FLORIDA
|
6411
|
59-2091510
|
(State
or jurisdiction of incorporation or organization)
|
(Primary
Standard Industrial Classification Code Number)
|
(I.R.S.
Employer Identification Number)
|
Title
of Class of Securities
To
be Registered
|
Amount
to be
Registered(1)
|
Proposed
Maximum Offering Price
per
Share(2)
|
Proposed
Maximum Aggregate Offering
Price
(2)
|
Amount
of
Registration
Fee
|
|||||||||
Common
Stock, $.001 par value
|
4,914,700
shares
|
$
|
0.95
|
$
|
4,668,965
|
$
|
549.54
|
||||||
Common
Stock, $.001 par value (3), (4)
|
1,660,000
shares
|
$
|
0.95
|
$
|
1,577,000
|
$
|
185.61
|
||||||
Common
Stock, $.001 par value (3), (5)
|
3,420,000
shares
|
$
|
0.95
|
$
|
3,249,000
|
$
|
382.41
|
||||||
Common
Stock, $.001 par value (3), (6)
|
1,236,000
shares
|
$
|
0.95
|
$
|
1,174,200
|
$
|
138.20
|
||||||
Common
Stock, $.001 par value (3), (7)
|
420,853
shares
|
$
|
0.95
|
$
|
399,810
|
$
|
47.06
|
||||||
Total
|
11,651,553
shares
|
$
|
11,068,975
|
$
|
1,302.82*
|
|
|
PROSPECTUS
SUMMARY
|
5
|
RISK
FACTORS
|
9
|
CAUTIONARY
STATEMENT CONCERNING FORWARD LOOKING STATEMENTS
|
17
|
USE
OF PROCEEDS
|
17
|
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|
18
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
18
|
BUSINESS
|
32
|
MANAGEMENT
|
37
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
41
|
PRINCIPAL
STOCKHOLDERS
|
42
|
SELLING
STOCKHOLDERS
|
45
|
PLAN
OF DISTRIBUTION
|
47
|
DESCRIPTION
OF SECURITIES
|
48
|
COMMISSION
POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
|
54
|
LEGAL
MATTERS
|
55
|
EXPERTS
|
55
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS
|
55
|
WHERE
YOU CAN FIND MORE INFORMATION
|
55
|
FINANCIAL
STATEMENTS
|
F-1
|
-
|
preparation
of plan feasibility and design studies, including the fields of
contribution maximization/reduction, retirement planning and distribution,
executive compensation, new comparability, 401(k) plans, plan
terminations, governmental compliance and coverage, participation
and
discrimination testing; and
|
-
|
administration
of existing plans, including: preparation of government forms and
summary
plan descriptions, training personnel, maintaining employee data
maintenance systems, maintaining detailed asset reconciliation data,
providing periodic reports, determining plan contributions and benefits,
distributions to plan participants, termination of employees and
plans and
coordination with other benefit programs.
|
-
|
review
of assets and investments, including investment allocations;
|
-
|
determination
of investment goals and strategies in light of the client's objectives,
degree of risk and time horizon;
|
-
|
implementation
of investment programs from among a broad spectrum of investment
choices,
including domestic and international mutual funds, certificates of
deposit, treasuries, fixed and variable annuities, and specialty
investments; and
|
-
|
monitoring
performance results of investments and advising the client of any
recommended adjustments.
|
Securities
Offered by
Selling
Stockholders
|
11,651,553
shares of Common Stock, including 6,316,000 shares of Common Stock
issuable upon exercise of warrants and conversion of Preferred Stock
and
conversion of convertible notes, and 420,853 shares reserved for
issuance
upon payment of dividends on preferred stock in shares of common
stock, as
follows:
|
|
|
§
|
4,914,700
shares of outstanding Common Stock
|
|
§
|
1,660,000
shares of Common Stock issuable upon the exercise of warrants held
by our
shareholders, with an exercise price of $0.1667 per share
|
|
§
|
3,420,000
shares of Common Stock issuable upon the conversion of shares of
our
Series A Preferred Stock, convertible on a 1:1 basis
|
|
§
|
736,000
shares of Common Stock issuable upon conversion of $500,000 of principal
under convertible notes issued to a subordinated secured lender,
at a
conversion price of $0.68, plus an additional 500,000 shares of Common
Stock that would be issuable to that lender upon an uncured payment
default
|
|
§
|
420,853
shares reserved for issuance upon payment of dividends on preferred
stock
in shares of common stock
|
Offering
Price
|
Determined
at the time of sale by the selling stockholders.
|
|
|
Use
of Proceeds
|
We
will not receive any proceeds from the sale of the shares of Common
Stock
by the selling stockholders. We intend to use the proceeds from the
exercise or conversion of outstanding warrants and options relating
to a
portion of such shares of Common Stock, which cash proceeds would
not
exceed $276,667 if all such warrants were exercised, for general
corporate
purposes.
|
|
|
Shares
of Common Stock
outstanding
before the
Offering
|
13,320,413
shares.
|
|
|
Risk
Factors
|
An
investment in the Company involves significant risks and uncertainties.
See “Risk Factors,” beginning on page 9.
|
·
|
diversion
of management's attention from running our existing business;
|
·
|
Increased
expenses, including travel, legal, administrative and compensation
expenses resulting from newly hired employees;
|
·
|
increased
costs to integrate personnel, customer base and business practices
of the
acquired company with our own;
|
·
|
adverse
effects on our reported operating results due to possible write-down
of
goodwill associated with acquisitions;
|
·
|
potential
disputes with sellers of acquired businesses, technologies, services
or
products; and
|
·
|
dilution
to stockholders if we issue securities in any acquisition.
|
·
|
failure
to pay interest and principal when due,
|
·
|
an
uncured breach by us of any material covenant, term or condition
in the
note or related agreements,
|
·
|
a
breach by us of any material representation or warranty made in
the note
or in any related agreement,
|
·
|
any
money judgment or similar final process is filed against us for
more than
$100,000,
|
·
|
any
form of bankruptcy or insolvency proceeding is instituted by or
against
us, and
|
·
|
our
Common Stock is suspended from our principal trading market for
five
consecutive days or five days during any ten consecutive days.
|
|
·
|
variations
in our quarterly operating results;
|
·
|
loss
of a key relationship or failure to complete significant transactions;
|
·
|
additions
or departures of key personnel; and
|
·
|
fluctuations
in stock market price and volume.
|
|
|
PRICE
|
|
||||
|
|
HIGH
BID
|
|
LOW
BID
|
|
||
2005
|
|
|
|
|
|
||
First
quarter commencing March 28, 2005
|
|
$
|
0.80
|
|
$
|
0.25
|
|
Second
quarter ending June 30, 2005
|
|
$
|
2.75
|
|
$
|
0.45
|
|
·
|
Pension
plan design, creation, termination and administration
|
·
|
Investment
management of retirement plan assets
|
·
|
Investment
management of non-plan assets for wealthy individuals
|
·
|
Quarterly
asset monitoring reports
|
·
|
401(k)
asset management through an insurance company program
|
·
|
Retirement
distribution studies
|
·
|
Life
insurance
|
·
|
Deferred
compensation and annuities
|
·
|
Limited
hospitalization and long-term care insurance
|
·
|
Third
party administration. We
earn fees for the development and implementation of corporate and
executive benefit programs as well as fees for the duration that
these
programs are administered.
|
·
|
Financial
planning and investment advisory fees and securities commissions.
We
receive commissions related to the sale of securities and certain
investment-related insurance products as well as fees for offering
financial advice through financial intermediaries and related services.
These fees are based on a percentage of assets under management
and are
generally paid quarterly. We also charge fees for evaluations of
the
performance of portfolios.
|
·
|
Insurance
commissions .
Insurance and annuity commissions paid by insurance companies are
based on
a percentage of the premium that the insurance company charges
to the
policyholder. First-year commissions are calculated as a percentage
of the
first twelve months' premium on the policy and earned in the year
that the
policy is originated. In many cases, we receive renewal commissions
for a
period following the first year, if the policy remains in force.
|
·
|
Third
party administration.
|
|
·
|
Persuasive
evidence of an arrangement between the us and our client exists
|
·
|
Delivery
of the product to the customer has occurred or service has been
provided
to the customer
|
·
|
The
price to the customer is fixed and determinable
|
·
|
Collectibility
of the sales price is reasonably assured
|
·
|
Financial
planning and investment advisory fees and securities commissions.
|
·
|
As
services are rendered
|
·
|
Contingent
commissions are recorded as revenue when received
|
·
|
Insurance
commissions.
|
·
|
The
policy application is substantially complete
|
·
|
The
premium is paid
|
·
|
The
insured party is contractually committed to the purchase of the
insurance
policy
|
|
Amount
|
Estimated
Life
|
|||||
Customer
lists/relationships
|
$
|
3,100,000
|
15
years
|
||||
Covenants
not to compete
|
$
|
200,000
|
3
years
|
||||
Employment
agreements
|
$
|
50,000
|
1
year
|
·
|
Third
party administration of retirement plans and plan assets
|
·
|
Investment
management
|
·
|
Insurance
products
|
1.
|
Annual
plan reviews
|
2.
|
Document
fees
|
3.
|
Terminations
(both individuals within a plan and entire plans)
|
4.
|
Consulting
and special projects
|
5.
