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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): December 17, 1998
UNIFIED FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-22629 35-1797759
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
organization) Number)
431 NORTH PENNSYLVANIA STREET
INDIANAPOLIS, INDIANA 46204-1873
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 634-3301
======================================================================
<PAGE>
<PAGE>
ITEM 2. ACQUISITION OF ASSETS
Reference is made to the Current Report on Form 8-K filed by
the Registrant on December 23, 1998 announcing the closing of the merger
of Equity Acquisition Corporation, a wholly owned subsidiary of the
Registrant, into Equity Underwriting Group, Inc. ("Equity") on December 17,
1998. Reference is also made to the Current Report on Form 8-K filed by the
Registrant on January 8, 1999 announcing the closing of the merger of
AmeriPrime Financial Services, Inc. ("AmeriPrime") into a wholly owned
subsidiary of the Registrant on December 31, 1998.
ITEM 5. OTHER EVENTS
On October 31, 1998, the Company executed a letter of intent
with SBX Inc. to acquire all of the capital stock of SBX Inc. in
exchange for 363,636 shares of common stock, $0.01 par value, of the
Registrant. On January 29, 1999, the Company and SBX Inc. mutually
terminated such letter of intent.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Each Business Acquired (Equity
Underwriting Group, Inc. and AmeriPrime Financial
Services, Inc.)
(1) Equity Underwriting Group, Inc.
(i) Independent Auditors' Report
(ii) Consolidated Statements of Financial
Condition (Audited) as of December 31,
1997 and 1996
(iii) Consolidated Statements of Operations
(Audited) for the years ended December 31,
1997 and 1996
(iv) Consolidated Statements of Cash Flows
(Audited) for the years ended December 31,
1997 and 1996
(v) Consolidated Statements of Changes in
Stockholders' Equity (Audited) for the
years ended December 31, 1997 and 1996
(vi) Notes to Audited Consolidated Financial
Statements
(vii) Consolidated Balance Sheet (Unaudited) as
of September 30, 1998
(viii) Consolidated Statements of Operations
(Unaudited) for the nine months ended
September 30, 1998 and 1997
(ix) Consolidated Statements of Cash Flows
(Unaudited) for the nine months ended
September 30, 1998 and 1997
(x) Notes to Unaudited Financial Statements
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(2) AmeriPrime Financial Services, Inc.
(i) Independent Auditors' Report
(ii) Consolidated Statements of Financial
Condition (Audited) as of December 31,
1997 and 1996
(iii) Consolidated Statements of Operations
(Audited) for the years ended December 31,
1997 and 1996
(iv) Consolidated Statements of Cash Flows
(Audited) for the years ended December 31,
1997 and 1996
(v) Consolidated Statements of Changes in
Shareholders' Equity (Audited) for the years
ended December 31, 1997 and 1996
(vi) Notes to Audited Consolidated Financial
Statements
(vii) Statement of Financial Condition (Unaudited) as
of September 30, 1998
(viii) Statements of Operations (Unaudited) for
the nine months ended September 30, 1998
and 1997
(ix) Statements of Cash Flows (Unaudited) for
the nine months ended September 30, 1998
and 1997
(x) Notes to Unaudited Financial Statements
(b) Pro Forma Financial Information
(i) Pro Forma Consolidating Balance Sheet (Unaudited)
as of September 30, 1998
(ii) Pro Forma Consolidating Statements of Income
(Unaudited) for the nine months ended
September 30, 1998 and 1997
(iii) Pro Forma Consolidating Statements of Income
(Unaudited) for the years ended December 31,
1997 and 1996
(iv) Notes to Pro Forma Consolidating Financial
Statements (Unaudited)
(c) Exhibits
See Exhibit Index on page 49.
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To the Board of Directors and
Stockholder of Equity Underwriting Group, Inc.
INDEPENDENT AUDITORS' REPORT
----------------------------
We have audited the accompanying consolidated statements of financial
condition of Equity Underwriting Group, Inc. and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, changes in stockholders' equity, and cash flows for the
years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Equity Underwriting
Group, Inc. and subsidiaries at December 31, 1997 and 1996, and the
results of their operations, and their cash flows for the years then
ended in conformity with generally accepted accounting principles.
/s/ Larry E. Nunn & Associates, LLC
Columbus, Indiana
February 12, 1999
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<TABLE>
EQUITY UNDERWRITING GROUP, INC.
AUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, 1997 and 1996
<CAPTION>
1997 1996
---- ----
ASSETS
------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,901,940 $2,043,446
Money held for employees 100 100
Accounts receivable - trade 2,872,603 1,953,681
Accounts receivable - other 10,589 --
Deferred income tax benefit 35,700 --
Notes receivable - officers 50,000 50,000
Prepaid expense 62,070 35,649
Investments in marketable securities 4,863 281,857
Advances to affiliate 31,952 10,585
Other assets -- --
----------- ----------
Total current assets 4,969,817 4,375,318
----------- ----------
Property and Equipment:
Computer equipment and software 783,640 444,531
Furniture and fixtures 852,417 608,242
Automobiles 144,846 116,252
----------- ----------
1,780,903 1,169,025
Less accumulated depreciation (1,220,842) (806,153)
----------- ----------
Net property and equipment 560,061 362,872
----------- ----------
Other Assets:
Non-compete covenant 20,000 25,000
Goodwill, net of amortization of
$523,285 and $0, respectively 372,662 895,947
Cash value of officers' life insurance 39,520 33,247
Insurance agency purchased lease and
employment rights 257,947 --
Less accumulated amortization (107,966) --
Minority interest in subsidiary 466,424 10,601
Deferred income tax 437,990 21,000
----------- ----------
Total other assets 1,486,577 985,795
----------- ----------
TOTAL ASSETS $ 7,016,455 $5,723,985
=========== ==========
See notes to audited consolidated financial statements and
independent auditors' report.
</TABLE>
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<TABLE>
EQUITY UNDERWRITING GROUP, INC.
AUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, 1997 and 1996
<CAPTION>
1997 1996
---- ----
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current Liabilities:
Line of credit $ 80,000 $ --
Current portion of long-term debt 87,570 476,428
Accounts payable - insurance companies 4,787,147 3,829,077
Accounts payable - brokers 207,713 232,172
Accounts payable - trade 94,577 113,981
Accrued expenses 142,454 59,904
Cash held for employees 632 100
Income tax payable 8,387 5,700
Other liabilities 348,907 --
---------- ----------
Total current liabilities 5,757,387 4,717,362
---------- ----------
Long-Term Liabilities:
Notes payable 1,179,613 719,519
Other liabilities 514,611 --
---------- ----------
Total long-term liabilities 1,694,224 719,519
---------- ----------
Stockholders' Equity:
Common stock, no par value, 1,000 shares
authorized and issued, 100 shares
outstanding 1,000 1,000
Paid in capital 2,500 --
Retained earnings (438,557) 291,076
Unrealized loss on investments (99) (4,972)
---------- ----------
Total stockholders' equity (435,156) 287,104
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $7,016,455 $5,723,985
========== ==========
See notes to audited consolidated financial statements and
independent auditors' report.
</TABLE>
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<TABLE>
EQUITY UNDERWRITING GROUP, INC.
AUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 1997 and 1996
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenue:
Gross operating revenues $10,365,295 $ 7,890,257
Less commissions expense (4,741,726) (3,443,417)
----------- -----------
Net commission income 5,623,569 4,446,840
----------- -----------
Administration Expenses:
Compensation 4,268,165 2,724,682
Business development 611,358 579,314
Depreciation 414,689 144,309
Amortization 107,966 --
Postage and delivery expenses 281,611 246,480
Telephone and communications 62,991 52,030
Equipment rental 198,388 162,232
Professional fees 58,791 42,056
Insurance 60,350 59,476
Facilities rent 214,350 198,949
Other operating expenses 1,030,761 384,547
----------- -----------
Total administrative expenses 7,309,420 4,594,075
----------- -----------
Net Operating Income (Loss) (1,685,851) (147,235)
----------- -----------
Other Income (Expense):
Interest income 124,319 152,586
Interest expense (71,082) (5,300)
Other 22,962 --
Gain on disposal of assets 126 10,908
Realized loss on investments (6,967) --
Leased equipment income -- --
Loss on investment-subsidiary -- --
----------- -----------
Total other income 69,358 158,194
----------- -----------
Income (Loss) Before Income Taxes (1,616,493) 10,959
----------- -----------
Provision for Income Taxes:
Income taxes 21,653 22,987
Deferred benefit (452,690) (8,700)
----------- -----------
Total income taxes (431,037) 14,287
----------- -----------
Net Income Before Minority Interest
In Subsidiary (1,185,456) (3,328)
Minority interest in loss of
consolidated subsidiary 455,823 10,601
----------- -----------
Net Income (Loss) $ (729,633) $ 7,273
=========== ===========
See notes to audited consolidated financial statements and
independent auditors' report.
</TABLE>
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<TABLE>
EQUITY UNDERWRITING GROUP, INC.
AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1997 and 1996
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash Flow from Operating Activities:
Net income $ (729,633) $ 7,273
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 522,655 144,309
Unrealized loss on investments 4,873 --
Gain on sale of equipment -- (10,908)
Minority interest in subsidiary (455,823) (10,601)
Deferred income tax benefit (452,690) (8,700)
Cash value of officers' life insurance (6,273) (3,996)
Change in assets and liabilities:
Accounts receivable - trade (918,922) (346,387)
Accounts receivable - other (10,589) --
Prepaid expenses (26,421) (5,945)
Accounts payable - insurance companies 958,069 (408,656)
Accounts payable - brokers (24,459) --
Accounts payable - trade (19,404) --
Accrued expenses 82,550 12,093
Other liabilities 864,050 151,300
Income tax payable 2,687 (15,030)
---------- ----------
Net cash provided (used) by operating activities (209,330) (495,248)
Cash Flow from Investing Activities:
Property and equipment purchase (611,877) (197,470)
Investments purchased/redeemed 276,994 1,721
Proceeds from sale of assets -- 8,000
Advance to affiliates (21,367) (10,585)
Intangible assets 270,338 (920,947)
Payments on note receivable -- 170,000
---------- ----------
Net cash provided (used) by investing activities (85,912) (949,281)
Cash Flow from Financing Activities:
Line of credit 80,000 (300,000)
Current portion of long-term debt (388,857) --
Proceeds for paid in capital 2,500 --
Proceeds from long-term debt 460,093 1,195,947
---------- ----------
Net cash provided (used) by financing activities 153,736 895,947
---------- ----------
Change in cash and equivalents (141,506) (548,582)
Cash and equivalents, beginning of year 2,043,546 2,592,028
---------- ----------
Cash and equivalents, end of year $1,902,040 $2,043,446
========== ==========
See notes to audited consolidated financial statements and
independent auditors' report.
</TABLE>
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<TABLE>
EQUITY UNDERWRITING GROUP, INC.
AUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the years ended December 31, 1997 and 1996
<CAPTION>
Unrealized
Common Paid In Retained Loss on
Stock Capital Earnings Investment Total
----- ------- -------- ---------- -----
<S> <C> <C> <C> <C> <C>
Balance -
December 31, 1995 $1,000 $ -- $ 283,803 $ -- $ 284,803
Net income -- -- 7,273 -- 7,273
Unrealized loss on investment -- -- -- (4,972) (4,972)
------ ------ --------- ------- ---------
Balance -
December 31, 1996 1,000 -- 291,076 (4,972) 287,104
Contribution to capital -- 2,500 -- -- 2,500
Unrealized loss on investments -- -- -- 4,873 4,873
Net income (loss) -- -- (729,633) -- (729,633)
------ ------ --------- ------- ---------
Balance -
December 31, 1997 $1,000 $2,500 $(438,557) $ (99) $(435,156)
====== ====== ========= ======= =========
See notes to audited consolidated financial statements
and independent auditors' report.
</TABLE>
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EQUITY UNDERWRITING GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1997 and 1996
----------------------------------------------
NOTE 1 - NATURE OF BUSINESS
Equity Underwriting Group, Inc. (the "Company"), formerly known as
Equity Insurance Managers, Inc., and its related subsidiaries provide
services of all types for property and casualty insurance. The
subsidiaries contained within the group are Equity Insurance Managers,
Inc., Equity Insurance Managers, Inc. of Illinois, LLC, 21st Century
Claims Service, Inc. and Equity Insurance Administrators, Inc.
