SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 8-K/A
Amendment No. 1 to Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 3, 2000
----------
FINANCIAL PERFORMANCE CORPORATION
(Exact name of registrant as specified in its charter)
New York 0-16530 13-3236325
(State or other jurisdiction of (Commission file number) (I.R.S. employer
incorporation or organization) identification no.)
335 Madison Avenue
New York, NY 10017
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 557-0401
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Items 1, 3, 4, 5, 6, 8 and 9 are not applicable and are omitted from this
Current Report. The information required by Items 2 and 7(c) has been previously
filed. This amended report is filed to provide the financial information
required by Items 7(a) and 7(b).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of InContext, Inc., Policy Communications, Inc.,
and Program Flow, Inc.
InContext, Inc.: Statement of Operations for the Year Ended
December 31, 1999.
Report of Independent Auditors..................................
Balance Sheet as of December 31, 1999...........................
Statement of Operations and Retained Earnings for the
Year Ended December 31, 1999....................................
Statement of Cash Flows for the Year Ended December 31, 1999....
Notes to Financial
Statements......................................................
InContext, Inc.: Statement of Operations for the Year Ended
December 31, 1998.
Report of Independent Auditors..................................
Balance Sheet as of December 31, 1998...........................
Statement of Operations for the Year Ended
December 31, 1999.....................
Notes to Financial Statements...................................
Policy Communications, Inc.: Statement of Operations for
the Year Ended December 31, 1999.
Report of Independent Auditors..................................
Balance Sheet as of December 31, 1999...........................
Statement of Operations and Retained Earnings for the
Year Ended December 31, 1999....................................
Statement of Cash Flows for the Year Ended December 31, 1999....
Notes to Financial
Statements......................................................
Policy Communications, Inc.: Statement of Operations for
the Year Ended December 31, 1998.
Report of Independent Auditors..................................
Balance Sheet as of December 31, 1998...........................
Statement of Operations for the Year Ended
December 31, 1999.....................
Notes to Financial Statements...................................
Program Flow, Inc.: Statement of Operations for the
Year Ended December 31, 1999.
Report of Independent Auditors..................................
Balance Sheet as of December 31, 1999...........................
1
<PAGE>
Statement of Income for the Year Ended December 31, 1999........
Statement of Retained Earnings for the Year Ended
December 31, 1999.........
Statement of Cash Flows for the Year Ended December 31, 1999....
Notes to Financial Statements...................................
Program Flow, Inc.: Statement of Operations for the
Year Ended December 31, 1998.
Report of Independent Auditors..................................
Statement of Income for the Year Ended December 31, 1998........
Notes to Financial Statements...................................
(b) Pro Forma Financial Information of Financial Performance
Corporation and Subsidiaries.
Unaudited Pro Forma Consolidated Balance Sheet as of
December 31, 1999....
Notes to Unaudited Pro Forma Consolidated Balance Sheet
as of December 31, 1999.........................................
Unaudited Pro Forma Consolidated Statement of Operations
for the Year Ended December 31,1999.............................
Notes to Unaudited Pro Forma Consolidated Statement
of Operations for the Year Ended December 31, 1999..............
2
<PAGE>
InContext, Inc.: Statement of Operations for the Year Ended December 31, 1999.
REPORT OF INDEPENDENT AUDITORS
To The Stockholders
InContext Inc.
We have audited the accompanying balance sheet of InContext, Inc. at December
31, 1999, and the related statements of operations, retained earnings and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with 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 financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of InContext, Inc. at December 31,
1999, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
As described in Note 5, the Company was merged into iMapData.com, Inc. on
February 7, 2000. Subsequently, on March 3, 2000, iMapData.com, Inc. was merged
into FPC Acquisition Corp., a subsidiary of Financial Performance Corporation.
Grossberg Company LLP
March 25, 2000
3
<PAGE>
INCONTEXT, INC.
BALANCE SHEET
DECEMBER 31, 1999
ASSETS
Current assets:
Cash ..................................................... $ 1,253
Accounts receivable, net (Note 2) ........................ 151,880
Loan to stockholder ...................................... 400
Total current assets ............................ 153,533
Property and equipment:
Computers ................................................ 15,619
Accumulated depreciation ............................ (3,484)
Property and equipment - net .................... 12,135
Total assets ...................................................... $ 165,668
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ......................................... $ 61,976
Income taxes payable ..................................... 135
Deferred income taxes (Note 3) ........................... 27,100
Total current liabilities ....................... 89,211
Non-current deferred taxes (Note 3) ............................... 3,800
Stockholders' equity:
Common stock, $1 par value; 1,000,000 shares authorized;
shares issued and outstanding - none ................ 1,000
Stock subscription receivable ............................ (1,000)
Retained earnings ........................................ 72,657
Total stockholders' equity ...................... 72,657
Total liabilities and stockholders' equity ........................ $ 165,668
See accompanying notes.
4
<PAGE>
INCONTEXT, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1999
Revenues earned (Note 2) ..................................... $690,605
Operating expenses ........................................... 650,363
Operating profit ............................................. 40,242
Other income:
Interest ............................................ 685
Miscellaneous ....................................... 1,164
Total other income ......................... 1,849
Income before provision for income taxes ..................... 42,091
Provision for income taxes (Note 3) .......................... 16,235
Net income ................................................... 25,856
Retained earnings, beginning of year ......................... 46,801
Retained earnings, end of year ............................... $ 72,657
See accompanying notes.
5
<PAGE>
INCONTEXT, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Cash flows from operating activities:
<S> <C>
Net income .......................................................... $ 25,856
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation ............................................... 3,484
Change in allowance for doubtful accounts .................. 1,030
Deferred income taxes ...................................... 16,100
Changes in assets and liabilities:
Accounts receivable ............................... (20,581)
Income tax refunds receivable ..................... 80
Accounts payable .................................. (9,418)
Income taxes payable .............................. 35
Net cash provided by operating activities .................. 16,586
Cash flows used in investing activities:
Purchase of computers ............................................... (15,619)
Net increase in cash ......................................................... 967
Cash, beginning of year ...................................................... 286
Cash, end of year ............................................................ $ 1,253
</TABLE>
Supplementary information to statement of cash flows:
- - Cash payment: Income taxes paid for the year ended December 31, 1999 were
$100.
See accompanying notes.
6
<PAGE>
INCONTEXT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. Accounting policies
Nature of operations - The Company is an information research firm
which provides political-economic analyses of geographic areas for
various companies and lobbying firms.
