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 23, 2008
Brookside Technology Holdings Corp.
(Exact name of registrant as specified in its charter)
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Florida
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333-133253
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20-3634227
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(State or Other Jurisdiction)
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(Commission File Number)
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(IRS Employer Identification No.)
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15500 Roosevelt Blvd,
Suite 101
Clearwater, FL 33760
(Address of principal executive offices) (zip code)
(727) 535-2151
(Registrants telephone number, including area code)
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 (see General Instruction
A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Introductory Note
On September 29, 2008, Brookside Technology Holdings Corp (the Company) filed a current Report on
Form 8-K (the Current Report) to report the acquisition of all of the membership interest of
Standard Tel Networks, LLC, a California limited liability company. The Company is filing this
amendment to the Current Report to include the financial statements required under Item 9.01.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of the Business Acquired
FINANCIAL STATEMENTS OF STANDARD TEL NETWORKS, LLC
Index to Financial Statements Contents
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Report of Independent Registered Public Accounting Firm PMB Helin, Donovan, LLP
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4
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Financial Statements
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Balance Sheets as of September 30, 2008 and 2007
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5
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Statements of Operations for the years ended September 30, 2008 and 2007
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6
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Statements of Members Equity (Deficit) for the years ended September 30, 2008 and 2007
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7
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Statements of Cash Flows for the years ended September 30, 2008 and 2007
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8
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Notes to Financial Statements
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9
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(b) Pro Forma Financial Statements (unaudited)
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS OF
U.S. VOICE & DATA, LLC
Index to Contents
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Introduction to Pro Forma Financial Information
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16
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Financial Statements
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Proforma Balance Sheet as of September 30, 2008 (unaudited)
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18
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Proforma Statement of Operations for the nine months
ended September 30, 2008 (unaudited)
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19
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Proforma Statement of Operations for the year
ended December 31, 2007 (unaudited)
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20
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2
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Brookside Technology Holdings Corp.
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By:
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/s/ Bryan McGuire
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Bryan McGuire, Chief Financial Officer
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Dated: December 5, 2008
- 3 -
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Standard Tel Networks, LLC
We have audited the accompanying balance sheets of Standard Tel Networks, LLC (the Company) as of
September 30, 2008 and 2007, and the related statements of operations, members equity (deficit)
and cash flows for the years then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with the standards of the Public Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit 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 financial statements referred to above present fairly, in all material
respects, the financial position of Standard Tel Networks, LLC as of September 2008 and 2007, and
the results of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles in the United States of America.
As discussed in Note 10 of the financial statements, Brookside Technology Holdings Corp. acquired
all of the outstanding membership interests of Standard Tel Networks, LLC on September 26, 2008.
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/s/ PMB Helin Donovan, LLP
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December 4, 2008
Austin, Texas
- 4 -
STANDARD TEL NETWORKS, LLC
BALANCE SHEETS
As of September 30, 2008 and September 30, 2007
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September 30,
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September 30,
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2008
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2007
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ASSETS
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Current assets
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Cash and cash equivalents
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$
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522,319
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$
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178,299
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Accounts receivable, net
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1,176,392
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1,375,016
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Inventory
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902,777
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742,505
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Prepaid expenses
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27,543
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18,148
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Total current assets
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2,629,031
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2,313,968
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Property and equipment
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Office equipment
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318,077
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305,219
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Furniture, fixtures and leasehold improvements
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158,522
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158,471
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Vehicles
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168,474
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168,474
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645,073
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632,164
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Less: accumulated depreciation
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(522,396
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(478,233
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Property and equipment, net
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122,677
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153,931
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Deposits
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15,050
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23,030
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TOTAL ASSETS
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$
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2,766,758
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$
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2,490,929
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LIABILITIES AND MEMBERS EQUITY (DEFICIT)
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Liabilities
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Current liabilities
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Accounts payable and accrued expenses
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$
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434,461
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$
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583,582
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Billings in excess of revenues
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1,842,579
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1,398,371
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Payroll liabilities
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299,695
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389,638
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Current portion of long term debt
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21,308
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24,269
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Other current liabilities
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53,180
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72,355
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Total
current liabilities
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2,651,223
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2,468,215
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Long term debt, less current portion
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66,160
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87,586
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Total liabilities
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2,717,383
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2,555,801
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Members equity (deficit)
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49,375
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(64,872
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TOTAL LIABILITIES AND
MEMBERS EQUITY (DEFICIT)
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$
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2,766,758
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$
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2,490,929
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See accompanying notes and independent auditors report.
- 5 -
STANDARD TEL NETWORKS, LLC
STATEMENTS OF OPERATIONS
For the Years Ended September 30, 2008 and 2007
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Years Ended September 30,
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2008
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2007
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REVENUES
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Installation and other services
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$
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2,662,720
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$
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2,617,679
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Equipment sales
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6,579,732
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8,566,308
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Total revenues
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9,242,452
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11,183,987
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COST OF SALES
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3,274,858
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4,461,740
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GROSS PROFIT
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5,967,594
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6,722,247
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OPERATING EXPENSES
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General and administrative
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5,654,901
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7,168,171
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Depreciation expense
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44,163
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30,047
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Total operating expenses
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5,699,064
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7,198,218
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OTHER INCOME (EXPENSE)
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Interest expense
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(18,982
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(16,157
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Gain on disposal of asset
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6,593
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Other income (expenses), net
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7,433
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Total other income (expense)
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(11,549
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(9,564
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INCOME (LOSS) BEFORE
INCOME TAXES
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256,981
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(485,535
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Income tax expense
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(13,711
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(18,598
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NET INCOME (LOSS)
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$
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243,270
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$
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(504,133
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See accompanying notes and independent auditors report.
