UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: April 4, 2001
Pinnacle Business Management, Inc.
(Exact name of registrant as specified in its chapter)
Nevada
(State or other jurisdiction of incorporation)
________________________
(Commission File Number)
91-1871963
(IRS Employer Identification No.)
2963 Gulf to Bay Boulevard, Suite 265
Clearwater, FL 33759
(Address of principal executive offices and zip code)
(727) 669-7781
(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On December 27, 2000, Pinnacle Business Management, Inc. ("Pinnacle" or
the "Company") entered into a definitive Stock Purchase Agreement by and among
Lo Castro and Associates, Inc., a Pennsylvania corporation, ("Lo Castro"),
Vincent A. Lo Castro and Kim Lo Castro (the "Selling Shareholders"), and Jeff
Turino and Michael B. Hall (the "Guarantors"). As a result of the Stock
Purchase Agreement, Pinnacle acquired 1,000 shares of common stock of Lo Castro
("Lo Castro Acquisition"), and Lo Castro became a wholly owned subsidiary of
Pinnacle, effective as of January 1, 2001. The Stock Purchase Agreement is
incorporated by reference to the Company's Form 8-K filed with the Securities
and Exchange Commission (the "SEC") on February 5, 2001.
The Stock Purchase Agreement was adopted by the unanimous consent of the
Board of Directors of Lo Castro & Associates, Inc. on December 27, 2000, and by
the unanimous consent of the Board of Directors of Pinnacle on December 27,
2000. No approval of the shareholders of Pinnacle or Lo Castro is required
under applicable state corporate law.
The closing of the Lo Castro Acquisition occurred on January 19, 2001. As
consideration for the Stock Purchase Agreement, the Selling Shareholders
received an aggregate of (a) an amount equal to the (i) the book value of Lo
Castro's assets as of December 31, 2000 plus (ii) five times the amount Lo
Castro's annualized earnings based on the third quarter of its fiscal year
ending December 31, 2000 and (b) shares of Pinnacle's common stock, par value
$0.001.
(b) At the closing, Pinnacle and the Guarantors delivered 83,300,000 shares
of Pinnacle's common stock, constituting 16.66% of Pinnacle's total authorized
common stock. In addition to Pinnacle's common stock, Pinnacle executed a
Secured Promissory Note with a maturity date January 1, 2007. The Secured
Promissory Note is incorporated by reference to the Company's Form 8-K filed
with the "SEC" on February 5, 2001.
Also pursuant to the Stock Purchase Agreement, Vincent A. Lo Castro was
appointed an officer of Pinnacle. Vincent A. Lo Castro and Kim Lo Castro are
also the beneficial owners of the 83,300,000 shares of Pinnacle's common stock
received as part of his consideration under the terms of the Stock Purchase
Agreement.
The consideration exchanged pursuant to the Stock Purchase Agreement was
negotiated between the shareholders of Lo Castro and the management of Pinnacle.
In evaluating Lo Castro as a candidate for the proposed acquisition,
Pinnacle used criteria such as the value of the assets of Lo Castro, its annual
earnings, and Lo Castro's business name and reputation. The selling
shareholders of Lo Castro determined that the consideration for the merger was
reasonable.
(c) Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding beneficial
ownership of the common stock as of January 19, 2001 by each individual who is
known to the company, as of the date of this filing, to be the beneficial owner
of more then five percent of any class of Pinnacle's voting securities. The
table shows each class of equity securities of Pinnacle and its subsidiaries
owned by all directors and officers of Pinnacle. Messrs. Hall and Turino are the
Directors and Executive Officers of Pinnacle, and Mr. Lo Castro is an officer of
Pinnacle.
Title of Class Name and Address of Amount and Nature of Percent of Class
Beneficial Owner Beneficial Ownership
- -------------- ---------------------- -------------------- -----------------
Common Stock Michael Bruce Hall 39,502,000 8.6%
- -------------- ---------------------- -------------------- -----------------
Common Stock Jeff Turino 39,502,000 8.6%
- -------------- ---------------------- -------------------- -----------------
Common Stock Kim Lo Castro and 83,300,000 18.2%
Vincent Lo Castro
- -------------- ---------------------- -------------------- -----------------
Common Stock Officers and Directors 162,304,000 35.4%
as a Group
(d) There are no agreements between or among any of the shareholders
which would restrict the issuance of shares in any manner that would result in
change of control of Pinnacle other than the Shareholder Rights Agreement by and
among Pinnacle and Kim Lo Castro and Vincent Lo Castro, dated as of January 1,
2001, and the Stock Pledge Agreement by and among the same parties, dated as of
January 1, 2001. The Shareholder Rights Agreement is attached hereto as Exhibit
4. The Stock Pledge Agreement is incorporated by reference to the Company's
Form 8-K filed with the "SEC" on February 5, 2001.
(e) Pinnacle intends to continue Lo Castro's historical businesses as described
below.
Description of Business
- -------------------------
Lo Castro & Associates, Inc., a Pennsylvania corporation established on July 23,
1997, operates and conducts business through their three divisions:
(a) Lo Castro & Associates,Inc., d/b/a All Pro Auto Mall, which sells used
passenger cars and light trucks;
(b) Lo Castro & Associates, Inc., d/b/a All Pro Daewoo, which sells and
services Daewoo motor vehicles and parts and accessories under an
agreement with Daewoo Motor America, Inc. ("DMA"), a Delaware
corporation; and
(c) Lo Castro & Associates,Inc., d/b/a All Pro Communications, a full
service telecommunications company that provides a wide range of
products and services to business customers as well as digital
wireless telephones to individuals.
