<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
Amendment No. 1
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
/X/ EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED 12/31/95
TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
/ / EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
-------- --------
Commission file number 000-22996
---------
GILMAN & CIOCIA, INC.
---------------------
(Name of small business issuer in its charter)
Delaware 11-2587324
- ------------------------- -------------------------
(State of jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
475 Northern Boulevard, Great Neck, NY 11021
- -------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(516) 482-4860
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months ( or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for past 90 days.
Yes /X/ No / /
State the number of shares outstanding of each class of the issuer's
classes of common equity, as of the latest practicable date. As of February 15,
1996, 5,444,212 shares of the issuer's common equity were outstanding.
<PAGE> 2
PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
Page
----
Consolidated Balance Sheets as of December 31, 1995 and June 30, 1995 F-1 &
F-2
Consolidated Statements of Operations for the six and three-month
periods ended December 31, 1995 and 1994 F-3
Consolidated Statements of Stockholders' Equity for the six-month
periods ended December 31, 1995 and 1994 F-4
Consolidated Statements of Cash Flows for the six-month periods ended
December 31, 1995 and 1994 F-5 &
F-6
Notes to Consolidated Financial Statements F-7 &
F-10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS:
SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994 COMPARED.
The Company's revenues for the six months ended December 31, 1995 increased
78.5% to $2,908,980 as compared to $1,630,011 for the six months ended December
31, 1994. The increase in revenues for the six months ended December 31, 1995 is
primarily attributable to the opening of 22 new offices in January 1995, the
continued growth of existing offices and increased financial planning revenues
which are not confined to the Company's traditional tax return preparation
"season". The total revenues for the six months ended December 31, 1995 consist
of $243,582 in Tax Preparation, $2,308,586 in Financial Planning Services and
$356,812 in Direct Mailing Services. Total revenue for the six months ended
December 31, 1994 consist of $71,498 in Tax Preparation and $1,558,513 in
Financial Planning Services.
The Company's operating expenses for the six months ended December 31, 1995
increased 43.0% to $3,814,131 as compared to $2,666,427 for the six months ended
December 31, 1994. The increase in the Company's operating expenses is primarily
attributable to; increased rent of $199,339, additional salaries (including
officers' salaries) and commissions of $811,981, increased depreciation and
amortization expense of $87,747, increased general and administrative expenses
of $283,021 and an expense reimbursement for financial planning of $125,000. The
increase in operating expenses is primarily due to the opening of 22 new offices
since January 1995 and the growth of existing offices. The increase in salaries
and commissions is due to increased financial planning activities as well as
$235,514 in additional payroll for employees of the Direct Mailing Division.
2
<PAGE> 3
The Company's interest income for the six months ended December 31,1995
increased 83.8% to $66,015, from $35,922 for the six months ended December 31,
1994. The increase is primarily due to interest from outstanding subscriptions
receivable, marketable securities, and other notes receivable. The Company's
interest expense for the six months ended December 31, 1995 increased 30.7% to
$30,673 from $23,467 for the six months ended December 31, 1994. The increase is
primarily due to the increase in bank obligations to fund the Company's expanded
operations. The Company increased its other income in the six months ended
December 31, 1995 through gains from marketable securities of $86,342 and income
from investment in partnership of $149,660.
The Company's net loss before credit for income taxes for the six months
ended December 31, 1995 decreased by 38.8% to $625,273 from $1,021,036 for the
six months ended December 31, 1994. This decrease is primarily due to the gain
on investment in marketable securities of $86,342, the income from investment in
partnership of $149,660.
THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994 COMPARED.
The Company's revenues for the three months ended December 31, 1995 and
1994 were $1,399,769 and $686,705, respectively. Revenues increased by 103.8%
for the periods compared. Total revenues for the three months ended December 31,
1995 consist of $154,718 in Tax Preparation, $1,056,177 in Financial Planning
Services and $188,874 in Direct Mailing Services. Total Revenues for the three
months ended December 31, 1994 consist of $35,824 in Tax Preparation and
$650,881 in Financial Planning Services. This increase is principally
attributable to the reasons indicated above.
The Company's operating expenses for the three months ended December 31,
1995 and 1994 were $2,213,482 and $1,433,144, respectively. This increase of
54.4% is principally attributable to increased salaries and commissions of
$568,643, increased rent of $103,708, increased depreciation and amortization of
$62,039 and increased general and administrative expenses of $156,932.