- 6 -
STANDARD TEL NETWORKS, LLC
STATEMENTS OF MEMBERS EQUITY (DEFICIT)
For the years ended September 30, 2008 and 2007
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Year ended September 30,
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2008
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2007
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BEGINNING BALANCE
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$
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(64,872
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$
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575,008
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NET INCOME (LOSS)
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243,270
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(504,133
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DISTRIBUTIONS TO MEMBERS
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(129,023
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(135,747
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ENDING BALANCE
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$
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49,375
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$
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(64,872
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See accompanying notes and independent auditors report.
- 7 -
BROOKSIDE TECHNOLOGY PARTNERS, INC
STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 2008 and 2007
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2008
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2007
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net income (loss)
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$
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243,270
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$
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(504,133
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Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
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Depreciation
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44,163
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30,047
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Gain on disposal of asset
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(6,593
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(Increase) decrease in:
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Accounts receivable
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198,624
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331,214
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Inventory
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(160,272
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475,156
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Prepaid expenses
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(9,395
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)
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85,294
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Deposits and other assets
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7,980
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(2,552
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)
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Increase (decrease) in:
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Accounts payable and accrued expenses
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(149,121
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(464,632
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Accrued payroll liabilities
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(89,943
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350,582
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Billings in excess of revenues
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444,208
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(320,570
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)
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Other
current liabilities
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(19,175
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)
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57,930
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267,069
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535,876
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NET CASH PROVIDED BY OPERATING ACTIVITIES
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510,339
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31,743
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CASH FLOWS FROM INVESTING ACTIVITIES
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Acquisition of equipment
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(12,909
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)
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(115,277
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)
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Cash proceeds from disposal of asset
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6,593
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NET CASH USED IN INVESTING ACTIVITIES
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(12,909
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)
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(108,684
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)
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CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from long term debt
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116,154
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Repayment of long term debt
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(24,387
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)
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(4,299
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)
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Distribution to members
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(129,023
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)
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(135,747
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)
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NET CASH USED IN FINANCING ACTIVITIES
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(153,410
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)
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(23,892
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NET INCREASE (DECREASE) IN CASH
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344,020
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(100,833
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)
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CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
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178,299
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279,132
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CASH AND
CASH EQUIVALENTS AT END OF YEAR
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$
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522,319
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$
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178,299
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SUPPLEMENTAL DISCLOSURE
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Income taxes paid
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$
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(13,711
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)
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|
$
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(18,598
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)
|
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|
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|
|
|
|
|
|
|
|
|
|
|
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Interest paid
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$
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(18,982
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)
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|
$
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(16,157
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)
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|
|
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|
|
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|
See accompanying notes and independent auditors report.
- 8 -
Standard Tel Networks, LLC
Notes To Financial Statements
September 30, 2008 and 2007
Note 1 Nature of business and summary of significant accounting policies
Nature of business
Standard Tel Networks, LLC, a California Limited Liability Company, (the
Company), is engaged in the sale, installation, and service of telephone communications systems
in California. Sales and installation take place principally under fixed priced contracts. The
length of the contracts vary but are typically less than three months. The Company is
headquartered in Huntington Beach, California and has additional offices in San Diego, Sacramento
and Dublin, California. The Company operates on a fiscal year, beginning October 1 and ending
September 30.
Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 financial statements and the reported amounts of revenues
and expenses during the reported period. Actual results could differ from those estimates.
Cash and cash equivalents
For purposes of the statements of cash flows, the Company considers
short-term investments, which may be withdrawn at any time without penalty, and restricted cash,
which will become available within one year from the date of the financial statements, to be cash
equivalents.
Revenue recognition
The Company derives its revenues primarily from sales of converged VOIP
telecommunications equipment and professional services implementation/installation, data and
wireless equipment and installation, recurring maintenance/managed service and network service
agreements and other services. The Company recognizes revenue in accordance with SEC Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB 101), as amended
by SAB No. 104 Revenue Recognition, Corrected Copy (SAB 104). Under SAB 101 and SAB 104,
revenue is recognized when there is persuasive evidence of an arrangement, delivery has occurred or
services have been rendered, the sales price is determinable, and
collectibility is reasonably
assured. Sales are recorded net of discounts, rebates, and returns.
The Company primarily applies the percentage-of-completion method and generally recognizes revenue
based on the relationship of total costs incurred to total projected costs. Profits expected to be
realized on such contracts are based on total estimated sales for the contract compared to total
estimated costs, including warranty costs, at completion of the contract. These estimates are
reviewed and revised periodically throughout the lives of the contracts, and adjustments to profits
resulting from such revisions are made cumulative to the date of the change. Provision for
anticipated losses on uncompleted contracts is made in the period in which such losses become
evident.