All Pro Auto Mall
- --------------------
All Pro Auto Mall sells used passenger cars and light trucks in the Western
Pennsylvania area out of its Auto Mall store in McMurray, Pennsylvania. The Auto
Mall store, located on Route 19 South in Peters Township, has a showroom that
accommodates up to seven vehicles. The Company focuses its marketing efforts on
the sub-prime customer through its Buy-Here-Pay-Here program. In a typical
transaction, the Buy-Here-Pay-Here customer purchases a used vehicle that sells
for less than $9,000. The customer is required to make a down payment, ranging
from $1,500 to $2,500, and finances the balance with the Company. All Pro
charges interest rates ranging from 13% to 21%, depending on the condition and
model year of the vehicle, the degree of credit risk, and the size and term of
the loan.
All Pro Auto Mall also offers a wide range of traditional third party financing
and leasing options for customers not considered sub-prime. Occasionally, the
Auto Mall also offers a limited selection of classic cars, sports cars, exotic
cars, and motorcycles. These vehicles are financed through traditional financing
arrangements with other lending institutions.
All Pro Daewoo
- ----------------
All Pro Daewoo is an authorized dealer of Daewoo Motor America, Inc., and it
sells new and used Daewoo motor vehicles. Daewoo Motor America, Inc. currently
manufactures three Daewoo models for sale in the United States, all of which are
available at All Pro Daewoo. The Daewoo models consist of the sub-compact Lanos,
the mid-size Nubira, and the full-size Leganza. Daewoo motor vehicles are a
high-value, low price-point vehicle with Manufacturer's Suggested Retail Prices
ranging from $9,199 to $19,199, excluding taxes, title, and destination charges.
Daewoo vehicles are sold for cash or financed through traditional third party
sources and are not typically eligible for the Buy-Here-Pay-Here Program.
The All Pro Daewoo dealership has a full service parts department with eleven
service bays and a customer service department. It has the ability to service
any vehicle. It is also a fully licensed Safety Inspection and Emission Station
for the Commonwealth of Pennsylvania, making servicing any vehicle convenient
for the customer.
All Pro Communications
- ------------------------
All Pro Communications is a full service Telecommunications company engaged in
the sales, installation, and service of the following systems:
1. Digital Business Telephone Systems
2. Digital Voice Mail Systems
3. Automated Attendant Systems
4. Nurse Call Systems
5. Emergency Call Systems
6. Closed Circuit Television (CCTV) Surveillance Systems
7. Fire and Security Systems
8. Structured Cabling (voice, data, video, fiber optics)
9. Telephone Entry Systems
On May 24, 2000, All Pro entered into an agreement with NEC America, Inc.
("NECAM"), a New York corporation with a principal place of business located in
Irving, Texas, to sell and distribute telecommunications products and to provide
installation, repair, maintenance, training and related services in the
territory designated in the Agreement. The NECAM Agreement and Product
Appendices are incorporated by reference to the Company's Form 8-K filed with
the SEC on February 5, 2001.
All Pro Communications provides 24 hour per day, 7 day per week - Emergency
Service with 4 hour guaranteed response time. Non-emergency service calls may
often be handled remotely by the customer care department. All Pro systems
analysts can remotely dial into a customer's Digital PBX, or Key System and
perform remote diagnostics to determine the nature of the problem. Proper remote
diagnostics are ultimately cost effective for the end user.
All Pro, as NECAM's Associate under the agreement with NEC America, Inc., has
installed business telephone systems within the port configurations offered by
NECAM. During the calendar year 2000, All Pro provided installation and service
to the commercial industry, private business, government agencies, health care
facilities and educational institutions throughout the Western Pennsylvania
region.
All Pro Communication is lead by a group of experienced telecommunication
professionals specializing in the sales, design, installation and service of
Business Communication Systems. All Pro employees include communications
consultants, certified technicians, customer service representatives and
administrative personnel. Senior management of All Pro will be comprised of the
same team that has directed the growth of Lo Castro since its incorporation in
1997 and includes Vincent A. Lo Castro, Mark D. Jackson, Frank J. Lo Castro and
Vincent Trocheck. In addition, the current management brings to All Pro many
years of combined experience in business management and telecommunications.
In addition, All Pro Communications is an authorized agent of AT&T Wireless
Services in the Pittsburgh Metropolitan Statistical Area. As AT&T's agent, All
Pro offers a wide range of products, including the latest digital multi-network
and internet-ready wireless telephones manufactured by Nokia, Ericsson, and
Motorola. The Company also assists the customer in selecting the best calling
plan on which to activate service based on a review of their calling patterns
(minutes used per month, long distance and roaming activity).
All three divisions operate out of the same facility, a three story building and
parcel located at 3644 Washington Road, McMurray, Pennsylvania, 15317. The
property is owned by Arnoni, Lo Castro & Associates ("Arnoni"), a Pennsylvania
General Partnership, which was acquired by Pinnacle in the Lo Castro
Acquisition. Prior to the Lo Castro Acquisition, each of the Selling
Shareholders assigned their respective interest in Arnoni to Lo Castro &
Associates, Inc. The Assignment of Partnership Agreement has been filed with the
Commission as Exhibit 17.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
COMBINED
FINANCIAL STATEMENTS
YEARS ENDED
DECEMBER 31, 2000 AND 1999
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
TABLE OF CONTENTS
DECEMBER 31, 2000 AND 1999
PAGE
----
AUDITORS' REPORT
1
COMBINED FINANCIAL STATEMENTS:
Combined Balance Sheets 2-3
Combined Statements of Operations 4
Combined Statements of Shareholders'/Partners' Equity 5
Combined Statements of Cash Flows 6-7
NOTES TO COMBINED FINANCIAL STATEMENTS 8-20
SUPPLEMENTAL INFORMATION:
Independent Auditors' Report on Supplemental 21
Information
Schedule I - Combined Cost of Sales 22
Schedule II - Combined Operating Expenses 23
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Shareholders and Partners
Lo Castro & Associates, Inc.
