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):
February 4, 1998 (November 26, 1997)
---------------------------------------------------------------
Advanced Communication Systems, Inc.
---------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware
--------------------------------------------
(State or Other Jurisdiction of Incorporation)
0-22737 54-1421222
- --------------------------------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
10089 Lee Highway, Fairfax, Virginia 22030
- --------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(703) 934-8130
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(Registrant's Telephone Number, Including Area Code)
<PAGE>
On December 5, 1997, Advanced Communication Systems, Inc., a
Delaware corporation ("ACS"), filed a Current Report on Form 8-K with respect to
its November 26, 1997, acquisition (the "Acquisition") of all the outstanding
shares of Integrated Systems Control, Inc., a Virginia corporation ("ISC"). Such
Form 8-K was filed without the financial statements and pro forma financial
information required by Item 7 of Form 8-K, as it was impracticable to do so at
that time. This Current Report on Form 8-K/A provides such required information.
Item 7. Financial Statements and Exhibits
(a) The audited balance sheets of ISC, including independent
auditor's report thereon, as of September 30, 1997 and 1996, and the related
statements of income, retained earnings and cash flows for the years then ended,
are included at Exhibit 99(a) and incorporated herein by reference.
(b) Pro forma unaudited financial information for ACS giving
effect to the Acquisition as of and for the fiscal year ended September 30,
1997, is included at Exhibit 99(b) and incorporated herein by reference.
(c) Exhibits:
99(a) Audited balance sheets of ISC, including
independent auditor's report thereon, as of September 30, 1997
and 1996, and the related statements of income, retained
earnings and cash flows for the years then ended.
99(b) Unaudited pro forma financial information for
ACS giving effect to the Acquisition as of, and for the period
ended September 30, 1997.
Signature
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 4, 1998 Advanced Communication Systems, Inc.
/S/ Dev Ganesan
-----------------------------------
Dev Ganesan
Executive Vice President, Chief Financial
Officer and Treasurer
Exhibit 99(a)
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Directors
Integrated Systems Control, Inc.
Virginia Beach, Virginia
We have audited the accompanying balance sheets of Integrated Systems Control,
Inc. (an S corporation) as of September 30, 1997 and 1996, and the related
statements of income, retained earnings and of cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Integrated Systems Control,
Inc. as of September 30, 1997 and 1996 and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
/S/
Failes and Associates, P.C.
January 14, 1998
<PAGE>
INTEGRATED SYSTEMS CONTROL, INC.
BALANCE SHEETS
SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---------- ----------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 27,670 $ 36,083
Accounts receivables - Trade 3,079,260 3,046,071
Loans receivable - Officers -- 10,000
Prepaid expenses 26,692 3,191
----------- ----------
3,133,622 3,095,345
PROPERTY AND EQUIPMENT 2,361,601 2,371,766
OTHER ASSETS 61,902 40,458
----------- ----------
$5,557,125 $5,507,569
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 434,000 $ 614,000
Current portion of long-term debt 130,250 116,498
Accounts payable - trade 126,575 319,423
Accrued expenses 811,250 583,524
----------- ----------
1,502,075 1,633,445
LONG-TERM DEBT, NET 1,782,953 1,911,420
----------- ----------
3,285,028 3,544,865
----------- ----------
STOCKHOLDERS' EQUITY
Common stock, par value $1 per share; 1,000
shares authorized, issued and outstanding 1,000 1,000
Retained earnings 2,271,097 1,961,704
----------- ----------
2,272,097 1,962,704
----------- ----------
$5,557,125 $5,507,569
=========== ==========
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
INTEGRATED SYSTEMS CONTROL, INC.
STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
CONTRACT REVENUES $12,179,618 $10,686,969
----------- -----------
EXPENSES (including provision for depreciation
and amortization of $213,212 (1997)
and $210,264 (1996))
Direct job costs 6,504,569 5,712,848
Overhead expenses 3,746,152 3,177,367
General and administrative expenses 1,138,872 1,007,793
Non-allocable items 90,710 48,478
Interest expense 217,586 221,198
----------- ----------
TOTAL EXPENSES 11,697,889 10,167,684
----------- ----------
NET INCOME $ 481,729 $ 519,285
=========== ==========
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
INTEGRATED SYSTEMS CONTROL, INC.
