U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Amendment No. 2
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 5, 1999
GILMAN & CIOCIA, INC.
(Name of small business issuer in its charter)
Delaware 000-22996 11-2587324
(State or jurisdiction Commission (I.R.S.Employer
of incorporation or file Identification
organization) number No.)
475 Northern Boulevard, Great Neck, NY 11021
(Address of principal executive offices) (Zip Code)
(516) 482-4860
(Issuer's Telephone Number, Including Area Code)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The following financial statements are hereby incorporated by reference to
the Independent Auditor's Reports and Financial Statements for Prime Capital
Services, Inc., Prime Financial Services, Inc., a New York corporation, and
Asset & Financial Planning Ltd. and the financial statements covered thereby, a
copy of which is included as an exhibit hereto.
Prime Capital Services, Inc. (PCSI), Prime Financial Services, Inc.,
a New York Corporation (Oldco) and Asset & Financial Planning, Ltd.
(AFPL) Audited Combined Balance Sheets as of March 31, 1999 and
April 30, 1998.
PCSI, Oldco and AFPL Audited Combined Statements of Income and
Comprehensive Income for the eleven months ended March 31, 1999 and
the fiscal year ended April 30, 1998.
PCSI, Oldco and AFPL Audited Combined Statements of Changes in
Equity for the eleven months ended March 31, 1999 and the fiscal
year ended April 30, 1998.
PCSI, Oldco and AFPL Audited Combined Statements of Cash Flows for
the eleven months ended March 31, 1999 and the fiscal year ended
April 30, 1998.
PCSI's, Oldco's and AFPL's Notes to Combined Financial Statements
for the eleven months ended March 31, 1999 and the fiscal year ended
April 30, 1998.
(b) Pro-Forma Financial Information.
The following pro forma financial information is included in this Form
8-K.
Gilman & Ciocia, Inc. & Subsidiaries Consolidated Balance Sheet as
of March 31, 1999.
Gilman & Ciocia, Inc. & Subsidiaries Consolidated Statements of
Income for the nine months ended March 31, 1999 and the fiscal year
ended June 30, 1998.
-2-
<PAGE>
(c) Exhibits.
Exhibit No. Description
- ----------- -----------
1* Stock and Asset Purchase Agreement dated April 5, 1999, by and
among Gilman & Ciocia, Inc., a Delaware corporation, Prime
Financial Services, Inc., a Delaware corporation, Prime
Financial Services, Inc., a New York corporation, Michael Ryan
and Ralph Porpora.
2* Non-competition Agreement dated as of April 5, 1999 by and
among Gilman & Ciocia, Inc., a Delaware corporation, Prime
Financial Services, Inc., a New York corporation, Michael Ryan
and Ralph Porpora.
3* Registration Rights Agreement dated April 5, 1999, by and
among Gilman & Ciocia, Inc., a Delaware corporation, Prime
Financial Services, Inc., a New York corporation, Michael Ryan
and Ralph Porpora.
4* Limited Liability Company Interest Option Agreement dated
April 5, 1999, by and between Gilman & Ciocia, Inc. a Delaware
corporation, and Prime Financial Services, Inc., a New York
corporation.
5 Independent Auditor's Report and Financial Statements for
Prime Capital Services, Inc., Prime Financial Services, Inc.,
a New York corporation, and Asset & Financial Planning Ltd.
for the eleven months ended March 31, 1999.
*previously filed with original Form 8
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: June 21, 1999
GILMAN & CIOCIA, INC.
By:/s/ James Ciocia
-------------------
James Ciocia
President (authorized signatory)
PRIME FINANCIAL SERVICES, ET AL
COMBINED FINANCIAL STATEMENTS
MARCH 31, 1999 AND APRIL 30, 1998
<PAGE>
Independent Auditor's Report
To The Board of Directors of
Prime Financial Services, et al
11 Raymond Avenue
Poughkeepsie, New York
We have audited the accompanying combined balance sheets of Prime Financial
Services, et al, as of March 31, 1999 and April 30, 1998, and the related
combined statements of income and comprehensive income, changes in equity, and
cash flows for the eleven months ended March 31, 1999 and for the year ended
April 30, 1998. These combined financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on those
combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Prime Financial Services, et
al, as of March 31, 1999 and April 30, 1998, and the results of their operations
and their cash flows for the eleven months and twelve months then ended in
conformity with generally accepted accounting principles.