Arnoni, Lo Castro & Associates
McMurray, PA
We have audited the accompanying combined balance sheets of Lo Castro &
Associates, Inc. and Arnoni, Lo Castro & Associates as of December 31, 2000 and
1999 and the related combined statements of operations, shareholders'/partners'
equity, and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these combined financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall combined
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Lo Castro &
Associates, Inc. and Arnoni, Lo Castro & Associates as of December 31, 2000 and
1999, and the results of its operations, changes in shareholders'/partners'
equity, and cash flows for the years then ended in conformity with generally
accepted accounting principles.
BAGELL, JOSEPHS & COMPANY, L.L.C.
BAGELL, JOSEPHS & COMPANY, L.L.C.
Certified Public Accountants
March 15, 2001
Gibbsboro, New Jersey
-1-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
COMBINED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
ASSETS
2000 1999
-------------- -------------
Current Assets
Cash and cash equivalents $ 59,947 $ 114,859
Accounts receivable, net of allowance for doubtful
accounts of $15, 881 and $15,771, respectively 236,761 604,514
Accounts receivable - shareholders 502,000 132,000
Mortgage loans receivable 158,370 75,495
Automobile loans receivable, net of allowance for doubtful
Accounts of $145,534 and $40,534, respectively 1,644,448 1,478,144
Inventory 1,578,199 1,551,203
Other current assets 42,533 39,624
------------- ------------
Total current assets 4,222,258 3,995,839
Property, plant and equipment - net of accumulated
depreciation 1,751,142 1,784,133
Loan origination costs - net of accumulated
amortization 5,005 5,425
Other assets - 33,502
-------------- -------------
TOTAL ASSETS $ 5,978,405 $ 5,818,899
============== =============
See accompanying notes to the financial statements
-2-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
COMBINED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
LIABILITIES AND SHAREHOLDERS' / PARTNERS' EQUITY
2000 1999
-------------- -----------
Current Liabilities
Demand note - shareholders $ 1,500,000 $1,500,000
Current portion of mortgage payable 1,177,888 29,345
Current portion of notes payable - banks 330,601 230,015
Floor plan finance liability 410,518 624,810
Accounts payable and accrued expenses 711,637 406,948
Deferred revenue 20,608 -
-------------- ------------
Total current liabilities 4,151,252 2,791,118
-------------- ------------
Advances - shareholders - 998,578
Mortgage payable - net of current portion - 1,177,888
Notes payable - banks, net of current portion 1,033,688 806,459
-------------- ------------
Total liabilities 5,184,940 5,774,043
-------------- ------------
Shareholders' /Partners' Equity
Common stock 1,000 1,000
Additional paid-in capital 904,869 904,869
Accumulated (deficit) (112,404) (861,013)
-------------- ------------
Total shareholders' /partners' equity 793,465 44,856
-------------- ------------
TOTLAT LIBILITIES AND SHAREHOLDERS'/
PARTNERS' EQUITY $ 5,978,405 $5,818,899
============== ============
See accompanying notes to the financial statements
-3-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED
DECEMBER 31, 2000 AND 1999
2000 1999
------------ ------------
SALES AND SERVICES
Vehicles $ 9,160,029 $10,070,171
Business telephone systems and wireless telephones 655,856 1,949,121
Miscellaneous 17,656 98,334
Consulting 1,751,831 482,732
------------ ------------
Total Sales and Service 11,585,372 12,600,358
COST OF SALES - See Schedule I 7,854,613 9,843,572
------------ ------------
GROSS PROFIT 3,730,759 2,756,786
OPERATING EXPENSES - See Schedule II 2,369,907 3,243,772
------------ ------------
INCOME (LOSS) FROM OPERATIONS 1,360,852 (486,986)
------------ ------------
OTHER INCOME (EXPENSES)
Real estate, net (437,223) 152,159
Interest income 413,767 102,412
Interest expense (435,003) (395,003)
Depreciation and amortization (76,134) (71,789)
Bad debt expense (105,000) (34,771)
Unrealized gain (loss) on inventory valuation 27,350 (67,862)
Realized gain and disposal of fixed assets - 5,016
------------ ------------
Total Other Income (Expenses) (612,243) (309,838)
------------ ------------
NET INCOME (LOSS) $ 748,609 $ (796,824)
=========== ============
See accompanying notes to the financial statements
-4-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
COMBINED STATEMENTS OF SHAREHOLDERS'/ PARTNERS' EQUITY
FOR THE YEARS ENDED
DECEMBER 31, 2000 AND 1999
Number Additional
(1) of Common Paid-in Accumulated
Shares Stock Capital (Deficit)
--------- ---------- --------- -----------
Balance - January 1, 1999 1,000 $ 1,000 $ 252,316 ($64,189)
Contributions - - 652,553 -
Net Loss - - - (796,824)
--------- ---------- --------- -----------
Balance - December 31, 1999 1,000 $ 1,000 904,869 (861, 013)
Net Income - - - 748,609
---------- --------- --------- -----------
Balance - December 31, 2000 1,000 $ 1,000 $ 904,869 ($112,404)
========== ========= ========= ===========
(1) Common Stock, 100,000 shares authorized; 1000 shares
issued and outstanding at $1.00 par value.
See accompanying notes to the financial statements.
-5-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
DECEMBER 31, 2000 AND 1999
2000 1999
------------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 748,609 $ (796,824)
------------------ ------------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 76,134 71,789
Allowance for doubtful accounts - 15,771
Allowance for auto loans 105,000 40,534
Unrealized (gain) loss on inventory valuation (27,350) 67,862
Noncash recognition of vehicle inventory (604,041) (54,300)
(Increase) Decrease in Assets
Accounts receivable 367,753 (485,957)
Accounts receivable - shareholders (370,000) (132,000)
Mortgage loan receivable (82,875) (75,495)
Automobile loan receivable (271,304) (1,057,499)
Inventory 604,395 607,468
Other current assets (2,909) (39,624)
Other assets 33,502 (22,822)
Increase (Decrease) in Liabilities
Accounts payable and accrued expenses 304,689 160,274
Floor plans finance liability (214,292) 624,810
Deferred revenue 20,608 -
------------------ ------------
Total adjustment (60,690) (279,189)
------------------ ------------
Net cash provided by (used in) operating activities 687,919 (1,076,013)
------------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of fixed assets (44,806) (73,705)
Disposal of fixed assets, net 2,083 3,356
------------------ ------------
Net cash used in investing activities (42,723) (70,349)
------------------ ------------
See accompanying notes to the financial statements.