|
Commissions
on insurance and investment products related to plan assets
|
For
the years ended December 31,
|
2004
|
%
of
Revenues
|
2003
|
%
of
Revenues
|
$
Change
2003
to 2004
|
% Change
2003
to 2004
|
|||||||||||||
Revenues:
|
|||||||||||||||||||
Fees
|
$
|
1,488,766
|
71.19
|
%
|
$
|
1,303,150
|
70.86
|
%
|
$
|
185,616
|
14.24
|
%
|
|||||||
Commissions
and other
|
602,444
|
28.81
|
%
|
535,911
|
29.14
|
%
|
66,533
|
12.21
|
%
|
||||||||||
|
|||||||||||||||||||
|
2,091,210
|
100.00
|
%
|
1,839,061
|
100.00
|
%
|
252,149
|
13.71
|
%
|
||||||||||
Operating
expenses:
|
|||||||||||||||||||
Selling
|
950,663
|
45.46
|
%
|
766,779
|
41.69
|
%
|
183,884
|
23.98
|
%
|
||||||||||
General
and administrative
|
1,131,189
|
54.09
|
%
|
1,095,869
|
59.59
|
%
|
35,320
|
3.22
|
%
|
||||||||||
|
|||||||||||||||||||
|
2,081,852
|
99.55
|
%
|
1,862,648
|
101.28
|
%
|
219,204
|
11.77
|
%
|
Operating
income (loss)
|
9,358
|
0.45
|
%
|
(23,587
|
)
|
-1.28
|
%
|
32,945
|
NM
|
||||||||||
Other
income:
|
|||||||||||||||||||
Interest
and dividend income
|
1,653
|
0.08
|
%
|
2,640
|
0.14
|
%
|
(987
|
)
|
-37.39
|
%
|
|||||||||
Gain
on forgiveness of debt
|
20,000
|
(20,000
|
)
|
NM
|
|||||||||||||||
|
|||||||||||||||||||
|
1,653
|
0.08
|
%
|
22,640
|
0.14
|
%
|
(20,987
|
)
|
-92.70
|
%
|
|||||||||
|
|||||||||||||||||||
Net
income (loss)
|
$
|
11,011
|
0.53
|
%
|
($947
|
)
|
-1.14
|
%
|
$
|
11,958
|
NM
|
For
the years ended December 31,
|
2003
|
%
of
Revenues
|
2002
|
%
of
Revenues
|
$
Change
2002
to 2003
|
% Change
2002
to 2003
|
|||||||||||||
Revenues:
|
|||||||||||||||||||
Fees
|
$
|
1,303,150
|
70.86
|
%
|
$
|
1,367,441
|
72.58
|
%
|
($64,291
|
)
|
-4.70
|
%
|
|||||||
Commissions
and other
|
535,911
|
29.14
|
%
|
516,551
|
27.42
|
%
|
19,360
|
3.75
|
%
|
||||||||||
|
|||||||||||||||||||
|
1,839,061
|
100.00
|
%
|
1,883,992
|
100.00
|
%
|
(44,931
|
)
|
-2.38
|
%
|
|||||||||
|
|||||||||||||||||||
Operating
expenses:
|
|||||||||||||||||||
Selling
|
766,779
|
41.69
|
%
|
907,836
|
48.19
|
%
|
(141,057
|
)
|
-15.54
|
%
|
|||||||||
General
and administrative
|
1,095,869
|
59.59
|
%
|
1,174,233
|
62.33
|
%
|
(78,364
|
)
|
-6.67
|
%
|
|||||||||
|
|||||||||||||||||||
|
1,862,648
|
101.28
|
%
|
2,082,069
|
110.51
|
%
|
(219,421
|
)
|
-10.54
|
%
|
|||||||||
|
|||||||||||||||||||
Operating
income (loss)
|
(23,587
|
)
|
-1.28
|
%
|
(198,077
|
)
|
-10.51
|
%
|
174,490
|
-88.09
|
%
|
||||||||
|
|||||||||||||||||||
Other
income:
|
|||||||||||||||||||
Interest
and dividend income
|
2,640
|
0.14
|
%
|
6,558
|
0.35
|
%
|
(3,918
|
)
|
-59.74
|
%
|
|||||||||
Gain
on forgiveness of debt
|
20,000
|
20,000
|
NM
|
||||||||||||||||
|
|||||||||||||||||||
|
22,640
|
0.14
|
%
|
6,558
|
0.35
|
%
|
16,082
|
245.23
|
%
|
||||||||||
|
|||||||||||||||||||
Net
income (loss)
|
($947
|
)
|
-1.14
|
%
|
($191,519
|
)
|
-10.17
|
%
|
$
|
190,572
|
-99.51
|
%
|
For
the three months ended March 31,
|
2005
|
%
of
Revenues
|
2004
|
%
of
Revenues
|
$
Change
2004
to 2005
|
% Change
2004
to 2005
|
|||||||||||||
Revenues
|
$
|
555,664
|
100.00
|
%
|
$
|
547,499
|
100.00
|
%
|
$
|
8,164
|
1.49
|
%
|
|||||||
|
|||||||||||||||||||
|
|||||||||||||||||||
Operating
expenses:
|
|||||||||||||||||||
Selling
|
73,333
|
13.20
|
%
|
127,973
|
23.37
|
%
|
(54,640
|
)
|
-42.70
|
%
|
|||||||||
General
and administrative
|
544,078
|
97.91
|
%
|
292,340
|
53.40
|
%
|
251,738
|
86.11
|
%
|
||||||||||
Depreciation
and amortization
|
87,539
|
15.75
|
%
|
1,979
|
0.36
|
%
|
85,560
|
NM
|
|||||||||||
Stock
based compensation
|
2,953
|
0.53
|
%
|
0.00
|
%
|
2,953
|
NM
|
||||||||||||
|
|||||||||||||||||||
|
707,903
|
127.40
|
%
|
422,293
|
77.13
|
%
|
285,610
|
67.63
|
%
|
||||||||||
|
|||||||||||||||||||
Operating
income (loss)
|
(152,239
|
)
|
-27.40
|
%
|
125,207
|
22.87
|
%
|
(277,446
|
)
|
-221.59
|
%
|
||||||||
|
|||||||||||||||||||
Other
income (expense):
|
|||||||||||||||||||
Reverse
acquisition transaction costs
|
(215,000
|
)
|
-38.69
|
%
|
0.00
|
%
|
(215,000
|
)
|
NM
|
||||||||||
Interest
expense
|
(37,519
|
)
|
-6.75
|
%
|
0.00
|
%
|
(37,519
|
)
|
NM
|
||||||||||
Interest
and dividend income
|
3,081
|
0.55
|
%
|
540
|
0.10
|
%
|
2,541
|
NM
|
|||||||||||
|
(249,438
|
)
|
-44.89
|
%
|
540
|
0.10
|
%
|
(249,978
|
)
|
NM
|
|||||||||
|
|||||||||||||||||||
Income
(Loss) before provision for income taxes
|
(401,677
|
)
|
-72.29
|
%
|
125,746
|
22.97
|
%
|
(527,424
|
)
|
NM
|
|||||||||
|
|||||||||||||||||||
Deferred
income tax benefit
|
21,973
|
3.95
|
%
|
0.00
|
%
|
21,973
|
NM
|
||||||||||||
|
|||||||||||||||||||
Net
income (loss) available to common shareholders
|
(379,704
|
)
|
-68.33
|
%
|
125,746
|
22.97
|
%
|
($505,450
|
)
|
NM
|
|||||||||
|
|||||||||||||||||||
Preferred
dividends
|
(68,603
|
)
|
|||||||||||||||||
|
|||||||||||||||||||
Net
Income (Loss)
|
($448,307
|
)
|
$
|
125,746
|
|
March
31,
2005
|
December
31,
2004
|
|||||
|
|
|
|||||
Unrestricted
Cash
|
$
|
295,007
|
$
|
89,779
|
|||
Working
Capital
|
($
29,044
|
)
|
(83,959
|
)
|
|||
Stockholders'
Equity
|
$
|
3,707,661
|
$
|
3,091,632
|
Cash
flows from operating activities:
|
||||
Net
loss available to common shareholders
|
$ | (379,704 | ) | |
Adjustments
to reconcile net loss to net cash used in operating activities:
|
||||
Depreciation
and amortization
|
109,653
|
|||
Non-cash
interest
|
15,000
|
|||
Stock-based
compensation
|
2,953
|
|||
Stock
issued for services
|
25,000
|
|||
Deferred
income tax benefit
|
(21,973
|
)
|
||
Increase
(decrease) in cash attributable to changes in operating assets and
liabilities:
|
||||
Accounts
receivable
|
(41,389
|
)
|
||
Accrued
interest receivable
|
(2,778
|
)
|
||
Prepaid
and other current assets
|
(146,041
|
)
|
||
Accounts
payable
|
8,243
|
|||
Accrued
expenses and other current liabilities
|
(43,493
|
)
|
||
Accrued
interest payable
|
6,070
|
|||
|
||||
Net
cash used in operating activities
|
(468,459
|
)
|
||
|
||||
Cash
flows from investing activities:
|
||||
Purchases
of property and equipment
|
(8,358
|
)
|
||
Acquisition
costs (PAS transaction)
|
(27,500
|
)
|
||
Cash
acquired (reverse merger transaction)
|
10,618
|
|||
Increase
in restricted cash (for acquisition purposes)
|
(2,500,000
|
)
|
||
|
||||
Net
cash used in investing activities
|
(2,525,240
|
)
|
||
|
||||
Cash
flows from financing activities:
|
||||
Proceeds
from convertible notes
|
3,000,000
|
|||
Proceeds
from short-term debt
|
460,000
|
|||
Payments
on short-term debt
|
(23,831
|
)
|
||
Costs
of 2004 common and preferred stock sales, net
|
(58,242
|
)
|
||
of
$17,102 collected from the escrow agent
|
||||
Payment
of deferred financing costs
|
(179,000
|
)
|
||
|
||||
Net
cash provided by financing activities
|
3,198,927
|
|||
|
||||
Increase
in cash
|
$
|
205,228
|
Payments
due by period Contractual obligations
|
Total
|
Less
than 1 year
|
1
-
2 years
|
|||||||
|
$
|
61,224
|
$
|
56,122
|
$
|
5,102
|
·
|
Pension
plan design, creation, termination and administration
|
·
|
Investment
management of retirement plan assets
|
·
|
Investment
management of non-plan assets for wealthy individuals
|
·
|
Quarterly
asset monitoring reports
|
·
|
401(k)
asset management through an insurance company program
|
·
|
Retirement
distribution studies
|
·
|
Life
insurance
|
·
|
Deferred
compensation and annuities
|
·
|
Limited
hospitalization and long-term care insurance
|
NAME
|
|
AGE
|
|
POSITION
|
Richard
E. Stierwalt (4)
|
|
50
|
|
President,
Chief Executive Officer and Director
|
Richard
J. Berman (1,3,4)
|
|
62
|
|
Chairman
of the Board and Director
|
Leonard
Neuhaus
|
|
46
|
|
Chief
Financial Officer
|
Michael
Bluestein
|
|
57
|
|
Director
|
Steven
B. Ruchefsky (2,4)
|
|
42
|
|
Director
|
Kevin
T. Crow (2,3)
|
|
43
|
|
Director
|
Jeff
Cooke (1)
|
|
43
|
|
Director
|
Arthur
D. Emil (3)
|
|
79
|
|
Director
|
Steven
Ross (1)
|
|
47
|
|
Director
|
SHARES
BENEFICIALLY OWNED (1),(2)
|
|||||||
NUMBER
|
PERCENT
(%)
|
||||||
Beneficial
Owners of more than 5% of Common Stock (other than Directors
and Executive
Officers)
|
|||||||
CAMOFI
Master LDC (3)
|
1,463,619
|
9.9
|
%
|
||||
Caremi
Partners Ltd. (4)
|
2,400,000
|
18.0
|
%
|
||||
Steven
B. Ruchefsky (12)
|
2,440,000
|
18.3
|
%
|
||||
Richard
Smithline (5)
|
1,525,000
|
11.4
|
%
|
||||
Michael
Crow (6)
|
3,275,000
|
24.0
|
%
|
||||
William
Sarnoff (7)
|
900,000
|
6.6
|
%
|
||||
Christopher
P. Baker (8)
|
1,270,000
|
9.0
|
%
|
Richard
Stierwalt (9)
|
1,860,833
|
13.3
|
%
|
||||
Richard
Berman
|
0
|
*
|
|||||
Leonard
Neuhaus (10)
|
105,733
|
*
|
|||||
Michael
Bluestein (11)
|
250,082
|
1.5
|
%
|
||||
Steven
B. Ruchefsky (12)
|
2,440,000
|
18.3
|
%
|
||||
Kevin
T. Crow (13)
|
40,000
|
*
|
|||||
Jeff
Cooke (14)
|
40,000
|
*
|
|||||
Arthur
D. Emil (15)
|
940,000
|
6.9
|
%
|
||||
Steven
J. Ross (16)
|
190,000
|
1.4
|
%
|
||||
All
directors and executive
|
|||||||
officers
as a group (nine persons)(17)
|
5,866,648
|
40.1
|
%
|
1.
