SECURITIES AND EXCHANGE
COMMISION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report - August 19, 2005
SYSTEMS MANAGEMENT SOLUTIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
NEVADA
(State or Other Jurisdiction of Incorporation)
333-45210 88-0460457
(Commission File Number) (IRS Employer Identification Number)
7550 IH-10 West, 14th Floor
San Antonio, Texas 78229
(Address of Principal Executive Offices and Zip Code)
210-541-7133
(Registrant's Telephone Number, Including Area Code)
ITEM 2.01 Results of Audit and Review of Recent Acquisition.
On April 6, 2005, the Registrant's wholly owned subsidiary named SMSN
Merger Sub, Inc., a Texas corporation merged with SMS Envirofuels, Inc., a Texas
corporation, and the Registrant. Under the terms of such Plan of Merger, the
remaining entity name will be changed to SMS Envirofuels, Inc. To follow are the
results of audit of Years Ended December 31, 2003 and December 31, 2004 and
review of the Quarter Ended March 31, 2005 of SMS Envirofuels, Inc. In addition,
pro forma statements are provided to reflect financial statement effect as if
the merger took place at inception SMS Envirofuels, Inc. SMS Envirofuels, Inc.
has developed a plant to produce bio-diesel from soybean oil and has recently
begun marketing such bio-diesel to distributors and retailers. The Registrant
plans to continue this business with the operating assets of SMS Envirofuels,
Inc. and to expand the production and marketing of the bio-diesel product.
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
duly authorized undersigned.
SYSTEMS MANAGEMENT SOLUTION, INC.
(Registrant)
By: s/Jim Karlak
Date: August 19 , 2005 President, Chairman of the Board and CEO
TABLE OF CONTENTS
Page
----
PART I. FINANCIAL INFORMATION YEARS 2003 AND 2004.........................1
ITEM 1. FINANCIAL STATEMENTS (AUDITED)....................................1
PART II FINANCIAL INFORMATION QUARTER ENDED MARCH 31, 2005................7
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)..................................7
PART III - PROFORMA FINANCIAL STATEMENTS...................................11
SIGNATURES.................................................................15
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (AUDITED)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
SMS Envirofuels, Inc.
(formerly Texas Envirofuels, LLC.)
San Antonio, Texas
We have audited the accompanying balance sheet of SMS Envirofuels, Inc. as of
December 31, 2004, and the related statements of operations, members' equity,
and cash flows for each of the two years then ended. These financial statements
are the responsibility of SMS Envirofuels' management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits 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
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
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SMS Envirofuels, Inc. as of
December 31, 2004, and the results of its operations and its cash flows for each
of the two years then ended, in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the SMS
Envirofuels, Inc. will continue as a going concern. As discussed in Note 3 to
the financial statements, the deficiency in working capital at December 31, 2004
and the operating losses raise substantial doubt about SMS Envirofuels, Inc.'s
ability to continue as a going concern. Management's plans concerning these
matters are also described in Note 3. The financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
Malone & Bailey, PC
Houston, Texas
www.malone-bailey.com
August 10, 2005
SMS Envirofuels, Inc.
(formerly Texas Envirofuels, LLC)
BALANCE SHEET
December 31, 2004
ASSETS
Current Assets
Inventory 22,022
Prepaids 571
------------
Total current assets 22,593
Fixed Assets
Property, plant & equipment, net of
accumulated depreciation of $3,042 228,316
------------
TOTAL ASSETS $ 250,909
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 18,660
Accounts payable - related party 51,000
Accrued interest-related party 113,353
Notes payable - related party 1,281,380
------------
Total Current Liabilities 1,464,393
------------
Members' Equity (1,213,484)
------------
TOTAL LIABILITIES AND MEMBERS' EQUITY $ 250,909
============
See accompanying summary of accounting policies and notes to
financial statements.
F-1
SMS Envirofuels, Inc.
(formerly Texas Envirofuels, LLC)
STATEMENTS OF OPERATIONS AND MEMBERS'
EQUITY Years Ended December 31, 2004 and December 31, 2003
2004 2003
------------ ------------
Sales $ 7,501 $ 24,935
------------ ------------
General and administrative (177,821) (137,560)
Research and development (471,332) (445,409)
------------ ------------
Total operating expenses (649,153) (582,969)
------------ ------------
Net Operating Loss (641,652) (558,034)
Interest expense (89,084) (24,714)
------------ ------------
Net Loss $ (730,736) $ (582,748)
Beginning Members' Equity (482,748) -
Members' Contributions - 100,000
------------ ------------
Ending Members' Equity $ (1,213,484) $ (482,748)
============ ============
See accompanying summary of accounting policies and notes to
financial statements.