-6-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
COMBINED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED
DECEMBER 31, 2000 AND 1999
2000 1999
----------------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from notes payable - banks $ 327,815 $ 623,482
Payments of mortgage payable (29,345) (27,492)
Payments/Advances to shareholders (998,578) -
Contributions from shareholders - 652,553
----------------- -----------
Net cash provided by (used in) financing activities $ (700,108) $1,248,543
----------------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (54,912) 102,181
CASH AND CASH EQUIVALENTS - Beginning of Year 114,859 12,678
----------------- -----------
CASH AND CASH EQUIVALENTS - End of Year $ 59,947 $ 114,859
================= ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for interest $ 435,003 $ 395,003
================= ===========
SUPPLEMENTAL DISCLOSURE OF NON CASH
OPERATING ACTIVITIES
Vehicle inventory received as part of the consulting
revenues earned by the Company:
Decrease in inventory $ 354 $ 553,168
Vehicle inventory received as part of
consulting revenues 604,041 54,300
----------------- -----------
$ 604,395 $ 607,468
================= ===========
See accompanying notes to the financial statements
-7-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
NOTE 1 - NATURE OF BUSINESS
Lo Castro & Associates, Inc., (the "Company") was incorporated on July
23, 1997 in the Commonwealth of Pennsylvania. The Company is a
licensed new vehicle dealer that sells Daewoo motor vehicles pursuant
to a franchise agreement. In addition, the Company sells used cars,
communication systems, wireless telephones, and provides consulting
services to other dealers.
Arnoni, LoCastro & Associates ("Arnoni") is a Pennsylvania General
Partnership formed on November 6, 1997. On December 2, 1997, Arnoni
purchased the land and building on which the Company is located.
Vincent A. Lo Castro and Kim N. Lo Castro are each a 50% partner of
Arnoni.
On December 27, 2000, Vincent A. Lo Castro and Kim Lo Castro (the
"Sellers"), pursuant to a stock purchase agreement, agreed to sell
100% of the stock of the Company to Pinnacle Business Management,
Inc., a Nevada corporation, effective as of January 1, 2001. The
closing occurred January 19, 2001.
Effective as of January 1, 2001, in accordance with the Stock Purchase
Agreement, Vincent A. Lo Castro and Kim N. Lo Castro assigned 98% and
100% of their respective interests in the partnership to the Company.
-8-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination
---------------------------
The combined financial statements include the accounts of the Company
and Arnoni. All material intercompany accounts and transactions have
been eliminated in the combination.
Cash and Cash Equivalents
----------------------------
For the purpose of the combined financial statements, the Company
considers all highly liquid debt instruments with original maturity of
three months or less to be cash equivalents.
Revenue and Cost Recognition
-------------------------------
The Company utilizes the accrual method of accounting whereby revenue
is recognized when earned and expenses are recognized when incurred.
Inventory
---------
A] New vehicles and parts and accessories are valued at cost.
Cost is determined by specific identification.
B] Used vehicles are valued at the lower of cost or estimated
wholesale value as determined by the N.A.D.A. official used car
guide by specific identification.
C] Other inventories including business telephone systems and
wireless telephones are valued at cost.
-9-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounts Receivable and Automobile Loans Receivable
--------------------------------------------------------
The Company provides currently for the amount of receivables estimated
to become uncollectible in the future by providing an allowance for
doubtful accounts.
Property, Plant and Equipment
--------------------------------
Property, plant and equipment principally consist of land and
buildings, furniture and equipment, leasehold improvements and
vehicles. Property, plant and equipment are recorded at cost.
Maintenance and repairs are charged to operations when incurred, while
betterments and renewals are capitalized and depreciated over their
estimated useful lives. When property, plant and equipment are retired
or otherwise disposed of, the asset account and the related
accumulated depreciation account is reduced, and any resulting gain or
loss is included in operations.
Estimated
Assets Useful Life
----------------------------------------------------------
Building 39 years
Furniture and equipment 5-7 years
Leasehold improvements 39 years
Vehicles 5 years
Depreciation for book purposes is calculated on the straight-line
basis over the estimated useful lives, and for tax purposes computed
using accelerated methods.
-10-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Floor Plan Finance Liability
-------------------------------
The floor plan finance liability agreement is a direct financing of
vehicle inventory and therefore is classified as an operating activity
in the Combined Statements of Cash Flows.
Advertising Costs
------------------
The Company expenses the costs associated with advertising as
incurred. Total advertising expense for the years ended December 31,
2000 and 1999 was approximately $231,909 and $330,888, respectively.
Income Taxes
-------------
The Company, with the consent of its stockholders, has elected to be
treated as an "S" Corporation under Sections 1361-1369 of the Internal
Revenue Code. Under these Sections, corporate income or loss, in
general, is allocated to the stockholders for inclusion in their
personal income tax returns. Accordingly, there is no provision for
federal and state income tax in the accompanying financial statements,
nor does the Company receive the benefit of net operating loss
carryforwards or carrybacks.
Arnoni does not record a provision for income taxes because the
individual partners report their share of the partnership's income or
loss on their individual income tax returns. Accordingly, there is no
provision for federal and state income tax in the accompanying
financial statements.