The Company's interest income for the three months ended December 31, 1995
and 1994 was $26,977 and $21,013, respectively. This increase of 28.3% is
principally attributable to the reasons indicated above.
The Company's interest expense for the three months ended December 31, 1995
and 1994 was $25,535 and $11,945, respectively. This increase of 113.8% is
principally attributable to the reasons indicated above.
The Company's net loss before credit for income taxes for the three months
ended December 31, 1995 and 1994 were $682,311 and $735,796 respectively. The
decrease of 7.3% is principally attributable to the reasons indicated above.
3
<PAGE> 4
The Company's business is highly seasonal, with the majority of its revenue
earned in the first four months of the calendar year.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1995, the Company had a working capital of $2,658,287
compared to working capital of $4,062,344 at June 30, 1995. The decrease in
working capital for the six months ended December 31, 1995 is primarily due to
the increase in short-term borrowings of $1,880,555, the investment in
partnership of $348,360 which was transferred from marketable securities and the
purchase of intangible assets of $276,735 consisting of Customer Lists
amortizable over a period of five years from date of acquisition.
Cash used in operating activities in the Company's fiscal period consisted
primarily of an increase in prepaid expenses of $982,000 and an increase in
prepaid and refundable income taxes of $293,772.
Cash used in investing activities consists primarily of the investment in
partnership of $348,360 and the purchase of property and equipment of $409,656.
Cash provided by financing activities were primarily due to short-term
borrowings net of repayments of $1,880,555.
4
<PAGE> 5
PART II
ITEM 6. EXHIBITS; LISTS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Registrant's Articles of Incorporation, as amended,
incorporated by reference to the like-numbered exhibit in the
Registrant's Registration Statement on Form SB-2 under the
Securities Act of 1933, as amended, File No. 33-70640-NY
3.2 Registrant's by-laws, incorporated by reference to the
like-numbered exhibit in the Registrant's Registration
Statement on Form SB-2 under the Securities Act of 1933, as
amended, File No. 33-70640-NY
4.1 Form of Class A Warrant delivered to Bridge Loan lenders,
incorporated by reference to the like-numbered exhibit in the
Registrant's Registration Statement on Form SB-2 under the
Securities Act of 1933, as amended, File No. 33-70640-NY
4.2 Form of Class B Warrant delivered to Bridge Loan lenders,
incorporated by reference to the like-numbered exhibit in the
Registrant's Registration Statement on Form SB-2 under the
Securities Act of 1933, as amended, File No. 33-70640-NY
4.3 Form of Redeemable Warrant included in Units, incorporated by
reference to the like-numbered exhibit in the Registrant's
Registration Statement on Form SB-2 under the Securities Act
of 1933, as amended, File No. 33-70604-NY
4.4 Form of Purchase Option for Underwriter's Warrants,
incorporated by reference to the like-numbered exhibit in the
Registrant's Registration Statement on Form SB-2 under the
Securities Act of 1933, as amended, File No. 33-70604-NY
10.1 Restated and Amended Agreement and Plan of Merger dated
December 23, 1992 among the Registrant and 15 participating
corporations, incorporated by reference to the like-numbered
exhibit in the Registrant's Registration Statement on Form
SB-2 under the Securities Act of 1933, as amended, File No.
33-70640-NY
5
<PAGE> 6
10.2 Asset Sale Agreement dated December 31, 1992, incorporated by
reference to the like-numbered exhibit in the Registrant's
Registration Statement on Form SB-2 under the Securities Act
of 1933, as amended, File No. 33-70640-NY
10.3 Escrow letter regarding certain shares of Common Stock of the
Registrant, incorporated by reference to the like-numbered
exhibit in the Registrant's Registration Statement on Form
SB-2 under the Securities Act of 1933, as amended, File No.
33-70640-NY
10.4 (Omitted)
10.5 Warrant Agreement dated October 31, 1993 between the
Registrant and the Warrant Agent, incorporated by reference to
the like-numbered exhibit in the Registrant's Registration
Statement on Form SB-2 under the Securities Act of 1933, as
amended, File No. 33-70640-NY
10.6 (Omitted)
10.7 1993 Joint Incentive and Non-Qualified Stock Option Plan of
the Registrant, incorporated by reference to the like-numbered
exhibit in the Registrant's Registration Statement on Form
SB-2 under the Securities Act of 1933, as amended, File No.