F-2
SMS Envirofuels, Inc.
(formerly Texas Envirofuels, LLC)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2004 and December 31, 2003
2004 2003
------------ ------------
Cash Flows From Operating Activities
Net income (loss) $ (730,736) $ (582,748)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 2,815 227
Changes in:
Other current assets (571) -
Accounts payable 18,660 -
Inventory (22,022) -
Accounts payable-Related Party 51,000 -
Accrued expenses-Related Party 88,640 24,713
------------ ------------
Net Cash Used In Operating Activities (592,214) (557,808)
------------ ------------
Cash Flows From Investing Activities
Purchase of fixed assets (146,434) (84,924)
------------ ------------
Net Cash Used In Investing Activities (146,434) (84,924)
------------ ------------
Cash Flows From Financing Activities
Proceeds from member loans 738,561 542,819
Proceeds from member contributions - 100,000
------------ ------------
Net Cash Provided By Financing Activities 738,561 642,819
------------ ------------
Net change in cash (87) 87
Cash at beginning of year 87 -
------------ ------------
Cash at end of year $ - $ 87
============ ============
Supplemental disclosure:
Income taxes paid $ -- $ --
Interest paid -- --
See accompanying summary of accounting policies and notes to
financial statements.
F-3
SMS ENVIROFUELS,INC.
(formerly Texas Envirofuels, LLC)
NOTES TO FINANCIAL STATEMENTS
Note 1 Organization and Nature of Operations
SMS Envirofuels, Inc. ("SMSE") was originally organized as Envirofuels, LLC
under Wyoming State laws on August 26, 2003. In February 2004, the State of
Texas certified the application of Envirofuels, L.L.C. to do business in the
State of Texas under the name of Texas Envirofuels, LLC. In February 2005, the
Secretary of State for Texas issued a Certificate of Conversion for Texas
Envirofuels, LLC to convert to SMS Envirofuels, Inc. effectively converting the
Wyoming L.L.C. to a Texas Corporation and authorizing 1,000 shares of common
stock with a par value of $0.10.
On April 6, 2005, Systems Management Solutions, Inc.("SMS") acquired all of the
outstanding stock of SMS Envirofuels, Inc., a Texas corporation, in exchange for
1,444,444 shares of its common stock. The acquisition was accounted for under
the pooling method due to the fact that a majority shareholder of SMSE is also a
majority shareholder of SMS. All of the assets, liabilities, profit and loss of
SMS are combined with SMSE as if the companies have been consolidated from their
inception.
SMSE is a manufacturer and seller of Biodiesel, an alternative fuel for diesel
engines derived from vegetable oils. The corporate headquarters are located in
San Antonio, Texas while the manufacturing facility is located in Poteet, Texas,
approximately 20 miles south of San Antonio. Currently, SMSE is selling grade
B100 Biodiesel, produced from soybean oil and methanol, to a single distributor
located in Dallas/FW, Texas area. SMSE intends to capitalize on the current
federal subsidy programs available for Biodiesel production and expand its
customer base and manufacturing capabilities.
Note 2 Summary of Significant Accounting Policies
Cash Equivalents. Highly liquid investments with original maturities of three
months or less are considered cash equivalents. There were no cash equivalents
as of December 31, 2004.
Revenue Recognition. SMSE recognizes revenue from sales of Biodiesel fuel when
the earning process is complete and the risks and rewards of ownership have
transferred to the customer. Service revenues are recognized as services are
provided.
Allowance for Doubtful Accounts. SMSE analyzes current accounts receivable for
an allowance for doubtful accounts based on historical bad debt, customer
credit-worthiness, the current business environment and historical experience
with the customer. The allowance includes specific reserves for accounts where
collection is deemed to be no longer probable.
Inventory: SMSE tracks its inventory and values it using the First In First Out
(FIFO) method. Raw Materials are procured and upon processing flow directly into
the Finished Goods account. The entire process takes approximately 12-13 hours
and therefore the need for movement in and out a WIP accounts is not
cost-beneficial.
Property and equipment are stated on the basis of historical cost less
accumulated depreciation. Depreciation is provided using the straight-line
method over the estimated useful lives of the assets. Major renewals and
improvements are capitalized, while minor replacements, maintenance, and repairs
are charged to current operations.
Long-lived Assets. Property and equipment are stated on the basis of historical
cost less accumulated depreciation. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets. Major
renewals and improvements are capitalized, while minor replacements,
maintenance, and repairs are charged to current operations. The costs associated
with the development of the Plant's Processing system are accumulating and will
begin to be depreciated when the system is fully operational.
