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
FEBRUARY 23, 2001
-----------------------------------
Date of report (Date of earliest event reported)
KUPPER PARKER COMMUNICATIONS, INCORPORATED
----------------------------------
(Exact Name of Registrant as Specified in its Charter)
NEW YORK
----------------
(State or Other Jurisdiction of Incorporation)
000-24131
--------------
(Commission File Number)
8301 MARYLAND AVENUE, ST. LOUIS, MISSOURI
------------------------------------------------------
(Address of Principal Executive Offices)
112250305
--------------
(IRS Employer Identification No.)
63105
--------
(Zip Code)
(314) 290-2000
--------------------
(Registrant's Telephone Number Including Area Code)
The undersigned Registrant hereby amends Item 7 (a) of its Form 8-K dated
February 23, 2001 to include the unaudited interim financial statements of CGT
(UK) Limited for the nine months ended December 31, 2000 and the required pro
forma financial statements of Registrant and CGT (UK) Limited.
ITEM 2. OTHER EVENTS
On February 23, 2001, the registrant completed the acquisition of all of the
outstanding shares of CGT (UK) Limited ("CGT"), a London-based strategic
marketing communications agency, in exchange for $475,000 in cash and 70,000
shares of registrant's common stock. Under the terms of the acquisition
agreement, registrant will issue up to an additional 500,000 shares of its
common stock to the former CGT shareholders if CGT meets certain future pretax
income targets. The cash component of the acquisition price was funded through
the issuance of short-term bank borrowings under the registrant's existing
line-of-credit.
Registrant has recorded this acquisition as a purchase transaction and will
amortize the related goodwill arising from this transaction over a period of
twenty years.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Registrant has included herein the audited financial statements of CGT, a
foreign business, meeting the requirements of Item 17 of Form 20-F as prescribed
by Rule 3.05 of Regulation S-X.
(a) Financial Statements of Businesses Acquired
i. Financial Statements of CGT (UK) Limited as of March 31,
2000
Report of the Directors
Report of the Auditors
Profit and Loss Account for the year ended March 31, 2000
Balance Sheet at March 31, 2000
Statement of Cash Flows for the year ended March 31, 2000
Notes to the Financial Statements
ii. Unaudited Condensed Financial Statements of CGT (UK)
Limited as of December 31, 2000
Unaudited Profit and Loss Account for the nine months
ended December 31, 2000
Unaudited Balance Sheet at December 31, 2000
Unaudited Statement of Cash Flows for the nine months
ended December 31, 2000
Notes to Financial Statements
iii. Pro Forma Financial Information
(c) Exhibits
The following exhibit is filed with this report.
EXHIBIT NO. DESCRIPTION
2 Stock Purchase Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 9, 2001 By: /s/ John J. Rezich
John J. Rezich
Chief Financial Officer
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
DIRECTORS' REPORT
AND
FINANCIAL STATEMENTS
31 MARCH 2000
COMPANY NUMBER: 3304518
F-1
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
DIRECTORS
J L Coleman
R M Thackery
D I Thatcher
SECRETARY AND REGISTERED OFFICE
D I Thatcher
15 Station Road
St Ives
Cambridgeshire
PE27 5BH
REPORT OF THE DIRECTORS
The directors submit their report and the financial statements for the year
ended 31 March 2000.
ACTIVITIES AND REVIEW
The company's principal activity during the year was as an advertising agency.
On 16 March 2000 the company changed its name to CGT (UK) Limited.
RESULTS AND DIVIDENDS
The results for the year are shown on page 4 to the accounts. The directors
propose the payment of a dividend of (POUND) 200,000 for the year (1999 :
(POUND) 102,000 paid).
DIRECTORS AND THEIR INTERESTS
The directors who held office during the year under review were as named above.
The directors have the following interest in the share capital of the company.
ORDINARY SHARES
2000 1999
NO NO
J L Coleman 2,080 2,080
R M Thackery 2,080 2,080
D I Thatcher 1,040 1,040
DATE RECOGNITION
The directors have assessed the risks to our business resulting from
date-recognition issues. We do not envisage any such problems and hence foresee
no costs being incurred as a result.
We have also assessed the possibility of date-recognition related failures in
our significant suppliers, who inform us that they have adequately addressed
these problems.
