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: FEBRUARY 18, 2005
(Date of earliest event reported)
INCENTRA SOLUTIONS, INC.
(Exact name of Registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation)
333-16031 86-0793960
(Commission File No.) (I.R.S. Employer
Identification No.)
1140 PEARL STREET
BOULDER, COLORADO 80302
(Address of principal executive offices; zip code)
(303) 440-7930
(Registrant's telephone number, including area code)
N/A
(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 (SEE General Instruction A.2. below):
|_| 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 14-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13-4(e) under the Exchange
Act (17 CFR 240.13e-4(c))
EXPLANATORY NOTE:
Incentra Solutions, Inc. filed a Current Report on Form 8-K on February 23, 2005
announcing that it had completed its acquisition of all of the outstanding
capital stock of STAR Solutions of Delaware, Inc., a Delaware corporation,
("STAR"). The purpose of this amendment is to file financial statements and pro
forma financial information relating to the STAR business.
SECTION 9 - FINANCIAL STATEMENT AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
Paragraphs (a), (b) and (c) of Item 9, "Financial Statements and Exhibits"
are hereby amended to include the following:
(a) Financial Statements of Business Acquired (STAR):
Audited Financial Statements: PAGE
Report of Independent Auditor............................... F-1
Balance Sheet as of December 31, 2004....................... F-2
Income Statement and Member's Capital for the year
ended December 31, 2004..................................... F-3
Statement of Cash Flows for the year ended
December 31, 2004........................................... F-4
Notes to Consolidated Financial Statements.................. F-5
(b) Pro Forma Financial Information (Unaudited)
Unaudited Pro Forma Consolidated Financial
Information ................................................ F-8
Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 2004 (Unaudited).............................. F-10
Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 2004 (Unaudited)........... F-11
(c) Exhibits
Number Document
------ --------
23.1 Consent of Considine & Considine,
independent auditors
1
To The Members
Star Solutions, LLC
A California Limited Liability Company
10120 Pacific Heights Blvd., Suite 200
San Diego, Ca 92121
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Star Solutions, LLC, A
California limited liability company, as of December 31, 2004, and the related
income statement and member's capital, and cash flows for the year then ended.
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 auditing standards generally accepted
in the United States of America. 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 used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides 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 Star Solutions, LLC, A
California limited liability company, as of December 31, 2004, and the results
of its operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
/s/ CONSIDINE & CONSIDINE
An Accountancy Corporation
San Diego, California
January 29, 2005
F-1
STAR SOLUTIONS, LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
BALANCE SHEET
DECEMBER 31, 2004
ASSETS
CURRENT ASSETS
Cash (Note 3) $1,348,900
Accounts Receivable (Note 4) 2,140,417
Inventory 32,110
----------
3,521,427
PROPERTY AND EQUIPMENT (NOTE 5) 54,913
OTHER ASSETS
Deposits 7,005
----------
TOTAL ASSETS 3,583,345
==========
LIABILITIES AND MEMBERS' CAPITAL
CURRENT LIABILITIES
Accounts Payable 1,886,741
Accrued Product Costs (Note 6) 1,098,830
Accrued Liabilities (Note 7) 507,249
----------
TOTAL LIABILITIES 3,492,820
COMMITTMENTS (NOTE 8)
MEMBER'S CAPITAL 90,525
----------
TOTAL LIABILITIES AND MEMBERS' CAPITAL $3,583,345
==========
F-2
STAR SOLUTIONS, LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
INCOME STATEMENT AND MEMBER'S CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
REVENUE $ 17,338,983
COST OF SALES 11,175,564
------------
GROSS PROFIT 6,163,419
EXPENSES
Auto 113,528
Bad Debt 20,780
Consulting 581,254
Depreciation 39,507
Employee Compensation and Benefits 4,271,638
Insurance 127,098
Interest 77
Marketing 20,194