Use of estimates - The accompanying financial statement has been
prepared in conformity with generally accepted accounting principles
which require management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses, as
well as the disclosure of contingent assets and liabilities at the date
of the financial statements. Actual results could differ from those
estimates.
Equipment - Equipment is stated at acquisition cost and is depreciated
using accelerated methods over their estimated useful lives of 5 - 7
years.
Revenue recognition - Revenue is recognized as income in the period the
Company's services are completed and the work product is delivered to
its customers.
Income taxes - The Company accounts for income taxes under the asset
and liability method. This method provides for the recognition of
deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts of
assets and liabilities and their tax bases.
2. Accounts receivable and revenue concentrations
Accounts receivable and revenues at and for the year ended December 31,
1999 includes the following from major customers:
Accounts
Receivable Revenues
---------- --------
Ameritech $ -- $153,500
America Online -- 138,262
Eli Lilly and Company 60,000 60,000
-------- --------
$60,000 $351,762
======= ========
The Company has provided an allowance for doubtful accounts of $13,930
for the year ended December 31, 1999, based on management's estimates
of the collectibility of accounts receivable.
7
<PAGE>
INCONTEXT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
3. Income taxes
The provision for income taxes consists of deferred taxes resulting
primarily from temporary differences in income recognition from the use
of the accrual basis of accounting for financial reporting purposes and
the cash basis of accounting for tax purposes, as well as differences
in methods of depreciation used.
The components of the provision for income taxes are as follows:
Current:
Federal $ 35
State 100
Deferred:
Federal 11,700
State 4,400
--------
$ 16,235
========
4. Related party transactions
The stockholders also own Policy Communications, Inc, and Policy Flow,
Inc., two companies which provide consulting services to the Company.
Policy Communications, Inc. billed and was paid $118,903 during 1999
for its services. Policy Flow, Inc. billed $321,687 and was paid
$336,023 during 1999 for its services. Additionally, a third entity
partially owned by one of the stockholders paid $5,450 in revenues
during 1999.
5. Subsequent events
On January 13, 2000, the Board of Directors unanimously approved and
adopted a plan of merger with and into iMapData.com, Inc. and on
February 7, 2000 the separate existence of InContext, Inc. ceased.
Subsequently, on March 3, 2000, iMapData.com, Inc. was merged into FPC
Acquisition Corp., a subsidiary of Financial Performance Corporation.
8
<PAGE>
InContext, Inc.: Statement of Operations for the Year Ended December 31, 1998.
------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
To The Stockholders
InContext, Inc.
We have audited the accompanying statement of operations of InContext, Inc. for
the year ended December 31, 1998. This financial statement is the responsibility
of the Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit 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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects the results of operations of InContext, Inc. for the year
ended December 31, 1998 in conformity with generally accepted accounting
principles.
As described in Note 5, the Company was merged into iMapData.com, Inc. on
February 7, 2000. Subsequently, on March 3, 2000, iMapData.com, Inc. was merged
into FPC Acquisition Corp., a subsidiary of Financial Performance Corporation.
Grossberg Company LLP
March 25, 2000
9
<PAGE>
INCONTEXT, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
- ------------------------------------------------------------------------
Revenues earned (Note 2) $921,290
Operating expenses 879,343
Operating income 41,947
- ------------------------------------------------------------------------
Other income:
Interest 2,683
Miscellaneous 3,444
- ------------------------------------------------------------------------
Total other income 6,127
- ------------------------------------------------------------------------
Income before provision for income taxes 48,074
Provision for income taxes (Note 3) 13,281
- ------------------------------------------------------------------------
Net income $34,793
========================================================================
See accompanying notes.
10
<PAGE>
INCONTEXT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. Accounting policies
Nature of operations - The Company is an information research firm which
provides political-economic analyses of geographic areas for various
companies and lobbying firms.
Use of estimates - The accompanying financial statement has been prepared
in conformity with generally accepted accounting principles which require
management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses, as well as the
disclosure of contingent assets and liabilities at the date of the
financial statements. Actual results could differ from those estimates.
Revenue recognition - Revenue is recognized as income in the period the
Company's services are completed and the work product is delivered to its
customers.
Income taxes - The Company accounts for income taxes under the asset and
liability method. This method provides for the recognition of deferred tax
assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts of assets and
liabilities and their tax bases.
2. Revenue concentration
Revenues for the year ended December 31, 1998 included the following from
major customers:
--------------------------------------------------------------
Bell South 95,850
US West 548,302
Cahill, Gordon & Reindel 54,000
Law & Economics Consulting Group 127,078
--------------------------------------------------------------
$ 825,230
==============================================================
3. Income taxes
The provision for income taxes consists of deferred taxes resulting
primarily from temporary differences in income recognition from the use of
the accrual basis of accounting for financial reporting purposes and the
cash basis of accounting for tax purposes.
11
<PAGE>
INCONTEXT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
3. Income taxes (continued)
The components of the provision for income taxes are as follows:
--------------------------------------------------------------------
Current:
Federal $ -
State 100
Deferred
Federal 7,881
State 5,300
--------------------------------------------------------------------
$13,281
--------------------------------------------------------------------
4. Related party transactions
The owners of the Company also own Policy Communications, Inc. and Policy
Flow, Inc., two companies which provide consulting services to the Company.
Policy Communications, Inc. billed and was paid $396,632 during 1998 for
its services, and Policy Flow, Inc. billed $463,796 and was paid $408,085
during 1998.
5. Subsequent events
On January 13, 2000, the Board of Directors unanimously approved and
adopted a plan of merger with and into iMapData.com, Inc. and on February
7, 2000 the separate existence of InContext, Inc. ceased. Subsequently, on
March 3, 2000, iMapData.com, Inc. was merged into FPC Acquisition Corp., a
subsidiary of Financial Performance Corporation.
12
<PAGE>
Policy Communications, Inc.: Statement of Operations for the
------------------------------------------------------------
Year Ended December 31, 1999.
-----------------------------
REPORT OF INDEPENDENT AUDITORS
To: The Stockholders
Policy Communications, Inc.
We have audited the accompanying balance sheet of Policy Communications, Inc. at
December 31, 1999, and the related statements of operations, retained earnings
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with 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 financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Policy Communications, Inc. at
December 31, 1999, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
As described in Note 5, the Company became a wholly-owned subsidiary of
iMapData.com, Inc. on January 13, 2000. Subsequently, on March 3, 2000,
iMapData.com, Inc. was merged into FPC Acquisition Corp., a subsidiary of
Financial Performance Corporation.