Equity Insurance Managers, Inc. ("EIM") and Equity Insurance Managers,
Inc. of Illinois, LLC ("EIM of Ill.") are licensed Managing General
Agencies operating as a wholesale/broker of property and casualty
insurance products in Kentucky, Illinois, Tennessee, Virginia, West
Virginia, Ohio and Indiana. EIM and EIM of Ill. operate as managing
general agents between a number of admitted as well as Excess and
Surplus Line insurance companies with over 2,000 independent producers.
During 1996, EIM of Ill. was incorporated as a limited liability
corporation and the Company acquired a 55% owned interest. EIM of
Ill. purchased an existing agency to continue its operations as a
wholesaler/broker of property and casualty insurance products in the
states of Illinois and Indiana.
During 1997, the Company acquired a 50% ownership in 21st Century Claims
Service, Inc. ("21st Century"). EIM owns the other 50% in 21st Century.
21st Century was incorporated as a Kentucky corporation to conduct
business as a claim adjusting service company. 21st Century is currently
operating as a third party administrator for various insurance companies
in the private passenger and commercial trucking lines.
During 1997, the Company formed Equity Insurance Administrators, Inc.
("EIA") as a 100% owned subsidiary. EIA was established for the purpose
of performing administrative services on a contractual basis for
property and casualty insurance carriers.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of Equity
Underwriting Group, Inc., Equity Insurance Managers, Inc., a wholly owned
subsidiary, Equity Insurance Managers, Inc. of Illinois, LLC, a 55%
owned subsidiary, 21st Century Claims Service, Inc., a 50% owned
subsidiary, and Equity Insurance Administrators, Inc., a wholly owned
subsidiary. All significant inter-company transactions have been
eliminated.
The acquisition of the shares in all the subsidiaries were with the
initial incorporation or organization by the Company, which results in
the book value of the assets and liabilities of the subsidiaries being
reported in the Consolidated Financial Statements. EIM of Ill. acquired
certain assets of the insurance agency in which these assets, including
goodwill, were reported in the EIM of Ill. and the Consolidated
Financial Statements at fair market value on the purchase date.
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EQUITY UNDERWRITING GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1997 and 1996
----------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash and Equivalents
- --------------------
For purposes of the statements of cash flows, the Company considers
highly liquid investments with a maturity of three months or less to be
cash equivalents. The Company has invested excess cash in short-term
U.S. Government backed bonds and securities, through a financial
institution.
Accounts Receivable
- -------------------
The Company considers accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts is required. If amounts
become uncollectible, they will be charged to operations when that
determination is made.
Marketable Securities
- ---------------------
Under the provisions of FAS 115, Accounting for Certain Investments in
Debt and Equity Securities, marketable securities considered
available-for-sale are recorded at fair market value if they have a
readily determinable fair value. The corresponding unrealized gain or
loss in the fair market value in relation to cost is accounted for as a
separate item in the stockholders' equity section of the balance sheet.
Management believes that its investments in marketable securities should
be classified as investments that are available-for-sale and are stated
at fair value.
Property and Equipment
- ----------------------
Property and equipment is stated at cost, less accumulated
depreciation. Depreciation is computed by using the straight-line and
accelerated cost methods over the estimated useful lives of the assets.
Under the provisions of SOP 98-1, computer software is expensed when
developed for internal use and there is no existing plan to market the
software externally. Accordingly, management believes all software
should be expensed.
Intangible assets
- -----------------
The following intangible assets were acquired in the purchase of an
insurance agency by EIM of Ill. and are amortized on a straight-line or
remaining value basis using the following economic lives:
<TABLE>
<CAPTION>
Term Basis Cost
---- ----- ----
<S> <C> <C> <C>
Non-compete covenant 3 years Straight-line $ 20,000
Irland & Rogers Name 15 years Straight-line $ 25,000
Goodwill 15 years Straight-line $372,662
Value of Building Lease 8 years Remaining Value $200,200
</TABLE>
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EQUITY UNDERWRITING GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1997 and 1996
----------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Commission Income and Expense
- -----------------------------
Each of EIM and EIM of Ill. recognizes commission income from each
insurance company it represents on insurance policies written. This
commission income is recorded on the effective date of each policy. The
return commissions are recorded when a policy cancellation occurs. The
commission expense owed to the independent producer of a written policy
is recorded on the effective date of the policy.
Income Recognition
- ------------------
21st Century and EIA recognize revenue at the time service is performed
under the accrual method.
Income Taxes
- ------------
Deferred taxes result primarily from timing differences in the
recognition of the conversion from accrual basis of accounting for
financial statement purposes to the modified accrual basis of accounting
for income tax purposes. The remaining difference is primarily in the
allocation and amortization of the intangible assets in the insurance
agency purchase by EIM of Ill.
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 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.
NOTE 3 - RESTRICTED CASH
EIM maintains a cafeteria plan for the benefit of its employees. Cash
representing employee contributions to this plan is maintained in a
restricted cash account and is not included in these financial
statements.
EIA maintains a trust account for Insurance Ventures, Inc., a company
with which it has entered a business agreement. This account is used to
collect insurance payments to be forwarded to Explorer Insurance, a
division of The Insurance Company of the West, the company underwriting
the insurance. This account is not included in these financial
statements.
21st Century maintains a set of accounts for Rattner Mackenzie, a
Lloyd's of London brokered company. These accounts are used to pay
insurance claims from insurance business written through Rattner
Mackenzie. This account is not included in these financial statements.
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EQUITY UNDERWRITING GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1997 and 1996
----------------------------------------------
NOTE 4 - STOCKHOLDERS' AGREEMENT
The Company is obligated to make non-compete payments in the amounts of
$25,000 and $20,000 annually to former stockholders under various
agreements. These payments are expensed when paid. A schedule of
payments due is as follows:
<TABLE>
<CAPTION>
Year ending
December 31 Amount
----------- ------
<S> <C>
1998 $45,000
1999 45,000
2000 45,000
</TABLE>
NOTE 5 - LONG-TERM DEBT
EIM has a $400,000 revolving line of credit with a bank, which was fully
drawn as of December 31, 1997 and $250,000 was outstanding as of
December 31, 1996. The credit line bears interest at the bank's prime
rate. The loan is secured by all company assets and becomes payable on
January 20, 1999.
21st Century has a $200,000 revolving line of credit with a bank, which
was fully drawn as of December 31, 1997. The maturity date of the loan
is January 30, 1999. Interest on the loan is payable monthly at a rate
equal to the bank's prime rate plus 1%. The loan is secured by all
assets of 21st Century and is guaranteed by Equity Insurance Managers,
Inc.
EIM of Ill. has a note payable due to the former owner of the agency
purchased on December 31, 1996. The note is payable in six annual
installments of $150,952 beginning January 1, 1998. As of December 31,
1996, EIM of Ill. also owed the down payment on the purchase of $226,428,
which was paid in January, 1997. The original loan amount was $667,181,
bearing an interest rate of prime plus 1% (9 1/2%) as of the purchase
date. The long-term debt maturities are as follows:
<TABLE>
<CAPTION>
Year ended
December 31 Amount
----------- ------
<S> <C>
1998 $ 87,570
1999 95,889
2000 104,998
2001 114,973
2002 125,896
2003 137,855
--------
Total $667,181
========
</TABLE>
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EQUITY UNDERWRITING GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1997 and 1996
----------------------------------------------
NOTE 6 - INVESTMENT IN SUBSIDIARIES
On December 31, 1996, EIM of Ill. entered into a purchase agreement with
an Illinois based wholesale insurance agency to purchase an existing
agency, Irland & Rogers. The purchase included the assets, properties
and business of the seller. The assets were purchased for $893,609 and
Equity Insurance Managers, Inc. is a guarantor of the agreement. The
remaining payment terms of the purchase are disclosed in Note 5.
During 1997, the Company became a 50% stockholder in 21st Century. The
Company's investment in 21st Century is $2,500 as of December 31, 1997.
During 1997, the Company formed EIA as a wholly owned subsidiary. The
investment in EIA is $5,000 as of December 31, 1997.
The Company's investments in subsidiaries are all eliminated through
consolidation.
NOTE 7 - OPERATING LEASES
The Company's leasing activity consists principally of the leasing of
automobiles, office equipment (excluding computer equipment - See
Note 8) and office space under operating leases that expire over the
next five years.
The following is a schedule of future minimum rental payments by years
required under various operating leases in effect that have limited or
remaining noncancellable lease terms in excess of one year as of
December 31, 1997:
<TABLE>
<CAPTION>
Year ending
December 31 Amount
----------- ------
<S> <C>
1998 $ 275,855
1999 288,637
2000 281,315
2001 276,991
2002 91,850
----------
Total $1,214,648
==========
</TABLE>
NOTE 8 - SALES/LEASEBACK TRANSACTION
The Company entered into a sales/leaseback transaction with Commonwealth
Premium Finance Corporation ("CPFC"), under which CPFC purchased certain
computer equipment to be leased back to the Company under normal operating
lease terms. At December 31, 1997, the cost of all items leased was
$629,622 with accumulated depreciation of $447,516.
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EQUITY UNDERWRITING GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1997 and 1996
----------------------------------------------
NOTE 8 - SALES/LEASEBACK TRANSACTION (continued)
The following is a schedule by years of future minimum rentals under the
lease based on items leased at December 31, 1997:
<TABLE>
<CAPTION>
Year ending
December 31 Amount
----------- ------
<S> <C>
1998 $ 64,607
1999 35,869
2000 27,588
2001 12,064
2002 4,724
--------
Total $144,852
========
</TABLE>
Rental expense under this lease was approximately $160,407 in 1997 and
$148,614 in 1996.
NOTE 9 - RETIREMENT PLAN
During 1994, the Company implemented a Profit Sharing Plan including a
401(k) feature for its employees. Contributions to the plan are at the
discretion of management. The Company contributed $10,367 and $9,612 to
the Plan during the years ended December 31, 1997 and 1996,
respectively.
NOTE 10 - RELATED PARTIES
The officers of the Company are also the owners of CPFC, an affiliated
company. CPFC provides leasing and premium financing services for
various products represented by the Company. As of December 31, 1997
and 1996 the Company had $201,132 and $173,000, respectively, included
as accounts receivable - insurance agencies that were due from CPFC. In
addition CPFC owed the Company $32,823 for various expenses paid by EIM
in 1997. This amount is included in advances to affiliates. These
advances were eliminated in the consolidation.
The Company paid various expenditures on behalf of 21st Century
throughout 1997. As of December 31, 1997, the Company had $147,333
included as advances to affiliates due from 21st Century. These
advances were eliminated in the consolidation.
The Company also paid various expenditures on behalf of EIA throughout
1997. As of December 31, 1997, the Company had $108,897 included as
advances to affiliates due from EIA. These advances were eliminated
through consolidation.
As of December 31, 1997, the stockholders of the Company have received
advances of $50,000 from the Company. These advances, secured by their
CPFC stock, are due annually and bear interest at a rate equivalent to
the short-term applicable federal rate (AFR), adjustable quarterly. The
AFR rate used at December 31, 1997 and 1996, was 5.56% and 5.63%,
respectively.
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EQUITY UNDERWRITING GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1997 and 1996
----------------------------------------------
NOTE 11 - SUBSEQUENT EVENTS
Equity Underwriting Group, Inc., the holding company, was established on
January 20, 1998. The stockholders of Equity Insurance Managers, Inc.
exchanged their shares of EIM for the shares in Equity Underwriting
Group, Inc. Subsequently, the shares of the majority owner were retired
by Equity Underwriting Group, Inc. A payment in the amount of
$1,250,000, financed by a bank, was made to the majority stockholder.
The remainder is due in installments of $900,000 and $900,000 on
January 1, 1999 and January 1, 2000, respectively.
NOTE 12 - CONTINGENCY
The Company is a party to various lawsuits, claims and other legal
actions arising in the ordinary course of business. In the opinion of
management and counsel, all such matters are without merit or are of
such kind, or involve such amounts, that unfavorable disposition would
not have a material adverse effect on the financial position or results
of operations of the Company.
NOTE 13 - CONCENTRATION OF CREDIT RISK
The Company has a concentration of credit risk in that it periodically
maintains cash deposits in a single financial institution in excess
amounts insured by the FDIC. The Company has not experienced any losses
on such accounts to significant credit risk related to the losses.
