Exhibit 99.1
COMPUTER CONTACT SERVICES, INC.
TEMPSERV SEGMENT ACCOUNTING
FINANCIAL STATEMENTS
Nine Months Ended September 30, 2007
COMPUTER CONTACT SERVICES, INC.
Dba “TEMPSERV”
TABLE OF CONTENTS
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Report of Auditor | 2 |
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Balance Sheets | 3 |
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Statements of Income | 4 |
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Statements of Cash Flows | 5 |
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Statement of Stockholders Equity | 6 |
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Notes to Financial Statements | 7 |
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MADSEN & ASSOCIATES, CPA’s Inc. | 684 East Vine St, Suite 3 |
Certified Public Accountants and Business Consultants | Murray, Utah 84107 |
| Telephone 801 268-2632 |
| Fax 801-262-3978 |
Board of Directors
Computer Contact Services, Inc.
dba Tempserv
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheets of Computer Contact Services, Inc., dba Tempserv, at September 30, 2007 and December 31, 2006, and the related statements of operations, stockholders' equity, and cash flows for the nine months ended September 30, 2007 and the year ended December 31, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included 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 for the company’s internal control over financial reporting. Accordingly, we express no such opinion. 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 w ell as evaluating the over all financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
Our audit and report was limited to the business activity known as Tempserv, which was sold by the Company on September 30, 2007. (note 4) Our audit excluded the cash and a contract receivable resulting from the sale of assets from an unrelated business activity during 1998 because the information was not available.
In our opinion, except for the limitation described in the above paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of Computer Contact Services, Inc. at September 30, 2007 and December 31, 2006, and the results of operations, and cash flows for the nine months ended September 30, 2007 and the year ended December 31, 2006, in conformity with generally accepted accounting principles.
Salt Lake City, Utah
June 22, 2009 s/ Madsen & Associates, CPA’s Inc.
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COMPUTER CONTACT SERVICES, INC.
dbaTEMPSERV
BALANCE SHEETS
September 30, 2007 and December 31, 2006
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ASSETS |
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CURRENT ASSETS |
| Sept 30, 2007 |
| Dec 1, 2006 |
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Cash | $ | 753,643 | $ | 137,844 |
Accounts receivable – net |
| 974,640 |
| 1,299,011 |
Advances and prepaid expenses |
| 207,034 |
| 368,551 |
Total Current Assets |
| 1,935,317 |
| 1,805,406 |
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PROPERTY AND EQUIPMENT, net of depreciation |
| 52,467 |
| 65,225 |
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OTHER ASSETS |
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Deposits |
| 63,966 |
| 56,654 |
Total Other Assets |
| 63,966 |
| 56,654 |
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TOTAL ASSETS | $ | 2,051,750 | $ | 1,927,285 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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CURRENT LIABILITIES |
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Accounts Payable | $ | 160,733 | $ | 221,649 |
Total Current Liabilities |
| 160,733 |
| 221,649 |
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STOCKHOLDERS’ EQUITY |
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Common stock |
| 2,000 |
| 2,000 |
Accumulated adjustments account |
| 1,889,017 |
| 1,703,636 |
Total stockholders’ equity |
| 1,891,017 |
| 1,705,636 |
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TOTAL LIABILITIES and STOCKHOLDERS' EQUITY | $ | 2,051,750 | $ | 1,927,285 |
The accompanying notes are an integral part of these financial statements.
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COMPUTER CONTACT SERVICES, INC.
dbaTEMPSERV
STATEMENTS OF INCOME
For the Nine Months Ended Sept 30, 2007 and Year Ended December 31, 2006
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| Sept 30, 2007 |
| Dec 31, 2006 |
NET SALES |
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Staffing agency | $ | 5,474,806 | $ | 7,022,333 |
Total Net Sales |
| 5,474,806 |
| 7,022,333 |
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COST OF SALES |
| 4,335,343 |
| 5,728,477 |
Gross profit |
| 1,139,463 |
| 1,293,856 |
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OPERATING EXPENSES |
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Selling, general and administrative |
| 335,620 |
| 647,668 |
Depreciation and amortization |
| 24,803 |
| 33,071 |
Total operating expenses |
| 360,423 |
| 680,739 |
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INCOME FROM OPERATIONS |
| 779,040 |
| 613,117 |
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OTHER INCOME & EXPENSES |
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Interest income |
| 12,007 |
| 22,908 |
Other expenses |
| (3,187) |
| (2,277) |
Interest expense |
| (89,409) |
| (3,090) |
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NET INCOME | $ | 698,451 | $ | 630,658 |
The accompanying notes are an integral part of these financial statements.