33-70640-NY
10.8 (Omitted)
10.9 (Omitted)
10.10 Form of Lock-up letter executed by shareholders of the
Registrant, incorporated by reference to the like-numbered
exhibit in the Registrant's Registration Statement on Form
SB-2 under the Securities Act of 1933, as amended, File No.
33-70640-NY
10.11 Term-loan Promissory Note to State Bank of Long Island,
incorporated by reference to the like-numbered exhibit in the
Registrant's Registration Statement on Form SB-2 under the
Securities Act of 1933, as amended, File No. 33-70640-NY
10.12 (Omitted)
6
<PAGE> 7
10.13 Escrow Agreement among State Bank of Long Island as escrow
agent, the Registrant and Patterson Travis, Inc., incorporated
by reference to the like-numbered exhibit in the Registrant's
Registration Statement on Form SB-2 under the Securities Act
of 1933, as amended, File No. 33-70640- NY
10.14 Form of guarantee of Term-loan Promissory Note to State Bank
of Long Island, incorporated by reference to the like-numbered
exhibit in the Registrant's Registration Statement on Form
SB-2 under the Securities Act of 1933, as amended, File No.
33-70640-NY
10.15 Agreement among Registrant and James Ciocia, Thomas Povinelli,
Gary Besmer and Kathryn Travis regarding the repayment of
advances, incorporated by reference to the like-numbered
exhibit to the Registrant's Registration Statement on Form
SB-2 under the Securities Act of 1933, as amended, File No.
33-70640-NY
10.16 Underwriting Agreement between the Registrant and Patterson
Travis, Inc., incorporated by reference to exhibit number 1.1
in the Registrant's Registration Statement on Form SB-2 under
the Securities Act of 1933, as amended, File No. 33-70640-NY
10.17 Stock Purchase Agreement dated February 10, 1995 between
Registrant and Steven Gilbert, incorporated by reference to
exhibit 99.1 to the Company's Current Report on Form 8-K,
dated February 10, 1995
10.18 Noncompetition Agreement dated February 10, 1995 between
Registrant and Steven Gilbert, incorporated by reference to
exhibit 99.2 to the Company's Current Report on Form 8-K,
dated February 10, 1995
10.19 Employment Agreement dated February 10, 1995 between
Registrant and Steven Gilbert, incorporated by reference to
exhibit 99.3 to the Company's Current Report on Form 8-K,
dated February 10, 1995
10.20 Registration Rights Agreement dated February 10, 1995 between
Registrant and Steven Gilbert, incorporated by reference to
exhibit 99.4 to the Company's Current Report on Form 8-K,
dated February 10, 1995
10.21 Letter Agreement dated April 26, 1995 between the Company and
Steven Gilbert, incorporated by reference to exhibit 10.20 in
the Company's quarterly report on form 10Q for the fiscal
quarter ended March 31, 1995
7
<PAGE> 8
(b) Reports on Form 8-K
No Report on Form 8-K was filed by the Company during the quarter ended
December 31, 1995.
8
<PAGE> 9
SIGNATURE
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Dated: May 7, 1996
GILMAN & CIOCIA, INC.