Meals & Entertainment 48,274
Office 64,775
Professional Fees 79,833
Rent 194,265
Repairs & Maintenance 2,333
Telephone & Utilities 77,240
Travel & Lodging 103,175
Worker's Compensation 69,933
------------
5,813,904
------------
INCOME FROM OPERATIONS 349,515
OTHER INCOME/(EXPENSE)
Gain on Asset Sale (Note 9) 1,771,398
Interest 6,601
Loss on Disposal of Assets (12,864)
------------
1,765,135
------------
INCOME BEFORE TAX 2,114,650
INCOME TAX EXPENSE 25,180
------------
NET INCOME 2,089,470
MEMBER'S CAPITAL - BEGINNING OF YEAR 192,453
DISTRIBUTIONS (2,191,398)
------------
MEMBER'S CAPITAL - END OF YEAR $ 90,525
============
F-3
STAR SOLUTIONS, LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2004
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net Income $ 2,089,470
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH USED BY OPERATING ACTIVITIES
Depreciation 39,507
Loss on Disposal of Assets 12,864
Decrease in Accounts Receivable 924,458
Decrease in Inventory 296,300
Decrease in Accounts Payable (1,574,822)
Increase in Accrued Product Costs) 1,098,830
Increase in Accrued Liabilities 59,912
-----------
857,049
-----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,946,519
CASH FLOWS USED BY INVESTING ACTIVITIES
Purchase of Property and Equipment (3,602)
CASH FLOWS USED BY FINANCING ACTIVITIES
Distributions (2,191,398)
-----------
NET INCREASE IN CASH 751,519
CASH - BEGINNING 597,381
-----------
CASH - ENDING $ 1,348,900
===========
SUPPLEMENTAL DISCLOSURE:
Interest Paid $ 77
Income Taxes Paid $ 12,590
F-4
STAR SOLUTIONS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004
NOTE 1 THE COMPANY
Star Solutions, LLC, is a California limited liability company
participating in computer sales, installation and support. The
Company was formed on October 23, 1997 in the State of
California.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The accompanying financial statements
have been prepared using the accrual method in conformity with
generally accepted accounting principles.
Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. These
estimates may differ from actual results.
Cash - The Organization considers all highly liquid
investments with a fixed maturity date of three months or less
to be cash equivalents.
Inventory - Inventory is stated at the lower of cost or
market, cost being determined principally under the first-in
first-out (FIFO) method.
Property and Equipment - Property and equipment are carried at
cost. Depreciation is computed using the straight - line
method of depreciation over the assets' estimated useful lives
of 3-5 years. Maintenance and repairs are charged to the
expense as incurred; major renewals and betterment's are
capitalized. When items of property and equipment are sold or
retired, the related cost and accumulated depreciation are
removed from the accounts, and any gain or loss is included in
income.
Revenue Recognition - Revenue from product sales is recognized
upon shipment to customers.
Income Taxes - The Company is classified as a partnership for
income tax purposes and, accordingly, pays no federal tax.
Income tax expense represents the minimum state income tax and
any fees implied on total income for a California limited
liability company.
F-5
STAR SOLUTIONS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004
NOTE 3 CASH
The Company has cash in excess of the federally insured limits
at their financial institution totaling, $1,327,619. Cash
consists of the following:
Wells Fargo - Sweep Account $ 837,736
Wells Fargo - Money Market 490,064
Wells Fargo - Checking 18,467
Wells Fargo - Flex 2,633
----------
$1,348,900
==========
NOTE 4 ACCOUNTS RECEIVABLE
Accounts receivable are trade receivables arising from
operations. Management has determined the allowance for
doubtful accounts to be zero as of December 31, 2004.
NOTE 5 PROPERTY AND EQUIPMENT
Major categories of property and equipment are summarized as
follows:
Furniture and Fixtures $ 208,388
Vehicles 78,605
Office Equipment 11,975
Computers 9,503
---------
308,471
Accumulated Depreciation (253,558)
---------
$ 54,913
=========
NOTE 6 ACCRUED PRODUCT COSTS
Product costs represent estimated amounts owed to Sun
Microsystems for potential pricing adjustments based on prior
sales transactions.