Grossberg Company LLP
March 25, 2000
13
<PAGE>
POLICY COMMUNICATIONS, INC.
BALANCE SHEET
DECEMBER 31, 1999
ASSETS
- -------------------------------------------------------------------------------
Current assets:
Cash $ 441
Accounts receivable (Note 2) 120,411
Income tax refunds receivable 1610
Subscription receivable 200
Loan to stockholder (Note 4) 15,030
Prepaid expenses 6,845
- -------------------------------------------------------------------------------
Total current assets 144,537
- -------------------------------------------------------------------------------
Property and equipment:
Computers 39,599
Office furniture 18,422
- -------------------------------------------------------------------------------
58,021
- -------------------------------------------------------------------------------
Accumulated depreciation (44,510)
- -------------------------------------------------------------------------------
Property and equipment - net 13,511
- -------------------------------------------------------------------------------
Total assets $ 158,048
- -------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 58,796
Deferred income taxes (Note 3) 18,200
- -------------------------------------------------------------------------------
Total current liabilities 76,906
- -------------------------------------------------------------------------------
Noncurrent deferred taxes (Note 3) 3,400
- -------------------------------------------------------------------------------
Total liabilities 80,306
- -------------------------------------------------------------------------------
Stockholders' equity:
Capital stock, $1 par value, 3,000 shares authorized,
200 shares issued 200
Retained earnings 77,542
- -------------------------------------------------------------------------------
Total stockholders' equity 77,742
- -------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 158,048
- -------------------------------------------------------------------------------
See accompanying notes
<PAGE>
POLICY COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1999
- -------------------------------------------------------------------------------
Revenues earned (Note 2) $ 929,502
Operating expenses 929,749
- --------------------------------------------------------------------------------
Operating loss (247)
Other income, principally interest 742
- --------------------------------------------------------------------------------
Income before provision for income taxes 495
Provision for income taxes (Note 3) 1,300
- --------------------------------------------------------------------------------
Net loss (805)
Retained earnings, beginning of year 78,347
- --------------------------------------------------------------------------------
Retained earnings, end of year $ 77,542
- --------------------------------------------------------------------------------
See accompanying notes.
15
<PAGE>
POLICY COMMUNICATIONS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
<S> <C>
Cash flows from operating activities:
Net loss $ (805)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation 9,227
Changes in assets and liabilities:
Accounts receivable 97,047
Income tax refunds receivable (1,610)
Prepaid expenses (6,845)
Accounts payable (91,700)
Deferred income taxes (1,200)
Income taxes payable (921)
- --------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 3,193
- --------------------------------------------------------------------------------------------------
Cash flows used in investing activities:
Purchase of equipment (3,011)
- --------------------------------------------------------------------------------------------------
Net increase in cash 182
- --------------------------------------------------------------------------------------------------
Cash, beginning of year 259
- --------------------------------------------------------------------------------------------------
Cash, end of year $ 441
- --------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
16
<PAGE>
POLICY COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
Note 1. Accounting policies
Nature off operations - The Company is an information research
firm which provides political-economic analyses of geographic
areas for various companies and lobbying firms.
Use of estimates - The accompanying financial statements have
been prepared in conformity with generally accepted accounting
principles which require management to make estimates and
assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, as well as the disclosure
of contingent assets and liabilities at the date of the
financial statements. Actual results could differ from those
estimates.
Equipment - Equipment is stated at acquisition cost and is
depreciated using accelerated methods over their estimated
useful lives of 5 - 7 years.
Revenue recognition - Revenue is recognized as income in the
period the Company's services are completed and the work
product is delivered to its customers.
Income taxes - The Company accounts for income taxes under the
asset and liability method. This method provides for the
recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary differences
between the carrying amounts of assets and liabilities and
their tax bases.
Note 2. Accounts receivable and revenue concentrations
Accounts receivable and revenues at and for the year ended December 31, 1999,
included the following from major customers:
- --------------------------------------------------------------------------------
Accounts
Receivable Revenues
---------- --------
Incontext, Inc. $ -- $238,143
Phillip Morris Corporate Services, Inc. -- 37,921
Phillip Morris Management Company 108,111 282,495
Sinclair Broadcasting Group 12,300 270,943
- --------------------------------------------------------------------------------
$120,411 $929,502
- --------------------------------------------------------------------------------
17
<PAGE>
POLICY COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
Note 3. Income taxes
The provision for income taxes consists of deferred taxes resulting primarily
from temporary differences in income recognition from the use of the accrual
basis of accounting for financial reporting purposes and the cash basis of
accounting for tax purposes, as well as differences in methods of depreciation
used.
The components of the provision for income taxes are as follows:
-------------------------------------------------------
Current:
-------------------------------------------------------
Federal $ 1,400
-------------------------------------------------------
State 1,100
-------------------------------------------------------
Deferred:
-------------------------------------------------------
Federal (800)
-------------------------------------------------------
State (400)
-------------------------------------------------------
$ 1,300
-------------------------------------------------------
The provision for income taxes does not bear the expected statutory relationship
to income before taxes principally due to nondeductible meals and entertainment
expenses.
Note 4. Related party transactions
The Company advanced $15,030 to a stockholder in a prior year. The advance is
non-interest bearing and payable on demand.
A stockholder of the Company has an ownership interest in InContext, Inc.
Revenues derived and paid from this entity for 1999 were $238,143.
Stockholders of the Company also have ownership interests in Wunder & Lilley
(formerly Wunder, Knight, Levine, Thelen & Forscey, P.L.L.C.) which sublet
office space and provided administrative support to the Company. During 1999,
the Company was charged $153,845 for these services and paid $157,653.
Note 5. Subsequent events
On January 12, 2000, a 15% stockholder transferred 30 shares of common stock to
the Company for payment of $30.
On January, 13, 2000, the Company became a wholly-owned subsidiary of
iMapData.com, Inc. (the Acquirer) when the remaining stockholder exchanged all
of the Company's outstanding
18
<PAGE>
stock for 500 shares of the Acquirer's $0.01 par value common stock.
Subsequently, on March 3, 2000, iMapData.Com, Inc. was merged into FPC
Acquisition Corp., a subsidiary of Financial Performance Corporation.
19
<PAGE>
Policy Communications, Inc.: Statement of Operations for
--------------------------------------------------------
the Year Ended December 31, 1998.