By/s/Ralph V. Esposito
- ------------------------
Ralph V. Esposito
Chief Financial Officer
9
<PAGE> 10
GILMAN + CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------ --------
1995 1995
---- ----
<S> <C> <C>
CURRENT ASSETS:
CASH & CASH EQUIVALENTS $ 951,527 $1,335,762
INVESTMENT IN MARKETABLE SECURITIES 1,698,839 2,095,750
ACCOUNTS RECEIVABLE, NET OF ALLOWANCE FOR
DOUBTFUL ACCOUNTS OF $45,974 AND $23,685
RESPECTIVELY 534,575 562,339
NOTES RECEIVABLE - STOCKHOLDERS - CURRENT PORTION 101,942 44,625
OTHER RECEIVABLES -STOCKHOLDERS 239,794 180,895
NOTES RECEIVABLE - FORMER STOCKHOLDER-
CURRENT PORTION 4,503 4,242
PREPAID AND REFUNDABLE INCOME TAXES 468,885 118,589
PREPAID AND OTHER CURRENT ASSETS 1,109,652 127,652
---------- ----------
TOTAL CURRENT ASSETS 5,109,717 4,469,854
---------- ----------
PROPERTY & EQUIPMENT - NET OF ACCUMULATED
DEPRECIATION AND AMORTIZATION OF $719,851 AND
$617,768 RESPECTIVELY 1,225,231 926,967
---------- ----------
OTHER ASSETS:
NOTE RECEIVABLE - STOCKHOLDERS, NET OF CURRENT
PORTION 226,088 72,569
NOTE RECEIVABLE - FORMER STOCKHOLDER, NET OF
CURRENT PORTION 21,148 23,143
INTANGIBLE ASSETS, NET OF ACCUMULATED
AMORTIZATION OF $80,691 AND $20,467 RESPECTIVELY 688,072 471,561
INVESTMENT IN JOINT VENTURE 20,000
SECURITY DEPOSITS 184,655 109,366
INVESTMENT IN PARTNERSHIP 498,020 0
---------- ----------
TOTAL OTHER ASSETS 1,617,983 696,639
---------- ----------
TOTAL ASSETS $7,952,931 $6,093,460
========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
<PAGE> 11
GILMAN + CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------ --------
1995 1995
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 200,985 $ 34,248
NOTES PAYABLE - BANK, CURRENT PORTION 2,166,667 216,667
NOTES PAYABLE - OTHER, CURRENT PORTION 34,479 21,807
ACCRUED PAYROLL AND PAYROLL TAXES 62,573 38,979
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES 107,726 95,809
---------- ----------
TOTAL CURRENT LIABILITIES 2,572,430 407,510
---------- ----------
LONG TERM DEBT:
NOTE PAYABLE - BANK, NET OF CURRENT PORTION 97,222 166,667
NOTE PAYABLE - OTHER, NET OF CURRENT PORTION 15,521 28,193
---------- ----------
TOTAL LONG TERM DEBT 112,743 194,860
---------- ----------
STOCKHOLDERS' EQUITY:
PREFERRED STOCK - $.001 PAR VALUE
AUTHORIZED - 100,000 SHARES
ISSUED - NONE
COMMON STOCK - $.01 PAR VALUE
AUTHORIZED - 9,000,000 SHARES
ISSUED -5,678,140 and 5,634,864 SHARES RESPECTIVELY 56,781 56,348
PAID IN CAPITAL - COMMON STOCK 5,969,222 5,767,039
PAID IN CAPITAL - WARRANTS & OPTIONS 48,155 48,155
RETAINED EARNINGS 405,130 805,403
---------- ----------
6,479,288 6,676,945
LESS: STOCK SUBSCRIPTIONS AND ACCRUED INTEREST
RECEIVABLE 799,655 773,980
TREASURY STOCK -AT COST 116,964 SHARES 411,875 411,875
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 5,267,758 5,491,090
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,952,931 $6,093,460
========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-2
<PAGE> 12
GILMAN + CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six Months Ended For the Three Months Ended
December 31, December 31,
------------ ------------
1995 1994 1995 1994
---------------- -------------------------------------------
<S> <C> <C> <C> <C>
NET REVENUES $2,908,980 $1,630,011 $1,399,769 $686,705
---------- ---------- ---------- --------
OPERATING EXPENSES:
SALARIES & COMMISSIONS 1,935,553 1,123,572 1,078,971 510,328
ADVERTISING 65,681 175,065 50,375 161,359
RENT 589,367 390,028 308,100 204,392
DEPRECIATION & AMORTIZATION 178,220 90,473 104,657 42,618
GENERAL AND ADMINISTRATIVE EXPENSES 1,170,310 887,289 671,379 514,447
EXPENSE REIMBURSEMENT FOR FINANCIAL PLANNING (125,000) 0 0 0
---------- ---------- ---------- --------
TOTAL OPERATING EXPENSES 3,814,131 2,666,427 2,213,482 1,433,144
---------- ---------- ---------- --------
LOSS FROM OPERATIONS (905,151) (1,036,416) (813,713) (746,439)
---------- ---------- ---------- --------
OTHER INCOME (EXPENSES):
INTEREST INCOME 66,015 35,922 26,977 21,013
INTEREST EXPENSE (30,673) (23,467) (25,535) (11,945)
RENT INCOME 8,534 2,925 1,955 1,575
