SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------
FORM 8-K/A No. 1
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 15, 1999
CEREUS TECHNOLOGY PARTNERS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Deleware 33-82468 13-3773537
---------------------------- ------------ ----------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
1000 Abernathy Road
Suite 1000
Atlanta, GA 30328
--------------------------------------- ----------
Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (770)668-0900
-------------
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K,
dated November 15, 1999, as set forth in the pages attached hereto:
Items 7(a) and 7(b) - Historical and Pro Forma
Financial Information
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
CEREUS TECHNOLOGY PARTNERS, INC.
Date: January 31, 2000 By: /s/LEIGH S. ZOLOTO
------------------
Leigh S. Zoloto
Chief Financial Officer and
Secretary
<PAGE>
The Current Report on Form 8-K of Cereus Technology Partners, Inc.,
which prior to December 1, 1999 was named AIM Group, Inc (the "Company"),
dated November 15, 1999, and filed on November 30, 1999, reported the
acquisition by the Company on November 15, 1999 of Client Server Solutions,
Inc. ("CSS"). Items 7(a) and 7(b) of the report stated that the historical
financial statements of CSS required under Rule 3-05 of Regulation S-X, and
the pro forma financial information required under Article 11 of Regulation
S-X would be filed no later than 60 days after the date by which the Form 8-K
was required to be filed. The purpose of this amendment is to file such
financial statements and information.
On January 19, 2000, the Company filed a Form 8-A registering its Common
Stock pursuant to Section 12(g) of the Securities Exchange Act of 1934 (the
"1934 Act"). Due to an Edgar form mistagging of that filing, a new correct
1934 Act file number has not yet been assigned to the Company. Accordingly,
the file number previously used by the Company in connection with its filings
pursuant to Section 15(d) of the 1934 Act has been used in the making of this
filing.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
The following lists the historical financial statements of CSS attached
hereto: Page
Report of Frazier & Deeter, LLC ................................. F-1
Balance sheets as of December 31, 1998........................... F-2
Statements of income and retained earnings for
the years ended December 31, 1998 and 1997 .................... F-4
Statements of cash flows for the years ended
December 31, 1998 and 1997 .................................... F-5
Notes to financial statements ................................... F-8
Balance sheet as of September 30, 1999
(unaudited) ................................................... F-13
Consolidated income statement for the nine months
ended September 30, 1999 (unaudited) .......................... F-14
Statement of cash flow for the nine months
ended September 30, 1999 (unaudited) .......................... F-15
2
<PAGE>
(b) Pro Forma Financial Information.
The following lists the pro forma financial information attached hereto:
Introduction..................................................... F-16
Pro forma balance sheet dated September 30, 1999 ................ F-17
Notes to pro forma balance sheet dated September 30, 1999 ....... F-18
Pro forma statement of operations for the
year ended December 31, 1998 .................................. F-20
Notes to pro forma statement of operations for the
year ended December 31, 1998 .................................. F-21
Pro forma statement of operations for the
nine months ended September 30, 1999........................... F-22
Notes to pro forma statement of operations for the
nine months ended September 30, 1999........................... F-23
(c) Exhibits
The following exhibit is filed herewith.
Exhibit No. Document
----------- --------
23 Accountants' consent
3
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Client Server Solutions, Inc. and Affiliate
Atlanta, Georgia
We have audited the accompanying combined balance sheet of Client Server
Solutions, Inc. and Affiliate as of December 31, 1998, and the related
combined statements of income and retained earnings and cash flows for the
years ended December 31, 1998 and 1997. These combined financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these 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 audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Client Server
Solutions, Inc. and Affiliate as of December 31, 1998, and the results of
their operations and their cash flows for the years ended December 31, 1998
and 1997, in conformity with generally accepted accounting principles.
April 29, 1999 Frazier & Deeter, LLC
F-1
<PAGE>
CLIENT SERVER SOLUTIONS, INC. AND AFFILIATE
COMBINED BALANCE SHEET
DECEMBER 31, 1998
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Current Assets:
Cash $ 37,810 $ -
Accounts receivable, less allowance for doubtful
accounts of $25,000 1,182,182 677,493
Work in process 87,963 -
Unbilled expense reimbursements 5,452 -
Trading securities, at fair value 12,091 8,692
Other current assets 900 900
------------ ------------
Total current assets 1,326,398 687,085
Net property and equipment, at cost 114,273 108,189
------------ ------------
Total Assets $ 1,440,671 $ 795,274
============ ============
</TABLE>
-----------------------------------------------------------------------------
See notes to combined financial statements.
