Exhibit 99.1
OMNI POINT MARKETING, LLC AND AFFILIATE
COMBINED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)
1
OMNI POINT MARKETING, LLC AND COMBINED AFFILATE
BALANCE SHEET
MARCH 31, 2005
(UNAUDITED)
ASSETS
------
Current Assets:
Cash $ 100,194
Accounts receivable, less allowance for
doubtful accounts of $1,406,602 1,517,092
Prepaid expenses and other assets 71,698
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Total current assets 1,688,984
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Property and Equipment, net 759,698
Intangibles, net 1,091,685
Other Assets 228,966
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Total Assets $3,769,333
==========
LIABILITIES AND MEMBERS' EQUITY
-------------------------------
Current Liabilities:
Notes payable $ -
Accounts payable 608,008
Accrued expenses 321,280
Accrued commissions 396,534
Deferred rent 186,748
Customer deposits 264,213
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Total current liabilities 1,776,783
MEMBERS' EQUITY 1,992,550
----------
Total Liabilities and Members' Equity $3,769,333
==========
See notes to unaudited combined financial statements.
2
OMNI POINT MARKETING, LLC AND COMBINED AFFILATE
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2005
(UNAUDITED)
Revenues, net $2,691,670
Cost of revenue 355,551
----------
Gross Profit 2,336,119
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Selling Expenses:
Salaries and commissions 709,546
Advertising and trade shows 135,853
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845,399
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General and Administrative Expenses:
Bad debt 300,401
Salaries 129,989
Depreciation and amortization 160,291
Professional fees 22,443
Rent and occupancy 56,716
Stock-based consulting expense --
Stock-based compensation expense --
Other general and administrative 261,154
----------
930,994
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Net Income $ 559,726
==========
See notes to unaudited combined financial statements.
3
OMNI POINT MARKETING, LLC AND COMBINED AFFILATE
STATEMENT OF MEMBERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2005
(UNAUDITED)
Members'
Equity
---------
Balance - December 31, 2003 528,589
Member contributions 965,000
Net loss for the period (765)
-----------
Balance - December 31, 2004 $ 1,492,824
Member distributions (60,000)
Net income for the period 559,726
-----------
Balance - March 31, 2005 $ 1,992,550
===========
See notes to unaudited combined financial statements.
4
OMNI POINT MARKETING, LLC AND COMBINED AFFILATE
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2005
(UNAUDITED)
Cash Flows From Operating Activities:
Net income $ 559,726
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 160,291
Changes in assets and liabilities:
Accounts receivable (801,036)
Due from principal member 140,312
Prepaid expenses and other assets (15,455)
Accounts payable 187,508
Accrued expenses 114,647
Accrued commissions 140,264
Deferred rent (6,117)
Customer deposits (40,000)
---------
Net cash provided by operating activities 440,140
---------
Cash Flows From Investing Activities:
Purchase of property and equipment (26,098)
Purchase of intangible assets (408,227)
---------
Net cash used in investing activities (434,325)
---------
Cash Flows From Financing Activities:
Payments on notes payable (60,000)
---------
Net cash used in financing activities (60,000)
---------
Net decrease in cash (54,185)
Cash - Beginning of year 154,379
---------
Cash - End of period $ 100,194
=========
Supplemental Disclosures of Cash Flow Information
Cash payments for interest $ -
=========
See notes to unaudited combined financial statements.
5
OMNI POINT MARKETING, LLC AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------------------
Omni Point Marketing, LLC ("Omni Point") is a limited liability company formed
in February 2002 with one member owning 100%. On September 15, 2003, the member
sold 75% of its interest to three entities. Omni Point specializes in marketing
third party offers for products and services via email. Omni Point offers
advertisers integrated online and offline marketing programs including
Permission Based Email Advertising, Email Database Append Services, Online
Surveys, Ad Serving Networks and Internet Compiled Direct Mail Lists. Omni Point
has multiple Internet media and database products as follows:
EMAIL APPEND: Omni Point's email append solution allows marketers to
augment their existing customer database with Omni Point's
permission-based email data. When a match is confirmed, the
customer's email address is added to the client's file.
ELECTRONIC CHANGE OF ADDRESS: Omni Point's electronic change of
address service enables clients to update their email databases.
LEAD GENERATION: Omni Point offers lead generation programs to
assist a variety of businesses with customer acquisition. Omni Point
pre-screens the leads through its online surveys to meet its
clients' exact criteria.
