<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
X 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, 5,588,913 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 but
anticipates the availability of additional funds may be available through the
exercise of outstanding options and warrants because the sale and/or resale of
the common stock underlying such securities was recently registered. However,
there can be no assurance that the offering will be consummated or that any of
such options or warrants will be exercised.
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 1997 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 believes that the
direct mail division will eventually result in lower advertising costs on
per-office basis, as the Company takes advantage of economies of scale. The
Company intends for its direct mail division to operate as an independent
division and solicit 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 division.
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
major customers.
The Company's operating expenses for the quarter ended September 30,
1997 were $2,615,144 as compared to operating expenses of $3,014,294 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: an increase in advertising expenses of $6,493: a decrease
in direct mail costs of $177,106: 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
3
<PAGE> 4
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 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 due to less customers.
The increase in depreciation and amortization expense is due
primarily to additional amortization of customer list amounting to approximately
$18,000 and additional depreciation taken on capital additions. The increase in
advertising is due to a general increase in advertising costs for all locations.
The increase in other income is due to the Company's investment in
partnership of approximately $113,500, an increase in interest income of $544,
an unrealized gain on marketable securities of $1,157, management fee income
from Suffolk Bureau for $31,500. These increases were offset by an increase in
interest expense of $21,716 and a realized loss on sale of marketable
securities.
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 increases
in the tax preparation fees and financial planning services of approximately
$460,000, and offset by an increase in net loss of approximately $6,000 from the
Company's direct mail division.
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 provided by operating activities increased
approximately $522,000 to $88,266 for the three months ended September 30, 1997
from the $(433,780) provided by operations for the three months ended September
30, 1996. The increase is primarily due to a decrease in net loss plus non-cash
adjustments of approximately $292,000, the proceeds from the sale of marketable
securities of $22,323, and an in the increase in accounts receivable of
approximately $298,252, prepaid expenses and other current assets of
approximately $643,574, and a decrease in accounts payable. Depreciation and
amortization decreased by approximately $14,000.
Net cash used in investing activities was $245,087 and $246,921 for
the three months ended September 30, 1997 and 1996, respectively. The decrease
of approximately $2,000 is primarily due to decreases in capital expenditures
of approximately $218,000, a decrease in acquisition of intangible assets of
approximately $153,000, offset by decreased proceeds from the repayment of
related party transactions of approximately $369,000.
Net cash used in financing activities decreased by approximately
$40,000 to $238,644 from $278,547 due to a decrease in proceeds from bank and
other loans of $250,000 and acquisition of treasury stock of approximately
$153,000. These differences were offset by a decrease in payments of bank and
other loans in the amount of approximately $446,000.
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 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
5
<PAGE> 6
employee stock-based compensation provisions of SFAS No. 123 as of July 1, 1996
will require 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 fiscal years ending after December 15, 1997. The
Company will adopt Statement NO. 128 for the year ended June 30, 1998. The
adoption of this standard will not have a material impact on the Company's
earnings per share on a fully dilutive 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
No report on Form 8-K was filed by the Company dated September 16,
1997 regarding a change in auditors during the quarter ended
September 30, 1997.
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
PREPAID INCOME TAXES 39,222
RECEIVABLE FROM RELATED PARTIES, CURRENT PORTION 567,974 373,039
PREPAID EXPENSES AND OTHER CURRENT ASSETS 138,127 451,968
---------- ----------
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'S 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 AND OUTSTANDING 5,588,913 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 INCOME (LOSS)
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 INCOME (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 SECURITIES (16,213)
UNREALIZED GAIN ON MARKETABLE SECURITIES 1,157
OTHER INCOME 32,088
----------- -----------
TOTAL OTHER INCOME (EXPENSE) 23,451 (83,689)
----------- -----------
INCOME (LOSS) BEFORE PROVISION (CREDIT) (150,233) (965,183)
PROVISION (CREDIT) FOR INCOME TAXES (37,593) (378,085)
----------- -----------
NET INCOME (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 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 5,550,582 $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 INCOME (LOSS) (112,640) $ (587,098)
ADJUSTMENTS TO RECONCILE NET INCOME 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
(Gain)Loss on Sale of MKT SEC 16,213
INCREASE IN DEFERRED TAX ASSETS (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)
(INCREASE) DECREASE IN:
PROCEEDS FROM SALE OF MARKETABLE SECURITIES 22,323 --
ACCOUNTS RECEIVABLE (119,657) 178,595
ADVANCES TO FINANCIAL PLANNERS 108,630 (51,989)
SECURITY DEPOSITS (2,367) (7,548)
PREPAID EXPENSES AND OTHER CURRENT ASSETS 213,713 (258,880)
INCREASE(DECREASE)IN:
ACCOUNTS PAYABLE,ACCRUED EXPENSES, AND OTHER CURRENT LIABILITIES (205,055) (72,134)
----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 88,266 (433,780)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (52,600) (270,516)
ACQUISITION OF INTANGIBLE ASSETS (13,655) (166,865)
INVESTMENTS (6,360) --
PURCHASE OF MARKETABLE SECURITIES (23,048) --
PROCEEDS FROM RELATED PARTY TRANSACTIONS (149,424) 219,460
PAYMENTS TO RELATED PARTIES -- (29,000)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (245,087) (246,921)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
ACQUISITION OF T/S (154,874)
PROCEEDS FROM BANK AND OTHER LOANS -- 250,000
PROCEEDS FROM SALE OF COMMON STOCK & EXERCISE OF STOCK OPTIONS 18,025
PAYMENTS OF BANK AND OTHER LOANS (101,487) (547,934)
PROCEEDS FROM STOCK SUBSCRIPTIONS 30,292 19,387
INCURRENCE OF DEFERRED REGISTRATION COSTS (30,600)
NET CASH USED IN FINANCING ACTIVITIES (238,644) (278,547)
----------- -----------
NET INCREASE (DECREASE) IN CASH (395,465) (959,248)
CASH AT BEGINNING OF PERIOD 2,920,489 2,221,795
----------- -----------
CASH AT END OF PERIOD $ 2,525,024 $ 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
<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.
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, JT Securities, Inc., and Progressive
Mailing Service Inc. and have been prepared as if the entities had operated as a
single consolidated group since their respective dates of incorporation. 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.
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 1997 presentation were reclassified to conform with the
1997 presentation.
F-7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GILMAN AND
CIOCIA, INC., CONSOLIDATED FINANCIAL STATEMENTS AT 9/30/97 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,524,315
<SECURITIES> 66,568
<RECEIVABLES> 1,316,692
<ALLOWANCES> 87,500
<INVENTORY> 0
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55,889
0
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<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