- 16 -
<PAGE>
<PAGE>
<TABLE>
EQUITY UNDERWRITING GROUP, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, 1998
<CAPTION>
ASSETS
------
<S> <C>
Current Assets:
Cash and cash equivalents $ 909,286
Money held for employees --
Accounts receivable - trade 5,421,657
Accounts receivable - other 2,000
Notes receivable - officers 14,058
Prepaid expense 13,862
Advance to affiliate 21,689
Other assets 4,731
-----------
Total current assets 6,387,283
-----------
Property and Equipment:
Computer equipment and software 145,967
Furniture and fixtures 1,714,751
Automobiles 144,846
-----------
2,005,564
Less accumulated depreciation (1,398,958)
-----------
Net property and equipment 606,606
-----------
Other Assets:
Non-compete covenant 20,000
Goodwill, net of amortization of $523,285 372,662
Cash value of officers' life insurance 39,520
Amortized expenses 270,448
Deferred income tax 363,270
-----------
1,065,900
Less accumulated amortization (157,703)
-----------
Total other assets 908,197
-----------
Minority interest in subsidiary 549,389
-----------
TOTAL ASSETS $ 8,451,475
===========
</TABLE>
See notes to the unaudited financial statements.
- 17 -
<PAGE>
<PAGE>
<TABLE>
EQUITY UNDERWRITING GROUP, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, 1998
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C>
Current Liabilities:
Line of credit $ 75,000
Current portion of long-term debt 95,889
Accounts payable - insurance companies 6,650,587
Accounts payable - brokers 257,470
Accounts payable - trade 64,936
Accrued expenses 76,128
Income tax payable 2,886
Other liabilities 435,520
-----------
Total current liabilities 7,658,416
-----------
Long-Term Debt:
Notes payable 3,682,101
Deferred income tax --
Other liabilities 571,574
-----------
Total long-term liabilities 4,253,675
-----------
Total liabilities 11,912,091
-----------
Stockholders' Equity:
Common stock - no par value, 1,000 shares
authorized and issued, 45 outstanding 5,000
Paid in capital 2,500
Retained earnings (534,662)
Unrealized loss on investments (7,430)
Treasury stock (2,926,024)
-----------
Total stockholders' equity (3,460,616)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,451,475
===========
</TABLE>
See notes to the unaudited financial statements.
- 18 -
<PAGE>
<PAGE>
<TABLE>
EQUITY UNDERWRITING GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the nine months ended September 30, 1998 and 1997
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Revenue:
Gross Operating Revenues $ 7,972,468 $ 7,303,700
Less commissions expense (3,664,684) (3,453,429)
----------- -----------
Net commission income 4,307,784 3,850,271
----------- -----------
Administrative Expenses:
Compensation 2,490,427 3,475,690
Amortization 46,613 --
Depreciation 178,116 292,752
Business development 509,816 735,130
Postage 242,596 56,446
Telephone 54,184 44,556
Equipment rental 45,803 148,784
Professional fees 64,033 42,961
Insurance 55,772 57,222
Rent 250,851 215,559
Other operating 442,420 594,411
----------- -----------
Total expenses 4,380,631 5,663,511
----------- -----------
Net operating income (loss) (72,847) (1,813,240)
----------- -----------
Other Income (Expense):
Interest income 58,819 89,967
Interest expense (207,694) (50,628)
Other 160,395 118,910
Gain on disposal of assets -- 126
Leased equipment income 4,961 --
Income taxes (12,784) (7,765)
Deferred benefit (109,919) 447,489
----------- -----------
Total other income (expense) (106,222) 598,099
----------- -----------
Net loss before minority interest (179,069) (1,215,141)
Minority interest in loss of
consolidated subsidiary 82,966 403,921
----------- -----------
NET LOSS $ (96,103) $ (811,220)
=========== ===========
</TABLE>
See notes to the unaudited financial statements.
- 19 -
<PAGE>
<PAGE>
<TABLE>
EQUITY UNDERWRITING GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the nine months ended September 30, 1998 and 1997
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash Flow from Operating Activities:
Net income $ (96,103) $ (811,220)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 227,853 378,048
Unrealized loss on investments (7,331) (2,458)
Minority interest in subsidiary (82,966) (403,921)
Deferred income tax benefit 110,420 (447,489)
Cash value of officers' life insurance -- (3,996)
Change in assets and liabilities:
Accounts receivable - trade (2,549,055) (3,987,077)
Accounts receivable - other 3,858 (1,291)
Notes receivable - officers 35,942 --
Prepaid expenses 48,209 (29,637)
Amortized expenses (12,501) --
Accounts payable - insurance companies 1,863,440 3,625,937
Accounts payable - brokers 49,757 (232,172)
Accounts payable - trade (29,641) 1,328,113
Accounts payable - other 137,443 924,192
Accrued expenses (66,326) 6,882
----------- -----------
Net Cash Provided (used) by Operating Activities (367,001) 343,911
----------- -----------
Cash Flow from Investing Activities:
Property and equipment purchase (224,662) (441,610)
Investments purchased/redeemed 4,863 281,857
Intangible assets -- 256,390
Advance to affiliates 10,263 (15,105)
----------- -----------
(209,536) 81,532
----------- -----------
Cash Flow from Financing Activities:
Line of credit (5,000) --
Current portion of long-term debt 8,319 (396,426)
Proceeds from common stock 4,000 --
Proceeds from long-term debt 2,502,488 (52,338)
Paid in capital -- 2,500
Purchase of treasury stock (2,926,024) --
----------- -----------
(416,217) (446,264)
----------- -----------
Change in cash and equivalents (992,754) (20,821)
Cash and equivalents, beginning of period 1,902,040 2,043,546
----------- -----------
Cash and equivalents, end of period $ 909,286 $ 2,022,725
=========== ===========
</TABLE>
See notes to the unaudited financial statements.
- 20 -
<PAGE>
<PAGE>
EQUITY UNDERWRITING GROUP, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
For the Nine Months Ended September 30, 1998 and 1997
-----------------------------------------------------
NOTE 1--BASIS OF PRESENTATION
The unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation
have been included.
- 21 -
<PAGE>
<PAGE>
To the Board of Directors and
Stockholder of AmeriPrime Financial Services, Inc.
INDEPENDENT AUDITORS' REPORT
----------------------------
We have audited the accompanying consolidated statements of financial
condition of AmeriPrime Financial Services, Inc. and subsidiary which
gives the retroactive effect of the acquisition of AmeriPrime Financial
Securities, Inc., as of December 31, 1997 and 1996, and the related
consolidated statements of operations, changes in stockholders' equity,
and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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
consolidated financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of AmeriPrime
Financial Services, Inc. and subsidiary at December 31, 1997 and 1996,
and the results of their operations, and their cash flows for the years
then ended in conformity with generally accepted accounting principles.
/s/ Larry E. Nunn & Associates, LLC
Columbus, Indiana
February 12, 1999
- 22 -
<PAGE>
<PAGE>
<TABLE>
AMERIPRIME FINANCIAL SERVICES, INC.
AUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, 1997 and 1996
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
ASSETS
------
Current Assets
Cash and cash equivalents $ 53,504 $ 85,136
Investment in non-affiliated mutual funds 145,355 118,523
Accounts receivable 139,819 85,842
Allowance for doubtful accounts -- --
Prepaid assets and deposit -- --
-------- --------
Total current assets 338,678 289,501
-------- --------
Non-Current Assets
Organizational cost 337 337
Accumulated amortization of
organizational costs (337) (240)
-------- --------
Total non-current assets -- 97
-------- --------
Fixed Assets, at Cost
Equipment and furniture 8,174 2,437
Leasehold improvements 10,661 10,661
Vehicles -- --
-------- --------
Total cost 18,835 13,098
-------- --------
Less: accumulated depreciation 3,997 3,085
-------- --------
Net fixed assets 14,838 10,013
-------- --------
TOTAL ASSETS $353,516 $299,611
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable and accrued expenses $ 73,488 $ 73,342
Income taxes payable - deferred -- --
Other liabilities -- --
-------- --------
Total current liabilities 73,488 73,342
-------- --------
Long-Term Liabilities -- --
Total long-term liabilities -- --
-------- --------
Total Liabilities $ 73,488 $ 73,342
-------- --------
Stockholders' Equity
Common stock, par value $1 per share, 1,000
authorized and outstanding 1,000 1,000
Additional paid-in capital 120,000 173,453
Retained earnings 159,028 51,816
Net unrealized gain (loss) on securities
available for sale -- --
-------- --------
Total stockholders' equity 280,028 226,269
-------- --------
STOCKHOLDERS' EQUITY $353,516 $299,611
======== ========
</TABLE>
See notes to audited consolidated financial statements and
independent auditors' report.
- 23 -
<PAGE>
<PAGE>
<TABLE>
AMERIPRIME FINANCIAL SERVICES, INC.
AUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1997 and 1996
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenue
Brokerage $ 32,970 $ 12,000
Trust and administrative services 402,888 162,726
Other income -- --
-------- --------
Total revenue 435,858 174,726
-------- --------
Cost of Sales
Brokerage revenue changes -- --
Investment fees -- --
Administrative fees 50,101 73,342
Compliance and filing fees 30,591 28,439
Funds professional fees -- --
-------- --------
Total cost of sales 80,692 101,781
-------- --------
Gross Profit 355,166 72,945
-------- --------
Operating Expenses
Employee compensation and benefits 204,892 --
Reserves and allowances -- --
Fund services operating charges -- --
Mail and courier service 1,786 1,122
Telephone 4,677 --
Equipment rental and maintenance -- --
Occupancy 6,307 --
Depreciation 1,444 405
Professional fees 5,790 6,395
Other expenses 28,902 22,952
-------- --------
Total operating expenses 253,798 30,874
-------- --------
Income from operations 101,368 42,071
-------- --------
Other Income
Unrealized gain on securities 16,675 11,023
Investment income 11,782 5,280
Other -- --
-------- --------
Total other income (loss) 28,457 16,303
-------- --------
Income before income taxes 129,825 58,374
-------- --------
Income taxes
Current -- --
Deferred -- --
-------- --------
Total income taxes -- --
-------- --------
NET INCOME $129,825 $ 58,374
======== ========
</TABLE>
See notes to audited consolidated financial statements and
independent auditors' report.
- 24 -
<PAGE>
<PAGE>
<TABLE>
AMERIPRIME FINANCIAL SERVICES, INC.
AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1997 and 1996
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net income $129,825 $ 58,374
Adjustments to reconcile net income to net
cash provided by (used) in operating activities:
Deferred income taxes -- --
Provision for depreciation and amortization 1,444 405
Amortization of bond premium -- --
Unrealized gain on investments (16,675) (11,023)
Loss (gain) on fixed assets disposed or sold -- --
(Increase) decrease in operating assets:
Receivables (53,977) (26,718)
Prepaid and sundry assets -- 25,000
Increase (decrease) in current liabilities:
Accounts payable and accrued expenses 146 18,501
Other liabilities -- --
-------- --------
Net cash provided by operating activities 60,763 64,540
Cash flow from investing activities:
Purchase of fixed assets (5,737) --
Proceed from sale of fixed assets -- --
Investment in mutual funds (10,593) (24,838)
Investment in debt securities -- --
-------- --------
Net cash provided by investing activities (16,330) (24,838)
Cash flow from financing activities:
Return of capital (53,453) 40,274
Dividends (22,612) --
Proceeds from issuance of common stock -- --
Proceeds from bank line-of-credit and financing -- --
-------- --------
Net cash provided by financing activities (76,065) 40,274
Net increase (decrease) in cash and cash equivalents (31,632) 79,976
CASH AND CASH EQUIVALENTS, beginning of the year 85,136 5,071
-------- --------
CASH AND CASH EQUIVALENTS, end of the year $ 53,504 $ 85,136
======== ========
SUPPLEMENTARY INFORMATION
Interest paid $ -- $ --
Income taxes paid $ -- $ --
See notes to audited consolidated financial statements and
independent auditors' report.
</TABLE>
- 25 -
<PAGE>
<PAGE>
<TABLE>
AMERIPRIME FINANCIAL SERVICES, INC.
AUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1997 and 1996
<CAPTION>
Additional
Paid-In Retained
Capital Earnings
------- --------
<S> <C> <C>
1996
Balance at beginning of year $133,179 $ (6,558)
Proceeds on stock transactions or capital 40,274 --
Payments on stock transactions or capital -- --
Dividend payments -- --
Net income (loss) of the year -- 58,374
-------- --------
Balance as of December 31, 1996 $173,453 $ 51,816
======== ========
1997
Proceeds on stock transactions or capital $ -- $ --
Payments on stock transactions or capital (53,453) --
Dividend payments -- (22,612)
Net income (loss) of the year -- 129,825
-------- --------
Balance as of December 31, 1997 $120,000 $159,029
======== ========
See notes to audited consolidated financial statements and
independent auditors' report.
</TABLE>
- 26 -
<PAGE>
<PAGE>
AMERIPRIME FINANCIAL SERVICES, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1997 and 1996
----------------------------------------------
NOTE 1 - NATURE OF OPERATIONS
The consolidated financial statements include the accounts of AmeriPrime
Financial Services, Inc. (the "Company"), a Texas corporation, and its
wholly owned subsidiary, AmeriPrime Financial Securities, Inc.
("Securities").
Securities, a Texas corporation, is a registered broker-dealer under the
Securities Exchange Act of 1934, as amended, and is a member of the
National Association of Securities Dealers, Inc. Securities performs
distribution and sale of mutual fund shares for the respective mutual
funds.
The Company is a registered investment adviser under the Investment
Advisers Act of 1940, as amended and provides organization,
administration and advisory services for mutual funds.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
- ---------------------
The consolidated financial statements include the accounts of AmeriPrime
Financial Services, Inc. and AmeriPrime Financial Securities, Inc. All
intercompany transactions and balances between the Company and its
subsidiaries have been eliminated.
Effective December 30, 1998, the Company acquired Securities in a
transaction accounted for under the pooling-of-interest method of
accounting.
The Consolidated Financial Statements give retroactive effect to the
pooling-of-interest transaction and, as a result, the Consolidated
Statements of Financial Condition, Statements of Operations and
Statements of Cash Flows are presented as if the combining companies
have been consolidated for all periods presented. As required by
generally accepted accounting principles, the Consolidated Financial
Statements become the historical consolidated financial statements upon
issuance of the financial statements for the period that includes the
date of the transaction. The Consolidated Financial Statements,
including the notes thereto, should be read in conjunction with the
historical financial statements of the Company.
Fees and Commissions
- --------------------
The Company records revenue on the accrual basis of accounting. For the
administration operations revenue are recorded on the month the services
are performed. The organization revenue is recorded as earned and as
costs are incurred. The Securities brokerage business revenue is
recorded as earned on a monthly basis. The fees earned based upon
contracts with the mutual funds specifying a minimum fee or on a rate
basis of mutual fund asset value.
- 27 -
<PAGE>
<PAGE>
AMERIPRIME FINANCIAL SERVICES, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1997 and 1996
----------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Property and Equipment
- ----------------------
Property and equipment is stated at cost. Depreciation, including the
depreciation of capital leased equipment, is provided on the
straight-line or accelerated methods over the estimated useful lives of
the assets for financial statement purposes.
Investments in Mutual Funds
- ---------------------------
Investments, which consist primarily of an investment in a mutual fund
(affiliated or non-affiliated), are recorded and adjusted to the fair
market value as of the date of the financial statements and reported on
the statement of operations as unrealized gain or loss on securities.
Income Taxes
- ------------
The Company and Securities each file a separate federal and state income
tax return and during 1997 and 1996 filed as an S-corporation.
Therefore, federal and state taxable income and losses were passed
through to their stockholders. Subsequent to the acquisition by the
Company, Securities will be included in the consolidated tax returns
of the Company, which uses the accrual method of tax and accounting
reporting.
The Company has adopted Statement of Financial Accounting Standards No.
109 ("SFAS 109") accounting for income taxes. The Statement requires
use of the liability method of accounting for deferred income taxes.
Organizational Costs
- --------------------
Costs relating to the organization of the Company have been capitalized
and are being amortized over a sixty-month period on a straight-line
basis.
Use of Estimates
- ----------------
The presentation 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 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.
- 28 -
<PAGE>
<PAGE>
AMERIPRIME FINANCIAL SERVICES, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1997 and 1996
----------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Statement of Cash Flows
- -----------------------
For purposes of the statement of cash flows, the Company considers all
liquid investments with an original maturity of three months or less to
be cash equivalents. The Company maintains money market investments
that are not insured by the FDIC and bank accounts that periodically
exceed the FDIC limit during the year.
Financial Statement Presentation
- --------------------------------
Certain amounts in the 1996 financial statements have been reclassified
to conform to the 1997 presentation.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
The Company leases its corporate headquarters and administrative office
facilities located in Southlake, Texas pursuant to an operating lease on
a month to month basis.
The aggregate minimum rental commitments required is $720 per month as
of December 31, 1997.
Total rental expense was $6,307 and $-0- for the years ended
December 31, 1997 and 1996, respectively.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The Company makes disbursements for the benefit of the mutual funds,
which are reimbursed by the mutual funds. The Company records the
receivable from the funds and the payable to the provider when the
service is provided. The following represents the account as of
December 31, 1997 and 1996.
1997 1996
---- ----
Expense receivable from the funds $122,319 $73,342
Accounts payable for funds 73,488 73,342
-------- -------
Net $ 48,831 $ --
======== =======
NOTE 5 - EMPLOYEE BENEFIT PLANS
The Company initiated a 401(k) plan in 1998 to include matching for
funds contributed by the participants. The Company will match each
employee's contribution up to fifty percent of the first six percent of
the employee's pre-tax contribution. During 1997 and 1996, a
consolidated expense for matching the 401(k) was $-0- and
$-0- respectively.
- 29 -
<PAGE>
<PAGE>
AMERIPRIME FINANCIAL SERVICES, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1997 and 1996
----------------------------------------------
NOTE 6 - CASH SEGREGATED UNDER FEDERAL REGULATION
Pursuant to rule 15c3-3 as promulgated by the Securities and Exchange
Commission, Securities calculates its reserve requirement and segregates
cash and/or securities for the exclusive benefit of the customers on a
periodic basis. The reserve requirement calculated by the Company was
$5,000, at December 31, 1997 and 1996. Balances segregated in excess of
reserve requirements are not restricted.
NOTE 7 - NET CAPITAL REQUIREMENTS
Securities is subject to the Securities and Exchange Commission's
"Uniform Net Capital Rule" (Rule 15c3-1), which requires the maintenance
of minimum net capital, as defined, of 6 2/3% of aggregate indebtedness
or $5,000 and $5,000 at December 31, 1997 and 1996, whichever is
greater, and a ratio of aggregate indebtedness to net capital of not
more than 15 to 1. At December 31, 1997, Securities had net capital of
$124,706, which was $119,706 in excess of its required net capital of
$5,000, and a net capital ratio of .547 to 1. At December 31, 1996,
Securities had net capital of $101,817, which was $96,817 in excess of
its required net capital of $5,000, and a net capital ratio of 2.28 to 1.
NOTE 8 - MAJOR CLIENTS
The subsidiary and segments of the Company have major customers, which
are not material to the consolidated operations and balance sheet.
NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and estimated fair
values of the Company's financial instruments at December 31, 1997 and
1996. FASB Statement No. 107, Disclosures About Fair Value of Financial
Instruments, defines the fair value of a financial instrument as the
amount at which the instrument could be exchanged in a current
transaction between willing parties.
<TABLE>
<CAPTION>
1997 1996
------------------- -------------------
Carrying Fair Carrying Fair
($ in thousands) Amount Value Amount Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Financial assets
Cash and cash equivalents $ 53.5 $ 53.5 $ 85.1 $ 85.1
Investment in mutual funds 145.4 145.4 118.5 118.5
Receivables (trade) 139.8 139.8 85.8 85.8
Financial liabilities
Current liabilities 73.5 73.5 73.3 73.3
Long-term capitalized
lease obligations 21.4 21.4 21.4 21.4
</TABLE>
- 30 -
<PAGE>
<PAGE>
AMERIPRIME FINANCIAL SERVICES, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1997 and 1996
----------------------------------------------
NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
The carrying amounts shown in the above table are included in the
statement of financial position under the indicated captions.
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:
Cash, and cash equivalents, receivables, and current liabilities: The
- ----------------------------------------------------------------
carrying amounts approximate fair value because of the short maturity
of those instruments. Investment in money market mutual funds are
treated as cash equivalents with maturity under 90 days.
Investment in affiliated mutual funds: The carrying amount is
- -------------------------------------
determined by the NAV daily pricing sheets (fair market value) as of
the close of the markets on December 31.
NOTE 10 - INVESTMENTS IN MUTUAL FUNDS
The marketable investments in mutual funds cost and fair market value
of the investments as of December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
Number Market Unrealized Gain (Loss) Investment
of Shares Cost Value Accumulated Current Year Income
--------- ---- ----- ----------- ------------ ------
<S> <C> <C> <C> <C> <C> <C>
1996
Globalt Growth Fund 2,500.000 $ 25,425 $ 31,916 $ 6,491 $ 4,891 $ 425
AIT Vision U.S. Equity 2,853.045 29,000 32,011 3,011 2,836 4,000
Carl Domino Equity Income Fund 2,543.685 25,550 32,025 6,475 5,725 550
NewCap (Maxim) Contarian Fund 2,505.100 25,000 22,570 (2,430) (2,430) --
-------- -------- ------- ------- -------
Totals $104,975 $118,522 $13,547 $11,022 $4,975
======== ======== ======= ======= ======
<CAPTION>
Number Market Unrealized Gain (Loss) Investment
of Shares Cost Value Accumulated Current Year Income
--------- ---- ----- ----------- ------------ ------
<S> <C> <C> <C> <C> <C> <C>
1997
Globalt Growth Fund 2,784.201 $ 28,971 $ 41,067 $12,095 $ 5,604 $ 3,546
AIT Vision U.S. Equity 3,116.091 32,338 41,319 8,981 5,970 3,338
Carl Domino Equity Income Fund 2,720.922 28,297 43,344 15,047 8,572 2,747
NewCap (Maxim) Contarian Fund 2,575.428 25,526 19,625 (5,901) (3,471) 526
-------- -------- ------- ------- -------
Totals $115,132 $145,355 $30,222 $16,675 $10,157
======== ======== ======= ======= =======
</TABLE>
- 31 -
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMERIPRIME FINANCIAL SERVICES, INC.
STATEMENT OF FINANCIAL CONDITION
(Unaudited)
September 30, 1998
<S> <C>
ASSETS
------
Current Assets:
Cash and cash equivalents $ 48,849
Investments in non-affiliated mutual funds 145,355
Accounts receivable 190,019
Allowance for doubtful accounts --
--------
Total current assets 384,223
--------
Fixed Assets, at Cost:
Equipment 8,174
Leasehold improvements 10,661
--------
Gross 18,835
Accumulated depreciation and amortization 4,597
--------
Net fixed assets 14,238
--------
Non-Current Assets:
Organization cost 337
Accumulated amortization (337)
--------
Total non-current assets --
--------
TOTAL ASSETS $398,461
========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable $ 78,257
--------
Total current liabilities 78,257
--------
Commitments:
Shareholders' Equity:
Common stock 1,000
Paid-in capital 120,000
Retained earnings 199,204
--------
Total shareholders' equity 320,204
--------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $398,461
========
See notes to the unaudited financial statements.
</TABLE>
- 32 -
<PAGE>
<PAGE>
<TABLE>
AMERIPRIME FINANCIAL SERVICES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For the nine months ended September 30, 1998 and 1997
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Revenue:
Brokerage $ 13,486 $ 18,480
Fund services 384,058 279,145
Dividends and interest 2,078 776
-------- --------
Total revenue 399,622 298,401
-------- --------
Cost of Sales:
Fund services charges 92,948 73,476
-------- --------
Total cost of sales 92,948 73,476
-------- --------
Gross profit 306,674 224,925
-------- --------
Expenses:
Compensation and benefits 210,511 93,282
Professional fees 9,700 5,522
Occupancy 6,477 4,403
Telephone 6,449 3,445
Mail and courier service 2,278 1,482
All other 30,483 26,620
-------- --------
Total expenses 265,898 134,754
-------- --------
Income before income taxes 40,776 90,171
-------- --------
Income Taxes:
State -- --
Federal -- --
-------- --------
Total income taxes -- --
-------- --------
NET RESULTS $ 40,776 $ 90,171
======== ========
See notes to the unaudited financial statements.
