EXHIBIT 99.3
Mobley & COMPANY
A PARTNERSHIP OF PROFESSIONAL CORPORATIONS
DAVID D. MOBLEY, JR. P.C.
CATHERINE CAVE MOBLEY, P.C.
iTENDANT, INC.
FINANCIAL STATEMENTS
DECEMBER 31,2003 AND 2002
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CERTIFIED PUBLIC ACCOUNTANTS
2551 ROSWELL ROAD / SUITE 425 / MARIETTA, GEORGIA 30062
(770)859-0035
(770)859-0034 FACSIMILE
WWW.MOBLEYANDCOMPANY.COM
iTENDANT, INC.
FINANCIAL STATEMENTS
December 31,2003 and 2002
TABLE OF CONTENTS
Page No.
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Independent Accountants' Report 1
Balance Sheets 2
Statements of Income (Loss) and Retained Earnings (Deficit) 3
Statements of Cash Flows 4
Notes to Financial Statements 5-8
MOBLEY & COMPANY
A PARTNERSHIP OF PROFESSIONAL CORPORATIONS
DAVID D. MOBLEY, JR. P.C.
CATHERINE CAVE MOBLEY, P.C.
INDEPENDENT ACCOUNTANTS' REPORT
To the Stockholders and Board of Directors of
iTENDANT, INC.
Atlanta, Georgia
We have audited the accompanying balance sheets of iTENDANT, INC. (a Delaware
Corporation) as of December 31, 2003 and 2002, and the related statements of
income, retained earnings (deficit), and cash flows for the years then ended.
These financial statements are the representation of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audits in accordance with U.S. 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. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in these 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 our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material aspects, the financial positions OF iTENDANT, INC. as of December
31, 2003 and 2002, and the results of its operations and its cash flows for the
years then ended in conformity with U.S. generally accepted accounting
principles.
[MOBLEY & COMPANY]
Marietta, Georgia
May 26, 2004
CERTIFIED PUBLIC ACCOUNTANTS
2551 ROSWELL ROAD / SUITE 425 / MARIETTA, GEORGIA 30062
(770) 859-0035
(770) 859-0034 FACSIMILE
WWW.MOBLEYANDCOMPANY.COM
iTENDANT, INC.
BALANCE SHEETS
December 31, 2003 and 2002
2003 2002
------------ ------------
ASSETS
Current assets
Cash $ 23,994 $ 82,349
Accounts receivable, less allowances for
uncollectible accounts of $0 15,772 11,672
Prepaid expenses 5,530 4,397
Subscription receivable 25,000 700,000
------------ ------------
Total current assets 70,296 798,418
Deferred tax charge 1,019,143 722,642
Intellectual property, at cost, less
accumulated amortization (Notes 1 and 3) 409,039 477,035
Property and equipment, at cost, less
accumulated depreciation (Notes 1 and 2) 43,186 50,515
------------ ------------
Total assets $ 1,541,664 $ 2,048,610
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 5,273 $ 33,735
Accrued expenses 10,008 2,657
Deferred revenue (Note 1) 25,259 7,892
------------ ------------
Total current liabilities 40,540 44,284
Deferred compensation payable 105,543 101,073
------------ ------------
Total liabilities 146,083 145,357
------------ ------------
Commitments and Contingencies (Notes 5 and 6)
Stockholders' equity
Common stock, $.001 value, 1,367,000
Shares issued and outstanding 1,367 1,367
Preferred stock - Class A 780,500 780,500
Treasury preferred stock - Class A (5,000) -
Preferred stock - Class B 395,100 395,100
Preferred stock - Class C 1,905,334 1,905,334
Retained earnings (deficit) (1,681,720) (1,179,048)
------------ ------------
Total stockholders' equity 1,395,581 1,903,253
------------ ------------
Total liabilities and stockholders' equity $ 1,541,664 $ 2,048,610
============ ============
The accompanying notes and independent accountants' report are an integral
part of these financial statements.
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iTENDANT, INC.