-11-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Deferred Revenues
------------------
Periodically, the Company will receive deposits for business telephone
systems prior to installation. At December 31, 2000, the Company had
$20,608 of customer deposits for systems placed in service in 2001.
Use of 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.
Accordingly, actual results could differ from those estimates.
NOTE 3 - INVENTORY
At December 31, 2000 and 1999, inventory consists of the following:
2000 1999
---------- ----------
Vehicles $1,474,935 $1,425,530
Business Telephone Systems 83,003 67,003
Wireless Telephone and Accessories 8,444 24,576
Vehicle Parts and Other 11,817 34,094
---------- ----------
$1,578,199 $1,551,203
========== ==========
The vehicle inventory as reflected above is shown net of a valuation
allowance of $27,350 and $67,862 for the years ended December 2000 and
1999, respectively. The vehicles are reflected at the lower of cost or
estimated wholesale value as determined by the N.A.D.A. official used
car guide.
-12-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
NOTE 4 - BUY-HERE, PAY-HERE
Typical Program
----------------
The typical Buy-Here, Pay-Here (BHPH) customer buys a used vehicle
that sells for less than $9,000. Customers typically make a down
payment of $1,500 to $2,500 and finances the remaining balance with
the Company. The Company interest rate charges range from 13% to 21%,
depending on the condition of the vehicle, the degree of credit risk
taken by the Company, and the size and term of the loan.
Repossessions
-------------
The industry repossession rate is approximately 2%. The Company has
averaged less than 2% on their repossessions since inception in 1997.
The Company factors the repossession rate into establishing criteria
in charging interest rates on the respective loans that are
outstanding. (See Note 5).
NOTE 5 - AUTOMOBILE LOANS RECEIVABLE
As noted in the BHPH program description (Note 4), the Company
provides financing for customers in "sub-prime" lending brackets. In
certain BHPH deals, the Company borrows amounts from various banks
(See Note 9) and, in a separate transaction, enters into an agreement
with the customers for their acquisition of the vehicle.
At December 31, 2000 and 1999, the Company had $1,644,448 and
$1,478,144, respectively due from its customers in loans outstanding
as reflected in the Combined Balance Sheets.
-13-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000 AND 1999
NOTE 5 - AUTOMOBILE LOANS RECEIVABLE (CONTINUED)
The Company, has established a reserve for uncollectible loans of
$145,534 and $40,534, for December 31, 2000 and 1999 respectively.
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT
The following is a summary of land, building, equipment, leasehold
improvements and vehicles, at cost less accumulated depreciation at
December 31, 2000 and 1999:
2000 1999
----------- -----------
Land (1) $ 242,355 $ 242,355
Building (1) 1,356,891 1,356,891
Furniture, fixtures and equipment 141,371 136,613
Leasehold improvements 95,129 87,594
Vehicles 117,650 87,972
------------ -----------
1,953,396 1,911,425
Less: Accumulated depreciation (202,254) (127,292)
------------ -----------
Net property, plant and equipment $ 1,751,142 $1,784,133
============ ===========
Depreciation expense for the years ended December 31, 2000 and 1999,
was $74,962 and $71,369, respectively.
(1) The mortgagor has made a demand for the mortgage payable (see
Note 10) which is secured by the land and the building.
-14-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000 AND 1999
NOTE 7 - MORTGAGE LOANS RECEIVABLE
The Company has provided financing for the acquisition of certain real
property on behalf of employees and related parties (See Note 12).
Typically, the Company is paid back within one year for a majority of
the mortgages outstanding. As of December 31, 2000 and 1999, the
Company had $158,370 and $75,495 outstanding under mortgage loans
receivable.
NOTE 8 - DEMAND NOTE - SHAREHOLDERS
The shareholders of the Company, on behalf of the Company, have a
demand line of credit in the amount of $1,500,000 outstanding at
December 31, 2000 and 1999, respectively. The line of credit bears
interest monthly at a rate of one percent (1%) below the prime rate
(8.50% at December 31, 2000). The Company is responsible for and has
made all interest payments. The demand note was used to purchase
vehicle inventory, and is secured by all securities, instruments and
cash of the shareholders.
Interest expense for the years ended December 31, 2000 and 1999, for
the line of credit amounted to $124,719 and $105,385, respectively.
-15-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000 AND 1999
NOTE 9 - NOTES PAYABLE - BANKS
2000 1999
---- ----
Notes payable with various banks with payment
terms calling for equal monthly installments,
with the notes maturing through 2006 at
various interest rates ranging from 8.9%
to 14.9%. The notes are secured by
the individual vehicle financed. $1,364,289 $1,036,474
---------- ----------
1,364,289 1,036,474
Less: Current portion 330,601 230,015
---------- ----------
$1,033,688 $ 806,459
========== ==========
The future aggregate maturities of these notes at December 31, 2000
are as follows:
Year Ending December 31,
---------------------------
2001 $ 330,601
2002 347,983
2003 343,340
2004 224,755
2005 105,270
2006 12,340
----------
$1,364,289
==========
-16-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000 AND 1999
NOTE 10 - MORTGAGE PAYABLE
Mortgage payable with a bank in the original
amount of $1,260,000, with monthly payments of
$10,904, inclusive of interest at approximately 8.34%
through January, 2008. The mortgage payable is
secured by the building and land on which the
Company is situated. 2000 1999
---- ----
$ 1,177,888 $1,207,233
------------ -----------
1,177,888 1,207,233
Less: current portion (1,177,888) (29,345)
------------ -----------
$ -0- $1,177,888
============ ===========
The future aggregate maturities of this mortgage at December 31, 2000
is as follows:
2000
----
Year Ending December 31,
2001 $ 1,177,888
-----------
$ 1,177,888
===========
The mortgagor has made a demand for the principal balance due under
the terms of the mortgage note. The Company is in the process of
refinancing the indebtedness with another financial institution.