|
Gives
effect to the shares of Common Stock issuable upon the exercise
of all
options, warrants and convertible securities exercisable within
60 days of
the date of this prospectus and other rights beneficially owned
by the
indicated stockholders on that date. Shares of Common Stock issuable
pursuant to warrants or options or upon conversion of convertible
securities, to the extent such warrants or options or convertible
securities are currently exercisable or convertible within 60
days of the
date of this prospectus, are treated as outstanding for computing
the
ownership percentage of the person holding such securities, but
are not
treated as outstanding for computing the ownership percentage
of any other
person. Beneficial ownership is determined in accordance with
the rules of
the Securities and Exchange Commission and includes voting and
investment
power with respect to shares. Unless otherwise indicated, the
persons
named in the table have sole voting and sole investment control
with
respect to all shares beneficially owned. Percentage ownership
is
calculated based on 13,320,413 shares of the Common Stock outstanding
as
of July 1, 2005. All information is based upon information furnished
by
the persons listed or otherwise available to the Company.
|
2.
|
Each
share of the Company's Series A Preferred Stock is convertible
into one
share of Common Stock. Unless otherwise noted, the shares of Common
Stock
and Series A Preferred Stock and the five (5) year warrants to
purchase
shares of Common Stock at an exercise price of $0.1667 per share
(“Common
Stock Warrants”) described in the notes to this Principal Stockholders
table represent securities that were acquired by such holders from
the
Company on a 1:1 basis upon the exchange and/or conversion of similar
securities of Duncan Capital Financial Group, Inc. (“Duncan”) held by such
holders in connection with the consummation of the business combination
transaction between Duncan and the Company on March 9, 2005. See
“Business
- General”.
|
|
3.
|
Formerly
known as DCOFI Master LDC. Under an agreement between CAMOFI
Master LDC
and the Company, CAMOFI Master LDC is not permitted to exercise
any
convertible securities for that number of shares of Common
Stock that
would result in beneficial ownership by CAMOFI Master LDC of
more than
9.9% of the outstanding shares of our Common Stock. If not
for this
limitation, CAMOFI Master LDC’s beneficial ownership percentage would be
21.9%, representing (i) 2,000,000 shares of Common Stock issuable
on
conversion of 2,000,000 shares of Series A Preferred Stock,
(ii) 1,000,000
shares of Common Stock issuable upon conversion of Common Stock
Warrants,
and (iii) 736,000 shares of Common Stock issuable upon conversion
of up to
$500,000 principal amount convertible notes issued to CAMOFI
Master LDC.
Mr. Richard Smithline, who exercises voting and investment
control over
such securities, disclaims beneficial ownership of such securities.
|
4.
|
The
address of Caremi Partners Ltd. is Two American Lane, Greenwich
Connecticut 06836. Steven Ruchefsky, one of our directors, is employed
by
Caremi Partners Ltd. Mr. Ruchefsky, who has voting and investment
control
over such securities, disclaims beneficial ownership of the securities
of
Caremi Partners Ltd.
|
5.
|
Includes
(i) 1,165,000 shares of Common Stock held of record by Mr. Smithline,
and
(ii) 120,000 shares held of record by Mr. Smithline as custodian
for each
of William Smithline, Robert Smithline and Andrew Smithline.
Mr. Smithline
disclaims beneficial ownership of shares held of record by him
as
custodian for William Smithline (120,000 shares), Robert Smithline
(120,000 shares) and Andrew Smithline (120,000 shares). Under
an agreement
between Mr. Smithline and the Company, Mr. Smithline is not permitted
to
exercise any convertible securities for that number of shares
of Common
Stock that would result in beneficial ownership by Mr. Smithline
of more
than 9.9% of the outstanding shares of our Common Stock. If not
for this
limitation, Mr. Smithline’s beneficial ownership percentage would be 31.7%
of the outstanding shares of our Common Stock, giving effect
to (w)
100,000 shares of Common Stock issuable on conversion of 100,000
shares of
Series A Preferred Stock owned by Mr. Smithline, (x) 50,000 shares
of
Common Stock issuable upon conversion of Common Stock Warrants
owned by
Mr. Smithline, (y) 62,500 shares of Common Stock issuable upon
conversion
of Common Stock Warrants owned by Centrecourt Asset Management
LLC, over
which Mr. Smithline exercises voting and investment control,
and as to
which securities Mr. Smithline disclaims beneficial ownership,
and (z)
3,736,000 shares of Common Stock beneficially owned by CAMOFI
Master LDC
described in footnote 3 above, over which Mr. Smithline exercises
voting
and investment control, and as to which securities Mr. Smithline
disclaims
beneficial ownership.
|
6.
|
Consists
of (i) 2,925,000 shares of Common Stock, (ii) 200,000 shares of
Common
Stock issuable on conversion of 200,000 shares of Series A Preferred
Stock
and (iii) 150,000 shares of Common Stock issuable upon conversion
of
Common Stock Warrants, in each case held of record by DCI Master
LDC.
Michael Crow, the brother of one of our directors, Kevin Crow,
has sole
voting and dispositive power with respect to such shares. Michael
Crow
disclaims beneficial ownership of such securities.
|
7.
|
Consists
of (i) 600,000 shares of Common Stock, (ii) 200,000 shares of Common
Stock
issuable on conversion of 200,000 shares of Series A Preferred
Stock and
(iii) 100,000 shares of Common Stock issuable upon conversion of
Common
Stock Warrants.
|
8.
|
Consists
of: (i) 180,000 shares of Common Stock, 140,000 shares of Common
Stock
issuable upon conversion of 140,000 shares of Series A Preferred
Stock and
70,000 shares of Common Stock issuable upon conversion of Common
Stock
Warrants, held of record by Mr. Baker, (ii) 180,000 shares of Common
Stock, 240,000 shares of Common Stock issuable upon conversion
of 240,000
shares of Series A Preferred Stock and 70,000 shares of Common
Stock
issuable upon conversion of Common Stock Warrants, held of record
by
Anasazi Partners III LLC, as to which Mr. Baker has sole voting
and
dispositive power, and (iii) 180,000 shares of Common Stock, 140,000
shares of Common Stock issuable upon conversion of 140,000 shares
of
Series A Preferred Stock and 70,000 shares of Common Stock issuable
upon
conversion of Common Stock Warrants, held of record by Anasazi
Partners
III Offshore Ltd., as to which Mr. Baker has sole voting and dispositive
power. Mr. Baker disclaims beneficial ownership as to the foregoing
shares
of Common Stock, Series A Preferred Stock and Common Stock Warrants
securities held of record by Anasazi Partners III LLC and by Anasazi
Partners III Offshore Ltd.
|
9.
|
Consists
of (i) 1,200,000 shares of Common Stock and (ii) 660,833 shares
of Common
Stock issuable within 60 days of July 1, 2005 at an exercise price
of
$0.1666 per share upon Mr. Stierwalt's exercise of his Warrant,
dated as
of November 1, 2004, for 793,000 shares, which vest at the rate
of 8.333%
per month, commencing December 1, 2004.
|
10.
|
Represents
105,733 shares issuable within 60 days of July 1, 2005 at an exercise
price of $0.1666 per share upon Mr. Neuhaus' exercise of his Warrant,
dated as of January 1, 2005, for 317,200 shares, which vest at
the rate of
4.166% per month, commencing February 1, 2005.
|
11.
|
Consists
of (i) 200,082 shares of Common Stock and (ii) 50,000 shares that
may be
purchased upon exercise of currently exercisable stock options
at an
exercise price of $1.00 per share.
|
12.
|
Consists
of (i) 40,000 shares
of Common Stock that may be purchased upon exercise of currently
exercisable stock options issued in February 2005 as remuneration
for
services as a director at an exercise price of $0.1666 per share,
and (ii)
2,400,000 shares of Common Stock owned by Caremi Partners Ltd.
Mr.
Ruchefsky, who has voting and investment control over such securities
of
Caremi Partners Ltd., disclaims beneficial ownership of such
securities.
|
13.
|
Represents
40,000 shares of Common Stock that may be purchased upon exercise
of
currently exercisable stock options issued in February 2005 as
remuneration for services as a director at an exercise price of
$0.1666
per share.
|
14.
|
Represents
40,000 shares of Common Stock that may be purchased upon exercise
of
currently exercisable stock options issued in February 2005 as
remuneration for services as a director at an exercise price of
$0.1666
per share.
|
15.
|
Consists
of (i) 600,000 shares of Common Stock, (ii) 200,000 shares of Common
Stock
issuable on conversion of 200,000 shares of Series A Preferred
Stock,
(iii) 100,000 shares of Common Stock issuable upon conversion of
Common
Stock Warrants and (iv) 40,000 shares of Common Stock that may
be
purchased upon exercise of currently exercisable stock options
issued in
February 2005 as remuneration for services as a director at an
exercise
price of $0.1666 per share.
|
16.
|
Includes
40,000 shares of Common Stock that may be purchased upon exercise
of
currently exercisable stock options issued in February 2005 as
remuneration for services as a director at an exercise price of
$0.1666
per share.
|
17.
|
Includes
Messrs. Stierwalt, Berman, Neuhaus, Bluestein, Ruchefsky, Kevin
Crow,
Cooke, Emil and Ross.
|
·
|
the
number of shares currently held;
|
·
|
the
number of shares issuable upon exercise or conversion of options,
warrants
or other convertible securities; and
|
·
|
the
number of shares offered by each selling stockholder.
|
BEFORE
OFFERING
|
AFTER
OFFERING (4)
|
|||||||||||||||
Name
of Selling Stockholder
|
Number
of Shares Owned
|
Number
of Shares Issuable upon Exercise or Conversion of Warrants, Options,
Series A Preferred Stock, Notes, Preferred Stock Dividends (1)
|
Number
of Shares Offered
|
Number
of Shares Owned (3)
|
Percentage
Owned (2)
|
|||||||||||
Anasazi
Partners III LLC (7)
|
180,000
|
339,551
(5
|
)
|
519,591
|
0
|
*
|
||||||||||
Anasazi
Partners III Offshore Ltd. (7)
|
180,000
|
227,379
(6
|
)
|
407,379
|
0
|
*
|
||||||||||
Asset
Managers International Ltd.
|
0
|
749,031
(8
|
)
|
749,031
|
0
|
*
|
||||||||||
Christopher
P. Baker
|
180,000
|
227,379
(6
|
)
|
407,379
|
0
|
*
|
||||||||||
Bushido
Capital Master Fund, L.P. (10)
|
300,000
|
162,212
(9
|
)
|
462,212
|
0
|
*
|
||||||||||
CAMOFI
Master LDC
|
0
|
4,482,124
(11
|
)
|
4,482,124
|
0
|
*
|
||||||||||
Drake
Investments Ltd. (12)
|
600,000
|
0
|
600,000
|
0
|
*
|
|||||||||||
William
Sarnoff
|
600,000
|
324,425
(13
|
)
|
924,425
|
0
|
*
|
||||||||||
Frederick
Smithline
|
300,000
|
0
|
300,000
|
0
|
*
|
|||||||||||
Richard
Smithline
|
1,525,000
|
162,212
(9
|
)
|
1,687,212
|
0
|
*
|
||||||||||
Uzi
Zucker
|
600,000
|
0
|
600,000
|
0
|
*
|
|||||||||||
Alan
Gelband (14)
|
300,000
|
0
|
300,000
|
0
|
*
|
|||||||||||
John
Rice (15)
|
149,700
|
0
|
149,700
|
0
|
*
|
|||||||||||
Centrecourt Asset
Management LLC (16)
|
0
|
62,500
|
62,500
|
0
|
*
|
(1)
|
Includes
shares of Common Stock that the selling stockholders have the
right to
acquire beneficial ownership of within 60 days. Each
share of the
Company's Series A Preferred Stock is convertible into one share
of Common
Stock. Unless otherwise noted, the shares of Common Stock and
Series A
Preferred Stock and the five (5) year warrants to purchase shares
of
Common Stock at an exercise price of $0.1667 per share (“Common Stock
Warrants”) described in this Selling Stockholders table and in the notes
to this Selling Stockholders table represent securities that
were acquired
by such holders from the Company on a 1:1 basis upon the exchange
and/or
conversion of similar securities of Duncan Capital Financial
Group, Inc.
