<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED 09/30/97
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 November 14,
1997, 5,375,180 shares of the issuer's common equity were outstanding.
<PAGE> 2
PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
Page
<S> <C>
Consolidated Balance Sheets as of September 30, 1997 and
June 30, 1997 F-1 - F-2
Consolidated Statements of Operations for the three-months
Ended September 30, 1997 and 1996 F-3
Consolidated Statements of Stockholders' Equity for the three months
Ended September 30, 1997 and 1996 F-4
Consolidated Statements of Cash Flows for the three months ended
September 30, 1997 and 1996 F-5 - F-6
Notes to Consolidated Financial Statements F-7
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
PLAN OF OPERATION
Over the past two fiscal years, the Company opened 48 new offices,
which represents 40% of all offices at September 30, 1997. The Company plans to
continue its expansion and open new offices during the next year (although no
specific target has been set), recruit successful financial planners and acquire
existing tax preparation practices. The Company anticipates funding this growth
through operating profits and use of its short-term line of credit.
The Company anticipates that opening new offices will increase its
revenues, but will involve a substantial increase in costs. The Company has no
basis to predict whether its new offices will have a material effect on its net
income. The Company believes that its new offices can ultimately be operated
profitably, but expansion may initially reduce the Company's profits or result
in an overall loss in future years.
During the Company's 1996 fiscal year, the Company commenced
operations of a direct mail division in order to control the substantial costs
of advertising its many offices. The Company's direct mail division operates as
an independent division and also solicits its own customers for its direct mail
services.
2
<PAGE> 3
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 COMPARED.
The Company's revenues for the three months ended September 30, 1997
were $2,441,460 as compared to revenues of $2,159,800 for the comparable period
of the prior year. The increase in revenues for the quarter ended September 30,
1997 from the comparable period of the prior year is attributable to (1)
increased revenues from tax preparation services of $45,951 (2) increased
financial planning revenues of $433,251 over all offices and (3) decreased
revenues of approximately $197,542 from its direct mailing services.
The Company's total revenues for the quarter ended September 30, 1997
consist of $279,944 for tax preparation services, $1,801,672 for financial
planning services, and $359,844 for direct mail services. The Company's total
revenues for its quarter ended September 30, 1996 consist of $233,993 for tax
preparation services, $1,368,421 for financial planning services and $557,386
for direct mail services.
The increase in the Company's financial planning revenues for the
quarter ended September 30, 1997 compared to the prior year's first quarter was
approximately 32%. The increase in such financial planning revenues is
attributable to the continued growth of the existing offices and the increase of
production from the acquisition of the new financial planners. The remaining
growth in financial planning revenues is a result of the Company's benefiting
from a period of rapidly rising activities in the marketplace, which induced
clients to invest funds with the Company, generating commission revenues for the
Company.
The decrease in the Company's direct mail services for the quarter
ended September 30, 1997 was approximately 35%, resulting from the loss of a
few customers.
The Company's operating expenses for the quarter ended September 30,
1997 were $2,615,144 as compared to operating expenses of $3,041,294 for the
comparable period of the prior year. The decrease of 14% in the Company's
operating expenses for the quarter ended September 30, 1997 from the comparable
period of the prior year was attributable to a decrease in salaries and
commissions in the amount of $253,908, a decrease in general and administrative
expenses of $40,649, a decrease in direct mail costs of $177,106. These
decreases in operating expenses were offset by an increase in advertising
expenses of $6,493, an increase in rent expense of $17,710 and an increase in
depreciation and amortization of $21,311. Salaries and commissions decreased
19.5% for the quarter ended September 30, 1997 as compared to the quarter ended
September 30, 1996 due to personnel changes. The $40,649 decrease in general and
administrative expenses had been offset by a bad debt write-off of approximately
$150,000 in the quarter ended September 30, 1996. Otherwise, the increase in
general and administrative expenses was as follows: $50,000 for telephone,
$72,000 for professional fees, $83,000 filing fees. These increases were offset
by a decrease in other expenses that resulted due to a decrease of revenues.
The reduction in direct mail costs of approximately $177,000 resulted
primarily from the decrease in sales volume.