-17-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000 AND 1999
NOTE 11 - FLOOR PLAN FINANCE LIABILITY
The floor plan finance liability is collateralized by the Company's
inventory of new Daewoo vehicles and personal guarantees of the
shareholders. The liability is financed under a Floor Plan Agreement
with Promistar Bank (formerly Laurel Bank). Interest charged on the
facility financed with Promistar Bank is based on prime plus one-half
of a percent (.50%) as determined by the lender. The rate at December
31, 2000 and 1999 was 10% and 9%, respectively. All advances are
considered current and are due when the related vehicles are sold. The
Company has $1,000,000 available under this Floor Plan Agreement. At
December 31, 2000 and 1999, the Company had $410,518 and $624,810
outstanding.
NOTE 12 - RELATED PARTY TRANSACTIONS/COMMITMENTS
The Company's shareholders are also the partners of Arnoni. The
Company pays rent to Arnoni in the amount of $11,000 per month. The
lease is on a month-to-month basis, with the Company being responsible
to pay for the real estate taxes and insurance associated with the
property and the building. The rents have been eliminated in the
combination.
Periodically, the shareholders will contribute capital into the
Company in the form of vehicle inventory and cash. The cars are
contributed at the lower of cost or estimated wholesale value, and the
deal terms are consummated in an arms-length transaction.
-18-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000 AND 1999
NOTE 12 - RELATED PARTY TRANSACTIONS/COMMITMENTS (CONTINUED)
The Company performs consulting and management services for the New
Auto Store, Inc. an automobile dealership that is 10% owned by the
Company's shareholders. The fees earned by the Company are for
services rendered by the shareholder of the Company. Consulting fees
for the years ended December 31, 2000 and 1999 amounted to $1,585,372
and $241,232, respectively, and a portion of those fees were paid in
the form of vehicle inventory. The consulting revenue is earned on a
month to month basis. There is no long-term contract governing this.
The Company provides management consulting services to a related
entity in the Washington, D.C. area, All Pro Telecommunications, Inc.
The services performed include financial accounting and management of
the wireless telephone business of All Pro Telecommunications, Inc.
Management fee income from All Pro Telecommunications, Inc. for the
years ended December 31, 2000 and 1999 was $138,000 and $221,500
respectively.
The Company has provided financing in the form of mortgage loans to an
employee and a relative of the shareholders.
-19-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000 AND 1999
NOTE 13 - CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of temporary cash
investments and trade accounts receivables. The Company places its
temporary cash investments with financial institutions and limits the
amount of credit exposure to any one financial institution.
Concentrations of credit risk with respect to trade receivables are
limited due to the large number of customers comprising the Company's
customer base and their dispersion across different industries and
geographic locations. As of December 31, 2000 and 1999, the Company,
had approximately $72,445 and $119,166 respectively of concentration
of credit risk, from cash exceeding the federally insured limits.
-20-
SUPPLEMENTAL INFORMATION
INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL INFORMATION
--------------------------------------------------------
To the Shareholders and Partners
Lo Castro & Associates, Inc.
Arnoni, Lo Castro & Associates
McMurray, PA
Our report on the basic combined financial statements of Lo Castro & Associates,
Inc. and Arnoni, Lo Castro & Associates appears on page one. Our audits were
made for the purpose of forming an opinion on the basic combined financial
statements taken as a whole. The supplemental information presented in
Schedules I and II are presented for the purpose of supplemental analysis and is
not a required part of the basic combined financial statements. The
supplemental information has been subjected to the auditing procedures applied
in the audits of the basic combined financial statements.
BAGELL, JOSEPHS & COMPANY, L.L.C.
BAGELL, JOSEPHS & COMPANY, L.L.C.
Certified Public Accountants
March 15, 2001
Gibbsboro, New Jersey
-21-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
SCHEDULE I - COMBINED COST OF SALES
FOR THE YEARS ENDED
DECEMBER 31, 2000 AND 1999
2000 1999
------------ ------------
INVENTORY - Beginning of Year $1,551,203 $2,172,233
------------ ------------
Purchases:
Vehicles 7,446,902 8,215,318
Business telephone systems and wireless telephones 386,035 908,662
Miscellaneous 29,390 75,614
------------ ------------
Total purchases 7,862,327 9,199,594
------------ ------------
Freight 19,282 22,948
INVENTORY - End of Year (1,578,199) (1,551,203)
------------ ------------
COST OF SALES $ 7,854,613 $ 9,843,572
============ ============
See accountants' report on supplemental information.
-22-
LO CASTRO & ASSOCIATES, INC.
AND
ARNONI, LO CASTRO & ASSOCIATES
SCHEDULE II - COMBINED OPERATING EXPENSES
FOR THE YEARS ENDED
DECEMBER 31, 2000 AND 1999
2000 1999
---------- ----------
Salaries, wages and labor costs $1,351,795 $1,946,769
Payroll taxes 97,271 136,607
Employee benefits 56,102 35,417
Rent 66,850 57,519
Office expense 122,352 119,981
Telephone 55,190 87,804
Utilities 40,268 37,302
Auto expense 50,079 62,058
Insurance 81,492 69,677
Advertising 231,909 330,888
Professional fees 45,075 31,712
Postage 4,410 13,307
Real estate taxes 27,358 32,273
Travel and entertainment 48,450 18,280
Miscellaneous expense 91,306 264,178
---------- ----------
TOTAL OPERATING EXPENSES $2,369,907 $3,243,772
========== ==========
See accountants' report on supplemental information.
