 1,631 Interest expense ......................... (3) (3) Other, net ............................... (124) 14 (110) ------------ ------------ ------------ ------------ Total other income ...................... 1,499 19 1,518 ------------ ------------ ------------ ------------ Income Before Provision for Income Taxes .. 6,552 621 (936) 6,237 Provision for Income taxes ............... (2,621) 126 (9) (2,495) ------------ ------------ ------------ ------------ Net Income ................................ 3,931 621 (810) 3,742 Other Comprehensive Income Foreign currency translation adjustment .. (45) (45) ------------ ------------ ------------ ------------ Comprehensive Income ...................... $ 3,886 $ 621 $ (810) $ 3,697 ============ ============ ============ ============ Net Income Per Common Share Basic .................................... $ 0.14 $ 0.13 ============ ============ ============ ============ Diluted .................................. $ 0.14 $ 0.13 ============ ============ ============ ============ Shares Used in Calculation of Net Income Per Common Share Basic .................................... 27,442,603 27,790,760(10) ============ ============ ============ ============ Diluted .................................. 28,664,458 29,012,615(10) ============ ============ ============ ============
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements. 5 6 THE MANAGEMENT NETWORK GROUP, INC. NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION On September 5, 2000, The Management Network Group, Inc. purchased The Weathersby Group, Inc. a privately-owned marketing management consulting company. The purchase price at closing consisted of 348,157 shares of common stock valued at $8.0 million and cash payments totaling $11.2 million. Earnout provisions could provide for additional consideration up to $9.0 million, consisting of up to $2.5 million cash consideration and up to $6.5 million stock consideration, contingent on TWG achieving certain performance targets in 2001. Consideration will be paid-out if the above performance targets are met on March 31, 2002. The transaction has been accounted for as a purchase with the majority of the purchase price being allocated to goodwill. The preliminary allocation of the purchase price is summarized below (in thousands): Net assets acquired $ 2,005 Goodwill 17,186 -------- Purchase price $ 19,191 ========
The fair value of the net assets acquired was based on preliminary estimates and is subject to further refinement. The purchase price is subject to further refinement based on finalization of direct incremental costs incurred in the acquisition. The amount attributable to goodwill will be amortized over its estimated useful life of ten years. 2. PRO FORMA ADJUSTMENTS (1) To reflect the adjustments to cash for purchase price ($11,191) and final distribution to TWG shareholder ($653) as part of purchase agreement (2) To reflect certain prepaid direct acquisition costs included in other assets as of July 1, 2000 to goodwill (3) To record goodwill on purchase in amount equal to excess of the preliminary purchase price over the preliminary allocation of the fair value of the net assets acquired ($17,186), purchase costs incurred ($885)during acquisition, and final distribution to the TWG shareholder ($653) as part of purchase agreement. (4) To record accrual at July 1, 2000 for acquisition costs incurred by TMNG during the period July 2, 2000 through September 30, 2000. (5) To reflect elimination of TWG common stock (6) To reflect stock consideration ($8,000) to TWG shareholder as part of the purchase price (7) To reflect elimination of TWG retained earnings ($2,004). (8) To reflect the period's amortization of goodwill (9) To record provision for taxes on TWG's pretax accounting income for the period and the period's amortization of goodwill. The proforma adjustments assume the tax status of TWG changes from an "S" to a "C" corporation at the date of the proforma acquisition (10) To reflect adjustment to shares used in calculation of basic and diluted earnings per share for stock consideration (348,157 shares) to TWG shareholder as part of purchase transaction 6 7 SIGNATURE 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, thereunto duly authorized. THE MANAGEMENT NETWORK GROUP, INC. a Delaware corporation Dated: November 13, 2000 By: /s/ Donald E. Klumb -------------------------------- Donald E. Klumb Executive Vice President and Chief Financial Officer 7 8 EXHIBIT INDEX 99.1 Audited Financial Statements for The Weathersby Group, Inc. for The Year Ended December 31, 1999 and Independent Auditors' Report. 99.2 Unaudited Interim Financial Statements for The Weathersby Group, Inc. for The Period Ended June 30, 2000. EX-99.1 OTHERDOC 8 EX-99.1 2 f669448kex99-1.txt EXHIBIT 99.1 1 EXHIBIT 99.1 THE WEATHERSBY GROUP, INC. FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999, AND INDEPENDENT AUDITORS' REPORT 2 THE WEATHERSBY GROUP, INC. TABLE OF CONTENTS - --------------------------------------------------------------------------------
PAGE INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999: Balance Sheet 2 Statement of Income 3 Statement of Shareholder's Equity 4 Statement of Cash Flows 5 Notes to Financial Statements 6-8
3 INDEPENDENT AUDITORS' REPORT To the Board of Directors of The Weathersby Group, Inc. Bethesda, MD We have audited the accompanying balance sheet of The Weathersby Group, Inc. (the Company) as of December 31, 1999, and the related statement of income, shareholder's equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 audit provides a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 1999, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP Kansas City, Missouri June 8, 2000 4 THE WEATHERSBY GROUP, INC. BALANCE SHEET DECEMBER 31, 1999 - --------------------------------------------------------------------------------