(“Duncan”) held by such holders in connection with the consummation of
the
business combination transaction between Duncan and the Company
on March
9, 2005. See “Business - General”. Except as otherwise indicated in the
footnotes below, such securities of Duncan were acquired in a
private
placement in December 2004 to a total of 21 individuals and entities,
each
of whom was an accredited investor within the meaning of the
Securities
Act, in reliance on Section 4(2) of the Act. Also includes shares
of
Common Stock issuable upon payment of Series A Preferred Stock
dividends
in the amounts noted in the footnotes
below.
|
(2)
|
Based
on 13,320,413 shares of Common Stock issued and outstanding on
July
1,
2005.
|
(3)
|
This
table assumes that each selling stockholder will sell all shares
offered
for sale by it under this registration statement. Stockholders
are not
required to sell their shares.
|
(4)
|
Assumes
that all shares of Common Stock registered for resale by this prospectus
have been sold.
|
(5)
|
Consists
of (i) 240,000 shares of Common Stock issuable on conversion of
240,000
shares of Series A Preferred Stock, (ii) 70,000 shares of Common
Stock
issuable upon conversion of Common Stock Warrants and (iii) 29,591
shares
of Common Stock issuable upon payment of Series A Preferred Stock
dividends. 100,000 of these shares of Series A Preferred Stock
were
acquired from MW Crow Family LP, a purchase in the December 2004
private
placement referred to in Note 1.
|
(6)
|
Consists
of (i) 140,000 shares of Common Stock issuable on conversion of
140,000
shares of Series A Preferred Stock, (ii) 70,000 shares of Common
Stock
issuable upon conversion of Common Stock Warrants and (iii) 17,379
shares
of Common Stock issuable upon payment of Series A Preferred Stock
dividends.
|
(7)
|
Christopher
Baker, who holds sole voting and dispositive power with respect
to the
securities held by Anasazi Partners III, LLC and Anasazi III Partners
Offshore Ltd., disclaims beneficial ownership of such securities.
|
(8)
|
Consists
of (i) 500,000 shares of Common Stock issuable on conversion of
500,000
shares of Series A Preferred Stock, (ii) 187,500 shares of Common
Stock
issuable upon conversion of Common Stock Warrants and (iii) 61,531
shares
of Common Stock issuable upon payment of Series A Preferred Stock
dividends. Mr. Quang
Tran of Pentagon Capital Management plc, the financial advisor
of Asset
Managers International Ltd., who exercises voting and investment
control over such securities, disclaims beneficial ownership of
such
securities.
|
(9)
|
Consists
of (i) 100,000 shares of Common Stock issuable on conversion of
100,000
shares of Series A Preferred Stock, (ii) 50,000 shares of Common
Stock
issuable upon conversion of Common Stock Warrants and (iii) 12,212
shares
of Common Stock issuable upon payment of Series A Preferred Stock
dividends.
|
(10)
|
Bushido
Capital Partners, Ltd., a Cayman Island company, is the General
Partner of
Bushido Capital Master Fund, LP, a Cayman Island registered limited
partnership, with the power to vote and dispose of the shares being
registered on behalf of Bushido Capital Master Fund, LP. As such,
Bushido
Capital Partners, Ltd. may be deemed to be the beneficial owner
of said
shares. Christopher Rossman is the Managing Director of Bushido
Capital
Partners possessing the investment power to act on its behalf.
Bushido
Capital Partners, Ltd. and Christopher Rossman each disclaims beneficial
ownership of the shares being registered by Bushido Capital Master
Fund,
LP.
|
(11)
|
Represents
(i) 2,000,000 shares of Common Stock issuable on conversion of
2,000,000
shares of Series A Preferred Stock, (ii) 1,000,000 shares of Common
Stock
issuable upon conversion of Common Stock Warrants, (iii) 736,000
shares of
Common Stock issuable upon conversion of up to $500,000 principal
amount
of a 12% Senior Secured Note issued by Duncan to CAMOFI Master
LDC in
January 2005 (“Bridge Note”), (iv) 500,000 shares of Common Stock issuable
in the event of a payment default under the Bridge Note and (v)
246,124
shares of Common Stock issuable upon payment of Series A Preferred
Stock
dividends. Mr.
Richard Smithline, who exercises voting and investment control
over such
securities, disclaims beneficial ownership of such
securities.
|
(12)
|
The
directors of Drake Investments Ltd. are Dudley R. Cottingham, S.
Arthur
Morris and Chris C. Morris, who have voting and investment control
over
such securities.
|
(13)
|
Consists
of (i) 200,000 shares of Common Stock issuable on conversion of
100,000
shares of Series A Preferred Stock, (ii) 100,000 shares of Common
Stock
issuable upon conversion of Common Stock Warrants and (iii) 24,425
shares
of Common Stock issuable upon payment of Series A Preferred Stock
dividends.
|
(14)
|
Consists
of 150,000 shares of Common Stock owned of record by Mr. Gelband
and
150,000 shares of Common Stock owned of record by the Alan Gelband
Co.
Defined Contribution Pension Plan and Trust, as to which Alan Gelband
has
sole voting and dispositive power.
|
(15)
|
In
consideration for $25,000 due to John Rice on March 9, 2005, for
services
rendered, on April 14, 2005, we issued to Mr. Rice 149,700 shares
of
Common Stock. This issuance was made to Mr. Rice, an accredited
investor,
in reliance on Section 4(2) of the
Act.
|
(16)
|
Formerly
known as DC Asset Management LLC. Securities consist of 62,500
shares of
Common Stock issuable upon conversion of Common Stock Warrants.
Mr. Richard Smithline, who exercises voting and investment control
over
such securities, disclaims beneficial ownership of such
securities.
|
·
|
ordinary
brokerage transactions and transactions in which the broker dealer
solicits purchasers;
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal
to
facilitate the transaction;
|
·
|
purchases
by a broker-dealer as principal and resale by the broker dealer
for its
account;
|
·
|
privately
negotiated transactions;
|
·
|
broker-dealers
may agree with the stockholders to sell a specified number of such
shares
at a stipulated price per share;
|
·
|
a
combination of any such methods of sale; and
|
·
|
any
other method permitted pursuant to applicable law.
|
·
|
None
of the shares of our Common Stock:
|
·
|
have
preemptive rights;
|
·
|
are
redeemable;
|
·
|
are
subject to assessments or further calls;
|
·
|
have
conversion rights; or
|
·
|
have
sinking fund provisions.
|
·
|
voting
rights, including the right to vote as a series on particular matters,
which could be superior to those of our Common Stock;
|
·
|
preferences
over our Common Stock as to dividends and distributions in liquidation;
|
·
|
conversion
and redemption rights, including the right to convert into shares
of our
Common Stock; and
|
·
|
sinking
fund provisions.
|
DESCRIPTION
|
PAGE
|
Unaudited
Pro Forma Combined Condensed Statement of Operations of National
Investment Managers Inc. and Duncan Capital Financial Group, Inc.
|
F-2
|
Financial
Statements of Fast Eddie Racing Stables, Inc. - December 31, 2004
and
December 31, 2003
|
F-4
|
Consolidated
Financial Statements of Duncan Capital Financial Group, Inc. and
Subsidiaries - December 31, 2004
|
F-15
|
Combined
Financial Statements of Pension Administration Services, Inc, and
Affiliates - December 31, 2004 and December 31, 2003
|
F-31
|
Consolidated
Financial Statements of National Investment Managers Inc. and Subsidiaries
(unaudited) - March 31, 2005
|
F-42
|
Historical
|
||||||||||||||||||
National
Investment Managers Inc.
|
Duncan
Capital
Financial
Group,
Inc.
|
Pension
Administration
Services, Inc.
and
Affiliates
|
Pro
Forma Adjustments
|
Pro
Forma
Combined
Company
|
||||||||||||||
REVENUES
|
$
|
-
|
$
|
-
|
$
|
2,091,210
|
$ |
$
|
2,091,210
|
|||||||||
|
||||||||||||||||||
SELLING
EXPENSES
|
950,663
|
950,663
|
||||||||||||||||
|
||||||||||||||||||
GENERAL
AND ADMINISTRATIVE EXPENSES
|
9,946
|
81,344
|
1,131,189
|
1,222,479
|
||||||||||||||
|
||||||||||||||||||
INCOME
(LOSS) FROM OPERATIONS
|
(9,946
|
)
|
(81,344
|
)
|
9,358
|
(81,932
|
)
|
|||||||||||
|
||||||||||||||||||
OTHER
|
(215,000
|
)
|
(b)
|
|
(215,000
|
)
|
||||||||||||
|
||||||||||||||||||
INTEREST
INCOME
|
18
|
1,653
|
1,671
|
|||||||||||||||
|
||||||||||||||||||
|
(9,928
|
)
|
(81,344
|
)
|
11,011
|
(215,000
|
)
|
(295,261
|
)
|
|||||||||
|
||||||||||||||||||
INCOME
TAXES - PAS
|
(3,000
|
) |
(a)
|
|
(3,000
|
)
|
||||||||||||
|
||||||||||||||||||
DEFERRED
INCOME TAX BENEFIT
|
9,000
|
9,000
|
||||||||||||||||
|
||||||||||||||||||
NET
INCOME (LOSS)
|
$
|
(9,928
|
)
|
$
|
(72,344
|
)
|
$
|
11,011
|
(218,000
|
)
|
$
|
(289,261
|
)
|
|||||
|
||||||||||||||||||
BASIC
AND DILUTED INCOME (LOSS)
|
||||||||||||||||||
PER
COMMON SHARE
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
$
|
9.66
|
$
|
(0.02
|
)
|
|||||||
|
||||||||||||||||||
WEGHTED
AVERAGE NUMBER OF
|
||||||||||||||||||
COMMON
SHARES OUTSTANDING (c)
|
5,000,000
|
12,040,000
|
1,140
|
12,874,000
|
(a)
|
Represents
pro forma income taxes for Pension Administration Services, Inc.
and
Affiliates as if these entities were taxed under Subchapter C (and
not
Subchapter S) of the Internal Revenue Code. See page 24 of this
Form
SB-2/A regarding the change in tax
status.
|
(b)
|
Represents
transaction costs associated with the reverse acquisition, including
$200,000 to settle outstanding liabilities of the registrant and
$15,000
of related legal fees.
|
(c)
|
Unaudited
pro forma combined basic and diluted share information of NIM and
DCFG and
earnings per share for the year ended December 31, 2004 are as
follows:
|
Year
Ended
December
31, 2004
|
||||
NIM
historical weighted average shares outstanding
|
5,000,000
|
|||
Adjusted
for plan of reorganization (a)
|
(4,166,000
|
)
|
||
NIM
pro forma weighted average shares outstanding
|
834,000
|
|||
|
||||
DCFG
historical weighted average shares outstanding
|
12,040,000
|
|||
|
||||
Pro
forma combined weighted average shares outstanding
|
12,874,000
|
(a)
|
After
giving effect a 20:1 reverse split of the company’s
common stock and the subsequent issuance of 534,000 shares in February
2005 to twelve accredited investors as a private placement under
Section
4(2) of the Securities Act of 1933.
|
|
Page
|
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
F-5
|
|
|
FINANCIAL
STATEMENTS
|
|
|
|
Balance
Sheets as of December 31, 2004 and 2003
|
F-6
|
|
|
Statements
of Operations and Comprehensive Loss for the years ended December
31, 2004
and 2003
|
F-7
|
|
|
Statement
of Changes in Shareholders' Equity for the years ended December 31,
2004
and 2003
|
F-8
|
|
|
Statements
of Cash Flows for the years ended December 31, 2004 and 2003
|
F-9
|
|
|
Notes
to Financial Statements
|
F-10
|
/s/ S.
