| UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 |
||||
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
September 1, 2004
SEGMENTZ, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 000-49606 | 03-0450326 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 18302 Highwoods Preserve Parkway, Suite 100, Tampa, FL | 33647 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code
(813) 989-2232
| Not applicable |
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On September 1, 2004, Segmentz acquired all of the issued and outstanding stock of Express-1, Inc., a privately owned provider of third party logistics services. The stock of Express-1, Inc. was acquired from 5 nonaffiliated individual accredited shareholders. Prior to the closing of the transaction Segmentz had no material relationship with any of the selling shareholders.
The purchase price for the stock of Express-1, Inc., included a $6,000,000 cash payment, the issuance of 50,000 shares of restricted common stock of Segmentz, and the issuance of warrants to purchase 2,928,571 shares of common stock of Segmentz at an exercise price of $1.75 per share. The consideration also includes an earn-out provision under which Segmentz could be required to pay up to an additional $6,500,000 in cash and restricted common stock to the selling shareholders over the following 3 years, depending on the performance of Express-1, Inc.
The effective date of the closing is August 1, 2004.
A copy of the Stock Purchase Agreement setting forth the terms of the transaction is incorporated by reference to Exhibit 10.1 to that certain Form 8-K filed by Segmentz with the Commission on August 13, 2004.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
| (a) | Financial Statements of Business Acquired |
Express-1, Inc.
December 31, 2003 and 2002
CONTENTS
| Page | ||||
| FINANCIAL STATEMENTS | ||||
| Report of Independent Certified Public Accountants | F - 1 | |||
| Balance Sheets | F - 2 | |||
| Statements of Operations | F - 3 | |||
| Statement of Stockholders’ Equity | F - 4 | |||
| Statements of Cash Flows | F - 5 | |||
| Notes to Financial Statements | F - 6 | |||
Report of Independent Certified Public Accountants
To the Board of Directors
and Stockholders of
Express-1 Inc.
We have audited the accompanying balance sheet(s) of Express-1, Inc. as of December 31, 2003 and 2002 and the related statements of operations, changes in stockholders’ equity, and cash flows for the years, then ended. These financial statements are the responsibility of the management of Express-1, Inc. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. These 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 Express 1, Inc. as of December 31, 2003 and 2002 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Pender Newkirk & Company
Certified Public Accountants
Tampa, Florida
August 27, 2004
F - 1
BALANCE SHEETS
| December 31, | ||||||
| 2003 |
2002 | |||||
| ASSETS | ||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 5,300 | $ | 1,000 | ||
| Accounts receivable, net of allowance for doubtful accounts of $27,000 and $12,000, respectively |
2,730,925 | 1,240,909 | ||||
| Prepaid expenses and other current assets |
57,900 | 117,972 | ||||
| Total current assets |
2,794,125 | 1,359,881 | ||||
| Property and equipment, net of accumulated depreciation |
728,118 | 700,842 | ||||
| Total assets |
$ | 3,522,243 | $ | 2,060,723 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities: |
||||||
| Accounts payable |
$ | 213,247 | $ | 304,986 | ||
| Line of credit |
751,303 | 258,541 | ||||
| Accrued salaries and wages |
294,120 | 265,918 | ||||
| Accrued owner / operator expenses |
425,653 | 52,232 | ||||
| Accrued liabilities, other |
504,254 | 74,450 | ||||
| Current portion of notes payable |
24,569 | 35,148 | ||||
| Total current liabilities |
2,213,146 | 991,275 | ||||
| Notes payable, less current portion |
7,654 | 32,223 | ||||
| Total liabilities |
2,220,800 | 1,023,498 | ||||
| Commitments and contingencies |
— | — | ||||
| Stockholders’ equity: |
||||||
| Common stock, $40 par value, 1,250 authorized, 125 issued and outstanding at December 31, 2003, and 2002 |
5,000 | 5,000 | ||||
| Additional paid in capital |
55,800 | 55,800 | ||||
| Retained earnings |
1,240,643 | 976,425 | ||||
| Total stockholders’ equity |
1,301,443 | 1,037,225 | ||||
| Total liabilities and stockholders’ equity |
$ | 3,522,243 | $ | 2,060,723 | ||
The accompanying notes are an integral part of these financial statements.