Lawrence B. Goodman & Co. P.A.
Certified Public Accountants
Fair Lawn, New Jersey
June 14, 1999
<PAGE>
PRIME FINANCIAL SERVICES, ET AL
COMBINED BALANCE SHEETS
MARCH 31, 1999 AND APRIL 30, 1998
March 31, 1999 April 30,1998
ASSETS
Current Assets
Cash and cash equivalents $1,143,704 $1,345,586
Accounts receivable 1,508,406 1,038,342
Other current assets 2,154 6,784
---------- ----------
Total current assets 2,654,264 2,390,712
---------- ----------
Property and Equipment
Equipment 681,228 595,463
Furniture and fixtures 143,855 140,858
Leasehold improvements 114,951 114,951
---------- ----------
940,034 851,272
Less: Accumulated depreciation 693,406 650,111
---------- ----------
Total property and equipment 246,628 201,161
---------- ----------
Other Assets
Loans receivable 329,540 220,456
Security deposits 9,346 11,845
Officer loans 10,000 130,739
---------- ----------
Total other assets 348,886 363,040
---------- ----------
Total Assets $3,249,778 $2,954,913
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 210,784 $ 234,558
Commissions payable 2,518,864 1,622,244
Notes payable 96,720 152,949
---------- ----------
Total current liabilities 2,826,368 2,009,751
Long-Term Liabilities
Notes payable 138,110 172,329
---------- ----------
Total Liabilities 2,964,478 2,182,080
---------- ----------
Stockholders' Equity
Common stock 1,515 1,515
Additional paid-in capital 334,985 334,985
Accumulated other comprehensive income 25,172 24,335
Asset purchase adjustment (8,608) 392,405
Retained earnings (deficit) (67,764) 19,593
---------- ----------
Total stockholders' equity 285,300 772,833
---------- ----------
Total Liabilities and Stockholders' Equity $3,249,778 $2,954,913
========== ==========
See auditor's report and notes to the financial statements.
<PAGE>
PRIME FINANCIAL SERVICES, ET AL
COMBINED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE ELEVEN MONTHS ENDED MARCH 31, 1999 AND
THE YEAR ENDED APRIL 30, 1998
March 31, 1999 April 30, 1998
Income
Net revenue $17,824,443 $15,562,126
----------- -----------
Operating Expenses
Commissions 14,750,273 12,367,279
Salaries and taxes 1,000,788 1,155,544
Ticket charges 939,609 718,963
Rent 121,050 128,414
Other operating costs 965,319 821,338
----------- -----------
Total operating expenses 17,777,039 15,191,538
----------- -----------
Income from operations 47,404 370,588
----------- -----------
Other Income and (Expenses)
Interest 47,204 256,766
Dividend income 182,865 67,839
Loss on firm trading (67,024) --
Miscellaneous income and expenses 69,223 (91,386)
----------- -----------
Total other income and (expenses) 232,268 233,219
----------- -----------
Income before provision for
corporate income taxes 279,672 603,807
Income taxes (10,559) (8,016)
----------- -----------
Combined net income 269,113 595,791
Other Comprehensive Income
Unrealized gain on investments 837 8,484
----------- -----------
Comprehensive income $ 269,950 $ 604,275
=========== ===========
See auditor's report and notes to the financial statements.