3
<PAGE> 4
The increase in depreciation and amortization expense is due primarily
to additional amortization of customer lists amounting to approximately $18,000
and additional depreciation taken on capital additions. The increase in
advertising is due predominately to a general increase in advertising costs for
all locations.
The net increase in other income ofapproximately $107,000 is due
primarily to the Company's investment in partnership.
The Company's net loss for the three months ended September 30, 1997 is
$112,640 as compared to $587,098 for the three months ended September 30, 1996.
The decrease of approximately 81% is primarily attributable to the increase in
financial planning revenue of approximately $434,000.
The Company's business is highly seasonal, with the majority of its revenue
earned in the first four months of the calendar year.
The Company does not consider inflation to be a risk to the cost of doing
business in the current or foreseeable future.
The Company's tax return preparation business and its financial
planning business are closely linked together in that such various lines of
business generally use the same employees assets, marketing and facilities and
cannot be easily separated. The Company believes that its tax return preparation
business is inextricably intertwined with, and a necessary adjunct to, its
financial planning activities and that the two segments can be viewed
meaningfully only as a whole.
4
<PAGE> 5
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flows used in operating activities was $281,843 and
$433,780 for the three months ended September 30, 1997 and 1996, respectively.
The decrease of approximately $152,000 is due primarily to a decrease in net
loss plus non-cash adjustments of approximately $293,000, an increase in the
proceeds from sale of marketable securities of approximately $22,000, a decrease
of approximately $107,000 in advances to financial planners, a decrease in
security deposits of approximately $5,200, and a decrease in prepaid expenses
and other current assets of approximately $198,000. These decreases in net cash
used in operating activities were offset by an increase in accounts receivable
of approximately $300,000 and a decrease in accounts payable and other accrued
expenses of approximately $175,000.
Net cash provided by investing activities was $59,812 and $(246,921)
for the three months ended September 30, 1997 and 1996, respectively. The
increase of approximately $307,000 is primarily due to decreases in capital
expenditures of approximately $216,000 and a decrease in acquisition of
intangible assets of approximately $153,000. These increases were offset by an
increase in investments and marketable securities of approximately $62,000.
Net cash used in financing activities was $174,143 and $278,547 for the
three months ended September 30, 1997 and 1996, respectively. The decrease in
net cash used in financing activities of approximately $104,000 is primarily due
to a decrease in the payments of bank and other loans of approximately $446,000,
an increase in the proceeds from stock subscriptions receivable of approximately
$11,000, a decrease in deferred registration costs of $30,000 and the exercise
of stock options of approximately $18,000. These decreases in net cash used in
financing activities were offset by a decrease in proceeds from bank loan of
$250,000 and an increase in the acquisition of treasury stock of approximately
$151,000.
The Company has two credit facilities with a bank. The first facility
is a line of credit for up to $2,500,000 which expires on October 31, 1997.
Borrowings under this line are in the form of short-term notes with interest
charged monthly at the bank's prime lending rate plus 1 1/2%. At September 30,
1997, the Company had an outstanding principal balance of $500,000.
The second credit facility is an installment note in the principal
amount of $1,000,000. The note is payable in 36 equal monthly installments of
approximately $28,000, plus interest at the bank's prime lending rate plus 1
3/4%. The final installment is due December 1999. At September 30, 1997, the
note had an outstanding principal balance amounting to $750,000.
The Company believes that it could continue to operate without any
additional financing (other than its seasonal bank loans) during the next 12
months. The Company anticipates that it will not pay dividends on its Common
Stock in the foreseeable future, but will apply any profits to fund the
Company's expansion.
RECENT ACCOUNTING PRONOUNCEMENTS
In March, 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standard ("SFAS") No. 121, "Accounting
For the Impairment of Long Lived Assets and for Long Lived Assets to be Disposed
Of", which is effective for fiscal years beginning after December 15, 1995. The
Company's adoption of SFAS No. 121 as of July 1, 1996 did not have a material
impact on its
5
<PAGE> 6
results of operations, financial position or cash flows.