W. Hatfield, CPA
|
|
S.
W. HATFIELD, CPA
|
December
31,
2004
|
December
31,
2003
|
ASSETS
|
|||||||
CURRENT
ASSETS
|
|
|
|||||
Cash
on hand and in bank
|
$
|
10,617
|
$
|
—
|
|||
TOTAL
CURRENT ASSETS
|
10,617
|
—
|
|||||
TOTAL
ASSETS
|
$
|
10,617
|
$
|
—
|
|||
LIABILITIES
|
|||||||
CURRENT
LIABILITIES
|
|||||||
Accounts
payable - trade
|
$
|
—
|
$
|
7,000
|
|||
TOTAL
CURRENT LIABILITIES
|
—
|
7,000
|
|||||
COMMITMENTS
AND CONTINGENCIES
|
|||||||
SHAREHOLDERS'
EQUITY (DEFICIT)
|
|||||||
Common
stock - $0.001 par value 100,000,000 shares authorized 5,000,000
and
2,245,500 shares issued and outstanding, respectively
|
5,000
|
2,245
|
|||||
Additional
paid-in capital
|
782,200
|
757,410
|
|||||
Accumulated
deficit
|
(776,583
|
)
|
(766,655
|
)
|
|||
TOTAL
SHAREHOLDERS' EQUITY (DEFICIT)
|
10,617
|
(7,000
|
)
|
||||
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
10,617
|
$
|
—
|
Year
ended
December
31, 2004
|
Year
ended
December
31, 2003
|
||||||
REVENUES
|
$
|
—
|
$
|
—
|
|||
EXPENSES
|
|||||||
General
and administrative expenses
|
9,946
|
1,000
|
|||||
Total
operating expenses
|
9,946
|
1,000
|
|||||
LOSS
FROM OPERATIONS
|
(9,946
|
)
|
(1,000
|
)
|
|||
OTHER
INCOME
|
|||||||
Interest
income
|
18
|
—
|
|||||
LOSS
BEFORE PROVISION FOR INCOME TAXES
|
(9,928
|
)
|
(1,000
|
)
|
|||
PROVISION
FOR INCOME TAXES
|
—
|
—
|
|||||
NET
LOSS
|
(9,928
|
)
|
(1,000
|
)
|
|||
OTHER
COMPREHENSIVE INCOME
|
—
|
—
|
|||||
COMPREHENSIVE
LOSS
|
$
|
(9,928
|
)
|
$
|
(1,000
|
)
|
|
Earnings
per share of common stock outstanding computed on net loss - basic
and
fully diluted
|
nil
|
nil
|
|||||
Weighted-average
number of shares outstanding - basic and fully diluted
|
3,374,393
|
2,245,000
|
Common
Stock
|
||||||||||||||||
Shares
|
Amount
|
Additional
paid-in
capital
|
Accumulated
deficit
|
Total
|
||||||||||||
|
||||||||||||||||
BALANCES
AT JANUARY 1, 2003
|
2,245,500
|
$
|
2,245
|
$
|
757,410
|
$
|
(765,655
|
)
|
$
|
(6,000
|
)
|
|||||
Net
loss for the year
|
—
|
—
|
—
|
(1,000
|
)
|
(1,000
|
)
|
|||||||||
BALANCES
AT DECEMBER 31, 2003
|
2,245,000
|
2,245
|
757,410
|
(766,655
|
)
|
(7,000
|
)
|
|||||||||
Private
placement of common stock
|
2,754,500
|
2,755
|
24,790
|
—
|
27,545
|
|||||||||||
Net
loss for the year
|
—
|
—
|
—
|
(9,928
|
)
|
(9,928
|
)
|
|||||||||
BALANCES
AT DECEMBER 31, 2004
|
5,000,000
|
$
|
5,000
|
$
|
782,200
|
$
|
(776,583
|
)
|
$
|
10,617
|
Year
ended
December
31, 2004
|
Year
ended
December
31, 2003
|
||||||
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||||
Net
income (loss) for the period
|
$
|
(9,928
|
)
|
$
|
(1,000
|
)
|
|
Adjustments
to reconcile net loss to net cash provided by operating activities
|
|||||||
Depreciation
and amortization
|
—
|
—
|
|||||
Increase
(Decrease) in Accounts payable - trade
|
(7,000
|
)
|
1,000
|
||||
NET
CASH USED IN OPERATING ACTIVITIES
|
(16,928
|
)
|
—
|
||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
—
|
—
|
|||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||
Proceeds
from sale of common stock
|
27,545
|
—
|
|||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
27,545
|
—
|
|||||
INCREASE
(DECREASE) IN CASH
|
10,617
|
—
|
|||||
Cash
at beginning of period
|
—
|
—
|
|||||
CASH
AT END OF PERIOD
|
$
|
10,617
|
$
|
—
|
|||
SUPPLEMENTAL
DISCLOSURE OF INTEREST AND INCOME TAXES PAID
|
|||||||
Interest
paid for the year
|
$
|
—
|
$
|
—
|
|||
Income
taxes paid for the year
|
$
|
—
|
$
|
—
|
|
Year
ended
December
31,
2004
|
Year
ended
December
31,
2003
|
|||||
Federal:
|
|||||||
Current
|
$
|
—
|
$
|
—
|
|||
Deferred
|
—
|
—
|
|||||
|
— |
—
|
|||||
State:
|
|||||||
Current
|
—
|
—
|
|||||
Deferred
|
—
|
—
|
|||||
|
— |
—
|
|||||
Total
|
$
|
—
|
$
|
—
|
Year
ended
December
31,
2004
|
Year
ended
December
31,
2003
|
||||||
Statutory
rate applied to income before income taxes
|
$
|
(3,375
|
)
|
$
|
(340
|
)
|
|
Increase
(decrease) in income taxes resulting from:
|
|||||||
State
income taxes
|
—
|
—
|
|||||
Other,
including reserve for deferred tax asset and application of
net operating
loss carryforward
|
3,375
|
340
|
|||||
Income
tax expense
|
$
|
—
|
$
|
—
|
December
31,
2004
|
December
31,
2003
|
||||||
Deferred
tax assets, reflecting the 2004 change in control
|
|||||||
Net
operating loss carryforwards
|
$
|
3,375
|
$
|
—
|
|||
Less
valuation allowance
|
(3,375
|
)
|
—
|
||||
Net
Deferred Tax Asset
|
$
|
—
|
$
|
—
|
Report
of Independent Registered Public Accounting Firm
|
F-17
|
Consolidated
Financial Statements
|
|
Balance
Sheet
|
F-18
|
Statement
of Operations
|
F-19
|
Statement
of Stockholders’ Equity
|
F-
20
|
Statement
of Cash Flows
|
F-21
|
Notes
to Financial Statements
|
F-22
|
December
31, 2004
|
|
|||
|
||||
ASSETS
|
||||
|
||||
Current
assets
|
||||
Cash
|
$
|
89,779
|
||
Accounts
receivable, net of allowance for doubtful
|
||||
accounts
of $11,000
|
116,370
|
|||
Due
from escrow agent
|
17,102
|
|||
Prepaid
expenses and other current assets
|
4,360
|
|||
Total
current assets
|
227,611
|
|||
|
||||
Property
and equipment
|
50,000
|
|||
|
||||
Other
assets
|
||||
Goodwill
|
1,374,486
|
|||
Customer
lists/relationships
|
3,100,000
|
|||
Other
intangibles
|
250,000
|
|||
Deferred
tax asset
|
9,000
|
|||
|
4,733,486
|
|||
|
||||
$
|
5,011,097
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
|
||||
Current
liabilities
|
||||
Long-term
debt, current portion
|
$
|
121,879
|
||
Accounts
payable
|
10,917
|
|||
Accrued
expenses and other current liabilities
|
178,774
|
|||
Total
current liabilities
|
311,570
|
|||
|
||||
Long-term
liabilities
|
||||
Long-term
debt, less current portion
|
243,756
|
|||
Deferred
tax liability
|
1,364,139
|
|||
|
1,607,895
|
|||
Stockholders'
equity
|
||||
Preferred
stock, $.001 par value, authorized 10,000,000
|
||||
shares;
4,000,000 designated as Series A shares, of
|
||||
which
3,820,000 shares issued and outstanding
|
||||
(liquidation
preference $3,820,000)
|
3,820
|
|||
Common
stock, $.001 par value, authorized 50,000,000
|
||||
shares;
issued and outstanding 12,040,000 shares
|
12,040
|
|||
Additional
paid-in capital
|
3,148,116
|
|||
Accumulated
deficit
|
(72,344
|
) | ||
Total
stockholders' equity
|
3,091,632
|
|||
$
|
5,011,097
|
Revenues
|
$
|
-
|
||
|
||||
Operating
expenses
|
81,344
|
|||
|
||||
Loss
from operations
|
(81,344
|
)
|
||
|
||||
Deferred
income tax benefit
|
9,000
|
|||
|
||||
Net
loss attributed to common stockholders
|
$
|
72,344
|
||
|
||||
Weighted
average common shares outstanding
|
12,040,000
|
|||
|
||||
Loss
per common share - basic and diluted
|
$
|
0.01
|
Additional
|
Total
|
|||||||||||||||||||||
Preferred
Stock
|
Common
Stock
|
Paid
- In
|
Accumulated
|
Stockholders'
|
||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
||||||||||||||||
Issuance
of shares to founder
|
-
|
$
|
-
|
2,500,000
|
$
|
2,500
|
$
|
-
|
$
|
-
|
$
|
2,500
|
||||||||||
|
||||||||||||||||||||||
Private
placement (common)
|
9,540,000
|
9,540
|
1,580,460
|
1,590,000
|
||||||||||||||||||
|
||||||||||||||||||||||
Private
placement (preferred)
|
3,820,000
|
3,820
|
1,906,180
|
1,910,000
|
||||||||||||||||||
|
||||||||||||||||||||||
Private
placement closing costs
|
||||||||||||||||||||||
and
other
|
(377,500
|
)
|
(377,500
|
)
|
||||||||||||||||||
|
||||||||||||||||||||||
Stock-based
compensation
|
38,976
|
38,976
|
||||||||||||||||||||
|
||||||||||||||||||||||
Net
loss
|
(72,344
|
)
|
(72,344
|
)
|
||||||||||||||||||
|
||||||||||||||||||||||
Balances,
December
31, 2004
|
3,820,000
|
$
|
3,820
|
12,040,000
|
$
|
12,040
|
$
|
3,148,116
|
$
|
(72,344
|
)
|
$
|
3,091,632
|
Period
December 13, 2004 (date of capitalization) through December 31, 2004
|
|
|||
|
|
|||
Cash
flows from operating activities
|
||||
Net
loss
|
$
|
(72,344
|
)
|
|
Adjustments
to reconcile net loss to net
|
||||
cash
used in operating activities:
|
||||
Stock-based
compensation
|
38,976
|
|||
Deferred
income tax benefit
|
(9,000
|
)
|
||
Increase
in accrued expenses and other current liabilities
|
638
|
|||
|
||||
Net
cash used in operating activities
|
(41,730
|
)
|
||
|
||||
Cash
flows from investing activities
|
||||
Acquisition
of PAS, net of cash acquired of $81,509
|
(3,026,389
|
)
|
||
|
||||
Cash
flows from financing activities
|
||||
Proceeds
from sales of common and preferred stock,
|
||||
net
of closing costs and amount due from escrow agent
|
3,157,898
|
|||
|
||||
Net
increase in cash
|
89,779
|
|||
|
||||
Cash,
beginning
of period
|
||||
|
||||
|
||||
Cash,
end
of period
|
$
|
89,779
|
||
|
||||
Supplemental
disclosure of non cash investing
|
||||
and
financing activities:
|
||||
|
||||
The
Company purchased 100% of the common stock of PAS for initial
|
||||
consideration
of $3,473,533, excluding a Holdback Amount which is contingent
|
||||
upon
certain future events. In conjunction with the acquisition, notes
were
issued
|
||||
and
liabilities were assumed as follows:
|
||||
|
||||
Fair
value of assets acquired
|
$
|
4,976,725
|
||
Cash
paid
|
(3,107,898
|
)
|
||
Notes
issued
|
(365,635
|
)
|
||
Accrued
acquisition costs
|
(27,500
|
)
|
||
|
||||
Liabilities
assumed
|
$
|
1,475,692
|
||
|
||||
In
connection with the Company's private placement, $50,000 of closing
costs
|
||||
were
accrued at December 31, 2004.