<PAGE>
PRIME FINANCIAL SERVICES, ET AL
COMBINED STATEMENTS OF CASH FLOWS
FOR THE ELEVEN MONTHS ENDED MARCH 31, 1999 AND
THE YEAR ENDED APRIL 30, 1998
March 31, April 30,
1999 1998
Cash flows from operating activities:
Combined net income $ 269,113 $ 595,791
----------- -----------
Adjustments to reconcile consolidated net loss to
net cash provided by operating activities:
Depreciation 43,295 74,521
Unrealized holding gain 837 8,484
Changes in assets and liabilities:
Increase in accounts receivable (470,064) (501,058)
Decrease in other current assets 4,630 3,295
Increase in loans receivable (109,084) (125,151)
Decrease (Increase) in security deposits 2,499 (2,723)
Decrease in officer loans 120,739 --
Decrease in accounts payable and
accrued expenses (23,774) (22,424)
Increase in commissions payable 896,620 694,867
----------- -----------
Total adjustments 465,698 129,811
----------- -----------
Net cash provided by operating activities 734,811 725,602
----------- -----------
Cash flows from investing activities:
Acquisition of property and equipment (88,762) (121,245)
----------- -----------
Cash flows from financing activities:
Proceeds from notes payable 94,939 294,137
Payments on notes payable (185,387) (44,933)
Adjustment for cash activity for assets
and liabilities not part of acquisition (757,483) (164,726)
----------- -----------
Net cash provided (used) by financing activities (847,931) 84,478
----------- -----------
Increase (Decrease) in cash (201,882) 688,835
Cash and cash equivalents at beginning of period 1,345,586 656,751
----------- -----------
Cash and cash equivalents at end of period $ 1,143,704 $ 1,345,586
=========== ===========
See auditor's report and notes to the financial statements.
<PAGE>
PRIME FINANCIAL SERVICES, ET AL
COMBINED STATEMENTS OF CHANGES IN EQUITY
FOR THE ELEVEN MONTHS ENDED MARCH 31, 1999 AND THE YEAR ENDED APRIL 30, 1998
<TABLE>
<CAPTION>
Accumulated
Retained Other Additional Asset
Earnings Comprehensive Common Paid-in Purchase
Total (Deficit) Income Stock Capital Equity
<S> <C> <C> <C> <C> <C> <C>
Balance at May 1, 1997 $ 349,360 ($ 2,991) $15,851 $1,515 $334,985 $ --
Comprehensive Income
Net income 595,791 22,584 -- -- --
573,207
Other Comprehensive Income
Unrealized gain 8,484 -- 8,484 -- --
Asset Purchase Adjustment (180,802) -- -- -- -- (180,802)
--------- ------- ------- ------ -------- --------
Balance at April 30, 1998 772,833 19,593 24,335 1,515 334,985 392,405
Comprehensive Income
Net income 269,113 (87,357) -- -- -- 356,470
Other Comprehensive Income
Unrealized gain 837 -- 837 -- -- --
Asset Purchase Adjustment (757,483) -- -- -- -- (757,483)
--------- ------- ------- ------ -------- --------
Balance at March 31, 1999 $ 285,300 ($67,764) $25,172 $1,515 $334,985 ($ 8,608)
========= ======= ======= ====== ======== ========
</TABLE>
See auditor's report and notes to financial statements.
<PAGE>
PRIME FINANCIAL SERVICES, ET AL
NOTES TO COMBINED FINANCIAL STATEMENTS
MARCH 31, 1999 AND APRIL 30, 1998
Note 1: DESCRIPTION OF BUSINESS
The Company is in the business of selling various insurance products
and offering investment advisory and financial planning services. The
Company is also a broker dealer serving registered sales
representatives. Its principal place of business is located in
Poughkeepsie, New York.
Note 2: COMBINATION POLICY
The accompanying combined financial statements include the accounts of
the following companies:
Prime Financial Services, Inc. (PFS)
Prime Capital Services, Inc. (PCS)
Asset & Financial Planning, Ltd. (AFP)
Intercompany balances and transactions have been eliminated in
combination.