Page F-2
<PAGE>
CLIENT SERVER SOLUTIONS, INC. AND AFFILIATE
COMBINED BALANCE SHEET - CONTINUED
DECEMBER 31, 1998
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Current Liabilities:
Borrowings under line of credit $ 244,160 $ 108,586
Current portion of obligations under capital leases 40,455 39,712
Accounts payable 270,244 28,394
Accrued retirement plan contribution 20,000 231,119
Customer deposits 81,570 9,118
Sales tax payable 105,000 -
Accrued interest due to stockholders 7,169 61,000
Accrued stockholder distributions 75,901 13,514
Due to stockholders 510,003 650
------------ ------------
Total current liabilities 1,354,502 492,093
Obligations under capital leases, less current
portion included above 41,866 52,209
------------ ------------
Total liabilities 1,396,368 544,302
------------ ------------
Commitments - -
Stockholders' Equity:
Common stock, no par value; 2,237 shares
authorized, issued and outstanding - -
Common stock, no par value; 2,237 shares
authorized, issued and outstanding 300 300
Retained earnings 44,003 250,672
------------ ------------
Total stockholders' equity 44,303 250,972
------------ ------------
Total Liabilities and Stockholders' Equity $ 1,440,671 $ 795,274
============ ============
</TABLE>
-----------------------------------------------------------------------------
See notes to combined financial statements.
Page F-3
<PAGE>
CLIENT SERVER SOLUTIONS, INC. AND AFFILIATE
COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
1998 1997
<S> <C> <C>
Revenues $ 4,920,935 $ 3,125,953
Cost of revenues 2,987,296 2,286,043
------------ ------------
Gross profit 1,933,639 839,910
------------ ------------
Operating expenses:
Selling, general and administrative 1,166,811 667,315
Depreciation 53,564 26,476
------------ ------------
1,220,375 693,791
------------ ------------
Operating income 713,264 146,119
------------ ------------
Other income (expense):
Realized and unrealized investment income 3,399 4,031
Interest and service fees expenses (82,921) (21,859)
Miscellaneous income 11,471 17,050
------------ ------------
(68,051) (778)
------------ ------------
Net income 645,213 145,341
Retained earnings, beginning of year 250,672 240,461
Less: Stockholder distributions (851,882) (135,130)
------------ ------------
Retained earnings, end of year $ 44,003 $ 250,672
============ ============
</TABLE>
-----------------------------------------------------------------------------
See notes to combined financial statements.
Page F-4
<PAGE>
CLIENT SERVER SOLUTIONS, INC. AND AFFILIATE
COMBINED STATEMENTS OF CASH FLOWS
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
(DECREASE) INCREASE IN CASH
For the Year Ended December 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 4,415,872 $ 2,640,298
Cash paid to suppliers and other direct expenses (2,913,289) (2,038,762)
Cash paid for selling, general and
administrative expenses (1,146,811) (658,197)
Dividends and interest received - 342
Interest and service fees paid (75,752) (21,859)
------------ ------------
Net cash provided by (used in) operating activities 280,020 (78,178)
------------ ------------
Cash flows from investing activities:
Payments for capital expenditures (22,977) (30,450)
------------ ------------
Net cash (used in) investing activities (22,977) (30,450)
------------ ------------
Cash flows from financing activities:
Excess of outstanding checks over bank balance (39,712) 39,712
Net borrowings on line of credit 135,575 108,586
Stockholder distributions paid (280,142) (121,616)
Cash received from issuance of common stock - 300
Payments on obligations under capital leases (34,954) (22,963)
------------ ------------
Net cash (used in) provided by financing activities (219,233) 4,019
------------ ------------
Net increase (decrease) in cash 37,810 (104,609)
Cash, beginning of year - 104,609
------------ ------------
Cash, end of year $ 37,810 $ -
============ ============
</TABLE>
-----------------------------------------------------------------------------
See notes to combined financial statements.