|
1.
|
Basis
of presentation and nature of business
|
2.
|
Summary
of significant accounting policies
|
2.
|
Summary
of significant accounting policies (continued)
|
|
Amount
|
Estimated
Life
|
Customer
lists/relationships
|
$
3,100,000
|
15
years
|
Covenant
not to compete
|
$
200,000
|
3
years
|
Employment
agreements
|
$
50,000
|
1
year
|
2.
|
Summary
of significant accounting policies (continued)
|
2.
|
Summary
of significant accounting policies (continued)
|
3.
|
Accrued
expenses and other current liabilities
|
Accrued
professional fees:
|
$
|
77,500
|
||
Accrued
commissions and related liabilities:
|
94,159
|
|||
Other
|
7,115
|
|||
|
$
|
178,774
|
4.
|
Long-term
debt
|
Year
ending December 31,
|
||||
2005
|
$
|
121,879
|
||
2006
|
121,878
|
|||
2007
|
121,878
|
5.
|
C
apital stock
|
6.
|
Warrants
and stock options
|
|
Warrants
Outstanding
|
Warrants
Exercisable
|
|||||||||||
|
|
|
|
|
|||||||||
|
|
Weighted
Average
|
|
Weighted
|
|||||||||
|
Number
|
Contractual
Life
|
Number
|
Average
|
|||||||||
Exercise
price
|
Outstanding
|
(Years)
|
Exercisable
|
Exercise
Price
|
|||||||||
$
.1667
|
2,693,000
|
5.0
|
2,040,500
|
$.1667
|
6.
|
Warrants
and stock
options (continued)
|
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||
|
|
|
|
|
|||||||||
|
|
Weighted
Average
|
|
Weighted
|
|||||||||
|
Number
|
Contractual
Life
|
Number
|
Average
|
|||||||||
Exercise
price
|
Outstanding
|
(Years)
|
Exercisable
|
Exercise
Price
|
|||||||||
$
1.00
|
75,000
|
10.0
|
75,000
|
$
1.00
|
7.
|
Income
taxes
|
U.S.
federal statutory income tax rate
|
(20
|
)%
|
||
State
income taxes rate, net of federal benefit
|
(3
|
)
|
||
Non
deductiblity of stock-based compensation
|
12
|
|||
|
||||
Effective
income tax rate
|
(11
|
)%
|
8.
|
Commitments
|
8.
|
Commitments
(continued)
|
9.
|
Acquisition
of PAS effective December 31, 2004
|
9.
|
Acquisition
of PAS effective December 31, 2004 (continued)
|
Assets
acquired:
|
||||
Cash
|
$
|
81,509
|
||
Accounts
receivable
|
116,370
|
|||
Prepaid
expenses and other current assets
|
4,360
|
|||
Property
and equipment
|
50,000
|
|||
Customer
lists/relationships
|
3,100,000
|
|||
Goodwill
|
1,374,486
|
|||
Covenant
not to compete
|
200,000
|
|||
Employment
agreements
|
50,000
|
|||
|
||||
Total
|
4,976,725
|
|||
|
||||
Liabilities
assumed:
|
||||
Accounts
payable
|
10,917
|
|||
Accrued
expenses and other current liabilities
|
100,636
|
|||
Deferred
tax liability
|
1,364,139
|
|||
|
||||
Total
|
1,475,692
|
|||
|
||||
Net
purchase price
|
$
|
3,501,033
|
10.
|
Subsequent
events
|
10.
|
Subsequent
events (continued)
|
Report
of Independent Registered Public Accounting Firm
|
F-33
|
Combined
Financial Statements
|
|
Balance
Sheet
|
F-34
|
Statements
of Operations
|
F-35
|
Statements
of Stockholders’ Equity
|
F-36
|
Statements
of Cash Flows
|
F-37
|
Notes
to Financial Statements
|
F-38
|
December
31, 2004
|
|
|||
|
|
|||
ASSETS
|
||||
|
||||
Current
assets
|
||||
Cash
|
$
|
81,509
|
||
Accounts
receivable, net of allowance for doubtful
|
||||
accounts
of $11,000
|
116,370
|
|||
Prepaid
expenses and other current assets
|
4,360
|
|||
|
||||
Total
current assets
|
$
|
202,239
|
||
|
||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
|
||||
Current
liabilities
|
||||
Accounts
payable
|
$
|
10,917
|
||
Accrued
expenses and other current liabilities
|
100,636
|
|||
|
||||
Total
current liabilities
|
111,553
|
|||
|
||||
Commitments
|
||||
|
||||
Stockholders'
equity
|
||||
Common
stock
|
11,100
|
|||
Additional
paid-in capital
|
174,586
|
|||
Less:
Treasury stock at cost
|
(95,000
|
)
|
||
|
||||
Total
stockholders' equity
|
90,686
|
|||
|
||||
$
|
202,239
|
Years
Ended December 31,
|
2004
|
2003
|
|||||
|
|
|
|||||
Revenues
|
|||||||
Asset-based
fees
|
$
|
906,344
|
$
|
652,252
|
|||
Fee
income
|
582,422
|
650,898
|
|||||
Commissions
|
408,017
|
323,445
|
|||||
Other
|
194,427
|
212,466
|
|||||
|
|||||||
|
2,091,210
|
1,839,061
|
|||||
|
|||||||
Operating
expenses
|
|||||||
Selling
expenses
|
950,663
|
766,779
|
|||||
General
and administrative expenses
|
1,131,189
|
1,095,869
|
|||||
|
|||||||
|
2,081,852
|
1,862,648
|
|||||
|
|||||||
Operating
income (loss)
|
9,358
|
(23,587
|
)
|
||||
|
|||||||
Other
income
|
|||||||
Interest
and dividend income
|
1,653
|
2,640
|
|||||
Gain
on forgiveness of debt
|
20,000
|
||||||
|
|||||||
|
1,653
|
22,640
|
|||||
|
|||||||
Net
income (loss)
|
$
|
11,011
|
$
|
(947
|
)
|
Years
Ended December 31, 2004 and 2003
|
||||||||||||||||
Additional
|
||||||||||||||||
Common
|
Paid-In
|
Retained
|
Treasury
|
|||||||||||||
Stock
|
Capital
|
Earnings
|
Stock
|
Total
|
||||||||||||
Balances,
January
1, 2003
|
$
|
11,100
|
$
|
900
|
$
|
458,795
|
$
|
(95,000
|
)
|
$
|
375,795
|
|||||
|
||||||||||||||||
Net
loss
|
(947
|
)
|
(947
|
)
|
||||||||||||
|
||||||||||||||||
Balances,
December
31, 2003
|
11,100
|
900
|
457,848
|
(95,000
|
)
|
374,848
|
||||||||||
|
||||||||||||||||
Distribution
to stockholder
|
(295,173
|
)
|
(295,173
|
)
|
||||||||||||
Constructive
distribution and contribution of capital
|
173,686
|
(173,686
|
)
|
|||||||||||||
|
||||||||||||||||
Net
income
|
11,011
|
11,011
|
||||||||||||||
|
||||||||||||||||
Balances,
December
31, 2004
|
$
|
11,100
|
$
|
174,586
|
$
|
0
|
$
|
(95,000
|
)
|
$
|
90,686
|
Years
Ended December 31,
|
2004
|
2003
|
|||||
|
|
|
|||||
Cash
flows from operating activities
|
|||||||
Net
income (loss)
|
$
|
11,011
|
$
|
(947
|
)
|
||
Adjustments
to reconcile net income (loss) to net
|
|||||||
cash
provided by (used in) operating activities:
|
|||||||
Depreciation
|
16,015
|
8,188
|
|||||
Bad
debt expense
|
2,500
|
||||||
Gain
on forgiveness of debt
|
(20,000
|
)
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
16,971
|
756
|
|||||
Prepaid
expenses and other current assets
|
10,653
|
(14,531
|
)
|
||||
Accounts
payable
|
(15,482
|
)
|
19,837
|
||||
Accrued
expenses and other current liabilities
|
27,115
|
(11,109
|
)
|
||||
|
|||||||
Net
cash provided by (used in) operating activities
|
66,283
|
(15,306
|
)
|
||||
|
|||||||
Cash
flows from investing activities
|
|||||||
Purchases
of property and equipment
|
(7,041
|
)
|
|||||
Payments
on note receivable, stockholder
|
45,304
|
||||||
|
|||||||
Net
cash provided by investing activities
|
38,263
|
||||||
|
|||||||
Cash
flows from financing activities
|
|||||||
Proceeds
from loan
|
40,000
|
||||||
Payments
on loan
|
(65,692
|
)
|
(20,000
|
)
|
|||
Distribution
to stockholder
|
(295,173
|
)
|
|||||
|
|||||||
Net
cash provided by (used in) financing activities
|
(360,865
|
)
|
20,000
|
||||
|
|||||||
Net
increase (decrease) in cash
|
(294,582
|
)
|
42,957
|
||||
|
|||||||
Cash,
beginning
of year
|
376,091
|
333,134
|
|||||
|
|||||||
Cash,
end
of year
|
$
|
81,509
|
$
|
376,091
|
1.