Specific assets, liabilities, and corresponding income and expense
items of PFS have not been included in these combined financial
statements to reflect only those assets and businesses acquired
pursuant to an aquisition agreement dated April 5, 1999. If those
assets, liabilities, and corresponding income and expense items were
included, the Company would have incurred additional expenses of
$573,207 for the eleven months ended March 31, 1999 and additional
expenses of $356,470 for the twelve months ended April 30, 1998. All of
the common stock of PCS and AFP, subsidiary companies of PFS, were to
be acquired, therefore, except for the intercompany eliminating
entries, they are presented in their entirety.
Note 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Cash and Cash Equivalents
The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
b) Accounts Receivable
Accounts receivable are carried without provision for losses
in that management deems all accounts to be realizable.
<PAGE>
c) Depreciation
The cost of property and equipment is depreciated over the
estimated useful lives of the related assets. Depreciation is
computed on the straight-line method for both financial
reporting and income tax purposes. At the time depreciable
assets are retired or otherwise disposed, the cost and the
related accumulated depreciation of such assets are eliminated
from the accounts and any gain or loss is recognized in the
current period.
d) Use of Estimates
The preparation of financial statements requires management to
make estimates and assumptions that affect the amounts
reported in the financial statements. Actual results could
differ from those estimates.
Note 4: PROPERTY AND EQUIPMENT
The useful lives for the purposes of computing depreciation are:
Equipment 5 years
Furniture and fixtures 5 years
Leasehold improvements 39 years
Leasehold improvements, according to generally accepted accounting
principles, should be depreciated over the lesser of the life of the
lease or the life of the leasehold assets. If depreciation had been
calculated over the life of the lease, the difference, deemed
immaterial, is estimated to be about $7,000.
Note 5: LOANS RECEIVABLE
Loans receivable consist of amounts outstanding from various sales
people. These notes are paid back from commissions earned when certain
specified criteria are met. Interest rates vary for each agreement, as
well as the conditions and terms for each agreement.
Note 6: OFFICER LOANS
Amounts due to AFP from its officers at April 30, 1998 were
reclassified as commission expense during the eleven month period ended
March 31, 1999.
Included in officer loans is a non-interest bearing note from Prime
Funding to AFP in the amount of $10,000 with no fixed date of maturity.
The loan is considered to be long-term.
<PAGE>
Note 7: NOTES PAYABLE
Notes payable consist of the following:
<TABLE>
<CAPTION>
March 31, 1999 April 30, 1998
<S> <C> <C>
o Various equipment loans maturing
between December, 1999 and
October, 2001 $170,563 $166,070
o Lawsuit settlements maturing between January, 2000
and October, 2007 with interest calculated at rates
between eight and ten percent.
64,267 159,208
-------- --------
234,830 325,278
Less: Current maturities 96,720 152,949
-------- --------
$138,110 $172,329
======== ========
</TABLE>
Interest expense in the amounts of $24,749 and $66,379 for the
periods ended March 31, 1999 and April 30, 1998, respectively,
were charged to operations.
The scheduled maturities of notes payable are as follows:
Year Ending March 31, 1999
2000 $ 96,720
2001 75,302
2002 25,110
2003 12,054
2004 7,224
Thereafter 18,420
--------
$234,830
========
Note 8: COMMISSIONS PAYABLE
Included in commissions payable are amounts representing referral fees
earned by sales representatives of Gilman & Ciocia, Inc. (the
purchaser) during the period from January 1, 1999 through March 31,
1999.
Note 9: COMMON STOCK
Common stock consists of 5,000 authorized shares of $0.01 par value
stock of PCS, of which 1,525 shares are issued and outstanding, and 100
authorized shares of no par value stock of AFP, all of which is issued
and outstanding. Common stock of PFS is not represented in accordance
with the acquisition agreement dated April 5, 1999.
<PAGE>
Note 10: NET CAPITAL REQUIREMENT
As a registered broker-dealer and member of the National Association of
Securities Dealers, Inc., PCS is subject to Rule 15c3-1 of the
Securities and Exchange Commission which specifies uniform net capital
requirements, as defined, equal to the greater of one-fifteenth of
aggregate indebtedness, as defined, or $100,000. PCS exceeded the
minimum requirements as of March 31, 1999 and April 30, 1998.