Revenue from contracts that contain multiple elements that are not accounted for under the
percentage-of-completion method are accounted for in accordance with Emerging Issues Task
Force (EITF) Issue No. 00-21, Accounting for Revenue Arrangements with Multiple
Deliverables. Revenue from these contracts is allocated to each respective element based on
each elements relative fair value, if determinable, and is recognized when the respective
revenue recognition criteria for each element are fulfilled. The Company recognizes revenue
from the equipment sales and installation services using the percentage of completion method.
The services for maintaining the systems we install are sold as a stand-alone contract and
treated
- 9 -
Standard Tel Networks, LLC
Notes To Financial Statements
September 30, 2008 and 2007
Note 1 Nature of business and summary of significant accounting policies (continued)
according to the terms of the contractual arrangements then in effect. Revenue from this
maintenance service is generally recognized over the term of the subscription period or the
terms of the contractual arrangements then in effect. A majority of equipment sales and
installation services revenues are billed in advance on a monthly basis based upon the fixed
price, and are included both in accounts receivable and billings in excess of revenues on the
accompanying balance sheets. Direct costs incurred on such contracts are deferred until the
related revenue is recognized and are included in inventory on the accompanying balance
sheets. The Company also provides professional services (maintenance/managed services) on a
fixed price basis. These services are billed as bundles and or upon completion of the
services.
Trade accounts and contracts receivable
Credit is extended based on an evaluation of the
customers financial condition, and generally collateral is not required. Management estimates an
allowance for uncollectible trade accounts and contracts receivable through specific identification
of known collection problem accounts based on past due status and through the utilization of
historical trend information. Trade accounts and contracts receivable are charged-off when
management has exhausted collection attempts and concludes the amounts are uncollectible. Trade
accounts and contract receivables are considered past due based on invoice or contract terms, as
applicable. Management believes all trade accounts and contracts receivable as of September 30,
2008 and 2007 are fully collectible; therefore, no allowance for doubtful accounts has been
recorded.
Inventory
Inventory consists of telecommunications equipment and related purchased parts.
Inventory is recorded at the lower of cost (first-in, first-out) or market.
Property and equipment
Net property and equipment is stated at cost less accumulated depreciation
and amortization. Depreciation and amortization is provided for using the straight-lined method
over the estimated useful lives of the related assets, which range from five to seven years.
Amortization of leasehold improvements is provided for using the straight-line method over the term
of the lease or the estimated useful lives of the assets, whichever is shorter.
Deferred Income
Deferred income arises in the ordinary course of business from advance
maintenance payments required under maintenance contracts. The maintenance contracts are typically
for a one-year period, are billed and collected in advance of the maintenance period, and are
non-cancelable. There are no refunds given against these contracts even if the customer ceases
business or chooses another vendor prior to contract expiration. Revenue from maintenance
contracts is earned ratably over the contract term.
Warranty expense
The Company provides customers a variety of warranties covering workmanship and
performance on certain products. Warranty costs are charged to operations in the year in which the
warranty claim is made. If a warranty reserve method was used, it would not have a material effect
on the financial statements. Warranty expense totaled approximately $111,000 and $138,000 for the
years ended September 30, 2008 and 2007, respectively.
Shipping and handling costs
Shipping and handling costs are expensed as incurred and included in
cost of contract revenue in the accompanying statements of operations. Shipping and handling costs
totaled approximately $46,000 and $70,000 for the years ended September 30, 2008 and 2007,
respectively.
- 10 -
Standard Tel Networks, LLC
Notes To Financial Statements
September 30, 2008 and 2007
Note 1 Nature of business and summary of significant accounting policies (continued)
Advertising expense
The Company charges all advertising expenses to operations when incurred.
Advertising expense totaled approximately $14,000 and $29,000 for the years ended September 30,
2008 and 2007, respectively.
Income taxes
The Company has elected under the Internal Revenue Service to be taxed as a
partnership. Accordingly, no Federal income taxes are paid by the Company since the taxable income
or loss is reported by the members on their individual income tax returns. California and local
income taxes are provided for in the accompanying statements of operations.
Note 2 Billings in Excess of Revenue
Costs, estimated earnings, and billings on uncompleted contracts as of September 30, 2008 and 2007
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
Customer deposits and deferred income on
installation contracts
|
|
$
|
944,436
|
|
|
$
|
718,006
|
|
Deferred revenue on maintenance contracts
|
|
|
898,143
|
|
|
|
680,365
|
|
|
|
|
|
|
|
|
|
|
$
|
1,842,571
|
|
|
$
|
1,398,371
|
|
|
|
|
|
|
|
|
Note 3 Debt
Long-term debt as of September 30, 2008 and 2007 consists of the following:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
Six notes payable to bank; interest at 9.75%;
monthly payment of principal and interest of
$2,274 through June 2012; secured by six
vehicles with a total net book value of
approximately $54,000 as of September 30, 2008.