|
Nature
of operations and summary of significant accounting policies
|
1.
|
Nature
of operations and summary of significant accounting policies
(continued)
|
2.
|
Accrued
expenses and other current liabilities
|
Accrued
commissions and related liabilities
|
$
|
94,159
|
||
Benefit
plans payable
|
6,477
|
|||
|
$
|
100,636
|
3.
|
Stockholders’
equity
|
Additional
|
||||||||||
Common
|
Paid-in
|
Treasury
|
||||||||
|
Stock
|
Capital
|
Stock
|
|||||||
Pension
Administration Services, Inc.:
|
||||||||||
|
||||||||||
Common
stock, no par value, 100,000 shares authorized,
|
||||||||||
80
shares issued
|
$
|
1,000
|
$
|
-
|
$
|
-
|
||||
|
||||||||||
Adjustment
to equity due to change in tax status
|
171,978
|
|||||||||
Treasury
stock, 40 shares
|
(95,000
|
)
|
||||||||
|
||||||||||
Complete
Investment Management, Inc.:
|
||||||||||
|
||||||||||
Common
stock, $10 par value, 2,000 shares authorized,
|
||||||||||
1,000
shares issued and outstanding
|
10,000
|
|||||||||
Adjustment
to equity due to change in tax status
|
(6,198
|
)
|
||||||||
|
||||||||||
MDB,
Inc.:
|
||||||||||
|
||||||||||
Common
stock, $1 par value, 1,000 shares authorized,
|
||||||||||
100
shares issued and outstanding
|
100
|
900
|
||||||||
Adjustment
to equity due to change in tax status
|
7,906
|
|||||||||
|
||||||||||
|
$
|
11,100
|
$
|
174,586
|
$
|
(95,000
|
)
|
4.
|
Related
party transactions
|
5.
|
Commitments
|
6.
|
Forgiveness
of debt
|
7.
|
Acquisition
of PAS, CIM, and MDB
|
Financial
Statements
|
Page
No.
|
|
|
Condensed
Consolidated Balance Sheet - March 31, 2005 (unaudited)
|
F-43
|
|
|
Condensed
Consolidated Statement of Operations - Three Months ended
|
|
March
31 2005 (unaudited)
|
F-44
|
|
|
Condensed
Consolidated Statement of Stockholders’ Equity -
|
|
Three
Months ended March 31, 2005 (unaudited)
|
F-45
|
|
|
Condensed
Consolidated Statement of Cash Flows - Three Months ended
|
|
March
31, 2005 (unaudited)
|
F-46
|
|
|
Notes
to Condensed Consolidated Financial Statements
|
F-48
|
CURRENT
ASSETS:
|
||||
Cash
|
$
|
295,007
|
||
Accounts
receivable, net
|
157,759
|
|||
Accrued
interest receivable
|
2,778
|
|||
Prepaid
directors and officers liability insurance
|
94,722
|
|||
Prepaid
expenses and other current assets
|
60,679
|
|||
|
||||
Total
current assets
|
610,945
|
|||
|
||||
PROPERTY
AND EQUIPMENT ,
net
|
57,845
|
|||
|
||||
OTHER
ASSETS
|
||||
Restricted
cash
|
2,500,000
|
|||
Goodwill
|
1,374,486
|
|||
Customer
lists/relationships
|
3,048,333
|
|||
Other
intangibles
|
220,833
|
|||
Deferred
financing costs
|
145,694
|
|||
Deferred
tax asset
|
30,973
|
|||
|
7,320,319
|
|||
|
||||
$
|
7,989,109
|
|||
CURRENT
LIABILITIES:
|
||||
Short-term
debt
|
$
|
436,169
|
||
Long-term
debt, current portion
|
132,353
|
|||
Accounts
payable
|
19,160
|
|||
Accrued
expenses and other current liabilities
|
52,307
|
|||
|
||||
Total
current liabilities
|
639,989
|
|||
|
||||
LONG-TERM
LIABILITIES:
|
||||
Long-term
debt, less current portion
|
2,202,647
|
|||
Preferred
dividends payable
|
68,603
|
|||
Accrued
interest payable
|
6,070
|
|||
Deferred
tax liability
|
1,364,139
|
|||
|
||||
Total
long-term liabilities
|
3,641,459
|
|||
|
||||
Total
liabilities
|
4,281,448
|
|||
|
||||
COMMITMENTS
AND CONTINGENCIES
|
||||
STOCKHOLDERS'
EQUITY:
|
||||
Preferred
Stock, $.001 par value, 10,000,000 shares authorized;
|
||||
4,000,000
designated as Series A shares of which 3,820,000
|
||||
shares
issued and outstanding (liquidation preference
|
||||
$3,820,000)
|
3,820
|
|||
Common
Stock, $.001 par value 100,000,000 shares authorized,
|
||||
13,318,513
shares issued
|
13,319
|
|||
Additional
paid-in capital
|
4,211,173
|
|||
Accumulated
deficit
|
(520,651
|
)
|
||
Total
stockholders' equity
|
3,707,661
|
|||
|
||||
$
|
7,989,109
|
REVENUES
|
$
|
555,664
|
||
|
||||
OPERATING
EXPENSES:
|
||||
SELLING
EXPENSES
|
73,333
|
|||
GENERAL
AND ADMINISTRATIVE EXPENSES
|
544,078
|
|||
DEPRECIATION
AND AMORTIZATION
|
87,539
|
|||
STOCK
BASED COMPENSATION
|
2,953
|
|||
|
707,903
|
|||
|
||||
LOSS
FROM OPERATIONS
|
(152,239
|
)
|
||
|
||||
|
||||
OTHER
INCOME (EXPENSE)
|
||||
REVERSE
ACQUISITION TRANSACTION COSTS
|
(215,000
|
)
|
||
INTEREST
EXPENSE
|
(37,519
|
)
|
||
INTEREST
AND DIVIDEND INCOME
|
3,081
|
|||
|
||||
|
(249,438
|
)
|
||
|
||||
|
(401,677
|
)
|
||
|
||||
DEFERRED
INCOME TAX BENEFIT
|
21,973
|
|||
|
||||
NET
LOSS AVAILABLE TO COMMON SHAREHOLDERS
|
(379,704
|
)
|
||
|
||||
PREFERRED
DIVIDENDS
|
(68,603
|
)
|
||
|
||||
NET
LOSS
|
$
|
(448,307
|
)
|
|
|
||||
BASIC
AND DILUTED LOSS
|
||||
PER
COMMON SHARE
|
$
|
(0.03
|
)
|
|
|
||||
WEIGHTED
AVERAGE NUMBER OF
|
||||
COMMON
SHARES OUTSTANDING
|
12,396,000
|
Preferred
Stock
|
Common
Stock
|
|||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Additional
Paid-In
Capital
|
Accumulated
Deficit
|
Total
Stockholders'
Equity
|
||||||||||||||||
Beginning
balances (Duncan Capital Financial Group, Inc.)
|
3,820,000
|
$
|
3,820
|
12,040,000
|
$
|
12,040
|
$
|
3,148,116
|
$
|
(72,344
|
)
|
$
|
3,091,632
|
|||||||||
|
||||||||||||||||||||||
Debt
and accrued interest converted to common stock
|
294,813
|
295
|
220,814
|
221,109
|
||||||||||||||||||
|
||||||||||||||||||||||
Common
stock for services
|
149,700
|
150
|
24,850
|
25,000
|
||||||||||||||||||
|
||||||||||||||||||||||
Common
stock issued to FEST stockholders in reverse acquisition
|
834,000
|
834
|
9,784
|
10,618
|
||||||||||||||||||
|
||||||||||||||||||||||
Option,
warrant and embedded conversion option associated with debt
|
830,000
|
830,000
|
||||||||||||||||||||
|
||||||||||||||||||||||
Stock
based compensation
|
2,953
|
2,953
|
||||||||||||||||||||
|
||||||||||||||||||||||
Private
placement costs
|
(25,344
|
)
|
(25,344
|
)
|
||||||||||||||||||
|
||||||||||||||||||||||
Preferred
dividends
|
(68,603
|
)
|
(68,603
|
)
|
||||||||||||||||||
|
||||||||||||||||||||||
Net
loss
|
(379,704
|
)
|
(379,704
|
)
|
||||||||||||||||||
|
3,820,000
|
$
|
3,820
|
13,318,513
|
$
|
13,319
|
$
|
4,211,173
|
$
|
(520,651
|
)
|
$
|
3,707,661
|
Cash
flows from operating activities:
|
||||
Net
loss available to common shareholders
|
$
|
(379,704
|
)
|
|
Adjustments
to reconcile net loss to net
|
||||
cash
used in operating activities:
|
||||
Depreciation
and amortization
|
109,653
|
|||
Non-cash
interest
|
15,000
|
|||
Stock-based
compensation
|
2,953
|
|||
Stock
issued for services
|
25,000
|
|||
Deferred
income tax benefit
|
(21,973
|
)
|
||
Increase
(decrease) in cash attributable to changes
|
||||
in
operating assets and liabilities:
|
||||
Accounts
receivable
|
(41,389
|
)
|
||
Accrued
interest receivable
|
(2,778
|
)
|
||
Prepaid
and other current assets
|
(146,041
|
)
|
||
Accounts
payable
|
8,243
|
|||
Accrued
expenses and other current liabilities
|
(43,493
|
)
|
||
Accrued
interest payable
|
6,070
|
|||
|
||||
Net
cash used in operating activities
|
(468,459
|
)
|
||
|
||||
Cash
flows from investing activities:
|
||||
Purchases
of property and equipment
|
(8,358
|
)
|
||
Acquisition
costs (PAS transaction)
|
(27,500
|
)
|
||
Cash
acquired (reverse merger transaction)
|
10,618
|
|||
Increase
in restricted cash (for acquisition purposes)
|
(2,500,000
|
)
|
||
|
||||
Net
cash used in investing activities
|
(2,525,240
|
)
|
||
|
||||
Cash
flows from financing activities:
|
||||
Proceeds
from convertible notes
|
3,000,000
|
|||
Proceeds
from short-term debt
|
460,000
|
|||
Payments
on short-term debt
|
(23,831
|
)
|
||
Costs
of 2004 common and preferred stock sales, net
|
(58,242
|
)
|
||
of
$17,102 collected from the escrow agent
|
||||
Payment
of deferred financing costs
|
(179,000
|
)
|
||
|
||||
Net
cash provided by financing activities
|
3,198,927
|
|||
|
||||
Increase
in cash
|
205,228
|
|||
|
||||
Cash,
beginning of period
|
89,779
|
|||
|
||||
Cash,
end of period
|
$
|
295,007
|
Supplemental
disclosure of cash flow information:
|
||||
Interest
paid
|
$
|
16,449
|
||
|
||||
Supplemental
disclosures of non-cash investing and
|
||||
financing
activities:
|
||||
Accrued
preferred dividends
|
$
|
68,603
|
||
|
||||
Conversion
of debt and accrued interest into
|
||||
common
stock
|
$
|
221,109
|
||
|
||||
Warrants
and options issued and embedded
|
||||
conversion
feature associated with convertible
|
||||
debt
financing
|
$
|
830,000
|
Amount
|
Estimated
Life
|
||||||
Customer
lists/relationships
|
$
|
3,100,000
|
15
years
|
||||
Covenants
not to compete
|
$
|
200,000
|
3
years
|
||||
Employment
agreements
|
$
|
50,000
|
1
year
|
·
|
Third
party administration. We
earn fees for the development and implementation of corporate and
executive benefit programs as well as fees for the duration that
these
programs are administered.
|
·
|
Financial
planning and investment advisory fees and securities commissions.