</TABLE>
- 33 -
<PAGE>
<PAGE>
<TABLE>
AMERIPRIME FINANCIAL SERVICES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the nine months ended September 30, 1998 and 1997
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net results $ 40,176 $ 90,171
Adjustments to reconcile net income to net
cash provided (used) in operating activities:
Provision for depreciation and amortization 600 669
(Increase) decrease in operating assets:
Receivables (50,200) 800
Prepaid and sundry assets
(Decrease) increase in liabilities:
Accounts payable 4,769 3,589
-------- --------
Net cash from (used) in operating activities (4,655) 95,229
-------- --------
INVESTING ACTIVITIES:
Purchase of fixed assets (5,737)
-------- --------
Net cash provided (used) in investing activities -- (5,737)
-------- --------
FINANCING ACTIVITIES:
Return of capital (53,453)
-------- --------
Net cash provided (used) in financing activities -- (53,453)
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS (4,655) 36,039
CASH AND CASH EQUIVALENTS
Beginning of period 53,504 85,136
-------- --------
End of period $ 48,849 $121,175
======== ========
SUPPLEMENTARY INFORMATION
Interest paid $ -- $ --
======== ========
Income taxes paid $ -- $ --
======== ========
See notes to the unaudited financial statements.
</TABLE>
- 34 -
<PAGE>
<PAGE>
AMERIPRIME FINANCIAL SERVICES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
For the Nine Months Ended September 30, 1998 and 1997
-----------------------------------------------------
NOTE 1--BASIS OF PRESENTATION
The unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation
have been included.
- 35 -
<PAGE>
<PAGE>
PRO FORMA CONSOLIDATING FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------
The following unaudited pro forma consolidating balance sheet gives
effect to the acquisitions by the Company of Equity, Commonwealth Premium
Finance Corporation ("CPFC"), AmeriPrime and Strategic Fund Services, Inc.
("Strategic") as if each of the transactions were consummated on
September 30, 1998.
The pro forma consolidating income statements for the nine months
ended September 30, 1998 and 1997 and for the years ended December 31, 1997
and 1996 set forth the results of operations of the Company combined with
the results of operations of Equity, CPFC, AmeriPrime and Strategic as if
the transactions had occurred as of the first day of each of the periods
presented; provided, however, Strategic was not organized until June 25,
1998 and, as such, had no results of operations prior to such date. In
addition, the results of operations of each of Resource Benefit Planners,
Inc. ("Resource Benefit") and EMCO Estate Management Company, Inc. ("EMCO")
are set forth in the consolidating income statements for the nine months
ended September 30, 1997 and the years ended December 31, 1997 and 1996 as
if the transactions had occurred as of the first day of each of the periods
presented. The results of operations of Resource Benefits and EMCO are
included in the results of operations of the Company for the nine months
ended September 30, 1998.
The Company acquired Fiduciary Counsel, Inc. ("Fiduciary Counsel")
on August 21, 1998, which acquisition was accounted for under the purchase
method of accounting. Accordingly, the historical results of operations of
the Company include the results of operations of Fiduciary Counsel from
August 21, 1998 forward. Consistent with the Securities and Exchange
Commission's rules regarding the treatment of acquisitions accounted for as
purchases in pro forma presentations, the pro forma consolidating income
statements for the nine months ended September 30, 1998 and 1997 and the
year ended December 31, 1997 include the results of operations of Fiduciary
Counsel but the pro forma consolidating income statement for the year ended
December 31, 1996 does not.
On March 31, 1998, the Company acquired 100% of the outstanding
capital stock of Unified Investment Advisers, Inc. ("Unified Advisers")
(upon the surrender to Unified Advisers by all stockholders of such
company other than the Company of all shares of capital stock held by
them). Accordingly, the historical results of operations of the Company
include the results of operations of Unified Advisers from March 31, 1998
forward. Except for the period since the date of acquisition, the pro
forma combined consolidating income statements for the nine months ended
September 30, 1998 and 1997 and the years ended December 31, 1997 and 1996
do not include the results of operations of Unified Advisers.
The unaudited pro forma consolidating financial statements should be
read in conjunction with the accompanying Notes to Pro Forma Consolidating
Financial Statements and with the historical financial statements of each
of the Company, Fiduciary Counsel, Equity and AmeriPrime. The historical
interim financial information for the nine months ended September 30, 1998,
used as a basis for the pro forma consolidating financial statements,
include all necessary adjustments, which, in management's opinion, are
necessary to present the financial position and operations fairly. These
pro forma consolidating financial statements may not be indicative of the
results of operations that actually would have occurred if the transactions
had been consummated on the dates assumed above or of the results of
operations that may be achieved in the future.
- 36 -
<PAGE>
<PAGE>
<TABLE>
UNIFIED FINANCIAL SERVICES, INC.
Pro Forma Consolidating Balance Sheet (unaudited)
September 30, 1998
<CAPTION>
UNIFIED EQUITY AMERIPRIME
CONSOLIDATED UNDERWRITING CPFC FINANCIAL
------------ ------------ ---- ---------
<S> <C> <C> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 9,367,300 $ 909,286 $ 33,414 $ 48,849
Investments in securities 14,556
Investments in affiliated mutual funds 375,134 130,511
Investments in non-affiliated mutual funds 184,619
Receivable, affiliated company -- 21,689
Notes receivable -- 49,058
Accounts receivable insurance clients 5,423,657
Accounts receivable 1,867,890 1,515,846 78,110
Allowance for doubtful accounts (2,041)
Prepaid and sundry assets 91,598 111,858
----------- ----------- ---------- --------
Total current assets 11,899,056 6,515,548 1,549,260 257,470
----------- ----------- ---------- --------
FIXED ASSETS, AT COST:
Equipment and furniture, gross 1,481,425 1,907,246 13,097
Accumulated depreciation (889,404) (1,388,248) (3,423)
Capitalized leased equipment 188,102
Accumulated depreciation (74,937)
----------- ----------- ---------- --------
Total fixed assets 705,186 518,998 -- 9,674
----------- ----------- ---------- --------
NON-CURRENT ASSETS:
Investments in debt securities 994,170
Deferred cost 589,445 667,872 337
Accumulated amortization (233,594) (500,345) (307)
Notes receivable, net of current maturity --
Goodwill, gross 1,564,802 895,947
Accumulated amortization (8,693) (48,573)
Equity in and investment in affiliate --
Other non-current assets 23,531 397,270
----------- ----------- ---------- --------
Total non-current assets 2,929,661 1,244,644 167,527 30
----------- ----------- ---------- --------
TOTAL ASSETS $15,533,903 $ 8,279,190 $1,716,787 $267,174
=========== =========== ========== ========
<PAGE>
<CAPTION>
ADJUSTMENTS AND ELIMINATIONS
----------------------------
STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED
--------- -------- ----- ------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 978 $10,359,827 $ $ $10,359,827
Investments in securities 14,556 14,556
Investments in affiliated mutual funds 505,645 505,645
Investments in non-affiliated mutual funds 184,619 184,619
Receivable, affiliated company 21,689 21,689 --
Notes receivable 49,058 49,058
Accounts receivable insurance clients 5,423,657 5,423,657
Accounts receivable 3,461,846 3,461,846
Allowance for doubtful accounts (2,041) (2,041)
Prepaid and sundry assets 203,456 203,456
------- ----------- -------- -------- -----------
Total current assets 978 20,222,312 -- 21,689 20,200,623
------- ----------- -------- -------- -----------
FIXED ASSETS, AT COST:
Equipment and furniture, gross 9,911 3,411,679 3,411,679
Accumulated depreciation (382) (2,281,457) (2,281,457)
Capitalized leased equipment 188,102 188,102
Accumulated depreciation (74,937) (74,937)
------- ----------- -------- -------- -----------
Total fixed assets 9,529 1,243,387 -- -- 1,243,387
------- ----------- -------- -------- -----------
NON-CURRENT ASSETS:
Investments in debt securities 994,170 994,170
Deferred cost 1,257,654 314,500 943,154
Accumulated amortization (734,246) 48,048 (686,198)
Notes receivable, net of current maturity -- --
Goodwill, gross 2,460,749 2,460,749
Accumulated amortization (57,266) (57,266)
Equity in and investment in affiliate -- --
Other non-current assets 420,801 244,140 664,941
------- ----------- -------- -------- -----------
Total non-current assets -- 4,341,862 292,188 314,500 4,319,550
------- ----------- -------- -------- -----------
TOTAL ASSETS $10,507 $25,807,561 $292,188 $336,189 $25,763,560
======= =========== ======== ======== ===========
See notes to pro forma consolidating financial statements (unaudited).
</TABLE>
- 37 -
<PAGE>
<PAGE>
<TABLE>
UNIFIED FINANCIAL SERVICES, INC.
Pro Forma Consolidating Balance Sheet (unaudited)
September 30, 1998
<CAPTION>
UNIFIED EQUITY AMERIPRIME
CONSOLIDATED UNDERWRITING CPFC FINANCIAL
------------ ------------ ---- ----------
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of capitalized leases $ 50,928 $ $ $
Current portion of bank borrowing 30,719 75,000
Accounts payable 1,024,578 99,767 410,646 63,435
Accrued compensation and benefits 570,855
Payable to insurers 6,646,480
Payable to broker/dealers 247,017 257,470
Income taxes payable 4,646 (122,945) (10)
Deferred income taxes 59,918
Other liabilities 818,656 435,224 (73,011)
Payable to affiliates
----------- ----------- ---------- --------
Total current liabilities 2,807,317 7,390,996 337,625 63,435
----------- ----------- ---------- --------
LONG-TERM LIABILITIES:
Long-term capitalized lease obligations,
net of current portion 51,386
Bank borrowing, net of current portion 298,537 3,817,311 1,240,000
Deferred income taxes 800
Other liabilities -- 492,000
----------- ----------- ---------- --------
Total long-term liabilities 350,723 4,309,311 1,240,000 --
----------- ----------- ---------- --------
TOTAL LIABILITIES 3,158,040 11,700,307 1,577,625 63,435
----------- ----------- ---------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock 20,350 7,500 50,000 2,000
Preferred stock Series C 1,672
Additional paid-in capital 11,385,171 (2,926,024) 180,856
Retained earnings 968,670 (502,593) 89,162 20,883
----------- ----------- ---------- --------
TOTAL STOCKHOLDERS' EQUITY 12,375,863 (3,421,117) 139,162 203,739
----------- ----------- ---------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $15,533,903 $ 8,279,190 $1,716,787 $267,174
=========== =========== ========== ========
<PAGE>
<CAPTION>
ADJUSTMENTS AND ELIMINATIONS
----------------------------
STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED
--------- -------- ----- ------ ------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of capitalized leases $ $ 50,928 $ $ $ 50,928
Current portion of bank borrowing 105,719 105,719
Accounts payable 1,598,426 21,689 1,576,737
Accrued compensation and benefits 570,855 570,855
Payable to insurers 6,646,480 6,646,480
Payable to broker/dealers 504,487 504,487
Income taxes payable (118,309) 125,831 244,140 --
Deferred income taxes 59,918 59,918
Other liabilities 1,180,869 1,180,869
Payable to affiliates 26,527 26,527 26,527
-------- ----------- -------- -------- -----------
Total current liabilities 26,527 10,625,900 147,520 244,140 10,722,520
-------- ----------- -------- -------- -----------
LONG-TERM LIABILITIES:
Long-term capitalized lease obligations,
net of current portion 51,386 51,386
Bank borrowing, net of current portion 5,355,848 5,355,848
Deferred income taxes 800 800
Other liabilities 492,000 492,000
-------- ----------- -------- -------- -----------
Total long-term liabilities -- 5,900,034 -- -- 5,900,034
-------- ----------- -------- -------- -----------
TOTAL LIABILITIES 26,527 16,525,934 147,520 244,140 16,622,554
-------- ----------- -------- -------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock 1,000 80,850 53,505 27,345
Preferred stock Series C 1,672 1,672
Additional paid-in capital 8,640,003 53,505 8,693,508
Retained earnings (17,020) 559,102 288,292 147,671 418,481
-------- ----------- -------- -------- -----------
TOTAL STOCKHOLDERS' EQUITY (16,020) 9,281,627 341,797 201,176 9,141,006
-------- ----------- -------- -------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 10,507 $25,807,561 $489,317 $445,316 $25,763,560
======== =========== ======== ======== ===========
See notes to pro forma consolidating financial statements (unaudited).