F - 2
Express, Inc.
| For the Year Ended December 31, |
||||||||
| 2003 |
2002 |
|||||||
| Operating revenues |
$ | 15,860,957 | $ | 12,856,177 | ||||
| Cost of services |
11,000,668 | 9,118,444 | ||||||
| Gross profit |
4,860,289 | 3,737,733 | ||||||
| Selling, general and administrative expenses |
4,290,819 | 3,497,469 | ||||||
| Other income |
(45,974 | ) | (29,811 | ) | ||||
| Net income |
$ | 615,444 | $ | 270,075 | ||||
The accompanying notes are an integral part of these financial statements.
F - 3
STATEMENT OF STOCKHOLDERS’ EQUITY
For the Years Ended December 31, 2003 and 2002
| Common Stock |
Common Stock |
Additional Paid in Capital |
Retained Earnings |
Total |
||||||||||||
| Balance at December 31, 2001 |
125 | $ | 5,000 | $ | 55,800 | $ | 908,798 | $ | 969,598 | |||||||
| Distributions to stockholders |
— | — | — | (202,448 | ) | (202,448 | ) | |||||||||
| Net income |
— | — | — | 270,075 | 270,075 | |||||||||||
| Balance at December 31, 2002 |
125 | 5,000 | 55,800 | 976,425 | 1,037,225 | |||||||||||
| Distributions to stockholders |
— | — | — | (351,226 | ) | (351,226 | ) | |||||||||
| Net income |
— | — | — | 615,444 | 615,444 | |||||||||||
| Balance at December 31, 2003 |
125 | $ | 5,000 | $ | 55,800 | $ | 1,240,643 | $ | 1,301,443 | |||||||
The accompanying notes are an integral part of these financial statements.
F - 4
For the Years Ended December 31, 2003 and 2002
| For the Years Ended December 31, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 615,444 | $ | 270,075 | ||||
| Adjustments to reconcile net operations to net cash used in operating activities: |
||||||||
| Depreciation |
235,223 | 236,746 | ||||||
| Adjustments to allowance for doubtful accounts |
15,000 | — | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(1,505,016 | ) | (62,181 | ) | ||||
| Prepaid expenses and other current assets |
60,072 | 10,100 | ||||||
| Accounts payable |
(91,739 | ) | (48,180 | ) | ||||
| Accrued salaries and wages |
28,202 | 64,205 | ||||||
| Accrued owner / operator expense |
429,804 | 26,149 | ||||||
| Accrued liabilities |
206,617 | (2,687 | ) | |||||
| Net cash (used in) provided by operating activities |
(6,393 | ) | 494,227 | |||||
| Cash flows from investing activities: |
||||||||
| Purchases of property and equipment |
(291,481 | ) | (278,597 | ) | ||||
| Proceeds from sale of equipment |
28,982 | 20,015 | ||||||
| Net cash used in investing activities |
(262,499 | ) | (258,582 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Proceeds and payments on line of credit, net |
492,762 | (32,729 | ) | |||||
| Principal payments on notes payable |
(35,148 | ) | (30,918 | ) | ||||
| Proceeds from issuance on notes payable |
— | 30,615 | ||||||
| Distributions to stockholders |
(184,422 | ) | (202,448 | ) | ||||
| Net cash provided by (used in) financing activities |
273,192 | (235,480 | ) | |||||
| Net increase in cash and cash equivalents |
4,300 | 165 | ||||||
| Cash and cash equivalents at beginning of period |
1,000 | 835 | ||||||
| Cash and cash equivalents at end of period |
$ | 5,300 | $ | 1,000 | ||||
| Supplemental disclosure of cash flow information: |
||||||||
| Cash paid: |
||||||||
| Interest |
$ | 12,988 | $ | 24,384 | ||||
| Non-cash financing activity |
||||||||
| Accrued distribution to stockholders |
$ | 166,804 | $ | — | ||||
The accompanying notes are an integral part of these financial statements.