In October 1995, FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation", which is effective for transactions entered into for fiscal years
that begin after December 15, 1995. SFAS No. 123 establishes a fair value method
for accounting for stock-based compensation plans either through recognition or
disclosure. The Company's adoption of the employee stock-based compensation
provisions of SFAS No. 123 as of July 1, 1996 requires disclosure of the pro
forma net income and pro forma net income per share amounts assuming the fair
value method was adopted July 1, 1995. The adoption of this standard does not
impact the Company's consolidated results of operations, financial position or
cash flows.
In February 1997, FASB issued Statement No. 128, "Earnings Per Share,"
which is effective for periods ending after December 15, 1997. The Company will
adopt Statement No. 128 for the quarter ending December 31, 1997. The adoption
of this standard will not have a material impact on the Company's earnings per
share on a diluted basis.
6
<PAGE> 7
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
27 Gilman & Ciocia, Inc. - Financial Data Schedule, Dated
September 30, 1997.
(b) Reports on Form 8-K
A report on Form 8-K was filed by the Company dated September 16, 1997
regarding a change in public auditors.
7
<PAGE> 8
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: November 18,1997
GILMAN & CIOCIA, INC.
By/s/Thomas Povinelli
- --------------------
Thomas Povinelli
Chief Financial Officer
8
<PAGE> 9
GILMAN & CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1997 1997
---------- ----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
CASH $2,524,315 $2,920,489
MARKETABLE SECURITIES $ 66,568 $ 49,658
ACCOUNTS RECEIVABLE, NET 1,229,192 1,109,535
RECEIVABLE FROM RELATED PARTIES, CURRENT PORTION 394,296 373,039
PREPAID EXPENSES AND OTHER CURRENT ASSETS 351,027 451,968
---------- ----------
TOTAL CURRENT ASSETS 4,565,398 4,904,689
---------- ----------
PROPERTY AND EQUIPMENT, NET 1,625,774 1,679,106
---------- ----------
OTHER ASSETS:
INTANGIBLE ASSETS, NET 1,075,737 1,147,297
ADVANCES AND NOTES RECEIVABLE FROM FINANCIAL
PLANNERS, NET OF CURRENT PORTION 83,952 169,239
RECEIVABLES FROM RELATED PARTIES, NET OF CURRENT
PORTION 402,295 447,806
DEFERRED TAX ASSETS 27,889 27,899
OTHER ASSETS 715,767 649,540
---------- ----------
TOTAL OTHER ASSETS 2,305,640 2,441,781
---------- ----------
TOTAL ASSETS $8,496,812 $9,025,576
========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
<PAGE> 10
GILMAN & CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1997 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES:
SHORT-TERM BORROWINGS $ 883,333 $ 899,487
ACCOUNTS PAYABLE 190,089 168,210
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES 157,641 318,690
INCOME TAXES PAYABLE -- 68,200
----------- -----------
TOTAL CURRENT LIABILITIES 1,231,063 1,454,587
----------- -----------
LONG-TERM LIABILITIES:
LONG-TERM BORROWINGS 466,667 552,000
----------- -----------
STOCKHOLDERS' EQUITY:
PREFERRED STOCK-$.001 PAR VALUE - SHARES AUTHORIZED
100,000: NONE ISSUED AND OUTSTANDING -- --
COMMON STOCK - $.01 PAR VALUE - SHARES AUTHORIZED
9,000,000: ISSUED 5,588,913 (September 30, 1997) 55,889 55,789
PAID-IN-CAPITAL 6,249,580 6,231,555
RETAINED EARNINGS 1,480,729 1,593,369
LESS-TREASURY STOCK, AT COST: 213,733 SHARES (789,951) (638,556)
----------- -----------
6,996,247 7,242,157
STOCK SUBSCRIPTIONS AND ACCRUED INTEREST RECEIVABLE (197,165) (223,168)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 6,799,082 7,018,989
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,496,812 $ 9,025,576
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-2
<PAGE> 11
GILMAN & CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
.
