Exhibit 2.2
11
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1994
(Unaudited)
ASSETS
------
December 31 December 31
1994 1994
INAV Santiago
Travel Data
Corporation Systems Pro Forma
--------------- --------------- ---------------
CURRENT ASSETS
Cash and cash equivalents $ 6,228 $ - $ 6,228
Trade accounts receivable, less allowance -
for accounts of $24,000 in 1993 17,491 155,929 173,420
Inventories 40,732 2,691 43,423
Notes receivable 26,520 - 26,520
Prepaid expenses and other 22,479 25,834 48,313
--------------- --------------- ---------------
Total current assets 113,450 184,454 297,904
--------------- --------------- ---------------
PROPERTY AND EQUIPMENT, NET 154,544 29,269 183,813
--------------- --------------- ---------------
OTHER ASSETS
Assets held for sale 435,000 - 435,000
Notes receivable, less current portion 228,434 - 228,434
Software development costs - - -
Patents, net of accumulated amortization of $1,784 38,641 - 38,641
Deposits 1,500 980 2,480
--------------- --------------- ---------------
Total other assets 703,575 980 704,555
--------------- --------------- ---------------
$ 971,569 $ 214,703 $ 1,186,272
=============== =============== ===============
-continued-
12
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued
December 31, 1994
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
December 31, December 31,
1994 1994
INAV Santiago
Travel Data
Corporation Systems Pro Forma
--------------- --------------- ---------------
CURRENT LIABILITIES
Cash overdraft $ 22,023 $ (10,740) $ 11,283
Notes payable, including $440,328 and $261,750
due to related parties 709,213 473,296 1,182,509
Accounts payable 300,287 123,729 424,016
Accrued liabilities 264,294 118,636 382,930
Other liabilities 115,894 362,938 478,832
Deferred revenue - 89,722 89,722
--------------- --------------- ---------------
Total current liabilities 1,411,711 1,157,581 2,569,292
--------------- --------------- ---------------
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock; $.001 par value; 50,000,000
shares authorized; 49,485,000 shares issued 49,485 6,561,418 6,610,903
Additional paid-in capital 518,722 - 518,722
Retained earnings (deficit) (861,310) (7,504,296) (8,365,606)
Treasury stock, at cost; 4,909,577 and 57,518 -
shares, respectively (147,039) - (147,039)
--------------- --------------- ---------------
Total shareholders' equity (deficit) (440,142) (942,878) (1,383,020)
--------------- --------------- ---------------
$ 971,569 $ 214,703 $ 1,186,272
=============== =============== ===============
13
INAV TRAVEL CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
December 31, 1994
(Unaudited)
INAV Santiago
Travel Data
Corporation Systems Pro Forma
--------------- --------------- ---------------
December 31, December 31,
1994 1994
--------------- --------------- ---------------
REVENUES
Service fee and broker income $ 927,391 $ 927,391
Smart card product sales 350,149 - $ 350,149
Software and maintenance sales 111,762 1,155,834 $ 1,267,596
Other 17,488 - $ 17,488
--------------- --------------- ---------------
Total revenues 1,406,790 1,155,834 $ 2,562,624
--------------- --------------- ---------------
COST OF REVENUES
Cost of service fees and broker income 127,552 - 127,552
Cost of smart card product sales 242,872 - 242,872
Cost of software and maintenance sales 35,300 218,827 254,127
--------------- --------------- ---------------
Total cost of revenues 405,724 218,827 624,551
--------------- --------------- ---------------
GROSS PROFIT 1,001,066 937,007 1,938,073
--------------- --------------- ---------------
OPERATING EXPENSES
Selling, general & administrative 1,848,347 1,443,725 3,292,072
Depreciation and amortization 28,585 - 28,585
Loss on write down of assets held for sale 68,294 - 68,294
Loss on disposition of assets held for sale and related 15,268 - 15,268
note receivable
--------------- --------------- ---------------
Total operating expenses 1,960,494 1,443,725 3,404,219
--------------- --------------- ---------------
INCOME (LOSS) FROM OPERATIONS (959,428) (506,718) (1,466,146)
OTHER INCOME AND EXPENSE
Interest expenses (25,947) - (25,947)
Other, net 35,848 - 35,848
--------------- --------------- ---------------
Total other income (expense) 9,901 - 9,901
--------------- --------------- ---------------
NET INCOME (LOSS) $ (949,527) $ (506,718) $ (1,456,245)
=============== =============== ===============
Income (loss) per weighted-average common share $ (0.02) $ 0.00 $ (0.02)
=============== =============== ===============
Weighted-average common shares outstanding 49,485,000 49,485,000
=============== =============== ===============
14
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 31, 1995
(Unaudited)
ASSETS
------
July 31, July 31,
1995 1995
INAV Santiago
Travel Data
Corporation Systems Pro Forma
--------------- --------------- ---------------
CURRENT ASSETS