F - 5
1. Description of Business and Organization
Express-1, Inc. (“Express-1” or “the Company”) is incorporated in the state of Michigan and headquartered in Buchanan, Michigan. The Company is engaged in the business of expedited trucking and is licensed to carry cargo in the 48 continental states and Canada. The Company runs automobiles, cargo vans, straight trucks and tractor-trailers and charter planes. These vehicles run under the Company’s authority in addition to brokering freight to other approved carriers to provide their customers service. The Company’s customer base is made up primarily of manufacturers located in the Midwest and Southeast United States.
Express-1 was founded in 1989 in a small business incubator in Niles, Michigan with a cargo van, a straight truck and a pager. The Company has forged a partnership between drivers and management to build Express-1’s reputation as a premier trucking company. The company currently occupies a 20,000 square foot facility in Buchanan, Michigan and regularly contracts with over 150 owner operators all equipped with the latest telecommunication technology. Express-1 is ISO 9001-2000 certified and has embraced this management philosophy and practice throughout its operations.
2. Summary of Significant Accounting Policies
Method of accounting
The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. These principles require 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 financial statements and the reported amounts of revenues and expenses during the reporting period. The Company reviews its estimates, including but not limited to, purchased transportation, recoverability of long-lived assets and allowance for doubtful accounts, on a regular basis and makes adjustments based on historical experiences and existing and expected future conditions. These evaluations are performed and adjustments are made, as information is available. Management believes that these estimates are reasonable; however, actual results could differ from these estimates.
Cash and cash equivalents
Cash and cash equivalents are defined as highly liquid investments that have original maturities of three months or less. The majority of cash is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk.
F - 6
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies – Continued
Accounts receivable
The Company extends credit to its various customers based on the customer’s ability to pay. The Company provides for estimated losses on accounts receivable considering a number of factors, including the overall aging of the receivables, previous history with the customer and the customer’s current ability to pay its obligation to the Company. Based on management’s review of accounts receivable, an allowance for doubtful accounts of approximately $27,000 and approximately $12,000 is considered necessary as of December 31, 2003 and 2002, respectively. The Company does not accrue for interest on delinquent accounts.
Property and equipment
Property and equipment are stated at cost. Expenditures for maintenance and repair costs are expensed as incurred. Major improvements that increase the estimated useful life of an asset are capitalized. Depreciation is computed using an accelerated method of depreciation over the following estimated useful lives of the related assets:
| Years | ||
| Office furniture |
7-10 | |
| Office equipment |
5-7 | |
| Automotive |
5-7 | |
| Communication equipment |
3-5 | |
| Trucks |
3-5 | |
| Leasehold improvements |
Lease term |
Prepaid expenses and other current assets
Prepaid expenses and other current assets consist primarily of prepaid insurance.
Revenue recognition
Operating revenues for expediting services are recognized on the date the freight is delivered. Related costs of deliveries, which includes accrued owner / operator expense, are accrued as incurred and are also recognized when the freight is delivered.
Income taxes
The Company, with the consent of the stockholders, has elected under Sections 1361 through 1379 (sub-chapter S) of the Internal Revenue Code to be treated substantially as a partnership instead of as a corporation for income tax purposes. As a result, the stockholders will report the entire corporate taxable income and investment credit on their individual tax returns. Therefore, no provision for income taxes has been made to these financial statements.
F - 7
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies – Continued
Estimated fair value of financial instruments
Management estimates that the aggregate net fair value of financial instruments recognized on the statements of financial condition (including cash and cash equivalents, receivables, payables, and short-term borrowings) approximates their carrying value, as such financial instruments are short-term in nature, bear interest at current market rates, or are subject to re-pricing.
Retirement Plans
The Company sponsors a 401k profit sharing plan covering substantially all of its employees with one year of service. The Company matches 50 percent of the employee elected deferrals up to a total of 3 percent of the employees’ compensation. Total expense was approximately $49,000 and approximately $43,000 in 2003 and 2002, respectively.