STATEMENTS OF INCOME (LOSS) AND RETAINED EARNINGS (DEFICIT)
For the years ended December 31, 2003 and 2002
2003 2002
------------ ------------
Net operating revenue (Note 1) $ 378,145 $ 129,850
Cost of services provided (Note 1) 10,330 634
------------ ------------
Gross profit 367,815 129,216
Selling, General and Administrative Expense 1,023,728 722,746
Depreciation expense 19,436 17,345
Amortization expense 118,252 67,443
------------ ------------
Operating income (loss) before other income and taxes (793,601) (678,318)
Other income and expenses
Interest expense (4,469) (4,912)
Interest income - 17
Loss on disposal of fixed assets (1,103) -
------------ ------------
Total other income and expenses (5,572) (4,895)
------------ ------------
Net income (loss) before income tax (expense) benefit (799,173) (683,213)
Income tax (expense) benefit - current - -
Income tax (expense) benefit - deferred 296,501 259.621
------------ ------------
Net income (loss) (502,672) (423,592)
Distribution to stockholders - -
Retained earnings (deficit), beginning of period (1,179,048) (755,456)
------------ ------------
Retained earnings (deficit), end of period $ (1,681,720) $ (1,179,048)
============ ============
The accompanying notes and independent accountants' report are an integral
part of these financial statements.
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iTENDANT, INC.
STATEMENTS OF CASH FLOWS
For the years ended December 31, 2003 and 2002
2003 2002
---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (502,672) $ (423,592)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 137,688 84,788
Loss on disposal of fixed assets 1,103 -
Decrease (increase) in subscription receivable 675,000 (700,000)
Increase (decrease) in accrued expenses 7,351 (100,130)
Increase in deferred revenue 17,367 5,065
Increase in deferred tax charge (296,501) (259,621)
(Increase) in accounts receivable (4,100) (2,840)
(Decrease) increase in accounts payable (28,462) 13,138
(Increase) / decrease in prepaid expenses (1,133) 32,985
Increase in other assets - -
---------- -----------
Net cash provided by operating activities 5,641 (1,350,207)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intellectual assets (50,256) (457,846)
Purchase of capital assets (13,210) (26,665)
Distribution to stockholder - -
---------- -----------
Net cash (used in) investing activities (63,466) (484,511)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury preferred stock (5,000)
Increase in deferred compensation 4,470 4,842
Preferred stock purchase 1,905,334
---------- -----------
Net cash provided by (used in)financing
activities (530) 1,910,176
Net increase (decrease) in cash (58,355) 75,458
Cash, beginning of period 82,349 6,891
---------- -----------
Cash, end of period $ 23,944 $ 82,349
========== ===========
The accompanying notes and independent accountants' report
are an integral part of these financial statements.
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iTENDANT, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
1. SIGNIFICANT ACCOUNTING POLICIES
Operations
ITENDANT, INC. (the Company) was incorporated in the state of Delaware on
August 22, 2000, to be an automated service provider of property service
and maintenance solutions that automate service requests and maintenance
management using the Internet and wireless hand-held devices. Services are
contracted with a variety of developers, property management companies and
entities throughout the southeastern United States.
Recognition of Contracted Service Income
The Company's accounting policies are consistent with generally accepted
accounting principles. In some instances where more than one generally
accepted accounting principle may be applied, the Company has adopted the
one that it believes most accurately and fairly reflects the
circumstances.
Billings and their collection on an unperformed contract are recorded as a
current liability as deferred revenue. Revenues recognized on a contract
in excess of the billings are shown as a current asset. The contract
amounts, as shown in these financial statements, also include approved
change orders that have been made.
Income Taxes
The Company has elected to be taxed under the provisions of Subchapter C
of the Internal Revenue Code. Under those provisions, the Company does pay
corporate income taxes on its taxable income. The Company's tax return is
prepared on an accrual basis.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation.
Depreciation is recorded using the straight-line method for financial
reporting purposes applied over the estimated useful lives of the assets.
For federal income tax purposes, depreciation is computed using the
Modified Accelerated Cost Recovery System. Cost of property sold or
otherwise disposed of and related accumulated depreciation is removed from
the accounts, and any resulting gain or loss is recognized in income
currently.