It is impossible to guarantee that no date-recognition problems will remain.
However, the directors believe that the company will be able to deal promptly
with any failures that might occur.
AUDITORS
In accordance with Section 385 of the Companies Act 1985, a resolution for the
re-appointment of Edwards as auditors of the company is to be proposed at the
forthcoming Annual General Meeting.
F-2
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
REPORT OF THE DIRECTORS CONTINUED
DIRECTORS' RESPONSIBILITIES
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the profit or loss of the company for that period. In preparing
those financial statements, the directors are required to:
- - select suitable accounting policies and then apply them consistently;
- - make judgements and estimates that are reasonable and prudent;
- - state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements;
- - prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time, the financial position of the
company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. The directors are also responsible for safeguarding the
assets of the company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
In preparing this report advantage has been taken of the special exemptions
conferred by Part VII of the Companies Act 1985 relating to small companies.
BY ORDER OF THE BOARD
16 JANUARY 2001 D I THATCHER
D I THATCHER
SECRETARY
F-3
[EDWARDS CHARTERED ACCOUNTANTS LETTERHEAD]
REPORT OF THE AUDITORS TO THE MEMBERS OF
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
We have audited the financial statements on pages four to eleven.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The directors are responsible for preparing the directors' report and, as
described on page 2, the financial statements in accordance with applicable
United Kingdom law and accounting standards. Our responsibilities, as
independent auditors, are established in the United Kingdom by statute, the
Auditing Practices Board and by our profession's ethical guidance.
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act. We
also report to you if, in our opinion, the directors' report is not consistent
with the financial statements, if the company has not kept proper accounting
records, if we have not received all the information and explanations we require
for our audit, or if information specified by law regarding directors'
remuneration and transactions with the company is not disclosed.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the preparation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the state
of the company's affairs as at 31 March 2000 and of the results for the year
then ended and have been properly prepared in accordance with the provisions of
the Companies Act 1985.
16 JANUARY 2001 EDWARDS
EDWARDS
REGISTERED AUDITORS
F-4
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2000
2000 1999
NOTES (POUND) (POUND)
TURNOVER 1 2,081,868 1,671,729
Cost of sales (1,168,369) (979,530)
----------- ----------
GROSS PROFIT 913,499 692,199
Administrative expenses (655,779) (476,976)
----------- ----------
OPERATING PROFIT 2 257,720 215,223
Investment income and interest receivable 3,978 4,220
----------- ----------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 261,698 219,443
Taxation 3 (55,816) (47,029)
----------- ----------
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION 205,882 172,414
Dividends 5 (200,000) (102,000)
----------- ----------
RETAINED PROFIT FOR THE YEAR (POUND) 5,882 (POUND) 70,414
----------- ----------
CONTINUING OPERATIONS
Turnover and operating profit derive wholly from continuing operations for the
above two financial years.
TOTAL RECOGNISED GAINS AND LOSSES
There were no recognised gains or losses either in the current or preceding year
other than those recorded in the profit and loss account.
HISTORICAL PROFITS AND LOSSES
Historical profit is the same as shown above.
F-5
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
BALANCE SHEET
AS AT 31 MARCH 2000
2000 1999
NOTES (POUND) (POUND) (POUND) (POUND)
FIXED ASSETS
Tangible assets 6 64,332 54,107
Investments 7 15,000 -
------- -------
79,332 54,107
CURRENT ASSETS
Stocks 32,745 51,996
Debtors 8 399,283 378,231
Cash at bank and in hand 44,449 178,171
------ ------
476,477 608,398
CREDITORS: AMOUNTS FALLING DUE
WITHIN ONE YEAR 9 (439,795) (552,373)
------ ------
NET CURRENT ASSETS 36,682 56,025
------- -------
TOTAL ASSETS LESS CURRENT
LIABILITIES (POUND) 116,014 (POUND) 110,132
------- -------
CAPITAL AND RESERVES
Called up share capital 11 5,200 5,200
Profit and loss account 12 110,814 104,932
------- -------
SHAREHOLDERS' FUNDS 13 (POUND) 116,014 (POUND) 110,132
------- -------
In the opinion of the directors, for the year ended 31 March 2000, the company
was entitled to the exemptions under Part VII of the Companies Act 1985 and the
accounts have been prepared in accordance with the special provisions of the Act
relating to small companies.