</TABLE>
- 38 -
<PAGE>
<PAGE>
<TABLE>
UNIFIED FINANCIAL SERVICES, INC.
Pro Forma Consolidating Statement of Income (unaudited)
For the nine months ended September 30, 1998
<CAPTION>
UNIFIED FIDUCIARY EQUITY AMERIPRIME
CONSOLIDATED COUNSEL UNDERWRITING CPFC FINANCIAL
------------ ------- ------------ ---- ---------
<S> <C> <C> <C> <C> <C>
REVENUE:
Brokerage $2,541,340 $ -- $ -- $ -- $ 13,486
Fund services 1,074,505 384,058
Investment advisory 2,486,627 858,618
Trust and administration services 900,046
Insurance -- 8,003,938 290,436
Software and programming services 24,153
Other income 206,923 130 133,886 249
Interest and dividends 169,000 3,410 58,819 2,078
---------- -------- ---------- -------- --------
Total revenue 7,402,594 862,158 8,196,643 290,685 399,622
---------- -------- ---------- -------- --------
COST OF SALES:
Brokerage revenue charges 1,180,369
Fund service revenue charges 374,410 92,948
Insurance commissions -- 3,664,683
Investment fees 103,121
Administration fees 56,692
---------- -------- ---------- -------- --------
Total cost of sales 1,717,592 -- 3,664,683 -- 92,948
---------- -------- ---------- -------- --------
Gross profit 5,685,002 862,158 4,531,960 290,685 306,674
---------- -------- ---------- -------- --------
EXPENSES:
Employee compensation and benefits 2,263,440 523,246 2,362,162 34,295 210,511
Brokerage operating charges 345,704
Fund services operating charges 428,080
Mail and courier 72,842 4,163 242,596 9,714 2,278
Telephone 102,339 12,122 54,184 2,888 6,449
Equipment rental and maintenance 99,369 34,801 45,803 1,350
Occupancy 218,421 57,701 250,851 3,611 6,477
Depreciation and amortization 268,198 30,407 189,983 52,829
Professional fees 199,388 148,311 64,033 24,768 29,700
Insurance 88,963 3,840 55,772 223
Advertising, marketing, etc. 329,652 -- 509,816
Interest expense 32,767 6,539 166,397 72,026
All other 178,151 90,308 454,151 8,448 35,377
---------- -------- ---------- -------- --------
Total expenses 4,627,314 911,438 4,395,748 209,929 291,015
---------- -------- ---------- -------- --------
INCOME FROM OPERATIONS 1,057,688 (49,280) 136,212 80,756 15,659
---------- -------- ---------- -------- --------
<PAGE>
<CAPTION>
ADJUSTMENTS AND ELIMINATIONS
----------------------------
STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED
--------- -------- ----- ------ ------------
<S> <C> <C> <C> <C> <C>
REVENUE:
Brokerage $ -- $ 2,554,826 $ -- $ -- $ 2,554,826
Fund services 9,850 1,468,413 9,850 1,458,563
Investment advisory 3,345,245 3,345,245
Trust and administration services 900,046 900,046
Insurance 8,294,374 100,000 8,394,374
Software and programming services 24,153 24,153
Other income 341,188 341,188
Interest and dividends 233,307 233,307
-------- ----------- ------ -------- -----------
Total revenue 9,850 17,161,552 9,850 100,000 17,251,702
-------- ----------- ------ -------- -----------
COST OF SALES:
Brokerage revenue charges 1,180,369 1,180,369
Fund service revenue charges 467,358 467,358
Insurance commissions 3,664,683 3,664,683
Investment fees 103,121 103,121
Administration fees 56,692 59,692
-------- ----------- ------ -------- -----------
Total cost of sales -- 5,475,223 -- -- 5,475,223
-------- ----------- ------ -------- -----------
Gross profit 9,850 11,686,329 9,850 100,000 11,776,479
-------- ----------- ------ -------- -----------
EXPENSES:
Employee compensation and benefits 14,926 5,408,580 14,926 5,393,654
Brokerage operating charges 345,704 345,704
Fund services operating charges 428,080 428,080
Mail and courier 15 331,608 15 331,593
Telephone 177,982 177,982
Equipment rental and maintenance 181,323 181,323
Occupancy 537,061 537,061
Depreciation and amortization 541,417 21,840 519,577
Professional fees 446,200 446,200
Insurance 17 148,815 17 148,798
Advertising, marketing, etc. 839,468 839,468
Interest expense 277,729 277,729
All other 11,912 778,347 11,890 766,457
-------- ----------- ------ -------- -----------
Total expenses 26,870 10,462,314 -- 48,688 10,413,626
-------- ----------- ------ -------- -----------
INCOME FROM OPERATIONS (17,020) 1,224,015 9,850 148,688 1,362,853
-------- ----------- ------ -------- -----------
<CAPTION>
See notes to pro forma consolidating financial statements (unaudited).
- 39 -
<PAGE>
<PAGE>
UNIFIED FINANCIAL SERVICES, INC.
Pro Forma Consolidating Statement of Income (unaudited)
For the nine months ended September 30, 1998
UNIFIED FIDUCIARY EQUITY AMERIPRIME
CONSOLIDATED COUNSEL UNDERWRITING CPFC FINANCIAL
------------ ------- ------------ ---- ---------
<S> <C> <C> <C> <C> <C>
OTHER INCOME (LOSS):
Unrealized gain or (loss) on securities $ (27,028) $ $ $ $ 24,517
Realized gain or (loss) on securities 6,451
Results of affiliate loss (39,945)
Gain (loss) on sale/disposal of fixed assets 5,141 249
---------- -------- ---------- -------- --------
Total other income (loss) (55,381) -- -- 249 24,517
---------- -------- ---------- -------- --------
INCOME BEFORE INCOME TAXES 1,002,307 (49,280) 136,212 81,005 40,176
---------- -------- ---------- -------- --------
INCOME TAXES:
Current 1,935 10,821
Deferred (6,080) (2,847)
---------- -------- ---------- -------- --------
NET INCOME $1,006,452 $(46,433) $ 136,212 $ 70,184 $ 40,176
========== ======== ========== ======== ========
Preferred dividends $ 65,844 $ -- $ -- $ -- $ --
========== ======== ========== ======== ========
Income available to common stockholders $ 940,608 $(46,433) $ 136,212 $ 70,184 $ 40,176
========== ======== ========== ======== ========
<CAPTION>
ADJUSTMENTS AND ELIMINATIONS
----------------------------
STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED
--------- -------- ----- ------ ------------
<S> <C> <C> <C> <C> <C>
OTHER INCOME (LOSS):
Unrealized gain or (loss) on securities $ $ (2,511) $ $ $ (2,511)
Realized gain or (loss) on securities 6,451 6,451
Results of affiliate loss (39,945) (39,945)
Gain (loss) on sale/disposal of fixed assets 5,390 5,390
-------- ----------- ------ -------- -----------
Total other income (loss) -- (30,615) -- -- (30,615)
-------- ----------- ------ -------- -----------
INCOME BEFORE INCOME TAXES (17,020) 1,193,400 9,850 148,688 1,332,238
-------- ----------- ------ -------- -----------
INCOME TAXES:
Current 12,756 12,784 (28)
Deferred (8,927) 113,047 (121,974)
-------- ----------- ------ -------- -----------
NET INCOME $(17,020) $ 1,189,571 $9,850 $274,519 $ 1,454,240
======== =========== ====== ======== ===========
Preferred dividends $ -- $ 65,844 $ -- $ -- $ 65,844
======== =========== ====== ======== ===========
Income available to common stockholders $(17,020) $ 1,123,727 $9,850 $274,519 $ 1,388,396
======== =========== ====== ======== ===========
See notes to pro forma consolidating financial statements (unaudited).
</TABLE>
- 40 -
<PAGE>
<PAGE>
<TABLE>
UNIFIED FINANCIAL SERVICES, INC.
Pro Forma Consolidating Statement of Income (unaudited)
For the nine months ended September 30, 1997
<CAPTION>
RESOURCE
UNIFIED ESTATE BENEFIT FIDUCIARY EQUITY
CONSOLIDATED MANAGEMENT PLANNERS COUNSEL UNDERWRITING CPFC
------------ ---------- -------- ------- ------------ ----
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Brokerage $2,022,262 $ $ $ $ $
Fund services 1,614,066
Investment advisory 1,509,636 969,946
Trust and administration services 123,561 206,007 278,201
Insurance 7,309,509 319,780
Software and programming services 143,178
Other income 23,095 346 117,271
Interest and dividends 44,799 2,774 85,798
---------- -------- -------- -------- ----------- --------
Total revenue 5,480,597 206,007 278,547 972,720 7,512,578 319,780
---------- -------- -------- -------- ----------- --------
COST OF SALES:
Brokerage revenue charges 1,208,753
Fund services revenue charges 200,000
Investment fees 52,694
Insurance commissions 3,453,429
Administration fees 13,491
---------- -------- -------- -------- ----------- --------
Total cost of sales 1,474,938 -- -- -- 3,453,429 --
---------- -------- -------- -------- ----------- --------
Gross profit 4,005,659 206,007 278,547 972,720 4,059,149 319,780
---------- -------- -------- -------- ----------- --------
EXPENSES:
Employee compensation and benefits 2,122,910 156,909 118,376 348,682 2,652,175 36,344
Brokerage operating charges 264,885
Fund services operating charges 185,803
Mail and courier 43,034 1,452 2,368 15,441 56,446
Telephone 49,031 3,746 3,453 9,483 44,556
Equipment rental and maintenance 62,734 9,808 16,526 44,830 148,784 3,476
Occupancy 151,656 10,760 5,954 83,675 215,559
Depreciation and amortization 147,084 10,325 31,462 115,314 66,818
Professional fees 50,839 1,350 145 118,745 42,961 20,324
Insurance 10,538 6,269 57,222 1,707
Advertising, marketing -- 150 100 -- 721,278
Interest expense 3,364 5,508 3,450 320,159 65,477
All other 314,746 17,450 101,873 118,015 800,695 5,986
---------- -------- -------- -------- ----------- --------
Total expenses 3,396,086 201,625 275,166 780,052 5,175,149 200,132
---------- -------- -------- -------- ----------- --------
INCOME FROM OPERATIONS 609,573 4,382 3,381 192,668 (1,116,000) 119,648
---------- -------- -------- -------- ----------- --------
<PAGE>
<CAPTION>
ADJUSTMENTS
AND ELIMINATIONS
----------------
AMERIPRIME STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED
---------- --------- -------- ----- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Brokerage $ 18,480 $ $ 2,040,742 $ $ $ 2,040,742
Fund services 279,145 1,893,211 1,893,211
Investment advisory 2,479,582 2,479,582
Trust and administration services 607,769 607,769
Insurance 7,629,289 125,598 7,503,691
Software and programming services 143,178 143,178
Other income 140,712 140,712
Interest and dividends 776 134,147 134,147
-------- ------ ----------- -------- -------- -----------
Total revenue 298,401 15,068,630 125,598 -- 14,943,032
-------- ------ ----------- -------- -------- -----------
COST OF SALES:
Brokerage revenue charges 1,208,753 1,208,753
Fund services revenue charges 43,476 243,476 243,476
Investment fees 52,694 52,694
Insurance commissions 3,453,429 3,453,429
Administration fees 13,491 13,491
-------- ------ ----------- -------- -------- -----------
Total cost of sales 43,476 4,971,843 -- -- 4,971,843
-------- ------ ----------- -------- -------- -----------
Gross profit 254,925 10,096,787 125,598 -- 9,971,189
-------- ------ ----------- -------- -------- -----------
EXPENSES:
Employee compensation and benefits 63,282 5,498,678 5,498,678
Brokerage operating charges 264,885 125,598 139,287
Fund services operating charges 185,803 185,803
Mail and courier 1,482 120,223 120,223
Telephone 3,445 113,714 113,714
Equipment rental and maintenance 286,158 286,158
Occupancy 4,403 472,007 472,007
Depreciation and amortization 371,003 371,003
Professional fees 5,522 239,886 239,886
Insurance 3,963 79,699 79,699
Advertising, marketing 721,528 721,528
Interest expense 397,958 397,958
All other 44,657 1,403,422 1,403,422
-------- ------ ----------- -------- -------- -----------
Total expenses 126,754 10,154,964 -- 125,598 10,029,366
-------- ------ ----------- -------- -------- -----------
INCOME FROM OPERATIONS 128,171 (58,177) 125,598 125,598 (58,177)
-------- ------ ----------- -------- -------- -----------
<CAPTION>
See notes to pro forma consolidating financial statements (unaudited).