We
receive commissions related to the sale of securities and certain
investment-related insurance products as well as fees for offering
financial advice through financial intermediaries and related services.
These fees are based on a percentage of assets under management
and are
generally paid quarterly. We also charge fees for evaluations of
the
performance of portfolios.
|
·
|
Insurance
commissions .
Insurance and annuity commissions paid by insurance companies are
based on
a percentage of the premium that the insurance company charges
to the
policyholder. First-year commissions are calculated as a percentage
of the
first twelve months premium on the policy and are earned in the
year that
the policy is originated. In many cases, we receive renewal commissions
for a period following the first year, if the policy remains in
force.
|
· |
Third
party administration.
|
· |
Persuasive
evidence of an arrangement between us and our client exists
|
· |
Delivery
of a completed product to the customer has occurred or the
service has
been provided to the customer
|
· |
The
price to the customer is fixed and determinable
|
· |
Collectibility
of the sales price is reasonably assured
|
· |
Financial
planning and investment advisory fees and securities commissions.
|
· |
As
services are rendered
|
· |
Contingent
commissions are recorded as revenue when received
|
· |
Insurance
commissions .
|
· |
The
policy application is substantially complete
|
· |
The
premium is paid
|
· |
The
insured party is contractually committed to the purchase
of the insurance
policy
|
Options
|
718,700
|
|||
Warrants
|
4,090,638
|
|||
Convertible
Notes
|
3,614,458
|
|||
|
8,468,796
|
Securities
and Exchange Commission Registration Fee
|
$
|
4,200
|
||
Legal
Fees and Expenses
|
$
|
_______
|
*
|
|
Accounting
Fees and Expenses
|
$
|
_______
|
*
|
|
Other
Expenses
|
$
|
_______
|
*
|
|
Total
Costs and Expenses
|
$
|
_______
|
*
|
Exhibit Number |
Description
|
|
3.1
|
Articles
of Incorporation of the Company, as amended*
|
|
3.2
|
Amended
and Restated Bylaws of the Company*
|
|
4.1
|
Securities
Purchase Agreement dated March 9, 2005 by and between the Company
and
Laurus Master Fund, Ltd. (Incorporated by reference to Form 8-K filed
with
the Securities and Exchange Commission on March 15, 2005)
|
|
4.2
|
Secured
Convertible Term Note dated March 9, 2005 issued by the Company to
Laurus
Master Fund, Ltd. (Incorporated by reference to Form 8-K filed with
the
Securities and Exchange Commission on March 15, 2005)
|
|
4.3
|
Common
Stock Purchase Warrant dated March 9, 2005 issued by the Company
to Laurus
Master Fund, Ltd. (Incorporated by reference to Form 8-K filed with
the
Securities and Exchange Commission on March 15, 2005)
|
|
4.4
|
Common
Stock Option dated March 9, 2005 issued by the Company to Laurus
Master
Fund, Ltd. (Incorporated by reference to Form 8-K filed with the
Securities and Exchange Commission on March 15, 2005)
|
|
4.5
|
Master
Security Agreement dated March 9, 2005 among Fast Eddie Racing Stables,
Inc., Duncan Capital Financial Group, Inc., Pension Administration
Services, Inc., Complete Investment Management Inc. of Philadelphia,
MD
Bluestein, Inc. and Laurus Master Fund, Ltd. (Incorporated by reference
to
Form 8-K filed with the Securities and Exchange Commission on March
15,
2005)
|
4.6
|
Stock
Pledge Agreement dated March 9, 2005 among Fast Eddie Racing Stables,
Inc., Duncan Capital Financial Group, Inc., Pension Administration
Services, Inc., Complete Investment Management Inc. of Philadelphia,
MD
Bluestein, Inc. and Laurus Master Fund, Ltd. (Incorporated by reference
to
Form 8-K filed with the Securities and Exchange Commission on March
15,
2005)
|
|
4.7
|
Subsidiary
Guaranty dated March 9, 2005 executed by Duncan Capital Group, Inc.,
Pension Administration Services, Inc., Complete Investment Management
Inc.
of Philadelphia, MD Bluestein, Inc. and Laurus Master Fund, Ltd.
(Incorporated by reference to Form 8-K filed with the Securities
and
Exchange Commission on March 15, 2005)
|
|
4.8
|
Registration
Rights Agreement dated March 9, 2005 by and between Fast Eddie Racing
Stables, Inc. and Laurus Master Fund, Ltd. (Incorporated by reference
to
Form 8-K filed with the Securities and Exchange Commission on March
15,
2005)
|
|
4.9
|
Common
Stock Purchase Warrant dated March 9, 2005 issued by Duncan Capital
Financial Group, Inc. to Richard E. Stierwalt. (Incorporated by reference
to Form 8-K filed with the Securities and Exchange Commission on
March 15,
2005)
|
|
4.10
|
Common
Stock Purchase Warrant dated March 9, 2005 issued by Duncan Capital
Financial Group, Inc. to Leonard Neuhaus. (Incorporated by reference
to
Form 8-K filed with the Securities and Exchange Commission on March
15,
2005)
|
|
4.11
|
Form
of Stock Option Agreement, dated March 9, 2005, between the Company
and
certain non-management directors. *
|
|
5.1
|
Opinion
of Cohen Tauber Spievack & Wagner LLP.
|
|
10.1
|
Agreement
and Plan of Reorganization, dated as of February 18, 2005, by and
among
Fast Eddie Racing Stables, Inc, Glenn A. Little, Duncan Capital Financial
Group, Inc. and FERS Acquisition Corp. (Incorporated by reference
to Form
8-K filed with the Securities and Exchange Commission on February
23,
2005)
|
|
10.2
|
Employment
Agreement, dated as of December 23, 2004, between Duncan Capital
Financial
Group, Inc. and Richard E. Stierwalt. (Incorporated by reference
to Form
8-K filed with the Securities and Exchange Commission on March 15,
2005)
|
|
10.3
|
Employment
Agreement, dated as of January 1, 2005, between Duncan Capital Financial
Group, Inc. and Leonard Neuhaus. (Incorporated by reference to Form
8-K
filed with the Securities and Exchange Commission on March 15, 2005)
|
|
10.4
|
12%
Senior Secured Note, dated January 27, 2005, in the original principal
amount of $350,000, delivered by Duncan Capital Financial Group,
Inc. to
CAMOFI Master LDC (formerly known as DCOFI Master LDC)*
|
|
10.5
|
Securities
Purchase Agreement, dated as of January 27, 2005, between Duncan
Capital
Financial Group, Inc. and CAMOFI Master LDC*
|
|
10.6
|
Security
Agreement, dated as of January 27, 2005, among Duncan Capital Financial
Group, Inc., Pension Administration Services, Inc., Complete Investment
Management Inc. of Philadelphia, MD Bluestein Inc. and CAMOFI Master
LDC.*
|
|
10.7
|
Subsidiary
Guarantee, dated as of January 27, 2005, among Duncan Capital Financial
Group, Inc., Pension Administration Services, Inc., Complete Investment
Management Inc. of Philadelphia and MD Bluestein Inc. in favor of
CAMOFI
Master LDC.*
|
|
10.8
|
12%
Senior Secured Note, dated May 4, 2005, in the original principal
amount
of $150,000, delivered by Duncan Capital Financial Group, Inc. to
CAMOFI
Master LDC.*
|
|
10.9
|
Agreement,
dated as of June 15, 2005, between the Company and Richard Berman.
*
|
|
16.1
|
Resignation
letter of S. W. Hatfield, CPA (Incorporated by reference to Form
8-K filed
with the Securities and Exchange Commission on March 15, 2005)*
|
21.1
|
List
of Subsidiaries of the Company.*
|
|
23.1
|
Consent
of Rothstein, Kass & Company, P.C.
|
|
23.2
|
Consent
of S.W. Hatfield, CPA
|
|
23.3
|
Consent
of Cohen Tauber Spievack & Wagner LLP (included in their opinion filed
as Exhibit 5.1)
|
|
24.1
|
Powers
of Attorney of certain officers and directors of the Company*
|
NATIONAL
INVESTMENT MANAGERS INC.
(Registrant)
|
||
|
|
|
By: |
/s/
Richard E. Stierwalt
|
|
Richard
E. Stierwalt
|
||
President
and Chief Executive Officer
|
SIGNATURE
|
TITLE
|
DATE
|
||||||
|
|
|
||||||
/s/
Richard E. Stierwalt
|
Chief
Executive Officer and Director
|
July
20, 2005
|
||||||
Richard
E. Stierwalt
|
|
|||||||
|
|
|
||||||
/s/
Richard E. Stierwalt*
|
Chief
Financial Officer
|
July
20, 2005
|
||||||
Leonard
A. Neuhaus
|
|
|
||||||
|
|
|
||||||
/s/
Richard E. Stierwalt*
|
Chairman
of the Board and Director
|
July
20, 2005
|
||||||
Richard
Berman
|
|
|
||||||
|
|
|
||||||
/s/
Richard E. Stierwalt*
|
Director
|
July
20, 2005
|
||||||
Michael
Bluestein
|
|
|
||||||
|
|
|
||||||
/s/
Richard E. Stierwalt*
|
Director
|
July
20, 2005
|
||||||
Steven
B. Ruchefsky
|
|
|
||||||
|
|
|
||||||
/s/
Richard E. Stierwalt*
|
Director
|
July
20, 2005
|
||||||
Kevin
T. Crow
|
|
|
||||||
|
|
|
||||||
/s/
Richard E. Stierwalt*
|
Director
|
July
20, 2005
|
||||||
Arthur
D. Emil
|
|
|
||||||
|
|
|
||||||
/s/
Richard E. Stierwalt*
|
Director
|
July
20, 2005
|
||||||
Jeff
Cooke
|
|
|
||||||
|
|
|
||||||
/s/
Steven J. Ross
|
Director
|
July
20, 2005
|
||||||
Steven
J. Ross
|
|
|
(a) |
4,914,700
shares of the Company’s common stock, $.001 par value per share (“Common
Stock”), owned by certain shareholders of the
Company;
|
(b) |
736,000
shares of Common Stock issuable upon the conversion by CAMOFI Master
LDC
(“CAMOFI”) of a secured convertible promissory note delivered by the
Company in connection with a loan (the CAMOFI Note”), plus an additional
500,000 shares of Common Stock (“CAMOFI Default Shares”) issuable to
CAMOFI if certain obligations under the CAMOFI Note are not met;
|
(c) |
3,420,000
shares of Common Stock issuable upon the conversion of the Company’s
Series A Convertible Preferred Stock issued by the Company in a
private
placement (the “Preferred Stock”);
|
(d) |
420,853
shares of Common Stock issuable to holders of Preferred Stock for
payment
of dividends thereon; and
|
(e) |
1,660,000
shares of Common Stock issuable upon the exercise of warrants issued
in a
private placement (the “Warrants”).
|
/s/ S. W. Hatfield, CPA | |
S. W. HATFIELD, CPA |