These financial statements were approved by the board of directors on 16 January
2001 and were signed on its behalf by:
J L COLEMAN
J L COLEMAN
DIRECTOR
F-6
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
STATEMENTS OF CASHFLOWS
FOR THE YEAR ENDED 31 MARCH 2000
2000 1999
(POUND) (POUND) (POUND) (POUND)
CASHFLOWS FROM OPERATING ACTIVITIES
Net profit 5,882 117,664
------- -------
Adjustments to reconcile net profit to net cash provided
by operating activities
Depreciation and amortisation 22,220 11,734
(Increase)/decrease in assets
Accounts receivable (40,095) (238,166)
Other current assets 38,294 (43,732)
Other assets (15,000) (25,333)
Increase/(decrease) in liabilities
Accounts payable (228,979) 224,603
Accrued expenses 116,401 100,576
------- -------
Total adjustments (107,159) 29,682
------- -------
Net cash provided by operating activities (101,277) 147,346
------- -------
CASHFLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (32,445) (42,878)
------- -------
Net (decrease)/increase in cash and cash equivalents (133,722) 104,468
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 178,171 73,703
------- -------
CASH AND CASH EQUIVALENTS, END OF YEAR (POUND) 44,449 (POUND) 178,171
------- -------
F-7
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2000
1 ACCOUNTING POLICIES
The following accounting policies have been applied consistently in
dealing with items which are considered material in relation to the
company's financial statements:
BASIS OF PREPARATION
The financial statements have been prepared under the historical cost
convention and in accordance with applicable accounting standards.
TURNOVER
Turnover represents sales invoiced net of Value Added Tax and is
derived wholly from within the United Kingdom.
TANGIBLE FIXED ASSETS
Tangible fixed assets acquired by the company have been capitalised at
cost.
LEASED ASSETS
Assets which have been funded through finance leases are recorded as
tangible fixed assets and are depreciated over their estimated useful
lives. Further lease obligations, net of finance charges are included
in creditors. Rentals payable are apportioned between the finance
element which is charged to the profit and loss account and the capital
element which reduces outstanding lease obligations. All other leases
are operating leases and the rental charges are taken to profit and
loss account over the life of the lease.
DEPRECIATION
Depreciation is provided on tangible fixed assets at rates calculated
to write off the cost less estimated residual value over the estimated
useful life as follows:-
Plant and machinery - 25%/33% on cost
Fixtures, fittings and equipment - 25% on cost
STOCKS
Stocks are valued at the lower of cost and net realisable value. Cost
comprises the purchase cost plus the cost incurred in bringing each
product to its present location or condition. Net realisable value is
based on estimated selling price and further costs expected to be
incurred to completion, sale and distribution.
FINANCE LEASES AND HIRE PURCHASE CONTRACTS
Assets held under finance leases and hire purchase contracts are
capitalised as tangible fixed assets and depreciated in accordance with
the policies outlined above. Lease obligations are included as
creditors, with the interest being charged against profit over the
period of the lease.
OPERATING LEASES
Rentals under operating leases are charged against profits as they are
incurred.
DEFERRED TAXATION
No provision has been made for deferred taxation, as, in the opinion of
the directors, the likelihood of the liability crystallising in the
foreseeable future is remote.
PENSION COSTS
The company operates a money purchase (defined contribution) pension
scheme. Contributions payable to this scheme are charged to the profit
and loss account in the period to which they relate. These
contributions are invested separately from the company's assets.
TAXATION
The taxation charge is based on the profit for the year and takes into
account the taxation deferred because of timing differences on certain
items. Provision is only made for deferred taxation if it is probable
that an actual liability will arise.
GENERALLY ACCEPTED ACCOUNTING PRACTICE (GAAP)
There are no material differences between United Kingdom GAAP and USA
GAAP relating to the preparation of the company's financial statements.