Page F-5
<PAGE>
CLIENT SERVER SOLUTIONS, INC. AND AFFILIATE
COMBINED STATEMENTS OF CASH FLOWS - CONTINUED
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
For the Year Ended December 31,
1998 1997
<S> <C> <C>
Net income $ 645,213 $ 145,341
------------ ------------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 53,564 26,476
Unrealized investment income (3,399) (3,689)
Changes in assets and liabilities:
(Increase) in accounts receivable (504,689) (479,720)
(Increase) in work in process (87,963) -
(Increase) in unbilled expense reimbursements (5,452) -
(Increase) in other current assets - (73)
Increase in accounts payable 39,125 207,343
Increase in accrued retirement plan contribution 10,882 9,118
Increase (decrease) in customer deposits 81,570 (22,985)
Increase in sales tax payable 44,000 61,000
Increase in accrued interest due to stockholders 7,169 -
(Decrease) in accrued payroll and payroll taxes - (20,989)
------------ ------------
Total adjustments (365,193) (223,519)
------------ ------------
Net cash provided by (used in) operating activities $ 280,020 $ (78,178)
============ ============
</TABLE>
-----------------------------------------------------------------------------
See notes to combined financial statements.
Page F-6
<PAGE>
CLIENT SERVER SOLUTIONS, INC. AND AFFILIATE
COMBINED STATEMENTS OF CASH FLOWS - CONTINUED
-----------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 1998:
The Company acquired fixed assets in the amount of $99,528 by entering into
capital leases in the aggregate amount of $99,528.
FOR THE YEAR ENDED DECEMBER 31, 1997:
The Company acquired fixed assets in the amount of $36,672 by entering into
capital leases in the aggregate amount of $36,672.
-----------------------------------------------------------------------------
See notes to combined financial statements.
Page F-7
<PAGE>
CLIENT SERVER SOLUTIONS, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
-----------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
The combined financial statements include the financial statements of
Client Server Solutions, Inc. and CSS Financial Software Sales, Inc.,
which are related through common ownership and management.
Client Server Solutions, Inc. was incorporated on November 16, 1995 for
the purpose of providing installation and consulting for financial
software for customers primarily in the eastern United States. The
affiliate, CSS Financial Software Sales, Inc., was incorporated on March
15, 1997 for the purpose of selling financial software for customers
primarily in the eastern United States. The combined entities are
collectively referred to as the Company.
The following is a summary of the more important accounting principles
and policies followed by the Company:
REVENUE RECOGNITION
Revenues are recognized when services are performed and when software is
sold and expenses are recognized when the obligation is incurred.
Customers are billed for consulting services generally on a monthly
basis.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation is computed
using accelerated methods over the assets' estimated useful lives.
Expenditures for maintenance and repairs are charged to income as
incurred. Additions and betterments are capitalized. The cost of
properties sold or otherwise disposed of, and the accumulated
depreciation thereon is eliminated from the property and reserve
accounts, and resulting gains and losses are reflected in income.
TRADING SECURITIES
The Company's investment securities that are bought and held principally
for the purpose of selling them in the near term are classified as
trading securities. Trading securities are recorded at fair value with
the change in fair value during the period included in earnings.
Page F-8
<PAGE>
CLIENT SERVER SOLUTIONS, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1998 AND 1997
-----------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED:
INCOME TAXES
The Company and its affiliate, with the consent of its stockholders, has
elected to be an S corporation under the Internal Revenue Code.
Consequently, the Company's income or loss is presented without a
provision or credit for federal and state income taxes. Under this
election, the Company's taxable income or loss and tax credits are
passed through to the individual stockholders.
ADVERTISING
The Company expenses all advertising costs as incurred. The Company
expensed $14,737 and $30,041 in advertising costs during the years ended
December 31, 1998 and 1997, respectively.
USE OF ESTIMATES IN THE PRESENTATION OF COMBINED FINANCIAL STATEMENTS
The preparation of combined financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the combined financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 2 - PROPERTY AND EQUIPMENT:
Property and equipment as of December 31, 1998 is summarized as follows:
<TABLE>
<S> <C>
Furniture, fixtures and equipment $ 28,739
Computer equipment 165,574
----------
Total property and equipment 194,313
Less: Accumulated depreciation
and amortization (80,040)
----------
Net property and equipment, at cost $ 114,273
==========
</TABLE>
Page F-9
<PAGE>
CLIENT SERVER SOLUTIONS, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1998 AND 1997
-----------------------------------------------------------------------------
NOTE 2 - PROPERTY AND EQUIPMENT - CONTINUED:
At December 31, 1998, there was $136,199 of computer equipment and
furniture under capital leases and $58,022 of accumulated depreciation
on equipment under capital leases.
