UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 24, 2003 (April 14, 2003)
PACEL CORP.
-----------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Virginia 000-31935 54-1712558
--------------- ---------------- -----------------
(State or other (Commission (IRS Employer
jurisdiction file number) Identification No.)
of incorporation)
7900 Sudley Road, Suite 619
Manassas, Virginia 20109
------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 257-4759
Copy of Communications to: Donald F. Mintmire
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Phone: (561) 832-5696
Fax: (561) 659-5371
Filed herewith are the financial statements and pro forma financial information
required to be filed by Item 7 of Form 8-K in connection with the Company's
acquisition of all of the outstanding capital stock of BeneCorp Business
Services, Inc. ("BeneCorp") as reported in the Current Report on Form 8-K, filed
with the Commission on April 29, 2003, to which this Amendment No. 1 relates:
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
Report of Independent Accountants
Balance Sheet of BeneCorp Business Services, Inc. at December 31, 2002
Statement of Operations of BeneCorp Business Services, Inc. for the year
ended December 31, 2002
Statement of Changes in Stockholders' Equity of BeneCorp Business Services,
Inc. for the year ended December 31, 2002
Statement of Cash Flows of BeneCorp Business Services, Inc. for the year
ended December 31, 2002
Notes to Financial Statements of BeneCorp Business Services, Inc. for the
year ended December 31, 2002
Balance Sheet of BeneCorp Business Services, Inc. as of March 31, 2003
(Unaudited)
Statement of Operations of BeneCorp Business Services, Inc. for the three
months ended March 31, 2003 (Unaudited)
Statement of Changes in Stockholders' Equity of BeneCorp Business Services,
Inc. for the three months ended March 31, 2003 (Unaudited)
Statement of Cash Flows of BeneCorp Business Services, Inc. for the three
months ended March 31, 2003 (Unaudited)
Notes to Financial Statements of BeneCorp Business Services, Inc. for the
three months ended March 31, 2003 (Unaudited)
2
(b) Pro Forma Financial Information
Introduction to Unaudited Pro Forma Condensed Consolidated Financial
Information
Unaudited Pro Forma Condensed Consolidated Balance Sheet of Pacel Corp. and
BeneCorp Business Services, Inc. at March 31, 2003
Unaudited Pro Forma Condensed Consolidated Statement of Operations for
Pacel Corp. and BeneCorp Business Services, Inc. for the three months ended
March 31, 2003
Unaudited Pro Forma Condensed Consolidated Statement of Operations for
Pacel Corp. and BeneCorp Business Services, Inc. for the year ended
December 31, 2002.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 11, 2003
PACEL CORP.
/s/ David E. Calkins
---------------------------------------------
David E. Calkins, President, CEO and Chairman
3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Board of Directors
BeneCorp Business Services, Inc.
We have audited the accompanying balance sheet of BeneCorp Business Services,
Inc. as of December 31, 2002 and the related consolidated statements of
operations, stockholders' equity, 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.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in 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 present fairly, in
all material respects, the financial position of Benecorp. Business Services,
Inc. as of December 31, 2002 and results of their operations and their cash
flows for the year then ended in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1(g) to
the financial statements, the Company had losses for the past several years and
requires additional capital to continue operations. These conditions raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1(g). The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Peter C. Cosmas Co., CPAs
Peter C. Cosmas Co., CPAs
370 Lexington Ave.
New York, NY 10017
June 20, 2003
4
BeneCorp Business Services, Inc.