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
REVENUES:
TAX PREPARATION FEES $ 279,944 $ 233,993
FINANCIAL PLANNING SERVICES 1,801,672 1,368,421
DIRECT MAIL SERVICES 359,844 557,386
----------- -----------
TOTAL REVENUES 2,441,460 2,159,800
----------- -----------
OPERATING EXPENSES:
SALARIES AND COMMISSIONS 1,047,521 1,301,430
GENERAL AND ADMINISTRATIVE EXPENSES 656,502 697,151
ADVERTISING 29,187 22,694
DIRECT MAIL COSTS 202,104 379,210
RENT 486,043 468,333
DEPRECIATION AND AMORTIZATION 193,787 172,476
----------- -----------
TOTAL OPERATING EXPENSES 2,615,144 3,041,294
----------- -----------
OPERATING (LOSS) (173,684) (881,494)
----------- -----------
OTHER INCOME (EXPENSE):
INCOME (LOSS) FROM INVESTMENT IN PARTNERSHIP 20,913 (92,587)
INTEREST INCOME 21,459 20,915
INTEREST EXPENSE (38,653) (16,937)
RENTAL INCOME 2,700 4,920
REALIZED LOSS ON SALE OF MARKETABLE (16,213)
SECURITIES
UNREALIZED GAIN ON MARKETABLE SECURITIES 1,157
OTHER INCOME 32,088
----------- -----------
TOTAL OTHER INCOME (EXPENSE) 23,451 (83,689)
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES (BENEFIT) (150,233) (965,183)
INCOME TAXES (BENEFIT) (37,593) (378,085)
----------- -----------
NET (LOSS) $ (112,640) $ (587,098)
=========== ===========
NET LOSS PER SHARE $ (0.02) $ (0.11)
=========== ===========
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES:
PRIMARY 5,461,216 5,550,582
FULLY DILUTED 5,558,296 5,550,582
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-3
<PAGE> 12
GILMAN & CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
STOCK
SUBSCRIPTIONS
AND ACCRUED TREASURY STOCK
COMMON STOCK PAID-IN RETAINED INTEREST SHARES AMOUNT
SHARES AMOUNT CAPITAL EARNINGS RECEIVABLE
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1997
BALANCE AT JULY 1, 1997 5,578,913 $ 55,789 $6,231,555 $1,593,369 $(223,168) 157,433 $(638,556)
REPAYMENTS OF STOCK
SUBSCRIPTIONS 25,117
PURCHASE OF TREASURY STOCK 56,300 (151,395)
ISSUANCE OF STOCK OPTIONS 10,000 100 18,025
ACCRUED INTEREST INCOME 886
NET INCOME (LOSS) (112,640)
---------------------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 1997 5,588,913 $ 55,889 $6,249,580 $1,480,729 $(197,165) 213,733 $(789,951)
=============================================================================================
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
BALANCE AT JULY 1, 1996 5,550,582 $ 55,505 $6,184,075 $717,375 $(458,014) - $ -
REPAYMENTS OF STOCK
SUBSCRIPTIONS 19387
COMPENSATION RECOGNIZED IN
CONNECTION WITH THE
ISSUANCE OF STOCK OPTIONS 29,735
ACCRUED INTEREST INCOME (10,305)
NET LOSS (587,098)
---------------------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 1996 5,550,582 $55,505.00 $6,213,810.00 $ 130,277 $(448,932) - $ -
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
TOTAL STOCK-
HOLDERS'
EQUITY
------------
<S> <C>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1997
BALANCE AT JULY 1, 1997 $7,018,989
REPAYMENTS OF STOCK
SUBSCRIPTIONS 25,117
PURCHASE OF TREASURY STOCK (151,395)
ISSUANCE OF STOCK OPTIONS 18,125
ACCRUED INTEREST INCOME
886
NET INCOME (LOSS) (112,640)
------------
BALANCE AT SEPTEMBER 30, 1997 $6,799,082
============
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
BALANCE AT JULY 1, 1996 $6,498,941
REPAYMENTS OF STOCK
SUBSCRIPTIONS 19,387
COMPENSATION RECOGNIZED IN
CONNECTION WITH THE
ISSUANCE OF STOCK OPTIONS 29,735
ACCRUED INTEREST INCOME (10,305)
NET LOSS (587,098)
------------
BALANCE AT SEPTEMBER 30, 1996 $ 5,950,660
============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-4
<PAGE> 13
GILMAN & CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1997 1996
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET (LOSS) $(112,640) $(587,098)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
COMPENSATION EXPENSE RECOGNIZED IN
CONNECTION WITH THE
ISSUANCE OF STOCK OPTIONS 27,735