F-8
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED 31 MARCH 2000
2 OPERATING PROFIT 2000 1999
(POUND) (POUND)
This is stated after charging:
Depreciation of fixed assets 22,220 11,735
Auditors' remuneration 4,250 3,500
Operating lease rentals
Land and buildings 44,584 34,960
------- -------
3 TAXATION
UK Corporation Tax at 20% (1999: 24%) (POUND) 55,816 (POUND) 47,029
------- -------
4 INFORMATION ON DIRECTORS AND EMPLOYEES
DIRECTORS' EMOLUMENTS
Emoluments including pension contributions to money
purchase (defined contribution) schemes (POUND) 193,408 (POUND) 207,934
------- -------
2000 1999
NO NO
During the year the following number of directors
accrued benefits under money purchase (defined
contribution) pension schemes 1 1
------- -------
5 DIVIDENDS
Ordinary dividend on equity shares final proposed/paid (POUND) 200,000 (POUND) 102,000
------- -------
F-9
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED 31 MARCH 2000
6 TANGIBLE FIXED ASSETS FIXTURES,
PLANT FITTINGS
AND AND
MACHINERY EQUIPMENT TOTAL
COST (POUND) (POUND) (POUND)
At 1 April 1999 58,405 11,488 69,893
Additions 31,683 762 32,445
------ ------ -------
At 31 March 2000 90,088 12,250 102,338
------ ------ -------
Depreciation
At 1 April 1999 14,009 1,777 15,786
Charge for the year 19,209 3,011 22,220
------ ------ -------
At 31 March 2000 33,218 4,788 38,006
------ ------ -------
Net Book Values
At 31 March 2000 56,870 7,462 64,332
------ ------ -------
At 31 March 1999 (POUND) 44,396 (POUND) 9,711 (POUND) 54,107
------ ------ -------
The net book value of tangible fixed assets held under hire purchase
contracts at 31 March 2000 amounted to: (POUND) Nil (1999:
(POUND) 31,828).
7 INVESTMENTS
2000 1999
(POUND) (POUND)
Listed securities in Flag Technologies 15,000 -
------- -------
8 DEBTORS 2000 1999
(POUND) (POUND)
Trade debtors 374,594 334,499
Other debtors 18,843 26,858
Prepayments and accrued income 5,846 16,874
------- -------
(POUND) 399,283 (POUND) 378,231
------- -------
9 CREDITORS: AMOUNTS FALLING DUE 2000 1999
WITHIN ONE YEAR (POUND) (POUND)
Trade creditors 79,627 308,606
Corporation tax 61,356 72,750
Other taxes and social security 35,762 21,314
Other creditors 36,502 111,884
Accruals and deferred income 26,548 37,819
Proposed equity dividend 200,000 -
------- -------
(POUND) 439,795 (POUND) 552,373
------- -------
F-10
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED 31 MARCH 2000
10 COMMITMENTS
At the year end the company was committed to making the following
payments during the next year in respect of operating leases with
expiry dates as follows:
LAND AND BUILDINGS OTHER
2000 1999 2000 1999
(POUND) (POUND) (POUND) (POUND)
More than five years (POUND) 44,000 (POUND) 44,000 (POUND) - (POUND) -
------ ------ ------ ------
11 SHARE CAPITAL 2000 1999
(POUND) (POUND)
AUTHORISED
50,000 Ordinary shares of(POUND) 1 each (POUND) 50,000 (POUND) 50,000
------- -------
ALLOTTED, CALLED UP AND FULLY PAID
5,200 Ordinary shares of (POUND) 1 each (POUND) 5,200 (POUND) 5,200
------- -------
12 PROFIT AND LOSS ACCOUNT
Retained profits at 1 April 1999 104,932 34,518
Retained profit for the year 5,882 70,414
------- -------
Retained profits at 31 March 2000 (POUND) 110,814 (POUND) 104,932
------- -------
F-11
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED 31 MARCH 2000
13 RECONCILIATION OF MOVEMENTS IN 2000 1999
SHAREHOLDERS' FUNDS (POUND) (POUND)
Net profit for the year 205,882 172,414
Dividends (200,000) (102,000)
-------- --------
Net addition to shareholders' funds 5,882 70,414
Opening shareholders' funds 110,132 39,718
-------- --------
Closing shareholders' funds (POUND) 116,014 (POUND) 110,132
-------- --------
REPRESENTED BY:-
Equity interests (POUND) 116,014 (POUND) 110,132
-------- --------
14 PENSION COSTS
MONEY PURCHASE (DEFINED CONTRIBUTION) PENSION SCHEME
The company operates a money purchase (defined contribution) pension
scheme. The assets of the scheme are held separately from those of the
company in an independently administered fund. The pension cost charge
represents contributions payable by the company to the fund and
amounted to (POUND) Nil (1999: (POUND) Nil).