Balance Sheet
December 31, 2002
ASSETS
Current Assets:
Cash $ 233,370
Accounts receivable 34,239
Other receivables 13,105
Prepaid expenses 23,967
Workers compensation insurance deposit 30,857
----------
Total current assets 335,538
Property and equipment, net of accumulated depreciation 11,600
----------
Total assets $ 347,138
==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses $ 281,816
Payroll tax and payroll related liabilities 718,750
Deferred client revenue 20,112
Lease payable 16,069
Loan payable to Pacel Corp. 96,000
Loans payable to officers/stockholders 304,019
----------
Total current liabilities 1,436,766
----------
Commitments and contingencies -
Common stock, $.10 par value; 3,000 shares authorized
and 2,940 shares outstanding 294
Additional paid-in capital 2,706
Retained deficit (1,092,628)
----------
Total stockholders' equity (deficit) (1,089,628)
----------
Total liabilities and stockholders' equity $ 347,138
==========
See accompanying notes to financial statements
5
BeneCorp Business Services, Inc.
Statement of Operations
For the year ended December 31, 2002
Revenue $ 709,999
Cost of sales 351,162
------------
Gross profit 358,837
Operating costs and expenses:
Depreciation and amortization 12,550
Interest expense 36,084
General and administrative expenses 781,507
------------
Total operating costs and expenses 830,141
------------
Net loss from operations (471,304)
------------
Other income (expenses):
Cash surrender value of life insurance 126,527
Gain on the disposal of assets 9,447
Write off of related party receivable (439,913)
------------
Total other income (expenses) (303,939)
------------
Net loss $ (775,243)
============
See accompanying notes to financial statements
6
BeneCorp Business Services, Inc.
Statement of Changes in Stockholders' Equity
For the year ended December 31, 2002
Additional
Common Stock Paid-in Retained
Shares Amount Capital Deficit Total
-------------------------------------------------------------------------
December 31, 2001 2,940 $ 294 $ 2,706 $ (317,385) $ (314,385)
Net loss - - - (775,243) (775,243)
----------- ------------ -------------- ------------ ------------
December 31, 2002 2,940 $ 294 $ 2,706 $ (1,092,628) $ (1,089,628)
=========== ============ ============== ============ ============
See accompanying notes to financial statements
7
BeneCorp Business Services, Inc.
Statement of Cash Flows
For the year ended December 31, 2002
Cash flows from operating activities:
Net loss $ (775,243)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 12,550
Cash value of life insurance 126,527
Changes in assets and liabilities:
Accounts receivable 58,567
Workers compensation deposits 100
Prepaid expenses and other current assets (23,967)
Other receivables 427,493
Accounts payable and accrued expenses 147,110
Payroll taxes and payroll related liabilities 407,414
Deferred client income 20,112
------------
Net cash provided by operating activities 400,663
------------
Cash flows from investing activities:
Sale of property and equipment 9,447
------------
Net cash provided by investing activities 9,447
------------
Cash flows from financing activities:
Loans from officers/stockholders 49,686
------------
Net cash provided by financing activities 49,686
------------
Net increase in cash and cash equivalents 459,796
Cash and cash equivalents, beginning of year (226,426)
------------
Cash and cash equivalents, end of year $ 233,370
============
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $36,085
Taxes -0-
See accompanying notes to financial statements
8
BeneCorp Business Services, Inc.
Notes to the Financial Statements
December 31, 2002
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Nature of the business
BeneCorp Business Services Inc. (the"Company") was organized under the laws
of the State of Texas in 1988. The Company is a professional employer
organization ("PEO"). As a PEO, the Company provides a broad range of human
resource functions, including payroll and benefits administration, health
and workers' compensation insurance programs and personnel records
management.
b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those
estimates.
c) Revenue Recognition
The gross billings that the Company charges its clients under its
Professional Services Agreement include each worksite employee's gross
wages, payroll taxes, workers' compensation premiums, a service fee and, to
the extent elected by the clients, health and welfare benefit plan costs
and other ancillary fees. The Company's service fee, which is computed as a
percentage of gross wages is intended to yield a profit to the Company and
to cover the cost of certain employment-related employer taxes and
administrative and field services provided by the Company to the client,
including payroll administration, record keeping, risk management, human
resources, and regulatory compliance consultation. The component of the
service fee related to administration varies according to the size of the
client, the amount and frequency of payroll payments and the method of
delivery of such payments. The component of the service fee related to
unemployment insurance is based, in part, on the client's historical claims
experience. All charges by the Company are invoiced along with each
periodic payroll delivered to the client.