-23-
PINNACLE BUSINESS MANAGEMENT, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2000
(1)
PINNACLE BUSINESS LO CASTRO & PRO FORMA
MANAGEMENT, INC. ASSOCIATES, INC. ADJUSTMENTS PRO FORMA
------------------- ------------------ ------------- ------------
ASSETS
Current assets
Cash and cash equivalents $ 2,988 $ 59,947 $ - $ 62,935
Accounts receivable, trade - net 15,620 236,761 - 252,381
Accounts receivable, other - net 423,000 502,000 - 925,000
Mortgage receivable - 158,370 - 158,370
Automobile loans - net - 1,644,448 - 1,644,448
Inventory - 1,578,199 - 1,578,199
Other current assets 30,000 42,533 - 72,533
Deposit - Lo Castro & Associates, Inc. 1,249,500 - (B) (1,249,500) -
------------------- ------------------ ------------- ------------
Total current assets 1,721,108 4,222,258 (1,249,500) 4,693,866
Property, plant and equipment - net 166,485 1,751,142 (A) 1,400,000 3,317,627
Investment 135,000 - - 135,000
Loan costs - 5,005 - 5,005
Cost in excess of net assets acquired - - (A) 5,605,762 5,605,762
------------------- ------------------ ------------- ------------
TOTAL ASSETS $ 2,022,593 $ 5,978,405 $ 5,756,262 $13,757,260
=================== ================== ============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Demand notes $ 200,000 $ 1,500,000 $ - $ 1,700,000
Current portion of mortgage payable - 1,177,888 - 1,177,888
Current portion of long-term debt - 330,601 (A) 330,601
Floor plan finance liability - 410,518 - 410,518
Accounts payable and accrued expenses 322,356 711,637 (C) 401,608 1,435,601
Deferred revenue - 20,608 - 20,608
------------------- ------------------ ------------- ------------
Total current liabiliites 522,356 4,151,252 401,608 5,075,216
Long-term debt, net of current portion 299,920 1,033,688 (A) 6,693,465 8,027,073
------------------- ------------------ ------------- ------------
TOTAL LIABILITIES 822,276 5,184,940 7,095,073 13,102,289
------------------- ------------------ ------------- ------------
Shareholders' Equity
Common stock 457,000 1,000 (A) (1,000) 457,000
Additional paid-in capital 8,189,703 904,869 (A) (904,869) 8,189,703
Accumulated deficit (7,446,386) (112,404) (A) (C) (D) (432,942) (7,991,732)
------------------- ------------------ ------------- ------------
TOTAL SHAREHOLDERS' EQUITY 1,200,317 793,465 (1,338,811) 654,971
------------------- ------------------ ------------- ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 2,022,593 $ 5,978,405 $ 5,756,262 $13,757,260
=================== ================== ============= ============
(1) The Arnoni financial statements are combined with Lo Castro for presentation
purposes.
See accompanying notes to the unaudited pro forma consolidated balance sheet.
PINNACLE BUSINESS MANAGEMENT, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(1)
PINNACLE BUSINESS LO CASTRO & PRO FORMA
MANAGEMENT, INC. ASSOCIATES, INC. ADJUSTMENTS PRO FORMA
------------------- ------------------ ------------- ------------
REVENUE
Vehicle sales $ - $ 9,160,029 $ - $ 9,160,029
Business telephone systems and wireless
telephones - 655,856 - 655,856
Consulting 71,199 1,751,831 - 1,823,030
Other - 17,656 - 17,656
------------------- ------------------ ------------- ------------
Total revenue 71,199 11,585,372 - 11,656,571
COST OF SALES - 7,854,613 - 7,854,613
------------------- ------------------ ------------- ------------
GROSS PROFIT 71,199 3,730,759 - 3,801,958
OPERATING EXPENSES
Marketing and sales 278,263 - - 278,263
General and administrative 2,532,165 2,369,907 - 4,902,072
Depreciation and amortization 492,770 76,134 (D) 143,738 712,642
------------------- ------------------ ------------- ------------
Total operating expenses 3,303,198 2,446,041 143,738 5,892,977
------------------- ------------------ ------------- ------------
INCOME (LOSS FROM OPERATIONS (3,231,999) 1,284,718 (143,738) (2,091,019)
OTHER INCOME (EXPENSES) (43,959) (536,109) (C) (401,607) (981,675)
------------------- ------------------ ------------- ------------
NET INCOME (LOSS) $ (3,275,958) $ 748,609 $ (545,345) $(3,072,694)
=================== ================== ============= ============
EARNINGS (LOSS) PER SHARE (0.012) 0.003 (0.002) (0.011)
=================== ================== ============= ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 271,976,000
===================
(1) The Arnoni financial statements are combined with Lo Castro for presentation
purposes.
See accompanying notes to the unaudited pro forma consolidated statement of
operations.
UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
- ----------------------------------------------------------
On January 19, 2001, Pinnacle Business Management, Inc. (the "Company") acquired
the net assets of Lo Castro & Associates, Inc., a Pennsylvania "S" corporation
("Lo Castro"). The Company also acquired the net assets of Arnoni, Lo Castro &
Associates, a Pennsylvania general partnership ("Arnoni"). Lo Castro and Arnoni
are related entities under common ownership.
The Company acquired Lo Castro and Arnoni for 83,300,000 shares of the Company's
common stock, plus a promissory note in the amount of $6,693,465 due in
quarterly installments commencing April 1, 2002 through and including January 1,
2007.
The following unaudited pro forma consolidated financial statements of the
Company present the unaudited consolidated balance sheet as of December 31, 2000
and the unaudited consolidated statement of operations for the year then ended,
as if the acquisition of Lo Castro and Arnoni had occurred January 1, 2000.
The acquisition will be accounted for as a purchase, with the assets acquired
and the liabilities assumed recorded at fair values, and the results of Lo
Castro's and Arnoni's operations included in the Company's consolidated
financial statements as of January 1, 2000.
The pro forma adjustments represent, in the opinion of management, all
adjustments necessary to present the Company's pro forma consolidated financial
position and results of its consolidated operations in accordance with Article
11 of SEC Regulation S-X based upon available information and certain
assumptions considered reasonable under the circumstances.