NOTE 3 - CAPITAL LEASE OBLIGATIONS:
The Company leases equipment under non-cancellable capital leases
expiring in 2003. The following is a schedule by years of future minimum
rentals under capital leases, together with the present value of the net
minimum lease payments, as of December 31, 1998:
<TABLE>
<S> <C>
YEAR ENDING DECEMBER 31,
1999 $ 46,866
2000 32,031
2001 7,619
2002 4,722
2003 1,182
---------
Total minimum payments 92,420
Less: Amount representing interest (10,099)
---------
Present value of net minimum lease payments 82,321
Less: Current portion (40,455)
---------
Long-term portion $ 41,866
=========
</TABLE>
NOTE 4 - BORROWINGS UNDER LINE OF CREDIT:
At December 31, 1998, the Company has a $500,000 line of credit
available with a financial institution, bearing interest at prime plus
3.0%. The prime rate at December 31, 1998 was 7.75%. At December 31,
1998, borrowings under this agreement were $244,160. This line of credit
is secured by accounts receivable. (See Note 11).
Page F-10
<PAGE>
CLIENT SERVER SOLUTIONS, INC. AND AFFILIATE
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1998 AND 1997
-----------------------------------------------------------------------------
NOTE 5 - EMPLOYEE BENEFIT PLAN:
The Company has a defined contribution 401(k) profit sharing plan
covering all eligible employees. Under the plan, employees can
contribute up to 15% of their salary. The Company makes a qualified
nonelective employer contribution for all eligible employees. The
Company contributed approximately $20,000 and $9,000 to the plan for the
years ended December 31, 1998 and 1997, respectively.
NOTE 6 - OPERATING LEASES:
The Company leases office facilities and certain office equipment under
non-cancellable operating leases exiring in 2002. Rent expense for
operating leases for the years ended December 31, 1998 and 1997 was
$118,819 and $64,755, respectively.
Total future minimum rentals under operating leases as of December 31,
1998 are as follows:
<TABLE>
<S> <C>
YEAR ENDING DECEMBER 31,
1999 $ 86,869
2000 74,599
2001 60,011
2002 12,131
----------
$ 233,610
==========
</TABLE>
NOTE 7 - CONCENTRATION OF CREDIT RISK:
The Company sells and installs financial software for customers
primarily in the eastern United States. There is a concentration of
customers with respect to trade accounts receivable. Credit evaluations
are performed on each customer and, generally no collateral is required.
Losses pertaining to those credit risks, in the aggregate have not
exceeded managements' expectations.
The Company maintains its cash in accounts which, at times, may exceed
federally insured limits. The Company has not experienced any losses in
such accounts. The Company believes it is not exposed to any significant
credit risk on cash.
Page F-11
<PAGE>
CLIENT SERVER SOLUTIONS, INC. AND AFFILIATE
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1998 AND 1997
-----------------------------------------------------------------------------
NOTE 8 - MAJOR SUPPLIER:
The Company had one major supplier that accounted for all purchases of
financial software in 1998 and 1997.
NOTE 9 - COMMITMENTS AND CONTINGENCIES:
The Company is currently a defendant in a lawsuit filed by a customer
pending arbitration. Due to the factors concerning various issues raised
in the lawsuit, the amount of liability cannot be reasonably estimated.
Management believes that the liability, if any, resulting from this
matter will not have a material impact on the Company's financial
position.
NOTE 10 - STOCKHOLDER BUY-SELL AGREEMENT:
Under the buy-sell agreement, if a stockholder terminates his employment
for any reason (e.g., the stockholder quits, dies, becomes disabled, or
is terminated without cause), the Company will be obligated to pay book
value for his shares of common stock. If, however, a stockholder is
terminated for cause, then the amount payable to the stockholder will be
discounted by twenty-five percent. If a stockholder's employment by the
Company is terminated for any reason other than death or disability
within the first five years of the stockholder's employment by the
Company, the amount paid to the stockholder will be equal to twenty
percent of the book value of his shares multiplied by the number of
years the stockholder has been employed.
NOTE 11 - SUBSEQUENT EVENT:
In February, 1999, the Company negotiated a $400,000 line of credit with
a bank, bearing interest at prime plus 1.5%. This line is secured by all
assets of the Company and the assignment of a $100,000 life insurance
policy on certain stockholders. This line is also personally guaranteed
by two stockholders. As of the report date, the borrowings under this
agreement amounted to $354,193. The previous line of credit has been
terminated.
Subsequent to December 31, 1998, the stockholders signed a letter of
intent to sell the common stock of the Company to a third party.