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COMPUTER CONTACT SERVICES, INC.
dbaTEMPSERV
STATEMENTS OF CASH FLOWS
Nine Months Ended Sept 30, 2007 and Year Ended December 31, 2006
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| Sept 30, 2007 |
| Dec 31, 2006 |
CASH FLOWS FROM OPERATING ACTIVITIES |
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| Net income | $ | 698,451 | $ | 630,658 | |||
| Adjustments to reconcile net income to |
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| Net cash provided by operating activities |
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| Depreciation |
| 24,803 |
| 33,071 | |
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| Changes in |
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| Accounts receivable |
| 324,371 |
| (349,811) |
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| Prepaid expenses |
| 161,517 |
| 171,949 |
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| Advance & Deposits |
| (7,312) |
| 570 |
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| Payments on line of credit |
| -- |
| (494,990) |
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| Accounts payable & accrued expenses |
| (60,916) |
| (363,107) |
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| Net cash provided by operating activities |
| 1,140,914 |
| (371,660) | |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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| Purchase of land, property and equipment |
| (12,045) |
| (5,722) | |||
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| Net cash used in investing activities |
| (12,045) |
| (5,722) | |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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| Investments from/ (distributions to) shareholders |
| (513,070) |
| 141,001 | |||
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| Net cash provided by financing activities |
| (513,070) |
| 141,001 | |
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| Net change in cash |
| 615,799 |
| (236,381) | |||
| Cash at beginning of period |
| 137,844 |
| 374,225 | |||
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| Cash at end of period | $ | 753,643 | $ | 137,844 | |||
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SUPPLEMENT DISCLOSURE OF CASH FLOW INFORMATION |
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| Interest expense | $ | 89,409 | $ | 3,090 |
The accompanying notes are an integral part of these financial statements.
5
COMPUTER CONTACT SERVICES, INC.
dbaTEMPSERV
STATEMENT OF STOCKHOLDERS’ EQUITY
Nine Months Ended Sept 30, 2007 and Year Ended December 31, 2006
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| Common Stock |
| Accumulated | ||
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| Shares |
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| Adjustments |
Balance December 31, 2005 |
| 800 | $ | 2,000 | $ | 931,977 |
Shareholder contributions |
| - |
| - |
| 141,001 |
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Net operating profit for the year |
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Ended December 31, 2006 |
| - |
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| 630,658 |
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Balance December 31, 2006 |
| 800 | $ | 2,000 | $ | 1,703,636 |
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Shareholder distributions |
| - |
| - |
| (513,070) |
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Net operating profit for the nine months |
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ended September 30, 2007 |
| - |
| - |
| 698,451 |
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BalanceSeptember 30, 2007 |
| 800 | $ | 2,000 | $ | 1,889,017 |
The accompanying notes are an integral part of these financial statements.
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COMPUTER CONTACT SERVICES, INC.
dbaTEMPSERV
NOTES TO FINANCIAL STATEMENTS
September 30, 2007
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1.
ORGANIZATION
The Company was incorporated under the laws of the state of California on December 18, 1981 with 800 common shares outstanding and is doing business as Tempserv.
Tempserv is located in Bakersfield, California, and provides temporary industrial, construction, and clerical staffing services nationwide. In addition to the more traditional functions of job placement, payroll and personnel administration, Tempserv provides screening, testing, counseling and supervision of its placements.
2.
SIGNIFICANT ACCOUNTING POLICIES
Accounting Method: The Company recognizes income and expenses based on the accrual method of accounting.
Dividend Policy: The company has not yet adopted a policy regarding payment of dividends.