ASSETS CURRENT ASSETS: Cash and cash equivalents .................. $ 359,388 Accounts receivable ........................ 2,389,072 ---------- Total current assets ..... 2,748,460 PROPERTY AND EQUIPMENT - Net ................... 67,748 OTHER ASSETS ................................... 15,980 ---------- TOTAL ASSETS ................................... $2,832,188 ========== LIABILITIES AND SHAREHOLDER'S EQUITY CURRENT LIABILITIES: Trade accounts payable ..................... $ 783,437 Accrued expenses ........................... 567,914 Deferred revenue ........................... 80,583 ---------- Total current liabilities 1,431,934 ---------- SHAREHOLDER'S EQUITY Common stock; $.01 par value; 10,000 shares authorized; 100 outstanding ......... 1 Additional paid-in-capital ................. 999 Retained earnings .......................... 1,399,254 ---------- Total shareholder's equity 1,400,254 ---------- TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY ..... $2,832,188 ==========
See notes to financial statements. 2 5 THE WEATHERSBY GROUP, INC. STATEMENT OF INCOME YEAR ENDED DECEMBER 31, 1999 - -------------------------------------------------------------------------------- SERVICE REVENUES ............................. $11,121,562 OPERATING EXPENSES: Cost of services ......................... 7,936,847 Selling, general, and administrative ..... 2,393,383 ----------- Total operating expenses ......... 10,330,230 ----------- INCOME FROM OPERATIONS ....................... 791,332 OTHER INCOME: Interest income .......................... 5,891 ----------- NET INCOME ................................... $ 797,223 ===========
See notes to financial statements. 3 6 THE WEATHERSBY GROUP, INC. STATEMENT OF SHAREHOLDER'S EQUITY YEAR ENDED DECEMBER 31, 1999 - --------------------------------------------------------------------------------
ADDITIONAL COMMON PAID-IN- RETAINED STOCK CAPITAL EARNINGS TOTAL BALANCE, JANUARY 1, 1999 ..... $ 1 $ 999 $ 602,031 $ 603,031 Net income ............... -- -- 797,223 797,223 ---------- ---------- ---------- ---------- BALANCE, DECEMBER 31, 1999 ... $ 1 $ 999 $1,399,254 $1,400,254 ---------- ---------- ---------- ----------
See notes to financial statements. 4 7 THE WEATHERSBY GROUP, INC. STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1999 - -------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income ................................................ $ 797,223 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation .......................................... 51,057 Changes in: Accounts receivable ............................... (1,133,816) Other assets ...................................... (13,182) Trade accounts payable and accrued expenses ....... 440,832 Deferred revenue .................................. (61,462) ----------- Net cash provided by operating activities 80,652 ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment ..................... (79,637) ----------- Net cash used in investing activities ... (79,637) ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments made on shareholder's loan ....................... (85,841) ----------- Net cash used in financing activities ... (85,841) ----------- NET DECREASE IN CASH .......................................... (84,826) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR .................. 444,214 ----------- CASH AND CASH EQUIVALENTS, END OF YEAR ........................ $ 359,388 ===========
See notes to financial statements. 5 8 THE WEATHERSBY GROUP, INC. NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1999 - -------------------------------------------------------------------------------- 1. ORGANIZATION NATURE OF OPERATIONS - The Weathersby Group, Inc., (the "Company") was formed in 1990 as a marketing management consulting firm specializing in highly competitive, technology-driven industries. Primary services include providing marketing management services to wireless and wireline communications carriers, internet companies, software companies, hardware companies, financial services companies, and energy companies. A majority of the company's revenues come from three primary markets - Washington D.C., Boston, and New York - in addition to serving clients throughout the U.S. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION - The Company enters into time-and-materials contracts with its customers. Under a time-and-materials contract, the customer pays a negotiated hourly rate for all services performed plus expenses incurred. Time-and-materials service revenues and related time-and-materials service costs are recorded in the period in which the service is performed. CASH AND CASH EQUIVALENTS - Cash includes cash on hand, cash in bank, and investments in money market accounts and is stated at cost, which approximates market. PROPERTY AND EQUIPMENT - Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is based on the estimated useful lives of the assets and is computed using the straight-line method. Computer equipment is depreciated over three to five years, and furniture and fixtures are depreciated over five to seven years. Maintenance and repairs are charged to expense as incurred. The cost and accumulated depreciation applicable to assets retired are removed from the accounts and the gain or loss on disposition is recognized in income. DEFERRED REVENUE - Revenues received in advance are deferred and recognized in the period in which services are performed. ADVERTISING COSTS - Advertising costs are expensed as incurred. Advertising expense charged to operations totaled $114,396 for the year ended December 31, 1999. INCOME TAXES - The Company has elected to be treated as a Subchapter S Corporation under the Internal Revenue Code and thus is treated substantially as a partnership for income tax purposes. Accordingly, the individual stockholder is responsible for the corporate taxable income or loss for federal and state income tax reporting purposes. 