Note 11: ASSET PURCHASE ADJUSTMENT
In accordance with the acquisition agreement dated April 5, 1999, PFS
is selling certain assets and liabilities to the purchaser. Therefore,
only those assets and liabilities are presented in these financial
statements. In addition, only the income and expense items that relate
directly or indirectly to these assets and liabilities are presented.
The asset purchase adjustment represents the cumulative effect as of
the balance sheet date.
Note 12: OVERHEAD ALLOCATION
Operating expenses are reduced by an overhead allocation amount that
management deemed reasonable for the divisions of PFS that are not
included in the acquisition agreement. The amount of overhead
allocation that would have been incurred for shared costs was $406,148
and $632,723 for March 31, 1999 and April 30, 1998, respectively.
Note 13: LOSS ON FIRM TRADING
Marketable securities held for trading activities are included in cash
and cash equivalents. They are recorded at market value as of the
balance sheet date. Both realized and unrealized income or losses
derived from these securities are included in the loss on firm trading
account and are treated as ordinary income or losses. Unrealized
holding gains or losses on these securities are estimated to be less
than $10,000 at March 31, 1999 and April 30, 1998 and have been deemed
immaterial.
Note 14: INCOME TAXES
Corporation income tax expense consists of the following components:
1999 1998
Federal $ 451 $5,874
State 8,444 2,142
City 1,663 --
------- ------
$10,558 $8,016
======= ======
<PAGE>
For income tax purposes, the combined results of operation were
included with losses incurred by the Division of PFS that is not
represented in the financial statements. Accordingly, the combined
entities are not responsible for income tax on historical income.
Deferred income taxes, as per FASB 109, were not recorded on the asset
purchase adjustment since the difference between book and taxable
income is considered a permanent difference.
Note 15: SUBSEQUENT EVENTS
Subsequent to the balance sheet date, Gilman & Ciocia, Inc. and its
subsidiary, Prime Financial Services, Inc. (a newly formed Delaware
corporation), purchased the common stock of PCS and AFP and certain
assets and liabilities of PFS.
Note 16: CONTINGENCIES
The Company is involved in litigation in the normal course of
operations. Management believes that liabilities, if any, arising from
such litigation will not have a material adverse effect on the
financial position of the Company.
Note 17: LEASES
The companies lease their office space from Prime Income Partners LP,
an affiliate. These leases, accounted for as operating leases, expire
September 30, 2003.
Minimum future rental payments as of March 31, 1999 and each of the
next five years are as follows:
2000 $161,267
2001 161,267
2002 161,267
2003 161,267
2004 80,634
--------
$725,702
========
<PAGE>
GILMAN & CIOCIA, INC. & SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
<TABLE>
<CAPTION>
Prime
Gilman & Ciocia, Inc. Financial
& Subsidiaries Services Adjustments Pro Forma
-------------- -------- ----------- ---------
ASSETS
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,785,000 $ 1,144,000 $ -- $ 3,929,000
Marketable securities 370,000 -- 370,000
Accounts receivable, net 8,603,000 1,508,000 -- 10,111,000
Receivables from related parties, current portion 1,803,000 -- 1,803,000
Prepaid expenses and other current assets, net 2,520,000 2,000 2,522,000
Deferred tax assets 54,000 -- 54,000
----------- ----------- ----------- -----------
Total current assets 16,135,000 2,654,000 -- 18,789,000
Property and equipment, net 2,060,000 247,000 2,307,000
Intangible assets, net 7,813,000 --(1) 5,059,000 12,872,000
Receivables from related parties, net of current portion 634,000 339,000 973,000
Deferred tax assets 191,000 -- 191,000
Other assets 490,000 9,000 499,000
----------- ----------- ----------- -----------
Total assets $27,323,000 $ 3,249,000 $ 5,059,000 $35,631,000
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loan payable, bank $ 7,000,000 $ -- $ -- $ 7,000,000
Due to former shareholders of acquired companies 575,000 -- -- 575,000
Accounts payable and accrued expenses 2,234,000 2,826,000(2) 150,000 5,210,000
Income taxes payable 2,087,000 -- 2,087,000
----------- ----------- ----------- -----------
Total current liabilities 11,896,000 2,826,000 150,000 14,872,000
Notes payable 138,000 138,000
STOCKHOLDERS' EQUITY 15,427,000 285,000(3) (285,000) 20,621,000
(4) 5,194,000
----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $27,323,000 $ 3,249,000 $ 5,059,000 $35,631,000
=========== =========== =========== ===========
</TABLE>
In preparing the pro forma consolidated balance sheet as of March 31, 1999,
adjustments were made to the historical financial statement to reflect:
(1) goodwill resulting from the acquisition,
(2) an increase in accounts payable pertaining to acquisition costs,
(3) net assets acquired, and
(4) the issuance of 751,000 shares at closing.