---------------------------------
REPORT OF INDEPENDENT AUDITORS
To The Stockholders
Policy Communications, Inc.
We have audited the accompanying statement of operations of Policy
Communications, Inc. for the year ended December 31, 1998. This financial
statement is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit 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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects the results of operations of Policy Communications, Inc.
for the year ended December 31, 1998 in conformity with generally accepted
accounting principles.
As described in Note 5, the Company became a wholly-owned subsidiary of
iMapData.com, Inc. on January 13, 2000. Subsequently, on March 3, 2000,
iMapData.com, Inc. was merged into FPC Acquisition Corp., a subsidiary of
Financial Performance Corporation.
Grossberg Company LLP
March 25, 2000
20
<PAGE>
POLICY COMMUNICATIONS, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
============================================================================
Revenues earned (Note 2) $1,362,439
Operating expense 1,254,165
- ----------------------------------------------------------------------------
Operating income 108,274
Other income, principally interest 2,296
- ----------------------------------------------------------------------------
Income before provision for income taxes 110,570
Provision for income taxes (Note 3) 26,841
- ----------------------------------------------------------------------------
Net income $ 83,729
============================================================================
21
<PAGE>
POLICY COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
Note 1. Accounting policies
Nature of operations - The Company is an information research firm
which provides political-economic analyses of geographic areas for
various companies and lobbying firms.
Use of estimates - The accompanying financial statement has been
prepared in conformity with generally accepted accounting principles
which require management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses, as
well as the disclosure of contingent assets and liabilities at the date
of the financial statements. Actual results could differ from those
estimates.
Revenue recognition - Revenue is recognized as income in the period the
Company's services are completed and the work product is delivered to
its customers.
Income taxes - The Company accounts for income taxes under the asset
and liability method. This method provides for the recognition of
deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts of
assets and liabilities and their tax bases.
Equipment - Equipment is stated at acquisition cost and is depreciated
using accelerated methods over their estimated useful lives of 5 - 7
years. Depreciation expense for 1998 was $7,396.
Note 2. Revenue concentration
Revenues for the year ended December 31, 1998 included the following
from major customers:
================================================================
InContext, Inc. $396,633
Phillip Morris Corporate Services, Inc. 166,407
Phillip Morris Management Company 569,083
Sinclair Broadcasting Group 230,316
----------------------------------------------------------------
$1,362,439
================================================================
22
<PAGE>
POLICY COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
Note 3. Income taxes
The provision for income taxes consists of deferred taxes resulting
primarily from temporary differences in income recognition from the use
of the accrual basis of accounting for financial reporting purposes and
the cash basis of accounting for tax purposes, as well as differences
in methods of depreciation used.
The components of the provision for income taxes are as follows:
---------------------------------------------------
Current:
Federal $2,294
State 1,747
Deferred:
Federal 14,200
State 8,600
---------------------------------------------------
$26,841
---------------------------------------------------
Note 4. Related party transactions
A stockholder of the Company also has an ownership interest in
InContext, Inc. Revenues derived and paid from this entity for 1998
were $396,633.
A stockholder of the Company also has an ownership interest in Wunder,
Knight, Levine, Thelen & Forscey, P.L.L.C., which sublet office space
and provided administrative support to the Company. During 1998, the
Company was charged $170,274 for these services and paid $184,022.
Note 5. Subsequent events
On January 12, 2000, a 15% stockholder transferred 30 shares of common
stock to the Company for payment of $30.
On January, 13, 2000, the Company became a wholly-owned subsidiary of
iMapData.com, Inc. (the Acquirer) when the remaining stockholder
exchanged all of the Company's outstanding stock for 500 shares of the
Acquirer's $0.01 par value common stock. Subsequently, on March 3,
2000, iMapData.Com, Inc. was merged into FPC Acquisition Corp., a
subsidiary of Financial Performance Corporation.
23
<PAGE>
Program Flow, Inc.: Statement of Operations for the
---------------------------------------------------
Year Ended December 31, 1999.
-----------------------------
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Program Flow, Inc.
McLean, Virginia
We have audited the accompanying balance sheet of Program Flow, Inc. as of
December 31, 1999, and the related statements of income, retained earnings and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with 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 financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Program Flow, Inc. as of
December 31, 1999, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Dembo, Jones, Healy, Pennington & Ahalt, P.C.
Rockville, Maryland
March 25, 2000
24
<PAGE>
PROGRAM FLOW, INC.
BALANCE SHEET
December 31, 1999
Assets
Current Assets
Cash and cash equivalents .................................... $ 75,564
Accounts receivable .......................................... 100,781
Prepaid expenses ............................................. 2,988
--------
Total current assets .................................... 179,333
--------
Property and Equipment
Furniture and equipment ..................................... 74,423
Less accumulated depreciation ................................ 37,743
--------
36,680
--------
Other Assets
Deposits .......................................................... 2,139
--------
$218,152
========
Liabilities and Stockholder's Equity
Current Liabilities
Accounts payable ............................................. $ 38,978
Accrued payroll taxes ........................................ 65,849
Current maturities of note payable ........................... 1,592
--------
Total current liabilities ....................... 106,419
--------
Long-Term Debt, less current maturities ........................... 946
--------
Stockholder's Equity
Common stock, $ 1.00 par value 5,000 shares authorized;
10 shares issued and outstanding ......................... 10
Additional paid-in capital ................................... 33,290
Retained earnings ............................................ 77,487
--------
110,787
$218,152
========
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
PROGRAM FLOW, INC.
STATEMENT OF INCOME
Year Ended December 31, 1999
<TABLE>
<CAPTION>
Revenue
<S> <C>
Sales ............................................................. $ 640,972
Direct Expenses
Salaries .......................................................... 214,409
Data purchases .................................................... 151,532
Travel ............................................................ 32,365
Payroll taxes ..................................................... 13,723
Consultant ........................................................ 3,480
---------
415,509
---------
General and Administrative Expenses
Rent .............................................................. 34,815
Retirement plan expense ........................................... 22,500
Office supplies ................................................... 20,062
Telephone ......................................................... 10,969
Depreciation ...................................................... 10,003
Insurance ......................................................... 9,206
Legal and accounting .............................................. 7,198
Equipment leasing ................................................. 5,351
Computer supplies ................................................. 4,669
Other taxes ....................................................... 4,479
Entertainment and promotion ....................................... 2,995
Utilities ......................................................... 2,395
Messenger service ................................................. 2,032
Dues and subscriptions ............................................ 1,307
Security .......................................................... 1,241
Bank charges ...................................................... 1,158
Interest .......................................................... 341
---------
140,721
---------
Operating income ........................... 84,742
Other Income/Expense
Interest income ................................................... 733
Loss on abandonment of assets ..................................... (5,084)
---------
(4,351)
---------
Net income ................................................................ $ 80,391
---------
</TABLE>
The accompanying notes are an integral part of these financials statements
26
<PAGE>
PROGRAM FLOW, INC.