|
|
$
|
87,468
|
|
|
$
|
104,109
|
|
|
Note payable to shareholder
|
|
|
|
|
|
|
7,746
|
|
|
|
|
|
|
|
|
|
Total long term debt
|
|
|
87,468
|
|
|
|
111,855
|
|
Less current portion
|
|
|
(21,308
|
)
|
|
|
(24,269
|
)
|
|
|
|
|
|
|
|
Long term portion
|
|
$
|
66,160
|
|
|
$
|
87,586
|
|
|
|
|
|
|
|
|
- 11 -
Standard Tel Networks, LLC
Notes To Financial Statements
September 30, 2008 and 2007
Note 3 Debt (continued)
Principal maturities of long-term debt as of September 30, 2008 are as follows:
|
|
|
|
|
2009
|
|
$
|
21,308
|
|
2010
|
|
|
19,777
|
|
2011
|
|
|
25,674
|
|
2012
|
|
|
20,709
|
|
|
|
|
|
|
|
|
$
|
87,468
|
|
|
|
|
|
Note 4 Commitments
The Company leases its operating facilities and certain vehicles under noncancellable operating
leases expiring in various years through 2012. The lease agreements for office facilities contain
one five-year renewal option and obligate the Company for its prorated share of the common area
maintenance expenses, taxes, and insurance costs.
Minimum future lease payments under noncancellable operating leases having initial or remaining
terms in excess of one year as of September 30, 2008 are as follows:
|
|
|
|
|
2009
|
|
$
|
175,551
|
|
2010
|
|
|
82,752
|
|
2011
|
|
|
71,437
|
|
2012
|
|
|
73,277
|
|
2013
|
|
|
12,264
|
|
|
|
|
|
|
Total future minimum lease payments
|
|
$
|
415,281
|
|
|
|
|
|
Rental expense under the facilities totaled $204,589 and $284,704 for the years ended September 30,
2008 and 2007, respectively.
Note 5 Defined contribution retirement plan
The Company sponsors a defined contribution plan covering substantially all Company employees.
Eligible employees may contribute up to $15,000 of their annual compensation. The Company did
not make any contributions to the plan in the years ended September 30, 2008 and 2007.
- 12 -
Standard Tel Networks, LLC
Notes To Financial Statements
September 30, 2008 and 2007
Note 6 Concentrations, risks and uncertainties
Historically, the Company has purchased a significant portion of its inventory from one supplier,
Mitel. Mitel manufactures and supplies telephone equipment under the brand names Mitel and
Inter-tel. Management believes other suppliers would provide similar items on comparable
terms. A change in its current relationship with this supplier, however, could cause a delay
in customer service and a possible loss of sales, which could present significant adverse
financial consequences to the Company. However, the Companys management feels a relationship
with a similar supplier could be developed in a timely manner to minimize any potential
adverse financial impact to the Company.
Historically the Company maintains cash deposits at financial institutions in excess of federally
insured limits. As of September 30, 2008, cash deposits totaled approximately $507,000 in
excess of federally insured limits.
Revenues are concentrated in the telecommunications industry, which is highly competitive and
rapidly changing. Significant technological changes in the industry or customer requirements,
or the emergence of competitive products with new capabilities or technologies could adversely
affect operating results.
During the years ended September 30, 2008 and 2007 sales and net receivables (receivables billed,
plus unbilled receivables, less billings in excess of revenues) by customers with more than
10% of revenue or the total of accounts and unbilled receivables balances were as follows:
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer
|
|
Revenues
|
|
Receivables
|
|
|
|
Customer A
|
|
Less than 10%
|
|
$
|
216,703
|
|
|
|
15.8
|
%
|
Customer B
|
|
Less than 10%
|
|
$
|
249,428
|
|
|
|
18.1
|
%
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer
|
|
Revenues
|
|
Receivables
|
|
|
|
Customer C
|
|
Less than 10%
|
|
$
|
130,227
|
|
|
|
11.1
|
%
|
Note 7 Related Party Transactions
The Company had a note payable to a shareholder of the Company in the amount of $7,746 at
September 30, 2007. This note was repaid in the year ended September 30, 2008.
- 13 -
Standard Tel Networks, LLC
Notes To Financial Statements
September 30, 2008 and 2007
Note 8 Cost of Sales
For the years ended September 30, 2008 and 2007, costs of sales consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
|
|
|
September 30,
|
|
|
|
2008
|
|
|
2007
|
|
Equipment costs
|
|
$
|
3,045,937
|
|
|
$
|
4,135,055
|
|
Contract labor
|
|
|
73,028
|
|
|
|
98,896
|
|
Direct labor
|
|
|
109,967
|
|
|
|
158,200
|
|
Freight
|
|
|
45,926
|
|
|
|
69,589
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,274,858
|
|
|
$
|
4,461,740
|
|
|
|
|
|
|
|
|
Note 9 General and Administrative Expenses
For the years ended September 30, 2008 and 2007, general and administrative expenses consisted of
the following:
|
|
|
|
|
|
|
|
|
|
|
Nine months Ended
|
|
|
|
September 30,
|
|
|
|
2008
|
|
|
2007
|
|
Employee compensation and
|
|
$
|
4,367,467
|
|
|
$
|
5,549,965
|
|
Bad Debt Expense
|
|
|
2,625
|
|
|
|
9,416
|
|
Repairs and maintenance
|
|
|
73,209
|
|
|
|
111,379
|
|
Travel expense
|
|
|
276,137
|
|
|
|
434,223
|
|
Occupancy
|
|
|
204,589
|
|
|
|
284,704
|
|
Professional fees
|
|
|
133,818
|
|
|
|
104,386
|
|
Other
|
|
|
597,056
|
|
|
|
674,098
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,654,901
|
|
|
$
|
7,168,171
|
|
|
|
|
|
|
|
|
- 14 -
Standard Tel Networks, LLC
Notes To Financial Statements
September 30, 2008 and 2007
Note 10 Acquisition by Brookside Technology Holdings Corp
On September 23, 2008, Brookside Technology Holdings Corp. (Brookside Holdings), through its
wholly owned subsidiary, Standard Tel Acquisitions, LLC (Acquisition Sub), acquired the Company.