STATEMENTS OF RETAINED EARNINGS
YEARS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
RETAINED EARNINGS - beginning $1,961,704 $1,511,345
Net income 481,729 519,285
S corporation cash dividends paid (172,336) (68,926)
------------ -----------
RETAINED EARNINGS - ending $2,271,097 $1,961,704
============ ===========
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
INTEGRATED SYSTEMS CONTROL, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
-------------- -------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 481,729 $ 519,285
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 213,212 210,264
Gain on disposal of fixed assets 2,107 (2,575)
Changes in assets and liabilities:
(Increase)decrease in:
Accounts receivable (33,189) (1,017,444)
Prepaid expense (23,501) 2,236
Deposits (23,141) (4,933)
Increase(decrease) in:
Accounts payable - trade (192,848) 239,047
Accrued expenses 227,726 81,408
-------------- -------------
Net cash provided by operating activities 652,095 27,288
-------------- -------------
Cash Flows From Investing Activities
Proceeds from sale of fixed asset -- 2,575
Capital expenditures (203,457) (227,212)
-------------- -------------
Net cash used in investing activities (203,457) (224,637)
-------------- -------------
Cash Flows From Financing Activities
Net borrowings (payments) under
line-of-credit agreements (180,000) 5,000
Proceeds from long-term borrowing -- 100,000
Principal payments on long-term debt (114,715) (100,154)
Repayments from officers 10,000 --
Cash dividends paid to stockholders (172,336) (68,926)
-------------- -------------
Net cash provided used by investing activities (457,051) (64,080)
-------------- -------------
Net decrease increase in cash and cash
equivalents (8,413) (261,429)
Cash and cash equivalents, at beginning of year 36,083 297,512
-------------- -------------
Cash and cash equivalents, at end of year $ 27,670 $ 36,083
============== =============
Supplemental Disclosures of Cash Flow
Information
Interest paid $ 217,586 $ 221,198
State income taxes (refunded) paid $ -- $ (4,804)
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
INTEGRATED SYSTEMS CONTROL, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND NATURE OF OPERATIONS
Nature of Operations
Integrated Systems Control, Inc. is a Virginia based corporation. The
Company's principal lines of business are communication resource master
planning, implementation support and concept development, as well as, the
design, engineering and analysis of communication systems. The principal markets
of the Company are the United States and allied military forces.
Revenue Recognition
The principal source of revenue of Integrated Systems Control, Inc.
is contracts for systems engineering services in the government defense
industry. Revenue on cost-plus-fixed-fee contracts is recognized to the extent
of costs incurred plus a proportionate amount of fee earned. Revenue on
firm-fixed-price contracts is recognized on the percentage-of-completion method
based on costs incurred in relation to total estimated costs. Revenue on
time-and-material contracts is recognized based on hours incurred, extended at
contract rates plus materials expense incurred. Anticipated losses are
recognized as soon as they become known.
Property and Equipment
Property and equipment are recorded at cost. Depreciation and
amortization is provided using accelerated and straight-line methods over the
estimated useful lives of the assets. Expenditures for major renewals or
betterments that extend the useful lives of property, plant and equipment are
capitalized. Expenditures for maintenance and repairs are charged to expense as
incurred.
Advertising
The Company follows the policy of charging the cost of advertising to
expense as incurred. There were no advertising costs incurred for the years
ended September 30, 1997 and 1996.
<PAGE>
INTEGRATED SYSTEMS CONTROL, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND NATURE OF OPERATIONS
(Continued)
Income Taxes
The Company's stockholders have elected to be taxed as an S Corporation.
Under this election, the Company's net income or loss is reportable by the
stockholders. Therefore, no provision or liability for federal or certain states
income taxes is presented in these statements. The Company operated in one state
which required them to pay income taxes on approximately 13% of the Company's
net income. A (benefit) provision of $-0- (1997) and ($4,804) (1996) for state
income tax has been reflected in general and administrative expenses.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
NOTE 2 - 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 - CONCENTRATION OF CREDIT RISK
The Company maintains it's cash in bank deposit accounts at high credit
quality financial institutions. The balances, at times, may exceed Federally
insured limits.