STATEMENT OF RETAINED EARNINGS
Year Ended December 31, 1999
Balance, beginning of year ................................ $ 196,109
Stockholder distributions ........................ (199,013)
Net income ....................................... 80,391
---------
Balance, end of year ...................................... $ 77,487
=========
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
PROGRAM FLOW, INC.
STATEMENT OF CASH FLOWS
Year Ended December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net income ....................................................... $ 80,391
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation ........................................ 10,003
Loss on abandonment of assets ....................... 5,084
(Increase) decrease in:
Accounts receivable .......................... 80,275
Stockholder advance .......................... 51,950
Prepaid expenses ............................. (2,988)
Increase (decrease) in:
Accounts payable ............................. 29,829
Accrued payroll taxes ........................ (36,812)
---------
Net cash provided by operating activities 217,732
---------
Cash flows from investing activities:
Purchase of property and equipment ............................... (15,785)
---------
Net cash used in investing activities ... (15,785)
---------
Cash flows from financing activities:
Principal payments on note payable ............................... (1,337)
Distributions paid ............................................... (199,013)
---------
Net cash used in financing activities ... (200,350)
---------
Net increase in cash and cash equivalents ................................... 1,597
Cash and cash equivalents at beginning of year .............................. 73,967
---------
Cash and cash equivalents at end of year .................................... $ 75,564
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
Note 1. Organization and Significant Accounting Policies
Program Flow, Inc. began operations in 1982. The Company performs
politicoeconomic analysis to produce economic impact studies.
Program Flow, Inc.'s products are sold in the United States and
Europe to corporations, government agencies and sports
organizations.
Basis of Accounting
The financial statements are prepared on the accrual
basis of accounting.
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 amount of revenues and expenses
during the reporting period. Actual results could
differ from those estimates.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the
Company considers cash in checking, money market
accounts, certificates of deposits, and investments
in government securities with maturities of three
months or less to be cash and cash equivalents.
Allowance for Doubtful Accounts
The Company considers accounts receivable to be fully
collectible; accordingly, no allowance for doubtful
accounts is required.
Income Taxes
The Company, with the consent of its stockholder, has
elected under the provisions of the Internal Revenue
Code to be an S Corporation. Under those provisions,
the Company does not pay federal or state corporate
income taxes on its taxable income. Instead, the
stockholder is liable for individual income taxes on
the Company's taxable income.
29
<PAGE>
Note 1. Organization and Significant Accounting Policies (continued)
Depreciation
Property and equipment are being depreciated using
straight-line and accelerated methods over their
estimated useful lives of three to seven years. Total
depreciation expense in 1999 was $ 10,003.
Note 2. Long-Term Debt
Note payable at December 31, 1999 consists of the following:
Note payable $152 per month including interest at
12.46%. Secured by property with a net book
value of $3,125 $ 2,538
Less current maturity 1,592
--------
$ 946
Aggregate maturities or payments required on principal under
long-term note obligations are as follows:
2000 $ 1,592
2001 946
Note 3. Operating Leases
The Company leases its office space under a lease which
expires on December 31, 2002. The basic rent is $2,901
monthly, plus increases in real estate taxes and operating
costs over base amounts. Total occupancy expense in 1999 was
$34,815.
In addition, the Company leases computer equipment and
automobile. The leases expire in different periods through
September 2000. Lease payments are currently $999 per month.
Future minimum rentals under the leases mentioned above are as
follows:
2000 $ 43,050
2001 34,812
2002 34,812
30
<PAGE>
Note 4. Major Customers
Revenue from major customers for the year ended December 31,
1999 was as follows:
InContext, Inc. $ 336,023
Policy Communications, Inc. 299,183
------------
$ 635,206
============
Accounts receivable from those major customers at December 31,
1999 were as follows:
InContext, Inc. $ 51,375
Policy Communications, Inc. 49,406
------------
$ 100,781
============
Note 5. Retirement and Benefit Plan
The Company adopted a Simplified Employee Pension Plan (SEP)
as of January 1, 1992. This plan covers employees who are at
least 21 years of age and have worked for the Company at least
three of the last five years. The Company contributions are
subject to limitations imposed by the Internal Revenue
Service. Company contributions to the plan totaled $22,500 in
1999.
Note 6. Distribution
The Company makes distributions to its stockholder to help
fund the stockholder's approximate personal taxes due on the
Company's undistributed net income. A distribution of $82,000
was made subsequent to December 31, 1999.
Note 7. Subsequent Event
On January 13, 2000, the Company became a wholly owned
subsidiary of iMapData.com, Inc. (the Acquirer) when the
stockholder exchanged all of the Company's outstanding stock
for 500 shares of the Acquirer's $0.01 par value common stock.
Subsequently, on March 3, 2000, iMapData.com, Inc. was merged
into FPC Acquisition Corp., a subsidiary of Financial
Performance Corporation.
31
<PAGE>
Program Flow, Inc.: Statement of Operations for the
---------------------------------------------------
Year Ended December 31, 1998.
-----------------------------
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Program Flow, Inc.
McLean, Virginia
We have audited the accompanying statement of income of Program Flow, Inc. for
the year ended December 31, 1998. This financial statement is the responsibility
of the Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit 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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of income referred to above presents fairly, in
all material respects, the results of operations of Program Flow, Inc. for the
year ended December 31, 1998, in conformity with generally accepted accounting
principles.
Dembo, Jones, Healy, Pennington & Ahalt, P.C.
Rockville, Maryland
March 25, 2000
32
<PAGE>
PROGRAM FLOW, INC.