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 9 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. 3. ACCOUNTS RECEIVABLE Accounts receivable consist of the following: Billed ................................. $ 1,631,788 Unbilled ............................... 757,284 ----------- $ 2,389,072 =========== 4. PROPERTY AND EQUIPMENT Computer equipment ..................... $ 125,483 Furniture and fixtures ................. 111,816 ---------- 237,299 Less: Accumulated depreciation ........ (169,551) ---------- $ 67,748 =========== Depreciation expense was $51,057 for the year ended December 31, 1999. 5. LINE OF CREDIT The Company maintains a revolving credit agreement with a bank that provides for borrowings up to $250,000 at the prime rate (8.50% at December 31, 1999) plus 1%; the Company did not have outstanding borrowings at December 31, 1999. Borrowings under the agreement are collateralized by virtually all of the Company's assets. In addition, the Company's stockholder personally guaranteed any amounts borrowed up to the borrowing limit. 6. EMPLOYEE BENEFIT PLAN The Company has a 401(k) retirement/savings plan for all full time employees. The Company made contributions of $8,427 for the year ended December 31, 1999. 10 7. OPERATING LEASES The Company leases office facilities under noncancelable operating leases expiring at various dates through February 2004. Total rental expense was $132,759 for 1999. As of January 1, 2000, the future minimum payments under operating leases are as follows: 2000 ............................................ $ 133,384 2001 ............................................ 138,271 2002 ............................................ 118,275 2003 ............................................ 109,999 2004 ............................................ 18,642 --------- $ 518,571 =========
8. MAJOR CUSTOMERS AND SIGNIFICANT CONCENTRATIONS OF CREDIT RISK Major customers in terms of significance to the Company's revenues (i.e. in excess of 10% of revenues) for the year ended December 31, 1999 and accounts receivable as of December 31, 1999 are approximately as follows:
ACCOUNTS REVENUES RECEIVABLE ---------- ----------- Customer A ................... $2,181,000 $ 467,000 Customer B ................... 1,422,000 266,000 Customer C ................... 1,149,000 189,000
The Company generally does not require collateral or other security on their accounts receivable. The credit risk on these accounts is controlled through credit approvals, limits and monitoring procedures. 9. RELATED PARTY TRANSACTIONS During the year ended December 31, 1997, the Company borrowed approximately $136,000 from the stockholder. The loan was repaid in installments with the final installment of approximately $86,000 being repaid during the fiscal year 1999. The loan did not bear interest. * * * * * EX-99.2 3 f669448kex99-2.txt EXHIBIT 99.2 1 EXHIBIT 99.2 THE WEATHERSBY GROUP, INC. CONDENSED BALANCE SHEET AS OF JUNE 30, 2000 (in thousands) (unaudited) Current Assets: Cash and cash equivalents $ 792 Receivables: Accounts receivable 1,845 Accounts receivable - unbilled 1,289 ------- 3,134 Loss: Allowance for doubtful accounts (61) ------- 3,073 ------- Total current assets 3,865 Property and Equipment, net 88 Other assets 57 ------- Total Assets $ 4,010 ======= Current Liabilities: Trade accounts payable $ 1,788 Accrued payroll, bonuses and related expenses 150 Other accrued liabilities 67 ------- Total current liabilities 2,005 Stockholder's Equity Common stock 1 Retained earnings 2,004 ------- Total stockholder's equity 2,005 ------- Total Liabilities and Stockholder's Equity $ 4,010 =======
Page 4 2 THE WEATHERSBY GROUP, INC. CONDENSED STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2000 (in thousands) (unaudited) Revenues $ 7,245 Cost of Services 5,089 ------- Gross profit 2,156 Operating Expenses - Selling general and administrative 1,554 ------- Income from Operations 602 Other Income/(Expense): Interest income 5 Other, net 14 ------- Total other income 19 ------- Net income $ 621 =======
3 THE WEATHERSBY GROUP, INC. CONDENSED STATEMENT OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2000 (in thousands) (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 621 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation and amortization 13 Changes in: Accounts Receivable 605 Accounts Receivable - unbilled (1,289) Deferred revenue (40) Trade accounts payable 1,005 Accrued liabilities (432) ------- Net cash provided from continuing operations 483 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment (34) ------- Net cash used in investing activities (34) CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to shareholder (16) ------- Net cash used from financing activities (16) ------- NET INCREASE IN CASH 433 CASH AND CASH EQUIVALENTS, Beginning of period 359 ------- CASH AND CASH EQUIVALENTS, End of period $ 792 =======
NOTE TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) Basis of Reporting The accompanying condensed financial statements of The Weathersby Group, Inc. (the "Company") as of June 30, 2000, and for the six months ended June 30, 2000 are unaudited and reflect all normal recurring adjustments which are, in the opinion of management, necessary for the fair presentation of the Company's financial position, results of operations, and cash flows as of this date and for the period presented. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Consequently, these statements do not include all the disclosures normally required by accounting principles generally accepted in the United States of America for annual financial statements. Page 5 -----END PRIVACY-ENHANCED MESSAGE-----