NOTE 7 ACCRUED LIABILITIES
Accrued liabilities consists of the following:
Compensation $269,844
Sales Tax 70,529
Vacation 53,412
Professional Services 50,000
Other Liabilities 31,139
Income Taxes 12,590
Consulting 10,057
Payroll Taxes 9,678
--------
$507,249
========
F-6
STAR SOLUTIONS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004
NOTE 8 COMMITMENTS
The Company leases office space under a non-cancelable
operating lease that expires in January of 2006. The Company
also leases office equipment under non-cancelable operating
lease which expires in August of 2006. The lease agreements
currently require aggregate monthly rental payments of
approximately $12,000. The minimum future lease payments for
the years ended December 31, are as follows:
2005 $149,082
2006 12,782
--------
$161,864
========
Rent expense for the period ended December 31, 2004 was
$194,265.
NOTE 9 GAIN ON ASSET SALE
Gain on asset sale presents the proceeds collected on a
contract sale.
F-7
Pro Forma Financial Information (Unaudited)
Acquisition of MSI
On August 18, 2004 (the "Acquisition Date"), we acquired all of the
outstanding capital stock of MSI, a Delaware corporation. The transaction was
structured as a reorganization of MSI with and into Front Porch Merger Corp., a
Delaware corporation and newly-formed, wholly-owned subsidiary of our company.
The Acquisition of MSI by our company has been accounted for as a reverse merger
because on a post-merger basis, the former MSI shareholders hold a majority of
our outstanding common stock of our company on a voting and diluted basis. As a
result, MSI is deemed to be the acquirer for accounting purposes.
The MSI stockholders were issued 47,454,985 restricted shares of common
stock and 2,466,971 restricted shares of the newly-designated, voting and
non-dividend bearing Series A Redeemable Preferred Stock (the "Series A
Preferred") of our company in exchange for their ownership of MSI securities.
The Series A Preferred shares are convertible into shares of common stock on a
twenty-for-one basis. In connection with the Acquisition, we canceled 13,452,381
shares of outstanding Incentra common stock and warrants to purchase 3.5 million
shares of Incentra common stock that were held by MSI prior to the Acquisition
Date. MSI canceled $0.2 million in receivables owed to it from us. We also had
outstanding warrants to purchase 202,740 shares of restricted common stock at a
price per share of $.0003 and outstanding warrants to purchase 33,029 shares of
Series A Preferred at a price per share of $10.35.
The accompanying unaudited pro forma statement of operations includes
the pro forma results of Front Porch Digital, Inc. from January 1, 2004 through
August 17, 2004 (the date of the acquisition).
Acquisition of STAR Solutions of Delaware, Inc.
On February 18, 2005 (the "STAR Closing Date"), we acquired all of the
outstanding capital stock of STAR Solutions of Delaware, Inc., a privately-held
Delaware corporation ("STAR"). The acquisition was effected pursuant to an
Agreement and Plan of Merger (the "Merger Agreement").
Pursuant to the Merger Agreement, the purchase price consisted of (i) a
cash payment of $1,422,000, (ii) the issuance of 12,617,555 unregistered shares
of our common stock and (iii) the issuance of an unsecured convertible
promissory note for $2.5 million (the "Note"). In addition, we paid $78,000 to
the sole remaining stockholder of STAR in exchange for all shares of capital
stock of STAR held by such stockholder.