F-4
Research and Development. SMSE expenses research and development costs as
incurred. Research and development costs expensed in the periods ended December
31, 2003 and December 31, 2004 are $445,499 and $471,332 respectively.
Income taxes. Through December 31, 2004, SMSE was a limited liability company
(Texas Envirofuels, LLC). Federal and state income taxes are not payable by, or
provided for, the limited liability company. Members of Texas Envirofuels, LLC
are taxed individually on their share of partnership earnings.
Use of Estimates in Financial Statement Preparation. The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Recently Issued Accounting Pronouncements. SMSE does not expect the adoption of
recently issued accounting pronouncements to have a significant impact on their
financial position, results of operations or cash flow.
Note 3 Going Concern
SMSE incurred a net loss of $582,748 and $730,736 for the years ended December
31, 2003 and December 31, 2004 respectively, and has a negative working capital
of $1,441,800 as of December 31, 2004. These conditions create an uncertainty as
to SMSE's ability to continue as a going concern. Management is trying to raise
additional capital through sales of common stock as well as seeking financing
from third parties. The financial statements do not include any adjustments that
might be necessary if SMSE is unable to continue as a going concern.
Note 4 Property and Equipment
Property and equipment as of December 31, 2004 consisted of the following:
Depreciation
Lives Cost
------------------ ----------
Plant Processing System 10 $ 161,055
Plant Storage Tanks 20 14,835
Leasehold Improvements 10 50,498
Plant Equipment 07 4,000
Furniture 05 970
----------
231,358
Less Accumulated Depreciation (3,042)
----------
$ 228,316
==========
Note 5 Related Party Line of Credit
As of December 31, 2004, the SMSE owes $1,281,380 to United Mangers Group, Inc.
("UMG"), the primary source of funding and a majority stockholder in SMSE's
parent company SMS. There exists two promissory notes of $1,000,000 each issued
by SMSE to UMG. The notes bear interest at 10% and are secured by all of the
assets of SMSE and mature on August 10, 2006.
F-5
Note 6 Related Party Commitments and Contingencies
SMSE is party to a manufacturing site operating lease agreement with a related
party for a term expiring on April 30, 2013. The minimum annual lease payments
are summarized as follows:
Lease
12 Months Ending Payments Due
---------------- ------------
December 31, 2005 $ 72,000
December 31, 2006 72,000
December 31, 2007 72,000
December 31, 2008 72,000
December 31, 2009 72,000
------------
$ 360,000
============
Note 7 Other Related Party Transactions
The corporate headquarters of SMSE are located in the lease space of a wholly
owned subsidiary of its parent, SMS.
Note 8 Subsequent Event
On April 6, 2005, the SMSE was acquired by SMS. The merger agreement called for
the exchange of 1,444,444 shares of common stock from SMS for 100% of the common
stock of the SMSE. The purchase will be accounted for using the Pooling of
Interest Method due to fact that there exists a common majority ownership. SMS's
majority shareholder is also the majority shareholder of SMSE.
F-6
PART II. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
SMS ENVIROFUELS, INC.
(Formerly Texas Envirofuels, LLC)
BALANCE SHEET
March 31, 2005
(Unaudited)
ASSETS
Current Assets
Accounts Receivable $ 25,648
Inventory 9,447
Prepaids 229
------------
Total current assets 35,324
Fixed Assets
Property, plant & equipment, net of
accumulated depreciation of $5,000 267,935
------------
TOTAL ASSETS $ 303,259
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 27,174
Accounts payable - related party 69,000
Accrued interest - related party 154,548
Notes payable - related party 1,448,158
------------
Total Current Liabilities 1,698,880
------------
Stockholders' Deficit
Common stock, $.10 par value, 1,000 shares authorized,
issued and outstanding 100
Additional Paid-in Capital 99,900
Accumulated deficit (1,495,621)
------------
Total Stockholders' Deficit (1,395,621)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 303,259
============
See accompanying summary of accounting policies and notes to
financial statements.
F-7
SMS ENVIROFUELS, INC.
(Formerly Texas Envirofuels, LLC)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2005 and March 31, 2004
(Unaudited)
2005 2004
------------ ------------
Sales $ 41,982 $ -
------------ ------------
General and administrative (190,649) (26,885)
Research and Development - (159,547)
------------ ------------
Total operating expenses (190,649) (186,432)
------------ ------------
Net Operating Loss (148,667) (186,432)
Interest expense (33,470) (15,347)
------------ ------------
NET LOSS $ (182,137) $ (201,779)
============ ============
Basic and diluted loss
per share $ (182) $ -
Weighted average shares
outstanding 1,000 -
See accompanying summary of accounting policies and notes to
financial statements.