The acquisition was conducted pursuant to a Stock and Membership Interest Purchase Agreement dated
July 17, 2008 (the Purchase Agreement), and was structured as the acquisition of (a) all of the
stock of Trans-West Network Solutions, Inc. (Trans-West) from the shareholders of Trans-West (the
Trans-West Shareholders) and (b) all of the membership interest of the Company owned by ProLogic
Communication, Inc. (ProLogic and collectively with the Trans-West Shareholders, the Seller
Parties). Trans-West, a holding company with no operations, owns eighty percent (80%) of the
membership interest of the Company and ProLogic owned the other twenty percent (20%), and,
accordingly, Acquisition Sub now owns (directly, in part, and indirectly through Trans West, in
other part) one hundred percent (100%) of the Company. Prior to the acquisition, Brookside Holdings
did not have any relationship with the Seller Parties.
At the closing of the acquisition, Brookside Holdings issued to the Seller Parties 40,843,376
shares of Brookside Holdingss common stock and paid to the Seller Parties $3,209,263 in cash.
However, pursuant to the Purchase Agreement, one-half of such shares and $500,000 of the cash
payment are being held in escrow subject to certain post-closing purchase price adjustments and
indemnification obligations.
In connection with the acquisition, Brookside Holdings entered into Restrictive Covenant Agreements
with the Seller Parties, pursuant to which the Seller Parties, subject to certain limited
exceptions, agree not to use or disclose confidential information belonging to Brookside Holdings
or the Company and not to compete with Brookside Holdings nor to solicit its customers or
employees. Additionally, Brookside Holdings caused the Company to enter into an Employment
Agreement with Michael Promotico, with an initial term of three years, pursuant to which he will
serve as the Companys Chief Executive Officer (the Employment Agreement).
The Employment Agreement contains standard terms and provisions, including non-competition and
confidentiality provisions and provisions relating to early termination and constructive
termination, and provides for an annual base salary, performance incentives, certain standard
benefits and stock options at an exercise price equal to the fair market value of the shares on the
closing date.
- 15 -
Unaudited Pro Forma Condensed Combined
Consolidated Financial Statements
The following unaudited pro forma condensed combined financial information and explanatory
entries present how the combined financial statements of Brookside Technology Holdings Corp.
(Brookside or the Company), Standard Tel Networks, LLC (STN) and U.S. Voice & Data, LLC
(USVD) have been combined as of September 30, 2008 (with respect to the balance sheet) and
for the nine months ended September 30, 2008 and for the year ended December 31, 2007 (with
respect to the statement of operations) had the acquisitions occurred at the beginning of each
period. The unaudited pro forma condensed combined financial information shows an impact on
the merger of the Brookside, STN and USVD on the financial position and results of operations
under the purchase method of accounting with Brookside treated as the acquirer. Under this
method of accounting, the assets and liabilities of STN and USVD are recorded by Brookside at
the estimated fair values as of the date the merger is completed.
Amounts reported in the Companys Form 10-Q for the third
quarter ended September 30, 2008 were slightly different than
the amounts reported in the Unaudited Pro Forma Condensed Combined
Consolidated Financial Statements. Such differences are considered
immaterial.
On September 23, 2008, the Company, through its wholly owned subsidiary, Standard Tel Acquisitions,
Inc. (Acquisition Sub), acquired Standard Tel Networks, LLC (STN), an independent distributor
of high quality, turnkey converged voice and data business communications products and services
with California offices in the San Francisco Bay Area, Sacramento, San Diego and headquartered in
Huntington Beach. The acquisition was conducted pursuant to a previously-disclosed Stock and
Membership Interest Purchase Agreement dated July 17, 2008 (the Purchase Agreement), and was
structured as the acquisition of (a) all of the stock of Trans-West Network Solutions, Inc.
(Trans-West) from the shareholders of Trans-West (the Trans-West Shareholders) and (b) all of
the membership interest of STN owned by ProLogic Communication, Inc. (ProLogic and collectively
with the Trans-West Shareholders, the Seller Parties). As previously reported, Trans-West, a
holding company with no operations, owns eighty percent (80%) of the membership interest of STN and
ProLogic owned the other twenty percent (20%), and, accordingly, the Company now owns (directly, in
part, and indirectly through Trans West, in other part) one hundred percent (100%) of STN.