The Company is also subject to concentration of credit risk due to high
dollar value of accounts receivable. The credit risk with respect to accounts
receivable is mitigated because the majority of the Company's receivables are
due from prime contractors conducting business with agencies of the U.S.
Government.
<PAGE>
INTEGRATED SYSTEMS CONTROL, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 4 - ACCOUNTS RECEIVABLE - TRADE
Accounts receivable - trade consist of the following:
<TABLE>
<CAPTION>
1997 1996
------------- ------------
<S> <C> <C>
Amounts billed, net of allowance for doubtful $ 2,882,630 $ 2,774,669
accounts of $36,226 (1997), $-0- (1996)
Recoverable costs and accrued profit on
progress completed - not billed 196,630 271,402
------------- ------------
$ 3,079,260 $ 3,046,071
============= ============
</TABLE>
Recoverable costs and accrued profit not billed principally comprise
amounts of revenue recognized on contracts for which billings had not been
presented to the contract owners because the amounts were not billable at
balance sheet date. It is anticipated such unbilled amounts will be billed and
collectible in the near future once certain contract commitments have been
fulfilled.
NOTE 5 - LOANS RECEIVABLE - OFFICERS
Loans receivable - officers represents a note with interest accrued at
81/4% per annum. The balances are $-0- (1997) and $10,000 (1996).
NOTE 6 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
1997 1996
------------- ------------
Land $ 231,325 $ 231,325
Building and related fixtures 1,995,940 1,978,332
Furniture and fixtures 708,844 813,855
Computer equipment and software 445,642 283,159
-------------- ------------
3,381,751 3,306,671
Less: Accumulated depreciation and
amortization 1,020,150 934,905
-------------- ------------
$2,361,601 $2,371,766
============== ============
<PAGE>
INTEGRATED SYSTEMS CONTROL, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 7 - OTHER ASSETS
Other assets consist of the following:
1997 1996
------------- -------------
Deposits $ 32,703 $ 9,562
Loan acquisition costs, net of amortization
of $4,738 (1997) and $3,041 (1996) 29,199 30,896
------------- -------------
$ 61,902 $ 40,458
============= =============
NOTE 8 - ACCRUED EXPENSES
Accrued expenses consist of the following:
1997 1996
------------- -------------
Payroll $511,515 $258,363
Vacation and sick leave 275,285 304,284
Benefits 24,450 20,876
------------- -------------
$811,250 $583,523
============= =============
NOTE 9 - NOTES PAYABLE AND LONG-TERM DEBT
Notes payable consists of the following line of credit arrangements with
a bank. All credit arrangements are secured by accounts receivable, furniture,
fixtures, equipment and various current and future U.S. Government contract
rights.
1997 1996
------------- -------------
$1,000,000 maximum borrowing limit, interest
accrues monthly at the prime rate plus
one-half percent $ 434,000 $ 614,000
============= =============
Long-term debt consists of the following:
Note payable with bank, balloon payment due
February 2005, payable in monthly installments
of $9,062 including interest at 9.9% (fixed for
first five years) secured by a First Deed of
Trust on the office building with a book value
of $2,105,000. $ 976,898 $ 989,199
<PAGE>
INTEGRATED SYSTEMS CONTROL, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 9 - NOTES PAYABLE AND LONG-TERM DEBT (Continued)
Note payable with Urban Business Development
Corporation, due January 2015, payable in
monthly installments of $6,537, including
interest at 8.575% also added to monthly
payment is $375 for Small Business
Administration (SBA) service fees (which will
be recalculated every five years based on the
principal balance at that time), the note
is guaranteed by the SBA plus secured by a
second deed of trust on the office building
and personal guarantees of the stockholders. 706,847 722,518
Note payable with bank, due April 2000,
payable in monthly installments of $6,264,
including interest at 9.25% secured by
accounts receivables, furniture, fixtures,
equipment and various government contracts. 173,426 229,443
Note payable with bank, due April 1999,
payable in monthly installments of $3,169,
including interest at 8.75%, secured by
accounts receivable, furniture, fixtures,
equipment and various government contracts 56,032 86,758
------------ -------------
1,913,203 2,027,918
Less: current portion 130,250 116,498
------------ -------------
$1,782,953 $1,911,420
============ =============
Annual maturities of long term-debt after September 30, 1997, are as follows:
1998 $ 130,250
1999 120,199
2000 77,308
2001 47,550
Thereafter 1,537,896
-----------
$1,913,203
===========
<PAGE>
INTEGRATED SYSTEMS CONTROL, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 10 - LEASE COMMITMENTS
The Company leases three facilities which are accounted for as
noncancelable operating leases expiring through April 2001. In addition, the
Company rents equipment under noncancelable operating leases expiring on various
dates through November 1999.