DEPRECIATION AND AMORTIZATION 158,500 172,464
(INCOME) LOSS FROM INVESTMENT (20,913) 92,587
LOSS ON SALE OF MKT SEC 16,213
DEFERRED TAX BENEFIT (57,417)
UNREALIZED GAIN ON MARKETABLE SECURITIES (1,157) --
COMPENSATION EXPENSE RECOGNIZED IN
CONNECTION WITH AMORTIZATION
OF ADVANCES TO FINANCIAL PLANNERS 35,287 115,210
PROVISION FOR DOUBTFUL ACCOUNTS 25,000
INTEREST ON STOCK SUBSCRIPTIONS (4,611) (10,305)
PROCEEDS FROM SALE OF MARKETABLE 22,323 --
SECURITIES
(INCREASE) DECREASE IN:
ACCOUNTS RECEIVABLE (119,657) 178,595
ADVANCES TO FINANCIAL PLANNERS 54,662 (51,989)
SECURITY DEPOSITS (2,367) (7,548)
PREPAID EXPENSES AND OTHER CURRENT (60,891) (258,880)
ASSETS
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE,ACCRUED EXPENSES, AND (246,592) (72,134)
OTHER CURRENT LIABILITIES
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (281,843) (433,780)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (54,737) (270,516)
ACQUISITION OF INTANGIBLE ASSETS (13,655) (166,865)
INVESTMENTS (39,394) --
PURCHASE OF MARKETABLE SECURITIES (23,048) --
PROCEEDS FROM RELATED PARTY TRANSACTIONS 190,646 219,460
PAYMENTS TO RELATED PARTIES -- (29,000)
----------- -----------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 59,812 (246,921)
----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
ACQUISITION OF T/S (151,395)
PROCEEDS FROM BANK AND OTHER LOANS -- 250,000
PROCEEDS FROM SALE OF COMMON STOCK & 18,125
EXERCISE OF STOCK OPTIONS
PAYMENTS OF BANK AND OTHER LOANS (101,487) (547,934)
PROCEEDS FROM STOCK SUBSCRIPTIONS 30,614 19,387
INCURRENCE OF DEFERRED
REGISTRATION COSTS 30,000
----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (174,143) (278,547)
----------- -----------
NET DECREASE IN CASH (396,174) (959,248)
CASH AT BEGINNING OF PERIOD 2,920,489 2,221,795
----------- -----------
CASH AT END OF PERIOD $ 2,524,315 $ 1,262,547
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-5
<PAGE> 14
GILMAN & CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: 1997 1996
------- -------
<S> <C> <C>
CASH PAYMENTS FOR THE PERIOD:
INTEREST $34,012 $16,937
------- -------
INCOME TAXES $58,830 $22,515
------- --------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-6
<PAGE> 15
GILMAN & CIOCIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
NOTE 1 - BASIS OF FINANCIAL STATEMENTS
The consolidated financial statements include the accounts of Gilman & Ciocia,
Inc. and its wholly owned subsidiaries. All intercompany balances and
transactions have been eliminated.
The consolidated financial statements and the related notes thereto as of
September 30, 1997 and for the three months ended September 30, 1997 and 1996
are presented as unaudited, but in the opinion of management include all
adjustments necessary to present fairly the information set forth therein. These
adjustments consist solely normal recurring accruals. The consolidated balance
sheet information for June 30, 1997 was derived from the audited financial
statements in the Company's Form 10-KSB. These interim financial statements are
not necessarily indicative of the results for any future periods.
The Company's business is highly seasonal, with a majority of its revenue earned
in the first four months of the calendar year.
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that effect the reported amounts of assets and liabilities and the disclosures
of contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Certain items in the 1996 presentation were reclassified to conform with the
1997 presentation.
In February 1997, FASB issued Statement No. 128, "Earnings Per Share," which is
effective for periods ending after December 15, 1997. The Company will adopt
Statement NO. 128 for the quarter ending December 31, 1997. The adoption of this
standard will not have a material impact on the Company's earnings per share on
a diluted basis.
F-7