The Company reports revenues from service fees in accordance with Emerging
Issues Task Force ("EITF") No. 99-19, Reporting Revenue Gross as a
Principal versus Net as an Agent. The Company reports as revenues, on a
gross basis, the total amount billed to clients for administration service
fees, retirement plan fees, workers' compensation premiums and unemployment
insurance fees. The Company reports revenues on the gross basis for these
fees because the Company is the primary obligor and deemed to be the
principal in these transactions under EITF No. 99-19. The Company now
reports revenues on a net basis for the amount billed to clients for
worksite employee salaries,
9
BeneCorp Business Services, Inc.
Notes to the Financial Statements
December 31, 2002
wages and payroll-related taxes less amounts paid to worksite employees and
taxing authorities for these salaries, wages and taxes. The Company
accounts for its revenues using the accrual method of accounting. Under the
accrual method of accounting, the Company recognizes its revenues in the
period in which the worksite employee performs work. The Company accrues
revenues and unbilled receivables for service fees relating to work
performed by worksite employees but unpaid at the end of each period. In
addition, the related costs of services are accrued as a liability for the
same period. Subsequent to the end of each period, such costs are paid and
the related PEO service fees are billed.
d) Plant, Property and Equipment
The cost of the plant, property and equipment is depreciated over the
estimated useful lives of the related assets. Depreciation is computed
utilizing principally the straight-line method of financial reporting
purposes and on various cost recovery methods for income tax purposes.
Maintenance and repairs were charged to operational. Improvements and
renewals are capitalized. When plant, property, and equipment are sold or
otherwise disposed of, the asset account and related accumulated
depreciation account are relieved, and any gain or loss is included in
operations.
e) Income Taxes
The Company records income tax expense using the asset and liability method
of accounting for deferred income taxes. Under such method, deferred tax
assets and liabilities are recognized for the expected future tax
consequences of temporary differences between the financial statement
carrying values and the income tax bases of the Company's assets and
liabilities.
10
BeneCorp Business Services, Inc.
Notes to the Financial Statements
December 31, 2002
f) Statement of Cash Flows
For purposes of the Statement of Cash Flows, cash equivalents include time
deposits, certificates of deposit, and all highly liquid debt instruments
with original maturities of three months or less.
g) Basis of Financial Statement Presentation
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company has generated
losses over the past several years. In addition the PEO industry is
undergoing many regulatory changes, which has affected the Companies
ability to remain profitable. These factors indicate that the Company's
continuation, as a going concern is dependent upon its ability to obtain
adequate financing and to identify profitable areas of the PEO business.
NOTE 2 -- PLANT, PROPERTY AND EQUIPMENT
Plant, property and equipment consisted of the following:
Computer and Office equipment $ 122,101
Less: Accumulated Depreciation 110,501
---------
$ 11,600
Depreciation expense totaled $12,550 for the year ended December 31,2002.
NOTE 3 -- NOTE PAYABLE - OFFICERS
The two officers have loaned the Company a total of $304,019. They consist of
two lines of credit totaling $167,436, bearing interest rates of 6.25% and
5.25%, calculated on a monthly basis, and $136,583 in unsecured loans that bear
no interest.
11
BeneCorp Business Services, Inc.
Notes to the Financial Statements
December 31, 2002
NOTE 4 -- COMMITMENTS AND CONTINGINCIES
Lease Agreements
The Company leases space in Allen, Texas. The lease commenced on January 1, 2002
and terminates December 31, 2002 and will continue on an annual renewal basis
thereafter. With annual incremental minimum rent requirements of $89,220.