F-12
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2000 AND 1999
COMPANY NUMBER: 3304518
F-13
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
UNAUDITED PROFIT AND LOSS ACCOUNT
FOR THE NINE MONTHS ENDED 31 DECEMBER 2000
2000 1999
NOTES (POUND) (POUND)
TURNOVER 1,148,007 1,623,180
Cost of sales (408,900) (927,218)
---------- ---------
GROSS PROFIT 739,107 695,962
Administrative expenses (559,001) (478,305)
---------- ---------
OPERATING PROFIT 2 180,106 217,657
Investment income and interest receivable 1,085 604
---------- ---------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 181,191 218,261
Taxation (36,238) (43,651)
---------- ---------
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION 144,953 174,610
Dividends 3 (15,000) (150,000)
---------- ---------
RETAINED PROFIT FOR THE YEAR (pound) 129,953 (pound) 24,610
========== =========
CONTINUING OPERATIONS
Turnover and operating profit derive wholly from continuing operations for the
above two financial periods.
TOTAL RECOGNISED GAINS AND LOSSES
There were no recognised gains or losses either in the current or preceding year
other than those recorded in the profit and loss account.
HISTORICAL PROFITS AND LOSSES
Historical profit is the same as shown above.
F-14
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
UNAUDITED BALANCE SHEET
AS AT 31 DECEMBER 2000
2000 1999
NOTES (POUND) (POUND) (POUND) (POUND)
FIXED ASSETS
Tangible assets 44,574 72,044
Investments 4 15,000 -
------- -------
59,574 72,044
CURRENT ASSETS
Stocks 56,897 23,289
Debtors 5 374,001 347,811
Cash at bank and in hand 55,966 233,464
-------- --------
486,864 604,564
CREDITORS: AMOUNTS FALLING DUE
WITHIN ONE YEAR 6 (300,470) (541,866)
-------- --------
NET CURRENT ASSETS 186,394 62,698
------- -------
TOTAL ASSETS LESS CURRENT
LIABILITIES (pound)245,967 (pound)134,742
------- -------
CAPITAL AND RESERVES
Called up share capital 7 5,200 5,200
Profit and loss account 8 240,767 129,542
------- -------
SHAREHOLDERS' FUNDS 9 (pound)245,967 (pound)134,742
------- -------
F-15
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
UNAUDITED STATEMENTS OF CASHFLOWS
FOR THE NINE MONTHS ENDED 31 DECEMBER 2000
2000 1999
(POUND) (POUND) (POUND) (POUND)
CASHFLOWS FROM OPERATING ACTIVITIES
Net profit 129,953 24,610
------- -------
Adjustments to reconcile net profit to net cash provided
by operating activities
Depreciation and amortisation 18,819 15,533
(Increase)/decrease in assets
Accounts receivable 92,226 30,420
Other current assets (66,946) 28,707
Other assets (24,152) -
Increase/(decrease) in liabilities
Accounts payable 76,123 (37,621)
Accrued expenses (215,446) 27,114
------- -------
Total adjustments (119,376) 64,153
------- -------
Net cash provided by operating activities 10,577 88,763
------- -------
CASHFLOWS FROM INVESTING ACTIVITIES
Purchase/sale of property and equipment 940 (33,470)
------- -------
Net (decrease)/increase in cash and cash equivalents 11,517 55,293
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 44,449 178,171
------- -------
CASH AND CASH EQUIVALENTS, END OF YEAR (pound)55,966 (pound)233,464
------- -------
F-16
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED 31 DECEMBER 2000
1 ACCOUNTING POLICIES
These unaudited interim financial statements have been prepared by the
Company under United Kingdom Generally Accepted Accounting Principles
("GAAP"). Certain information and disclosures normally included in
financial statements prepared in accordance with United Kingdom GAAP
have been condensed or omitted. It is therefore suggested that these
unaudited interim financial statements be read inconjunction with the
company's audited financial statements for the year ended March 31,
2000 included elsewhere in this Form SB-1. Results of operations for
interim periods are not necessarily indicative of annual results.