Website Development Costs
The Company accounts for Website development costs in accordance with the
FASB Emerging Issues Task Force 00-2 ("EITF"), Accounting for Website
Developments Costs. EITF 00-2 requires all costs related to the
development of websites other than those incurred during the application
development stage to be expensed as incurred. Costs incurred during the
application development stage are required to be capitalized and amortized
over the estimated useful life of the software. As of December 31, 2003
and 2002, the Company has capitalized website development costs and
recorded them and included in intellectual property.
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iTENDANT, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Capitalized Software
Costs related to internally developed software and software purchased for
internal use, which are required to be capitalized pursuant to Statement
of Position (SOP) No. 98-1, "Accounting for Costs of Computer Software
Developed or Obtained for Internal Use," are included in intellectual
property.
Inventories
Inventories of construction materials are valued at the lower of cost, as
determined by the first-in, first-out method, or market.
Cash Flows
For purposes of the statements of cash flows, the Company considers cash
and highly liquid investments with a maturity of three months or less to
be cash equivalents.
Concentration of Credit Risks
The Company performs services primarily to customers in the Southeastern
United States. The Company performs ongoing credit evaluations on its
customers' financial condition and generally does not require collateral
or security receivables.
2. PROPERTY AND EQUIPMENT
A summary of property and equipment and accumulated depreciation thereon
at December 31, 2003 and 2002, is as follows:
2003 2002
-------- --------
Computer equipment $ 69,203 $ 58,748
Computer software 24,246 24,247
Furniture 5,220 5,220
-------- --------
Total Fixed Assets 98,669 88,215
Less: accumulated depreciation (55,483) (37,700)
-------- --------
Net Fixed Assets $ 43,186 $ 50,515
-------- --------
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iTENDANT, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
3. INTELLECTUAL PROPERTY
A summary of intellectual property and accumulated amortization thereon at
December 31, 2003 and 2002, is as follows:
2003 2002
------------ ------------
Website and software development costs $ 616,392 $ 566,136
------------ ------------
Total Intellectual Property 616,392 566,136
Less: accumulated amortization (207,353) (89,101)
------------ ------------
Net Intellectual Property $ 409,039 $ 477,035
============ ============
4. LEASING ARRANGEMENTS
On February 1, 2001, the Company entered into three year lease of an
office space at 817 West Peachtree Street, Atlanta, Georgia requiring
monthly base rent of $3,405 for 2,270 square feet of office. The lease was
amended on March 10, 2004 for a term of an additional three months to
expire June 30, 2004.
Future minimum rental payments required under the operating lease as of
December 31, 2003, are as follows:
YEAR ENDING
DECEMBER 31, AMOUNT
- ------------ ------------
2004 $ 20,430
2005 -
2006 -
2007 -
2008 -
------------
Thereafter $ 20,340
============
Rental payments amounted to $40,860 and $40,860 on the current facility
for the years ended december 31, 2003 and 2002, respectively.
Future minimum rental payments required under other operating leases as of
December 31, 2003, are as follows:
YEAR ENDING
DECEMBER 31 AMOUNT
- ----------- ------
2004 $ -
2005 -
2006 -
2007 and thereafter -
------
$ -
======
Rental payments on operating lease equipment amounted to $-0- on the current
equipment for the year ended December 31, 2003.
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iTENDANT, INC.
NOTES TO FINANCIAL STATEMENTS
December 31,2003 and 2002
5. COMMITMENTS
As discussed in these notes, the Company has various outstanding
commitments entered into in the ordinary course of business.
6. CONTINGENCIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates based on
management's knowledge and experience. Those estimates and assumptions
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported revenues and expenses.
Due to their prospective nature, actual results could differ from those
estimates.
7. SUBSEOUENT EVENT
On April 16, 2004, the Company's assets including intellectual property
and software were purchased by Servidyne Systems, LLC, a Georgia Limited
Liability Company, a wholly owned subsidiary of Abrams Industries, Inc., a
Georgia Corporation.
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