STATEMENT OF INCOME
Year Ended December 31, 1998
Revenue
Sales ................................................. $821,413
--------
Direct Expenses
Salaries .............................................. 323,229
Data purchases ........................................ 37,025
Payroll taxes ......................................... 17,097
Travel ................................................ 11,434
Consultant ............................................ 1,150
--------
389,935
--------
General and Administrative Expenses
Rent .................................................. 26,957
Depreciation .......................................... 12,386
Office supplies ....................................... 11,188
Telephone ............................................. 10,915
Computer supplies ..................................... 8,395
Insurance ............................................. 8,174
Other taxes ........................................... 7,123
Equipment leasing ..................................... 4,357
Legal and accounting .................................. 3,423
Messenger service ..................................... 2,680
Utilities ............................................. 2,339
Dues and subscriptions ................................ 2,203
Entertainment and promotion ........................... 2,098
Bank charges .......................................... 850
Security .............................................. 353
Interest .............................................. 170
--------
103,611
--------
Operating income .............................. 327,867
Other Income
Interest income ....................................... 924
--------
Net income .................................................. $328,791
========
The accompanying notes are an integral part of this financial statement.
33
<PAGE>
PROGRAM FLOW, INC.
NOTES TO FINANCIAL STATEMENT
December 31, 1998
Note 1. Organization and Significant Accounting Policies
Program Flow, Inc. began operations in 1982. The Company performs
politico-economic analysis to produce economic impact studies.
Program Flow, Inc.'s products are sold in the United States and
Europe to corporations, government agencies and sports
organizations.
Basis of Accounting
The financial statement is prepared on the accrual basis of
accounting.
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 amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Income Taxes
The Company, with the consent of its stockholder, has elected
under the provisions of the Internal Revenue Code to be an S
Corporation. Under those provisions, the Company does not pay
federal or state corporate income taxes on its taxable income.
Instead, the stockholder is liable for individual income taxes on
the Company's taxable income.
Depreciation
Property and equipment are being depreciated using straight-line
and accelerated methods over their estimated useful lives of
three to seven years. Total depreciation expense in 1998 was $
12,386.
34
<PAGE>
PROGRAM FLOW, INC.
NOTES TO FINANCIAL STATEMENT
December 31, 1998
Note 2. Operating Leases
The Company leases its office space under a lease which expires on
December 31, 2002. The basic rent is $ 2,246 monthly, plus
increases in real estate taxes and operating costs over base
amounts.
Total occupancy expense in 1998 was $ 26,957.
In addition, the Company leases computer equipment and
automobiles. The leases expire in different periods through
September 2000. Lease payments are currently $ 999 per month.
Future minimum rentals under the leases mentioned above are as
follows:
1999 $ 46,803
2000 43,050
2001 34,812
2002 34,812
Note 3. Major Customers
Revenue from major customers for the year ended December 31, 1998
was as follows:
InContext, Inc. $ 388,085
Policy Communications, Inc. 290,621
---------
$ 678,706
Accounts receivable from those major customers at December 31,
1998 were as follows:
Policy Communications, Inc. $ 115,345
InContext, Inc. 65,711
---------
$ 181,056
Note 4. Retirement and Benefit Plan
The Company adopted a Simplified Employee Pension Plan (SEP) as of
January 1, 1992. This plan covers employees who are at least 21
years of age and have worked for the Company at least three of the
last five years. The Company contributions are subject to
limitations imposed by the Internal Revenue Service. The Company
made no contribution to the plan in 1998.
35
<PAGE>
PROGRAM FLOW, INC.
NOTES TO FINANCIAL STATEMENT
December 31, 1998
Note 5. Subsequent Event
On January 13, 2000, the Company became a wholly owned subsidiary of
iMapData.com, Inc. (the Acquirer) when the stockholder exchanged all of the
Company's outstanding stock for 500 shares of the Acquirer's $0.01 par value
common stock. Subsequently, on March 3, 2000 iMapData.com, Inc. was merged into
FPC Acquisition Corp., a subsidiary of Financial Performance Corporation.
36
<PAGE>
Financial Performance Corporation and Subsidiaries
INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
BASIS OF PRESENTATION
Financial Performance Corporation ("FPC" or the "Company") was incorporated in
New York in August 1984 under the name of Performance Services Group, Inc. and
changed its name to Financial Performance Corporation in June 1998. Through its
subsidiary, Michaelson Kelbick Partners, Inc. ("MKP"), the Company provides
communications consulting services to the financial services industry,
particularly with respect to communications concerning mergers and other
business combinations. The Company is implementing a new business strategy in
which it will also focus on Internet-related businesses and services aimed at
the business-to-business market. In March 2000, the Company completed its
acquisition of iMapData.com, Inc. ("iMapData"), headquartered in Washington,
D.C., that provides business-to-business clients with convenient access via
digital computer software to competitive marketing and economic data on a secure
proprietary website.
The following unaudited pro forma consolidated financial information (the "Pro
Forma Financial Statements") of the Company is based on the consolidated
historical financial statements of Financial Performance Corporation and
Subsidiaries adjusted to give effect to the iMapData Acquisition (the
"Transaction").
The Pro Forma Financial Statements were prepared to illustrate the estimated
effects of the Transaction. The Pro Forma Consolidated Balance Sheet gives
effect to the Transaction as if it had occurred on December 31, 1999. The Pro
Forma Consolidated Statement of Operations for the year ended December 31, 1999
gives effect to the Transaction as if it had occurred on January 1, 1999.
The pro forma adjustments are based on assumptions that management believes are
reasonable. The Pro Forma Financial Statements do not purport to represent what
the results of operations or financial position of the Company would have been
had the Transaction in fact occurred on such dates nor do they purport to
project the results of operations or financial position of the Company for any
future period or as of any date. The Pro Forma Financial Statements should be
read in conjunction with the consolidated financial statements of FPC and the
related notes thereto included in the Company's Form 10-KSB for the year ended
December 31, 1999, and the financial statements of iMapData and related notes
thereto included in their Form 8-K.
The Transaction will be accounted for as a purchase business combination. Under
purchase accounting, the total purchase cost will be allocated to the tangible
and intangible assets acquired and liabilities assumed based upon their
respective fair values. The excess of the purchase cost over the book value of
the net assets acquired has been allocated to goodwill in the accompanying Pro
Forma Financial Statements. The pro forma allocation represents the Company's
preliminary determination of purchase accounting adjustments based upon
available information and certain
37
<PAGE>
assumptions that management believes are reasonable. The actual allocation of
the purchase cost and its effect on the Company's results of operations and
financial position may differ significantly from the pro forma amounts included
herein.