Page F-12
<PAGE>
CLIENT SERVER SOLUTIONS, INC. AND AFFILIATE
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<S> <C> <C> <C>
CASH & CASH EQUIVALENTS 48,032
ACCOUNTS RECEIVABLE - NET 906,295
PREPAID EXPENSES 900
-----------
TOTAL CURRENT ASSETS 955,227
COMPUTER EQUIPMENT 151,171
OFFICE EQUIPMENT 19,870
COMPUTER SOFTWARE 24,439
FURNITURE AND FIXTURES 26,800
ACCUMULATED DEPRECIATION (80,040)
-----------
TOTAL PROPERTY & EQUIPMENT 142,239
OTHER ASSETS
PREPAYMENT OF NOTE 122,965
MERGER COSTS 153,792
-----------
276,756
TOTAL ASSETS 1,374,222
===========
ACCOUNTS PAYABLE 661,105
OUTSTANDING BILLABLE EXPENSES 98,032
SHORT-TERM CAPITAL LEASES 40,455
LINE OF CREDIT 5,000
-----------
TOTAL CURRENT LIABILITIES 804,593
LONG-TERM LEASES 41,866
LINE OF CREDIT 399,193
-----------
TOTAL LONG TERM LIABILITIES 441,059
-----------
TOTAL LIABILITIES 1,245,652
COMMON STOCK 300
OTHER CONTRIBUTED CAPITAL 593,074
RETAINED EARNINGS- CURRENT YEAR (534,397)
RETAINED EARINIGS 44,003
SHAREHOLDERS DISTRIBUTION CY (99,410)
PRIOR YEAR ADJUSTMENTS 125,000
-----------
TOTAL STOCKHOLDERS' EQUITY 128,570
-----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 1,374,222
===========
</TABLE>
F-13
<PAGE>
CLIENT SERVER SOLUTIONS, INC. AND AFFILIATE
CONSOLIDATED INCOME STATEMENT
FOR NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
SALES 3,225,577
SALES RETURNS & ALLOWANCES (68,153)
MAINTENANCE 58,419
-----------
NET SALES 3,215,843
PURCHASES 361,222
FREIGHT IN 69
-----------
TOTAL COST OF GOODS SOLD 361,291
GROSS MARGIN 2,854,551
OPERATING EXPENSES
DIRECT EXPENSE -EMPLOYEE COMPENSATION 2,248,424
DIRECT EXPENSE - TRAVEL & ENTERTAINMENT 143,132
OTHER DIRECT EXPENSE 8,000
REFERRAL FEE 50,145
CONTRACTOR FEES 231,076
OFFICE SUPPLIES AND UTILITIES 5,120
BENEFIT & PERSONNEL ADMINISTRATION 1,955
BUSINESS INSURANCE 17,974
HEALTH INSURANCE AND OTHER MISC BENEFITS 83,223
DIVISION MEETINGS 4,351
MARKETING 15,440
RENT 63,169
LEGAL 39,308
MERGER EXPENSE 21,819
POSTAGE 10,333
PHONE, PAGERS, FAX 58,121
TRAINING 12,256
FURNITURE RENT 5,307
EQUIP LEASE 60,187
GA SALES & USE TAX 262
SOFTWARE 7,483
BANK CHARGES AND FEES 6,751
PAYROLL TAXES 161,849
PAYROLL PROCESSING FEES 5,462
PRINTING 6,116
ACCOUNTING SERVICES 3,758
TECHNICAL LINES 23,968
EQUIPMENT EXPENSE AND MAINTENANCE 6,158
SHIPPING AND CLEANING EXP 1,800
RECRUITING EXPENSE 26,422
SUBSCRIPTIONS 3,125
BAD DEBT EXPENSE 2,551
SHAREHOLDER'S EXPENSE 23,771
-----------
TOTAL OPERATING EXPENSES 3,358,817
INTEREST EXPENSE 19,391
MISCELLANEOUS 350
SERVICE FEES 10,390
-----------
TOTAL OTHER INCOME & EXPENSES 30,131
NET INCOME (LOSS) BEFORE TAXES (534,397)
===========
</TABLE>
F-14
<PAGE>
CLIENT SERVER SOLUTIONS, INC. AND AFFILIATE
STATEMENT OF CASH FLOW
FOR THE NINE MONTHS ENDED SEPT. 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
CASH FLOW (DEFICIT) FROM OPERATIONS ($185,987)
CASH FLOWS FROM INVESTING ACTIVITIES
PURCHASES OF EQUIPMENT AND FURNITURE (27,966)
-----------
NET CASH USED BY INVESTING ACTIVITIES (27,966)
CASH FLOWS FROM FINANCING ACTIVITIES
SHAREHOLDER DISTRIBUTIONS (99,410)
-----------
NET CASH USED BY FINANCING ACTIVITIES (99,410)
NET INCREASE (DECREASE) IN CASH ($313,363)
===========
</TABLE>
F-15
<PAGE>
PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
UNAUDITED
The following proforma condensed combined balance sheet as of September
30, 1999 and condensed combined statement of operations for the year ended
December 31, 1998 and the nine months ended September 30, 1999, give effect to
Cereus Technology Partners, Inc. (the "Company") acquiring all the outstanding
stock of Client Server Solutions, Inc. and Affiliate ("CSS"). The effective
date of this acquisition is November 15, 1999.