Income Taxes:The Company, with the unanimous consent of its shareholders, has elected to have its income taxed under Subchapter S of the Internal Revenue Code and a similar section of the state income tax law. Under those provisions, the Company does not pay federal or state corporate income tax on its taxable income, nor is it allowed a net operating loss carryover or carryback as a deduction. Instead, the shareholders are liable for individual income tax on their respective shares of the Company’s taxable income or may include their respective shares of the Company’s net operating loss in their individual income tax returns. Therefore, no provision or liability for income tax has been included in these financial statements.
Revenue Recognition: The major source of income is received in the form of services provided from staffing services. TempSERV service revenue is recognized as services are performed on an hourly or weekly basis, prices are fixed or determinable based on customer requisitions and collectability is reasonably assured. Contracts and relationships for providing employees can be cancelled by the contractor and can be cancelled at any time.
Advertising and Marketing Development: The company expenses advertising and market development costs as incurred.
Financial Instruments: The carrying amounts of financial instruments are considered by management to be their estimated fair values due to their short-term maturities.
Financial and Concentrations Risk: The Company does not have any concentration or related financial credit risks except for cash and accounts receivable, however, the Company considers the accounts to be fully collectible at the recorded amounts, net of a reserve for bad debts. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits, however the bank is considered of high quality. The Company has not experienced any losses in such accounts.
Trade Accounts Receivable: Trade accounts receivables refer to amounts due for the performance of staffing services.
Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
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2. SIGNIFICANT ACCOUNTING POLICIES – continued
Allowance for doubtful accounts: We provide a reserve against our receivables for estimated losses that may result from our customers’ inability to pay related to our staffing business. We determine the amount of the reserve by analyzing known uncollectible accounts, economic conditions and historical losses and our customers’ creditworthiness. The likelihood of a material loss from this area is minimal due to our limited exposure to credit risk.
Property and Equipment: Property and equipment are stated at cost. Depreciation is computed on the accelerated methods over the estimated useful lives of the assets, which range from three to five years. A summary is included below.
Equipment | $ | 64,254 |
Furniture & fixtures |
| 38,667 |
Vehicles |
| 150,087 |
Less accumulated depreciation |
| (200,541) |
Net | $ | 52,467 |
Impairment of Long-Lived Assets: The Company reviews its major assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an asset is considered impaired, then impairment will be recognized in an amount determined by the excess of the carrying amount of the asset over its fair value. There was no impairment of long-lived assets during the current interim periods presented.
Other Recent Accounting Pronouncements: The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.
3.
SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Officer-directors have acquired all of the outstanding common stock of the Company at September 30, 2007.
4.
DISPOSITION OF TEMPSERVE ASSETS.
The Company entered into an Asset Purchase Agreement with Parks! America, Inc. to sell selected assets of tempSERV, a division of CCS and the scope of this report and audit is limited to that business activity.
The disposition was completed on September 30, 2007. Assets sold by the Company pursuant to the Agreement include: (i) certain fixed assets, equipment, fixtures, leasehold improvements located at tempSERV’s office in Bakersfield, California; (ii) certain intellectual property of tempSERV; (iii) the goodwill of tempSERV.
The consideration for the assets sold by CCS was an aggregate of $1,162,500, consisting of $400,000 in cash, a promissory note in the principal amount of $562,500 which was to be paid out of the cash flow of Tempserv in 36 equal monthly installments, in the amount of $17,292.41 each, commencing on January 1, 2008, and continuing through December 1, 2010, and a promissory note in the principal amount of $200,000 due to EDLA, LLC. The note includes interest at a rate of 6% with 12 monthly payments of $17,643 beginning March 31, 2008.
The purchase price was allocated as follows:
Furniture and fixtures | $ | 100,000 |
Goodwill |
| 621,000 |
Continuing contracts |
| 391,500 |
Covenant not to compete |
| 50,000 |
Total assets acquired |
| 1,162,500 |
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Total consideration paid consists of: |
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Note receivable-Computer Contract Service Inc |
| (562,500) |
Note receivable-EDLA LLC |
| (200,000) |
Cash for purchase |
| (400,000) |
Total Consideration | $ | (1,162,500) |
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