The unaudited pro forma consolidated financial statements presented herein do
not purport to present what the Company's consolidated financial position or
results of its consolidated operations would actually have been had the events
leading to the pro forma adjustments in fact occurred on the date or at the
beginning of the period indicated or to project the Company's consolidated
financial position or results of its consolidated operations for any future date
or period.
The unaudited pro forma consolidated financial statements should be read in
conjunction with the audited financial statements of the Company and the notes
thereto and management's discussion and analysis thereof, included in the
Company's annual statements together.
PINNACLE BUSINESS MANAGEMENT, INC.
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
Note 1 - The pro forma adjustments to the consolidated balance sheet are as
follows:
(A) To reflect the acquisition of Lo Castro and Arnoni and the allocation
of the purchase price on the basis of the fair values of the assets
acquired and liabilities assumed. The components of the purchase price
and its allocation to the assets and liabilities of Lo Castro and
Arnoni are as follows:
Components of purchase price:
Common stock (1) (3) $ 83,300
Additional paid-in capital (1) (3) 1,166,200
Note payable (2) 6,693,465
--------------
7,942,965
Allocation of purchase price:
Stockholders'/ Partners equity of
Lo Castro and Arnoni 793,465
Increase in property, plant and
Equipment 1,400,000
---------
2,193,465
---------
Cost in excess of net assets acquired $ 5,749,500
============
(1) 83,300,000 shares of the Company's common stock issued to Vincent A.
Lo Castro at $.001 par value. These shares represent 16.67% of the
authorized common stock of the Company.
(2) There are no current payments of debt on the $6,693,465 note.
(3) These amounts were booked by the Company in its consolidated financial
statements as a deposit (see (B)).
(B) Pro Forma adjustment to eliminate the deposit paid to Lo Castro &
Associates, Inc., due to the recording of the acquisition transaction.
PINNACLE BUSINESS MANAGEMENT, INC.
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
Note 2 - The pro forma adjustments to the consolidated statements of operations
are as follows:
(C) Adjustment to interest expense:
Interest on note payable to Vincent A. Lo Castro from the
acquisition of Lo Castro and Arnoni at 6% per annum (4) $ 401,608
(4) Principal payments of the note payable commence on April 1,
2002 and continue thereafter on each quarterly installment
date through and including January 1, 2007 at an amount
equal to 1/20th (5%) of the note payable.
(D) Represents the amortization of the cost in excess of net assets
acquired for the year ended December 31, 2000 of $143,738.
SIGNATURES
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to the signed on its behalf by the
undersigned hereunto duly authorized.
PINNACLE BUSINESS MANAGEMENT, INC.
(Registrant)
Dated: April 4, 2001 By: ______________________
Mr. Jeffrey Turino
Chief Financial Officer
By: ______________________
Vincent A. Lo Castro
Chief Operating Officer
EXHIBITS:
The following Exhibits are incorporated by reference to the Company's Form 8-K,
filed with the Securities and Exchange Commission on February 5, 2001:
1. Stock Purchase Agreement among Pinnacle Business Management, Inc. and
Vincent A. Lo Castro and Kim Lo Castro, and Michael B. Hall and Jeff
Turino, dated as of December 27, 2000.
2. Stock Pledge Agreement among Pinnacle Business Management, Inc., Vincent
and Kim Lo Castro, and Mark Jackson as Pledge Agent, dated as of January 1,
2001.
3. Secured Promissory Note by Pinnacle Business Management Inc., made on
January 1, 2001.
4. Shareholder Rights Agreement among Pinnacle Business Management, Inc. and
Kim and Vincent Lo Castro, dated as of January 1, 2001.
5. Mortgage, Security Agreement, and Financing Statement between Kim and
Vincent Lo Castro, as Mortgagees, and Arnoni, Lo Castro & Associates, as
Mortgagor, effective as of January 1, 2001.
6. Closing Agreement between Pinnacle Business Management, Inc. and Kim and
Vincent Lo Castro, dated as of January 18, 2001.
7. Articles of Incorporation of Lo Castro and Associates, Inc.
8. Application for Registration of Fictitious Name for All Pro Communications.
9. Application for Registration of Fictitious Name for All Pro Auto Mall.
10. Application for Registration of Fictitious Name for All Pro Daewoo.
11. By-Laws of Lo Castro & Associates, Inc.
12. Associate Agreement between NEC America, Inc. and All Pro Communications,
dated as of May 24, 2000.
12.1 Extended Hardware Warranty Products Appendix.
12.2 Active Voice Product Appendix.
12.3 Professional Services Appendix
13. Daewoo Motor America, Inc. Dealer Sales and Service Agreement between
Daewoo Motor America, Inc. and Lo Castro & Associates, Inc. d/b/a All Pro
Daewoo, effective as of October 5, 1999.
13.1 Addendum to Daewoo Motor America, Inc., Automobile Dealer Sales and Service
Agreement, executed on October 5, 1999.
14.* Exclusive Retail Dealer Agreement between Lo Castro & Associates, Inc.,
d/b/a All Pro Communications and Pittsburgh Cellular Telephone Company, a
Pennsylvania Partnership d/b/a AT&T Wireless Services, AT&T Proprietary and
Confidential, effective as of January 1, 2000.
15.* Commercial Note: Demand Line of Credit, Amount $1,500,000, executed on
February 13, 1998.
16.* Open-End Mortgage and Security Agreement, made by Arnoni, Lo Castro &
Associates, as Mortgagor, and National City Bank of Pennsylvania, a
national banking association as Mortgagee, on December 2, 1997.
17.**Assignment of Partnership Interest between Vincent A. Lo Castro, Kim Lo
Castro, and Lo Castro & Associates, Inc., entered into on December 31,
2000.
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Commission on February 5, 2001.
** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Commission on April 4, 2001.