The company also sponsors a defined contribution money purchase plan covering substantially all of its employees with one year of service. Total expense was approximately $170,000 and approximately $184,000 in 2003 and 2002, respectively.
3. Property and Equipment
Property and equipment consists of the following:
| December 31, |
||||||||
| 2003 |
2002 |
|||||||
| Office furniture |
$ | 171,756 | $ | 155,566 | ||||
| Office equipment |
524,666 | 401,617 | ||||||
| Automotive |
126,862 | 126,862 | ||||||
| Communication equipment |
599,095 | 469,118 | ||||||
| Trucks |
380,701 | 480,405 | ||||||
| 1,803,080 | 1,633,568 | |||||||
| Less: Accumulated depreciation |
(1,074,962 | ) | (932,726 | ) | ||||
| $ | 728,118 | $ | 700,842 | |||||
Depreciation expense of property and equipment totaled approximately $235,000 and approximately $237,000 for 2003 and 2002, respectively.
F - 8
NOTES TO FINANCIAL STATEMENTS
4. Line of Credit
The Company has a line of credit with a bank that is collateralized by substantially all assets of the Company in addition to certain non-Company assets and due on demand. The note bears interest at the bank’s prime rate, an effective rate of 4.00 percent and 4.25 percent, at December 31, 2003 and 2002, respectively. The balance includes checks written in anticipation of draws on the line of credit. To maintain this line of credit, Express-1 agreed to certain financial covenants, which include a minimum: net worth, debt ratio and current ratio. The company is not in compliance with all financial covenants for the year ended December 31, 2003 of which the bank waived compliance. The line of credit is limited to 70% of eligible accounts receivable with a maximum of $1,250,000. There was approximately $440,000 available under the line of credit as of December 31, 2003.
The Company has an outstanding letter of credit drawn in favor of its auto liability insurance carrier. The letter of credit allows draws up to approximately $66,000 at December 31, 2003 and 2002. No draws have been made on the letter of credit to date. The current letter of credit expires on April 25, 2004.
5. Notes Payable
The Company has entered into various notes to purchase equipment, which are collateralized by that equipment. The terms range from three to five years with interest rates ranging up to 0.9% with varying payoff dates through 2005.
The balances outstanding on the above debt instruments are as follows:
| December 31, | ||||||
| 2003 |
2002 | |||||
| Equipment notes |
$ | 32,223 | $ | 67,371 | ||
| Less: current portion |
24,569 | 35,148 | ||||
| Long-term portion of notes payable |
$ | 7,654 | $ | 32,223 | ||
Minimum principal payments on long-term debt to maturity as of December 31, 2003 are as follows:
| 2004 |
$ | 24,569 | |
| 2005 |
7,654 | ||
| Total |
$ | 32,223 | |
F - 9
NOTES TO FINANCIAL STATEMENTS
6. Commitments and Contingencies
Lease commitments
The following is a schedule by year of future minimum payments required under operating leases that have an initial or remaining non-cancelable lease term in excess of one year as of December 31, 2003:
| 2004 |
$ | 65,938 | |
| 2005 |
37,974 | ||
| 2006 |
2,754 | ||
| 2007 |
1,770 | ||
| 2008 |
|||
| Thereafter |
— | ||
| $ | 108,436 | ||
The Company rents equipment and facilities under operating leases with lease terms of less than one year.
Rent expense amounted to approximately $284,000 and approximately $353,000 for the years ended December 31, 2003 and 2002, respectively.
Litigation
In the ordinary course of business, the Company may be a party to a variety of legal actions that affect any business. The Company does not anticipate any of these matters or any matters in the aggregate to have a material adverse effect on the Company’s business or its financial position or results of operations.
Regulatory compliance
The Company’s activities are regulated by state and federal regulatory agencies under requirements that are subject to broad interpretations. The Company cannot predict the position that may be taken by these third parties that could require changes to the manner in which the Company operates.