38
<PAGE>
Financial Performance Corporation and Subsidiaries
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1999
<TABLE>
<CAPTION>
Financial
Performance
Corporation iMapData.com, Inc. Pro forma Pro forma
(Historical) (Historical) adjustments consolidated
------------ ------------ ----------- ------------
(Note A) (Note B)
ASSETS
<S> <C> <C> <C> <C>
Cash $ 4,179,179 $ 77,258 $ (82,000) $ 4,174,437
Restricted cash 500,000 500,000
Short-term investments 485,000 485,000
Accounts receivable, net 24,843 272,291 297,134
Income tax refunds receivable 1,610 1,610
Subscription receivable 200 200
Loan to stockholder 15,430 15,430
Prepaid expenses 321,003 9,833 330,836
----------- --------- ----------- ------------
5,510,025 376,622 (82,000) 5,804,647
Property and equipment, net 219,571 62,326 281,897
Goodwill 12,738,814 12,738,814
Other assets 280,779 2,139 282,918
----------- --------- ----------- ------------
Total assets $6,010,375 $ 441,087 $ 11,807,560 $ 19,108,276
========== ======= ========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
39
<PAGE>
Financial Performance Corporation and Subsidiaries
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (continued)
December 31, 1999
<TABLE>
<CAPTION>
Financial
Performance
Corporation iMapData.com, Inc. Pro forma Pro forma
(Historical) (Historical) adjustments Consolidated
------------ ------------ ----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY (Note A) (Note B)
<S> <C> <C> <C> <C>
Current liabilities
Accounts payable $ 988,287 $ 58,879 $ 1,047,166
Accrued payroll taxes 65,849 65,849
Income tax payable 135 135
Deferred income taxes 45,300 45,300
Secured promissory note due to stockholder 500,000 500,000
Current maturities of note payable 1,592 1,592
--------- ------- -----------
Total current liabilities 1,488,287 171,755 1,660,042
--------- ------- -----------
Long-term debt 946 946
Noncurrent deferred taxes 7,200 7,200
Minority interest 1,029,046 1,029,046
Stockholders' equity
Common stock 99,280 1,210 $ 8,790 109,280
Stock subscription receivable (1,000) 1,000
Additional paid-in capital 7,945,696 33,290 12,956,710 20,935,696
Accumulated deficit (4,551,934) 227,686 (309,686) (4,633,934)
---------- ------- ----------- -----------
3,493,042 261,186 11,807,560 16,411,042
---------- ------- ---------- ----------
$ 6,010,375 $441,087 $11,807,560 $19,108,276
========== ======= ========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
40
<PAGE>
Financial Performance Corporation and Subsidiaries
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1999
NOTE A - iMapData.com MERGER
On March 3, 2000, the Company acquired the stock of iMapData.com. The
acquisition was made with the issuance of 1,000,000 shares of the Company's
stock (valued at $13,000,000, based upon the closing price of the Company's
stock on March 3, 2000). iMapData.com commenced its operations on January
13, 2000, when it acquired Program Flow, Inc., InContext, Inc. and Policy
Communications, Inc. Due to common ownership interests, these three
companies were combined into iMapData, and the merger was accounted for as
a pooling of interests.
The following pro forma combined balance sheet includes the historical
balance sheet of these three companies and related pro forma elimination
adjustments. These pro forma adjustments reflect the elimination of
intercompany receivables and payables arising from intercompany sales.
The pro forma combined balance sheet below gives effect to the transaction
as if it had occurred on December 31, 1999:
41
<PAGE>
Financial Performance Corporation and Subsidiaries
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (continued)
December 31, 1999
NOTE A (continued)
<TABLE>
<CAPTION>
As of December 31, 1999
-----------------------------------------------------------------------------
Policy
Communi-
Program InContext, cations, iMapData.com,
ASSETS Flow, Inc. Inc. Inc. Eliminations Inc.
--------- ----------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Current assets
Cash and cash equivalents $ 75,564 $ 1,253 $ 441 $ 77,258
Accounts receivable 100,781 151,880 120,411 $(100,781) 272,291
Income tax refunds receivable 1,610 1,610
Subscription receivable 200 200
Loan to stockholder 400 15,030 15,430
Prepaid expenses 2,988 6,845 9,833
--------- ----------- --------- ------------- ---------
Total current assets 179,333 153,533 144,537 (100,781) 376,622
Property and equipment
Furniture and equipment 74,423 18,422 92,845
Computers 15,619 39,599 55,218
Less accumulated depreciation (37,743) (3,484) (44,510) (85,737)
-------- -------- -------- ------------- --------
36,680 12,135 13,511 62,326
Other assets
Deposits 2,139 2,139
--------- ----------- ----------- ------------- ---------
Total assets $218,152 $165,668 $158,048 $(100,781) $441,087
======= ======= ======= ======== =======
LIABILITIES AND
STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable $ 38,978 $ 61,976 $ 58,706 $(100,781) $ 58,879
Accrued payroll taxes 65,849 65,849
Income tax payable 135 135
Deferred income taxes 27,100 18,200 45,300
Current maturities of note payable 1,592 1,592
--------- ----------- ----------- ------------- ---------
Total current liabilities 106,419 89,211 76,906 (100,781) 171,755
------- -------- -------- -------- -------
Noncurrent deferred taxes 3,800 3,400 7,200
------------- --------- --------- ------------- ---------
Long-term debt, less current maturities 946 946
---------- ----------- ----------- ------------- ----------
Stockholder's equity
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
As of December 31, 1999
-----------------------------------------------------------------------------
Policy
Communi-
Program InContext, cations, iMapData.com,
Flow, Inc. Inc. Inc. Eliminations Inc.
--------- ----------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Common stock 10 1,000 200 1,210
Stock subscription receivable (1,000) (1,000)
Additional paid-in capital 33,290 33,290
Retained earnings 77,487 72,657 77,542 227,686
-------- -------- -------- ------------- -------
Total stockholder's equity 110,787 72,657 77,742 261,186
------- -------- -------- ------------- -------
$218,152 $165,668 $158,048 $(100,781) $441,087
======= ======= ======= ======== =======
</TABLE>
43
<PAGE>
Financial Performance Corporation and Subsidiaries
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (continued)
December 31, 1999
NOTE B - UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
ADJUSTMENTS
The following table summarizes the unaudited pro forma consolidated balance
sheet adjustments:
<TABLE>
<CAPTION>
Total
pro forma
adjustments
-----------
(1) (2)
-------------- ------
<S> <C> <C> <C>
Cash $(82,000) $ (82,000)
Goodwill $12,738,814 12,738,814
Common stock (8,790) (8,790)
Stock subscription receivable (1,000) (1,000)
Additional paid-in capital (12,956,710) (12,956,710)
227,686 82,000 309,686
------------ ------- -------------
Accumulated deficit
$ - $ - $ -
================ =========== ==============
</TABLE>
44
<PAGE>
Financial Performance Corporation and Subsidiaries
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (continued)
December 31, 1999
NOTE B (continued)
(1) The following table provides an analysis of the purchase price of the
iMapData acquisition. The excess of the purchase price over the book
value of the net assets acquired has been allocated to goodwill based
upon a preliminary analysis of the net assets acquired and certain
assumptions that the Company believes are reasonable. The actual
allocation of purchase price may differ significantly from the pro
forma amounts included herein.