INCOME FROM INVESTMENT IN PARTNERSHIP 149,660 0 106,326 0
GAIN ON SALE OF MARKETABLE SECURITIES 86,342 0 21,679 0
---------- ---------- ---------- --------
TOTAL OTHER INCOME 279,878 15,380 131,402 10,643
---------- ---------- ---------- --------
LOSS BEFORE CREDIT FOR INCOME TAXES-Historical (625,273) (1,021,036) (682,311) (735,796)
CREDIT FOR INCOME TAXES-Historical 225,000 485,779 237,252 341,713
---------- ---------- ---------- --------
NET LOSS-Historical $ (400,273) ($535,257) ($445,059) ($394,083)
PROVISION FOR INCOME TAXES-Proforma 0 119,439 0 33,562
---------- ---------- ---------- --------
NET LOSS-Proforma $ (400,273) ($654,696) ($445,059) ($427,645)
========== ========== ========== ==========
EARNINGS PER SHARE:
Historical $(.07) $(.12) $(.08) $(.10)
====== ====== ====== ======
Proforma $(.07) $(.15) $(.08) $(.10)
====== ====== ====== ======
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 5,648,684 4,221,401 5,656,219 4,328,337
========== ========== ========== =========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-3
<PAGE> 13
GILMAN + CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
PAID-IN SUBSCRIPTIONS
CAPITAL RECEIVABLE
COMMON STOCK PAID-IN WARRANTS RETAINED AND ACCRUED
SHARES AMOUNT CAPITAL & OPTIONS EARNINGS INTEREST
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOR THE SIX MONTHS ENDED
DECEMBER 31, 1995
BALANCE AT JULY 1, 1995 5,634,864 $56,348 $5,767,039 $ 48,155 $ 805,403 $(773,980)
COLLECTION OF STOCK SUB. AND
ACCRUED INT. RECEIVABLE 44,184
COMMON STOCK ISSUANCE 42,821 428 159,690
CANCELLATION OF C/S (10,000) (100) (17,400)
PREVIOUSLY
ISSUED
ISSUANCE OF C/S FOR CASH AND
SUBSCRIPTIONS REC. 10,455 105 59,893 (40,000)
ACCRUED INTEREST REC. (29,859)
NET LOSS FOR SIX MONTHS ENDED
DECEMBER 31, 1995 (400,273)
------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 5,678,140 $56,781 $5,969,222 $ 48,155 $ 405,130 ($799,655)
================================================================================================
FOR THE SIX MONTHS
ENDED DECEMBER 31, 1994
BALANCE AT JULY 1, 1994 4,114,465 $41,144 $1,170,745 $226,080 $ 714,923 ($694,148)
COLLECTION OF SUB. AND
ACCRUED INT. 68,187
RECEIVABLE
PROCEEDS FROM PUBLIC OFFERING 1,015,852 10,158 3,544,491
LESS: UNDERWRITING COSTS (278,094)
DEFERRED REGISTRATION (189,877)
ISSUANCE OF COMMON STOCK FOR
CASH AND SUBSCRIPTIONS REC. 19,974 200 67,300 (20,000)
ACQUISITION OF TREASURY STOCK
PURCHASE OF STOCK OPTIONS
ACCRUED INTEREST REC. (28,034)
NET LOSS FOR THE SIX MONTHS
ENDED DECEMBER 31, 1994 (535,257)
------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994 5,150,291 $51,502 $4,314,565 $226,080 $ 179,666 ($673,995)
================================================================================================
<CAPTION>
TOTAL STOCK-
TREASURY STOCK HOLDERS'
SHARES AMOUNT EQUITY
-----------------------------------------------
<S> <C> <C> <C>
FOR THE SIX MONTHS ENDED
DECEMBER 31, 1995
BALANCE AT JULY 1, 1995 116,964 ($411,875) $5,491,090
COLLECTION OF STOCK SUB. AND
ACCRUED INT. RECEIVABLE 44,184
COMMON STOCK ISSUANCE 160,118
CANCELLATION OF C/S (17,500)
PREVIOUSLY
ISSUED
ISSUANCE OF C/S FOR CASH AND
SUBSCRIPTIONS REC. 19,998
ACCRUED INTEREST REC. (29,859)
NET LOSS FOR SIX MONTHS ENDED
DECEMBER 31, 1995 (400,273)
-----------------------------------------------
BALANCE AT DECEMBER 31, 1995 116,964 ($411,875) $5,267,758
===============================================
FOR THE SIX MONTHS
ENDED DECEMBER 31, 1994
BALANCE AT JULY 1, 1994 $1,458,744
COLLECTION OF SUB. AND
ACCRUED INT. 68,187
RECEIVABLE
PROCEEDS FROM PUBLIC OFFERING 3,554,649
LESS: UNDERWRITING COSTS (278,094)
DEFERRED REGISTRATION (189,877)
ISSUANCE OF COMMON STOCK FOR
CASH AND SUBSCRIPTIONS REC. 47,500
ACQUISITION OF TREASURY STOCK 20,000 (72,500) ( 72,500)
PURCHASE OF STOCK OPTIONS
ACCRUED INTEREST REC. (28,034)
NET LOSS FOR THE SIX MONTHS
ENDED DECEMBER 31, 1994 (535,257)
-----------------------------------------------
BALANCE AT DECEMBER 31, 1994 20,000 ($ 72,500) $4,025,318
===============================================