F - 10
NOTES TO FINANCIAL STATEMENTS
7. Related Party Transactions
The company has entered in the following transactions with related parties having substantially the same ownership as Express-1, Inc.:
| December 31, 2003 |
December 31, 2002 | |||||
| Receivable/Payable |
||||||
| Receivable Express-1 Transportation, LLC |
$ | 2,648 | $ | 2,867 | ||
| Receivable Express-1 Properties, LLC |
— | 53,544 | ||||
| Income/Expense |
||||||
| Management fees received from Express-1 Transportation, LLC |
38,563 | 50,398 | ||||
| Building rent paid to Express-1 Properties, LLC |
130,000 | 120,000 | ||||
| Supplies purchased from Express-1 Transportation, LLC |
$ | 10,508 | $ | 15,587 | ||
The Company is related through common ownership and control to Express-1 Properties Inc., which owns the headquarters building in Buchanan Michigan. The financial statements reflect the financial position and results of operations of only Express-1 Inc. During the year ended December 31, 2003 and 2002 the Company paid approximately $130,000 and $120,0000 in month-to-month rent payments to Express-1 Properties Inc., respectively.
Express-1 Properties has a mortgage of approximately $723,000 and approximately $765,000 at December 31, 2003 and 2002, respectively. Express-1 Properties Inc. had depreciation expense of approximately $43,000 and approximately $49,000 and interest expense of approximately $48,000 and approximately $53,000 for the year ended December 31, 2003 and 2002, respectively.
From time to time, the Company charges Express-1 Transportation, LLC a management fee as determined by the officers of the Company.
The above amounts are not necessarily indicative of the amounts that would have been incurred had comparable transactions been entered into with independent parties.
| 8. | Subsequent Events |
Effective as of August 1, 2004, Segmentz, Inc. acquired all of the outstanding capital stock of Express-1 Inc. Segmentz Inc. paid $6,000,000 cash, 2,928,571 options to buy common stock and 50,000 shares of Segmentz, Inc.’s common stock. In addition to the initial payment, the stockholders will be able to receive additional consideration in the form of an earn-out based on revenue and gross margin targets.
F - 11
| (b) | Pro Forma Financial Information |
The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2004 of Segmentz, Inc. (“Segmentz”) and Express-1 Inc (“Express-1”). The Unaudited Pro Forma Condensed Consolidated Income Statement for the Six-months Ended June 30, 2004 of Segmentz and Express-1. The Unaudited Pro Forma Condensed Consolidated Income Statement for the Year Ended December 31, 2003 for Segmentz, Dasher Express Inc. (Dasher) and Express-1. Management has included Dasher for the year ended December 31, 2003, as it is more indicative of historical performance of the current combined entities. The following table includes pro-forma adjustments for the estimated fair value of Express-1.
3
Segmentz, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
June 30, 2004
Historical
| Pro-Forma Adjustments |
|||||||||||||||
| Segmentz |
Express-1 |
Pro-Forma |
|||||||||||||
| Assets |
|||||||||||||||
| Current assets |
|||||||||||||||
| Cash and cash equivalents |
$ | 9,239,631 | $ | 800 | $ | (6,000,000 | )(1) | $ | 3,240,431 | ||||||
| Trade receivables, net |