Collectively, the forgoing transactions are referred to in this Current Report as the STN
Acquisition. Prior to the STN Acquisition, the Company did not have any relationship with the
Seller Parties.
At the closing of the STN Acquisition, the Company issued to the Seller Parties 40,843,376 shares
of the Companys common stock and paid to Seller Parties $3,209,262.70 in cash. However, pursuant
to the Purchase Agreement, one-half of such shares and $500,000 of the cash payment are being held
in escrow subject to certain post-closing purchase price adjustments and indemnification
obligations.
In connection with the STN acquisition, the Company entered into Restrictive Covenant Agreements
with the Seller Parties, pursuant to which the Seller Parties, subject to certain limited
exceptions, agree not to use or disclose confidential information belonging to the Company or STN
and not to compete with the Company nor to solicit its customers or employees. Additionally, the
Company caused STN to enter into an Employment Agreement with Michael Promotico, with an initial
term of three years, pursuant to which he will serve as STNs Chief Executive Officer (the
Employment Agreement). The Employment Agreement contains
standard terms and provisions, including non-competition and confidentiality provisions and
provisions relating to early termination and constructive termination, and provides for an annual
base salary, performance incentives, certain standard benefits and stock options at an exercise
price equal to the fair market value of the shares on the closing date.
The Acquisition of the Company was accounted for under the purchase method of accounting which
requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at
their respective fair market value. The judgments made in determining the estimated fair values
assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can
materially impact net income. The acquisition was accounted for using the purchase method of
accounting. The purchase price was allocated to the assets acquired and liabilities assumed, based
on estimated fair values at the date of the acquisition. The value of assets and liabilities was
estimated based on purchase price and future intended use.
- 16 -
Unaudited Pro Forma Condensed Combined
Consolidated Financial Statements
The unaudited pro forma condensed combined financial information is presented for illustrative
purposes only and does not indicate the financial results of the combined companies had the
companies actually been combined as of the dates indicated. The financial information has been
derived from and should be read together with the historical consolidated financial statements and
the related notes of Brookside, reflected in its quarterly and annual SEC filings, and of STN
appearing elsewhere in this document. In addition, as explained more fully in the accompanying
notes to the unaudited pro forma condensed combined financial information, the allocation of the
purchase price reflected in the pro forma condensed combined financial information is preliminary
and is subject to adjustment and may vary from the actual purchase price allocated that will be
recorded as of the effective date of the merger.
- 17 -
Brookside Technology Holdings Corp
Pro Forma Balance Sheet
September 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brookside
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology
|
|
|
|
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
Holdings Corp
|
|
|
STN
|
|
|
Adjustments
|
|
|
Combined
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,476,592
|
|
|
$
|
522,319
|
|
|
$
|
|
|
|
$
|
1,998,911
|
|
Restricted cash
|
|
|
1,250,000
|
|
|
|
|
|
|
|
|
|
|
|
1,250,000
|
|
Trade accounts and contracts receivable, net
|
|
|
2,894,346
|
|
|
|
1,176,392
|
|
|
|
|
|
|
|
4,070,738
|
|
Inventory
|
|
|
929,039
|
|
|
|
902,777
|
|
|
|
|
|
|
|
1,831,816
|
|
Deferred contract costs
|
|
|
48,283
|
|
|
|
|
|
|
|
|
|
|
|
48,283
|
|
Deferred finance charges, net of amortization
|
|
|
588,984
|
|
|
|
|
|
|
|
|
|
|
|
588,984
|
|
Prepaid expenses
|
|
|
102,122
|
|
|
|
27,544
|
|
|
|
|
|
|
|
129,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
7,289,366
|
|
|
|
2,629,032
|
|
|
|
|
|
|
|
9,918,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office equipment
|
|
|
380,284
|
|
|
|
51,542
|
|
|
|
|
|
|
|
431,826
|
|
Furniture, fixtures and leasehold improvements
|
|
|
147,194
|
|
|
|
6,377
|
|
|
|
|
|
|
|
153,571
|
|
Vehicles
|
|
|
105,901
|
|
|
|
65,229
|
|
|
|
|
|
|
|
171,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property and equipment
|
|
|
633,379
|
|
|
|
123,148
|
|
|
|
|
|
|
|
756,527
|
|
Less: accumulated depreciation and amortization
|
|
|
(291,580
|
)
|
|
|
(472
|
)
|
|
|
|
|
|
|
(292,052
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
341,799
|
|
|
|
122,676
|
|
|
|
|
|
|
|
464,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
16,854,005
|
|
|
|
|
|
|
|
(49,373
|
)
|
|
|
16,804,632
|
|
Intangible assets, net
|
|
|
965,044
|
|
|
|
|
|
|
|
|
|
|
|
965,044
|
|
Deposits and other assets