F-8
SMS ENVIROFUELS, INC.
(Formerly Texas Envirofuels, LLC)
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Three Months Ended March 31, 2005 and March 31, 2004
(Unaudited)
2005 2004
------------ ------------
Cash Flows From Operating Activities
Net income (loss) $ (182,137) $ (201,779)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 1,731 89
Changes in:
Other current assets 342 (143)
Accounts receivable (25,648) --
Accounts payable 8,516 515
Inventory 12,575 (5,505)
Accounts payable-related party 59,196 --
Accrued expenses-related party -- 22,160
------------ ------------
Net Cash Used In Operating Activities (125,425) (184,663)
------------ ------------
Cash Flows From Investing Activities
Purchase of fixed assets (41,350) --
------------ ------------
Net Cash Used In Investing Activities (41,350) --
------------ ------------
Cash Flows From Financing Activities
Proceeds from shareholder loans 166,775 184,641
------------ ------------
Net Cash Provided By Financing Activities 166,775 184,641
------------ ------------
Net change in cash -- (22)
Cash at beginning of year -- 87
------------ ------------
Cash at end of year $ -- $ 65
============ ============
Supplemental disclosure:
Income taxes paid $ -- $ --
Interest paid -- --
See accompanying summary of accounting policies and notes to
financial statements.
F-9
SMS ENVIROFUELS,INC.
NOTES TO FINANCIAL STATEMENTS
Note 1 Basis of Presentations
The accompanying unaudited interim financial statements of SMS Envirofuels, Inc.
have been prepared in accordance with accounting principles generally accepted
in the United States of America and the rules of the Securities and Exchange
Commission ("SEC"), and should be read in conjunction with the audited financial
statements and notes thereto contained in the Company's financial statements
filed with the SEC on this Form 8-K. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim
periods presented have been reflected herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year. Notes to the financial statements which would substantially
duplicate the disclosure contained in the audited financial statements for the
most recent fiscal year 2004 as reported in this Form 8-K, have been omitted.
F-10
PART III. PROFORMA FINANCIAL INFORMATION
ITEM 1. PROFORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
The following pro forma financial statements has been derived from the financial
statements of System Management Solutions, Inc. ("SMS") at March 31, 2005,
December 31, 2004 and June 30, 2004 and adjusts such information to give effect
to the acquisition of SMS Envirofuels, Inc. ("SMSE"), a Texas corporation, as if
the acquisition had occurred at March 31, 2005 for the pro forma consolidated
condensed balance sheet and as of the beginning of the period for each of the
pro forma consolidated condensed income statements. The pro forma financial
statements are presented for informational purposes only and do not purport to
be indicative of the financial condition that would have resulted if the
acquisition had been consummated at March 31, 2005 or earlier. The pro forma
financial statements should be read in conjunction with the notes thereto and
the Company's consolidated financial statements and related notes thereto
contained in the Company's latest annual report filed with the SEC.
March 31, 2005 Pro forma Consolidated Condensed Balance Sheet:
03/31/05 03/31/05 03/31/05
SMS SMSE Adjustments Pro-Forma
------------ ----------- ------------
Current Assets
Cash $ 9,345 - $ 9,345
Accounts receivable,
net of allowance 36,605 25,648 62,253
Other Receivable - - -
Inventory - 9,447 9,447
Prepaid expenses 4,375 229 4,604
------------ ----------- ------------
Total Current Assets 50,325 35,324 85,649
------------ ----------- ------------
Property and equipment, net 93,281 267,935 361,216
Other Assets
Deposit - - -
------------ ----------- ------------
$ 143,606 $ 303,259 $ 446,865
============ =========== ============
F-11
March 31, 2005 Pro forma Consolidated Condensed Balance Sheet (Cont.):
03/31/05 03/31/05 03/31/05
SMS SMSE Adjustments Pro-Forma
------------ ----------- ------------ ------------
Current Liabilities
Accounts payable and
accrued expenses 357,031 27,174 384,205
Accounts payable - related
party - 223,548 223,548
Note payable - related
party 570,026 1,448,158 2,018,184
Note payable - - -
Other - - -
------------ ----------- ------------
Total Current Liabilities 927,057 1,698,880 2,625,937
------------ ----------- ------------