Future minimum rents under this lease are as follows:
December 31,
-------------
2003 $ 100,714
2004 7,510
---------
$ 108,224
Rent payments of $61,195 were made in 2002.
NOTE 5 -- RETIREMENT PLANS
The Company maintains the BeneCorp I 401(k) Profit Sharing Plan (the "Plan")
open to enrollment to all employees based on client-elected participation and
the Company's internal employees. The Plan is a multiple-employer plan that
became effective on January 1, 1995. The Plan is intended to qualify as a "Safe
Harbor 401(k) Plan" and has been updated in accordance with recent IRS
regulations. Each of the Company's clients that have adopted the Plan has the
ability to adjust the Plan participation guidelines to meet the client's
specific needs as allowed by the governing plan document.
The Company's internal employees who participate in the Plan receive an employer
matching contribution of fifty percent (50%) of the first six percent (6%) of
salary contributed to plan by the employee. Company employees must be twenty-one
(21) years of age and 1,000 hours of service by the semi-annual enrollment dates
of January 1 and July 1 in order to be eligible for participation. For the year
ended December 31, 2002, the Company made matching contributions of $3,271 for
company employees.
Investments in the Plan are made through the Travelers Insurance Company, with
over twenty (20) investment options to choose from.
12
BeneCorp Business Services, Inc.
Notes to the Financial Statements
December 31, 2002
NOTE 6 -- INCOME TAXES
The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any, represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of December 31, 2002 the Company had no
material current tax liability, deferred tax assets, or liabilities
respectively. The Company has available a net operating loss carry forward of
approximately $600,000 for tax purposes to offset future taxable income. The net
operating loss carry forwards expire in 2012-2020.
NOTE 7 -- CONCENTRATION OF CREDIT RISK
The Company's financial instruments that are exposed to concentration of credit
risk consist primarily of cash and cash equivalents and trade accounts
receivable. The Company places its cash and temporary cash investments in high
credit quality institutions. At times, such investments may be in excess of the
FDIC insurance limit. The Company routinely assesses the financial strength of
its customers and, as a consequence, believes that its trade accounts receivable
credit risk exposure is limited.
NOTE 8 -- DEFERRED INCOME
The Company had $20,112 of deferred income at December 31, 2002, consisting of a
customer deposit for a January 1, 2003 payroll.
NOTE 9- RETLATED PARTY TRANSACTIONS
The Company wrote off a receivable in the amount of $439,913 from STI, Inc.
(owned by the two stockholders) . At the present time STI is not an operating
company and has not ability to repay the receivable.
NOTE 10 -- SUBSEQUENT EVENTS
In April 2003, the stockholders (the "Sellers") of the Company signed an
agreement to sell 100%, or 2,940 shares, of the outstanding capital stock of the
Company to Pacel Corp. (the "Buyer"). The buyer will assume approximately
$1,000,000 of debt in connection with the purchase. The Sellers will receive
$216,000 in cash and 200,000 shares of Section 144 restricted common stock of
the Buyer. In 2002,
13
BeneCorp Business Services, Inc.
Balance Sheet
March 31, 2003
(Unaudited)
ASSETS
Current Assets:
Cash $ 360,744
Accounts receivable 5,253
Other receivables 13,105
Loans from officers/stockholders 10,000
Prepaid expenses 42,542
Workers compensation insurance deposit 55,842
----------
Total current assets 487,486
Property and equipment, net of accumulated depreciation 9,159
----------
Total assets $ 496,645
==========
LIABILITIES AND STOCKHOLDERS' EQUITY DEFICIT
Current Liabilities:
Accounts payable and accrued expenses $ 51,244
Payroll tax and payroll related liabilities 372,282
Deferred client revenue 1,228,746
Current portion of leases payable 9,066
Loan payable to Pacel Corp. 96,000
Loans payable to officers/stockholders -
----------
Total current liabilities 1,757,338
----------
Long-term portion of leases payable 4,869
Commitments and contingencies -
Common stock, $.10 par value; 3,000 shares authorized
and 2,940 shares outstanding 294
Additional paid-in capital 2,706
Retained deficit (1,268,562)
----------
Total stockholders' equity (deficit) (1,265,562)
----------
Total liabilities and stockholders' equity $ 496,645
==========
14
BeneCorp Business Services, Inc.