|
|
|
12,414
|
|
|
|
15,050
|
|
|
|
|
|
|
|
27,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
25,462,628
|
|
|
$
|
2,766,758
|
|
|
$
|
(49,373
|
)
|
|
$
|
28,180,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND MEMBERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
1,597,421
|
|
|
$
|
744,813
|
|
|
$
|
|
|
|
$
|
2,342,234
|
|
Accrued payroll and related payables
|
|
|
370,250
|
|
|
|
|
|
|
|
|
|
|
|
370,250
|
|
Current maturities of long term debt
|
|
|
3,888,578
|
|
|
|
18,777
|
|
|
|
|
|
|
|
3,907,355
|
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
|
|
2,239,156
|
|
|
|
1,842,579
|
|
|
|
|
|
|
|
4,081,735
|
|
Other current liabilities
|
|
|
54,213
|
|
|
|
42,525
|
|
|
|
|
|
|
|
96,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
8,149,618
|
|
|
|
2,648,694
|
|
|
|
|
|
|
|
10,798,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long term debt
|
|
|
3,433,175
|
|
|
|
68,691
|
|
|
|
|
|
|
|
3,501,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
11,582,793
|
|
|
|
2,717,385
|
|
|
|
|
|
|
|
14,300,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Convertible Preferred Stock, 12,226,716 and 2,175,322 issued
and outstanding at September 30, 2008, at 8% dividend yield. Liquidation
preference of $12,485,954 at September 30, 2008
|
|
|
9,974,486
|
|
|
|
|
|
|
|
|
|
|
|
9,974,486
|
|
Common stock
|
|
|
139,888
|
|
|
|
|
|
|
|
|
|
|
|
139,888
|
|
Additional paid-in capital
|
|
|
19,873,900
|
|
|
|
|
|
|
|
|
|
|
|
19,873,900
|
|
Accumulated deficit
|
|
|
(16,108,439
|
)
|
|
|
|
|
|
|
|
|
|
|
(16,108,439
|
)
|
Members equity
|
|
|
|
|
|
|
49,373
|
|
|
|
(49,373
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
13,879,835
|
|
|
|
49,373
|
|
|
|
(49,373
|
)
|
|
|
13,879,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND MEMBERS EQUITY
|
|
$
|
25,462,628
|
|
|
$
|
2,766,758
|
|
|
$
|
(49,373
|
)
|
|
$
|
28,180,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: The pro forma combined balance sheet at September 30, 2008 is the same as the consolidated
balance sheet of Brookside Technology Holdings Corp at September 30, 2008 as the acquisition
occurred on September 23, 2008.
- 18 -
Brookside Technology Holdings Corp
Pro Forma Statements of Operations
Nine Months Ended September 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brookside Technology
|
|
|
|
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
(2) Holdings Corp
|
|
|
STN
|
|
|
Adjustments
|
|
|
Combined
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and services
|
|
$
|
3,867,951
|
|
|
$
|
2,045,214
|
|
|
$
|
|
|
|
$
|
5,913,165
|
|
Contract revenue
|
|
|
10,380,773
|
|
|
|
4,948,705
|
|
|
|
|
|
|
|
15,329,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
14,248,724
|
|
|
|
6,993,919
|
|
|
|
|
|
|
|
21,242,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS OF SALES
|
|
|
7,593,217
|
|
|
|
2,358,139
|
|
|
|
|
|
|
|
9,951,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
6,655,507
|
|
|
|
4,635,780
|
|
|
|
|
|
|
|
11,291,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
5,530,280
|
|
|
|
4,210,393
|
|
|
|
|
|
|
|
9,740,673
|
|
Stock compensation expense
|
|
|
168,833
|
|
|
|
|
|
|
|
|
|
|
|
168,833
|
|
Depreciation
|
|
|
97,491
|
|
|
|
33,122
|
|
|
|
|
|
|
|
130,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
5,796,604
|
|
|
|
4,243,515
|
|
|
|
|
|
|
|
10,040,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(1,799,028
|
)
|
|
|
(16,752
|
)
|
|
|
(324,938
|
)
(1)
|
|
|
(2,140,718
|
)
|
Amortization expense, warrant discount
|
|
|
(3,252,984
|
)
|
|
|
|
|
|
|
(730,017
|
)
(3)
|
|
|
(3,983,001
|
)
|
Amortization expense, customer contracts
|
|
|
(420,822
|
)
|
|
|
|
|
|
|
(675,000
|
)
(4)
|
|
|
(1,095,822
|
)
|
Gain on debt extinguishment
|
|
|
151,619
|
|
|
|
|
|
|
|
|
|
|
|
151,619
|
|
Other income (expense), net
|
|
|
11,827
|
|
|
|
7,433
|
|
|
|
|
|
|
|
19,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense), net
|
|
|
(5,309,388
|
)
|
|
|
(9,319
|
)
|
|
|
(1,729,955
|
)
|
|
|
(7,048,662
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES
|
|
|
(4,450,485
|
)
|
|
|
382,946
|
|
|
|
(1,729,955
|
)
|
|
|
(5,797,494
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR STATE AND LOCAL INCOME TAXES
|
|
|
|
|
|
|
13,711
|
|
|
|
|
|
|
|
13,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
(4,450,485
|
)
|
|
$
|
369,235
|
|
|
$
|
(1,729,955
|
)
|
|
$
|
(5,811,205
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends
|
|
|
(2,102,989
|
)
|
|
|
|
|
|
|
|
|
|
|
(2,102,989
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common shareholders
|
|
$
|
(6,553,474
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(7,914,194
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share-basic and fully diluted
|
|
$
|
(0.071
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(0.059
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
92,755,324
|
|
|
|
|
|
|
|
40,843,375
|
(5)
|
|
|
133,598,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Interest expense on the combined debt of $3,209,000 used to finance the acquisition.