The proforma information is based on the historical financial statements
of the Company and CSS, giving effect to the transactions under the purchase
method of accounting and the assumptions and adjustments in the accompanying
notes to the proforma financial statements. The proforma adjustments include
the private placement of the Company's stock and debt issuance necessary to
complete the acquisition.
The proforma balance sheet gives effect to the transactions as if they
occurred on the balance sheet date. The proforma statements of operations for
the year ended December 31, 1998 and the nine months ended September 30, 1999
give effect to these transactions as if they occurred at the beginning of each
of the periods presented. The historical statement of operations of the
Company will reflect the effects of these transactions from the date of
acquisition.
The proforma combined statements have been prepared by the Company's
management based upon the historical financial statements of the Company and
CSS. These proforma statements may not be indicative of the results that
actually would have occurred if the combination had been in effect on the date
indicated or which may be obtained in the future.
F-16
<PAGE>
CEREUS TECHNOLOGY PARTNERS, INC.
PROFORMA CONSOLIDATED BALANCE SHEET
September 30, 1999
UNAUDITED
<TABLE>
<CAPTION>
ASSETS CEREUS TECH. CLIENT SERVER PROFORMA
PARTNERS, INC. SOLUTIONS, INC. ADJUSTMENTS COMBINED
------------- ------------- ------------- -------------
Current Assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 122,007 $ 48,032 $ (400,000)(1) $ 468,806
(51,233)(1)
750,000 (2)
-------------
Accounts Receivable 722,107 906,295 1,628,402
Inventories 146,627 146,627
Prepaid Expenses and Other 18,466 900 19,366
------------- ------------- -------------
Total Current Assets 1,009,207 955,227 298,767 2,263,201
Resource property 4,036,814 4,036,814
Property, Plant, and Equip. 1,113,131 222,279 1,335,410
Less: Accum. depreciation (413,817) (80,040) (493,857)
------------- ------------- -------------
Net property, plant, and equip. 699,314 142,239 841,553
Investments (cost) 317,388 317,388
Deposits and Patents 51,978 51,978
Other Assets 276,756 276,756
Investment in Subsidiary 5,277,466 (1)
(5,277,466)(3) 0
Goodwill 3,616,123 5,148,896 (3) 8,765,019
Less: Accum. Amortization (40,179) (40,179)
------------- -------------
TOTAL ASSETS $ 9,690,645 $ 1,374,222 $ 5,447,663 $ 16,512,530
============= ============= ============= =============
</TABLE>
F-17
<PAGE>
CEREUS TECHNOLOGY PARTNERS, INC.