DIRECT MAIL AND POSTAL LIST ADVERTISEMENT: Omni Point has compiled
an exclusive Internet responders' postal mailing list. This list is
sourced from online registration and individuals who have responded
to Omni Point's online campaigns. These consumers are responsive to
offers and purchase products and services through online and offline
channels. Omni Point offers a wide variety of demographic and
psycho-graphic criteria for its customers' list selection.
ONLINE MARKET RESEARCH: Omni Point has developed a consumer survey.
Omni Point offers a variety of targeted leads generated from its
ongoing survey responses. Omni Point also offers marketers the
opportunity to add specific questions to the survey. Omni Point then
sells the response information to the marketer on a cost per
response basis. If a marketer or a market research company needs a
full survey completed, Omni Point will broadcast its client's survey
to a designated responder list on a cost per thousand basis.
Friendsand LLC ("Friendsand") is an online, interactive social
networking community.
The combined financial statements include the accounts of Omni Point and
Friendsand (collectively herein referred to as the "Company"). All material
intercompany balances and transactions have been eliminated.
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OMNI POINT MARKETING, LLC AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------------------
(continued)
- -----------
A summary of the Company's significant accounting policies follows:
CASH AND CASH EQUIVALENTS: The Company considers all investments
purchased with an original maturity of three months or less to be
cash equivalents.
IMPAIRMENT OF LONG-LIVED ASSETS: Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be disposed of
requires that long-lived assets and certain identifiable intangibles
to be held and used or disposed of by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Under such
circumstances, the accounting principles require that such assets be
reported at the lower of their carrying amount or fair value less
cost to sell. Accordingly, when events or circumstances indicate
that long-lived assets may be impaired, the Company estimates the
assets' future cash flows expected to result from the use of the
asset and its eventual disposition. If the sum of the expected
future undiscounted cash flows is less than the carrying amount of
the asset, an impairment loss is recognized based on the excess of
the carrying amount over the fair value of the asset.
FAIR VALUE OF FINANCIAL INSTRUMENTS: The carrying amounts reported
in the accompanying balance sheets for accounts receivable, accounts
payable and accrued expenses approximate fair value due to the
short-term nature of these accounts. Accounts receivable are carried
at original invoice amount less an estimate made for doubtful
receivables based on a review of all outstanding amounts on a
periodic basis. Management determines the allowance for doubtful
accounts by regularly evaluating individual customer receivables and
considering a customer's financial condition, credit history, and
current economic conditions.
REVENUE RECOGNITION: The Company recognizes revenue from all
products when the service is performed and the customer's order is
fulfilled.
USE OF ESTIMATES: The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America 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. Actual results
could differ from those estimates.
7
OMNI POINT MARKETING, LLC AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------------------
(continued)
- -----------
PROPERTY AND EQUIPMENT: Property and equipment is stated at cost.
Depreciation is computed by the straight-line method over the
following estimated useful lives:
Years
-----
Leasehold improvements 5-6
Computer equipment 5
Furniture, fixtures and office equipment 7
Software 3
Leasehold improvements are depreciated over the shorter of the term
of the lease or their estimated useful lives.
INTANGIBLE ASSET: Intangible assets consist of a database of email
addresses acquired during normal operations and costs associated
with the development of the Company's various websites. These costs
are being amortized using the straight-line method over the
following estimated useful lives:
Years
-----
Email database 3
Web properties 3-5
INCOME TAXES: The Company has made an election to have its income or
loss taxed directly to its members as a partnership for income tax
purposes. Accordingly, the pro rata income or loss will be included
in the tax return of the members. As a result, no income taxes have
been recognized in the accompanying financial statements.
SOFTWARE DEVELOPMENT: The Company entered into a development
agreement in September 2004 for the design of co-registration
software at a total cost of $200,000. The project was completed in
October 2004; however, the software is included in "Other Assets" in
the accompanying balance sheet as it has not yet been used in
operations as of December 31, 2004.
ADVERTISING COSTS: Advertising costs are expensed as incurred.
NOTE 2 - SUBSEQUENT EVENT
- -------------------------
Effective May 16, 2005, Relationserve, Inc., through its wholly-owned subsidiary
Relationserve Access, Inc., a Delaware company, purchased the assets and assumed
certain liabilities of Omni Point Marketing, LLC, a Florida limited liability
8
OMNI POINT MARKETING, LLC AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)
NOTE 2 - SUBSEQUENT EVENT (continued)
- -------------------------------------
company ("Omni Point"), and through its wholly-owned subsidiary, Friendsand,
Inc. ("Friendsand") acquired all of the assets and liabilities of Friendsand
LLC, a Delaware limited liability company. These companies were acquired for a
combination of cash payments, a two-year promissory note payable in the amount
of $700,000, and 8,000,000 newly-issued common shares of RelationServe, Inc.
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