Interest on the Note accrues an annual rate of 0.5%, and therefore a
discount was applied to reflect a fair value rate of interest. Principal is
payable through August 1, 2007. All or a portion of the outstanding principal
and interest due under the Note may be converted by the holder into shares of
common stock at any time from the end of each calendar quarter immediately
preceding a payment due date, as defined. The Note is initially convertible at a
conversion price equal to the greater of (i) $0.40 or (ii) seventy percent (70%)
of the average closing price of our common stock, as reported on the
Over-The-Counter Bulletin Board, for the ten (10) consecutive trading days
ending on and including the last day of the calendar quarter immediately
preceding the applicable Payment Due Date. As of the Star Closing Date, the Note
was convertible into a maximum of 6,250,000 shares of common stock. Our
obligations under the Note are not secured by any of our assets.
STAR also entered into a consulting agreement with FGBB, Inc., a Nevada
corporation that is controlled by the formaer STAR stockholder ("FGBB"),
pursuant to which FGBB will provide sales and
F-8
marketing services to us relating to the business of STAR. The consulting
agreement provides that we will pay FGBB a consulting fee of $500,000 for
services to be provided thereunder, which amount shall be paid in twenty-four
equal monthly payments of approximately $20,800, commencing in March 2005.
In addition, on February 18, 2005, STAR obtained a revolving line of
credit, which provides for borrowings until March 1, 2007, of up to $5,000,000.
All acquisitions have been accounted for as purchases. There were no
significant accounting policy differences or other items, which required
adjustment in the accompanying unaudited pro forma consolidated statement of
operations.
The accompanying unaudited condensed pro forma consolidated balance
sheet gives effect to the acquisition as if it had been consummated on December
31, 2004. The accompanying unaudited condensed pro forma consolidated statement
of operations for the year ended December 31, 2004, gives effect to the
acquisition as if it had been consummated on January 1, 2004.
The unaudited condensed pro forma consolidated financial statements
should be read in conjunction with the historical financial statements of Star
Solutions of Delaware, Inc. (included herein) as well as those of our company.
The unaudited pro forma consolidated financial statements do not purport to be
indicative of the financial position or results of operations that would have
actually been obtained had such transactions been completed as of the assumed
dates and for the periods presented, or which may be obtained in the future. The
pro forma adjustments are described in the accompanying notes and are based upon
available information and certain assumptions that we believe are reasonable.
The pro forma excess of the STAR purchase price over STAR's net
tangible assets acquired was approximately $7.6 million. A preliminary
allocation of the STAR purchase price has been made to major categories of
assets and liabilities in the accompanying unaudited pro forma consolidated
financial statements, including a preliminary allocation of the STAR purchase
price excess over the net tangible assets acquired to goodwill, approximately
$7,000,000, and certain identifiable intangible assets, primarily customer
relationships, totaling approximately $600,000.
The purchase price allocation and adjustments are not final; the
allocation is only preliminary at this time, as we and our independent valuation
advisors are still reviewing all of the underlying assumptions and calculations
used in the allocation. The pro forma adjustments represent our best estimates
based upon available information and certain assumptions that we believe to be
reasonable at this time, which includes our best estimate that approximately
$7,000,000 of the excess purchase price of STAR over the net tangible assets
acquired represents goodwill, which is not amortized pursuant to U.S. generally
accepted accounting principles.
However, because the purchase price allocation is not final, the
amounts reflected in the unaudited pro forma consolidated financial statements
are subject to change, and the actual allocation of the purchase price (which
could include a change in the allocation between goodwill and other
identifiable, amortizable assets) and the resulting effect on income (loss) from
operations may differ from the pro forma amounts included herein.