PROFORMA CONSOLIDATED BALANCE SHEET
September 30, 1999
UNAUDITED
<TABLE>
<CAPTION>
LIABILITIES AND EQUITY CEREUS TECH. CLIENT SERVER PROFORMA
PARTNERS, INC. SOLUTIONS, INC. ADJUSTMENTS COMBINED
------------- ------------- ------------- -------------
Current Liabilities
<S> <C> <C> <C> <C>
Accounts payable $ 1,061,087 $ 666,106 $ 1,727,193
Notes payable 167,500 $ 167,500
Current portion of LT debt 161,443 40,455 $ 201,898
Accrued Expenses 210,232 98,032 $ 308,264
------------- ------------- ------------- -------------
Promissory notes payable 1,325,000 (2)
250,000 (2) $ 1,575,000
------------- ------------- ------------- -------------
Total Current Liabilities 1,600,262 804,593 1,575,000 $ 3,979,855
Long-term debt less current 284,691 441,059 $ 725,750
Convertible notes payable 600,000 $ 600,000
Subordinated notes payable 750,000 (2)
Promissory notes payable 250,000 (2) $ 1,000,000
Total Liabilities $ 2,484,953 $ 1,245,652 $ 2,575,000 $ 6,305,605
============= ============= ============= =============
STOCKHOLDERS' EQUITY
Common Stock 30,464 300 10,004 (1) $ 40,768
Additional Paid In Capital 9,386,312 493,664 2,991,228 (1)
(128,569)(3) 12,742,635
Retained Earnings(Deficit) (2,201,208) (365,394) $ (2,566,602)
Treasury Stock (9,876) $ (9,876)
Total Stockholders' Equity 7,205,692 128,570 2,872,663 $ 10,206,925
TOTAL LIABILITIES & EQUITY $ 9,690,645 $ 1,374,222 $ 5,447,663 $ 16,512,530
============= ============= ============= =============
</TABLE>
F-18
<PAGE>
NOTES TO PROFORMA BALANCE SHEET AS OF SEPTEMBER 30, 1999
(1) Represents the purchase of Client Server Solutions, Inc (CSS) as
follows:
<TABLE>
<CAPTION>
Purchase Price CSS Finders Fee
<S> <C> <C>
Shares of Stock Issued 983,333 17,078
Issue Price $3.00 $3.00
Total Shares Price 2,949,999 51,233
Cash Paid 400,000 51,233
Debt Issued 1,825,000
Total Purchase Price 5,174,999 102,466
</TABLE>
The issue price of $3.00 per share is stated in the purchase agreements.
This is considered fair value at the date the purchases were announced
based on the market price for the stock at that time and the
restrictions on the stock.
Debt issued is explained in note (2) below.
In connection with the finders fee, certain warrants were issued at a
price above the market price at that time. These warrants have been
assigned no value at this time since any ultimate value is considered
immaterial.
The purchase price is subject to adjustment based on final resolution of
agreed working capital at the purchase date. Based on the information
currently available it is believed that there may be some adjustments to
the purchase price that would be favorable to the Company.
Goodwill of $5,148,896 will be amortized over 15 years under the
straight-line method.
(2) Various debt instruments are being used to finance this acquisition
and include:
a. Subordinated notes for $750,000 used in part for the $400,000 cash
downpayment on the purchase price. The notes carry a 15% interest
rate.
b. Two promissory notes in the amounts of $1,325,000 and $500,000.
The former note bears interest at 8% per annum with $1,149,000 due
in six months from the purchase date and the remainder, $176,000,
due in four months from acquisition date. The $500,000 note bears
interest at 3% with $250,000 due within twelve months of
acquisition and $250,000 due within twenty four months of
acquisition.
(3) Represents purchase accounting adjustments and eliminations of
investments in the company acquired. The acquired assets and liabilities are
considered to approximate fair value, pending further evaluation, and all
excess purchase price over book value acquired is considered to be goodwill.
F-19
<PAGE>
CEREUS TECHNOLOGY PARTNERS, INC.
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
CEREUS ESG And THE
TECHNOLOGY REDDY GROUP CLIENT SERVER PROFORMA
PARTNERS, INC GROUP, INC.(1) SOLUTIONS, INC. ADJUSTMENTS COMBINED
------------- -------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Sales 2,085,398 1,643,790 4,935,805 8,664,993
Cost of Sales 1,546,904 1,014,647 2,987,296 5,548,847
------------- ------------- ------------- ------------
Gross Profit 538,494 629,143 1,948,509 3,116,146
Operating Expenses
Selling and Administrative 612,832 448,788 1,166,811 120,000 (1) 2,348,431
Interest 204,009 1,042 82,921 188,500 (1,2) 476,472
Depreciation and Amortization 73,259 27,791 53,564 589,538 (1,3) 744,152
------------- ------------- ------------- ------------- -------------
Total Operating Expenses 890,100 477,621 1,303,296 898,038 3,569,055
Operating Income (loss) (351,606) 151,522 645,213 (898,038) (452,909)
Income (loss) before inc taxes (351,606) 151,522 645,213 (898,038) (452,909)
Income taxes (4)
Net Income (loss) (351,606) 151,522 645,213 (898,038) (452,909)
============= ============= ============= ============= =============
Basic and diluted earnings per share:
Net Loss available to common shareholders (351,606) (452,909)
Imputed non-cash preferred stock dividend (67,500) (67,500)
------------- -------------
Loss available to common shares (419,106) (520,409)
Weighted average common shares
outstanding (1),(5) 1,325,016 3,742,843
Basic and diluted earnings per share: (0.32) (0.14)
</TABLE>
F-20
<PAGE>
NOTES TO PROFORMA STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1999
1. Enterprise Solutions Group, Inc. ("ESG") and The Reddy Group, Inc.
were companies acquired by Cereus Technology Partners, Inc.
