Pro-Forma Financial Statements :
Exhibit 10.4
Pro-Forma Financial Statements :
On May 5, 2008, with an effective date of April 30, 2008, Technology Solutions Company (the “Company”) and
EnteGreat Solutions, LLC (“EnteGreat”) entered into an Asset Purchase Agreement (the “Purchase Agreement”)
pursuant to which the Company agreed to sell and EnteGreat agreed to acquire substantially all of the assets and
assume certain liabilities of the Company’s SAP practice (the “Practice”) together with certain other assets, liabilities,
properties and rights of the Company relating to its SAP services business.
The accompanying unaudited pro-forma consolidated balance sheet as of March 31, 2008 presents our historical amounts,
adjusted for the effects of the sale of the SAP Practice, as if such sale had occurred on March 31, 2008. The accompanying
unaudited pro-forma consolidated statements of operations are a summary of the Company’s operating results, excluding the SAP
Practice on a stand-alone basis. It was derived by adjusting the financial information found in the Company’s Annual Report on
Form 10-K of the year ended December 31, 2007 and the financial results for the first quarter of 2008. The accompanying
unaudited consolidated pro-forma financial statements should be read in conjunction with the Company’s historical consolidated
financial statements and related notes thereto, and Management’s Discussion and Analysis of Financial Condition and Results of
Operations, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007. The accompanying
unaudited pro-forma consolidated financial statements and related notes are provided for information purposes only and do not
purport to be indicative of results which may be expected to occur in the future or which would have been actually obtained had
the sale of the SAP Practice been completed on the date indicated.
a. Pro-forma condensed balance sheet — post sale of SAP Practice:
| Pro-forma Balance Sheet - Post Sale of SAP Practice | ||||||||||||
| Pre-Transaction | Post-Transaction | |||||||||||
| As reported | Transaction | Pro-forma | ||||||||||
| March 31, 2008 (1) | Adjustments (2) | March 31, 2008 (3) | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
Cash and short-term investments |
$ | 9,557 | $ | 4,150 | $ | 13,707 | ||||||
Promissory Note from EnteGreat |
— | 750 | 750 | |||||||||
Other current assets |
4,796 | (2,661 | ) | 2,135 | ||||||||
Fixed assets and intangible assets, net |
566 | — | 566 | |||||||||
TOTAL ASSETS |
$ | 14,919 | $ | 2,239 | $ | 17,158 | ||||||
Accounts payable |
$ | 2,252 | $ | (569 | ) | $ | 1,683 | |||||
Accrued compensation |
1,772 | 324 | 2,096 | |||||||||
Other current liabilities |
785 | — | 785 | |||||||||
Transactions liabilities |
— | 215 | 215 | |||||||||
Total shareholder equity |
10,110 | 2,269 | 12,379 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 14,919 | $ | 2,239 | $ | 17,158 | ||||||
NOTES:
| (1) | The pre-transaction unaudited condensed balance sheet represents the Company’s balance sheet as of March 31, 2008, prior to the sale of the SAP Practice. | |
| (2) | The transaction adjustments column represents those assets and liabilities changes resulting specifically from the sale of the SAP Practice to EnteGreat. | |
| (3) | The post-transaction pro-forma unaudited condensed balance sheet represents a pro-forma look back to March 31, 2008 assuming the impact of the transaction related adjustments. | |
| (4) | The pro-forma condensed balance sheet may not necessarily reflect the balance sheet of the Company during any other future period. |
(b) Pro-forma Condensed statements of operations (1)
| Year Ended December 31, 2007 | Quarter ended March 31, 2008 | |||||||||||||||||||||||
| SAP Practice (2) | Exogen/Corp (2) | As Reported | SAP Practice (2) | Exogen/Corp (2) | As Reported | |||||||||||||||||||
| (unaudited) | (unaudited) | (Audited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||
Revenues before reimbursable expenses |
$ | 12,859 | $ | 10,388 | $ | 23,247 | $ | 3,673 | $ | 2,235 | $ | 5,908 | ||||||||||||
Reimbursable expenses |
1,939 | 1,200 | 3,139 | 552 | 347 | 899 | ||||||||||||||||||
TOTAL REVENUES |
14,798 | 11,588 | 26,386 | 4,225 | 2,582 | 6,807 | ||||||||||||||||||
Cost of Services |
14,969 | 9,244 | 24,213 | 3,502 | 1,856 | 5,358 | ||||||||||||||||||
Management and administrative support |
1,051 | 9,538 | 10,589 | 538 | 759 | 1,297 | ||||||||||||||||||
Intangible assets amortization |
— | 205 | 205 | — | 49 | 49 | ||||||||||||||||||
Intangible assets impairment — one-time, non-recurring (3) |
— | 143 | 143 | — | 106 | 106 | ||||||||||||||||||
TOTAL COSTS AND EXPENSES |
$ | 16,020 | $ | 19,130 | $ | 35,150 | $ | 4,040 | $ | 2,770 | $ | 6,810 | ||||||||||||
OPERATING (LOSS) — Company
reflecting SAP Practice on a stand-alone basis |
$ | (1,222 | ) | $ | (7,542 | ) | $ | (8,764 | ) | $ | 185 | $ | (188 | ) | $ | (3 | ) | |||||||
INVESTMENT INCOME |
— | 469 | 469 | — | 134 | 134 | ||||||||||||||||||
NET (LOSS) — Company
reflecting SAP Practice on a stand-alone basis |
$ | (1,222 | ) | $ | (7,073 | ) | $ | (8,295 | ) | $ | 185 | $ | (54 | ) | $ | 131 | ||||||||
NOTES:
| (1) | The pro-forma statements of operations are a summary of the Company’s operating results excluding the SAP Practice on a stand-alone basis. It was derived by adjusting the financial information found in the Company’s Form 10K for year ended December 31, 2007 and the financial results for the first quarter of 2008. | |
| (2) | The Company has traditionally reported a consolidated look at the statement of operations and not by practice area. For this pro-forma representation, revenues and expenses were segregated by those estimated amounts associated with the SAP Practice on a stand-alone basis, with the remainder being reflected as Exogen / Corporate. The Exogen/Corporate column, for this pro-forma illustration, is carrying the entire burden of corporate administrative expenses, but for those such costs which could be directly attributed to the SAP Practice. The allocated costs for both above periods reflect those costs that were reasonably estimated to be directly attributable to the SAP Practice during the timeframe as indicated. | |
| (3) | The intangible asset impairment amounts represents one-time non-recurring expenses recorded in the period when an impairment of the intangible assets has been determined to have occurred. These amounts are not-recurring and represent a one time recognition of expense. | |
| (4) | The pro-forma condensed statement of operations may not necessarily reflect the results of the operations of the Company during any other future period. |