Common stock issuance $13,000,000
Total purchase cost 13,000,000
Estimated fair value of net assets acquired 261,186
-----------
Purchase price in excess of estimated fair value
of net assets acquired $12,738,814
Allocation of purchase price in excess of book
value of net assets acquired to goodwill $12,738,814
==========
(2) Subsequent to December 31, 1999, Program Flow, Inc., a subsidiary of
iMapData.com, Inc. made distributions of $82,000 to its shareholder to
help fund the stockholder's approximate personal taxes due on the
company's undistributed net income. Had the distributions been made in
1999, the retained earnings and cash would decrease by $82,000.
45
<PAGE>
Financial Performance Corporation and Subsidiaries
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year ended December 31, 1999
<TABLE>
<CAPTION>
Financial
Performance iMapData.com,
Corporation Inc. Pro forma Pro forma
(Historical) (Historical) adjustments consolidated
(Note A) (Note B)
<S> <C> <C> <C> <C>
Revenues $12,269,351 $13,657,081
$1,387,730
8,986,701 8,986,701
----------- -----------
Cost of revenues
3,282,650 1,387,730 4,670,380
----------- --------- -----------
Gross profit
Salaries and related expenses 1,435,179 385,532 $ 250,600 2,071,311
Selling, general and administrative 1,883,190 877,461 2,760,651
Amortization of goodwill 849,254 849,254
--------------- ----------- ---------- -----------
Total operating expenses 3,318,369 1,262,993 1,099,854 5,681,216
----------- --------- ---------- -----------
Operating income (loss) (35,719) 124,737 (1,099,854) (1,010,836)
Other income (expenses)
Investment income 131,323 2,160 133,483
Loss from FPC Information Corp. (167,000) (167,000)
Write-off of investment in FPC Information Corp. (478,224) (478,224)
Miscellaneous (3,920) (3,920)
(181,000) (181,000)
----------- ------------
Minority interest in earnings of subsidiary
(694,901) (1,760) (696,661)
----------- ----------- ------------
Income (loss) before taxes (730,620) 122,977 (1,707,497)
(1,099,854)
132,164 17,535 149,699
----------- ----------- ------------ ------------
Provision for income taxes
NET LOSS $ (862,784) $ 105,442 $(1,099,854) $ (1,857,196)
============ ========== ========= ===========
Net (loss) per share (Note C)
Basic and diluted $(0.09)
$(0.18)
Shares used in computing pro forma net loss per share
Basic and diluted 9,520,263 10,520,263
========= ==========
</TABLE>
The accompanying notes are an integral part of this statement.
46
<PAGE>
Financial Performance Corporation and Subsidiaries
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year ended December 31, 1999
NOTE A - iMapData MERGER
On January 13, 2000, iMapData acquired Program Flow, Inc., InContext, Inc.
and Policy Communications, Inc. Due to common ownership interest, these
three companies were combined into iMapData, and the merger was accounted
for as a pooling of interests.
The following pro forma combined statement of operations includes the
historical statements of operations of these three companies and related
pro forma elimination adjustments. These pro forma adjustments reflect the
elimination of intercompany sales and related costs of sales.
The pro forma combined statement of operations below gives effect to the
transaction as if it had occurred on January 1, 1999:
47
<PAGE>
Financial Performance Corporation and Subsidiaries
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year ended December 31, 1999
<TABLE>
<CAPTION>
For the year ended December 31, 1999 Policy
----------------------------------------------------------------------------------
Communi- iMapData.com,
Program InContext, cations, Inc.
Flow, Inc. Inc. Inc. Eliminations Combined
<S> <C> <C> <C> <C> <C>
Revenues $640,972 $690,605 $929,502 $(873,349) $1,387,730
Operating expenses
Salaries and related expenses 228,132 157,400 385,532
Selling, general and administrative 328,098 650,363 772,349 (873,349) 877,461
------- ------- ------- -------- ----------
Total operating expenses 556,230 650,363 929,749 (873,349) 1,262,993
Operating income (loss) 84,742 40,242 (247) 124,737
Other income (expenses)
Investment income 733 685 742 2,160
Loss on disposal of assets (5,084) (5,084)
Miscellaneous 1,164 1,164
--------- --------- ------------ ------------- ------------
(4,351) 1,849 742 (1,760)
--------- --------- ---------- ------------- ------------
Income before income taxes 80,391 42,091 495 122,977
Income taxes 16,235 1,300 17,535
--------- -------- --------- ------------- -----------
Net income (loss) $ 80,391 $ 25,856 $ (805) $ - $ 105,442
======== ======== ========== ============ ==========
</TABLE>
48
<PAGE>
Financial Performance Corporation and Subsidiaries
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (continued)
Year ended December 31, 1999
NOTE B - UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF
OPERATIONS ADJUSTMENTS
Certain executive officers of iMapData were paid $349,400 as compensation
in 1999. After the Transaction, their aggregate salaries were adjusted to
$600,000 based on signed employment agreements. Had the Transaction taken
place at the beginning of year of 1999, the salaries expenses would
increase by $250,600.
The Company amortizes goodwill over a 15-year life, using the straight-line
method. Had the transaction taken place as of January 1, 1999, goodwill
amortization expense would be $849,254.
NOTE C - PRO FORMA NET LOSS PER SHARE
The pro forma weighted-average number of shares outstanding is equal to the
historical number of weighted-average shares outstanding increased by
1,000,000 shares representing the effect of issuing shares to the
stockholders of iMapData.
49
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Financial Performance Corporation has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Date: May 16, 2000 FINANCIAL PERFORMANCE CORPORATION
By: /s/ William F. Finley
-------------------------
Name: William F. Finley
Title: Chief Financial Officer
50