<PAGE>
GILMAN & CIOCIA, INC. & SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
Prime
Gilman & Ciocia, Inc. Financial
& Subsidiaries Services Adjustments Pro Forma
-------------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues $ 28,533,000 $ 15,562,000 $ -- $ 44,095,000
Selling, general and administrative expenses 25,130,000 15,191,000(1) 202,000 40,523,000
------------ ------------ ---------- ------------
Operating income 3,403,000 371,000 (202,000) 3,572,000
Other income 15,000 241,000 -- 256,000
------------ ------------ ---------- ------------
Income before income taxes 3,418,000 612,000 (202,000) 3,828,000
Income taxes 1,407,000 8,000(2) 221,000 1,636,000
------------ ------------ ---------- ------------
Net income $ 2,011,000 $ 604,000 $ (423,000) $ 2,192,000
============ ============ ========== ============
Income per share of common stock $ 0.32 $ 0.31
============ ============
Weighted average shares outstanding 6,315,345 (3) 751,000 7,066,345
============ ========== ============
</TABLE>
In preparing the pro forma unaudited consolidated statement of income for the
year ended June 30, 1998, adjustments were made to the historical financial
statement to reflect:
(1) amortization expense resulting from the amortization of goodwill and other
intangible assets, and
(2) additional income taxes that arise as a consolidated subsidiary of Gilman
& Ciocia, Inc. ($237,000) less the tax benefit of adjustment (1) above
($16,000), and
(3) the consideration issuance.
<PAGE>
GILMAN & CIOCIA, INC. & SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
Prime
Gilman & Ciocia, Inc. Financial
& Subsidiaries Services Adjustments Pro Forma
-------------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues $ 31,995,000 $ 14,807,000 $ -- $ 46,802,000
Selling, general and administrative expenses 26,430,000 14,742,000(1) 152,000 41,324,000
------------ ------------ ---------- ------------
Operating income 5,565,000 65,000 (152,000) 5,478,000
Other income (expenses) (70,000) 230,000 -- 160,000
------------ ------------ ---------- ------------
Income before income taxes 5,495,000 295,000 (152,000) 5,638,000
Income taxes 2,251,000 11,000(2) 95,000 2,357,000
------------ ------------ ---------- ------------
Net income $ 3,244,000 $ 284,000 $ (247,000) $ 3,281,000
============ ============ ========== ============
Income per share of common stock $ 0.49 $ 0.44
============ ============
Weighted average shares outstanding 6,677,458 (3) 751,000 7,428,458
============ ========== ============
</TABLE>
In preparing the pro forma unaudited consolidated statement of income for the
nine months ended March 31, 1999, adjustments were made to the historical
financial statement to reflect:
(1) amortization expense resulting from the amortization of goodwill and other
intangible assets, and
(2) additional income taxes that arise as a consolidated subsidiary of Gilman
& Ciocia, Inc. ($107,000) less the tax benefit of adjustment (1) above
($12,000), and
(3) the consideration issuance.