F-9
INCENTRA SOLUTIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 2004
PRO PRO FORMA
INCENTRA STAR FORMA CONSOLIDATED
HISTORICAL HISTORICAL ADJUSTMENTS TOTAL
---------- ---------- ----------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 3,068,458 $ 1,348,900 -- $ 4,417,358
Accounts receivable, net 3,740,554 2,140,417 -- 5,880,971
Other current assets 645,637 32,110 -- 677,747
------------- ------------- ------------- -------------
Total current assets 7,454,649 3,521,427 -- 10,976,076
------------- ------------- ------------- -------------
Property and equipment, net 2,452,817 54,913 -- 2,507,730
Capitalized software development costs, net 1,188,885 -- 1,188,885
(1), (2),
(3), (4)
(5), (6),
Intangible assets, net 16,537,060 $ 7,604,484 (7) 24,141,544
Other assets 1,043,634 7,005 -- 1,050,639
------------- ------------- ------------- -------------
TOTAL ASSETS $ 28,677,045 $ 3,583,345 $ 7,604,484 $ 39,864,874
============= ============= ============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of notes payable, capital leases
and other long term obligations $ 1,738,516 $ 764,305 (1) $ 2,502,821
Accounts payable 1,374,953 $ 1,886,741 -- 3,261,694
Accrued expenses 3,058,806 1,606,079 38,645 (5) 4,703,530
Current portion of deferred revenue 1,185,736 -- -- 1,185,736
------------- ------------- ------------- -------------
Total current liabilities 7,358,011 3,492,820 802,950 11,653,781
------------- ------------- ------------- -------------
Notes payable, capital leases and other long term
obligations, net of current port 2,266,970 1,855,695 (2) 4,122,665
Derivative warrant liability 1,925,534 -- 1,925,534
Line of credit 1,900,000 (3), (4) 1,900,000
Deferred revenue, net of current portion 149,204 -- -- 149,204
------------- ------------- ------------- -------------
TOTAL LIABILITIES 11,699,719 3,492,820 4,558,645 19,751,184
------------- ------------- ------------- -------------
Series A convertible redeemable preferred stock 22,000,767 -- -- 22,000,767
------------- ------------- ------------- -------------
Stockholders' equity:
Preferred stock, nonvoting, $.001 par value, 2,500,000 --
shares authorized, none issued or outstanding
Common stock, $.001 par value, 200,000,000 shares
authorized, 106,493,617 shares issued,
105,059,978 shares outstanding, 1,433,639
shares in treasury 105,060 12,618 (6) 117,678
Common stock, no par value; 1,000,000 shares
authorized, 800,000 shares issued -- -- --
and outstanding -- -- --
Additional paid-in capital 113,271,091 3,123,746 (6) 116,394,837
Accumulated other comprehensive loss 19,184 -- 19,184
Accumulated deficit (118,418,776) 90,525 (90,525) (118,418,776)
------------- ------------- ------------- -------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (5,023,441) 90,525 3,045,839 (1,887,077)
------------- ------------- ------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $ 28,677,045 $ 3,583,345 $ 7,604,484 $ 39,864,874
============= ============= ============= =============
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(1) Record current portion of note payable to former owner of Star of $629,305,
net of discount of $75,000, and consulting agreement with former owner of
Star of $250,000, net of discount of $40,000.
(2) Record long term portion of note payable to former owner of Star of
$1,870,695, net of discount of $225,000, and consulting agreement with
former owner of Star of $250,000, net of discount of $40,000.
(3) Record cash payments to former owners of Star of $1,500,000 paid by drawing
on the line of credit.
(4) Capitalize investment banking fees of $400,000 paid by drawing on the line
of credit.
(5) Capitalize attorney fees and other costs associated with the acquisition of
Star of $38,645.
(6) Record 12,617,555 shares of common stock ($12,618) and additional paid in
capital ($3,123,746) based on the market value of common stock issued in
the acquisition of Star.
(7) Eliminate equity of acquired entity of $90,525.