GENERALLY ACCEPTED ACCOUNTING PRACTICE (GAAP)
There are no material differences between United Kingdom GAAP and USA
GAAP relating to the preparation of the company's financial statements.
2 OPERATING PROFIT 2000 1999
(POUND) (POUND)
This is stated after charging:
Depreciation of fixed assets 18,819 15,533
Auditors' remuneration - -
Operating lease rentals
Land and buildings 33,122 33,000
------- -------
3 DIVIDENDS
Ordinary dividend on equity shares final proposed/paid (pound) 15,000 (pound)150,000
------- -------
4 INVESTMENTS
2000 1999
(POUND) (POUND)
Listed securities in Flag Technologies 15,000 -
------- -------
5 DEBTORS 2000 1999
(POUND) (POUND)
Trade debtors 282,367 310,171
Other debtors 58,402 18,032
Prepayments and accrued income 33,232 19,608
------- -------
(pound)374,001 (pound)347,811
------- -------
6 CREDITORS: AMOUNTS FALLING DUE 2000 1999
WITHIN ONE YEAR (POUND) (POUND)
Trade creditors 155,750 270,985
Corporation tax 97,595 43,874
Other taxes and social security 4,544 18,365
Other creditors 19,114 195,686
Accruals and deferred income 23,467 12,956
Proposed equity dividend - -
------- -------
(pound)300,470 (pound)541,866
------- -------
F-17
CGT (UK) LIMITED (FORMERLY ABERCRAFT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED 31 MARCH 2000
7 SHARE CAPITAL 2000 1999
(POUND) (POUND)
AUTHORISED
50,000 Ordinary shares of (pound)1 each (pound) 50,000 (pound) 50,000
------- -------
ALLOTTED, CALLED UP AND FULLY PAID
5,200 Ordinary shares of(pound)1 each (pound) 5,200 (pound) 5,200
------- -------
8 PROFIT AND LOSS ACCOUNT
Retained profits at 1 April 2000 110,814 104,932
Retained profit for the period 129,953 24,610
------- -------
Retained profits at 31 December 2000 (pound)240,767 (pound)129,542
------- -------
9 RECONCILIATION OF MOVEMENTS IN 2000 1999
SHAREHOLDERS' FUNDS (POUND) (POUND)
Net profit for the period 144,953 174,610
Dividends (15,000) (150,000)
------- -------
Net addition to shareholders' funds 129,953 24,610
Opening shareholders' funds 116,014 110,132
------- -------
Closing shareholders' funds (pound)245,967 (pound)134,742
------- -------
REPRESENTED BY:-
Equity interests (pound)245,967 (pound)134,742
------- -------
F-18
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
INTRODUCTION
The following unaudited pro forma financial statements give effect to the
acquisition of 100% of the outstanding stock of CGT (UK) Limited ("CGT"), a
London-based strategic marketing communications agency, in exchange for
$475,000 in cash and 70,000 shares of Registrant's Common Stock. Under the
terms of the acquisition agreement, Registrant will issue up to an additional
500,000 shares of our Common Stock to the former CGT shareholders if CGT meets
certain pretax earnings targets.
The unaudited pro forma balance sheet of Kupper Parker Communications,
Incorporated as of January 31, 2001 presents the combined financial position of
Kupper Parker and CGT assuming the acquisition of CGT had occurred on that
date.
The unaudited pro forma income statements of Kupper Parker Communications,
Incorporated for the year ended October 31, 2000 and for the three months ended
January 31, 2001 present the combined operations of all of the above-noted
entities assuming each acquisition had occurred at the beginning of each period
presented.
This pro forma financial information does not purport to be indicative
of the results that would have actually occurred had these transactions
occurred at the beginning of each period presented or which may be obtained in
the future.