The following is a schedule of future minimum rental payments required
under the above leases as of September 30, 1997:
1998 $ 514,399
1999 490,432
2000 325,956
2001 218,858
2002 193,805
-----------
$1,743,450
===========
Rent expense charged to operations was $363,960 (1997) and $247,641 (1996).
NOTE 11 - EMPLOYEE BENEFIT PLANS
The Company maintains a qualified 401(K) employee savings and profit
sharing plan for the benefit of substantially all employees. Under the plan,
individual employee contributions are not to exceed the lesser of 15% of total
compensation earned by plan participants during the year or $9,500 (1997 and
1996). The Company matches, within prescribed limits, the contributions of
employees. The Company also has the option to make additional profit sharing
contributions to the plan. Employer contributions to the plan amounted to
$189,261 (1997) and $160,106 (1996).
NOTE 12 -SUBSEQUENT EVENTS
Effective October 31, 1997, all of the outstanding common stock of the
company was acquired by Advanced Communication Systems, Inc. (ACS), a company
publicly traded on the NASDAQ exchange. In order to conform with ACS's fiscal
year, the accompanying financial statements have been presented based on a
September 30 year end.
Exhibit 99(b)
ADVANCED COMMUNICATION SYSTEMS, INC.
UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying unaudited pro forma consolidated financial statements give
effect to the acquisition of Integrated Systems Control, Inc. ("ISC"), as
described below.
Effective October 31, 1997, Advanced Communication Systems, Inc. ("ACS"),
acquired all of the outstanding common stock of ISC in exchange for 475,000
shares of ACS common stock. The acquisition has been accounted for as a
purchase, and accordingly, the total purchase price has been allocated among the
acquired assets in accordance with the provisions of Accounting Principles Board
Opinion No. 16. The excess of the purchase price over the net fair market value
of the assets acquired is being classified as intangible assets, principally
goodwill, and will be amortized over its estimated life of 30 years.
The unaudited pro forma consolidated balance sheet as of September 30, 1997, has
been prepared to reflect the acquisition of ISC as if it had occurred on
September 30, 1997. The unaudited pro forma consolidated statement of
operations, with appropriate adjustments, has been prepared to reflect the
acquisition of ISC as if it had occurred at the beginning of the period
presented.
The unaudited pro forma consolidated financial statements have been prepared by
the ACS's management and should be read in conjunction with the historical
financial statements of ACS and ISC and the related notes thereto. The unaudited
pro forma consolidated statements of operations are not necessarily indicative
of the results of operations that may have actually occurred had the acquisition
occurred on the dates specified, or of the future results of the combined
companies. The pro forma adjustments are based upon available information and
certain adjustments that the management of ACS believes are reasonable. In the
opinion of ACS's management, all adjustments have been made that are necessary
to present fairly the unaudited pro forma consolidated financial statements.