- 41 -
<PAGE>
<PAGE>
UNIFIED FINANCIAL SERVICES, INC.
Pro Forma Consolidating Statement of Income (unaudited)
For the nine months ended September 30, 1997
RESOURCE
UNIFIED ESTATE BENEFIT FIDUCIARY EQUITY
CONSOLIDATED MANAGEMENT PLANNERS COUNSEL UNDERWRITING CPFC
------------ ---------- -------- ------- ------------ ----
<S> <C> <C> <C> <C> <C> <C>
OTHER INCOME (LOSS):
Unrealized gain or (loss) on securities $ (25,127) $ $ $ $ $
Realized gain or (loss) on securities
Results of loss (gain) of affiliate (54,722)
Gain or loss on sale/disposal
of fixed assets (1,700) (126)
---------- -------- -------- -------- ----------- --------
Total other income (loss) (79,849) -- -- (1,700) (126) --
---------- -------- -------- -------- ----------- --------
INCOME BEFORE INCOME TAXES 689,422 4,382 3,381 194,368 (1,115,874) 119,648
---------- -------- -------- -------- ----------- --------
INCOME TAXES:
Current 16,000 1,748 13,906 19,500 7,766 4,552
Deferred
---------- -------- -------- -------- ----------- --------
NET INCOME $ 673,422 $ 2,634 $(10,525) $174,868 $(1,123,640) $115,096
========== ======== ======== ======== =========== ========
Preferred dividends $ 101,854 $ -- $ -- $ -- $ -- $ --
========== ======== ======== ======== =========== ========
Income available to common stockholders $ 571,568 $ 2,634 $(10,525) $174,868 $(1,123,640) $115,096
========== ======== ======== ======== =========== ========
<CAPTION>
ADJUSTMENTS
AND ELIMINATIONS
----------------
AMERIPRIME STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED
---------- --------- -------- ----- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
OTHER INCOME (LOSS):
Unrealized gain or (loss) on securities $ $ $ (25,127) $ $ $ (25,127)
Realized gain or (loss) on securities -- --
Results of loss (gain) of affiliate (54,722) (54,722)
Gain or loss on sale/disposal
of fixed assets (1,826) (1,826)
-------- ------- --------- -------- -------- ---------
Total other income (loss) -- -- (81,675) -- -- (81,675)
-------- ------- --------- -------- -------- ---------
INCOME BEFORE INCOME TAXES 128,171 -- 23,498 125,598 125,598 23,498
-------- ------- --------- -------- -------- ---------
INCOME TAXES:
Current 63,472 63,472
Deferred -- --
-------- ------- --------- -------- -------- ---------
NET INCOME $128,171 $ -- $ (39,974) $125,598 $125,598 $ (39,974)
======== ======= ========= ======== ======== =========
Preferred dividends $ -- $ -- $ 101,854 $ $ $ 101,854
======== ======= ========= ======== ======== =========
Income available to common stockholders $128,171 $ -- $(141,828) $125,598 $125,598 $(141,828)
======== ======= ========= ======== ======== =========
See notes to pro forma consolidating financial statements (unaudited).
</TABLE>
- 42 -
<PAGE>
<PAGE>
<TABLE>
UNIFIED FINANCIAL SERVICES, INC.
Pro Forma Consolidating Statement of Income (unaudited)
For the year ended December 31, 1997
<CAPTION>
RESOURCE
UNIFIED BENEFIT FIDUCIARY ESTATE EQUITY
CONSOLIDATED PLANNERS COUNSEL MANAGEMENT UNDERWRITING CPFC
------------ -------- ------- ---------- ------------ ----
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Brokerage $2,542,130 $ -- $ -- $ -- $ -- $ --
Fund services 1,624,395
Investment advisory 1,859,566 1,277,954
Trust and administration services 367,555 284,381 263,921
Insurance 10,365,295 446,553
Software and programming services 131,787
Other income 241,775 223 22,962
Interest and dividends 3,497 124,319
---------- -------- ---------- -------- ----------- --------
Total revenue 6,767,208 284,604 1,281,451 263,921 10,512,576 446,553
---------- -------- ---------- -------- ----------- --------
COST OF SALES:
Brokerage revenue charges 1,712,545
Fund service revenue charges
Insurance commissions 4,741,726
Investment fees 90,768
Administration fees 59,015
---------- -------- ---------- -------- ----------- --------
Total cost of sales 1,862,328 -- -- -- 4,741,726 --
---------- -------- ---------- -------- ----------- --------
Gross profit 4,904,880 284,604 1,281,451 263,921 5,770,850 446,553
---------- -------- ---------- -------- ----------- --------
EXPENSES:
Employee compensation and benefits 2,623,443 257,520 483,251 212,945 4,268,165 64,016
Brokerage operating charges 317,381
Fund services operating charges 235,561
Mail and courier 50,518 3,523 281,611
Telephone 104,068 4,797 1,719 4,843 62,991
Equipment rental and maintenance 90,404 3,607 62,833 2,377 198,388
Occupancy 216,618 13,992 100,096 14,424 214,350 3,744
Depreciation and amortization 189,752 13,768 55,276 654 522,655 73,901
Professional fees 193 251,097 4,684 58,791 23,184
Insurance 3,692 6,283 -- 60,350
Advertising, marketing, etc. 100 -- 412 611,358
Interest expense 6,213 6,378 -- 71,082 87,842
All other 596,394 50,219 181,775 47,564 1,030,761 33,030
---------- -------- ---------- -------- ----------- --------
Total expenses 4,424,139 357,624 1,148,708 287,903 7,380,502 285,717
---------- -------- ---------- -------- ----------- --------
INCOME FROM OPERATIONS 480,741 (73,020) 132,743 (23,982) (1,609,652) 160,836
---------- -------- ---------- -------- ----------- --------
<PAGE>
<CAPTION>
ADJUSTMENTS
AND ELIMINATIONS
AMERIPRIME ----------------
FINANCIAL STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED
--------- --------- -------- ----- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Brokerage $ 32,970 $ -- $ 2,575,100 $ -- $ -- $ 2,575,100
Fund services 402,888 2,027,283 2,027,283
Investment advisory 3,137,520 3,137,520
Trust and administration services 915,857 915,857
Insurance 10,811,848 171,174 10,640,674
Software and programming services 131,787 131,787
Other income 11,782 276,742 276,742
Interest and dividends 127,816 127,816
-------- ----- ----------- -------- -------- -----------
Total revenue 447,640 -- 20,003,953 171,174 -- 19,832,779
-------- ----- ----------- -------- -------- -----------
COST OF SALES:
Brokerage revenue charges 1,712,545 1,712,545
Fund service revenue charges 80,692 80,692 80,692
Insurance commissions 4,741,726 4,741,726
Investment fees 90,768 90,768
Administration fees 59,015 59,015
-------- ----- ----------- -------- -------- -----------
Total cost of sales 80,692 -- 6,684,746 -- -- 6,684,746
-------- ----- ----------- -------- -------- -----------
Gross profit 366,948 -- 13,319,207 171,174 -- 13,148,033
-------- ----- ----------- -------- -------- -----------
EXPENSES:
Employee compensation and benefits 204,892 8,114,232 8,114,232
Brokerage operating charges 317,381 317,381
Fund services operating charges 235,561 235,561
Mail and courier 1,786 337,438 337,438
Telephone 4,677 183,095 183,095
Equipment rental and maintenance 357,609 357,609
Occupancy 6,307 569,531 569,531
Depreciation and amortization 1,444 857,450 30,154 887,604
Professional fees 5,790 343,739 343,739
Insurance 70,325 70,325
Advertising, marketing, etc. 611,870 611,870
Interest expense 171,515 171,515
All other 28,903 1,968,646 171,174 1,797,472
-------- ----- ----------- -------- -------- -----------
Total expenses 253,799 -- 14,138,392 30,154 171,174 13,997,372
-------- ----- ----------- -------- -------- -----------
INCOME FROM OPERATIONS 113,149 -- (819,185) 201,328 171,174 (849,339)
-------- ----- ----------- -------- -------- -----------
<CAPTION>
See notes to pro forma consolidating financial statements (unaudited).
- 43 -
<PAGE>
<PAGE>
UNIFIED FINANCIAL SERVICES, INC.
Pro Forma Consolidating Statement of Income (unaudited)
For the year ended December 31, 1997
RESOURCE
UNIFIED BENEFIT FIDUCIARY ESTATE EQUITY
CONSOLIDATED PLANNERS COUNSEL MANAGEMENT UNDERWRITING CPFC
------------ -------- ------- ---------- ------------ ----
<S> <C> <C> <C> <C> <C> <C>
OTHER INCOME (LOSS):
Unrealized gain or (loss) on securities $ 28,855 $ $ $ $ $
Realized gain or (loss) on securities 15,647 6,540 (6,967)
Results of affiliate loss (160,298) 1,700
Gain (loss) on sale/disposal of
fixed assets (52,720) 126
Minority interest 455,823
--------- -------- -------- -------- ----------- --------
Total other income (loss) (168,516) -- 8,240 -- 448,982 --
--------- -------- -------- -------- ----------- --------
INCOME BEFORE INCOME TAXES 312,225 (73,020) 140,983 (23,982) (1,160,670) 160,836
--------- -------- -------- -------- ----------- --------
INCOME TAXES:
Current 45,500 6,691 1,185 21,653
Deferred 7,500 (452,690)
--------- -------- -------- -------- ----------- --------
NET INCOME $ 259,225 $(73,020) $134,292 $(25,167) $ (729,633) $160,836
========= ======== ======== ======== =========== ========
Preferred dividends $ 136,552 $ -- $ -- $ -- $ -- $ --
========= ======== ======== ======== =========== ========
Income available to common stockholders $ 122,673 $(73,020) $134,292 $(25,167) $ (729,633) $160,836
========= ======== ======== ======== =========== ========
<CAPTION>
ADJUSTMENTS
AND ELIMINATIONS
AMERIPRIME ----------------
FINANCIAL STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED
--------- --------- -------- ----- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
OTHER INCOME (LOSS):
Unrealized gain or (loss) on securities $ 16,675 $ $ 45,530 $ $ $ 45,530
Realized gain or (loss) on securities 15,220 15,220
Results of affiliate loss (158,598) (158,598)
Gain (loss) on sale/disposal of
fixed assets (52,594) (52,594)
Minority interest 455,823 455,823
-------- ----- --------- -------- -------- ---------
Total other income (loss) 16,675 -- 305,381 -- -- 305,381
-------- ----- --------- -------- -------- ---------
INCOME BEFORE INCOME TAXES 129,824 -- (513,804) 201,328 171,174 (543,958)
-------- ----- --------- -------- -------- ---------
INCOME TAXES:
Current 75,029 75,029
Deferred (445,190) (445,190)
-------- ----- --------- -------- -------- ---------
NET INCOME $129,824 $ -- $(143,643) $201,328 $171,174 $(173,797)
======== ===== ========= ======== ======== =========
Preferred dividends $ -- $ -- $ 136,552 $ -- $ -- $ 136,552
======== ===== ========= ======== ======== =========
Income available to common stockholders $129,824 $ -- $(280,195) $201,328 $171,174 $(310,349)
======== ===== ========= ======== ======== =========
See notes to pro forma consolidating financial statements (unaudited).
</TABLE>
- 44 -
<PAGE>
<PAGE>
<TABLE>
UNIFIED FINANCIAL SERVICES, INC.