Cash and cash equivalents $ 6,960 $ - $ 6,960
Trade accounts receivable, less allowance -
for accounts of $24,000 in 1993 1,061 33,235 34,296
Inventories - - -
Notes receivable 20,517 193,103 213,620
Prepaid expenses and other 18,147 17,788 35,935
--------------- --------------- ---------------
Total current assets 46,685 244,126 290,811
--------------- --------------- ---------------
PROPERTY AND EQUIPMENT, NET 137,188 - 137,188
--------------- --------------- ---------------
OTHER ASSETS
Assets held for sale 135,000 - 135,000
Notes receivable, less current portion 222,470 - 222,470
Software development costs - - -
Patents, net of accumulated amortization of $1,784 38,641 - 38,641
Deposits 1,500 - 1,500
--------------- --------------- ---------------
Total other assets 397,611 - 397,611
--------------- --------------- ---------------
$ 581,484 $ 244,126 $ 825,610
=============== =============== ===============
-continued-
15
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued
July 31, 1995
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
July 31, July 31,
1995 1995
INAV Santiago
Travel Data
Corporation Systems Pro Forma
--------------- --------------- ---------------
CURRENT LIABILITIES
Cash overdraft $400 $46,206 $46,606
Notes payable, including $440,328 and $261,750
due to related parties 749,004 425,781 1,174,785
Accounts payable 262,873 171,625 434,498
Accrued liabilities 150,090 747,917 898,007
Other liabilities 77,262 421,345 498,607
Deferred revenue - 100,430 100,430
--------------- --------------- ---------------
Total current liabilities 1,239,629 1,913,304 3,152,933
--------------- --------------- ---------------
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock; $.001 par value; 50,000,000
shares authorized; 49,485,000 shares issued 49,485 6,561,418 6,610,903
Additional paid-in capital 518,722 - 518,722
Retained earnings (deficit) (1,079,313) (8,230,596) (9,309,909)
Treasury stock, at cost; 4,909,577 and 57,518 -
shares, respectively (147,039) - (147,039)
--------------- --------------- ---------------
Total shareholders' equity (deficit) (658,145) (1,669,178) (2,327,323)
--------------- --------------- ---------------
$581,484 $244,126 $825,610
=============== =============== ===============
16
INAV TRAVEL CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
July 31, 1995
(Unaudited)
INAV Santiago
Travel Data
Corporation Systems Pro Forma
--------------- --------------- ---------------
July 31, July 31,
1995 1995
--------------- --------------- ---------------
REVENUES
Service fee and broker income $ 30,592 $ - $ 30,592
Software and maintenance sales 265,864 1,509,652 $ 1,775,516
Other 38,666 - $ 38,666
--------------- --------------- ---------------
Total revenues 335,122 1,509,652 $ 1,844,774
--------------- --------------- ---------------
COST OF REVENUES
Cost of service fees and broker income (145) - (145)
Cost of software and maintenance sales 107,810 152,108 259,918
--------------- --------------- ---------------
Total cost of revenues 107,665 152,108 259,773
--------------- --------------- ---------------
GROSS PROFIT 227,457 1,357,544 1,585,001
--------------- --------------- ---------------
OPERATING EXPENSES
Selling, general & administrative 267,277 1,906,674 2,173,951
Depreciation and amortization 5,076 14,240 19,316
Loss (Gain) on disposition of assets held
for resale and related note receivable 233,136 - 233,136
--------------- --------------- ---------------
Total operating expenses 505,489 1,920,914 2,426,403
--------------- --------------- ---------------
INCOME (LOSS) FROM OPERATIONS (278,032) (563,370) (841,402)
--------------- --------------- ---------------
OTHER INCOME AND EXPENSE
Interest expenses 4,905 - 4,905
Other, net 36 (800) (764)
--------------- --------------- ---------------
Total other income (expense) 4,941 (800) 4,141
--------------- --------------- ---------------
NET INCOME (LOSS) $ (282,973) $ (564,170) $ (847,143)
=============== =============== ===============
Income (loss) per weighted-average common share $ (0.02) $ 0.00 $ (0.02)
=============== =============== ===============
Weighted-average common shares outstanding 49,485,000 49,485,000
=============== =============== ===============
17
INAV TRAVEL CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMS CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
The Pro Forma Consolidated Balance Sheet as of December 31, 1994 and Pro Forma
Statements of Operations for the year ended December 31, 1994 for INAV Travel
Corporation ("INAV") are derived from financial statements previously filed with
the securities and Exchange Commission on Form 10-KSB and from audited financial
statements contained within this document. The Pro Forma Consolidated Balance
Sheet as of December 31, 1994 and Pro Forma Statements of Operations for the
year ended December 31, 1994 for Sanitago, SDS, Inc.