(formerly AIM Group, Inc.) on July 30, 1999. The financial results
of these companies for August and September, 1999 are included in
the Company's reporting column on this report and come from the
Company's 10-Q filing with the SEC for the quarter ended September
30, 1999. The financial results for the two acquired companies
prior to acquisition are shown in a separate column on the report
and represent the seven month period of January 1, 1999 through
July 31, 1999.
2. Represents provision for interest on acquisition debt per the
following:
a. Subordinated notes at 15%
b. Promissory notes: 1,325,000 at 8% and 500,000 at 3%.
3. Represents provision for amortization of goodwill using a 15 year
life.
4. Due to net loss and no deferred taxes, no tax benefit is provided.
5. Includes all new shares issued as if outstanding for the full
period.
F-21
<PAGE>
CEREUS TECHNOLOGY PARTNERS, INC.
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
UNUADITED
<TABLE>
<CAPTION>
CEREUS ESG And THE
TECHNOLOGY REDDY GROUP CLIENT SERVER PROFORMA
PARTNERS, INC GROUP, INC.(1) SOLUTIONS, INC. ADJUSTMENTS COMBINED
------------- -------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Sales $ 2,441,816 $ 1,491,646 $ 3,215,843 $ 7,149,305
Cost of Sales 1,753,800 730,936 361,291 $ 2,846,027
------------- ------------- ------------- -------------
Gross Profit 688,016 760,710 2,854,552 4,303,278
Operating Expenses
Selling and Administrative 1,010,489 389,091 3,369,558 $ 4,769,138
Interest 133,171 445 19,391 135,750 (2) $ 288,757
Depreciation and Amortization 93,930 21,146 257,445 (3) $ 372,521
------------- ------------- ------------- ------------- -------------
Total Operating Expenses 1,237,590 410,682 3,388,949 393,195 5,430,416
Operating Income (loss) (549,574) 350,028 (534,397) (393,195) (1,127,138)
Income (loss) before inc taxes (549,574) 350,028 (534,397) (393,195) (1,127,138)
Income taxes (4)
Net Income (loss) (549,574) 350,028 (534,397) (393,195) (1,127,138)
============= ============= ============= ============= =============
Basic and diluted earnings per share:
Net Loss available to common
shareholders: (549,574) (1,127,138)
Weighted average common shares
outstanding (5) 1,799,794 2,800,205
Basic and diluted earnings per share: (0.31) (0.40)
============= =============
</TABLE>
F-22
<PAGE>
NOTES TO PROFORMA STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER
31, 1998
1. Enterprise Solutions Group, Inc. ("ESG") and The Reddy Group, Inc.
were companies acquired by Cereus Technology Partners, Inc.
(formerly AIM Group, Inc.) on July 30, 1999. The financial results
for the two acquired companies are shown in a separate column on
the report and represent the twelve month period of January 1,
1998 through December 31, 1998 per each company's certified audit
report. Anticipated annual goodwill amortization of $246,278,
annual interest on acquisition debt of $7,500, and the provision
for annual salary for a new company officer of $120,000 are shown
in this statement. Additionally, the common shares needed for
these acquisitions documented in the Company's prior Form 8-K,
1,342,416, are provided for in the earnings per share calculations
on this statement.
2. Represents provision for interest on acquisition debt per the
following:
a. Subordinated notes at 15%
b. Promissory notes: 1,325,000 at 8% and 500,000 at 3%.
3. Represents provision for amortization of goodwill using a 15 year
life.
4. Due to net loss and no deferred taxes, no tax benefit is provided.
5. Includes all new shares issued as if outstanding for the full
period.
F-23
EXHIBIT 23
ACCOUNTANTS' CONSENT
We consent to the inclusion of our report, dated April 29, 1999,
relating to the combined balance sheet of Client Server Solutions, Inc. and
Affiliate as of December 31, 1998 and the related combined statements of
income and retained earnings and cash flows for the years ended December 31,
1998 and 1997 of that company, in the amendment to the Current Report on Form
8-K of Cereus Technology Partners, Inc.
January 31, 2000 Frazier & Deeter, LLC