<PAGE>
ADVANCED COMMUNICATION SYSTEMS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 1997
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
ACS ISC Pro Forma
Historical Historical(A) Adjustments Combined
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $2,744 $28 $0 $2,772
Contract receivables 17,643 3,079 - 20,722
Other receivables 154 - - 154
Income taxes receivable 529 - - 529
Inventories 544 - - 544
Prepaid expenses 296 26 - 322
------------ ------------- ------------ ------------
Total current assets 21,910 3,133 - 25,043
------------ ------------- ------------ ------------
Property and equipment, net 1,261 2,362 900 (B) 4,523
Other assets:
Other related party receivables 86 - - 86
Software development costs, net 950 - - 950
Goodwill, net 1,706 - 1,059 (B) 2,765
Long-term deferred tax asset 147 - - 147
Other assets 152 62 - 214
------------ ------------- ------------ ------------
Total other assets 3,041 62 1,059 4,162
------------ ------------- ------------ ------------
Total assets $26,212 $5,557 $1,959 $33,728
============ ============= ============ ============
LIABILITIES AND STOCKHOLDES'EQUITY
Current Liabilities:
Notes payable $0 $434 $0 $434
Current portion of long-term debt - 130 - 130
Accounts payable 3,321 127 - 3,448
Accrued expenses 8,838 811 - 9,649
Billings in excess of revenue 225 - - 225
Deferred income tax liability - - 1,141 (B) 1,141
------------ ------------ ------------ ------------
Total current liabilities 12,384 1,502 1,141 15,027
Long-term debt - 1,783 - 1,783
------------ ------------ ------------ ------------
Total liabilities 12,384 3,285 1,141 16,810
Total stockholders' equity 13,828 2,272 3,090 (B) 16,918
(2,272)(C)
------------ ------------ ------------ ------------
Total liabilities and stockholders'
equity $26,212 $5,557 $1,959 $33,728
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
consolidated financial statements.
<PAGE>
ADVANCED COMMUNICATION SYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
BALANCE SHEET
SEPTEMBER 30, 1997
(A) Information obtained from the September 30, 1997 audited balance sheet of
ISC.
(B) Reflects intangible assets, principally goodwill, originating from the
purchase of all of the outstanding stock of ISC and represents the allocation of
the excess purchase price using the purchase method of accounting for the
transaction after adjusting the assets acquired and the liabilities assumed to
their respective fair market values.
(C) Eliminates the equity of ISC upon consolidation with ACS.
<PAGE>
ADVANCED COMMUNICATION SYSTEMS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1997
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
ACS ISC Pro Forma
Historical Historical(A) Adjustments Combined
------------ --------------- -------------- ------------
<S> <C> <C> <C> <C>
Revenues $52,194 $12,180 - $64,374
Direct Costs 37,687 6,505 - 44,192
Indirect, general and administrative expenses 11,128 4,975 46 (B) 16,149
Write-off of acquired in-process R & D costs 1,910 - - 1,910
------------ --------------- -------------- ------------
Income from operations 1,469 700 (46) 2,123
Interest expense (136) (218) - (354)
Other income, net 153 - - 153
------------ --------------- -------------- ------------
Income before taxes 1,486 482 (46) 1,922
Benefit for income taxes (250) - - (250)
------------ --------------- -------------- ------------
Net income $1,736 $482 ($46) $2,172
============ =============== ============== ============
Pro forma statements of operations data: (Note C and D )
Income before taxes as reported $1,486 $482 ($46) $1,922
Pro forma tax provision 571 183 - 754
------------ --------------- -------------- ------------
Pro forma net income $915 $299 ($46) $1,168
============ =============== ============== ============
Pro forma net income per share $0.19 - - $0.22
============ =============== ============== ============
Pro forma weighted average shares outstanding 4,767 - 475 (E) 5,242
============ =============== ============== ============
</TABLE>
The accompanying notes are an integral part of these unaudited
pro forma consolidated financial statements.
<PAGE>
ADVANCED COMMUNICATION SYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1997
(A) Information obtained from the audited statement of income for the year ended
September 30, 1997.
(B) Depreciation of property and amortization of intangible assets, principally
goodwill, calculated on a straight line basis over the estimated useful lives of
the assets.
(C) Prior to June 25, 1997, ACS elected to be treated as an S corporation and
was not subject to federal and state income taxes. The pro forma statement of
operations data reflects federal and state income taxes based on applicable
rates as if ACS had not elected S corporation status for the period indicated.
(D) Prior to the acquisition, ISC elected to be treated as an S corporation and
was not subject to federal and state income taxes. The pro forma statement of
operations data reflects federal and state income taxes based on applicable
rates as if ISC had not elected S corporation status for the period indicated.
(E) Issuance of 475,000 shares of ACS common stock in exchange for all of the
outstanding common stock of ISC.