Statement of Operations
For the three months ended March 31, 2003
(Unaudited)
Revenue $ 276,470
Cost of sales 242,809
-----------
Gross profit 33,661
-----------
Operating costs and expenses:
Depreciation and amortization 2,442
Interest expense 8,776
General and administrative expenses 198,377
-----------
Total operating costs and expenses 209,595
-----------
Net loss from operations $ (175,934)
===========
15
BeneCorp Business Services, Inc.
Statement of Cash Flows
For the Three Months ended March 31, 2003
(Unaudited)
Cash flows from operating activities:
Net loss $ (175,934)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 2,441
Changes in assets and liabilities:
Accounts receivable 28,986
Workers compensation deposits (24,985)
Prepaid expenses and other current assets (18,575)
Accounts payable and accrued expenses (230,575)
Payroll taxes and payroll related liabilities (346,468)
Deferred client income 1,208,634
-----------
Net cash provided by operating activities 443,524
-----------
Cash flows from investing activities:
Sale of property and equipment -
-----------
Net cash provided by investing activities -
-----------
Cash flows from financing activities:
Loans from officers/stockholders (146,580)
Repayments of lines of credit (167,436)
Payments on leases payable (2,134)
-----------
Net cash used by financing activities (316,150)
-----------
Net increase in cash and cash equivalents 127,374
Cash and cash equivalents, beginning of year 233,270
-----------
Cash and cash equivalents, end of period $ 360,744
===========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 8,731
Taxes $ -
16
INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
On April 12, 2003, Pacel Corp. (the "Company"), acquired all of the outstanding
capital stock of BeneCorp Business Services, Inc. ("BeneCorp"), pursuant to a
Stock Purchase Agreement (the "Agreement") dated as of April 12, 2003, by and
between the Company, BeneCorp and Gordon Swor and Gordon Hanson, as the sole
shareholders of BeneCorp.
The aggregate consideration paid by the Company in exchange for all of the
outstanding capital stock of BeneCorp consists of the following: (1) and initial
closing payment of $1,000; (2) additional cash consideration of $215,000; (3)
Section 144 restricted shares of the capital stock of the Company valued at
$200,000, the value determined based on 70% of the closing price of the stock of
the Company on the date of closing; and (5) the assumption of liabilities
totaling approximately $1,000,000.
The acquisition will be accounted for using the purchase method of accounting.
The purchase price will be allocated to the estimated fair value of the assets
acquired and liabilities assumed. The estimated fair value of the assets and
liabilities assumed approximated the historical cost basis, and the preliminary
purchase price allocation indicates goodwill of approximately $1,688,620. The
consideration paid to date by the Company has been funded by the Company
existing equity lines of credit obtained through the issuance of common stock.
The following unaudited pro forma condensed consolidated balance sheet assumes
that the acquisition of BeneCorp was consummated as of March 31, 2003 and
presents a preliminary allocation of the purchase price over historical net book
value and is for illustrative purposes only and is not necessarily indicative of
the operating results or financial position that would have occurred if the
purchase has been consummated on such dates, nor is it necessarily indicative of
future operating results or financial position. . Actual fair values will be
based on financial information as of the acquisition date. The following
unaudited pro forma condensed consolidated statement of operations for the year
ended December 31, 2002 and the three months ended March 31, 2003 give effect to
the acquisition as if it had occurred on January 1, 2002.
The pro forma adjustments represent, in the opinion of management, all
adjustments necessary to present the Company's pro forma combined financial
position and results of its combined operations in accordance with Article 11 of
Regulation S-X of the Securities Exchange Act of 1934 based upon available
information and certain assumptions considered reasonable under the
circumstances.