F-19
KUPPER PARKER COMMUNICATIONS, INCORPORATED
UNAUDITED PRO FORMA BALANCE SHEET
AT JANUARY 31, 2001
Historical
-------------------------
KUPPER PRO FORMA
PARKER CGT (a) ADJUSTMENTS TOTAL
------------ --------- ------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 839,159 $ 81,872 $ -- $ 921,031
Accounts receivable, net of allowance for bad debts 6,981,817 547,126 -- 7,528,943
Other current assets 621,311 83,235 -- 704,546
------------ --------- ------------ ------------
Total current assets 8,442,287 712,233 -- 9,154,520
------------ --------- ------------ ------------
Property and equipment, net of accumulated depreciation and
amortization 1,058,669 65,207 -- 1,123,876
Goodwill, net of accumulated amortization 2,812,881 -- 328,607 (e) 3,141,488
Other assets 346,963 21,944 -- 368,907
------------ --------- ------------ ------------
$ 12,660,800 $ 799,384 $ 328,607 $ 13,788,791
============ ========= ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 48,796 $ -- $ -- $ 48,796
Short-term bank borrowings -- -- 475,000 (b) 475,000
Accounts payable 7,214,514 255,808 47,182 (d) 7,517,504
Deferred revenue 648,689 -- -- 648,689
Accrued expenses 595,139 183,751 -- 778,890
------------ --------- ------------ ------------
Total current liabilities 8,507,138 439,559 522,182 9,468,879
------------ --------- ------------ ------------
Noncurrent liabilities
Long-term debt, less current maturities 129,188 -- -- 129,188
Other long-term liabilities 1,524,078 -- -- 1,524,078
------------ --------- ------------ ------------
Total noncurrent liabilities 1,653,266 -- -- 1,653,266
------------ --------- ------------ ------------
Stockholders' equity 7,000 (c)
Common stock 589,595 7,607 (7,607)(f) 596,595
Paid-in capital 3,113,320 -- 159,250 (c) 3,272,570
Retained earnings (590,561) 352,218 (352,218)(f) (590,561)
Treasury stock, at average cost (611,958) -- -- (611,958)
Cumulative translation adjustment -- -- -- --
------------ --------- ------------ ------------
2,500,396 359,825 (193,575) 2,666,646
------------ --------- ------------ ------------
$ 12,660,800 $ 799,384 $ 328,607 $ 13,788,791
============ ========= ============ ============
F-20
KUPPER PARKER COMMUNICATIONS, INCORPORATED
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
Historical
------------------------------
KUPPER PRO FORMA
PARKER CGT (g) ADJUSTMENTS TOTAL
------------ ---------- ----------- ------------
REVENUES $ 12,033,040 $1,494,831 $ -- $ 13,527,871
OPERATING EXPENSES:
Salaries and Benefits 9,981,015 627,285 -- 10,608,300
Office and General 2,336,578 589,544 16,430 (h) 2,942,552
------------ ---------- ----------- ------------
Total Operating Expenses 12,317,593 1,216,829 16,430 13,550,852
------------ ---------- ----------- ------------
Operating Loss (284,553) 278,002 (16,430) (22,981)
OTHER INCOME (EXPENSE):
Interest income 106,448 6,887 -- 113,335
Interest expense (45,365) -- 28,500 (i) (16,865)
------------ ---------- ----------- ------------
61,083 6,887 28,500 96,470
------------ ---------- ----------- ------------
Pretax Loss (223,470) 284,889 12,070 73,489
PROVISION FOR TAXES 224,913 84,731 (11,400) (j) 298,244
------------ ---------- ----------- ------------
NET LOSS $ (448,383) $ 200,158 $ 23,470 $ (224,755)
============ ========== =========== ============
BASIC AND DILUTED LOSS PER SHARE $ (0.09) $ (0.04)
============ ============
WEIGHTED AVERAGE SHARES USED IN BASIC
AND DILUTED PER SHARE COMPUTATION 4,960,749 (k) 5,030,749
============ ============
F-21
KUPPER PARKER COMMUNICATIONS, INCORPORATED
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JANUARY 31, 2001
Historical
------------------------------
KUPPER PRO FORMA
PARKER CGT (l) ADJUSTMENTS TOTAL
----------- ----------- ------------- -----------
REVENUES $ 3,553,395 $ 233,868 $ -- $ 3,787,263
OPERATING EXPENSES:
Salaries and Benefits 2,617,528 72,443 -- 2,689,971
Office and General 845,372 101,977 4,108 (m) 951,457
----------- ----------- ------------- -----------
