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10-Q document for the period ending Sept 30, 2005.
Same address, still incorporated in Delaware
Exact same number of shares

Comparisons below are from Dec 31, 2005
Balance Sheet:
Cash increased by 22%
AR increased by 24%
Current Assets increased by 28%

Net PP&E decreased by 14%
Non-goodwill intangibles dropped almost in half
Total assets increased slightly

AP increased 10%
Accrued expenses doubled

The majority of the increase in accrued expense balances relates to the increase in the sales tax payable account of approximately $238,000 related to the accrual of the settlement and payment of a prior year sales tax liability that was negotiated and paid in October 2005.

Deferred taxes doubled

Current ratio decreased to 3.0 from 3.2
Net cash increased to $757K or 11 cents/share from $676K.
Equity increased to $1.89 million or 28 cents/share from $1.65 million.
Equity increased by $240K.
no off-balance sheet arrangements

Income Statement:
Revenue decreased by 2% for Q3 (increased slightly for 9 months)
Gross profit decreased by 17% for Q3 to a level expected by the company (decreased slightly for 9 months)
G&A doubled for Q3 (increased 40% for 9 months) This was due to a tax settlement* they mentioned in the 10-K as a subsequent event. I didn't capture it in my 10-K write up because I knew I'd catch it here.

The company had a $43K operating loss for Q3 (9 month operating profit cut in half)
Net loss $21K for Q3 (Net profit dropped to $240K from $423K for 9 months)

Cash Flow Statement:
3 month operating cash flow was $231K due to favorable asset/liability changes
3 month free cash flow was $220K

9 month operating cash flow was $331K which wasn't much more than net income plus depreciation
9 month free cash flow was $297K

There was pretty much no other cash activities.

They now have $0 on the overdraft line of credit (which has an interest rate of prime + 6%). There was also $0 on the $400K line of credit (with interest rate of prime + 1%). It expires May 31, 2006.

* Tax settlement details
From the 10-K subsequent events (Note 7).

During March 2005, the Company paid approximately $61,000 to the New York State Department of Taxation and Finance for settlement of their sales tax audit. The Company had originally accrued approximately $26,000 in a prior year, and as a result of the settlement, approximately $35,000 was charged to expense during the fourth quarter of 2004.

And this is from the 10-Q for Q3:

This increase is directly attributable to the settlement in the amount of $298,200 paid in October 2005 to the New York State Department of Taxation and Finance related to a sales tax audit of our Florida subsidiary. Absent this issue, general and administrative expenses have decreased for the quarter in comparison to the same period last year due to efficiencies realized in the financial reporting and administrative areas of the Company.

They also issued an 8-K about it.


I need to take a quick look at the Q2 2005 results.
The balance sheet looks ok.

Six month revenues were up very slightly. Gross profit was up more. G&A was also up slightly.
Six month operating income: $414K (vs $380K in prior year)
Six month net income was $261K or 3.88 cents/share (vs $234K in prior year)

Six month cash flow from ops was only $100K for 6 months, with capex of $23K. It was fine for 3 months, which means Q1 stunk in terms of cash from ops.

The only other significant cash flow item was a $7K of repayment on a capital lease obligation.