4,981,135 | 3,515,076 | 8,496,211 | ||||||||||||
| Prepaid expenses and other current assets |
1,556,200 | 179,744 | 1,735,944 | ||||||||||||
| Total current assets |
15,776,966 | 3,695,620 | (6,000,000 | ) | 13,472,586 | ||||||||||
| Equipment, net |
3,170,314 | 824,405 | 3,994,719 | ||||||||||||
| Goodwill and other intangible assets |
1,550,446 | 4,765,851 | (2) | 6,316,297 | |||||||||||
| Other assets |
955,300 | 955,300 | |||||||||||||
| Loans and advances |
100,401 | 100,401 | |||||||||||||
| $ | 21,553,427 | $ | 4,520,025 | $ | (1,234,149 | ) | $ | 24,839,303 | |||||||
| Liabilities and Stockholders’ Equity |
|||||||||||||||
| Current liabilities |
|||||||||||||||
| Accounts payables |
$ | 751,449 | $ | 784,534 | $ | 1,535,983 | |||||||||
| Accrued salaries and wages |
265,601 | 243,124 | 508,725 | ||||||||||||
| Accrued expenses, other |
501,120 | 904,208 | 250,000 | (1) | 1,655,328 | ||||||||||
| Line of credit |
550,569 | 550,569 | |||||||||||||
| Short-term portion of long-term debt |
205,928 | 122,519 | 328,447 | ||||||||||||
| Other current liabilities |
10,450 | 10,450 | |||||||||||||
| Total current liabilities |
1,734,548 | 2,604,954 | 250,000 | 4,589,502 | |||||||||||
| Long-term liabilities |
283,056 | 180,922 | 463,978 | ||||||||||||
| Deferred tax liabilities |
450,979 | 450,979 | |||||||||||||
| Stockholders Equity |
|||||||||||||||
| Common stock |
26,097 | 5,000 | (4,950 | )(1) | 26,147 | ||||||||||
| Additional paid in capital |
19,748,912 | 55,800 | 194,150 | (1) | 19,998,862 | ||||||||||
| Retained earnings |
(690,165 | ) | 1,673,349 | (1,673,349 | )(1) | (690,165 | ) | ||||||||
| Total stockholders’ equity |
$ | 21,553,427 | $ | 4,520,025 | $ | (1,234,149 | ) | $ | 24,839,303 | ||||||
| (1) | Adjustments for purchase of all outstanding Express-1 Inc. stock (cash, stock and options) and $250,000 estimated acquisition costs. |
| (2) | Adjustment for purchase price allocation. |
4
Segmentz, Inc.
Unaudited Pro Forma Condensed Consolidated Income Statement
Six-months Ended June 30, 2004
Historical
| Pro-forma Adjustments |
||||||||||||||||
| Segmentz |
Express-1 |
Pro-forma |
||||||||||||||
| Sales, net |
$ | 14,188,842 | $ | 11,538,921 | $ | 25,727,763 | ||||||||||
| Cost of services |
11,690,090 | 8,135,250 | 19,825,340 | |||||||||||||
| Gross profit |
2,498,752 | 3,403,671 | 5,902,423 | |||||||||||||
| Selling, general and administrative |
3,732,134 | 2,382,889 | 140,000 | (3) | 6,255,023 | |||||||||||
| (Loss) income before tax provision |
(1,233,382 | ) | 1,020,782 | (140,000 | ) | (352,600 | ) | |||||||||
| Provision for income tax |
(435,000 | ) | 374,627 | (1) | (51,380 | )(1) | (111,753 | ) | ||||||||
| Net (loss) income |
$ | (798,382 | ) | $ | 646,155 | $ | (88,620 | ) | $ | (240,847 | ) | |||||
| Basic loss per share |
$ | (0.04 | ) | — | $ | (0.01 | ) | |||||||||
| Basic weighted average shares |
21,443,788 | 50,000 | (2) | 21,493,788 | ||||||||||||
| Diluted loss per share |
$ | (0.04 | ) | — | $ | (0.01 | ) | |||||||||
| Diluted weighted average shares |
21,443,788 | 50,000 | (2) | 21,493,788 | ||||||||||||
| (1) | Pro forma taxes estimated at 36.7% |
| (2) | Initial shares issued related to the Express-1 acquisition |
| (3) | Estimated additional amortization expense related to the Express-1 acquisition, $280,000 per year |
5
Segmentz, Inc.