F-10
INCENTRA SOLUTIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2004
PRO FORMA
INCENTRA FPDI PRO FORMA INCENTRA STAR PRO FORMA CONSOLIDATED
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS TOTAL
---------- -------------- --------- ---------- ----------- ------------
TOTAL REVENUE $ 13,284,670 $ 4,455,014 (3) $ 17,739,684 $ 17,338,983 -- $ 35,078,667
------------- ------------- ------------- ------------- ------------- -------------
Total cost of revenue 7,300,335 1,231,075 (3) 8,531,410 13,417,719 -- 21,949,129
------------- ------------- ------------- ------------- ------------- -------------
GROSS MARGIN 5,984,335 3,223,939 9,208,274 3,921,264 -- 13,129,538
------------- ------------- ------------- ------------- ------------- -------------
Selling, general and
administrative 10,461,010 3,192,768 (3) 13,653,777 3,532,242 -- 17,186,019
Acquisition costs 1,275,189 150,000 (4) 1,425,189 -- -- 1,425,189
Amortization &
depreciation 1,959,530 1,503,459 (3), (5) 3,462,989 39,507 $ 130,000 (2) 3,632,496
------------- ------------- ------------- ------------- ------------- -------------
13,695,729 4,846,227 18,541,955 3,571,749 130,000 22,243,704
------------- ------------- ------------- ------------- ------------- -------------
(LOSS) INCOME FROM
OPERATIONS (7,711,393) (1,622,288) (9,333,681) 349,515 (130,000) (9,114,166)
------------- ------------- ------------- ------------- ------------- -------------
Interest expense, net (2,406,548) (1,042,647) (3,449,194) 6,601 (233,746) (3,676,339)
Other income (expense) 79,647 72,621 152,268 1,758,534 -- 1,910,802
------------- ------------- ------------- ------------- ------------- -------------
(2,326,901) (970,026) (3,296,927) 1,765,135 (233,746) (1) (1,765,538)
------------- ------------- ------------- ------------- ------------- -------------
NET LOSS BEFORE INCOME TAX (10,038,295) (2,592,314) (12,630,608) 2,114,650 (363,746) (10,879,704)
Income tax expense (400,000) -- (400,000) (25,180) -- (425,180)
------------- ------------- ------------- ------------- ------------- -------------
NET LOSS (10,438,295) (2,592,314) (13,030,608) 2,089,470 (363,746) (11,304,884)
------------- ------------- ------------- ------------- ------------- -------------
Deemed dividends and
accretion of redeemable
preferred stock to
redemption amount (1,339,319) (2,617,572) (3,956,891) -- -- (3,956,891)
------------- ------------- ------------- ------------- ------------- -------------
NET LOSS APPLICABLE TO
COMMON SHAREHOLDERS $ (11,777,614) $ (5,209,886) $ (16,987,498) $ 2,089,470 $ (363,746) $ (15,261,774)
============= ============= ============= ============= ============= =============
Weighted average number
of common shares 51,027,329 104,865,183 12,617,555 117,482,738
============= ============= ============= =============
outstanding - basic
and diluted
Basic and diluted
Net loss per share
applicable to
common shareholders $ (0.23) $ (0.16) $ (0.13)
============= ============= =============
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
STAR
(1) Record interest expense on $2.5 million note payable to former owners,
consulting agreement with former owner and outstanding borrowings on line
of credit used to finance the acquisitions. Included in the amount is
$115,000 of non-cash interest expense on the note payable and consulting
agreement.
(2) Record estimated amortization expense on identifiable intangible assets
acquired in the acquisition (based on preliminary allocation of purchase
price) of $130,000 using an estimated life of 3-5 years.
FPDI
(3) Record activity for FPDI from 1-1-04 through 8-17-04.
(4) Record acquisition costs paid prior to 8-17-04.
(5) Record amortization on intangibles acquired in the acquisition from 1-1-04
through 8-17-04.
(6) Record interest expense on note payable of $342,169, deferred financing of
$105,338 and 8% convertible notes of FPDI of $595,140 from 1-1-04 through
8-17-04.
(7) Record accretion on Series A preferred stock issued in connection with the
acquisition from 1-1-04 through 8-17-04.
F-11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
INCENTRA SOLUTIONS, INC.
Date: April 29, 2005 By:/s/Paul McKnight
--------------------------------------
Paul McKnight
Chief Financial Officer
EXHIBIT INDEX
Number Document
------ --------
23.1 Consent of Considine & Considine,
independent auditors