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-4
<PAGE> 14
GILMAN + CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31
--------------------------------
1995 1994
--------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET LOSS $(400,273) $(535,257)
--------------------------------
DEPRECIATION AND AMORTIZATION 178,220 90,473
BAD DEBT EXPENSE 22,289
COMPENSATORY ELEMENT OF STOCK & OPTION ISSUANCES 113,474 30,875
UNREALIZED GAIN ON MARKETABLE SECURITIES (5,463)
EXPENSE REIMBURSEMENT FOR FINANCIAL PLANNING (125,000)
INCOME FROM INVESTMENT IN PARTNERSHIP (149,660)
INCREASE/(DECREASE) IN CASH FLOWS AS A RESULT OF CHANGES IN
ASSET AND LIABILITY ACCOUNT BALANCES
ACCOUNTS RECEIVABLE 74,947 42,427
PREPAID EXPENSES (982,000) (1,093,233)
SECURITY DEPOSITS (75,289) (4,020)
ACCOUNTS PAYABLE 166,737 (84,733)
PREPAID AND REFUNDABLE INCOME TAXES (293,772) 0
ACCRUED PAYROLL AND PAYROLL TAXES 23,594 (105,726)
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES 11,915 (38,755)
INCOME TAXES PAYABLE 0 (122,746)
--------------------------------
TOTAL ADJUSTMENTS (1,040,008) (1,285,438)
--------------------------------
--------------------------------
NET CASH USED IN OPERATING ACTIVITIES (1,440,281) (1,820,695)
--------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
ACQUISITION OF PROPERTY & EQUIPMENT (409,656) (206,105)
PROCEEDS FROM SALE (PURCHASE) OF MARKETABLE SECURITIES 402,374 (1,450,418)
PURCHASE OF INTANGIBLE ASSETS (276,735) (31,993)
RECEIPTS ON NOTE FROM STOCKHOLDERS (83,441)
INCREASE IN OTHER RECEIVABLES - STOCKHOLDERS (186,294) (75,602)
INCREASE IN ACCRUED INTEREST (18,075) (7,912)
INVESTMENT IN JOINT VENTURE 20,000
INVESTMENT IN PARTNERSHIP (348,360)
--------------------------------
NET CASH USED IN INVESTING ACTIVITIES (900,187) (1,772,030)
--------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
ACQUISITION OF TREASURY STOCK (72,500)
RECEIPTS ON NOTE FROM FORMER STOCKHOLDER 1,734 1,910
BORROWINGS/REPAYMENT ON NOTE PAYABLE FROM BANK 1,880,555 916,667
INCURRENCE OF DEFERRED REGISTRATION COSTS (3,632)
PROCEEDS FROM SALE OF COMMON STOCK - NET OF UNDERWRITING COSTS 81,544 3,324,055
COMMON STOCK SUBSCRIPTIONS COLLECTED (INCURRED) (7,600) 55,024
"S" CORPORATION DIVIDEND DISTRIBUTIONS (275,017)
--------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,956,233 3,946,507
--------------------------------
NET INCREASE (DECREASE) IN CASH (384,235) 353,782
CASH AT BEGINNING OF PERIOD 1,335,762 1,176,425
--------------------------------
CASH AT END OF PERIOD 951,527 1,530,207
===============================
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-5
<PAGE> 15
GILMAN + CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
------------
1995 1994
----------------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAYMENTS FOR THE PERIOD:
INTEREST $ 25,531 $11,522
======== =======
INCOME TAXES $122,834 $32,704
======== =======
NON CASH TRANSACTIONS FOR THE PERIOD:
ISSUANCE OF COMMON STOCK AND COMPENSATORY
ELEMENT OF STOCK OPTIONS GRANTED $113,474 $30,875
======== =======
INCOME FROM INVESTMENT IN PARTNERSHIP $149,660 $ 0
======== =======
CONVERSION OF ADVANCES TO SHAREHOLDERS' INTO
NOTES RECEIVABLE $127,395 $ 0
======== =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-6
<PAGE> 16
GILMAN + CIOCIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
(Unaudited)
NOTE 1 - PREPARATION OF FINANCIAL STATEMENTS
In the opinion of the Company, the accompanying unaudited consolidated
balance sheet as at December 31,1995 and the related unaudited consolidated
statements of operations for the six and three months ended December 31, 1995
and 1994 and statements of stockholders' equity and cash flows for the six
months ended December 31, 1995 and 1994 include all adjustments (consisting only
of normal recurring adjustments) necessary to present fairly the Company's
financial position as at December 31, 1995, results of operations for the six
and three months ended December 31, 1995 and 1994 and changes in stockholders'
equity and cash flows for the six months ended December 31, 1995 and 1994.