The unaudited pro forma combined financial information should be read in
conjunction with the audited financial statements of the Company and the notes
thereto.
17
Pacel Corp.
Unaudited Pro Forma Consolidated Condensed Balance Sheet
As of March 31, 2003
BeneCorp
Business
Pacel Services, Pro Forma Pro Forma
Corp. Inc. Adjustments Consolidated
--------------------------------------------------------------------
ASSETS
Current Assets:
Cash $ 211,545 $ 360,744 $ (216,000) (1) $ 452,289
Accounts receivable - 5,253 - 5,253
Deposit on BeneCorp
acquisition 96,000 - (96,000) (3) -
Workers' compensation
insurance deposit - 55,842 - 55,842
Prepaid expenses - 42,542 42,542
Loans from officers - 10,000 - 10,000
Other receivables 46,164 13,105 - 59,269
----------- ----------- ----------- -----------
Total current assets 353,709 487,486 (216,000) 625,195
Property and equipment, net 23,713 9,159 10,179 (4,5) 43,051
Goodwill - - 1,688,620 (6) 1,592,620
Other assets 3,991 - - 3,991
----------- ----------- ----------- -----------
Total assets $ 381,413 $ 496,645 $ 1,386,800 $ 2,264,858
=========== =========== =========== ===========
18
Pacel Corp.
Unaudited Pro Forma Consolidated Condensed Balance Sheet
March 31, 2003
BeneCorp
Business
Pacel Services, Pro Forma Pro Forma
Corp. Inc. Adjustments Consolidated
--------------------------------------------------------------------
LIAIBILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable $ 1,299,520 $ 51,242 - $ 1,350,762
Accrued expenses 259,381 - 20,000 (7) 279,381
Payroll taxes and payroll
related liabilities - 372,282 - 372,282
Deferred revenues - 1,228,746 - 1,228,746
Loans payable officers 1,006,839 - - 1,006,839
Notes payable 873,750 96,000 (96,000) (3) 873,750
Current portion of long-
term debt - 9,066 - 9,066
Note payable - Bank 35,437 - - 35,437
----------- ----------- ----------- -----------
Total current liabilities 3,474,927 1,757,337 (76,000) 5,156,264
Convertible debentures 287,618 - - 287,618
Long-term debt - 4,869 - 4,869
----------- ----------- ----------- -----------
Total liabilities 3,762,545 1,762,207 (76,000) 5,448,752
----------- ----------- ----------- -----------
Common stock 11,365,769 294 199,706 (2,8) 11,565,769
Preferred stock 11,320 - - 11,320
Additional paid-in capital - 2,706 (2,706) (8) -
Cumulative currency
translation adjustment (18,720) - - (18,720)
Retained deficit (14,739,501) (1,268,562) 1,265,800 (5,8) (14,742,263)
----------- ----------- ----------- -----------
Total stockholders
equity (3,381,132) (1,265,562) 1,462,800 (3,183,894)
----------- ----------- ----------- -----------
Total liabilities and
stockholders
equity $ 381,413 $ 496,645 $ 1,386,800 $ 2,264,858
=========== =========== =========== ===========
The accompanying notes are an integral part
to these financial statements.
19
Pacel Corp.