Pro Forma Consolidating Statement of Income (unaudited)
For the year ended December 31, 1996
<CAPTION>
RESOURCE
UNIFIED BENEFIT ESTATE EQUITY
CONSOLIDATED PLANNERS MANAGEMENT UNDERWRITING CPFC
------------ -------- ---------- ------------ ----
<S> <C> <C> <C> <C> <C>
REVENUE:
Brokerage $2,841,519 $ -- $ -- $ -- $ --
Fund services 2,214,523
Investment advisory 1,679,728
Trust and administration services 191,166 292,505 281,561
Insurance -- 7,890,257 276,277
Software and programming services 194,626
Other income 145,090
Interest and dividends 152,586 2,658
---------- -------- -------- ---------- --------
Total revenue 7,266,652 292,505 281,561 8,042,843 278,935
---------- -------- -------- ---------- --------
COST OF SALES:
Brokerage revenue charges 1,794,886
Fund services revenue charges
Insurance commissions 3,443,417
Investment fees 67,624
Administration fees 16,591
---------- -------- -------- ---------- --------
Total cost of sales 1,879,101 -- -- 3,443,417 --
---------- -------- -------- ---------- --------
Gross profit 5,387,551 292,505 281,561 4,599,426 278,935
---------- -------- -------- ---------- --------
EXPENSES:
Employee compensation and benefits 2,742,595 162,141 207,271 2,724,682 31,387
Brokerage operating charges 332,508 5,112
Fund services operating charges 233,500
Mail and courier 63,511 2,380 61
Telephone 74,969 4,746 6,951
Equipment rental and maintenance 111,540 -- 10,782
Occupancy 203,651 23,673 --
Depreciation and amortization 195,064 3,063 832 103,176
Professional fees 1,129 3,450 12,430
Insurance 17,662 --
Advertising, marketing, etc. 659 725 579,314
Interest expense 5,067 -- 5,300 31,476
All other 427,391 55,891 49,137 1,290,079 10,784
---------- -------- -------- ---------- --------
Total expenses 4,384,729 276,411 279,209 4,599,375 194,365
---------- -------- -------- ---------- --------
INCOME FROM OPERATIONS 1,002,822 16,094 2,352 51 84,570
---------- -------- -------- ---------- --------
<PAGE>
<CAPTION>
ADJUSTMENTS
AND ELIMINATIONS
AMERIPRIME ----------------
FINANCIAL STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED
--------- --------- -------- ----- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Brokerage $ 12,000 $ -- $ 2,853,519 $ -- $ -- $ 2,853,519
Fund services 162,726 2,377,249 2,377,249
Investment advisory 1,679,728 1,679,728
Trust and administration services 765,232 765,232
Insurance 8,166,534 8,166,534
Software and programming services 194,626 194,626
Other income 145,090 145,090
Interest and dividends 155,244 155,244
-------- ---- ----------- ---- ---- -----------
Total revenue 174,726 -- 16,337,222 -- -- 16,337,222
-------- ---- ----------- ---- ---- -----------
COST OF SALES:
Brokerage revenue charges 1,794,886 1,794,886
Fund services revenue charges 101,781 101,781 101,781
Insurance commissions 3,443,417 3,443,417
Investment fees 67,624 67,624
Administration fees 16,591 16,591
-------- ---- ----------- ---- ---- -----------
Total cost of sales 101,781 -- 5,424,299 -- -- 5,424,299
-------- ---- ----------- ---- ---- -----------
Gross profit 72,945 -- 10,912,923 -- -- 10,912,923
-------- ---- ----------- ---- ---- -----------
EXPENSES:
Employee compensation and benefits 5,868,076 5,868,076
Brokerage operating charges 337,620 337,620
Fund services operating charges 233,500 233,500
Mail and courier 1,122 67,074 67,074
Telephone 86,666 86,666
Equipment rental and maintenance 122,322 122,322
Occupancy 227,324 227,324
Depreciation and amortization 405 302,540 302,540
Professional fees 6,395 23,404 23,404
Insurance 17,662 17,662
Advertising, marketing, etc. 580,698 580,698
Interest expense 41,843 41,843
All other 22,951 1,856,233 1,856,233
-------- ---- ----------- ---- ---- -----------
Total expenses 30,873 -- 9,764,962 -- -- 9,764,962
-------- ---- ----------- ---- ---- -----------
INCOME FROM OPERATIONS 42,072 -- 1,147,961 -- -- 1,147,961
-------- ---- ----------- ---- ---- -----------
See notes to pro forma consolidating financial statements (unaudited).
</TABLE>
- 45 -
<PAGE>
<PAGE>
<TABLE>
UNIFIED FINANCIAL SERVICES, INC.
Pro Forma Consolidating Statement of Income (unaudited)
For the year ended December 31, 1996
<CAPTION>
RESOURCE
UNIFIED BENEFIT ESTATE EQUITY
CONSOLIDATED PLANNERS MANAGEMENT UNDERWRITING CPFC
------------ -------- ---------- ------------ ----
<S> <C> <C> <C> <C> <C>
OTHER INCOME (LOSS):
Unrealized gain or (loss) on securities $ 1,659 $ $ $ $
Realized gain or (loss) on securities 49,684
Results of affiliate loss (151,108)
Gain (loss) on sale/disposal of fixed assets (41,859) 10,908
Minority interest in loss of consolidated
subsidiary 10,601
--------- ------- ------ ------- -------
Total other income (loss) (141,624) -- -- 21,509 --
--------- ------- ------ ------- -------
INCOME BEFORE INCOME TAXES 861,198 16,094 2,352 21,560 84,570
--------- ------- ------ ------- -------
INCOME TAXES:
Current 20,400 2,245 22,987 923
Deferred 9,600 (8,700)
--------- ------- ------ ------- -------
NET INCOME $ 831,198 $16,094 $ 107 $ 7,273 $83,647
========= ======= ====== ======= =======
Preferred dividends $ 136,634 $ -- $ -- $ -- $ --
========= ======= ====== ======= =======
Income available to common stockholders $ 694,564 $16,094 $ 107 $ 7,273 $83,647
========= ======= ====== ======= =======
<PAGE>
<CAPTION>
ADJUSTMENTS
AND ELIMINATIONS
AMERIPRIME ----------------
FINANCIAL STRATEGIC COMBINED DEBIT CREDIT CONSOLIDATED
--------- --------- -------- ----- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
OTHER INCOME (LOSS):
Unrealized gain or (loss) on securities $11,023 $ $ 12,682 $ $ $ 12,682
Realized gain or (loss) on securities 5,280 54,964 54,964
Results of affiliate loss (151,108) (151,108)
Gain (loss) on sale/disposal of fixed assets (30,951) (30,951)
Minority interest in loss of consolidated
subsidiary 10,601 10,601
------- ---- ---------- ---- ---- ----------
Total other income (loss) 16,303 -- (103,812) -- -- (103,812)
------- ---- ---------- ---- ---- ----------
INCOME BEFORE INCOME TAXES 58,375 -- 1,044,149 -- -- 1,044,149
------- ---- ---------- ---- ---- ----------
INCOME TAXES:
Current 46,555 46,555
Deferred 900 900
------- ---- ---------- ---- ---- ----------
NET INCOME $58,375 $ -- $ 996,694 $ -- $ -- $ 996,694
======= ==== ========== ==== ==== ==========
Preferred dividends $ -- $ -- $ 136,634 $ -- $ -- $ 136,634
======= ==== ========== ==== ==== ==========
Income available to common stockholders $58,375 $ -- $ 860,060 $ -- $ -- $ 860,060
======= ==== ========== ==== ==== ==========
See notes to pro forma consolidating financial statements (unaudited).
</TABLE>
- 46 -
<PAGE>
<PAGE>
UNIFIED FINANCIAL SERVICES, INC.
Notes to Pro Forma Consolidating Financial Statements (Unaudited)
The pro forma consolidating balance sheet and statement of operations
give effect to the merger or acquisition of the following companies
as if each such merger or acquisition had occurred as of the first day
of the period reported.
Effective March 10, 1998, the Company acquired Resource Benefit
Planners, Inc. in a transaction accounted for under the pooling-of-
interest method of accounting. In connection with such acquisition,
the Company issued 12,000 shares of Common Stock.
Effective August 21, 1998, the Company acquired EMCO Estate Management
Company, Inc. in a transaction accounted for under the pooling-of-
interest method of accounting. In connection with such acquisition,
the Company issued 11,000 shares of Common Stock.
Effective December 17, 1998, the Company acquired Equity Underwriting
Group, Inc. in a transaction accounted for under the pooling-of-interest
method of accounting. In connection with such acquisition, the Company
issued 241,745 shares of Common Stock.
Effective December 17, 1998, the Company acquired Commonwealth Premium
Finance Corporation in a transaction accounted for under the pooling-of-
interest method of accounting. In connection with such acquisition,
the Company issued 12,800 shares of Common Stock.
Effective December 21, 1998, the Company acquired Strategic Fund
Services, Inc. in a transaction accounted for under the pooling-of-
interest method of accounting. In connection with such acquisition,
the Company issued 7,500 shares of Common Stock.
Effective December 31, 1998, the Company acquired AmeriPrime Financial
Services, Inc. in a transaction accounted for under the pooling-of-
interest method of accounting. In connection with such acquisition,
the Company issued 410,000 shares of Common Stock.
During February 1998, the Company formed Unified Internet Services,
Inc., an Indiana corporation.
Effective August 21, 1998, the Company acquired Fiduciary Counsel, Inc.
in a transaction accounted for under the purchase method of accounting.
In connection with such acquisition, the Company issued 36,110 shares of
Common Stock and paid $800,835 in cash in exchange for all the capital
stock of Fiduciary Counsel, Inc. The excess of cost over fair value of
net assets acquired was $1,564,802. Goodwill will be amortized on a
straight-line method over 15 years.
- 47 -
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
UNIFIED FINANCIAL SERVICES, INC.
Dated: February 19, 1999 By: /s/ Timothy L. Ashburn
---------------------------------
Timothy L. Ashburn
Chairman, President and Chief
Executive Officer
- 48 -
<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
2.1 Agreement and Plan of Merger, dated October 16, 1998, by
and among Unified Financial Services, Inc., Equity
Acquisition Corporation, Equity Underwriting Group, Inc.,
John R. Owens and D. Richard Meyer, filed as Exhibit 2.2
to Unified Financial Services, Inc.'s Current Report on
Form 8-K dated October 16, 1998, is incorporated herein
by reference.
2.2 First Amendment to Agreement and Plan of Merger, dated
December 14, 1998, by and among Unified Financial
Services, Inc., Equity Acquisition Corporation, Equity
Underwriting Group, Inc., John R. Owens and D. Richard
Meyer.<F*>
2.3 Agreement and Plan of Merger, dated October 16, 1998, by
and among Unified Financial Services, Inc., AmeriPrime
Acquisition Corporation, AmeriPrime Financial Services,
Inc. and Kenneth D. Trumpfheller, filed as Exhibit 2.1 to
Unified Financial Services, Inc.'s Current Report on
Form 8-K dated October 16, 1998, is incorporated herein
by reference.
23.1 Consent of Larry E. Nunn & Associates, LLC with respect to
its report dated February 12, 1999 regarding the financial
statements of Equity Underwriting Group, Inc.
23.2 Consent of Larry E. Nunn & Associates, LLC with respect to
its report dated February 12, 1999 regarding the financial
statements of AmeriPrime Financial Services, Inc.
- ---------------------------
<F*> Previously filed
- 49 -
<PAGE>
Exhibit 23.1
------------
[Letterhead of Larry E. Nunn & Associates, LLC]
CONSENT OF LARRY E. NUNN & ASSOCIATES, LLC
------------------------------------------
We consent to the incorporation by reference in the Registration
Statement and in the related Prospectus listed below of Unified
Financial Services, Inc. of our report dated February 12, 1999, with
respect to the financial statements of Equity Underwriting Group, Inc.
for the years ended December 31, 1997 and 1996, included in Unified
Financial Services, Inc.'s Current Report on Form 8-K/A, dated
December 17, 1998.
Form Registration Number
---- -------------------
S-8
333-53863
/s/ Larry E. Nunn & Associates, LLC
Larry E. Nunn & Associates, LLC
Columbus, Indiana
February 19, 1999
<PAGE>
Exhibit 23.2
------------
[Letterhead of Larry E. Nunn & Associates, LLC]
CONSENT OF LARRY E. NUNN & ASSOCIATES, LLC
------------------------------------------
We consent to the incorporation by reference in the Registration
Statement and in the related Prospectus listed below of Unified
Financial Services, Inc. of our report dated February 12, 1999, with
respect to the financial statements of AmeriPrime Financial Services,
Inc. for the years ended December 31, 1997 and 1996, included in Unified
Financial Services, Inc.'s Current Report on Form 8-K/A dated December
17, 1998.
Form Registration Number
---- -------------------
S-8 333-53863
/s/ Larry E. Nunn & Associates, LLC
Larry E. Nunn & Associates, LLC
Columbus, Indiana
February 19, 1999