The accompanying consolidated balance sheet as at June 30, 1995 is
presented herein as unaudited. Such consolidated balance sheet was prepared from
the audited year-end June 30, 1995 financial statements, and does not reflect
all disclosures and footnotes contained therein. The footnotes should be read in
conjunction with the audited financial statements for the year ended June 30,
1995.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation:
The consolidated financial statements include the accounts of
Gilman + Ciocia, Inc. (The Parent) (a Delaware Corporation) and its wholly-owned
subsidiaries, JT Securities, Inc. (New York), BT Telemarketing, Inc. (New York)
and Gilbert Financial Services, Inc. (Florida), and its seventy-five percent
owned subsidiary, Mid Wood Tax Service, Inc. (See Note 3). All significant
intercompany transactions have been eliminated in consolidation.
(b) Per Share Data:
Primary net loss per share of common stock for the six and three
months ended December 31, 1995 and 1994 have been computed based on the weighted
average number of common shares and common stock equivalents outstanding
including common stock that may be subject to recision. The acquisition of
Gilbert Financial Services, Inc., accounted for as a pooling of interests, has
been retroactively reflected as of the beginning of all periods presented.
(c) Investment in ATM Partners
The Company is using the equity method to account for its 35.88%
ownership in ATM Partners. The Partnership reflects its investment at fair
market value.
F-7
<PAGE> 17
The condensed balance sheet of ATM Partners at December 31, 1995 is as
follows:
<TABLE>
<CAPTION>
<S> <C>
Investment in Marketable Securities $1,388,017
==========
Partners Capital $1,388,017
==========
</TABLE>
Income of the Partnership for the six months ended December 31, 1995
amounted to $416,993. The Company's prorata share amounted to $149,660.
(d) Expense Reimbursement for Financial Planning
As per an agreement between the Company and a manager, the manager
is required to reimburse the Company for certain expenses incurred on behalf of
the Company should he fail to achieve certain gross revenue criteria. Based on
these criteria the Company is entitled to be reimbursed for $125,000 of these
expenses. The Company will offset the managers future earnings to collect this
reimbursement. The individual has personally guaranteed repayment of the amount.
NOTE 3 - MERGERS AND ACQUISITIONS
On September 18, 1995 the Company acquired seventy-five percent of the
outstanding stock of Midwood Tax Service Inc. ("Midwood"). Previously the
Company and Midwood were engaged in a joint-venture. The Company has accounted
for the acquisition as an investment in a subsidiary using the equity method.
Midwood's results of operations for the six months ended December 31,
1995 have been included in the financial statements presented herein. Due to the
immateriality of Midwood's results of operations for the period and the minority
interest in the equity of Midwood, the Company has presented Midwood herein as
if it were a wholly owned subsidiary.
NOTE 4 - SEGMENT REPORTING (UNAUDITED)
The Company is a service business which operates primarily in two
segments; Tax Preparation Services and Financial Planning Services.
(a) Tax Preparation Services
The Company is engaged in providing tax return preparation, filing and
related services to the general public. This segment of the Company's business
is seasonal and generates most of its revenues between February and April.