Unaudited Pro Forma Consolidated Condensed Statement of Operations
For the three months ended March 31, 2003
BeneCorp
Business
Pacel Services, Pro Forma Pro Forma
Corp. Inc. Adjustments Consolidated
--------------------------------------------------------------------
Revenue $ 583 $ 276,470 - $ 277,053
Cost of sales - 242,809 - 242,809
----------- ----------- ----------- -----------
Gross profit 583 33,661 - 34,244
Depreciation and
amortization 1,248 2,442 320 (5) 4,010
Interest expense 27,556 8,776 - 36,332
Sales and marketing 1,014 - - 1,014
General and administrative 309,615 198,377 - 507,992
----------- ----------- ----------- -----------
Total operating costs 339,433 209,595 320 548,348
Other income (expenses) - - - -
----------- ----------- ----------- -----------
Net loss $ (338,850) $ (175,934) $ (320) $ (515,104)
=========== =========== =========== ===========
Net loss per share:
Basic $ (0.01) $ (0.02)
Diluted $ (0.01) $ (0.02)
Weighted average shares
outstanding:
Basic 27,296,056 27,496,056
Diluted 27,296,056 27,496,056
The accompanying notes are an integral part
to these financial statements.
20
Pacel Corp.
Unaudited Pro Forma Consolidated Condensed Statement of Operations
For the year ended December 31, 2003
BeneCorp
Business
Pacel Services, Pro Forma Pro Forma
Corp. Inc. Adjustments Consolidated
--------------------------------------------------------------------
Revenue $ 298,419 $ 709,999 - $ 1,008,418
Cost of sales 281,339 351,162 - 632,501
----------- ----------- ----------- -----------
Gross profit 17,080 358,837 - 375,917
Research and development 9,121 - - 9,121
Depreciation and
amortization 55,618 12,550 (1,502) (5) 66,666
Interest expense 141,450 36,084 - 177,534
Sales and marketing 218,313 - - 218,313
Financing expenses 235,509 - - 235,509
General and administrative 4,149,052 781,507 - 4,930,559
----------- ----------- ----------- -----------
Total operating costs 4,809,063 830,141 (1,502) 5,637,702
Other income (expenses):
Cash surrender value
of life insurance - 126,527 - 126,527
Gain on disposal of assets - 9,447 - 9,447
Write-off of related
party receivable - (439,913) - (439,913)
----------- ----------- ----------- -----------
Loss before extraordinary
Items (4,791,183) (775,243) 1,502 (5,565,724)
----------- ----------- ----------- -----------
Gain on extinguishment
of debt 426,150 - - 426,150
Discontinued operations:
Loss from operations (220,268) - - (220,268)
Gain on disposal 177,817 - - 177,817
Cumulative effect of
accounting change (407,049) - - (407,049)
----------- ----------- ----------- -----------
Net loss $(4,815,333) $ (775,243) $ 1,502 $(5,589,074)
=========== =========== =========== ===========
The accompanying notes are an integral part
to these financial statements.
21
Pacel Corp.
Unaudited Pro Forma Consolidated Condensed Statement of Operations
For the year ended December 31, 2003
BeneCorp
Business
Pacel Services, Pro Forma Pro Forma
Corp. Inc. Adjustments Consolidated
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Net loss per share:
Basic $ (0.33) $ (0.37)
Diluted $ (0.33) $ (0.37)
Weighted average shares
outstanding:
Basic 14,714,561 14,914,561
Diluted 14,714,561 14,914,561
The accompanying notes are an integral part
to these financial statements.
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Pacel Corp.
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
The pro forma adjustments give effect to the acquisition of BeneCorp as if the
transaction was consummated on March 31, 2003. The pro forma balance sheet
adjustments are as follows:
(1) To reflect the cash consideration paid to the shareholders of BeneCorp.
(2) To reflect restricted stock issued as consideration to the shareholders of
BeneCorp.
(3) To eliminate intercompany advances made to BeneCorp.
(4) To adjust assets acquired to fair market value.
(5) To reflect adjustment of depreciation of fixed assets.
(6) To reflect goodwill as a result of the acquisition as follows:
Cash consideration $ 216,000
Stock issued 200,000
Liabilities assumed 1,762,207
Fees paid 20,000
Less fair value of assets acquired (509,586)
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Estimated goodwill acquired 1,688,620
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(7) To record accrual of direct acquisition costs.
(8) To eliminate the historical stockholders' equity of BeneCorp.
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