Unaudited Pro Forma Condensed Consolidated Income Statement
For the Year Ended December 31, 2003
Historical
| Pro-forma Adjustments |
|||||||||||||||||||
| Segmentz |
Dasher |
Express-1 |
Pro-forma | ||||||||||||||||
| Sales, net |
$ | 14,687,754 | $ | 6,728,249 | $ | 15,860,957 | (179,090 | )(6) | $ | 37,097,870 | |||||||||
| Cost of services |
11,118,710 | 5,440,675 | 11,000,668 | (179,090 | ) | 27,380,963 | |||||||||||||
| Gross profit |
3,569,044 | 1,287,574 | 4,860,289 | — | 9,716,907 | ||||||||||||||
| Selling, general and administrative |
3,391,846 | 1,308,501 | 4,244,845 | 361,083 | (4)(5) | 9,306,275 | |||||||||||||
| (Loss) income before tax provision |
177,198 | (20,927 | ) | 615,444 | (361,083 | ) | 410,632 | ||||||||||||
| Provision for income tax |
(25,965 | ) | (7,680 | )(1) | 225,868 | (1) | (132,517 | )(1) | 59,706 | ||||||||||
| 203,163 | (13,247 | ) | 389,576 | (228,566 | ) | 350,926 | |||||||||||||
| Net (loss) income |
|||||||||||||||||||
| Gain on repurchase of preferred stock |
174,268 | 174,268 | |||||||||||||||||
| Net income (loss) applicable to common stock |
$ | 377,431 | $ | (13,247 | ) | $ | 389,576 | $ | (228,566 | ) | $ | 525,194 | |||||||
| Basic income per share |
$ | 0.04 | $ | 0.06 | |||||||||||||||
| Basic weighted average shares |
9,403,695 | (3) | 50,000 | (2) | 9,453,695 | ||||||||||||||
| Diluted income per share |
$ | 0.04 | $ | 0.05 | |||||||||||||||
| Diluted weighted average shares |
10,630,956 | (3) | 50,000 | (2) | 10,680,956 | ||||||||||||||
| (1) | Pro forma taxes estimated at 36.7% |
| (2) | Initial shares issued related to the Express-1 acquisition |
| (3) | Initial shares issued related to the Dasher acquisition are included in the December 31, 2003 totals for Segmentz |
| (4) | Estimated additional amortization expense related to the Express-1 acquisition, $280,000 per year |
| (5) | Estimated additional amortization expense related to the Dasher acquisition, $81,083 per year |
| (6) | Elimination of inter-company transaction |
6
| (c) | Exhibits |
| 10.1 | Stock Purchase Agreement (incorporated by reference to Exhibit 10.1 to that certain Form 8-K filed by Segmentz with the Commission on August 13, 2004). | |
| 10.2 | Amendments to Stock Purchase Agreement (incorporated by reference to Exhibit 10.1 to that certain Form 8-K filed by Segmentz with the Commission on August 13, 2004. | |
| 10.3 | Promissory note from Segmentz, Inc. to the Payees of Express-1, Inc. | |
| 99.1 | Express-1 Inc. Audited financial statements for the six-months ended June 30, 2004 and for the year ended December 31, 2003. | |
| 99.2 | Express-1 Inc. Unaudited financial statements for the six-months ended June 30, 2004 and 2003 | |
| 99.3 | Marshall Stevens Inc. Fairness opinion | |
| 99.4 | Mike Welch Employment Agreement and Amendment | |
| 99.5 | Jim Welch Employment Agreement and Amendment | |
| 99.6 | John Welch Employment Agreement | |
| 99.7 | Keith Avery Employment Agreement and Amendment | |
7
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SEGMENTZ, INC. | ||
| By: |
/s/ Andrew J. Norstrud | |
| Name: |
Andrew J. Norstrud | |
| Title: |
Chief Financial Officer | |
Date: October 22, 2004
8
Exhibit Index
| Exhibit No. |
Description | |
| 10.2 | Amendments to Stock Purchase Agreement (incorporated by reference to Exhibit 10.1 to that certain Form 8-K filed by Segmentz with the Commission on August 13, 2004. | |
| 10.3 | Promissory note from Segmentz, Inc. to the Payees of Express-1, Inc. | |
| 99.1 | Express-1 Inc. Audited financial statements for the six-months ended June 30, 2004 and December 31, 2003. | |
| 99.2 | Express-1 Inc. Unaudited financial statements for the six-months ended June 30, 2004 and 2003 | |
| 99.3 | Marshall Stevens Inc. Fairness opinion | |
| 99.4 | Mike Welch Employment Agreement and Amendment | |
| 99.5 | Jim Welch Employment Agreement and Amendment | |
| 99.6 | John Welch Employment Agreement | |
| 99.7 | Keith Avery Employment Agreement and Amendment | |