Total Operating Expenses 3,462,900 174,420 4,108 3,641,428
----------- ----------- ------------- -----------
Operating Income 90,495 59,448 (4,108) 145,835
OTHER INCOME (EXPENSE):
Interest income 30,456 -- -- 30,456
Interest expense (12,732) -- (7,125) (n) (19,857)
----------- ----------- ------------- -----------
17,724 -- (7,125) 10,599
----------- ----------- ------------- -----------
Pretax Income 108,219 59,448 (11,233) 156,434
PROVISION FOR TAXES 61,463 11,889 (2,850) (o) 70,502
----------- ----------- ------------- -----------
NET INCOME $ 46,756 $ 47,559 $ (8,383) $ 85,932
=========== =========== ============= ===========
BASIC EARNINGS PER SHARE $ 0.01 $ 0.01
=========== ===========
DILUTED EARNINGS PER SHARE $ 0.01 $ 0.01
=========== ===========
WEIGHTED AVERAGE SHARES USED IN BASIC
AND DILUTED PER SHARE COMPUTATION
BASIC 5,754,277 (p) 5,824,277
=========== ===========
DILUTED 5,940,403 (p) 6,010,403
=========== ===========
F-22
KUPPER PARKER COMMUNICATIONS, INCORPORATED
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
On February 23, 2001 Kupper Parker Communications, Incorporated ("Kupper
Parker") acquired 100% of the outstanding stock of CGT (UK) Limited ("CGT"), a
London-based strategic marketing communications agency, in exchange for $475,000
in cash and 70,000 shares of our Common Stock. Under the terms of the
acquisition agreement, Kupper Parker will issue up to an additional 500,000
shares of its Common Stock to the former CGT shareholders if CGT meets certain
pretax earnings targets. Because the acquisition of CGT occurred prior to July
1, 2001, this business combination has been accounted for as a purchase
transaction under APB Opinion No. 16, "Business Combinations". Goodwill arising
from this business combination is being amortized over a twenty-year period.
2. UNAUDITED PRO FORMA BALANCE SHEET AT JANUARY 31, 2001
(a) Represents the unaudited balance sheet of CGT as of December 31, 2000.
(b) Represents the short-term borrowings incurred in connection with the
acquisition of CGT.
(c) Represents the issuance of 70,000 shares of Kupper Parker stock to the
former shareholders of CGT at a cost of $2.375 per share.
(d) Represents estimated acquisition costs related to the acquisition of CGT.
(e) Represents the net excess of acquisition cost over the fair value of net
assets acquired in connection with the acquisition of Christopher Thomas,
calculated as follows:
Purchase price
Cash $ 475,000
Kupper Parker common stock 166,250
-----------
Total purchase price 641,250
Acquisition costs 47,182
-----------
Total cost of acquisition 688,432
Less: fair value of net assets (liabilities) acquired (359,825)
-----------
Excess of total cost of acquisition over the fair
value of net assets (liabilities) acquired $ 328,607
(f) Represents elimination of the equity accounts of CGT.
F-23
3. UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE TWELVE MONTHS
ENDED OCTOBER 31, 2000
(g) Represents the unaudited statement of operations of CGT for the twelve
months ended October 31, 2000.
(h) Represents amortization of goodwill arising from the acquisition of CGT.
(i) Represents interest expense arising from the acquisition of CGT.
(j) Represents tax benefits related to the interest expense incurred in the
acquisition of CGT.
(k) Represents the weighted average number of common shares outstanding for the
period presented after giving effect to the acquisition.
4. UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED JANUARY 31, 2001
(l) Represents the unaudited statements of operations of CGT for the three
months ended December 31, 2000.
(m) Represents amortization of goodwill arising from the acquisition of CGT.
(n) Represents interest expense arising from the acquisitions of CGT.
(o) Represents tax benefits related to the interest expense incurred in the
acquisition of CGT.
(p) Represents the weighted average number of common shares outstanding for the
period presented after giving effect to the acquisition.
F-24