Preferred stock, $.0001 par
value; 5,000,000 shares
authorized, none outstanding
Series A Cumulative Convertible
Preferred Stock, $.0001 par
value, 60,0000 shares authorized,
no shares issued and outstanding - - -
Series B Cumulative Convertible Preferred
Stock, $.0001 par value, 50,0000
shares authorized, no shares
issued and outstanding - - -
Common stock, $.10 par value, 1,000
Shares authorized, issued
and outstanding - 100 (1) (100) -
Common stock, $.0001 par
value; authorized
100,000,000 shares;
19,195,942 outstanding 1,919 - (1) 145 2,064
Paid in capital 19,259,250 99,900 (1) (45) 19,359,105
Accumulated Deficit (20,044,620) (1,495,621) (21,540,241)
------------ ----------- ------------
(783,451) (1,395,621) (2,179,072)
------------ ----------- ------------
$ 143,606 $ 303,259 $ 446,865
============ =========== ============
F-12
2005 Quarter Ended March 31 Pro Forma Consolidated Condensed Income Statement:
For the 3 For the 3
Months Ended Months Ended
03/31/05 03/31/05 03/31/05
SMS SMSE Adjustments Pro-Forma
------------ ---------- ------------ ------------
Revenue $ 52,269 $ 41,982 $ 94,251
General and
administrative (667,684) (190,649) (858,333)
------------ ---------- ------------
Net Operating Loss (615,415) (148,667) (764,082)
Interest income - - -
Interest expense (54,862) (33,470) (88,332)
------------ ---------- ------------
NET LOSS $ (670,277) $ (182,137) $ (852,414)
============ ========== ============
Basic and diluted
loss per share $ (0.09) $ (0.09)
Weigted average shares
Outstandins 7,566,609 1,444,444 9,011,053
2004 Pro Forma Consolidated Condensed Income Statement:
For the 6 For the 12
Months Ended Months Ended
12/31/04 12/31/04 12/31/04
SMS SMSE Adjustments Pro-Forma
------------ ------------ ------------ ------------
Revenue $ 68,792 $ 7,501 $ 76,293
General and
administrative 1,301,104 177,821 1,478,925
Research and Development - 471,332 471,332
------------ ---------- ------------
Total operating expenses 1,301,104 649,153 1,950,257
------------ ---------- ------------
Net Operating Loss (1,232,312) (641,652) (1,873,964)
Interest income 2,452 - 2,452
Interest expense (76,557) (89,084) (165,641)
------------ ---------- ------------
NET LOSS $ (1,306,417) $ (730,736) $ (2,037,153)
============ ========== ============
Basic and diluted
loss per share $ (0.23) $ (0.27)
Weigted average shares
Outstandins 6,094,542 1,444,444 7,538,986
F-13
2003 Pro Forma Consolidated Condensed Income Statement:
For the 12 For the 12
Months Ended Months Ended
06/30/04 12/31/03 12/31/03
SMS SMSE Adjustments Pro-Forma
------------ ------------ ------------ ------------
Revenue $ 28,515 $ 24,935 $ 53,450
Cost of sales 113,777 - 113,777
------------ ------------ ------------
Gross margin (85,262) 24,935 (60,327)
------------ ------------ ------------
General and administrative 2,436,753 137,560 2,574,313
Research and Development - 445,409 445,409
Impairment 5,271,967 - 5,271,967
------------ ------------ ------------
Total operating expenses 7,708,720 582,969 8,291,689
------------ ------------ ------------
Net Operating Loss (7,793,982) (558,034) (8,352,016)
Interest income - - -
Interest expense (401,940) (24,714) (426,654)
------------ ------------ ------------
Loss from continuing
operations (8,195,922) (582,748) (8,778,670)
Loss from discontinued
Operations 2,030,039 - 2,030,039
------------ ------------ ------------
NET LOSS $ (6,165,883) $ (582,748) $ (6,748,631)
============ ============ ============
Basic and diluted
loss per share $ (1.02) $ (0.90)
Weigted average shares
Outstandins 6,067,110 1,444,444 7,511,544
NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) The Closing Date of the Merger Agreement between Systems Management
Solutions, Inc. ("SMS") and SMS Envirofuels, Inc. ("SMSE") occurred April 6,
2005 . On that date, 1,444,444 shares of SMS common stock were issued to SMSE
shareholders for 1,000 SMSE shares, or 100% of the outstanding stock of SMSE.
The acquisition was accounted for under the pooling of interest method due to
the entities being under common control, where all of SMSE's assets, liabilities
and earnings are combined with SMS's.
F-14
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: May 6, 2005
SYSTEMS MANAGEMENT SOLUTIONS, INC.,
a Nevada corporation
By: /s/ James Karlak
-----------------------------------------------
James Karlak, President and Chief Executive Officer
By: /s/ Morris Kunofsky
-----------------------------------------------
Morris Kunofsky, Chief Financial Officer
F-15