("SDS") were prepared by management.
The pro forma financial information should be read in conjunction with each
Company's historical Financial Statements and Notes thereto as of and for the
years ended December 31, 1994.
The pro forma information does not purport to be indicative of the results of
operations or the financial position which would have actually been obtained of
the acquisition transactions had been consummated on the dates indicated. In
addition, the pro forma financial information does not purport to be indicative
of results of operations or financial positions that may be obtained in the
future.
18
SANTIAGO DATA SYSTEMS, INC.
FINANCIAL STATEMENTS
JUNE 30, 1995
(See Accompanying Notes to Financial Statements and Accountants' Opinion)
19
TABLE OF CONTENTS
Page #
------
Balance Sheet - Assets 22
Balance Sheet-Liabilities and Equity 23
Statement of Operations 24
Statement of Cash Flows 25
Notes to Financial Statements 26-27
20
R. ANDREW GATELY & CO.
Certified Public Accountant
To the Board of Directors &
Stockholders' of Santiago Data Systems, Inc.
We have audited the accompanying balance sheet of Santiago Data Systems, Inc. (a
California Corporation) as of June 30, 1995, and the related statements of
income, retained earnings 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 generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about misstatements. 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 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 fairly, in all
material respects, the financial position of Santiago Data Systems, Inc., as of
June 30, 1995, and results of its operations and its cash flows for the year
then ended in conformity with generally accepted accounting principles.
As discussed in Note C to the financial statements, Company's management and
stockholders' sold, on August 1, 1995, all of the Company's assets.
The accompanying financial statements have been prepared assuming that the
Company will continue is a going concern. As discussed in Note F to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency, which raise substantial doubt about its
ability to continue as a going concern. Managements plans regarding those
matters also are described in Note C. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
R. Andrew Gately & Co.
Los Alamitos, California
April 8, 1996
- - --------------------------------------------------------------------------------
5030 Katella Avenue, Suite 224. Los Alamitos, California 90720
(310) 596-2622. (714) 995-6535. FAX (310) 596-4290
21
SANTIAGO DATA SYSTEMS, INC.
BALANCE SHEET
AS OF JUNE 30, 1995
(See Accompanying Notes to Financial Statements and Accountants' Opinion)
ASSETS
CURRENT ASSETS
Accounts Receivables (Net of 0 Allowance) $ 40,567
Due from MedBanc 200,435
Prepaid Assets & Deposits 17,788
--------
Total Current Assets 258,790
Property Plant & Equipment
Equipment, Furniture & Fixtures 424,656
Less Accumulated Depreciation (424,656)
--------
Net Property & Equipment 0
--------
TOTAL ASSETS $ 258,790
===========
22
SANTIAGO DATA SYSTEMS, INC.
BALANCE SHEET
AS OF JUNE 30, 1995
(See Accompanying Notes to Financial Statements and Accountants' Opinion)
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Deficit in Cash $ 37,763
Accounts Payable & Accrued Liabilities 162,514
Due to Officer/Stockholder 65,447
Payroll Tax Liability (Note B & C) 747,917
Priority Service Contracts 100,430
Due to MedBanc 168,469
Note to Vendor 91,000
Notes to Stockholders' & Employees (Note D) 360,334
Accrued Interest on Notes 161,876
-------
TOTAL CURRENT LIABILITIES 1,895,750
Contingencies (Note F)
STOCKHOLDERS' EQUITY
Preferred Stock Series A, No Par Value
Authorized Shares - 20,000,000
Issued - 13,333,333 (Note E) 200,000
Preferred Stock Series B, No Par Value
Authorized Shares- 40,000,000
Issued - 4,879,623 (Note E) 243,981
Common Stock, No Par Value
Authorized Shares - 40,000,000
Issued - 14,258,771 6,117,437
DEFICIT (8,198,378)
TOTAL STOCKHOLDERS' EQUITY-DEFICIT (1,636,960)
-----------
TOTAL LIABILITIES & EQUITY $ 258,790
============
23
SANTIAGO DATA SYSTEMS, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1995
(See Accompanying Notes to Financial Statements and Accountants' Opinion)
REVENUE
Sales To Customers $ 1,403,427
COST & EXPENSES
Cost of Items Sold to Customers 142,757
Advertising 75,106
Commissions 39,925
Employee Expenses 27,985
Insurance 46,575
Interest 54,462
Lease Expense 25,158
Marketing 24,142
Payroll and related expenses (Note B) 1,188,565
Postage 44,440
Rent 68,907
Telephone 94,962
Depreciation 14,240
Other 87,355
---------