(b) Financial Planning Services
The Company provides financial services such as insurance, investments,
pensions and estate planning to its existing clients. Financial information
pertaining to the above segments are as follows:
F-8
<PAGE> 18
For the six months ended December 31, 1995
<TABLE>
<CAPTION>
Tax Prep. Financial Planning Other Consolidated
<S> <C> <C> <C> <C>
Revenues $ 243,582 $2,308,586 $356,812 $2,908,980
Direct Costs $ 2,254,183 $1,145,668 $414,280 $3,814,131
---------------------------------------------------------------------
Operating Profit (loss) $(2,010,601) $1,162,918 $(57,468) $ (905,151)
=====================================================================
Identifiable assets $ 6,608,264 $1,273,681 $ 70,986 $7,952,931
=====================================================================
</TABLE>
For the six months ended December 31, 1994
<TABLE>
<CAPTION>
Tax Prep. Financial Planning Consolidated
<S> <C> <C> <C>
Revenues $ 71,498 $1,558,513 $ 1,630,011
Direct Costs $ 1,832,677 $ 833,750 $ 2,666,427
--------------------------------------------------------
Operating Profit (loss) $(1,761,179) $ 724,763 $(1,036,416)
========================================================
Identifiable assets $ 5,187,331 $ 435,083 $(5,622,414)
========================================================
</TABLE>
For the three months ended December 31, 1995
<TABLE>
<CAPTION>
Tax Prep. Financial Planning Other Consolidated
<S> <C> <C> <C> <C>
Revenues $ 154,718 $1,056,177 $188,874 $1,399,769
Direct Costs $ 1,292,506 $ 657,158 $263,818 $2,213,482
-------------------------------------------------------------------------
Operating Profit (loss) $(1,137,788) $ 399,019 $(74,944) $ (813,713)
=========================================================================
Identifiable assets $ 6,608,264 $1,273,681 $ 70,986 $7,952,931
=========================================================================
</TABLE>
For the three months ended December 31, 1994
<TABLE>
<CAPTION>
Tax Prep. Financial Planning Consolidated
<S> <C> <C> <C>
Revenues $ 35,824 $650,881 $ 686,705
Direct Costs $1,014,263 $418,881 $ 1,433,144
------------------------------------------------
Operating Profit (loss) $ (978,439) $232,000 $ (746,439)
================================================
Identifiable assets $5,187,331 $435,083 $(5,622,414)
================================================
</TABLE>
The Company has allocated advertising, rent and other expenses based upon
managements best estimates. The allocation of salaries has been based on the
specific service provided by the employee, expept for administrative costs which
have been allocated based upon managements best estimates.
F-9
<PAGE> 19
NOTE 5 - REFERENCE TO THE JUNE 30, 1995 AUDITED FINANCIAL STATEMENTS
See the notes to the Company's audited financial statements included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1995
for disclosures of significant accounting policies and other pertinent
disclosures which have not materially changed.
F-10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1995 JUN-30-1995
<PERIOD-END> DEC-31-1995 DEC-31-1995
<CASH> 951,527 1,335,762
<SECURITIES> 1,698,839 2,095,750
<RECEIVABLES> 580,549 586,024
<ALLOWANCES> (45,974) (23,685)
<INVENTORY> 0 0
<CURRENT-ASSETS> 5,109,717 4,469,854
<PP&E> 1,945,082 1,544,735
<DEPRECIATION> (719,851) (617,768)
<TOTAL-ASSETS> 7,952,931 6,093,460
<CURRENT-LIABILITIES> 2,572,430 407,510
<BONDS> 0 0
0 0
0 0
<COMMON> 56,781 56,348
<OTHER-SE> 5,210,977 5,434,742
<TOTAL-LIABILITY-AND-EQUITY> 7,952,931 6,093,460
<SALES> 2,908,980 1,399,769
<TOTAL-REVENUES> 2,908,980 1,399,769
<CGS> 0 0
<TOTAL-COSTS> 3,814,131 2,213,482
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 30,673 25,535
<INCOME-PRETAX> (625,273) (682,311)
<INCOME-TAX> (225,000) (237,252)
<INCOME-CONTINUING> (400,273) (445,059)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (400,273) (445,059)
<EPS-PRIMARY> (.07) (.08)
<EPS-DILUTED> (.07) (.08)
</TABLE>