|
|
(2)
|
|
Excludes STN operations included in the Companys Third Quarter Form 10-Q/A as filed on
November 18, 2008.
|
|
(3)
|
|
Full nine months of amortization of warrants issued in connection with the acquisition
financing.
|
|
(4)
|
|
Full nine months of amortization of customer contracts acquired in connection with the
acquisitions of USVD and STN.
|
|
(5)
|
|
Shares issued to sellers of STN in conjunction with the acquisition.
|
- 19 -
Brookside Technology Holdings Corp
Pro Forma Statements of Operations
Year Ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brookside Technology
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
Holdings Corp
|
|
|
(2) USVD
|
|
|
STN
|
|
|
Adjustments
|
|
|
Combined
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and services
|
|
$
|
1,369,097
|
|
|
$
|
2,507,796
|
|
|
$
|
2,500,732
|
|
|
$
|
|
|
|
$
|
6,377,625
|
|
Contract revenue
|
|
|
4,182,486
|
|
|
|
8,928,429
|
|
|
|
8,104,727
|
|
|
|
|
|
|
|
21,215,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
5,551,583
|
|
|
|
11,436,225
|
|
|
|
10,605,459
|
|
|
|
|
|
|
|
27,593,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS OF SALES
|
|
|
3,174,127
|
|
|
|
6,193,646
|
|
|
|
4,246,012
|
|
|
|
|
|
|
|
13,613,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
2,377,456
|
|
|
|
5,242,579
|
|
|
|
6,359,447
|
|
|
|
|
|
|
|
13,979,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
3,390,139
|
|
|
|
3,049,514
|
|
|
|
6,992,821
|
|
|
|
|
|
|
|
13,432,474
|
|
Stock compensation expense
|
|
|
915,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
915,000
|
|
Depreciation
|
|
|
69,921
|
|
|
|
63,769
|
|
|
|
30,047
|
|
|
|
|
|
|
|
163,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
4,375,060
|
|
|
|
3,113,283
|
|
|
|
7,022,868
|
|
|
|
|
|
|
|
14,511,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(621,633
|
)
|
|
|
(2,741
|
)
|
|
|
(5,135
|
)
|
|
|
(1,434,938
|
)
(1)
|
|
|
(2,064,447
|
)
|
Amortization expense, warrant discount
|
|
|
(4,820,582
|
)
|
|
|
|
|
|
|
|
|
|
|
(5,279,356
|
)
(3)
|
|
|
(10,099,938
|
)
|
Amortization expense, customer contracts
|
|
|
(179,178
|
)
|
|
|
(420,822
|
)
|
|
|
|
|
|
|
(900,000
|
)
(4)
|
|
|
(1,500,000
|
)
|
Other income (expense), net
|
|
|
14,493
|
|
|
|
36,355
|
|
|
|
|
|
|
|
|
|
|
|
50,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense), net
|
|
|
(5,606,900
|
)
|
|
|
(387,208
|
)
|
|
|
(5,135
|
)
|
|
|
(7,614,294
|
)
|
|
|
(13,613,537
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES
|
|
|
(7,604,504
|
)
|
|
|
1,742,088
|
|
|
|
(668,556
|
)
|
|
|
(7,614,294
|
)
|
|
|
(14,145,266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR STATE AND LOCAL INCOME TAXES
|
|
|
|
|
|
|
129,868
|
|
|
|
|
|
|
|
(129,868
|
)
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
(7,604,504
|
)
|
|
$
|
1,612,220
|
|
|
$
|
(668,556
|
)
|
|
$
|
(7,484,426
|
)
|
|
$
|
(14,145,266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends
|
|
|
(139,856
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(139,856
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common shareholders
|
|
$
|
(7,744,360
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(14,285,122
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share-basic and fully diluted
|
|
$
|
(0.099
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.113
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
78,174,247
|
|
|
|
7,000,000
|
(4)
|
|
|
|
|
|
|
40,843,375
|
(5)
|
|
|
126,017,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Interest expense on the combined debt of $3,209,000 and $10,000,000 used to finance the STN and
USVD acquisitions, respectively.
|
|
(2)
|
|
Represents USVD operations from January 1, 2007 through acquisition date, September 14, 2007.
|
|
(3)
|
|
Full twelve months of amortization of warrants issued in connection with the acquisitions of
USVD and STN financings.
|
|
(4)
|
|
Full twelve months of amortization of customer contracts acquired in connection with the
acquisitions of USVD and STN.
|
|
(5)
|
|
Shares issued to sellers of USVD and STN in conjunction with the acquisitions.
|
|
(6)
|
|
Record reversal of income tax expense.
|
- 20 -
BluePrint Technologies (CE) (USOTC:BKSD)
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