Total Cost & Expenses 1,934,579
---------
Income tax expense 800
Net Loss (531,952)
Deficit - Beginning (7,666,426)
-----------
Deficit - Ending $ (8,198,378)
24
SANTIAGO DATA SYSTEMS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 1995
(See Accompanying Notes to Financial Statements and Accountants' Opinion)
OPERATING ACTIVITIES
Net Loss $ (531,952)
Adjustments to Revenue Net Loss to Net Cash Used
in Operating Activities:
Depreciation 14,240
CHANGES IN ASSETS & LIABILITIES
Accounts Receivable 115,362
Inventories 2,691
Due from MedBanc (200,435)
Deposits & Prepaid 8,046
Accounts Payable & Accrued liabilities 14,286
Due to Shareholders' & Employees 31,483
Payroll Tax Liability 383,812
Due to MedBanc 57,134
Priority Service Container Payable 10,708
Accrued Interest 43,240
Other 24,362
Cash Used In Operating Activities (27,023)
Cash Deficit - Beginning (10,740)
--------
Cash Deficit - Ending $ (37,763)
==========
25
Santiago Data Systems, Inc.
Notes to Financial Statements
June 30, 1995
NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Santiago Data Systems, Inc. (the "Company") primarily develops and markets
medical billing systems for use by doctors and medical billing centers. They
also offer technical support contracts to their customers. The Company provides
electronic data interchange for insurance companies and patient billings.
Basis of accounting
Revenue from products are recognized when the product is shipped to the
customers. Revenue from the technical support contracts are recognized on a
pro-rata basis over the coverage period.
Expenses and cost are recognized when incurred.
Property and equipment are stated at cost. Depreciation is being provided over
the estimated useful lives of the assets using accelerated rates.
NOTE B-PAYROLL TAXES PAYABLE
The Company is delinquent in paying $747,917 of federal and state payroll tax
liabilities which includes interest and penalties of $229,667.
Included in payroll and related expenses for the year ended June 30, 1995, are
approximately $84,000 or penalties and $17,000 of interest, charged by federal
and state taxing authorities for the above mentioned delinquencies.
NOTE C-SUBSEQUENT EVENTS
On August 1, 1995 the Company's management and stockholders' agreed to sell all
of the Company's rights, title, interest to all the business property and assets
(real and personal), assign certain commitments and trademarks, for
approximately $1.2 million. The consideration received was made up a note,
forgiveness of debt and the assumption of certain liabilities.
In conjunction with the above mentioned sale, an installment agreement was
negotiated with the Internal Revenue Service whereby the Company's federal
payroll tax liability was reduced to $377,306 which includes an amount of
$47,183 for the personal income tax liability of an officer/stockholder of the
Company. No such agreement has been reached with the California taxing
authorities.
26
Santiago Data systems, Inc.
Notes to Financial Statements
June 30, 1995
continued
NOTE C-SUBSEQUENT EVENTS (continued)
Per the Asset Purchase Agreement, the Company agrees to use the cash proceeds
from the sale, to the extent necessary, to retire the Company's obligation to
the Internal Revenue Service.
NOTE D-UNSECURED NOTES PAYABLE TO STOCKHOLDERS' AND EMPLOYEES
Unsecured notes payable to stockholders' and employees accrue interest at 12%.
NOTE E-PREFERRED STOCK SERIES A AND B
Preferred stock series A and B shall be entitled to receive, when declared by
the Board of Directors, annual cash dividends of 9/10th of 1 cent ($0.009) per
share and $0.01 per share, respectively, in preference to and in priority over
dividends for the common stock. In the event of a liquidations, dissolution or
winding down of the Company, the holders of series A preferred stock shall be
entitled to receive 5/10ths of 1 cent ($0.005) per share and the holders of
series B preferred stock shall be entitled to receive 10 cents ($0.10) per share
out of the assets of the corporation, plus any accrued and unpaid dividends, in
preference to and in priority over dividends for the common stock.
NOTE F-CONTINGENCIES
Going Concern
As shown in the accompanying financial statement, the Company incurred a net
loss of $531,952 for the year ended June 30, 1995, and as of that date the
Company's current liabilities exceeded its current assets by $1,636,960. These
factors create an uncertainty about the Company's ability as a going concern
(See Note C). The financial statements do not include any adjustments that might
be necessary if the Company is unable to continue as a going concern.
27